The Wall Street Journal - 28.10.2019

***** MONDAY, OCTOBER 28, 2019 ~ VOL. CCLXXIV NO. 101 WSJ.com HHHH$4.

Last week:DJIA26958.06À187.86 0.7% NASDAQ8243.12À1.9% STOXX 600398.01À1.6% 10-YR. TREASURYg 17/32, yield 1.805% OIL$56.66À$2.79 EURO$1.1080 YEN108.

China’s Next Financial Bubble:

High-End Sneakers

iii

Investors flood what’s hot—bitcoin, garlic,

Travis Scott Nike Air Force 1s at $2,

In recent months, Chinese

officials have had to contend

with a bruising U.S. trade war,

a slowing economy and crip-

pling outbreaks of African

swine fever.

Add to those threats to or-

der and prosperity a financial

bubble in high-end sneakers.

“Trading sneakers is not so

different from trading stocks,”

said Wang Zhichen, a 32-year-

old client manager at a Shang-

hai mobile-payments firm, who

checks prices on Nice and

Poizon, two widely used Chi-

nese sneaker-trading platforms,

as soon as he wakes up. He

then adjusts the prices of shoes

he intends to sell to a clientele

of 700-plus potential buyers via

Chinese all-purpose app

WeChat. “You need to watch

the opening and closing prices.”

Chinese sneaker mania has

gone into hyperdrive, taking

the U.S. subculture and its ob-

session with the first Air Jor-

dans to a new level. Specula-

tors are flooding trading

platforms and treating sneak-

ers much like financial deriva-

Please turn to page A

BYSTELLAYIFANXIE

ANDJULIEWERNAU

Jonathon Jacobson picked stocks for

three decades. He spent the 1990s at

Harvard University’s endowment, mak-

ing winning bets on and against com-

panies. Then he built a hedge fund,

Highfields Capital Management, which

made a mint in 2001 betting against

Enron Corp.

Recent history hasn’t been as kind.

After badly trailing the market in re-

cent years, Mr. Jacobson told investors

in his $12.1 billion fund a year ago he

was giving them their money back.

LIFE & ARTS

Combating the

isolation that an

Alzheimer’s diagnosis

brings.A

BUSINESS & FINANCE

Labor pact at GM sets

up costly deals for

Ford and Fiat

Chrysler.B

BILL PUGLIANO/GETTY IMAGES

INSIDE

“I wasn’t having fun,” he told a

group of other hedge-fund titans the

next month at a Miami dinner. “How

about you guys?”

Hedge-fund managers once reigned

over the investment industry. The best

of them accumulated huge wealth. In-

vestment funds angled to buy pieces of

their business. Clients lined up for the

privilege of investing with them. The

biggest endowed the arts and education

and put their names on buildings.

Today, clients have withdrawn

money for three straight years from

hedge funds that pick stocks, either

betting for or against, according to re-

search firm HFR Inc. That is the lon-

gest stretch of net outflows from such

funds, once the growth engine of the

industry, since HFR began tracking the

data in 1990.

The reason isn’t hard to find:

They’re no longer especially good at

picking stocks.

Hedge funds use many strategies.

Some make calls on the direction of in-

terest rates or currencies. Some buy

discounted bonds in a wager the com-

panies that issued them will

Please turn to page A

BYJULIETCHUNG

Tiffany & Co. has received

a takeover approach from

LVMH Moët Hennessy Louis

Vuitton, which is seeking to

add the iconic U.S. jeweler to

its portfolio of upscale

brands.

The French company sent

Tiffany officials a letter in the

past couple of weeks outlining

an all-cash takeover bid of

about $120 a share, according

to people familiar with the

matter. That would value Tif-

fany at close to $14.5 billion.

The companies aren’t in

talks but Tiffany is expected

to work quickly on a re-

sponse, some of the people

said. Even though the bid rep-

resents a premium of 30% or

more to where Tiffany traded

when the offer was made, ac-

cording to one of the people,

LVMH is expected to have to

payupevenmoreifitwants

to clinch the deal.

Shares of New York-based

Tiffany closed Friday at

$98.55, giving it a market

value of nearly $12 billion.

The stock reached nearly

$140 a share during the sum-

mer of 2018.

LVMH has a market value

of €193 billion ($214 billion).

Please turn to page A

BYBENDUMMETT

ANDSUZANNEKAPNER

Tiffany

Receives

Offer From

LVMH

PETALUMA, Calif.—Califor-

nia’s governor declared a state

of emergency as a wildfire

north of San Francisco burned

nearly uncontrolled and mil-

lions of people were left with-

out power as utilities tried to

prevent more fires amid raging

winds.

“We are deploying every re-

source available, and are coor-

dinating with numerous agen-

cies as we continue to respond

to these fires,” Gov. Gavin

Newsom, a Democrat, said.

Firefighters confronted fe-

rocious winds, with at least

one gust clocking in at 102

miles an hour shortly after

sunrise Sunday in the hills

above the evacuated Sonoma

County wine town of Healds-

burg, according to the National

Weather Service.

Some 180,000 people were

ordered to evacuate the area

near the Kincade Fire, the larg-

est of eight wildfires currently

blazing in the state, according

Please turn to page A

BYJIMCARLTON

ANDLAURAKUSISTO

Extreme Winds Stoke California Wildfires

A firefighter outside a burning home caught in the Kincade fire on Sunday, as California’s governor declared a state of emergency.

self and three children, deto-

nating a suicide vest in a tun-

nel while being pursued by

U.S. troops, Mr. Trump said.

Considered Islamic State’s

founder and inspirational

leader, Baghdadi was responsi-

ble for its reign of terror as it

amassed territory across Iraq

and Syria in recent years. The

group has displaced tens of

thousands of people and per-

petrated widespread barba-

rism, including rapes and

video-recorded beheadings.

The president made public

Please turn to page A

WASHINGTON—The ideo-

logical leader of Islamic State

died in a U.S.-led raid in north-

western Syria, President Trump

said Sunday, fulfilling a long-

held U.S. goal and marking the

most significant setback for the

militant group since losing the

last of its territorial caliphate

earlier this year.

Abu Bakr al-Baghdadi, who

was 48 years old, killed him-

ByMichael C. Bender,

Gordon Lubold

andRaja Abdulrahim

Baghdadi’s death won’t be

enough to end an insurgency

and ideology of international

terrorism that has spawned

affiliated groups from Afghan-

istan to West Africa and re-

mains central to the global ji-

hadist movement.

Baghdadi “was a uniquely

charismatic figure who built a

terrorist state that attracted

like-minded individuals around

the world and exploited the

power vacuum in Iraq and

Syria,” a U.S. official said. “His

fingerprints are all over that.”

Please turn to page A

The death of Abu Bakr al-

Baghdadi deprives Islamic

State of its ideological head at

a time when it is reeling from

the loss of its self-proclaimed

caliphate and trying to keep

its extremist ideas alive.

Still, the group’s flexible hi-

erarchy and decentralized au-

thority have helped it replace

other slain leaders quickly.

ByIsabel Colesin Erbil,

Iraq,Jared Malsinin

Istanbul andWarren P.

Strobelin Washington

Hedge Fund Kings Face a Reckoning

Clients withdraw funds as portfolio managers find it harder to navigate markets and deliver returns

Terrorist’s End

 Gerald F. Seib: A political

win, with caveats............ A

 Final moments in the hunt

for Baghdadi..................... A

ISIS Leader Dies in Raid in Syria

Abu Bakr al-Baghdadi detonated a suicide vest

as he was pursued by U.S. military, Trump says

After a long-sought U.S. victory, the insurgency

he led and ideology he espoused remain a threat

NOAH BERGER/ASSOCIATED PRESS

ASSOCIATED PRESS

Hidden fees? Not on our watch.

Wechargeyoulesssoyouhavemoretoinvest.FindoutmoreonpageR16.

ADVERTISEMENT

CONTENTS

Business & Finance B2,

Business News...... B

Crossword.............. A

Heard on Street... B

Life & Arts....... A11-

Markets.....................B

Opinion.............. A15-

Outlook.........................A

Sports....................... A

Technology.................B

U.S. News............. A2-

Weather................... A

World News....... A6-

s2019 Dow Jones & Company, Inc.

All Rights Reserved

What’s

News

The ideological leaderof

Islamic State died in a U.S.-

led raid in northwestern

Syria, fulfilling a long-held

American goal and marking

a significant setback for the

militant group.A1, A6, A

California declareda state

of emergency as a wildfire

north of San Francisco

burned nearly uncontrolled

and millions of people were

left without power.A

House committeescon-

ducting the impeachment

inquiry are expected to

hear from at least six more

witnesses this week.A

Argentina’s Peronists

returned to power as vot-

ers rejected Macri’s aus-

terity policies.A

The U.S. has takensteps

toward leaving an agree-

ment designed to reduce

the risk of war between

Russia and the West.A

Protesters detainedby

Egyptian security officers

say they were tortured.A

A battle overMissouri’s

last abortion clinic continues

this week, as a state commis-

sion weighs arguments in a

licensing dispute.A

Died:Former Rep. John

Conyers of Detroit, a civil-

rights leader, 90.A

T

iffany has receiveda

takeover approach from

LVMH Moët Hennessy Louis

Vuitton, which is seeking to

add the iconic U.S. jeweler

to its upscale brands.A

Microsoft’s winof a land-

mark Pentagon contract adds

force to its effort to unseat

Amazon as the leader in the

cloud-computing market.B

GM’s new labor deal

with the UAW won’t only

add to its labor costs but

could also pose problems

for its Detroit rivals.B

Investorsand credit-rat-

ing firms are growing con-

cerned about risks and weak

controls at SoftBank after

its bailout of WeWork.B

Stocks are flirtingwith re-

cords but have been stuck in

a narrow trading range since

the beginning of last year.B

Blackstone is bettingthat

the rise of online shopping

will remain a bright spot,

but it isn’t buying retailers—

it is buying warehouses.B

Popeyes is bringingback

its popular spicy chicken

sandwich next month after

securing suppliers.B

P&G didn’t makeenough

hand-dishwashing soap, and

Walmart is letting its cus-

tomers know about it.B

Business&Finance

World-Wide

JOURNAL REPORT

C-Suite Strategies: The

business case for more

diversity.R1-