For personal non-commercial use only. Do not edit or alter. Reproductions not permitted. To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com TUESDAY, OCTOBER 24, 2017 ~ VOL. CCLXX NO. 97 * * * * * DJIA 23273.96 g 54.67 0.2% NASDAQ 6586.83 g 0.6% STOXX 600 390.74 À 0.2% 10-YR. TREAS. À 2/32 , yield 2.375% WSJ.com OIL $51.90 À $0.06 GOLD $1,277.70 À $0.30 Tillerson Travels to Iraq, Afghanistan to Shore Up Ties What’s News mazon said 238 cities and regions had bid to be the site of the company’s second headquarters, a project expected to be worth $5 billion over nearly 20 years. A1 A Sears will stop selling Whirlpool appliances, following a pricing dispute. Separately, Whirlpool issued a profit warning. B1, B3 Hartford agreed to acquire Aetna’s group life and disability-insurance unit for $1.45 billion. B11 ON THE ROAD: Secretary of State Rex Tillerson Monday made unannounced visits to Afghanistan and Iraq, where U.S. troops and local forces are trying to stop militant groups. He met with Afghan President Ashraf Ghani, top, and Iraqi Prime Minister Haider al-Abadi. A7 The Treasury criticized a CFPB rule that makes it easier to bring class-action suits against financial firms. B11 Russia’s Kaspersky Lab pledged to turn over the source code for its antivirus software for review. B4 Cisco said it would pay $1.73 billion for BroadSoft, a maker of cloud-based communications software. B4 Potlatch intends to combine with Deltic Timber in an all-stock deal. B3 T-Mobile said it added 817,000 postpaid customers. B3 World-Wide Green Berets fought Islamic State militants in Niger for two hours before air support arrived, much longer than the Pentagon previously reported about the deadly Oct. 4 ambush, the Joint Chiefs chairman said. A1 Trump pledged to protect 401(k) plans, shooting down a proposal to cap contributions to the retirement-savings program. A4 Tillerson met with the leaders of Iraq and Afghanistan on his first trip as secretary of state to those two countries. A7 U.S. Revises Niger Timeline Ambushed Army Green Berets unit took hour to call for help, top military official says Pentagon officials. The Special Forces unit didn’t call for help for an hour after shooting started, and French Mirage jets didn’t arrive for another hour after that, said Gen. Joe Dunford, chairman of the military’s Joint Chiefs of Staff. By that time, the Army would determine later, four U.S. soldiers had been killed and two others wounded. Gen. Dunford, speaking at a hastily convened Pentagon news conference, provided the most detailed public accounting to date of what happened in the Oct. 4 ambush of 12 U.S. BY BEN KESLING WASHINGTON—A U.S. Army Green Berets patrol, outnumbered by suspected Islamic State militants, fought for two hours in Niger before air support provided by French military jets arrived, a top U.S. official said Monday, much longer than previously reported by Japan Stocks Stage a Record Run Japanese investors celebrated the election victory of Prime Minister Shinzo Abe, driving the country’s benchmark stock index to its 15th straight gain on Monday, a record streak. A6, B12 Japan's Nikkei Stock Average, year-to-date performance Investors grow nervous over rising tensions between the U.S. and North Korea Japan's economy marks its longest quarterly expansion streak in 11 years Prime Minister Shinzo Abe scores a clear victory in general election Antiregime activists posted photos of two malnourished children who died in a besieged suburb of Syria’s capital. A7 Abe said he would tackle the Japanese economy’s structural problems following his election victory. A6 Japan’s defense minister said the threat from North Korea has reached a “critical and imminent level.” A6 Iowa is withdrawing its application to alter the health-care law after federal officials laid out tough conditions for its approval. A5 Journal Report A spotlight on media and technology. WSJ D.Live R1-14 Markets............. B12-13 Opinion.............. A15-17 Sports....................... A14 Technology............... B4 U.S. News............. A2-5 Weather................... A13 World News....... A6-9 > s Copyright 2017 Dow Jones & Company. All Rights Reserved 19000 Nikkei posts gains for 15 consecutive trading sessions 18000 Jan. Feb. March April May June July Source: FactSet Aug. and 30 Nigerien troops, which marked the single deadliest American toll resulting from military combat so far during the Trump administration. But his description also reflected the depth of the mystery still surrounding the incident in remote West Africa, where the U.S. has a force of about 800 troops and relies on Nigerien forces, French deployments and contract support to function. For instance, officials want to determine why it took the U.S. force an hour to call for air support, Gen. Dunford said. “My judgment would be Sept. Oct. THE WALL STREET JOURNAL. i Bergdahl lawyers fault president for remarks........... A3 Gerald F. Seib: Where unpredictability could hurt... A4 Amazon.com Inc.’s open competition for its second headquarters triggered an extraordinary response, with the tech giant saying 238 cities and regions had bid for the project it expects to cost $5 billion over nearly 20 years. The proposals, from 54 states, provinces, districts and territories, were announced on Monday. Only seven U.S. states don’t have a location participating in the beauty contest, according to a map published by the company. Amazon, based in Seattle, didn’t name any of the bidders or say when it would come up with a short list of finalists. Cities including New York, Boston, Atlanta, Nashville, Tenn., and Austin, Texas, have said they applied for the new corporate site. The more unexpected bidders included Puerto Rico, which was devastated by a hurricane last month, and several locations in Mexico and Canada. The proposals were due last week, and Amazon has said it would make a decision on the new location next year. Amazon has said it would consider factors such as the availability of software developers and other tech talent, good transportation options, cultural fit—recreational opportunities are a metric—and the ability to move into a phase-one site as early as 2019. Other items on its wish list: a metro area of more than one million people and tax incentives such as breaks, abatePlease see AMAZON page A4 Supersized Family Farms Transform U.S. Agriculture Big growers, with scale and clout, squeeze struggling smaller outfits COLBY, Kan.—Lon Frahm may represent the future of farming. Inside a two-story office building overshadowed by 80-foot steel grain bins, he points to a map showing the patchwork of square and circular fields that make up his operation. It covers nearly 10% of the county’s cropland, and when he climbs into his Cessna Skylane to check crops from the air, he can fly 30 miles before reaching the end of his land. At 30,600 acres, his farm is among the country’s vastest, and it yields enough corn and wheat each year to fill 4,500 semitrailer trucks. Big operations like Mr. Frahm’s, which he has spent decades building, are prospering despite the deepest farm slump since the 1980s. Years of low prices for corn, wheat and other commodities brought on by a glut of grain world-wide are driving smaller American farmers out of business. Farms with $1 million or more in annual sales—only 4% of the total—now produce two-thirds of the country’s agricultural output, the largest portion since the U.S. Agriculture Department’s census began tracking the statistic in the ’80s. The shift means food production is being increasingly handled by larger farms, which can be more financially secure. It also fuels a cycle in which size begets size, further transforming the rural economy. Smaller-scale farmers struggle to expand their operations to become profitable. Work becomes more scarce. Farm-supply retailers and grain companies are pressured, since larger farms use their size to wrangle better deals. Owners say the big operations—which are Please see FARM page A10 INSIDE Give the English 1.6 Kilometers And They’ll Take a Mile i that the unit thought they could handle the situation without additional support,” Gen. Dunford said. “I have been in these situations myself where you’re confronted with enemy contact, your initial assessment is you can deal with that contact with the resources that you have, and at some point in the fire fight, they concluded they then Please see NIGER page A7 BY JACOB BUNGE 20000 Bergdahl’s lawyers said Trump’s comments on his case make it impossible for the former Taliban captive to receive a fair sentence. A3 CONTENTS Business News.. B3,6 Capital Journal...... A4 Crossword.............. A13 Heard on Street.. B13 Journal Report R1-14 Life & Arts....... A11-13 22000 21000 Catalan separatists called for civil disobedience amid the prospect of Madrid’s temporary takeover of the regional police force. A8 YEN 113.43 BY LAURA STEVENS ALEX BRANDON/AGENCE FRANCE-PRESSE/GETTY IMAGES (2) Arconic named a former GE executive as CEO, as the aerospace parts firm missed earnings expectations. B1 EURO $1.1751 Amazon Lures 238 Bids for Its Second Home Business & Finance GE shares took another pounding, reflecting fears that the firm may be forced to cut dividends. B1, B6, B11 U.S. stocks fell. The Dow shed 54.67 points to finish at 23273.96, with GE its worst performer. B12 HHHH $4.00 i Brexit-inspired vigilantes use ladders, sticky letters to eradicate metric system BY JENNY GROSS “We have our own very excellent system of weights and BURNLEY, England—Tony measures,” said Mr. Bennett, 70 Bennett took Brexit prepara- years old and not the American tions into his own hands at crooner. “We don’t need big indusk one Friday this month, de- stitutions in Europe telling us fying authority to reinstate a what to do.” venerable element of British Mr. Bennett is a member of culture. Active Resistance All it took was to Metrication, a glue and stick-on tiny group that has numerals. for years been The retired pushing England to lawyer crept go back to its old Converted sign through a park, he weights and measaid, and up to a footpath sign. sures. Britain’s planned exit It read “1.5km.” from the European Union has Unacceptable! breathed new hope into his He took a numeral and campaign. pasted it on to make the sign By the end of the night’s read, simply, “1.” That’s one “raid,” as Mr. Bennett called it, mile, one glorious British impe- he had plastered miles over kirial mile, rounding up a bit. No lometers—a mile is 1.6 kilomeneed to add an “m,” Mr. Ben- ters—on three signs in the nett said, because Britons park. He said he fixed 10 more Please see METRIC page A10 would know what it meant. DIVIDEND FEARS TAKE TOLL ON GE ET TU, STEVE BANNON? HALLOWEEN DECOR GOES OUT ON A LIMB BUSINESS & FINANCE, B1 OPINION, A15 LIFE & ARTS, A11 Uber Investment Jolts Saudi Fund BY JUSTIN SCHECK AND MAUREEN FARRELL RIYADH—Saudi Arabia’s state-owned Public Investment Fund is poised to become one of the world’s biggest investors. But the fund is troubled by disappointing investments, including in Uber Technologies Inc., and has struggled to calculate its own value. This week, investing luminaries including chief executives of BlackRock Inc. and Blackstone Group LP and leaders from Goldman Sachs Group Inc. and J.P. Morgan Chase & Co. are descending on a Riyadh palace for a conference where the fund is expected to discuss its strategy, among other topics. Attendees are calling it “Davos in the desert.” The fund plans to detail its central role in efforts to break Saudi oil dependence. The fund, which already is making large investments, has allocated about $50 billion to tech alone. It is now preparing to make new investments that could grow much larger after a cash infusion from a planned offering of stock in the statePlease see FUND page A2 For personal non-commercial use only. Do not edit or alter. Reproductions not permitted. To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com A2 | Tuesday, October 24, 2017 * *** THE WALL STREET JOURNAL. U.S. NEWS After Harvey, a Rush to the Courthouse Water released from Addicks Reservoir flowed into Houston neighborhoods on Aug. 29 in the aftermath of Hurricane Harvey. The release has sparked suits by residents. Lawyers Vie to Lead Dam-Release Cases The flooding litigation has attracted the attention of plaintiffs’ lawyers from across Texas and other states, including those who typically specialize in personal-injury and privacy cases, as well as other unrelated specialties. People at the introductory hearing in Houston estimate at least 100 attorneys filled the room. Now, many of them are forming coalitions and vying for a leadership position in the cases, which would position them to help steer the direction and potentially be in line for extra compensation. Houston attorney Derek Potts said he has hosted in his office two meetings of lawyers from between 40 and 50 area firms to try to create a cohesive plan for the litigation. “This is a very high-profile case that strikes close to home for all of us,” he said. Judge Susan Braden with the U.S. Court of Federal Claims, a specialized court used for claims against the federal government, set an Oct. 20 deadline for applications for lead counsel. The judge has also asked for input on the best way to consolidate the more than 50 cases that have been filed so far, some as proposed class actions and others on behalf of individuals or groups. Lawyers involved say it looks like the court wants to avoid a repeat of the prolonged litigation against the federal government that followed Hurricane Katrina in 2005. Some of those cases are still on appeal. The Justice Department, meanwhile, has proposed a timeline that wouldn’t determine if the case is a class action until 2018, with discovery starting after that. —Sara Randazzo the government’s position as the “one flood free” rule. “I figured, they know what they’re doing, and are releasing water only when it won’t cause harm to everybody else,” said Jennifer Arriaga, 44 years old, whose home in Houston’s Memorial Bend neighborhood largely survived the storm be- fore being flooded with 18 inches of water from the Addicks dam release. Her family faces an estimated $220,000 in damage in the house they built a year ago, and is pursuing litigation. Val Aldred, 65, a retiree who is a plaintiff in the litigation, said he was shocked to see water inching closer to his Memorial Bend home that Tuesday after the storm when the rain had already stopped. “They didn’t even give me notice,” he said. “If they said look, we’re going to release the water, and you’ve got…even three hours to get out, I would have at least ap- preciated that. That angers me like you can’t believe.” In 2012, the U.S. Supreme Court ruled that temporary flooding could qualify as a taking eligible for compensation, in a case brought by the Arkansas Game and Fish Commission against the U.S. government over the flooding of a U.S. WATCH JUSTICE DEPARTMENT CALIFORNIA U.S. Will Now Target MS-13 Street Gang State Senate Orders Harassment Probe Attorney General Jeff Sessions on Monday designated MS-13, the violent gang, a target for a Justice Department task force that has traditionally attacked drug kingpins and cartels. The designation will allow the Justice Department to more aggressively go after the gang for violating racketeering, gun and tax laws, Mr. Sessions said in a speech in Philadelphia. MS-13, short for Mara Salvatrucha, is comprised mostly of immigrants from El Salvador and their offspring. Mr. Sessions’ move has designated it a priority for the Justice Department’s Organized Crime Drug Enforcement Task Forces. Justice Department officials said the designation would allow a variety of law-enforcement agencies to better coordinate and target the gang. MS-13 has focused most of its energy on such activities as human trafficking, prostitution and extortion, rather than drug dealing. But Mr. Sessions said he believed the gang’s willingness to engage in extreme acts of violence and retaliation justified designating it a priority for the drug-enforcement task forces. —Del Quentin Wilber California’s Senate is taking steps to address reports of a culture of sexual harassment within the Sacramento capital community, a move that highlights the ripple effects of the sexual-harassment allegations that have engulfed Hollywood. The Senate has hired Law Offices of Amy Oppenheimer, which specializes in workplace investigations, to probe allegations of sexual harassment and assault, Senate President Kevin de León said Monday. The Senate also hired a workplace-consulting firm, CPS HR Consulting, to review Senate policies and practices against “harassment, discrimination and retaliation,” it said. More than 140 women in Sacramento’s political community last week signed a letter, first published in the Los Angeles Times, outlining what they called a pervasive culture of sexual harassment and intimidation in California’s state capital. The letter came amid the fallout from sexual-harassment and assault allegations against film mogul Harvey Weinstein, who was fired earlier this month from the company he co-founded after the allegations became public. —Nour Malas THE WALL STREET JOURNAL (USPS 664-880) (Eastern Edition ISSN 0099-9660) (Central Edition ISSN 1092-0935) (Western Edition ISSN 0193-2241) FUND Continued from Page One owned Saudi oil company. Behind the scenes, however, it faces turmoil. After the Saudi fund invested $3.5 billion in Uber last year, the car-hailing company’s fortunes dimmed when its chief resigned under misconduct allegations. At the same time, the investment gave Uber help in trying to undercut a local company that was a successful investment for the fund. More recently, the fund’s chairman has been pushing back against parts of a deal with the biggest PIF partner, SoftBank Group Corp., that could cut Uber’s value, which would force the Saudi fund to take a loss. A spokesman for the fund didn’t respond to specific questions about its investments. The move into startups is a shift for a fund that spent four decades backing only domestic interests including banks and a money-losing fish farm. That changed in 2015, after Saudi King Salman charged his then-30-year-old son, Prince Mohammed bin Salman, with weaning the country off oil. The prince led a strategy that would sell stock in the Saudi state oil company to fund investments in nonoil sectors. Saudi Arabia’s broader shift from petrostate to a high-tech Saudi Prince Mohammed bin Salman led a strategy in which sales of stock in the state oil company fund nonoil investments. Saudi Arabia’s shift from petrostate to a high-tech economy is untested. economy is also untested, amounting to a bet that Saudi money managers can get better returns than the world’s most productive oil fields. Prince Mohammed began making investments soon after unveiling his 2015 plan—before hiring experienced international investors, and before the fund determined its holdings’ value. Poor accounting made it difficult for Saudi officials and foreign consultants to calculate CORRECTIONS AMPLIFICATIONS Editorial and publication headquarters: 1211 Avenue of the Americas, New York, N.Y. 10036 Published daily except Sundays and general legal holidays. Periodicals postage paid at New York, N.Y., and other mailing offices. Postmaster: Send address changes to The Wall Street Journal, 200 Burnett Rd., Chicopee, MA 01020. 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SUBMIT IT AT WSJ.COM/TIPS The U.S. dollar conversion for €60 billion was $70.9 billion, using data from late New York trading on Friday, Oct. 13. A Page One article on Monday, Oct. 16 about central bankers’ wildlife management area that destroyed timber. Ilya Somin, a law professor at George Mason University, said the plaintiffs’ claims seem plausible, but that the “doctrine in this area is very vague,” and that courts sometimes have a tendency to rule in favor of the government. The Arkansas case laid out guidelines for when a deliberate flooding by the government can count as a taking, he said, but didn’t specify how long the flooding must take place, what degree of intent is required, and other key factors, leaving the issue somewhat open to interpretation. Separate Hurricane Harveyrelated litigation is being pursued against local entities that released water from Lake Conroe, and lawyers say litigation is also likely against insurance companies as residents start to file claims. BANDAR AL-JALOUD/AGENCE FRANCE-PRESSE/GETTY IMAGES The plaintiffs’ lawyers lined up shoulder to shoulder on a recent Friday in a Houston courtroom, filling every available bench, jury box and table. All had come to hear how they could get a piece of sprawling litigation emerging from the devastation wrought by Hurricane Harvey. “I’ve never seen so many suits in the same room, unless it was in church,” said Chris Johns, a Texas lawyer in attendance at the Oct. 6 hearing. The lawyers have coalesced around a corner of eminentdomain law they hope will lead to big payouts from the federal government. Dozens of lawsuits filed so far seek compensation for the damage homeowners say was caused when the U.S. Army Corps of Engineers released water from two area reservoirs in the days after a Category 4 hurricane and historic rainfall flooded Houston in late August. With an estimated 10,000 homes or more affected by the reservoirs, the litigation has the potential to reach into the billions of dollars. But convincing a judge the controlled release counts as an improper “taking” of private property under eminent-domain law could face challenges in court, and a payout isn’t a sure thing. The Addicks and Barker dams were built in the 1940s to reduce the risk of flooding in Houston. By ordering the controlled release, the Army Corps alleviated water levels that could have poured over or around the two earthen dams, potentially rupturing them and causing significant damage. The government said in a court filing that the flooding was a 1,000-year event, and that the release of water to relieve the Addicks and Barker dams doesn’t qualify as a taking under the Constitution’s Fifth Amendment. A “single flood—as opposed to an inevitably recurring flooding caused by the Government—is not a taking as a matter of law,” the filing said. The Justice Department didn’t respond to a request for comment. Affected homeowners and their lawyers are referring to DAVID J. PHILLIP/ASSOCIATED PRESS BY SARA RANDAZZO concerns about inflation incorrectly stated the conversion as $79.7 billion. Archer Daniels Midland Co. is 115 years old. A Journal Report article on Oct. 16 about the global food sector misquoted the company’s CEO, Juan R. Luciano, as saying the company had been around for 150 years. Readers can alert The Wall Street Journal to any errors in news articles by emailing firstname.lastname@example.org or by calling 888-410-2667. the fund’s value, according to a fund official and a person briefed on the effort to audit it. “More than $200 billion and less than $300 billion,” said one senior official at the fund earlier this year. “One-hundred-eighty to $200 billion,” estimated a government minister involved in the fund’s oversight. A person briefed by the fund said it recently determined a “fairly definitive” value, but declined to detail it. Some holdings lacked Western governance standards, said a person briefed on an audit of the fund by Ernst & Young. “Although they do have audited financial statements, they’re not necessarily the right figures,” this person said. The accounting challenge stems from rapid growth in the fund, said officials with the fund. But others trace it to the central decision-making role of Prince Mohammed, rather than professional investors. A spokesman for the Saudi royal court didn’t respond to questions about the fund and the prince’s role in it. The fund committed $500 million last year to Dubai-based e-commerce startup Noon.com, which promised to offer 20 million products by last January. By May, when Noon still hadn’t launched, it fired most staff including its CEO, said people familiar with the com- pany. It recently started shipping, but the delay allowed Amazon.com Inc. to beat it into the Gulf market. Representatives for Noon didn’t respond to requests for comment. Prince Mohammed last year also met with Uber’s then CEO Travis Kalanick—whom he subsequently called “a friend”— and this led to another big deal for the fund. Talks originally involved the fund investing $1.5 billion in Uber, said people familiar with the matter. But Prince Mohammed wanted control and information, so demanded a board seat. In exchange for a $3.5 billion investment, Uber agreed to put the fund’s chief, Yasir al Rumayyan, on its board, according to the people. Mr. Kalanick later came under fire for Uber’s flouting of local regulations and for employees’ claims he fostered a culture that allowed men to harass women. Mr. al Rumayyan pushed to keep the CEO, said people familiar with the matter, but investors forced him to resign. At the time of his resignation, Mr. Kalanick said he accepted the investors’ request to step aside so Uber could “go back to building.” The Uber deal also worked against the kingdom’s most successful homegrown tech firm, which the fund backed before Prince Mohammed’s Uber splurge. Taxi-app maker Careem, started in Saudi Arabia in 2013, was on its way to generating paper returns in excess of 50 times the initial investment for the venture capital arm of Saudi Telecom, which is majority owned by the fund. Careem had little competition until 2014, when Uber launched in Riyadh. Uber, willing to lose money to take market share, undercut Careem on price, according to people familiar with the situation. Uber also announced that it hired a Saudi princess as an adviser, then received the $3.5 billion Saudi investment. Careem officials remain disappointed—and “baffled,” one executive said— that the fund would tilt the scales in favor of its rival. For personal non-commercial use only. Do not edit or alter. Reproductions not permitted. To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com THE WALL STREET JOURNAL. Hackers Target Schools © Verdura. All rights reserved. U.S. NEWS Tuesday, October 24, 2017 | A3 Some districts bet it is cheaper to surrender and pay up, going against FBI advice Hackers looking to exploit sensitive information for profit are increasingly targeting the nation’s schools, where they are finding a relatively weak system to protect a valuable asset: student data. Cyberthieves have struck more than three dozen school systems from Georgia to California so far this year, stealing paychecks and data or taking over networks to extort money. The thefts have prompted many school officials to hire cybersecurity consultants to fight back against a trend that experts say is growing fast. The attackers have gained access to servers containing student names, addresses, Social Security numbers, birth dates, academic performance, phone numbers and medical and discipline records—in some cases releasing data in an escalating series of demands and actions. A few districts, betting that surrender would be cheaper and easier than defeating a hack, have gone against Federal Bureau of Investigation advice and paid off the hackers. “They know that cyber craziness is not our game, and they are winning,” said Laura Sprague, a spokeswoman in the Johnston Community School District in Iowa, where hackers this month publicly released student information. “These groups are targeting some of the most vulnerable people in the nation—kids.” Cyber experts say as schools rush to ramp up the use of technology in the classroom, they haven’t done enough to protect an easily monetized trove of data on students. “Bad guys can use that information to create fake identities and things like that, and that information can be sold on the black market for a lot of money,” said Zuly Gonzalez, a former cybersecurity expert with the National Security Agency and chief executive officer of Light Point Security in Maryland. In 2016, the FBI’s Internet Crime Complaint Center received 2,673 complaints from various entities including schools for ransomware, which locks up networks, with victim LOS ANGELES VALLEY COLLEGE BY TAWNELL D. HOBBS Los Angeles Valley College in California paid $28,000 in ransom to hackers in January. 118k 8 k gol g o l d , $ 99,50 ,50 0 Districts Bolster Their Defenses School districts are responding to the increase in hacks by bringing in security experts, investing in cyber insurance and getting employees trained in computer security. Dorchester School District Two in South Carolina beefed up schools’ security after being hacked. The district paid a $5,000 deductible in an insurance claim, which covered the $2,900 ransom and just over $150,000 for legal fees, consulting costs and personnel costs to rebuild some databases destroyed in the hack. Some school districts have spent thousands to reimburse employees whose direct deposits were rerouted by hackers, including Atlanta Public Schools where 27 employees had a combined $56,000 stolen in such a scheme last month. At Fulton County Schools in Georgia in August, thieves tricked 46 employees into providing login credentials via phony emails and then used that information to reroute direct deposits onto reloadable money cards. About $75,000 was lost, with the district recouping about $3,400 by reversing some transactions. The district reimbursed its employees. Cyber experts say schools need to be proactive in the rush to go digital, such as having antivirus software up-to-date, backup files, and providing computer security training. “We’re rushing to connect everything while we know that even for the most sophisticated technology companies in the world that they’re vulnerable, and schools don’t have a chance in that context,” said Douglas A. Levin, president of EdTech Strategies LLC, a Virginia-based research and consulting company focused on education and technology. “It’s really a nightmare.” —Tawnell D. Hobbs losses of $2.43 million—up from $1.62 million in 2015. For extortion cases, where thieves target sensitive information for payment, losses increased by 7% to $15.8 million last year. Hackers gain access in various ways, including from users opening infected emails, links or programs. Affected schools have lost tens of thousands of dollars either by fighting back against attacks, reimbursing stolen paychecks, providing credit-monitoring services for victims, or paying the hackers. Los Angeles Valley College in California paid $28,000 in ransom to hackers in January. Dorchester School District Two in South Carolina paid $2,900 in July. In 2016, Horry County Schools in South Carolina paid nearly $10,000. School districts in Atlanta, Boston and Georgia’s Fulton County each had payroll checks stolen this year after hackers rerouted employee direct-deposits into unauthorized accounts. The FBI warns against paying ransom, saying it is a risky strategy that could encourage future attacks. “We don’t condone the payment of ransom. However, we understand that certain business decisions have to be made,” said Lauren Hagee, a spokeswoman with the FBI’s Dallas division. School officials who paid up say they had little choice. “If we decided not to pay, it would virtually guarantee our data would be lost,” said Los Angeles Valley College spokes- woman Jennifer Fong Borucki. After paying, “we’re back up and running,” she said. Charles Hucks, Horry County’s executive director of technology, said its nearly $10,000 payment to hackers pales in comparison to each day it didn’t have access to files and content created by 43,000 students and 4,000-plus faculty and staff. In the Splendora Independent School District in Texas, where hackers are threatening to release student information, physical security has been beefed up but parents are on edge. “My kid has to go there,” said parent Tiffany Autrey. “I’m just trying not to think about it too much. If I do, I’ll just start to worry.” Trump’s Remarks Forestall Fair Hearing, Lawyers Argue BY NANCY A. YOUSSEF Wisconsin Eyes Halting M.B.A. Program BY KELSEY GEE JONATHAN DRAKE/REUTERS FORT BRAGG, N.C.—Defense lawyers for Army Sgt. Bowe Bergdahl argued Monday that he shouldn’t be sent to prison because President Donald Trump’s latest comments on the case make it impossible for the former Taliban captive to receive a fair sentence. Army Col. Jeffrey Nance, the military judge handling Sgt. Bergdahl’s court-martial and now sentencing phase, said he would rule on whether the president’s latest statements about the case could be seen as “undue command influence.” Military law defines undue influence as occurring when a commander exerts influence over the action of a court in reaching the findings or the sentence in any case. That definition encompasses the U.S. president, who is commander-in-chief of the U.S. armed forces. Col. Nance previously has ruled that Mr. Trump’s comments during the presidential campaign—when he called Sgt. Bergdahl a traitor—didn’t constitute undue command influence. On Monday, he noted that Mr. Trump’s statements during an Oct. 16 news conference were made while president, not as a candidate. Because of that, the public could conclude that Sgt. Bergdahl can’t get a fair sentence, Col. Nance said. During the Oct. 16 Rose Garden news conference with Senate Majority Leader Mitch McConnell (R., Ky.), Mr. Trump was asked whether he believed his past comments affected Sgt. Bergdahl’s ability to receive a fair trial. Mr. Trump, a Republican, said he couldn’t comment on FEAT H ER CU FF EA RCLI PS U.S. Army Sergeant Bowe Bergdahl, right, arrived at the courthouse at Fort Bragg, N.C., on Monday. the case, then added: “But I think people have heard my comments in the past.” Sgt. Bergdahl, 31 years old, had pleaded guilty that day to misbehavior before the enemy and desertion when he walked away from his post in Afghanistan on June 30, 2009. The misbehavior charge carries a ‘It’s not as simple as, “Can we figure out what Donald Trump thinks?”’ maximum life sentence; desertion brings a maximum fiveyear sentence. During Monday’s session, the defense played a video clip of Mr. Trump’s news conference, followed by a second clip of Mr. Trump, when he was a candidate, calling Sgt. Bergdahl a traitor and vowing: “If I get in, I will review his case.” Sgt. Bergdahl has said he left his post in 2009 to go to another outpost, where he wanted to raise concerns about his chain of command. He was captured by militants and held more than five years, suffering repeated torture. Col. Nance spent most of an hour-long hearing Monday questioning the prosecution about whether Mr. Trump’s assertion that the public knew his position on the case would affect views of Sgt. Bergdahl’s ability to receive a fair sentence. The prosecutor, led by Army Maj. Justin Oshana, argued that Mr. Trump’s latest comments on the case shouldn’t lead the judge to reconsider his previous rulings and that there was no way to draw a definitive conclusion from Mr. Trump’s latest comments. “It’s not as simple as, ‘Can we figure out what Donald Trump thinks?’ ” Maj. Oshana said. Officials at the Wisconsin School of Business have proposed suspending admissions to its full-time master’s in business administration program for a year. At a time when students want shorter, more targeted degrees, the school at the University of Wisconsin-Madison may become the latest to discontinue its flagship M.B.A. program. The University of Iowa’s Tippie College of Business and Wake Forest University’s business school have also ended their full-time M.B.A. programs recently, citing flagging student demand. The proposal has touched a nerve with students and alumni, who say a vote to halt M.B.A. admissions at Wisconsin, one of country’s oldest business schools, could effectively end the program. Hundreds of the business school’s students and staff assembled Monday for a townhall meeting with Dean Anne Massey, attendees said. Originally scheduled for 45 minutes, the meeting stretched to nearly two hours as students questioned the dean about potentially cutting the program. Faculty are scheduled to vote on whether to halt M.B.A. admissions in early November as part of a wider review of the school’s programs. In a posting on its website Monday, the school said its portfolio review was prompted by competing demands for resources and “a changing market for graduate business education.” 74 5 F I F T H AV E N U E , 12 T H F LO O R 212 .758 . 33 8 8 • V E R D U R A .CO M Original O r iigg i n a l ggouache o u a ch e bbyy Duke D uke F Fulco u l c o di d i Verdura Ve rd u r a Ve For personal non-commercial use only. Do not edit or alter. Reproductions not permitted. To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com A4 | Tuesday, October 24, 2017 P W L C 10 11 12 H T G K B F A M 1 2 3 4 5 6 7 8 9 O I X X ***** THE WALL STREET JOURNAL. U.S. NEWS Where Unpredictability Could Hurt Trump At home, it’s harder for his opponents to work around him if they aren’t sure exactly where he will plant his flag, and less likely they’ll try to bulldoze over him if they think there’s a chance he’ll shift to their side. Because Mr. Trump has no fixed ideology, he sees no need to defend a position simply on philosophical grounds. Instead, he maintains maximum flexibility to close a deal in the end. “He has a lot of flexibility in his own mind,” says John Feehery, who served as a top aide to former House Speaker Dennis Hastert. “There’s a lot of ideological flexibility there. But the American people have a lot of ideological flexibility too.” CAPITAL JOURNAL By Gerald F. Seib EVAN VUCCI/ASSOCIATED PRESS Donald Trump warned us. During the 2016 presidential campaign, then-candidate Trump advertised that he would be unpredictable, and, in fact, saw unpredictability as a strategic asset. In his campaign-season book “Crippled America,” he wrote: “I don’t want people to know exactly what I’m doing—or thinking. I like being unpredictable. It keeps them off balance.” He said a business associate described unpredictability as “one of my better qualities.” Later, in a television interview, he went further. He was asked whether voters had a right to know whether he would go so far as to bomb Iran’s nuclear facilities. “No, they don’t,” Mr. Trump replied. “The voters want unpredictability.” Now the more pertinent question is this: When does unpredictability serve a president, leaving him flexibility while keeping his opponents off guard, and when does it turn into a liability, leaving friends convinced they can’t count on him and enemies potentially miscalculating his true intentions? “Unpredictability can be occasionally helpful,” says Kenneth Duberstein, who President Donald Trump waves after signing an executive order on health care in the White House’s Roosevelt Room this month. served as Ronald Reagan’s White House chief of staff. “But it can’t be an operating management style.” T he question arises most immediately because of Mr. Trump’s U-turns in the past two weeks on health care, which has left fellow Republicans baffled about his bottom line. Two weeks ago, he ended subsidies the federal government had been paying to insurers to help them absorb the cost of policies for low-income Americans. Then, last Tuesday, he appeared to support a biparti- san deal being worked out by Republican Sen. Lamar Alexander and Democratic Sen. Patty Murray that would continue those subsidies. Mr. Trump said the White House was involved in the negotiations, and he seemed to bless the compromise, saying “they’re coming fairly close to a short-term solution.” Finally, 24 hours later, Mr. Trump pulled the plug on his backing of the deal, saying in a tweet: “I can never support bailing out” insurance companies that have “made a fortune” under Obamacare. Lawmakers in both parties are perplexed. Could the WASHINGTON WIRE Senate Bill Would Assist Puerto Rico RON SACHS/CNP/ZUMA PRESS BY RICHARD RUBIN DECORATED: Retired U.S. Army Capt. Gary M. Rose, a Special Forces combat medic during the Vietnam War, received the Medal of Honor from President Trump at the White House on Monday. HOMELAND SECURITY Republicans and Democrats demanded answers from the U.S. government after BritishAmerican financier William Browder, who lobbied heavily for a law targeting Russian officials over human rights, said his visa was revoked. Mr. Browder pushed for the 2012 law named after his former employee, Russian whistleblower Sergei Magnitsky, that AMAZON Continued from Page One ments, credits and rebates. “Few companies have the swagger, the wherewithal to do a high profile site selection like this,” said John Boyd, principal and site-selection expert at The Boyd Co. Inc. “Clearly, this is a very special, special case.” The last time site selection has seen something remotely comparable to this process was in the late 1980s, when General Motors Co. had governors going on TV to market their states for a car-manufacturing plant, Mr. Boyd added. Massachusetts released a proposal last week separate from Boston’s, touting the state’s higher education network—125 colleges and universities—and Amazon’s existing operations there, which include warehouses and an office focusing on robotics. New York City said that it imposed travel bans on, and froze assets of, dozens of Russian officials. Mr. Magnitsky died in jail after accusing Russian officials of stealing government money in a tax-fraud scheme. Mr. Browder said on Monday he was checking in for flight to the U.S. on Sunday when he discovered his visa had been revoked. He said it was denied because Russian President Vladimir Putin had issued “an abusive Interpol arrest warrant for me.” Mr. Browder said he believed his visa was revoked by “an auwas proposing four different locations: Midtown West, Long Island City, the Brooklyn Tech Triangle and lower Manhattan, all of which meet Amazon’s prerequisites. “We see this as a competition for 50,000 new job openings—jobs we want New Yorkers to land,” Mayor Bill de Blasio said in a statement last week. Washington, D.C., in comments released last week, proposed four sites, touting last year’s No. 1 restaurant-city ranking in Bon Appétit, as well as its 2014 “Coolest City” title from Forbes. Amazon founder and Chief Executive Jeff Bezos, who also owns the Washington Post, bought a home there last year for $23 million In recent weeks, would-be competitors have tried to grab Amazon’s attention with stunts including New York lighting up its iconic buildings in the company’s signature orange and southern Arizona attempting to send Mr. Bezos a 21-foot cactus. (Amazon ar- tomatic process” in the U.S., and he didn’t think this was an active attempt by President Donald Trump’s administration to bar him from entering the U.S. Senate Armed Services Committee Chairman John McCain (R., Ariz.) and Maryland Sen. Ben Cardin, the top Democrat on the Foreign Relations Committee, said Mr. Browder was a “strong advocate for anticorruption efforts” and Homeland Security should immediately review the decision. —Associated Press contributions at as little as $2,400 a year and push additional savings into so-called Roth-style accounts where posttax dollars go in and money comes out tax-free in retirement was a combination of both. Much of the revenue it generated would have come from accelerating tax collections from the future into the near term. WASHINGTON—President Donald Trump pledged Monday to protect a popular retirement-savings program, promising to leave it untouched in the forthcoming GOP plan to overhaul taxes. Mr. Trump, in a tweet, shot down an idea that had been circulating in Washington policy circles and worrying the retirement-savings industry: limiting pretax contributions to retirement accounts. “There will be NO change to your 401(k),” the president wrote on Twitter. “This has always been a great and popular middle class tax break that works, and it stays!” Mr. Trump’s comments point to a challenge he and fellow Republicans face as they race to write and pass a tax plan: They have ambitious targets for rate cuts and a self-imposed $1.5 trillion limit on the size of the tax cut over the decade. Those guidelines have propelled them to look for large tax breaks they can limit or repeal and to seek budgetary maneuvers that shift the timing of tax revenue into the period measured by congressional scorekeepers. The proposal to cap 401(k) Cities including New York, Boston, Atlanta, Nashville, Tenn., and Austin, Texas, have applied for the new corporate site for Amazon. ranged for it to be donated.) Some cities and states are proposing big incentives. Newark, N.J., last week said it would offer a potential package of $7 billion over a decade. Still, it is unclear where Amazon might land. “I don’t think any one market fits everything. It’s going to be a balancing act of the various attributes,” said Dave Bragg, a managing director at Green Street Advisors, a Newport Beach, Calif., firm that conducts real-estate research. Amazon has increased its workforce from a few thousand to more than 40,000 over the past decade. And it is still planning to add 2 million square feet and 6,000 people in Seattle in the next 12 months. While Amazon continues to grow in Seattle, experts say it would be difficult for the company to essentially double its footprint there. In addition, But even a few days of chatter showed the concept’s unpopularity, especially at the $2,400 level. By foreclosing changes to 401(k) plans, Mr. Trump again positioned himself in favor of a broadly enjoyed tax break. Mr. Trump’s decision to weigh in on a still-forming proposal showed how he can alter the legislative process, but it is Congress, not the president, that is putting the details together. “Presidents have a right to make determinations and we ought to pay attention to it, but there are some things he shouldn’t be shooting down,” said Senate Finance Chairman Orrin Hatch (R., Utah), who said he didn’t like the potential 401(k) limits. “He can make his moves, but we’re going to do things up here that might be a little bit different and that might be one where we have to say we disagree.” Other parts of the tax plan that the president and congressional Republicans support would deliver significant benefits to households at the top of the income scale. “I plan to hold President Trump to his word that he and congressional Republicans will not put forward any plan that taxes the retirement savings of American families,” Rep. Richard Neal of Massachusetts, the top Democrat on the House Ways and Means Committee, said. Lobbyists and others in the retirement and financial-services industries who had spoken to congressional staff said last week that lawmakers are looking at proposals that would allow 401(k) participants to contribute significantly less before taxes than what is currently allowed. hiring thousands more software developers will almost certainly be cheaper and easier in a different city, they say. Amazon has said that it will give its team leaders the choice of staying in Seattle, relocating or being based out of both locations. The weeks leading up to the deadline included some applications from potentially unlikely candidates. Puerto Rico bid even as much of the island remains without electricity following Hurricane Maria. Some Native American reservations also applied. Nearly a dozen Canadian cities have submitted bids, including a joint effort from Toronto and Waterloo as well as bids from Hamilton, Vancouver and Ottawa. While the Toronto-led bid didn’t include any tax incentives, it appears to be Canada’s best bet in landing the tech giant’s second headquarters, highlighting the region’s access to local talent, a strong immigration policy and how the country’s health-care system could save Amazon another $600 million a year. According to Amazon’s map, bids came from three Mexican states: Chihuahua, which borders Texas and New Mexico, Hidalgo and Querétaro. Four of the U.S. states that didn’t bid—North and South Dakota, Wyoming and Vermont—don’t have one million people. Two more that didn’t bid, Montana and Hawaii, aren’t far above that mark. Arkansas, home to Amazon’s biggest competitor, WalMart Stores Inc., was also absent from bidding. Little Rock last week launched a new, economic-development campaign with an ad and a banner over Seattle that said, “Hey Amazon, it’s us, not you.” “We decided that we would break up with them before they broke up with us,” Little Rock Mayor Mark Stodola said in an interview last week. —David George-Cosh and Robbie Whelan contributed to this article. ‘This has always been a great and popular middle class tax break that works.’ ELAINE THOMPSON/ASSOCIATED PRESS Rights Activist Says U.S. Visa Revoked price of jeopardizing his cherished tax overhaul. It was left for White House budget director Mick Mulvaney to say over the weekend that the AlexanderMurray effort doesn’t go “far enough yet” in making other changes Republicans want. One Republican veteran described the back-andforth as an example of “unplanned unpredictability.” It’s clear that Mr. Trump thinks that, in most cases, being unpredictable is better than being transparent, especially when trying to keep enemies abroad guessing about American intentions. Trump Promises ‘No Change’ To 401(k) in Big Tax Overhaul DISASTER RELIEF The Senate pressed ahead on a $36.5 billion hurricane-relief package that would give Puerto Rico a much-needed infusion of cash. The measure also would replenish dwindling emergency disaster accounts and provide $16 billion to permit the financially troubled federal flood-insurance program to pay an influx of Hurricane Harvey-related claims. The bill rejects requests from the Texas and Florida congressional delegations for additional money to rebuild after hurricanes Harvey and Irma. After a procedural vote Monday a final vote on the bill is expected no later than Tuesday. —Associated Press president accept a plan that continues the insurance subsidies or not? Is it worthwhile for Sens. Alexander and Murray to continue their efforts, or would the president try to block Republican backing and ultimately veto a deal? One guess among Republicans is that Mr. Trump simply misread the situation and didn’t realize Alexander-Murray was hitting a lot of resistance from conservatives, whose support is going to be crucial for getting a tax-cut plan across the finish line. Mr. Trump badly wants a health deal but not at the D omestically, the danger is that lawmakers start to simply ignore what Mr. Trump says because they don’t think they can count on it. Internationally, the danger is that opponents miscalculate because they don’t know where bluster ends and bottom-line reality begins. That seems a real danger right now in the tensions with North Korea. President Barack Obama learned the price of unpredictability in foreign policy in at least one important case. He warned publicly that Syria’s use of chemical weapons in its civil war would cross a red line for him, prompting retaliation. When that red line was crossed, Mr. Obama failed to act, creating doubts about American reliability that lingered through his presidency. As that suggests, in national security, steady-asshe-goes may be preferable to you-never-can-be-sure. For personal non-commercial use only. Do not edit or alter. Reproductions not permitted. To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com THE WALL STREET JOURNAL. Tuesday, October 24, 2017 | A5 * * * * * U.S. NEWS Pence Vets Warsh as Potential Fed Chief BY ANNA WILDE MATHEWS BY PETER NICHOLAS AND KATE DAVIDSON Iowa is withdrawing its application for an ambitious program to reshape the Affordable Care Act after federal officials laid out tough conditions for its approval, a decision that signals limits to states’ efforts to alter parts of the health law. Iowa had applied for federal permission to move forward under a provision of the ACA that allows states to waive certain parts of the law. Though the Trump administration initially signaled it welcomed such initiatives, states have recently gotten mixed results for their applications. The foundering of Iowa’s much-watched effort will likely be seen as another caution flag as other states consider their own future proposals. Separately, federal officials said a Massachusetts waiver application was incomplete and couldn’t be approved fast enough. Iowa officials had said they wanted to repair an ACA exchange that is down to just one insurer next year, Medica. The company is increasing average premiums by around 57%, due partly to the Trump administration’s cutoff of federal cost-sharing payments to insurers. Iowa’s governor, Republican Kim Reynolds, faulted the 2010 health law for Iowa’s individual insurance market problems and the failure of the waiver application, and she called the ACA “unworkable.” Around 72,000 Iowans currently buy individual plans, either through the exchange or outside it. The state’s waiver application suggested that as many as 22,000 might drop out of the market if the status quo continued. However, patient groups said the Iowa program, if implemented, could hurt lower-income ACA enrollees. The Centers for Medicare and Medicaid Services, a federal agency, in a letter on Thursday to Iowa officials detailed limits on the federal funding that could be available to support the state’s program, based on the ACA’s rules. Iowa would have to “ensure sufficient funds, on an annual or other appropriate basis,” according to the letter. The response came days before enrollment for 2018 plans is set to start, on Nov 1. Iowa Insurance Commissioner Doug Ommen, a Republican, said Monday that the Treasury Department signaled it couldn’t give the state a final projection on the money available for several more weeks. A spokesman for the Department of Health and Human Services responded to a request for comment by referring to a joint statement criticizing the ACA that was attributed to both Gov. Reynolds and CMS Administrator Seema Verma. A bipartisan bill that has been introduced in the Senate would somewhat bolster the flexibility of the waiver review process, but the fate of that bill is uncertain amid mixed signals from the Trump administration. The Iowa setup would have offered just one type of insurance plan in the individual market and reshaped the subsidies that help people buy coverage, among other big alterations to the infrastructure of the ACA. Iowa’s largest insurer, Wellmark Blue Cross and Blue Shield, had said it would reverse its plans to exit from the state’s individual market and would instead sell plans in every county next year if the state won approval for its proposal. MARK WILSON/GETTY IMAGES Iowa Won’t Redo Health Law After Federal Demands Sens. Patty Murray, left, and Lamar Alexander, architects of the bill, on Capitol Hill last week. GOP Faces Decision on Backing Bipartisan Senate Health Deal BY STEPHANIE ARMOUR Republicans returning to Washington will decide in coming days whether to embrace or set aside a bipartisan health bill that has gained traction in Congress, a decision potentially made harder by President Donald Trump’s statements praising the effort but opposing the bill itself. Senate Minority Leader Chuck Schumer (D., N.Y.) said on Sunday the bipartisan bill’s support includes all 48 Senate Democrats as well as the 12 publicly committed Republicans, enough to overcome any filibuster. Senate Majority Leader Mitch McConnell (R., Ky.) said he would bring the bill to a vote if it is clear Mr. Trump will sign it. But that remains far from certain, given Mr. Trump’s recent comments on the plan from Sens. Lamar Alexander (R., Tenn.) and Patty Murray (D., Wash.). The proposal would bolster the Affordable Care Act by providing payments to insurers to help off- set the costs of providing subsidies to some low-income consumers, while giving states more flexibility in implementing the 2010 health law. Some GOP lawmakers have been talking with Mr. Trump in hopes he will decide to support the proposal, likely in exchange for some tweaks. On Tuesday, Mr. Trump is sched- Bill has the support to pass, but Trump’s opposition could prevent a floor vote. uled to appear at Senate Republicans’ weekly luncheon. Mr. Trump sounded supportive of the deal initially but later signaled opposition. A White House spokesman has since said the president could only support a bipartisan agreement if it includes a series of conservative provisions. A new one-page paper from the White House, circulating on Capitol Hill on Monday, outlined administration demands such as ending, this year, the requirement that most people have health insurance or pay a penalty, as well as halting penalties on larger employers who don’t provide health coverage. The administration is also demanding that Americans have more access to shortterm insurance plans that offer fewer benefits, as well as socalled association health plans that can be exempt from some ACA requirements. It is unlikely Democrats would support significant changes that further roll back the ACA. Democrats have said such actions would erode the main goal of the ACA of expanding insurance coverage. Ending the requirement people have insurance would likely raise premiums for older and sicker consumers, they say. Many Democrats are pressing Mr. McConnell to bring the bill to the floor quickly in its current form. Kevin Warsh, a candidate for the Federal Reserve chairmanship, met with Vice President Mike Pence last week to talk about the central-bank job, according to a White House aide. Mr. Warsh visited Thursday—the same day Fed Chairwoman Janet Yellen was in the Oval Office interviewing for the same job with the president. Ms. Yellen’s term as Fed chairwoman expires in early February. Mr. Pence has been part of a small group of senior White House officials who have been vetting candidates for the world’s most powerful centralbanking job. The president has narrowed his search to five candidates, telling reporters Monday he is “very, very close” to a decision. In an interview with Fox News on Friday, he named Ms. Yellen, Fed governor Jerome Powell and John Taylor, a Stanford University economics professor, as favorites. Mr. Trump has talked to all five about the job, interviewing Mr. Warsh last month. Mr. Pence also has interviewed Messrs. Taylor and Powell, a White House official said. Mr. Trump’s top economic adviser, Gary Cohn, is also a candidate. Mr. Warsh is a former Morgan Stanley executive who served on the Fed board from 2006 to 2011. Advocates say Mr. Warsh would tolerate the faster economic growth Mr. Trump has promised to achieve through tax cuts and looser regulation without raising rates too quickly, though as a Fed governor after the financial crisis he argued against easy-money policies that were meant to support growth. For personal non-commercial use only. Do not edit or alter. Reproductions not permitted. To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com THE WALL STREET JOURNAL. A6 | Tuesday, October 24, 2017 WORLD NEWS From After Win, Abe Turns to Economy Risk Pyongyang Victory at polls puts Japanese leader in position to tackle long-term challenges Is Called ‘Critical’ TOKYO—Prime Minister Shinzo Abe said he would tackle some of the Japanese economy’s deeper structural problems after his coalition scored a convincing victory in parliamentary elections. A relatively strong economy and higher stock prices helped Mr. Abe’s ruling coalition win more than two-thirds of Parliament’s lower house in Sunday’s voting. Investors cheered the result by driving Tokyo’s benchmark stock average on Monday to a record 15th straight day of gains. But Mr. Abe faces longerterm challenges for Japan’s economy, including an aging society and productivity that trails other leading nations. Mr. Abe said on Monday that he would push to make preschool education free for all families and higher education free for all who need it, lifting a page from the policies pushed by his left-leaning opponents in a bid to encourage larger families. “The key to sustainable growth in our country is our response to aging and the low birthrate,” he said. “It is the biggest challenge for Abenomics.” Mr. Abe is also likely to move ahead with labor legislation that was delayed by the election. The package of bills aims to reduce excess overtime and encourage equal pay for temporary workers who often receive less than full-time counterparts for doing similar work. One of the proposed changes would eliminate mandatory overtime pay for certain professional workers. Officials in Mr. Abe’s government say it would make it easier for people like con- BY GORDON LUBOLD RODRIGO REYES MARIN/AFLO/ZUMA PRESS BY PETER LANDERS AND STEVEN RUSSOLILLO Prime Minister Shinzo Abe, above in Tokyo on Saturday, said Monday that the biggest challenge to Abenomics is Japan’s aging. sultants and financiers to be paid as they are in the U.S. Opponents, including labor unions, say it could pave the way for long work hours without compensation, running counter to the aims of Mr. Abe’s overhaul. The election also pointed to one of the areas where Mr. Abe has fallen short on an oftstated promise of Abenomics. He has said he wants women to occupy 30% of positions of responsibility in Japanese organizations, but only 47 women were elected to the 465-seat lower house, with a handful of seats left to be determined, according to public broadcaster NHK. Mr. Abe said he would go ahead with an increase in the national sales tax to 10% from 8% planned for October 2019. While that is likely to reassure fiscal hawks, the additional spending on education left some concern, said Morgan Stanley MUFG Securities economist Robert Feldman. Mr. Abe’s election stance “represented a modest shift toward larger government, with no clarification of how fiscal reform would be achieved,” said Mr. Feldman in a note to clients. “Investors will be left confused on the direction of economic policy until the new government clarifies its stance.” Another concern hanging over the market is tension with North Korea, which has fired two missiles over Japanese territory in recent months. Mr. Abe on Monday spoke by phone with President Donald Trump, who is visiting Japan as the first stop on his Asian tour next month. The two leaders plan to play golf with Japanese professional Hideki Maruyama before turning to intensive talks on North Korea, officials in Tokyo said. Mr. Abe will soon have to decide whether to reappoint Bank of Japan Gov. Haruhiko Kuroda or name a successor when Mr. Kuroda’s term expires in April. Either way, markets expect the major portions of the central bank’s ul- tra-easy monetary policy, including its annual ¥6 trillion ($53 billion) of purchases in exchange-traded stock funds, to continue. Takahiro Sekido, Japan strategist with Bank of TokyoMitsubishi UFJ, said he believed the BOJ would continue its stock-fund purchases, “which will be a big supporting factor.” Recent moves suggest the BOJ has begun to taper its purchases of Japanese government bonds, and Mr. Kuroda or his successor will have to determine how far to lag the Federal Reserve in tightening policy. —Suryatapa Bhattacharya contributed to this article. CLARK FREEPORT, Philippines—Japan’s defense minister said the threat posed by North Korea has grown to an “unprecedented, critical and imminent level,” reflecting a rising sense of urgency over Pyongyang’s nuclear weapons program. Japanese Defense Minister Itsunori Onodera told counterparts from South Korea and the U.S. at a gathering of defense ministers of the Association of Southeast Asian Nations here that Japan supports the American position that “all options are on the table”—referring to a possible military response—while also favoring efforts at peace. He said the danger from North Korea’s development of nuclear weapons and ballistic missiles meant the allies had to carefully calibrate their response. Mr. Onodera met with Defense Secretary Jim Mattis and South Korean Minister of National Defense Song Youngmoo, for a rare trilateral meeting on security issues. The Japanese defense minister’s pronouncements on North Korea came within a day of an election victory by Prime Minister Shinzo Abe, who has pushed to change Japan’s posture as a pacifist nation and play a larger international role, taking part in peacekeeping missions and other operations. South Korea, considered the most vulnerable to a missile attack from the North, has struggled to refine its message since a new, more liberal administration was installed earlier this year. Mr. Song said Monday that military options must be weighed carefully. FINTECH GREG BAKER/AGENCE FRANCE-PRESSE/GETTY IMAGES ESG BL ACK SWANS BLOCKCHAIN Chen Min’er, center, is expected soon to be named to the Communist Party’s 25-member Politburo. Protégé of President Xi Rises To Political Heights in China BY EVA DOU AND CHUN HAN WONG Track topics of high importance before they become high-risk Introducing Dow Jones Curated Insights—bespoke business briefings designed to help you avoid disruptive forces, identify peripheral risks and seize opportunities. Follow up to 18 different topics, from drones to blockchain, as well as our weekly Disruption Insight Radar. Exclusively available and curated for Factiva members. Dow Jones Curated Insights Join now at dowjones.com/curation © 2017 Dow Jones & Company, Inc. All rights reserved. 3DJ6034 BEIJING—The best career move by rising political star Chen Min’er may well have been his efforts 15 years ago to promote another phenom— Xi Jinping. With Mr. Xi now starting a second five-year term as China’s top leader—and with the question looming of whether he will step down in 2022—Mr. Chen is poised to enter the upper ranks as a potential handpicked successor to his mentor. “Chen Min’er has enjoyed a helicopter ride to the top,” said Willy Lam, a professor at the Chinese University of Hong Kong. “It’s a signal that he’s certainly one of the favorites of Xi Jinping.” No Chinese leader since Deng Xiaoping in the 1980s has picked his own successor. But Mr. Xi has shown impatience with such conventions. In his first five years he commandeered decision-making, and the Communist Party Congress now under way is expected to grant him more authority for his next five. After that, Mr. Xi faces retirement conventions intended Stepping Stones On Way to the Top u 1960 Born in Shaoxing, Zhejiang province u 1987 Propaganda director, Shaoxing u 2001 Propaganda director, Zhejiang province u 2013 Governor, Guizhou province u July 2017 Party secretary, Chongqing municipality megacity to avoid the infighting and bloodshed that tore at the party during the later years of Mao Zedong—who ruled until he died—and after his passing. Mr. Xi, 64 years old, is keeping his options open, said Steve Tsang, director of the School of Oriental and African Studies China Institute at the University of London. “I think it depends in five years’ time how powerful he has become,” said Mr. Tsang. “He may continue to rule. But if he thinks there is a need to formally stand down, he could hand over the presidency to one of his trusted younger colleagues.” The most likely candidate, Mr. Tsang said, appears to be Mr. Chen. When Mr. Xi governed the wealthy coastal province of Zhejiang in the 2000s, Mr. Chen, as propaganda director, was there to burnish his image. After Mr. Xi became Communist Party general secretary five years ago, Mr. Chen’s career took off. He was appointed governor of impoverished Guizhou and then, in July, to head the megacity of Chongqing. When the Party Congress ends this week, Mr. Chen, 57 years old, is expected to be named to the 25-member Politburo because of his role as party secretary of Chongqing. He could also vault directly into the leadership’s inner sanctum—the Politburo Standing Committee—which could place him in pole position to succeed Mr. Xi, especially if other members of the new standing committee are too old to be considered leadersin-waiting under the party’s recent retirement norms. For personal non-commercial use only. Do not edit or alter. Reproductions not permitted. To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com THE WALL STREET JOURNAL. Tuesday, October 24, 2017 | A7 * * WORLD NEWS Rex Tillerson made his first trip as secretary of state to Iraq and Afghanistan, secretly jetting in and out of countries where U.S. troops and local forces are trying to stop Sunni Muslim militant groups threatening beleaguered governments allied with Washington. By Paul Sonne in Doha, Qatar, and Craig Nelson in Kabul Mr. Tillerson met the leaders of both nations, including Iraqi Prime Minister Haider al-Abadi and Afghan President Ashraf Ghani, on Monday during a broader tour through the Middle East and South Asia, which has included stops in Saudi Arabia and Qatar and will take him to Pakistan and India this week. Mr. Abadi’s government in Iraq and Mr. Ghani’s in Afghanistan are relying on U.S. troops and aid to help them reassert control amid militant threats. In recent years, attacks by Islamic State in Iraq and the Taliban and Islamic State in Afghanistan have weakened governmental authority, leaving swaths of territory in the two countries outside government control. At the same time, both coun- tries are suffering from severe political divisions. An independence bid by the Kurds in Iraq has sparked tensions with Baghdad, while political discord in Afghanistan has undermined the effectiveness of Kabul’s government amid heightened violence. In Baghdad, Mr. Tillerson said the U.S. is “concerned and a bit saddened by the recent differences that have emerged between the Kurdistan Regional Government and the Iraqi government.” During his meeting with Mr. Tillerson in Baghdad, Mr. Abadi vowed to complete the liberation of Iraq from Islamic State and secure the country’s borders, the Iraqi prime minister’s office said. Mr. Abadi also addressed his government’s dispute with the Kurds, describing his recent decision to reassert control over disputed areas of the Kirkuk province by force as a necessary reimposition of state authority. He said Baghdad didn’t want to go to battle with any component of the country “since all of them are our sons.” Mr. Tillerson’s trip has focused heavily on marshaling support from others in the region to help stabilize Iraq and Afghanistan. Western officials ALEX BRANDON/ASSOCIATED PRESS Tillerson Visits Afghans, Iraqis To Bolster Ties Secretary of State Rex Tillerson, center, on Monday stepped off a plane in Baghdad, where he met with Iraqi Premier Haider al-Abadi. see improving ties between Iraq and Gulf Arab neighbors as a way to hedge against Iranian influence in the region. The secretary of state met on Sunday in Riyadh with Saudi Arabia’s King Salman and Iraq’s Mr. Abadi, encouraging Saudi Arabia to play a bigger role in Iraq to counter Iran’s growing influence there. On Tuesday, he is going to Pakistan and India, where he will outline ways they can play a more constructive role in Afghanistan. Mr. Tillerson, speaking from Bagram Air Field north of Kabul on Monday, where he touched down for meetings with top U.S. and Afghan officials for just under three hours, called Pakistan’s cooperation in the fight against the Taliban critical to achieving stability in neighboring Afghanistan. The U.S. has made “some very specific requests of Pakistan” to erode the Taliban’s support, Mr. Tillerson said. He said the future of the U.S.’s relationship with Pakistan would be based on whether Islam- abad takes the steps Washington has requested. “In our conversations with Pakistani leadership, we are as concerned about the future stability of Pakistan as we are in many respects here in Afghanistan,” he said. “Pakistan needs to I think take a cleareyed view of the situation that they are confronted with in terms of the number of terrorist organizations that find safe haven inside of Pakistan.” Islamabad insists there are no remaining havens for Tali- ban and other militants on its territory, and it calls for action against terrorists based in Afghanistan that attack Pakistan. Mr. Tillerson said the U.S. would stay in Afghanistan until securing reconciliation and peace in the country, but he cautioned the Trump administration’s approach didn’t amount to an unlimited commitment. —Isabel Coles in Baghdad and Felicia Schwartz in Washington contributed to this article. Infant Deaths Signal Worsening Aid Crisis in Syria Two malnourished children died over the weekend in a suburb of Syria’s capital under government siege, and antigovernment activists circulated photos showing their emaciated bodies near death, underlining the toll of the yearslong conflict. One-month-old Obeida died of malnutrition on Saturday in the Damascus suburb of Eastern Ghouta, according to activists and a humanitarian group. Photos before his death showed his skin wrinkled around emaciated legs. The next day, 1-month-old Sahar died from an infection and malnutrition, said Mohamad Katoub, advocacy manager with the humanitarian group, the Syrian American Medical Society. Photos showed her with sunken eyes and visible ribs. The last photo posted was of her tiny grave. The organization, founded by Syrian-Americans, supports hospitals and clinics in opposition-held parts of Syria, including Eastern Ghouta, as well as neighboring countries with large refugee populations. Residents of the suburb say stockpiles of food and medicine have begun to run out as regime forces have tightened the siege in recent months and commercial shipments and aid convoys have become rare. Residents said they fear the situation will worsen as government forces making steady gains against Islamic State elsewhere in Syria turn attention back to conquering the few areas still under opposition control. “In another month or two we will see even more of an impact,” said Nizar Madani, a surgeon in Eastern Ghouta. Since 2016, antigovernment rebels have been forced to surrender many areas they once controlled—often through sieges and bombardments like the ones Eastern Ghouta is under. In many places, such as the eastern half of the city of Aleppo, the areas were retaken by regime forces, and rebel fighters and tens of thousands of civilians were sent to northwest Idlib province, one of the last opposition strongholds in Syria. Though a recent cease-fire Damascus Suburb Has Been Under Siege Since 2013 AMER ALMOHIBANY/AGENCE FRANCE-PRESSE/GETTY IMAGES BY RAJA ABDULRAHIM One-month old Sahar died on Sunday of malnutrition in a Damascus suburb, an aid group said. deal was reached between rebels in Eastern Ghouta and the Syrian regime of President Bashar al-Assad, government forces continue to launch airstrikes on the suburb, local activist Anas Dauod said. There are 68 other cases of severe malnutrition in the suburb, all in children under 5 years of age, said Mr. Katoub. In a report released last month, the medical group said there are at least 243 critical medical cases in need of evacuation from the suburb. In addition to the two latest deaths, three other children have died while awaiting evacuations and a 9-year-old girl died while negotiations were under way, according to the report. “Medicine has begun to run out,” said Dr. Madani, who added that with the coming Continued from Page One needed support.” He said a continuing military investigation would try to ascertain what happened, and added “we shouldn’t conclude anything” about why it took them an hour to call for air support. “This is a very complex situation that they found themselves in. A pretty tough firefight,” Gen. Dunford said. U.S. officials earlier had said French planes were overhead within 30 minutes after first contact. Gen. Dunford said that estimate was based on incomplete information. Questions surrounding the ambush have taken on a sharp note of contention because of acrimony over condolence calls by President Donald Trump, especially involving a call to the widow of Sgt. La David Johnson, who was killed in the ambush but whose body wasn’t found for nearly two days. Instead of an intimate exchange between a president and a grieving widow, the calls have turned into a public spat pitting the president and his chief of staff, John Kelly, against Sgt. Johnson’s widow, mother and Rep. Frederica Wilson (D., Fla.), a friend of the family. The discord continued on Monday, with Myeshia Johnson, the soldier’s widow, saying in an ABC interview that the call from Mr. Trump was hurtful because of the way he spoke to her and because of what she described as the president’s difficulty re- JOE SKIPPER/REUTERS NIGER Myeshia Johnson, the widow of Army Sgt. La David Johnson, at a graveside service on Saturday in Hollywood, Fla. calling her late husband’s name. Rep. Wilson has backed Ms. Johnson’s statement. Mr. Trump posted a Twitter message afterward, saying: “I had a very respectful conversation with the widow of Sgt. La David Johnson, and spoke his name from beginning, without hesitation!” Gen. Dunford’s meeting with reporters Monday also came against the backdrop of repeated complaints by lawmakers that the Trump administration hadn’t been forthcoming about the incident. Sen. John McCain (R., Ariz.), chairman of the Senate Armed Services Committee, last week threatened to subpoena information, prompting Defense Secretary Jim Mattis to travel to the Capitol to brief Mr. McCain and Sen. Lindsey Graham (R., S.C.). Lawmakers as well complained they didn’t know about the 800 U.S. troops in Niger, although American forces have been there for many years, and more steadily since a flare-up of extremist violence in neighboring Mali and Algeria in 2013. Gen. Dunford disclosed Monday that an estimated 6,000 troops are engaged in missions in 53 African countries. The 12-member patrol made up primarily of Army Special Forces, or Green Berets, accompanied 30 Nigerien troops on what Gen. Dunford said was a “simple reconnaissance mission” from the country’s capital of Niamey to a village about 50 miles north. Two of the Americans killed were not Green Berets, but were attached to the unit. The troops began their mission on Oct. 3, spent the night in the village, and were on their way back to their base the next day when the firefight began in the middle of the morning, Gen. Dunford said. The troops came under fire from a variety of weapons including small arms and rocketpropelled grenades, he said. It took an hour for the Americans to first request air support, according to initial investigations, Gen. Dunford said. Within minutes of that call, an American drone arrived on scene. The drone didn’t fire at the militants, and Gen. Dunford declined to comment on whether the drone was armed or if it simply didn’t fire and just provided intelligence and surveillance. French pilots took 30 minutes to begin to respond to the emergency call and were on the scene another 30 minutes after that, he said. That put French jet fighters overhead some two hours after the first shots were fired, according to Gen. Dunford. The Pentagon previously said air support arrived in half an hour. Once in the area, the French jets apparently didn’t launch airstrikes against the dozens of suspected Islamic State fighters, although Gen. Dunford said there were no known limitations against action by the planes. “I don’t know why the Mirages didn’t drop bombs during those initial passes,” he said. “I don’t know if the unit on the ground asked them to do that. Those are things we’ll find out in the investigation.” French officials weren't immediately available for comment. The French pilots may not have felt they had adequate communication with ground forces in a chaotic setting, officials have said. winter the situation could become even more dire. “We are entering a very, very dangerous phase with regards to the hunger and siege.” The yearslong siege coupled with continuing clashes and airstrikes carried out by regime and Russian warplanes have crippled the economy of the farming suburb, once known as the capital’s food basket. Eastern Ghouta, home to nearly 400,000 people, has been under siege by Syrian regime forces since 2013. Aid deliveries or medical evacuations to the area must be approved by the regime. The United Nations has previously said requests for access to certain besieged areas have been denied or blocked. The last convoy to reach Eastern Ghouta, in September, included food and nutritional packets for 25,000 people for one month, said Ingy Sedky, a spokeswoman for the International Committee of the Red Cross. Before that was another limited aid convoy in August. Each month, ICRC requests access to the suburb, but it isn’t always granted. Both sides—the rebels and the regime—must agree to allow access and the safe passage of the aid convoy, she said. —Raja Abdulrahim For personal non-commercial use only. Do not edit or alter. Reproductions not permitted. To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com A8 | Tuesday, October 24, 2017 * * THE WALL STREET JOURNAL. WORLD NEWS WORLD WATCH Catalonia Tensions Ensnare Police BARCELONA—Catalan separatists on Monday called for massive civil disobedience amid the prospect of Madrid’s temporary takeover of a police force and other institutions that are potent symbols of the region’s autonomy. Prime Minister Mariano Rajoy is set to deploy never-used constitutional powers in a bid to halt Catalonia’s drive for independence. The prospect of unauthorized, prolonged protests in the region could provide an early test of whether Catalonia’s police force, the Mossos D’Esquadra, would obey Madrid’s orders after many of its officers resisted an order from a Spanish court to stop voters from participating in an independence referendum on Oct. 1. “There is lot of respect for [the Mossos] in Catalonia,” said Siân Edwards, a professor at Cardiff University in Wales. Control from Madrid “will be seen as an attack on Catalan institutions.” Lawmakers in Catalonia’s regional parliament, where separatists hold a majority of seats, are set to meet on Thursday and some are calling for officials to unilaterally declare independence. This Friday, Spain’s Senate Economic Overhaul Double-digit inﬂation has been the norm in Argentina for years. Consumer prices Change from previous year 50% June 2017 22.9% 40 30 20 10 0 2007 ’10 Source: PriceStats ’15 THE WALL STREET JOURNAL. ’17 LLUIS GENE/AGENCE FRANCE-PRESSE/GETTY IMAGES BY JEANNETTE NEUMANN AND GIOVANNI LEGORANO Catalan President Carles Puigdemont, center, and police chief Josep Lluís Trapero review Mossos forces. will vote on Mr. Rajoy’s request to remove Carles Puigdemont, the president of Catalonia and leader of the separatist movement, and his 13 cabinet members, including the Mossos leadership. Mr. Rajoy’s centerright Popular Party has a majority in the upper house, so approval is widely expected. Madrid would start to administer Catalonia’s institutions as soon as Monday, although it remains unclear how such a transition would occur. The premier will seek to convene regional elections within six months and hand back control to a new Catalan leadership. Such a move would be a blow to a region that enjoys significant power over its own institutions, controlling its education and health systems, as well as the Mossos. The 17,000-strong Mossos force has risen in the estimation of some Catalans after the Barcelona terrorist attacks in August, when locals cheered its work in tracking down several terrorists. Pro-independence Catalans also cheered the Mossos over how they handled the referendum. Officials said the force would have caused more harm if it tried to use force to prohibit hundreds of thousands of Catalans from entering polling stations, pointing out that Mossos officers did seize ballot boxes and closed some voting places. Indeed, Spanish national police clashed with voters, injuring hundreds, regional officials said. The contrasting views came into sharp focus Saturday, when protesters in Barcelona demonstrating in support of Catalan independence booed and made obscene gestures at a national police helicopter, then greeted officers from the region’s local police with applause, friendly banter and requests for selfies. Last week, a Spanish judge seized the passport of Mossos Chief Josep Lluís Trapero as the courts investigate him and another Mossos official on allegations of sedition during a pro-independence rally in September. Mossos spokesmen say the allegations Mr. Trapero tried to hinder an investigation by national police are false. Catalonia’s foreign-affairs chief on Monday said he expected officials in the region to disobey Madrid. “I have no doubt that all civil servants in Catalonia will keep following the instructions provided by the elected and legitimate institutions that we have right now in place” in Catalonia, Raul Romeva told BBC radio. Mr. Rajoy demurred on Saturday when asked how the government would respond if Catalan civil servants ignored orders. A Mossos spokesman said the force is awaiting details on the powers Madrid will assume. Argentine Leader Pushes Deficit Cuts BY TAOS TURNER BUENOS AIRES—President Mauricio Macri, buoyed by a sweeping nationwide victory in midterm congressional elections on Sunday, vowed to push ahead with tax cuts and austerity measures aimed at overhauling Argentina’s economy. Mr. Macri, speaking at a news conference, defended a decision to lift gasoline prices about 10% on Monday, just hours after the election, saying it was necessary to reduce a bloated fiscal deficit and curb double-digit inflation. Mr. Macri said that his top priority is to reduce a 28.6% poverty rate, and that this requires lowering inflation and cutting costly government subsidies for some public services. The president plans to submit bills to Congress soon to overhaul the tax code, cut the deficit and make it less expensive to hire and employ workers, officials say. Mr. Macri was elated by the election results. His ruling Let’s Change coalition won more than 40% of the vote na- FloorLiner™ tionwide, almost unprecedented for a new political movement in a country long dominated by Peronism, an ideologically diverse platform loyal to big labor unions. His coalition picked up 21 seats in the Lower House of Congress and nine in the Senate, winning elections in Argentina’s five most populated districts. “Macri’s electoral sweep in the regions solidify his ability to drive through further economic reforms in the next two years and enhance his chances in the 2019 presidential elec- tions,” Exotix Capital said in a report on Monday. Mr. Macri’s top Senate candidate in Buenos Aires province, Esteban Bullrich, outpolled former President Cristina Kirchner by about 41% to 37%, potentially weakening her hopes of regaining control over the Peronist movement. Although she won one of three seats at stake in the province, her failure to beat Mr. Bullrich could embolden her Peronist rivals, many of whom support Mr. Macri and don’t want her in the presidency again. PHILIPPINES Marawi Is Declared Clear of Militants The Philippine government said it had broken the final stand of Islamic State-linked militants in the southern city of Marawi, killing all remaining combatants exactly five months after the bloody battle began. “We have successfully concluded what has been, so far, the most serious threat of violent extremism and radicalism in the Philippines and in Southeast Asia,” presidential spokesman Ernesto Abella said. Mr. Abella said the government would shift its focus “to the enormous and challenging task of rebuilding, reconstruction and rehabilitation of the Islamic City.” Separately, at a meeting of defense ministers from Southeast Asia in the northern city of Clark, Defense Secretary Delfin Lorenzana said there were no more militants in Marawi and that combat was over, local media reported. The battle for Marawi, once a relatively prosperous Muslim trading town of 200,000, has stoked concern about the spread of Islamic State-inspired violence into other parts of the world, including Southeast Asia, as the terror group loses its traditional strongholds in the Middle East. —Jake Maxwell Watts EUROZONE Consumers Express Greater Confidence Eurozone consumers continued to gain confidence in October. The European Commission said Monday its monthly measure of sentiment rose to minus 1.0 from minus 1.2 in September, its highest level since April 2001. The steady rise in confidence over the past 12 months has been driven by greater optimism about the outlook for the eurozone economy, which has experienced a tumultuous decade as the global financial crisis and the currency area’s debt troubles caused two periods of contraction. The economy has been growing since mid-2013 and the pace of its recovery has picked up in 2017. —Paul Hannon MARCELO SAYÃO/EPA/SHUTTERSTOCK Cargo Liner Police at the entry of the Miguel Couto Hospital, where the 67-year-old victim was taken. TechLiner® CargoTech® Officers Shoot Tourist Dead In Rio Amid Rising Violence BY PAUL KIERNAN See the Full Line of Automotive Accessories at WeatherTech.com 800.441.6287 International #001.630.769.1500 American Customers WeatherTech.com European Customers Canadian Customers WeatherTech.ca WeatherTech.eu Accessories Available for Acura · Audi · BMW · Buick · Cadillac · Chevrolet · Chrysler · Dodge · Ferrari · Ford · GMC · Honda · Hummer Hyundai · Infiniti · Isuzu · Jeep · Kia · Land Rover · Lexus · Lincoln · Maserati · Mazda · Mercedes-Benz Mercury · Mini · Mitsubishi · Nissan · Oldsmobile · Plymouth · Pontiac · Porsche · Saab · Saturn · Scion Subaru · Suzuki · Toyota · Volkswagen · Volvo ©2017 by MacNeil IP LLC RIO DE JANEIRO—Police shot and killed a foreign tourist visiting a slum here on Monday, underscoring a sharp rise in police violence that is on pace to claim more than 1,000 lives this year in Rio state. Police said officers opened fire on a vehicle in Rocinha, one of the city’s largest socalled favelas, or slums, hitting a passenger in the neck. The victim, whom police identified as 67-year-old María Esperanza Jiménez Ruiz of Spain, was taken to a nearby hospital but couldn’t be revived. After the shooting, police determined that the vehicle was providing an organized tour of the community. Rio’s state government said it “laments the death…and is following the investigation” by police. Local media reported the officer who did the shooting was detained. He couldn’t immediately be reached for comment. The incident is likely to deepen public concern over the tactics of Rio’s police force, regarded by humanrights organizations as one of world’s most violent. In the first eight months of 2017, Rio state police killed 712 people, 30% more than a year earlier and the most since 2009, according to official statistics. Rio’s overall homicide rate also rose 8%. A police official said Ms. Jiménez was in the back seat of a sport-utility vehicle with tinted windows of the sort often used by drug dealers. Police alleged that the driver, whose identity they didn’t re- The surge in police violence comes amid severe budget problems in Rio. lease, disobeyed an order to stop at a checkpoint that authorities had set up following a shootout with suspects about an hour earlier that left two officers wounded. The driver, who was identified in local media reports, couldn’t immediately be reached for comment. Brazil’s Globo News reported that the driver and at least one other passenger denied the police’s account that they ordered the vehicle to stop. The surge in police violence has come amid severe budget problems in Rio following the Olympics last year. Police officers, like other civil servants, aren’t receiving their salaries on time, let alone sufficient funding for equipment ranging from office supplies to patrol cars. A touted initiative to introduce community policing to troubled neighborhoods like Rocinha has fallen into disarray. Some experts blame leadership for the crisis, saying the state government’s head of public security since last October, a former SWAT commando named Roberto Sá, has been lenient toward violent officers. “The criminals are armed, bellicose and aggressive, and the police are out of control,” said Silvia Ramos, head of the Center for Security and Citizenship Studies at Rio’s Candido Mendes University. Mr. Sá didn’t immediately respond to a request for comment. Ms. Jiménez is at least the fourth foreign tourist killed in Rio since December, though she is the first to die at the hands of authorities. A Spanish diplomat said she was with her brother and his wife at the time of the shooting. For personal non-commercial use only. Do not edit or alter. Reproductions not permitted. To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com THE WALL STREET JOURNAL. Tuesday, October 24, 2017 | A9 NY WORLD NEWS Indonesia Pilgrimage Scam Turns Political Islamist opposition to President Joko Widodo embraces cause of thousands who paid for trips they didn’t receive BY ANITA RACHMAN Travel Boom Indonesia has seen a surge of Muslims making the umrah pilgrimage to Mecca. AMR NABIL/ASSOCIATED PRESS; MUHAMMAD FADLI FOR THE WALL STREET JOURNAL (BELOW) JAKARTA, Indonesia—An alleged travel scam that police describe as one of the biggest frauds in Indonesia’s history has put new scrutiny on the country’s billion-dollar pilgrimage industry and forced the government to rethink how it regulates trips to Islam’s holiest site. More than one million Indonesians traveled to Mecca in the last Islamic year, a significant increase as conservative Islam gains ground in the population and politics of the largest Muslimmajority nation. President Joko Widodo’s hard-line Islamist opponents have seized on the rising number of allegations of fraud by companies that organize trips to Mecca on the umrah, which is known as the minor pilgrimage in comparison with the hajj. The Islamic Defenders Front, an influential hardline pressure group, is offering free legal help to pilgrims and said it would press lawmakers and the Ministry of Religious Affairs, which regulates and oversees pilgrimages, to make sure swindlers are prosecuted. “The ministry functions as checks and balances here. We demand their responsibility,” said Aziz Yanuar, a lawyer for the group, which is also known as the FPI. The FPI brought hundreds of thousands of protesters to the streets over the past year in a successful campaign to defeat a re-election bid by the governor of Jakarta, an ally of Mr. Widodo, and have him jailed for blasphemy. Any further gains by the FPI would represent a growing challenge for Mr. Widodo in the run-up to the 2019 presidential election. Iskan Qolba Lubis, an Islamist opposition lawmaker who isn’t affiliated with the 900 thousand 800 700 October 2016June 2017 876,246 600 500 400 300 200 100 0 1434 1436 Islamic lunar calendar Pilgrims in Mecca in June. Below, Asmana, who sells soup by the street, said she is still determined to make the umrah journey. FPI, said the Ministry of Religious Affairs should compensate victims. The ministry is supporting investigations and prosecutions, but won’t pay compensation for fraud victims, said Mastuki, a ministry spokesman who goes by one name. Umrah trips attracted more than 876,000 Indonesians in the season of around nine months that ended in June, an increase of around 60% from four years ago. Pilgrims must wait up to 30 years for one of Indonesia’s 211,000 annual places in the hajj. Until recently, the Religious Affairs Ministry had only eight employees to monitor umrah trips, and it wasn’t prepared to handle the surge, Mr. Mastuki said. The ministry has now doubled that number, he said. The ministry and other agencies said they would form a regulator to check the flow of funds to and from all umrah travel companies. The ministry is also looking at reviewing some permits. In the case that drew national attention to alleged umrah fraud, police accuse Anniesa Hasibuan, a designer of Muslim fashion, and her husband, Andika Surachman, of taking around $63 million from nearly 60,000 people who booked trips with their Ja- karta-based company, First Travel, and failing to provide services. The couple have been named as suspects pending the conclusion of police investigations, at which time prosecutors will decide whether to press formal charges. Police allege the couple used client payments to finance the purchase of a palatial home, fund a fashion business and put on shows at New York Fashion Week. The couple’s lawyer, Deski Kuddeh, said that his clients deny any wrongdoing and don’t know what happened to the money. “Ms. Anniesa’s volunteer did the corruption,” he said, without explaining further. “It was a time bomb,” Sularsi, coordinator for complaints and legal issues of the nonprofit Indonesian Consumers Foundation, said of First Travel. “We’ve received many reports from pilgrims who registered with various agents before this case exploded, but no real actions were taken by the government.” The foundation said it had received more than 22,000 complaints from pilgrims this year through July, of whom 17,000 were registered with First Travel. Mr. Mastuki said the ministry had monitored the busi- Invent a better way. Start the next big thing. Disrupt the status quo. Whatever you’re pursuing, our advisors will help you realize your vision. It’s a personalized approach to wealth that transforms your aspirations into action. Call 866.803.5857 or visit northerntrust.com/Pursuits ACHIEVE GREATER INVESTING \ BANKING \ TRUST & ESTATE SERVICES \ WEALTH PLANNING \ FAMILY OFFICE Member FDIC. © 2017 Northern Trust Corporation. 1438 Note: Data from the nine-month umrah season in the Islamic lunar calendar. 1434=November 2012-August 2013 Source: Ministry of Religious Affairs THE WALL STREET JOURNAL. ness well, and that many complaints reported to the foundation were about trips managed by unregulated companies outside of the ministry’s ability to take action. Asmana, a 63-year-old grandmother who sells noodles by the roadside on the outskirts of Jakarta, said she picked First Travel’s umrah package because it was cheaper than others. She paid $1,000 in February 2016 to make the umrah in February this year. After the company delayed the trip, she paid another $184 to book a June departure, only to be delayed again. When news of the First Travel arrests broke in August, she learned that she had been defrauded. She said she is still determined to make the trip. “I am embarrassed,” she said. “I told my neighbors and even my loyal diners. People say, ‘it’s great, a noodle seller can go to Mecca.’ ” For personal non-commercial use only. Do not edit or alter. Reproductions not permitted. To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com A10 | Tuesday, October 24, 2017 THE WALL STREET JOURNAL. * * Continued from Page One still almost entirely run by private farmers and not companies—use machinery and technology more efficiently, get better prices on bulk supplies and manage to keep more of the profits by cutting out middlemen. Mr. Frahm, 59 years old, said decisions on his farm are driven by the constant analysis of efficiency and scale—cents per pound or units per acre. “I’m always interested in, how big is too big, how far can this thing go?” he said, clad in bluejeans and a Pioneer seeds ball cap. In more than three decades of running his farm, through droughts and commodity-market swings, he said he had only one losing year. Three decades Mr. Frahm estimated that farms of his size can produce $10 million to $15 million worth of grain in a good year. With that amount of production, well-managed farms can reap $1 million to $3 million in profit, even in times of low crop prices, he said. A typical smaller farm selling just $500,000 worth of grain annually has over the past three years generated a 5% profit margin, or about $25,000, said Mark Wood, a Colby-based agricultural economist for the Kansas Farm Management Association. Mr. Frahm said his farm provides steady, well-paying jobs and helps fund Colby’s hospital and community college. But he has stepped in at the last moment to place the winning bid at land auctions, and he knows that rankles other farmers. Some landowners see him as more of a corporate manager than a grower and have avoided renting their fields to him, looking instead for smaller farmers, he said. “I run into that resentment—‘haven’t you got enough by now?’ ” he said. Mr. Frahm’s family settled and began farming near Colby, which now has a population of 5,419, in the 1880s. In 1986, after a heart attack killed his father, Mr. Frahm took over the family’s 5,600 acres. The farm was large but not unheard-of in Kansas at that time. He said he looked for opportunities to expand, persuading relatives to lease him fields and plowing profits from good years into buying land. In 2013 he negotiated his biggest-ever expansion, adding 7,000 acres when an uncle retired, boosting his total land by nearly one- Green Acres More U.S. farms are becoming giant operations. Number of farms, by agricultural sales: $100,000 to $499,999 $500,000 or more 300 thousand 250 200 150 100 50 0 1982 ’87 ’92 ’97 2002 ’07 ’12 Source: U.S. Department of Agriculture THE WALL STREET JOURNAL. METRIC Continued from Page One the next day. The English from at least medieval times have hewed to their own measurements—cubits, stones, miles, acres—some of which are still used in America. Since 1965, the British government has been pushing its people toward the metric system, used most everywhere else but the U.S., Liberia and Myanmar. While metric measurements frequently appear in parks, on packaging, in cookbooks and at markets, Britons still weigh themselves in stone, drink pints and drive under miles-per-hour speed limits. The EU requires members to use the metric system alone, although the U.K. negotiated exemptions, such as road-traffic signs and to label produce in metric and imperial. Beer, cider and a few other items can be sold in imperial units. For many Britons, the Brexit vote, driven by the perception Brussels had too much influ- ence on the isles, raises questions about what kind of country Britain should be. One with strong or weak ties to Europe? Interventionist or isolationist? Dark-red passports, as elsewhere in Europe, or traditional navy-blue? Metric or imperial? In a YouGov PLC poll after the Brexit vote, 45% preferred produce sold in pounds and ounces while 39% wanted it in kilos. Most over 50 wanted imperial measurements; those between 18 and 24 preferred metric. A move back to exclusively imperial measurements isn’t on the table, said Liam Fox, Britain’s trade secretary, this month. That hasn’t stopped the Active Resistance—it counts three full members who amend signs and dozens of supporters around England—from pressing the point. Mr. Bennett and another member, retired engineer Derek Norman, 83, said they planned the most recent raid over tea and white-bread sandwiches at Mr. Norman’s house. At meetings, they typically talk about expenses and discuss Jacob Rickli heads back to work after a dinner break during the corn harvest on one of Lon Frahm’s fields in Colby, Kan., this month. Shift to Greater Size The largest U.S. farms are growing in number and size, and commanding more of the country's food production, while smaller farms shrink. Number of farms, by size of farm 500 to 999 acres Percentage of acres harvested, by size of farm 1,000 to 1,999 acres 250 thousand 50% 200 40 150 30 100 20 50 10 0 1982 ’87 ’92 ’97 ’02 ’07 ’12 Midpoint farm size* Percentage of market of agricultural products sold by farms with revenue of $1 million or more 1,200 acres 80% 2,000 acres or more 900 60 600 40 300 20 0 0 0 1974 ’78 ’82 ’87 ’92 ’97 ’02 ’07 ’12 1982 ’87 ’92 ’97 ’02 ’07 ’12 1987 *Harvested cropland Source: U.S. Department of Agriculture have family in it, you’re probably not going to get into it, because of the expense” of acquiring land, he said. The local school district has lost more than one-fourth of its students over the past 20 years, he said. “The young people are moving away, because the farmers need less help,” Mr. Miller said. The big machinery and technology used on large farms—such as remote sensors for irrigation systems—mean fewer workers are needed. At Colby’s Farm Credit of Western Kansas, chief credit officer Mark Winger said the bank over the past decade has reduced the number of loan officers that deal with farmers. As large farms absorb smaller ones, he said, that leaves fewer farmers to finance, and more concentration of risk. Supplier pressure Some area farm-supply retailers, which sell seed and chemicals, have trimmed head count. Local grain companies, such as Winona Feed and Grain and Rexford Grain, which buy grain from farmers and sell it on to exporters, livestock operations and ethanol plants, have been absorbed by larger regional players, including Frontier Ag Inc. Large farmers often seek to buy chemicals and materials from suppliers with direct links to manufacturers, and increasingly handle grain storage and sales themselves. Farmer-owned cooperatives, which handle grain and suptips about metric signs around England deserving of conversion. Sometimes, they pack into a car and head out together on raids. On a raid several years ago in Chelmsford, northeast of London, Mr. Norman said he and Mr. Bennett had to dash through hedges in the dark after a park ranger threatened to call police, who sometimes tried to thwart such raids. The group said it has changed about 3,000 signs since it formed in 2001—most still in place, it said—and writes to local officials where signs are metric. Members use imperial-inspired code names including “Yardstick” and “Wun Tun.” They sometimes distribute leaflets at markets reminding traders they can label produce in imperial units alongside metric and have written clothing companies urging them to use imperial units only in catalogs. Movement toward metrication threatens to erode British culture, said Stephen Dixon, 56, a supporter of the Active Resistance to Metrication and a ’92 ’97 ’02 ’07 ’12 THE WALL STREET JOURNAL. plies and share profits among member-owners, are working to adjust. Jeff Kahle, who grew up near Colby and now manages eight regional facilities under farm cooperative company CHS Inc., has watched area farms consolidate. Two decades ago, around the time Mr. Kahle started working at the co-op, it wasn’t uncommon for 120 farmers to turn up at a planting seminar hosted by Kansas State researchers. These days, he figures 20 farmers might show up, even though they still represent the same number of acres. As a result, he said his operation has shed about onefifth of its staff over the past 10 years. “The larger [the big farms] get, the more difficult they are to do business with on a retail level,” Mr. Kahle said. Over time he said he aims to provide more advisory and technology services to farmers. Mr. Frahm said he largely stopped dealing with local coops around 15 years ago, when he started finding better prices by scouring the internet for deals on seed and chemicals. Now he orders seed and pesticides by the truckload. When selling crops, he prefers dealing with brokers that match up his crops with area feedlots and ethanol plants, which can fetch him higher prices. He stores nearly all his grain in his own bins and runs his own loading station, saving on transport costs and giving him more flexibility on when to sell based on grain prices. Cooperatives are becoming “just a place to drink coffee,” Mr. Frahm said. “They can’t change quickly enough to keep up with competition that can turn on a dime.” Mr. Frahm, who holds three degrees in business and agricultural economics, said his operation thrives by pushing efficiency at every turn. His nine-person team totes tablet computers that control sprinkler systems miles away, switching them off when sensors report adequate moisture. When his tractors are rolling, automated systems monitor the number and type of seeds being sown in each row, to maximize planting on fertile ground. Tony Bennett with signs he freed from the metric system member of a sister group, the British Weights and Measures Association, which opposes compulsory metric-system use. He realized things had gone too far, he said, when paging through a Bible and seeing Noah’s Ark described in meters, not cubits. “Now of course, we’re supposedly coming out of the European Union,” said Mr. Dixon, a retired archivist. The equipment beams the data to remote servers, where Mr. Frahm and his team analyze it to determine how machinery can be run more efficiently, or where they can spray fewer chemicals. This year Mr. Frahm has been testing automated insect traps that deliver updates on the number and type of bugs killed to help time pesticide spraying. Mr. Frahm acknowledges big farms have brought changes to the community. But he sees his operation as an economic engine for Colby. His employees hold year-round, salaried positions with health care and four weeks of vacation. His longesttenured employee started working for Mr. Frahm’s father on the farm 43 years ago. He brings them on cruises as bonuses and outfits them with matching white Ford pickups for work. He said he gives each one $1,000 each year to donate to charity. “These jobs offer a higher quality of life than if you were out trying to [farm] on your own,” he said. The farmer’s Colby office is outfitted with flat-screen TVs and a grand piano where he sometimes plinks out jazz standards. Before Mr. Frahm bought the building, it housed the bank that lent him money. He owns a sprawling house on the town’s edge, and vacation houses in Denver and Arizona and a cabin on a nearby lake. Wheeling his own white Ford truck around Colby, where rows of corn march up to the edge of the town’s main thoroughfare, Mr. Frahm notes the farm’s sponsorship of the annual county fair, and support for the historical society and public radio station. Mr. Frahm said he has no heirs, and after he dies he plans to have a foundation own his property, with the goal of maintaining jobs and funding his community charities. “There’s a reason behind continuing to accumulate,” Mr. Frahm said. “My main concern is that everything carries on.” “Surely, logically, we de-metricate.” Melding systems as the U.K. does can cause confusion. Zena Martin, a 53-year-old from Connecticut, has lived in London for nearly two decades and still relies on conversion websites when baking from U.K. cookbooks. Her cookies kept coming out flat, she said, until she realized she was converting grams of butter incorrectly. In Burnley, Bernadette Blackburn, a 59-year-old administrator, said the U.K. has been too slow to align with the world “because you get the old stick in the mud that doesn’t want change.” The metrification-resistance group argues the law is on its side, as U.K. road signs must be in imperial units only, except for those showing height and width restrictions, which must be in both systems—all allowed under EU exemptions. Burnley’s offense: The town council this year erected kilometer signs along footpaths. In an email demanding their removal, Mr. Bennett, using the name “Polly Peck,” said town residents voted overwhelm- ingly for Brexit and “clearly indicated that they would prefer to have signs in miles and yards.” The council replied saying it would look into the matter. It geared the signs toward walkers and runners who may be training for 5K or 10K races, said Jeremy Richards, a council spokesman. Mr. Bennett—he also goes by “Hundredweight,” or 112 pounds—said he couldn’t wait for Burnley to ponder its signs and drove 3½ hours to the town for his raid. Passerby Alan Wall, 69, approved. “Seeing as we’re coming out of the EU,” he said, “what’s the point of using metric?” Mr. Bennett eventually won the Burnley battle. The council spokesman Mr. Richards, acknowledging the kilometer signs are noncompliant, said the town will put up imperial numbers. Mr. Bennett said he has been arrested several times on charges of criminal damage but considers it his duty to act. “We want to keep what’s best about Britain.” ‘I’m always interested in, how big is too big, how far can this thing go?’ JENNY GROSS/THE WALL STREET JOURNAL FARM third. This spring, Mr. Frahm rented another 480 acres, and he said he is negotiating this fall to buy more. Rural demographics are moving in Mr. Frahm’s favor. The average age of a U.S. farmer is 58. Younger people are moving away, and over time more fields wind up owned by heirs in towns or cities hundreds of miles away. In Kansas’ Thomas County, where agricultural economists estimate that more than half the land is absentee-owned, Mr. Frahm can make an attractive tenant. Some landlords have approached him to rent their fields, knowing he has a good reputation for making payments and maintaining land. That makes it tough for farmers like Michael Juenemann. He grew up on a family farm near Colby, but his parents’ 160 acres don’t produce enough crops to support the two of them, let alone Mr. Juenemann and his own family. For the past five years Mr. Juenemann, 29, has been renting small parcels of land to farm himself, borrowing machinery and rolling out of bed to bale his own hay in the dark. To make ends meet he works for other farmers, and said the hours mean he missed much of his son’s first years. Still, he said, “for as long as I can remember, it’s been what I wanted to do.” Mr. Juenemann needs more land if he is to farm full time for himself. But buying enough acres requires a down payment he can’t afford. This spring, a few fields became available for rent just up the road from his in-laws’ farm—but Mr. Juenemann only found out after Mr. Frahm began farming them. “That’s aggravating—opportunities like that where I could get some more land, but [landowners] will go directly to the big guys,” said Mr. Juenemann, adding he doesn’t blame Mr. Frahm. Many large farmers pay cash on leases, versus the crop-sharing deals that smaller farmers have often used and which add risk for the landowner. Some large farmers provide more data on how the property is cared for. Mr. Frahm offers a mobile app that shows his landowners how much moisture their fields are getting. Three-quarters of America’s farmed cropland is controlled by 12% of farms, USDA data show. The number of milliondollar-plus revenue farms more than doubled between 1992 and 2015, while the ranks of smaller farms, with revenue between $350,000 and $999,999, fell by 5%, as farmers get older and have a hard time making profits. USDA researchers, in a December report, said consolidation is likely to continue. An average farm household in the Colby area needs income of at least $50,000 annually to get by, said Mr. Wood, the agricultural economist, which has become harder to generate from a smaller farm. “The big guys can cover their costs and have money left over to grow,” Mr. Wood said. Smaller farms, he said, “are going to struggle.” Bill Miller, 65, who farms about 10,000 acres around Colby, has absorbed other farms from neighbors who retired or moved on. He said the younger generation will have a hard time growing big enough to compete with large, entrenched farms. “If you don’t NICK COTE FOR THE WALL STREET JOURNAL IN DEPTH For personal non-commercial use only. Do not edit or alter. Reproductions not permitted. To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com THE WALL STREET JOURNAL. Tuesday, October 24, 2017 | A10A NY * * GREATER NEW YORK A New Way to Pay the Fare DAVID KLEPPER/ASSOCIATED PRESS MTA panel OK’s plan to have subway, bus riders use bank cards, phones to ‘tap and go’ High-Tax States Balk at Republican Deduction Plan BY MIKE VILENSKY Lawmakers from New York and other high-tax states are resisting efforts to roll back a policy that helps residents save on their federal taxes. Republicans have proposed eliminating or limiting the deductibility of state and local taxes as part of new tax legislation. New York Gov. Andrew Cuomo, a Democrat, has seized on the issue, touring the state and joining with local and federal lawmakers who want to preserve the lucrative tax break. The deduction allows individuals to subtract their homestate levies from their federal taxable income. In high-tax states such as New York, that can allow taxpayers to save big. “This is probably one of the most destructive policies to the state of New York I’ve heard proposed in 30 years,” Mr. Cuomo said Monday at a news conference with Sen. Chuck Schumer, a fellow New York Democrat. The status of White House and congressional efforts to eliminate the deduction for some or all taxpayers isn’t clear. A tax policy the White House outlined earlier this year proposed repealing the deduction. House Republicans from New York, New Jersey and other high-tax states have been resisting GOP leaders’ proposals to repeal the deduction and use the money to lower tax rates. House leaders need at least some of those members’ votes to get the bill through and they have been negotiating with New York and New Jersey lawmakers. So far, they haven’t announced a deal, though they have been considering proposals to allow property tax deductions or to set an income limit for the tax break. On Monday, a White House spokeswoman said: “The President has made it clear that his two non-negotiables are a middle-class tax cut and getting the corporate rate down to 20% or lower.” The spokeswoman also said that only about 30% of U.S. taxpayers claim itemized deductions, and pointed to a report from the Congressional Budget Office that said the state and local tax deduction “provides a much larger benefit relative to income for higher-income households than for lower-income households.” The issue has put some New York Republicans in a difficult position, torn between a policy their party generally supports and concerns about how it could affect them in their districts. Rep. Peter King, a Republican representing Long Island, has been at the fore for pushing back on the policy within his party. In an interview, Mr. King described a recent meeting of House Republicans where he and other high-tax state representatives expressed concerns about repealing the deduction. “Politically and economically, it would be devastating,” Mr. King said, describing his suburban district as a swing region where voters backed Mr. Trump last year after previously voting for President Barack Obama, a Democrat. “The deduction is essential for these people to get by.” For Mr. Cuomo, the issue is familiar. In the 1980s, Republican President Ronald Reagan sought to eliminate the deduction, and New York Gov. Mario Cuomo, Mr. Cuomo’s late father, led a successful effort against the repeal. —Richard Rubin contributed to this article. The MTA is looking to phase out the MetroCard system, which is more than two decades old. and labor to take care of everything from fixing MetroCard machines to handling cash. Each MetroCard transaction costs the agency about 15 cents, according to MTA Chairman Joseph Lhota. Transaction costs would drop under the new system, partly because the new readers won’t break down as often because they have fewer moving parts, said Mr. Lhota. John Raskin, executive director of the Riders Alliance, an advocacy group, said the new system would open up the possibility of faster boarding Man With a Mission on buses and new fare options that “make transit more efficient and fair” for low-income New Yorkers. The new payment system will be rolled out in 2019, part of a first phase which includes development of the back-end system, a website and the installation of the readers at 500 turnstiles and in 600 buses. The system will work on subways, buses and the Long Island Rail Road and Metro-North. MetroCards will be totally phased out in 2023. The MTA expects the ma- jority of riders will use an established digital-wallet program, like Apple Pay, or a style of debit card issued from a personal bank for “tap-and-go” payment, commonly referred to as contactless payment. The MTA will also roll out its own contactless card, aimed at the roughly 10% of riders who don’t have a cellphone or use a bank account. The plan is to phase in the agency’s own contactless cards late in the process to force riders to use their phones or their own bank-issued debit cards. Mayor Puts the Brakes On Prospect Park Cars BY MARA GAY BRENDAN MCDERMID/REUTERS Gov. Andrew Cuomo, right, and Sen. Chuck Schumer on Monday So long, swipe. A committee of the Metropolitan Transportation Authority on Monday approved a contract for the creation of a new payment system that will allow riders to “tap” or wave a cellphone, a bank debit card or an MTA-issued card with a special chip at a subway turnstile or upon boarding a bus. Such systems are used in other major cities, including London and Chicago. The committee voted to award the $573 million contract for the development and rollout of the new payment system to Cubic Corp., the company that created the current MetroCard system. The total cost to convert the payment system is expected to be around $1 billion. A final vote on the new system is scheduled for Wednesday’s full MTA board meeting. Phasing out the MetroCard has long been on the agenda for the MTA. The current system, now more than two decades old, requires constant upkeep—like maintaining swipe readers at turnstiles— CLAUDIO PAPAPIETRO FOR THE WALL STREET JOURNAL BY MELANIE GRAYCE WEST CRUSHING BLOW: Ashrita Furman, who is the holder of the most Guinness World Record titles, tried Monday in Queens to break the record for the most pumpkins smashed in one minute. New York City Mayor Bill de Blasio is banning cars from Brooklyn’s Prospect Park, a move he says will make one of the city’s flagship parks safer and more tranquil. “People are working really hard, long hours, a lot of stress,” he said at an event on Monday. “There gotta be some places that are stress free.” Cars will be permanently banned from the park starting Jan. 2. They had been temporarily prohibited this summer in what Mr. de Blasio, a Democrat, had said was linked to his “Vision Zero” initiative to reduce pedestrian fatalities in the city. Prospect Park has been the scene of deadly crashes involving cars and pedestrians or cyclists. About 1,000 people walk, jog, or bike through the park weekday mornings, and about 300 vehicles use it during the same period, according to the city’s Transportation Department. De Blasio administration officials said they received petition this summer supporting a permanent ban. The mayor said he and others had worked to prohibit cars in Prospect Park since his days as a New York City councilman, representing the Park Slope neighborhood adjacent to the park. He noted that he and his wife, Chirlane McCray, were married in the park and their two children played there. “I can’t possibly describe to you how much Prospect Park has meant to our family,” Mr. de Blasio said. Mitchell Moss, director of the Rudin Center for Transportation Policy and Management at New York University said the ban was “long overdue.” He added: “It makes sense for safety and because there’s overwhelming sentiment in the communities around the park that this is the right thing.” Moore Show Falls Short at Box Office Film director Michael Moore may have arrived on Broadway with the self-professed goal of taking down a sitting president. But in the end, his politically liberal-minded show, “The Terms of My Surrender,” which closed this past weekend, failed to wow at the box office. In its 13-week run, including a preview period, the show had ticket sales of $4.2 million, according to BroadwayWorld.com, a theater website that tracks grosses. That figure represents only about 49% of the show’s potential gross. Mr. Moore’s largely oneman production started on a strong note, taking in $456,000 in its first full week. But it quickly fell well under that mark, with ticket sales dipping below $300,000 in some subsequent weeks. By contrast, Bruce Springsteen’s show, simply titled “Springsteen on Broadway,” already has grossed a total of $6.6 million, far eclipsing Mr. Moore’s show. True to the billing, Mr. Moore’s production skewered Republican President Donald Trump. It also focused on Mr. Moore’s life and history of political activism. In an email, Mr. Moore said the show was “the most artisti- MICHAEL NOBLE JR./ASSOCIATED PRESS BY CHARLES PASSY Michael Moore’s Broadway show ended a 13-week run last weekend. cally gratifying experience of my life.” He said there are “talks happening about taking this show on the road.” A spokesman for the show didn’t comment on the budget of the production or if it made a profit or loss. Theater-industry observers say reviews of the show, which mostly were negative, affected the box office. Moreover, observers noted that Mr. Moore wasn’t helped by the fact that many comedians already are offering that Trump-skewering perspective—without charging their audiences the price of a Broadway ticket. “If you want to see something anti-Trump, you can just watch any of the late-night shows” on television, said Christopher McKittrick, an editor with Daily Actor, a website that covers theater. GREATER NEW YORK WATCH SEXUAL HARASSMENT State Opens Probe Into Weinstein Co. New York Attorney General Eric Schneiderman has opened an investigation into the Weinstein Co. to determine whether its handling of allegations of sexual misconduct against company co-founder Harvey Weinstein violated state or city laws. The civil rights bureau of the attorney general’s office issued a subpoena to the company Monday, a person familiar with the investigation said. Representatives for the Weinstein Co. and Mr. Weinstein didn’t respond to requests for comment. Mr. Weinstein, who was fired from the company earlier this month, has denied allegations of nonconsensual sex. —Rebecca Davis O’Brien ENVIRONMENT City Could See Dire Floods, Study Warns Within the next three decades, floods that used to strike the New York City area only once every 500 years could occur every five years, according to a new scientific study released just days before the fifth anniversary of superstorm Sandy. The study, performed by researchers at several universities and published Monday in the Proceedings of the National Academy of Sciences, primarily blames the predicted change on sea-level rise caused by global warming. The researchers based their analysis on multiple models that factored in predictions for sealevel rise and possible changes in the path of future hurricanes. —Associated Press ROBERTO COIN BOUTIQUE Westﬁeld World Trade Center Oculus | Main Level C2 New York, NY | 212.287.1299 BLACK JADE COLLECTION | robertocoin.com For personal non-commercial use only. Do not edit or alter. Reproductions not permitted. To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com A10B | Tuesday, October 24, 2017 NY * * THE WALL STREET JOURNAL. FINALLY, AFTER 40 YEARS, A REAL ALTERNATIVE* *THE RELATIONAL DATABASE WAS INTRODUCED OVER 40 YEARS AGO. Neither Nasdaq, Inc. nor its affiliates makes any recommendation to buy or sell any security or any representation about any company’s financial condition. Investors should undertake their own due diligence before investing. ©2017 Nasdaq, Inc. All Rights Reserved. Business.Nasdaq.com For personal non-commercial use only. Do not edit or alter. Reproductions not permitted. To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com THE WALL STREET JOURNAL. LIFE&ARTS Tuesday, October 24, 2017 | A11 HALLOWEEN What Would Santa Say? BY ANNE MARIE CHAKER A 6-foot fake willow tree with orange lights from Target, left, and a Treetopia tree bedecked with skeletons, giant spiders and ghoulish ornaments. evenly,” says Ms. Book. She aims to have the tree completed by the second weekend in September so the family has six weeks to enjoy it. After Halloween, it is replaced by autumnal décor like gourds and pumpkins for Thanksgiving. Then, her 7-foot Christmas tree goes up, trimmed with home-sewn burlap garland, strings of popcorn and cranberries and an “Our New Home” ornament from 2006. “It’s more sentimental,” she says. “The Halloween tree is funny and silly.” While some people may shudder at the ITS UGLY AND SPOOKY, and that’s the point. The Halloween tree is a fake orange Christmas tree, and retailers hope we’ll buy it, and then also candy corn lights, black and orange ornaments, oversize spiders and miniature pumpkins. Candy makers like the idea because we’ll need garlands of skull chocolates and gummies, too. Target Corp. for the first time is selling 6- to 9-foot trees for Halloween, including a $968 orange Christmas tree and has new in-store “Hyde and Eek Boutiques” featuring holiday merchandise like lace copper pumpkins or $20 plastic spooky-piano figurines. Spending on Halloween decorations, candy and costumes is expected to reach $9.1 billion this year, up 8% from last year’s projection, according to the National Retail Federation. At online home-décor retailer Wayfair, sales of Halloween-themed trim, such as a $20 string of candy corn lights, have increased by 73% since last year. Bronner’s Christmas Wonderland, a year-round holiday decorations store in Frankenmuth, Mich., says it increases its Halloween inventory each year, including window and tree ornaments as well as a Halloween village. “Anything Halloween I can find goes on the tree,” says Drew Holmes, a 31-year-old pharmacist in Morgantown, W.Va., who has two trees, including a bright orange fake fir purchased last month from Treetopia and decorated with black Christmas balls. That is in addition to his black Christmas tree trimmed with $300 worth of orange and purple lights, garlands and ornaments, including clip-on feathery blackSpending expected on Halloween birds. decorations, candy and costumes “A Christmas tree is a blank canvas that you can change the look of,” says Carrie Chen, brand manager for Treetopia. “It can beA Christmas tree is come spooky.” The online Christmore sentimental mas tree retailer has sold 40% more orange trees this fall combut the Halloween pared with last year and carries tree is silly, says an assortment of other brightlycolored trees including hot pink Christina Book, Increase in and “sassy sapphire.” number of who starts For some households, Halloworange trees sold een kicks off a three-month pedecorating her by Treetopia riod of home decorating. Christhis year home in September. tina Book, a 35-year-old stay-athome mother of three in Bakersville, Calif., creates a Halspookification of the Christmas symbol, loween witch-stuck-in-a-tree in her home’s she says, “I see it as a way to fill with entryway by positioning a plastic witch and things that add to the atmosphere of the a pointy hat in a pre-lit artificial black fir. home.” When friends and neighbors see it, “Whenever people come in, it’s ‘oh my gosh she says, “they definitely giggle and think you have a Halloween tree,’” she says. Her it’s awesome.” tree comes out from a backyard storage Since September, sales of fake trees at Balshed in early September, and she and her sam Hill, a Redwood City, Calif., maker of arthree children trim it with orange ribbon, tificial Christmas trees sold online, are up store-bought ornaments and homemade more than 10% due in part to the Halloween Popsicle-stick crafts, children’s phototree phenomenon, says Thomas Harman, Balgraphs and glittery classroom projects. sam Hill chief executive. “People don’t only “I always take a few steps back as I’m gowant to decorate with spiders and witches,” ing, to make sure things are distributed F. MARTIN RAMIN/THE WALL STREET JOURNAL (TREES); ISTOCK (4) $9.1 billion 40% he says. “They’re pulling forward their Christmas decorations and decorating with trees and garlands.” It also sells a Halloween tree. “Halloween tree” this year is one of the most-searched product queries for Halloween, along with inflatables, wreaths and pillows on Wayfair. The site began selling Halloween décor four years ago. This year, sales of Halloween trees—including a $385, 7-foot tree that shakes—are up 20%. Nestlé SA, maker of Butterfinger, Nerds and SweeTarts, says it has been pleased with its candies’ role in the Halloween tree phenomenon. “All of our products can be used to make Halloween crafts, including being strung or hung,” says spokeswoman Tricia Bowles. “I’ve seen SweeTarts Skulls & Bones glued to yarn to create a strung look that was then wrapped around a Halloween tree,” says Ms. Bowles. “So creative!” One caveat for Halloween tree decorators: They are tempting to household cats. Ms. Book’s cat, Milo, finds the fabric bats hard to resist: “I have to hang them high in the tree or else he’ll have them in his mouth.” YOUR HEALTH | By Sumathi Reddy ALAN WITSCHONKE FOR WOMEN, FIBROID HELP WITHOUT SURGERY THE FIRST ORAL TREATMENT for women with the common condition of uterine fibroids could be available as soon as summer 2018, with two other medications in the pipeline. The drugs, experts say, would provide a new treatment option for a condition most commonly treated with a hysterectomy, or removal of the uterus. “For the longest time we have not really had good options from an oral medication standpoint to treat fibroids,” says Arnold Advincula, vice chairman of women’s health and chief of gynecology at Sloane Hospital for Women at NewYorkPresbysterian/Columbia University Medical Center. “It’s nice to have some additional tools in the toolbox.” Earlier in October the U.S. Food and Drug Administration accepted Allergan’s new drug application for ulipristal acetate (UA) to treat abnormal uterine bleeding caused by uterine fibroids. The company expects a decision by May. The drug has been available in Europe and Canada for several years. Two other oral medications indicated to treat uterine fibroids are also in development. Bayer launched a phase 3 clinical trial—usually the final trial used by regulators to decide whether to approve a drug— for a similar drug, vilaprisan, in the summer. And AbbeVie is in the midst of phase 3 trials for elagolix to treat uterine fibroids and endometriosis, a disorder in which the tissue that lines the inside of the uterus grows outside of it, causing pelvic pain. The company hopes to have a product available by 2020. Uterine fibroids are benign tumors that grow in and around the uterus. It’s estimated that as many as 26 million women in the U.S. have one or more such tumors, though less than half experience symptoms. The most common symptom is long and excessive bleeding during menstrual periods, which can lead to anemia and the need for blood transfusions. Other symptoms can include pelvic pain or pressure, a swollen abdomen and frequent urination. Fibroids can also cause fertility and pregnancy problems, de- pending on their size and location. The cause of fibroids remains unknown. African-American women have a higher rate of uterine fibroids. If a woman has no symptoms, treatment of fibroids isn’t necessary, experts say. While a hysterectomy is the most common way to treat fibroid tumors, women who still want to have children can have a myomectomy. That surgery removes fibroids while keeping the uterus intact. But fibroids can grow back after the procedure. A number of other minimally invasive procedures are less commonly used and usually not recommended for women who want to have children. There’s some chance of recurrence with most of them. UA belongs to a group of drugs called selective progesterone receptor modulators (SPRM). They block the progesterone from feeding the fibroids, which causes them to shrink. “This particular drug also works directly on the lining of the uterus—the enPlease see HEALTH page A13 The location of fibroids in and around the uterus helps determine whether a woman is symptomatic, and how severe symptoms are. For personal non-commercial use only. Do not edit or alter. Reproductions not permitted. To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com THE WALL STREET JOURNAL. A12 | Tuesday, October 24, 2017 LIFE & ARTS WINE. CHOCOLATE. Bingewatching “The Crown.” How are your coping strategies working for you these days? Therapists have, for months, been reporting a significant increase in clients who are stressed and saddened by current events—hurricanes, fires, the threat of nuclear war. In some cases, they say, these large-scale worries are undermining people’s ability to cope with their own private stressors. In addition to talk therapy, many therapists teach their clients new tactics for dealing with anxiety and stress when it arises. Psychologists use the term “emotion regulation” to describe how we change our emotions. Most often (but not always) people want to change, or “down regulate,” a negative emotion. We can effectively reduce anxiety or worry in one of two fundamental ways, says Maurice Schweitzer, a professor at the Wharton School at the University of Pennsylvania, who studies the regulation of emotions. You can switch your attention to something else, such as when you are on an unpleasant flight and you watch a movie. Or you can change the way you conceptualize the situation: A co-worker snaps at you, yet you try not to take it personally because you realize he is under a lot of stress. “This gives us agency,” Dr. Schweitzer says. “We can choose what to focus on and decide how we want to react.” Many people rely on exercise, yoga and meditation, and favorite music, all proven to reduce stress and calm our nervous system. Peter Wagner, 60, an investment manager in New York, has created a “calmdown” playlist of songs, which includes Dusty Springfield’s “Son of a Preacher Man” and Randy New- BONDS: ON RELATIONSHIPS | By Elizabeth Bernstein Calm Your Mind In Anxious Times man’s “Sail Away.” Barry McCarthy, 74, a psychology professor in Washington, D.C., curbs his late-night worrying by reminding himself that problems seem unsolvable between midnight and 5 a.m. and switching to thoughts of past or future vaca- tions. And when Mary Westheimer, 62, a business manager from Phoenix, is anxious, she pictures a water faucet, turns the tap on in her mind and lets all the water run out. Shannon McCormick, 42, a public relations manager from Columbus, Ohio, limits her worrying to one room in the house, a stress-management strategy that a nun taught her in high school. (She uses the bathroom.) Liz Singer, 61, a psychotherapist in New York, puts both hands on her chest and envisions her body progressively relaxing, from the soles of her feet on up. Then she focuses in her mind on a place she loves in upstate New York. Brooke Devine, 39, a school psychologist in Louisville, Ky., practices deep breathing by imagining her breath coming in her body, filling her lungs and abdomen, and then releasing out. And Ellen Jovin, 51, a communication skills consultant from New York, has recently started listening to audiobooks about ancient history or science. “How much can you really worry about an unpleasant task hanging over your head when you are learning about delightful ancient sea creatures?” she says. I put on upbeat music, and try to distract myself with a funny show, movie or novel. (Carl Hiaasen has never let me down.) I have sticky notes above my desk, on my nightstand and on the front of each journal I use that say “Don’t speculate!” They are constant reminders that it is impossible to know the outcome of an event or what another person is thinking or will do. So it’s better to focus on my own actions, which are the only thing I can control. And when I’m really stressed I picture my friend, James, who taught me to scuba dive, giving me an OK sign. It’s a signal often used in diving, and the first time James flashed me an OK sign, 40 feet down in the Atlantic, and I replied with my own, was a transformative experience for me. Now, imagining someone I trust asking me if I’m OK, and responding in my head “yes” immediately calms me down. Write to Elizabeth Bernstein at email@example.com or follow her on Facebook, Instagram and Twitter at EBernsteinWSJ Seven Tips From the Experts to Cut Out Stress IDENTIFY THE CAUSE. A study by researchers at Yale University and the University of Toronto, published in 2013 in the journal “Psychological Science,” showed that people often misattribute the source of their anxiety. They think it is one thing when it really is another. As a result, they make bad decisions. An example: You almost get into a car accident on your way home from work, which leaves you sweaty and tense. Then when you get home you need to make an investment decision and are more conservative than you would normally be. Some questions to ask yourself: What is the source of your feelings? Do they stem from something you are dealing with in the moment or a different issue? “Focus only on what is before you,” says Jeremy Yip, the lead researcher on the study, who is now an assistant professor at Georgetown University’s McDonough School of Business. DON’T RUMINATE. As soon as you notice yourself doing it, decide to take action. Brad Stulberg, a mental-skills coach for executives and entrepreneurs in Oakland, Calif., and author of “Peak Performance,” tells clients that the question “what if?” is a clue they’re ruminating, as is feeling their mind is racing for 10 minutes. Pause and ask yourself what step you can take. Are you worried about your child? Plan some quality time with her. Upset about a natural disaster or political issue? Make a donation. You’ll feel better because you’ve taken control of your thoughts and done something, however small, to make the situation better. PUT DOWN YOUR PHONE. Social media can produce the same gawker effect as a car accident on the highway, Mr. Stulberg says. We can’t tear our eyes away from the carnage on Twitter or Facebook. This is a pathway to rumination, so set a time limit for social media. Texas. Speaking it out loud helps you realize how you speak to yourself and identify thoughts that may sound ridiculous when verbalized. VISUALIZE YOUR ANXIETY. Focus intently for a moment on your worry and give it a rating on a one-to-10 scale. Picture where the fear is in your body—chest, throat, abdomen? Then imagine your fear as an object, such as a fiery, red ball. Now, imagine the color of the ball changing. Make it pink or pale yellow. Put stripes or polka dots on it. Visualize it changing size. Then lift it up over your head in your mind and imagine the breeze carrying it away. “This allows you to shape your emotions in a positive way,” says Candida Abrahamson, a life coach in Skokie, Ill. SAY IT OUT LOUD. “When our voice is trapped in our mind we start to believe it is true,” says Vasavi Kumar, a licensed social worker in Austin, TAP. The “emotional freedom technique,” or “tapping,” helps calm anxiety by focusing on our energy and where it may be blocked, says Julie Barthels, a licensed clinical social worker in Rockford, Ill. You start by labeling your emotion as specifically as you can—“I am worried my partner is irritated with me”—and rating it on a one-10 scale. Then, take two fingers and tap gently on the top of your head while saying your worry slowly out loud several times. Repeat this by tapping in the following spots down the same side of your body: the inside of your eyebrow, outside of your eyebrow, under your eye, your chin, your collarbone, and the side of your torso. After you finish, take a deep breath and rate the strength of your feeling. Repeat as needed until you get to one. “It sounds hokey, but it works,” Ms. Barthels says. 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To your colleagues, it’s a fashion statement. To your feet, it’s an all-day festival of lush, leather-lined comfort. But let’s keep that confidential. Great Sound. Made Simple. 800-615-0136 30-Day Home Trial | Free Shipping | zvox.com | amazon.com ® ZVOX & AccuVoice are registered trademarks of ZVOX Audio. ORDER AT AMAZON.COM OR ZVOX.COM Free shipping and returns. Order online or call 844.482.4800. ILLUSTRATIONS BY THOMAS PITILLI FOCUS ON YOUR BREATH. Research shows that a technique called “breath-focused attention” lowers activity in the amygdala, the brain’s fear and anxiety center. People who practice it regularly have fewer negative emotional experiences overall. For five minutes, focus on the feeling of air passing the outside edge of your nostrils. You don’t have to try to breathe deeply or slow down your breath. Just focus on the sensation. For personal non-commercial use only. Do not edit or alter. Reproductions not permitted. To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com THE WALL STREET JOURNAL. Tuesday, October 24, 2017 | A13 LIFE & ARTS FROM TOP: GETTY IMAGES; PARAS GRIFFIN/WIREIMAGE ART REVIEW Conversing via Canvas BY KAREN WILKIN Washington I’VE REMEMBERED, for more than two decades, debates I overheard at the National Gallery of Art’s great Johannes Vermeer retrospective about what had provoked the pictures. Was the robust girl pouring milk from a jug a servant in the artist’s household? Was the woman with the balance his wife? Probably because the space of these domestic interiors was so logical and the floods of light illuminating them so convincing, visitors seemed to believe that Vermeer had scrupulously reproduced real events, translating glimpses of actuality into mesmerizing images. It was like listening to the criticisms leveled at Caravaggio by his enemies during his lifetime—all he did, they claimed, was copy nature. But art, although it is about many things, is almost always about other art— even that of Vermeer and his contemporaries during the Golden Age of Dutch painting—an observation confirmed by the spectacular, enlightening exhibition “Vermeer and the Masters of Genre Painting: Inspiration and Rivalry,” at the National Gallery. Jointly organized by the curator of the landmark Vermeer show, the museum’s Arthur K. Wheelock Jr., with Adriaan Waiboer of the National Gallery of Ireland, Dublin, and Blaise Ducos of the Louvre Museum, Paris, the show and its excellent catalog examine, for the first time, the complex relationships and cross-fertilization manifest in the work of the leading genre painters of 17th-century Holland. We learn that while Vermeer and such colleagues as Gerard ter Borch, Gerrit Dou, Pieter de Hooch, Gabriel Metsu, Frans van Mieris and Jan Steen, to name only a few, may have all painted themes rooted in the life of their times, how they presented them owed as much to shared aesthetic ideals and inventions as it did to a desire for fidelity to appearances. The exhibition concentrates on what it calls “high life” genre scenes—images not of rowdy smokers in taverns, but of well-dressed people in well-appointed domestic interiors. Witness Vermeer’s women in their ermine-trimmed jackets and fashionable hairstyles, apparently captured unawares at intimate moments: writing and receiving letters, putting on a necklace, playing a virginal, making lace. We associate these motifs with the Delft master, but we discover that Vermeer was following the lead of Ter Borch, an accomplished painter 15 years his senior who was the first to explore images of women in unguarded, private moments. “Vermeer and the Masters of Genre Painting” underscores such connections by presenting us with groups of works by different artists on similar subjects—with similar compositions and, often, similar combinations of hues and protagonists in similar costumes. One gathering encourages comparison of scenes of men entering Uterine fibroids are often treated with a hysterectomy. Tanika Gray Valbrun, below, advocates for awareness of the condition. HEALTH NATIONAL GALLERY OF IRELAND, DUBLIN Johannes Vermeer’s ‘Woman Writing a Letter, With Her Maid’ (c. 1670-71). emphasizing his particular strengths; sometimes it seems there was competition to see who could paint the most dazzling cascades of silk. Moving through the show, we notice more and more repetitions and variations throughout the exhibited paintings, enlarging our understanding of how Dutch Golden Age artists worked. But the show can be enjoyed simply for its superb works, some, normally in diverse collections, reunited, such as Vermeer’s pendants “The Geographer” (1669) and “The Astronomer” (1668) with their sturdy male figures surrounded by the accouterments of scientific investigation, in washes of warm light, or Ter Borch’s pair of letter-writing correspondents and their companions, linked by near-mirror-image rooms and a play of reds and blues. Everything, including the paintings by less familiar artists, richly rewards study. But, as always, Vermeer’s glowing images of insignificant moments endlessly prolonged demand our attention, despite the excellence and close thematic relationships of the works beside them. No one else constructed compositions with such Apollonian authority. the domain of women, some as welcome suitors and guests, other as intruders, albeit blocked by laughing maidservants. The paintings are by Metsu and Ter Borch, the compositions and concepts subtly varied, yet each includes an elegant young woman in a shimmering white silk skirt and a cochineal-red bodice. Other groups reveal the prevalence of compositions anchored by a standing woman seen from the back or by women playing musical instruments, often gazing at the viewer, as if inviting him to join them. Each work is freshly conceived, yet the relationships are palpable. It’s not, however, a question of younger artists following the example of teachers or mentors. It’s a cross-generational call and response across the Netherlands. It’s clear that even the most innovative artists of the day were alert to what their fellows of all ages were doing, even those working in different places. Then, as now, travel to and from the main centers of (notably small) Holland was quick and relatively simple, so it was easy for artists to see each other’s work in studios and collections. (The time required for regularly scheduled horse-drawn canal barges to reach The Hague from Amsterdam compares favorably with modern transportation.) Nor, despite the similar motifs, were artists imitating each other. Rather, each interpreted his chosen themes individually, Ms. Wilkin is an independent curator and critic. The WSJ Daily Crossword | Edited by Mike Shenk Shown are today’s noon positions of weather systems and precipitation. 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Dr. Al-Hendy says the changes to the endometrium don’t raise the risk of endometrial cancer, which some have raised as a concern. Patients with the condition say it’s time for better treatments. Tanika Gray Valbrun, a 39-year-old network news producer in Atlanta, says she welcomes less invasive treatments that don’t affect fertility. She started the White Dress Project, a nonprofit patient advocacy group for women with uterine fibroids, in 2014. She was diagnosed with fibroids at 19. She has suffered from pelvic pain, abdominal bloating that has resulted in people mistakenly Vermeer and the Masters of Genre Painting: Inspiration and Rivalry The National Gallery of Art, through Jan. 21, 2018 Weather V ancouver Vancouver Continued from page A11 dometrium—so it also quite fast and dramatically decreases and stops the vaginal bleeding,” says Ayman AlHendy, director of interdisciplinary translational research at Augusta University in Georgia and a member of Allergan’s advisory board. Bleeding is reduced within five to six days, he says. Headaches and hot flashes were the most common side effects in the trials with UA, affecting less than 10% of women. Patients take the once-aday pill for three months and then stop for one menstrual cycle to allow the endometrium to shed, since the med- thinking she’s pregnant and extremely heavy bleeding that has left her anemic. “I’ve had five blood transfusions because of the amount of blood I’ve lost,” she says. She has tried different types of birth control, but none helped with her symptoms. In 2013 she had a myomectomy and doctors removed 27 fibroids, keeping her out of work for nine weeks. Four years later, the fibroids are back. Vanessa Jacoby, an associate professor in the department of obstetrics, gynecology and reproductive sciences at University of California, San Francisco, conducts research in new fibroid treatments. She says UA appears to have fewer side effects than Lupron, the only medication, an injectable, available in the U.S. that shrinks fibroids. Lupron effectively puts women into early menopause, which can result in hot flashes and bone loss. Women often must take it with hormone replacement therapy. It is usually used in preparation for surgery to shrink fibroids and maintain blood reserves. While the company has done studies of women taking the drug up to a year, some experts believe the longterm health profile of a drug needs to be evaluated up to seven years. Shao-Lee Lin, vice president of therapeutic areas and international development at AbbVie, says the company is testing a twice daily dosing of elagolix. It is also studying including lowdose hormone therapy within elagolix to help maintain bone health. Like Lupron, elagolix decreases sex hormones that cause fibroids to grow. What makes it different is it’s fast-acting and easier to reverse the effects if you stop taking it. Studies have found it significantly reduces heavy menstrual bleeding and decreases the thickness of the endometrium by six months. It also decreases the size of fibroids. 52 Musical Diamond 53 Home run pace 54 James in the Blues Hall of Fame 56 1967 World Series MVP Gibson Previous Puzzle’s Solution A T S H K R MO EW V A M P A R E A E Y E R O L L I N G P E A S R U S H U R S A P E K O E A S N E A R H E R A L E C L A C H L E I S S C U S K N S E D OWN A X E L N P I C O T T E R T K A L I L E D S A S C O A T I M I E R S C Y B S O N R I G T T E A C H E R S P E T C A N T E R O B O E E S C O O B I E S E N T T E E S R O C K B O T T O M E R I E D E A N T R A N S H E R O N For personal non-commercial use only. Do not edit or alter. Reproductions not permitted. To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com THE WALL STREET JOURNAL. A14 | Tuesday, October 24, 2017 SPORTS MLB The Rise of Baseball’s Superteams A World Series matchup between the Dodgers and Astros highlights the huge gap between baseball’s top and bottom teams Devotees of baseball’s data revolution describe the playoffs as a crapshoot, an unpredictable tournament where chaos reigns and the most deserving participant rarely emerges victorious. But this year’s World Series between the Los Angeles Dodgers and Houston Astros introduces a new paradigm sweeping the sport. Instead of the vast parity that defined the last decade, there exists a Grand Canyon-sized gap between the top and bottom of the standings. A few teams accumulated so much talent that they simply overpowered the field, which is weakened by a phenomenon in which many executives view mediocrity as the ultimate failure—and are willing to suffer ineptitude for a while to achieve greatness. It resulted in a regular season in which three teams—the Dodgers, Astros and Cleveland Indians—finished with more than 100 wins for the fourth time in major-league history. Starting Tuesday night at Dodger Stadium, two such clubs will square off with a championship at stake for the first time since 1970. Welcome to the Age of the Superteam. “You have front offices thinking more strategically about, ‘Which side of the spectrum are we on?’” Dodgers general manager Farhan Zaidi said. “Because I’m actively trying to avoid getting stuck in the middle.” This push to the extremes originated in basketball and football, before seeping into baseball more recently. On paper, it makes sense: Good teams vie for titles and reap the benefits of qualifying for the postseason. Bad ones earn coveted top draft picks, the easiest way to add a direction-altering player without giving anything up in return—a must for smaller franchises that lack vast financial resources. Teams in the middle often stay in neutral, spinning their wheels without going anywhere. To escape that fate, teams developed a strategy known, somewhat controversially, as “tanking”—a rebuilding technique that involves enduring a stretch of futility in order to acquire the pieces necessary to climb back to prominence. With commitment and patience, the approach undoubtedly can work. Theo Epstein employed it with the Chicago Cubs, the reigning champs. Under Jeff Luhnow, Houston’s ultra-statistically minded GM, the Astros embarked on an unprecedented teardown, averaging 103 losses in his first three years at the helm. This season, they went 101-61, brimming with young stars like Carlos Correa, George Springer and Alex Bregman. Luhnow faced plenty of skepticism for using such an unorthodox method. Now, with copycats JIM YOUNG/REUTERS, ELSA/GETTY IMAGES BY JARED DIAMOND AND BRIAN COSTA Above, the Dodgers celebrate during Game 5 of the National League Championship Series. Left, Carlos Correa and Jose Altuve of the Astros. sprouting up, nobody questions the Astros anymore. “We were just bluntly honest with people,” Astros president Reid Ryan said. Those in the industry attribute the popularity of Houston’s model to changes to the MLB draft that coincided with Luhnow’s hiring for the 2012 season. Before that point, teams could sign draftees for as much money as they wanted, which in some cases disincentivized high picks. Cash-strapped teams would sometimes refrain from selecting the best available player out of fear that his contract demands would strain their economic limits. To combat that problem, the league implemented limits on how much teams could spend in draft bonuses, with teams holding more desirable picks receiving a larger pool. Suddenly, putting up the worst record in the majors came with an even better prize, and smart teams took advantage. As time passes, the tactic seems less crazy, which was not the case a decade ago. Former Baltimore Orioles executive Jim Duquette recalled that in 2007, saddled with a hopeless team, he wanted to trade shortstop Miguel Tejada. The Los Angeles Angels offered Ervin Santana and Erick Aybar, a package Duquette thought would help the Orioles in the future. He says his boss, Peter Angelos, quickly rejected the idea. “My owner wasn’t willing to take that beating and be really bad,” said Duquette, now an analyst for SNY. “He wanted to stay somewhat competitive.” More owners appear willing to go that route now. For the first time since 1997, only five American League teams finished with a win- ning record, the five that made the playoffs. Four teams finished with at least 95 losses—the same number as 2015 and 2016 combined. With a growing number of teams choosing to struggle, it creates an opportunity for win-now teams to load up in ways never before possible. It sparked an arms race among a few teams to suck up as many assets as they possibly could, not only to improve their few weak spots, but to bolster areas of strength. Consider the Dodgers, who at 104-58 compiled the best record in the major leagues since 2004. They mixed baseball’s largest payroll with smart leadership to construct a squad with a stunning amount of depth, replete with quality backups at every position, at least some of whom would start elsewhere. When they lost All-Star shortstop Corey Seager to a back injury for the National League Championship Series, they replaced him with Charlie Culberson, who went 5for-11 at the plate. Though the Dodgers already boasted MLB’s best rotation heading into the end of July, they still targeted arguably the best starting pitcher on the market, trading for right-hander Yu Darvish. After the Dodgers clinched their first pennant since 1988 last week, closer Kenley Jansen praised Zaidi and president of baseball operations Andrew Friedman, saying they “put a ridiculous team together.” Darvish turned a great team into an even greater one. The Astros responded. A month after the Darvish deal, Houston dealt for ace right-hander Justin Verlander, who has gone 4-0 with a 1.46 ERA in the playoffs. He cemented the Astros’ status as a Superteam. “When we came into spring training, we thought we had a great team, but at the All-Star break, some teams started loading up. The Dodgers were one of those teams,” Astros pitcher Lance McCullers Jr. said. “We were really excited to get [Verlander], because we felt like that was our moment to get loaded up.” The stratification is producing a strange new reality—the duty to lose. Vince Gennaro, the associate dean at NYU’s Tisch Institute for Sports Management, Media, and Business, said that in this environment, middling teams with trade chips “have an obligation to their fans to deal those players for prospects to make their team less competitive in the near future so they can return to contention.” Others question how long it will remain effective. If too many teams try to tank at once, not all of them can lose enough to get the draft spot they seek. This season, for instance, the San Diego Padres looked like textbook tankers, and they didn’t even finish in last place in their division. Zaidi pointed out that “there are equilibrium effects to a bunch of people changing their strategy.” The Dodgers and Astros, meanwhile, will exit their showdown with a mission to outsmart their opponents again when the time comes to retool. “How do you stay at the top once you’re successful?” Luhnow said. “That’s the Holy Grail we’re trying to figure out.” THE COUNT On Saturday, Michigan will host Rutgers and, in all likelihood, mercilessly pulverize a weaker team. To put it another way, it won’t be too different from what Penn State did to the Wolverines this past weekend. Two and a half years into Jim Harbaugh’s tenure, this is the state of Michigan football: The Wolverines are decent. And that’s better than worse-than-decent, but it isn’t exactly a compliment, either, for one of the game’s pre-eminent powerhouses. For the third straight season, Michigan is out of the national title conversation. Any faint hopes the team still clung to were summarily extinguished during Saturday’s 42-13 loss to the Nittany Lions. Still, the Wolverines are 5-2 and for maybe any other coach at most any other school, these early returns might be considered incredible. But Harbaugh isn’t just any coach. He’s the one so celebrated that he turned the world’s blandest article of clothing—the khaki—into a fashion statement. His return to Ann Arbor to coach at his alma mater was met with unbridled jubilation, along with one of the fattest checks in the entire sport. The problem is this: Through Har- baugh’s first 33 games, Michigan is 25-8. Which is the exact same record his predecessor, Brady Hoke, had during his first two and a half years on the job. During that third season, Hoke limped to a 7-6 finish. The team went 5-7 the next year, and Hoke was canned. Nobody is expecting for Michigan to miss out on a bowl game and hit that type of low, but Harbaugh is going through a rough patch of his own: Dating back to last year, the Wolverines are 6-5 in their last 11 games. That includes a 1-3 record against ranked opponents, with the lone win coming against a Florida team that’s now 3-3. With a 2-2 conference record this year, the Wolverines are tied for fourth place in the Big Ten East division (with Rutgers) and have games against two top-10 teams, Wisconsin and Ohio State, still to come. (Here it deserves mentioning that, unlike Harbaugh, Hoke actually beat Ohio State in his first year. Harbaugh, thus far, is 0-2 against the school’s dreaded rival after last year’s double-overtime thriller.) “A team that goes through this understands that it can have a great First 33 Games How some notable coaches performed through their first 33 games at their current schools: COACH/SCHOOL RECORD Urban Meyer Ohio State 30-3 (.909) Jim Harbaugh Michigan 25-8 (.758) Nick Saban Alabama 25-8 (.758) Jimbo Fisher Florida State 24-9 (.727) Brian Kelly Notre Dame 23-10 (.697) Chris Petersen Washington 21-12 (.636) James Franklin Penn State 19-14 (.576) Dabo Swinney Clemson* 19-14 (.576) 3RD SEASON 14-1 (Won national championship) 5-2 (t-4th, Big Ten East) 14-0 (Won national championship) 12-2 (Won the Orange Bowl) 12-1 (Lost national championship) 12-2 (Lost CFP semifinals) 11-3 (Lost the Rose Bowl) 6-7 (Lost Meineke Car Care Bowl ) JUSTIN K. ALLER/GETTY IMAGES MAYBE JIM HARBAUGH ISN’T INFALLIBLE Source: Stats LLC; WSJ *Includes interim season in 2008 opportunity,” Harbaugh said at his news conference Monday. “When the going gets tough, the tough get going. It’s a cliche, many call it a cliche, but cliches are usually cliches because they’re true.” In fairness: College-football turnarounds can be notoriously slow because of the time it takes to get top recruits and then actually develop them. And Michigan has one of the youngest teams in the country. Still, preaching patience to college football fans is like serving steak and whole milk to a vegan. So what’s stranger than the time it has taken Harbaugh to turn Michigan into a College Football Playoff team is the reason why: Harbaugh, the former quarterback and offensive mastermind who produced Andrew Luck at Stanford, hasn’t found a reliable signal caller yet for the Wolverines. Wilton Speight struggled at the position to start the year, and then he got hurt. His replacement, John O’Korn, has thrown four interceptions and just one touchdown. Harbaugh has brought in two highly regarded recruits, but they’re young and have combined for one career pass. Despite these bumps in the road, Harbaugh’s record so far at Michigan is still better than many other big- name coaches—such as Clemson’s Dabo Swinney, Penn State’s James Franklin and Notre Dame’s Brian Kelly—through as many games at their current stops. In fact, Harbaugh’s mark is exactly the same as the best coach in the entire sport in his first 33 games at his school. At Alabama, Nick Saban started out 25-8 as well, which included a 7-6 record in that first season—and some of those wins were later vacated. But there’s a big difference, too: Saban’s third year wrapped up undefeated and with a national championship. —Andrew Beaton For personal non-commercial use only. Do not edit or alter. Reproductions not permitted. To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com THE WALL STREET JOURNAL. Tuesday, October 24, 2017 | A15 OPINION Et Tu, Steve Bannon? Is Steve Bannon working for my agenda—or his? That’s the question DonMAIN ald Trump STREET might ask By William himself now McGurn that Mr. Bannon has declared a “season of war” against establishment Republicans on the president’s behalf. Mr. Bannon’s top target? Senate Majority Leader Mitch McConnell. During an appearance at the Value Voters Summit two weekends ago, Mr. Bannon invoked Plutarch and Shakespeare to declare that we are reliving the “Ides of March.” The only question on Capitol Hill, he warned Mr. McConnell, is “who’s going to be Brutus to your Julius Caesar.” But whereas Caesar was done in by Roman senators wielding knives, Mr. Bannon proposes a bloodless assassination. He wants to make Mr. McConnell’s continued leadership a litmus test for every Republican Senate candidate next year. That means backing primary challengers who pledge not to support Mr. McConnell as leader. Unfortunately for Mr. Trump, given what the past few weeks have revealed about the GOP’s political shortcomings, it’s difficult to see how Mr. Bannon’s new initiative will end up providing the president what he needs most today: more Republican senators. The Bannon-McConnell clash grows out of an age-old political argument. McConnell advanced his side of this argument in the Rose Garden of the White House last week alongside President Trump: “Our operating approach will be to support our incumbents and, in open seats, to seek to help nominate people who can actually win in November. That’s my approach and that’s the way you keep a governing majority.” To which Mr. Bannon responds: What good is having a majority if it does’t deliver? Here Exhibit A is the sevenyear Republican promise to repeal ObamaCare, which met its death in Mr. McConnell’s Republican Senate. Certainly Mr. McConnell’s leadership has taken a hit from the failures to get an ObamaCare repeal through. But slim majorities always disproportionately empower dissenters and outliers, regardless of who the majority leader might be. So long as GOP bills can be defeated by the defection of three Republicans, the Trump agenda will be held hostage to those on the margins, whether it’s John McCain or Lisa Murkowski. This is where Mr. Bannon’s war could end up doing the Trump agenda harm. In 2018, Democratic senators are up for re-election in 10 states Mr. Trump carried last November. In any normal year, Republicans would concentrate on increasing their Senate numbers by squeezing these Democratic incumbents on issues where they are vulnerable. Take Claire McCaskill. She’s running for re-election in Missouri, which Mr. Trump carried by almost 19 points. The last time she ran, her GOP opponent, Todd Akin, basically took himself out of the race with a boneheaded comment that a women wouldn’t get pregnant from “legitimate rape.” This time Mr. Trump is telling Missourians that if Ms. McCaskill doesn’t vote to lower taxes, “you have to vote her out of office.” Taking out McConnell will not give Trump what he needs: more Republican senators. Ditto for Indiana Sen. Joe Donnelly, a Democratic incumbent in another state Mr. Trump carried by 19 points. So long as the focus is on Mr. McConnell and Republican-onRepublican warfare, it largely lets incumbents like Sens. McCaskill and Donnelly off the hook. Some people think this doesn’t matter to Mr. Bannon, because his real objective is less in moving the Trump agenda forward than in making himself relevant again. Josh Holmes, a former chief of staff to Sen. McConnell, puts it this way: “The best path to the front page of any newspaper is an attack on a Republican from within the tent. [Mr. Bannon] knows that.” In the short term, the future of the Bannon-McConnell feud will likely be determined by another Senate vote key to the Trump agenda: tax reform. In sharp contrast to the way the president outsourced the ObamaCare repeal to Congress, he and his team are now publicly making the case for tax reform. If Mr. McConnell gets a bill through the Senate, the victory will recast the debate, and it will be more difficult to make his Senate leadership a compelling primary issue. If a tax-reform bill dies under Mr. McConnell, it would be a second big strike against his leadership. But even here, it’s not clear Mr. Bannon’s war is the solution. It is one thing to take a candidate you oppose out; it is quite another to get one you support in. Or, as Mr. McConnell tartly put it, Mr. Bannon is a “specialist at nominating people who lose.” In other words, Mr. Bannon may succeed in rallying unhappy Republican voters to oust Republican incumbents deemed insufficiently proTrump. He may even succeed in ousting Mr. McConnell from the Senate leadership. But killing off establishment Republicans does nothing to get Mr. Trump’s judicial picks through, his federal nominees confirmed, or his legislation passed. Surely the president must appreciate that unless this “war” results in more Republican senators, Mr. Bannon will have undermined the Trump agenda. Write to firstname.lastname@example.org. What Brings Trump and Macron Together By John Vinocur W Paris hat Europe lacks most today, French President Emmanuel Macron believes, is a common strategic culture. In his view, that means one that is interventionist, has a single doctrine for taking action, and has a joint budget for producing its own military hardware. “Our inability to work together convincingly undermines our credibility,” Mr. Macron asserted in a speech at the Sorbonne last month. Correct. And, although he won’t say it, this reality savages the idea that the European Union, in an undertaking called Defence Europe, could emerge as a military player of sufficient substance and boldness to inhibit Russia in Eastern Europe or stare down a threat in the Middle East. Two Fridays ago, Mr. Macron publicly received the 2017 Strategic Review, a 100-page doctrinal summary drawn up by a panel of experts proud of France’s “strategic singularity”—its nuclear strike forces, its capacity to intervene rapidly around the globe, and its permanent membership in the U.N. Security Council. In an uncertain time, the review essentially repeated, as expected, what Mr. Macron has said must be Europe’s goal for 2020: “autonomous European operating capabilities in complement to NATO.” Yet the document, in its published version, skipped naming the central element smothering a common European strategic culture: Germany and its passivity. Although this reality discomforts Mr. Macron’s sought-after closeness with Chancellor Angela Merkel, members of the French defense community attacked Germany’s soft strategic stance at a closed seminar last month. Washington and Paris have a problem in common: Germany’s passive attitude. Alain Barluet of Le Figaro, a participant, reported that French officers and experts were concerned about a “Germanization of the Defence Europe project. That means making concessions to norms and a culture recalcitrant to join tough operations.” He called the difference in concepts “a chasm.” Meantime, Jean-Dominique Merchet of L’Opinion wrote that “French military men, industrialists and defense experts regard Germany more readily as a counter-model or a threat than an indispensable partner.” At the general staff level, he went on, the U.S. and Britain, sharing what was described as France’s we-actually-fight strategic culture, were called “our two closest allies.” The French and Germans may sign joint communiqués disapproving of Mr. Trump’s position on the Paris climate accord or the Iran nuclear deal, but there are real differences behind them. Earlier this month Mr. Macron told Der Spiegel that he has an “extremely cordial relationship” with Mr. Trump, while Germany’s Foreign Minister Sigmar Gabriel, an eager friend of Russia, routinely portrays America as a warmonger forcing Europe to align itself with Russia and China on Iran and North Korea. These days, Mrs. Merkel hardly puts any energy into comprehending an American president whose popularity rating in her country runs at about 5%. Yet at the U.N. last month, discussing the adequacy of the Iran nuclear pact, Mr. Macron asked rhetorically, “Is this accord enough?” and answered, “No. It is not.” he said: “Let’s be honest, the tensions are on the rise. Look at activities of Hezbollah and Iran’s pressure on Syria.” He spoke of the need “to reassure regional countries and the United States.” And on North Korea the same dissuasion-conscious tone comes out of Paris. Pyongyang is the creator of a “strategic rupture,” French Foreign Minister Jean-Yves Le Drian recently said in a television appearance. “It’s hard to see how the Americans could accept the risk of a ballistic missile pointed towards Alaska or a part of the United States.” No major German political fig- ure brushes close to using that vocabulary. Where the French and Germans seem to have more strategic commonality is in wanting to start production of military equipment for sale to their neighbors. It’s at the disregard of the North Stream 2 natural gas pipeline problem, where they both are participants, and Russia as producer has the strategic goal of dominating European energy supply. At the same time, France is trying to sell fighter-bombers to Belgium against NATO’s recommendation that it purchase Lockheed-Martin F-35s with dual conventional and nuclear bomb-carrying capabilities that the French Rafales can’t accommodate. Norway, the Netherlands and Denmark already bought the F-25s. In response, Florence Parly, the French armed forces minister, has said the Rafales’ purchase “would contribute to the reinforcing of the Defence Europe project and to its strategic autonomy.” That’s a reckless statement. It would threaten the European Union defense effort among many of its members, ridicule Mr. Macron’s contention that the undertaking is “in complement to NATO,” amuse Russia, and end the French president’s hopes that Mr. Trump comes to see him as America’s go-to guy in Europe. Mr. Vinocur was executive editor and vice president of the International Herald Tribune. Family Businesses Deserve a Tax Break By Brian Reardon T he U.S. is unique in its prevalence of small and family-owned businesses. S corporations and other passthroughs employ the majority of workers and are the foundation of thousands of local economies, ensuring that the benefits of economic growth aren’t concentrated in a few financial centers. The tax-reform debate has largely ignored this reality. Instead, it has been mired in claims that family businesses do not pay enough taxes. In reality, the combination of higher marginal rates, the individual alternative minimum tax, and the inability to shift income to lower-taxed countries results in S corporations, not C corporations, paying the highest effective tax rate. There is good reason to support cutting rates for C corporations, but there is an even better argument to apply those rate cuts to passthrough businesses. What about the tax on dividends and capital gains—the so-called corporate double tax? Only a small percentage of C corporations today pay any dividends, and most of that money goes to shareholders with limited or no tax liability, ‘S corporations’ are major job creators but get a bum rap. such as pensions, mutual funds, nonprofits and foreign investors. The Congressional Budget Office estimates that shareholder taxes add just 2 percentage points to the corporate effective tax rate. Pass-through businesses are more than law firms and hedge funds, too. There are 4.3 million active S corporations, and they are in every industry and every corner of the country. S corporations easily outnumber C corporations in manufacturing, construction, wholesale trade, agriculture, mining, transportation and food services. Large pass-through businesses are a major source of employment. A 2011 Ernst & Young report estimates that pass-through businesses with at least 100 workers account for nearly 1 in 6 private-sector jobs. The income from these businesses, even when reinvested in the company, helps to push their owners into the top tax brackets. Cutting the C corporation rate while leaving passthrough rates high would put these employers in a no-win situation: They could remain as they are and pay higher taxes. Or they could convert to C corporation status and pay higher taxes. Unlike most C corporations, these businesses would be subject to the entire double tax. Either option is unsustainable. A business that operates with effective tax rates in the mid-30s cannot long survive competing against companies paying effective rates in the low 20s or high teens. The third alternative would be to sell the family business. That might be good for private-equity investors eager to snap them up, but it would be bad for local communities. The choice whether to keep production domestic or move it offshore is more meaningful when the person making the decision lives in the same community as the workers whose jobs are at stake. The good news for these communities is that the tax reform framework targets family businesses for lower rates similar to the rate cuts for C corporations. For tax reform to help all employers, these lower rates need to stay in the plan. Mr. Reardon is president of the S Corporation Association and a former White House official at the National Economic Council. BOOKSHELF | By Peter Stothard That’s How You Got Caesar The Storm Before the Storm By Mike Duncan (PublicAffairs, 327 pages, $27) D onald Trump has been good for the study of Ancient Rome. Those who see the president as a monster have eagerly likened him to the “bad emperors” (almost any one will do), deploying parallels to Caligula, Nero and Commodus to highlight sins of self-glorification, nepotism, the free use of the lie and playing fast-and-loose with political norms. At the same time, the president’s sympathizers have responded with parallels of their own. Victor Davis Hanson has noted how the “careful and shrewd” elderly emperor Claudius, ruling between the reigns of Caligula and Nero, was hated by the intellectuals of his time, deemed as “sometimes hasty and inconsiderate, occasionally silly and like a crazy man.” “Sound familiar?” asks Mr. Hanson, reminding Mr. Trump’s critics that a president whom they think of as bad may not only be good, but an alternative (or precursor) to someone worse. Comparing individuals is little more than a game. But it is a simplification of a very old American game. To the Founding Fathers, any Roman emperor, “good” or “bad,” was a warning. A better Republican constitution had existed before them in Rome, and even the best of autocrats was a subversion of it. Benjamin Franklin’s minatory message to his fellow Americans that the constitution’s framers had given them a Republic, if they could keep it, is cited on the opening page of Mike Duncan’s “The Storm Before the Storm: The Beginning of the End of the Roman Republic.” The author is described as “one of the foremost history podcasters in the world” and his book is a retelling for present times of Rome’s history from 146 to 78 B.C., when the seeds of constitutional subversion were sown. What parallels does Mr. Duncan see to our current age? Noting that the American republic has not collapsed and been taken over by a dictator (“that hasn’t happened yet,” he writes), the author suggests that “if the United States is anywhere on the Roman timeline, it must be somewhere between the great wars of conquest and the rise of the Caesars.” (Carthage and Corinth were destroyed in 146 B.C.; Julius Caesar’s rise began in around 60 B.C.) “If” and “somewhere” are the key vagaries in Mr. Duncan’s assertion, but he cites “rising economic inequality, dislocation of traditional ways of life, increasing political polarization, the breakdown of unspoken rules of political conduct” as well as “a set of elites so obsessed with their own privileges that they refused to reform the system in time to save it.” Tiberius Gracchus was born into a wealthy elite but cemented a bond with the poor plebes who distrusted domination by elites. Sound familiar? The Roman generals who triumphed in 146 B.C. ended the independence of the Republic’s two greatest rivals in north Africa and Greece. At Carthage the glory went to the old aristocrat and aesthete, Scipio Aemilianus; at Corinth it went to a “new man” (the first senator from his family), Lucius Mummius, an upstart with a cheerful contempt for foreign art. Also at Carthage was Tiberius Gracchus, a young aristocrat who would become a popular radical, demanding a fairer distribution of the spoils of empire and driving what Mr. Duncan sees as the dominant plot line of the period. The reforms he and his brother Gaius attempted to force into effect helped pave the way for the civil wars that make up most of the narrative of “The Storm Before the Storm.” The book’s final year, 78 B.C., is the date of the death of the dictator Sulla, the most successful leader of the old guard. The most prominent character is Gaius Marius, dominant among the “new men.” In Republican Rome there were no political parties of the modern kind, but the successor to Sulla’s senatorial support was Pompey the Great, while the heir to Marius’s was Julius Caesar. The radical martyrs won some of their aims before everyone fell under the one-man rule of Caesar’s adopted son, the first emperor, Augustus. When Mr. Duncan’s tale begins, Rome had what nostalgics would come to see as a constitution of checks and balances: executive consuls served for only one year at a time; a senate of land-owning elders served for life; popular assemblies passed laws and elected peoples’ tribunes. After the death of Sulla, Rome was well on the way to a checked-and-balanced constitution only in name. How did this happen? Was it inevitable? Was the constitution ever really balanced in the first place, given how easily it gave way? How, in the future, might a country produce a constitution strong enough to withstand the bad rulers who, under any system, must appear from time to time? To most Romans, “democracy” simply meant mob rule, and this was the aim of almost no one except as a means to an end. Liberty, however, was a clarion call always worth answering. How was liberty to be preserved when the virtuous who believed in it were not in control? Mr. Duncan does not answer such questions. He is a story– teller, and a story alone never can give an answer. His style is more folksy than forensic. “Fate intervened to alter the course of Roman history,” he declares when describing the windfall legacy that King Attalus of Pergamum left to the Republic, and which Tiberius Gracchus hoped would pay for his redistribution of land. “History has a sense of humor,” he adds, which is humorous if not helpful. The author does disentangle well some complex events others neglect: Marius made his name through some massive victories against what the Romans saw as marauding northern tribes, but how the Teutones and the Cimbri saw their own ambitions is wholly unknown. Mr. Duncan gives them due place in his story. Yet for a professional of the spoken word, he is curiously silent on what is perhaps the greatest parallel between his subjects and President Trump: the use of rhetorical devices to identify the wealthy speaker with the poor, the man born to an elite with those who distrust domination by elites, the educated anti-intellectual with those not much educated at all. It is possible to argue that President Trump brilliantly used the playbook of Marius and Caesar—and that his opponents last year and this have sounded more like the aristocratic old guard. More on language and less on war would have better advanced Mr. Duncan’s argument. Mr. Stothard is the author of “The Senecans: Four Men and Margaret Thatcher.” For personal non-commercial use only. Do not edit or alter. Reproductions not permitted. To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com THE WALL STREET JOURNAL. A16 | Tuesday, October 24, 2017 OPINION W REVIEW & OUTLOOK LETTERS TO THE EDITOR The Wages of Corporate Taxes Death Taxes and the Capital-Gains Step-Up hat do left-of-center economists back to the U.S. for new investment. Much of have against a tax cut that would that investment will go to increase worker proraise wages for American workers? ductivity, which would boost wages. They’re always telling us that What really angers the libAmerica needs a raise, and Kevin Hassett earns the erals is that, in a paper rethat labor isn’t capturing leased this month by the wrath of the left by enough of corporate profits, White House, Mr. Hassett colyet along come Republicans lected years of economic evishowing how tax rate promising to raise wages by to make the case that cuts will help workers. dence encouraging more investment cutting the U.S. rate to 20% in the U.S., and they react with would raise average wages by shock and smears. $4,000 to perhaps more than That’s the only way to describe the remark- $9,000. Outrageous, says Mr. Summers. able attack on economist Kevin Hassett for But Mr. Hassett isn’t alone. Economist Laumarshaling the considerable economic evi- rence Kotlikoff wrote on these pages last week dence that cutting the corporate tax rate to that the GOP framework would “raise real 20% from 35% will benefit workers. Mr. Hassett wages by 4% to 7%, which translates into is an expert in this field, having done his own roughly $3,500 a year for the average working research over the years, and now he is chair- household.” Other economists have found the man of the White House Council of Economic increase closer to $1,000. Still others say it’s Advisers. higher, but the debate is over the magnitude of Mr. Hassett didn’t start this fight. But he felt the raise, not the fact that American workers obliged to respond to the recent political as- will benefit if the U.S. cost of capital falls. sault on tax reform by the Tax Policy Center. In their blogs, economists Casey Mulligan of The TPC, which fancies itself nonpartisan but the University of Chicago and Greg Mankiw of has a record of opposing every Republican tax Harvard dissect Mr. Summers’ academic argureform, assailed the Trump-Congress tax policy ments in rigorous detail, and Mr. Mulligan does framework by inventing details that don’t exist. him the service of citing some of his earlier So on Oct. 5 Mr. Hassett responded in a speech work. In a 1981 paper Mr. Summers referred to at the TPC. “the increase in gross wages which results from It was “scientifically indefensible,” Mr. Has- the increased capital intensity arising from sett said, for the TPC to assert that there would eliminating capital taxation.” be little growth from the proposed reform. The In his response, Mr. Summers has grabbed static analysis, Mr. Hassett added, was “based for the lifeline that a small economy like Ireon many fictions.” And by promoting its attack land has no relevance to America and that before the final details were known, the TPC Britain saw no increase in wages after it cut had behaved “irresponsibly” and undermined the corporate tax rate. But the corporate tax hopes for “bipartisan cooperation.” rate isn’t the only factor in the cost of capital, In speaking so forthrightly, Mr. Hassett un- and the U.K. partially offset the benefit of the leashed the furies. Not only was he wrong, rate cut with other tax changes. And until thundered former Treasury Secretary Larry Brexit, the U.K. economy was still one of the Summers, the plan he defended is “an atrocity,” strongest in Europe. a combination of “ignorant, disingenuous and Other large economies are also cutting their dishonest.” The Summers-ettes in the economic corporate rates, and Emmanuel Macron wants press corps all kicked in unison, and Sen. Chuck to cut the French rate to 25% from 33%. In his Schumer called it “fake math.” paper Mr. Hassett points out that wage growth i i i has been far greater since 2013 in the 10 develThere is a long and legitimate debate about oped countries with the lowest statutory tax who pays corporate taxes. Corporations essen- rate compared with those with the highest. i i i tially collect taxes that are ultimately paid by Which brings us back to why Mr. Summers someone else: a combination of workers in lower wages, customers in higher prices, or and his followers are so upset now. Our guess is that it has something to do with the disasshareholders in lower after-tax returns. For many years the dominant belief was that trous record of their own policies in lifting shareholders bore the biggest burden, but this wages. Mr. Hassett had the audacity to point has changed in recent decades with new research out that real corporate profits rose 11% a year on the impact of capital mobility in a global under President Obama, but “the pass-through economy. While labor is relatively immobile, es- to workers” was only 0.3%. The Summers crowd that preaches about the pecially across national borders, capital can go dangers of inequality presided over an economy whereever it wants with relative ease. U.S. companies have taken advantage of this that increased it. Obamanomics was great for reality by investing more abroad in lower-tax Wall Street, not for the American middle class. countries. The benefits accrue to Irish or Singa- How dare conservatives try to do better—and porean workers whose jobs are created by that with policies that look to increase supply-side capital investment. In his speech at the TPC, Mr. incentives rather than by redistributing inHassett noted that in 1989 the average statutory come, fixing prices and regulating business to corporate tax rate in the OECD was 43%—com- the point that capital investment has been hispared with 39% for the U.S. Today the average torically weak. If we presided over that liberal record, we’d corporate tax rate for the Organization of Economic Cooperation and Development—a proxy be sore, too. But if they look in the mirror with some honesty, they might understand that the for the industrialized world—is 24%. Yet the combined average U.S. federal and failure of their policies in lifting wages is one state rate is still 39%. By making the U.S. rate reason Donald Trump is President. Meanwhile, competitive in a global market, capital will flow why begrudge Americans a raise? A Argentina Votes for Change rgentina may finally be turning away from the populist class-warfare politics of former president Cristina Kirchner. President Mauricio Macri’s Let’s Change coalition clobbered its opponents in Sunday’s midterm elections, taking the five-most populated districts in the country and 40% of the national vote. Argentines put Mr. Macri at the helm two years ago, and on Sunday confirmed their fatigue with kirchnerismo. Mrs. Kirchner’s Citi- I zen’s Unity movement won in only three of 23 provinces. In her own bid for a senate seat, she lost to Let’s Change candidate Esteban Bullrich. On Monday Mr. Macri pledged to cut taxes, curb inflation and reduce poverty. Standing next to Buenos Aires Province Governor María Eugenia Vidal on Sunday, Mr. Bullrich captured the nation’s hopes when he said, “We are the generation that came to change the province forever.” Sunday was a good start. Rule and Law in Catalonia t’s a topsy-turvy world when an elected and Madrid, but he won’t say what he wants to leader enforcing a democratic constitu- negotiate. He has refused even to say whether tion gets accused of staging a coup, but he is declaring independence. then that’s Catalonia this Mr. Rajoy owes it to loyal Rajoy tries to stave off Catalans to call time on this month. Separatists are furious that Spanish Prime Minisfarce. Though he may need to mob rule until voters ter Rajoy might suspend audeploy a heavy police prestake responsibility. tonomous government and ence to quell violent protests, force a new election to rethe focus should be on keeping solve a separatist crisis in the streets safe, schools open and northeastern region. other public services functioning while preparSeparatists, led by regional President Carles ing quickly for regional elections. The courts Puigdemont, claim Catalonia voted for indepen- will weigh sedition prosecutions against indidence from Spain in a referendum this month. vidual Catalan officials in some cases. Two local No such thing happened. A majority of the mi- police officials are under investigation for their nority of Catalans who participated in a public- failures to stop the illegal vote, charges they ity stunt dressed up as an election said they deny. Madrid should be judicious but not shy want to secede. A constitutional court had ruled about enforcing the laws. the exercise illegal before it happened. It was There is nothing undemocratic about this. A an attempt at mob rule. duly elected national leader is trying to afford Now Mr. Rajoy wants to protect the rights all citizens the protection of the national conof the non-secessionist majority. The national stitution against a minority of rabble-rousers. Senate will vote Friday on Mr. Rajoy’s plan to The biggest threat to Spain—and to Europe— invoke a constitutional clause suspending au- would be to set a precedent for allowing fake tonomous local government until new elections votes to tear real countries apart. for a regional parliament can be held, perhaps The virtue of Mr. Rajoy’s approach is that it in six months. In the interim, Madrid would take would put Catalan voters firmly back in control, over responsibility for policing, taxation and through a legal election. Those voters say they most public administration. want to remain within Spain but they keep It’s a draconian step, but Mr. Rajoy has little electing separatist local officials, presumably choice. The regional government abandoned its as a protest and on the assumption Madrid obligation to uphold Spain’s constitution when would hold the country together anyway. A new it authorized the phony vote. Mr. Puigdemont ballot offers Catalans a path out of this crisis claims to want negotiations between Barcelona by taking political responsibility for the union. Regarding Phil Gramm’s “The GOP’s ‘Tax the Rich’ Temptation” (op-ed, Oct. 9): The estate tax (or death tax) only applies to 0.02% of Americans. The $5.49 million exemption reaches only the super rich. The remaining 99.98% of estates in America reap great economic benefits from the estate tax through a mechanism called “step-up basis.” Because every estate is subject to estate tax (though almost none pay it), all assets are revalued at death at their current value rather than at their original cost. Say farmer A paid $200 an acre for farmland many years ago, which gets revalued to $12,000 at his death. The heirs can then sell it immediately without paying the costly capital-gains tax. But if the estate tax ends there would be no reason for a step-up. Ending the estate tax would be a pure gift to the richest 0.02% and put a new burden on 99.98% of families, as well as a drag on GDP. MIKE CARROLL Tuscola, Ill. The repeal of the estate tax and the asset step-up basis provisions embedded with it will ensure that assets passed to the next generation will eventually be taxed if there is no estate tax. Reports indicate that there are currently $3 trillion of unrealized gains held by U.S. taxpayers. Much of this escapes taxation because the step-up basis provisions of the estate tax system are effective on death even if no estate tax is paid. Minor law changes to the capitalgains tax provisions so that assets held at death are taxed as if they had been sold at capital-gains tax rates could generate far more for the Treasury than the current estate tax. This approach would also flat- ten the tax system so that it reaches a much wider population, but at much lower rates of taxation: 15% for long-term capital gains contrasted with the federal 40% estate tax on all assets held at death above the threshold exemption at current rates. Canada and many other countries have declined to enact estate taxes but rely on capital-gains taxation as outlined above. R .D. MCCREERY Cleveland Mr. Gramm compares the percentage of income taxes paid by the top 10% U.S. earners to France and Sweden, concluding that the top 10% U.S. earners pay a greater percentage of taxes than in the other countries. While this may be true on the surface, it’s a fallacious comparison because Mr. Gramm conveniently fails to mention that the percentage of total income earned by the top 10% of U.S. earners is much higher than the top 10% in France or semi-socialist Sweden due to the U.S.’s far more skewed income distribution. STAN KUICK Richland, Wash. Mr. Gramm doesn’t mention the best argument for repealing the estate tax: the waste of brainpower. Brilliant accountants and attorneys are working to prevent their clients’ estates from being taxed, opposed by equally brilliant people in the IRS. We have a bunch of geniuses spending their professional lives canceling each other out fighting over a trivial sum, less than 1% of federal tax revenue. KEITH SMITH Silver Spring, Md. Difficult to Hold Rogue Prosecutors to Account In your editorial “Prosecutorial Impunity” (Sept. 18), you state: “The only real check on prosecutorial abuse are judges willing to enforce standards of honesty.” You are sadly mistaken. Judges cannot enforce standards, they can only enforce laws. Sen. Ted Stevens’s conviction was overturned because the prosecution didn’t abide by the rulings of the U.S. Supreme Court pertaining to the sharing of exculpatory evidence with the defense. This didn’t save his political career, which was destroyed by the initial conviction. When the trial judge in the case tried to obtain some punitive action against the offending prosecutors, he could not, because the rulings of ObamaCare’s Generational Disparate Impact Eased Regarding your editorial “The ObamaCare ‘Sabotage’ Meme” (Oct. 14): Thanks to President Trump you healthy under-35-year-olds may soon be free from the intrusive, socialist strictures of ObamaCare. Since you have little or no need for health insurance, the government has no right to make you pay for it in order for you to have access to medical services and drugs you don’t need or want, or otherwise pay a penalty. You will no longer be subsidizing those elderly who do need such coverage. After all, this is fairness, this is democracy. I trust you will remember this when later in life you need essential, continuing treatment for diabetes, arthritis, congestive heart failure or dementia. TOM MOULSON Corona del Mar, Calif. Desire to Preserve National Culture Isn’t Undemocratic William A. Galston doesn’t seem to understand the current concern among nations faced with a surge in immigration (“Is Populism a Threat to Democracy?,” Politics & Ideas, Oct. 18). Their populist concern isn’t opposition to democracy. Their opposition is to changes in their freedoms that could be imposed by the culture and beliefs of a new, nonnative ruling majority. The standards for individual rights and freedoms vary among peoples from different cultural backgrounds. Even though the newcomers from other political or religious backgrounds are a minority, they can have a disruptive influence, especially if they resist social integration and tolerance for the beliefs of their host nation. HOLLISTER SYKES Cranford, N.J. Letters intended for publication should be addressed to: The Editor, 1211 Avenue of the Americas, New York, NY 10036, or emailed to email@example.com. Please include your city and state. All letters are subject to editing, and unpublished letters can be neither acknowledged nor returned. the Supreme Court do not have the force of law. Therefore the powerabusing prosecutors didn’t break the law. The only remedy against prosecutors disobeying Supreme Court rulings is the overturn of the conviction on appeal. The same thing will be true of any “standards of honesty.” I would respectfully suggest that you change your recommendation as follows: “The only real check on prosecutorial abuse are laws that consider the willful use of false information in any prosecution to be a crime of malfeasance in office and will be punished as such.” May I recommend an additional consideration: Any willful disregard of U.S. Supreme Court rulings pertaining to the criminal justice system will also be considered malfeasance in office and will be punished as such. SAMUEL COLMAN Boca Raton, Fla. Why Should the Kurds or Anyone Else Trust the U.S.? You say abandoning the Kurds would damage America’s credibility (“Assault on the Kurds,” Review & Outlook, Oct. 17). But we’ve often abandoned people we once supported. Just ask the Cuban exiles, the South Vietnamese, the Afghans who defeated the Soviet Union (see “Charlie Wilson’s War”), the Iraqis who worked with us in fighting Saddam Hussein and now the Kurds, whom we should fully support. It has been demonstrated over and over again that our word means very little. Also why would anyone want to negotiate and strike a deal with the U.S. if we sign agreements and then abandon them shortly thereafter (see Paris Accords, Iran deal)? The fact is American credibility is already damaged and is getting to the point of no repair under the shortsighted leadership of President Trump. STEVEN MORRIS Mount Pleasant, S.C. Pepper ... And Salt THE WALL STREET JOURNAL “This year I’m planting only invasive species so they can kill each other.” For personal non-commercial use only. Do not edit or alter. Reproductions not permitted. To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com THE WALL STREET JOURNAL. Tuesday, October 24, 2017 | A17 OPINION By Peter Berkowitz N ews broke last week about possible Russian wrongdoing in the U.S., and it didn’t involve the Trump campaign. The Hill reported that in 2009 the FBI “gathered substantial evidence that Russian nuclear industry officials were engaged in bribery, kickbacks, extortion and money laundering designed to grow Vladimir Putin’s atomic energy business inside the United States.” The former FBI directors tend to investigate Republicans far more zealously than Democrats. The FBI kept that information from Congress and the public, the Hill reported, even as Hillary Clinton’s State Department in 2010 approved a deal that transferred control of more than 20% of America’s uranium supply to a Russian company. The Hill also reported the FBI had documents showing that during this period Russia engineered the transmission of millions of dollars to the Clinton Foundation. The FBI director at the time: Robert Mueller, now special counsel in charge of investigating “Russian interference with the 2016 presidential election and related matters.” The revelations can only heighten anxieties about Mr. Mueller, the FBI and the rule of law. The special counsel’s open-ended mandate covers not only “any links and/or coordination between the Russian government and individuals associated with the campaign of President Donald Trump” but also “any matters that arose or may arise directly from the investigation.” Because Mr. Mueller has interpreted his mandate expansively, his effort may become the most politically disruptive federal investigation of our young century—more than the FBI’s investigation of Mrs. Clinton’s private email server and mishandling of classified information, more than Special Counsel Patrick Fitzgerald’s investigation into the 2003 disclosure of CIA employee Valerie Plame’s identity. All three investigations have one important characteristic in common: James Comey, Mr. Mueller’s successor as FBI director, played a dubious role in each. In December 2003, after Attorney General John Ashcroft recused himself from the Plame matter, then-Deputy Attorney General Comey named Mr. Fitzgerald—a close friend who was godfather to one of Mr. Comey’s children—as special counsel to head the Justice Department’s “investigation into the alleged unauthorized disclosure” of Ms. Plame’s employment. Unknown to the public then, and still not widely known, that potential crime had already been solved. By early fall 2003, the CIA had determined that revealing Ms. Plame’s identity caused no injury to national WIN MCNAMEE/GETTY IMAGES Comey and Mueller Imperil the Rule of Law James Comey and Robert Mueller at the White House, June 21, 2013. security, while the FBI knew it was not a White House official—as many Democrats and liberal pundits ardently believed—but rather Deputy Secretary of State Richard Armitage who was columnist Robert Novak’s source for the original Plame story. Mr. Fitzgerald declined to prosecute Mr. Armitage, but he played hardball with the Bush White House. Over several years, Mr. Fitzgerald inflicted severe damage by feeding the false accusation that the president had lied the nation into the Iraq war. The only criminal charges he prosecuted were generated by his investigation. He won a 2007 conviction of I. Lewis “Scooter” Libby, former chief of staff to Vice President Dick Cheney, for obstruction of justice, false statements and perjury. The conviction When Ballpark Fan Favorites Strike Out By Bob Greene ‘V ery disappointing,” said Larry White, the tone of his voice matching the words. “Ninety percent of the appeal was in the anticipation. What am I going to get? What’s going to be in my hand when I reach in there?” Mr. White, of Rowley, Mass., is one of the nation’s leading authorities on Cracker Jack—specifically, the toys and doodads that for more than a century were included in Cracker Jack boxes. At one time he owned in excess of 120,000 Cracker Jack prizes, and is the author of a guide to their resale value. Cracker Jack prizes aren’t what they used to be, but there is still hope for the World Series. I sought out Mr. White after my inspired plan for attending the World Series had gone sour and I had ordered a 24-pack of Cracker Jack to munch on while I watched on television. No foodstuff has ever been more associated with baseball. When the Cracker Jack arrived, I was mildly disheartened that the 24 packages were not the traditional boxes, but little bags. Still, there was Sailor Jack on the front with his dog, Bingo. And there, in capital letters, was the eternal promise: NEW PRIZE INSIDE! I ripped open the top pack. There were the caramel-coated popcorn pieces and a few peanuts. I searched for the prize. There have been so many delightful (although understandably inexpensive-to-produce) ones down through Cracker Jack history, such as metal locomotives, wooden wedding rings, miniature park benches, tiny joke books, colorful whistles, scaled-down trumpets. What I found was a small square of paper with a scannable image on it. I was instructed to download a cutely named app, aim my phone at the image, and then “experience” a videogame of some sort on my screen. I started to tear open the other bags. Same thing: Download, aim, experience. Which is why I called Mr. White. He informed me that the big change came last year, when Cracker Jack— owned by Frito-Lay since 1997—decided it would be a good idea to get rid of the traditional prizes, and to go all-digital. “This is not progress,” Mr. White said. Frito-Lay’s official position, as explained in a news release, is that “for nearly 125 years, the Cracker Jack brand has been a part of memorable family moments,” and the new “baseball-inspired mobile digital experiences” are consistent with a product that “authentically reminds people of simpler times [and] childhood memories.” Because there’s nothing like going to a beautiful ballpark with your mom and dad, buying some Cracker Jack, and then spending the rest of the afternoon gazing at the Cracker Jack app on the screen of your phone. I was not going to allow this to dissuade me; I had another plan to get in the World Series mood. For the first time in decades, I bought some packs of Topps baseball cards: the 2017 edition. As a boy, I knew that if you didn’t live in a big-league city, you could do one of two things: Mail a stamped, self-addressed postcard to a favorite star in care of the ballpark where he played (Stan Musial at old Busch Stadium, Duke Snider at Ebbets Field) and hope against hope that, sitting around the clubhouse before a game, he might take the time to scrawl his autograph and have the clubhouse man drop the postcard in a mailbox. Sometimes this actually worked. Or you could buy some baseball cards, stare at the heroic photographic images on the front, and spend many happy minutes studying the statistics printed on the back: number of hits, home runs, walks, stolen bases. This was real baseball— the nuts and bolts of it. I opened my set of Topps 2017 cards and noticed something right away. Printed prominently on the back of each card, above the players’ bios and statistics and in larger typeface, were their social media accounts. A tacit invitation to toss the cards to the floor, dispense with the dull statistics, grab a smartphone or go to a keyboard, and punch in the players’ Twitter and Instagram handles. Which, inevitably, I did. I can’t tell you much about Baltimore Orioles infielder Ryan Flaherty’s prospects for next season, but I can vouch for the cup of clam chowder he photographed during dinner one night. PUBLISHED SINCE 1889 BY DOW JONES & COMPANY Rupert Murdoch Executive Chairman, News Corp Robert Thomson Chief Executive Officer, News Corp Gerard Baker Editor in Chief William Lewis Chief Executive Officer and Publisher Matthew J. Murray Deputy Editor in Chief DEPUTY MANAGING EDITORS: Michael W. Miller, Senior Deputy; Thorold Barker, Europe; Paul Beckett, Washington; Andrew Dowell, Asia; Christine Glancey, Operations; Jennifer J. Hicks, Digital; Neal Lipschutz, Standards; Alex Martin, News; Shazna Nessa, Visuals; Ann Podd, Initiatives; Matthew Rose, Enterprise; Stephen Wisnefski, Professional News Paul A. Gigot, Editor of the Editorial Page; Daniel Henninger, Deputy Editor, Editorial Page WALL STREET JOURNAL MANAGEMENT: Suzi Watford, Marketing and Circulation; Joseph B. Vincent, Operations; Larry L. Hoffman, Production EDITORIAL AND CORPORATE HEADQUARTERS: 1211 Avenue of the Americas, New York, N.Y., 10036 Telephone 1-800-DOWJONES DOW JONES MANAGEMENT: Mark Musgrave, Chief People Officer; Edward Roussel, Innovation & Communications; Anna Sedgley, Chief Operating Officer & CFO; Katie Vanneck-Smith, President OPERATING EXECUTIVES: Ramin Beheshti, Product & Technology; Jason P. Conti, General Counsel; Frank Filippo, Print Products & Services; Steve Grycuk, Customer Service; Kristin Heitmann, Transformation; Nancy McNeill, Advertising & Corporate Sales; Jonathan Wright, International DJ Media Group: Almar Latour, Publisher; Kenneth Breen, Commercial Professional Information Business: Christopher Lloyd, Head; Ingrid Verschuren, Deputy Head New York Yankees hurler Sonny Gray’s curveball may or may not be at peak efficiency; I was fixated on the dozens of jars of pickles he photographed while grocery shopping. I would comment further, but I have to go to the mailbox and see if Willie Mays has sent me his autograph. Yes, it was 1957 when I mailed the letter to him at the Polo Grounds, but sometimes items can get delayed at the post office, and what is a World Series about if not the excited conviction that anything can happen? Mr. Greene is completing a new novel, “Yesterday Came Suddenly,” about an America with no internet. was based on small inconsistencies Mr. Fitzgerald discovered in (or created from) more than 20 hours of Mr. Libby’s FBI interrogation and grandjury testimony. Star prosecution witness Judith Miller wrote in her 2015 memoir that Mr. Fitzgerald had withheld crucial information and manipulated her memory, inducing her to testify falsely against Mr. Libby. In contrast, then-FBI Director Comey played softball with the 2015-16 Hillary Clinton investigation. Despite the gravity of the matter— military service members can be court-martialed and discharged for sending classified information on nonsecure systems—Mr. Comey mostly avoided issuing subpoenas and cooperated with the Obama Justice Department in obscuring the investigation’s criminal character. He permitted Mrs. Clinton and her team to destroy evidence and granted generous immunity deals to her advisers. He drafted a statement exonerating Mrs. Clinton months before the FBI interviewed her. And his FBI neither recorded the interview nor compelled her to answer questions under oath. In addition, in a July 2016 press conference, Mr. Comey usurped the authority of Justice Department prosecutors by publicly exonerating Mrs. Clinton. In the process, he confused the pertinent legal issue by asserting she did not intend to violate the law. But intent wasn’t a necessary condition for a crime. Federal law criminalizes “gross negligence” in mishandling classified information. By Mr. Comey’s own account, Mrs. Clinton had been “extremely careless.” With Mr. Trump, by contrast, Mr. 60 YEARS OF ADVENTURE AND DISCOVERY Comey is playing hardball even after leaving government. In May, shortly after President Trump fired him, Mr. Comey—possibly in conflict with FBI policy—leaked notes of an Oval Office meeting with the president. His purpose, Mr. Comey publicly acknowledged, was to “prompt the appointment of a special counsel.” Mr. Mueller is playing hardball too. Unlike the Clinton investigation into narrowly defined allegations, his mandate authorizes pursuit of unspecified crimes. That invites casting a wide net, which Mr. Mueller has done, exploring conduct that long predated the 2016 presidential campaign. He has assembled a huge team that includes, in addition to FBI agents, 16 seasoned prosecutors, at least seven of whom have contributed money to Democratic candidates. He might have extended his investigation to Mr. Trump’s business interests. And he is working with agents from the Internal Revenue Service’s criminal investigation unit, raising the possibility that he has obtained Mr. Trump’s tax returns. Mr. Mueller has adopted scorchedearth tactics in pursuit of Paul Manafort, who ran Trump’s presidential campaign from June to August 2016. The special counsel’s team has reached back more than a decade into Mr. Manafort’s financial affairs and conducted a predawn, guns-drawn raid on his home on a day he was scheduled to testify before Congress as a cooperating witness. One crucial difference distinguishes the probe of Mrs. Clinton from the two Comey-instigated special-counsel investigations of Republican administrations. Mr. Fitzgerald’s multiyear investigation of the Bush administration and Mr. Mueller’s ever-widening scrutiny of the Trump campaign exhibit a tenacious and nearly unconstrained search for persons and crimes to prosecute. In contrast, Mr. Comey’s investigation of Mrs. Clinton reflects a determination not to prosecute systematic and obvious unlawful conduct. Both excesses threaten the rule of law—but the dogged search for persons and crimes to prosecute poses the graver threat to constitutional government. Mr. Berkowitz is a senior fellow at the Hoover Institution, Stanford University. For personal non-commercial use only. Do not edit or alter. Reproductions not permitted. To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com A18 | Tuesday, October 24, 2017 THE WALL STREET JOURNAL. For personal non-commercial use only. Do not edit or alter. Reproductions not permitted. To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com TECHNOLOGY: CISCO FORTIFIES ITS SHIFT AWAY FROM HARDWARE B4 BUSINESS & FINANCE © 2017 Dow Jones & Company. All Rights Reserved. S&P 2564.98 g 0.40% S&P FIN g 0.14% * * * * ** S&P IT g 0.40% Tuesday, October 24, 2017 | B1 THE WALL STREET JOURNAL. DJ TRANS g 0.33% WSJ $ IDX À 0.11% LIBOR 3M 1.367 NIKKEI (Midday) 21733.10 À 0.17% Dividend Fears Take Toll on GE Conglomerate’s shares swoon amid worries slow growth will force management’s hand BY BEN EISEN Shares of General Electric Co. took another pounding on Monday, reflecting investors’ fears that a conglomerate that was once the bluest of blue chips faces challenges daunting enough to force a dividend cut. At least six analysts have either downgraded the stock or cut their year-ahead price tar- gets since Friday, when the Boston-based conglomerate missed analysts’ earnings expectations and slashed its forecasts. GE’s new chief executive, John Flannery, called the quarterly performance “unacceptable” and said he would review the company’s 24-cent quarterly dividend. Mr. Flannery’s remarks forced many investors and analysts to reassess their estimates of the company’s earnings power, sales growth and capacity to return cash to shareholders in the form of dividends and share buybacks. On Monday, GE fell $1.51, or 6.3%, to $22.32, making it the worst performer in the Dow Jones Industrial Average on a day when the index declined by 0.2% to 23273.96. The stock is down 29% so far this year, while the S&P 500 is up 15%. The rout is the latest sign that GE, once the most-valuable company in America, is facing existential challenges revolving around its size, business mix and cost structure. Many analysts and investors said they believe Mr. Flannery is well equipped to handle the task, but few think the company is on the verge of turning around a run of bad news that has shredded $86 billion in market value this year. GE shareholders range from mom-and-pop investors to America’s biggest institutions and money managers, such as BlackRock Inc., Capital Group and Fidelity Investments. Many said they are continuing to hold on to GE shares, reasoning that the firm’s broad array of business lines and its reputation for cultivating top managers will make the investment a winner in the long term. “We’re holding our nose,” said Mike Bailey, director of research at $1 billion wealth manager FBB Capital Partners, which is retaining its shares of GE for the moment. “It’s obviously been tough for a lot of folks. The pain for the moment is the dividend fear.” A dividend cut would reduce income for holders of the company’s 8.66 billion shares outstanding, and would send a downbeat signal at a time when investors have been loading up on stocks for their income potential, sending the Dow indusPlease see GE page B2 Executive pay at the company comes up for review.............. B6 GE isn’t alone in woes over long-term-care insurance... B11 See more at WSJMarkets.com Arconic Picks GE Veteran As Chief BY BOB TITA Aerospace-parts specialist Arconic Inc. named General Electric Co. veteran Chip Blankenship as its chief executive, looking to end a year of management turmoil marked by a bitter fight with an activist investor and the sudden resignation of its former chief. Mr. Blankenship, who headed GE’s appliance business until recently, will become Arconic’s CEO on Jan. 15., the company said Monday. Interim CEO David Hess, who has run the company since April, will stay as a director. The appointment came as Arconic missed quarterly earnings expectations because of rising aluminum prices and costs for supplying parts for new jet engines built by GE and United Technologies Corp. Arconic shares fell more than 10% to $24.35. KELLY LAUB At GE, Chip Blankenship worked in its jet-engine unit and led its appliance business. Florida’s insurance market is being upended by assignment of benefit contracts. A fire at Kelly Laub's home drew multiple contractors trying to get her to sign one. Contractors Vie for Home-Insurance Claims Average annual premiums for Florida homeowners* $1,500 1,000 500 0 2017 ’18 ’19 ’20 ’21 ’22 *For new house costing $150,000; 2018-2022 projected Source: Florida Ofﬁce of Insurance Regulation THE WALL STREET JOURNAL. BY NICOLE FRIEDMAN AND LESLIE SCISM Within hours of a fire at Kelly Laub’s four-bedroom house in New Smyrna Beach, Fla., in June, four contracting companies showed up to offer rebuilding services. Each vendor wanted Ms. Laub to sign a document giving the contractor the rights to her homeowners insurance benefits, she said. In exchange, they offered to repair her home and negotiate with her insurance company on her behalf. These assignment of benefit, or AOB, contracts are upending the insurance market in one of the largest U.S. states. Insurers and regulators said the pacts are responsible for Sears and Whirlpool Split Over Price Fight BY SUZANNE KAPNER AND ANDREW TANGEL Sears Holdings Corp. will no longer sell Whirlpool Corp. appliances after a pricing dispute and changing market dynamics fractured a partnership that stretched back more than a century. The struggling department store chain has stopped carrying products made by the biggest U.S. appliance manufacturer, including Maytag, KitchenAid and Jenn-Air appliances, according to an internal Sears memo. Sears will deplete Whirlpool inventory currently in its stores, the memo said, but hundreds of items have disappeared from the websites of Sears and Kmart, which is also owned by Sears Holdings. Sears has been a top seller of refrigerators, washing machines, dryers and other appliances for decades, but its grip on the market has weakened in recent years. The retailer has closed hundreds of stores across the country, and home-improvement chains like Home Depot Inc. have stolen market share. As recently as 2002, Sears sold four of every 10 major appliances in the U.S., far outpacing its rivals. But its share of the market fell to 22% in the 12 months ended March, according to TraQline, a market-research firm. Sears has scrambled to keep suppliers from abandoning the retailer as its financial position has deteriorated. In June, Chief Executive Edward Lampert took the unusual step of suing two makers of Craftsman tools to ensure they continue to supply the chain. Both lawsuits were resolved and the manufacturers are continuing to ship to Sears. The disagreement with Whirlpool was unrelated to Sears’s credit issues and instead had to do with pricing, Please see SEARS page B6 Whirlpool issues a warning on its earnings.......................... B3 driving up insurance rates for some Florida homeowners and spurring a boom in contractor lawsuits against insurers. Based on current AOB trends, the average statewide annual homeowners insurance premium for a $150,000 new home is projected to rise from $1,232.08 in 2017 to $1,595.07 in 2022, a 29% increase, according to the Florida Office of Insurance Regulation. These increases are higher than nationwide projections from the Insurance Information Institute, a trade group. Rate increases could steepen, executives said, if damage from Hurricane Irma last month causes major losses for the state’s insurers or an increase in AOB-related law- INSIDE TESLA TO FACE CRUCIAL TEST IN CHINA AUTOS, B3 ECONOMY WITHSTANDS HURRICANES FINANCE, B12 suits. Many Irma-related insurance claims are still being processed, so it is too soon to see much litigation related to the storm. Catastrophe-modeling firms expect the insured losses to reach the tens of billions. “The concern is that when you have a large event such as Irma, that when you add AOB on top of it, it’s just going to magnify the impact of the storm,” said Don Matz, president of Tower Hill Insurance in Gainesville, Fla. Tower Hill has raised rates for homeowners in some Southeast Florida counties by up to 15% in the past year partly due to AOB costs, he said. AOBs allow repair companies to report a homeowner’s claim to an insurer and be paid directly, without the money going first to the consumer. Contractors can sue the insurer if there is a disagreement about the cost of the claim. They also can go after homeowners to make up for shortfalls if the insurer doesn’t pay the full amount requested, according to regulators. Other states allow AOB agreements, but they have had a larger impact in Florida because of a state law that requires the insurer to pay attorneys’ fees if more money is awarded after a lawsuit than was initially offered. Insurers say the use of AOB agreements in Florida encourages contractors to overcharge insurers for repair work and perform more Please see ASSIGN page B2 Russia Capitalizes on YouTube QILAI SHEN/BLOOMBERG NEWS Price Push “Arconic needs improvement in performance across the board,” Mr. Hess told analysts Monday. Analysts said Monday’s selloff reflects investors’ anxiety about whether a new CEO will be able to deliver on the ambitious profit targets established by his predecessor, Klaus Kleinfeld, who stepped down in April under pressure from activist investor Elliott Management Corp. Arconic, which separated from aluminum producer Alcoa a year ago, has been beset by operating problems that have forestalled the high profit margins envisioned in the breakup. Mr. Blankenship, 51 years old, will be expected to tighten cost controls and address persistent efficiency and technical problems weighing on production, particularly in businesses acquired in recent years to expand Arconic’s presence in high-value forgings and metals besides aluminum. Mr. Blankenship, whose training is in metallurgy and material-science engineering, joined GE in 1992, and cycled through several jobs with GE’s aircraft-engine business. Mr. Blankenship is “an excellent selection” for CEO, said David Miller, Elliott’s senior portfolio manager, in a statement issued Monday. BY JACK NICAS Google, Facebook Inc. and Twitter Inc. have spent months trying to ferret out covert Russian influence on their sites. Meanwhile, RT, the Russian state news organization that federal intelligence officials call “the Kremlin’s principal international propaganda outlet,” uses Google’s YouTube, Facebook and Twitter as the main distributors of its content. RT’s main English-language YouTube channel has amassed 2.1 billion views and 2.2 million subscribers, roughly the same figures as CNN’s primary YouTube channel. Fox News’s main channel has 600 million views. RT has drawn an additional 3.3 billion views across roughly 20 other channels, making it among YouTube’s most-watched news networks. YouTube, by running ads before RT’s videos, also gives the Russian-government outlet ad revenue. Twitter named RT in a report last month on alleged Russian interference in the U.S. election, and the company noted that RT spent $274,100 Long Reach Russian state news outlet RT is among the most watched news networks on YouTube, helping it spread its content to anyone with an internet connection. YouTube views in billions YouTube subscribers in millions RT 2.1 CNN 2.2 Fox News 0.6 Followers in millions 2.2 4.5 Facebook 2.6 Twitter 28.7 2.4 0.7 38.1 15.5 16.2 Note: Figures are for networks' primary YouTube channels and social-media accounts. Sources: YouTube; Facebook; Twitter THE WALL STREET JOURNAL. to promote tweets to U.S. users. The Twitter dossier, submitted to a congressional committee investigation into Russian influence in the election, cited a federal intelligence report released earlier this year that claimed RT was a primary tool in Russia’s alleged efforts to swing the U.S. election toward President Donald Trump—a charge RT has denied. Yet RT maintains a thriving presence on Twitter with 10 million followers. RT’s popularity on YouTube, Facebook and Twitter shows how the open approach of social-media companies can empower unreliable news sources—from governmentbacked propaganda outlets to conspiracy theorists to extremist groups. While the companies ban harassment, Please see RUSSIA page B4 For personal non-commercial use only. Do not edit or alter. Reproductions not permitted. To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com B2 | Tuesday, October 24, 2017 THE WALL STREET JOURNAL. * **** INDEX TO BUSINESSES BUSINESS & FINANCE These indexes cite notable references to most parent companies and businesspeople in today’s edition. Articles on regional page inserts aren’t cited in these indexes. B Baidu ........................... R4 Bain Capital ................ B4 Bank of America.........B3 BlackRock....................B1 Bounce Imaging..........R8 BroadSoft....................B4 BuzzFeed.....................R9 C Capital Group..............B1 Cisco Systems.....B4,R13 CrowdStrike ................ R4 D Davis Polk & Wardwell .....................................B3 Dell Technologies........B4 Deltic Timber..............B3 E Elliott Management ... B1 Equilar.........................B6 Etsy ........................... B11 Eviation.......................R8 F Facebook ......B1,R1,R5,R9,R13,R14 Fidelity Investments..B1 Fonterra Co-Operative Group.......................B11 Ford Motor..................R7 Frontier ..................... A10 G General Electric .................B1,B6,B11,B12 General Motors ..... R6,R7 GGV Capital...............R11 Goldman Sachs Group B3 Google .. B1,R1,R2,R4,R5,R9,R13 Google Ventures.......R11 H Hartford Financial Services Group ....... B11 Hasbro.........................B3 HCI Group....................B2 Heritage Insurance.....B2 Hikma Pharmaceuticals .....................................B2 Hurdl............................R8 I-J IAC/InterActiveCorp...R5 Intel.............................R9 International Business Machines...................B4 J.P. Morgan Chase......R7 K-L Kaspersky Lab.............B4 KinTrans ...................... R8 Laughly........................R8 Levi Strauss..............R12 M Mattel..................B3,B12 Merck .......................... A2 Microsoft.....................R7 My Jomo ..................... R8 N-O Netflix.........................R5 New York Times....R1,R2 Novartis.......................B2 NXP Semiconductors ...................................R12 P-Q A Hurd, Mark..................R6 James, Sha'Ron..........B2 Johnson, Peggy...........R7 B Bar-Yohay, Omer ........ R8 Bergh, Chip ............... R12 Bitzer, Marc ................ B3 Blankenship, Chip.......B1 Bragg, Dave ................ A4 Bryan, Jeremy...........B12 Bryson, William........B13 D-E DeBlander, David........B2 Diller, Barry.................R5 Emerson, Joelle..........R5 F Flannery, John..B1,B2,B6 G Gonzalez, Zuly............A3 Grooten, Martijn.........B4 J K Kaspersky, Eugene ..... B4 Katzenberg, Jeffrey ............................... R1,R2 Khosrowshahi, Dara ... R1 Kleinfeld, Klaus .......... B1 Kosheleva, Natalia......B2 Krzanich, Brian ........... R9 Kurtz, George..............R4 L Lal, Unmesh................B2 Lampert, Edward........B1 Ledgett, Rick...............B4 Lee, Jenny.................R11 Levchin, Max...............R2 Levin, Douglas A........A3 Li, Robin......................R4 Lore, Marc...................R2 T Tesla............................B3 Teva Pharmaceutical B13 T-Mobile US................B3 Toshiba........................B4 Tower Hill Insurance .. B1 Toys “R” Us ................ B3 Twitter...................B1,R1 U-V Uber Technologies.A1,R1 United Technologies...B1 Valeant Pharma..........B2 Vanguard Group..........B2 Volkswagen...............B13 W-Y Wal-Mart Stores.B13,R2 Whirlpool...............B1,B3 Whole Foods...............R2 WikiLeaks....................B4 Workday......................R8 Y Combinator............R11 YouTube............B1,R1,R2 Matthews, Jessica O. ...................................R10 Matz, Don..............B1,B2 McFaul, Michael..........B4 Meir,, Edward............B13 Mollenkopf, Steven .. R12 Mosley, Dave .............. B4 N-P Nason, Jennifer .......... R7 Noreika, Keith...........B11 Peretti, Jonah.............R9 R Robbins, Chuck....B4,R13 S Sandberg, Sheryl........R1 Saunders, Brent........B13 Schneier, Bruce...........B4 Simons, Thomas.......B12 T-W Tsai, Joseph................R4 Weinstein, Harvey R1,R2 Y-Z Yamada, Shusuke ..... B12 Zhang, Yale.................B3 Drugmakers Aim Branded Generics At Foreign Markets Estimated global market size Branded generic Unbranded generic 2013 2016 2018* $99 billion 69 155 80 191 92 *Projected Source: Sun Pharmaceutical THE WALL STREET JOURNAL. 15,000 Samsung Electronics R13 Seagate Technology....B4 Sears Holdings............B1 Section 32.................R11 SoftBank Group...A2,R11 Sprint .......................... B3 State Street..............B12 Sun Pharmaceutical Industries..................B2 M Branded generics are growing more quickly than their better-known cousin, the plain-package generic. 20,000 S Marcus, David...........R14 Maris, Bill ................. R11 Brand Aid 25,000 Reckitt Benckiser Group ...................................B11 H One of Abbott’s latest drug launches is a fruit-flavored gummy bear containing a laxative for children. But the bears won’t be appearing in any U.S. pharmacies: They were developed exclusively for the emerging markets, rolling out in Russia, Eastern Europe, the Middle East and Africa. The product, known as Duphabears, is part of Abbott’s big shift three years ago toward “branded generics,” essentially off-patent medicine launched with the sort of brand name and marketing more typical of a patented drug. In many cases, the drugs are aimed squarely at fast-growing markets like Eastern Europe, the Mideast and Latin America. The sector isn’t one of the pharmaceutical industry’s highest-profile businesses, though most generic drug giants make branded generics in one form or fashion. The category has long been caught somewhere in between the industry’s two bigger core businesses: patented medicines, which drug firms spend heavily both developing and then marketing; and generics, where they do little of either. Still, branded generics have given Abbott and a handful of other players a relatively cheap fount of growth—allowing them 30,000 R Hess, David.................B1 Huffington, Arianna...R1 BY DENISE ROLAND Assignment of beneﬁt lawsuits Pershing Square Capital Management.............R8 Pfizer.........................B13 Potlatch.......................B3 Pro Clean Restoration & Cleaning....................B2 Qualcomm.................R12 INDEX TO PEOPLE Ackman, William........R8 Altman, Sam.............R11 Ammann, Dan.............R6 Heavy Caseload Oracle..........................R6 TANNEN MAURY/EPA/SHUTTERSTOCK A Abbott Laboratories...B2 Aetna.........................B11 Affirm..........................R2 Alcoa............................B1 Alibaba Group Holding ............................... R4,R9 Allergan.....................B13 Alphabet.........B4,R4,R12 Amazon.com ......A1,B11,B13,R2,R6,R7 Apple .............. B4,R7,R12 Archer Daniels Midland .....................................A2 Arconic ........................ B1 AT&T..........................R11 Automatic Data Processing.................R8 to repackage off-patent drugs and extend their commercial lifespan. Novartis AG’s generic drug arm Sandoz, Valeant Pharmaceuticals Inc. and India’s Sun Pharmaceutical Industries Ltd. are among the big drugmakers that also sell them. They require much less of the expensive research and development that goes into prescription drugs. Abbott and others can tweak things like how the medicine is delivered—for instance, in liquid form or in gel caps—for relatively little. Branded generics, while much cheaper than patented medicines, can command higher prices than their unbranded counterparts in the developing world. In richer countries, pharmacists, insurers and health-plan administrators tend to guide patients toward cheaper generics, regardless of the brand’s supplier or manufacturer. But in poorer countries—where government budgets are strained and health-care infrastructure spotty—spending for medicine tends to come mostly out of a patient’s pocket. That gives them discretion to shell out on brands they trust. Sales are “very much driven by promotion,” said Susan Ringdal, head of corporate strategy at U.K.-based Hikma Pharmaceuticals PLC, which sells branded generics in the Middle East and North Africa. All that can translate into fatter margins. The Hikma division, which sells mostly branded generics, boasts margins of around 18.4%, versus 6.9% for its unbranded oral generics business. Abbott made an operating margin of 18.7% on its branded generics business last year, according to Wall Street Journal calculations. In India, branded generics accounted for about 63% of all drug sales by value in 2015, according to Unmesh Lal, a health-care specialist at consultancy Frost & Sullivan. In China, that figure stands at 55%. In the U.S., they comprise around 11%. —Olga Padorina contributed to this article. A Texas home after Hurricane Harvey. AOB pacts have had a larger impact in Florida than other states. ASSIGN Continued from the prior page work than is needed. Heritage Insurance in Clearwater, Fla., will pay out about $50 million more than it otherwise would have this year due to AOB claims, said Chief Executive Bruce Lucas. Some lawyers, consumer advocates and contractors say AOB agreements can help homeowners who are unfamiliar with the claims process and don’t know how to navigate the system. Many homeowners are frustrated when some insurers can take days or even weeks to send adjusters to inspect damage, said Sha’Ron James, Florida’s insurance consumer advo- GE Continued from the prior page trials and other indexes to records. With the 10-year Treasury note yielding less than 2.4%, GE’s 4.3% dividend yield—the firm’s stated annual dividendpayout rate divided by its current share price—has been particularly attractive. The S&P 500’s dividend yield is just under 2%. Index funds operated by Vanguard Group are among the biggest GE owners. The Falling Flat Analysts’ price targets for General Electric have been tracking the stock price lower. $34 a share 32 Monday Analyst target $25.56 30 28 26 24 Stock price $22.32 22 2016 ’17 Source: FactSet THE WALL STREET JOURNAL. 10,000 5,000 0 2006 ’09 ’12 ’15 ’17* *Through July 31 Source: Florida Department of Financial Services THE WALL STREET JOURNAL. cate. “The lawyers have found an opening,” Ms. James said. “They realized there are a lot of unhappy consumers.” Some contractors say the agreements also ensure builders are paid fairly for their work. “Unless I have an assignment of benefit, I may not get paid, or I won’t get paid the right amount,” said David DeBlander, president of Pro Clean Restoration & Cleaning in Pensacola, Fla. More than 28,000 AOB lawsuits were filed in Florida in 2016, up from 405 in 2006, according to the state’s Department of Financial Services. Through July of this year, more than 20,000 were filed. Insurers and regulators warn that AOB costs could accelerate rate increases in the state. When HCI Group Inc.’s Homeowners Choice unit requested a 3.3% rate increase from Florida this year, regulators told the company the increase wasn’t sufficient to cover its rising AOB costs. An actuarial analysis indicated a jump of 19% was justified. The insurer ended up increasing its rates by 8%. Earlier this year, state insurance regulators unsuccessfully sought legislation to curb AOB lawsuits by limiting the instances in which insurers are required to pay attorneys’ fees. Lawmakers are taking up the issue again. Brooke Fehr, a magazine editor in Sanford, Fla., tried to get repair estimates from about five roofing companies after Irma. All but one wouldn’t look at her roof un- less she signed an AOB contract, she said. After seeing warnings from state regulators and her insurance company, she decided not to sign. “It’s really tough to be put into this position,” Ms. Fehr said. “You’re basically told nobody will do business with you if you don’t [assign benefits], but the state is saying absolutely don’t do business this way.” Ms. Laub, the homeowner in New Smyrna Beach, refused to sign any AOB contracts after her house fire. She had signed one earlier for roof damage and regretted it, because the roofing company turned out to be unreliable. “Once they have that assignment of benefits, the policyholder is kind of out of the loop,” she said. Vanguard Total Stock Market Index Fund, which had $621 billion in assets as of the end of September, by itself owns roughly 205 million shares, or 2.4% of GE’s shares outstanding, according to Morningstar. Mr. Flannery, who had previously committed to maintaining GE’s dividend, said Friday that his views are “continuing to evolve.” GE last cut its dividend in mid-2009 just as the financial crisis was ending. Its stock fell 56% in 2008 and rose 6.6% in 2009, far undershooting the major stock indexes. Recently, the company has become known for its dividend growth, increasing its payout by nearly 9% annually between 2012 and 2016, according to FactSet. Dividends, and the pace at which they are increased and cut, have long operated as a key barometer of corporate health. Academic research has shown that investors tend to bid up shares of companies that initiate payouts and sell those that cut them. “It’s a like a window into the health of the business,” said Eric Ervin, co-founder of Reality Shares, which manages $97 million in its exchange-traded funds. “If they have to cut the dividend, what does that say about the company and management team running the business?” Reality Shares buys stocks based on their potential for dividend growth. Its funds have stayed away from GE because of weak earnings growth and free cash flow, among other factors, Mr. Ervin said—adding, however, that a cut to GE’s dividend could be a big part of reviving the company. “Sometimes a business falls on hard times and they have to cut the dividend and it’s the right thing to do,” Mr. Ervin said. Some say that with new management taking over, the decline in GE’s stock price is a good chance for investors to jump in. “It’s in the new guy’s inter- est to clear the deck and start fresh,” said Jack Ablin, chief investment officer at BMO Wealth Management, which holds only a small amount of GE shares. Others believe the firm has no choice but reduce payouts. “We now don’t see how” GE can maintain its current rate, said C. Stephen Tusa, an equity research analyst at J.P. Morgan Chase & Co. He said the company would struggle to keep the dividend intact without taking on even more debt. —Chris Dieterich and Tom Destefano contributed to this article. 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Interactive Brokers calculates the interest charged on margin loans using the applicable rates for each interest rate tier listed on its website. For additional information on margin loan rates, see ibkr.com/interest.  Credit interest rate as of 9/06/2017. USD credit interest is paid on balances over USD 10,000 in accounts with Net Asset Value exceeding USD 100,000. For more information, see ibkr.com/interest.  According to Barron’s Broker Survey 2017: How They Stack Up, March 20, 2017. For complete information, see ibkr.com/info Margin loan rates and credit interest rates are subject to change without prior notice. BY USING THIS CARD YOU AGREE WITH THE TERMS AND CONDITIONS OF THE CARDHOLDER AGREEMENT AND FEE SCHEDULE, IF ANY. This card is issued by Metropolitan Commercial Bank (Member FDIC) pursuant to a license from Mastercard International. “Metropolitan Commercial Bank” and “Metropolitan” are registered trademarks of Metropolitan Commercial Bank © 2014. All interest and borrowing activity is through Interactive Brokers LLC. Please see your customer agreement with Interactive Brokers LLC for further details. Card program marketed and administered by Interactive Brokers LLC, the Program Manager of the Interactive Brokers Debit Mastercard. 09-IB17 1130CH1125 For personal non-commercial use only. Do not edit or alter. Reproductions not permitted. To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com THE WALL STREET JOURNAL. Tuesday, October 24, 2017 | B3 * * BUSINESS NEWS T-Mobile Puts Off Sprint ‘Rumors’ Signal Strength T-Mobile's net postpaid subscriber additions 1.4 million 3Q 2017 +817,000 1.2 1.0 0.8 0.6 0.4 0.2 0.0 2015 ’16 Source: the company THE WALL STREET JOURNAL. ’17 A Deltic processing plant in Arkansas in 2015. Based on Friday’s closing stock prices, the agreement would provide a roughly 7% premium for Deltic shareholders. Lumber Companies Cut a Deal Potlatch and Deltic plan to combine in all-stock transaction; tax benefits of REIT BY DANA MATTIOLI Lumber company Potlatch Corp. intends to combine with Deltic Timber Corp. in an allstock deal, the companies said Monday. Deltic shareholders are to receive 1.8 common shares of Potlatch for each share of Deltic that they own. Based on Friday’s closing prices, that would amount to a roughly 7% premium for Deltic shareholders. The Wall Street Journal first reported the companies were nearing a deal Sunday. On Friday, Potlatch shares closed at $53, giving the company a market value of $2.2 billion. Deltic closed at $89.12, putting its value at $1.1 billion. Potlatch shareholders are set to own about 65% of the combined company, to be named PotlatchDeltic. It would trade under Potlatch’s existing ticker symbol, PCH. Shares in Deltic rose 4.1% to close at $92.77 on Monday, while Potlatch shares fell less than 1% to $52.50. Potlatch and Deltic are big timberland owners and lumber manufacturers. Together, they own nearly 2 million acres, with 1.1 million in the U.S. South, 600,000 in Idaho and 150,000 in Minnesota. Potlatch, of Spokane, Wash., got its start in 1903. The company is structured as a realestate investment trust, or REIT, an entity that passes its profit to shareholders. As a result of the deal, Deltic will attain REIT status, giving the new company a more-favorable tax structure. Under the REIT conversion, Deltic’s accumulated earnings, estimated at $250 million, would be distributed to the combined company’s shareholders through a dividend, 80% in stock and the rest in cash, by the end of next year. The companies expect about $50 million in synergies from the deal. Deltic, based in El Dorado, Ark., was founded in 1907 and became part of Murphy Oil in the 1950s. In 1996, Murphy Oil spun off the company. In addition to timber, it also has a real-estate arm. Mike Covey, chairman and chief executive of Potlatch, would serve in those roles at the combined company. Deltic CEO John Enlow would run the integration and serve as vice chairman, the people said. Potlatch and Deltic compete with timber giants such as Weyerhaeuser Co., which last year bought competitor Plum Creek Timber Co. for more than $11 billion. Deltic has been under pressure to consider a deal by Southeastern Asset Management Inc., a big holder of its shares. The companies expect the deal to close in the first half of next year. Potlatch has agreed to a $66 million termination fee if the deal falls through under certain circumstances, and Deltic has agreed to a $33 million fee. Bank of America and Perkins Coie LLP advised Potlatch on the deal. Goldman Sachs and Davis Polk & Wardwell LLP advised Deltic on the deal. Potlatch on Monday narrowly missed earnings estimates for its third quarter, posting adjusted earnings per share of 89 cents on income of $36.7 million, less than the 90 cents on $36.9 million analysts expected. But the company said it plans to raise its annual dividend to $1.60 from $1.50 a share beginning in the fourth quarter. —Cara Lombardo contributed to this article. Whirlpool Warning Puts Stock In a Spin Hasbro Warns About Sales Impact of Toys ‘R’ Us Bankruptcy BY ANDREW TANGEL CHARLES SYKES/INVISION FOR HASBRO/ASSOCIATED PRESS T-Mobile US Inc. on Monday said it added 817,000 postpaid customers in the third quarter but hardly commented on its merger discussions with rival Sprint Corp., keeping investors on hold about the company’s future. T-Mobile ended the period with about 37 million postpaid subscribers—its most valuable—with its customer total reaching 70.7 million. Shares in the carrier rose 1.7% to $61.47 on Monday. The stock is up 32% over the past 12 months. In an unusual move, the company’s quarterly results were accompanied by a video of Chief Executive John Legere discussing the numbers, rather than the freewheeling conferences its top executives typically host on the web each quarter. Mr. Legere avoided mentioning merger discussions with Sprint, the No. 4 U.S. carrier by subscribers behind No. 3 T-Mobile. “With all the rumors and speculation out there, we decided that we wanted to make sure you all saw and focused on our Q3 results and not just on the rumors and speculation that seem to fill the news every day,” he said in the video. The question of whether the U.S. wireless industry is due for another round of consolidation has vexed investors for months. Discussions between Sprint and T-Mobile have gone the furthest but remain short of an agreement, according to people close to the matter. Sprint, which has scheduled its earnings release for Wednesday, also plans to forgo a conference call and instead share a recorded message. Overall, T-Mobile posted a $537 million quarterly profit, or 63 cents a share, up from $353 million, or 42 cents a share, in last year’s third period. Revenue rose 8% to $10 billion. It has been a relatively quiet season in the wireless industry, with most customers choosing to hold on to their old handsets instead of upgrading to a new device. Analysts expect choppier results after Apple Inc. starts selling its high-end iPhone X next month. T-Mobile said it expects to see most of the impact from the new iPhones in the fourth quarter and potentially in the first quarter of next year, “depending on inventory.” “T-Mobile typically does well when there is a jump ball or an event that pushes customers to act such as the launch of a new iconic phone or aggressive promotional activity,” said Colby Synesael, an analyst at investment bank Cowen Co. With a lack of such catalysts, plus a destructive hurricane season, the company’s results were slightly below Wall Street’s expectations, he said. Monthly churn, a measure of customers dropping service, rose slightly for T-Mobile in the third quarter from the second. The uptick was especially pronounced in T-Mobile’s MetroPCS brand, with churn in prepaid plans rising to 4.3% from 3.9% in the second quarter. T-Mobile contended with low prices in the prepaid market from Sprint’s Boost Mobile brand, while its main brand competed against heavily promoted unlimited plans from Verizon. —Cara Lombardo contributed to this article. MOMENT EDITORIAL/GETTY IMAGES BY DREW FITZGERALD Hasbro Inc. warned that the Toys “R” Us Inc. bankruptcy will soften sales during the key holiday period, with the maker of Nerf guns and Disney Princess dolls unsure how frequently it will ship items to the retailer. Hasbro’s shares fell 8.6%, after the Pawtucket, R.I., company on Monday forecast fourth-quarter sales growth of between 4% and 7%, below expectations for growth of around 11%. Shares of Mattel Inc. also dropped, finishing the day down 3.2%. The toy maker is set to report its third-quarter results on Thursday. Hasbro Chief Executive Brian Goldner tried to reassure investors that the impact of the Toys “R” Us bankruptcy could be softened by the fact that the industry’s fortunes aren’t tied to one retailer and that toys are broadly available. In addition to growth in toy sales at drugstores and dollar stores, Mr. Goldner said sales are growing much more rapidly online than in stores. Still, the Toys “R” Us bankruptcy filing—which occurred in September after some suppliers scaled back shipments—does inject considerable uncertainty during a period when around 50% of toy sales are made. Toys “R” Us has secured $3.1 billion in bankruptcy financing and plans to continue operating most of its 1,600 stores through the holidays. Mattel and Hasbro were among the toy retailer’s biggest unsecured creditors, with Mattel owed more than $135 million and Hasbro $59 million when Toys “R” Us filed for protection, according to court papers. For the third quarter, Hasbro said its earnings rose 3% to $265.6 million, or $2.09 a share. Sales gained 7% to nearly $1.8 billion. —Paul Ziobro Tesla Likely to Face Price Test in China BY TREFOR MOSS SHANGHAI—The Tesla Inc. brand is becoming popular in China. But the electric-car maker’s plan to establish a factory here raises the question: Is it popular enough? Tesla has carved out a lucrative niche among wealthy buyers seeking brand cachet, but to reach the huge mainstream market it “will need to lower its costs as soon as possible,” said Yale Zhang, managing director of Automotive Foresight, a Shanghai-based consultancy. Emboldened by strong sales of imported high-end cars and by an anticipated boom in electric vehicles in China, Tesla has struck a deal to build its first overseas plant in the Shanghai free-trade zone, The Wall Street Journal reported on Sunday. Tesla didn’t comment beyond referring to a June statement in which it said it was in talks with Shanghai authorities about a factory. Chief Executive Elon Musk is praised in the Chinese media as a tech visionary. That has helped the upstart become the only foreign maker to make significant inroads into China’s electric-vehicle market—despite being the only one without a local base. Tesla sold roughly 12,000 imported cars in the first nine months of 2017, up from an estimated 11,000 in 2016 and good for 4% of China’s plug-in market, according to EV Sales, a website tracking the sector. Tesla hasn’t disclosed unit sales figures, but says China accounted for $1.1 billion of its $7 billion revenue last year, second only to the U.S. A 25% tariff on imported cars means Tesla’s Chinese customers pay far more than their American counterparts: The Model S starts at $106,000 on Chinese auto website Yiche.com, compared Channeling China China is Tesla's second-biggest market, after the U.S. China $1.1B U.S. $4.2B 2016 revenue $7.0B Rest of World $1.7B Source: the company THE WALL STREET JOURNAL. with the recommended U.S. retail price of $74,500. Zhou Lixun said she bought a $166,000 Model X for her business partner, who owns an auto-parts company in Beijing, earlier this year. “There are other EV brands, but nothing else at the top end,” said Ms. Zhou. “We think Tesla is hightech, and it makes us feel young and fashionable.” Now Tesla is seeking to appeal to a much broader customer base. Its China strategy is to become the first foreign auto maker to build a wholly owned plant, according to people familiar with the company’s plans. Not having to form a joint venture with a local company will allow it to safeguard its technology and retain 100% of profits. The drawback is that cars built in a free-trade zone will almost certainly be subject to the 25% tariff, auto analysts say. The Shanghai government didn’t respond to a request for comment. That could be a deal breaker for potential buyers of the mass-market Model 3, which starts at $35,000 in the U.S. “The people who would buy that car care about their money,” Mr. Zhang said. —Kersten Zhang in Beijing contributed to this article. Whirlpool Corp. shares fell sharply in after-hours trading Monday after the appliance maker issued a profit warning, blaming rising costs. Chief Executive Marc Bitzer cited rising raw-material costs and slow progress on its European integration as hurting the company’s profit margins. Whirlpool said Monday it expected to earn $11.10 to $11.40 a share for 2017, down from an earlier estimate for full-year earnings of $12.40 to $12.90 a share. The Michigan-based manufacturer said its outlook includes up to $175 million in costs related to restructuring, up from a second-quarter estimate of $165 million. $175M Outlook for restructuring costs, up from a $165 million estimate Whirlpool shares fell almost 10% at one point after hours but later were off 6.6% at $170.50, after closing at $182.50 in 4 p.m. New York Stock Exchange composite trading. Overall for the third quarter, Whirlpool reported profit of $276 million, or $3.72 a share, up from $238 million, or $3.10 a share, in the same period a year ago. Net revenue rose 3% to $5.4 billion. “We are pleased with our revenue growth and free cash flow improvement but are not satisfied with our operating margins,” Mr. Bitzer said in a statement. Mr. Bitzer added that the company would continue with its recently announced price increases on home appliances and a plan to reduce fixed costs. Whirlpool’s latest quarterly results come as the company is engaged in a trade battle over imported washing machines with two South Korean rivals. The company is asking U.S. trade regulators to recommend tariffs and quotas to combat what it has said is a flood of imports that hurt the domestic industry. For personal non-commercial use only. Do not edit or alter. Reproductions not permitted. To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com B4 | Tuesday, October 24, 2017 * **** THE WALL STREET JOURNAL. TECHNOLOGY WSJ.com/Tech BY IMANI MOISE Seagate Technology PLC reported higher-than-expected earnings in its latest quarter as executives touted benefits of a prospective technologysupply deal with Toshiba Corp.’s memory-chip business and outlined plans for additional cost cuts. Shares of Seagate rose 13% to $39.35 Monday as the datastorage provider also guided revenue and earnings ahead of estimates in the current quarter. Late last month, Seagate, 13% Seagate stock rose by this much in Monday’s trading. along with a number of other companies led by Bain Capital LLC, signed a deal with the embattled Japanese industrial conglomerate for its booming memory-chip business in a deal valued at $18 billion. Seagate is expected to provide $1.25 billion in financing to support the acquisition, which Toshiba has said it wants to close by March 31. The company said the Toshiba agreement would solidify its so-called NAND flashmemory business and deepen its portfolio. Analysts from RBC Capital Markets said in a research note the company’s diverse product offering helps it weather the volatility of the disk-drive industry. “This agreement has the opportunity to increase the potential for meaningful future revenue growth from Seagate’s NAND storage portfolio while providing significant value for our storage customers,” Chief Executive Dave Mosley said on a call with analysts. Companies involved in the deal for Toshiba’s memorychip business, including Apple Inc. and Dell Technologies Inc., stand to gain easier access to supply in a competitive market. Surging demand for memory chips has led to shortages and higher prices of these components. Seagate, one of the biggest makers of disk drives, has resorted to job and cost cuts in recent years to cope with weakening demand for personal computers that use its storage product. Sales continued to fall during the first quarter, dropping 5.9%, but the company said demand for its storage products is beginning to turn around, fueled by an increasing appetite for data. In its current quarter, Seagate said it expects revenue to rise between 3% and 5% from the first quarter and to lift margins by cutting operating costs between 2% and 3%. RBC Capital Markets said the company’s guidance implies earnings of $1.08 a share on $2.74 billion in revenue at the midpoint, ahead of estimates of $1.03 a share on $2.63 billion. In all for the quarter ended Sept. 29, the California-based company reported a profit of $181 million, or 62 cents a share, up from $167 million, or 55 cents a share, a year earlier. On an adjusted per-share basis, earnings fell to 96 cents from 99 cents. Revenue fell 5.9% to $2.63 billion. Analysts polled by Thomson Reuters had forecast earnings of 86 cents a share on $2.54 billion in revenue. SAVOSTYANOV SERGEI/TASS/ZUMA PRESS Seagate Exceeds Expectations, Touts Toshiba Deal The headquarters of Moscow-based Kaspersky Lab, whose antivirus software has come under suspicion among U.S. officials. Countermove in Code War Russia’s Kaspersky vows transparency after U.S. complaints of cyberespionage BY DAVID GAUTHIER-VILLARS AND DAN STRUMPF Kaspersky Lab ZAO, the Moscow-based cybersecurity company, pledged to turn over the source code for its antivirus software for independent review—a bid to protect its reputation after U.S. officials said Russian operatives have used the popular program to spy on Americans. The company said Monday the review is part of a “transparency initiative” it hopes will improve the trustworthiness of its products. It said it would hand over the source code for its software in next year’s first quarter but didn’t specify who would undertake the review or how widely the code would be disseminated. Cybersecurity experts wel- comed the announcement—a rare, albeit not unprecedented, move—but said it could have limited impact. Martijn Grooten, editor of the Virus Bulletin, a U.K.-based information portal on information security, said he hoped the move would help “take away some of the distrust between Kaspersky and Western governments, as I don’t think there’s a good reason for this distrust.” But the move could be viewed as insufficient because the company could issue, or be forced to issue, “a rogue update at any moment,” he added. Kaspersky has been caught in a public-relations crisis amid reports that the company’s flagship software, designed to protect computers against malware, was used by the Russian government as an espionage tool. The Wall Street Journal reported earlier this month that Kaspersky’s antivirus software was used by Russian operatives to help them secretly scan computers around the world for U.S. gov- ernment documents and topsecret information. Kaspersky has denied any complicity with Russian officials—or any government—in efforts to spy on other countries. The company’s chief executive, Eugene Kaspersky, has said his firm is being made a pawn in a wider geopolitical war of words between the West and Moscow. Amid the backlash over the U.S. allegations against Kaspersky, a number of clients have said they would stop using the company’s products. That includes the U.S. Department of Homeland Security. Others, though, have said they weren’t shaken by the accusations. In Germany, one of Kaspersky’s largest markets, the BSI, a federal cyber agency, said it had found no reason to warn against the use of the company’s products. “Because of what it does, an antivirus program needs to have very intimate access to your computer,” said Bruce Schneier, chief technology of- ficer of International Business Machines Corp.’s cybersecurity unit IBM Resilient. “So subverting an antivirus program is a very effective way to attack someone.” Rick Ledgett, deputy director of the National Security Agency when some of the alleged data theft occurred, said Kaspersky’s proposal doesn’t address the problem. The problem isn’t “the code itself, it’s the use of the code,” he said in a blog post Monday. “The experts will find that the code does exactly what it’s supposed to do, and [Mr. Kaspersky] knows that.” Jeanne Shaheen (D., N.H.), a member of the Senate Foreign Relations and Armed Services committees, said Kaspersky’s proposed independent review failed to address concerns with the company’s products— “most significantly, that Russian law enables the Kremlin to monitor data transmissions, including Kaspersky’s.” —Shane Harris contributed to this article. Cisco Systems Inc. said Monday it will pay $1.73 billion to acquire BroadSoft Inc., a maker of cloud-based communications software, as the networking giant steers further away from its legacy hardware and into sales of software and services. The deal would help Cisco increase its recurring revenue from subscription-based services, which Chief Executive Chuck Robbins has said is core to its growth strategy. Increasingly, software and services are driving value in providing corporate technology, while hardware, such as Cisco’s routers and switches, face pricing pressures due to commoditization. “BroadSoft has been a visionary in the idea that all collaboration technologies are going to move to the cloud,” said Rowan Trollope, senior vice president of Cisco’s Applications Business Group. On Monday, BroadSoft climbed 1.7% to $54.80. Cisco is paying $55 in cash for each of BroadSoft’s shares, which as of Friday’s close had gained 31% on the year. The deal, which had been rumored since late August, is expected to close early next year. BroadSoft, based in Gaithersburg, Md., makes a software product that combines video, voice, messaging, screen sharing, file sharing and conferencing in an application accessed online. It also makes communications software for call centers and team collaboration that workers can access online. BroadSoft has been growing at about 20% annually over the past few years, but its subscription business has been growing at about twice that rate, BroadSoft CEO Michael Tessler said in an interview. Al- RUSSIA Continued from page B1 hate speech, the promotion of violence and other unsavory posts, they tend to allow unreliable, misleading and highly partisan content, as well as other content that falls in a gray area, in an effort to avoid accusations of censorship and to protect users’ free speech. One former YouTube employee said YouTube managers are struggling with the site’s role in spreading RT’s content. “There is definitely a lot of hand-wringing, but there’s also a lot of, ‘We have to protect this speech,’ ” the employee said. YouTube’s policy chief, Juniper Downs, said at a conference this month that restricting content on YouTube has costs, including the infringement of free speech and the exchange of ideas. “I don’t think we should tweak the way the entire system works in order to solve a very specific problem without thinking through the collateral damage,” she said. YouTube, part of Alphabet Inc., said, “We have a wide variety of news channels available on YouTube that represent an array of viewpoints from across the political spectrum.” The company added that it removes videos that violate its policies. Facebook and Twitter declined to comment. RT, which called the intelligence report “a complete fail,” said in an email: “RT’s goal is, most half of BroadSoft’s revenue comes from recurring software and subscriptions. Although Cisco’s revenue declined 4% in the most recent quarter compared with a year earlier, revenue related to recurring software and subscriptions rose by half, good for 31% of the company’s total take. Cisco also is creating cloudbased subscription services to help customers manage its own networking hardware. “Our objective is to continue moving to cloud-managed solutions across our entire enterprise networking portfolio,” Mr. Robbins told securities analysts in June. and has always been, to inform. The hysteria surrounding such mundane activities as RT’s social-media advertising of its content—something done by practically all news organizations—speaks to the establishment’s fear of losing the monopoly on information, and betrays a concerted effort to push RT out of the US market.” Michael McFaul, a former U.S. ambassador to Russia who is now a political-science professor at Stanford University, said RT is “an instrument of Kremlin foreign policy and should be thought of that way.” SHARIFULIN VALERY/TASS/ZUMA PRESS BY RACHAEL KING Vladimir Putin said if the U.S. acts against Russian media, a response will follow against U.S. outlets. When Mr. McFaul toured RT’s Moscow newsroom as ambassador a few years ago, RT officials’ “proudest moment was where they are with YouTube,” he said. Until a few weeks ago, YouTube included RT in its package of premium channels for advertisers, charging brands extra to advertise before RT videos. The company said its algorithm recently removed RT from the program, but it declined to say why. YouTube says such premium channels are among the top 5% of its most popular content. RT said in an email that the move was politically ROSLAN RAHMAN/AFP/GETTY IMAGES Cisco Fortifies Shift From Hardware Cisco has agreed to buy software firm BroadSoft for $1.73 billion. motivated and called suggestions its viewership is declining “patently absurd.” YouTube still runs ads before some RT videos, with YouTube and RT sharing the ad revenue. Researchers say sites like YouTube and Facebook have boosted RT by helping old clips live on and recommending RT videos to viewers who have shown interest in news sources outside the mainstream. As a result, YouTube, Facebook and Twitter are now the battlegrounds for RT’s fight against Western influence. RT joined YouTube in March 2007 and uploads roughly 13 videos a day alone to its main Englishlanguage channel, according to Tubular Labs, which tracks YouTube data. Google News also includes RT stories, helping legitimize the site with readers. The Russian government funds RT, which broadcasts in six languages, to spread its perspective to audiences outside Russia. In 2009, it changed its name from Russia Today and began boosting its presence in the U.S. with a Washington newsroom and cable and satellite carriage deals. Unlike other governmentfunded news outlets, such as the U.K.’s BBC or the U.S.’s Radio Free Europe, researchers say RT is more overtly political, with a goal of undermining Western institutions and democracies. In recent months, RT has faced more scrutiny in the U.S. In September, RT said the Justice Department asked a company affiliated with RT to register as a foreign agent. A bipartisan bill in Congress would broaden the foreignagent-registration law to include RT. RT said the legislation is part of an attempt to eventually ban it from the U.S. Russian President Vladimir Putin said last week that if the U.S. takes any steps to restrict Russian media, “a mirrored response will immediately follow” against U.S. news outlets in Russia. The vast majority of RT’s YouTube videos are political, though some of its most popular are of natural disasters. Researchers and former RT employees say the outlet highlights conflict in the West, questions prevailing narratives in Western media and promotes conspiracy theories. On Nov. 4, four days before the election, RT posted videos on YouTube of an interview with WikiLeaks founder Julian Assange. Two of the videos— titled in part “ ‘Trump would not be permitted to win’ - Assange” and “ ‘Clinton & ISIS funded by the same money’ Assange”—together have more than 3.4 million views. Several times after the U.S. alleged the Russian-backed Syrian government used chemical weapons in the country’s civil war, RT ran segments questioning whether the regime was behind the attacks—or whether they even happened. RT says on its website, “We are set to show you how any story can be another story altogether.” Google and Facebook have included some disclaimers around debunked stories but they haven’t labeled posts from state media. For personal non-commercial use only. Do not edit or alter. Reproductions not permitted. To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com THE WALL STREET JOURNAL. Tuesday, October 24, 2017 | B5 B6 | Tuesday, October 24, 2017 THE WALL STREET JOURNAL. * **** BUSINESS NEWS BY EZEQUIEL MINAYA that makes that decision in the end,” said Dan Marcec, director of content for research firm Equilar Inc. Ultimately, however, “Flannery is going to make some changes to company strategy and as a result it wouldn’t be surprising to see performance measures change to align with that strategy,” he added. Companies have increasingly tied performance-based pay to long-term goals. Mr. Flannery could try to modify the metrics used to determine compensation to achieve a more immediate impact, said Steven Hall Sr., founding partner and managing director of compensation consultancy Steven Hall & Partners. The conglomerate already modified its bonus program for top executives in March to tie pay more closely to specific performance goals, including the level of cost reductions over the next year. GE at the time said the changes came out of discussions with activist investor Trian Fund Management, which had called for more stringent targets. The company also cut pay for Mr. Flannery’s predecessor, Executive compensation is one of the many things John Flannery plans to shake up as he tightens the belt at General Electric Co. But his options may be limited. The new chief executive said Friday he was working with the board CFO “on comprehenJOURNAL sive changes” to the company’s compensation plans to “better align the team with investors.” The company declined to elaborate on those plans. Executive compensation at GE— like many other large public companies—generally comprises salary, cash bonus and long-term performance awards, such as options and restricted stock. Pension benefits and other perks, such as life insurance and aircraft use, also are included. Setting compensation policy is the responsibility of independent board members. But Mr. Flannery, who is also board chairman, will have a strong hand. “It’s absolutely the board CHRISTOPHER GOODNEY/BLOOMBERG NEWS GE Executive Pay up for Review SEARS New Highs and Lows | WSJ.com/newhighs Monday, October 23, 2017 Stock 52-Wk % Sym Hi/Lo Chg Stock 214.72 284574 189.72 60.12 15.95 9.25 26.06 265.98 29.93 10.66 29.06 84.59 40.11 17.10 39.20 35.99 43.39 132.34 194.29 43.26 25.49 79.22 16.19 178.81 91.72 37.50 BectonDickinson BDX A NYSE highs - 203 BerkHathwy BerkHathwy B AbbottLabs ABT Accenture ACN AdamsDivEquityFd ADX AffiliatedMgrs AMG Albemarle ALB AllianzGIEqtyConv NIE AllyFinancial ALLY Ameren AEE Ameriprise AMP Ametek AME Aon AON ArcelorMittal MT ArcosDorados ARCO ArtisanPtrsAsset APAM BBVABancoFr BFR BWX Tech BWXT Ball BLL BancoMacro BMA BankofAmWtA BAC.WS.A BankofAmerica BAC Bard CR BCR BeazerHomes BZH BectonDickinsonPfA BDXA 56.69 140.17 15.56 198.40 141.40 21.03 24.94 61.76 154.75 68.84 152.47 30.32 10.80 36.15 22.73 60.12 43.12 136.10 15.34 27.43 330.31 19.98 57.79 -0.4 -0.1 -0.2 -0.9 -1.6 -0.4 -1.1 0.3 ... -0.1 0.3 0.8 1.0 -0.3 4.0 0.4 1.4 8.4 0.3 ... -0.6 0.2 -0.7 BerryGlobal BlkRkCapEnIncoFd BlckRkEnDivTr BlkRkSci&Tech Boeing BostonScientific BoulderGrowth BoydGaming BroadridgeFinl CAI Intl CBIZ CalAtlantic Canon Catalent Caterpillar Cigna Colfax ColonyNorthPfdJ Comerica CreditSuisse Cummins Danaher DaqoNewEnergy BRK.A BRK.B BERY CII BDJ BST BA BSX BIF BYD BR CAI CBZ CAA CAJ CTLT CAT CI CFX CLNSpJ CMA CS CMI DHR DQ -0.4 0.3 0.2 -0.6 -0.6 1.1 -0.5 -0.9 -0.3 0.2 -0.8 ... 4.0 0.9 0.4 0.3 -0.5 0.2 1.0 -0.1 0.2 -0.7 -0.4 0.1 -0.4 -2.4 Jeffrey Immelt, by 35% to $21.3 million in 2016. Compensation for exiting finance chief Jeffrey Bornstein fell 25% to $9.9 million. The conglomerate’s compensation plan for executives paid out only 80% of its target amounts. Stock The following explanations apply to the New York Stock Exchange, NYSE Arca, NYSE MKT and Nasdaq Stock Market stocks that hit a new 52-week intraday high or low in the latest session. % CHG-Daily percentage change from the previous trading session. 52-Wk % Sym Hi/Lo Chg Stock John Flannery, General Electric’s new chief executive, is working with the board on ‘comprehensive changes’ to compensation plans. 52-Wk % Sym Hi/Lo Chg 83.17 0.6 DellTechnologies DVMT 96.65 4.1 DelticTimber DEL 13.22 0.1 Dividend&IncomeFd DNI 84.86 0.4 DollarGeneral DG 95.99 0.6 Dover DOV 72.18 0.5 DowDuPont DWDP 52.13 -1.2 EatonVance EV 66.44 0.5 EmersonElectric EMR 85.99 -0.5 Entergy ETR 186.98 0.3 FactSet FDS 96.00 0.5 FidelityNtlInfo FIS 19.23 -0.9 FirstData FDC 15.44 -0.2 FT EnhEquity FFA 68.11 0.8 FortBrandsHome FBHS 22.86 -0.6 GabelliDividend GDV 36.56 -0.7 GenAmInv GAM 32.15 -0.7 Gildan GIL ... GlMedREIT PfdA GMREpA 25.24 27.76 ... GoldmanSachsPfN GSpN 128.30 -0.6 Graco GGG 14.39 -0.1 GraphicPkg GPK 52.05 0.9 Greenbrier GBX 27.21 5.5 GpoSupervielle SUPV 22.31 0.5 HP HPQ 25.28 -2.0 HannonArmstrong HASI 137.64 0.1 Harris HRS ADVERTISEMENT The Mart To advertise: 800-366-3975 or WSJ.com/classiﬁeds AUCTION 52-Wk % Sym Hi/Lo Chg Stock HawaiianElec HE Heico A HEI.A Hexcel HXL HoeghLNG PfdA HMLPpA Honeywell HON DR Horton DHI Invesco IVZ IRSA IRS ITT ITT IDEX IEX IllinoisToolWks ITW Ingersoll-Rand IR Insperity NSP IntlFlavors IFF iStarPfdD STARpD iStarPfdI STARpI JPMorganWt JPM.WS JPMorganChase JPM JohnBeanTech JBT J&J JNJ JupaiHoldings JP KKRIncomeOppsRt KIOrw Kadant KAI KoninklijkePhil PHG KornFerry KFY Kraton KRA KronosWorldwide KRO Kyocera KYO LCI Inds LCII LambWeston LW LennoxIntl LII LibertyAllStar USA LincolnNational LNC MVC Capital MVC MagnaIntl MGA Manpower MAN MarriottVacations VAC Masco MAS MaxarTech MAXR Maximus MMS MeritageHomes MTH MetLife MET MettlerToledo MTD MicroFocus MFGP ModineMfg MOD MohawkIndustries MHK Moody's MCO MorganStanley MS NACCO Inds NC NL Industries NL NewRelic NEWR NextEraEnergyUn NEEpQ NextEraEnergyUn NEEpR NextEraEnergy NEE NortelInversora NTL NuvDow30Dyn DIAX OaktreeSpecNts24 OSLE OwensCorning OC PPG Ind PPG PVH PVH PampaEnergia PAM ParkerHannifin PH PennyMacPfdB PMTpB Pentair PNR Penumbra PEN Petrobras PZE Pfizer PFE PolyOne POL Praxair PX ProPetro PUMP 35.78 77.70 63.93 26.02 146.49 43.47 37.51 27.86 47.50 125.88 157.28 95.33 96.30 151.04 25.56 25.46 58.70 99.99 105.50 144.35 29.00 0.67 102.15 42.35 41.22 42.53 26.49 66.20 123.85 51.08 196.50 6.21 76.32 10.69 55.76 125.08 129.16 40.76 63.33 66.50 48.90 53.65 672.64 33.20 21.50 265.98 146.22 51.10 44.29 13.80 52.74 69.61 57.19 154.70 41.89 17.63 25.18 81.06 117.91 133.24 70.27 184.76 25.44 71.44 97.65 13.60 36.78 41.98 143.96 15.71 0.8 -0.3 -1.3 0.2 0.4 0.5 -0.2 8.4 -0.1 -0.8 0.3 0.3 -0.2 -0.1 0.1 0.8 -0.3 -0.2 0.1 0.9 -8.9 3.3 0.1 0.9 -0.9 0.6 0.3 1.9 -0.6 0.5 7.3 -0.5 0.1 3.7 -0.7 -1.3 -0.2 ... 0.9 -0.2 0.9 0.3 -0.2 1.8 -1.2 -0.1 0.3 -0.1 2.9 4.2 -1.8 0.5 0.3 0.1 4.3 0.2 0.2 0.1 -0.7 1.1 4.9 -0.9 0.2 -0.5 -0.1 5.2 -0.1 ... -0.5 -1.2 But Mr. Flannery appears to be going deeper, aiming to exit $20 billion in business and shedding executive perks. When he took over on Aug. 1, one of his first belt-tightening moves was to ground GE’s entire fleet of six business jets. 52-Wk % Sym Hi/Lo Chg Stock Prudential PUK PulteGroup PHM PzenaInvtMgmt PZN RH RH Raytheon RTN RedHat RHT Renren RENN Rockwell ROK RockwellCollins COL RoperTech ROP RoyalDutchA RDS.A RoyalDutchB RDS.B S&P Global SPGI SPX FLOW FLOW Salesforce.com CRM ScorpioTankNt20 SBNA SeaspanPfdE SSWpE SeaspanPfdH SSWpH SensataTech ST ServiceNow NOW SkechersUSA SKX SmithAO AOS SpiritAeroSys SPR StanleyBlackDck SWK Steris STE STMicroelec STM Stryker SYK TE Connectivity TEL TRI Pointe TPH TeekayOffshorePf TOOpA TeekayOffshrPfB TOOpB TelecomArgentina TEO TeledyneTech TDY ThermoFisherSci TMO Thermon THR 3M MMM Toll Bros TOL Torchmark TMK TransUnion TRU Travelers TRV Trex TREX Tronox TROX TsakosEngyNavPfdE TNPpE Unifi UFI UnitedHealth UNH VF VFC VarianMed VAR VistraEnergy VST VMware VMW Wal-Mart WMT WarriorMetCoal HCC Waters WAT WellsFargoPfdV WFCpV WestAllianceBcp WAL WestRock WRK Winnebago WGO ZayoGroup ZAYO Zoetis ZTS 49.87 28.19 12.70 88.54 189.98 122.95 11.50 188.95 135.38 256.06 61.43 63.41 163.11 43.27 99.44 25.03 25.49 24.96 50.83 129.56 34.87 61.94 81.07 160.19 92.20 20.91 151.88 88.92 15.70 24.10 25.90 33.80 166.34 195.92 22.16 222.78 44.77 83.74 51.04 134.47 90.14 27.42 25.77 39.21 208.45 71.95 108.78 19.58 119.55 88.92 27.89 190.64 26.78 56.51 61.12 48.45 36.79 66.35 0.6 -0.4 1.3 1.0 0.1 0.3 -5.1 -0.4 ... -0.4 -0.1 0.1 0.3 -1.6 -0.5 0.1 -1.0 -0.1 0.7 -0.7 -0.1 -0.1 -1.1 -1.2 ... 4.0 -0.4 -0.4 -0.3 1.6 1.0 6.6 0.4 0.3 1.9 0.1 0.3 0.7 -0.1 0.8 0.7 0.9 0.4 -0.1 -0.2 5.4 0.6 2.4 0.7 1.4 -0.4 -0.3 ... -1.4 0.4 -1.5 -1.1 -1.0 NYSE lows - 53 43.34 2.19 31.40 13.25 52.47 9.70 9.71 13.74 11.18 11.75 AmCampus ACC AvonProducts AVP BakerHughes BHGE BlueCapReins BCRH BuckeyePtrs BPL CapitolInvIV A CIC CenterCoastMLP CEN ClearBridgeEnMLPFd CEM ClearbridgeEngyMLP EMO ClearbridgeEnMLPTR CTR -0.4 -3.1 -5.4 1.8 -1.6 0.1 -1.5 -0.9 -0.4 -1.3 Continued from page B1 one person familiar with the situation said. “Whirlpool has sought to use its dominant position in the marketplace to make demands that would have prohibited us from offering Whirlpool products to our members at a reasonable price,” Sears told employees Friday in the internal memo, a copy of which was reviewed by The Wall Street Journal. Sears has marketed itself for years as being the only retailer to sell all of the top U.S. appliance brands. Even as rivals such as Home Depot, Lowe’s Co. and Best Buy Co. gained share in the appliance market, the company held exclusive control over its Kenmore brand. But earlier this year, Sears agreed to start selling Kenmore appliances on Amazon.com Inc., loosening its grip on one of its historic product lines in a gamble to boost sales. Monday evening, a Sears customer-service representative tried to interest a caller in a Kenmore or GE appliance, saying: “We don’t carry any Whirlpool appliances anymore.” 52-Wk % Sym Hi/Lo Chg Stock ComstockRscs CRK Volaris VLRS Corts JCPen JBR JBR DeutscheMuniIncmTr KTF Duff&PhelpsSelEn DSE EP Energy EPE EastmanKodak KODK EdgewellPersonal EPC EldoradoGold EGO EnduroRoyalty NDRO EnergyTransfer ETP FivePoint FPH FootLocker FL GenesisEnergy GEL GS MLPEnergyRen GER GS MLP IncmOpp GMZ GranitePointWi GPMTw HCP HCP HormelFoods HRL KayneAnMLPInv KYN KeyEnergySvcs KEG KinderMorgan KMI KinderMorganPfdA KMIpA Mack-Cali CLI MacquarieInfr MIC Mallinckrodt MNK Netshoes NETS NewellBrands NWL NuSTAREnergy NS NuSTAR GP NSH NuvEnerMLPTR JMF OFGBancorp OFG PQ Group PQG PrecisionDrilling PDS Qudian QD RangerEnergySvcs RNGR SanchezEnergy SN TortoiseEnerInf TYG TortoiseMLPFund NTG WeatherfordIntl WFT WesternGasPtrs WES WideOpenWest WOW Yext YEXT 4.12 10.24 12.52 12.10 5.82 2.54 6.18 65.31 1.55 2.75 17.07 12.70 30.40 23.43 6.11 8.53 17.50 25.91 30.19 16.14 9.66 18.04 38.26 22.52 68.49 30.77 9.92 39.99 33.35 17.15 11.07 8.10 16.45 2.37 26.30 12.61 3.70 26.37 16.75 3.26 47.73 13.97 11.46 -5.5 -1.5 -2.2 -0.2 -1.8 -6.2 -2.3 -1.6 -28.6 1.7 -1.7 -1.1 1.1 -0.6 -2.8 -2.4 -1.1 -1.4 -1.0 -1.3 -8.4 -1.6 -2.4 1.0 -3.2 -5.0 10.7 -0.5 -3.4 -3.3 -0.4 -1.8 -1.2 -2.5 -19.4 -3.1 -4.7 -1.0 -0.6 -4.0 -2.7 -2.2 -1.3 NYSE Arca highs - 269 AIPoweredEquity AIEQ ALPS EqSecWgh EQL ALPSIntlDivDogs IDOG ALPSSectorDivDogs SDOG ARKIndlInnovation ARKQ AdvShFocusedEqu CWS AdvShWilshireBuybk TTFS S&PVEQTOR VQT Barrons400ETF BFOR BluStrTABIGIIsrael ITEQ BuzzUSSentLdrs BUZ CambriaShareholder SYLD ClearSharesOCIO OCIO ColumbiaIndiaInfr INXX ColumbiaSustGlb ESGW ColumbiaSustIntl ESGN ColumbiaSustUSEqu ESGS DeepValueETF DVP DiamondHillVal DHVW DirexAeroBl3 DFEN DirexFinlBull3 FAS DirexHlthcrBull3 CURE DirexHmbldrBull3 NAIL DirexJapanBl3 JPNL DirexMcBull3 MIDU 25.99 67.43 28.53 45.30 33.00 29.89 68.50 153.02 40.58 32.46 31.34 36.31 26.18 15.29 30.61 30.59 30.66 30.12 30.68 42.87 60.80 49.62 67.41 69.37 43.13 -0.9 -0.2 -0.2 -0.4 -1.0 0.2 -0.3 0.6 -0.6 ... -0.5 -0.1 ... 0.9 0.4 -0.1 1.2 1.0 -0.3 -1.9 -0.7 -0.6 0.3 0.7 -1.4 52-Wk % Sym Hi/Lo Chg Stock DirexS&P500Bl3 SPXL DirexS&P500Bull2X SPUU DirexS&P500Bl1.25 LLSP DirexSemiBl3 SOXL DirexTechBull3 TECL DirexNasd100EW QQQE ETRACS2xLevxEn LMLP EthoClimateLeader ETHO FidelityCoreDiv FDVV FidelityDivRising FDRR FidelityLowVol FDLO FidelityMSCIFinls FNCL FidelityMSCIHlthCr FHLC FidelityMSCIIndls FIDU FidelityMSCIIT FTEC FidelityMSCIMatls FMAT FidelityQualFactor FQAL FidelityValFactor FVAL FinSelSectorSPDR XLF FT ConsDscAlpDx FXD FT Dow30EW EDOW FT IndlsAlpDx FXR FT Long/Short FTLS FT MatAlpDX FXZ FT TechAlphaDEX FXL FT USEquityOpp FPX FT ValDivFd FVD FlexShQualDivDef QDEF FlexShQualityDiv QDF GlbX GuruIndex GURU GlbXSciBetaJapan SCIJ GlbXSciBetaUS SCIU GSActiveBetaUSLC GSLC GuggDefEqty DEF GuggDJIA Div DJD GuggS&P500EW RSP GuggS&P500EWHlthcr RYH GuggS&P500EWIndl RGI GuggS&P500EWMat RTM GuggS&P500EWTech RYT GuggS&P500PureGr RPG GuggS&P500PrVal RPV GuggS&P400PrGrwth RFG GuggS&P400PureVal RFV GuggGlbTimber CUT GuggMC Core CZA GuggMultiC GMFL GuggS&P500Top50 XLG GuggS&PSpinOff CSD GuggSolar TAN 41.07 46.32 34.46 137.48 99.39 42.26 16.88 33.17 27.86 29.89 29.49 39.15 40.61 37.49 48.10 34.30 30.70 31.28 26.70 38.98 21.05 38.30 38.20 41.91 50.31 65.98 30.49 42.50 43.28 28.77 31.39 30.20 51.26 45.21 33.01 97.61 180.57 115.73 107.73 141.23 103.16 63.32 149.00 65.61 31.04 64.98 25.75 181.98 51.96 23.08 -1.0 -0.6 -0.3 1.6 -1.2 -0.5 -1.2 -0.4 -0.1 -0.1 0.1 -0.3 -0.3 -0.6 -0.4 -0.1 -0.2 -0.2 -0.1 -0.4 ... -0.4 -0.1 -0.6 -0.1 -0.7 -0.1 ... -0.3 -0.7 0.8 ... -0.2 ... -0.3 -0.3 -0.2 -0.3 -0.4 0.1 -0.4 -0.5 -0.3 -0.4 0.2 -0.3 0.3 -0.4 -0.7 2.1 ETF Monday, October 23, 2017 Closing Chg YTD Symbol Price (%) (%) AlerianMLPETF CnsmrDiscSelSector CnsStapleSelSector DBGoldDoubleLgETN DBGoldDoubleShrt AMLP XLY XLP DGP DZZ 10.63 90.74 53.86 24.36 5.57 –1.57 –15.6 –0.68 11.5 4.2 –0.07 ... 21.1 0.32 –18.7 To advertise: 800-366-3975 or WSJ.com/classiﬁeds !" "" # $ % & " & ' ( '( )"**" +,-%.'/0 ANNOUNCEMENTS BUSINESS OPPORTUNITIES ! "# $ '( )) BUSINESS OPPORTUNITIES TRAVEL !!! "# $$$%&% BUSINESS OPPORTUNITY Short term business sales contracts for sale. Contracts pay 28% interest with 12 monthly payments ph-616-430-7987 firstname.lastname@example.org $1,000,000 Yearly-$5,000 Daily Save Up To 60% FDA approved medical device Very large passive income Financing and placement in a doctor’s office available Call Today! (877) 670-1134 First & Business INTERNATIONAL Major Airlines, Corporate Travel Never Fly Coach Again! www.cooktravel.net (800) 435-8776 THEMART ADVERTISE TODAY (800) 366-3975 email@example.com © 2017 Dow Jones & Company, Inc. All Rights Reserved. + ! ! + ! 1 ! + I ! " !!"# " $ " !! !!"# % ! 1 1 + 1 1 !+ & '( ' )&! *!!! #&+ !,- &! !" !# !. !# " /&0! 11## 2!" 3#. &! !" !# # . &! #! # &0 +!" !" !# !. !# " /&0! 11## !#. ! ! + #! ! 4#! I5 )&! *!!! #&+ !!"0#,- 0# !#. ! ! + #! 0& 6 6 ! !6 $0"1 ##! 0!1! 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(1 "2#! +"!0#( (2.3 5 67 -8 41 46-4 34-. $.8.4 8-48 -5 12 , 946 :#&;< 7 -.8 -1.= 46 $55 46.8 46 1$55 46.8 -.8 4536 -.> 54 1-.7 3-5 921,7 >.1?. -5 -.>5 54 1-.7< -5 54 9?6. -34.= . 536 3--347 46 :0&;< $. -3318-.3 ?46 46 -,3-, firstname.lastname@example.org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k % Sym Hi/Lo Chg JanusVelTailLC TRSK HancockIndustrials JHMI HancockLC JHML HancockMatls JHMA HancockMC JHMM HancockTech JHMT JPM DivRetGlEq JPGE JPM DivRetIntl JPIH JPM DivRetUS Eq JPUS KraneMSCIChinaEnv KGRN MatlsSelSectorSPDR XLB NationRiskBasedUS RBUS OShFTSEAsiaPacQlty OASI OShFTSEUSQuality OUSA OppESGRevenue ESGL OppenheimFclsSect RWW OppenheimerLgCpRev RWL OppenheimerMdCpRev RWK PIMCOEnhShMaturity MINT PIMCO DynMultUS MFUS PwrShAerospace PPA PwrShContrarian CNTR PwrShDynBldg&Con PKB PwrShDynLCValue PWV PwrShDynSemicon PSI PwrShDynSoftware PSJ PwrShFTSE US1000 PRF PwrShDynLC Grwth PWB PwrShRuss1000EqWt EQAL PwrShRussTop200G PXLG PwrShS&P500Down PHDG PwrShS&P500EnhVal SPVU PwrShS&P500xRate XRLV PwrShS&P500HiBeta SPHB PwrShS&P500Mom SPMO PwrShS&P500Qual SPHQ PwrShS&PIntlDev IDMO PwrShS&P400LowVol XMLV ProShS&P500xEner SPXE ProShS&P500xTech SPXT ProShShtVIXST SVXY ProShrUltraDow30 DDM ProShUltFTSEEurope UPV ProShrUltraFnl UYG ProShrUlHlthCr RXL ProShrUltraInd UXI ProShrUltraJapan EZJ ProShrUMdCp400 MVV ProShrUltraS&P SSO 30.40 33.97 33.78 34.25 33.14 41.20 61.06 29.98 69.05 25.93 59.17 25.53 29.95 30.95 29.72 66.11 48.82 58.44 101.84 26.47 53.19 31.76 32.70 38.67 52.81 65.60 109.38 40.30 30.08 44.20 26.80 33.60 32.53 40.72 32.85 29.58 27.62 45.16 53.88 50.23 109.05 117.62 57.65 118.85 90.43 68.48 120.68 114.67 101.46 0.3 -0.2 -0.4 -0.2 -0.4 -0.4 -0.2 -0.2 -0.2 1.0 -0.2 1.0 -1.3 -0.1 0.4 -0.1 -0.2 -0.5 ... -0.1 -0.1 1.1 ... -0.2 0.3 -0.5 -0.3 -0.2 -0.2 -0.3 0.2 ... -0.1 -0.6 -0.2 -0.3 1.1 -0.2 0.1 0.5 -3.1 -0.5 -0.3 -0.5 -0.3 -0.9 1.1 -1.1 -0.8 Continued on Page B10 Largest 100 exchange-traded funds, latest session Legal Notices PUBLIC NOTICES 29.78 84.31 28.15 21.80 34.08 33.43 87.24 259.22 183.21 59.03 29.46 26.15 32.39 177.00 115.29 156.29 174.50 30.78 81.31 96.70 62.75 41.99 57.84 95.46 107.55 53.46 85.92 154.67 149.83 102.15 179.19 194.50 129.01 143.44 152.91 201.90 86.48 69.94 59.12 50.99 113.92 208.40 147.45 148.37 114.82 110.30 155.11 161.78 128.99 116.82 Exchange-Traded Portfolios | WSJ.com/ETFresearch ADVERTISEMENT 52-Wk % Sym Hi/Lo Chg Stock HartfordMultiUSEqu ROUS HealthCareSelSect XLV HullTacticalUS HTUS IQ50%HdgFTSEJapan HFXJ InnovatorIBD50Fd FFTY iShCoreDivGrowth DGRO iShCoreHiDividend HDV iShCoreS&P500ETF IVV iShCoreS&PMdCp IJH iShS&PTotlUSStkMkt ITOT iShCurrHdgNikk400 HJPX iShCurrHdgMSCICda HEWC iShCurrHdMSCIJapan HEWJ iShUSHealthcare IYH iShUS Finls IYF iShU.S.Technology IYW iShUSMedDevices IHI iShEdgeMSCIMultUSA LRGF iShEdgeMSCIUSASize SIZE iShIntRtHdgCorpBd LQDH iShJPX-Nikkei400 JPXN iShMSCIAllPeruCap EPU iShMSCIJapanETF EWJ iShMSCIKLD400Soc DSI iShMSCIUSAESGSelct SUSA iShMSCIUSAEqWeight EUSA iShMSCIWorldETF URTH iShMorningstarLC JKD iShMornLCGrowth JKE iShMornLCValue JKF iShMorningstarMC JKG iShMornMCGrowth JKH iShRussell1000Gwth IWF iShRussell1000ETF IWB iShRussell3000ETF IWV iShRussellMid-Cap IWR iShRussellMCValue IWS iShRussellTop200Gr IWY iShRussellTop200 IWL iShRussellTop200Vl IWX iShS&P100 OEF iShS&PMC400Growth IJK iShS&P500Growth IVW iShGlobalTechETF IXN iShGlobalHealthcr IXJ iShS&P500ValueETF IVE iShS&PMC400Value IJJ iShNorthAmerTech IGM iShDowJonesUS IYY iShRussellMCGrowth IWP !"#$ #"% &#' BUSINESS OPPORTUNITIES It wasn’t immediately clear how Whirlpool’s loss of Sears’s retail floor space would affect the Michigan-based appliance maker. Longbow Research analyst David MacGregor estimates Whirlpool sells approximately $600 million of its branded appliances through Sears each year. But his estimate doesn’t include Kenmore-branded products, many of which have been manufactured by Whirlpool. Retail floor space has been repeatedly raised as an issue in a heated trade battle over washing machines that Whirlpool has been waging against LG Electronics Inc. and Samsung Electronics Co. Whirlpool in part has complained that underselling by its South Korean rivals has edged it out of prime floor space. Whirlpool dominates the U.S. market for washers, with 35% of retail dollars spent on the appliances in the second quarter of this year, according to TraQline data. Whirlpool will continue to make products for Sears’s Kenmore brand, a person familiar with the matter said. And Sears will continue to sell appliances from LG, Samsung, GE, Frigidaire, Electrolux, and Bosch, some of which also make Kenmore products. %&' () %* +& , # $ # $ ! 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(, 9-<9< 1,=-48 7 46 .8 46 345 34 12 % -5 -.88 946 :34;< -.8 - :A-,B8 36-5; 21 155 12 341. 93<9< 12 46 .48 4-45 $.@54.4 1-.7 34 12 % -5 -.88G -.8 9< -= 46-4 467 ?,, .14 5,, 536 -5545 ?4614 31,-.3 ?46 46 =54-41. A.45 12 46 34 -.8 -,3-, 54-4 5345 ,-?5 1 5-.4 41 @-,8 H41.5 4621 -.8 9< 41 15 536 146 ,4-41.5 1 31.841.5 . 31..341. ?46 465 &,3 341. -5 46 54 85 .355-7 1 -8@5-, . 18 41 31,7 ?46 46 34 1 -.7 146 -,3-, ,-? LEGALNOTICES (800) 366-3975 | email@example.com Place an ad at: wsj.com/classifieds © 2017 Dow Jones & Company, Inc. All Rights Reserved. ETF Closing Chg YTD Symbol Price (%) (%) EnSelectSectorSPDR FinSelSectorSPDR GuggS&P500EW HealthCareSelSect IndSelSectorSPDR iShIntermCredBd iSh1-3YCreditBond iSh3-7YTreasuryBd iShCoreMSCIEAFEETF iShCoreMSCIEmgMk iShCoreMSCITotInt iShCoreS&P500ETF iShCoreS&PMdCp iShCoreS&PSmCpETF iShS&PTotlUSStkMkt iShCoreUSAggBd iShSelectDividend iShEdgeMSCIMinEAFE iShEdgeMSCIMinUSA iShGoldTr iShiBoxx$InvGrCpBd iShiBoxx$HYCpBd iShJPMUSDEmgBd iShMBSETF iShMSCIACWIETF iShMSCIBrazilCap iShMSCI EAFE iShMSCIEAFESC iShMSCIEmgMarkets iShMSCIEurozoneETF iShMSCIJapanETF iShNasdaqBiotech iShNatlMuniBdETF iShRussell1000Gwth iShRussell1000ETF iShRussell1000Val iShRussell2000Gwth iShRussell2000ETF iShRussell2000Val iShRussell3000ETF iShRussellMid-Cap iShRussellMCValue iShS&PMC400Growth iShS&P500Growth iShS&P500ValueETF iShUSPfdStk iShTIPSBondETF iSh1-3YTreasuryBd iSh7-10YTreasuryBd iSh20+YTreasuryBd iShRussellMCGrowth PIMCOEnhShMaturity PwrShQQQ 1 PwrShS&P500LoVol PwrShSrLoanPtf SPDRBloomBarcHYBd SPDR Gold SchwabIntEquity SchwabUS BrdMkt SchwabUS LC SPDR DJIA Tr SPDR S&PMdCpTr SPDR S&P 500 SPDR S&P Div TechSelectSector UtilitiesSelSector VanEckGoldMiner VangdInfoTech VangdSC Val VangdDivApp VangdFTSEDevMk VangdFTSE EM VangdFTSE Europe VangdFTSEAWxUS VangdGrowth VangdHlthCr VangdHiDiv VangdIntermBd VangdIntrCorpBd VangdLC VangdMC VangdMC Val VangdREIT VangdS&P500 VangdST Bond VangdSTCpBd VangdSC VangdTotalBd VangdTotIntlBd VangdTotIntlStk VangdTotalStk VangdTotlWrld VangdValue WisdTrEuropeHdg WisdTrJapanHdg XLE XLF RSP XLV XLI CIU CSJ IEI IEFA IEMG IXUS IVV IJH IJR ITOT AGG DVY EFAV USMV IAU LQD HYG EMB MBB ACWI EWZ EFA SCZ EEM EZU EWJ IBB MUB IWF IWB IWD IWO IWM IWN IWV IWR IWS IJK IVW IVE PFF TIP SHY IEF TLT IWP MINT QQQ SPLV BKLN JNK GLD SCHF SCHB SCHX DIA MDY SPY SDY XLK XLU GDX VGT VBR VIG VEA VWO VGK VEU VUG VHT VYM BIV VCIT VV VO VOE VNQ VOO BSV VCSH VB BND BNDX VXUS VTI VT VTV HEDJ DXJ 67.42 26.62 97.08 83.67 72.50 109.94 105.26 123.11 64.78 55.31 61.74 257.86 182.01 74.61 58.70 109.42 95.43 71.63 51.50 12.33 121.18 88.59 115.94 106.86 69.98 41.23 69.19 62.19 45.89 43.26 57.66 327.74 111.13 128.04 142.57 120.31 180.25 148.86 124.41 151.93 200.77 85.95 207.23 146.40 109.84 38.61 113.42 84.29 106.14 124.20 116.22 101.83 147.74 46.74 23.16 37.28 121.80 33.84 62.00 61.20 232.65 331.80 256.11 93.54 60.81 54.89 23.14 157.37 128.79 97.28 43.84 44.41 58.21 53.38 134.59 155.43 83.05 84.49 87.97 117.69 149.71 107.41 83.33 235.30 79.68 80.03 142.72 81.76 54.70 55.51 131.86 71.84 102.24 64.97 56.77 –0.52 –10.5 –0.08 14.5 –0.34 12.0 –0.25 21.4 –0.63 16.5 1.6 0.06 0.3 0.07 0.5 0.08 –0.22 20.8 –0.74 30.3 –0.31 22.3 –0.38 14.6 –0.52 10.1 8.5 –0.49 –0.41 14.4 1.3 0.11 7.7 –0.15 –0.21 17.0 –0.08 13.9 0.24 11.3 3.4 0.10 2.4 –0.11 5.2 –0.09 0.5 0.08 –0.48 18.3 –2.44 23.7 –0.22 19.9 –0.22 24.8 –0.80 31.1 –0.30 25.0 0.24 18.0 –1.22 23.5 2.7 0.04 –0.49 22.1 –0.38 14.6 7.4 –0.27 –0.63 17.1 –0.75 10.4 4.6 –0.81 –0.43 14.3 –0.37 12.2 6.9 –0.41 –0.39 13.7 –0.50 20.2 8.3 –0.16 3.8 0.05 0.2 0.01 ... –0.2 1.3 0.09 4.3 0.18 –0.33 19.3 0.5 0.04 –0.65 24.7 –0.20 12.4 0.09 –0.9 2.3 –0.11 0.16 11.1 –0.21 22.3 –0.39 14.4 –0.39 14.9 –0.21 17.8 –0.53 10.0 –0.39 14.6 9.3 –0.12 –0.47 25.7 13.0 0.05 –0.39 10.6 –0.36 29.5 6.4 –0.63 0.07 14.2 –0.25 20.0 –0.89 24.1 –0.34 21.4 –0.34 20.8 –0.59 20.7 –0.31 22.6 9.6 –0.24 1.7 0.11 2.6 0.11 –0.36 15.0 –0.35 13.7 –0.32 10.5 1.0 –0.38 –0.36 14.6 0.3 0.04 0.8 0.04 –0.61 10.7 1.2 0.09 0.8 0.07 –0.27 21.0 –0.42 14.3 –0.39 17.8 9.9 –0.23 –0.11 13.2 0.05 14.6 For personal non-commercial use only. Do not edit or alter. Reproductions not permitted. To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com THE WALL STREET JOURNAL. Tuesday, October 24, 2017 | B7 NY / NE OCTOBER 27-30, 2017 Over 90 Distinguished Dealers Will Exhibit a Lavish Array of Antique and Estate Jewelry, Vintage Time Pieces and Fabulous Modern Collections. METROPOLITAN PAVILION 125 WEST 18TH STREET • NEW YORK, NY 10011 Friday October 27 11:00am – 7:00pm Saturday October 28 11:00am – 7:00pm Sunday October 29 11:00am – 7:00pm Monday October 30 11:00am – 4:00pm GENERAL ADMISSION TICKET PURCHASED ONLINE $5.00 OFF A P A L M B E A C NYCJAWS.com PROMO CODE: WJ17 H S H O W G R O U P E V E N T For personal non-commercial use only. Do not edit or alter. Reproductions not permitted. To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com THE WALL STREET JOURNAL. B8 | Tuesday, October 24, 2017 MARKETS DIGEST EQUITIES Dow Jones Industrial Average S&P 500 Index Last Year ago 23273.96 t 54.67, or 0.23% High, low, open and close for each trading day of the past three months. Trailing P/E ratio 21.38 19.93 P/E estimate * 19.58 17.26 Dividend yield 2.21 2.61 All-time high 23328.63, 10/20/17 Nasdaq Composite Index Last 2564.98 t 10.23, or 0.40% High, low, open and close for each trading day of the past three months. Year ago Trailing P/E ratio 24.52 24.41 P/E estimate * 19.56 18.05 Dividend yield 1.95 2.15 All-time high: 2575.21, 10/20/17 Last Year ago 6586.83 t 42.23, or 0.64% High, low, open and close for each trading day of the past three months. Trailing P/E ratio * 26.35 24.13 P/E estimate * 21.29 19.51 Dividend yield 1.10 1.23 All-time high: 6629.05, 10/20/17 Current divisor 0.14523396877348 23500 2560 6600 23000 2530 6500 22500 2500 6400 22000 2470 Session high UP Close t DOWN Session open Open t Close Session low 6300 65-day moving average 21500 2440 6200 2410 6100 65-day moving average 65-day moving average 21000 Bars measure the point change from session's open 20500 July Aug. Sept. Oct. 6000 2380 July Aug. Sept. July Oct. Aug. Sept. Oct. Weekly P/E data based on as-reported earnings from Birinyi Associates Inc. Major U.S. Stock-Market Indexes High Latest Close Low Net chg % chg High 52-Week Low % chg % chg 3-yr. ann. YTD Dow Jones Industrial Average 23368.37 23273.96 23273.96 -54.67 Transportation Avg 10008.34 9934.88 750.73 745.87 Utility Average Total Stock Market Barron's 400 9939.39 -32.71 6581.15 6061.08 23328.63 17888.28 27.7 17.8 -0.33 10038.13 7967.02 23.4 9.9 5.4 754.80 625.44 14.0 13.6 9.1 26697.94 21514.15 691.35 521.59 19.5 26.2 14.2 14.3 9.4 10.1 0.05 0.34 749.55 -0.45 26727.54 26572.48 26578.90 -119.04 692.68 687.50 687.79 -3.55 Nasdaq Stock Market Nasdaq Composite 6641.57 Nasdaq 100 6122.24 -0.23 -0.51 -0.64 6586.83 -42.23 6067.83 -40.98 6629.05 6122.61 -0.67 5046.37 4660.46 24.0 23.6 11.7 22.4 24.8 13.9 14.8 Standard & Poor's 500 Index 2578.29 2564.33 2564.98 -10.23 -0.40 2575.21 2085.18 19.2 14.6 9.6 MidCap 400 SmallCap 600 1836.28 915.42 1824.55 908.32 1824.91 908.77 -9.38 -4.98 -0.51 -0.55 1834.29 918.72 1476.68 703.64 18.9 22.8 9.9 8.5 10.0 12.1 Other Indexes Russell 2000 1511.48 1497.34 1497.49 -11.75 -0.78 1512.09 1156.89 22.1 10.3 10.3 NYSE Composite -0.37 12443.80 12383.36 12384.42 -46.10 546.77 542.89 4253.06 4202.26 Value Line NYSE Arca Biotech 16.9 12.0 5.6 -3.02 -0.55 545.98 455.65 14.1 7.3 4.5 4204.23 -38.83 -0.92 4304.77 2834.14 38.1 36.7 9.5 542.96 12430.52 10289.35 NYSE Arca Pharma 563.16 558.55 558.68 -1.43 -0.25 560.52 463.78 14.0 16.0 2.7 KBW Bank 101.27 100.66 100.79 -0.38 -0.38 101.17 73.36 36.1 9.8 13.6 84.77 83.75 84.17 -0.84 -0.98 96.72 73.03 -1.2 6.7 3.3 -1.63 117.79 -19.8 802.88 49.1 9.19 -15.0 PHLX§ Gold/Silver PHLX§ Oil Service PHLX§ Semiconductor CBOE Volatility 132.37 129.36 129.56 -2.15 1243.93 11.08 1231.64 9.94 1237.14 11.07 5.80 1.10 192.66 0.47 1237.14 22.51 11.03 Philadelphia Stock Exchange Region/Country Index Close Volume, Advancers, Decliners DJ Americas 617.79 Sao Paulo Bovespa 75413.13 S&P/TSX Comp 15855.76 S&P/BMV IPC 49548.13 Santiago IPSA 4220.14 YTD % chg –0.27 –0.27 –0.11 17.0 17.4 20.7 –2.76 –0.44 –977.38 –1.28 –0.01 –1.46 –440.58 –0.88 27.01 14.3 25.2 3.7 8.6 30.9 –8.08 –1.03 –0.28 EMEA Eurozone Belgium France Germany Israel Italy Netherlands Russia Spain Sweden Switzerland U.K. Stoxx Europe 600 Euro Stoxx Bel-20 CAC 40 DAX Tel Aviv FTSE MIB AEX RTS Index IBEX 35 SX All Share Swiss Market FTSE 100 390.74 391.30 4089.84 5386.81 13003.14 1440.59 22379.16 545.96 1131.08 10161.40 591.86 9248.49 7524.45 0.61 0.38 6.86 14.43 11.86 –4.87 32.31 1.33 –3.37 –61.30 –1.46 11.36 1.22 Asia-Pacific Australia China Hong Kong India Japan Singapore South Korea Taiwan S&P/ASX 200 5894.00 Shanghai Composite 3380.70 Hang Seng 28305.88 S&P BSE Sensex 32506.72 Nikkei Stock Avg 21696.65 Straits Times 3349.80 Kospi 2490.05 Weighted 10735.21 –13.00 2.05 –181.36 116.76 239.01 9.07 0.51 6.33 Company Symbol Volume (000) 0.64 0.16 0.10 0.17 0.27 0.09 –0.34 –0.30 –0.60 –0.25 –0.22 –0.64 0.14 0.24 0.12 0.02 0.06 0.36 1.11 0.27 0.02 0.06 8.1 11.7 13.4 10.8 13.3 –2.1 16.3 13.0 –1.8 8.7 10.7 12.5 5.3 4.0 8.9 28.7 22.1 13.5 16.3 22.9 16.0 Global X Robotics AI BOTZ 7,640.6 23.42 0.03 0.13 23.42 23.05 General Electric GE 4,978.9 22.21 -0.11 -0.49 22.85 22.10 4,724.0 23.14 … unch. 23.18 23.04 CMCSA 4,273.2 36.52 -0.03 -0.08 36.84 36.43 PwrShrs QQQ Tr Series 1 QQQ 3,596.6 147.67 -0.07 -0.05 148.71 147.55 Intel INTC 2,423.1 40.88 0.05 0.12 41.00 40.43 iPath S&P 500 VIX ST Fut VXX 2,299.5 35.05 0.20 0.57 35.33 34.79 VanEck Vectors Gold Miner GDX Comcast Cl A 0.07 0.03 257.29 255.96 Percentage gainers… Knoll KNL 22.9 22.25 2.25 11.25 22.50 20.00 Impax Laboratories IPXL 43.5 21.40 1.05 5.14 22.60 20.35 67.4 2.91 0.10 3.56 3.00 2.74 7.5 86.50 2.89 3.46 86.50 83.61 6.6 3.00 0.09 3.09 3.09 2.93 57.7 4.20 -1.00 -19.23 5.20 4.20 9.6 35.50 -6.79 -16.06 42.30 34.07 Tandem Diabetes Care TNDM Crane Co CR Destination Maternity DEST ...And losers IMDZ HNI Cp HNI -29.5 -19.3 Whirlpool Corp WHR 36.5 26.9 -21.2 -12.5 Scorpio Bulkers SALT 8.6 8.20 -0.50 -5.75 8.70 8.20 uniQure QURE 89.0 17.70 -0.82 -4.43 18.60 17.35 Company Symbol Exactech Aimmune Therapeutics HTG Molecular Diagnostics PetMed Express ReneSola ADR EXAC 343.8 170.98 -11.52 -6.31 184.00 166.02 Destination Maternity KalVista Pharmaceuticals Seagate Technology Fuling Global BeyondSpring DEST U.S. Global Investors A Veritone Tandem Diabetes Care Netshoes (Cayman) Chicken Soup Soul Ent A GROW HTGM PETS SOL KALV STX FORK BYSI VERI TNDM NETS CSSE High 52-Week Low % chg Symbol General Electric Bank of America SPDR S&P 500 Advanced Micro Devices Weatherford International GE iShares MSCI Emg Markets Finl Select Sector SPDR Dextera Surgical Eldorado Gold Seagate Technology EEM SPY AMD WFT 30.78 28.37 23.56 18.15 17.11 42.55 22.20 37.50 14.87 13.25 1.20 50.90 18.90 5.04 2.12 55.0 94.7 14.9 119.4 -43.7 DBV Technologies ADR Eldorado Gold Qudian ADR Aytu BioScience Helios Matheson Analy DBVT 2.91 13.02 39.35 4.55 32.50 0.42 1.76 4.41 0.50 3.51 16.87 15.63 12.62 12.35 12.11 8.42 1.02 15.80 5.48 50.96 30.60 6.00 1.70 48.49 16.55 -60.6 78.8 14.0 122.0 ... Aqua Metals PAVmed Dragon Victory Intl Social Reality Cl A MiMedx Group AQMS 2.43 39.64 2.81 11.27 7.82 0.25 3.97 0.28 1.09 0.66 11.47 11.13 11.07 10.71 9.22 2.75 74.92 68.00 26.96 13.26 51.9 ... -95.8 ... ... Digital Ally Myomo Chanticleer Holdings RumbleON Cl B Arconic DGLY 1.25 7.76 2.27 9.92 6.79 DXTR EGO STX A consumer rate against its benchmark over the past year New car loan Volume % chg from Latest Session (000) 65-day avg Close % chg 297.0 5.3 -14.0 -14.7 198.5 22.32 27.16 256.11 14.10 3.40 -6.34 -0.04 -0.39 2.10 -3.95 52-Week High Low 32.38 22.10 27.43 16.28 257.51 208.38 15.65 6.22 7.09 3.26 -2.9 45.89 -0.80 -16.5 26.62 -0.08 713.0 0.22 17.84 506.6 1.55 -28.57 512.2 39.35 12.62 46.82 26.70 2.33 3.91 50.96 33.94 19.40 0.11 1.55 30.60 4.00% 3.50 3.00 t t 2.00 1.89% 800-288-3425 Hilltop National Bank Casper, WY 2.24% 307-265-2740 TrustCo Bank Orlando, FL 2.37% 407-422-7129 Lake City Bank Warsaw, IN 2.49% 888-522-2265 Cambridge Savings Bank 2.59% Cambridge, MA 888-418-5626 3.00 Monday One year ago 1 3 6 month(s) 1 2 3 5 710 years maturity 10% WSJ Dollar index 5 2.25 0 1.50 –5 0.75 –10 0.00 –15 30 s Euro s Yen Federal-funds rate target 1.00-1.25 1.00-1.25 Prime rate* 4.25 4.25 Libor, 3-month 1.35 1.37 Money market, annual yield 0.32 0.32 Five-year CD, annual yield 1.46 1.47 30-year mortgage, fixed† 3.86 3.93 15-year mortgage, fixed† 3.15 3.24 Jumbo mortgages, $424,100-plus† 4.31 4.33 Five-year adj mortgage (ARM)† 3.57 3.39 New-car loan, 48-month 3.07 3.01 HELOC, $30,000 5.22 5.20 3-yr chg 52-Week Range (%) Low 0 2 4 6 8 High (pct pts) 0.25 l l 3.50 0.88 l 0.26 l 1.19 l l 3.54 l 2.81 l 4.23 l 3.13 l 2.85 l 4.57 1.25 4.25 1.37 0.36 1.47 4.33 3.50 4.88 4.03 3.36 5.30 1.00 1.00 1.13 -0.10 -0.04 -0.06 0.11 0.04 0.10 -0.21 0.76 Bankrate.com rates based on survey of over 4,800 online banks. *Base rate posted by 70% of the nation's largest banks.† Excludes closing costs. Sources: SIX Financial Information; WSJ Market Data Group; Bankrate.com Corporate Borrowing Rates and Yields Bond total return index Close Yield (%) Last Week ago 52-Week High Low Total Return (%) 52-wk 3-yr 1456.556 2.127 2.078 2.237 1.482 –1.778 1.820 10-yr Treasury, Ryan ALM 1728.943 DJ Corporate 379.729 Aggregate, Barclays Capital 1937.810 High Yield 100, Merrill Lynch 2872.977 Fixed-Rate MBS, Barclays 1984.410 Muni Master, Merrill 522.729 2.375 3.034 2.600 5.046 2.880 1.907 2.309 3.004 2.560 5.154 2.800 1.890 2.609 3.390 2.790 6.448 3.120 2.516 1.758 2.654 2.060 4.948 2.190 1.677 1.296 2.034 0.391 7.296 0.314 2.104 804.200 5.459 5.413 6.290 5.279 4.438 5.783 Treasury, Ryan ALM EMBI Global, J.P. Morgan AYTU HMNY PAVM LYL SRAX MDXG MYO HOTR RMBL ARNC High 52-Week Low % chg 28.32 -19.75 -41.09 1.55 -0.62 -28.57 26.59 -6.41 -19.42 4.57 -1.08 -19.10 13.30 -2.98 -18.30 50.57 22.33 3.91 1.55 35.45 26.30 6.82 0.17 38.86 2.20 -19.8 -56.6 ... 173.7 35.7 -52.3 -61.5 ... -40.8 42.8 4.41 4.56 11.50 3.80 12.32 -0.96 -0.89 -2.17 -0.68 -1.58 -17.88 -16.33 -15.87 -15.18 -11.37 22.75 12.12 14.99 7.00 17.47 2.35 2.89 2.32 4.61 24.35 -0.30 -0.36 -0.27 -0.54 -2.82 -11.32 -11.08 -10.55 -10.49 -10.38 6.45 2.15 -63.3 23.20 2.74 ... 9.00 1.90 -50.6 10.00 3.40 1781.6 30.69 16.75 20.7 4.36 2.54 6.00 1.11 7.64 Ranked by change from 65-day average* Company Symbol Exactech PIMCO 1-3 US Trea Idx DBV Technologies ADR BroadSoft Aimmune Therapeutics EXAC FT Asia Pacific ex Japan Global X MSCI Norway ETF RumbleON Cl B Xunlei ADR Deltic Timber FPA Country/currency TUZ DBVT BSFT AIMT NORW RMBL XNET DEL Volume % chg from Latest Session (000) 65-day avg Close % chg 52-Week High Low 2,948 701 13,112 15,807 8,298 9680 9264 6503 4158 2971 41.85 30.78 50.55 -0.02 28.32 -41.09 54.80 1.67 32.94 28.37 42.55 51.58 50.57 54.90 37.50 141 1,785 184 4,136 694 1651 1566 1312 1277 1071 34.72 0.43 13.56 -0.88 4.61 -10.49 6.11 -7.14 92.77 4.10 34.83 26.99 13.86 10.63 10.00 3.40 7.39 3.11 96.65 53.21 US$vs, YTDchg Mon in US$ per US$ (%) Americas Argentina peso .0574 17.4120 Brazil real .3088 3.2379 Canada dollar .7907 1.2648 Chile peso .001578 633.60 Colombia peso .0003390 2950.22 Ecuador US dollar 1 1 Mexico peso .0524 19.0814 Peru new sol .3088 3.239 Uruguay peso .03381 29.5800 Venezuela b. fuerte .100100 9.9901 1.638 3.846 2.298 4.220 2.054 2.710 Sources: J.P. Morgan; Ryan ALM; S&P Dow Jones Indices; Barclays Capital; Merrill Lynch Australian dollar .7808 1.2807 China yuan .1506 6.6401 Hong Kong dollar .1282 7.8004 India rupee .01537 65.050 Indonesia rupiah .0000739 13538 Japan yen .008816 113.43 Kazakhstan tenge .002977 335.93 Macau pataca .1242 8.0524 Malaysia ringgit .2359 4.2385 New Zealand dollar .6966 1.4355 Pakistan rupee .00950 105.300 Philippines peso .0194 51.486 Singapore dollar .7343 1.3619 South Korea won .0008843 1130.83 Sri Lanka rupee .0065058 153.71 Taiwan dollar .03305 30.257 22.20 50.17 22.33 33.85 14.87 9.7 –0.5 –5.9 –5.4 –1.7 unch –8.0 –3.4 0.8 –0.1 Track the Markets Compare the performance of selected global stock indexes, bond ETFs, currencies and commodities at WSJ.com/TrackTheMarkets –7.8 –4.4 0.6 –4.3 0.1 –3.1 0.7 1.7 –5.5 –0.6 0.9 3.8 –5.9 –6.4 3.6 –6.8 US$vs, YTDchg Mon in US$ per US$ (%) Country/currency .03014 33.180 –7.3 .00004401 22724 –0.2 Thailand baht Vietnam dong Europe Czech Rep. koruna Denmark krone Euro area euro Hungary forint Iceland krona Norway krone Poland zloty Russia ruble Sweden krona Switzerland franc Turkey lira Ukraine hryvnia UK pound .04579 21.837 –15.0 .1578 6.3356 –10.4 1.1751 .8510 –10.5 .003813 262.25 –10.9 .009471 105.58 –6.5 .1250 8.0016 –7.4 .2780 3.5978 –14.1 .01739 57.511 –6.1 .1220 8.2000 –10.0 1.0151 .9851 –3.3 .2691 3.7163 5.5 .0376 26.5800 –1.9 1.3197 .7577 –6.5 Middle East/Africa Bahrain dinar Egypt pound Israel shekel Kuwait dinar Oman sul rial Qatar rial Saudi Arabia riyal South Africa rand 2.6521 .3771 –0.03 .0567 17.6425 –2.7 .2862 3.4939 –9.2 3.3091 .3022 –1.1 2.5987 .3848 –0.04 .2644 3.782 3.9 .2666 3.7504 –0.01 .0730 13.7062 0.1 Close Net Chg % Chg YTD%Chg WSJ Dollar Index 87.09 0.10 0.11 –6.29 Sources: Tullett Prebon, WSJ Market Data Group Commodities COMMODITIES Monday 52-Week Pricing trends on someClose raw materials, or commodities Net chg % Chg High Low DJ Commodity Get real-time U.S. stock quotes and track most-active stocks, new highs/lows and mutual funds. Plus, deeper money-flows data and email delivery of key stock-market data. Available free at WSJMarkets.com QD Latest Session Close Net chg % chg Asia-Pacific 2016 2017 Sources: Ryan ALM; Tullett Prebon; WSJ Market Data Group Yield/Rate (%) Last (l)Week ago * Primary market NYSE, NYSE American NYSE Arca only. †(TRIN) A comparison of the number of advancing and declining issues with the volume of shares rising and falling. An Arms of less than 1 indicates buying demand; above 1 indicates selling pressure. U.S.-dollar foreign-exchange rates in late New York trading Yen, euro vs. dollar; dollar vs. major U.S. trading partners t 2.50 Think Mutual Bank Rochester, MN NYSE Arca Currencies Forex Race 3.75% 3.01% Nasdaq Total volume*1,789,320,304 192,310,586 Adv. volume* 731,300,266 48,197,838 Decl. volume*1,037,052,834 143,246,281 Issues traded 3,040 1,290 Advances 947 405 Declines 1,951 857 Unchanged 142 28 New highs 172 269 New lows 39 36 Closing tick 379 111 Closing Arms† 0.69 1.14 Block trades* 7,256 981 * Common stocks priced at $5 a share or more with an average volume over 65 trading days of at least 5,000 shares =Has traded fewer than 65 days * Volumes of 100,000 shares or more are rounded to the nearest thousand notes and bonds Bankrate.com avg†: EGO Volume Movers 46,730 42,767 37,187 36,972 33,476 XLF Symbol 9.85 7.28 0.53 6.67 0.40 182,309 68,133 54,025 49,330 47,938 BAC Company 41.85 32.94 2.78 43.41 2.76 Most Active Stocks Company Total volume* 756,321,238 10,697,320 Adv. volume* 183,368,418 2,333,825 Decl. volume* 557,034,567 8,178,940 Issues traded 3,070 328 Advances 1,011 99 Declines 1,928 214 Unchanged 131 15 New highs 203 1 New lows 53 14 Closing tick 263 9 Closing Arms† 1.65 1.19 Block trades* 6,470 96 Percentage Losers Latest Session Close Net chg % chg AIMT t Selected rates WSJ .COM Low 9,854.6 256.18 s U.S. consumer rates Interest rate After Hours % chg High Immune Design Benchmark Yields Treasury yield curve andtoRates Yield maturity of current bills, Consumer Rates and Returns to Investor N D J FMAM J J A S O 2016 2017 Net chg SPY CREDIT MARKETS & CURRENCIES New car loan Last SPDR S&P 500 Sources: SIX Financial Information; WSJ Market Data Group Prime rate NYSE NYSE Amer. Most-active issues in late trading Percentage Gainers... Latest % chg Net chg 2961.39 382.82 258.13 The Global Dow DJ Global Index DJ Global ex U.S. Americas Brazil Canada Mexico Chile Trading Diary Most-active and biggest movers among NYSE, NYSE Arca, NYSE Amer. and Nasdaq issues from 4 p.m. to 6:30 p.m. ET as reported by electronic trading services, securities dealers and regional exchanges. Minimum share price of $2 and minimum after-hours volume of 5,000 shares. Sources: SIX Financial Information; WSJ Market Data Group International Stock Indexes World Late Trading TR/CC CRB Index Crude oil, $ per barrel Natural gas, $/MMBtu Gold, $ per troy oz. 596.68 2.34 184.71 51.90 2.991 1277.70 0.59 0.06 0.076 0.30 0.39 600.13 527.06 0.32 195.14 54.45 0.12 3.93 2.61 0.02 1346.00 166.50 42.53 2.56 1127.80 % Chg 10.17 YTD % chg 5.19 -2.50 -4.05 2.73 -3.39 5.65 -19.68 1.24 11.10 For personal non-commercial use only. Do not edit or alter. Reproductions not permitted. To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com THE WALL STREET JOURNAL. Tuesday, October 24, 2017 | B9 COMMODITIES Futures Contracts Open Metal & Petroleum Futures Contract Open High hi lo Low Settle Chg Copper-High (CMX)-25,000 lbs.; $ per lb. Oct 3.1450 3.1750 3.1450 3.1740 0.0225 Dec 3.1700 3.1895 3.1520 3.1880 0.0225 Gold (CMX)-100 troy oz.; $ per troy oz. Oct 1274.70 1280.80 1271.50 1277.70 0.30 Dec 1281.50 1284.70 1273.60 1280.90 0.40 Feb'18 1283.40 1288.30 1277.70 1285.10 0.50 April 1285.00 1291.00 1281.90 1288.90 0.40 June 1288.60 1295.70 1285.70 1292.90 0.60 Dec 1301.00 1308.00 1298.30 1305.20 0.80 Palladium (NYM) - 50 troy oz.; $ per troy oz. Oct 985.00 985.00 s t 985.00 951.05 –19.90 Dec 973.15 973.15 948.45 949.95 –19.90 March'18 959.70 960.35 941.20 941.25 –20.05 Platinum (NYM)-50 troy oz.; $ per troy oz. Oct 921.10 925.10 917.50 924.50 0.40 Jan'18 925.30 929.30 916.00 927.20 0.40 Silver (CMX)-5,000 troy oz.; $ per troy oz. Oct 16.920 16.920 16.870 17.024 0.002 Dec 17.035 17.130 16.870 17.075 –0.003 Crude Oil, Light Sweet (NYM)-1,000 bbls.; $ per bbl. Dec 52.07 52.30 51.68 51.90 0.06 Jan'18 52.29 52.48 51.86 52.08 0.04 Feb 52.33 52.61 51.98 52.19 0.02 March 52.46 52.67 52.05 52.26 … June 52.48 52.58 52.00 52.18 –0.05 Dec 51.77 51.84 51.27 51.43 –0.10 NY Harbor ULSD (NYM)-42,000 gal.; $ per gal. Nov 1.8107 1.8146 1.7857 1.7878 –.0174 Dec 1.8103 1.8155 1.7874 1.7896 –.0158 Gasoline-NY RBOB (NYM)-42,000 gal.; $ per gal. Nov 1.6841 1.6915 s 1.6725 1.6783 .0002 Dec 1.6498 1.6550 s 1.6337 1.6390 –.0045 Natural Gas (NYM)-10,000 MMBtu.; $ per MMBtu. Nov 3.001 3.017 2.948 2.991 .076 Dec 3.180 3.198 3.127 3.156 .043 Jan'18 3.300 3.316 3.254 3.280 .039 Feb 3.305 3.321 3.257 3.284 .035 March 3.264 3.279 3.213 3.240 .032 April 3.010 3.010 s 2.975 2.992 .013 Contract High hilo Low Settle Open interest Chg Agriculture Futures Open interest Corn (CBT)-5,000 bu.; cents per bu. Dec 344.25 351.75 343.00 351.25 6.75 792,898 March'18 358.25 365.75 357.00 365.25 6.75 300,109 Oats (CBT)-5,000 bu.; cents per bu. Dec 268.50 275.00 266.75 273.50 3.75 4,947 March'18 271.25 275.00 270.75 274.75 3.50 1,746 Soybeans (CBT)-5,000 bu.; cents per bu. Nov 977.00 982.75 975.00 980.75 2.00 219,793 Jan'18 987.50 993.25 985.50 991.00 1.75 251,660 Soybean Meal (CBT)-100 tons; $ per ton. Dec 316.50 317.90 315.00 315.90 –1.20 144,933 Jan'18 318.70 320.00 317.30 318.00 –1.30 88,764 Soybean Oil (CBT)-60,000 lbs.; cents per lb. Dec 34.16 34.65 34.04 34.63 .47 170,384 Jan'18 34.32 34.79 34.21 34.77 .46 98,987 Rough Rice (CBT)-2,000 cwt.; $ per cwt. Nov 1210.00 1210.00 1197.00 1197.50 –10.00 3,922 Jan'18 1239.50 1240.00 1228.00 1228.00 –10.50 5,908 Wheat (CBT)-5,000 bu.; cents per bu. Dec 426.25 438.25 423.75 436.75 10.75 272,808 March'18 445.00 456.25 t 442.50 455.00 10.50 107,810 Wheat (KC)-5,000 bu.; cents per bu. Dec 422.50 434.75 421.25 433.50 10.75 147,088 March'18 440.50 452.50 439.25 451.50 10.75 83,798 Wheat (MPLS)-5,000 bu.; cents per bu. Dec 610.00 620.00 609.25 615.00 3.75 35,985 March'18 624.25 632.50 622.25 627.75 3.50 24,222 Cattle-Feeder (CME)-50,000 lbs.; cents per lb. Oct 152.025 153.700 151.650 153.625 … 3,676 Jan'18 148.350 151.400 148.175 150.875 –.450 22,526 Cattle-Live (CME)-40,000 lbs.; cents per lb. Oct 110.750 112.250 110.675 111.525 –.150 4,272 Dec 115.050 117.375 115.000 116.750 .150 141,978 Hogs-Lean (CME)-40,000 lbs.; cents per lb. Dec 64.900 65.325 63.450 63.525 –1.325 116,461 Feb'18 68.650 69.450 s 68.100 68.225 –.875 48,730 Lumber (CME)-110,000 bd. ft., $ per 1,000 bd. ft. Nov 424.10 437.50 s 424.10 435.60 8.10 3,117 Jan'18 416.70 428.90 s 416.50 428.50 9.60 3,273 Milk (CME)-200,000 lbs., cents per lb. Oct 16.61 16.62 16.61 16.61 .01 3,787 Nov 15.85 16.00 15.74 15.98 .26 4,581 944 175,739 686 398,173 71,979 15,451 12,766 10,707 1 30,528 3,464 52 68,719 233 143,585 608,176 299,750 126,950 238,393 198,710 256,908 48,067 112,208 58,498 141,382 75,253 270,968 200,877 81,636 173,661 125,522 Cash Prices | WSJ.com/commodities Monday, October 23, 2017 These prices reflect buying and selling of a variety of actual or “physical” commodities in the marketplace— separate from the futures price on an exchange, which reflects what the commodity might be worth in future months. Monday Monday 16.9950 12872 (U.S.$ equivalent) Coins,wholesale $1,000 face-a Energy 0.9310 1.0525 2.940 2.890 2.880 2.680 2.810 0.950 2.860 55.500 11.750 Propane,tet,Mont Belvieu-g Butane,normal,Mont Belvieu-g NaturalGas,HenryHub-i NaturalGas,TranscoZone3-i NaturalGas,TranscoZone6NY-i NaturalGas,PanhandleEast-i NaturalGas,Opal-i NaturalGas,MarcellusNE PA-i NaturalGas,HaynesvilleN.LA-i Coal,C.Aplc.,12500Btu,1.2SO2-r,w Coal,PwdrRvrBsn,8800Btu,0.8SO2-r,w Metals Other metals LBMA Platinum Price PM *919.0 Platinum,Engelhard industrial 916.0 Platinum,Engelhard fabricated 1016.0 Palladium,Engelhard industrial 970.0 Palladium,Engelhard fabricated 1070.0 Aluminum, LME, $ per metric ton *2159.0 Copper,Comex spot 3.1740 Iron Ore, 62% Fe CFR China-s 60.3 Shredded Scrap, US Midwest-s,w 286 Steel, HRC USA, FOB Midwest Mill-s n.a. Fibers and Textiles Gold, per troy oz 1276.82 1372.58 1274.90 1415.13 *1280.25 *1281.20 1331.10 1343.90 1343.90 1551.18 1257.56 1343.90 Engelhard industrial Engelhard fabricated Handy & Harman base Handy & Harman fabricated LBMA Gold Price AM LBMA Gold Price PM Krugerrand,wholesale-e Maple Leaf-e American Eagle-e Mexican peso-e Austria crown-e Austria phil-e Silver, troy oz. 16.9200 20.3040 16.9850 21.2310 £12.9000 Engelhard industrial Engelhard fabricated Handy & Harman base Handy & Harman fabricated LBMA spot price Burlap,10-oz,40-inch NY yd-n,w Cotton,1 1/16 std lw-mdMphs-u Cotlook 'A' Index-t Hides,hvy native steers piece fob-u Wool,64s,staple,Terr del-u,w 0.6150 0.6972 *77.60 n.a. n.a. Grains and Feeds Barley,top-quality Mnpls-u Bran,wheat middlings, KC-u Corn,No. 2 yellow,Cent IL-bp,u Corn gluten feed,Midwest-u,w Corn gluten meal,Midwest-u,w Cottonseed meal-u,w Hominy feed,Cent IL-u,w Meat-bonemeal,50% pro Mnpls-u,w Oats,No.2 milling,Mnpls-u Rice, 5% Broken White, Thailand-l,w Rice, Long Grain Milled, No. 2 AR-u,w Sorghum,(Milo) No.2 Gulf-u n.a. 71 3.1750 80.8 467.8 228 86 228 2.9850 374.00 24.00 7.8350 Monday 312.40 9.3650 7.5500 4.2350 3.6550 5.3500 SoybeanMeal,Cent IL,rail,ton48%-u Soybeans,No.1 yllw IL-bp,u Wheat,Spring14%-pro Mnpls-u Wheat,No.2 soft red,St.Louis-bp,u Wheat - Hard - KC (USDA) $ per bu-u Wheat,No.1soft white,Portld,OR-u Food Beef,carcass equiv. index choice 1-3,600-900 lbs.-u select 1-3,600-900 lbs.-u Broilers, National comp wghtd-u,w Butter,AA Chicago Cheddar cheese,bbl,Chicago Cheddar cheese,blk,Chicago Milk,Nonfat dry,Chicago lb. Cocoa,Ivory Coast-w Coffee,Brazilian,Comp Coffee,Colombian, NY Eggs,large white,Chicago-u Flour,hard winter KC Hams,17-20 lbs,Mid-US fob-u Hogs,Iowa-So. Minnesota-u Pork bellies,12-14 lb MidUS-u Pork loins,13-19 lb MidUS-u Steers,Tex.-Okla. Choice-u Steers,feeder,Okla. City-u,w 176.27 167.08 0.8421 2.3200 166.00 171.25 75.50 2400 1.2375 1.4315 0.8850 15.20 0.77 65.11 n.a. 0.9459 111.00 162.00 Fats and Oils 34.5500 0.2300 n.a. 0.3326 0.2500 0.3100 Corn oil,crude wet/dry mill-u,w Grease,choice white,Chicago-h Lard,Chicago-u Soybean oil,crude;Centl IL-u Tallow,bleach;Chicago-h Tallow,edible,Chicago-u KEY TO CODES: A=ask; B=bid; BP=country elevator bids to producers; C=corrected; E=Manfra,Tordella & Brooks; G=ICE; H=Hurley Brokerage; I=Natural Gas Intelligence; L=livericeindex.com; M=midday; N=nominal; n.a.=not quoted or not available; R=SNL Energy; S=Platts-TSI; T=Cotlook Limited; U=USDA; W=weekly, Z=not quoted. *Data as of 10/20 Source: WSJ Market Data Group October 23, 2017 Key annual interest rates paid to borrow or lend money in U.S. and international markets. Rates below are a guide to general levels but don’t always represent actual transactions. Week Latest ago Sept. index level Chg From (%) Aug. '17 Sept. '16 246.819 252.941 0.53 0.19 2.2 1.7 International rates Latest Week ago 52-Week High Low 4.25 4.25 4.25 3.50 3.20 3.20 3.20 2.70 1.475 1.475 1.475 1.475 Policy Rates Euro zone Switzerland Britain 0.00 0.50 0.25 0.00 0.50 0.25 1.50 1.50 0.00 0.50 0.25 1.19 1.20 U.S. 1.38 U.S. government rates 0.00 0.50 0.25 1.105 1.090 1.180 0.340 1.245 1.240 1.245 0.475 13 weeks 26 weeks Secondary market 1.75 1.75 1.00 Federal funds 1.1700 1.3125 1.0500 1.1600 1.1700 1.1700 1.3125 1.0300 1.1600 1.1700 1.2000 1.3125 1.1600 1.1700 1.1900 0.3500 0.5625 0.2400 0.3000 0.3200 Data are annualized on a 360-day basis. Treasury yields are per annum, on actively traded noninflation and inflation-indexed issues that are adjusted to constant maturities. Data are from weekly Federal Reserve release H.15. Federal funds (effective) 1.16 1.16 0.40 1.12 1.17 1.19 1.14 1.17 1.22 0.40 0.50 0.56 Commercial paper Nonfinancial 1-month 2-month 3-month Financial 1-month 2-month 3-month 1.14 1.17 1.21 1.18 1.22 1.28 1.15 1.20 1.26 1.19 1.22 1.28 0.44 0.57 0.66 Discount window primary credit 1.75 1.75 1.75 1.00 n.a. n.a. Conventional mortgages n.a. n.a. Treasury yields at constant maturities 1-month 3-month 6-month 1-year 2-year 3-year 5-year 7-year 10-year 20-year 0.99 1.10 1.25 1.42 1.57 1.70 1.98 2.18 2.33 2.61 1.01 1.09 1.26 1.41 1.51 1.65 1.94 2.16 2.33 2.62 52-Week High Low Treasury yields (secondary market) 1.16 1.07 1.13 1.26 1.42 1.57 1.70 2.08 2.37 2.55 2.91 0.21 0.32 0.47 0.64 0.82 0.97 1.25 1.54 1.76 2.17 1-month 3-month 6-month 0.96 1.08 1.23 0.99 1.07 1.24 1.05 1.11 1.24 0.21 0.32 0.47 0.29 0.44 0.49 0.74 0.79 0.19 0.37 0.45 0.74 0.78 0.29 0.49 0.63 0.97 0.97 -0.30 -0.13 0.08 0.48 0.51 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 1.00 1.09 1.17 1.25 1.33 1.48 1.65 2.00 0.97 1.05 1.12 1.19 1.26 1.41 1.59 1.94 TIPS 5-year 7-year 10-year 20-year Long-term avg Interest rate swaps 1-year 2-year 3-year 4-year 5-year 7-year 10-year 30-year n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Corporate bonds, Moody's seasoned Aaa Baa n.a. n.a. n.a. n.a. n.a. n.a. Week ago Latest 118,802 60,069 430,183 126,384 2,538 829 118,426 72,879 1,600 5,310 Currency Futures Japanese Yen (CME)-¥12,500,000; $ per 100¥ Nov .8795 .8829 t .8773 .8801 –.0017 Contract High hilo Low Open Settle Chg Open interest Dec .8809 .8852 .8785 .8814 –.0017 265,614 Nov Dec .7914 .7921 .7928 .7931 .7901 .7901 .7912 –.0010 568 .7913 –.0010 175,232 Nov Dec 1.3200 1.3210 1.3234 1.3249 1.3173 1.3179 1.3209 1.3221 Dec March'18 1.0187 1.0255 1.0206 1.0274 1.0156 1.0226 1.0171 –.0019 1.0241 –.0019 .7817 .7811 .7804 .7812 .7801 .7870 .7831 .7829 .7827 .7824 .7823 .7870 .7796 .7791 .7791 .7789 .7787 .7865 Canadian Dollar (CME)-CAD 100,000; $ per CAD British Pound (CME)-£62,500; $ per £ Swiss Franc (CME)-CHF 125,000; $ per CHF .0008 918 .0008 178,601 Australian Dollar (CME)-AUD 100,000; $ per AUD Nov Dec Jan'18 Feb March June t .7805 .7801 .7800 .7797 .7795 .7790 Mexican Peso (CME)-MXN 500,000; $ per MXN .05210 .05224 Dec March'18 .05142 .05194 Euro (CME)-€125,000; $ per € 1.1787 1.1789 Nov Dec 1.1808 1.1812 59,254 171 –.0008 1,179 –.0008 134,268 –.0008 486 –.0008 335 –.0008 672 –.0008 242 .05182 .05123 .05185 –.00027 182,543 .05109 –.00028 598 1.1739 1.1760 1.1751 –.0042 6,098 1.1773 –.0042 430,428 Index Futures Mini DJ Industrial Average (CBT)-$5 x index Dec March'18 23302 23278 23320 s 23303 s 23214 23205 2575.00 2576.90 s 2562.20 S&P 500 Index (CME)-$250 x index Dec Mini S&P 500 (CME)-$50 x index 23228 23213 –49 156,147 –50 1,453 2563.40 –10.60 58,855 2572.75 2577.25 s 2562.00 2563.50 –10.50 3,086,207 Dec March'18 2573.50 2577.25 s 2562.00 2563.75 –10.75 38,137 Mini S&P Midcap 400 (CME)-$100 x index 1833.50 1837.00 s 1823.30 1824.20 –9.30 92,047 Dec Mini Nasdaq 100 (CME)-$20 x index 6109.5 6128.0 6060.5 6064.8 –46.3 275,492 Dec March'18 6125.0 6137.8 6074.0 6077.3 –46.3 1,115 Mini Russell 2000 (ICE-US)-$100 x index 1509.10 1513.10 1496.40 1497.50 –13.00 63,756 Dec Mini Russell 1000 (ICE-US)-$100 x index 1427.10 1427.30 s 1420.80 1420.80 –4.70 258 Dec U.S. Dollar Index (ICE-US)-$1,000 x index 93.64 93.90 93.56 93.81 .23 47,791 Dec March'18 93.49 93.57 93.27 93.52 .23 1,931 Source: SIX Financial Information 2,427 Bonds | WSJ.com/bonds Tracking Bond Benchmarks Return on investment and spreads over Treasurys and/or yields paid to investors compared with 52-week highs and lows for different types of bonds Total return close YTD total return (%) Yield (%) Latest Low High Index 3.1 1937.81 Total return close YTD total return (%) Yield (%) Latest Low High Index Mortgage-Backed Bloomberg Barclays Broad Market Bloomberg Barclays 2.600 2.060 2.790 U.S. Aggregate U.S. Corporate Indexes Bloomberg Barclays 1984.41 2.2 Mortgage-Backed 1952.56 1.7 Ginnie Mae (GNMA) 2.840 2.080 3.090 2.880 2.190 3.120 3.160 2.890 3.520 1163.42 2.4 Fannie mae (FNMA) 2.900 2.240 3.120 3.9 Intermediate 2.690 2.320 3.010 1792.09 2.5 Freddie Mac (FHLMC) 2.910 2.250 3.130 3831.78 9.0 Long term 4.160 4.110 4.710 522.73 4.8 Muni Master 1.907 1.677 2.516 566.62 4.0 Double-A-rated 2.630 2.250 2.870 365.78 5.3 7-12 year 1.934 1.674 2.618 3.440 3.250 3.870 410.03 6.3 12-22 year 2.345 2.114 3.047 395.06 6.4 22-plus year 2.851 2.567 3.622 5.5 2776.27 2621.88 U.S. Corporate 6.2 717.10 Triple-B-rated High Yield Bonds Merrill Lynch 7.6 418.22 High Yield Constrained 5.376 5.376 6.858 541.79 5.046 4.948 6.448 751.90 Global High Yield Constrained 4.937 4.937 6.450 369.60 Europe High Yield Constrained 2.121 2.121 3.814 708.15 7.1 High Yield 100 379.42 7.7 6.8 306.40 Global Government J.P. Morgan† 10.203 9.584 13.189 9.0 Triple-C-rated 419.16 2872.98 U.S Agency Bloomberg Barclays 0.9 Global Government 1.460 1.020 1.560 -0.2 Canada 2.090 1.390 2.190 0.2 EMU§ 1.135 0.692 1.363 0.2 France 0.880 0.430 1.210 507.99 -1.3 Germany 0.480 0.090 0.620 1638.12 2.0 U.S Agency 1.970 1.330 1.980 287.15 -0.4 Japan 0.430 0.170 0.460 1466.01 1.3 10-20 years 1.800 1.140 1.810 560.24 -1.1 Netherlands 0.620 0.200 0.760 3341.83 6.9 20-plus years 2.970 2.640 3.460 916.68 U.K. 1.620 1.340 1.790 2.800 2.430 3.090 804.20 4.7 Yankee 2454.61 0.4 8.8 Emerging Markets ** 5.459 5.279 6.290 *Constrained indexes limit individual issuer concentrations to 2%; the High Yield 100 are the 100 largest bonds ** EMBI Global Index † In local currency § Euro-zone bonds Sources: Merrill Lynch; Bloomberg Barclays; J.P.Morgan n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Eurodollars Notes on data: Federal-funds rate is an average for the seven days ended Wednesday, weighted according to rates on broker trades; Commercial paper rates are discounted offer rates interpolated from sales by discounted averages of dealer bid rates on nationally traded certificates of deposit; Discount window primary credit rate is charged for discounts made and advances extended under the Federal Reserve's primary credit discount window program; rate is average for seven days ended Wednesday; Inflation-indexed long-term TIPS average is indexed and is based on the unweighted average bid yields for all TIPS with remaining terms to maturity of 10 years or more; Swap rates are International Swaps and Derivatives Association (ISDA(R)) mid-market par rates for a fixed-rate payer, who in return receives three-month Libor, and are based on rates collected at 11:00 a.m. ET by Garban Intercapital PLC; Source is Reuters; Moody's triple-AAA rates are averages of industrial bonds only; Muni rates are Thursday quotes based on the Bond Buyer Index for general obligation, 20 years to maturity, mixed quality debt; Mortgage rates are contract rates on commitments for fixed-rate first mortgages Sources: Federal Reserve; for additional information on these rate data and their derivation, please see, www.federalreserve.gov/releases/h15/data.htm Yields and spreads over or under U.S. Treasurys on benchmark two-year and 10-year government bonds in selected other countries; arrows indicate whether the yield rose(s) or fell (t) in the latest session Country/ Coupon (%) Maturity, in years 1.375 2.250 52-Week high low 0.100 2.750 Call money 3.00 3.00 2.25 Spread Under/Over U.S. Treasurys, in basis points Latest Prev Year ago 1.572 2.385 1.435 2.255 0.828 1.738 1.952 s 2.808 s l 1.949 1.973 1.671 37.9 37.6 l 2.789 2.802 2.298 43.3 40.4 56.1 France 2 -0.527 t 10 0.713 t l -0.523 -0.472 -209.5 -144.1 l 0.736 0.733 -0.614 -210.0 0.280 -166.3 -164.9 -145.7 Germany 2 -0.717 t 10 0.436 t l -0.717 -0.673 -228.9 -148.4 l 0.455 0.449 -0.656 -229.0 0.007 -194.0 -193.0 -173.1 Italy 2 -0.162 t 10 2.008 t l -0.147 -0.114 -0.077 -173.5 -171.9 -90.5 l 2.046 2.103 1.371 -36.8 -33.9 -36.7 Japan 2 -0.134 s 10 0.070 t l -0.138 -0.130 -0.254 -170.6 -171.0 -108.2 l 0.073 0.028 -0.053 -230.6 -231.2 -179.1 Spain 2 -0.287 t 10 1.623 t l -0.278 -0.321 -0.208 -186.0 -185.0 -103.5 l 1.662 1.619 1.105 -75.3 -72.3 -63.2 0.440 t 1.315 t l 0.444 0.438 0.244 -113.3 -112.8 -58.4 l 1.331 1.357 0.987 -106.1 -105.4 -75.0 10 2.050 Year ago l Australia 2 0.050 Month ago l 2.750 0.000 Yield (%) Latest(l) 0 20 40 60 80 100 120 Previous U.S. 2 1.573 s 10 2.376 t 2.750 1.450 1.750 U.K. 2 4.250 10 Commercial paper (AA financial) 1.30 1.26 1.30 84.3 Source: Tullett Prebon 0.62 Corporate Debt in that same company’s share price. 1.23788 1.23666 1.23889 0.53044 1.36742 1.35389 1.36742 0.87567 One month Three month Six month 1.56078 1.53316 1.56078 1.24267 1.83511 1.80956 1.83511 1.55622 One year Euro Libor -0.405 -0.405 -0.376 -0.405 -0.379 -0.375 -0.319 -0.381 -0.315 -0.312 -0.212 -0.317 One month Three month Six month One year -0.220 -0.230 -0.071 -0.230 Euro interbank offered rate (Euribor) One month Three month Six month -0.373 -0.371 -0.366 -0.375 -0.329 -0.329 -0.311 -0.332 -0.274 -0.274 -0.210 -0.275 One year -0.183 -0.182 -0.069 -0.183 Latest Value Traded 52-Week High Low DTCC GCF Repo Index Treasury MBS n.a. n.a. State and local bonds 1 month 3 month 6 month 97,997 93,615 Dec 152-030 152-200 151-280 152-110 5.0 746,705 March'18 150-230 151-120 150-230 151-050 5.0 220 Treasury Notes (CBT)-$100,000; pts 32nds of 100% 124-250 125-000 124-230 124-295 3.0 3,049,567 Dec March'18 124-140 124-220 124-130 124-190 3.5 11,559 5 Yr. Treasury Notes (CBT)-$100,000; pts 32nds of 100% 117-025 117-070 117-015 117-057 2.7 2,980,932 Dec 2 Yr. Treasury Notes (CBT)-$200,000; pts 32nds of 100% 107-215 107-230 107-210 107-227 1.2 1,717,493 Dec March'18 107-157 107-177 107-157 107-175 1.5 2,115 30 Day Federal Funds (CBT)-$5,000,000; 100 - daily avg. 98.848 98.848 98.845 98.845 … 233,238 Oct Jan'18 98.635 98.640 t 98.630 98.635 –.005 354,158 10 Yr. Del. Int. Rate Swaps (CBT)-$100,000; pts 32nds of 100% 100.781 100.938 100.750 100.844 .078 28,796 Dec 1 Month Libor (CME)-$3,000,000; pts of 100% 98.7625 98.7625 98.7625 98.7575 … 828 Nov Dec 98.5800 98.5825 t 98.5800 98.5675 … 2,264 Eurodollar (CME)-$1,000,000; pts of 100% 98.5825 98.5900 98.5825 98.5875 .0025 102,329 Nov Dec 98.4950 98.4950 98.4900 98.4950 .0050 1,833,564 March'18 98.3550 98.3650 98.3450 98.3600 .0100 1,280,648 Dec 98.0600 98.0850 98.0450 98.0750 .0200 1,599,330 0.100 Libor Week Ended Oct 20 Oct 13 Open interest Treasury Bonds (CBT)-$100,000; pts 32nds of 100% 0.500 Other short-term rates 3.00 0.995 1.015 1.300 0.240 Key Interest Rates 52-Week High Low Chg Interest Rate Futures 0.000 3.483 3.406 3.865 2.960 3.507 3.429 3.899 2.990 30 days 60 days Treasury bill auction 4 weeks Settle Cocoa (ICE-US)-10 metric tons; $ per ton. Dec 2,134 2,147 2,105 2,124 –14 March'18 2,129 2,140 2,102 2,120 –12 Coffee (ICE-US)-37,500 lbs.; cents per lb. Dec 125.10 126.50 123.85 124.35 –.90 March'18 129.00 130.20 127.60 128.10 –.90 Sugar-World (ICE-US)-112,000 lbs.; cents per lb. March 14.02 14.12 13.84 13.88 –.12 May 14.10 14.19 13.95 14.00 –.11 Sugar-Domestic (ICE-US)-112,000 lbs.; cents per lb. March 26.99 27.00 26.95 26.97 –.03 July 27.02 27.02 27.00 27.01 .10 Cotton (ICE-US)-50,000 lbs.; cents per lb. Dec 66.89 69.79 66.89 69.72 2.84 March'18 66.83 69.25 66.83 69.19 2.42 Orange Juice (ICE-US)-15,000 lbs.; cents per lb. Nov 155.70 159.05 151.70 152.75 –3.25 Jan'18 154.90 157.00 151.80 152.95 –2.25 2.750 Fannie Mae 90 days Week Ended Oct 20 Oct 13 —52-WEEK— High Low 30-year mortgage yields 1.75 Effective rate High Low Bid Offer Week Latest ago 0.15 Discount Prime rates U.S. Canada Japan —52-WEEK— High Low Overnight repurchase U.S. consumer price index All items Core 1.50 1.50 Australia Contract High hilo Low Open Global Government Bonds: Mapping Yields Borrowing Benchmarks | WSJ.com/bonds Money Rates Inflation WSJ.com/commodities 1.177 1.203 46.510 1.366 0.244 88.130 1.506 0.257 Open Implied Settle Change Interest Rate DTCC GCF Repo Index Futures Treasury Oct Treasury Nov Treasury Dec 98.850 0.005 4712 1.150 98.850 unch. 6026 1.150 98.720 unch. 2002 1.280 Notes on data: U.S. prime rate is the base rate on corporate loans posted by at least 70% of the 10 largest U.S. banks, and is effective June 15, 2017. Other prime rates aren’t directly comparable; lending practices vary widely by location; Discount rate is effective June 15, 2017. DTCC GCF Repo Index is Depository Trust & Clearing Corp.'s weighted average for overnight trades in applicable CUSIPs. Value traded is in billions of U.S. dollars. Federal-funds rates are Tullett Prebon rates as of 5:30 p.m. ET. Futures on the DTCC GCF Repo Index are traded on NYSE Liffe US. Sources: Federal Reserve; Bureau of Labor Statistics; DTCC; SIX Financial Information; General Electric Capital Corp.; Tullett Prebon Information, Ltd. Investment-grade spreads that tightened the most… Spread*, in basis points One-day change Stock Performance Close ($) % chg Issuer Symbol Coupon (%) Tech Data Kraft Heinz Foods Royal Bank of Scotland Royal Bank of Canada TECD KHC RBS RY 4.950 2.800 8.625 2.150 Feb. 15, ’27 July 2, ’20 Aug. 15, ’49 Oct. 26, ’20 186 36 196 33 –16 –15 –11 –11 206 52 239 n.a. 90.35 … 7.41 80.19 –1.72 … –1.20 –0.09 Enel Finance International NV* General Motors Deutsche Bank AG* Delphi Automotive ENELIM GM DB DLPH 2.875 4.875 4.500 3.150 May 25, ’22 Oct. 2, ’23 April 1, ’25 Nov. 19, ’20 65 116 193 58 –10 –9 –8 –8 70 126 199 65 ... 45.15 16.63 97.77 ... –1.01 –2.06 0.96 –88 310 n.a. 37 99.34 14.13 … … –0.17 –0.70 … … n.a. 22 n.a. 32 6.43 145.92 ... ... –4.03 0.39 ... ... Maturity Current Last week …And spreads that widened the most JPMorgan Chase Pitney Bowes US Bank NA GE Capital Intl Funding Unlimited JPM PBI USB GE 7.900 April 30, ’49 4.625 March 15, ’24 2.050 Oct. 23, ’20 2.342 Nov. 15, ’20 –88 284 30 40 Nabors Industries Honeywell International Reckitt Benckiser Treasury Services Santander UK NBR HON RBLN SANUK 4.625 Sept. 15, ’21 1.400 Oct. 30, ’19 2.375 June 24, ’22 2.375 March 16, ’20 301 26 58 35 54 22 18 11 9 7 7 7 High-yield issues with the biggest price increases… Bond Price as % of face value Current One-day change Issuer Symbol Concordia International Endo Finance Seagate HDD Cayman McClatchy CXRCN ENDP STX MNI 9.000 April 1, ’22 5.750 Jan. 15, ’22 4.250 March 1, ’22 6.875 March 15, ’29 86.750 89.500 101.500 84.500 Cenveo EP Energy Sprint Communications GameStop CVO EPENEG S GME 8.500 Sept. 15, ’22 6.375 June 15, ’23 6.000 Nov. 15, ’22 6.750 March 15, ’21 22.250 59.000 107.224 105.400 Coupon (%) Maturity 2.75 2.00 1.63 1.50 1.25 1.00 0.93 0.89 Last week Stock Performance Close ($) % chg 80.000 86.880 99.755 79.500 ... … … 8.75 ... … … 1.04 25.250 59.500 107.438 n.a. 1.52 ... … 20.28 –4.40 ... … 0.75 102.125 99.750 112.375 74.760 … 61.00 ... 1.89 … 2.78 ... –3.08 110.250 93.750 101.000 59.750 3.40 ... ... ... –3.95 ... ... ... …And with the biggest price decreases Avon International Operations DaVita Vertiv Windstream Services AVP DVA CORTNP WIN 7.875 5.125 9.250 7.500 Aug. 15, ’22 July 15, ’24 Oct. 15, ’24 June 1, ’22 102.125 101.100 110.500 74.250 Weatherford International Albertsons Midas Intermediate Holdco II Fresh Market WFT ALBLLC SVKING TFM 9.875 6.625 7.875 9.750 Feb. 15, ’24 June 15, ’24 Oct. 1, ’22 May 1, ’23 108.124 92.000 100.500 59.000 –2.25 –2.15 –2.06 –2.00 –1.88 –1.38 –0.75 –0.75 *Estimated spread over 2-year, 3-year, 5-year, 10-year or 30-year hot-run Treasury; 100 basis points=one percentage pt.; change in spread shown is for Z-spread. Note: Data are for the most active issue of bonds with maturities of two years or more Sources: MarketAxess Corporate BondTicker; WSJ Market Data Group For personal non-commercial use only. Do not edit or alter. Reproductions not permitted. To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com THE WALL STREET JOURNAL. B10 | Tuesday, October 24, 2017 BIGGEST 1,000 STOCKS How to Read the Stock Tables The following explanations apply to NYSE, NYSE Arca, NYSE MKT and Nasdaq Stock Market listed securities. Prices are composite quotations that include primary market trades as well as trades reported by Nasdaq OMX BXSM (formerly Boston), Chicago Stock Exchange, CBOE, National Stock Exchange, ISE and BATS. The list comprises the 1,000 largest companies based on market capitalization. Underlined quotations are those stocks with large changes in volume compared with the issue’s average trading volume. Boldfaced quotations highlight those issues whose price changed by 5% or more if their previous closing price was $2 or higher. Stock Footnotes: s-New 52-week high. t-New 52-week low. dd-Indicates loss in the most recent four quarters. FD-First day of trading. h-Does not meet continued listing standards lf-Late filing q-Temporary exemption from Nasdaq requirements. t-NYSE bankruptcy v-Trading halted on primary market. vj-In bankruptcy or receivership or being reorganized under the Bankruptcy Code, or securities assumed by such companies. Wall Street Journal stock tables reflect composite regular trading as of 4 p.m. and changes in the closing prices from 4 p.m. the previous day. Net Sym Close Chg Net Stock Sym Close Chg s BerkHathwy A BRK.A 284198845.50 s BerkHathwy B BRK.B 189.39 0.35 s BerryGlobal BERY 59.52 -0.36 BestBuy BBY 56.02 0.19 ABB ABB 25.28 -0.18 Bio-RadLab A BIO 223.57 1.63 AES AES 11.13 ... Bio-RadLab B BIO.B 223.00 4.70 Aflac AFL 84.32 0.47 BlackKnight BKI 45.05 -0.90 AT&T T 35.25 -0.29 BlackBerry BB 11.00 -0.12 s AbbottLabs ABT 56.08 -0.24 BlackRock BLK 474.39 -2.23 AbbVie ABBV 94.51 -1.59 s Accenture ACN 139.33 -0.16 BlackstoneGroup BX 34.72 0.26 BoardwalkPipe BWP 14.67 ... AcuityBrands AYI 159.95 -0.95 s Boeing BA 262.32 -2.43 Adient ADNT 85.00 -0.10 BorgWarner BWA 52.13 -0.07 AdvanceAuto AAP 85.91 -0.87 BostonProperties BXP 122.88 -0.05 AdvSemiEngg ASX 6.26 0.06 s BostonScientific BSX 29.61 -0.08 Aegon AEG 5.86 0.04 Braskem BAK 28.55 -0.95 AerCap AER 52.55 -0.51 Bristol-Myers BMY 63.75 -0.67 Aetna AET 161.47 0.63 s AffiliatedMgrs AMG 195.85 -1.69 BritishAmTob BTI 64.25 0.06 s BroadridgeFinl BR 84.33 -0.03 AgilentTechs A 67.02 -0.23 AgnicoEagle AEM 44.91 0.55 BrookfieldMgt BAM 42.53 -0.36 Agrium AGU 107.79 0.14 BrookfieldInfr BIP 43.23 -0.29 AirProducts APD 153.60 -0.62 Brown&Brown BRO 49.65 0.33 AlaskaAir ALK 78.74 -0.95 Brown-Forman A BF.A 57.17 0.68 s Albemarle ALB 138.53 -2.25 Brown-Forman B BF.B 56.36 0.28 t Alcoa AA 47.93 ... BuckeyePtrs BPL 52.53 -0.88 BG 71.12 -0.05 AlexandriaRealEst ARE 121.96 -0.30 Bunge Alibaba BABA 173.13 -4.19 BurlingtonStores BURL 90.09 1.55 CBD Pao CBD 24.50 -0.45 Alleghany Y 565.04 0.39 Allegion ALLE 87.31 -0.71 CBRE Group CBG 39.60 -0.64 CBS A CBS.A 58.57 -0.90 Allergan AGN 187.77 -0.51 CBS 57.95 -0.97 AllianceData ADS 239.33 -0.04 CBS B CF Industries CF 36.31 -0.68 AllianceBernstein AB 25.20 -0.15 AlliantEnergy LNT 43.77 -0.10 CGI Group GIB 53.56 0.56 CIT Group CIT 49.42 -0.49 AllisonTransm ALSN 39.63 0.10 Allstate ALL 92.97 ... CMS Energy CMS 48.21 0.03 CNA Fin CNA 50.35 -0.14 s AllyFinancial ALLY 24.62 -0.27 CEO 126.40 -0.79 AlticeUSA ATUS 25.60 -0.42 CNOOC CPFLEnergia CPL 16.90 -0.21 Altria MO 64.50 -0.50 CRH 36.98 0.29 AlumofChina ACH 21.43 -0.57 CRH Ambev ABEV 6.52 -0.19 CVS Health CVS 75.91 -0.08 COG 25.23 -0.30 s Ameren AEE 61.72 0.16 CabotOil AmericaMovil AMX 18.83 -0.41 CamdenProperty CPT 92.23 -0.03 CampbellSoup CPB 46.45 0.48 AmericaMovil A AMOV 18.63 -0.43 CM 89.13 -0.09 t AmCampus ACC 43.46 -0.16 CIBC CanNtlRlwy CNI 81.78 0.20 AEP AEP 73.92 -0.06 AmericanExpress AXP 92.38 0.29 CanNaturalRes CNQ 32.54 -0.48 CanPacRlwy CP 177.11 -0.50 AmericanFin AFG 105.41 0.15 CAJ 35.90 0.12 AIG AIG 64.96 0.09 s Canon CapitalOne COF 89.72 0.05 AmerTowerREIT AMT 138.75 -0.32 AmerWaterWorks AWK 87.73 -0.03 CardinalHealth CAH 66.65 -0.06 Carlisle CSL 104.48 0.68 Amerigas APU 45.03 0.15 KMX 74.39 -0.75 s Ameriprise AMP 154.18 0.06 CarMax CCL 66.10 0.22 AmerisourceBrgn ABC 82.53 -0.68 Carnival CUK 66.27 0.25 s Ametek AME 68.49 -0.09 Carnival Amphenol APH 86.35 -0.22 s Caterpillar CAT 131.68 0.32 AnadarkoPetrol APC 48.10 -0.91 Celanese A CE 105.17 -0.43 CX 8.08 0.12 Andeavor ANDV 105.85 -0.71 Cemex AB InBev BUD 125.10 -0.39 CenovusEnergy CVE 9.69 -0.22 CNC 97.99 1.49 AnnalyCap NLY 12.09 -0.20 Centene AnteroResources AR 19.08 -0.38 CenterPointEner CNP 29.67 -0.03 Anthem ANTM 195.64 0.95 CentraisElBras EBR 6.87 0.12 s Aon AON 151.94 0.40 CenturyLink CTL 18.80 -0.24 Apache APA 40.30 -1.23 Chemours CC 55.95 0.06 CVX 118.93 0.29 ApartmtInv AIV 44.11 0.04 Chevron ApolloGlobalMgmt APO 32.15 0.12 ChinaEastrnAir CEA 25.37 -0.11 ChinaLifeIns LFC 16.17 -0.05 AquaAmerica WTR 35.88 -0.14 Aramark ARMK 42.73 -0.56 ChinaMobile CHL 50.70 -0.33 ChinaPetrol SNP 72.53 -0.89 s ArcelorMittal MT 30.09 0.25 ArcherDaniels ADM 43.57 0.08 ChinaSoAirlines ZNH 34.76 -0.16 ChinaTelecom CHA 51.00 -0.66 Arconic ARNC 24.35 -2.82 AristaNetworks ANET 191.57 -0.11 ChinaUnicom CHU 14.31 -0.04 CMG 320.45 -4.31 ArrowElec ARW 83.19 -0.39 Chipotle CB 155.19 1.19 AstraZeneca AZN 34.39 -0.23 Chubb ... Athene ATH 53.95 0.23 ChunghwaTelecom CHT 33.82 AtmosEnergy ATO 86.58 -0.29 Church&Dwight CHD 46.19 0.01 CI 193.38 1.96 Autohome ATHM 59.48 0.34 s Cigna Autoliv ALV 122.87 -0.10 CimarexEnergy XEC 114.28 -3.06 C 73.53 ... AutoZone AZO 589.00 -1.06 Citigroup Avalonbay AVB 181.98 0.79 CitizensFin CFG 38.50 0.17 CLX 128.57 0.80 Avangrid AGR 48.27 -0.03 Clorox COH 39.80 -0.55 AveryDennison AVY 99.01 -0.70 Coach AxaltaCoating AXTA 29.38 0.07 Coca-Cola KO 46.32 -0.06 Coca-Cola Euro CCE 41.75 -0.18 BB&T BBT 47.41 -0.09 BCE BCE 46.86 -0.09 Coca-Cola Femsa KOF 70.42 -1.02 Colgate-Palmolive CL 72.19 -0.13 BHPBilliton BHP 41.22 -0.05 BHPBilliton BBL 36.43 -0.04 ColonyNorthStar CLNS 12.51 0.01 s CMA 78.54 -0.53 BP BP 38.79 0.04 Comerica SBS 9.42 -0.21 BRF BRFS 13.60 -0.24 SABESP BT Group BT 18.27 0.15 ConagraBrands CAG 34.21 0.30 s BWX Tech BWXT 60.12 0.26 ConchoRscs CXO 131.70 -2.41 t BakerHughes BHGE 31.47 -1.79 ConocoPhillips COP 50.26 0.01 ED 85.10 0.24 s Ball BLL 42.91 0.61 ConEd BancoBilbaoViz BBVA 8.41 -0.16 ConstBrands A STZ 211.71 0.46 BancodeChile BCH 90.85 -1.53 ContinentalRscs CLR 37.47 -0.43 COO 237.31 1.96 s BancoMacro BMA 135.46 10.46 Cooper GLW 30.01 -0.05 BcoSantChile BSAC 30.77 -0.04 Corning COTY 15.45 -0.40 BancoSantander SAN 6.46 -0.10 Coty BAP 207.35 -1.27 BanColombia CIB 43.27 -0.22 Credicorp s BankofAmerica BAC 27.16 -0.01 s CreditSuisse CS 16.04 -0.06 BankofMontreal BMO 78.22 -0.02 CrestwoodEquity CEQP 23.95 -0.10 BankNY Mellon BK 52.51 -0.61 CrownCastle CCI 103.95 -1.04 BkNovaScotia BNS 64.27 0.12 CrownHoldings CCK 60.91 0.04 Barclays BCS 10.27 -0.04 Cullen/Frost CFR 97.90 -1.27 s Bard CR CMI 177.23 0.13 BCR 328.14 -2.02 s Cummins BarrickGold ABX 16.15 0.12 DTE Energy DTE 113.05 0.81 BaxterIntl BAX 64.12 0.53 DXC Tech DXC 91.49 -0.40 s BectonDickinson BDX 211.03 -0.80 s Danaher DHR 90.47 -0.32 DRI 82.35 -0.42 Berkley WRB 70.04 -0.09 Darden Monday, October 23, 2017 Stock NYSE Stock Net Sym Close Chg DaVita DVA 61.00 Deere DE 129.59 s DellTechnologies DVMT 82.71 DelphiAutomotive DLPH 97.77 DeltaAir DAL 52.28 DeutscheBank DB 16.63 DevonEnergy DVN 34.65 Diageo DEO 135.96 DigitalRealty DLR 120.22 DiscoverFinSvcs DFS 66.84 Disney DIS 98.70 DolbyLab DLB 59.84 s DollarGeneral DG 83.92 DominionEner D 80.38 Domino's DPZ 182.63 Donaldson DCI 47.14 DouglasEmmett DEI 39.83 s Dover DOV 95.54 s DowDuPont DWDP 71.55 DrPepperSnap DPS 90.33 DrReddy'sLab RDY 36.25 DukeEnergy DUK 87.54 DukeRealty DRE 28.74 ENI E 32.45 EOG Rscs EOG 96.97 EQT EQT 62.97 EQT Midstream EQM 71.22 EastmanChem EMN 88.67 Eaton ETN 78.48 s EatonVance EV 51.29 Ecolab ECL 132.60 Ecopetrol EC 9.84 EdisonInt EIX 80.01 EdwardsLife EW 114.11 s EmersonElectric EMR 66.10 EnbridgeEnPtrs EEP 14.77 Enbridge ENB 39.05 Encana ECA 11.15 EnelAmericas ENIA 10.87 EnelChile ENIC 5.97 EnelGenChile EOCC 27.24 EnergyTrfrEquity ETE 16.91 t EnergyTransfer ETP 17.24 s Entergy ETR 85.23 EnterpriseProd EPD 25.10 Equifax EFX 109.36 EquityLife ELS 86.98 EquityResdntl EQR 66.67 EssexProp ESS 259.64 EsteeLauder EL 109.07 EverestRe RE 235.85 EversourceEner ES 62.37 Exelon EXC 39.74 ExtraSpaceSt EXR 81.87 ExxonMobil XOM 83.24 FMC FMC 94.21 s FactSet FDS 186.35 FederalRealty FRT 126.61 FedEx FDX 225.34 Ferrari RACE 113.71 FiatChrysler FCAU 16.55 FibriaCelulose FBR 16.40 FidelityNatlFin FNF 35.46 FNFV Group FNFV 17.80 s FidelityNtlInfo FIS 95.71 58.com WUBA 66.57 s FirstData FDC 18.91 FirstRepBank FRC 99.26 FirstEnergy FE 32.13 FleetCorTech FLT 164.67 Flowserve FLS 44.61 Fluor FLR 42.58 FomentoEconMex FMX 88.70 FordMotor F 12.04 ForestCIty A FCE.A 24.74 Fortis FTS 36.98 Fortive FTV 72.09 s FortBrandsHome FBHS 67.54 Franco-Nevada FNV 79.92 FranklinRscs BEN 44.54 Freeport-McMoRan FCX 14.81 FreseniusMed FMS 48.82 GGP GGP 21.31 Gallagher AJG 62.96 Gap GPS 27.20 Gartner IT 124.78 Gazit-Globe GZT 9.82 GeneralDynamics GD 212.51 GeneralElec GE 22.32 GeneralMills GIS 51.67 GeneralMotors GM 45.15 Genpact G 29.57 GenuineParts GPC 89.27 Gerdau GGB 3.55 s Gildan GIL 31.46 GlaxoSmithKline GSK 40.62 GlobalPayments GPN 97.44 GoDaddy GDDY 44.98 Goldcorp GG 13.03 GoldmanSachs GS 242.13 s Graco GGG 127.23 Grainger GWW 209.50 GreatPlainsEner GXP 31.99 GpoAvalAcciones AVAL 8.86 GpFinSantandMex BSMX 8.89 GrupoTelevisa TV 23.58 GuidewireSoftware GWRE 78.16 HCA Healthcare HCA 80.75 1.65 0.44 0.47 0.93 -0.99 -0.35 -0.28 0.65 -3.17 0.27 -0.70 0.07 0.31 0.38 -3.48 -0.03 0.02 0.59 0.37 1.30 -0.43 -0.39 -0.11 -0.27 0.13 -0.38 -0.74 -0.15 -0.45 -0.61 -0.20 -0.10 0.41 1.03 0.32 -0.22 -0.26 -0.23 ... 0.03 0.13 -0.35 -0.30 -0.43 -0.15 -0.61 -0.41 0.53 0.30 0.27 -0.82 0.24 0.16 0.10 0.13 -0.34 0.59 0.81 0.27 -0.89 -0.17 0.16 -0.24 -0.20 0.43 -0.51 -0.17 -1.03 ... -0.01 -0.77 -0.61 -2.01 -0.06 -0.24 -0.11 0.08 0.54 0.25 -0.53 -0.02 -0.07 0.14 0.04 0.24 -0.50 0.05 -1.35 -1.51 -0.34 -0.46 -0.12 0.64 -0.08 -0.22 -0.22 0.27 -0.02 -0.06 -2.60 -0.73 1.69 -0.08 -0.14 -0.10 -0.26 0.39 -0.30 t HCP HCP 25.98 -0.38 HDFC Bank HDB 94.66 -1.34 s HP HPQ 22.12 0.10 HSBC HSBC 48.88 -0.66 Halliburton HAL 42.24 -1.09 Hanesbrands HBI 22.86 -0.63 HarleyDavidson HOG 48.51 -0.99 s Harris HRS 136.82 0.09 HartfordFinl HIG 54.06 -2.43 HealthcareAmer HTA 29.49 -0.28 Heico HEI 91.62 -0.67 s Heico A HEI.A 77.15 -0.20 Herbalife HLF 73.69 -0.93 Hershey HSY 109.12 0.10 Hess HES 45.21 0.18 HewlettPackard HPE 14.25 0.21 s Hexcel HXL 62.90 -0.86 Hilton HLT 70.42 -0.62 HollyFrontier HFC 36.27 -0.44 HomeDepot HD 164.74 1.31 HondaMotor HMC 30.37 0.14 s Honeywell HON 145.92 0.57 t HormelFoods HRL 30.43 -0.31 s DR Horton DHI 42.87 0.20 HostHotels HST 19.33 -0.13 HuanengPower HNP 25.21 0.04 Hubbell HUBB 121.32 -1.75 Humana HUM 246.13 0.32 HuntingtonIngalls HII 234.58 -0.84 Huntsman HUN 28.75 -0.22 HyattHotels H 61.33 -0.52 ICICI Bank IBN 7.97 0.06 ING Groep ING 18.51 -0.18 s Invesco IVZ 37.26 -0.08 s IDEX IEX 124.74 -1.03 s IllinoisToolWks ITW 155.51 0.48 Infosys INFY 14.83 0.27 s Ingersoll-Rand IR 93.76 0.25 Ingredion INGR 124.77 0.79 ICE ICE 65.69 -0.43 InterContinentl IHG 53.76 0.10 IBM IBM 159.55 -2.52 s IntlFlavors IFF 150.16 -0.20 IntlPaper IP 58.25 0.04 Interpublic IPG 20.63 -0.25 InvitationHomes INVH 22.66 -0.18 IronMountain IRM 40.06 -0.86 IsraelChemicals ICL 4.19 -0.06 ItauUnibanco ITUB 13.43 -0.33 s JPMorganChase JPM 99.34 -0.17 JacobsEngineering JEC 58.34 -0.48 JamesHardie JHX 14.80 0.08 JanusHenderson JHG 35.17 -0.10 s J&J JNJ 143.62 1.22 JohnsonControls JCI 41.61 -0.01 JonesLangLaSalle JLL 129.49 -1.15 JuniperNetworks JNPR 25.76 -0.27 KAR Auction KAR 47.54 -0.30 KB Fin KB 50.38 0.18 KKR KKR 20.37 -0.01 KT KT 14.28 -0.07 KSCitySouthern KSU 106.01 0.82 Kellogg K 61.48 0.03 KeyCorp KEY 18.45 -0.04 KeysightTechs KEYS 42.53 -0.33 KilroyRealty KRC 71.52 -0.70 KimberlyClark KMB112.53 -0.91 KimcoRealty KIM 18.87 0.10 t KinderMorgan KMI 18.12 -0.30 Knight-Swift KNX 40.23 -0.05 Kohl's KSS 44.16 -0.33 s KoninklijkePhil PHG 41.96 0.39 KoreaElcPwr KEP 17.81 -0.41 Kroger KR 21.35 0.33 s Kyocera KYO 66.13 1.23 LATAMAirlines LTM 13.64 -0.17 L Brands LB 43.92 0.17 LG Display LPL 12.94 -0.38 LINE LN 36.34 -0.14 L3 Tech LLL 189.20 -0.22 LabCpAm LH 151.77 0.05 s LambWeston LW 50.90 0.27 LasVegasSands LVS 63.13 0.44 Lazard LAZ 45.54 -0.49 Lear LEA 172.31 -1.43 Leggett&Platt LEG 49.08 0.16 Leidos LDOS 61.78 -0.40 Lennar A LEN 57.30 -0.20 Lennar B LEN.B 48.30 -0.24 s LennoxIntl LII 193.43 13.13 LeucadiaNatl LUK 25.55 -0.46 Level3Comms LVLT 53.19 -0.32 LibertyProperty LPT 41.55 0.15 EliLilly LLY 87.18 -0.05 s LincolnNational LNC 75.62 0.07 LionsGate A LGF.A 29.59 -0.50 LionsGate B LGF.B 28.44 -0.60 LiveNationEnt LYV 43.14 -0.06 LloydsBanking LYG 3.60 -0.02 LockheedMartin LMT 320.73 0.73 Loews L 48.70 -0.30 Lowe's LOW 80.41 0.37 LyondellBasell LYB 98.56 -0.38 M&T Bank MTB 164.94 -0.26 MGM Resorts MGM 30.90 -0.13 MPLX MPLX 33.44 -0.66 MSCI MSCI 121.70 -0.30 Macerich MAC 57.58 0.82 t MacquarieInfr MIC 68.64 -2.24 Macy's M 21.33 0.16 MagellanMid MMP 67.59 -0.52 s MagnaIntl MGA 54.99 -0.40 s Manpower MAN 121.13 -1.61 ManulifeFin MFC 20.54 -0.07 MarathonOil MRO 13.63 -0.30 MarathonPetrol MPC 56.34 -1.15 Markel MKL 1077.42 -0.81 Marsh&McLennan MMC 84.28 -0.16 MartinMarietta MLM 213.25 -2.91 s Masco MAS 40.11 0.02 Mastercard MA 145.56 0.18 McCormick MKC 99.22 -0.04 McCormickVtg MKC.V 99.12 -0.25 McDonalds MCD 163.34 -2.96 McKesson MCK 148.30 -2.48 Medtronic MDT 79.02 0.68 Merck MRK 63.40 -0.48 s MetLife MET 53.44 0.15 s MettlerToledo MTD 667.37 -1.35 MichaelKors KORS 49.44 -0.51 s MicroFocus MFGP 33.05 0.60 New Highs and Lows | WSJ.com/newhighs Continued From Page B6 Stock 52-Wk % Stock Sym Hi/Lo Chg SPDR DJIA Tr ProShrUlSemi USD ProShrUlTech ROM ProShUltDow30 UDOW ProShUltraProFin FINU ProShUltMC400 UMDD ProShUltS&P500 UPRO RenaissanceIPOETF IPO SPDRGlobalDow DGT SPDRMFSSysGrowth SYG SPDRMFSSysValueEqu SYV SPDRMSCIWorldStrat QWLD SPDR NYSE Tech XNTK SPDRPortfolioLC SPLG SPDRS&P500Value SPYV SPDRS&P500Growth SPYG SPDRS&P500HiDiv SPYD SPDR Ptf TSM SPTM SPDRRuss1000Mom ONEO SPDR S&P500MidGr MDYG SPDR S&P400MidVl MDYV SPDR Aero & Dfns XAR SPDRS&PCapitalMkts KCE SPDRS&P500Buyback SPYB SPDRS&P500Fossil SPYX SPDRS&PSft&Svs XSW SPDRS&PTechHardwr XTH SPDRGenderDivers SHE SPDR US SC LowVol SMLV SPDRSSgAIncmAllctn INKM SchwabFundUSBrd FNDB SchwabFundUSLrgCo FNDX Schwab1000Index SCHK SchwabUS BrdMkt SCHB SchwabUS Div SCHD SchwabUS LC SCHX SchwabUS LC Grw SCHG SchwabUS LC Val SCHV SchwabUS MC SCHM 114.89 81.65 79.28 92.33 104.05 125.11 27.93 82.42 77.11 63.93 73.90 82.11 30.28 29.81 31.87 36.91 32.04 74.39 151.65 100.55 82.95 54.40 59.52 62.50 68.59 79.91 71.42 97.73 33.56 35.70 35.91 25.39 62.34 48.67 61.54 67.59 53.27 51.28 1.5 -1.1 -0.4 -0.5 -0.9 -1.1 -1.0 -0.4 -0.3 -0.1 0.1 -0.4 -0.3 -0.1 -0.5 -0.1 -0.4 -0.3 -0.4 -0.5 -1.0 -0.6 0.1 -0.3 -0.7 -0.1 -0.3 -0.4 -0.1 -0.3 -0.2 -0.4 -0.4 0.1 -0.4 -0.5 -0.2 -0.4 52-Wk % Sym Hi/Lo Chg Stock DIA SPDR S&PMdCpTr MDY SPDR S&P 500 SPY SPDR S&P Div SDY SPDR S&P Home XHB SPDR S&P Semi XSD TechSelectSector XLK VanEckAgribus MOO VanEckMornWideMoat MOAT VanEckSemiconduc SMH VangdExtMkt VXF VangdMatrls VAW VangdInfoTech VGT VangdDivApp VIG VangdFinls VFH VangdGrowth VUG VangdHlthCr VHT VangdHiDiv VYM VangdLC VV VangdMegaCap MGC VangdMegaVal MGV VangdMC VO VangdMCGrowth VOT VangdMC Val VOE VangdS&P500 VOO VangdS&P500 Grw VOOG VangdS&P500Val VOOV VangdS&PMC400 IVOO VangdS&P400Grwth IVOG VangdS&P400Val IVOV VangdSC VB VangdTotalStk VTI VangdTotlWrld VT VangdValue VTV VelocityShVIXShrt XIVH VirtusWMCGlb VGFO WBIPwrFactorHiDiv WBIY WBITacticalHiIncm WBIH WBITacticalLCS WBIL WBITacticalLCV WBIF 233.58 333.83 257.51 93.96 41.46 68.42 61.25 60.14 41.14 99.27 109.00 133.29 158.42 97.55 67.32 135.65 156.54 83.41 118.30 88.39 73.92 150.67 124.97 108.06 236.49 132.30 106.24 123.76 129.19 119.14 143.78 132.68 72.14 102.66 68.35 25.31 25.43 24.88 26.09 27.32 -0.2 -0.5 -0.4 -0.1 0.1 0.6 -0.5 -0.2 -0.4 0.4 -0.7 -0.3 -0.4 0.1 -0.3 -0.6 -0.3 -0.2 -0.4 -0.4 -0.2 -0.3 -0.5 -0.3 -0.4 -0.5 ... -0.5 -0.4 -0.6 -0.6 -0.4 -0.4 -0.2 -2.5 0.6 0.5 -0.1 0.3 0.3 Stock 52-Wk % Sym Hi/Lo Chg WBITacticalLCY WBIG WBITacticalSMG WBIA WisdTrJpnCapGds DXJC WisdTrJpnHdgQuDiv JHDG WisdTrJapanHdg DXJ WisdTrUSDivxFin DTN WisdTrUSEarn500 EPS WisdTrUSHiDiv DHS WisdTrUSLCDivFd DLN WisdTrUSLCValueFd EZY WisdTrUSMCEarn EZM WisdTrUSTotalDivFd DTD XtrkrsJpnJPXNik400 JPN XtrkrsMSCIAWxUS DBAW XtrkrsMSCIEAFE DBEF XtrkrsMSCIJapan DBJP XtrkrsRussell1000 DEUS 24.41 24.95 27.72 28.61 57.25 86.58 89.73 71.57 89.09 78.01 37.97 89.83 28.29 27.89 31.78 42.60 31.02 AdvShRangerEqBear HDGE PathS&P500VIXMT VXZ iPathS&P500VIXST VXX BarclaysETN+Select ATMP CTrksETNsMillerHwd MLPC DirexFinlBear3 FAZ DirexMcBear3 MIDZ DirexS&P500Br3 SPXS DirexSemiBear3 SOXS DirexTechBear3 TECS ETRACS Alerian MLP AMU ETRACS2xMLvAlerian MLPQ ElemntsGrain GRU IQMacKayShMuni MMIN InfraCapMLPETF AMZA JPM AlerianMLP AMJ KraneEMCnsTech KEMQ ProShShtDow30 DOG ProShShtFinls SEF ProShShtMC400 MYY 8.23 19.13 33.54 20.31 15.12 13.35 15.14 33.78 17.61 8.02 16.90 35.16 3.40 25.04 8.29 26.83 24.71 15.87 12.08 11.64 0.1 1.3 3.1 -1.3 -1.4 0.6 1.5 1.1 -1.5 1.0 -1.3 -3.4 -0.1 -0.1 -2.0 -1.5 -1.0 0.2 0.2 0.3 Data provided by Monday, October 23, 2017 Net YTD Net YTD NAV Chg % Ret Fund NAV Chg % Ret Fund WshA p -0.17 25.7 Baird Funds AggBdInst -0.15 17.2 CorBdInst -0.15 -0.05 +0.02 -0.15 -0.15 -0.01 -0.22 -0.26 ... -0.22 -0.08 -0.12 -0.18 -0.16 -0.17 ... 13.3 11.5 3.3 12.1 20.1 28.3 17.2 19.8 6.9 14.5 10.6 25.7 29.8 27.8 21.8 4.9 45.17 -0.11 14.5 IntSmVa 10.90 11.26 BlackRock Funds A 20.27 GlblAlloc p BlackRock Funds Inst EqtyDivd 23.01 20.40 GlblAlloc HiYldBd 7.87 StratIncOpptyIns 9.98 Bridge Builder Trust 10.19 CoreBond Dimensional Fds 11.02 5GlbFxdInc 30.05 EmgMktVa EmMktCorEq 22.26 14.12 IntlCoreEq IntlVal 19.75 21.33 IntSmCo US CoreEq1 +0.01 +0.01 52-Wk % Sym Hi/Lo Chg Stock 31.40 15.02 23.47 9.67 12.83 9.83 29.63 18.09 23.95 28.80 44.46 11.42 23.15 27.86 6.26 23.30 0.4 6.4 0.5 -0.9 1.2 0.3 -0.6 -0.5 -2.3 -0.7 0.8 -1.3 1.2 3.2 1.9 -1.6 CET 26.71 0.1 NYSE Arca lows - 36 NYSE American lows - 14 e-Ex-distribution. f-Previous day’s quotation. g-Footnotes x and s apply. j-Footnotes e and s apply. k-Recalculated by Lipper, using updated data. p-Distribution costs apply, 12b-1. rRedemption charge may apply. s-Stock split or dividend. t-Footnotes p and r apply. v-Footnotes x and e apply. x-Ex-dividend. z-Footnote x, e and s apply. NA-Not available due to incomplete price, performance or cost data. NE-Not released by Lipper; data under review. NN-Fund not tracked. NS-Fund didn’t exist at start of period. American Century Inv 43.86 Ultra American Funds Cl A 31.46 AmcpA p 41.13 AMutlA p BalA p 27.24 12.95 BondA p 63.03 CapIBA p CapWGrA 51.86 56.70 EupacA p 62.61 FdInvA p GwthA p 50.35 10.51 HI TrA p 41.00 ICAA p IncoA p 23.45 44.41 N PerA p 46.68 NEcoA p NwWrldA 65.77 56.00 SmCpA p 13.04 TxExA p MidAmApt MAA 104.41 -0.40 MitsubishiUFJ MTU 6.50 -0.01 MizuhoFin MFG 3.56 -0.02 MobileTeleSys MBT 10.43 -0.09 s MohawkIndustries MHK 264.14 -0.38 MolsonCoors B TAP 83.61 0.36 Monsanto MON 122.00 -0.15 s Moody's MCO 146.06 0.40 s MorganStanley MS 50.61 -0.07 Mosaic MOS 21.03 -0.38 MotorolaSolutions MSI 89.94 -0.06 NRG Energy NRG 24.89 -0.51 NTTDoCoMo DCM 23.55 -0.03 NVR NVR 3190.04-33.21 NationalGrid NGG 62.55 0.54 NatlOilwell NOV 33.80 -0.29 NatlRetailProp NNN 41.61 -0.11 NewOrientalEduc EDU 93.97 1.22 NY CmntyBcp NYCB 12.71 -0.14 t NewellBrands NWL 40.16 -0.21 NewfieldExpln NFX 28.52 -1.26 NewmontMining NEM 37.37 -0.42 s NextEraEnergy NEE 154.38 0.22 NielsenHoldings NLSN 41.38 -0.38 Nike NKE 53.66 0.60 NiSource NI 26.82 0.16 NobleEnergy NBL 27.30 -0.46 Nokia NOK 6.03 -0.05 NomuraHoldings NMR 5.78 -0.01 Nordstrom JWN 41.77 -0.38 NorfolkSouthern NSC 131.87 -0.88 NorthropGrumman NOC 294.05 -0.55 Novartis NVS 85.91 0.17 NovoNordisk NVO 50.20 -0.35 Nucor NUE 59.45 -0.55 t NuSTAREnergy NS 33.60 -1.17 OGE Energy OGE 37.23 0.14 ONEOK OKE 55.05 -0.95 OccidentalPetrol OXY 65.05 -0.42 Och-Ziff OZM 3.39 -0.07 Olin OLN 34.55 -0.58 OmegaHealthcare OHI 31.85 -0.35 Omnicom OMC 73.01 -0.68 Oracle ORCL 49.31 0.06 Orange ORAN 16.00 -0.01 OrbitalATK OA 132.95 0.26 Orix IX 84.98 -0.02 Oshkosh OSK 87.09 -0.04 s OwensCorning OC 80.22 0.11 PG&E PCG 57.26 -0.60 PLDT PHI 32.81 0.01 PNC Fin PNC 136.77 -0.18 POSCO PKX 73.65 -0.75 s PPG Ind PPG 116.89 -0.87 PPL PPL 38.13 0.38 s PVH PVH 129.68 1.37 PackagingCpAm PKG 118.14 -0.22 PaloAltoNtwks PANW 148.23 -1.38 ParkHotels PK 28.03 -0.45 s ParkerHannifin PH 182.87 -1.63 ParsleyEnergy PE 24.33 -1.54 Pearson PSO 9.10 ... PembinaPipeline PBA 32.82 -0.04 s Pentair PNR 70.82 -0.35 PepsiCo PEP 111.69 0.08 PerkinElmer PKI 71.64 -0.09 Perrigo PRGO 86.32 -1.12 PetroChina PTR 63.33 -0.90 PetroleoBrasil PBR 10.21 -0.14 PetroleoBrasilA PBR.A 9.98 -0.15 s Pfizer PFE 36.40 -0.02 PhilipMorris PM 109.36 -0.16 Phillips66 PSX 91.24 0.44 PinnacleFoods PF 56.02 -0.03 PinnacleWest PNW 88.81 0.03 PioneerNatRscs PXD 143.93 -0.82 PlainsAllAmPipe PAA 19.88 -0.51 PlainsGP PAGP 20.18 -0.57 PolarisIndustries PII 106.92 0.46 Potash POT 19.30 0.03 s Praxair PX 142.44 -0.70 PrincipalFin PFG 68.27 0.52 Procter&Gamble PG 87.30 -0.95 Progressive PGR 48.90 -0.01 Prologis PLD 64.46 0.02 PrudentialFin PRU 110.79 0.01 s Prudential PUK 49.43 0.29 PublicServiceEnt PEG 48.98 -0.02 PublicStorage PSA 214.78 -0.31 s PulteGroup PHM 27.90 -0.10 t Qudian QD 26.59 -6.41 QuestDiag DGX 95.20 0.12 QuintilesIMS Q 102.16 -0.87 RELX RENX 21.85 -0.07 RELX RELX 22.65 -0.05 RPM RPM 52.08 -0.09 RalphLauren RL 89.56 -0.81 RaymondJames RJF 86.32 -0.31 s Raytheon RTN 189.07 0.17 RealtyIncome O 55.47 -0.07 s RedHat RHT 122.13 0.33 RegencyCtrs REG 63.74 0.09 RegionsFin RF 15.12 -0.10 ReinsuranceGrp RGA 144.71 -0.29 RepublicServices RSG 64.14 -0.05 ResMed RMD 79.82 0.82 RestaurantBrands QSR 66.65 -0.78 RiceEnergy RICE 28.09 -0.03 RioTinto RIO 47.96 -0.41 RobertHalf RHI 50.84 -0.81 s Rockwell ROK 187.67 -0.83 s RockwellCollins COL 134.99 -0.01 RogersComm B RCI 53.10 0.09 Rollins ROL 47.62 -0.08 s RoperTech ROP 253.74 -1.08 RoyalBkCanada RY 80.19 -0.07 RoyalBkScotland RBS 7.41 -0.09 RoyalCaribbean RCL 121.74 1.03 s RoyalDutchA RDS.A 61.01 -0.06 s RoyalDutchB RDS.B 63.11 0.08 SAP SAP 112.32 0.29 s S&P Global SPGI 162.10 0.55 SINOPECShanghai SHI 61.54 -1.01 SK Telecom SKM 25.65 -0.25 SLGreenRealty SLG 97.92 0.52 s Salesforce.com CRM 98.44 -0.46 Sanofi SNY 49.62 0.11 Sasol SSL 28.65 -0.21 Scana SCG 48.35 -0.69 Schlumberger SLB 61.91 -1.24 SchwabC SCHW 44.47 -0.21 NYSE American highs - 1 Top 250 mutual-funds listings for Nasdaq-published share classes with net assets of at least $500 million each. NAV is net asset value. Percentage performance figures are total returns, assuming reinvestment of all distributions and after subtracting annual expenses. Figures don’t reflect sales charges (“loads”) or redemption fees. NET CHG is change in NAV from previous trading day. YTD%RET is year-to-date return. 3-YR%RET is trailing three-year return annualized. Fund Net Sym Close Chg Stock ProShShrtS&P500 SH ProShUltVIXST UVXY ProShUltShtDow30 SDOW ProShUltraProShFnl FINZ ProShUltProShS&P SPXU ProShUltShDow30 DXD ProShrUSHlthCr RXD ProShrUSInd SIJ ProShrUS MSCI EAFE EFU ProShrUS MSCI Jpn EWV ProShUltShtS&P500 SDS ProShrUSSemi SSG ProShsVIXMTFut VIXM ProShsVIXSTFut VIXY TeucriumWheatFund WEAT E-TRACS AlrInfr MLPI 0.2 ... 0.9 0.6 0.1 -0.3 -0.3 -0.3 -0.1 0.1 -0.4 -0.2 0.3 -0.3 -0.1 0.1 ... CentralSecs Mutual Funds | WSJ.com/fundresearch Explanatory Notes Net Sym Close Chg 3.7 US CoreEq2 4.2 US Small US SmCpVal ... 11.5 US TgdVal USLgVa Net YTD NAV Chg % Ret 23.30 21.91 20.83 36.35 38.93 25.00 38.84 -0.04 -0.09 -0.09 -0.25 -0.28 -0.19 -0.09 -0.04 12.7 Dodge & Cox ... 11.7 Balanced 109.25 -0.26 ... 7.8 GblStock 14.02 -0.04 ... 4.3 Income 13.83 +0.02 46.88 +0.05 Intl Stk +0.01 3.7 Stock 201.96 -0.93 DoubleLine Funds ... 2.2 TotRetBdI NA ... -0.17 27.2 Edgewood Growth Instituti -0.11 30.1 EdgewoodGrInst 29.21 -0.16 -0.02 23.3 Federated Instl -0.04 20.6 StraValDivIS NA ... -0.02 24.7 Fidelity 23.2 15.0 13.2 8.2 4.6 5.0 12.3 9.2 17.7 4.0 23.0 12.7 NA 31.5 NA Daxor DXR EMX Royalty EMX GoldenMinerals AUMN JRjr33 JRJR Myomo MYO NanoViricides NNVC NorthernOil&Gas NOG ParamountGoldNV PZG RegionalHlthPfdA RHEpA RegionalHlthProp RHE SamsonOil&Gas SSN TanRoyExplr TRX VolitionRX VNRX VoltInfoSci VISI 4.06 0.73 0.40 0.20 2.74 0.94 0.65 1.19 10.05 0.44 0.32 0.25 2.11 2.15 -8.3 -1.1 -0.3 -10.4 -11.1 -5.9 -4.9 1.6 -15.1 2.8 -2.1 -0.4 -3.1 -2.2 Nasdaq highs - 172 AGNCN 26.71 ASML 179.28 ABMD 177.76 Fund Net YTD NAV Chg % Ret Fund 500IdxInst 500IdxInstPrem 500IdxPrem ExtMktIdxPrem r IntlIdxPrem r SAIUSLgCpIndxFd TMktIdxF r TMktIdxPrem USBdIdxInstPrem 89.76 89.76 89.76 62.42 43.08 13.76 74.48 74.47 11.60 Fidelity Advisor I 32.89 NwInsghtI Fidelity Freedom 16.64 FF2020 14.39 FF2025 FF2030 18.02 Freedom2020 K 16.64 Freedom2025 K 14.39 Freedom2030 K 18.02 Freedom2035 K 15.11 Freedom2040 K 10.62 Fidelity Invest 23.56 Balanc 85.23 BluCh 124.14 Contra 124.13 ContraK 10.29 CpInc r DivIntl 41.13 178.61 GroCo 178.56 GrowCoK InvGB 7.93 11.28 InvGrBd 52.58 LowP r LowPriStkK r 52.54 104.03 MagIn 105.54 OTC Puritn 22.90 SrsEmrgMkt 21.12 SrsGroCoRetail 17.54 SrsIntlGrw 16.11 10.83 SrsIntlVal 10.67 TotalBond -0.36 -0.35 -0.35 -0.42 -0.01 -0.05 -0.34 -0.33 +0.01 0.3 1.6 0.8 16.4 16.4 16.4 13.7 22.1 16.4 15.9 15.9 3.1 -0.18 23.2 -0.03 12.8 -0.04 13.7 -0.05 16.0 -0.03 NS -0.03 NS -0.05 NS -0.05 NS -0.03 NS -0.10 -0.61 -0.78 -0.78 -0.02 -0.06 -1.30 -1.30 +0.01 +0.01 +0.10 +0.10 -0.52 -1.18 -0.07 -0.14 -0.12 -0.03 -0.02 ... 13.5 29.1 26.9 27.0 10.4 23.5 30.6 30.7 3.5 3.8 14.7 14.8 20.6 32.5 14.8 34.5 31.3 25.9 18.2 3.8 ScottsMiracleGro SMG 98.57 SealedAir SEE 44.86 SemicondctrMfg SMI 6.83 SempraEnergy SRE 114.43 s SensataTech ST 50.30 ServiceCorp SCI 34.16 ServiceMaster SERV 46.71 s ServiceNow NOW 123.99 ShawComm B SJR 21.71 SherwinWilliams SHW 386.58 ShinhanFin SHG 44.16 Shopify SHOP 102.91 SimonProperty SPG 165.44 s SmithAO AOS 61.55 Smith&Nephew SNN 37.93 Smucker SJM 104.79 Snap SNAP 14.97 SnapOn SNA 162.15 SOQUIMICH SQM 59.40 Sony SNE 37.51 Southern SO 52.20 SoCopper SCCO 43.42 SouthwestAirlines LUV 58.76 SpectraEnerPtrs SEP 42.39 SpectrumBrands SPB 109.36 s SpiritAeroSys SPR 80.10 Sprint S 6.86 Square SQ 32.53 s StanleyBlackDck SWK 158.19 StarwoodProp STWD 21.74 StateStreet STT 96.17 Statoil STO 20.42 s Steris STE 91.27 s STMicroelec STM 20.71 s Stryker SYK 149.92 SumitomoMits SMFG 7.81 SunCommunities SUI 88.78 SunLifeFinancial SLF 39.59 SuncorEnergy SU 33.19 SunTrustBanks STI 59.49 SynchronyFin SYF 32.68 Syngenta SYT 92.12 Sysco SYY 54.95 TAL Education TAL 33.65 s TE Connectivity TEL 88.08 Telus TU 35.88 Ternium TX 31.65 TIM Part TSU 18.49 TJX TJX 72.20 TableauSoftware DATA 79.15 TaiwanSemi TSM 41.21 TargaResources TRGP 42.77 Target TGT 62.58 TataMotors TTM 32.16 TechnipFMC FTI 24.99 TeckRscsB TECK 22.93 s TelecomArgentina TEO 33.80 TelecomItalia TI 9.10 TelecomItalia A TI.A 7.27 s TeledyneTech TDY 166.15 Teleflex TFX 242.99 TelefonicaBras VIV 15.72 Telefonica TEF 10.29 TelekmIndonesia TLK 31.24 Tenaris TS 26.20 Teradyne TER 38.94 TevaPharm TEVA 14.54 Textron TXT 53.70 s ThermoFisherSci TMO 194.37 ThomsonReuters TRI 47.54 ThorIndustries THO 130.52 s 3M MMM 221.55 Tiffany TIF 93.67 TimeWarner TWX 101.33 s Toll Bros TOL 44.36 s Torchmark TMK 83.70 Toro TTC 62.32 TorontoDomBk TD 56.55 Total TOT 54.07 TotalSystem TSS 68.15 ToyotaMotor TM 122.77 TransCanada TRP 48.59 TransDigm TDG 267.58 s TransUnion TRU 50.69 s Travelers TRV 134.45 TurkcellIletism TKC 9.45 TurquoiseHill TRQ 3.15 Twitter TWTR 17.37 TylerTech TYL 177.78 TysonFoods TSN 71.52 UBS Group UBS 17.33 UDR UDR 38.55 UGI UGI 47.80 US Foods USFD 27.52 UltraparPart UGP 24.13 UnderArmour A UAA 16.85 UnderArmour C UA 15.22 Unilever UN 55.89 Unilever UL 54.28 UnionPacific UNP 113.19 UnitedContinental UAL 59.10 UnitedMicro UMC 2.57 UPS B UPS 119.68 UnitedRentals URI 141.48 US Bancorp USB 54.13 US Steel X 27.99 UnitedTech UTX 120.89 s UnitedHealth UNH 207.01 UniversalHealthB UHS 112.96 UnumGroup UNM 52.36 VEREIT VER 7.97 s VF VFC 69.95 Visa V 107.53 VailResorts MTN 229.24 Vale VALE 10.05 ValeroEnergy VLO 77.40 Vantiv VNTV 69.86 s VarianMed VAR 107.37 Vedanta VEDL 20.30 VeevaSystems VEEV 60.27 Ventas VTR 62.50 Verizon VZ 48.99 s VistraEnergy VST 19.48 s VMware VMW 119.11 VornadoRealty VNO 74.57 VoyaFinancial VOYA 39.77 VulcanMaterials VMC 121.08 WABCO WBC 151.57 WEC Energy WEC 66.80 W.P.Carey WPC 69.40 Wabtec WAB 76.39 s Wal-Mart WMT 88.65 WasteConnections WCN 70.71 WasteMgt WM 77.72 s Waters WAT 187.55 Watsco WSO 161.71 Wayfair W 67.10 WellCareHealth WCG 181.36 WellsFargo WFC 54.91 Welltower HCN 67.49 WestPharmSvcs WST 92.51 WestarEnergy WR 52.89 s WestAllianceBcp WAL 55.10 WesternGasEquity WGP 39.29 t WesternGasPtrs WES 47.87 WesternUnion WU 20.20 WestlakeChem WLK 83.26 WestpacBanking WBK 26.00 s WestRock WRK 60.76 Weyerhaeuser WY 34.82 WheatonPrecMetals WPM 20.99 Whirlpool WHR 182.50 Williams WMB 28.84 WilliamsPartners WPZ 37.78 Wipro WIT 5.43 WooriBank WF 45.10 Wyndham WYN 108.27 XPO Logistics XPO 67.69 XcelEnergy XEL 49.27 Xerox XRX 33.28 Xylem XYL 63.68 YPF YPF 24.21 YumBrands YUM 75.55 YumChina YUMC 42.23 ZTO Express ZTO 15.38 s ZayoGroup ZAYO 36.12 ZimmerBiomet ZBH 121.70 s Zoetis ZTS 65.28 1.13 -0.10 -0.03 -0.50 0.45 -0.02 -0.10 0.13 -0.29 -0.05 -0.33 -0.63 -0.69 -0.43 -0.51 0.20 -0.80 -0.01 -0.08 -2.92 0.04 -0.44 -0.04 -0.48 0.11 0.07 -0.09 3.57 -0.02 0.73 -0.23 -0.14 0.51 0.68 0.09 -0.73 -0.50 -0.54 0.45 0.77 0.07 -0.38 -0.53 -3.09 -0.01 -0.34 -0.48 1.21 0.11 -0.01 -0.59 1.42 -0.94 0.84 -0.01 -0.68 -1.33 -0.10 -0.80 -0.31 -1.33 -0.11 -0.56 -0.27 0.23 -0.46 0.08 0.04 -0.49 -0.70 ... -1.30 -0.73 0.08 0.01 -0.10 -0.55 1.25 -0.62 0.08 -0.22 -0.40 -0.65 -0.66 Net Sym Close Chg Stock NASDAQ AGNC Invt AGNC 21.63 -0.16 Ansys ANSS 131.22 0.28 s ASML ASML 178.07 2.85 s Abiomed ABMD 176.00 1.38 ActivisionBliz ATVI 61.46 -1.17 AdobeSystems ADBE 172.16 -3.48 AkamaiTech AKAM 51.46 -0.41 AlexionPharm ALXN 135.20 -3.82 s AlignTech ALGN 202.76 1.88 Alkermes ALKS 49.47 -1.11 AlnylamPharm ALNY 115.57 0.87 Alphabet A GOOGL 985.54-19.53 Alphabet C GOOG 968.45-19.75 Altaba AABA 66.51 -1.00 Amazon.com AMZN 966.30-16.61 Amdocs DOX 65.94 -0.13 Amerco UHAL381.33 6.04 AmericanAirlines AAL 50.98 -0.95 Amgen AMGN 180.53 -2.43 AnalogDevices ADI 88.77 -0.16 Apple AAPL 156.17 -0.08 s AppliedMaterials AMAT 56.37 0.28 s ArchCapital ACGL 102.38 0.23 Atlassian TEAM 49.00 -1.17 Autodesk ADSK 118.99 -1.82 ADP ADP 117.01 1.08 s BOK Fin BOKF 89.85 -1.06 Baidu BIDU 266.13 1.23 BankofOzarks OZRK 45.71 -1.38 Biogen BIIB 328.55 -9.55 BioMarinPharm BMRN 86.46 -1.29 Bioverativ BIVV 58.92 -1.30 s bluebirdbio BLUE 140.35 -2.20 BrighthouseFin BHF 61.73 -0.39 Broadcom AVGO 244.27 0.03 CA CA 34.29 0.19 CDK Global CDK 65.58 0.14 CDW CDW 69.56 -0.06 CH Robinson CHRW 78.43 0.13 CME Group CME 134.61 -0.52 CSX CSX 54.12 -0.40 CadenceDesign CDNS 42.15 -0.13 Carlyle CG 23.88 -0.48 s CboeGlobalMkts CBOE 110.69 0.70 Celgene CELG 122.37 1.04 Cerner CERN 72.45 -0.56 CharterComms CHTR 345.07 -5.69 CheckPointSftw CHKP 117.52 -0.98 s ChinaLodging HTHT141.02 6.50 CincinnatiFin CINF 76.12 -0.34 Cintas CTAS 151.49 -0.71 s CiscoSystems CSCO 34.35 0.10 CitrixSystems CTXS 83.15 -0.34 s Cognex CGNX 122.68 0.24 s CognizantTech CTSH 74.40 -0.40 Coherent COHR 262.41 0.61 Comcast A CMCSA 36.55 -0.67 CommerceBcshrs CBSH 57.72 -0.28 CommScope COMM 32.49 -0.16 Copart CPRT 36.15 -0.33 CoStarGroup CSGP 283.70 1.14 Costco COST 162.04 1.27 Ctrip.com CTRP 48.43 0.08 DISH Network DISH 48.98 -0.32 DentsplySirona XRAY 61.82 -0.02 DiamondbackEner FANG 100.35 -2.18 t DiscoveryComm B DISCB 23.60 -0.05 DiscoveryComm A DISCA 19.62 -0.67 DiscoveryComm C DISCK 18.66 -0.60 s DollarTree DLTR 91.72 -0.65 E*TRADE ETFC 42.75 -0.45 s EastWestBancorp EWBC 60.91 -0.46 eBay EBAY 36.83 -0.78 ElbitSystems ESLT 149.30 -1.44 ElectronicArts EA 113.66 0.04 Equinix EQIX 458.81 -9.95 Ericsson ERIC 6.44 -0.01 ErieIndemnity A ERIE 123.78 -0.06 Exelixis EXEL 26.98 -0.19 Expedia EXPE 150.68 -2.12 ExpeditorsIntl EXPD 59.19 0.27 Company Amount Yld % New/Old Frq Symbol Payable / Record Increased AVX Corp Carolina Financial CONE Midstream Partners Hubbell Manhattan Bridge Permian Basin Royalty Tr Potlatch REIT Tower International VF Corp AVX CARO CNNX HUBB LOAN PBT PCH TOWR VFC 2.4 0.5 7.7 2.5 7.5 7.1 3.0 1.7 2.6 .115 /.11 .05 /.04 .3025 /.2922 .77 /.70 .11 /.1025 .054 /.04023 .40 /.375 .12 /.11 .46 /.42 Q Q Q Q Q M Q Q Q Nov16 /Nov02 Jan05 /Dec14 Nov14 /Nov03 Dec15 /Nov30 Jan15 /Dec29 Nov14 /Oct31 Dec29 /Dec08 Dec08 /Nov10 Dec18 /Dec08 5.1 .44 /.54 Q 11.4 .0727 /.21668 M Nov06 /Oct30 Nov14 /Oct31 Reduced Blackstone Group San Juan Basin Royalty Tr BX SJT Initial PowerShares PB US Agg Bd .05272 PBND Oct31 /Oct24 Funds and investment companies Alpine Glbl Dynamic Div Alpine Tot Dyn Div AlpnGlblPrProp Barings Corp Investors Barings Part Investors ChineseYuanDimSumBd FundInvGradeCorpBdPort PowerSh CA AMT-Fr Mun Bd PowerSh Natl AMT-Fr Muni PowerSh NY AMT-Fr Mun Bd PowerSh Taxable Mun Bd PowerShares DWA Tactical AGD AOD AWP MCI MPV DSUM PFIG PWZ PZA PZT BAB DWIN 52-Wk % Sym Hi/Lo Chg Stock 91.47 37.50 205.99 60.29 56.73 24.99 102.60 66.49 8.43 92.08 93.95 21.60 145.70 54.90 29.49 12.50 72.00 36.90 111.04 27.78 21.90 33.00 141.85 34.68 6.84 123.57 75.00 25.13 63.65 33.55 93.68 14.99 61.58 12.80 16.71 27.30 30.90 42.55 15.32 261.41 37.80 19.04 -0.2 28.4 0.9 0.2 0.5 -0.1 0.2 -0.4 0.6 -1.2 -0.6 0.7 -1.5 1.7 -0.5 -1.1 2.1 1.7 0.6 -0.6 -1.7 6.6 4.8 0.3 3.4 0.2 -0.5 2.1 1.0 2.0 -0.7 -15.9 -0.7 8.5 3.5 1.1 ... 30.8 -0.9 -0.6 0.1 1.8 ShtDurIncmA p 29.0 Lord Abbett F ShtDurIncm 9.4 NA 5.3 3.2 8.0 15.6 7.9 3.8 14.7 3.9 NA NA NA 7.9 12.6 15.9 11.8 9.9 3.4 23.9 7.0 .065 .0575 .05 .30 .27 .07198 .05475 .04859 .06356 .05533 .09907 .10782 M M M Q Q M M M M M M M Nov30 /Nov22 Nov30 /Nov22 Nov30 /Nov22 Nov10 /Oct30 Nov10 /Oct30 Oct31 /Oct24 Oct31 /Oct24 Oct31 /Oct24 Oct31 /Oct24 Oct31 /Oct24 Oct31 /Oct24 Oct31 /Oct24 52-Wk % Sym Hi/Lo Chg Stock FT APxJapan FPA FT CapStrength FTCS FT DorseyDyn5 FVC FT DorseyFoc5 FV FT NasdTechDiv TDIV FT JapanAlpha FJP FT LC CoreAlpha FEX FT LC GrwthAlpha FTC FT LC US Equity RNLC FT LC Value FTA FT LowBetaIincm FTLB FT MegaCap FMK FT MC CoreAlpha FNX FT NasdCleanEdge QCLN FT Nasd100Tech QTEC FT NasdSemicon FTXL FT Nasd100 EW QQEW FT RBAQualIncm QINC FT USEquityDiv RNDV FirstUnited FUNC FiveBelow FIVE Flex FLEX FlexShUSQualLC QLC FlirSystems FLIR Garmin GRMN GilatSatellite GILT GladstoneInvt GAIN GlbXConsciousCos KRMA GlbX Robotics&AI BOTZ GpoFinGalicia GGAL HeritageFin HFWA HollysysAuto HOLI Hurco HURC ICU Medical ICUI II-VI IIVI IPG Photonics IPGP IRSA Prop IRCP Illumina ILMN IntegratedDevice IDTI Intel INTC Intuit INTU IntuitiveSurgical ISRG Net YTD NAV Chg % Ret Fund 10.9 7.3 7.6 8.9 7.6 7.3 3.7 2.6 2.2 3.0 2.7 3.9 4.8 34.83 48.99 25.16 26.97 33.80 56.74 56.41 59.80 20.93 52.34 22.82 32.81 63.39 20.16 72.02 30.25 56.67 25.13 21.00 17.34 58.07 17.88 31.85 44.18 55.98 7.15 10.37 18.72 23.45 58.61 31.00 23.13 46.00 195.20 43.70 205.97 64.49 214.50 28.74 41.04 148.89 378.32 0.4 ... -0.2 -0.3 0.4 0.7 -0.2 -0.3 -0.1 -0.2 -0.7 0.5 -0.5 -0.2 0.2 0.4 -0.4 -0.6 0.6 ... -0.9 0.1 0.7 1.0 ... 1.4 1.3 -0.1 1.3 5.9 0.3 2.4 1.6 1.0 -0.2 1.6 4.9 0.8 1.5 1.0 -0.4 1.1 ExpressScripts ESRX 58.65 F5Networks FFIV 118.27 Facebook FB 171.27 Fastenal FAST 48.92 FifthThirdBncp FITB 28.43 Fiserv FISV 127.99 s Flex FLEX 17.79 s FlirSystems FLIR 43.76 Fortinet FTNT 40.17 Gaming&Leisure GLPI 36.56 s Garmin GRMN 55.80 GileadSciences GILD 80.17 Goodyear GT 33.91 Grifols GRFS 21.35 HD Supply HDS 36.41 Hasbro HAS 89.75 HenrySchein HSIC 82.85 Hologic HOLX 37.20 JBHunt JBHT 107.41 HuntingtonBcshs HBAN 14.11 IAC/InterActive IAC 123.67 IdexxLab IDXX 164.43 IHSMarkit INFO 43.96 INC Research INCR 54.40 s IPG Photonics IPGP 205.71 s IRSA Prop IRCP 64.49 IcahnEnterprises IEP 56.68 Icon ICLR 113.49 s Illumina ILMN 211.55 Incyte INCY 113.48 s Intel INTC 40.83 InteractiveBrkrs IBKR 50.55 s Intuit INTU 147.32 s IntuitiveSurgical ISRG 373.52 IonisPharma IONS 62.80 JD.com JD 38.43 JackHenry JKHY 106.40 JazzPharma JAZZ 140.16 JetBlue JBLU 19.88 KLA Tencor KLAC 107.80 KraftHeinz KHC 77.06 LKQ LKQ 37.06 s LamResearch LRCX 205.89 LamarAdvertising LAMR 66.90 LibertyBroadbandA LBRDA 90.93 LibertyBroadbandC LBRDK 92.71 LibertyGlobal A LBTYA 31.35 LibertyGlobal C LBTYK 30.40 LibertyLiLAC A LILA 21.83 LibertyLiLAC C LILAK 21.86 LibertyQVC A QVCA 23.16 LibertyVenturesA LVNTA 56.42 LibertyFormOne A FWONA 37.48 LibertyFormOne C FWONK 39.19 LibertyBraves A BATRA 24.62 LibertyBraves C BATRK 24.63 LibertySirius A LSXMA 43.25 LibertySirius C LSXMK 43.19 LincolnElectric LECO 97.21 LogitechIntl LOGI 37.15 LogMeIn LOGM 121.05 lululemon LULU 63.83 MarketAxess MKTX 191.24 Marriott MAR 115.31 s MarvellTech MRVL 18.47 MatchGroup MTCH 25.13 MaximIntProducts MXIM 52.00 MelcoResorts MLCO 23.78 MercadoLibre MELI 226.35 MicrochipTech MCHP 92.61 s MicronTech MU 41.56 Microsemi MSCC 52.04 s Microsoft MSFT 78.83 Middleby MIDD 117.05 Momo MOMO 31.58 Mondelez MDLZ 41.04 MonsterBeverage MNST 56.36 Mylan MYL 38.47 s NXP Semi NXPI 116.40 Nasdaq NDAQ 73.49 NatlInstruments NATI 43.90 NetApp NTAP 44.74 Netease NTES 275.09 Netflix NFLX 192.47 ... 4.27 ... Metropolitan West 10.66 ... TotRetBd 10.66 ... TotRetBdI 10.03 ... TRBdPlan MFS Funds Class I 41.04 -0.07 ValueI MFS Funds Instl 25.40 +0.02 IntlEq Mutual Series 32.87 -0.10 GlbDiscA Oakmark Funds Invest 33.88 -0.14 EqtyInc r 84.03 -0.45 Oakmark 29.00 -0.03 OakmrkInt Old Westbury Fds 14.81 -0.03 LrgCpStr Oppenheimer Y 41.78 -0.30 DevMktY 42.82 +0.02 IntGrowY Parnassus Fds 43.66 -0.09 ParnEqFd PIMCO Fds Instl NA ... AllAsset TotRt 10.29 +0.01 PIMCO Funds A IncomeFd NA ... PIMCO Funds D NA ... IncomeFd PIMCO Funds Instl NA ... IncomeFd PIMCO Funds P NA ... IncomeP Price Funds 94.73 -0.75 BlChip CapApp 29.59 -0.08 34.87 -0.09 EqInc EqIndex 68.93 -0.27 68.60 -0.47 Growth HelSci 74.52 -0.40 2.3 InstlCapG 2.7 3.0 3.0 14.5 25.4 9.3 11.4 15.9 27.8 15.4 30.7 23.5 12.0 NA 4.9 NA NA NA NA 30.5 13.0 12.3 16.2 28.8 26.1 -0.86 -1.21 -3.71 0.53 -0.17 -0.45 0.01 0.44 -0.15 -0.15 ... -1.04 -0.03 -0.27 -0.34 -8.44 -1.68 0.19 0.83 -0.08 -1.05 -0.28 -0.07 -1.45 3.16 2.99 -0.81 -0.14 1.67 -0.71 0.40 1.16 -0.65 3.94 -1.59 -0.57 0.62 -3.89 -0.47 -0.54 0.35 -0.28 0.55 -1.41 -1.05 -0.79 -0.28 -0.28 -0.16 -0.18 -0.22 -1.30 -1.22 -1.23 -0.26 -0.20 -0.51 -0.59 1.31 0.44 1.90 0.54 0.98 0.29 0.06 -0.56 -0.09 -0.13 -9.38 -0.12 0.06 0.43 0.02 -4.06 -0.31 0.02 -0.10 -0.04 0.52 0.57 -0.22 0.18 -1.54 -1.69 Net Sym Close Chg Stock NewsCorp A NWSA 13.75 NewsCorp B NWS 14.00 Nordson NDSN 125.49 NorthernTrust NTRS 95.41 NorwegianCruise NCLH 53.72 NVIDIA NVDA 196.62 OReillyAuto ORLY 205.65 s OldDomFreight ODFL 111.80 ON Semi ON 20.08 OpenText OTEX 33.89 PTC PTC 60.76 s Paccar PCAR 74.65 PacWestBancorp PACW 48.37 Paychex PAYX 64.34 PayPal PYPL 69.80 People'sUtdFin PBCT 18.75 s PilgrimPride PPC 30.87 Priceline PCLN 1934.55 Qiagen QGEN 34.14 Qorvo QRVO 69.80 Qualcomm QCOM 53.39 RandgoldRscs GOLD 98.23 RegenPharm REGN 432.76 RossStores ROST 64.31 Ryanair RYAAY104.61 SBA Comm SBAC 147.99 SEI Investments SEIC 62.68 Sina SINA 111.09 s SS&C Tech SSNC 42.10 SVB Fin SIVB 186.80 ScrippsNetworks SNI 83.54 Seagate STX 39.35 SeattleGenetics SGEN 62.37 Shire SHPG 144.78 SignatureBank SBNY 133.62 SiriusXM SIRI 5.70 Skyworks SWKS 104.77 Splunk SPLK 64.23 Starbucks SBUX 54.27 SteelDynamics STLD 38.83 Stericycle SRCL 72.64 Symantec SYMC 32.22 Synopsys SNPS 84.28 TD Ameritrade AMTD 48.14 TESARO TSRO 113.64 T-MobileUS TMUS 61.47 TRowePrice TROW 96.13 TakeTwoSoftware TTWO 105.01 Tesla TSLA 337.02 s TexasInstruments TXN 96.21 TractorSupply TSCO 58.43 Trimble TRMB 40.78 21stCenturyFoxA FOXA 26.69 21stCenturyFoxB FOX 26.01 UltaBeauty ULTA 202.36 UltimateSoftware ULTI 193.13 UniversalDisplay OLED 134.85 VEON VEON 3.91 VeriSign VRSN 107.96 VeriskAnalytics VRSK 84.77 VertxPharm VRTX 151.06 Viacom A VIA 33.20 Viacom B VIAB 26.31 Vodafone VOD 28.86 WPP WPPGY 89.81 WalgreensBoots WBA 67.51 Weibo WB 96.07 WesternDigital WDC 87.99 s WillisTwrsWatson WLTW 164.02 Workday WDAY 107.75 WynnResorts WYNN 144.76 Xilinx XLNX 71.68 Yandex YNDX 30.77 ZebraTech ZBRA 111.46 Zillow A ZG 40.75 Zillow C Z 40.93 ZionsBancorp ZION 46.39 0.04 -0.10 0.83 0.14 -0.01 -0.28 -0.25 -0.70 0.01 0.10 0.04 -0.27 0.38 0.30 -1.17 -0.14 -0.17 -7.56 0.01 -0.12 1.37 0.65 -0.22 0.08 -2.25 0.10 -1.02 0.61 0.12 -2.67 -0.96 4.41 -1.49 -0.47 -0.51 -0.05 -0.38 0.14 -0.30 -0.07 -0.05 -0.44 -0.04 -0.13 -2.76 1.01 -0.73 0.08 -8.08 1.03 -0.46 -0.34 -0.81 -0.83 -2.48 -0.29 0.55 -0.09 -0.98 -0.08 -3.57 -0.80 -0.39 -0.12 -0.88 -0.55 0.59 1.58 1.20 -0.81 0.32 -0.49 -0.39 0.08 -0.35 -0.32 -0.37 NYSE AMER CheniereEnergy LNG CheniereEnerPtrs CQP CheniereEnHldgs CQH ImperialOil IMO Amount Yld % New/Old Frq 45.52 27.98 25.38 30.98 -0.66 -0.24 -0.10 -0.32 Payable / Record PGF PGHY KBWD KBWY XRLV BKLN VRP LDRI SPLV VRIG PCF PIM PMO PPT PMM XSHD PVI PLW PCEF PGX PCY PHB PEY PICB SPHD 5.3 5.0 9.3 7.4 1.7 3.6 3.9 1.8 2.2 2.2 3.8 6.5 5.1 5.8 5.1 4.4 0.6 2.0 6.4 5.7 4.8 3.9 3.4 1.5 2.9 .08407 .1015 .18695 .2302 .045 .07 .08561 .03831 .084 .04602 .0283 .026 .0541 .026 .0318 .09157 .01282 .05351 .12778 .07189 .11764 .06233 .049 .03388 .10114 M M M M M M M M M M M M M M M M M M M M M M M M M Oct31 /Oct24 Oct31 /Oct24 Oct31 /Oct24 Oct31 /Oct24 Oct31 /Oct24 Oct31 /Oct24 Oct31 /Oct24 Oct31 /Oct24 Oct31 /Oct24 Oct31 /Oct24 Dec01 /Nov24 Dec01 /Nov24 Dec01 /Nov24 Dec01 /Nov24 Dec01 /Nov24 Oct31 /Oct24 Oct31 /Oct24 Oct31 /Oct24 Oct31 /Oct24 Oct31 /Oct24 Oct31 /Oct24 Oct31 /Oct24 Oct31 /Oct24 Oct31 /Oct24 Oct31 /Oct24 SCCO UL 2.3 3.1 .25 .4217 Q Q Nov22 /Nov08 Dec13 /Nov03 THFF 2.1 1.50 Foreign Southern Copper Unilever ADR Special First Financial Indiana Dec01 /Nov17 KEY: A: annual; M: monthly; Q: quarterly; r: revised; SA: semiannual; S2:1: stock split and ratio; SO: spin-off. 53.84 51.88 53.47 95.85 69.69 56.44 153.63 168.34 25.76 38.00 36.59 55.76 26.60 2.20 56.52 208.41 31.11 26.48 5.18 23.42 12.26 38.02 18.88 14.45 42.19 79.34 8.97 115.34 14.60 116.44 81.22 12.59 31.26 112.96 31.83 75.68 9.70 25.39 31.42 56.35 50.36 25.33 -1.8 -0.5 -0.2 -0.1 0.8 0.1 -0.3 0.5 0.9 ... -0.1 -0.7 -1.6 2.1 0.3 0.3 -0.3 0.2 -0.6 0.1 -1.7 0.2 0.3 -0.7 0.1 ... 2.2 0.6 0.3 0.4 0.3 2.5 2.7 -0.6 0.9 -0.4 ... -0.5 -0.5 -0.9 -0.1 ... 31.9 25.0 19.8 21.6 6.8 27.6 3.6 24.7 NA NA NA NA NA 14.8 24.0 25.6 NA 16.4 52-Wk % Sym Hi/Lo Chg Stock PwrShDynIndls PRN PwrShDynTech PTF PwrShUS1500 PRFZ PwrShGlbWater PIO PwrShHY EqDiv PEY PwrShRuss1000Low USLB PwrShWaterRscs PHO PrincipalContVal PVAL PrincipalPriceSet PSET PrincipalSustMom PMOM RF Industries RFIL ROBOGlblRobotics ROBO RichardsonElec RELL SG Blocks SGBX SS&C Tech SSNC SprottFocus FUND StarBulkNts2019 SBLKL Strattec STRT Synalloy SYNL TechTarget TTGT TexasInstruments TXN TheBancorp TBBK TriumphBancorp TBK TwoRiverBancorp TRCB 2U TWOU UFP Tech UFPT uniQure QURE UniversalForest UFPI VangdRuss1000 VONE VangdRuss1000Grw VONG VangdRuss1000Val VONV VangdRuss3000 VTHR VSInverseVIXSTerm XIV VicShDivAccel VSDA VicShUS500EnhVol CFO VicShUS500Vol CFA VirtusInvtPfdD VRTSP WillisTwrsWatson WLTW WisdTrJapanHdgSC DXJS WisdTrUSQltyDiv DGRW Woodward WWD Xunlei XNET Net YTD NAV Chg % Ret Fund 38.57 -0.27 19.12 -0.06 15.34 -0.07 91.67 -0.22 MCapGro 31.03 -0.12 MCapVal N Horiz 55.26 -0.20 9.50 +0.01 N Inc 11.31 -0.03 OverS SF r NA ... R2020 R2025 NA ... NA ... R2030 NA ... R2035 NA ... R2040 Value 38.63 -0.09 PRIMECAP Odyssey Fds 35.52 -0.20 Growth r Principal Investors DivIntlInst 13.82 -0.07 Prudential Cl Z & I NA ... TRBdZ Schwab Funds S&P Sel 40.06 -0.16 TIAA/CREF Funds 19.23 -0.08 EqIdxInst IntlEqIdxInst 20.18 -0.05 Tweedy Browne Fds 28.37 -0.03 GblValue VANGUARD ADMIRAL 237.01 -0.94 500Adml BalAdml 33.93 -0.08 11.85 ... CAITAdml CapOpAdml r 155.08 -1.01 36.89 -0.26 EMAdmr EqIncAdml 76.31 -0.09 ExtndAdml 82.01 -0.55 GNMAAdml 10.51 +0.01 69.27 -0.42 GrwthAdml HlthCareAdml r 90.99 -0.35 HYCorAdml r 5.99 ... 25.67 +0.02 InfProAd 93.67 -0.48 IntlGrAdml ITBondAdml 11.43 +0.01 IntlStk 2.4 IntlValEq Symbol PowerShares Finl Pfd PowerShares Gl Shrt Tm PowerShares KBW Hi Div PowerShares KBW REIT PowerShares S&P 500 xRate PowerShares Sr Loan Ptf PowerShares Variable Rate PS LadderRite 0-5 Yr Corp PS S&P 500 Lo Voltl Prtf PS Variable Rate Inv Grd Putnam High Income Sec Putnam Mas Inco Putnam Muni Opportunities Putnam Premier Income Tr Putnam Tr PwrSh S&P SC Hi Div Low PwrSh VRDO Tax-Free Wkly PwrShrs 1-30 Laddrd Treas PwrShrs CEF Inco Comp Ptf PwrShrs Preferred PwrShs Emrg Mkts Sov Debt Pwrshs Fundm H Y F Cp Bd PwrShs Hi Yld Eqty Dv Ach PwrShs Intl Corp Bd Ptf PwrShs S&P 500 High Divd 52-Wk % Sym Hi/Lo Chg Stock iRhythmTechs IRTC iShCoreS&PUSGrowth IUSG iShCoreS&PUSValue IUSV iShSelectDividend DVY iShGlbTimber WOOD iShMSCIUSAESGOpt ESGU iShMornMCValue JKI iShPHLXSemicond SOXX iShRuss1000PureUS AMCA IturanLocation ITRN JanusSCGrwAlpha JSML KLX KLXI KellyServices A KELYA KingoldJewelry KGJI LGI Homes LGIH LamResearch LRCX LeggMasonLowVol LVHD LeggMasonSCQualVal SQLV LimelightNetworks LLNW MCBCHoldings MCFT MDC Partners MDCA MainSourceFncl MSFG MarvellTech MRVL MercerIntl MERC MicronTech MU Microsoft MSFT MitelNetworks MITL MonolithicPower MPWR NMI Holdings NMIH NXP Semi NXPI Neogen NEOG NewStarFinancial NEWS NovaMeasuring NVMI OldDomFreight ODFL OrganicsETF ORG Paccar PCAR PacificMercBncp PMBC PennNational PENN PilgrimPride PPC Potlatch PCH PwrShDWA Mom PDP PwrShDivAch PFM Net YTD NAV Chg % Ret Fund 4.28 Net Sym Close Chg Stock Company Dividend announcements from October 23. Fidelity Selects 224.61 -2.97 First Eagle Funds 60.18 -0.08 GlbA FPA Funds 35.25 -0.18 FPACres FrankTemp/Frank Adv IncomeAdv NA ... FrankTemp/Franklin A 7.48 ... CA TF A p Fed TF A p 12.01 +0.01 2.39 -0.01 IncomeA p 60.36 -0.15 RisDv A p FrankTemp/Franklin C 2.42 -0.01 Income C t FrankTemp/Temp A GlBond A p 12.17 -0.03 27.02 -0.06 Growth A p FrankTemp/Temp Adv GlBondAdv p 12.12 -0.03 Harbor Funds NA ... CapApInst NA ... IntlInst r Harding Loevner IntlEq NA ... Invesco Funds A 11.27 -0.03 EqIncA John Hancock Class 1 15.90 -0.04 LSBalncd 17.03 -0.06 LSGwth John Hancock Instl 24.00 -0.14 DispValMCI JPMorgan Funds MdCpVal L 40.01 -0.13 JPMorgan R Class 11.65 +0.01 CoreBond Lazard Instl 19.67 +0.01 EmgMktEq Loomis Sayles Fds 14.22 -0.02 LSBondI Lord Abbett A Biotech r -0.13 -0.36 0.19 0.30 0.34 -0.17 -0.45 -0.83 -0.02 -3.12 -0.49 0.81 0.72 -0.04 -0.35 0.57 -0.59 2.03 0.10 -0.04 -0.01 0.29 -0.61 -0.44 -0.67 -0.86 -0.07 0.03 -1.93 -0.20 -2.95 -0.01 0.03 0.79 -0.57 -0.06 -0.66 -0.03 -0.14 -0.53 -0.36 0.05 0.06 -1.26 -0.39 0.20 -0.17 -0.65 0.11 0.37 0.09 -1.01 0.82 -0.59 0.03 0.19 2.10 -0.02 -0.08 0.73 -0.07 -0.40 -0.09 -0.37 -0.09 -0.17 -0.36 -0.04 0.51 -0.13 -1.21 0.23 -0.87 -0.50 0.15 0.58 -1.13 -0.27 -0.09 0.27 -0.94 -0.44 -1.02 -0.04 Net Sym Close Chg Stock Dividend Changes AdvEnergyInds AEIS AimmuneTherap AIMT AlignTech ALGN AnikaTherap ANIK AppliedMaterials AMAT ArchCapitalPfdE ACGLP ArchCapital ACGL AspenTech AZPN AudioCodes AUDC BOK Fin BOKF Blackbaud BLKB BlueBird BLBD bluebirdbio BLUE BroadSoft BSFT CNB FinPA CCNE CalamosStratTot CSQ CambridgeBncp CATC CarolinaFinancial CARO CboeGlobalMkts CBOE CenterStateBank CSFL ChefsWarehouse CHEF ChinaInternet CIFS ChinaLodging HTHT CiscoSystems CSCO Co-Diagnostics CODX Cognex CGNX CognizantTech CTSH Cohu COHU ColumbiaSportswr COLM Diodes DIOD DollarTree DLTR DragonVictory LYL EastWestBancorp EWBC EducDev EDUC ElectroScientific ESIO EntegraFin ENFC Entegris ENTG Exactech EXAC Ferroglobe GSM FidelityNasdComp ONEQ FirstInternetBncp INBK FirstSouthBancorp FSBK AGNC InvPfdC ASML Abiomed Net Sym Close Chg Stock 60.39 53.12 127.63 25.38 17.53 30.16 29.36 25.20 30.82 25.25 2.75 39.90 6.88 6.48 42.27 7.92 25.59 46.20 14.92 12.30 96.74 8.64 33.00 20.24 62.05 30.80 21.35 110.50 118.25 132.32 105.65 118.54 113.59 26.86 46.82 46.84 109.21 164.58 43.98 39.47 81.78 7.39 ... -0.4 -0.7 -0.6 -0.1 -0.2 -0.5 0.7 0.6 0.9 ... 0.2 1.2 1.1 0.3 -0.1 ... 4.7 2.9 0.8 1.1 1.5 -0.5 ... -0.8 -0.8 -3.9 0.9 -0.4 -0.5 -0.3 -0.4 -3.1 1.2 -0.2 -0.1 -2.5 0.7 0.1 -0.1 -0.7 -7.1 ZAGG 15.9 21.9 VANGUARD FDS 26.37 DivdGro 215.69 13.3 HlthCare r INSTTRF2020 22.43 16.4 INSTTRF2025 22.69 10.7 INSTTRF2030 22.87 5.0 INSTTRF2035 23.06 24.8 INSTTRF2040 23.24 26.3 INSTTRF2045 23.38 39.01 13.8 IntlVal 32.96 13.7 LifeGro 26.81 1.9 LifeMod PrmcpCor 26.86 22.0 32.97 20.0 SelValu r 27.04 7.3 STAR 10.68 1.7 STIGrade 39.1 TgtRe2015 15.86 3.9 TgtRe2020 31.47 +0.01 +0.01 -0.74 ... ... ... ... ... -0.71 -0.48 -0.44 ... ... +0.01 +0.02 -0.10 -0.28 -0.03 -0.10 -0.19 +0.03 -0.07 -0.17 4.2 8.8 14.9 7.0 4.7 5.8 2.7 1.4 24.0 3.8 11.7 1.4 2.2 3.2 1.6 23.2 16.0 22.3 12.1 11.8 7.8 11.2 15.1 ... -0.82 -0.04 -0.05 -0.06 -0.07 -0.08 -0.08 -0.12 -0.10 -0.05 -0.10 -0.14 -0.06 ... -0.02 -0.05 14.3 20.0 11.4 12.8 14.1 15.3 16.5 17.1 22.9 15.3 12.1 21.1 14.6 15.0 2.1 9.3 11.4 ZAGG 17.75 1.5 Nasdaq lows - 39 ADOMANI ADOM AduroBiotech ADRO AdvaxisWt ADXSW Advaxis ADXS Aemetis AMTX AquaMetals AQMS AvenueTherap ATXI AxovantSciences AXON CHF Solutions CHFS CardiomePharma CRME Catasys CATS ConcordiaIntl CXRX Connecture CNXR DBVTechnologies DBVT DiscoveryComm B DISCB FFBW FFBW FTD FTD FT LowDurOpp LMBS FlexPharma FLKS HabitRestaurants HABT iShMSCIQatarCapped QAT KrystalBiotech KRYS LexiconPharm LXRX MYndAnalytics MYND NabrivaTherap NBRV NovelionTherap NVLN OasmiaPharm OASM OxbridgeRe OXBR ProfDiversity IPDN RennovaHealth RNVA RexEnergy REXX StrataSkinSci SSKN Synaptics SYNA TrinityBiotech TRIB US Gold USAU VS2xVIXMedTerm TVIZ VS2xVIXShortTerm TVIX VSVIXShortTerm VIIX WMIH WMIH Net YTD NAV Chg % Ret Fund ITIGradeAdml 9.82 LTGradeAdml 10.58 MidCpAdml 185.35 MuHYAdml 11.42 14.22 MuIntAdml 11.70 MuLTAdml MuLtdAdml 10.99 MuShtAdml 15.80 PrmcpAdml r 134.96 REITAdml r 118.09 SmCapAdml 68.37 STBondAdml 10.44 STIGradeAdml 10.68 10.77 TotBdAdml TotIntBdIdxAdm 21.85 TotIntlAdmIdx r 29.76 64.16 TotStAdml TxMIn r 14.08 ValAdml 39.88 69.00 WdsrllAdml 65.12 WellsIAdml 73.61 WelltnAdml 79.03 WndsrAdml 52-Wk % Sym Hi/Lo Chg TgtRe2025 TgtRe2030 TgtRe2035 TgtRe2040 TgtRe2045 TgtRe2050 TgtRetInc TotIntBdIxInv WellsI Welltn WndsrII 3.81 8.70 1.25 3.48 0.53 4.36 4.50 5.48 6.53 1.57 3.54 0.47 0.25 22.33 19.80 11.00 11.22 51.83 2.90 11.95 14.90 9.01 10.88 2.80 6.00 5.82 0.82 3.25 3.22 0.65 1.84 1.10 35.31 4.79 1.20 10.84 8.20 14.20 0.78 -3.1 -4.9 -3.8 -7.7 -4.9 -17.9 ... -3.0 -0.7 -7.3 -1.4 -6.5 -40.8 -41.1 -0.2 2.1 0.3 -0.1 -9.7 -1.2 0.1 -6.8 -2.3 6.3 -4.1 -9.2 -12.6 -9.6 -3.6 -13.4 -2.6 -15.6 -3.6 -6.1 -3.7 2.5 6.5 3.3 -5.3 Net YTD NAV Chg % Ret 18.44 -0.04 33.30 -0.09 20.45 -0.06 35.20 -0.12 22.11 -0.08 35.57 -0.12 13.53 -0.01 10.93 +0.01 26.88 +0.01 42.62 -0.05 38.88 -0.11 VANGUARD INDEX FDS 236.99 -0.94 500 202.37 -1.37 ExtndIstPl SmValAdml 55.30 -0.37 10.73 +0.01 TotBd2 17.79 -0.06 TotIntl TotSt 64.13 -0.29 VANGUARD INSTL FDS 33.94 -0.08 BalInst DevMktsIndInst 14.10 -0.03 DevMktsInxInst 22.04 -0.05 82.00 -0.56 ExtndInst 69.28 -0.41 GrwthInst InPrSeIn 10.46 +0.01 233.84 -0.92 InstIdx 233.85 -0.93 InstPlus InstTStPlus 57.55 -0.26 40.95 -0.16 MidCpInst 201.94 -0.80 MidCpIstPl SmCapInst 68.36 -0.44 ... STIGradeInst 10.68 10.77 +0.01 TotBdInst TotBdInst2 10.73 +0.01 10.77 +0.01 TotBdInstPl TotIntBdIdxInst 32.79 +0.03 TotIntlInstIdx r 119.02 -0.38 TotItlInstPlId r 119.05 -0.37 64.17 -0.28 TotStInst ValueInst 39.88 -0.09 Western Asset NA ... CorePlusBdI 12.8 14.0 15.3 16.5 17.0 17.0 6.9 1.6 7.8 11.1 11.7 16.3 13.7 7.7 3.1 23.1 15.8 10.7 22.4 22.4 13.7 22.0 1.7 16.4 16.4 15.9 14.9 14.9 11.7 2.2 3.2 3.2 3.2 1.7 23.2 23.2 16.0 12.1 NA For personal non-commercial use only. Do not edit or alter. Reproductions not permitted. To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com THE WALL STREET JOURNAL. Tuesday, October 24, 2017 | B11 * * * * * MONEY & INVESTING GE Isn’t Alone in Long-Term-Care Woes Conglomerate reviews reinsurance obligations amid wider concerns about sector’s reserves BY LESLIE SCISM Worries about the health of the long-term-care insurance industry have nettled investors for years. General Electric Co.’s comments show the problem isn’t going away soon. The Boston company on Friday cut its earnings fore- cast for the year, citing poor results at units including its power division. The company also said results could be hit by a reassessment of an insurance unit’s prospects, a remark that came as a surprise to some, given that GE years ago spun out a business closely identified with long-term care, now known as Genworth Financial Inc. A GE executive on the company’s conference call Friday said the firm has actuaries combing through its longterm-care insurance reserves in “a very complex exercise” to figure out if they are deficient. GE still has billions of dollars in reinsurance obligations on its books from coverage it sold to other insurers that had sold policies to consumers. By doing so, GE took on some of those carriers’ responsibilities for paying claims, according to analysts. The risk for GE and others is whether carriers that sold long-term-care policies have adequate reserves to pay future claims. If GE proceeds with an outsize charge, it “may result in a negative read across” a wide range of other companies with long-term-care reserves, said analysts at securities firm Evercore ISI in a recent report. Their report followed GE’s disclosure this summer of the review, when it noted “adverse claims experience.” Evercore said long-term care is “one of the larger balance-sheet concerns” at insurers including Genworth, Manulife Financial Corp. and Unum Group. The three companies declined to comment. Evercore said its analysis of GE’s regulatory filings indi- Mongolia Returning to Debt Market With $650 Million Offshore Bond cates the company likely has “a deficiency of 20% or more” in its long-term-care reserves, which could mean a charge of $2.5 billion or more. Until its review is completed, GE is halting dividends from its GE Capital unit to the parent, which has fueled concerns about whether the company will maintain its common-stock dividend. GE is aiming to conclude the review before year-end. Long-term-care insurance took off in the early 1990s. In general, the policies pay for nursing homes, assisted Hartford to Buy Unit From Aetna matures in 2018, the person said. This will be Mongolia’s second visit to the offshore dollarbond market in 2017. In March, Ulaanbaatar—the capital city, above—raised $600 million by issuing seven-year bonds. The latest bonds have received an initial credit rating of B-minus from S&P Global Ratings and Fitch Ratings, meaning they are rated as junk debt. The country agreed to a $5.5 billion bailout package with the International Monetary Fund this year to help deal with its existing debt load. This month’s issuance comes in a strong year for bond sales by emerging countries. Last month, Tajikistan raised $500 million in its first-ever international bond sale, paying a 7.125% interest rate. Speculative-grade bond issuance in the developing world has topped $200 billion so far in 2017, according to data from J.P. Morgan Chase & Co. and Dealogic, up 60% from a year earlier. Junk-rated bonds issued by sovereign nations this year have been some of the best performers in credit markets. Mongolia’s bonds issued in March have given double-digit-percentage returns to investors. Credit Suisse Group AG, Deutsche Bank AG and J.P. Morgan are joint lead managers and joint bookrunners. —Manju Dalal HEARD ON THE STREET China Feeding Frenzy Will Need Shrewd Play BY STEPHEN WILMOT AND JACKY WONG Selling baby food should be a steady business, but in China it has been anything but. The world’s largest infant formula market is booming again. It probably won’t last. Last week global dairy company Danone posted organic growth in its thirdquarter formula sales of more than 20%, with an increase of more than 50% in China, which accounts for two-fifths of global sales. Rivals Mead Johnson, which has belonged to consumer group Reckitt Benckiser since mid-June, and Nestlé also noted improvements in China. An uptick in births has created a rosier picture. Chinese births rose 8% to 17.9 million last year, the highest point since 2000. How much of the rise is due to the relaxation of the infamous one-child policy is a matter of debate. The jump may have more to do with a quirk of the Chinese zodiac calendar. The Year of the Monkey, Bouncing Babies Value of infant formula sales in China $20 billion 15 10 5 0 2012 ’13 ’14 ’15 ’16 ’17* *Projection Source: Euromonitor International THE WALL STREET JOURNAL. beginning in 2016, was an auspicious year in which to be born. The longer-term outlook for births is negative. Last year there were 225 million Chinese ages 23 through 32 but only 176 million ages 13 through 22, notes Deutsche Bank. Demographics won’t generate sustainable growth in China. The other big reason for the third-quarter improvement is also temporary: Distributors are no longer running down inventory. Following a succession of health scandals, China last year said that formula products, of which there were more than 2,000, would need to be registered with the nation’s food and drug regulator as of 2018. Not knowing which brands would be allowed, distributors held off buying. Meanwhile, lowquality brands that couldn’t hope for approval cleared their warehouses. Western groups found it hard to compete. Now that some brands have received approval, distributors seem to be buying again. Another likely factor is a delay in the government’s clampdown on cross-border ecommerce, a loophole for unlicensed imports that has become a major conduit for cut-price formula sales. Authorities were going to close it at the end of this year; now it looks like it will remain open another 12 months. This may have encouraged importers to place orders. Danone’s emergence as the key beneficiary is rooted in crisis. Two years ago its mainstream brand, Dumex, was drawn into a health scare by a big supplier, New Zealand dairy company Fonterra Co-Operative Group. Danone responded by unloading Dumex and betting big on the cross-border ecommerce channel. Management expects a strong fourth quarter, but stressed that “volatility is still to be expected.” Stable sales trends could eventually emerge if the regulatory situation settles down. As they do, big global players should flourish in a more concentrated and disciplined market. Their brands also typically have better reputations for food safety than domestic ones. But investors shouldn’t get their hopes up too early. For the foreseeable future, feeding babies in China will remain a tricky affair. Hartford Financial Services Group Inc. has agreed to pay $1.45 billion to health insurer Aetna Inc. for a unit that provides life-, disabilityincome and other insurance products to employers’ benefits programs in the U.S. The acquisition will nearly double the Connecticut company’s business of selling benefits to employers, one of its main operations outside of property-casualty insurance. Hartford Chairman and Chief Executive Christopher Swift said in an interview that the acquisition “will make us one of the top two players” in sales of the group-benefits products. Hartford’s annual premium in the business will expand to about $5 billion from $3.15 billion in 2016, and there will be more than 20 million people insured by the combined operation. Property-casualty insurance will remain Hartford’s dominant business with more than $10.5 billion in annual premium. The deal marks another sign of Hartford’s turnaround from struggles during the 2008-09 global markets meltdown. It was among the hardest-hit insurers, when a long marketleading position in sales of a stock-market-linked retirement-income product proved riskier than anticipated. It took $3.4 billion in U.S. government aid, since repaid. In a news release, Aetna President Karen S. Lynch said the divestiture allows “a stronger focus on our strategy of creating a personalized approach to improving member health.” Aetna said options for deploying sales proceeds include internal investments, share repurchases and debt repayment. Hartford doesn’t intend to issue debt or equity to fund the purchase. It said it would use some money allocated for share buybacks and that the transaction would add to its 2018 earnings. Hartford President Doug Elliot said the acquisition comes with important digital technology. Hartford will use Aetna’s claims data in its advanced analytics to try to find ways to speed up recoveries of people drawing on disability-income and workers’ compensation policies. The deal includes a multiyear arrangement in which Aetna’s sales team will offer Hartford’s group-insurance products to clients. At Hartford during the financial crisis, then newly installed Chief Executive Liam McGee faced pressure from hedge-fund manager John Paulson to focus on its property-casualty business, possibly by spinning it off. Mr. McGee divested some operations to narrow Hartford’s focus. $1.45B Amount Hartford agreed to pay for the Aetna business Hartford continues to wind down the precrisis book of variable annuities, which it quit selling after the crisis. In the interview, Mr. Swift said: “We’ve told our investors we’re not the natural long-term owner [of the runoff unit], but we’re happy running it off…It produces decent earnings.” In 2014, Mr. Swift succeeded Mr. McGee, who died of cancer the following year. Hartford has shown up on some Wall Street analysts’ lists as both a buyer and seller in potential merger-and-acquisition activity. It is viewed as attractive as a target partly because it is a leading seller of propertycasualty insurance to small and midsize companies. This is an area many large insurers consider ripe for increased use of algorithms in sizing up risk. But at about $21 billion in market capitalization, Hartford is a size at which there is a limited number of potential acquirers. “We are in attractive aspects of the market—property-andcasualty and benefits—with good execution, innovation…I feel like we can control our destiny,” Mr. Swift said. Amazon Throws Etsy for a Loop CHRIS BRONSON/ASSOCIATED PRESS TAYLOR WEIDMAN/GETTY IMAGES BY LESLIE SCISM Mongolia is planning to raise up to $650 million in an offshore bond sale this week, a person familiar with the situation said. The government plans to issue a 5½-year bond with a yield of about 6%, which is roughly where its existing dollar bonds due in 2022 and 2024 are trading, the person said Monday. Proceeds from the latest bond offering will be used to retire, or buy back, U.S. dollar- and yuan-denominated debt that living facilities or health-care aides in people’s private residences. Such care generally isn’t paid by the Medicare health-insurance program for older people. But by the middle part of the last decade, many insurers were rapidly ratcheting back the benefits, concluding they had badly miscalculated how many people would file claims and how long they would draw benefits before dying, among other things. Industrywide, insurers have taken billions of dollars of charges over the past decade. Treasury, CFPB Clash Over Arbitration Rule BY YUKA HAYASHI WASHINGTON—The Treasury Department on Monday criticized a rule governing how banks resolve disputes with consumers, part of an effort by the White House to thwart a plan initiated under the Obama administration. The dispute relates to a regulation issued in July by the Consumer Financial Protection Bureau, which continues to be run by an Obama-appointed official. The rule makes it easier for con- sumers to bring class-action lawsuits against financial companies by banning arbitration requirements written in the fine print of financial-services contracts. Senate Republicans are preparing to vote on a bill that would overturn the rule, which is unpopular in the financial industry. Senate GOP leadership has told Democrats to expect a vote this week. The Office of the Comptroller of the Currency, an independent banking regulator affiliated with the Treasury Department and headed by an acting Trump official, earlier in October released an analysis saying that the rule would increase the cost of credit for consumers. The CFPB disputed the OCC analysis, saying it was “based on flawed statistics and is contradicted by publicly available historical data.” The Treasury report released Monday predicted that the new rule would generate more than 3,000 additional class-action lawsuits over the next five years, resulting in more than $500 million in additional legaldefense fees for the financial industry. The CFPB said the Treasury report rehashes industry arguments. “Our rigorous analysis of the costs and benefits of the rule found that mandatory arbitration clauses allow companies to avoid accountability for breaking the law and cost consumers billions of dollars by blocking group lawsuits,” a CFPB spokesman said. —Siobhan Hughes contributed to this article. The Amazon effect’s long shadow again fell on Etsy Inc. Shares of the online crafts marketplace declined 62 cents, or 3.8%, to $15.76 Monday after Amazon.com Inc. unveiled a new way for shoppers to seek out handcrafted wares. Amazon’s Handmade Gift Shop allows users to search for tchotchkes under categories such as “for her” and “for baby,” as well as by price range. Etsy shares fell as much as 6.8% after the opening Monday. Etsy reported $11.7 million in earnings on revenue of $101.7 million in the most recent quarter. —Chris Dieterich For personal non-commercial use only. Do not edit or alter. Reproductions not permitted. To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com B12 | Tuesday, October 24, 2017 THE WALL STREET JOURNAL. * *** MARKETS Glum Company News Hits Stocks A flurry of downbeat updates from American companies dragged down U.S. stocks Monday. Major indexes were little changed in early trading and then slid into MONDAY’S the close, MARKETS with the Dow Jones Industrial Average ending at its session low. Still, stocks have been generally resilient. Monday’s modest decline of 0.2% for the blue-chip index was its biggest since early September. Analysts and investors have attributed the stability to a period of solid earnings and economic growth. Many expect corporate news to drive much of the action in the coming days, with nearly 200 companies in the S&P 500 on this week’s earnings calendar, according to FactSet. “Listening to companies on their earnings calls, I think the general trend is still looking pretty positive,” said Jeremy Bryan, a portfolio manager at Gradient Investments. While some sectors like the insurance industry are expected to report weaker results than in previous years, partially because of damage from hurricanes earlier this year, “we’re looking through the one-time hits and still expecting robust growth into 2018,” Mr. Bryan said. The Dow industrials fell 54.67 points to 23273.96. The S&P 500 dropped 10.23 points, or 0.4%, to 2564.98, and the Nasdaq Composite declined 42.23 points, or 0.6%, to 6586.83. All three indexes closed at records on Friday. Hasbro shed $8.44, or 8.6%, to $89.75, after the toy maker posted earnings and sales results that beat analysts’ expectations, but gave a downbeat projection for sales in the key holiday period. Mattel, a rival toy maker, dropped 51 cents, or 3.2%, to 15.46. State Street, which posted better-than-expected earnings but reported foreign-exchange trading results that disappointed some analysts, fell 2.95, or 3%, to 96.17. General Electric slid 1.51, or 6.3%, to 22.32, and posted its biggest one-day percentage decline since August 2011 after several analysts cut their price targets for the stock following the company’s latest earnings report, which slashed 2017 projections. GE’s stock has fallen 29% so far this year, putting it on pace for its worst year since 2008. Elsewhere, the Stoxx Europe 600 rose 0.2% as gains in technology companies offset declines in the banking sector. Investors this week will be watching closely for the European Central Bank’s plans to announce the fate of its giant bond-buying program at its meeting Thursday. This “may be a potential turning point in the timeline for withdrawing accommodation,” said Holly MacDonald, chief investment strategist at Bessemer Trust, noting the ECB faces constraints on continuing its program of quantitative easing. Still, with the move welltelegraphed to markets and no interest-rate increase on the horizon for some time, the ECB’s October meeting is unlikely to ruffle bond markets much, she said. BY DANIEL KRUGER ALWYN SCOTT/REUTERS BY AKANE OTANI AND RIVA GOLD Investors Seek More Clarity on Fed Chief Shares of conglomerate General Electric posted their biggest one-day percentage drop since 2011. U.S. government bonds strengthened Monday, with the yield on the 10-year Treasury note falling to 2.375% from 2.381% on Friday. Yields fall as bond prices rise. In Asia, Japan’s Nikkei Stock Average rose 1.1%, rounding out its longest-ever winning streak with a 15th session of consecutive gains, after Japanese Prime Minister Shinzo Abe won a national election by a landslide. The Nikkei was down slightly early Tuesday. Hong Kong’s Hang Seng Index reversed its opening gains to trade down 0.6% as investors turned cautious on Chinese banks ahead of their earnings releases this week. It was down 0.2% early Tuesday. Downbeat Shares of toy makers fell after Hasbro gave a cautious outlook for the holiday sales period. 0% S&P 500 –2 Mattel –4 –6 Hasbro –8 –10 9:30 10 11 noon Source: FactSet 1 2 3 4 THE WALL STREET JOURNAL. Japanese Shares Extend Winning Streak BY STEVEN RUSSOLILLO Japanese stocks refuse to go down. The Nikkei Stock Average has risen each day this month, and closed 1.1% higher Monday. It was the 15th consecutive day the Nikkei recorded gains, the longest-ever streak. Prime Minister Shinzo Abe’s clear victory in Sunday’s general election has only added to the bullish sentiment engulfing the market. Mr. Abe’s Liberal Democratic Party and its coalition partner retained a two-thirds majority following a lowerhouse election on Sunday. The victory for Mr. Abe, 63 years old, puts him on course to become the longest-serving Japanese prime minister. In turn, investors are relieved that his government’s policy Bouncing Back Japan's Nikkei Stock Average has jumped to its highest level since 1996. 40000 30000 Monday 21696.65 20000 10000 0 1987 1990 2000 Source: FactSet mix of loose monetary policy and corporate governance reform is likely to continue. “The result is fundamentally positive for the equity market,” said Shusuke Yamada, 2010 THE WALL STREET JOURNAL. chief Japan FX and equity strategist at Bank of America Merrill Lynch. “Political stability should be restored and Abe’s economic policy will likely continue.” The Nikkei is up 13% this year, nearly all of it since early September after having vastly underperformed most global equity markets in 2017. Analysts and investors cite strengthening domestic corporate earnings and signs of a strengthening economy as catalysts for the Japanese market’s recent surge to its highest level since 1996. It isn’t overly expensive, either. The Nikkei trades at about 17 times projected earnings over the next 12 months, roughly around its five-year average, according to FactSet. By comparison, many other markets, including the U.S., sport valuations that are much higher than average. The Bank of Japan’s annual ¥6 trillion ($53 billion) of purchases in exchange-traded stock funds provide a steady source of liquidity and support for the stock market. But monetary policy might not be as favorable as it once was, as recent moves suggest Japan’s central bank might have already started tightening. The BOJ bought just ¥7.7 trillion ($68.8 billion) worth of Japanese government bonds in September, according to J.P. Morgan. The figure represents its smallest monthly amount of outright buying, which doesn’t account for maturing bonds, since October 2014. But that isn’t stopping equity investors now. The 15 days of consecutive gains appears to be one of the longest streaks on record of any stock market. —Saumya Vaishampayan contributed to this article. Prices of Treasurys edged higher Monday as investors paused to wait for clarity over whom President Donald Trump will nominate to lead the Federal Reserve. The yield on the benchmark 10-year U.S. Treasury note fell to 2.375% from 2.381% Friday, posting its second decline in three days. Bond yields fall when prices rise. Some analysts said the implications for monetary policy may be signifiCREDIT cantly different MARKETS depending on which candidate Mr. Trump selects. Potential nominees John Taylor, a Stanford University economics professor, and Kevin Warsh, a former Fed governor, are seen by investors as likely to favor raising interest rates at a faster pace than the central bank has suggested it will take. Others in the running are current Fed Chairwoman Janet Yellen and central-bank governor Jerome Powell, both of whom are seen as more likely to maintain the status quo as the Fed has projected three rate increases in 2018. A fifth possibility, White House economic adviser Gary Cohn, has no record in central banking. Mr. Trump has said he would like to name his pick before his Nov. 3 trip to Asia. “People are a little wary of getting out ahead” of a decision about the Fed’s leadership, said Thomas Simons, a money-market economist at Jefferies Group LLC. Investors are also awaiting the European Central Bank meeting Thursday, looking for signs about whether policy makers there will move to slow or curtail the bank’s €60 billion ($70.5 billion) in monthly bond purchases. The ECB’s three-year policy of negative interest rates and its huge bond purchases have driven sovereign-bond yields in the bloc to near record lows. AUCTION RESULTS Here are the results of Monday's Treasury auctions. All bids are awarded at a single price at the marketclearing yield. Rates are determined by the difference between that price and the face value. 13-WEEK AND 26-WEEK BILLS 13-Week 26-Week Applications $134,345,850,900 $115,607,926,000 Accepted bids $42,000,076,800 $36,000,038,000 " noncomp $563,800,900 $468,276,000 " foreign noncomp $976,000,000 $993,000,000 99.720681 99.370583 (1.105%) (1.245%) Auction price (rate) Coupon equivalent 1.123% 1.270% Bids at clearing yield accepted 57.71% 51.38% 912796NP0 912796LX5 Cusip number Both issues are dated Oct. 26, 2017. The 13-week bills mature on Jan. 25, 2018; the 26-week bills mature on April 26, 2018. Hurricanes Don’t Slow Down the Economy for Long BY CHELSEY DULANEY The economy is bouncing back from Hurricanes Harvey and Irma more rapidly than many analysts expected, a sign that the “Goldilocks” environment that has propelled U.S. stock indexes to dozens of records this year is still intact. “Incoming data suggest Hurricanes Harvey and Irma had slightly less of a negative impact on economic activity in the third quarter than we had previously assumed,” said analysts at Macroeconomic Advisers last week. The firm raised its estimate for third-quarter growth to 2.7% from 2.6%. Barclays PLC also raised its forecast for gross domestic product last week to 2.5% from 1.5%, saying that U.S. economic activity had returned to normal sooner than the bank had anticipated. The upgrades come ahead of the Commerce Department’s estimate for third-quarter GDP, to be released Friday. Economists anticipate a 2.5% increase in GDP in the quarter, slowing from 3.1% ALVIN BAEZ/REUTERS Some analysts have raised their estimates for third-quarter economic growth. Analysts were surprised by the speed with which the economy has rebounded from storms that hit Florida and Puerto Rico, seen here. growth in the prior quarter. The data are expected to confirm that while the economy is expanding at a steady pace, growth hasn’t accelerated enough to prompt a faster unwind of stimulus from the Federal Reserve. That should help sustain this year’s market moves, analysts say, with U.S. stocks continuing to climb higher while the U.S. dollar and Treasury yields remain soft. Hurricane Harvey battered the Texas coast in August, shutting ports and oil refineries and leading to a spike in gasoline prices. Hurricanes Irma and Maria followed in early September, hitting the Florida coast and Puerto Rico. Economists had warned that the storms could disrupt a wide swath of the economy, from housing construction to factory production. While the storms did indeed take a toll, recent data have suggested that the economic impact has been more subdued than previously forecast. A recent report from the Fed showed industrial production—a measure of output at factories, mines and utilities— rebounded 0.3% in September after a sharp decline in the prior month. The report, which also included an upward revision to August’s data, indicated that disruptions from the storm were less severe than initially reported. Data on U.S. trade—which economists feared would be hurt by port closures—and jobless claims also have been surprisingly upbeat, analysts say. The data are “strongly suggesting that the distortions caused by the hurricanes in the Gulf states will prove to be a short-lived phenomenon,” said analysts at Jefferies Group. The resilience of the economy should confirm the Federal Reserve’s case for raising interest-rates again this year, analysts say. Markets are pricing in a 98% chance of another U.S. rate increase by December, according to CME Group Inc. data. For personal non-commercial use only. Do not edit or alter. Reproductions not permitted. To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com Tuesday, October 24, 2017 | B13 THE WALL STREET JOURNAL. MARKETS Palladium Soars on Hopes for Growth Investors believe rising auto production will fuel demand for year’s top commodity Driving Gains Bets that rising global growth will increase automobile production have helped fuel a surge in prices for palladium, a rare metal used in emission ﬁlters for gasoline engines. BY IRA IOSEBASHVILI AND AMRITH RAMKUMAR Palladium prices are at their highest level in nearly two decades as investors bet that rising global growth will buoy automobile production and stoke demand for the rare metal. Prices for palladium, a key ingredient in emission filters for gasoline engines, crossed $1,000 a troy ounce earlier this month for the first time since 2001. They closed Monday at $949.95 a troy ounce and are up 39% in 2017, making it the year’s best performing major commodity. “Nobody really predicted this big move,” said Edward Meir, a strategist at brokerage INTL FCStone. “It’s really quite staggering.” Driving the rally are expectations that robust demand for gasoline-powered cars will continue as the global economy picks up steam. That is expected to create more need for palladium, a silvery-white metal that is already much scarcer than gold, silver or platinum. Car sales in China, the world’s largest auto market, rose 4.3% in the first eight months of this year, according to the China Association of Automobile Manufacturers. Although sales have cooled from last year’s double-digit growth, analysts said demand has still been healthy enough to boost palladium prices. Brokerage Johnson Matthey projected in May that palladium demand will top supply by 792,000 ounces this year, from 163,000 ounces in 2016. Some investors believe the metal will receive an additional boost from a continuing Annual car sales in China 2013 22 million cars 2014 23 2015 40 25 2016 28 2017* 29 30 Sept. 28 China says it will force auto makers to accelerate production of electric vehicles by 2019. 20 Metal prices in 2017 Palladium Gold Platinum July 26 The U.K. says it will ban the sale of cars powered by traditional internalcombustion engines by 2040. 0 Gap between demand and supply widens again Net bets on higher palladium prices Global hybrid electric car stocks 8.0 million ounces 30,000 contracts 900 thousand cars 800 25,000 700 7.5 600 20,000 Demand 7.0 500 15,000 400 300 10,000 6.5 200 5,000 Supply 6.0 100 0 2013 ’14 ’15 ’16 ’17 0 2013 ’14 ’15 ’16 ’17 2010 ’11 ’12 ’13 *Projection for 2017 based on year-over-year growth this year through August Sources: China Association of Automobile Manufacturers (sales); FactSet (prices); Johnson Matthey (demand); Commodity Futues Trading Commission (net bets); International Energy Agency (growth) switch to hybrid vehicles, which primarily use gasoline rather than diesel. China in September said it would force auto makers to accelerate production of hybrids and electric vehicles by 2019, the latest signal that officials across the globe are determined to phase out traditional internal-combustion engines altogether. Meanwhile, sales of dieselpowered cars have declined in Europe, after Volkswagen AG, the world’s biggest auto maker by sales, was caught rigging diesel engines to dupe emissions tests two years ago. Electric cars and hybrids are expected to grab 4% of the European market this year, up from 2.3% before the diesel scandal, according to research group LMC Automotive. That has hurt the price of platinum, which is often mined together with palladium but used mainly in diesel engines, driving prices for palladium above platinum prices in September for the first time in 16 years. Some analysts believe at least part of the rapid run-up in palladium prices has come from investors eager to catch a piece of the rally. Those same investors are likely to be just as quick to abandon the metal as soon as prices lose momentum. Palladium’s rise this year has been punctuated by sharp drops as investors locked in profits on big moves. A stronger dollar could be another obstacle. Palladium is priced in the U.S. currency and becomes more expensive to foreign investors when the dollar rises. In the longer term, the auto industry may consider switching to platinum in gasoline engines if the price of palladium continues to climb, some market participants said. Shree Kargutkar, portfolio manager at Sprott Asset Management, said he thinks platinum provides a better long- HEARD ON THE STREET FINANCIAL ANALYSIS & COMMENTARY A Lost Opportunity for Allergan Swelling Allergan’s quarterly net debt $40 billion RICHARD DREW/ASSOCIATED PRESS 30 20 10 0 2016 ’17 Source: S&P Global Market Intelligence Allergan CEO Brent Saunders THE WALL STREET JOURNAL. 2016 after the Treasury Department changed the tax rule that was driving the deal. But a big source of Allergan’s trouble, a weak balance sheet, is self-inflicted. Allergan sold its generics unit to Teva Pharmaceutical Industries last year for about $40 billion in cash and Teva stock. The deal was announced in 2015, when generic drug stocks were white-hot. Aller- gan got out just before prices starting falling. That deal pushed Allergan’s net debt down to $5.4 billion as of last September, according to S&P Global Market Intelligence. Allergan hasn’t spent the money as wisely as it could have, though. It has paid down a chunk of debt and spent about $7 billion on acquisitions. Those deals may pay off, but Allergan’s biggest financial move after the deal was buying back some $15 billion in stock. Unfortunately for Allergan, the intense buying didn’t push the stock any higher even as net debt has swelled back up to $24.4 billion as of June 30. Allergan could improve its cash flow by raising prices on its existing products, a standard tactic in the industry. But the company has some self-imposed limits there. Chief Executive Brent Saunders pledged in 2016 that Allergan would limit itself to one price rise a year on its medicines and limit those increases to less than 10% as part of a “social contract” with patients. The company’s pipeline could still churn out some new hits, which would relieve pressure on the balance sheet. For example, Allergan presented favorable latestage data on an investigational treatment for uterine fibroids Monday. But Allergan’s capital allocation choices mean that pipeline has a lot to live up to. —Charley Grant OVERHEARD Which one of these states doesn’t belong? As the deadline passed for cities to submit plans for Amazon.com’s second headquarters, it received a surprising number of bids. The 238 proposals it received from North America seemed like a lot given that its criteria called for a metropolitan area with at least one million residents, a condition met by only about 54 U.S. cities. There were only seven U.S. states that failed to bid. Four states—North Dakota, South Dakota, Wyoming and Vermont—don’t have one million people in the entire state, and two, Montana and Hawaii, aren’t far above that mark. The outlier is Arkansas, with nearly three million residents in the state, which probably abstained from submitting a bid for a different reason. It is home to Amazon’s rival, Wal-Mart Stores, which recently said it would build a new headquarters in Bentonville. Prices for Natural Gas Are Poised to Surprise This Winter After nine years of booming production of natural gas, this winter could be one of the rare instances when supply and demand conspire to drive up prices. Those expecting prices to rise have had plenty to point to on the demand side of the equation: Scores of industrial plants have sprung up to take advantage of cheap fuel, the U.S. has become a major exporter of gas and coal plants are closing in droves in favor of environmentally friendlier and more flexible gas-fired generators. The supply side of the ledger has been just as dynamic, though. The recent boom in oil drilling in shale 10 2017 Email: firstname.lastname@example.org Last year Allergan did one of the best deals in drug industry history. The drug company has been busily squandering the benefits ever since. Shares are down nearly 25% over the past three months and more than 40% from the high set in 2015. The latest blow came last week after a federal judge invalidated a patent on the dry-eye drug Restasis. That could pave the way for generic competition on Allergan’s second best-selling product. Allergan says it will appeal the ruling. To make things worse, Judge William Bryson wrote in his decision that he has “serious concerns” about the “legitimacy” of Allergan’s recent sale of Restasis patents to a Native American tribe to beat back a separate challenge. That rebuke aside, some of the issues that have pushed the stock lower, such as the patent decision, weren’t Allergan’s fault. A planned merger with Pfizer, for instance, was scuttled in 50% Aug. 25 Hurricane Harvey makes landfall in Texas, destroying hundreds of thousands of vehicles. Tank Half Empty Natural gas in U.S. underground storage 4 trillion cubic feet 3 2 1 0 2014 ’15 ’16 ’17 Source: Energy Information Administration basins such as the Permian has unlocked cheap gas almost as a byproduct. New pipelines will make it easier for the fuel to reach market. U.S. natural-gas production is seen rising for the eighth month in a row in November to a record. Even so, this winter could see prices go up. No matter how much gas is being produced, the heating season, which runs roughly from November through April, sees underground gas inventories depleted far faster than supply can replenish it. The “injection season,” which unofficially ends in two weeks, is when the surplus is built up. Last Thursday, the U.S. Energy Information Administration reported that gas in underground storage stood at 3.646 trillion cubic feet, or 4.7% less than the same week a year ago. That isn’t a huge difference, but it might be if this winter is extra cold because of La Niña conditions, as some climatologists predict. Analysts at the Natural Gas Supply Association, Plants have sprung up to use cheap fuel, while new pipelines are easing transport. American Gas Association and Barclays all have noted the possibility of a frigid winter. For some perspective, the winter of 2015-2016 was re- markably mild and saw prices crash to their lowest this century in February. Stored gas fell by just 1.4 trillion cubic feet. But the cold winter of 2013-2014 saw a draw of 2.95 trillion cubic feet. Prices soared in February 2014 to nearly double their price a year earlier. Gas prices, at roughly $3 a million British thermal units, are about where they were at this time last year. But storage is starting this heating season around where it was during the 2013-14 winter. The margin of safety in the gas market shouldn’t be taken for granted before the glut resumes in the spring. —Spencer Jakab ’14 ’15 ’16 THE WALL STREET JOURNAL. term value alternative to palladium given palladium’s sharp rise. Still, changes in the automotive industry don’t pose an immediate threat to the rally, he said. Those shifts and mining companies’ efforts to bring more areas of supply on line to capitalize on higher prices are likely to take years. “We’re not at a point where the palladium bulls have something to worry about,” he said. WSJ.com/Heard In China, Banks Need Careful Check Chinese bank stocks have been on a tear this year. As lenders start reporting earnings this week, it is time for a more realistic assessment. China’s banks have been vital forces behind the explosive growth of credit across the economy, with corporate debt now estimated at about 250% of gross domestic product. For investors, the question is where this leaves banks’ asset quality, a driver of their share prices. Over the past 4½ years, Chinese banks have recognized some 5 trillion yuan ($755 billion) of bad loans. Even so, official estimates of nonperforming loans in the overall banking system still put them at 1% to 2% of assets; the most bearish independent analysts reckon the real figure could be up to 20%. Even though state-owned enterprises’ profitability has edged up, their debt has, too, and at a higher interest rate, hampering their ability to repay. Their liabilities continue to rise as well, up 11% in the first half of this year. Meanwhile, the amount of “special mention loans”— those that are overdue but haven’t been written off— that banks record has been rising sharply. Any correction in China’s frothy property market could spark a rise in nonperforming loans. When property prices in Wenzhou, a wealthy coastal town that has seen significant housingprice fluctuations, dropped almost 50%, the nonperforming loan ratio for banks there surged more than 4 percentage points, according to Deutsche Bank analysts. It is time for investors to go back to basics and question banks’ balance sheets harder. —Anjani Trivedi For personal non-commercial use only. Do not edit or alter. Reproductions not permitted. To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com B14 | Tuesday, October 24, 2017 THE WALL STREET JOURNAL. EMERGING MARKETS ARE ON THE MOVE. We see a rising middle class in Southeast Asia move from motorcycles to cars. Frontier economies leap into the digital era, adopting ﬁntech faster than developed nations. Trade and travel surge between emerging nations. The monolithic view of emerging markets is obsolete. At PGIM, we see new opportunities for alpha across emerging market sectors and themes. And every day, our 1,100 investment professionals around the world seek out such opportunities.1 Partner with PGIM to see the investable implications. Get our perspective at pgim.com/EM The Global Investment Management Businesses of Prudential FIXED INCOME | EQUITIES | REAL ESTATE | ALTERNATIVES | PRIVATE DEBT 1 Data as of 6/30/17. © 2017 Prudential Financial, Inc. (PFI) and its related entities. PGIM Inc. is the principal asset management business of PFI. PGIM is a trading name of PGIM Inc. and its global subsidiaries. Prudential Financial, Inc. of the United States is not afﬁliated with Prudential plc, which is headquartered in the United Kingdom. The PGIM logo and the Rock design are service marks of PFI and its related entities, registered in many jurisdictions worldwide. Alpha indicates the performance, positive or negative, of an investment when compared against an appropriate standard, typically a group of investments known as a market index. This information is not intended as investment advice and is not a recommendation about managing or investing assets. Investing is subject to investment risk, including the loss of the principal amount invested. For personal non-commercial use only. Do not edit or alter. Reproductions not permitted. To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com JOURNAL REPORT THE WALL STREET JOURNAL. © 2017 Dow Jones & Company. All Rights Reserved. Tuesday, October 24, 2017 | R1 Katzenberg on Weinstein A SPOTLIGHT ON MEDIA AND TECHNOLOGY The Hollywood icon also talks about his plan to revolutionize TV NIKKI RITCHER/DOW JONES (2) ‘The problem is there’s a pack of wolves. He is not a lone actor in this.’ It has been a difficult period for Hollywood, as the Harvey Weinstein scandal has focused attention on an uncomfortable issue for the entertainment business: ongoing sexual abuse. Wall Street Journal Editor in Chief Gerard Baker spoke with industry giant and former colleague of Mr. Weinstein, Jeffrey Katzenberg. Mr. Katzenberg, a former chairman of Walt Disney Studios, co-founder of DreamWorks and now partner at WndrCo, spoke about the crisis and what it means for Hollywood, as well as his own efforts to explore new territory in shortform television. Here are edited excerpts of the conversation. The abuse question MR. BAKER: I want to start with a topic that’s on everybody’s mind, what happened with Harvey Weinstein. Now you, Jeffrey, last week in a very powerful statement spoke out in response to a direct communication from Harvey Weinstein asking for you to support him. You responded to him in no uncertain terms. You said he had done terrible things to women, and you went on to say there appear to be two Harvey Weinsteins: one that I’ve known well, appreciated and admired, and another that I’ve not known at all. How on Earth could powerful people, yourself included, not have known that he was behaving like this? MR. KATZENBERG: I do a lot of soul searching about it. I don’t have a good answer. I’ve had hundreds of meetings with Harvey Weinstein—my office, his office, on sets, on locations, the south of France, the Sundance Festival, the Peninsula Hotel. And literally not a single time had Harvey been abusive to somebody in my presence, other than, “Why’s the car not here?” “I thought that script was supposed—.” You know, that’s not abusive behavior. That’s why I said there are two Harveys, because somehow or another this behavior was masked from me by him, but more important, that these women masked it from all of us too, because they were intimidated, they were scared, they were humiliated. And it literally took the New York Times and the bravery of these women to speak out about something that has been around from the beginning of Hollywood. The casting couch has been in Hollywood from the beginning. The complicity around the acceptance of it and the silence about it is the crime. Harvey Weinstein, make no mistake about it, he is a monster. The problem is there’s a pack of wolves, he is not a lone actor in this. That’s the challenge that I think all of us now really have to find a way to deal with. MR. BAKER: You say in all your encounters with Mr. Weinstein directly, you’ve never seen behavior like this. But you must have heard about it? MR. KATZENBERG: Unfortunately, the answer is no. From 1994 on, I had no business engagements or dealings with him whatsoever. Did I hear stories about Harvey abusing Some of the biggest names in media and technology assembled in Laguna Beach, Calif., last week for The Wall Street Journal’s fourth annual WSJ D.Live conference. The event kicked off with Arianna Huffington, founder of the Huffington Post and Thrive Global, discussing corporate culture issues at Uber Technologies, where she is a director. Jeffrey Katzenberg, DreamWorks co-founder and partner at WndrCo, spoke about Hollywood’s “casting couch” problems in the wake of Harvey Weinstein’s downfall. Other highlights included Barry Diller, chairman of IAC/ InterActiveCorp, discussing the likelihood of more regulation for tech giants; Marc Lore, Wal-Mart Stores Inc.’s U.S. ecommerce chief, explaining its acquisition strategy; and Peggy Johnson, Microsoft Corp.’s executive vice president of business development, and Jennifer Nason, J.P. Morgan Chase & Co. global chairman of investment banking, talking about the outlook for tech M&A. A trio of venture capitalists—GGV Capital’s Jenny Lee, Y Combinator’s Sam Altman and Section 32’s Bill Maris—foreshadowed the future of tech investing, and executives including Intel Corp. Chief Executive Brian Krzanich and Baidu Inc. CEO Robin Li discussed the importance of artificial intelligence. Plus there were interviews with BuzzFeed founder Jonah Peretti, Oracle Corp. CEO Mark Hurd, Alibaba Group Executive Vice Chairman Joe Tsai, and Pershing Square Capital Management head William Ackman. Here are selected excerpts. —Jason Dean women and people? The answer is no. Is that because there was never a forum, that I never opened myself to somebody to be able to have that conversation? Guilty. But I’m not going to do it again. I don’t think our industry is. I think you will see in these coming weeks and months real action. We cannot go on this way. MR. BAKER: One thing that would clearly, presumably change the culture would be if there were a lot more women in senior positions in media WSJ .COM companies generally, but in Hollywood perhaps in particular. MR. KATZENBERG: That’s a long-term solution. I’m talking about something that has to bring this to a stop immediately. In movies, in television, in live entertainment, in Las Vegas, on Broadway shows, in the news industry, actors and actresses, men and women, must audition on an ongoing, regular basis for their work. So the question is: How do we address that moment and add Please turn to the next page FULL WSJ D.LIVE COVERAGE See videos and complete coverage of the WSJ D.Live conference at wsj.com/wsjdlive. It’s Time to End the Culture of Stress and Burnout Arianna Huffington says that Uber could have been as successful without its ‘brilliant jerks’ Arianna Huffington, founder of the Huffington Post and Thrive Global, spoke with Dennis K. Berman, financial editor of The Wall Street Journal, about a range of topics, from her experience as an Uber board member to the perils of an economy driven by social-media platforms. Edited excerpts follow. Importance of culture MR. BERMAN: Take us back to your arrival on the Uber board in April 2016. What was going on? What did you see? MS. HUFFINGTON: The growth was the most amazing thing. Then, though, what I began to see is that the growth was also achieved at the expense of an incredible burnout in the company. Working hard is great, but the data is very clear that working longer and working smarter contradict each other. MR. BERMAN: Was there a moment where you said, “This is crazy”? MS. HUFFINGTON: I think there was a moment when I said, “We need to do something about this culture.” We produced a series of workshops to help everybody understand that even though we claim to be in a datadriven culture, we are forgetting the data—which is that when you are operating in a culture of burnout and constant stress there are going to be consequences. Burned-out people act out again and again. They make mistakes. MR. BERMAN: So is there a mo- ment now, where you have various board members in litigation with other board members, alliances being struck, chaos reigning, where you say, “This is crazy”? MS. HUFFINGTON: No. We have a great CEO. I chaired the search committee and I’m very, very thrilled with the results. Dara Khosrowshahi is really somebody who has the perfect combination of talents for this time in Uber’s history, ‘We are recognizing that what’s happening in the culture has direct consequences to the bottom line.’ including being unflappable, which I consider the greatest trait of leadership. MR. BERMAN: Could Uber have been what it became without, to use a term I know you like, a bunch of brilliant jerks? MS. HUFFINGTON: Oh, yes. One of the things I said in my first all-hands when I spoke to the employees was that with growth forward we would end the cult of the top performer. This is not just a Silicon Valley cult. Why did Harvey Weinstein last that long? The cult of somebody who delivers results. When you deliver results, somehow a lot is forgiven. And that is particularly prevalent in the Valley. So I called the top performers brilliant jerks and I said, “We’re going to have zero tolerance for them.” We are recognizing that what’s happening in the culture has direct consequences to the bottom line. A culture is not nice to have, it’s absolutely essential. Especially right now, in the world of social media, companies can no longer hide behind expensive ads what’s happening in the company. On social media MR. BERMAN: What do you view as the moral responsibility of Facebook, Google, Twitter, YouTube, social-media platforms, to the people and the countries that they serve? MS. HUFFINGTON: I think there is a moral responsibility, as [Facebook COO] Sheryl Sand- berg said last week, not to allow foreign powers to come in and use fake names and be able to infiltrate the platform. She said if these were from real accounts, as opposed to fake accounts, they would only Please turn to the next page INSIDE Wal-Mart Takes Aim at Amazon Marc Lore, Wal-Mart’s U.S. e-commerce chief, explains its acquisition strategy, R2 Baidu Sees AI as Key to Its Future CEO Robin Li on the company’s tech expertise, autonomous cars, and the battle against fake information, R4 The Thinking Behind Alibaba’s Expansion Executive Vice Chairman Joseph Tsai says the company can compete with all the tech giants, R4 Is Regulation Ahead for Titans of Tech? Barry Diller says it’s inevitable. He also thinks unicorn valuations are absurd, R5 At Oracle, It’s All About the Cloud CEO Mark Hurd says moving to the cloud is in customers’ best interest, R6 GM’s Strategy for the Autonomous Car President Dan Ammann on the company’s role, what the timetable is, and what the driverless car means for the industry, R6 In Defense of an Ad Model BuzzFeed’s Jonah Peretti talks about social media, algorithms and fake news, R9 The Outlook for Tech M&A Peggy Johnson and Jennifer Nason talk about the prospect for big deals, R7 Where the Money Will Come From Sam Altman, Jenny Lee and Bill Maris on startup funding, the most exciting technologies, and increased regulation, R11 The View of an Activist Investor Pershing Square founder William Ackman explains why he’s battling with ADP, R8 Where Wearable Tech Is Headed Chip Bergh, Levi Strauss’s CEO, says the possibilities are endless, R12 Self-Flying Plane Wins Startup Showcase Israel-based Eviation was the audience favorite at the WSJ D.Live conference, R8 Qualcomm’s Game Plan CEO Steven Mollenkopf on smart cars and 5G technology, R12 Companies Must Use AI—Or Else Intel CEO Brian Krzanich says companies that don’t use artificial intelligence will be left behind, R9 The Big Benefits of Smart Cities Cisco CEO Chuck Robbins says cities can no longer do things the way they always have, R13 Facebook Opens Up on Messenger VP of messaging products David Marcus on how the company’s new channel for advertisers works, R14 PLUS: Voices From the Conference Affirm’s Max Levchin on the dangers lenders face, R2 CrowdStrike’s George Kurtz pleads for better password practices, R4 Paradigm’s Joelle Emerson on tech’s meritocracy problem, R5 Uncharted Play’s Jessica O. Matthews on Africa’s tech rush, R10 Samsung’s David Eun on the integration between hardware and software, R13 For personal non-commercial use only. Do not edit or alter. Reproductions not permitted. To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com THE WALL STREET JOURNAL. R2 | Tuesday, October 24, 2017 JOURNAL REPORT | WSJ D.LIVE Wal-Mart Takes Aim at Amazon Marc Lore, the company’s U.S. e-commerce chief, explains its acquisition strategy Elevating the brand MR. ANDERS: Wal-Mart re- cently acquired ShoeBuy, Bonobos, ModCloth, Moosejaw and delivery company Parcel. But you aren’t done shopping, right? There’s more to come? MR. LORE: That’s right. We’re looking at a lot of different things right now. Everything in every sector—technology, retailers, digitally native brands. We’re looking a lot. MR. ANDERS: The brands you bought are all established, well-known names. What’s the overall strategy? Do you plan to integrate these things closely into Walmart.com or keep them as their own brands? MR. LORE: There are two different strategies that we are pursuing simultaneously. The retail specialists such as ShoeBuy and Moosejaw—we bought those companies to really help us accelerate in the long tail. They have an amazing assortment, amazing relationships with brands. The teams are great, product content is much better than what we had before. So being able to take that product content and those relationships and bring that to Walmart.com and Jet is really the reason to do it. We’ve also empowered the leaders of these companies to basically run the category across the entire entity. We didn’t just buy them and say, “Just keep doing what you’re doing.” Instead we told them, “We want you to run and manage this category.” It’s worked out really well. MR. ANDERS: Are these types of brands helping to elevate Wal-Mart overall, make it cooler? MR. LORE: It’s about bringing in a better, more unique, specialist assortment to the site. We’re working on a couple of partnerships now that will be announced in the next few months to help bring an even more premium assortment onto the site. We’re also redesigning the website, investing heavily in vertical experiences in both home and fashion, to make it less about transaction and more about browse and discovery. So yes, we’re definitely making a push to elevate the brand. Importance of scale MR. ANDERS: Wal-Mart is fa- mous for paying attention to the bottom line. Jet.com came up not having that same sort of restraint. Can you do this in a way on Jet.com that is ultimately profitable? MR. LORE: Absolutely. E-commerce is a scale game. And the great thing here is that we get to combine the scale of both Walmart.com and Jet together on a common infrastructure. So it isn’t looking at each of them in isolation. We actually get the ability of each one to leverage from the other. MR. ANDERS: When do you think Jet.com will become profitable? MR. LORE: I haven’t talked about profitability, although at the analysts’ meeting last week, I did say that this year would be the peak in losses. We expect a slight reduction of losses next year. MR. ANDERS: When we polled audience members about which company they think is going to dominate e-commerce in five years, they didn’t pick Wal-Mart. NIKKI RITCHER/DOW JONES (2) Wal-Mart Stores Inc. has been on a buying spree over the past year, seeking to better position itself for an intensifying e-commerce battle with Amazon.com Inc. Leading the effort is Marc Lore, who became Wal-Mart’s U.S. e-commerce chief last year after the Bentonville, Ark.-based retailer acquired his startup, Jet.com, for $3.3 billion. Mr. Lore sat down with The Wall Street Journal’s Jason Anders to discuss the megaretailer’s plans for e-commerce. Edited excerpts follow: ‘We get to combine the scale of both Walmart.com and Jet together on a common infrastructure.’ Chasing Amazon In an e-commerce market projected to grow by nearly 50% over the next four years, Wal-Mart is chasing market leader Amazon Leading e-commerce retailers in the U.S. in 2016, in billions of dollars Unique monthly visitors to the most popular retail websites in the U.S. as of March 2017, in millions Projected retail e-commerce sales in the U.S., in billions of dollars Amazon 200 $700 150 600 $46.66 Wal-Mart $12.73 Apple $6.11 Home Depot $5.37 Liberty Interactive $4.89 100 500 50 400 0 Amazon eBay Wal- Apple Target Home Etsy Kohl’s Best Wish sites Mart sites Depot Buy 300 2017 MR. LORE: It will be interesting to ask that question 50 years from now, or 20, because WalMart has some really unique assets that no one else has. To date, we haven’t fully leveraged the scale of Wal-Mart, specifically its 4,600 stores within 10 miles of 90% of the population. Fresh, frozen, over 100,000 general-merchandise skews are in that proximity. That product gets there in full truckloads—not cases and pallets—and those 4,600 warehouses are profitable. They’re already covering their entire fixed expense. So each marginal dollar that ships out of there comes out at an incredible profit. Already, [customers can pick up online orders] of fresh grocery at 1,000 stores. We’re rolling that out to over 2,000 stores next year. And from each of those stores, we will have the ability to deliver. We are testing grocery deliveries now in 22 stores, using a combination of our own associates, Uber drivers, Deliv, and a bunch of other players. MR. ANDERS: There is a big arms race under way right now with groceries. Certainly, Amazon and Whole Foods are getting a lot of attention. Up to now, Wal-Mart has been banking heavily on its vast physical store network and making that better. MR. LORE: The hard part is done. We have forward-deployed inventory, full truckloads, warehouses making money. We have pickup capability for online orders at 1,000 stores, which will be 2,000 stores by the end of next year and eventually 3,000 and 4,000 stores. Now, it’s just about that last-mile delivery piece, and there are plenty of partners we can work with to do that. MR. ANDERS: Amazon has plowed a ton of money into the logistics side. Are you saying that Wal-Mart can go head-to-head with Amazon and offer the exact same services that they’re offering? MR. LORE: We have a little bit Ending Stress and Burnout Continued from the prior page a level of protection for what is an imperative part of the creative process? Continued from the prior page have taken them down if the language was violent or hatefilled. Otherwise, they, on the grounds of free speech, would have kept them up. So that’s the question that we need to discuss, in terms of platforms. For me, the more significant question has to do with what’s happening with the hi jacking of people’s attention. I think in the attention economy, companies like Facebook or YouTube, especially, the part of Alphabet that is directly about people’s attention, the goal is to get as much of your attention as possible through an enormous amount of persuasive techniques. If you look at the “like,” it’s a way to keep you hooked, to keep you returning to see how many likes the picture of your salad got. And among teenagers especially, and college kids, this has become a symbol of validation. It cannot be in our interest to have persuasive techniques hijacking our attention in such a way. And I think that’s going to be the big, existential issue we need to discuss. And if you think, “Oh, don’t worry, I have incredible will power and I’m only going to The short-form future MR. BAKER: Let’s move on to a happier topic, which is the future of TV. You’ve got a plan to revolutionize TV, WndrCo. Tell us why there’s space for another major initiative in the TV field. MR. KATZENBERG: We’ve hit a moment in time in which there’s a fantastic opportunity to innovate storytelling and to evolve it. Ten years ago, two things happened. One, everybody now has a television with them all the time. At the same time, a little earlier than that, there was a platform called YouTube. And out of YouTube came this amazing new form and format. Short form, under 10 minutes. And in a very short period of time, that platform gets a size and a scale that is unprecedented as a media platform. And Google comes along, buys it, does a fantastic job investing in the platform itself and the creators in it, creates a business model for monetization. Out of that, the platform evolves. There starts MR. BAKER: Without being too flippant, isn’t it all skateboarding, ducks and puppies, falling down stairs, and all this kind of stuff? MR. KATZENBERG: No. It’s what people can afford to make. I believe that if you create short-form content that can be consumed in these chapters of under 10 minutes, it will revolutionize the storytelling opportunity. I’ll point to another medium where somebody capitalized on this. Traditionally, a chapter in a novel is 20 to 40 pages long. Fifteen years ago, two great authors came along and realized that as a society and a world we’re ADD. James Patterson and Dan Brown changed the architecture, the formatting, of the way in which they told a story. So “The Da Vinci Code” was 464 pages long, 105 chapters. Now the quality of that story, the arc of the story, the quality of the characters, the richness of it, the excitement of it, it was one of the great reads. What he did is, he al- lowed a different consumption habit, which is if you had 10 minutes you could read a chapter or two. If you had an hour you could read five or six. MR. BAKER: Give us a sense of how it’s going. MR. KATZENBERG: This is as hard as anything I’ve ever done for many reasons, not the least of which is that anytime anybody has started a new media platform, at its foundation was library content. The challenge for new TV is there isn’t any. Everything has to be created from scratch, because you cannot take an episode of “Game of Thrones” and cut it up into six 10-minute pieces. It’s a Catch-22. For people to pay for a subscription service, there needs to be not just supreme quality but there also needs to be quantity. You have to deliver on both of those. So I have spent the last year in conversations with all of the major suppliers of television and created a business model, a licensing model. I’ve talked with many of the best show runners to talk about creatively how they’re going to interpret this. VOICES FROM THE CONFERENCE “It’s a great time to be a lender, but it’s also a terrible time to be a lender if you’re overconfident. If you’re not reserving enough, if you’re not thinking of risk management, if you’re not considering scenarios of your losses doubling or tripling, which is a rare event but it does happen, as we saw in 2008.” Max Levchin, Founder and CEO, Affirm ’19 ’20 ’21 of a second-mover advantage. We were able to build a logistics network from scratch. We’ve got the warehouses in place at the right size, with the right amount of automation. And today, we can hit 87% of the country overnight and 99% in two days, via ground shipping. Over the next two years, you’ll start to see dramatic improvements. You’ll see the new design rollout at Walmart.com. You’ll start to see more sameday and two-hour delivery. You’re going to see a lot of changes. And I think two years from now, it will be interesting to ask the same question to see how people think. Katzenberg on Weinstein to be professionally produced content there, some of it incredibly imaginative, very compelling. ’18 THE WALL STREET JOURNAL. Source: Statista The Journal Report welcomes your comments—by mail, fax or email. Letters should be addressed to Lawrence Rout, The Wall Street Journal, 4300 Route 1 North, South Brunswick, N.J. 08852. The fax number is 609-520-7256, and the email address is email@example.com. THE JOURNAL REPORT For advertising information please contact Katy Lawrence at 212-416-4119 or firstname.lastname@example.org spend as much time as I really want on this,” think again. MR. BERMAN: In your testing, what is the average social-media consumption? MS. HUFFINGTON: Stunning. There are people who are totally addicted and they spend over 10 hours [a day]. But normal people, who are not completely addicted, may spend seven hours on Instagram or Facebook a week. MR. BERMAN: Should a 12- year-old have a smartphone? MS. HUFFINGTON: The closer you get to the Valley, to people who are part of these companies and actually producing this product, the later the kids get the phones and the stricter they are about how much time they allow them on their phones. Over 70% of people sleep with their phones. With the best will power, if you wake up in the middle of the night and you can’t go right back to sleep, you are going to be tempted to look at your phone, to look at texts. And then your whole sleep cycle is interrupted. None of us would be here without all that technology has brought us. It’s basically about setting boundaries and reconnecting with ourselves. Gender issues MR. BERMAN: Based on your experience on the Uber board, what are some practical things that a company should be thinking about as it relates to gender in the workplace? MS. HUFFINGTON: When workplaces are fueled by this culture of burnout, where people wear this like a badge of honor, it disproportionately affects women. First of all, women internalize stress differently. The numbers show that women in stressful jobs have a 40% greater risk of diabetes and a 60% greater risk of heart disease. So that’s something we need to be working on ourselves. Also, there’s more sexist behavior when people are burned out. They act out. We all know that when we are running on empty, when we’re exhausted, we operate at our worst. MR. BERMAN: If you were to give mindfulness training in the White House, what would be your prescription? MS. HUFFINGTON: To take the president’s phone away at night. That might change the course of world history. REPRINTS AVAILABLE FULL PAPER: The entire Wall Street Journal issue that includes the WSJ D.Live report can be obtained for $10 a copy. Order by: Phone: 1-800-JOURNAL Fax: 1-413-598-2259 Mail*: WSJ D.Live Dow Jones & Co. 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Tuesday, October 24, 2017 | R3 I CAN KNOW THOUSANDS OF With IBM Services and Watson, customer service ag gents canít exactly read minds, but they can know which customers to he elp ˇrst and how to help th hem better. This helped on ne company to reduce call re esolution times by 99% an nd saved another company $1 11.2 million a year. Find ou ut more at ibm.com/you Th his is customer service to o the power of IBM. IBM and its logo, ibm.com and Watson are trademarks of International Business Machines Corp., registered in many jurisdictions worldwide. See current list at ibm.com/trademark. Other product and service names might be trademarks of IBM or other companies. ©International Business Machines Corp. 2017. For personal non-commercial use only. Do not edit or alter. Reproductions not permitted. To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com THE WALL STREET JOURNAL. R4 | Tuesday, October 24, 2017 JOURNAL REPORT | WSJ D.LIVE Baidu Sees AI as Key to Its Future ‘We’re going to deliver a fully autonomous bus by the end of next year.’ CEO Robin Li on the company’s technology expertise, its autonomous-driving program and the battle against fake information The search future MR. DEAN: You’re placing a huge bet on artificial intelligence. Why do you think that could help you regain your edge? MR. LI: First, every company has its own DNA. Baidu is a technology company. During the desktop age, in order to serve the users better, you just needed to come out with the best technology to rank contents on the internet. I think that’s what we are good at. But when the world moved into mobile, the landscape changed. The market involvement changed. For mobile, you need to build your own ecosystem. You need to enable people to create content for you, and we don’t have access to that content anymore. We’re still dominating in mobile search, but we need to figure out what’s next. Luckily, we have entered the age of AI, and technology is important again. You need to have the best natural-language processing technology, the best voicerecognition technology, the best image or computer-vision technology. You need to analyze a lot of data. I think we are good at that, and there are a lot of new opportunities for AI. If you think about search, it’s the most natural AI application. When you type in a keyword or query, we will try to guess what you mean and provide the best answer for that query. That’s pretty much the definition of AI. Let computers understand humans and provide answers or provide services. MR. DEAN: A big part of what you’re doing related to your AI is your autonomous-driving program. You just announced a new deal with BAIC, which is one of the biggest Chinese state-owned auto makers in Beijing. Tell us about that deal. MR. LI: We have a very solid plan. The plan is to mass produce level-three cars by 2019 and mass produce level-four cars by 2021. Asleep at the wheel MR. DEAN: Level-four autono- mous is where the person doesn’t need to be awake, basically, and the car drives itself. What is your involvement in this? MR. LI: We don’t manufacture cars. They do. We provide technologies so that they can drive automatically. We also provide technology and content for people to be entertained in the car. When a passenger gets into the car, our vision is that you will never need to touch your phone anymore. The car can provide all the things—the screen, the songs, the microphone. Everything can be better than the mobile experience. MR. DEAN: Where would you say your technology ranks in autonomous driving against Waymo [the driverless-car division of Google parent Alphabet Inc.]? MR. LI: It’s a question of open versus closed. Apollo [Baidu’s autonomous-car software system] is a very open system, and the first day, we had about 50 partners join us, including companies like Ford and Daimler, Bosch, Continental and many in China. I think history has also proved that an open system has better momentum. We published Apollo 1.0 in July, and we published 1.5 in September on GitHub. If you go there and check it out, it’s a very active community. Lots of people are contributing to the Apollo technology, because the world believes we will be moving into an autonomous-driving society. I think a lot of people are participating, and they are providing signals to us. They are providing data to us. They are providing requests or demands for us. We know more about the real market demand. That gives us an edge. MR. DEAN: So if I’m a potential partner to you, and then Waymo’s coming over and they want to talk to me, why would I go with Baidu over them? MR. LI: Because you will have much better control over your destiny. Apollo is open, and you can see everything, and you can contribute data to us, and we can provide you simulation technology, security technol- NIKKI RITCHER/DOW JONES (3) Baidu is the search titan in China, but with its mobile efforts, it stumbled relative to the competition. The Wall Street Journal’s global technology editor, Jason Dean, spoke with the cofounder, chairman and chief executive of Baidu, Robin Li, about the company’s plans for reclaiming its advantage, as well as its push into autonomous vehicles. Here are edited excerpts. ogy, and we can provide you data too. Growing Smartly MR. DEAN: How are you going Projected growth of the artiﬁcialintelligence market to make money on this opensource autonomous-driving platform? MR. LI: We can sell simulation systems, and we can sell data. We can sell high-definition maps. We can even in the future write insurance policies. There are lots of things you can do. It’s a very large market. I think auto represents about one-sixth of the total Chinese GDP, and it’s growing fast, too. $60 billion 50 40 30 20 10 0 2017 ’18 ’19 ’20 ’21 ’22 ’23 ’24 ’25 Source: Statista Getting there first THE WALL STREET JOURNAL. MR. DEAN: Fake news has been a big issue in the U.S. It’s been an issue in China, too. You re- cently took some measures to address them that stirred some controversy. How do you see the role and responsibility of big internet companies like yourself in balancing the need to safeguard against bad information versus the risk of censorship? MR. LI: We want to provide the best way for people to find information, and that means we need certain kinds of control over information so that we provide people with true information instead of fake information or fake news. The fake-news issue became more and more serious as social media became more popular. MR. DEAN: The BAIC deal, is the goal to be first with the level-four autonomous car? Do you think you’ll beat the competition to delivering that to market? MR. LI: That’s not the first level-four vehicle we’re working on. We issued another announcement with King Long, which is one of the larger bus manufacturers in China. We’re going to deliver a fully autonomous bus by the end of next year. It’s going to be run in designated areas, but it’s going to be fully autonomous. There’s no fact checking. There’s no editorial control. We recently set up a platform to clarify a lot of things in collaboration with the government and quite a few other companies. We also integrated in our existing products features like Baidu Encyclopedia. It’s one of the most authoritative information sources in Chinese. From time to time, there are things that are unverified. People are curious about the authoritative explanation of those kind of topics. We use our technology to extract the main topics from every article and provide a Baidu Encyclopedia entry right after the news text. MR. DEAN: The concern in China is that partly what is fake news can be dictated by the government. How do you balance that into your equation? MR. LI: The government cares more about politically sensitive content. But we, as a general information provider, need to do a lot more with rumors about scientific issues, rumors about entertainment, all kinds of things. We need to do a lot more work, and we’re doing that, using technology, using editorial control. The Thinking Behind Alibaba’s Expansion Executive Vice Chairman Joseph Tsai says the company can compete with all the tech giants ‘Our international expansion really focuses on our customers, who are doing business in China, as they expand abroad.’ China’s Alibaba has grown into one of the world’s biggest tech giants. As it has grown, it has spread into many different areas of tech and has begun to bump against U.S. tech giants like Amazon and Google. The Wall Street Journal’s global technology editor, Jason Dean, discussed Alibaba’s strategy with Joseph Tsai, the company’s executive vice chairman. Here are edited excerpts. What now, what next? MR. DEAN: Let’s talk about your ambition. You started off in e-commerce. You’re now directly or indirectly in cloud computing, media and entertainment, logistics, payments and others as well. Your vision is that customers will meet, work and live at Alibaba, which is pretty much everything. Where does the ambition end, and what’s the unifying vision? MR. TSAI: Since 1999, we started the company with a mission to make it easy to do business anywhere. We want to make sure we help businesses, companies, especially small companies, to be able to reach their markets and reach consumers. Today, we run the largest retail platform in China. There are over 500 million consumers on that platform. And most of them are mobile. So whenever we think about expanding into a new space, we ask ourselves, “Is that consistent with our mission? Are we staying true to that mission?” MR. DEAN: You’ve been called the Amazon of China. You’ve competed in China against them and won. But increasingly, you’re competing headto-head globally, particularly in the cloud business. What is the strategy there? Are you trying to take them on outside China, as well as Microsoft and Google in the cloud? MR. TSAI: If you look at Amazon and Alibaba, the two companies grew up in very different environments. We grew up in China. Amazon grew up in the United States. We started as e-commerce companies. You can say that we’re from the same genus but grew up as two different species because we have our own environment. China is a developing economy. It’s an environment where the economy is shifting from investment and exports to consumption. If you look at China today, it exhibits a lot of the developing-economy characteristics, whereas Amazon is in a very well-developed economy. Ecommerce is actually very, very tough. It’s not about just doing an app or launching a website. It’s about figuring out the entire supply chain. We have to worry about putting merchants together. We have to worry about logistics. We have to worry about payment. There is going to be some competition at the fringe. But in China today, the cloud market is probably what the U.S. was like maybe seven, eight years ago. It’s about to take off. We’re very excited by it. We’re very happy to continue to grow our business in China. Our international expansion really focuses on our customers, who are doing business in China, as they expand abroad. We help them expand. We also have an effort in, for example, Southeast Asia, outside of China, where a lot of Southeast Asian companies are looking at cloud solutions. So that’s where we are. The push for AI MR. DEAN: In that world, you have to be going up against them head-to-head, at least in some cases. And you’re targeting multinationals as well, you’re advertising in the U.S. What’s your competitive advantage against Amazon when you go head-to-head with them? MR. TSAI: In the cloud you really compete on technology and products. And we have areas we feel we are excellent in. We’re very good in database, we’re very good in middleware as well as security. We’re not just competing with Amazon, we’re competing with Google, we’re competing with Microsoft, great, great technology companies. But we feel like we have both the wherewithal and the technology and the people to compete. MR. DEAN: You announced last week you’re ramping up R&D spending to a total of $15 billion over the next three years. What’s driving that? MR. TSAI: As a percentage of revenue, historically, we’ve been spending roughly around 10%, 11% of our revenues on R&D. So with this effort, $15 billion over three years, roughly on average about $5 billion a year, you’re looking at midteens revenue percentage spending. I don’t think that’s a huge stretch. This just shows our commitment to put more resources into the talent as well as the technology develop- ment as we see the future. With this effort we’re going to be focused a lot on very advanced areas like quantum computing, machine learning, computer vision, voice recognition, natural-language processing. MR. DEAN: Several of those categories that you mentioned fall under the rubric of artificial intelligence. It’s hard to separate the hype from the reality. Where do you have an advantage in AI technology? MR. TSAI: I have a cigar theory on AI; you look at Cuba, C-UB-A. Those are the four important elements. C stands for cloud computing, which means low-cost computing to train the machines and manage massive amounts of data. U means use case. We serve hundreds of millions of consumers every day. We’re seeing their behavior. We have fresh data every day. B means big data. A is algorithm. You need to have smart people, the scientists, the mathematicians, to develop the good algorithms. We are one of the top companies that have all those elements in place. A question of trust MR. DEAN: You and Google and Facebook have an enormous amount of data on people. Why should people trust the big tech companies to treat that data responsibly? MR. TSAI: It’s because it’s good for business to be a responsible custodian of consumer data. If you lose that trust, why would anybody want to use your service the next day? That’s the basic principle there. It’s very, very important that those that preside over these large troves of data, the companies, are very mindful of that consumer trust, the difference between the trust and nontrust is a very thin wall. So, we feel like we’re treading on thin ice all the time. MR. DEAN: Alibaba founder Jack Ma told President Trump in January that Alibaba would create a million jobs in the U.S. over five years. That pledge was met with some skepticism. Can you tell us what you’re doing to make that a reality? MR. TSAI: We take our China experience. There are over 10 million small merchants that are selling on our platform. Whenever you try to help a merchant to sell more, grow their business, it creates jobs. We have studies that show that the Alibaba platform has created over 30 million jobs in China just from merchants hiring people. The logistics industry is hiring a lot of people. We believe that we can bring the same idea, create a platform here to let American companies, especially small businesses, sell to Chinese consumers. Remember, we have access to 500 million consumers in China. That is a huge job-creation opportunity. VOICES FROM THE CONFERENCE “We’re still dealing with crappy passwords over the last 25 years. Literally every conference, we talk about all this crazy security and big-data analytics, and we still can’t get the passwords right. So, as a consumer one of the biggest things that seems simple is at least have a different password for each site.” George Kurtz, Co-Founder and CEO, CrowdStrike For personal non-commercial use only. Do not edit or alter. Reproductions not permitted. To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com THE WALL STREET JOURNAL. Tuesday, October 24, 2017 | R5 JOURNAL REPORT | WSJ D.LIVE Is Regulation Ahead For Giants of Tech? ‘Google is the true monopolist in terms of advertising.’ Barry Diller says it’s inevitable. Also: He talks about the absurd valuations put on ‘unicorns.’ MR. BAKER: You’ve created tremendous value for shareholders by acquiring or developing internet businesses and then spinning them off. Tell us how that model works. MR. DILLER: How it happened originally was we owned Ticketmaster, and one day the guy who ran Ticketmaster came in and said he would like to make a greater investment the next year. And therefore, he would take his earnings way down. And he said, “So can I do it?” And I said, “So you’re, like, coming to Daddy to ask? You’re in a false environment.” It occurred to me that companies, once they got up to being a substantial business, should not rely on a corporate for capital or for telling them what’s right or wrong. So we started spitting these companies out. I believe that companies that have multiple and disparate operating divisions are really suboptimal. MR. BAKER: What was the threshold at which you— MR. DILLER: There is none. MR. BAKER: There is none? MR. DILLER: No. It’s feel. Every one worked better when they were independent. If you really want a company to continue to innovate, they’ve got to be on their own melting ice cube. MR. BAKER: What do you think of the virtues of going public versus going private? You’ve spun off a lot of companies that are now public. MR. DILLER: They’re all public. MR. BAKER: But they are con- fronting all of those challenges public companies face: tougher regulation and scrutiny and reporting requirements. What would your advice be to an Uber or an Airbnb as they go through this process? MR. DILLER: If you don’t have to, don’t do it. Meaning the reason that you would take a company public is liquidity, for all the obvious reasons. However, unless you need capital, there’s utterly no purpose so long as you can provide some liquidity to people who need it. I’ve never sold a share of my company. By the way, I think that the pressure of venture capital to force companies to go public because they’ve got to return money to shareholders isn’t a very good process. MR. BAKER: These valuations for so-called unicorns, do you think that the aura of being a tech company somehow bestows on them some kind of VOICES FROM THE CONFERENCE “We know that bias prevents us from being a meritocracy, but research shows that when you say you’re a meritocracy, when you design an organization and you say that it is meritocratic, it leads to spikes in bias. It leads you to be more biased. Because basically it frees people up from thinking that they have to try hard to be fair in their decision making.…And I think that’s one thing we’re seeing going on in tech.” Joelle Emerson, Founder and CEO, Paradigm NIKKI RITCHER/DOW JONES (2) Barry Diller, after a long and successful career in traditional entertainment, has reinvented himself as chairman of IAC/ InterActiveCorp, owner of such popular digital properties as Angie’s List and Expedia. Wall Street Journal Editor in Chief Gerard Baker spoke with Mr. Diller about the fierce competition and harsh realities in today’s digital business world. Edited excerpts follow. magical valuation? MR. DILLER: Well, yeah. A company isn’t dealing with basics when VCs in a room with three or four people make up a valuation when they do additional rounds of financing. It has no reality. It’s just a bunch of guys saying, “Oh, we were worth $300 million. Oh, let’s make it $700 million.” And if they get enough people to buy it, “Let’s make it $5 billion.” Or in Uber’s extreme case, “Let’s make it $65 billion.” MR. BAKER: How do we do that? Can you give us a clue? MR. DILLER: Let me tell you, it’s very easy. You and I sit in a room and say, “We’re going to get this dope over here to put some money in. Let’s just make up a good figure and if he’s going to buy it, fine with us.” These valuations don’t bear reality. MR. BAKER: Really? MR. DILLER: It isn’t possible. There’s no pricing power. You have two monopolists. One, really. Google is the true monopolist in terms of advertising. No one is going to enter it and take share away from that. It’s just not possible. Not that there won’t be other forms of advertising channels. MR. BAKER: So you don’t think anything can be done about the duopoly or the monopoly as you call it? MR. DILLER: Eventually. on advertising in the current environment, unless your name is Google or Facebook, is pretty challenging, right? MR. DILLER: There’s no hope. MR. BAKER: You think regulators are going to tackle it? MR. DILLER: As we now see these companies, these four or five, having more hegemony over more areas, inevitably, it has to bring regulation. The track is so clear. This is a different situation than the standard fear that down the street, in a garage somewhere, will be your competitor that will destroy you. These main tracks have been laid now. And the dominant companies in them do not really have fundamental competition. MR. BAKER: No hope? MR. DILLER: If you’re going to MR. BAKER: What about video? MR. DILLER: Everybody and MR. BAKER: Being dependent build a business based upon advertising, purely advertising is your sole source of revenue, I would say go home. their mother is trying to do video. Mostly, defensively. Two companies are doing it offensively, Netflix and Ama- To learn more, visit netjets.com or call a Private Aviation Concierge at 1-866-JET-0065. NetJets is a Berkshire Hathaway company. Aircraft are managed and operated by NetJets Aviation, Inc. NetJets is a registered service mark. ©2017 NetJets IP, LLC. All rights reserved. zon, interestingly, with two different business models. The Netflix model is very clear. They have 100 million subscribers. Their next closest competitor has 35 million or 40 million. They are so far ahead of everyone else, it’s impossible at a mass communication scale to compete with them. And it’s unlikely they’re going to lose it, because they’re overprogramming way beyond the water line. The other model, which is completely weird if you’re in the program business, or entertainment, is Amazon, because Amazon isn’t particularly in the business of saying, “We’d like you to like our programming for its sake.” Meaning, to the degree that people watch it, you do well. Amazon is doing it to build Prime, because they want to sell you more things. That’s a business model entertainment has never had to compete with. From the beginning of time, incumbents never invent anything new. Incumbents protect their ground. Other people come in with new ideas. And up until the last couple of years, the methodology was that HBO would be created by Time Inc., a publisher, and would eventually be bought. Guess what? They are not buying Amazon and they’re not buying Netflix. For personal non-commercial use only. Do not edit or alter. Reproductions not permitted. To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com THE WALL STREET JOURNAL. R6 | Tuesday, October 24, 2017 JOURNAL REPORT | WSJ D.LIVE At Oracle, It’s All About the Cloud ‘There is a possibility that all of development testing, which is a third of the IT market, will be done in the cloud.’ Chief Executive Officer Mark Hurd says the move is in the customers’ best interest Generational change MR. BERMAN: Let’s talk about year-end compensation, about how you are being incentivized. That has changed at Oracle, and I think that says a lot about the company. MR. HURD: The compensation has always been about stock options, and people would only make money if the company was performing. The problem with that methodology—low salaries, low bonuses, lots of stock options—has always been that when you do a Black-Scholes model against that, it gets you to crazy numbers, but you don’t get anything unless the stock performs. What we have done is tried to evolve that. We’re sticking with the mentality of options-related comp, but aligning it to performance incentives, some of which are around our transition to the cloud. It’s a big deal. MR. BERMAN: So the way you are paid is changing simply because you need to push the company to the cloud? MR. HURD: Yeah. Our industry is going through a secular change that’s generational. This will be a 10- to 15-year run to get there. And what’s happened over the last 20 to 25 years in tech is all being challenged now. So for us, we’re cannibalizing ourselves. MR. BERMAN: Was there a mo- ment inside when you were like, “We’ve just got to do this differently? We have to make a change?” MR. HURD: No. Nothing like that. It took us a bit to figure out where the market is headed. So we started with, “Here’s where this thing is going to land.” And if we are right, there’s a possibility that there isn’t a data center that a company owns in 2025. There is a possibility that all of development testing, which is a third of the IT market, will be done in the cloud. These numbers are gargantuan. If you don’t prepare for that now, you won’t get there. You have to internalize that and say, “I can kick this can down the road for a couple of years or I can go do what we decided to do.” Right now, you’re doing a blend of cloud services, on-premise systems, all kinds of custom brew for customers. What will that look like in 2020? MR. HURD: Right now, Silicon Valley does a good job of providing a bunch of individual parts—servers, operating systems, databases—all of this stuff. You send it all to the customer basically a la carte. The customer creates a huge IT staff and then tries to put it together like a Lego set. The stuff that they put together like a Lego set is really hard to upgrade, it’s really hard to MR. BERMAN: maintain, and frankly, it’s really hard to secure. All of this is going to move toward a simpler, more flexible, more variable market. MR. BERMAN: Is the future really a fully vertically integrated IBM of the 21st century? MR. HURD: That’s a great question. If you went back into the ‘80s, there was a rebellion against exactly that model, which was, “We want to procure our way to more leverage with all of these vendors.” I think what has happened is you’ve gotten a lot of that, and what you’ve gotten in return is a very complicated, very difficult environment out there. I think you’ll see a rotation to a degree back to more optimization, more integration. The cloud is a lot of that. MR. BERMAN: Isn’t there sort of a great kind of Greek mythological irony that the IBM destroyer becomes IBM in the end? MR. HURD: I’m going to stay out of mythology. But the environment in IT today isn’t sustainable. Forget anything to do with IT’s performance. The simple risk from a security perspective has to change. It isn’t sustainable. MR. BERMAN: What do you mean by that? MR. HURD: Let’s pretend we got attacked. Oracle would see something today in the marketplace that would try to penetrate something. We would create a piece of software to fix that. That’s called a patch. You’ll hear this term “patch” used a lot. A patch is simply a new piece of code NIKKI RITCHER/DOW JONES (2) Business software giant Oracle Corp. is in the midst of a massive transition, taking on Amazon.com Inc. and others in selling cloud-computing services. Helping lead the shift is Mark Hurd, the company’s chief executive officer. In an interview with Wall Street Journal Financial Editor Dennis K. Berman, Mr. Hurd discussed Oracle’s strategy and why shifting software operations to the cloud is in companies’ best interest. Edited excerpts follow. that fixes another piece of code. We would fix it immediately in our cloud. But by the time it rippled its way through our on-premise customers, it would be one year. This is now becoming an issue for CEOs, for boards. issues with everything in the cloud, having all of that valuable data in one place? MR. HURD: I don’t think so. Equifax to me was an absolutely perfect target. I don’t mean this to be derogatory toward them, but they’re a relatively small company, their resources are aligned to the size of company, and they have an incredible treasure trove of in- ‘Really flipping hard’ MR. BERMAN: Have we sort of gotten over that psychological barrier where a CEO says, “I’m willing to risk myself and my reputation and my company by doing all this work in the cloud”? MR. HURD: Do you want to be in front of the U.S. Congress and say, “Listen, I put all this software and my IT staff missed a patch”? Or do you want to say, “I did exactly what Oracle said.” If I’m a CEO, not Oracle’s CEO, I like the second talk track. I’d much rather say, “Listen, I got the best guys in the world doing this for me” as opposed to, “I tried to do it myself.” This patching thing, while it may sound trivial, when you have tons of configurations, tons of operating systems and tons of databases, this is really, really flipping hard. formation. To be able to fight every day, you need the best to fight for you. We do things that other people can’t do. Simple things, like all of your data, if it was in our cloud, would be encrypted. We wouldn’t even have your data. So if anyone got through, what they would get would be a set of encrypted files. Getting Cloudier Projected global public cloud services market $500 billion Management and security services 450 Application infrastructure services (PaaS) 400 350 Business process services (BPaaS) 300 System infrastructure services (IaaS) 250 200 Application services (SaaS) 150 100 Advertising 50 0 2017 MEMBER: Aren’t there a lot of serious security AUDIENCE 2018 2019 2020 2021 THE WALL STREET JOURNAL. Source: Gartner GM’s Strategy for the Autonomous Car President Dan Ammann on what the company is doing—and what the timetable is ‘I think the promise of what the technology can do will help from a regulatory perspective.’ Will auto makers or tech companies lead the way to the era of the autonomous car? Dan Ammann is helping chart General Motors Co.’s course. The company’s president for nearly four years, he spoke with Jamie Heller, The Wall Street Journal’s business editor, about the company’s strategy of developing the whole autonomous-car ecosystem and whether the new era will benefit auto makers. Here are edited excerpts of their conversation. Ready to scale MS. HELLER: About a decade ago, GM’s CEO was talking about leading the way in autonomous cars. And history intervened—the financial crisis, GM’s struggles. Why should we believe now is the time for GM to succeed in robot cars? MR. AMMANN: No. 1, the technology is here today to enable this to happen. No. 2, we think that with the advent of transportation as a service, and the change in consumer behavior that we’re seeing with ride sharing and so on, that now is the time for autonomous tech- nology to move to a point where it can be deployed in commercial scale. MS. HELLER: So it’s a technology play, and Google’s been out there with Waymo, and has logged many more hours of test-driving on public roads than GM. Why do you think you can succeed as the leader? MR. AMMANN: A demonstration-level capability or smallscale deployment doesn’t have the impact on the world that we think this technology can. Our goal is to get to the point where we can launch a truly driverless car, with all of the safety validation and everything that needs to go with that, at large commercial scale. We’re making sure we have control of all of the capabilities necessary to do that, from the advanced software-engineering capability for the selfdriving brain of the car, all the way through the integration of that into all of the sensors on the vehicle, the electrical architecture, the automotivegrade safety validation, and then the ability to reliably build these cars at large scale once we believe we’re ready to do that. That all lets us think about this as one big integrated system, rather than just working on one piece of it or another. So we can move quickly and iterate the entire system continuously through development. MS. HELLER: You played with some partnerships, and there seem to be a lot of frenemy relationships between Detroit and Silicon Valley. Is the new message “We got this”? MR. AMMANN: The message is that this technology will change the world for the better in a really significant way. It will have a huge impact on safety and our roads. It will have a huge impact on the consumer experience. It will create time for people. So we think therefore we have an obligation to work as fast as we can, to bring it to commercial reality as quickly and as safely as we can. So that’s what we’re working on. MS. HELLER: You just said in The Wall Street Journal that you’re now going to be testing environments, which are the same environments in which we ultimately think the technology should be deployed, we won’t get the level of performance that we need. in lower Manhattan. MR. AMMANN: We’re currently testing in San Francisco, in Scottsdale, Ariz., and in Michigan. There’s a different rate of learning and a different experience operating in each of these environments. As you would expect, downtown San Francisco is a significantly more complex environment than Scottsdale, for example. As a rule of thumb, our cars experience about as much in one minute of San Francisco driving as they do in one hour of Scottsdale driving, just given the number of interactions with other players, between pedestrians, cyclists, other vehicles, and things going on. In the more complex environment, our cars can learn more quickly, and we learn more quickly about the problems we need to solve. Now we’re taking that a step further, to Manhattan, which most of us would agree is the most complex and difficult driving environment in the U.S. Attracting talent MS. HELLER: A lot of people here talk about competing for talent. How are you attracting the people you need to GM? MR. AMMANN: When we began to see the change in the transportation landscape a few years ago, we saw we were missing some of the specific software-engineering capability that we needed, particularly in the self-driving area. So we learned what was out there, and we ended up acquiring a company called Cruise Automation, which was a very small but very talented engineering team. And with that team we not only bought capability at the time, but we bought the ability to recruit more talent. People see what we’re doing, and often reach the conclusion that if you want to come to the place where your technical contribution will actually be commercialized in large scale, then this is the place to come. MS. HELLER: Is that just a tech- nical thing, or is there also a messaging and branding element in taking it to New York, where Wall Street is? MR. AMMANN: It’s all about getting the technology ready as fast as we can. Until we’re testing in the most complex MS. HELLER: What’s happening on the regulatory front? How much of an impediment or help is that going to be? Speedy Growth Share of global market in 2024 Forecast size of the market for self-driving cars $20 billion t North America Asia-Paciﬁc Europe Rest of world 15 29.7% 5 27.3% 0 ’18 ’19 Source: Variant Market Research ’20 ’21 Industry impact MS. HELLER: Let’s say you succeed and we’re all getting driven around by robots. Is this going to be good or bad for the car industry long term? Will we just need fewer cars? MR. AMMANN: We think by making transportation more accessible, lower cost, safer, we actually create the opportunity for more vehicle miles to be traveled. We think transportation becomes more readily available in general to people. So total vehicle miles traveled or total passenger miles traveled probably goes up. While autonomous cars are seen out on the road in testing, what we still haven’t seen is what we’re aiming to achieve, which is a truly driverless car deployed in large commercial scale. But once you’ve deployed, the technology will only continue to improve. So we view that on-off switch of the beginning of commercial deployment as just the beginning of a really interesting journey, and changing that total customer experience. 40.8% 10 2017 MR. AMMANN: It’s still being formulated, but I think the promise of what the technology can do will help from a regulatory perspective. Every year 40,000 people are killed in traffic accidents in the U.S. Regulators will tell you 95% of those fatalities are caused by human error. So if we can make a significant impact by replacing the human driver with a better driver, then it almost becomes an obligation to deploy this technology for the betterment of society. ’22 ’23 ’24 2.2% THE WALL STREET JOURNAL. MS. HELLER: The big question is when that on-off switch gets flipped. MR. AMMANN: We and others are working on this as fast as we possibly can. MS. HELLER: You said the last prediction was five years from 2016. Are we still in that timetable? MR. AMMANN: I think inside of that time frame we will see some pretty interesting developments. For personal non-commercial use only. Do not edit or alter. Reproductions not permitted. To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com THE WALL STREET JOURNAL. Tuesday, October 24, 2017 | R7 JOURNAL REPORT | WSJ D.LIVE The Outlook for Tech M&A Peggy Johnson and Jennifer Nason talk about past deals and the prospect for more deals MS. KIM: What is the outlook for big acquisitions? MS. NASON: I am bullish about 2018 for activity. Money is still virtually free. The equity market has been very responsive to M&A. Prices are still high, so we’re seeing very high valuations. That is tough. But increasingly companies are looking at assets and saying, “This is just strategic for me. I need to make a move.” MS. KIM: Peggy, one of your partnerships came as a surprise this year: the partnership with Amazon on digital assistants. You have Cortana and Alexa working together. MS. JOHNSON: They’re talking to each other. MS. KIM: What was the logic behind that deal? MS. JOHNSON: It started with a conversation that Jeff Bezos and Satya Nadella had at our CEO Summit about how we’re really operating in different spaces. Jeff’s all about shopping, and that experience. We’re all about productivity and that experience. I think there was a recognition that there will be a multitude of personal agents, and could ours talk to each other? When it was handed off to the engineering teams, then the hard work began. They figured out how you can have a seamless experience between your two devices. I think you’ll see more of that going forward. MS. KIM: Are you open to working with companies like Apple and Google in the AI space as well? MS. JOHNSON: We are. We try not to look at everything through a competitive lens. Is there some shared value that together we can build more for our joint customers? Rather than fighting over a piece of the pie, can we grow the pie, is really our model. MS. KIM: This partnership is an example of a potential expansion in the AI space? MS. JOHNSON: Yes, AI is a big area for a lot of people right now. If we can take out some of the friction in the development process, I think we’ll start to see some of the outcomes that we’ve all been talking about and envisioning. MS. KIM: Jennifer, a lot of ri- vals in tech are partnering and working on emerging technologies. Will this be a trend? MS. NASON: It’s certainly more capital efficient. Sometimes you just can’t go out and buy everything. M&A is hard, timeconsuming, and it doesn’t always work. So some of these partnerships can be a good way to have a bet in a certain area and see how it plays out. MS. KIM: We’re seeing a lot of software companies going after hardware, and hardware companies going after software. Jennifer, will that trend continue in the industry? NIKKI RITCHER/DOW JONES Tech companies aren’t sticking to their bread and butter when it comes to acquisitions. In 2016, Microsoft Corp. surprised the market with its $26 billion acquisition of LinkedIn. And this year, Amazon.com Inc. purchased Whole Foods for more than $13 billion. Wall Street Journal Senior Editor Yun-Hee Kim talked about mergers and acquisitions and strategic investments with Peggy Johnson, Microsoft’s executive vice president of business development, and Jennifer Nason, global chairman, investment banking at J.P. Morgan Chase & Co. Edited excerpts follow. Jennifer Nason (left) and Peggy Johnson MS. NASON: Yes, there are many examples. But the big hardware of the future is going to be the autonomous vehicle, and the networks that are going to those vehicles, the software, all the technology, the content. MS. KIM: Which companies are in best position? MS. NASON: I would never un- derestimate the big OEMs [original equipment manufacturers], so Ford and General Motors. We know there’s a lot going on there. Thousands of companies are trying to raise private equity for elements of the autonomous vehicle. MS. KIM: What is Microsoft do- ing in this space? MS. JOHNSON: We’re enabling that space. We’ve come out with our connected-vehicle platform, which takes care of a lot of the plumbing, if you will, that the car needs to go through; the aggregation of data from all of the different sensors, off-loading it, and analyzing it in the cloud. We’ve looked at a set of tools that can enable OEMs in the space. It's a Deal Merger, acquisition and buyout activity involving venture-backed information-technology companies headquartered in the U.S. Number of deals Total amount paid 300 $40 billon 250 200 150 100 50 0 2008 ’09 ’10 ’11 ’12 ’13 ’14 ’15 ’16 ’17* 35 30 25 20 15 10 5 0 2008 ’09 ’10 ’11 ’12 ’13 ’14 ’15 ’16 ’17* *2017 ﬁgures are for ﬁrst three quarters of the year Source: Dow Jones VentureSource MS. KIM: What is Microsoft’s next big growth opportunity? MS. JOHNSON: We have a big focus in AI. Just over a year ago we announced a reorganization. We’ve had AI on our campus for about 25 years, so we’ve put a lot energy into that, and this reorganization will help refocus even more. MS. KIM: You are both rare fe- THE WALL STREET JOURNAL. male senior leaders in your industries. What can companies do to promote more women into senior roles? MS. NASON: Well, if they could just send an email out tomorrow, and promote a bunch of people. (LAUGHTER) I hope Jamie Dimon is listening. I’ve invested more time and effort in diversity committees and panels, and generally it’s women talking to other women about how to fix it. I think that’s been a big tactical mistake on our part to talk to each other, rather than to involve the men, and particularly the men who are typically in power at a lot of these organizations. MS. JOHNSON: I’m an electrical engineer, and when I first started out, there was nobody who looked like me out there. I worked at Qualcomm, and I remember coming into meeting rooms, and I could never get the floor. I could never get my opinion across. And I thought at one point, “I’m just going to drop out.” My manager at the time said, “Don’t do that. How can we fix things?” And I said, “Well, just throw me the ball. I have something to say, but it’s hard to interject.” And he started doing that. That’s when my career really took off. So I’ve tried to do that over and over, you know, going forward with any team or group of people, make sure everybody is heard. It’s very important, whether you’re a quiet man, or a quiet woman. We’re taught in school, “If you listen, your patient will tell you what they need.” The truth is, patients share a lot of valuable information that cannot be captured. That’s why I’m collaborating with health and technology leaders to make meaningful patient data accessible and actionable. Our patients are still telling us what they need, but in the future, technology will help us hear them even better. Join the AMA in unleashing a new era of better, more effective patient care through the Integrated Health Model Initiative at ama-assn.org/ihmi For personal non-commercial use only. Do not edit or alter. Reproductions not permitted. To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com THE WALL STREET JOURNAL. R8 | Tuesday, October 24, 2017 JOURNAL REPORT | WSJ D.LIVE The View of An Activist Investor William Ackman explains why he’s battling with ADP In fact I think it is dangerous not to have opposing points of view in a board room. ADP is operating in a world that has changed dramatically in the last five or six years because of technology, because of cloud-based software. And they’ve missed the market as a result. ‘Once the owner is gone, there is a real risk that a company will lose its innovation.’ Risk of disruption NIKKI RITCHER/DOW JONES (2) MS. HELLER: You recently said Activist investor William Ackman, the founder of Pershing Square Capital Management, has spent the past few months locked in battle with Automatic Data Processing after taking a stake in the humanresources software firm and having his request for board seats rebuffed. In an interview with The Wall Street Journal’s business editor, Jamie Heller, Mr. Ackman laid out his case for board changes at ADP and for shareholder activism in general. Edited excerpts follow. Replacing the founders MS. HELLER: What do you think about this new proposal out of Silicon Valley for a new U.S. stock exchange, where the longer you hold a stock, the more voting rights you get? And no earnings guidance. Is that a world you would welcome? MR. ACKMAN: I think a lot of companies make the mistake of giving guidance to their shareholders on earnings. When you have companies very focused on meeting numbers, it causes them to miss opportunities. ADP is the classic example of a company that has met its numbers but missed the market. We’ve heard stories from former employees that ADP had an opportunity to build a competitive product to Workday, but there just wasn’t room in the budget for it. They couldn’t make the numbers if they had to make a big capital expense on a new program. That decision has cost them tens of billions of dollars, and created competitors. You get the shareholders you deserve. If you have earnings guidance, you’re going to have shareholders who are very focused on the short term. If you don’t, you’re going to attract investors who take a longer-term view. MS. HELLER: You haven’t done that much investing in tech, so how did you pick ADP? MR. ACKMAN: ADP is sort of the classic example of a company started by a founder, built up over decades to become the dominant company in payroll processing. It was an innovative company that helped with an important task. Then, the founder dies and the stock gets disseminated out to children, and estates, and foundations, and then to the market, to the government to pay taxes. And then the board becomes comprised of what I call professional directors. If you look at the board of ADP today, only one director in the last 14 years has bought a share of stock. Owners are willing to make bold decisions. Once the owner is gone, there is a real risk that a company will lose its innovation. So activism is sort of a replacement for the founders. Because we own 8% of the company, we’re seeking representation on the board. Once we’re there, we can think like an owner. We can help make decisions like an owner. MS. HELLER: One of the criti- cisms of your ADP campaign is that there aren’t specifics. Its just “let’s improve margins.” What’s your response to that? MR. ACKMAN: What companies do when they want to defend against activists, and they don’t have a good response, is they will attack the activist. They say that bringing the activist on the board is extremely risky. that as an investor, you need to be looking at what the venture capitalists are looking at, and what the startups are doing because you never know who is going to come in and blow up your business. Yet you’re investing in a business that seems to be on the defensive from rivals like Workday and Paychex. How did you decide to make that leap? MR. ACKMAN: I’m a pretty active small investor in venture capital personally. It helps me think about the risk of disruption. The most important thing a long-term investor needs to think about is the risk of someone in a garage coming out with the next new thing. ADP has some of those kinds of risks. But we think as long as ADP is open to change, it still has a strong enough market position, a strong enough balance sheet, enormous resources, that it can mitigate competitive threats. What’s fascinating is, ADP has a $50 billion market cap. It spends $860 million a year on systems development and R&D. They have 9,000 developers, technologists, working for the company. They spend more than the entire industry does developing products and software. And much smaller competitors, with a fraction of the resources, have better products than ADP. [In response to Mr. Ackman’s comments, ADP said in a statement that while it understands the value of diverse perspectives on a board, none of Pershing Square’s nominees had the “relevant technology” experience or skills to “be additive” to ADP’s board. It also said the company had transitioned 83% of clients to the cloud and was delivering longterm value for shareholders.] MS. HELLER: Does this mean we’re going to see more of Bill Ackman in tech? MR. ACKMAN: The reason we haven’t been an investor in technology generally is that most true technology companies are so dynamic that it’s hard to predict the future. If a business is dynamic and subject to so much change, I can’t predict what it’s worth. And if I can’t predict what it’s worth, I’m not going to be an investor in the company. ADP’s business model is a little bit different. It’s really a business service company. It tends to have very long-term relationships with its customers, as switching costs are very high. MS. HELLER: Let’s go back to this idea that more companies in Silicon Valley are moving away from one vote, one share. Is that a good trend? MR. ACKMAN: I think super voting is dangerous unless it’s in the hands of an incredibly talented entrepreneur. Look at what Uber Technologies is going through now, where Travis Kalanick was the greatest CEO of all time, and then all of a sudden the board soured on him. But by virtue of ownership, he’s got enormous influence and ability to elect people to the board. Fundamentally I prefer one vote, one share. But if it’s Steve Jobs, you can probably give him control. The risk is really in the next generation. If a company goes public with supervoting stock, after the founder retires, it should convert to one vote, one share. Self-Flying Plane Wins Startup Showcase Eviation was the audience choice, while the judges favored a comedy-streaming service The Wall Street Journal would like to thank the sponsors of D.LIVE Laguna 2017 for their generous support. Eviation co-founder and CEO Omer Bar-Yohay at The Wall Street Journal’s D.Live conference For more information, please visit DLIVE.wsj.com. © 2017 Dow Jones & Co. Inc. All rights reserved. 3DJ6029 EVIATION, A STARTUP developing self-flying, electric passenger planes, was crowned the audience choice for the most promising startup at The Wall Street Journal’s D.Live technology conference. The Israel-based startup is hoping to build a company it describes as “Uber meets Tesla in the sky,” using self-piloting, lightweight aircraft that can whisk up to nine passengers each at 280 miles an hour on demand. With the aircraft still in planning, it is an ambitious vision that would require rapid changes to U.S. aviation, a highly regulated and crowded industry where self-flying and electric planes are still thought by many to be far off. Eviation won out in the audience choice over five other young companies that made up the Startup Showcase at the conference. Founders from each of the startups faced off in pitches before three judges—Levi Strauss & Co. Chief Executive Chip Bergh; Philip Krim, CEO of mattress seller Casper; and Jenny Lee, managing partner at venture-capital firm GGV Capital. Sitting on director’s chairs on an outdoor stage overlooking the Pacific Ocean, the judges peppered the founders with questions on their business models. Eviation describes its vision as ‘Uber meets Tesla in the sky’ Judges choose Laughly Other contenders In the end, the judges unanimously went with a different choice than Eviation, all three favoring Laughly, a comedystreaming service that claims 30,000 monthly active users who pay for something akin to a Netflix of stand-up comedy. But Eviation, helmed by Omer Bar-Yohay, won over the crowd. Mr. Bar-Yohay spoke about the plane in epoch-shifting terms, comparing it to the shift from horses to highways. Highways, he said in a slide presentation “gave us traffic, and they gave us the suburbs…is this the last paradigm shift?” Eviation’s planned aircraft, shaped similar to many military drones, is designed to be about 36 feet long, and very low-cost, Mr. Bar-Yohay said. Others in the Startup Showcase included: KinTrans, a sign-language translator that aims to read sign language made by a human, transcribe it, and play it back with voice. Hurdl, which makes lowcost, wirelessly connected LED wristbands meant for concerts and other live events, aimed at allowing more ways for musicians to interact with the audience. Bounce Imaging, a company that makes throwable cameras for law enforcement to see into rooms or around corners. My Jomo, which makes small, round digital screens worn by retail salespeople that can flash discount promotions or a person’s name to help draw in consumers. For personal non-commercial use only. Do not edit or alter. Reproductions not permitted. To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com THE WALL STREET JOURNAL. Tuesday, October 24, 2017 | R9 JOURNAL REPORT | WSJ D.LIVE Companies Must Use AI—or Else ‘Now that we have enough data, we can start to think about artificial intelligence.’ Artificial intelligence is the latest Holy Grail for the tech industry. What is the potential for this technology? And how close are companies to achieving it? To get a report on the state of play, The Wall Street Journal’s chief news editor, Jason Anders, spoke with Intel Chief Executive Brian Krzanich. Here are edited excerpts of their conversation. The smart revolution MR. ANDERS: AI is everywhere. You’ve had a front-row seat to some of the biggest innovations in computing. How big is this moment? MR. KRZANICH: We’re just at the beginning of a transformation. Artificial intelligence is going to be similar to what the internet was back in the ’90s. You remember back in the ’90s everybody said, “If you’re not going to be an internet company, you’re not going to be around.” The same thing is going to be true. Almost every company you can think of, every application, it’s going to be affected by artificial intelligence. You’re going to be using artificial intelligence, or you’re going to be outpaced by people who are. MR. ANDERS: What are the real applications that you’re most excited about today? MR. KRZANICH: Today I think you already see it in some applications and social media, where your news feeds, or what you’re shopping for, or if you listen to one of the music systems, they’ll send you weekly suggestions. What they look at is things like what you listen to, what are the word patterns, things like that. But where you’re starting to see it break through that’s really exciting are things like health care. There’s already data that suggests that using machine learning, looking at MRIs, they can detect Alzheimer’s years earlier than what humans can detect. So imagine the transformation if Alzheimer’s, which can be slowed down by drugs, could be detected five, 10 years earlier. MR. ANDERS: To be able to do that, you have to be a company that has both the AI tech, but also access to the MRIs? MR. KRZANICH: You’d be surprised at how many companies actually have access to data but don’t put the investment in place. I went to the National Retail Federation in January. I talked about how brick and mortar needs to think about one of the differences between brick and mortar and online shopping. Online shopping has all the data about you. They see what you searched, they What's It Good For? Some of the ways surveyed companies are using or plan to use artiﬁcial-intelligence technology 37% | Improve efﬁciencies in IT operations 34% | Improve data, analytics or insights platforms 33% | Improve business automation 33% | Mitigate security risk 32% | Test new products 31% | Gain better customer insights 30% | Innovate product design and development 30% | Create and deliver a better customer experience 30% | Improve efﬁciencies in business operations Source: Responses from 1,476 data and analytics decision makers whose ﬁrms are planning to use or currently use AI technologies, surveyed in Forrester's Global Business Technographics Data and Analytics Survey, 2017 THE WALL STREET JOURNAL. see what you put in your basket and then don’t buy. They understand what colors you choose. All of that data is then tuned to what they send to you. Brick and mortar should be doing that same thing. They have cameras in there already, they can put in small [radio-frequency identification tracking tags]. We did a project with Levi’s. They can now track what goes into the changing room and never comes out, never goes out of their store. Do you pick up red things, but you only buy white things. All of that data could really transform brick-and-mortar retail as well. MR. ANDERS: You have a new Nervana platform, a different way of designing chips. What is different about this? MR. KRZANICH: In industry, five, seven years ago, people started saying, artificial intelligence is going to take off, really it’s the advent of the cloud. The cloud allowed aggregation of data. Now that we have enough data, we can start to think about artificial intelligence. We started to think about what we call neural processing, which is that you’re starting to look at very large data sets with a very different architecture that allows for much larger data sets to be worked on at one time. We have a goal by 2020 to be 100 times better than the best artificial-intelligence systems out there today using this neural processing. MR. ANDERS: How do you mea- sure 20 times better than the best artificial intelligence, or 100 times better? What’s the metric? MR. KRZANICH: There are algorithms that you can test against. So you show it a set of pictures, or a set of data sets that are large, and you say, how long does it take to find the five patterns that are ‘We try to not think too much about the algorithm. We’re always looking at, what is the actual job the content’s doing?’ In Defense of an Ad Model Jonah Peretti of BuzzFeed talks about social media, algorithms and fake news The world of online news is in flux, facing any number of questions. Where’s the money going to come from? How do you attract readers who have so many options? And how can you keep inaccurate news from taking hold? For insight into these issues, The Wall Street Journal’s deputy technology editor, Christina Passariello, spoke with the founder and chief executive of BuzzFeed, Jonah Peretti. Here are edited excerpts. Who pays for it? MS. PASSARIELLO: Barry Diller said that anybody who was building an ad-based business should go home. What are you doing to make BuzzFeed less reliant on ads? MR. PERETTI: If you’re reaching a really large audience, advertising is a good model. We reach more than half of the millennials in the U.S. I agree that diversification of revenue is also important. We, like a lot of media companies, have expanded into areas like merchandise, show development, commerce, a bunch of other areas. MS. PASSARIELLO: You’re very dependent on social-media platforms. Do you see it as a crutch to be so reliant on platforms that can change their strategy? MR. PERETTI: When BuzzFeed started, Facebook was how you hooked up with friends to go places. The iPhone hadn’t launched yet. We were trying to understand, “What does it mean for content to become social?” We didn’t realize these platforms were going to get so huge. We saw these three trends come together: digital video, mobile and social. That has created the largest audience that the world has ever seen. You’re able to reach literally billions of people. We feel like we’ll be able to build on top of these platforms and reach many more people and build a great business by reaching people where they’re consuming media today. MS. PASSARIELLO: Does it give Please see PERETTI page R10 NIKKI RITCHER/DOW JONES (2) If a company isn’t using artificial intelligence, says Intel CEO Brian Krzanich, it is going to be outpaced by another company that is inside there? And you can look at those speeds. What we’re talking about here is being able to do those much faster, but it isn’t only about speed. It’s going to be the amount of data that we can look at. Look at things like weather prediction. One of the biggest things that limits accuracy is the amount of data that can be absorbed into the system when you look at all of the temperature measurements and wind speeds and all. What we’ll do is massively expand the amount of data that can be used by these systems. The big players MR. ANDERS: Who besides Intel is doing things that you find absolutely are just blowing you away? MR. KRZANICH: The place where we see probably the most innovation is with the cloud-service providers. That’s the Googles, the Facebooks, the Amazons, the Alibabas. Those companies, because of their large access to data, are really helping drive. They’ve been great partners back to us, saying this is the kind of engine that we need. Nervana’s a good example. We’re partnering with companies like Facebook. They’re one of the people who are starting to take a look at it in its early phase and saying, “Hey, this really could change the way we think about artificial intelligence, and help us steer how we develop the software and the hardware.” MR. ANDERS: Any company you talk to, any startup you talk to, any established company you talk to, they’re all an AI company. How do we tell who’s really doing stuff, versus who’s just talking about doing stuff? MR. KRZANICH: I think it comes down to, can you show a case that is genuinely shifting how that company does something. Let me give you a real-life example within Intel. Intel’s one of the largest manufactur- ers in the world. We produce about a million chips a day, roughly. For each one of those million chips we take about 1.6 million pictures as it progresses through the production line. Why didn’t this chip work? Well, we have to go back through the 1.6 million photos in order to try and find where the defect is. We now use artificial intelligence to compare against known images, and what that image really is, to go through those 1.6 million images. What used to take three weeks, now takes a couple of hours. And so our ability to shift how fast we can solve issues. I think when you ask a company, are you an artificial-intelligence company, you have to ask them, what’s your use? What have you shifted? What have you changed? What have you improved? What’s running more efficiently? Or, what are you delivering to the customer that shifts what makes their life better? For personal non-commercial use only. Do not edit or alter. Reproductions not permitted. To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com THE WALL STREET JOURNAL. R10 | Tuesday, October 24, 2017 JOURNAL REPORT | WSJ D.LIVE Peretti “I think what’s going to define Africa’s tech rush is whether or not it is controlled by the people of Africa or it’s simply happening to the people of Africa. Ultimately, what’s going to yield the most synergy is if we’re taking advantage of all the resources and the untapped opportunities of the continent, which includes the individuals on the ground as well. And the way that they’re thinking about building businesses there and building businesses that not only address the needs of the continent, but the global diaspora and I think, honestly, humanity in general.” Jessica O. Matthews, Founder and CEO, Uncharted Play NIKKI RITCHER/DOW JONES VOICES FROM THE CONFERENCE Continued from the prior page you whiplash when one of these platforms suddenly changes, like away from live video news content to focus on something else? MR. PERETTI: BuzzFeed started as a lab. We’re continually innovating. The more change there is in the media industry, the better it is for us. I worry about the opposite, which would be if Facebook and Google became the only two platforms, and they decided to stop innovating and they lost their paranoid fear of other people taking share from them, and they just did the same, boring thing. Then BuzzFeed would get less of a benefit from all of our innova- tion and ability to switch platforms and to connect with audiences in a deeper way. Meeting the audience MS. PASSARIELLO: How do you tweak your content based on changes to the algorithms on Facebook or Google that change how content appears in search or the news feed? MR. PERETTI: We try to not think too much about the algorithm. We’re always looking at, what is the actual job the content’s doing? How do we make content that actually is serving a job in someone’s life in a deep and meaningful way, and gives them a reason to connect with other people? Facebook or Google or whoever is building these algorithms, they’re trying to surface great content, get more user engagement, get people to spend more time on the platforms. But the algorithms are always flawed, and they’re always changing. If you are a company that’s trying to figure out the algorithm or game the algorithm, you’re going to have whiplash, as you said earlier. The best thing is to not think that way, to think about the user and consumer. MS. PASSARIELLO: What is your prediction of what’s going to be performing well six months from now? MR. PERETTI: I think that all great companies go back to the customer or the consumer or the audience and they try to understand them in a deep way. Facebook had a program where they had people look at their news feed and then answer survey questions, and then they could use that data to improve the algorithm. There are a lot of weird things. For example, we do D.I.Y. content. We have a brand called Nifty, all about hacks and things you can build. People will see a Nifty video, then a large chunk of them will spend their entire weekend building a project. Or with Tasty, a food brand that we created. People will watch, make the thing and post their version of it. Then we’ll post something that maybe is a fun piece of entertainment that gets the same number of views, but people see it and then they forget about it. It doesn’t have a longer impact. The algorithm might see the same number of shares, the same amount of engagement, but not be able to tell that someone did a project with their kids or cooked a meal with their family. There’s a lot of things that are hard to measure. When we see those signals, of people actually posting responses of them making or cooking it, we know we’re on to something and we know that’s a deeper, more meaningful thing. We know that will drive brand affinity, so people will start to associate the brand with things that really matter in their life, which will cause more page likes, and start to show up in the metrics. Even if the algorithm can’t measure it, we stay on it and keep pushing toward it. The fake-news problem MS. PASSARIELLO: You’re com- peting against fake news, so how do you approach that? MR. PERETTI: The dystopian view is that The Wall Street Journal and the New York Times and the Washington Post will prioritize subscriptions and move behind a paywall. A very small percentage of elites will get the quality journalism that those organizations produce. If you’re thinking about an electorate and people being informed, the subscription model in media doesn’t help inform the public. If Facebook can’t find ways to support quality content in their news feed, that would be bad for democracy. Facebook is going to find more ways to allow publishers to generate revenue on their platform. It’s a huge question for society and democracy. If Google and Facebook take all of the revenue but don’t want to pay for the fact checking, reporting, more-intensive investigations, who does that work? If it’s only subscription services, that’s a big challenge. Google and Facebook are going to have to fix that. It isn’t tenable that the only people getting quality news will be 2% or 5% or even 20% of the public. MS. PASSARIELLO: Is there a way that tech platforms should be solving fake news more aggressively with algorithms? MR. PERETTI: The challenge with the big tech platforms is they’re places where people are getting news and entertainment. And they’re kind of the telephone company, where people communicate with their friends. It’s hard to do both. We don’t want the telephone company interrupting a phone call when someone says something fake or incorrect on the phone. Speech should be open. Big tech platforms need to lean more on organizations where we have brands that we stand behind. They’re going to need more help from media partners to say, “OK, different media sources can vouch for the information that’s circulating.” They’re not necessarily going to be able to do that themselves. For personal non-commercial use only. Do not edit or alter. Reproductions not permitted. To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com THE WALL STREET JOURNAL. Tuesday, October 24, 2017 | R11 Sam Altman Jenny Lee Bill Maris Where the Money Will Come From Sam Altman, Jenny Lee and Bill Maris offer their thoughts on startup funding, the most exciting technologies and increased regulation Ideas about investing and politics were bubbling as Wall Street Journal reporter Rolfe Winkler met with Sam Altman, president of the accelerator and seed-money investor Y Combinator, Jenny Lee, managing partner at GGV Capital, and Bill Maris, founder of the venture fund Section 32, and the founder and former CEO of Google Ventures. Edited excerpts follow. MR. WINKLER: Sam, are you considering running for governor of California next year? MR. ALTMAN: No. MR. WINKLER: Willie Brown, the former California Assemblyman and San Francisco mayor, wrote back in May [in the San Francisco Chronicle] that you are “looking at running for governor in 2018.” What did you and Willie Brown talk about? MR. ALTMAN: A lot of people have suggested that I run. But I love my current job. The state is extremely, badly broken and it would be good to try some new ideas. But there are so many important things to do right now on my list that are higher than that, I am not going to do it. MR. WINKLER: Let’s talk about Y Combinator: Is it now 250 companies a year that you invest seed money in? MR. ALTMAN: In our main program, it’s probably about 280. But we started this online version. We did 3,000 companies. We did an online version of Y Combinator that we called Startup School this spring. Up to that date, Y Combinator had funded, let’s say, 1,700 or 1,800 companies ever, and advised that many too. We advised 3,000 companies at once in this one thing. MR. WINKLER: That’s a lot. MR. ALTMAN: It worked really well. We used our alumni to advise them. We had companies all around the world, we had meetups all around the world. It worked so well that we’re going to expand that. MR. WINKLER: Is it too many? How do you sort through all of these companies? MR. MARIS: I don’t think it’s too many. We can’t invest in everything. Sam has a different mission and job, which is coming at this startup ecosystem from a different place. I’m looking for 15 to 20 companies a year that I feel like I or my network can help grow. MS. LEE: I spend time talking to a lot of companies. But the way we play is, if you are a hunter who’s looking for elephants, you have to have the skill set to identify, “Is this an elephant, or is this a zebra?” We have to have partners who know how to identify, have the right skill sets, and the resources and tools to go hunt them down and then help them to grow. MR. ALTMAN: There is some limit of how many good companies there are to fund. We’re not anywhere close to that. And until we get there, I’d rather figure out how to structure our organization so that we’re not spread too thin. MR. WINKLER: What are the best companies right now? The technologies you’re most excited about? MS. LEE: We think technology is going to come back around and bring with it new inventions in the form of new products, new planes, new autonomous cars, hardware. MR. MARIS: It wouldn’t surprise me if the sun is setting on the golden age of Silicon Valley. I mean, the companies that used to be fun and disruptive and interesting and benevolent, that were largely viewed that way, now we’re concerned that they’re disrupting our elections. They’re hoarding our personal information and using it for profit, and so forth. And I think the tide, the populism that sort of helped get Trump elected, may be turning against the concentration of wealth that’s happening in Silicon Valley in a similar way. MR. WINKLER: Do you guys see a coming wave of regulation that’s going to break up these big tech companies? MR. MARIS: I wouldn’t be surprised. These companies are more powerful than AT&T ever was. If you think the system is broken, the people with power and money are the ones people will look to to say, “We need to disrupt that. This isn’t working for us.” MS. LEE: I have a different perspective. Entrepreneurs out there, don’t focus on the politics. Your world should be consumed with trying to figure out a way to deliver value and services to your target audience. It could be consumers, it could be enterprises. And that world doesn’t have to be in the U.S. If it isn’t going to work here, look elsewhere. MR. WINKLER: SoftBank Group Corp. is an 800-pound gorilla. Bill, what impact is it having? MR. MARIS: Turbulence. I think it’s unprecedented to have a fund that size [the tech-focused Vision Fund has close to $100 billion]. It creates some turbulence and probably compresses returns over time because you have a large fund that needs to do large deals at high prices to deploy capital. MR. WINKLER: Why did you leave Google Ventures so abruptly? MR. MARIS: It wasn’t abrupt from my point of view. I went in there kind of voluntarily to do an experiment for a year. And by the time I got to almost 10 years, it felt like it was time to go do something new, learn something new. MR. WINKLER: Were you trying to raise money for Section 32, your new venture-capital fund, while you were still at GV? MR. MARIS: No. I left GV thinking I was going to become a magician. I didn’t know what I wanted to do. I was really just enjoying taking a break. NIKKI RITCHER/DOW JONES (3) JOURNAL REPORT | WSJ D.LIVE For personal non-commercial use only. Do not edit or alter. Reproductions not permitted. To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com THE WALL STREET JOURNAL. R12 | Tuesday, October 24, 2017 JOURNAL REPORT | WSJ D.LIVE Where Wearable Tech Is Headed Chip Bergh, Levi Strauss’s CEO, says the company wants to see what new functions consumers want. But the possibilities are endless. NIKKI RITCHER/DOW JONES (2) Wearing the internet MS. PASSARIELLO: Levi’s just unveiled its first connected item of clothing, this $350 jacket that you’re wearing. How are consumers starting to use it? MR. BERGH: We have a line of product called Commuter, which really is for bike riders. It’s a little bit niche, but getting more mainstream. So we decided to use the Commuter line. This allows cyclists to get directions, listen to their music, change their playlist without ever needing to look at their phone. MS. PASSARIELLO: How do you see the use of the product evolving? MR. BERGH: Where this specific product goes and how much more functionality we build into this is one question. The other big question is where does wearable technology go? Right now devices kind of control our life, and the picture for the future is that technology is embedded in our life, into the clothing that we wear, perhaps into the sheets in our bed at home, and anything that’s a fabric will be able to have conductive fiber in it that can do just about anything. MS. PASSARIELLO: Do you plan to roll this fabric out across many other products in your lineup? MR. BERGH: Yeah. We have a lot to learn from the consumer. What other kinds of functionality do they want built into this? And then we’ll go there. We’re already working with Google on 2.0. MS. PASSARIELLO: What do you have in mind already for 2.0? MR. BERGH: If you think about all the different ways or times you need to take your phone out to use an app, imagine replacing more of that. Scroll through your phone and look at the apps and say, “Do I really need to look at the screen for this?” And if not, if I can control it with a swipe, it’s W E D N E S D A Y, D E C E M B E R 1 3 , N E W Y O R K Join WSJ Pro journalists and cybersecurity experts for an exclusive event on cyber risks. Tailored to the needs of senior managers, the Cybersecurity Executive Forum will help you navigate the ever-evolving cybersecurity landscape, from protecting data and staying compliant with major laws to defending your business and how to respond should a crisis emerge. SPEAKERS INCLUDE Ajay Arora John P. Carlin CEO and Co-Founder, Vera Chair, Global Risk and Crisis Management Team, Morrison & Foerster Theresa Payton Stephen Schmidt CEO, Fortalice Solutions; CIO, The White House (2006–2008) VP, Security Engineering and Chief Information Security Officer, Amazon Web Services Wednesday, December 13, 2017 The Grand Hyatt 109 E 42nd St, New York, NY 10017 Request your invitation today: cyber.wsj.com © 2017 Dow Jones & Co., Inc. All rights reserved. 3DJ5980 there’s no such thing as a real failure. It’s just an opportunity to learn. Learning from Google Working with Amazon MS. ‘Anything that’s a fabric will be able to have conductive fiber in it that can do just about anything.’ Levi Strauss & Co. has 164 years of history behind it—and the challenge of remaining competitive in the digital age ahead of it. The company is addressing that challenge in part by using big data to better understand its customers and cater to them. But it’s also taking a higher-profile tack with cutting-edge wearable technology, an internet-connected jacket it developed with Alphabet Inc.’s Google unit. The Wall Street Journal’s deputy technology editor, Christina Passariello, sat down with Chip Bergh, Levi’s president and chief executive, to discuss high-tech clothing, the blending of Levi’s and Google’s work cultures, and the pros and cons of working with Amazon.com Inc. Edited excerpts follow. something that we’re going to be able to build in from a functionality standpoint. PASSARIELLO: Tell us about working with Google. Different cultures. What’s it like to go through this innovation process with them? MR. BERGH: We’re perfectionists. Everything we sell has got to have quality embedded in it. It’s got to be perfect before we launch something. When we launch a new fit, the team travels around the world to make sure it fits all the different body types around the world. We really focus on perfection and really failure is not an option. Google embraces mistakes. We had one instance where the sleeve actually caught fire. That’s not a good thing for a consumer, right? But they loved it. They were like, “That gives us a problem to solve.” And so it was two very, very different cultures coming together trying to solve a common problem. And I think we learned a lot from it. We’re now embracing failure a lot more readily, willing to fail fast, fail early, but just keep moving forward because MS. PASSARIELLO: You’ve had an official supplier relationship between Levi’s and Amazon for several years. What do you gain from having Amazon as an official supplier? MR. BERGH: They’ve got enormous scale in the online space. They attract the most eyeballs for consumers who are shopping. We do have our own website. We do work with our other wholesale customers like Macy’s, like J.C. Penney, like Kohl’s on their e-commerce sites. We’re trying to innovate in the e-commerce space, so we just launched a chat bot that is a virtual stylist. If you go to levi.com, you can experience that. As we develop these capabilities and prove them out, we’re willing to share them with all of our online partners. But Amazon’s one of our biggest customers globally. They’re one of our fastestgrowing customers. MS. PASSARIELLO: Amazon gathers a lot of information about how Levi sells. Do you get access to that data? MR. BERGH: Some of it. I’m sure we don’t get all of it. But we try to have a productive working relationship, and not just with Amazon here in the U.S. I met with Alibaba this morning. We’re working with Wal-Mart as well. All of these e-commerce players are collecting a lot of data, and I think we can partner together to do a better job of targeting consumers. MS. PASSARIELLO: Amazon has launched a lot of its own lines to compete with others, and now they have all this data about how well they sell your product. When do you expect them to go head-to-head with you with their own denim line? MR. BERGH: I would be the first to argue that they shouldn’t go there, but a lot of our customers have their own private label and we’ve been dealing with this for 30 years. I don’t want to say it’s inevitable, because they’re really happy with our business and they’ve got other brands as well. But if they launch a private label, competition’s a good thing. It will make us take our game up to the next level. Qualcomm’s Game Plan CEO Steven Mollenkopf talks about smart cars and 5G technology ‘All of the things that have to be done to support 5G products in 2019 are happening.’ Qualcomm Inc. isn’t a big consumer name, but it’s one of the companies most responsible for what consumers can do with their smartphones and increasingly smart cars. The company’s chief executive, Steven Mollenkopf, spoke with Jason Anders, The Wall Street Journal’s chief news editor, about what’s around the corner for Qualcomm and consumers as technology continues to shake things up. Here are edited excerpts. MR. ANDERS: Last fall you announced one of your biggest deals, to buy NXP Semiconductors, a Dutch company, for something like $39 billion plus a fair amount of debt. This would be not only a huge deal for Qualcomm, but also a really big push deeper into automotive technology. How’s that going? Regulators are still looking at it, right? MR. MOLLENKOPF: We’re on track to close this year. I think it’s the second-largest tech deal in history. NXP has a strong footprint in Europe and other places, so it’s natural that people ask a lot of questions. But nothing unusual. MR. ANDERS: How will this deal change Qualcomm? What will you be able to do that you can’t do right now? And does it fundamentally change the mission of the company? MR. MOLLENKOPF: The mission of the company has always been to take technology, invest in it ahead of the industry, and then put it in a way that it can be used at scale. And for the past 30 years, we’ve been doing that in the cellphone space. That’ll continue—you have 5G [wireless technology] on the horizon. The NXP deal accelerates our strategy of driving the mobile road map into new industries at the time when the industry is being disrupted by those new technologies. Estimates are that 20% of the economic value of 5G will accrue to the automobile industry— which may seem unusual at first glance, but in reality, if you think about the connected car and all its implications it’s immense. MR. ANDERS: NXP is in a lot of the parts of the car, and a lot is not about autonomous driving—it’s in a lot of core tech systems that make cars hightech today in ways most of us don’t fully appreciate. MR. MOLLENKOPF: Our portfolio, independent of NXP, is already pretty strong. If you look at our position in telematics, in infotainment, we’ve shipped hundreds of millions of devices into cars in the past 15 years. Now, what’s happening in the car space is that there’s a big change in the architecture of the car. The car is getting smarter, so all of these distributed smarts in the car, it’s essentially consolidating into a number of smarter subsystems that are all connected in a coherent way. And they’re all being connected to the internet. And so our goal—and we’ll be able to do this quite well with NXP—is to have a piece of all of those subsystems. If you look at the combination of those two portfolios— the computing power and connectivity from Qualcomm with all of the other parts of the car coming from NXP—we’re in a pretty strong position. MR. ANDERS: Do you see Qual- comm being a major player in self-driving cars? MR. MOLLENKOPF: We do. First of all, it’s probably a 30-year next wave. If you look at where the car is going, we are just starting to scratch the surface. My guess is the industry isn’t thinking far enough ahead in terms of the implications to transportation, of having the car connected and smart. MR. ANDERS: Let’s change gears and talk about Apple. Qualcomm and Apple are locked in an epic battle right now. You’ve both sued each other, and lots of allegations are flying around. Can this relationship be saved? MR. MOLLENKOPF: This is fundamentally a discussion about pricing over the fundamental technology that makes the phone the phone. We have a long history of providing value and settling these issues. Sometimes they get more publicity than others, but I think we’ll get through it. We have a very strong product relationship with them. MR. ANDERS: Let’s talk about 5G. You had a bit of a milestone yesterday [Oct. 16] on this front, which was the first call. You made the first call? MR. MOLLENKOPF: We had an event in Hong Kong where we made the first call on a real chip. Not a prototype, but a real chip. MR. ANDERS: Who did you call? MR. MOLLENKOPF: It was a data connection—everything’s in data these days. But it’s a milestone. All of the things that have to be done to support 5G products in 2019 are happening. MR. ANDERS: What exactly will I be able to get in 2019? MR. MOLLENKOPF: You will get a device, a phone in your pocket, that will access 5G networks, in addition to devices that I think you’re going to start seeing in the home and in cars that get access to a tremendous amount of data at lower latency. You’re also going to see tremendous capacity for the distribution of video. Part of that is coming from 5G. Part of that is coming from access to new spectrum. And I think that’s going to be disruptive not only to the cellular industry, but to how the cable industry delivers data over the top or how it is delivered. For personal non-commercial use only. Do not edit or alter. Reproductions not permitted. To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com THE WALL STREET JOURNAL. Tuesday, October 24, 2017 | R13 JOURNAL REPORT | WSJ D.LIVE The Big Benefits Of Smart Cities ‘Lower cost should result in lower taxes or at least more efficient use of your taxes or greater services.’ Cities have long been doing things the same way. No longer, says Chuck Robbins, CEO of Cisco. MR. ANDERS: Why do we need smarter cities? MR. ROBBINS: Some statistics say that 30% of traffic is created by people looking for parking, so that’s a problem that technology can solve and is solving. We have 70% of the world’s energy usage in cities; 20% of global energy usage is lighting, so connect to LED lighting and leverage technology to actually make them more efficient. You can cut 50% to 75% out of it. There are environmental opportunities. There are efficiency and citizen-service opportunities. There are lots of great oppor- MR. ANDERS: What are some of tunities. MR. ANDERS: Where exactly do you come in? How does this get off the ground? MR. ROBBINS: It does require infrastructure. Security has to be dealt with up front. The partnerships required to actually make this work are pretty significant. MR. ANDERS: Some of this isn’t quite Jetsons-level stuff. Garbage pickup doesn’t sound that high tech. But what’s the future of waste management? MR. ROBBINS: We’ve done things the same way forever. Waste-management vehicles leave, they have a route. They pick up receptacles, and they empty receptacles even if they’re empty. The ability to put sensors inside those— there are applications that have been written now that actually understand where that needs to occur. You can actually put sensors in that measure the presence of toxic materials so safety issues can be addressed. the big cities that you’re involved in? MR. ROBBINS: We’re involved in 120 around the world today. Hamburg has gone all in, particularly in the port. Collaboration between their employees running the dock, communicating to vehicles that are waiting, managing the traffic congestion—everything’s connected, all the sensors, so that they can actually make that seamless. They’ve increased the productivity of the port and improved the efficiency by 20% just by implementing this technology. Every city has different things going on. In 2016, I was in Davos and the party secretary of Guangzhou, China, said, “I’d like Cisco to come partner with us to build a smart city in Guangzhou.” And 15 months later, we had shovels, shoveling dirt for the Cisco Guangzhou Smart City Project. We’re building innovation centers. We’re partnered with universities. VOICES FROM THE CONFERENCE “What you need in the future to continue to grow and to thrive as a company is what we call a thoughtful integration between hardware and software. In the future, what we will have to do is really think about creating the best experiences possible, and that includes working with partners like Google and Facebook. They’re incredibly important partners of ours.” MR. ANDERS: Cities are ultimately businesses, and some aren’t well run. I assume the pitch is the technology is good not only for society but for the bottom line and budget. But at the end of the day, someone has to write the check. MR. ROBBINS: Yeah. I was in a major city last week talking to the mayor, and the discussion quickly got to, “The first-use case has to really create hard dollar savings so that we can then invest those in some of the other things going on. But we need to create money and then show people.” So investing in, perhaps, reduction of lighting cost to then fund the fundamental change in how citizen services are delivered is how they tend to think about these things. MR. ANDERS: How does technology bring the city together? MR. ROBBINS: Chicago’s another example where they’ve aggregated lots of data sources, and they bring that data together and they’re encouraging these hyperlocal applications. We create opportunities for people to live more efficiently, to get to where they’re trying to get to more efficiently, to engage in different conversations about what’s going on locally. And that can extend to social issues, social opportunities. MR. ANDERS: Is the primary goal of a smarter city to empower me as the citizen or to more closely manage and control and observe me as a customer of city services? MR. ROBBINS: In general, I think it’s the former, because lower cost should result in lower taxes or at least more efficient use of your taxes or greater services. Guangzhou obviously moved people out of this location when they created this spot for us to go in with some Chinese partners and build this smart city. But one of the commitments they made to the citizens was that we were going to move them back to this city afterward and they were going to have a better life as a result of it. MR. ANDERS: This is a hacker’s dream. Now, everything from my garbage can to my Wi-Fi to literally the way I’m driving my kids to school is in a database somewhere and for some- one to access. MR. ROBBINS: It is a pressing issue. We’re moving to this massively distributed virtualized world of technology assets. The network has to actually play a very deep, defensive role. So we’ve been investing in new technologies. We’ve created technology that can determine when malware is present in encrypted traffic without decrypting it, then you can quarantine it. We have to build more of those applications, I think, for this to come to life. But it’s very much a forefront ambition. MR. ANDERS: Do you worry that you’re creating targets? MR. ROBBINS: Every day we are. But the way we operate with mobile phones in the enterprise today says that we, as a society, will take the benefit of the technology at a pretty significant risk. The benefits and the productivity enhancements from that technology were so great that we just kind of tried to operate around that and build and work around. I think we’re going to build defenses here, and then, we’re going to quickly adapt as we see things. © 2017 Optum,® Inc. All rights reserved. David Eun, President, Samsung NEXT NIKKI RITCHER/DOW JONES (2) The big push at networking giant Cisco Systems Inc. these days is to create “smart cities,” where wireless networks with enough sensors and computers to process the data will attempt to make services more efficient and lower costs. Cisco Chief Executive Chuck Robbins spoke with Jason Anders, chief news editor of The Wall Street Journal, about how it’s going. Edited excerpts follow. LOWER HEALTH COSTS CAN ACTUALLY LEAD TO HIGHER QUALITY. Unnecessary ER visits, ineffective treatments, unmanaged conditions— these are just a few of the factors driving up today’s health care costs. As a health services and innovation company, Optum is tackling the biggest challenges in health care by partnering across the entire system. Our integrated, data-driven solutions help increase quality and consistency of care while controlling costs, which improves outcomes for everyone. optum.com D a t a a n d A n a l y t i c s | P h a r m a c y C a r e S e r v i c e s | P o p u l a t i o n H e a l t h M a n a g e m e n t | H e a l t h C a r e D e l i ve r y | H e a l t h C a r e O p e r a t i o n s For personal non-commercial use only. Do not edit or alter. Reproductions not permitted. To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com THE WALL STREET JOURNAL. R14 | Tuesday, October 24, 2017 JOURNAL REPORT | WSJ D.LIVE Facebook Opens Up on Messenger David Marcus on how the company’s new channel for advertisers works, and why he thinks consumers won’t be put off by it MS. PASSARIELLO: Messenger recently introduced advertising. What did you test in terms of monetization that didn’t work before you settled on advertising? MR. MARCUS: It isn’t like we tested a lot of things, but we thought about a lot of things. If you turn to Asia and you look at different messaging platforms that are thriving, they tend to use a completely different approach to monetization. They use sticker-package sales, game monetization. All kinds of different things. We decided that we wanted to take a completely different stance, because the setup, notably in places where Messenger is the preferred messaging app, is really different. You have apps for almost everything you do daily, and we needed to find what problem we could actually fix for businesses and people alike to actually generate a decent revenue stream for Facebook. We started trying to figure out how we could completely reinvent interactions between people and businesses. Sixtyfive percent of the interactions we have with companies are over the phone, which is a thing I never want to do. You can’t put the phone down, go about your life and wait for someone to respond, because they’ll hang up on you. And it basically doesn’t preserve context of all past interactions. Messaging [in Messenger] has those two abilities. It’s instant and preserves the context of all past interactions. We talked about customer care, but if you expand into customer acquisition, lead generation, businesses that build a really great experience inside of Messenger are seeing massive uplift if they redirect people from an ad on News Feed, on Instagram, and now more and more on Messenger, into a conversation, versus a mobile website. And the reason for that is basically that the conversation remains forever, and you have the context of all your past interactions, and you can retarget and re-engage because we have ad products that enable you to do that if you’re an advertiser. MS. PASSARIELLO: Isn’t there a risk that we are so inundated with advertising in all of our different feeds that consumers don’t want to see it anymore? MR. MARCUS: Well, I think that it’s different. First, you cannot get contacted by a business. You have to start conversations. We have plug-ins that enable businesses to get you in a conversation. We have m.me/your-business-brand URLs that you can deploy in emails and everywhere. We have click-to-Messenger ads. If you’re buying advertising on Facebook now you can buy, basically, conversations as an objective, messages. And now we’re testing ads inside of Messenger. But we’re doing it in a way that’s the least possible disruptive path for people, because we never want to get in the way of people getting to their messages and doing TECHNOLOGY BANKING • GLOBAL TREASURY MANAGEMENT • PAYMENTS • FOREIGN EXCHANGE • CREDIT AND TRADE • INVESTMENT BANKING* • WELLS FARGO STARTUP ACCELERATOR what they want to do. Messaging is very transactional. MS. PASSARIELLO: Have you had any feedback from users who are resisting seeing ads in Messenger yet? MR. MARCUS: The way we measure this is by measuring engagement. We’ve rolled out ads inside of Messenger in a number of countries and certain percentages of people. And what we’re trying to track is where there are any drops in engagement, as in people not going to Messenger as often, not messaging as often, et cetera. And so far, so good. MS. PASSARIELLO: How are you sharing best practices in monetization with WhatsApp? MR. MARCUS: We both have 1.3 billion monthly active users: 1.3 billion people using Messenger, 1.3 billion people using WhatsApp. But it’s generally very different people. If you look at North America, it’s mainly Messenger. Western Europe is kind of split. All of Latin America and India is mostly WhatsApp. The markets and when the markets got to free unlimited texting has determined whether you’re using WhatsApp or Messenger as the preferred platform. What we’re trying to do right now is really demonstrate that there’s a playbook for monetizing messaging platforms in the West. WhatsApp is testing different things as well, enabling smaller businesses to start experimenting with messaging on WhatsApp. We’ll see whether the paths converge over time or not. MS. PASSARIELLO: Have you shared your experiences with the new rollout of advertising on Messenger with WhatsApp? MR. MARCUS: We share every- NIKKI RITCHER/DOW JONES David Marcus, vice president of messaging products for Facebook, is head of Messenger, one of the company’s two messaging products. He spoke with Wall Street Journal Deputy Technology Editor Christina Passariello about the introduction of ads in Messenger that offer the advertisers a channel for direct communication with consumers. He also talked about Russian use of Facebook accounts to influence U.S. elections. Edited excerpts follow. ‘We never want to get in the way of people getting to their messages.’ thing, but we’ll see. The WhatsApp team is really starting to enable businesses to be on the platform, and they’re doing it in a very deliberate, thoughtful way. MS. PASSARIELLO: Russian entities have used Facebook and Facebook platforms to try to influence the American electorate during the election. What is your best understanding about how Messenger was used by these Russian actors? MR. MARCUS: The narrative about Facebook as of late has not been super positive. The impact Facebook has in the world, we don’t talk about it anymore. It’s completely overshadowed by all of this. If you look at the impact we’re having every day, like when you see people who have an orphan disease and they can’t find other people to talk to, even their family can’t relate to what they’re living through, on Facebook you can find other people from the other side of the world that are living the exact same thing and groups that are so meaningful for people. We’ve raised more than $17 million on the platform for Harvey victims. We’ve been able to use Safety Check that we activated 600 times since we launched it, and sent one billion notifications around the world to let people know that people are safe. And I could go on and on. Clearly when you design a platform that reaches two billion people every month, sometimes bad things happen. And we shouldn’t tolerate those things, and they shouldn’t happen. Mark Zuckerberg and Sheryl Sandberg outlined a clear plan about how we’re going to ensure that this isn’t going to happen again, and we’re going to hire thousands of people, we are, actually, hiring thousands of people to review ads and review all activities around, notably, elections around the world. We tend to do well at those things. We tend to actually take those things very seriously and execute plans ruthlessly and get to really good outcomes. So I’m actually confident that we’re going to be able to deal with this. The way the platform was used is still being investigated. But traditionally if you’re a [Facebook] page, for instance, you cannot message people. People have to message you. We’re collaborating with the special counsel and Congress. And we’ll figure out what happened, we’ll get to the bottom of it, we’ll learn from it, and we’ll make sure that we build systems to prevent what happened from happening again. MS. PASSARIELLO: On the 470 accounts that Facebook has already identified, how many have also been using Messenger to communicate? MR. MARCUS: My understanding at this stage is it’s a small number. MS. PASSARIELLO: Facebook’s approach often has been to be reactive to these kinds of ways that people are using its products in malicious ways. Does Facebook need to be more proactive in anticipating these kinds of uses? MR. MARCUS: Now that we know that we have a lot of actors that are trying to do things, we need to continue to be more thoughtful when we build new product experiences, new ad products, to try to overthink how it can be used in ways that the platform wasn’t designed for. A better perspective can help you build a better future for your company. Our experience in areas such as financing, treasury management, M&A, and more runs deep through the tech community. So whether you’re expanding or launching in a new market, Wells Fargo has the financial and intellectual capital to help you build toward your next step. We’ll help you build the future. Building better every day. wellsfargo.com/techbanking * INVESTMENT PRODUCTS: Not Insured by FDIC or any Federal Government Agency May Lose Value Not a Deposit or Guaranteed by a Bank of Any Bank Affiliate ©2017 Wells Fargo Bank, N.A. All rights reserved. Member FDIC. 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