The Wall Street Journal: Saturday, August 24, 2013

CEO Exit Sets Microsoft on New Path (page A1): In announcing his sudden retirement Friday after more than three decades at Microsoft Corp., Chief Executive Steve Ballmer will leave his successor with the enormous task of reviving one of the world’s largest technology companies that finds itself beset by competitors on all fronts. Mr. Ballmer, 57 years old, along with his college buddy and Microsoft founder Bill Gates, built the company into a profit machine whose Windows operating system will still power nearly all the 305 million personal computers expected to be sold globally this year, according to research firm Gartner Inc. But it will run just 15% of all computing devices, if PCs, smartphones, tablet computers and other gadgets connected to the Internet are lumped together, given the rise of rivals such as Apple Inc. and Google Inc. Investors cheered the news of Mr. Ballmer’s departure, sending Microsoft shares up 7% to $34.75 on the Nasdaq Stock Market. Microsoft remains a behemoth financially. It generated nearly $78 billion in revenue in the year ended June 30—an average pace of $150,000 worth of sales every minute. The company’s fat profit, amounting to $21.86 billion last year, remains the envy of most industries. Under Mr. Ballmer’s watch, the company succeeded in limiting many threats, including the open software standard called Linux that Mr. Ballmer once described as a “cancer.” He also helped Microsoft recover from the shock of the U.S. government’s effort to break the company apart. But Microsoft generates nearly all of its profit from a trio of products—Windows, Microsoft Office and related software to run companies’ back-end computing gear—that are deeply dependent on the sales of Windows-powered PCs. Other products, such as the Xbox videogame machine and the Bing search engine, are either unprofitable or only marginally so.

The Real Reason College Costs So Much (page A9): Another school year beckons, which means it’s time for President Obama to go on another college retreat. “He loves college tours,” says Ohio University’s Richard Vedder, who directs the Center for College Affordability and Productivity. “Colleges are an escape from reality. Believe me, I’ve lived in one for half a century. It’s like living in Disneyland. They’re these little isolated enclaves of nonreality.” Mr. Vedder, age 72, has taught college economics since 1965 and published papers on the likes of Scandinavian migration, racial disparities in unemployment and tax reform. Over the last decade he’s made himself America’s foremost expert on the economics of higher education, which he distilled in his 2004 book “Going Broke by Degree: Why College Costs Too Much.” His analysis isn’t the same as President Obama’s. College costs have continued to explode despite 50 years of ostensibly benevolent government interventions, according to Mr. Vedder, and the president’s new plan could exacerbate the trend. By Mr. Vedder’s lights, the cost conundrum started with the Higher Education Act of 1965, a Great Society program that created federal scholarships and low-interest loans aimed at making college more accessible. In 1964, federal student aid was a mere $231 million. By 1981, the feds were spending $7 billion on loans alone, an amount that doubled during the 1980s and nearly tripled in each of the following two decades, and is about $105 billion today. Taxpayers now stand behind nearly $1 trillion in student loans. Meanwhile, grants have increased to $49 billion from $6.4 billion in 1981. By expanding eligibility and boosting the maximum Pell Grant by $500 to $5,350, the 2009 stimulus bill accelerated higher ed’s evolution into a middle-class entitlement. Fewer than 2% of Pell Grant recipients came from families making between $60,000 and $80,000 a year in 2007. Now roughly 18% do. This growth in subsidies, Mr. Vedder argues, has fueled rising prices: “It gives every incentive and every opportunity for colleges to raise their fees.”

Enter the Post-Ballmer World (page B1): Microsoft Corp.’s Steve Ballmer tried new operating systems, new gadgets and new management structures. But the times caught up with a man who helped build one of the greatest companies of the 20th century. Mr. Ballmer’s surprise retirement announcement Friday follows years of criticism about the waning growth and stagnant stock price of Microsoft, a force in the personal-computer era whose power was once so great that U.S. regulators sought to break up the company. PC sales—the lifeblood of Microsoft’s business—are on a steady decline. Business and casual users alike are switching to devices and services offered by Apple Inc. and Google Inc. Investors cheered the news, pushing Microsoft shares up 7%, or $2.36, to $34.75, in 4 p.m. trading Friday on the Nasdaq Stock Market. Microsoft’s offerings to customers “are downright confusing,” said Daniel Gasparro, an IT consultant who recently managed Microsoft software purchases for clients including Washington, D.C. law firm Patton Boggs LLP. “When you’re spread too thin, you’re not good at anything.” Mr. Ballmer, who took the reins from Chairman Bill Gates in January 2000, has responded to the changes by recently overhauling the company’s Windows software to be used with touch commands and introducing a Microsoft-designed tablet computer called Surface. More broadly, Mr. Ballmer has attempted in the past year to remake the company’s overarching strategy to become a provider of devices and services rather than emphasizing software sales. A management structure announced in July that abandons autonomous product groups is expected to speed the transition. But the shifts haven’t yet helped reignite the company’s growth, though its longtime businesses continue to produce healthy profits. Its stock hasn’t shown significant gains since the crash following the Internet bubble, which had taken its share price to a high of $58.03.

Inside Comcast’s $30 Billion TV Bet (page B1): Cameras popped as celebrities stepped out of tinted-window vehicles at a Manhattan ballroom where E! cable network was hosting an event for advertisers. Kim Kardashian preened on the red carpet while Ryan Seacrest chatted with fans. But Steve Burke, the CEO of E’s parent, NBCUniversal, was decidedly not in a partying mood. “I want to kill myself,” he said before ducking into an elevator. “They tried to get me to do the red carpet, but I said ‘no’,” he laughed. When the doors opened, a woman asked him to pose for a picture with the Olympian swimmer Ryan Lochte. “You’re a good sport to put up with all of these suits,” he told Mr. Lochte, leaning in for the photo. In the two years since Comcast Corp. bought NBCUniversal, Mr. Burke has shown a zeal for shaking things up with little sentimentality, weeding out some of the company’s most well-known personalities in the process. A straight-talking Harvard Business School graduate, Mr. Burke belongs to a new generation of media chieftains—including Time Warner Inc.’s Jeff Bewkes and Viacom Inc.’s Philippe Dauman—who are more enamored with the bottom line than with Hollywood glamour. He refrains from hanging out in the news rooms and indulging stars—hallmarks of his predecessor Jeff Zucker. Warren Buffett, who made him a director on his board at Berkshire Hathaway, describes him as “a personable guy, but not flamboyant.” Mr. Burke is the man in charge of pulling off a colossal wager. With Comcast’s two-stage, $30 billion deal completed in March, the cable giant is betting that its distribution business, combined with a content company, can create outsize benefits. That logic, of course, runs counter to the trend of big U.S. media companies breaking themselves into smaller pieces. Time Warner Inc. spun off its cable operations in 2009 after failed bids to happily marry its content and distribution arms; Viacom Inc. carved out its CBS broadcast television and radio business into a separate company in 2005. Mr. Burke argues that the Comcast model is different, and that the company he took over from General Electric Co. was “very broken.” “You don’t get a chance to buy a company like NBCUniversal unless it’s not doing well,” he said in his first major interview, sitting in an office notable only for its multiple television screens and many framed family photos. “We started from the premise there is a lot of opportunity here.”

Intern’s Death Scrutinized (page B2): Bank of America Merrill Lynch has appointed a committee of senior officials to investigate the circumstances surrounding the death of a summer intern in London, the bank said. The bank’s statement said the “formal senior working group” would “review all aspects of this tragedy” and “listen to employees at all levels” as more information becomes available. The group at the investment-banking division of Bank of America Corp. will be looking at, among other things, whether its interns and other junior employees are encouraged to work overly long hours or are pushed into unhealthily competitive environments as they vie for a limited number of jobs, said a person familiar with the situation. Moritz Erhardt, who was 21 years old, died on Aug. 15, just before completing his internship with the bank’s investment-banking group. While his cause of death is unknown, it has become a cause célèbre in the U.K., generating widespread media coverage. Like other Bank of America interns, Mr. Erhardt was rotating through the division, working on a variety of projects. Long working hours were the norm, as is often the case at investment banks in London, according to a person familiar with the matter. Interns at investment banks often work between 60 to 80 hours a week, said Scott Rostan, founder of Training the Street Inc., which provides financial-training courses for new Wall Street employees.

Friday’s Markets: Microsoft Helps Pull Stocks Up (page B5): U.S. stocks ended the week on a bright note, as a drop in Treasury yields and a rally in Microsoft helped divert investors’ attention away from recent concerns over Federal Reserve policy. It was an eventful week for stocks, if not an active one in terms of volume. Stocks slumped early in the week, with blue chips experiencing the longest losing streak in over a year and Treasury yields jumping to two-year highs, amid increasing worries that an improving economy would prompt the Fed to start slowing the flow of liquidity by tapering bond purchases as early as September. The market started rebounding on Thursday, as investors shook off technical issues that forced trading halts in all Nasdaq Stock Market-listed for three hours that afternoon. The Dow Jones Industrial Average rose 46.77 points, or 0.3%, to 15010.51 on Friday. The Dow still posted a third-straight weekly loss, the longest such stretch since November 2012. The S&P 500-stock index gained 6.54 points, or 0.4%, at 1663.50, and the Nasdaq Composite Index advanced 19.09 points, or 0.5%, to 3657.79. The S&P 500 and Nasdaq posted weekly gains.

Investors Embark on a European Tour (page B7): Things are starting to come together for the continent that almost fell apart. The economy in the 17-member euro zone is growing again—slowly—after contracting for more than a year. Signs of revival are showing up in data on business activity and consumer confidence. As in the U.S., central bankers’ extraordinary commitment to injecting cheap money into their economies has so far helped avert disaster. The euro zone hasn’t splintered, as some feared, and no country has dropped the common currency. As worries ease, markets are up from Ireland to Italy. Benchmark national indexes in the U.K., France and Germany have climbed at least 10% this year. The pan-European Stoxx Europe 600—akin to the S&P 500 in the U.S.—is up 19% in the 13 months since Mario Draghi said the European Central Bank, which he heads, was “willing to do whatever it takes to preserve the euro.” Investors planning their own grand investing tour of Europe’s stocks should know there still are discounts available. But as many a shopper in the markets of London, Paris or Rome will agree, it can pay to be choosy. For instance, many fund managers see more near-term upside in consumer goods and banks than in European utilities or energy firms. There are several options for investors. Low-cost index funds, such as the Vanguard FTSE Europe exchange-traded fund—which charges 0.12% in fees, or $12 for every $10,000 invested—offer broad exposure that includes many of the region’s global heavyweights. There also are actively managed, Europe-focused funds run by stock pickers who try to beat benchmark indexes, and global funds that feature a hefty dose of European exposure. In addition, many European companies issue American depositary receipts that trade like shares on U.S. exchanges. Some firms only trade on home-country exchanges, which U.S. investors can access through brokers or international accounts, though this typically involves taking on currency risk and navigating complicated tax rules.

Lofty Profit Margins Hint at Pain to Come for U.S. Shares (page B7): Profit margins at near-record levels—watch out below! If you are wondering what might prove to be the stock market’s Achilles’ heel, look no further than its dependency on near-record corporate profit margins. Any sizable decline would almost certainly translate into big losses for the stock market. Given the current high levels, such a retreat seems likely. Investors therefore may want to begin building up a healthy cash position to take advantage of lower prices in coming years. U.S. corporations, on average, currently report a profit of 9.3 cents for every dollar of sales, according to U.S. Commerce Department data—a profit margin of 9.3%. It has gotten only slightly higher than this over the past six decades: In the fourth quarter of 2011, it was 10%. The average since 1952 is 5.9%. Profit margins in the past have exhibited a strong historical tendency to “revert to the mean,” according to James Montier, a visiting fellow at the U.K.’s University of Durham and a member of the asset-allocation team at Boston-based GMO, an investment firm with $108 billion under management. That is, above-average levels in the past have tended to quickly fall, just as below-average levels in the past have soon risen. Consider all occasions since the early 1950s in which the profit margin rose to at least 6.9% or fell to at least 4.9%—one percentage point away from its historical mean, in other words. On average, it was back at its mean in just 4.8 years.

Microsoft: Hitting Ballmer Out of the Park (page B14): Merely by announcing his retirement, Steve Ballmer can more than pay for it. Shares in Microsoft leapt more than 7% Friday when the software giant announced its chief executive will retire within 12 months. Owning 333 million shares of Microsoft, Mr. Ballmer’s personal net worth increased by about $800 million on the news. Microsoft needs a change in leadership. This is a company that, after establishing its dominance in the personal-computing market 30 years ago, whiffed badly on two of the next three computing megatrends: the Internet and mobile. Former CEO Bill Gates deserves blame for missing the Internet. Blowing it in mobile is Mr. Ballmer’s error, having taken the reins in 2000. And that is arguably more dangerous to Microsoft’s long-term financial outlook, because one of the company’s largest businesses is writing software that powers computers, most successfully in PCs and servers.

Tell Harvard What You Think (page C3): This spring, with little fanfare, the folks behind the Common Application—the main application form for almost 500 of the nation’s top colleges and universities—announced a big change: the personal statement, the form’s core essay, has been extended from 500 to 650 words long. I thought: That’ll be $13,000. Several years ago, on a high floor in a midtown Manhattan office, a father offered me $10,000 to write his son’s personal statement. Apparently he had misunderstood what was meant by “independent college applications adviser.” The publishing industry may be in a tailspin, but in some places, writers can still earn $20 a word. Thanks to the Common Application’s changes (and not including inflation), that’s $13,000 a kid. Though I had other “day jobs,” for 15 years I worked discreetly as a college-applications adviser in cities from Los Angeles to London. I never wrote a student’s essay, but I was practicing a dark art: such tutoring privileges the elite whose parents can afford it and profits from a miserable process. The grim statistics of the college admissions race (last year Harvard reported a 5.79% acceptance rate), fueled by an obsession with trophy schools, have warped what might be a powerful threshold for adolescents. At the very moment when teenagers are invited to offer what they’ve learned and who they’ve become, their voices are hijacked by well-meaning adults who think kids can’t possibly be allowed to risk answering these questions on their own. In my years handling applications to elite schools, from Harvard to Haverford, Davidson to Dickinson and everything in between, I was often surprised by where students did gain acceptance. But in every case it was a student who wrote a fabulously independent essay. Not necessarily hyper-sophisticated. But true. My students always asked me, What should I write about? I’d answer: You are a student of the world. What is it that moves you? What incites you, enrages you? The first-person pronoun is a mighty tool. Use it.

Weekend Confidential: An Interview with Edward Frenkel (page C11): The words love and math aren’t usually uttered in the same breath. But mathematician Edward Frenkel is on a mission to change that, uniting the terms in both his recent film, “The Rites of Love and Math,” and upcoming book, “Love and Math.” Both are attempts to bridge the gap between his passion for math and the popular appetite for it. “You say the word ‘math’ and people shut down,” says Mr. Frenkel, sitting outdoors in New York’s Bryant Park. In his book, to be published in October, the tenured professor at the University of California at Berkeley argues that the boring way that math is traditionally taught in schools has led to a widespread ignorance that may have even been responsible for the recession. “It’s like teaching an art class where they only tell you how to paint a fence but they never show you Picasso,” he says of elementary school math classes. “People say, ‘I’m bad at math,’ but what they’re really saying is ‘I was bad at painting the fence.’ ” Love is a different story, though. “People might think they hate math but everyone loves love,” he says. “I want to put more love into math.” And Mr. Frenkel, a youthful, puckish 45-year-old with a slight Russian accent and a flair for fitted shirts and tailored jeans, hopes to be math’s next leading man. With YouTube videos of his lectures at UC Berkeley viewed by hundreds of thousands of people—”and that’s even the most boring stuff,” he adds—Mr. Frenkel does indeed talk about math adoringly. “It is this great connector,” he says. “Nobody can take it away from us.” What he means is that while the philosopher Pythagoras lived over 2,000 years ago, his theorem still exists today; it holds true across cultures, time and space. “How many things have the same endurance?” he asks. Mathematical formulas “have a quality of inevitability.”

Suites Get Even Sweeter (page D1): Over the past few years, the world’s fanciest hotels have been introducing a new generation of incredibly posh suites. These signatures spaces have eye-widening views and couture furnishings, and they are immense—in many instances, bigger than the average American home, which is about 2,200 square feet, according to the U.S. Census. In tourist magnets like New York, Paris, London and Dubai, the suites can be priced at tens of thousands of dollars a night. “These are for people who don’t pay their own bills,” said Steven Carvell, associate dean for academic affairs at the Cornell University School of Hotel Administration. “They have people who pay their bills for them.” Some of these super-suites are the crowning glories of new, haute hotels hoping to make a splash; others are being carved out of existing space by properties seeking to raise their profiles in the luxury market. And plenty are remakes of older suites that had faded and grown dated over the years.

Juicing, A to Z (page D7): “A juice bar on every corner” could be the unofficial slogan of the Obama era. In New York, the trend hit critical mass in the last year or so, but long before that, there was Melvin Major, Jr. “When I got into juicing 23, 24 years ago, it was kale, collards, chard,” he said of the prevailing circa-1990 approach. “I couldn’t do all-green—it was too hard-core. I wanted a great taste.” Today, at Melvin’s Juice Box in SoHo, Mr. Major serves the Jamaican Green, a lively kale, apple, lemon, ginger and celery blend with terrific body and a mineral finish. To describe a juice in this way—as one might a wine—is beginning to make sense now that more chefs are getting into the game. At long last, juice is having its epicurean moment. The new wave runs to refined combinations like beet, blood orange, fennel and shiso leaf—aka the Zest for Life, at Creative Juice in New York. (The juice’s creator, chef Michael Romano, said, “I’d serve it with a meal, something like roasted venison.”) Or elegantly spare sips like a honeydew, cilantro and lime mix at Moon Juice in Venice, Calif. Owner Amanda Chantal Bacon, a veteran of top restaurant kitchens, said, “I didn’t want to distract from the honeydew. The lime just polishes it a bit.” Up the beach in Santa Monica, Matthew Kenney of the acclaimed raw-vegan restaurant M.A.K.E. spikes his citrusy Spice-C with jalapeño. “You’re getting superpowered nutrition; you should feel it,” he said. “It’s a dynamic mouth experience.” Mixologists are expanding the repertoire of ingredients still further. In Portland, Ore., Lydia Reissmueller of TenderBAR is in the process of launching her own juice company. Her Succotash Smash of squash, tomato and sweet pepper gets its exotic herbal note from Mexican epazote. Among serious home juicers, cold-pressing—a slow process said to extract a more nutrient-rich juice—is the prevailing orthodoxy. But for those just starting out, Matt Shook of JuiceLand in Austin, Texas, recommends the easy-to-use Breville Juice Fountain (models start at $100), a centrifugal machine that pulverizes produce and spins to separate juice and pulp. The 26 fruits, vegetables, herbs and spices featured here are another great place to start. Use them in the recipes below, or just go with whatever tastes good to you. Delicious is the new hard-core.

2013_08_24_cmyk_NA_04To Tokyo with Gadget Love (page D11): Rest and relaxation in Waikiki. A boys’ night out in Vegas. Gadget shopping in Tokyo. Most guys might choose the first two escapes, but I’ve been going to Tokyo every year for the past decade to seek out the newest gizmos—products that haven’t yet made it to the west or are simply too niche to ever be imported. In my travels, I’ve found tiny wooden speakers hand-carved out of rare Japanese cedar, silicone keyboards that roll up like a burrito and a Gameboy cartridge filled with 500 games that were never released stateside. Some of the gadgets are brilliant solutions to urgent nerd problems; others will leave you dumbfounded. Don’t let the sillier products deter you, though. For every bewildering gadget you’ll find, a dozen more will be worth taking home. And, luckily for tech-obsessed tourists, getting around is easy: Most of the key stops are in the Akihabara neighborhood, on the Japan Railway’s Yamanote line. Here are five of my favorite spots, as well as a few of the curios that I found on my latest trip. While you can buy some of these products online, there’s no substitute for making an actual pilgrimage.

Don’t Let the Tech out of the Bag (page D12): Two bags keep your iPad, iPhone and other essential gear at the ready, here are two backbacks: the Osprey Pixel Port and Cocoon SLIM.

 

The Wall Street Journal: Friday, August 23, 2013

Nasdaq in Fresh Market Failure (page A1): A technical glitch knocked out trading in all Nasdaq Stock Market securities for three hours Thursday afternoon, an unprecedented meltdown for a U.S. exchange that paralyzed a broad swath of markets and highlighted the fragility of the financial world’s electronic backbone. Nasdaq officials scrambled to figure out what happened and resume trading. They shared few of their findings with trading firms or the public during regular trading hours, sowing confusion across Wall Street and leaving many investors frustrated. The decision to reopen trading with about 35 minutes to go before the close came after exchange officials were sure that banks and brokers had enough time to prepare for securities to trade again, people familiar with the discussions said. Some hiccups persisted after Nasdaq reopened trading, though Nasdaq told traders that the markets closed normally Thursday.

Obama Proposes Rating Colleges to Curb Tuition Costs (page A2): Calling growing student debt levels a “crisis,” President Barack Obama laid out a plan Thursday aimed at reining in rising tuition costs by creating a system to rate colleges and eventually tie federal student aid to the institutions’ performance. The president called for rating colleges before the 2015 school year on measures such as affordability and graduation rates—”metrics like how much debt does the average student leave with, how easy is it to pay off, how many students graduate on time, how well do those graduates do in the workforce,” Mr. Obama told a crowd at the University at Buffalo, the first stop on a two-day bus tour. “The answers will help parents and students figure out how much value a college truly offers,” he said. Once a rating system is in place, Mr. Obama will ask Congress to allocate federal financial aid based on the scores by 2018. Students at top-performing colleges could receive larger federal grants and more affordable student loans. “It is time to stop subsidizing schools that are not producing good results,” he said.

Purchases or Promises: What Works for Fed? (page A2):  Federal Reserve officials gathering in Jackson Hole, Wyo., this week with academics, private bank economists and others will ponder a question that will influence Fed decisions in the coming months: Which of its novel monetary tools are doing the most for the economy? Is it the huge purchases of long-term Treasury bonds and mortgages, now known as “quantitative easing?” Or is it the promise to keep short-term interest rates low for a long time? The Fed is considering scaling back the first, while sticking firmly to the second. The first—the $85 billion a month in bonds it has been buying—uses the power of the Fed’s printing press. The other relies on the power of the Fed’s words. Both are aimed at holding down long-term rates, the ones that home buyers and corporations pay, and, thus, encouraging borrowing, spending and investing. Views vary widely about which works better, a disagreement that is complicating the Fed’s decision-making.

Inside a Secret Airline Club (page B1): For years, upmarket carriers including British Airways, Deutsche Lufthansa AG and Qatar Airways have used exclusive programs, lounges and perks to reward their best customers. In the U.S., United and AMR Corp.’s American Airlines have recently tried to catch up, offering unpublicized programs that afford sometimes extravagant service to those fliers incessantly at airports, like George Clooney’s character in the movie “Up in the Air,” who pursues a dream of reaching 10 million frequent-flier miles. The airlines employ teams to track these fliers’ journeys and solve disruptions before they happen, sometimes bumping coach passengers to fit rerouted elite travelers. The carriers invite these customers to expensive restaurants and professional sporting events when they aren’t traveling. At the airport, they send their mail, press their suits and sew on buttons. United said that when an elite flier once stained his shirt, an employee sent her husband to the mall to buy a replacement.

Teen Retailers Left Hanging (page B3): Abercrombie & Fitch Co.’s stock tumbled Thursday after the teen retailer said profit fell 33% on a sharp drop in sales and indicated it would continue to struggle through the current quarter. Abercrombie’s troubles stem from weaker traffic and a drop in U.S. sales, which also have been weighing on rival teen retailers American Eagle Outfitters Inc. and Aéropostale Inc. But unlike those companies, Abercrombie gave no warning to Wall Street of the expected difficulties, making Thursday’s results a surprise. Mike Jeffries, Abercrombie’s chief executive, said teens are still struggling with an economic recovery that has failed to fully include them.

Gap Avoids Retail Slump, Posts Profit Rise (page B3): Gap Inc.’s fiscal-second-quarter profit rose 25% on higher sales at the apparel retailer’s namesake and Old Navy stores, prompting the company to raise its full-year earnings outlook. The retailer has reported higher same-store sales for six consecutive quarters, bolstered by an improving product line that has tapped some hot fashion trends, including a line of colored jeans last year that were well received. Gap is facing rising competition from fast-fashion players such as Forever21 and Inditex Group Inc.’s Zara, but has managed to outperform other mall-based retailers, including Macy’s Inc. and American Eagle Outfitters Inc.

Chinese Consumers Take a Step Back, Pinching Firms (page B3): Companies as diverse as retailers and gadget makers are reporting weakened results from China, as the economic slowdown there blunts Beijing’s drive to make the nation’s consumers a bigger driver of growth. Last month, Canon Inc. cut the Japanese company’s year-end profit forecast to ¥380 billion ($3.89 billion), off 16% from forecasts three months earlier, citing in part the slowdown in China. Nike Inc. reported falling China sales in its latest results, while British supermarket chain Tesco PLC is in talks with a local company, China Resources Enterprise Ltd., about folding its 131 underperforming Chinese stores into a joint venture. Apple Inc. said last month that its revenue from the greater China region fell 14% from a year earlier to $4.6 billion for the quarter ended June 29. The figure represents a 43% decline from the previous quarter. “A lot of the China story that companies would tell their shareholders was always about 15% nominal growth in gross domestic product, 20% increases in sales,” said Derek Scissors, an expert on China’s economy at the Heritage Foundation, a Washington, D.C., think tank. “That overarching growth story has weakened.” Many are blaming China’s economic slowdown for at least part of their performance. Growth slowed to 7.5% year-to-year in the second quarter, compared with 7.7% in the first.

Wal-Mart to Grow in Sub-Saharan Africa (page B4): Wal-Mart Stores Inc.’s South African arm plans to open 90 new stores across sub-Saharan Africa over the next three years as it targets growth markets such as Nigeria and Angola. Massmart Holdings Ltd. said it will open a trial stand-alone food store in West Africa by the end of the year, in hopes of expanding to East Africa. It said it is also adding more brands from Wal-Mart stores in other parts of the world to its Africa operations, including a clothing line from the U.K. in November. Wal-Mart last year closed a deal valued at roughly $2.4 billion to buy 51% of the South African retailer, a move many industry watchers viewed as a springboard for Wal-Mart to grow across the continent. Over the coming three to five years, Massmart will open more stores in the rest of Africa, Grant Pattison, its chief executive, said Thursday. Wal-Mart and Massmart aren’t the only companies setting their sights on Africa. Companies from the U.S., China and India have poured billions of dollars into the continent, investing both in its emerging consumers market and in infrastructure deals, amid forecasts for strong growth in the region. By 2018, five of the world’s fastest-growing economies will be in sub-Saharan Africa, according to the International Monetary Fund.

Thursday’s Markets: Stocks Record a Gain (page C4): U.S. stocks rose, with blue chips snapping the longest losing streak in over a year, as investors shook off trading halts in all securities listed on the Nasdaq Stock Market due to technical issues that affected the major market indexes for most of the afternoon. Nasdaq parent Nasdaq OMX Group announced the halts at 12:15 p.m. EDT. Notices sent to traders said the technical issues were related to data feeds providing market data for Nasdaq-listed securities. One stock, Atlantic American, began trading at 3 p.m. EDT, while full trading resumed at 3:25 p.m. Nasdaq OMX shares fell 3.5%. During the halt, the Nasdaq Composite Index remained frozen at 3631.17, up 31.38, or 0.9%. The Dow Jones Industrial Average traded within a range of about 14927 to 14968, while the S&P 500-stock index held roughly within 1652 to 1656. The halts also affected the calculation of the Dow, which include Nasdaq stocks Microsoft, Cisco Systems, and Intel, and the S&P 500. The Nasdaq rose 38.92 points, or 1.1%, to 3638.71. The index added to gains after the halts were lifted. The Dow rose 66.19 points, or 0.4%, to 14963.74. It was the first gain for the blue chip index in seven sessions. The S&P 500 advanced 14.16 points, or 0.9%, to 1656.96.

Fed Seeks More Control Over Rates (page C4): A plan that has been under consideration by the Federal Reserve to borrow money from investors at fixed interest rates shows how the central bank is preparing for an eventual exit from its ultra-easy monetary policies. In the July minutes of the Fed meeting released Wednesday, officials discussed a proposal to introduce a so-called reverse repurchase program, which would let the Fed set an interest rate on securities it would sell at auctions as part of its open-market operations. Banks and other investors would then decide how much to buy. This is a departure from current procedures, in which the Fed announces the amount of government bonds it intends to buy or sell in these operations and lets the market set the rate. While this appears to be a small tweak to the Fed’s practices, the implications could be wide-ranging if the plan is adopted. Contrary to popular belief, the Fed doesn’t set outright the interest rate that banks charge each other for overnight funding. Instead, it seeks to influence the effective federal-funds rate—a widely watched benchmark—by these open-market operations, which are conducted at the New York Fed. The Fed has been planning tools to eventually exit from its easy money policies for several years. This essentially adds a new tool to its kit. The Fed wants to be sure it can control short-term interest rates and lift them from near zero when the time comes. Talk of the plan comes as financial markets are anticipating the Fed will begin reducing the extraordinary support it has provided in the form of bond purchases, known as quantitative easing.

A Breakout Band Waits to Take Off (page D4): “This is amazing! Gives me chills!” Actor and musician Kevin Bacon tweeted that message last October to hundreds of thousands of followers, along with a link to a music video by an unknown Boston band. Sung in a smoky alto by Rachael Price, Lake Street Dive’s jazzy acoustic cover of the Jackson 5’s “I Want You Back” has had more than 900,000 views since Mr. Bacon’s tweet. Produced on a shoe string—it was filmed by a friend on the street in front of his Boston home when the local bowling alley where they had planned to shoot wasn’t available—the video created an instant following for a band that has been championed by influential radio stations like New York City’s listener-supported WFUV, but ignored by mainstream radio. “When I first heard them,” says WFUV program director Rita Houston, “I immediately became an evangelist. I wanted to tell everybody. I wanted my mom to know about them.”

A Hipster Goes for Baroque (page D4): Chris Thile has never been shy about genre-hopping. In his early 20s, singing and playing with the band Nickel Creek, the mandolin virtuoso covered songs by slacker-rock heroes Pavement, picking along with a fiddler and a guitarist. And a year ago, he was onstage with his band at Bonnaroo, the Tennessee summer music festival, working the crowd with acoustic string-band covers of rock songs by The Cars, Radiohead and others. Now, he’s trying to get the same fans just as excited about classical music. For his latest record, “Bach: Sonatas and Partitas Vol. 1,” Mr. Thile, 32, has taken an approach of unadorned simplicity: It is just him, alone in a room with his mandolin, playing three suites—16 tracks in all—of works written for solo violin by Johann Sebastian Bach, the master composer of late-Baroque church music. Mr. Thile argues that the same crowds that headbang to Radiohead anthems should be just as able to get psyched for Bach or Mahler. “The great musics of the world are great for very similar structural reasons: good melody, good harmony, and a balance of feminine and masculine energy. What makes one type of music classical and one bluegrass and one folk—these things aren’t what’s important,” he said at a recent interview in midtown Manhattan. “My thesis statement would be—Bach didn’t write Baroque music. He wrote great music.” At times, Mr. Thile’s new record has the same technical “wow factor” as his work with his band, Punch Brothers. On the “Presto” from Bach’s Sonata No. 1 in G minor, for example, Mr. Thile’s fingers trace Bach’s elegant melody lines and near-nonstop arpeggios at an off-to-the-races tempo, up and down the neck of his instrument—not unlike a bluegrass fiddle tune. At other points, such as the “Allemanda” from the Partita No. 1 in B minor, Mr. Thile plays in a purely Baroque vernacular, shedding any trace of bluegrass and making his mandolin sound stately and delicate, not unlike the lutes played by Bach’s Renaissance forebears.

Running Out of Chances to Lose to Roger (page D7): For years, Roger Federer has been the most popular attraction at the U.S. Open. He has played 58 matches in Arthur Ashe Stadium, more than any other male player, and once won this tournament five years in a row. As he ages, though, his fellow pros are getting a bit nervous. “I am scared he will leave tennis and I don’t have the chance to play against him,” said Lorenzo Giustino, a 21-year-old Italian, at a small tournament in San Marino earlier this month. Giustino, ranked No. 302, didn’t qualify for the U.S. Open. “He’s a big guy,” said Illya Marchenko, a 25-year-old from the Ukraine, after his first qualifying match at the U.S. Open on Tuesday. “He was No. 1 for the longest period of time, and for me he’s the No. 1 still, even if he’s not now.” In a sport that has no shortage of legends, Federer is perhaps the most coveted opponent in history. It isn’t difficult to understand why. He has won 17 Grand Slam singles titles, more than any man who has ever played the game. His strokes have an elegance and ease that make even fellow pros marvel. He also plays at a brisk pace and doesn’t throw temper tantrums or intimidate opponents with scowls or trash talk. At worst, he might embarrass them. “That one,” Thomas Schoorel said as he recalled Federer hitting the ball between his legs for a winner when they played in Dubai in 2011, “when it landed in, I had to laugh. But I also felt pretty s—.”

Your House Is Ready for Its Closeup (page M1): Mini-movies and Hollywood-style trailers complete with scripts, musical scores and even action sequences are cropping up as a new way to pitch pricey homes and condominium buildings. According to the National Association of Realtors, 14% of sellers used video to help sell their homes in 2012, up from 9% five years ago. Mr. Hahn, director and CEO of Film House, said he shot his first real-estate mini-movie in September of last year. He has since shot nearly 10, doing about one a week since June. Real-estate agents and developers who commission the films say that perfectly lighted rooms and aspirational story lines help grab buyers, and are the next extension of a home-buying experience that has increasingly gone online. Budgets for such films are often a percentage of the home’s listing price, and can range from a couple thousand dollars to $1 million or more for large-scale productions marketing condo buildings. The cost is paid either by the listing agents or sellers, and sometimes split between them.

Cold Cash: The Effect of AC on Home Prices (page M5): Even in the winter, the air conditioner is working hard—boosting a home’s value. An analysis of property listings in 22 major metro areas found that homes with central air conditioning are offered for 13% more, on average, than homes without central air, according to real-estate brokerage Redfin. Cities in the Midwest see the widest price gap: Homes with central air are listed for 105% more than homes without central air. Of course, homes with central air may have other amenities that help bump up the list price. But AC seems to be a driving force in the decision making, according to the National Association of Realtors, a trade group. In a survey of recent home buyers released in November, central air was the No. 1 feature sought when house shopping, according to the survey of 2,005 respondents who bought a home between 2010 and 2012. Respondents who purchased a home without central AC would be willing to pay $2,520 more for a home with this feature.

 

The Wall Street Journal: Thursday, August 22, 2013

To Athlete on Sore Knees, Age Is but a Number (page A1): To prepare for this summer’s Senior Olympics, Jim Kales used the following training regimen: He went dancing three to five nights a week. He played tennis six days a week. He bowled a little. He tooled around southwest Florida in a champagne-colored Lincoln MKZ. He didn’t practice at all for the shot put, javelin, discus, long jump or his specialty, the triple jump, in which he holds the record for his age group. Mr. Kales isn’t your typical athlete. For starters, he will be 99 years old in September. “People ask me, ‘What is the secret of your longevity?’ ” says Mr. Kales, who took up tennis in his 80s and has competed in the Senior Olympics since he was 90. “I like to play tennis, I like to dance, I bowl and I don’t abuse myself. I eat a lot of seafood. I have a glass of wine with my dinner, red mostly, white with fish.” He did all right this year in the Olympics, bringing home two gold medals, three silvers and a bronze. He is still annoyed that he didn’t win a medal in discus. A retired restaurant owner from Michigan, Mr. Kales didn’t take up sports or dancing seriously until his wife died, when he was 85. His tennis buddies told him about the Senior Olympics (known officially as the National Senior Games). He qualified at state-level matches and discovered that the Games also included field sports, which he hadn’t tried since he was a child in Greece, where he was born. He eventually qualified in those sports, too.

Fed Stays Course on Bond Buying (page A1): Federal Reserve officials reaffirmed their plan to try winding down an easy-money program that has charged up global markets but left investors on tenterhooks about when or how aggressively they would move. Minutes of the Fed’s July 30-31 policy meeting, released Wednesday, suggested officials were on track to start winding down the $85 billion-a-month bond-buying program, possibly as early as September, if the economy strengthens as they expect. They were, however, a bit more uncertain than in June about whether economic growth would pick up as they forecast and about the gains they were seeing in the job market. The Fed’s deliberations—and its sometimes confusing efforts to publicly signal how officials are thinking—have roiled global markets in the past few months, pushing up U.S. interest rates and knocking down emerging markets, which initially benefited from the Fed’s easy-money policies. Wednesday’s market movements mirrored the broader turmoil and investor confusion. U.S. stocks initially dropped after the minutes were released at 2 p.m. New York time, then moved higher and tumbled again as investors tried to make sense of the report.

Obama Is Taking on College Costs Again (page A2): Barack Obama is testing an interesting proposition: Can the U.S. president cajole or shame a huge American industry into changing its ways? Mr. Obama embarks Thursday on a bus tour of schools in upstate New York and Pennsylvania to highlight what he calls “a personal mission to make higher education more affordable.” Higher ed is one of his preoccupations. He talked about it in the State of the Union address. He talked about it at Knox College when he set out his latest bolster-the-middle-class agenda. He doesn’t think taxpayers can keep pumping more money into student aid to chase (and possibly fuel) tuition tabs rising faster than almost anything besides health care. After all, the number of undergraduates getting federal grants, loans or tax breaks already has doubled over the past decade; the taxpayers’ tab has tripled, adjusted for inflation. Something has to give. This quest is a political winner with nearly everyone except the president’s fans among liberal college professors. In a Pew Research Center poll last year, 57% of Americans said colleges fail to provide students with good value for the money. But the rising cost of college is more than a politically appealing talking point. It’s a threat to widely shared prosperity. Rising tuition threatens to discourage all but the best-off from going to and finishing college, restraining future economic growth and widening the gap between winners and losers in the U.S. economy. The College Board says that over the past 20 years, the inflation-adjusted average published cost of tuition and fees at a four-year state university has more than doubled. Factor in scholarships and tax breaks, and it’s still up more than 50%. Over the same period, the income of the typical family in the middle of the middle class has risen only 7%. That’s one reason student borrowing is up so much. Tuition is climbing because there have been so few constraints. There’s strong demand for seats in U.S. college classrooms, both from the U.S. and abroad. College is still a smart investment that pays off in higher wages. And it’s a whole lot harder (though not impossible) to improve productivity in a college than in a car factory.

Antipsychotic Drugs, Kids’ Diabetes Linked (page A3): The use of antipsychotic drugs appears to increase the risk of diabetes in children, not just adults, according to new research published Wednesday. And kids seem to be at an even higher risk, the study found. A number of studies have concluded that adults who take these medications, including risperidone, also known as Risperdal, and olanzapine, also called Zyprexa, have an elevated risk of developing Type 2 diabetes. Less is known about the link between these drugs and diabetes in children. Studies of other psychiatric medicines, such as antidepressants, have found that kids can have different reactions to the same drugs than adults. The use of antipsychotics in children has grown tremendously. A 2009 study by the U.S. Food and Drug Administration found such use rose 65% to 4.8 million prescriptions in 2009 from 2.9 million in 2002.

An Exit Strategy for Bad Teachers (page A15): Age and experience have much to recommend them over youth and enthusiasm but the advantages don’t always show up in teaching. That’s the finding of a new study, “Early Retirement Incentives and Student Achievement,” published by the National Bureau of Economic Research. According to Cornell University economists Maria Fitzpatrick and Michael Lovenheim, when young, inexperienced teachers replaced older, more experienced faculty in Illinois, the newcomers did as well or better at getting students to learn. The study doesn’t discount the value of seasoned, motivated teachers. It does indicate that teachers going through the motions to qualify for a pension can be a drag on student achievement. The study is more evidence that students do better when teachers are graded on performance, not seniority.

The Battle for the Organic Shopper (page B1): Whole Foods Market Inc. wants to shed its “whole paycheck” reputation. The upscale grocer, known for its pricey organic products, is increasingly emulating the discount tactics used by traditional supermarkets. It is also moving beyond the realm of grass-fed beef with more lower-priced items like frozen meatballs and vacuum-packed fish fillets. The new strategy comes as Whole Foods fends off a growing swarm of rivals competing for customers who have become more careful with their pocketbooks. “The recession was a wake-up call for us,” said co-Chief Executive Walter Robb in an interview. One of the chain’s latest initiatives: nationwide “flash” sales on specific items promoted on Twitter and Facebook that run for just a few hours, like a five-hour buy-one-get-one-free deal on ice cream last month. The chain also is increasing one-day sales on items like salmon, blueberries and organic chicken to 17 this fiscal year, from 14 last year. Whole Foods long avoided such supermarket tactics, thriving instead on a pricey mix of products that appealed to clientele in upscale neighborhoods of large cities where most of its approximately 350 stores are located. High prices on everything from meat to vegetables led critics to quip that shopping at Whole Foods would eat up a middle class earner’s whole paycheck.

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Tesla Amps Its Crash Score (page B3): Tesla Motors Inc. has created its own vehicle-safety ranking based on federal crash-test data to amplify a claim that its Model S electric car is the safest car ever tested by U.S. regulators. Tesla, in a statement widely reported this week, said its car “achieved a new combined record of 5.4-stars” in federal crash tests. Tesla noted that the National Highway Traffic Safety Administration, which conducts the government’s auto-crash tests, doesn’t use a rating above five stars.

Inventing for the Future (page B6): Even with an exceptional idea, budding entrepreneurs can struggle to move past the brainstorming stages. They face challenges in execution like building a cohesive team, coming up with a business plan and even understanding how to present their product or service. This week mentors on “WSJ Startup of the Year,” a documentary on wsj.com, offered some words of inspiration for all entrepreneurs. Here’s what some science and technology innovators had to say. Edited excerpts:

Nordstrom Tests an App to Identify Customers page (B7): Nordstrom Inc. is testing mobile technology that sends salespeople the digital profiles of customers as they enter a brick-and-mortar store, said James Nordstrom, president of the company’s online division. “The concept is that a customer would opt-in and download an application because ‘I want the sales person to know I’m here, and I want the salesperson to know my preferences because it will lead to a better experience,’ ” Mr. Nordstrom said. Another recent Nordstrom in-store technology, which anonymously tracked the way people moved through stores, ended last May after customers complained the monitoring was too intrusive.

Mom and Pop Flee Emerging Markets (page C1): Retail investors have led the summer stampede out of emerging-market stocks, bonds and currencies, pulling almost twice as much money as institutional investors such as insurance companies and pension funds. The action highlights the outsize impact mom-and-pop investors can have on global markets at a time of low interest rates, disappointing investment returns and volatile market reactions to perceived shifts in central-bank policy.

SEC Is Set to Propose New Rule on CEO Pay (page C1): The Securities and Exchange Commission will soon thrust CEO compensation back into the spotlight when it proposes a long-delayed rule requiring companies to disclose the pay gap between chief executives and rank-and-file employees. The requirement, a mandate of the 2010 Dodd-Frank financial law, could put added pressure on corporate boards to slow pay increases for chief executives at companies with significant or growing gaps, proponents say. The rule, expected to be approved by the SEC as early as next month, has come under fire from corporations. But it is expected to be less onerous than what lawmakers originally ordered the SEC to adopt, according to people familiar with the proposal. Rather than surveying the entire workforce, the SEC is expected to allow companies to consider a fraction of their employees when calculating median pay. It isn’t clear what percentage of the workforce would be included in the sample. Companies would have to disclose the ratio between CEO compensation and the median pay of the sampled employee group. Median pay is the point on the income scale at which half the employees earn more and half earn less.

Wednesday’s Markets: Stocks End Lower After Jolt by Fed (page C4): U.S. stocks ended a volatile session with broad losses after the minutes to the Federal Reserve’s latest policy meeting provided little clarity on when the central bank might start paring back on stimulus measures. The Dow Jones Industrial Average dropped 105.44 points, or 0.7%, to 14897.55. Soon after the release of the minutes, the Dow fell as much as 122 points, then bounced sharply to be up as much as 17 points, before selling off again. The decline marked the sixth-straight loss for the blue-chip index, the longest losing streak since July 2012. The S&P 500 index lost 9.55 points, or 0.6%, to 1642.80, while the Nasdaq Composite Index fell 13.80, or 0.4%, to 3599.79.

Google May Make a Play on Pay TV (page C10): Google may have found a path to the end zone for Internet TV. Top executives at the search giant met with representatives from the National Football League, according to a report Tuesday by All Things D. Among the topics of discussion: the Sunday Ticket package, which includes all NFL games not in the viewer’s local market and is offered exclusively by DirecTV. There is no indication that Google is anywhere near a deal to offer the package. But the news raises the possibility of a powerful partnership that could be the magic bullet for Google in its goal of luring traditional TV viewers, and associated advertising dollars, to the Internet. Live sporting events are among the primary reasons U.S. consumers pay for TV. Bringing them online as a separate subscription would allow many more people to stop paying for traditional TV. It would also let the NFL broaden its viewer base by selling to those people who don’t pay for TV. For CBS, NBC, Fox and ESPN, all of which have agreed to pay huge sums for the right to carry NFL games, Google’s reach would likely be seen as a serious threat. That said, most of the networks’ deals with the NFL extend to 2022, buying the league some time. And considering the value of football to ratings and affiliate fees, it is difficult to imagine networks turning their backs on the NFL.

Facebook and Google’s Free-for-All (page C10): Google wants to launch balloons; Facebook wants to lighten the data load. Just as conspicuous as these efforts to bring Internet access to the sea of humanity still lacking it, is the fact these two companies aren’t working together on it. On Wednesday, Facebook chief Mark Zuckerberg announced a “rough plan” to connect billions more people in the developing world to the Internet. But while he laid out some nifty ideas for technologies that might make this easier, there’s plenty missing from the plan. That includes some partners likely needed to make it possible, such as wireless carriers. Google isn’t a partner either. Meanwhile, Google has Project Loon, centered on solar-powered balloons that can beam Internet access to places lacking it.

Summer Debate: Avoid the Heat or Embrace It (page D3): Why do some people thrive when the temperature soars, while others can’t think straight without air-conditioning? Variables such as where a person grew up, their amount of body fat and even their hydration level can influence how they feel in hot or cold temperatures, says Michael Sawka, a professor at the School of Applied Physiology at Georgia Institute of Technology in Atlanta. People who avoid going outside when it’s hot—preferring to move straight from an arctic office to air-conditioned transportation to a well-chilled restaurant, store or home—can quickly lose their ability to acclimate, Dr. Sawka says. Without regularly experiencing heat, the body becomes less efficient at sweating and has more difficulty increasing blood flow to the skin—both functions that help the body cool itself. It takes one to two hours a day in hot temperatures to acclimate properly. Then, says Dr. Sawka, “you don’t feel the stress of the heat,” he says. “You feel more comfortable.” When it comes to cold, most people have greater difficulty adapting. Some can eventually learn to ignore uncomfortably low temperatures, but “it’s a lot more dependent on body fat and the size of your body,” Dr. Sawka says.

The Wall Street Journal: Wednesday, August 21, 2013

Rising Markets Batter Short Sellers (page A1): Short sellers are facing their worst losses in at least a decade, a Wall Street Journal analysis has found, as many of the rising stocks they bet against have only continued to soar. That has stung several high-profile hedge-fund managers, including William Ackman and David Einhorn, who have placed prominent short bets. In the Russell 3000 index, the 100 most heavily shorted stocks are sharply outperforming the average returns of stocks in the index, according to a Journal analysis of data provided by S&P Capital IQ. The shorted stocks are up by an average of 33.8% through Aug. 16, versus 18.3% for all stocks in the index. The gap between the performance of the most-shorted shares—as measured by percent of total shares outstanding at the beginning of the years—and the market as a whole is wider than it has been in at least a decade.

Summer Jobs Elude Many Teenagers (page A2): The job-market recovery is leaving teenagers behind—especially those from low-income and minority backgrounds. Less than a third of 16- to 19-year-olds had jobs this summer, essentially unchanged from a year ago, according to Labor Department data released Tuesday. Before the recession, more than 40% of teens had summer jobs. One in four teens who tried to find work failed to get a job, far above the 7.4% unemployment rate for the broader population.

After Tragedy, Schools Tap Technology (page A3): Ever since the Sandy Hook Elementary School shooting in Connecticut last December, school officials across the country have debated how best to improve safety, including whether to arm teachers. The debate intensified Tuesday when a gunman walked into a DeKalb County, Ga., elementary school, barricaded himself in the front office and fired multiple shots at police before being taken into custody. No one was injured. Many schools are opening their doors this semester with an option less controversial than arming teachers: panic buttons. At least 400 schools in a dozen states, from California to Maine, are adding the devices, according to administrators. “It’s basically a common-sense approach. Businesses have these buttons all over the place,” said Mario Civera, a county council member in Delaware County, Pa., which is installing panic buttons in its 237 schools. Panic buttons are installed under desks, in school front offices or on pendants around administrators’ necks. When pressed, they silently alert local security companies or 911 dispatchers of a high-level emergency, signaling that authorities should be sent immediately—no questions asked. Some panic-button systems also send text messages to administrators and announce an alert over the school’s intercom system after 911 is called. The buttons are meant for the worst type of emergencies, such as a shooting or a hostage situation, school officials say.

Bookseller Rejects Split (page B1): Barnes & Noble Inc. has abandoned any plans to split up the company, the bookseller declared Tuesday. But it also reported a wider loss for the latest quarter, a sign that the retailer has to rethink the way it competes in a rapidly changing market. Barnes & Noble said Tuesday that Leonard Riggio, its chairman and largest shareholder, had decided against going forward with a personal offer to buy the retailer’s 674 consumer bookstores. More broadly, the company said that after considering the idea for 18 months it had decided not to divide its retail stores from its Nook e-reader and e-books operation. Instead, it will focus on managing its current businesses.

Facebook’s Zuckerberg Sets Forth Web Access Program (page B2): Facebook Inc. Chief Executive Mark Zuckerberg said the company is teaming up with six others to help bring Internet access to more than four billion people who still do not have it. The group, called internet.org, will attempt to aid emerging economies by making Web access more affordable, use data more efficiently and help business drive access to more users.

PlayStation Debuts Nov. 15 (page B3): Sony Corp. said its PlayStation 4 videogame console will reach store shelves in North America on Nov. 15, around the same time that rival Microsoft Corp. is expected to begin selling the Xbox One. The two companies are battling for initial purchases among gamers seeking to play a new generation of videogames. Sony has taken a nearly pure videogame tack, building and acquiring new technologies to help it stream games to handheld devices. It is also creating a streaming game service, which does all the computational work for intricate visuals on a server, and then beams the images over the Web to the videogame console. At $399, the PlayStation 4 will also cost $100 less than Microsoft’s offering. Microsoft, meanwhile, is emphasizing broader possibilities than game-playing for the Xbox One, focusing on multimedia capabilities such as live television viewing and interactions with its Kinect motion controller.

Video Site Vevo Eyes TV Screens (page B7): Music-video company Vevo LLC is migrating from YouTube to the boob tube in a back-to-the-future attempt to recreate something akin to the original MTV. But unlike the music television of yore, the new incarnation of Vevo is supposed to generate revenue for the record companies that create the videos. Vevo, a joint venture between Sony Corp.’s Sony Music Entertainment and Vivendi SA’s Universal Music Group, has signed deals to deliver on-demand music videos—plus a new channel of original, 24-hour-a-day programming—via Apple TV set-top boxes and Samsung television sets.

Tuesday’s Markets: Retailers Give Lift to Stocks (page C4): The S&P 500 rose Tuesday, snapping a four-day streak of declines, as a handful of retailers reported better-than-expected earnings and investors waited to hear more on the future of the Federal Reserve’s easy monetary policy. The S&P 500 added 6.29 points, or 0.4%, to 1652.35, reversing course after a 2.6% slide over the previous four days. The Nasdaq Composite Index gained 24.50 points, or 0.7%, to 3613.59. The Dow Jones Industrial Average lagged behind, declining 7.75 points, or 0.1%, to 15002.99.

Detroit Schools Pay Premium (page C4): Detroit’s public-school system sold $92 million in debt Tuesday at a substantial yield premium, in the largest Michigan municipal-bond sale since Detroit’s bankruptcy filing last month. The Michigan Finance Authority, which sold the debt for Detroit Public Schools, offered the one-year debt at yield of 4.375%. That compares with 0.18% on a typical triple-A rated, one-year municipal bond, according to Thomson Reuters Municipal Market Data. In May 2012, a one-year maturity in a $134.6 million bond offering for Detroit schools had a yield of 1.25%, according to data provider Ipreo LLC. When Detroit schools sold one-year notes in 2011, the yield was about 6.50%, according to the Michigan Department of Treasury. Investors placed orders for more than five times the amount of debt on offer, according to people familiar with the transaction, bringing the yield down from the initially offered 4.50%. The borrowing is backed by a pledge of state aid, a protection cited by some investors who placed orders for the debt.

Strike a Powerful Pose (page D1): Can how you stand or sit affect your success? New research shows posture has a bigger impact on body and mind than previously believed. Striking a powerful, expansive pose actually changes a person’s hormones and behavior, just as if he or she had real power. Merely practicing a “power pose” for a few minutes in private—such as standing tall and leaning slightly forward with hands at one’s side, or leaning forward over a desk with hands planted firmly on its surface—led to higher levels of testosterone and lower levels of the stress hormone cortisol in study participants. These physiological changes are linked to better performance and more confident, assertive behavior, recent studies show.

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Crisis Centers Turn to Texting to Help Teens (page D3): Sometimes a call for help isn’t as successful as a text for help—at least that is the thinking from several organizations offering text hotlines that aim to serve people in distress. A few national help lines are training staff and volunteers in the art of counseling via text message or online chat. The added anonymity of digital communication means people seeking help talk more openly about experiences such as sexual abuse on chat and text than on phone lines, says Katie Ray-Jones, president of the National Dating Abuse Helpline in Austin, Texas, which has been offering texting services for about three years and now gets texts from victims at about the same rate it gets phone calls. Teens prefer texting when talking about intimate issues, says Danah Boyd, an assistant professor of media, culture and communication at New York University. “It’s not that they’re incapable of talking,” Ms. Boyd says. “When they’re in crisis, more often than not, the need for intimacy, the need for privacy trumps all else.” The shift to include texting comes with a big scientific benefit: Text data is far easier to sift through than phone data. Some researchers are using help-line text conversations to determine the most effective ways for counselors to communicate with people seeking help for issues such as depression or abuse.

 

The Wall Street Journal: Tuesday, August 20, 2013

Federal Aid Is Tapped by 57% of Undergrads (page A4): The share of undergraduates who used federal student aid to help pay for college jumped to 57% in 2011-12 from 47% in 2007-08, according to a report set to be released by the Education Department on Tuesday. The increase in federal loans, grants and work-study jobs coincides with the wider trend of climbing tuition costs and underscores the expanding use of federal aid for higher education across all income levels. The average federal aid amounts for undergraduates came to about $8,200 a recipient in 2011-12. Average in-state tuition and fees at public four-year colleges rose to about $7,700 in 2011-12 from about $5,900 in 2007-08 in current dollars, according to the National Center for Education Statistics, part of the Education Department.

School Lessons Spark Fight Over Patriotism (page A6): As public schools in Texas get ready to resume later this month, many are still not sure whether they can use lesson plans prepared by a quasi-state agency due to criticism that some of the lessons demonstrate an anti-American bias. Bowing to pressure, the creators of the popular prefab lessons have agreed to stop producing new ones after Republican legislators and other critics cited examples of what they see as bias, such as a high-school lesson in which students are asked to delve into the historical origins of Communism and Socialism. Some of the contested lessons have been phased out. Still, debate lingers about whether teachers should use any of the hundreds of existing plans, with some school officials arguing the lessons are a valuable resource and merely aim to educate Texas children on other perspectives. Curriculum fights are common in Texas and other states, particularly in science, religion and history, education experts said. In recent years, Texas Board of Education members have debated whether teachers can offer creationist critiques of evolution. They have also fought over whether former United Farm Workers of America leader Cesar Chavez and former U.S. Supreme Court Justice Thurgood Marshall should be featured prominently in history classes. Critics of the Texas lesson plans have also complained about a lesson on religion, saying it offers a more detailed examination of Islam than Christianity.

Keeping Corporate Managements Honest (page A13): In a rare burst of bipartisanship, the House of Representatives last month voted 321 to 62 to stop a government board from forcing public companies to change auditors every six or seven years. This requirement was floated by the Public Company Accounting Oversight Board, which suggested that term limits would bolster the independence of auditors. An overwhelming number of congressmen rejected this requirement as too costly, and they passed an amendment to the 2002 Sarbanes-Oxley corporate-accounting law that would prohibit the board from adopting such mandatory rotation. Keeping auditors independent of management interference remains an important goal, but there is a better and less expensive way to achieve it. The key is to switch the allegiance of the auditor from the management of a public company to the board of directors’ audit committee that must be composed entirely of independent, or outside, directors. Instead of mandatory rotation, I’d suggest that the audit committees of public companies be required, at least once every 15 years, to issue a request for proposals (RFP) for auditors to bid for the company’s audit business. The current audit firm would be permitted to submit a proposal explaining why it should be retained. The independent directors on the audit committee would then choose the company’s auditor for the next 15 years, based on a cost-benefit analysis of competing bids. A newly appointed auditor must put forth a substantial investment to get up to speed on the complexities of a large public company. These costs, which are likely to be passed on to the company, would be incurred every six or seven years under mandatory auditor rotation. Under the RFP approach, the costs would occur at most every 15 years. In practice, the committee is likely to change auditors only if the benefits would exceed the transition costs.

Why Shouldn’t Princeton Pay Taxes (page A15): For the latest evidence of the town-gown divide, look no further than New Jersey, where earlier this summer residents of Princeton banded together to sue the prestigious school in their backyard. The residents argued that Princeton University, which boasts the largest endowment per student in the country, should no longer be entitled to its tax-exempt status because the school makes money—from its scientific patents, ticketed concerts, on-campus eateries and more. The Ivy League school is operating like a business, the plaintiffs say, so the tax code should treat it like one. The conflict isn’t going away. In June, a state tax court judge said the case had merit and refused the school’s request to dismiss the case. Princeton officials don’t seem worried: Reacting to the judge’s decision, a school vice president said that he expected any adjustments to its tax bill to be “quite modest.” Perhaps, but the townies still have a point. According to the lawsuit, the university took in over $115 million from patents in 2011, of which $35 million was given to various faculty members. The lawyer for the plaintiffs told the Times of Trenton that “People in Princeton pay at least one-third more in taxes because the university has been exempt all of these years.” If all of the school’s property were taxed, the bill would come to roughly $28 million a year, instead of the roughly $10 million the university is now contributing voluntarily to town coffers. As cities and towns struggle to pay for public services, it’s hard to blame public officials and taxpayers for wondering why well-off educational institutions aren’t sharing the load for police and fire departments, sanitation and road maintenance. The reason they don’t dates to 1917, when Congress decided that educational institutions, which then operated on a far more modest scale, should be exempt from federal income taxes. State and local governments have typically followed suit by exempting schools from local taxes. Yet Princeton—with its $16 billion endowment, high tuition and research funded by federal and corporate grants—is a very different institution today than it was when the law passed nearly a century ago.

Nepotism: When Is It a Crime? (page B1): Companies seeking influence need to be careful they don’t network themselves into bribery investigations. An inquiry by U.S. securities regulators into whether J.P. Morgan Chase & Co. hired the children of some Chinese officials to win business is a fresh reminder of the risks around the practice of giving jobs to the well connected. The Justice Department has warned companies since at least the 1980s about hiring practices that appear to be attempts to curry favor with officials. In recent years, the U.S. has pursued several companies, including Tyson Foods Inc. and Daimler AG, for hiring relatives of foreign officials in violation of the Foreign Corrupt Practices Act, or FCPA. The 1977 law bars companies from giving foreign officials money or a “thing of value” in return for business. Daimler and Tyson settled their cases in 2010 and 2011, respectively. So far, many of the government cases have included allegations of hiring relatives for no-show jobs—as a way of concealing the transfer of cash to foreign officials. But the probe by the Securities and Exchange Commission into J.P. Morgan’s activities in China has to do with the bank’s hiring of children of state officials, according to a person close to the bank. And it suggests the U.S. government is reaching further—to cases in which the job itself may be the prize offered to influence an official’s decision.

Activists Spur Horse Trading for Seats on Corporate Boards (page B1): Office Depot Inc. is pursuing an unusual tactic for dealing with dissident investors: Give them seats as long as key management appointees can keep theirs. Fearing the outcome of a bitter proxy fight at its annual meeting Wednesday, the big office-supply retailer has offered to expand its 10-member board and give seats to three of Starboard Value LP’s four nominees—if two current directors get re-elected. Those two directors serve on a committee that is running the search to find a CEO to run the company after it merges with rival OfficeMax Inc. Starboard, which holds nearly 15% of Office Depot’s shares, rejected the offer. As of Monday, however, both sides were discussing a possible compromise, people familiar with the matter said. Office Depot’s defensive gambit highlights the growing clout of activist investors amid what have become increasingly competitive board elections. Activists have scored a 44% success rate in U.S. contests for board seats this year, whether through settlements or elections, according to FactSet SharkRepellent’s database. Activists won 49% of the seats they sought in 2012 and 41% in 2011, according to FactSet. “Boards are getting better at negotiating settlements with activists and getting more clever at offering hybrid boards as a possible solution because they recognize the activists carry a lot of weight in contested elections,” said Damien J. Park, managing partner of Hedge Fund Solutions LLC, who advises boards and investors about issues around activists.

Amazon Losing Its Price Edge (page B2): For a brief period on Monday afternoon, the world’s biggest e-commerce site went offline. Amazon.com Inc. customers hungry for an Internet bargain needed to go look somewhere else on the Internet. They should get used to it. Amazon’s competitors including brick-and-mortar giants and online upstarts have spent years trying to beat the famously low-margin company on prices. And they are starting to succeed: The world’s biggest online retailer is no longer the cheapest. At least in some markets it isn’t. Those looking for fluffy white towels, scented candles and curtain rods will now find cheaper prices, on average, at the brick-and-mortar Bed Bath & Beyond than they will at Amazon, according to research from BB&T Capital Markets. The home-goods chain isn’t alone in catching up to Amazon, which has spent the best part of two decades making a name by undercutting rivals on price, and earning little to no profits in the process. Others like Best Buy Co. have made guarantees to match or beat Amazon’s prices in their stores. On Monday, online seller Overstock.com said it would permanently match Amazon’s book prices.

One Size Doesn’t Fit All (page B3): There was a time when companies tried to make mobile phones as small as they possibly could. This is not that time. Samsung Electronics, which (literally) pushed the boundaries of the smartphone with its Galaxy Note line, is going where no phone maker has gone before with the Galaxy Mega. The Galaxy Note II sports a 5.5-inch screen. The Mega, making its U.S. debut this month, brings a 6.3-inch screen to the “phablet” party, although you might need custom pockets if you actually want to bring it to a party.

Apple Readies Two iPhones; Launch Likely in September (page B3): Apple Inc. has asked assembler Hon Hai Precision Industry Co. to begin shipping both a new high-end and low-end iPhone in early September, people familiar with the matter said. The shipping plans suggest that two new iPhone models could be launched as soon as next month, pointing to a strategy shift as Apple attempts to regain its momentum in the smartphone market. The company hasn’t previously announced different iPhone models around the same time.

LinkedIn Drops Minimum Age to 14 (page B3): For LinkedIn Corp., the next frontier for the professional-networking site is high school. The social network said Monday it is lowering the minimum age of its membership to 14 years old in the U.S. next month to try to become a go-to resource for college-bound teenagers. LinkedIn is also offering a new feature, “University Pages,” to encourage colleges to build out their profiles on LinkedIn, in the same way that companies currently do. By changing its minimum age—which had been 18—the Silicon Valley company is following in the footsteps of Facebook Inc., which initially targeted college students but later expanded to high-school students and has been open to users 13 and older since 2006. With University Pages, users—especially prospective and current students—can follow updates from colleges, such as campus news or information about activities, and discover and connect with other students or alumni. Members will also be able to trace the careers of alumni, who selected particular majors, a potentially useful tool for students trying to decide which track to take. So far, about 200 schools have signed up.

Activist Investors: A Roar or a Bark? (page C1): Can a lion be confused with a dog? In Luohe, China, the answer is a resolute “no.” Visitors at the local zoo weren’t impressed last week when they found a Tibetan mastiff in the cage earmarked for the king of the jungle. When it comes to activist investors, though, the situation is less clear-cut. On Wall Street, this breed of hedge-fund manager engenders extreme reactions. Some lionize them as intrepid champions of shareholders’ rights in the face of corporate ineptitude. Others accuse them of terrier-like aggression, snapping at executives’ heels with short-term demands that end up harming companies. Investors and corporate executives are watching, because activists punch above their weight. They control just over $84 billion in assets, according to HFR, a drop in the bucket when compared with the trillions of dollars managed by passive funds. But activists’ campaigns can often move share prices because of their following in the market.

Flaws Cited Anew in Audit Reviews (page C3): Auditors of broker-dealers need to improve their performance when it comes to compliance with independence requirements and other accounting rules, an industry regulator said, citing for the second year in a row “disappointing” results from a review of such audits. A report released Monday by the Public Company Accounting Oversight Board, which oversees audits of public companies, found deficiencies in an expanded review of audit firms performing work for securities brokers and dealers. The reviews were conducted from March to December 2012 as part of an interim inspection program it started under new powers granted by the Dodd-Frank financial-overhaul legislation. The results are “very similar” to the oversight board’s report released a year earlier, showing auditors have a “long way to go” to ensure compliance with audit requirements, Jay Hanson, a member of the group’s board, said during a conference call with reporters. Auditors, he said, should “up their game.”

Monday’s Markets: Stocks on a Streak Lower (page C4): U.S. stocks tumbled for a fourth session in a row, their longest losing streak this year, as investors braced for the possible end of the Federal Reserve’s easy-money policies. The Dow Jones Industrial Average lost 70.73 points, or 0.5%, to 15010.74. The S&P 500-stock index sank 9.77 points, or 0.6%, to 1646.06. Both marked a fourth consecutive session of losses for the first time this year. The Nasdaq Composite Index shed 13.69 points, or 0.4%, to 3589.09.

Antibiotics Do’s and Don’ts (page D1): Doctors aren’t only handing out too many antibiotics, they also are frequently prescribing the wrong ones, researchers and public-health officials say. Recent studies have shown that doctors are overprescribing broad-spectrum antibiotics, sometimes called the big guns, that kill a wide swath of both good and bad bacteria in the body. Instead, narrow-spectrum antibiotics, like penicillin, amoxicillin and cephalexin, can usually clear up many infections, while targeting a smaller number of bacteria. Overuse of antibiotics, and prescribing broad-spectrum drugs when they aren’t needed, can cause a range of problems. It can make the drugs less effective against the bacteria they are intended to treat by fostering the growth of antibiotic-resistant infections. And it can wipe out the body’s good bacteria, which help digest food, produce vitamins and protect from infections, among other functions.

antibiotics

Does Going from Hot to Cold Cause Colds (page D2): For most people, summer involves numerous daily shifts between scorching outdoor heat and frosty air-conditioned interiors. But does exposing the body to extreme temperature swings make people sick? Professor Ron Eccles, director of the Common Cold Centre at Cardiff University in Wales, which performs clinical trials for treatments for coughs, colds and flu, explains why keeping a sweater at work isn’t such a bad idea.

Health Research (page D3):

  • How Song Selection Affects Driving: Fumbling with the buttons to find a good song while driving has been linked to increased risk of crashes, but is listening to that song risky? It depends on the music, says a report to be published in the October issue of Accident Analysis & Prevention. The study found teenage drivers who played their own music had significantly more traffic violations compared with background music designed by the researchers to minimize driving distractions, or no music.
  • Stress Hormones: The chronic anxiety experienced by shy people in social situations may alter a physiological mechanism that controls how the body adapts to daily stress, says a study scheduled for publication in the October issue of Personality and Individual Differences.
  • Alzheimer’s Resilience: Scientists have been at a loss to explain why some patients with characteristic hallmarks of Alzheimer’s disease—a buildup of abnormal plaque and tangled fibers in the brain—don’t develop dementia. New research has identified other cellular brain anomalies that may help to explain human resilience to Alzheimer’s disease and serve as potential targets for preventive treatments, according to a report in the journal Brain.
  • Standing Tall: Babies learning how to stand look tottering and unstable, but a new study reported in PLoS One found they are significantly more balanced than they appear and can remain standing for significantly longer periods if they’re focused on a specific goal.
  • Hip Retraining: Middle-age men enrolled in an accelerated rehabilitation program after undergoing hip-resurfacing surgery, with full weight-bearing starting on the first day, were significantly more active a year later than patients in a standard hip-recovery program, according to a study in the September issue of Clinical Rehabilitation. Hip surfacing is a modified form of hip replacement, resulting in more stable hips than total replacements.
  • Caesarean Birth and Immunity: How babies are born can influence their chances of developing allergic and autoimmune diseases later in life, suggests a study published online in the journal Gut. The study found infants delivered by caesarean section had significantly fewer beneficial bacteria in their gastrointestinal tract from birth to 2 years old than infants born vaginally. A healthy mix of gut microorganisms is believed to help a newborn’s immune system develop.

Extra Load on Your Back to Help Build Bones (page D4): Weight-bearing exercise can help make bones stronger and stave off the effects of osteoporosis. But walking—popular because of its gentleness on the joints—isn’t as good at building bone mass as higher-impact activities, such as running. The Claim: Wearing a weighted vest can boost the amount of bone mass built while walking. Running or jumping with a vest may provide even more benefit. The Verdict: Several small studies have shown exercise with a weighted vest increases bone-mineral density in older women and improves balance. The evidence isn’t conclusive, says Felicia Cosman, senior clinical director of the National Osteoporosis Foundation, but it’s logical to think the vests would be beneficial because “bone responds to the magnitude of the force put on it.”

 

The Wall Street Journal: Monday, August 19, 2013

Manufacturers Gain Ground (page A1): After more than a decade of losing ground to China and other export powerhouses, U.S. manufacturers are finally showing signs of regaining their competitive edge. The U.S. deficit on trade of manufactured goods in this year’s first half shrank to $225 billion from $227 billion a year earlier, according to data compiled by Ernest Preeg, an economist and trade expert at the Manufacturers Alliance for Productivity and Innovation, an industry-funded research group in Arlington, Va. The improvement, while slight, came after years of ballooning deficits as the U.S. lost manufacturing business to China, South Korea and other nations. The Boston Consulting Group—a leading proponent of the idea that U.S. manufacturing will come roaring back—predicts a surge in U.S. exports, partly helped by lower energy costs and stagnating wages. In a report for release Tuesday, BCG says rising exports and “reshoring” of production to the U.S. from China “could create 2.5 million to five million American factory and service jobs associated with increased manufacturing” by 2020. That, BCG says, could reduce the unemployment rate, currently 7.4%, by as much as two to three percentage points. The U.S. has lost much ground over the past 15 years, largely because of China’s surging growth and focus on exports. The U.S. accounted for 11% of global exports of manufactured goods in 2011, down from 19% in 2000, Mr. Preeg said. During the same period, China’s share rocketed to nearly 21% from 7%, and the European Union slipped to 20% from 22%.

To Liven Up Its Season, Baseball Team Pitches a Funeral (page A1): The IronPigs draw 9,000 per game, among the best in the minors, thanks in part to a steady stream of outside-the-box ideas that keep fans engaged. “My job is producing 17 Broadway shows,” says general manager Kurt Landes, referring to the number of breaks in a nine-inning game. Instead of watching the game, he patrols his stadium with an earpiece, chats with fans, directs charges and scoops up loose trash. Mr. Landes, 40 years old, has installed motion-sensor videogames atop some urinals—men score points by hitting penguins with a snowmobile—dressed players in tuxes and Santa Claus suits, an essay contest to win a funeral, and sent a dog-riding monkey galloping around the field. He dreams of hosting a birth at the ballpark (inside team offices) and showing the new baby on the scoreboard at the end of the game.

Cheering for Teams That Don’t Sell Stadium Names (page A17): What’s the new status symbol in professional sports? Being able to name your own stadium. When the Dallas Cowboys open their season at home on Sept. 8 against the New York Giants, they’ll play not at Cowboys Stadium but at AT&T Stadium. Last month, the Cowboys became the latest storied franchise to sell naming rights (in Dallas’s case, for an estimated $19 million per year), leaving even fewer professional teams in the U.S. maintaining their traditional venue names. Unsponsored Yankee Stadium and Madison Square Garden in New York, and Soldier Field in Chicago, are part of a rapidly shrinking group. Their venue names send a message that seems to grow in volume with every “AT&T Stadium”—a message that says, “We are big enough, good enough, and rich enough that we don’t need no stinkin’ naming-rights deal.”

Cyberattacks Get Physical (page B4): Vulnerable computer systems have exposed companies to a host of legal and reputational risks. But as companies work to limit their vulnerability to cyberattacks, many may be overlooking an obvious weak spot: the front door. While the threat of a hacker cracking the company firewall is real, cybersecurity experts say a would-be thief is just as likely to gain access to company data by persuading an employee to hold open a locked office door. “People will put their finger on a biometric fingerprint reader, but they’re still willing to hold the door open for the guy behind them,” says Dan Berger, president and chief executive of Redspin Inc., a cybersecurity firm. Physical intrusion is a threat companies have to guard against as U.S. regulators step up efforts to make companies guard against and possibly disclose attacks on their computer systems. Regulators are particularly concerned about the risk to banks, which have spent millions of dollars defending their computer systems. Companies tend to be more focused on viruses and malware than on physical threats, Mr. Berger says. To shift corporate attention to the problem, companies such as his Carpinteria, Calif., firm deploy tactics out of a spy novel: pretext phone calls, fake identities and covert surveillance. Cybersecurity experts have long highlighted the risk that a company’s employees pose to security. Hackers frequently employ so-called social-engineering attacks, preying on people’s trusting nature to gain access to company data. The Ponemon Institute, a data-privacy and cybersecurity research firm, found in a study last year that 38% of companies had experienced a social-engineering attack.

Stocks Are Splitting from the Herd (page C1): The lost art of picking stocks is enjoying a renaissance. Shares are moving less in tandem with the overall market than at any time since the financial crisis, by some measures. That suggests that investors are zeroing in on the prospects for individual companies rather than making wide bets on stocks as a whole. That behavior marks a departure from recent years, when central-bank stimulus and worries about continued global financial gyrations caused many stocks and bonds to move in concert. Investors would buy when they felt optimistic and sell when they became worried, a phenomenon that caused what became known as “risk on, risk off” moves in the market.

Journal Report on Small Business (section D):

 

 

The Wall Street Journal: Saturday, August 17, 2013

Teachers Face License Loss (page A4): Many states have begun to link teachers’ pay to their effectiveness in the classroom. On Friday, Tennessee joined a handful that are taking the idea further: pull the license of teachers whose students consistently fail to improve. “This is not about taking away teacher licenses, but about making sure our students have the best classroom teachers,” said Kevin Huffman, the state’s education commissioner. Over the past three years, many states have started linking teacher evaluations to test-score improvements and other measures of student performance. But only Rhode Island, Louisiana and Delaware have tied some teaching-license renewals to these evaluations, according to Sandi Jacobs of the National Council on Teacher Quality, a research and advocacy group that supports grading teachers on classroom effectiveness. In many states, teachers renew their licenses after completing a number of professional development course-credit hours, or by earning a master’s degree. But research has shown that, for the most part, neither boosts teacher effectiveness as measured by growth in student achievement, said Jane Hannaway, director of the National Center for Analysis of Longitudinal Data in Education Research, a federally funded nonpartisan research center. Under the new policy in Tennessee, teachers must show they are boosting student achievement or they would lose their teaching license. For a third of K-12 educators, the measuring stick would be the standardized state exams given to students. The remaining teachers, such as those in art or physical education, would be judged on other measures, such as portfolios of student work.

What We Lose If We Give Up Privacy (page A13): What is privacy? Why should we want to hold onto it? Why is it important, necessary, precious? Is it just some prissy relic of the pretechnological past? We talk about this now because of Edward Snowden, the National Security Agency revelations, and new fears that we are operating, all of us, within what has become or is becoming a massive surveillance state. They log your calls here, they can listen in, they can read your emails. They keep the data in mammoth machines that contain a huge collection of information about you and yours. This of course is in pursuit of a laudable goal, security in the age of terror. Is it excessive? It certainly appears to be. Does that matter? Yes. Among other reasons: The end of the expectation that citizens’ communications are and will remain private will probably change us as a people, and a country.

The Match That Changed the Game Forever (page A14): There’s no mystery why the U.S. Golf Association chose The Country Club in Brookline, Mass., as the venue for this week’s U.S. Amateur. That’s where Francis Ouimet, an unheralded 20-year-old amateur, won the U.S. Open 100 years ago next month. Somewhat inconveniently, Friday’s amateur action left four players standing, none from the U.S. (two from Australia, one each from England and Canada). But Ouimet’s victory, only the second by an American in America’s own championship, became a legend almost before his final putt—on the 18th hole of a playoff against the two leading British professionals of the day—found the bottom of the cup. Some people and events in sports have had transformative impact far beyond the action on the field. Jackie Robinson’s first season in baseball. The televised 1958 NFL championship game, in which the Baltimore Colts behind Johnny Unitas beat the New York Giants. That game set pro football on the path to becoming America’s favorite living room sport. Ouimet’s victory at Brookline similarly introduced golf to the American mass market, in an era before even radio. “Ouimet World’s Golf Champion,” trumpeted the New York Times in one of at least eight stories it ran about the playoff by the next day. “Remarkable Golf Feat,” the sub-headlines scrolled on. “Splendid Display of Nerve…Big Gallery Makes Demonstration at Finish.” Golf wasn’t even that popular in 1913. The U.S. had only 300,000 to 400,000 players, most of them new because golf itself was still relatively new here. Bobby Jones later recalled that reading about Ouimet’s victory, in Atlanta where he lived, was the first time he’d ever seen the game covered in a newspaper. Within a decade, more than 2 million were playing the game. Ouimet’s triumph is remebered today, largely from Mark Frost’s masterful retelling in his 2002 book, “The Greatest Game Ever Played.” But it’s striking how quickly the newspapers of the day metamorphosed what was, after all, just a few good rounds by a talented amateur, into a nationally celebrated civic event. The themes were irresistible. First were the two men Ouimet beat in the playoff, Harry Vardon and Ted Ray. They were on a barnstorming tour of the States, to show the upstart Yanks what real golf looked like. In fact, the U.S. Open had been postponed to September from June to accommodate their schedule, with the assumption that one or the other would win. Vardon, 43 years old, was considered the best golfer in the world. He was a five-time British Open champion (he would later win another) and was said to have won 14 tournaments in a row in Europe. Ray, 36, had won the previous year’s British Open. To an America still insecure about its place in the world, the triumph of a humble immigrant’s son over golf’s reigning British overlords was magnificent comeuppance.

Friday’s Markets: Worries on Fed Move Pound Stocks, Bonds (page B4): U.S. stocks declined Friday, with a late-day selloff sending the Dow average to its biggest weekly slide in more than a year. The Dow Jones Industrial Average fell 30.72 points, or 0.2%, to 15081.47, reversing gains in the last half-hour of the session. The move followed steeper declines earlier in the week, adding up to a 2.2% drop for the benchmark, the biggest since June 2012. The S&P 500 dropped 5.49 points, or 0.3%, to 1655.83. The Nasdaq Composite Index ticked down 3.34 points, or 0.1%, to 3602.78.

Stocks Test Technical Level (page B4): Here we go again. After big back-to-back declines, the S&P 500 on Friday finished below its 50-day moving average—a key technical level. The stock index ended little changed, but how it reacts around this support area could have broad implications for the rally in the days and weeks ahead. The 50-day average has previously acted as a key gauge for the market’s near-term trend. The S&P 500 pulled back to this level six prior times this year. In all but one, it proved to be a buying opportunity as the market immediately bounced back. The S&P 500 fell 5.49 points, or 0.3%, to 1655.83 on Friday. The 50-day moving average sits at 1657.39, according to FactSet. But now, some technical analysts are warning about tougher times ahead.

‘Bye’ to Uncle Sam? (page B7): Here is a sign that life is getting complicated for U.S. taxpayers with assets abroad: More of them are deciding they are better off cutting official ties with America. In the first half of 2013, 1,809 people renounced their American citizenship or permanent-resident status, according to a tally by Andrew Mitchel, a tax lawyer who tracks U.S. data. At that pace, the 2013 total would double the previous high of 1,781 renunciations in 2011. Daniel Kuettel, a Colorado native who lives near Zurich, says he gave up his U.S. citizenship in October because he feared he wouldn’t be able to get a mortgage now that some Swiss banks are cutting ties with American clients. “It was a really difficult decision. I had to think about what was best for me and my family, to reduce the risk,” says Mr. Kuettel, a 41-year-old software developer. He says his income was below the limit the U.S. allows overseas taxpayers to exempt and he owed no U.S. taxes. The increase in renunciations is one sign that ordinary Americans who have lived and worked abroad for years, as well as green-card holders in the U.S. and overseas, believe they are at growing risk because of the intensifying government pursuit of undeclared foreign assets.

Price-to-Earnings Ratio Aren’t Always What They Seem (page B7): “The stock market is overvalued.” “The stock market is undervalued.” Which one of these statements is true? Both are, thanks to quirks of the most popular way of measuring a stock’s valuation: the price/earnings ratio. While no one disagrees about what the “P” is when calculating the ratio, there is no consensus on how to define earnings-per-share. One of the biggest points of dispute: whether to use analysts’ earnings estimates for the coming year or reported company earnings from the previous 12 months. Comparing ratios calculated in these two ways is little better than comparing apples to oranges, according to Cliff Asness, managing partner at AQR Capital Management, an investment firm with $84 billion of assets under management. In an email, he went so far as to say that those who compare P/Es in this way are engaging in a “sleight of hand,” though he allowed that many may “not be aware of the mistake they are making.” Consider the S&P 500’s current P/E based on trailing earnings. For the four quarters through June 30, the index’s earnings per share amounted to $91.13, according to S&P Dow Jones Indices. That translates into a P/E ratio of 18.2, which is higher than 79% of comparable readings since 1871, according to a database maintained by Yale University professor Robert Shiller. Many bulls try to wriggle out from this bearish sign by focusing on estimated earnings. According to FactSet Data Systems, the consensus forecast from Wall Street analysts is that earnings from companies in the S&P 500 will be $122.01 a share next year, which translates into a P/E ratio of 13.6. That is 6% less than the 14.5 median of historical P/Es in Mr. Shiller’s database.

Annuities Call for Caution (page B8): Conservative savers are flocking to an insurance product with a controversial past: fixed indexed annuities. For investors seeking steady retirement income—typically drawn to products such as certificates of deposit and safe-haven bonds—these annuities can make sense. But be aware: They are complex, and they vary in quality and security. Fixed annuities are a type of savings contract with a tax-deferred interest component. “Indexed” versions link the annual interest to a stock-market benchmark, most commonly the S&P 500. Insurers promise to protect buyers against market losses but cap the upside gain they pay. They also typically exclude dividends from the calculation of payouts. Some buyers have been lured by the stock-market rally, which has sent the S&P 500 up 16% this year. Low interest rates, meanwhile, have cut the appeal of traditional annuities. The rap on indexed annuities is that consumers could overestimate the upside. While the stock-market link is part of the pitch, the product is more like a juiced-up bank CD. Insurers back the contracts mostly with bonds, and use options on market indexes to boost returns. Many contracts sold recently capped the annual upside at about 4% to 5%, according to advisers.

Still Hope for Bond Funds (page B9): Many investors are fleeing bond funds. Those who have stuck around this long might be better off staying put. Investors yanked more money out of bond funds in June than they put in, removing $68 billion—the first monthly net outflow in nearly two years, according to investment researcher Morningstar. They took out another $8 billion in July. Sharply rising yields have pushed down prices, which move in the opposite direction, spurring the exodus amid signs of an improving economy and speculation the Federal Reserve will soon shrink its bond-buying stimulus program. Nervous municipal-bond investors still are weighing the fallout from Detroit’s July bankruptcy filing. The yield on 10-year Treasurys climbed from below 1.7% in early May to above 2.8% Friday. Investors who got out before rates spiked and prices dropped likely dodged some losses. But not everyone is bailing. Before giving up, bond investors should consider that rates could well go back down. Furthermore, bonds offer protection to long-term investors by diversifying a portfolio.

Value Seen in Europe (page B9): With rising rates looming over U.S. Treasurys, now might be a good time for bond investors to go bargain hunting in Europe, financial advisers say. Since May, Federal Reserve officials have indicated that they might begin to scale back the central bank’s huge bond-buying program. That has caused Treasury yields to soar and prices to drop. However, European leaders are leaning in the opposite direction. Just this month, Mario Draghi, head of the European Central Bank, said that rates in the euro zone are likely to stay at historically low levels for the foreseeable future. That means European bonds don’t face the same risk of rising rates as Treasurys, says John Sajdak, head of fixed income at Chicago-based MainStreet Advisors, which manages $2 billion. “With no immediate threat of inflation and slow economic growth in Europe, investors don’t need to be as worried about a big surge in yields,” he says.

In Defense of Football (page C1): It’s a rough, sometimes dangerous sport, but critics exaggerate football’s risks, writes Max Boot—and fail to see what America’s beloved game contributes to the lives of young players and their communities.

Our Unique Obsession With Rover and Fluffy (page C2): Recently, an almost literal case of lifeboat ethics occurred. On Aug. 4, Graham and Sheryl Anley, while yachting off the coast of South Africa, hit a reef, capsizing their boat. As the boat threatened to sink and they scrambled to get off, Sheryl’s safety line snagged on something, trapping her there. Instead of freeing his wife and getting her to shore, Graham grabbed Rosie, their Jack Russell terrier. (One media account reported that Sheryl had insisted that the dog go first). With Rosie safe and sound, Graham returned for Sheryl. All are doing fine. It’s a great story, but it doesn’t strike me as especially newsworthy. News is supposed to be about something fairly unique, and recent research suggests that, in the right circumstances, lots of people also would have grabbed their Rosie first. We have strange relationships with our pets, something examined in a wonderful book by the psychologist Hal Herzog, “Some We Love, Some We Hate, Some We Eat: Why It’s So Hard to Think Straight About Animals.” We lavish our pets with adoration and better health care than billions of people receive. We speak to pets with the same high-pitched voices that we use for babies (though when addressing pets, we typically don’t repeat and emphasize key words as we do with babies, in the hope of boosting their language acquisition). As a grotesque example of our feelings about pets, the Nazis had strict laws that guaranteed the humane treatment of the pets of Jews being shipped to death camps. A recent paper by Richard Topolski at George Regents University and colleagues, published in the journal Anthrozoös, demonstrates this human involvement with pets to a startling extent. Participants in the study were told a hypothetical scenario in which a bus is hurtling out of control, bearing down on a dog and a human. Which do you save? With responses from more than 500 people, the answer was that it depended: What kind of human and what kind of dog? Everyone would save a sibling, grandparent or close friend rather than a strange dog. But when people considered their own dog versus people less connected with them—a distant cousin or a hometown stranger—votes in favor of saving the dog came rolling in. And an astonishing 40% of respondents, including 46% of women, voted to save their dog over a foreign tourist. This makes Parisians’ treatment of American tourists look good in comparison.

Whatever Happened to August? (page C3): It’s the month when the summer nights have a consistent, delicious crispness to them unknown at any other time of the year. It’s when the corn is sweet, the plums are purple and pungent, the baseball pennant races are mature, the ocean temperatures are warm. It is the very best month of the year. And we have ruined it. Not so long ago—well within the memory of half the American population—August was the vacation month. It was a time, much anticipated and much appreciated, of leisure, languor, lassitude and lingering at the beach well into suppertime. Unlike July, it had no holiday disruption, no grocery-store rush, no rituals, no reason to hurry, except maybe to get to the ice-cream stand before closing time, and even that was flexible, depending upon the length of the line. Hardly anyone got married, and no one went to class. Congress barely met, and then it departed for most of the month, a great relief to them and an even bigger one for the nation. It was an idyll of idleness, a time of pure ease—and now it’s gone. We’ve made August a horror of back-to-school and blinding activity, a time when offices are open late and summer camps close early. August it is now no more special than June (part work and school, part holiday season), without Flag Day or Bunker Hill Day, or a sunburned version of March, without much threat of snow. What we’ve done to August has made it the cruelest month: infuriating work and inescapable school obligations amid intoxicating weather. Summer is a lot shorter than it used to be.

The Bad-Boy Entrepreneur (page C4): What does it take to be a successful entrepreneur? The signs are obvious in future moguls’ teenage years: brains, confidence—and illicit activities. Those are the surprising findings of a new working paper by economists at the University of California at Berkeley and the London School of Economics. The researchers argue that merely being self-employed isn’t a particularly good indicator of entrepreneurship, in the sense of taking big risks and mobilizing capital to create new goods and services. As the Harvard economist Edward Glaeser has observed, lumping the self-employed into a single category makes “little distinction between Michael Bloomberg and a hot-dog vendor.” But things looked very different when the professors sorted the self-employed into those who were incorporated and those who were not, with the researchers regarding the former as the genuine entrepreneurs. While the self-employed in general earned less than the salaried, the incorporated made more money and were more likely to make a killing. Relying on the 1973 National Longitudinal Survey of Youth and data from the Current Population Survey, the economists found that those who incorporated had higher aptitude-test scores as teens. As teens, they also engaged in more rule-breaking activities, including stealing, using marijuana and alcohol, drug dealing, violence and gambling. Indeed, their index of illicit activities was almost three times that of teens who went on to become salaried workers. Despite these dubious youthful pursuits, the incorporated tended to come from stable, well-educated families with high incomes in 1979. These entrepreneurs were much more likely to be white, male and well-educated than were salaried workers or the unincorporated self-employed. In other words, incorporated entrepreneurs may be likelier to cross home plate with the winning run, but they’re also likelier to have been born on third base.

Dan Ariely: Ask Ariely (page C12): The behavioral economist answers readers’ questions on losing weight, society’s attitude toward exercise and smoking.

  • the secret weapon of European dieters
  • exercise as a good excuse to escape work
  • employer incentives to quit smoking

 

The Wall Street Journal: Friday, August 16, 2013

Stocks’ Surge Showing Cracks (page A1): The Dow Jones Industrial Average on Thursday suffered its worst decline since June, as fears intensified that the Federal Reserve will reduce its stimulus in the fall, potentially eroding a key element in this year’s stock-market advance. The Dow tumbled 225.47 points, or 1.5%, to 15112.19. It was the second consecutive triple-digit decline, following a 113-point pullback Wednesday. After being up as much as 19.5% for 2013 on Aug. 2, the Dow now is up 15.3% this year. The big news hurting stocks was a seemingly positive report: New weekly unemployment claims were the lowest since 2007, the latest in a series of indications the job market is improving. But that reinforced fears that the Fed will decide as soon as September that the economy is strong enough for it to begin reducing its $85 billion in monthly bond purchases designed to stimulate the economy.

Rising Stars of the Little Screen Learn to Cope with Fans, Fame (page A1): To make it in Hollywood, it helps to appeal to the masses. To make it on YouTube, it helps to appeal to everyone else. Thousands of YouTube “creators”—many coming to fame through very niche talents or fan bases—filled the Anaheim Convention Center this month for the fourth annual VidCon conference. VidCon has grown from 1,500 people in 2010 to a crowd of 11,000 that believes it is possible to “make it” without leaving Google Inc.’s YouTube for a mainstream movie or television deal, said VidCon co-founder John Green.

U.S. Inflation Moves Closer to Fed’s Target (page A2): Consumer prices rose broadly in July and the number of Americans filing new claims for jobless benefits fell to a six-year low, developments that could comfort Federal Reserve officials as they consider dialing back their bond purchases. The consumer-price index, which measures what Americans pay for everything from bread to medical care, rose 0.2% in July, the Labor Department said Thursday. Core prices, which strip out volatile food and energy costs, rose at the same rate. From a year earlier, overall consumer prices were 2% higher in July while core prices rose 1.7% year over year. The latest price increases were modest, but they reinforced views that inflation may be stabilizing and could dampen fears inside the Fed about inflation falling from already low levels.

Three States Get Warning about ‘No Child’ Waivers (page A2): The Education Department said Thursday that three of 40 states granted waivers from the No Child Left Behind law were at high risk of losing them, because they either have been slow to link teacher evaluations with student achievement or had adopted programs that didn’t meet federal guidelines. If they fail to comply with federal requirements by May, Kansas, Oregon and Washington state face losing their waivers from the George W. Bush-era law, which could entail a loss of autonomy over some funding decisions and changes in how school districts’ performance is judged. The Education Department granted all three states approval to continue their waiver programs for the 2013-2014 school year and asked each to submit a plan of recourse within the next month.

Philadelphia Schools Get Lifeline (page A2): Philadelphia public schools will open on time next month, city officials announced Thursday, saying they would direct $50 million to the struggling district to help close a budget hole. The cash infusion would allow Superintendent William Hite Jr. to rehire 1,000 counselors, assistant principals, aides and others who were among 4,100 employees laid off this year as part of budget cuts amid a $304-million deficit. Mr. Hite had said that if he didn’t receive funds by Friday, the district wouldn’t be able to open all its schools on Sept. 9. But questions remained over the finances of the 136,000-student district as Mayor Michael Nutter and the head of the city council offered conflicting plans Thursday on where the $50 million would come from.

Disney Tries Anew to Raise Its Score on Digital Games (page B1): Walt Disney Co. is rallying Mickey Mouse, Buzz Lightyear and more of its best-known characters to tackle a formidable challenge: bringing its digital division into the black. Disney’s technophile chief executive, Robert Iger, in 2008 grouped the company’s videogame, online and mobile businesses into a single unit, Disney Interactive. Since then, the division has racked up losses of $1.41 billion as it unsuccessfully chased one fad after another—from racing games to virtual worlds to social-network games. The fallout has included more than 500 layoffs, four closed videogame-production studios, and a raft of canceled projects and diminished ambitions. Enter “Disney Infinity,” a combination videogame and toy line that features characters from classic and new movies and television shows. It is a high-stakes effort to right the Disney digital ship, and it hits stores on Sunday in the U.S. and Tuesday in Europe. People close to the company peg the cost of making the game and toys at well over $100 million—similar to a major film production. With “Infinity,” players can create their own Disney-inspired landscapes and game levels in a mode called “toybox.” They can also bring characters, such as the tow truck Mater from “Cars” and Jack Sparrow from “Pirates of the Caribbean,” into the game by buying $13 figurines and placing them on a special scanner.

H&M Gives Ethiopia a Spin (page B2): H&M Hennes & Mauritz AB is looking to Ethiopia as a new low-cost country in which it will produce clothing, as the apparel retailer races to keep shelves stocked at a growing number of stores world-wide. The Swedish company relies heavily on Bangladesh for clothes production, and a move to Africa would expand its sourcing footprint but not replace its commitment to production in Asia. One supplier says H&M is looking to source one million garments a month from Ethiopia.

Infant Dies After Eating Soap Packet (page B3): An infant in central Florida died last week after accidentally eating a packet of concentrated laundry detergent, the state’s Department of Children and Families said Thursday. The death of the 7-month-old boy is believed to be the first associated with single-dose liquid detergent packets, which have been involved in a rash of unintentional ingestion by babies and toddlers since becoming widely available in the U.S. early last year. It heightens the stakes as consumer-products companies such as Procter & Gamble Co. try to stop the problem by modifying their packaging and warning consumers.

Facebook Tests Payments Tool (page B4): Facebook Inc. is testing a way to make it easier for its users to make purchases through retailers’ mobile apps. The new service will give consumers an option to prefill their payment information stored on Facebook with the mobile apps of retailers that partner with the social network. Facebook, however, underscored that it won’t process the payments nor compete directly with digital-payments processors such as eBay Inc.’s PayPal. “We continue to have a great relationship with our payment processing partners, and this product is simply to test how we can help apps provide a simpler commerce experience,” a Facebook spokeswoman said.

Wal-Mart: Where Are All the Hot New Gadgets (page B4): Wal-Mart Stores Inc. has a message for electronics makers: Make more exciting gadgets. The world’s biggest retailer on Thursday blamed its disappointing second-quarter sales results in part on the failure of device makers to churn out more innovative products. “Consumers will spend, but you have to give them a good reason to spend,” Chief Financial Officer Charles Holley said. A lack of refreshed products—from televisions to videogame systems—is a problem for Wal-Mart. Entertainment accounts for 11% of its $274.5 billion in U.S. net sales.

With Gmail Overhaul, Not All Mail Is Equal (page B5): For some retailers that rely on emailed promotions, Google Inc. is adding insult to injury. When the search giant overhauled its free email service three months ago, it set up algorithms to automatically siphon the flow of airfare offers and spa deals away from users’ main inboxes and into an easily bypassed “Promotions” folder. But there is another wrinkle: For Gmail users that do visit those Promotions folders, the first items they see will often be ads sold by Google. The ads are different from those that already appear inside users’ opened messages. Instead, they look like emails sitting in an inbox but are shaded yellow and feature informational “i” icons explaining their purpose. Marketers still complain that the ads threaten to draw attention away from the coupons and pitch emails they want their targets to read first.

Penn State Workers Protest Wellness Plan (page B6): Pennsylvania State University employees are protesting a new wellness program that requires them to provide detailed health information or pay penalties that can total $1,200 a year, in an unusually public backlash against an increasingly common employer practice. Employer wellness programs offering financial carrots and sticks have been growing for years. According to a survey conducted last fall by the National Business Group on Health and Fidelity Investments, 86% of employers were linking incentives to health-related activities this year, up from 57% in 2009. The most common activities were filling out health-risk assessments, getting biometric screenings and participating in smoking-cessation programs. Penn State’s program will charge employees $100 a month starting in January if they—and covered spouses—don’t fill out the health questionnaire and certify that they are having a physical exam. To avoid the penalties, employees also must get biometric screenings, including blood-sugar and cholesterol tests and body-mass index measurements.

Mom-and-Pop Pitches Draw Flak (page C1): Individual investors are pouring tens of billions of dollars into a new generation of complex investment products, and regulators are raising concerns that not all buyers understand the costs and risks. Outside scrutiny is intensifying on securities firms’ sales practices and whether so-called alternative products—ranging from certain types of mutual funds to vehicles that invest in highly indebted companies—are suitable for all of the Americans flocking to them. Some state securities regulators are focusing their examinations on alternative-product brokers, while officials at Wall Street’s self-funded watchdog, the Financial Industry Regulatory Authority, say they are planning to file civil enforcement actions by year-end. “With these things, it can be like giving a 6-year-old a circular saw,” said Brad Bennett, Finra’s enforcement chief. Most mom-and-pop investors “don’t understand the risks they’re taking.” Securities firms say the alternative products can add balance to investors’ portfolios and some protection if markets go into free fall, as they did in the financial crisis. The products also give retail investors affordable access to assets that were once exclusive to wealthy investors.

Misplaced Confidence in a Key Indicator (page C1): Unlike being thin or rich, you can be too confident. So when the Thomson Reuters/University of Michigan index of consumer sentiment hit a six-year high of 85.1 in July, the applause wasn’t unanimous. Some fretted it may presage a nasty fall. After all, the previous high came back in the innocent days when most Americans swallowed the pablum about subprime-mortgage woes being “contained.” Stocks would peak several weeks later, while the worst postwar recession was just five months off. Economists polled by Dow Jones Newswires see a further rise in Friday’s preliminary reading of the index for August, to 85.5, which might prove fodder for optimists and worrywarts alike. Confidence certainly can signal complacency. Five of the top seven readings in the history of the series came within a few months of the bursting of the technology bubble. All of the top 35 readings came between then-Federal Reserve Chairman Alan Greenspan’s “Irrational Exuberance” speech in December 1996 and the onset of the bear market in 2000. But outstanding historical periods by definition precede worse ones. And investors enjoyed years of heady gains during that period of 3½ years.

New ‘Dawn’ in Exchanges’ War on Hackers (page C3): When prices on some U.S. stocks suddenly zoomed one day last month and others unexpectedly plunged, stock-market officials set out to detect a possible computer glitch or a trading algorithm run amok. But after hastily comparing notes, exchange employees—who were participating in a test of market defenses along with bank technicians, regulators and law-enforcement officials—realized the price swings were the work of hackers wielding rogue computer code generating a torrent of erroneous buy and sell orders. The July 18 drill, called “Quantum Dawn 2,” didn’t affect actual market prices. Even so, it sent exchange officials into a flurry of action and emergency planning. The exercise underscored one of the greatest fears of exchange executives and some policy makers: That a well-funded terrorist organization or a rogue nation could pierce the financial system’s defenses and mount an attack that unleashes waves of trading losses, compromises sensitive financial data or even forces the U.S. stock market to shut down. The simulated attack, organized by the Securities Industry and Financial Markets Association and involving more than 500 people from about 50 firms and government agencies, marked the biggest effort yet by the U.S. securities industry to ward off a coordinated assault on the computer systems that underlie the financial markets.

Upbeat Economic Signals Take Down Bonds (page C4): Bond yields in the U.S. and Europe jumped to multiyear highs Thursday as a brightened outlook for global economic growth sparked a new round of concern that the world’s major central banks soon will pull back on monetary stimulus. With yields going higher again, investors also could continue to cash out of bond funds for fear of further declines in prices, traders said. When yields climb on benchmark bonds, the prices of new bonds become more attractive relative to older ones that pay much lower interest.

Recappers: The New TV Guides (page D1): Every night, legions of bloggers churn out descriptions and critiques of shows, episode by episode, from ‘Breaking Bad’ to ‘Honey Boo Boo.’ The rise of a cottage industry. If a TV series has mustered enough of a following to stay on the air, it has likely attracted scribes that churn out the episodic plot summaries known as recaps. In a reflection of how we devour and digest television now, the number of TV recaps has exploded in recent years. Unlikely outlets from political magazines to local news affiliates are publishing CliffsNotes-style summaries of “Under the Dome” and “Big Brother,” piggybacking on the shows’ popularity and thrusting themselves into competition with established entertainment sites and individual bloggers. (The Wall Street Journal’s Speakeasy blog posts recaps of about 10 shows per week, from “Mad Men” to the reality TV spectacle “Here Comes Honey Boo Boo.”) Recaps have emerged as a cornerstone of TV culture in a phase of major transition. For networks, they are indicators of buzz at a time when traditional Nielsen ratings don’t tell the whole story. Though the weekly scrutiny annoys some producers, others monitor recaps to help guide storytelling decisions. Yet the rise of recaps has most to do with the transformation of the TV audience at large. Not only are viewers more inclined to sound off online about the minutiae of their favorite shows, many are also looking for insights about a growing number of serial dramas with complex and sophisticated storytelling. The best recaps serve a dual purpose: guiding fans of a show through subtleties (or entire episodes) they might have missed, and serving as fixed hubs of discussion for readers whose viewing patterns are staggered by time-shifting. There’s also a more basic driver of recap activity: They drum up steady web traffic for the content-hungry sites that host them.

Don’t Shoot! It’s an ‘Empathy Game’ (page D1): Among the many videogames at a recent arts and games festival in Baltimore, none was more difficult to navigate than “That Dragon, Cancer.” The challenge: Getting through it without crying. The game is about war, but not the bullet-blazing variety normally associated with gaming. It’s an autobiographical story that puts players in the role of a father whose 4-year-old son is dying of cancer. As Hannah Armbruster sampled the game, using a mouse to move a pixelated dad around its hospital-room setting, her face showed none of the excited contortions that might accompany “Call of Duty.” She took gulps of sadness and at one point rubbed her forehead in disbelief. When the game was over, she said, “Whoo,” removed her headphones and left the computer. Why would anyone want to put themselves through this? “For the same reason you’d want to read a novel about something really heavy,” says Ms. Armbruster, a 20-year-old college student. “There’s something really satisfying about experiencing narratives that are outside your own experience.” More than four decades after Pong, players are tackling a range of heady subjects including cancer, depression and alcoholism. Instead of pumping adrenaline, these “empathy games” use the videogame form to tell stories that are far more personal than the Hollywood tropes most big budget games still rely on.

How Penn State Football Survived (page D8): To write his forthcoming book “Fourth and Long: The Fight for the Soul of College Football,” author John U. Bacon embedded himself with four Big Ten programs—Penn State, Ohio State, Michigan and Northwestern—in search of the sport’s old ideals as it is roiled by money, greed and scandal. In this excerpt, he offers a behind-the-scenes look at how Penn State’s team reacted to the Jerry Sandusky sex-abuse scandal last year.

 

The Wall Street Journal: Thursday, August 15, 2013

Europe’s Economy Starts to Grow (page A1): The euro zone’s marathon recession has ended, spurred by solid economic performances in both Germany and France. But the modest recovery won’t go very far in fixing the bloc’s deeper problems and threatens to stoke a sense of complacency in European capitals. The currency bloc’s return to slow growth—confirmed by data published Wednesday that showed its economy grew at a 1.1% annualized rate in the second quarter—is likely to encourage European politicians to claim that the region’s debt crisis is receding. Once-frantic efforts to fix the common currency’s flaws are already showing signs of petering out. Most economists say the recovery is too sluggish to overcome the euro zone’s multiple ailments, including still-rising debts, mass unemployment, hobbled banks and political instability.

Confident Consumers Step Up Their Borrowing (page A1): After years of struggling to shed debt, Americans are finally gaining enough confidence in their finances to step up borrowing for autos, homes and other goods—a shift that could boost the economic recovery. Auto lending increased by $20 billion in the second quarter from the previous quarter, the largest gain in seven years, Federal Reserve Bank of New York figures showed Wednesday. Americans also increased their credit-card balances, reversing a first-quarter decline, and took out more mortgages. At the same time, total consumer debt declined by $78 billion last quarter to $11.15 trillion, putting it 12% lower than its peak in the fall of 2008 during the recession and at its lowest level since 2006. Most of the adjustment was due to a decline in the amount of debt tied to outstanding home loans, likely due to lenders’ write-offs from foreclosures and recent gains in home prices that helped owners sell. The new data showed that Americans, four years into a lethargic economic recovery, are making substantial progress in a long slog of deleveraging—cutting debt that has been weighing down households for years. One exception is student debt. The amount of education loans outstanding has increased every quarter since the New York Fed began tracking the figure in 2003. They now account for almost 9% of all consumer debt, up from 3% a decade ago.

Nurse Practitioners Seek Right to Treat Patients on Their Own (page A3): Nurse practitioners in five states are fighting for the right to treat patients without oversight from doctors, as they can in many parts of the country. The battle is particularly pitched in California, where a bill that would let some nurse practitioners do their work independently passed a key legislative committee this week. California doctors strenuously oppose the idea, arguing that it could jeopardize patient safety. Other nonphysician health professionals around the country also are lobbying to expand their roles, citing the shortage of doctors in some areas and the expected onslaught of millions of patients newly insured under the Affordable Care Act next year. NPs, as nurse practitioners are known, say they are particularly positioned to fill such gaps. Unlike physician assistants, who are licensed to practice under a doctor’s supervision, NPs—who have more training and education than registered nurses—can serve as patients’ primary health providers. NPs are trained to examine, diagnose and treat patients, manage acute and chronic illnesses and can prescribe medications, including controlled substances, in all 50 states.

Government Steps in on College Dispute (page A6): A dispute that erupted last month over an accreditation agency’s proposed shutdown of one of the country’s largest community colleges escalated this week when the Department of Education warned the agency that it wasn’t in compliance with federal guidelines. The Education Department warning, in a letter dated Tuesday, comes at a time when President Barack Obama is calling for major changes in the accountability of the nation’s higher-education accreditation system and has threatened to create an alternative system if the changes aren’t forthcoming. The letter was issued after the Accrediting Commission for Community and Junior Colleges, Western Association of Schools and Colleges, which certifies two-year colleges in the western U.S., told the City College of San Francisco on July 3 that the school would lose its accreditation in one year. The agency faulted the school for deficiencies in 14 areas including financial management, library services and student achievement.

When a New Job Leads to a Lawsuit (page B1): More employers are requiring their new workers to sign “noncompete” agreements, which they say are needed to prevent insiders from taking trade secrets, business relationships or customer data to competing firms when they leave. But with a more than 60% rise over the past decade in the number of departing employees who are getting sued by their former bosses for breaching the agreements, some worry these clauses are having an unintended damping effect on U.S. entrepreneurship, by preventing people from leaving the corporate world to launch their own businesses, or hire workers when they do.

A Mentor’s Advice: Stick to One Thing, Not a Bunch (page B4): Startup founders face many hurdles when building their businesses, some more daunting than others. Some startups featured in WSJ’s Startup of the Year documentary struggled to figure out whether their product lineup is right. They also grappled with creating a clear marketing message for their website and when to seek angel-investor funding. The Journal paired the participating startup founders with experienced mentors who could help them identify their priorities. Edited excerpts from three recent video mentoring sessions follow:

Growth by Leaps and Bounds (page B5): Mike Wood had been practicing law for about 11 years when he encountered a challenge that would change his life: teaching his 3-year-old son to read. His son Mat had memorized the letters of the alphabet, but struggled to learn the sounds that the letters represented. Over the next five years, Mr. Wood researched marketing and phonics, a teaching method that focuses on the correlation between letter groupings and sounds, while holding down his partnership at a technology law firm. He decided to take sound chips—like the ones used in singing greeting cards—and put them in plastic toy letters. When a child pushed down on a letter, it would make the sound that the letter represented. Mr. Wood designed a prototype, left his job and set up focus groups with mothers. He then found a buyer at Toys “R” Us Inc. and a manufacturer in China. In 1995, he started LeapFrog Enterprises Inc., an educational toy company. By 2002, LeapFrog had $520 million in annual revenue, and its best-selling product, a hand-held learning device called LeapPad, was in nine million homes. The Emeryville, Calif., company’s stock soared almost 99% after it went public that July, making it the top-performing IPO of the year. Mr. Wood stepped down from LeapFrog in 2004 when he grew tired of managing the company. In 2006, he founded Smarty Ants Inc. of San Rafael, Calif., which makes a cloud-based software program designed to teach kids how to read. Mr. Wood, 60 years old, spoke in an interview about creating and marketing educational toys and dealing with problems overseas. Edited excerpts:

Wednesday’s Markets: Investors Dim the Lights (page C4): U.S. stocks declined broadly Wednesday, amid growing investor caution about the outlook for the rest of the year. The Dow Jones Industrial Average shed 113.35 points, or 0.7%, to 15337.66, its biggest one-day point decline since June 28. The S&P 500-stock index slipped 8.77 points, or 0.5%, to 1685.39, with nine of 10 sectors lower. The technology-heavy Nasdaq Composite Index dipped 15.17 points, or 0.4%, to 3669.27.

Shopping Up A Storm (page D1): The Weather Channel knows the chance for rain in St. Louis on Friday, what the heat index could reach in Santa Fe on Saturday and how humid Baltimore may get on Sunday. It also knows when you’re most likely to buy bug spray. The enterprise is transforming from a cable network viewers flip to during hurricane season into an operation that forecasts consumer behavior by analyzing when, where and how often people check the weather. Last fall the Weather Channel Cos. renamed itself the Weather Co. to reflect the growth of its digital-data business. The Atlanta-based company has amassed more than 75 years’ worth of information: temperatures, dew points, cloud-cover percentages and much more, across North America and elsewhere. The company supplies information for many major smartphone weather apps and has invested in data-crunching algorithms. It uses this analysis to appeal to advertisers who want to fine-tune their pitches to consumers. “People generally check the weather because they’re planning to do something,” says David Kenny, the company’s chairman and chief executive. “We are getting better at knowing the kind of things people will be planning based on where and when they are checking the weather and what the weather is.”

weather_shopping

Is That Ice Cream on Your Beer? Japan’s Wacky Summer Brews (page D1): Care for some pineapple juice or fermented milk in your beer? Strange brews are on tap in Japan this summer, as the country’s biggest beer-makers—Asahi Breweries Ltd. and Kirin Brewery Co. —experiment with novelty beers they hope will appeal to younger Japanese drinkers, particularly women, who prefer drinks sweeter than the average pint. The gimmicky concoctions are available mainly at bars and temporary beer gardens the companies have set up for the peak quaffing season in cities across Japan. The drinks are becoming a regular summer feature, a way for Asahi and Kirin to promote and test new-product ideas, the most promising of which can be sold more broadly later.

 

The Wall Street Journal: Wednesday, August 14, 2013

Companies Spruce Up Neighborhoods, Putting Gentrification in Overdrive (page A1): On a recent weekday morning, a crew was busy sprucing up the exterior of Koonal Parmar’s one-story house in West Oakland. They trimmed trees, pressure-washed the wood siding and touched up his paint job. Mr. Parmar didn’t pay a dime for all this. The upgrades were compliments of REO Homes LLC, an investment firm that owns several houses on Mr. Parmar’s block. In addition to helping homeowners upgrade their homes, REO has mended fences and planted hundreds of trees along city streets. “The neighborhood was badly in need of capital, to maintain, beautify and restore it,” said REO founder Neill Sullivan, while driving his hybrid sedan through the streets of West Oakland. The company’s motives aren’t altruistic. They are part of a broader strategy designed to upgrade the neighborhood to attract higher-income residents who, in turn, will help boost properties’ values. In past housing recoveries, investors purchased foreclosed homes and often tried to flip them for a quick profit. But investors with a different approach have plunged into the housing market this time. They have assembled billions of dollars to acquire homes and upgrade them. Their aim is to gentrify communities and profit later when rents and property values rise.

Newark’s Booker Gets Closer to Senate Seat (page A4): Cory Booker, the mayor of Newark, N.J., and a quickly ascending Democrat on the national stage, won the party’s primary race Tuesday night for U.S. Senate in New Jersey. With most precincts reporting, Mr. Booker had 59% of the vote, topping state Assembly Speaker Sheila Oliver and U.S. Reps. Rush Holt and Frank Pallone. Mr. Pallone captured 20% of the vote, Mr. Holt 17% and Ms. Oliver 4%. Steve Lonegan, a former mayor in Bergen County, N.J., and past director of the state branch of the conservative Americans for Prosperity group, won the Republican primary. Results showed he had 80% of the vote, compared with 20% for Alieta Eck, a physician from Franklin Township. Messrs. Booker and Lonegan will face off in an Oct. 16 special election. The winner will immediately join the Senate once the results are certified. An election for the full, six-year term is to be held in 2014. Mr. Booker is heavily favored to win over Mr. Lonegan. New Jersey has 705,000 more registered Democrats than Republicans, and it hasn’t elected a GOP senator since 1972, when Clifford P. Case won the office.

Wealth Effect Boosts Retailers (page A5): U.S. consumers continued spending steadily in July, signaling shoppers are likely to remain the engine of the economy’s slow but steady expansion in the months ahead. Retail sales climbed a seasonally adjusted 0.2%, the fourth consecutive month of increases, the Commerce Department said Tuesday. The previous month’s gain was revised up to 0.6% from 0.4%, amid brisk demand for cars and furniture. Shoppers are “seeing the value of their homes and retirement accounts go up,” said John Venhuizen, chief executive of Ace Hardware Corp., an Oak Brook, Ill., retailer cooperative with 4,700 stores globally. “That wealth effect is making people feel more comfortable buying higher-priced items like barbecue grills, which increased by double digits in July” from a year earlier, he said. Consumers started the year confronted by higher taxes, surging gasoline prices and the impact of federal budget cuts. However, more than halfway through 2013, they are notching the highest confidence levels in years. Economists attribute the optimism to a gradually improving jobs picture, rising home values and the bull market in stocks.

Icahn Pushes Apple on Buyback (page B1): Investor Carl Icahn has grabbed a stake valued at over $1.5 billion in Apple Inc., believing that more cash should be falling from the tech giant’s branches. Specifically, Mr. Icahn is pressing the company to buy back shares now. While Apple earlier this year announced a large buyback, Mr. Icahn said in an interview Tuesday that he wants to see it happen right away, near the current share price, which he considers cheap. “This is a no-brainer to go buy stock in a company that can go borrow” at a low rate, Mr. Icahn said in an interview. “Buy the company here and even without earnings growth, we think it ought to be worth $625,” he said, referring to the stock price, which closed Tuesday at $489.57, having risen 5% on the news of Mr. Icahn’s investment.

Chinese Job Site Offers 2.5 Million Openings (page B5): Worried about China’s slowing economy? Evan Guo, chief executive officer of Zhaopin Ltd., has more than 2.5 million reasons not to. That’s the number of job opportunities posted on Zhaopin.com, one of China’s largest recruitment websites. Despite sharply slower growth, the world’s second-largest economy continues to create jobs, he says. Mr. Guo, who previously worked at management consultancy McKinsey & Co. and helmed a state-owned enterprise in China’s logistics sector, sat down with The Wall Street Journal in his Beijing office to discuss the evolution of China’s Internet and why the models you learn at business school don’t work in China. Edited excerpts:

In Asia, Locals Hit Western Ceiling (page B6): As Western multinationals ratchet up their operations in Asia, there is one glaring omission from the upper ranks of management: Asians. Asians are employed by multinationals in greater numbers than ever before at lower levels, but when it comes to the top roles, companies from food to finance tend to pick Westerners. When Western companies first started expanding to Asia, headquarters sent an executive to Asia to show employees how the business should run. Decades later, not much has changed. In part, that’s because leaders tend to promote people in their own image and culture, perpetuating a cycle of white, male bosses, according to consulting and executive-search firms. Many executive-search firms say their clients would leap at the chance to hire locally, but few firms are taking steps to develop and groom talent. “[Multinationals] in Asia often fall into the trap of overrelying on expatriates and headhunters as ‘easy’ ways to quickly fill vacancies,” notes a 2011 study by the Corporate Executive Board, a global business advisory. “But time to productivity is slow for outsiders who lack company or market knowledge.” Having less diversity at the top can be bad for business. Expat executives may lack some of the skills needed on the ground, says Nicklas Jonow, a partner at Pacific Consulting Group, a consulting firm. “For example, understanding consumer needs, trends, purchasing power, brand positioning—not just for luxury brands, and not just in Tier 1 cities—is becoming increasingly important,” he said in an email. “To fill those needs, multinationals have to shift their hiring practices to [local] talent who really understand these markets.”

No Need to Ask Price at Euro Stores (page B8): Taking a page from the popularity of dollar stores in the U.S., consumer-goods manufacturers, retailers and restaurants throughout the euro zone have discovered the power of the round price point and are introducing one-euro products aimed at budget-conscious  hoppers. Unilever, Danone SA, Starbucks Corp. and McDonald’s Corp. in recent months have pushed one-euro products to light a fire under a consumer market in deep recession.

Buyers Tackle a Fear of Debt (page C1): Investors aren’t afraid of the bond market anymore. After a broad selloff in May and June, investors are pouring money back into corporate bonds and riskier types of debt, some with complex structures and favorable terms for issuers. Pension funds, insurance companies, mutual funds and hedge funds are resuming a hunt for higher yields that petered out earlier this spring when the Federal Reserve said it may begin to wind down its $85 billion-a-month bond-buying program, known as quantitative easing.

Student-Loan Load Kills Startup Dreams (page C1): The rising mountain of student debt, recently closing in on $1.2 trillion, is forcing some entrepreneurs to abandon startup dreams and others to radically reshape their business plans. Some academic experts say leftover loans are the biggest impediment to upstart entrepreneurship by those who recently received college or graduate degrees. “I mentor students all the time,” says Vivek Wadhwa, a fellow at Stanford University Law School. “The single largest inhibitor to entrepreneurship is the student loans.”

Audit Report Adds Beef (page C2): Auditors would have to tell investors more about the tough decisions they had to make in evaluating a company’s finances under a new proposal from the government’s audit-industry regulator. The proposal, issued Tuesday by the Public Company Accounting Oversight Board, also would require auditors to evaluate whether the assertions a company makes in its annual report are accurate—a move which would take the auditors beyond their traditional rule of verifying a company’s numbers. Both changes are part of a plan by the PCAOB to overhaul and expand the audit report— the letter in every annual report in which an auditor avers that the company’s financial statements are “fairly presented.” The moves are aimed at making the audit report more useful for investors, as opposed to the current boilerplate letter that critics say tells investors little of substance about a company’s true condition. The PCAOB’s proposal also would add some disclosures to the audit report, notably information about how long the auditor has worked for the company. Many companies have used the same audit firms for decades, and some critics think that can lead to coziness that can jeopardize an auditor’s professional skepticism and ability to conduct a tough audit. “I think we’ve got a better mousetrap,” said PCAOB Chairman James Doty. He called the proposal “a watershed moment for auditing.”

Tuesday’s Markets: Stocks Move To and Fro as Traders Spin Their Wheels (page C4): U.S. stocks edged higher Tuesday, recovering from early losses as a positive economic backdrop and strength in technology stocks helped offset a rise in longer-term Treasury yields. The Dow Jones Industrial Average rose 31.33 points, or 0.2%, to 15451.01. The Dow was down 77.34 points, or 0.5%, at a one-month low early in the session before rebounding. The S&P 500-stock index advanced 4.69 points, or 0.3%, to 1694.16, and the Nasdaq Composite Index added 14.49 points, or 0.4%, to 3684.44.

After Losing Season, Records May Be Safe (page C4): U.S. stocks are facing a formidable obstacle on the road to further records: slowing profit growth.  With 90% of companies in the S&P 500 having reported second-quarter results, firms are on track to post 2.2% earnings growth from the year-ago quarter. That is the second-lowest growth rate since the depths of the financial crisis, and down from previous periods. Earnings among the large U.S. companies tracked by the index rose 3.4% in the first quarter and 5.6% in the fourth quarter of 2012. And the gains from earlier this year have been driven largely by corporate cost cutting and a bounceback by financial companies. Excluding financials, profits are on track to be down 2.9% in the second quarter from last year, according to FactSet. With the S&P 500 up 18.8% so far this year, this slowdown in earnings growth means valuations are heading toward the expensive side of the ledger at a time when the biggest boost from the earnings recovery may be in the rearview mirror. The high valuations, along with the prospect that the Federal Reserve soon will scale back its efforts to support the economy, may make the outlook for earnings more important to investors.

Why People Love to Crunch (page D1): Are you a cruncher? Or a “smoosher”? Some people crave the perfectly crispy crunch of a cracker or a salty chip. Others yearn for the silky smoothness of a chocolate mousse. Food companies are paying closer attention to consumer’s texture preferences as they drill down on attributes that make new products stand out on store shelves. Food developers are putting specific textures at the top of the list of traits they want to achieve, and they are emphasizing “mouth feel” in descriptions on packaging. Texture “is just as important as taste or flavor, in many cases,” says Jack Fortnum, president of the North American business at Ingredion Inc., a Westchester, Ill., food-ingredient processor that holds hundreds of consumer taste tests a year.

food_textures

Walter Mossberg: So Many Ways to Deliver Online Video to Your TV (page D1): Streaming vs. Beaming vs. Downloading. Watching TV shows, movies and other video via the Internet on your big-screen television has become all the rage. But the proliferation of devices and methods for doing so has made the whole thing mighty confusing. Should you buy a “smart TV” to watch, say, Netflix? Or should you make an older TV “smart” by attaching a box that includes Netflix? Or should you buy an adapter and just beam Netflix wirelessly from your smartphone or tablet? And then, should you stream a movie or download it? Do you have to pay to get TV shows and movies from the Internet, or can you get them for free? There’s no one right answer for everyone, or every situation. To help sort out the choices, here’s a primer for watching Internet video on a TV, legally. This isn’t a review of any one product and it’s aimed at average, non-techie consumers. Techies reading this won’t find some of the more obscure products and methods. I’ve also chosen to omit the oldest, but most complex, method—hooking up a PC to a TV using cables. That’s so 2008. 

Comedic Gold or Clunker? Secrets of Effective Office Humor (page D1): Employers like to hire people with a sense of humor, research shows. And mixing laughter and fun into a company culture can attract skilled workers, according to a study last year in the journal Human Relations. A 2011 study at Pennsylvania State University found that a good laugh activates the same regions of the brain that light up over a fat bonus check. But the office can be a comedic minefield. Making colleagues laugh takes timing, self-confidence—and the ability to rebound from a blooper.

A Tech Device That Nags You to Sit Up Straight (page D3): “Sit up straight. Put your shoulders back. Don’t slouch.” Chances are good that you’ve heard nags like these from your mother more than a few times in your life. This week, I tested a gadget that might give mothers a rest. It’s a $150 sensor called LumoBack, from a company called Lumo BodyTech, that straps around your lower waist to track your posture and vibrates whenever you slouch. It also tracks steps while walking and running, standing time, sitting time, sleep positions and sleep time.

College Athletics Could Die! Or Not (page D6): A lawsuit brought by former and current college athletes is a potentially devastating threat to the NCAA. But an examination of worst-case scenarios finds that most Division I athletic departments would avoid catastrophe.