WSJ[1].US.s.2009.07.15

P2JW196083-6-A00100-1000FF7FD7F ****** C M Y K Composite 07/15/2009 AZ,CL,CX,DL,DX,EE,FL,HO,MW,NC,NE,NY,RM,SA,SC,SL,SW,WB,WE BG,BM,CH,CK,CT,DA,DE,DM,DN,DR,HL,HW,LK,NA,NM,OR,PA,RI,RO,SB,SH,TD,TU,UT,WO P2JW196083-6-A00100-1000FF7FD7F * * * * * * W E D N E S DAY, J U LY 1 5 , 2 0 0 9 ~ VO L . C C L I V N O. 1 2 NIKKEI 9261.81 s 2.3% DJ STOXX 50 2083.68 s 1.3% 10-YR TREAS t 26/32, yield 3.445% OIL $59.52 t $0.17 GOLD $922.50 s $0.30 HHHH $2.00 EURO $1.3939 YEN 93.37 DJIA 8359.49 s 27.81 0.3% NASDAQ 1799.73 s 0.4% Harry Potter and the Half-Good Film Small Business Faces Big Bite House Health Bill Penalizes All but Tiniest Employers for Not Providing Insurance By Janet Adamy And Laura Meckler WASHINGTON—House Democrats on Tuesday unveiled sweeping health-care legislation that would hit all but the smallest businesses with a penalty equal to 8% of payroll if they fail to provide health insurance to workers. The House bill, which also would impose new taxes on the wealthy estimated to bring in more than $544 billion over a decade, came as lawmakers in the Senate raced against a self-imposed deadline of this week to introduce a bill in time for action this summer. Senators face a tougher battle because they are striving for a bipartisan bill. Key senators are weighing a combination of several more-modest fund-raising provisions, including some new fees on health-care industries. Under the House measure, employers with payrolls exceeding $400,000 a year would have to provide health insurance or pay the 8% penalty. Employers with payrolls between $250,000 and $400,000 a year would pay a smaller penalty, and those less than $250,000 would be exempt. Certain small firms would get tax credits to help buy coverage. The relatively low thresholds for penalties triggered the sharpest criticism yet from employer groups, who said the burden on small business is too high and doesn’t do enough to help them expand insurance coverage. “This bill costs too much, it covers too few and it has way too much government involvement,” said Michelle Dimarob, a lobbyist with the National Federation of Independent Business, the main trade group for small firms. “Small business doesn’t want any of those things.” According to 2006 data from the federation, businesses with between five and nine workers, representing about one million employers, had an average payroll of around $375,000 a year. A report from the Kaiser Family Foundation found that only about half of firms with three to nine workers offered health benefits in 2008. House Speaker Nancy Pelosi unveiled the measure on Tuesday, praising it as a historic step toward insuring all Americans that has eluded lawmakers for Please turn to page A2 Associated Press ‘Half-Blood Prince’ shows well, but the presentation struggles at a laborious pace, according to Joe Morgenstern’s review. D1 What’s News– i 7 i i i i i 7 Business&Finance World-Wide Britain’s Deadliest 24 Hours Since Afghanistan War Began oldman Sachs posted its most profitable quarter ever as the firm snatched business away from weakened rivals and churned out huge trading gains by revving up risk-taking. Secondquarter net totaled $3.44 billion, more than Goldman earned in all of 2008. A1, C14 n J.P. Morgan is taking tougher stands against the government, clients and competitors after repaying $25 billion in federal money. C1 n CIT and U.S. regulators were working to iron out details of an aid package after customers drained hundreds of millions from the lender. C1 n The Justice Department’s probe of credit-default swaps is homing in on the role of Markit and its ownership by a group of banks that control a large amount of pricing data. C1 n Retail sales rose in June, but excluding gasoline and autos, sales fell for the fourth straight month. Businesses continued to slash inventories. A2 n Stocks mustered only small gains after Monday’s rally. The Dow industrials rose 27.81 points, or 0.3%, to 8359.49. Oil slipped to $59.52 a barrel. C1 n Intel posted a quarterly loss owing to an EU antitrust fine, but the chip maker’s sales and profit margins were stronger than expected and it issued an upbeat outlook. B1 n Dell offered a bleaker view, saying technology spending is weak and likely will remain so as companies postpone computer purchases. B5 n Calpers has filed suit against the three biggest credit-ratings agencies, alleging that inaccurate ratings saddled it with losses. C3 n U.S. aviation investigators are examining a Southwest jet that developed a one-footwide hole midflight. B6 n China’s foreign-exchange reserves grew at an accelerated rate in the second quarter, a sign capital is flowing back as its economy recovers. A8 n The lead bidders for AIG’s asset-management unit have dropped out. Questions are emerging over the insurer’s handling of the talks. C3 n Johnson & Johnson’s net fell 3.6%. Drug sales dropped sharply, hurt by generics. B4 n Lehman administrators in Europe set a plan to return about $12 billion in client funds thathad been stuck in limbo. C2 n GM is expected to get an offer of about $300 million for Opel from RHJ as bidding for the German unit heats up. B2 n GM outlined ex-CEO Wagoner’s benefits deal. B2 G n House Democrats unveiled a sweeping health-care bill. The measure would impose new taxes on the wealthy estimated to bring in more than $500 billion over a decade. It also would hit businesses with a penalty equal to 8% of payroll if they fail to provide health insurance to employees. The bill creates a new public health-insurance plan and requires that most Americans carry insurance. A1 Senators are weighing a combination of several moremodest tax increases to finance their health-care bill. n Sotomayor distanced herself from Obama’s remarks about judicial empathy as the Supreme Court nominee faced tough GOP questioning. A3 n Iran hanged 13 members of a Sunni Muslim rebel group convicted of bombings and killings in the country’s southeast. n Tehran announced new guidelines that appear aimed at reining in the press. A9 n Thousands more refugees returned to Pakistan’s Swat Valley as officials struggled with transport bottlenecks. n An aid helicopter was shot down in southern Afghanistan, killing all six crew members and a child on the ground. n Hackers extracted files from computers that triggered cyberattacks in the U.S. and South Korea, police said. A9 n The European Parliament chose a former Polish leader as president, the first East European to head a big EU body. n Liberia’s former president, Charles Taylor, denied all war-crimes charges as he testified at The Hague. A9 n Menopausal women who took hormone therapy raised their risk of ovarian cancer by 38%, a study in JAMA said. n Britain’s health system, facing the threat of a rapid spread of swine flu, is planning a massive vaccination program. A8 n Twelve police agents were captured, tortured and killed by a Mexican drug cartel in a major blow to the government. A7 n Blacks’ test scores have risen in recent years, but a gap with white students persists, a new report said. n Obama announced a 10-year, $12 billion initiative to aid community colleges. A6 n The Obama administration will weigh whether to revamp or scrap the color-coded terrorism-alert system. A6 n Nigerian militants said they will observe a 60-day cease-fire after a rebel leader’s release. n Washington University said a surgeon accused of falsifying a study failed to disclose a consulting deal with Medtronic. A6 Reuters SOMBER PROCESSION: Hearses carrying the bodies of eight British soldiers killed during the bloodiest 24 hours for U.K. forces since the 2001 invasion of Afghanistan move slowly through Wootton Bassett in southern England Tuesday. A10 A Chinese Upstart Goldman Gains Goes After Detroit On Rivals’ Pain By Norihiko Shirouzu TAIZHOU, China—After quitting his job as a senior engineer at Chrysler to join China’s fledgling domestic auto industry, Frank Zhao had a stark premonition. “I saw the end of Detroit,” says 45-year-old Mr. Zhao, who now supervises 1,200 engineers building a new generation of vehicles for Geely Holding Group Co., one of China’s top-selling brands. As Chrysler LLC and General Motors Co. close plants and shed jobs, Geely’s expansion plans are moving into high gear, showing how the crisis in the U.S. is accelerating a shift in the global auto industry towards China and other emerging markets. “We are making progress,” says Mr. Zhao, the president of Geely’s research and development arm who moved back to his native China five years ago and joined Geely in 2006. “GM is big but moving down. We are small but moving up.” Geely, with a group of financial backers, is now considered a front-runner in the bidding for Ford Motor Co.’s Volvo unit. A decision could come in the next several weeks, according to people familiar with the situation. That deal is taking shape just as another Chinese car company, Beijing Automotive Holding Co., is gunning for a 51% stake in GM’s Germany-based Opel unit. German officials have expressed concern that such a transaction could make the GM unit too reliant on the Chinese government. In 2008, Geely, one of China’s top 10 passenger-car brands, sold 221,900 vehicles, up 3.2% from a year earlier, according to U.S. consulting firm CSM Worldwide. That’s a small figure compared with other Chinese car producers that market vehicles through joint ventures with giants like GM and Volkswagen AG. But Geely stands out as one of the country’s few independent companies building branded vehicles without the help of established foreign partners. Industry analysts believe that, unlike most of its Chinese rivals, Geely will be poised to export its models to the U.S. or Europe within three to five years. The ascent of China and other new car-making nations is likely to mean a faster outflow of auto manufacturing jobs Please turn to page A12 By Susanne Craig And Aaron Lucchetti Wall Street’s meltdown fueled the most profitable quarter ever at Goldman Sachs Group Inc., which snatched business away from weakened rivals and churned out huge trading gains by revving up risk taking. With competitors such as Lehman Brothers Holdings Inc. and Bear Stearns Cos. gone, and others like Citigroup Inc. flailing, Goldman appears to be pulling off one of the biggest marketshare grabs in Wall Street history. Net income in the second quarter was $3.44 billion, or $4.93 a share—more than Goldman earned in all of 2008, when it was hammered by the financial crisis. Analysts had expected strong earnings, but were surprised by how much the firm exceeded expectations. The primary earnings driver was wider profit margins on the buying and selling of securities, in part due to fewer competitors. Goldman’s resurgence, including a 33% jump in money set aside for compensation and benefits in the year’s first half, could invite criticism that it is benefit- Back on Track Goldman Sachs Group’s quarterly net income, in billions $4 3 2 1 0 –1 –2 –3 2007 ’08 ’09 Source: the company ing too much from the government’s Wall Street rescue. Its quarter, on the other hand, could be viewed as evidence that the government’s intervention has succeeded in returning some firms to solid ground. Goldman executives were cautious Tuesday about whether the company can keep churning out such profits. “We are not feeling great Please turn to page A6 n Regulators nearing a deal on package to save CIT .....................C1 n J.P. Morgan strikes back at derivatives regulation .................C1 Some City Folk Are Mad as Wet Hens When Chickens Come Home to Roost i i i 7 In Salem, Ore., the Claws Have Come Out Over Backyard Coops; ‘Get a Farm’ 7 Vital Signs Change from previous month in the Producer Price Index 2% 1 0 -1 -2 -3 ’07 ’08 ’09 By Nick Timiraos n Wholesale prices rose last month. The Producer Price Index rose 1.8% from May to June, the largest gain since late 2007, boosted by a 6.6% increase in energy prices. Prices excluding the food and energy sectors rose 0.5% for the biggest gain since October, driven by an increase in the prices of vehicles. With energy prices lately on the decline, most economists expect the index to reverse its course. SALEM, Ore.—For three hours at a City Council meeting, residents clucked over the latest debate ruffling feathers here: Should homeowners be allowed to keep chickens in their backyards? The chicken fight began last summer, when a neighbor snitched on Barbara Palermo to city authorities for keeping four pet hens in a backyard coop. Chickens and other livestock aren’t allowed in Salem backyards where land isn’t zoned for agricultural use. A city compliance officer knocked on Ms. Palermo’s door to tell her she had to get rid of her pet birds. But she has decided not to give up without a fight. Ms. Pal- Source: Bureau of Labor Statistics Follow the news all day at WSJ.com > CONTENTS Corporate News ....B2-4 Deals & Deal Makers ..C3 Gadgets ...........................D6 Heard on the Street ..C14 Home & Family ..........D2 Leisure & Arts ...........D7 Opinion ..................A13-15 Personal Finance .....D3 Property Report .....C6-9 Sports ...............................D8 Technology ....................B5 Weather Watch ........B6 World News .........A7-10 s Copyright 2009 Dow Jones & Company. All Rights Reserved ermo put her chickens in “foster care” with a friend outside town as she rallies residents and presses city councilors to pass an ordinance legalizing backyard coops. She’s asking the city to allow homeowners to have three hens—no roosters, which are much noisier—that would have to be kept in enclosed coops at all times. Ms. Palermo is part of a debate that’s playing out in several cities across the country. The 51-year-old veterinarian’s assistant says she’s stunned by the opposition. It’s hypocritical that Salem residents can keep potbellied pigs weighing under 100 pounds, she says. “They generate a lot of poo and don’t give you eggs…so it’s ridiculous Please turn to page A12 Announcing A new weAlth mAnAgement firm with over 130 yeArs of experience. see pAge A16 6606697 P2JW196083-6-A00100-1000FF7FD7F Composite CYAN BLACK YELLOW MAGENTA P2JW196002-4-A00200-1--------XA **** BLACK 07/15/2009 AZ,CL,CX,DL,DX,EE,FL,HO,MW,NC,NE,NY,RM,SA,SC,SL,SW,WB,WE P2JW196002-4-A00200-1--------XA * * * * A2 Wednesday, July 15, 2009 THE WALL STREET JOURNAL. U.S. NEWS Signs of Upturn in Inventories Remain Elusive By Alex Frangos And Elizabeth Holmes When businesses add merchandise to store shelves again and consumers gobble up the goods, the signs of an economic turnaround will have arrived. That hasn’t happened yet. U.S. retail sales rose in June, but mostly because of higher gasoline prices and volatile auto sales, the Commerce Department reported Tuesday. Meanwhile, businesses continued to slash inventories. Retail sales climbed 0.6% in June from a month earlier on a seasonally adjusted basis to $342.1 billion, according to the Commerce Department. Excluding gas and autos, retail sales actually declined for the fourth consecutive month. Amid high unemployment and stagnant wage growth, consumers’ thriftiness is likely to persist in the second half of the year, even as some economists predict the economywill begin to grow again. “People will continue to prioritize spending until income growth comes back—until mid-2010 at the earliest,” said Adam York, an economistat WellsFargo. “People will have to be really careful about where they are spending.” That consumer behavior is prompting retailers to keep stocks of goods low, seeking to avoid a discount bloodbath similar to the one last year, when many were forced to liquidate Businesses Slim Down, Consumers Hold Back Change from previous month in U.S business inventories and retail-and-food sales Businesses continue to trim inventories… And while U.S. retail and food sales rise again… Sales shrink without autos, parts and gasoline May: down 1% 2% 1 0 –1 –2 –3 –4 2008 ’09 2% 1 0 –1 –2 –3 –4 2008 June: up 0.6% 2% 1 0 –1 –2 –3 –4 ’09 June: down 0.2% 2008 ’09 Note: Data are seasonally adjusted Source: U.S. Commerce Department merchandise in order to raise cash. Such caution means that the bounce to the economy from any restocking—which spurs production—could be muted. Terry Lundgren, president andchiefexecutive ofMacy’sInc., said he doesn’t expect a repeat of the panic promotions of last year, because supply and demand are “relatively at parity again.” “There will not be the same level of promotions to clear inventory” as there was last year, Mr. Lundgren said. But retailers streamlining inventory ahead of the back-toschool and end-of-year holiday sellingseasonsarealsounderpressure. If they don’t produce enough shinynewitems,customerswillremain content with their old prod- ucts. If they don’t stock up on enough of the new products, customers will get angry when stores run out of the popular ones. Cheryl Kehl, a 56-year-old homemaker from the Chicago suburbs, has noticed far less merchandise in stores where she regularly shops for her adult children, including Old Navy by Gap Inc. and Ann Taylor Loft by AnnTaylor Stores Corp. “It’s so much sparser,” Ms. Kehl said. “In some subliminal way, instead of encouraging you, it discourages you from shopping.” To replenish inventories more quickly and decrease costs, some sellers are narrowing their assortment of materials or customer choices. Clothing retailer Aeropostale Inc. has cut down on the number of different fabrics it uses. The thermal fabric for some of its T-shirts, for example, is also used in hooded shirts and dorm apparel. By having a smaller range of fabric, Aeropostale can be more flexible in the use of its materials and restock more quickly, said Mindy Meads, the company’s president. Sealy Corp., the large mattress manufacturer, has reduced its inventory by cutting out some ofthe choicesit provides consumers, such as different quilting patterns on mattress borders. Meanwhile, companies are continuing to pare inventory, albeit at a slower rate. Businesses cut inventories 1% in May from the month earlier on a seasonally adjusted basis to $1.368 trillion, according to the Commerce Department. That follows a 1.3% decline in April. Inventories are down 8% from a year earlier. Intel Corp. said Tuesday that its inventories were down 25% since the start of the year, and that its outlook for the second half of the year has improved. Aluminum titan Alcoa Inc. told investors last week that it has reduced inventories 23% since the start of the year. The hope among more optimistic analysts is that eventually businesses—and consumers— will work through their stocks of goods and be forced to buy again. Socks with holes in them will need to be replaced, and empty cupboards restocked. “Low inventories will contribute to increased production, which will bring people back to work,” said Robert Dye, an economist at PNC Financial Services. “The groundwork is being put in place,andwe’llseethatcyclere-engage”inthesecondhalfoftheyear. Of course, consumers may decide to darn their socks rather than buy new ones. “Household balance sheets are a wreck,” said Joshua Shapiro of economic consultants MFR Inc. in New York. Some businesses said they might begin restocking soon. Rick Gold, chief executive of wireless equipment manufacturer CalAmp Corp., said his customers are beginning to wade back into purchasing again. “The inventory correction in the markets we serve is done,” he said. CalAmp, based in Oxnard, Calif., had $98 million in revenue last year. It cut inventory for the fifth quarter in a row in the period ended May 31. Its stock of equipment declined by 6.5%. “Now we are seeing the demand from the end user,” Mr. Gold said. Small Business Faces a Big Bite From Health-Care Bill Continued from Page One decades. “This bill is a starting point and a path to success to lower costs to consumers and businesses,” the California Democrat said. The Congressional Budget Office on Tuesday calculated the cost of the House’s plan to expand insurance coverage at $1.04 trillion over 10 years, and predicted the measure would eventually lead 97% of legal American residents to have insurance. That’s in line with President Barack Obama’s desired budget for a health overhaul and lawmakers’ pledges for expanding coverage. The estimate doesn’t factor in the plan to pay for the bill, including the new tax on wealthy Americans, or certain changes to Medicare and Medicaid, all of which could affect the final price tag. The House bill would place new taxes on the wealthiest people to help expand insurance coverage to the nation’s 46 million uninsured people. The legislation calls for a 5.4% surtax on those with annual gross incomes exceeding $1 million. Households with annual income between $500,000 a year and $1 million would be hit with a 1.5% surtax, and those earning between $350,000 and $500,000 would face a 1% surtax. Those rates could eventually increase to 3% and 2%, respectively, if the government doesn’t achieve certain health-cost savings. The 1,018-page initiative contains several components pushed by liberal Democrats that were long expected to be part of House legislation, but which face considerable opposition in the Senate. Most notably, the House bill creates a new public health-insurance plan aimed at individuals and small businesses that otherwise can’t get affordable coverage. The House measure would bar insurance companies from denying coverage to individuals who are sick, while also requiring most Americans to carry health insurance or pay a penalty equal to about 2.5% of their gross income. It would provide families earning up to $88,000 a year with subsidies to help them buy coverage. And it would expand health-insurance coverage through the Medicaid federalstate insurance program for the poor. The Senate legislation is also expected to include mandates on insurers to provide coverage and individuals to carry it, although the details may differ. The bigger differences will come on the financing side, where many senators are cautious about introducing major new taxes on the wealthy to pay for health care. The White House is pushing for action before the August recess in both houses of Congress to give lawmakers time to reconcile their two versions, pass that compromise through the House and the Senate and send Mr. day meeting one-on-one with members of his committee, and he put on an optimistic face. “We’re going to pass very significant health reform this year,” the Montana Democrat said. But the pre-recess deadline appeared in danger as Republicans expressed concern that the process is moving too quickly. Sen. Olympia Snowe, a key Republican whom Mr. Baucus is trying to win over, said Tuesday that the legislation is far too complex to rush and that she saw little chance of moving a bill through the Senate before the August break. In addition to health care, the White House also hopes for action on energy and financial-sector regulation, both of which would consume time this fall. At a White House meeting with top Democratic leaders on Monday, Mr. Obama pushed Mr. Baucus to produce legislation by Thursday. Senators are now talking openly of keeping the chamber in session an extra week, though some say that is simply a tactic to discourage delay by senators who have plans for vacations, congressional trips and hometown activities. A further complication is that if it looks as if the Senate can’t or won’t act this summer, many House Democrats are likely to hesitate about voting on a contentious issue—including raising taxes—for something that might never become law. Associated Press House Speaker Nancy Pelosi, from left, with House Majority Leader Steny Hoyer and Rep. Pete Stark, at a news conference in Washington Tuesday to announce the introduction of health-care legislation. Obama a final bill by autumn. The Senate Health, Education, Labor and Pensions Committee could approve its health overhaul bill as soon as Wednesday. That will get merged with a bill in the Senate Finance Committee, where lawmakers are trying to craft a bipartisan measure. Chairman Max Baucus on Tuesday was pitching his colleagues on a plan to finance the bill through a combination of more-modest tax increases. He is trying to fill a hole of about $320 billion over 10 years, after Democrats objected to a provision to tax upper-end employee health benefits. The fresh package included a new fee on pharmaceuticals and other health-care industries, and stiffer corporate-reporting measures aimed at collecting a greater share of corporate taxes owed each year, two Senate aides said. Under the first proposal, health industries including drug makers and insurers would be charged an assessment, with individual companies’ fees based on their market share. It’s not clear how large the total assessment would be. The proposal also seeks to raise $75 billion to $100 billion over 10 years by giving states an incentive to issue bonds that would help offset the expanded federal share of Medicaid. “The goal here is a bunch of smaller, less controversial items that can add up,” one official said. The package may still include a modified version of the plan to tax high-end employer-provided health insurance, though on a smaller scale, aides said. Mr. Baucus spent much of the Corrections & Amplifications A July 10 World News article on Honduras reported the results of a poll by CID-Gallup that was commissioned by the Honduran newspaper La Prensa. The newspaper reported that 41% of Hondurans thought the ouster of President Manuel Zelaya was justified given the president’s attempts to reform the constitution, while 28% didn’t think so. However, the newspaper didn’t publish the results of a second question that found that 46% objected to the action taken to remove Mr. Zelaya from power, while 41% agreed. While Overstock.com said July 1 that it was ending business with marketing affiliates in four states, it later in the day reinstated its California affiliates. A July 2 Technology article failed to note the reinstatement. Jonathan Pollard, who admitted to spying for Israel, was a civilian intelligence analyst for the U.S. Navy. A Tuesday Money & Investing article about Bernard Madoff’s prison assignment incorrectly said that Mr. Pollard was a former Navy officer. Russia is the world’s thirdlargest beer market. In some editions Tuesday, a Marketplace article about restrictions on beer advertising in that country incorrectly said Russia is the world’s largest beer market. There are 10 million neuronal connections in the neocortical column of a rat brain. A Currents article Tuesday about a project that is building a biologically accurate artificial brain incorrectly said there were 10 billion such connections. Reporter Yoshio Takahashi’s first name was misspelled as Yokio in a byline with a Corporate News article about a possible merger of Kirin Holdings Co. and Suntory Holdings Ltd. Surgeon General Pick Boosts Primary Care By Alicia Mundy And Jane Zhang WASHINGTON—The president’s choice for U.S. surgeon general, Regina Benjamin, puts a primary-care physician in a prominent role as the administration pushes to reorient the health-care system toward prevention and primary care. Dr. Benjamin, 52 years old, who has been part of the center studying health-care disparities at the National Institutes of Health, is expected to be a proponent of delivering more health care and medicine to the poor, minorities and rural areas. In her own family, Dr. Benjamin mentioned the loss of family members to smoking-related lung cancer, an HIV-related illness and diabetes. She pointed to these deaths as one of the reasons for her commitment to improve primary-care medicine in treating preventable diseases. “While I cannot change my family’s past, I can be a voice in the movement to improve our nation’s health care and our nation’s health for the future,” Dr. Benjamin said when President Barack Obama introduced her Monday at the White House Rose Garden. “My hope, if confirmed as surgeon general, is to be America’s doctor, America’s family physician.” The administration and major groups representing doctors are discussing health-overhaul plans that could result in the government diverting some federal funds to primary care and away from specialty surgeries and diagnostic tests, according to representatives of physician societies and industry lobbyists. Dr. Benjamin emerged several years ago as a critic of government regulations that complicate general practitioners’ ability to treat uninsured patients or those covered by Medicaid, the federal and state health-care program for the poor. In a speech to the American Hospital Association in 2005, she blasted medical and government bureaucracy, saying that once in private practice, she learned that medicine “wasn’t just sewing up shark bites.” “I had to deal with the land sharks, the regulators, the reviewers, the red tape, dispensers and what I call the hammerheads, the lawyers,” she said. But she also nodded to the financial realities of providing health care, saying if “you can’t keep your doors open you can’t continue to serve people.” And she said health-care workers needed to avoid burnout. “As health-care workers we always tell everybody else what to do but we don’t do it,” she said. Dr. Benjamin, who received a MacArthur “genius” grant in 2008, has spent two decades serving rural Alabama. Her clinic is in the 2,500-person town of Bayou La Batre. After Hurricane Katrina, she expanded her work to other parts of the state. Readers can alert The Wall Street Journal to any errors in news articles by emailing wsjcontact@wsj.com or by calling 888-410-2667. THE WALL STREET JOURNAL (USPS 664-880) (Eastern Edition ISSN 0099-9660) (Central Edition ISSN 1092-0935) (Western Edition ISSN 0193-2241) Editorial and publication headquarters: 1211 Avenue of the Americas, New York, N.Y. 10036 Published daily except Sundays and general legal holidays. Periodicals postage paid at New York, N.Y., and other mailing offices.POSTMASTER: Send address changes to The Wall Street Journal, 200 Burnett Rd., Chicopee, MA 01020. 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Email: wsj.ltrs@wsj.com WSJ UK Customer Service contact information: Telephone: +44 (0) 207 309 7799 E-mail: WSJUK@dowjones.com Available at Nordstrom The enduring style of the Gold Cup collection 6606698 P2JW196002-4-A00200-1--------XA BLACK P2JW196003-4-A00300-1--------NY **** C M Y K Composite 07/15/2009 EE,NY LD,RO,SB P2JW196003-4-A00300-1--------NY Wednesday, July 15, 2009 THE WALL STREET JOURNAL. * * * * A3 U.S. NEWS Abaca Supreme Court nominee Sonia Sotomayor answers questions Tuesday on the second day of confirmation hearings. ‘I do not believe that any ethnic, racial or gender group has an advantage in sound judging,’ she said. Sotomayor Grilled by Panel High Court Nominee Distances Herself From Obama’s ‘Empathy’ Comments By Jess Bravin WASHINGTON—Judge Sonia Sotomayor, parrying tough Republican questioning, distanced herself from President Barack Obama’s comments about judicial empathy, saying, “We don’t apply feelings to facts.” Republicans suggested Judge Sotomayor was changing her views to get through her confirmation hearings. They expressed dissatisfaction with her answers on questions such as what she meant when she suggested a “wise Latina” would make better decisions than a white man. “I do not believe that any ethnic, racial or gender group has an advantage in sound judging,” she said. “Had you been saying that with clarity over the last decade or 15 years, we’d have a lot fewer problems today,” said Alabama Sen. Jeff Sessions, the Judiciary Committee’s ranking Republican. Sen. Jon Kyl (R., Ariz.) cited Mr. Obama’s comments that in the hardest questions of constitutional law, when text, precedent and other legal tools reach their limits, the rest must be determined by what is in the judge’s heart. The senator asked if Judge Sotomayor agreed. “No, sir, I wouldn’t approach the issue of judging the way the president does,” she said. “Judges can’t rely on what’s in their heart…The job of a judge is to apply the law.” She added, “It’s not the heart that compels conclusions in cases, it’s the law.” On the “wise Latina” matter, Judge Sotomayor first said, to laughter in the hearing room, “No words I have ever spoken or written have received so much attention.” She said she had used similar lines for years in lectures to different audiences, particularly women lawyers or “young Latino lawyers and students.” “I was trying to inspire them to believe that their life experiences would enrich the legal system, because different life experiences and backgrounds always do,” she said. Sen. Sessions made clear he wasn’t persuaded. He said that remark and others by the judge go “against the American ideal and oath that a judge takes to be fair to every party.” Judge Sotomayor calmly deflected head-on Republican assaults, but questioning by Sen. Lindsey Graham (R., S.C.) seemed at times to leave her stumped. Mr. Graham challenged Judge Sotomayor with unfavorable reviews she received from anonymous lawyers in the Almanac of the Federal Judiciary, which rates judges. The reviews singled her out among Second Circuit federal appellate judges, describing her as “a terror on the bench,” among other things. “Do you think you have a temperament problem?” he asked. “No, sir,” she said. But she had no explanation for the rating, other than that she often asks “hard questions.” Like earlier nominees, Judge Sotomayor sought to avoid disclosing her views on virtually any legal issue, saying she feared prejudging a question that could reach the Supreme Court. When asked whether she agreed with earlier precedents, she generally described them rather than saying whether she would have ruled the same way. “Equality requires effort,” she said when asked about affirmative action. To enforce the 14th Amendment’s equal-protection clause, courts have found that “there are situations in which race in some form must be considered.” She added her hope “as it was expressed by [retired Justice Sandra Day] O’Connor in her decision involving the University of Michigan law school admissions criteria, that in 25 years race in our society won’t be needed to be considered in any situation.” Asked her view of Bush v. Gore, the 2000 case that resulted in the George W. Bush presidency, Judge Sotomayor said simply: “The court took and made the decision that it did.” She said it led to “some good” in highlighting problems in election procedures. Despite sustained questioning, she wouldn’t reveal her inclination toward a major constitutional issue heading toward the Supreme Court. The justices said last year that the Second Amendment protects an individual’s right to own handguns for self defense from federal obstruction. Cases in the pipeline could present the question of whether state legislatures are also restricted. —Naftali Bendavid contributed to this article. AMaster Sommelier Join us for our S W I R L , S I P A N D S AVO R L I K E Master Wine tasting event 12 insider wines, $10 at lunch, $25 at dinner ©2009 Rare Hospitality International, Inc. July 13 – august 23 thecapitalgrille.com/wine WSJ.com ONLINE TODAY: See photos and video highlights from the hearings so far, plus continuing coverage at WSJ.com/Sotomayor. Reserve your table today at thecapitalgrille.com Supreme Strategy: Stick to the Script By Naftali Bendavid WASHINGTON—If repetition were the qualification for a Supreme Court justice, Sonia Sotomayor would already be on the high court. Her mission Tuesday was to tell senators as many times as possible, with a minimum of variation, that Congress, not judges, makes the law. “It’s important to remember that as a judge, I don’t make law,” she told Sen. Patrick Leahy (D., Vt.). “Judges...don’t determine the law. Congress makes the laws,” she said to Sen. Jon Kyl (R., Ariz.). “That’s the job of Congress, to decide what the policy should be for society,” she assured Sen. Jeff Sessions (R., Ala.), who wondered about a remark by Judge Sotomayor, in her prenominee days, that appeals courts are where policy is made. This, of course, was no accident. In the lead-up to the hearing, Republican senators made clear that one of their main concerns was whether Judge Sotomayor would let her prejudices and biases affect her rulings. Members of Congress tend to jealously guard their prerogative to make laws, arguing that they are responsive to the public in a way judges aren’t. “I want her to show me she understands the difference between her job and mine,” Sen. Lindsey Graham (R., S.C.) said a few days before the hearing. Every White House hammers it into the head of every Supreme Court nominee that he or she must stay on message and say nothing controversial. The result was a day in which Judge city of reverse discrimination. “We were following precedent,” she told Sen. Sessions. Republicans noted that the Supreme Court, which overturned the ruling, said there were “few, if any, precedents in the courts of appeals discussing the issue.” As if to test the judge’s ability to withstand tugs at her heartstrings, Sen. Charles Schumer (D., N.Y.) asked about a case brought by families of victims of a plane crash off Long Island. “One in a tragic, tragic, horrible situation like that can’t feel anything but a personal sense of regret,” Judge Sotomayor allowed. “But those personal senses can’t command a result in a case.” The nominee’s unswerving insistence on staying on message delighted the White House, but it frustrated Republican senators, who suggested her assurances didn’t match her speeches and statements over the past 15 years. At one point Mr. Sessions, the committee’s top Republican, read a statement from several years ago in which the judge said she “willingly accepts” that prejudices, sympathies and experiences affect judges. “That’s the opposite of what you just said, is it not?” Mr. Sessions demanded. Mr. Graham appeared especially befuddled. “I listen to you today, I think I’m listening to Judge Roberts,” he said, referring to conservative Chief Justice John Roberts. But he said her opinions as a judge and her statements Tuesday suggested something else. “What we’re trying to figure out,” said Sen. Graham, “is who we’re getting here, who we’re getting as a nation.” Wine Tasting Participation Requires Purchase of Lunch or Dinner. Getty Images Sen. Jeff Sessions (R., Ala.) challenged Judge Sonia Sotomayor Tuesday in her confirmation hearing about things she said before becoming the nominee. Sotomayor virtually from the first moment to the last insisted she would follow the law and not let her feelings intrude. “We apply law to facts,” she told Mr. Kyl. “We don’t apply feelings to facts.” She followed the script in addressing the Ricci v. DeStefano case, in which she and two colleagues ruled against New Haven firefighters who accused the 6606699 WWW.ULYSSE-NARDIN.COM P2JW196003-4-A00300-1--------NY Composite CYAN BLACK YELLOW MAGENTA P2JW196004-5-A00400-1--------XA ***** BLACK 07/15/2009 AZ,CL,CX,DL,DX,EE,FL,HO,MW,NC,NE,NY,RM,SA,SC,SL,SW,WB,WE P2JW196004-5-A00400-1--------XA * * * * * A4 Wednesday, July 15, 2009 P W L C 10 11 12 H S G D B F A R 1 2 3 4 5 6 7 8 9 THE WALL STREET JOURNAL. U.S. NEWS Taxes Sought to Fix Aged Infrastructure By Jake Sherman WASHINGTON—A bipartisan group of lawmakers is proposing to raise about $10 billion a year to fix aging water and sewer systems by taxing the biggest users. The legislation, which has sparked significant opposition from industry, is expected to be unveiled Wednesday at a news conference on Capitol Hill. The bill calls for a 0.15% tax on any corporation earning a profit of more than $4 million a year. Manufacturers of any waterbased beverages, excluding alcohol, would see a four-cent tax per container. Soaps, detergents, toiletries, toilet tissue, water softeners and cooking oils would face a 3% tax on wholesale prices. Pharmaceuticals would be taxed at 0.5% of the wholesale price. Rep. Earl Blumenauer (D., Ore.), the main sponsor of the Water Protection and Reinvestment Act, said he believed the bill was necessary to repair an aging system used by all Americans. The taxes, he said, would target some of the biggest users of water and companies that have the biggest stake in the efficiency of the system. He called the fees modest and fair. The federal government has paid an average of $2.3 billion each year since 2000 to help maintain the water system. A spokeswoman for Mr. Blumenauer said the trust fund created under the bill would bring in about $10 billion a year. Concerns about the safety and integrity of water systems is a perennial concern, particularly in older cities. Recent water-main breaks in New York City have disrupted traffic and transit. A U.S. Chamber of Commerce representative, Janet Kavinoky, said: “Anytime there’s a broad base of general taxes being used to fund infrastructure, the chamber is going to take a close look at how that affects our members.” The chamber also has concerns that a federal subsidy for infrastructure repair could send a signal to local municipalities that they don’t need to charge the real cost of providing water. Representatives of the industries that would be hardest hit by the proposed fees said they feel unfairly targeted. Joe Doss, president and chief executive of the International Bottled Water Association, said the proposal singled out one product category, while other water users wouldn’t see tax increases. Kevin Keane, senior vice president of the American Beverage Association, said beverage companies would almost certainly raise their prices to help compensate for the tax. This is just another example of “raising taxes on the middle class,” Mr. Keane said. © KARATS & FACETS, 2009 Dallas has sued the U.S. Fish and Wildlife Service over East Texas’s Neches River, which the city wants to dam to build a reservoir. ‘Water Hog’ Label Haunts Dallas In the South and West, Neighbors Resist Cities’ Efforts to Siphon Resources By Ana Campoy DALLAS—A reputation as a wasteful “water hog” is complicating Dallas’s efforts to siphon water from nearby communities. Local officials, who say they need to nearly double their water supply in coming decades to keep up with a fast-growing population, want to build new reservoirs and buy water from nearby Oklahoma. But these efforts are entangled in federal lawsuits as Dallas’s neighbors see the city’s love for emerald-green lawns and lush golf courses as rampant waste. “It’s not that they need the water to survive,” said Michael Banks, an East Texas dentist who lives near a river Dallas wants to dam. “What they want is to destroy our wildlife so they’ll have enough water for their grass.” City officials recognize they have an image problem. “We’ve been called water hogs,” said Ramon Miguez, Dallas assistant city manager. But he said the city has made significant efforts to conserve water in recent years, including educating residents not to drench their lawns. Spats between communities that sip and those that gulp are becoming increasingly common in the South and the West. Sprawling cities packed with houses featuring big lawns and many bathrooms typically don’t use water very efficiently, experts and environmentalists say. So when city officials scout for more water beyond their boundaries, they don’t get much sympathy from their neighbors. “It’s an environmental equity issue,” said David Feldman, chairman of the Department of Planning, Policy and Design at University of California, Irvine. “Before they give up their water, they want to make sure that the city isn’t being wasteful.” In recent years, cities such as Los Angeles and Las Vegas have been forced to conserve water aggressively to meet their needs and persuade other communities to let them tap their supplies. While other cities in droughtprone Texas started slashing water consumption decades ago, Dallas used increasing amounts until the late 1990s. From 1980 to 1999, per-capita water use in Dallas ballooned by 35%, even as Houston and Austin cut per-capita consumption by more than 15% and San Antonio by 32%, according to data from the Texas Water Development Board. But, Mr. Miguez argues, Dallas residents have since changed their ways. In 2001, Dallas Water Utilities, the city’s water provider, launched a conservation plan that reduced per-capita use 19% by 2008. The 16-county water-planning zone that encompasses Dallas and Fort Worth has several water-recycling projects operating or in the works. Water planners project that reuse and conservation will cover 28% of the area’s water needs by 2060. Still, with its population expected to expand to 13.1 million that year—from more than six million currently— the region also needs new water sources, they say. “Conservation will not provide the water supply that is needed,” said Jim Parks, chairman of the regional water planning group. “It is impossible.” His group’s water plan proposes four new reservoirs, two of them outside the region’s boundaries. One of them would be on the Sulphur River, in a rural corner of northeast Texas. Max Shumake, a local resident, said that damming the river would flood thousands of acres of land, including some of his, and obliterate the local timber, hunting and ranching industries. Dallas’s future growth, he said, shouldn’t be an excuse for his neighbors to live beyond their liquid means. Mr. Miguez contends that the area’s economic importance necessitates the new reservoirs. “The north central Texas region is the economic engine of the state, bar none,” he said. “The only way that this region can sustain its economic growth has to be working a mutually agreeable agreement with a region that is richer than we are and simply does not need the water as we do.” After Mr. Shumake and his neighbors protested at public meetings and to legislators, the state Legislature created a special study group to look at alternative water sources for the region. The group is expected to issue a recommendation by the end of next year. Regional water planners also looked to Oklahoma, but the state Legislature refused to sell them water, and earlier this year passed a law that makes water purchases harder for out-ofstate buyers. “They have a terrible record,” said Oklahoma state Sen. Jerry Ellis of Valliant. “They’ve got to prove that they have exhausted all avenues and they are truly doing conservation before they start taking their neighbors’ precious resource.” With the support of neighboring water providers, the Tarrant Regional Water District, which serves Fort Worth, filed a lawsuit against Oklahoma, arguing that the state’s behavior violates constitutional laws on interstate commerce. The trial is scheduled for December at the U.S. District Court for the Western District of Oklahoma. On another front, the city of Dallas is fighting the U.S. Fish and Wildlife Service. In 2006, the federal agency designated the bottomland hardwood forests along a 38-mile stretch of the Neches River as a refuge for mallards, otters, alligators and other critters. Dallas, which envisioned building a reservoir there, sued the agency, arguing it failed to conduct necessary environmental-impact studies. The U.S. District Court for the Northern District of Texas, as well as the U.S. Court of Appeals for the Fifth Circuit, ruled against Dallas. Last month the city filed a request for an appeal with the Supreme Court, which could accept or deny it as soon as October. 24 DIAMONDS, 24 RUBIES BRACELET $1,999 SPECIAL $795 To capture her heart – 7 inches of wall-to-wall diamonds and rubies, sapphires or emeralds. 3 ct. tot. wt. Each gem in its own 14kt gold link. Each link pin-hinged for flex-strength. 2 safety clasps for backup security. Our secret? Buy gems direct from abroad, smith the gold in our own workshops (please visit anytime), and sell direct to you to avoid markups. 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PLEASE CALL E S T A T E Howto earn new cash from old jewelry J E W E L E R S S T A B 800-260-4987ext 77 E . 1 9 7 8 Rail Funds Give Chicago Hub a Lift By Christopher Conkey And Alex Roth CHICAGO—A long-delayed plantoreducecongestioninthenation’s busiest freight rail hub has won $322 million in funding from Illinois, a big victory for railroads that improves the odds the state will win federal stimulus grants to expand passenger rail service. The project, called Create, was launched in 2003 tountangle a system with dozens of rail yards and hundreds of intersecting lines that bog down rail and vehicle traffic, wasting fuel and driving up costs for shippers. The plan is emblematic of the sort of big infrastructure improvement project the Obama administration has said it wants to advance with stimulus money. But the Chicago overhaul has been hamstrung by a lack of funding. As a senator from Illinois in 2006, President Barack Obama urged his colleagues to provide more money for the plan. Rail congestion in Chicago is so bad that some freight is taken off trains at one side of the city, driven across town on trucks and placed back on another train. Paul Nowicki, assistant vice president at Burlington Northern Santa Fe Corp., said that is particularly true for perishable goods transiting Chicago via Western states. “If you’re going to hold a train outside Chicago for 12 hours, that cuts down the shelf life,” he said “Meanwhile, a truck is coming through Chicago at noon at 60 miles per hour.” The situation has improved only marginally since Canadian NationalRailway Co.’s recent purchase of the Elgin, Joliet and Eastern Railway, a suburban Chicago line that allows CN to route some of its freight around the city. OnTuesday,CSXCorp.ChiefExecutive Michael Ward said he has Unsinkable comfort, unbeatable price EX PER IENCE F R O N T G AT E Associated Press Relax on nearly 3" of unsinkable comfort — solid or printed. These are the thickest, most durable floats you’ll find. Offered at the lowest prices ever, satisfaction guaranteed or your money back. Chicago has one of the busiest rail systems in the nation. Above, freight cars at Belt Railway Co. of Chicago’s rail yard. also seen a marginal reduction in congestion thanks to the few Create projectsthat have alreadybeen finished. Hugh Kiley, assistant vice president at Norfolk Southern Corp., said the Create program, when finished, is expected to resultinanincreaseinNorfolk’saverage Chicago train speed. Illinois Gov. Pat Quinn’s decision to sign a bill providing new money for the Chicago rail overhaul means that $322 million from the state will be pooled with roughly $200 million provided by railroads and the federal government to fund a series of projects, including modern signal technology, new underpasses and “flyovers” that will carry fast-moving passenger trains up and over lines used by lumbering freight trains. The funding will allow several key projects to move forward, but railroad and government officials will need to come up with at least an additional $1 billion to finish all 78 projects envisioned. The Transportation Department, led by former Illinois congressmanRayLaHood,istakingapplications for a $1.5 billion stimulus program that will award grants for infrastructure projects of regional and national significance. The Federal Railroad Administration, headed by Joseph Szabo, a former labor leader from Illinois, willdoleoutmorethan$8billionin grants for high-speed rail projects in the years ahead. The Chicago plan ties into both priorities, and it may have a leg up thanks to the financial backing shown by Illinois and the railroads. “We’ll be very disappointed if we don’t get something, given the fact that we’ve got $700 million of projects ready to go,” said Edward Hamberger, president of the Association of American Railroads. Separately, Rep. Daniel Lipinski (D., Ill.) is seeking to earmark about $700 million for the Create project in a major transportation spending bill being crafted by House lawmakers. $ W O R L D ’ S F I N E S T P O O L F L O AT S 99 L I M I T E D -T I M E P R I C E S TA R T I N G AT 95 REG. 169 $ FREE SHIPPING SITE-WIDE * ENDS JULY 24 Visit frontgate.com/WS to order. Enter code WJ7FF at checkout or call 1-800-626-6488 to receive free shipping. F R O N T GAT E BLACK ® *Excludes Truck Delivery, In-home Delivery, expedited shipments, and oversize surcharges. This offer cannot be combined with any other special offers or incentives. 6606700 Adrian Van Dellen P2JW196004-5-A00400-1--------XA P2JW196006-5-A00600-1--------XE ***** BLACK 07/15/2009 EE,FL,NE,NY,SA,WB P2JW196006-5-A00600-1--------XE * * * * * A6 Wednesday, July 15, 2009 THE WALL STREET JOURNAL. U.S. NEWS President’s Signing Statements Anger Lawmakers By Jonathan Weisman WASHINGTON—With$108 billion in International Monetary Fund loan guarantees in jeopardy last month, White House economic officials begged, cajoled and cut deals with Democrats to secure passage of legislation boosting the fund’s power. Days later, President Barack Obama announced he wasn’t bound by any of the agreements. The ensuing flap over the president’s June 24 signing statement is the latest in a series of clashes between the White House and Congress over an issue Mr. Obama once fought against himself: presidential fiat. As a candidate, Mr. Obama pledged that he wouldn’t abuse the presidential signing statement, a declaration issued by the president when he signs a bill to give his interpretation of that law. President George W. Bush used so many signing statements—more than 750—that the American Bar Association criticized it as an abuse of power. After Mr. Obama’s issuance of his second signing statement last month, even some Democrats say he isn’t keeping his word on reining in unilateral presidential actions. “Of course there’s a broader issue here,” said House Financial Services Chairman Barney Frank (D., Mass.), referring to the brewing battles with Mr. Obama over presidential prerogative. “It’s outrageous. It’s exactly what the Bush people did.” A White House official said the signing statement was issued “out of an abundance of caution” to preserve “core presidential prerogatives” in the area of foreign policy. “The administration negotiated in good faith on this bill and has every intention of living up to our commitments undertaken in the legislation,” said White House deputy press secretary Jen Psaki. The House last week reinstated the restrictions on the IMF that were undone by the president’s June signing statement, by a vote of 429-2, in a foreign-operations appropriations bill. In a letter slated for delivery on Wednesday, Mr. Frank, House Appropriations Committee Chairman David Obey (D., Wis.), and New York Democratic Reps. Nita Lowey and Gregory Meeks will inAt the London summit of the Group of 20 largest economic powers in April, Mr. Obama had promised to secure large increases in loan guarantees for the IMF. With the Group of Eight summit kicking off soon, failure to make good on that promise would have been an embarrassment. Many Republicans opposed the IMF loan-guarantee language, which had been inserted in a warspending bill making its way through Congress last month, calling it a bailout for international bankers. The White House needed to win over balking Democrats. Rep. Brad Sherman (D., Calif.), negotiating for some Jewish lawmakers, said he told White House National Economic Council Director Lawrence Summers they needed stronger guarantees that IMF loans wouldn’t go to Iran. Senate Foreign Relations Committee Chairman John Kerry (D., Mass.) and ranking committee Republican Richard Lugar of Indiana said they wanted more transparency from, and oversight over, the World Bank and IMF. Mr. Frank, bargaining for a group of House liberals, wanted assurances that the lenders wouldn’t demand that poor governments cut education, environmental and other social programs as a prerequisite to getting emergency loans. Mr. Frank said his talks with TreasurySecretaryTimothyGeithnercouldn’tbedescribedasnegotiations. Mr. Geithner, he said, was begging. He said Treasury assurancesthatitwouldaccepttheserestrictionspersuadedhimtoswitch his vote, and that he, in turn, won over several other Democrats. Mr. Kerry’s account was similar, saying for the past several months, he had worked with the Senate and Treasury “to encourage financial institutions such as the IMF to become more transparent and accountable.” Mr. Obama’s signing statement said the IMF and World Bank provisions “would interfere with my constitutional authority to conduct foreign relations.” Ted Truman, an international economist who recently left the Treasury, said some of the lawmakers’ requirements weren’t feasible. The U.S. doesn’t have the power to block a particular country from obtaining IMF loans, he said. “You either allocate them to everyone or no one. You can’t pick and choose.” Mr. Frank has long been angered by the World Bank’s “Doing Business” report, which ranks countries according to such measures as the ease of starting businesses and enforcing contracts there. The report ranks Saudi Arabia ahead of Sweden. Mr. Frank, whose support would be critical if the White House is to win passage of its plan to impose stronger regulation on financial markets, wanted language explicitly saying assistance shouldn’t be based on the report’s findings. He got it. Mr. Obama negated it. As a candidate, Mr. Obama said he wouldn’t abuse the signing statement. formthe president that if he issues another signing statement on IMF andWorldBankfunding,Congress will cut off the funds he wants. Mr. Obama needs good relations with congressional Democrats to help pass his agenda on health care, energy and financialmarkets regulation. U.S. WATCH Disclosure By Surgeon Is Faulted By David Armstrong And Thomas M. Burton Washington University said a surgeon accused by the U.S. Army of falsifying a study favorable to Medtronic Inc. failed to tell the school he had a paid consulting arrangement with the medical-device maker. Surgeon Timothy Kuklo is on paid personal leave at the request of the St. Louis school, where he is a member of the medical faculty. The allegation that he failed to properly disclose his financial relationship with Medtronic was made in a June 23 letter from Washington University medical-school Dean Larry J. Shapiro to Sen. Charles Grassley (R., Iowa), who is investigating the Kuklo matter. At the time he failed to report his relationship with Medtronic, Dr. Kuklo was involved in at least two studies of Medtronic products, the university said. “In the last several months, Washington University has received—and discovered—many disturbing allegations and concerns regarding Dr. Kuklo’s activities, and we are conducting detailed investigations of these issues,” Dr. Shapiro wrote. Dr. Kuklo, a former Army surgeon, joined the Washington University faculty in August 2006. Earlier this year, the Army said that Dr. Kuklo’s study of injured soldiers treated with a Medtronic bone-growth agent was based on “falsified information.” Medtronic has said it had nothing to do with the Army study, and that Dr. Kuklo’s work for the company was unrelated to that research. Dr. Kuklo didn’t return a phone call seeking comment on Tuesday. The university declined to comment. In his letter, Dr. Shapiro also said the university discovered “extensive personal health information” for soldiers treated at the Walter Reed Army Medical Center from 2006 and before on computers used by Dr. Kuklo. The school said it notified the Army of the discovery. The privacy of medical records is strictly regulated by the Health Insurance Portability and Accountability Act, better known as HIPAA. The university said it is continuing to investigate. In early 2007, Washington University’s institutional review board, a research-oversight panel, approved protocols for two studies by Dr. Kuklo of Medtronic’s Infuse bone-graft product, which was also the subject of the study the Army alleges to be fraudulent. At the time the study protocols were approved, Dr. Kuklo indicated on university forms that he wasn’t receiving any payments from the company whose products were being studied, the school said. Medtronic provided some funding to the school to support such research, the university said. Dr. Kuklo was already a Medtronic consultant at this time, having signed a contract with the company on Sept. 7, 2006, the school said. Two months later, he received his first payment under that contract, part of $42,627 he received from the company in 2006, according to Medtronic. The university said it learned from Dr. Kuklo in May 2007 that he had a contract with Medtronic, and “stopped” his company-related research in February 2008. Medtronic has said it paid Dr. Kuklo $356,241 for consulting in 2007 and nearly $800,000 in total from 2006 through the first few months of this year. The company said Dr. Kuklo is on “inactive status” now. Associated Press Albert Pujols of the St. Louis Cardinals signs autographs for military personnel before the Major League Baseball All-Star Game at Busch Stadium in St. Louis on Tuesday. uMICHIGAN Obama Unveils Initiative To Boost Community Colleges President Barack Obama announced a 10-year, $12 billion community-college initiative designed to boost graduation rates, improve facilities and develop new technology. Speaking in Warren, Mich., a blue-collar Detroit suburb, Mr. Obama framed the initiative as an opportunity to change the face of Rust Belt states that have traditionally relied heavily on unskilled labor. The effort marks an increase in direct federal spending on community colleges. A report by the Brookings Institution, a lib- eral think tank, estimated the federal government provides community colleges with $2 billion a year in direct support, a tenth of what it spends on public-four year schools. Administration officials said they plan to fund the initiative with savings from proposed changes in the student-loan program. Democratic Rep. George Miller, chairman of the U.S. House Education and Labor Committee, is expected to introduce legislation Wednesday backing Mr. Obama’s proposal to eliminate private lenders from the federal loan program and make the government the sole provider of such loans. Alex P. Kellogg and Robert Tomsho uWISCONSIN uFLORIDA State Supreme Court Limits Seven Arrested in Break-In Lead-Paint Makers’ Liability That Led to Killing of Couple Children poisoned by lead paint can’t allege that manufacturers defectively designed the product because the dangerous lead was a key ingredient, the Wisconsin Supreme Court ruled. The 6-0 decision limits the potential liability of companies that made components of lead paint for decades and are facing dozens of lawsuits by Milwaukee children who ingested paint chips. The lawsuits, including about 30 that are pending, will still move forward, said attorney Peter Earle. Associated Press The suspected organizer of a break-in that led to the killing of a Florida couple is a 35-year-old self-defense teacher whose MySpace page declared on the day of the deaths that he was “making a move for humanity,” authorities said Tuesday. Police didn’t specify a motive that allegedly led Leonard Patrick Gonzalez Jr. to organize the July 9 break-in of the home of Byrd and Melanie Billings, a wealthy couple with 17 children. Mr. and Mrs. Billings were shot dead during the home invasion. Mr. Gonza- lez was charged with two counts of murder and robbery. A lawyer for Mr. Gonzalez couldn’t be reached for comment. Mr. Gonzalez is one of seven suspects arrested and charged in the break-in, in which surveillance cameras captured a group of individuals in ninja-like attire breaking into the home simultaneously from two entrances. None of the nine children home at the time were harmed. A few of the suspects, who included Mr. Gonzalez’s father as well as two teenagers, had military backgrounds, Escambia County, Fla., Sheriff David Morgan said Tuesday, describing the operation as “well planned and well executed.” Ansley Haman Goldman Sachs Gains on Its Rivals’ Pain Continued from Page One about the economy,” said Goldman Chief Financial Officer David Viniar. “But our clients need to trade and need to hedge and need risk-management services, which gives us business.” The gains—net revenue was up 46% to $13.76 billion—bolster Goldman’s reputation as one of the savviest on Wall Street. They also underscore the emergence of a handful of large U.S. financial institutions that are likely to profit mightily from the wreckage left by the financial crisis. How Goldman Did It Goldman, its profits fueled by increased customer business as rivals like Lehman failed and others stumbled, increased its risk taking in the second quarter, but reduced its reliance on borrowed money. Average daily value-at-risk $250 million 200 150 100 50 0 2007 2008 2009 2009 ends as it has begun, they will be paid well. Goldman ramped up its risktaking during the quarter. By the end of the quarter, its VAR, or “value at risk,” had risen by 33% from the year-ago level, to $245 million, up from $240 million in the previous quarter. VAR represents an estimate of how much the firm could lose in a single day. Less Leverage At the same, Goldman reduced its leverage ratio, a measure of how much it is using borrowed money to magnify bets. That ratio fell to 14.2 at the end of the quarter, from 27.9 at the beginning of 2008. “Goldman produced these results on half the leverage, and no one believed they could,” said Tom Marsico, founder of Marsico Capital Management, which owns 13 million Goldman shares. Data show Goldman has gained market share as rivals like Lehman have disappeared. In the second quarter, the firm ranked No. 2 in revenue derived from global equity underwriting, with a 12% market share, trailing only J.P. Morgan, according to data provider Dealogic. In the second quarter of 2007, Goldman had ranked No. 5 in that category. Leading such stock deals often leads to more business for trading desks. Goldman’s stock-trading division posted net revenue of $3.2 billion for the quarter, up 59% from the first quarter, and 28% from the quarter ended May 30, 2008. Goldman also picked up some business from clients that had used competitors in the past. U.S. Bancorp tapped Goldman Sachs as one of its lead underwriters on a stock offering in May, the first time it had used Goldman in that role in more than five years, Dealogic data showed. The banking firm had used Citigroup and Lehman Brothers, among others, on similar deals. —Scott Patterson contributed to this article. HAIRMAX LASERCOMB ® FINALLY, A NEW HAIR LOSS TREATMENT THAT ACTUALLY WORKS! FDA 510(k) Cleared* for Marketing Leverage ratio 24.5 26.7 26.2 27.9 24.3 23.7 13.7 14.6 14.2 Next Up J.P. Morgan Chase & Co. is expected to report strong quarterly results on Thursday that include a lift from retail branches scooped up when Washington Mutual Inc.’s banking operations failed last year. The New York bank is increasingly flexing its muscles with the U.S. government, including opposing parts of the Obama administration’s efforts to regulate derivatives. J.P. Morgan and Goldman recently freed themselves from the limitations on pay and other business practices that came with the Troubled Asset Relief Program, by repaying federal loans they got last fall. “Right now, [Goldman is] one of only a few people on the beach, so they’re getting all the girls,” said Roy Smith, a finance professor at New York University and a former Goldman partner. “It’s about to get more crowded, though.” Competing firms, he notes, also have paid back the government, including Morgan Stanley. Analysts surveyed by Thomson Reuters expected Goldman to earn $3.48 a share. Its actual profit blew through that target by about 40%. Goldman’s shares, which had risen sharply over the past week in anticipation of its earnings, rose 22 cents to $149.66 in 4 p.m. New York Stock Exchange composite trading on Tuesday. Goldman’s equity and fixedincome, currency and commodi- Average compensation and benefits per employee $300,000 200,000 100,000 0 –100,000 2007 2008 2009 *The HairMax LaserComb is indicated to promote hair growth in males with Androgenetic Alopecia (male pattern hair loss) with Norwood IIa to V with Fitzpatrick skin types I to IV. w w w. H a i r M a x . c o m 1.800.9REGROW Note: Goldman changed to a December fiscal year at the end of 2008. Previous fiscal years ended in November. Data prior to 2009 are for fiscal year ending in November. Data are quarterly Source: the company SAVE TIME & MONEY! WHY PAY RETAIL? ALL SHIPS. ALL DATES. ROYAL CARIBBEAN CELEBRITY•NORWEGIAN HOLLAND AMERICA PRINCESS•CUNARD REGENT•CRYSTAL SILVERSEA•AZAMARA CARNIVAL•OCEANIA•DISNEY INSURANCE FREE eCRUISES.COM M to F 9-10/Sat & Sun 10-6 (ET) 800-223-6868 ties desks posted record results and accounted for 75% of the firm’s net revenue. Trading in credit products, interest-rate products and currencies was particularly strong, as was stock trading in general. While Goldman is perhaps best known for profitable proprietary bets made using its own capital, it said Tuesday that the bulk of its quarterly profit came from increased client trading in various product lines. It makes money charging commissions and by taking socalled principal risk, buying a security from a client and then selling it at a profit. The firm also logged gains from a number of investments, including a $948 million gain from its stake in Industrial and Commercial Bank of China Ltd. That helped offset a 15% yearover-year drop in investmentbanking net revenue, and a loss of $499 million from various commercial-real-estate investments. Paydays Ahead The strong quarter puts Goldman employees in line for an impressive payday when the firm doles out bonuses in January. So far, the firm has set aside $11.36 billion for compensation and benefits during the year’s first six months, enough to pay each employee $386,429 for the period. If Goldman continues to accrue compensation at that rate, employees are on track to make an average of about $770,000 each, the largest per-person payout in Goldman’s history. Such payouts would come in the wake of an uproar over the past year about huge pay packages on Wall Street. Mr. Viniar said Tuesday that Goldman has a “pay-for-performance culture,” and its employees should expect that if 6606702 P2JW196006-5-A00600-1--------XE BLACK P2JW196007-4-A00700-1--------XA **** BLACK 07/15/2009 AZ,CL,CX,DL,DX,EE,FL,HO,MW,NC,NE,NY,RM,SA,SC,SL,SW,WB,WE P2JW196007-4-A00700-1--------XA Wednesday, July 15, 2009 THE WALL STREET JOURNAL. * * * * A7 WORLD NEWS Mexico Police Agents Are Killed In Alleged Retribution by Cartel By David Luhnow MEXICO CITY—Twelve undercover federal police agents were captured, tortured, and executed by a relatively new and dangerous Mexican cartel calling itself La Familia, or The Family, officials said Tuesday. The killings are a major psychological blow to President Felipe Calderón’s war on drugs. The bodies of 11 men and one woman were found by locals on the side of a highway in Mr. Calderón’s home state of Michoacán on Monday. The victims had their hands and feet tied, showed signs of torture, and had all been shot in the head at close range. The agents had been in Michoacán to gather intelligence on the cartel, said Monte Alejandro Rubido, the government’s top spokesman on security issues. Officials said they believed the killings were connected to the weekend capture of Arnoldo Rueda Medina, one of the cartel’s major operators. “We have reinforced our operations in several states and we will not retreat a single step in our fight against organized crime,” Mr. Rubido said at a news conference. Since the Saturday arrest, gunmen believed to be working for the cartel have gone on a rampage, attacking police stations, army patrols and hotels in several different cities in Michoacán with grenades, AK-47s and AR-15 semiautomatic rifles. The attacks killed two soldiers and six other federal police agents, and wounded a further 18 agents. Together with the executions, the toll from three days of violence climbed to 18 federal police agents killed, as well as the two soldiers—not including about a dozen other civilian victims, police said. That would mark one of the bloodiest single episodes against federal forces since Mr. Calderón launched a crackdown on drug cartels shortly after taking power in December 2006. The violence highlights the increasing power, brazenness, and operational capability of Mexican cartels like La Familia. Within a day of Mr. Rueda’s arrest, gunmen attacked a hotel where police were staying in Apatzingán, federal police barracks in the tourist town of Pátzcuaro, a police base in Huetamo, and a police convoy on a rural road— all in different parts of the state. Since Mr. Calderón took power, more than 12,000 people have died in Mexico in drug-related killings. The killings could raise political pressure on Mr. Calderón to retreat in the battle against drug lords. While the war on drugs is popular, many opposition politicians say it is only stirring up trouble and causing more violence. On Monday, leftist senator Carlos Navarrete called on Mr. Calderón to scale back the war on drugs, partly because traffickers could target senior law-enforcement and government officials. The killings are also a major blow to the Federal Police. Mr. Calderón’s government has invested millions in training, technology and arms for the agency, a two-year-old institution being fashioned after the U.S. Federal Bureau of Investigation. It has been part of a national effort to clean up police agencies that have traditionally been corrupted by drug cartels. Federal police have been dispatched across Mexico in joint operations with the military to take on drug organizations in areas where the local and state police are suspect. The officers work in two- to three-month shifts before being sent to a new hot spot. The reasoning is that if they are there any longer, the risk that the officers might succumb to offers of money or threats by the drug gangs becomes too great. Responding to the violence, Mr. Calderón said that the cartels were increasingly desperate due to the crackdown by the federal government, which has included sending 45,000 troops to patrol cities. “In these cowardly attacks, brave members of our federal forces have lost their lives,” Mr. Calderón said Tuesday. “They have fallen thinking it is possible to construct a safer Mexico. They have fallen fighting for the safety of all of us.” A new poll by Mexican pollster GCE, however, showed that 51% of Mexicans believe the cartels have the upper hand in the drug war, while only 29% think the government is winning. Of Mexico’s major drug cartels, perhaps none is as dangerous as La Familia, a relatively obscure trafficking organization that has gained notoriety in the past year. Founded in part by a charismatic leader who preaches family values, the cartel first gained attention in 2006 in grisly fashion: By rolling the severed heads of five men onto a dance floor at a Michoacán disco, along with a hand-scrawled note warning off rival traffickers. La Familia has tried to cast itself as a Robin Hood-type cartel, a quasi-legitimate business that gives back money to the poor, abides by a code of ethics such as not selling certain drugs like methamphetamines in Michoacán, and metes out justice to its enemies only when it is doublecrossed. Experts say it recruits heavily among recovering drug and alcohol addicts. It has published manifestoes in local newspapers. One golden rule: “family” members of traffickers should be off-limits to both other traffickers and the federal government. “It’s a bit like a cult, a mixture of evangelicals with new-age self-help that gives members a sense of belonging and creates a very disciplined organization,” says Alberto Islas, a security consultant based in Mexico City. Federal officials say the cartel has infiltrated the state government to a shocking degree. Soldiers arrested 10 mayors in Michoacán, as well as 17 police chiefs, in May. —Paul Kiernan and John Lyons contributed to this article. Agence France-Press/Getty Images The capture of ‘La Familia’ cartel member Arnoldo Rueda Medina, seen above on Saturday, has been linked to the killing of 12 federal police. Mexico’s Drug War Bodies of 12 federal agents were found along a mountain road in La Huacana. Attacks have been reported all over Michoacán state. UNITED STATES MEXICO Guadalajara Pacific O cean MICHOACÁN Gulf of Mexico La Huacana Lázaro Cárdenas Mexico City 200 miles 200 km GUATEMALA BELIZE AEP Ohio's COO Joe Hamrock watches over the monitoring system that ensures immediate alerts in the event of a power outage. Joe Hamrock sings and plays in pick-up band The Navigators, who perform at local venues where proceeds go to charity. The State of Perfect Balance Whether it’s at work as a leader of AEP Ohio, one of Ohio’s largest utilities, or rocking on stage as a longtime member of a pick-up band, Joe Hamrock is always looking for the perfect balance that enables him to be his best. Joe successfully juggles his roles as a corporate leader, musician and family man because his home in Columbus – Ohio’s largest city and its state capitol – has big-city perks and a small-town feel. He is available for work or play commitments in Columbus’ world-class downtown or easily reached suburbs, interlinked by manageable commutes and a culture that cherishes work:life balance. Ohio is an ideal combination of natural resources, energy infrastructure and a highly educated workforce, carrying forward AEP Ohio into a future of innovation and quality customer service. As the preferred energy partner for thousands of Ohio businesses, AEP Ohio has a stake in the state’s economic vitality. Ohio is the prime location for a major energy company to prosper. And, Ohio is the perfect fit for Joe and his family, combining excellent schools, limitless opportunities for family time and safe and beautiful neighborhoods to call home. Being plugged in to the state of perfect balance will keep Joe fulfilled for years to come. “Not many of us compartmentalize family into weekends and work into weekdays anymore. We’re all trying to fit it into 24 hours, and Ohio is the place to find that balance.” Joe Hamrock President and COO AEP Ohio OhioMeansBusiness.com Ted Strickland, Governor Lee Fisher, Lt. Governor Find your balance at OhioMeansBusiness.com. For direct help, contact Matt McQuade at (614) 857-0900 ext. 231 or mmcquade@ohiomeansbusiness.com 6606703 Photos by georgecanderson.com P2JW196007-4-A00700-1--------XA BLACK P2JW196008-4-A00800-1--------XA **** BLACK 07/15/2009 AZ,CL,CX,DL,DX,EE,FL,HO,MW,NC,NE,NY,RM,SA,SC,SL,SW,WB,WE P2JW196008-4-A00800-1--------XA * * * * A8 Wednesday, July 15, 2009 THE WALL STREET JOURNAL. WORLD NEWS U.K. Plans Massive Swine-Flu Vaccination Argentina’s Health Ministry Reports More Deaths, Exceeding Mexico’s Toll By Jeanne Whalen LONDON—The medical establishment in Britain, the nation hardest hit by swine flu outside North America, is scrambling to roll out a large-scale vaccination program in an effort to protect its population against a virus that threatens to spread rapidly here in coming weeks. The state-run health system is deciding whether to hire private contractors to help doctors carry out the massive vaccination job, said Peter Holden, a general practitioner who represents the British Medical Association in pandemic-flu planning with the government. Doctors would rather handle the shots themselves, he said, but as phone calls and office visits related to swine flu have jumped, they are concerned the extra work will overwhelm them unless they suspend some other routine care. In his own practice in the Peak District in central England, Dr. Holden is making plans for each doctor or nurse to vaccinate between 30 and 40 people country fourth in the world, behind the U.S., Mexico and Canada, according to the World Health Organization’s most recent figures. World-wide, 429 people have died from swine flu and 94,512 have been infected, according to the WHO. The latest reports from some governments indicate higher death tolls than the WHO figures. Argentina’s health ministry on Tuesday reported that the number of deaths from the swine flu had reached 137, with a total of 3,056 officially confirmed cases. The latest tally puts Argentina second only to the U.S. in swine-flu deaths—passing Mexico, which this week reported its toll had risen to 124 dead, with 12,645 confirmed cases. Many in Argentina believe the official count has been slow to confirm swine flu and the actual toll could be much higher. The number of cases in the U.K. is several times greater than in any other European country. Ian Jones, professor of virology at the University of Reading, says the U.K. has been hit hard because many Britons were traveling to Mexico and the U.S. when the virus first appeared there. Wendy Barclay, chair in influenza virology at Imperial College London, said the U.K. also has a good surveillance system that ensures that a high percentage of infections are reported. The country has ordered enough vaccine to cover all 60 million of its residents. The government plans to offer everyone free shots as soon as they become available, a Department of Health spokeswoman said on Tuesday. It won’t require people to get the shots, but will make vaccine available to everyone, she said. The health department expects the first doses to arrive in the fall, and will start vaccinating certain groups first, including health-care workers, children and pregnant women. The U.K. expects enough vaccine for 30 million people, or about half the population, to be available by the end of the year, the health department spokeswoman said. The companies supplying China Posts Big Gains In Reserves By Andrew Batson BEIJING—Growth in China’s foreign-exchange reserves accelerated in the second quarter of 2009, central-bank figures issued Wednesday showed, taking the total to $2.132 trillion by the end of June. The big increase in official reserves—already the world’s largest—came despite China’s substantially smaller monthly trade surpluses in the second quarter. The gains are likely a sign that capital began to flow back into the country as its economy recovered and investor confidence returned. Inflows of foreign currency into China—whether from export earnings or foreign investment—end up in the reserves because the central bank buys up most foreign currency in exchange for Chinese yuan. For the second quarter as a whole, foreign-exchange reserves grew by $177.87 billion, according to figures published by the People’s Bank of China, the central bank, on its Web site. That compares to an increase of just $7.71 billion in the first quarter and a $40.45 billion gain in the fourth quarter of 2008. Reserve growth had been damped by swings in the foreign-exchange markets and by banks and foreign companies moving money out of China. The renewed gains in reserves are consistent with other figures from the U.S. Treasury and Federal Reserve showing that China’s purchases of U.S. Treasury bonds have stayed at high levels in recent months. Central banks tend to keep most of their foreign-currency holdings in safe and frequently traded government bonds. China’s reserves increased by $55.14 billion in April, $80.61 billion in May, and $42.12 billion in June, according to the centralbank figures. The increase in foreign reserves adds to the already extraordinary amount of liquidity being pumped through China’s economy. The central bank also said Wednesday that loan growth accelerated to 34.4% in June from 30.6% in May, while the increase in the broad M2 measure of money supply rose to 28.5% in June from 25.7% in May. News International/ZUMA Press A parent and child leave a school meeting in London on Tuesday, after a pupil there died of swine flu last week. Britain with the vaccine—GlaxoSmithKline PLC and Baxter International Inc.—have already won preliminary approval for their pandemic vaccines from the European Medicines Agency, or EMEA, Europe’s top medicines regulator. Preliminary approval is possible because flu vaccines are generally made in the same way, with the same basic ingredients. The main element that changes is the type of virus used in the vaccine. Because the companies have already supplied the EMEA with plentiful data on their vaccine ingredients and won the preliminary approval, it shouldn’t take the agency long to review their completed H1N1 shots, an EMEA spokeswoman said Tuesday. The agency expects to receive more information from the companies around the end of September, and could make a decision within five days after that, she said. The U.S.—which has had 211 deaths from swine flu and 37,246 confirmed cases, according to the Centers for Disease Control and Prevention—is also making plans for a voluntary vaccination program. Health and Human Services Secretary Kathleen Sebelius said last week that as many as 100 million doses of vaccine would be available in the U.S. by mid-October. U.S. health officials have said clinical trials must be conducted first to be sure the vaccine is safe and effective. They expect those trials to get under way in early August, with some results in early October. Earlier this month, U.K. Health Secretary Andy Burnham said that if current infection rates continue, new swine flu infections could rise to 100,000 a day by the end of August. But he stressed that this was a projection, and also that the vast majority of cases so far have been mild. Dr. Jones said he didn’t think infection rates would grow as quickly as the health minister projected, but that the U.K. could have half a million cases by the end of the year. There is a good chance that many of these cases will be mild, he said, because the H1N1 virus has shown little evidence yet of becoming more virulent. A public awareness campaign organized by the Department of Health has done a good job of teaching people how to avoid infection, which should help reduce infection rates, he said. Ads telling people to wash their hands frequently and cover their sneezes have been running for months in women’s magazines, bus stations, and on the London Underground, as well as on supermarket trolleys and ATM screens. Prime Minister Gordon Brown has called the U.K. one of the countries best prepared to cope with swine flu. In addition to ordering vaccine, the U.K. has stockpiled enough antiviral medication, including Tamiflu, to treat 50% of the population, and is aiming to increase that to 80%. Antivirals are used to reduce symptoms in a person already infected with the flu, while vaccines are used to prevent infection. ‘There’ll be no chitchat. It will be, ‘Are you allergic to anything? Bang, in, out,’ ’ the doctor said. an hour. “There’ll be no chitchat. It will be, ‘Are you allergic to anything? Bang, in, out,’ ” he said. It isn’t yet clear how many doses will be needed per person, but many flu experts believe it will be two. Since the spring, 17 Britons have died after being infected with the H1N1 virus that is causing the swine-flu pandemic, according to U.K. officials. The U.K. recently recorded its first swineflu death in an otherwise healthy patient, an event that set off further concern, even as other deaths, including that of a 6-yearold girl last week, have gained attention. As of July 6, the U.K. had 7,447 confirmed cases, ranking the 6606704 P2JW196008-4-A00800-1--------XA BLACK P2JW196009-5-A00900-1--------XE ***** BLACK 07/15/2009 EE,FL,NE,NY,SA,WB P2JW196009-5-A00900-1--------XE Wednesday, July 15, 2009 THE WALL STREET JOURNAL. * * * * * A9 WORLD NEWS China Seeks Leverage on Ore Price Iran Adds to Limits State Effort to Give Steel Sector Bargaining Clout Set Stage for Rio Tinto Controversy China’s espionage allegations against employees of Anglo-Australian mining company Rio Tinto come amid an effort by Beijing to strengthen the bargaining power of its steel industry against the biggest iron-ore suppliers. By Gordon Fairclough in Shanghai and Chuin-Wei Yap in Beijing The government on July 5 detained four Rio Tinto executives, including Stern Hu, an Australian who heads Rio’s iron-ore business in China. The State Security Bureau in Shanghai has accused them of bribing Chinese steelmakers to obtain secret information related to iron-ore price negotiations. An official at steelmaker Shougang Corp. has also been detained. Chinese media reports Tuesday cited anonymous sources saying executives at several Chinese steel companies have been questioned or detained. The reports couldn’t be confirmed. An official in the iron-ore trading arm of China’s largest steel maker, Baosteel Group, said he was unaware of anyone there being questioned, as one newspaper reported. Likewise, Anshan Iron & Steel Group said no officials from the company were involved in the investigation, despite reports. On the supply side, a spokeswoman for AngloAustralian miner BHP Billiton said she was unaware of any investigation into the company. Spokesmen at other companies either declined to comment or didn’t answer their phones. In a case that threatens to chill bilateral relations, Australian Prime Minister Kevin Rudd on Wednesday warned that China may also risk damaging ties with other trading partners and businesses operating in China. “A range of foreign governments and corporations around the world will be watching this case with interest, and will be watching it very closely,” he said. Qin Gang, a spokesman with China’s Foreign Ministry, said China isn’t signaling it will restrain the activities of multinationals in the country. Some analysts say the investigation is part of a broader push by Beijing to assert greater control over the pricing of iron ore, a crucial material for China’s economy because it is needed to make the steel used in buildings, bridges and cars. “This may be the strongest ever message sent by authorities that China is trying to assume control over iron-ore price talks” in a more direct way, said Xiangfan Ren, of IHS Global Insight, a research firm. The government wants smaller steel companies to work with bigger ones to negotiate iron-ore prices, and is considering reducing the number of companies allowed to import iron ore, the analysts say. China is the world’s largest importer of iron ore, and its purchases are soaring. Iron-ore imports for the first six months of 2009 rose 29% from the same period last year. Benchmark iron-ore prices are set in annual negotiations between steel producers and major ore suppliers: Rio Tinto, BHP Billiton and Vale SA of Brazil. This year’s talks failed to strike a deal by the June 30 deadline. Beijing efforts to hold down prices have been frustrated by a lack of unity among its ore buyers and by a resurgent economy, which is boosting demand. When this year’s talks got under way, China expected to gain more leverage over pricing as the downturn in the global economy damped steel demand. The Chinese side wanted bigger price cuts than those negotiated with steel producers in South Korea and Japan. China expected it “would have a bigger voice at the negotiating table” this year, said Hou Zhiyun, an analyst at the Beijing Lange Steel Information Research Center. But as talks dragged on and world spot ironore prices began to rise, the miners refused to budge and the deadline passed. Chinese negotiators blamed small and mediumsize steel mills that they said had On Local Media By Roshanak Taghavi Nation in Need China’s imports of iron ore, in millions of metric tons 60 50 40 30 20 10 0 2000 ’02 ’04 ’06 ’08 Source: China Customs via Thomson Reuters cut separate supply deals with Rio and other miners, undermining their ability to make an umbrella deal at a low-enough price. China has more than 1,200 steel mills. Now, Ms. Hou and others say, China is considering cutting the number of companies allowed to import iron ore, currently 112. Rio Tinto, which has been the suppliers’ lead negotiator, declined to comment. On Wednesday, Zou Jian, a consultant to the China Iron and Steel Association, said China’s iron-ore negotiations with global mining majors are still going on, but he is unsure whether they can be completed by the end of the month. DUBAI—An Iranian regulatory agency announced a new set of guidelines Tuesday that it says are designed to ensure “objectivity” in Iran’s domestic media. The move appears to be the latest in a series of measures aimed at reining in the local and international press, after contested June 12 presidential elections and the sometimes-violent clashes between demonstrators and authorities that followed. In the aftermath of the vote and amid massive protests, Iran clamped down on international and domestic journalists, refusing to extend visas and eventually forbidding correspondents from attending unapproved gatherings or news conferences. Regime officials also rounded up scores of local journalists, and have accused the foreign media of inciting violence or working as agents of foreign governments during the unrest. Forty-one journalists and bloggers are being held by authorities in the Islamic Republic, according to media watchdog Reporters Without Borders. Iran expelled the British Broadcasting Corp.’s correspondent in Tehran, Jon Leyne, and has held Iranian-Canadian reporter Maziar Bahari, who has reported for Newsweek, in detention since mid-June. Iran’s State Inspectorate Or- ganization, a sort of superregulatory agency that supervises a wide range of government administrations, said the guidelines will ensure that any criticism communicated through state media is “constructive,” “nonjudgmental” and doesn’t “stray from objectivity,” Iran’s state-controlled English-language news site Press TV quoted SIO chief Mostafa Pourmohammadi as saying. He didn’t give details of the new rules, and it wasn’t clear which outlets are being specifically targeted—the governmentcontrolled media or the heavily monitored independent press. It is also unclear how much clout the agency has in pursuing violations or referring them to authorities for enforcement. Still, the public decree appeared to ratchet up pressure on journalists inside the country. Press TV said only that the new guidelines came after “provocative, insulting, derogatory and defamatory” reports in the run-up to the June 12 vote and in its immediate aftermath. Election officials declared President Mahmoud Ahmadinejad the winner, triggering weeks of widespread protests. Authorities cracked down hard in sometimes-bloody street melees. Government officials say as many as 20 people died in the violence, though independent groups put the number much higher. EU Parliament Picks Polish Head By Carolyn Henson The European Union’s new Parliament elected Poland’s former Prime Minister Jerzy Buzek as president, the first East European to head one of the bloc’s big institutions. Though the president of the 736-member body has few powers, the choice of Mr. Buzek is symbolic for the former communist-bloc nations that have joined the EU since 2004, and have sometimes felt they were secondary to longer-serving members. The 69-year-old told an inaugural session of the parliament in Strasbourg, France that his election was “a tribute to the millions of people who didn’t bow to a hostile system,” referring to communism. “There is now no ‘you’ and ‘us’; we live in a shared Europe.” Mr. Buzek, a member of the conservative European People’s Party, received a strong endorsement with 555 of 644 votes. Green party member Eva-Britt Svensson of Sweden, got 89 votes. Mr. Buzek was Poland’s prime minister from 1997 to 2001, helping guide the country into the North Atlantic Treaty Organization and launching its membership talks with the EU. He was one of the original members of Poland’s Solidarity union, which played a prominent role in toppling communism. Solidarity veterans have since split into two conservative factions, and Mr. Buzek has sided with the more moderate Civic Platform party, headed by Prime Minister Donald Tusk. A chemical engineer, lecturer and former director of Poland’s Academy of Science, Mr. Buzek represented Poland until 1997 in the International Energy Agency’s program to assess technologies believed to contribute to global warming. He will serve a 2µ-year term— half the Parliament’s mandate— before handing over to the socialist-bloc leader, Germany’s Martin Schulz, under a pact by the body’s two biggest factions.The European Parliament is the EU’s only elected institution, serving alongside the executive European Commission and the European Council of national governments. The Parliament doesn’t initiate legislation on its own—that role belongs primarily to the commission. The Parliament has joint powers to approve some legislation with the council. A new EU treaty, the Treaty of Lisbon, if voted through by Ireland on Oct. 2, would extend those joint powers to virtually all areas where the EU has the right to act. —Marc Champion contributed to this article. WORLD WATCH Reuters A family looks at paper lanterns at the four-day Mitama festival at Yasukuni Shrine in Tokyo on Tuesday. More than 30,000 lanterns lit up the shrine, commemorating 2.4 million Japanese killed in war. uPERSIAN GULF U.S. Reassures Region On Dollar’s Strength U.S. Treasury Secretary Timothy Geithner reassured Saudi Arabia that the U.S. is committed to reducing its deficit and backing a strong dollar—a concern for many countries in the Persian Gulf that maintain a dollar peg. “Policies of the United States are designed to lay the conditions for a strong dollar,” Mr. Geithner said. Mr. Geithner, on a swing through Middle East and European financial capitals, plans meetings Wednesday in Abu Dhabi, the capital of the United Arab Emirates. He is expected to discuss issues such as oil-price stability and revamped foreign-investment laws. Mohammed Aly Sergie crimes, is charged with 11 counts of murder, torture, rape, sexual slavery and the use of child soldiers and terrorism during Sierra Leone’s 1991-2002 civil war. Prosecutors at the Special Court for Sierra Leone say Mr. Taylor armed rebels to help gain control of the West African nation and strip it of its mineral wealth. Associated Press uSOUTH KOREA Hackers Extract Files After PC Virus Attacks Hackers extracted files from computers they contaminated with the virus that triggered cyberattacks last week in the U.S. and South Korea, a sign that they tried to steal information from the victims, police said. The attacks, in which floods of computers tried to connect to a single Web site at the same time to overwhelm the server, caused outages on government-run sites in both countries. The finding adds to concern that contaminated computers were ordered to damage their own hard disks or files after the Web assaults. Police said the finding doesn’t mean information was in fact stolen. Associated Press uHONDURAS Zelaya Says Citizens Have ‘The Right to Insurrection’ Ousted Honduran President Manuel Zelaya said the Honduran people “have the right to insurrection” against the interim government that forced him out of the country. The remarks appeared to pave the way for a further escalation of the conflict in Honduras, where Mr. Zelaya’s supporters have demanded his return and one person has been killed in clashes between demonstrators and soldiers. Mr. Zelaya was toppled by a military-backed coup June 28. The government of Roberto Micheletti, who replaced Mr. Zelaya, has threatened to have him jailed if he returns. Mr. Micheletti’s administration insists Mr. Zelaya was ousted legally. Associated Press uTHE HAGUE Liberia’s Taylor Testifies At War-Crimes Trial Former Liberian President Charles Taylor testified at his war-crimes trial that the case against him was built on lies and misinformation, and he denied charges he had commanded and armed rebels who killed and tortured tens of thousands of civilians. Mr. Taylor, the first African leader to stand trial for war uNIGERIA Militants Begin Cease-Fire Nigeria’s most prominent militant group said it will observe a 60-day cease-fire from Wednesday after the release of rebel leader Henry Okah. The Movement for the Emancipation of the Niger Delta said it was also halting its attacks, which have crippled Africa’s biggest oil and gas industry, to allow for government peace talks. Reuters 6606705 P2JW196009-5-A00900-1--------XE BLACK P2JW19600A-4-A01000-1--------XA **** C M Y K Composite 07/15/2009 AZ,CL,CX,DL,DX,EE,FL,HO,MW,NC,NE,NY,RM,SA,SC,SL,SW,WB,WE P2JW19600A-4-A01000-1--------XA * * * * A10 Wednesday, July 15, 2009 THE WALL STREET JOURNAL. WORLD NEWS Europeans Review Bank Rules By Matthew Dalton BRUSSELS—European governments, faced with a rash of bank failures, are moving to bolster their powers to take over troubled financial institutions that might cripple the economy if they are allowed to go bankrupt. The United Kingdom, Germany and Belgium have passed or are drafting new bank-nationalization laws following high-profile struggles with shareholders of several banks that were near collapse, and the European Commission—the European Union’s executive arm—is examining whether the bloc needs harmonized rules for unwinding troubled banks. The moves are intended to cut the cost of future bank failures and reduce their threat to the wider financial system. But the proposed new powers have raised questions about whether property rights are being appropriately protected and whether the specter of nationalization could increase the cost of funding for all banks. The U.K. Treasury’s analysis of the new law identifies concerns such as the need for compensation rules to ensure that property rights in the European Convention on Human Rights are protected. The rules would also ensure that nationalized banks are treated no worse than banks that went through bankruptcy, which would prevent bank funding costs from rising. A few of the 27 EU governments had laws on their books allowing them to take over failing banks before the financial crisis hit in September—but most didn’t. Governments’ inability to take over banks and the patchwork of regulations within the EU became problems when banks began to totter. The near-collapse of BelgianDutch financial conglomerate Fortis Holding is a prime example of the problem facing EU financial authorities, according to EU regulators and experts on the financial market. The Dutch government had the legal authority to take over its banks, which it did for the Dutch operations of Fortis after an initial capital injection failed to assuage fears about the bank’s health. But Belgium didn’t have that power. Fortis shareholders successfullyblockedagovernment-orchestrated sale of Fortis’s Belgian banking assets to BNP Paribas SA for more than six months. “That really made life very difficult in the period between September and early this year,” said Luc Coene, vice governor of the National Bank of Belgium. Mr. Coene said the Belgian government is drafting new legislation that will give the government powers to nationalize a bank or force it to merge with another. Compensation for bank shareholders and creditors would be debated after control had already changed hands to minimize instability in the financial system, he said. Regulators say there will also have to be action from the European Commission to ensure governments have the authority to take over troubled banks. The near-collapse of Hypo Real Estate Holding AG prompted Germany to pass new bank-nationalization laws, which the government used to pressure Hypo shareholders into voluntarily accepting nationalization by the German government. The U.K. this year passed a law that would give the government the power to take over banks, expanding changes enacted in early 2008 to nationalize Northern Rock. British Coffins Raise Ire Over Afghan Push By Alistair MacDonald WOOTTONBASSETT,England— With its cricket field, pubs and a centuries-old church, this is a typical southern English town in all respects but one: Every corpse that returns from Britain’s wars abroad passes through it, in what has become a public show of respect. Wootton Bassett is near Royal Air Force Lyneham, the base to which the country’s war dead are returned. Starting about two years ago, townspeople began gathering for the processions of each soldier as the body, in a flag-draped casket, was moved from Lyneham to a coroner’s office in Oxford. The first processions were attended by just a dozen saluting war veterans. Crowds recently have swelled to the thousands. Now, the repetition of these sad processions is testing the U.K. public’s patience for the war—and throwing up another potential obstacle to continued support for U.S.-led efforts in Afghanistan. In recent weeks the convoy of coffins through Wootton Bassett has turned from a trickle to a stream, as U.K. troops join the U.S.-led surge in southern Afghanistan. The recent rise in casualties—15 soldiers died in 10 days—is raising new questions from the public, politicians and local media about Britain’s continued role. On Tuesday, an estimated 7,000 people gathered in the sun on the town’s High Street to pay their respects to the bodies of eight soldiers who were killed in one 24-hour period late last week. At 4:36 p.m. a solitary church bell tolled, the road was closed off, and an undertaker stepped out of a hearse to lead the procession. As the eight bodies passed, relatives and friends were held in tight embraces, tears fell, and a round of applause followed the coffins down the road. “We have to support our troops,” said Percy Miles, who as mayor in early 2007 arranged the first turnout in the town for four Afghanistan casualties. But with deaths mounting, the 77-year-old Mr. Miles, a British Army veteran, added: “We shouldn’t be there. It’s not a war of our making, it’s a U.S. war.” British Prime Minister Gordon Brown told Parliament on Monday that the U.K.’s security depends on defeating al Qaeda and the Taliban in an area where three-quarters of the serious terrorist threats to Britain originate. In recent days he and government ministers have campaignedtoshore uppublic sup- Reuters A mourner ties a rose to a hearse driving through the British town of Wootton Bassett on Tuesday, carrying the body of a soldier killed in Afghanistan. port, as a host of politicians, retired military officers and commentators have criticized what they see as a lack of objectives and poor equipment for the forces. Nick Clegg, the leader of the opposition Liberal Democrats, said in Parliament that the government’s policy in Afghanistan is “overambitious and underresourced.” The Conservative Party blames the government, for instance, for cutting the helicopter budget by £1.4 billion ($2.3 billion) in 2004, a move the government says it is now rectifying. At stake are future troop numbers from the U.S.’s biggest ally in Afghanistan. Britain has 9,000 military personnel in the country, more than half of whom are currently fighting with U.S. troops to seize Taliban-held territory in Helmand province ahead of an Afghan presidential election next month. A senior U.S. defense official said a British decision to draw down forces would be a serious blow, because the British are the most full participants in the American-led war effort. He said U.K. defense officials had reassured U.S. counterparts in recent days that a drawdown isn’t being considered. President Barack Obama has tried to prop up British public support himself, telling Britain’s Sky News last week that British troops are “critical” and that “the likelihood of a terrorist attack in London is at least as high, if not higher, than it is in the United States.” Some recent German deaths in Afghanistan have heightened opposition to the war there, and broke, showed opposition to the war at 47%, about the same as the 46% who support it. Support has increased by 15 percentage points since 2006, partly due to a campaign by the U.K. government and military to shore up support generally for the British armed services. Des Browne, as minister of defence, helped push some of the changes. There was a desire to “address the balance of decades of neglect,” he said. British military uniforms had become less common on the streets over the years due to worries about being targeted by terrorists linked to Northern Ireland, and then—according to some analysts—out of deference to Britain’s Muslim population, parts of which disagreed with the wars in Iraq and Afghanistan. A 2007 report on the relationship between the armed forces and the public suggested more wearing of uniforms in public, shifting homecoming parades and medal presentations to public places, and creating a British Armed Forces Day. Wootton Bassett influenced the government’s thinking, Mr. Browne said. When Mr. Miles was told by the station commander at RAF Lyneham in 2007 that bodies would be passing through his town, he remembers going upstairs to put on the chain and robes that were a symbol of his mayoral post and walking with his wife to the local war memorial. Now, when RAF Lyneham hears of a “repatriation,” a base official calls secretaries at the Town Hall, who email and call around 30 local people who have their own lists of 10 numbers each. Through what locals call a “jungle telegram,” news spreads. So far 166 coffins have passed through in 79 ceremonies. Tuesday’s procession was not about politics, but grief, said Alison Aldridge, 40, after watching as her nephew Will Aldridge’s coffin was driven past. One of the youngest soldiers stationed in Helmand, at 18, Mr. Aldridge was killed in an explosion as he helped to retrieve casualties hurt in an earlier blast. “The army was what Will wanted all his life. It just didn’t have a happy ending,” she said, holding tears back behind dark glasses. —Yochi J. Dreazen contributed to this article. The trickle of coffins through Wootton Bassett has turned to a stream. other North Atlantic Treaty Organization countries are showing fatigue from the conflict. Mr. Brown now has to decide whether to keep around 700 troops in Afghanistan who were scheduled to come home after local elections next month. He says he is continuously evaluating the situation with commanders. A poll by ICM for the Guardian newspaper late last week, as news of the latest casualties Obama Puts Arms Control at Core of New Strategy By Peter Spiegel WASHINGTON — President Barack Obama has moved nuclear deterrence to the top of the national-security agenda—and in his dealings in the past month with Iran, North Korea and Russia, revealed the issue to be an organizing principle to his foreign policy. Mr. Obama has restarted moribund arms talks with Moscow, pushed for sanctions against Pyongyang, and sought nuclear talks with Tehran despite his condemnation of its crackdown on protesters. Those moves, significant shifts from policies of the Bush White House, were designed to put efforts to halt the spread of weapons of mass destruction at the center of policymaking, senior Obama administration officials say. “His view is: If this is the No. 1 threat that we face, we need to address it with urgency,” says Benjamin Rhodes, Mr. Obama’s chief national-security speechwriter. “For nonproliferation to work, you have to do everything at once.” Several officials said the White House views President Ronald Reagan as a model, noting that Mr. Reagan engaged with Soviet leaders on arms control even as he condemned their humanrights record. A senior official said White House summit planners examined Mr. Reagan’s early meetings with Mikhail Gorbachev for guidance before Mr. Obama met with Russian President Dmitry Medvedev last week. Some critics say the White House should have been quicker to condemn Tehran’s handling of the Iranian election and slower to embrace arms talks with Moscow because of its record of suppressing internal dissent. Elliot Abrams, a top foreign-policy adviser in the George H.W. Bush White House who specializes in democracy issues at the Council on Foreign Relations, says U.S. democratization efforts have been “marginalized.” Senior Obama administration officials dismiss such criticism, saying that working on arms control and promoting democracy and human rights aren’t mutually exclusive. They point to Mr. Obama’s emphasis on democratic values in his June speech in Cairo and a major address given at the New Economic School in Moscow last week. “You can walk and chew gum on these issues,” Mr. Rhodes says. Current and former Obama foreign-policy advisers said Mr. Obama’s emphasis on nuclear arms sprang from his work in the Senate with Sen. Richard Lugar, the Indiana Republican who spearheaded post-Cold War efforts to secure fissile material in the former Soviet Union. The advisers say that focus has since broadened into an attempt at rebuilding the entire international arms-control regime, particularly the Cold Warera Nuclear Non-Proliferation Treaty and the U.N.’s International Atomic Energy Agency, out of fear that the decades-old controls are weakening from inattention. “I believe we are at a tipping point,” says Brent Scowcroft, who was national-security adviser to President George H.W. Bush and has long pushed for nonproliferation issues to return to the top of the agenda. “If we fail in Iran, we’re going to have a number of countries go the same route Iran has just in self-defense. Egypt will, Saudi Arabia will, Turkey will. In northeast Asia, if we can’t deal with North Korea, the Japanese are going to say: ‘We’ll have to do it ourselves.’ ” Several Obama advisers say Rep. Lee Hamilton, the Indiana Democrat who served as an informal adviser to the Obama campaign, has had particular influence on the president’s thinking. “[Obama] has really kind of clicked with that old school, end-of-the-Cold-War wise men generation,” says a White House official. Former Hamilton aides are now in influential posts at the White House, including Mr. Rhodes; Denis McDonough, the deputy national-security adviser; and Daniel Shapiro, who runs Mideast policy at the National Security Council. Mr. Hamilton plays down his role in Mr. Obama’s thinking. “A number of events are coming together that kind of reinforce his own personal instincts with regards to trying to deal with this problem,” Mr. Hamilton says. 40th Anniversary Landing on The Moon To Order: 1.800.793.6542 | www.etoncorp.com | ext. WSJ0709 © Copyright 2009 Etón Corporation. All Rights Reserved. AVIATOR G6 AM/FM/Shortwave Portable Radio with Aircraft Band Grundig Radio Line by Etón www.etoncorp.com www.etoncorp.com 6606706 P2JW19600A-4-A01000-1--------XA Composite CYAN BLACK YELLOW MAGENTA P2JW19600B-4-A01100-1--------XA **** BLACK 07/15/2009 AZ,CL,CX,DL,DX,EE,FL,HO,MW,NC,NE,NY,RM,SA,SC,SL,SW,WB,WE P2JW19600B-4-A01100-1--------XA Wednesday, July 15, 2009 THE WALL STREET JOURNAL. * * * * A11 CURRENTS Spun: The Off-the-Wall Accounting of Record Sales Confusion Over Songs vs. Albums, Scant Historical Data Amplify Tallies for Michael Jackson and Other Pop Superstars Greatest Hits | The best-selling albums of all time, sized proportionate to their estimated sales world-wide FPO ART IS FPO Michael Jackson Thriller 62.4 MILLION Pink Floyd Dark Side of the Moon 41.8 MILLION Soundtrack Grease 40.4 MILLION Soundtrack The Bodyguard 38.6 MILLION Soundtrack Saturday Night Fever 37.2 MILLION The Eagles Their Greatest Hits 1971-’75 36.7 MILLION Images: Getty Images (Thriller, Saturday Night Fever, record background); Capitol/EMI (Dark Side of the Moon); Polydor Records (Grease); Arista Records (Bodyguard); Asylum Records (Their Greatest Hits) Source: Fan of Music In the last three years of his life, long after the release of his final original album, Michael Jackson’s career album sales took a curious leap. For many years, Mr. Jackson’s lifetime sales tally typically was reported at 200 THE million alNUMBERS bums worldGUY wide. But in late 2006, news articles began putting the number at 750 million, a figure that beBy Carl came part of Bialik the popular lore as Mr. Jackson was attempting a comeback. In the last few weeks, it has popped up in obituaries and retrospectives. So how did the sales figure nearly quadruple? A likely explanation is that a rough tally of individual songs was misinterpreted or misrepresented to reflect album sales. Such a numerical misstep is surprisingly easy to make in the world of album sales figures, where reliable information is spotty in the U.S., and often nonexistent overseas. “When we were asked how many albums Michael Jackson sold, we were as embarrassed as anybody,” says Adrian Strain, a spokesman for the International Federation of the Phonographic Industry, a London-based trade group. “We had to go to the Guinness Book of World Records.” Inflated numbers aren’t unique to Mr. Jackson. The Beatles’ supposed one-billion-plus sales record also reflects an estimate of the number of songs, not albums, according to trackers of such landmarks. Other performers, such as AC/DC, Julio Iglesias and ABBA, supposedly are members of the 200 million album club, but compiled sales figures put their respective totals closer to 100 million. The modern era of music measurement began in the U.S. in 1991, when retailers began transmitting sales reports electronically to Nielsen SoundScan. Before then, the iconic Billboard charts relied on rankings rather than absolute sales figures from record stores. The magazine didn’t know whether, at a given store, the No. 1 album outsold all others combined, or whether they were more tightly bunched, so it assumed equal spacing in assembling its chart, according to Geoff Mayfield, former director of charts at Billboard. Once SoundScan started compiling actual sales totals, Billboard used those numbers instead. Today, SoundScan covers about 95% of music sales in the U.S., according to Chris Muratore, vice president of retail relations and research services for Nielsen Entertainment. SoundScan calculates that Mr. Jackson’s albums have sold 23 million copies since 1991—far more than Julio Iglesias’s 5.1 million, but a far cry from the Beatles’ 57.6 million. But SoundScan doesn’t track data by album outside the U.S. and Canada, and has no numbers prior to 1991—nine years after the release of “Thriller,” Michael Jackson’s biggest hit. Also, SoundScan doesn’t include sales made to record labels’ music-club members as part of their promotional offers of, say, 10 albums for a penny. “It’s not a true consumer decision to purchase each one of those items,” Mr. Muratore says. SoundScan isn’t the only source of sales data. In the U.S., the Recording Industry Association of America charges record labels a few hundred dollars to certify shipments of albums. The RIAA reported 61.5 million album sales by Mr. Jackson throughout his career, fewer than half the total for Garth Brooks, and only 17th in the U.S. overall. But record labels don’t always request certification, and sales might not be tracked for more than a short period of time after an album is released. On the other hand, the certified numbers might overstate sales if stores order more albums than they are able to sell. RIAA shipment figures also are used to determine which albums can claim coveted “gold” status (500,000 albums sold in the U.S.); or platinum (one million albums). Outside the U.S., industry trade groups have their own methods for tracking album sales, but the data aren’t standardized or readily accessible. The IFPI, the international trade group, provides rankings and industrywide totals, not sales by a given artist or album. Turning to the Guinness World Records won’t yield more definitive information, either. In the record book’s most recent entry on “Thriller” sales, Guinness notes that in 1982, “esti- mations from Sony and the Recording Industry Association of America put sales at over 55 million copies, although Jackson’s management claims that international sales have pushed the total world-wide figure to over 100 million.” Guinness concludes that “while it is impossible to verify the final global sales, there is no doubt that it remains the biggest-selling album of all time.” With so little hard data made available by the recording industry, amateur musicdata trackers have stepped in to try to fill the void. These sleuths dig through certifications, SoundScan figures and other sources to compile sales by album and artist. One such enthusiast, Lau Ho Hoi, who works for a construction firm in Hong Kong and posts on a popular U.K. online music forum, gained attention on the music blog Hitsville last week for his posts from 2004 compiling Mr. Jackson’s sales by country. In an updated analysis, he calculated that the pop star sold 131.5 million albums worldwide, and 65.6 million singles. The total doesn’t include digital downloads, which have taken off for Mr. Jackson since his death. Guillaume Vieira, an engineer in Paris, has compiled his own totals for his Web site, Fan of Music. By his count, Michael Jackson had sold 205.5 million albums before his death, plus many millions more in singles and downloads. It is an impressive total, and second only to the Beatles, but far fewer than 750 million. That figure first got legs in late 2006, when Raymone Bain, a publicist for Mr. Jackson at the time, touted in a letter to Jackson fan clubs that sales had “exceeded over 750 million units.” Units could be interpreted to mean a rough tally of the number of songs sold, not albums. But many journalists and fans interpreted the figure as albums sold, and a wildly inflated number was born. Mr. Jackson’s record label, Sony Music, declined to share sales numbers. Ms. Bain didn’t respond to requests for comment; she sued Mr. Jackson in May after their business relationship ended. In her lawsuit, she claimed Mr. Jackson sold “over 1 billion records world-wide.” Learn more about the topic at WSJ.com/NumbersGuy. Email Carl at numbersguy@wsj.com. REMEMBRANCES / Samuel Genensky: 1927-2009 An Inventor Whose Blindness Was Just a Legal Technicality By Stephen Miller Sam Genensky liked watching baseball, birds and women— not necessarily in that order. So it might have come as a surprise to those who never met him that Mr. Genensky was legally blind. A RAND Corp. mathematician who had been left almost sightless by an accident in infancy, Mr. Genensky developed a system for projecting magnified text on video screens that has helped millions of the partially sighted people around the world to read. “The technology had a dramatic impact,” says Mitch Pomerantz, president of the American Council of the Blind. “Up until then, people with low vision had no alternatives, except perhaps magnifying glasses, and they were clunky.” Mr. Genensky, who died June 26 at age 81, always resisted being treated as sightless, even though his 20-1,000 vision in his one functioning eye made him blind by law. That didn’t stop him from being a fan of the impressionists, even if he had to view canvasses one piece at a time and mentally reassemble them. As a child, he balked at Braille and spoke of his one year at a school for the blind as a prison sentence. In his teens, he discovered how to modify a pair of binoculars his dad brought home from World War I so that he could see the blackboard in class and take notes. He went on to graduate with honors from Brown University and returned to earn a Ph.D. in mathematics in 1958. At RAND in Santa Monica, Calif., he programmed early computers, and modeled fluid dynamics and spontaneous combustion. But he continued to be dogged by his limited vision that made reading into a neck-craning chore. He described the way he read as “nosing.” The problem was that programs were geared toward the totally blind. The Veterans Administration offered white-cane training and guide dogs to servicemen blinded in World War II. But despite the fact that the majority of the legally blind have at least a limited capacity to see, there was little help for those whose vision was severely impaired but could be improved with technology. “People seem to want blind Los Angeles Times Samuel Genensky, who created solutions for the blind, would observe paintings one section at a time and then reassemble them mentally. people to conform to the image of blind men, even if the person can see,” Mr. Genensky told the Los Angeles Times in 1971. His answer, constructed with the help of a team of RAND scientists and engineers, was Randsight, the prototype for systems that project large text on a video screen. Randsight presented text 31 times its original size when he first demonstrated it at a convention of the American Academy of Optometry in Los Angeles in 1968. A Reader’s Digest feature in 1971 dubbed it “Sam Genensky’s Marvelous Seeing Machine,” and generated thousands of inquiries from around the world. Mr. Genensky declined to patent the invention to encourage other companies to develop and manufacture video magnification systems. He said he could read 130 words a minute with his system, slow for a sighted adult, but a near-miracle for many of the legally blind. Says American Federation for the Blind President Carl Augusto, “Sam was responsible for really bringing low vision into the mainstream.” The video systems were one of an array of solutions offered at the Los Angeles-based Center for the Partially Sighted, which Mr. Genensky founded with federal grants in 1978. The center continues to offer technology, as well as psychological counseling. Mr. Genensky himself used a pair of “monster binoculars” for reading signs, a footlong spyglass for attending the ballet or sporting events, and an odd-looking compound lens mounted on glasses for walking the streets and “even girl-watching,” as he once said. He traveled internationally to raise funds and bring attention to the cause of the partially sighted, and did some counseling himself. Teenagers sometimes resisted help. “They say, ‘I don’t want to use that. It looks funny!’ ” Mr. Genensky told the Los Angeles Times in 1990. “I say, ‘I’m going to give you my ‘it’s fun to be different’ lecture.” To address another possible source of embarrassment, he developed what became a California state standard for lavatory signage, a large triangle for the men’s room, a circle for the ladies. As a result of cataract surgery in the early 1990s, Mr. Genensky’s vision improved dramatically for a time, and he was stunned to realize that his wife was a redhead, not a brunette, as he’d thought. But the improvement was temporary, and in recent years he’d had to dust off his Braille-reading skills. Paul Baran, a scientist who worked on the team that developed the original Randsight device, says the project came about almost on a whim. “Low vision was not a subject RAND was interested in,” says Mr. Baran. “We just thought Sam was a great guy.” Tip The ScaleS in Your Favor English JockEy scalE A racing treasure. Renowned maker. A fascinating function. This jockey scale, crafted by the famed W. & T. Avery of Birmingham, England, has an intriguing place in the annals of horse racing. Made of fine mahogany, scales such as this were used to weigh jockeys at important English race tracks. With an upholstered leather seat, a built-in scale and a complete set of fully engraved weights measuring in stones, this scale is in perfect working condition. Circa 1890. 32” wide x 20” deep x 41” high. Since 1912, M.S. Rau Antiques has specialized in the world’s finest art and antiques. Backed by our unprecedented 125% guarantee, we stand behind each and every antique. For more information, please call us toll free at 1-877-677-2801. 630 Royal Street • New Orleans, LA 70130 • 1-877-677-2801 • ws@rauantiques.com • www.rauantiques.com 6606707 P2JW19600B-4-A01100-1--------XA BLACK P2JW19600C-5-A01200-1--------XA ***** C M Y K Composite 07/15/2009 AZ,CL,CX,DL,DX,EE,FL,HO,MW,NC,NE,NY,RM,SA,SC,SL,SW,WB,WE P2JW19600C-5-A01200-1--------XA * * * * * A12 Wednesday, July 15, 2009 THE WALL STREET JOURNAL. FROM PAGE ONE Chinese Upstart Geely Expands to Take On Detroit Continued from Page One from the U.S., Europe and Japan, say auto executives and analysts. Despite broader concerns about quality control and management expertise, they say higher-level design and engineering positions could still move to lower-cost countries. Over the past few years, as the global auto industry was faltering, Geely was carefully honing a strategy to transform itself into an international competitor. Starting around 2006, it lined up deep-pocketed financial backers, hired top management talent, poured funds into research and development and built engineering and manufacturing capabilities. Thus far, Geely is known mainly for producing affordable small cars such as the Panda subcompact and the larger King Kong compact. More recently, it has been trying to break into bigger and more luxurious models such as sport-utility vehicles and upscale sedans—segments that are currently dominated by GM, Toyota Motor Corp. and other global players. Meanwhile, the company has been working for almost three years on its takeover plan for Volvo, key elements of which people familiar with the plans described to The Wall Street Journal. Geely is bidding at the parent company level, not through its Hong Kong-listed unit Geely Automobile Holdings Ltd. It has hired consultants to advise it, including a former top executive at Volvo. It has also appointed a veteran Chinese finance executive to spearhead the effort. Although the bid could still fail, as some industry analysts predict, a successful deal could point to the future shape of global auto manufacturing. Geely, according to people familiar Cruising Geely vehicle sales 200,000 150,000 100,000 50,000 0 Getty Images 2000 *Through May ’05 ’09* Source: CSM Worldwide Left: A worker assembles a vehicle in a Geely factory in Ningbo, China, in 2008. Below: Chairman Li Shufu in one of the company's sedans. ous, beautiful woman,” he told The Wall Street Journal in April. “We just look at her from far away, amazed. We don’t dare get close to her. We’re just a bunch of farm boys.” Chinese auto makers face significant obstacles to growth. A lack of global management skills and other shortcomings could make it tough for Geely and other Chinese auto companies to buy and digest foreign brands—or make inroads overseas on their own. Another issue: Labor unions and governments trying to defend jobs in the U.S. and Europe could balk at any attempts by Chinese companies to shift auto jobs to China. China’s corporate culture, which has often tolerated shortcuts on quality to accelerate product development, could also dent the reputation of acquired brands, say engineering experts who have worked with Chinese auto makers. There are signs that momentum is gaining anyway. GM’s tech outpost in Shanghai, jointly operated with a Chinese partner, recently designed the interior of a Buick car it sells in the U.S. The center also develops vehicles for the China market in collaboration with GM’s other R&D centers around the world. Honda Motor Co. recently opened a development center in Guangzhou with one of its Chinese partners. Tens of thousands of engineers graduate each year from China’s top universities and vocational schools, making it fertile territory for technical talent. Couple that with government policy support and subsidies for automotive research, and “China may soon become the most significant hub of lowcost engineering for the global auto industry,” says Michael Laske, head of the China operations of Austrian engine-technology firm AVL List GmbH. While it took 30 to 40 years for Toyota to crawl its way to the top of the engineering ladder to sophisticated engineering, “Geely may be setting itself up to repeat the same process in a much accelerated fashion,” says Steven Spear, a senior lecturer in engineering at the Massachusetts Institute of Technology. At Geely’s tech center in Taizhou, a coastal city nestled against tea fields, stylists sketch cars with a special digital pen on touch-sensitive drawing tablets while engineers put a new engine on a test bench to gauge its emissions and performance. Upstairs, a chemist, clad in a white lab coat, mixes ingredients in test tubes to develop a new “new car” fragrance for auto interiors. Geely technicians also routinely check the durability of door hinges and locks by putting a car door on a machine that opens and closes it automatically 24 hours a day. “We didn’t do it before, but this is how we build good quality into vehicles,” says Mr. Zhao, who spent nine years in Detroit teaching engineering at Wayne State University before joining Chrysler in 1997. Mr. Zhao convinced Mr. Li to invest at least 8% of Geely’s revenue in product development. Toyota and its subsidiaries, by comparison, spend 5% of revenue on R&D. Since arriving at the tech center three years ago, Mr. Zhao has tripled the number of engineers to 1,200. Behind Geely’s transformation is the chairman, Mr. Li, a self-described workaholic who most nights sleeps inside the company’s headquarters building in Hangzhou. Born in 1963 to poor farmers in Taizhou, about 250 miles southeast of Shanghai, he came of age during the era of economic reform that began in the late 1970s. When he finished high school, he used his graduation gift of 100 yuan, about $14 today, to buy a used camera. He then opened a photo studio for villagers. With the money he earned, he launched a business stripping gold and other rare metals from discarded appliabout Geely, it didn’t take the overture seriously, according to people familiar with the situation. But the U.S. auto industry sank deeper into despair as the year wore on, and Ford, while healthier than its American rivals, reevaluated its options. Soon after, the Geely bid began to get attention inside Ford. John Thornton, a longtime Ford board member and former president of Goldman Sachs with extensive contacts in China, learned of it, and with Ford management’s encouragement, he started checking into Geely. In December, he met at Beijing’s Grand Hyatt hotel with Mr. Li and Mr. Zhang, who laid out Geely’s strategy. Mr. Thornton reported back that the bid should be taken seriously. Around that time, Ford announced it was ready to put the money-losing Volvo cars unit up for sale. Mr. Li’s vision for Volvo is to radically slash the Swedish brand’s costs for some of its primary activities, such as productdevelopment and manufacturing, by tapping the relatively cheap labor available in China, people familiar with the situation say. Mr. Li, according to those people, doesn’t plan to merge Volvo and Geely: Volvo would remain as an independent brand, and Mr. Li would retain Volvo’s current management team. Ford CEO Alan Mulally and Lewis Booth, Mr. Leclair’s successor as chief financial officer, agreed to meet with Geely executives again during the Detroit auto show this past January. Chairman Bill Ford did not attend that meeting, but Mr. Li also met with Mr. Ford briefly during the same visit, say people familiar with the situation Geely reconfirmed its interest in Volvo in March and is expected to offer a final bid by mid-July with an offer that is anticipated to be around $2 billion, according to people familiar with Geely. —Ellen Zhu contributed to this article. Bloomberg News (2) A main goal would be to make and sell more Volvos in China, the world’s only major car market still growing. with its plans, would use Chinese engineers—including graduates from four engineering colleges the company set up in cities around China—to conduct basic engineering tasks like generating digital blueprints of parts designed by more seasoned engineers in Sweden. A main goal would be to make and sell more Volvos in China, the world’s only major car market still growing, where Volvo sold only 12,600 vehicles last year. Ford management, initially skeptical of Geely’s bid, now believes the Chinese company could successfully run Volvo, say people familiar with the situation. A Ford spokesman declined to comment. Geely Chairman Li Shufu has thus far refused to discuss his plans for Volvo publicly. In interviews, he has been coy about his interest in the Swedish auto maker. “Volvo is like a mysteri- ances and machinery. Later, he opened factories to produce refrigerators and freezers, and then construction materials. By the early 1990s Mr. Li was thinking about building cars. But at the time, China’s central government barred private companies from the auto industry. So Mr. Li began making motorcycles, while still buying cars and stripping them down to learn how they were made. In the late 1990s, as official restrictions began to ease, Mr. Li founded Geely. He came up with the company’s first auto prototypes based loosely on competitors’ models and began selling cars in 2001. In 2002, Toyota sued Geely in Beijing accusing it of copyright infringement for using a corporate logo that resembled its own, and of using a label on one of its engines that made it seem like it was made by Toyota in Japan. Toyota lost both cases and didn’t appeal. By 2006, Geely was producing and selling more than 200,000 vehicles a year, and a confident Mr. Li pronounced that the company would start marketing cars in Europe and the U.S. by 2008. But when it began re-engineering cars to meet U.S. and European safety and emissions regulations, Geely saw that the task couldn’t be easily accomplished. It needed to design cars from the ground up. “We realized you cannot create a car by simply gathering needed components,” Mr. Li told an industry conference in 2006. “We’re only a baby, learning to crawl let alone walk on our own.” But Mr. Li began thinking that Geely could accelerate its growth by taking over an established global auto maker. He started thinking seriously about Volvo, a famous brand but a money loser for Ford in recent years. In 2007 Mr. Li hired Peter Zhang, a financial controller from BP PLC, to lead the pursuit of Volvo. And he tapped HansOlav Olsson, Volvo’s former top executive, as an adviser. Through an American consulting company, Mr. Li was able to get a meeting in January 2007 with Don Leclair, then Ford’s chief financial officer, during the Detroit auto show. The two discussed a number of issues, including Volvo, but nothing firm came of the meeting, according to people familiar with the situation. They met again in January 2008, and this time Mr. Li directly expressed Geely’s interest in acquiring Volvo. Mr. Li sent Ford a letter making his proposal official. By then, Ford was trying to restructure Volvo, and hadn’t decided to sell it. Knowing little Neighbors Are Mad as Wet Hens Over Backyard Chicken Coops Continued from Page One when you ask for a hen and people panic.” Enthusiasts say chickens make great pets, especially for young children, and that their eggs taste much better than the store-bought kind. Ms. Palermo also uses chicken waste as fertilizer for her vegetable garden and composter and feeds grass clippings, carrot tops, and other green waste to her birds. “In 24 hours, it will be an egg and fertilizer,” she says. Advocates, who also tout the economic benefits of having free eggs, say the recession is driving an interest in backyard gardens that increasingly include chicken coops. But critics of the backyard coops say chickens attract raccoons, coyotes, and other pests and that they create unsanitary conditions. And the foes say the cited economic benefits are nonsense. Just building a coop can cost hundreds of dollars and raising hens is time-consuming. “It’s silliness,” says Terri Frohnmayer, a commercial realestate broker who is co-chairwoman of one of Salem’s 19 neighborhood associations and lives outside town next to a farm that has chickens. “Eggs aren’t even that expensive anyway. What’s next? Goats? Llamas?” Her advice to hen-loving neighbors: “Get a farm.” There are no official statistics on how many city folk keep chickens, and it isn’t clear whether urban coops are on the rise. Randall Burkey Co., a Boerne, Texas, hatchery, credits a doubling of small orders for chickens and supplies in urban and suburban areas for boosting profit at a time when traditional sales to commercial farmers have been flat or down. “We’re experiencing some pretty nice growth, which, considering the economy, has been quite a blessing,” says Clark Burkey, vice president for marketing. One online network, BackyardChickens.com, has 35,000 members, up from about 10,000 a year ago. Members there solicit tips on how to keep illegal coops hidden from nosy neighbors and on how to persuade local politicians to allow backyard chickens. During the two world wars, many cities encouraged residents to grow their own food and to keep chickens. But restrictions have cropped up in the past 50 years as urbanization reached deeper into the countryside. Salem allowed residents to keep livestock, including chickens, until the 1970s, when it decided “to be a city and not a rural community,” says Chuck Bennett, a City Council member who opposes allowing backyard chickens. Madison, Wis., in 2004 was one of the first cities to reverse a chicken ban, and other cities have followed suit, including Portland, Maine, and Vancouver, British Columbia. In other cities, chickens other animal into this kind of [close] environment,” says Mr. Bennett, the council member. Ms. Frohnmayer, who lives outside Salem, often finds her own springer spaniel sizing up chickens on her neighbor’s farm. It’s only natural, she says, for her dog to want to eat her neighbor’s birds. “Are they going to put my dog down when it eats one of their chickens?” she says. That issue has already come up. Salem resident Jason Caldwell replaced his neighbor’s chicken after his Labrador retriever mauled a bird that had wandered onto his property. “I was just being a good neighbor,” he says. But when the dog ate the replacement, Mr. Caldwell bought yet another chicken for his neighbors and offered the following warning: “If there are any more chickens that are in my yard, I’m going to let the dog do whatever he wants.” He says he offered to build a better coop for his neighbor and spent $100 to replace the birds, which were a specialty breed. “That’s a terrible way of having to have a conversation with your neighbor, but at some point I’ve got to put my foot down,” he says. Salem’s City Council remains divided over the issue. Salem Mayor Janet Taylor is guardedly supportive of the measure and ready to vote after months of debate. “I know chickens are important, but we need to move on,” she says. Kenneth B. Hill Barbara Palermo has been pressing a fight to make backyard chicken coops legal in Salem, Ore. have become a nuisance as they roam city streets. In 2003, Miami formed a “Chicken Busters” squad with a firefighter and code enforcement bureaucrat armed with big nets and small cages to patrol neighborhoods once a month. The team captured more than 6,600 chickens, and raised more than $11,000 selling them to local farms. In Salem, city compliance officers inspect homes only when there are complaints, and owners usually are told to get rid of the birds or face fines. The city got around 30 complaints last year and has received about one a week since the debate heated up this year. Nancy Baker-Krofft unsuccessfully lobbied the city in 2006 to change the law and brought her birds out of hiding earlier this year when it appeared that Salem might allow them. When city officials come to inspect, she says, she’ll hide the birds in her son’s room or check them into a neighbor’s contraband coop, which she calls the “chicken hotel.” Last month, a chicken got loose when an officer inspected Ms. Baker-Krofft’s home, resulting in her third citation. “I cannot afford another $250 ticket,” says the 54-year-old substitute teacher. She has already racked up $350 in fines for repeated chicken-related citations, which she is challenging in city court. Her behavior has alienated her from some neighbors, and her neighborhood association opposes keeping chickens. “It’s like she has some underground railroad for chickens,” says Alan Scott, the head of the association. Mr. Scott and others worry that neighbors who don’t take care of their coops will lower property values. The biggest concern, however, is that chickens will just lead to more conflicts between chicken owners and neighbors who own more traditional pets, like dogs. “You can just see the conflict associated with the addition of an- 6606708 P2JW19600C-5-A01200-1--------XA Composite CYAN BLACK YELLOW MAGENTA P2JW19600D-0-A01300-1--------XA BLACK 07/15/2009 AZ,CL,CX,DL,DX,EE,FL,HO,MW,NC,NE,NY,RM,SA,SC,SL,SW,WB,WE P2JW19600D-0-A01300-1--------XA Wednesday, July 15, 2009 THE WALL STREET JOURNAL. A13 OPINION China’s War for Ore hina was miffed by the outcome of what we last year called the corporate “deal of the century.” But shareholder interests prevailed. How often will that be said in the future? Politics, that ugly dynamic when mixed with business, was already back in play last week as Rio Tinto, an Australian mining giant at the heart of the controversy, saw four of its Chinese executives arrested in Shanghai on spying charges. China says the busts are not retribution for the cancelled deal between Rio and BUSINESS a state-owned company, WORLD By Holman W. which received angry press in Jenkins, Jr. China. Instead, the arrests supposedly arise from skullduggery by Rio officials during fraught annual oreprice negotiations with mainland steelmakers. But the distinction may be irrelevant. Ore has become a major neuralgic concern for China. It sees its dependence on imported supply as strategically risky. It fears that its massive attempts to “stimulate” domestic job growth are being drained off as fatter profits for Australian mining companies. When the intrigue is unraveled, moreover, don’t be surprised if the arrests are partly aimed at corralling the mainland’s own restive steelmakers, many of whom have not cooperated in Beijing’s ore strategy but have been striking their own spot market deals at higher prices. But let’s step back. Rio has been wrongfooted over and over lately amid the zigzagging of the world’s monetary conditions, whose chaos is now disastrously reshaping business-government BUSINESS BOOKSHELF By Michael MacCambridge Kevin Rudd, who prides himself on being an old China hand, must have been overjoyed when this icky chalice was taken from his lips by Rio’s shareholders Yet the politics have only turned ickier since the Rio arrests. And Beijing has other cards up its sleeve. It can take its opposition to the BHP-Rio deal to Europe’s trustbusters, who voiced qualms about their earlier proposed tie-up. China also can make use of its own new antimonopoly law, which has already been used to punish the U.S. for blocking an oil deal. Earlier this year, Chinese regulators nixed Coca-Cola’s purchase of a local juicemaker on “competition” grounds that antitrust lawyers considered ludicrous. More disturbing, China has upped its ore purchases in recent weeks even as mainland growth seems to be slowing, suggesting an effort to lay in a stockpile for a longer showdown against Rio-BHP. If the Rio arrests mark the beginning of a Chinese war to remake the global ore market more to China’s liking, Beijing might want to think again. Its clumsy attempt to make computer makers instruments of Internet censorship was not exactly confidenceinspiring. Ensuring nobody wants to do a business deal with China for fear of being charged with a death penalty crime hardly improves the case. Then there’s the epic civil disorder in Xinjiang. The final casualty may be China’s overblown reputation for macroeconomic competence, on which so many hopes for global recovery depend. There are already signs its stimulus efforts are running off the rails. The world might appreciate a signal right now that China’s government actually knows what it’s doing. C The Goal Is Popularity The Beckham Experiment By Grant Wahl (Crown, 294 pages, $24.99) An iron ore loading port in Rizhao, in China’s Shandong province. relations globally (think the Obama administration’s ownership of most of the Detroit auto industry). When China was booming, Rio played coy in the face of a merger bid from fellow miner BHP Billiton 18 months ago, acknowledging the “industrial logic” of the deal but insisting the offering price was “several ballparks” short of fair value. Business is being reshaped around the world. Oops. With the collapse of Lehman and the global meltdown, ore prices plummeted and BHP withdrew its bid. Suddenly, Rio needed its own debt bailout and turned to a company on the cash-rich mainland, state-owned Chinalco. Beijing was doubly pleased by the $19.5 billion Chinalco deal. Not only was China getting ownership of Australian ore assets at a bargain price, but the deal also killed off any chance of a BHP merger, seen on the mainland as an Aussie plot to gouge China. Oops. The Chinalco proposal ran into a buzzsaw of nationalist opposition in Australia. And while a government review board dragged its feet, the delay allowed Ben Bernanke to rev up the monetary engine and China to launch its own massive stimulus. Ore prices recovered. A BHP joint venture was back on the table. In a jilting worthy of a Judy Blume novel, Rio last month dumped its Chinese savior and leapt into bed with its erstwhile Australian suitor. Now the Chinese naturally see dirty politics at work, but the deal was actually scuttled by Rio’s shareholders, who rightly saw more upside in BHP’s offer. Yet it’s also true the Chinalco bid would likely eventually have been torpedoed by the Australian government. Polls were running strongly against selling the country’s mineral patrimony to a company ultimately controlled by the Chinese Communist Party. Australia Prime Minister Poor, Persecuted Sarah Palin hen Alaska Gov. Sarah Palin announced her resignation two weeks ago it was after a series of strange, petty bouts with her detractors. Many “frivolous ethics violations” had been alleged against her, she noted. David Letterman had told an ugly joke about her daughter. A blogger had posted something that was probably not true. Someone had photoshopped a radio talker’s face onto a picture of her baby—a “malicious desecration” of the image, in the words of Ms. PaTHE lin’s spokesTILTING woman. YARD Team Palin By Thomas got duly indigFrank nant at each of these. They took special, detailed offense. They issued statements magnifying their wounds. And, finally, the governor resigned her office, a good woman cruelly wronged. The culture’s fantastically unfair treatment of middle Americans is the main lesson that many will no doubt take away from Ms. Palin’s time in the national spotlight. In fact, it may be the only lesson. We don’t really know where the former vice presidential candidate stands on most issues. We know only that she is constantly being maligned, that when we turn on the TV and see her fair face beaming, we are about to hear that some W liberal someone has slurred this noble lady yet again. Indeed, if political figures stand for ideas, victimization is what Ms. Palin is all about. It is her brand, her myth. Ronald Reagan stood tall. John McCain was about service. Barack Obama has hope. Sarah Palin is a collector of grievances. She runs for high office by griping. This is no small thing, mind you. The piling-up of petty complaints is an important aspect of conservative movement culture. For those who believe that American life consists of the trampling of Middle America by the “elites”—that our culture is one big insult to the pious and the patriotic and the traditional—Sarah Palin’s long list of unfair and disrespectful treatment is one of her most attractive features. Like Oliver North, Robert Bork, and Clarence Thomas, she is known not for her ideas but as a martyr, a symbol of the culture-war crimes of the left. To become a symbol of this stature Ms. Palin has had to do the opposite of most public figures. Where others learn to take hostility in stride, she and her fans have developed the thinnest of skins. They find offense in the most harmless remarks and diabolical calculation in the inflections of the anchorman’s voice. They take insults out of context to make them seem even more insulting. They pay close attention to voices that are ordinarily ignored, relish- ing every blogger’s sneer, every celebrity’s slight, every crazy Internet rumor. This has been Ms. Palin’s assigned role ever since she stepped on the national stage last summer. Indeed, she has stuck to it so unswervingly that one suspects it was settled on even before she was picked for the VP slot, that it was imposed on her by a roomful of GOP image consultants: Ms. Palin was to be the candidate on a cross. The GOP embraces the culture of victimhood. Resentment was, for example, the most-noticed theme in her famous speech at the Republican convention in September, when she introduced herself to America by taking umbrage at those Democrats who “seem to look down on” small-town ways. Before long she had become a full-time victim of the media, deploring “the bitter shots” they took at her. She imagined that reporters were threatening her First Amendment rights by criticizing her. She found a fellow underdog in Joe the Plumber, and after reviewing his mistreatment by the media she made him part of her stump routine. But the template was appar- ently set even before her big roll-out. In an essay in The Weekly Standard that was written before Ms. Palin’s celebrated debut in St. Paul, William Kristol somehow already knew that liberals “will ridicule her and patronize her. They will distort her words and caricature her biography. They will appeal, sometimes explicitly, to anti-small town and anti-religious prejudice.” And all this contempt will serve an important propaganda purpose, he continued, with Ms. Palin becoming a “powerful symbol” for “lots of Americans who are told every day that to be even a bit conservative or Christian or oldfashioned is bad form.” Mr. Kristol’s magazine has beat the persecution drum ever since. Its current issue features a cover story about Ms. Palin’s suffering by Matthew Continetti, who is actually said to be writing a book titled, “The Persecution of Sarah Palin.” In the course of Mr. Continetti’s essay he admits to collecting insults of Ms. Palin, which he stores in a computer file that he says is seven pages long. My advice to Mr. Continetti: Put your insult collection aside for a moment and ask instead why people like Ms. Palin savor insults in the first place. The answer may not endear you to Weekly Standard readers, but it will take you a lot further toward understanding the world we live in. Write to thomas@wsj.com t was two years ago this week that David Beckham was unveiled as the latest savior of American soccer. After signing a five-year contract with the Los Angeles Galaxy, his mere presence led to sell-out crowds throughout Major League Soccer, and he and his wife, Victoria (Posh Spice of the Spice Girls), were greeted by hundreds of paparazzi and nearly as many A-list friends upon their arrival in Beverly Hills. Mr. Beckham recognized the power of his celebrity but dutifully repeated that he was coming to America for the soccer. Of course, soccer has been billed as the Next Big Thing in the U.S. for nearly 40 years now, but with the storm of Beckham-related publicity—700 media credentials were issued for his introductory press conference alone—it seemed that critical mass had finally been reached. Or perhaps not. As portrayed in Grant Wahl’s sharply-reported “The Beckham Experiment,” the signing of David Beckham—who longed to conquer mythic America in the way the Beatles had in the 1960s— was an investment in both sizzle and steak. As a cultural icon, Mr. Beckham offered instant name recognition and star appeal that transcended sports to a degree that perhaps only Joe Namath had before. For serious soccer fans who had followed Mr. Beckham’s remarkable career as the anchor of club giants Manchester United and Real Madrid, and as the captain of the English national team, he provided Major League Soccer (MLS) with a shot of worldclass legitimacy. But the Beckham experiment—bring the world’s most famous athlete to the last major outpost of soccer apathy and see whether he can carry soccer to the center of the American sporting consciousness—ran into problems almost instantly. Mr. Beckham was injured for much of the 2007 season, and the momentum that greeted his arrival quickly fizzled. Nielsen ratings for MLS matches returned to microscopic levels, losing out to softball games and Scrabble tournaments. At the same time, there was a tumultuous battle going on for the soul of the Los Angeles franchise. Mr. Wahl, a writer for Sports Illustrated, documents the way that Mr. Beckham and his entourage influenced the direction of the team, usurping the power of Alexi Lalas, the Galaxy’s president and general manager. But the most compelling story is the culture clash going on within the club, where Mr. Beckham, with annual earnings of $50 million a year, was asked to find common ground with teammates often making $30,000 or less. (Alan Gordon has worked part-time coaching a girls soccer team to make ends meet.) Among Mr. Beckham’s teammates was also, though, America’s highest-profile soccer star, the forward Landon Donovan. What gives “The Beckham Experiment” its punch is Mr. Donovan’s outspoken honesty—he relayed his frustrations to Mr. Wahl on the record throughout Mr. Beckham’s first two seasons with the club. Mr. Donovan has earned headlines in recent weeks for the comments that appear in the book (which he doesn’t deny but now says he regrets): He is quoted questioning Mr. Beckham’s leadership, professionalism and sincerity. In sports parlance, he has thrown his more celebrated teammate under the bus. I Associated Press The attempt to boost a franchise and give soccer a higher profile in the U.S. For longtime soccer fans, there is irony in watching the high-revving, somewhat thin-skinned Landon Donovan taking David Beckham to task; it’s a little on the order of Beyoncé complaining that Madonna can be such a diva. But it takes one to know one, and Mr. Donovan, it must be said, has earned the right to speak: He is arguably the most accomplished soccer player in American history. He was brilliant in the USA’s surprise run to the championship game in last month’s Confederations Cup—and all evidence suggests that he has been the Galaxy’s best player, even on the rare occasions when Mr. Beckham has been healthy. The dynamics of any pro sports team centers on respect, and there is evidence to suggest that Mr. Beckham and his entourage brought a patronizing attitude to American soccer. Some of this is understandable. Major League Soccer—in its payrolls, its travel accommodations and its schedule (which causes its best players to miss league matches for international duty)—is still not really a major league. And as Mr. Wahl notes, American players continue to struggle in topflight European leagues. Alas, tens of millions of U.S. soccer moms have left quite a carbon footprint shuttling their kids to games and yet haven’t produced a single first-class, world-wide soccer superstar. Mr. Donovan has the talent to be that player but has not played well during his stints in Europe. That has brought him back to America—and to the clash of wills with Mr. Beckham. So far, the Beckham experiment has been a cautionary tale of hubris and mismanagement, cultural miscommunication, and the ineluctable truth that, in true sports, there is no script. But there might still be hope. For starters, it could be that the challenge Mr. Wahl describes Mr. Beckham taking on (“to make soccer matter on a regular basis in the U.S.”) has been met. A generation of U.S. soccer fans walk around American cities in Barcelona and Liverpool jerseys; they buy pricy imported English soccer magazines and spend too many workday afternoons in the spring monitoring minute-by-minute Champions League match reports on the Guardian’s Web site. In the past, they simply haven’t followed the MLS. But now they have a team drama straight from one of the top European leagues—two nervy stars, with egos to match, who must learn to exist in harmony on the field. Mr. Beckham, back from a five-month loan to a Milan team and from international duties with England, returns to the field tomorrow, when the Galaxy travel to East Rutherford, N.J. In the wake of Mr. Wahl’s highly readable book, both Messrs. Beckham and Donovan have reputations on the line. Mr. MacCambridge is the co-author, with Brian Billick, of “More Than a Game: The Glorious Present and Uncertain Future of the NFL,” to be published in September by Scribner. Universal Health Care Isn’t Worth Our Freedom By Thomas Szasz P eople who seek the services of auto mechanics want car repair, not “auto care.” Similarly, most people who seek the services of medical doctors want body repair, not “health care.” We own our cars, are responsible for the cost of maintaining them, and decide what needs fixing based partly on balancing the seriousness of the problem against the expense of repairing it. Our health-care system rests on the principle that, although we own our bodies, the community or state ought to be responsible for paying the cost of repairing them. This is for the ostensibly noble purpose of redistributing the potentially ruinous expense of the medical care of unfortunate individuals. But what is health care? The concept of reimbursable healthcare service rests on the premise that the medical problem in need of servicing is the result of involuntary, unwanted happenings, not the result of voluntary, goal-directed behavior. Leukemia, lupus, prostate cancer, and many in- fectious diseases are unwanted happenings. Are we going to count obesity, smoking, depression and schizophrenia as the same kinds of diseases? Many Americans would willingly pay for insurance to protect them against the exorbitant cost of treating their own leukemia. But how many Americans would willingly pay for insurance to protect them from the expenses of treating their own depression? What would Thoreau have made of the current debate? Everyone recognizes that the more fully we wish insurance companies to defray our out of pocket expenses for our car repairs, the higher the premium they will charge for the policy. Yet foregoing reimbursement for trivial or unnecessary health-care costs in return for a more suitable health-care policy is an option unavailable under the present system. Every- one with health insurance is compelled to protect himself from risks, such as alcoholism and erectile dysfunction, that he would willingly shoulder in exchange for a lower premium. The idea that every life is infinitely precious and therefore everyone deserves the same kind of optimal medical care is a fine religious sentiment and moral ideal. As political and economic policy, it is vainglorious delusion. Rich and educated people not only receive better goods and services in all areas of life than do poor and uneducated people, they also tend to take better care of themselves and their possessions, which in turn leads to better health. The first requirement for better health care for all is not equal health care for everyone but educational and economic advancement for everyone. Our national conversation about curbing the cost of health care is crippled by the vocabulary in which we conduct it. We must stop talking about “health care” as if it were some kind of collective public service, like fire protection, provided equally to everyone who needs it. No gov- ernment can provide the same high quality body repair services to everyone. Not all doctors are equally good physicians, and not all sick persons are equally good patients. If we persevere in our quixotic quest for a fetishized medical equality we will sacrifice personal freedom as its price. We will become the voluntary slaves of a “compassionate” government that will provide the same low quality health care to everyone. Henry David Thoreau famously remarked, “If I knew for a certainty that a man was coming to my house with the conscious design of doing me good, I should run for my life.” Thoreau feared a single, unarmed man approaching him with such a passion in his heart. Too many people now embrace the coercive apparatus of the modern state professing the same design. Dr. Szasz is emeritus professor of psychiatry at Upstate Medical University in Syracuse, New York. He is author of “The Myth of Mental Illness,” among other books (HarperCollins, 1961). 6606709 P2JW19600D-0-A01300-1--------XA BLACK P2JW19600E-5-A01400-1--------XA ***** BLACK 07/15/2009 AZ,CL,CX,DL,DX,EE,FL,HO,MW,NC,NE,NY,RM,SA,SC,SL,SW,WB,WE P2JW19600E-5-A01400-1--------XA * * * * * A14 Wednesday, July 15, 2009 THE WALL STREET JOURNAL. OPINION REVIEW & OUTLOOK LETTERS TO THE EDITOR A Tale of Two Bailouts esterday saw one TARP recipient, quarter from taking advantage of spreads Goldman Sachs, report $3.44 billion left wide by the disappearance of some comin profits even as another, CIT, teeters petitors (Lehman, Bear Stearns) and the risk aversion of others (Morgan on the edge of either bankStanley). Meantime, Goldruptcy or another taxpayer Goldman’s profits, man’s own credit spreads bailout. The feds were negoCIT’s trouble, over Treasurys have nartiating a rescue last night as rowed as the market has we went to press, but its and ‘too big to fail.’ priced in the likelihood that very plight shows how the the government stands begovernment’s approach to systemic risk has created groups of financial hind the risks it is taking in its proprietary trading books. “haves” and “have nots.” Goldman will surely deny that its risk-takWhat the Goldmans of the world have in addition to profits is the widespread belief that ing is subsidized by the taxpayer—but then they are too big to fail. Both Goldman and CIT so did Fannie Mae and Freddie Mac, right up converted into bank holding companies at to the bitter end. An implicit government the height of the financial panic last fall, guarantee is only free until it’s not, and when which made them eligible for TARP injec- the bill comes due it tends to be huge. So for tions. Goldman also benefited at a crucial mo- the moment, Goldman Sachs—or should we ment from the Federal Reserve takeover of say Goldie Mac?—enjoys the best of both AIG, and it received the additional filip of worlds: outsize profits for its traders and FDIC-guaranteed debt issuance through the shareholders and a taxpayer backstop should Temporary Liquidity Guarantee Program. anything go wrong. We like profits as much as the next capitalCIT was excluded from the latter program on grounds that it didn’t pose a systemic risk, ist. But when those profits are supported by even as larger competitors like General Elec- government guarantees or insured deposits, taxpayers have a special interest in how the tric were allowed in. CIT’s asset quality has since fallen further, companies conduct their business. Ideally and it now faces $2.7 billion in maturing debt we would shed those implicit guarantees altothis year that investors fear it will not be able gether, along with the very notion of too big to roll over. So it is seeking another taxpayer to fail. But that is all but impossible now and rescue, and officials at Treasury and Fed are for the foreseeable future. Even if the Obama Administration and Fed were to declare with sympathetic. But if CIT—a company one-tenth the size one voice that banks such as Goldman were of Lehman Brothers—can be bailed out long on their own, no one would believe it. If there is a lesson in this week’s tale of after the panic has passed, the word “systwo banks, it’s that it won’t be enough to give temic” has lost all meaning. CIT has long been a lender to subprime corporate borrow- the Federal Reserve a mandate to “monitor” ers, and this decade it took on even greater systemic risk. Last fall’s bailouts are reverrisks at precisely the wrong time. It has lost berating through the financial system in a way that is already distorting the competimoney for eight straight quarters. Its lending tion for capital and financial market share. supports less than 1% of the total U.S. retail Banks that want to be successful will also and manufacturing, and plenty of competiwant to be more like Goldman Sachs, creattors could pick up its market share. ing an incentive for both larger size and more There’s also a question of why the FDIC— risk-taking on the taxpayer’s dime. which is supposed to protect bank depositors— One policy response to the incentives creshould be the rescue agent. CIT’s bank is only ated by last fall’s bailout is simply to restrict a small part of the company and is so far the proprietary trading done by the subsidiarwalled off from trouble. CIT executives want ies of bank holding companies that enjoy permission to stuff some of the company’s as- both FDIC deposit insurance and an implicit sets into the bank so they can finance them government subsidy on their cost of capital. with brokered deposits. But that would put This is what Paul Volcker proposed, only to the FDIC’s deposit fund at greater risk just be overruled by Tim Geithner and Larry Sumwhen it is stretched from other bank failures. mers. Another answer would be an FDICThe FDIC should also be winding down its style bailout tax, perhaps tied to leverage radebt guarantee program, not extending it to tios, for those in the too-big-to-fail camp. Denew and riskier companies. Taxpayers veloping a template to facilitate the seizure shouldn’t be put at risk for further losses via and orderly winding down of failing financial the FDIC merely because Treasury and the giants is also an essential element of whatFed don’t want to admit losses on their TARP ever reform Congress cooks up. investment. i i i Of course, if the feds do let CIT fail, this No one welcomes the pain and dislocation will only confirm that the only certain survi- if CIT files for bankruptcy. But U.S. policy tovors in the current market are banks big ward financial companies cannot avoid all enough that the government figures it must hardship, or the result will be a de facto cartelbail them out. Just ask the many small banks ization of finance, with a resulting loss of that have been rolled up by the FDIC at a rate competition and dynamism that have long of two a week since the beginning of the year, been an American strength. The divergent with eight so far in July alone. That can only fortunes of CIT and Goldman Sachs show strengthen the likes of Goldman, which appar- how much we changed when we stepped in to ently needs no help printing money anyway. save certain banks in the name of saving the Goldman’s traders profited in the second system. We Are Protecting All Our Citizens, Uighur and Han The Chinese government and people are very much displeased with the Journal’s decision to publish Rebiya Kadeer’s “The Real Story of the Uighur Riots” (op-ed, July 8), which is full of political lies and separatist rhetoric that are schemed to mislead the American public. What is the truth about the July 5 rioting that ravaged Urumqi, capital city of China’s Xinjiang Autonomous Region? On that tragic day, highly violent crimes involving beating, smashing, looting and arson took place. A large number of innocent civilians and armed policemen of both Han and Uighur Chinese were killed and many others were injured. These were premeditated and organized crimes of violence, directed and instigated by separatists abroad and organized and carried out by separatists inside the country. The World Uighur Congress (WUC), an overseas organization headed by Rebiya Kadeer, was behind the riots. These elements made an issue of an incident on June 26—a brawl between workers from Xinjiang and local workers, an ordinary case of public disorder—in Shaoguan, Guangdong Province to vilify China's ethnic and religious policies for the purpose of creating publicity and stirring up trouble. Some people with ulterior motives inside China acted in collusion with the WUC. They played up the Shaoguan incident and made a lot of noise on the Internet, calling for an unlawful gathering at key downtown areas in Urumqi on the evening of July 5, to answer the call from the WUC for a demonstration and to “be braver” and to “do something big.” Rebiya Kadeer clamored for “a big event in Urumqi on 5 July” and urged people to “follow closely the developments and collect relevant information.” Hundreds of people gathered at the dictated time and areas, and started beating, smashing and looting at about 8:18 p.m. The rioters began their barbaric sabotage of arson and killing, wreaking havoc in streets, alleys and the area connecting the city and the countryside. They tried to kill any Han person within sight, and smashed and set fire to stores and vehicles. The government of the Xinjiang Uighur Autonomous Region speedily deployed police to those places where the situation was grave. The police sent in small teams to rescue people across the downtown area and search for criminals. The public security authority has arrested and detained over 1,000 suspects who will be dealt with in accordance with the law. The violent crimes committed by the outlaws in Urumqi have inflicted heavy losses in life and property. According to figures as of July 13, at least 184 people were killed, of whom 137 people were Han Chinese, 46 Uighur Chinese and one Hui Chinese. A total of 1,680 people were injured, of whom 939 are hospitalized, with 216 of them seriously injured and 74 on the verge of death. Property losses are huge. Public life and order in Urumqi have now returned to normal. History has repeatedly shown that stability is a blessing and chaos is disaster for people of all ethnic groups in Xinjiang. We are unequivocally against ethnic separatism, terrorism, extremism and violence committed in whatever name. Unity among people of all ethnic groups, social harmony and stability represent the highest interests of the Chinese nation, the 21 million people of all ethnic groups in Xinjiang included. The Chinese government’s actions against the Urumqi rioting are completely lawful and justified. It is doing what any responsible government is obliged to do under any similar situation, and will redouble its effort to ensure that people of all ethnic groups will continue to work as one for common prosperity and development. In the past few days, Rebiya Kadeer and her like have been exceptionally active in spreading political lies. Their trick is to try to clear themselves of their evil acts, mislead the international community, and win its sympathy and support by playing the “victim card,” and disguising mobsters as the “underprivileged” and “peaceful protestors.” At the same time, they are tarnishing the Chinese government’s ethnic policies, sabotaging national unity and continuing their separatist activities by fanning hatred between the people of Han and Uighur Chinese. Rebiya Kadeer’s various claims on the death toll of the Uighur Chinese in the rioting have been rejected by international media. We sincerely hope that the American public will see the true nature of people who are committed to violence and separatism, and understand and support the justified measures taken by the Chinese government in restoring law and order and safeguarding China's sovereignty and territorial integrity. Wang Baodong Spokesman Chinese Embassy Washington Y It Is Important to Get Nuclear Weapons Policy Right Prof. Keith B. Payne’s superb analysis of the arms control aspects of the president’s Moscow visit (“Arms Control Amnesia,” op-ed, July 7) makes a point that all those who argue for a nuclear-free world would do well to consider: Given Russia’s perhaps 10 to one numerical advantage over the U.S. in tactical nuclear weapons, the administration—if it hopes at some point to negotiate a reduction in this disparity—“must maintain negotiating leverage in the form of strategic launchers and weapons.” In other words, don’t accept the Russian demand that negotiations be limited to reductions in strategic weapons and launchers. The U.S. maintenance of substantial numbers of strategic weapons and launchers must be maintained for some time to come. In all my time in government, I never completely understood the mind set of those who negotiated on the very complicated issues involved in nuclear arms control. Specifically, they often seemed to believe there was no tomorrow. Prof. Payne’s article raises that issue for me again. The bipartisan failure to prevent North Korea from becoming a nuclear weapons state, and the almost certain failure of this administration and other pusillanimous states to prevent Iran from soon joining that group, lead me to wonder about the wisdom of agreeing to further reductions in our nuclear forces when such a commitment limits us, no matter what other nations aside from Russia may do. Admittedly, it will be some months before Iran will successfully deploy a weapon or two, and some years (I hope) before North Korea has much of an inventory. The point is, the genie is out of the bottle. It is now clear that the only constraints on nations that wish to join the nuclear club are access to money and technology. An American administration may yet come along that might be able to stop this slide toward international chaos, but I don’t count on it. There is a Nuclear Posture Review underway in the Pentagon which may consider what impact the increase in numbers of nuclear weapons states could have on the future of our negotiating posture. If by chance it does consider the question, it will not have cast much light if it simply finds that, since the immediate impact is negligible, negotiations can proceed. We are a nation that takes our international commitments seriously. Once we have accepted numerical limits on our nuclear forces by treaty, how do we cope with changes in the global balance of forces even if it is some years down the road? I believe this to be a question deserving of an answer. Lawrence S. Eagleburger Charlottesville, Va. Mr. Eagleburger served as secretary of state under President George H.W. Bush. Defining Activism Down A fter two days of Senate hearings on troversial remark that a “wise Latina” would the nomination of Sonia Sotomayor, make better decisions than a white male, an onlooker could be forgiven for won- Judge Sotomayor backed away from the statement, calling it a “bad” dering where all the judicial play on the words of Sandra liberals went. To hear the adA liberal vote cast Day O’Connor that a wise jectives heaped on the judge in conservative old man and a wise old by members of the Presiwoman would reach the dent’s party, you’d think Mr. judicial rhetoric. same conclusion. Still, she Obama had nominated Chief insisted, she was trying to Justice John Roberts’s coninspire Hispanic law students “to believe servative cousin. Judge Sotomayor is smart and accom- that their life experiences would enrich the leplished, New York Democrat Chuck Schumer gal system, because different life experisaid Monday, “but most important . . . [her ences and backgrounds always do.” Democrats emphasize that Judge Sotorecord] bespeaks judicial modesty” and shows she is a better “umpire” than Justice mayor’s record on the bench shows she is a Roberts himself. Dick Durbin called her “re- moderate whose decisions were frequently strained, moderate and neutral,” while Pat in step with her colleagues on the Second CirLeahy said her record shows a “careful and re- cuit Court of Appeals. According to a study by strained judge with a deep respect for judi- the left-leaning Brennan Center for Justice, Judge Sotomayor voted with the majority in cial precedent.” The activists in Mr. Leahy’s rhetorical 98.2% of her 217 constitutional cases, dissentshow are, presto, the conservatives of the ing only four times. Falling within the mainstream of liberal Roberts Court, which has very, very cautiously chipped away at some precedent in judges, however, is not the same as falling cases on issues like the Second Amendment into the mainstream of the rest of the country. The judge’s decision to deny a racial bias and campaign finance reform. Under this brave new meaning of judicial claim by white firefighters was overturned by the Supreme Court in activism advanced several years ago by nowRicci v. DeStefano last White House aide Cass Sunstein, a judicial acmonth. Afterward, a Rastivist is any judge invalidating a federal law, mussen poll found that 46% however shoddily made. Ergo, conservative of voters considered her a judges are obliged to uphold liberal precepolitical liberal compared dents no matter how narrow the vote and to only 32% who thought how recent the case, while liberals can overshe was a moderate. Justurn long-time principles in the name of the tices shouldn’t be conevolving Constitution. firmed based on polls, but The effect is a liberal ratchet, where precethe numbers do explain the dents like Miranda v. Arizona and Roe v. concerted Democratic atWade are cast in stone, but any rethinking by Sonia tempts to define her as a conthe Roberts Court of the six-year-old 5-4 camSotomayor servative. paign-finance ruling in McConnell v. FEC is a In fact, what was once the Felix Frankscandal. “So many of the rulings of the current conservative majority on the Supreme furter-Whizzer White school of liberal judiCourt can be described as activist,” Wiscon- cial restraint no longer exists in the polite echsin Democrat Russ Feingold insisted. “The elons of the judicial left. The new school is best definition of a judicial activist is when a now remarkably uniform in wanting to dicjudge decides a case in a way you don’t like.” tate racial outcomes, limit political speech, inActually, we have a better one. An activist voke foreign rulings as a legal guide, and do judge is one who is willing to decide cases whatever else the activist cause of the mobased on something other than what’s in the ment demands. Judge Sotomayor gives every sign of being Constitution. But that’s a troublesome standard for Sonia Sotomayor, who in speeches of that school, and there’s little reason to beand writings has shown she is open to a wide lieve she wouldn’t be a reliable liberal vote on variety of sources, from human empathy to every important issue. Elections have consepersonal experience to foreign and interna- quences, and Justice Sotomayor is almost certional law to help her in judging cases, or to tain to be confirmed. But for a President who “set our creative juices flowing,” as she said was elected on the promise of moving beyond of the latter. old racial divisions, Mr. Obama’s first SuUnder questioning yesterday on her con- preme Court nominee looks jarringly passé. BLACK Economics Isn’t Jesus’s Main Focus Regarding Tyler Cowen’s “Vaticanomics: The Holy Father Tackles Globalization” (Houses of Worship, July 10): True to his master’s calling (that would be Jesus Christ, in case Mr. Cowen needs a refresher), Pope Benedict XVI is calling for a change in men’s hearts and minds so that they may reflect their inward spiritual growth outward for positive change in their own societies. This is the goal that has always been set forth for every Christian. Likewise, Mr. Cowen’s sneers about China and India being ignored show his lack of understanding that the pope holds his goals for “all men of good will,” meaning the entire world. Jesus did not preach against slavery or the Roman government’s economic plan, and then put forth a blueprint for men to achieve ecomomic gains. He was after something more ethereal and infinitely more precious, men’s hearts and souls. Thus, Pope Benedict follows in Jesus’s footsteps in his encyclical. It is both sad and telling that Mr. Cowen expected otherwise. He would do well to read and reflect upon Father Robert Sirico’s op-ed, “The Pope on ‘Love in Truth’ ” (July 10), in your publication, which reminds those who need it that “to this pope’s mind, there is no just or moral system without just and moral people.” Julie Davis Dallas Power to Regulate Is The Power to Destroy Your June 30 editorial “Spitzerism Revisited” brings to mind the opinion of Chief Justice John Marshall in McCulloch v. Maryland that the power to tax is the power to destroy. One hundred and ninety years later, it does not seem to have occurred to Justice Antonin Scalia and the four liberal justices that the power to regulate can be equally destructive. Fred Rothzeid Cincinnati CORRECTIONS A photo that ran with our July 11 review of books on the 1969 moon landing featured, from left to right, Neil Armstrong, Michael Collins and Buzz Aldrin. The accompanying photo caption had transposed the names of Messrs. Collins and Aldrin. i i i Iraq Needs More Private Investment I disagree with John Nagl and Daniel Rice’s “A Jump Start for Iraq’s Private Sector” (op-ed, July 7), in which they urge the U.S. government to “open 10 $25 million enterprises” in Iraq to advance private investment in the country and to grow its economy. Given the administration’s intent to withdraw all U.S. forces by the end of 2011, creating U.S. government-sponsored enterprises (GSEs) “strategically located throughout the country” would send conflicting messages to the Iraqi people and the region at large. In addition, the political (mis) management and uninspiring record of existing GSEs are reasons to think deliberately before pursuing similar ventures. More investment in Iraq would do its economy good, but it would be wiser to leave the execution of forprofit endeavors to private investors with regional knowledge and industry expertise. Mr. Rice must know the many opportunities in Iraq available to private investors. After all, it is his private equity firm that invested in the Harir Tomato Paste factory which he and Mr. Nagl cite so prominently. Captain Matthew Freund U.S. Army Baghdad Liz Cheney was deputy assistant secretary of state under George W. Bush. An op-ed by Ms. Cheney on Monday misstated her title. Letters intended for publication should be addressed to: The Editor, 1211 Avenue of the Americas, New York, NY 10036, or emailed to wsj. ltrs@wsj.com. Please include your city and state. All letters are subject to editing, and unpublished letters can be neither acknowledged nor returned. 6606710 P2JW19600E-5-A01400-1--------XA P2JW19600F-0-A01500-1--------XA BLACK 07/15/2009 AZ,CL,CX,DL,DX,EE,FL,HO,MW,NC,NE,NY,RM,SA,SC,SL,SW,WB,WE P2JW19600F-0-A01500-1--------XA Wednesday, July 15, 2009 THE WALL STREET JOURNAL. A15 OPINION The Bernanke Market By Andy Kessler remember once buying the stock of a small company and I couldn’t believe my luck. Every time my fund bought more shares the stock would go up. So we bought even more and the stock kept climbing. When we finally built our full position and stopped buying the stock started dropping, ending up at a price below where we started buying it. We were the market. Just about every policy move to right the U.S. economy after the subprime sinking of the banking system has been a bust. We saved Bear Stearns. We let Lehman Brothers go. We forced Merrill Lynch, Wachovia and Washington Mutual into the hands of others. We took control of Fannie and Freddie and AIG and even own a few car companies, pumping them with high-test transfusions. None of this really helped. I The Dow Tracks the Money Supply Dow Jones Industrial Average (left scale) vs. the WSBASE* (Right scale), January-July 2009 9000 DJIA 8500 1750 8000 1700 1650 7500 1600 7000 WSBASE: Reserves and Monetary Base 1550 1500 1450 1400 February March April May June July $1850 1800 6500 6000 January 2009 * St. Louis Weekly Reserves and Monetary Base - Sum of currency in circulation, reserve balances with Federal Reserve Banks, and service-related adjustments to compensate for float (in billions). Source: Federal Reserve Bank of St. Louis We won’t get real growth until Congress and Treasury get policy right. We have a zero interest-rate policy. We guaranteed bank debt. We set up the Troubled Asset Relief Program (TARP) to buy toxic mortgage assets off bank balance sheets. But when banks refused to sell at fire sale prices, we just gave them the money instead. Dumb move. So we set up the Public-Private Investment Program to get private investors to buy these same toxic assets with government leverage, and still there are few sellers. Meanwhile, the $1 trillion federal deficit is crowding out private investment and the porky $787 billion stimulus hasn’t translated into growth. At the end of the day, only one thing has worked—flooding the market with dollars. By buying U.S. Treasuries and mortgages to in- crease the monetary base by $1 trillion, Fed Chairman Ben Bernanke didn’t put money directly into the stock market but he didn’t have to. With nowhere else to go, except maybe commodities, inflows into the stock market have been on a tear. Stock and bond funds saw net inflows of close to $150 billion since January. The dollars he cranked out didn’t go into the hard economy, but instead into tradable assets. In other words, Ben Bernanke has been the market. The good news is that Mr. Bernanke got the major banks, except for Citigroup, recapitalized and with public money. June retail sales rose 0.6%. Housing starts jumped 17% month to month in May and will likely be flat for June. Second quarter GDP may be slightly up. And he was successful in spreading a “green shoots” psychology throughout the media. But the real question is, now what? Government interventions are only meant to light a fire under the real economy and unleash what John Maynard Keynes called our “animal spirits.” But government dollars can’t sustain growth. Like it or not, the stock market is bigger than the Federal Reserve and the U.S. Treasury. The stock market anticipates only future profits and prosperity, not government-funded starter fluid. You can only fool it for so long. Unless there are real corporate profits from sustainable economic growth, the stock market is not going to play along. It’s the ultimate Enforcer. I n mid-May, Mr. Bernanke’s outlook seemed to change. Maybe he didn’t approve of the sharp housing rebound—like we need more houses! Maybe he saw inflation in commodity prices—oil popping to $72 from $35. Or, more likely, he finally realized that he was the market and took his foot off the money accelerator, as evidenced in the contracting monetary base (see nearby chart). Sure enough, things rolled over—the market dropped 7.5% from its peak, oil prices dropped almost 17%, and even gold has lost some of its luster. But in July, the Fed started buying again and the market rallied. Can the U.S. economy stand on its own two feet without Mr. Bernanke’s magic dollar dust? Eventually, but apparently not yet. Unemployment stubbornly hit 9.5% in June, according to the Bureau of Labor Statistics. Housing prices are still dropping, albeit at a slower pace, and foreclosures are still rampant. But I think what really bothers the market is that the structural problems that got us into trouble in the first place still exist. We took the easy way out and, with the help of Treasury Secretary Tim Geithner’s loose “stress tests,” swept banking problems under the carpet. We waved off mark-to-market accounting and juiced bank stock prices to help them recapitalize, but all those toxic mortgage assets on bank balance sheets are still there as anchors on lending. All the pump priming and stock market flows didn’t get rid of them. Hats off to Mr. Bernanke for getting the worst behind us. He’ll be pressured politically to keep pumping out dollars, but he should resist the urge. The stock market will ignore his dollars if it doesn’t believe they’ll turn into real profits. Green jobs and government health-care clerks do not make a productive, sustainable economy. That can only come from innovative companies with access to growth capital. The stock market won’t turn bullish until it sees that type of economy. Again, when it’s clear that you are the market you have to stop buying and begin tackling the hard stuff. By not restructuring banks, by not getting bad loans off bank balance sheets, by not standing up to the massive increases in government debt crowding out private capital, the Fed and Treasury are holding back real economic growth. Mr. Kessler, a former hedge-fund manager, is the author of “How We Got Here” (Collins, 2005). Health Reform Requires Lawsuit Reform By Philip K. Howard C ontaining health-care costs is impossible under the current legal structure. That fact has to be addressed if President Barack Obama is to create an affordable health-care system that is accessible to everyone. Every incentive in the system now is to do more—that’s how doctors get paid and that’s how doctors get protected from lawsuits. Billions of dollars are wasted in “defensive medicine.” Bureaucracy built up over decades diverts resources from patient care to mindless compliance. Forms are everywhere. The only path to affordable health care is a basic overhaul to realign incentives. The new ideas are out there— for example, creating a reimbursement model that rewards effective care, and restoring trust in the reliability of justice by creating special health courts. Overhaul, however, requires letting go of the old ways. Congress is perfectly willing to come up with new programs and introduce new taxes to pay for ever-rising health-care costs. But Congress seems unwilling to make hard choices. Like a crash in slow motion, you can see Congress tumbling down toward the lowest common denominator—a reform package that will do little to contain costs, but will offend the least number of special interests. But tort lawyers are the one special interest Democrats won’t offend. Studies have repeatedly demonstrated that the current ad hoc system of justice, with verdicts that vary widely from one jury to the next, has spawned a culture of legal fear and self protection. Studies also show that the system fails injured patients—a claim takes an average of five years to resolve and nearly 60 cents out of every dollar spent in the malpractice system ends up going to lawyers or administrative costs. That’s why most of the important health-care constituencies, from the American Medical Association to AARP, favor creating pilot projects for special health courts. Mr. Obama has recently talked about the need “to explore a range of ideas about how to . . . scale back the excessive defensive medicine.” But one interest group hates the idea. You guessed which one. Sen. Mike Enzi (R., Wy.) discovered just how powerful the trial lawyers are when he proposed creating health court pilot projects. His proposal was only to permit experiments, not broad-scale tort reform, and it had been developed with Sen. Max Baucus (D., Mt.), chairman of the Finance Committee. But when Mr. Enzi offered this modest proposal, other members of the Senate Committee on Health, Education, Labor and Pensions killed the idea, declaring that the Constitution requires juries to be the ultimate decision maker in civil lawsuits. That’s not true. Special courts without juries are common in America and include courts for bankruptcy, tax disputes, workers compensation and more. America has a long history of using expert courts when there is a need for expertise and consistency. It’s hard to imagine any area that needs consistent justice more than health care. The senators weren’t willing to discuss the merits of an expert court. The jury, as Sen. Sheldon Whitehouse (D., R.I.) put it, is “our protection against tyranny of the majority.” But that’s not true either, at least not for civil cases. In private lawsuits, juries have the limited role of deciding disputed issues of fact. “What is the object of the jury trial?,” asked John Marshall in the debates over ratifying the Constitution. Marshall, the future chief justice of the U.S. Supreme Court, then answered his own question: “To inform the court of the facts.” It is the judge who is tasked with drawing legal boundaries that determine who can sue for what. Those boundaries are precisely what’s missing in deciding whether doctors have abided by accepted standards of care. At the hearing, Mr. Whitehouse warned that “we take enormous risks as a country if we interfere with the institution of trial by jury.” Actually, the enormous damage of unreliable justice is visible all around American society—in playgrounds stripped of athletic equipment (contributing to the epidemic of obesity), in schools where disorder is the norm because of loss of teacher authority, and in a health-care system that squanders resources practicing unnecessary defensive medicine. Fear is the tool not of leadership but of the status quo. It could hardly be easier to scare people into keeping programs and institutions the way they are. But that only delays the day of reckoning. Congress is mortgaging our children’s future. Cost containment must be a goal. Protecting trial lawyers is not the solution. Mr. Howard, a lawyer and author, is chairman of Common Good (www. commongood.org). The Tragedy of Michael Jackson By Bill Wyman A m I the only one who sensed, amid the raucous hoopla that followed Michael Jackson’s death, something antiquated in the air? The hip-hop era, profane and insistent, continues with little obvious influence owed to the supposed King of Pop. Superstar franchises like Bruce Springsteen, the Police and the Rolling Stones efficiently sweep across the world’s stages, pulling in $300 million, $400 million, even a half billion dollars. Jackson barely appeared live in the last dozen years of his life. Jackson’s fame was a simulacrum from another era—or eras, to be precise, because he managed to glide effortlessly out of the slightly musty world of 1970s soul into the bright and incandescent MTV age of the early ’80s. But that was more than 25 years ago, before Public Enemy or Nirvana, before Eminem, Jay Z or Lil Wayne. There was another way Jackson seemed from a previous time. And that is the obsession with victimhood that ran through all of the commentary and memorials that followed his death. Marlon Jackson, one of the original members of the Jackson Five, gave this version of his late brother’s life at the memorial service: “Being judged, ridiculed—how much pain can one take? Maybe now, Michael, they will leave you alone.” The Rev. Al Sharpton got the crowd cheering with his litany: “He outsang his cynics, he outdanced his doubters, he outperformed the pessimists. Every time he got knocked down he got back up!” Even the head of AEG, the promoter of the series of London concerts Jackson was set to perform, hit this note in Billboard: “To me, the success of [the memorial] is measured by the fact that I think we were able to really humanize my friend and erase those caricatures that the press had created of him.” From Brooke Shields to Rep. Sheila Jackson Lee (D., Texas) everyone was on message, echoing the talking points Jackson himself threw up in the shadowy years before his death. Somehow or other Jackson convinced himself— and seemingly, his family and partisans—that he wasn’t a powerful musical superstar. He was instead a victim of some mysterious stew of health maladies, public persecution, and secret sadnesses that, we were to understand, made this frail man-child shiver with fear. The reality is different. Yes, Jackson grew up in a working-class black family during the 1960s. His father by his own account did not spare the rod. According to the Jackson children, he overused it. And touring with a group of randy older brothers who (Jackson said later) bedded groupies in the hotel rooms they shared after warning a cowering Michael to keep his eyes closed was not a great environment for a preteen. The self-proclaimed King of Pop was nobody’s victim. On the other hand, young Michael had a recording contract at 10 and was a star at 11. (Not many 12-year-olds get six-figure royalty checks in the mail.) His group, the Jackson Five, enjoyed an impressive burst of fame. From there Jackson had continuing hits as a child solo artist. And after a disruptive but smart break from Motown, he had more hits with his brothers, rechristened as the Jacksons. His first adult solo record, “Off the Wall,” (Epic) was an immediate smash and was hailed, then as now, as perhaps the greatest dance-pop record of all time. His second adult solo record was called “Thriller” and, well, you know that story. If you’re still looking for clouds in Michael Jackson’s life, they are hard to find. It’s said, for example, that his record label gave him some grief about hiring Quincy Jones to produce his solo albums. And Jackson was apparently miffed that “Off the Wall” didn’t win enough Grammys. He certainly could not have complained about the reception “Thriller” received. With “Thriller” behind him, Jackson was 24. All that was required of him was to maintain credibility with his fans and continue making respectable albums. Stevie Wonder had demonstrated how effective that road was. Mr. Wonder, with little of Jackson’s PR manipulations, was able to pull off sales stunts like having an album debut at No. 1 on the Billboard chart—a virtually unprecedented achievement in the 1970s. And he dominated the Grammys for years. Rather than focusing on his music, Jackson began to obsess about his appearance. He altered his features, at first slightly, then eerily. His imagemaking began to shift, too. The sexy and charming young man on the covers of “Off the Wall” and “Thriller” was suddenly “Bad,” as the title of his next album insisted. Then he was “Dangerous,” as the next one claimed. It felt shrill and forced. In “Man in the Mirror” he said he was going to take a look at himself and “make a change.” It was an odd declaration for a guy who’d been embarking on a plastic-surgery regimen extreme even by entertainment-industry standards. Jackson still sold records, but it was clear he was no longer the music’s biggest star. That’s when he began strong-arming compliant entertainment news outlets to call him “the King of Pop.” It was the start of his relentless devotion to trying to convince the world of how famous he was. He developed a fondness for walking around in front of a large band of what seemed to be Central American military personnel; this was in the ’80s, the era of Salvadoran juntas and assassinations of priests and nuns. One album, “HIStory,” featured an enormous Soviet-style Jackson statue on the cover. Replicas of it were set up when he made public appearances. Then Jackson began to lose interest in his creative side altogether. He managed to release but two CDs of new material in the last 18 years of his life. He toured the world twice during that time, but somehow, besides a couple of shows in Hawaii, managed to miss the United States. His last coherent series of stage appearances was in 1997. You have to ask: What did Michael Jackson do all day? Well, he evidently spent a lot of time ingratiating himself into families with young kids, notably boys, some of them ill. He had them over for sleepovers, sometime private ones. Then he claimed to have fathered his own kids and blandly demurred when anyone pointed out that the children—how to put this?—were white. People who care about Jackson and loved his music—I’m one of them— should acknowledge that Michael Jackson had exactly one mortal enemy on earth, and that was Michael Jackson. He apparently had some mildly embarrassing medical afflictions like vitiligo. But, far more significantly, he apparently suffered from a psychological condition that made him want to alter himself physically—ultimately beyond repair. If only he had an enormous fortune, a large family, and an extraordinary network of famous friends to help him cope with those problems. Instead of turning to them, he chose to run away from his art, become a drug addict, ruin his personal reputation, dismantle a towering fortune, embark on transparently absurd PR campaigns, and turn himself into a world-class freak show. In the transfixing 2003 documentary “Living with Michael Jackson,” the star looks like nothing more than a latter-day Blanche DuBois, denying a sordid past and ultimately reality with a shake of his hair and a deranged titter. Jackson’s tragedy was almost entirely self-made. Even his complaints about the press ring hollow. It’s hardly sporting to complain about the dogs he unleashed for nosing around the spectacle he quickly became. All of these realities are ignored by the victim talk. It’s a cover for a terrible waste, and a lost chance to reflect on how not to live one’s life. Michael Jackson was older than Elvis when he died, but he died the same way: alone with the one person who could have saved him. Mr. Wyman, a former assistant managing editor of National Public Radio, blogs at Hitsville.org. Notable & Quotable Virgina Postrel writing in the Atlantic about kidney donation: [K]idneys are hard to come by. In the United States, more than 80,000 people are on the official waiting list, all hoping that someone will die in just the right circumstances and bequeath them the “gift of life.” Last year, only 16,517 got transplants: 10,550 with the cadaver organs allocated through the list, and 5,967 from living donors. More than 4,000 on the list, or about 11 a day, died. And the list gets longer every year. . . . With 300 million people in the United States, the numbers shouldn’t be so daunting. Eighty thousand people wouldn’t even fill the Rose Bowl. Surely we could find enough kidney donors to end the list. But solving that problem demands creativity, daring, and, above all, a sense of urgency—a radical break with the fatalism fostered by dialysis culture. Kidney patients ought to command the kind of outrage that demanded a cure for AIDS. The list doesn’t have to exist. It is a result not of medical necessity or economic constraints but of public ignorance, conscious policy, and complacent institutions. Too many people are suffering unnecessarily. . . . But very few people are willing to give someone a kidney without getting something in return. Last year, 106 people anonymously donated kidneys to transplant centers as nondirected donors; a few more gave kidneys to people they’d met online but hadn’t previously known. But almost all living donors are helping a relative or friend. Although many people call these donations “altruistic,” they in fact offer donors a substantial benefit: saving someone they care about . . . . The obvious solution . . . is, of course, money. Altruistic blood donors often receive freebies like movie tickets or paid vacation hours that would be illegal for kidney donors. Plasma and sperm donors routinely receive cash, as do egg donors and surrogate mothers, who get tens of thousands of dollars. If transplant centers could pay $25,000 or $50,000 to each living kidney donor, many more people would line up to contribute. Published since 1889 by DOW JONES & COMPANY Rupert Murdoch Chairman Leslie Hinton Chief Executive Officer and Publisher Robert Thomson Editor in Chief Gerard Baker, Deputy Editor in Chief Deputy Managing Editors: Michael W. Miller, Senior Deputy; Deborah Brewster, Nikhil Deogun; Alix M. Freedman; Alan Murray; Matthew J. Murray; F. James Pensiero; Michael Williams Paul A. 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Subscription Services: Call 1-800-JOURNAL, http://services.wsj.com 6606711 P2JW19600F-0-A01500-1--------XA BLACK P2JW196011-5-B00100-1--------XA ***** C M Y K Composite 07/15/2009 AZ,CL,CX,DL,DX,EE,FL,HO,MW,NC,NE,NY,RM,SA,SC,SL,SW,WB,WE P2JW196011-5-B00100-1--------XA J&J Profit Drops As Drugs Feel Pinch CORPORATE NEWS B4 s Copyright 2009 Dow Jones & Company, All Rights Reserved * * * * * Dell Sees Weakness In Tech Spending TECHNOLOGY B5 THE WALL STREET JOURNAL. Southwest Incident Renews Worries MARKETPLACE B6 Wednesday, July 15, 2009 B1 Intel Gives Upbeat Outlook as Sales Revive Chip Giant Posts Quarterly Loss After EU Fine but Sees Improving Demand for PCs; ‘A Nice Tailwind’ By Don Clark Intel Corp. provided fresh evidence that PC sales are rebounding for some vendors, though the company’s second-quarter results were marred by a rare loss due to a $1.45 billion antitrust fine. The Silicon Valley chip giant posted revenue and profit margins for the period ended June 29 that were much stronger than the first quarter. “While the global economic environment is still recovering, our customers signaled increased confidence” with their ordering patterns, said Intel Chief Executive Paul Otellini during a conference call Tuesday. Intel projected that revenue would expand further in the current period, with additional improvements in profit margins. The company’s stock jumped 7% in after-hours trading following the news to $18.02. It finished the 4 p.m. Nasdaq Stock Market session at $16.83. “These results really do show that the worst is behind for Intel,” said Doug Freedman, an analyst at Broadpoint AmTech. The company declared in April that the PC market had bottomed out, and suggested that revenue would be flat with the $7.1 billion reported in the first period. Analysts were expecting slightly better than that. Instead, Intel reported second-quarter revenue of $8.02 billion, up 13% from the first quarter though still 15% below yearearlier levels. The improvement in profitability was more dramatic; Intel in April projected a gross margin percentage for the second quarter in the “mid-40s,” but Tuesday reported 50.8%. The company’s remarks contrast sharply with those of Dell Inc., which is second to HewlettPackard Co. in global PC sales. Dell on Monday projected shrinking profit margins, and on Tuesday told analysts that companies continue to put off technology purchases. (Please see related article on B5.) But Intel’s sales lately have been much more closely tied to spending by consumers—particularly for laptop computers— while most of Dell’s sales go to businesses. Mr. Otellini said Intel had a strong rebound in shipments of microprocessors for laptop computers, though he said sales of chips for server systems also were surprisingly strong because of demand spurred by a new chip family dubbed Nehalem, which offers a big leap in computing performance. Stacy Smith, Intel’s chief financial officer, added that the company reduced inventories and headcount. “We have a nice tailwind going into the third quarter,” he said in an interview. Intel Net revenue, quarterly $12 billion 9 6 3 0 2007 ’08 ’09 Source: the company Not that all is rosy. Intel, which helped push for inexpensive laptops called netbooks, faces analyst fears that the low- priced chip called Atom used in those products will steal sales from more profitable products. Intel said that its average sales prices declined from the first quarter, even excluding Atom. Then there is the fine from the European Union, which in May found that the company had abused its dominant position in competing against Advanced Micro Devices Inc. Because of the fine, Intel swung to a loss of $398 million, or seven cents a share, from a profit in the year-earlier period of $1.6 billion, or 28 cents a share. Intel, which is appealing the EU ruling, had not posted a quarterly loss since the mid-1980s. Seeking Fame in Apple’s Sea of Apps By Yukari Iwatani Kane Apple Inc.’s App Store has spawned a cottage industry of software developers trying to profit from games and other applications that people can download onto their iPhones. But with more than 65,000 free and paid applications in the online store, success has hinged on an app’s ability to stand out. So developers are increasingly coming up with various strategies to make a splash, employing everything from temporary discounts to guerilla marketing tactics. PopCap Games Inc., maker of the popular Bejeweled puzzle game, experimented in June by cutting the price on its Peggle game from to 99 cents from $4.99 for four days. Peggle, which had been ranked at around 60 in top paid apps, shot up to second place within 24 hours. Andrew Stein, PopCap’s director of mobile business development, declined to provide revenue figures but said sales during the discount period increased 20 to 25 times the previous volume. For Apple, the one-year-old App Store has been a key driver of sales of its iPhone and iPod touch devices, by giving consumers new applications to keep coming back to download. Rivals like Palm Inc. and Research In Motion Ltd. are also pushing application stores for their devices. Apple, which approves every app before putting it in the store, gets 30% of any third-party app sales. On Tuesday, the company said customers had downloaded more than 1.5 billion free and paid apps so far. Apple doesn’t disclose the store’s revenue. “The App Store is like nothing the industry has ever seen before in both scale and quality,” Apple Chief Executive Steve Jobs said in a press release. “With 1.5 billion apps downloaded, it is going to be very hard for others to catch up.” Making a Splash Developers are trying various strategies to get their products to stand out on Apple's App Store Restaurants Burned By Deep Discounts By Julie Jargon The deep discounts that restaurant chains have been offering to lure cash-strapped customers out of their kitchens are coming back to bite them. Restaurant chains ranging from Denny’s to Applebee’s this year have been giving away food or offering deals to boost traffic slowed by the recession. But as several chains prepare to report second quarter earnings in coming weeks, Wall Street is bracing for news that price cuts not only ate into profits but failed to bring in as many customers as hoped. Yum Brands Inc., whose Taco Bell and Pizza Hut brands have been emphasizing lowpriced fare, reported Tuesday that earnings in its fiscal second-quarter ended June 13 rose 10%, excluding an acquisitionrelated gain. But same-store sales in the U.S. declined 1% due to an 8% decline at Pizza Hut, which has been offering discounts for online pizza orders and other deals. “We’ve been hearing from a lot of restaurant management teams that discounting wasn’t driving the traffic they hoped for,” said Jeffrey Bernstein, an analyst at Barclays Capital. Despite heavy discounts across the retail industry— prices have been slashed on everything from food to clothing— consumers have been stubbornly reluctant to open their wallets. Some bigger chains including McDonald’s Corp. and Starbucks Corp. have avoided offering deep price cuts. But even they are boosting promotions. Starbucks has lowered prices on some drinks and McDonald’s on Monday began a promotion called “Mocha Mondays,” in which customers can get a free sample of iced or hot mocha from 7 a.m. to 7 p.m. every Monday until Aug. 3. When Darden Restaurants Inc. reported earnings last month, the owner of Red Lobster, Olive Garden and The Capital Grille said it avoided the kinds of discounts and giveaways that many of its peers Please turn to the next page Peggle PopCap cut the price of its game from $4.99 to 99 cents for four days Cops & Robbers Photo illustration by Sergio Capursi/The Wall Street Journal Glu Mobile cut its price and then added a free ‘lite’ version Star Defense Ngmoco invited bloggers and reviewers to play each other and Twitter about it The Moron Test DistinctDev listed its quiz game in the less crowded ‘entertainment’ category Developers say the key to succeeding on the App Store is to appear on the lists of top-ranked apps that Apple compiles. The 25 most downloaded apps appear on the first page of the store when someone accesses the site from their iPhone. People also find apps through keyword searches or by browsing categories. “If it appears in the top 100, then everybody will see it,” said Vijay Chattha, head of VSC Consulting, a San Francisco marketing firm that is launching a business to help iPhone app developers promote their wares. For many developers, their strategy to get on the top-ranked list starts when they submit their app to Apple for approval. Many developers jostle to release their apps around week- ends, when consumers are most active on the store. Some developers attempt to boost their profile in the App Store by listing their apps in categories that are less crowded. Apple requires developers to put their app into one of 20 categories. The largest category, games, has more than 13,000 apps, according to data-tracking firm Mobclix Inc. The smallest, weather, has 310 apps. DistinctDev Inc., which created a quiz game dubbed the Moron Test, chose to list the 99-cent app in the less competitive entertainment category. The Moron Test has been one of the App Store’s top 10 paid apps since its mid-April launch. Still, developers say no tactics will help if an application is low quality. “If your application isn’t good, it might get to the top, but it’s not going to stay there,” said Mike Monaco, cofounder of DistinctDev. Some developers try to capitalize on popular brands by embedding those brand names into their own apps’ descriptions. For example, a recent search for EA, the brand for game giant Electronic Arts Inc., turned up 15 games from a company called Digital Chocolate Inc. A close look at the games’ description showed that the word “each” was abbreviated to “ea.” Digital Chocolate Chief Executive Trip Hawkins was a co-founder of EA. An EA spokesman called the tactic “barnacle marketing.” On Monday, Digital Chocolate stopped using the abbreviation. Same-store sales fell 8% at Yum Brands’ Pizza Hut despite discounting. Indonesia’s Garuda Airline Plans Expansion After EU Lifts Safety Ban By Tom Wright JAKARTA—Indonesia’s stateowned airline plans to start flying to Europe next year and take other steps to expand its operations after the European Union lifted a two-year ban on selected Indonesian carriers. The ban was lifted in response to the country’s efforts to improve safety standards. The move could also help Garuda Indonesia stave off challenges in Indonesia, one of the world’s biggest markets for air travel, and build a larger regional presence in Asia. Emirsyah Satar, the chief executive of Garuda, said the airline would fly first to Amsterdam in the first half of 2010 and would look at other destinations in Europe after that. As part of its planned expansion—which will double its fleet to 116 aircraft in the next five years, including larger Boeing 777s and Airbus 330-200s— Garuda is also interested in flying to the U.S., which it doesn’t currently serve, Mr. Satar said. On Tuesday, the European Union lifted a flight ban on Garuda and three other Indonesian operators—Mandala Airlines, a low-cost carrier that is controlled by U.S. private equity firm Indigo Partners; cargo operator PremiAir; and Airfast, which runs charter flights. The EU banned all Indonesian aircraft from flying in European airspace or landing there in June 2007 after a string of deadly crashes in Indonesia that year, including a Garuda plane that overshot the runaway in Yogyakarta in central Java due to pilot error, killing 21 people. In another incident, a flight by Adam Air, a privately owned Indonesian carrier, crashed in Indonesian waters after the failure of navigational equipment, killing all 102 people on board. The U.S. Federal Aviation Administration in 2007 also downgraded Indonesia’s airline oversight rating, saying it fell short of international safety standards. An audit in 2007 by the United Nations International Civil Aviation Organization, which sets gloPlease turn to the next page On the job. On the go. Equip your team with Internet on the go so they can do their job from virtually anywhere, anytime. 1-800-SPRINT-1 sprint.com/business America’s most dependable 3G network. And bringing you the first and only wireless 4G network from a national carrier. 3G Mobile Broadband Card Ovation™ U760 by Novatel Wireless Reuters Garuda has focused on improving safety since a 2007 crash in central Indonesia that killed 21 people. “Dependable” based on independent, third-party drive tests for 3G data on connection success, session reliability and signal strength for the top 50 most populous markets from January ’08 to February ’09. Not all services available on 3G and coverage may default to a separate network when 3G is unavailable. 4G currently available in limited areas on select devices; check sprint.com for Sprint 4G coverage. The Sprint Mobile Broadband Network reaches over 269 million people (including data roaming). Not available in all markets/retail locations. Other restrictions apply. See store or sprint.com for details. ©2009 Sprint. 6606713 Associated Press P2JW196011-5-B00100-1--------XA Composite CYAN BLACK YELLOW MAGENTA P2JW196012-5-B00200-1--------XA ***** BLACK 07/15/2009 AZ,CL,CX,DL,DX,EE,FL,HO,MW,NC,NE,NY,RM,SA,SC,SL,SW,WB,WE P2JW196012-5-B00200-1--------XA * * * * * B2 Wednesday, July 15, 2009 THE WALL STREET JOURNAL. INDEX TO BUSINESSES These indexes cite notable references to most parent companies and people in today’s edition. Articles on regional page inserts aren't cited in these indexes. Abbott Laboratories ... B4 AMD ............................ B1 Aeropostale ................ A2 Aetna ............................ C5 AIC Ventures ............... C8 AirAsia ........................ B2 Alcoa ............................ A2 Amazon.com ............... B5 American Intl ............... C3 Amgen .......................... B4 Anchor Blue Retail ...... B4 Angelo Gordon ............. C8 AngloGold Ashanti ...... B2 Anshan Iron & Steel ... A9 Apple ........................... B1 AT&T ............................. C5 Bank of America C1,C3,C6 Baosteel ...................... A9 Barclays ................... C1,C2 Barratt Developments . C9 BaWang Intl ............... C14 Baxter Intl .................. A8 BBMG ........................ C14 Bear Stearns ................ C3 Beijing Automotive A1,B2 Bellway ......................... C9 Berkeley Group ............ C9 BHP Billiton ................ A9 Biotel ............................ C5 BlackRock ..................... C3 Blue Nile ...................... C5 BlueMountain Capital .. C1 BMW ............................ C2 BNP Paribas ........ A10,C2 Boeing ......................... B6 Bovis ............................. C9 Burger King Holdings . B2 Burlington Northern Santa Fe ................... A4 Cablevision Systems ... B5 CalAmp ......................... A2 Canada Land ................ C6 Canadian Natl Railway A4 CardioNet ..................... C5 Cathay Pacific Airways B2 CBS ....................... B5,C14 CCMP Capital Advisors C3 CDL China Real Estate Opportunity Fund ...... C6 Centennial Comm ......... C5 Chigo Holding ............ C14 Chrysler ........................ A1 Chrysler Financial ........ B4 CIT Group .......... B5,C1,C3 Citigroup ................ A1,C1 Cnooc ............................ C5 Comcast Corp. ............. B5 Credit Suisse Group ..... C1 Crestview Partners ..... C3 CSX Corp. ............... A4,C5 Darden Restaurants .... B1 Dell .................... B1,B5,C5 Deutsche Bank ............ C1 Digital Chocolate ......... B1 Dime Community Bancshares ................ C5 DistinctDev ................. B1 DryShips ....................... C5 Elan .............................. B4 Electronic Arts ............ B1 Equity Capital Management ............. C8 Estée Lauder ................ B4 Excel Maritime Carriers C5 Exxon Mobil ................ B4 Fiat .............................. B4 Fimalac ...................... C10 First Industrial Realty Trust ........................... C8 Ford Motor ............ A1,B2 Fortis Holding ............ A10 Franklin Templeton Investments .............. C3 Garuda Indonesia ........ B1 Geely ............................ A1 General Motors ...... A1,B2 GlaxoSmithKline .......... A8 GLG Partners ............... C2 Gold Field .................... B2 Goldman Sachs ....... A1,C1,C10,C14,C2,C5 Google ......................... B5 Guangzhou R&F Properties ................. C2 Haverty Furniture ........ C8 HDFC Bank .................. C2 Health Net ................... C5 Hewlett-Packard .......... B1 Hisamitsu Pharma ...... C5 Hi-Tech Pharmacal ....... C5 Home Depot ................. C1 Honda Motor .............. A12 Hornbeck Offshore ...... C5 HSBC Holdings ............ C1 Humana ....................... C5 Hypo Group Alpe Adria ................................... C12 Hypo Real Estate ..... A10 Hyundai Motor ............ B2 IAC/InterActiveCorp. .. C3 Intel ........ A2,B1,C1,C2,C5 Intl Game Technology . C5 Intrepid Potash ............ C5 Investor ....................... C2 IOI .............................. C14 Irish Nationwide ........ C12 iStar Financial ............. C8 J.P. Morgan Chase .............. A6,C1,C14,C3,C6 Janus Capital Group .. C12 Janus Contrarian ....... C12 Janus Overseas ....... C12 Johnson & Johnson B4,C5 Kirin Holdings .............. A2 Kraft Foods ............... C14 Kuala Lumpur Kepong ................................... C14 Lehman Brothers ......... C2 Levi Strauss ................. B4 Liberty Media .............. B5 London Stock Exchange ..................................... C2 Loomis Sayles & Co. ... C3 Macquarie Office Trust ..................................... C6 Macy’s ........................ A2 Magna Intl .................. B2 Maguire Properties ..... C6 Markit Group ............... C1 McDonald’s ................... B1 McGraw-Hill ............... C10 Medtronic ..................... A6 Mesirow Financial ....... C8 Metropolitan Real Estate Investors .................... C6 Microsoft ...................... B5 Mohawk Industries ..... C5 Mondi ........................... B2 Monsanto .................... B4 Moody’s ..................... C10 Morgan Stanley .... C1,C14 Nasdaq OMX ................ C2 Nestlé ........................ C14 New York Times .... B6,C8 News Corp. .............. B5,C3 Nissan Motor .............. C2 Nomura Holdings ......... C2 Norfolk Southern ......... A4 Noven Pharma ............ C5 OAO GAZ ...................... B2 Opus ............................. C6 Oracle ........................... B5 Oslo Børs ...................... C2 Pacific Management Investment ................ C3 Palm ............................. B1 Persimmon .................. C9 PopCap Games ............. B1 PricewaterhouseCoopers ..................................... C2 Prudential Financial .... C5 Quiznos ........................ B2 Ramius ......................... C2 RIM .............................. B1 RHJ International ........ B2 Rio Tinto ...................... A9 Ripplewood Holdings .. B2 Salesforce.com ............ B5 Sappi ............................ B2 Sasol ............................ B2 Sberbank ..................... C2 Schering-Plough .......... B4 Scripps Networks Interactive ................ B5 Sealy ........................... A2 Shanghai Yuyuan Tourist Mart ........................... C2 Shougang .................... A9 Sichuan Expressway ... C2 Sinclair Broadcast Group ................................... C14 Sinclair Broadcasting Group .......................... B4 Singapore Airlines ....... B2 Skandinaviska Enskilda Banken .................... C12 Société Générale ......... C2 Southwest Airlines .... B6 Starbucks .................... B1 Stone Energy .............. C5 Sumitomo Mitsui Financial Group ....... C12 Sun Microsystems ....... B5 Suntory Holdings ......... A2 Synthetic Genomics ... B4 Take-Two Interactive .. C5 Taylor Wimpey ............. C9 Time Warner ................ B5 Toyota Motor ............ A12 Tribune Co. ................ C14 UBS ......................... C1,C2 Unilever ..................... C14 United Plantations .... C14 UnitedHealth Group .... C5 Univision Comm ........... B6 US Airways ................. B4 Vale .............................. A9 Volkswagen .................. A1 W.P. Carey .................... C8 Walt Disney ................ B5 Wells Fargo & Co. ........ C6 WestBred .................... B4 Wyeth ........................... B4 Xstrata ........................ C2 Yorkshire Water Services ................................... C12 Young Broadcasting .. C14 Yum Brands .................. B1 CORPORATE NEWS Rolling Out ‘Cash for Clunkers’ Car Dealers Set Up Hotlines, Web Sites but Fret That Strict Rules Will Hurt Trade-Ins By Jeff Bennett Auto dealers are starting to ramp up advertising built around the government’s “cash for clunkers” program, even as they are growing more concerned that the incentives won’t provide enough of a spark to revive U.S. auto sales. Restrictions on eligibility combined with delays in launching the program—which promises rebates as high as $4,500—have quashed hopes that the U.S. will see the same sort of car-shopping craze experienced by countries such as Germany and Brazil that implemented similar plans. Cash-for-clunkers, formally known as the Car Allowance Rebate System, will provide about $1 billion in federal funds as incentive money. Eligible owners of gas guzzlers will receive a credit if they turn them in and buy or lease a new, more fuel-efficient vehicle. The program was approved June 1, but final details on eligibility have yet to be released. That information is expected “on or around” July 24, according to the program’s Web site, www.cars. gov. Dealers are gearing up with online and newspaper ads inviting potential buyers to stop by and see if they are eligible. Some dealers have set up special Web sites. But the lag between passage of the measure by Congress last month and implementation has cooled consumer sentiment, dealers across the country say. A Few More Laps Average length of U.S. vehicle ownership, in months 56.3 49.4 41.3 37.2 31.6 2002 2008 46.3 Newvehicle buyers Source: R.L. Polk Usedvehicle buyers Total (new and used) Ford With a combined fuel economy of 18 miles a gallon, a 2000 Ford Crown Victoria LX is eligible for trade-in under the ‘Cash for Clunkers’ program. Preliminary rules saying clunkers must be less than 25 years old and get 18 miles per gallon or less in combined city/highway mileage also have hurt. “We like the idea behind the program; however, the eligibility could be a little too strict and may keep some of my people away,” said Alan Helfman, vice president of Houston’s River Oaks ChryslerJeep. The program might boost sales by 175,000 vehicles in 2009, said IHS Global Insight analyst Rebecca Lindland. That isn’t much help given the hole the industry is in. U.S. auto sales ran at an annualized rate of 9.69 million vehicles in the first six months of the year, down from 13.69 million in the same months of 2008. “And these will be sales that are pulled ahead and not new demand,” Ms. Lindland said. “We don’t see that many people willing to trade in to take on new debt.” Ford Motor Co. and General Motors Co. have rolled out Web sites dedicated to answering questions. Ford has also established a 1-800 hotline. “We have seen 300,000 people go to the Ford. com site to check their eligibility,” said Jim Farley, Ford’s marketing chief. “We are seeing customers at least coming in and talking to dealers about it.” Hyundai Motor Corp. dealers are already starting to offer discounts based on the expected rebates, funded by loans from Hyundai that cover the difference until the program officially starts. The National Automobile Dealers Association is encouraging dealers not to make any offers until the final details of the program are known so they don’t put their own money at risk. The clunkers program will run through Nov. 1 or until the funds are exhausted. A similar program in Germany drew more than one million applications for vouchers. That program, at $6.5 billion, is larger than the U.S. version. —Josh Mitchell contributed to this article. Ousted GM CEO Is Given Salary, Benefits Deal By Kathy Shwiff General Motors Corp. said Tuesday that former Chairman and Chief Executive Rick Wagoner will receive an annual salary of $74,030 for his lifetime and annual benefits of $1.6 million for five years. Mr. Wagoner’s benefits are reduced in line with cuts given other retired GM executives earlier this year. His pension was worth $20 million at the end of 2008, according to regulatory filings. The Obama administration demanded Mr. Wagoner step down in March because GM wasn’t making enough progress in demonstrating it would be viable. He remained on the payroll at $1 a year. In a filing, GM said Mr. Wagoner will retire effective Aug. 1 and receive benefits based on his 32 years at the auto maker. He will continue to receive liability insurance at a level similar to other retired executives until Jan. 1, 2010. He also will receive companypaid life insurance or its cash value, currently $2.6 million. GM filed for bankruptcy June 1 and emerged Friday, with the U.S. government owning a 60% stake. RHJ Readies Offer for Opel By Sharon Terlep Bidding on General Motors Co.’s Opel European unit is heating up this week, with RHJ International SA expected to offer around $300 million for majority control in the car maker, a person familiar with the situation said Tuesday. The offer from RHJ, a Brusselsbased holding company linked to U.S. buyout firm Ripplewood Holdings LLC, is expected as soon as Wednesday. GM also will likely get a modified bid from Magna International Inc., a Canadian-Austrian auto parts maker that had previously been the front-runner in the bidding war, the person said. GM had anticipated Magna may drop out of the running amid intensifying competition from RHJ and a third bidder, Beijing Automotive Industry Holding Co. Ltd.. Instead, Magna, which has remained confident it would emerge as Opel’s new owner, appears to be readying a revised bid this week, according to this person. A Magna representative couldn’t immediately be reached for comment Tuesday. GM, which emerged from bankruptcy Friday with a pledge to become a leaner, profitable company, is eager to offload its INDEX TO PEOPLE Agrawal, Vaibhav ........ C2 Armour, Tim .............. C12 Backshall, Tim ............. C1 Bartley, Newton ........... C9 Bek-Nielsen, Carl ...... C14 Bennenbroek, Nick ...... C2 Black, Gary ................. C12 Blank, Stephen ............ C6 Bond, Matt ................... B5 Brenneman, Greg ........ C3 Caruso, Dominic .......... B4 Chattha, Vijay .............. B1 Chick, Teresa ................ C1 Clare, Mark .................. C9 Coene, Luc .................. A10 Cole, Samuel ................ C1 Dell, Michael ................ B5 DePizzol, Sam .............. C6 Deutsch, Thomas ........ C9 Dimon, James .............. C3 Dye, Robert .................. A2 Farley, Jim ................... B2 Fasulo, Dan .................. C6 Fink, Dennis ................. C8 Ford, Bill ..................... A12 Freedman, Doug .......... B1 Friedman, Stephen ..... C14 Gardner, Dana .............. B5 Garriques, Ron ............. B5 Genensky, Sam .......... A11 Gladden, Brian ............. B5 Gogerty, Andrew ....... C12 Gold, Rick ..................... A2 Grübel, Oswald ............. C2 Hanson, Robert ........... B4 Hardy, Robin ................ C9 Harris, Benjamin ......... C8 Hecht, Michael .......... C14 Hewett, Winston ........ C6 Holden, Peter ............... A8 Hou Zhiyun ................. A9 Islas, Alberto .............. A7 Jobs, Steve ................. B1 Johnson, Charles E. ..... C3 Jorgensen, Blake ........ B4 Kent, William ............... C5 Kitchin, Tom Gidley ..... C9 Koenig, Kirk ................. B6 Kunda, Eugene ........... C14 Lauria, Thomas ............ C3 Lawler, Thomas ........... C9 Leary, Ted ..................... C6 Leclair, Don ............... A12 Li, Richard ................... C3 Lim, Roy .................... C14 Lindland, Rebecca ........ B2 Lundgren, Terry .......... A2 Madoff, Bernard .......... C3 McDonald, John ........... C1 Meads, Mindy ............. A2 Monaco, Mike ............. B1 Moody, Chuck ............... C6 Moonves, Leslie ......... C14 Morris, Michael ......... C14 Muglia, Bob .................. B5 Mulally, Alan .............. A12 Neuger, Win ................. C3 Nicol, Dan ..................... C6 Nielsen, Teresa ............ C2 Nobrega, William ........ C6 Norton, Greg ............... C3 Olson, Hans-Olaf ....... A12 Osborne, Shaun ........... C2 Otis, Clarence ............. B2 Overby, Brian ............... C5 Pearson, Steven .......... C2 Peek, Jeffrey ................ C1 Peterson, Shelley ...... C12 Pruett, Shelby ............. C8 Ren, Xiangfan ............. A9 Richardson, Matthew .. C3 Rifkin, William ............. C3 Rossignolo, Giandomenico .................................... B4 Rubinsohn, Simon ....... C9 Sanders, Anthony ........ C9 Sandler, Andrew ......... C9 Saslove, Joshua ........... C9 Satar, Emirsyah .......... B1 Schaden, Rick ............... B2 Schwartz, Michael ....... C5 Scott, David ................ C5 Shah, Seema ................ C9 Shapiro, Joshua .......... A2 Shufu, Li .................... A12 Sikaitis, John .............. C6 Singleton, Greg ............ B4 Snadon, Daryl .............. C9 Sorkin, Ira ..................... C3 Stein, Andrew .............. B1 Steinwedell, David ...... C8 Sullivan, Mary .............. C6 Sweeney, Laura ........... C1 Thornton, John ......... A12 Trone, David ................. C5 Uggla, Lance ................. C3 Varney, Christine ......... C3 Venter, J. Craig ........... B4 Viniar, David .............. C10 Volz, Roger ................... C1 Wagoner, Rick .............. B2 Ward, Jason .............. C14 Waring, Rachael .......... C9 Watson, John ............... C9 Wheeler, Darrell ........ C10 Whitney, Meredith ...... C5 Wu, Shaw ..................... B5 Wulf, Derrick .............. C10 York, Adam .................. A2 Young, Rob .................. B4 Zannino, Richard ......... C3 Zhang, Peter ............. A12 Reuters Workers arrive at an Opel plant. Bidding for the GM unit is heating up. struggling European arm. Magna in May signed a nonexclusive memorandum of understanding to acquire a majority stake as part of a bid backed by Russia’s 1Sberbank Rossia and auto maker OAO GAZ Group. The deal became shaky after RHJ and Beijing Automotive joined the race. Beijing Automotive plans to invest in Opel in China to ramp up production there by 2015, according to a document dated July 2 and reviewed by Dow Jones. Beijing Automotive is offering $990 million in equity for a 51% stake in Opel, with GM retaining a 49% stake. RHJ on Monday said in a statement that its talks with GM were at an “advanced stage,” but didn’t offer further details. The Magna offer envisions $2 billion in bridge financing from the German government. Talks have stalled amid unresolved issues including intellectual property rights and access to growth markets. The Beijing Automotive offer may be considered attractive because it involves less government funds than Magna’s. But GM remains wary of turning the company over to what could become a key competitor in China, a nation on track to become the world’s largest auto market this year. Garuda Air to Expand as EU Rescinds Safety Ban Continued from the prior page bal safety standards for the airline industry, said the Indonesian aviation authority lacked the legal power to reprimand airlines that broke safety rules and that training of pilots and safety-maintenance personnel was poor. Since then, Indonesia has moved to address the UN body’s recommendations, including setting out clearer safety codes and restructuring its aviation regulator to give it wider powers. A year ago, the Indonesian regulator permanently revoked Adam Air’s operating license after a series of safety breaches. This year, Garuda plans to fly 18 new routes domestically and internationally, including from Jakarta to Melbourne, Sydney and Shanghai. Other Asian operators such as Singapore Airlines Ltd. and Hong Kong-based Cathay Pacific Airways Ltd. have capitalized on the region’s growth in recent years by becoming transport hubs to Australia, Europe and the U.S. For now, Garuda is unlikely to be able to compete regionally with these airlines because of its poor safety record and much smaller fleet. Jakarta’s international airport also can’t handle heavy traffic. But the lifted ban could strengthen Garuda at home, where new competition is angling for the 40 million passengers Indonesia’s airline industry served last year. Kuala Lumpur-based budget carrier AirAsia Bhd., for instance, operates Indonesian domestic routes and recently began offering flights to Australia from Indonesia. Many travelers switched to AirAsia, despite regular delays, because of safety concerns over Garuda following the EU ban. Garuda last year earned a safety certification from the International Air Transport Association, an airline industry body, a goal that Mr. Satar targeted when he joined the carrier as chief executive in 2005 from Bank Danamon, an Indonesian bank. Construction Workers Agree To End South African Strike By Robb M. Stewart JOHANNESBURG—Tens of thousands of striking South African construction workers agreed to return to work Thursday after accepting a wage deal with companies, the industry body said. A deal was worked out with unions early Wednesday and is set to be signed at midday, when details of the pact will be disclosed, the South African Federation of Civil Engineering Contractors said in an emailed statement. The federation represents companies including Murray & Roberts Holdings Ltd. Unionized workers have been on strike since last Wednesday after wage talks deadlocked, halting work on power stations, ports, railroads and other projects. The strike had raised doubts that soccer stadiums intended for the 2010 World Cup, the first ever to be held by an African nation, would be built on time. The federation said the unions have agreed to call off the strike as soon as the deal is signed and return to work Thursday morning. The unions had been holding out for above-inflation, double-digit pay increases for their members. The strike took place as unions representing miners and other industries have threatened to put down their tools to press their demands for pay increases in a country where poverty and unemployment remain high, and the economy has been hit by the first recession in 17 years. Trade unions on Tuesday rejected an improved offer from mining companies AngloGold Ashanti Ltd. and Gold Fields Ltd. and warned of a strike if a double-digit increase isn’t tabled in the next round of talks, set for next week. The unions have held firm to demands for a 15% pay increase. They have warned that 150,000 miners could put down their down tools across South Africa, the world’s third-largest gold producer behind China and the U.S. The Chemical, Energy, Paper, Printing, Wood and Allied Workers Union said Tuesday that pay talks had failed and that its 65,000 members would strike at companies including petrochemicals firm Sasol Ltd. and paper producers Sappi Ltd. and Mondi Ltd. Restaurants Find Discounts Are Failing to Win Customers Continued from the prior page were engaging in. “We don’t know that a lot of folks who did discounting got much for it from a traffic perspective,” Darden Chief Executive Clarence Otis then said. Some chains have tried to turn up the heat in the price wars but have failed to win over franchisees, who see the discounts hurting their profit margins. Burger King Holdings Inc. wanted to sell its double cheeseburger nationally for $1 for a four-month period, but franchisees last Wednesday voted down the proposal. Prices vary by city, but at a Chicago Burger King, the double cheeseburger sells for $2.69. The chain instead proposed offering the $1 offer for just six weeks, but franchisees on Friday rejected that idea, too. On Tuesday, the chain said it would mail coupons to 80 million households allowing them to buy the sandwich for $1. Quiznos has taken a different approach. Rather than just cutting prices of existing menu items, the Denver-based sandwich chain has designed new, lower-priced menu items. In March, Quiznos introduced the Toasty Torpedo, a 13-inch sandwich on ciabatta bread, for $4. After hearing from consumers who liked it but didn’t want so much sandwich, Quiznos on Monday introduced an 8-inch version called the Toasty Bullet, for $3. In the second week of the Torpedo’s launch, sales increased 26%. It will remain on the menu. “It was a product designed to be sold at $4, which is different than taking an existing menu item and discounting it down,” Quiznos Chief Executive Rick Schaden said in an interview. “Discounting items that weren’t designed to be sold at lower prices isn’t sustainable and will hurt earnings.” From the Archive April 14th, 1970 Read the Journal’s coverage of the fast-food chain boom around 1970, at WSJ.com/News. 6606714 P2JW196012-5-B00200-1--------XA BLACK P2JW196014-4-B00400-1--------XA **** BLACK 07/15/2009 AZ,CL,CX,DL,DX,EE,FL,HO,MW,NC,NE,NY,RM,SA,SC,SL,SW,WB,WE P2JW196014-4-B00400-1--------XA * * * * B4 Wednesday, July 15, 2009 THE WALL STREET JOURNAL. CORPORATE NEWS J&J Net Falls as Drug Business Feels Pinch Currency Rates, Generic Competition and Tighter Spending Combine for ‘Challenging’ Quarter By Peter Loftus Johnson & Johnson’s secondquarter profit fell 3.6%, with sales hurt by unfavorable currency rates, competition from generic drugs and tighter consumer spending. In a sign of the significant challenges facing J&J’s drug business, the unit’s quarterly sales were eclipsed by those of the medical-device operation for the first time in 10 years. Analysts said J&J’s weakness was tempered by cost controls, less harmful currency rates than expected, and higher-than-expected sales of some products, including the blockbuster arthritis drug Remicade. The New Brunswick, N.J., company reported second-quarter net income of $3.21 billion, or $1.15 a share, compared with $3.33 billion, or $1.17 a share, a year earlier. Sales fell 7.4% to $15.24 billion from $16.45 billion. The stronger U.S. dollar accounted for six percentage points of the decline. Declining Johnson & Johnson global pharmaceutical sales, change from year earlier 15% 10 5 0 –5 –10 –15 ’07 Source: the company Bloomberg News 2Q 2009: $5.5 billion ’08 ’09 Second-quarter drug sales were hurt by the loss of patent protection for Risperdal. “This was one of the most challenging quarters for yearover-year comparisons in our history,” J&J Chief Financial Officer Dominic Caruso told analysts on a conference call Tues- day. But he said the maker of Tylenol pain reliever and Band-Aid bandages is strong and well-positioned for long-term profit growth. Drug sales dropped 13% to $5.5 billion. The division was hurt by the loss of patent protection for two of the company’s top sellers: antipsychotic Risperdal tablets and epilepsy-and-migraine treatment Topamax. The drugs’ sales fell 66% and 73%, respectively. Another top J&J drug rebounded. Sales of the Remicade treatment for rheumatoid arthritis rose 24% to $1.1 billion. Schering-Plough Corp. markets Remicade outside the U.S. Remicade’s sales growth slipped to 3% in the first quarter amid signs that high-priced biologic drugs, those engineered from living cells, felt the pinch of tighter consumer spending. The second quarter’s gain could be a good sign for other biologics, such as Abbott Laboratories’ Humira and Enbrel from Wyeth and Amgen Inc. Sales in the device unit slipped 3.1% to $5.89 billion. The DePuy division, which makes joint-reconstruction and other products, had roughly flat sales of $1.3 billion. Sales rose 2.1% for the Ethicon surgical-products division to $1.04 billion. Mr. Caruso, the finance chief, said it was too early to tell whether sales of Tylenol would be hurt substantially by recent recommendations of a U.S. Food and Drug Administration panel to lower dose limits to avoid liver injuries. Tylenol products for adults generate about $1 billion in annual sales. J&J has made a flurry of new drug applications and continues efforts to beef up its drug pipeline. J&J this month agreed to pay $1.5 billion for a minority stake in Elan Corp. and control of Elan’s rights to experimental Alzheimer’s drugs. J&J also closed its $1 billion acquisition of Cougar Biotechnology Inc., which is developing cancer drugs. But J&J continues to run into roadblocks in bringing new products to market. The company said Tuesday that the FDA has asked J&J for more information on experimental anticlotting drug rivaroxaban. Levi Strauss is opening 30 new stores and acquiring 73 others. Levi Continues To Add Stores Despite Loss By Elizabeth Holmes Levi Strauss & Co. swung to a loss during its fiscal second quarter on a 3% sales drop as executives brushed off the chance of an initial public offering of stock. While other retailers are consolidating in the ailing economy, San Francisco-based Levi’s said it is expanding its footprint. “Retail continues to be an important part of our growth strategy,” said Robert Hanson, president of Levi Strauss Americas. “It really allows us to showcase our product offering.” This week, Levi’s completed the purchase of 73 Levi’s and Dockers outlets for $72 million from Anchor Blue Retail Group Inc. Levi’s also opened more than 30 new stores world-wide during the quarter, in part by taking advantage of other casualties of the recession, including the closure of small, individual stores. However, company executives dismissed the likelihood of a near-term IPO. Levi’s recently hired Blake Jorgensen, a former chief financial officer of Yahoo Inc., as its financial chief, fueling speculation of a public offering for the closely held company. “I do have some of that experience in my background, but I think more important, I saw this as an incredible brand and a unique opportunity,” Mr. Jorgensen said in a telephone interview. He declined to comment further. When asked if he would say Mr. Jorgensen’s hiring increased the possibility of an IPO, Chief Executive John Anderson replied, “I would not.” Levi’s reported a net loss of $4.13 million for the quarter ended May 31, compared with $701,000 in net income a year earlier. Revenue fell 3.4% to $904.5 million. Levi’s attributed the revenue decline to currencyexchange rates. On a constantcurrency basis, the company said net revenue increased 5% for the quarter. The Americas was the strongest region for the company, with revenue up 8% to $518 million despite adverse currency effects. Europe and Asia Pacific revenues declined 17% and 13%, respectively. Asian sales were hurt by slowing wholesale orders in Japan. Mr. Anderson said the company is seeing slim fits and skinny jeans as among its strongest sellers world-wide. The two most popular washes are very dark or the distressed-look. Monsanto Resurrects Efforts to Engineer Wheat By Scott Kilman Monsanto Co. is resurrecting its efforts to genetically engineer wheat five years after resistance from the food industry led it to drop its work on the world’s most widely planted crop. The move eventually could help slow or reverse the decline in the size of the wheat harvest on the Great Plains, where many farmers have abandoned their traditional crop to grow plants— such as corn and soybeans—genetically engineered to be easier to grow. But it also could reignite opposition to biotechnology among makers of bread, pasta and cake, particularly in foreign markets that are dependent on U.S. wheat. Even though more than 85% of all of the corn, soybeans and cotton grown in the U.S. are already genetically modified to resist pests or tolerate weed killer, the St. Louis biotechnology company is starting from scratch with wheat, long a major crop in Plains states such as North Dakota, Montana and Kansas. Monsanto plans to create wheat that can tolerate drought and consume less fertilizer, among other things. But any genetically modified seeds probably won’t reach farmers for at least eight years, time that Monsanto executives hope they can use to smooth over any concerns within the wheat industry. Monsanto’s plan came to light Tuesday when it announced that it had definitively agreed to buy WestBred LLC, a small, closely held Montana wheat-breeding outfit, for $45 million. Monsanto will probably have to spend another $100 million on research and development to bring its first genetically modified wheat plant to market. Monsanto’s new GMO, or genetically modified organism, wheat push is much broader than its original effort in 2003, which involved a Northern Plains spring wheat variety that had been genetically modified to tolerate exposure to the company’s Roundup herbicide. Now, Monsanto is interested in genetically modifying many varieties of wheat with several traits. The U.S. wheat industry— from farmers to exporters—originally put up more resistance to biotechnology than other major crops, such as corn and cotton. The wheat industry feared that consumers would be more leery of tinkering with wheat because that crop is more easily recognized by shoppers since it is a known ingredient in staples such as breads, pastas and cakes. Part of what has changed is that many wheat farmers have started growing genetically modified corn and soybeans in their fields, helping reduce wheat production to levels that concern buyers of wheat ingredients. In October, for example, North American Millers’ Association adopted the position that genetically modified wheat should be commercialized. In May, organizations representing wheat farmers in three of the biggest wheatexporting nations—U.S., Canada and Australia—backed the simultaneous commercialization of genetically modified wheat. In Strategy Shift, Exxon Plans $600 Million Biofuels Venture By Russell Gold After years of snubbing alternative fuels as a bad investment, global energy giant Exxon Mobil Corp. said Tuesday it will sink $600 million into researching how to turn algae into a biofuel that would also help fight global warming. Exxon’s partner in the biofuels effort will be groundbreaking genomics scientist J. Craig Venter and his company Synthetic Genomics Inc. The companies will attempt to develop algae strains that excel at both sucking up greenhouse gases and secreting oil that can be fed into refineries alongside conventional crude oil. If the companies are successful in developing cost-competitive barrels of algae-based oil on a large scale, the Texas energy company said it could invest billions of additional dollars to build production facilities in the future. Exxon’s embrace of biofuels represents a strategic turnaround for one of the world’s biggest refiners of transportation fuel. Exxon grew into the world’s largest publicly traded company by extracting fossil fuels from the earth and converting them into gasoline, diesel and chemicals. But as global supplies of oil become harder to find and growing concerns about greenhousegas emissions inspire new attempts at government regulation, the concept of domestically produced oil derived from algae has become an alluring enough prospect to catch Exxon’s interest. Mr. Venter, a well-known biologist who led an effort to map the human genome, said the leap into algae-based fuels wasn’t going to be easy: “The challenges are not minor for any of us, but I think we have the combined teams, scientific and engineering talents, to give this the best chance of success.” The two companies said they would like to use genetic engineering to develop algae strains that consume significant amounts of carbon dioxide, a gas produced by fossil-fuel use that is contributing to climate change. Exxon’s head of research, Emil Jacobs, said it was possible the algae farms would be located near power plants and other industrial complexes to use the carbon dioxide generated in those places as feedstocks for the algae. Algae farms could produce two streams of income for the venture: one from selling barrels of algae oil to refineries and the other from capturing and reusing carbon dioxide. “It is reasonable to say you have to look at all commercial elements,” said Exxon spokesman Rob Young. Greg Singleton, a senior analyst with Point Carbon, an energy and environment marketanalysis firm, cited industry findings that 40% of carbon-dioxide emissions from a coalfired power plant could be reused, but it would require an enormous 13.1-square-mile algae farm. “On paper it looks attractive,” he said, but cautioned, “I haven’t seen it done on a large scale.” The U.S. Senate is set to soon take up the Waxman-Markey energy bill, which would cap greenhouse-gas emissions and allow companies to sell credits for any Reuters Exxon will join with scientist J. Craig Venter and his Synthetic Genomics. emissions savings they produce. Though it isn’t clear how the proposed law would treat a carbonmunching algae farm, said Mr. Singleton, “In a carbon-constrained environment, it is something that could be very profitable for Exxon in the long run.” Executives stressed that the partnership will be focused on research, and it could take up to a decade to produce commercial quantities of fuel from algae. Exxon’s investment follows years of criticism from environmentalists and some shareholders for the company’s reluctance to invest significantly in renewable energy. Exxon Chief Executive Rex Tillerson once dismissed the future of biofuels by quipping that he expected to be driven to his funeral in a hearse using gasoline or diesel. CORPORATE WATCH uCHRYSLER FINANCIAL Former Chrysler Lending Arm Pays Back U.S. Government Chrysler Financial said it reimbursed the U.S. government $1.5 billion, becoming the first auto-sector company to pay off the loans provided by the Treasury Department. The former primary lending arm of Chrysler LLC received the loan on Jan. 16 through the Treasury’s Troubled Asset Relief Program. The money was plowed into new consumer-incentive programs and used to fund 85,000 consumer loans for the purchase of Chrysler cars and pickup trucks. Chrysler Financial had five years to pay off the loan. The reimbursement offers little insight into the future of Chrysler Financial, which was replaced by GMAC LLC as the primary lending unit for Chrysler in May as part of the auto maker’s bankruptcy reorganization process. Chrysler Financial continues to write some loans and work with dealers. Jeff Bennett and Kate Haywood It is in negotiations with lenders to restructure its debt, but the company also disclosed that it has been unable to sell its non-TV assets because of a lack of buyers with access to credit. Nat Worden future of the company,” she said in an interview. Ellen Byron u U S A I R WAY S Air Carrier Makes Plans To Cut About 600 Jobs US Airways Group Inc. said it will cut about 600 of its 33,200 jobs this fall to better align its staffing to its reduced schedule. The No. 6 U.S. carrier by traffic, US Airways said it will cut staff in its loadplanning department, close an airport club in Las Vegas and a ticketing office in Phoenix and use outside vendors for baggage handling and ramp duties at nine airports it serves. The company, based in Tempe, Ariz., said the majority of the reductions affect employees in two unions, the International Association of Machinists and the Communications Workers of America, and will be done in order of seniority. US Airways, like other carriers, has been cutting the number of seats it offers to cope with the recession and a sharp drop in travel demand. US Airways also is asking 400 flight attendants to volunteer for furloughs in an effort to avoid layoffs. The company is expected to announce a second-quarter loss when it reports its results next week. Susan Carey uESTÉE LAUDER Founder’s Granddaughter Joins Company Board Estée Lauder Cos. said Tuesday that Jane Lauder, a granddaughter of its founder, has joined its board. Ms. Lauder, 36 years old, succeeds her father, Ronald Lauder, 65. Ms. Lauder, a senior vice president and general manager of the company’s Origins brand, joins her sister Aerin Lauder, senior vice president and global creative director for the Estée Lauder brand, on the company’s board. The New York beauty-products company reserves two seats each for the families of founder Estée Lauder’s two sons. Ronald Lauder has 9.4% of the voting power; his brother, Leonard, commands 48.3%, according to a proxy that the company filed in October. Jane Lauder’s 13-year career at the company includes working on a variety of brands. She earlier led global marketing for Clinique, the company’s biggest selling brand. “It’s exciting to be part of forming the Associated Press Italy’s Fiat has expressed interest in buying Bertone, which designed Cadillac’s Villa concept car, pictured. firm, located a few miles away from Fiat’s Mirafiori plant in Turin, was put in special administration in February 2008 to prevent bankruptcy. The deadline for presenting offers for Bertone is Thursday. One offer has been made, by former Telecom Italia SpA manager Giandomenico Rossignolo, and two companies besides Fiat have submitted expressions of interest. Bertone has designed cars for Fiat and General Motors Co.’s Opel unit as well as produced vehicles for auto makers. Milena Vercellino and Giada Zampano debt isn’t restructured, in yet another sign of the financial woes facing traditional media outlets with heavy debt loads amid the recession and the rise of digital media. The Baltimore company, which operates 58 TV stations in 35 markets, said in a regulatory filing that it will face a cash crunch if lenders exercise options to require about $500 million of debt payments within the next 18 months. uSINCLAIR uBERTONE Fiat Expresses Interest In Car Designer Bertone Fiat SpA has expressed interest in buying Bertone. The high-profile design Debt Worries Prompt Bankruptcy-Filing Warning Sinclair Broadcasting Group Inc. warned investors that it may have to file for bankruptcy protection if its 6606716 Getty Images P2JW196014-4-B00400-1--------XA BLACK P2JW196015-4-B00500-10007FBFFEF **** BLACK 07/15/2009 AZ,CL,CX,DX,EE,FL,HO,MW,NC,NE,NY,RM,SA,SC,SL,SW,WB,WE P2JW196015-4-B00500-10007FBFFEF Wednesday, July 15, 2009 THE WALL STREET JOURNAL. * * * * B5 TECHNOLOGY Dell Says Tech Spending Is Likely to Remain Weak Demand Suppressed by Deferred Business-Computer Purchases, Consumer Predilection for Lower-Cost Devices By Justin Scheck AUSTIN, Tex.—Dell Inc. executives said world-wide technology spending is weak and likely will remain so for the near future as companies delay computer purchases and consumers gravitate to low-cost devices. “We’re going to run the business assuming relatively weak demand continues,” said Dell Chief Financial Officer Brian Gladden, speaking at the Round Rock, Texas, company’s annual conference for Wall Street analysts. Chief Executive Michael Dell added that big customers are delaying new technology purchases during the recession and are “elongating the life cycle” of personal computers. He said spending should pick up next year. The remarks came a day after Dell said its profit margins are shrinking because of high component prices and other factors, which Mr. Dell said the company didn’t see coming. The computer maker has been trying to turn itself around amid a weak market, but progress has been slow. In 4 p.m. composite trading Tuesday on the Nasdaq Stock Market, Dell shares were down $1.05, or 8.1%, to $11.97. At the conference, Dell executives outlined their latest strategy to revive profit growth. They said Dell is cutting costs to expand profit margins and likely will acquire other companies, but they provided little specific information on future plans. “I think investors were hoping to hear more,” said Shaw Wu, an analyst with Kaufman Bros. In a report Tuesday, Mr. Wu lowered his revenue and profit predictions for Dell’s current fiscal year and said Dell’s problems seem to be “companyspecific,” since the overall PC industry is improving. Dell has been struggling to grow since 2006, when its direct-sales model faltered and it lost market share to HewlettPackard Co. H-P eventually toppled Dell as the world’s largest ing to sell more devices through cellular carriers. Dell already sells netbooks—miniPCs that cost less than $500—through carriers, which subsidize devices for consumers, who then use the netbooks to access the Internet over the wireless networks. But Mr. Garriques declined to say whether those other devices would be cellphones or other machines. People briefed on the matter say Dell has been developing phones and a handheld Internet device. Mr. Gladden added that Dell could face some repercussions from the struggles of CIT Group Inc. The struggling lender works with Dell to finance computer purchases from businesses. “It’s a critical partner,” Mr. Gladden said, adding that if CIT folds, Dell would have to find new financing partners. He said Dell also has $35 million in “accounts receivable” from CIT. —Ben Charny contributed to this article. CNImaging/Newscom CEO Michael Dell, pictured in March in Beijing, says customers are delaying technology purchases. PC maker by units and revenue. Company founder Mr. Dell returned as CEO in 2007 and promised a turnaround staked on cutting costs and expanding in areas like consumer sales. Dell’s consumer division accounts for only about 20% of company revenue, and its operating-profit margin of 2.4% last fiscal year is lower than other Dell businesses. Dell’s consumer chief, Ron Garriques, on Tuesday said consumer operating margins should reach the “mid-single digits” in two or three years. Mr. Garriques said he is try- TV Networks Join Comcast Web Test By Nat Worden More than a dozen TV networks—including broadcaster CBS Corp.—agreed to join Comcast Corp.’s nationwide test of an online-video subscription offering, as companies seek additional revenue streams amid the advertising slump. Comcast’s “On Demand Online” will offer a Web authentication system that will allow 5,000 Comcast customers in markets across the country to verify their cable-TV subscription in order to access programming online at Comcast’s Fancast.com and Comcast.net sites at no extra cost. Financial details of the agreement weren’t disclosed. Broadcasters have been putting popular TV content online free on ad-supported Web sites like Hulu. Unlike their cable counterparts, broadcast networks depend mostly on ad revenue and have little incentive to limit access to content to help pay-TV distributors preserve their business. Hulu is a joint venture of media companies, including News Corp., which owns The Wall Street Journal. CBS’s participation in the trial could signal a willingness to work more closely with distributors as ad markets suffer through the recession and Web players such as Google Inc. steal market share. “Today’s announcement highlights the industry’s growing interest to bring long-form content to consumers via a secure and easy-to-use online platform,” said Matt Bond, executive vice president of content acquisition Sun Projects Wider Loss By Don Clark And Tess Stynes Sun Microsystems Inc. projected a wider fiscal-fourth-quarter loss and lower revenue than Wall Street had been expecting, in what may be its last quarterly report as an independent company. But Oracle Corp., which is close to completing a $7.38 billion deal to buy Sun, continues to predict the acquisition will boost its profit. Sun’s results would continue a series of losses that helped push the computer maker into the arms of software giant Oracle, which edged out International Business Machines Corp. to buy Sun. Once one of Silicon Valley’s most influential companies, Sun reacted later than competitors to a shift to low-price server systems. More recently, the company suffered more than competitors because many customers were concentrated in the hardhit financial-services sector. Sun projected a loss for the period ended June 30, excluding items, of six cents a share to 16 cents a share on revenue of $2.58 billion to $2.68 billion. Analysts polled by Thomson Reuters, on average, had forecast a one-cent loss on revenue of $3.03 billion. Oracle reiterated an estimate made in April that it expects the Sun acquisition to add at least 15 cents a share to its earnings, excluding items, in the first year after the deal closes. It estimated that the business will contribute more than $1.5 billion to operating profit, increasing to more than $2 billion in the second year. Sun shareholders are set to vote on the deal Thursday. AMC/Everett Collection Comcast’s trial will give subscribers online access to popular shows, possibly including AMC’s ‘Mad Men,’ above. with Comcast. The agreements signal that a critical mass of major players in the TV business are lining up behind a concept championed by Time Warner Inc. Chief Executive Jeff Bewkes known as “TV Everywhere.” Mr. Bewkes has said he envisions an industrywide authentication platform that will allow subscribers to any pay-TV service to access programming online on PCs and mobile devices. CBS has made many of its TV series available on numerous Web sites, including CBS.com and its own video site, TV.com. But the company has made progress recently in increasing carriage fees that it gets from distributors to complement its ad revenue. CBS does not plan to stop streaming shows it has available on its own Web site and may add series from its pay cable network Showtime down the line, said Quincy Smith, CEO of CBS Interactive. In addition to CBS, the other networks include cable network AMC, owned by Cablevision Systems Corp.; the Food Network, owned by Scripps Networks Interactive Inc.; and BBC America, owned by the BBC. Along with others, they joined Time Warner’s HBO and Turner networks as well as Liberty Media Corp.’s Starz. The trial will provide online access for Comcast’s TV subscribers to some of TV’s most popular programming, including HBO shows such as “Entourage” and “True Blood” and TNT’s “The Closer.” AMC’s “Mad Men” and “Breaking Bad” are expected to be included later this summer, and the offering will also include major Hollywood films like “The Dark Knight” and “Juno.” Other broadcast giants such as News Corp., Walt Disney Co. and NBC Universal have yet to participate, although A&E Television Networks, which is participating, is part-owned by Disney and NBC Universal. Comcast, however, is still holding talks with most TV companies to bring more in. Comcast and Time Warner recently agreed on a framework for putting programming from cable networks online to satisfy consumer demand while still requiring customers to subscribe to a TV service in order to prevent an erosion in their revenue base. “A stunning, detailed vision of the world we’re about to live in.” —Alexis Madrigal, lead writer for Wired.com’s “Wired Science” blog TRAFFIC REPORT Most Popular Articles on WSJ.com on July 14 Most Viewed Most Emailed ‘Cloud Computing’ Prices Announced by Microsoft By Jessica Hodgson And Scott Morrison SAN FRANCISCO—Microsoft Corp. unveiled some of the pricing for its “cloud computing” platform, Windows Azure, Tuesday in the latest signal that the software company intends to compete aggressively in the emerging market to provide enterprise computer services over the Internet. Azure, which was announced eight months ago, is the central plank of Microsoft’s strategy to grab a share of the customers expected to access services online and pay for them on a metered basis. “Microsoft is throwing down the gauntlet and saying it’s going toe to toe with cloud providers,” said Dana Gardner, a principal analyst at Interarbor Solutions. Azure will provide the platform on which independent software developers and corporate customers can create Microsoftcompatible cloud applications. On Monday, the company announced it will also offer Webbased versions of its popular Office suite of applications to consumers. Microsoft’s initial payment plans are targeted at the independent software developers who will build applications designed to run on Azure. The company will offer a discount of 15% to 30% to developers and resellers who sign on for six months or more. It plans to unveil pricing for corporate customers in the second half of its fiscal year, which began in July. In the pay-per-use category, Microsoft will charge 12 cents an hour for computing, 15 cents per gigabyte for storage and 10 cents per 10,000 storage transactions. With Azure, Microsoft will compete with such other cloudcomputing pioneers as online retailer Amazon.com Inc., archrival Google Inc. and the software-as-a-service provider Salesforce.com Inc. Although Amazon.com’s pricing model offers different tiers, making direct comparisons difficult, the online retailer charges 12.5 cents an hour and 15 cents a gigabyte for storage in two of its pricing models. Bob Muglia, who heads Microsoft’s servers business, said the key appeal of Windows Azure will be helping customers minimize the labor costs associated with maintaining data centers. Customers will be able to run Azure applications that are based either at Microsoft’s or their own data centers. In becoming a cloud-computing provider, Microsoft must balance the advantages of creating a new revenue stream against the potential loss of sales from its key software franchises, including the Windows operating system and server tools, which may be supplanted by the new services. In 4 p.m. trading on the Nasdaq Tuesday, the company’s shares were down 0.5% to $23.11. 1. Opinion: Mortimer Zuckerman: The Economy Is Even Worse Than You Think 2. Auto Czar Quits Post After Six Months 3. CIA Had Secret Al Qaeda Plan 4. Minority Broadcasters Seek Aid 5. Welch: 'No Such Thing as Work-Life Balance' 1. Opinion: Mortimer Zuckerman: The Economy Is Even Worse Than You Think 2. Opinion: Obama Rewrites the Cold War 3. Opinion: The Small Business Surtax 4. Culture Wars Hit History Classes in Texas 5. How Much Sharing Is Too Much? WSJ.com subscribers can see these articles and more at WSJ.com. Top-Rated U.S. Broadcast Network Programs For the Week Ended July 12 Title Network Viewers (in millions)* 1. America’s Got Talent — Wednesday ................................................. NBC .................. 11.9 2. NCIS .................................................................. CBS .................... 11.0 3. America’s Got Talent — Tuesday ......................................................... NBC .................. 10.6 4. Two and a Half Men ............................... CBS .................... 5. The Mentalist — Tuesday .................. CBS .................... 6. 60 Minutes .................................................. CBS .................... 7. CSI: Miami .................................................... CBS .................... 8. Primetime: Family Secrets ................. CBS .................... 9. The Big Bang Theory ............................ CBS .................... 10. The Mentalist ............................................ CBS .................... *Viewing estimates include same-day DVR playback Source: Nielsen Media Research “The surprising snapshots of the future…make for vivid and compelling reading. ” —Publishers Weekly (starred review) 9.4 9.2 8.8 8.8 8.7 8.3 8.3 “A brilliant and provocative look at what our future holds— a future that’s coming sooner than we think.” —Stephen Leeb, PhD, bestselling author of The Oil Factor, The Coming Economic Collapse, and Game Over SUBSCRIBE TODAY! Hachette Book Group 1-800-WSJ-2206 ext. 374 1D223 © Dow Jones & Company All Rights Reserved. www.hachettebookgroup.com Available in hardcover, as an audiobook, and as an eBook 6606717 P2JW196015-4-B00500-10007FBFFEF BLACK P2JW196016-4-B00600-1--------XA **** C M Y K Composite 07/15/2009 AZ,CL,CX,DL,DX,EE,FL,HO,MW,NC,NE,NY,RM,SA,SC,SL,SW,WB,WE P2JW196016-4-B00600-1--------XA * * * * B6 Wednesday, July 15, 2009 THE WALL STREET JOURNAL. MARKETPLACE Southwest Incident Renews Maintenance Worries Jet Makes Emergency Landing After Hole Appears in Fuselage; Transportation Safety Board Is Investigating By Mike Esterl Federal aviation investigators are examining a Southwest Airlines Co. airplane that developed a one-foot-wide hole in its main body midflight, a setback for the discount airline just four months after it agreed to pay a $7.5 million civil fine for maintenance lapses. The Boeing 737 jet was heading to Baltimore from Nashville on Monday carrying 126 passengers and five crew members at an altitude of about 30,000 feet when a hole developed at the top of the fuselage, forcing the plane to make an emergency landing in Charleston, W.Va., as the cabin rapidly lost air pressure, according to the National Transportation Safety Board and Southwest. The company, based in Dallas, said no one was injured. Southwest visually inspected all 181 of its 737-300 airplanes Monday night after the incident but said it didn’t find any structural problems. The planes continued flying Tuesday. Investigators from the NTSB, Federal Aviation Administration and Boeing Co. have been dispatched to the scene. Authorities declined to speculate Tuesday on possible causes and said it could take weeks or months before they issue findings. “We inspect our aircraft on a routine basis and have an exceltween June 2006 and March 2007 without performing necessary structural inspections. Les Dorr, an FAA spokesman, said Tuesday that the civil penalty was tied to fuselage inspections on the sides of the airplanes, not the top of the fuselage that caused Monday’s problem. The lapses surfaced in March 2008, after Southwest voluntarily disclosed them to FAA inspectors. Southwest said Tuesday it carried out a visual inspection of all its 737-300 planes overnight “in an abundance of caution” and that it is working with federal authorities to pinpoint what caused the small rupture. The affected Southwest airplane was built in 1994, which isn’t particularly old for a 737-300. Southwest said the airplane had its most recent routine inspection earlier this month and that the portion of the airplane that suffered the rupture had last been fully inspected in January. Aviation experts said fuselage cracks that cause decompression, as happened in Monday’s incident, are extremely rare. The last major incident occurred in 1989, when a 10-foot by 40-foot section of the fuselage on a Boeing 747 jet came apart during a United Airlines flight near Honolulu, Hawaii. Nine people were swept from the New Zealand-bound flight. Associated Press An investigator looks at a hole on top of a Southwest Airlines plane that was forced to make an emergency landing in Charleston, W.Va., Monday. lent safety record,” Southwest said in a statement. People familiar with the investigation said the tear occurred near the tail of the airplane, where navigation antennas are often mounted. That part of the fuselage typically has a small plate the size of a football that is connected to the rest of the fuselage and may have come loose, they added. Such a rupture would be less dangerous than a fault line along other parts of the fuselage where large pieces of metal skin overlap, according to Kirk Koenig, president of Expert Aviation Consulting in Indianapolis. “It’s not like a tear which starts and you don’t know where it ends,” he said. Southwest agreed in March to pay the second-largest civil penalty ever against a carrier after the FAA initially proposed a $10.2 million fine for missed inspections. Regulators said Southwest knowingly flew 46 of its older 737s on nearly 60,000 flights be- New York Times to Sell Radio-Station License to Univision By Russell Adams And Sarah McBride New York Times Co. agreed to sell its New York City radiostation license to Univision Communications Inc., in a deal that will net the publisher $45 million as it seeks to stabilize its finances. The spot on the dial will be converted from a classical-music station to Spanish-language programming, but under a threeway transaction, the classical format will continue, further up the dial under public-radio ownership. Under the terms of the deal, announced Tuesday, Univision Radio will pay Times Co. $33.5 million for the Federal Communications Commission license, equipment and signal of WQXR-FM, its classical music station in New York. As part of the deal, Univision will give Times Co. the license and transmitting equipment for a less powerful station, which Times Co. will then sell—with the QXR call letters and brand— to WNYC Radio for $11.5 million. Univision Radio will move its WCAA station to the stronger signal in a deal Univision executives said will allow it to expand its coverage of New York’s Hispanic population. The transaction, expected to close by year’s end, continues Times Co.’s efforts to shed noncore assets at a time when steep Public radio organizations are building up networks of stations. declines in advertising have squeezed the New York Times’s profit and hampered the company in managing its long-term debt. WQXR’s classical format will find a new home on public radio, but with its new, weaker signal, many fans might not be able to hear it. The signal won’t be as strong as it is at present in parts of Long Island and New Jersey, for example. WQXR, which has broadcast classical music for 73 years, “is the nation’s pre-eminent classical music station,” said Janet Robinson, president and chief executive of Times Co., in a statement. “We are very pleased that this transaction will preserve WQXR’s ability to serve New York City’s classical music audience and its cultural institutions as a public radio station.” Just 275 of the nation’s 13,000 radio stations carry classi- cal music, but their listeners tend to be well-educated, relatively wealthy and loyal. When Washington, D.C.. public-radio station WETA dropped the classical format for news and talk in 2005, its ratings dropped. It returned to classical music in 2007. Public radio organizations are building up networks of stations, realizing many of the same efficiencies as commercial radio station groups, such as the ability to cross-sell on-air sponsorship slots. American Public Media’s Minnesota Public Radio is perhaps the best-known example, operating a network of 38 stations in the region. WNYC works with New York Times Co. and other partners on the public radio morning news show “The Takeaway,” which will be unaffected by the sale of WQXR. Times Co. posted a loss of $74.5 million for the first quarter as advertising revenue fell 27% from a year earlier. The company had over $1 billion in debt and $33.6 million in cash at the end of the quarter. In March, Times Co. sold the TimesDaily, an Alabama newspaper that is part of the company’s Regional Media Group, for $11.5 million. Currently it is shopping the Boston Globe as well as Times Co.’s nearly 18% stake in the holding company of the Boston Red Sox. WEATHER WATCH Edmonton Vancouver Calgary Seattle Portland Eugene Boise Pierre Helena Billings AccuWeather.com 50s Dublin Oslo Copenhagen Amsterdam Frankfurt Zurich Geneva Milan Lisbon Stockholm Today Hi Lo W 72 91 80 97 77 75 93 97 76 66 67 81 79 72 83 83 82 73 91 86 75 78 82 72 77 77 88 79 75 88 86 97 78 59 76 69 71 61 55 70 70 58 54 54 57 61 54 70 67 63 55 61 64 54 56 69 56 61 58 68 58 59 70 68 70 56 sh s s s t pc s s sh sh sh t t sh s pc s sh s t pc r s sh pc r s s pc s s s r Tomorrow Hi Lo W 76 93 83 94 79 79 97 95 75 63 66 84 87 75 88 88 79 75 97 90 82 85 84 75 82 81 94 75 73 87 81 91 84 61 75 69 71 61 61 72 64 60 52 53 63 62 55 75 68 63 57 63 66 59 56 70 57 64 57 72 54 57 66 61 62 56 s s s s s pc s t s r sh pc s sh sh pc s pc s pc pc s s t pc s s sh sh s pc s s 50s Winnipeg <0 0s International Forecasts Europe City Amsterdam Athens Barcelona Belgrade Berlin Brussels Bucharest Budapest Copenhagen Dublin Edinburgh Frankfurt Geneva Helsinki Istanbul Kiev Lisbon London Madrid Milan Moscow Munich Nice Oslo Paris Prague Rome St. Petersburg Stockholm Vienna Warsaw Zagreb Zurich 70s 60s Montreal Ottawa Toronto Detroit Buffalo Cleveland Pittsburgh Charleston Charlotte Washington D.C. Richmond Raleigh Albany Augusta Boston Hartford New York Philadelphia 10s 20s 60s London Brussels Paris Bismarck 70s Mpls./St. Paul Sioux Falls Milwaukee 30s 40s 50s 60s 70s 80s 90s 100+ Warm Berlin Prague Vienna 80s Warsaw Kiev 80s Reno San Francisco Las Vegas Los Angeles San Diego Phoenix Tucson El Paso Salt Lake City Cheyenne Denver Colorado Springs Santa Fe Albuquerque Budapest 90s Des Moines Chicago Omaha Springfield Indianapolis Topeka St. Louis Kansas City Wichita Louisville Nashville Memphis Little Rock Dallas Birmingham 90s Bucharest Istanbul 100s Madrid Barcelona Rome Oklahoma City Columbia Atlanta Cold Stationary Showers Miami Rain T-storms Snow 100s Ft. Worth Austin San Antonio Jackson Mobile Jacksonville Houston New Orleans Orlando Tampa 70s 100s 80s New Delhi Karachi Kolkata Beijing Seoul Tokyo Shanghai Taipei Manila 90s Hong Kong Hanoi Bangkok 50s 70s 60s Anchorage Cabo San Lucas Monterrey 90s 80s Kuala Lumpur Honolulu Flurries Singapore 80s 70s Mexico City Ice Today City Hi Lo W Tomorrow Hi Lo W City Kansas City Las Vegas Little Rock Los Angeles Louisville Manchester Memphis Miami Milwaukee Mpls./St. Paul Mobile Nashville New Orleans New York Oklahoma City Omaha Orlando Philadelphia Phoenix Pierre Pittsburgh Portland, ME 88 108 101 88 90 80 98 90 80 78 92 94 92 84 100 84 90 86 110 84 84 76 Today Hi Lo W 67 81 76 66 72 58 78 80 66 59 76 69 77 71 72 60 74 70 87 57 66 58 t s s s t s pc t t pc t t t s s pc t s s pc pc s Tomorrow Hi Lo W 89 110 96 89 86 84 91 90 78 74 89 85 92 86 99 85 92 86 111 83 82 77 65 87 73 66 67 66 75 79 59 55 74 69 77 72 70 60 75 70 88 56 60 64 t s t pc pc t t t s s t t t t t t t t s s pc c City Portland, OR 90 Providence 80 Raleigh 92 Reno 96 Richmond 90 St. Louis 90 Salt Lake City 91 San Antonio 101 San Diego 76 San Francisco 79 San Jose 87 Santa Fe 94 Seattle 80 Shreveport 102 Sioux Falls 80 Spokane 86 Springfield, IL 86 Tampa 90 Topeka 88 Tucson 103 Washington, DC 90 Wichita 92 Today Hi Lo W 60 64 71 63 68 71 63 76 68 58 60 58 57 76 54 60 66 77 63 79 72 69 s s s s s t s s pc pc s t s s pc s t t t t s t Tomorrow Hi Lo W 90 82 92 98 90 89 96 99 77 78 89 94 81 103 77 92 87 91 89 104 86 92 60 67 74 66 69 67 68 76 68 57 60 57 56 76 51 58 60 77 67 80 69 70 pc t t s t t s s pc pc s s s t s pc pc t t s t t U.S. Forecasts High-low forecasts and general weather conditions. s...sunny; pc... partly cloudy; c...cloudy; sh...showers; t...thunderstorms; r...rain; sf...snow flurries; sn...snow; i...ice Today City Albany Albuquerque Anchorage Atlanta Augusta, GA Austin Baltimore Billings Birmingham Bismarck Boise Boston Buffalo Burlington Charleston, WV Charlotte Hi Lo W 78 97 74 92 93 100 89 83 96 77 94 80 82 75 90 92 61 70 58 69 70 73 68 57 75 48 64 65 64 60 66 70 s t pc s pc s s pc s pc s s pc pc t s Tomorrow Hi Lo W 80 97 75 90 95 100 88 90 89 79 99 84 76 79 80 92 63 68 58 71 73 74 68 60 71 49 66 67 58 63 61 72 t s c t t s t s t s s t c t t t Asia/Pacific Auckland Bangkok Beijing Chengdu Dhaka Hanoi Hong Kong Jakarta Kabul Karachi Kolkata Kuala Lumpur Manila Melbourne Mumbai New Delhi Perth Seoul Shanghai Singapore Sydney Taipei Tashkent Tokyo 59 89 100 82 90 95 91 90 102 98 91 89 86 56 86 95 68 86 93 86 61 93 99 91 49 79 75 79 82 81 82 74 62 86 81 76 77 38 84 83 48 68 79 77 45 82 72 75 pc t pc t sh t t pc s pc t sh t c r t s sh t t pc pc s s 63 90 85 81 90 96 91 90 103 102 92 91 83 57 88 100 62 90 90 85 60 94 98 88 52 79 79 77 83 79 82 74 62 88 81 77 77 36 83 82 51 68 81 79 40 79 71 77 r t c t r s pc pc s pc sh t r s r pc pc pc t t s pc s pc Canada City Calgary Edmonton Halifax Montreal Ottawa Toronto Vancouver Winnipeg 68 70 69 75 74 77 76 66 Today Hi Lo W 48 45 54 63 58 61 59 48 s s pc pc t t s t Tomorrow Hi Lo W 71 77 70 73 77 77 75 60 48 45 55 61 58 57 59 50 s s c t t c s pc Caribbean City Barbados Havana Kingston Nassau Port-au-Prince Port of Spain San Juan Santo Domingo 86 90 89 90 95 88 93 90 Today Hi Lo W 77 72 79 81 73 77 81 73 sh t pc t pc t pc t Tomorrow Hi Lo W 86 91 92 90 98 88 91 87 77 75 80 81 73 77 79 72 sh t sh t sh sh pc sh Cheyenne 80 53 s 83 54 t Chicago 84 64 t 81 59 s Cincinnati 88 67 t 80 59 pc Cleveland 82 69 t 80 60 pc Colorado Spgs. 82 57 t 88 55 t Columbia, SC 93 69 s 95 75 t Dallas 100 78 s 103 77 s Denver 85 57 pc 93 59 t Des Moines 84 63 pc 82 58 t Detroit 84 66 t 82 59 pc Duluth 74 49 c 67 46 c El Paso 103 75 s 102 75 s Eugene 91 49 s 93 52 pc Fairbanks 71 56 c 75 54 c Grand Rapids 80 64 t 78 56 pc Hartford 82 63 s 85 65 t Helena 85 53 s 93 56 s Honolulu 88 76 s 90 75 s Houston 96 77 sh 96 76 t Indianapolis 86 66 t 83 63 pc Jackson, MS 98 75 t 95 74 t Jacksonville 92 72 t 93 74 t Latin America Bogota 65 44 pc Buenos Aires 52 43 c Caracas 81 71 t Guatemala 81 63 pc La Paz 57 32 pc Lima 74 61 s Mexico City 77 54 t Monterrey 102 75 s Montevideo 54 46 c Panama 90 75 t Rio de Janeiro 71 65 sh Santiago 57 36 pc Sao Paulo 63 57 sh 66 52 82 81 57 73 78 102 59 91 74 66 73 45 43 71 61 27 59 53 75 47 77 67 43 58 sh c t pc pc s t s r t pc s c Africa/Middle East Abu Dhabi Addis Ababa Baghdad Beirut Cairo Casablanca Dakar Harare Jerusalem Johannesburg Nairobi Riyadh Tehran 107 67 107 86 97 79 84 73 79 52 77 102 101 88 59 79 75 73 66 72 49 62 26 54 79 82 pc t s s s s pc pc s s r s s 107 67 106 79 98 83 83 70 83 56 77 104 101 92 60 71 77 74 65 73 49 63 32 53 79 84 pc t s s s s pc s s s sh pc s Weather Delays Weather and forecast weather-related delays at major airline hubs. Check most updated schedule with airlines. Legend: Allday delays possible (AD); Morning delays (AM); Evening delays (PM) U.S. Atlanta Chicago Dallas/Ft. Worth Denver Detroit Houston Las Vegas Los Angeles Miami Weather s t s pc t s s s t Delay NO AM NO NO AD NO NO NO AD U.S. Mpls./St. Paul New York Orlando Philadelphia Phoenix San Francisco Salt Lake City Seattle Washington Weather pc s t s s pc s s s Delay PM NO PM NO NO AM NO NO NO International Weather Delay Hong Kong Johannesburg London Paris Rio de Janiero Singapore Sydney Tokyo Vancouver pc s pc pc sh sh pc s s PM PM none none AM PM PM none none Weather to Buy or Sell Natural gas demand across the Northeast will be affected due to below normal temperatures over the next 10 to 15 days. U.S. Midwest & Great Plains Below-Normal Temperatures Nymex Natural Gas Closing price in $ per ton Normal Temperatures U.S. NEXT 10-15 DAYS Below-normal temperatures to continue for the next 10-15 days. Source: Thomson Datastream 6606718 P2JW196016-4-B00600-1--------XA Composite CYAN BLACK YELLOW MAGENTA P2JW196017-5-C00100-1--------XA ***** C M Y K Composite 07/15/2009 AZ,CL,CX,DL,DX,EE,FL,HO,MW,NC,NE,NY,RM,SA,SC,SL,SW,WB,WE P2JW196017-5-C00100-1--------XA First Day in Prison For #61727-054 THE MADOFF FRAUD C3 s Copyright 2009 Dow Jones & Company, All Rights Reserved * * * * * CBS May Need Help From Dr. Phil HEARD ON THE STREET C14 THE WALL STREET JOURNAL. UBS is hopeful its second-quarter results will show the worst is over — INTERNATIONAL FINANCE . . . . . . C2 The lead bidders for AIG’s asset-management unit drop out — DEALS & DEAL MAKERS . . . . . . . . . . . . . . C3 After a turnaround and controversy under his watch, CEO Black resigns from Janus — FUND TRACK . . . . . C12 Wednesday, July 15, 2009 C1 Regulators Near Deal On Package To Save CIT CIT Group Inc. and federal regulators were working to iron out details of an aid package Tuesday night after customers drained hundreds of millions of dollars from the lender, according to people familiar with the matter. By Serena Ng, Jeffrey McCracken and Damian Paletta An outline of the plan began to emerge Tuesday as CIT’s liquidity crisis worsened. Corporate customers drew down on their credit lines Monday and Tuesday. People familiar with the matter put the drawdowns at several hundred million dollars; one said a number discussed by the board ran as high as $775 million. That placed an added strain on the cash-strapped company and increased the urgency for a resolution. Under the plan, regulators would allow CIT to transfer assets from its holding company to its bank in Utah; the Federal Reserve would let CIT pledge some of those assets at its discount window and the company would take steps to refinance some of its existing debt. The package isn’t yet finalized and it remains uncertain whether a deal can be struck. CIT’s board, which has been meeting regularly in the past few days, met again late Tuesday with the hope of coming to a solution soon, said one person familiar with the matter. It is unclear what role CIT Chief Executive Jeffrey Peek would have if a deal is reached involving the government, the person said. The financial position of CIT, a lender to almost a million small and midsize businesses, has weakened in recent days and government officials have come under increasing pressure to find a solution. News over the weekend that the company hired lawyers to help prepare for a possible bankruptcy filing prompted customers to draw down on credit lines and the company’s bonds and stock slumped. While CIT customers recently had as much as $3.9 billion in undrawn revolvers, it is unlikely that whole amount can be drawn down in the near term because many of the credit agreements require borrowers to put up collateral against the loan or meet certain financial-performance standards known as covenants. Shares of CITrose 26 cents to $1.61 on Tuesday as it became clear that at least some arms of Please turn to page C3 Markit’s Market | An investigation focuses on access to proprietary information The Justice Department’s antitrust division requested information from Markit and its shareholder banks relating to price transparency. MARKIT Collects credit-default swap price quotes and creates indexes and other data that can be sold to clients. Various groups pay for access for Markit’s CDS data. INSTITUTIONAL INVESTORS Pay Markit for data to help in pricing their CDS positions. Loan Paid, J.P. Morgan Swagger Returns By Robin Sidel J.P. Morgan Chase & Co., freed from the government’s strictures after repaying $25 billion in federal money, is back to playing hardball. The bank’s tougher stands include stepping up its opposition to the government’s proposed legislation on derivatives and telling the Treasury Department it is fed up with haggling over the value of warrants that the government holds in J.P. Morgan. The bank also is talking tough with clients and taking market share and top performers from competitors. The renewed swagger comes as J.P. Morgan is poised to report strong quarterly results on Thursday, solidifying its place as the strongest major commercial bank. Although the bank’s mortgage and credit-card businesses are being hurt badly by rising unemploymentandtherecession,its traditional Wall Street businesses are booming. The bank also is expected to provide a strong showing from retail branches that it acquired last fall from failed thrift Washington Mutual. Analysts surveyed by Thomson Reuters expect J.P. Morgan to earn four cents a share in the second quarter. Although a blockbuster earnings report from Goldman Sachs Group Inc. means that J.P. Morgan could beat those expectations, the results still will likely fall well short of the 54 cents that the company reported last year for the same period. “While some banks have spent the cycle shrinking to survive, J.P. Morgan has been investing, acquiring and expanding,” John McDonald, a banking analyst at Sanford C. Bernstein & Co., wrote in a recent report. The bank’s latest effort to promote its views involves the Obama administration’s plan to step up regulation and transparency in the derivatives market. The bank supports a proposal to send standard derivatives contracts through an industrywide clearinghouse that can be monitored by regulators. J.P. Morgan, however, opposes a requirement that the trades should be moved onto an exchange, in part, because it would inhibit the use of customized derivatives that clients require. J.P. Morgan’s strong voice starts at the top. Although he initially supported the Troubled Asset Relief Program, Chief ExecuPlease turn to page C3 INDEX CD Rates .......................C4 Commodities ...........C11,14 Credit Markets ...........C10 Currency Trading..........C14 Deals & Deal Makers ...C3 Exch.-Traded Funds........C9 Heard on the Street ...C14 International Finance ...C2 Money Rates ...............C10 Mutual Funds ..............C12 Property Report ........C6-9 Stock Listings .............C11 Stocks in the News.......C5 BANKS, DEALERS Several big banks privately own Markit and deliver to it information on their CDS trades. Markit’s largest shareholders are among the biggest CDS dealers, including J.P. Morgan, Citigroup, UBS and Goldman Sachs. Sources: the companies; WSJ reporting Information INDEX TRADERS Hedge funds, investors and other bank clients can trade Markit indexes to make general bets on the direction of various markets. U.S. Tightens Its Derivatives Vise T he Justice Department’s investigation into credit-default swaps is homing in on the role of Markit Group Holdings Ltd. and its ownership by a group of banks that control a large amount of pricing information in the $26 trillion market. By Liz Rappaport, Carrick Mollenkamp and Serena Ng In recent weeks, the Justice Department’s antitrust division contacted Markit and several large banks that own the company, seeking information on the banks’ ownership of Markit and what data they provide to the company, according to people familiar with the matter. The interest of the Justice Department reflects the growth of credit derivatives from an obscure corner of the credit markets into a world-wide business that is drawing increased scrutiny. As the market grew, Markit became the dominant provider of pricing and information. The probe dovetails with a push by the Obama administra- tion for more transparency in the market, which was blamed for helping deepen the credit crisis last year. Credit-default swaps are effectively insurance contracts designed to protect investors against losses on bonds or loans. The contracts are now more often used as a tool to speculate on the health of an issuer. Investors and competitors have groused about the dominance of Markit and its owners, which comprise the top dealers in thecredit-derivativesmarkets,including J.P. Morgan Chase & Co., Goldman Sachs Group Inc. and Credit Suisse Group. They complain that Markit has access to key pricing information that is handed to it by banks, preventing them from producing competing products.Aswell, Markitruns key indexes that now account for muchof the trading in the market. Other companies are able to utilize banks’ credit-default swaps data for product sales. They include the ABX indexes that track subprime mortgages, and CDX index of corporate credit-default swaps, both of which became a fixation for many as markets cratered last year. While the Justice Department didn’t specify its concerns in letters it sent, the fact that its antitrust division is leading the probe indicates the agency is examining anticompetitive behavior rather than market manipulation. Laura Sweeney, a spokeswoman for the department, declined to comment. Markitissuedastatementsaying it has “been informed of an investigation by the Department of Justice into the credit derivatives and related markets.” Markit’s Teresa Chick wouldn’t comment on the extent of the investigation, or provide additional details. The agency asked each bank for information on its participation in the credit derivatives mar- The Justice Department is probing Markit Group and its bank owners. ket, its ownership stake and the type of data provided to Markit, according to people familiar with the letters. Markit shareholders also include Citigroup Inc., Deutsche Bank AG, Bank of America Corp., Barclays PLC, UBS AG, Morgan Stanley, HSBC Holdings PLC and others. Other shareholders include asset managers and Markit employees. Spokespeople for the banks declined to comment. Several market participants have complained behind the scenes about Markit’s behavior in the credit-default swap market, said Tim Backshall, chief strategist at Credit Derivative Research, which studies the creditdefault-swap market. It is problematic that “the dealers who make the markets should be in charge of the pricing services,” Mr. Backshall said. Competitors to Markit say they have run into headwinds trying to develop rival products and investors have complained that dealers have too tight a grip on the market. In an email a few weeks ago to about a hundred market participants, Samuel Cole, chief operating officer of hedge-fund manager BlueMountain Capital, expressedfrustrations over what he Please turn to page C3 After Dow’s Homer, a 27.81-Point Single By Peter A. McKay Stocks mustered only tiny gains after Monday’s rally, despite strong earnings from Wall Street bellwether Goldman Sachs Group and better-than-expected retail sales data. The Dow Jones Industrial Average, which soared 185 points Monday, closed up 27.81 points, or 0.3%, at 8359.49, helped by a 2.4% gain in Home Depot. Consumer stocks got a boost from data showing that U.S. retail sales rose a better-than-expected 0.6% in June, the best gain in five months. Strong auto and gasoline sales offset weakness in many sectors. The S&P 500 rose 0.5% to 905.84, breaking into positive territory for the year, up 0.3%. It was led by a 1.5% increase for its consumer-discretionary category, which played catch-up after lagging behind the broader market in recent sessions. Monday’s hefty gains were driven largely by hopes that earnings reports due from Wall Street bellwethers would show signs of recovery from the credit crunch. Goldman Sachs confirmed some of that optimism Tuesday as its quarterly numbers smashed through analyst estimates, but after Monday’s 5.3% gain its shares rose just 0.1%, to $149.66, following the news. Tuesday’s Markets DJIA Nasdaq Oil/barrel 10-year Treasury Dollar 8359.49 1799.73 $59.52 Price Yield s vs. euro s vs. yen s 27.81 s t 6.52 0.17 t 26/32 3.445% $1.3939 ¥93.37 Free updates at WSJMarkets.com “A lot of the Goldman move was set up on Monday. The question now is what is the next incentive,” said Roger Volz, director of equities at BGC Partners in New York. Intel rose 2.1% ahead of its earnings announcement after the close, helping the Nasdaq Composite Index gain 0.4%. The shares continued to rise in afterhours trading after the semiconductor giant’s results and outlook beat expectations. Oil slipped for the third day in a row, down 0.3% to $59.52 a barrel, the lowest settlement price since mid-May. But copper rose 3.5% and the Dow Jones-UBS Commodity Index was up 1%. Treasury prices were hurt by a stronger-than-expected reading of wholesale-level inflation. The yield on the benchmark 10-year note rose to 3.445%, the highest in a week. AHEAD OF THE TAPE | By Mark Gongloff Rental Market: the New Inflation Fighter In the battle between inflation and deflation, landlords may be on the deflationary side, like it or not. The Bureau of Labor Statistics on Wednesday releases the most closely watched U.S. inflation gauge, the consumer-price index. Economists estimate CPI rose 0.6% in June, due largely to resurgent energy prices. Expensive energy also boosted producer prices in June, the bureau reported Tuesday. Retail gasoline averaged $2.68 a gallon in June, up nearly 16% from May and 57% from its December low. Excluding food and energy, “core” CPI likely rose just 0.1% in June. Rising energy costs are painful for consumers and could exacerbate investors’ worries that an inflationary monster is coming to sap their nest eggs, particularly the fixed-income investments they have snatched up lately. But perhaps even more key to the inflation outlook, or at least the CPI’s imper- Receding Rent Percentage change from a year earlier 8% 6 4 2 0 1985 ’90 Rent recession ’95 ’00 ’05 Owners’ equivalent rent Source: Labor Department fect measure of it, is the rental market. Rent and an exotic construction called “owners’ equivalent rent,” which measures what owners give up by occupying instead of renting their homes, together make up roughly 39% of core CPI. As such, what residential landlords can fetch can significantly affect the world’s perception of inflation. A small army of former homeowners and would-be buyers unable to get credit are now hunting for shelter in the rental market, putting some up- ward pressure on rents. But pressures in the other direction may prove stronger in the long run. A young generation too shellshocked by the Great Recession to leave their parents’ homes has helped push the national rental vacancy rate to 10.1%, near a record, notes J.P. Morgan economist Robert Mellman. Rising unemployment will make it harder for landlords to raise the rent. Rent typically declines for at least a year after a recession, as leases often take a year to turn over, which keeps them deceptively expensive for a time. A combined 2% decline in rent and owners’ equivalent rent, the average decline following the past three recessions, would cut the year-over-year percentage change in core CPI from 1.8% to 1%, according to Mr. Mellman. That could go a long way toward deflating inflation fears. Email: tape@wsj.com See why many portfolios of today have iShares ETFs at their core. Visit www.iShares.com for more information. www.iShares.com Call 1-800-iShares to request a prospectus, which includes investment objectives, risks, fees, expenses and other information that you should read and consider carefully before investing. Investing involves risk, including possible loss of principal. Neither BGI nor SEI provide investment advice. Funds distributed by SEI Investments Distribution Co. (SEI) and advised by Barclays Global Fund Advisors (BGFA). BGFA is a subsidiary of Barclays Global Investors, N.A., not affiliated with SEI. ©2009 Barclays Global Investors. All rights reserved. iShares® is a registered trademark of Barclays Global Investors, N.A. iS-0714-0409 6606719 P2JW196017-5-C00100-1--------XA Composite CYAN BLACK YELLOW MAGENTA P2JW196018-4-C00200-1--------XA **** BLACK 07/15/2009 AZ,CL,CX,DL,DX,EE,FL,HO,MW,NC,NE,NY,RM,SA,SC,SL,SW,WB,WE P2JW196018-4-C00200-1--------XA * * * * C2 Wednesday, July 15, 2009 THE WALL STREET JOURNAL. Nikkei Ends Loss Streak; London Rises 0.9% By Rosalind Mathieson And Sarah Turner Japanese stocks broke a ninesession losing streak on Tuesday as auto stocks rose and brokerage shares rallied in anticipation of strong results from Goldman Sachs. Strong gains Monday on Wall Street combined with a rise in commodity stocks to push other Asian markets higher, too. WORLD News of GoldSTOCK MARKETS man’s surprisingly strong result, released after the close of Japanese trading, helped extend the rally into the European day, reassuring investors about second-quarter profits. Asian shares continued mostly higher in early Wednesday trading, with tech stocks leading in Tokyo and Seoul after optimistic comments from Intel on its earnings outlook. Japan was up 0.4%, with South Korea gaining 2.2% and Australia adding 1.0%. New Zealand was down 0.1%. In TOKYO on Tuesday, the Nikkei Stock Average of 225 companies rose 2.3% to 9261.81 points. Nomura Holdings, Japan’s biggest investment bank, soared 6.9%. The Nikkei newspaper reported auto makers were increasing production capacity in China to meet brisk local demand. Nissan Motor surged 7.3%. In HONG KONG, the Hang Seng Index surged 3.7% to 17885.73. Guangzhou R&F Properties rose 3.1% after the brokerage UOB KayHian said Chinese residential sales surged 35% in June from the previous month. China’s Shanghai Composite Index rose 2.1% to 3145.16, Australia’s S&P/ASX 200 closed 3.5% higher at 3867.10, and India’s Sensex climbed 3.4% to 13853.70. Later in the day, the pan-European Dow Jones Stoxx 600 index rose 1.3% to 203.50. Banks with investment-banking operations gained ground. Barclays rose 1.2% in London and BNP Paribas added 3.1% Paris. In LONDON, the FTSE 100 index rose 0.9% to 4237.68. Mining stocks rose. Xstrata shares closed up 5.4%. In PARIS, the CAC-40 index gained 1% to 3081.87, but trading was light because of the Bastille Day holiday. Société Générale shares climbed 2.5%. In FRANKFURT, the DAX index rose 1.3% to 4781.69. Auto stocks rose in response to slightly more favorable economic news. BMW added 5.3%. Markets in the Americas were mixed. In MEXICO CITY, the IPC index of leading issues rose 1.6% to 24340.65. 7 In Brief 7 Sberbank Net Falls On Big Provisions OAO Sberbank on Tuesday posted a sharp decline in first-quarter net profit as Russia’s biggest lender increased provisions against rising loan defaults sparked by the recession. Net fell to 600 million rubles ($18.3 million) from 31.1 billion rubles a year earlier, the stateowned bank said. Net interest income, meanwhile, rose 37% to 115.5 billion rubles from 84.2 billion rubles. The fall in profit was driven by provisions—the money a bank sets aside to cover possible loan defaults—which climbed to 90.7 billion rubles from 7.5 billion rubles. The bank plans to set aside enough money to prepare for the possibility of 9.5% to 10% of its loans turning sour by the end of 2009. Associated Press Though UBS recently warned of a second-quarter loss, Chief Executive Oswald Grübel, left, sees ‘encouraging signs’ for its performance. Reuters UBS Sees Signs of a Turnaround Effort to Focus on Private Banking Gains Traction; Restoring the Reputation By Katharina Bart ZURICH—UBS AG, one of the banks hit hardest by the financial crisis, sees “encouraging signs” for its second-quarter performance and is proceeding as planned with efforts to reposition itself around its privatebank and investment-banking arms, its chief executive said. In a company memo Tuesday, CEO Oswald Grübel said that further details about what the Swiss banking giant calls a “comprehensive turnaround program” would be disclosed with its second-quarter results, due Aug. 4. Despite previously warning investors to expect a net loss because of a reversal of credit gains on the bank’s own debt and restructuring charges, Mr. Grübel said the second quarter showed encouraging signs, such as lower write-downs on UBS’s remaining risk positions. UBS has had to write down more than $50 billion in illiquid securities and raise outside capital four times, including once through an emergency Swiss government-aid package last October. Now, with most of its illiquid and troublesome securities switched to a fund managed by the Swiss National Bank, UBS’s biggest problem is dwindling client funds. “We are on the right path to leaving this crisis behind us,” Mr. Grübel wrote in the memo. UBS is fighting to stanch heavy outflows of client funds as it struggles to reach a settlement in a U.S. tax probe, which has evolved into a diplomatic matter between the U.S. and Switzerland over bank secrecy. The restructuring effort centers on a sharper focus on private banking, or money management for the wealthy, and has resulted in major steps such as the sale of Brazilian Banco Pactual earlier this year and cutting thousands of jobs. On the restructuring, Mr. Grübel said that “we will combine our wealth management and Swiss banking businesses with the global expertise of our investment bank and our institutional asset management.” Specifically, plans for UBS’s so-called corporate center are most advanced, he said in the memo. Those include plans to pool information-technology, real-estate and building-maintenance services, and human resources. Mr. Grübel said more specifics about the restructuring will be released Nov. 17 at an investor day. A spokeswoman for UBS confirmed the contents of Mr. Grübel’s memo. Mr. Grübel has said he is aiming to reach as much as 4 billion Swiss francs ($3.7 billion) in cost savings next year compared with 2008, in part by shedding 11% of its work force. UBS warned of the second-quarter loss last month when it raised 3.8 billion francs in its most recent stock sale. The memo is meant as a rallying cry for employees as encouraging signs start to emerge and rivals begin reporting secondquarter earnings, Bank Vontobel analyst Teresa Nielsen said. In the memo, Mr. Grübel urged employees to shift their thinking from the risky bets that fueled huge profits in recent years, and said clients would be choosier and more critical of overpriced products. “Whoever dreams of ‘easy money’ and, in doing so, jeopardizes the confidence of clients, the reputation of the firm and its long-term success, has not understood what the new rules of the game are all about,” Mr. Grübel said in the memo. Restoring UBS’s reputation is the bank’s utmost priority, Mr. Grübel said, as he urged employees to improve transparency of services to clients. India’s HDFC Logs 31% Gain in Profit HDFC Bank Ltd., India’s second-largest privatesector bank by assets, posted 31% growth in fiscal first-quarter net profit, as fees, commissions and income from noncore operations rose while its lending business slowed. Net rose to 6.06 billion rupees ($123.9 million) for the quarter ended June 30 from 4.64 billion rupees a year earlier. Total income rose 22% to 51.37 billion rupees, while other income nearly doubled to 10.44 billion rupees. Fees and commissions, up 27% at 6.49 billion rupees, were the largest contributors to the bank’s other income. Vaibhav Agrawal, banking analyst at Angel Broking, said the results were in line with sector trends. Nasdaq Is Out Of Oslo Exchange Nasdaq OMX Inc. last month sold its stake in Oslo Børs, the only Scandinavian stock market it doesn’t control, a stake that had become awkward after Oslo Børs ended a technology contract with Nasdaq and signed a strategic agreement with Nasdaq rival London Stock Exchange Group PLC. Nasdaq, parent of the Nasdaq Stock Market in the U.S., sold its 6% stake in Oslo Børs in early June, and no longer has an interest in the exchange, according to a spokeswoman. A spokesman for Oslo Børs said the recent stake sale came as “no surprise.” Positive Change Nikkei Stock Average, change from previous day 3% 2 1 0 –1 –2 –3 July 1 6 9 14 Source: Thomson Reuters via WSJ Market Data Group Administrators representing Lehman Brothers Holdings Inc.’s main European unit have set forth a plan to return about $13 billion in client funds that have been in legal limbo since the investment bank collapsed last September. Under the U.K. court filing expected to be made Wednesday, roughly 1,000 clients still owed money by Lehman’s European arm have until the end of 2009 to submit their claims. The plan, which requires court approval, targets the first quarter of 2010 for those assets to be returned. “This scheme will allow our clients to get finality on their financial positions,” said Steven Pearson, an administrator of the unit, called Lehman Brothers International Europe, and a partner at PricewaterhouseCoopers. Lehman Brothers’ Chapter 11 filing spawned financial chaos across the globe, as nearly 80 Lehman subsidiaries Lehman’s Europe Unit Sets Repayment Plan China Ends A Freeze On Bond Issues By Peter Lattman world-wide were forced to fold. When Lehman filed for legal protection from creditors in the U.K., many client assets held in custody there were essentially frozen under the court proceeding. A number of those clients were hedge funds that maintained Lehman accounts for holding bonds, only about 35 large Lehman clients, mostly large financial institutions and hedge funds. That left nearly 1,000 clients that are still owed money by Lehman’s European arm. Complicating matters, roughly $6 billion of European client assets remains tied up with Lehman’s U.S. operations. The European unit is still negotiating the release of those assets. Mr. Pearson worked with a creditors’ committee, including Ramius LLC and GLG Partners Inc., to devise a plan to return the assets. Earlier this year, Lehman’s U.S. estate pushed for an international framework for coordinating bankruptcy proceedings. That global protocol was approved by the court in June and signed by nearly every Lehman subsidiary. Lehman Brothers International chose not to participate in the international agreement, saying it lacks practicality and they are governed by their own local rules. SHANGHAI—China ended a 10-month moratorium on the issuance of exchange-traded corporate bonds Tuesday by giving Shanghai Yuyuan Tourist Mart Co. permission to sell 500 million yuan ($73.2 million) of the bonds. The five-year bonds will be sold on the Shanghai Stock Exchange on Friday. Exchangetraded bonds are one of three categories of bonds in China’s corporate-bond market. The relaxation of restrictions in this particular section of the corporate-debt market comes on the heels of the CSRC’s decision last month to resume initial public offerings after a nine-month hiatus. It also reflects Beijing’s growing ease with the domestic capital markets’ capacity and appetite for supply as the economic recovery gains traction. About $12 billion has been in limbo since the bank collapsed. stocks, and other securities. The protracted process of identifying clients’ claims and returning assets raised the ire of these clients, several of which filed lawsuits against Lehman to reclaim their funds. The administrator has returned about $13 billion of $32 billion in total client assets. Those funds were distributed to Sichuan Expressway Sets a China IPO Toll-road operator Sichuan Expressway Co. aims to raise as much as 1.8 billion yuan (US$264 million) in an initial public offering, and set an indicative price range of 3.25 yuan to 3.60 yuan. Sichuan Expressway, the first company to launch an IPO on China’s main board in nearly a year, plans to sell 500 million Class A shares. The IPO’s indicative price range was above the price of its Hong Kong-traded shares. Sichuan Expressway said the final pricing will be disclosed Friday. Dollar Reverses Monday’s Moves By Paul Evans The dollar clawed back its losses of a day earlier against its major rivals Tuesday, as foreignexchange marCURRENCY kets continued to suffer from a TRADING lack of conviction and direction. Just as Monday was marked by a turn higher for risk appetites, sentiment drooped again Tuesday as stocks see-sawed most of the day. The euro and other higher-yielding currencies typically sell off in favor of safer assets like the dollar when stocks and other indicators of risk appetite dip. Tuesday’s risk relapse came despite positive factors such as a greater-than-expected increase in the U.S. June retail sales report and strong second-quarter earnings results announced by Goldman Sachs Group Inc. Analysts attributed the lack of any positive impact from the Goldman Sachs earnings to the fact that a robust second quarter for the firm was already anticipated and discounted in the over- Currencies U.S.-dollar foreign-exchange rates in late New York trading Country/currency US$ vs, Tues YTD chg in US$ per US$ (%) Country/currency July 14, 2009 US$ vs, Tues YTD chg in US$ per US$ (%) Forex Race The yen and the euro against the dollar, and the dollar versus the major U.S. trading partners* $ per Per $ Euro Yen $1.3939 $0.010710 ê 0.7174 ¥93.37 87.2 Dollar index* 30% 20 10 0 –10 –20 –30 2008 '09 *J.P.Morgan trade-weighted index Source: Thomson Reuters Datastream via WSJ Market Data Group all risk environment. “I don’t think the risk appetite has gone away completely,” said chief currency strategist Shaun Osborne of TD Securities in Toronto. “It’s just that, as has often been the case in these mar- kets, we’re unable to get any follow-through.” Indeed, dealings this week have reinforced the tendency in effect since about mid-June for the euro and many widely traded currencies to simply drift through relatively narrow, wellestablished ranges. Nick Bennenbroek, head of currency strategy at Wells Fargo Bank in New York, said recent trading patterns suggest “it would likely take a significant economic, earnings or policy surprise to jolt the foreign-exchange markets into a new orbit.” Late Tuesday, the euro was at $1.3939 from $1.3996 late Monday, and the dollar was at 93.37 yen from 92.93 yen. The euro was at 130.15 yen from 130.06 yen. The dollar logged a sizable improvement versus the Swiss franc in rising to 1.0906 francs from 1.0817 francs, and the Swiss unit also suffered big losses against the euro, raising suspicions of more Swiss National Bank intervention tactics even though none was confirmed. The pound moved to $1.6288 from $1.6232 late Monday on encouraging U.K. economic data. Americas Argentina peso* .2628 3.8052 10.2 Brazil real .5084 1.9670 –15.0 Canada dollar .8804 1.1358 –6.7 1-mos forward .8804 1.1358 –6.7 3-mos forward .8808 1.1353 –6.7 6-mos forward .8809 1.1352 –6.6 Chile peso .001825 547.95 –14.1 Colombia peso .0004883 2047.92 –8.9 Ecuador US dollar 1 1 unch Mexico peso* .0725 13.7931 0.5 Peru new sol .3307 3.024 –3.5 Uruguay peso† .04320 23.15 –5.1 Venezuela b. fuerte .465701 2.1473 unch Europe Czech Rep. koruna** Denmark krone Euro area euro Hungary forint Norway krone Poland zloty Russia ruble‡ Sweden krona Switzerland franc 1-mos forward 3-mos forward 6-mos forward Turkey lira** UK pound 1-mos forward 3-mos forward 6-mos forward Bahrain dinar Eqypt pound* Israel shekel Jordan dinar Kuwait dinar Lebanon pound Saudi Arabia riyal South Africa rand UAE dirham SDR†† .05373 .1872 1.3939 .005069 .1544 .3232 .03104 .1262 .9169 .9173 .9181 .9198 .6474 1.6288 1.6287 1.6285 1.6285 18.612 5.3419 .7174 197.28 6.4767 3.0941 32.217 7.9239 1.0906 1.0902 1.0892 1.0872 1.5447 .6139 .6140 .6141 .6141 –3.2 0.3 0.2 3.8 –6.9 4.2 5.5 1.3 2.2 2.2 2.2 2.3 0.3 –10.4 –10.5 –10.5 –10.5 Sweden’s Investor Sees Assets Rise Investor AB, the investment vehicle of Sweden’s Wallenberg family, reported the first quarterly rise in the value of its assets in two years, supported by a rebound in stock markets. The market rally also allowed Investor to swing to a quarterly net profit from a year-earlier net loss. The company on Tuesday reported a second-quarter net profit of 16.85 billion Swedish kronor ($2.14 billion). A year earlier, the company recorded a net loss of 3.52 billion kronor. Investor, the Nordic region’s largest investment company, said its closely watched net asset value per share rose 15% to 165 kronor on June 30, from 144 kronor on March 31. Asia-Pacific Australian dollar .7897 1.2663 China yuan .1464 6.8328 Hong Kong dollar .1290 7.7504 India rupee .02046 48.876 Indonesia rupiah .0000982 10183 Japan yen .010710 93.37 1-mos forward .010713 93.34 3-mos forward .010721 93.27 6-mos forward .010738 93.13 Malaysia ringgit .2788 3.5868 New Zealand dollar .6352 1.5743 Pakistan rupee .01213 82.440 Philippines peso .0208 48.146 Singapore dollar .6847 1.4605 South Korea won .0007718 1295.67 Taiwan dollar .03019 33.124 Thailand baht .02929 34.141 Vietnam dong .00005618 17801 –9.9 0.1 unch 0.5 –6.6 2.9 2.9 3.0 3.1 3.9 –7.7 4.2 1.4 2.0 2.6 1.1 –1.8 1.8 Middle East/Africa 2.6526 .3770 unch .1790 5.5869 1.6 .2528 3.9557 4.7 1.4104 .7090 0.1 3.4751 .2878 4.2 .0006634 1507.39 unch .2666 3.7509 –0.1 .1204 8.3056 –11.6 .2723 3.6724 unch 1.5499 .6452 –0.6 *Floating rate †Financial sGovernment rate ‡Russian Central Bank rate **Rebased as of Jan 1, 2005 ††Special Drawing Rights (SDR); from the International Monetary Fund; based on exchange rates for U.S., British and Japanese currencies. Note: Based on trading among banks of $1 million and more, as quoted at 4 p.m. ET by Reuters. 6606720 P2JW196018-4-C00200-1--------XA BLACK P2JW196019-6-C00300-1--------XA ****** BLACK 07/15/2009 AZ,CL,CX,DL,DX,EE,FL,HO,MW,NC,NE,NY,RM,SA,SC,SL,SW,WB,WE P2JW196019-6-C00300-1--------XA Wednesday, July 15, 2009 THE WALL STREET JOURNAL. * * * * * * C3 J.P. Morgan Exercises Fresh Verve Continued from page C1 tive James Dimon bristled when the government added restrictions to banks that received the funds. He was particularly furious when the government banned firms that received TARP funds from hiring foreigners to work in U.S. offices. Over the next few months, Mr. Dimon’s indignation grew each time a customer or politician referred to the company as a bailedout bank, according to people familiar with the matter. Leading one of the few financial behemoths that skirted the types of problems that led to the collapse of Merrill Lynch & Co., Bear Stearns Cos. and Lehman Brothers Holdings Inc., Mr. Dimon has benefited enormously from those woes by scooping up Bear Stearns and WaMu in government-assisted transactions. Although both deals have been expensive and difficult, they also have bolstered the firm’s market presence in retail banking and prime brokerage. Since repaying the funds, J.P. Morgan has taken a tougher stance with the government. Last week, the bank waived its rights to buy warrants that the government received as part of the financial bailout. After the government rejected the bank’s offer, the bank opted to allow the Treasury to auction the war- Raters Sued By Calpers Over Losses By Rick Brooks Calpers filed a lawsuit against the three biggest creditratings agencies, accusing them of issuing “wildly inaccurate and unreasonably high” ratings on structured investment vehicles that saddled the California pension fund with at least hundreds of millions of dollars in losses. The suit, filed last week in California Superior Court in San Francisco by the nation’s largest public pension fund, ratchets up the unflattering scrutiny of Moody’s Corp.’s Moody’s Investors Service, the Standard & Poor’s unit of McGraw-Hill Cos. and Fimalac SA’s Fitch Ratings over their culpability for the financial crisis. The California Public Employees’ Retirement System alleges that the methodology used by all three companies to rate the complicated mortgage-backed securities was “seriously flawed in conception and incompetently applied,” according to the suit. In 2006, Calpers invested $1.3 billion in three separate SIVs, all of them awarded top triple-A ratings by the ratings agencies. As the financial crisis deepened in 2007 and 2008, Cheyne Finance LLC, Stanfield Victoria Funding LLC and Sigma Finance Inc. defaulted on their payment obligations. Calpers said the resulting losses on its investment could be more than $1 billion. Calpers didn’t indicate how much in damages it is seeking. A cover sheet filed by a lawyer representing the pension fund indicated only that the amount “exceeds $25,000.” Moody’s, S&P and Fitch officials couldn’t be reached for comment late Tuesday night. Ratings agencies have been pilloried by lawmakers and investors for failing to cast a more skeptical eye toward mortgage securities that got the firms’ highest ratings during the realestate boom but then collapsed. While the companies are facing other lawsuits and tighter oversight, they generally have avoided moves that would fundamentally change how they do business, including the controversial practice of being paid by the issuers of securities. (See related article on C10). Calpers, which has about $173 billion in assets and manages the retirement benefits of more than 1.6 million California employees, retirees and their families. The lawsuit was reported on the Web site of the New York Times. Associated Press Bernard Madoff was assigned to one of two medium-security prisons at the Butner complex in North Carolina (shown on Monday). Madoff Begins 1st Day of 150 Years Ponzi Operator, Now Prisoner 61727-054, Arrived 11:15 a.m. EDT at Prison By Chad Bray Convicted Ponzi-scheme operator Bernard Madoff arrived at a federal prison in North Carolina THE MADOFF toi s begin 5serving h 1 0 - ye a r FRAUD prison term. Greg Norton, a spokesman for the U.S. Bureau of Prisons, said Mr. Madoff arrived about 11:15 a.m. Eastern time Tuesday at Butner Federal Correctional Complex in Butner, N.C. Mr. Madoff, 71 years old, was assigned to one of two mediumsecurity prisons at the complex. Mr. Madoff is prisoner number 61727-054. The Butner complex, about 30 miles north of Raleigh, includes two medium-security prisons, a low-security prison, a medical facility and a satellite prison camp for minimum-security male inmates. Butner had 4,874 inmates in custody at its five prisons as of last Thursday, according to the Bureau of Prisons. The mediumsecurity prison to which Mr. Madoff has been assigned had about 725 inmates in custody as of last Thursday. On Monday, Mr. Madoff was moved from the Metropolitan Correctional Center in New York, where he had been housed since he pleaded guilty to fraud and other charges in March. He was held overnight at the U.S. Penitentiary in Atlanta before being transported to Butner. Ira Sorkin, Mr. Madoff’s lawyer, declined to comment on Tuesday. Mr. Sorkin had asked that Mr. Madoff be housed at the Federal Correctional Institution in Otisville, N.Y. Mr. Madoff was sentenced to 150 years in prison June 29 after admitting in March to running a decades-long Ponzi scheme that bilked thousands of investors out of billions of dollars. According to the Bureau of Prisons Web site, inmates at the Butner medium-security prisons are assigned 16 visiting points a month. Visits during the week count as one point, while visits on weekends and holidays are four points. Only three adults may visit an inmate at a time. Inmates who are medically cleared to work are assigned jobs at the prison and assigned to work a seven-hour day, Mr. Norton said. The bank is talking tough with clients and taking market share from competitors. rants in the public market. Elsewhere, J.P. Morgan is taking issue with portions of the White House’s financial plan that deals with the regulation of derivatives. The bank’s derivatives contracts were valued at roughly $81 trillion at the end of the first quarter, representing 40% of the derivatives held by banks, according to the Office of the Comptroller of the Currency. The bank has played down its potential exposure from the contracts, saying that notional value isn’t equivalent to the amount of risk facing the bank. The unregulated derivatives market has taken the heat for much of the financial crisis, leading the White House to propose measures aimed at regulating the instruments by funneling trades through exchanges where regulators can monitor them. Such a move could crimp the derivatives industry, eating into the billions of dollars that J.P. Morgan earns each year in helping clients navigate the contracts and assuming counterparty risk in such transactions. The bank also is using its industry standing to bolster its ranks. Just two weeks after it repaid the TARP funds, the bank swiped William Rifkin, one of Wall Street’s best-known investmentbankers, away from Bank of America Corp. and named him as vicechairman of itsmergers-andacquisitions department. Mr. Rifkin had worked at Merrill Lynch for more than a decade beforethe brokeragewas subsumed by the Charlotte, N.C., bank. Regulators Near Deal On CIT Aid Package Continued from page C1 the government would offer assistance to the company. White and Case LLP attorney Thomas Lauria said Tuesday that he is trying to organize CIT bondholders. “This is a very unpredictable situation with a lot of volatility and uncertainty on how it will impact investors,” said Mr. Lauria. The group includes Pacific Management Investment Co. and Loomis Sayles & Co., according to a banker familiar with the matter. Analysts expect CIT to offer should be offered and some feel that CIT could be trying to overhype the consequences of its potential collapse to scare Washington into action. There is also the risk that propping up CIT will reinforce the stigma that Washington will bail out companies that aren’t even considered too big to fail. Still, officials know they face unknown ramifications if the company does collapse, and the economy is still in weak enough shape that it is unclear whether they are willing to take that risk. The asset transfers to CIT’s bank would require approvals from the Fed and the Federal Deposit Insurance Corp. The FDIC remains reluctant to give CIT access to a temporary program that allows banks and thrifts to issue debt with government backing. CIT late last year received approval to convert to a bank holding company and received $2.33 billion from the Treasury under the Troubled Asset Relief Program. One likely concern for regulators is how CIT can fund a steep rise in assets at its Utah bank. Part of the company’s strategy is to aggressively seek out deposits through brokers, but the FDIC traditionally views such moves as higher risk, especially at companies that are struggling. It is unclear if the FDIC will sign off on such a strategy. DEAL JOURNAL Breaking Insight From WSJ.com Should the U.S. Let CIT Fail? Question Pits Theory Of Creative Destruction Against Repercussions By Michael Corkery o bail out or not to bail out CIT Group? Deal Journal posed the question to Matthew Richardson, a finance professor and director of the Salomon Center at New York University’s Stern School of Business. Here are excerpts from the interview: T Government officials know they face unknown ramifications if the company does collapse. to exchange some existing debt for new securities with better claims over the company’s assets. Discussions over the government’s approach to CIT have exposed many of the fault lines that widened during the financial crisis last year and come at an awkward time for regulators. Government officials have tried to pivot their attention to focus on broader industry clean up instead of reverting to one-off rescues of flailing companies. Government officials remain split over how much help CIT DJ: When Lehman Brothers Holdings collapsed, the securities firm wasn’t considered too big to fail, yet its collapse caused financial chaos globally. Mr. Richardson: It’s a tough case to make that CIT is like Lehman. Lehman had counterparty risks, which were extraordinary. It literally had millions of transactions outstanding in the capital markets when it declared bankruptcy. It also happened at a time of complete uncertainty. People wondered if there would be runs at Morgan Stanley and Goldman Sachs next. That environment is very different than it is today. DJ: Can you measure the level of systemic risk that a CIT failure poses. Mr. Richardson: Our research shows that CIT ranks 25th out of 102 financial institutions in a ranking of systemic risk from 2004 to 2007. At the top of the list were Bear Stearns, Lehman and Merrill Lynch, Fannie Mae and Freddie Mac. DJ: Why do you think CIT ran into such serious trouble? Mr. Richardson: It’s hard to say whether it’s purely a financing issue or whether the quality of its loans is subpar. Read continuous updates on the high-stakes world of deal making, Deal Journal, free online at blogs.wsj.com/deals Deal Journal: Should the U.S. government save CIT Group from a bankruptcy filing? Mr. Richardson: Anytime an important player in the economy—a bank, a lender or auto company—goes under it has repercussions for that economy. But I am not sure that is a great argument for saving them. Part of capitalism is that it allows for creative destruction and the next generation of business to be more efficient. DJ: What is the biggest potential fallout of allowing CIT to fail? Mr. Richardson: It creates uncertainty. If you let CIT go down, people are going to wonderifthe governmentis alsogoing to let the guy that has a little more systemic risk fail and they’ll withdraw their capital. Suitors End Pursuit Of AIG Unit By Jenny Strasburg And Liam Pleven The lead bidders for American International Group Inc.’s asset-management unit have dropped out, marking another twist in the insurer’s efforts to sell the division. Meanwhile, questions have emerged about how AIG has managed the talks and why they have dragged on. Franklin Templeton Investments Inc. and its lead adviser in the buyout effort, Charles E. “Chuck” Johnson, a former executive of the mutual-fund company, this past weekend dropped out of two-month exclusive talks to buy AIG Investments, citing irreconcilable strategic differences within the bidding group, say people familiar with the matter. Franklin Templeton’s bidding partners are seeking to pursue a deal without the mutual-fund company, potentially with a new partner, people familiar with the talks say. It is unclear how far along the conversations are. “This deal remains on track and we’re quite satisfied with the progress,” says an AIG spokesman. Regarding questions about the process, he says questions are often raised “from people who are ignorant of the facts.” AIG, trying to sell assets to raise tens of billions to pay back government loans, in March received interest from a range of bidders for AIG Investments. Since then, the potential price for the unit, which manages some $85 billion in investments for clients, has fluctuated from $800 million to $300 million. Win Neuger, the unit’s chief executive, has played a key role in the negotiations. Mr. Neuger said in an interview Tuesday that he has represented executives and investment managers on issues including retaining employees and overall compensation and equity stakes for hundreds of staffers. James Dimon Timothy Geithner U.S. Probes Markit, Its Bank Owners Continued from page C1 calleddealers’“oligopolisticdominance” in the credit markets, including their interests in Markit. From its London headquarters, Markit collects credit-default-swap pricing data from credit-market dealers and then complies and distributes it to clients early the next morning. The firm was founded in 2001 by Lance Uggla, a credit trader at TD Securities in London, a unit of TD Bank Financial, growing out of a database Mr. Uggla began to collate pricing information on credit derivatives. He persuaded TD to let him form a separate unit and soon Markit had equity investments from major banks. As credit derivatives ballooned, Markit became an integral part of the market. The Justice Department’s inquiry has raised eyebrows among some observers who wonder how this will intersect with proposals from the Obama administration to overhaul regulation of overthe-counter derivatives. Some pointed out that the administration’s proposal, if adoptedfully by Congress,wouldpotentiallyeliminate much of Markit’s advantage by moving products onto exchanges. The probe, while in its early stages, also underscores the renewed vigor of the Justice Department under Assistant Attorney General Christine Varney. The department has ramped up its investigations into potentially monopolistic practices at cellphone carriers to hiring within Silicon Valley to a range of takeover deals. A centerpiece of the Obama administration’s proposals involves requiring that all derivatives with “standardized” terms be cleared centrally through regulated clearinghouses and traded on exchanges or regulated electronic platforms. Trades on Markit’s swap indexes and many contracts tied to well-known corporate names are considered to be standardized. As well as clearing, the banks have a stake in protecting the proprietary nature of Markit’s indexes, which comprise at least a third of the market’s overall trading volume. The ABX indexes gave investors the ability to bet against the mortgage market for the first time. They surged in popularity as the market began to melt down. And like the skyrocketing prices of swaps on financial institutions like American InternationalGroupInc.,orMorgan Stanley last fall, the CDX became a key indicator of coming trouble. “These market indices are widely used and have a tangible role in how credit is priced across all the markets,” said David Havens, managing director at Hexagon Securities. —Kara Scannell contributed to this article. Former Dow Jones Chief Lands a Private-Equity Job Dow Jones in 2001 as chief financial officer after holding senior fiRichard Zannino, the former nance, strategy and operating pochief executive of Dow Jones, sitions at several companies, including Saks and Liz Claiborne. landed a job in private equity. “I came to realize Mr. Zannino is jointhat private equity is a ing CCMP Capital Advinatural next step,” said sors, a New York buyMr. Zannino, who last out firm with $10 bilmonth joined the board lion under manageof Internet media firm ment. Formerly known IAC/InterActiveCorp. as J.P. Morgan Partners He will sit on CCMP’s before J.P. Morgan investment committee Chase & Co. spun it out and co-head its conin 2006, CCMP’s holdsumer, media and retailings include sandwich ing practice. He joins anshop Quiznos Subs, AMC Entertainment Richard Zannino other recent hire, corporate executive Greg and Spanish cable operBrenneman, who joined last Auator Grupo Corporativo Ono. The 50-year-old Mr. Zannino gust as chairman. While CCMP resigned as CEO of Dow Jones & has been hiring, it has been quiet Co., publisher of The Wall Street as a deal maker during the finanJournal, in January 2008 after cial downturn. Last month it ofNews Corp. acquired the com- fered $202 million to buy Eddie pany for $5 billion. He joined Bauer out of bankruptcy. By Peter Lattman 6606721 P2JW196019-6-C00300-1--------XA BLACK P2JW19601A-0-C00400-1--------XA BLACK 07/15/2009 AZ,CL,CX,DL,DX,EE,FL,HO,MW,NC,NE,NY,RM,SA,SC,SL,SW,WB,WE P2JW19601A-0-C00400-1--------XA THE WALL STREET JOURNAL. C4 Wednesday, July 15, 2009 få jÉãçêá~ã MARKETS LINEUP Dow Jones Industrial Average 8359.49 s 27.81, or 0.33% High, low, open and close for each trading day of the past three months. All-time high: 14164.53, October 9, 2007 9000 Last Year ago jáÅÜ~Éä gK jóÉêë 1940 – 2009 We mourn the passing of our dear friend and Senior Advisory Partner, who worked with and encouraged us since Sentinel’s inception in 1995 and who made a profound impact on Sentinel’s founders during an association that spanned almost three decades. We will miss him greatly. Nasdaq Composite Index 1799.73 s 6.52, or 0.36% High, low, open and close for each trading day of the past three months. All-time high: 5048.62, March 10, 2000 2000 Last † Year ago † 74.26 Trailing P/E ratio 12.33 13.00 11.94 P/E estimate * 3.43 2.95 Dividend yield 0.132319125 Current divisor Trailing P/E ratio * 32.85 18.13 P/E estimate * 0.70 Dividend yield † Based on Nasdaq 100 Index 14.85 20.30 0.56 8700 1900 8400 1800 8100 65-day moving average Session high DOWN Session open Close Bars measure the point change from session's open UP Close Open 7800 65-day moving average 1700 1600 t t 7500 1500 Session low 7200 1400 Apr. 2009 Composite t t Big Six-Month CDs at 0.86% NEW YORK—Yields on certificates of deposit were mostly lower in the latest week. The average yield on sixmonth “jumbo” CDs, which typically require deposits of $95,000 or more, fell to 0.86% from 0.90% the previous week, according to Bankrate.com. The yield on fiveyear jumbos was 2.29%, down from 2.30%. The average yields on smalldenomination “savings” CDs also were mostly lower. The average six-month yield fell to 0.79% from 0.83% the prior week. The average two-year CD yield was unchanged at 1.52%, while the average five-year yield edged down to 2.16% from 2.17%. Apr. 2009 May June July Primary market May June July NYSE daily volume, in billions of shares Nasdaq daily volume, in billions of shares 4 2 0 April May June July 8 4 0 April May June July * P/E data based on as-reported earnings from Birinyi Associates Inc. STOCKS, CURRENCIES & COMMODITIES Major U.S. Stock-Market Indexes High Low LATEST Close Net chg % chg High 52-WEEK RANGE Low % chg YTD % CHG 3-yr. ann. BANKRATE.COM$ MMA, Savings and CDs Average Yields of Major Banks Type MMA 1-MO 2-MO 3-MO 6-MO 1-YR Tuesday, July 14, 2009 DJTA Dividend yield 3186.42 s 41.81 63.27/31.21 2.34% 3600 3200 2800 s P/E, trailing/estimate* 2-YR 2.5YR 5YR National average Savings Jumbos 0.36 0.82 0.35 0.38 0.34 0.36 0.54 0.59 0.79 0.86 1.10 1.21 1.52 1.62 1.46 1.54 2.16 2.29 Dow Jones Industrial Average Transportation Avg Utility Average Total Stock Market Barron's 400 8361.23 3203.94 354.52 9273.50 204.96 8285.20 3132.55 350.04 9173.69 202.40 8359.49 3186.42 354.45 9273.50 204.96 27.81 41.81 2.36 55.10 1.89 0.33 1.33 0.67 0.60 0.93 11782.35 5216.50 508.08 13307.96 295.82 6547.05 2146.89 290.68 6858.43 144.83 –23.7 –31.6 –30.2 –25.2 –26.5 –4.8 –9.9 –4.4 2.1 8.3 –8.0 –11.5 –5.4 –9.3 –8.5 DJTA daily close t Nasdaq Stock Market Nasdaq Composite 1800.73 Nasdaq 100 1455.00 Standard & Poor's 500 Index MidCap 400 SmallCap 600 1782.85 1439.57 1799.73 1452.84 905.84 564.99 265.12 6.52 5.14 0.36 0.36 0.53 0.82 0.70 2453.67 1964.38 1268.64 –18.8 1036.51 –19.2 676.53 –25.4 404.62 –26.9 181.79 –23.7 14.1 19.9 –4.1 –0.2 –9.9 –8.1 –9.3 65-day moving average Feb. Mar. Apr. May June 2400 2000 Weekly change Savings Jumbos -0.01 -0.01 0.00 0.00 -0.01 0.00 -0.01 -0.01 -0.04 -0.04 -0.04 -0.03 0.00 0.00 0.00 0.00 -0.01 -0.01 905.84 564.99 265.19 896.50 557.12 261.61 4.79 4.60 1.85 1305.32 824.99 397.34 0.3 5.0 –1.3 DJUA Dividend yield 354.45 s 2.36 11.18/11.35 4.69% 390 DJUA daily close t s P/E, trailing/estimate* Consumer Savings Rates Explanation of ratings: Safe & Sound SM, (561) 627-7330 ext. 11410, evaluates the financial condition of federally insured institutions and assigns a rank of 1,2,3,4 or 5 based on data from the first quarter of 2009 from federal regulators. 5: most desirable performance; NR: institution is too new to rate, not an indication of financial strength or weakness. Information is believed to be reliable, but not guaranteed. High yield savings Bank/rank Phone number Minimum Yield (%) Bank/rank Phone number Minimum Yield (%) Other Indexes Russell 2000 496.69 NYSE Composite 5805.59 Value Line 238.60 NYSE Arca Biotech 655.46 NYSE Arca Pharma 263.60 KBW Bank 36.67 PHLXs Gold/Silver 135.71 PHLXs Oil Service 155.50 PHLXs Semiconductor 270.59 CBOE Volatility 26.84 sPhiladelphia Stock Exchange 490.81 5743.05 235.37 648.57 261.63 35.89 133.00 152.54 265.65 24.99 496.52 5805.58 238.60 649.95 263.60 36.41 134.88 154.97 269.61 25.02 3.21 44.21 2.22 –0.60 –3.91 1.87 –0.11 –0.30 2.63 2.72 4.32 –1.29 –4.90 0.65 0.77 0.94 0.71 1.99 1.79 1.63 754.38 8580.57 391.70 886.57 317.83 82.55 195.86 334.86 377.09 80.86 343.26 4226.31 152.74 541.77 218.19 18.62 64.36 104.14 171.32 18.81 –25.0 –28.8 –31.7 –16.9 –13.2 –24.9 –31.1 –51.9 –22.4 –12.3 –0.6 0.8 5.6 0.4 –3.4 –17.8 8.9 27.7 27.1 –37.5 –10.0 –10.0 –15.9 0.9 –6.6 –29.9 –2.4 –9.4 –13.0 11.5 360 330 300 65-day moving average 270 Feb. Mar. Apr. May June Sources: Thomson Reuters; WSJ Market Data Group Money market and savings account Tennessee Commerce Bank /2 (877) 684-2265 Goldwater Bank /3 (480) 281-8200 UFBDirect.com /1 (888) 580-0049 $500 2.01 $1,500 2.03 $250 2.30 Six-month CD UFBDirect.com /1 (888) 580-0049 Corus Bank /1 (800) 989-5101 newdominionDIRECT.com /2 (704) 943-5700 $3,000 1.67 $10,000 1.75 $8,000 1.90 Commodities and Currencies Pricing trends on some raw materials, or commodities, and the strength of the U.S. dollar against other currencies Close TUESDAY Net chg % Chg High 52-WEEK Low % Chg YTD % chg Financial Flashback The Wall Street Journal July 15, 1986 ‘ One way of looking at Florida is that it has the fastest-growing economy in which alligators can be a deterrent to commerce. This business backwater has developed one of the country’s most powerful economies. DJ-UBS Commodity Reuters-Jefferies CRB Crude oil, $ per barrel Natural gas, $/MMBtu Gold, $ per troy oz. U.S. Dollar Index U.S. dollar, JPM index Euro, per dollar Yen, per dollar 115.599 236.20 59.52 3.429 922.50 1.524 2.59 –0.17 0.166 0.30 1.34 1.11 –0.28 5.09 0.03 0.07 –0.46 0.41 0.48 224.206 101.999 –48.44 –1.40 450.30 138.74 11.477 1001.80 89.105 96.0 0.8017 110.51 200.34 33.87 3.253 704.90 71.703 78.6 0.6290 87.40 –47.55 2.90 –57.10 33.45 –70.12 –39.01 –5.65 4.40 11.83 –1.38 10.94 –1.58 14.05 0.21 –10.89 2.91 ’ YTD % chg One-month CD UFBDirect.com /1 (888) 580-0049 Park National Bank /2 (866) 727-5628 Lone Star Bank /3 (713) 358-9400 $1,000 0.99 $1,000 1.00 $8,000 1.05 One-year CD newdominionDIRECT.com /2 (704) 943-5700 Goldwater Bank /3 (480) 281-8212 Ally Bank /2 (877) 247-ALLY $0 2.10 $50,000 2.13 $3,000 2.26 80.184 0.058 87.2 –0.40 0.7174 0.0029 93.37 0.44 International Stock Indexes LATEST Region/Country Index Close Net chg % chg World WSJ.com $5,000 2.40 World Americas Brazil Canada Mexico Venezuela Europe Euro zone Belgium France Germany Israel Italy Netherlands Spain Sweden Switzerland U.K. Asia-Pacific Australia China Hong Kong India Japan Singapore South Korea Taiwan The Global Dow DJ World Index DJ World ex U.S. MSCI EAFE* DJ Americas Sao Paulo Bovespa S&P/TSX Comp IPC All-Share Caracas General DJ Stoxx 600 DJ Euro Stoxx Bel-20 CAC 40 DAX Tel Aviv FTSE MIB AEX IBEX 35 SX All Share Swiss Market FTSE 100 1596.38 181.46 159.77 1277.72 235.92 48872.58 9986.15 24340.65 45054.96 203.50 219.83 2025.71 3081.87 4781.69 858.28 18450.54 251.91 9634.0 243.68 5365.05 4237.68 19.82 2.27 2.80 20.77 1.86 –314.35 94.22 388.69 213.36 2.70 2.35 32.12 29.79 59.35 6.68 233.07 2.12 66.60 2.68 49.76 35.55 2.22 129.60 64.60 631.10 453.38 211.48 43.91 7.44 108.59 –0.64 1.26 1.27 1.78 1.65 0.79 0.95 1.62 0.48 1.34 1.08 1.61 0.98 1.26 0.78 1.28 0.85 0.70 1.11 0.94 0.85 2.19 3.47 2.10 3.66 3.38 2.34 1.94 0.54 1.66 4.6 5.5 8.9 3.3 4.3 30.2 11.1 8.8 29.0 3.4 –1.3 6.1 –4.2 –0.6 31.1 –5.2 2.4 4.8 19.3 –3.1 –4.4 10.5 3.9 72.7 24.3 43.6 4.5 31.2 23.2 44.6 Two-month CD Lone Star Bank /3 (713) 358-9400 UFBDirect.com /1 (888) 580-0049 First NB of Baldwin County /1 (251) 943-5656 $500 0.50 $8,000 1.10 $1,000 1.10 Two-year CD California First National Bank /5 (800) 735-2465 Ally Bank /2 (877) 247-ALLY Intervest National Bank /3 (212) 218-8383 $2,500 2.35 $0 2.35 How the Largest Mutual Funds Did Largest fund vs. the broad market American Fds Gro;A DJ Total Stock Market Quarter-to-date –1.6% –1.6% Year-to-date 10.3% 2.1% One-year –24.7 –25.2 Three-year –6.1 –7.5 Five-year 0.8 –1.2 Stock Funds American Fds Gro;A American Fds CIB;A Fidelity Contrafund American Fds CWGI;A Vanguard T Stk Idx;Inv American Fds ICA;A American Fds Inc;A Vanguard 500 Idx;Inv Vanguard Instl Idx;Inst American Funds Wsh; Bond Funds PIMCO:Tot Rtn;Inst American Fds Bond;A Vanguard Tot Bd;Inv Vanguard GNMA;Adm Vangrd Int-Tm TxEx; Net TOTAL RETURN (%) Symbol change YTD 52-wk AGTHX CAIBX FCNTX CWGIX VTSMX AIVSX AMECX VFINX VINIX AWSHX Three-month CD Imperial Capital Bank /1 (866) 413-5626 UFBDirect.com /1 (888) 580-0049 Lone Star Bank /3 (713) 358-9400 $1,000 1.25 $8,000 1.30 $2,000 1.35 Five-year CD iGObanking.com /3 (888) 432-5890 Lone Star Bank /3 (713) 358-9400 Goldwater Bank /3 (480) 281-8212 $50,000 3.46 $1,000 3.50 $1,000 3.50 0.12 0.10 0.23 0.12 0.13 0.11 0.03 0.44 0.44 0.09 –0.02 –0.03 –0.02 –0.02 ... 10.3 2.7 4.9 5.3 2.8 4.1 2.5 1.8 1.8 –3.6 –24.7 –20.0 –26.1 –25.0 –24.3 –20.3 –17.7 –24.2 –24.1 –23.7 PTTRX ABNDX VBMFX VFIJX VWIUX High yield jumbos - Minimum is $100,000 Money market and savings account UFBDirect.com /1 (888) 580-0049 Discover Bank /3 (888) 204-8984 State Farm Bank /3 (877) 734-2265 x 1.90 x 1.95 x 2.01 Six-month CD UFBDirect.com /1 (888) 580-0049 Corus Bank /1 (800) 989-5101 giantbank.com /3 (877) 446-4200 x 1.66 x 1.75 x 1.90 7.2 9.5 7.9 –3.6 2.8 6.3 3.1 8.5 6.3 4.4 Source: Lipper Quick Click: Visit WSJMarkets.com for free quotes, research and performance data on more than 10,000 funds and ETFs. DJ Asia-Pacific 103.44 S&P/ASX 200 3867.1 Shanghai Composite 3145.16 Hang Seng 17885.73 Bombay Sensex 13853.70 Nikkei Stock Avg 9261.81 Straits Times 2310.55 Kospi 1385.56 Weighted 6639.41 *Europe, Australia, Far East, U.S.-dollar terms Sources: Thomson Reuters; WSJ Market Data Group BONDS, RATES & YIELDS x 2.10 One-month CD UFBDirect.com /1 (888) 580-0049 Park National Bank /2 (866) 727-5628 Silvergate Bank /3 (800) 595-5856 x 0.90 x 1.00 x 1.05 One-year CD Discover Bank /3 (888) 204-8970 Ally Bank /2 (877) 247-ALLY Nexity Bank /1 (877) 738-6391 x 2.10 x 2.10 Consumer Rates and Returns to Investor U.S. consumer rates A consumer rate against its benchmark over the past year 4.00% Five-year CD yields t Benchmark Yields and Rates Treasury yield curve 2.60 % Selected rates 5-year CDs Bankrate.com avg†: Intervest National Bank 3.55 % New York, NY 212-218-8383 iGObanking.com Lake Success, NY Lone Star Bank Houston, TX Discover Bank New Castle, DE E-LOAN Pleasanton, CA 3.50 % 888-432-5890 3.50 % 713-358-9400 3.50 % 888-204-8970 3.50 % 866-576-SAVE Libor-swap curve Fixed mid rates* to be paid against three-month Libor 5.00% 4.00 Libor t Yield to maturity of current bills, notes and bonds Swap t t Two-month CD UFBDirect.com /1 (888) 580-0049 First Trade Union Bk /3 (800) 242-0272 First NB of Baldwin County /1 (251) 943-5656 x 0.50 x 0.50 x 1.10 Two-year CD California First National Bank /5 (800) 735-2465 Intervest National Bank /3 (212) 218-8383 Ally Bank /2 (877) 247-ALLY x 2.35 x 2.35 x 2.40 One year ago t 5.00% 4.00 3.00 2.00 3.00 2.00 One year ago 3.00 2.00 Federal-funds target rate t 1.00 0.00 1.00 t Tuesday 1.00 0.00 –1.00 A S O N D J F M AM J J 2009 2008 Interest rate t Tuesday 0.00 –1.00 30 1 3 6 1 2 3 5 10 20 30 month(s) year(s) maturity Three-month CD UFBDirect.com /1 (888) 580-0049 Excel National Bank /2 (888) 392-5265 Nexity Bank /1 (877) 738-6391 x 1.16 x 1.25 x 1.30 Five-year CD Waterfield Bank /1 (877) 992-4700 Intervest National Bank /3 (212) 218-8383 Third Federal Savings and Loan /4 (888) 844-7333 x 3.40 x 3.45 x 3.50 YIELD/RATE (%) Last (l) Week ago 52-WEEK RANGE (%) 3-yr chg Low 0 2 4 6 8 High (pct pts) 1 3 6 1 2 3 5 710 month(s) years maturity *Semiannual swaps maturing in 2 yrs–30 yrs Sources: Ryan ALM; ICAP plc. Notes: Accounts are federally insured up to $250,000 per person effective Oct 3, 2008 through Dec 31, 2013. Yields are based on method of compounding and rate stated for the lowest required opening deposit to earn interest. CD figures are for fixed rates only. MMA: Allows six (6) third-party transfers per month, three (3) of which may be checks. Rates are subject to change. Source: Bankrate.com, a publication of Bankrate, Inc., North Palm Beach, FL 33408 Internet: www.bankrate.com Federal-funds rate target 0-0.25 Prime rate* 3.25 Libor, 3-month 0.51 Money market, annual yield 1.24 Five-year CD, annual yield 2.60 30-year mortgage, fixed† 5.33 15-year mortgage, fixed† 4.98 Jumbo mortgages, $417,000-plus† 6.75 Five-year adj mortgage (ARM)† 4.70 New-car loan, 48-month 7.27 Home-equity LOC, $30,000 5.80 0.00 3.25 0.54 1.28 2.61 5.46 5.14 6.84 4.80 7.26 5.86 0.00 3.25 0.51 1.24 2.60 5.06 4.69 6.43 4.67 6.45 4.70 l l l l l l l l l l l 2.00 5.00 4.82 2.54 4.28 6.61 6.22 7.89 6.14 7.50 5.87 –5.25 –5.00 –4.99 –2.12 –2.54 –1.09 –1.14 0.15 –1.42 0.30 –1.02 Corporate Borrowing Rates and Yields Bond total return index Close YIELD (%) Last Week ago 52-WEEK High Low TOTAL RETURN (%) 52-wk 3-yr Bankrate.com rates based on survey of over 4,800 online banks. *Base rate posted by 70% of the nation's largest banks.† Excludes closing costs. Sources: Thomson Reuters; WSJ Market Data Group; Bankrate.com Treasury, Ryan ALM 10-yr Treasury, Ryan ALM DJ Corporate Aggregate, Barclays Capital High Yield 100, Merrill Lynch Fixed-Rate MBS, Barclays Muni Master, Merrill EMBI Global, J.P. Morgan 1084.71 1231.33 228.68 1393.97 1493.03 1502.76 370.59 418.87 2.588 3.445 5.225 3.950 9.359 4.250 3.443 7.744 2.613 3.460 5.266 4.050 9.421 4.370 3.638 7.787 3.801 4.148 8.872 5.670 17.034 5.920 5.021 12.208 1.503 2.078 4.860 3.540 9.229 2.440 3.198 7.087 7.74 7.73 11.15 6.30 –3.31 9.37 4.44 2.80 8.19 8.74 7.31 6.54 1.38 7.91 4.93 6.05 Sources: J.P. Morgan; Ryan ALM; Ryan Labs; Barclays Capital; Merrill Lynch 6606722 P2JW19601A-0-C00400-1--------XA BLACK P2JW19601B-2-C00500-1--------XA ** BLACK 07/15/2009 AZ,CL,CX,DL,DX,EE,FL,HO,MW,NC,NE,NY,RM,SA,SC,SL,SW,WB,WE P2JW19601B-2-C00500-1--------XA Wednesday, July 15, 2009 THE WALL STREET JOURNAL. * * C5 STOCKS IN THE NEWS Dell’s 8.1% Decline Was S&P’s Biggest By Karen Talley NEW YORK—As stocks put in a modest advance, Dell dropped on a disappointing outlook, Humana fell on a contract loss and railroad CSX remained on track to move forward. “We got off on a good foot Tuesday with better-than-expected earnings from Goldman LARGE Sachs and STOCK Johnson & FOCUS Johnson,” said David Scott, president at Chase Investment Council, a moneymanagement firm. “We’re in earnings season now, so if you get companies like this doing well, it can be just enough to push the bias in favor of buying.” Dell (Nasdaq) fell $1.05, or 8.1%, to $11.97, the S&P 500’s biggest percentagedecliner.The personal-computer maker said a tough technology market and high component prices will lower its profit margins for its current quarter, deflating investors’ hopes for a quick turnaround in the PC industry. CSX gained 2.26, or 6.9%, to 34.80. Second-quarter profit dropped20% asrevenue and margins declined, resulting in continued cost-cutting efforts for the railroad. Still, the results topped Wall Street’s expectations and CSX said freight volume for the current quarter isn’t expected to slide as steeply as the second quarter’s 21% decline. Humana dropped 2.31, or 7.6%, to 28.28. The Department of Defense awarded billion-dollar military health-care contracts to Aetna and UnitedHealth Group, ending an alliance with Humana and Health Net. Aetna shed two cents to 26.31 and UnitedHealth dropped 24 cents, or 1%, to 24.77. Goldman Sachs Group added 22 cents to 149.66. Secondquarter profit surged as Wall Street’s largest surviving investment bank delivered record results in trading and stock underwriting. Share movement may have been tempered by Goldman’s 5.3% rise on Monday after generally bearish financial analyst Meredith Whitney upgraded Goldman to “buy” and raised her 2010 earnings estimate. Dow industrial Johnson & Johnson gained 51 cents, or almost 1%, to 58.23. Second-quarter profit declined nearly 4%, with sales hurt by unfavorable currency rates, generic competition for prescription drugs and tighter consumer spending. The results were better than analysts expected and the maker of Tylenol and Band-Aids reiterated its full-year profit forecast. Dow industrial AT&T dropped 32 cents, or 1.3%, to 23.45. Small-cap Centennial Communications was down as much as 15%, to 6.94, during the session, significantly below AT&T’s 8.50-a-share offer for the company, reflecting market concerns the deal won’t be approved by regulators. Centennial closed down 78 cents, or 9.6%, to 7.35, on the Nasdaq. Dow industrial Intel (Nasdaq) advanced 34 cents, or 2.1%, to 16.83 ahead of the chip maker posting second-quarter results after the close. International Game Technology rose 80 cents, or 5.4%, to 15.64. Shares of gambling-equipment makers rose after Illinois’ governor signed a bill that could bring tens of thousands of video poker machines to bars and restaurants in the state. Mohawk Industries rose 1.99, or 6%, to 35.04. J.P. Morgan raised the flooring-product supplier’s shares to “overweight,” saying the building-products sector looks like a good bet for longterm investors, based on its estimate that a return to “normalized earnings” will take about five years and could bring a 48% average upside for the group. Cnooc’s American depositary shares gained 4.40, or 3.8%, to 120.80. “The stock is not cheap,” based on the long-term price of oil, said Banc of America Securities-Merrill Lynch, but shares could see support because of the company’s position as a pure oil play, excellent execution, operational capabilities and premium asset portfolio. Prudential Financial rose 33 cents, or about 1%, to 37.32. J.P. Morgan raised the insurer’s stock to “overweight” from “neutral,” saying potential catalysts for share upside include “superior” return on equity, earnings-per-share growth potential and a strong capital position following recent debt and equity offerings. Below, news-making stocks' 4 p.m. closing share prices. The three-month charts show percentage changes in a stock's price in relative terms (logarithmic scale), but are labeled in price. The Good News… CIT Group $1.61 CIT DryShips $5.76 DRYS CSX $34.80 CSX Blue Nile $42.45 NILE s $0.26, or 19.26% s $0.50, or 9.51% s $2.26, or 6.95% s $4.43, or 11.65% Reports said the business lender was in advanced talks with the government about getting potential aid. Vessel day rates for dry bulk shippers increased and the Baltic Dry Index, a measure of the cost of hauling freight across oceans, was higher for the first time in several days. $11 8 5 The railroad company’s earnings results topped Wall Street expectations, but a drop in second-quarter profit resulted in continued cost-cutting efforts. $55 40 25 Citigroup upgraded the online jeweler’s stock to “buy” from “hold,” saying the retailer's stock slip provides an entry point and the drop in diamond prices helps inventories. $66 48 30 $5.5 65-day moving average s 4.0 2.5 Daily closes 1.0 Apr. May June July Apr. May June July 2 Apr. May June July 10 Apr. May June July 12 …And the Bad News Dell $11.97 DELL Customer are straying from tech spending as the personal-computer maker deals with higher component costs and a competitive pricing environment. $22 Daily closes t 65-day moving average Apr. Stone Energy Rises 6.6%, Hornbeck Adds 4.9% By Geoffrey Rogow NEW YORK—A pause in the recent slide of oil prices helped spur broad buying in energy stocks Tuesday, leading smallcaps higher. Though crude oil closed down 17 cents at $59.52 a barrel, the commodity’s decline was SMALL slowed down STOCK Tuesday. TradFOCUS ers say the impact of weak demand is becoming priced into the market after improved demand expectations had led to a false surge in oil earlier this year. For the session, the Russell 2000 index of small-capitalization stocks rose 3.21 points, or 0.65%, at 495.52, marking itsthird consecutive day in the green. The Standard & Poor’s Small Cap 600 rose 1.85, or 0.7%, to 265.12. Leading the gains, Stone Energy climbed 46 cents, or 6.6%, to $7.41, and Hornbeck Offshore rose 1.02, or 4.9%, to 21.78, both on the New York Stock Exchange. Online jeweler Blue Nile jumped 4.43, or 12%, to 42.45, after an analyst at Citigroup said abating revenue declines and improved polished diamond pricing will contribute to a “reasonable” second quarter. On the deals front, Japanbased Hisamitsu Pharmaceutical said it will buy Noven Pharmaceuticals for $428 million. The offer values Miami drug-delivery-systems maker Noven at $16.50 a share, a 22% premium to Noven’s closing price Monday. Noven closed Tuesday up 3, or 22%, at 16.48. Shares of dry-bulk shippers traded higher as vessel day rates increased, giving a boost to several Greece-based companies. Among them, Excel Maritime Carriers (NYSE) tacked on 1.27, or 21%, to 7.41, and DryShips rose 50 cents, or 9.5%, to 5.76. Burnsville, Minn., medical-device maker Biotel declined 2.54, or 53%, to 2.22, after saying CardioNet ended its proposed acquisition of Biotel because it allegedly failed to satisfy the agreement terms, a position Biotel dismissed as being “without merit.” Biotel said it is considering legal options. San Diegobased CardioNet closed up 33 cents, or 5.6%, at 6.20. Take-Two Interactive Software slid 88 cents, or 9.8%, to 8.10, after the New York videogame maker lowered its fiscal 2009 guidance, largely to reflect the delayed release of “BioShock 2,” which was expected to sell about 5 million copies. Hi-Tech Pharmacal climbed 2.86, or 29%, to 12.75, after the Amityville, N.Y., pharmaceutical company reported fiscal fourthquarter earnings that were much better than expected. Dime Community Bancshares climbed 71 cents, or 7.8%, to 9.86, after the New Yorkbased regional bank preannounced second-quarter earnings above its April guidance, thanks to lower-than-expected credit costs. Goldman Trade Points to a Short-Term Pullback By Ed Welsch A blowout second quarter in Goldman Sachs Group’s highly anticipated earnings report didn’t settle the matter for options traders, who continued heavy trading in Goldman’s July options contracts after the news. Trading in July puts, which allow traders to sell shares, was OPTIONS well above the REPORT open interest at the $150 and $145 strike prices, which suggests traders expect that Goldman shares will make a short-term pullback before the July contracts expire on Friday, according to Brian Overby, an options analyst at TradeKing. “This heavy volume in the July contract looks like the upside is overshot on the earnings news,” Mr. Overby said. “It’s such a short-term trade with such huge volume, it looks like it could be a ‘buy the rumor, sell the news’ situation.” The $150 July puts traded at $2.60, which mean they reach the break-even point if Goldman shares drop below $147.40 by Friday, while the $145 puts traded for 85 cents each, meaning they are in the money if Goldman shares decline below $144.15. Goldman shares closed up more than 5% Monday, but traded in a narrow range Tuesday even though Goldman’s earnings of $4.93 a share beat estimates. Shares rose a fraction to $149.66. Analyst David Trone of FoxPitt Kelton Cochran Caronia Waller LLC told clients he expected Goldman’s results to be “far weaker” during the second half of the year due to a smaller deal pipeline, less demand for corporate-debt issuance and the end of the big bank capital raises following the government stress test results this spring. Options traders also appeared to be engaged in speculative trading around fertilizer company Intrepid Potash. About 16,000 call options traded, according to Track Data, most of which were in July contracts that expire on Friday. Call options allow traders to buy shares at a set price. Most of the activity was above the level of open interest, meaning traders were entering into new contracts with just three days of trading left. “They would have to be expecting some very bullish news coming out,” said Michael Schwartz, chief options strategist at Oppenheimer & Co. “The only trading profile that makes sense is that they think there’s going to be an imminent takeover offer,” he said. “But most of the time it doesn’t play out.” Intrepid spokesman William Kent said, “It’s our policy not to comment on unusual market activity or rumors.” Intrepid has been a target of takeover speculation in the past. Tuesday’s traders picked up July call options at the $24 and $25 strike prices. Intrepid shares would have to rise more than 4% and 7%, respectively, within the next three days for those contracts to be in the money. Intrepid shares closed up 1.6% at $23.35. INSIDE TRACK | By David J. Reynolds The Price Is Right for O’Reilly Automotive Stock W ith O’Reilly Automotive stock hovering near alltime highs, two members of the founding family have marked $40 a share as a good price to sell. Chairman David O’Reilly and brother Lawrence O’Reilly, a company director, sold $8 million in shares at $40 each, regulatory filings show. The brothers planned the sales two months ago, but didn’t execute them until last week when the stock crossed the $40 threshold. Ben Silverman, director of research at InsiderScore.com, a site that tracks and rates insider transactions, sees the sales as a near-term valuation call. “That gives investors a pretty good idea where the O’Reilly brothers feel comfortable” selling, Silverman said. “It’s like an analyst putting a $40 target on a stock.” The auto-parts company declined to discuss the transactions beyond regulatory disclosures made in May. At the time, the company reported that the brothers would sell shares to diversify their holdings. Both trading plans, the company said, provide “for the sales of specified share amounts at specific market prices, subject to specified limitations.” Using trading plans, an insider can avoid the appearance of illegal insider trading by mapping out stock transactions according to a set of instructions formulated in advance. That DAILY SHARE PRICE O’Reilly Automotive (ORLY) Tuesday’s close: $40.14, up 14 cents or 0.4% Year-to-date change: up 31% $40 L LLLL L LLLLL LL LL LL L L L L LL L LL L L LLLLL LLL L LL L L LL L LLLL L LL L L LL 35 L LL L 30 L L L L L LL LLLL L L LLL L L L L L 25 J F M A M J J Cal Sport Media/Zuma Press Source: WSJ Market Data Group way, the trades can be executed even if the insider later learns of important nonpublic information. Auto-parts retailers have benefited from the perception that consumers want to repair old cars rather than buy new ones. Shares of Springfield, Mo.-based O’Reilly Auto have nearly doubled since October lows and closed Tuesday at $40.14, just off the 52-week high of $40.50 a share. Chad Potter, an analyst with Gradient Analytics who studies insider transactions, said stock sales by the O’Reilly brothers make sense. “Both own a considerable amount of O’Reilly stock, so we’d expect them to diversify,” he Ron Hornaday celebrates at the O’Reilly Auto Parts 250 race in 2008. O’Reilly family members recently sold $8 million in shares at $40 each. said. “Typically, we see executives overinvested in their company’s stock.” Still, he said, the latest insider sales at O’Reilly Auto have been quite a bit larger than past sales. Messrs. Silverman and Potter said they will be watching for future sales that might show even more about how the O’Reilly insiders structured their plans. If $40 was a trigger for last week’s sales, what will the next trigger be? With enough data points, Mr. Potter said, observers can extrapolate the workings of the plans with some confidence, and possibly even predict future transactions. “Once in a while,” Mr. Silverman said, “you’ll be able to figure things out.” See the biggest buyers and sellers in the Insider Trading Spotlight table, in Weekend Edition papers. 6606723 P2JW19601B-2-C00500-1--------XA t Humana $28.28 HUM Take-Two Software $8.10 TTWO AT&T $23.45 T t $1.05, or 8.06% t $2.31, or 7.55% t $0.88, or 9.80% t $0.32, or 1.35% The Department of Defense awarded billiondollar military health-care contracts to Aetna and UnitedHealth Group, ending its alliance with the HMO provider. $44 32 20 The videogame maker lowered its fiscal 2009 guidance, largely to reflect the delayed release of “BioShock 2,” which was expected to sell about five million copies. $22 16 10 Investors got increasingly concerned that the telecommunications company’s plan to acquire Centennial Communications would not obtain approval. $44 32 20 16 10 s 4 May June July Apr. May June July 8 Apr. May June July 4 Apr. May June July 8 You can’t protect your company’s reputation if you don’t know what’s said about it on social media sites. Being unaware of what’s said about your company in the social media is risky business. A new generation has embraced blogs, chat rooms and Web sites as a preferred method of communication; it’s where opinions about your company ─ true or not ─ spread like wildfire. Without the right tools to monitor millions of sites globally, discovering negative publicity or dispelling misinformation is virtually impossible. But you can participate in the global conversation when your public relations staff uses advanced text mining, visualization tools and personalized media analysis reports. Don’t turn your back on social media. Dow Jones keeps you abreast of local news and gives you a global perspective by making it easier to monitor, analyze, discover and engage the social media in 22 languages. To learn more, download a complimentary copy of “The Conversational Corporation” today at www.solutions.dowjones.com/antisocial. © Copyright 2009 Dow Jones & Co., Inc. All rights reserved. 2WUOT1449 BLACK P2JW196043-4-C00600-1--------NS **** BLACK 07/15/2009 NY P2JW196043-4-C00600-1--------NS * * * * C6 Wednesday, July 15, 2009 THE WALL STREET JOURNAL. Crisis at Opus Signals Trouble at Private Developers ‘Merchant Builder’ Model Worked Well Until Credit Crunch Dealt Blows to Asset Sales and Debt Refinancing By Christina S.N. Lewis Opus Corp., until recently one of the largest private real-estate developers in the nation, is facing the biggest crisis in its 56-year history, showing how the recession is humbling even companies once regarded as well-managed. The problems of Opus also could be an early indicator of trouble brewing for private realestate companies, whose struggles often remain quiet until they end up in court. “The question is, is Opus the canary in the coal mine,” said Stephen Blank, a senior resident fellow for real-estate finance with the Urban Land Institute. “There are any number of large private developers, who have the same potential issues.” Opus, run by Minnesota’s Rauenhorst family, has been one of the most active so-called merchantbuilders,which develop commercial properties, lease them to corporate tenants and then sell the properties to investors. It was a business model that worked well for decades, until the credit crunch scared away tenants while leaving Opus with short-term debt it couldn’t refinance and dozens of completed construction projects that it couldn’t sell. In the past several months, Opus has sought bankruptcycourt protection for three of its five regional operating companies. Phoenix-based Opus West, the company’s West Coast division with dozens of shopping centers, office complexes, industrial buildings and condominiums across California, Arizona and Texas, filed under Chapter 11 of the bankruptcy code last week, listing $1.28 billion in assets and roughly $1.46 billion in debt. Opus East, in Washington, filed under Chapter 7 bankruptcy liquidation on July 1, with about $238 million in assets and $502 million in liabilities, and Atlanta-based Opus South filed under Chapter 11 in April, facing expirations on $324 million in bank loans. The company’s remaining divisions, Opus North, based in the Chicago-area, and Opus Northwest, in Minnetonka, Minn., the company headquarters, are still running and aren’t expected to file for bankruptcyother troubled companies, Opus was widely viewed as well-run and conservative. “I think they just got caught in that proverbial perfect storm,” said Chuck Moody, a director with Atlanta-based Barry Real Estate Cos., who for nine years was Opus’s southern region marketing director before leaving in 2007. Founded in 1953 as Rauenhorst Construction Co., Opus grew from a suburban Minneapolis general contractor into a full-service developer with its own team of designers and engineers and offices in 28 cities. In 1999, it completed construction on Minneapolis-based Best Buy’s global headquarters. It also built a one million square foot Minneapolis skyscraper for American Express Financial Adv i s o r s, n o w k n o w n a s Ameriprise Financial Services Inc. since it was spun off from American Express Co. in 2005. In this decade, Opus expanded aggressively into other sectors: building condominiums in Southern California and Florida; shopping malls in Minnesota, Oregon and Texas; and industrial warehouses outside Atlanta. It also started building more speculative office buildings, which are those that have no agreed-upon tenant. Now, some of its most valuable properties have an uncertain future, including Hill Country Galleria, a $192 million mixed-use development in Bee Cave, Texas, outside Austin. In April, 10 lenders led by Bank of America Corp., filed a lawsuit against Opus West claiming $160 million in unpaid loans and other debts relating to Hill Country Galleria. Opus subsidiaries have filed some lawsuits of their own, including one against the U.S. General Services Administration over a planned 280,000-squarefoot campus for the National Oceanic and Atmospheric Administration on the University of Maryland Campus in College Park, Md. Opus Chief Executive Mark Rauenhorst declined a request for an interview, citing continuing negotiations with lenders. The company plans to continue operating, but in a much smaller form, according to spokeswoman Winston Hewett. —Anton Troianovski contributed to this article. Opus faces unprecedented challenges. The private developer’s Hill Country Galleria, a $192 million Texas project, above, has filed for Chapter 11. court protection, according to Opus. “Our business model works as long as the project that we’re building is sold,” said Dan Nicol, senior vice president and general counsel for Opus. “What happened to us is the assets could no longer be sold, and we had short-term debt that we couldn’t refinance.” The company has set a late August date to auction the bulk of its Western properties, including The Shoppes at Chino Hills, a 380,000-square-foot open-air shopping mall on the edge of Orange County, Calif., with debt of $106 million. Opus is hardly the first major developer to end up in bankruptcy court because of the growing problems in commercial real estate. But unlike many PLOTS & PLOYS What’s Brewing in the Real-Estate Market Jaded Americans A Hong Kong developer is getting ready for a U.S. road show to raise $1 billion to buy distressed apartment buildings in China, but the company’s fund-raising team appears pessimistic about its chances here. “I’m becoming a bit jaded on Americans, and a little bit hung up,” says William Nobrega, a Conrad Group managing partner advising HongKong based Canada Land Ltd. on its fund-raising efforts for its CDL China Real Estate Opportunity Fund LP. Asian and European institutional investors are bullish on Chinese real estate, Mr. Nobrega says, but not so for their U.S. counterparts. “In many cases, what we have found is that many American investors have pulled out of the Asian market.” CDL has already raised $220 million, Mr. Nobrega says, mostly from big investors in other countries. In the U.S., CDL will face a tough audience. Cash-strapped pension funds and college endowments are dialing down their exposure to real-estate risk in the midst of a disastrous year for commercial-property investments. Just three Americans attended a CDL-sponsored property conference in Singapore recently, Mr. Nobrega said. —Anton Troianovski Toxic Space A new report by Jones Lang LaSalle, a commercial brokerage firm, says there is about 85 million square feet of sublease space on the market nationwide, roughly equivalent to the size of the entire Phoenix market. Sublease inventory grew more than 10% in the second quarter from the first quarter, according to the report, the sharpest rise yet in this down cycle. “As long as job losses continue, sublease space will continue to pile up,” said John Sikaitis, vice president, director of research, for Jones Lang LaSalle and the report’s author. The excess space comes mainly from banks and other financial institutions in New York and the surrounding area. J.P. Morgan Chase & Co. recently listed 450,000 square feet at 277 Park Avenue, in Midtown Manhattan; it no longer needs the space because, when it acquired Bear Stearns Cos. last year, it also acquired the firm’s Skidmore, Owings & Merrill-designed 45-story headquarters at 383 Madison Avenue. But other sizable sublet blocks came from life-sciences companies in Boston, New Jersey and Northern California, as well as some media companies in Los Angeles. The swelling inventory helped drive effective rents down a steep 15.3% over the past 12 months, says Mr. Sikaitis, as building owners were forced to cut asking rents and offer steeper concessions. “Sublease is toxic to landlords,” says Ted Leary, president of Crosswater Realty Advisors, a real-estate consulting firm specializing in restructuring. —Christina S.N. Lewis CoStar Group, Inc. Specialty-Finance IPO Hedge-fund manager Ellington Management Group’s Ellington Financial LLC affiliate plans to raise as much as $200 million in an initial public offering on the New York Stock Exchange, the company said. In a Securities and Exchange Commission filing, the specialty-finance company that invests in mortgage-related securities said it will use the money to buy new assets. Ellington Financial, which will list its common shares on the NYSE under the symbol EFC, was formed with $250 million from Ellington Management principals and existing investors in August 2007. A spokesman for Ellington declined to comment, citing “quiet period” rules surrounding IPOs. Ellington Financial invests in residential mortgage-backed securities, or RMBS, backed by subprime, “Alt-A” and other mortgage loans. It also invests in both mortgage-related and other types of derivatives. —Joseph Checkler and Kerry Grace Benn DEAL OF THE WEEK | By Maura Webber Sadovi ©2009 All rights reserved. The Wall Street Journal® is a registered trademark of Dow Jones L.P. 3HR3017 he owners of Denver’s iconic cash-register building could be inching closer to ringing up a sale for as much as $330 million, people close to the transaction say. The 52-story granite and glass building, designed by Philip Johnson and John Burge and completed in 1983, was nicknamed after its distinctive top that looks like it could be at the end of a checkout line. It has collected about 10 written bids from interested buyers in the past month or so. Now about 96% leased and with Wells Fargo & Co. as one of its largest tenants, the 1.2 million-square-foot building formally known as the Wells Fargo Center was put on the block early this year by Macquarie Office Trust, an Australia real-estate investment trust. If there is a deal, and there isn’t any guarantee there will be one in this turbulent market, brokers believe it would be in the $290 million to $330 million range, and most estimate it will be at the lower end of that range. Back in 2006, Macquarie purchased an 80% stake in the building in a deal that valued the building at $355 million, according to Real Capital Analytics, a realestate-research firm. The seller at that time was Maguire Properties of Los Angeles, which retained ownership of 20% of the property through a joint venture. Macquarie and Maguire declined to comment on the proposed sale. So far, Macquarie has met the bids with radio silence. That has led to speculation from some brokers that the deal has stalled because the sellers aren’t satisfied with a potential sale price that barely covers the building’s debt. About $275 million in debt is secured by the building, say people close to the transaction. The potential transaction’s halting progress also highlights the interconnection of regional U.S. real-estate markets. Some sellers, scrambling to raise cash, are scouring the country for new benchmarks to help them weigh which properties to cut loose from their portfolios— and for what price—as values have slumped because of the recession. “Market participants are trying to get comfortable with where true values reside,” says Dan Fasulo, a managing director at Real Capital Analytics. “Every additional sale brings us closer to consensus.” The Australian seller may be looking to gain some traction by closing another deal roughly 1,000 miles away from Denver’s Wells Fargo building, in Los Angeles. Macquarie won’t turn its attention to selling the Denver building until it unloads the L.A. building, people close to the transaction say. That strategy may in part reflect its wish to gauge pricing patterns, though it also could be an internal decision related to financial demands it faces or an effort to marshal limited negotiating resources, brokers say. It is likely the Los Angeles benchmark will be sobering. Macquarie and Maguire are negotiating to sell One California Plaza, a trophy tower in downtown L.A.’s Bunker Hill submarket, to Metropolitan Real Estate Investors LLC for somewhere between $200 million and $240 million, people close to the transaction say. The Bunker Denver Icon for Sale As New Benchmarks Help Check Out Prices T CoStar Group Inc. Wells Fargo Center, known locally as the cash register, has fetched bids estimated as high as $330 million. Hill area is popular with financial companies and law firms and home to Frank Gehry’s Walt Disney Concert Hall. The price range it is expected to fetch is well below the $325 million value placed on the building when Macquarie bought a majority stake in it in 2006. Metropolitan, which didn’t respond to requests for comment, also owns the Lipstick Building in New York. In Denver, Macquarie’s negotiators recently got a substantial peg on how far values have fallen in the Mile High city. Seventeenth Street Plaza, a 666,653 square-foot building located along a corridor popular with financial firms, was sold last month by J.P. Morgan Asset Management for about $135 million. While it was the biggest office sale so far this year in Denver, it didn’t provide much of a bargaining chip for Macquarie. The J.P. Morgan Chase unit paid about the same price for the building, which is 93% leased, when it bought the property in 2000, before the most recent real-estate boom. Mary Sullivan, an executive vice president with CB Richard Ellis in Denver who represented J.P. Morgan in the sale, says the deal translates into a capitalization rate of about 8.5% to 9%, well above the 4% range seen at the peak of the market two or so years ago. A socalled cap rate is a closely watched metric used to value buildings derived by dividing a building’s annual net operating income by the price paid. The rate has been on the rise nationwide in part because buyers can no longer assume rents will rise as they did at the market’s peak. Rents are falling and vacancies rising in Denver, though the metro area’s first-quarter vacancy rate was 16.2%, compared with a national average of 17.5% for the major markets surveyed by Property & Portfolio Research Inc., a real-estate-research firm. “It’s good to see people are still interested in Denver as a long-term play,” says Sam DePizzol, a senior vice president with CB Richard Ellis in Denver, referring to the Seventeenth Street Plaza sale. “But it was a steal.” 6606990 P2JW196043-4-C00600-1--------NS BLACK P2JW19601E-2-C00800-1--------XE ** BLACK 07/15/2009 EE,FL,NE,NY,SA,WB P2JW19601E-2-C00800-1--------XE * * C8 Wednesday, July 15, 2009 THE WALL STREET JOURNAL. THE PROPERTY REPORT Sale-Leaseback Sticker Shock By David A. Graham NEW YORK—Demand for corporate sale-leaseback real-estate transactions is picking up across the U.S. as companies seek a fast way to raise cash to ride out the recession. But a scarcity of buyers and low bids mean fewer deals are actually getting done. Sale-leaseback transactions— where a company sells its office building, plant or other property and then REAL-ESTATE leases it back from the new FINANCE owner—is an alternative form of financing that some companies turn to when traditional financing, such as bank loans, are harder to obtain. During the first five months of this year, the value of U.S. saleleaseback transactions declined to $853 million, compared with nearly $3 billion in the year-earlier period, according to Real Capital Analytics, which tracks deals greater than $5 million. Part of the drop in transaction value reflects lower real-estate values, but the biggest issue is that buyers and sellers are so far apart on price that many transactions fizzle when sellers walk away. Just 63 deals were completed between January and May, compared with 174 in the first five months of 2008, according to Real Capital Analytics. “It’s the pricing,” says David Steinwedell, a managing partner of AIC Ventures in Austin, Texas, which buys properties via sale-leaseback transactions. “There’s some sticker shock for sellers, the same as there is with houses right now.” AIC, which specializes in properties owned by manufacturers with low investment-grade credit ratings, expects $5 billion in potential deals to cross his desk this year, up from $3 billion in 2008. In addition, Mr. Steinwedell says many of the companies seeking to sell properties to AIC are healthier and in more stable industries than those in the past. That, of course, is great news for AIC and other buyers, which say they are seeing the best bargains since the early 2000s. “It’s a fantastic time to be in the market,” says Mr. Steinwedell, who expects to purchase about $300 million in property this year. With so many transactions on Ups and Downs The value of U.S. sale-leaseback transactions* has shrunk... $15 billion 12 9 6 3 0 2001 Full year First five months ...but their share of all real-estate sales has increased. 9% 8 7 6 5 4 2001 First five months Even in today’s twisted economy, we have millions to lend. ’03 ’05 ’07 ’09 ’03 ’05 ’07 ’09 * In a sale-leaseback transaction, a company sells its office building, plant or other property and then leases it back from the new owner. Source: Real Capital Analytics While other lenders have all but stopped lending, Kennedy Funding continues closing loans… and closing them fast. Our way of working has made us the nation’s leading direct private lender. We’re even closing loans for unusual situations that traditional lenders won’t even touch– how’s that for a twist? HOW CAN WE FUND YOU? Borrow $1 million to $100 million and more – fast. Commercial loans for land development, income producing properties, acquisitions, bankruptcies, workouts, foreclosures Kennedy Funding is a registered trademark of Kennedy Funding, Inc. the market, “we’re able to be highly selective in both markets and companies themselves.” Shelby Pruett, managing principal of Chicago-based privateequity company Equity Capital Management, which focuses on acquiring office buildings from companies with investmentgrade credit ratings, says his firm is doing deals that “couldn’t have been done in terms of pricing and terms” a few years ago. In one of the largest saleleasebacks this year, New York Times Co. in March raised $225 million for debt relief by completing a sale-leaseback with New York sale-leaseback firm W.P. Carey & Co. for 21 floors of its 52-floor headquarters building in Manhattan. The terms of deal stunned some would-be sellers who thought the price was unusually low. W.P. Carey paid around $300 a square foot. In comparison, the mean price for comparable Class-A office real estate in New York was an average $839 a square foot last year and $434 a square foot in the first quarter of 2009, according to Reis Inc., a real-estate-research firm. W.P. Carey said the New York Times deal carried an unusually deep discount because the deal gives the company an option to buy back the space for $250 million at the end of the leaseback in 2019. Meanwhile, the number of buyers has fallen sharply due to the credit crunch. And with fewer bidders, there is less competition to drive up prices. “For people ex- pecting pricing and leverage levels to revert, I don’t think that’s a realistic expectation,” says Benjamin Harris, W.P. Carey’s head of domestic investments. Two of the largest participants in sale-leaseback financing last year, iStar Financial Inc. and First Industrial Realty Trust, have been sidelined by their own financial problems. First Industrial Realty Trust has decided not to seek new deals this year in order to retain capital, according to a spokesman. IStar didn’t respond to requests for comment. That leaves just two or three large firms, including W.P. Carey and Angelo, Gordon & Co., along with smaller companies such as AIC, Equity Capital and Mesirow Financial. The dearth of buyers is making it difficult for companies like Atlanta-based furniture retailer Havertys to get the prices for which they had originally hoped. Haverty Furniture Cos. Chief Financial Officer Dennis Fink said Havertys began marketing one of its stores in July but saw a potential deal grind to a temporary halt amid worries about the economy. By the time the sale was completed, they sold an approximately 45,000-square-foot store at a prime location in Charlotte, N.C., for $6.8 million in February. “We had somewhat higher expectations” in July, Mr. Fink says. He wouldn’t disclose what it cost Havertys to build the store— the land was bought for about $2 million in 2000—but said the deal brought a modest profit. BUSINESS REAL ESTATE & AUCTIONS AUCTIONS AUCTIONS GLOBAL, NATIONAL, REGIONAL TO ADVERTISE CALL 1.800.366.3975 FAX: 214.640.7900 WSJ.COM/REALESTATE/COMMERCIAL EE FL NE NY SA WB INVESTMENT PROPERTIES INVESTMENT PROPERTIES Land Land OUR NATIONAL DEBT IS TRILLIONS OF DOLLARS "INTEREST ONLY" ON THIS DEBT IS "ONE BILLION DOLLARS A DAY" Los Angeles § Palmdale § Lancaster The Population Continues to Grow Land at Acreage Prices The Last Area of Los Angeles 2.5 Acres 5th St. E-G-4 Near FWY Record of Survey $59,500 10 Acres Near 2 Public Schools $159,500 Agents! Agents! Wanted Leads - High Commission - Brochures - Videos Easy Terms! Invest - IRA - 401K- OK TO BUY LAND INVESTMENT PROPERTIES INVESTMENT PROPERTIES Est. 1969 Owner § Tel: (323) 653 - 8428 www.california-land.com Owner will consider 1031 Exchange and is willing to explore options which could include land or ranch property, commercial retail or residential. This offering is for an executive home in the Cherry Hills Village area of Denver, Colorado. Interested parties inquire at: exploreoptions@ denverrealestate.com Available NNN Walgreens A + Central CA Location $4,134,700 Net Leased Investment Group Kevin Held - CA Lic: 01240358 kheld@breb.com | 858-546-5428 CANCUN MEXICO MARINA FOR SALE cancunmarinaforsale.com FINANCING Heritage Capital Group Heritage Capital Group LLC, is now c offering non-recourse mezzanine loans & preferred equity investments up to $3.0M for qualified performing & non-performing retail, office, industrial & multifamily property in the Northeast United States. Investments will have up to a 36 month term. Our organization can close within 30 days of commitment. For more information call 201-251-9700 or info@heritagecapitalgroup.net BROKER PARTICIPATION ENCOURAGED INVESTMENT PROPERTIES New NNN Walgreens Great Return on Cash Rare Boston Metro sites Strong demographics 25 year NNN leases Brokers welcome: John Giordani & Art Griffith l l l INVESTMENT PROPERTIES New Rite-Aid CA Assm. loan cashflow 7.75 cap $5.350M 325 K sq.ft. Industrial Credit tenant NY area, near Port 9.7% cap $21M 15Yr NNN lease, Firestone Tires 8% cap, Fl location (888) 472-0782 team@batterycommercial.com Call Allan 323-930-2555 6606726 P2JW19601E-2-C00800-1--------XE BLACK P2JW19601F-4-C00900-1--------XA **** BLACK 07/15/2009 AZ,CL,CX,DL,DX,EE,FL,HO,MW,NC,NE,NY,RM,SA,SC,SL,SW,WB,WE P2JW19601F-4-C00900-1--------XA Wednesday, July 15, 2009 THE WALL STREET JOURNAL. * * * * C9 THE PROPERTY REPORT Aspen Home Climbs Atop U.S. Price Peak By Sara Lin Despite the recession, a mansion in Aspen, Colo., has fetched a boom-market price. The 21,400 square foot home sold this week for $43 million. Brokers say it is the most expensive home that has sold in the U.S. so far this year. The Aspen house, a 10-bedroom contemporary mountain home on 4.5 acres, sits at the base of Red Mountain. The home of wood, glass and stone, completed in 2006, overlooks downtown Aspen and includes a heated outdoor pool, four-car garage and a guesthouse. The seller was a limited liability concern managed by Dallas real-estate developer Daryl Snadon, who owns Beltway Development Co. and Beltway Commercial Real Estate. The home wasn’t on the market, says listing broker Joshua Saslove of Christie’s Great Estates affiliate Joshua & Co. But a deal came together once his office identified another client as a potential buyer. Newton Bartley, also of Joshua & Co., represented the buyers, an American family that purchased the property through a limited-liability corporation. The home is one of the most expensive homes ever sold in Aspen. To date, the highest residential sale in Aspen was $47 million in 2006 for Crystal Island Ranch, a sprawling ranch estate with multiple building sites. Charles Cunniffe Architects Loan Proposal Shifts Risk on to Lenders By Ruth Simon Proposed guidelines aimed at restoring credibility to the market for mortgage securities would switch more of the risk to lenders that originate loans and investment firms that package them into securities. The guidelines, expected to be announced Wednesday by the American Securitization Forum, a trade group that represents lenders, servicing companies and investors, are intended to set standards for when mortgage companies should buy back delinquent loans because of violations of representations and warranties made at the time the mortgages were packaged into securities. Representations and warranties state the characteristics of the loans in the bond deal, such as the value of the home, how the lender verified the borrowers’ income and whether the home was purchased by the owner to live in or as an investment. The proposed guidelines, which are being put out for comment, have no legal force, but would serve as the “baseline for negotiations” between investors and mortgage companies when loans are packaged into securities, said Thomas Deutsch, deputy executive director of the American Securitization Forum. Among other things, the guidelines would call on mortgage companies to repurchase bad loans if the companies should have been reasonably able to detect fraud by originators, borrowers, appraisers and others who were a party to the transaction. In the past, some contracts between investors and mortgage companies haven’t required the mortgage companies to take responsibility for fraudulent transactions; in others, their liability has been limited to fraud by the company itself and not by related parties, even when it would have been relatively easy to uncover. The guidelines are aimed at companies that originate loans as well as those that buy loans from others and then package them into securities. The guidelines are part of an effort by the industry to restart the mortgage-securitization market, which collapsed in the wake of rising delinquencies and foreclosures from poor underwriting practices and fraud. Last year, $58 billion of loans were packaged into private-label securities, which don’t carry government backing, according to Inside Mortgage Finance, an industry publication, down from a peak of $1.2 trillion in 2005. One complaint has been that DJ Equity All REIT Index Daily data 1000 800 600 SOLD! Ten bedrooms and 21,400 square feet on 4.5 acres at the base of Red Mountain, with Aspen views, all for a cool $43 million. 400 200 2008 ’09 Note: Includes reinvested dividends Source: Dow Jones Indexes U.K. Housing Improves, but for How Long? By Eric Jones LONDON—The U.K. housing market shows signs of improvement and developers are looking to acquire land again, but economists say a sustained housing recovery remains far off. Home prices fell for six quarters beginning in February 2007 to about £158,000 ($256,500), down from nearly £200,000 at the peak, according to Halifax Bank. But prices have risen 1.9% since April, said Nationwide Building Society, and lending volumes have been stabilizing since February, according to the Bank of England. While the improvements are notable, economists say they are temporary and prices could start to decline again now that the spring buying season has ended. “Although the sector has witnessed a better performance in terms of volumes secured in recent months, this is likely to turn down as we progress through the summer,” said Rachael Waring, building and property analyst at Panmure Gordon. In the last U.K. housing slump from 1989 to 1996, there were four times in which the housing market had rallies similar to the rally just experienced. None of these rallies were sustainable, and after a short period, prices fell further each time. Each also occurred during the traditionally strong spring season. Inadequate mortgage financing remains the problem. Though home prices and lending volumes have risen, the issue of deficient financing Bear Rallies In the last U.K. housing slump from 1989 to 1996, the housing market had four rallies similar to the recent one. U.K. house-price index 240 230 220 2% rally 210 200 5% rally 190 1989 Note: Monthly data 1989 peak 2% rally 4% rally Start of long bull run ’90 ’91 ’92 ’93 ’94 ’95 ’96 Source: Halifax hasn’t been solved, said Seema Shah, an analyst at Capital Economics. Lending policies have actually tightened, with mortgage rates rising this month. First-time buyers find it particularly hard to secure mortgages, Ms. Shah added. The U.K. government is trying to encourage freer financing flows with its Home-Buy-Direct Scheme, which allows firsttime buyers to secure a 70% home loan, with the government and house builders sharing the rest of the equity. But banks are still reluctant to lend to first-time buyers, making the program largely ineffective, said RICS chief economist Simon Rubinsohn. Barratt Developments PLC is the only major U.K. developer whose share price has risen over the past three months, but despite the gains, Chief Executive Mark Clare said the market is “not going to see a sustained improvement in trading conditions until the availability of mortgage finance improves.” The market also could be restrained by concerns about rising unemployment, which is crimping demand. Economists predict unemployment will rise to more than three million in 2010 from 2.2 million now. For home builders, this climate does present an opportunity to buy land at deep discounts if they have the cash or equity on hand to do so. Bovis PLC, which has a policy of investing in land for longterm value, and Bellway PLC, which focuses on regeneration projects, hold limited amounts of debt on their balance sheets and have good cash flow, which gives them the ability to buy land. Berkeley Group Holdings PLC is in a very flexible position financially as the only debt-free developer, holding £285 million of net cash. Bovis said it is looking to get back into the residential land market in the second half. John Watson, CEO of Bellway, in May said the company will spend more than £100 million on new land. Berkeley has a policy of matching production to demand but, despite the weak market, plans to spend £150 million on land. Taylor Wimpey PLC, the largest U.K. developer by revenue, has expressed interest in stepping back into the land market. But the company is burdened by £1.01 billion of debt and has £4.75 billion of land and stock, much of which was bought at land price peaks in 2007, said KBC Peelhunt analyst Robin Hardy, and is therefore vulnerable to large writedowns. However, analysts say that among the big players, the company may perform the best when recovery does come. Tom Gidley Kitchin, an analyst at Charles Stanley, said Taylor Wimpey is at risk because of its exposure to the U.S. and Canadian markets and its highly leveraged balance sheet, but if the market turns, those factors that penalize it now will enhance performance. Persimmon PLC, the largest U.K. house builder by market capitalization, said that with 64,500 plots, its land bank is large enough for seven years’ work and land purchases aren’t needed. It reported an impairment of £652.3 million on its inventory for 2008 due to the deteriorating housing market but doesn’t expect to take any more writedowns, giving it the ability to build quickly when the market finally turns. The company reported debt of about £495 million at the end of June. Nevertheless, Panmure Gordon’s Ms. Waring said it “is well placed to weather the storm.” companies that originated and packaged loans didn’t have “skin in the game” and, as a result, had little incentive to keep bad loans from being made. In its regulatory-reform proposal, issued last month, the Obama administration called on sponsors of securitizations to provide investors with “strong standardized representations and warranties” regarding the risks of securitized loans. The representations and warranties for securitizations “vary across all these deals,” said Anthony Sanders, a professor of finance at George Mason University in Fairfax, Va., making it difficult for investors to rely on them. “Uniformity would greatly reduce some of the problems,” he said. Ratings firms are likely to use these guidelines in evaluating bond deals, Mr. Deutsch said. The American Securitization Forum is working on another set of standards that will make it easier for investors to enforce their rights when loans go bad. To meet the proposed standards, mortgage companies would have to verify a borrower’s income or determine that the income is reasonable. The standards also call on mortgage companies to determine whether the borrower plans to actually live in the home. During the housing boom, many borrowers submitted loan applications that overstated their incomes or indicated that they planned to live in the home when that wasn't the case. One area in dispute between issuers and investors: whether a mortgage company would have to repurchase a loan made to a borrower with good credit if the loan became delinquent within the first three months after it was packaged into a security. This type of provision is typically included in deals made of subprime loans. Such early delinquencies often are a sign of fraud. IN THE MARKETS Hedge-Fund Benchmarks Dow Jones Index 30-DAY YTD (%) ANNUALIZED (%) Pct chg Volatility Return BETA COEFFICIENT VS. DJ Corp Bond=1 DJ U.S. TSM=1 Dividend Changes Dividend announcements from July 14. KEY: t: approximate U.S.-dollar amount per American depositary receipt/share before adjustment for foreign taxes when applicable; A: annual; b: payable in Canadian dollars; k: from capital gains; c: corrected; h: from income; M: monthly; Q: quarterly; r: revised; SA: semiannual; S2:1: stock split and ratio; SO: spin-off. Company/ Symbol Yield (%) Amount New/Old Payable/ Record Company/ Symbol Yield (%) CAH EXCHANGE-TRADED PORTFOLIOS Largest 100 exchange-traded funds, latest session Tuesday, July 14, 2009 ETF Ytd (%) Closing Symbol price IYR 31.42 FXI 37.42 EFA 45.04 IBB 70.41 IWB 49.60 IWF 40.44 IWD 46.17 IWM 49.55 IWV 52.75 IWP 35.56 IWR 63.81 IWS 28.13 IVW 47.07 IVV 90.96 IVE 43.12 ILF 32.96 IJH 56.42 IJR 43.70 GDX 36.76 MOO 33.42 RKH 65.96 BBH 94.49 PPH 59.43 SMH 21.83 OIH 94.58 DBA 24.41 DBC 20.85 DGP 19.55 DZZ 21.49 PHO 14.06 QQQQ 35.72 SH 66.47 UYG 3.78 SSO 25.29 SKF 42.22 TBT 50.63 SRS 20.48 SDS 56.57 RTH 77.19 MDY 102.60 XLP 23.37 XLE 45.96 XLF 11.76 XLV 26.21 XLI 21.56 XLB 25.24 XLK 17.88 XLU 27.59 JNK 33.90 GLD 90.81 SPY 90.61 UNG 12.55 USO 32.11 VWO 31.17 VEA 28.12 VGK 39.69 VEU 35.31 VUG 42.81 VV 41.10 VO 45.75 VPL 45.02 VNQ 30.01 BSV 79.26 VB 44.62 BND 77.73 VTI 45.48 VTV 38.84 Chg (%) Ytd (%) ETF Closing Symbol price DIA FAZ FAS CSJ TLT SHV IAU DVY HYG LQD EEM EPP IWO IWN IEV IJK IJJ EWZ EWC EWH EWJ EWY EWT OEF MUB IGE PFF SLV SHY IEF AGG MBB TIP Chg (%) DJ U.S. Total Stock Mkt DJ Corporate Bond Equity Market Neutral Event Driven Merger Arbitrage Equity Long/Short 2.3 9.7 –3.2 6.4 4.5 0.7 21.7 –13.8 –0.96 8.7 2.1 2.3 2.6 2.8 41.6 2.1 17.2 11.0 7.1 –0.01 –0.05 0.03 0.02 –0.01 1 –0.15 1 0.03 0.05 0.05 Amount New/Old SO Payable/ Record Increased Smith (A.O.) AOS Stocks 2.3 .195/.19 Q Aug 17/Jul 31 Cardinal Health Aug 31/Aug 25 Funds and Investment Companies Pharma Hldrs PPH Foreign Core Labs ADS Core Labs ADS CLB CLB ... .056 Aug 19/Jul 15 0.5 0.5 t.10 t.75 Q Aug 24/Jul 24 Q Aug 24/Jul 24 Note: Hedge fund benchmark values are estimates, after fees; betas are based on 30 days of returns. Beta measures volatility versus the market; above 1 indicates more risk. Source: www.djhedgefundindexes.com Dow Jones Specialty Indexes Stock Indexes Net change Daily TOTAL RETURN (%) Year-toThree-yr. date 52-wk annualized Dividend yield P/E The following explanations apply to the New York Stock Exchange, NYSE Arca, NYSE Amex and Nasdaq Stock Market stocks (%) ratio Dow Jones Index that hit a new 52-week intraday high or low in the latest session. % CHG-Daily percentage change from the previous trading session. 1.43 12 Select MicroCap Tuesday, July 14, 2009 NEW HIGHS AND LOWS 52-WK % SYM HI/LO CHG STOCK 52-WK % SYM HI/LO CHG STOCK 2.12 1.14 0.83 11.50 18.87 37.89 10.78 15.06 655.94 122.63 2.62 –2.23 35.59 4.68 97.35 230.85 21.26 4.84 0.28 0.93 1.04 1.47 1.22 2.59 0.65 0.87 2.46 3.67 1.75 –0.54 1.66 3.60 2.71 3.39 1.22 1.72 –3.0 –14.7 32.1 6.1 8.4 32.6 3.7 1.7 87.6 32.5 10.7 36.2 –1.0 43.5 38.1 29.3 … 5.2 –23.8 –40.7 –13.3 –27.9 –25.6 –25.4 –22.7 –21.9 20.9 –10.5 –30.0 –11.3 –27.2 0.4 –44.2 –10.3 –36.5 –41.5 –10.2 –18.6 –1.0 –7.0 –3.0 0.9 –2.7 –2.6 35.3 17.1 –9.2 7.8 –10.6 7.0 –9.0 13.2 –12.6 –1.0 5.66 52-WK % SYM HI/LO CHG 22 Equity All REIT TR … Internet Composite 12 Sustainability World 12 Islamic Market World 14 Islamic World Emerging Mkt 12 Islamic US 11 Islamic Titans 100 30 CBN 600 16 China Offshore 50 8 UK Titans 50 7 Turkey Titans 20 … Japan Titans 100 16 India Titans 30 STOCK 0.08 3.44 2.64 4.30 2.13 2.92 0.80 2.50 4.69 2.61 1.98 1.17 NYSE highs - 31 BcoSantChile ADS BankAm pfE BearStrn Trups ClWater Pap n CooperT&R Corts IBM HZD Corts JCPen JBS CyprsSemi s DlrThrfty DominResNts n DufPhlpsBnd DyncorpInt A EmrgcyMedSvc A EntrgyTexMtgBnd n FordMtr nts32 GldmnSachs pfB JMP Gp LumberLiquidat NtlCityCapTr III NtlCityCapTr II NtlCityCapTr IV NaviosMaritime OmnovaSol Oshkosh PrePdLegal PPlus GSG-1 ShwtzMaud SvrnBcp pfN SAN BACE BSCX CLW CTB HZD JBN CY DTG DRU DUC DCP EMS EDT FCJ JMP LL NCCB NCCA NCCC NNA OMN OSK PPD PJI SWM SOVC 48.74 18.34 24.44 28.68 12.19 26.41 20.27 9.45 16.25 25.66 12.39 20.00 39.14 25.50 16.06 23.50 8.18 17.16 19.25 19.49 23.00 9.61 4.26 23.91 48.36 20.48 30.36 22.15 SOVB 22.65 -3.2 SvrnCapTr V Synnex SNX 29.24 0.7 -1.0 WhitingPete Pfd n WLLA 101.43 2.3 3.8 1.1 NYSE lows - 5 3.4 BurgerKing BKC 15.61 -2.2 7.4 CntlPacFnl CPF 2.54 -25.8 2.9 GlblShipLease GSL 1.35 -12.4 4.5 Heckmann wt 0.34 -4.0 1.5 RaserTech RZ 1.78 -9.5 1.5 0.5 NYSE Arca highs - 5 -0.4 MSCI EAFE Cap n MKE 10.52 1.8 1.7 GlblIntBolsa FTSE n GXG 24.18 7.5 0.9 iShrMSCI PeruCpd n EPU 29.48 1.5 0.4 ProShrCrSuis CSM 40.41 ... 2.1 ProShUltRus3000 n UWC 38.69 1.6 0.2 1.8 NYSE Amex highs - 5 0.8 AlphaPro APT 2.35 12.0 0.5 DgtlPwr DPW 2.67 3.5 1.1 GloblConsmrAcq GHC 9.79 0.5 0.6 GloblConsmrAcq un GHCU 10.20 4.9 -0.2 HicksAcqu TOH 9.65 0.2 1.7 3.1 NYSE Amex lows - 2 2.3 ChNetwIntHldg CNR 4.10 3.6 5.4 CortexPhm COR 0.18 2.6 -0.7 Nasdaq highs - 20 ... Aixtron ADS ArdeaBiosci BooksMillion Endologix HiTechPhrml Imunomed Inergy IntrIntgnc MercryCptr NovenPharm RossStr STEC Inc SXC HlthSol SpltyUndrwrtrs StanlyFurn SteinMart Tekelec TranscndSvc US Lime Virtusa AIXG RDEA BAMM ELGX HITK IMMU NRGY ININ MRCY NOVN ROST STEC SXCI SUAI STLY SMRT TKLC TRCR USLM VRTU 15.13 19.64 8.89 3.94 13.79 3.08 27.00 15.75 11.53 16.49 41.93 28.37 28.15 6.55 11.44 9.81 17.65 17.60 44.93 9.29 1.9 5.6 3.3 4.9 28.9 13.5 0.5 18.5 0.7 22.3 0.6 2.0 3.5 0.8 -2.4 7.2 1.4 0.1 0.4 1.3 Diamond DrxFinancBear 3x DrxFinancBull 3x iShrBrcl1-3CrBd iShrBrcl20+ iShrBrclShrtTreas iShrComexGld iShrDJSelDiv iShr iBxxHYCorp iShriBoxxFd iShrMSCIEmrgMkt iShrMSCI Pac iShrRu2000G iShrRu2000V iShrSPEu350 iShrSP400G iShrSP400V iShrMSCI Bra iShrMSCI Can iShrMSCI HK iShrMSCI Jpn iShrMSCI SK iShrMSCI Taiwn iShrSP100 iShsSPNtlMunFd iShrSP NANatRes iShrSPUSPref iShrSilverTr iShrBrcl1-3 iShrBrcl7-10 iShrBrclAggBd iShrBrclMBS BF iShrTIPSBdFd 83.66 46.84 43.57 103.00 94.10 110.20 90.93 35.08 77.00 100.62 31.48 31.08 54.94 45.45 30.77 60.86 51.09 50.05 21.12 13.42 9.21 34.97 10.38 42.58 100.55 26.67 32.47 12.72 83.85 91.22 102.52 105.60 100.16 0.42 –4.4 0.24 –86.9 –0.55 –65.8 –0.51 2.1 –1.66 –21.2 ... –0.2 0.66 4.9 0.49 –15.0 0.39 1.3 –0.22 –1.0 1.09 26.1 3.15 18.0 0.70 8.0 0.60 –7.6 0.26 –1.2 0.96 9.8 0.71 1.6 –0.46 43.0 2.87 21.2 1.51 29.4 ... –3.9 0.78 25.0 0.58 36.8 0.52 –1.4 –0.29 1.0 1.83 5.3 1.22 11.2 0.47 13.6 –0.07 –1.0 –0.66 –7.4 –0.30 –1.6 –0.11 0.7 –0.08 0.9 Lipper Indexes PERCENT CHANGE FROM Stock-Fund Indexes Large-Cap Growth Large-Cap Core Large-Cap Value Multi-Cap Growth Multi-Cap Core Multi-Cap Value Mid-Cap Growth Mid-Cap Core Mid-Cap Value Small-Cap Growth Small-Cap Core Small-Cap Value Equity Income Fd Science and Tech Fd International Fund Balanced Fund PRELIM CLOSE 2685.47 1976.61 8632.71 2427.90 6481.52 3597.95 649.55 631.59 945.02 464.43 376.22 601.37 3817.07 597.58 910.05 5198.82 PREV CLOSE +0.63 +0.58 +0.51 +0.56 +0.72 +0.59 +0.99 +0.37 +0.89 +0.89 +0.88 +0.81 +0.52 +0.53 +0.74 +0.26 –0.07 –0.20 –0.33 –0.12 –0.25 WK AGO DEC. 31 +3.18 +2.89 +2.86 +3.14 +2.87 +2.79 +3.16 +2.99 +3.12 +2.87 +2.68 +3.11 +2.66 +3.47 +1.45 +1.69 +0.18 +0.36 +0.02 +0.18 +0.33 +10.57 +04.00 +01.12 +10.48 +07.61 +01.59 +11.01 +08.15 +08.06 +09.93 +06.04 +03.55 –00.04 +23.03 +07.82 +05.25 +05.86 +06.99 +01.14 +05.16 +07.13 0.08 270 Russia Titans 10 3.09 3.46 5.70 15 Hong Kong Titans 30 9 Italy Titans 30 9 Arabia Titans 50 Nasdaq lows - 10 ARCA biophrm s AbraxisBiosci ChinaNatGas n HokuScnfc NewEnglandBcsh OscientPharm SnclrBdcst A TemeculaValBcp 9 Limited ADS USA Tech Rt n ABIO ABII CHNG HOKU NEBS OSCI SBGI TMCV NCTY USATR 2.20 29.87 8.34 1.67 5.15 0.05 0.85 0.13 8.08 0.16 -2.6 -2.8 -2.0 -9.8 -4.6 -69.5 Volatility BETA* Dow Jones Index -24.7 -6.1 0.64 –0.06 DJ Corporate Bond -3.6 0.40 0.10 DJ Target Today -20.0 Bond and Portfolio Indexes US TOTAL RETURN (%) Three-yr. Daily 52-wk annualized GLOBAL TOTAL RETURN (%) Three-yr. Daily 52-wk annualized –0.50 –0.17 –0.06 0.18 0.47 0.63 0.65 11.1 2.8 –2.4 –9.6 –16.5 –20.3 –20.4 7.3 4.1 1.9 –1.2 –4.6 –6.5 –6.6 ... –0.04 0.10 0.41 ... 1.2 –3.9 –11.1 ... 3.9 2.3 –0.6 –3.5 –5.2 –5.3 Bond-Fund Indexes Short Inv Grade 289.17 Intmdt Inv Grade 359.49 US Government 495.01 GNMA 560.47 Corp A-Rated Debt 1269.31 0.67 0.21 DJ Target 2010 1.20 0.40 DJ Target 2020 0.62 DJ Target 2030 0.73 DJ Target 2040 0.74 DJ Target 2050 WSJ.com During the trading day, 52-week highs and lows are updated hourly at WSJMarkets.com. Lists for each market are available free, along with easy access to charts and headlines. 1.80 2.14 2.16 0.78 –17.6 1.00 1.02 –21.1 –21.3 *Against the Dow Jones U.S.Total Stock Market Index Source: Dow Jones Indexes Indexes are based on the largest funds within the same investment objective and do not include multiple share classes of similar funds. Source: Lipper Inc. iShrDJUSRE iShrChina25 iShrMSEAFE iShrNasBiotch iShrRu1000 iShrRu1000G iShrRu1000V iShrRu2000 iShrRu3000 iShrRuMidGrth iShrRuMid iShrRuMidVlu iShrSP500G iShrSP500 iShrSP500V iShrTr40 iShrSP400 iShrSP600 ¡MktVecGold ¡MktVecAgBusETF RegBkHldrs BiotchHldrs PharmaHldrs SemiConHldrs OilSvcHldrs PwrShrDB Agrcltr PwrShrDB CmFd PwrShr DBGoldDblLng PwrShr DBGoldDblShrt ¡PwrShrWtrRes PwrShrs QQQ ¡ProShrShrtS&P ¡ProShrUltraFnl ¡ProShrUltraS&P ¡ProShrUSFnl ¡ProShrUltra20 ¡ProShrUSRlEst ¡ProShrsUShrt S&P RetailHldrs SP400 Spdrs ConStplSel SPDR SPDR EngySelSct SPDR FnclSelSct HlthcarSel SPDR InduSelSctr SPDR MatrlsSel SPDR TechSelSctr SPDR UtilsSelSctr SPDR SPDR BarcHyld SPDR GldTr SPDR S&P 500 US NatGas US OilFd VangdEmrgMkt VangdEurPacfc VangdEuro VangdAllWldxUS VangdGrowth VangdLgCap VangdMdCap VangdPacific VangdReit VangdShrtTrm VangdSmCap VangdTtlBndMkt VangdTtlStock VangdValue 1.16 –15.6 1.93 28.6 0.54 0.4 0.16 –0.9 0.61 1.5 0.47 9.1 0.61 –6.8 0.59 0.6 0.78 1.4 0.97 13.7 0.95 6.8 0.82 –1.1 0.53 4.8 0.63 0.7 0.61 –4.6 0.03 29.4 0.80 5.8 0.76 –0.6 2.31 8.5 1.12 20.0 –0.53 –12.8 –0.28 5.4 0.73 –3.1 1.77 24.0 1.50 28.2 –0.85 –6.8 ... –1.6 1.35 8.1 –1.29 –13.6 0.21 –2.3 0.37 20.1 –0.64 –7.7 –0.79 –37.3 1.16 –3.7 –0.05 –59.0 3.28 34.2 –2.10 –59.6 –1.27 –20.3 0.94 2.7 0.74 5.6 0.30 –2.1 1.35 –3.8 –0.42 –6.1 0.46 –1.3 1.46 –7.9 0.76 11.0 0.11 16.0 0.77 –5.0 0.33 4.7 0.69 5.0 0.57 0.4 4.32 –45.8 –0.80 –3.0 0.97 32.2 0.25 2.4 0.51 3.5 0.74 9.3 0.56 8.4 0.66 0.9 0.88 5.9 0.58 2.7 1.21 –17.7 –0.25 –1.6 0.95 5.1 –0.30 –1.6 0.71 1.7 0.75 –5.6 6606727 P2JW19601F-4-C00900-1--------XA BLACK P2JW196020-0-C01000-1--------XA BLACK 07/15/2009 AZ,CL,CX,DL,DX,EE,FL,HO,MW,NC,NE,NY,RM,SA,SC,SL,SW,WB,WE P2JW196020-0-C01000-1--------XA THE WALL STREET JOURNAL. C10 Wednesday, July 15, 2009 CREDIT MARKETS Tracking Bond Benchmarks Return on investment and spreads over Treasurys and/or yields paid to investors compared with 52-week highs and lows for different types of bonds Total return close YTD total return (%) Index Latest Low 0 YIELD (%), 52-WEEK RANGE l Latest 9 18 27 36 l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l l S&P Downgrade Hits CMBS By Anusha Shrivastava High 45 1393.97 1640.29 1682.43 1830.88 358.16 361.80 186.66 150.21 1493.03 163.72 126.96 1339.55 1240.21 1918.49 1502.76 1466.16 871.93 1353.72 370.59 250.31 259.79 231.18 1661.16 407.77 573.36 257.81 490.36 368.79 237.97 393.18 572.59 418.87 –2.0 –0.2 –0.7 –2.3 –8.9 2.7 9.3 10.2 7.1 3.3 16.4 30.0 49.8 17.1 31.3 39.9 0.3 1.1 Broad market Barclays Aggregate U.S. Corporate Barclays Capital Intermediate Long term Double-A-rated Triple-B-rated High Yield Constrained Merrill Lynch Triple-C-rated High Yield 100 Global High Yield Constrained Europe High Yield Constrained U.S Agency Barclays 10-20 years 20-plus years 3.950 5.820 5.470 6.920 4.470 6.780 3.540 5.730 5.390 6.770 4.390 6.690 5.670 9.090 9.030 9.420 7.610 10.220 22.490 41.885 17.034 22.954 27.356 4.230 4.110 5.800 5.920 5.940 5.910 5.940 5.021 5.223 6.183 7.171 6.420 3.720 3.990 6.440 4.880 4.780 1.670 4.870 4.860 12.208 In U.S. - dollar terms Euro-zone bonds 13.053 10.974 20.414 15.367 9.359 9.229 13.842 11.157 17.362 12.849 2.190 1.990 5.150 4.250 4.320 4.210 4.270 3.443 3.574 4.687 5.687 4.470 2.820 3.440 3.780 3.490 3.260 1.360 3.480 3.950 7.744 1.980 1.890 1.830 2.440 3.110 2.300 2.390 3.198 3.085 4.413 5.193 4.390 2.400 2.850 3.660 3.270 2.970 1.190 2.770 3.420 7.087 3.3 3.0 3.4 3.2 5.6 5.1 7.9 15.3 5.8 Mortgage-Backed Barclays Ginnie Mae (GNMA) Fannie mae (FNMA) Freddie Mae (FHLMC) Muni Master Merrill Lynch 7-12 year 12-22 year 22-plus year Yankee Barclays Global Government J.P. Morgan Canada 1.9 0.9 0.5 1.4 15.1 EMU France Germany Japan Netherlands U.K. Emerging Markets ** * Constrained indexes limit individual issuer concentrations to 2%; the High Yield 100 are the 100 largest bonds ** EMBI Global Index Sources: Dow Jones Indexes; Merrill Lynch; Barclays Capital; J.P.Morgan Syndicated-Loan Market/Global Merger & Acquisition Lending Global merger and acquisition loan volume, in billions. Bars represent capital made available to borrowers globally for the purpose of financing growth via the purchase and/or merger of assets by corporates or the buyout of assets by sponsors. Europe, Middle East and Africa Americas Asia-Pacific ex. Japan Year-to-date $700 525 350 175 0 2003 2004 2005 2006 2007 2008 2009 to–date Bonds backed by commercial mortgages were hit after Standard & Poor’s downgraded several commercial mortgagebacked securities amid signs of strain in the market for loans to build office malls and shopping centers. The CMBX Series 5, the most recent derivatives index based on bonds backed by commercial mortgages, fell three cents on the dollar, to 72 cents on the dollar, on the downgrades, according to Derrick Wulf, a senior portfolio manager at Dwight Asset Management in Burlington, Vt. S&P cut several of these securities because of a recent change in its rating methodology. The commercial-real-estate market is grappling with a worsening outlook. Delinquencies have risen to about 3%, with hotels seeing the greatest month-to-month increase, at 3.26%, up from 2.02%, according to a note from Moody’s Investors Service. The aggregate delinquency rate is likely to go up further, to between 5% and 6% by the end of the year, according to Moody’s. Banks holding commercial mortgages on their balance sheets are expected to feel the pinch as borrowers default on loans. Tuesday, Goldman Sachs Group Inc. reported strong second-quarter results but took a $700 million hit on its holdings of commercial real-estate mortgage loans. At the end of the quarter, Goldman had $6.4 billion of commercial real-estate loans that were reduced by almost half their original valuation, said David Viniar, Goldman’s chief financial officer. More downgrades are expected, which means more volatility ahead for the commercial mortgage-backed securities market, as S&P is expected to “roll out the results of their new methodology over the next three to six months,” said Darrell Wheeler, head of securitization research at Citigroup, in a note to clients. The downgrades mean these bonds are no longer eligible for cheap financing under the Federal Reserve’s Term AssetBacked Securities Loan Facility, or TALF. At this point, the market is “getting bifurcated,” Mr. Wulf said, adding TALF-eligible bonds are doing better than the ones that can no longer be bought using the Fed’s cheap loans. Among the bonds downgraded Tuesday was the benchmark commercial mortgagebacked security, which lost its triple-A rating and is now rated one notch above “junk” status at BBBminus. Moody’s and Fitch Ratings still have the bond rated AAA. Treasury Yields 10-year note: 3.445% Two-year note: 0.932% 6% 5 4 3 2 1 0 2008 '09 Source: Ryan ALM via WSJ Market Data Group prices. The 30-year bond was down 1 30/32 points to yield 4.349%. —Deborah Lynn Blumberg Treasury Prices Extend Losses on Upbeat Data Treasury prices extended their losses as investors, soothed by stronger-than-forecast retail-sales data and upbeat earnings from Goldman Sachs Group Inc., moved away from the relative safety of government debt. Treasurys seven years and out suffered the most, with the 30-year bond in the worst shape. Higher inflation hurts longdated Treasurys as rising prices eat into fixed returns. The day’s losses built on weakness Monday, when Treasurys fell as stocks rose. Selling has put the brakes on the rebound in Treasurys over the past month, which had pushed the 10-year note’s yield down more than half a percentage point after pushing up to 4% in June. Late Tuesday in New York, the 10-year note was down 26/32 point, or $8.125 per $1,000 face value, at 97 11/32. Its yield rose to 3.445% from 3.348% late Monday, as yields move inversely to California Rating Cut Moody’s cut the ratings on California’s general-obligation bonds two notches to Baa1 from A2, and threatened further downgrades, as political gridlock over the budget continues to grip the Golden State. It also took action on other types of state-backed securities. Some $72 billion in debt is affected by the action, Moody’s said. Fitch Ratings last week cut its ratings on California’s generalobligation bonds to triple-B, two notches above speculative grade. Standard & Poor’s rates California’s general obligation debt single-A. AUCTION RESULTS Here are the results of the Treasury auction of four-week bills. All bids are awarded at a single price at the marketclearing yield. Rates are determined by the difference between that price and the face value. Applications .................................................. $118,256,207,400 Accepted bids ............................................... $34,000,282,400 Accepted noncompetitively ......................... $294,957,400 Foreign noncompetitively ............................ $200,000,000 Auction price (rate) ....................................... 99.987944 (0.155%) Coupon equivalent ....................................... 0.157% Bids at market-clearing yield accepted ...... 78.71% Cusip number ................................................ 912795N64 The bills are dated July 16, 2009, and mature Aug. 13, 2009. SEC Chief Targets the Credit Raters ing as it explores ways to curb conflicts of interest and improve WASHINGTON—In a sign transparency and accountability that credit-rating firms may by ratings companies, she said. Credit-ratings providers such face tougher rules, the head of as McGraw-Hill Cos.’ the Securities and ExStandard & Poor’s Corp.; change Commission Moody’s Corp.; and Fisignaled her support malac SA’s Fitch Ratfor proposals that ings have been blamed would make it easier by some critics for exacfor investors to sue. erbating the financial SEC Chairman Mary crisis after giving overly Schapiro told a congrespositive ratings to cersional panel on Tuestain kinds of debt, includday that she believes ing some backed by proposals to impose liasubprime mortgages. bility standards, which The firms have come go beyond anything currently suggested by the Mary Schapiro under scrutiny from those who say their busiObama administration, could result in higher-quality ness model presents an inherent conflict of interest because issuwork by the firms. The SEC also is considering ers pay them to rate the debt. Issuer-paid ratings firms have ways to curb to the practice of issuers “shopping” for the best rat- argued in the past that they be- By Sarah N. Lynch Prior year to date figures are through March 17, 2008. Source: Thomson Reuters LPC Global Government Bonds: Mapping Yields Yields and spreads over or under U.S. Treasurys on benchmark two-year and 10-year government bonds in selected other countries; arrows indicate whether the yield rose(s) or fell (t) in the latest session Coupon (%) Country/ Maturity, in years Yield (%) Latest (l) 0 1.5 3 4.5 6 7.5 9 Previous Month ago Year ago SPREAD UNDER/OVER U.S. TREASURYS, in basis points Latest Chg from prev Year ago 1.125 3.125 5.750 4.500 1.250 3.750 1.500 3.500 0.300 1.400 5.250 4.250 4.000 3.000 4.250 4.500 U.S. 2 10 Australia 2 10 Canada 2 10 Germany 2 10 Japan 2 10 Sweden 2 10 Switzerland 2 10 U.K. 2 10 0.939 s 3.459 s 3.790 s 5.420 s 1.217 s 3.425 s 1.247 s 3.300 s 0.250 t 1.345 s 0.842 s 3.305 s 0.516 s 2.276 s 1.094 s 3.739 s l l l l l l l l l l l l l l l l 0.908 3.352 3.662 5.338 1.179 3.311 1.221 3.273 0.255 1.310 0.838 3.244 0.501 2.230 1.063 3.673 1.279 3.793 3.966 5.694 1.406 3.510 1.686 3.623 0.370 1.560 1.324 3.633 0.583 2.474 1.467 3.973 2.459 3.861 6.700 6.410 3.118 3.708 4.426 4.420 0.845 1.650 4.756 4.241 2.698 3.143 4.904 4.895 –15.9 –68.9 –211.4 –9.7 –15.4 –42.3 –118.3 15.5 28.0 –4.1 –3.4 30.8 285.1 196.1 27.8 9.7 –2.5 0.7 0.7 –0.5 –8.0 –3.6 –7.2 –2.7 –4.6 –1.6 –6.1 424.1 254.9 65.9 –15.3 196.7 55.9 –161.4 –221.1 229.7 38.0 23.9 –71.8 244.5 103.4 lieve such conflicts can be properly managed. In May, Fitch publicly expressed concerns that imposing a liability standard on firms would be “an unwise approach.” S&P and Moody’s declined to comment on Ms. Schapiro’s latest statements, and Fitch was unavailable for comment. Ms. Schapiro said she thinks imposing liability on the firms could “certainly make a very big difference.” Ms. Schapiro also told lawmakers that the SEC is exploring possible ways of curbing “rating shopping,” in which debt issuers seek the best possible ratings from a variety of firms. One approach could be to “require on a confidential basis” that issuers disclose the underlying data of structured products to ratings firms and allow the firms to then conduct an unsolicited rating. BORROWING BENCHMARKS Money Rates Inflation May index level CHG FROM (%) April '09 May '08 Week ago 52-WEEK High Low Week ago July 14, 2009 Source: Thomson Reuters Corporate Debt Price moves by a company’s debt in the credit markets sometimes mirror and sometimes anticipate moves in that same company’s share price. Here’s a look at both for two companies in the news. Key annual interest rates paid to borrow or lend money in U.S. and international markets. Rates below are a guide to general levels but don’t always represent actual transactions. Latest Latest 52-WEEK High Low Investment-grade spreads that tightened the most… Issuer Symbol TCK JPM MKL STI AA C DFS SPG Coupon (%) Maturity Current SPREAD*, in basis points One-day change Last week STOCK PERFORMANCE Close ($) % chg U.S. consumer price index All items Core 213.856 219.128 0.3 –0.0 –1.3 1.8 120 days 150 days 180 days 0.55 0.60 0.75 0.55 0.75 0.85 5.00 5.00 5.00 0.55 0.60 0.68 Three month 0.5190 0.5600 4.9000 0.5044 Libor Swaps (USD) Two year Three year Five year Ten year 20 year 30 year 1.382 1.986 2.811 3.670 4.060 4.135 1.350 1.946 2.782 3.652 4.044 4.116 3.729 4.095 4.455 4.851 5.111 5.146 1.187 1.542 1.903 2.304 2.438 2.365 Other short-term rates Latest Week ago 52-WEEK High Low Teck Resources Bear Stearns Markel Freddie Mac Alcoa Citigroup Discover Financial Services Simon Property 5.375 5.350 6.800 3.000 6.750 5.500 10.250 5.300 Oct. 1, ’15 Feb. 1, ’12 Feb. 15, ’13 Nov. 16, ’11 July 15, ’18 April 11, ’13 July 15, ’19 May 30, ’13 441 164 402 15 –48 –47 –44 –41 429 n.a. n.a. 43 n.a. 466 n.a. n.a. 17.15 … 293.49 … 9.59 2.92 … 49.72 4.13 … –1.18 … –0.72 5.04 … 2.12 International rates Latest Week ago 52-WEEK High Low Call money 506 –34 437 –30 682 –30 336 –29 2.00 2.00 3.75 2.00 Euro Libor One month Three month Six month One year 0.573 0.966 1.221 1.415 0.635 1.107 1.254 1.451 5.186 5.391 5.438 5.514 0.573 0.966 1.221 1.415 Prime rates U.S. Canada Euro zone Japan Switzerland Britain Australia Hong Kong 3.25 2.25 1.00 1.475 0.52 0.50 3.00 5.25 3.25 2.25 1.00 1.475 0.52 0.50 3.00 5.25 5.00 4.75 4.25 1.875 4.09 5.00 7.25 5.50 3.25 2.25 1.00 1.475 0.51 0.50 3.00 5.00 Commercial paper 30 to 30 days 0.23 31 to 49 days n.q. 50 to 89 days n.q. 90 to 119 days n.q. 120 to 125 days n.q. 126 to 141 days n.q. 142 to 151 days n.q. 152 to 161 days n.q. 162 to 270 days n.q. ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... ... …And spreads that widened the most Celulosa Arauco Y Constutucion S.A. Genworth Financial HSBC Finance Valero Energy Hewlett-Packard Freddie Mac Dell Travelers CELARA GNW HSBC VLO HPQ PNC DELL TRV Euro interbank offered rate (Euribor) One month Three month Six month One year 0.615 0.985 1.225 1.419 0.675 1.044 1.261 1.452 5.197 5.393 5.448 5.526 0.615 0.985 1.225 1.419 5.125 5.750 5.250 6.875 5.250 2.300 5.650 5.900 July 9, ’13 June 15, ’14 Jan. 15, ’14 April 15, ’12 March 1, ’12 June 22, ’12 April 15, ’18 June 2, ’19 315 1291 295 283 79 27 212 180 26 23 19 19 17 17 10 10 n.a. n.a. n.a. 265 84 33 203 175 ... 5.55 ... 16.39 37.14 … 11.97 39.54 ... –2.63 ... 1.11 –0.43 … –8.06 –2.13 Overnight repurchase U.S. U.K. (BBA) Euro zone 0.18 0.420 0.32 0.23 0.482 0.38 2.28 5.742 4.50 0.08 0.418 0.32 Hibor Dealer commercial paper 30 days 60 days 90 days 0.32 0.37 0.40 0.35 0.40 0.45 5.95 5.95 5.95 0.30 0.35 0.40 One month Three month Six month One year 0.080 0.268 0.568 0.985 0.091 0.299 0.599 1.000 4.993 4.442 4.100 3.950 0.054 0.259 0.559 0.959 U.S. government rates Discount 0.50 0.50 2.25 0.50 Euro commercial paper 30 day Two month Three month Four month Five month Six month n.a. n.a. n.a. n.a. n.a. n.a. 0.36 0.56 0.75 0.83 0.90 0.98 4.75 4.80 5.00 5.00 5.02 5.07 0.28 0.45 0.65 0.79 0.86 0.94 Asian dollars One month Three month Six month One year 0.294 0.514 0.980 1.472 0.300 0.561 1.040 1.520 4.588 4.780 4.438 4.228 0.294 0.505 0.972 1.460 High-yield issues with the biggest price increases… Issuer Symbol GCI RDN SELA TPORT X Coupon (%) Maturity Current BOND PRICE as % of face value One-day change Last week STOCK PERFORMANCE Close ($) % chg Federal funds Effective rate High Low Bid Offer 0.14 0.3800 0.0625 0.1000 0.2500 0.19 0.3800 0.1000 0.1875 0.2500 3.47 7.0000 2.0000 3.0000 4.0000 0.12 0.2500 0.0000 0.0000 0.0500 Gannett Radian Seitel Travelport United States Steel Synovus Financial Newpage Qwest 6.375 7.750 9.750 9.875 April 1, ’12 June 1, ’11 Feb. 15, ’14 Sept. 1, ’14 June 1, ’13 June 15, ’17 May 1, ’12 Sept. 1, ’11 72.500 70.000 50.875 70.000 91.625 51.625 43.500 102.000 4.50 4.00 2.13 2.00 1.88 1.63 1.50 1.50 n.a. n.a. 59.250 67.250 90.500 50.000 40.000 99.750 3.49 2.02 ... ... 32.57 2.84 ... ... 5.12 –0.98 ... ... 2.94 1.43 ... ... London interbank offered rate, or Libor One month 0.28750 Three month 0.51313 Six month 0.98375 One year 1.49375 0.30188 4.58750 0.28750 0.53750 4.81875 0.50500 1.02250 4.39375 0.96500 1.51125 4.23375 1.45625 One month Two month Three month Four month Five month Six month LATEST Offer Bid Week ago 52-WEEK High Low Eurodollars (mid rates) 0.35 0.40 0.50 0.50 0.50 0.60 0.60 0.80 1.00 1.00 1.00 1.00 0.45 0.55 0.70 0.70 0.80 0.90 6.25 5.50 5.75 5.25 5.25 5.25 0.43 0.55 0.70 0.70 0.75 0.80 5.650 SNV 5.125 NEWPAG 10.000 QUS 7.875 Treasury bill auction 4 weeks 13 weeks 26 weeks 0.155 0.180 0.270 0.160 0.190 0.285 1.845 1.870 2.020 0.000 0.005 0.250 New York Funding Rate One month 0.2960 0.3155 4.8273 0.2956 …And with the biggest price decreases International Lease Finance Host Hotels & Resorts AES United Rentals CIT Edison Mission Energy Nova Chemicals Goodyear Tire & Rubber AIG HST AES URI CIT EIX NCX GT Secondary market Freddie Mac Nov. 15, ’13 June 1, ’16 Oct. 15, ’17 Feb. 15, ’14 April 27, ’11 May 15, ’17 Jan. 15, ’12 Dec. 1, ’11 73.000 85.000 93.500 77.250 61.500 76.750 94.000 98.000 –2.50 –2.00 –1.75 –1.75 –1.50 –1.50 –1.50 –1.25 n.a. 87.438 93.500 n.a. 74.000 78.000 93.500 99.250 … 7.94 11.59 5.72 1.61 … ... 11.71 … 4.47 1.13 2.88 19.26 … ... 3.81 30-year mortgage yields 30 days 4.94 4.91 60 days 5.02 5.01 One-year RNY 2.500 2.500 6.49 6.56 3.375 3.98 4.14 2.500 6.625 6.750 8.000 7.000 5.600 7.000 6.500 8.625 Fannie Mae 30-year mortgage yields 30 days 4.736 4.960 60 days 4.817 5.048 6.566 6.618 4.099 4.186 Notes on data: U.S. prime rate and discount rate are effective December 16, 2008. U.S. prime rate is the base rate on corporate loans posted by at least 70% of the 10 largest U.S. banks. Other prime rates aren’t directly comparable; lending practices vary widely by location; Discount rate is the charge on loans to depository institutions by the New York Federal Reserve Banks; Federal-funds rate is on reserves traded among commercial banks for overnight use in amounts of $1 million or more; Call money rate is the charge on loans to brokers on stock-exchange collateral; Dealer commercial paper rates are for high-grade unsecured notes sold through dealers by major corporations; Freddie Mac RNY is the required net yield for the one-year 2% ratecapped ARM. Libor is the British Bankers’ Association average of interbank offered rates for dollar deposits in the London market; Libor Swaps quoted are mid-market, semi-annual swap rates and pay the floating 3-month Libor rate. New York Funding Rate:survey-based average of unsecured bank funding costs. Sources: Merrill Lynch; Bureau of Labor Statistics; ICAP plc.; Thomson Reuters; General Electric Capital Corp.; Tullett Prebon Information, Ltd. *Estimated spread over 2-year, 3-year, 5-year, 10-year or 30-year hot-run Treasury; 100 basis points=one percentage pt.; change in spread shown is for Z-spread Note: Data are for the most active issue of bonds with maturities of two years or more Sources: MarketAxess Corporate BondTicker; WSJ Market Data Group Bankers acceptances 30 days 60 days 90 days 0.30 0.35 0.35 0.40 0.48 0.55 5.13 5.13 5.00 0.30 0.35 0.35 Reuters Group PLC is the primary data provider for several statistical tables in The Wall Street Journal, including foreign stock quotations, futures and foreign exchange tables. Reuters real-time data feeds are used to calculate various Dow Jones Indexes. 6606728 P2JW196020-0-C01000-1--------XA BLACK P2JW196021-0-C01100-1--------XA BLACK 07/15/2009 AZ,CL,CX,DL,DX,EE,FL,HO,MW,NC,NE,NY,RM,SA,SC,SL,SW,WB,WE P2JW196021-0-C01100-1--------XA Wednesday, July 15, 2009 THE WALL STREET JOURNAL. C11 COMMODITIES Futures Contracts Metal & Petroleum Futures Open Contract High hi lo Low Settle Chg Open interest Open High Contract hi lo Low Settle Chg Open interest Open High Contract hi lo Low Settle Chg Open interest Open High Contract hi lo Low Settle Chg Open interest Copper-High (CMX)-25,000 lbs.; cents per lb. July Sept July Aug Oct Dec Feb'10 April July Oct July Sept Aug Sept 224.90 229.30 223.80 231.10 920.20 921.20 922.90 924.70 922.40 925.90 926.20 927.80 929.00 930.20 931.20 932.70 224.90 221.90 920.20 917.80 919.80 920.90 922.30 924.50 229.00 229.90 922.50 922.80 924.20 925.60 926.80 928.00 7.70 7.60 0.30 0.30 0.20 0.20 0.20 0.30 17.30 17.80 7.0 7.0 –0.17 –0.17 2,201 68,872 47 189,583 14,103 76,989 16,385 16,977 69 21,286 606 56,085 143,508 258,120 Oct Dec Dec'10 Dec'11 Aug Sept Aug Sept Aug Sept Oct Nov Dec Jan'10 62.07 62.90 69.47 72.70 63.22 64.90 70.05 73.00 61.15 62.90 68.38 71.82 1.4962 1.5350 1.6350 1.6298 3.304 3.445 3.672 4.356 5.038 5.319 61.50 63.37 68.73 72.09 1.5119 1.5495 1.6466 1.6402 3.429 3.571 3.786 4.445 5.116 5.409 –0.12 –0.04 –0.24 –0.22 .0081 .0050 .0072 .0057 .166 .169 .160 .156 .149 .149 77,208 160,000 92,583 47,227 47,945 48,213 47,235 62,685 129,793 123,525 86,530 39,197 43,834 41,620 Dec Aug March'10 July Dec July Nov July Dec July Dec July Sept 340.50 346.00 1.48 1.49 1.49 1.50 t 339.50 1.46 1.47 … 228.25 345.50 1.49 1.49 209.50 230.00 6.00 .02 .02 –1.50 –1.00 –17.50 6.50 –14.80 .50 .38 .39 –.50 4.50 –14.00 –12.75 –13.25 –13.00 –3.00 –9.50 –.675 –.875 .275 –.125 –.800 .150 –1.200 –1.200 … –6.40 … –.08 64 63 .60 .60 .14 .15 .01 .63 .72 2.70 2.70 417,563 423 533 3 8,440 159 240,063 64 70,604 1,011 112,084 32 5,186 779 144,809 536 43,076 22 12,873 11,504 6,523 66,965 79,518 5,748 45,106 34 488 424 4,879 4,580 4,251 4 46,946 28 61,639 308,442 176,862 2,352 2,541 100,242 19,039 6,995 Dec Sept Dec Sept Sept July Nov Aug Sept 118-200 118-200 118-085 118-150 116-205 116-225 116-095 116-135 108-177 108-185 99.828 99.830 s 99.740 99.740 99.6600 99.6850 99.6350 99.6550 99.4600 99.4250 99.2150 99.0400 117-040 117-145 –1-11.0 117-170 117-250 116-080 116-130 115-270 116-000 108-140 108-160 99.825 99.730 99.828 99.740 –17.5 –17.5 –10.2 –1.7 .002 … … … 806 1,027,737 2,248 758,151 611,375 59,224 59,915 7,822 6,911 Ethanol (CBT)-29,000 gal.; $ per gal. Oats (CBT)-5,000 bu.; cents per bu. … … 230.75 236.00 1079.75 1090.00 915.00 923.00 357.60 357.60 283.80 286.00 33.69 34.33 33.69 34.66 Treasury Notes (CBT)-$100,000; pts 32nds of 100% 5 Yr. Treasury Notes (CBT)-$100,000; pts 32nds of 100% 2 Yr. Treasury Notes (CBT)-$200,000; pts 32nds of 100% 30 Day Federal Funds (CBT)-$5,000,000; 100 - daily avg. 1 Month Libor (CME)-$3,000,000; pts of 100% 99.6600 99.6775 99.6325 99.6500 99.4400 99.3950 99.1750 98.9700 99.4550 99.4150 99.2000 99.0000 Gold (CMX)-100 troy oz.; $ per troy oz. Heating Oil No. 2 (NYM)-42,000 gal.; $ per gal. 1.5109 1.5409 1.5486 1.5796 1.6448 1.6710 1.6410 1.6662 3.320 3.482 3.731 4.372 5.040 5.319 3.472 3.614 3.831 4.473 5.150 5.431 Gasoline-NY RBOB (NYM)-42,000 gal.; $ per gal. Natural Gas (NYM)-10,000 MMBtu.; $ per MMBtu. Soybeans (CBT)-5,000 bu.; cents per bu. 1058.25 1074.00 906.75 918.00 344.00 279.90 33.58 33.88 344.50 283.00 33.65 34.46 Soybean Meal (CBT)-100 tons; $ per ton. Soybean Oil (CBT)-60,000 lbs.; cents per lb. Rough Rice (CBT)-2,000 cwt.; cents per cwt. 1299.00 1310.00 1300.50 1330.00 515.25 516.00 542.25 544.50 563.25 563.25 569.75 572.00 618.00 621.00 629.00 630.00 104.000 104.000 104.000 104.100 84.925 85.400 90.175 90.500 58.900 59.100 58.700 59.500 61.000 62.550 63.100 63.800 168.00 177.50 194.10 197.80 9.91 10.34 … 2,672 9.91 10.46 … 2,730 1288.50 1288.50 1295.50 1310.50 505.25 525.50 551.00 555.25 618.00 617.50 501.75 530.00 550.50 558.00 618.00 620.50 Platinum (NYM)-50 troy oz.; $ per troy oz. 1107.20 1122.10 1113.90 1136.50 1283.0 1297.0 1283.0 1299.5 60.14 61.00 61.46 62.21 1107.20 1128.40 1112.00 1135.10 1283.0 1278.5 59.15 60.02 1285.5 1285.5 59.52 60.39 Silver (CMX)-5,000 troy oz.; cnts per troy oz. Eurodollar (CME)-$1,000,000; pts of 100% Aug 99.4600 Sept 99.4150 Dec 99.2000 March'10 99.0150 … 30,266 –.0050 1,025,621 –.0100 938,211 –.0300 885,002 Crude Oil, Light Sweet (NYM)-1,000 bbls.; $ per bbl. Agriculture Futures Corn (CBT)-5,000 bu.; cents per bu. July 369.00 369.00 348.00 350.00 –9.00 400 Wheat (CBT)-5,000 bu.; cents per bu. July Sept July Sept July Dec Aug Sept Aug Oct July Oct July Aug Currency Futures Japanese Yen (CME)-¥12,500,000; $ per 100¥ Sept Dec Sept Dec Sept Dec Sept Dec Sept Dec Aug Sept Sept Dec 1.0761 1.0794 1.0767 1.0803 .8694 .8691 .8834 .8819 1.0672 1.0703 .8672 .8680 1.6225 1.6234 .9147 .9165 .7779 .7757 … .71600 1.3913 1.3915 1.0726 1.0738 .8805 .8808 1.6275 1.6273 .9169 .9183 .7851 .7801 –.0050 –.0049 .0128 .0128 .0070 .0071 –.0069 –.0068 .0075 .0075 105,565 182 80,097 2,217 87,794 346 32,518 100 82,911 479 0 47,334 113,358 1,476 Wheat (KC)-5,000 bu.; cents per bu. Tuesday, July 14,2009 These prices reflect buying and selling of a variety of actual or "physical" commodities in the marketplace--separate from the futures price on an exchange, which reflects what the commodity might be worth in future months. Tuesday Year ago Tuesday Year ago Tuesday Year ago Cash Prices Canadian Dollar (CME)-CAD 100,000; $ per CAD British Pound (CME)-£62,500; $ per £ 1.6235 1.6342 1.6250 1.6335 .9242 .9211 .7804 .7757 .9262 .9271 .7925 .7862 Wheat (MPLS)-5,000 bu.; cents per bu. Cattle-Feeder (CME)-50,000 lbs.; cents per lb. 103.050 103.125 103.300 103.350 84.600 89.725 58.425 58.600 61.300 60.500 166.20 186.50 9.89 10.27 … 2,672 113.20 114.55 17.46 18.83 22.51 60.68 62.38 93.50 97.80 85.050 90.125 58.700 58.950 61.300 61.300 168.00 188.50 9.89 10.29 2,700 2,727 112.90 115.50 17.68 19.03 22.58 61.59 63.38 97.80 101.15 Energy European crude oil spot prices, 11 a.m. ET, Northwestern Europe Austria crown-e Austria phil-e Forties Brent Bonny light Urals-Mediterranean West Texas intmdt, Cushing West Texas sour, Midlands Louisiana sweet, St. James Alaska North Slope, Pac delivery 59.77 60.05 61.30 60.00 59.52 57.32 61.97 59.52 1.4836 1.5419 1.5894 1.7503 1.8441 1.6016 1.6541 1.7650 0.7159 0.9413 3.290 n.a. n.a. n.a. n.a. Domestic crude oil spot prices, 4 p.m. ET Refined products Fuel oil, No. 2 NY Diesel,500ppm low sulfur NY Diesel,15ppm ultra-low sulf NY Gasoline,conv prem NY Gasoline,RBOB prem NY Gasoline,conv reg NY Gasoline,RBOB reg NY Gasoline,CARBOB,reg LA-m Propane,nontet,Mont Belvieu-g Butane,normal,Mont Belvieu-g Natural gas Henry Hub Metals Gold, per troy oz Engelhard industrial Engelhard fabricated Handy & Harman base Handy & Harman fabricated London a.m. fixing London p.m. fixing Krugerrand,wholesale-e Maple Leaf-e American Eagle-e Mexican peso-e 926.97 996.49 924.75 998.73 921.75 924.75 960.44 960.44 965.06 1121.46 138.74 136.54 Other metals 142.59 Platinum,free market 138.04 Platinum,Engelhard industrial Platinum,Engelhard fabricated 3.8902 Palladium,Engelhard industrial 3.9265 Palladium,Engelhard fabricated 3.9790 Aluminum,Comex spot 3.3523 Antimony-d 3.4648 Copper,Comex spot 3.2275 Lead,NA solder-d 3.3335 Stainless steel scrap,US-d 3.5450 Tin,NA solder-d 1.9717 Zinc,NA-d 2.4602 11.775 Fibers and Textiles Burlap,10-oz,40-inch NY yd-n,w Cotton,1 1/16 std lw-mdMphs-u Hides,hvy native steers fob-u 988.33 Wool,64s,staple,Terr del-u,w 1062.45 986.00 Grains and Feeds 1064.88 Barley,top-quality Mnnpls-u 981.75 Bran,wheat middlings, KC-u 986.00 Corn,No. 2 yellow,Cent IL-bp,u 985.50 Corn gluten feed,Midwest-u,w 1026.38 Cottonseed meal-u,w 1026.38 Hominy feed,Cent IL-u,w 1186.57 Meat-bonemeal,50% pro IL-u,w 2.2075 908.21 961.15 Oats,No.2 milling,Mnnpls-u 5.3550 960.44 1026.38 Sorghum,(Milo) No.2 Gulf-u SoybeanMeal,Cent IL,rail,ton48%-u 361.50 Silver, troy oz. 10.7050 Soybeans,No.1 yllw IL-bp,u Engelhard industrial 12.9700 19.3500 Wheat,Spring14%-pro Mnpls-u 6.8300 Engelhard fabricated 15.5640 23.2200 Wheat,No.2 soft red,St.Louis-bp,u 4.2250 Handy & Harman base 12.9300 19.0300 Wheat,hard,KC 5.3250 Handy & Harman fabricated 15.5160 22.8360 Wheat,No.1soft white,Portld,OR-u 5.4500 London fixing,spot price £7.8994 £9.5982 (U.S.$ equivalent) 12.8800 19.3000 Food Coins,wholesale $1,000 face-a 9756 12824 Beef,carcass equiv. index 1129.0 1133.0 1233.0 240.0 340.0 0.7350 2.2650 2.2900 99.143 1659 810.643 76.633 1987.0 1995.0 2095.0 452.0 552.0 1.4550 2.9900 3.7220 119.943 2973 1453.675 96.636 choice 1-3,600-900 lbs.-u select 1-3,600-900 lbs.-u Broilers,dressed ‘A’-u Broilers,12-city comp wghtd-u Butter,AA Chicago Cheddar cheese,bbl,Chicago Cheddar cheese,blk,Chicago Milk,Nonfat dry,Chicago Cocoa,Ivory Coast Coffee,Brazilian,Comp Coffee,Colombian, NY Eggs,large white,Chicago-u Flour,hard winter KC Hams,17-20 lbs,Mid-US fob-u Hogs,Iowa–So. Minnesota-u Hogs,Sioux Falls,SD-u Pork bellies,12–14 lb MidUS-u Pork loins,13–19 lb MidUS-u Steers,Tex.-Okla. Choice-u Steers,feeder,Okla. City-u Sugar,cane,raw,world,fob 126.46 119.71 0.8796 0.8405 1.2250 108.00 108.75 88 3055 1.0330 1.8065 0.6450 15.00 z 59.06 40.50 z 0.9550 z 103.19 18.62 4.0250 10.0600 423.30 15.1100 9.6700 6.1050 8.6600 7.9500 Swiss Franc (CME)-CHF 125,000; $ per CHF Australian Dollar (CME)-AUD 100,000; $ per AUD Mexican Peso (CME)-MXN 500,000; $ per 10MXN … … .72325 .72575 1.3989 1.4018 1.4000 1.4011 .72225 –.00225 .71775 –.00225 1.3935 1.3935 –.0039 –.0036 Cattle-Live (CME)-40,000 lbs.; cents per lb. Hogs-Lean (CME)-40,000 lbs.; cents per lb. Pork Bellies (CME)-40,000 lbs.; cents per lb. Lumber (CME)-110,000 bd. ft., $ per 1,000 bd. ft. July Sept July Aug July Sept July Sept Oct March'10 Sept Oct Dec Sept Nov Euro (CME)-Œ125,000; $ per Œ 0.4600 0.4250 0.5659 0.6538 z 89.125 2.28 2.85 154.81 147.33 0.8677 0.8622 1.5400 189.00 193.25 144 3292 1.3586 1.5194 0.9350 20.05 0.76 73.47 52.00 0.8000 1.1650 98.42 116.06 15.57 Milk (CME)-200,000 lbs., cents per lb. t Index Futures DJ Industrial Average (CBT)-$10 x index Sept Sept Sept Dec Sept Dec Sept Sept Dec Sept Dec Sept Sept Dec 8257 8256 8333 8334 8240 8231 892.80 891.20 892.50 888.50 8304 8304 901.40 897.00 901.50 897.00 45 45 5.80 5.80 11,942 58,593 385,721 8,550 Cocoa (ICE-US)-10 metric tons; $ per ton. Coffee (ICE-US)-37,500 lbs.; cents per lb. 113.20 113.75 114.90 117.60 17.50 18.83 22.51 60.75 62.40 17.85 19.13 s 22.55 61.60 63.44 Mini DJ Industrial Average (CBT)-$5 x index S&P 500 Index (CME)-$250 x index 895.50 903.90 895.50 898.50 895.50 904.00 891.75 899.25 1443.00 1453.00 1441.8 1453.3 1438.3 1451.0 490.80 500.40 491.00 492.00 490.35 492.80 80.19 80.65 80.49 80.65 Mini S&P 500 (CME)-$50 x index 6.00 2,389,760 5.75 18,968 4.25 4.3 4.3 3.20 3.30 3.40 .07 .08 17,771 257,716 618 357,512 2,299 26,176 18,832 2,090 Sugar-World (ICE-US)-112,000 lbs.; cents per lb. Sugar-Domestic (ICE-US)-112,000 lbs.; cents per lb. Cotton (ICE-US)-50,000 lbs.; cents per lb. Orange Juice (ICE-US)-15,000 lbs.; cents per lb. 94.55 98.75 97.85 102.00 Nasdaq 100 (CME)-$100 x index 1437.00 1446.75 1437.3 1436.3 487.80 490.90 487.55 80.05 80.52 1446.8 1444.8 493.60 491.60 491.90 80.37 80.72 Mini Nasdaq 100 (CME)-$20 x index Mini Russell 2000 (ICE-US)-$100 x index Mini Russell 1000 (ICE-US)-$100 x index U.S. Dollar Index (ICE-US)-$1,000 x index z 7.25 Fats and Oils 68 156 Corn oil,crude wet/dry mill-u 35.5000 79.5000 3.3650 5.9450 Grease,choice white,Chicago-u 0.2350 0.5100 63.13 126.31 Lard,Chicago-u 0.2625 z 305 340 Soybean oil,crude;Centl IL-u 0.3114 0.6115 90 210 Tallow,bleach;Chicago-u 0.2400 0.4875 416 408 Tallow,edible,Chicago-u 0.2550 0.4900 Interest Rate Futures Treasury Bonds (CBT)-$100,000; pts 32nds of 100% Sept 119-300 120-075 118-080 118-210 –1-12.5 717,361 KEY TO CODES: A=ask; B=bid; BP=country elevator bids to producers; C=corrected; D=Ryan's Notes; E=Manfra,Tordella & Brooks; G=ICE; M=midday; N=nominal; n.a.=not quoted or not available;U=USDA; W=weekly, Z=not quoted Source: WSJ Market Data Group Source: Thomson Reuters BIGGEST 1,000 STOCKS How to Read the Stock Tables The following explanations apply to NYSE, NYSE Arca, NYSE Amex and Nasdaq Stock Market listed securities. Prices are composite quotations that include primary market trades as well as trades reported by Nasdaq OMX BXSM (formerly Boston), Chicago Stock Exchange, CBOE, National Stock Exchange, ISE, and BATS. The list comprises the 1,000 largest companies based on market capitalization. Underlined quotations are those stocks with large changes in volume compared with the issue’s average trading volume. Boldfaced quotations highlight those issues whose price changed by 5% or more if their previous closing price was $2 or higher. STOCK NET SYM CLOSE CHG STOCK NET SYM CLOSE CHG STOCK NET SYM CLOSE CHG STOCK NET SYM CLOSE CHG STOCK NET SYM CLOSE CHG STOCK NET SYM CLOSE CHG DunBradst DNB 79.14 EMC Cp EMC 12.88 EOG Res EOG 64.67 EQT EQT 33.03 EXCO Res XCO 12.13 EmanChm EMN 36.85 Eaton ETN 42.72 Footnotes: h-Does not meet continued listing v-Trading halted on primary market. EatonVance EV 24.71 standards Ç-New 52-week high. vj-In znkruptcy or receivership or being Ecolab ECL 37.75 Ÿ-New 52-week low. reorganized under the Bankruptcy lf-Late filing EdisonInt EIX 30.64 dd-Indicates loss in the most recent q-Temporary exemption from Nasdaq Code, or securities assumed by such EdwardsLife EW 66.33 companies. four quarters. requirements. ElPaso EP 8.87 FD-First day of trading. t-NYSE bankruptcy ElPasoPipeline EPB 17.95 Elan ADS ELN 6.65 Wall Street Journal stock tables reflect composite regular trading as of 4 p.m. and changes in the closing prices from 4 p.m. the previous day. EmbrBrzl ADS ERJ 15.75 EmersnElec EMR 31.87 Tuesday, July 14, 2009 NET NET STOCK SYM CLOSE CHG STOCK SYM CLOSE CHG Empresa ADS EOC 48.97 NET EmpICA ADS ICA 6.32 STOCK SYM CLOSE CHG BB&T Cp BBT 21.65 –0.21 Cemex ADS CX 7.88 –0.02 ¡BCE Inc BCE 21.30 0.42 ¡CentrpntEngy CNP 11.20 0.09 ¡EnbridgePtnr EEP 40.33 ¡Enbridge ENB 34.68 CentTel CTL 29.25 –0.09 BHPBilton ADS BHP 53.30 1.67 EnCana ECA 47.66 CGG ADS CGV 15.94 0.16 BHPBilton PLC BBL 45.02 1.08 Energen EGN 37.02 ChrlsRvrLab CRL 31.58 0.57 BJ Svc BJS 13.43 0.26 ACE Ltd ACE 43.46 –0.17 EnrgzrHldg ENR 53.89 AES Cp AES 11.59 0.13 BMC Sftwr BMC 32.35 0.08 ¡ChespkeEngy CHK 18.45 0.22 EngyTrnsfrEqty ETE 25.65 ¡Aflac AFL 31.38 0.72 ¡BP Plc ADS BP 46.40 0.20 ¡Chevron CVX 63.00 0.56 EnergyTransf ETP 41.69 AGL Res AGL 31.13 0.34 BakrHughs BHI 36.06 0.89 ChimeraInv CIM 3.46 0.07 Ball Cp BLL 45.91 –0.02 ChinaEAir CEA 23.06 0.31 ¡EnerplusRes ERF 19.67 AMB Prop AMB 17.53 –0.05 Enersis ADS ENI 18.32 BcoBilViz BBV 12.71 0.17 ChinaLfIns ADS LFC 59.12 0.61 AT&T T 23.45 –0.32 ENI S.p.A E 44.88 BncoBrdsco BBD 13.74 –0.10 ¡AXA ADS AXA 17.35 0.03 ChinaMobile CHL 47.72 0.62 Ensco ESV 35.90 BcoDeChli BCH 42.25 1.40 ABB ADS ABB 15.49 0.02 ChinaPete ADS SNP 80.40 1.00 Entergy ETR 74.82 BancoMacro BMA 16.58 0.13 AbbottLab ABT 46.49 0.34 ChinaAir ADS ZNH 13.26 –0.08 ChinaTele CHA 48.14 1.29 ¡Ent GP Hldgs EPE 25.42 Abercrombie A ANF 24.52 0.59 Ç BcoSantChile ADS SAN 47.52 –0.49 ¡EntPdtsPtnr EPD 26.23 BcoSantdr STD 11.90 0.01 ChinaUnicomHK CHU 13.33 0.04 Accenture ACN 33.71 0.35 Equifax EFX 25.56 AdvanceAuto AAP 44.39 –0.53 ChipotleMex A CMG 82.20 1.50 Bancol ADS CIB 29.35 0.85 EqResdntl EQR 20.24 AdvMicro AMD 3.55 –0.01 BankAm BAC 12.91 –0.08 ¡Chubb CB 40.34 –0.71 EsteeLaudr A EL 31.78 BkIrlnd ADS IRE 8.59 0.52 ChunghwaTel CHT 19.03 –0.20 AdSemEg ADS ASX 3.21 0.09 EvrstReGrp RE 75.41 BkMntrl BMO 42.29 1.76 Church&Dwt CHD 54.76 0.81 Advntst ADS ATE 18.58 0.86 Exelon EXC 50.08 CimarexEngy XEC 29.16 0.81 BankNY Mellon BK 28.76 0.23 AECOM Tech ACM 30.55 –0.25 ¡ExxonMobil XOM 66.22 Citigroup C 2.92 0.14 BkNovaScotia BNS 37.07 1.04 Aegon AEG 5.66 0.06 FMC FMC 43.29 CliffsNtrlRes CLF 21.54 0.20 Barclays ADS BCS 19.60 0.13 Aeropostale ARO 35.28 1.00 FMC Tech FTI 36.60 Clorox CLX 57.41 0.04 Bard CR BCR 73.25 0.37 Aetna AET 26.31 –0.02 FPL Gp FPL 56.26 Coach COH 24.77 0.92 ABX 32.84 0.85 ¡AffilCmptr A ACS 43.56 0.22 ¡BarckGld FTI Cnsltng FCN 52.34 CocaCola KO 49.29 0.24 BaxterInt BAX 53.50 0.09 AffilMangr AMG 56.24 1.21 FactstRsch FDS 50.90 AGCO Cp AGCO 26.59 0.38 CC Femsa ADS KOF 39.06 0.03 BeckmnCoultr BEC 55.21 0.38 FairfaxFnl FFH 253.90 AgilentTch A 19.49 0.10 CocaColaEnt CCE 16.83 0.16 BectonDksn BDX 69.73 0.65 FamilyDlr FDO 30.67 AgnicoEgl AEM 51.42 1.04 ¡Bemis CocaCola ADS CCH 20.29 –0.03 BMS 25.13 –0.01 FedRlty FRT 50.77 ColgatePalm CL 73.34 0.50 Berkley WRB 21.67 –0.26 ¡Agrium AGU 37.14 0.14 FedInv B FII 23.42 Comerica CMA 21.84 0.28 BerkHathwy A BRKA 89400 905.00 AirProduct APD 65.05 0.19 FedExCp FDX 55.54 Airgas ARG 38.49 ... BerkHathwy B BRKB 2869 41.95 ¡Commscope CTV 24.25 –0.12 FidNtlFnl FNF 13.28 Albemarle ALB 24.57 0.16 BestBuy BBY 34.41 0.29 CmntyHlth CYH 26.38 0.41 FidelityNtlInfo FIS 19.84 AlbertoCl ACV 25.10 0.02 BlackRock BLK 172.71 0.61 CoSaoPlo ADS SBS 28.40 –0.17 FstAmCp FAF 25.88 BlackstoneGp BX 9.48 0.35 EngGr-Cmg ADS CIG 13.04 –0.23 AlcatelLucent ALU 2.16 –0.13 FstHoriznNat FHN 12.05 BlockHR HRB 16.61 0.12 CmpnhiaSidr SID 20.20 –0.35 Alcoa AA 9.59 –0.07 FstEngy FE 40.26 Alcon ACL 118.34 2.51 BdwlkPipePtnr BWP 22.94 0.05 CptrSci CSC 43.73 0.28 FlwrsFoods FLO 22.07 Allghny Y Boeing BA 40.41 –0.03 ¡ConAgraFoods CAG 18.90 0.06 267.00 –0.70 Flowserve FLS 64.13 BorgWarner BWA 31.23 0.72 AllghnyEngy AYE 24.62 0.31 ConchoRes CXO 27.77 0.78 FluorCp FLR 47.35 BostProp BXP 46.13 –0.01 ¡ConocoPhil COP 40.55 –0.07 ¡AllghnyTch ATI 32.00 –0.01 Fomento ADS FMX 32.26 BosSci BSX 10.13 0.21 ConsolEngy CNX 29.85 –0.55 Allergan AGN 45.96 0.06 FordMotor F 5.84 AllianceData ADS 37.80 –0.84 BrasilTelPart ADS BRP 36.36 –0.74 ConEd ED 37.38 0.24 ForestLabs FRX 24.15 AlliantEngy LNT 25.81 0.22 BRF ADS PDA 41.56 –0.21 ConstBrands A STZ 12.66 0.08 FortBrnds FO 33.79 AlliantTech ATK 79.85 1.25 BrisMyrsSqb BMY 19.47 –0.01 CnstlnEngy CEG 27.32 0.49 FraTelecm FTE 22.45 ContntlRes CLR 24.35 0.70 BritishSky BSY 31.67 0.71 Allianz ADS AZ 9.15 –0.02 FrnklnRes BEN 69.97 Cooper CBE 29.65 –0.06 BdridgeFnlSol BR 15.96 –0.05 AldIrhBk ADS AIB 4.58 0.50 FrptMcCG FCX 48.18 Corning GLW 15.41 0.34 AlldWrldAssrnc AWH 41.14 –0.49 ¡BrookfieldMgt BAM 16.47 0.63 FresensMed FMS 43.89 Covance CVD 48.65 1.00 Allstate ALL 23.99 –0.67 BrkfldProp BPO 7.52 0.14 FrontierComm FTR 6.63 CovantaHldg CVA 17.17 0.34 AltriaGp MO 16.64 –0.02 Brown&Brown BRO 19.00 –0.09 Frontln FRO 20.77 Coventry CVH 18.73 0.61 BFB 43.08 0.72 Alumina ADS AWC 4.29 0.14 ¡BrFormn B Gallagr AJG 21.22 Covidien COV 36.21 0.25 BT Gp BT 17.04 0.13 AluCpChina ACH 22.49 0.49 GameStop A GME 21.63 Credicorp BAP 58.30 1.13 BuckeyePtr BPL 42.98 0.11 AmBev ADS ABV 64.38 0.41 Gap Inc GPS 15.50 Amdocs DOX 21.81 0.13 Buenavnt ADS BVN 22.00 0.23 CrdtSuisse ADS CS 45.33 –0.52 GenDynam GD 53.10 Ameren AEE 23.96 0.26 ¡Bunge CrownCastl CCI 24.26 0.09 BG 60.12 0.94 GenElec GE 11.64 AmMovil ADS AMX 38.50 0.16 Ÿ BurgerKing BKC 16.15 –0.36 ¡CrownHldgs CCK 23.31 –0.05 GenMills GIS 59.21 BurlNthSF BNI 71.78 1.59 CullnFrst CFR 46.49 –0.04 AmEagleOut AEO 13.42 0.14 Genpact G 11.85 CBD Pao ADS CBD 41.04 0.04 Cummins CMI 32.68 –0.50 ¡AEP AEP 28.98 0.23 GenuinePart GPC 33.34 CB RichElSvc CBG 8.58 0.22 DPL Inc DPL 23.14 0.03 AmExpress AXP 24.46 –0.06 GnwrthFnl A GNW 5.55 CBS Corp B CBS 6.23 0.25 DTE Engy DTE 31.85 0.36 AmFnl AFG 22.19 –0.43 Gerdau GGB 9.42 CF IndHldgs CF 69.73 –0.96 DaimlerAG DAI 36.78 0.70 AmTower A AMT 31.83 0.20 Gildan GIL 14.93 CGI Gp A GIB 8.73 0.15 Danaher DHR 59.67 0.48 AmerWaterWrks AWK 18.93 0.24 GSK ADS GSK 36.43 Cigna CI 24.61 –0.07 Darden DRI 33.69 1.00 ¡AmerprsFncl AMP 23.51 0.08 GlblPymts GPN 37.80 CMS Engy CMS 12.15 0.03 DaVita DVA 49.72 –0.24 AmeriSrcBrg ABC 18.23 0.12 ¡GoldFields ADS GFI 11.46 CNA Fnl CNA 14.36 –0.25 DeanFoods DF 20.02 0.05 Ametek AME 34.20 0.50 ¡Goldcp GG 34.16 CNH Global CNH 13.28 1.06 Deere DE 36.88 0.29 Amphenol APH 32.20 0.20 GoldmanSachs GS 149.66 Cnooc ADS CEO 120.80 4.40 ¡Delhaize ADS DEG 70.58 –0.40 ¡AnadrkPete APC 43.79 1.03 Goodrich GR 51.40 AnalogDevcs ADI 24.18 –0.09 CNX Gas CXG 25.80 0.73 DeltaAir DAL 5.98 0.01 Goodyear GT 11.71 ¡AngGldAsh ADS AU 35.10 1.07 DNR 13.59 0.34 CPFL Energia CPL 46.20 –1.24 ¡DnbryRes Grainger GWW 82.58 AnnalyCap NLY 15.58 0.04 DesarrHomex HXM 27.50 0.15 CRH ADS CRH 22.74 –0.07 GrtPlnsEngy GXP 15.00 DtscheBK DB 64.91 –0.07 CSX CSX 34.80 2.26 AON Cp AOC 37.57 0.06 Greenhill GHL 76.56 CVS Caremark CVS 31.37 –0.31 ¡DtscheTel ADS DT 11.26 –0.04 ¡ApacheCp APA 71.15 1.88 Greif A GEF 44.00 AptarGp ATR 33.33 0.01 Cablevsn CVC 17.92 0.08 DevonEgy DVN 52.79 0.94 GrpAeroPac ADS PAC 25.80 AquaAmer WTR 17.47 0.04 ¡CabotO&G COG 31.27 1.05 DeVry DV 45.95 0.51 GpoTelevsa ADS TV 17.23 Aracruz ADS ARA 14.84 0.05 CamecoCp CCJ 24.38 0.47 Diageo ADS DEO 56.42 –0.37 Guess GES 24.81 CameronInt CAM 27.27 0.61 DmndOffshr DO 80.33 1.51 ArcelorMitl MT 31.14 0.25 HCC InsHldg HCC 24.47 CampblSoup CPB 29.39 –0.04 DicksSprtgGds DKS 17.91 0.34 ArchCoal ACI 14.81 0.12 HCP HCP 21.65 ArcherDan ADM 27.26 0.18 CIBC CM 52.74 1.94 DgtlRltyTr DLR 36.99 0.88 HDFC Bnk HDB 91.95 ArrowElec ARW 20.64 0.42 CanNtlRlwy CNI 41.02 1.22 DiscvrFnlSvc DFS 10.22 0.08 HSBC ADS HBC 41.70 Assurant AIZ 23.31 –0.17 CndNatRes CNQ 51.01 1.47 ¡Disney DIS 23.11 0.41 Hallibrtn HAL 19.82 CanPacRlwy CP 35.44 0.99 DolbyLab A DLB 36.29 0.27 AstraZen AZN 44.07 0.48 HarleyDav HOG 16.53 Canon ADS CAJ 32.56 0.36 DominRes D 33.10 0.08 Atmos Eng ATO 24.97 0.03 HrmnyGld ADS HMY 8.85 AU Optrncs AUO 11.47 0.59 CapOneFnl COF 23.11 1.25 Donaldson DCI 33.52 0.49 Harris HRS 28.58 AutoNation AN 17.57 0.24 CardnlHlth CAH 29.89 0.14 Donnelly RRD 11.50 0.38 Harsco HSC 28.20 AutoZone AZO 158.77 2.88 CarMax KMX 14.46 0.46 DoverCp DOV 32.33 0.36 HrtfrdFnl HIG 11.18 Carnival CCL 25.49 0.42 DowChem DOW 15.38 0.09 AvalnBay AVB 53.95 0.43 Hasbro HAS 23.86 Carnival ADS CUK 26.52 0.33 DrPepperSnap DPS 22.57 0.40 AveryDensn AVY 24.77 0.32 HlthCr Reit HCN 35.50 Caterpillar CAT 31.93 0.13 DrssrRndGrp DRC 25.62 0.47 Avnet AVT 21.29 0.37 Heinz HNZ 36.29 Celanese A CE 20.95 0.43 DuPont DD 25.55 0.29 AvonPdts AVP 26.09 0.07 Hellenic OTE 7.38 DukeEngy DUK 14.52 –0.05 AxisCapHldgs AXS 27.19 0.29 ¡CellcomIsrael CEL 27.10 0.59 HelmPayne HP 29.57 Hershey HSY 37.55 HertzGlbHldgs HTZ 9.00 ¡Hess HES 49.35 Hewitt HEW 28.88 HewlettPk HPQ 37.14 Hitachi HIT 29.25 HomeDpt HD 23.68 ¡HondaMtr ADS HMC 26.29 Honeywell HON 31.18 HormelFood HRL 34.51 ¡DR Horton DHI 8.88 Hospira HSP 37.17 HostHtlRsrt HST 7.94 HuanengPwr HNP 26.89 Humana HUM 28.28 Htchsn Telcm HTX 3.64 ICICI Bk ADS IBN 28.25 IHS A IHS 46.73 NYSE –0.05 –0.14 0.84 0.32 0.72 0.07 0.59 –0.10 –0.30 0.02 0.20 0.29 0.04 –0.11 0.22 0.16 0.76 0.27 0.63 0.73 1.04 0.51 1.34 –0.20 0.40 0.42 0.62 –0.35 0.31 1.07 –0.06 0.07 –0.03 –0.03 0.41 0.71 0.55 0.52 –0.04 0.94 1.01 0.04 0.21 5.90 0.55 0.73 0.11 –0.26 –0.57 –0.06 –0.60 –0.08 0.48 0.25 –0.48 –0.14 0.18 0.15 0.38 0.96 –0.42 0.81 0.27 –0.92 –0.02 0.11 0.17 0.60 0.21 0.81 0.18 0.12 0.18 0.18 –0.15 –0.13 0.79 0.33 0.51 0.30 0.65 0.22 0.86 0.43 1.44 0.10 –1.39 0.27 0.27 0.73 0.57 –0.24 0.27 –1.97 0.79 0.34 –0.05 0.09 0.81 0.10 –0.13 0.17 0.14 0.06 0.05 0.60 0.68 0.09 0.74 0.16 –0.16 0.05 0.57 0.12 0.37 –0.17 0.35 0.10 0.34 –0.04 –2.31 ... 0.96 0.51 IMS Hlth RX 12.39 ING Grp ADS ING 9.69 ITC Hldgs ITC 43.19 ITT Cp ITT 43.29 ITT EduclSvc ESI 92.07 IcahnEnt IEP 33.77 IL Tool ITW 37.19 Indosat IIT 26.02 IngRnd A IR 20.43 ¡IngramMicro A IM 17.21 IntegrysEngy TEG 29.84 InteractvData IDC 23.23 IntercntlExch ICE 85.27 InCntHtl ADS IHG 10.11 IBM IBM 103.25 IntFlavor IFF 31.92 IntGameTch IGT 15.64 IntPaper IP 15.23 Interpublic IPG 5.09 InvrnssInv IMA 32.14 Invesco IVZ 16.95 IronMtn IRM 28.87 JPMorgChas JPM 34.70 JacobEngrg JEC 38.52 JamesHardie JHX 14.97 JefferiesGp JEF 20.05 JohnsJohns JNJ 58.23 JohnsCtrl JCI 20.13 KBFinc ADS KB 36.00 KBR KBR 17.63 KT Crp ADS KTC 14.32 ¡Kellogg K 47.75 KeyCp KEY 5.20 KimbClark KMB 53.08 ¡KimcoRlty KIM 8.84 KindrMrgEgy KMP 51.85 KindrMrgMg KMR 45.70 KingPharm KG 9.09 ¡KinrossGld KGC 18.64 KohlsCp KSS 44.47 Konami ADS KNM 18.30 KoreaElecPwr KEP 11.07 KftFoods KFT 27.00 Kroger KR 21.68 Kubota ADS KUB 39.69 Kyocera KYO 72.81 LSI Corp LSI 4.67 L 3Comm LLL 68.46 LabCpAm LH 66.74 LanAirline ADS LFL 11.82 LasVegasSands LVS 7.14 Lazard LAZ 28.91 LeggMason LM 24.10 LegPlatt LEG 14.83 LenderPrcsSrvc LPS 27.95 LeucdaNat LUK 19.48 LG DisplayADS LPL 13.30 LbtyProp LRY 22.32 EliLilly LLY 32.91 LimitedBrnds LTD 11.12 ¡LnclnNtl LNC 15.73 LloydsGp ADS LYG 4.35 LockhdMartin LMT 81.19 LoewsCp L 26.37 Lorillard LO 67.81 Lowes Cos LOW 19.57 Lubrizol LZ 48.81 LuxottGp LUX 20.70 M&T Bnk MTB 53.49 MDU Res MDU 18.45 MEMC Elec WFR 16.84 MGM Mirage MGM 5.98 MSC IndDir A MSM 35.53 Macys M 11.02 ¡MagelnPtnrs MMP 35.38 MagnaInt MGA 43.28 MgyrTelkm ADS MTA 15.11 Manpower MAN 39.93 Manulife MFC 18.00 MarathnOil MRO 29.42 ¡MarkelCp MKL 293.49 MarriottInt A MAR 21.08 MarshMcL MMC 19.10 MrtnMarMat MLM 74.49 MarvEntn MVL 37.88 Masco MAS 8.68 MasterCard MA 165.93 Mattel MAT 15.77 McAfee MFE 41.95 McCrmkCo MKC 32.87 McDermInt MDR 17.83 McDonalds MCD 57.46 McGrawH MHP 30.87 McKesson MCK 43.90 MeadJohnNutr ClA MJN 33.14 MeadWVaco MWV 16.09 Mechel OAO MTL 7.70 MedcoHlthSol MHS 47.53 ¡Medtronic MDT 33.75 Merck MRK 27.16 MetavanteTch MV 25.84 MetLife MET 29.28 MetroPCS Comm PCS 13.01 MetlrToledo MTD 76.17 MicronTch MU 5.32 Millipore MIL 67.72 MindrayMed ADS MR 28.17 Mirant MIR 15.43 MitsuUFJ ADS MTU 5.99 MobilTelsys MBT 35.03 MohawkInd MHK 35.04 MolsonCoors B TAP 42.72 Monsanto MON 74.70 Moodys MCO 27.96 MorgStan MS 27.88 Mosaic MOS 43.22 Motorola MOT 6.17 MSCI Cl A MXB 25.57 ¡MurphyOil MUR 52.39 NRG Engy NRG 24.85 NVEnergy NVE 10.90 NVR Inc NVR 519.50 NYSE Euronext NYX 25.59 NaborInd NBR 15.32 0.21 0.29 0.18 0.58 2.13 0.17 0.47 0.15 0.04 0.01 0.55 0.11 –3.75 0.10 –0.37 0.14 0.80 0.40 0.28 –0.01 –0.11 0.71 –0.01 0.50 0.47 0.01 0.51 0.01 0.57 0.41 –0.18 –0.17 –0.18 –0.06 –0.04 0.32 0.46 –0.02 0.43 0.63 –0.30 0.08 0.12 0.04 0.33 0.65 0.10 2.18 –0.26 0.23 0.20 0.09 0.25 0.20 0.11 0.08 0.22 0.17 –0.02 0.19 0.28 0.07 1.19 –0.27 0.32 0.31 1.64 0.29 –1.12 0.23 0.09 0.13 0.19 0.37 –0.31 –0.22 0.19 0.10 0.64 0.44 –3.50 0.44 –0.13 –2.61 0.67 0.11 0.41 0.35 0.73 0.20 0.36 0.19 0.39 ... 0.19 –0.14 0.34 –0.20 0.31 0.34 –0.17 –0.11 0.45 0.24 0.11 0.03 0.49 0.57 0.06 1.35 1.99 –0.08 1.15 0.44 –0.03 0.76 0.13 –0.16 0.66 1.22 0.02 7.50 –0.35 0.17 NalcoHldg NLC 16.63 NtlBkGrc ADS NBG 5.19 ¡NtlFuelGas NFG 36.08 NtlGrid ADS NGG 44.99 NtlOilwellVarco NOV 32.13 NtlSemi NSM 12.29 NatwdHlth NHP 26.66 NavistarIntl NAV 39.75 NewOrntlEdu ADS EDU 62.90 NY CmntyBcp NYB 10.73 Newell NWL 10.70 NewfldExpl NFX 32.58 ¡NewmtMin NEM 39.11 ¡Nexen NXY 19.90 Nike B NKE 51.90 NiSource NI 11.75 NobleCp NE 29.80 NobleEngy NBL 56.34 Nokia NOK 14.71 NmuraHldg NMR 7.80 Nordstm JWN 20.11 NorflkSo NSC 38.78 ¡NE Util NU 21.54 ¡NorthrpGrum NOC 45.22 Novartis ADS NVS 39.75 NovoNordisk NVO 54.20 Nstar NST 30.62 Nucor NUE 42.75 NuSTAR Engy NS 52.89 OGE Engy OGE 27.53 ¡ONEOK OKE 29.06 OcciPete OXY 64.29 OceanrgInt OII 43.64 Och-ZiffCapMgmt OZM 9.03 OdsyHldgs ORH 41.49 OldRepublic ORI 9.48 Omnicare OCR 25.53 Omnicom OMC 31.22 ¡ONEOK Ptnrs OKS 47.10 Orix ADS IX 28.26 OwensIL OI 27.08 ¡PG&E PCG 37.83 PNC FnlSvcs PNC 36.70 PPG Ind PPG 44.13 PPL Cp PPL 32.20 Pactiv PTV 20.84 PallCp PLL 26.89 ParkerHan PH 42.08 ¡PartnerRe PRE 62.72 PeabdyEngy BTU 29.76 Pearson ADS PSO 9.92 ¡PennWstEngyTr PWE 11.94 PenneyJC JCP 27.15 Pentair PNR 24.93 PepcoHldg POM 13.54 PepsiBttlng PBG 33.21 PepsiAm PAS 26.34 PepsiCo PEP 56.09 ¡PerkinElmer PKI 17.15 Petrobrs ADS PZE 5.98 PetroCnda PCZ 35.35 PtroChna ADS PTR 103.00 PtrohwkEnrgy HK 20.37 PetrlBra ADS PBR 36.90 Pfizer PFE 14.90 PhilipMrrsIntl PM 42.66 PhlpLngDst PHI 49.10 PhlpsEl PHG 19.46 PinaclWCap PNW 30.18 PionrNtrlRes PXD 24.20 PitneyBws PBI 21.11 PlnsAmPipe PAA 45.04 PlainsExplr PXP 25.82 PlumCrk PCL 29.13 PoloRlphLrn RL 52.14 PrtglTlcom ADS PT 9.74 Posco PKX 86.38 PotashCp POT 84.13 Praxair PX 71.33 PrecisnCast PCP 73.83 ¡PrideInt PDE 24.41 PrncpFinGp PFG 18.73 ¡ProctGamb PG 53.54 ¡PrgsEgy PGN 37.16 ProgrsvCp PGR 14.57 ¡ProLogis PLD 7.40 PrudentialFnl PRU 37.32 PrudentialPLC PUK 12.07 PubSvcEnt PEG 31.50 PubStrg PSA 64.97 Pulte PHM 8.35 QuantaSvcs PWR 20.49 QuestDiag DGX 54.74 ¡Questar STR 30.67 QwestComm Q 3.82 RalcpHldg RAH 61.40 ¡RangeRes RRC 39.58 RayJamFnl RJF 18.00 RayonierReit RYN 35.26 Raytheon RTN 44.23 RltyIncoCp O 21.19 RedHat RHT 19.52 ReedElsvr NV ENL 21.91 ReedElsvr ADS RUK 30.04 Regal A RGC 13.02 RegencyCtrs REG 32.14 RegionsFin RF 4.09 ReinsGA RGA 34.22 ¡RelianceStl RS 36.00 ¡RensHldg RNR 47.91 RepslYPF ADS REP 21.84 RepSvcs RSG 25.02 ResMed RMD 39.86 ReynoldsAmer RAI 39.13 RioTinto ADS RTP 132.10 RobHalfIntl RHI 21.36 Rockwell ROK 32.69 RckwllCol COL 40.68 RogerComm B RCI 26.44 RoperInd ROP 43.34 RosTele ROS 28.34 ¡RowanCos RDC 18.77 RoylBkCan RY 42.15 RylBkScotADS RBS 12.03 0.44 0.27 0.67 0.10 0.96 0.18 0.02 –0.25 2.04 0.22 0.28 1.40 0.66 0.31 0.36 0.01 0.37 0.51 –0.12 0.30 0.03 1.39 –0.01 0.96 –0.06 0.39 –0.17 0.17 0.32 0.10 –0.02 1.51 1.55 0.58 0.35 –0.04 0.05 0.35 0.29 0.92 –0.04 –0.25 –1.24 0.56 0.28 –0.26 0.13 0.46 –0.02 –0.06 0.09 0.36 0.48 0.23 –0.02 0.31 0.08 0.42 0.24 0.03 0.95 1.69 0.58 –0.09 0.14 –0.24 0.15 –0.05 0.33 0.59 –0.09 0.44 0.82 –0.09 1.02 –0.07 2.88 –0.60 0.28 0.83 1.01 –0.15 0.56 0.36 –0.33 0.05 0.33 0.23 0.08 0.22 0.21 0.16 0.06 0.27 –0.04 0.32 1.60 0.48 0.13 0.65 0.01 0.23 –0.07 0.29 –0.01 0.01 0.02 –0.06 0.97 –0.72 0.06 0.44 0.16 0.02 3.30 0.28 0.17 0.71 0.29 –0.07 –0.22 –0.31 1.86 0.03 RylCaribn RCL RylDutchShl A RDSA SAIC SAI ¡SAP ADS SAP SLM Cp SLM SPX Cp SPW Sadia ADS SDA Safeway SWY StJoe JOE StJudeMed STJ ¡Salesforce.com CRM ¡SanofiAvnts ADS SNY SaraLee SLE Sasol SSL SatyamCom ADS SAY SCANA SCG ScheringPl SGP ¡Schlumbgr SLB ScottMrclGro SMG ScrippsNetA SNI SealedAir SEE SemiMfgInt ADS SMI SmpraEngy SRE SrHsngTr SNH ¡ShawCom B SJR ShawGp SGR ¡SherwinWil SHW ShinhanFnlGp SHG Siemens ADS SI ¡SimonProp SPG SinShngPet ADS SHI SmthNphw ADS SNN SmithInt SII Smucker SJM ScQuim ADS SQM ¡SonocoPdt SON SonyCp SNE SouthernCo SO SoCopper PCU SoUnion SUG SowestAir LUV ¡SowestEngy SWN ¡SpectraEnergy SE SprintNextel S StanleyWks SWK StrwdHtlRsrt HOT StateSt STT StatoilHydro ADS STO SterltInd SLT STMicroelec STM Stryker Cp SYK SunLfFnl SLF ¡SuncorEngy SU Sunoco SUN SuntechPwr STP SunTrustBk STI Supervalu SVU Sybase SY Syngnta ADS SYT SyscoCp SYY TIM Partic ad TSU TJX Cos TJX TaiwanSemi TSM ¡TalismnEngy TLM Target TGT TeckResourc B TCK TecoEngy TE TelNoLeste TNE TlcmArg ADS TEO TeleNZ ADS NZT TelItalia ADS TI TelSaoPlo ADS TSP Telefonica TEF TelMex ADS TMX TelkomIndo TLK TeleData TDS Telkom ADS TKG Telus TU Tenaris ADS TS ¡TeppcoPtnrs TPP Teradata TDC Ternium ADS TX TerraInd TRA TX Instr TXN Textron TXT ThermFshrSc TMO 3M MMM Tidewtr TDW Tiffany TIF ¡TimHortons THI TimeWarnerCbl TWC TimeWarner TWX ¡Toll Bros TOL Tomkins ADS TKS Torchmark TMK TorntoDomn TD Total ADS TOT TotlSysSvc TSS ¡ToyotaMtr ADS TM Transalta TAC TransatlHldg TRH ¡TransCan TRP ¡Transocean RIG TravelersCos TRV Turkcell ADS TKC TycoElec TEL TycoInt TYC TysonFood A TSN UBS UBS UGI UGI URS Cp URS US Cellu USM UltraPetro UPL Unilever NV UN Unilever UL UnPacific UNP UtdMicro ADS UMC ¡UtdParcel B UPS US Bcp USB ¡US Steel X UnitedTech UTX UtdHlthGp UNH UnvlHlthSvc B UHS UnumGrp UNM 12.69 47.75 17.69 40.54 9.45 48.44 8.06 19.79 24.57 39.35 38.14 29.56 10.11 33.09 3.63 33.10 24.92 51.83 36.06 28.02 19.31 2.50 48.31 16.38 16.00 25.70 53.82 53.28 68.04 49.72 37.50 35.82 23.95 48.87 35.82 23.59 24.77 30.84 20.39 17.69 6.82 38.54 16.65 4.38 35.00 20.74 46.15 19.00 12.15 7.16 38.26 26.50 27.74 22.65 14.61 15.98 12.94 31.00 45.80 21.95 17.96 33.78 9.82 13.94 38.57 17.15 11.57 13.72 12.80 8.51 13.28 21.17 66.49 15.47 31.77 27.31 21.40 25.26 25.88 31.61 23.53 19.73 26.20 21.10 9.51 39.35 60.63 43.97 27.00 25.41 30.07 24.87 16.07 10.03 35.69 51.88 51.67 13.03 75.45 18.32 42.88 27.05 70.41 39.54 13.35 17.30 26.91 12.75 12.51 25.20 46.00 36.84 38.56 24.35 23.67 53.28 2.76 49.58 17.42 32.57 51.58 24.77 49.02 15.89 0.13 0.24 0.18 –0.50 ... –0.19 –0.02 0.09 1.08 –0.31 –0.08 0.02 0.11 0.02 –0.02 0.52 0.38 0.84 –0.38 0.98 0.04 0.05 0.09 0.03 0.34 1.02 0.59 1.39 –0.09 1.03 –0.91 –0.24 0.62 0.29 –0.74 –0.17 0.69 0.12 0.59 0.07 0.02 0.96 0.26 0.08 0.69 0.30 –0.38 0.23 0.25 –0.11 –0.29 0.78 0.65 0.30 –0.31 –0.26 –0.16 0.10 –0.25 –0.03 0.27 0.78 0.13 0.43 0.23 0.68 0.16 –0.59 0.12 0.03 –0.20 –0.32 –0.39 0.15 0.38 0.05 1.01 0.10 –0.21 0.08 0.08 0.60 –0.50 0.25 0.27 0.12 0.14 0.32 1.72 0.56 0.21 0.44 0.50 0.17 –0.23 1.40 –0.27 0.07 0.86 0.26 –0.16 0.48 0.71 –0.86 –0.21 0.28 0.01 0.15 0.11 0.03 –0.55 –0.03 1.68 0.09 0.03 2.03 0.07 0.16 –0.27 0.93 0.16 –0.24 0.61 –0.14 VF Cp Vale ads ValeroEngy Valspar VarianMed Ventas VeoliaEnvr ADS Verizon Viacom B VISA ClA VivoPart ADS VMware Vodafon ADS Vornado ¡VulcanMat WadlRed A Walgreen WalMart WashPost B WsteConn WasteMgt WatersCp ¡WatsnPharm ¡Weatherford Wellpoint WellsFargo WendysArbys ¡WestarEngy WstnDgtl WstrnUnion WpacBk ADS Weyerhsr Whirlpool WhtMtnIns WillmsCos WillisGrp Windstream Wipro ADS WI Engy WooriFinHldgs Wyeth WyndhmWldwd XL Cap A XcelEngy Xerox ¡XTO Engy YPF ADS YamanaGld Yanzhou ADS YumBrands ¡Zimmer VFC 56.84 VALE 16.37 VLO 16.39 VAL 22.70 VAR 32.77 VTR 29.56 VE 28.83 VZ 28.95 VIAB 20.99 V 60.29 VIV 19.61 VMW 28.60 VOD 18.53 VNO 42.48 VMC 41.09 WDR 24.99 WAG 29.40 WMT 48.13 WPO 350.51 WCN 25.81 WMI 27.31 WAT 48.81 WPI 33.50 WFT 18.81 WLP 49.70 WFC 24.40 WEN 4.41 WR 18.66 WDC 26.28 WU 16.73 WBK 77.54 WY 29.04 WHR 47.37 WTM 226.47 WMB 14.69 WSH 25.50 WIN 8.01 WIT 11.27 WEC 41.18 WF 27.50 WYE 45.82 WYN 11.46 XL 11.83 XEL 18.66 XRX 6.45 XTO 35.85 YPF 33.29 AUY 9.05 YZC 12.46 YUM 36.23 ZMH 40.70 0.49 –0.08 0.18 0.17 0.17 0.24 –0.31 –0.10 0.13 –0.06 0.28 0.34 –0.23 0.24 –0.26 0.22 0.08 0.30 –1.28 0.07 0.14 –0.19 –0.02 0.37 –0.08 –0.40 0.21 0.15 –0.19 –0.16 1.67 –0.05 2.12 –2.53 0.19 0.22 –0.03 0.05 0.26 0.32 0.27 0.25 –0.10 0.22 0.13 0.46 0.30 0.24 0.23 0.56 0.11 NASDAQ ActivisionBliz ATVI 11.35 AdobeSys ADBE 28.30 AkamaiTch AKAM 19.07 AlexionPharm ALXN 38.95 AllscrptsHlth MDRX 15.10 AlteraCp ALTR 16.56 Amazon.com AMZN 81.95 Amgen AMGN 58.10 AmMov ADS A AMOV 38.35 AmNatlIns ANAT 77.50 AngloAm ADS AAUK 14.35 ANSYS Inc ANSS 29.57 ¡ApldMatl AMAT 11.64 ApolloGp A APOL 66.89 AppleInc AAPL 142.27 ArchCapGp ACGL 59.56 ASML ASML 22.00 AutDataProc ADP 34.44 Autodesk ADSK 18.04 Baidu ADS BIDU 299.05 BedBath BBBY 31.29 BiogenIdec BIIB 45.94 BOK Fnl BOKF 37.07 BrcadeComm BRCD 7.61 Broadcom A BRCM 25.43 CA Inc CA 17.09 CapFedFnl CFFN 37.63 Celgene CELG 46.02 Cephalon CEPH 54.23 CernerCp CERN 59.61 CH Robinson CHRW 51.17 ChkPntSftwr CHKP 23.12 ChrtSemi ADS CHRT 12.82 CinnFnl CINF 22.13 CintasCp CTAS 22.32 CiscoSys CSCO 18.73 CitrixSys CTXS 32.33 Clearwire A CLWR 6.16 CME Group A CME 268.74 CmrcBcsh CBSH 32.08 CognizntTch A CTSH 27.18 Comcast A CMCSA 13.56 Copart CPRT 32.44 CostcoWsale COST 45.03 Cree CREE 27.09 CtripInt ADS CTRP 45.21 DataDomain DDUP 33.46 Dell DELL 11.97 Dendreon DNDN 22.97 Dentsply XRAY 28.17 DirecTV DTV 23.79 DiscComm A DISCA 22.92 DISH Ntwrk A DISH 14.91 DollarTree DLTR 43.72 DrmwrksAnmt A DWA 27.17 eBay EBAY 17.09 ElectroArts ERTS 21.17 EndoPharma ENDP 17.64 Equinix EQIX 70.55 EricsnTel ERIC 9.39 Expedia EXPE 15.82 ExpeditrInt EXPD 29.93 ExpresScrpt ESRX 65.31 F5 Ntwk FFIV 34.29 Fastenal FAST 31.65 FfthThrd FITB 7.06 FirstSolar FSLR 141.54 Fiserv FISV 46.80 FlextronInt FLEX 4.57 FLIR Sys FLIR 21.83 0.01 –0.07 0.15 0.69 –0.18 0.19 0.48 0.09 0.34 –0.49 0.36 –0.41 0.22 1.63 –0.07 –1.12 0.01 0.33 0.08 8.42 0.79 –0.22 –0.24 0.17 0.51 0.27 –1.02 –1.13 0.44 0.29 0.59 0.25 0.38 –0.67 0.42 0.16 0.03 0.33 –3.72 –0.19 0.20 0.04 0.24 0.06 –0.59 1.75 0.01 –1.05 0.07 –0.28 0.13 0.54 0.24 0.14 0.13 0.33 –0.31 –0.13 1.80 –0.04 0.56 0.05 0.17 0.12 0.12 –0.10 –4.25 1.25 0.23 –0.02 FostrWheelr FWLT 19.75 FujiFilm ADS FUJI 31.13 ¡Garmin GRMN 22.95 GenProbe GPRO 39.79 GileadSci GILD 44.91 Gnzym GENZ 53.81 GOOG 424.69 Google GrnMtnCofRstr GMCR 58.55 HANS 29.13 HansnNtrl HenrySchein HSIC 45.81 Hologic HOLX 13.00 HudsnCtyBcp HCBK 14.25 HuntgBcsh HBAN 4.09 IACInteractv IACI 16.21 IdexxLab IDXX 44.08 ILMN 31.95 Illumina Infosys INFY 36.07 Intel INTC 16.83 Intuit INTU 27.53 IntutvSrgcl ISRG 151.26 JBHT 29.62 JBHunt JoyGlbl JOYG 32.59 JunprNtwk JNPR 23.42 ¡KLA Tencor KLAC 27.86 LamRsch LRCX 28.33 LbertyGlob A LBTYA 15.72 LeapWirlsInt LEAP 28.96 Level3Comm LVLT 1.45 LibertyMedInt A LINTA 5.41 LibrtyMedEntnA LMDIA 25.56 LifeTech LIFE 40.02 LihirGold ADS LIHR 22.74 ¡LinnEnergy LINE 19.63 LinrTch LLTC 23.77 LKQX 15.92 LKQ Cp Logitch LOGI 13.75 MacrovsnCp MVSN 22.86 Makita ADS MKTAY 22.46 MarvellTch MRVL 12.23 MaximIntgt MXIM 16.43 MelcoCrwn ADS MPEL 4.41 ¡MicrochpTch MCHP 23.65 ¡Microsoft MSFT 23.11 MITSY 230.16 Mitsui ¡Molex MOLX 15.30 Mylan MYL 12.35 MyriadGntcs MYGN 25.42 Nasdaq OMX Grp NDAQ 19.52 NTAP 20.05 NetApp Netease.com NTES 35.45 Netflix NFLX 43.30 NWSA 8.54 NewsCp A NewsCp B NWS 10.03 NII Hldgs NIHD 19.26 Nissan ADS NSANY 11.91 NrthnTrust NTRS 57.05 NuanceCommu NUAN 11.90 NVIDIA NVDA 10.71 ONNN 7.14 ON Semi OracleCp ORCL 20.63 OReillyAuto ORLY 40.14 Paccar PCAR 30.34 PALM 14.63 PalmInc PattrsnCos PDCO 21.44 Paychex PAYX 24.64 PENN 29.75 PennNtl PeopUniFncl PBCT 15.36 Perrigo PRGO 27.63 Petsmart PETM 22.07 PharmPdtDev PPDI 21.81 Priceline PCLN 110.32 PrtnrComm PTNR 17.00 PttrsnUtiEngy PTEN 13.35 Qualcomm QCOM 44.65 RangldRes ADS GOLD 61.22 Ç RossStr ROST 41.84 RschInMotn RIMM 66.18 Ryanair ADS RYAAY 28.10 SanDisk SNDK 15.47 Santos ADS STOSY 42.63 SBA Comm SBAC 24.06 SCHW 17.44 SchwabC ¡SeagateTch STX 10.61 SearsHldgs SHLD 59.69 SEI Inv SEIC 17.41 Shire ADS SHPGY 40.70 ShndaIntrEnt SNDA 52.05 ¡SigmaAldr SIAL 47.41 Slcnwr ADS SPIL 6.43 Sohu.com SOHU 59.97 Staples SPLS 20.03 SBUX 14.11 Starbucks ¡SteelDyn STLD 14.54 Stericycle SRCL 49.95 STRA 203.36 StrayerEd SunMicrsys JAVA 9.17 Sunpower A SPWRA 22.74 SYMC 15.90 Symantec Synopsys SNPS 18.75 TD Ameritrade AMTD 17.52 ¡TechneCp TECH 59.91 Tellabs TLAB 5.22 TevaPhm TEVA 49.50 TFS Fnl TFSL 10.96 TrimbleNav TRMB 19.64 TRowePrice TROW 40.46 UrbanOutfit URBN 21.06 UTHR 83.77 UtdThera VarianSemi VSEA 28.17 VCA Antech WOOF 25.11 VeriSign VRSN 18.58 VertxPharm VRTX 32.40 VirginMedia VMED 9.85 Wacoal ADS WACLY 63.52 WarnerChil A WCRX 13.42 WholeFoods WFMI 20.45 ¡WPP ADS WPPGY 32.52 WynnRsrts WYNN 33.80 XLNX 19.83 Xilinx ¡Yahoo YHOO 15.18 0.52 0.16 –0.19 –0.08 –0.38 –0.63 0.39 2.45 0.13 0.98 –0.06 –0.14 –0.04 0.10 –0.23 ... –0.16 0.34 –0.25 1.61 0.54 –0.02 0.17 0.89 0.58 0.37 1.09 0.03 0.21 0.14 –0.12 0.04 –0.04 0.21 0.31 –0.08 0.31 1.01 0.34 0.15 0.22 0.52 –0.12 1.56 0.14 0.12 0.48 –0.33 0.02 0.44 1.11 0.22 0.21 –0.07 0.61 0.28 0.04 0.22 0.09 –0.09 0.14 0.35 –0.16 0.07 0.02 1.06 –0.35 0.35 0.06 0.27 1.26 –0.10 0.25 0.34 1.14 0.24 –0.46 –1.23 0.22 1.12 0.23 0.08 0.24 2.10 –0.03 0.02 0.24 –0.02 ... 1.05 ... 0.06 0.41 0.38 1.11 0.01 –0.41 0.34 0.09 –0.12 –0.31 0.04 0.20 –0.01 0.50 0.86 0.70 2.47 0.77 –0.12 0.36 –0.59 0.04 –0.38 0.26 0.53 0.80 1.49 0.14 0.17 NYSE AMEX BrtAmTb ADS BTI 56.32 0.37 GpoSimec ADS SIM 6.03 0.13 WescoFnl WSC 302.00 –2.90 6606729 P2JW196021-0-C01100-1--------XA BLACK P2JW196022-0-C01200-1--------XA BLACK 07/15/2009 AZ,CL,CX,DL,DX,EE,FL,HO,MW,NC,NE,NY,RM,SA,SC,SL,SW,WB,WE P2JW196022-0-C01200-1--------XA THE WALL STREET JOURNAL. C12 Wednesday, July 15, 2009 MUTUAL FUNDS Explanatory Notes Top 250 mutual-funds listings for Nasdaq-published share classes. NAV is net asset value. Percentage performance figures are total returns, assuming reinvestment of all distributions and after subtracting annual expenses. Figures don't reflect sales charges ("loads") or redemption fees. NET CHG is change in NAV from previous trading day. YTD%RET is year-to-date return. e-Ex-distribution. f-Previous day’s quotation. g-Footnotes x and s apply. j-Footnotes e and s apply. k-Recalculated by Lipper, using updated data. p-Distribution costs apply, 12b-1. r-Redemption charge may apply. s-Stock split or dividend. t-Footnotes p and r apply. v-Footnotes x and e apply. x-Ex-dividend. z-Footnote x, e and s apply. NA-Not available due to incomplete price, performance or cost data. NE-Not released by Lipper; data under review. NN-Fund not tracked. NS-Fund didn’t exist at start of period. Source: Lipper Tuesday, July 14, 2009 FUND NET YTD NAV CHG %RET FUND NET YTD NAV CHG %RET FUND NET YTD NAV CHG %RET FUND NET YTD NAV CHG %RET FUND TRACK | By Eleanor Laise FUND NET YTD NAV CHG %RET FUND NET YTD NAV CHG %RET ABC American Century Inv Ultra 15.65 American Funds Cl A BalA p 14.00 AmcpA p 13.30 AMutlA p 19.28 BondA p 11.28 CapIBA p 41.70 CapWA p 19.18 CapWGrA 27.39 EupacA p 30.89 FdInvA p 26.36 GovtA p 14.05 GwthA p 22.59 HI TrA p 9.16 ICAA p 21.47 IncoA p 13.03 IntBdA p 12.98 N PerA p 20.39 NEcoA p 18.27 NwWrldA 38.20 SmCpA p 24.24 TxExA p 11.63 WshA p 20.27 American Funds Cl B GwthB t 21.83 Artio Global Funds IntlEqA 23.66 IntlEqI r 24.22 IntlEqII I r 9.83 Artisan Funds Intl 16.24 0.07 0.02 0.11 0.11 –0.03 0.10 –0.06 0.12 0.18 0.15 –0.04 0.12 ... 0.11 0.03 –0.03 0.10 0.10 0.30 0.20 ... 0.09 0.11 0.37 0.38 0.17 0.05 8.3 3.3 11.5 2.7 7.9 2.7 3.7 5.2 10.3 6.6 1.0 10.3 23.4 4.1 2.5 3.8 8.0 Davis Funds A 24.80 17.3 NYVen A 21.7 Davis Funds C & Y 23.93 17.3 NYVenC 25.08 9.3 NYVenY Dimensional Fds –3.6 EmgMktVa 23.30 12.17 9.9 IntSmVa USLgVa 13.30 15.03 –1.5 US SmCpVal –1.4 Dodge & Cox 53.05 –0.7 Balanced Income 12.38 24.90 8.6 Intl Stk Baron Funds Growth 33.72 Bernstein Fds DivMu 14.24 IntDur 12.61 TxMgdIntl 12.34 BlackRock Funds A GlblAlloc p 15.77 BlackRock Funds C GlblAlloc t 14.73 BlackRock Funds Inst GlblAlloc 15.85 Calamos Funds GrowthA p 34.03 Columbia Class Z AcornZ 18.97 ValRestr 32.13 0.34 0.02 –0.01 0.09 0.05 0.05 0.05 9.6 4.1 9.3 1.0 5.3 5.0 5.5 0.29 16.7 0.19 0.20 7.1 9.8 DEF 0.13 0.13 0.14 5.0 4.5 5.2 0.27 38.5 0.11 11.8 0.10 0.7 0.13 1.9 0.28 5.2 –0.04 8.2 0.11 13.7 Free Fund Information and prospectuses, available for funds with the symbol. 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Stock 75.64 Eaton Vance Class A LgCpVal 13.64 NatlMuni 8.84 Fairholme 24.72 Fidelity Freedom FF2010 11.02 FF2015 9.13 FF2020 10.74 FF2025 8.80 FF2030 10.35 FF2035 8.52 FF2040 5.92 Fidelity Invest 100Index 6.64 AilSectEq 9.76 AMgr50% 11.95 Balanc 14.01 BluCh 28.68 CapAp 16.51 CpInc r 6.86 Contra 47.44 DisEq 17.37 DivGth 18.14 DivIntl 22.83 Eq Inc 31.28 EQII 13.14 Fidel 23.55 GNMA 11.33 GovtInc 10.75 GroCo 53.97 GroInc 13.09 HighInc r 7.29 IntlDisc 24.48 InvGB 6.71 InvGrBd 11.04 LgCpVal 9.59 LowP r 25.70 MagIn 52.31 MidCap 17.41 MuniInc 12.13 OTC 35.22 Ovrse 25.93 Puritn 13.74 STBF 8.13 StratInc 9.85 StratReRt r 7.46 TotalBond 9.97 USBI 10.91 Value 42.62 Fidelity Spartan 500IdxInv r 62.73 EqIdxInv 32.04 TotMktIdxInv 25.65 Fidelity Spartan Adv 500Ad r 62.73 EqIdxAd 32.04 First Eagle Funds GlbA 34.12 FrankTemp/Franklin A CA TF A p 6.63 Fed TF A p 11.36 FoundFAlA p 8.14 HY TF A p 9.21 IncomeA p 1.78 NY TF A p 11.34 US Gov A p 6.62 0.67 0.06 0.02 0.26 0.03 0.02 0.04 0.03 0.04 0.04 0.03 0.03 0.08 0.03 0.05 0.16 0.09 0.02 0.23 0.09 0.15 0.08 0.17 0.07 0.14 –0.02 –0.04 0.26 0.08 0.01 0.17 –0.02 –0.03 0.06 0.18 0.38 0.18 ... 0.13 0.09 0.04 –0.01 –0.01 0.04 –0.02 –0.04 0.54 0.33 0.17 0.15 0.33 0.17 0.27 0.01 0.01 0.05 ... 0.01 ... –0.01 2.8 FrankTemp/Franklin C Income C t 1.79 ... –5.1 FrankTemp/Mutual A&B 23.84 0.11 26.4 Disc A 15.86 0.09 13.2 Shares A FrankTemp/Temp A 11.84 0.04 7.0 GlBond A p 13.48 0.12 7.1 Growth A p 11.28 0.09 7.4 World A p 7.3 6.5 6.4 6.3 GMO Trust Class VI 16.35 0.06 ... Quality 7.0 Harbor Funds Bond 11.93 –0.03 11.8 26.38 0.09 8.2 CapApInst 42.09 0.27 9.0 IntlInst r 5.0 Hartford Funds A 24.47 0.18 31.6 CapAppA p 4.9 Hartford HLS Fds IA CapApp 28.71 0.20 –0.2 14.9 HussmanStrGr r 13.20 0.03 6.1 Ivy Funds 2.8 AssetStrA p 18.75 0.09 18.32 0.09 –0.1 AssetStrC t 4.5 4.1 ... 10.2 Janus J Shrs –0.1 JanusFd J 21.03 0.13 25.8 Ovrseas r 32.62 0.38 3.6 PrkMdCpVal 16.14 0.11 8.4 Twen 50.72 –0.06 5.4 John Hancock Class 1 –5.9 LSBalncd 10.05 0.04 11.2 LSGwth 9.55 0.05 14.3 KEELEY Funds 11.5 SmCpValA p 15.60 0.11 8.0 Lazard Instl 25.0 EmgMkt 14.04 0.07 3.4 Longleaf Partners 6.9 Partners 18.82 –0.04 3.7 Loomis Sayles Fds 16.4 LSBondI 11.80 ... 9.5 LSBondR p 11.75 –0.01 11.2 LSStrIncA p 12.08 ... 3.3 LSStrIncC t 12.13 –0.01 6.9 Lord Abbett A Affiltd p 8.41 0.04 1.8 BdDeb p 6.47 ... 1.8 2.7 12.0 MnStFndA p 23.32 0.10 5.8 StrIncA p 3.59 –0.01 7.6 OppenheimerRochester 6.9 RoMu A p 13.93 –0.01 25.3 4.2 GHI JKL 8.3 3.3 5.1 PIMCO Fds Admin TotRtAd p 10.52 PIMCO Fds Instl AllAsset 10.79 CommodtyRR 6.76 HiYld 7.52 10.51 ... InvGrdCorp LowDur 9.91 10.26 7.6 RealRtnI 10.52 13.2 TotRt 4.9 PIMCO Funds A TotRtA 10.52 13.9 PIMCO Funds C TotRtC t 10.52 13.3 PIMCO Funds D 10.52 7.9 TRtn p Price Funds 26.42 3.8 BlChip 15.81 3.3 CapApp EqInc 16.82 EqIndex 24.39 Growth 21.91 HiYield 5.61 IntlStk 10.01 9.9 MCapGro 36.99 36.2 MCapVal 15.98 6.1 N Inc 8.99 18.0 N Horiz 19.93 R2020 12.24 11.1 R2030 12.37 10.0 SpecInc 10.89 Value 16.40 –4.4 Putnam Funds Class A GrIn p 9.64 29.0 19.9 PQR –0.02 7.1 0.02 9.0 0.09 8.4 0.02 18.0 –0.04 7.6 –0.01 7.6 ... 9.8 –0.02 7.2 –0.02 –0.02 –0.02 0.13 0.06 0.12 0.13 0.11 ... 0.08 0.32 0.16 –0.02 0.18 0.06 0.07 –0.01 0.11 0.06 7.0 6.6 7.1 14.8 13.3 –0.3 1.7 13.9 25.4 18.5 13.2 12.0 6.8 12.0 10.2 10.8 8.5 8.3 3.6 STU 0.17 0.21 4.2 7.4 1.8 1.8 MFS Funds Class A TotRA p 11.69 3.4 ValueA p 17.49 Mutual Series 9.3 DiscZ 24.14 10.1 SharesZ 15.99 6.5 Oakmark Funds Cl I 16.1 EqtyInc r 22.17 12.4 Oppenheimer A 8.4 GloblA p 42.37 2.6 IntlBdA p 6.07 MNO 0.01 0.06 0.11 0.09 0.08 0.20 –0.03 17.6 Selected Funds 17.4 AmShS p 29.75 18.3 Templeton Instit 17.7 ForEqS 15.91 Third Avenue –1.9 Value 37.24 15.7 Thornburg Fds IntValA p 20.43 IntVal I 20.86 0.62 13.3 0.07 0.06 8.0 8.2 3.8 0.7 Van Kampen Funds A CmstA p 10.90 7.1 EqIncA p 6.47 4.4 VANGUARD ADMIRAL 500Adml 83.55 2.8 GNMAAdml 10.65 HlthCareAdml r 42.98 10.7 HYCorAdml r 4.91 4.6 InfProAd 23.67 VWXYZ 0.03 0.03 1.7 1.7 0.44 1.8 –0.02 3.1 –0.03 0.5 ... 20.4 0.02 4.7 ITIGradeAdml 9.16 –0.01 ITsryAdml 11.53 –0.04 MuHYAdml 9.84 ... MuIntAdml 13.22 ... MuLTAdml 10.67 0.01 MuLtdAdml 10.95 0.01 MuShtAdml 15.87 ... PrmcpAdml r 49.31 0.26 STIGradeAdml 10.29 ... STsryAdml 10.83 –0.01 TotBdAdml 10.22 –0.02 TotStAdml 22.15 0.13 WdsrIIAdml 33.83 0.14 WellsIAdml 44.41 ... WelltnAdml 43.12 0.03 WndsrAdml 31.82 0.21 VANGUARD FDS AssetA 18.38 0.04 Energy r 48.32 0.61 Explr 45.67 0.39 GNMA 10.65 –0.02 HlthCare r 101.81 –0.09 HYCor r 4.91 ... InflaPro 12.04 ... IntlGr 13.66 0.09 IntlVal 25.11 0.17 ITIGrade 9.16 –0.01 LifeCon 13.63 0.02 LifeGro 16.34 0.07 LifeMod 15.36 0.03 Morg 12.29 0.08 MuInt 13.22 ... Primcp r 47.51 0.25 STAR 15.12 0.03 STIGrade 10.29 ... TgtRe2015 9.94 0.02 TgtRe2020 17.25 0.06 TgtRe2025 9.65 0.04 TgtRe2035 9.64 0.05 WellsI 18.33 ... Welltn 24.97 0.02 Wndsr 9.43 0.06 WndsrII 19.06 0.07 VANGUARD INDEX FDS 500 83.54 0.44 EmerMkt r 19.56 0.21 Europe 21.06 0.08 Growth 22.03 0.11 MidCp 12.49 0.12 SmCap 21.39 0.18 STBond 10.37 –0.02 TotBd 10.22 –0.02 TotIntl 11.69 0.07 TotSt 22.15 0.13 VANGUARD INSTL FDS DevMktInst 7.72 0.04 InPrSeIn 9.64 0.01 InstTBdIdx 51.32 –0.14 InstIdx 83.01 0.44 InstPlus 83.01 0.44 InstTStPlus 20.01 0.12 MidCpInst 12.52 0.11 TotBdInst 10.22 –0.02 TotStInst 22.15 0.13 VANGUARD SIGNAL FDS 500Sgl 69.02 0.37 TotBdSgl 10.22 –0.02 Western Asset Core Plus 9.23 ... 9.4 –2.1 12.4 6.3 8.6 3.5 2.0 6.7 9.0 1.0 2.8 2.8 1.2 2.3 4.2 5.7 –0.3 9.6 8.4 3.0 0.4 20.3 4.6 12.0 7.2 9.3 4.0 3.1 3.0 8.8 6.3 6.7 6.0 8.9 4.1 4.1 4.1 4.2 2.2 4.1 5.6 1.2 1.8 31.3 3.2 9.3 5.9 4.9 2.5 2.8 8.3 2.8 3.5 4.7 2.8 1.8 1.8 2.8 6.0 2.8 2.8 1.8 2.8 11.1 Black to Exit Janus After Stormy Tenure G ary Black resigned as chief Mr. Black’s tenure also saw executive of Janus Capital some staff upheaval, thanks in Group Inc., which had a volatile part to his attempts to rein in fund performance under his fund-manager compensation watch. and tie it more closely to perAt the helm of the Denver formance. “He made dramatic firm, Mr. Black oversaw a turn- changes to fund-manager comaround of fund performance and pensation and I think that coninvestment research tributed to a lot of the but also sparked contromanager departures,” versy. A number of top Mr. Gogerty says. Top executives and fund executive posts, includmanagers have lately ing general counsel and left the firm. chief financial officer, “The firm is in a also turned over under much stronger place Mr. Black’s watch. than when I joined, and Mr. Black first the time is right for a joined Janus in 2004, afchange,” Mr. Black said ter the firm had been in a statement. through a period of diThe departure of Mr. sastrous fund performGary Black Black “was a mutual deance thanks largely to cision between Gary and the big bets on tech and telecom board,” says Janus spokes- stocks in the dot-com bubble. He woman Shelley Peterson. Mr. previously served as chief investBlack had accomplished the long- ment officer at Goldman Sachs term goals that were set for him Asset Management’s global equiwhen he took the post, Ms. Peter- ties business and as an analyst at son says, such as improving dis- Sanford Bernstein. tribution and drawing in more inTim Armour, a Janus direcvestor assets. tor, was named interim chief exMr. Black, chief executive ecutive. since 2006, also beefed up stock Janus on Tuesday announced research and elevated the role of second-quarter net income of research analysts. $15.8 million, down 76% from a But some of Janus’s biggest, year earlier. The company also highest-profile funds were hit announced a capital raise and particularly hard in last year’s market downturn. The Janus tender offer, saying it intends to Contrarian fund, for example, offer $150 million in common declined 48% last year, while the shares and $150 million in conJanus Overseas fund fell 53%. vertible senior notes and is offer“A lot of their funds took it on ing to repurchase about $400 the chin last year,” says Andrew million of the principal amount Gogerty, analyst at investment- of outstanding debt. As of June 30, Janus’s total asresearch firm Morningstar Inc., though the firm’s value-oriented sets under management were and fixed-income funds per- $132.6 billion, down more than 30% from a year earlier. formed relatively well. KEEPING SCORE: STOCKS & STOCK MARKETS Percentage Gainers… Hi-Tech Phrmcl $12.75 s 28.92% $12.50 Daily close t Percentage Losers USEC Inc $5.84 s 14.96% $10 Daily close 8 6 65-day moving average 7.00 4 A M J J A M J J 4 A M J J 10 A M J J 3.00 s t Interactive Intel $15.54 s 18.54% $17.50 14.00 10.50 CoBiz Fnl Inc $4.84 t 17.69% $10 8 6 Health Net Inc $12.06 t 14.65% $25 20 15 MannKind Corp $7.35 t 8.58% $7.50 6.00 4.50 GLOBAL Hypo Group Alpe Adria—Œ1 billion bond issue was priced for Hypo Alpe Adria Bank AD via lead managers BayernLB, BNP Paribas SA, Citigroup and UniCredit SpA, one of the banks said Tuesday. The bond is guaranteed by the Austrian government. Terms were as follows: maturity: July 24, 2013; coupon: 3.125%; reoffer: 99.852; date: July 24, 2009; spread: 60 basis points more than midswaps; debt ratings: Aaa (Moody’s Investors Service). Irish Nationwide—Œ500 million increase to an existing 2010-dated bond issue was priced for this bank through Citigroup, DZ Bank and Goldman Sachs Group, one of the banks said Tuesday. The size of the bond is now Œ1.25 billion. Terms: maturity: Sept. 22, 2010; coupon: 3.5%; reoffer: 100.491; date: July 21, 2009; spread: 175 basis points more than midswaps; debt ratings: Aa1 (Moody’s). Skandinaviska Enskilda Banken AB—Œ500 million bond issue was priced via sole lead manager UniCredit SpA, a syndicate official at the bank said Tuesday. Terms: maturity: July 23, 2012; coupon: 2.25%; reoffer: 99.468; date: July 23, 2009; spread: 60.1 basis points more than bundisobligation; debt ratings: Aaa (Moody’s). Sumitomo Mitsui Financial Group Inc.—229 billion yen multitranche bond issue was priced for Sumitomo Mitsui Banking Corp., Tuesday, underwriters said. Terms: Tranche 1: amount: 50 billion New Securities Issues The following were among recent offerings and pricings in U.S. and non-U.S. capital markets, with terms and syndicate manager, based on information provided by Dow Jones Newswires and Factiva. (A basis point is one-hundredth of a percentage point; 100 basis points equal a percentage point.) yen; maturity: July 18, 2014; coupon: 0.91%; price: 99.96; yield: 0.918% (No.260 JGBs +24 bps); debt ratings: A+ (R&I), AA- (JCR); lead managers: Daiwa Securities SMBC. Tranche 2: amount: 56 billion yen; maturity: July 24, 2019; coupon: 1.72% for first five years (swap rates +90 bps), six-month euroyen London interbank offered rate +240 bps afterwards; price: 100.00; debt ratings: A (R&I), A+ (JCR); lead managers: Daiwa Securities SMBC, Goldman Sachs. Tranche 3: amount: 50 billion yen; maturity: July 24, 2019; coupon: six-month euroyen Libor +90 bps for first five years, +240 bps afterwards; price: 100.00; debt ratings: A (R&I), A+ (JCR); lead managers: Daiwa Securities SMBC, Goldman Sachs. Tranche 4: amount: 73 billion yen; maturity: July 24, 2019; coupon: 2.21%; price: 99.91; yield: 2.220% (No.302 JGBs +90 bps); debt ratings: A (R&I), A+ (JCR); lead managers: Daiwa Securities SMBC, Goldman Sachs. Common terms: date: July 24, 2009. Interest is payable semiannually. Yorkshire Water Services—£650 multitranche bond issue was priced, via lead managers Royal Bank of Scotland Group PLC, HSBC Holdings and Banco Santander, one of the lead managers said Tuesday. The December 2039 tranche of the bond is an inflation linked note. Terms: Tranche 1: amount: £275 million; maturity: Aug. 21, 2019; coupon: 6%; reoffer: 98.908; spread: 230 basis points more than gilts. Tranche 2: amount: £200 million; maturity: Aug. 19, 2039; coupon: 6.375%; reoffer: 98.761; spread: 200 basis points more than gilts. Tranche 3: amount: £175 million (inflation linked); maturity: Dec. 30, 2039; coupon: 2.718%; reoffer: par; spread: 200 basis points more than gilts. Common terms: date: July 24, 2009; debt ratings: A3 (Moody’s), single-A-minus (Standard & Poor’s Ratings Group) and A (Fitch Inc.). 10.00 7.50 A 65-day moving average 5.00 M J J s A M J J Stocks' trends based on a comparison of three moving averages (20-day, 50-day and 100-day), as supplied by www.InvestorsIntelligence.com, based on DJ Wilshire 5000 universe. Bullish s Shorter-term moving averages hold above longer-term (20>50>100). Bearish t Shorter have crossed below longer. No trend + ( (No symbol: not in DJ index) Trend/Company Volume LATEST SESSION Symbol (in 000s) Close Net chg % chg PGV SNFCA CARV HITK NOVN CSLR EXM ADY High 52-WEEK Low % chg Trend/Company Volume LATEST SESSION Symbol (in 000s) Close Net chg % chg High 52-WEEK Low % chg s Velocity Portfolio Gp s SecurityNat'l FnlA s Carver Bancorp s Hi-Tech Pharmacal s Noven Pharmaceut Consulier Engnrg 20 5.00 3 3.00 3 6.89 1,061 12.75 6,355 16.48 3 3.70 1.90 0.73 1.64 2.86 3.00 0.66 1.27 3.97 0.46 0.78 2.43 0.55 1.22 0.53 0.76 2.29 0.33 0.44 61.29 22.00 32.16 3.80 31.24 9.18 28.92 12.46 22.26 14.88 21.51 5.55 20.68 19.77 19.25 18.93 18.54 18.03 15.57 15.36 14.96 14.54 13.47 13.06 42.00 44.00 8.83 16.05 13.85 10.25 10.38 10.93 7.24 21.98 2.85 16.43 1.00 –76.2 1.10 –1.6 1.50 –13.3 3.46 21.2 7.54 51.9 2.50 –8.6 3.00 6.40 0.75 1.52 5.51 1.20 –79.3 222.4 –48.2 –67.1 106.4 –43.3 t Central Pac Fin'l t CoBiz Fnl Inc s EuroBancshares Inc + ( Health Net Inc Pathfinder Bncp Deswell Indus 2,060 2.62 –0.91 –25.78 435 4.84 –1.04 –17.69 EUBK 29 2.15 –0.40 –15.69 HNT 12,528 12.06 –2.07 –14.65 PBHC 5 6.60 –1.08 –14.06 DSWL 83 3.31 –0.51 –13.35 CPF COBZ 22.49 15.20 4.00 28.93 13.50 6.05 12.50 4.65 12.80 23.40 5.05 25.75 3.09 8.50 5.90 3.50 9.25 5.99 3.07 4.00 0.38 7.38 4.75 1.12 0.70 0.81 2.70 3.06 1.60 5.56 0.50 1.80 1.25 1.06 2.00 1.31 –64.6 –11.0 –22.9 –46.3 –4.3 –36.2 –11.1 –36.0 –59.5 –74.4 3.1 –66.5 28.6 17.0 –61.5 –31.7 175.3 –23.4 + ( Excel Maritime American Dairy Inc s Dixie Group Inc + ( HMN Fin'l s Interactive Intel + ( American Apparel Osage Bancshares 4,034 7.41 1,686 24.05 DXYN 17 2.85 HMNF 3 4.90 ININ 477 15.54 APP 510 3.60 8 9.04 109 3.98 USU 5,671 5.84 FUQI 2,783 18.04 IMMU 2,267 2.78 ONAV 738 3.81 OSBK SHLO s MGIC Investment Cp s Mod-Pac Corp + ( SouthCoast Fin'l Invitel Holdings ads s Celsion Corp s Take-Two Sftwr Rada Electronic 3,628 4 SOCB 26 IHO 11 CLSN 60 TTWO 5,694 MTG MPAC RADA TBAC XETA 3.29 2.75 5.00 5.45 3.95 8.10 2.43 7.35 2.00 2.05 7.35 4.31 –0.48 –0.39 –0.69 –0.75 –0.50 –0.88 –0.26 –0.78 –0.21 –0.20 –0.69 –0.40 –12.73 –12.42 –12.13 –12.10 –11.23 –9.80 –9.67 –9.59 –9.50 –8.89 –8.58 –8.49 s Shiloh Industries + ( USEC Inc Fuqi Int Inc s Immunomedics Inc Omega Nav Ent A 6.80 –8.7 1.18 –51.5 2.58 25.6 3.31 115.5 0.84 4.9 3.25 –75.5 16 + ( Centennial Comm + ( Tandy Brands s Xeta Technol s MannKind Corp s Osteotech Inc CYCL 19,050 9 3 MNKD 1,380 OSTE 16 Most Active Stocks Trend/Company Symbol BAC Volume (000) % chg from LATEST SESSION 65-day avg Close Net chg % chg 52-WEEK High Low Volume Movers Trend/Company LEGAL NOTICES PUBLIC NOTICES EE MW SW WE Ranked by change from 65-day average* Volume % chg from LATEST SESSION Symbol (000) 65-day avg Close Net chg % chg NOVN 6,355 3,081 16.48 FYR CYCL HITK DSP GHC 52-WEEK High Low s Bank of America t Citigroup Inc 252,847 C 203,091 SPDR 500 SPY 159,637 Fin'l Sel SPDR XLF 145,529 s Dell Inc DELL 102,348 PowerShares QQQ Tr 1 QQQQ 95,157 –46 –41 –36 –15 261 –25 18 651 –31 –49 –45 –35 12.91 –0.08 –0.62 39.50 2.53 2.92 0.14 5.04 23.50 0.97 90.61 0.51 0.56 131.51 67.10 11.76 –0.05 –0.42 24.50 5.88 11.97 –1.05 –8.06 26.04 7.84 35.72 0.13 0.37 48.57 25.05 16.83 0.34 2.06 24.75 12.05 14.32 –0.25 –1.72 621.80 6.60 11.64 0.18 1.57 30.39 5.73 24.40 –0.40 –1.61 44.30 7.80 5.84 0.15 2.64 6.54 1.01 34.70 –0.01 –0.03 50.63 14.96 s Noven Pharmaceut Sapphire Industrials + ( Centennial Comm s Hi-Tech Pharmacal SP Acq Hldgs Inc Global Consumer Acq 2,336 19,050 1,061 656 965 3.00 1,810 9.77 –0.03 1,647 7.35 –0.78 1,584 12.75 2.86 1,280 9.70 –0.02 1,204 9.76 0.05 950 934 909 851 766 751 22.26 14.88 –0.31 9.80 –9.59 8.50 28.92 12.46 –0.21 9.73 0.51 9.71 7.54 8.37 1.80 3.46 8.50 8.37 s Intel Corp t Amer Int'l Group t General Electric s Wells Fargo s Ford Motor Co s JP MorganChase INTC AIG GE WFC F JPM 78,310 72,993 68,603 63,695 53,465 49,780 BlkrckBroadInv2009 BCT 80 SPDR S&P EmgMidE&Africa GAF 143 Tat Technologies TATTF 87 NRDC Acq Cp NAQ 662 s American Cap Agency AGNC 1,651 t Amer Int'l Group AIG 72,993 12.06 0.45 3.87 14.00 10.94 51.04 0.83 1.65 66.27 33.01 6.42 0.62 10.69 8.26 3.75 9.73 unch. … 9.79 8.55 21.51 –1.43 –6.23 24.04 12.00 14.32 –0.25 –1.72 621.80 6.60 * Volumes of 100,000 shares or more are rounded to the nearest thousand * Common stocks priced at $5 a share or more with an average volume over 65 trading days of at least 5,000 shares †Has traded fewer than 65 days Late Trading Most-active and biggest movers among NYSE, NYSE Arca, NYSE Amex and Nasdaq issues between 4 p.m. and 6:30 p.m. ET as reported by electronic trading services, securities dealers and regional exchanges. Minimum share price of $2 and minimum after-hours volume of 5,000 shares. Trading Diary: Volume, Advancers, Decliners % chg from NYSE 65-day avg % chg from Nasdaq 65-day avg % chg from NYSE Amex 65-day avg Most-active issues in late trading Company Volume Symbol (000) INTC 14,975 Last Net chg AFTER HOURS % chg High Low Intel Corp PowerShrs QQQ Tr 1 SPDR 500 Citigroup Inc Bank of America Fin'l Sel SPDR iShrRus2000 Energy Sel SPDR 18.05 QQQQ11,532 36.22 SPY 10,753 91.40 C 6,219 2.95 4,970 4,398 IWM 3,905 XLE 3,558 BAC XLF 1.22 0.50 0.79 0.03 7.25 1.40 0.87 1.03 0.93 unch. 1.15 0.65 18.25 16.51 36.36 35.62 91.70 90.03 2.97 2.78 13.07 11.89 50.24 46.26 12.90 11.73 49.50 45.39 13.03 0.12 11.76 unch. 50.12 0.57 46.26 0.30 Issues traded 3,152 Advances 2,139 Declines 916 Unchanged 97 New highs 31 New lows 5 Adv. volume* 672,177,574 Decl. volume* 299,743,510 Total volume* 976,624,124 Closing tick +833 Closing Arms (TRIN)† 1.04 Block trades* p5,640 MARKET –0.1 2,810 29.0 1,516 –35.0 1,130 12.5 164 180.3 20 6.9 10 –8.6 1,200,516,426 –54.4 603,314,157 –30.7 1,856,916,042 … +870 … 0.67 ... p7,761 –30.7 113,000 28.3 6,522,266 –52.3 1,698,100 –29.4 243,826,157 –22.8 611,966,855 –22.7 679,719,831 … … … … 55.3 35,171,493 –55.4 17,397,487 –35.6 37,304,264 –22.1 223,196,589 –25.1 1,856,916,042 –1.5 8.9 –15.1 25.2 –13.4 16.5 –2.1 –42.2 –19.4 … … ... 570 313 207 50 5 2 5,947,590 2,055,070 10,256,060 +99 0.52 n.a. –2.9 11.8 –17.9 –9.2 –34.9 9.2 –33.4 –71.6 –42.1 … … ... 884.8 –8.7 –39.0 –36.1 –32.9 –44.7 … –42.1 –10.6 –61.8 –56.7 –27.7 –37.5 BIDS & PROPOSALS NOTICE OF SALE NOTICE OF RECEIVERSHIP SALEMALIBU RESIDENTIAL PROPERTY On August 3, 2009, at 10:00 a.m. in Courtroom 8, U.S. District Court, located at 312 North Spring Street, Los Angeles, California, David A. Gill, the Receiver in the matter of Securities and Exchange Commission vs. Diversified Lending Group, et. al., U.S.D.C. case number CV09-1533-RJTLx, will seek to confirm a sale of residential real property located at 31610 Broad Beach Road, Malibu, California for $5,700,000 cash, free and clear, as-is, where-is, subject to overbid. For information about qualifying to overbid and for other details, contact Jessica Ramos, paralegal, 310 201-2498. Information will not be given to persons who do not identify themselves. The Receiver cannot ensure that last minute inquiries will result in timely receipt of the requested information. For information about the property, see www.31610broadbeachroad.com Percentage gainers… Collectors Univer Brigham Exploratn Ferro Corp Intel Corp ProShares UltSemi Advanced Micro Dev ON Semiconductor Viacom Inc B Lexmark Int'l A Marvell Technology 116 5.00 68 3.18 FOE 8 2.28 INTC 14,975 18.05 USD 5 21.68 CLCT BEXP AMD ONNN VIAB LXK MRVL 0.90 0.28 0.18 1.22 1.26 0.21 0.36 0.95 0.82 0.52 21.95 9.66 8.57 7.25 6.17 5.92 5.04 4.53 4.51 4.25 5.00 4.10 3.18 2.89 2.28 2.14 18.25 16.51 21.87 20.32 3.90 3.54 7.50 7.04 21.94 20.88 19.00 17.75 12.75 11.90 716 3.76 26 7.50 32 21.94 247 19.00 219 12.75 ...And losers 3PAR Inc Codorus Valley Bcp Janus Capital Grp Hunt (JB) Transprt ProShares UltShSemi Tech Bear 3x Monro Muffler Brk Acxiom Corp Cato Corp A Talisman Engy PAR CVLY JNS JBHT SSG TYP MNRO ACXM CTR TLM New York Chicago CBOE NYSE Arca Nasdaq NASD ADFs PHLX Alternext Boston National Exch. ISE BATS Composite 976,624,124 22,221,597 3,512,600 579,104,074 669,890,288 1,452,387,046 … … 99,217,538 16,312,286 82,286,746 403,068,889 4,304,625,188 253.8 1,000 –16.3 12,075,332 –41.3 5,068,700 –22.2 314,036,095 –19.6 308,361,688 –20.7 434,433,471 … … … 10,256,060 58.6 25,567,419 –20.1 7,550,622 –39.5 16,835,479 –12.8 225,282,299 –19.4 1,359,468,165 69 9.04 –2.41 –21.05 13 6.00 –0.97 –13.89 77 10.14 –1.03 –9.22 163 27.20 –2.42 –8.17 7 32.00 –1.83 –5.41 7 8 6 7 35 20.90 25.40 7.89 17.51 13.36 –0.99 –1.12 –0.35 –0.77 –0.58 –4.52 –4.21 –4.21 –4.20 –4.14 10.42 8.75 6.00 6.00 11.17 9.85 29.87 27.00 33.95 32.00 21.89 26.51 8.24 18.03 13.88 20.69 25.40 7.89 17.51 13.36 * Primary market NYSE & NYSE Amex only. † A comparison of the number of advancing and declining issues with the volume of shares rising and falling. An Arms of less than 1 indicates buying demand; above 1 indicates selling pressure. s Alternate Display Facility. p – previous day. WSJ.com Real-time U.S. stock quotes are available on WSJ.com. Track stocks on the move with actives, gainers and decliners that allow you to quickly scan the headlines behind the trading. Plus, get deeper money-flows data and email delivery of key stock market data. All are available free at WSJMarkets.com. 6606730 P2JW196022-0-C01200-1--------XA BLACK P2JW196024-0-C01400-1--------XA C M Y K Composite 07/15/2009 AZ,CL,CX,DL,DX,EE,FL,HO,MW,NC,NE,NY,RM,SA,SC,SL,SW,WB,WE P2JW196024-0-C01400-1--------XA THE WALL STREET JOURNAL. C14 Wednesday, July 15, 2009 HEARD ON THE STREET Email: heard@wsj.com Financial Analysis and Commentary More at WSJ.com/Heard Shining Results Aren’t Solid Gold Only months after the government rescued Wall Street, risk is back in fashion. Or at least it is on Broad Street, home to Goldman Sachs Group. As investors expected, the firm Tuesday reported blowout second-quarter profits. The secret? Putting risk capital to work as markets revived. Goldman reported net income of $2.7 billion on record net revenue of $13.8 billion. The stellar results raise two big questions: Are they sustainable for Goldman? And do they suggest the broader financial system is on the mend? On the first, Goldman recognized early that sentiment was changing. It didn’t shrink from using its balance sheet to make markets for clients stampeding back into recovering markets. And Goldman appears to have booked solid proprietary-trading profits alongside increased client activity. Full marks for timing. More-cautious rivals may have lost out on a possibly fleeting period of hefty profits. But Goldman swung for the fences to post these secondquarter numbers, judging by its OVERHEARD Many investors had reason to cheer Goldman Sachs Group’s blowout earnings, capping a 73% surge in its stock this year. But Stephen Friedman, who was early to the party, has done particularly well. In December, Mr. Friedman—a Goldman director and, at that time, also chairman of the Federal Reserve Bank of New York—bought 37,300 shares at an average of $80.78 apiece, according to regulatory filings. In January, he bought two more slugs totaling 15,300 shares at average prices of $66.19 and $67.12 apiece, respectively. Disclosure of those Goldman purchases in The Wall Street Journal led to Mr. Friedman’s departure as chairman of the New York Fed, but he has a few reasons to smile now. Goldman shares trade around $150. Mr. Friedman’s paper gain on the shares he bought when the firm was on its knees: a cool $3.9 million. overheard@wsj.com Shooting VaR Goldman Sachs’s average daily value-at-risk $250 million 200 150 100 50 0 2005 ’06 ’07 ’08 ’09* Share performance, daily data 100% 75 50 25 0 –25 –50 J F Morgan Stanley Goldman Sachs J.P. Morgan Chase M A M J J *Based on December year-end. November year-end for previous years. Sources: the company (risk); WSJ Market Data Group value-at-risk—an industry risk measure that estimates the oneday loss on trading positions in certain adverse conditions. Granted, VaR is an imperfect and narrow measure. It gave no warning of the huge recent losses at banks. It is hard to reconcile across firms. And Goldman has higher capital buffers today to absorb potential losses. Even so, the big gap between Goldman’s latest VaR and first-quarter numbers from other firms is raising eyebrows. In the second quarter, Goldman’s VaR climbed to $245 million, its highest quarterly level since the firm went public in 1999. At Morgan Stanley, VaR was $142 million in the first quarter, while J.P. Morgan Chase’s trading VaR was $190 million. Goldman’s firstquarter figure also was higher at $240 million. Embracing risk could keep working for Goldman if market conditions continue to improve or, at least, stabilize. However, Goldman increased VaR the most in equities. And stock markets have weakened so far this quarter, notes Michael Hecht at JMP Securities. In addition, credit markets could easily swoon again, especially if massive government programs aimed at shoring up bond prices lose their impact. True, having a bank the size of Goldman doing well adds to confidence. But beneath the gleaming headlines, some of Goldman’s figures suggest the financial system is still in trouble. For instance, the valuations Goldman has placed on its commercial-real-estate debt should spook banks with hefty exposure that have taken few hits on this asset class so far. The bank said its commercial-real-estate securities and loans are now marked at about half their par value. That implies big losses ahead for the wider banking system, which typically doesn’t mark commercial-real-estate loans to market. If Goldman is setting the tone for other banks, it isn’t all good news. —Peter Eavis Mr. Bean’s Effect on U.K. Bonds Charlie Bean, deputy governor of the Bank of England, is touring the U.K. to explain the wonders of quantitative easing. Government bond (gilt) investors will be hanging on his every word. Just last week certain gilt issues swung wildly after the central bank surprisingly decided not to increase its bond purchases beyond £125 billion ($203 billion). Quantitative easing creates a problem. The bond market is both the direct conduit for such unconventional policy and the judge of its likelihood of success. Many had assumed that the BOE would increase purchases last week. When it said it would merely continue with the £125 billion already committed to, turmoil ensued: 10-year gilt yields rose a huge 0.18 percentage points in a day, to 3.78%. By Monday, Mr. Bean was saying that it was too soon to call a firm end to asset purchases, sending gilt yields lower again. The BOE may simply have been trying to keep its options open and keep monetary policy on hold. But in a market where prices for certain securities have become heavily dependent on BOE buying, “on hold” is a slippery concept. The policy committee is likely to have been aware of market expectations, and of the potential impact of failing to meet them. That made the decision a de facto tightening of monetary conditions. The BOE says it will be months before it is clear whether quantitative easing is helping the economy. Yet the long-dated gilt market is looking only as far ahead as Aug. 6, when the next quantitative easing decision is due. Expect volatility—and intense scrutiny of any BOE comments— until then. —Richard Barley Serial Trouble for CBS at TV Stations CBS chief Leslie Moonves may need some help from Dr. Phil. Even as CBS has been hurt by the plunging ad market in both television and radio over the past year, a bright spot has been its strength in selling TV shows to TV stations and cable channels. But now there are questions hanging over that business. Rising financial distress among TV-station groups is likely to damp demand for program purchases. And a growing wave of bankruptcies means existing long-term deals could be renegotiated. Sinclair Broadcast Group, owner of 58 stations, warned Friday it may have to file for Chapter 11 if it is unable to refinance debt coming due next year. Sinclair would follow station owners “Dr. Phil,” “Wheel of Fortune,” “Inside Edition” and “Jeopardy.” Shows in the first-run market are sold almost exclusively to broadcast stations, unlike network reruns, which are often sold to more-stable cable channels. CBS is by far the biggest supplier. The first-run market accounts for more than $1 billion in revenue for the company, estimates UBS analyst Michael Morris, or about 7% of its total 2008 revenue and 10% of operating income. Meanwhile, syndication can account for 15% of a station’s expenses, with first-run often the bulk of it. That makes it a target for price cutting when stations come to renew existing deals—unless bankruptcy gives them the chance to renegotiate earlier. —Martin Peers Hong Kong’s IPO Surge Hong Kong has IPO fever. There is good reason to wonder whether it will last. Good timing, relatively small offerings, and heavy retail-investor demand have made Hong Kong’s stock exchange the second biggest for new share offerings by value this year, after São Paolo, Brazil, Dealogic says. But the recent wave hasn’t excited a critical group of investors: still-skeptical institutions. In fact, retail demand for last month’s $247 million IPO by BaWang International (Group) Holding was so high that these investors were allotted more than half the offering— instead of the expected 10%. Monday’s much-smaller $21 million offering, of air-conditioner-products maker Chigo Holding, also was heavily oversubscribed by individuals—and, like BaWang, jumped sharply once it opened for trading. As deals grow in size, though, individuals will create far less of a splash. Seeking to raise $763 million, BBMG, a cement maker, is pitching its offering at about 11 times expected earnings, nearly half the valuation afforded other cement companies listed in Hong Kong. And BBMG offers institutions a compelling prospect: The unit of a state-owned Chinese company will benefit directly from China’s stimulus spending. As such it is the first offering since last October to line up a group of cornerstone investors. For the big investors to stay interested, they will need more compelling stories, and keen valuations. —Amy Or Associated Press Makers of syndicated shows like ‘Dr. Phil’ may feel pain of downturn. Tribune and Young Broadcasting, which both filed in the past year. The segment of the program market most exposed to this distress is “first-run syndication,” shows that haven’t previously aired on a network, like “The Oprah Winfrey Show,” COMMODITIES REPORT Backers Don’t Buy ‘Friendly’ Palm Oil By Shie-Lynn Lim KUALA LUMPUR, Malaysia— European consumer groups and nongovernmental organizations have said they want environmentally friendly palm oil. Malaysian producers of palm oil that have made the switch are discovering that it is still a hard sell. The price premium for palm oil certified as produced through sustainable plantation practices has been shrinking since the first eco-friendly palm oil was shipped to European markets last November, and producers say it may need to disappear if they are to regain business in the key European Union market. Producers say the difficulty in selling higher-priced sustainable palm oils highlights the double standards of those who criticize the industry but buy the cheaper, uncertified oil that they say is harming the environment. “We [plantation firms] have complied with the strictest criteria on sustainability. The multinational companies, which also are end-users of palm oil, should not preach wine and drink water,” said Carl Bek-Nielsen, vice chairman of United Plantations Bhd., the first Malaysian company certified as a sustainable producer. Palm oil is a vegetable oil used in products ranging from margarine and cosmetics to feedstock for biofuel. It competes with soybean oil. Premiums for sustainable palm oil have shrunk to between $10 and $15 a ton, from $45 to $50 a ton before the global financial crisis took a toll on European economies late last year and demand waned, said Roy Lim, group plantations director of Kuala Lumpur Kepong Bhd., Malaysia’s third-largest listed palm-oil producer by stock-market value. Noncertified palm oil currently sells for about $565 a ton, he said, already down more than 50% from last year’s peak. Consumer-goods companies like Unilever PLC, Nestlé SA and Kraft Foods Inc. repeatedly have said they would seek to buy palm oil produced with minimal harm to the environment. All support the goals and efforts of the Roundtable for Sustainable Palm Oil, formed by World Wildlife Fund and Unilever, which is adopting stringent and sustainable practices for palm-oil cultivation. Although the combined annual production capacity of RSPO-certified producers in Malaysia, Indonesia and Papua New Guinea exceeded 1.57 million tons of certified palm oil and palm-kernel oil at the end of May, only 15,000 tons of certified oil has been sold since certification started late last year. “At the moment, demand for certified palm oil is only 1% of the [produced] volume, so this has been disappointing for the growers and we feel the food companies should keep their end of the promise,” said Lee Yeow Chor, executive director of Malaysia’s second-largest palm oil producer, IOI Corp. Bhd. IOI, KLK and United Plantations say they are committed to producing sustainable palm oil, even if the price premium disappears. Nestlé remains committed to sustainable sourcing and only buys products derived from crude palm oil from reputable manufacturers, spokeswoman Nina Backes said. Kraft spokesman Richard D. Buino said that while the company supports the RSPO’s efforts, “it is clear more work is needed to consolidate standards, enforce principles, verify traceability along the supply chain and ensure competitive pricing to bring certified palm oil to market. We’re monitoring the RSPO process and actively engaging our suppliers to monitor their certification efforts to find viable options for sourcing sustainable palm oil.” Neither Nestlé nor Kraft directly addressed purchases of Malaysia’s certified palm oil. Officials from Unilever, which purchases between 1.3 million and 1.5 million tons of palm oil annually, couldn’t be reached for comments. The Anglo-Dutch consumer-goods giant announced in 2008 that it was committed to completely switch to certified palm oil by 2015. Bloomberg News Despite position limits, grain prices have remained volatile. Here, working the floor of the New York Mercantile Exchange on July 7. Test of the Limits: Grain Curbs Fall Short As CFTC Looks to Rein In Energy Speculation, Another Market’s Flaws Show By Tom Polansek And Ian Berry CHICAGO—While the Commodity Futures Trading Commission pushes position limits on speculators in energy markets, traders and analysts say such curbs have had little effect on the grain markets. The CFTC, which plans to hold hearings to consider imposing limits for the energy sector, maintains a cap on the number of positions for speculators in the agricultural markets “to reduce the potential threat of market manipulation or congestion, especially during trading in the delivery month.” Even with the limits, though, grains and soybean futures weathered a wild ride in 2008, soaring to record highs before crashing. Nearby Chicago Board of Trade corn went from a low of $3.8250 in early December 2007 to a high of $7.76 in late June 2008 before plunging as low as $3.06 in December 2008. Soybeans made a similar move during that time period, while wheat peaked earlier in 2008 before falling back to earth. Corn Corn Futures Daily settlement price on the continuous front-month contract Tuesday: $3.50 a bushel, down 9 cents $7 6 5 4 3 2 2008 ’09 Source: Chicago Board of Trade via Thomson Reuters Datastream and soy prices skyrocketed on U.S. supply worries and an influx of speculative money, while wheat was worried about global crop failures. Tuesday nearby July corn fell nine cents to 35.0 cents a bushel. Limits were in place during the surge, but analysts said it was unclear how many speculators ever bumped up against them. A few investment funds might have come close to the limit, but if it did happen, it wasn’t widespread, a CBOT floor trader said. Some analysts agreed, saying funds can always find a way around the limits through methods like taking positions in over-the-counter markets or by “splitting” their positions and taking on more contracts through another fund. After watching the grain markets for years, Eugene Kunda, formerly a senior economist at the CBOT, predicted that there would be no impact from imposing speculative position limits on energy markets. A cap on position limits wouldn’t limit the number of traders that could enter the market, he said. “Nobody’s convinced me that you can’t just split the fund,” said Mr. Kunda, who is now visiting assistant director of the Office for Futures and Options Research at the University of Illinois at Urbana-Champaign. “The experience that energy is going to have with putting in spec limits is [negligible]. It’s window dressing.” Jason Ward, an analyst in grains and energy with North- star Commodity, said limits could have more of an effect in energy than grains because there is much more money in energy. For every dollar that goes into the Goldman Sachs commodity index, 68% goes into energy, including about 37% into crude oil, he said. Only about 11% goes into grains and soybeans, according to Goldman Sachs’s Web site. “When you’re talking about real dollars, the energy dominates it,” Mr. Ward said. “It’s going to have more impact.” In other commodity markets: COPPER: Prices rose, supported by strength in stocks and positive technical-chart formations. Nearby July copper rose 7.70 cents per pound to $2.2900 on the Comex division of the New York Mercantile Exchange. NATURAL GAS: Futures rose as traders took advantage of relatively low gas prices before the Atlantic hurricane season intensifies. Gas for August delivery on the New York Mercantile Exchange settled 16.6 cents, or 5.1%, higher at $3.429 a million British thermal units. Commodities tables on page C11. 6606732 P2JW196024-0-C01400-1--------XA Composite CYAN BLACK YELLOW MAGENTA P2JW196025-0-D00100-1--------XA CMYK Composite 07/15/2009 AZ,CL,CX,DL,DX,EE,FL,HO,MW,NC,NE,NY,RM,SA,SC,SL,SW,WB,WE BG,BM,CH,CK,CT,DA,DE,DM,DN,DR,FW,HL,HW,LD,LG,LK,NA,NM,OR,PA,RI,RO,SB,SH,TD,TU,UT,WO Coming to Grips With Traffic Jams EYES ON THE ROAD D3 © Copyright 2009 Dow Jones & Company, All Rights Reserved Behind the Win: The Glue Guys SPORTS D8 THE WALL STREET JOURNAL. When surgically repairing a human heart can do more harm than good — HEALTH D6 No sympathy for tax evaders with Swiss bank accounts — COMMON SENSE Wednesday, July 15, 2009 D3 D1 FILM REVIEW Latest ‘Potter’ Long on Setup, Short on Magic BY JOE MORGENSTERN Potions play a pivotal part in “Harry Potter and the Half-Blood Prince,” and I wish I’d been able to find one for patience. The filmmakers have certainly honored the book, which is famously dark, though with bright spots provided by the stirrings of teenage romance. And that chiaroscuro is enhanced by some very funny moments in the movie; the director, David Yates, has lightened his touch since the previous installment. But the book’s dramatic challenge is its overall sense of incipiency, rather than immediacy—great events aren’t happening quite yet, they’re soon to happen. (While the death of a major character is momentous, it’s mainly symbolic as a passing of the torch.) In a mythical analog to “The Gathering Storm,” the stage is being set for the final, epic battle between Harry and Lord Voldemort. For those who’ve lived with the series for more than a decade, this fateful pause may heighten the suspense. For a Muggle like me, the storm does gather slowly. You wouldn’t guess it from the excitement of the first action sequence. With Voldemort returned, as if from the dead, an unholy trio of Death Eaters terrorize London by reaching down with invisible black fingers—they’re scarily visible to us—that wreak chaos in the streets and turn the Millennium Bridge into a metallic pretzel. Soon afterward, however, the pace slows to a saunter as Hogwarts’ headmaster, Albus Dumbledore, enlists Harry in a mission to seek out the school’s former Potions professor, Horace Slughorn. Dumbledore is played, as before, by Michael Gambon, a great actor who has finally settled fully into the role. Slughorn is played by Jim Broadbent, another great actor —the adjective isn’t used loosely in either case—who gets to do a wonderful drunk scene that turns into something more serious and poignant. (The screenplay was adapted by Steve Kloves.) The whole antic mission to find Slughorn turns into something serious and genuinely intriguing. It’s always tempting to lapse into plot summaries when dealing with a Harry Potter movie, since the plots are so elaborate and the details are so much a part of the story’s spirit as well as its substance. Instead of jumping into that rabbit hole, I’ll simply say that Slughorn’s role involves recovered memory, that the recovery process involves advanced potions, that the memories are meant for exploring Voldemort’s vulnerabilities, and that some of them, just like those of eyewitnesses in courts of law, turn out to be entirely unreliable. Please turn to page D7 Prime Time for Steak Lovers BY KATY MCLAUGHLIN For years, Brian Wong, a 25-year-old technology consultant in San Jose, Calif., longed to buy USDA prime beef. He had tried it at an expensive steakhouse, but whenever he looked in supermarkets or at Costco for the beef with the Department of Agriculture’s highest grading, he was told they didn’t carry it. So when Mr. Wong saw a cut labeled USDA prime at Costco—selling for $9.99 a pound—he was so startled that he knocked on the window of the butcher department. “I asked them, ‘Is this a joke? Is it really prime?’ ” Mr. Wong says. The rib eyes he bought were the real thing: They were “more tender, more juicy” and more “delicious” than any other steaks he has cooked, Mr. Wong says. Mr. Wong experienced a phenomenon steak lovers are observing across the country: High-end beef that was once available mostly at steak houses and fine-dining restaurants is increasingly showing up in retail butcher cases. Two years ago, the only way most home cooks could get their hands on beef varieties such as USDA prime was to buy them in a gourmet store or by mail order, which could be as expensive as a steak-house dinner. But now, not only is steak-house-quality beef easier to find; in many cases, it is selling for little more than standard supermarket meat. The cause: a severe contraction in steak-house dining. Many top steak houses specialize in serving beef that’s ranked USDA prime, a grading given to between 1% and 3% of the country’s beef that designates the meat with the most marbling—the tendrils of fat running through meat that enhance its flavor and texture. As steak houses expanded over the past decade, they and other high-end restaurants bought nearly all the prime beef available. Amid growing competition in the past few years, many restaurants branched out into serving other specialty steaks, including Wagyu, from the breed of cattle used for Japan’s highly marbled Kobe beef, grass-fed beef, which has a reputation for being healthier, and brand names such as Niman Ranch. But this year, high-end steak houses, which depend largely on expense-account dining, have suffered single- and double-digit declines in same-store sales, according to restaurant consultant Technomic. So restaurants are buying a lot less fancy beef, leaving more of it for home cooks. Two weekends ago, Ray Juskiewicz was at Please turn to the next page Software That Makes Twitter So Much Tweeter BY KATHERINE BOEHRET Most people who aren’t familiar with Twitter are eager to list the reasons why they don’t use this social-networking service. It’s for narcissists. It’s for teenagers. It’s for people who have nothing better to do. It’s a forum for oversharing. While all of these things may be true in some cases, I find Twitter’s 140-character messaging network to be an incredibly useful tool in my everyday life. I use Twitter as my personalized news feed by following people who “tweet” (write updates) about things that interest me. In one glance I can read White House correspondent Mark Knoller’s tweets about President Obama’s activities, a recipe tweeted by Martha Stewart and WSJ.com tweets with links to news stories. But Twitter works best with a little help from its friends, namely those programs that are designed to make it more customized and useful with minimal work on the user’s behalf. Here’s a rundown of just some of these helpers. I’m focusing only on THE MOSSBERG ones that run on your computer, SOLUTION either in Web browsers or as stand-alone programs. There is also a plethora of Twitter applications that work on mobile devices like the iPhone and BlackBerry, too many to go into here. A few Twitter programs let you lurk and read tweets without a Twitter account, but in most cases these programs require a Twitter user name and password so they can better organize tweets of the people whom you follow. To get a Twitter account in the first place, you will need to sign up with a user name and password at Twitter.com and start following people—or subscribing to read someone’s updates. These may be friends or people you simply find interesting, like journalists whose work you read (my Twitter user name is kabster728). You can see whom one person follows, and then opt also to follow those same people and the people those people follow and so on. Though it’s possible to lock your account so it’s private, very few people do so because Twitter encourages open communication throughout the Web. That said, you can always choose to block Please turn to page D6 Harry Potter, more complex and mature Warner Brothers Pictures WORK & FAMILY Facing shrunken savings and borrowing options, parents and students are making some tough trade-offs in choosing and paying for college, suggesting some shifting attitudes toward higher education may endure beyond the recession. Old dreams of adult children earning degrees from elite, doorBy Sue opening colleges Shellenbarger or “legacy” schools attended by relatives are falling away in some families, in favor of a new pragmatism. Other parents and students are doing a tougher cost-benefit analysis of the true value of a pricey undergraduate degree. As parents wrestle privately with such emotional issues, many say they wish they’d begun years earlier to assess their values and priorities, long before their children’s college-decision deadline was upon them. Throughout her childhood, Sarah Goldstein imagined attending New York University, says her mother, Rose Perrizo of Sharon, Mass. Sarah’s grandmother is an NYU alum; Sarah lived near campus with her parents when she was small. “In her mind, Sarah was always headed there,” Ms. Perrizo says. But as Sarah’s college choice loomed last year, Ms. Perrizo, a real-estate appraiser, and her husband, Richard Goldstein, an attorney, “were agonizing over whether to pay $52,000 for one year at NYU, or $18,000” at their state university, Ms. Perrizo says. Both regard a bachelor’s degree as “only the beginning” of higher education for students like their daughter, who is interested in international studies; they hope to help with her graduate-school costs. Finally, they sat down with Sarah and gave her a choice: They’d pay her way at the University of Massachusetts, or half her costs at NYU and she could borrow the rest. Sarah chose the debt-free route, but she was upset. The choice “was really hard,” she says; her peers, disdainful and heedless of costs, asked, “why would you want to go to a state school?” But after a successful year in the honors program at the University of Massachusetts, she is happy with her choice. Looking back, Sarah says, “it wouldn’t have made sense to pay $50,000.” Ms. Perrizo says Sarah has learned an important lesson. “It’s like shopping at Loehmann’s vs. Mustafah Abdulaziz for The Wall Street Journal Weighing Price and Value When Picking a College Teaching Kids About Money The Hard Way BY KAREN BLUMENTHAL It’s getting harder for parents to raise financially independent young adults. Many banks refuse to open individual checking accounts for 16- and 17-year-olds, requiring parents to jointly own the account, even if the youngsters have a job. Colleges urge parents to link their bank accounts or credit cards to the prepaid cash cards that double as their students’ ID cards, to ensure a regular flow of funds from the Bank of Mom and Dad. And under the new credit-card law that goes into effect early next year—part of a broader move toward aggressive consumer protection—parents of those under 21 will have to agree to take responsibility for their kids’ credit cards unless the young applicants can show they have the income to qualify. All of this seems to encourage parents to interfere with—and maybe even bail out—these young adults. And it comes at an age when the youngsters themselves should be taking on personal responsibility and making their own financial decisions. So this is the kind of mean and rotten parent I’ve become: Recently, I vigorously persuaded my 19-year-old daughter to get her first credit card. Most young people should consider getting a credit card in college because they will need a credit record to lease an apartment, land a car loan, qualify for a good rate on car insurance and maybe even get a job. My daughter wanted to wait until next year to get a card, but I would have had to cosign for it—something I was unwilling to do, even though she’s very conscientious. The reason? I believe youngsters need room to Please turn to the next page Pam Mousseau has delayed home repairs to save money for her kids’ college. Bloomingdale’s. I’m teaching my daughter to be a good shopper and to pick value.” Ms. Perrizo’s only wish is that she had started talking about college costs earlier. Such thinking challenges what Joseph Losco, an expert on the history of education, calls “one of the strange things” about the economics of higher education: “Universities and colleges don’t compete on price.” In fact, some college administrators fear lowering their sticker price will hurt their image, says Dr. Losco, chairman of the political science department at Ball State University, Muncie, Ind. Consumers have been complicit, largely because of what Ms. Perrizo calls “the baby-boomer notion that parents should give it all up for the kids.” In a May 2008 survey of 720 parents of college students by Gallup and Sallie Mae, a student-loan company, 46% said they had never, at any point, ruled out any colleges for their kids based on costs. But now, “families are much more price-conscious and valueconscious,” Dr. Losco says. A soon-to-be-released Sallie MaeGallup study of 1,600 college students and their parents, conducted in March and April, says parents are increasingly anxious about tuition—and students are more skeptical about the value of a degree, compared with the survey from a year earlier. Chelsea Thomas’s family was proud when she enrolled at Amherst College, in Amherst, Mass., and had an academically rich freshman year. Having a child at Please turn to page D3 Shira Kronzon/The Wall Street Journal P2JW196025-0-D00100-1--------XA Composite MAGENTA BLACK CYAN YELLOW P2JW196026-0-D00200-1--------XN BLACK 07/15/2009 EE,NE,NY,WB CK,LD,RO,SB,WO D2 Wednesday, July 15, 2009 THE WALL STREET JOURNAL. HOME FAMILY It’s Prime Time for Steak Aficionados Continued from the prior page Seattle’s Metropolitan Market when a special caught his eye: Snake River Farm’s Wagyu beef, on sale for $14.99 a pound. That struck Mr. Juskiewicz, a 47-yearold computer hardware salesman and avid weekend cook, as quite a deal: The only other time he had bought Wagyu beef, he had paid more than $40 a pound. He bought the steaks, seasoned them with coarse salt and black pepper, and grilled them over high heat. “They were amazing. Very juicy, with a very buttery flavor to them, incredibly tender. You didn’t really need a steak knife,” says Mr. Juskiewicz. Though he usually finishes a steak with a pat of compound butter, which has herbs or other ingredients mixed in, he didn’t garnish the Wagyu, preferring to let its flavor stand alone, he says. Other people cooking extremely marbled beef would do well to follow Mr. Juskiewicz’s approach, says Steven Raichlen, host of public television’s Primal Grill and author of “The Barbecue Bible.” Such meat needs little adornment: just a sprinkling of coarse salt and freshly ground, coarse black pepper and quick cooking on a hot grill. By contrast, grass-fed meat, which comes from cattle that haven’t been fattened on grain towards the end of their lives, rarely earns the prime grade because it tends to be less marbled. But it can have a more complex flavor, with herbal notes that reflect the grass diet, and it is also healthier than corn-fed beef, with more omega-3 fatty acids and less saturated fat. This meat benefits from a sprinkling of melted butter or olive oil. For the ultimate garnish, Mr. Raichlen recommends making a cup of aluminum foil, filling it with a piece of beef fat, and placing it over a cooler part of the grill until it melts. Pour a little liquid fat over a cooked steak for a beefy enhancement, he recommends. Given a choice between cuts of USDA prime beef, Mr. Raichlen says he would choose a New York strip or a T-bone in order to take advantage of the firm meat, which tastes lush and juicy when well-marbled. But take a page from top steak houses and don’t bother buying prime tenderloin, or filet mignon. This cut is only slightly marbled, so buying prime barely changes the eating experience. Rib eyes, which are very rich, can be too fatty when they come from Wagyu beef, but they are the perfect choice for grass-fed beef, Mr. Raichlen says. The best way to showcase the concentrated, beefy quality created by dry-aging is to choose a T-bone or porterhouse. These cuts include a piece of filet, which becomes more flavorful through the dry-aging process. Other factors have contributed to the wealth of fancy beef at stores today. For one thing, specialty ranches expanded their herd sizes during the steakhouse boom. Three years ago, Snake River Farms in Boise, Idaho, decided to enlarge its herd of 7,000 cattle. Back then, more than 90% of Snake River’s Wagyu beef was sold to restaurants. Today, the herd is 10,000 strong, and retail stores account for a third of sales. Niman Ranch beef was one of the first ingredients to be identified by the name of the rancher or farmer on top restaurant menus in the 1990s. Its cachet derived from the beef’s taste and the company’s humane ranching methods, as well as the product’s rarity at the time. Two years ago, the company expanded its herd size fourfold, says executive vice president Jeff Tripician. Now the beef is in “thousands of retail stores” around the country, Mr. Tripician says. Whole Foods Market Inc. has been able to lower the price of its beef because home cooks looking to save money have started buying more ground beef, roasts and other cuts from various parts of the cow, says Theo Weening, head of meat purchasing for Whole Foods. That enables the company to buy more whole animals, allowing it to sell all the parts for a lower price, he says. In the Rocky Mountain region, Whole Foods recently had a sale on grass-fed ground beef for $3.99 a pound, Mr. Weening says. He also says the store has sold New York strip steak for $8.99 and $9.99 a pound in recent months, about $5 per pound cheaper than normal for the store’s standard beef. Indeed, across the spectrum of beef varieties and grades, prices for “steak-house cuts” such as tenderloin, porterhouse and rib eyes are down by 3% to 12%, depending on the cut, from last year, according to the National Cattlemen’s Beef Association. Wal-Mart, under the Genuine Steakhouse label it rolled out to all stores last April, is selling USDA choice-grade meat. Prior to Genuine Steakhouse, WalMart sold mostly select-grade meat, a less marbled variety. Food aficionados around the country have been buzzing online about steak-house beef at retail. Frank Deis, a 64-year-old biochemistry professor in Highland Park, N.J., found it “terribly frustrating” to hear from his friends in wine-appreciation discussion groups that they were finding USDA prime beef at Costco when he couldn’t. He dropped notes in the Costco suggestion box asking for the meat and complained to the store’s butchers. Then, one day in December, Mr. Deis found prime beef—at $8.99 a pound. “At that price, why should I buy anything else?” says Mr. Deis, who puts his biochemistry background to use by aging whole loins of beef. He cuts it into steaks, grills it to rare, and serves it with a selection from his 1,000-bottle wine cellar. “Man, oh man, it couldn’t be any tenderer” he says. “You chew it with your tongue.” Letting Kids Make Their Own Mistakes Continued from the prior page make their own mistakes—and learn from them when the consequences (and dollar amounts) are low. It’s a parenting theory I learned from Jim Fay, cofounder of Love & Logic Institute Inc. in Golden, Colo. Since the late 1970s, he has warned about the wrong messages sent by helicopter parents, who swoop in to rescue their kids, and drill sergeants, who tell their children what to do step by step. If my daughter pays her bills late in college, she will learn FAMILY quickly about MONEY late fees and the impact on her credit score. But if I’m on the account, I’ll have to choose between her life lesson and my own credit score. Cosigning on a credit-card account, as Mr. Fay notes, “is a good way to end up paying the bill.” The new credit-card law will also limit the marketing of card offers to young people, apparently in response to reports that they were running up huge debts. Those same reports prompted Soyeon Shim, a University of Arizona professor specializing in consumer behavior, to survey more than 2,000 freshmen at the school, the first in a longitudinal study funded by the National Endowment for Financial Education. The survey, published in April, found that 58% of the students had a credit card and an average debt of $169. Generally, they weren’t spendthrifts: More than 60% of those with credit cards said they used them a few times a month or less and paid the bill in full every month. But what jumped out at the researchers was that more than 70% of the students reported a “financially risky” behavior—in other words, they had made a money-related mistake—in the past six months, by, for instance, not paying a bill on time, maxing out a credit card or taking out a payday loan. Dr. Shim notes that the percentage of students reporting a risky behavior was the same for those with credit cards as those without. In other words, it wasn’t credit cards that got them into trouble, but other factors. And what was the greatest influence on the students’ behavior? Overwhelmingly, it was their parents. What students learned at home was far more important than what they learned from having jobs or in financial-literacy classes. Students who reported good communication with their parents about money also felt like they had more financial knowledge and more control over their finances, which Dr. Shim believes may lead to greater financial happiness when they are adults. So what’s a parent to do? Start early. Most banks and credit unions will provide fee-free savings accounts to kids. Grade-school children can understand budgeting basics. Young teens can begin to learn about how credit works. Share the ways you use a credit card and how you pay it off. Encourage independence. Let kids decide how they spend their allowance or earnings. Some banks, like Wells Fargo, will let you open a joint checking account for kids as young as 13. Some credit unions and banks, like Bank of America, will open an individual checking account for those 16 or 17. If you’re in a joint checking account, resist the urge to monitor it online; instead, talk with your teen about budgeting and spending. Pick plastic wisely. If you want your young teens to learn about using cards—or they need to have a card to go on a trip—consider a prepaid card, which works much like a reloadable gift card. Most cards are pricey, with monthly fees, transaction fees or charges to deposit money, so be sure to compare offers carefully. You can make your older teens authorized users on your credit card, which can help them build a credit record. But first explain your expectations and rules about when they can use it. And when it’s time for those young adults to get their own cards, go through the fine print together to understand credit limits, interest rates, due dates, cash advances and the many different ways to amass penalty charges. Email: familymoney@wsj.com Ryan Heshka On the House: How to Nab Restaurants’ Latest Deals Amid a steep fall-off in expense-account dining, steak houses are trying to attract people eating out on their own dime by offering specially priced meals. But some of the best offers are not on the menu. The customer has to ask the waiter for them. Steak houses tend to have welltrained, professional waiters, so inquiring about special deals need not be embarrassing. At Morton’s Beverly Hills branch, we wondered if we would feel like cheapskates asking our waiter, “Isn’t there some kind of special menu here?” In fact, the waiter seemed pleased and told us that he himself orders the special RESTAURANT DEAL when he eats at the restaurant. A couple of caveats: Most steakhouses put a smaller cut of filet on special menus. That’s partly because tenderloin doesn’t need to be USDA prime to be very tender, so few restaurants shell out for prime. It also isn’t dry-aged, because boneless cuts can’t be dry-aged. Also, most of the menus provide a huge amount of food, so they’re cost-effective only for truly hungry diners. Steak houses are taking different tacks to stimulate business: Morton’s and Ruth’s Chris are offering lowerpriced food, a classic strategy for restaurants, which hope patrons paying less to CAVEAT THE BEEF eat will spend more on wine. Capital Grille offers a deal on wine and hopes patrons will order a lot of food. The Palm and Morton’s are rolling out relatively cheap bar menus, hoping to draw a happy-hour crowd. Consumers who want deals should visit these restaurants’ Web sites regularly or sign up for email alerts or loyalty-club memberships; the restaurants offer their best deals to people they think will be repeat customers. The Palm offers its club members discounts on wine and food; membership currently costs $25 but comes with a $25-off certificate. —Katy McLaughlin COMMENT Dinner of filet mignon and scallops, shrimp or crab cakes, a generous portion of a side dish and dessert for $49.99 in most markets and Morton’s the Steakhouse $54.50 in a few. One $39.95 menu includes a six-ounce filet and shrimp entrée, among other choices, plus a starter, side and dessert. Ruth’s Chris Diners won’t see this on the menu; instead, they should mention the deal to a server and they will receive the offer, which runs through September 30th. USDA prime beef, wetaged for three to four weeks. $39 more buys a bottle of selected wine; for $8 the steak can be upgraded to rib eye or New York strip. USDA prime, wet-aged for Steakhouses often put filet between 24 and 28 days. on special menus because it is popular and also because it is easiest to slice into smaller portions. USDA prime beef, wetaged, except at one branch in New York City (the one at 837 Second Avenue) where the beef is dryaged. Beef is either USDA prime or the more marbled end of USDA choice. Steaks are dry-aged in the restaurant for 14 days. The restaurant offers another menu, for $49.95, which includes a bigger filet or a 16-ounce strip steak. Both offers run until September 13th. Starting this month, the Palm is testing a bar menu in some locations featuring beef sliders, mini crab cakes, and filet mignon sandwiches for $3.50 each. George Miliotes is Master Sommelier, a designation held by 176 people world-wide that represents having passed rigorous wine and spirits exams. Not on the menu—diners should A summer lobster dinner includes a four-pound lobster mention it to the server to get for two, salads and a side for the deal. $89.95. The Palm Offer goes from July 13th to Starting this week, diners can pay an extra $10 at lunch August 23rd. or $25 at dinner and receive tasting portions of 11 or 12 selections by the chain’s Master Sommelier. The Capital Grille Save up to 50% during The Summer of Possibilities Sale. With up to half off 2008 prices, there’s never been a better time to get away. 4-star hotel per night* from 2008 from 2008 Las Vegas from $ 31 50% 50% 49% 46% 44% Orlando from $ 69 89 38% 36% 50% 49% 46% Hong Kong from $ 57 Los Angeles from $ Dominican Republic from $ 82 from London $ 105 140 167 from from from Cancun $ 89 New York City $ Chicago $ 136 from Paris $ www.travelocity.com/sale 1-888-TRAVELOCITY Pick where the Roaming Gnome ™ goes next – become a fan on *Hotel prices are in USD, per room, per night, based on double occupancy and are subject to availability. Sample prices were found recently by Travelocity or its customers. Other restrictions apply.**Percent off is based on a comparison of the 2009 price for all hotels in the relevant destination with the price for all hotels in the same destination consumed by Travelocity customers in July and August 2008. See www.travelocity.com/sale for details. ©2009 Travelocity.com LP. All rights reserved. TRAVELOCITY, the Stars Design and The Travelocity Roaming Gnome are trademarks of Travelocity.com LP. CST# 2056371-50. ** ** ** ** P2JW196026-0-D00200-1--------XN ** ** ** ** % Off 4-star hotel per night* % Off BLACK P2JW196027-0-D00300-1--------XA BLACK 07/15/2009 AZ,CL,CX,DL,DX,EE,FL,HO,MW,NC,NE,NY,RM,SA,SC,SL,SW,WB,WE BG,BM,CH,CK,CT,DA,DE,DM,DN,DR,FW,HL,HW,LD,LG,LK,NA,NM,OR,PA,RI,RO,SB,SH,TD,TU,UT,WO THE WALL STREET JOURNAL. Wednesday, July 15, 2009 D3 PERSONAL FINANCE COMMON SENSE Offshore Tax Evaders Deserve No Sympathy Do you know anyone with a Swiss bank account? I don’t, which is probably no surprise since the whole point is secrecy. But evidently there are plenty of Americans who do—at least 52,000 at UBS alone—whose identities the Internal Revenue Service and the Department of Justice are trying to learn. By James B. In light of Stewart this highly publicized investigation into tax evasion, I’ve been wondering just why anyone needs or wants a Swiss bank account. For African dictators, international arms traffickers and terrorists, the answer is pretty obvious. And there are certainly citizens of countries whose own banking systems are so precarious, and the risks of persecution for any number of reasons so great, that a Swiss bank account may provide welcome security. mitted that it helped U.S. citizens evade taxes and agreed to cooperate with U.S. investigators. But now it is balking at turning over its clients’ names. UBS says it would violate Swiss financial privacy laws if it complied. In that case, UBS (and its government) should be faced with a simple choice: continue its policy of strict secrecy, in which case UBS should forfeit the right to do business in the U.S.; or compromise, aligning its banking laws with those in the rest of the civilized world. Moral High Ground I have no sympathy for the bank’s plight. Switzerland is a sovereign nation, free to pursue whatever banking laws it deems appropriate. That doesn’t mean the U.S. has to open its borders to the exploitation of its citizens for tax evasion and other nefarious purposes, nor should other countries. A trade war would be unfortunate, and the Swiss might retaliate by banning U.S. financial institutions there. But the U.S. SMARTMONEY would have the great advantage of the moral high ground. I think the likely outcome is clear. Nor do I have any sympathy for those Americans whose identities may be made known, especially those like Mr. Olenicoff, a billionaire who owned a yacht and maintained foreign accounts in multiple so-called tax havens. Those who have accepted an offer of amnesty should count themselves lucky. Paying taxes is an obligation all American citizens share, but somehow tax evasion seems more reprehensible when committed by the rich, who owe their prosperity to this country and could so easily meet their obligations. With the Madoff scandal still fresh in the public mind, I hope the Justice Department maintains its tough stance. The wealthy need to be reminded that all Americans stand equal before the law. James B. Stewart, a columnist for SmartMoney magazine and SmartMoney.com, writes weekly about his personal investing strategy. Unlike Dow Jones reporters, he may have positions in the stocks he writes about. For his past columns, see: www.smartmoney.com/commonsense. www.smartmoney.com/commonsense. Newscom Morning rush-hour traffic on Pasadena Freeway into downtown Los Angeles. EYES ON THE ROAD | By Joseph B. White Rush Hour Is Likely to Remain Anything But America’s love affair with cars isn’t what it used to be, and one reason could be the amount of time we spend stuck in traffic. If Congress proposed a $750per-person tax on everyone who drives, there’d be a political firestorm. But big-city commuters pay that much annually, on average, in the form of lost time and fuel wasted crawling through cities, according to the latest Urban Mobility Report from the Texas Transportation Institute. The TTI study is one of those surveys that confirms what you already think you know: Traffic in America’s big metropolitan regions is a nightmare much of the day. The scale of the problem is bigger than you might have guessed. Since 1982, the number of hours each year that the average traveler spent in rush-hour traffic jams rose to 36 in 2007 from 14 in 1982. Put another way, big-city commuters spend nearly a week’s vacation time dawdling on the road. In the process, that same average commuter wasted 24 gallons of fuel in 2007, compared with nine in 1982. “Rush hour” is an anachronism. In most big cities, peak congestion consumes three hours in the morning and evening, during which very little rushing takes place, the report says. Maybe we should rename the commuting periods of the day “jam time.” The good news? The 2007 numbers marked a slight improvement from 2006, when time wasted was 37 hours per person, on average. The bad news? If and when the economy recovers, the trend toward more congestion and more delays will likely resume, the report’s authors write. Traffic jams are a symptom of bigger problems created over many years that won’t be quickly fixed. When you fly into Washington, D.C., look at the patterns of the streets in the suburbs that ring the city, says Rep. Earl Blumenauer (D.-Ore.), who has made transportation policy one of his main issues in 13 years in Congress. “You see fields of cul de sacs,” he says. Residents in these neighborhoods have just one way to get out—and when they rush for the exit, they clog the road that runs in front of the subdivision. That is just one reason why, for all the awareness of energy conservation in the nation’s capital, the average jam-time traveler in Washington, D.C., wastes 42 gallons of fuel a year in slow traffic—second worst in the nation after Los Angeles, according to the TTI mobility study. People live where they do and commute long distances to work for complex reasons, involving family ties, schools, housing costs, economic necessity and differing definitions of what makes a pleasant living environment. Some people like city living; other people want a lawn to mow. Changing a job is a lot easier than changing where you live, even if that means driving farther to work. Federal housing and highway policies for many years encouraged the spread of city dwellers out into suburbs. Along the way, the U.S. became a nation with almost one registered passenger vehicle per person. It shouldn’t be a shock that all those cars, trucks, sport-utility vehicles and minivans are having trouble fitting on highways that haven’t expanded to keep pace with rising travel. Now Washington faces an acute conflict of missions. The government has significant ownership of two U.S. car makers—Chrysler LLC and General Motors Co.—and a big political stake in saving auto jobs. So it makes sense for the government to keep on encouraging driving, and thus, car-buying. On the other hand, the Obama administration and Congress want to curb America’s consumption of fossil fuels, particularly oil, for environmental and national-security reasons. That would argue for policies aimed at getting us to drive less, ride mass transit more, and buy fewer, smaller cars. On the third hand, the pressure to do something to ease the congestion tax on the economy is coming from all directions. Mr. Blumenauer expresses frustration over the “reflexive opposition to raising gas taxes,” noting that the same consumers who complain about the idea of an extra 10 cents a gallon in fuel taxes volunteer to pay $25 a gallon for bottled water. It’s also time, he says, to focus federal spending on the problems of big urban areas, and give commuters in those populous areas more transportation choices—he stresses that word “choice.” Janet Kavinoky, a transportation lobbyist for the U.S. Chamber of Commerce, says, “We have got to reformulate transportation policy so we are actually achieving some outcomes, instead of spreading the peanut butter around.” That’s a reference to Congress’s tendency to spread highway money to as many districts as possible. Ms. Kavinoky says the chamber would support a gas tax, or other methods of raising more money from people who use the transportation grid. “If I increased the gas tax a dime today, nobody would notice,” she says. Where the chamber differs with some Democrats in Congress is over the issue of privately funded roads and transit projects. The Chamber wants federal policy to more clearly promote those investments. Rep. John Mica (R.-Fla.), the senior Republican on the House Transportation Committee, has also said the government should encourage private transportation investments such as toll roads. Congress is supposed to act by Sept. 30 on a new five-year highway bill. The Obama administration wants to delay a debate about transportation policy until 2010—postponing a potentially awkward debate about how to raise more money to fix existing roads and mass-transit systems, and add new ones. But by that time, the gas-tax fund that pays for federal transportation projects could run dry. In the meantime, drivers stuck in “jam time” traffic can look at the bright side: If you’re commuting, you still have a job. Email:joseph.white@wsj.com Ample Confidentiality But the U.S. is not one of those countries. Despite our recent banking woes, the U.S. has plenty of financial institutions with impeccable balance sheets. It has a legal system second to none that provides ample confidentiality and dueprocess protections. But it doesn’t offer ironclad secrecy in the face of a legitimate, court-sanctioned subpoena, which means it doesn’t lend itself to tax evasion. That is evidently why California billionaire Igor Olenicoff parked hundreds of millions of dollars with UBS, and subsequently pleaded guilty to a felony count of filing a false tax return. His former UBS banker, Bradley Birkenfeld, pleaded guilty to conspiracy and testified that UBS bankers prospected for wealthy U.S. clients eager to avoid taxes at art shows, musical performances, yachting regattas, golf and tennis tournaments—anywhere “rich people hang out.” They even served as couriers to avoid money transfers that might be detected by U.S. surveillance, according to Mr. Birkenfeld’s testimony. All of this was met with depressingly great success: Prosecutors say UBS managed $20 billion for U.S. customers. Earlier this year, UBS agreed to pay a fine of $780 million, ad- Weighing Price and Value in Picking a College Continued from page D1 Amherst confers “bragging rights,” says Suzanne Thomas, Chelsea’s aunt who shares the college costs with the student’s mother. When Chelsea’s scholarship expired after her first year, the family faced coming up with $26,000 to keep her at Amherst. That would have meant digging deep into savings that had been set aside for retirement, says her mother, Shelley Thomas. WORK & FAMILY MAILBOX Columnist Sue Shellenbarger answers readers’ questions I plan to begin infertility treatment and I need to talk with my supervisor about the time off I’ll need. Any advice? —E.B. It would be wise first to research your company’s policies and past practices. If it’s not clear how infertility treatments have been handled, check out policies on time off for medical treatment in general. Also, make plans in advance to avert any damage to your job performance or coworkers. Your approach with your boss should suit your relationship. Some women undergoing infertility treatment avoid revealing that fact, citing unspecified medical reasons for their absences. Others feel it’s necessary to be specific because of the frequent time off required by the process. Most employers realize “family life is important to employees” and should accommodate infertility treatment, says Beth Weinhouse of Conceive, publisher of a Web site and magazine. Also, amendments to the federal Americans with Disabilities Act went into effect this year, making it easier for workers with disabilities, including problems with reproduction, to qualify for protection from job bias. For information, see EEOC.gov and click on “disability.” Q: A: I’m paid a salary and my employer asks me to work up to 70 hours a week without overtime. While I do some supervisory duties, I also wash and drive buses. How can I tell whether I should be paid overtime? —R.L., La Mesa, Calif. You would need to consult an attorney for advice specific to your situation. Generally, an employee in California must spend at least half his or her time at work performing supervisory, managerial or professional duties in order to be exempt from labor laws requiring overtime pay, says Kelly Armstrong, a San Francisco employment attorney. The categories are complex, but they generally exempt workers such as executives whose primary job is to supervise other workers, including hiring and firing; administrators whose duties are tied to management; or professionals who are licensed, certified or extensively trained in a skilled profession, according to Ms. Armstrong. An employee also must make at least twice the minimum wage to be exempt. Email sue.shellenbarger@wsj.com. Q: Whatever It Takes Relatives and friends pressured them, saying Chelsea “should do whatever it takes to continue” at Amherst, says Suzanne. Instead, the family decided that Chelsea would be happier as a financially independent young adult living close to family. Chelsea returned to the family’s home in Boulder, Colo., last year and became a partner in the realestate-investment business that her mother and aunt own jointly. Now 20 years old, Chelsea co-owns two rental houses and is working on a bachelor’s degree at a nearby public university. Chelsea says she misses her Amherst friends and the stimulating campus environment. Still, she adds, a degree from a top school “is worth a lot, but it’s not worth that much.” A: Mustafah Abdulaziz for The Wall Street Journal Despite the costs, the Mousseaus promised their daughters they could attend ‘the best school they get into.’ picks up, some of this new price-consciousness is likely to endure. The engines that have enabled college costs to soar—easy credit, home-equity loans and growth in savings—have stalled. Total college costs are already up 67% in the past decade at private colleges and 84% at public four-year universities, based on College Board data, and graduates’ wages haven’t kept pace. Parents and students are borrowing less for college, the forthcoming Sallie Mae study shows. The percentage of students from middle-income households who are attending state schools is rising, and more lower-income students are enrolling at community colleges, the study shows. “We would expect to see an even greater shift” next year, a Sallie Mae spokeswoman says. Even for savvy parents who anticipated the costs, the trade-offs for a top-tier education can be steep. Pam MousBLACK seau recalls hearing when her oldest daughter was a baby that a college education would cost $50,000 a year by the time she finished high school. Her daughter is now 19 years old and a sophomore at a private university, and the cost at many schools has indeed risen to match that earlier projection. 1940s-era Magic Chef stove and ancient cabinets with multiple paint layers. “Some parts of the ceiling have fallen down,” Pam says. But redecorating is on hold. They drive two old cars and haven’t bought a third, even with four drivers in the house. And they’re bypassing vacations they used to take, skiing or relaxing in beach-side rental homes. “Sometimes I think, ‘I’m 53 years old. Can’t I have a decent kitchen?’ ” Pam says. “But it’s momentary.” She and John both graduated from private universities with their parents’ help, and they want to do the same for their kids. “I’m glad to make the sacrifices,” John says. But with seven years of helping with college tuition ahead, he adds, jokingly, “check back with me in a few years, and see if I feel the same.” E-mail sue.shellenbarger@wsj.com. The engines that have enabled college costs to soar—easy credit, home-equity loans and growth in savings—have stalled. Such thinking bucks the cultural view that an elite college degree is “the gold standard for both parents and students ... validating their worth in society,” Dr. Losco says. Now, more “parents are saying, ‘I don’t have the money to get you where you want to go,’ ” he says. Even when the economy Promises Made Nevertheless, Pam and her husband, John, have promised their three daughters that they could attend “the best school they get into,” according to John, a portfolio manager. The girls work and will probably take out modest loans, but their parents will pay the lion’s share. “We always figured we would find a way to do it,” Pam says. The Mousseaus have refrained from taking equity loans against their 91-year-old Maplewood, N.J., home, conserving their borrowing power for college. The kitchen has a 2009 P2JW196027-0-D00300-1--------XA P2JW196028-0-D00400-1--------XE BLACK 07/15/2009 EE,FL,NE,NY,SA,WB CH,CK,LD,LG,LK,OR,RO,SB,WO D4 Wednesday, July 15, 2009 THE WALL STREET JOURNAL. CARS ME MY CAR Columnist Jonathan Welsh answers readers’ questions about automobiles I have a 2002 BMW 745i sedan with 85,000 miles that is dripping oil around both the oil-pan gasket and the timing-gear gasket. My dealer says it will cost $6,500 to replace the gaskets, as the front of the car needs to be taken off. The car does not have an accessible dipstick, so I can’t determine its oil level. The dealer says when the oil is half a quart low, I will be alerted via a dashboard warning light. The car is ideal otherwise. Is this some- Q: phistication should soil the garage with engine fluids. I wouldn’t worry about it, though, because such drips are common in many cars after several years of use. If you don’t trust the electronic oil-level monitor—and I’m not sure I do—your mechanic can check the oil level. My family is growing. We already have a midsize sportutility vehicle, and now we are looking at a midsize-plus sedan costing $25,000 to $30,000, with above-average quality and solid resale value. We’re considering a Honda Accord, Mazda6 or Hyundai Azera. Any recommendations? —A. Graham, Cleveland You’ve got a good short list. The Accord, Mazda6 and Azera are solid, roomy, attractive cars. I would add the new 2010 Ford Taurus to the list. It is larger than the typical midsize family sedan, and is nearly a fraternal twin to Volvo’s topof-the-line S80. My 18-year-old son has his heart set on buying a used Pontiac Aztek crossover. My husband and I are concerned about getting parts and the vehicle’s resale value, since the Aztek is no longer being made and the Pontiac brand itself is being closed down. Do you know if finding parts in the future will be an issue, or will some A: other company still make them, as the salesmen are now telling us? —Jenny Schenewerk, Smithton, Ill. It was bound to happen: The Aztek is finally cool, 10 years after it was introduced. And why not? When I was your son’s age, I longed for a 1960s Citroen DS 19, which was at least as strange-looking as the Aztek. Even a well-kept used Aztek should cost next to nothing to buy. And since it shares its overall design with the longer-running Buick Rendezvous, parts should be plentiful for many years. Send questions to: mecar@wsj.com. A: thing I should get repaired? —Robert Wentworth, Melbourne, Fla. I never worried when my old 1972 BMW left a little oil on the garage floor. But I understand your concern about the 2002 model’s leaks. It seems simply wrong that a car with the 745’s technological so- Q: Q: A: SHOWROOM GLOBAL, NATIONAL, REGIONAL TO ADVERTISE CALL 1.800.366.3975 FAX: 214.640.7900 ADVERTISING.WSJ.COM EE FL NE NY SA WB PORSCHE MERCEDES-BENZ BOATING Calling All Boats www.caboats.com An Elite Marketplace of For-SaleBy-Owner Power and Sail Boats PLUS Personal Water Craft. 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GADGETS Programs Give Twitter a Helping Hand CommonHeartSurgery Continued from page D1 someone’s Twitter feed. You can comment on a tweet by sending the person who wrote it an “at reply,” named because the reply starts with the “@” sign followed by the user name of the person to whom you are replying. You can also send direct messages to another Twitter user as long as he or she is following you. MayBeUnnecessary BY LAURA YAO All-Purpose Programs TweetDeck and Seesmic are two programs that do a good job of filtering others’ tweets and aiding the process of writing tweets. Both use Adobe Air, a tool that lets the program work in the background while continuously refreshing its content. This increases productivity because the programs can be set to display pop-up notifications whenever certain tweets appear. TweetDeck (a free download at TweetDeck.com) organizes tweets into columns that you designate, such as a column of all tweets that mention your name, your company’s name or the word “Wimbledon.” It eases the process of writing tweets by building in ways to shorten Web links, post photos or translate a tweet into one of 35 languages. TweetDeck also integrates with Facebook so that one TweetDeck column displays your Facebook friends’ latest status updates. The most recent version of TweetDeck enables synchronization of accounts with an email and password. This means that you can download TweetDeck on several computers, log into your account and see the same columns and settings on all platforms. The new version also includes fun extras like search within each column and the option to show how many followers a user has by displaying that number below his or her tweets. Seesmic (a free download at seesmic.com) is another all-purpose Twitter program. It works much like TweetDeck, but has a few differences. Seesmic also integrates with Facebook, but does so in a more robust way, showing when Facebook friends share photos or Web links and letting you comment on or “like” someone’s status; TweetDeck only shows Facebook status updates. Seesmic lets you drag photos into a small window for sharing via Twitter. But its overall look isn’t as visually appealing as TweetDeck’s and it lacks some of TweetDeck’s extra features. Twhirl (twhirl.org) also runs on Adobe Air, working in the background as you use your computer for other activities. Like the aforementioned programs, it also enables easier tweeting with built-in tools for photo uploading and URL shrinking. Unlike TweetDeck and Seesmic, which focus on Twitter and Facebook, Twhirl enables logging into four types of accounts: Twitter, FriendFeed, Laconi.ca and Identica. But Twhirl shows only one category at a time, like a screen of replies, rather than showing all of these categories at a glance like TweetDeck and Seesmic. tion—like opening Twitter.com. One such browser-based program is HootSuite (HootSuite.com), which uses an owl as its mascot. HootSuite’s unique features include its ability to set tweets to send at a later time or date, giving your followers the illusion that you are tweeting when you’re actually not, and a steroids for Twitter.com, adding photo uploading and link shortening right into the Web site. It also makes friends’ tweets richer by displaying details about any Web links that they share. No Sign-Up Necessary If you’re just curious about Twitter and want to see what people are talking about without signing up, try sites that are open to everyone. Twitterfall.com, for example, displays tweets about trending Twitter topics and custom search results in a waterfall-like visual with new tweets spilling over the top every half second. TwitterVision.com cleverly displays tweets around the world on a global map as they are posted, showing where the tweets are from, geographically. Twitter isn’t limited to Twitter.com, and I wouldn’t likely use it as much were it not for programs like the ones I’ve mentioned and others. So give them a try and find out what makes Twitter useful for you. —Edited by Walter S. Mossberg. Email mossberg. solution@wsj.com Twitter works best with those programs that are designed to make it more customized and useful with minimal work by the user. built-in statistic-tracker to measure how many people opened a link you posted using its ow.ly URL shortener. Like Twhirl, HootSuite shows only certain categories at a time rather than one overall glance at many categories of tweets. Twitter.com is getting better, though it’s still weak compared with these other programs. I’ve used add-ons in my Firefox browser to enhance Twitter, and one called Power Twitter is like The widespread practice of stitching shut a hole in the heart may do more harm than good, by increasing patients’ chance of having a stroke, research shows. The hole, a defect called patent foramen ovale, or PFO, often doesn’t cause noticeable symptoms in people who have it. But some surgeons close it when they detect it during the course of unrelated heart surgery. That practice results in a nearly 2½ times higher chance of postoperative stroke and doesn’t increase patients’ life span, according to a study published Tuesday in JAMA, the Journal of the American Medical Association. Some 25% of adults have the defect, which occurs when a small, flap-like opening between the upper chambers of the heart fails to close during normal fetal development. The condition has been linked to increased risk of stroke, possibly because a blood clot can travel through the opening and up to the brain, but the exact nature of the relationship is still being debated. It may also cause migraine headaches with aura, though evidence of the latter is scarce. As a result, there is no consensus on whether or not to close the flap. “Some people feel very strongly that if you see a PFO, even if there are no associated problems with it, it should be closed at the time of surgery,” said study author Richard Krasuski, a cardiologist at the Cleveland Clinic. “I’ve heard sur- geons say it’s just a simple stitch or two and the defect will be fixed. [These results make] you wonder, if you put a stitch or two in, what exactly are you doing physiologically?” The researchers studied the medical records of 13,092 patients who had not been diagnosed with patent foramen ovale prior to surgery, from 1995 through 2006. The defect was discovered during surgery in 2,277 of them, or 17%. Although that rate of diagnosis stayed steady during the 11year study period, the rate of repair increased to almost 40% of diagnosed cases in 2003 despite a lack of evidence suggesting repair is beneficial, the study found. The study showed that 1.2% of patients who didn’t have the defect repaired experienced a stroke, compared with 2.8% of patients who did. There was no difference in mortality. Tim Gardner, medical director of the Center for Heart and Vascular Health at Christiana Care Health System in Wilmington, Del., said he generally repairs the defect when he finds it and was surprised by the study results. “The assumption has been that the procedure was safe and effective,” he said. “This report has certainly raised some concern.” The increased rate of stroke could be a result of the closure procedure itself, which could make a blood clot more likely. Because of the open wound, the patient cannot take anticoagulant medication immediately. Ryan Snook FDA Approves New Plan B Labeling The Food and Drug Administration approved labeling that will allow 17-year-olds access to the Plan B emergencycontraceptive pill without a prescription. The agency also approved a one-dose version of the product called Plan B OneStep that will also be available over the counter to women age 17 and older. Both products are sold by Duramed Pharmaceuticals, a unit of Teva Pharmaceuticals Industries Ltd. Duramed loses market exclusivity on the traditional Plan B pill—which is taken in two steps—next month, allowing generic versions to be made available. Teva said the Plan B One-Step would be available in pharmacies next month. In March a federal court ordered the FDA to lower the age requirement for Plan B to be sold over the counter, to 17 from 18. Browser Power Some Twitter programs run in browsers, not as stand-alone programs. This saves you from downloading a program on multiple computers because you can simply log into your account on any computer using its Web browser. But these programs won’t use the helpful pop-up notifications of Adobe Air; instead, you will need to look in your browser to see new informa- Sponsor N E W I N PA P E R B AC K July 7–26 ® Discover two musical icons from Algeria and Morocco! US Debut Why Is Ordinary Travel Such an Extraordinary Ordeal? Idir/Najat Aatabou July 18 at 8:00 Avery Fisher Hall Tickets from $30 “One of the most influential musicians Algeria has ever produced.” —World Literature Today on Idir “Najat Aatabou has made a name with her powerhouse voice.” Photo: Abdullah Koc —San Francisco Chronicle ON SALE NOW Photo: Jean-Marc Beaudoin A Night in the Maghreb Feel the pure vitality of Idir and Najat Aatabou, whose styles embrace the Maghreb tradition, hip hop, folk, songs of protest, and more. These cultural ambassadors ignite the stage and celebrate their unique Berber artistry. Najat Aatabou Imagine a world without late planes, missed connections, lost luggage, and bumped passengers. In The Wall Street Journal Guide to Power Travel, “Middle Seat” columnist Scott McCartney gives you the tips and insider knowledge you need to make traveling enjoyable again. Idir For tickets and complete season information: LincolnCenterFestival.org or 212.721.6500 BLACK 3AVJ9017 © 2009 by Dow Jones & Company Inc. All Rights Reserved. P2JW196044-2-D00600-1--------NS P2JW19602B-0-D00700-1--------XA BLACK 07/15/2009 AZ,CL,CX,DL,DX,EE,FL,HO,MW,NC,NE,NY,RM,SA,SC,SL,SW,WB,WE BG,BM,CH,CK,CT,DA,DE,DM,DN,DR,FW,HL,HW,LD,LG,LK,NA,NM,OR,PA,RI,RO,SB,SH,TD,TU,UT,WO THE WALL STREET JOURNAL. Wednesday, July 15, 2009 D7 LEISURE MUSEUMS BY ROY J. HARRIS JR. Chantilly, Va. he nation’s most-visited exhibition space—the Smithsonian National Air & Space Museum on Washington’s Mall—plans a whole week of programs to mark next week’s 40th anniversary of man first setting foot on the moon. At the Smithsonian’s Steven F. UdvarHazy Center out by Dulles International Airport, meanwhile, not much is planned to remember the Apollo 11 mission. But more certainly could be. A small group on the daily “expert tour” here, for example, recently heard Smithsonian space-history curator Allan Needell recall one nearly forgotten aspect of the astronauts’ return to Earth: fears that micro-organisms on Neil Armstrong, Buzz Aldrin and Michael Collins might cause a global pandemic among their fellow earthlings. Standing by the original Mobile Quarantine Facility—a humble Airstream trailer in which the crew was isolated for 65 days after the July 24, 1969 Pacific splashdown—Mr. Needell described the caution surrounding President Richard Nixon’s trip to the carrier USS Hornet to greet America’s newest heroes. A photo showed the three men beaming at their commander-in-chief through a window in the rear of the trailer. “Wouldn’t that have been something?” one tour-group member said to his children. “We send men to the moon and they come back and infect the president with moon germs.” For all the history here, the ARTS frogmen attached to keep the module from sinking—in this case fitted onto an “egress trainer” version of the module. Signage explaining the exhibits here is weaker than on the Mall, but the newer location compensates with a crack crew of 230 tour guides. “The docents at Hazy have wonderful backgrounds,” says one of their number, William Jackman. “Sometimes I feel like a fish out of water because I’m not a pilot,” adds the 74-year-old who is, nonetheless, a former vice president of the Air Transport Association and lifelong warplane buff. Docents delight in telling stories about the planes: What seems at first glance to be an ordinary Boeing 707 is actually, for example, the “Dash-80 test bed” for what became the first jet widely accepted by the world’s airlines. Its legendary test pilot, Tex Johnson, performed a barrel roll in the four-engine Dash-80—a shocking demonstration, but one that helped prove that jets were safe for use in flying passengers. Some of the disparity between the two Smithsonians has little to do with their displays. The Udvar-Hazy is much harder to reach, with shuttle service between the Dulles location and the Mall having been discontinued when grant money evaporated a year after the new site’s 2003 opening. There is regular transportation from the airport, Smithsonian Institution Schizophrenic Smithsonian T Udvar-Hazy (pronounced OODvar HAH-zee) is the Rodney Dangerfield of museums. Though more than twice the 141,000square-foot size of the Smithsonian’s famous museum on the Mall—and drawing a million visitors annually to a collection that is nearly three times larger—the six-year-old center gets relatively little respect. Air & Space downtown, you see, draws more than seven million visitors a year—second in the world to the Louvre in Paris. Among the Mall site’s 103 “large artifacts,” as the Smithsonian calls planes, rockets and the like, are such aviation icons as the original 1903 Wright Brothers Flyer, Charles Lindbergh’s Spirit of St. Louis, Amelia Earhart’s Lockheed Vega and the first aircraft to break the sound barrier, the Bell X-1. All of which, incidentally, appear in “Night at the Museum: Battle of the Smithsonian,” filmed in part at the Mall venue—giving it a cameo that could boost attendance as much as 20% this year. The UdvarHazy Center isn’t shown at all, even though its first-rate displays include a Lockheed SR-71 Blackbird spyplane—the world’s fastest jet airplane—and the space shuttle Enterprise. (The Udvar-Hazy may have the last laugh, however. It—and its SR71s—did get a featured role in the “Transformers” sequel, which has turned out to be a box-office hit far surpassing “Night at the Museum.”) “We’re one museum, two locations, although sometimes it doesn’t seem that way,” says F. Robert van der Linden, chairman of the Smithsonian National Air & Space Museum, and between them “we have about all the great gems in aircraft and spacecraft.” From the day the Mall building opened in 1976, the Smithsonian envisioned a second venue—and hoped it would be out by Dulles, where aviation access would be easier. Numerous U.S. sites wanted Congress to crown them with “a second Smithsonian,” he says. So to discourage such competition, the new venue was officially dubbed an “open-storage” facility, a label that still stings some staffers at the Udvar-Hazy. But to visitors, this expansive facility looks like anything but open storage. From the “overlook” on the second level, just inside the main entrance, the immediate impression is of the massive, futuristic SR-71, with the evenlarger Enterprise—a trainer that never flew in space—appearing to be on the Blackbird’s tail. (The Enterprise actually dominates the enormous “space hangar” that extends from the main area.) A glance to the left summons other giants of aviation, including the Boeing B-29 Superfortress Enola Gay, which dropped the atomic bomb on Hiroshima. Beyond that, unique aircraft include the first jet bomber, the Arado 23; luckily for Allied fleets of much-slower propeller planes, the Arado 23 saw limited service for Nazi Germany at the end of World War II. And while the original Apollo 11 command module is downtown, the Udvar-Hazy houses more than the quarantine trailer. In Chantilly you can see the original flotation collar that The Udvar-Hazy museum. but drivers making the trip to the Udvar-Hazy get hit with a $15 parking fee—undercutting the lure of the free admission. (Federal appropriations take care of about half the combined $30 million annual budget for the Air & Space facilities.) The Udvar-Hazy name, which rolls haltingly off most tongues, isn’t much help, either. It recognizes a $65 million gift from the Hungarian-born aircraft-leasing entrepreneur who is CEO of the most profitable unit of AIG—a parent organization lacking in respect for its own reasons. Still, nearly all the growth in the Smithsonian Air & Space system is here. “Phase 2” at the Udvar-Hazy, now under construction, will house restoration work and offer homes to some of the collection’s 100 aircraft now out of public view. Additional planes on the Smithsonian’s wish list, including a World War II B-24 Liberator bomber and a Lockheed F-117A stealth fighterbomber, also likely would go here. Unlike most museums, which must pay dearly for exhibits, the Smithsonian gets most offered for free. One special acquisition now on display, a sleek European-built Air France Concorde supersonic transport, was a surprise gift from the French, made with the Udvar-Hazy Center in mind. “It was presented because they knew that this was the most popular museum in the world,” says Mr. van der Linden. The remark may be his subtle attempt to introduce a Smithsonian vs. Louvre debate to upstage any suggestions that a real battle of the Smithsonians is going on. The combined attendance for the Washington area’s two Air & Space facilities, after all, this year could surpass the 8.5 million packed in by the Paris museum. Mr. Harris, a former Wall Street Journal reporter who covered the aerospace industry, is the author of “Pulitzer’s Gold: Behind the Prize for Public Service Journalism” (University of Missouri Press). JAZZ One Half Note, Two Talents BY WILL FRIEDWALD ew buffs would describe the mid-1960s as a “golden age” of jazz. It wasn’t—not compared with the swing era or the early modern period. Yet this was an amazing time in the music’s history and the last point when nearly all the iconic giants were still with us (save those Bixes and Birds who died tragically young). If two new releases of previously unissued live performances by saxophonist Lucky Thompson and blues singer Jimmy Rushing are any indication, a disproportionate number of major musicians of the period appeared at New York’s old Half Note club at 289 Hudson St. The South Carolina-born, Detroit-raised tenor saxophonist and composer Eli “Lucky” Thompson (1923-2005) was a man constantly on the move. He shuttled back and forth between the U.S. and Europe, and his style and approach were as changeable as his mailing address. Where most major players of his generation perfected a distinctive sound early in their careers and stuck with it for decades, Thompson evolved from big-band swing and early R&B to bebop to a very Euro-cool sonority in the 1950s—and by the mid1960s to a sound that resembled no one else’s. In a sense, Thompson was one of jazz’s first postmodernists, and his unique music has had a strong influence on such contemporary players as the young saxists Mark Turner and Chris Byars, who frequently play Thompson’s compositions. “New York City, 1964-65,” the new two-CD set of Thompson’s music from Montreal’s Uptown Records, presents two live shows—a concert in an OffBroadway theater (underwritten, surprisingly, by Frank Sinatra’s right-hand man, Jilly Rizzo) and a less formal nightclub set with only a rhythm section at the Half Note. The first features Thomp- BASEBALL Ted Williams in Full BY ALLEN BARRA F I met Ted Williams just one time, at a card show in Atlantic City in 1990, but I was able to fulfill his lifelong dream. After demonstrating to my 10year-old cousin, Derek Schofield, how to stand in against a southpaw’s curve, Williams headed for the auditorium exit. “Derek,” I said, “there goes the greatest hitter who ever lived.” The Splendid Splinter stopped, turned and tipped his cap. It was, Williams had always said, the one thing he wanted to hear when he walked down the street. He would have loved the title of HBO’s superb “Ted Williams—There Goes the Greatest Hitter Who Ever Lived,” which premieres Wednesday (9:30 p.m. EST). He probably would have loved everything else about the documentary too, particularly the anecdotes and praise from one-time teammates Bobby Doerr and Johnny Pesky and Yankee foe Jerry Coleman, not to mention former President George H.W. Bush and Robert Redford (who wore No. 9 in his film, “The Natural,” in homage to his idol). Nor would Williams have shrunk from any revelations of his character flaws. “This is a warts-and-all biography,” says producer Ross Greenburg, “and some of the warts are pretty big.” “Everything about him was big,” says John Underwood, coauthor of Williams’s autobiography, “My Turn at Bat.” Mr. Underwood later compiled a collection of interviews, “It’s Only Me: The Ted Williams We Hardly Knew.” “His height [about 6 feet, 4 inches], his voice, his swing. A lot of people compared him to John Wayne. To tell you the truth, I wonder if John Wayne could stand up to the comparison.” Not in some ways. Unlike Wayne, who only served in the military on the silver screen, Williams did two stints in the Marine Corps, flying fighter planes during both World War II and the Korean War. His military service took nearly five full years out of Williams’s career, nearly all in his prime. This makes his amazing batting numbers even more astonishing. A conservative estimate is that Williams lost 700 games to the wars. A projection of his statistics if he had played those games would make him the alltime leader in runs scored and third in runs batted in behind Hank Aaron and Babe Ruth; he is already the all-time leader in onbase average and second only to Ruth in slugging average. The last player in baseball history to hit over .400 (in 1941), Williams did it in legendary fashion. “He was batting .3995, officially .400,” says Leigh Montville, author of the definitive “Ted Williams: The Biography of an American Hero.” As Mr. Montville explains, “His manager, Joe Cronin, told him he could sit out a doubleheader on the last day of the season and still be a .400 hitter. But that wasn’t Ted’s style. He played both games, got six hits and finished at .406. Ted always played as if he had something to prove.” This compulsion both on and off the field might have been due to what Mr. Underwood calls “being the original latch-key kid.” Williams grew up in San Diego neglected by both his father, a photographer, and his mother, a near-fanatical Salvation Army worker. The story goes that Williams, a cocky 20-year-old rookie with the Boston Red Sox in 1939, was told by a teammate “wait till you see [Hall of Famer Jimmie] Foxx hit.” “Wait,” Williams allegedly shot back, “till Foxx sees me hit.” Williams’s life was riddled with conflict and controversy. He was married three times and feuded unceasingly with Boston sportswriters, some of whose names survive today only because of their print wars with Williams. “He fueled himself with negativity,” Mr. Montville says. “It was a negativity often directed at Boston fans, for whom he refused to tip his cap while rounding the bases after a home run because some had booed him in his second season.” In 1956, at age 37, he was fined the thenbreathtaking sum of $5,000 for spitting at booing fans. (It was his third spitting incident in three weeks.) He could have made up for it on Sept. 28,1960 when he slammed a dramatic home run in his final at-bat, but he remained true to form, refusing to acknowledge their standing ovation. As he left the field in the final innings —again to a standing ovation—Williams muttered to shortstop Pumpsie Green, “What a crock.” And yet, as Mr. Montville puts it, “everyone cheers in retrospect.” After a series of debilitating strokes, Williams was brought out to the pitcher’s mound in a golf cart at the 1999 All-Star Game in Fenway Park where, finally, he tipped his cap to the cheering crowd. That moment would have been a perfect place for “There Goes the Greatest Hitter Who BLACK Ever Lived” to end. Unfortunately, a bizarre aftermath to William’s life—in which his son, John Henry, had his father’s remains cryogenically frozen—looms larger in the public eye. Wisely, HBO has chosen to downplay what one newspaper called “The Frozen Splinter.” “That’s not the way I want to remember him,” says Mr. Underwood. “I want to think of his ninth-inning home run that won the 1941 All-Star Game or his lifelong commitment to the Jimmy Fund for kids with cancer. Or delivering his acceptance speech in Cooperstown in 1966, when he made an impassioned plea for the Hall of Fame to start inducting great players from the Negro League Greats.” In 1971, a special committee selected Satchel Paige to be the first player from the Negro Leagues inducted into the hall; today, 35 Negro Leaguers are members. (You can find his speech on the Negro League Ballplayers Association website, http:// w w w. n l b p a . c o m / t e d _ w i l l iams.html.) On the other hand, “Who’s to say that Williams wouldn’t have gotten a kick out of the cryogenic thing?” says Mr. Underwood with a laugh. “Ted was never happy unless he had something to be angry about. Mr. Barra writes about sports for the Journal; his latest book is “Yogi Berra: Eternal Yankee” (W.W. Norton & Co.). son’s compositions and arrangements for an octet; in a review back in 1964, the Times’s John S. Wilson thought that the charts were too heavy and underrehearsed—unfortunately, Thompson got precious few opportunities to work in the expanded format. Although far from perfect, and possibly not up to the leader’s own exacting standards, the performances here shine because of the excellent soloists (including pianist Hank Jones and trombonist Benny Powell in addition to Thompson) and the high quality of the leader’s tunes. On both sets, octet and quartet, Thompson features one of his most distinctive compositions, “The World Awakes.” According to annotator and Thompson discographer Noal Cohen, this 1956 original is simply an F-minor blues, but Thompson does so much with it that it seems infinitely richer. Playing mostly soprano in the latter part of his career (he was a modernist pioneer on the instrument) he lays out the basic blues melody, then plays an incredibly catchy second strain. There’s a Latin rhythm underneath and a pop element too; it’s the kind of tune that Quincy Jones, Thompson’s fellow American in Paris a few years earlier, could have handily orchestrated into a funky chart hit. The writing and playing, overall, are so outstanding on these two shows that it seems especially tragic that Thompson left music for the last 30 years of his life and all but vanished from the map. i i i Jimmy Rushing (1901-72) was a blues-centric vocalist who spent the most celebrated part of his career as Count Basie’s “boy singer.” He toured and recorded as a soloist in the 1950s and ’60s, but while most of Rushing’s studio albums have been reissued, no one has yet unearthed and released a whole Potter’s Acting Wizards Continued from page D1 Pepper ... And Salt THE WALL STREET JOURNAL “I won’t lie to you. There’s some very risky paperwork involved with this procedure.” “Harry Potter and the HalfBlood Prince” may suffer by comparison to visual memories of the first film, which wasn’t all that wonderful but teemed with wondrous images—a first look at the Great Hall, a first trip on the Hogwarts Express, a first game of Quidditch. That was all about the thrill of discovery, of course, about first steps on a long and winding road. Now that the series is near the end of that road—two more films will be adapted from the final book—the original funhouse tone has given way to complexity and maturity. Daniel Radcliffe, a sweet-faced preteen when the first movie was released, has become such an engaging young man that Harry’s attraction to Ron’s sister, Ginny (Bonnie Wright), seems less a matter of heedless infatuation—Slughorn’s most dangerous home brew is an infatuation potion—than the early onset of love. At its worst, the movie feels less like a labor of love than a labor of labor —industrialized enchantment with an elegant veneer that’s compounded of, among other elements, Stuart Craig’s production design, Jany Temime’s costumes, Bruno Delbonnel’s brooding cinematography and a seductive array of special effects supervised by Tim Burke. But the pace quickens and the intensity grows toward the end. (In the film’s most impressive sequence, strongly reminiscent of “The Lord of the Rings,” Gollumesque monstrosities rise up from the sea to pull Harry under and down.) And the enterprise continues to be blessed by veteran English actors who lend authority to their every scene: Mr. Gambon, of course, whose Dumbledore is a mere century and a half old; Mr. Broadbent, to be sure, and the supremely acerbic Alan Rickman, whose Snape figures intricately in the proceedings. They’re the authentic wizards of the piece. live show by the famous “Mr. Five by Five.” “The Scene: Live in New York” (High Note) was taken from several sets, at least one of which was from the Half Note, where Rushing worked regularly with the legendary two-tenor team of Zoot Sims and Al Cohn (and the young pianist Dave Frishberg). The bulk of this first-rate set is given to hard-swinging treatments of jazz standards that Rushing undoubtedly had been singing since they were brand new in the ’20s: “Deed I Do,” “I Can’t Believe That You’re in Love With Me” and “I Want a Little Girl.” Rushing heats up these old chestnuts with his unique combination of a big, heavy voice and a light-footed and fast rhythmic sense of time. No one could do what Rushing does on Don Redman and Andy Razaf’s “Gee Baby Ain’t I Good to You?,” one of the original soul ballads. This is truly crooning the blues; he’s equal parts Leroy Carr and Bing Crosby, singing the number tenderly but with an undercurrent of aggression. Although Rushing always insisted that he was more than a blues shouter, the set is highlighted by several extended blues features, all elaborations on the best-known numbers from his Basie tenure. To Rushing, a blues is a blues is a blues: One track starts out with the opening of “Goin’ to Chicago” and then spontaneously detours through “Jimmy’s Blues” (“I got a mind to ramble . . . ”). The last track on the disc begins with “Good Morning Blues” and then morphs into “Harvard Blues,” “Jimmy’s Blues” (again), and—a sign that these were recorded during separate sessions—“Goin’ to Chicago.” Both songs end with Rushing’s signature tag (from “Baby, Don’t Tell on Me”): “Little Jimmy Rushing has been here and gone.” The one blues that follows a wholly familiar trajectory is his cover of Joe Williams’s hit “Everyday I Have the Blues.” On most of these, Rushing exhorts his co-stars to “come on and blow the blues,” but as excellent as Sims, Cohn and Mr. Frishberg are, they can’t do what Jimmy Rushing can do with a blues. No one could. Mr. Friedwald writes about jazz for the Journal. corbis/ Bettman Summer Scoops Live Culture brought to life. Join The Journal for dynamic discussions with cultural newsmakers at Lincoln Center. Next Event: July 15, 7:30 p.m. ‘Do You Know What It Means to Miss New Orleans?’ Big Easy musicians discuss the fight to preserve art and culture in the wake of Hurricane Katrina. A live performance by the Terence Blanchard Quartet concludes the evening. For more information and tickets, call 212-721-6500 or visit WSJ.com/LincolnCenter. P2JW19602B-0-D00700-1--------XA P2JW19602C-2-D00800-1--------XA CMYK Composite 07/15/2009 AZ,CL,CX,DL,DX,EE,FL,HO,MW,NC,NE,NY,RM,SA,SC,SL,SW,WB,WE BG,BM,CH,CK,CT,DA,DE,DM,DN,DR,FW,HL,HW,LD,LG,LK,NA,NM,OR,PA,RI,RO,SB,SH,TD,TU,UT,WO D8 Wednesday, July 15, 2009 ** THE WALL STREET JOURNAL. SPORTS HEARD ON THE FIELD... Too Many Sick Days For D-Backs’ Starters? The Arizona Diamondbacks aren’t the worst team in the major leagues, but they do have a dubious distinction: Their original starting position players have played in just 64.2% of their games this season, the lowest in baseball. Thank Tony Clark and Conor Jackson (pictured) in particular for that—they both played badly and had injuries. Even the New York Mets, who have been plagued by injuries, are better at 66.5%. The Philadelphia Phillies are the best at 90.2%, and they’ve got a division lead to show for it. —David Biderman Two glue guys of note: Ryan Howard, above, of the Philadelphia Phillies and starting pitcher Tim Wakefield, below, of the Boston Red Sox Baseball’s Winning Glue Guys Teen Sees the World —the Hard Way It took Zac Sunderland more than 80 days to sail around the world, but he still managed the feat, becoming the youngest ever to do so. Mr. Sunderland, 17, started his trip in June 2008, leaving from Southern California. He arrived back into the Golden State on Monday. When he pulls into his home dock Thursday, the 28,000-mile trip will have lasted 398 days, about the time it takes Mercury to orbit the sun five times. But Mr. Sunderland’s record isn’t secure. Michael Perham, 3 ½ months younger, is expected to finish his own world-wide sail in about a month. —David Biderman The Gritty, Gutty Players Who Hold Teams Together—and Help Them Succeed BY DARREN EVERSON There are aces, closers, sluggers and Gold Glovers. And then there are the really important people in a ballclub: the glue guys. “Glue” guys, in baseball parlance, are the players whose oftoverlooked performance quietly holds winning teams together—and without which, presumably, the team would fall apart. Statisticians don’t buy that they exist, but psychologists do. And players and managers swear by them. “He’s the scrapper,” says Charlie Manuel, manager of the defending World Series-champion Philadelphia Phillies. “The guy who plays every day. Who gets big hits. Hustles. He’s the guy who, in his own way, whether it’s quiet or spoken or whatever, he leads.” Jason Bartlett is a glue guy. Before he joined the Rays last season, Tampa Bay had baseball’s worst record in 2007, due greatly to having the majors’ worst defense. Then Mr. Bartlett came over from the Twins and took over the shortstop position. The Rays’ defense became the best in baseball last season and they reached the World Series. Tim Wakefield, the Red Sox’s knuckleball pitcher, is a glue guy. As Boston’s pitching staff has evolved over the past 15 years—with youngsters coming, veterans going and pricey additions like Daisuke Matsuzaka not always delivering—the dependable constant has been Mr. Wakefield, a first-time All-Star this year at 42 who has made at least 15 starts each season. As baseball enters the second half of the season Thursday, the top contenders all have a glue guy or two whom they attribute part of their success to. With the Tigers, it’s All-Star third basedeed a spill-over effect with glue guys that helps their teams win, one which goes beyond quantifiable contributions. John F. Murray, a sports psychologist in Palm Beach, Fla., says that teams are much like fraternities or high schools in that players spend a massive amount of time in close proximity to each other. Because of this, “they’re constantly influencing one another,” he says. “One of the keys to confidence is social support and modeling. If you have some outstanding role models who deal with pressure effectively, that glue is going to spill out of the bottle and help everyone.” A huge hole in the reasoning of glue believers is that it’s impossible to know in retrospect how teams would have fared without their glue players. For example, the Rays won 58% of their games (11 of 19) earlier this season when Mr. Bartlett, their slick-fielding shortstop, was out with an injured ankle. They’ve won 54% overall. But the firstplace Phillies’ abundance of glue, according to both them and their opponents, appears to be what’s put that franchise over the top—just a few years after it had a reputation for underachieving. “It’s not about just one guy,” says All-Star second baseman Chase Utley. The Phillies’ most-talented players also happen to be their glue guys, including Mr. Utley, who has led the majors the past two years in times hit by pitch, and Mr. Howard, who has played in 362 of Philadelphia’s last 363 games. Unlike many left-handed hitters over the years, he even refused to take a day off against Randy Johnson once last season. “He’s definitely a leader, just by keeping his mouth shut,” Mr. Manuel says. “I call him the Big Piece. As in the big piece of the puzzle.” Remembering Gehrig With a Splash of Milk Wheaties, the cereal that calls itself the breakfast of champions, is celebrating its 85th birthday. Lou Gehrig was the first athlete to grace a Wheaties box, appearing on the back of the carton in 1934. Since then more than 150 individual athletes have been pictured on the box, and 50 teams have been featured. Michael Jordan was the first basketball player to get the honor in 1988, and he’s also the most frequent guest, appearing 18 times. Tiger Woods is on his heels at 16. —David Biderman man Brandon Inge, who not only has a surprising 21 home runs but is also hitting .348 in close, late-game situations. With the Yankees, as usual, it’s shortstop Derek Jeter, who owns the highest on-base percentage among the American League’s starting shortstops despite being its oldest (35). And the Phillies insist slugger Ryan Howard is a glue guy—despite not fitting the tag’s small, scrappy stereotype—because he quietly never takes a day off. “They’re the reliable guys,” says Braves president John Schuerholz, “who, in the toughest of circumstances, in the biggest of moments, deliver the goods.” The legend of the glue guy is an extension of the age-old question in sports over whether natural “winners” exist—players who are greater than their statistics indicate, who win in part because of their force of will or ability to perform under pressure. Whether it’s with superstars who make clutch plays or unknowns who have a knack for being in the right place at the right time, fans and observers ascribe special talents to these players—often exaggerating their actual contributions. Michael Jordan famously said in a 1997 Nike commercial that he’d missed 26 potential gamewinning shots. “He’s probably been successful about 50 times,” then-Bulls coach Phil Jackson said at the time. But when Mr. Jordan retired from the Bulls in 1999—seven months after making his iconic shot to beat the Jazz for the championship—the total number of game-winning shots he’d hit was 25. Skeptical about whether winners exist, statistician Scott Berry of Berry Consultants studied the matter in 2005. Taking the statistics of more than 14,000 players who had played in Major League Baseball, he created a formula to find the ultimate winner: the player whose teams exceeded their win-loss expectations the most when he happened to be on them. The winners’ winner? Dennis Cook, a journeyman lefty reliever in the 1990s. Several players whom fans widely regard as win- ners and glue guys did fare well: Mr. Jeter, the Yankees shortstop, was in the 97th percentile, and David Wells, a noted big-game pitcher in the 1990s and 2000s, was in the 99th. But the presence of the relatively unknown Mr. Cook at the top, Mr. Berry says, proves his point. “Announcers refer to players who just have the will to win,” he says. “The fact that he comes out on top pokes fun at that notion.” But Mr. Cook does believe in glue. Although he admits he was lucky to bounce from one winner to the next—including the 1996 division-winning Rangers, the 1997 world-champion Marlins and the 2000 National Leaguewinning Mets—Mr. Cook says his teams won in part because they invested in overlooked roles like middle relievers. “A long man who eats up 100 innings a year, he saves the rest of your pitching staff,” he says. “Those guys don’t get recognized, but they’re every bit as important. Baseball people see that, but number-crunchers don’t.” Psychologists say there is in- ( See an interactive graphic of the Tour de France with daily video highlights at WSJ.com/Sports. Heard on the Field (t-b): Getty Images, Agence France-Presse/Getty Images, General Mills; Main: Getty Images (2) Midseason Projections By AccuScore For the Diehard Sports Fan, Today Is Misery Only a handful of times a year do sports fans face that ugly day when they’re forced to converse with their families. Today is one of them. In fact, with no baseball, basketball, football or hockey games on the schedule (nor any significant events in other major sports, like golf and tennis), Wednesday may be the worst day in the whole year. So what are the most exciting days to be a fan and which are the dullest? To answer this, the Count developed an “excitement score” for all 365 days (Sept. 1, 2008-Aug. 31, 2009). Different games were assigned different values—one point for a regular-season Sunday afternoon NFL game, for instance, and 0.3 for a mid-season NHL contest. Playoff and nationally televised games (like the NBA on Christmas Day) were worth more. For college, scores depended on conference profile and whether teams were ranked when they played. We also assigned point scores for major golf and tennis events, Nascar, the NFL and Getty Images (2) National League Odds Of Making the Playoffs And Odds of Winning Division* MAKE WIN PLAYOFFS DIVISION The Worst Sports Days Using a point system that awarded each noteworthy sporting event a score from 35 (Super Bowl) to .01 (low-major college basketball in Dec.), we were able to identify the worst days in the sports calendar from Sept. 2008-Aug. 2009: RANK DATE WHAT HAPPENED/RATING Central T-1 T-1 T-1 4 T-5 T-5 7 7/15/09 10/8/08 7/13/09 10/7/08 12/24/08 6/15/09 10/21/08 MLB All-Star break, nothing else (rating: 0) MLB playoff off-day, nothing else (0) MLB All-Star break, nothing else (0) MLB playoff off-day; Florida Atlantic vs. Troy, college football (0.1) Sheraton Hawai’i Bowl, nothing else (0.5) Indians vs. Brewers, Angels vs. Giants, MLB (0.5) 5 NHL games, Ohio vs. Temple, college football (1.6) $5 Source: Milwaukee Brewers St. Louis Cardinals Milwaukee Brewers Chicago Cubs Cincinnati Reds Houston Astros Pittsburgh Pirates Philadelphia Phillies Atlanta Braves Florida Marlins New York Mets Washington Nationals Los Angeles Dodgers San Francisco Giants Colorado Rockies Arizona Dbacks San Diego Padres 83.3% 17.6% 11.8% 3.8% 2.1% 0.1% 63.7% 24.8% 16.3% 1.5% 0.0% 95.3% 64.0% 15.6% 0.2% 0.0% 79.3% 11.2% 6.2% 2.0% 1.4% 0.0% 61.5% 22.5% 14.7% 1.3% 0.0% 79.7% 18.2% 2.1% 0.0% 0.0% East West Todd Helton of the Colorado Rockies NBA drafts and the Triple Crown. Three dates received a zero—this Monday and Wednesday and last Oct. 8, an MLB playoff off-night. Oct. 7, another baseball off-night, managed 0.1 points, thanks to an obscure college football game. June 15 (just two MLB games) and last Christmas Eve (only a Notre Dame-Hawaii bowl game) were next with 0.5 each. On the flip side, Feb. 1 was the most exciting, thanks mostly to the Super Bowl but also the Australian Open. The NFL playoffs (and loads of college basketball) made Jan. 3 and Jan. 10 the next best, followed by last Oct. 5 (MLB playoffs, a race at Talladega and a full NFL Sunday). —Steve Kornacki * Projections are based on 10,000 computer simulations of the remainder of the season. EVERY TEAM, EVERY SCORE, EVERY STAT at WSJ.com/Sports P2JW19602C-2-D00800-1--------XA Composite MAGENTA BLACK CYAN YELLOW