Swiss Move Roils Global Markets

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Paramount Pictures; Sundance Selects; Fox Searchlight; Weinstein Co.
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TODAY IN AreNA
Oscar’s Biggest Surprises
mANsION Stylish Hair Salons—at Home
FRIDAY, JANUARY 16, 2015 ~ VOL. CCLXV NO. 13
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DJIA 17320.71 g 106.38 0.6% NASDAQ 4570.82 g 1.5% NIKKEI 17108.70 À 1.9% STOXX 600 348.45 À 2.6%
Central Bank’s Surprise Action Wreaks Havoc in Currency Trading, Signals Perilous Times for Policy Makers
BY NEIL MACLUCAS
AND BRIAN BLACKSTONE
T
he Swiss central bank
scrapped its cap on the
franc-euro rate in advance of
the ECB’s expected bond-buying program, bringing new volatility to bonds and currencies world-wide. A1, A10, C1-2
 Currency broker FXCM
suffered losses that wiped out
its equity and a New Zealand
trading house failed as fallout
from the Swiss move spread. C1
n Bank of America’s net slid
58% in 2014 and Citigroup’s
profit plunged 47%. Both
banks were hurt by regulatory
fines and sluggish revenue. A1
n The Dow shed 106.38
points to 17320.71, government-bond yields fell and gold
climbed. Japan’s Nikkei was
down 2.5% early Friday. C4
n Economists said falling
oil prices should be a boon
to the U.S. and forecast GDP
will grow 3% this year. A2
n Target is closing its moneylosing operations in Canada,
wiping out billions in investment to focus on the U.S. B1
n Google is halting individual sales of its Glass eyewear
and developing the next generation out of the limelight. B1
n BlackRock said investors
poured a record amount of
money into the firm in 2014. C1
n Schlumberger laid off 7%
of its staff late last year and
profit slid as oil prices fell. B1
n Caesars’ largest unit filed
for Chapter 11 after months
of talks with creditors. B3
n Intel’s net rose 39%, aided
by sales of server chips, but the
firm gave a cautious outlook. B3
i
World-Wide
Big Switch
The Swiss franc soared Thursday after the SNB removed its cap on the currency’s value vs. the euro.
Meanwhile, five-year government bond yields in some countries have slumped below zero, indicating
buyers are paying governments to hold their money.
Thursday 0.99
1.00 Swiss francs that €1 buys
n Afghan authorities said
they arrested militants suspected of being accomplices in
the massacre at a school in the
Pakistani city of Peshawar. A14
n The U.S. will let many
Americans travel more freely
to Cuba beginning Friday and
allow some U.S. firms to do
business on the island. A3
n Major League Baseball
scored a legal win that preserved its antitrust exemption, setting the stage for a
Supreme Court appeal. A3
n BP faces a $13.7 billion maximum penalty under the Clean
Water Act after a judge’s ruling
on the 2010 Gulf oil spill. B6
n The pope, speaking of the
Paris attacks, called killing in
the name of religion an “aberration” but cautioned against
deriding other faiths. A5
n The Obama administration
is proposing new rules aimed
at making food served at daycare centers healthier. A3
n Winter storms in the
Mideast have left hundreds
of thousands of refugees living
in inadequate shelter. A14
n China’s anticorruption
agency said it has placed a top
spy under investigation. A8
Opinion................... A11-13
The Oscars.............. D1-4
Sports........................... D10
Theater........................... D9
U.S. News................. A2-4
Weather Watch........ B6
World News..... A6-8,14
>
s Copyright 2015 Dow Jones & Company.
All Rights Reserved
Five-year
government
bond yields
1.5
1.20
U.S.
1.224%
U.K.
0.983%
1.0
1.40
1.60
Scale inverted to show strength of franc
2010
’11
’12
’13
’14
0.5
Japan
0.0115%
0.0
Germany
–0.049%
–0.5
Switzerland
–0.31%
2014
Sources: Tullett Prebon (currency); FactSet (international yields); Thomson Reuters (U.S. yield)
’15
The Wall Street Journal
Franc Fallout
 Bracing for ECB shift...... A10
 Bankers, traders scramble... C1
 Heard on the Street: Swiss
tarnish central banks.......... C1
People line up to change currency in Geneva on Thursday. The euro plunged as much as 30% versus the franc.
EUROPE ON EDGE
Belgium Thwarts Terror Plot, Paris Attacks Stir
Political Waters
Reflecting a Rising Threat
Europe’s fragile political equilibrium was shaken by the attacks perpetrated last week by
France’s homegrown Islamic terrorists, which exposed a gaping
divide between the continent’s
native populations and immigrant communities.
BRUSSELS—Belgian police
killed two people in a firefight
on Thursday evening, disrupting
what authorities called an imminent terrorist plot just a week
after Islamist extremists set Europe on edge with massacres in
Paris.
The plot was aimed at attacking the police, authorities said,
and involved people who had returned from Syria, possibly
fighting alongside terrorist
groups there.
The police operations, which
resulted in 10 raids, were the
product of an investigation that
began several weeks ago, before
last week’s killings in Paris at
the satirical magazine Charlie
Hebdo and a kosher grocery, authorities said.
“This group was on the verge
of committing a terrorist attack
in Belgium,” said Thierry Werts,
Biggest Banks
Lag Behind
As Economy
Gains Steam
BY CHRISTINA REXRODE
AND SAABIRA CHAUDHURI
More than five years into the
economic recovery, the nation’s
biggest banks are still on the
outside looking in, as their fortunes grow increasingly disconnected from the rest of the
country’s.
Once looked to as a proxy for
the financial health of American
consumers and businesses, banking giants are struggling to
boost profits despite safer balance sheets, a boom in global
deal making and pockets of loan
growth.
Bank of America Corp. and
Citigroup Inc. on Thursday
posted disappointing results.
While bank profits have bounced
back from the dark days of the
financial crisis in late 2008 and
Please turn to the next page
 Heard on the Street.................... C8
By Matthew Karnitschnig,
Anton Troianovski
and Jenny Gross
European Pressphoto Agency
n Amnesty International released satellite photos that it
said suggest Boko Haram killed
hundreds of people when it
stormed a Nigerian town. A8
2.0%
Previous floor 1.20
BY MATTHEW DALTON
n Belgian police killed two
people in a firefight, disrupting what authorities called
an imminent terrorist plot
that involved individuals who
had returned from Syria. A1
CONTENTS
Art...................................... D7
Books............................ D5,6
Corporate News... B2-5
Global Finance............ C3
Heard on the Street C8
In the Markets........... C4
ZURICH—Switzerland’s central bank triggered turmoil in
the markets Thusday when it
unexpectedly scrapped its cap
on the Swiss franc’s exchange
rate against the euro, a move
that unleashed new volatility
among bonds and currencies
around the world and further
underscored growing concerns
about global economic prospects.
Against the cloudy backdrop
of collapsing oil prices, a
sharply rising dollar, fresh
doubts about the stability of the
euro and mounting global concerns over deflationary pressures, the move by the Swiss authorities was the starkest sign
yet of the pressure policy makers face in dealing with unusual
financial
conditions
that
threaten the world’s already
fragile economy.
Some of the fallout was felt
early Friday in Asia as FXCM
Inc., the biggest retail foreign
exchange broker in Asia and the
U.S., said it suffered “significant
losses” that wiped out its equity.
(See related story on C1.)
The abandonment of the cap,
which had essentially pinned the
currency at 1.20 francs per euro
for the past 3½ years, prompted
a collapse of as much as 30% in
the euro versus the franc—the
biggest single-day move in a developed market traders could recall. Swiss stocks fell 8.7% as
traders worried the stronger
Composite
i
franc would hurt Switzerland’s
exports, especially to Europe.
The currency move was accompanied by further cuts in interest rates by Swiss authorities,
pushing some European government bond yields deeper into
negative territory.
The Swiss National Bank became the first of what is expected to be a series of central
banks to act in light of the European Central Bank’s anticipated
launch of a new bond-buying
program to boost the currency
area’s sagging economic prospects. The reaction shows the
ECB’s bond-buying program is
having a big impact on markets
before it even takes effect.
It also increases the market
glare on the ECB’s action next
Thursday, and potentially sets
investors up for disappointment
if the central bank doesn’t deliver a convincing package to
fight off deflation.
Tim Adams, president of the
Institute of International Finance, said given the market expectations for the ECB, not acting could spark a market
firestorm. “I think markets
would be incredibly disappointed if it doesn’t happen,”
Mr. Adams, a former U.S. TreaPlease turn to page A10
Agence France-Presse/Getty Images
i
Business & Finance
i
GOLD $1,264.70 À $30.30 EURO $1.1633 YEN 116.17
Riot police block a street in Verviers, Belgium, on Thursday, after an
antiterrorism raid sparked a gunbattle that left two people dead.
spokesman for the Belgian federal prosecutor’s office.
The authorities raised the nation’s terror alert and said police
operations continued Thursday
evening. A Belgian police
spokesman said extra security
Please turn to page A6
 Focus on gunmen’s wives....... A5
Europe’s establishment politicians, after years of playing
down concerns about the growing influence of Islam in their
communities, are rushing to reassure constituents worried
about further violence. And antiimmigrant parties, which stand
to gain ground, face the dilemma
of how to capitalize on public
fears without appearing insensitive to the victims.
Even before the Paris attacks,
rising public disquiet over what
many Europeans regard as the
New Soap Operas: Office Showers
Don’t Wash With Everybody
i
i
i
Amenities Offer a Clean Break but Can Put
Workers in a Lather; Using T-Shirts as Towels
BY RACHEL FEINTZEIG
ers. Many workers have mastered
the perils of the corporate gym
One day before work, Shaun locker room—studiously avoiding
Martin made a moist unpleasant eye contact to avert a glimpse of
discovery.
the boss in boxer briefs—but the
The Austin, Texas, software de- showers near their cubicles have
velopment manager had just fin- raised a host of new issues, from
ished a workout and
purloined towels to
hit the shower in his
hot-water hogs.
office to clean off
Showering
at
before settling into
Brooks Running Co.
work. Then the 32has become more of
year old reached for
a relay race than an
his navy blue towel.
exercise in relax“The towel was
ation, thanks to timdamp. Worse than
ers in the Seattledamp,” he says, debased apparel and
scribing the mofootwear company’s
Shower timer
ment he first realshowers. The showized a co-worker
ers shut off after
had been secretly using his terry four minutes, and to deter an emcloth.
ployee from doubling the length of
The latest homey amenity to a rinse, don’t turn on again for
crop up in the workplace, office five minutes.
showers are going mainstream,
Designed to conserve water, the
ushering in a new era of intimacy showers have led to unexpected
Please turn to page A8
and awkwardness among co-work-
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Swiss Move Roils Global Markets
What’s
News
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WSJ.com
establishment’s failure to integrate Muslims was fueling antiimmigrant movements across
the region.
“Our political class has
failed,” says Joerg Forbrig, a political scientist at the German
Marshall Fund of the United
States in Berlin. The ascendancies of the anti-immigrant parties, he predicts, likely will push
the political center to the right,
further isolating Europe’s Muslim communities.
Such concerns aren’t new. Europe’s chronic economic malaise
and resentment over the growing influence of the Brusselsbased European Union have
fueled a surge of support for antiestablishment parties. But the
brutal attacks in Paris and the
slaying of a British soldier in
2013 in London have brought the
discussion of immigration, religious tolerance and national
identity to a boil.
Please turn to page A6
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