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* * * * * * MONDAY, FEBRUARY 11, 2013 ~ VOL. CCLXI NO. 34 WSJ.com HHHH $2 .00

Political Battles Ahead Sen. Graham holds up nominations for

Hagel, Brennan over Benghazi probe..... A4 President to push economic vision in

State of the Union address Tuesday..... A4

CONTENTSCorporate News... B2-5Global Finance........... C3Heard on the Street C8Law Journal................. B7Letters to the Editor. A12Market Data................ C4

Media & Marketing.. B6Moving the Market.. C2Opinion................... A11-13Sports.............................. B8U.S. News................ A2-4Weather Watch........ B7World News... A5-10,14

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Vital Signs

Mortgage rates heldsteady last week afterclimbing in January. Therate on a 30-year fixedmortgage stands at 3.53%,the highest since Septem-ber—though well below the6% level seen five years ago.Low rates are encouragingAmericans to buy homes orrefinance their mortgages.Many investors expect theFederal Reserve to continuebuying mortgage securitiesto keep rates low. A2

Fixed rate on 30-yearhome mortgages

Source: Freddie Mac

3.0

3.5

4.0%

'13’12

>

Financial policy makersfrom the U.S. and Europe

are discussing issuing a jointmessage designed to head off apotentially destabilizing roundof currency devaluations. Thetalks come ahead of a gather-ing of G-20 finance officialswhere currency concerns areexpected to draw attention. A5n U.S. companies are lessoptimistic than investorsabout the global economyand their own prospects, andmany are cutting forecastseven as the Dow industrialsare pushing near a record. A1n The recent rise in stockshas fueled debate aboutwhether a 13-year stretch oflackluster returns is over. C1nApple is testing designs fora watch-like device that wouldperform some functions of asmartphone, and has discussedsuch a device with Hon Hai. B3n Barclays CEO Antony Jen-kins is expected to unveil aplan on Tuesday that willleave the British bank’sstrategy largely intact. C3n A potential deal betweenAMR and US Airways to cre-ate the world’s biggest airlinelikely would pass U.S. anti-trust scrutiny, experts say. B1nDell’s largest outside share-holder faces an uphill battlein its bid to squeeze billionsmore out of the tech giant’splanned $24.4 billion LBO. B1nMoody’s took steps to avoidcreating a trove of potentiallyembarrassing employee mes-sages like those that came backto haunt S&P, some formerMoody’s employees say. C1n Employers in severalstates are bracing for higherhealth-care costs as somegovernors resist a plannedMedicaid expansion. A1n Gap is retaking lost groundafter struggling for years toget sales moving, giving aboost to the once-trendset-ting apparel retailer. B1n Foreign and domestic in-vestors are preparing topounce on bad debts held byChinese banks, a potentiallylucrative but risky area. C1

n Sen. Graham plans a “hold”on CIA, Pentagon nominees.The South Carolina Republicansaid he would make use of theprocedural practice until theWhite House gives more infor-mation about the attack on U.S.facilities in Benghazi, Libya.Democrats criticized the callto block Brennan from the spyagency post and Hagel fromDefense, calling it “unprece-dented and unwarranted.” A4AMcCain aide said the Ari-zona senator backs themove.Both lawmakers said theydon’t support a filibuster.nA suicide bombing and gun-battles erupted in Mali as Isla-mist militants counterattackedafter a French offensive. A10n Syrian forces and rebelsbattled for control of a Damas-cus area that rebels see as keyto “liberate” the capital. A7nMarine Gen. Dunford tookcontrol of coalition forces inAfghanistan as the U.S. seeksto wind down its role. A6nNortheast states continuedto dig out from a weekend bliz-zard, utilities restored serviceand travel bans were lifted. A3nObama is expected to callfor spending initiatives aimedat creating jobs in Tuesday’sState of the Union speech. A4nA stampede broke out at atrain station in India asmillionsgathered for a Hindu festival,leaving at least 36 dead.A6nARussian opposition leaderwas put under house arrest, ascritics see the Kremlin tighten-ing control over protests. A8nTunisia’s government ap-peared a step closer to collapseas secular party ministers quitthe Islamist-led coalition. A6nAn ex-Malaysian officer,jailed for years for allegedly aid-ing terrorists, was rearrested,stoking new terror fears. A9nPaterno’s family blasted areport that said the late PennState coach conspired to hideSandusky’s child sex abuse. A3nMumford & Sons won theGrammys’ marquee prize ofalbum of the year for theirsecond album, “Babel.” B6

Business&Finance World-Wide

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SPORTS: WhenBadTeams Seize the Spotlight

What’s News–i i i i i i

What’s Ahead—MONDAY, FEB. 11 Euro-zone finance minis-ters meet in Brussels.TUESDAY, FEB. 12 President Barack Obamadelivers his annual State ofthe Union address.WEDNESDAY, FEB. 13 The Commerce Departmentreleases data on retail salesfor January and business in-ventories for December. The Senate Finance Com-mittee holds a hearing onthe nomination of Jack Lewto be Treasury secretary.THURSDAY, FEB. 14 Bank of Japan officialsconclude a two-day policymeeting.

The Labor Departmenttallies unemployment claimsfor the latest week.FRIDAY, FEB. 15 Finance ministers andcentral bankers from Groupof 20 economies open twodays of meetings in Moscow. A report on industrialproduction for January is duefrom the Federal Reserve. The University of Michi-gan issues its initial readingof consumer sentiment forFebruary.MONDAY, FEB. 18 U.S. markets are closed inobservance of Presidents Day.

For the week ahead in corporatenews, see page B2.

Western forces armed with drones, jets, laser-guided bombs and state-of-the-art wiretappingtechnology are engaged in a cat-and-mouse huntfor fundamentalist insurgents who have disap-peared into the Sahara, holed up in ancient deserthide-outs.

The U.S. is working with France to find the fugi-tives, including Mokhtar Belmokhtar, whose fol-lowers commandeered an Algerian gas plant lastmonth in a kidnap plot that left at least 37 peopledead—three Americans among them. For the pastdecade, the 40-year-old insurgent leader hasraised tens of millions of dollars from kidnappingand other criminal enterprises to buy weapons andwage a holy war, U.S. officials said.

French warplanes, before reclaiming Timbuktulast month, fired U.S.-made bombs at hide-outsand the command center of the terrorist group, alQaeda in the Islamic Maghreb, which for monthshad occupied the northern half of Mali. WhenFrench soldiers arrived in tanks a week later, theyfound the blitz to finish off the AQIM’s leadershiphad instead bombed decoy cars and empty build-ings, according to French officials.

Among the insurgents who escaped the Frenchonslaught, Western authorities say, none is as elu-sive as Mr. Belmokhtar, a breakaway AQIM com-mander, whose brigade is named Those Who SignWith Blood.

The U.S. is employing the Federal Bureau of In-vestigation, the Central Intelligence Agency, theDrug Enforcement Administration and the JointSpecial Operations Command in a manhunt thatunderscores how quickly Washington is eyeing anexpansion of its counterterrorism actions in north-western Africa following the gas-plant attack. Se-nior U.S. officials are pressing to add Mr.Belmokhtar to a list of U.S. targets for capture orkilling.

Since arriving in the country on Jan. 11, Frenchand African soldiers have liberated much ofAQIM’s seized empire, a Texas-size stretch ofnorthern Mali. Mr. Belmokhtar and the others have

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Employers in several states arebracing for higher health-carecosts as some governors, worriedabout the impact on state budgetsfrom the federal overhaul, resist aplanned Medicaid expansion.

Under the new law, lower-paidworkers at companies such as theNashville, Tenn.-based chain ofCaptain D’s seafood restaurantscould qualify for the national ex-pansion of Medicaid set to begin

in 2014. Having those employeeson Medicaid, the health programfor low-income people that isfunded with federal and state dol-lars, would mean the workers gethealth insurance while the com-pany pays nothing.

But the Supreme Court rulingon the health law last summer letstates opt out of the law’s Medic-aid expansion. Captain D’s oper-ates mostly in Southern statesthat have signaled they will optout, arguing that it is unfair to ex-

pose their already-strapped bud-gets to the federal government’soverhaul of health care.

That means the company willhave to spend thousands of dol-lars to insure each full-timeworker who can’t enroll in theprogram, or pay fines starting at$2,000 a person.

“If the state doesn’t expand theMedicaid coverage then by defaultthat population becomes the re-sponsibility of their employer,”said Michael Folks, Captain D’s

general counsel and a senior vicepresident.

That has paved the way fortough choices for states. If statesdon’t expand the Medicaid pro-grams, the cost of covering mil-lions of uninsured full-time work-ers will fall to employers. Butstate lawmakers also worry theirbudgets can’t absorb the costs ofparticipating over the long term.

To date, some 25 governorshave indicated they want to take

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BY LOUISE RADNOFSKY

InMedicaid, a NewHealth-Care Fight

Sensing better times ahead,investors have pushed the DowJones Industrial Average up thisyear near its record high. But adifferent mood is pervading U.S.companies, where executives areless optimistic about the globaleconomy and their own pros-pects, and many are lowering fi-nancial forecasts.

Fourth-quarter operatingearnings topped diminished ex-pectations, rising 7.3% at the 339members of the Standard &Poor’s 500-stock index that havereported results, while revenuerose 5.9%, according to ThomsonReuters. But the companies warnthat the current quarter will bemore challenging, and analystsproject first-quarter earnings atS&P companies will rise just1.7%, Thomson Reuters says, orless than half what they werepredicting at the beginning ofthe year.

Sixty-three S&P companieshave lowered their forecasts forfirst-quarter earnings, accordingto FactSet Research, while 17have raised them, the largestdisparity since the firm begantracking the data in 2006.

Many executives see shrinkingeconomies in Europe. Closer tohome, they worry about hesitantU.S. customers, chilled by con-tinued Washington gridlock.

In a sign of executive caution,a Wall Street Journal survey of50 S&P companies found theyplan to increase investment thisyear by 2%, signaling a dearth ofbig growth opportunities.Through the first nine months of2012, S&P companies boosted in-vestment 8%, following a 20% in-crease in 2011.

Consider Corning Inc. Theglassmaker said on Jan. 29 thatit plans to cut spending on newplants and equipment this yearby 28%, to $1.3 billion from $1.8billion, with most of the declineat its LCD operations. Corningreported a 42% drop in fourth-

Pleaseturntothenextpage

BY SCOTT THURM

CompaniesFret OverUncertainOutlook

By Drew Hinshaw in Timbuktu, Mali,Siobhan Gorman and Devlin Barrett

in Washington

Terror Leader Emerges,Then Vanishes, in Sahara

RECORD REWARD: The city of Los Angeles is offering the sizable bounty for information leading to thearrest of Christopher Dorner, suspected of killing three. On Sunday, police scoured Big Bear Lake, Calif. A2

JaeC.

Hon

g/AssociatedPress

Everybody Loves Labradors,So Why Are They Underdogs?

i i i

In 136 Years of Westminster Show,Popular Breed Has Never Won Grand Prize

For the past 22 years, the La-brador Retriever has been themost popular dog breed in theU.S., tying the Poodle’s recordreign atop AmericanKennel Club registra-tions. “They’re thegreatest dogs in theworld,” said DavidFrei, the Westmin-ster Kennel Club’scommunications di-rector. “Who doesn’tlove a Labrador Re-triever?”

The answer isjudges at the West-minster Dog Show. In 136 yearsof the event, no Labrador hasever won Best in Show.

The Labrador hasn’t evenmade it out of the Sportinggroup to sniff at Westminster’sgrand prize. In other words, La-bradors are the Chicago Cubs ofshow dogs: the most lovable of

four-legged losers.Fifty-four Labradors will pa-

rade around Madison Square Gar-den’s ring Tuesday at this year’sWestminster show, which beginsMonday. Only the Golden Re-

triever breed, anotherBest in Show shutout,has more entries. Butthe odds of a Labra-dor breaking thecurse are 450-to-1, ac-cording to JohnnyAvello of the WynnLas Vegas casino’ssports book, makingLabradors an under-dog yet again.

“We all feel thatwe’ve been really ignored,” saidMary Wiest, a Labrador breederin Warren, N.J.

A black Labrador namedWindy was given Best of Breed atlast year’s Westminster show.Elizabeth Martin, her owner andbreeder, only entered Windy be-

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Windy

BY BEN COHEN

A $1 Million Manhunt for Fugitive Ex-Cop

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