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* * * * * FRIDAY, JANUARY 11, 2013 ~ VOL. CCLXI NO. 9 WSJ.com HHHH $2 .00

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Vital Signs

Wholesalers kept leanerinventories in November.The ratio of inventory tosales, which measures howmany months it would takefor businesses to depletetheir current inventory,slipped to 1.19 from October.That was the lowest levelseen since last May. Thedrop partly reflects a pickupin sales, which rose fasterthan the pace at whichwholesalers restocked.

Wholesalers’ ratio ofinventory to sales

Source: Commerce Department

'09 '10 '11 '12’081.0

1.1

1.2

1.3

1.4

>

SAC Capital has told em-ployees and business

partners it is bracing for cli-ent withdrawals of at least$1 billion this year—nearly17% of the money it managesfor outside investors—amidintense regulatory scrutinyof alleged insider trading. A1n American Express setplans to cut 5,400 jobs in itsbiggest retrenchment in adecade, as the company paresback its travel business. C1n Nokia said sales of its newLumia smartphones have beenbrisk, quelling investor con-cern that its bet on Microsoft’ssoftware was a blunder. B1n Bank stocks led indexeson a broad upward march, asthe S&P 500 marked a five-year closing high. The Dowindustrials rose 80.71 points. C4n The FAA plans to launch atop-priority safety review ofBoeing’s 787 focusing on itselectrical system and qualitycontrols in manufacturing. B1n The epidemic of long-termunemployment, one of themost persistent challenges forthe U.S. economy, is finallyshowing signs of easing. A2n The Fed sent a record$88.9 billion in profits to theTreasury in 2012 as it reapedgains from programs launchedto spur economic growth. A2n Inflation in China acceler-ated in December as unusuallycold winter weather pushedup food prices, potentiallyposing a risk to recovery. A9n Europe’s central banksent a strong signal that it isunlikely to cut interest ratesdespite economic contractionand record unemployment. A8n Japan’s new governmentapproved a $115.7 billion eco-nomic stimulus package andvowed to beef up ties withthe nation’s central bank. A9n BATS rushed to allay con-cerns of customers and regu-lators after disclosing thaterrors on its exchange wentundetected for four years C1n Private-equity investorsled by Cerberus are buyingSupervalu’s Albertsonsstores and four of its othersupermarket chains. B1, B2n RBS’s board has held talkswith British regulators overwhether two key executivesshould quit over the bank’salleged attempt to rig rates. C2n Herbalife presented a de-fense of its business model,seeking to counter a hedge-fundmanager’s assertion that thefirm is a pyramid scheme. C1n Crude-oil prices climbedto a 16-week high on newsthat Saudi Arabia, the world’slargest oil exporter, cut pro-duction in December. C4n China’s Lenovo is lookingto introduce its high-endpersonal computers to theU.S. consumer market. B4nWorld-wide PC shipmentsdropped 6.4% in the fourthquarter despite the debut ofMicrosoft’s Windows 8. B4

n Biden will urge broad mea-sures to stem gun violence.The vice president saidmeetings with a range ofgroups this week showedgrowing support for tighterbackground checks on gunpurchasers, restrictions onhigh-capacity clips and othermoves. Biden said he woulddeliver his recommendationsTuesday to Obama, who haspromised a quick effort toput them into practice. A1The NRA delivered a swiftrebuke, saying the adminis-tration was gearing up foran attack on gun ownership.n Bombings in Pakistankilled 115 people, including 81who died in twin attacks on abilliards hall in a Shiite area ofa southwestern city. A10nObama’s choice of Lew asTreasury secretary elicited lit-tle GOP opposition, but he stillis likely to face grilling overtax and spending plans. A4nThree Kurdish activists, in-cluding a founder of themili-tant PKK, were killed in Paris inexecution-style shootings. A7n Syrian rebels battled armytroops inside an air base inthe north. NATO said it de-tected the launch of an un-guided ballistic missile. A10n Afghan President Karzaimet with Washington offi-cials in talks over a long-termU.S. troop presence. Hemeets today with Obama. A7nA censorship row at a Chi-nese paper united activists fromaround the country, but officialscracked down on protests.A9nVenezuelans celebrated thebeginning of Chávez’s fourthterm as president even as heremained hospitalized. A9nAustralia arrested an allegedally of Russian arms dealer Bouton charges of trying to buyplanes to move weapons. A10nMali’s Islamist rebels saidthey seized control of a centralcity, encroaching further ongovernment-held territory. A10n Sandusky’s lawyers arguedthat he should be given a newtrial because they didn’t haveenough time to prepare hischild sex-abuse defense. A3nA pastorwithdrew from giv-ing the benediction at Obama’sswearing-in after a sermon ofhis on gays came to light.A4n The FDA told makers ofsleep drugs to lower dosesbecause they impair activi-ties in the morning. B3nCalifornia is predicting asurplus for its next fiscal year,due to cost cuts, tax increasesand an improving economy. A6nA Colorado judge said thereis enough evidence for the sus-pect in last year’s movie the-ater killings to stand trial. A4nDetroit received $150 mil-lion from the Kresge Founda-tion for a land-use plan. A6n “Lincoln” led the field ofOscar nominees. Other picksfor best picture included “ZeroDark Thirty” and “Argo.” B6

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What’s News–i i i i i i

Chuck Hagel was the one Senate Republicanwilling to help Barack Obama when he neededit most—in July 2008, as Mr. Obama, then anIllinois senator, prepared to fight Sen. JohnMcCain in the presidential election.

Mr. Hagel, at the time a GOP senator whohad already fallen out of favor with Mr. McCainand other Republican Party leaders, agreed tojoin Mr. Obama on a tour of Iraq and Afghani-stan, just weeks before the national conven-tions. Running against a war hero with long ex-perience in foreign policy, Mr. Obama hadnever visited Afghanistan and been just once toIraq.

The overseas trip was intended to bolsterMr. Obama’s foreign policy credentials and

claims to bipartisanship. But through the longplane rides, cramped quarters and endlessmeetings, Mr. Obama came to see Mr. Hagel asa kindred spirit, as much for his beliefs as hispragmatism, said people who were there. Asthey relaxed in a Kuwait hotel room tradingjokes and talking shop, a senior administrationofficial said, it was obvious the two men “justkind of clicked.”

Mr. Hagel’s unlikely road from Republicanstalwart to apostate to nominee for Secretaryof Defense begins in Vietnam and takes a sharp

turn at Iraq. The son of a lumberyard worker,he grew up in Ainsworth, Neb., joined theArmy’s Ninth Infantry Division and in 1968served as an infantry sergeant in Vietnam. Hereturned a decorated combat veteran and overthe years developed a measured skepticism to-ward war.

Mr. Obama now seeks Senate approval forMr. Hagel, 66 years old, who went on to makea fortune early in the cellphone industry beforeserving two six-year terms in Washington and

PleaseturntopageA5

Hedge-fund group SAC CapitalAdvisors has told employees andbusiness partners it is bracing forclient withdrawals of at least $1billion this year—nearly 17% ofthe money it manages for outsideinvestors—amid intense regula-tory scrutiny of alleged insidertrading, people briefed on theconversations said.

A withdrawal of that sizewould represent a serious blowfor the firm, one of the world’smost successful hedge funds fortwo decades, and its founder Ste-ven A. Cohen.

SAC manages $14 billion in to-tal, but only around $6 billioncomes from outside investors,

most of the rest belonging to Mr.Cohen and SAC employees. Cli-ents have until Feb. 15 to put in aredemption request to receivemoney by the first quarter’s end;it is likely even SAC won’t knowthe precise figure that investorswill ask to pull until then.

However, in recent weeks thefirm’s executives have been alert-ing advisers and senior employ-ees that the withdrawal requests,known as “redemptions” in thehedge-fund industry, could total$1 billion or more. At the sametime, SAC’s top ranks have beenreaching out to investors togauge whether they want to keeptheir money with the firm or not,the people briefed said.

“It is premature to speculateabout redemptions,” an SACspokesman said Thursday. “Inves-

PleaseturntopageA6

By Dana Cimilluca,Juliet Chung

and Jenny Strasburg

SAC Is Bracing forBig Exodus of Funds

Vice President Joe Biden saidThursday he would recommendthe White House push for broadmeasures to stemgun violence, cit-ing growing support for tighterbackground checks on gun pur-chasers, restrictions on high-ca-pacity clips and other moves.

But the National Rifle Associ-ation delivered a swift rebukefollowing a meeting with Mr. Bi-den, saying the administrationwas gearing up for an attack ongun ownership.

Mr. Biden said he would de-liver his recommendations Tues-day to President Barack Obama,who has promised a quick effortto put them into practice. Thestrong opposition from the NRA,the nation’s most powerful gun-rights group, suggested propo-nents of new measures had sub-stantial work to do to buildpolitical support.

“We disagreed, obviously, onimportant issues,’’ said JamesBaker, director of federal affairsfor the NRA, who attended themeeting Thursday with Mr. Bi-den. In a written statement, theNRA said it was “disappointedwith how little this meeting hadto do with keeping our childrensafe and how much it had to dowith an agenda to attack the Sec-ond Amendment.’’

Mr. Biden and other adminis-tration officials have met with arange of groups this week,among them medical associa-tions, victims’ rights and sports-men’s organizations, entertain-ment-industry trade groups andgun retailers, as part of an as-signment from Mr. Obama todraw up a response to the schoolkillings last month in Newtown,Conn.

Mr. Biden detailed some of hisPleaseturntopageA4

BY COLLEEN MCCAIN NELSONAND GARY FIELDS

Biden’sGunPushDrawsNRA Ire

SAC’s PieFounder Steven A. Cohenholds a large portion ofSAC’s funds

Outside funds$6 billion

$1 billion

$8 billion

Possible withdrawalsthis year

Source: WSJ reporting

The Wall Street Journal

Assets belonging toCohen and SAC

employees

$14 billiontotalassets

By Julian E. Barnes, Adam Entous,SaraMurray and Carol E. Lee

Hagel, Obama Forged Bond Over Iraq

HONOR GUARD: Afghan President Hamid Karzai, at the Pentagon, began talks on a U.S. troop presence in hiscountry after 2014. He will discuss future military aid with President Obama at the White House Friday. A7

AlexWon

g/Getty

Images

Japan’s Philanderers Stay FaithfulTo Their ‘Infidelity Phones’

i i i

Cads Attracted to How Outdated DeviceHides Calls, Texts; Juggling Three Girlfriends

TOKYO—Over the past fewyears, as many people rushed totrade in their old phones forsmartphones, Japan’s philander-ers have remained faithful to oneparticular brand: Fujitsu Ltd.’solder “F-Series” phones, whichfeature some attractive stealthprivacy features.

The aging flip-p h o n e—n i c k -named the “uwakikeitai” or “infidel-ity phone”—owesits enduring pop-ularity to custom-ers who don’t be-lieve newersmartphones are as discreet athiding their illicit romances.

A Japanese blogger who goesby the name Bakanabe andwrites anonymously about pick-ing up women, said he lookedinto buying a new device butfound the privacy settings fell

short of his current phone. In-stead, he opted to refurbish hisbattered, three-year-old Fujitsuflip-phone with a new casing anda new battery.

“Women may want to checkmy phone for strange emails orcalls when I’m not around. WithFujitsu’s ‘privacy mode,’ theycan’t see that information at all,”

he said in anemail. “The key isto give off theimpression thatyou’re not lock-ing your phone atall.”

Fujitsu’s “pri-vacy mode” is alayer of nearly in-

visible security that hides missedcalls, emails and text messagesfrom contacts designated as pri-vate. If one of those acquain-tances gets in touch, the onlysignal of that communication is asubtle change in the color or

PleaseturntopageA8

BY DAISUKE WAKABAYASHI

Mr. Karzai Goes to Washington

FujitsuF-03 phone

Obama turns to ‘band of brothers’ to fillcabinet in new term............................................... A5

Little opposition to Lew surfaces................... A4

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