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 ADVERTISEMENT WHEN THE MARKET CALLS, ANSWER IT. See how the #1 trading app can help you monitor your watch lists with customized alerts. Go to page R8. MONDAY, OCTOBER 16, 2017 ~ VOL. CCLXX NO. 90 * * * * * * Last week: DJIA 22871.72 À 98.05 0.4% NASDAQ 6605.80 À 0.2% STOXX 600 391.42 À 0.5% WSJ.com 10-YR. TREASURY À 25/32 , yield 2.280% OIL $51.45 À $2.16 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 (USPS 664-880) (Eastern Edition ISSN 0099-9660) (Central Edition ISSN 1092-0935) (Western Edition ISSN 0193-2241) Editorial and publication headquarters: 1211 Avenue of the Americas, New York, N.Y. 10036 Published daily except Sundays and general legal holidays. Periodicals postage paid at New York, N.Y., and other mailing offices. According to the monitoring group Deir Ezzour24, about 100 civilians are stuck in the Syrian city of Mayadeen, where airstrikes are seeking to drive out Islamic State. A World News article on Saturday about civilian casualties in Syria incorrectly said 100,000 civilians remain in Mayadeen. Readers can alert The Wall Street Journal to any errors in news articles by emailing email@example.com or by calling 888-410-2667. Postmaster: Send address changes to The Wall Street Journal, 200 Burnett Rd., Chicopee, MA 01020. All Advertising published in The Wall Street Journal is subject to the applicable rate card, copies of which are available from the Advertising Services Department, Dow Jones & Co. Inc., 1211 Avenue of the Americas, New York, N.Y. 10036. The Journal reserves the right not to accept an advertiser’s order. Only publication of an advertisement shall constitute final acceptance of the advertiser’s order. Letters to the Editor: Fax: 212-416-2891; email: firstname.lastname@example.org NEED ASSISTANCE WITH YOUR SUBSCRIPTION? By web: customercenter.wsj.com; By email: email@example.com By phone: 1-800-JOURNAL (1-800-568-7625); Or by live chat at wsj.com/livechat REPRINTS & LICENSING By email: firstname.lastname@example.org; By phone: 1-800-843-0008 GOT A TIP FOR US? SUBMIT IT AT WSJ.COM/TIPS 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 | 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. For personal non-commercial use only. Do not edit or alter. Reproductions not permitted. To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com A4 | Monday, October 16, 2017 P W L C 10 11 12 H T G K B F A M 1 2 3 4 5 6 7 8 9 O I X X ***** THE WALL STREET JOURNAL. U.S. NEWS 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- FINE WATCHES & TIMEPIECES PREVIEW Heritage Auctions | 445 Park Avenue | New York October 22 - 24 From the Collection of an Influential Tech Entrepreneur Patek Philippe Very Rare and Important Ref. 3974J Yellow Gold Automatic Perpetual Calendar Minute Repeating Wristwatch with Moon Phases, circa 1991 Estimate: $250,000+ Rolex Ref. 6263 Steel Oyster Cosmograph with Original Box & Papers Estimate: $20,000+ AUCTION: October 24 HA.com/5309 | New York 392 Rare & Fine Timepieces Lots Valued at 3+ Million Dollars Featuring the Collection of an Influential Tech Entrepreneur INQUIRIES: 212.486.3500 | Bid@HA.com CATALOG: Visit HA.com/Catalogs to Register and Please Enter WS46753 DALLAS | NEW YORK | BEVERLY HILLS | SAN FRANCISCO | CHICAGO | PALM BEACH LONDON | PARIS | GENEVA | AMSTERDAM | HONG KONG Paul R. Minshull #16591. BP 12-25%; see HA.com. 46753 cated to-do list. 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. 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. SHORT STORIES OF ORDINARY PEOPLE WHO DEMONSTR ATE E X TR AORDINARY COU R AG E . SEASON 2 NOW AVAIL ABLE starbucks.com/upstanders Also streaming on © 2017 Starbucks Coffee Company. All rights reserved. BYSTANDER BYSTANDER BYSTANDER BYSTANDER BYSTANDER BYSTANDER BYSTANDER BYSTANDER BYSTANDER BYSTANDER BYSTANDER BYSTANDER BYSTANDER BYSTANDER BYSTANDER BYSTANDER BYSTANDER BYSTANDER BYSTANDER BYSTANDER BYSTANDER BYSTANDER BYSTANDER BYSTANDER BYSTANDER BYSTANDER BYSTANDER BYSTANDER BYSTANDER BYSTANDER BYSTANDER BYSTANDER BYSTANDER UPSTANDER. BYSTANDER BYSTANDER BYSTANDER BYSTANDER BYSTANDER BYSTANDER BYSTANDER BYSTANDER BYSTANDER BYSTANDER BYSTANDER BYSTANDER BYSTANDER BYSTANDER BYSTANDER BYSTANDER Monday, October 16, 2017 | A5 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 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. 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 | A7 INDEX INVESTORS KNOW VALUE WHEN THEY SEE IT. Fidelity® stock and bond index mutual funds and sector ETFs have lower expenses than comparable Vanguard® funds and we have more commission-free ETFs available for purchase online. Plus, we offer 24/7 customer service online or by phone,2 and were named Barron’s 2017 Best Online Broker. Value—it’s the Fidelity difference. 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Barron’s, March 18, 2017, Online Broker Survey: Fidelity was evaluated against 15 others and earned the top overall score of 35.6 out of a possible 40.0. Fidelity was also named Best for Long-Term Investing (tied with two others), Best for Novices (tied with one other), and Best for Investor Education (tied with two others), and was ranked ﬁrst in the following categories: Trading Experience & Technology (tied with two others), Mobile (tied with one other), Research Amenities, and Portfolio Analysis & Reports (tied with two others). Overall ranking based on unweighted ratings in the following categories: Trading Experience & Technology; Usability; Mobile; Range of Offerings; Research Amenities; Portfolio Analysis & Reports; Customer Service, Education, Security; and Costs. 2 System availability and response times may be subject to market conditions. Third-party trademarks and service marks are the property of their respective owners. All other trademarks and service marks are the property of FMR LLC or its affiliated companies. Investing involves risk, including risk of loss. Before investing in any mutual fund or exchange-traded fund, you should consider its investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus, an offering circular, or, if available, a summary prospectus containing this information. Read it carefully. Fidelity Brokerage Services LLC, Member NYSE, SIPC. © 2017 FMR LLC. All rights reserved. 809190.1.0 For personal non-commercial use only. Do not edit or alter. Reproductions not permitted. To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com A8 | Monday, October 16, 2017 * ***** 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 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 | 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 For personal non-commercial use only. Do not edit or alter. Reproductions not permitted. To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com A10 | 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. Make your mark. Write down your most ambitious ideas while making a statement. Ajoto’s Stainless Steel Pen is a luxurious and artfully designed writing instrument that has been made using advanced aerospace manufacturing techniques. It is the perfect blend of form and function. Exclusively made for The Journal Collection. Explore now at THEJOURNALCOLLECTION.COM © 2017 Dow Jones & Co., Inc. All rights reserved. 6DJ5338 The Journal Collection is operated independently of The Wall Street Journal news department. These products are available for sale and delivery in the United States only. ForP2JW289000-0-A01100-1--------XA 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 | 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.” Rethinking your charitable giving strategy could help lift your impact. We call a realization like this an Unlock. 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. At Wells Fargo Wealth & Investment Management, our expertise is identifying insights that better enable our clients to look at their situations differently. It’s how we help strengthen their philanthropic efforts. And it’s led us to become one of the largest investment and wealth management providers in the country. wellsfargo.com/Unlock Investment and Insurance Products: NOT FDIC Insured ► NO Bank Guarantee ► MAY Lose Value Wells Fargo Wealth and Investment Management, a division within the Wells Fargo & Company enterprise, provides financial products and services through bank and brokerage affiliates of Wells Fargo & Company. Brokerage products and services offered through Wells Fargo Clearing Services, LLC, a registered broker-dealer and non-bank affiliate of Wells Fargo & Company. Bank products are offered through Wells Fargo Bank, N.A. © 2017 Wells Fargo Bank, N.A. All Rights Reserved. CAR-0617-05322 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 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, 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. * * NY Once they see it, it stays with them. Children who witness domestic violence are more likely to become victims or abusers as adults. Join us in ending this terrible cycle. Learn more or donate at joetorre.org Monday, October 16, 2017 | A12A 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 A12B | Monday, October 16, 2017 NY * * THE WALL STREET JOURNAL. #1 SERIES FIVE YEARS IN A ROW MORE FANS THAN THIS IS US, EMPIRE, MODERN FAMILY, BIG BANG THEORY & NFL FOOTBALL BY DOUBLE-DIGIT PERCENTAGES Source: Nielsen. L+3 A18-49 #1 Series – 9/19/16-9/24/17, 9/21/15-9/18/16, 9/22/14-9/20/15, 9/23/139/21/14 & 9/24/12-9/22/13, Prime Programs (M-Su 8p-11p, Start), excl sports, specials, repeats, gapped, breakouts, sustainers, and <2 t/c (000). More Fans Than – 9/19/16-9/24/17 excl repeats NAT RTG. ALL NEW EPISODES OCTOBER 22ND © 2017 AMC Network Entertainment LLC. All Rights Reserved. REACH VIEWERS WHO ARE THE MOST PASSIONATE, MOST ENGAGED AND MOST READY TO PURCHASE THAN ANY OTHER AUDIENCE ON TV 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. NY * * * * Monday, October 16, 2017 | A12C 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 NEW LOOK. NEW MODERN CLASSICS. NEW DESTINATIONS. OUR NEWLY RENOVATED FLAGSHIP STORE INCLUDES A MEN’S SHOE MEZZANINE, FLEISCHMAN, A MEN’S SALON & AN EXPANDED WOMEN’S ON ONE. VISIT US NOW! MADISON AVENUE AT 45TH STREET 212.682.0320 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 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.” SAVE $50 $ 99 199 Reg. $249.99 Offer Ends October 21st. Can’t Hear Voices On TV? Our AccuVoice® Speaker uses hearing aid technology to make TV dialogue crystal clear. SOHO | 75 GRAND ST, NEW YORK, NY 10013, 212-219-8022 MADISON | 1100 MADISON AVE, NEW YORK, NY 10028, 212-628-8022 W 18TH STREET | 232 W 18TH ST, NEW YORK, NY 10011, 212-706-0509 GREENWICH | 23 E PUTNAM AVE, GREENWICH, CT 06830, 203-629-8022 58TH STREET | 202 E 58TH ST, NEW YORK, NY 10022, 212-486-8022 HAS T E N S . COM ROBERTO COIN BOUTIQUE Westﬁeld World Trade Center Oculus | Main Level C2 New York, NY | 212.287.1299 NEW BAROCCO & CENTO COLLECTIONS | robertocoin.com Can’t hear dialogue on TV? You’re not alone. Today’s TVs have tiny speakers with weak sound. 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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 t Vancouver Vancouver Calgary Eugene g 30s 50s Winnipeg ip ttl Seattle Portland Por P tl d 60s l Helena Billings 40s Ottawa Toronto T t Mpls./St.. Paul Mpls./St 50s 10s 20s Bismarckk Boise 0s 50s 30s Anchorage A h g 40s 90s Honolulu l l 50s t Boston 70s U.S. Forecasts 60s rtford Hartford New Yorkk ew Y 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 Hi 74 80 92 90 65 70 76 76 96 62 59 Today Lo W 56 pc 64 s 60 s 77 t 49 s 53 s 54 s 61 s 78 s 48 r 51 r Tomorrow 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 57 44 r 71 52 s 69 51 pc 71 44 pc 69 44 pc 4 5 6 7 8 20 21 25 27 28 32 33 29 35 36 61 62 31 40 43 44 46 49 47 50 53 58 13 22 39 42 52 12 26 34 45 57 30 38 41 11 19 24 37 10 16 18 23 48 9 15 17 51 54 55 56 59 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 40s Augusta A g t k Milwaukee Detroit t l Buffalo 70s 70s Cleve Cl l d Cleveland Ch Chic g Chicago Reno Salt Lake ake City Des es Moines Cheyenne Omaha Philadelphia Ph h d lph hi 80s h 90s Pittsburgh Pittsb gh Indianapolis Sacramento Springfield p g 90s h gton hi g on D.C. 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Worth 80s Mobile bil A ti Austin Jacksonville Jack 10s Stationary Snow t Houston Orlando l d New ew Orleans 20s Tampa T Ta p San an Antonio 80s 80s 2 30s Montreal Albany A b y oux FFalls ll 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 G E L MU T E A L O N A S T A I T T N E E G R R S T T R A S I I U N G C G O M E R T S N A T C G T H I R E J U S O S T E S S WE A K A N G O S T E R I N E E R T A N E V T A O V O T G O R E U L P E S E L D A T F O R E R G A Y E S T E R R I N D O G E S H S I I N N K I E N R N M A R O O N S C A R F S O Y R E E S D S O A S T 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 email@example.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 “Can you recommend a wine that tastes like a good beer?” 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 | 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 PUBLISHED SINCE 1889 BY DOW JONES & COMPANY Robert Thomson Chief Executive Officer, News Corp Gerard Baker Editor in Chief William Lewis Chief Executive Officer and Publisher DEPUTY MANAGING EDITORS: Michael W. Miller, Senior Deputy; Thorold Barker, Europe; Paul Beckett, Washington; Andrew Dowell, Asia; Christine Glancey, Operations; Jennifer J. Hicks, Digital; Neal Lipschutz, Standards; Alex Martin, News; Shazna Nessa, Visuals; Ann Podd, Initiatives; Matthew Rose, Enterprise; Stephen Wisnefski, Professional News Paul A. Gigot, Editor of the Editorial Page; Daniel Henninger, Deputy Editor, Editorial Page WALL STREET JOURNAL MANAGEMENT: Suzi Watford, Marketing and Circulation; Joseph B. Vincent, Operations; Larry L. Hoffman, Production EDITORIAL AND CORPORATE HEADQUARTERS: 1211 Avenue of the Americas, New York, N.Y., 10036 Telephone 1-800-DOWJONES 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 DOW JONES MANAGEMENT: Mark Musgrave, Chief People Officer; Edward Roussel, Innovation & Communications; Anna Sedgley, Chief Operating Officer & CFO; Katie Vanneck-Smith, President OPERATING EXECUTIVES: Ramin Beheshti, Product & Technology; Jason P. Conti, General Counsel; Frank Filippo, Print Products & Services; Steve Grycuk, Customer Service; Kristin Heitmann, Transformation; Nancy McNeill, Advertising & Corporate Sales; Jonathan Wright, International DJ Media Group: Almar Latour, Publisher; Kenneth Breen, Commercial Professional Information Business: Christopher Lloyd, Head; Ingrid Verschuren, Deputy Head 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). 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 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. For personal non-commercial use only. Do not edit or alter. Reproductions not permitted. To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com TECHNOLOGY: E-BOOKS FALL BACK IN FACE OF TRADITIONAL PRINT B4 BUSINESS & FINANCE © 2017 Dow Jones & Company. All Rights Reserved. Last Week: S&P 2553.17 À 0.15% S&P FIN g 0.86% S&P IT À 1.32% Monday, October 16, 2017 | B1 THE WALL STREET JOURNAL. * * * * ** DJ TRANS À 0.50% WSJ $ IDX g 0.81% LIBOR 3M 1.353 NIKKEI 21155.18 À 2.24% See more at WSJMarkets.com 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 BECAUSE HAPPENS. Gridlock in Congress can cause volatility. The SPDR S&P 500 ETF (SPY) is the only ETF with an average trading volume of 15 million shares per hour, for unmatched liquidity. Learn why it matters at spdrs.com/SPYliquidity S o u r c e : B l o o m b e r g F i n a n c e L P, average trading volume year to date as of 4/30/17. ETFs trade like stocks, are subject to investment risk, fluctuate in market value and may trade at prices above or below the ETFs net asset value. ETF shares may not readily trade in all market conditions. SPY Brokerage commissions and ETF expenses will reduce returns. Past per formance is not a guarantee of future results. SPDR® S&P 500 ® ETF Trust, a unit investment trust, is listed on NYSE Arca, Inc. SPDR®, S&P and S&P 500 are registered trademarks of Standard & Poor’s Financial Services LLC (S&P) LIQUIDITY RESILIENCY PERFORMANCE and have been licensed for use b y S t a t e S t r e e t C or p or a tion. No financial product offered by State Street or its afﬁliates is sponsored, endorsed, sold or promoted by S&P. A L P S Dis t ribu tor s, Inc. ( f und distributor) ; St ate Street Global Advisors Funds Distributors, L LC ( marketing agent) . Before investing, consider the funds’ investment objectives, risks, charges and expenses. To obtain a prospectus or summary prospectus, which contains this and other information, call 1.866.787.2257 or visit www.spdrs.com. Read it carefully. IBG-23968 Not FDIC Insured • No Bank Guarantee • May Lose Value 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. ADVERTISEMENT Legal Notices To advertise: 800-366-3975 or WSJ.com/classiﬁeds BANKRUPTCIES !" #$%& '($$' )" * +,$$ !- ".) $' '" ' '" $ $ )%%)$.%& +!"- /%' $$ 0$ $' 123 )& 3 4 !$$) 4 !%0 +3- 3' ) 4 $% 4 $' ' 55 67* +123 )& '- 3"8) )$ 9) $ )$ *: 4 123 )& ' & 4 & ) "$ $ 4 & 4 4( !"; 9)$ )% . & 4 4( !"; ,$$ ! !" /%' ! " # $% &% ' " () () * ' ' <!)2 := +>$- )" 3 ' ! " # $% &% ' " () () * ' ' <!)2 *= +'- .$? )'3 4 )$ 4 4 ' ')%$ 4 0% 0$ ) (( )2 ' ,4' )2 4 $ !"#$#% )' ' +,)'3- 33 ' 3"$% %' (& )3(( & 3) % 4 4 (( )2 ,4' )2 1/)$% 0$ 4 (( )2 ,4' )2 $ .$%$ 4 ,)'3 ' & 3) )$ $ .$%$ 4 ,)'3 %% " 3%% ' .$' 33 ' 7,) %' (& )%$( 0% )2 ''3)$ $ ) 4 )2 $ .$%$ 4 ,)'3 ' & 3) ''3)$ $ .$%$ 4 3) ,)'3 %% " 3%% ' .$' 33 ' ,)'3 %% %& %'$? 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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 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. Special Advertising Feature What Is the Future Of Banking? I “Trust.” Emeaﬁnance Treasury Service 2017 Best cash management services in Africa. Best trade finance services in Africa. Best transactional bank for financial institutions in Africa GTR Leaders in Trade 2016 By Tim Phillips n 1978, 300 bankers traveled to Brussels for SIBOS, a banking operations seminar organised by SWIFT, an emerging cooperative of banks which wanted to be able to exchange secure electronic transactions. Thirty-nine years later, banks are still meeting at SWIFT’s annual conference, but SIBOS 2017 will host 8,000 executives from more than 200 member countries in Toronto, Oct. 16-19. The focus on innovation, however, doesn’t change. This year the checklist is an intimidating “ABCD”: artificial intelligence, blockchain, cyber-security and data. Banking is often called out for its sluggish adoption of this type of technology, but it’s not easy to combine interoperability between banks (the reason that SWIFT was created) and adapt services for local economies. Vinod Madhavan, head of trade for Standard Bank Group, which operates throughout Africa, explains: “We are in 20 markets and we see the full spectrum of infrastructure development. In a market like South Africa, the banking infrastructure is fairly mature, but the situation is very different in countries like Tanzania and Zimbabwe.” There are other challenges: customers expect 24-hour availability, but total security. Regulators hover, while a generation of fintech start-ups and tech giants nibble at bank business models. At SIBOS, four areas of banking dominate. Traditional banking is changing rapidly. Start-ups like M-Pesa threaten to replace traditional payment functions, while corporates demand closer integration to make international payments faster, “Risk?” Best trade finance bank in Southern and Eastern Africa. more transparent and easier to trace. Meanwhile, half the world’s population still doesn’t have access to a bank account. Compliance is more complex, with money-laundering and terrorist financing becoming more sophisticated. Emerging regtech (regulation technology) enlists AI to track criminal activity. Global Finance World’s Best Banks in Africa 2017 Best Bank in Africa The Banker Transaction Bank of the Year – Africa 2017 “INNOVATIVE BANKS WILL PARTNER WITH TECH COMPANIES.” In securities, regulation is changing the structure of banks. But artificial intelligence and blockchain technology may eliminate manual processes and revolutionize settlement. 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 client experience that there is room for innovative fintech providers,” he says, “we bring the balance sheet, and the clients know us. Fintech providers have a tolerance for failure that’s much lower than ours, so they quickly solve specific problems.” In times of change, trust is the most powerfulcurrency and steadfast experience hold the greatest value. With 154 years of capability on your side, let us be your trusted partner for growth on this continent we call home. standardbank.com/CIBInsights Corporate and Investment Banking Tim Phillips is a freelance business and tech writer and author. Authorised ﬁnancial services and registered credit provider (NCRCP15). 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. To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com 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 The Global Investment Management Businesses of Prudential 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: firstname.lastname@example.org 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. TOTAL USD BONDS IUSB WHEN INSPIRATION HITS, MAKE YOUR MONEY MOVE. U.S. BONDS AGG Build for retirement with iShares Core Bond ETFs. iShares Core bond ETFs give you broad exposure to bond indexes at 1/10th the cost of comparable mutual funds.1 So you can keep more of what you earn along the way. INSPIRED TO BUILD. ’10 iShares.com/build 1. Source: BlackRock and Morningstar, as of 4/30/17. Comparison is between the average Prospectus Net Expense Ratio for the iShares Core Series Bond ETFs (0.08%) and the average Prospectus Net Expense Ratio of active open-end mutual funds in comparable Morningstar categories (0.84%) available in the U.S.on 4/30/17. Visit www.iShares.com to view a prospectus, which includes investment objectives, risks, fees, expenses and other information that you should read and consider carefully before investing. Investing involves risk, including possible loss of principal. Fixed income risks include interest-rate and credit risk. Typically, when interest rates rise, there is a corresponding decline in bond values. Credit risk refers to the possibility that the bond issuer will not be able to make principal and interest payments. Buying and selling shares of ETFs will result in brokerage commissions. The iShares funds are distributed by BlackRock Investments, LLC. © 2017 BlackRock, Inc. All rights reserved. iSHARES and BLACKROCK are registered trademarks of BlackRock. 247208 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 throughout the week include: “Get Ready for Food as a Management Tool” by John Sullivan, a professor of management at San Francisco State University and a talent-management thought leader from Silicon Valley. “It’s Time to Let the Free Market Work for Water,” by Sam Ori, executive director of the Energy Policy Institute at University of Chicago. “Why One Cardiologist Has Drunk His Last Diet Soda” by Dr. Harlan Krumholz (@HMKYale), a cardiologist and the Harold H. Hines, Jr. Professor of Medicine and Epidemiology and 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 The Journal Report welcomes your comments—by mail, fax or email. Letters should be addressed to Lawrence Rout, The Wall Street Journal, 4300 Route 1 North, South Brunswick, N.J. 08852. The fax number is 609-520-7256, and the email address is email@example.com. THE JOURNAL REPORT For advertising information please contact Katy Lawrence at 212-416-4119 or firstname.lastname@example.org 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. email@example.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 firstname.lastname@example.org. 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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 | 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 For personal non-commercial use only. Do not edit or alter. Reproductions not permitted. To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com THE WALL STREET JOURNAL. R4 | 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 firstname.lastname@example.org and email@example.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 firstname.lastname@example.org. 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 | 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. An additional two billion people will require housing by 2030. Over that same time period, the global middle class will increase to nearly five billion people. Add to that the fact that interest rates are set to rise and it’s no wonder businesses and individuals turn to CME Group to help manage their risks and navigate fluctuating borrowing costs. That, in turn, enables lenders and property developers to keep pace with population growth. This is how the housing industry can find solutions that make shelter more accessible around the world. This is how the world advances. Learn more at cmegroup.com/finance. 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, CME Group is a trademark of CME Group Inc. The Globe logo is a trademark of Chicago Mercantile Exchange Inc. All other trademarks are the property of their respective owners. Copyright © 2017 CME Group. All rights reserved. For personal non-commercial use only. Do not edit or alter. Reproductions not permitted. To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com THE WALL STREET JOURNAL. R6 | 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 Please turn to the next page 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 | 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: email@example.com. When the market calls, answer it. 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