Strong Dollar Squeezes U.S. Firms

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The stronger dollar is slicing
sales and profits at big American
companies, prompting them to
put renewed emphasis on cost
cutting and cramping the
broader U.S. economy.
The currency effects are hitting a wide swath of corporate
America—from consumer products giant Procter & Gamble Co.
to technology stalwart Microsoft
he strong dollar is hurting
sales and profits at big U.S.
companies, prompting them to
cut costs and adding pressure
on the broader economy. A1
 The Dow tumbled 291.49
points to close at 17387.21 on
disappointing corporate results
and downbeat outlooks. C1
value or not keeping up with
dollar-based costs.
Even booming companies are
contending with the currency
fallout: Apple Inc. reported surging profits Tuesday, sparked by
booming demand for its new
bigger-screen iPhones, but it
also pointed to the dollar as a
drag on results.
The pressure on American
By Paul Ziobro,
Josh Mitchell
and Theo Francis
Corp. to pharmaceuticals company Pfizer Inc. Those companies and others have expanded
aggressively overseas in search
of growth and now are finding
that those sales are shrinking in
firms from the dollar wasn’t a
bolt from the blue. P&G, for instance, has been warning of impending damage for months. But
the severity of the blow appears
to have caught companies and
investors by surprise. The Dow
Jones Industrial Average plummeted 291 points, or 1.7%, to
17387, its steepest decline in
three weeks.
n Yahoo unveiled a plan to
spin off tax-free its nearly
$40 billion stake in Chinese
e-commerce giant Alibaba. B1
n Currency broker FXCM
was nearly felled by big bets
by foreign customers who
aren’t subject to U.S. caps. C1
n Treasury auctions of TARP
investments in small banks have
been a boon to a few savvy private investors, a report said. C1
By Benoît Faucon,
Matt Bradley
and Felicia Schwartz
n A hotel attack in Libya
killed nine people, including
an American, and stoked fears
that Islamic State is spreading beyond the Mideast. A1
n A winter storm pounded
the Northeast, dumping over
2 feet of snow in New England but falling short of predictions in other areas. A3
n Kurdish forces declared
victory in the battle with Islamic State for the Syrian
border city of Kobani. A8
n The Yemeni leader’s top
aide was freed by militants,
who called for talks among the
nation’s clashing factions. A8
n EU leaders rebuked Russia
over its actions in Ukraine and
asked foreign ministers to
work up fresh sanctions. A6
n The Obama administration
dropped a plan to tax “529”
college savings accounts after
widespread criticism. A2
n The administration proposed eventually opening up
the Atlantic to drilling but restricting Alaskan waters. A3
n A panel looking at ways to
revamp U.S. military benefits
is expected to call for a 401(k)type retirement system. A4
n Greece’s new premier unveiled a cabinet that includes an outspoken bailout
critic as finance minister. A6
n A federal agent proposed
using license-plate readers to
scan vehicles near gun shows,
a government email said. A4
n Obama visited Saudi Arabia to pay his respects to the
family of the late king and
meet with his successor. A9
Arts in Review.......... D3
Corporate News B2,3,6
Global Finance............ C3
Heard on the Street C12
Home & Digital...... D1,2
In the Markets........... C4
Opinion.................. A13-15
Property Report.. C6-8
Sports.......................... D5,6
Technology................... B4
U.S. News................. A2-4
Weather Watch........ B8
World News.......... A6-11
s Copyright 2015 Dow Jones & Company.
All Rights Reserved
Deal Offers
Model for
Indiana on Tuesday announced plans to expand Medicaid under the Affordable Care
Act after securing concessions
from the Obama administration
that could pave the way for
other Republican-led states to
widen health coverage for lowincome residents.
Gov. Mike Pence is the latest
Republican to opt into the health
law’s expansion of Medicaid despite his party’s opposition to
the legislation. His move could
prompt up to a half-dozen other
GOP-led states to follow suit, including Florida, Tennessee and
Alabama, by giving them a
model to follow. Under Indiana’s
agreement, the state can require
some Medicaid enrollees to contribute toward their care.
The expansion decision by Mr.
Pence, who has been mentioned
as a 2016 presidential candidate,
is the latest example of how the
GOP is trying to broaden its
reach by appealing to lower
earners. It also signals a growing
willingness by the Obama administration to cut deals with
states in order to expand insurance coverage under the 2010
health law after the Supreme
Court hampered that effort.
Twenty-seven other states have
agreed to use federal dollars to
expand Medicaid.
“With this decision, our state
can begin covering our uninsured working poor the Indiana
way, based on personal responsibility,” Mr. Pence said Tuesday.
As a result of the deal, about
350,000 Hoosiers could qualify
for coverage that will begin as
soon as Feb. 1.
Indiana’s agreement marks
the first time a state has been
allowed to impose strict requirements on some Medicaid enrollees to pay a portion of their premiums, up to around $26 a
Please turn to page A4
NOT FORGOTTEN: Igor Malitsky was one of about 300 survivors who visited the Nazi death camp Tuesday on the 70th anniversary of its liberation. A6
Debt That Once Boosted
Its Cities Now Burdens China
WUHAN, China—A little over a year ago, a Chinese credit agency downgraded a governmentowned financing company in this dusty industrial
city. Default—nearly unheard-of in China on government bonds—was a possibility, it said.
But during discussions with lenders, city officials made sure Wuhan Urban Construction Investment & Development Corp. could keep borrowing,
officials with knowledge of the matter say. The
city during those discussions said it backed the finance firm, essentially guaranteeing the debt, and
helped the company restructure its assets to entice investors to lend more.
Borrowing by firms like Wuhan Urban is a big
reason China’s debt load is expanding. The International Monetary Fund says China’s debt is growing more rapidly than debt in Japan, South Korea
and the U.S. did before they tumbled into deep recessions. Local-government borrowing is responsible for one-fourth of the buildup in China’s overall
domestic debt since 2008.
Beijing in early December took a step to rein in
rampant borrowing by local-government firms.
China’s clearing agency for bonds surprised the
market on Dec. 8 with new rules to prohibit investors from using low-grade debt to borrow cash.
The order contributed to a selloff in mainland-Chinese securities ranging from government bonds to
stocks, as investors sold liquid assets—including
bonds from local-government financing companies—to raise cash. China’s markets have since rebounded but remained volatile.
The price of a 1 billion yuan Wuhan Urban bond
tumbled as much as 2% after that move while investors pushed up the bond’s yield to compensate
Please turn to page A12
A group calling itself Islamic
State-Tripoli Province claimed
responsibility over Twitter for
the attack Tuesday morning on
the Corinthia Hotel, a seaside
complex popular with foreign
businessmen, diplomats and
The apparent international
nature of its authors and target
makes Tuesday’s attack stand
out from the usual violence afflicting the North African nation,
which has seen almost continuous factional fighting since longtime leader Moammar Gadhafi
was killed in a popular uprising
in 2011.
A posting Tuesday on a Twitter account thought to be connected to the central Islamic
State organization in Syria and
Iraq described two of the attackers as their own. That claim is
difficult to authenticate, but if
further evidence surfaces that
the self-proclaimed caliphate
played a role, the attack could
point to a growing footprint for
a group whose rapid advance
has unsettled much of the Middle East and drawn U.S. forces
back into Iraq.
Among those killed Tuesday
was an American security contractor, David Berry, employed
by the Virginia-based security
firm Team Crucible LLC. The 34year-old former marine sergeant,
a native of Arizona, had been in
Please turn to page A8
 Hostage trade deadline set.... A8
 Yemeni official is freed............. A8
Hollywood’s Bit Players Need
To Stand Out Before They Can Blend In
Firm That Casts Extras Searches for All Types:
Got a Forked Tongue? One Hand? You’re Hired
But Central Casting takes all
kinds. More recently, the firm has
Calif.—Jennifer cast Mongolian horse riders, JenBender walked straight out of Cen- nifer Lawrence’s body double and
tral Casting on a recent Wednes- men with forked tongues.
day morning and surveyed the
“We wouldn’t have thought to
crowd of would-be superstars.
ask about that at orientation,” said
Some had lined up
Ms. Bender, a senior vice
hours earlier, ready to
president at the comjoin the 70,000 other expany.
tras, or background acSince 1925, long betors, in the company’s
fore “straight out of
roster. Such characters
central casting” enhave been used by Hollytered the American
wood studios for devernacular, the Central
cades to flesh out the
Casting company has
periphery in movies and
fed wannabe actors—
television shows.
and those just looking
Many surely hoped
for work—into the Holthey’d follow the path Juliette B. Reiss lywood pipeline, bein costume
of Central Casting alhind and around the
ums like Brad Pitt (who
real stars. Many spend
early in his career played the only the occasional day on set,
“guy at beach with drink” in miming conversations and filling
1987’s “Hunk”) or Ava Gardner out banal settings like restau(“girl in car lighting cigarette” in rants, offices and parks. Others
Please turn to page A12
1942’s “This Time for Keeps”).
n The FCC warned that it
would prosecute businesses
that block people from using
personal Wi-Fi networks. B4
Alik Keplicz/Associated Press
n DuPont warned 2015 results would take a hit from the
strong dollar and weakness in
its agricultural-seed unit. B5
n AT&T added 854,000
wireless customers last
quarter as profits showed
strain from competition. B3
 Stocks tumble on earnings...... C1
An attack on a luxury hotel in
Libya’s capital killed nine people,
including an American, and
stoked fears that the Islamic
State militant group is expanding beyond the Middle East toward North Africa and Europe.
n Caterpillar said net plunged
25%, hurt by falling commodity prices, and forecast a drop
in 2015 sales and profit. B5
n Pfizer said the dollar’s
strength and drug-patent losses
contributed to a 52% drop in net
and would hurt 2015 results. B5
Worse, the results were accompanied by fresh data Tuesday that suggests the fall in oil
prices and the soaring dollar are
rippling through the economy in
unpredictable ways. U.S. businesses broadly cut capital spending in the final months of 2014,
Please turn to the next page
Libya Hit
Holocaust Survivors Mark Seven Decades of Life After Auschwitz
n Apple’s quarterly profit
surged 38% to $18 billion,
beating even the most bullish forecasts, on sales of its
higher-priced iPhones. B1
YEN 117.87
Rising Currency Takes a Toll on Sales and Profits; Stocks Drop as Capital Spending Slows, Too
Business & Finance
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Strong Dollar Squeezes U.S. Firms
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