The Wall Street Journal - 02.10.2019

B12| Wednesday, October 2, 2019 THE WALL STREET JOURNAL.

Net Stock Sym CloseChg ParkerHannifin PH 175.73-4.88 Paychex PAYX 81.89 -0.88 PaycomSoftware PAYC 207.94-1.55 PayPal PYPL 102.53-1.06 Pearson PSO 9.12 0.08 t Peloton PTON22.51-2.59 PembinaPipeline PBA 36.52 -0.55 Pentair PNR 36.72 -1.08 People'sUtdFin PBCT 15.18 -0.46 PepsiCo PEP 137.370.27 PerkinElmer PKI 83.47 -1.70 Perrigo PRGO 55.21 -0.68 PetroChina PTR 50.65 -0.16 PetroleoBrasil PBR 14.35 -0.12 PetroleoBrasilA PBR.A 13.18 0.04 Pfizer PFE 35.43 -0.50 PhilipMorris PM 77.83 1.90 Phillips66 PSX 101.03-1.37 PilgrimPride PPC 30.87 -1.18 Pinduoduo PDD 32.75 0.53 PinnacleWest PNW 97.31 0.24 Pinterest PINS 26.43 -0.02 PioneerNatRscs PXD 121.73-4.04 PlainsAllAmPipe PAA 20.55 -0.20 Pool POOL 199.20-2.50 PostHoldings POST 105.21-0.63 PrincipalFin PFG 55.18 -1.96 Procter&Gamble PG 123.85-0.53

ResMed RMD 133.59-1.52 RestaurantBrands QSR 70.84 -0.30 RingCentral RNG 123.59-2.07 RioTinto RIO 51.37 -0.72 RobertHalf RHI 53.99 -1.67 Rockwell ROK 162.29-2.51 RogersComm B RCI 49.05 0.32 Roku ROKU 102.400.64 Rollins ROL 33.50 -0.57 RoperTech ROP 345.45-11.15 sRossStores ROST 109.30-0.55 RoyalBkCanada RY 80.65 -0.51 RoyalBkScotland RBS 4.96 -0.14 RoyalCaribbean RCL 104.65-3.68 RoyalDutchA RDS.A 58.39 -0.46 RoyalDutchB RDS.B 59.30 -0.60 RoyalGold RGLD 123.960.75 Ryanair RYAAY 66.36 -0.02 SAP SAP 117.15-0.72 S&P Global SPGI 242.85-2.13 SBA Comm SBAC 237.08-4.07 SEI Investments SEIC 57.74 -1.52 SK Telecom SKM 22.04 -0.16 SLGreenRealty SLG 78.50 -3.25 SS&C Tech SSNC 50.10 -1.47 StoreCapital STOR 37.61 0.20 SVB Fin SIVB 198.93-10.02 Sabre SABR 22.25 -0.14 SageTherap SAGE 136.28-4.01

Biggest 1,000 Stocks | WSJ.com/stocks

Continued From Page B8

Net Stock Sym CloseChg

Net Stock Sym CloseChg Net Stock Sym CloseChg

Net Stock Sym CloseChg Progressive PGR 75.93 -1.32 Prologis PLD 84.25 -0.97 sProofpoint PFPT 128.59-0.46 PrudentialFin PRU 87.28 -2.67 Prudential PUK 35.47 -0.92 PublicServiceEnt PEG 61.70 -0.38 PublicStorage PSA 240.22-5.05 sPulteGroup PHM 36.43 -0.12 tQiagen QGEN 31.94 -1.03 Qorvo QRVO 73.17 -0.97 Qualcomm QCOM 75.47 -0.81 QuestDiag DGX 106.32-0.71 RS RELX RELX 23.36 -0.36 sRPM RPM 67.17 -1.64 RalphLauren RL 91.54 -3.93 RaymondJames RJF 79.40 -3.06 Raytheon RTN 192.13-4.06 RealPage RP 62.04 -0.82 RealtyIncome O 76.84 0.16 RegencyCtrs REG 69.24 -0.25 RegenPharm REGN 276.47-0.93 RegionsFin RF 15.43 -0.39 ReinsGrp RGA 157.02-2.86 RelianceSteel RS 99.15 -0.51 RenaissanceRe RNR 191.92-1.53 RepublicSvcs RSG 86.15 -0.40

Salesforce.com CRM 147.69-0.75 Sanofi SNY 45.18 -1.15 SantanderCons SC 25.53 0.02 SareptaTherap SRPT 76.53 1.21 Sasol SSL 17.16 0.15 Schlumberger SLB 32.70 -1.47 SchwabC SCHW37.76-4.07 ScottsMiracleGro SMG 100.82-1.00 Sea SE 31.29 0.34 Seagate STX 52.86 -0.93 SealedAir SEE 40.79 -0.72 SeattleGenetics SGEN 86.00 0.60 SempraEnergy SRE 146.08-1.53 SensataTechs ST 49.67 -0.39 ServiceCorp SCI 47.35 -0.46 ServiceMaster SERV 54.90 -1.00 ServiceNow NOW 250.13-3.72 ShawComm B SJR 19.62 -0.04 SherwinWilliams SHW 544.86-5.01 ShinhanFin SHG 35.04 0.05 Shopify SHOP 313.221.56 SignatureBank SBNY 116.57-2.65 SimonProperty SPG 152.36-3.29 SiriusXM SIRI 6.18 -0.08 SkechersUSA SKX 36.57 -0.78 Skyworks SWKS 77.41 -1.84 SlackTech WORK 22.87 -0.86 SmithAO AOS 46.81 -0.90 Smith&Nephew SNN 47.30 -0.83 Smucker SJM 107.96-2.06 Snap SNAP 15.52 -0.28

SnapOn SNA 154.78-1.76 SolarWinds SWI 18.64 0.19 SonocoProducts SON 57.99 -0.22 Sony SNE 57.96 -1.17 Southern SO 61.88 0.11 SoCopper SCCO 33.10 -1.03 SouthwestAir LUV 53.37 -0.64 SpiritAeroSys SPR 81.40 -0.84 Splunk SPLK 117.07-0.79 Spotify SPOT 112.52-1.48 Sprint S 6.16 -0.01 Square SQ 61.63 -0.32 StanleyBlackDck SWK 139.33-5.08 Starbucks SBUX 86.51 -1.91 StarwoodProp STWD 24.08 -0.14 StateStreet STT 56.87 -2.32 SteelDynamics STLD 29.02 -0.78 Steris STE 140.62-3.87 STMicroelec STM 19.12 -0.22 StoneCo STNE 34.15 -0.63 Stryker SYK 212.72-3.58 SumitomoMits SMFG 6.79 -0.05 SunComms SUI 148.550.10 sSunLifeFinancial SLF 44.16 -0.65 SuncorEnergy SU 30.69 -0.89 SunTrustBanks STI 67.49 -1.31 Suzano SUZ 7.98 -0.09 Symantec SYMC 23.51 -0.12 SynchronyFin SYF 33.15 -0.94 SyneosHealth SYNH 51.92 -1.29 sSynnex SNX 110.35-2.55

Synopsys SNPS 135.99-1.26 SynovusFin SNV 34.51 -1.25 sSysco SYY 79.36 -0.04 TUV TAL Education TAL 33.85 -0.39 TC Energy TRP 51.47 -0.32 TCF Financial TCF 36.94 -1.13 t TD AmeritradeAMTD34.67-12.03 TE Connectivity TEL 91.53 -1.65 Telus TU 35.90 0.28 TIM Part TSU 14.09 -0.27 TJX TJX 55.39 -0.35 T-MobileUS TMUS 78.20 -0.57 TRowePrice TROW 111.41-2.84 sTaiwanSemi TSM 47.19 0.71 TakeTwoSoftware TTWO 122.91-2.43 TakedaPharm TAK 17.34 0.14 Tapestry TPR 25.60 -0.45 TargaResources TRGP 39.66 -0.51 Target TGT 105.94-0.97 TechnipFMC FTI 23.23 -0.91 tTeckRscsB TECK 15.42 -0.81 sTeledyneTech TDY 317.04-4.95 Teleflex TFX 331.53-8.22 Ericsson ERIC 7.92 -0.06 TelefonicaBras VIV 12.91 -0.26 Telefonica TEF 7.58 -0.02 TelekmIndonesia TLK 29.82 -0.29 Tenaris TS 20.69 -0.49 Teradyne TER 58.11 0.20

Tesla TSLA 244.693.82 TevaPharm TEVA 6.76 -0.12 sTexasInstruments TXN 128.59-0.65 Textron TXT 47.90 -1.06 ThermoFisherSci TMO 287.40-3.87 ThomsonReuters TRI 66.51 -0.37 3M MMM 158.38-6.02 Tiffany TIF 90.88 -1.75 Toll Bros TOL 40.27 -0.78 Toro TTC 72.41 -0.89 TorontoDomBk TD 56.88 -1.38 Total TOT 51.50 -0.50 ToyotaMotor TM 133.29-1.20 TractorSupply TSCO 89.80 -0.64 TradeDesk TTD 183.59-3.96 TransDigm TDG 506.47-14.20 TransUnion TRU 80.58 -0.53 Travelers TRV 145.55-3.14 Trimble TRMB 37.77 -1.04 Twilio TWLO 109.73-0.23 Twitter TWTR 40.25 -0.95 sTylerTech TYL 262.01-0.49 TysonFoods TSN 83.32 -2.82 UBS Group UBS 11.14 -0.17 UDR UDR 48.30 -0.18 UGI UGI 49.30 -0.97 US Foods USFD 41.12 0.02 tUber UBER 29.15 -1.32 UltaBeautyULTA265.9915.34 UnderArmour A UAA 19.73 -0.21 UnderArmour C UA 18.01 -0.12

Unilever UN 60.61 0.58 Unilever UL 60.23 0.13 UnionPacific UNP 155.95-6.03 UnitedAirlines UAL 87.84 -0.57 UPS B UPS 115.81-4.01 UnitedRentals URI 119.57-5.07 US Bancorp USB 53.78 -1.56 UnitedTech UTX 133.79-2.73 UnitedHealth UNH 217.21-0.11 UnivDisplay OLED 165.41-2.49 UniversalHealthB UHS 147.11-1.64 UnumGroupUNM28.21-1.51 VEREIT VER 9.75 -0.03 VF VFC 89.01 0.02 VICI Prop VICI 22.59 -0.06 VailResorts MTN 228.500.94 Vale VALE 11.45 -0.05 ValeroEnergy VLO 85.22 -0.02 VarianMed VAR 115.60-3.49 Vedanta VEDL 8.48 -0.20 VeevaSystems VEEV 154.992.30 Ventas VTR 72.56 -0.47 VeriSign VRSN 183.95-4.68 VeriskAnalytics VRSK 156.45-1.69 Verizon VZ 59.85 -0.51 sVersumMaterials VSM 52.97 0.04 VertxPharm VRTX 167.58-1.84 Viacom A VIA 26.25 -0.01 Viacom B VIAB 23.95 -0.08 Visa V 174.292.28 VistraEnergy VST 26.50 -0.23

VMware VMW 153.803.74 Vodafone VOD 19.40 -0.51 VornadoRealty VNO 62.76 -0.91 VoyaFinancial VOYA 53.10 -1.34 VulcanMatls VMC 149.06-2.18 WXYZ WABCO WBC 134.380.63 WEC Energy WEC 95.19 0.09 WEX WEX 199.55-2.52 W.P.Carey WPC 90.08 0.58 WPP WPP 61.79 -0.80 Wabtec WAB 68.38 -3.48 WalgreensBoots WBA 54.70 -0.61 Walmart WMT 117.85-0.83 WasteConnections WCN 91.26 -0.74 WasteMgt WM 114.87-0.13 Waters WAT 224.200.97 Watsco WSO 164.14-5.04 Wayfair W 105.55-6.57 Weibo WB 44.56 -0.19 WellCareHealth WCG 258.51-0.66 WellsFargo WFC 49.06 -1.38 Welltower WELL 89.46 -1.19 WestPharmSvcs WST 139.68-2.14 WesternDigital WDC 58.59 -1.05 WesternMidstrm WES 24.71 -0.18 WesternUnion WU 23.22 0.05 WestlakeChem WLK 63.06 -2.46 WestpacBanking WBK 19.71 -0.28 WestRock WRK 34.86 -1.59

Weyerhaeuser WY 27.25 -0.45 WheatonPrecMet WPM 26.51 0.27 sWhirlpool WHR 154.79-3.57 Williams WMB 23.82 -0.24 WillisTowers WLTW 187.93-5.04 tWipro WIT 3.56 -0.09 Wix.com WIX 114.21-2.53 Woodward WWD 104.77-3.06 WooriFin WF 30.72 -0.49 Workday WDAY 168.74-1.22 WW Ent WWE 71.16 0.01 WynnResorts WYNN 109.921.20 XPO Logistics XPO 70.05 -1.52 XcelEnergy XEL 64.95 0.06 Xerox XRX 29.47 -0.44 Xilinx XLNX 92.04 -3.86 Xylem XYL 76.83 -2.79 Yandex YNDX 34.76 -0.25 YumBrands YUM 112.89-0.54 YumChina YUMC 44.17 -1.26 ZTO Express ZTO 21.03 -0.30 ZayoGroup ZAYO 33.88 -0.02 ZebraTech ZBRA 199.54-6.83 Zendesk ZEN 72.71 -0.17 Zillow C Z 29.80 -0.02 Zillow A ZG 29.45 -0.10 ZimmerBiomet ZBH 133.61-3.66 ZionsBancorp ZION 42.97 -1.55 Zoetis ZTS 125.120.53 ZoomVideo ZM 75.81 -0.39 Zscaler ZS 47.02 -0.24 Zynga ZNGA 5.78 -0.04

raised the tax again, although offsetting spending is likely to prevent a serious downturn. The overall government budget is on track for the smallest deficit next year since the post- bubble recession of 1993, according to estimates by the International Monetary Fund, something which can’t help inflation.

T

he reform program has been more effective, helping encourage better allocation of capital by companies and supporting the existing trend of more women joining the workforce. Earnings per share have risen faster even than in the U.S. recently, according to MSCI data. And figures collected by the Ministry of Finance show operating profit margins for big

nonfinancial companies not far from the peak of 8.6% reached in the second quarter of last year, far above the 2007 high of 5.7%. Historically, shareholders wouldn’t give companies credit for high profits because they could never get their hands on the money. Better corporate governance gives hope that less of it will be frittered away, and should support valuations. At the same time, Japanese manufacturers have improved their productivity since Abenomics began, at a time when most of the developed world has seen productivity growth slow, according to Conference Board data. (The Bank of Japan puts part of the blame for too-low inflation on productivity growth.) But there’s still a problem: Japan’s huge manufacturers

are heavily exposed to global trade troubles and to the value of the yen, and profit margins have been falling fast as both move against them. The nonmanufacturing sector is more domestic and hasn’t been hit the same way, but its operating profit margin of 5.4% has been flat since 2016. That doesn’t support a story of continuous improvement, even if it is far above the pre-Abe norm. Shigeto Nagai, a former BoJ official now at Oxford Economics, argues that the single biggest change produced by Abenomics was to correct the overvaluation of the yen, which helped exporters most. The relatively muted gains of the yen in the race to safety this summer supports the idea that there’s less danger to

One deal facilitated by the PFA that ran into trouble was a project at the Denver Interna- tional Airport. Denver Great Hall LLC, an affiliate of the private developers, borrowed $189 million for the project through the PFA in 2017. But work stalled in August, when the airport announced it would termi- nate its partnership with the developers after a series of problems, delays and disagree- ments. Denver Great Hall plans to pay off the bonds early at 100 cents on the dollar, well below their price at issuance. “We are disappointed,” Den- ver International Airport’s chief executive, Kim Day, said. PFA board members listed on

the PFA website, mostly current and retired Wisconsin local-government officials, didn’t return phone calls seeking comment. The website also lists a PFA “program manager,” Walnut Creek, Calif.-based GPM Mu- nicipal Advisors LLC and pro- vides phone numbers for three people listed in Securities and Exchange Commission docu- ments as employees of GPM. None is employed by the state of Wisconsin, according to state records. They didn’t respond to emails seeking comment. There is about $783 billion in nongovernment debt outstanding in the municipal market, according to Federal Re- serve data.

BANKING & FINANCE

market for municipal bonds, which are typically backed by local governments with the power to collect taxes or fees and are considered low-risk. Yet the total amount of debt the PFA has outstanding has nearly doubled to $10.4 billion as of December from $5.5 billion two years earlier, according to its audited financial statements. The PFA doesn’t back any of that debt. High-yield municipal funds have attracted $14 billion in the year through August, more than in any other year on re- cord, according to Refinitiv data going back to 1992. There are many agencies similar to the PFA around the

country that confer tax-exempt borrowing power usually re- served for cities and towns on private projects seen to serve some public good. These are known as conduit issuers. Typi- cally, though, conduit issuers facilitate projects within their own state or city. When the state law autho- rizing the PFA was passed in April 2010, lawmakers gave it the power to issue debt for projects in all 50 states as long as local officials in the project area approved. It has financed projects in 44 states, according to its website. The PFA, which is managed by a California municipal advi- sory firm, gets operating reve-

nue from fees it collects to do bond deals and consider bond applications, according to its audited financial statements. “Purely out-of-state issuance with no connection to the state is quite rare,” said Chuck Samuels, counsel for the National Associ- ation of Health and Educational Facilities Finance Authorities. Executives from the Wiscon- sin agency have said it fills a void for issuers that might not find tax-exempt approval for their projects closer to home. Yet critics have claimed the Wisconsin organization’s willing- ness to back deals not promoted or championed by state officials elsewhere means investors are vulnerable to risky bonds.

Wisconsin has long been fa-
mous for its lakes and cheese.
Now it is becoming known for
risky debt.
Wisconsin is home to the
Public Finance Authority ,an
agency that has issued billions
of dollars in tax-exempt debt
across the U.S. for projects
ranging from senior-living com-
munities to student housing.
Many projects claim no direct
economic ties to Wisconsin.
Some of that debt is now
starting to sour, one sign of
how investors’ hunger for yield
has ushered increasing levels of
risk into a corner of the munic-
ipal market.
The agency’s bonds have
been the subject of 10 of the
105 reports of impairment in
the municipal market so far this
year, according to research firm
Municipal Market Analytics, by
far the highest of any issuer.
“The PFA is producing some
of the riskiest debt in the mu-
nicipal market,” said MMA
partner Matt Fabian. Impair-
ments can range from having to
rely on reserves to default.
The Wisconsin-based agency
was created nine years ago after
lobbying groups for cities and
counties said they wanted to
improve access to funding and
accelerate economic growth.
They chose Wisconsin as the
PFA’s headquarters because of
the state’s accommodating laws.
The PFA’s issuance makes up
a tiny slice of the $4 trillion

BYHEATHERGILLERS

Wisconsin Agency’s Muni Deals Go Sour

A Denver airport project facilitated by the Public Finance Authority ran into trouble.

HELEN H. RICHARDSON/THE DENVER POST/GETTY IMAGES

Concerned that the long bullruninstocksmayhave run its course yet tired of high-yield bonds that don’t live up to their name, more investors are turning to convertible bonds. The longstanding appeal of convertible bonds is that they offer some of the safety of bonds with the upside poten- tial of stocks. Heading into the end of the year, some investors say the asset class is es- pecially attractive. Stocks are hovering near records, yet concerns persist about an economic slowdown that could hit share prices. The total return this year on the BofA Merrill Lynch All U.S. Convertibles Index has been 14.7%, counting price changes and interest pay- ments, through Monday. That compares with 8.5% on the Bloomberg Barclays U.S. Ag- gregate bond index. The S&P 500 has returned roughly 19% through Tuesday. The convertibles index is on track for its best year since 2013, when it returned 25%. Companies sold roughly $43 billion of convertible bonds this year through Friday. In basic terms, convertible bonds are unsecured corporate bonds that investors can convert to shares if the company’s stock hits a predetermined price, known as the conversion price. If a company goes bank- rupt while a convertible bond is still a bond, investors are paid after secured creditors but before shareholders, who usually lose their investment. The securities pay lower coupons than regular unsecured bonds—a source of their appeal to borrowers—but can more than make up for that difference if the company’s shares climb enough.

BYSAMGOLDFARB

Convertible

Bonds

Win More

Converts

Net flows into/out of high-yield muni funds

Source: Refinitiv

Note: 2019 figure is through August.

$15

–10

–5

0

5

10

billion

2000 2010

STREETWISE|By James Mackintosh

If You’re Bullish on the Economy, Watch Japan

Profits are
up. Deflation
is over. Yet
Japan’s stock
market is
widely
reviled, valued even more
cheaply than the struggling
eurozone.
Investors think Prime
Minister Shinzo Abe’s “three
arrows” of loose monetary
policy, fiscal stimulus and
reform of capital and jobs
markets have misfired since
he started Abenomics in
2012, and that they won’t
reach their mark any time
soon.
I prefer another
interpretation: Japan’s stock
market is dominated by
economically and currency-
sensitive cyclical stocks
whose profits have soared
but could crash back to the
ground if the global
slowdown worsens. Investors
don’t value such cyclical
profits very highly anywhere,
and they value Japan’s
cyclical profits even less.
Yet Abenomics isn’t such
a dud as many investors
seem to think—in fact, it
scored some hits—and
Japan’s stocks merit
watching if the global
economy turns up.
It is both obvious that
Abenomics hasn’t hit its
target, and at the same time
overly harsh to deem the
prime minister’s efforts a
complete failure. Inflation
remains well below the 2%
goal set shortly after his
election, despite some of the
loosest monetary policy ever
seen outside Zimbabwe. But
after almost two decades of
deflation, the fact that
there’s any inflation at all is
a triumph.
Government spending
didn’t offer much of a boost,
and Mr. Abe shot the fiscal
arrow into his foot in 2014
when his sales-tax rise
caused a recession. Fiscal
stimulus is now a thing of
the past, and this week he

Japanese stocks from a strong currency, but it’s too early to be sure. Investors looking for cheap stocks shouldn’t be misled by the overall valuation of the market. MSCI Japan trades at 13.3 times estimated 12-month- forward earnings, exactly in line with the world excluding the U.S., and far behind the U.S.’s 17.4 times.

T

he country has the cheapest financials, the cheapest industrials, and the cheapest consumer discretionary companies, a sector that includes upmarket retailers and car makers. Taken together, those three sectors account for half the market, more than the U.S., U.K., eurozone or emerging markets. If the world economy picks up, these stocks should do well, but few want to make that bet at the moment. Look at the more- defensive sectors and bargains are hard to see. Makers and sellers of consumer staples (such as toothpaste) are more expensive than in other developed markets, as are health-care stocks. Japan’s energy and utilities sectors are cheap, but the fourth- biggest utility is Tokyo Electric Power Co., of Fukushima meltdown infamy, which trades at just 3.7 times forecast earnings. The biggest stock in the tiny energy sector is barely profitable. Investors who think the world economy can escape the doldrums and trade wars be resolved should consider Japanese stocks. Others should take heart from the improving productivity and corporate governance and the possibility that the yen is losing some of its haven status, but shouldn’t get too excited by the cheapness.

Japanesestocksarethecheapesttheyhavebeencomparedwiththerestof theworldsincethe1989marketbubbleburst,despitefast-risingearnings andimprovingmanufacturingproductivity. Forward price/earnings ratio

Earnings per share change since June 2004

2013-’17

200

–200

–100

0

100

%

’102004

Japan U.S.

Europe

80

0

20

40

60

times

1990 2000 ’10

MSCIJapan

MSCIWorldex-Japan

’95 ’05 ’15 ’15 Real value added per hour worked in manufacturing, annual change

Sources: Refinitiv (P/E ratio); MSCI (earnings per share); The Conference Board (value added)

0% 1 2 3

Japan France Switzerland Germany Italy UK US

2004-’12

The Wall Street Journal - 02.10.2019

Wisconsin Agency’s Muni Deals Go Sour

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