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The Wall Street Journal - October 16 2017

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To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
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MONDAY, OCTOBER 16, 2017 ~ VOL. CCLXX NO. 90
* * * * * *
Last week: DJIA 22871.72 À 98.05 0.4%
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WSJ.com
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Twin Bombings in Somalia’s Capital Leave More Than 200 Dead
What’s
News
Business & Finance
eaders of the world’s
largest central banks
indicated that weak inflation could prolong the
postcrisis era of easy
money policies. A1
L
Energy companies are trying to establish new markets
for liquefied natural gas, promoting its use for industrial
trucking and shipping. B2
Oil prices jumped to
$51.45 a barrel due to bullish Chinese data. B7
Rent the Runway is testing whether Middle America is willing to borrow
rather than buy apparel. B3
The trial of a lawyer accused of working with Shkreli
to defraud a pharmaceutical
company is under way. A2
World-Wide
The Senate will grapple
with Trump’s decision to
stop making subsidy payments to health insurers, as
lawmakers seek a deal to
keep the money flowing. A1
Trump is looking to advance his tax overhaul,
wooing key GOP senators
in hopes of jump-starting
a legislative agenda. A4
FEISAL OMAR/REUTERS
Weinstein was expelled
from the Academy, and
London authorities are investigating more allegations of sexual assault. B1
Yellen predicts increases
in short-term interest rates,
but sounded a note of caution on weak inflation in
the U.S. and abroad. A6
TERROR’S DEVASTATION: Civilians on Sunday carried a body from the scene of one of two explosions in Mogadishu over the weekend.
The death toll from the bombings rose to at least 231, in one of the deadliest attacks since an Islamist insurgency started a decade ago. A8
Bankers Uneasy on Inflation
BY DAVID HARRISON
AND HARRIET TORRY
WASHINGTON—Leaders of
the world’s largest central
banks indicated that weak inflation in advanced economies
could prolong the postcrisis
era of easy money policies.
Despite a broad-based improvement in the global economy, wages and consumer
prices remain stubbornly low,
making central bankers wary
of removing their stimulus
measures too quickly, they told
a Group of 30 banking conference here on Sunday.
Their concerns contrasted
with the generally upbeat tone
that prevailed during last
week’s fall meetings of the International Monetary Fund and
World Bank, and they suggest
that there is still work to do to
get the world’s economy on
track nearly a decade after the
onset of the global financial
crisis.
As the outlook has brightened, many central bankers are
tiptoeing toward scaling back
their efforts to boost growth.
Some are further along than
others.
The U.S. Federal Reserve has
been slowly raising short-term
interest rates for almost two
years, but the European Central Bank is just now nearing
Please see BANKS page A6
Fed choice rivets central
bankers.......................................... A6
Yellen ties rate increases to
economy’s path........................ A6
INSIDE
Iraqi forces clashed
with fighters from the
Kurdish semiautonomous
region near the oil-rich
province of Kirkuk. A1
Two bombings in Somalia’s capital killed at least
231 and injured 275. A8
Officials cited progress
in the weeklong-battle
against deadly fires in
Northern California. A3
Agencies are monitoring
a pipeline fracture that has
spilled 9,350 barrels of oil
into the Gulf of Mexico. A3
Officials said Trump was
decertifying the Iran nuclear
accord because the country
threatens global stability. A8
Maduro claimed victory
in Venezuela gubernatorial
elections, as the opposition
challenged the results. A10
Austria’s right-wing parties made strong gains in
parliamentary elections. A11
Kaepernick filed a
grievance against the NFL
for alleged collusion. A2
CONTENTS
Business News........... B3
Crossword.............. A16
Heard on Street...... B9
Life & Arts...... A13-15
Markets.................B8,10
Opinion.............. A17-19
Outlook....................... A2
Journal Report.. R1-8
Sports........................ A16
Technology............... B4
U.S. News............. A2-6
Weather................... A16
World News...... A8-11
>
s Copyright 2017 Dow Jones &
Company. All Rights Reserved
EURO $1.1821
YEN 111.82
Health
Care Duel
Shifts to
Congress
BY STEPHANIE ARMOUR
AND KRISTINA PETERSON
Blackstone is targeting
investors with $5 million
or less for its next leg of
growth, pushing into products for retail investors. A1
Puerto Rico could lose
between $20 billion and
$40 billion in productivity
output because of stormrelated disruptions. A3
HHHH $4.00
THE NEW
SEARCH FOR
SWEET
A BATTERY
TO POWER
YOUR HOME
JOURNAL REPORT, R1
BUSINESS & FINANCE, B1
Blackstone Targets
Millionaire Next Door
BY MIRIAM GOTTFRIED
Blackstone Group LP, which
has become a Wall Street juggernaut by catering to institutions and the ultrarich, is targeting investors with $5 million
or less for its next leg of
growth.
The private-equity firm is
pushing aggressively into products for retail investors, betting
it can raise as much from them
over the long term as it does
from the pension funds and
other institutions that form the
main source of its $371 billion
of assets, Blackstone executives
say.
Individuals with $5 million
or more in liquid assets have
for years been able to invest in
Blackstone and other buyout
funds by pooling their money
in feeder vehicles set up by
brokers like Morgan Stanley
and Goldman Sachs Group Inc.
Blackstone is now going further
down market with some of its
newest products, aiming to attract more investors with $1
million to $5 million by offering direct access.
The logic is simple: There
were 7½ times more U.S.
households with $1 million to
$5 million in assets at the end
Please see FUNDS page A2
Weakly Reader
Despite a global upturn, persistently low inflation is making central
bankers from advanced economies wary of removing their stimulus
measures too quickly.
4%
3
2
ECB
1
U.S.
WASHINGTON—The Senate
this week will grapple with
President Donald Trump’s decision to stop making subsidy
payments to health insurers,
with lawmakers seeking a deal
that would keep the money
flowing while Republicans try
to fold in conservative-oriented health-care priorities.
It remains unclear whether
a package could emerge that
attracts support from a critical
mass of senators and also from
House Republicans. That could
be put to the test quickly, as
Sens. Lamar Alexander (R.,
Tenn.) and Patty Murray (D.,
Wash.) are expected to introduce a plan within days and
Sen. Ron Johnson (R., Wis.)
unveils his own, more-conservative-leaning version.
The result, driven by unexpectedly far-reaching moves
by Mr. Trump on health care
last week, could be a resumption or even an escalation of
the legislative battle that unfolded during Republicans’ attempts to repeal the 2010 Affordable Care Act. It comes as
insurers press some state and
federal officials to let them reset their rates for 2018 in light
of the halting of the subsidies.
One state, Oregon, already has
Please see HEALTH page A4
Trump steps up pressure on
GOP congress............................ A4
Japan
0
–1
–2
–3
2007
’10
’15
’17
Note: Inflation is the change from a year earlier in the price index for personal-consumption
expenditures (U.S.), consumer-price indexes (others). Dec. 2016 is latest data for Japan.
Sources: National statistical agencies and central banks via the Federal Reserve Bank
THE WALL STREET JOURNAL.
of St. Louis
Wildfire Victims
Had Only Seconds
to Make Choices
California’s deadliest blazes advanced 100
yards every three seconds
UKIAH, Calif.—Hurtling
down a mile-long dirt driveway, the wildfire closing in,
Eli Monroe pulled to a stop at
a crossroads. He sat for a moment with his girlfriend, his
parents in the car behind
them, deciding which way to
turn on Tomki Road.
The fastest way out was to
the right, toward Route 101, a
freeway they had hoped
would take them to safety.
Flames licked the roadsides in
By Sara Randazzo,
Erin Ailworth
and Ian Lovett
that direction.
A left turn would lead to
creeks and backcountry dirt
roads they hadn’t traveled in
months, a route that carried
the risk of a deathtrap. They
Please see FIRES page A12
Fire battle makes progress... A3
Iraq Army
Advances
On Kirkuk
BY ALI A. NABHAN
AND BEN KESLING
Iraqi forces clashed with
fighters from the Kurdish
semiautonomous region in the
oil-rich province of Kirkuk
early Monday, Iraqi and Kurdish officials said, in a standoff
over Kurdish independence
that threatens to unravel a
multinational coalition battling Islamic State.
Before dawn, units from
Iraq’s Shiite-majority Popular
Mobilization Forces as well as
elite Iraqi military units
moved toward the city of Kirkuk on the orders of Prime
Minister Haider al-Abadi.
Kurdish Peshmerga troops reacted to the advances, provoking clashes before sunrise.
An Iraqi military official
said four Iraqi army vehicles
were burned in the clashes,
and a number of injured had
arrived at Kirkuk’s general
hospital. The Iraqi forces were
passing through a village
named Jerdaglu when an explosion destroyed the vehicles,
Please see IRAQ page A8
Gourmet Truck Drivers Put the Pedal to the Kettle
i
i
i
In-cab kitchen rigs yield Thai peanut pork; the pothole problem
BY JENNIFER SMITH
Long-haul truckers, who
spend weeks at a time working
and sleeping in spaces the size
of a modest suburban bathroom, say life on the road does
have its monastic charms.
Cooking dinner at 70 miles
an hour has never been one of
them.
Yet in a bid to stay healthy,
save money or simply satisfy a
discerning palate, some drivers are committed to making
their own meals in an environment where nearly everything
works against them.
In this culinary tradition,
truck-stop showers sometimes
function as dishwashers, engine blocks double as grills,
and there is no shame in cooking frankfurters in a plug-in
dashboard coffee pot.
While snowed in at a weigh
station in Wyoming, trucker
Micheal “Boomer” Welch, a
Louisiana native based in
Houston, was hit by a sudden
craving for jambalaya. Digging
through his truck pantry he
found canned chicken and tomato sauce but no sausage.
He did, however, happen to
Please see CHEFS page A12
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 | Monday, October 16, 2017
* ****
THE WALL STREET JOURNAL.
U.S. NEWS
THE OUTLOOK | By Jacob M. Schlesinger
A Nafta Collapse Would Carry Risks
proved unusually contentious.
U.S. proposals, like a sunset
clause that would subject the
deal to regular renewal, have
been branded unacceptable by
Mexico and Canada. With
wide gaps remaining, all sides
now talk openly about the risk
of a Nafta collapse.
“We don’t desire that it
will, we don’t believe that it
will,” Commerce Secretary
Wilbur Ross said Wednesday.
But, he added, “it is at least a
conceptual possibility.”
M
ost economists are
staying away from calamitous warnings. “It
would be like a mini-Brexit,
with very modest effects on
U.S. growth,” says Harvard’s
Kenneth Rogoff, referring to
the U.K.’s similar move to extricate itself from the European Union. Just as dire predictions before last year’s
British referendum have
proved exaggerated, so too
may be Nexit warnings.
The ImpactECON report
sees a drop in U.S. GDP of less
than a 10th of a percent, with
bigger hits of about half a percent to Canada, and nearly 1%
to Mexico.
If the pact disappeared
without any negotiated unwinding, the three countries
would likely impose tariffs on
one another equal to those
facing their non-free-tradeagreement partners: a 3.5%
average by the U.S., 4.2% by
Canada and 7.5% by Mexico,
according to the Peterson Institute for International Eco-
FUNDS
University” on the benefits of
investing in alternative assets.
The retail business is run as a
separate unit with its own human-resources, product-development and marketing teams.
Blackstone isn’t alone in
seeking new cash from wellheeled investors. Carlyle Group
LP plans to announce it will
join with OppenheimerFunds
on private-credit investments
for high-net-worth customers.
“There’s a bit of a ’grass is
greener’ component” to the asset-management business, Art
Steinmetz, chief executive of
OppenheimerFunds, said in an
interview. Private-equity firms
Continued from Page One
of 2016 than there were households with $5 million to $25
million, according to market research firm Spectrem Group.
Blackstone’s effort has the potential to significantly bolster
management fees, which Wall
Street values more highly than
profits from investments because they’re more dependable.
And that could help spur the
firm’s stock, which has turned
in disappointing performance
since its initial public offering a
decade ago—something Blackstone Chief Executive Stephen
Schwarzman has publicly bemoaned.
Still, Blackstone must tread
carefully: Raising mountains of
capital sometimes leads firms
to be less selective and take
bigger individual stakes, which
can ultimately hurt returns.
“The goal is not to raise as
much money as possible,” Joan
Solotar, Blackstone’s head of
private-wealth solutions, said
in an interview. “We want to
grow assets at what we deem
are appropriate returns.”
Ms. Solotar, who sits on
Blackstone’s management committee, was asked in 2015 to
help accelerate growth in its
retail business.
The firm only recently has
begun to talk publicly about the
results of that effort. The retail
unit has trained more than
3,500 financial advisers from
brokerage firms at “Blackstone
Despite challenges,
smaller investors are
an increasing focus
for buyout firms.
have long struggled to enter
the retail market, he said.
Blackstone in January
launched Blackstone Real Estate Income Trust, a private investment trust with a minimum
investment requirement of
$2,500. The real-estate investment trust aims to generate
steady income and is managed
by the same team that runs the
firm’s successful real-estate
funds. It has invested in a diverse assortment of apartments in markets such as Atlanta, Phoenix and Las Vegas,
as well as industrial property in
Rocky Road
Blackstone shares, including dividends, versus the S&P 500 since the
company's IPO 10 years ago.
100% Recession
50
0
Blackstone
S&P 500
Total Return
–50
–100
2008 ’09
’10
’11
’12
’13
’14
’15
’16
’17
Blackstone's total assets under management...
...by segment
...at year end
$400 billion
$72.5 billion
Hedge fund solutions
300
200
94.5
Credit
June 21, 2007
IPO
100
Private equity
100
104
Real estate
0
2007 ’09
’11
’13
’15
Sources: WSJ Market Data Group (price);
the company (assets)
’17*
*2017 data are as of second quarter.
THE WALL STREET JOURNAL.
Winners and Losers
The services sector would be especially hard-hit by U.S. withdrawal
from Nafta, according to analyst estimates of select industries.
Impact on
U.S. production
Sugar
Impact on
U.S. employment
1,276 workers
5.1%
Electronic equipment
1.0
Machinery
0.6
5,880
27,568
Metals
0.3
Chemicals
0.2
4,018
Natural resources extraction 0.2
2,646
–0.1
Services
Textiles
7,609
–247,657
–0.7
–4,446
Livestock & fishing –1.2
Motor vehicles
Food
Total effect
–9,510
–1.2
–16,887
–1.7
–0.08
–26,842
-255,678
Note: Assumes reciprocal action by Canada and Mexico.
Source: ImpactECON
nomics. If the U.S. and Canada
agreed to keep their pre-Nafta
free-trade pact in place, they
could still have zero tariffs between them.
In Brexit, the ultimate impact depends heavily on the
terms and timing, still being
negotiated. An American exit
could have a similarly long
transition, on terms less disruptive than worst-case scenarios floated.
That doesn’t mean a painless death. Just as some towns
and companies suffered under
Nafta, sectors and regions
thriving under the pact risk
Chicago and some California
hotels, and has about $1.4 billion in net asset value.
Investors can sell back their
shares once a month, providing
the REIT agrees to buy them.
Such liquidity likely means
accepting lower returns. The
ability to lock up investor
money over a decade or more
is key to the superior returns
private-equity firms have historically enjoyed. Individual investors in Blackstone’s REIT
must pay fees to brokerage
firms on top of the fees of
1.25% a year plus 12.5% of the
annual return providing it exceeds 5%. Still, that is lower
than the 1.5% and 20% Blackstone typically charges investors in its buyout funds.
Other products are expected
to follow.
There is no guarantee the effort will succeed. The fees are
still steep at a time when investors are gravitating to ultralow-cost index funds. Even if it
does succeed, stock-market investors may not reward the effort. Blackstone’s stock, including dividends, has slightly
lagged behind the S&P 500
since the firm’s IPO in June
2007 even as assets under
management quadrupled.
Private-equity firms have
stumbled in some past efforts
to reach individual investors. In
2014, KKR & Co. said it would
liquidate two mutual funds for
individual investors. One fund
had an onerous application
process, while the other wasn’t
differentiated enough to stand
out in a crowd of similar offerings, The Wall Street Journal
has reported.
Despite the challenges,
smaller investors are an increasing focus for buyout firms.
Blackstone says between 15%
and 20% of new capital now
comes from individual investors, a figure that includes ultrahigh net worth individuals
and family offices. KKR gets
10% to 15% of inflows from
such investors, the company
said in April. Carlyle said in
June that 22% of inflows came
from high-net worth individuals.
All the large publicly traded
private-equity firms recognize
the importance of individual investors, but “Blackstone is
probably further down the line
in terms of having their strategy thought out,” said Devin
Ryan, an analyst with JMP Securities LLC.
“Historically, the biggest
pools of capital were institutions, but those are finite pools
of capital, and they aren’t really
growth pools,” Jim Burns, head
of KKR’s individual-investor
business, said in an interview.
The 401(k) business, on the
other hand, is huge and growing, he said.
—Sarah Krouse contributed
to this article.
THE WALL STREET JOURNAL.
getting pinched. Border states
like Texas and farm states like
Iowa have been among the
biggest winners from Nafta
and would likely face the biggest hits from any reversal.
The ImpactECON study
sees small gains in U.S. production and employment in
some machinery and chemical
sectors. But those would be
offset by bigger losses among
auto, food, and apparel makers that have crafted supply
chains around duty-free passage of parts and goods. Even
the restoration of small tariffs
would be disruptive.
The American Automotive Policy Council calls Nafta withdrawal a “$10 billion tax” on
the U.S. industry, while autoparts makers say it would
force them to cut as many as
50,000 U.S. jobs.
Brexit may not have pushed
the U.K. immediately into recession, but analysts now see
supply constraints and other
longer-term problems emerging, like slower worker-productivity growth, chilled investment from uncertainty
over future rules and higher
inflation due to the pound’s
drop following the vote. In a
similar vein, economists warn
of a Nexit’s incalculable, slowmotion damage to the U.S.
Nafta’s collapse would raise
broader doubts about U.S.
support for the international
free-trading system, which
most economists believe has
lifted U.S. and global growth.
E
ven some Nafta critics
believe withdrawal
would do the U.S. more
harm than good. Robert Scott
of the left-leaning Economic
Policy Institute wrote the 2011
report widely cited by Nafta
opponents claiming 700,000
U.S. jobs lost from the pact.
Killing Nafta, he says,
wouldn’t bring them back.
With the resulting higher
costs, “multinationals like GM,
Ford, and Toyota may just decide to shift production to
Asia or Europe,” he says. “The
U.S. benefits from having that
production in North America,
even if it’s in Mexico.”
TUESDAY: The Federal Reserve releases industrial production figures for September.
August’s 0.9% fall in production,
the largest one-month decline
since May 2009, was an early
sign of economic disruptions
from a severe hurricane season.
September’s reading could show
the full force of the hurricanes
that battered the U.S.
Amid increasingly hawkish
signals from some Bank of England officials, markets will pay
close attention to figures on U.K.
inflation. Economists polled by
The Wall Street Journal expect
that price growth—spurred by
sterling’s depreciation after the
Brexit vote last year—accelerated to 3% in September, its
fastest in more than five years,
strengthening the case for a
rate increase in the not-too-distant future.
WEDNESDAY: The Federal
Reserve releases its beige book
report on U.S. economic conditions. The September release
showed economic activity grew
at a measured pace even though
employment growth slowed
somewhat in July and August. A
glowing report would be more
fodder for the Fed as it begins
tightening monetary policy, but
the effects of recent hurricanes
could make a clear economic
reading difficult.
THURSDAY: China releases
third-quarter gross domestic
product data (release time is
Wednesday evening in the U.S.).
China’s economy steamed along
in the second quarter, beating
forecasts and matching the 6.9%
expansion in the first. Economists expect third-quarter
growth to tick down to 6.8%.
U.S. WATCH
JOHN MINCHILLO/ASSOCIATED PRESS
D
onald Trump’s presidency has so far been
largely good for big
business and investors, with
deregulation in train, hopes
for corporate tax cuts, and
stocks hitting records. But the
risk of a serious jolt now
looms: the potential end of the
North American Free Trade
Agreement, which has governed continental commerce
for a quarter-century.
Because the likelihood of a
collapse has seemed so remote, analysts are only now
starting to assess the implications. The early read: It
wouldn’t necessarily be catastrophic, but it would be a net
negative for the overall economy, cause a big squeeze to
some sectors and states and
could dent stocks.
“The reversal of Nafta leads
to a decline in real GDP, trade,
investment, and employment
in the U.S., Canada and Mexico,” concludes one of the first
detailed studies on the subject, by ImpactECON LLC, a
Colorado-based economic consultancy. The firm estimates
that while some production
would move north from Mexico, the U.S. would still suffer
a net loss of 256,000 U.S. jobs
over three to five years. Mexico would lose 951,000 jobs
and Canada 125,000.
Nafta isn’t dead yet. Talks
to rewrite the pact are continuing, with fresh rounds
scheduled through year-end.
But the current round—
launched last week and slated
to run through Tuesday—has
ECONOMIC
CALENDAR
KALEIDOSCOPE EYES: A view Sunday of Alan Parkinson’s ‘luminarium,’ on exhibit in Cincinnati.
NEW YORK
Shkreli Lawyer’s Trial
To Get Under Way
Jury selection is set to begin
on Monday in the Brooklyn, N.Y.,
trial of a lawyer accused of working with Martin Shkreli to defraud
a pharmaceutical company.
Evan Greebel, 44 years old,
faces counts of conspiracy to
commit securities and wire fraud
in connection with what federal
prosecutors allege were schemes
to loot Retrophin Inc., a publicly
traded pharmaceutical company,
to pay investors in Mr. Shkreli’s
failed hedge funds.
Mr. Shkreli was convicted in
August on securities-fraud
charges, following a trial he was
originally slated to share with
Mr. Greebel.
Mr. Greebel was arrested in
2015 and was charged in two of
the eight counts Mr. Shkreli
faced. He previously had been a
partner in the New York office of
Katten Muchin Rosenman LLP,
while serving as outside counsel
to Retrophin.
A lawyer for Mr. Greebel de-
CORRECTIONS AMPLIFICATIONS
clined to comment.
Court filings show that Mr.
Greebel’s defense plans to rely
on an argument that any alleged
misconduct stemmed from Mr.
Shkreli, who they say withheld
information from Mr. Greebel.
This year, U.S. District Judge
Kiyo A. Matsumoto agreed to
separate Mr. Greebel’s case from
Mr. Shkreli’s, ruling that trying
the two together would prevent
Mr. Shkreli from receiving a fair
trial.
—Rebecca Davis O’Brien
Mr. Kaepernick, 29 years old,
led the San Francisco 49ers to the
Super Bowl in the 2012 season.
The grievance will be heard by
an arbitrator under the anticollusion section of the collective-bargaining agreement between the
NFL and its players association.
The NFL declined to comment
on Sunday.
The grievance was filed “only
after pursuing every possible avenue with all NFL teams and
their executives,” said Mr. Kaepernick’s attorney, Mark Geragos.
—Andrew Beaton
NATIONAL FOOTBALL LEAGUE
Kaepernick Grievance
Alleges Collusion
Free agent quarterback Colin
Kaepernick filed a grievance
against the National Football
League, alleging that the league’s
owners have colluded to keep
him unsigned.
The grievance, filed on Sunday, alleges that Mr. Kaepernick
remains out of the league because of his social activism, including the national anthem protests he initiated last season.
LITERATURE
Prize-Winning Poet
Richard Wilbur Dies
Richard Wilbur, the Pulitzer
Prize-winning poet and translator
who delighted generations of readers and theatergoers through his
rhyming editions of Molière and
his own verse on memory, writing
and nature, has died. He was 96.
Mr. Wilbur’s friend, poet Dana
Gioia, said he died Saturday night
with his family by his side.
—Associated Press
THE WALL STREET JOURNAL
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THE WALL STREET JOURNAL.
* *
Monday, October 16, 2017 | A3
U.S. NEWS
California Firefighters Make Progress
Containment figures
improve; Santa Rosa
mayor says his city
‘can take a breath’
SANTA ROSA, Calif.—A
week into the battle against
the deadly fires scorching
Northern California, officials
cited some progress Sunday as
they continue trying to hem in
the blazes.
Containment figures have
improved for the major fires,
which have killed at least 40
people and forced the evacuation of more than 100,000
people. The containment efforts have allowed many to return home, and by Sunday
morning, the evacuation tally
stood at about 75,000.
“Yesterday, nearly 11,000
firefighters beat back the
flames and made good progress towards the containment
of now 15 large wildfires
across California,” Cal Fire,
the state’s firefighting agency,
said in a news release.
Even as officials mark some
progress, they also warned the
fight continues and that it will
take time to get people back in
their homes.
A few fires are still “bucking us back,” said Bret Gouvea,
a Cal Fire incident commander. “They’re not going
down easy but we are getting
them.”
There are also fires in southern California, but the ones in
the northern part of the state
are the major concern, including blazes in Sonoma County
that have killed at least 22 people there alone.
The Sonoma County Sheriff’s Office identified four
more of the deceased there, all
seniors aged 71 to 82 years
old. Missing-person cases have
dropped to 174 active
searches, according to Sonoma
County Sheriff Rob Giordano.
JIM URQUHART/REUTERS
By Erin Ailworth, Sara
Randazzo
and Jon Kamp
A wildfire near Santa Rosa, Calif., on Saturday. Firefighters have made strides in containing several major blazes in Northern California.
Containment figures for the
local fires have all improved,
including the Tubbs Fire in
Sonoma and Napa counties,
which was 60% contained
early Sunday. That fire ravaged the city of Santa Rosa
early last week and has been
blamed for destroying nearly
3,500 structures. Two other
major fires in Sonoma County
were only 25% contained by
early Sunday, yet that marked
improvements in the battles
against both of them.
Santa Rosa “can take a
breath” for the first time since
the fire began and can look
ahead “instead of just worrying
about the five minutes in front
of our faces,” Santa Rosa Mayor
Chris Coursey said Sunday.
Still, some homes continued
to be threatened in Santa
Rosa’s Northern Oakmont
area, officials said, by a fire
that sprouted midweek.
The number of evacuees in
American Red Cross shelters
across California dropped to
3,250 by Saturday night, Red
Cross spokeswoman Monique
Dugaw said.
Fire officials said Sunday
that the Sonoma-area blazes
were quiet overnight, and that
crews were getting a better
handle on them. They are
dealing with hot, dry weather
as they battle the blazes, but
the winds have eased in
Northern California.
“Big thing today: your winds
are subsiding,” Don Watt, a firebehavior specialist, told crews
gathered for a morning briefing
at the Sonoma County Fairgrounds. “You’re going to get
those fuel-driven and topography-driven runs.”
Steve Crawford, operations
section chief with Cal Fire,
urged crews to stay focused on
getting up more black line,
which is the map indication
that shows the edge of a fire is
no longer uncontrolled.
“Everything you guys are
doing, wherever you’re placed
on the line is important to the
overall picture,” he said. “Getting black line on the map is
really important.”
The black lines continued to
grow elsewhere, too. The large
Redwood fire in Mendocino
County, which has burned
35,000 acres, was 35% contained Sunday, up from 20%
on Saturday. The smaller Sulphur Fire in Lake County was
75% contained, Cal Fire said.
The fire has killed eight
people in Mendocino County.
The local sheriff said utility
crews would be flying low
over many parts of the county
Sunday to check power lines
and re-establish service.
Mr. Gouvea, with Cal Fire,
commended the firefighters
Sunday, many of whom have
been working for days to snuff
the flames.
“I know a lot of you are hurting, bleeding; it’s been a long
road,” he said. “We are getting
around it—I told you we
would—and we are going to get
this thing done very shortly.”
Agencies Monitoring Oil Spill Off Louisiana Coast
BY DAN MOLINSKI
AND ALISON SIDER
An offshore pipeline fracture that has spilled as much
as 9,350 barrels of oil into the
Gulf of Mexico near Louisiana
appeared to be contained, the
company responsible said on
Sunday.
LLOG Exploration Company LLC on Thursday morning discovered the spill, which
stemmed from a fracture of
some of its infrastructure in
4,463 feet of water, 40 miles
southeast of Venice, La. The
offshore oil producer estimated the spill had released
between 7,950 and 9,350 bar-
rels of oil and said it said it
would be monitoring the area
with authorities to clean up oil
where possible.
The Bureau of Safety and
Environmental Enforcement,
which regulates offshore oil activity, said no shoreline impacts
have been reported and there
were no reports of injuries. It is
investigating the cause.
The spill appeared to be
one of the largest in the Gulf
of Mexico since the 2010
Deepwater Horizon explosion
and spill, which killed 11 people and released more than 4
million barrels of crude.
U.S. authorities said three
sheens of oil visible on the wa-
ter’s surface Saturday morning
during an observation flight
dissipated as the weekend
went on and there appeared to
be no risk to shoreline impact.
“Four over flights were conducted throughout Saturday and have identified no additional visible oil,” the U.S.
Coast Guard said in a statement late Saturday. “Any surface oil is expected to move in
a southwesterly direction and
is not expected to impact the
shoreline.”
LLOG, based in Covington,
La., said it was working alongside the Coast Guard to gauge
the movement of any of the
spilled crude oil.
“There continues to be no
detection of potentially related
oil on the surface (six flights
since Friday night),” the company said in an email. “Multi-
The cause of the spill,
40 miles southeast of
Venice, La., is under
investigation.
ple barriers are in place on either side of the fracture.”
The spill was discovered by
workers who noticed volume
Puerto Rico’s Economy Is Back to Basics
Weeks after Hurricane Maria struck Puerto Rico, Alejandra Fedato, owner of a clothing boutique in San Juan’s
Condado neighborhood, is
having a hard time reopening.
Without power, she can’t
take customer credit cards.
She is still waiting for an insurance adjuster to assess the
costs of flood damage. Never
mind that many of her clients,
as well as her sole employee,
have temporarily left Puerto
Rico because of conditions on
the island.
Ms. Fedato, 48 years old,
said she is missing the fall
clothing season and trying to
sell the merchandise she salvaged at cost. Now she is
weighing whether to buy new
merchandise for winter—a decision she needs to make by
the end of this month.
“People say Puerto Rico is
coming back, but I don’t
know,” she said.
Already deeply troubled
with more than $70 billion of
debt, the island’s economy is
starting to emerge from the
lashing of the Category 4 hurricane. But in the absence of
power and internet connectivity, local commerce is crippled,
relying on paper and cash. Hotels and car-rental agencies
that are open have turned to
written records to keep track
of bookings. Consumers must
MARIO TAMA/GETTY IMAGES
BY DANIELA HERNANDEZ
AND ARIAN CAMPO-FLORES
A worker eats lunch in a bar without power in San Isidro, weeks
after Hurricane Maria caused extensive damage to Puerto Rico.
often pay in cash because
most credit-card machines
aren’t working. Many ATMs
aren’t yet operational.
Between $20 billion and
$40 billion could be lost in
productivity output due to the
storm-related disruptions, according to a September
Moody’s Analytics report. Insured losses from Maria could
total $28.4 billion due to damage to residential, commercial
and industrial properties, as
well as to vehicles, according
to Karen Clark & Co.
Gov. Ricardo Rosselló said
it could take $95 billion to rebuild. That’s nearly equivalent
to the U.S. territory’s total annual economic output.
“Without a doubt, Hurricane Maria has been a catastrophic event that’s impacted
the entire island. Every single
sector of the economy has
been affected,” said Manuel
Laboy, Puerto Rico’s secretary
for economic development and
commerce.
Many residents are considering leaving or have already
left the island, fueling concerns that the economy will
continue to shrink. Before the
storm, the island’s population
had been declining for more
than a decade as residents
moved to the U.S. mainland in
search of better jobs and economic stability.
Manufacturing accounts for
nearly half of Puerto Rico’s
economy, according to Mr.
Laboy, including operations
for Honeywell International
Inc., Medtronic PLC and Boston Scientific Corp. He said his
office is working closely with
companies to manage productivity losses, which could
eventually affect not just the
local economy but “the global
supply chain.”
Another mainstay of the island’s economy, tourism, is
also taking a hit. In the normally bustling tourist area of
Old San Juan, the storefronts
of many colorful colonial
buildings remain boarded up,
and only a handful of businesses have reopened.
At Valor Souvenir, a shop
that sells T-shirts and mementos near the waterfront where
cruise ships anchor, Loretta
Francis sat on a chair in the
middle of the store. The
store’s owner, her brother-inlaw, opened last week for four
hours a day in hopes of generating some sales, she said. But
foot traffic has been scant.
“Nada, nothing,” said Ms.
Francis. “There are no tourists, no money. It’s rough.”
For many of the island’s
workers, the half-speed economy has led to shortened
hours and smaller paychecks.
Raisa Tirado, who supervises the food shops in the
San Juan airport’s terminal C,
had her work week cut by a
full day. She said she is worried about being able to pay
her bills. Some of her colleagues “lost everything,” and
others weren’t able to come to
work because of a lack of
transportation, she said.
numbers from data collected
at a well and numbers collected on a platform at the
surface weren’t adding up.
LLOG said it is investigating
the cause.
Spills of this size are relatively rare in the Gulf of Mexico, where federal authorities
have tightened regulations following the Deepwater Horizon
disaster. There were three reported offshore spills of over
50 barrels last year, according
to federal data.
Mark Salvo with Defenders
of Wildlife, a Washingtonbased environmental group,
said the LLOG oil spill is another unfortunate reminder of
the inherent risks of drilling
for fossil fuels.
“In addition to the immeasurable immediate effects
from oil spills—including from
bursted pipelines—the impacts
on fish, wildlife and ecosystems could last for years,” Mr.
Salvo said.
The Coast Guard said two
response vessels, one from
Clean Gulf Associates and Marine Spill Response Corp., are
on scene to help with the
cleanup and it is coordinating
with LLOG, the BSEE and the
National Oceanic and Atmospheric Administration to locate and respond to any oil
that reaches the surface.
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A4 | Monday, October 16, 2017
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THE WALL STREET JOURNAL.
U.S. NEWS
Trump Steps Up Pressure on GOP Congress
concern.”
Yet Dan Meyer, who was
head of legislative affairs for
former President George W.
Bush, compared Mr. Trump’s
decisions to “passing the hot
potato” and suggested the
president needs to work more
closely with GOP leaders.
“It’s easy to disrupt. It’s not
as easy to put it back together
again,” he said. “You don’t get
the impression that they’re
working as a seamless team.”
Mr. Trump’s actions last
week move the Republican-
controlled Congress into new
territory, beyond the divides
created earlier this year when
GOP lawmakers were caught
off guard by the president’s
surprise actions on transgender people serving in the military or angry tweets aimed at
Attorney General Jeff Sessions.
Now, lawmakers are in a position of having to respond not
just with words but with legislative action, creating more serious pressures for congressional Republicans who already
had problems advancing highpriority bills.
“It’s not enough to simply
dump everything in Congress’s
lap and say ’deal with it,’ ” said
Brian Walsh, who spent years
as a Republican strategist. He
said Mr. Trump may be setting
up fellow Republicans for failure. “What specifically is he
advocating for?”
But Sam Geduldig, a lobbyist and former House GOP
leadership aide, said Congress
needs to get some practice at
“doing important things.”
“Congress has an opportunity to write legislation—they
should take it,” Mr. Geduldig
said.
The president also has
urged voters to oust lawmakers who don’t support his tax
overhaul plan this year; he
phoned his former chief strategist, Steve Bannon, to offer encouragement after Mr. Bannon
appeared on Fox News on
Monday vowing to unseat sitting Republicans who don’t actively support the president’s
agenda, said two people familiar with the call.
voted on as a standalone bill
or as part of complex negotiations looming in December.
The government’s current
funding expires after Dec. 8, and
other hot-button issues could
get wrapped into the end-ofyear discussions, including how
to handle illegal immigrants
brought to the country by their
parents at a young age.
Democrats will have leverage in those talks because the
spending bill, needed to avert
a government shutdown,
would need 60 votes to clear
the Senate, where Republicans
hold a 52-48 advantage.
For now, many in the health
industry are reacting with
alarm to the prospect of the
subsidy payments ending. A
diverse coalition representing
health plans, doctors and businesses sent a letter to Congress Saturday asking lawmakers to “act immediately” to
restore the payments.
In one example of the immediate impact of halting the
payments, Oregon ordered insurers that sell on the ACA’s
exchanges to increase premium rates for 2018 for the
most popular plans by 7.1%.
While some insurers had already filed rates for higher
premiums with the expectation
the payments might be discontinued, insurers in more than a
dozen states filed rates that
didn’t take into account the
possibility. Some of those insurers are now saying they
need to raise rates by 20% or
more for next year, but the
federal deadline for filing has
already passed.
Before saying late Thursday
he would cut off the payments,
Mr. Trump issued an executive
order designed to bolster various alternative insurance arrangements, which are less
regulated than traditional policies. Mr. Trump has he would
continue using administrative
action to try to dismantle the
ACA, and Democrats are seeking ways to fight back, from
litigation to legislation.
Sen. Susan Collins of Maine,
a centrist Republican, said on
ABC that for a deal on payments to work, “Democrats are
going to need to step up to the
plate and assist us.”
She added, “I’m very disappointed in the president’s actions this past week…But Congress needs to step in and I
hope the president will take a
look at what we’re doing.”
—Brody Mullins
and Eric Morath
contributed to this article.
President Donald Trump is
looking to advance his proposed tax overhaul this week,
wooing key Republican senators in hopes of jump-starting
a legislative agenda that has
faltered despite the party’s
control of Washington.
HEALTH
Continued from Page One
told insurers to jack up rates
for their most popular plans.
On Monday, Mr. Trump is
meeting with Senate Majority
Leader Mitch McConnell (R.,
Ky.) to discuss budget and tax
issues, with health care also a
possible topic.
Mr. Trump met Saturday
with Mr. Alexander, Sen. Lindsey Graham (R., S.C.) said on
CBS, and he encouraged Mr.
Alexander to pursue his deal,
Mr. Graham said.
The “cost-sharing reduction”
payments ended last week by
Mr. Trump help insurers offset
subsidies to low-income Americans. Many Republicans, fearing chaos in the insurance market if the payments stop, want
to extend them as long as that
is accompanied by moves such
as relaxing regulations on some
insurance plans.
“I think Congress should
pass that short-term extension” of payments, Sen. Bill
Cassidy (R., La.) said Sunday
on Fox. “We absolutely have to
think about that family around
the kitchen table.” He added
that the payment extension
President Donald Trump getting out of Marine One to walk to the White House on Friday.
Paul, the president spent hours
golfing with the senator on Sunday at the Trump National Golf
Club in Northern Virginia. Afterward, Mr. Paul spoke to reporters and voiced broad support for the goal of cutting
taxes, though he didn’t indicate
how he would vote on the underlying budget measure that
could determine the tax package’s fate.
In recent days Mr. Trump
has been ratcheting up pressure on Congress, adding to
lawmakers’ already complishould only be passed if it is
packaged with provisions that
would lead to lower premiums.
Democrats say the Republican approach to lowering premiums involves stripping important consumer protections,
allowing for insurance policies
that provide insufficient coverage. Healthier, younger Americans may have access to lower
premiums under the GOP approach, they say, but older and
sicker consumers would see
their costs go up.
Sen. Chris Murphy (D.,
Conn.) said Mr. Trump’s decision to end the payments was
retaliation for Republicans’ inability to repeal the ACA. “This
is the equivalent of health-care
arson,” Mr. Murphy said on Fox.
“He is literally setting the entire
health care system on fire just
because he is upset that Congress won’t pass a repeal bill
supported by 17% of the public.”
Some Republicans say they
are less concerned with the
payments than the fact that
the Obama and Trump administrations have been making
them without an appropriation
from Congress, which they say
is unconstitutional.
This week’s most closely
watched event will likely be the
unveiling of the Alexander-Mur-
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In the span of about 15
hours from Thursday night to
Friday afternoon, Mr. Trump
canceled crucial payments under the Affordable Care Act
and delivered a stiff blow to
the agreement aimed at curtailing Iran’s nuclear program.
He put the onus on Congress
to fix both.
Last month, he removed
protection for immigrants
brought to the country as children, and he told Congress to
find a new way to allow them
to stay before 690,000 face deportation. The moves add a
trio of contentious issues to a
crowded legislative agenda.
“Trump
is
following
through on being a disruptive
force that his core base of support loves to see,” said Ron
Bonjean, a Republican strategist who has assisted the
Trump White House. “Trump
expects Republicans to follow
through on tax reform and if
adding to the workload creates
more headaches for Congress,
that probably won’t be his top
CHIP SOMODEVILLA/GETTY IMAGES
An important test is likely
to come Thursday, when the
Senate begins voting on a budget resolution that will determine whether Republicans can
pass the tax package without
any Democratic support. It is
part of a challenging agenda
that Congress must tackle by
year-end, an agenda Mr.
Trump has added to with recent moves on health care and
Iran.
Republicans hold a 52-48
Senate majority and can lose
no more than two votes to
pass the budget measure that
would give Mr. Trump the
clearest path toward enacting
the tax package and notching
the most consequential legislative victory of his presidency.
One potential holdout is
Sen. Rand Paul (R., Ky.), who
hasn’t yet said how he would
vote but has voiced concerns
about “spending too much
money.” After speaking to the
White House budget director,
Mick Mulvaney, Mr. Paul said
in an interview Friday: “He
knows what our concerns are,
and we’re hoping they can fix
those concerns.”
With a sharp focus on Mr.
BRENDAN SMIALOWSKI/AGENCE FRANCE-PRESSE/GETTY IMAGES
By Michael C. Bender,
Siobhan Hughes and
Kristina Peterson
Sens. Patty Murray, left, and Lamar Alexander early this year.
ray plan, which the two senators
have been discussing for months.
In exchange for extending the insurer payments, the bill would
give states permission to obtain
waivers under the ACA, paving
the way for more variation in insurance plans, according to people on Capitol Hill.
Mr. Johnson, for his part, is
working on legislation that includes additional conservative
measures, such as expanding
the use of health-savings accounts and delaying the enforcement of the mandate that
most employers provide insurance. Mr. Johnson said he rec-
ognized that many Republicans are hesitant to fund the
payments. But ending them
could result in higher premiums for consumers and more
money spent by the government, which would have to
provide larger subsidies to certain consumers, he said.
Conservative House Republicans have indicated any support for continuing the payments would depend upon
significant concessions from
Democrats on curbing the ACA.
If lawmakers reach a bipartisan deal on health care, it
isn’t clear whether it would be
Disaster Group Seeks
More Medical Workers
BY MELANIE EVANS
A U.S. government program
that sends doctors and nurses
to disaster zones says it needs
more health-care workers, as
relief efforts during this hurricane season are near the end
of a second month with no end
in sight in Puerto Rico and the
U.S. Virgin Islands.
The National Disaster Medical System, which recently
wrapped up big deployments
to hurricane-ravaged areas in
Texas and Florida, said it
would start recruiting more
medical professionals in the
next few weeks.
“We’re far from the recovery stage of this event,” Robert Kadlec, a Department of
Health and Human Services
assistant
secretary,
said
Thursday of Hurricane Maria’s
devastation. The storm largely
destroyed Puerto Rico’s power
grid, leaving half the local
hospitals without power, and
downed its communications
network. The federal health
agency oversees the program
that temporarily hires healthcare workers for what are typically two-week rotations.
The teams, which set up
temporary hospitals and clinics, are helping relieve the
strain on Puerto Rico hospitals.
Nearly half of the local hospitals are depending on sometimes unreliable generators for
power. Generator failures have
forced recent evacuations at
two hospitals. And others suffered storm damage that crippled operations, said Jaime Pla
Cortes, executive president of
the Puerto Rico Hospital Association, in an interview.
“Everybody has to improvise,” Mr. Pla Cortes said. “The
nurses and the doctors are
tired, they are working full
time.”
The teams are
helping relieve the
strain on Puerto Rico
hospitals.
The National Disaster Medical System entered the hurricane season understaffed, system director Ron Miller said,
adding that the U.S. Office of
Personnel Management recently authorized expedited
hiring.
The prolonged response is a
“huge anomaly” for the system, Mr. Miller said. Twoweek rotations have occasionally stretched into a month, he
said.
Some American health-care
workers are traveling to
Puerto Rico as volunteers, coordinating their efforts with
those of HHS.
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A6 | Monday, October 16, 2017
* *
THE WALL STREET JOURNAL.
U.S. NEWS
Democrat
To Run
Against
Feinstein
Fed Choice Rivets Central Bankers
As Trump mulls move,
financial leaders work
to gauge U.S. direction
if there is no Yellen
BY JON KAMP
As central bankers and finance ministers from around
the world gathered in Washington last week, the discussion returned many times to
the fate of one person in particular: Federal Reserve Chairwoman Janet Yellen.
President Donald Trump
will soon make one of the
most consequential appointments of his administration
when he nominates the next
Fed leader. Because the U.S.
central bank sets monetary
policy for the world’s largest
economy, the decision was of
urgent interest to the foreign
officials who were in Washington for the annual meetings of
the International Monetary
Fund and World Bank.
Ms. Yellen’s term expires in
February. Mr. Trump is considering asking her to stay on but
has also interviewed three
candidates to succeed her:
current Fed governor Jerome
Powell, former Fed governor
Kevin Warsh and Stanford University economist John Taylor.
Mr. Powell is a Yellen ally
on interest-rate policy, while
Messrs. Warsh and Taylor are
Fed critics.
The level of uncertainty is
“wider than previous transitions because the range of
candidates
is
probably
broader,” said Vincent Reinhart, chief economist of
Standish Mellon and former
director of the Fed’s monetary
policy division.
Fed policies influence
global economic growth, stock
prices, bond yields and exchange rates, including the
value of the U.S. dollar, the
world’s largest reserve currency. A new Fed chair might
change the course of U.S. in-
A top Democrat in the California State Legislature and a
critic of U.S. Sen. Dianne Feinstein said he planned to challenge her bid for reelection
next year.
Kevin de León, president
pro tempore in the state Senate, announced his plans over
social media. In a biographical
video accompanying the announcement, Mr. de León talks
about lifting people out of
poverty and providing jobs
and opportunities, and notes
he is the youngest child of a
single, immigrant mother who
“worked her fingers to the
bone” cleaning homes when he
was a child. He didn’t mention
Ms. Feinstein by name.
A fellow Democrat, Ms.
Feinstein has drawn fire from
the left for voting to confirm
several of President Donald
Trump’s cabinet nominees and
not ruling out working with
the president, while Mr. de
León has said Californians are
owed “resistance” to the
Trump agenda, not patience
with it.
Bill Carrick, lead strategist
for Ms. Feinstein’s re-election
campaign, said “she’s in a
strong political position here
in the state.” He noted the endorsements she has picked up
since announcing her plans for
the coming race last week, including one from fellow Democrat Kamala Harris, the junior
U.S. senator from California.
Jessica Levinson, a professor at Loyola Law School in
Los Angeles, said she expects
Mr. de León will position himself as “the true anti-Trump
candidate,” but said he faces a
tough, uphill climb against an
84-year-old senator with decades of political experience
on her résumé.
“Most people in California
can’t remember a time when
Dianne Feinstein wasn’t an
elected official,” Ms. Levinson
said.
Ms. Feinstein, who served
as mayor of San Francisco for
about a decade starting in the
late 1970s, was first elected to
the Senate in a special election
in 1992 and has been reelected four times.
The top Democrat in the
Senate Judiciary Committee,
she recently introduced legislation that would ban the sale,
transfer, manufacture or possession of “bump stocks” and
other accessories that speed
up the rate of firing on semiautomatic weapons. The proposal, which has drawn bipartisan support, followed the
Oct. 1 mass shooting in Las
Vegas.
Ms. Feinstein announced
her next campaign via Twitter
on Oct. 9.
YURI GRIPAS/REUTERS
BY JOSH ZUMBRUN
Fed Chairwoman Janet Yellen’s fate was buzz-worthy at last week’s IMF/World Bank meetings in Washington, which she attended.
terest rates, forcing budgets
and monetary policies around
the world to adjust. If the new
Fed chairman favored higher
interest rates, it could
strengthen the dollar, sparking
capital to rush out of emerging markets.
“We borrow in U.S. dollars,
so if the Fed decides to increase the interest rate that
means additional costs on our
borrowing going forward,”
said Saudi Arabia’s Minister of
Finance Mohammed al-Jadaan.
In interviews with central
bankers and finance ministers
from Poland to Paraguay,
many said they are watching
the decision closely.
Depending on the Fed candidate, the implications vary
for global policy makers. Mr.
Taylor has proposed using a
mathematical rule to set Fed
interest-rate policy. His “Taylor rule” prescribes a significantly higher benchmark interest rate than the Fed’s
current setting.
Mr. Warsh has been a sharp
critic of the Fed’s easy-money
policies in recent years and indicated he would pursue a different approach.
One source of comfort for
many world leaders is that
U.S. interest-rate policies are
set by the Federal Open Market Committee, consisting of
all the Fed’s governors, the
president of the New York Fed,
and a rotating group of four
other regional Fed bank presidents. A new chairman would
have to build consensus
among many of the same people who have endorsed Ms.
Yellen’s strategy of raising
rates gradually.
“I know there is a very
good team of FOMC people,
and whatever happens I’m not
afraid of the future of Ameri-
can monetary policy,” Mateusz
Morawiecki, Poland’s deputy
prime minister, said in an interview.
For much of the world, the
Fed’s committee-driven process is a source of both stability and admiration.
“This is something we usually admire in the U.S. and
that we lack in Latin America,
which is the stability of the institution,” said Carlos Fernández Valdovinos, the governor
of the Central Bank of Paraguay.
—Tom Fairless
contributed to this article.
Yellen Ties Rate Increases to Economy’s Path
WASHINGTON—Federal Reserve Chairwoman Janet Yellen kept the door open to another increase in short-term
interest rates this year, but
sounded a note of caution on
still-weak inflation in the U.S.
and abroad.
The “ongoing strength of
the economy will warrant
gradual increases” in shortterm interest rates, the Fed
chairwoman said, although she
didn’t specify when the next
rate increase would come. Ms.
Yellen spoke Sunday at a
Group of 30 banking seminar
in Washington.
At their last policy meeting
Sept. 19-20, Fed officials left
rates unchanged and penciled
BANKS
Continued from Page One
the point where it can ease up
on economic stimulus and the
Bank of Japan is still nowhere
near paring back.
Yet officials from all three
central banks said weak inflation readings could keep them
from moving too rapidly.
Fed Chairwoman Janet Yellen said she expected the U.S.
central bank to continue slowly
raising short-term rates, but
she expressed caution about
how weak inflation might affect that path.
Gradual increases in the
Fed’s benchmark federal-funds
rate “are likely to be appropriate over the next few years to
sustain the economic expansion,” she said, without specifying when the next rate increase would come.
Fed officials are watching
price pressures closely, Ms.
Yellen said, as the “biggest surprise in the U.S. economy this
year has been inflation.”
Fed officials at their September meeting penciled in
one more short-term rate increase this year and three
more in 2018. The Fed has
raised rates four times since
December 2015 and this month
began shrinking its portfolio of
bonds purchased to support
the economy by lowering longterm rates after the financial
crisis.
Nevertheless, the Fed’s
benchmark rate—in a range
in one more rate rise in 2017.
They expect three rate increases next year, two in 2019
and one in 2020.
The central bank has raised
its benchmark rate twice this
year, in March and June, most
recently to a target range of
1% to 1.25%.
Economists surveyed by
The Wall Street Journal this
month saw the Fed raising interest rates once more in 2017
and three times in 2018. The
poll found 56 out of 59 respondents saying the Fed
would next raise its benchmark short-term interest rate
in December to a range between 1.25% and 1.50%.
The Fed has two more
meetings this year, Oct. 31Nov. 1 and Dec. 12-13. Econofrom 1% to 1.25%—is well below historical levels and still
providing economic stimulus.
Officials say the path of
rate increases ahead will depend on how the economy behaves. U.S. consumer prices
rose 1.4% in August from a
year earlier, according to the
Fed’s preferred measure, well
below its 2% target. Ms. Yellen
said her “best guess” was that
inflation would pick up next
year as the labor market
strengthens further.
In its flagship World Economic Outlook report released
last week, the IMF raised its
forecast for global economic
growth to 3.6% in 2017 and
3.7% in 2018, up from 3.2% in
2016.
But the IMF noted the recovery “is not complete,” citing
weak inflation in the advanced
world.
The fund expects inflation in
advanced economies to grow at
1.7% over the next two years,
below the 2% for which many
advanced-economy
central
banks aim.
Sluggish inflation growth,
which has confounded officials
and economists, is “something
that we did not observe to that
extent in the past,” former ECB
President Jean-Claude Trichet
said. “It complicates considerably the life of central banks in
the advanced economies.”
One possibility, Ms. Yellen
said, could be that there is still
room for the labor market to
recover. It could also be that
households and businesses today expect lower inflation
mists’ and the market expectations for a rate increase at
the Fed’s next meeting are
currently minimal, since the
central bank is seen as unlikely to raise rates at a meeting that isn’t followed by a
scheduled opportunity for the
chairwoman to explain the
decision at a news conference. Federal-funds futures,
used by investors to bet on
central-bank policy, on Sunday showed an 85.5% probability of at least one rate rise
at the Fed’s December meeting, according to CME Group.
Ms. Yellen on Sunday said
Fed officials “will be paying
close attention to the inflation
data in the months ahead.”
The Fed’s preferred price
gauge, the personal-consump-
tion expenditures price index,
rose 1.4% on the year in August and so-called core prices
were up just 1.3%—well below
the Fed’s long-elusive 2% annual target.
“My best guess is that these
soft readings will not persist,
and
with
the
ongoing
strengthening of labor markets, I expect inflation to move
higher next year,” Ms. Yellen
said, adding that “most of my
colleagues on the [interestrate-setting Federal Open Market Committee] agree.”
She cautioned, however,
that U.S. central bankers recognize recent low inflation
could reflect something more
persistent.
Ms. Yellen gave her first
public comments on the labor
market since the Labor Department reported the first
decline in U.S. nonfarm payrolls in seven years for September, as the economy took a
hit from hurricanes.
While the U.S. shed 33,000
jobs in September, ending the
longest stretch of job growth
on record, Ms. Yellen said
“other aspects of the jobs report for September were
strong.” She noted a decline in
the unemployment rate to
4.2%, and said news on average hourly earnings was “encouraging.”
“I would expect employment to bounce back in subsequent months as communities
recover and people return to
their jobs,” she said of the effects of the hurricanes.
SAUL LOEB/AGENCE FRANCE-PRESSE/GETTY IMAGES
BY HARRIET TORRY
Central bankers gathered in Washington on Sunday included Fed Chairwoman Janet Yellen, second right.
rates than in the past, which
would hold down price increases.
Broad changes in the world
economy, “perhaps technological in nature, such as the tremendous growth of online
shopping,” could also be responsible for keeping inflation
down around the developed
world, she said.
ECB Vice President Vítor
Constâncio said the link between an improving labor market and rising inflation has
weakened lately, which would
lead officials to maintain easy
monetary policies.
Eurozone inflation was 1.5%
on the year in September but
ECB officials say it could slip
below 1% at the start of next
year because of moderating
food and oil prices.
The ECB’s policy of reinvesting its maturing assets “will
continue until further notice,”
Mr. Constâncio said, calling it
an “important element” of the
central bank’s efforts.
The ECB is expected this
month to announce plans to
scale down its €60 billion-amonth ($79.7 billion) bondbuying program, but ECB President Mario Draghi has
suggested the move could be
delayed.
Likewise, Bank of Japan Gov.
Haruhiko Kuroda said weak inflation would prolong the central bank’s expansionary policy
despite a growing economy.
“The Bank of Japan will
consistently pursue aggressive
monetary easing with a view to
achieving the price-stability
target at the earliest possible
time,” he said. “Achieving the
2% target is still a long way
off,” Mr. Kuroda said.
Japanese consumer prices
excluding fresh food rose 0.7%
in August from a year earlier,
up from 0.5% in July.
Mr. Kuroda said companies
that were reluctant to cut
wages during the crisis are
equally reluctant to raise them
today, removing pressure to increase prices. Likewise, workers who value stable employment are less likely to demand
pay raises, he said.
The BOJ has kept monetary
policy ultraloose since Septem-
ber 2016, when it started targeting long-term interest rates,
aiming to hold the yield on 10year government bonds at 0%.
The prolonged period of low
interest rates has raised worries that investors may be taking on too much risk by bidding up asset prices.
“There is a possibility that
market participants are complacent and not properly pricing risks,” Mr. Kuroda said.
Bank of Mexico Gov.
Agustín Carstens said some
emerging-market assets may
have been “priced too high” by
investors looking for yield outside the developed world.
That could cause rapid price
swings if U.S. interest
rates rise unexpectedly. Central
banks have so far clearly communicated their intentions, but
“we cannot rule out that at
some point markets might read
things
in
a
different
way than was meant,” said Mr.
Carstens, who in November
takes over as the general manager of the Bank for International Settlements, a Baselbased consortium of central
banks.
Ms. Yellen took a more sanguine approach.
While asset valuations today
are “high in historical terms,”
that may reflect investors’ expectations of a “new normal”
of lower interest rates for the
foreseeable future than in the
earlier decades, she said, adding that financial stability risks
remain “at a moderate level.”
—Jason Douglas
contributed to this article.
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
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THE WALL STREET JOURNAL.
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THE WALL STREET JOURNAL.
WORLD NEWS
U.S. Officials Back Trump on Iran Freed
Captive
KENA BETANCUR/AGENCE FRANCE-PRESSE/GETTY IMAGES
U.S. officials defended President Donald Trump’s refusal
to certify the 2015 Iran nuclear
agreement, saying the country
threatens global stability even
while technically complying
with the accord itself.
By Eric Morath
in Washington
and Asa Fitch
in Manama, Bahrain
Iran is “the No. 1 state
sponsor of terrorism,” Nikki
Haley, the U.S. ambassador to
the United Nations, said on
Sunday on NBC. “You look at
the ballistic-missile tests that
they continue to do. You look
at the arms sales. When you
look at all the trouble they’re
causing around the world,
what the president is saying
is, ‘It’s not proportionate. We
need to look at this.’”
Ms. Haley stopped short of
saying Iran had violated the
terms of the agreement, however. “No one is questioning…they are in compliance”
with inspections to determine
if they are developing a nuclear
weapon, she said, but that
shouldn’t prevent Mr. Trump
from seeking a better deal.
The comments by Ms. Haley
and other senior officials on
Sunday followed Mr. Trump’s
Ambassador Nikki Haley, seen in September, said Sunday Iran is the leading ‘state sponsor of terrorism.’
Friday speech at the White
House where the president reiterated his fierce opposition to
the terms of the deal—under
which Iran agreed to put limits
on its disputed nuclear program
in exchange for relief from international sanctions—after denouncing what he called a
“rogue regime” run by radicals.
Mr. Trump on Friday took
Iran to task for a number of
destabilizing behaviors, including its missile program.
He also cited Iran’s history
with America dating back to
1979, the year of the country’s
Islamic revolution, pointing to
attacks on American diplo-
matic properties and targeting
American service members, as
well as Iran’s support for extremist groups, alluding to al
Qaeda and Hezbollah.
The president vowed to end
U.S. participation in the nuclear accord unless Congress
and American allies can deliver punitive measures targeting Tehran’s missile program,
its support for regional militant groups and any future nuclear activities.
As a first step, he declined
to certify to Congress under a
U.S. law that Iran was complying with its obligations under
the agreement, setting off a
period of negotiations in Washington and European capitals
over the future of the accord.
On Sunday, national security
adviser H.R. McMaster said
“the president is not walking
away from the deal yet.” He
said the administration would
want an agreement that would
”lay alongside" the current
one. “It is a weak deal that is
being weakly monitored,” he
said on Fox News on Sunday.
”We can’t really say with confidence that they are complying.…This is not a trustworthy
regime, so much more comprehensive monitoring is in order."
Secretary of State Rex Tillerson, meanwhile, said Iran
had violated the agreement in
a number of technical ways
but has remedied them. Iran is
“walking right up to the line,”
he said on CNN, suggesting it
was seeking to “test the limits.”
Iranian leaders responded
with anger and defiance to Mr.
Trump’s speech, saying the
nuclear deal was a multilateral
accord that the U.S. couldn’t
cancel on its own.
If the U.S. proceeds to undermine it, Iran will respond
by fast-tracking its nuclear
program, Ali Akbar Salehi, the
head of Iran’s Atomic Energy
Organization, told state television on Sunday.
The Trump administration
has been working with Sen.
Bob Corker (R., Tenn.), the
Foreign Relations Committee
chairman, on legislation that
would reimpose U.S. sanctions
on Iran if Tehran ever engages
in nuclear activities now prohibited under the agreement,
or if Tehran hits other “trigger
points,” such as achieving a
“breakout time” required for
fielding a nuclear weapon of
less than a year.
The legislation would also
require a broader assessment
of Iran’s activities, including
its ballistic-missile program.
Mr. Corker has said he plans
to introduce the bill as early
as this week.
—Felicia Schwartz
in Washington
contributed to this article.
Death Toll Tops 200 in Pair of Somalia Blasts
Continued from Page One
he said. What caused the explosion wasn’t immediately
clear.
The clashes follow a referendum in which the Kurds,
who run their own semiautonomous region in northern Iraq,
voted overwhelmingly in favor
of independence, defying
Baghdad, regional powers and
the U.S, which warned it
would distract from the final
battles to defeat Islamic State.
The fighting threatens to
unravel the anti-Islamic State
coalition, and poses risks to
the viability of Iraq itself.
The Iraqi state is made up
of Kurds, Sunni Arabs and Shiite Arabs but also has a hodgepodge of other ethnic groups,
including those with connections to neighboring Turkey
and a large number with ties
to Iran, all of which are jockeying for dominance. Analysts
warn those centrifugal forces
risk pulling Iraq apart, increasing its vulnerability to a
re-emergence of Islamic State
or a successor group.
“The one major fear of the
U.S., that it will be forced to
be a referee of post-ISIS Iraq,
AHMAD AL-RUBAYE/AGENCE FRANCE-PRESSE/GETTY IMAGES
IRAQ
A member of the Iraqi forces on the outskirts of Kirkuk on Sunday
may come true,” said Nicholas
Heras, Middle East Security
Fellow with Center for a New
American Security, a Washington defense think tank. “If
that’s the case, it becomes a
target more quickly.”
While the U.S. has been reluctant to back any single
party in Iraq, it now might
have to pick a side, which
could more likely then make it
the other group’s enemy.
If the U.S. backs the Kurds,
it will draw the ire of the central Iraqi government and the
Iranian-backed militias. If it
backs Iraq, it loses the support
of Kurds who have proved ca-
pable and often loyal. If it remains neutral, it might just be
pushing a simmering fight into
the future.
The U.S. is hoping for a decent, not perfect outcome that
ends violence but leaves neither Erbil or Baghdad satisfied, which is a recipe for future conflicts, Mr. Heras said.
“In post-ISIS Iraq, the U.S. has
to decide what flavor of poison it prefers.”
In the wake of the referendum, Iraq’s parliament authorized Mr. Abadi to deploy
troops to retake areas outside
the official boundary of the
semiautonomous Kurdistan re-
Joshua Boyle,
left, and his
wife, Caitlan
Coleman, were
taken captive
in 2012.
adishu and much of Somalia
from 2007 until 2011, when its
militants were driven out of
the capital by African Union
peacekeepers led by troops
from Uganda and Burundi.
The militants have waged a
guerrilla war from the countryside against Somalia’s United
Nations-backed government.
gion that have come under
Kurdish control during the
battle against Islamic State.
Kurds have expanded the territory they oversee by as much
as 40% during the fight.
The Kurds say much of that
territory now under their control is subject to negotiation
as to its future.
Baghdad has turned to Iran
to help squeeze the Kurds.
Turkey has also ratcheted up
pressure. Both countries have
their own restive Kurdish populations.
Based on a request by the
Iraqi government, Iran closed
the official border crossings
with Kurdistan, a spokesman for
the Iraqi foreign ministry said.
Meanwhile, Kurds have
said travelers crossing into
Turkey in the past few days
were warned by Turkish authorities that they might not
be able to cross back over the
same land border.
Late Sunday, Mr. Abadi
chaired a meeting for the Ministerial Council for National
Security and his office released a statement detailing
grievances by the Iraqi state
against the Kurdish semiautonomous region.
The council warned of “the
serious escalation and provocations by forces belonging to
the Kurdistan region outside
the borders of the region,
which wants to drag the
country into internal strife in
order to achieve its goal of
dismantling Iraq and the region in order to establish a
state on an ethnic basis,” according to a release after the
meeting.
The council said the Kurds’
decision to hold an independence referendum and lay
claim to so-called disputed
territories like Kirkuk showed
the Kurdish government’s
“deliberate intention to resort
to force and impose the status quo.”
Bayan Sami Abdul Rahman,
the Kurdish regional government’s official representative
to Washington, said, “We
knew this was coming and this
was imminent,” adding, “It’s
still not too late to keep this
from escalating.”
She called on Mr. Abadi to
consider the consequences of
war and called on the White
House to help mediate the
matter, blaming much of this
on Iranian influence over the
Popular Mobilization Forces.
In the event of an all-out
war, “Kurdistan will be hurt,
but so will Iraq,” she said. “No
one can be a winner.”
Early Monday, Mr. Abadi’s
office said he had ordered
Iraqi forces to “impose security in Kirkuk in cooperation
with residents of Kirkuk and
the Peshmerga forces.”
A senior Iraqi security official said troops from the regular Iraqi Army, the elite Counterterrorism Service and the
Emergency Response Division
were advancing from the
south and west of Kirkuk with
no intention to enter the city
but rather surround it and assert control over major oil
fields and air bases that Kurdish forces claimed after the
upheaval of 2014, when Islamic State helped reshape the
map of Iraq and Syria.
As of early Monday, Iraq
time, the Pentagon said it had
no operational updates on reports of clashes between Iraqi
government-affiliated units
and Peshmerga forces in and
around Kirkuk, though said it
opposed any further escalation
in the country and urged all
groups to focus on defeating
Islamic State.
“We oppose violence from
any party, and urge against
destabilizing actions that distract from the fight against
ISIS and further undermine
Iraq’s stability,” Defense Department spokeswoman Laura
Seal said.
MOHAMED ABDIWAHAB/AGENCE FRANCE-PRESSE/GETTY IMAGES
The U.S., which has stepped
up drone attacks in Somalia this
year, condemned the attacks.
“Such cowardly attacks reinvigorate the commitment of
the United States to assist our
Somali and African Union
partners to combat the
scourge of terrorism to promote stability and prosperity
OTTAWA—The AmericanCanadian couple rescued by
Pakistani military forces last
week has begun to rebuild
their family life in a small town
southwest of the Canadian capital after five harrowing years
in captivity in which they say
an infant daughter was killed
and her mother raped.
Joshua Boyle, a Canadian,
Caitlan Coleman and their
three surviving children are at
the home of Mr. Boyle’s parents in Smiths Falls, Ontario,
after landing Friday night in
Toronto. The couple was abducted in 2012 while backpacking in Afghanistan and
then held by the Talibanlinked Haqqani network. They
were expecting their first child
when they were abducted;
they now have three children.
Upon landing, Mr. Boyle
made new allegations against
his captors. He said the Haqqani
network killed his infant daugh-
for the Somali people and
their regional neighbors” the
U.S. Embassy in Somalia said.
The attack came two days after the head of the U.S. Africa
Command, Thomas Waldhauser,
visited Mogadishu for a meeting with Mr. Farmaajo over the
country’s security situation.
Al-Shabaab controlled Mog-
People in Somalia’s capital, Mogadishu, on Sunday walked through the scene of the deadly explosion of a truck bomb the day before.
Hundreds of people waited in
the hope of getting news
about missing relatives, witnesses said.
At least five Red Crescent
volunteers were among those
killed in the blast. The International Federation of the Red
Cross warned the death toll
could rise.
BY PAUL VIEIRA
ter, Margaret Boyle, for his refusal to heed unspecified requests. He also said his captors
raped his wife. The events happened in 2014, he said. The
birth of the fourth child wasn’t
publicly known until Mr. Boyle
revealed it on Friday.
The Taliban on Sunday dismissed Mr. Boyle’s allegations.
“We strongly deny this false
claim of the enemy,” said the
group’s spokesman, Zabiullah
Mujahid. He said the infant
died shortly after birth due to
limited medical care in the remote area where the family
was located. Mr. Mujahid also
denied the rape allegations
and said Mr. Boyle was never
separated from his wife during
their captivity.
In a statement he issued via
email to the Associated Press,
Mr. Boyle said the family had
“reached the first true ‘home’
that the children have ever
known—after they spent most
of Friday asking if each subsequent airport was our new
house hopefully.” Messages for
Mr. Boyle and his parents
weren’t immediately returned.
A senior Afghan security official said the claims Mr. Boyle
made about Taliban abuses
weren’t a surprise. “The Taliban behead, torture and rape
hostages in their captivity all
the time,” the official said.
“The Taliban have no value for
human life or human dignity.”
Representatives for Canada’s
Foreign Ministry didn’t respond
to a request for comment about
Mr. Boyle’s allegations. A U.S.
State Department official declined to comment on Saturday.
BY NICHOLAS BARIYO
The death toll from twin
bombings in Somalia’s capital,
Mogadishu, climbed above 200
over the weekend, making it
one of the deadliest attacks in
the country since an Islamist insurgency started a decade ago.
A truck bomb exploded at a
busy intersection on Saturday,
ripping through several buildings, including hotels and government offices, the African
Union Mission in Somalia said.
Hours later, a second explosion hit the suburb of Medina,
setting dozens of vehicles on
fire.
The two blasts killed at least
231 people, Abdirizak Mohamed, a member of Parliament
and former minister of international security, said in a message on Twitter, citing the number of dead counted at two local
hospitals he said he visited.
Officials said some 275 people had been injured in the attacks, which followed several
months of relative calm in the
capital. The attacks came amid
a renewed push from the U.S.
to rid Somalia of al Qaeda-affiliated al-Shabaab militants.
President Mohamed Abdullahi Farmaajo declared three
days of mourning and called
for more international support
to fight the militants.
Emergency workers and police were digging through the
rubble of flattened buildings
in search of more victims.
Discloses
New Details
MIKE CARROCCETTO/AGENCE FRANCE-PRESSE/GETTY IMAGES
Technical compliance
with nuclear pact
shouldn’t preclude a
better deal, they say
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THE WALL STREET JOURNAL.
Monday, October 16, 2017 | A9
Thank You and
Congratulations
President Trump!
Congratulations to the Trump administration and
Agriculture Secretary Sonny Perdue (pictured left,
at last week’s second annual Global Food Forum) for
increasing America’s food exports by 9 percent in the
past 12 months — including beef by 25% and dairy by
16% — after recent years of decline.
We salute the Trump Administration’s constancy of
focus on exports, deregulation and other key drivers of
success for farmers and food processors of America.
Anthony Pratt
Executive Chairman, Pratt Industries
Pratt Industries is one of the largest corrugated box manufacturers in the United States.
Our boxes save money and save the environment.
www.prattindustries.com
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A10 | Monday, October 16, 2017
* *****
THE WALL STREET JOURNAL.
WORLD NEWS
Maduro Claims Victory in Venezuela Vote
Government declares
backers sweep state
contests as opposition
rejects the results
Venezuelan President Nicolás Maduro’s embattled government won at least 17 of the
23 states in Sunday’s gubernatorial elections, results that
prompted allegations of fraud
from the opposition coalition.
Moments after the electoral
council’s televised announcement, state television carried
images of Mr. Maduro, holding
his wife’s hand and flanked by
several of the more powerful
members of his government,
walking down a narrow lane
outside the presidential palace, smiling and waving.
“It’s another victory!” Mr.
Maduro said, holding a microphone. He said turnout
reached 61%, “a record unimaginable” in Europe or in
neighboring countries. He
stressed that the Trump administration, which has called
his government a dictatorship,
needed to take note.
The opposition coalition,
Democratic Unity, said it
doesn’t recognize the outcome
and will in the coming days
announce a strategy in response. “This is a very grave
MIGUEL GUTIERREZ/EPA/SHUTTERSTOCK
BY JUAN FORERO
AND ANATOLY KURMANAEV
Carlos Ocariz, center, an opposition candidate for governor of Miranda state, left a polling station in Caracas’s Petare neighborhood on Sunday.
moment for the republic,” opposition spokesman Gerardo
Blyde said.
The results were at odds
with polls that showed the opposition could expand its hold
on governorships from three
to as many as 18 states if the
participation rate reached
60%.
Polls have shown that Mr.
Maduro is deeply unpopular,
with Venezuela suffering a
grinding economic meltdown
marked by food shortages and
the world’s highest inflation.
The International Monetary
Fund released a recent report
saying the country “remains in
a full-blown economic, human-
itarian, and political crisis
with no end in sight.” By 2018,
the IMF said, the country’s
economy will have contracted
by 35% from 2014.
“With such high participation levels, the manipulation
of results is too obvious,” said
Eugenio Martinez, an electoral
system expert at Caracas’s
Catholic University. “Now the
challenge for the opposition
will be to prove it.”
Nicolas Toledo, pollster at
Caracas-based Consultores 21,
said the results verged on the
statistically impossible. “Every
single political poll done by
anyone in the last three years
would have to be wrong,” he
said.
Electoral authorities didn’t
immediately respond to a request for comment on the opposition’s fraud allegations. Earlier
Sunday, Mr. Maduro said Venezuela had the most secure and
tamper-proof electoral system
in the world.
Mr. Maduro said that progovernment candidates had
taken 54% of the vote to 45%,
with the electoral council still
counting votes in the large eastern state of Bolivar, the only
state where a clear winner had
not been declared as of late
Sunday. Sounding defiant, he
warned that jail could await
some of his opponents.
“Whoever passes the line,
justice,” he said. “I won’t accept
coup-plotting governors.”
Though there was no immediate comment from the U.S.,
both the Trump administration
and the European Union have
sharply criticized what diplomats call Mr. Maduro’s increasing authoritarianism.
The European Union is
working on a package of sanctions against the government
here, a move that is favored
by Spain, France and the U.K.,
officials say. The U.S. has already sanctioned a range of
high-ranking Venezuelan officials for alleged corruption
and human-rights violations.
—Sheyla Urdaneta in
Maracaibo, Venezuela,
contributed to this article.
CHINA
Producer Prices’ Rise
Fastest in Six Months
Producer price inflation accelerated to a six-month high in September as a construction boom
showed no signs of abating and a
government crackdown on air pollution triggered fears of winter
shortages and jumps in commodity prices. PPI rose 6.9% in September from a year earlier, compared with a 6.3% rise in August,
the statistics bureau said.
Consumer inflation rose 1.6%
in September from a year earlier,
compared with a 1.8% gain in
August, the National Bureau of
Statistics said, on renewed
weakness in food prices.
Food prices declined 1.4%, after
dropping 0.2% in August. Nonfood
prices grew 2.4%, compared with
2.3% growth in August.
The reading matched a 1.6%
gain forecast by economists polled
by The Wall Street Journal.
China’s economy is expected to
grow 7% in the second half of
2017, the central bank governor
said, defying economists’ expectations for a slowdown.
—A WSJ Roundup
KYRGYZSTAN
Ex-Prime Minister
Seen Leading Ballot
Former Prime Minister
Sooronbai Jeenbekov appeared
set for a surprise outright victory
in Sunday’s presidential election,
preliminary results showed.
According to data published
by the central election commis-
sion, Mr. Jeenbekov had secured
about 55% of the vote based on
1.6 million ballots counted.
Mr. Jeenbekov’s main opponent, oil tycoon Omurbek Babanov, was well behind with 34%
of the votes counted, according to
the same preliminary data. Both
men are considered pro-Russian.
Citing pre-election polls, observers had expected that none
of the candidates would clear the
50% threshold needed for outright victory, and had predicted
that a runoff would be necessary.
—Reuters
VLADIMIR PIROGOV/REUTERS
WORLD WATCH
Voters cast ballots in the Kyrgyz village of Kyzyl-Birdik Sunday.
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THE WALL STREET JOURNAL.
Monday, October 16, 2017 | A11
WORLD NEWS
Austrians
Put Faith
In the Right
Austria’s right-wing parties
made strong gains in parliamentary elections on Sunday,
after a campaign in which the
main contenders competed
with tough stances on immigration.
The conservative People’s
Party, led by the country’s rising political star, 31-year-old
Sebastian Kurz, won 31.6% of
the vote, according to the preliminary official results, which
exclude postal votes. The farright Freedom Party won 26%,
close to the party’s best result
ever in 1999.
The left-leaning Social
Democrats, who led the departing Austrian government
in a coalition with conservatives, were set to win 27.1%,
putting them in second place.
Two other parties cleared the
4% threshold for winning seats
in parliament, according to the
projection, while the Greens
were hovering around the
threshold.
Mr. Kurz, who ran promising a crackdown on immigra-
Communities with large migrant populations ask ‘Who is integrating whom?’
BY ANDREA THOMAS
tion and a shake-up of Austria’s political establishment,
is now the favorite to form the
next government, possibly in
coalition with the Freedom
Party.
Mr. Kurz wants to cut social
benefits for refugees, to restrict access to the welfare
state for workers from other
European Union countries, and
for the EU to send migrants
rescued while crossing the
Mediterranean to asylumseeker processing camps in
North Africa.
“Today is a strong mandate
for us to change this country,”
Mr. Kurz told supporters on
Sunday evening. He said it was
too early to discuss coalitions.
The contest has displayed
some of the main trends of
Europe’s elections in 2017, including fear of large-scale immigration from Muslim countries, disillusion with longtime
political incumbents, the decline of established center-left
parties, and the efforts by traditional parties to deflate public support for populist radicals.
Right Rising
Right-wing parties made gains in Austria’s election amid immigration angst
Party
Results
People's Party (ÖVP)
Center-right
Social Democrats (SPÖ)
Center-left
Freedom Party (FPÖ)
Far-right
5.1
New Austria (NEOS)
5.0
Center-left
4.3
Pilz List*
Didn’t exist
Left
3.9
Greens
Left
Didn’t run
Team Stronach
5.7
Right
4% needed to enter parliament
31.6%
2017
2013
24.0%
26.9
26.8
26.0
20.5
*Split from Greens
Note: 2017 data with
99.6% counted
12.4
Source: Austrian National Council (2013); ORF.at (2017)
Pct. pt.
Change
7.6
0.1
5.5
0.1
4.3
-8.5
-5.7
THE WALL STREET JOURNAL.
SALZGITTER, Germany—
Late this summer, Nadine
Langer took her six-year old
to her first day at school.
The girl was one of two
Germans in her class, she
said, amid 20, mostly Syrian, refugees.
“I am not against foreigners,” said Ms. Langer, 41.
“But there is a point where
we have to wonder who is integrating whom.”
Germany’s 2015 refugee
crisis has largely disappeared
from the headlines. But in
this and other midsize towns,
it is continuing to unfold,
putting communities under
stress, pressuring local coffers and feeding concern
about safety, jobs and the
quality of education.
Some 140,000 asylum
seekers have entered Germany this year—a sharp drop
from the 1.2 million who arrived in the past two years.
But in places such as Salzgitter there is a sense that the
government, having housed
and fed the newcomers, is
failing in the longer-term effort to integrate them into
German society.
Conservatives for years
have said that refugees, a
majority of whom settle permanently in the country,
must learn German values, a
concept known as Leitkultur.
Many here say they are
proud of their town’s tradition as a refugee haven. But
as their numbers rose
sharply last year Salzgitter
took the unusual step of requesting a moratorium on
new arrivals.
“The established parties
lived in a bubble. They said
everything was fine, closed
their eyes to reality and
didn’t see people’s concern,”
said mayor Frank Klingebiel.
Mr. Klingebiel hails from
the conservative Christian
Democratic Union. But his
concerns transcend political
lines. It was Stephan Weil,
ANDREA THOMAS/THE WALL STREET JOURNAL
BY MARCUS WALKER
Refugees Strain German Towns
Andrea Bernhof works with Syrian refugees Eva, center, and Deliana, right, at a Salzgitter kindergarten.
the left-leaning state premier
who sought re-election on
Sunday, who greenlighted the
ban on further refugees moving to Salzgitter, which took
effect this past week.
With about 5,700 mainly
Syrian refugees among
106,000 residents, the highest proportion in the country,
Salzgitter is an outlier. But
several other communities,
from Wilhelmshaven in the
north to Hof in the south are
also struggling.
In Salzgitter, a pre-existing
Syrian community and a glut
of affordable housing drew
over 2,000 refugees last year
and nearly 1,000 this year,
leaving a clear imprint on the
town’s district of Lebenstedt.
Nour Alwadi, a 25-year-old
from Damascus, arrived last
year with his brother and his
wife, Asma. They now have a
9-month-old baby. His parents joined him in Salzgitter
five months ago.
“We moved to Salzgitter
because there are already
many Arab and Turkish migrants here, we have friends
here,” said Mr. Alwadi. “The
people here are nice. We can
attend mosques here.”
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Conservatives’ Loss
Is Blow to Merkel
BERLIN—Angela Merkel’s
conservative party lost in state
elections Sunday, marking a
setback for the German chancellor ahead of this week’s coalition-formation talks, according to early estimates.
Ms. Merkel’s Christian Democrats won 34.3% in the western state of Lower Saxony,
placing second behind the leftleaning Social Democrats,
which won 37.1%, according to
estimates by public-sector
broadcaster ZDF based on exit
Many of those born or
growing up in Salzgitter say
they want to help refugees
but that the influx has become too big to handle. Concerns range from the impact
on schools to rising welfare
costs, crime, and a diffuse
sense that the local culture is
becoming diluted, defeating
the purpose of integration.
A national school report
released Friday showed a
polls and initial results.
National polls published by
Emnid institute earlier Sunday
put the conservatives at 31%
support nationally, the lowest
in six years. The institute had
polled 1,960 people between
Oct. 5 and Oct. 11 for the Bild
am Sonntag newspaper.
“The migration crisis is the
reason,” said Tilman Mayer,
professor of political science at
Bonn University. “Ms. Merkel is
no longer undisputed…people
get nervous about her future.”
The Social Democrats’ win
was partly due to the popularity of incumbent State Premier
Stephan Weil, Mr. Mayer said.
—Andrea Thomas
correlation between rising
numbers of migrant schoolchildren and a deterioration
in academic performance. In
2016, the share of foreign
fourth-graders rose by onethird to 34% from 2011, according to the education
ministry, while the number of
children who passed standard writing requirements
dropped to 55% against 65%
five years earlier.
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CAR-0617-05322
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A12 | Monday, October 16, 2017
* ****
THE WALL STREET JOURNAL.
IN DEPTH
Sgt. Brandon Cutting, with
the Sonoma County Sheriff’s
CHEFS
Continued from Page One
have on hand a Slim Jim meat
stick. Mr. Welch sliced up the
convenience-store staple and
mixed it in with the chicken
and tomato sauce.
“I looked over and saw the
Slim Jim and said ‘hey, why
not!’ I cut off the hard part
and used the inside. It had the
spice,” he said.
Mr. Welch’s kitchen includes a George Foreman grill,
an electric skillet, a rice
cooker that is also used for
frying meat, and a Crock-Pot
with a customized Velcro rig
to keep the lid in place. He is
thinking of investing in a
bread maker.
Jacqueline Rocha, a trucker
based near Fort Lauderdale
who drives and cooks with her
boyfriend, has learned that
cooking while driving requires
vigilance. Crock-Pot lids slip,
slopping stew over bunks.
A frozen burrito once
caught fire in Ms. Rocha’s
electric convection oven during a jaunt on the New Jersey
Turnpike. “I look at the door
County, Charles and Sara
Rippey, an elderly couple who
had just celebrated their
75th anniversary, were roused
from sleep at around 10:15
p.m. Sunday by their 23-yearold caretaker, Maria. The fence
around the property in the
Napa hills was engulfed in
flames, family members said.
At 10:19 p.m., she called the
Rippeys’ son, Chuck. “There’s
fire everywhere,” she said. He
told her, “Drag those guys out
of the house any way you can.”
Maria struggled to get Ms.
Rippey, 98, who had had a
stroke five years ago, out of
bed and into a wheelchair. The
fire had knocked out the power,
so neither the electric bed lift
nor the electric garage-door
opener worked.
Maria called Chuck Rippey
back in hysterics. She fled the
house and tried to flag down a
passing car for help, but it
didn’t stop.
From outside, she watched
the windows in the home explode and the roof collapse.
Charles and Sara Rippey were
still inside. An emergency
worker found Maria and took
her to the hospital.
“For Maria to even escape
with her life and not have the
roof fall in on her—she stayed
there very heroically trying to
get everybody out,” Chuck
Rippey, 69, said. “She didn’t
have time enough, almost, to
even get herself out.”
others around them off Tomki
Road—were destroyed.
Mary and Kim Monroe, Eli’s
parents, had been on the property, nicknamed Moon Dance
Ranch, for 38 years. They are
retired schoolteachers and
lived in the Sky House, a home
built by friends with recycled
redwood. A yurt called Moonburger Delight and the Sun
Cabin housed friends and family.
All of the watercolors Mrs.
Monroe had painted over the
years are gone, as are her husband’s guitars and African
drum collection. “You just let it
go,” Mrs. Monroe said.
At the first signs of fire,
their neighbor, Tom Kirsch,
said he didn’t want to leave the
house he had built and lived in,
off the grid, for 22 years. But
his partner, Charlotte Scott,
didn’t waste any time.
She knew what to pack after
a fire scare over the summer:
family jewelry, passports, birth
certificates, a set of clothes for
the children, a few suits for her
job as an attorney. She grabbed
her daughters, ages 3 and 7, her
This month's wildfires in Northern California have so far killed at least
40 people, making them together the deadliest in state history.
YEAR DEATHS
FIRE
COUNTIES
Wine Country*
Napa, Sonoma 2017
Griffith Park
Los Angeles
Tunnel-Oakland Hills Alameda
40
1933
29
1991
25
Cedar
San Diego
2003
15
Rattlesnake
Glenn
1953
15
Loop
Los Angeles
1966
12
Hauser Creek
San Diego
1943
11
Inaja
San Diego
1956
11
Iron Alps Complex
Trinity
2008
10
*Active fire and deaths as of Oct. 15. Includes deaths from Tubbs, Pocket, Nuns and Oakmont,
Medicino, Atlas and Cascade fires.
Source: California Department of Forestry
THE WALL STREET JOURNAL.
and Fire Protection
Bryce Enderlin photographed his condo afire in Santa Rosa, Calif.
Office, was among the emergency workers trying to warn
residents closest to danger in
the first hours of the fire.
Around 11 p.m. Sunday, he
knocked on doors in a neighborhood north of Santa Rosa.
The smoke was thick as he
loaded a disabled woman into a
vehicle. Embers glowed all
around. “I’m in a bad spot,” he
said, according to body camera
footage released by the
Sonoma County Sheriff’s Office.
Just after midnight, Sgt.
Cutting asked a dispatcher
what was being done in the
Fountaingrove neighborhood,
where he feared the fire would
head next. “Nothing,” the dispatcher said. Fountaingrove
would sustain heavy damage.
“We’ve got to keep pushing
the evacuations as far west as
we can,” Sgt. Cutting replied
on the recording.
He added, “We gotta be
ready to evacuate all the way
and it was full-blown flames,”
she said. “Smelled up the
truck for probably two or
three hours.”
To avoid that, the two, who
share their sleeper cab with
three small dogs and a greencheeked parakeet, often cook
outside on a folding table with
an extension cord running
back to the cab.
Trucker-chefs swap recipes
online and compete in virtual
contests like the “Chopped
Challenge” run by Big Truck
Cooking, a 12,600-member
Facebook group whose recent
contest entries include slowcooked Thai peanut pork and
skillet shepherd’s pie.
Most novices start with a
lunchbox stove, a sturdy 12volt appliance that heats food
and accommodates a small foil
loaf pan. Truck stops sell them.
Jon Hohman has used his to
prepare chanterelle mushrooms with organic broccoli,
scrambled eggs with okra and
a 3 1/2-pound chicken, seasoned with a can of V8 juice
picked up at a truck stop after
he forgot to buy spices.
Space in his onboard fridge
is tight, so Mr. Hohman favors
foods that don’t need one, like
to 101 in my mind,” referring to
the six-lane freeway that many
residents had always assumed
would act as an effective fire
break. They, too, would be surprised.
Houston Glyn Evans, Jr., and
his wife, Victoria Evans, lived
in a 110-year-old house at the
eastern edge of Santa Rosa,
separated from wilderness areas by the 101 freeway.
Around 10:40 p.m. on Sunday night, Mr. Evans woke his
wife. “Babe, there’s ash falling
from the sky,” he said.
Ms. Evans then went next
door to warn her in-laws, she
said. The two couples stepped
outside to flee as embers
rained. A nearby house caught
fire. The younger Evans couple
drove away.
Valerie Evans, Mr. Evans
mother, returned to her house
to get the dog, who was blind.
Her remains were later found
clutching the animal’s remains.
Over the hills in Napa
Nowhere to go
teenage stepdaughter and stepson and raced out.
Before reaching Tomki Road,
the family was blocked by a
tree engulfed in flames. Ms.
Scott tried a three-point turn,
but the car got stuck. Their 65year-old neighbor pulled up at
that moment, and they piled in
to her car.
There was no place to go but
return the 2½ miles toward the
house. They stopped at Rattlesnake Rock, grabbed a few water bottles and left the car, hiking down a canyon and up a
steep incline toward a service
road.
The group made it to a secluded house, and Mr. Kirsch
found a four-wheeler with keys
in the ignition. He fashioned a
trailer to fit the rest of the
group, and they drove toward
the town of Willits, Calif., their
neighbor’s dog trotting alongside. Passersby in a truck
N.M., says he spends about
$60 a week on groceries for
the truck, far less than the
roughly $210 he figures he
would pay for prepared meals.
Doing his own cooking has
also helped with his weight. Between eating fast food and
downing two liters of soda a
day, he went from 195 pounds to
260 pounds in his first year of
driving, Mr. Dearth said. He is
down to about 235 pounds now.
Almost 70% of long-haul
truck drivers are obese, according to a 2010 survey by
the National Institute for Occupational Safety and Health,
which also found more than
half were smokers.
Some trucking companies
promote cooking as a way to
stay healthy in the sedentary
profession.
Dedicated Systems Inc. in
Green Bay, Wis., installs refrigerators on its big rigs and auxiliary power units so drivers
can run appliances. About half
the drivers in its 70-truck fleet
now cook, said M.J. Hintz, a
company vice president.
Among them are Mike Wolford, who lives full time on the
truck with his wife, Emily
Wolford, an aspiring driver
and head chef of what the two
call the Dedicated Drive &
Dine kitchen.
On a recent afternoon at a
Pilot Travel Center in Newburgh, N.Y., Mrs. Wolford
swung a bag of potatoes down
from the top bunk of their cab
and began peeling, sending
skins flying into a narrow
trash can. Pork loin in a lunchbox stove emitted savory
wafts while a casserole dish of
corn steamed in a soft-sided
portable cooker.
When the truck is rolling,
her countertop is the Wolfords’ prized 62-quart portable
fridge-freezer. It cost them
around $700. This day it held
drinks, sausages and precooked spiced meat, frozen
and rolled tight in Ziploc bags.
Outside, Mr. Wolford set a
picnic table with utensils, condiments, and salad fixings for
them and two guests, then
hopped back up on the passenger-side step to empty a pot
filled with water used to wash
the potatoes.
When the meal was ready the
Wolfords paused to say grace,
then dug in. It was delicious.
—Erica E. Phillips
contributed to this article.
On the first day, fires
advanced the length
of a football field
every three seconds.
As officials struggled to
evacuate in Sonoma County,
another fire about 70 miles
north was ripping through Redwood Valley in Mendocino
County.
Mr. Monroe and his family
got their warning call at 12:48
a.m. Monday and began alerting neighbors. Less than 45
minutes later, they were in
their cars, deciding if he should
turn left toward the dirt road
through the woods. He thought
he could recall the way from
past trips to the Eel River during summers growing up there.
Once they hit the dirt road,
the fire began to recede. A tire
on Mr. Monroe’s mom’s car
blew out after the last creek
crossing, but by then they were
safe.
On Wednesday, they learned
their home—and most of the
AGATON STROM FOR THE WALL STREET JOURNAL
After midnight
Historic Blazes
Emily Wolford, who rides with her husband Michael, checks on a
corn dish she cooked in their truck cab near Newburgh, N.Y.
sweet potatoes and lentils. He
travels with a meat thermometer and rubber gloves.
Mr. Hohman recommends
care when using oven bags,
having once exploded a lunchbox cooker by not pushing all
the air from the bag.
“I tied a knot in the bag and
was going down the road and
hear this pop, pop, pop. It was
the hinges and the latch popping like Jiffy Pop,” he said.
Some drivers started cooking after spending hungry
Out of water
By early Monday, what was
named the Tubbs Fire was
reaching residential neighborhoods in Santa Rosa, the largest
city in Sonoma County.
Cyndi Foreman, 49, had
worked in fire departments for
two decades, and she couldn’t
believe what she was seeing.
Firefighters had set up a command post outside the Kmart
just west of the 101 freeway.
The fire had jumped the freeway, and Kmart was burning.
“You’re talking six lanes of
freeway,” she said. “Every
house around us was on fire,
and there was little to no water
in the hydrants.”
She drove a 4-wheel-drive
truck through Santa Rosa
neighborhoods, yelling at people to run. Houses were on fire.
She told some people to go to
Sutter Hospital, which she
thought would be safe.
The hospital, too, was soon
surrounded by fire. The performing arts center next door
was in flames. Evacuees who
had fled to the hospital had to
take cover again. Out of water
from hydrants, firefighters
pulled from the hospital’s reserve tank.
“We kept trying to pick a
point where we could anchor in
and say, ‘Let’s stop it here,’” Ms.
Foreman said. “Then there way
no way to stop it here. It was
already behind us. We just kept
moving that marker of ‘Let’s
stop it here.’ I can’t count how
many times we had to move
that marker. Every time we had
to move that marker, we had to
get more people out.”
That night as she drove, she
saw a man standing in his underwear in his driveway with a
flashlight, looking dazed. She
backed the truck up and yelled,
“You gotta get out of here. He
couldn’t even respond to me.
He was just completely frozen.”
She threw him in the truck, and
drove him to safety.
Justin Enderlin, a Sonoma
County firefighter, said he received a text message around 3
a.m. from his father, Bryce, in
Santa Rosa: Fires were burning
behind his condo and he was
hosing down his home. Justin
Enderlin then checked his fire
dispatch log. “Ditch the hose,
and get inside and start grabbing your stuff,” he told his father.
His father, Bryce Enderlin,
fled around 3:40 a.m., packing
his mountain bike and financial
records into the car. He went
back to look at his house by
bike less than two hours later.
It was burning.
—Alejandro Lazo, Erich
Schwartzel and Alexandra
Berzon contributed to this
article.
Eli Monroe with the car he used to escape a wildfire that destroyed his family home. Behind the car is his brother, Wes Monroe.
BRYCE ENDERLIN
Continued from Page One
went left.
As they passed a few cars
speeding the opposite way, Mr.
Monroe, 34 years old, recalled
thinking, “Why are we the only
ones going this direction? Are
we digging our own grave?”
The deadliest wildfires in
California history, which have
left more than 40 people dead
and caused more than $1 billion
in damage in one city alone,
continue to burn. Officials said
Sunday that easing winds
would help firefighters. A few
hundred people remain missing.
Together, the fires that began a week ago in Northern
California have surpassed the
state’s fire-death record. They
have been not only the deadliest but spread with unusual
fury. On the first day, fed by
high winds and dry vegetation,
they advanced the length of a
football field every three seconds, Red Cross officials said,
reaching neighborhoods and
business districts long thought
safe.
Thousands of people in the
fires’ path were forced to try to
save not only themselves and
their loved ones, but also property and businesses, in fateful,
often split-second decisions.
Leave now, or wait for an evacuation order? Go back for the
dog? Stay in the car, or run?
Turn right, or turn left?
Their choices would, in many
cases, determine who lived and
who died.
Last Sunday night, as flames
first whipped toward the city
of Santa Rosa, Sonoma County
officials decided against issuing a regionwide phone alert to
evacuate. That choice would
later face scrutiny as the tragedies multiplied.
By 9:26 p.m. Sunday, the 911
calls were coming in every few
minutes. Soon, there were too
many for emergency dispatchers to answer them all.
At 10:51 p.m. the county issued an emergency alert on a
system called Nixle. The warning, however, reached only residents who had signed up to
receive the alerts.
At 11:03 p.m., officials issued
their first mandatory evacuation order. “Our deputies are
en route to assist Fire and CHP
with evacuations,” the notice
said. “911 lines are inundated.
Please only call for immediate
emergencies.” Yet the calls kept
coming, including from people
trapped in burning houses.
Hannah Euser, a spokeswoman for Sonoma County,
said officials decided not to
send a Wireless Emergency
Alert, which would have gone
to every cellphone in the area.
“Emergency managers noted
potential risks of these types of
alerts causing clogged roads
and unnecessary panic, making
it hard for those who are in the
most significant danger to get
out safely,” Ms. Euser said. “We
chose the best tools available
to ensure residents who were
in the most significant danger
had the safest path possible to
get out.”
Officials said they planned
to analyze the decision after
the fires were over. For now,
they said, they are focused on
protecting people from further
harm.
ERIC KAYNE FOR THE WALL STREET JOURNAL
FIRES
helped them the rest of the
way.
Mr. Kirsch then returned to
protect his house. By Monday afternoon, surrounded by a
towering wall of flames, he
said, he considered jumping in
a nearby pond. He took 10
steps,
then
turned
back. “Something inside me
clicked and I decided to stay,”
he said.
All night, he doused small
fires with three hoses until the
water tank ran dry. By then, the
fire had retreated, and Mr.
Kirsch’s house was still standing.
“It seemed paramount to
save that place,” he said. His
victory that night, Mr. Kirsch
said, was “one of the highlights
of my life.”
hours waiting to load or unload in remote locations.
“You could sit in a truck for
three days with a bag of crackers between two people,” said
Kym Pagh, who works as a
team driver with her husband,
based near Russellville, Ark.
They are saving up for a tailgate-sized smoker they plan to
stow on the metal catwalk between the trailer and the cab
of their truck.
Alex Dearth, a long-haul
driver from Albuquerque,
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GREATER NEW YORK
BY MELANIE GRAYCE WEST
Organizations working with
AIDS and HIV patients are a
well-established presence in
New York City. But as infection
rates have dropped and improved medicines have enabled
people with the virus to live
longer, some groups are adapting their service models and expanding their reach, taking on
new health issues from heart
disease to heroin addiction.
Until recently, Manhattanbased nonprofit Alliance for
Positive Change was known as
the AIDS Service Center NYC,
with a mission to provide New
Yorkers with HIV prevention,
treatment and support services.
Sharen Duke
of Alliance for
Positive
Change, which
has increased
the scope of
its work.
HOLLY PICKETT FOR THE WALL STREET JOURNAL (2)
The Alliance, founded 27
years ago, still does that work.
But in the past year, it also took
over the operations of the
Lower East Side Harm Reduction Center, another decades-old
organization focused on reducing the spread of HIV and AIDS
among injection drug users.
As part of a total expansion,
the nonprofit now helps people
with drug addiction and mental
illness, as well clients with
chronic diseases like hepatitis,
diabetes and heart disease.
Roughly half of the Alliance’s
5,000 clients don’t have HIV,
though almost all are at high
risk for contracting the virus.
“Organically, we began to
address and learn about these
other chronic health conditions,” says Alliance Chief Executive Sharen Duke. “We took
our HIV model of care and ex-
panded it to address other
chronic conditions.”
Ms. Duke says the organization, which has an annual budget of $22 million, decided to
broaden its offerings after looking at the direction of healthcare finance and delivery after
New York’s recent redesign of
Medicaid, which focuses on
care coordination instead of fee
for service.
The move is part of a larger
shift among New York City nonprofits “to look at the whole
person,” says Allison Sesso, executive director of the Human
Services Council of New York,
an advocacy organization for
nonprofits.
The Staten Island Aids Task
Force changed its name in 2004
to the Community Health Action of Staten Island and widened its offerings to include
services such as insurance enrollment and health screenings.
In 2013, CitiWide Harm Reduction and Bronx AIDS Services
merged
to
become
BOOM!Health, adding a variety
of social services for low-income residents in the Bronx.
Jeffrey Reynolds, vice chairman of the New York State Aids
Advisory Council, noted that
this follows a statewide trend.
As new infection rates dropped,
legacy HIV and AIDS organizations have been changing their
names and broadening their
operations, transitioning into licensed primary-care centers or
mental-health and substanceabuse clinics.
Even as organizations have
evolved, many practitioners say
they see parallels between the
AIDS crisis of the 1980s and the
current surge in heroin use and
related deaths.
“Part of it is that if you
lived through that epidemic
the first time, you promise
yourself ‘Never again,’ ” says
Mr. Reynolds. “Well, ‘Never
again’ is now.”
An intake and assessment coordinator, left, and an intern at
Alliance for Positive Change at its Lower East Side facility.
FROM LEFT: PETER FOLEY FOR WSJ; RACHEL HONIG CAMPAIGN; YANA PASKOVA FOR WSJ
AIDS Nonprofits
Expand Reach
As Infections Ebb
Council candidates, from left, Democrat Keith Powers, Rachel Honig running on the Liberal Party line, and Republican Rebecca Harary.
City’s Center Up for Grabs in Race
BY MIKE VILENSKY
An open City Council seat
representing the heart of New
York City will test the politics
of one of Manhattan’s few centrist areas.
Many neighborhoods in the
Fourth District, which hugs
Manhattan’s east flank from
14th to 98th streets and
stretches into Midtown, chose
Republican Joseph Lhota over
Democrat Bill de Blasio for
mayor in 2013, then Democrat
Hillary Clinton over Republican
Donald Trump for president in
2016.
“The district’s voters really
prize independence,” said Eva
Moskowitz, the area’s former
Democratic councilwoman who
now runs Success Academy
Charter Schools. She pointed to
her work as a councilwoman
holding hearings on teachersunion contracts: “In virtually
any other district in the city, I
would have…become roadkill
for that.”
Voters will head to the polls
Nov. 7 to fill term-limited Councilman Daniel Garodnick’s seat,
offering candidates a chance to
represent New York’s central
business district and some of
its most iconic neighborhoods,
including Times Square.
“When most people think of
things in New York City, they
are thinking of things in District
Four,” said Rachel Honig, a businesswoman running a thirdparty race for the seat after losing the Democratic primary.
The outcome won’t change
control of the 51-member
council, which currently has
three GOP members. But Republicans hope the seat is a
chance to pick up power, and
Democrats hope it reaffirms
their dominance.
The GOP candidate, Rebecca
Harary, a 54-year-old founder
of two nonprofit schools for
students with learning disabili-
Psst, Spy Attraction Headed to NYC
ADJAYE ASSOCIATES
BY CHARLES PASSY
New York is getting a spy
attraction of its own.
Spyscape, which bills itself
as a spy museum and experience, is slated to open in December, said officials with the
project. It will be located in
Midtown Manhattan at 55th
Street and Eighth Avenue.
Archimedia, a Britishbased private investment
group, is developing
the 60,000-squarefoot project, which
will be spread over
two floors. The attraction will feature seven main
galleries devoted to
different key aspects of espionage,
such as deception,
hacking and cyberwarfare.
But just as important to
Spyscape’s concept, say officials, is the participatory aspect. Visitors will get to play
James Bond through such activities as encoding and decoding messages.
“It’s truly experiential and
personalized in a way no
other museum is,” said Shelby
Prichard, Spyscape’s chief of
staff.
Ms. Prichard wouldn’t
specify the exact cost of creating the attraction, but said
the budget was in the “tens of
millions of dollars.”
Also behind the project is
Adjaye Associates, the firm
that designed the National
Museum of African American
History & Culture in Washing-
A rendering of a gallery at
Spyscape, which is opening in
Midtown later this year.
ton, which opened last year.
The spy attraction isn’t
staking entirely new ground.
In Washington, the International Spy Museum has established itself as a major draw,
attracting more than nine
million visitors since its
opening in 2002. To meet demand, the museum is planning on moving to a new
space in the district that is
more than double the size of
its 65,000-square-foot home.
The Washington museum’s
success and the rise of the
New York attraction speak to
the fact that espionage is a
topic of great relevance and
fascination, say museumindustry insiders.
Spying “certainly has
the cool factor,” said
Susie Wilkening, a Seattle-based museum
consultant.
But if Spyscape
faces any challenge, it
may be in terms of pricing. Unlike most museums, the attraction will be
run as a for-profit institution, and it plans to charge
$39 for a standard adult admission.
That would put Spyscape
in a far pricier category than
many New York museums, including some that have a paywhat-you-wish policy.
Ms. Prichard said she
didn’t think the cost would be
a deterrent for visitors. “We
think it’s a fair value for this
experience,” she said.
Winner to Inherit
A Packed Agenda
Whoever wins the open City
Council race representing Midtown Manhattan will take on
Councilman Daniel Garodnick’s
work in the area.
His portfolio includes shepherding a plan that passed the
council earlier this year to rezone the East Midtown business district, clearing the way
for 13.4 million square feet of
new and redeveloped office
space while tapping developers
to pay for public improvements.
Mr. Garodnick’s agenda also
includes a push to partially
ties, has styled herself a socially liberal problem-solver.
The Democrat is Keith Powers, a 33-year-old former state
legislative aide and lobbyist
who won a nine-person primary
and has touted his deep roots
in the area.
Ms. Honig is running on the
Liberal Party line, saying she
will be a check on the mayor
and the president.
As in the rest of Manhattan,
Democrats have a vast registration advantage. Mr. Powers is
the front-runner, aided by the
backing of New York’s labor
unions and an endorsement
from Mr. Garodnick, a Democrat.
Republicans are hoping Upper East Side voters will turn
out against the mayor, while
Democrats are hoping the district will turn out against the
president.
Deborah Coughlin, a conservative activist who runs a Republican club on the Upper East
Side, said residents remember a
late city response in the neighborhood to a 2014 blizzard.
“That did not go unnoticed,”
she said.
repeal a city tax on commercial
rents throughout Manhattan
to help buoy the struggling
retail sector. And he has been
navigating the logistics of
new crowds, congestion and security around Trump Tower
since President Donald Trump’s
election.
Democrat Keith Powers said
he is running partly to carry on
Mr. Garodnick’s legacy. He supports the rezoning legislation
and the tax-repeal plan. He
wants to push forward with a
proposal to create a dedicated
team of city officials to manage
transit and security around
Trump Tower.
Republican candidate Re-
becca Harary has been more
skeptical of Mr. Garodnick’s
legacy. She said she wants
more commitments to public
improvement from the developers involved in the rezoning
deal. She also said she wants
a total repeal of the tax on
commercial rents over three
years instead of a partial repeal, and she said the federal
government should pay for all
Trump Tower security.
A Liberal Party candidate,
Rachel Honig, said she largely is
supportive of the rezoning plan
but wants to monitor it carefully, and supports Mr. Garodnick’s tax-repeal plan.
—Mike Vilensky
Mr. de Blasio declined to
comment but said at the time
that more should have been
done to help the area dig out
earlier.
On a recent morning at the
corner of Park Avenue and 77th
Street, Ms. Harary handed out
pamphlets that described her in
large letters as “pro-LGBTQ+”
“pro-Israel,” and “pro-NYPD.”
Town-Peter Cooper Village, the
25,000-person residential development where both of them
live.
Many people already knew
them from the neighborhood,
which has maintained a working-class population and several
generations of families thanks
partly to rent-control laws governing some of the units.
“It’s familiar territory to
me,” Mr. Powers said in an interview at a local bagel shop.
Though the district used to
be home to Republican representatives including state legislator Roy Goodman, Democrats have increased their
numbers here, even as the district largely supported Mayor
Michael Bloomberg, who ran
as a Republican and then an
independent.
Mr. Powers said Mr. Trump’s
presidency will boost support
for Democrats, both because of
the liberal sentiments in New
York City and the logistical
stresses around Trump Tower,
which is in the Fourth District.
“New York City has to be at
the forefront of the fight
against him,” he said.
Voters head to the
polls Nov. 7 to fill
the Fourth District’s
City Council seat.
When a passerby asked her
to describe her top issues, her
first was “stopping de Blasio.”
The person nodded.
“I try to remind them de Blasio is the one who affects their
everyday issues, not President
Trump,” she said afterward.
Some 40 blocks downtown a
few days later, Mr. Powers and
his father were shaking hands
with residents of Stuyvesant
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A12D | Monday, October 16, 2017
NY
THE WALL STREET JOURNAL.
* *
GREATER NEW YORK
GREATER NEW
YORK WATCH
NEW JERSEY
Bear Kill Fell Sharply
In This Year’s Hunt
FROM TOP: MAQE; SILVERSTEIN PROPERTIES
Far fewer black bears were
culled during this year’s hunt compared with last year’s, New Jersey
wildlife officials said.
Preliminary data show 241 bruins were killed during the six-day
hunt that concluded Saturday.
Hunters killed 562 bears during
last year’s hunt.
The just-completed hunt took
place in eight counties, but more
than half of the overall kills occurred in Sussex County.
The number of bears culled
could increase slightly because
some hunters may not have been
able to bring their bears to the
check-in stations before they
closed Saturday night.
Officials say the annual hunts
help control the black bear population and minimize run-ins with
humans. Opponents say the hunts
are inhumane and unnecessary.
—Associated Press
Once-Exclusive Office Lobbies Open Up
BY KEIKO MORRIS
For the past century, Manhattan office lobbies have
served as little more than
sterile passageways between
the sidewalk and the desks
above, with building attendants shooing people along to
discourage loitering.
Now some landlords are
embracing it.
A proposal by Silverstein
Properties Inc. to restore and
upgrade its 102PROPERTY year-old Equitable Building in
the
Financial
District includes opening up
the lobby space of the fullblock beaux-arts skyscraper to
the public. Guests will be able
to walk through an enclosed
streetscape from block to block,
taking in the architecture and
new dining venues in the skyscraper at 120 Broadway.
“There’s a different mindset of what lobbies can be,”
said Carlos J. Cardoso, a part-
ner at Beyer Blinder Belle Architects & Planners LLP, which
is designing the restoration
and improvement project.
“The question is, how do you
engage the public and how do
you bring the outside in?”
While Manhattan landlords
are only beginning to explore
new functions for entrances
and lobby spaces, with some
adding a cafe or tenant-only
lounge space, owners in other
cities such as Minneapolis,
Milwaukee and Oklahoma City
have gone further, turning private ground-floor spaces into
public gathering spots.
Some of these ground-floor
and lobby designs include
couches and cushioned chairs
with throw pillows, fireplaces,
cafes and cafe seating. They
have become work destinations not only for employees
in the building but those in
surrounding buildings.
“There is the old-world
view that these things should
be exclusive only to tenants,”
A rendering, top, of the Equitable Building at 120 Broadway, above,
after a renovation that would make it more accessible to the public.
said Tony Layne, principal at
architecture and design firm
Perkins+Will. “But exclusivity
is trumped by vibrancy and
access and hipness that comes
with this.”
Competition in the office
market has spurred owners to
differentiate buildings with
amenities and new approaches
to creating social spaces, ar-
chitects and real-estate executives said.
At the same time, companies are placing an emphasis
on the workplace experience
to attract and keep employees,
offering internal settings such
as living-room areas as well as
outdoor gathering spaces.
A few years ago, Perkins+Will redesigned the first-
and second-floor lobbies and
underused retail space in the
1.5 million-square-foot Capella
Tower in Minneapolis. Now
the space offers a variety of
meeting nooks with big
couches, reading chairs, bar
stools and long tables. The
space draws tenant employees
and workers in nearby buildings, Mr. Layne said.
Architecture firm Pickard
Chilton has designed headquarters buildings for companies such as Milwaukee’s
Northwestern Mutual Life Insurance Co., making public
space within the buildings a
priority, said William Chilton,
a principal of Pickard Chilton.
“They want the public to be
in the building because it just
gives it an energy,” Mr. Chilton
said. He pointed to New York’s
Grand Central Terminal. “One
of the most magnificent things
about Grand Central other
than the magnificence of the
space are the people walking
through it.”
NEW YORK
Schumer Presses
FDA on E-Cigarrettes
Sen. Chuck Schumer called on
the federal government to reverse a decision to delay the
regulation of e-cigarettes.
The Democrat said Sunday
that the Food and Drug Administration should reconsider its decision announced earlier this year to
put regulating electronic cigarettes
on hold. FDA Commissioner Scott
Gottlieb the delay would give the
agency time to determine how ecigarettes fit into its overall strategy for tobacco regulation.
According to the surgeon
general, in 2015 more than three
million middle- and high-school
students said they had used ecigarettes in the past month.
—Associated Press
BY MARA GAY
Michael Grimm, a former
congressman from Staten Island who recently served time
in prison for tax fraud, faces a
tough battle to retake his old
seat.
But he may have at least
one thing working in his favor
in the Republican primary:
Staten Island, a place that, like
Mr. Grimm, has always gone its
own way.
“I do see myself as the underdog but when you really
look at the constituency, I’m
not so sure that I am,” he said.
U.S. Rep. Dan Donovan, who
currently holds the seat, is
well-liked on Staten Island, the
only Republican-leaning borough in New York City. The
district, which includes a small
piece of southern Brooklyn,
voted for former President Ba-
rack Obama twice, but went
57% for President Donald
Trump. Mr. Donovan, who supported Mr. Trump but voted
against a measure to repeal the
Affordable Care Act earlier this
year, is seen as a moderate.
Mr. Donovan said he had
served Staten Island for two
decades as a district attorney,
prosecutor and deputy borough
president, helping close the
Fresh Kills landfill, which was
unpopular in the borough, and
recover from the Sept. 11 terrorist attacks. “I think the
choice is between that person
and someone who has lied to
the community,” he said.
Though Mr. Donovan has
locked up most of the establishment support among Republicans in New York, Mr.
Grimm, who served in the Marines and used to be an FBI
agent, has long had a strong
base of support on Staten Island. During his last campaign
in 2014, voters sometimes
rushed out of their homes to
thank Mr. Grimm for helping
family members out of their
flooded homes during superstorm Sandy.
Mr. Grimm has
styled himself an avid
Trump supporter
and a firebrand.
Where Mr. Donovan is a
consensus-builder, Mr. Grimm,
who first won office in 2010
amid the fervor of the teaparty movement, has styled
himself an avid Trump supporter and a firebrand. He
went to prison in 2015 after
pleading guilty to tax fraud.
Mr. Grimm admitted to underreporting income from a restaurant he owned and paying
workers off the books. He was
sentenced to eight months.
Some in Staten Island politics, including several of Mr.
Donovan’s supporters, say they
fear he may not be able to hold
on to the seat amid a wave of
Trump support that has swept
over the borough.
Mr. Grimm has drawn support from former Trump
strategist Steve Bannon, and
hired Michael Caputo, a former
Trump campaign aide, to work
on his campaign. But even before Mr. Trump burst onto the
stage as a presidential candidate, Mr. Grimm had cultivated
a reputation for making bombastic remarks that thrilled
supporters and made detrac-
SPECIAL EDITION 2017
HÄSTENS TRIBUTE
Limited time only
JAN SOMMA-HAMMEL/STATEN ISLAND ADVANCE/AP
Freed Ex-Lawmaker Counts on Staten Island in His Comeback Attempt
Former Rep. Michael Grimm is
running for his old seat.
tors grimace. In January 2014,
the then-congressman was
caught on video threatening to
throw a reporter off a balcony
inside the U.S. Capitol building.
“I’ll break you in half,” he said.
“Like a boy.” Mr. Grimm later
apologized, and months later
won re-election despite having
been indicted.
Mr. Grimm sees parallels between himself and the president. “I was laughed at when I
first ran,” he said. “They said I
wouldn’t raise any money.
They said I had no chance of
winning. They said all those
things about President Trump,
too.”
Jessica Proud, Mr. Donovan’s campaign spokeswoman,
said Mr. Grimm’s congressional
record wasn’t aligned with the
president’s agenda. She said he
was trying to “ride on Trump’s
coattails.” And she noted that
Mr. Bannon hadn’t formally endorsed Mr. Grimm.
Mr. Grimm said he felt confident about the relationship
with Mr. Bannon. “He shook
my hand, looked in my eyes
and said, ‘I’m going to support
you.’ How exactly he decides to
express that is his business.”
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THE WALL STREET JOURNAL.
CLOCKWISE FROM TOP LEFT: ABC; EVERETT COLLECTION; ABC: KENDRICK BRINSON FOR THE WALL STREET JOURNAL
LIFE&ARTS
TELEVISION
The Sleeper Hit Behind
TV’s New Direction
‘The Middle’ is a model as networks add working-class characters in push for economic diversity
BY JOHN JURGENSEN
ON THE ABC COMEDY “The Middle,” a dad who works at a quarry
explains why he won’t go to career
day at school to one of his three
children.
“If I don’t clock in,” Mike Heck
says, “I don’t get paid. And if I
don’t get paid, you guys are wiping
your butts with junk mail again.”
The Hecks are a sitcom family
that struggles to pay bills and juggle work, school and everyday obligations in Orson, Ind. They arrived on TV eight years ago when
a recession had millions of real
American families reeling. Now
“The Middle” has entered its ninth
and final season with renewed relevance, as broadcasters try to
reach audiences divided along
sharp economic, political and cultural lines.
“We’ve been chugging along
with the same template while the
world around us has changed,”
says Eileen Heisler, co-creator of
“The Middle” with DeAnn Heline,
who adds, “People are paying attention now.”
In recent years ABC broadened
the range of families represented
in its comedies, including “blackish,” “Fresh Off the Boat” and
“Speechless,” featuring a character
with cerebral palsy who can’t communicate verbally.
However, while prioritizing racial and other types of diversity in
the network’s drama lineup, “we
‘The Middle,’ top and right, starring Patricia Heaton and Neil Flynn, has renewed relevance in its last season. It was
created by DeAnn Heline, above left, and Eileen Heisler who met at Indiana University. Below, ABC is reviving ‘Roseanne,’
starring John Goodman and Roseanne Barr, to represent ‘people who feel frustrated because they’ve been left behind.’
might not have done the best job
in terms of the economic differences,” says Channing Dungey,
president of ABC Entertainment.
Now the network is introducing
more working-class characters.
New dramas will feature fewer
people “striding down corridors in
high heels and carrying Prada
bags,” Ms. Dungey says, referring
to the milieu of hit series “Scandal.” For example, a coming
“Grey’s Anatomy” spinoff will be
set in a fire house. And in early
2018, ABC is bringing back a show
famous for mining humor at the
lower end of the income scale,
“Roseanne.”
The eight-episode reboot, starring Roseanne Barr, John Goodman
and other original cast members,
aims to represent “people who feel
frustrated because they’ve been
left behind,” Ms. Dungey says. The
show, which taped its first episode
last week, will be “a little more
strident” in tone than “The Middle,” Ms. Dungey says.
The sweetness of “The Middle,”
however, contributed to the show’s
low-key success as much as its setting. On a typical episode, dental
assistant mom Frankie (Patricia
Heaton) tries to meet the standards of a model family, but gets
hamstrung by her own shortcomings and those of skeptical husband Mike (Neil Flynn) and their
children: loafer Axl (Charlie McDermott), eternal optimist Sue
(Eden Sher) and odd-duck Brick
(Atticus Shaffer).
They go to church on Sunday
but, like the Simpsons, mostly as a
matter of obligation. Teen quandaries like drinking and sex don’t
Monday, October 16, 2017 | A13
come up. The family is strapped
with money problems and unreliable appliances, but they improvise fixes. Occasionally true crises
hit, as when Sue botched her financial aid forms for college last
season.
It’s a show set in the present
that is somehow tinged with nostalgia. The avocado green walls
and outdated furniture in the
Hecks’s home initially led some
viewers to think the show was set
in the 1970s.
That look reflects the Midwest
memories of Ms. Heisler and Ms.
Heline, who grew up in Illinois and
Ohio, respectively. They teamed up
as writers after meeting at Indiana
University. They worked on a variety of shows, including the original “Roseanne,” before selling
“The Middle.” They pitched it as
an ode to “those places you fly
over on your way from somewhere
to somewhere else,” as Frankie
narrates in the first episode.
In 2006, ABC rejected a pilot
episode they shot with a different
set of actors. After the recession
hit, however, the network gave the
producers a second chance, and
picked up the sitcom starring the
current cast.
The show is shot at the Warner
Bros. studio in Burbank, Calif.
Near the facade of the modest blue
Heck home is the office that Ms.
Heisler and Ms. Heline have shared
throughout the show’s run. It’s
decorated with mementos such as
a yellowing newspaper article introducing the series, and a collage
of images—high-school football, a
community barbecue and other
Americana —once used to give
ABC a sample of the show’s look.
The show’s creators say they
chose to end the show while its
following is still strong. Announcing the finale in advance gives
them time to wrap “The Middle”
up on their own terms and revisit
favorite characters, such as an unseemly single mom played by
Brooke Shields, and guest stars including Norm Macdonald. The finale will stay true to the show’s
steady nature, says Ms. Heisler:
“The Hecks are not going to win
the lottery.”
“Modern Family,” which also
launched in 2009, is the more celebrated ABC comedy by far. The
multi-family sitcom has accumulated 80 Emmy nominations and
22 wins, including being crowned
Outstanding Comedy Series five
years in a row. “The Middle” has
been nominated one time—in
2012, for the makeup in an episode
involving a community production
of “The Wizard of Oz.”
Though it doesn’t have a minivan full of trophies, “The Middle”
has been a steady provider for
ABC. It averaged 6.7 million total
viewers in its first season, and 7
million viewers in its eighth season.
“The Middle” has long aired at
8 p.m., kicking off ABC’s primetime lineup, first on Wednesdays
and now on Tuesdays. With no
lead-in series and relatively little
promotion, “We’ve been a cactus,
a self-sufficient little organism,”
Ms. Heisler says.
Occupying a slot after “Wheel of
Fortune” isn’t necessarily sexy, but
it’s where “The Middle” is at
home. “Kids can watch it with
their grandmas,” says Ms. Heline.
Adds Ms. Heisler, “Because cable and [streaming TV] are grabbing other parts of the audience,
broadcast television is trying to be
that hearth it once was.”
ANATOMY OF A SONG | By Marc Myers
AFTER THE CHARLIE DANIELS BAND released “The Devil Went Down to Georgia” in
May 1979, the #1 country single reached #3
on Billboard’s pop chart and won a Grammy.
Recently, Mr. Daniels, 80, the band’s
founder, guitarist, fiddler and lead vocalist—and the song’s co-writer—
looked back on the group’s biggest hit. His memoir, “Never
Look at the Empty Seats”
(Thomas Nelson), will be
published Oct. 24. Edited
from an interview.
Charlie Daniels: In late 1978,
we were pretty far along recording songs for our 10th album, “Million Mile Reflections.”
We were at Nashville’s Woodland
Sound Studios, and our producer
John Boylan had brought along an ingenious Los Angeles engineer named Paul
Grupp. He miked us in a way that cleanly captured all our energy and sound.
John was big on the details. In November
‘78, just as we finished recording most of
the new album, John noticed we were missing a fiddle song. We traditionally included
at least one on each album.
So our road crew moved our gear out of
Woodland and into rehearsal space at Nashville’s Studio Instrument Rentals.
Fiddle songs were important to me and
our fans. They were a bridge from hard
rock to our bluegrass roots.
I never took fiddle lessons as
a child. In fact, I never took
lessons on anything. I learned
to play by ear.
When I began my career
as a professional fiddler
and guitarist in North Carolina in the early 1950s, I
played country music, like
everyone else down there.
Then one day in 1955, a
steel-guitar player came to Gulf,
N.C., and asked to play with the
band I was in. He didn’t have an amplifier, so I took him down to our local music
store and cosigned one for him.
A few months later, he skipped town and
left me with the amp and a bunch of payments. I had nothing to play on the amp, so
I decided to buy a Gibson electric guitar and
Please see ANATOMY page A14
JANET KOTWAS/ZUMA PRESS
HOW CHARLIE DANIELS MADE ‘THE DEVIL’ A HIT
Charlie Daniels performed with his band in December 2013 at the Orleans Arena in Las Vegas.
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 | Monday, October 16, 2017
LIFE & ARTS
WHAT’S YOUR WORKOUT?
Training Continues After the Storm
A pro baseball scout prepares for the Marine Corps Marathon after long days on the road and a hurricane hit his Texas home
BY RACHEL BACHMAN
From spring to early fall, Chuck
LaMar ran in 13 states while
traveling for his work as a Toronto Blue Jays scout and preparing for a marathon. Some of
his top training spots:
Karl Boyes Multi-Purpose National Recreation Trail, Presque
Isle State Park, Erie, Pa.: This
13.5-mile paved route runs the
circumference of the park, a
3,200-acre sandy peninsula that
juts into Lake Erie.
CLOCKWISE FROM TOP: MAX BURKHALTER FOR THE WALL STREET JOURNAL (2); CHUCK LAMAR
AS A TRAVELING SCOUT for the
Toronto Blue Jays, Chuck LaMar
already faced hurdles to training
for his first marathon. Then in late
August, Hurricane Harvey hit his
coastal hometown of Rockport,
Texas.
Mr. LaMar’s family evacuated
inland and their home suffered
significant damage, though it
wasn’t destroyed. They returned to
it a month later.
“I almost feel guilty at times to
be training for a marathon when
there’s so many people in Rockport
who don’t even know where to begin to start their life over,” he says.
Mr. LaMar, 61, isn’t a lifelong
runner, but always wanted to run a
marathon. About two years ago his
daughter Emily pushed him to try
a half-marathon. He did. Then, inspired by his son, Charlie, a Marine, Mr. LaMar aimed for the Marine Corps Marathon on Oct. 22 in
Washington, D.C.
Training has helped burn off
nervous energy, says Mr. LaMar,
who was the Tampa Bay Rays’ first
general manager, working with the
team from 1995 to 2005. From this
summer through early fall he has
run in 13 states, found humor in
early-morning workouts and kindness from strangers in a running
community he calls as tightknit as
baseball.
The baseball games he
scouted—both in the minors and
the big leagues—often kept him up
until 11 p.m. or later. He woke as
early as 3:30 a.m. to avoid running
in the heat. He napped in the afternoon.
When Mr. LaMar was in Gulf
Breeze, Fla., near Pensacola, he ran
into retired Navy pilot Joe Costello, who helps his wife coach the
girls lacrosse team at Gulf Breeze
High School. Mr. Costello agreed
to open the high school track at
5:30 a.m. for Mr. LaMar’s speed
workouts.
“As an airline pilot, I’m always
looking for safe and reliable places
to run overseas,” says Mr. Costello,
now a first officer for United Airlines. The men discovered their
sons were both Marines aiming to
be pilots.
In Fort Myers, Fla., Mr. LaMar
started a run on an elevated sidewalk flanked by deep puddles from
recent storms. About a mile into
his 7-mile run, he came upon a
family of feral hogs.
He could either “take the Marine Corps way” and go straight
ahead, or avoid the animals and
run 6 miles in wet shoes and
socks, he recalls. “I was smart
enough to know that sow’s going
to protect her piglets, so I ran in
the ankle-deep water.”
One day at White Rock Lake
These Runs Are All
Hits for This Scout
Ann and Roy Butler Hike and
Bike Trail, Austin, Texas: This
traces the reservoirs of the Colorado River and is abuzz with runners, walkers and cyclists.
Pensacola Beach Trail, Pensacola Beach, Fla.: “You literally are
running through two sets of sand
dunes,” Mr. LaMar says. From the
Pensacola Beach Bridge to the
Portofino Island Resort and back
it’s a little more than 9 miles.
Fulton Beach Road, Rockport,
Texas: Hurricane Harvey devastated much of the area along this
route in Mr. LaMar’s hometown.
“It’s one of the prettiest 6-mile
runs, easily, on the Texas coast,”
he says.
protein powder, 2% milk and fruit
and mixed it in a blender he brings
on the road. Then he had another
breakfast of fruit, a bagel with
peanut butter and eggs.
Lunch was chicken or fish with
vegetables. Dinner in the ballpark
press room was salad, chicken or
fish, and sometimes pasta. Mr. LaMar vowed not to eat at a concession stand all summer—he loves
hot dogs—and says he succeeded.
He munched on Quest protein bars
instead.
He always had a cookie or a little ice cream after dinner. “My reward for the day!” he says.
Chuck LaMar, a scout for the Toronto
Blue Jays, trains in Rockport, Texas.
He draws inspiration from his son,
Charlie, below, who is in the Marines.
The Gear & Cost
Park in Dallas, after Mr. LaMar had
finished his first-ever 18-mile run,
he lay down, happily spent, on a
patch of grass. A woman happened
upon him and poked him with a
walking stick.
“She thought I was dead,” Mr.
LaMar recalls, laughing. “And
when I woke up, it scared her half
to death.”
The Workout
Mr. LaMar followed a training program designed by Sarah Whipple,
a fitness instructor in Scottsdale,
Ariz., and former distance runner
at the University of Oregon, and
got counseling and advice from his
sister-in-law, Julie Gregory, who
has run multiple marathons.
He did one long run a week,
typically on Monday, with a day
off before and after to rest and recuperate from travel. Twice a week
he did speed workouts that included faster-paced 200- to 800meter runs, often on a track. He
often did a 2-mile warm-up and
cool-down to keep up his mileage.
Twice a week, he did three sets
each of a one-minute plank, 100
sit-ups and 25 push-ups. About six
weeks ago, he started doing that
workout three or four days a week.
The Diet
Mr. LaMar hit the grocery store
when he got to each town for bottled water, bananas and milk, and
requested a hotel room with a
fridge. He ate a banana before runs.
Afterward he made a shake with
Mr. LaMar wears New Balance
1260v6 shoes, which cost $150. On
early-morning runs he ran with a
headlamp, which costs about $40.
He uses a Garmin 235 watch,
which retails for about $330. Its
key feature for Mr. LaMar is that
it lights up each time he’s run a
mile. That’s important, because
he can’t see the watch’s smaller
displays without his reading
glasses.
“The sign of old age is not that
you can’t run a marathon,” Mr. LaMar says. “It’s that you can’t read
your watch while you’re training
for it.”
Continued from page A13
Georgia’s mountains playing his
start a rock ’n’ roll band. I quit
fiddle as free as a whippoorwill’s
playing fiddle, since it didn’t really
call. He winds up in a fiddle contest
fit in.
and wins by playing from the heart.
By 1971, I began recording my
Fired up by Benét’s poem, I
own songs and incorporating a litwrote a lyric about a kid named
tle bit of everything. When we beJohnny who was a great fiddler.
gan playing hard rock, I added the
But I needed something more exfiddle back in where we had the
citing than an ordinary contest.
guitar stuff.
The stakes had to be higher.
In late ’78, once our gear was
So I had the Devil go down to
moved out of Woodland and into
Georgia to challenge Johnny. If
our rehearsal space, we all just
Johnny won, he’d get the Devil’s
started jamming to
gold fiddle. But if
come up with a
he lost, the Devil
song. We didn’t
get his soul.
‘For the Devil’s solo, would
have a title yet.
Johnny accepts the
I played all kinds
The song’s inspichallenge.
ration had nothing
After my verse
of junk to illustrate explaining
to do with Vassar
all of
his soullessness.’
Clements’s “Lonethat, I wrote a chosome Fiddle Blues”
rus lyric: “Fire on
(1972), as some
the mountain, run
people have
boys run /the
claimed. The music for “Devil” was
Devil’s in the house of the rising
all stuff we came up with totally on sun / Chicken in the bread pan
our own. Vassar is one of my favor- pickin’ out dough / ‘Granny does
ite fiddle players, but there was no
your dog bite?’ ‘No, child, no.’”
Those are old square-dance recorrelation between the two songs.
frains. I used to play square
As soon as we knew what we
dances when I started out in
wanted to do with the music, we
North Carolina.
moved back to Woodland and reIn my lyric, Johnny wins the
corded the basic instrumental
contest, and the Devil bows his
track.
head and puts his golden fiddle on
Then I went home and wrote
the ground at Johnny’s feet.
the song’s words. I like to write
The next day, I brought in my
late at night or early in the mornlyric sheet to Woodland and overing, when everything is quiet.
dubbed my vocal with the band
The phrase “the devil went
down to Georgia” just popped into
singing the harmony parts. Then I
my head for the opening line.
had to record the two fiddle solos.
The inspiration for my lyric was
For the Devil’s solo, I played all
Stephen Vincent Benét’s 1925
kinds of junk to illustrate his soulpoem, “The Mountain Whippoorlessness. I made the fiddle solo all
will.” I first read the poem in high
fury and noise, without melody or
school and it stuck with me.
poetry.
It’s about a boy who grows up in
After I finished, Paul, our engi-
MICHAEL PUTLAND/GETTY IMAGES
ANATOMY
Charlie Daniels, in red shirt, and members of his band after being honored at the 1980 Grammy Awards in Los Angeles.
neer, had me put on headphones
and overdub six more fiddle tracks
to illustrate the Devil’s “band of
demons.”
Then Paul and John brought all
seven tracks together as one cohesive solo. When they mixed it,
the Devil’s solo had a wider, angry sound. I was amazed. I had
never worked like that before in
the studio.
We also overdubbed an evil,
devilish hiss. That was keyboardist
Joel “Taz” DiGregorio’s idea. He
ran a guitar pick across the strings
of the studio’s acoustic piano.
Next, I recorded Johnny’s fiddle
solo, which is earthier and more
melodic than the Devil’s—more like
those hoedowns in North Carolina.
After “Devil” was released and
became a big hit, someone told me
that classical violinist Itzhak Perlman was trying reach me.
When I called him back, Mr.
Perlman said, “I just want you to
know that my children and myself
are fans of yours.” He finished by
saying, “I’d like to do something
with you sometime.”
When I got off the phone, I
stood there as if someone had hit
me in the face with a cold mullet. I
just assumed he would have said
to himself, “My gosh, listen to this
guy. He’s horrible.”
We run in different circles, so
we never got a chance to do that.
But the fact that he even knew who
I was shocked me to the bone. As
far as I’m concerned, Mr. Perlman
is the best fiddle player there is.
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.
Monday, October 16, 2017 | A15
FROM LEFT: NATIONAL GALLERY OF ART, WASHINGTON; MUSÉE DU LOUVRE, PARIS/RMN-GRAND PALAIS/ART RESOURCE, NY
LIFE & ARTS
ART REVIEW
Another Side
Of Fragonard
Portraits that serve as compelling displays of the artist’s mythic
powers of invention rather than as identifiable likenesses
BY MARY TOMPKINS
LEWIS
THE RAVISHING portraits
de fantaisie of the French
painter Jean Honoré Fragonard (1732-1806) challenged
his century’s conventions of
portraiture as powerfully as
they showcased the artist’s
extravagant, painterly technique. His elegantly coiffed
and costumed figures, posed
theatrically in the fashionable
masquerade dress known as
à l’espagnole (or Spanish
style) and realized in dazzling, sketchlike strokes, have
long been revered as compelling displays of the artist’s
mythic powers of invention
rather than as identifiable
likenesses. Among his most
beloved works, they have engendered endless speculation
as to their inscrutable subjects, origins and larger role
in Fragonard’s art.
A previously unknown
sheet of sketches from the
artist’s hand, which recently
appeared on the art market,
has shed new light on these
enigmatic paintings. The
drawing, which features ordered, symmetrical rows of
thumbnail sketches of 18
portraits (including a few
canvases yet to be discovered) and annotations by
the artist revealing many of
the sitters’s names, has removed some of the mystery
surrounding such works. It
has also raised questions as
to the painter’s creative process, and even the professional stature he may have
sought as an artist. In the
intimate and exquisite
“Fragonard: The Fantasy
Figures,” an exhibition of 14
paintings and the newly discovered sheet of sketches on
which many of them appear,
Yuriko Jackall, an assistant
curator at the National Gallery of Art, Washington,
draws on groundbreaking
art historical and technical
research to argue anew the
special place of these en-
chanting images in Fragonard’s art.
The National Gallery’s
breathtaking “Young Girl
Reading” ( c. 1769) hangs
deservedly as the centerpiece of the show. The
painting, a subject of recent
scrutiny by the museum’s
imaging scientist John K.
Delaney and the conservator
Michael Swicklik, establishes the documentary significance of the drawing
now known as his “Sketches
of Portraits” for the fantasy
images as a whole.
For example, in the Gallery’s painting the demure
adolescent is shown sitting
in profile with upswept locks
and in an elaborately ruffled
gown while absorbed in
reading the volume she
holds. The dominant yellow
pigment (also known as
Fragonard yellow) that describes her jacket is tempered with delicate touches
of red; along with roseate
tones on her cheeks they
render the image an indescribably eloquent evocation
of blushing, youthful beauty.
In the corresponding sketch,
however, the subject sports
simpler attire and, notably,
turns outward to openly peer
at the viewer. This surprising
discrepancy prompted an Xray of the canvas that revealed the presence of an
earlier version of the motif
hidden beneath the present
painted figure, one that conforms to the drawing in its
full-face pose. Executed in a
more measured, readable
style, the painting would
have made the sitter’s identity far more discernible. The
finding suggests that Fragonard altered a previous (perhaps rejected?) portrait into
a more loosely painted genre
figure that would have had a
broader commercial appeal,
a status enjoyed by many of
the works here on view.
The fantasy paintings
share a number of pictorial
characteristics that allow us
to consider them a cohesive
ensemble, a notion the sheet
of sketches and the exhibition underscore. In each
composition, light streams
in conspicuously from the
left to reveal a half-length
figure (or, in the case of the
so-called Cavalier, a fulllength subject) that dramatically fills the canvas’s generous space. Almost all figures
pose above a wooden ledge
or railing in the foreground,
and were executed quickly
in a bold, wet-on-wet technique that highlights the
painter’s presence over that
of the subject he portrays.
Many canvases share the
same costumes or studio
props, which lend them a
formal and coloristic harmony as a group. The lus-
Jean Honoré Fragonard’s ‘M. de La Bretèche’ (c. 1769), above, and
‘Young Girl Reading’ (c. 1769), left
trous yellow jacket with an
elaborate ruff worn by the
figure we can now identify
as the financier Louis de La
Bretèche, for example, appears in at least two of the
other male portraits on
view, its radiant tones, like
those in the “Young Girl
Reading,” illuminated by
sunlight pouring in. Finally,
Fragonard’s use of standardsize canvases, rather than
the made-to-measure supports his commissioned portraits often demanded, again
suggests that he must have
envisioned these unique
works as a deliberate and
purposeful series.
Fragonard’s fantasy paintings were greeted with adulation and awe by a handful
of his vanguard contemporaries, and are believed to
have been forged in a burst
of creative prowess in the
years surrounding 1769, an
important juncture in the
painter’s career. By then the
37-year-old artist had retreated from the brutally
competitive atmosphere of
the Parisian art world and
its murderous critics. Paint-
ing now not for the official
Salon but for sophisticated
private collectors who valued his bold, virtuoso technique and images as vivid
expressions of his brilliance,
the fantasy paintings may
well represent, as the exhibition argues, Fragonard’s
liberating path and future
away from the strictures of
the academy. And while fans
of his art may be disconcerted by the identities we
can now firmly attach to
some works (it is particularly painful to give up
Denis Diderot, the great
critic and philosopher of the
Enlightenment, as the subject of the Louvre’s enthralling “Portrait of a Man”),
such discoveries do little to
lessen our appreciation of
the portrait they now offer
us of Fragonard as a genius.
Fragonard: The Fantasy
Figures
National Gallery of Art,
through Dec. 3
Ms. Lewis teaches art
history at Trinity College,
Hartford, Conn.
FROM TWO-TIME PULITZER PRIZE
FINALIST RICHARD WHITE
ART
THE OBAMAS PICK PORTRAIT ARTISTS
BY KELLY CROW
‘LL Cool J Artist,’ left, by
Kehinde Wiley, who will paint
President Obama’s portrait.
FROM LEFT: KEHINDE WILEY; AFP/GETTY IMAGES
THE SMITHSONIAN’S National Portrait Gallery has
commissioned a pair of rising-star artists—New York’s
Kehinde Wiley and Baltimore’s Amy Sherald—to
paint its official portraits of
former President Barack
Obama and Michelle Obama.
Both artists have exhibited widely, but the presidential assignment amounts
to a coup as they follow in
the footsteps of artists like
Gilbert Stuart, whose portraits of George Washington
are considered masterpieces.
The Obamas also made a
point to champion the arts
during their time in the
White House, which has
heightened art-world curiosity over which artists they
would choose.
Mr. Wiley, the 40-year-old
artist who will paint former
President Obama, often depicts his subjects wearing
hip-hop attire like hoodies
and baggy, blue jeans and
arranges them in postures
once reserved for European
aristocrats. The juxtaposition helps the artist explore
potent issues of race, class
and power.
Three years ago, Sotheby’s sold Mr. Wiley’s
2006 double portrait of a
pair of men in tank tops,
“Charles I and Henrietta Maria (after Anthony Van
Dyck),” for $143,000. The
Brooklyn Museum and other
institutions have also shown
and collected his work.
Ms. Sherald, a 44-yearold artist known for painting surreal portraits of elegant black women, will paint
Ms. Obama. Ms. Sherald’s
signature style is to use a
palette of grays instead of
skin tones to capture her
subjects’ faces and hands.
Her greyscale women are
typically dressed in bright
patterns and set against
solid swaths of saturated
color, a combination that
looks like paper dolls or silhouettes from vintage photographs have been set atop
children’s construction paper.
Ms. Sherald, who studied
painting at Georgia’s ClarkAtlanta University, is newer
to the international art
scene and hasn’t seen her
work head to auction yet.
Last year she won a national
painting competition at the
Portrait Gallery. Her winning
piece, “Miss Everything (Unsuppressed Deliverance),”
showed a young woman in a
navy, polka-dot dress and
white gloves, sipping from
an oversized tea cup and
staring defiantly. She also
has a piece in the Smithsonian’s new National Museum
of African American History
and Culture.
A spokeswoman for the
National Portrait Gallery declined to discuss details
about the Obama portraits
until they are unveiled early
next year.
Mr. Wiley and Ms. Sherald are the first black artists
hired by the Smithsonian to
paint a president and his
first lady. The Smithsonian
said it plans to pay for the
works via private donations.
The artists, reached
through their galleries, declined to comment.
“White is one of the nation’s most gifted
historians....The Gilded Age will keep its name,
but White’s book ought to worsen its already
dismal reputation for sordidness and rapacity.”
—The New York Times Book Review
The newest volume in the critically
acclaimed, best-selling series:
THE OXFORD HISTORY OF
THE UNITED STATES
AVAILABLE WHEREVER BOOKS ARE SOLD
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 | Monday, October 16, 2017
SPORTS
NFL
GREEN BAY’S
BAD BREAK
LAST WEEK, Aaron Rodgers was
peak Aaron Rodgers. He threw
three touchdowns, the last of
which came on a game-winning
drive to help the Green Bay Packers beat the Dallas Cowboys.
It was the ultimate demonstration of why he’s the most irreplaceable player in the NFL. Now
the Packers face the grim prospect
of trying to replace him: Rodgers
left Sunday’s 23-10 loss to the
Minnesota Vikings with a broken
right collarbone, the team said,
and he may miss the rest of the
season. He missed seven games in
2013 with a broken left collarbone.
The injury happened in the first
quarter, when Rodgers rolled out
to his right and, after throwing the
ball, he was hit by Vikings linebacker Anthony Barr. No flag was
thrown on the play. He was subsequently carted off the sidelines.
Rodgers’s injury throws another
wrench into an NFL season that
has lacked certainty from its very
beginning. On the first night of the
year, the Super Bowl favorite New
England Patriots were clobbered
by the Kansas City Chiefs and haven’t looked like the dominant juggernaut they were supposed to be.
All the while, the Packers figured to be one of the locks to
make a deep run. This was a team
that was on the brink last season
after a 4-6 start, until Rodgers
told the world Green Bay could
run the table. That type of claim
from anybody else would have
been ludicrous. But carried by extraordinary performances from
Rodgers, the Packers did exactly
that and won their final six games
to make the playoffs.
So for the rest of the season, no
player may have more weight on
his shoulders than backup quarterback Brett Hundley, the Packers’
2015 fifth-round pick out of UCLA.
Stepping into the lineup after Rodgers went down on Sunday, Hundley completed 18 of 33 passes for
157 yards with one touchdown and
three interceptions.
Aaron Rodgers left Sunday’s game
with a broken right collarbone.
FROM LEFT: BRUCE KLUCKHOHN/ASSOCIATED PRESS; JASON SZENES/EPA/SHUTTERSTOCK
BY ANDREW BEATON
Yankees slugger Aaron Judge received scholarship offers to play football at Stanford, Notre Dame and UCLA. He opted to play baseball at Fresno State.
MLB
Baseball’s Battle for Multi-Sport Stars
BY BRIAN COSTA
THE RESURGENCE of the New
York Yankees can be traced in part
to a conversation between Aaron
Judge and his high school football
coach in late 2009. Judge had received full scholarship offers to play
tight end at Stanford, Notre Dame
and UCLA, among other top college
football programs. Still, for sheer
love of the game, he was inclined to
take only a partial scholarship to
play baseball at Fresno State.
The coach, Mike Huber, was incredulous. “You’re talking about a
five-year ride to Notre Dame,” he
told Judge. “Let your parents retire
a little early.”
That Judge ultimately ignored
that advice didn’t just help propel
the Yankees to the ALCS, after a
season in which he hit a rookie-record 52 home runs. It was also a
win for baseball in a contest it often loses: the fight for America’s
best all-around athletes.
The majority of major-league
players come from one of two distinct pipelines. One is in Latin
America, where an ingrained baseball culture coupled with rich signing bonuses serve as a magnet.
The other is the American travel
baseball circuit, in which parents
pay thousands of dollars for children to play year-round schedules
in pursuit of a scholarship.
But the Yankees are here in part
on the strength of a handful of
players that baseball is desperately
seeking more of: multi-sport stars
who could have been lost to football, basketball or other games.
Just like Judge, pitcher CC Sabathia turned down football scholarship offers from colleges including UCLA to pursue baseball.
Outfielder Aaron Hicks was a
Southern California golf prodigy
who won several elite junior tournaments before taking up baseball
at age 12. Designated hitter Matt
Holliday, once a top football prospect, was recruited to play quarterback at Oklahoma State.
“It’s important for our sport to
have good athletes, and you see
that materializing,” said Tony Reagins, who oversees MLB’s youth
initiatives. “Hopefully what we see
now is just the beginning.”
Changes in youth sports have
hurt that effort, particularly in attracting black players, who comprise only around 7% of MLB players, the lowest percentage since
1958. The primacy of the travel circuit as a path for American players
not only encourages earlier specialization. It also prices many kids
out of the sport before they have a
chance to get hooked on it.
“It just gets to be cost prohibitive for two parents making
$50,000 a year,” said Hall of Fame
slugger Reggie Jackson, now a
Yankees special advisor, who went
to Arizona State on a football
scholarship before switching to
baseball. “So how do you get that
person in the sport?”
But baseball still has a few nota-
Weather
ble advantages over other sports.
It offers seven-figure bonuses for
top prospects. Unlike the NFL, it
promises guaranteed contracts for
free agents. Careers also tend to be
significantly longer than in football, which is one of the reasons
Sabathia signed with the Cleveland
Indians out of high school in 1998.
As all-around athletes go, the 6foot-7 Judge is baseball’s biggest
coup in years. Literally. “He definitely picked the right sport,” said
Huber, who saw Judge break every
school receiving record at Linden
(Calif.) High School.
Aaron Judge represents
a win for baseball in the
fight for America’s best
all-around athletes.
Hicks, 28, is especially a success
story for the league, since he
played at MLB’s youth academy in
Compton, Calif., during high
school. But the pivotal moment for
him came a few years earlier.
Hicks was a scratch golfer at age
12, according to his father, Joe, and
was making a name for himself in
the junior golf world. “I thought
that would open up choices for college for him,” Joe Hicks said.
Then his son learned something
his father had never told him: He
was once a minor-league baseball
player. Joe Hicks was a Padres
prospect in the 1970s who waited
for years for a call to the majors
that never came. His career ended
after he was struck in the face by a
fastball. “I just figured, why put
Aaron through that?” he said.
Eventually, after the revelation
sparked Aaron’s interest in baseball, Joe Hicks made his son pick a
sport, citing the cost of competing
in two. Aaron chose baseball. “I
was kind of crushed,” his father
said. Hicks debuted with the Minnesota Twins in 2013 and was
traded to the Yankees in late 2015.
To be sure, many multi-sport
stars still end up giving baseball
the cold shoulder as they get older.
Tom Kotchman, a longtime MLB
scout, recalls seeing one such
player while at a college baseball
game about 10 years ago.
By then, the player had forsaken
baseball for the school football
team, but when he threw out the
ceremonial first pitch, Kotchman
noticed something. It wasn’t just
the arm strength. It was how irritated he was when the pitch got
away from the catcher. “You saw
the competitiveness,” he said.
Kotchman, then a scout with the
Los Angeles Angels, asked coaches
to pass along an information card
for him to fill out, eyeing him as a
likely late-round draft pick. But he
never heard back, and the player
continued his foray into football.
His name was Tim Tebow. He is
now a minor-league outfielder with
the New York Mets.
The WSJ Daily Crossword | Edited by Mike Shenk
Shown are today’s noon positions of weather systems and precipitation. Temperature bands are highs for the day.
40s
<0
Edmonton
d
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Vancouver
Vancouver
Calgary
Eugene
g
30s
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Winnipeg
ip
ttl
Seattle
Portland
Por
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tl d
60s
l
Helena
Billings
40s
Ottawa
Toronto
T
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Mpls./St.. Paul
Mpls./St
50s
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0s
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Anchorage
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Boston
70s
U.S. Forecasts
60s
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Hartford
New
Yorkk
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Showers
Flurries
Ice
City
Omaha
Orlando
Philadelphia
Phoenix
Pittsburgh
Portland, Maine
Portland, Ore.
Sacramento
St. Louis
Salt Lake City
San Francisco
Santa Fe
Seattle
Sioux Falls
Wash., D.C.
Today
Hi Lo W
70 45 s
87 73 t
64 42 pc
97 72 s
58 38 pc
60 35 pc
68 45 pc
85 50 s
66 46 s
65 42 s
83 56 s
69 35 s
64 50 pc
68 40 s
66 47 s
Tomorrow
Hi Lo W
73 49 s
81 71 t
63 48 s
97 70 s
63 43 s
56 43 s
61 51 r
85 51 s
72 48 s
72 48 pc
74 53 s
71 41 s
59 48 r
74 48 s
65 47 s
International
City
Amsterdam
Athens
Baghdad
Bangkok
Beijing
Berlin
Brussels
Buenos Aires
Dubai
Dublin
Edinburgh
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Today
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56 pc
64 s
60 s
77 t
49 s
53 s
54 s
61 s
78 s
48 r
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Hi Lo W
64 53 s
78 61 s
87 57 s
87 75 t
62 53 c
69 51 s
68 53 s
78 62 pc
96 81 s
57 45 pc
57 46 r
City
Frankfurt
Geneva
Havana
Hong Kong
Istanbul
Jakarta
Jerusalem
Johannesburg
London
Madrid
Manila
Melbourne
Mexico City
Milan
Moscow
Mumbai
Paris
Rio de Janeiro
Riyadh
Rome
San Juan
Seoul
Shanghai
Singapore
Sydney
Taipei
Tokyo
Toronto
Vancouver
Warsaw
Zurich
Today
Tomorrow
Hi Lo W Hi Lo W
71 50 pc 72 49 s
72 46 s
73 45 pc
88 70 pc 86 72 t
85 73 sh 89 75 pc
70 55 pc 71 57 s
92 75 sh 91 77 c
70 58 s
74 57 s
84 47 s
74 47 s
73 53 pc 62 55 pc
80 51 s
70 53 t
88 77 t
88 79 pc
81 58 s
82 59 s
69 55 pc 68 54 pc
77 50 s
75 51 pc
44 39 c
54 40 pc
92 80 c
94 79 pc
77 52 s
74 56 pc
75 63 pc 79 68 pc
100 71 s 100 68 s
76 53 s
75 52 pc
89 78 sh 88 79 t
68 52 pc 70 55 pc
68 62 r
67 64 sh
90 76 pc 89 78 c
73 63 pc 73 63 pc
93 78 pc 90 77 pc
60 55 r
63 55 r
54 41 pc 64 47 pc
56 48 r
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71 52 s
69 51 pc
71 44 pc 69 44 pc
4
5
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9
15
17
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54
55
56
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60
63
64
65
66
67
68
WRAPPING UP | By Roger & Kathy Wienberg
Across
1 Soft mineral
5 Floor-swabbing
tools
9 Small amphibians
14 Noted baseball
family
15 Notion
16 City on the
Missouri River
17 •Canadian
symbol
19 Directive to the
bandleader
20 Long locks
22 Gift from a
parent
23 Color akin to
turquoise
25 Suffering lasting
effects, literally
or figuratively
27 Golfing group
31 Emmy winner
Baldwin
32 Albany-toBuffalo canal
33 “Fantasia” frame
34 Blend of Indian
spices
37 Catchall abbr.
38 •“M*A*S*H”
nickname
40 Negating prefix
41 Add to the
payroll
43 Rocks in a glass
44 Shortly, in
sonnets
45 “You gotta be
kidding!”
46 19 nations with
a common
currency
48 Crave
51 Outlaws
52 Burn
superficially
53 North American
hawk
57 Trace of color
59 Fraying result,
and what the
second parts of
the starred
answers can be
63 Peripheral
parts
64 Wild and crazy
65 Distinctive
ambience
66 Monopoly
cards
67 Cravings
68 “Mr. Roboto”
band
Solve this puzzle online and discuss it at WSJ.com/Puzzles.
s
s...sunny; pc... partly cloudy; c...cloudy; sh...showers;
t...t’storms; r...rain; sf...snow flurries; sn...snow; i...ice
Today
Tomorrow
City
Hi Lo W Hi Lo W
Anchorage
38 28 pc 37 28 pc
Atlanta
70 50 pc 69 48 s
Austin
76 45 s
78 46 s
Baltimore
65 40 pc 65 43 s
Boise
66 41 s
70 43 pc
Boston
62 43 pc 57 49 s
Burlington
52 35 s
58 47 s
Charlotte
69 45 pc 68 43 s
Chicago
61 45 s
68 51 s
Cleveland
58 44 s
67 50 s
Dallas
75 48 s
78 50 s
Denver
75 40 s
77 46 s
Detroit
59 42 s
68 47 pc
Honolulu
86 76 pc 86 76 s
Houston
77 52 pc 79 52 s
Indianapolis
62 42 s
67 45 s
Kansas City
68 46 s
72 51 s
Las Vegas
86 60 s
88 63 s
Little Rock
70 44 s
72 46 s
Los Angeles
95 66 s
92 68 s
Miami
89 77 t
87 77 pc
Milwaukee
61 47 s
68 52 s
Minneapolis
62 45 s
69 52 s
Nashville
66 42 s
69 45 s
New Orleans
75 60 pc 76 65 s
New York City
62 45 pc 62 50 s
Oklahoma City
70 43 s
74 48 s
Miami
3
14
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A
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Milwaukee
Detroit
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Atlanta
Atl
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80s
Tucson
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Birmingham
h
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Dallas
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Houston
Orlando
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80s
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Montreal
Albany
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Pierre Sioux
1
Down
1 Flat hat
2 Start for carte
3 Prune
4 Artistic
awareness
5 Odometer unit
6 Grandiloquent
verses
7 Del Monte
product
8 Spots for
valuables
9 Masked drama
of Japan
10 Asylum seekers
11 •Crowd
disperser
12 Yours, of yore
13 Unable to eat
another bite
18 Memorable
periods
21 Run playfully
23 Main artery
24 •Type of
performance
artist
26 “What a shame!”
27 Altimeter units
28 First female
Supreme Court
justice
29 Convened
30 “Dallas”
matriarch
35 Birds with
mournful cries
36 Writer
McCaffrey
38 Horseshoe
setting
39 Hosp. section
42 Became visible
44 Ornamental
shrubs
47 Annual theater
award
48 Didn’t just sit by
49 Tell off
50 Swimming race
54 Capitol capper
55 Road Runner, for
one
56 Queries
58 Snaky curve
60 Bolt partner
61 Dishwasher cycle
62 Wailing
instrument
Previous Puzzle’s Solution
S C A R
A S S E
L I K E
L
MA K I
O D I N
WO N
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L
MU T E
A L O N
A S T A
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The contest answer is BOSTON. Each theme
answer’s initials spell the official airport code of an
American city’s airport: LAS for Las Vegas, MCO
for Orlando, GNV for Gainesville, ATL for Atlanta,
and JFK for New York City. Those cities’ first
letters spell LOGAN, which is the main airport of
Boston.
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.
Monday, October 16, 2017 | A17
OPINION
Venezuela’s Latest Election Fraud
Venezuela
held elections
for its 23 state
governors
Sunday amid
rising malnuAMERICAS trition, hunger, hyperinBy Mary
flation and a
Anastasia
looming debt
O’Grady
crisis. In a fair
contest, candidates backed by dictator Nicolás Maduro would have been
crushed. But Venezuela is now
a police state at war with its
people. The truth has little
chance on a good day, even
less on a so-called election
day.
This is not to say opposition
victories were impossible. As
we went to press, results had
not yet been announced. But
Maduro controls the national
electoral council (CNE) and
therefore has significant
power to influence the outcome. In states the regime
considers strategically important, he will put his thumb on
the scale as necessary. He
might also allow some opposition victories to support his
claim that Venezuela remains a
democracy.
To interpret Sunday’s results requires context. Remember that this election was
held—10 months after its regularly scheduled date—to ward
off European Union sanctions.
Maduro sought to showcase a
fair election so that the EU will
back his continuing charade of
“dialogue” with the opposition.
An international community
that is paying attention won’t
fall for it. Sunday’s exercise in
the Cuba-backed dictatorship
was a sham.
Maduro had other motives
as well. He wants to lull Venezuelans into the false sense
that a transition away from
communism is possible at the
ballot box. That illusion has so
far held back rebellion.
He also seeks to legitimize
his illegal “constituent assembly,” elected on July 30—from
an unchallenged list of candidates—to replace the Legislature and rewrite the constitution. He said voting Sunday
was an endorsement of the
new assembly and any opposition governor who will not
swear allegiance to it will be
removed.
The fraud was under way
long before the first vote was
cast. The dictatorship announced the election only a
month in advance. Candidates
rushed to submit their names
under a five-day deadline.
Later the regime decided to
hold a day of primaries. But
when antigovernment candidates who lost the primaries
asked to withdraw and throw
their support to the primary
winners, the regime refused
to take their names off the
ballot.
The effect was to spread the
opposition vote among numerous candidates, all running
against a single regime-backed
candidate appearing on multiple party tickets. For example,
in Táchíra state, which is
known for its anti-Caracas, rebellious character, incumbent
chavista Gov. José Vielma
Mora appeared on the ballot
under 10 pro-government lo-
gos. He squared off against
nine opposition candidates on
11 tickets. Ballots in the other
states looked similar.
The government further
weakened the opposition’s
chances by relocating voting
stations, some to dangerous
neighborhoods. Some 274 polling places were moved, creating public confusion. With no
free press, candidates, who
have few resources anyway,
had a hard time getting their
message out.
Maduro allowed
the phony balloting
only to promote the
illusion of democracy.
Frustrating the public with
tricks has been the modus operandi of the regime since Hugo
Chávez first consolidated
power in the 2000s. In practice they are only games. The
regime holds the trump card in
that the CNE uses electronic
voting machines, controls the
voter registry, and does not allow opposition audits. Yesterday it made sure voting lines
moved at a glacial pace.
Government critics long
held that London-based Smartmatic, which used to provide
the regime with voting-machine technology, was complicit in its shenanigans. The
company always denied it.
Smartmatic is no longer a provider for Venezuela and now it
alleges regime cheating in the
July 30 constituent assembly
election. It says the government invented one million
votes in its final tally. The CNE
rejects the claim.
Monkey business at the
polls is only part of the story.
There are more than 400 political prisoners in Venezuela today, including many sitting
mayors. The regime also has
forbidden some opposition
candidacies on trumped-up
charges so as to eliminate political talent from the competition.
Venezuela’s opposition leaders initially called for a boycott
of Sunday’s elections. They later
backtracked, arguing that the
opposition could win. Yet even
if they do score victories, even
in a majority of states, opposition governors will be essentially powerless. In a country
where most of the wealth is
concentrated in the stateowned oil industry, the regime
can and does often starve states
governed by opponents of resources. Maduro won’t hesitate
to put the most effective opposition governors in jail.
The National Guard will
continue to enforce the repression, which will grow worse as
hunger and famine spread and
the population gets more desperate. Even Maduro understands that he sits on a ticking
time bomb. Last month he announced “Plan Rabbit,” a project aimed at getting Venezuelan city-dwellers to breed and
eat the furry creatures as a
source of protein.
Sunday’s phony balloting
changes nothing. Venezuelan
democracy is dead.
Write to O’Grady@wsj.com.
Get Ready for the Internet of Goods
By Michael Mandel
S
keptics have blamed
technology for just
about everything, including economic inequality.
The “winner take all” digital
economy has concentrated
wealth in relatively few hands,
the explanation goes, leaving
the bulk of Americans behind.
But this antitech narrative
misses the real story.
For most of the 20th century, industrialization lifted the
incomes of ordinary Americans
by shifting them from low-productivity agriculture jobs to
higher-productivity manufacturing work. Today digitization
is lifting incomes by creating
hundreds of thousands of new,
higher-paid jobs.
Consider e-commerce. Today retail sales workers in
most brick-and-mortar stores
perform the same tasks their
predecessors did in the 1980s.
And their real wages reflect
this lack of change. In 2016
the average nonsupervisory
retail worker actually earned
about the same every week as
his retail predecessors did in
1987, in inflation-adjusted
2016 dollars.
By contrast, the men and
women who go to work each
day in e-commerce fulfillment
centers are much betterequipped with information
technology—and
therefore
more productive and betterpaid. Our research shows that
fulfillment center weekly
wages are 31% higher on average than brick-and-mortar retail in the same area.
Note that fulfillment centers are not hiring college-educated coders. Instead, these
jobs use a mixture of physical
and cognitive skills. Better
yet, they pay decent wages,
and require only a high-school
education. Jobs like these can
close the income gap.
Already, e-commerce
has been creating
more and better jobs
than it destroys.
But does e-commerce destroy more jobs than it creates? So far the answer
seems to be no. From the
third quarter of 2015 to the
third quarter of 2017, brickand-mortar retail full-timeequivalent jobs fell by
roughly 123,000, or about 1%,
according to my think tank’s
analysis of the latest Labor
Department data.
Over the same two-year
stretch, the e-commerce industry has added some 178,000
jobs in fulfillment centers and
electronic shopping firms. In
addition, express delivery
companies and other local
couriers boosted their fulltime-equivalent workers by
another 58,000.
Americans spend 1.2 billion
hours a week driving to the
mall, finding a parking space,
wandering around the aisles,
checking out, and driving
home. Think of this as unpaid
work. Since 2007, roughly 64
million hours a week of these
“unpaid hours” have shifted to
fulfillment center workers, who
do the “picking and packing”
for customers, and truck drivers, who do the driving.
What about automation?
Aren’t these fulfillment center
workers just there until robots
can take over? In the short
run, e-commerce employment
is likely to keep soaring, as
big brick-and-mortar retailers
like Wal-Mart and Target
build out their e-commerce
capabilities.
Increased automation of
fulfillment centers, if it happens, will bring down the cost
of distribution, which now
amounts to 50% or more of
the final purchase price of
many consumer goods. That
would drive down prices,
helping consumers.
More important, the ability
to sort and deliver individual
items inexpensively will dramatically change the economics of manufacturing. Until
now, it has been far cheaper
to produce, ship and distribute goods in bulk. This is why
America is still filled with bigbox stores. But once it becomes possible to sort and deliver individual items cheaply,
the economics of small-batch
or custom manufacturing will
become more attractive. Since
people want their purchases
quickly, these small-batch and
custom manufacturers will be
located much closer to the ultimate consumer.
The growth of e-commerce
fulfillment centers is like the
shift from the original circuit-
switched telephone network
to the packet-switched internet. The internet requires a
lot more processing power
than the telephone network
did, but it’s far cheaper and
more flexible. And that’s why
so many new applications and
services are created every
year. The Internet of Goods—
our term for the fast-growing
digitization of the production,
sorting and movement of
physical products—will be the
next major step in the internet’s evolution.
If e-commerce is any guide,
the jobs created for the Internet of Goods will require
workers who have a good mix
of physical and cognitive
skills, just like the industrial
jobs of the early-20th century.
Moreover, they will be more
evenly spread around the
country, boosting growth in
America’s heartland as well as
the coasts.
Not every state or locality
will prosper equally. The gains
will depend on how well the
local workforce is prepared
for tech-enabled physical industries, the availability of
capital for local entrepreneurs,
and the regulatory environment. But like its industrial
predecessors, the Internet of
Goods should bring a more
balanced distribution of income and opportunities.
Mr. Mandel is chief economic strategist at the Progressive Policy Institute and a
senior fellow at the Mack Institute for Innovation Management at the Wharton School.
The ‘Resistance’ vs. George Washington
By Josh Blackman
role in the separation of pow- to appointed positions, not to $1.4 million award. The Office
And Seth Barrett Tillman ers—a position the Constitu- elected ones.
of Legal Counsel concluded Mr.
T
he Trump administration
has been under siege
from the left’s self-professed “legal resistance.” Perhaps the highest-profile example involves President Trump
himself. Several lawsuits allege
that his business interests run
afoul of the Constitution’s Foreign Emoluments Clause.
The Justice Department has
done a good job defending the
president’s actions on most issues—but not on this one. The
department still has refused to
make its strongest argument:
that the Foreign Emoluments
Clause does not apply to the
president. The Trump administration needs to throw out a
2009 opinion from the department’s Office of Legal Counsel
that concluded, without any
analysis, that the Foreign
Emoluments Clause “surely”
applied to President Obama.
Instead the department should
defend the president’s unitary
tion supports.
The Foreign Emoluments
Clause says that “no Person
holding any Office of Profit or
Trust under [the United States]
shall, without the Consent of
the Congress, accept of any
present, Emolument, Office, or
Title, of any kind whatever,
If a president can’t
take emoluments, the
founders were crooks.
from any King, Prince, or foreign State.” These lawsuits argue that when foreign dignitaries pay to stay at Trump hotels,
they’re putting money in Mr.
Trump’s pocket, and such payments constitute an unlawful
foreign emolument or a present.
But the constitutional clause refers only to persons holding an
office under the U.S. The Constitution’s language extends only
History backs up this reading. Treasury Secretary Alexander Hamilton set the precedent in 1793: When the Senate
requested a financial statement
listing the “emoluments” of
“every person holding any civil
office or employment under
the United States,” Hamilton’s
comprehensive report excluded
all elected offices—the president, vice president and members of Congress—but included
appointed positions in all three
governmental branches.
George Washington accepted,
as a diplomatic gift from France,
a framed full-length portrait of
King Louis XVI. Thomas Jefferson accepted a bust of Czar Alexander I from Russia. Neither
president sought Congress’s
consent to keep the gifts.
But for some reason the
Trump administration continues to stand by the 2009 opinion, drawn up when Mr. Obama
was being awarded the Nobel
Peace Prize, which came with a
Obama could accept the money,
but the opinion simply assumed the Foreign Emoluments
Clause applied to the presidency. It was taken as a given
with no citations either to judicial rulings or to the practices
established by Washington and
other founders.
We have submitted friendof-the-court briefs in New York,
the District of Columbia and
Maryland explaining this argument. At a minimum, the historical record should give Justice pause. But ideally the
department would abandon the
2009 opinion and argue in
court that the president is not
governed by this clause. Mr.
Trump’s adversaries are arguing that Washington and Jefferson were crooks.
Mr. Blackman is a law professor at the South Texas College of Law of Houston. Mr.
Tillman is a law lecturer at
Maynooth University, Ireland.
BOOKSHELF | By Emily Esfahani Smith
Redefining a
Well-Lived Life
Finding Meaning in an Imperfect World
By Iddo Landau
(Oxford, 297 pages, $24.95)
I
n the 1990s, psychiatrist William Breitbart ran studies
at New York’s Memorial Sloan-Kettering Cancer Center
to determine what motivates terminally ill patients to
request prescriptions for assisted suicide. Dr. Breitbart had
assumed that patients wanted to die because they were in
terrible pain. It turns out, however, that the strongest predictor of “a desire for hastened death” was despair. The
patients were hopeless, depressed, and had concluded their
lives were meaningless—so why keep living?
In his new book, “Finding Meaning in an Imperfect
World,” Iddo Landau provides a timely corrective. Rates of
suicide, depression and alienation have been rising for decades, and when researchers crunch the numbers to understand why, the data show that many people in the modern
world—like Dr. Breitbart’s patients—are living in what the
psychiatrist and Holocaust survivor Viktor Frankl once
called an “existential vacuum.” In measured and
dispassionate prose, Mr.
Landau, a philosophy professor at Haifa University in
Israel, sets these people
straight. It’s not that their
lives lack meaning—it’s that
they have distorted ideas
about what a meaningful life
actually is.
In a series of self-contained
thematic chapters, drawing on
personal anecdotes, literature
and secular philosophy, Mr. Landau dismantles common myths
and offers strategies to help people
find greater purpose in their own lives.
Systematically, he refutes the usual arguments
as to why life is pointless: Since the universe is so vast and
we’re so tiny, nothing that we do matters; soon after we
die, no one will remember us; everything we do and treasure will one day perish from the earth. None of these deters Mr. Landau from his rational, philosophical argument
for why each individual’s life is meaningful.
As Mr. Landau points out, these concerns are hardly limited to the college sophomores he teaches. Some of the
greatest thinkers in history have fallen into fits of despair
pondering these very questions—from the author of Ecclesiastes to Leo Tolstoy, whose autobiography, “A Confession,” recounts his midlife crisis of meaning. “Is there any
meaning in my life,” Tolstoy wondered, “that will not be
destroyed by my inevitably approaching death?” (This was
after he wrote “War and Peace” and “Anna Karenina.”)
Mr. Landau notes that all such concerns are animated by
the same mistaken belief: that a valuable life must necessarily be a perfect one. “According to this presupposition,”
he writes, “meaningful lives must include some perfection
or excellence or some rare and difficult achievements.”
Those who despair of life’s meaning can’t see the value in
the ordinary; only lives of greatness such as Michelangelo’s
or Lincoln’s can be worthwhile.
Being a perfectionist is likely to cause one
despair—it sets a standard for meaningfulness
in life that is nearly impossible to attain.
As Mr. Landau observes, such perfectionism sets a standard for meaningfulness that is nearly impossible to attain.
He mentions a talented biologist he knows who considers her
life wasted because she didn’t reach the very top of her field.
Perfectionism’s other, more odious, problem is its elitism: It
assumes that some lives have more worth than others.
Though clearly wrong, a version of this idea is deeply embedded in our secular culture. A meaningful life, we’re constantly
told, lies in worldly success: going to certain colleges, landing
certain jobs and living in certain communities.
Mr. Landau doesn’t spell it out, but he seems to understand where this flawed assumption leads. Does the life of a
child with Down syndrome have less value than the life of a
healthy child? Is a retail clerk leading a less meaningful life
than, say, Elon Musk? A perfectionist would have to say yes
and yes. But Mr. Landau wisely points out that it’s cruel
and misguided to hold ourselves or others to this standard
for meaning, because it neglects each life’s inherent worth.
Mr. Landau is a clear and deliberate thinker, and he
argues this important point and many others convincingly.
But his book takes effort. It requires a reader who doesn’t
mind unexciting prose—or a pluralistic approach to the
problem of meaning. Mr. Landau doesn’t rely on a single
overarching philosophical or spiritual system like Stoicism,
Buddhism or Christianity to ground his book—a move that
will surely appeal to skeptical and secular readers. But we
live in a time when shared sources of meaning like religion
and tradition are withering away, and Mr. Landau doesn’t
take enough advantage of these time-tested, anchoring
frameworks to help readers who may be adrift.
Mr. Landau also somewhat compromises his project with
his definition of “meaning.” The word can explain something
that has value, as in, “that note means a lot to me.” It can
also describe how we understand or interpret something, as
in, “the meaning of ‘bonjour’ is good morning.” Examining
our lives, Mr. Landau argues, we use the first definition—
looking to see whether our lives have value. But he problematically leaves aside any discussion of the second option—of
meaning as understanding. Empirical research suggests that
when people rate their lives as meaningful, they do so both
because their lives have worth and because the world makes
sense to them. This is why senseless suffering can drive
people to abandon their faith; it is why, in psychology
experiments where people are presented with incoherent information, they later rate their lives as less meaningful. In
overlooking the connections between order, understanding
and meaning, Mr. Landau leaves out part of the picture.
Nevertheless, in “Finding Meaning in an Imperfect
World,” Mr. Landau presents a much-needed lesson in
humanity and compassion. Don’t beat yourself up if you fail
to achieve your lofty goals, he urges; instead, celebrate the
value of an ordinary life well lived. In the same way you
don’t have to become a monk or nun to be a good Christian,
you don’t have to be a Shakespeare or Rockefeller to lead a
good life. Holding your child’s hand, volunteering in your
community, doing your job, appreciating the beauty around
you—these are the wellsprings of meaning all of us can tap.
Ms. Smith is the author, most recently, of “The Power
of Meaning: Crafting a Life That Matters.”
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.
A18 | Monday, October 16, 2017
OPINION
D
REVIEW & OUTLOOK
LETTERS TO THE EDITOR
Trump’s Nafta Threat
Burns’s ‘Vietnam’: a Fair and True Account?
onald Trump is threatening again to returns. As Charles Uthus at the American Autoterminate the North American Free motive Policy Council said last week, Nafta
Trade Agreement if Canada and Mexico “brings scale, it brings competitiveness, it brings
don’t agree to his ultimatums.
efficiencies [and] synergies
Ending the pact would between all three countries,
If this is a negotiating tactic of
making extreme demands only
it brings duty-free trade.”
be the worst economic and
to settle for much less and
Its demise would be “basically
blunder since Nixon.
claim victory, maybe it will
a $10 billion tax on the auto inwork. Otherwise Mr. Trump is
dustry in America.”
playing a game of chicken he
Last week the Boston Concan’t win.
sulting Group also released a study sponsored
Mr. Trump’s obsession with undoing Nafta by the Motor & Equipment Manufacturers Assothreatens the economy he has so far managed ciation that found ending Nafta could mean the
rather well. The roaring stock market, rising loss of 50,000 American jobs in the auto-parts
GDP and tight job market are signs that deregu- industry as Mexico and Canada revert to prelation and the promise of tax reform are restor- Nafta tariffs.
ing business and consumer confidence. Blowing
Mexico has elections next year and no party
up Nafta would blow up all that too. It could be that bows to unreasonable demands by Mr.
the worst economic mistake by a U.S. President Trump can win. The Mexican political class
since Richard Nixon trashed Bretton-Woods and appears willing to call his bluff, which is makimposed wage and price controls.
ing American business very nervous. More
U.S. demands in the Nafta renegotiations— than 300 state and local chambers of comwhich returned to Washington last week—are merce signed an Oct. 10 letter to Mr. Trump
growing more bizarre. U.S. Trade Representa- imploring him to “first ‘do no harm’ in the
tive Robert Lighthizer now wants to add a sun- Nafta negotiations.”
set clause, which would automatically kill it in
It noted that 14 million American jobs rely
five years unless all three governments agree on North American daily trade of more than
to keep it. In other words, the U.S. proposes to $3.3 billion. “The U.S. last year recorded a trade
increase economic uncertainty and raise the in- surplus of $11.9 billion with its NAFTA partners
centive for businesses to deploy capital to more when manufactured goods and services are
reliable investment climates.
combined,” the letter said. “Among the biggest
The U.S. also wants to change Nafta’s “rules beneficiaries of this commerce are America’s
of origin” for autos. Cars now made in North small and medium-sized businesses, 125,000 of
America can cross all three borders duty-free if which sell their goods and services to Mexico
62.5% of their content is Nafta-made. Mr. Light- and Canada.”
hizer wants to raise that to 85% and add a subEnding Nafta would be even more painful for
clause requiring 50% be made in the U.S.
U.S. agriculture, whose exports to Canada and
Mr. Lighthizer needs to get out more. Nafta’s Mexico have quadrupled under Nafta to $38 bilcurrent rules-of-origin for autos are already the lion in 2016. Reverting to Mexico’s pre-Nafta
highest of any trade agreement in the world, tariff schedule, duties would rise to 75% on
says John Murphy of the U.S. Chamber of Com- American chicken and high-fructose corn syrup;
merce. Raising them would give car makers an 45% on turkey, potatoes and various dairy prodincentive to source components from Asia and ucts; and 15% on wheat. Mexico doesn’t have to
pay America’s low 2.5% most-favored-nation buy American, and last week it made its first
tariff. A higher-content rule would hurt Mexico, wheat purchase from Argentina—30,000 tons
but it won’t bring jobs to the U.S.
for December delivery.
It’s hard to overstate the damage that ending
Canada and Mexico know that ending Nafta
Nafta would inflict on the U.S. auto industry. Un- will hurt them, but reverting to pre-Nafta tariff
der Nafta, companies tap the comparative ad- levels could hurt the U.S. more. Mr. Trump can
vantages of all three markets and have created hurt our neighbors if he wants, but the biggest
an intricate web of supply chains to maximize victims will be Mr. Trump’s voters.
O
The Antidote to Steve Bannon
ne irony of Washington these days is that will probably get beat. It will be the end of [Maa press corps that claims to loathe right- jority Leader] Mitch McConnell as we know it.”
wing political operative Steve Bannon
The host teed up Mr. McConnell, but Mr.
can’t get enough of him. The
Graham elaborated: “Mitch
Lindsey Graham
media broadcast his every utMcConnell is not our probterance, cheering on his declalem. Our problem is that we
has
good
advice
for
ration of “civil war” against Repromised to repeal and reSenate Republicans.
publicans in Congress.
place ObamaCare, and we
Republican Senator Lindsey
failed. We promised to cut
Graham (S.C.) captured that
taxes, and we’ve yet to do it.
reality on CBS’s “Face the Nation” Sunday when If we’re successful, Mitch McConnell is fine. If
he said, “You’re going to ask me about Bannon, we’re not, we’re all in trouble, we lose our maso I’ll just go and ask myself.” And he replied by jority, and I think President Trump will not get
giving Republicans good advice on how to defeat re-elected.”
Mr. Bannon, his Mercer family financiers and
That’s exactly right. Mr. Bannon is recruiting
Breitbart campaign operation.
carpetbaggers or multiple-race losers, but they’ll
“Yes, so, what is going on?” Mr. Graham have a chance if Republicans can’t deliver on
asked. “It’s a symptom of a greater problem. If their campaign promises. Mr. Bannon’s best enwe don’t cut taxes and we don’t eventually repeal ablers are the GOP Senators who killed health reand replace ObamaCare, then we’re going to lose form: Susan Collins, John McCain, Rand Paul and
across the board in the House in 2018. And all Lisa Murkowski. If they want to make Mr. Bannon
of my colleagues running in primaries in 2018 a kingmaker, they’ll do the same on tax reform.
T
The Rest of the Russia Story
he Beltway media move in a pack, and a month ago but has been stonewalled. There is
that means ignoring some stories while no plausible reason that senior leaders of Conleaping on others. Consider the pack’s gress—who have top-level security clearance—
lack of interest in the story of
can’t see files directly relevant
GPS Fusion and the “dossier” Justice shouldn’t protect to the question of Russian
from former spook Christo- the FBI and Fusion GPS election interference.
pher Steele.
Justice Department exfrom House subpoenas. cuses about interfering with
The House Intelligence
Committee recently issued
Mr. Mueller’s investigation
subpoenas to Fusion GPS, the
don’t wash. Mr. Mueller is
opposition-research firm that paid for the dos- conducting a criminal probe, while Congress
sier that contained allegations against then- has a duty to oversee the executive branch.
candidate Donald Trump and ties to Russia. The Both investigations can proceed simultanedossier’s details have been either discredited ously. Deputy Attorney General Rod Rosenor are unverified, but the document nonetheless stein, who supervises Mr. Mueller, needs to
framed the political narrative about Trump- deputize specific Justice officials to handle
Russian collusion that led to special counsel Congress’s requests.
Robert Mueller.
The media attacks on Mr. Nunes for issuing
Democrats and Fusion seem to care mostly the subpoenas are a sign that he is onto somethat House Intelligence Chairman Devin Nunes thing. He recused himself in April after comissued the subpoenas, given that he temorarily plaints about his role bringing to light Obama
stepped aside from the Russia probe in April. Administration officials who “unmasked” and
But only the chairman is allowed to issue sub- leaked the names of secretly wiretapped Trump
poenas, and Mr. Nunes did so at the request of officials. Mr. Nunes has since been vindicated,
Republican Mike Conaway, who is officially as we’ve learned that former National Security
leading the probe.
Adviser Susan Rice and former U.N. AmbassaThe real question is why Democrats and Fu- dor Samantha Power did the unmasking. Yet
sion seem not to want to tell the public who re- Democrats on the House Ethics Committee have
quested the dossier or what ties Fusion GPS refused to clear Mr. Nunes—trying to keep him
boss Glenn Simpson had with the Russians in sidelined from the Russia probe.
2016. All the more so because congressional inSenate Judiciary Chairman Chuck Grassley
vestigators have learned that Mr. Simpson was has also pursued the Fusion GPS trail, but he
working for Russian clients at the same time he could use House backup. Speaker Paul Ryan
was working with Mr. Steele.
needs to call on the Ethics Committee to render
Americans deserve to know who paid Mr. a quick decision on Mr. Nunes or allow him to
Simpson for this work and if the Kremlin influ- resume his Russia investigation. Mr. Ryan
enced the project. They also deserve to know should also prepare to have the House vote on
if former FBI director James Comey relied on a contempt citation if the Justice Department
the dossier to obtain warrants to monitor the doesn’t supply subpoenaed documents.
Trump campaign. If the Russians used disinforMr. Mueller will grind away at the Trumpmation to spur a federal investigation into a Russia angle, but the story of Democrats, the
presidential candidate, that would certainly Steele dossier and James Comey’s FBI also
qualify as influencing an election.
needs telling. Americans don’t need a Justice
The House committee also subpoenaed FBI Department coverup abetted by Glenn Simpdocuments about wiretap warrants more than son’s media buddies.
Mark Moyar’s insightful “Ken
Burns’s ‘Vietnam’ Is Fair to the
Troops, but Not the Cause” (op-ed,
Oct. 7) on Ken Burns’s “The Vietnam
War” series is right on. The segment
on the Tet Offensive, in its focus on
Hue, showed groups of troops dashing
from place to place and firing in an
undisciplined way at unseen targets.
The impression projected to the audience was one of no coherence. Combat
is confusing, but this depiction seems
to be disparate clips pieced together
with no clear focus or goal. I had elements of my unit in Hue, and we were
not that confused. We owned all nine
Army tanks in Hue, so I don’t know
where all the clips of tanks firing at
nothing came from. The mythology is
perpetuated one more time by veterans who later turned against the war,
which may well have colored their
memories, aided and abetted by selective film shots.
COL. MICHAEL D. MAHLER, USA (RET.)
Bozeman, Mont.
this side is never mentioned by Mr.
Burns, who restates the same old leftist view of the war and truly misses a
great opportunity to provide a balanced documentary.
BRUCE CRAIG
Denver
As a Vietnam veteran and former
combat officer during that war, I think
Mr. Moyar’s review is spot on. I am
one of the 90% of veterans who was
glad I served and has no regrets.
Many of my contemporaries who
didn’t go to Vietnam have told me often how they regret not doing so, but
If there was any chance for a free
democratic Vietnam, it came and went
in 1945 with the State Department’s
support of France’s colonial ambitions.
America lost its credibility with the
Vietnamese people then.
CHARLES PLUSHNICK
Brooklyn, N.Y.
President Eisenhower and Secretary
of State John Foster Dulles agreed that
if free elections were held in Vietnam,
perhaps 80% of the people would have
voted for Ho Chi Minh. By going to
war against the known will of the Vietnamese people, we violated our own
first principles.
MICHAEL DALY
Gallup, N.M.
Mr. Burns’s creation is an insult to
the military personnel who, in good
faith, obeyed their orders and performed a mission they thought to be
for a noble cause: to give the South
Vietnamese people an opportunity to
choose their form of government. Although we were angered when, years
I subscribe to Ken Burns’s version
after the fact, we learned our national
without hesitation or qualification. I
leaders had given up long before they
was drafted out of graduate school in
stopped sending us there, that doesn’t
1969 and sent to Vietnam, where I
change the commitment nor the sacriserved for a year in the First and Ninth fices we had made years earlier.
Infantry Divisions. My unit, the
MARK MACHINA, RVN 1967-’68
Sahuarita, Ariz.
6th/31st Infantry, participated in the
“Cambodian incursion” in 1970. I recThe main takeaway from the series
ognized what Ken Burns portrayed,
having lived it. I could not relate to Mr. is how the U.S. leadership knew from
the outset that the war was unwinnaMoyar’s view. His statement that 69%
ble, but that the political environment
of Vietnam combat veterans enjoyed
made it impossible to acknowledge it
the war is especially hard to accept.
When I arrived back in the States, publicly. The notion that we could
I was told by my first boss that “we have indefinitely upheld the South
Vietnamese government if only our
won’t hold it against you that you
were in Vietnam.” Numerous people leaders “let them win” is laughable. It
is the same misguided thinking that
asked me if I had killed any babies
has kept us in Afghanistan for 16
during the war, or if I was a drug
years. A military advantage is necesaddict.
sary but insufficient for lasting peace
I had absolutely no idea if friends
in a foreign nation. Without political
in my platoon were pro-war or antilegitimacy, the foreign government is
war. We had responsibilities which
doomed to failure no matter the militook all of our time and energy. We
tary strength of the protector.
were consumed with a desire to get
The documentary represented all
our job done, with never a thought
points of view fairly and helped me
about politics or whether this was a
understand the psyche of my parent’s
just war or if the Army was handling
generation.
things correctly.
PHIL POTTER
ALBERT S. CAIN
Naperville, Ill.
Laguna Niguel, Calif.
Time to Hold Cuba to Account for Its Crimes
Your editorial “Cuba’s Sonic Attacks” (Sept. 26) quotes Secretary of
State Rex Tillerson, “It’s a very serious
issue with respect to the harm that
certain individuals have suffered.”
Cuba is a totalitarian state and very
little happens on the island that escapes Raúl Castro’s security police. International law requires governments
to provide protection to foreign diplomats. Unquestionably Cuba failed to
protect U.S. diplomats.
The White House has now ordered
60% of American diplomats and their
families to return to the U.S. for medical tests and treatment. It’s also warning American tourists about the risks
of staying in Cuban hotels where some
of our diplomats were attacked.
“Essential” personnel will remain in
Cuba, assisted by the many Cuban nationals working in the embassy. The
U.S. isn’t allowed to hire Cuban nationals directly; the Cuban government assigns Cubans to work at the embassy,
collects their paychecks and returns a
small percentage of the official “salary.” It wouldn’t be surprising if many
of those Cuban employees are intelligence officers. Certainly all of them
are susceptible to the pressure of
The educational establishment has
Cuba’s political police.
found a new way to decrease incenIf Havana wants the U.S. to issue
tives for educational attainment, to
thousands of visas annually so that the
lower U.S. test scores and ultimately
Castro regime has an “escape valve” to
to diminish labor productivity and
dilute the opposition on the island,
wages (“You’re All No. 1! High Schools Americans should be handling the task.
Say ‘Vale’ to the Valedictorian,” page
These are minor issues compared
one, Oct. 7). It will soon be asking for
with Cuba’s alliances with Syria, Iran
more funding to reverse these self-in- and North Korea. President Trump is
flicted trends.
right when he says that “the Cuba
JAMES FACKLER deal” is one-sided—fully and comLexington, Ky. pletely. If Gen. Raúl Castro wanted to
restore “normal relations” with the
If the administration of a high
U.S., he could revoke Cuba’s grants of
school abandons the title of valedicto- asylum to terrorists sought by the FBI
rian for the top academic performer
and U.S. courts to stand trial for their
because of “unhealthy competition,”
crimes, including murder.
then any playoff or postseason apAMBASSADOR ARMANDO VALLADARES
Miami
pearances for all teams and athletes
Mr. Valladares was U.S. representapursuing a state championship should
tive to the U.N. Commission on Human
be eliminated also. Unhealthy compeRights and a former Cuban political
tition is unhealthy competition.
ERIC J. LITTLETON prisoner.
Sevierville, Tenn.
We’re Saying ‘Vale’ to High
Standards and Prosperity
I have always believed that in
America everyone has an equal opportunity to be as unequal as they can be.
The notion of young people getting
their feelings hurt because they didn’t
put forth the effort that others did
isn’t healthy or productive. Based on
this logic, everyone should be able to
be a brain surgeon just because they
want to be. Liberal thinking in liberal
schools has created a recipe for disaster for our future adults.
R.B. DELOIAN
Parker, Colo.
Letters intended for publication should
be addressed to: The Editor, 1211 Avenue
of the Americas, New York, NY 10036,
or emailed to wsj.ltrs@wsj.com. Please
include your city and state. All letters
are subject to editing, and unpublished
letters can be neither acknowledged nor
returned.
Pepper ...
And Salt
THE WALL STREET JOURNAL
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Monday, October 16, 2017 | A19
OPINION
A Slow Death for the Iran Deal
By John Bolton
Trump has ‘scotch’d the
snake, not kill’d it.’ But
proposed congressional
‘fixes’ are feckless.
The core provisions are the central danger. There are no real “fixes”
to this intrinsically misconceived
agreement. The Nuclear Non-Proliferation Treaty, to which Iran is a
party, has never included sunset
clauses, but the mullahs have been
violating it for decades.
If the U.S. left the JCPOA, it
would not need to justify the decision by showing that the Iranians
have exceeded the deal’s limits on
uranium enrichment (though they
have). Many argued Russia was not
violating the 1972 Anti-Ballistic Missile Treaty (though it likely was)
when President Bush gave notice of
withdrawal in 2001, but that was not
TAHERKE/EPA-EFE/REX/SHUTTERSTOCK
A
s Abba Eban observed,
“Men and nations behave
wisely when they have exhausted all other resources.” So it goes with
America and the Iran deal. President
Trump announced Friday that the
U.S. would stay in the Joint Comprehensive Plan of Action, even while
he refused to certify under U.S. law
that the deal is in the national interest. “Decertification,” a bright, shiny
object for many, obscures the real issue—whether the agreement should
survive. Mr. Trump has “scotch’d the
snake, not kill’d it.”
While Congress considers how to
respond—or, more likely, not respond—we should focus on the
grave threats inherent in the deal.
Peripheral issues have often dominated the debate; forests have been
felled arguing over whether Iran
has complied with the deal’s terms.
Proposed “fixes” now abound, such
as a suggestion to eliminate the
sunset provisions on the deal’s core
provisions.
A Tehran headline: ‘Crazy Trump and Logical JCPOA.’
the point. The issue was whether the
ABM Treaty remained strategically
wise for America. So too for the Iran
deal. It is neither dishonorable nor
unusual for countries to withdraw
from international agreements that
contravene their vital interests. As
Charles de Gaulle put it, treaties
“are like girls and roses; they last
while they last.”
When Germany, Britain and France
began nuclear negotiations with Iran
in 2003, they insisted that their objective was to block the mullahs from
the nuclear fuel cycle’s “front end”
(uranium enrichment) as well as its
“back end” (plutonium reprocessing
from spent fuel). They assured Washington that Tehran would be limited
to “peaceful” nuclear applications like
medicine and electricity generation.
Nuclear-fuel supplies and the timely
removal of spent fuel from Iran’s
“peaceful” reactors would be covered
by international guaranties.
So firm were the Europeans that
they would not even negotiate unless Iran agreed to suspend all enrichment-related activity. Under
these conditions, then-Secretary of
State Colin Powell agreed their effort could proceed. Today, JCPOA
advocates conveniently ignore how
much Barack Obama and the Europeans conceded to Iran’s insistence
that it would never give up uranium
enrichment.
The West’s collapse was a grave
error. Regardless of JCPOA limits,
Iran benefits from continued enrichment, research and development by expanding the numbers of
scientists and technicians it has
with firsthand nuclear experience.
All this will be invaluable to the
ayatollahs come the day they disdain any longer to conceal their real
nuclear strategy.
Congress’s ill-advised “fixes”
would only make things worse. Sens.
Bob Corker and Tom Cotton suggest
automatically reimposing sanctions
if Iran gets within a year of having
nuclear weapons. That’s a naive and
dangerous proposal: Iran is already
within days of having nuclear weapons, given that it can buy them from
North Korea. On the deal’s first anniversary, Mr. Obama said that “Iran’s
breakout time has been extended
from two to three months to about a
year.” At best, Corker-Cotton would
codify Mr. Obama’s ephemeral and
inaccurate propaganda without constraining Iran.
Such triggering mechanisms assume the U.S. enjoys complete certainty and comprehensive knowledge of every aspect of Iran’s
nuclear program. In reality, there is
serious risk Tehran will evade the
intelligence and inspection efforts,
and we will find out too late Tehran already possesses nuclear
weapons.
The unanswerable reality is that
economic sanctions have never
stopped a relentless regime from
getting the bomb. That is the most
frightening lesson of 25 years of
failure in dealing with Iran and
North Korea. Colin Powell told me
he once advised British Foreign Secretary Jack Straw: “Jack, if you want
to bring the Iranians around, you
have to hold an ax over their
heads.” The new proposals aren’t
even a dull razor blade.
The JCPOA is also packed with
provisions that have never received
adequate scrutiny. Take Annex III,
which envisages full-scale assistance
to, and cooperation with, Iran’s
“peaceful” civil nuclear efforts. Annex III contemplates facilitating
Iran’s acquisition of “state of the
art” light-water reactors, broader
nuclear-research programs, and,
stunningly, protection against “nuclear security threats” to Iran’s nuclear program.
It sounds suspiciously like the
Clinton administration’s failed
Agreed Framework with North Korea. Many Clinton alumni were part
of Mr. Obama’s Iran negotiation
team. In Washington, nothing succeeds like failure. Mr. Trump and his
congressional supporters should expressly repudiate Annex III and insist that Europe, Russia and China
do the same.
The Iran nuclear deal, which Mr.
Trump has excoriated repeatedly, is
hanging by an unraveling thread.
Congress won’t improve it. American and European businesses proceed at their own peril on trade or
investment with Iran. The deal
should have died last week and will
breathe its last shortly.
Mr. Bolton is a senior fellow at
the American Enterprise Institute
and author of “Surrender Is Not an
Option: Defending America at the
United Nations and Abroad” (Simon
& Schuster, 2007).
You Can’t Buy the Presidency for $100,000
By Mark Penn
T
he fake news about fake news
is practically endless. Americans worried about Russia’s
influence in the 2016 election have
seized on a handful of Facebook
ads—as though there weren’t also
three 90-minute debates, two televised party conventions, and $2.4
billion spent on last year’s campaign.
The danger is that bending facts to
fit the Russia story line may nudge
Washington into needlessly and
recklessly regulating the internet
and curtailing basic freedoms.
After an extensive review, Facebook has identified $100,000 of ads
that came from accounts associated
with Russia. Assume for the sake of
argument that Vladimir Putin personally authorized this expenditure.
Given its divisive nature, the campaign could be dubbed “From Russia,
With Hate”—except it would make
for a disappointing James Bond
movie.
Analyzing the pattern of expenditures, and doing some back-of-theenvelope math, it’s clear this was no
devilishly effective plot. Facebook
says 56% of the ads ran after the
election, reducing the tally that
could have influenced the result to
about $44,000. It also turns out the
ads were not confined to swing
states but also shown in places like
New York, California and Texas. Supposing half the ads went to swing
states brings the total down to
$22,000.
Facebook also counted ads as
early as June 2015. Assuming they
were evenly spread and we want
only those that ran the year of the
election, that knocks it down to
$13,000. Most of the ads did not solicit support for a candidate and carried messages on issues like racism,
immigration and guns. The actual
electioneering then amounts to
about $6,500.
Now look at the bigger picture.
Every day, Americans see hundreds
of ads on TV and radio, in newspapers and magazines, on billboards
and smartphones. North Americans
Russia didn’t win Trump
the White House any more
than China re-elected
Bill Clinton in 1996.
post to Facebook something like a
billion times a day, and during the
election many of those messages
were about politics. Facebook
typically runs about $40 million
worth of advertising a day in North
America.
Then consider the scale of American presidential elections. Hillary
Clinton’s total campaign budget, including associated committees, was
$1.4 billion. Mr. Trump and his allies
had about $1 billion. Even a full
By Mike Kerrigan
S
ome Americans question the
Boy Scouts’ recent decision to
welcome girls within its ranks.
I do not. My sense is the Boy Scouts
will be right for some but not all
girls, just as it is for some but not
all boys. Boys like my son Joe.
Joe has always been his own
man. When he was younger, his
mother and I wrestled with whether
to make him do things that other
boys his age were doing. Neither of
us had our hearts in the effort, but
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campaign. There were congressional
investigations, and several fundraisers were prosecuted, but Attorney
General Janet Reno rejected calls for
an independent counsel. Campaigns
tightened up their donor-validation
procedures, and life moved on. The
same is called for here. Internet
companies should improve their
screening of electioneering ads, impose clearer standards on all ads,
and do a better job weeding out
phony accounts.
Millions of taxpayer dollars have
probably been spent already poring
over that $100,000 of Facebook ads.
Better to keep it all in perspective,
as everyone did in 1996. The only
way Russia will get its money’s
worth is if Washington overreacts
and narrows the very freedoms that
make America different in the first
place.
Mr. Penn, managing director of
the Stagwell Group, was chief strategist on Bill Clinton’s 1996 presidential campaign, Hillary Clinton’s 2000
Senate campaign, and Mrs. Clinton’s
2008 presidential campaign.
Scouting Isn’t for Everyone
Rupert Murdoch
Executive Chairman, News Corp
Matthew J. Murray
Deputy Editor in Chief
$100,000 of Russian ads would have
erased just 0.025% of Hillary’s financial advantage. In the last week
of the campaign alone, Mrs. Clinton’s super PAC dumped $6 million
in ads into Florida, Pennsylvania
and Wisconsin.
I have 40 years of experience in
politics, and this Russian ad buy,
mostly after the election anyway,
simply does not add up to a carefully
targeted campaign to move voters. It
takes tens of millions of dollars to
deliver meaningful messages to the
contested portion of the electorate.
Converting someone who voted for
the other party last time is an enormously difficult task. Swing voters
in states like Ohio or Florida are typically barraged with 50% or more of
a campaign’s budget. Try watching
TV in those states the week before
an election and you will see how
jammed the airwaves are.
No one wants foreign governments meddling in American elections. In 1996, the Chinese government had the “China plan” and
pumped hundreds of thousands of
dollars into Bill Clinton’s re-election
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he was our first child. What did we
know?
Thus did Joe become a Cub Scout,
something I never did, right after his
7th birthday. My disinclination for
him to join was a function of my
own childhood. I came of age in the
1980s, a free-range after-school environment where we saw nary an adult
before dinner. Like our favorite
books, we chose our own adventures.
So it’s no surprise that Joe and I
were not model Scouts. We missed
our share of events in our only year
of Scouting, practicing an attendance
policy of salutary neglect. But we
determined not to miss the signature
event: a night on the USS Yorktown,
an aircraft carrier docked in Charleston Harbor.
The evening began with dinner.
To re-create an authentic fighting
ship experience, we were expected to
play the part and move quickly
through the chow line, accepting
whatever fare was slopped onto our
trays.
That’s not entirely true. You could
choose between red and white sauce
on your noodles. But the same ladle
was sloshed between the red and
white sauce vats. This horrified my
son, who could not eat any food two
different sauces had touched. Tears
welled up in his eyes as he shuffled
down the serving line, toward the
gathering gastric storm. Then it was
upon us.
“Red or white, kid, what’ll it be?”
the cook snapped. Joe froze. Staying
in character, the cook continued,
“Son, if we were at war, there’d be no
time to dither.” Joe’s lip quivered.
It’s what he said next, through a
7-year-old’s tears, that I’ll never forget: “I know,” he wailed, “but we’re
not at war, this ship has been decommissioned, and I’m just saying
using the same ladle for two different sauces is bad for business!”
My son has always been
his own man—including
during his ill-fated stint
as a Cub Scout at age 7.
I’ve never felt so many eyes zero
in on me as in that moment. I don’t
know what upset the other parents
most. Joe’s stepping out of seaman
character? His strangely proper use
of the word “decommissioned”? The
suspicion that maybe two ladles were
used in wartime?
I’ll never know, because after that
Joe and I were ghosts on the ship.
Excusing ourselves, we scared up a
nacho dinner from the hangar snack
bar and hit the rack. The next morning, we rode the charter bus home in
silence.
Afterward, my wife and I decided
to trust our guts going forward—to let
Joe be Joe. Looking back, I wouldn’t
have it any other way. Scout’s honor.
Mr. Kerrigan is an attorney in
Charlotte, N.C.
The Clean
Power Plan’s
Counterfeit
Benefits
By Steve Milloy
T
he Environmental Protection
Agency’s proposed repeal of
the Obama administration’s
Clean Power Plan is a milestone.
No Republican administration has
ever mustered the courage to roll
back a major EPA regulation. In a
clever twist, the Trump administration has done so by directly challenging the plan’s purported health
benefits.
Although the Clean Power Plan
was pitched as a way to reduce
emissions of greenhouse gases
from coal-fired power plants,
averting climate change was not
how the Obama EPA justified the
rule. In 2015 House Science Committee Chairman Lamar Smith
forced Obama’s EPA administrator,
Gina McCarthy, to acknowledge
that the plan would produce no
change to global temperatures. Instead, the EPA justified the net
benefit of the rule based on collateral reductions in power plants’
emissions of fine particulate matter. In regulatory parlance, this
soot is called PM2.5.
The Obama EPA claimed
its regulation would have
a $55 billion payoff.
You’ll never believe how.
While the compliance costs to
industry of the Clean Power Plan
could be as high as $33 billion a
year, the Obama EPA claimed that
the economic benefits from reducing PM2.5 emissions would be even
larger—as much as $55 billion a
year.
What are the supposed $55 billion in economic benefits? That
sum is intended to represent the
value of thousands of premature
deaths allegedly prevented every
year by the Clean Power Plan via
the co-benefit of reduced PM2.5
emissions. The EPA values lives
“saved” at around $9 million each.
Thousands times millions equal
billions.
EPA staff invented this calculus
in 1996 to justify the agency’s first
effort to regulate PM2.5, although
there’s no scientific evidence, then
or now, to support the notion that
particulates in outdoor air kill people. The EPA regulated them anyway, stiff-arming not only the Republican-controlled
Congress’s
demands for proof of the danger of
PM2.5 emissions but the objections
of then-Vice President Al Gore, who
thought the rule too costly.
The Clean Air Act requires airquality standards for pollutants
such as PM2.5 be set at a “safe”
level. The EPA has long claimed
that there is no safe level of exposure to PM2.5 and that inhalation
can cause death within hours. But
the EPA could never lower the
PM2.5 standard to zero because
such a standard could not be attained even if the economy was entirely shut down.
The Trump EPA has now largely
jettisoned the notion that PM2.5 is
a killer by slashing the supposed
economic benefits of reduced emissions by $29 billion per year. That
nets out favorably against the rule’s
anticipated annual costs of as much
as $33 billion.
A robust body of scientific literature—from large epidemiologic
studies to clinical research to historical air-quality data—supports
the EPA’s reversal. Standing against
it are a few decades of dubious
agency-funded studies, the underlying data for which the agency has
kept well hidden in order to prevent independent analyses. The
Obama EPA even defied a congressional subpoena in order to keep its
PM2.5 epidemiologic secret.
EPA chief Scott Pruitt has hailed
repeal of the Clean Power Plan as
the end of the Obama administration’s “war on coal.” It’s more like
the beginning of the end. New
York’s Democratic Attorney General
Eric Schneiderman and green
groups have already announced
they will sue. Good luck. When the
Supreme Court voted to stay the
Clean Power Plan in February 2016,
it was a clear signal that the coal
industry and red-state plaintiffs
would prevail on the merits in any
future legal challenge. The EPA’s
acknowledgment that the Clean
Power Plan has no economic or climate benefits is the final nail in
the regulation’s coffin.
Mr. Milloy served on the Trump
EPA transition team and is the author of “Scare Pollution: Why and
How to Fix the EPA” (Bench Press
2016).
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A20 | Monday, October 16, 2017
THE WALL STREET JOURNAL.
I CAN
TURN MILLIONS
OF PLAYERS
INTO
MILLIONS OF
PAYERS.
Now developers can build games
that will win out over the 500
other games released daily.Watson
Data Platform lets them access
real-time player data and build
machine learning modelsócreating
customer-centric games no one is
able to put down. Find out more at
ibm.com/you
This is gaming to 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.
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TECHNOLOGY: E-BOOKS FALL BACK IN FACE OF TRADITIONAL PRINT B4
BUSINESS & FINANCE
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Fallout
Grows for
Harvey
Weinstein
Pentagon Pits Traders vs. Hackers
BY ALEXANDER OSIPOVICH
Dozens of high-speed traders and others from Wall
Street are helping the Pentagon study how hackers could
unleash chaos in the U.S. financial system.
The Department of Defense’s research arm over the
past year and a half has consulted executives at high-frequency trading firms and
quantitative hedge funds, and
people from exchanges and
other financial companies,
participants in the discussions
said. Officials described the effort as an early-stage pilot
project aimed at identifying
market vulnerabilities.
The Defense Advanced Research Projects Agency, or
Darpa, began the initiative before the revelations of attacks
on Equifax Inc. and the Securities and Exchange Commission
brought public scrutiny of risks
to U.S. market infrastructure.
Participants
described
meetings as informal sessions
in which attendees brainstorm
about how hackers might try to
bring down U.S. markets, then
rank the ideas by feasibility.
Among the potential scenarios: Hackers could cripple a
widely used payroll system;
they could inject false information into stock-data feeds,
sending trading algorithms
out of whack; or they could
Among the potential
scenarios: Hackers
could cripple a widely
used payroll system.
flood the stock market with
fake sell orders and trigger a
market crash.
High-speed traders and
quant-fund managers, who
use sophisticated computer
programs to buy and sell
stocks, sometimes in fractions of a second, form the
core of the group. Such traders tend to have deep expertise in the inner workings of
financial markets and the automated systems that account
for huge swaths of trading
activity today.
Darpa officials confirmed
the effort, which is unclassified but hasn’t been previously
reported. The Wall Street
Journal spoke with several
traders who participated in
the initiative, called the Finan-
cial Markets Vulnerabilities
Project.
“We started thinking a couple years ago what it would be
like if a malicious actor
wanted to cause havoc on our
financial markets,” said Wade
Shen, who researched artificial
intelligence at the Massachusetts Institute of Technology
before joining Darpa as a program manager in 2014.
Darpa famously developed
the technology behind the internet and stealth bombers. It
recruits experts from academia and industry in a bid to
keep its thinking fresh. The
Please see DARPA page B2
BY ERICH SCHWARTZEL
Aramark
Bites Off
Big Deals
Food-service giant Aramark Corp. plans to acquire
two closely held companies for
a total of $2.35 billion, in its
largest deals since going public nearly four years ago.
The company is buying Avendra LLC, which procures
food, supplies and services
such as landscaping for hotels
and other institutions, for
$1.35 billion; and AmeriPride
Services Inc., a supplier of
uniforms and towels, for $1
billion, officials said Sunday.
Buying Avendra, which
manages $5 billion in purchasing, “will allow us to leverage
our scale to procure food at a
lower cost,” Aramark Chief Executive Eric Foss said in an interview. AmeriPride, which
has annual sales of $600 million, “will improve our competitive position,” buy allowing the company to offer more
services to customers, particularly in Canada, he said.
Based in Philadelphia, Aramark provides food, facilities
and uniform services to universities, hospitals, jails and
other institutions globally.
The company has more
than 200,000 employees and a
market capitalization of some
$10 billion. Last year, it
booked $14.4 billion in revenue. It’s been in and out of
public ownership over the
years, with its most recent IPO
in 2013.
The food-service industry,
with other major players such
as Compass Group PLC and
Sodexo SA, has come under
pressure as consumers push
for healthier options and as
college students enjoy more
higher-end fast-food and delivery options.
JAMES MACDONALD/BLOOMBERG NEWS
BY ANNIE GASPARRO
AND HEATHER HADDON
An ArcelorMittal plant in Hamilton, Ont. The steelmaker expects auto makers’ demand for press-hardened steel sheet to grow 36%.
Auto Makers Find Strength in Steel
Fiat Chrysler, Honda and Audi are using lighter, hardier versions as aluminum fades
BY BOB TITA
2012 ’14
’16
’18
’20
Auto makers are rediscovering steel.
Varieties of lighter, stronger steel are being used in
Fiat Chrysler Automobiles
NV’s Pacifica van, Honda
Motor Co.’s Ridgeline pickup
truck and General Motors
Co.’s Chevrolet Malibu sedan.
Audi AG, which switched to
an all-aluminum body for its
A8 sedan more than 20
years ago, is using steel
again on the latest model.
“It’s the strongest and
most rigid A8 we’ve built,”
said Audi spokesman Mark
Clothier.
Steel has always been
cheaper and stronger than
aluminum. But conventional
steel is heavy. Many car
makers seeking to comply
with tougher fuel-economy
requirements have shifted in
recent years to aluminum
and other light materials
such as carbon fiber.
Now, steelmakers have
figured out how to make
steel lighter without compromising its strength or versatility. “Everything is moving
to thinner and lighter,” said
Mark Bula, chief commercial
officer at Big River Steel. a
mill that opened in Arkansas
last year. “The steel industry
is moving that way as well.”
On next year’s Audi A8,
steel will make up 40% of
the metal in the passengercompartment frame, up from
8% eight years ago.
By 2025, the amount of
lightweight, high-strength
steel in a car or light truck
in North America is projected to rise to an average
of 483 pounds, 76% above
the 2015 average, according
to industry consultancy
Ducker Worldwide.
ArcelorMittal NV expects
auto makers’ global demand
for press-hardened steel sheet,
which is strong and malleable
Please see STEEL page B2
LOS
ANGELES—Harvey
Weinstein saw fallout from
sexual-assault allegations increase over the weekend, including fresh investigations in
London, as the Oscar-winning
producer was expelled from
the Academy of Motion Picture Arts and Sciences.
Mr. Weinstein was immediately expelled after a majority
of the Academy’s board of
governors voted to dismiss
him, the board said Saturday.
The Academy’s board of
governors said it wanted to
“send a message that the era
of willful ignorance and
shameful complicity in sexually predatory behavior and
workplace harassment in our
industry is over.”
Mr. Weinstein has seen his
company, career and reputation crater in just over a week,
since the New York Times published a report detailing alleged financial settlements he
paid to women who accused
him of sexual harassment.
Since then, allegations of
rape have emerged against
the producer, who was fired
by the board of his independent movie and television
studio, Weinstein Co., and is
now the subject of investigations by police in New York
and London.
London Metropolitan Police
said it was pursuing three
more allegations of sexual assault, in addition to a case
from the late 1980s that it said
it was investigating last week.
U.K. media identified the suspect as Mr. Weinstein, but police wouldn’t identify the man
accused of the assault.
The additional cases were
said to have occurred in
Please see FALLOUT page B2
INSIDE
PRODUCERS
TRY TO IGNITE
LNG DEMAND
THE WEEK AHEAD, B2
KEYWORDS | By Christopher Mims
Homes Tap In to Battery Power
In the near
future, your
home could
be battery-operated.
This is especially true if you live in
New York, California, Massachusetts, Hawaii, Vermont,
Arizona or a growing roster
of other states and municipalities experimenting with
revamping their electrical
grids for the 21st century.
You might not even know
your lights are being kept on
by the same chemical process
that powers your smartphone, since the batteries
could be tucked into what
looks like a neighborhood
junction box, or behind a
fence in a substation. But
now, thanks to efforts by
startups and the utility companies they sell to (and sometimes battle), you might get
one right inside your home.
The rise of these home
batteries isn’t just a product
of our collective obsession
with new tech. Their adoption is being driven by a
powerful need, says Ravi
Manghani, of GTM Research:
Solar Power Takes Off
Annual net additions to global solar panels capacity
80 gigawatts
China
60
40
U.S.
Japan
Europe
India
Other
20
0
2000
’02
’04
’06
’08
Source: International Energy Agency
renewable energy.
Without batteries and
other means of energy storage, the ability of utility companies to deliver power could
eventually be threatened.
Solar power, especially,
tends to generate electricity
only at certain times—and
it’s rarely in sync with a
home’s needs. In some
states, such as California and
Arizona, there’s an overabundance of solar power in
the middle of the day during
’10
’12
’14
’16
THE WALL STREET JOURNAL.
cool times of the year, and
then a sudden crash in the
evenings, when people get
home and energy use spikes.
For utilities, it’s a headache. The price of electricity
on interstate markets can go
negative at certain times, forcing them to dump excess electricity or pay others to take it.
“This is not a long-term
theoretical issue that might
happen—this is now,” says
Marc Romito, director of
Please see MIMS page B4
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B2 | Monday, October 16, 2017
INDEX TO BUSINESSES
A
F
Fiat Chrysler
Automobiles ............. B1
Focus Brands...............R4
B
Bertelsmann ............... B4
Blackstone Group.......A1
Blumhouse..................B4
BP................................B2
C
Campbell Soup............R4
Cheniere Energy..........B2
Chevron ....................... B2
Comcast.......................B4
Compass Group...........B1
Conagra Brands...........R4
Costco Wholesale.......R8
D
Dedicated Systems .. A12
Digital River................B4
Domino's Pizza...........R4
DowDuPont.................R7
E
Electricite de France...B2
Equifax...................B1,B4
Exxon Mobil................B2
McAlister's Deli..........R4
McDonald's..................B8
Mondelez Internatl.....R4
N
G
Nestle .................... R1,R2
General Mills....R1,R2,R8
General Motors...........B1
Goldman Sachs Group B8
Green Mountain
Power........................B4
PayPal Holdings..........B8
Pearson ....................... B4
PepsiCo .................. R2,R8
Procter & Gamble.......R8
P
H
R
HarperCollins .............. B4
Hershey.......................R4
Honda Motor...............B1
Retrophin....................A3
Royal Dutch Shell.......B2
I
Simon & Schuster.......B4
Social Finance.............B8
Sodexo.........................B1
Starbucks....................R4
InContext Solutions ... R4
Instacart......................R4
K
Kellogg...................R1,R2
Kobe Steel...................B9
Kroger..........................R8
S
T
M
Taco Bell......................R4
Takata..........................B9
Teza Technologies.......B2
Total ............................ B2
Tropical Smoothie
Cafe..........................R4
Tyson Foods................R2
Malwarebytes.............B4
Mana Partners............B2
Mandalay Homes........B4
Mars............................R1
Wal-Mart Stores ........ R8
Weinstein....................B1
Yum Brands.................R4
L
Lagardere .................... B4
LLOG Exploration........A3
W-Y
INDEX TO PEOPLE
A-B
F
N-O-R
Aitken, Stuart.............R8
Ashour, Mohammed...R2
Brotman, Adam .......... R4
Brown, Ethan..............R2
Bula, Mark...................B1
Foss, Eric.....................B1
Novogratz, Amy..........R6
Orr, Jim.......................B4
Ross, Jacqueline.........R2
H-K
Hjelm, Chris................R8
Khan, Mehmood..........R2
C-D
L-M
Clothier, Mark.............B1
Collins, James C. .......R7
Dohle, Markus.............B4
Luciano, Juan R..........R6
Macaluso, Paul............R4
McMillon, Doug...........R8
FALLOUT
Continued from the prior page
2010, 2011 and 2015. On Sunday, police said all four allegations were against the
same man.
New York authorities are
re-examining evidence of an
additional alleged assault
charge against the producer
that occurred in 2015. The incident was detailed in a New
Yorker report about the allegations against Mr. Weinstein,
which featured audio from a
recording of Mr. Weinstein
apologizing for touching the
woman’s breasts.
A spokeswoman for Mr.
Weinstein said, “Mr. Weinstein
obviously can’t speak to anonymous allegations, but he unequivocally denies allegations
of non-consensual sex.”
The Academy’s Board of
Governors, whose 54 members
include Tom Hanks and Steven
Spielberg, met Saturday to
discuss Mr. Weinstein’s membership status. It is extremely
rare to see an Academy member expelled for behavior.
The Producers Guild of
America is also weighing
S-T-W
Shkreli, Martin ........... A3
Tate, Tj........................R6
Weinstein, Harvey......B1
Williams, Liz...............R4
whether to expel Mr. Weinstein
from the organization. Mr.
Weinstein has already been suspended from the British Academy of Film and Television Arts,
which hosts the Bafta awards
that have previously honored
Weinstein Co. movies like
“Gangs of New York.”
French President Emmanuel
Macron said Sunday speaking
on national TV that he had
taken steps to strip Mr. Weinstein from the Légion d’honneur.
Mr. Weinstein’s rise in the
1990s was fueled by his ability to turn small independent
releases at his Miramax studio into bona fide Oscar contenders. His shepherding of
movies such as “Pulp Fiction”
shook up the Academy
Awards by positioning his
comparatively tiny company
as a worthy competitor to major studios.
Weinstein Co. had a memorable awards sweep in the
1990s, winning best-picture
awards for “The English Patient” and “Shakespeare in
Love” and collecting numerous
nominations for movies such
as “Good Will Hunting” and
“The Crying Game.”
—Wiktor Szary
contributed to this article.
BUSINESS & FINANCE
Energy Firms Hunt for LNG Buyers
BY SARAH MCFARLANE
After spending hundreds
of billions of dollars to
transform themselves into
global natural-gas giants,
some of the world’s biggest
energy compaTHE WEEK nies face a
AHEAD
new challenge:
generating
more demand
as supplies threaten to balloon and prices languish.
Companies including
Royal Dutch Shell PLC, Total SA and Cheniere Energy
Inc., are trying to establish
new markets for liquefied
natural gas, a super-chilled
version of the fuel that can
be shipped around the
world. Producers are promoting the use of LNG for
industrial trucking and shipping. Companies also say
they are considering building
the power plants and infrastructure necessary to provide gas and electricity in
developing markets such as
South Africa and Vietnam.
”If we want to unlock
these pockets of demand in
emerging markets, we all
have to do more to make
that happen,” said Peter
Mackey, an executive at GE
Power, which designs LNG
facilities. “We have to ultimately help the end customer; it’s about delivering
the whole solution.”
The opportunities and
challenges of developing a
global LNG market will be a
focus for Shell, BP PLC,
Chevron Corp., Exxon Mobil
Corp. and other energy companies gathering this week
in London for an industry
conference.
LNG prices are mired at
roughly half of their 2014
peak, with LNG delivered to
Asia trading around $8.70
per million British thermal
units. And after the global
energy industry spent $725
billion from 2007 to 2016 on
LNG projects, according to
consultant Wood Mackenzie,
large new supplies are coming online in the U.S., Russia,
Australia and Qatar.
Shell spent over $50 billion to buy BG Group in 2016
to become the world’s biggest shipper and producer of
LNG. Chevron has recently
brought online two Australian LNG projects that cost
over $80 billion. Shell and
Exxon say they produce
more gas than crude oil to-
ANTARA FOTO AGENCY/REUTERS
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.
Amazon.com..........B4,R8
AmeriPride Services...B1
Aramark ...................... B1
ArcelorMittal .............. B1
Archer Daniels
Midland.....................R6
Audi.............................B1
Avendra.......................B1
Prices for liquefied natural gas are mired at roughly half of their 2014 peak. A plant in Indonesia.
Chilled Gas Expands
Liquefied natural gas production from onstream/
under-construction projects
400 million metric tons a year
Projections from 2017
STEEL
Continued from the prior page
for complex stamped parts, to
grow 36% by 2020 to 3.7 million metric tons.
The company, the world’s
largest steelmaker, began
producing a new generation
of super-strong steel at its
mill in Calvert, Ala., this
year.
And it plans to open a
plant in Detroit late this
year—the third of its kind in
the U.S.—to weld and heattreat multiple pieces of lightweight steel of varying
Australia
Qatar
200
Rest of World
100
0
2010 ’11 ’12 ’13 ’14 ’15 ’16 ’17 ’18 ’19 ’20 ’21 ’22
Source: Wood Mackenzie
day, and BP will do so by
2025, according to Wood
Mackenzie.
These shifts in strategy
were aimed at capturing demand for gas as a cleanerburning alternative to coal
for electricity and as a transportation fuel as governments across the world
sought to cut emissions.
Demand for natural gas
will grow about 1.5% a year
out to 2040, compared with
oil-demand growth of 0.4% a
year, according to the International Energy Agency.
From 2016 to 2020, trade in
LNG is expected to increase
by one-third to 350 million
tons a year, Shell estimates.
So far, companies have
found customers for that
new gas, mostly because it
was inexpensive and technological innovations cut the
cost of building import terminals. The number of countries importing LNG has
said he began taking part in
the Darpa meetings as a skeptic, thinking the U.S. stock
market was resilient and it
was unlikely for attackers to
cause anything more than temporary damage. But since then,
he has gotten more worried.
One scenario he fears: a
hack of a U.S. exchange in
which the attacker sends a
wave of fake sell orders to every firm offering to buy shares.
That could potentially erase
hundreds of billions of dollars
of market value as prices drop
and firms try to cover losses
by selling on other exchanges,
Mr. Narang said.
Project participants have also
strength grades and thicknesses into a single sheet.
Sheets from these plants
are stamped into large components, such as door
frames, that feature some
sections with extra-strong
steel and others with steel
that has less strength but is
easier to bend. The 2017
Chrysler Pacifica’s two frontdoor frames are each made
of five pieces of steel with
three different thicknesses.
The door frames shaved 22
pounds off the vehicle, Fiat
Chrysler said.
Aluminum remains in
wide use with auto manufacturers looking to reduce a
vehicle’s weight. Even as
lighter steel gains popularity,
aluminum is expected to
continue replacing heaviersteel varieties.
Aluminum content in cars
and light trucks in North
America is expected to reach
an average of 520 pounds in
2025, a 31% increase from
2015, according to Ducker
Worldwide. More than twothirds of closure components, such as hoods and
trunk lids, on light vehicles
are expected to be aluminum
by 2020, double from 2016.
“High-strength steel has
some inherent properties
that are tough to escape
from. It’s three times
heavier” than aluminum,
said Svein Richard Brandtzaeg, chief executive of Norwegian aluminum producer
Norsk Hydro ASA.
Aluminum’s penetration
into the auto industry is experiencing some growing pains.
Auto makers in Japan are
scrambling to check the
safety of their aluminum
components after one of
Japan’s biggest aluminum
suppliers, Kobe Steel Ltd., last
week disclosed that qualitycontrol paperwork for auto
customers had been doctored.
—Chester Dawson
contributed to this article.
MICHAEL BUCHER/THE WALL STREET JOURNAL
fund Mana Partners, said he
had advised Darpa, too.
Among potential targets
that participants have worried
could appeal to hackers given
their broad reach are creditcard companies, payment processors and payroll companies
such as Automatic Data Processing, Inc., or ADP, which
handles the paychecks for one
in six U.S. workers, participants said.
An ADP spokesman said,
“We work diligently to protect
our clients’ data, which includes efforts to prevent, detect and respond to attempted
cybersecurity incidents.”
The Mana Partners CEO
debated the impact of attackers
transmitting false data via the
electronic feeds that traders use
to monitor stock prices, or publishing “fake news” to shake investor confidence.
The goal of Darpa’s project is
to develop a simulation of U.S.
markets, which could be used to
test scenarios, Mr. Shen said.
Such software would need
to model complex, interrelated
markets—not just stocks but
also markets such as futures—
as well as the behavior of automated trading systems operating within them.
Many quantitative trading
firms already do something
similar, Mr. Narang said. His
company won a small contract
from Darpa this year to test
whether its simulation tool
could be used by the agency,
according to Mr. Narang and a
Darpa spokeswoman.
The project isn’t the first
time the Pentagon has studied
such risks.
In 2009, military experts
took part in a two-day war
game exploring a “global financial war” involving China
and Russia, according to “Currency Wars: The Making of the
Next Global Crisis,” a 2011
book by James Rickards. The
Applied Physics Laboratory at
Johns Hopkins University
hosted the event, a spokesman
there confirmed.
Mana CEO Manoj Narang is among those who have advised Darpa.
U.S.
300
DARPA
Continued from the prior page
agency declined to release a
list of its financial-industry
advisers for the project.
There have been three
meetings for the project since
last year, with another one expected later this year, an
agency spokeswoman said.
The last meeting took place in
a conference room at New
York University this spring
over pizza, participants said.
High-frequency traders have
been vilified by critics such as
author Michael Lewis, who accused them in his book “Flash
Boys” of exploiting slowermoving investors by “frontrunning” their orders, though
these traders deny doing this
and say it isn’t even possible.
Some of the biggest names in
the high-speed trading business
have advised Darpa. They include Jamil Nazarali, senior adviser to the chief executive officer of Citadel Securities, a
trading giant responsible for
around 20% of daily volume in
U.S. stock markets. Misha Malyshev, CEO of trading firm Teza
Technologies, has “advised
Darpa on vulnerabilities within
the U.S. financial markets,”
Teza’s website said. Manoj
Narang, CEO of quant hedge
THE WALL STREET JOURNAL.
* *****
THE WALL STREET JOURNAL.
risen to 40, from 17 a decade
ago, according to GIIGNL, the
International Group of Liquefied Natural Gas Importers.
But many countries, such
as Myanmar, Vietnam and
South Africa, don’t have the
infrastructure to import and
distribute large amounts of
natural gas for home heating
and electricity. After building all of that LNG production capacity, companies now
are forced to look to such
less-developed and potentially riskier markets.
“The next wave of LNG
consumers are less creditworthy, less experienced,
less organized, and politically less predictable,” said
Jason Feer, head of business
intelligence at consultancy
Poten & Partners.
Total said it is interested
in supplying Myanmar and
South Africa with LNG and
building infrastructure including power plants to dis-
tribute power. It also is planning to build an LNG
terminal in Ivory Coast along
with Shell in a project allowing the West African country
to plug more gas into its
electricity system.
Shell said it seeks to participate in projects to build
import terminals and to find
partners to construct power
plants, in addition to supplying LNG.
“Shell overall is moving
more into the power sector
both in terms of investment
propositions and the trading
business,” said Steve Hill, executive vice president for
Shell Energy.
U.S. gas exporter Cheniere
Energy teamed up with
French utility EDF SA to find
an outlet for its gas. The
project has stalled because
of environmental-permitting
issues, but Cheniere is sticking to its approach.
“We’re actively casting a
global net for more such opportunities,” said Anatol Feygin, chief commercial officer
at Cheniere. “As are all of
our competitors,” he added.
Only one LNG-to-power
project has come to fruition.
Earlier this year Malta
started importing LNG to
fuel a power plant converted
from fuel oil to natural gas.
Meanwhile, energy companies face challenges in finding other uses for LNG. Environmental regulations for
cleaner shipping fuels could
create an opportunity for
LNG. But there are only a
limited number of ports in
the world where LNG as a
shipping fuel is available.
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THE WALL STREET JOURNAL.
Monday, October 16, 2017 | B3
NY
* *
BUSINESS NEWS
BY RYAN DEZEMBER
Smarte Carte International Holdings Inc., whose
luggage carts, lockers and
massage chairs are ubiquitous
in U.S. airports, has been acquired by 3i Group PLC, a
British buyout firm that is
pushing into North American
infrastructure, said people familiar with the matter.
The firm paid $385 million
for Smarte Carte, a sum that
includes the company’s debt,
one of the people said. The
firm plans to eventually refinance the deal with new debt,
the people said.
Management of closely held
Smarte Carte will retain a
stake in the 50-year-old St.
Paul, Minn., company alongside 3i, the people said.
The purchase comes at a
time when many investment
firms around the world are
flush with cash and are scouring the U.S. for infrastructure
deals. Despite the Trump ad-
ministration’s pledges to boost
private investment in roads,
airports and utilities, the firms
are finding limited opportunities to put their cash to work.
The Smarte Carte deal
shows how these firms remain
somewhat restricted to the
types of infrastructure assets
and services in which they
have long traded rather than
pursuing new privatizations
and public-works projects.
Investors committed $60
billion to private infrastructure funds last year and have
added more than $40 billion
this year, according to data
provider Preqin. They have
been drawn by fairly reliable
returns that often outperform
private-equity funds that tend
to make riskier bets, such as
on corporate buyouts, Preqin
data show.
Meanwhile, deals are down
in both number and dollar volume, according to the data
provider. It says higher prices
are resulting from more firms
JAE C. HONG/ASSOCIATED PRESS
Buyer Wheels Off Cart Maker
Buyout firm 3i has purchased Smart Carte International Holdings.
angling in a smaller pool of
opportunities.
London-based 3i hasn’t yet
raised an infrastructure fund.
In March, it hired Rob Collins,
who once ran Morgan Stanley’s infrastructure business,
to hunt for investments in
North America using its own
balance sheet.
Smarte Carte is well-trod
territory for private-equity
firms. 3i will be the seventh
firm to take over the company
since its founder first sold a
controlling interest to a New
York buyout shop in 1993.
That firm, Castle Harlan
Inc., sold Smarte Carte to a
Dallas investment firm three
years later for $113.5 million, a
deal in which the seller said it
made 25 times its cash investment. It was sold again in
1998 to Blum Capital Partners.
Smarte Carte buckled under
nearly $200 million of buyout
debt, though, and filed for
bankruptcy protection in 2005.
The company’s creditors took
it over and sold it to Macquarie Bank Ltd. the next year
for $270 million. The Australian bank then flipped the
company in 2014 to Fortress
Investment Group LLC, which
has sold it to 3i.
3i approached Fortress to
head off a competitive auction,
according to a person familiar
with the latest sale. Smarte
Carte’s luggage trolleys, phone
chargers, lockers, massage
chairs and strollers are in all
but one of the 50 largest U.S.
airports.
Rent the Runway Puts Fashion on a Budget
BY KHADEEJA SAFDAR
AND SUZANNE KAPNER
To Buy or Not to Buy
Rent the Runway, a fashion
rental service popular in big
U.S. cities, is set to launch a
new plan to test whether
women in Middle America are
willing to borrow apparel
rather than buy it.
The New York-based company on Monday is introducing a subscription priced at
$89 a month, 36% less than
the $139 monthly subscription
plan the company launched
last year. The lower-priced
plan limits customers to four
items a month and excludes
some high-end designers.
Jennifer Hyman, chief executive and co-founder of Rent
the Runway, said the new plan
is aimed at price-sensitive
shoppers. “It’s unrealistic to
assume that at a price point of
over $100 a month that you’re
ever going to touch people
Here’s how many dresses a shopper could rent in a year, at a cost of $1,068, from Rent the Runway's lower-priced plan versus
how many she could buy at selected retailers.
TARGET
ZARA
32.9 dresses
21.2 dresses
RENT THE RUNWAY
48 dresses
Average monthly rental/dress = $22.25
Average price/dress = $32.44
KATE SPADE
1.9 dresses
Average
price/dress =
$568.82
Average price/dress = $50.32
THE WALL STREET JOURNAL.
Source: MarketTrack
who are making less than
$100,000 a year,” she said.
Under the new model, customers can rent as many as
four pieces a month, including
dresses, coats or handbags,
from labels such as Tory
Burch, Vince and Diane von
Furstenberg. The items arrive
dry-cleaned and in a garment
bag with a prepaid postage label; the customer must return
them by the end of a month to
obtain four more items.
With the new price tier,
Rent the Runway is hoping to
compete with fast-fashion and
discount retailers such as T.J.
Maxx, Zara and H&M, which
have bucked many of the prob-
lems dragging down traditional clothing chains by luring shoppers with low prices.
The $89 plan offers access
to over 200 brands; subscribers keep the four items for the
month. The regular monthly
plan offers higher-end labels
such as Proenza Schouler and
Oscar de la Renta and unlim-
ited exchanges throughout the
month; it is set to go from
three items at a time to four,
and to increase in cost to $159
a month for new customers.
The price will remain $139 a
month for existing customers.
Under both plans, more
items can be rented for an additional charge.
Mylan Hits
Patent Sale
To Tribe
BY JONATHAN D. ROCKOFF
Generic-drug company Mylan NV has fired back at rival
Allergan PLC’s attempt to shield
its top-selling eye drug from
competition by transferring the
patents to an Indian tribe.
Allergan last month sold
patents for its Restasis dryeye drug to the St. Regis Mohawk Tribe in upstate New
York. Allergan said its aim was
to avoid the “double jeopardy”
of defending Restasis patents
in both federal court and the
U.S. Patent and Trademark Office. The tribe’s sovereign status would exempt it from
cases before the patent office.
Mylan on Friday asked a
federal judge in Marshall,
Texas, to rule that the patent
transfer is a “sham” and prevent the Indian tribe from
joining Allergan’s patent litigation before the court.
In its brief, Mylan argued
Allergan sold the patents to
preserve Restasis sales. “There
has been no real change in
ownership—just a maneuver
to derail” the patent office’s
review, Mylan’s brief said.
Also Friday, Allergan filed a
brief arguing for adding the
tribe to the patent-litigation
proceeding in the federal
court. Allergan said a “legitimate arm’s-length transaction” transferred ownership of
the patents to the tribe.
A ruling for Mylan could
bolster its efforts to persuade
the patent office to reschedule
the hearing on the validity of
the Restasis patents.
Such a ruling might also affect whether other drug and
technology companies follow
Allergan’s lead in joining with
Indian tribes to take advantage of their special legal status as sovereign governments
to avoid patent challenges.
Michael Shore, a lawyer for
the tribe, said there was “zero
chance” Mylan would prevail
on its allegation of a sham
patent transfer.
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n 1978, 300 bankers traveled to
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The focus on innovation, however, doesn’t
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Vinod Madhavan, head of trade for
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like South Africa, the banking infrastructure is fairly mature, but the situation is
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Meanwhile, half the world’s population still
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Finally, collaboration with fintech
companies, or tech giants like Google, Apple
and Facebook, may be a shotgun wedding
for banks, or a historic opportunity.
Mr. Madhavan suggests that innovative
banks will increasingly partner with
technology companies so they can think
and act local. For example, in South Africa
Standard Bank worked with a provider of
QR codes called SnapScan, later taking a
financial stake in the start-up.
“There are enough inefficiencies in the
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Tim Phillips is a freelance business
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The Wall Street Journal news organization was not involved in the creation of this content.
The Standard Bank of South Africa Limited (Reg. No. 1962/000738/06).
Moving Forward is a trademark of The Standard Bank of South Africa Limited. SBSA 275608 07/17
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
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B4 | Monday, October 16, 2017
* *
THE WALL STREET JOURNAL.
TECHNOLOGY
The story behind
Equifax’s latest web
problems is a digital
whodunit.
petitor, connecting to the Netflame.cc domain, he said.
Equifax didn’t respond to a
message seeking comment Friday. On Thursday, the company
blamed its security issue on a
third-party analytics website,
without naming Digital River.
Neither Equifax nor TransUnion have been Digital River
customers directly, but Central
Source LLC, a joint venture set
up by the credit-reporting agencies to run annualcreditreport.com, had a contract to
use Fireclick that expired in May
2014, Digital River said. Annualcreditreport.com is a site where
people can check their credit reports with each of the three major firms free once a year.
Central Source couldn’t be
reached for comment.
That joint venture is likely
the reason Equifax and TransUnion were still trying to connect to the defunct Fireclick
service, Mr. Segura said. “It’s
the responsibility of whoever
owns the website to ensure that
all scripts are relevant,” he said.
Equifax has blamed failures
in its scanning and patch-management systems for a May
2017 data breach that compromised the personal information of 145.5 million consumers. The security issue
reported this week was likely
due to a similar type of failure.
Digital River said Fireclick’s
last clients stopped using the
service in late 2015, so there
were no clients to notify when
it took the Fireclick service
down and released the domain.
In a statement Friday, TransUnion said it was aware its Central America site redirected users to download malware. After
fixing the issue, TransUnion
scanned its other sites and
found no unauthorized access to
its systems, the company said.
BY ZEKE TURNER
FRANKFURT—Book publishers are giving an advance
review of the industry’s future, and it looks a lot like the
past.
After a decade of technological upheaval and lackluster
growth, executives at the top
four U.S. consumer-book publishers say they are done relying on newfangled formats to
boost growth.
It has been nearly 10 years
since Amazon.com Inc. introduced its Kindle e-book reader
amid the financial crisis, destabilizing publishers and
challenging their well-honed
business models.
Now, e-book sales are on
the decline, making up a fraction of publishers’ revenue,
and traditional book sales are
rising. The consumer-books
industry is enjoying steady
growth in the U.S., with total
revenue increasing about 5%
from 2013 to 2016, according
to the Association of American
Publishers.
Executives gathered in
Frankfurt for the industry’s
biggest trade fair said they are
returning to fundamentals:
buying and printing books
that readers want to buy—and
they are streamlining their
businesses to get them out
faster than ever before.
It is about “knowing what
[readers] want, to drive demand at scale,” said Markus
Dohle, chief executive of Bertelsmann SE and Pearson
PLC’s joint venture Penguin
Random House.
The shift is a surprise reversal for an industry that experts just a decade ago predicted was facing radical
change, if not a slow death,
because of digitization and
MIMS
Continued from page B1
customer technology at Arizona Public Service, the
state’s largest electric utility.
There’s something ruggedly individualistic and inherently American about having batteries in your home.
They’re good for keeping
power going in a disaster, as
customers of the two biggest
firms by sales volume in this
field, Sonnen Inc. and Tesla
Inc., demonstrated in the
aftermath of Hurricane Irma.
And in combination with
rooftop solar panels, they
free people from total
dependence on the grid—a
kind of energy cable-cutting
that wonks call “grid
defection.”
The very real possibility
of grid defection is changing
the power dynamics between
utilities and their customers.
Last week, real-estate developer Mandalay Homes
announced a plan to build up
to 4,000 ultra energy-effi-
JOHN MACDOUGALL/AGENCE FRANCE-PRESSE/GETTY IMAGES
The security issue that
caused visitors to Equifax
Inc.’s website this week to encounter malicious software
happened because the site was
attempting to use a discontinued web product, security researchers said Friday.
The story behind Equifax’s
latest web problems is a digital whodunit illustrating the
complex nature of the creditreporting company’s online
operations and the struggles it
has had in securing its systems despite several data
breaches in the past year.
On Thursday, security researchers at security vendor
Malwarebytes Corp. identified
a small piece of code on Equifax’s website that connected
users to the Netflame.cc internet domain, which was the
source of the malicious software. That domain once was
used by Digital River Inc., an
e-commerce and digital-marketing vendor, for a now-defunct web-analytics product
called Fireclick, Digital River
said.
But the domain’s registration was released in October
2016, three months after Digital River ended support for
Fireclick as part of an “ongoing domain cleanup,” said
Christopher Rence, the company’s chief information and
risk officer.
That domain was registered
Nov. 15 to an individual with
an address listed southeast of
Bangkok, according to internet
records.
On Thursday, the Netflame.cc domain was serving up
a variety of malicious software,
including fraudulent online surveys, adware and software designed to steal online-banking
credentials, said Jerome Segura, an analyst with Malwarebytes. It is common for scammers to be on the lookout for
soon-to-expire web domains so
they can snatch them up and
use them to deliver malicious
software, he said.
Mr. Segura also discovered
the Central America site of
TransUnion, an Equifax com-
With e-book sales off,
publishers emphasize
the traditional format
and at a quicker pace
A visitor browsed at the Frankfurt Book Fair last week. Printed-book revenue rose 4.5% in the U.S. last year, as e-book sales fell 17%.
House, CBS Corp.’s Simon &
Schuster Inc., Lagardère
SCA’s Hachette Livre and News
Corp’s HarperCollins Publishers—showed the decade of
seeking cover from outside
threats is over, but the fight to
overcome
the
lackluster
growth it left behind has just
begun.
One thing all agree on is
the need for speed. Companies
are reinvesting in printed
books after years of cost-cutting, and they are building
pipelines to bring an author’s
words into readers’ hands
faster.
The effort has been spurred
on by the success of books
that resonate with the political moment such as HarperCollins’s “Hillbilly Elegy,” by
J.D. Vance, about rural American culture and Penguin Random House’s “Devil’s Bargain,”
by Joshua Green, about former
White House chief strategist
Steve Bannon.
HarperCollins is printing
two million copies of “Hillbilly
Turn the Page
U.S. book publishers have
watched e-book sales decline,
even as printed-book sales
rise. Annual change in
revenue, by type
Print*
5%
0
0
–5
–10
–15
–20
2013
E-Book
’14
’15
’16
*Includes, hardcover, paperback
and mass market.
Source: Association of American Publishers
THE WALL STREET JOURNAL.
changing reading habits. Instead, e-book sales in the U.S.
were down about 17% last
year, according to the AAP industry group, while printedbook revenue rose 4.5%.
Interviews at the Frankfurt
Book Fair with the top four
consumer-book publishers in
the U.S.—Penguin Random
cient homes—including
2,900 in Prescott, Ariz.—that
will feature 8 kilowatt-hour
batteries from German
maker Sonnen. It could eventually be the biggest home
energy-storage project in the
U.S., says Blake Richetta, senior vice president at Sonnen.
The homes, which will
come with the Sonnen battery preinstalled, will be part
of a Sonnen-managed “virtual power plant for demand
response” that could allow
the houses to stabilize the
grid, lower its carbon footprint and decrease peak
load, says Mr. Richetta.
While the Mandalay
Homes project is still in the
blueprint stage, with only
one test home built so far,
this kind of radical, batteryenabled rethink of the grid is
already happening in Vermont.
In partnership with Tesla
Energy, Green Mountain
Power is offering 2,000 of its
customers the opportunity to
have a Tesla Powerwall in
their home for $15 a month.
Elegy,” Chief Executive Brian
Murray said, after an initial
pre-election print run of just
15,000 copies. “Everyone on
the coasts wanted to know
how Donald Trump got
elected…and to understand the
view from the heartland of
America,” Mr. Murray said.
HarperCollins, like The Wall
Street Journal, is owned by
News Corp.
Mr. Murray blamed flagging
e-book sales on “screen fatigue,” and said HarperCollins
was raising its investment in
printed books, “the value anchor” for the entire business.
Printed books are “more
beautiful now,” he said. “You’ll
see endpapers [and] a lot
more design sensibility going
into the print editions because
we recognized that they can’t
be throwaway.”
When Simon & Schuster
published the hardback edition
of Hillary Clinton’s “What
Happened” last month, it sold
167,000 copies in its first
week, more than any hard-
cover nonfiction book since
2012, according to the company and NPD Bookscan data.
CEO Carolyn Reidy said a million copies would ship by the
end of the year.
And after years “spent taking pennies out of the cost of
making a book,” the company
is raising the quality of its
print editions again, she said.
Publishers say the quickening pace of politics, especially
in the U.S., has made speed
all the more crucial. “Previous
presidents
moved
more
slowly,” said Eric Nelson, executive editor for the Harper
imprint of HarperCollins.
“You could write to where
you’d think the political world
would be in a year and likely
be correct. Now, you could
spend an entire chapter on a
prominent political figure in
President Trump’s administration and that person could
be gone by the time the book
comes out.”
—Jeffrey A. Trachtenberg
contributed to this article.
IAN THOMAS JANSEN-LONNQUIST/BLOOMBERG NEWS
BY ROBERT MCMILLAN
AND ANNAMARIA ANDRIOTIS
In Books, Print Makes a Stand
A customer inspects a Tesla Powerwall unit inside a Vermont home.
The 13.5 kilowatt-hour batteries retail for $5,500, but
the utility can afford to put
them in homes because they
help the company save on
other grid infrastructure,
says Mary Powell, GMP’s
chief executive and president. “Peaker plants,” for instance, are fired up only
when the grid is strained to
maximum capacity, saving
the utility from using one of
its most expensive forms of
electricity.
GMP also uses batteries
from Sonnen, SimpliPhi and
Sunverge. Ms. Powell says
the larger battle for home
battery storage will be over
how each of these companies—and dozens of others—
differentiates itself, selling
different size batteries
adapted for different uses in
homes, businesses and utilities.
Arizona Public Service’s
Mr. Romito says not all of
these batteries are created
equal—though he wouldn’t
name names.
The biggest challenge to
home battery storage remains economics. Utilities’
current rate structures
don’t charge most homeowners for using excess
power, nor do they change
the price based on time of
day. For the overwhelming
majority of homeowners,
the payback on a solar
power system with battery
storage could take decades.
Batteries aren’t the only
way to reduce the need for
short-order energy, or socalled “demand response,”
says Mr. Romito. Smart thermostats, managed by the utility company, can precool
homes when solar power is
at peak production, reducing
load on the grid in the evening.
MEDIA
‘Death Day’ Scares Off Its Rivals
Associated Press
UNIVERSAL PICTURES/ASSOCIATED PRESS
Equifax
Runs Into
A Fresh
Problem
WSJ.com/Tech
The horror movie ‘Happy Death Day’ led the weekend box office.
Estimated Box-Office Figures, Through Sunday
SALES, IN MILLIONS
DISTRIBUTOR
WEEKEND* CUMULATIVE % CHANGE
1. Happy Death
Day
FILM
Universal
$26.5
$26.5
--
2. Blade Runner
2049
3. The Foreigner
Warner Bros.
$15.1
$60.6
-54
STX
Entertainment
Warner Bros.
Twentieth
Century Fox
$12.8
$12.8
--
$6.1
$5.7
$314.9
$20.5
-39
-46
4. It
5. The Mountain
Between Us
*Friday, Saturday and Sunday
Source: comScore
LOS ANGELES—The box office might be struggling this
year, but the horror genre is
alive and well.
This weekend the “Groundhog Day”-like horror movie
“Happy Death Day” scored a
first-place finish, outperforming the much costlier and stardriven “Blade Runner 2049.”
Studio estimates Sunday
showed “Happy Death Day”
took in $26.5 million from
3,149 North American theaters. Having a $5 million production price tag, “Happy
Death Day” is already a hit.
With a PG-13 rating, the
film scored big with younger
crowds: 63% of audience members were under 25 years old.
It is the latest success story
from Blumhouse Productions,
which earlier this year released “Split” and “Get Out,”
with the help of distributor
Universal Pictures, which is
owned by NBCUniversal, a unit
of Comcast Corp.
Jim Orr, executive vice
president of domestic distri-
bution for Universal, said
“Happy Death Day” is an original movie that rethinks the
genre. “It’s as much thriller as
it is horror film,” he said. “It’s
scary, it’s funny, and it has an
extraordinarily clever script
that is very well executed.”
The film also had the benefit of coming on the heels of
the success of “It,” the movie
adaptation of the Stephen
King horror novel. “It” has
earned $314.9 million domestically to date. The “Happy
Death Day” trailer played in
front of “It” at theaters, which
“exponentially increased” audience awareness, according
to comScore senior media analyst Paul Dergarabedian.
Horror continues to be a
bright spot at the box office.
“This is a horror gold rush
at the theaters,” Mr. Dergarabedian said. “It’s been perhaps
the most consistently positive
story this year.”
One film that doesn’t look
destined for a happy ending is
“Blade Runner 2049,” which
fell 54% in its second weekend
in theaters, adding $15.1 mil-
lion to bring its domestic total
to $60.6 million.
The film was a costly endeavor with a production price
tag north of $150 million and
was well reviewed by critics,
but couldn’t manage to draw
in significant audiences beyond the fans of the 1982 original, which was also a flop
upon release.
Jackie Chan’s “The Foreigner” made its debut in
third place with $12.8 million
from 2,515 screens, while “It”
landed in fourth place in its
sixth weekend in theaters.
The Kate Winslet and Idris
Elba disaster movie “The
Mountain
Between
Us”
rounded out the top five with
$5.7 million.
Other new releases landed
outside the top 10. The Thurgood Marshall biopic “Marshall” took in a promising $3
million from 821 theaters.
“Goodbye
Christopher
Robin,” about author A.A.
Milne and the creation of beloved children’s books and
characters, opened poorly with
$56,000 from nine theaters.
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.
Monday, October 16, 2017 | B5
THE MONOLITHIC VIEW
OF EMERGING MARKETS
INVESTING IS OBSOLETE.
At PGIM, we see things differently, unbundling emerging
markets to identify the trends driving alpha.
We see opportunity in the leap into the digital era with
fintech and e-commerce; in trade and travel surging between
emerging markets; in a rising middle class projected to spend
$33 trillion by 2030.1
And every day, our 1,100 investment professionals around
the world seek out such opportunities.2
Partner with PGIM to see the investable implications across
emerging market sectors and themes.
Get our perspective at pgim.com/EM
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FIXED INCOME | EQUITIES | REAL ESTATE | ALTERNATIVES | PRIVATE DEBT
1
Ericsson, June 2016; Brookings Institute, July 2012; PGIM Real Estate, February 2017.
2
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
THE WALL STREET JOURNAL.
B6 | Monday, October 16, 2017
MARKETS DIGEST
Dow Jones Industrial Average
22871.72 s 98.05, or 0.43% last week
High, low, open and close for each of
the past 52 weeks
New to the Market
S&P 500 Index
Last Year ago
Trailing P/E ratio 20.93 20.03
P/E estimate *
19.39 17.46
Dividend yield
2.24
2.59
All-time high 22872.89, 10/11/17
Current divisor 0.14523396877348
Last
2553.17 s 3.84, or 0.15% last week
High, low, open and close for each of
the past 52 weeks
Year ago
Trailing P/E ratio 24.55 24.33
P/E estimate *
19.39 18.12
Dividend yield
1.95
2.15
All-time high: 2555.24, 10/11/17
23000
65-day moving average
2525
22000
2450
65-day moving average
21000
t
t
Friday's close
200-day moving average
200-day moving average
UP
Friday's close
19000
Monday's open
18000
2150
17000
2075
16000
2000
Week's low
2225
Bars measure the point change from Monday's open
D
J
F
M
A
M
J
J
A
S
O
NYSE weekly volume, in billions of shares
O N
t
Primary
market
t
O N
Composite
D
J
F
M
A
M
J
J
A
S
D
J
F
M
A
M
J
J
A
S
O
Apple reported a $2.7 million fiscal fourth-quarter profit,
slightly better than some expected. Apple stock ended at
$23.75, down 25 cents, before the announcement.
O
Weekly P/E data based on as-reported earnings from Birinyi Associates Inc.
Major U.S. Stock-Market Indexes
High
% chg
52-Week
Close (l)
Low
Dow Jones
Industrial Average 22905.33 22739.38 22871.72
Transportation Avg 10080.51 9836.96 9936.22
Utility Average
747.07 730.94
737.25
Total Stock Market 26538.40 26379.57 26485.98
685.13
Barron's 400
688.50 683.41
98.05
49.34
6.10
18.63
-1.93
0.43 17888.28
0.50 7967.02
0.83 625.44
0.07 21514.15
-0.28
l 22872.89
l 10038.13
l
754.8
l 26510.39
l
687.05
521.59
s 15.62, or 0.24%
% chg
YTD 3-yr. ann.
% chg
High
26.1
23.6
13.1
20.1
26.9
15.7
9.9
11.8
13.8
13.9
11.9
8.8
9.5
10.9
12.3
26.7
26.7
22.7
25.3
16.2
17.0
last week
6625
6600
Nasdaq Stock Market
Nasdaq Composite
Nasdaq 100
6616.58 6561.78
6100.06 6036.72
6605.80
6092.45
0.24
0.46
15.62
27.88
l
5046.37
4660.46
6605.8
l 6092.45
6575
Standard & Poor's
2557.65 2541.60
1826.23 1810.81
917.61 906.16
500 Index
MidCap 400
SmallCap 600
2553.17
1818.82
908.37
0.15
0.02
3.84
0.39
-6.73 -0.74
l 2555.24
l 1819.96
2085.18
1476.68
703.64
l
918.72
14.0
9.5
8.4
19.7
19.7
23.3
1501.14 1502.66
12281.17 12352.02
540.55
542.81
4244.29 4261.55
549.94
553.32
97.79
98.88
85.43
87.29
136.04
138.09
1194.18 1219.21
9.61
9.44
-7.56 -0.50
34.33
-0.33
-1.80
-20.94 -0.49
0.77
-1.86 -1.85
0.39
-0.17
-0.24
27.77
-0.04 -0.41
1156.89
10289.35
455.65
2834.14
0.14
463.78
70.93
0.45
73.03
117.79
2.33 802.88
9.19
l
0.28
Philadelphia Stock Exchange
1512.09
l 12362.06
l
545.78
10.8
12.2
14.2
l
4304.77
l
555.86
l
100.76
l
96.72
l
192.66
l 1219.21
l
22.51
Close
Americas
Brazil
Canada
Mexico
Chile
DJ Americas
Sao Paulo Bovespa
S&P/TSX Comp
S&P/BMV IPC
Santiago IPSA
EMEA
Stoxx Europe 600
Stoxx Europe 50
Eurozone
Euro Stoxx
Euro Stoxx 50
Austria
ATX
Belgium
Bel-20
France
CAC 40
Germany
DAX
Greece
Athex Composite
Israel
Tel Aviv
Italy
FTSE MIB
Netherlands AEX
Portugal
PSI 20
Russia
RTS Index
South Africa FTSE/JSE All-Share
Spain
IBEX 35
Sweden
SX All Share
Switzerland Swiss Market
U.K.
FTSE 100
Asia-Pacific
Australia
China
Hong Kong
India
Japan
Malaysia
Singapore
South Korea
Taiwan
S&P/ASX 200
Shanghai Composite
Hang Seng
S&P BSE Sensex
Nikkei Stock Avg
FTSE Bursa Malaysia KLCI
Straits Times
Kospi
Weighted
52-Week Range
Close
Low
2955.99
383.12
259.56
0.90
0.91
1.69
2390.11
311.55
206.73
616.34
76989.79
15807.17
49981.94
4145.17
0.17
1.23
0.50
503.67
57110.99
14509.25
44364.17
3137.71
The Global Dow
DJ Global Index
DJ Global ex U.S.
391.42
3199.76
391.00
3604.55
3375.80
4069.91
5351.74
12991.87
761.35
1441.19
22413.54
546.21
5457.96
1156.64
57876.60
10258.00
587.70
9311.69
7535.44
5814.20
3390.52
28476.43
32432.69
21155.18
1755.32
3319.11
2473.62
10724.09
–0.64
–0.46
0.50
0.31
0.30
0.03
1.55
0.56
–0.15
0.28
2.12
0.58
0.09
1.17
1.16
1.97
1.13
0.71
–0.001
0.64
0.17
328.80
2730.05
317.93
2954.53
2412.67
3426.21
4377.46
10259.13
573.92
1363.50
16217
440.51
4370.84
960.32
48935.90
8607.1
496.66
7593.20
6693.26
5156.6
1.81
3041.17
1.24
21574.76
0.06
25765.14
1.94
16251.54
2.24
1616.64
–0.49
2787.27
0.85
3.31 1958.38
8931.03
1.82
Consumer Rates and Returns to Investor
U.S. consumer rates
Selected rates
A consumer rate against its
benchmark over the past year
5-year CDs
High
1.50%
1.00
t
Federal-funds
target rate
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
2955.99
383.12
259.56
16.8
17.5
21.3
616.56
76989.79
15922.37
51713.38
4164.28
14.1
27.8
3.4
9.5
28.6
396.45
3276.11
392.06
3658.79
3375.80
4070.68
5432.40
12991.87
858.08
1478.96
22811
546.21
5457.96
1195.61
57876.60
11135.4
596.72
9311.69
7556.24
8.3
6.3
11.6
9.5
28.9
12.9
10.1
13.2
18.3
–2.0
16.5
13.0
16.6
0.4
14.3
9.7
9.9
13.3
5.5
5956.5
3390.52
28490.83
32575.17
21155.18
1792.35
3354.71
2474.76
10724.09
•
•
•
•
•
•
•
•
Interest rate
1.46%
Bankrate.com avg†:
EverBank
Jacksonville, FL
9/22
Rise Education Cayman
English education
company.
REDU
Nq
22.0
12.00/ MS, Credit Suisse, UBS
14.00
9/22
Sea Ltd
Developer and operator of
an online gaming platform.
SE
N
49.7
12.00/ GS, MS, Credit Suisse
14.00
10/19
10/19
Lockup Expirations
Below, companies whose officers and other insiders will become eligible
to sell shares in their newly public companies for the first time. Such
sales can move the stock’s price.
Offer Offer amt Through Lockup
Symbol price($) ($ mil.) Friday (%) provision
Issuer
Oct. 17
April 20, ’17 Select Energy Services WTTR
14.00
140.1
12.9
180 days
Oct. 20
June 22, ’17 Granite Point Mortgage Trust GPMT
19.50
195.0
–3.1
120 days
Sources: Dealogic; WSJ Market Data Group
Off the Shelf
Issuer/Industry
Takedown date/ Deal value Registration
Registration date ($ mil.)
(mil.)
Micron Technology
Technology
Oct. 11
Oct. 10,317
$1,200.0
Flexion Therapeutics
Healthcare
Oct. 11
June 30,317
$122.4
$300.0
WFS, BMO Cptl Mkts,
RBC Cptl Mkts
$60.0
$200.0
Leerink Prtnrs,
Barclays
$19.2
$50.0
Protagonist Therapeutics Oct. 11
Healthcare
Sept. 1,317
Eagle Bancorp Montana
Finance
Oct. 11
March 28,317
26300
6 9 10 11 12 13
October
2.35%
888-720-8756
0.00
Synchrony Bank
Morristown, NJ
2.35%
800-903-8154
Goldman Sachs Bank USA
2.40%
New York, NY
855-730-7283
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
1.36
0.36
1.47
4.33
3.50
4.88
4.03
3.36
5.30
YTD
% chg
17.52
3.87
3.01 5.57
2.14 -3.99
51.45
2.16
4.38 -4.23
Natural gas, $/MMBtu 3.000
Gold, $ per troy oz.
1301.50
0.14
4.79 -19.44
29.90
2.35 13.17
Crude oil, $ per barrel
U.S. Dollar Index
WSJ Dollar Index
93.06
-0.74 -0.79 -8.96
86.25
-0.70 -0.81 -7.20
Euro, per dollar
0.8460 -0.0064 -0.75 -11.01
Yen, per dollar
U.K. pound, in dollars
111.82
-0.82 -0.73 -4.43
1.33 0.0216
1.65
7.61
52-Week
Low Close(l) High
% Chg
DJ Commodity
527.06
TR/CC CRB Index
166.50
l
DA Davidson & Co
Tuesday, October 17
Auction of 30 year TIPS;
announced on October 12; settles on October 31
Public and Municipal Finance
Deals of $ 150 million or more expected this week
Final
maturity Issuer
Total
($mil.)
Rating
Bookrunner/
Fitch Moody’s S&P Bond Counsel(s)
Oct. 17 Oct. 1, 2023 California
508.6 N.R.
N.R.
N.R. Preliminary/
Orrick H & S
Oct. 17 Aug. 1, 2032 California
1,079.7 N.R.
N.R.
N.R. Preliminary/
Orrick H & S
Oct. 17 Nov. 1, 2018 Illinois
500.0 N.R.
N.R.
N.R. Preliminary/
Chapman and Cutler LLP/
Burke Burns & Pinelli Ltd
Oct. 17 Nov. 1, 2029 Illinois
1,000.0 N.R.
N.R.
N.R. Preliminary/
Chapman and Cutler LLP/
Burke Burns & Pinelli Ltd
Oct. 17 Aug. 1, 2045 NYC
Transitional
Finance Auth
850.0 N.R.
N.R.
N.R. Goldman &
Co/Norton Rose
Fulbright
Oct. 18 Nov. 1, 2046 Massachusetts
818.1 N.R.
N.R.
N.R. Preliminary/
Mintz Levin
Cohn Ferris
Oct. 19 Feb. 1, 2034 San Francisco
Muni Transport
Agy
248.5 N.R.
N.R.
N.R. Preliminary/
Nixon
Peabody LLP
Natural gas, $/MMBtu
Oct. 20 prelim.
Berks
Industrial Dev
Auth
575.0 N.R.
N.R.
N.R. Citi/—
Oct. 20 prelim.
West Virginia
Comm of
Highways
219.7 N.R.
N.R.
N.R. Citi/—
l
3.86
1346.00
103.25 -5.14
84.49
l
93.56 -2.50
0.83
l
91.35
WSJ Dollar Index
102.99
U.K. pound, in dollars
3.93 -8.68
l
l
U.S. Dollar Index
Yen, per dollar
0.96 -7.18
l
118.18
7.34
1.36
9.00
l
1.20
Real-time U.S. stock
quotes are available on
WSJ.com. Track mostactive stocks, new
highs/lows, mutual
funds and ETFs.
WSJ
.COM
2.6
9.2
29.4
21.8
10.7
6.9
15.2
22.1
15.9
2.56
2.18
54.45
l
1127.80
Euro, per dollar
598.83 10.25
195.14 -2.45
l
Crude oil, $ per barrel 42.53
Gold, $ per troy oz.
Plus, get deeper money-flows data and
email delivery of key stock-market
data.
All are available free at
WSJMarkets.com
3.75%
1.00
1.00
1.12
-0.10
-0.08
-0.17
-0.05
0.11
-0.11
-0.15
0.81
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
Friday
1
3 6
month(s)
One year ago
1 2 3 5 710
years
maturity
Yen, euro vs. dollar; dollar vs.
major U.S. trading partners
10%
3.00
5
2.25
0
1.50
–5
0.75
–10
0.00
WSJ Dollar index
s
Euro
s Yen
–15
30
2016 2017
Sources: Ryan ALM; Tullett Prebon; WSJ Market Data Group
Corporate Borrowing Rates and Yields
Bond total return index
Spread +/- Treasurys,
Yield (%)
in basis pts, 52-wk Range
Last Wk ago
Last
Low High
10-yr Treasury, Ryan ALM
DJ Corporate
Aggregate, Barclays Capital
High Yield 100, Merrill Lynch
Fixed-Rate MBS, Barclays
Muni Master, Merrill
EMBI Global, J.P. Morgan
2.280
2.969
2.530
5.224
2.780
1.893
5.409
2.370
3.015
2.590
5.106
2.850
1.934
5.441
37
331
22
9
310
Bookrunner(s)
JPM
...
Public and Private Borrowing
Sale
598.83
184.83
2.30%
855-228-6755
Barclays
Wilmington, DE
Federal-funds rate target
1.00-1.25 1.00-1.25
Prime rate*
4.25
4.25
Libor, 3-month
1.35
1.35
Money market, annual yield
0.35
0.32
Five-year CD, annual yield
1.45
1.46
30-year mortgage, fixed†
3.90
3.90
15-year mortgage, fixed†
3.16
3.18
Jumbo mortgages, $424,100-plus† 4.37
4.39
Five-year adj mortgage (ARM)† 3.42
3.39
New-car loan, 48-month
3.06
3.07
HELOC, $30,000
5.23
5.22
18.00/ MS, GS, Barclays,
20.00 Allen & Co
Auction of 13 and 26 week bills;
Auction of 4 week bill;
announced on October 12; settles on October 19 announced on October 16; settles on October 19
26375
TR/CC CRB Index
First Internet Bank of Indiana
2.30%
Indianapolis, IN
888-873-3424
Yield/Rate (%)
Last (l)Week ago
8.0
Monday, October 16
26450
DJ Commodity
Yield to maturity of current bills,
notes and bonds
t
N D J F MAM J J A S O
2016 2017
MDB
Nq
9/21
last week
Benchmark Yields and Rates
Treasury yield curve Forex Race
0.50
–0.50
MongoDB
Developer of an opensource, non-relational
database.
10/18
s 18.63, or 0.07%
Last Week
Close Net chg %Chg
t
t
19.00/ MS, Credit Suisse, Citi,
22.00 China Int'l, UBS
Qudian
Operator of an online
platform to facilitate small
cash loans.
Thursday, October 19
YTD
% chg
Source: SIX Financial Information;WSJ Market Data Group
Five-year CD yields
37.5
9/18
CommoditiesandCurrencies
Latest Week
% chg
Bookrunner(s)
QD
N
10/17
Treasurys
s
Region/Country Index
Symbol/
Pricing
primary Shares Range($)
exchange (mil.) Low/High
Issuer/business
DJ US TSM
26525
Sources: SIX Financial Information; WSJ Market Data Group
International Stock Indexes
World
10.7 12.7
11.7
6.7
7.2
6.5
38.6 13.1
14.9
3.3
7.7 13.1
10.7
3.6
-24.9 -16.1
34.5 30.4
-31.6 -26.9
23.9
17.4
15.1
40.5
11.6
38.8
7.7
-16.2
50.6
-40.4
6550
6 9 10 11 12 13
October
Other Indexes
Russell 2000
1513.30
NYSE Composite
12377.89
Value Line
545.36
NYSE Arca Biotech 4293.42
NYSE Arca Pharma
556.60
KBW Bank
100.92
PHLX§ Gold/Silver
88.19
PHLX§ Oil Service
141.90
PHLX§ Semiconductor 1223.31
CBOE Volatility
10.66
Expected
pricing date Filed
“Shelf registrations” allow a company to prepare a stock or bond for
sale, without selling the whole issue at once. Corporations sell as
conditions become favorable. Here are the shelf sales, or takedowns,
over the last week:
Nasdaq Composite
Latest Week
Close
Net chg
Low
Initial public offerings of stock expected this week; might include some
offerings, U.S. and foreign, open to institutional investors only via the
Rule 144a market; deal amounts are for the U.S. market only
Lockup
expiration Issue date
Financial Flashback
The Wall Street Journal, October 15, 1993
30
20
10
0
O N
IPOs in the U.S. Market
2300
Week's high
DOWN
Monday's open
Public Offerings of Stock
2375
20000
More coverage on page B7
36
309
11
-4
304
47
490
34
18
407
Total Return
52-wk
3-yr
-2.24 2.01
2.99 3.97
0.85 2.48
7.458 4.515
0.71 2.28
2.162 2.598
5.353 6.012
Sources: J.P. Morgan; Ryan ALM; S&P Dow Jones Indices; Barclays Capital; Merrill Lynch
Source:Thomson Reuters/Ipreo
A Week in the Life of the DJIA
A look at how the Dow Jones Industrial Average component stocks
did in the past week and how much each moved the index. The DJIA
gained 98.05 points, or 0.43%, on the week. A $1 change in the price
of any DJIA stock = 6.89-point change in the average. To date, a
$1,000 investment on Dec. 31 in each current DJIA stock component
would have returned $34,991, or a gain of 16.60%, on the $30,000
investment, including reinvested dividends.
The Week’s Action
Pct Stock price Point chg
chg (%) change in average Company
Symbol Close
9.65
3.62
2.98
2.41
1.96
7.62
5.77
3.78
3.21
1.49
52.47
39.73
26.03
22.10
10.26
Wal-Mart Stores
McDonald’s
Caterpillar
Johnson & Johnson
Microsoft
WMT
MCD
CAT
JNJ
MSFT
1.82
1.81
1.52
1.43
1.28
2.13
1.93
0.69
1.31
1.60
14.67
13.29
4.75
9.02
11.02
1.09
0.86
0.84
0.80
0.77
1.69
0.70
2.16
0.29
0.71
11.64
4.82
14.87
2.00
4.89
0.55
0.42
0.41
0.29
0.10
1.20
0.62
0.49
0.21
0.04
–0.83
–0.83
–1.09
–1.80
–1.95
–2.69
–2.75
–2.80
–3.04
–5.78
$1,000 Invested(year-end '16)
$1,000
$86.62
165.37
130.71
136.43
77.49
$1,281
1,391
1,445
1,210
Chevron
Visa
Coca-Cola
American Express
Travelers
CVX 119.16
V 108.66
KO
46.18
AXP 92.86
TRV 126.67
1,041
1,402
1,144
1,276
Apple
Exxon Mobil
Boeing
Pfizer
Procter & Gamble
AAPL 156.99
XOM 82.41
BA 260.74
PFE 36.34
PG
93.04
1,377
937
1,722
1,153
8.26
4.27
3.37
1.45
0.28
3M
MMM 217.72
IBM
IBM 147.10
United Technologies UTX 118.72
DowDuPont
DWDP 71.43
Intel
INTC 39.67
1,244
910
1,103
1,279
–0.28
–1.38
–1.06
–1.16
–0.95
–1.93
–9.50
–7.30
–7.99
–6.54
Cisco Systems
CSCO 33.47
Home Depot
HD 164.47
J.P. Morgan Chase JPM 95.86
Merck
MRK 63.39
Verizon
VZ
47.86
1,150
1,251
1,138
1,103
–2.69
–1.44
–5.54
–7.49
–1.41
–18.52
–9.92
–38.15
–51.57
–9.71
DIS
97.38
NKE 50.98
UNH 192.52
GS 238.53
GE
22.98
941
1,014
1,219
1,005
Walt Disney
Nike
UnitedHealth Group
Goldman Sachs
General Electric
1,271
1,053
1,134
1,118
937
744
Sources: WSJ Market Data Group; S&P Dow Jones Indices. For more information on the Dow Jones
Industrial Average and the 30 industrials, please visit www.djindexes.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.
Monday, October 16, 2017 | B7
COMMODITIES
Oil Prices Leap on Strong Chinese Data
BY CHRISTOPHER ALESSI
AND STEPHANIE YANG
Oil prices jumped Friday on
a mix of factors, including
bullish Chinese data and geopolitical risks from oil-rich regions in the Middle East.
Light, sweet crude for November delivery rose 85 cents,
or 1.7%, to $51.45 a barrel on
the New York Mercantile Exchange, closing at a two-week
high. Brent, the global benchmark, rose 92 cents, or 1.6%,
to $57.17 a barrel.
Chinese crude imports rose
by roughly 1 million barrels a
day in September, on the
month, to 9 million barrels a
day, according to government
data released Friday. The news
alleviated investor concern
that demand in the world’s
largest crude importer might
be waning amid faltering economic growth.
The September “bounce
back” was the highest import
volume in China since May, according to analysts at ING
Groep.
On Friday, President Donald
Trump said he wouldn’t recertify a 2015 international
agreement with Iran to curb
its nuclear program in exchange for economic-sanctions
relief. The lifting of sanctions
at the start of 2016 has al-
lowed Iran to significantly increase its production to
around 3.8 million barrels a
day. But disavowal of the deal
or the imposition of fresh
sanctions on Iran could undermine the country’s export capacity.
At the same time, tensions
are building between Iraq’s
central government in Baghdad and the leaders of the
semiautonomous Kurdistan region in the north, which late
in September held an independence referendum. Kurdistan
exports over 500,000 barrels
of crude a day.
“Until recently, market
participants have underesti-
mated geopolitical risk because the discussion was all
about oversupply,” said Giovanni Staunovo, commodity
analyst at UBS Wealth Management.
Mr. Staunovo said the market was now more attuned to
the fact that the Iran and Iraq
situations could result in less
oil on the market, in turn
boosting prices.
Traders also weighed news
reports that Saudi Arabia’s
state-owned oil company is
considering options other than
its plan to list shares in New
York or London in 2018.
Some market participants
have cited the impending ini-
tial public offering of Saudi
Aramco as a reason for the
major oil producer to prioritize supply cuts and support
crude prices. If the IPO is derailed, it could be a bearish
catalyst for oil prices, analysts
said. However, the market reaction to the news was muted
on Friday.
“I just don’t think that’s as
much of a market factor as
some other people think,” said
Kyle Cooper, a consultant at
ION Energy Group. “There’s
just a tremendous amount of
money flow and sentiment
driving this market.”
The news threatens to muddle an already conflicted pic-
ture of how successful Saudi
Arabia and the Organization of
the Petroleum Exporting
Countries have been at reducing a global glut of crude oil.
This week, OPEC said its
crude oil production had increased by nearly 90,000 barrels a day in September, complicating the cartel’s efforts to
limit output and curb the
global supply glut.
However, the IEA praised
OPEC’s efforts to rein in output and said its production
had increased by only 10,000
barrels a day, adding that
global supply had risen in September because of increased
U.S. production.
52 wk
Prem Ttl
Fund (SYM)
NAV Close /Disc Ret
Virtus Global Dividend ZTR 12.86 13.15 +2.3 30.3
Convertible Sec's. Funds
AdvntClymrFd AVK 17.67 16.28 -7.9 24.6
AllianzGI Conv & Incm NCV 6.65 7.11 +6.9 19.5
AllianzGI Conv & Incm II NCZ 5.97 6.23 +4.4 19.8
AllianzGI Div Incm ACV 22.42 22.31 -0.5 35.9
AllianzGI Equity & Conv NIE 22.51 20.50 -8.9 20.6
Calamos Conv Hi Inco Fd CHY 11.91 11.89 -0.2 21.5
Calamos CHI
11.29 11.64 +3.1 27.9
World Equity Funds
Alpine Tot Dyn Div AOD 9.98 9.13 -8.5 33.0
Cdn Genl Inv CGI
31.08 22.04 -29.1 28.6
China Fund CHN
23.19 21.24 -8.4 34.5
Clough Global Opp Fd GLO 12.03 11.46 -4.7 34.2
EtnVncTxAdvGblDiv ETG 18.30 17.38 -5.0 28.9
EatonVance TxAdv Opport ETO 24.71 25.05 +1.4 30.6
First Trust Dynamic Eur FDEU 19.73 19.39 -1.7 39.7
Gabelli Glbl Multimedia GGT 9.21 9.47 +2.8 37.8
GDL Fund GDL
11.66 10.25 -12.1 13.4
India Fund IFN
31.09 27.94 -10.1 22.8
Japan Sml Cap JOF 14.34 12.56 -12.4 32.9
Korea Fund KF
47.85 42.90 -10.3 26.9
Mexico Fund MXF
18.64 16.40 -12.0 2.9
Morgan-Stanley Asia-Pac APF 20.27 17.95 -11.4 23.4
MS China a Shr Fd CAF 27.93 24.39 -12.7 34.1
MS Emerging Fund MSF 19.89 17.98 -9.6 26.1
MS India Invest IIF
39.92 36.47 -8.6 34.0
New Germany Fund GF 20.74 18.80 -9.4 44.7
Swiss Helvetia Fund SWZ 14.17 12.86 -9.2 23.5
Templeton Dragon TDF 24.25 21.85 -9.9 36.9
Templeton Emerging EMF 19.17 17.29 -9.8 43.5
Virtus Total Return Fund ZF 13.37 12.82 -4.1 23.7
Voya Infr Indls & Matls IDE 16.42 16.14 -1.7 39.7
Wells Fargo Gl Div Opp EOD 6.68 6.33 -5.2 25.5
Prem12 Mo
Fund (SYM)
NAV Close /Disc Yld
U.S. Mortgage Bond Funds
BlackRock Income Trust BKT 6.68 6.25 -6.4 5.0
Nuveen Mtg Opp Term Fd JLS 26.49 25.74 -2.8 5.3
Investment Grade Bond Funds
Blackrock Core Bond Tr BHK 14.91 14.12 -5.3 5.5
BlkRk Credit Alloc Incm BTZ 14.89 13.44 -9.7 6.2
John Hancock Income Secs JHS 15.59 14.77 -5.2 5.4
MFS Inc Tr MIN
4.50 4.28 -4.9 9.2
WstAstClymr InfLnkd Fd WIW NA 11.24 NA 3.5
WstAssetClymr InflLnk Sec WIA NA 11.51 NA 3.2
Loan Participation Funds
Apollo Sr Fltg Rate Fd AFT 18.11 16.87 -6.8 7.3
BlkRk Debt Strat Fd DSU 12.79 11.71 -8.4 6.9
BlackRock FR Incm Strat FRA 15.01 14.25 -5.1 5.6
Blkrk FltRt InTr BGT 14.49 14.09 -2.8 5.4
BlackstoneGSO Strat Cred BGB NA 16.18 NA 8.4
Blackstone GSO Sr Float BSL NA 17.48 NA 6.6
Eagle Point Credit ECC NA 21.18 NA 7.7
Eaton Vance FR Incm Tr EFT 15.57 14.64 -6.0 5.8
EatonVnc SrFltRate EFR 15.23 14.78 -3.0 5.9
Eaton Vance Sr Incm Tr EVF 7.16 6.58 -8.1 5.6
First Trust Sr FR Fd II FCT 14.08 13.28 -5.7 6.0
FT Sr Floating Rate 2022 FIV 9.76 9.67 -0.9 NS
Invesco Credit Opps Fund VTA 13.01 11.96 -8.1 7.1
Prem12 Mo
Fund (SYM)
NAV Close /Disc Yld
Invesco Senior Income Tr VVR 4.88 4.45 -8.8 6.0
Nuveen Credit Strt Inc Fd JQC 9.21 8.48 -7.9 7.3
NuvFloatRteInco Fd JFR 11.63 11.69 +0.5 6.8
Nuv Float Rte Opp Fd JRO 11.56 11.74 +1.6 7.0
Nuveen Senior Income Fund NSL 6.90 6.76 -2.0 7.0
Pioneer Floating Rate Tr PHD 12.51 12.14 -3.0 6.1
Voya Prime Rate Trust PPR 5.65 5.20 -8.0 5.9
High Yield Bond Funds
AllianceBernstein Glbl AWF 14.03 13.01 -7.3 6.7
Barings Glbl Short Dur HY BGH 21.29 20.70 -2.8 8.9
BlackRock Corp Hi Yd Fd HYT 12.36 11.39 -7.8 7.8
BlackRockDurInco Tr BLW 17.14 16.20 -5.5 7.8
Brookfield Real Assets RA 25.64 24.24 -5.5 NS
Credit Suisse High Yld DHY 2.81 2.89 +2.8 9.3
DoubleLine Incm Solutions DSL NA 21.29 NA 8.4
Dreyfus Hi Yd Strat Fd DHF 3.57 3.51 -1.7 8.8
Fst Tr Hi Inc Lg/Shrt Fd FSD 18.17 17.06 -6.1 8.0
Guggenheim Strat Opps Fd GOF 19.63 21.11 +7.5 10.2
Ivy High Income Opps Fund IVH 16.34 15.93 -2.5 9.2
Neuberger Berman HYS NHS 13.40 12.17 -9.2 7.5
NexPoint Credit Strat Fd NHF 24.95 23.50 -5.8 10.5
Nuveen Credit Opps 2022 JCO 9.94 10.02 +0.8 NS
Nuveen Gl Hi Incm Fd JGH 18.53 17.38 -6.2 8.2
Nuveen High Incm Dec18 JHA 10.10 9.99 -1.1 5.3
Nuveen High Incm Dec19 JHD 10.26 10.06 -1.9 5.9
Nuveen Hi Incm Nov 2021 JHB 10.15 10.09 -0.6 5.9
Pioneer High Income Trust PHT 10.90 10.07 -7.6 8.4
Prud Gl Shrt Dur Hi Yd GHY 16.45 14.93 -9.2 7.7
Prudentl Sh Dur Hi Yd Fd ISD 16.64 15.19 -8.7 7.8
Wells Fargo Incm Opps Fd EAD 9.34 8.64 -7.5 8.6
Wstrn Asset Glbl Hi Inco EHI NA 10.36 NA 9.0
Wstrn Asset High Inco II HIX NA 7.22 NA 8.7
Wstrn Asset Opp Fd HIO NA 5.14 NA 7.2
West Asst HY Def Opp Fd HYI NA 15.71 NA 7.8
Other Domestic Taxable Bond Funds
Apollo Tactical Incm Fd AIF 17.51 16.28 -7.0 8.8
Ares Dynamic Credit Alloc ARDC NA 16.47 NA 7.5
Barings Corp Investors MCI NA 15.88 NA 3.8
BlackRock Multi-Sector IT BIT 20.07 18.47 -8.0 9.4
BlackRock Taxable Mun Bd BBN 23.72 23.51 -0.9 6.7
Doubleline Oppor Credit DBL NA 23.48 NA 8.3
Duff & Phelps Utl & Cp Bd DUC 9.75 9.17 -5.9 6.4
EtnVncLtdFd EVV
15.13 14.08 -6.9 7.1
Franklin Ltd Duration IT FTF NA 12.02 NA 10.9
GuggenheimTaxableMuni GBAB 23.32 22.61 -3.0 6.6
Invesco High Incm 2023 IHIT 10.12 10.06 -0.6 NS
John Hancock Investors JHI 18.78 18.11 -3.6 7.1
KKR Income Opps Fund KIO NA 18.09 NA 8.8
MFS Charter MCR
9.37 8.70 -7.2 8.6
MFS Multimkt MMT 6.71 6.24 -7.0 8.6
Nuveen Build Am Bd Fd NBB 22.22 21.91 -1.4 5.8
PIMCO Corporate & Incm PTY NA 16.89 NA 10.3
PIMCO Corporate & Incm PCN NA 17.28 NA 10.1
PIMCO HiInco PHK
NA 8.19 NA 12.7
PIMCO Inco Str Fd PFL NA 12.17 NA 8.9
PIMCO Incm Strategy Fd II PFN NA 10.73 NA 8.9
Putnam Mas Inco PIM NA 4.83 NA 6.6
Putnam Premier Income Tr PPT NA 5.32 NA 5.8
Wells Fargo Multi-Sector ERC 14.38 13.24 -7.9 9.0
World Income Funds
Abeerden Asia-Pacific FAX 5.52 5.16 -6.5 8.1
Etn Vnc Short Dur Fd EVG NA 14.28 NA 7.0
Legg Mason BW Glbl Incm BWG NA 13.29 NA 7.3
MS EmMktDomDebt EDD 8.99 8.07 -10.2 8.2
PIMCO Dynamic Credit PCI NA 23.26 NA 11.2
PIMCODynamicIncomeFund PDI NA 31.03 NA 13.2
PIMCO Income Opportunity PKO NA 26.56 NA 9.9
PIMCO Strat Income Fund RCS NA 9.62 NA 9.2
Templeton Emerging TEI 12.99 11.68 -10.1 4.5
Templeton Global GIM 7.42 6.70 -9.7 6.2
Wstrn Asset Emerg Mkts EMD NA 15.72 NA 7.3
Wstrn Asset Gl Def Opp Fd GDO NA 18.51 NA 7.4
National Muni Bond Funds
AllianceBrnstn NtlMun AFB 14.98 13.87 -7.4 4.5
Blackrock Invest BKN 15.97 15.05 -5.8 5.3
Prem12 Mo
Fund (SYM)
NAV Close /Disc Yld
BlackRockMun2030Target BTT 24.16 22.74 -5.9 4.1
BlackRock Municipal Trust BFK 14.55 14.30 -1.7 5.6
BlackRockMuni BLE 15.14 15.04 -0.7 5.8
BlackRockMuni Tr BYM 15.28 14.91 -2.4 5.2
BlkRk MuniAssets Fd MUA 14.22 15.84 +11.4 4.5
BlkRk Munienhanced MEN 12.02 12.03 +0.1 5.7
BlkRk MuniHldgs Inv MFL 14.83 15.14 +2.1 5.7
BlkRk MuniHldgs Qlty II MUE 14.17 14.07 -0.7 5.5
BlkRk MuniVest MVF 9.71 9.75 +0.4 5.8
BlkRk MuniVest II MVT 15.36 15.50 +0.9 5.8
BlkRk MuniYield MYD 14.96 14.89 -0.5 5.7
BlkRk MuniYld Quality MQY 15.92 15.67 -1.6 5.6
BlkRk MuniYld Qlty II MQT 13.97 13.40 -4.1 5.5
BlRkMunyldQltyIII MYI 14.55 14.33 -1.5 5.7
Deutsche Mun Income Tr KTF 12.66 12.38 -2.2 6.3
Dreyfus Mun Bd Infr Fd DMB 14.28 13.46 -5.7 4.8
Dreyfus Strat Muni Bond DSM 8.41 8.53 +1.4 5.8
Dreyfus Strategic Munis LEO 8.62 8.84 +2.6 5.8
Eaton Vance Mun Bd Fd EIM 13.80 12.86 -6.8 5.0
Eaton Vance Mun Income EVN 13.46 12.87 -4.4 5.2
EV National Municipal Opp EOT 22.02 23.40 +6.3 4.5
Invesco Adv Mun Incm II VKI 12.21 11.54 -5.5 5.7
Invesco Mun Incm Opps Tr OIA 7.59 7.91 +4.2 5.2
Invesco Mun Opportunity VMO 13.59 12.97 -4.6 5.9
Invesco Municipal Trust VKQ 13.58 12.66 -6.8 5.7
Invesco Qlty Mun Inco IQI 13.71 12.73 -7.1 5.4
Invesco Inv Grade Muni VGM 14.07 13.50 -4.1 5.7
Invesco Value Mun Incm Tr IIM 16.36 14.93 -8.7 4.9
MainStay DefinedTerm MMD 20.24 20.07 -0.8 5.3
MFS Munl Inco MFM
NA 7.21 NA 5.3
Nuveen AMT-Free Quality NEA 15.14 13.80 -8.9 5.4
Nuveen AMT-Free Mun NVG 16.46 15.55 -5.5 5.7
Nuveen Mun Credit Incm Fd NZF 16.11 15.25 -5.3 5.8
Nuveen Enhncd Mun Val Fd NEV 15.11 14.64 -3.1 5.6
Nuveen Intermed Dur Mun NID 13.81 13.41 -2.9 4.8
NuveenMuniIncoOpp Fd NMZ 13.53 13.63 +0.7 6.0
Nuveen Muni Value Fund NUV 10.33 10.30 -0.3 3.8
Nuveen Qual Mun Incm Fd NAD 15.47 14.12 -8.7 5.5
Nuveen Sel Tax Free NXP 15.45 15.02 -2.8 3.6
Nuveen Sel TF NXQ 14.86 14.26 -4.0 3.5
PIMCO MuniFd PMF
NA 13.59 NA 5.8
Pimco Muni Inc II PML NA 13.36 NA 5.9
PIMCO Muni Inc III PMX NA 11.88 NA 5.8
Pioneer Mun Hi Inc Adv Tr MAV 11.98 11.67 -2.6 5.4
Pioneer Mun Hi Incm Tr MHI 12.87 12.15 -5.6 5.0
Putnam Tr PMM
NA 7.60 NA 5.3
PutnamMuniOpportunities PMO NA 12.72 NA 5.1
Wstrn Asset Mngd Muni MMU NA 14.14 NA 5.4
WesternAssetMunTrFund MTT NA 22.74 NA 4.7
Single State Muni Bond
BlackRock CA Municipal Tr BFZ 15.37 14.50 -5.7 5.1
BlkRk MuniHldgs CA Qlty MUC 15.58 14.84 -4.7 4.9
Blkrck MunHl NJ Qlty MUJ 15.71 14.59 -7.1 5.5
BlRk MuHldg NY Qlty MHN 14.92 14.18 -5.0 4.9
BlkRk MuniYld CA Fd MYC 15.66 15.57 -0.6 5.0
BlkRk MuniYld CA Quality MCA 15.79 15.40 -2.5 5.0
BlkRk MuniYld MI Qlty MIY 15.51 14.00 -9.7 5.5
BlRk Muyld NY Qlty MYN 14.31 13.23 -7.5 4.9
Eaton Vance CA Mun Bd EVM 12.49 12.20 -2.3 4.8
Invesco CA Value Mun Incm VCV 13.50 13.15 -2.6 4.8
Invesco PA Value Mun Incm VPV 14.09 12.29 -12.8 5.1
Invesco Inv Grade NY Muni VTN 14.68 13.81 -5.9 5.0
Nuveen CA AMT-Free Qual NKX 15.82 15.79 -0.2 5.0
Nuveen CA Muni Value NCA 10.44 10.56 +1.1 3.9
Nuveen CA Quality Muni NAC 15.68 14.88 -5.1 5.4
Nuveen MD Qual Muni NMY 14.58 12.87 -11.7 5.0
Nuveen MI Qual Muni NUM 15.46 13.67 -11.6 4.8
Nuveen NJ Qual Muni NXJ 15.85 13.89 -12.4 5.1
Nuveen NY AMT-Free NRK 14.51 13.15 -9.4 4.8
Nuveen NY Qual Muni NAN 15.14 14.15 -6.5 5.0
Nuveen OH Qual Muni NUO 16.70 15.03 -10.0 4.6
Nuveen PA Qual Muni NQP 15.24 13.63 -10.6 5.2
Nuveen VA Qual Muni NPV 14.46 13.18 -8.9 4.2
PIMCO California Muni PCQ NA 17.26 NA 5.3
PIMCO California Mun II PCK NA 10.11 NA 5.6
52 wk
Prem Ttl
Fund (SYM)
NAV Close /Disc Ret
General Equity Funds
Specialized Equity Funds
Griffin Inst Access RE:A 26.72 NA NA 6.0
Griffin Inst Access RE:C 26.30 NA NA 5.2
Griffin Inst Access RE:I 26.87 NA NA 6.3
Griffin Inst Access RE:L 26.71 NA NA NS
Griffin Inst Access RE:M 26.60 NA NA NS
NexPointRlEstStrat;A 19.98 NA NA 6.9
NexPointRlEstStrat;C 19.92 NA NA 6.0
NexPointRlEstStrat;Z 19.93 NA NA 7.2
Resource RE Div Inc:L
NA NA NA NS
SharesPost 100
25.85 NA NA -4.0
Tot Inc+ RE:A
29.31 NA NA 7.0
Tot Inc+ RE:C
28.56 NA NA 6.2
Tot Inc+ RE:I
29.64 NA NA 7.3
Tot Inc+ RE:L
29.28 NA NA NS
USQ Core Real Estate:I USQIX 25.09 NA NA NS
USQ Core Real Estate:IS USQSX 25.09 NA NA NS
Versus Cap MMgr RE Inc:F 27.69 NA NA 5.5
Versus Cap MMgr RE Inc:I 27.77 NA NA 5.8
Versus Capital Real Asst VCRRX 25.03 NA NA NS
Wildermuth Endwmnt Str 12.82 NA NA 12.4
Wildermuth Endwmnt S:C 12.66 NA NA 11.6
Wildermuth Endwmnt S:I 12.87 NA NA NS
Income Preferred Stock Funds
The Relative Value:CIA VFLEX 25.42 NA NA NS
Convertible Sec's. Funds
Calmos Dyn Conv and Inc CCD 20.93 20.63 -1.4 16.8
World Equity Funds
BMO LGM Front ME 10.28 NA NA 13.3
CalamosGlbTotRet CGO 13.28 13.56 +2.1 19.0
Prem12 Mo
Fund (SYM)
NAV Close /Disc Yld
U.S. Mortgage Bond Funds
Vertical Capital Income 12.50 NA NA 3.2
Loan Participation Funds
504 Fund
9.75 NA NA 3.7
FedProj&TrFinanceTender 10.04 NA NA NS
Invesco Sr Loan A
6.68 NA NA 4.3
Invesco Sr Loan B
6.68 NA NA 4.3
Invesco Sr Loan C
6.69 NA NA 3.5
Invesco Sr Loan IB
6.68 NA NA 4.5
Invesco Sr Loan IC
6.68 NA NA 4.4
Invesco Sr Loan Y
6.68 NA NA 4.5
RiverNorth MP Lending RMPLX NA NA NA 6.6
Sierra Total Return:T SRNTX 25.09 NA NA NS
Voya Senior Income:A 12.53 NA NA 5.4
Voya Senior Income:C 12.50 NA NA 4.9
Voya Senior Income:I 12.49 NA NA 5.7
Voya Senior Income:W 12.54 NA NA 5.7
High Yield Bond Funds
Griffin Inst Access Cd:A NA NA NA NS
Griffin Inst Access Cd:C NA NA NA NS
Griffin Inst Access Cd:F NA NA NA NS
Griffin Inst Access Cd:I NA NA NA NS
Griffin Inst Access Cd:L NA NA NA NS
PIMCO Flexible Cr I;Inst NA NA NA NS
PionrILSInterval
9.75 NA NA 10.4
WA Middle Mkt Dbt
NA NA NA 8.6
WA Middle Mkt Inc WMF NA NA NA 8.5
Other Domestic Taxable Bond Funds
Capstone Church Capital 11.41 NA NA 1.5
CION Ares Dvsfd Crdt;A NA NA NA NS
CION Ares Dvsfd Crdt;C NA NA NA NS
CION Ares Dvsfd Crdt;I NA NA NA NS
CNR Select Strategies 7.83 NA NA NS
GL Beyond Income
3.68 NA NA NE
Palmer Square Opp Income NA NA NA 5.1
Resource Credit Inc:A
NA NA NA 6.4
Resource Credit Inc:C
NA NA NA 5.7
Resource Credit Inc:I
NA NA NA 6.7
Resource Credit Inc:L
NA NA NA NS
Resource Credit Inc:W NA NA NA 6.3
Closed-End Funds | WSJ.com/funds
Listed are the 300 largest closed-end funds as
measured by assets.
Closed-end funds sell a limited number of shares and
invest the proceeds in securities. Unlike open-end
funds, closed-ends generally do not buy their shares
back from investors who wish to cash in their holdings.
Instead, fund shares trade on a stock exchange.
a-The NAV and market price are ex dividend. b-The
NAV is fully diluted. c-NAV is as of Thursday’s close. dNAV is as of Wednesday’s close. e-NAV assumes rights
offering is fully subscribed. f-Rights offering in process.
g-Rights offering announced. h-Lipper data has been
adjusted for rights offering. j-Rights offering has
expired, but Lipper data not yet adjusted. l-NAV as of
previous day. o-Tender offer in process. v-NAV is
converted at the commercial Rand rate. w-Convertible
Note-NAV (not market) conversion value. y-NAV and
market price are in Canadian dollars. NA signifies that
the information is not available or not applicable. NS
signifies fund not in existence of entire period.
12 month yield is computed by dividing income
dividends paid (during the previous twelve months for
periods ending at month-end or during the previous
fifty-two weeks for periods ending at any time other
than month-end) by the latest month-end market price
adjusted for capital gains distributions.
Source: Lipper
Friday, October 13, 2017
52 wk
Prem Ttl
Fund (SYM)
NAV Close /Disc Ret
General Equity Funds
Adams Divers Equity Fd ADX 17.91 15.48 -13.6 28.8
Boulder Growth & Income BIF 12.32 10.48 -14.9 35.0
Central Securities CET 31.70 26.45 -16.6 33.6
CohSteer Opprtnty Fd FOF 14.07 13.39 -4.8 22.0
Cornerstone Strategic CLM 13.38 14.95 +11.7 30.0
EtnVnc TaxAdvDiv EVT 23.01 22.38 -2.7 23.3
Gabelli Dividend & Incm GDV 24.20 22.75 -6.0 27.9
Gabelli Equity Trust GAB 6.53 6.53 0.0 34.1
Genl American Investors GAM 42.71 36.32 -15.0 25.8
Guggenheim Enh Fd GPM 8.81 8.70 -1.2 25.7
HnckJohn TxAdv HTD 26.27 25.98 -1.1 21.2
Liberty All-Star Equity USA 6.74 6.13 -9.1 32.2
Royce Micro-Cap RMT 10.53 9.41 -10.6 34.7
Royce Value Trust RVT 17.49 15.95 -8.8 39.4
Source Capital SOR 44.90 40.61 -9.6 17.3
Tri-Continental TY
28.97 25.89 -10.6 28.4
Specialized Equity Funds
Adams Natural Rscs Fd PEO 22.89 19.57 -14.5 6.5
AllnzGI NFJ Div Interest NFJ 14.56 13.44 -7.7 21.0
AlpnGlblPrProp AWP 7.35 6.83 -7.1 41.9
ASA Gold & Prec Metals ASA 13.82 12.15 -12.1 -6.8
BlkRk Enh Cap Inco CII 16.52 15.67 -5.1 27.6
BlkRk Engy Res Tr BGR 14.92 13.55 -9.2 3.6
BlackRock Enh Eq Div Tr BDJ 9.70 9.07 -6.5 27.1
BlackRock Enh Gl Div Tr BOE 14.52 13.75 -5.3 25.8
BlkRk Intl Grwth&Inco BGY 7.05 6.68 -5.2 26.9
BlkRk Health Sci BME 35.39 36.70 +3.7 20.0
BlackRck Rscs Comm Str Tr BCX 10.16 8.91 -12.3 24.2
BlackRock Science & Tech BST 27.03 25.69 -5.0 47.5
BlackRock Utility & Infr BUI 21.26 21.17 -0.4 20.6
CBREClarionGlblRlEstIncm IGR 8.92 7.98 -10.5 8.5
Central Fund of Canada CEF 13.77 13.54 -1.7 3.6
ClearBridge Amer Engy CBA
8.51 NA 5.2
ClearBridge Engy MLP Fd CEM
14.53 NA -1.0
Clearbridge Engy MLP Opp EMO
11.93 NA 2.5
Clearbridge Engy MLP TR CTR
12.27 NA 7.3
Cohen & Steers Infr Fd UTF 25.63 23.34 -8.9 24.9
52 wk
Prem Ttl
Fund (SYM)
NAV Close /Disc Ret
C&S MLP Incm & Engy Opp MIE 11.06 10.41 -5.9 11.1
Cohen & Steers Qual Inc RQI 13.81 12.89 -6.7 11.3
CohnStrsPfdInco RNP 23.08 21.87 -5.2 21.4
Cohen & Steers TR RFI 13.59 12.75 -6.2 9.8
CLSeligmn Prem Tech Gr Fd STK 21.96 22.60 +2.9 43.0
Duff & Phelps DNP
10.06 11.48 +14.1 22.4
Duff&PhelpsGblUtilIncFd DPG 17.88 16.21 -9.3 8.9
Eaton Vance Eqty Inco Fd EOI 14.64 14.25 -2.7 24.2
Eaton Vance Eqty Inco II EOS 15.42 15.31 -0.7 22.7
EtnVncRskMngd ETJ 9.97 9.38 -5.9 12.3
Etn Vnc Tax Mgd Buy-Write ETB 16.30 16.94 +3.9 14.3
Eaton Vance BuyWrite Opp ETV 14.79 15.40 +4.1 15.3
Eaton Vance Tax-Mng Div ETY 12.01 11.84 -1.4 22.9
EatonVanceTax-MngdOpp ETW 11.58 11.84 +2.2 21.4
EtnVncTxMngGlDvEqInc EXG 9.50 9.45 -0.5 21.8
Fiduciary/Clymr Opp Fd FMO 12.72 12.76 +0.3 -7.6
FT Energy Inc & Growth Fd FEN 24.33 24.60 +1.1 3.6
FstTrEnhEqtIncFd FFA 16.32 15.18 -7.0 21.6
First Tr Engy Infr Fd FIF 19.50 18.88 -3.2 10.1
First Tr MLP & Engy Incm FEI 14.78 15.12 +2.3 5.1
Gabelli Hlthcr & Well GRX 11.50 10.10 -12.2 6.7
Gabelli Utility Tr GUT 5.55 7.17 +29.2 21.0
GAMCOGlblGoldNatRscs&Inc GGN 5.55 5.72 +3.1 9.3
GoldmanSachsMLPIncOpp GMZ
9.22 NA 7.3
Goldman Sachs MLPEnergy GER
6.84 NA 6.8
John Hancock Finl Opps Fd BTO 36.25 37.35 +3.0 42.9
Macquarie Glbl Infrstrctr MGU 28.15 26.16 -7.1 34.8
NeubergerBermanMLPIncm NML 10.18 9.37 -8.0 12.6
Neubrgr Brm Rl Est Sec Fd NRO 5.91 5.62 -4.9 14.5
Nuveen Dow 30 Dynamic DIAX 18.06 17.19 -4.8 30.1
Nuveen Core Eq Alpha JCE 15.92 15.68 -1.5 29.0
Nuveen Diversified Div JDD 13.02 12.90 -0.9 22.3
Nuveen Engy MLP Fd JMF 11.40 11.61 +1.8 4.0
NuvNASDAQ100DynOver QQQX 22.41 23.00 +2.6 32.6
Nuveen Real Est Incm Fd JRS 11.39 11.22 -1.5 10.3
NuvS&P500DynOverwrite SPXX
15.83 NA 26.8
NuveenS&P500Buy-Write BXMX 14.23 13.95 -2.0 18.3
Reaves Utility Fund UTG 33.24 30.91 -7.0 13.2
Tekla Hlthcr Investors HQH 26.24 25.36 -3.4 24.4
Tekla Healthcare Opps Fd THQ 20.05 18.59 -7.3 17.4
Tekla Life Sciences HQL 21.78 21.84 +0.3 37.4
Tekla World Hlthcr Fd THW 15.54 14.52 -6.6 10.6
Tortoise Energy TYG 26.42 28.54 +8.0 4.2
Tortoise MLP Fund NTG 17.54 17.87 +1.9 2.7
Voya Gl Equity Div IGD 8.29 8.06 -2.8 27.4
Income Preferred Stock Funds
Calamos Strat Fd CSQ 12.67 12.30 -2.9 33.4
Cohen & Steers Dur Pfd LDP 27.48 26.93 -2.0 18.2
Cohen & Strs Sel Prf Inco PSF 28.04 28.67 +2.2 17.5
FT Interm Duration Pfd FPF 25.05 24.74 -1.2 18.9
Flaherty & Crumrine Dyn DFP 26.52 26.58 +0.2 16.6
Flaherty & Crumrine Pfd FFC 20.49 21.38 +4.3 14.1
John Hancock Pfd Income HPI 21.47 21.81 +1.6 12.4
John Hancock Pfd II HPF 21.23 21.81 +2.7 11.1
John Hancock Pfd Inc III HPS 18.93 18.69 -1.3 11.9
JHancock Pr Div PDT 15.89 16.72 +5.2 21.6
LMP Cap & Inco Fd SCD
14.60 NA 22.5
Nuveen Pfd & Incm Opps Fd JPC 10.77 10.56 -1.9 17.3
Nuveen Pfd & Incm Secs Fd JPS 10.34 10.37 +0.3 20.6
Nuveen Preferred & Incm JPI 25.91 25.49 -1.6 12.8
TCW Strategic Income Fund TSI
5.75 NA 14.6
Insider-Trading Spotlight
Trading by ‘insiders’ of a corporation, such as a company’s CEO, vice president or director, potentially conveys
new information about the prospects of a company. Insiders are required to report large trades to the SEC
within two business days. Here’s a look at the biggest individual trades by insiders, based on data received by
Thomson Financial on October 13, and year-to-date stock performance of the company
KEY: B: beneficial owner of more than 10% of a security class CB: chairman CEO: chief executive officer CFO: chief financial officer
CO: chief operating officer D: director DO: director and beneficial owner GC: general counsel H: officer, director and beneficial owner
I: indirect transaction filed through a trust, insider spouse, minor child or other O: officer OD: officer and director P: president UT:
unknown VP: vice president Excludes pure options transactions
Borrowing Benchmarks | WSJ.com/bonds
Biggest weekly individual trades
Based on reports filed with regulators this past week
Date(s)
Company
Symbol
Title
Insider
No. of shrs in Price range ($) $ Value
trans (000s) in transaction (000s)
Close ($) Ytd (%)
Buyers
Oct. 6-10
Sept. 18
Oct. 10
Oct. 9-11
Oct. 5-6
Oct. 10
Oct. 5
Oct. 3
Sept. 25
Sept. 22
Oct. 4
Oct. 10
Oct. 10
Oct. 6
Oct. 10
Oct. 10
Oct. 10
Oct. 9
Mercer International
Workhorse Group
Rhythm Pharmaceuticals
Biglari Holdings
CASI Pharmaceuticals
MERC
WKHS
RYTM
BH
CASI
HEICO
Century Bancorp
Great Elm Capital Group
Pathfinder Bancorp
Vuzix
NexPoint Residential Trust
Gladstone Commercial
Lands' End
First Financial Bancorp
HEIA
CNBKA
GEC
PBHC
VUZI
NXRT
GOOD
LE
FFBC
Pershing Gold
PGLC
.
J. Lukens
D. Mott
S. Biglari
W. He
W. He
M. Hildebrandt
J. Filler
J. Woods
G. Joyce
P. Boris
J. Dondero
R. Cutlip
J. Staw
M. Rahe
D. Barker
J. Meyer
B. Honig
B
BI
BI
DOI
D
D
DI
B
CFO
DI
COI
PI
P
D
D
D
D
DOI
2659*
11.95-12.49
6,970
2.86-3.20
550
26.01
2 334.76-334.97
200
1.80-1.86
100
1.95
1
76.13
x
80.83
10
3.64
2
15.39
5
5.20
1
23.37
x
22.41
x
13.09
x
26.47
x
26.47
x
26.47
3
3.12
33,000 13.20 23.9
2.45 -65.3
20,201
14,306 24.42 -18.6
571 339.47 -28.3
2.72 136.5
366
195
100 73.45 35.2
48 85.60 42.7
3.65 -2.7
36
31 15.46 14.6
5.55 -18.4
26
9.4
26 24.45
11 22.67 12.8
10 12.15 -19.8
10 26.15 -8.1
9
8
3.05 -6.7
9
Sellers
Oct. 9-10
Oct. 4
Oct. 9-11
Oct. 4-6
Oct. 9-10
Oct. 10
Oct. 10
Sept. 18
Oct. 5-9
Oct. 6-9
Oct. 4-5
Oct. 9-10
Oct. 10-11
Oct. 10
Oct. 4
Oct. 9-11
Oct. 10-11
Oct. 10
Marvell Technology Group
MRVL
Workday
Vail Resorts
Palo Alto Networks
WDAY
Workhorse Group
HealthEquity
Liberty Interactive
WKHS
MTN
PANW
HQY
QVCA
Barracuda Networks
ServiceNow
CBS
Okta
Splunk
Broadridge Financial Solutions
Facebook
CUDA
NOW
CBS
OKTA
SPLK
BR
FB
S. Sutardja
S. Sutardja
D. Duffield
R. Katz
N. Zuk
M. Mclaughlin
R. Bonvanie
J. Lukens
F. Medici
M. Vadon
M. Vadon
M. Perone
F. Luddy
L. Moonves
J. Runyan
G. Sullivan
R. Daly
M. Schroepfer
BI
BI
DO
CEO
CT
CEO
O
B
DI
D
D
D
DI
CEO
GC
D
CEO
CTI
2,728
388
461
116
146
35*
27
6189*
317
680*
475
598*
100
164*
300
120
94
38
18.47-18.49
18.48
107.06-109.82
214.43-221.00
148.01-152.49
149.70-149.70
150.00
2.86
51.95-51.97
22.48-23.27
23.39-23.56
25.70-25.77
120.08-121.43
57.54-58.27
27.01-27.26
63.53-66.64
81.94-81.95
171.48-172.37
50,433
7,165
50,015
25,351
21,880
5,240
4,087
17,701
16,454
15,462
11,148
15,380
12,051
9,450
8,109
7,750
7,706
6,527
18.28
31.8
109.36
217.44
149.91
65.5
34.8
19.9
2.45 -65.3
50.67 25.0
22.31 11.7
22.31
4.1
122.29 64.5
57.00 -10.4
27.63 17.5
63.55 24.2
82.59 24.6
173.74 51.0
* Half the transactions were indirect **Two day transaction
p - Pink Sheets
Money Rates
October 13, 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
Inflation
Sept. index
level
Chg From (%)
Aug. '17 Sept. '16
U.S. consumer price index
246.819
252.941
All items
Core
Latest
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
Australia
0.00
0.50
0.25
1.50
0.00
0.50
0.25
1.50
0.00
0.50
0.25
1.50
0.00
0.50
0.25
1.50
1.38
0.15
Overnight repurchase
U.S.
1.13
1.08
Basic Industries
Business services
Capital goods
Consumer durables
Consumer nondurables
Consumer services
Energy
7,599
0
0
0
0
83,742
0
1.75
1.75
1.00
1.1700
1.3125
1.0500
1.1600
1.1700
1.2000
1.3125
1.1600
1.1700
1.1900
0.3500
0.5625
0.2400
0.3000
0.3200
1.75
Federal funds
Effective rate
High
Low
Bid
Offer
Selling
7,569,446
5,084,412
0
5,269,464
8,221,866
32,986,419
604,146
Buying
Finance
Health care
Industrial
Media
Technology
Transportation
Utilities
180,164
561,000
0
0
36,400
0
0
Selling
19,021,203
27,156,242
5,345,914
39,256,715
26,541,721
154,347
4,661,495
Sources: Thomson Financial; WSJ Market Data Group
52-Week
high
low
3.00
3.00
3.00
2.25
Commercial paper (AA financial)
1.25
90 days
1.21
1.30
0.62
Libor
Treasury bill auction
1.015 0.980 1.300 0.240
1.085 1.050 1.180 0.340
1.220 1.190 1.220 0.470
Secondary market
One month
Three month
Six month
One year
1.23667
1.35333
1.53433
1.81289
1.23500
1.35028
1.51878
1.80456
1.23889
1.35917
1.53433
1.82761
0.52400
0.87567
1.24267
1.55622
-0.402
-0.375
-0.312
-0.230
-0.405
-0.376
-0.309
-0.223
-0.376
-0.319
-0.212
-0.071
-0.405
-0.381
-0.312
-0.230
Euro Libor
Fannie Mae
30-year mortgage yields
30 days
3.432 3.461 3.865 2.960
60 days
3.454 3.483 3.899 2.990
One month
Three month
Six month
One year
Euro interbank offered rate (Euribor)
Continued from page B6
IPO Scorecard
-0.371
-0.329
-0.274
-0.181
One month
Three month
Six month
One year
Performance of IPOs, most-recent listed first
Company SYMBOL
IPO date/Offer price
% Chg From
Friday3s Offer 1st-day
close ($) price close
OptiNose
OPTN Oct. 13/$16.00
CarGurus
CARG Oct. 12/$16.00
OrthoPediatrics
KIDS Oct. 12/$13.00
Restoration Robotics
HAIR Oct. 12/$7.00
Switch
SWCH Oct. 6/$17.00
19.00
18.8
...
28.53
78.3
3.4
18.75
44.2
–2.4
9.60
37.1
–3.2
19.72
16.0
–5.4
Company SYMBOL
IPO date/Offer price
% Chg From
Friday3s Offer 1st-day
close ($) price close
Rhythm Pharmaceuticals
RYTM Oct. 5/$17.00
PQ Grp Hldgs
PQG Sept. 29/$17.50
Deciphera Pharmaceutical
DCPH Sept. 28/$17.00
Nightstar Thera
NITE Sept. 28/$14.00
NuCana
NCNA Sept. 28/$15.00
24.42
43.6 –18.6
17.39
–0.6
0.8
24.20
42.4
37.1
18.43
31.6 –23.2
14.38
–4.1 –11.0
Other Stock Offerings
Sector
Week
ago
Latest
Call money
1.1700
1.3125
1.0000
1.1600
1.1700
4 weeks
13 weeks
26 weeks
—52-WEEK—
High Low
Other short-term rates
Sources: WSJ Market Data Group; FactSet Research Systems
Based on actual transaction dates in reports received this past week
Buying
U.S. government rates
New to the Market
Buying and selling by sector
Sector
2.2
1.7
Prime rates
U.S.
Canada
Japan
Week
Latest ago
Discount
0.53
0.19
International rates
Week
ago
—52-WEEK—
High Low
Secondaries and follow-ons expected this week in the U.S. market
Symbol/
Expected Issuer/Business
Oct. 1
BlueLinx Holdings
Construction/Building
RumbleON
Technology
Oct. 18
LiveXLive Media
Publishing
Primary Amount
exchange ($mil.)
Friday’s
price ($) Bookrunner(s)
BXC
N
40.0
9.61
BTIG LLC
RBML
Nq
14.5
n.a.
Roth Cptl Ptnrs
LXL
N
100.0
n.a.
BMO Cptl Mkts
Latest
-0.373
-0.329
-0.273
-0.173
Value
Traded
-0.366
-0.311
-0.204
-0.069
-0.375
-0.332
-0.275
-0.181
52-Week
High
Low
DTCC GCF Repo Index
Treasury
MBS
1.148
1.129
26.280 1.366 0.244
89.600 1.506 0.257
Open Implied
Settle Change Interest Rate
DTCC GCF Repo Index Futures
Treasury Oct
Treasury Nov
Treasury Dec
98.890 0.005 5020 1.110
98.880 unch. 5501 1.120
98.740 0.015 1938 1.260
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.
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 | Monday, October 16, 2017
MARKETS
PayPal’s Market Value Eclipses AmEx
Mobile-payments
company’s shares
surge as market cap
climbs to $83 billion
BY PETER RUDEGEAIR
PayPal
Holdings
Inc.
vaulted over American Express Co. in terms of market
value last week, punctuating a
rally that has pushed up the
payments company’s shares by
nearly 75% since
EQUITIES the start of 2017.
The San Jose,
Calif.-based
company has enjoyed breakneck growth in both e-commerce and mobile money
transfers. Its market capitalization stands at about $83
billion, nearly double the $47
billion value it had when it
spun off from eBay Inc. a little
over two years ago.
PayPal is even gaining
ground on Wall Street titans.
Its market value is now
around $6 billion less than
Morgan Stanley’s and around
$10 billion less than that of
Goldman Sachs Group Inc.
The strong share gains for
the company run by former
AmEx executive Dan Schulman
have fueled investor debate
about its prospects.
On Wednesday, analysts at
Morgan Stanley upgraded PayPal’s stock, writing that it “is
among the few large companies that can deliver highteens revenue [growth] ... with
significant upside opportunities.”
But Craig Maurer, an analyst at Autonomous Research,
said in an interview that PayPal’s shares are trading so
richly that shareholders aren’t
pricing in much room for error
if the company doesn’t deliver
on its projections.
“When I talk to bulls,
they’re in the nothing-can-gowrong camp because it’s the
only way to justify the valuation,” Mr. Maurer said.
PayPal, which reports earnings on Thursday, now trades
at a multiple of around 32
times forward earnings, according to FactSet. So although its market value is
around half that of Mastercard
Inc. and around two-fifths
that of Visa Inc., its earnings
multiple is far dearer. Visa
trades at around 27 times forward earnings and Mastercard
is around 29 times. AmEx,
Paying Up
PayPal's shares have soared on the back of strong growth in e-commerce and mobile money transfers.
PayPal share price
Market capitalization
$70
$92.3
billion
Goldman Sachs
65
60
$88.7
Morgan Stanley
55
50
PayPal
$82.6
American Express
$82.1
Oct. 13
$68.66
▲74% in 2017
45
40
35
Jan.
Feb.
March April May
Sources: FactSet (market cap as of Oct. 13); WSJ Market Data Group (share price)
meanwhile, trades just shy of
15 times.
Under Mr. Schulman, PayPal
has sought to branch out beyond its best-known offering
of a checkout button that enabled shoppers to easily pay
for goods and services on retailers’ websites.
The company has spent
more than $1 billion on acquisitions of firms that provide
services such as cross-border
remittances, utility-bill payments and small-business
lending.
Additionally, PayPal has cut
deals with credit-card networks, banks, smartphone
makers and other technology
companies to make it easier
for customers of those firms
to use its namesake digital
wallet.
It is also pushing to expand
the reach of divisions like
Braintree, which enables tech
companies such as Uber Technologies Inc. to accept mobile
payments, and Venmo, which
June
July
Aug.
Sept. Oct.
THE WALL STREET JOURNAL.
lets users send money digitally
to one another.
“It’s grown into much more
of a technology platform play,”
said Lori Keith, a portfolio
manager and research analyst
at Parnassus Investments,
which owns PayPal shares.
“They were trying to be the
disrupter in the space, but
now they are very much focused on partnering.”
One of the biggest pending
issues on which investors and
analysts are looking for clarity
is what PayPal plans to do
with its lending operation.
Unlike Visa and Mastercard,
PayPal makes and holds on to
loans to consumers and small
businesses, which exposes it
to the risk of default should
the economic environment
worsen. At the end of the second quarter, PayPal had $6.1
billion in loan balances on its
books largely financed with
the company’s cash.
“If they have an adverse
credit report, people are suddenly reminded of risk on the
balance sheet,” said Mr. Maurer.
PayPal executives have
said they are looking at ways
to continue making loans but
unload the credit risk to
third parties and potentially
sell its outstanding loan portfolio.
Additionally, PayPal faces
questions about whether the
growth in its payment volume is coming at the expense
of profitability. PayPal’s socalled take rate, which measures the transaction revenue
it earns as a share of total
payment volume, slipped to
2.58% in the second quarter
from 2.69% in the same period a year ago.
Fintech Firm SoFi
Drops Plan for Bank
MARK BLINCH/REUTERS
BY PETER RUDEGEAIR
Corporations, including McDonald’s Corp., have issued almost C$15 billion in Canadian-dollar-denominated bonds this year.
U.S. Firms Pile Into Canadian Bonds
BY VIPAL MONGA
TORONTO—More U.S. companies are going north to borrow money.
Large corporations, including Apple Inc., Walt Disney
Co. and McDonald’s Corp.,
have issued almost C$15 billion in Canadian-dollar-denominated bonds this year, the
most ever, to
CREDIT
take advantage
MARKETS of lower rates
and a rise in demand from Canadian investors.
Offerings of Maple bonds—
Canadian-dollar-denominated debt issued by non-Canadian issuers—jumped to
C$14.9 billion ($11.9 billion)
between January and Oct. 13, a
record, according to Dealogic. That is almost three
times the C$5 billion borrowed for all of 2016 and
higher than the previous record of C$14.3 billion set in
2007.
A key reason: Rates for Canadian debt have been lower
than in the U.S. for most of
this year, allowing companies
to save money by borrowing
here, said Brad Meiers, head of
debt capital markets in Canada
for HSBC Securities Inc. The
firm worked on a C$1.25 billion offering by Disney earlier
this month.
The issuance was Disney’s
first in Canada and its first outside the U.S. since 2008. The
media conglomerate increased
the size of the bond from
Surging
Canadian-dollar-denominated offerings by foreign issuers
have hit a record this year.
15,000
12,500
10,000
7,500
5,000
2,500
0
2005 ’06 ’07 ’08 ’09
’10
*As of Oct. 13.
Source: Dealogic
C$750 million after investors
lined up for the debt, which
pays annual interest of 2.758%.
Underwriters ultimately priced
the bond 0.81 percentage point
higher than the seven-year
government bond, cheaper
than the 0.84 point they had
initially expected.
“Market conditions were attractive for us to issue there,”
said a Disney spokesman.
Disney’s offering followed a
C$1 billion transaction by
McDonald’s in late September,
and came less than two months
after Apple borrowed C$2.5 billion, the largest Maple offering
on record. Other issuers this
year include AT&T Inc., United
Parcel Service Inc., the financing arm of Anheuser-Busch In-
’11
’12
’13
’14
’15
’16
’17*
THE WALL STREET JOURNAL.
Bev SA and PepsiCo Inc.
AT&T also cited favorable
market conditions for its May
issuance of Canadian bonds,
adding that it sought to diversify its fixed-income investor
base.
A UPS spokesman said the
interest rate was lower than it
would have been on the U.S.
side of the transaction. The
company’s C$750 million bond
carried interest of 2.125% in
May, compared with a 2.35%
rate UPS is paying on a fiveyear bond it issued a few days
earlier, he said.
Apple, Anheuser-Busch InBev and Pepsi didn’t respond
to requests for comment.
Also driving the trend are
Canadian investors, who are
eager to invest in global household names because they need
to diversify bond portfolios
that lean heavily toward financial issuers, Mr. Meiers said.
The diversification push
comes as some investors are
worried about Canadian banks’
exposure to an overheating
housing market and are looking
for other places to park their
cash.
“If things were to go bad,
you’re buying the cream of the
U.S. crop,” he said.
Surging house prices in Toronto and Vancouver and rising
consumer debt levels are causing concern about the potential
for consumer defaults and rising
stress on bank balance sheets
and the economy. Some analysts
estimate the Canadian housing
market is overvalued by as
much as 60%, and Canada’s ratio of household debt to disposable income hit a new high of
167.8% in the second quarter.
“I prefer not to hold Canadian bank credit,” said Geoff
Castle, portfolio manager for
Vancouver-based PenderFund
Capital. “There’s a lot of unusual stuff in the Canadian
real-estate market.”
Mr. Castle sold some U.S.denominated Disney debt to
buy the Disney Maple bonds so
he could hold a highly rated
U.S. corporate in his local currency. He said the Canadian
Disney debt had a slightly
higher yield than the U.S.
bonds. He also didn’t need to
hedge his U.S. dollar holdings,
removing a cost, he added.
Online lender Social Finance Inc. said Friday that it
is pulling its application to
open a bank, retreating from
one of its most ambitious
goals just weeks after its chief
executive resigned as lawsuits
claimed sexual harassment
and a toxic workplace culture
at the company.
In June, SoFi had asked
Utah state regulators and the
Federal Deposit Insurance
Corporation to bless its plan
to launch a wholly-owned
banking subsidiary that would
offer customers deposit accounts and credit cards. Michael Cagney, then chief executive of SoFi, had written in a
letter to shareholders over the
summer that the company was
“optimistic that the FDIC will
move expeditiously to approve
our application.”
Last month, however, Mr.
Cagney suddenly resigned
from the company, saying his
presence was a distraction, especially in the wake of litigation brought by former employees that accused managers
of tolerating sexual harassment. Chief Technology Officer
June Ou resigned soon after,
leaving four vacancies at
SoFi’s top ranks following the
departures of its chief financial officer and chief revenue
officer earlier this year.
“With SoFi’s leadership in
transition, we’re withdrawing
our application with the FDIC
for now,” a SoFi spokesman
said in a statement to The
Wall Street Journal. He added
that a bank charter “remains
an attractive option when the
time is right” and that SoFi
still plans to offer its own deposit accounts to its customers “through partner banks in
the near future.”
SoFi’s bid to start a bank was
controversial among bank lobbyists and consumer-advocacy
groups. The San Franciscobased firm had applied for a
charter to form a so-called industrial loan company.
In comment letters to regulators, consumer groups wrote
that SoFi’s plan would subject it
to less scrutiny than other
types of banks and that it
wasn’t doing enough to serve
low- and moderate-income consumers.
By withdrawing its applica-
tion, SoFi clears the field for
payments company Square Inc.
to pursue its own bid for an industrial-loan company. Square
submitted an application in
September for a charter that
would enable it to offer loans
and deposit accounts to the
small businesses that use its
payment-processing services.
Earlier this week, the Independent Community Bankers
of America urged regulators in
a letter to deny Square’s application because it could jeopardize the safety of the financial
system and give Square an unfair advantage over small
banks. “The integration of
these technology and banking
firms would not only result in
an enormous concentration of
financial and technological assets but also would pose conflicts of interest and privacy
concerns to our banking system,” the ICBA wrote in a letter to the FDIC.
A Square spokeswoman said
in a statement that its application “reflects Square’s ability to
SoFi has tried to
move past its internal
issues under interim
CEO Tom Hutton.
build a bridge between the financial system and the underserved, addressing the needs of
small businesses that few community banks even reach.” She
added that Square believes
“each and every ILC application
should be considered on its individual merits, not ICBA’s inaccurate view of ILCs.”
Meanwhile, SoFi has been
trying to move past its internal issues under interim CEO
Tom Hutton. This week, the
company completed its largest-ever securitization, a sale
of $776.7 million in bonds
backed by refinanced student
loans. Roughly 30 investors
participated in the transaction
and demanded lower yields
than they did on a similar SoFi
deal earlier this year, according to people familiar with the
matter. That signals money
managers are still willing to
do business with the company
in the wake of its management
turnover.
BY IRA IOSEBASHVILI
The dollar fell Friday, as
mixed consumer price data
clouded the
CURRENCIES
case for an
interestrate
increase over the next few
months.
The Wall Street Journal
Dollar Index, which measures
the U.S. currency against a
basket of 16 others, was recently down 0.2%, at 86.25.
While
gasoline
prices
soared last month, largely a
result of hurricanes hitting the
southern U.S., prices for other
items rose very modestly, Labor Department data showed
Friday. Prices for drugs, cars
and clothing fell.
Many investors believe con-
sumer price data will play an
important role in determining
whether the Federal Reserve
raises rates for a third time
this year. Expectations of
higher rates costs tend to
boost the dollar, as they make
the U.S. currency more attractive to yield-seeking investors.
After a sharp September
rally, the dollar has made little
headway this month, weighed
down in part by mixed economic data.
Further gains will likely depend on how successful the
White House is in pushing
through its tax reform agenda,
said Christian Lawrence, senior market strategist at Rabobank.
The euro was down 0.1%, at
$1.1824. The dollar was down
0.4%, at ¥111.82.
NOAM GALAI/GETTY IMAGES FOR TECHCRUNCH
Dollar Weakens Amid Mixed Consumer Data
SoFi’S Michael Cagney resigned, saying his presence was a distraction.
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.
HEARD ON THE STREET
FINANCIAL ANALYSIS & COMMENTARY
Email: heard@wsj.com
Nikkei
Unhurt by
Scandal
Japan Inc. is reeling from
a string of corporate scandals. Meantime, the Nikkei is
at a two-decade high. What
are investors missing?
The latest misdeed involves Kobe Steel which, despite its name, is one of
Japan’s biggest aluminum
producers. The company has
admitted to falsifying quality
data for some of its aluminum
and copper products—which,
worryingly, are often used in
car and airplane-making. Its
shares have plunged more
than 40% since the announcement on Sunday.
Several other major Japanese companies have admitted wrongdoing in the recent
past. Takata Corp. slid into
bankruptcy after problems
with air bags it made led to
several deaths. Mitsubishi
Motors was hit by a fuelemissions scandal, while last
week Nissan Motor was
forced to recall over a million cars. Toshiba, one of
Japan’s most famous names,
has been rocked by yearslong accounting problems.
Look at the numbers,
though, and corporate Japan
seems alive and well. Business
confidence is booming, exports
are recovering and industrial
production has picked up.
The recent series of scandals seems symptomatic of
companies’ need to cut corners to improve profit margins, with revenues still not
growing very fast.
Nor have investors been
unalloyed winners: Their returns, as a proportion of
companies’ net income, haven’t risen, suggesting Japanese firms aren’t getting any
more generous with dividends. As ever with Japan,
it’s important to look beneath the surface.
—Anjani Trivedi
Monday, October 16, 2017 | B9
* *
What a Shocker:
General Electric
Growing Attractive
Fortress China
Capital outflows have slowed dramatically since late 2016
Forex reserves*
Net forex purchases by banks
Chinese yuan per dollar
元7.00
$150 billion
100
6.80
50
6.60
0
6.40
–50
–100
6.20
–150
6.00
2010
’11
’12
’13
’14
’15
’16
’17
*Change from a month earlier
Source: CEIC (flows); People’s Bank of China (yuan)
2012 ’13
’14
’15
’16
’17
THE WALL STREET JOURNAL.
China Won’t Let Yuan Go
China has always been a
pressure cooker—too many
people, not enough land, and
a long tradition of authoritarian governments with a
flexible approach to the rule
of law that depends on who
you are and who you know.
But the country is a highly
pressurized system in another way too: unlike most
major economies, China
strictly controls the movement of cash in and out of
the country, and actively
manages the value of its currency, the yuan. China’s central bank sets a daily trading range for the yuan
against the dollar every
morning, and actively intervenes in foreign-exchange
markets through state banks
when the currency moves
too sharply.
Reformers inside China
and many investors are hoping that pressure will be
eased by another round of
big-bang reforms in China
similar to its accession to
the World Trade Organization in the early 2000s. One
big change would be a shift
toward a free-floating currency after President Xi Jinping is comfortably ensconced in his second fiveyear term following the big
Communist party meeting
that starts Wednesday.
Instead, Mr. Xi and his al-
lies are busy shoring up
China’s rickety, heavily indebted state-owned companies and banks, which are
dependent on a plentiful supply of cheap capital. As long
as key parts of the state sector can’t survive without
low-cost funding, allowing
capital to leave the country
at will in search of higher returns is simply too risky. The
result: strict controls on the
yuan, in one form or another,
are likely to remain in place.
Meanwhile, all that capital
trapped in China will keep
blowing bubbles in real estate, stocks, commodities
and every other asset imaginable: distorting signals
about China’s economy.
Capital controls will be
eased incrementally when
domestic assets are doing
better—to let some of the
steam out of overheated
markets—and tightened
again when outflows rise too
fast. The real direction of
“reform” will be sideways,
not forward.
The fundamental dilemma
for Chinese policy makers is
simple: China saves 46% of
its gross domestic product
every year, far more than the
U.S. and most major economies, but finding good investment opportunities at
home is getting trickier. The
average return on assets for
WSJ.com/Heard
listed companies in China
has fallen roughly 30% to
50% since the boom years of
the late 2000s and early
2010s, as the economy has
slowed and domestic reforms have stalled. Banks
pay depositors essentially
nothing, and property in
large cities is shockingly expensive.
For an aging population
which needs to save for its
future, this adds up to a big
problem. Even during good
times, a certain amount of
capital is always eyeing the
exits.
Despite government control of the currency, the yuan
will still move around and
the rules will shift.
This year the yuan is up
5% due to tighter capital
controls instituted during
the height of the last big
yuan selloff in 2016, lower
than expected U.S. interest
rates and improved Chinese
growth.
But the experience of 2015
and 2016, when China’s $4
trillion of foreign exchange
reserves fell by roughly $1
trillion as capital fled the
country and the central bank
wrestled with currency speculators, shows that the real
priority is still maintaining
control—and market credibility—in a pinch.
—Nathaniel Taplin
Investor expectations for
General Electric are low. GE
should consider lowering
them further as an ugly year
gets worse.
Some of the conglomerate’s vast pool of businesses,
such as its oil & gas and
power units, are struggling.
The stock is down more than
20% over the past six
months, including nearly 5%
so far in October.
Meanwhile, change is
afoot in the front office.
Longtime former CEO Jeffrey
Immelt retired over the summer, and GE announced last
week that finance chief Jeff
Bornstein and other key executives would leave the
company by the end of this
year. Meanwhile, GE recently
appointed an executive from
activist investor Trian Fund
Management to its board.
Projections are falling in
tandem with the stock price.
Wall Street analysts expect
GE to report third quarter
adjusted earnings of 49
cents a share next week, according to FactSet. Their average forecast was for 53
cents a share as recently as
June. GE’s most recent goal
of $2 a share in profits for
2018 seems unrealistic. The
FactSet consensus now calls
for $1.65 a share, down from
$1.89 in June.
That might mean some
aggressive belt tightening
from the company is imminent. Analysts at J.P. Morgan
said in a note Wednesday
that a dividend cut is “increasingly likely” when new
CEO John Flannery unveils
his strategy to investors
sometime next month.
It is possible, even likely,
that such a cut would further damage the stock price.
After all, such a move
wouldn’t sit well with GE’s
fairly large base of retail
shareholders.
But the selloff would be
temporary even in that unhappy scenario. While the
stock has dropped, GE’s outstanding bonds are all trading
near or above their par value.
The steadily lower trajectory of earnings estimates
also means that investors
won’t likely be taken aback
by bad news. GE could cut
next year’s profit forecast
by nearly 18% without causing analysts to revise their
models.
More significantly, a backdrop of bad news gives Mr.
Flannery the freedom to reset expectations that the
company can meet. The
tough moment also means
flexibility to consider a more
ambitious reshaping of GE’s
business portfolio, something that Wall Street would
likely welcome.
GE’s shares fetch less than
14 times next year’s analyst
consensus earnings. Shareholders were right to sell the
rumor. If Mr. Flannery can
unveil a convincing strategic
vision, though, then they will
have a chance to buy the
news.
—Charley Grant
Outage
Mean analyst expectation for GE's
2018 adjusted earnings per share
$2.0
1.5
1.0
0.5
0
A
M
J
J
A
S
O
Source: FactSet
THE WALL STREET JOURNAL.
MARKETS
Currencies
$3.3B
emerging-market currencies has
gained 8.7%.
Some analysts fear the
search for higher-yielding investments has driven investors into
increasingly risky corners of financial markets, such as junk
bonds in poor countries like Tajikistan. With the world’s biggest
central banks moving to normal-
The amount investors poured into
emerging-market equity funds last week,
the largest net inflow in 21 weeks.
MONEYBEAT
Hot Emerging Markets
Investors can’t get enough of
emerging markets.
Investors poured $3.3 billion
into emerging-market equity
funds last week, the largest net
inflow in 21 weeks, according to
data from Bank of America Merrill Lynch.
Emerging-market bond funds
also registered inflows of $1.7
billion last week and have now
ize monetary policy, they argue
that this year’s rally in emerging
market assets may be nearing
its end.
Still, many believe the
emerging-market rally has further to run.
Inflation has remained
weak, and the global economic
expansion has gained momentum this year.
Last week, the International
Monetary Fund raised its forecasts for global growth to
received inflows for 37 of the
past 38 weeks, BAML’s data
shows.
Demand for high-yielding assets and a pickup in global economic growth has driven a surge
in emerging-market stocks,
bonds and currencies.
MSCI’s emerging-market
stock index has surged 31% this
year, while a similar index for
3.6% for this year and 3.7%
next year, an acceleration from
the 3.2% growth recorded in
2016.
For emerging-market countries, the IMF is forecasting 4.6%
growth this year and 4.9% in
2018, up from 4.2% growth in
2016.
This year’s slide in the U.S.
dollar—down 7.2% against a basket of peers tracked by The Wall
Street Journal—has also helped
emerging markets, making their
dollar-denominated debts easier
to service and the commodities
many export cheaper for global
buyers.
—Chelsey Dulaney
ONLINE
WSJ
.COM
For more
MoneyBeat blog
posts, go to
blogs.wsj.com/
MoneyBeat
U.S.-dollar foreign-exchange rates in late New York trading
Country/currency
US$vs,
YTDchg
Fri
in US$ per US$ (%)
Argentina peso
.0577 17.3395
Brazil real
.3179 3.1458
Canada dollar
.8021 1.2467
Chile peso
.001604 623.30
Colombia peso
.0003408 2934.26
Ecuador US dollar
1
1
Mexico peso
.0529 18.9069
Peru new sol
.3078 3.249
Uruguay peso
.03401 29.4000
Venezuela b. fuerte .100050 9.9951
9.3
–3.4
–7.3
–6.9
–2.3
unch
–8.8
–3.1
0.2
unch
Asia-Pacific
Australian dollar
.7887 1.2679
China yuan
.1517 6.5901
Hong Kong dollar
.1281 7.8069
India rupee
.01546 64.671
Indonesia rupiah .0000741 13499
Japan yen
.008943 111.82
Kazakhstan tenge .002990 334.44
Macau pataca
.1241 8.0601
Malaysia ringgit
.2372 4.2154
New Zealand dollar
.7178 1.3931
Pakistan rupee
.00950 105.250
Philippines peso
.0195 51.288
Singapore dollar
.7412 1.3492
South Korea won .0008876 1126.67
Sri Lanka rupee
.0065041 153.75
Taiwan dollar
.03320 30.122
Thailand baht
.03025 33.060
Country/currency
Vietnam dong
Americas
–8.7
–5.1
0.7
–4.8
–0.2
–4.4
0.2
1.8
–6.0
–3.5
0.8
3.4
–6.8
–6.7
3.6
–7.2
–7.7
US$vs,
YTDchg
Fri
in US$ per US$ (%)
.00004401
22720 –0.2
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
.04580 21.833 –15.0
.1588 6.2988 –10.9
1.1821 .8460 –11.0
.003838 260.56 –11.5
.009514 105.11 –6.9
.1268 7.8881 –8.7
.2783 3.5928 –14.2
.01746 57.273 –6.5
.1234 8.1061 –11.0
1.0262 .9745 –4.4
.2751 3.6349 3.2
.0376 26.5650 –1.9
1.3285 .7527 –7.1
Middle East/Africa
Bahrain dinar
Egypt pound
Israel shekel
Kuwait dinar
Oman sul rial
Qatar rial
Saudi Arabia riyal
South Africa rand
2.6508 .3773 0.02
.0567 17.6255 –2.8
.2856 3.5009 –9.0
3.3120 .3019 –1.2
2.5967 .3851 0.04
.2672 3.742 2.8
.2666 3.7504 –0.01
.0754 13.2671 –3.1
Close Net Chg % Chg YTD%Chg
WSJ Dollar Index 86.25 –0.18–0.21 –7.20
Sources: Tullett Prebon, WSJ Market Data Group
THE TICKER | Market events coming this week
Empire Manufacturing
Sep., previous
24.4
Oct., expected
20
Earnings expected
Estimate/Year Ago ($)
Celanese Class A
1.92/1.67
Charles Schwab
0.41/0.35
CSX Corp
0.52/0.48
Equity LifeStyle Prop
0.54/0.48
IDEX
1.06/0.92
Netflix
0.32/0.12
Tuesday
Capacity utilization
Aug., previous
76.1%
Sep., expected
76.2%
Sep., expected
up 0.3%
Earnings expected
Estimate/Year Ago
Goldman Sachs Group
4.17/4.88
IBM
3.28/3.29
Johnson & Johnson
1.80/1.68
Morgan Stanley
0.81/0.81
Prologis, Inc. 0.35/0.53
UnitedHealth Group
2.56/2.17
Wednesday
Mort. bankers indexes
Purch., previousdown
0.1%
Refinan., prev. down 4%
EIA status report
Previous change in stocks in
millions of barrels
Import price index
Aug., previous
up 0.6%
Sep., expected
up 0.6%
Crude-oil stocks down 2.7
Gasoline stocks
up 2.5
Distillates
down 1.5
Industrial production
Aug., previous down 0.9%
Building Permits
Aug., previous 1.30 mil.
Sep., expected
1.22 mil.
Housing Starts
Aug., previous 1.18 mil.
Sep., expected 1.17 mil.
Philadelphia Fed survey
Sep., previous
23.8
Oct., expected
20.8
Earnings expected
Estimate/Year Ago
Earnings expected
Estimate/Year Ago
Abbott Labs 0.65/0.59
American Express
1.48/1.20
Crown Castle 0.24/0.26
eBay Inc.
0.48/0.45
M&T Bank
2.40/2.10
U.S. Bancorp 0.88/0.84
Thursday
Initial jobless claims
Previous
243,000
Expected
239,000
EIA report: natural-gas
Previous change in stocks in
billions of cubic feet
up 87
Leading indicators
Aug., previous
up 0.4%
Sep., expected
up 0.1%
BoNY Mellon 0.92/0.90
Danaher
0.95/0.87
Intuitive Surgical
1.99/2.06
PayPal Hldgs 0.43/0.35
Philip Morris 1.39/1.25
Verizon Comm 0.98/1.01
Friday
Existing home sales
Aug., previous 5.35 mil.
Sep., expected 5.30 mil.
Earnings expected
Estimate/Year Ago
GE
Honeywell
P&G
Schlumberger
SunTrust
Synchrony Finl
LUKE SHARRETT/BLOOMBERG NEWS
Monday
0.49/0.32
1.74/1.60
1.07/1.03
0.42/0.25
1.05/0.91
0.64/0.73
* FACTSET ESTIMATES EARNINGS-PER-SHARE ESTIMATES DON’T INCLUDE EXTRAORDINARY ITEMS (LOSSES IN PARENTHESES) ADJUSTED FOR
STOCK SPLIT
NOTE: FORECASTS ARE FROM DOW JONES WEEKLY SURVEY OF ECONOMISTS
CSX Corp. is among companies scheduled to report earnings this week.
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 | Monday, October 16, 2017
MARKETS
THE DAILY SHOT By Lev Borodovsky and Colin Barr
Fixing Up the Labor Market
Taking the temperature
of the U.S. labor market has
grown more complicated
in the aftermath of major
storms that hit the Gulf
Coast and Florida. Unemployment is low and wages
remain mostly tepid. But
slack is clearly diminishing,
which is why some
indicators are drawing
analysts’ attention.
For instance, flows
into the labor force have
spiked, driven in part by
hurricane-cleanup efforts
whose higher pay drew in
a group that included
retired utility workers
and carpenters. At least
some of this bump could
be temporary, and other
dynamics will likely mute
some of those gains.
Prime-age population has
not risen in a decade, and
labor force participation
trends vary widely in some
cases by demographic.
The bigger question is
whether the U.S. labor
market will recover its
resilience. One possible
scenario: economic growth
sops up the remaining idle
workforce, wages finally
accelerate, corporate
margins get crunched and
more firms move abroad in
search of labor. Economic
growth would stagnate,
as it has in Japan—one
reason economists view
anti-immigration policies
so negatively.
WSJ
subscribers can get
The Daily Shot—
a chart-by-chart briefing
on markets and economics—
sent to their email
each morning. Subscribe at
wsj.com/newsletters
Labor force participation rate
by demographic group*
U.S. recessions
Age 25-54
80%
70
Men
Hispanic
White
Total
60
Black
Women
50
Age 55+
40
Age 16-19
30
1980
’90
Labor force participation rate*
2000
Flows into the labor force†
67%
September
4.9 million
5 million
’10
Prime-age employment-topopulation ratio**
Prime-age population**
82%
130 million
September
78.9%
4
80
3
78
110
64
2
76
100
63
1
74
90
66
September
63.1%
Four-year high
65
62
72
0
’07 ’08
’10
’12
’14
’16 ’17
’07 ’08
’10
’12
’14
’16 ’17
September
125.8 million
120
80
’07 ’08
’10
’12
’14
’16 ’17
*Seasonally adjusted †People age 16 and older changing status from 'not in labor force' to 'employed', seasonally adjusted **Ages 25-54, seasonally adjusted
Source: Bureau of Labor Statistics
1980
’90
2000
THE WALL STREET JOURNAL.
You were looking to retire by the water.
Better yet, above it.
Captain of your own floating home.
That would be retiring like a boss.
That would also be tough without a plan.
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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
© 2017 Dow Jones & Company. All Rights Reserved.
THE WALL STREET JOURNAL.
Monday, October 16, 2017 | R1
HIGH
LIGH
R5-7 TS
The Search for Sweet
As traditional sweeteners come under attack, food companies
are in hot pursuit of alternatives. It isn’t easy.
FOOD MAKERS ARE RACING TO FIND
acceptable alternatives to sugar. But it’s hard
to replace a taste that so many Americans
have grown to love.
Traditional sweeteners—from sucrose, or
table sugar, to high-fructose corn syrup—are
an increasing concern to consumers and lawmakers, who see them as a key culprit in
America’s obesity and diabetes epidemic.
Now researchers at food giants, startups
and universities are looking for new ways to
make foods sweet without putting people’s
health at risk. Some are testing out natural
zero-calorie ingredients like monkfruit and
South American root extracts that are so intensely sweet that they can add flavor without
calories. Others are manipulating granules of
sugar to make them taste sweeter. They’re also
developing new ingredients that will block bitter taste receptors and make food seem like it
has more sugar than it does.
Nestlé SA scientist Olivier Roger, who’s
leading the food titan’s sugar-reduction effort
globally, says many companies are working on
finding answers. Adding to the urgency: Some
companies, like Nestlé, have self-imposed
deadlines for lowering sugar content in food.
But there are big challenges to removing
what has been a key ingredient in processed
food for over a century.
For one thing, there are side effects to removing sugar: It not only adds sweetness but
also functions as a preservative and adds texture, as well as contributing to the overall volume of food. Whole recipes have to be rethought when it is removed. And after finding
an alternative, companies may face higher
costs, supply constraints or regulatory hurdles
related to the substitute ingredients.
“It’s very difficult, very complex. We still
don’t have the magic solution that would replace sugar,” Mr. Roger says.
The push comes amid a widespread effort
to put the brakes on sugar consumption. In a
survey released by market-research firm NielYears ago, when consumers were trying to
sen earlier this year, 22% of respondents said cut calories in general, artificial sweeteners
they already restrict their sugar intake. Most such as aspartame (Equal) and later sucralose
major food makers, including Mars Inc., Gen- (Splenda) gained popularity, and scientists
eral Mills Inc. and Kellogg Co., have pledged thought they had cracked the code. Now those
to reduce sugar in candy,
products have come under
children’s cereals and other
scrutiny by consumer advoproducts.
cates over health concerns.
Souring on Sugar
Last year, the federal
While there is still a debate
government called out
among the scientific commuAs more U.S. consumers snub
sugar consumption as a
nity, the Center for Science
sugar and artificial sweeteners,
problem in the U.S. Dietary
in the Public Interest, CSPI,
natural alternatives gain ground
Guidelines, recommending
warns that artificial sweet22%
for the first time that peoeners may post a slight risk
Americans who restrict their
ple consume no more than
of cancer. More than half of
sugar intake
10% of their daily calories
Americans surveyed by Nielfrom added, or refined, sugsen said they avoid those arars. Americans currently avtificial sweeteners.
52%
erage 13% of their calories
One avenue researchers
Americans who avoid artificial
from added sugar, the reare exploring is altering
sweeteners like aspartame
port says.
sugar itself. Nestlé, which
Regulators also said last
adds sugar to chocolate bars,
22,000
year that food and beverage
ice cream and less-obvious
Food products containing
makers will be required to
products like frozen dinners,
high-fructose corn syrup
disclose on nutrition labels
says it has discovered a way
how much sugar has been
to make sugar particles dis206
added to products, as a dissolve faster when people eat
Variations on how high-fructose
tinct item within the total
them. That allows people to
corn syrup can be listed on labels
sugar content. The FDA retaste the sugar immediately
cently extended the deadso that the product seems
19%
line for the new labels to
sweeter, allowing the comIncrease in 2016 sales of
Jan. 1, 2020 from July 2018.
pany to reduce sugar content
products with
Cutting the amount of
by up to 40%.
natural/low-glycemic sweeteners
sugar will be a steep task.
Hershey, meanwhile, says
More than 22,000 products
Source: Label Insight, Nielsen
it has patented technologies
in the U.S. contain highTHE WALL STREET JOURNAL.
that boost sweetness by alfructose corn syrup, accordtering the surface area and
ing to food labels cataloged
shape of sugar particles in
by Nielsen and Label Insight, a provider of chocolate. It wouldn’t provide details of how
food-label data. Even foods widely seen as shape impacts taste, but some scientists say
healthy contain added sugars. For instance, that when there’s more surface area to touch
among yogurt products, 86% contain added the tongue’s taste receptors, a food can seem
sugars of some kind, as do 79% of shelf-stable as sweet with less sugar.
Please turn to the next page
juices and drinks.
INSIDE
The Future of Protein
The Grocery Store of the Future
Food Companies Revamp for a
Digital World
GLOBAL FOOD FORUM
The hunt for meat alternatives
is heating up
R2
Enticing online shoppers to make
impulse purchases is just one
challenge they are working to solve
R4
When Restaurant Apps Don’t
Work as Planned
Starbucks and others adjust as
mobile orders create new hassles
R4
In Kroger labs, scientists hunt for
patterns in data
R8
Where the FDA Is
Going Under Trump
Scott Gottlieb says it is about
making the agency more efficient
R5
Trade in the Balance
Archer Daniels Midland’s CEO says
the U.S. food sector is incredibly
productive. For now
R6
The Seafood Shortfall
Tj Tate and Amy Novogratz on the
promises and problems associated
with sustainable seafood
R6
How Data Science Will
Transform Farming
Hugh Grant of Monsanto and
James C. Collins Jr. of DowDuPont
on new gene-editing technologies
R7
The Agricultural Agenda
Sonny Perdue talks about the TPP,
Nafta and climate change
R7
JOHN KUCZALA
BY ANNIE GASPARRO
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 | Monday, October 16, 2017
JOURNAL REPORT | THE FUTURE OF FOOD
The Future of Protein (the Meatless Variety)
BY JENNIFER MALONEY
THE FUTURE OF PROTEIN could be
a meal worm, a fungus, an obscure
plant or a run-of-the-mill pea.
“If we look around the world,
there’s a big consumer trend on
more protein,” says Mehmood Khan,
vice chairman and chief scientific officer at PepsiCo Inc. “The question
is: How are we going to do this in a
manner that’s sustainable? Protein
isn’t cheap. And animal protein has
the greatest footprint on the planet.”
The maker of Cheetos, Rice-ARoni and Quaker Oats earlier this
year issued a request for proposals
on “novel protein sources” for its
snacks and beverages. PepsiCo is focused primarily on plant-based proteins but said it would also consider
insects or mycoprotein—an ingredient made from fermented fungus.
Indeed, companies from startups
to conglomerates are expanding
their portfolios to serve consumers
concerned not just about what they
eat, but how their food is grown.
A growing number of U.S. consumers are looking for healthy, minimally processed ingredients sourced
in a way that is kind to the environment.
While U.S. per-capita consumption of meat and poultry combined
grew 6% from 2014 to 2016, according to the U.S. Department of Agriculture, consumption of meat substitutes is also growing. U.S. retailstore sales of products using meat
substitutes climbed 16% over the
same period to $700 million in 2016,
according to research firm Euromonitor International. The firm projects
that meat substitutes, including frozen, refrigerated and shelf-stable
products, will reach $863 million in
annual U.S. sales by 2021.
“The consumer is demanding
more and more plant-based solutions,” says Ethan Brown, chief executive of Beyond Meat, a Los Angelesarea company that uses peas to
make burger patties with a texture,
taste and sizzle similar to ground
beef.
The company last year sold a 5%
stake to Tyson Foods Inc., the largest U.S. meat company by sales. Tyson, which raised some eyebrows
with the move, said at the time that
investing in plant-based protein
would help it meet consumer demand for more choice and keep tabs
on innovations.
Nestlé SA last month agreed to
acquire Sweet Earth Foods, a Moss
Landing, Calif., company that substitutes plant for meat proteins in
meals such as curries, stir fries,
breakfast wraps, burgers and pasta.
Nestlé didn’t disclose the terms of
the deal.
As shoppers look for healthy, natural ingredients, big food companies
are investing in startups that offer
alternatives to traditional dairy products as well.
Kellogg Co.’s venture-capital fund
in January announced an investment
in Kuli Kuli, an Oakland, Calif., company that makes smoothie mixes and
bars from the protein-rich leaves of
the moringa tree, cultivated in West
Africa, the Caribbean and elsewhere.
General Mills Inc.’s venture-capital
fund, too, has invested in such companies as Kite Hill, a producer of nutmilk-based cheeses and yogurts; and
Purely Elizabeth, which sells granola
and hot cereal made with ingredients
such as kaniwa, a protein-rich seed
grown in South America.
Alternatives to traditionally
raised animal products are coming
from some surprising sources. Take
jackfruit, for example. It isn’t high in
protein, but when cooked it has a
texture similar to pulled pork. Then
there’s Memphis Meats Inc., which is
developing technology to grow meat
from self-reproducing animal cells.
Cargill Inc. invested in the company
in August.
PepsiCo’s request, posted on a
website that helps match projects
with researchers, notes that the
company has already done “extensive work” on ingredients including
soy, moringa, duckweed, cricket
powder and mealworm powder. But
don’t expect a Quaker cricket bar
soon. The company says that “extensive work” could mean reading the
research literature on a given subject.
The company has set goals for
lowering the amounts of sugar, fat
and sodium in its products and is
shifting its portfolio to include more
of what it calls “everyday nutrition”
products containing whole grains,
fruits, vegetables, dairy and protein.
BEYOND MEAT
Companies are racing to come up with
meat-product substitutes. Care for
some moringa or mealworm powder?
Beyond Meat says the firm’s plant-based burger patties are designed to look, taste and cook like the real thing.
These products, such as overnight
oats, granola and hummus-based
sandwich spreads, now represent
27% of PepsiCo’s net revenue.
In its search for new protein
sources, the company says it is looking for ingredients that are affordable, easy to pronounce and have
minimal impact on the flavor and
texture of a drink or snack.
“Ask anybody who enjoys cooking,” says Dr. Khan, a former endocrinologist. “Take anything with protein; if you mishandle it, it either
curdles, denatures, gels, tastes bad.
It is not easy to cook with.”
In some cases, PepsiCo has taken
a conventional ingredient and given
it a new form.
The company’s latest innovation
is a patented process that makes
oats soluble in water so they can be
consumed as a protein-rich beverage. The resulting drinks don’t have
the viscosity or granularity one
might expect from mixing oats and
water, PepsiCo says. The company is
developing products made with
“SoluOats” for the U.S. and other
markets that vary by seasoning, flavoring and texture. Some may include additional protein from dairy.
Food companies are also looking
for ingredients that address concerns that meat production—because
of the amount of land, water and energy it requires—won’t meet the
world’s growing protein needs.
That’s where the use of insects
could come in.
The Search for Sweet
Continued from the prior page
DouxMatok, an Israel-based food-tech company, says it has patented technology that intensifies the sweetness of sugar by attaching
sugar molecules to what it calls a carrier that
targets certain taste buds and makes the
sweetness linger. That can reduce the sugar
content in food by up to 40%, depending on the
product, the company says.
More than sweetness
Even if scientists find a way to reduce sugar,
that isn’t the end of the problem. For one
thing, if you take out sugar, you end up with a
product that isn’t, well, as big as it used to be.
The high-tech sugar Hershey has developed
allows the company to use less, but it needs to
add something to make up the volume, or its
chocolate bars would shrink. Replacing sugar
with more of the other ingredients—such as
milk or cocoa butter—can add fat, and that’s
viewed as a negative.
If you take out 30 grams of sugar, you have
to put in 30 grams of something else, and it
also has to be healthy, says DouxMatok Chief
Technology Officer Alejandro Marabi. “Every
category has different challenges. Chefs and
food scientists every day will have recipes they
try and test,” he says.
Sugar also serves a lot of functions in food
beyond making it sweet, and they aren’t easy
to replicate. “What many people may not realize is that sugar plays several roles in chocolate,” like affecting the texture, a Hershey
Where’s the Beef?
U.S. retail-store sales of products made
from meat substitutes are forecast to
rise steadily through 2021:
PROJECTED
$900 million
600
300
0
2011
’13
’15
spokesman says.
For instance, Nestlé’s Mr. Roger says, “if you
remove sugar from ice cream, you have an ice
cream that is very, very hard.”
Adding fiber, however, can soften it. “You
have to have a combination of different ingredients to overcome different gaps that we have
when we reduce sugar,” he says.
Sugar also acts as a preservative because it
binds with water, not allowing bacteria to
grow. Removing it from bread can enable mold
to grow faster.
Looking to nature
Some researchers now say natural, high-intensity sweeteners that come without calories
are the future of sweetness. But current alternatives such as stevia and monkfruit can have
a bitter aftertaste.
Researchers around the world are testing in-
Big Business
2016 category sales, in billions of dollars
Juice & drinks
$7.4
100%
Snack bars
$3.4
80
Yogurt
$7.6
60
Cereal
$8.6
40
Salad dressing
$2.1
20
Bread
$14.5
0
Condiments
Juice & drinks Snack bars
Yogurt
Cereal
Salad dressing
Bread
Condiments
$1.2
THE WALL STREET JOURNAL.
Source: Label Insight, Nielsen
Follow The Experts >>
This Journal Report doesn’t stop here. Join us online with The Experts—a group of industry, academic and cultural thinkers who weigh in on
the latest issues raised in this and future reports.
Read what they have to say at WSJ.com/Experts. Posts featured
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Public Health at Yale University School of Medicine.
’21
Mohammed Ashour, chief executive of a Texas company called Aspire Food Group, is aiming to introduce American palates to insects—a
protein source consumed by two billion people around the world.
“We are growing in numbers and
we are growing in appetite,” Mr.
Ashour says of the world’s population, noting that raising livestock requires much more water, land and
fossil fuels per pound of meat produced than insect farming does. “We
have to start shifting how the
world’s resources are used.”
In a newly expanded indoor facility in Austin, Aspire produces a
How Sweet It Is
Pct. of consumers looking for low sugar in these products
’19
THE WALL STREET JOURNAL.
Added sugar is the norm in many food categories, sparking a hunt by consumers for healthier options.
Pct. items with added sugar
’17
Source: Euromonitor International
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cricket powder that is used in protein bars, cookies and dog treats.
The company also makes wholeroasted crickets, a crunchy snack
that comes in flavors such as Texas
BBQ and sour cream and onion. The
roasted crickets were a hit this year
at the Seattle Mariners’ Safeco Field,
where concession stands served
them in a 4-ounce cup with chilelime seasoning for $4. Aspire is now
in talks with an NBA team, Mr. Ashour says.
“There’s definitely a psychological
hurdle,” he says. “A lot of insects are
just simply gross to look at. This
isn’t an overnight shift.”
Meanwhile, Beyond Meat is exploring protein sources beyond the
humble pea.
“People don’t like to eat the same
thing every day,” Mr. Brown says. A
mix of proteins can create a better
mouthfeel and a more complete
amino-acid profile. The company is
also looking to increase the stability
of its amino acid supply by diversifying the crops it uses.
Among other crops, it is considering lentils, mung beans, mustard
seeds and lupin beans, a legume
eaten in the Mediterranean. The
company’s next product will likely
use a combination of protein
sources.
Ms. Maloney is a reporter for The
Wall Street Journal in New York.
She can be reached at jennifer.
maloney@wsj.com.
gredients derived from mushrooms that block
bitterness. They can be added to coffee drinks
and dark chocolate to reduce the amount of
sugar. Or they can offset the unwanted aftertaste of those natural zero-calorie sweeteners.
But even when they find the right combination of ingredients, it can be difficult to source
them. One all-natural sweetener that has recently become a popular candidate for tests is
a syrup from yacon, a South American root
that is relatively hard to find in the U.S. Even
if it works great, it’s currently too expensive,
one food-company scientist says.
Some companies are finding solutions closer
to home. Ahold Delhaize NV, a European grocer
with nearly 2,000 stores in the U.S., says it removed 500,000 pounds of sugar from its own
brands in 2015 and 2016. For its juices, food
scientists found sweeter varieties of apples and
other fruits, says Jacqueline Ross, director of
product development for Ahold USA. “It’s important to take out [added sugar], but also to
not replace it with something else that may not
be liked, like artificial sweeteners,” she says.
Allison Fickett, a dietitian and regulatory
manager at Daymon Worldwide, a grocery consultancy, says some of the company’s clients
are reducing added sugar in products that contain fruit by picking it when it’s riper and cooking it a bit longer to enhance caramelization.
That method “doesn’t require reformulating or
investing in new food technology,” she says.
Eve Crampon, senior product developer at
Stonyfield yogurt, says she and her team have
worked for more than two years to reduce the
sugar in its yogurt. They screened the thousands of strains of bacteria cultures until they
found the right combination that produced a
less tart yogurt and thus required less added
sugar. “Finding the right strain that would be
mild without posing other challenges took a
while. We had to test a lot of strains,” she says.
Ms. Gasparro is a staff reporter in The Wall
Street Journal’s Chicago bureau. Email
annie.gasparro@wsj.com.
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Monday, October 16, 2017 | R3
Thank You and
Congratulations
President Trump!
Congratulations to the Trump administration and
Agriculture Secretary Sonny Perdue (pictured left,
at last week’s second annual Global Food Forum) for
increasing America’s food exports by 9 percent in the
past 12 months — including beef by 25% and dairy by
16% — after recent years of decline.
We salute the Trump Administration’s constancy of
focus on exports, deregulation and other key drivers of
success for farmers and food processors of America.
Anthony Pratt
Executive Chairman, Pratt Industries
Pratt Industries is one of the largest corrugated box manufacturers in the United States.
Our boxes save money and save the environment.
www.prattindustries.com
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THE WALL STREET JOURNAL.
R4 | Monday, October 16, 2017
JOURNAL REPORT | THE FUTURE OF FOOD
Food Companies Revamp for a Digital World
Big brands learn new tricks to spur impulse buys, aid search results, drive reorders
AS CONSUMERS increasingly shop
for groceries online, giant food
brands are scrambling to keep up.
Consider just one small fact: Consumers who buy groceries online
usually stick to a list of must-have
items. That has left some big food
companies scrambling to find new
ways to persuade them to add that
last-minute chocolate bar or bottle
of water.
Hershey Co., for instance, is
working on a technology to make it
easier for online shoppers who pick
up their orders at stores to throw in
a piece of candy or a pack of gum at
the last minute. As customers arrive
at the store and an employee prepares to bring their groceries out to
their car, an offer would pop up on a
smartphone app, suggesting they
add something extra to their orders.
The idea is to mimic the experience
in the checkout lane, where 56% percent of shoppers always or often
purchase a snack, the company says.
Figuring out how to drive impulse
purchases is just one of the challenges that multibillion-dollar food
brands face as they gear up to win
customers online. They also have
more competition from startups on
the internet, where it is possible to
build a consumer following without
a massive marketing budget and
where newer brands perceived as
less processed and more healthful
tend to be popular.
As food makers and retailers test
new technologies and develop ecommerce strategies to compete in
this changing landscape, the overall
grocery-shopping experience for customers is likely to shift dramatically,
food executives and analysts say.
“Food is changing like it’s never
changed before,” Kroger Co. Chief
Executive Rodney McMullen told investors earlier this month. “It will be
anytime, anything, anywhere that
they want it.”
Critical segment
Amazon.com Inc.’s recent acquisition of Whole Foods Market Inc. and
its big push into the grocery industry is generating a new sense of urgency among food makers and traditional supermarkets to keep up with
the e-commerce giant.
Campbell Soup Co., Conagra
Brands Inc., Kraft Heinz Co. and others, have said they are investing
more to build sales online, hiring ecommerce experts and making adjustments to their supply chain and
distribution systems to serve e-commerce needs.
The stakes are high. While e-com-
ROB SHEPPERSON
BY ANNIE GASPARRO AND
HEATHER HADDON
merce represents a small segment of
food and beverage sales today, at
about 4%, it is expected to account
for 8% of such sales, or $70 billion,
by 2021, according to Inmar Willard
Bishop Analytics, a Chicago-area
consulting firm.
One big challenge for behemoth
brands such as Campbell’s chickennoodle soup and Mondelez International Inc.’s Oreo cookies is that
they don’t always have the kind of
leverage online that they are used to
having in brick-and-mortar stores.
For decades, such brands controlled
grocery-store aisles, commanding
prime shelf space and funding expensive advertising displays. Online,
however, the playing field is more
level, as the internet has provided a
quick, cheap and easy sales platform
for newer, trendier food companies
to reach consumers.
David Ciancio, senior customer
strategist for consumer-data firm
Dunnhumby, says that foods viewed
as healthful and consumed as part of
a routine—such as breakfast bars
made with ingredients perceived as
simple or nutritious—do better online because they are habitual and
therefore ripe for automatic reordering. Processed foods and items
bought on impulse, such as candy,
typically suffer in the transition to
online, he says.
Many websites have no way of
presenting impulse-related food
items as pop-ups when shoppers
check out, and buying online doesn’t
offer immediate gratification. As
such, online shopping lends itself to
An advantage
Online Shopping
The percentage of shoppers who buy groceries online at least occasionally is
expanding rapidly, led by millennials:
All shoppers
50%
Millennials (age 18–38)
Boomers (53–71)
Gen X (39–52)
Mature (72+)
40
30
20
10
0
2015
2016
Source: Food Marketing Institute, U.S. Grocery Shopper Trends, 2017
more “list-driven” shopping, says
Paul Weitzel, vice president of Inmar
Willard Bishop.
Hershey CEO Michele Buck, who
took the helm in March, said on an
earnings call in July that the company plans to continue working with
retailers to find ways to drive impulse purchases online. “I can’t tell
you I have the answer to that right
now,” she said, but “we are doubling-down” on e-commerce.
Some companies are looking toward new technologies to help them
drive more online sales in general.
One idea, from InContext Solutions,
which has developed virtual-reality
Mondelez, which hired a vice
president of global e-commerce
about a year ago, says snacks are
relatively underdeveloped in e-commerce today, generating just 2% of
overall online grocery sales in the
U.S. and 15% in China.
The company is trying a variety
of strategies to drive sales online,
including subscription options on
Amazon, where shoppers get a lower
price on products such as belVita
breakfast cookies in exchange for
signing up for automatic reorders.
Mondelez says it is aiming to generate at least $1 billion in e-commerce revenue by 2020, up from
about a third of that now.
Campbell Soup recently created
an e-commerce business unit for
North America and named Shakeel
Farooque, a veteran of Amazon and
eBay, to lead it. The company says it
is working with retailers to capture
more sales online and investing in a
network of distribution centers in
states such as Texas and Ohio to better serve e-commerce customers. It
aims to generate $300 million in online sales over the next five years.
2017
THE WALL STREET JOURNAL.
software for retailers, is to provide
virtual shopping to consumers who
own VR headsets. By one day enabling people to virtually unwrap
candy bars and look inside boxes of
cereal while they shop, the technology could make food look more appealing than on a 2-D computer
screen, InContext says.
Elsewhere, Instacart, an online
grocery-delivery service that partners with many major retailers, is
working with hundreds of brands,
ranging from large companies such
as Unilever and PepsiCo Inc. to
smaller niche sellers, to put samples
of items in customers’ deliveries.
One benefit big food companies
have online is that store brands,
called private label, aren’t as popular
as they are in stores. General Mills
says that in the U.K., where online
shopping is more prevalent, its market share is almost 30% higher for ecommerce than in physical stores.
Company executives say getting
products such as Cheerios cereal and
Progresso soup into the customer’s
first online order is a priority for
them because people often reorder
past purchases out of convenience.
General Mills say best-selling
products tend to come up early in
search results, though many retailers
offer paid search advertising that
can drive placement.
In addition to paying for placement, some food manufacturers are
striking partnerships with other
brands to give shoppers discounts if
they purchase two products together. Companies are using customer analytics to figure out if a frozen-dinner buyer might also buy
snack cakes, for example, says Bill
Bishop, co-founder of consulting
firm Brick Meets Click.
“There is a tremendous focus on
paying to move up [in search results]. The question is, is it worthwhile,” said Mr. Bishop. “You have to
get to the granular data.”
Ms. Gasparro and Ms. Haddon are
reporters for The Wall Street Journal in Chicago. Email them at annie.gasparro@wsj.com and
heather.haddon@wsj.com.
When Restaurant Mobile Apps Don’t Work as Planned
Starbucks and others found
online ordering initially
increased congestion and
frustrated customers
RESTAURANT-CHAIN APPS
are reshaping a business built
on human interaction. But
these new systems don’t always work as planned.
Soon after McAlister’s Deli,
a chain of sandwich shops, introduced mobile ordering a
few months ago, it found it
had a problem: The counter
where customers place their
orders in the shops was often
clogged with patrons who had
ordered meals ahead of time
through the McAlister app.
“People who place mobile
orders think they have to wait
in line,” says Paul Macaluso,
president of McAlister’s, which
is owned by Focus Brands Inc.
“They feel bad about cutting
the line.”
They also felt frustrated. To
fix the problem, McAlister’s
built cubbies with sliding
doors that open to the kitchen,
so that employees can pass
takeout orders onto shelves
where customers can pick
them up without standing in
line with people ordering food.
New signs in the store direct
customers who placed online
orders to the pickup area, and
employees were given extra
training that includes guiding
to-go customers to the right
area.
To further improve customer flow, soon an updated
app will allow patrons to
choose to pick up their food
curbside or in the restaurant,
Mr. Macaluso says.
Starbucks Corp. noticed a
similar problem about nine
months ago at its 1,000 cafes
with the highest volume of
mobile orders. Congestion was
getting worse in the area
where drinks are handed off,
as customers who ordered online showed up to pick up
their orders. Many customers
who came into the cafes to
buy something saw the long
lines and turned away, contributing to an overall decline
in transactions.
In an effort to reduce the
crowding, Starbucks has
changed the way its baristas
handle orders. Previously, orders would show up on a display screen that made no distinction between those made
online and those made at the
registers in the cafes. Now,
baristas can see which orders
were made online, and they
can notify customers on the
app when those orders are
ready, so that those patrons
don’t need to mill around the
cafe waiting for their drinks.
In addition, the new system
allows Starbucks to track how
long it takes to fill mobile orders, and adjust staffing accordingly. For instance, if the
data show that it is taking longer for mobile orders to be
filled during a particular shift,
a cafe can add staff during
that shift to speed up service.
The company also “rethought the entire production
methodology,” says Adam
Brotman, the company’s executive vice president of global
retail operations and partner
digital engagement.
For example, almost all
The number of food orders
placed via mobile app, text
message or the internet for
pickup or delivery has more than
doubled over the past five years.
Digital food orders placed
annually, in billions
2.5
2.0
1.5
MOHAMMAD KHURSHEED/REUTERS
BY JULIE JARGON
On-the-Go Ordering
1.0
0.5
0
2013
’14
’15
’16
’17
Source: NPD Group Inc.
Starbucks changed the way it handles mobile orders after drink pick-up areas became clogged.
THE WALL STREET JOURNAL.
Starbucks cafes have two
espresso machines, but often
only one was in use at a time.
Now, during peak traffic periods at certain cafes, a barista
uses one machine to make
drinks for mobile customers
while another uses the second
to make drinks for in-store
guests.
Starbucks says it has
shaved one minute off wait
times for all customers at
some of its cafes, though it
won’t say how long wait times
are. It also says customer-satisfaction scores at those stores
have improved significantly.
“We got faster at making food
and beverages for all customers,” Mr. Brotman says.
ask about deals or coupons.
Another problem several
restaurant chains have experienced is that customers often
end up at the wrong location
to pick up their order, because
they tend to place orders
while in transit, and the software selects the location closest to them to fill the order,
rather than the destination
they intended.
“Inaccurate location is our
top user error right now,” says
Kira McCabe, associate director of digital media and marketing at Tropical Smoothie
Cafe, which is adding a “confirming location” button to the
ordering process in its next
app update.
“We have a highly mobile
audience and they’re distracted,” Ms. McCabe says.
Thinking big
Taco Bell, a unit of Yum
Brands Inc., had a different
concern about its app. Specifically, people weren’t using it
because its drive-through service was so fast. Executives
thought the app would appeal
to people making small orders,
but customers found they
were able to get their food
just as quickly at the drivethrough as they could by ordering ahead, says Liz Williams, Taco Bell’s chief
financial officer.
So now, she says, Taco Bell
plans to aim the app at people
who want to place large orders but might worry about
clogging up drive-through
lines with complicated requests. It plans to introduce a
version of the app soon that
will allow customers to name
a pickup time, so they can pick
up even the largest orders
without delay.
“We are looking forward to
communicating how easy it is
to place group orders online,”
Ms. Williams says.
Coupon, location snafus
Some companies that have
offered digital ordering for
years, like Domino’s Pizza
Inc., are facing new challenges
as technology evolves. The
pizza chain is one of the few
restaurant companies to allow
voice ordering through Amazon’s Alexa and Google’s Home
devices.
The challenge is that voice
technology doesn’t always
work well with coupons, and
more than three-quarters of
orders in the pizza industry
involve coupons. “If it’s a local
coupon that’s only available in
one or two stores, the voice
assistant has a hard time figuring out which coupon you’re
talking about,” says Dennis
Maloney, Domino’s chief digital officer. “Some people give
up and move to another platform like desktop or mobile,”
he says.
Domino’s is working to find
a solution, Mr. Maloney says,
but until it does it is offering
20% off on platforms including
Alexa and Home if customers
Ms. Jargon is a Wall Street
Journal reporter in Los Angeles. She can be reached at
julie.jargon@wsj.com.
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THE WALL STREET JOURNAL.
Monday, October 16, 2017 | R5
NY
JOURNAL REPORT | THE GLOBAL FOOD FORUM
Where the FDA Is
Going Under Trump
Food and Drug Administration Commissioner Scott Gottlieb serves a president who
regularly speaks of rolling back
business regulation. Dr. Gottlieb has postponed Obama-era
food-labeling rules, pleasing
some food manufacturers. But
at the same time, he says, the
FDA is working to implement
another law passed under the
former administration: the
Food Safety Modernization
Act, which will require companies to develop plans to prevent foodborne illness. Dr.
Gottlieb talked about his job
with Wall Street Journal reporter Jacob Bunge. Edited excerpts follow.
MR. BUNGE: You are part of an
administration looking for
ways to roll back regulation.
Does this mean that food becomes less safe?”
DR. GOTTLIEB: I certainly don’t
look at it that way. It is true
we are undertaking an effort to
look across a lot of regulations
where we can make regulations
more efficient. Where things
might be outdated we’re going
to need to pull certain regulations or update them. But
there is a lot of opportunity to
look across our regulatory
portfolio to try to find efficiencies in what we do. There are
some things we do that maybe
don’t make a lot of sense, relative to the modern world. We
have a regulation that establishes a standard of identity for
cherry pie. I’m not sure FDA in
a modern, risk-based environment needs to be regulating
the contents of cherry pie.
But remember, we introduce innovation and efficiency
by issuing regulations. So part
of what FDA does is issue regulations to try to create a
more modern framework for
new technologies, new ways of
doing business. It isn’t a question of regulations or no regulations. I think it is a question
for us of smart regulations.
MR. BUNGE: With the example
of the cherry pie, the Obama
administration tried in certain
ways to drive more transparency in food with regulations
around labeling. What happens to that under your
watch?
DR. GOTTLIEB: We’re committed to the food labeling regulations, if that is what you’re
talking about. Menu labeling
and nutrition facts.
This isn’t just an issue of
transparency. This is an issue
of public health. There is evidence that there is publichealth value in providing this
information to consumers in a
restaurant, or providing information in a better way on the
nutrition-facts label.
This was a comprehensive
rethinking of the nutritionfacts label. We have implemented some delays in the implementation
of
those
regulations. But those delays
were required to make certain
adjustments to make sure that
they’re sustainable for the
long run.
You talk about them as
transparency initiatives. I look
at them as public-health initiatives. I see evidence of publichealth benefit in providing
this information to consumers.
We’re going to go forward and
provide it to them.
MR. BUNGE: What is your oper-
ating definition of “healthy,”
and why is it important for
FDA to regulate this?
DR. GOTTLIEB: There’s a
broader question. “Healthy” is
obviously a term that is becoming used in certain labeling. It is a subject of litigation
in California.
There’s a broader principle
of what role FDA plays more
generally in the regulation of
labeling. When certain claims
that might be important to
providing information to consumers get made in the absence of a scientific framework and get litigated in state
courts and torts, outside our
review, I think that isn’t what
was intended. I think we have
a role to play.
I want to see the agency
step in to adjudicate some of
the important claims that
product developers want to
make on labeling that could be
important in informing consumers. So we intend to do
that. We’re taking a more
wholesale look right now inside the agency at the full
range of claims that product
developers want to make on
labeling or are making on labeling where FDA hasn’t
played a role, and making a
decision from a public-health
standpoint where it is important for us to step in.
“Healthy” might be one of
those claims. We might make
a decision that that claim is
more of a commercial claim
and doesn’t really convey
something important from a
public-health standpoint to a
consumer. I don’t know where
we’re going to come out on
that. But we’re going to prioritize from a public-health
standpoint which claims we
think we should be providing
more adjudication of.
If a manufacturer can’t
make a claim around some attribute of the health of a food
product, then they’re going to
innovate in areas where they
can make claims. And invariably it is around portion size
and taste and convenience.
1 in 6
People sickened by
food annually in U.S.,
according to the CDC
And those are all important
attributes. They provide value
to consumers.
But I’d like to see more
manufacturers trying to innovate around things that actually deliver health attributes
to people, because I’m the FDA
commissioner, and I think in
order to allow innovation
around things that produce
public-health benefits, we
need to allow people to make
claims around those publichealth attributes.
nutrition-facts labels, menu labeling, and there are others,
that we’re fully committed to
implementing these; and when
we talked about what aspects
of it we were going to try to
push out a little bit to give industry more time to come into
compliance, to give us more
time to come up with ways to
implement these things so
we’re being efficient and not
overly burdensome.
The administration’s fully
committed to the ethos of
food safety. And FSMA was an
important, broadly bipartisan,
GABE PALACIAO/DOW JONES
Commissioner Scott Gottlieb says it isn’t about
more or fewer regulations. It’s about efficiency.
‘We introduce innovation and efficiency by issuing regulations.’
wholesale change in how we
approach food safety. But I
think from the standpoint of
the policy and the politics of
this, because you keep going
back to the politics of this,
what we want to do is make
sure we do this efficiently.
That’s the key from my standpoint, that we’re not imposing
undue costs on industry, that
we’re doing this in an efficient
way and providing very clear
rules that people could actually implement.
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MR. BUNGE: What happens to
the Food Safety Modernization
Act now?
DR. GOTTLIEB: Implementation
is moving forward. We’ve recently made again certain accommodations to push out
certain deadlines related to
FSMA to make sure we get it
right. These are very important laws. FSMA is an exceedingly important change in the
whole posture of the FDA toward food safety, to an environment of preventive controls, as you know.
We need to make sure we
get it right. And there are certain aspects of that implementation that certain sectors
weren’t really ready to accommodate. The produce industry
had certain concerns around
us going onto the farms and
whether or not they were
ready for the inspections. And
so we talked about pushing
out another year the actual inspectional regime and doing
more readiness inspections for
the next year.
There
were
concerns
around how we were going to
assess agricultural water on
the farms. So we’ve extended
a deadline on the imposition
of a requirement on how we’re
going to do that. We’re going
to go back and take a look at
that and make sure we have
the right tools for doing that,
the right standards for doing
that so they can actually be
implemented by producers.
There are aspects of FSMA
we’re continuing to look at
very closely to make sure we
get it right. I’ve been at the
agency before. I worked with
three different commissioners.
And I will tell you, when you
get it wrong the first time, it
is very hard to unwind that.
MR. BUNGE: How do you think
about providing an atmosphere of predictability for the
companies that have to plan
and invest for years in the future in this industry?
DR. GOTTLIEB: Well, you come
to forums like this and you
talk about what you intend to
do. I think we’ve been pretty
transparent. I’ve been pretty
communicative with the press.
I was very clear from the outset that with respect to FSMA,
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THE WALL STREET JOURNAL.
R6 | Monday, October 16, 2017
JOURNAL REPORT | THE GLOBAL FOOD FORUM
Trade in the Balance
Juan Luciano of Archer Daniels Midland says the
U.S. food sector is incredibly productive. For now.
MR. MURRAY: What’s your
sense of today’s trade atmosphere?
MR. LUCIANO: I continue to be
optimistic. But, of course, a
company that has been around
for 150 years, we are pretty
paranoid. This was the first
year that I’ve been to China
and Mexico twice before February. We spent a lot of time
making sure that we clarified
the message, if you will.
through the river in barges—
incredibly efficient—versus
maybe 15% in trucks. The Brazilian situation is the reverse.
But Brazil has committed $14
billion in infrastructure. China
has committed $1.4 trillion in
the new silk road.
Think about the productivity of this. Today, a towboat
with barges of soybeans can
push the equivalent of nine
football fields down the Mississippi River. You can push
one metric ton of grain 652
miles with a gallon of fuel. It
is incredibly efficient.
Trade Outlook
The U.S. agricultural trade
surplus is forecast to decline by
$100 million in fiscal 2018 from
fiscal 2017.
Exports
Imports
Balance
$150 billion
100
MR. MURRAY: Meaning, what-
ever happens, we’re a global
company, global trade ties are
still central to the industry?
MR. LUCIANO: I think the message is that trade flows in the
food industry, or free trade in
the food industry, is essential.
50
0
2012 ’13 ’14 ’15 ’16 ’17* ’18*
*Reflects forecasts
Source: U.S. Department of Agriculture
MR. MURRAY: Even though the
U.S. is coming off record harvests, as a percentage globally, isn’t it bound to decline in
coming decades? Brazil is rapidly increasing, including in
areas like corn. China is picking up. The U.S. role in the total food trade globally has got
to change, right?
MR. LUCIANO: Yes. Obviously,
we’re going to feed the world
with more yield. So, it isn’t
that much about shifting of
land right now. The critical
point will be how do you turn
God-given advantages into
competitive advantages.
Today the U.S. sends about
55% or 60% of production
THE WALL STREET JOURNAL.
But those 240 locks and
dams in the Mississippi River,
they date from 1930, some
from 1903. So far, we have an
advantage. But we need to pay
attention to it.
MR. MURRAY: Are there things
in trade conversations that get
you concerned?
MR. LUCIANO: I worry about
whether we’re going to define
trade as being good or bad depending on whether we have a
net positive balance with a
certain country.
In food, it changes, but the
basic trade flows have been
stable for the past 50 years.
And I think the less governments touch on those things,
the better. The more we send
price signals that are incorrect, the more mistakes the
farmer will make in terms of
planting what we need.
MR. MURRAY: In terms of
Nafta, are there food issues
that need adjustment?
MR. LUCIANO: When I talk to
the Mexican officials, they realize Nafta was put together,
like, 23 years ago. And there
were things that weren’t on
our radar screen 23 years ago,
whether it’s sustainability or
e-commerce or things like
that. The consumer has shifted
significantly.
I think everybody acknowledges that we probably need
to open up, look at all those
things, and put it back together again. I don’t expect a
massive revolution. The U.S.
has been incredibly blessed
with two very peaceful partners. I think we need to leverage that and continue with
that advantage.
MR. MURRAY: ADM is in 160
countries. It is a volatile time
in the world. What does it
mean for your company?
MR. LUCIANO: There are difficult challenges; feeding a
growing population. By 2050
we will have to feed 10 billion
people. It looks like we’re going to have time. I worry more
about the next 10 years.
I’m very optimistic about
this convergence of technologies from computing science,
from biological science and
physics science. I’m an engineer so I love technology. The
potential is, for the first time,
we’re going to get the ability
to learn faster. I don’t think
that happened in the previous
industrial revolutions.
MR. MURRAY: And when you
think about the next 10 years,
The Wall Street Journal
thanks the sponsors of the
Global Food Forum for
their generous support.
GABE PALACIO/DOW JONES (3)
Feeding the world while
dealing with the complexities
of global trade has never been
so difficult. And no industry
has a bigger stake in succeeding abroad than the U.S. food
sector. Matt Murray, deputy
editor in chief of The Wall
Street Journal, sat down with
Juan R. Luciano, chairman,
president and CEO of Archer
Daniels Midland Co., to discuss the challenges through
the prism of ADM. Edited excerpts follow.
‘This was the first year that I’ve been to China and Mexico twice before February.’
let alone 2050, what do we
need to learn faster?
MR. LUCIANO: Think about corn
yields, for example. The next
feeding of the world won’t
come from more land. It will
come from intensity, from
yields. So, I bet a lot on technologies. Farming has become
so full of data now. Sensors
are almost free, so you can
have a sensor in every bushel,
a sensor in every acre. You can
predict much better. Agriculture has become high tech.
MR. MURRAY: Is there anything,
just as an engineer, that really
excites you about the future of
the industry?
MR. LUCIANO: We have bought
a company, Biopolis, which is a
microbiology company. It is a
genome company. We’re looking much more at personalized
nutrition, the impact or the interactions between the microbiome in your gut with either
your food or your pharmaceuticals.
People are taking a more
proactive approach to health.
If you have heart disease and
diabetes, you can influence
those with food, with functional food, personalized nutrition. So, we are putting a
lot of research into can we get
ingredients, microbiology ingredients, that we can use to
tailor food for you? That will
be the next revolution.
MR. MURRAY: What are the
black swans you worry about?
Climate change? Superbugs?
MR. LUCIANO: On this task of
feeding the world, I worry
about two things. One is, right
now we have an abundance of
crops. Inventories are very
high in the world. It could lead
us to this sense of complacency, that everything is going
to be all right. We can’t. We
need to produce more food in
the next 40 years than we produced in the last 10,000. It
hasn’t been done. And it needs
a lot of things.
The Large Seafood Gap
Tj Tate and Amy Novogratz say innovation is
the key to increasing production
Seafood has a big role to
play in feeding a rapidly growing global population. But
there aren’t enough wild fish
in the sea to do the job. So fish
farming, or aquaculture, with
its promise of sustainable seafood, will have to fill the gap.
The question is: Can it?
The Wall Street Journal’s
Matt Murray sat down with Tj
Tate, director of the sustainable-seafood program at the
National Aquarium, and Amy
Novogratz, co-founder and
managing partner of AquaSpark, an aquaculture investment fund, to discuss the
promise and problems of sustainable seafood. Edited excerpts follow.
‘We need to improve our practices,’ says Amy Novogratz.
Tough goal
MR. MURRAY: Tj, what’s unsustainable about our seafood
ecosystem today?
MS. TATE: The most unsustainable thing has to be the lack of
knowledge, the ignorance in
how far we’ve come in technology, in the need for growth,
in innovation, and that it has
to be the solution for feeding
our future populations.
MR. MURRAY: Ignorance of the
consumer, you mean?
MS. TATE: Exactly.
MS. NOVOGRATZ: It’s hard to
get clear information about
seafood, where it comes from,
how it’s produced.
But when you’re talking
about unsustainable seafood,
it’s also the fact that we just
don’t have enough. We’re taking as much as we can from
the oceans and we’re currently
producing a whole lot of aquaculture, but we’re predicted to
need to actually triple the
amount of aquaculture we’re
producing by the end of the
century.
MR. MURRAY: Simply to feed
the growing population?
MS. NOVOGRATZ: Yeah.
MR. MURRAY: So what needs to
happen?
MS. NOVOGRATZ: We need to
improve our practices. We
need to bring in some of the
better technologies for aquaculture. We need to lower the
[environmental] footprint of
aquaculture as we grow it.
© 2017 Dow Jones & Company, Inc. All rights reserved.
For more information, please visit:
globalfood.wsj.com
MR. MURRAY: Better practices
like what? What are the big
hurdles?
MS. NOVOGRATZ: If we really
are going to triple our aquaculture production, it’s predicted that we’ll need 300 million more metric tons of feed
to be able to do that. So feed
is a huge issue.
Current feed for fish is in
large part made up of wildcodfish meal and fish oil. It’s
‘I think you have to have government’ involved, says Tj Tate.
not necessarily environmentally friendly. But even if that’s
not your thing, we don’t have
enough of it to get there.
MR. MURRAY: Is it a problem to
get it? Or is it just simply a
technical hurdle that you have
to overcome?
MS. NOVOGRATZ: It’s just that
we’re taking fish from one
part of the ocean ecosystem
and kind of emptying it. It just
isn’t sustainable. It’s also expensive.
So we’re looking at replacements for fish meal. For example, we’re working with a company that’s created a microbial
alternative to fish meal that’s
almost an identical amino-acid
profile.
MS. TATE: But also when you’re
talking about the innovation
side and it comes to feed, back
in the day in aquaculture, we
used to just feed and feed and
feed. Feed is 60% to 70% of
the operational cost of a farm.
So they had to get smarter
with their feed usage, which
means that there are cameras
in the water. When [fish farmers] see the fish swimming
around and the fish swim by
the food, they stop feeding.
For shrimp, for example, if
they don’t hear the crunching
of the food, they stop feeding.
The technology has helped
us get to the level of not wasting, but actually utilizing what
we have—and using those by-
products of fish that are
caught from the wild harvest
and then putting that back
into the feed so that for wildharvest fish, every single part
of that fish should be utilized.
More challenges
MR. MURRAY: What are the
other challenges for the kind
of aquaculture world you envision?
MS. NOVOGRATZ: We need better ways to battle disease.
We’re working with a Polish
company now that uses
phages that can potentially replace antibiotics in fish farming.
There is now more and
more technology around landbased systems that do things
well with no pollution whatsoever.
And we’re finally getting to
a place where those kind of
deep, submersive, open aquaculture technologies that you
can use out in the open ocean
are actually getting to the
point where they’re commercially viable and cost effective.
So technology is absolutely
changing aquaculture and
changing it quickly.
MR. MURRAY: Fish farming his-
torically has been an environmental challenge, right?
MS. TATE: Actually the environmental challenges are one
of the things that are being
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THE WALL STREET JOURNAL.
Monday, October 16, 2017 | R7
JOURNAL REPORT | THE GLOBAL FOOD FORUM
Hugh Grant of Monsanto and James C. Collins
Jr. of DowDuPont on the impact of new geneediting technologies and big data
About two decades ago, genetically modified organisms
came into popular use. And
the technique quickly drew fire
from critics for introducing
DNA from one organism into
another.
Now there are new technologies on the rise that promise
to reshape the world of agriculture.
Data science is making it
possible to get a much more
detailed look at things like
how fertilizer can be used
more effectively.
Potentially more controversial is a new technique known
as gene editing that lets scientists remove negative traits
from an organism or add positive ones without introducing
any foreign DNA.
Proponents say the method
is simply what farmers have
been doing for centuries—
breeding for certain traits—
only much faster and more efficiently.
To find out more about the
potential of these new technologies, The Wall Street Journal’s Dennis Berman spoke
with Hugh Grant, chairman
and chief executive of Monsanto Co., and James C. Collins Jr., chief operating officer
of the agriculture division at
DowDuPont.
What follows are edited excerpts of the conversation.
The road ahead
MR. BERMAN: What about
Crispr [a kind of gene editing]
is new and potentially exciting
for you?
MR. COLLINS: I think the real
aspect of Crispr is the fact
that technology that we’ve
known for hundreds of years,
some of our oldest technology,
is actually now our newest
technology.
Bountiful Harvest
World-wide acreage planted with biotech crops, by year
500 million
Total accumulated acreage: 5.31 billlion
400
300
200
100
4.2
0
1996
2000
2005
Source: International Service for the Acquisition of
Agri-biotech Applications (ISAAA), 2016
2010
2015
THE WALL STREET JOURNAL.
It will allow us to do the
same kind of things that we’ve
always been able to do. The
breeding work that we do every day, much faster. We can
do in six months now what
used to take us six or seven
years.
MR. GRANT: Like gene editing,
data science is going to touch
broad swaths of our life. What
we are seeing is more efficient, more specific, accurate
applications of fertilizer, a
much deeper understanding of
disease in plants and addressing disease at a much earlier
stage.
MR. BERMAN: What does that
look like for a farmer in the
field? Is that being able to apply different levels of nitrogen
or fertilizer or pesticide on a
square-inch-by-square-inch
basis?
MR. GRANT: You plant your
good seed in the best land,
and you plant more of it. And
in land that’s sandy or gravely
or burns off early in the
spring, you reduce your seeding rates. We’re now at the
point where we’re farming one
seed at a time.
MR. COLLINS: I’ll give you one
other example. For a farmer
who, say, grows 1,000 acres,
he doesn’t know today which
of those thousand acres is his
most profitable and most productive and which isn’t. He
gets a 1,000-acre snapshot.
As we enter into this digital
world and we start to use
data, as you suggested, on a
square-meter or square-inch
basis we’re able to help our
Meeting the fears
MR. BERMAN: For most of the
world, food is about emotion.
How do you meet the average
person who doesn’t care a
whit about what you just said,
but has a very emotional reaction?
MR. COLLINS: It’s starting at a
very local level. It’s certainly
starting about sharing the
benefits and the opportunity.
We talk about trying to feed
10 billion people by 2050 and
needing to maintain the productivity curve that we have
today.
We’re going to feed a lot of
folks, but we’re also going to
create a lot of economic stability, which leads to political
stability and leads to prosperity. Explaining that story and
talking about how we move
the world forward from a stability perspective, it all starts
with agriculture.
MR. BERMAN: A gene-edited
food or gene-edited seed that
creates a food—should that be
labeled as a GMO or not? I
know this is a somewhat controversial topic. What’s your
view?
MR. COLLINS: Let’s be clear.
The technology that we’re deploying is the capability that
already existed in mother nature. We’ve been using these
tools for hundreds of years
through the normal breeding
process that we’ve used.
Gregor Mendel taught us
this, and you learned about it
in your high-school biology
class.
MR. BERMAN: But again, from
an emotional standpoint, it
does feel different when a scientist is turning genes on and
turning genes off literally as if
he or she is God.
MR. COLLINS: The main point
there is that we’re working
within the genome of corn, for
example. We’re not introducing any non-native DNA into
The climate question
MR. BUSSEY: Give us your view
on climate change and whether
or not human activity is contributing to climate change.
MR. PERDUE: Farmers and producers have dealt with climate
change their whole lives and
their careers. Nothing affects
our production as much as
weather changes. Now, it
doesn’t really matter to me
whether we determine what
the cause is or not. I think
from a conservation perspective, agricultural producers,
ranchers, foresters ought to be
doing everything they can to
be good stewards of the land,
which I think is good.
MR. BUSSEY: But it does matter
one of the most open economies in the world. I think there
needs to be more parity regarding free trade vis a vis the
U.S. and our other trading
partners. As you know, Japan
just raised their tariff on our
beef to 50% because their customers liked it so much. We’re
simply asking the international
marketplace to remove the
barriers as we have here.
if you believe that human activity is contributing to climate
change from a policy-making
standpoint, because that could
lead to certain policy-making.
Do you believe that human activity is contributing to climate
change?
MR. PERDUE: I don’t know that,
nor that I think that it has
been proven to be that. There
are scientists on both sides of
that. And frankly, from my perspective it doesn’t matter
whether I think that or not. I
would love to hear what you
think our operation and agriculture would change if we
thought humans were causing
it. I think farmers are some of
the best agriculturalists. Some
of our forests consume CO2.
So I think we’re doing our part
in agriculture over any kind of
climate change or CO2 accumulation.
MR. BUSSEY: The administra-
MR. BUSSEY: What have you
‘The farming community liked the TPP. They felt like it was an opportunity to sell more.’
The Agricultural Agenda
Agriculture Secretary Sonny Perdue talks about
the TPP, Nafta and climate change
Farmers are facing uncertainty over a number of large
issues. Trade deals may have a
big impact on how they sell
their goods overseas. Immigration laws may restrict their access to workers.
To sort through these questions, The Wall Street Journal’s John Bussey spoke with
Secretary of Agriculture Sonny
Perdue. Here are edited excerpts of the conversation.
The trade picture
MR. BUSSEY: Trade is a topic
that you have written on, you
have sung its virtues, praised
the opportunities for our farmers to export abroad. Yet this
administration pulled out of
the Trans-Pacific Partnership.
What was wrong with the TPP
as far as the farming community is concerned?
MR. PERDUE: Broadly, the farming community liked the TPP.
They felt like it was an opportunity to sell more. The president obviously had different
ideas about that regarding the
fairness of it. Similarly to
other global types of deals
that we’ve entered into, he felt
like it wasn’t fair to the American producer and American
economy and decided to withdraw from that. I think we can
take some of those long-held
principles of trade relationships and inject those into bilateral deals as we go forward.
MR. BUSSEY: What might hap-
pen to Nafta? What would you
like to see happen to the agreement that would enhance the
ability of the U.S. to sell its
products to Mexico?
MR. PERDUE: Most people in
the agricultural sectors in all
three nations believe that
Nafta has been essentially positive for agricultural interests.
There are little irritants that
we must address in there.
Overall, we began with a philosophy. First, do no harm
with agricultural interests. But
I believe we can increase opportunities for U.S. producers.
MR. BUSSEY: You see the agree-
ment, as far as the farming
community is concerned, staying intact, with tweaks?
MR. PERDUE: That’s my hope.
I’m not the U.S. trade representative. Ambassador Lighthizer is. I try to stay in his ear to
let him know what ag producers would like to see.
MR. BUSSEY: Back on the TPP
for just a moment. What elements of it would you like to
keep in the conversation in
Washington?
MR. PERDUE: Our economy is
tion has said that for every
new regulation you’ve got to
get rid of two regulations that
already exist. What does that
mean in your realm?
MR. PERDUE: I embrace that.
We will have a fall agenda. As
you know, this is done twice a
year in Washington. Interestingly, I found out in Washington, it is just as difficult to get
rid of a regulation as to get
one in place. So that’s what we
are doing with the Federal
Register.
We’ve got to get rid of unclear regulations. Farmers are
pretty much Boy Scouts when
it comes to complying with the
rules. But we need to have
transparency, clarity in the
regulations there and promote
them and educate people in
the compliance.
learned about Donald Trump?
MR. PERDUE: I was fascinated
by his hard concern for agriculture, understanding what
agricultural producers have
done. I think he understands
that agriculture has been very
significant to the U.S. economy.
Obviously, President Trump
is an interesting sort, and we
have a lot of conversations
within the cabinet about policy
and issues. But he was very
supportive when I went in to
see him regarding Nafta, understood the things that we
were communicating. I’ve
found him to be a pretty good
listener when it comes to business issues and willing to
change his mind when you
make a proposal that’s meaningful and persuasive to him.
GABE PALACIO/DOW JONES (3)
Data Science Will
Transform Farming
grower decode where is his
most profitable land, his most
productive land. And then we
can replicate that completely
across those 1,000 acres.
’We need to get in front of this,’ Hugh Grant says.
`We’re going to feed a lot of folks,’ says James C. Collins Jr.
corn. We’ve identified a corn
hybrid in Argentina that has a
desired trait that’s already in
corn. Mother nature put it
there and we’re optimizing
that trait in corn in North
America.
Finding the right label
MR. BERMAN: So, not a GMO.
Hugh?
MR. GRANT: We’re now getting
ready to sell seed for the
spring of 2018. We’ll be 22
years into planting GMOs commercially. Twenty-two years.
So billions of acres, trillions of
meals. It took us 22 years to
get labeling figured out for
GMOs. It shouldn’t take that
long for gene editing.
Here’s how I would think
about it. It takes seven years
to breed a corn hybrid. To go
from a seed to truckloads of
seeds, it’s about seven years.
The Crispr, the gene-editing
stuff, is faster, but the ratelimiting step is going to be
how fast can you produce the
seed.
And that’s going to take
time. You can have hundreds
of edits in one seed. But for
the seed to bring a new variety is still going to be six,
seven years. So we get time to
figure this out. But to your
earlier question, how do we
avoid what the last 22 years
looked like?
We need to get in front of
this as an agricultural, as a
business, community. We need
to do better job explaining it
to the consumers.
The Large Seafood Gap
Continued from page R6
overcome, because you’re
not going to get a permit to
put your farm in a certain
place until all those regulators have looked to make
sure that you’re not going to
environmentally degrade an
area.
MS. NOVOGRATZ: Which is a
good point. We’re talking
about all the challenges. But
we’re actually at a place
where there’s really, really
well done aquaculture right
now.
MR. MURRAY: But the U.S. is
not the biggest player in this
space?
MS. NOVOGRATZ: The U.S. is
tiny. It’s 1% of the world’s
aquaculture.
MR. MURRAY: Why is the U.S.
slow on this versus other
countries?
MS. NOVOGRATZ: The U.S.
first of all doesn’t consume a
ton of fish.
And originally there were
a lot of U.S.-based foundations that were focused on
ocean conservation that kind
of said that aquaculture is a
bad thing and we shouldn’t
have it. It changed about
somewhere between five and
10 years ago when conservationists started to realize if
we really are concerned with
our ocean’s health, we need
to get behind fish farming.
MR. MURRAY: Is there a gov-
ernmental solution? Or is it
really up to private industry
to grow the presence here?
MS. NOVOGRATZ: There’s a
big collective coming together of all different stakeholders around aquaculture
globally right now.
MS. TATE: I think you have to
have government. You have
to have NGOs. You have to
have the venture capitalists.
You have to have the educators.
MR. MURRAY: When you think
about how the oceans are
changing, what climate
change is doing right now,
what’s the challenge as you
build up aquaculture with
changes in the environment?
Is it an opportunity or does
it make it harder in some
ways to develop more aquaculture?
MS. NOVOGRATZ: I think it’s
definitely an opportunity for
more innovation. People
want aquaculture produced
locally so you don’t have to
transport it. So it’s definitely
bringing more innovation
into the space.
MS. TATE: It’s also an opportunity where perhaps we’ve
overfished some species, let’s
say on the Northeast coast of
the United States.
MR. MURRAY: Well, you’re in
Baltimore. You work with the
Chesapeake Bay a lot.
MS. TATE: Exactly. And so
Fish Supply
Aquaculture is helping fuel growth
in the supply of fish for human
consumption.
Capture
Aquaculture
175 million tons
150
125
100
75
50
25
0
2009 ’10
’11
’12
’13
’14
Source: Food and Agriculture
Organization of the United Nations, 2016
THE WALL STREET JOURNAL.
there are opportunities there
where we don’t have the harvest of wild oysters that we
used to. Well, an oyster is actually a very simplistic type
of aquaculture. And it’s a filter feeder. So it’s actually
cleaning the bay. The more
oyster farms we have, the
better.
What they found out is
that they can grow different
species and not just have the
oysters. They can grow seaweed with it. Or if you’re in
the Northeast you can do
clams, mussels, oysters, kelp.
So it doesn’t always have
to be about that huge aquaculture farm. There could be
some small farms that are
literally just columns of water, and within those columns of water are huge factors that are cleaning up that
space around the water and
growing
an
ecosystem
around that water column.
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 | Monday, October 16, 2017
JOURNAL REPORT | THE FUTURE OF FOOD
Grocers Imagine the Store of the Future
BY HEATHER HADDON
FOOD RETAILERS are racing
to leverage one of the most
important weapons in their
battle to keep people coming
to grocery stores: data.
“Data is the new battleground,” says Stuart Aitken,
chief executive of 84.51˚,
Kroger Co.’s data-analytics
unit, whose name derives from
the longitude of the division’s
Cincinnati headquarters and
because its 750 employees do
so-called longitudinal studies,
researching habits of customers over long periods.
Working from a small host
of research facilities, Kroger’s
app developers and data scientists are mining consumer information to devise the grocery store of the future. They
are testing apps for shoppers’
mobile devices that will highlight sales based on whether
the customer eats meat or
needs help finding recipes for
chicken, for example. Want to
make fish tacos tonight? Another app will populate a
user’s digital shopping list
with the necessary ingredients
available at the store.
For store managers, meanwhile, a program is in the
works to allow them to literally see how products are selling in a given aisle, using augmented-reality apps on their
phones that show the prices
and sales figures for the products found there.
Whiteboard fever
“We play in a variety of
spaces,” says Matt Wiley, a developer at 84.51˚, during a behind-the-scenes tour that
wound continuously through
groups of employees brainstorming ideas on white
boards. The analytics unit also
does consulting for such firms
as Procter & Gamble Co.,
General Mills Inc. and Pep-
siCo Inc.
Kroger, the nation’s largest
supermarket chain by revenue
and store count, competes
with food sellers such as WalMart Stores Inc. and a growing cohort of online foodshopping rivals, chief among
them Amazon.com Inc. The
Seattle-based company is generally upending retail business
with its competitive prices,
quick deliveries and the data
analytics it uses to target customers based on their buying
and shopping habits.
Food industry executives
know they have to be smarter
and faster to compete. Kroger
has invested billions over the
past decade and a half to hire
engineers out of leading universities and away from companies recruiting talent with
the same kinds of specialized
skills—including data analytics, logistics and app-development. Recent innovations developed in Kroger’s labs
include infrared sensors that
monitor the number of customers in a store and automatically deploy checkout
clerks as the number grows.
This tool alone, Kroger says,
has reduced wait times by several minutes across its stores.
In-house equipment at most
Kroger locations remotely
monitors the freshness of certain produce and notifies managers the second a cooler
blows out. Set to roll out at
stores next year: shelves with
sensors designed to recognize
and communicate with apps
on the mobile devices of certain customers. The apps contain data about each customer’s shopping habits, and
the shelves, in response, display banner ads customized
for them, for such products as
gluten-free or nondairy products. Kroger also is rolling out
a wireless scanning device it
calls Scan, Bag, Go at 400
stores next year. Customers
KROGER
Straight from Kroger labs:
customized ads, smart shelves,
sensors that deploy cashiers
Kroger’s Scan, Bag, Go system allows customers to check out items in store aisles as they shop.
Digital Tools
Percentage of food shoppers
who use a smartphone to do the
following either before or during
a visit to the grocery store:
Use digital coupons
52%
Check weekly sales specials
48%
Look up recipes
43%
Read reviews of products/brands
32%
Use the in-store item locator
23%
Compare pricing*
22%
Find nutritional value*
22%
*Note: Scan QR codes or barcodes
Source: Food Marketing Institute,
U.S. Grocery Shopper Trends, 2017
THE WALL STREET JOURNAL.
will use the device to ring up
groceries as they shop, then
pay for their purchases
through an app.
Other retailers are using
similar devices and other technology to woo customers. At
Wal-Mart’s Sam’s Club stores,
members can scan goods on
their mobile devices while
they are still shopping and pay
through an app as they exit
the store. Wal-Mart, the biggest U.S. food seller by stores
and sales, also has developed—but not yet deployed—a
patented facial-recognition
technology that it says could
be used to detect dissatisfied
customers and respond to
their needs.
“We’re going to make shopping with us faster, easier and
more enjoyable,” Wal-Mart
Chief Executive Doug McMillon told investors and employees this summer.
Not all of the supermarket
industry’s tech-driven efforts
are about increasing sales.
Costco Wholesale Corp., for
example, uses its ability to
track every purchase to inform
its customers of food-safety
recalls. And at Wal-Mart,
stores are using virtual-reality
headsets to train employees to
deal with situations from holiday-shopping crowds to spills
in the beverage aisle.
Supermarkets increasingly
need to woo shoppers to their
stores. Only 47% of 2,145 grocery shoppers surveyed in
February said they shopped
for most of their food at one
primary supermarket, down
from 61% a decade earlier, according to Hartman Group Inc.
research for the Food Marketing Institute.
Mining customer data is increasingly seen as the key to
maintaining market share for
supermarkets. Large regional
chains, such as Michiganbased Meijer Inc. and California’s Raley’s Supermarkets, are
hiring consultants to harvest
data from their customers.
But Kroger has a head start
on many of its competitors.
Wal-Mart’s advance into the
grocery business in the late
1990s prompted it to start a
customer-loyalty program in
part to keep closer tabs on its
shoppers. Today Kroger uses
850 algorithms to personalize
the coupons it mails to 12 million households. The company
can use purchase data to determine whether someone has
gone on a diet, had children or
retired, and to market different products to those customers accordingly. Some Kroger
coupons have a redemption
rate of 65%, compared with a
national average of about 5%,
executives say.
“We know our customers
better than anyone,” Kroger
Chief Executive Rodney Mc-
Mullen told investors last
month.
Retail analysts say that
Kroger and other grocery companies need to do even more
to make their discounts and
stores appealing to shoppers
as Amazon ramps up its attempt to grab more of the
$800 billion U.S. grocery market. The e-commerce powerhouse, whose recent acquisition of the Whole Foods chain
makes its ambitions in the
food-retailing space even more
plain, spends 12% of its sales
on technology each year, compared with less than 3% at
most grocers, according to estimates from the U.K.-based
consumer-analytics firm Dunnhumby.
“Grocery companies need to
think of themselves more like
tech companies,” says David
Ciancio, senior customer strategist at Dunnhumby.
Amazon declines to comment on its investments and
grocery strategy.
Risky investment
Selling groceries is a lowmargin business, meaning that
big investments in technology
can be risky. Sometimes companies invest in new features
their customers don’t want to
use, says Michael Halula Jr.,
retail practice director for the
Americas for Teradata, a database analytics firm. “Too often
it is the ‘Field of Dreams’ scenario,” Mr. Halula says.
Kroger’s digital spending is
weighing on profits, which is
one reason the company recently lowered its financial
outlook this year. The grocer’s
stock has lost more than a
third of its value this year.
But executives insist that
technology is critical to keeping Kroger competitive.
“This is the obsession,”
says Chris Hjelm, Kroger’s
chief information officer; it is
“the customer experience in
our stores and how technology
can be a part of that.”
Ms. Haddon is a reporter for
The Wall Street Journal in
Chicago. Email her at:
heather.haddon@wsj.com.
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