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: Friday, July 5, 2013

Low Interest Rates Promised In Europe as Crisis Rekindles (page A1): Europe’s central bank broke with longstanding tradition by pledging that interest rates will remain at record lows far into the future—distancing itself from speculation it would follow any U.S. move toward less growth-friendly policies as the euro zone’s financial crisis flares up again. The strategy shift by the European Central Bank, which has long prided itself for keeping all its options open, came amid a political crisis in Portugal that threatened to bring down the government of a country largely seen as a model for Europe’s troubled periphery. As of late Thursday, Portugal’s coalition government appeared to have found a way to stay together. But doubts linger about the country’s financial health and political stability. The renewed euro-crisis concerns, combined with a recent rout in global bonds triggered by the Federal Reserve, raised doubts that the euro bloc would emerge from its recession this year as hoped. Thursday’s soothing message from the ECB, as well as the Bank of England, underscored the stakes as officials around the world try to safeguard fragile economies as financial markets swing wildly.

Export Declines Signal Headwinds Ahead (page A2): The world’s economic growth is increasingly falling on the shoulders of U.S. consumers. But at the same time, a slowdown in U.S. exports is threatening to restrain the already fitful recovery. U.S. imports jumped in May, reflecting an emerging rebound in American demand for foreign products other than oil. At the same time, a continued softening in U.S. exports highlighted the global troubles weighing on American firms trying to sell their goods abroad while demand from key trading partners falters. The weakness in American exports represents a mounting headwind for the U.S. economy, primarily due to a prolonged recession in Europe and China’s slowdown from its previous breakneck growth rate. Exports, which helped power the early stages of the economic recovery, had supported U.S. growth until a year ago. American businesses are already citing the dynamic as harmful.

Student Loans Caught in Capitol Crossfire (page A4): Congressional efforts to revamp how borrowing costs are set for millions of college students are being thwarted by the broader partisan fight over taxes and deficit reduction. The White House said it hopes Congress will reach a deal later this month to reverse a July 1 increase in the interest rate on some new federal student loans. The rise to 6.8% from 3.4% will affect an estimated seven million students who take out certain federal student loans for the coming school year, representing about a third of all undergraduates. Student-aid administrators at the nations colleges and universities will begin assembling student-loan packages at the higher rates this week, said Justin Draeger, head of the National Association of Student Financial Aid Administrators. He said the money for most of those loans won’t be disbursed until August, giving Congress time to retroactively lower the rates with minimal administrative consequences. But such a deal faces long odds. While the White House and lawmakers of both political parties agree on the general parameters of a plan, they remain deeply divided over key details. Some pertain specifically to student loans, including how high rates should be set, whether rates should be capped, and whether rates on a given loan should be fixed or vary annually. But other differences are broader, echoing other recent fiscal battles, such as the largely partisan disagreements over whether taxes should be raised to pay for lowering rates and whether some revenue from student-loan interest payments should be used to reduce the budget deficit.

The Myth of Unreligious America (page A9): Is America losing its faith in religion? The answer would seem to be yes, judging by polls and news stories lately. Gallup announced in May that 77% of Americans believe that religion is losing its “influence on American life.” Reporting online about the Gallup results, The Blaze said the poll “suggests that America’s slide toward secularism continues to gain steam.” In March at the Faith Angle Forum in South Beach, Fla., a paper by the Pew Forum on Religion & Public Life was presented bearing the title “The Decline of Institutional Religion.” The presentation followed up on Pew research that gained wide publicity last fall indicating that the fastest-growing “religious” group in America is made up of those who say they have no religion. According to Pew, 8% of Americans in 1990 gave their religious preference as “none.” By 2007, that response had nearly doubled to 15%, and in 2012 the “no religion” response had climbed to 20%. Earlier this year, an analysis of the General Social Survey by the National Opinion Research Center at the University of Chicago tracked a similar trend, also citing the 20% no-religion response. Many interpret the numbers to mean that America is heading down the secular road. In a survey published this month by the Pew Research Center, 48% of Americans say the growing number of “people who are not religious” is a bad thing for American society (and only 11% say it is a good thing). But I disagree with the notion that the U.S. is heading toward becoming as unchurched as much of Europe. One reason is that saying you have “no religion” is not the same as disbelieving in God. Many people who say they have no religion are simply saying they have no official religious affiliation. They may actually have strong personal beliefs. The increase in the “no religion” group may also be an illusion caused by the rising nonresponse rate to survey studies. Consider: The proportion of Americans who claim to be atheists has not increased even slightly since Gallup first asked about belief in God in 1944. Back then, 4% said they did not believe in God, and 3% or 4% give that answer today. Most of those Americans who are reported as having no religion are not unreligious but only unaffiliated, and some of them even attend church. They do not belong to any specific denomination, but probably most of them would agree that they are Christians, had they been directly asked that question. A far more important indicator, as many recent studies—including the Baylor National Religion Surveys—have found, is that those who say they have no religion are surprisingly religious. Most say they pray, and a third even report having had a religious experience. Half of these respondents who would be considered by survey takers to have “no religion” believe in angels.

Classic Board Games Score as Users Discover Them on Tablets and Web (page B2): Scrabble might want to consider adding iPad to its dictionary of acceptable words. The Hasbro Inc. board game, which was created about three-quarters of a century ago, has found a new audience as one of the most popular games for tablets. It is now the 14th best-selling app ever for Apple Inc.’s iPad. Scrabble isn’t alone. Its online cousin, the Zynga Inc. word game “Words With Friends,” is ranked No. 8. Other titles from the board-game world such as TheCodingMonkeys’ Carcassonne, United Soft Media Verlag GmbH’s Settlers of Catan and Hasbro’s Monopoly have become mainstays of the app store’s popularity lists. Chip Lange, who oversees Electronic Arts Inc.’s digital versions of Hasbro’s classics, says the reason these games have found such an audience on tablets is because they are timeless classics to begin with. The sales haven’t been limited to tablets, either. Eric Hautemont, chief executive at Days of Wonder Inc., says that 16% of the people who buy the iPhone or iPad version of Ticket To Ride buy the physical version of the game within a month. Overall, he says, between 30% and 40% of those who purchase the iPad version will eventually buy the board game.

Egypt Likes Facebook; Investors Prefer U.S. (page C8): Beyond the streets, Egypt’s crisis has been unfolding on Facebook. The Egyptian military’s 48-hour ultimatum was posted to its official page. Deposed President Mohammed Morsi’s “vision” for the country went out via his own. It is just the latest evidence that in the developing world, the social network dominates the Internet even more than it does in the U.S. The challenge is turning that flood of traffic into a flood of cash. Despite a hugely engaged Facebook audience, Egypt lacks a lucrative advertising market. That is a reminder to investors that they must not only track how quickly Facebook’s audience is growing, but also where that growth comes from.

Movie Reviews:

Home on the High Seas (Page M1): Luxury vessels are attracting home buyers who love travel and hate hassles. But will big plans float?

Signs of Life Emerge in Dublin (page M3):

The Wall Street Journal: Thursday, June 27, 2013

Historic Win for Gay Marriage (page A1): The Supreme Court dramatically advanced gay rights Wednesday in rulings that direct the federal government to provide equal treatment to same-sex spouses and allow the resumption of gay marriages in California. In a pair of 5-4 rulings on the final day of the court’s term, the justices struck down the 1996 Defense of Marriage Act, which denied federal benefits to gay couples married under state law, and let stand a ruling that found Proposition 8, a 2008 voter initiative that ended same-sex marriage in California, unconstitutional. In striking down DOMA, Justice Anthony Kennedy said Congress had no business undermining a state’s decision to extend “the recognition, dignity and protection” of marriage to same-sex couples. By excluding such couples from the rights and responsibilities of marriage contained in more than 1,000 provisions of federal law, “DOMA writes inequality into the entire United States Code,” Justice Kennedy wrote. The DOMA ruling had immediate effects. The Obama administration said it would move swiftly to ensure same-sex married couples get the same tax and other benefits as heterosexual couples, although the process for doing so is uncertain for same-sex couples who marry in one state, then move to a state that doesn’t recognize gay marriage.

Business Feels Pinch Of Swift Rate Rise (page A1): Sharp increases in long-term interest rates, triggered by Federal Reserve statements last week, threaten sales of homes, cars and other big-ticket items that have helped drive the U.S. economic recovery. Rate increases on interest-sensitive sectors likely aren’t severe enough to derail the recovery, say economists. But they arrived just as the economy’s lagging growth had showed welcome signs of improvement, raising worries among consumers and company executives.

Companies Still Wary Despite Hefty Profits (page A2): The U.S. economy has spent four years shaking off damage from a brutal recession. But American businesses still haven’t shed their caution. Despite stellar profits and lean payrolls, U.S. firms remain scarred by the deep downturn, surveys of businesses show. Their appetite for investing continues to be patchy and their hiring slow, a reflection of the global turbulence. As the U.S. recovery enters its fifth year, a new round of financial-market turmoil risks spurring another bout of anxiety across the business sector. Exports have already retrenched alongside rising uncertainty in Asia, Europe and the Middle East. Recent signals that the Federal Reserve may start easing off the gas pedal threaten to raise more doubts about whether the economy is strong enough to accelerate on its own. The latest reading of the U.S. economy Wednesday underscored the choppy picture. Business investment rose at a scant 0.4% pace in the first quarter, one factor that kept growth in the overall economy at a relatively slow 1.8% annualized rate. Capital spending by business in the U.S. remains 4% below its prerecession level. Total output by manufacturers last month sat 5% below its 2007 average. A key measure of small-business sentiment trails its pre-2008 average, while a separate reading of confidence among big-company CEOs is hovering at middling levels as firms seek signs of stronger demand.

Sluggish Consumer Spending Drags Down 1st-Quarter Growth (page A2): The Commerce Department offered an unpleasant surprise Wednesday in its latest estimate of U.S. economic growth: an unusually sharp downward revision to first-quarter growth. The economy expanded at a 1.8% annual pace in the first three months of the year, far slower than the 2.4% pace estimated just a month ago. The latest revision came largely from weaker-than-expected consumer spending—particularly in the services sector—and substantially slower business investment. The government offers three readings of the nation’s gross domestic product in the months after a quarter ends, updating its estimates each time based on new information. The initial estimate of first-quarter growth, in late April, came in at 2.5%. Releasing reports based on incomplete data isn’t unusual for government agencies, considering the demand by investors and policy makers for up-to-date snapshots of the economy’s performance. Rather, it is a trade-off between timeliness, accuracy and relevance, the Commerce Department’s Bureau of Economic Analysis says.

B&N’s Mystery of Vanishing Sales (page B1): Even as Barnes & Noble Inc. scales back on the tablet front, it faces a struggle to compete in its core business of selling print books. One question is whether a change in merchandising mix is helping or hurting. Some publishing executives say they have noticed signs that the retailer is reducing the range of titles it stocks, as it gives more floor space to toys, games and other products that generate high profit margins. While that strategy is boosting the company’s bottom line, publishers worry it may also drive book lovers to Inc., which says its physical book sales are still growing.

The Accelerators: How to Make It Big Time (page B4): How do you define a scalable startup? What are the signs you’re starting this kind of business as opposed to one that might be viable, but which isn’t suited to high growth? See what our mentors have to say:

Airlines Jettison a Costly Load of Paper (page B6): Airline pilots, who fly some of the world’s most technologically advanced machines, have long relied on paper navigation charts and manuals, which clutter the cockpit and have to be lugged around in cases that can weigh as much as a small child. Now, however, airlines are catching up with the tablet era. JetBlue Airways Corp. said Wednesday that it has received regulatory clearance to provide its 2,500 pilots with Apple Inc. iPads that will store digital copies of the heavy paper manuals they refer to during flights. Earlier this week, AMR Corp.’s American Airlines said its 8,000 pilots had largely gone paperless now that the carrier has completed the rollout of its own iPad program. By storing manuals and navigation charts on iPads, American figures it has eliminated 3,000 pages of paper per pilot. The volume of paper traditionally required by cockpit crews is almost overwhelming in the confines of a cockpit. Before the start of a flight, pilots typically remove the necessary papers from their bags and affix them to clipboards, a process they call “building the nest.” When plans changed, the pilots had to root around for the necessary charts in leather flight bags so heavy—often more than 35 pounds—that toting them around was one of American’s biggest sources of pilot injuries, said Capt. Jim Kaiser, the carrier’s managing director of flight operations. American estimates that removing the bags from all its planes saves about 400,000 gallons of fuel annually, worth $1.2 million at current prices.

Regulator Is Poised to Step on the Gas On the Road Toward Driverless Cars (page B6): Federal regulators are expected to issue new rules in the next few months that could jump-start the market for cars that communicate with other cars and road infrastructure. The technology—on demonstration this week a U.S. Department of Transportation event in Washington—uses a combination of positioning technology, such as GPS or other kinds of sensors, and high-speed wireless networks. The immediate goal is to reduce the number of accidents, cut back on toxic emissions and make transportation more efficient. But the rulings could also have a big impact on the development of next-generation vehicles, including cars that drive themselves, and could provide an opening for companies from outside the auto industry.

Nike Earnings May Be Tripped Up by China (page C1): With LeBron, Tiger and Federer on the payroll, clutch performances should be business as usual for Nike Inc. Looking back at a decade of quarterly earnings reports, that has been the case with 36 “beats” of the analyst consensus out of 40 opportunities. The company’s performance against the point spread was less impressive, with the stock rising on just 27 occasions. Although Nike shares fall on earnings day only a third of the time, Thursday’s fiscal fourth-quarter report runs a higher risk than most. Forecast earnings of $2.68 a share for the year through May, up from $2.37 a year earlier, look achievable. But investors care more about “futures”—anticipated future shipments—and those have the potential to disappoint. It was last June that Nike saw its sharpest one-day share-price drop in years after unveiling weak fourth-quarter earnings and a sharp cut in futures. The culprit that time, “Greater China,” looks shaky again.

China Cash Crush Spreads (page C3): Even as Chinese officials indicate a softening of their tight grip on cash, some businesses are reporting liquidity is increasingly hard to find in some places and that customers are turning to alternatives. It isn’t clear how deep the liquidity issues have trickled down from the financial sector, which has been gripped this month by a cash crunch widely believed to be aimed at deflating ballooning credit in the Chinese economy. But it suggests the pain could spread to other areas if cash borrowing rates for banks remain stubbornly high. Over the past couple of weeks companies have increasingly used bankers’ acceptances—a type of short-term guarantee issued by banks to finance trade—to pay their bills instead of cash, according to people in a range of industries around the country. “Bankers’ acceptance are relatively easy to get as they don’t show up on banks’ balance sheets,” said Mr. Liu, a purchasing manager at a copper-cable maker in China’s eastern Zhejiang province, whose firm supplies China’s State Grid Corp. and consumes about 150,000 tons of copper a year. He also said that his firm’s financing costs have more than doubled from the beginning of the month, though “we haven’t felt the pinch yet.”

Wednesday’s Markets: Another 100-Point Dow Day (page C4): Fading fears about a pullback in central-bank support helped push stocks higher. The Dow Jones Industrial Average advanced 149.83 points, or 1%, to 14910.14. On Tuesday, the Dow gained 101 points. The Standard & Poor’s 500-stock index added 15.23 points, or 1%, to 1603.26. The Nasdaq Composite Index rose 28.34 points, or 0.8%, to 3376.22.

Overheard: Obesity Is Now a ‘Disease’ (page C10): Obesity is now a “disease,” according to the American Medical Association, which recently changed its classification from a “condition” to a full-fledged illness. The change is largely symbolic. But the aim is to shift attitudes among physicians and encourage a greater focus on finding treatments from pharmaceutical companies. How about diet and exercise?

Wimbledon’s Grass Buries Its Seeds (page D6): Grass is a well-known habitat for ticks. It can trigger allergies. It constantly needs to be mowed. It will leave a permanent stain on your linen pants. But there may be no more irritating thing one can do on grass than play tennis. On a day of slips, falls, aches, pains, retirements, withdrawals, and out-and-out nuttiness at Wimbledon, Roger Federer, the seven-time and defending champion, did something he hadn’t done here, or at any Grand Slam, in nine years: He lost before the quarterfinals. To make matters worse, it happened on Centre Court against Sergiy Stakhovsky, ranked No. 116 in the world, in four sets, 6-7(5), 7-6(5), 7-5, 7-6(5). Federer wasn’t the only victim Wednesday. The grass went on the attack from the moment play began. Players went slip sliding all over; seven of them either retired or withdrew from the singles event, a number the International Tennis Federation said “is believed to be the most” on a single day at a Grand Slam event in the Open Era, which began in 1968. Maria Sharapova was another grassy victim. The No. 3 seed and favorite to reach the final took several spills before losing to qualifier Michelle Larcher de Brito, who had never beaten a Top 5 player in her life. “I don’t think I’ve ever fallen three times in a match before in my career, so that was a little strange,” Sharapova said.

Harvard’s Imperial Coach (page D6): As Harvard’s rowing coach, Harry Parker put together 22 undefeated regular seasons, claimed 16 national championships and went 44-7 in the Harvard-Yale Regatta. Harder to measure is Parker’s broader legacy. Following his death Tuesday from cancer at age 77, Parker was hailed as a force behind triumphs from Wall Street to Silicon Valley and Hollywood. “My mother said, ‘Your father gave you your brains, I gave you your drive and Harry Parker put it all together,'” said Richard Cashin, a managing partner at One Equity Partners who rowed at Harvard and at the 1976 Olympics. Still coaching at the time of his death, Parker had just completed his 53rd season at Harvard, meaning that his influence extended across generations, from 1960s-era Harvard graduates to the Winklevoss twins (Harvard 2004)—the technology investors whose legal battle with Mark Zuckerberg over Facebook’s founding inspired the movie “The Social Network.” Popular perception has it that sports don’t matter in the Ivy League. But during Parker’s long reign at Harvard, rowing was less a sport than religion. No other school came close to matching its dominance. Rowers train year-round for only one or two major events, but Parker excelled at instilling deep stores of discipline. Parker had a different approach to every rower, according to Cashin, while maintaining a quiet personality. He was frank, not rude. He got the best out of teams by telling them exactly where they stood, then telling them what they needed to do to achieve their goals. For his athletes, that approach started out as a way to win races, but it also taught them about success in life. “He made people prove themselves to themselves,” said Zimmerman. “It’s like he said, ‘This is what you could be. Do you want to be that?'”


The Wall Street Journal: Friday, June 21, 2013

Turmoil Exposes Global Risk (page A1): Worries about China and the Federal Reserve’s plans rattled global markets for a second day, sending U.S. stocks to their biggest loss this year and hammering bonds and many commodities. The Dow Jones Industrial Average dropped 353.87 points, or 2.34%, to 14758.32, on big volume, marking its first back-to-back decline of 200 points or more since Nov. 1, 2011. Yields on Treasurys hit their highest since August 2011 as bond prices fell. The turmoil exposed vulnerabilities in the financial markets and the world economy that had been mostly ignored because central banks were willing to ride to the rescue with huge amounts of money. Investors said Thursday they were buffeted by two distinct forces: worries about the health of China’s economy and financial sector, and the prospect that the beginning of the end of the Fed’s extraordinary stimulus could reverse the huge rally in assets ranging from “junk” bonds to dividend-paying stocks. Gains in many of those assets had been fueled by ultralow interest rates and expectations that the Fed would continue to pump money into financial markets.

Americans Worked Less in ’12 (page A2): With the economy struggling to find its footing, Americans spent less time at work last year and found more time for leisure activities such as watching television, a new government survey finds. The average American aged 15 or older spent three hours, 32 minutes a day doing work-related activities last year, according to the American Time Use Survey released by the Labor Department on Thursday. That is down from 2011, when time spent on work jumped from three hours and 30 minutes to three hours and 34 minutes. While such changes may not seem big, average yearly changes in time spent on different activities tend to be small, and even minor changes are significant. The survey, which has been conducted annually since 2003 and includes both employed and unemployed persons, suggests America’s sluggish recovery continues to hamper workers. With less time spent at work, Americans boosted the portion of their day going to leisure and sports activities: Time spent on leisure jumped about nine minutes to five hours and 22 minutes. Americans watched TV for two hours and 50 minutes a day, a second-straight increase from two hours and 44 minutes in 2010. Meanwhile, time spent sleeping edged up to eight hours and 44 minutes, from eight hours and 40 minutes in 2010. Time devoted to volunteering and cooking, meanwhile, fell.

Distress Signs Test Beijing’s Resolve (page A8): Beijing’s determination to ride out increasing economic headwinds without resorting to its usual interventions is heightening anxiety in markets around the world. Concern that leaders are offering neither stimulus nor other ways to address mounting evidence of economic weakness grew after a preliminary gauge suggested that China’s crucial manufacturing sector contracted faster in June than in May. At the same time, a shortage of cash has intensified this week, with sudden heavy selling in the bond market and companies turning to Hong Kong for funds. Early Friday, rates in China’s money markets fell sharply on rumors that Beijing had ordered its big banks to loosen up cash. Still, they remain more than double than average for the year, and the turbulence suggests continued uncertainty in the market for cash in coming days.

Euro Zone Braces for Stagnation (page A9): The euro-zone economy may finally be exiting its longest postwar recession but entering a period of stagnation or very weak growth at best, latest data suggest. The closely watched purchasing managers survey for the euro zone rose to a 15-month high of 48.9 in June, adding to recent evidence that overall economic activity in the 17-country bloc could stabilize this summer after falling continually since late 2011. Meaningful growth still isn’t in sight, however. The PMI and other data indicate that any recovery in coming months will be too weak to halt the rise in unemployment in Europe or to alleviate the region’s public and private debt burdens.

How Tesla Pulled Ahead of the Electric-Car Pack (page A11): Tesla Motors has had a very good year. First came an announcement that the California-based maker of electric cars had, in the first quarter of 2013, turned a profit for the first time. Then came news that the Tesla Model S sedan had earned Consumer Reports’ highest rating. With a base price of $62,400 (after a $7,500 federal tax credit) the Model S even outsold similarly priced luxury BMW and Mercedes models in the first quarter. Tesla has come on so strong that auto dealerships across the country, threatened by the electric-car company’s model of selling directly to customers, have mounted a legal and political campaign to force Tesla to change course. The company’s market capitalization is now more than $11 billion, nearly triple where it stood two months ago, and roughly a quarter of General Motors’ $44.8 billion market cap. Yet despite all the excitement, Tesla is not yet in an open lane to success. Tesla has been able to do well so far in substantial part because it is a small and focused company. It isn’t saddled with outsize legacy costs like the Big Three auto makers are. Another reason for Tesla’s success is founder and CEO Elon Musk’s skill at partnering with other companies and developing new technology for them. Toyota and Daimler AG, for instance, teamed up with Tesla to help develop batteries for their electric cars, and both invested in Tesla.

God Is Still in the Classroom (page A11): Ellery Schempp, a 16-year-old junior at Abington Senior High School in Abington, Pa., went to his homeroom class one day in 1956 with an extra book in his bag. The public-address system crackled to life and a student began reading 10 verses from the King James Bible—an exercise required by law in Pennsylvania at the time. At that moment, Ellery, as he had planned, took the book out of his bag. He began silently reading the Quran. A few minutes later, he declined to participate in recitation of the Lord’s Prayer. So began a legal conflict that culminated 50 years ago this week (on June 17, 1963) in one of the most contentious rulings in Supreme Court history. In Abington School District v. Schempp, the justices ruled that public schools violated the Establishment Clause of the First Amendment when they sponsored prayer and Bible reading. The court said the activities in the Abington schools were religious exercises, violating the “strict neutrality” that the government must show on religion. Today, Schempp remains a flash point in the nation’s politics and culture, in large part because the decision is seriously misunderstood. Those who want to return prayer to the public schools often blame the ruling on liberal, activist judges and argue that their ruling banished religion from the public schools. The critics are wrong on both counts. Two essential points about the decision seem lost in public debate—that the decision was a consensus of liberal and conservative legal thought on the court at the time and that the decision actually permits meaningful religious teaching and activity in public schools.

Facebook Unwraps Video (page B3): Facebook Inc. made its first major move into video on Thursday, adding the ability for people to create and share ultrashort clips with its Instagram application. The new feature, called Video on Instagram, puts Facebook in direct competition with rival Twitter Inc., whose similar Vine app has grown rapidly in recent months. Facebook’s tool, which is embedded in photo-sharing app Instagram, lets people take a continuous clip, or a series of clips, to build a video. Unlike Vine, which limits video to six seconds, Instagram video clips can be as long as 15 seconds and the service offers additional tools to edit videos, such as the ability to delete clips or add visual filters.

Samsung’s Gadgets Try to Satisfy All (page B4): Samsung Electronics Co. on Thursday showed off an array of new devices with wide appeal, including a cheaper version of its flagship smartphone and two new tablets, in its bid to gain more market share in the highly competitive mobile-devices market. The product launches come amid mounting concerns that sales of the company’s flagship Galaxy S4 smartphone may not be as strong as estimated. Shares in Samsung, South Korea’s biggest company by market capitalization, have fallen sharply over the past two weeks, wiping out more than $27 billion off its market value. The decline in its stock price is reminiscent of the fall in rival Apple Inc. shares earlier this year that was sparked by concerns over demand for its latest iPhone 5.

A Pension Takes Neighborly Advice (page C1): When officials with Montgomery County, Pa., became troubled by their pension fund’s investment fees and recent performance, they turned to a neighbor for advice. His take: Park money in low-cost index funds. And that is what they are doing, a move that highlights the growing frustration many pension officials feel toward expensive Wall Street investment managers. The county is now shifting nearly all its $470 million in pension assets to a handful of index funds run by Vanguard Group Inc. But the neighbor’s strong opinion on this issue wasn’t a surprise either: He is John C. “Jack” Bogle, Vanguard’s founder and the godfather of index funds, which track the broader stock and bond markets. “It’s not pie in the sky,” says Mr. Bogle, 84 years old, whose office on the Vanguard campus is about 13 miles from the Montgomery County courthouse. “The arithmetic says it’s all indexing.” Index funds aren’t just cheap but also offer one of the simplest types of investing, which is why they have become staples for individual investors. But pension funds have long been privy to the most sophisticated, complex financial products money can buy. Montgomery County’s gambit is akin to abandoning a fully loaded sports car in exchange for a bicycle. Active managers usually employ multiple investment strategies and move money in and out of various products to try to achieve high returns. Index funds, by comparison, hold a range of stocks and bonds over a longer term that often reflect the broader market. They charge lower fees because they often involve less-frequent trading, and less manpower.

Vines Start Creeping Up on Facebook (page C8): Lately, Facebook is having trouble inventing social services of its own. That is a risk for investors who take comfort in the network’s sheer ubiquity. As Internet usage shifts from desktop computers to mobile devices, rival social services are the ones offering innovative ways to share photos and videos as well as to communicate with friends. Given the huge advertising business Facebook has grafted onto such activities—generating $1.2 billion of revenue in the first quarter alone—it is problematic if users migrate elsewhere. The latest hot social service is Vine, a smartphone app that makes it simple to record and share snippets of video. Owned by Twitter, Vine’s app is ranked among the top 10 for the iPhone and has gathered more than 13 million registered users since launching in January. That may equate to a tiny fraction of Facebook’s user base, but Chief Executive Mark Zuckerberg knows how to spot a threat. On Thursday, he announced that Facebook-owned mobile app Instagram would adopt Vine-like video features. Indeed, Instagram is the cautionary tale Mr. Zuckerberg wants to avoid. Facebook was losing users to the app and so ended up buying it in a billion-dollar deal. The good news for Facebook shareholders is that while it is fairly easy to copy rival services, it will be very difficult for rivals to replicate Facebook’s gigantic user network.

The Trouble With Kickstarter (page D1): The only thing worse than having to watch your friend’s arty movie is having to pay for it, too; the crowdfunding backlash. For aspiring artists, crowdfunding sites that raise cash from the masses can make a dream project come true. For contributors like Annabelle Gurwitch, they’re a potential minefield. The Los Angeles actress and comedian is worried she’ll create personal or professional bad blood if she ignores the constant requests for money. So she funds nearly every one she gets—from a show by a director friend (she might want a role one day) to a web series by a fellow actress (they shared a dressing room at the time). An old classmate she hadn’t seen in 30 years asked her for “quite a bit of money” while another campaigner complained that she didn’t offer enough. Ms. Gurwitch, who gives up to $1,000 a year, considers this the art-world equivalent of paying protection money to the mob. “I’m terrified not to contribute,” she says. Crowdfunding sites like Kickstarter and Indiegogo have revolutionized financing across the art world, contributing to two Oscar-winning movies (“Inocente” and”Curfew”), a best-selling book (the zombie-filled graphic novel “FUBAR: Empire of the Rising Dead”) and many other creative triumphs. The phenomenon has also led to an awkward new social dynamic when would-be Scorseses pressure their family, friends and colleagues for cash. The transparency of crowdfunding sites makes things worse. Campaigners are free to scour their backer lists to see which uncle went cheap, which best friend “forgot” to contribute and which former co-worker turned out to be surprisingly generous.

The Daughters of Title IX (page D5): ESPN celebrates a generation of female athletes in ‘Nine for IX,’ a series of documentary films. The series of nine documentary films highlights female athletes from Venus Williams to the 1999 U.S. soccer team, from Sheryl Swoopes to Katarina Witt, to the reporters who opened up men-only locker rooms.

Neil Gaiman’s Childhood Secret (page D7): Neil Gaiman is such an exuberant storyteller that no single medium satisfies him. He writes novels, screenplays, comic books, poems, short stories, TV scripts, radio plays and operas. He blogs and tweets, of course, and has 1.86 million Twitter followers. He draws and even sings, appearing onstage with his wife, the indie-rock singer Amanda Palmer. So perhaps it’s not surprising that bookstores are flooded with his work this year. Mr. Gaiman is releasing seven new books in 2013, including “The Ocean at the End of the Lane,” a dark fantasy novel that came out this week, two children’s books, a comic book, a short story anthology he edited and a philosophical manifesto about making art that he adapted from a commencement speech he gave. He’s also dabbling in television, guest writing for the BBC sci-fi show “Doctor Who” and adapting his 2001 epic fantasy novel “American Gods” into a series for HBO. The buzz surrounding the book has been amplified by the long wait. “The Ocean at the End of the Lane” is Mr. Gaiman’s first novel for adults in eight years. It’s also the darkest, most personal and most autobiographical book he’s produced in his 30-year career.

Take It Outside (page M1): In a growing number of homes, luxury furnishings and high-end appliances are moving into the backyard; commercial-grade heating and automated mosquito control.

Where Celebrities Live: Hollywood’s Worst-Kept Secrets (page M1): The “Bling Ring,” a group of fame-obsessed youths from the San Fernando Valley used the Internet to locate celebrity homes and steal more than $3 million worth of goods from them in 2008 and 2009. Homes owned by Paris Hilton, Orlando Bloom, Rachel Bilson and others were hit. The Bling Ring, immortalized in a film directed by Sofia Coppola and starring Emma Watson, left a lasting imprint on the world of Hollywood real estate. Here, security and privacy are primary concerns—agents with famous clients are often required to sign confidentiality agreements—yet the exact locations of celebrity homes are hardly a secret. Encouraging interlopers are celebrity-gossip websites, aggressive paparazzi and reality-television shows, not to mention satellite mapping.

In a Florida Town, Horses Upstage the Celebrities (page M3): Life in Wellington—particularly within the confines of the lush 9,200-acre district known as the Equestrian Preserve—revolves around horses. An estimated 9,000 reside there: Hanoverian dressage horses trained for intricate footwork, Selle Français show jumpers and fleets of polo ponies. Some 60 miles of bridle paths lace the district, where speed limits are set at 25 miles per hour and street-crossing buttons are positioned at rider height. Celebrities and billionaires sit in the saddles. The Malones’ neighbors in the Palm Beach Polo residential community include Charles Dolan, Cablevision founder and chairman, and Frank McCourt, former owner of the Los Angeles Dodgers, who bought a home for $10.95 million in February, according to Palm Beach property records. Bruce Springsteen has a house nearby. “You can measure [property] value in steps to the ring of the Grand Prix field,” says Martha W. Jolicoeur of Illustrated Properties. In 2006, she says, she sold a 12-acre estate with a barn in the coveted Mallet Hill neighborhood—a short hack to the show grounds—to Georgina Bloomberg, a competitive show jumper and daughter of New York City Mayor Michael Bloomberg. Ms. Bloomberg is but one of many heiresses to hang her riding hat in Wellington. Jessica Springsteen, whose father, Bruce, owns a home near the show grounds in the Equestrian Club Estates neighborhood, competes in the Winter Festival. So does Jennifer Gates, the 17-year-old daughter of Microsoft’s Bill Gates. The Gates family and their horses spent the past winter at a 4.8-acre estate with a 20-stall barn in Mallet Hill, according to local agents. The property, which Mr. Gates reportedly rented for $500,000 for the season, just sold for $8.7 million. “Wealthy people like horses,” says Mr. Varney. “Wealthy people’s kids like riding horses. It’s a relatively small world.”


The Wall Street Journal: Thursday, June 20, 2013

Markets Flinch as Fed Eyes Easy-Money End (page A1): Federal Reserve Chairman Ben Bernanke said the central bank could start winding down its $85 billion-a-month bond-buying program later this year and end it altogether by mid-2014, setting up a high-stakes test to see if the economy and financial markets can begin to stand on their own. Financial markets—which have been enlivened by the fuel of the Fed’s easy-money policies—didn’t take the news happily. The Dow Jones Industrial Average finished the day down 206.04, or 1.35%, at 15112.19. Yields on 10-year Treasury notes jumped 0.126 percentage point to 2.308%, the highest level since March 2012. The dollar strengthened. Asian markets moved lower in early trading Thursday. Behind the Fed’s strategy for unwinding its bond-buying program were its optimistic new economic forecasts for next year, including a projection that the jobless rate, which was 7.6% in May, will fall to between 6.5% and 6.8% by the end of 2014.

For Web Firms, Faster Access Comes at a Price (page B1): Facebook, Google and Microsoft and other Internet companies have been paying broadband-service providers for connections to get faster and smoother access into their networks. Netflix has been reluctant.

A Boot at Men’s Wearhouse (page B2): A month ago, Men’s Wearhouse Inc. called co-founder and Chairman George Zimmer the “chief driving force behind the Company.” By Wednesday, the seller of discount suits had driven him out. The public ousting of Mr. Zimmer, who opened the first Men’s Wearhouse with a hand-painted sign and $7,000 in 1973 and who has been the face of the retail chain’s advertising, is a reminder of the often-fractious relationships between companies and their founders. Men’s Wearhouse said early in the day that it had “terminated” Mr. Zimmer as the board’s executive chairman and was discussing what if any relationship he would have with the company in the future. The 64-year-old Mr. Zimmer shot back later saying he had disagreed with the company’s direction and “the board has inappropriately chosen to silence my concerns.” Investors didn’t expect the move, which sent the company’s shares down as much as 6.9% Wednesday before they recovered to close at $37.04, down 1.1%. The company has warned in its securities filings that Mr. Zimmer is important to its success and that a loss of his services could hurt its business and stock price.

Microsoft Backtracks on Xbox Policies (page B2): Microsoft Corp. said Wednesday it will reverse some unpopular policies it recently announced for its coming Xbox One videogame console. The Redmond, Wash., software company said it would no longer require its Xbox to connect to the Internet each day, nor would it restrict how its videogame discs are traded, resold or rented. “We have listened and we have heard loud and clear from your feedback that you want the best of both worlds,” Don Mattrick, head of Microsoft’s entertainment division that houses the Xbox, said in a statement. The changes are a clear misstep for Microsoft, whose currently selling Xbox 360 has reigned as the top videogame console in the U.S. for more than two years, according to NPD Group. Microsoft unveiled its $499 Xbox One in May to much acclaim for its new features and high fidelity images. But shortly after, the company fell under heavy criticism among gamers for its newly restrictive stance on used games and game play. The policies for the Xbox One due out in November included offering technology to videogame publishers to restrict how titles are resold or traded at participating retailers. The result was a large campaign by customers, partly through Twitter, to convince Microsoft to reverse course.

Nike Takes a Page from Apple’s Playbook (page B4): At a trendy loft here where DJs spin songs and assistants wheel in Red Bull energy drinks, Nike Inc. is embarking on an experiment that it says is increasingly crucial to its business: encouraging software developers to build applications for its FuelBand activity-monitoring device. Nike is giving select developers terabytes of data from customers wearing the digital wristband. The company hopes the aggregate data—from the average duration of a run (35 minutes) to how energetic residents of certain cities are (New Yorkers move more than Angelenos)—will lead to apps that make the FuelBand more indispensable to users. “The more uses there are for the FuelBand, the more it becomes something you will never take off,” said Stefan Olander, Nike’s head of digital sport, in an interview. Nike’s data-sharing venture is part of a larger shift at the Beaverton, Ore., sportswear giant to think more like a technology company. Nike, which reported $24 billion in revenue last year, can no longer just make sneakers and clothing, Mr. Olander said, but also must develop a technology business to better connect with customers who are increasingly glued to smartphones and social media. Whether Nike can prosper in technology remains to be seen. Nike has a checkered history with gadgets, dating back to a clunky running monitor it debuted in the 1980s with lackluster results. The company also faces a slew of competitors with FuelBand, which Nike released early last year. Upstarts such as Fitbit Inc. and Jawbone Inc. that make similar fitness-tracking products already share customer data with app makers, and larger companies such as Apple Inc. and Google Inc. are emerging as potential rivals by working on their own wearable technology. Analysts say Nike’s move to encourage developers to build software for the FuelBand is an attempt to mimic Apple’s successful effort to build its App Store. The App Store, which started as a platform to encourage programs for Apple’s mobile devices, has now become a $25 billion industry, setting Apple’s iPhone apart from its competitors and encouraging more customers to buy the device. “The iPhone was successful because people built great apps around it,” said Greg Gottesman, managing director at Madrona Venture Group, a Seattle venture capital firm, and a Nike accelerator mentor. “Nike will be more successful owning a platform, rather than just a product.”

Extreme Sports Get a Camera (page B7): Nick Woodman longed for a way that he and other surfers could photograph their most outrageous stunts. Using rubber bands and a Velcro surfboard leash, he attached hundreds of waterproof cameras to his wrist. But the rough Northern California surf proved too powerful, flooding every model he tested. Mr. Woodman concluded he needed to build his own camera, and he soon began assembling a prototype with hot glue and plastic. He raised $235,000 from his parents to perfect his invention and hired a manufacturing firm in China to produce it in bulk. In 2004, he started selling the cameras under the brand name GoPro at surf shops and trade shows. Six years later, he landed his first big retailer, Best Buy Co. Today, Mr. Woodman’s company, Woodman Labs Inc., pulls in $526 million in annual revenue, and its cameras have become the gold standard for self-documenting extreme sports. The matchbox-sized devices, which range in price from $200 to $400, are mounted on helmets, bike handles, surfboards and snowboards of both weekend warriors and professional athletes, including Olympian Shaun White and sky diver Felix Baumgartner.

Facebook Plays Catch-Up on Video (page B12): When Twitter Inc. acquired the video-sharing app Vine in October, it was largely viewed as a consolation prize after the company missed out on photo-sharing app Instagram, which was snapped up by rival Facebook Inc. earlier last year. But now, Facebook is trying to catch up to Twitter. At an event on Thursday, Facebook is expected to unveil pieces of its own Vine-like video service, under development for months, that would allow users to create and share brief video clips, people familiar with the matter said. The latest contest between Twitter and Facebook shows just how hard it is for even these relatively nimble young companies to stay ahead of the curve. At stake is more than just Facebook’s credibility with tech-savvy trend setters, but rather a growing form of advertising that both rivals want to dominate: The video-ad market is expected to grow 41% to top $4 billion this year, according to eMarketer Inc.

Wednesday’s Markets: Stocks Taper Off From Recent Gains (page C4): Federal Reserve Chairman Ben Bernanke spoke, and investors cringed. Stocks declined and both Treasury-bond yields and the dollar rose sharply, all signs of market unease, after Mr. Bernanke repeated his May comments that the Fed this year could begin trimming the size of its monthly debt purchases. “For some people, it is, ‘Oh my goodness, the Fed is going to put it in reverse,’ ” said Andy Brooks, head of U.S. stock trading at Baltimore asset-management firm T. Rowe Price. He said he thinks the stock market will eventually bounce back, if, as the Fed forecasts, the economy keeps improving, but bonds could take a harder hit. The Dow Jones Industrial Average fell 206.04 points, or 1.3%, to 15112.19, declining sharply after two consecutive days of gains. It remains just 1.9% below its record of 15409.39 hit May 28. The bond market can be more sensitive to Fed policy changes than stocks, and that was the case on Wednesday. The yield of the 10-year Treasury note jumped to 2.308%, a 15-month high, from 2.182% on Tuesday. The dollar, seen benefiting from a Fed pullback, climbed against rival currencies. The heavy swings reflect the expectation that, as the Fed cuts back on its stimulus program, all manner of interest rates will continue their recent moves up from the exceptionally low levels of recent years. Higher rates are bad for stocks, bonds and economic growth. They help the dollar by boosting the return on short-term dollar investments. Mr. Bernanke continued his policy of stating his plans clearly, in hopes markets won’t be surprised when the Fed begins to act.

Credit Markets: Markets for Bonds Sell Off (page C4): Bond prices slumped, sending the yield on the 10-year Treasury note to its highest level in 15 months, as the Federal Reserve upgraded its growth projections for the U.S. economy. Yields on 10-year Treasurys jumped, closing at 2.308%, according to Tradeweb, from a low point on the day of 2.167%. Later in the afternoon, the yield on the 10-year Treasury note reached 2.360%. When bond yields rise, prices fall. Highly rated corporate bonds are more sensitive to sharp interest-rate moves as they are tethered more tightly to Treasury yields. When rates go up, the prices of existing, lower-yielding bonds fall.

No Losers or Winners with These Digital Toys (page D3): If you are the parent of a child under age 6, there’s a good chance you know about Toca Boca, the Swedish app developer with games like Toca Hair Salon, Toca Tea Party and Toca Kitchen, which are helping define the world of digital play. Boca’s newest “digital toy,” launching Thursday, is an app called Toca Builders. It aims to pull in slightly older children by combining elements of a box of plastic Legos with a classic red Etch A Sketch. It will provide another test of how well the company and its team of “playsmiths” can anticipate the desires of the first generation to use an iPad before they could talk. Unlike with Angry Birds and many other popular digital games, kids can’t win or lose when playing one of Toca Boca’s 20 apps. The Toca apps instead provide an immersive play task, and kids interact with each other while doing it. One kid may be at the controls, but the other is interjecting, making suggestions and laughing.


The Wall Street Journal: Wednesday, May 22, 2013

Apple CEO, Lawmakers Square Off on Taxes (page A1): Apple Inc.’s tax strategies came under harsh scrutiny Tuesday in the Senate, where lawmakers are finding it far easier to call for a simpler tax code than to produce one. Tim Cook, Apple’s chief executive, defended the technology giant’s tax practices, which Senate investigators say have led Apple to pay no corporate taxes on tens of billions of dollars in overseas income over the past four years. He said the company pays all taxes due and argued the U.S. tax code needs a “dramatic simplification.” Mr. Cook’s appearance before the Senate’s Permanent Subcommittee on Investigations focused both on Apple’s practices and the broader question of tax reform. One consistent complaint from large companies is that the U.S. taxes multinational companies on their global earnings, while many others tax only profits earned within a country’s borders. That gives U.S. companies reason to park foreign earnings overseas: They are taxed only when brought back to the U.S. Some U.S. companies with substantial foreign earnings favor legislation to tax only the profit they earn in the U.S. Others, including some that are primarily domestic, place a higher priority on legislation that would reduce the statutory corporate tax rate, now 35%, by eliminating various deductions and credits.

Apple Tax Bill Overstated to Investors (page A8): Apple Inc.’s real tax bill isn’t as big as the one it reports to its investors. Among the findings of an investigation by the Senate’s Permanent Subcommittee on Investigations are figures that show Apple’s reported taxes substantially exceed the sum it actually pays the U.S. Treasury. One factor: Apple uses a conservative approach to accounting for taxes on its overseas earnings. It has been setting aside billions of dollars a year in provisions against possible taxes on income that it earned abroad. But those taxes wouldn’t be due until Apple brought the funds home to the U.S., something Chief Executive Tim Cook said he has no intention of doing. Thus, the provisions have the effect of making the tax liabilities that Apple discloses to investors look bigger than what it is likely to pay, said a person familiar with the Senate probe.

Scrutiny Aside, Apple Has Big Fans in Congress; ‘I Have an iPad’ (page A8): Senate investigators on Tuesday described Apple Inc.’s tax practices as “outrageous,” an “absurdity” and akin to “alchemy.” And what about Apple’s iPhones? “I’ve got one right here,” declared Sen. Carl Levin, a Michigan Democrat, waving the ubiquitous device. “It’s a terrific instrument.” If Tuesday’s hearing before a Senate panel led by Mr. Levin was meant to highlight Apple’s ability to avoid corporate taxes, it also showed the panel’s challenge in vilifying a company that tries to turn customers into fans.

Public School Spending per Student Shows Drop (page A2): U.S. public-education spending per student fell in 2011 for the first time in more than three decades, according to new U.S. Census Bureau data issued Tuesday. Spending for elementary and high schools across the 50 states and Washington, D.C. averaged $10,560 per pupil in the fiscal year ended June 30, 2011. That was down 0.4% from 2010, the first drop since the bureau began collecting the data on an annual basis in 1977, the agency said Tuesday. However, when you adjust the figures for inflation, this isn’t the first drop on record. By that measure, spending per pupil dropped once in 1995 and hit its highest level in 2009. In inflation-adjusted terms, spending per pupil was down 4% in 2011 from the peak.

Beijing Vows to Ease Imbalance with India (page A12): Chinese Premier Li Keqiang said Tuesday he was aware of India’s concerns over a bilateral trade deficit and expressed a willingness to help Indian companies access China’s market. “I am confident we have the ability to mitigate the trade imbalance between our two countries. China never has any intention to seek a trade surplus, only a dynamic trade balance is sustainable to our nations,” Mr. Li told businesspeople at an event in New Delhi, on the penultimate day of an official visit. India’s trade deficit with China is $40 billion, up from just $1 billion in 2002, according to data from India’s Ministry of Commerce. In that period, trade has risen from around $2 billion to $68 billion, as Indians have bought more Chinese goods such as telecommunications and power equipment.

Some Companies Foster Creativity, Others Fake It (page A15): Some companies crank out creative ideas one after the other and reap the benefits. Others struggle, always one step behind. Trying to copy what they think is the competition’s formula for success, they add flexible work hours, new technology, collaborative workspaces, fun tools, free child care and free food. But the creative ideas never come. In the end, company leaders are left wondering how these gimmicks led to innovation for some, but not for them. Why? Because creativity—or what is commonly referred to as innovation or out-of-the box thinking—is not the product of gimmicks. It is true that creative companies like Clif Bar (a staple of my diet!), Zappos and Starbucks are known for using collaborative workspaces and offering free child care and employing similar concepts. But these gimmicks don’t make a creative environment, they come out of one that already exists. That environment comes from only one thing: leadership. Most leaders talk about creativity (or its cousin, innovation) without understanding what it is and how it happens. The process of real creativity is messy, chaotic, sometimes even disgusting, and it reeks of failure, experimentation and disorganization. Because of this, most leaders don’t actually want creativity, they just want the results of it.

Phone Firms Sell Data on Customers (page B1): Big phone companies have begun to sell the vast troves of data they gather about their subscribers’ locations, travels and Web-browsing habits. The information provides a powerful tool for marketers but raises new privacy concerns. Even as Americans browsing the Internet grow more accustomed to having every move tracked, combining that information with a detailed accounting of their movements in the real world has long been considered particularly sensitive. The new offerings are also evidence of a shift in the relationship between carriers and their subscribers. Instead of merely offering customers a trusted conduit for communication, carriers are coming to see subscribers as sources of data that can be mined for profit, a practice more common among providers of free online services like Google Inc. and Facebook Inc.

ESPN Cuts Jobs Amid Rising Fees for Games (page B1): ESPN started laying off a few hundred workers Tuesday, a sign that the hugely profitable sports cable-TV powerhouse is responding to the higher prices it is paying for rights to air games as well as other industry changes. ESPN said some of the job cuts are coming through attrition or unfilled open positions, and didn’t disclose the precise number or types of workers who are being let go. ESPN, which operates several cable channels in addition to its flagship, has about 7,000 employees. ESPN is a crucial profit engine for its majority owner, Walt Disney Co. It is the biggest part of Disney’s cable networks division, which accounted for 69% of the company’s segment operating income in the quarter ended March 30. Operating income at the cable networks was up 15% in the quarter, an increase that Chief Financial Officer Jay Rasulo said was “primarily due to growth at ESPN.” Much of that growth came from pay-TV operators paying higher rates to carry ESPN channels. Those fees are significantly higher than that commanded by most other cable channels, according to SNL Kagan. But ESPN faces steadily rising costs of its own, as the price of sports rights balloons. Last summer, ESPN struck an eight-year deal with Major League Baseball that was reported to double the payments made by ESPN to $700 million a year. ESPN is also paying an average of $1.9 billion per season for the rights to air “Monday Night Football.” For the six months ended March 30, operating expenses including programming and production rose 9% to more than $5 billion. A major factor was the rising costs of carrying college football, NFL and NBA programming, the company said.

Pesticides Make a Comeback (page B1): Many corn farmers are going back to using chemicals as mother nature outwits genetically modified seeds. Insecticide sales are surging after years of decline, as American farmers plant more corn and a genetic modification designed to protect the crop from pests has started to lose its effectiveness. The sales are a boon for big pesticide makers, such as American Vanguard Corp. and Syngenta AG. But it has sparked fresh concerns among environmental groups and some scientists that one of the most widely touted benefits of genetically modified crops—that they reduce the need for chemical pest control—is unraveling. At the same time, the resurgence of insecticides could expose both farmers and beneficial insects to potential harm. My solution: go organic!

Supply Chain Trips H&M (page B3): Swedish fast-fashion retailer Hennes & Mauritz said on Tuesday that some of its clothing was produced in a Cambodia factory where 23 people were injured in an accident on its premises Monday. The Stockholm-based retailer also said its orders had been placed at the factory without its knowledge, highlighting the lack of control some of the world’s biggest brands may have over their supply chains. Garment factories in Cambodia and other countries sometimes subcontract orders from retail brands to other factories to help meet demand or save costs, even though major brands often officially forbid the practice. Workers’ rights activists condemn such subcontracting because they say it makes it harder to track the origin of garments, obscuring responsibility for working conditions at the factories. Subcontracted factories may also be subjected to less rigorous auditing than factories approved by the brands.

Some CEOs Open Door to Hackers (page B6): What’s the biggest threat to corporate security? In many companies, it could be the CEO. As they seek ways to access sensitive corporate and personal data, cyber-attackers are increasingly targeting executives, according to security professionals. They say top bosses, who are often exempt from company-wide security rules, are more likely than rank-and-file employees to take a cyber-attacker’s bait, opening email or clicking links that can expose their firms to theft of proprietary data, intellectual property or personal information.

New Xbox One Moves Beyond Games (page B8): Microsoft Corp. unveiled a reinvented Xbox videogame console Tuesday, demonstrating an advanced motion and voice-control system and new television functions as it tries to thrust the machine back into the spotlight amid changing consumer habits. The Redmond, Wash., software giant said its new device, dubbed Xbox One, was designed to take advantage of new technologies to offer customers ways to play games while responding to trends such as the popularity of smartphones and tablets. Microsoft also integrated technology from its Skype video chatting subsidiary into Xbox One, allowing customers to interact with friends using a more refined version of the Kinect motion and speech sensor. Xbox One also can play and control live television streaming from a cable or satellite set-top box.

Voice and Motion Control Impress, but Other Features Come Up Short (page B8): Microsoft Corp. spent most of Tuesday’s Xbox One presser talking up its “future-proof” features. Some of the most intriguing among them include:

  • Multitasking
  • Voice Control
  • Kinect
  • Wi-Fi Direct
  • Compatibility
  • Controller
  • Design

Tech Oldie H-P Might Still Be a Goody (page C1): The last shall be first, and the first shall be last. While biblical prophecy and stock-market forecasting rarely intersect, the topsy-turvy nature of 2013’s bull run brings that verse to mind. Beleaguered Hewlett-Packard Co. is a notable beneficiary of this year’s reversal, with its shares having beaten once-highflying Apple Inc.’s by 66 percentage points so far. There has been some improvement in the market’s assessment of H-P, of course. Earnings-per-share expectations for the fiscal year ending in October have risen 4% since the start of 2013. Even so, that is hardly justification for this year’s rally.

Tuesday’s Markets: TGIT? Stocks Cheer Tuesday (page C4): Stocks carried on in their winning ways Tuesday, as investors cheered signals the Federal Reserve remains far from winding down its bond purchases and a bullish stock-market outlook from Goldman Sachs. The Dow Jones Industrial Average finished with an advance of 52.30 points, or 0.34%, to 15387.58, giving the blue-chip measure its 19th consecutive Tuesday of gains. With the advance, the Dow, which has fallen on just one Tuesday this year, posted its 22nd new high of the year. The Standard & Poor’s 500-stock index, meanwhile, added 2.87 points, or 0.2%, to 1669.16, finishing at its own record, while the Nasdaq Composite climbed 5.69 points, or 0.2%, to 3502.12.

Apple Stock Trumps Its Debt (page C4): Apple Inc. is giving investors a real-time lesson in why stocks can be a better bet than bonds when investors think rates are poised to rise. Investors who bought Apple’s 30-year bonds at issue April 30 have watched the debt lose more than 5% of its value, while the company’s stock is down about 0.5% over the same period. The disconnect boils down to the fact that Apple stock is being driven in part by broad stock-market ebullience, while the bonds are trading on expectations that, sooner or later, the Federal Reserve will let interest rates rise. As rates climb, Treasury bonds fall in price, pulling down corporate-bond prices that use Treasurys as benchmarks. “The biggest risk right now in the market is interest-rate risk,” says Tom Murphy, an investment-grade bond portfolio manager at Columbia Management Investment Advisers. Corporate bonds are even more sensitive to interest rates now, he says, because the Fed has pushed a flood of investors’ cash into credit markets over the past few years, driving bond prices up and yields down. The result is that the difference, or spread, between corporate and Treasury bond yields have hit a postcrisis low, leaving less cushion for corporate-bond prices to absorb a fall in Treasury prices.

What Makes a Risk-Taker (page D1): You might not think of yourself as a risk-taker. Think again. Recent studies using new experimental tools are upending the old belief that a person’s appetite for risk is mostly inborn and unchanging. In fact, the reasons people take crazy gambles are far more complex. People who are cautious in some contexts may embrace risk in others, depending on factors such as their familiarity with the setting and their emotions at the time. The findings are exploding old stereotypes—that women are innately more cautious than men, for example, or that teenagers are inevitably risk-seekers. “It has been surprising to learn what a wide variety of reasons people have for risk-taking,” says Elke Weber, a professor of international business at Columbia University and a leading researcher on risk. Understanding the roots of risk-taking can guide people in making better decisions, she says. Some long to advance in their careers or have new adventures but overestimate the hazards. Others race quickly and without thinking into dangerous risks. Getting to know your surroundings can change how you size up a risk. “Most people overestimate the probability of something going wrong” when they venture into unfamiliar turf, says Margie Warrell, a Melbourne, Australia-based authority on risk-taking who has coached many U.S. executives and employers. “They also overestimate the consequences of things going badly,” says Ms. Warrell, author of “Stop Playing Safe.” With experience, they become more realistic, and learn they can handle the consequences of failure. “The more often we step out of our comfort zone, the more we build our tolerance for risk-taking,” she says.

To Spark Buyers for Electric Cars, Drop the Price to Nearly $0 (page D1): This car deal sounds too good to be true: Drive a car, almost free. To entice drivers to try electric-powered cars, auto makers are lowering the price of entry to the zero-emission lifestyle. A new round of discount leases on mainstream-brand plug-in cars such as the Nissan Leaf or Fiat 500e, combined with federal, state and local electric-vehicle incentives, could make a battery-electric car an extraordinarily economical way to get around for drivers. There are two big caveats: Drivers need to live in states offering tax incentives and can’t drive very far in a single day.

Apps to Make Sure You Don’t Forget the Eggs (page D3): The reporter and her husband decided to try a few services that aim to make shopping a piece of cake: grocery-list mobile apps that promise to scan items to our lists, sync or share lists with other family members’ phones, find local deals and keep copies of the lists we use again. All the apps have accompanying websites so users can type in lists at a computer with a full-size keyboard.

It’s OK to Feel Sorry for Cole Hamels (page D6): In baseball, weird statistical quirks have a way of evening themselves out over the course of a season. But until that happens, there’s plenty of fun to be had gawking at them and marveling at the good fortune—or in the case of Philadelphia Phillies starter Cole Hamels, the distinct misfortune—they can bring. Hamels, the 2008 World Series MVP, hasn’t thrown a pitch with his team leading the game since April 7. On Monday, in a 5-1 loss to the Marlins, the Phillies wasted a 10-strikeout, zero-walk outing by Hamels, whose streak of pitching without a lead has now reached 52.2 innings, the 10th longest since 2000. But while most of the pitchers ahead of him on the list were at least partly to blame (seven had ERAs over 5.00) Hamels has pretty much been the same All Star pitcher he was in 2012. Over his last eight starts (52 innings), he’s compiled a 3.12 ERA—which isn’t far from last year’s 3.05 ERA, which was good enough for a 17-6 record and eighth place in Cy Young Award voting.


The Wall Street Journal: Saturday, May 18, 2013

Rising Wages Pose Dilemma for China (page A7): China is showing rapid increases in wages and signs of resilience in hiring despite slowing growth, a reassuring sign for leaders seeking to put more money in the pockets of ordinary Chinese, but a trend that could prove difficult to sustain as countries nearby threaten to encroach on China’s manufacturing dominance. Chinese private-sector wages rose 14% in 2012, data showed Friday, good news overall for Beijing’s push to make consumer spending a more important part of growth. But higher labor costs also hurt business profitability and export competitiveness—which could pose its own risks to the economic recovery. Countries such as Bangladesh, Cambodia and Vietnam have all ramped up their garment sectors as global retailers look for alternatives to China.

Abe Tries to Get Japan Inc. to Spend Again (page A10): Prime Minister Shinzo Abe pledged action Friday to encourage businesses to increase their spending as he seeks to turn recent improvements in the economy into sustainable growth. In a speech to business leaders and academics, Mr. Abe said he would remove barriers preventing capital spending and seek to raise it by 10%, to around ¥70 trillion or $680 billion, in three years—the level seen before the 2008 financial crisis. The comments shed further light on the direction the prime minister will take with the next stage of his “Abenomics” policies for invigorating and deregulating Japan’s economy, ahead of a more comprehensive announcement planned for June. Gross domestic product figures released Thursday showed better-than-expected growth amid a wave of optimism surrounding the administration’s aggressive stance on the economy. But capital spending fell, suggesting that companies are still reluctant to bet on the future.

Houston: the Modern American Boomtown (page A13): ‘Redneck white city down in Texas.” That’s how Houston Mayor Annise Parker sums up the caricature of her town, and she wants everyone to know it’s bunkum. Houston is “a really cool city,” she says. “Open and entrepreneurial and welcoming.” It’s also booming. The mayor herself is a walking testament to the cosmopolitan contrarian reality of modern Houston. Annise Parker is a Democrat in a deep-red state, the first openly gay mayor of a major American city. She’s a social liberal who’s also a former oil-industry executive with a pro-business attitude running what may be the nation’s least-regulated metropolis. Houston’s recent track record is startling. For the calendar year ending in February, it saw the fastest pace of job growth (4.5%) among the country’s 20 largest metropolitan areas. (With a population of 2.1 million, it’s the fourth-largest U.S. city.) In 2011, the last year such data are available, Houston had the fastest-growing large metropolitan economy, at 3.7%. Add to that a cost of living that is 7.8% below the U.S. average—New York is 53.4% above the average—and you can see the attraction for waves of new arrivals. Housing costs run a third less than the average in the 29 largest metro areas. Adjusting for these lower costs, Houston has the highest per-capita income of any city in the nation.

What Michigan’s Charter Schools Can Teach the Country (page A13):  A study by Stanford’s Credo Center for Research on Education Outcomes) found that 42% of Michigan’s charter schools are outperforming conventional public schools in math and 35% of charters are outperforming in reading. Only 6% of charters are underperforming in math and only 2% in reading. Further, 82% of charters produced growth in average reading test scores and 72% did so in math. Of the 56 outcomes for different subgroups of students and schools the study dissected, 52 showed charter-school students outperforming their peers in conventional public schools. Perhaps the most notable finding was that from 2007-11 the typical Michigan charter-school student made annual academic gains in both reading and math equivalent to about two additional months of learning, compared with his or her peers in conventional public schools. The longer a student stayed in a charter school the greater the annual gains. After five years the average charter-school student made cumulative learning gains equivalent to an entire additional year of schooling.

Aristotle Wouldn’t Friend You on Facebook (page A13): The Greek philosopher knew nothing of social media. He did know a thing or two about relationships. Worth reading this short editorial!

SAC to Limit Help in Probe (page B1): SAC Capital Advisors LP told clients it will no longer provide “unconditional” cooperation with a criminal insider-trading probe of the hedge-fund firm, marking an abrupt turn for a company that has spent months reassuring investors. The move signals that a multiyear, multipronged government investigation of the company and its billionaire founder, Steven A. Cohen, has intensified, according to people familiar with the matter. The Stamford, Conn., firm also told investors in a letter Friday that it won’t any longer update them on developments in the government investigation, according to people who have seen the letter. “While we have in the past told you of our cooperation with the government’s investigation, our cooperation is no longer unconditional, and we do not intend to give updates in this area going forward,” the letter said.

GM Shares Road Back to Old Levels (page B1): General Motors Co. shares eclipsed their $33 initial public offering price amid investor enthusiasm over its new vehicles and speculation the U.S. government may soon exit its ownership stake in the auto maker. The Detroit auto maker rose 3.2% to $33.42 on Friday to close above its November 2010 IPO price for the first time since February 2011. The stock bottomed out after the IPO at $18.80 apiece in July 2012. GM shares have risen nearly 16% for the year, just below the returns for the broader Standard & Poor’s 500-Stock Index. Today, GM is riding a wave of strong U.S. economic news and auto sales, market share gains and profit in China, and a sense that the worst may be over in Europe. A University of Michigan Consumer Sentiment survey released Friday indicated that the desire to buy cars was at its highest since 2005. Investors are betting that the share run-up above the IPO price could give the U.S. Treasury reason to accelerate its divestiture of the auto maker’s shares. As of April 1, U.S. taxpayers owned a 16.4% stake, or 241.7 million shares worth about $8.08 billion. A Treasury sale would also help the auto maker return to the S&P 500 Index, which in turn would increase demand for the stock among mutual funds. GM was dropped from the index after it filed for bankruptcy in 2009. For the U.S. to break even on its GM bailout, it would need to sell the remaining shares at an average of about $79 a share. The Treasury has said it intends to fully exit its GM investments by April 2014. By the end of March, the government had recovered $30.4 billion of the bailout funds GM received under the Troubled Asset Relief Program.

Google Glass Is Watching – Now What? (page B1): As Congress frets about the privacy implications of Google Glass, one thing is clear: The technology that can redefine what is “public” and link the digital and physical worlds is here. Now the question is what will anyone do about it? Owners of wearable Internet-connected devices already face choices about where or when it is appropriate to wear them—while legal experts say there aren’t many protections for people whose activities the technology records.

Starbucks Brings Its Culture to Vietnam (page B3): Starbucks Corp. has entered scores of new markets over the years, but in Vietnam, could it have met its match? The Southeast Asian nation—known for its nerve-jangling strong coffee, often sweetened with condensed milk—has its own deep-rooted coffee culture that could prove challenging to the Seattle-based coffee chain. The company launched a flagship two-story store in Ho Chi Minh City in February. So far sales at the new location are exceeding expectations, according to Starbucks Chief Executive and Chairman Howard Schultz, though he didn’t provide specific sales figures. Starbucks decorated the downtown store with local art and artifacts to create a distinctly Vietnamese flavor. It also came up with a drink, the Asian Dolce Latte, to appeal to local palates. For food, it serves roast-duck wraps and French-style baguettes. But some say the chain could do more. Nguyen Van Minh Khanh, 24 years old, said Starbucks should use drip filters perched on top of glass mugs, the way the Vietnamese do. Local coffee entrepreneurs such as Dang Le Nguyen Vu seem confident that drinkers will likely stick with thick, oily Vietnamese coffee, which is available nearly anywhere. “If Starbucks wants to succeed in Vietnam, they have to change the way they serve,” he said.

Friday’s Markets: Stocks Cap Week with Rally (page B5): Stocks capped off another strong week with a broad rally, the dollar extended its gains and Treasurys fell, as a bigger-than-expected rise in consumer sentiment bolstered the view of an economy that is faring better than some had feared. The Dow Jones Industrial Average climbed 121.18 points, or 0.8%, to 15354.40. A surge higher in the final hour of trading, which has been a familiar pattern during the market’s extended rally, propelled the Dow to its third record close in four sessions. The Standard & Poor’s 500-stock index rose 17.00 points, or 1%, to 1667.47, and the Nasdaq Composite Index advanced 33.72 points, or 1%, to 3498.97. The S&P 500 rose 2.1% this past week, the fourth-straight weekly gain, as the market shrugged off Thursday’s biggest one-day decline in the benchmark indexes since May 1.

Financial Advice, Served Rare (page B7): You don’t have to be a Rockefeller to join a family office. Family offices are private firms that manage just about everything for the wealthiest families: tax planning, investment management, estate planning, philanthropy, art and wine collections—even the family vacation compound. Now many family offices are courting the merely rich. The price of admission is still steep, and having your own personal chief financial officer doesn’t come cheap. But the help is worth considering. Single-family offices gained popularity in the 1800s to manage the burgeoning fortunes of tycoons such as the Rockefellers. The offices offer many of the same services as top-tier private banks and wealth managers but are devoted to a single family. The attention can cost $1 million or more per year, industry experts say, meaning family offices make financial sense mainly for families with at least $100 million in assets. There are about 5,000 such households in the U.S., according to the Family Wealth Alliance, a research and consulting firm in Wheaton, Ill, and Wealth-X, a wealth-research firm based in Singapore. By contrast, there are about 100,000 households in the U.S. with between $5 million and $10 million in investible assets, says Tom Livergood, founder and chief executive of the Family Wealth Alliance. The figure is expected to grow, he says. Entrepreneurial wealth managers are starting “multifamily” offices, which handle a handful to hundreds of families as clients.

A Year After Its Debut, Facebook Still Looks Overpriced (page B7): A year after its turbulent public debut, shares in the social-networking giant are still 31% below their offering price. Yet, with virtually no earnings over the past 12 months, Facebook’s price/earnings ratio is in the stratosphere—more than 2,000-to-1, in fact—compared with just 19-to-1 for the Standard & Poor’s 500-stock index. Many of Facebook’s defenders try to wriggle out from this damning comparison by arguing that the company—like most firms in the wake of their initial public offerings—is sacrificing earnings in pursuit of increasing market share. That’s all the more reason to pay attention to a valuation model that is based on sales rather than earnings. That model also finds that Facebook is a lousy investment for the long term. If it is even close to being correct, Facebook will prove to be an even bigger disappointment to investors than it has already been in its first year as a publicly traded company. After going public at $38 a share, Facebook’s stock plummeted to below $18 before recovering to its current price of $26.25.

How WIll GenX Retire (page B8): Here’s another reason why Generation X might resent baby boomers. Typical Generation Xers now in their late 30s to late 40s saw their net worth drop by a larger proportion than older Americans during the financial crisis and came out of it less prepared for retirement than the post-World War II boomer generation, according to a new study. Members of Generation X suffered losses amounting to 45% of median net worth between 2007 and 2010, a significantly higher percentage than those born in the 20 years immediately after the war, according to the Pew Charitable Trusts’ economic mobility project. Based on income and other projections, typical Gen Xers are on track to replace half of their pre-retirement income if they stop working at 65, the study finds. Boomers born between 1946 and 1955 look set to replace 82% of income. Later boomers, born between 1956 and 1965, are on track to replace 59%. Gen Xers are “facing a genuine possibility of downward mobility, if they don’t change course,” says Erin Currier, who heads the mobility project.

Starting a Financial Life: Advice for New Graduates (page B8): Congratulations, 2013 graduates. You did it! Now it’s time to learn something really useful. Having conquered all those classes, now you can move on to mastering the practical skill of managing money. Luckily, the economy is in better shape than it was a couple of years ago, and the overall unemployment rate for college grads is roughly half that of the total U.S. population, boding well for your job prospects. If you learn to manage a paycheck, spend less than you earn and stash away some money for later, you can put that education to good use, no matter what you choose to do. Here’s some advice to get you on the right path.

  • Be Nice to Your Parents
  • Reduce Debt
  • Know Your Credit Report
  • Avoid Unnecessary Fees
  • Use Your Social Network

Will Interest Rates Ever Rise? (page B9): For decades, bond investors have been stuck in their own version of “Waiting for Godot.” Year after year, some analysts and economists wait anxiously for yields to rise and prices to drop. Year after year, they have been stood up. This year, things are no different. Most pundits are still predicting an imminent rate increase. But now, investors, seeking to protect themselves, are taking the advice to heart, pumping cash into short-term-bond funds and leveraged-loan funds, which have yields that can rise if rates go up. Those heavy bets on rising rates might be leading investors into dangerous waters. Investors need to make sure they’re not forgetting the primary role of bonds in a portfolio—to protect against a significant drop in stocks.

The Low-Price Boost for Stocks (page B14): The lousy job environment led the Federal Reserve to launch its latest round of bond buying. The leaden inflation environment could keep it from withdrawing it anytime soon. The upshot: Stocks could head much higher than they are now. Now consider that the U.S. economy looks like it is getting onto a more sustainable growth track. Meanwhile, the combination of a stronger dollar, lower commodity prices and weakness overseas is creating a disinflationary impulse that will stay the Fed’s hand. That isn’t unlike the environment that set in during the mid-1990s, when low rates of inflation kept the Fed largely to the sidelines even as the economy chugged higher. Despite slowing profit growth, investors rewarded companies with ever-higher stock valuations. At the end of 1995, the Standard & Poor’s 500-stock index traded at 16 times trailing 12-months earnings, where it trades now, according to S&P Capital IQ. By the end of 2007, that price/earnings multiple had reached 22 and the index was 58% higher. A P/E multiple of 22 is historically rich. But in bull markets stock valuations often go through rich on their way to stupidly high; the S&P’s P/E reached 28 at the dot-com bubble’s peak in early 2000.

Daniel Akst: All Ears for a Revolution (page C4): The singularity may not be near, but it’s getting close enough that you might just hear it coming—if you had the kind of synthetic ears scientists recently developed. The singularity is a term used by futurists for the merger of human and machine into an infinitely malleable, self-determining species with powers of intelligence that flesh-and-blood-mortals can only dream of. Although superhuman mental powers aren’t yet on the horizon, the new ears remind us that our future is very likely bionic. Human ears are a problem for plastic surgeons. But writing in Nano Letters, researchers at Princeton and Johns Hopkins universities described how they used a standard 3-D printer to create bionic ears with auditory powers far beyond the natural human endowment. The technique lets scientists mimic the structural complexity of the ear while achieving a wider range of audible frequencies through the embedded electronics. They used the printed ear to culture genuine cartilage in vitro from calf cells.

An Interview with Gabrielle Reece, author of ‘My Foot Is Too Big for the Glass Slipper: A Guide to the Less Than Perfect Life’ (and wife of surfer Laird Hamilton) (page C11): Gabrielle Reece, the former model and professional volleyball player, springs up from a squat while hurling a dumbbell over her head. She is demonstrating a move for a group that is training with her at an Upper East Side gym in New York, where she’s on tour for her new book, “My Foot Is Too Big for the Glass Slipper: A Guide to the Less Than Perfect Life.” So far, certainly, this trip has been less than perfect. After suggesting on national television in mid-April that women should be submissive to their husbands, Ms. Reece, 43, immediately felt the backlash. Legions of social-media commentators wondered everything from how many years she had set back the women’s movement to how “being a doormat is a sign of strength.” It all started with a line in her book about how she behaves in her marriage to surfer Laird Hamilton: “To be truly feminine means being soft, receptive, and—look out, here it comes—submissive.” On this morning, as she moves on to “mountain-climber push-ups,” Ms. Reece’s muscle-bound 6-foot-3 physique looks anything but submissive. Still, the hubbub was nearly enough to keep her hiding in her hotel. “The first day, I didn’t want to go anywhere,” she admits. “My friend told me I may as well have said I worship the devil.” At the grueling 75-minute circuit training class, it’s clear that she’s not there to socialize. Ms. Reece casually introduces herself to the 30-some participants as any other exercise teacher would. “One thing I don’t want to be is controversial,” she says after class. “I wrote the book to start the conversation, but I didn’t know this would be the point of entry.”

Gardens of Geeky Delight (page D12): Growing your own herbs and flowers can be rewarding—in theory. The problem for many of us is that tending plants, whether in a backyard or on a windowsill, requires ongoing work (not to mention space and sunlight). Is it possible to cultivate a green thumb without breaking into a sweat? We tested a number of indoor gardening gadgets—many of which feature automatic timers, moisture sensors and pumps—in search of the lowest-stress growing solutions. The most effective ones employ a technique called hydroponics, which keeps plants nourished using nutrient-enriched water instead of soil. For the most part, they yielded hearty plants with minimal fretting. Here are the three top performers.

  1. Click and Grow
  2. AeroGarden Ultra
  3. WindowFarms