For personal, non-commercial use only. Do not edit, alter or reproduce. For commercial reproduction or distribution, contact Dow Jones Reprints & Licensing at (800) 843-0008 or www.djreprints.com. MONDAY, DECEMBER 11, 2017 ~ VOL. CCLXX NO. 137 * * * * * Last week: DJIA 24329.16 À 97.57 0.4% NASDAQ 6840.08 g 0.1% STOXX 600 389.25 À 1.4% 10-YR. TREASURY g 6/32 , yield 2.383% WSJ.com OIL $57.36 g $1.00 The government of Qatar and British weapons maker BAE Systems have completed a multibillion deal for 24 combat jets. B3 Oil prices increased, supported by elevated geopolitical tensions and an increase in Chinese crude imports. B9 A boom in electric vehicles is stoking demand for a wide range of metals, which could have a far-reaching impact on commodity prices. B9 U.S. employers hired more information technology workers last month, signaling strong demand by businesses to leverage digital capabilities. B6 The animated film “Coco” topped the box office for a third time this weekend, ahead of the next “Star Wars” release. B2 Died: Atsutoshi Nishida, 73, former Toshiba president. B3 World-Wide The Alabama Senate race entered its final days with Democrat Jones trying to mobilize voters and Republican Moore leading in polls but facing a call from the state’s senior senator for GOP voters to avoid him. A1 California’s largest wildfire blazed into new terrain, forcing evacuations in two Santa Barbara County communities. A3 Alabama Hears Final Pitch Democrat Jones seeks support against GOP’s Moore before Tuesday vote for Senate seat MONTGOMERY, Ala.—A heated race for an Alabama U.S. Senate seat entered its final days with Democrat Doug Jones trying to mobilize voters, especially African-Americans, and front-runner Republican Roy Moore facing a fresh call from the state’s senior senator for GOP voters to avoid him on Tuesday. The two men are competing in what has become the closest race for a federal office in the deeply red state in decades. Mr. Moore, an evangelical Christian former judge, was the clear favorite until his campaign was hit by allegations by several women that he sought dates with them when they were teenagers and he was in his 30s. Mr. Moore, now 70 years old, has denied the accusations. President Donald Trump held a campaign rally in neighboring Pensacola, Fla., on Friday eve- Sapphire Cards Get New Chief Bitcoin Futures Start, Site Falters BY JOSHUA JAMERSON The first bitcoin futures started trading Sunday, sparking a swift run-up in the price of the digital currency as the exchange provider’s website experienced outages from heavy traffic. JPMorgan makes changes in its rewards card, while overall creditcard account openings fell. B1 New JPMorgan Chase creditcard account openings, quarterly 3 million By Alexander Osipovich, Gabriel T. Rubin and Paul Vigna 2 1 0 2015 Trading of the hotly anticipated U.S. bitcoin futures began at 6 p.m. Eastern Time Sunday on an exchange run by Cboe Global Markets Inc., while its larger rival CME Group Inc. plans to introduce its own bitcoin futures a week later. The bitcoin contract expiring in January opened at $15,000 and spiked to $16,660 ’16 ’17 Source: the bank THE WALL STREET JOURNAL. no Pockets of anger surfaced in the Middle East and Asia over Trump’s decision to recognize Jerusalem as Israel’s capital, but riots petered out in the Palestinian territories. A7 Doug Jones, left, Democratic nominee in the Alabama Senate race, spoke in Birmingham Sunday. Republican candidate Roy Moore, who faces allegations of sexual misconduct that he denies, has kept a low profile since a Tuesday appearance, shown above, and plans a rally Monday. Conservatives said repealing the ACA’s individual mandate will have less impact than predicted because of a rising number of exemptions. A4 Although Trump’s overall approval ratings have hit record lows, he is getting significantly higher marks for his handling of the economy. A4 After driving Islamic State-linked fighters from Marawi, the Philippines must rebuild and resettle nearly 400,000 people. A8 Iraq said it had retaken the last pockets of territory held by Islamic State in the country. A8 Some high-income business owners could face marginal tax rates exceeding 100% under the Senate’s tax bill. A6 Venezuela’s ruling Socialist Party swept local elections after an opposition boycott and allegations of pro-government bias. A9 CONTENTS Business & Finance B2 Business News........... B3 Crossword.............. A16 Heard on Street... B10 Journal Report R1-10 Life & Arts...... A13-15 Markets................B9-10 Opinion.............. A17-19 Sports........................ A16 Technology............... B4 U.S. News............. A2-6 Weather................... A16 World News...... A7-11 > s Copyright 2017 Dow Jones & Company. All Rights Reserved Two major hospital systems are in talks about a possible merger that would create the largest U.S. owner of hospitals, as a series of deals shape up to further consolidate control of the health-care landscape. Ascension and Providence St. Joseph Health, both nonprofits, are talking about combining, according to people familiar with the discussions. A deal would create an entity of unprecedented reach, with 191 hospitals in 27 states and annual revenue of $44.8 billion, based on the most recent fiscal year. That would dethrone the nation’s largest pure hospital operator, HCA Healthcare Inc., which owns 177 hospitals and ended 2016 with $41.5 billion in revenue. Ascension and Providence have been talking for months, and a merger is far from assured, according to the people. Talks have included a variety of arrangements short of a merger, one of the people said. Nearly 60% of U.S. hospitals are private nonprofits, a status that exempts them from some taxes but requires in exchange that they provide community benefits such as free care for low-income patients. Remaining U.S. hospitals are government-owned or Please see DEAL page A2 ly . JPMorgan Chase is bringing in a new executive to run the Sapphire Reserve rewards credit card. B1 ning in which he called for Mr. Moore to be voted in to protect his and the GOP’s congressional agenda. But on Sunday, Alabama GOP Sen. Richard Shelby said on CNN he had already voted for another Republican: “I couldn’t vote for Roy Moore. The state of Alabama deserves better.” Even Mr. Jones’s allies say the 63-year-old former federal prosecutor faces a challenge in taking advantage of the GOP’s ambivalence about their candidate because of a lack of Democratic electoral infrastructure in the state. A Jones coalition could unite African-American voters, who have traditionally skewed Democratic, and Republicans disaffected with Mr. Moore, Jones backers said. “It’s not like there’s some apparatus to get out the vote,” said Joe Trippi, a Democratic strategist working with the Jones campaign. Mr. Trippi said that Democrats have been “trying to, as quickly as possible, mobilize and upbuild an infraPlease see VOTE page A4 co Fo m rp m e er rs ci on al a us l, e on Pioneers of the so-called gig economy have become some of the world’s most valuable private companies by using apps and algorithms. B1 YEN 113.47 BY MELANIE EVANS AND ANNA WILDE MATHEWS n- The first bitcoin futures started trading Sunday, sparking a swift runup in the price of the digital currency. A1 JIM WATSON/AGENCE FRANCE-PRESSE/GETTY IMAGES (LEFT); DAN ANDERSON/ZUMA PRESS Business & Finance wo major hospital systems, Ascension and Providence St. Joseph Health, are in talks about a possible merger that would create the largest U.S. operator of hospitals. A1 EURO $1.1774 Hospital Giants In Talks To Merge What’s News T HHHH $4.00 within the first six minutes of trading, an 11% surge. Prices later dropped, then rebounded and the contract was trading at $18,220 at around 10:30 p.m., according to data from Cboe. About 1,000 contracts changed hands in the first three hours of trade. The exchange halted trading for two minutes at 8:31 p.m. due to volatility, said a spokeswoman for Cboe. The exchange operator can impose such halts after a 10% price swing. The price of bitcoin itself was at $16,559.24, according to CoinDesk. The price climbed 8% to $15,740.25 in the first seven minutes after the futures contract started trading. Interest in the futures caused problems for Cboe’s website. i “Due to heavy traffic on our website, visitors to www.cboe.com may find that it is performing slower than usual and may at times be temporarily unavailable. All trading systems are operating normally,” a Cboe spokeswoman said. The launch of bitcoin futures represents a milestone for the digital currency. But the new market could be roiled by hacks, technical snafus or manipulation schemes. One risk is that the underlying markets for bitcoin are largely unregulated and have a troubled history. Mt. Gox, once the largest bitcoin exchange, collapsed in 2014 after being robbed of more than $470 million of bitcoin. Other bitcoin exchanges have faced criminal Exemptions to health-law mandate to rise....................... A4 charges of money laundering. “The Bitcoin cash markets are immature, and hardly seem the epitome of robustness,” Craig Pirrong, a finance professor at the University of Houston, wrote in a blog post. The launch of bitcoin futures comes as a confluence of economic, financial and cultural developments has spurred a rise of more than 1,500% this year in the price of the digital currency. Regulators in countries such as Japan have given stamps of approval to trading bitcoin. Surging stock markets have made investors hungrier for riskier plays. Meanwhile, consumers have grown more comfortable with sending and receiving money Please see BITCOIN page A8 INSIDE Hong Kong Plight: Can You Have Your Cheesecake and Eat It All? i In polls, economy is a bright spot for Trump......................... A4 Infrastructure plan faces rough road in Congress....... A6 i Opening of American restaurant inspires strategies to handle heaping portions BY JULIE STEINBERG AND NATASHA KHAN single slice of key lime cheesecake to share. After the meal, the group planned a long walk Halfway through his meal around the harbor to help with at the new Cheesecake Factory digestion. “Feta cheese, Parmesan in Hong Kong, which opened earlier this year, Ken Wu knew cheese, cheddar cheese…I he had to come up with a sur- know it’s called The Cheesevival plan to get through the cake Factory but never could we have imagined how much rest of dinner. The amount of food—in- cheese was in everything!” said Una Wong, cluding nachos, who dined with pasta, a pork Mr. Wu. “Chichop, pizza and nese people just fried dishes— cannot handle was overwhelmthis much ing. Even the cheese.” salad, which Mr. Mr. Wu nodWu, 29, and his ded glumly. “All friends had choI can taste in sen for “balOreo cheesecake my mouth is ance,” arrived laden with bacon, chicken, av- cheese,” he said. He likened ocado and a “blue cheese the sensation to Sichuan peppercorn, the numbing and mountain.” So the group of seven ac- spicy flavoring used in Westcountants alighted on a new ern China that obliterates the strategy: Interval eating. taste of anything else. They took a full hour to Since it opened in a shopwork through their main ping mall in May with much courses. Then they instructed fanfare, Hong Kong’s first and the server to wait for at least only Cheesecake Factory resa half-hour before bringing taurant has been drawing Please see CHEESE page A12 dessert, which consisted of a PUT YOUR SAVINGS ON AUTOPILOT THE BEST FILMS OF 2017 HOW WOMEN LED, LOST FIRST TECH JOBS WEALTH MANAGEMENT, R1 LIFE & ARTS, A13 BUSINESS & FINANCE, B1 A Fight in Afghanistan That America Is Winning In Achin, the U.S. and its Afghan allies have driven away Islamic State BY MICHAEL M. PHILLIPS ACHIN, Afghanistan—The Special Forces captain gestured to the Takhto Valley, a brown-hued no man’s land of fallow fields and abandoned mud-brick compounds within easy reach of Islamic State gunners. “Everything over there is bad,” he said. Then the captain turned toward the Pekha Valley, an expanse of emerald-green fields of corn and wheat. Farmers there returned home this summer as Afghan and U.S. troops drove Islamic State fighters into the mountains on the Pakistan border. “Everything that way,” he said, “is better.” The war in Afghanistan is at a stalemate, according to Gen. John Nicholson, the top American commander in Afghanistan. But in Achin, the U.S. and its Afghan allies are winning on a battlefront demarcated in green and brown. Islamic State fighters poured into Afghanistan in 2014 and turned this region—particularly the Pekha, Takhto and Mohmand valPlease see AFGHAN page A12 Iraq says it is clear of Islamic State................... A8 For personal, non-commercial use only. Do not edit, alter or reproduce. For commercial reproduction or distribution, contact Dow Jones Reprints & Licensing at (800) 843-0008 or www.djreprints.com. A2 | Monday, December 11, 2017 * *** THE WALL STREET JOURNAL. U.S. NEWS THE OUTLOOK | By Jacob M. Schlesinger ECONOMIC CALENDAR U.S. Shift Puts Pressure on WTO World trade growth is rebounding, expanding this year at its fastest pace since 2011, while countries have in recent years taken more steps to open markets than close them. But paralysis at the World Trade Organization has created a backlog in its court system designed to mediate disputes among members. Trade policy trends World merchandise trade volume growth (average of exports and imports) Projected 15% Trump Hails Heroes Of Civil-Rights Era 0 NOAA Right Whales Are at Brink, Experts Say Federal government officials said it was time to consider the possibility that endangered right whales could become extinct unless new steps are taken to protect them. North Atlantic right whales are among the rarest marine mammals in the world, and 17 of them have died so far this year. The National Oceanic and Atmospheric Administration has said there are only about 450 of the whales left. American and Canadian regulators need to consider the possibility that the population won’t recover without action soon, said John Bullard, the Northeast Regional Administrator for NOAA Fisheries at a meeting in Maine. “You do have to use the extinction word, because that's where the trend lines say they are,” Mr. Bullard said. “That's something we can't let happen.” —Associated Press 30 30 20 20 10 10 0 0 -5 -10 -15 1995 2000 ’05 ’10 ’15 2010 ’12 ’14 ’16 ’17* 1995 2000 *Through Oct. 15 †Through Sept. Source: World Trade Organization willing to stand up for needed change.” All sides agree WTO relevance relies on its ability to make some big changes. WTO rules risk growing more out of date, undermining the body’s authority and leaving a greater portion of commerce outside world standards and hampered by national barriers. G lobal trade rules were last written in 1995, before the emergence of the internet. The trade rule book “doesn’t exist in the form that we actually need,” Mr. Wolff said. “Without attention, it will erode.” Mr. Trump has expressed less concern about WTO weakness than WTO strength, Continued from Page One for-profits, including leading players HCA, Tenet Healthcare Corp. and Community Health Systems Inc. For patients, the sector’s latest wave of consolidation could mean more tightly managed networks of medical care, which proponents say could reduce unnecessary spending but critics fear could raise prices and limit patient choice. The latest deal, if it happens, would up the ante in the competition between big hospital operators and health insurers, with each sector making huge deals and aiming to gain heft in negotiations over the cost of care and greater control over patients. “It can be a vicious cycle where consolidation happens in one place, and then other players say, ‘I need to consolidate too,’” said Martin Gaynor, a professor of economics and health policy at Carnegie Mellon University. “Everybody’s looking for ways to increase their negotiating leverage.” Pushing down the use of costly services such as emergency rooms is a focus of CVS Health Corp.’s $69 billion deal for Aetna Inc., announced last week. UnitedHealth Group Inc., the parent of the biggest U.S. health insurer, just sped up its own plunge into the healthcare provider sector by saying its Optum health-services arm will buy one of the largest physician groups in the nation, adding it to a growing roster of urgent-care clinics and outpatient surgery centers. “The goal of an insurer is to try to get people to the lowest cost-of-care site appropriate for their care,” said Brent D. Fulton, an assistant adjunct professor in the School of Public Health at the University of California, Berkeley. “The hospital is the most expensive setting.” Hospital operators have pursued ever-larger deals in recent years, creating multistate chains and regional powerhouses. The number of U.S. hospitals that are part of a system rose by nearly 20% between 2006 and 2016, American Hospital Association data show. Spending on hospitals accounts for roughly one-third of the nation’s $3.3 trillion annual health-care bill, the latest federal estimates show. Hospital companies have no President Donald Trump praised the achievements of the 20th-century African-American civil-rights movement and paid tribute to the movement’s martyrs as American heroes ahead of a museum opening Saturday, amid criticism over his past remarks on women, immigration and other issues. “Today, we strive to be worthy of their sacrifice, we pray for inspiration from their example,” he said in Jackson, Miss., after describing the life of slain Mississippi civil-rights leader Medgar Evers. The president spoke at an event that preceded the larger official opening of twin museums—the Mississippi Civil Rights Museum and the Museum of Mississippi History—as part of the state’s bicentennial celebrations. Two black Democratic lawmakers, civil-rights activist Rep. John Lewis of Georgia and Rep. Bennie Thompson of Mississippi, whose district includes some of Jackson, had said they wouldn’t attend because of their objections to Mr. Trump’s past controversial remarks. —Louise Radnofsky 40 disputes 5 n- MISSISSIPPI 40 per month, average 10 DEAL U.S. WATCH Active WTO disputes per year Trade-restrictive measures Trade-facilitating measures ’05 ’15 ’17† ’10 THE WALL STREET JOURNAL and how he sees it harming American sovereignty and American business. “We have not been treated fairly” by the WTO, the president told a November summit of Pacific Rim leaders in Vietnam. He complained the U.S. has been punished for following WTO rules while other countries— notably China—flouted them. He reiterated his preference for bilateral trade deals over such multilateral arrangements. Mr. Trump’s aides have registered dissent by blocking judicial appointments to the main WTO court that arbitrates trade disputes. The seven-member panel now has three vacancies, aggravating a mounting case backlog. The WTO was struggling to modernize rules and maintain relevance long before Mr. Trump took over American trade policy. The third ministerial conference in Seattle in 1999 notoriously collapsed amid violent street protests. The fourth, held in Qatar two months after the Sept. 11, 2001, attacks, launched the ambitious Doha Development Round aimed at somehow reducing poverty and terrorism through trade liberalization. The subsequent seven ministerials deadlocked over divisions between developed and developing countries. The Doha Round was effectively declared dead at the 2015 Nairobi session. The current WTO directorgeneral—Brazilian Roberto Azevêdo, who took office in 2013—has found more success by scaling back the organization’s ambitions and seeking progress on modest projects. A global “trade facilitation agreement” took effect this year designed to simplify and harmonize customs procedures, a technical pact that drew little attention. Officials say that, when fully implemented, it will be the equivalent of a world-wide 14% across-the-board tariff cut, boosting global trade by $1 trillion a year. In Buenos Aires, members will seek to build some momentum with narrow agreements governing fishing subsidies and “food security” programs often used by governments to protect domestic agriculture. M r. Azevêdo has encouraged member nations to skirt paralysis by creating coalitions of the willing, or “plurilateral” agreements that liberalize trade only among those WTO members—say 50 or 60, instead of all 164—who accept the terms. That avoids the bylaws’ requirement for consensus among all members for comprehensive rounds, giving any one veto power. The U.S. helped the WTO pursue previous plurilateral pacts. But under the Trump administration, it isn’t actively taking part in the current discussions. The big test this week is whether any of that can happen without American advocacy—whether some combination of the European Union, Japan, or China, can fill the void. And, if they do, whether the result will be less favorable to U.S. interests. ly . Progress and Threats co Fo m rp m e er rs ci on al a us l, e on Washington The world trading system confronts a new power vacuum, with out-of-date rules and no driving force spearheading any effort to update them. That’s in large part because of the shifting American position on trade. The U.S. has flipped from being chief advocate to lead skeptic of the World Trade Organization, leaving the guardian of globalization without its primary champion. That new dynamic is on display at the group’s biannual meeting, which started Sunday in Argentina. Ahead of that session, 164 trade ministers set modest policy-making goals and have low expectations they can meet any of them. For the first time in memory, WTO veterans say, Washington has largely been silent in advance deliberations meant to fix priorities for the gathering. “The central challenge to the world economy today is the absence of American leadership in the world trading system,” Alan Wolff, the top U.S. official at the WTO, said in a November speech. “The U.S. was an indispensable country to the creation of that system and its management. And now it has opted out.” Mr. Wolff took the post in September with the support of the Trump administration. Aides to President Donald Trump dispute Mr. Wolff’s characterization. “The president has never shrunk away from America’s role as a leader in global trade,” White House deputy press secretary Raj Shah said in a statement. “Sometimes being a leader means being Top Systems The nation’s largest hospital systems, by number of hospitals, include for-proﬁt and private nonproﬁt operators. Consolidation among some of the largest nonproﬁts is poised to create new giants. Number of hospitals Revenue* Non-proﬁts HCA Healthcare 177 $41.5B Ascension 141 22.6 Community Health Systems 18.4 127 Catholic Health Initiatives 100 15.5 Trinity Health 93 15.2 Tenet Healthcare 77 19.6 LifePoint Health 71 6.4 Providence St. Joseph Health 50 22.2 Dignity Health 39 12.9 Kaiser Permanente 39 64.6† *Most recent ﬁscal year operating revenue †Includes Kaiser Foundation Health Plan Inc. Sources: the companies; SEC ﬁlings; municipal bond investor ﬁlings THE WALL STREET JOURNAL. National Hospital Giant A combination of Ascension and Providence St. Joseph Health would span the country. States where the operators are present: Asension Providence St. Joseph Health Both Wash. Mont. Minn. Ore. Wis. N.Y. Mich. Conn. Md. D.C. Ill. Ind. Kan. Calif. Ariz. N.M. Okla. Mo. Ark. Ky. Tenn. Miss. Ala. Texas Alaska Source: the hospital operators also been deepening their own role in lower-cost settings outside the hospital walls by acquiring specialist and primarycare doctors, as well as outpatient surgery centers, occupational-health clinics and urgent-care centers. The hospitals say the consolidation aims to lower costs and help patients. Larger op- Ga. La. Fla. THE WALL STREET JOURNAL. erators say they can work better with the emerging, integrated giants on the healthinsurer side by providing more efficient, better-coordinated care. But the large operators are also seeking to leverage size to keep patients within their system, as is the case when health systems contract with TUESDAY: The Federal Reserve begins its two-day policy meeting. Officials have signaled they are likely to vote to raise their benchmark short-term interest rate by a quarter percentage point at the meeting. Fed officials have been cheery about the U.S. economy and job creation that could push up inflation over time, in turn bolstering the case for further rate rises in 2018. The U.K. statistics office publishes figures on consumer inflation in November. Economists polled by The Wall Street Journal expect annual price growth to come in at 3%, unchanged from October’s reading, but still significantly above the Bank of England’s 2% target. The BOE last month raised its benchmark interest rate to 0.5%, from a record low of 0.25%, in an attempt to get inflation under control. WEDNESDAY: The U.S. Labor Department releases inflation numbers for November, the same day the Fed’s policy meeting wraps up. The consumer-price index’s soft trend persisted in October, but so-called core prices that exclude the volatile food and energy categories rose 1.8% from a year earlier, the strongest annual gain since April. THURSDAY: IHS Markit’s composite purchasing managers index is expected to point to a strong end to the year for the eurozone. The consensus forecast is for a slight drop in the measure to 57.3 in December, from 57.5 in November, but that would still make the fourth quarter one of the strongest three-month periods since the recovery began in mid-2013. A few hours later, the European Central Bank is expected to leave its policies unchanged, but its economists are expected to raise their growth forecasts once again, a sign that 2018 may see the end of the ECB’s bond-buying program launched in early 2015. The Bank of England also releases a policy statement Thursday. When raising rates last month, the central bank indicated further tightening would be gradual and limited, indicating just two more quarter-point increases by the end of 2020. The Bank of Mexico releases a policy statement, with Gov. Alejandro Díaz de León newly at the helm. Mexico’s consumer-price inflation hit a 16-year high at 6.66% in August, though price increases slowed in September and early October. Most analysts expect the bank’s next move to be a rate cut around August next year. Mr. Díaz de León recently said all options are on the table, but uncertainty makes giving interest-rate guidance risky. FRIDAY: The Bank of Russia releases a policy statement, after cutting its key interest rate by 0.25 percentage point at its last meeting in late October. The Russian economy is gradually recovering from a recession brought on by a one-two punch of Western sanctions and declining global prices for oil, the country’s primary export. insurers to be the primary option for patients in a limited network of choices. Greater scale also can give hospitals greater weight with insurers in negotiations over prices, and they may be better able to counter the insurers’ move into the health-care-provider business. Hospitals are facing a series of threats to their financial strength. For them, the early benefits of the Affordable Care Act’s 2014 expansion of insurance, which boosted consumers’ use of health care, have faded. Nationwide, hospitalizations dropped 0.6% last year, after increasing 1.2% in 2015 and 0.7% the year before that, according to the latest Census Bureau data. Congressional Republicans’ efforts to push forward with a tax overhaul could add to the industry’s challenges by repealing the Affordable Care Act’s penalties for those who lack insurance, raising worries that hospitals will continue to see sagging demand and a rise in uninsured patients. Nonprofit hospitals could face additional financial pressure because the Republican tax legislation may shut them out from the tax-exempt debt market, which could raise their cost of borrowing. Nonprofit hospitals are rushing to tax-exempt markets to get ahead of possible changes in Congress. A deal involving Ascension and Providence would stretch across much of the U.S. Ascension operates across 22 states and the District of Columbia, including Texas and Washington, where Providence also operates. Providence also has hospitals in Alaska, California, Montana, New Mexico and Oregon. Both operators have high-profile CEOs, Ascension’s Anthony Tersigni and Providence’s Dr. Rod Hochman. Financial terms of a possible deal weren’t clear. Combinations of nonprofit hospital operators, unlike with forprofit companies, don’t typically involve one buying the other. Ascension and Providence are both Roman Catholic institutions, meaning church authorities would need to sign off on any merger. The possible combination would surpass another huge planned hospital merger that was announced Thursday, between Dignity Health and Catholic Health Initiatives, which together own 139 hospitals and would have combined revenue of $28.4 billion. CORRECTIONS AMPLIFICATIONS Readers can alert The Wall Street Journal to any errors in news articles by emailing email@example.com or by calling 888-410-2667. 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. 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, alter or reproduce. For commercial reproduction or distribution, contact Dow Jones Reprints & Licensing at (800) 843-0008 or www.djreprints.com. THE WALL STREET JOURNAL. Monday, December 11, 2017 | A3 * * ©T&CO. 2017 U.S. NEWS Strong Winds Drive California Wildfires Into New Areas MIKE ELIASON/SANTA BARBARA COUNTY FIRE DEPARTMENT/ASSOCIATED PRESS A TIFFANY HOLIDAY nited coastal mountains and filled the sky with plumes of smoke. Across Southern California on Sunday more than 9,000 firefighters battled some 200,000 acres of wildfires. The blazes, which began last week, have claimed one life and more than 800 structures, fire officials said. Over the weekend, progress was made on many of the six fires burning throughout Southern California, with significant containment reached on three fires in Los Angeles County and one in San Diego County, fire officials said. The Liberty Fire in Riverside County was completely contained. In Ventura and Santa Barbara counties, however, Thomas remained only 15% contained Sunday morning, after having burned 173,000 acres, according to the California Department of Forestry and Fire Protection. Mandatory evacuations were expanded early Sunday for portions of coastal Santa Barbara County, including within the communities of Carpinteria, shown above, and Montecito. —Alejandro Lazo 800 843 3269 co Fo m rp m e er rs ci on al a us l, e on Team Tracks Clues to Fire’s Path BY ERICA E. PHILLIPS attempting to predict the fire’s behavior at a time when increasingly intense and unpredictable wildfires have made this California’s worst fire season yet. Their jobs, now more challenging, are more crucial as the state faces a new dynamic of fires more frequently burning into densely populated cities and neighborhoods. The job OJAI, Calif.—The inferno consuming Ventura County tore through rustic Matilija Canyon, razing homes to smoldering foundations and snapping telephone poles at the base, downing the power lines that link this tiny community to the outside world. The wildfire jumped the canyon road— then stopped at a swath of dry grass primed to burn. “That is pretty freaky,” said Tim Chavez, surveying the strange path the wildfire had cut for clues to its next move. Mr. Chavez, a fire-behavior analyst, and his team are tracking a monster with the power to level neighborhoods, and trying to predict where it might strike next. Their daily reports on the fire’s behavior are used by fire officials in planning their daily attack, deploying firefighters and ordering evacuations. Over the past week, the Thomas Fire, one of the 20 largest on record in California, has cut across more than 250 square miles. Mr. Chavez and his crew are The fire analysts’ job is part science, part art. And these days, a measure of luck. is part science, part art. And these days, a measure of luck. Mr. Chavez works closely with Rich Thompson, a meteorologist, and Ventura County Fire Captain Brendan Ripley to anticipate what the inferno will do next. “We’re wrong a lot,” Mr. Chavez said. “But you get informed by your mistakes.” On Friday, Mr. Chavez and Mr. Thompson sat together at Cal Fire’s incident command post at the Ventura County fairgrounds, monitoring windspeed data from a handful of portable weather stations they had deployed near the fire. Mr. Thompson ran weather scenarios in a computer program called WindNinja and passed the results along via email to a fire captain on the ground. His wind report provided crews with a detailed “spot forecast” for the location where a fire crew was at work. The program aims to predict timing and location for the strongest winds or “squirelly wind directions” for a particular ridge or canyon. “We’re like the geek squad,” Mr. Thompson said. Mr. Chavez said computer models only go so far. They “just give you kind of a gut check,” he said. Getting into the field is a must, he said. Around 11 a.m. Mr. Ripley joined them, and the threeman team set out to survey conditions and check in with fire crews on the ground. On the drive up into the hills above Carpinteria, Mr. Ripley pointed out an embankment covered with grey, dry overgrowth. “It’s just chomping at the bit to be burned,” Mr. Thompson said. The team tracked the Thomas fire through a scorched and empty landscape, past hillside farms and ranches, through rural communities and down main thoroughfares of the communities of Ojai and Santa Paula. The team discussed each burn scar and active plume as they drove, trying to determine which direction the fire had come from and where it was going based on the vegetation and the lay of the land. The recent fires have surprised even Mr. Chavez, a 40year veteran firefighter based in Southern California. “This is really not the kind of fire we deal with on a dayto- day basis,” Mr. Chavez said. “When a fire burns 17,000 acres in one night, it creates a whole bunch of problems. You’ve got this gigantic perimeter, very little of it with containment lines…we just have all this fire, all over the countryside and its all growing.” no Civil-rights advocates in Florida are pushing to put a fundamental democratic question on the ballot: Should people convicted of felonies be able to vote? Florida bars an estimated 1.69 million people with felony records from voting unless they successfully petition the state to regain their rights. Its population of disenfranchised people with felony records accounts for more than a quarter of the 6.1 million nationally, according to the Sentencing Project, which advocates for criminal justice policy changes. Only Kentucky and Iowa currently maintain similar restrictions on voting. Every state except Maine and Vermont disenfranchises felons in some way, but in most states, they regain the right to vote either after leaving prison, or completing probation and parole. Democratic Gov. Terry McAuliffe of Virginia has used executive authority to restore voting rights to 154,000 former felons in the past two years. Organizers in Florida are pushing to lift voting barriers through a ballot measure and have collected hundreds of thousands of signatures in support ahead of a February deadline to make November’s election. The Florida Constitution Revision Commission is also weighing at least three proposed amendments that would restore voting rights to some people with felony records. “What’s at the heart of this TIFFANY.COM Starting at $1,950 www.baume-et-mercier.com AND THE WINNER IS... RATED #1 WORLD’S BEST GIN* CASSI ALEXANDRA FOR THE WALL STREET JOURNAL BY JON KAMP AND ARIAN CAMPO-FLORES n- In Florida, a Push to Let Ex-Felons Vote | ly . CARPINTERIA, Calif.—Reinvigorated by strong winds, Southern California’s largest wildfire blazed into new terrain early Sunday morning, forcing new evacuations in two wealthy Santa Barbara County communities. Fire crews scrambled north from Ventura to protect hillside homes as the 173,000-acre fire, known as the Thomas Fire, ig- *Cigar & Spirits Magazine March 2016 Issue Jhody Polk, a mother of two who works for the ballot campaign, served seven years in prison. issue is whether or not, when a person has served their time and paid back their debt to society, should they have their rights restored?” said Desmond Meade, a 50-year-old former felon leading the ballot effort. In Florida, felons must wait five to seven years after completing sentences to reapply for their civil rights, after which it takes another nine years on average to even have their petitions heard, according to the state office that oversees the process. “The system we have in Florida is not working,” said Howard Simon, executive director of the American Civil Liberties Union of Florida, which has financially backed the ballot effort. During the seven-year tenure of Gov. Rick Scott, a Repub- lican, regaining those rights has gotten harder. Roughly 2,900 people have regained their voting rights under the current governor, compared with 155,000 people under his predecessor, Charlie Crist. A spokeswoman for Mr. Scott said he believes in the state’s clemency process. There is no guarantee the Florida measure will make next year’s ballot. To get there, the campaign needs 766,200 valid signatures from registered voters by Feb. 1 and must clear thresholds in half the congressional districts. So far, more than 950,000 signatures have been collected and submitted to county supervisors for review, according to the campaign. State records show that more than 490,000 signatures have been validated thus far. No Vote States with the highest number of people disenfranchised due to felony convictions *October 2014 Issue Florida Virginia* Texas Tennessee Kentucky Alabama Georgia California Discover More At NOLETSGin.com Arizona Mississippi 0 million 1 *Figure predates Gov. Terry McAuliffe’s large-scale restoration of voting rights to former felons. Source: The Sentencing Project THE WALL STREET JOURNAL. 2 *Cigar & Spirits Magazine, October 2014 & March 2016 PLEASE DRINK RESPONSIBLY NOLET’S® Silver 47.6% Alc./Vol. (95.2 Proof) ©2017 Imported by NOLET’S US Distribution, Aliso Viejo, CA. For personal, non-commercial use only. Do not edit, alter or reproduce. For commercial reproduction or distribution, contact Dow Jones Reprints & Licensing at (800) 843-0008 or www.djreprints.com. A4 | Monday, December 11, 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 Health-Law Mandate Exemptions to Rise BY LOUISE RADNOFSKY AND STEPHANIE ARMOUR As congressional Republicans are poised to repeal the Affordable Care Act’s requirement that most people get insurance or pay a penalty, some conservatives argue the move might be less disastrous for the law than Democrats predict. Senate Republicans included a measure to repeal the mandate in their recently passed tax overhaul; the House didn’t, leaving GOP leaders to hammer out a final agreement for the compromise bill they hope to pass by year’s end. President Donald Trump on Friday night threw his weight behind the push to strike the mandate, promising a crowd in Pensacola, Fla., that it would soon be gone. But some experts say the impact of undoing the so-called individual mandate might not be as devastating to the ACA as was thought a few years ago. Rising premiums mean more people are exempt from the insurance requirement, and exceptions or exemptions granted during the Obama administration have also reduced the number of people obligated to get coverage. Others say the penalty was never big enough to persuade a critical mass of people to buy insurance, so repealing it might not cripple the individual health-insurance market. “It will still be really healthy,” said Avik Roy, a health-policy expert who ad- vised Sen. Marco Rubio (R., Fla.) during his presidential campaign. “It’s a weak mandate that has all sorts of loopholes.” Not everyone is persuaded. Many Democrats say repealing Rising premiums mean more people are exempt from the insurance requirement. the mandate would shred the ACA as younger, healthier people decline to get coverage, raising costs for older and sicker individuals. That, they warn, would plunge the individ- ual insurance market into a fresh round of premium spikes and insurer withdrawals. “Any Republican who backs this tax plan is backing a health-care repeal,” said Brad Woodhouse, director of the Protect Our Care campaign, which backs the ACA. The landscape was different as recently as 2012. During a Supreme Court battle over the constitutionality of the insurance requirement that year, liberals and conservatives agreed it was essential to the ACA. But now, more experts are concluding that rising premiums next year would exempt many more people from the mandate. The exemption applies if the least-expensive health insurance available costs more than 8.13% of an individual’s income. The Robert Wood Johnson Foundation, a think tank whose research typically supports liberal assessments of the ACA, found in a recent study that in the 15 most-expensive states, premiums would exceed the affordability threshold for a person with an income of $50,000. Doug Badger, a conservative health-policy analyst, wrote recently, “Premiums for Obamacare policies next year will be so high that millions will be exempt from the tax penalty whether Congress repeals it or not.” Republicans say health-insurance markets have struggled for years under the ACA because not enough healthy peo- ple signed up for coverage even with the mandate. As a result, they say, the ACA already suffers from the problems liberals are warning about. “That was the theory. The challenge was human behavior decided otherwise,” Alex Azar, President Donald Trump’s nominee for Health and Human Services Secretary, said at a congressional hearing in late November. He continued, “Twenty-eight million people are not in that pool, and it eroded the risk pool.” The Congressional Budget Office has projected that about 29 million Americans are uninsured. Of them, about 6.7 million people paid a penalty for not having coverage of $695 in 2016, or 2.5% of their income. BORN TO DARE AND BLACK BAY ARE ® TRADEMARKS. NEW YORK. TUDOR BRYNN ANDERSON/ASSOCIATED PRESS co Fo m rp m e er rs ci on al a us l, e on Supporters of Democratic Senate candidate Doug Jones cheered at a rally Saturday in Birmingham, Ala. BLACK BAY the-vote events, including a Sunday rally in Birmingham headlined by Sen. Cory Booker (D., N.J.). Mr. Booker also spoke at Alabama State University, a historically black school in Montgomery, on Sunday with Mr. Jones. “I don’t want this state to make this mistake that I’ve made in the past,” Mr. Booker said. “I’ve seen that bad people get elected when good people don’t vote.” Mr. Jones has been visiting churches, a power center in the African-American community that Democrats have long turned to for support. Black voters make up about 25% of Alabama’s electorate. “The black church is kind of a special different entity. The black congregation follows the pastor,” said the Rev. G.W.C. Richardson Jr. of Hutchinson Missionary Baptist Church in Montgomery. But Mr. Richardson said he hasn’t spoken with Mr. Jones since before the candidate secured the Democratic nomination in August. Mr. Richardson added that some conservative Christian blacks may find Mr. Moore’s antiabortion stances reassuring, and he suggested that he wouldn’t be devastated if Mr. Moore won. “Because he’s a Christian, I think that he would project what’s right in a strong way,” Mr. Richardson said of the former Alabama chief justice. Mr. Jones has said he favors abortion rights. The Jones campaign has also targeted students at historically black colleges and universities, including Tuskegee, Alabama State and Alabama A&M. Some black student leaders say Mr. Jones could have done more. Activist groups, such as Woke Vote, also have sought to step in late in the race and energize younger African-Americans. Brett Doster, a Moore campaign strategist, said that campaign also believed it had support among black voters. “If ultraliberal, pro-choice Doug Jones is counting on winning based on support in the AfricanAmerican community, he will lose,” Mr. Doster said. Because of past races for positions on the Alabama Supreme Court, the Moore campaign has a fuller statewide operation in place, but it faces some disadvantages. The Senate GOP’s campaign arm and the Republican National Committee had ended joint fundraising agreements with the Moore campaign last month when allegations against him emerged. The RNC restored its support for Mr. Moore after Mr. Trump officially endorsed him last week, but it sent no staff to help and just $50,000 in funds. In Polls, Economy Is a Bright Spot for Trump BY ELI STOKOLS Although President Donald Trump’s overall approval ratings have dropped to the lowest point of his presidency, he is getting significantly higher marks in one important area: his handling of the economy. With the U.S. unemployment rate holding at a 17year low, hiring strong and the stock market hitting regular records, Mr. Trump is getting stronger reviews from the public on the economy, with 42% approving and 37% disapproving, according to the most recent Wall Street Journal/NBC News survey, conducted in late October. That stands in stark contrast to his overall approval rating, which dropped last week to 32%, the lowest point of his 11-month presidency, according to a Pew Research Center poll. His disapproval rating of 68% in the same survey was also a new high. The WSJ poll showed the president with a 38% approval rating, his lowest to date in this poll, while 58% disapproved of his overall performance. A Gallup survey from November showed the president’s approval rating for his handling of the economy at 45%, eight points ahead of his overall approval number, which sagged to 37%. KEVIN LAMARQUE/REUTERS n- was elected as lieutenant governor in 2006. Giles Perkins, the Jones campaign chairman, said staff has had to cull data “county by county” to build a voter database. “We had to go out and get whatever existing voting data there was,” Mr. Perkins said. “There’s a lot of baseline voter files…that helped us refine who we talked to.” U.S. Rep. Terri Sewell (D., Ala.) said the Jones campaign would have to “overperform” in Democratic hubs such as Birmingham, Montgomery and Selma, all of which are at least partially inside her district. Ms. Sewell’s office helped the campaign organize get-out- no Continued from Page One structure and get-out-the-vote operation that is a real operation, on a scale that’s never been seen before.” Mr. Jones had edged ahead of Mr. Moore in many public surveys right after Mr. Moore’s accusers began to come forward last month. But Mr. Moore appears to have regained ground and is now leading Mr. Jones by 3.8 points in the Real Clear Politics average of polls. A Moore victory would maintain the GOP’s 52-48 majority in the Senate, a crucial margin for pressing the agenda of the party’s congressional leaders and Mr. Trump. An upset win for Mr. Jones would give the Democratic Party momentum going into the 2018 midterms after election wins in Virginia and elsewhere that were widely seen as a referendum on Mr. Trump’s administration. It would also improve their odds of retaking the majority in the Senate. The winner will serve the remaining three years of the Senate term. Mr. Moore’s campaign on Sunday also sought to cast the Alabama race as a referendum on the president, but in a state that Mr. Trump won by 28 points over Hillary Clinton. Friday in Pensacola, which is in the same media market as Mobile, Ala., Mr. Trump said, in reference to the Democratic congressional leaders: “We can’t afford to have a liberal Democrat who is completely controlled by Nancy Pelosi and Chuck Schumer.” The Jones campaign has been scrambling to galvanize voters in part because it was unprepared at the onset for a truly competitive race, according to Democratic strategists, African-American pastors, black college students, activists and other Democratic stakeholders across Alabama. The last Democrat to win a major statewide race was Jim Folsom Jr., who ly . VOTE Voters give President Donald Trump credit on the economy. “He’s a political contortionist in that he has high economic numbers and very low personal approval ratings. That’s almost impossible to do,” said Peter Hart, a veteran Democratic pollster. On Friday, the White House celebrated the December jobs report that showed the economy gaining 228,000 jobs in November. “President Trump’s bold economic vision continues to pay off,” White House Press Secretary Sarah Huckabee Sanders said in a statement that also referenced an increase in manufacturing jobs since the president took office. “As we continue to unleash the American economy from unnecessary regulation and taxes, we look forward to seeing more reports like this, showing a healthy and thriving jobs market for the American people.” The president expects to sign a final version of the GOP’s $1.4 trillion tax overhaul before the end of the year. White House political director Bill Stepien, who didn’t respond to a request to comment, has expressed confidence in the past that strong economic numbers, especially in the states Mr. Trump won in 2016, will be enough to help him overcome other political liabilities. "The issues that drove the 2016 election—change Washington and fix the economy— continue to break President Trump’s way. Today’s strong economy is a bulwark for the party in power as it faces the electorate next year in congressional elections,’’ said Bill McInturff of the Republican polling firm Public Opinion Strategies. Mr. McInturff directs the Journal/NBC News poll with Democrat Fred Yang. Mr. Hart isn’t so sure. He pointed to a recent focus group he conducted with North Carolina voters. He said they were less willing to forgive Mr. Trump’s sometimes controversial behavior amidst a strong economy than they were with President Bill Clinton two decades earlier. “During the Clinton impeachment, people said, ‘Look, the economy is doing fine.’ They weren’t in a mood to pursue impeachment,” Mr. Hart said. “What’s different now is the country is looking for an equilibrium and the president keeps the country constantly on edge. There’s never enough of a lull for voters to get their breath and say, ‘I’m comfortable.’ And that’s why Trump doesn’t get the full political benefit of the economic growth.” Some administration allies have been trying to impress upon the president and his communications team that he would be in a stronger position if he created fewer distractions with his tweets, according to people familiar with those conversations. For personal, non-commercial use only. Do not edit, alter or reproduce. For commercial reproduction or distribution, contact Dow Jones Reprints & Licensing at (800) 843-0008 or www.djreprints.com. THE WALL STREET JOURNAL. Monday, December 11, 2017 | A5 no n- co Fo m rp m e er rs ci on al a us l, e on With IBM Services and Watson, customer service ag gents canít exactly read minds, but they can know which customers to he elp ˇrst and how to help th hem better. This helped on ne company to reduce call re esolution times by 99% an nd saved another company $1 11.2 million a year. Find ou ut more at ibm.com/you Th his is customer service to o the power of IBM. ly . I CAN KNOW THOUSANDS OF 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, alter or reproduce. For commercial reproduction or distribution, contact Dow Jones Reprints & Licensing at (800) 843-0008 or www.djreprints.com. A6 | Monday, December 11, 2017 * **** THE WALL STREET JOURNAL. U.S. NEWS Infrastructure Plan Faces Rough Road in Congress ELAINE THOMPSON/ASSOCIATED PRESS BY TED MANN A roadway project in Seattle in September. The White House says voters want a rebuilding plan. WASHINGTON—The White House is preparing to roll out a long-delayed infrastructure plan in January, as President Donald Trump’s advisers bet that voters want a $1 trillion road-and-bridge-building plan—even though it is opposed by some lawmakers. Mr. Trump’s advisers are putting finishing touches on a plan to direct federal spending of $200 billion or more—funds it would propose to offset with cuts elsewhere in the federal budget—to leverage hundreds of billions more from local governments and private investors to pay for road, rail, water and utility upgrades. Big legislation can be more difficult in an election year, but Mr. Trump’s political advisers say they believe they have public support. That runs counter to widespread doubts in Washington that Congress would want to craft a major spending initiative on the heels of a tax package that could raise the deficit by more than $1 trillion. Polling shared with the White House recently shows majority support for an investment in infrastructure among groups that have favored Mr. Trump. But the issue also polls well among groups that disapprove of his performance. “Infrastructure is an issue through which we can move people into the president’s job approval column,” Deputy Press Secretary Lindsay Walters said. First, the administration will have to get a bill past resistant lawmakers. They include GOP spending hawks, centrist Republicans who rejected proposed budget cuts this spring and Democrats who want any infrastructure to be paid for directly by the federal government. Republicans have been skeptical of some other budget moves that could bode ill for plans to find $200 billion in cuts. A Senate subcommittee undid many of the administration’s proposed reductions to highway and rail funding programs in July, for instance. The infrastructure package was further complicated by the passage of the House and Senate tax-cut bills, a senior White House official acknowledged. The bills close off one alternative option for funding because revenue from a one-time tax on foreign corporate profits would be used to lower rates, not fund a building plan. The House bill also eliminates the tax advantage of taxfree bonds that are common in public-private partnership deals of the type the administration wants. Taxman Cometh: Marginal Rates Could Top 100% for Some WASHINGTON—Some highincome business owners could face marginal tax rates exceeding 100% under the Senate’s tax bill, far beyond the listed rates in the Republican plan. That means a business owner’s next $100 in earnings, under certain circumstances, would require paying more than $100 in additional federal and state taxes. As lawmakers rush to write the final tax bill over the next week, they are looking at changes to prevent this from happening. Broadly, House and Senate Republicans are trying to reconcile their bills, looking for ways to pay for eliminating the most contentious proposals. The formal House-Senate conference committee will meet on Wednesday, and GOP lawmakers may unveil an with three children and earnings of about $615,000. Getting $100 more in business income would force the lawyer to pay $105.45 in federal and state taxes, according to calculations by the conservativeleaning Tax Foundation. That is more than double the marginal tax rate that household faces today. If the New Jersey lawyer’s stay-at-home spouse wanted a job, the first $100 of the spouse’s wages would require $107.79 in taxes. And the tax rates for similarly situated residents of California and New York City would be even higher, the Tax Foundation found. Analyses by the Tax Policy Center, which is run by a former Obama administration official, find similar results, with federal marginal rates as high as 85%, and those don’t include items such as state taxes, self-employment taxes or the phase-out of child tax credits. The bill would provide incentives for business owners to shift profit across calendar years, move personal expenses inside the business and engage in other maneuvers, said David Gamage, a tax-law professor at Indiana University. “I would expect a huge taxgaming response once people fully understand how it works,” said Mr. Gamage, a former Treasury Department official. The analyses “raise a valid concern” that lawmakers are examining, said Julia Lawless, a spokeswoman for the Senate Finance Committee. “With any major reform, there will always be unusual hypotheticals delivering anomalous results,” she said. Marginal tax rates are dif- ferent from average tax rates. A marginal rate is the tax on the edge, or margin, of one’s earnings, and so it reflects what would be the next dollar of income. The average rate is a way of measuring a taxpayer’s total burden. Here’s how that New Jersey lawyer’s marginal rate adds up to more than 100%: The household is paying the 35% marginal tax rate on their income range. Or, they are paying the alternative minimum tax, which operates at the same marginal rate in that income range. The household is paying New Jersey’s highest incometax rate, which is 8.97%, and now has to pay all of that because the Republican tax plan wouldn’t let such state or local taxes be deducted from federal income. The household is also los- co Fo m rp m e er rs ci on al a us l, e on agreement by week’s end. The possible marginal tax rate of more than 100% results from the combination of tax policies designed to provide benefits to businesses and families but then deny them to the richest people. As income climbs and those breaks phase out, each dollar of income faces regular tax rates and a hidden marginal rate on top of that, in the form of vanishing tax breaks. That structure would create some of the disincentives to working and to earning business profit that Republicans have complained about, while opening lucrative avenues for tax avoidance. As a taxpayer’s income gets much higher and moves out of those phaseout ranges, the marginal tax rates would go down. Consider a married, selfemployed New Jersey lawyer ing a deduction the Senate created for so-called pass-through businesses such as partnerships and S corporations. That 23% deduction is fully available to owners of service businesses like law firms, but only if income is below $500,000 for a married couple. The Republican bill doubles the child tax credit to $2,000 but phases it out beginning at $500,000 income for joint filers. The analysis assumes that the lawyer is paying a 3.8% tax on self-employment income. Pushing marginal rates lower on these households would require tradeoffs. Republicans could make the phaseout of the business deduction more gentle, spreading it over, say, $200,000 of income above $500,000. But that would make the tax cuts bigger. ly . BY RICHARD RUBIN BUY 4 BACON WRAPPED FI LET MIGNONS Int LOroduct W ory P ASrice! $1 9 65 ea ch FOR $84.95* AND GET 95 * no free! teaks Get 4 S n- bacon 4 wrapped filet MignoNS free OFF ER 84 HO $ DAY LI Advance Release: Order Your New U.S. 2018 Silver Dollars Now! M illions of people collect the American Eagle Silver Dollar. 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The collectible coin market is speculative, and coin values may rise or fall over time. All rights reserved. © 2017 GovMint.com THE BEST SOURCE FOR COINS WORLDWIDE™ For personal, non-commercial use only. Do not edit, alter or reproduce. For commercial reproduction or distribution, contact Dow Jones Reprints & Licensing at (800) 843-0008 or www.djreprints.com. THE WALL STREET JOURNAL. Monday, December 11, 2017 | A6A no n- co Fo m rp m e er rs ci on al a us l, e on ly . NY For personal, non-commercial use only. Do not edit, alter or reproduce. For commercial reproduction or distribution, contact Dow Jones Reprints & Licensing at (800) 843-0008 or www.djreprints.com. A6B | Monday, December 11, 2017 NY THE WALL STREET JOURNAL. co Fo m rp m e er rs ci on al a us l, e on ly . A D E T A N I DO no n- A CHILD’S ABILITY TO READ HAS A BIG IMPACT ON THEIR FUTURE. DONATE AND GIVE THE GIFT OF LITERACY, OPPORTUNITY, AND SELF-SUFFICIENCY. HELP US AT READNYC.ORG #SPREADTHEWORDS For personal, non-commercial use only. Do not edit, alter or reproduce. For commercial reproduction or distribution, contact Dow Jones Reprints & Licensing at (800) 843-0008 or www.djreprints.com. THE WALL STREET JOURNAL. Monday, December 11, 2017 | A7 * * * * * WORLD NEWS Protests Quickly Lose Steam in Mideast U.S. decision to move its Israel embassy to Jerusalem spurs outcry in Palestinian territories Protesters in Lebanon tried to remove barbed wire from a road near the U.S. Embassy during a demonstration on Sunday. Three Held in Attack On Swedish Temple HELSINKI—Three people have been arrested for allegedly throwing firebombs at a synagogue in the Swedish city of Göteborg, the second antiJewish attack in the Nordic nation in two days. No one was injured in the attack late Saturday during a youth event at the synagogue and the adjacent Jewish center in Sweden’s second-largest city. Göteborg police spokesman Peter Nordengard said on Sunday it is being investigated as an attempted arson. Jewish groups condemned the attacks and demanded that authorities take action. The attack took place after some 200 people rallied late Fri- day in the southern city of Malmo, yelling anti-Jewish slogans and waving Palestinian flags to protest U.S. President Donald Trump’s decision to recognize Jerusalem as Israel’s capital. On Saturday, Swedish Foreign Minister Margot Wallstrom tweeted that those who called for Jews to be killed did something “totally unacceptable.” —Associated Press mains undeterred in its efforts to help achieve peace between Israelis and Palestinians and our peace team remains hard at work putting together a plan,” said Alyssa Farah, a spokeswoman for Mr. Pence. In a television interview, U.S. Ambassador to the United Nations Nikki Haley on Sunday defended Mr. Trump’s decision, calling it a courageous move that would further the Mideast peace process. Israeli officials have mostly welcomed the move, saying it reflects the reality on the ground. Most Israeli government buildings are in Jerusalem and Israelis have long considered it their capital. Israeli Prime Minister Benjamin Netanyahu held talks in Paris on Sunday with French President Emmanuel Macron, who has criticized the U.S. de- cision. In a news conference following the meeting, Mr. Netanyahu said Jerusalem is Israel’s capital, just as Paris is the capital of France. Mr. Macron condemned recent attacks against Israel, but reiterated his opposition to Mr. Trump’s declaration, and urged Mr. Netanyahu to make “courageous gestures” of peace toward Palestinians. Elsewhere, protesters ly . Bank and Gaza Strip. In Jerusalem, police arrested a 24-year-old Palestinian assailant after he stabbed an Israeli man in what authorities said was a terrorist attack, although this appeared to be an isolated incident. The Israeli suffered wounds to his upper body and was taken to the hospital, Israeli authorities said. Diplomatic steps to penalize the U.S. or Israel have also been muted, although Palestinian Authority President Mahmoud Abbas said he would cancel a planned meeting with U.S. Vice President Mike Pence this month. Mr. Abbas has also said the U.S. decision disqualifies Washington from any peacemaking role. Mr. Pence’s office called Mr. Abbas’s decision unfortunate and a missed opportunity to discuss the region’s future. “The administration re- co Fo m rp m e er rs ci on al a us l, e on TEL AVIV—Pockets of anger surfaced in the Middle East and Asia over the Trump administration’s decision to recognize Jerusalem as Israel’s capital, but predictions of widespread upheaval failed to materialize as riots petered out in the Palestinian territories. Protesters gathered outside the U.S. Embassy in Beirut on Sunday, with Lebanese security forces firing tear gas and water cannons. Demonstrators carried Palestinian flags and set fire to tires near the embassy, but the unrest had largely calmed by late afternoon. Last week’s decision to recognize Jerusalem as Israel’s capital and move its embassy there from Tel Aviv was widely condemned in Lebanon, which hosts about half a million Palestinian refugees—representing roughly 10% of the country’s population. The status of Jerusalem is a highly charged issue because Palestinians claim East Jerusalem as the capital of a future state. The White House has said its decision doesn’t preclude the establishment of East Jerusalem as the capital of a Palestinian state should Israelis and Palestinians agree to such a scenario in peace talks. Arab and Muslim leaders have warned that President Donald Trump’s decision could spark a Palestinian uprising against Israel and violence across the Mideast, as well as complicate the peace process. However, after three days of clashes between Palestinians and Israeli forces that left four Palestinians dead, the scene on Sunday was quieter in East Jerusalem, the West WAEL HAMZEH/REX/SHUTTERSTOCK/EUROPEAN PRESSPHOTO AGENCY BY RORY JONES staged marches in Cairo, Istanbul and Amman over the weekend, and thousands of Indonesians took to the streets of Jakarta on Sunday against the U.S. move. The most notable fallout from the U.S. decision came on Saturday, when Israel launched airstrikes at Hamas positions in response to rocket fire from the Gaza Strip. Three people were killed in the strikes and more than 20 were injured, the Palestinian Authority’s state news agency reported Gazan health authorities as saying. Hamas had called for a Palestinian uprising against Israel after Mr. Trump’s decision. It has also fought three wars with Israel over the past decade, and while exchanges of fire between the Israeli military and Gaza are common, Israelis fear that such firing could escalate into a broader conflict. The Israeli military said Sunday it had discovered and destroyed a tunnel penetrating Israel from Gaza, dug by Hamas militants to attack Israel. The Israeli military mounted a ground campaign in Gaza in 2014 to destroy tunnels constructed by Hamas. A Gazan man also died on Friday after clashing with Israeli soldiers near the border fence with Israel. Thousands of Palestinians clashed with Israeli soldiers on Friday in cities across the West Bank but only hundreds turned out on Saturday and Sunday. The muted response speaks to a reluctance to follow calls from Palestinian leaders for prolonged protest. Mr. Abbas is deeply unpopular among Palestinians after more than 10 years of rule, while Gazans also are frustrated by Hamas’s control of the strip and deep economic stagnation there. —Raja Abdulrahim in Beirut, Sam Schechner in Paris and Felicia Schwartz in Washington contributed to this article. Watching your 8-year-old mix and match potions, you see “Distinguished Chemistry Scholar” in her future. U.S. STOCKS IVV no n- And a tuition bill in yours. WHEN INSPIRATION HITS, BUILD FOR WHAT’S NEXT. U.S. BONDS AGG INT’L STOCKS IEFA Build for their future with iShares Core ETFs. At 1/10th the cost of typical mutual funds, iShares Core ETFs can help you keep more of what you earn.1 INSPIRED TO BUILD. iShares.com/build 1. Source: BlackRock and Morningstar, as of 12/31/16. Comparison is between the average Prospectus Net Expense Ratio for the iShares Core Series ETFs (0.08%) and the average Prospectus Net Expense Ratio of active open-end mutual funds (1.17%) available in the U.S. on 12/31/16. 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WORLD NEWS Says Setbacks Mar Big Philippine Win Iraq It Is Clear Government struggles to rehabilitate a city laid waste by a battle with Islamist militants Of Islamic State A soldier views destruction caused by months of heavy fighting earlier this year between the military and Islamic State-linked fighters. Marawi residents, the former textiles trader had no insurance. “When we saw the house we cried because all of our effort and all our belongings are gone,” he said, flanked by four generations of relatives who Much of Marawi remains closed as soldiers sweep for improvised explosives. In an interview in the bullet-strafed remains of Marawi’s Grand Mosque, Mr. Castro said the government hasn’t worked out how much the process will cost, though some estimates place it at up to $1.8 billion. Meanwhile, nearly 1,200 temporary shelters are being built for displaced people and more than 2,700 permanent houses are planned, to be funded by a private donation. Recent reports from human-rights groups about soldiers torturing or executing civilians have further fanned hostility toward the liberators. The military said it welcomes any probe and doesn’t tolerate rights violations. Underlying this broad distrust are decades of marginalization of the minority Muslim population of the southern Philippines by successive governments, including the colonial authorities of Spain and the U.S., which governed the country successively for about 350 years. That experience spawned dozens of separatist groups before the recent wave of violent extremists inspired by Islamic State. Once-violent older groups that have rejected the extremists, such as the Moro Islamic Liberation Front, or MILF, have sought peace in exchange for autonomous government. An agreement on self-rule for the small majority-Muslim part of the country has been reached, but the Philippine Congress has been slow to pass necessary legislation. MILF leaders warn they could lose control over their fighters if the legislation doesn’t pass. Philippine President Rodrigo Duterte has urged lawmakers to move fast on the legislation. If it doesn’t pass soon, he said in October, “we are headed for trouble.” lived in the house with him. “This is not just a house. This is our roots and all our hard work.” Felix Castro, a retired general now charged by the government with coordinating rebuilding, said “the reconstruction will take years.” Iraq said it had retaken the last pockets of territory held by Islamic State in the country, more than three years after the insurgents overran about a third of Iraq and threw the wider region into chaos. Military commanders said Iraqi forces had finished clearing a vast but sparsely populated desert area in the west of the country on Saturday, taking control of the border with Syria and marking the end of Islamic State’s occupation. “Your land has been fully liberated and your cities, towns and villages have returned to the nation’s embrace,” Prime Minister Haider al-Abadi said in a speech, flanked by members of the security forces. Iraqis celebrated the announcement and members of the international coalition that has backed the campaign against Islamic State sent congratulations, while signaling challenges ahead. The cost of victory has been high. A large part of the country is ruined, thousands of civilians and soldiers have been killed, and many people displaced. Although Islamic State has been dealt multiple blows in recent months—losing its defacto capital Raqqa in Syria, and Mosul, its stronghold in Iraq— the group hasn’t been wiped out. Militants continue to hold shrinking territory in Syria; active affiliates in Afghanistan, Libya and Egypt still claim allegiance to Islamic State. And even as its so-called caliphate has crumbled in Iraq, Islamic State has managed to survive as a deadly insurgency. ly . Officials say Islamist groups are already seeking to recruit young men from the many refugee camps crowded with people who lost their livelihoods in the battle. Much of Marawi remains closed as soldiers sweep for improvised explosives. The city was attacked on May 23 by hundreds of militants funded and inspired by Islamic State, who were joined by dozens of foreign fighters seeking to declare a caliphate, or Islamic kingdom. At least 165 Philippine security personnel and 47 civilians died in the ensuing battle, as well as nearly 1,000 militants. Aerial bombardment left the city in ruins. Hadj Esmail M. Abaton, 77 years old, returned to his house in late November to find almost everything destroyed. The metal roof had fallen in, charred belongings dotted the floor and broken furniture was rusting away. Like most co Fo m rp m e er rs ci on al a us l, e on MARAWI, Philippines—The Philippine military scored a victory against international extremism when it drove Islamic State-linked fighters from this city in October, but that success is now in peril as the government discovers as many pitfalls in rebuilding Marawi as in liberating it. The city was decimated in the battle, fought over five months with U.S. surveillance support. The government is now turning to the task of rebuilding and resettling nearly 400,000 people displaced by the fighting, while it pushes for new legislation that would give greater autonomy to marginalized Muslim-majority areas of Mindanao, the Philippines’ southernmost main island, in the hope of deterring future conflict. How it meets those challenges, residents and community leaders say, will determine whether the victory in Marawi can be a springboard to longer-term peace or end up providing new fervor for an insurgency inspired by Islamic State. The rebuilding process is beginning to fray before new bricks are laid, as sentiment turns against the government for what many residents see as its heavy-handed use of airstrikes in the campaign to recapture Marawi. “We hate ISIS, but we also know the one who destroyed our homes, our properties, is the military, by using the airstrikes,” said Agakhan Sharief, a Muslim leader who served as an intermediary in unsuccessful talks between the militants and the government. “If they don’t fulfill what they have promised to the victims of Marawi city, [residents] could be turning to more radicalization.” BY GHASSAN ADNAN AND ISABEL COLES JES AZNAR FOR THE WALL STREET JOURNAL BY JAKE MAXWELL WATTS FROM PAGE ONE BITCOIN n- Continued from Page One digitally from their phones, even when a bank isn’t involved. This has made it easier for individual investors to pile into bitcoin and they, in turn, have pushed it into the cultural mainstream. The singer Katy Perry recently posted a picture of herself on Instagram talking with Warren Buffett and said she asked him about cryptocurrencies (she didn’t reveal his advice). CBS’s “Big Bang Theory”—the top-rated show on U.S. television—devoted a recent episode to a story revolving around bitcoin. All this puts bitcoin’s recent ascent in a different category from gyrations witnessed in prior years. “I’m still wrapping my head around cryptocurrency being cool now,” said Neeraj Agrawal, the 29-year-old director of communications at Washington, D.C.-based Coin Center, a nonprofit cryptocurrency research and advocacy organization. “It doesn’t feel natural for crypto to be cool because of how nerdy it is.” Indeed, many people buying bitcoin today aren’t quite sure how it works. Bitcoin was designed by a small clique of coders as a stateless, digital alternative to traditional money. 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Shop Levenger.com for special offers and sales on our holiday gift guide Professional Accessories Tech Accessories Home & Ofﬁce Furniture & Lighting Travel Essentials Folios & Notebooks Writing Instruments Bags & Totes Levenger.com 800.544.0880 opted the look and feel, as well as ease of use, of popular payments services such as Venmo, said Scott Harkey, head of the payments practice at consulting firm Levvel LLC. The digital wallet operated by Coinbase in early December became the most-downloaded app in Apple Inc.’s store, above YouTube, Gmail and Facebook. There are 8.75 million monthly active users of the mobile app globally, according to Apptopia, which tracks downloads. “To the early adopters, it doesn’t matter,” Mr. Harkey said of the ease with which investors can trade bitcoin. “To the next segment of population now investing in crypto, they’re the ones that got more comfortable with the idea given the broader drive of third parties interacting with their money.” For all that, bitcoin has been the best-performing asset in financial markets in 2017. Part of the reason may have to do with supply and demand. Bitcoin is created, or “mined,” at a preset, steady pace. There are about 16.7 million bitcoin outstanding; mining will stop when the total reaches 21 million, expected to occur around 2140. So growing interest in bitcoin driven by its rising price results in greater demand, while the supply doesn’t expand at a similar rate. That leads to higher prices. Bitcoin futures could help damp some of the market’s volatility, by drawing in more buyers and sellers. But the launch of bitcoin futures has cast a spotlight on the market’s shaky foundations. Bitcoin exchanges were plagued with glitches in recent weeks, even as the price of the virtual currency soared to records— passing $17,000 on Thursday, from just $968.23 at the start of the year, according to CoinDesk. For their futures products, CME and Cboe are betting that a handful of bitcoin exchanges are sufficiently reliable and trustworthy to support a derivatives market. Still, recent mishaps have raised questions about whether bitcoin exchanges are ready for prime time. On Nov. 29, heavy trading sparked by bitcoin breaking through $10,000 the previous evening caused out- ages at Bitstamp and GDAX, among other exchanges. All five bitcoin exchanges working with CME or Cboe have taken steps to embrace regulation and anti-money-laundering laws. Their representatives said the industry had matured. “Exchanges that weren’t up to a certain standard, due to incompetence, have died out,” said Bitstamp Chief Executive Nejc Kodrič. Some critics warn that unscrupulous traders could push around the price of bitcoin on the bitcoin exchanges. 1,500% The increase in the price of bitcoin this year The bitcoin exchanges partnering with CME and Cboe account for a narrow slice of the market. That means a manipulator wouldn’t need to move the price of bitcoin world-wide, just on a small number of exchanges. CME’s four partner exchanges together handle roughly 10% of daily global bitcoin volume, according to coinhills.com, though they account for around a third of bitcoin trading in dollars, which CME argues is the more important measure. CME says it has taken steps to combat manipulation. The index that underpins its futures contract is based on trades executed over a one-hour period each day, with anomalous trades tossed out. CME also is working to add more bitcoin exchanges to its index, a CME spokeswoman said. Cboe’s contract uses a price determined in a daily auction at Gemini. Gemini data show its daily auction volumes this year have averaged $1.3 million—a drop in the bucket of global bitcoin trading, which runs into the billions of dollars daily. Gemini’s auction process also has failed to produce a price several times in recent months, on lightly traded weekends or holidays. —Telis Demos and Peter Rudegeair contributed to this article For personal, non-commercial use only. Do not edit, alter or reproduce. For commercial reproduction or distribution, contact Dow Jones Reprints & Licensing at (800) 843-0008 or www.djreprints.com. THE WALL STREET JOURNAL. Monday, December 11, 2017 | A9 * * * * WORLD NEWS Venezuelan Vote Lifts Rulers Allies to Contest BY JUAN MONTES People look for their names on electoral rolls before voting in municipal elections in Caracas. Some opposition candidates quit their parties to run as independents in an attempt to keep control of key metropolitan boroughs. But the failure of the opposition to effectively confront Mr. Maduro and offer economic solutions has disillusioned many former supporters and prompted them to stay home. Images posted on social media showed deserted voting centers in opposition strongholds, with participation in some as low as 10%. “The lack of vision from the opposition has taken away my desire to vote,” said Luis Esteves, a 32-year-old graphic designer in central Caracas. “I’m abstaining because I want to show that I’m against how they are handling things.” Some government supporters said they came out to vote to show their support for the president. For the government, Sunday’s poll provides an important test of its ability to mobilize voters ahead of next year’s presidential election. WORLD WATCH Thousands Protest At U.S. Embassy NORWAY Ms. Thurlow said the Hiroshima blast left her buried under the rubble, but she was able to see light and crawl to safety. In the same way, the campaign she is part of now is a driving force behind an international treaty to ban nuclear weapons, she said after ICAN received the Nobel prize it won in October. The treaty has been signed by 56 countries—none of them nuclear powers—and ratified by three. To become binding, it requires ratification by 50 countries. ICAN Executive Director Beatrice Fihn accepted the prize with Ms. Thurlow. —Associated Press Nobel Winner Urges Nuclear-Weapons Ban A survivor of the atomic bombing of Hiroshima compared her struggle to survive in 1945 to the objectives of the group awarded this year’s Nobel Peace Prize on Sunday. Setsuko Thurlow, who was 13 years old when the U.S. bomb devastated her Japanese city during the final weeks of World War II, spoke in Oslo, Norway, as a leading activist with the Nobelwinning International Campaign to Abolish Nuclear Weapons. Ricardo Anaya, standing, with members of the PAN-PRD coalition n- Thousands of Indonesians protested President Donald Trump’s move to recognize Jerusalem as the capital of Israel, the second such rally in recent days in the world’s largest Muslim-majority nation. The rally outside the U.S. Embassy in Jakarta drew more than 5,000 supporters of an opposition Islamic party and broke up without incident around midday, police said. Protesters carried Palestinian flags and signs de- claring Jerusalem the property of a Palestinian state. Indonesia doesn’t maintain diplomatic ties with Israel, and support for Palestinians has long been a rallying issue. Sunday’s protest came after similar gatherings in Jakarta and Kuala Lumpur two days earlier, and after Mr. Widodo and Malaysian Prime Minister Najib Razak condemned Mr. Trump’s decision. Political and religious analysts said the protests and the broader umbrage over Mr. Trump’s decision were unlikely to alter relations with Washington. —Ben Otto co Fo m rp m e er rs ci on al a us l, e on INDONESIA MEXICO CITY—After long and sometimes contentious negotiations, two of Mexico’s main opposition parties agreed to run together in next year’s presidential election, shaking up the political landscape less than seven months before the vote. At a crowded event Friday night, the leaders of the conservative National Action Party, or PAN, which governed Mexico from 2000 to 2012, and the center-left Party of the Democratic Revolution, or PRD, registered the alliance before the electoral agency. The smaller Citizen Movement party also signed up to join forces with the PAN and PRD. The coalition brings a third major contender into the field, and one that could be attractive to many Mexicans who reject President Enrique Peña Nieto’s ruling party but who also dislike the early frontrunner, left-wing nationalist Andrés Manuel López Obrador. The three coalition parties combined had 32% of voter support in a recent survey by Reforma newspaper, tied with Mr. López Obrador’s Morena party. The ruling Institutional Revolutionary Party, or PRI, which chose former Finance Minister José Antonio Meade as its candidate, was third with 25%. Mexican presidents are barred by law from seeking re-election. PAN President Ricardo Anaya, a 38-year-old former lawmaker nicknamed “the Boy Wonder” for his youth and eloquence, has broad support to become the coalition’s presidential candidate, party officials said. “We could see a three-way race next year. The coalition would compete with the PRI to win over the majority of moderate voters,” said José Antonio Crespo, a political scientist at the CIDE university. The presidential and congressional elections are scheduled for July 1. The challenge for the rightleft alliance will be to remain united in the months before the voting, according to analysts. It is also to be seen whether PRD voters would back a PAN member as candidate, Mr. Crespo said. It would be the first time the PAN and the PRD, which were fierce rivals in 2006 and 2012, run together in a presidential election. Both parties have strong electoral machineries, and between them govern half of Mexico’s 32 states and around 62% of Mexico’s population. The coalition forms at a moment of low approval for President Peña Nieto, amid rising violence, high inflation and low economic growth. ly . JUAN BARRETO/AGENCE FRANCE-PRESSE/GETTY IMAGES CARACAS, Venezuela—The ruling Socialist Party swept local elections in Venezuela after an opposition boycott and widespread allegations of pro-government bias, setting the stage for a presidential vote next year. President Nicolás Maduro said his party won more than 300 of the country’s 335 counties, tightening his grip on Venezuela as he seeks to keep his movement in power for a third decade despite hyperinflation and tumbling oil output. Electoral authorities said the ruling party won the vast majority of Venezuela’s major cities, including former opposition strongholds. In a further blow to the demoralized opposition, Mr. Maduro threatened to ban political parties that boycotted Sunday’s mayoral elections from fielding presidential candidates. More than nine million Venezuelans, or 47% of registered voters, cast ballots on Sunday, the lowest turnout in at least six years, but higher than most observers expected. 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A10 | Monday, December 11, 2017 no n- SIGN IN Manage Your WSJ Account Update your subscription details any time in the Customer Center. It’s easier than ever to access and manage your subscription online. Visit the Customer Center to reset your password, change an address, update your payment information, place vacation holds and more. Explore now at customercenter.wsj.com © 2017 Dow Jones & Co., Inc. All rights reserved. 6DJ6188 For personal, non-commercial use only. Do not edit, alter or reproduce. For commercial reproduction or distribution, contact Dow Jones Reprints & Licensing at (800) 843-0008 or www.djreprints.com. THE WALL STREET JOURNAL. Monday, December 11, 2017 | A11 NY WORLD NEWS China Celebrates Xi With Mao-Like Zeal Communist Party deploys dancers, ‘camelback publicists’ to spread message WUZHONG, China—In a packed auditorium in this Yellow River city, dancers in floral-pattern costumes twirl against a backdrop of a red star shining over the Great Wall. “General Secretary Xi’s words ring around our ears!” the dancers exclaim. Welcome to the “Spirit of the 19th Party Congress” publicity tour. The Communist Party traditionally launches propaganda drives to imprint new slogans unveiled at major conclaves. This time, after the party revised its charter in October to crown Xi Jinping as its greatest living theorist, an army of Marxist propagandists has gone to unusual lengths to spread their leader’s philosophy. Some rode camels across arid steppes to deliver lectures on Mr. Xi’s political manifesto. Others braved South China Sea waves to take his congress report to island outposts and CHUN HAN WONG/THE WALL STREET JOURNAL BY CHUN HAN WONG Singers from the Ningxia Song-and-Dance Theater performed a revolutionary song last month. fishing trawlers, or turned to communications satellites to beam the highlights. After some Xi allies started referring to him with labels such as “helmsman,” which is usually associated with Mao Zedong, such reverential terms have increasingly crept into broader use by officials and in state media. For some Chinese, such zeal skirts uncomfortably close to the adulation that underpinned Mao’s tumultuous rule. Though the party formally banned personality worship after Mao’s death, officials often use obsequious propaganda displays to signal loyalty to senior leaders, at times going too far in trying to strike appropriate tones of enthusiasm. A state-run newspaper in Guizhou province called Mr. Xi a “great leader”—a title that the party has granted only to Mao— under a portrait that dominated its Nov. 10 front page. That page and others showing Xi veneration are now absent from the publication’s website. An employee at the office of its editor said the pages may be missing because of technical issues. Mr. Xi’s congress slogans blanket cityscapes, filling highway billboards, streetside banners and electronic displays in malls and office blocks. Hammer-and-sickle symbols flash on screens above a Gucci store in Shanghai, paired with slogans promoting Mr. Xi’s vision of turning China into a “modern socialist power.” In Henan province, senior officials paid homage to a tree planted by Mr. Xi eight years ago in honor of a county chief who died in 1964. They listened to a recital of a poem, “Remembering Jiao Yulu,” that Mr. Xi wrote in 1990, local newspaper Henan Daily reported. The top item on China Central Television’s flagship news program one November evening broadcast more than four minutes of nonstop applause for Mr. Xi as he greeted attendees at an awards ceremony in Beijing. “The new party constitution reiterates: The party forbids all forms of personality cult,” Wang Zhanyang, a retired Beijing-based professor, wrote on his verified microblog in a thinly veiled critique of the Xi veneration, which was later censored, according to censorship monitor Weiboscope. Mr. Wang then republished his message with dots added, a common ploy to foil censorship. That post remained online. Such a personalized publicity campaign hasn’t been seen in China since the Mao era, said Daniel Leese, a professor at Germany’s University of Freiburg who has studied the Mao personality cult. The Communist Party is demanding “faith in one absolute truth” epitomized in its leader, like an organized religion, he said. The public celebration of Mr. Xi is a turnaround from the staid style of Mr. Xi’s immediate predecessor, Hu Jintao. The dance performance in Wuzhong was part of a statebacked concert tour in Ningxia, an expanse of desert steppe in western China with a large Muslim population. The state troupe had spent two hectic weeks throwing together a 12-item set list of choral performances, songand-dance routines and a poetry recital to promote Mr. Xi’s report to the party congress. “As performers, it’s our duty to educate the masses about how they benefit from party and state policies,” said Chen Liyun, the troupe’s director and Communist Party branch chief. —Kersten Zhang in Beijing contributed to this article. according to witnesses. Employees in the Feijia government office declined to comment and wouldn’t say if police detained protesters. The protest came on the same day the U.S., Canada and the European Union unusually issued near-identical statements condemning China on international Human Rights Day. In previous years, embassies each issued their own statements. Sunday’s statements, which didn’t mention the evictions, criticized China for continued violations of freedom of speech and religion, and for prosecution of human-rights lawyers. Feijia is one of dozens of neighborhoods across Beijing where local authorities, citing code violations, have evicted residents at short notice in recent weeks. Many of those evicted in Feijia were angry because they had belongings destroyed, residents said. It was unclear how the protest began or if it was organized to coincide with Human Rights Day. In past years, social activists and petitioners have organized protests in Beijing outside United Nations offices and other notable buildings to mark the day, with authorities quickly detaining protesters. $1935 n- * no The C8 Power Reserve Chronometer *A-List celebrity not included We love quality watches - so much so that in 2004 we started making our own. Combining award-winning British design with the finest Swiss watchmaking skills, and concentrating on craftsmanship rather than salesmanship, we’ve successfully created watches that stand comparison with the world’s greatest watch brands in every respect - apart from price. Do your research - we know you will. christopherward.com Workers prepared to leave their apartment on the outskirts of Beijing ahead of an eviction deadline in late November. IT’S THE DIFFERENCE BETWEEN LAUNDRY IN THE APARTMENT AND LAUNDRY AROUND THE CORNER. YOU KNOW WHICH IS BETTER. REALTOR.COM HAS 20% MORE ACTIVE LISTINGS IN NYC THAN STREETEASY. NG HAN GUAN/ASSOCIATED PRESS BEIJING—Migrant workers held a rare demonstration in China’s capital on Sunday, with several hundred protesting outside a local government office that recent forced evictions across the city violated human rights. The uncommon show of resistance by migrant workers seems to be the first protest since the Beijing government began sweeping evictions last month following a deadly fire in a slum tenement on the city’s southern outskirts. Those evictions have drawn angry critiques from middle- class professionals, while many of the workers left the city quietly. In Feijia Village, on the city’s northeastern fringe, protesters hung a large white banner reading “Violation of Human Rights” across the front gate of the village committee office, according to smartphone videos verified by people at the scene. One man repeatedly yelled “violent evictions,” and the crowd chanted back, “violate human rights.” The midday protest lasted several hours, with the crowds growing to hundreds of people before police dispersed them, co Fo m rp m e er rs ci on al a us l, e on BY EVA DOU ly . Migrant Workers Protest After Clearances in Beijing For personal, non-commercial use only. Do not edit, alter or reproduce. For commercial reproduction or distribution, contact Dow Jones Reprints & Licensing at (800) 843-0008 or www.djreprints.com. THE WALL STREET JOURNAL. A12 | Monday, December 11, 2017 IN DEPTH Ta kh to Takhto Va l le ley from the drinking glasses and décor to its 200-plus menu items. Novelties include burgers topped with fried macaroni and cheese and cheddar cheese sauce, and slices of chocolate-chip coconut cheesecake with layers of chocolate cake, brownie and coconut pecan frosting that pack 1,560 calories. “People ask me why we don’t make the portion sizes for Hong Kong,” said a manager working the evening shift. “But that wouldn’t be Cheesecake Factory.” A spokeswoman for the Hong Kong eatery said “The Cheesecake Factory has always been about choices. Many of our guests come in and want to celebrate, and not be concerned with calories.” She noted some diners share dishes and take food home. Some customers consider dining at The Cheesecake Factory a value proposition—a chance to extend one meal into many. Bosco Chan, 41, recently came back for dinner with his wife, father, and two sons. He was toting two Tupperware containers for the in- evitable leftovers, a trick he picked up after his first visit. “Really worth the wait,” he said, adding that dinners at the restaurant—and fighting over the leftovers in the days after—were becoming a family tradition. On another weeknight, a group of six men and one woman were seen sharing a salad and a single bowl of pasta. Others come determined to tackle a full American meal. Pan Chiu, 33, who is training to be a psychologist, said he started laying the groundwork for a Monday dinner days earlier. He studied the menu online, briefed his dinner companion on the portions to come and even warmed up by eating less during the day on Sunday and more on Sunday evening. When the big day arrived, he bypassed his usual lunch of fried rice or noodles in favor of a small fish sandwich. “I was very careful to eat less today to save space,” he said. When the food was served, he felt confident he could handle it. After chowing down half a plate of Spicy Chicken Chipotle Pasta, however, he and his companion were vanquished by an order of Buffalo Blasts—chicken, cheese and spicy sauce encased in a wrapper, then deep fried. Most of those had to be taken home. Founded in 1978, the Cheesecake Factory has 198 outlets, 18 of which are outside the U.S. The company’s sales have fallen in recent quarters. Analysts say pressures on the casual dining sector include consumers’ desire for smaller meals and healthier options. In Hong Kong, though, the portion sizes are part of the intrigue. First-timers to the chain say they were attracted by photos posted by online reviewers and tales of American excess relayed by friends and family abroad. After the meal, however, their enthusiasm sometimes diminishes. Mr. Wu, the accountant who practiced interval eating, offered this verdict: “I don’t think I can have cheese for another three months, at least.” PA K I STA N M oh o hm ma an nd d ley Va l le Sparah Kangar N Tangah Achin Pe ekh kh a Va Vall l e y Islamabad ly . A FG H A N I STA N Asad Khel Site of MOAB airstrike Mo ohm h m a nd nd ley Val le Sources: NASA (topography); Google (image overlay) loose rocks in the darkness. They were looking for a hidden location from which to monitor Islamic State fighters below. Instead, they noticed a rocky redoubt where they believe the sniper had hidden. The next morning, the Green Berets guided a U.S. jet to the spot. The plane dropped two 500-lb. bombs, sending the stone emplacement sliding down the mountainside. “A lot of places, you don’t know where the enemy is,” a top U.S. special operations commander told his soldiers during a visit to the battlefront. “At least you know they’re down that valley.” The militants operate a pirate radio station that broadcasts messages into Afghan villages. “They say they are Muslims intent on establishing an Islamic State, and they invite people to join them,” said Pvt. Ziyaulhaq, a commando. Like many Afghans, he goes by one name. He grew up nearby, and his family, which had moved north to avoid insurgent violence, has returned. The Americans and Afghans eavesdrop on Islamic State communications in Urdu, Uzbek and Russian, languages that suggest the militants include Pakistani, Uzbek and Chechen men. Insurgents know their calls are being intercepted and are careful to speak in vagaries: “That place where we were yesterday,” or “Bring that thing.” They are sometimes caught in moments of candor, however. In one conversation, an Islamic Renée Rigdon/THE WALL STREET JOURNAL. State fighter complained that his commanders had confiscated money from the sale of gems. Mohmand Valley’s jade mine is on the Islamic State side of the battlefront. And in a conversation between a fighter and a mullah, or religious leader, the fighter said a witness could confirm that the fighter had delivered 300,000 rupees in ransom money from an Islamic State kidnapping. “The hostage was released,” the fighter said in a recorded conversation heard by the Journal. “I have no idea who got the rest of the money.” Later, the mullah talked derisively about another Islamic State fighter. “He has become an apostate,” the mullah said. “He ran away.” “This is not an easy war,” Maj. Gen. Bismillah Waziri, commander of Afghan specialoperations forces, said in an interview. The Taliban control or contest a third of Afghan territory, although they haven’t expanded their reach in the past year, Gen. Nicholson said in November. Over the summer, President Donald Trump reversed Barack Obama’s practice of setting public deadlines for the U.S. commitment to the war. The Obama administration had hoped the threat of withdrawal would force the Afghan government to address corruption and military weaknesses. In recent months, the U.S. has boosted its forces in Afghanistan to 15,300 from 11,000—the largest American KEN WU CHEESE Continued from Page One droves of curious brand-obsessed diners who can wait up to two hours to sample a slice of American life. For some, the experience has produced some predictable confusion. Hoi Lam, 25, came for dessert one evening without realizing the restaurant serves dinner, too. “I was wondering why the Cheesecake Factory is not just about cheesecake,” she said. “It doesn’t make any sense!” Reviews have been mixed. Some stuffed individuals have called the meals a “waste of calories.” Others have found the cakes too sweet and decadent. Still others proclaim the food delicious. The most common reaction, however, is this one: How on Earth are we supposed to eat all of this food? “I always thought it was a myth that Americans eat big portions,” said Charlotte Hung, 19, her eyes widening as she described the size of her meal of Steak Diane and Prawn Afghan commandos, backed by Green Berets and U.S. airstrikes, launched the offensive against Islamic State in Achin in February. The campaign drew attention in April when a U.S. plane dropped one of the largest bombs in the U.S. arsenal: the Massive Ordnance Air Blast, also known as the MOAB, or Mother of All Bombs. The bomb targeted Islamic State hide-outs in underground talc mines in Asad Khel village in the Mohmand Valley. The village is back in government hands, about 900 yards behind the battlefront. Civilians have returned to their A FG H A N I STA N PA K I STA N Afghan/U.S. control Islamic State control Special forces outpost no One night, U.S. troops spotted two Islamic State fighters creeping toward the front lines. Red tracer fire arced across Takhto Valley in response. A U.S. plane dropped a 2,000-lb. bomb. The explosion was so powerful that a 3-pound chunk of shrapnel from the bomb flew more than a mile and crashed into the Green Beret outpost, missing a sleeping American soldier by 20 feet. The next morning, an Islamic State sniper took a shot or two at one outpost just as a U.S.-Afghan patrol prepared to leave. The soldiers took cover behind a dirt berm and fired bursts of machine-gun fire, volleys from grenade launchers and dozens of mortar rounds into the ridgelines, which are dotted with concealed enemy positions. A couple of nights after that, three Green Berets and an Afghan minesweeper climbed onto a ridge overlooking Mohmand Valley, scrambling over Kabul D ETA IL co Fo m rp m e er rs ci on al a us l, e on Sniper shots farms. Someone suspended a child’s swing from a tree with a view of the MOAB’s impact site: mud-brick buildings collapsed into mud-brick rubble. In November, U.S. aircraft conducted strikes in Mohmand Valley, killing 19 Islamic State fighters, a special-operations officer said. Up and down the front, Afghan and U.S. troops have seized buildings formerly occupied by Islamic State fighters. Militants left childlike drawings of AK-47 rifles and black Islamic State flags scrawled on walls. “We’d like to move forward and clear this place,” said 1st Lt. Nematullah Moshtaq, who leads an Afghan commando platoon in Achin. Americans have placed remote-controlled Claymore mines around their outposts to defend against militant counterattacks. When a mine is triggered, a wall of metal balls erupts at explosive velocity from one face of the rectangular device. The words “Front Toward Enemy” are embossed on the dangerous side. The fighting on the floor of the Mohmand Valley is matched by a lethal game of capture the flag on the ridgelines above. In September, Islamic State fighters wedged poles holding three of their signature black flags into the rocks on the north ridgeline, taunting the Afghan commandos and their U.S. allies in outposts below. On Sept. 17, two Afghan border police climbed the ridge to take down the flags. A booby trap exploded, killing one officer and wounding the other. U.S. forces shelled one flag with high-explosive mortars. It was windy, and 40 rounds missed the target. When the wind calmed, the mortarmen tried again, hitting the flag on their fourth try. The Americans destroyed another black flag with a bomb after failing to knock it down with grenades. The Afghans sent a patrol up the mountainside to plant a red, green and black national flag. “The commandos, they get really serious about the flag,” a Special Forces platoon sergeant said. As fall deepened, Afghan and U.S. troops spotted several buildings on fire a mile or so up Mohmand Valley. They speculated that Islamic State leaders Driving Out Islamic State One U.S. Special Forces outpost looks into the hostile Takhto Valley on one side and friendly Pekha Valley on the other. A second outpost is situated in the middle of Mohmand Valley, between liberated villages and areas that remain within reach of Islamic State gunners. Ken Wu, right, and friends at the Cheesecake Factory in Hong Kong in Lemon Garlic Sauce, which was topped with a heap of mashed potatoes. The combination had close to 1,800 calories. “Now I know it’s true, it’s really true,” she added. Hong Kong food portions tend to be more restrained. Overall, sugars and fats make up about 20% of the diet in Hong Kong, compared with about 38% in the U.S., according to food-supply data compiled by the Food and Agriculture Organization of the United Nations. Some Western restaurant chains have trimmed portion sizes. British chain Pret A Manger Ltd., which traditionally sells two halves of a sandwich together, started selling single half-sandwiches in Hong Kong over a decade ago. Not Cheesecake Factory. The Calabasas Hills, Calif.based chain has a simple formula for exporting its hedonism around the world: keep mostly everything the same, Home again The American team leader had served a tour a year ago, when the province was so thick with Islamic State fighters that his men couldn’t even reach the Mohmand Valley. Militants threatened to cut off Highway 7, an artery for commerce between Kabul and Peshawar, Pakistan. Farmers and their families fled. Now, on the green side of the front lines, many have returned to work the fields. Children wave at passing Afghan and American troops, and the sound of their laughter reaches the Special Forces outposts. Awa Jan, a farmer with a white beard and a weathered face, said that he, his wife and their children fled Islamic State fighters. But with no means to support his family, he was forced to return to his village. He recalled the time Islamic State fighters ordered residents to the bazaar, where the militants beheaded seven men. “They made us watch,” Mr. Jan said. “They said this would be our fate if we worked with the government.” His family became a target because his son serves as an Afghan commando. “Islamic State told me I had to bring my son here, or they’d kill me,” Mr. Jan said, adding that he refused. Militants spared his life, he said, but expelled him from the village. Mr. Jan is back farming his land—2 acres of wheat, tomatoes and rice. “They came in the name of Islam,” he said, “but actually they aren’t Muslims.” A teenager named Bakhtullah recalled the headless bodies in the back of a pickup truck that passed through his village. The boy’s father was killed serving in the army, he said. His mother and his two older brothers, he said, had no choice but to remain in the Pekha Valley during the Islamic State occupation. Bakhtullah said militants beat people with sticks and radio antennas when they didn’t attend prayers at the mosque. “They were like dogs,” Bakhtullah said. “Thank God they ran away” Wahidullah, a man in his 30s, said he couldn’t afford to leave his land. “We have a farm here, our livelihood,” he said. Islamic State tax collectors seized half of every bag of wheat he grew, he said. Another villager allegedly told Islamic State fighters that Wahidullah’s brother worked for the local police. Militants beat Wahidullah with a rubber hose, he said: “I wish all Islamic State were dead.” —Jessica Donati contributed to this article. U.S. Special Forces troops in the Mohmand Valley, which Islamic State fighters turned into a branch of the caliphate they had declared. n- Continued from Page One leys—into a branch of the caliphate they had declared in Syria and Iraq. Militants imposed a harsh brand of Islam and hunted those who had worked for the Kabul government. Afghan and U.S. special-operations troops this year have pushed back Islamic State in a monthslong offense largely overshadowed by high-profile battles to retake militant-held cities in Syria and Iraq. On Saturday, Iraq claimed victory over Islamic State, more than three years after the insurgents overran about a third of the country. Military commanders said Iraqi forces had finished clearing a desert area in the west of the country, taking control of the border with Syria. The campaign in eastern Afghanistan plays to U.S. strengths. The enemy is now holed up in unforgiving mountains. Islamic State fighters, isolated from civilians, are vulnerable to American airstrikes. On the ground, Green Berets are paired with some of the best Afghan units, elite commando companies. This advance against Islamic State in Achin contrasts with the fight elsewhere in Afghanistan against the Taliban and other insurgent groups who live among civilians and are difficult to target. Militants, including alleged adherents of Islamic State, carry out attention-grabbing suicide attacks in Kabul intended to make the government appear weak. U.S. military analysts estimate as many as 1,500 Islamic State fighters remain in Afghanistan, including areas along the Pakistan border that militants claim for their caliphate. The U.S. is conducting a bombing campaign to trap them in the mountains over winter, a top U.S. commander said. The Wall Street Journal in October was granted exclusive access to allied forces on the Islamic State front. U.S. Special Forces operate from two outposts about 1,000 yards apart, both sandbagged mud-brick buildings that look out onto Islamic State turf, about 7 miles from snow-covered peaks in Pakistan. The U.S. military didn’t allow identification of its special-operations troops or commanders for this story. MICHAEL M. PHILLIPS/THE WALL STREET JOURNAL AFGHAN might be torching their bases and fleeing to nearby valleys. The Afghans and Americans plan to form local militias to help fend off Islamic State once the troops have forced insurgents away. A dozen village elders have agreed to provide men for the force, U.S. officials said. It is a tactic the U.S. has tried before with limited success over the 16 years of the Afghan war. In some instances, U.S.-backed village police have preyed on residents, alienating those whose support the Afghan government needs. U.S. commanders say they expect Afghan police and regular army forces to help secure liberated villages. The more territory seized from militants, one Special Forces team leader said, “the more hold forces we’ll need” to keep it. deployment there since 2014. At the peak of the U.S. commitment in 2011, 110,000 American troops served in the country. Afghan commando units— which specialize in capturing or killing insurgent leaders during nighttime raids—are expected to double to 23,300 troops. From January through Oct. 4, the commandos and other elite Afghan army and police forces conducted 1,790 operations, about a third of them without assistance from the U.S. or its coalition partners, according to U.S. Army data. The enemy is holed up in unforgiving mountains, vulnerable to American airstrikes. For personal, non-commercial use only. Do not edit, alter or reproduce. For commercial reproduction or distribution, contact Dow Jones Reprints & Licensing at (800) 843-0008 or www.djreprints.com. THE WALL STREET JOURNAL. Monday, December 11, 2017 | A12A NY * * GREATER NEW YORK NYPD’s Real SVU Changes Tactics BY ZOLAN KANNO-YOUNGS Tally of Assaults Sex crimes in New York City Reported rapes Reported misdemeanor sex crimes Year to date 5 thousand 4 3 2 1 0 2006 ’10 ’15 Source: New York Police Department THE WALL STREET JOURNAL. witness, Detective Santos said. He said he has interviewed about 30 victims this year who initially couldn’t talk about their experiences until he began asking FETI questions. One victim didn’t open up until he asked about what she heard. She described the sound of a condom being unwrapped and then she unspooled more details. Another woman couldn’t describe the attack until he asked about smell; then she remembered the scent of the suspect’s cheap cologne. Michael Bock, an NYPD sergeant with the Special Victims Division who retired this year, said he used the questioning method to get cold-case victims, those who were assaulted years ago, to recall details about their attack. FETI interviews, however, can stretch hours longer than traditional questioning, Mr. Bock noted, adding that the division handles more than 13,000 cases a year. “At this case rate…I just don’t believe it can be implemented fully,” he said. The new tactics come as a spate of recent high-profile sexual misconduct cases are encouraging more victims to come forward. In New York City, reported misdemeanor sex crimes so far this year are up 9.7% to 3,409 from a year earlier. Total rape cases comPlease see VICTIM page A12B Deal Made to Sell Manhattan Home For $80 Million co Fo m rp m e er rs ci on al a us l, e on ly . New York City Detective Eusebio Santos is hoping that his second interview with a woman who had been sexually assaulted will bring her justice. During the first round of questioning, Detective Santos pressed the 25-year-old for details normally found on a crime sheet: description of the suspect, location of the assault and a timeline. When she couldn’t remember specifics, she grew frustrated and wouldn’t talk to the detective for months. When he got a second chance to sit down with her in November, he was determined to do it right this time. After receiving special training, Detective Santos made open-ended queries such as: “Tell me about how your experience was.” The woman gradually began recalling sights, smells, sounds and more. Detective Santos is one of 101 members of the New York Police Department’s Special Victims Division who received new training in January for in- terviewing sex-crime victims. Previously, detectives were told to press victims for details—the who, what, when, where, why and how. Some complained that the interactions were more like interrogations. The Forensic Experiential Trauma Interview technique teaches that such details are stored in the prefrontal cortex of the brain, which shuts down during traumatic events. In FETI training, the detectives are instructed to ask broad questions that tap into a victim’s primitive brain, which maintains sensory information of those events. Channeling this part of the brain can result in a more substantial narrative, said Deputy Chief Michael Osgood, head of the Special Victims Division. “When you say, ‘What did you feel?’ they can now go to their experienced part of the brain and their sensory part of the brain and they now start telling you stuff,” he explained. Information obtained during victim interviews can make or break a case because often the victim is the only FROM TOP: ALEXANDER COHN/THE WALL STREET JOURNAL; ANDREW KELLY/REUTERS A more open-ended approach to interviewing sex-assault victims has been successful, police say BESS ADLER FOR THE WALL STREET JOURNAL BY KATHERINE CLARKE Jeff Staten, senior cybersecurity analyst at the New York Power Authority’s operations center, which opens Monday in White Plains. Utility Powers Up Tool to Keep Tabs on Network no The New York Power Authority, the largest state public utility in the U.S., has flipped the switch on a digital system that will monitor its 16 power plants and 1,400 miles of transmission lines. The remote monitoring system continuously collects data such as temperature readings at a power plant in New York City and feeds the information into an operations center opening Monday in White Plains. The operations center makes 6,000 calculations a minute based on 24,000 data points. The goal is to improve reliability throughout its network that supplies power to governmental agencies in New York City and the Metropolitan Transportation Authority, to prevent unplanned shutdowns of power plants, and cut costs on maintenance and replacement of aging infrastructure, said NYPA Chief Executive Gil Quiniones. The authority estimates it will save about $1 billion over 10 years. Many of the state’s fleet of power plants are nearing retirement age and nearly 4,700 miles of transmission lines will need to be replaced during the next three decades, at an estimated cost of $25 billion, according to a recent report by the New York Independent System Operator, which oversees the state’s grid. The new remote-monitoring system is part of a $500 million investment to modernize the authority, which produces about a quarter of the power in New York state. “This hub keeps New York n- BY JOSEPH DE AVILA at the forefront of innovation, while leading the nation in combatting climate change through bold investments in clean-energy technology,” Gov. Andrew Cuomo said in a statement. NYPA is one of a growing number of power utilities in the U.S. seeking to update their operations in response to rapid transformation in the industry coming from renewable energy and increased pressure on the grid from extreme weather events, said Bill Ruh, digital chief for General Electric Co. “They are in their early days,” of modernization, Mr. Ruh said. GE produced the software that NYPA is using for its operations center, and the authority is GE’s first client to use the software for its entire network, he said. At NYPA’s headquarters in White Plains just north of New York City, the operations center has a 9-foot-tall computer screen that stretches 80 feet wide. Here, authority officials are able to get a real-time look at virtually every aspect of NYPA’s network. For instance, one part of the screen can monitor NYPA’s transmission lines across Long Island Sound, sending the authority notifications if a boat drops anchor and accidentally begins to drag them. People at the operations center also can view an infrared camera image monitoring the performance of a transformer inside a power plant. This type of monitoring typically was done monthly at the power plant itself, said Paul Tartaglia, the authority’s senior vice president of technology and innovation. A roughly 20,000-squarefoot mansion with its own redvelvet movie theater and panic room is in contract for around $80 million, according to two people with knowledge of the deal. If it closes for that price, the property will become the most expensive townhouse ever sold in New York City, according to appraiser Jonathan Miller. The current record was set in 2006, when financier J. Christopher Flowers paid $53 million for the Harkness mansion on East 75th Street, Mr. Miller said. The townhouse at 12 E. 69th St. is owned by Vincent Viola, the billionaire owner of the National Hockey League’s Florida Panthers who was briefly President Donald Trump’s nominee for secretary of the army, and his wife, Teresa Viola. They paid $20 million for the property in 2005, according to public records. Several people close to the deal said the buyer is the same person who purchased a penthouse at trophy condominium tower 15 Central Park West from former Barclays Chief Executive Bob Diamond. The penthouse sold for $50.5 million earlier this year, according to public records. About 40 feet wide, the seven-bedroom property dates to 1884 but was renovated in the past few years by the Violas, who installed the panic room, according to an old listing for the property. The movie theater has a 12-foot Vincent Viola, above, and his wife, Teresa Viola, are selling the Upper East Side home, top. screen and a balcony, and the home comes with a sauna and a swimming pool, the listing said. The house came on the market in 2013 for about $114 million, but was delisted after a price cut to $98 million in 2014, according to listings website StreetEasy.com. $114M Asking price of the townhouse when it hit the market in 2013 Real-estate agent Paula Del Nunzio of Brown Harris Stevens, who represented the buyer in the deal, declined to comment on the identity of her client. The property wasn’t formally listed for sale at the time the contract was signed. “First Republic not only cares about their communities, they care about the future of the kids in those communities.” COMMON SENSE MEDIA James Steyer, Founder and Chief Executive Officer (855) 886-4824 | firstrepublic.com | New York Stock Exchange symbol: FRC MEMBER FDIC AND EQUAL HOUSING LENDER For personal, non-commercial use only. Do not edit, alter or reproduce. For commercial reproduction or distribution, contact Dow Jones Reprints & Licensing at (800) 843-0008 or www.djreprints.com. A12B | Monday, December 11, 2017 NY THE WALL STREET JOURNAL. * * GREATER NEW YORK Online Retail Puts Warehouse Space In the Sweet Spot Building Up Construction of warehouse space in New Jersey has been surging 12 million square feet STEPHEN REMICH FOR THE WALL STREET JOURNAL 9 Completed construction Anticipated construction 6 3 0 2007 ’10 ’15 ’18 Source: CBRE Group Inc. THE WALL STREET JOURNAL. Employees pick, pack and ship orders at Dotcom Distribution in Edison, N.J., a logistics and distribution company that serves online retailers. faster deliveries, is the ability of larger ships to get to local ports, expansion of food and beverage delivery, and displaced warehouse tenants from New York, said Bill Waxman, an executive vice president at CBRE. “It has been nonstop,” he said of businesses’ hunt for space. “From paper companies to packaging companies to internet sellers, brick-andmortar sellers...everybody is looking at their supply chain. New Jersey is unique in its location and ability to service a huge consumer zone.” New Jersey’s real-estate market is being swept up in a sea change that is reshaping the U.S. retail sector as online shopping gains ground. Department-store chains and clothing retailers have been among the most-prominent casualties, closing thousands of store locations across the U.S. in recent years, leading mall landlords to scramble for new tenants. Warehouses, meanwhile, are thriving. In New Jersey, for each of the past seven years, the state’s warehouse availability rate—the percentage of space that is vacant or soon-to-become available—has declined, to a postrecession low of 6.8% in NEW JERSEY City Ballet Names Interim Leadership Town Faces Lawsuit Over Leaf-Blower Ban The New York City Ballet appointed an interim team to oversee the artistic management of the company during an investigation into a sexual-harassment accusation against longtime leader Peter Martins. Mr. Martins has referred to the accusation as “false claims.” The ballet company said Thursday that Mr. Martins, 71, is taking a leave of absence from the company and its School of American Ballet during the probe. City Ballet’s board of directors said Saturday the interim artistic management team will be led by Jonathan Stafford, a ballet master at the school and a former principal dancer with the company. He will be assisted by soloist Justin Peck and ballet masters Craig Hall and Rebecca Krohn. The company hired a law firm to investigate after receiving an anonymous letter accusing Mr. Martins of past harassment. —Associated Press A New Jersey town’s ban on landscapers and other businesses using gas-powered leaf blowers is heading to court. The suit by the New Jersey Landscape Contractors Association and nine companies against Maplewood calls the ban costly and discriminatory. The leaf-blower ban was approved in April after residents complained that a less-restrictive leaf-blower rule wasn’t being enforced. It bars commercial landscapers from using gas-powered blowers during summer months. The landscapers say the ban doesn’t apply to residents, noncommercial associations and even the town itself. And they say landscapers can be fined for violations, but residents and others face no penalties for violating other parts of the ordinance. Mayor Victor DeLuca declined to comment, citing the litigation. —Associated Press no n- NEW YORK Outsmart Burglars The Moment You Plug It In SimpliSafe is a complete home security arsenal. With motion sensors, glass break sensors, entry sensors, and a high-deﬁnition security camera, you’ll have everything you need to keep your family safe—and 24/7 professional monitoring is only $14.99 a month. Act now! Holiday deals end soon Manning Returns but Giants’ Troubles Persist BACK IN THE SADDLE: Eli Manning took the field at MetLife Stadium on Sunday after being sidelined the week before. The Giants lost to the Cowboys, who managed to keep their playoff hopes alive. VICTIM Continued from page A12A pared with last year are down 2%, but there were 15% more rapes reported in November of 2017 compared with November of 2016, according to the NYPD. “The focus that’s occurring on sexual criminal conduct coming out of the Hollywood celebrities and members of Congress may be a watershed moment,” Chief Osgood said. Previously, when sexual-assault victims went to advocacy organizations for help, Chief Osgood said, many staffers would caution that they could expect pressure from police to cooperate. Some victims wouldn’t report the incidents to law enforcement because they didn’t want the added stress, he said. The FETI approach, and a rule that a victim can opt out of a criminal investigation at any time, has helped to change that, he said. Sonia Ossorio, president of the New York chapter of the National Organization for Women, said her advocates still warn victims about NYPD questioning. “The old standard of grilling the victim like a suspect is woefully outdated but still is the norm,” she said. Aggressive questioning by some patrol officers who typically make initial contact with sexual-assault victims still occurs, said Josh Ulan, a detective with the Special Victims Division. “Everyone wants to catch the bad guy, all patrol guys they do, but they’re not trained like we are,” he said. “They would ask more direct questions: What color are his eyes? Was he black or His- panic? Someone that’s been a victim of trauma can’t necessarily answer that question.” Prosecutors in the Manhattan District Attorney’s office have noticed a positive change. “We applaud the NYPD for offering [FETI training] to all investigators and hope to be able ‘Grilling the victim like a suspect is woefully outdated but still is the norm.’ to do the same ourselves in the coming months,” said a spokeswoman for Manhattan District Attorney Cyrus Vance Jr. Detective Santos hopes the new information he gained from the second round of questioning the sexual-assault victim last month will help build a case. Initially, the woman’s recollections were fragmented: She Frank. Businesses are seeking warehouses and fulfillment centers closer to population centers, said Karl Siebrecht, chief executive of Flexe Inc., a company that connects firms with warehouse space and fulfillment services on a pay-as-you-go basis. “As it is more and more important to get your goods to consumers faster, you’ve got to put up additional fulfillment centers,” Mr. Siebrecht said. “Shipping from one site in Indianapolis can’t get it to consumers as fast as six sites closer to population centers.” ly . services firm Cushman & Wakefield. “If we’re expecting e-commerce to get to 50% of total retail sales, you’ve got a long way to go before we see any sort of slowdown.” As internet sales have increased, traditional retailers have been expanding their online operations and boosting their warehouse space, real-estate executives said. E-commerce uses accounted for 51% of the 7.6 million square feet of leases signed in 2017 for big box space in New Jersey, typically 500,000 square feet or more, according to Newmark Knight ELSA/GETTY IMAGES GREATER NEW YORK WATCH SimpliSafe.com/Wall the third quarter from 12% in 2010, according to CBRE. A burst of construction hasn’t had much impact. Of the 7.9 million square feet of active warehouse-construction projects in New Jersey, more than 60% of that space already has been committed to tenants. Eight of the 14 largest projects—those 200,000 square feet or larger—have been leased to single tenants, the CBRE report said. “E-commerce represents something between 8% and 15% of total retail sales” in the U.S., said Stan Danzig, a vice chairman at real-estate- was in front of a building eating. A drunk man was struggling nearby. Another man walked toward her. She was assaulted indoors. But a big question remained: Why did she go inside the building, apparently with one or both of those men? During the most recent interview, Detective Santos asked what she was thinking and what she saw. She wrote down a new detail: Another man had asked her to help him bring the drunk man inside the building. That second man is now Detective Santos’s suspect. Establishing an explanation as to why she went into the building with the suspect is a crucial detail for the investigation, he said. “When you’re putting a case together you need everything to be as full of a story to the person reading or hearing about it,” Detective Santos said, lamenting missed opportunities. “I think of so many cases I wish I could go back to do.” MARK KAUZLARICH FOR THE WALL STREET JOURNAL The growth of online shopping, which is stretching package-delivery systems across the U.S., is sparking a frenzy in New Jersey’s commercial real-estate market. Despite a feverish pace of construction in recent years, tight inventoPROPERTY ries and surging demand are driving rents for New Jersey warehouse space to new highs, according to a report from CBRE Group Inc. By the third quarter of this year, developers added about 7.8 million square feet of space, 83% more than in all of last year, according to CBRE. By the end of 2017, new industrial space completed is expected to reach 11.2 million square feet, more than twice the amount built in 2016 statewide. Rents have been on an upward march since 2012, surpassing a 2004 high of $6.23 a square foot last year and reaching $6.64 in the third quarter of 2017. The demand for space isn’t expected to let up anytime soon, real-estate brokers and consultants said, and so rents could keep rising. Behind the growing demand, in addition to online shopping and the drive for co Fo m rp m e er rs ci on al a us l, e on BY KEIKO MORRIS NYPD Deputy Chief Michael Osgood says a new questioning technique for sexual-assault victims has been effective. For Some, Technique Is A Tough Sell BY ZOLAN KANNO-YOUNGS Forensic Experiential Trauma Interview training was developed in 2009 when Russell Strand, a retired army special agent, responded to a mass shooting at the Fort Hood army base in Texas and asked traumatized soldiers what they were feeling, instead of pressing for details about the incident. He now trains other first responders around the U.S. in the technique. From Oregon to New Hampshire, police departments are learning how to question people using FETI. A typical five-day training course costs $1,690. For the New York Police Department the course runs seven days and trainers hold sessions at the new police academy in Queens. This year, the NYPD said it is spending $850,000 on FETI. Carrie Hull, who works with Mr. Strand at the Oregonbased Certified FETI training first responders, is developing a certificate course to identify departments that are properly using FETI. A former detective in Ashland, Ore., Ms. Hull knows it can be difficult to get police to change. “My favorite part about law enforcement is they are skeptical of things,” she said. New York Police Department Deputy Chief Michael Osgood, head of the Special Victims Division, said he learned about the training in February 2016. After investigating about 14,000 rapes, he knew it was normal for sex-assault victims to forget details of their trauma. He thought FETI could help, but recalled thinking, “I don’t know if I can teach this to the detectives.” He took one of his more “experienced, gritty” sergeants, Michael Bock, to a week-long FETI training course Oregon in March 2016. Mr. Bock, who retired this year, was open to the program because he knew the traditional approach wasn’t working. “We were like a processing plant,” Mr. Bock said. The victims “come in…and then they move along.” When Mr. Bock bought in to the technique, most Special Victims Division detectives followed. But there are still doubters, he said. “They think, now you’re a therapist,” he said of some of his former colleagues. “I don’t believe you’re a therapist, I just think it’s a way of extracting information.” For personal, non-commercial use only. Do not edit, alter or reproduce. For commercial reproduction or distribution, contact Dow Jones Reprints & Licensing at (800) 843-0008 or www.djreprints.com. THE WALL STREET JOURNAL. CLOCKWISE: FOX SEARCHLIGHT PICTURES; UNIVERSAL PICTURES; A24 (2); SONY PICTURES CLASSICS; WARNER BROS. LIFE&ARTS Monday, December 11, 2017 | A13 co Fo m rp m e er rs ci on al a us l, e on ly . Sally Hawkins and Octavia Spencer in ‘The Shape of Water,’ above; Ana de Armas and Ryan Gosling in ‘Blade Runner 2049,’ below Timothée Chalamet in ‘Call Me by Your Name,’ above; Saoirse Ronan and Laurie Metcalf in ‘Lady Bird,’ below Cinematic Gold Amid the Dross n- continue to make extraordinary films for the big screen, and the very best of them for me this year was Guillermo del Toro’s “The Shape of Water,” with Sally Hawkins as an enraptured lover in a fish story that’s pure fantasy— none of that squishy stuff about being based on a true incident— and pure pleasure, from bubbly start to submerged finish. The other choices follow, in alphabetical order. Blade Runner 2049 Denis Villeneuve’s direction enlivens his sequel to the 1982 Ridley Scott classic with verve and heart that couldn’t be predicted from the cool intelligence of his earlier sci-fi feature, “Arrival.” This broodingly sumptuous saga, starring Ryan Gosling, explores the primacy of feelings, the nature of memories and the essence of being human, no BEFORE I LAY OUT my list of bests and the bestest, a few words about the movie year, and the list itself. Theatrical features remain an endangered species, yet a vital one, with an extra spurt of yearend vitality that makes the medium look healthier than it is; how many people do you know who still see movies in theaters on a regular basis? These choices don’t reflect, though they surely will in the future, the emergence of a new genre—the feature film, produced by a service like Netflix or Amazon, that plays in a few big-city theaters while simultaneously streaming throughout the country. That said, gifted filmmakers FILMS OF THE YEAR | By Joe Morgenstern Daniel Kaluuya in ‘Get Out,’ above; Willem Dafoe and Brooklynn Prince in ‘The Florida Project,’ below ous music—but most of all in one another. It’s a tale of totality, not during an eclipse but during a brief conjunction that changes at least one life surprisingly. The Florida Project framed as the difference between being manufactured or born. Call Me by Your Name Luca Guadagnino’s radiant romance immerses us in the lives of two people, a boy coming into manhood and a man already there, who immerse themselves in everything an Italian summer has to offer—warm sunlight, good wine, ripe fruit, joy- I didn’t appreciate this film sufficiently when I saw it the first time around. My review was certainly admiring, but Sean Baker’s sixth feature, shot on a small budget, is bigtime remarkable—for its slice-of-life vision of kids living in shabby motels in the shadow of Walt Disney World, and for its cast of amateurs and professionals that includes Brooklynn Prince, Bria Vinaite, and Willem Dafoe as the harried manager of one of the motels. Get Out What makes Jordan Peele’s debut feature so special is its prime location at the intersection of horror and race. No preachments are preached, no parables are dwelled on. This funny and genuinely scary film starts with a great title and a promising idea—a black man’s fear as he walks at night down a street in an affluent white suburb. Then it delivers on that promise with explosive brilliance. Lady Bird Greta Gerwig is a wonderful actor, and wonderful actors often make good directors. But this debut film, the first that Ms. Gerwig has directed and also written on her own, goes way beyond good into allaround wonderfulness; it’s wise and Please see FILM page A14 For personal, non-commercial use only. Do not edit, alter or reproduce. For commercial reproduction or distribution, contact Dow Jones Reprints & Licensing at (800) 843-0008 or www.djreprints.com. THE WALL STREET JOURNAL. A14 | Monday, December 11, 2017 LIFE & ARTS WHAT’S YOUR WORKOUT? | By Jen Murphy Mr. Onysko estimates it takes him FILM ly . Mr. Onysko has prided himself on being what he calls a healthy vegan, avoiding processed foods and sweets. In April, he embraced a ketogenic diet high in healthy fats and low in sugars and starches. “It taught me that there is sugar in everything,” he says. “I used to think orange juice was healthy.” He cut all fruit from his diet and lessened his alcohol consumption by 80%. He lost 19 pounds in four weeks. He does the diet for six weeks every six months. When he’s off it, he tries to have carbs pre- or post-workout. In the morning he makes a warm drink of matcha, coconut milk and coconut oil. He later has a smoothie of matcha, Amazing Grass Green Superfood and coconut milk. For lunch he has a salad with kale, arugula, olive oil, lemon juice, pumpkin seeds, a whole avocado and stir-fried tofu. Dinner is a similar salad or a bowl of steamed vegetables and tofu. He snacks on nuts such as pecans, macadamia nuts and cashews. “I flavor them with different seasonings like chipotle and smoked sea salt and leave them in jars on my counter, so if I get a craving I reach for a handful of nuts.” Build Your Muscles The Lumberjack Way Lumberjacking could be considered the mountain man’s version of CrossFit. “Whether you’re swinging an ax or pulling a saw, you’re using every single muscle in your body,” says Matt Cogar, a West Virginia-based professional lumberjack and five-time Stihl Timbersports U.S. champion. “While your legs are working with your back to give you power, your arms are guiding the tool to make each cut as precise as possible.” Each lumberjack discipline engages certain muscles more than others. The underhand chop, which uses an ax to cut fallen logs to length, primarily works the shoulders and hamstrings, Mr. Cogar says. The two-man saw works the abdominals, quadriceps and lower back, while using a chain saw engages the shoulders, biceps and abdominals. Mr. Cogar says core strength is key to chopping and sawing through logs safely and efficiently. His own workout routine involves cable woodchops, dead lifts, body-weight squats, pullups, sit-ups and push-ups. co Fo m rp m e er rs ci on al a us l, e on Joshua Onysko chops wood with a maul, top. Above left, with friend David Delcourt, he uses a two-man saw to cut down a tree on his property. five hours to cut a cord of wood—it provides a full-body workout. “You’re usually carrying a 40pound chain saw and other equipment up a mountainside, and you have to burn piles out of all the dead trees you cut down,” he says. Once a week he’ll take down a tree with an ax. “It’s not the most efficient way to chop down a tree, but it’s a great stress release,” he says. He says the two-man saw is the best core workout. Monday through Friday he goes to a CrossFit class at Easton Training Center in Boulder. “It’s a great complement to lumberjacking, because you use every muscle in your body,” he says. Each hourlong workout focuses on two different sets of exercises, such as low-hang squat cleans, a lift that starts with the barbell just below the knee. He then does a circuit consisting of one minute on the rowing machine, one minute of dumbbell presses, sit-ups, push-ups and one minute of jumping rope. “After five n- The Workout The Diet no WHEN WINTER approaches the Rockies, Joshua Onysko has extra motivation to work out. He needs to chop wood to heat his home in Boulder, Colo. “Lumberjacking is harder than any exercise I’ve ever tried,” says the founder of the Pangea Organics skin-care line. “Within minutes you’re dripping in sweat. It also takes my mind off of the stresses of owning a company. Nothing releases tension like taking an ax to a dead tree.” Mr. Onysko spends weekends from November through April chopping wood on his 15-acre property. He estimates he goes through three cords—each cord is a stack 4 feet by 4 feet by 8 feet— each winter. Friends now ask to join him. “We each get on the end of a two-man saw. They call it the mountain-man workout.” Mr. Onysko says using a chain saw, ax and two-man saw requires him to use every muscle in his body. The lumberjacking sessions made him realize he wasn’t as strong as he thought. His low back, shoulders and legs would be sore at day’s end. When he turned 40 this year he decided he should start lifting weights, something he abandoned in his 20s following three knee surgeries—two on his left knee, one on his right—from ski injuries. A friend convinced him to try CrossFit. “It’s a lot of the same movements I do lumberjacking, but with a focus on proper technique and with the added motivation of a group atmosphere and coach,” he says. “I had to toss my ego out the door. I’m lifting the lowest weight in class, but I’m not trying to get huge, I’m trying to get fit.” MORGAN RACHEL LEVY FOR THE WALL STREET JOURNAL For Fitness, He Gets The Ax rounds of a circuit, I’m dead,” he says. “I can tell my endurance has improved, because this season it’s easier than ever to get up the mountain with my saws and gear.” He does 15 minutes of extra core work before class, like back extensions in the Roman chair and planks with weighted plates on his back. “My cat is pretty fat, so I put her on my back at home when I plank,” he says. Thanks to a stronger core, he says he’s no longer using his lower back when he chops or saws. He meditates for 15 minutes every morning. He’s been practicing yoga for 11 years and streams online yoga classes via YogaGlo in the evenings. “I try to practice 90 minutes and like classes by Rod Stryker and Elena Brower,” he says. Mr. Onysko says that in Boulder, everyone is “ultrafit.” “It’s constant motivation to work harder and a reminder that if I can keep fit, I can get out more and ski, hike and enjoy where I live,” he says. Mr. Onysko engineered a trade with local clothing company, Pact, swapping some of his company’s products for 30 black V-neck shirts. “It’s like my uniform,” he jokes. His Manduka eKO SuperLite travel yoga mat folds up to fit in luggage and retails for $42. He pays $200 a month for his membership at Easton Training Center and $18 a month for his YogaGlo membership. He paid $1,200 for each of his Stihl MS 362 C-M chain saws, $250 for his two-man saw, and $80 for his ax and maul, which has a thick, blunt head for heavy splitting. He wears Kevlar chaps, earplugs and eye protection when he uses a chain saw. The Playlist “When I hike I want to listen to nature,” he says. At the gym, he opts for electronic dance music or the OutKast Spotify station. FROM LEFT: WARNER BROS.; FOCUS FEATURES; STX ENTERTAINMENT; 20TH CENTURY FOX Continued from page A13 funny and full of grace. As her semi-autobiographical heroine and the title character, Saoirse Ronan captures the fullness of adolescence, while Laurie Metcalf gives a heartbreakingly beautiful performance as Lady Bird’s loving and deploring mother. Phantom Thread From left: Gal Gadot in ‘Wonder Woman’; Vicky Krieps and Daniel Day-Lewis in ‘Phantom Thread’; Gemma Arterton in ‘Their Finest’; Woody Harrelson and Frances McDormand in ‘Three Billboards Outside Ebbing, Missouri’ The Gear & Cost Paul Thomas Anderson’s latest film doesn’t open until Christmas Day, but it’s a gift worth waiting for. The arena is haute couture in 1950s London. The combatants, for they are exactly that, are Reynolds Woodcock, a reigning dressmaker played by Daniel Day-Lewis and, no, not so much the great man’s competitors as his favored model and precious muse, Vicky Krieps’s enchanting Alma. If this is Mr. Day-Lewis’s last performance, as he has said, it’s not just a gift but a treasure. Their Finest A perfect comic drama, one that’s been all but forgotten since it opened in April. The slightly opaque title refers to “their finest hour,” the culminating phrase of an inspirational speech Winston Churchill gave in 1940, during the darkest days of World War II. But it’s also an intricate reference to a movie within the movie, a woefully unpromising propaganda melodrama that Britain’s Ministry of Information is developing, in 1940, to provide some inspiration for the home front during the Blitz. Three Billboards Outside Ebbing, Missouri Is that the longest title of the year? Martin McDonagh’s third feature is surely the fiercest comedy of the year. It’s blazingly profane, flat-out hilarious and shockingly violent, not to mention flippant, tender, poetic and pro- found. At its core, the film is a tale of revenge, a testament to the power of grief and the possibility of forgiveness. Frances McDormand, Sam Rockwell and Woody Harrelson head a flawless cast. Wonder Woman Here is everything that can go right with a big-budget summer movie, a category of entertainment often diminished in recent years by galumphing enterprises bereft of joy. And here’s everything you need to know about what the right woman’s touch can do with the right woman in the title role. The director, Patty Jenkins, and the star, Gal Gadot, deserve each other in the best way, while Chris Pine, in a lesser role, makes a major contribution to the fun and the soaring excitement. For personal, non-commercial use only. Do not edit, alter or reproduce. For commercial reproduction or distribution, contact Dow Jones Reprints & Licensing at (800) 843-0008 or www.djreprints.com. THE WALL STREET JOURNAL. Monday, December 11, 2017 | A15 LIFE & ARTS TELEVISION OF THE YEAR | By Dorothy Rabinowitz Sex, Lies and Lots of Spies attention to those studio chiefs and their relation to the women who serve them. The character of Pat Brady (a splendid Kelsey Grammer) perfectly exemplifies those bosses who viewed sex as part of their job entitlements. This superbly written work that grasped the Hollywood of the ’30s in luscious detail, as it did the passionate politics of the era, unfortunately failed to impress the moguls at Amazon who declined to give it a second season. The Americans (FX) Season five of the best drama series on television had a special timeliness, coming as it did just after Donald Trump’s election to the presidency—a period of proliferating questions about Russian meddling in American affairs. The lives of Philip (Matthew Rhys) and Elizabeth Jennings (Keri Russell), Soviet sleeper agents, are now complicated by conflict. Philip, still loyal to his mission and homeland, has by now become an American at heart, unable to deny his attraction to freedom. The sixth and final season, which is bound to feel even timelier, begins March 28, 2018. Hunting the KGB Killers Big Little Lies (HBO) This riveting tale of suspicion, rivalry and worse among residents of an upscale community in Monterey, Calif., begins with a brutal murder committed during a school fundraiser. Whose murder no one will know till the end. Nor does the subject of the deceased have anything to do with the endless tensions that drive the lives of these mostly prosperous citizens, surrounded by lush oceanside vistas that seem unable to calm the demons that haunt these characters. Three wives are at the center of this serio-comic work, among them Madeline, a triumph of a creation as delivered by Reese Witherspoon in top form. There’s the beautiful Celeste—a commanding performance by Nicole Kidman—whose seemingly enviable family life is plagued by terror, and Jane (Shailene Woodley), a single mother whose young son becomes a target of accusations that provide most of the series’s searing social satire. n- no HBO (2); ACORN TV (2); AMAZON PRIME TV; FX; RICHARD JONES/JOHN DOWNER PRODUCTIONS Spy in the Wild (PBS) This five-part film concerns the kind of secret intelligence operations that uncover only moving, emotionally rich and uplifting information. In this irresistible series, robotic creatures disguised as animals insinuate themselves into communities of meerkats, crocodiles, giraffes—no animal escapes its camera eye. So viewers are able to watch, in awe, a procession of mourning giraffes, come to pay respects to one of their aged kin, found dead. A spectacle equaled only by the crocodile whipping her young into her mouth—under her terrifying teeth—to save them from predators. The Last Tycoon (Amazon) There aren’t many echoes of F. Scott Fitzgerald in this adaptation of his unfinished novel. That’s clear as this ambitious and powerfully engaging series by Billy Ray and Christopher Keyser establishes a voice of its own—one imbued with a fierce clarity in its representation both of 1930s Hollywood and of America and Europe at the edge of war. It is, in addition, a story of moguls—a timely theme, especially in its meticulously close, scathing ly . Maggie Gyllenhaal in ‘The Deuce,’ above; Lily Collins and Matt Bomer in ‘The Last Tycoon,’ below; Ashley Jensen and Kenny Doughty in ‘Love, Lies & Records,’ bottom left; Keri Russell and Matthew Rhys in ‘The Americans,’ bottom right (Acorn TV) The 2006 assassination, in London, of Alexander Litvinenko—a former KGB officer who had fled Russia for England, where he worked with British intelligence—would spur a criminal investigation that would implicate Vladimir Putin in his death. Spellbinding in its clinical pursuit of the cause of the extreme symptoms Litvinenko presented when he was hospitalized, the film is both the story of a medical mystery solved—his assassin had injected him with the heavy metal thallium, a poison favored by the KGB—and a spine-chilling account of the efforts that had been made to kill Litvinenko before a Russian agent finally succeeded. co Fo m rp m e er rs ci on al a us l, e on The Deuce (HBO) Its grim subject notwithstanding, “The Deuce” came barreling along in 2017, spreading light, wit and a humanity that glowed from its darkest places. And there are plenty of those in this series (by David Simon and George Pelecanos) set amid the prostitution and pornography that was thriving in Times Square during the early ’70s. The story’s eight episodes—exuberant, brutal and moving—follow the daily lives of the hookers and pimps of this place whose streets are filled with trash and, during prime business hours, with girls looking for customers. Girls with good reason to be aware that they’d better produce for their pimps. All, that is, except Candy, a rare independent who has determined that all the money she makes on her back belongs to her alone—a character Maggie Gyllenhaal summons to life with conspicuous brilliance. There’s something different about this working girl in her kinky blond wig, who gives off a sense of self-possession even after being viciously beaten by a client—something that could happen at any time to someone in her profession, and does. An extraordinary work that will be returning next season. Nicole Kidman, Shailene Woodley and Reese Witherspoon in ‘Big Little Lies,’ above; robotic meerkat being investigated by a young meerkat in ‘Spy in the Wild,’ right top; Alexander Litvinenko in ‘Hunting the KGB Killers,’ right bottom Love, Lies & Records (Acorn TV) A splendid brew of soap opera and murder mystery, set among the employees of the Register Office of Greater Leeds, England. A creation of British television writer Kay Mellor, who thought she found in the government office where citizens come to register births and deaths of loved ones, and where they marry, rich material for drama. She was right. For personal, non-commercial use only. Do not edit, alter or reproduce. For commercial reproduction or distribution, contact Dow Jones Reprints & Licensing at (800) 843-0008 or www.djreprints.com. A16 | Monday, December 11, 2017 THE WALL STREET JOURNAL. * * SPORTS NFL BIZARRE GAME IN A BLIZZARD BY ANDREW BEATON JAE C. HONG/ASSOCIATED PRESS The Bills and Colts were never expected to produce much aesthetically pleasing football Sunday, especially with both teams playing backup quarterbacks. Then it snowed so hard in Buffalo that it produced one of the most delightfully ugly football games. The Bills won 13-7 in overtime, but the final score was only memorable because of how they arrived there. At times, the field was barely visible. The snow was piled so high that running didn’t exist. There was only painstakingly slow trudging. Passing was so difficult it was barely even attempted. And kicking the ball was even more harrowing—which is why the Colts went for two points and the win with 1:16 left in regulation. This is how backward things were in the whiteout: The Colts didn’t attempt their first pass until there was 6:13 remaining in the second quarter. Indianapolis began with 17 straight runs—the most since the Raiders’ 21 consecutive rushes to start a game in 2003, according to Stats LLC. Trailing 7-6, the Colts went for—and converted a 2-point conversion, for what would have been an 8-7 lead with barely any time left. But a penalty took the score off the board, leaving kicker Adam Vinatieri with a 43-yard extra point. But Vinatieri wasn’t a perfect hero: With six seconds left, he missed a 43-yard field goal that would have won it in regulation. In overtime, Bills running back LeSean McCoy scored on a 21-yard run to end the game. McCoy rushed for 156 yards on 32 carries. For most of the game, the play was about as ugly as the final passing stats: The Colts’ Jacoby Brissett finished 11-for-22 with 69 yards. The Bills, who used Nathan Peterman and Joe Webb with Tyrod Taylor out injured and Peterman leaving after a hit to the head, finished 7-for-16 for 92 yards. It was the fewest combined passing yards in a game since 2010, according to Stats LLC. The Los Angeles Angels have to devise a schedule that will allow Shohei Ohtani to flourish simultaneously as a member of the rotation and as a regular hitter. MLB ing relief duties to outfielder Brett Eibner’s repertoire to boost his versatility and value. And now Ohtani will bring his triple-digits fastball and prodigious home-run power to the Los Angeles Angels. “We definitely plan on him being a two-way player,” Angels manager Mike Scioscia said Saturday, speaking at Ohtani’s introductory news conference in Anaheim. “There’s no doubt about that.” BY JARED DIAMOND unprecedented puzzle: how to devise a schedule that will allow Ohtani to flourish simultaneously as a member of the rotation and as a regular hitter, a feat barely attempted, let alone accomplished, since Babe Ruth. “The mindset an individual like Ohtani has to have is, ‘This is a pioneering position,’” said Owings, who retired with a 4.86 ERA in 138 outings and a .283 batting average in 205 at-bats. Owings attempted to establish himself as a two-way threat late in his career, but it never panned out on a large scale. Looking back now, Owings thinks that “it wasn’t really sat down, discussed and mapped out as well as it could have been.” To an extent, the same goes for Brooks Kieschnick, who actually enjoyed some success in that role for the Milwaukee Brewers in 2003 and 2004. Over that span he appeared in 74 games out of the bullpen and received 144 plate appearances mostly as a pinch hitter. Though Kieschnick established himself as the closest thing to a true two-way asset baseball has seen in years, even he admits that the Brewers more or less drew up the blueprint on the fly. “We didn’t know how to approach it,” Kieschnick said. The Angels will employ a much more sophisticated approach with Ohtani, allocating large amounts of time and resources to take full advantage of his unique talents. Eppler said that in their initial meeting with Ohtani they presented JEFFREY T. BARNES/ASSOCIATED PRESS With a six-man pitching rotation, Ohtani could DH in three games between starts. How exactly that will look remains unclear at this point, as the baseball world gathers in Florida this week for the annual winter meetings. At Saturday’s media event, which doubled as a pep rally for Ohtani that drew hundreds of fans outside Angel Stadium, the relevant parties offered little by way of specifics. General manager Billy Eppler said that the Angels don’t expect to put Ohtani in the outfield next season, meaning his offensive contributions will come exclusively as a designated hitter. Other than that, officials remained vague about the details of the plan. Before spring training, however, the Angels must solve a virtually n- LeSean McCoy rushed for 156 yards. Weather The WSJ Daily Crossword | Edited by Mike Shenk Edmonton d t Calgary C ary no Shown are today’s noon positions of weather systems and precipitation. Temperature bands are highs for the day. Vancouver V Winnipeg ip ttl Seattle Por P d Portland l Helena 40s 20s Boise 30s Reno Salt Lake Lake Cit C Cityy 40s Honolulu l l t Houston San an Antonio 80s 60s U.S. Forecasts 31 Rain l d Orlando International City Amsterdam Athens Baghdad Bangkok Beijing Berlin Brussels Buenos Aires Dubai Dublin Edinburgh Today Hi Lo W 36 31 sn 60 50 s 66 43 s 93 77 pc 36 14 s 40 37 c 38 33 r 76 59 s 78 70 s 40 30 pc 35 25 pc Tomorrow Hi Lo W 38 32 pc 64 50 s 67 44 s 92 78 s 29 12 pc 42 31 c 36 33 pc 87 65 pc 78 65 s 42 37 sh 37 33 pc 9 10 11 24 28 25 38 39 60 61 26 30 33 34 35 41 36 37 42 44 52 13 22 29 32 12 16 45 47 53 48 54 49 55 50 56 58 59 Cold T-storms 62 63 Stationary Snow 66 67 68 Showers Flurries 69 70 71 64 65 Tampa 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. 8 19 43 51 7 21 46 Warm 6 18 57 Miami Tomorrow Hi Lo W 44 28 pc 73 41 s 46 23 sn 78 48 s 33 16 sf 38 21 sn 47 31 s 63 31 s 39 28 pc 42 24 s 65 45 s 53 20 s 48 35 s 39 26 pc 50 25 c 5 15 23 27 40 70s Today Hi Lo W 47 23 c 63 41 s 43 32 s 76 47 pc 38 32 c 38 18 s 47 30 s 63 32 s 55 27 pc 39 24 s 65 46 s 55 22 s 48 36 s 39 19 sn 45 36 pc 4 20 70s 90s 3 17 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 Hi Lo W 44 37 r 49 39 r 71 52 s 71 60 s 60 54 s 89 77 sh 66 47 pc 75 57 t 38 25 sn 50 29 c 88 77 pc 72 51 c 67 38 s 44 40 r 37 24 sh 84 69 pc 50 34 r 87 72 pc 73 42 s 64 55 sh 84 72 pc 24 12 s 50 38 s 86 77 c 81 68 s 66 59 c 61 37 s 27 25 sn 44 36 s 46 41 c 42 36 c Tomorrow Hi Lo W 40 31 c 42 25 sh 74 60 s 66 64 pc 62 52 pc 88 76 c 68 45 s 84 61 t 37 34 pc 49 28 s 89 77 pc 80 58 pc 69 38 s 51 33 pc 37 35 r 81 68 pc 42 35 pc 79 69 r 75 42 s 62 50 sh 86 74 pc 24 11 s 48 40 pc 84 76 t 80 68 s 66 62 c 49 38 pc 30 11 sn 45 35 c 53 33 c 39 25 sh PARK PLACE | By Freddie Cheng Across 1 Commotion 5 Least likely to bite, perhaps 11 Wd. that modifies a noun 14 Take ___ (snooze) 15 Noisy bedfellow 16 Command to an attack dog 17 •Pigs flying, for example 19 Four-term pres. 20 Houston ballplayer 21 Vowel from Greece 22 Effortlessness 23 •“Not today...” 27 To’s counterpart 29 Danson of “The Good Place” 30 31 33 36 40 43 44 45 46 48 50 51 57 58 59 62 Fast-running bird 63 Attractions in Paris, Tokyo, Enlist again Hong Kong and Poker payment Shanghai, and Period of history the ends of the •Summer starred answers blockbuster 66 Last letter movie genre 67 Most slippery, in Chairperson? a way Milk choice 68 Canvas for a Thorn setting tattoo Chinese leader with a Little Red 69 Gridiron figs. 70 Patched up Book 71 Ballpark figs. Helping hand Down ___ Moines •Space, to 1 Appetizer for Juan Trekkies 2 Burden ___ Bator, Mongolia 3 Smallest Ivy League school Not that many 4 Donizetti Zodiac sign for specialty babies born on April Fool’s Day 5 Airport screening org. Nada 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 44 34 c 41 34 sh Atlanta 54 38 s 47 27 c Austin 74 37 pc 64 30 s Baltimore 44 31 s 47 20 pc Boise 30 24 c 32 22 pc Boston 38 27 s 43 23 sn Burlington 24 17 c 33 19 sn Charlotte 54 36 s 53 25 pc Chicago 38 20 sn 26 14 pc Cleveland 36 28 sn 29 16 sn Dallas 77 40 s 61 39 s Denver 59 30 s 65 33 s Detroit 33 21 sn 26 6 c Honolulu 82 69 pc 81 69 sh Houston 71 44 s 64 35 s Indianapolis 43 22 c 30 16 sf Kansas City 53 24 pc 42 26 pc Las Vegas 63 38 s 64 41 s Little Rock 69 35 s 55 29 s Los Angeles 82 53 s 81 49 s Miami 70 48 s 74 54 s Milwaukee 35 17 sn 24 12 pc Minneapolis 34 12 sf 25 14 c Nashville 57 37 s 43 24 pc New Orleans 66 47 s 60 39 s New York City 40 35 s 44 22 sn Oklahoma City 68 30 s 55 31 s Raleigh l igh h C h l tt Charlotte Columbia C b 2 80s 100+ Richmond h d Jacksonville Mobile bil A ti Austin 60s hington hi gton D.C. 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Paul Mpls./St. Pierre P 40s <0 0s 20s Bismarckk Billings Eugene g him with a potential calendar outlining what he would do every day of the season. “I don’t want to say that that plan gets ripped up,” Eppler said. “But I bet you that a large portion of that plan now gets modified because it was from a one-party perspective, and now we have two parties.” Eppler brought up the possibility of the Angels constructing a six-man starting rotation, which would better approximate Ohtani’s customary workload. In Japan, pitchers start once a week, rather than once every five days. Though Ohtani will need to create an individual routine he feels comfortable with, Owings drafted a theoretical schedule based on his own experiences that he thinks could work. After a start, Owings recommended a full day of recuperation, outside of perhaps some light tossing or cardio. With a six-man rotation, Owings said Ohtani could DH each of the next three days, taking traditional batting practice before the game. On one of those days, he would throw his between-start bullpen session. At some point, he would go to the weight room for a total body lift instead of dividing it into separate upper and lower body workouts, as he would as only a pitcher. On the day before a start, rest is suggested. “It’s going to take some trust from both parties,” Owings said. “When he gets on the field, his talent will take over.” co Fo m rp m e er rs ci on al a us l, e on Long before Japanese two-way sensation Shohei Ohtani captivated the baseball universe, Micah Owings dreamed of thriving on the mound and at the plate at the major-league level. Though the Arizona Diamondbacks drafted him as a pitcher, while in the minors Owings would spend his spare time in the batting cage keeping his swing in shape, just in case. The extracurricular activities didn’t go over well. “I would continually get reprimanded for going in there,” Owings said in a recent interview, adding that the team even threatened to fine him in clubhouse kangaroo court. “They really didn’t want me to be swinging it.” During Owings’s career, which lasted from 2007 through 2012, the very notion of a player doing both transcended the realm of possibility. He says he “was told many times that it’ll never happen, that it can’t be done” from people across the industry. He even remembers meeting with a prospective agent who outright dismissed the idea. Owings found representation elsewhere. But fast forward a decade, and the concept of a two-way player no longer sounds so crazy. Top Tampa Bay Rays prospect Brendan McKay started six games as a pitcher and 21 more at first base in Single-A last season. The Los Angeles Dodgers considered add- ly . The Angels’ Plan for Ohtani 6 TV journalist Curry 7 Sacred song 8 Muse of lyric poetry 9 Seeds ground to make tahini 10 Have a go 11 “I trust you about ___...” (start of a wary comment) 12 Playground comeback 13 Banana Republic rival 18 Four-time Indy 500 winner A.J. 22 What Old Faithful does roughly every 90 minutes 24 Noggin 25 Writers Ferber and O’Brien 26 Sign that can be good or bad 27 Herr’s spouse 28 CDs and LPs: Abbr. 32 Whom Simple Simon met 34 Japanese co. that made lots of cassettes 35 Water brand sourced near Lake Geneva 37 Takes more shots than, perhaps 38 One of Canada’s First Nations 39 Tailoring tasks 41 Spoken 42 Radiate 47 Cubicle setting 49 Clock face 51 Like some dangling dice 52 “But you promised!” retort 53 Turtlenecks cover them 54 Amber material 55 Held title to 56 Make blank 60 Tweak, as text 61 Nos. coveted by identity thieves 63 Not too bright 64 Jargon ending 65 From Jan. 1 Previous Puzzle’s Solution F E L I B R I T I A MW P E R I O UM P S B O O K I U R I N A N C I N S E C L U E O A R R T E N E D X O E P R I T O N X V I I M T A V E G A R E Y S AM A A N UM O N E S A N S H I N C O N E D O O N E B I T T E N A B E U P T A A N G E L R E A O C T N O O O P A D U S T S T H E I P A N S L G O A E D AM R S D O O R D N Y E T H E N I L E S I L E N T T G E I T N A N E E R T S The contest answer is OOPS! As noted at 59-Across, the editor carelessly changed four clues without realizing they affected other entries: OSCAR’s clue must have been something like “...and the other half” for 1-A to make sense with its ellipsis; OCTOPUS must have been “Creature named with a numerical prefix” for 42-D to make sense with its “Another”; PAGE must have been the missing “Part 4 of the quip” and SANTA must have been “With 58-A, a California city” or the like. The first letters of the changed clues’ answers spell the contest answer. For personal, non-commercial use only. Do not edit, alter or reproduce. For commercial reproduction or distribution, contact Dow Jones Reprints & Licensing at (800) 843-0008 or www.djreprints.com. THE WALL STREET JOURNAL. Monday, December 11, 2017 | A17 * * * * * OPINION W ith recent setbacks in the Philippines, Turkey, Venezuela and elsewhere, it is common to hear laments about the decline of democracy worldwide. Turbulent times in Britain and the U.S. add to the concern, as does the sweeping failure of the so-called Arab Spring since 2011. After major waves of progress in the wake of World War II and the Cold War, is freedom starting to sputter? Democracy has taken some hard hits. But before we cede bragging rights to autocrats, or persuade ourselves of the need for precipitate action to arrest a perilous strategic slide, we need perspective on what has been happening. It is true that the “third wave” of democratization— the proliferation of democratic states in the late 20th century—has largely ended. But it has not been reversed by any stretch of the imagination. Recall the magnitude of what transpired last century. By 2000 about 120 countries, or nearly two-thirds of the nations of the planet, had become electoral democracies. A hundred years before, the total could be counted on a single hand—or less, if one defines democracy as a system of full enfranchisement of women and men of all races. The 21st century is not off to such a good start. But the net setbacks have been modest. By one measure, according to Freedom House, 25% of all countries were assessed as “not free” in 2016, compared with 23% in 2006. Yet if one adjusts for population, there has been no setback at all. India, Indonesia, Nigeria and Brazil, with a combined population of two billion, have, for all their admitted troubles, been holding generally steady in recent years. The countries experiencing setbacks have generally been less populous. As a result, the fraction of people living in “not free” countries has declined slightly over the past dozen years, from 37% to 36%, while the total living in “free” countries rose gently, from 44% to 45%. The remainder were in countries deemed by Freedom House to be “partly free.” Much as we might regret partial setbacks to liberal democracy in Hungary, population 10 million, developments there pale in significance when compared with democratic progress in Indonesia, population 261 million. The big outlier here is Russia, with its 142 million people, where the early signs of liberalism in the mid-2000s have been decisively reversed. Viewed in broad historical terms, the democratic model continues to excel when measured against all the alternatives. Established democracies almost never go to war with each other, helping explain why the decades since World War II have been among the least violent in human history, at least when it comes to interstate war. A world of democracies is also proving to be unambiguously good for fighting poverty and strengthening the global middle class. As our colleague Homi Kharas has In 12 years, the share of the world’s people who live in ‘free’ countries has risen. shown, in 1950 less than 10% of the world’s population could be said to be middleclass—with daily family income between roughly $10 and $100 in 2005 dollars, adjusted for purchasing power. Today the figure approaches 50%. Some of that progress has been within autocracies, notably China. But more than two-thirds of it has been in democratic countries. Most of these democracies also generally remain united in a common strategic purpose, despite the occasional robust debates over when and how to use force. The U.S. leads a coalition or loose alliance system of some 60 states that together account for roughly 70% of world military spending and a similar fraction of total world gross domestic product. Except in the Middle East, almost all these U.S. allies are democracies. And while the megastate of India is not a U.S. ally in the way that Canada and the U.K. are, it is nonetheless an increasingly close American strategic partner. Democracies have struggled with corruption, violent crime, poverty, populism, challenges from globalization, and other hard realities of modern life. Democracy does not change human nature. It does, however, generally put us in a much better position to address those problems peacefully. Witness South Korea, which impeached a president earlier this year but seems no worse for the wear. Or Brazil, dealing with similar political problems in an ugly yet still constitutional manner. Or India, where a strongman leader is nonetheless checked in some of his ambitions by a balance-ofpowers system. Or the U.K., where Brexit, itself the result of a democratic choice, seems likely to cause only limited damage. We do need to learn one lesson from history’s recent sobering course: Democracy is fragile and can never be taken for granted. But declarations about democracy’s demise, or even its significant decline, go too far. Mr. Jones is vice president and Mr. O’Hanlon director of research at the Brookings Institution’s Foreign Policy Program. Mary Anastasia O’Grady is away. Protectionism Is a Negative-Sum Game T Foreign companies operating in the U.S. employ some seven million Americans. tariffs on washing machines made by South Korea’s LG and Samsung. Lost is the fact that Samsung plans to employ 1,000 workers at a South Carolina plant previously shuttered by Caterpillar. LG is slated to hire 600 American workers at a planned facility in Tennessee. Perhaps the worst example of us-versus-them policies is the Commerce Department’s recent preliminary decision against Canada-based aircraft manufacturer Bombardier. Boeing petitioned Commerce and the International Trade Commission to investigate Bombardier. Commerce recommended a jumbo-jet-sized total tariff of 300% to “protect” Boeing from competition from a new passengerfriendly aircraft. Boeing voluntarily exited this market in 2006. Not surprisingly, Boeing filed its petition no he Trump administration’s recent actions on trade indicate a narrow view of what drives America’s economic success. The only way for President Trump to attain his bold economic growth targets is to cultivate the jobcreating potential that global connections and international companies provide. Nearly seven million U.S. workers have jobs because an international company has set up operations here—paying wages and benefits about 25% higher than the economywide average. More than 35% of these jobs are in manufacturing, producing nearly a quarter of U.S. exports. Unfortunately, those high-quality jobs may soon be at risk if Mr. Trump continues to approach trade policy with an us-versus-them mentality. While other countries—including China—are expanding their trade networks and economies by pursuing new freetrade agreements, the Trump administration has focused its efforts on reducing bilateral trade deficits, a narrow metric for measuring the value of trade, and engaging in skirmishes likely to hurt rather than help U.S. workers. Take South Korea, a strategic U.S. ally with a population of 50 million. While U.S. consumers buy more South Korean-made products than South Korean consumers buy American-made goods, South Korean companies employ 52,000 U.S. workers, an in- crease of nearly 30% since the first free-trade agreement between the two countries entered into force five years ago. The Trump administration is not only considering a rewrite of the South Korea freetrade agreement. At the behest of Whirlpool, they are also considering imposing n- By Nancy McLernon against Bombardier days after the Trump administration announced a new tariff on Canadian softwood lumber imports. Casual observers may welcome what they see as the government punishing an international competitor at the request of a U.S. company. But U.S.-based suppliers provide more than half the components in each of Bombardier’s C Series aircraft, including engines, avionics, braking systems and fuel systems. The C Series is projected to generate more than $30 billion in business for U.S. suppliers across 19 states, supporting more than 22,700 domestic jobs. In October Bombardier and Airbus announced a broad partnership on the C Series that includes manufacturing airplanes at Airbus’s plant in Mobile, Ala. These two foreign companies are investing in manufacturing and creating U.S. jobs, supporting U.S. exports, and buying billions worth of components from U.S. aerospace suppliers. Bombardier has been operating and investing in the U.S. for more than 40 years. It builds and services planes, trains and related equipment in America for both domestic and export markets. It directly employs more than 7,000 U.S. workers across 17 states, and it generated more than $15 billion in business for its U.S. suppliers (and their employees) over the past five years. A successful C Series will only increase those numbers. In today’s global economy, it is difficult to plant one country’s flag on a company. Foreign firms are contributing to the U.S. economy in numerous ways, often importing world-class training programs that benefit local workforces and supporting cutting-edge research and development. “President Trump is committed to creating a businessfriendly environment across our nation,” said Commerce Secretary Wilbur Ross in a June statement. “The administration welcomes global investment to strengthen local economies and to ensure job creation.” That admirable and farsighted view is at odds with Washington’s protectionist tariff spree. Initiating fights with trading partners leads to destructive trade wars in which all sides lose. Would-be employers around the world are asking whether the U.S. is committed to remaining an open economy or repeating the mistakes of the past. If international companies lose faith in the U.S. commitment to free trade, high-paying jobs will leave America for friendlier shores. It can’t be us versus them anymore. America’s economic strength is built on its hardworking citizens, who increasingly work because of, not despite, our global connections. Ms. McLernon is president and CEO of the Organization for International Investment. Hispanic Entrepreneurs Need Tax Reform By Steve Cortes And Javier Palomarez T he two of us are good friends, and as leaders in the Hispanic business community, we have a lot in common. We don’t always see eye to eye: As a Republican and a Democrat, we disagreed strongly in 2016. But we both recognize that Congress must enact meaningful tax reform. In its present form, the tax code creates a burdensome barrier that inhibits innovators from launching new companies and prevents existing businesses from growing. Small-business owners regularly name regulations and taxes as their two biggest obstacles for growth. The Trump administration has already embarked on a policy of broad regulatory relief. Reducing the onerous tax burden is the final step to creating a pro-growth environment. Today small business faces A World Of Sickness Pale Rider By Laura Spinney (PublicAffairs, 332 pages, $28) W e live in an age of AIDS, SARS, bird and swine flu, Ebola, and Zika. Spurred by globalization and hyped by the internet, those plagues alarmed huge swaths of the world. Yet, aside from AIDS, none of these diseases has caused nearly as many deaths as feared. Bizarrely, the greatest killer of the past century is barely remembered today. The Spanish flu began in the spring of 1918, infected 500 million people, and killed between 50 million and 100 million of them—more than both world wars and the Holocaust combined. Not since the bubonic plague of the mid-14th century—the Black Death—had such a fearsome pestilence devastated mankind. Spanish-flu patients “would soon be having trouble breathing,” writes Laura Spinney in “Pale Rider,” her gripping account of the pandemic. “Two mahogany spots appeared over their cheekbones, and within a few hours that colour had flushed their faces from ear to ear.” Teeth fell out. Hair fell out. Delirium was common. Soon the doomed turned bluish. “Blue darkened to black. The black first appeared at the extremities—the hands and feet, including the nails—stole up the limbs and eventually infused the abdomen and torso. As long as you were conscious . . . you watched death enter at your fingertips and fill you up.” At the beginning, everything about the pandemic was cloaked in mystery. Where had it originated? How did it spread? What microbe caused it? How could the not-yet-infected be protected? How could the disease be treated? Would it ever end? Ms. Spinney, a British science writer and novelist, deals with these questions with exemplary clarity and sure narrative skill. At least one of the Spanish flu’s oddities can be resolved: Spain had little to do with it. King Alfonso XIII was one of the first to be stricken, in May 1918, and soon two-thirds of the population of Madrid fell ill. The disease had already broken out in America and in the World War I trenches in France. Learning of the scourge across the border, the French labeled it “the Spanish flu,” and, despite all evidence to the contrary, the name stuck. Ms. Spinney is at her best in trying to tease out the real origin of the pandemic. The first suspect was China, where pneumonic plague had erupted on the Manchurian border in 1910. The government, trying to curry favor with the Allies in World War I, had then sent tens of thousands of laborers, many infected, to dig trenches on the Western Front. Another theory put the initial outbreak at the British army’s mobilization base in Étaples in northern France. A third candidate was in the American heartland, at a U.S. Army staging base, Camp Funston in Kansas. The question is unsettled, but plainly the movement of troops in the Great War accelerated the flu’s spread. co Fo m rp m e er rs ci on al a us l, e on By Bruce Jones And Michael O’Hanlon BOOKSHELF | By Edward Kosner ly . Democracy Is Far From Dead an almost confiscatory tax scenario, because most are taxed as individuals and face a top rate of 39.6%. Throw in state and local taxes and many Latino startups surrender over half their income to Latino Democrats and Republicans ought to agree on that much. government. Home Depot cofounder Bernie Marcus wrote in the Hill newspaper last month, “I believe that if the Home Depot started today, overtaxation would have prevented it from achieving its current success.” Fortunately, help is on the way. The House’s tax-reform bill drops the business tax rate to 25% and for small enterprises it lowers the rate to just 9% on the first $75,000 of income. It’s hard to overstate how consequential this kind of policy can be for Hispanic opportunity. Hispanics are incredibly entrepreneurial. Today there are about 4.4 million Hispanic-owned businesses in the U.S., and this year they are projected to contribute $700 billion to the American economy. These businesses are growing at twice the rate of all U.S. companies, according to the U.S. Hispanic Chamber of Commerce. Data from American Express also show a 224% increase in Latinaowned businesses between 1997 and 2015. Now that the House and Senate have passed tax bills that put growth first, we recommend they take two further steps. First, advance through conference quickly so that the American people can reap the benefits of economic acceleration sooner. Second, make the final bill as pro-small-business and pro- employer as possible, so that the recent economic momentum—seen in optimistic CEO surveys, rising consumer confidence, and a recordshattering stock market— only grows. To keep the American Dream a reality, Congress needs to expedite this substantive tax reform. This catalyst can ignite success among all Americans, and particularly within our community, the fastest-growing and most industrious in the U.S. The right policies, combined with a growing economy, could create a new wave of prominent Hispanic entrepreneurs and businesses. And everyone would benefit from such empowerment. Mr. Cortes, a Fox News contributor, served on the Trump campaign’s National Hispanic Advisory Council. Mr. Palomarez is president of the U.S. Hispanic Chamber of Commerce. The Spanish flu of 1918-19 infected 500 million people, killing between 50 and 100 million. Its cause was discovered only decades later. The pandemic came in three stages—a relatively mild outbreak in the spring of 1918, a terrifyingly deadly wave that autumn and a lesser revival the next spring before it burned itself out. More American service members died of the flu than from fighting the war. It engulfed tiny Iceland and sprawling India; Ukraine, where it claimed a movie star named Vera Kholodnaya; and Brazil, where a British mail ship from West Africa delivered the seeds of death to Rio de Janeiro. Few parts of the world, even the most remote, were spared. The frantic search for the cause of the pandemic was nightmarish, too. A respected researcher persuaded himself and others that he had found the bacillus, and he persisted even though autopsies rarely turned up his pet suspect in the tissues of the dead. The microbe hunters couldn’t find their quarry because it slipped through the ultrafine strainers they tried to catch it with, and it was invisible to their microscopes. It was what the French bacteriologist Émile Roux called an “être de raison,” an organism whose existence could be deduced only from its effects. Eventually a virus—1/20th the size of a bacillus—was identified as the culprit. It was not actually seen until decades later with the invention of the electron microscope. At first, doctors tried aspirin, mercury and other nostrums, often with side effects worse than many flu symptoms. Antibacterial interventions sometimes worked but gave false hope: They didn’t relieve the flu itself but rather the pneumonia many victims developed. It wasn’t until the 1930s that most of the mysteries were solved. A lab ferret sneezed in the face of a British researcher, who developed a flu, establishing, Ms. Spinney writes, that an airborne virus could pass from animals to man. She goes on to deliver a masterly tutorial on the workings of the human immune system, the basis for the eventual development of vaccines against various strains of influenza. Ms. Spinney ends her story with speculation about various unheralded consequences of the pandemic. She suggests that the trauma of the flu inspired later back-to-nature and faithhealing movements and that the outbreak, by indirectly triggering the British massacre at Amritsar in 1919, may have speeded India’s drive for independence. An attack of the flu, she suggests, brought on Woodrow Wilson’s 1919 stroke, which doomed his efforts to get the Senate to ratify the Treaty of Versailles and have the U.S. join the League of Nations—failures that were stepping stones to World War II. She even traces President Donald Trump’s family fortune back two generations to the Spanish flu. After the pandemic, American insurance companies paid out nearly $100 million— the equivalent of $20 billion today—to the families of the dead. One victim was a German immigrant who left money to his widow and his son, Fred Trump, who would later sire Donald. They invested it in property, she writes, the foundation of Donald Trump’s real-estate empire. “Pale Rider” is a cautionary tale about human vulnerability and ingenuity in the face of peril. Today’s anxiety about Zika and Ebola is in part a proxy for dread of biowarfare waged by terrorists or rogue states, which could make the Spanish-flu pandemic look quaintly benign by comparison. Mr. Kosner is the author of “It’s News to Me,” a memoir of his career as editor of Newsweek, New York, Esquire and the New York Daily News. For personal, non-commercial use only. Do not edit, alter or reproduce. For commercial reproduction or distribution, contact Dow Jones Reprints & Licensing at (800) 843-0008 or www.djreprints.com. THE WALL STREET JOURNAL. A18 | Monday, December 11, 2017 OPINION LETTERS TO THE EDITOR Christopher Wray’s FBI Stonewall Trump’s Jerusalem Move Recognizes Reality T Killing the Electric Car Credit no n- he House and Senate are scrambling to and Ford are among the most vociferous special reconcile their tax bills, and one issue pleaders. They make most of their money on is how many loopholes to kill. Here’s trucks and SUVs, so they want the government one that should be easy: Elimito underwrite their electric Are Republicans really car production. nating the tax credit for electric vehicles. people to buy elecgoing to subsidize the tricPaying The House bill nixes the cars is a textbook example Leo DiCaprio set? credit for plug-in vehicles, of industrial policy that subsiwhich can run up to $7,500 a dizes some businesses and car, while the Senate bill preconsumers, loses revenue and serves the status quo. The credit is essentially complicates the tax code. The plug-in credit an indulgence for affluent Americans who have doesn’t cost the government too much revenue, been buying $70,000 Teslas. But even Tesla CEO but the political symbolism is important. If ReElon Musk now says he’d eliminate the credit publicans are willing to subsidize the purchases as his company begins to roll out its Model 3, of affluent consumers like Leo DiCaprio who which will cost $35,000 for a basic model. The want to demonstrate their seeming energy vircredit is capped at the first 200,000 vehicles tue, they’ll subsidize anything. that each manufacturer sells, and Tesla may The overall GOP reform is right in lowering reach its limit for customer tax credits some the top tax rate for corporations to 20% in retime next year. turn for eliminating many loopholes. That puts Now other car makers are lobbying to keep all industries on a more level playing field and the credit as they ramp up electric-car produc- should be enough for GM, Ford, and Americans tion to meet federal fuel-mileage standards. GM who want to buy electric cars. T You state that President Trump’s announcement that the U.S. will move its embassy to Jerusalem veers “from decades of U.S. policy” (“Jerusalem Move Stokes Tensions,” page one, Dec. 7). In fact, U.S. policy has recognized Jerusalem as the Israeli capital since 1995. The Jerusalem Embassy Act of 1995 states that Jerusalem should remain an undivided city and be recognized as the capital of the State of Israel, and it states that the U.S. Embassy in Israel “should be established in Jerusalem no later than May 31, 1999.” The act allows the president to delay the actual move of the embassy, which was done by Presidents Clinton through Obama. This announcement changes nothing for the Palestinians. Every option for peace that was a possibility before the announcement still exists. To date, catering to the Palestinian Arabs has resulted in nothing productive in the pursuit of peace. They have been offered a portion of Jerusalem as their future capital and repeatedly have rejected it. That is because, despite their rhetoric, what they really want is for Israel to disappear, have no capital at all and for Jerusalem to be solely theirs. Until the Palestinians are willing to accept Israel’s existence they will continue to reject any offer of statehood made to them whether the U.S. Embassy is in Tel Aviv or Jerusalem. Their furious reaction to this announcement is another excuse for them to rage against Israel in their pursuit of its destruction. NAN KLEIN Tuxedo Park, N.Y. in the center of the crosshairs and away from the comforts of Turtle Bay, the U.N. can become a real force for peace instead of -a debating society. JOHN A. PETERSON Walnut Creek, Calif. Regarding Eliora Katz’s “The Zionist Case Against an Embassy Move” (op-ed, Dec. 6): President Trump’s move of the U.S. Embassy from Tel Aviv to Jerusalem can be questioned by some in terms of cost/benefit analysis, but it may turn out to be a brilliant move in sending the correct negotiating message to the Palestinians. The U.S. government, under a Trump administration, will not continue to encourage unreasonable Palestinian demands. The Palestinians need to become realistic in seeking a peace, avoid maximalist positions and cease the official funding of violent terrorism against Israel. Rather than continue to posture on this issue like the rest of the political world and try to bully Israel into concessions (and end up with no tangible results), Mr. Trump has also wisely sent a strong message to Israelis: This U.S. administration, unlike others in the past, can actually be trusted. America will not seek to bully you into an insecure peace deal, but will truly support you. RON WEISS St. James, N.Y. Eliora Katz is correct in her opinion that, as President Trump said “Jerusalem is Israel’s eternal capital.” What other nation has foreign countries tell it what its capital is? In recognizing that and moving the American embassy, the administration is recognizing reality. It is impossible to make peace with enemies who refuse to make peace and who vow to destroy you. Congress acknowledged Jerusalem as Israel’s capital in the last century, and Russia did so this spring. If not now, when? HARRY J. JAFFE Chicago Moving the U.S. Embassy from Tel Aviv to Jerusalem is an extraordinarily bad idea. It will achieve nothing except exacerbating an alreadyway-too-tense situation, to say nothing of putting our diplomatic corps directly in harm’s way. I have a better idea. Let’s move the U.N. headquarters from New York to Jerusalem. Since the Israelis and the Palestinians can’t agree on who Had Arab consent and cooperation should control what in that historic city (and the Christians have been un- been a pivotal consideration, there would be no Israel, no security and fairly shut out of the debate altono hope for peace. gether), let’s make Jerusalem an inOSKAR WEG ternational city with a charter of its New York own. And perhaps once they’re there, co Fo m rp m e er rs ci on al a us l, e on hristopher Wray was supposed to bring much less be an excuse for executive officials a new candor and credibility to the FBI to protect their decisions from scrutiny. after the James Comey debacle, but the As for hiding behind “classified informacountry is still waiting. The dition,” the House Intelligence rector’s testimony Thursday The new director hides Committee that is investigatto the House Judiciary ComRussian campaign medbehind a phony excuse ing mittee suggests he has joined dling has appropriate clearthe Justice Department effort for refusing to answer ances. Mr. Goodlatte reminded to stop the public from learnWray that the Judiciary Congress’s questions. Mr. ing about the bureau’s role in Committee also has primary the 2016 election. jurisdiction over the FISA Judiciary Chairman Bob court. Goodlatte invited Mr. Wray to answer the multiThe FISA application is central to the issue plying questions about the bureau’s 2016 politi- of Russian meddling and whether the FBI used cal interference. This includes the role that the disinformation to trigger a counterintelligence Steele dossier—opposition research financed by investigation of a U.S. presidential candidate. the Clinton campaign—played in the FBI’s deci- Congress and the U.S. need to know not only if sion to investigate the Trump presidential cam- Trump officials were colluding with Russians paign. The committee also wants answers about but also if Russia and the Clinton campaign reports that special counsel Robert Mueller de- used false information to dupe the FBI into inmoted Peter Strzok, a lead FBI investigator in tervening in a U.S. election. Yet the FBI and Jusboth the Trump and Hillary Clinton email inves- tice have been stonewalling House Intelligence tigations, after Mr. Strzok exchanged anti- for months. Trump texts with his mistress, who also works The lack of cooperation has become more at the FBI. troubling amid reports that senior career JusMr. Wray spent five hours stonewalling. The tice officials have a partisan motivation. Judidirector ducked every question about the FBI’s cial Watch last week released emails showing behavior by noting that the Justice Department that Mr. Mueller’s top lieutenant, Andrew Inspector General is investigating last year’s Weissmann, praised Obama holdover and acting events. Attorney General Sally Yates in January for deIs Mr. Wray concerned that Mr. Strzok edited fying Mr. Trump on his travel ban. the FBI’s judgment of Mrs. Clinton’s handling Justice also confirmed a Fox News report last of her emails to “extremely careless” from week that one of its top lawyers, Bruce Ohr, was “grossly negligent” in a previous draft? The in contact with Christopher Steele (the dossier grossly negligent phrase might have put Mrs. author) before the election, and after the elecClinton in legal jeopardy, but Mr. Wray said he tion with Glenn Simpson, the founder of Fusion couldn’t answer because that is subject to the GPS, the opposition-research firm that hired Mr. “outside, independent investigation.” Steele. Mr. Ohr was demoted, which suggests his Is Mr. Wray taking steps to ensure his top contacts were unauthorized. ranks are free of political “taint”? He couldn’t By the way, the chief law enforcement officer say because of the “outside, independent” in- of the United States is the President. This means vestigation. he has the legal authority through his deputies Ohio Republican Jim Jordan noted that the at the White House and Justice to see the FISA only way for Congress to know if the FBI used application. AG Jeff Sessions is recused from the the Steele dossier to obtain a warrant to spy on Russia probe, which complicates his access bethe Trump campaign is for the FBI to provide cause we don’t know the extent of his recusal. its application to the Foreign Intelligence Sur- But Deputy AG Rod Rosenstein supervises the veillance Court. “Is there anything prohibiting FBI when Mr. Sessions does not. you from showing this committee [that applicaMr. Rosenstein can and should order the FBI tion]?” Mr. Jordan asked. to meet Congress’s document requests includMr. Wray’s answer was dismissive. “I do not ing the FISA application. If he refuses, then Mr. believe that I can legally and appropriately Trump through White House counsel Donald share a FISA court submission with this com- McGahn can order him to do so. Mr. Rosenstein mittee,” said Mr. Wray. “When I sign FISA appli- could choose to resign rather than comply, but cations, which I have to do almost every day of he will not have the law on his side. the week, they are all covered with a ‘classified The easy way to solve this standoff is for exinformation’ cover.” ecutive officials, including the FBI, to do their This is an excuse, not a serious reason. The duty and cooperate with the duly elected MemIG is a watchdog created by Congress to investi- bers of Congress. If they don’t, sterner meagate executive misbehavior. It was never in- sures like a finding of contempt of Congress will tended to supplant congressional oversight, be needed. ly . C REVIEW & OUTLOOK The Apple ‘Windfall’ That Isn’t he GOP is moving toward a tax-reform publican plan also includes a one-time deemed victory, which means the political at- repatriation rate on earnings now held abroad. tacks are increasing in volume if not The House’s 14% rate for cash is what President logic. A contender for the Obama proposed in 2015, and least accurate claim is the re- It’s hard to keep up with the Senate’s rate is 14.49%. port that the legislation would “deemed” rate means that all the false tax claims, The produce a $47 billion “windcompanies must pay that rate but this one is a doozy. on income previously earned fall” for Apple. The Financial Times overseas but so far untaxed in splashed this across page one the U.S. last week and the media Rockettes all kicked Enter the Financial Times, which says that in line. They need a tutorial in international Apple under the current system would owe taxation. $78.6 billion in taxes but under the GOP plan The U.S. has one of the most punishing cor- would pay $31.4 billion. The $47 billion differporate tax rates in the world, with its 35% fed- ence is what it calls a “windfall” for Apple. eral rate and an average of close to 39% inBut this ignores that under the current syscluding state and local levies. The land of the tem Apple will pay $0 in taxes on that billions free is also one of the only jurisdictions that overseas because it has no known plans, and littaxes income when it returns to the U.S. after tle incentive, to return the money to the U.S. it’s been taxed where it’s earned. The rest of Under the GOP’s deemed repatriation alone, Apthe world has reduced corporate rates—the ple would pay more than $30 billion in taxes. OECD average is about 24%—but the U.S. In other words, the real windfall is the $30 bilhasn’t caught up. lion in tax revenue that the U.S. Treasury otherThe result has been that companies have wise wouldn’t have. stashed some $2.5 trillion in cash overseas, This is the latest of many false claims that with little incentive to bring it back to the U.S. corporations are the sole beneficiaries of the at the 39% rate. Apple alone has some $252 bil- Republican tax plan, even though the GOP lion abroad. They and others even find it more agenda includes “base erosion” rules and many economical to borrow at home instead of mov- other clamps designed to address current tax ing the money back for productive uses such as loopholes and prevent future corporate tax investment and hiring. trickery. Whether the media attacks on the ReThe GOP plan would enshrine a 20% top cor- publican tax bill represent economic illiteracy porate rate and a permanent territorial system or ideological tendentiousness is a judgment that taxes income where it is earned. The Re- we’ll leave to readers. When a Wedding Cake Is More Than Dessert Regarding your editorial “Let Them Not Bake Cake” (Dec. 4): The issue is whether the Colorado antidiscrimination law is of the type described by Justice Antonin Scalia in Employment Division v. Smith, i.e., is it a “valid and neutral law of general applicability.” You misconstrue Smith in your claim that the Colorado law has been “applied” other than neutrally. Even if true, that is not the Smith test. The whole “non-neutral application” point is an irrelevant tangent that permits you to add to the misdirection with your lesson from Obergefell v. Hodges. It may seem to you that this is a heavy hammer as applied to discriminators who are otherwise decent, hardworking and, particularly in the present scenario, religiously observant people. Jack Phillips, like any artist, could offer his work for sale privately in his studio-bakery, by appointment, to family, friends or even strangers (if done carefully, with due regard to the niceties of the law). Had he done this, the Colorado law would not have been applicable, even if he turned away this gay couple. But if he adapts generally most or all of the attributes of a business open to the public (and it is undisputed that he did so), then his business behavior would be subject to a panoply of state laws, including in Colorado’s case, its antidiscrimination law. Mr. Phillips has not been censured for holding different “mores” than the law contemplated, nor has he been compelled to affirm any religious belief, nor has he suffered any special disability based on his religious view. He was found to have been operating a business generally open to the public and then to have discriminated against the gay couple in violation of the Colorado law. JONATHAN GOLDSTEIN New York In West Virginia State Board of Education v. Barnette, the 1943 landmark case cited in your editorial, Supreme Court Justice Robert H. Jackson famously wrote: “If there is any fixed star in our constitutional constellation, it is that no official, high or petty, can prescribe what shall be orthodox in politics, nationalism, religion, or other matters of opinion, or force citizens to confess by word or act their faith therein.” Colorado Letters intended for publication should be addressed to: The Editor, 1211 Avenue of the Americas, New York, NY 10036, or emailed to firstname.lastname@example.org. Please include your city and state. All letters are subject to editing, and unpublished letters can be neither acknowledged nor returned. officials are trying to force Masterpiece Cakeshop owner Jack Phillips to act against his faith, his conscience, his sacred honor. If liberty means anything, it means freedom from state coercion in matters of conscience. Lawmakers and courts tread on perilous ground when they impinge on a person’s deeply held religious convictions. Masterpiece Cakeshop v. Colorado Civil Rights Commission will go a long way toward determining whether “live and let live” and twoway tolerance still have a place in American society. CHARLES D. EDEN Atlanta Despite all attempts and examples put forth in the piece to obfuscate the issue, the only one on point was the one you disparage—that of hotel owners during the Jim Crow era. The others? Cakes with vulgar messages? Not unless you think foulmouthed individuals should be treated as a protected class. Personal participation or abstention at gay nuptials? Really? Is the Journal trying to liken that to a business service? The two Jehovah’s Witness cases refusing to participate in civic expressions? Again, and again, there is not a business interest in either case. Anti-gay marriage cakes? (See bad language above.) Bigots, likewise, will never qualify as a protected class. Forcing Catholic organizations to perform abortions or place adoptees with same-sex couples? I’m sure “some on the left” have this on a wish list right after forcing rabbis to serve pork BBQ at shul and Latter Day Saints to hold coffee klatches. JOHN CARBONE Louisville, Ky. Pepper ... And Salt THE WALL STREET JOURNAL “I’m sending it back. This doesn’t taste funny at all.” For personal, non-commercial use only. Do not edit, alter or reproduce. For commercial reproduction or distribution, contact Dow Jones Reprints & Licensing at (800) 843-0008 or www.djreprints.com. THE WALL STREET JOURNAL. Monday, December 11, 2017 | A19 OPINION Can a President Obstruct Justice? officers, such as the FBI director, is a core aspect of the president’s executive authority. It is the principal means by which a president disciplines the exercise of the executive power the Constitution vests in him. The same is true of Mr. Trump’s request, as purported by Mr. Comey: “I hope you can see your way clear . . . to letting Flynn go.” The FBI director wields core presidential powers when conducting an investigation, and the president is entirely within his rights to inquire about, and to direct, such investigations. The director is free to ignore the president’s inquiries or directions and risk dismissal, or to resign if he believes the president is wrong. Such officials serve at the president’s pleasure and have no right to be free of such dilemmas. A law criminalizing the president’s Richard Nixon and Bill Clinton at the White House, 1993. removal of an officer for a nefarious motive, or the application of a general law in that way, would be unconstitutional even if the president’s action interferes with a criminal investigation. Such a constraint would subject every exercise of presidential discretion to congressional sanction and judicial review. That would vitiate the executive branch’s coequal status and, when combined with Congress’s impeachment power, establish legislative supremacy—a result the Framers particularly feared. Mr. Trump’s critics claim that subjecting the president’s actions to scrutiny as potential obstructions of justice is simply a matter of asking judges to do what they do every day in other contexts—determine the purpose or intent behind an action. That is also wrong. The president is not only an individual, but head of the executive branch. Separating his motives between public interests and personal ones—partisan, financial or otherwise—would require the courts to delve into matters that are inherently political. Under Supreme Court precedent stretching back to Marbury v. Madison (1803), the judiciary has no power to do so. And lawmakers enjoy an analogous immunity under the Speech and Debate Clause. The president’s independence from the other branches does not merely support “energy” in the chief executive, as the Framers intended. It also ensures that he, and he alone, is politically accountable for his subordinates’ conduct. If officials as critical to the executive branch’s core functions as the FBI director could determine whom and how to investigate free from presidential supervision, they would wield the most awesome powers of government with no political accountability. History has demonstrated that even when subject to presidential authority, the FBI director can become a power unto himself—as J. Edgar Hoover was for decades, severely damaging civil liberties. There are limits to presidential power. The Constitution requires the Senate’s consent for appointment of the highest-level executivebranch officers—a critical check on presidential power. The Supreme Court has upheld statutory limits— although never involving criminal sanction—on the removal of certain kinds of officials. But the decision to fire principal executive-branch officers like the FBI director remains within the president’s discretion. A sitting president can also be subjected to civil lawsuits—but only in a carefully circumscribed fashion, to avoid impeding his ability to discharge the powers of his office. The ultimate check on presidential power is impeachment. Even though Mr. Trump cannot have violated criminal law in dismissing Mr. Comey, if a Messrs. Rivkin and Casey practice appellate and constitutional law in Washington. They served in the White House Counsel’s office and Justice Department in the Reagan and George H.W. Bush administrations. An Attack on My Privacy in Wisconsin’s Political War ‘E A rogue state agency took my personal emails and filed them under ‘opposition research.’ it upon themselves to acquire the personal emails of Republican politicians, including me. As of June 2016 the Wisconsin Government Accountability Board no longer exists. I wrote legislation that led to the agency’s elimination, and this has been one of my no lena, I have something I need to tell you.” Those were the first words I said to my 29-year-old daughter Thursday afternoon. I was calling to let her know that according to the Wisconsin Justice Department report released Thursday, my personal emails, along with approximately 500,000 of those belonging to my colleagues in the Wisconsin Senate and other Republican leaders, were acquired in a John Doe investigation. The emails had been kept in the Governmental Accountability Board building in a unsecured file called “opposition research.” Personal emails with Elena were included, I had learned. Some of our emails even involved discussion of her medical records. These communications didn’t belong in the hands of the government but were collected as part of a politically motivated investigation into Gov. Scott Walker. Under Wisconsin law, prosecutors can ask a judge to authorize a “John Doe” investigation, which is intended to protect the wrongly accused or allow investigators the ability to establish probable cause before filing charges. But in a gross manipulation of the law, in 2012 a liberal judge named Barbara Kluka allowed Milwaukee County District Attorney John Chisholm, a Democrat, to conduct a secret investigation into whether Gov. Walker had broken campaign-finance laws. He had not. Mr. Chisholm weaponized an arm of the government, which was supposed to be Wisconsin’s ethics watchdog, to issue broad subpoenas and warrants for documents. The agency even worked with law enforcement to conduct paramilitary raids on people’s homes. These raids and seizures were the result of a mere accusation of campaign-finance violation, for which there was no basis. As it turns out, investigators at the Wisconsin Government Accountability Board took n- By Leah Vukmir Matthew J. Murray Executive Editor Karen Miller Pensiero Managing Editor Jason Anders, Chief News Editor; Thorold Barker, Europe; Elena Cherney, Coverage Planning; Andrew Dowell, Asia; Neal Lipschutz, Standards; Meg Marco, Digital Content Strategy; Alex Martin, Writing; Mike Miller, Features & Weekend; Christopher Moran, Video; Shazna Nessa, Visuals; Rajiv Pant, Technology; Ann Podd, News Production; Matthew Rose, Enterprise; Michael Siconolfi, Investigations; Nikki Waller, Live Journalism; Stephen Wisnefski, Professional News; Carla Zanoni, Audience & Analytics 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 proudest accomplishments as a state senator. Yet I am still considering legal options for the invasion of my personal privacy. I was appalled at the news, especially because those who ran the John Doe investigation read and kept the emails between my daughter and me. This was criminal behavior, and the individuals involved ought to see jail time. Unaccountable investigations and special prosecutors have become typical. Take a look at the investigation of the president by Robert Mueller. More than $3 million in taxpayer funds, and what has been accomplished? From Lois Lerner and the IRS to James Comey and the FBI, something is rotten with the way justice is implemented in America today. In addition to being a mom and a nurse, I am a conservative state senator. I fear fewer people like me will seek office after seeing what I’ve gone through. Why would a mom want to speak on her political beliefs if she thought it might make her family the target of a government agency? Why would anyone want to become an elected official if it might mean that private conversations are not protected from unreasonable search and seizure? Elena will be fine. But I don’t want her to live in a country where the government deprives people of due process or their right to speak freely. If it can happen in Wisconsin, it can happen elsewhere. Let the stories of Wisconsin’s John Doe abuses be a warning for the rest of the country that liberty really does require vigilance. Ms. Vukmir, a Republican, is a state senator and U.S. Senate candidate from Wisconsin. About That ‘Hillsdale Exemption’ By Larry P. Arnn A s the Senate prepared to pass its tax-reform plan Dec. 1, Hillsdale College, which I lead, became an unexpected sticking point. The bill included a proposed 1.4% excise tax on the investment income of large university endowments. An amendment introduced by Sen. Pat Toomey (R., Pa.)—which did not make the final bill—sought to exempt schools that do not accept government funding under Title IV of the Higher Education Act of 1965, which established many of the financial-aid programs students use today. Hillsdale has an endowment that would qualify for the excise tax under the version of tax reform passed by the PUBLISHED SINCE 1889 BY DOW JONES & COMPANY Rupert Murdoch Robert Thomson Executive Chairman, News Corp Chief Executive Officer, News Corp Gerard Baker Editor in Chief By Greg Rushford D on’t expect much progress in dismantling global trade barriers from the World Trade Organization’s meeting in Buenos Aires this week. The Trump administration will take most of the blame. American trade negotiators have even said they will refuse to sign the customary ministerial declaration expressing support for the “centrality of the multilateral trading system.” The U.S., as WTO Deputy Director Alan Wolff noted, is “sitting this one out.” In the absence of American leadership, all eyes are on Chinese President Xi Jinping. Mr. Xi has missed no opportunity to declare his support for the WTO’s mission of advancing free trade. He acknowledges that China has benefited greatly since becoming a WTO member in 2001. Beijing runs with the G-33 —poorer, protectionistminded WTO laggards. “We should uphold multilateralism and pursue shared growth,” Mr. Xi declared last month in a speech to Asia-Pacific business leaders in Vietnam. His remarks were well-received—in clear contrast to Mr. Trump’s insular America First exhortations at the same forum. Global economic leadership is a key part of Mr. Xi’s “Chinese Dream.” But going by China’s actual record in the WTO, Mr. Xi will have to dream on. Despite the glowing free-trade rhetoric from Beijing, inside WTO negotiating rooms China is hardly a champion of free trade. Instead, the Chinese run with the G-33, a group of poorer, protectionist-minded WTO laggards—the likes of South Africa, Venezuela, Zimbabwe and India. These countries tailor their negotiating positions to longstanding grudges against their former European colonial masters, as well as rich Americans. They support China’s assertion that it remains a developing nation deserving of “special and differential treatment” when it comes to dismantling trade barriers. In the WTO’s thorny agriculture negotiations, for example, China and India stand together in demanding that rich Europeans and Americans dismantle trade-distorting subsidies. Yet they demand that “developing” countries be allowed to continue propping up tens of millions of subsistence farmers indefinitely. Beijing insists that it made enough concessions on lowering agriculture tariffs and subsidies when it joined the WTO in 2001. When the WTO held its ministerial meetings in Bali in 2013, the Chinese and Indians won the “temporary” right to circumvent their existing legal restrictions on exceeding their (wasteful) domestic support programs. In Buenos Aires, they will push for the permanent right to prop up their globally uncompetitive farmers. Beijing is also resisting an initiative to curb governmental subsidies that contribute to overfishing. In 2002 a group of WTO members led by Australia, New Zealand, Iceland and Chile established the so-called Friends of Fish to try to reach consensus. But China wants a carve-out to protect its subsidies and insists that countries be allowed to police violations themselves—an approach that threatens the collapse of already depleted global fishing stocks. China has also failed to join the WTO’s Government Procurement Agreement. Forty-seven advanced economies have opened bidding on more than $1.7 trillion of their governmental contracts to foreign competition. China entered negotiations to join the GPA in 2002. The big news from the WTO’s 2011 ministerial meetings in Geneva was that Beijing would sign on. But that deal has never materialized, while talks drag on and on. While Chinese rhetoric doesn’t square with the country’s record in the WTO, Beijing’s performance is not all negative. After arduous negotiations, Beijing joined the Information Technology Agreement, where 82 WTO members have agreed to slash tariffs on trade in high-tech goods. China also slashed average tariffs on industrial products to less than 9%, and has promised early action to slash its 25% auto tariffs. Chinese officials from President Xi on down vow that China will continue to play a “constructive” role inside the WTO. Just how constructive depends on whether Beijing continues to seek special treatment at the expense of its partners. This week’s meeting might begin to shed light on an important question: Is Mr. Xi’s free-trade talk worth more than scoring political points against Donald Trump? co Fo m rp m e er rs ci on al a us l, e on Yes, but not by doing any of the things we know Trump to have done. JEFFREY MARKOWITZ/SYGMA VIA GETTY IMAGES S peculation about Special Counsel Robert Mueller’s investigation has turned toward obstruction of justice—specifically, whether President Trump can be criminally prosecuted for firing James Comey as director of the Federal Bureau of Investigation or for earlier asking Mr. Comey to go easy on onetime national security adviser Mike Flynn. The answer is no. The Constitution forbids Congress to criminalize such conduct by a president, and applying existing statutes in such a manner would violate the separation of powers. The Constitution creates three coequal branches of government, and no branch may exercise its authority in a manner that would negate or fundamentally undercut the power of another. The power to appoint and remove high-level executive-branch majority of representatives believe he acted improperly or corruptly, they are free to impeach him. If two-thirds of senators agree, they can remove him from office. Congress would then be politically accountable for its action. Such is the genius of our Constitution’s checks and balances. None of this is to suggest the president has absolute immunity from criminal obstruction-of-justice laws. He simply cannot be prosecuted for an otherwise lawful exercise of his constitutional powers. The cases of Richard Nixon and Bill Clinton—the latter impeached, and the former nearly so, for obstruction of justice—have contributed to today’s confusion. These were not criminal charges but articulations of “high crimes and misdemeanors,” the constitutional standard for impeachment. And in neither case was the accusation based on the president’s exercise of his lawful constitutional powers. If a president authorizes the bribery of a witness to suppress truthful testimony, as Nixon was accused of doing, he can be said to have obstructed justice. Likewise if a president asks a potential witness to commit perjury in a judicial action having nothing to do with the exercise of his office, as Mr. Clinton was accused of doing. Although neither man could have been prosecuted while in office without his consent, either could have been after leaving office. That’s why President Ford pardoned Nixon—to avoid the spectacle and poisonous political atmosphere of a criminal trial. In Mr. Trump’s case, by contrast, the president exercised the power to fire an executive-branch official whom he may dismiss for any reason, good or bad, or for no reason at all. To construe that as a crime would unravel America’s entire constitutional structure. ly . By David B. Rivkin Jr. And Lee A. Casey Don’t Believe China’s Trade Hype William Lewis Chief Executive Officer and Publisher DOW JONES MANAGEMENT: Mark Musgrave, Chief People Officer; Edward Roussel, Innovation & Communications; Anna Sedgley, Chief Operating Officer; 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; Christina Van Tassell, Chief Financial Officer; Jonathan Wright, International DJ Media Group: Almar Latour, Publisher; Kenneth Breen, Commercial Professional Information Business: Christopher Lloyd, Head; Ingrid Verschuren, Deputy Head House. The college has never accepted any aid directly from the federal government, and since 1985 it has not accepted indirect federal aid that comes through students. Hillsdale students who demonstrate financial need can apply for scholarships entirely funded by private donors. The proposed tax in one of its forms would cost Hillsdale the equivalent of about 20 full-tuition scholarships every year. As a matter of principle the government should reduce its subsidies to universities rather than taxing endowments. But the bill being what it is, the exemption suggested by Mr. Toomey seemed fair to me. Taxpayers heavily subsidize the higher education of students at almost every school in the country. Hillsdale is one of fewer than 10 colleges providing students with educations paid for exclusively by private money. Hillsdale was founded in 1844. Our oldest building was dedicated on July 4, 1853. Two of my predecessors as president helped write the Republican Party’s first platform. Frederick Douglass spoke on our campus in 1863 and again in 1888. Consistent with the values of the party of Lincoln and Douglass, Hillsdale’s founding charter declares the college will take “all who wish, without regard to race, sex, or national origin.” Admissions decisions are still governed by that principle. Hillsdale is similarly committed to helping those in need. Last year we supplemented our need-based aid program, which assists almost half the student body, with the Frederick Douglass Scholarships, targeted to students from severe poverty. The first three students have been admitted to Hillsdale under that program. The college also spent a million dollars over the past three years to sponsor 17 classical K-12 charter schools, some of which serve needy families in tough neighborhoods. Despite these facts, Sen. Jeff Merkley (D., Ore.) claimed during debate over the proposed amendment that Hillsdale “quit taking federal funds because of discrimination,” a deliberate misreading of our historical commitment to merit-based admissions. Sen. Claire McCaskill (D., Mo.) even alleged that the suggested exemption was a political gift to Hillsdale donors, including the family of Education Secretary Betsy DeVos. All this is hot nonsense. Hillsdale forgoes government money in order to spare our students, faculty and administrators the bureaucratic interference that is the price of accepting federal financial support. Suggestions to the contrary are entirely without merit. I am reminded of Daniel Webster’s 1819 argument before the Supreme Court in defense of his beloved Dartmouth College, then under assault from aggressive state power. “When I see my Alma Mater surrounded, like Caesar in the senate house, by those who are reiterating stab upon stab,” he said, “I would not, for this right hand, have her turn to me and say, ‘Et tu quoque, mi fili’ ”—and you too my son! Webster had a flair for the dramatic. Unfortunately, the insults leveled at Hillsdale College on the Senate floor are the commonplaces of our contemporary political correctness. One pines for the day when senators were more artful in their slanders. Mr. Arnn is president of Hillsdale College. Mr. Rushford edits the Rushford Report, an online journal that tracks trade politics. For personal, non-commercial use only. Do not edit, alter or reproduce. For commercial reproduction or distribution, contact Dow Jones Reprints & Licensing at (800) 843-0008 or www.djreprints.com. THE WALL STREET JOURNAL. no n- co Fo m rp m e er rs ci on al a us l, e on ly . A20 | Monday, December 11, 2017 Lease for $789 per month* during the Gran Finale Celebration 2017 Maserati Levante with Q4 Intelligent All-Wheel Drive 36-Month Lease / 10k Miles per Year for Well-Qualified Lessees $5,584 Due at Signing / Exp. 1/2/18 *Low-mileage lease for well-qualified lessees. 36-month lease. Based on MSRP example of $77,750 for a 2017 Maserati Levante. Total due at lease signing includes a down payment, first month’s payment and acquisition fee. Offer requires dealer contribution. Tax, title and license extra. Lessee pays for excess wear and mileage of $0.30/mile for each mile over 10,000 miles per year, if vehicle is returned at end of term. Total amount of monthly payments is $28,404. Option to buy at lease end at pre-negotiated price. Dealer’s actual terms may vary. Offer through Chase Bank. Residency restrictions apply. Must take retail delivery by January 2, 2018. $795 disposition fee due at lease end. See your participating local authorized Maserati dealer for details. Model shown: 2018 Levante GranLusso. ©2017 Maserati North America, Inc. All rights reserved. Maserati and the Trident logo are registered trademarks of Maserati SpA. Maserati urges you to obey all posted speed limits. For personal, non-commercial use only. Do not edit, alter or reproduce. For commercial reproduction or distribution, contact Dow Jones Reprints & Licensing at (800) 843-0008 or www.djreprints.com. TECHNOLOGY: AMAZON’S DEAL OF THE DAY CATAPULTS SELLERS B4 BUSINESS & FINANCE © 2017 Dow Jones & Company. All Rights Reserved. Last Week: S&P 2651.50 À 0.35% THE WALL STREET JOURNAL. * * * * ** S&P FIN À 1.50% S&P IT À 0.08% DJ TRANS À 2.12% WSJ $ IDX À 0.92% Monday, December 11, 2017 | B1 LIBOR 3M 1.549 NIKKEI 22811.08 g 0.03% Algorithms Move Into Management BY SAM SCHECHNER Uber Technologies Inc. and other pioneers of the so-called gig economy became some of the world’s most valuable private companies by using apps and algorithms to assign tasks to self-employed workers. Now, established companies such as Royal Dutch Shell PLC and General Electric Co. are adopting parts of that model for the full-time workforce. Companies say the tools make them more efficient and give employees more opportunities to do new kinds of work. But the software also is starting to take on management tasks that humans have long handled, such as scheduling and guiding strategic projects. Researchers say the shift could lead to narrower roles for some managers and displace others. When Shell wanted help evaluating digital business models in the car-maintenance sector, executives plugged the project into an algorithm that scanned for available Shell staffers with the right expertise—and handed out the job with a click. Shell uses machine-learning software designed by Boston-based Catalant Inc. to match workers and projects. The program tracks their activity so it can refine the next round of matches. Shell said it began testing the system this year and will roll out the “Shell Opportunity Hub” in January across its business-to-business marketing arm, which has 8,000 employees. “We’re looking at how we can efficiently access and use the diverse talent we already have in Shell,” said Caroline Missen, the Shell executive who oversaw the pilot. These management tools are part of a broader shift to apply artificial intelligence to hiring and other human-resources work. The overall human-resources and workforce-management software market has grown 23% in the past two years to reach $11.5 billion this year and is projected to grow a further 25% by 2020, according to research firm Gartner. There is evidence computers might be better suited to Please see WORK page B4 Now Starring in Hollywood: Consolidation Disney could scale back Fox film studio and use TV holdings to become a digital powerhouse BY BEN FRITZ That’s a Wrap For years, many in Hollywood thought it was only a matter of time until the six major movie studios that have dominated the industry for decades would shrink to five or even four. Few, however, thought the first to go would be Twentieth Century Fox. Fox has performed in the middle of the pack among major studios for the past decade and the conventional wisdom has been that one of the laggards, Viacom Inc.’s Paramount Pictures or Sony Pictures Entertainment, would be bought first. But now that Walt Disney Co. is in talks to buy most of the assets of 21st Century Fox Inc. in a deal that could be announced as soon as this week, people with knowledge of the deal talks said Fox’s movie studio may be scaled back significantly and folded into Disney’s own film operation. The talks may not result in a deal, people close to the discussions cautioned. Fox and Wall Street Journal parent News Corp share common ownership. Founded in 1935 with the merger of Twentieth Century Pictures and Fox Films, the Please see STUDIOS page B2 With Disney in talks to acquire most of 21st Century Fox, Hollywood could lose one of its major studios. Lions Gate 8.6% 2017* Sony 8.8% Disney 18.1% Universal 15.1% *As of Nov. 26 Fox's top-grossing movies world-wide $2.8B Avatar (2009) MARY DELANEY COOKE/CORBIS/GETTY IMAGES Titanic (1997)* 1.5 Star Wars: Episode 1 – The Phantom Menace (1999) $1.0 Ice Age: Dawn of the Dinosaurs (2009) $887M Ice Age: Continental Drift (2012) $877 *Distributed by Fox overseas. Overseas gross. Hedy Lamarr on a set at Twentieth Century Fox, one of six studios that have dominated the industry. Source: Box Ofﬁce Mojo THE WALL STREET JOURNAL. KEYWORDS | By Christopher Mims Early Women in Tech Were Pushed Out n- Sexism in the tech industry is as old as the tech industry itself. Memos from the U.K.’s government archives reveal that, in 1959, an unnamed British female computer programmer was given an assignment to train two men. The memos said the woman had “a good brain and a special flair” for working with computers. Nevertheless, a year later the men became no ELECTRIC CARS LIGHT UP COMMODITIES MARKETS, B9 Warner Bros. 20.3% Fox 12.3% her managers. Since she was a different class of government worker, she had no chance of ever rising to their pay grade. Today, in the U.S., about a quarter of computing and mathematics jobs are held by women, and that proportion has been declining over the past 20 years. The situation is generally worse at the biggest tech companies: Only one in five engineers at Google or Facebook is a woman, according to the companies’ recent diversity reports. A string of recent events—from women coming forward about sexism, harassment and discrimination in the industry, to the controversy over a memo written by a Google employee arguing that women overall are biologically less suited to programming—suggest the steps currently being taken by tech firms to address these issues are inadequate. A growing army of women and members of other underrepresented minorities are working on solutions to JPMorgan Sapphire Cards Get New Head JPMorgan Chase & Co. is bringing in a new executive to run one of its hottest products, the Sapphire Reserve credit card, at a time when doubts By Emily Glazer and AnnaMaria Andriotis have surfaced within the bank about its financial prospects. The nation’s largest bank has hired Barclays PLC card executive Matthew Massaua to oversee the popular rewards card and other Sapphire cards, according to a JPMorgan memo reviewed by The Wall Street Journal. Mr. Massaua, who is scheduled to start his new job Jan. 1, will succeed Lisa Walker, who ran the Sapphire card suite and is planning to take on a new role within the bank’s card division. The bank has already made changes in recent months to Sapphire Reserve’s rewards and how it has offered the card to customers. Though consumer demand for Sapphire Reserve was high when the bank introduced the card last year, JPMorgan executives have raised concerns that it won’t make money for the bank, due in part to the card’s generous rewards, the Journal reported in July. The scrutiny inside the bank reflects changing economics of the competitive premium-card market. Rewards for consumers—paid for by card-issuing banks and merchants—have gotten sweeter. Spenders, meanwhile, are growing savvier about maximizing benefits and avoiding balances that result in interest payments to the banks. Banks over the past year have started to pull back on rewards offerings as a result. JPMorgan has said it is making a long-term bet on the millennial customers who favor the card. Much of that has been riding on how many Sapphire Reserve customers will spend $450 on the card’s annual renewal fee. Trish Wexler, a JPMorgan spokeswoman, said the bank has seen renewals in excess of 90%. The bank has seen “strong retention, frequent card usage, and we’re beginning to deepen these relationships across Chase,” she added, noting Ms. Walker “was a big part” of those results. Mr. Massaua was previously a top executive at Barclaycard International, which includes the British bank’s U.S. credit-card unit and is most well known for its co-branded cards with JetBlue Airways Please see CARD page B2 ly . Other 11.8% Paramount 5.0% co Fo m rp m e er rs ci on al a us l, e on INSIDE Domestic box-ofﬁce market share See more at WSJMarkets.com these issues. The history of computing, in the U.K. in particular, backs up one of their conclusions—that simply educating more women and other minorities to be engineers won’t solve the problem. At its genesis, computer programming faced a double stigma—it was thought of as menial labor and it was feminized, a kind of “women’s work” that wasn’t considered intellectual. Though part of the U.K. governPlease see MIMS page B4 SPY LIQUIDITY RESILIENCY PERFORMANCE For personal, non-commercial use only. Do not edit, alter or reproduce. For commercial reproduction or distribution, contact Dow Jones Reprints & Licensing at (800) 843-0008 or www.djreprints.com. B2 | Monday, December 11, 2017 THE WALL STREET JOURNAL. * *** INDEX TO BUSINESSES BUSINESS & FINANCE These indexes cite notable references to most parent companies and businesspeople in today’s edition. Articles on regional page inserts aren’t cited in these indexes. I Q Insiris .......................... B4 Queer Chocolatier.......R8 K Kraft Heinz ................. B4 Kronos.........................B4 L Ladbrokes..................B10 Leonardo......................B3 Lithium Americas.......B9 Long Financial.............R7 C M Catalant Technologies B1 Macy's.........................B4 Marks & Spencer Group ...................................B10 McLaren Automotive..B6 D Dassault Aviation.......B3 E Elliott Management . B10 F-G First Cobalt.................B9 GateHouse Media.......B4 P PepsiCo........................B4 PPG Industries..........B10 N Nasdaq ........................ B4 Netflix..................B2,B10 News Corp...................B1 Nexus A.I. ................... B4 R Raytheon.....................B3 Royal Dutch Shell.......B1 S Sherwin-Williams.....B10 Sony Pictures Entertainment..........B1 T Tea Forté.....................B4 Tesla............................B9 Toshiba........................B3 21st Century Fox........B1 U Uber Technologies ...... B1 V Viacom.........................B1 W Walt Disney................B1 INDEX TO PEOPLE Hicks, Marie................B4 O Altfest, Karen.............R8 Atkin, Jodi Rosenshein .....................................R6 I Orsolini, Joe................R6 Izzo, Maryrose............R7 P B J Crouch Jr., William.....R6 Page, Nick...................B9 Palmeri, Stephanie.....B4 Pirrong, Craig..............A1 Kenawell-Hoffecker, Kim Lee......................R6 Kodric, Nejc.................A8 L Codispoti, Pamela.......B2 Corden, James ............ B2 E Lake, Marianne...........B2 Long, Chris..................R7 Lundgren, Terry...........B4 Ensmenger, Nathan....B4 M F Magram, Jeffrey.........B4 Mason, Rick ................ R2 Massaua, Matthew .... B1 Medina, Victor............R6 Milkman, Katherine....R2 Missen, Caroline.........B1 G Gennette, Jeff ............ B4 Gold, Gold....................B9 H Harkey, Scott..............A8 N Continued from the prior page Corp. and more recently Uber Technologies Inc. Barclays declined to comment. In recent weeks, JPMorgan also promoted its head of Chase branded cards Pamela Codispoti, who helped launch Sapphire Reserve, to run the bank’s branch network, Ms. Wexler said. During the bank’s most recent earnings call in October, JPMorgan Chief Financial Officer Marianne Lake said that Sapphire Reserve renewMatthew Massaua will oversee the JPMorgan Sapphire Reserve credit cards. W Walker, Lisa................B1 Wesley, Matthew.......R8 Wexler, Trish...............B1 Whittington, Marna ... B4 Wierbicki, Diana ......... R6 Williamson, Gavin ...... B3 Wittenberg, Steve......R8 Wolf, Carolyn ReinachR6 woman said the decline is due in part to three card launches in mid-to-late 2016. Banks including JPMorgan generate credit-card revenue from the annual fees customers pay, the interest charged on their balances and the fees merchants pay when the card is used at their businesses. The bank pays out when it offers rewards, such as the 100,000-point sign-up bonus that JPMorgan initially offered on Sapphire Reserve. But after about five months, it halved that offer. Around that time the bank sent an internal notice to branch employees stating it would no longer preapprove customers for the card, according to the late January memo reviewed by the Journal. When bank customers meet with JPMorgan personal bankers for matters relating to their deposit accounts, personal bankers often suggest credit-card offers that they can qualify for. According to the memo, though, the bank wouldn’t include Sapphire Reserve among the cards it pitches to them. Still, consumers can apply for the card. And JPMorgan isn’t shying away from advertising it. In September, it rolled out its first Sapphire Reserve television campaign, with late-night host James Corden highlighting the card’s travel and dining rewards. no als are in the “early stages” but are “so far, very encouraging…better than our expectations, but a little early to sort of draw firm conclusions.” Ms. Lake also said, however, that revenue in the division that includes the card business is expected to be “relatively flat” in the fourth quarter. Credit-card openings fell to 1.9 million in the third quarter, down 30% from 2.7 million in the year-earlier period. Another bank spokes- V Veale, Michael ............ B4 Nicklas, Therese R......R6 Nishida, Atsutoshi......B3 CARD S Salman, Mohammed bin .....................................B6 Sebastian, Nicole........R8 Sheppard, ChristopherB6 Summers, Matthew ... B4 n- Fredricks, Laura..........R8 Friedman, Adena.........B4 NOTICE OF REDEMPTION BY PS BUSINESS PARKS, INC. OF ALL OUTSTANDING DEPOSITARY SHARES REPRESENTING INTERESTS IN ITS 6.00% CUMULATIVE PREFERRED STOCK, SERIES T NOTICE IS HEREBY GIVEN that, pursuant to Section 3.05 (c)(1) of the Restated Articles of Incorporation of PS Business Parks, Inc. (“PS Business Parks”) and Section 2.8 of the Deposit Agreement dated as of May 3, 2012 (the “Deposit Agreement”) by and among PS Business Parks, American Stock Transfer & Trust Company, LLC, as Depositary (the “Preferred Stock Depositary”) and the holders from time to time of the depositary receipts issued by the Preferred Stock Depositary under the Deposit Agreement, PS Business Parks has called for redemption, and will redeem, on January 3, 2018 (the “Redemption Date”), all of the shares of 6.00% Cumulative Preferred Stock, Series T (“Preferred Stock”), and, in accordance with the Deposit Agreement, the Preferred Stock Depositary will redeem, on the Redemption Date, all of the outstanding depositary shares (the “Depositary Shares”) representing interests in the Preferred Stock. On the Redemption Date, (1) PS Business Parks will deliver, or cause to be delivered, out of funds legally available therefor, to the Preferred Stock Depositary $130,000,000 plus a sum equal to all accrued and unpaid dividends in redemption of all of the Preferred Stock, and (2) the Preferred Stock Depositary will pay to the holders of record of the Depositary Shares, in exchange for each Depositary Share, $25.00 plus a sum equal to all accrued and unpaid dividends from January 1, 2018 through the Redemption Date (the “Redemption Price”). Depositary Receipts representing the Depositary Shares, accompanied by proper instruments of assignment and transfer if payment is to be made other than to the registered holder(s), shall be surrendered for redemption at the following place: By Mail, Overnight Courier or By Hand American Stock Transfer & Trust Company, LLC 6201 15th Avenue Brooklyn, NY 11219 Delivery of the foregoing instruments and documents to any other address shall not constitute valid delivery. On or before the Redemption Date, PS Business Parks will deposit with American Stock Transfer & Trust Company, LLC the Redemption Price, in trust for the pro rata benefit of the holders of the Depositary Shares called for redemption. On and after the Redemption Date, all Depositary Shares and shares of Preferred Stock shall be deemed no longer to be outstanding; dividends thereon shall cease to accrue; and all rights with respect to the Depositary Shares and shares of Preferred Stock called for redemption shall forthwith at the close of business on the Redemption Date cease and terminate, except only the right of the holders thereof to receive the Redemption Price of the shares so redeemed, but without interest, upon surrender of their Depositary Receipts. Any moneys deposited by PS Business Parks and unclaimed at the end of five years from the Redemption Date shall, to the extent permitted by law, be repaid to PS Business Parks, after which repayment the holders of the Depositary Shares called for redemption shall look only to PS Business Parks for the payment thereof. December 4, 2017 ‘Coco’ on Top but ‘Star Wars’ Looms cations in its second weekend in theaters. It managed to bring in $6.4 million, landing it in fourth place. Greta Gerwig's coming-ofage film “Lady Bird” also added 363 locations and placed 9th in its sixth weekend in theaters. With the $3.5 million from this weekend, “Lady Bird” has netted $22.3 million. The Guillermo del Toro-directed romantic fantasy “The Shape of Water” expanded to 41 theaters in its second weekend and earned $1.1 million. The Tonya Harding biopic “I, Tonya” launched in four locations in New York and Los Angeles and brought in a solid $245,602. The Winston Churchill film “The Darkest Hour” and the summer romance film “Call Me By Your Name” also continue to thrive in more limited releases as well. “The Darkest Hour,” which stars Gary Oldman as Churchill, earned $777,000 from 53 locations, and “Call Me By Your Name,” with Armie Hammer and Timothée Chalamet, took in $291,101 from nine theaters. “This is the best time to be a moviegoer if you’re an indie fan,” said comScore senior media analyst Paul Dergarabedian. “The last few weeks have enabled films like ‘The Shape of Water,’ ‘Three Billboards Outside Ebbing, Missouri’ and now ‘I, Tonya’ to really find an audience.” He added: “It’s a great time for those films ahead of the box-office death star that is ‘Star Wars.’ ” LOS ANGELES—The animated family film “Coco” topped the box office for a third time on a quiet, pre”Star Wars: The Last Jedi” weekend in theaters. Disney estimated Sunday that “Coco” added $18.3 million, which would bring its domestic total to $135.5 million. The weekend's sole new wide release was the Morgan Freeman film “Just Getting Started,” which launched to a meager $3.2 million from 2,161 theaters and barely made the top 10. Many studios have chosen to avoid competing against “The Last Jedi,” which is expected to dominate theaters and moviegoer attention when it opens on Dec. 15. As a result, most of the charts have looked quite similar for the past few weeks. Warner Bros. and DC's “Justice League” took second place with $9.6 million and the Lions Gate sleeper hit On Fox’s Los Angeles studio lot, anxiety is high as staffers speculate about their future while also trying to focus on three movies they will be opening in the next two weeks: the animated “Ferdinand,” the musical “The Greatest Showman” and the historical drama “The Post.” Nodding to wildfires raging just a few miles away from the studio, a Fox staffer last Wednesday tweeted, “Power outages here at the office. Not sure if it’s related to the fires or just the first phase of Disney cost-cutting measures.” “TOO SOON,” replied a colleague. Executives and producers who work at Fox say they ex- pect their business to be slimmed down but hope Disney allows them to maintain an independent culture and continue to make a range of films, some of which aren’t based on existing franchises. They said they recognize their business would likely be oriented more toward providing content for streaming platforms like Hulu, but hope Disney keeps releasing movies of all types in theaters first. releases from traditional Hollywood studios at a time when Netflix and Amazon are aggressively expanding their film output, primarily for their streaming platforms, these people said. The six major studios released 139 films last year compared with 189 in 2007, according to the Motion Picture Association of America. Movies are essentially a stagnant business, with global box-office revenues up just 1% last year and U.S. home-entertainment revenues down 7%, according to the MPAA and the Digital Entertainment Group. That is why many in Hollywood believe consolidation is inevitable. As he has reshaped Disney’s movie operation in his 12 years running the company, Mr. Iger has reduced the number of films it makes. Disney now focuses almost exclusively on bigbudget pictures based on existing properties—meaning sequels, remakes and comicbook adaptations. The strategy has been successful, with higher average grosses per picture and higher profit margins than competitors. Fox’s movie studio, led by CEO Stacey Snider, has a reputation as more “filmmaker friendly” and releases more movies—24 this year compared with Disney’s eight—at all budget levels. Unlike Disney, it makes a number of original live-action movies. Combined profits from Fox’s movie and television studios were just over $1 billion in the company’s most recent fiscal year, compared with nearly $2.4 billion for Disney’s film studio alone. Fox doesn’t report separate movie-studio results. One certain thing, the people familiar with the talks said, is that Disney has its eye on Fox’s two biggest movie franchises. “Avatar,” which still ranks as the highest-grossing movie of all time with $2.8 billion world-wide, was recently turned into a set of attractions at Walt Disney World in Orlando. Fox has begun production on a quartet of sequels to the 2009 hit and Disney would likely integrate the brand into its movie business and exploit synergies with its theme parks and merchandise units. Fox also controls the movie rights to Marvel’s X-Men under a deal that dates to the 1990s, before Disney owned the superhero company. Reuniting characters that have long coexisted in comic books but not on the big screen would be a creative coup for Marvel Studios and provide new merchandising opportunities. Fox’s Marvel pictures, including the R-rated hit “Deadpool,” have been less familyfriendly than Disney’s, though, and it may be a challenge to merge the two sensibilities. Estimated Box-Office Figures, Through Sunday SALES, IN MILLIONS FILM 1. Coco 2. Justice League DISTRIBUTOR WEEKEND* CUMULATIVE Disney $18.3 Warner Bros. $9.6 % CHANGE $135.5 $212.1 -34 -42 3. Wonder Lions Gate 4. The DisasterArtist A24 $8.5 $6.4 $100.3 $8 -30 431 5. Thor: Ragnarok $6.3 $301.2 -36 Disney *Friday, Saturday and Sunday Source: comScore “Wonder,” which has now passed $100 million, placed third with $8.5 million. Warner Bros. also crossed the $2 billion benchmark domestically Saturday—the first studio to do so in 2017. This quiet period before “Star Wars” has allowed some of the indie and prestige titles to thrive in limited releases and expansions, like James Franco’s “The Disaster Artist.” The film, about the making of one of the worst films of all time, “The Room,” expanded to 840 lo- co Fo m rp m e er rs ci on al a us l, e on C K Disney’s animated family film ‘Coco’ was No. 1 at the box office for a third time with an estimated $18.3 million for the weekend. Associated Press A Bareis, Andreas..........B6 Bartow, Bill.................B4 Benartzi, Shlomo........R2 Beshears, John...........R2 WALT DISNEY/EVERETT COLLECTION BAE Systems..............B3 Barclays.......................B1 Bayerische Motoren Werke........................B6 Berkshire Hathaway ...................................B10 Boeing ......................... B3 Boston Herald.............B4 H Herald Media Holdings .....................................B4 Hulu.............................B2 Nippon Paint Holdings ...................................B10 NYSE Euronext...........B4 PS BUSINESS PARKS, INC. STUDIOS Continued from the prior page studio was in its earlier years known for stars like Henry Fonda and Shirley Temple and films including “Gentleman’s Agreement,” “The Sound of Music” and the Liz Taylor-Richard Burton epic “Cleopatra,” which became a cinematic icon but nearly bankrupted the studio during its troubled production. In 1977 it released “Star Wars,” the beginning of a relationship with George Lucas that would span six films and generate $4.6 billion at the box office. Since Rupert Murdoch took control of the studio in 1985, it has had its biggest successes with “Avatar” and the “X-Men” film series, as well as hits such as “Independence Day,” “Home Alone” and “The Martian.” Disney is looking to buy Fox primarily for its television distribution and production businesses, the people close to the talks said. It would gain control of Fox’s foreign satellite services, a set of U.S. cable networks and majority control of streaming service Hulu. Those assets would largely be put to work in Disney Chief Executive Robert Iger’s goal of transforming Disney into a direct-toconsumer digital powerhouse that can rival companies like Netflix Inc., rather than simply selling content to them. The Twentieth Century Fox television studio would be kept busy producing shows for Disney-owned streaming services, as well as for other outlets, people with knowledge of the deal talks said. But it isn’t clear how Disney would integrate the Fox movie studio, which is ranked fourth at the domestic box office this year, with hits including “Logan” and “Kingsman: The Golden Circle” and disappointments such as “Alien: Covenant” and “Snatched.” Some people close to the deal talks said Twentieth Century Fox could become a production label within the Walt Disney Studios, akin to Pixar and Marvel. In that scenario, Fox operations such as theatrical and home-video distribution would likely be cut back, resulting in job losses among the studio’s approximately 3,200 employees. Fox under Disney would likely make fewer movies, further reducing the number of Liz Taylor in the epic ‘Cleopatra,’ an extravaganza that nearly bankrupted Fox. ASSOCIATED PRESS B General Electric .......... B1 GVC Holdings............B10 ly . A Airbus..........................B3 Akzo Nobel................B10 Amazon.com ............... B4 Aston Martin Lagonda .....................................B6 Axalta Coatings Systems..................B10 High Anxiety Seizes Fox Studio For personal, non-commercial use only. Do not edit, alter or reproduce. For commercial reproduction or distribution, contact Dow Jones Reprints & Licensing at (800) 843-0008 or www.djreprints.com. THE WALL STREET JOURNAL. Monday, December 11, 2017 | B3 BUSINESS NEWS Atsutoshi Nishida The British government and Qatar this summer first disclosed the potential deal over the sale of two dozen Eurofighter Typhoon jets. Qatar, U.K. in Fighter Deal BY ROBERT WALL LONDON—The government of Qatar and British weapons maker BAE Systems PLC have completed a multibillion-dollar deal for 24 combat jets, continuing a weapons buying spree by the Middle East country. BAE Systems on Sunday said the two sides have entered a roughly £5 billion ($6.7 billion) contract for the Eurofighter Typhoon combat jets, training and related items. Qatar and the British government this summer first disclosed the potential deal over the sale of two dozen of the combat planes. The contract would include weapons provided by Raytheon Co. and its European rival MBDA, the British government said. The deal comes days after Qatar said it was buying 12 more Rafale combat jets from France’s Dassault Aviation SA. The Persian Gulf state previously bought 24 Rafale planes. The tiny but gas-rich Gulf state earlier this year also signed a deal to buy 72 F-15 combat aircraft from Boeing Co. in a transaction valued at $12 billion. Qatar’s weapons purchases come amid a monthslong regional diplomatic spat between the Persian Gulf state and some of its neighbors. Saudi Arabia, the United Arab Emirates, Bahrain and Egypt broke off diplomatic relations with Qatar in June, accusing their neighbor of supporting terrorism and meddling in their internal affairs, charges Doha denies. The diplomatic standoff in the Gulf pits several U.S. partners against one another. For BAE Systems, the deal comes at an important time. The London-based company in October said it would eliminate almost 2,000 jobs and slow production of Typhoon combat jets amid a dearth of orders. The deal is still subject to financing conditions and first payments, BAE ceive its planes starting in late 2022. The British government said the contract signature, in the presence of its new defense secretary Gavin Williamson, included the intent to purchase six Hawk trainer planes made by BAE. The Middle East has been one of the rare bright spots for exports of the Typhoon, which has struggled to win orders in other regions. Saudi Arabia has acquired 72 of the planes and may take more. Oman and Kuwait also are customers for the twin-engine combat plane. Regional tension with Iran and the fight against Islamic State have bolstered Middle East demand for the newest defense equipment despite financial pressures on government budgets from a slump in oil prices since the middle of 2014. Saudi Arabia in May announced $110 billion in arms deals with the U.S., though several of those agreements had been previously disclosed. ly . Persian Gulf state to buy 24 combat jets from BAE Systems for about $6.7 billion The Middle East has been one of the rare bright spots for exports of the Typhoon. co Fo m rp m e er rs ci on al a us l, e on TOKYO—Atsutoshi Nishida, who rose from a locally hired employee in Iran to become president of Toshiba Corp. but saw his later years tarnished by an accounting scandal, has died at age 73. ATSUTOSHI Mr. Nishida NISHIDA died Friday at 1943-2017 a hospital in Tokyo after a heart attack, Toshiba said Saturday. After graduate study in German political thought, Mr. Nishida, whose wife was from Iran, joined Toshiba through an affiliate in Iran in 1975. He served as president from 2005 to 2009 and chairman from 2009 to 2013. He was known as a hardcharging executive who helped make Toshiba, which pioneered the notebook computer, into a personal-computer leader in the 1990s. “I’m practical, but I also have enthusiasm, which is the side of me that’s not practical,” he said in an interview with The Wall Street Journal in 2008. “If you have that in addition to a strong will to achieve your goals, then you can overcome any adversity.” While Mr. Nishida was president in 2006, Toshiba gambled on the nuclear-power business by paying $5.4 billion to buy U.S. nuclear company Westinghouse Electric Co. But global demand for nuclear power shriveled after the Fukushima Daiichi nuclear meltdowns in Japan in 2011, and Westinghouse filed for bankruptcy protection in March 2017. In 2015, Toshiba acknowledged inflating profits by more than $1 billion over seven years. An independent panel hired by the company to investigate the matter blamed three former presidents of the company including Mr. Nishida for the scandal and said they put intense pressure on business units to achieve unrealistic profit targets. In an interview published in the weekly magazine Shukan Post in November, Mr. Nishida denied knowing about the accounting irregularities and criticized the independent panel for what he described as its ignorance about business. He said there was “absolutely no way” he would try to keep a lid on improprieties. “I would like to say, look at the way I have lived my life,” he said. What the panel described as improper pressure was just everyday encouragement to his subordinates to try hard, he said. Mr. Nishida is survived by his wife, a son and a daughter, Toshiba said. Further information about survivors wasn’t immediately available. Another former Toshiba president, Taizo Nishimuro, died in October at age 81. Mr. Nishimuro, who served as president from 1996 to 2000, was seen as the power behind the throne when Mr. Nishida was president and chairman. PASCAL LAUENER/REUTERS BY PETER LANDERS AND TAKASHI MOCHIZUKI JASPER JUINEN/BLOOMBERG NEWS Former President Made Toshiba a Computer Leader Systems said. It expected those to be in hand by mid-2018. The decision to slow the pace of production of Typhoon planes, which BAE makes in conjunction with Airbus SE and Italy’s Leonardo SpA, stretched the current production activity until 2022 from a threatened stop in 2019. BAE said Qatar should start to re- no n- IF THERE ARE THREE TRADING THINGS YOU WANT, THEY’RE THESE THREE THINGS. POWER. VALUE. SERVICE. 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B4 | Monday, December 11, 2017 THE WALL STREET JOURNAL. TECHNOLOGY WORK WSJ.com/Tech Driving Sales Total gross merchandise volume $100 billion 80 New Management Sales of software that helps manage people, from human resources to workforce planning and scheduling, has seen an uptick in growth. $14 billion 12 10 8 40 (LEFT) EMILY KARDAMIS; (RIGHT) TEA FORTE Share from Amazon's retail sales* 60 Third-party merchants 20 0 2015 A cat-shaped touch lamp featured in one deal. ’16 ’17 *Includes related shipping fees and digital media content, as well as a portion of Amazon Prime fees Sources: the company; FactSet THE WALL STREET JOURNAL. A Tea Forté cup. Some of the firm’s sales jumped. Merchants Ride Amazon’s Deals BY LAURA STEVENS wide selection of merchandise and keep shoppers interested. Besides its roughly 30 “deals of the day” on Cyber Monday and other big shopping days, Amazon also promotes outside merchants in less-selective “lightning deals,” which typically cost a seller a $300 fee although in some cases are free. Amazon collects roughly 15% of each purchase, plus fees for warehousing and shipping under its Fulfillment by Amazon offering. An Amazon deal prompted Emily Kardamis to click “buy” late last month on a thirdparty item, a cat-shaped silicone touch lamp. Ms. Kardamis, a web designer, discovered the $12.59 item in a tweet and clicked through to Amazon.com’s deal page, where she found the item was almost sold out. Ms. Kardamis, 24 years old, said she wasn’t intending to buy a lamp. But “it strikes my fancy, and the price is also really good,” the Cleveland resident said. Amazon’s ability to keep up the steady stream of tempting impulse offerings year-round is possible in large part because of the company’s vast base of third-party sellers. Many smaller brands sell only On Cyber Monday, Tea Forté featured eight products priced from $10.40 to $19.25. At the peak, it was selling one unit every three seconds. Deciding on the discount means “we just find that sweet spot,” Mr. Nebelung said. It is a price where the company can earn money, protect its brand and fuel sales for the entire holiday season, he said. Last year, it participated in a holiday deal on Dec. 2 and made it to some of Amazon’s best-seller lists. “It had a halo effect,” Mr. Nebelung said, adding that sales of products that weren’t part of the holiday deal also rose. A sales surge will influence Amazon’s algorithmic suggestions to consumers. Recommendations might include items often purchased together or bought by customers looking at the similar items. Jason Boyce, chief executive of retailer Dazadi.com, hopes to help launch a rowing machine in a daily deal on Amazon this holiday season. He plans to offer 15% off its retail price of $129. Most of the company’s more than $20 million in annual sales come to it through Amazon. “It gets more eyeballs,” he said. on Amazon, making some of the deals exclusive. The variety of promotions makes for a type of “game-ification of the shopping journey,” says Forrester retail analyst Brendan Witcher. Traditional retail rivals such as Best Buy Co. and Macy’s Inc. tend to take markdowns across entire categories or offer selected “door buster” prices to drive store traffic. Amazon’s third-party deals, in 70% Portion of Amazon.com's sales contributed by third-party sellers co Fo m rp m e er rs ci on al a us l, e on Christmas came early this year for Tea Forté Inc. Amazon.com Inc. selected the company’s loose-leaf tea samplers and tea-steeping mugs as some of its Cyber Monday deals, causing one sampler to skyrocket to No. 4 in Amazon’s grocery rankings from No. 588 the previous day. “For us, the deal of the day is a game changer,” said Jurgen Nebelung, vice president of e-commerce and digital for Tea Forté. By sacrificing 35% of revenue per unit for the Cyber Monday discount on Amazon, Tea Forté did 6.5 times its normal sales volume on the website. Tea Forté, based in Concord, Mass., is one of more than two million independent merchants on Amazon, many of them jockeying to get their merchandise into the rotation for one of the site’s seemingly random holiday promotions. For an item to be considered, the online giant typically requires merchants to take a minimum 15% price reduction; sellers often slash prices further to try to get picked. While Amazon sells and promotes its own merchandise, third-party sellers of products as diverse as coffee pots, pet accessories and pajamas contribute 70% of the site’s sales, analysts estimate. Such is Amazon’s holiday selling might that winning a slot in one of Amazon’s shortterm promotions can trigger a sales windfall for the rest of the season, third-party sellers say. Those chosen say the promotions improve their odds of showing up in consumer search results on the site. Third-party sellers sold more than 140 million items on Amazon.com over the fiveday Thanksgiving holiday weekend this year, according to Amazon. Because the window can be short between submitting an item and notification that it has been selected as a daily deal, some merchants take a risk and stock up on inventory before they know the answer. For Amazon, promoting third-party sellers via limitedtime offers is a way to offer a ly . Site’s daily promotions can trigger windfalls over holiday season as search results improve contrast, feature a broad variety of products in categories that consumers might not actively search. Amazon’s deal of the day selections hinge on two important factors—whether it thinks an item will be a hot seller and whether the discount is deep enough. Amazon also takes into account the number of units the seller is willing to offer and customer reviews. n- Continued from page B1 ment’s low-paid “Machine Operator Class,” women performed knowledge work including programming systems for everything from tax collection to scientific research, using punch cards on a vacuum-tube computer. Then they were pushed out of the field, says technology historian Marie Hicks, assistant professor at the University of WisconsinMadison, who wrote about it in her recent book, “Programmed Inequality.” Government leaders in the postwar era held a thencommon belief that women shouldn’t be allowed into higher-paid professions with long-term prospects because they would leave as soon as they were married. Instead, the government sought to develop a class of career-minded and management-bound young men. But replacing experienced women with male novices didn’t go as bureaucrats planned, according to Dr. Hicks. “They were just hemorrhaging money and time to try and train and recruit this ideal young man, this technocrat who will manage people and machines,” she says. Not only were the male MIT PRESS MIMS no Continued from page B1 some managerial tasks than people are. Humans are susceptible to traps such as confirmation bias. People using intuition tend to make poor decisions but rate their performance more highly, according to a 2015 University of New England analysis of psychological studies. And in an increasingly quantitative business world, managers are asked to deliver more datadriven decisions—the sort at which machines excel. “What managers do mostly is identify potential, build teams, assign tasks, measure performance and provide feedback. Generally speaking, humans aren’t very good at these tasks,” said Tomas ChamorroPremuzic, a professor of business psychology at University College London. “Someday, we might not need managers.” Other researchers suggest artificial intelligence, too, can fall prey to traps when making decisions. AI systems are often trained to make decisions by finding similarities to historical data. But that can make them bad at predicting rare events, such as when employees would excel at a task they haven’t encountered before, said Michael Veale, a researcher in responsible machine learning at University College London. “What makes a great salesman this year might not make a great salesman next year,” Mr. Veale said. Companies that make and use workforce-management software acknowledge these concerns but say machines are no substitute for human judgment. Instead, they say their software speeds up administrative work and uses data to help human managers improve decisions they previously made only by drawing upon gut instinct and experience. “Our goal here is to optimize managers’ time,” said Bill Bartow, vice president of global product management at Kronos Inc., which this month announced software that evaluates vacation requests without human intervention and assigns tasks based on worker preferences and qualifications. Several startups and established firms offer tools to automate and optimize the allocation of work shifts and assignments, enabling one person to manage many more workers than previously. Insiris Ltd., a U.K.-based maker of workforce-management software, uses machine learning to draw up assignments for 100 river pilots at a large European port, taking into account variables such as each pilot’s past performance. “If you’re a human allocating work, a computer’s going to be much more efficient at that,” said Matthew Summers, Insiris’s managing director. Other firms focus on morecomplex forms of management. Chicago-based Nexus A.I. uses its algorithms to search employees’ profiles to determine which ones would work best together on projects. It also performs automated performance reviews. Amazon's third-party merchants make up a growing share of overall sales on the site. Early computer programming was considered menial labor and wasn’t deemed intellectual work. recruits often less qualified, they frequently left the field because they viewed it as unmanly. A shortage of programmers forced the U.K. government to consolidate its computers in a handful of centers with the remaining coders. It also meant the government demanded gigantic mainframes and ignored more distributed systems of midsize and mini computers, which would give rise to the personal computer, Dr. Hicks says. As a result, the U.K.’s computing industry imploded. By 1968 there was a 6 single firm, ICL. Some women who were pushed out of government and corporations started their own companies of women programmers. One was Dame Stephanie Shirley, who in the 1960s built a tech firm, Freelance Programmers, made up almost entirely of women and that even offered family-friendly benefits such as working from home. (The firm, eventually known as Xansa, was sold to a rival in 2007 for nearly $1 billion.) Dame Shirley has said that when she founded the company, she was seeking not wealth but “a workplace where I was not hemmed in by prejudice, or by other people’s preconceived notions of what I could or could not do.” In the U.S., as in the U.K., women found programming jobs after World War II. All six of the first programmers of America’s first digital computer, Eniac, were women. The decline in female programmers coincided with the professionalization of coding in the 1960s, writes computer historian Nathan Ensmenger in his 2012 book “The Computer Boys Take Over: Computers, Programmers, and the Politics of Technical Expertise.” The proportion of women earning degrees in computer science peaked in 1984 at 37% and has declined ever since. Today, 18% of computer-science degrees are granted to women, according to a 2016 study from Accenture and the nonprofit Girls Who Code. America’s computing workforce is 24% women, and that proportion is falling too, despite hundreds of millions of dollars the industry has spent on diversity and inclusion efforts. Stephanie Palmeri, a partner at venture-capital firm Uncork Capital, says raising the ratio of women in technology primarily requires having more women in positions of power, both as investors and executives. Without external influence, you can’t expect a system that prizes “culture fit” to change, says Dr. Hicks. You also can’t expect to rise in a “meritocracy” that doesn’t reward everyone equally. The risks of baking these flaws into the system become greater in an age when employers are training artificial intelligence to do the hiring—and in which AI is learning from pre-existing notions of what constitutes a “good” employee. BUSINESS WATCH 4 MACY’S 0 2014 ’15 ’16 ’17 ’18 Note: 2017 and 2018 are forecasts Source: Gartner THE WALL STREET JOURNAL. THE REPUBLIC OF ARGENTINA Collateralized Floating Rate Bond Due 2023 In accordance with the provisions of the Fiscal Agency Agreement, notice is hereby given that for the six month Interest Period from 30 November 2017 to 30 May 2018, the Bonds will carry an Interest Rate of 1.6875% p.a. and the Coupon Amount per US$1,000 nominal of the Bonds will be US$12.57. Citibank Agency & Trust 11 December 2017 Chairman’s Exit Completes Transition Macy’s Inc. Executive Chairman Terry Lundgren will retire next month from the board, completing a transition of leadership for the department-store operator announced nearly 18 months ago. Mr. Lundgren’s retirement will be effective on Jan. 31, Macy’s announced Friday. The board named Chief Executive Jeff Gennette as chairman. Mr. Lundgren left the chief executive post in March after serving in the role since 2003. Before becoming CEO, he was president and chief merchandising officer. Following Mr. Lundgren’s retirement, the board will have 10 directors, the company said. Marna Whittington will remain PEPSICO as lead independent director. Mr. Lundgren said he is confident the company “has the strategies, resources, talent and leadership to capitalize on the fundamental shifts in consumer shopping patterns we have all experienced.” —Aisha Al-Muslim Nasdaq Wins Listing From the Big Board BOSTON HERALD ANDREW KELLY/REUTERS 2 Tabloid Seeks A Purchaser The owner of the Boston Herald newspaper has filed for chapter 11 bankruptcy and is putting itself up for sale, with a $5 million starting offer from GateHouse Media Inc. The feisty tabloid, which dates to 1846, cited the growth of alternative media and erosion of ad revenue for the need to Terry Lundgren at Macy’s Herald Square in New York last year. seek bankruptcy protection. GateHouse intends to buy the newspaper free and clear of pension and retiree health and welfare obligations, according to an affidavit signed by Jeffrey Magram, chief operating officer of Herald Media Holdings Inc. —Peg Brickley and Becky Yerak PepsiCo Inc. said it would transfer its stock-exchange listing from the New York Stock Exchange to the Nasdaq later this month, in a big win for the Nasdaq Stock Market as it builds its data business. PepsiCo, which has a market capitalization of about $165 billion, is one of the largest companies to change exchanges recently and joins Kraft Heinz Co., which jumped ship from the NYSE in 2012. Under Chief Executive Officer Adena Friedman, Nasdaq has focused on building advanced marketplace technology and information analytics. —Austen Hufford For personal, non-commercial use only. Do not edit, alter or reproduce. For commercial reproduction or distribution, contact Dow Jones Reprints & Licensing at (800) 843-0008 or www.djreprints.com. THE WALL STREET JOURNAL. Monday, December 11, 2017 | B5 Transform Your Tomorrow co Fo m rp m e er rs ci on al a us l, e on ly . # $ % ( % & $ Every Precision ' % ) ' )' % 5 9 :$/ ; # 1.. 8 1. < 3 6 7 # 3 4 no n- Enjoy ! tomorrowsleep.com " WSJ ...-$1=$1/2-.>$: *+ ,-.. ./012012 For personal, non-commercial use only. Do not edit, alter or reproduce. For commercial reproduction or distribution, contact Dow Jones Reprints & Licensing at (800) 843-0008 or www.djreprints.com. THE WALL STREET JOURNAL. B6 | Monday, December 11, 2017 BUSINESS NEWS Firms Luxe Cars Are Hot in Persian Gulf U.S. Boosted Region becomes No. 1 market for extremely expensive cars based on per capita buying November IT Hiring BY ANGUS LOTEN On a typical Friday evening, some of the world’s swankiest cars can be seen crawling along a roughly 16-mile stretch of Dubai’s Jumeirah Beach road. Bentleys pull up next to Bugattis; there are Ferraris and Lamborghinis. In heavy traffic, most don’t speed up further than the next stop light, but for many of their owners, driving isn’t necessarily the point. Ultraluxury cars, some costing hundreds of thousands of dollars, are experiencing a surge in popularity in the Persian Gulf. The region’s rich sheikhs, wealthy locals and well-paid expatriates are splurging on relatively rare vehicles, along with designer jewelry, bespoke yachts and penthouses in London and New York. Saudi Arabia’s Crown Prince Mohammed bin Salman, through a proxy, bought a 500-year-old Leonardo da Vinci masterpiece in November for a record $450.3 million, The Wall Street Journal reported this past week. McLaren Automotive Ltd. recently created a one-off version of its latest 720S car for a customer in the United Arab Emirates. Finished in satin black with gold highlights, the vehicle has a 24-carat-gold engine heat shield, gold-painted wheels and Arabic calligraphy evoking the Dubai skyline on the air brake. The price: half a million dollars. “You are unlikely to find a McLaren in your rearview mirror at the traffic light,“ said Andreas Bareis, McLaren’s managing director for the Middle East, Africa and Latin America, referring to the Gulf market. “That’s a big attraction.” U.S. employers hired more information-technology workers last month, signaling strong demand by businesses across all sectors of the economy to leverage digital capabilities and other tech tools wherever possible, CompTIA reported Friday. The number of new IT positions at companies outside of the technology sector rose by an estimated 243,000 jobs in November, after dropping by 77,000 the previous month, the tech trade group said. For the year, IT jobs have grown by 223,000, following a series of ups and downs since January. “There is a degree of uncertainty and volatility in the monthly occupation-level data,” said Tim Herbert, the group’s senior vice president for research and market intelligence. “The trend line over time is the more important indicator,” he said. The results are based on an analysis of the latest Bureau of Labor Statistics data, released Friday. It shows nonfarm payrolls across the board rose by a seasonally adjusted 228,000 last month, a slight downturn from October, The Wall Street Journal reported. Unemployment held steady at 4.1%. Jobs posting for IT project managers also rose in November, while software developers, computer systems engineers, architects and analysts were down. So far this year, employers have posted an estimated 2.1 million jobs for IT positions. Separately, jobs within the IT sector rose by 8,100, driven by an upturn in hiring at IT and software-services firms and computer, electronic and semiconductor manufacturers. PATRICK T. FALLON/BLOOMBERG NEWS BY NIKHIL LOHADE The Persian Gulf’s rich sheikhs and wealthy locals are splurging on relatively rare vehicles such as McLaren Automotive’s 720S. Car companies don’t disclose their sales in the Persian Gulf region, but auto-industry executives estimate that the low-volume luxury segment, especially special editions built in limited numbers, has grown by high single digits in the past two years. Aston Martin says sales in the Gulf region are set to grow 10% to 15% for 2017 to about 250 cars. And McLaren Automotive expects a 12% increase in Gulf sales compared with last year, to some 200 cars. Rolls-Royce’s Dubai representative was the company’s top dealer by volume last year, the company said. A sales executive for the Dubai dealer said it sold more than 200 vehicles with the famous “Flying Lady” hood ornament, up from about 160 in 2015. Months before its ultraluxury sedan hits the roads early next year, the all-new RollsRoyce Phantom VIII has sold out in the Gulf, according to Rolls-Royce Motor Cars Ltd, a unit of BMW AG. The company declined to reveal the number of units sold, but a single car, with features such as handcrafted seats and wood interior paneling, costs at least half a million dollars. Aston Martin’s limited-edition Vanquish S Pearl, with mother-of-pearl finishes inside and a price tag of about $450,000, sold all 10 units made at its launch in the Gulf in November, according to the company. Sheppard said. The demand at the top end contrasts with relatively weak automobile sales overall in the Gulf region. A sharp drop in the price of oil since mid-2014 forced Gulf countries to cut back on government spending and adopt austerity measures, such as the withdrawal of fuel subsidies. The region’s overall new-car market shrank by nearly 20% last year and sales are down so far in 2017, according to Autodata Middle East, a Dubai-based company that collates data from auto dealers. ly . Luxury-Car Makers Cash In on Demand co Fo m rp m e er rs ci on al a us l, e on Lavish displays of wealth are linked with social status everywhere. But the Gulf’s bloc of oil-exporting countries has emerged as the world’s No. 1 market for ultraluxury cars—most costing at least $250,000—based on per capita buying, according to executives from several luxury car makers who track global sales data. The U.S. and China remain the largest markets overall for such automobiles. The tendency of many limited-edition vehicles to rise in value has made them even more attractive in the Gulf region’s otherwise wobbly investment climate, which is largely the result of volatile crude prices as well as political conflict and a sweeping anticorruption campaign in Saudi Arabia. “When you are buying [cars] right at the top of the market, they are investments,” said Christopher Sheppard, chief executive for Aston Martin Middle East and North Africa. “They are appreciating assets.” An Aston Martin Vantage Zagato, for example, which cost about $440,000 in 2013, now is changing hands at more than $1.1 million, Mr. DEFY Your Age. Only $29! You would be hard pressed to find a timepiece of this outstanding quality and precision at this price. no n- “Are you kidding? What a great watch at a ridiculous price. Thank you Stauer!” — Gitto, Hicksville NY It’s Enough to MakeYou Blue in the Face Time to take a stand against overpriced watches with the Stauer Urban Blue, now only $29. 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Monday, December 11, 2017 | B7 MARKETS DIGEST S&P 500 Index Dow Jones Industrial Average Last Year ago 2651.50 s 9.28, or 0.35% last week High, low, open and close for each of the past 52 weeks Trailing P/E ratio 21.42 21.55 P/E estimate * 19.93 18.43 Dividend yield 2.14 2.44 All-time high 24329.16, 12/08/17 Current divisor 0.14523396877348 Year ago Trailing P/E ratio 24.85 24.87 P/E estimate * 19.78 18.45 Dividend yield 1.90 2.09 All-time high: 2651.50, 12/08/17 t 2550 23000 Monday's open t 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 Expected pricing date Filed UP Friday's close Friday's close IPOs in the U.S. Market 2625 24000 Week's high DOWN Monday's open New to the Market Public Offerings of Stock 65-day moving average 22000 21000 2400 20000 2325 65-day moving average 200-day moving average 19000 2250 18000 2175 17000 2100 M A M J J A S O N t Primary market NYSE weekly volume, in billions of shares D D t F Composite J F M A M J J A S O N J F M A M J J A S O N D Bank of America announces plans to cut up to 35,000 jobs, about 10% of its workforce at the time, as a result of its purchase of Merrill Lynch and a weak economy. D Weekly P/E data based on as-reported earnings from Birinyi Associates Inc. Major U.S. Stock-Market Indexes High Nasdaq Composite Latest Week Close Net chg Low % chg 52-Week Close (l) Low Dow Jones Industrial Average 24534.04 24101.24 24329.16 Transportation Avg 10504.80 10178.29 10402.51 Utility Average 770.08 746.86 757.69 Total Stock Market 27997.67 27169.22 27435.24 704.12 Barron's 400 716.02 697.48 6899.23 6734.13 6380.77 6234.22 0.40 19732.40 2.12 8783.74 -1.23 645.05 0.22 23276.73 -0.16 600.24 97.57 215.88 -9.47 59.34 -1.15 -0.11 -7.51 6.69 6840.08 6344.57 l 24329.16 l 10402.51 l 774.47 l 27435.24 l 708.56 l 5383.12 4863.62 0.11 0.35 9.28 -3.72 -9.20 2651.50 1890.86 928.11 6912.36 6422.56 l 23.1 15.0 14.9 17.9 17.0 23.1 10.6 17.3 16.6 15.2 1508.15 1521.72 12512.03 12643.06 550.98 555.99 4068.32 4232.75 531.58 539.62 104.69 106.66 75.65 76.93 131.06 134.10 1211.49 1238.24 9.58 9.43 27.1 30.4 25.6 29.6 13.0 14.0 -15.30 28.50 -1.15 -23.14 -3.81 1.98 -2.72 -3.80 -20.41 -1.85 -1.00 0.23 1.89 -3.42 -2.75 -1.62 -16.19 Latest Week % chg l l l l l l l l l l 3015.17 389.92 259.18 635.36 72731.84 16096.07 47572.86 3704.57 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 S&P/ASX 200 Shanghai Composite Hang Seng S&P BSE Sensex Nikkei Stock Avg FTSE Bursa Malaysia KLCI Straits Times Kospi Weighted 389.25 3176.94 391.98 3591.45 3327.38 4025.75 5399.09 13153.70 740.72 1445.68 22773.80 547.22 5360.26 1119.54 58012.31 10321.10 576.14 9319.16 7393.96 Low 0.38 0.08 –0.13 0.20 0.65 0.36 0.65 –2.73 1.38 1.22 1.67 1.81 –0.02 1.55 1.55 2.27 –1.06 –0.66 3.02 2.18 0.18 –1.22 –2.42 2.34 1.06 0.48 1.28 no DJ Americas Sao Paulo Bovespa S&P/TSX Comp S&P/BMV IPC Santiago IPSA 5994.40 3289.99 28639.85 33250.30 22811.08 1721.25 3424.64 2464.00 10398.62 52-Week Range Close 540.31 57110.99 14951.88 44895.29 3137.71 353.74 2940.03 341.67 3197.54 2592.86 3542.27 4748.90 11190.21 608.79 1363.50 18293 469.77 4467.94 973.33 49400.56 9169.6 531.09 8040.09 6890.42 0.08 –0.83 –1.49 1.27 –0.03 0.20 –0.72 –0.46 –1.90 5532.9 3052.79 21574.76 25807.10 18335.63 1617.15 2871.05 2024.49 9078.64 • • • • • • • • • • • • • • • • • • • • • • • • 3017.76 391.12 263.11 19.1 19.6 21.1 635.36 76989.79 16131.79 51713.38 4255.93 17.6 20.8 5.3 4.2 14.9 396.77 3276.11 400.44 3697.40 3445.23 4118.51 5517.97 13478.86 858.08 1478.96 23046 555.22 5475.67 1195.61 61211.52 11135.4 600.20 9328.63 7562.28 7.7 5.5 11.9 9.1 27.1 11.6 11.0 14.6 15.1 –1.7 18.4 13.3 14.6 –2.8 14.5 10.4 7.8 13.4 3.5 6049.4 3447.84 30003.49 33731.19 22937.60 1792.35 3449.54 2557.97 10854.57 • • • • • • YTD % chg 5.8 6.0 30.2 24.9 19.3 4.8 18.9 21.6 12.4 Source: SIX Financial Information;WSJ Market Data Group Consumer Rates and Returns to Investor U.S. consumer rates Selected rates A consumer rate against its benchmark over the past year Five-year ARM, Rate 4.00% 8.8 9.7 11.2 Bay State Savings Bank Worcester, MA 2.99% 508-890-9015 1.00 Haven Savings Bank Hoboken, NJ 3.00% 201-659-3600 Amalgamated Bank New York, NY 3.13% 800-622-0860 Yield/Rate (%) Last (l)Week ago Federal-funds rate target 1.00-1.25 1.00-1.25 Prime rate* 4.25 4.25 Libor, 3-month 1.49 1.55 Money market, annual yield 0.33 0.34 Five-year CD, annual yield 1.49 1.49 30-year mortgage, fixed† 3.90 3.88 15-year mortgage, fixed† 3.32 3.29 Jumbo mortgages, $424,100-plus† 4.30 4.30 Five-year adj mortgage (ARM)† 3.71 3.68 New-car loan, 48-month 3.18 3.20 3-yr chg 52-Week Range (%) Low 0 2 4 6 8 High (pct pts) 0.25 l l 3.50 0.96 l 0.26 l 1.19 l l 3.73 l 2.99 l 4.21 l 3.20 l 2.85 % Chg From Friday3s Offer 1st-day close ($) price close Denali Thera DNLI Dec. 8/$18.00 GigCapital GIG.U Dec. 8/$10.00 21.45 19.2 ... 10.00 ... ... Luther Burbank LBC Dec. 8/$10.75 11.75 9.3 ... CURO Grp Hldgs CURO Dec. 7/$14.00 Odonate Thera ODT Dec. 7/$24.00 14.20 1.4 ... 22.67 –5.5 –1.4 1 4 5 6 7 8 December 6725 1.25 4.25 1.55 0.36 1.49 4.33 3.50 4.88 4.03 3.36 Net chg %Chg 26900 YTD % chg 596.18 -16.95 -2.76 5.10 185.02 -5.67 -2.97 -3.89 57.36 Crude oil, $ per barrel -1.00 -1.71 6.78 Natural gas, $/MMBtu 2.772 -0.29 -9.44 -25.56 Gold, $ per troy oz. 1245.20 -33.60 -2.63 8.28 U.S. Dollar Index 93.90 1.02 1.09 -8.13 WSJ Dollar Index 87.29 0.79 0.92 -6.08 Euro, per dollar 0.8494 0.0087 1.04 -10.65 Yen, per dollar U.K. pound, in dollars 113.47 1.09 -3.02 Issuer/Industry Takedown date/ Deal value Registration Registration date ($ mil.) (mil.) Fennec Pharmaceuticals Healthcare Dec. 8 Oct. 24,317 1.22 l 616.58 l 58.95 11.38 3.93 -26.00 l l 1346.00 7.40 l 103.25 -7.57 84.49 l 93.56 -4.98 0.96 -10.29 l 118.18 -1.64 l l 1.36 6.45 Real-time U.S. stock quotes are available on WSJ.com. Track mostactive stocks, new highs/lows, mutual funds and ETFs. Plus, get deeper money-flows data and email delivery of key stock-market data. All are available free at WSJMarkets.com Yield to maturity of current bills, notes and bonds 1.00 1.00 1.31 -0.09 -0.08 -0.12 0.03 -0.20 0.13 0.04 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 3.75% 10% 5 2.25 0 1.50 –5 One year ago 0.75 –10 0.00 –15 t 1 3 6 month(s) Yen, euro vs. dollar; dollar vs. major U.S. trading partners 3.00 Friday 1 2 3 5 710 years maturity 30 National Storage Affiliates TrustDec. 7 Real Estate/Property May 25,316 $127.5 $750.0 Tellurian Oil & Gas Dec. 7 Feb. 10,317 $100.0 ... Credit Suisse GW Pharmaceuticals Healthcare Dec. 6 April 17,317 $317.4 ... GS, MS, BofA ML, Cowen & Co At Home Group Retail Dec. 6 Oct. 20,317 $140.9 $1,106.8 Bill Barrett Oil & Gas Dec. 6 June 25,315 $105.0 $500.0 Attunity Technology Dec. 6 July 22,315 $20.0 $50.0 Viking Therapeutics Healthcare Dec. 6 June 20,316 $12.8 $150.0 Cleveland-Cliffs Mining Dec. 5 Feb. 9,317 $316.3 ... BofA ML, GS, DB, Credit Suisse, Jefferies Tabula Rasa HealthCare Technology Dec. 5 Oct. 16,317 $82.5 $350.7 Piper Jaffray, Citi, RW Baird & Co, W. Blair Editas Medicine Healthcare Dec. 5 March 3,317 $51.2 $354.2 MS GoDaddy Technology Dec. 4 April 5,316 $344.4 ... MS $292.4 $805.1 Orion Engineered Carbons Dec. 4 Chemicals March 4,316 Performance Food Group Food & Beverage Dec. 4 Nov. 16,316 $188.2 ... s Yen Monday, December 11 WSJ Dollar index Corporate Borrowing Rates and Yields 35 307 12 5 303 46 394 34 18 372 W. Blair GS, MS Barclays JPM Cantor Fitzgerald & Co Sale Final maturity Issuer Total ($mil.) Rating Bookrunner/ Fitch Moody’s S&P Bond Counsel(s) Dec. 11 Sept.14,2018 Connecticut 350.0 N.R. N.R. Dec. 11 Jan. 15, 2028 Connecticut 400.0 N.R. N.R. Dec. 11 Feb. 15, 2034 Howard CoMaryland 227.1 N.R. N.R. Dec. 14 March15,2032 Empire State Development Dec. 14 March15,2027 Empire State Development Dec. 15 prelim. Alaska Indus Dev & Export Auth Dec. 15 prelim. Allen Co-Ohio 545.7 N.R. N.R. 739.7 N.R. N.R. 162.8 N.R. N.R. 724.2 N.R. N.R. Dec. 15 prelim. 200.0 N.R. N.R. Dec. 15 240.0 N.R. N.R. 385.0 N.R. N.R. 450.0 N.R. N.R. 350.0 N.R. N.R. N.R. Mesirow Financial Inc/— N.R. Goldman & Co/— N.R. Wells Fargo & Co/— N.R. Citi/— 153.5 N.R. N.R. N.R. Citi/— 573.9 N.R. N.R. N.R. M. Stanley/— 795.0 N.R. 580.2 N.R. N.R. N.R. N.R. Loop Capital Markets/— N.R. BoA Merrill/— 200.0 N.R. N.R. N.R. BoA Merrill/— 189.0 N.R. N.R. 281.3 N.R. N.R. 181.1 N.R. N.R. N.R. M & T Securities Inc/— N.R. Piper Jaffray/— N.R. Wells Fargo & Co/— 158.4 N.R. N.R. Dec. 15 Dec. 15 Dec. 15 Total Return 52-wk 3-yr Dec. 15 2.88 1.50 6.46 3.90 3.44 2.30 6.853 4.480 2.17 1.91 4.965 2.633 9.656 6.312 Dec. 15 Sources: J.P. Morgan; Ryan ALM; S&P Dow Jones Indices; Barclays Capital; Merrill Lynch Tuesday, December 12 Deals of $ 150 million or more expected this week Dec. 15 Dec. 15 Sources: Ryan ALM; Tullett Prebon; WSJ Market Data Group n.a. 346 n.a. 14 316 W. Blair, Needham & Co, Roth Cptl Ptnrs Public and Municipal Finance Dec. 15 2.383 3.140 2.690 5.621 2.890 2.107 5.565 JPM Auction of 3 and 10 year note; Auction of 30 year bond; announced on December 7; settles on December 15announced on December 7; settles on December 15 Dec. 15 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 BofA ML, GS, Jefferies, Barclays, Guggenheim Prtnrs, MS Auction of 13 and 26 week bills; Auction of 4 week bill; announced on December 7; settles on December 14announced on December 11; settles on December 14 s Bond total return index Jefferies, MS, Citi, WFS Treasurys Dec. 15 Spread +/- Treasurys, Yield (%) in basis pts, 52-wk Range Last Wk ago Last Low High GS, Cowen & Co Public and Private Borrowing Euro 2017 2.363 3.137 2.680 5.545 2.910 2.212 5.559 ... 4.17 195.14 -3.63 l 91.35 WSJ .COM $190.3 ... 1.20 1.6 Dec. 7 Dec. 5,317 $149.9 107.84 1.7 Revance Therapeutics Healthcare Dec. 4 July 6,317 WSJ Dollar Index Yen, per dollar Oppenheimer Heron Therapeutics Healthcare U.S. Dollar Index U.K. pound, in dollars 54.8 –26.8 $100.0 % Chg 0.83 –0.1 $15.0 52-Week Low Close(l) High 1127.80 –0.1 Dec. 8 Sept. 2,316 $1,275.8 2.56 –0.8 Aqua Metals Metal & Steel $154.8 Crude oil, $ per barrel 42.53 Euro, per dollar Wedbush Sec Dec. 4 Nov. 13,317 166.50 Gold, $ per troy oz. $90.0 BlackLine Technology 532.01 –1.2 Bookrunner(s) $20.0 8.42 TR/CC CRB Index Natural gas, $/MMBtu Big Rock Ptnrs Acquisition 10.17 BRPAU Nov. 20/$10.00 1.34 -0.0094 -0.70 DJ Commodity 7.74 4.1 “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: 27200 TR/CC CRB Index RETO Eco-Solutions RETO Nov. 29/$5.00 21.2 6775 27500 DJ Commodity Quanterix 18.18 QTRX Dec. 7/$15.00 Leisure Acquisition 9.88 LACQU Dec. 1/$10.00 Regalwood Global Energy 9.99 RWGE.U Dec. 1/$10.00 Off the Shelf 27800 Close % Chg From Friday3s Offer 1st-day close ($) price close Company SYMBOL IPO date/Offer price 6825 s 59.34, or 0.22% Commodities and Currencies Last Week Third Federal Savings and Loan 2.79% Cleveland, OH 866-627-1785 2.00 t J FMAM J J A S ON D 2017 3.71% Bankrate.com avg†: 2.88% 800-530-2680 0.00 Performance of IPOs, most-recent listed first Secondaries and follow-ons expected this week in the U.S. market None expected this week DJ US TSM 12.1 9.2 14.3 5.2 9.8 4.1 37.6 6.3 12.1 -0.8 16.2 12.7 -2.4 3.1 -27.0 -12.6 36.6 21.3 -31.8 -12.3 t 5-year Treasury note yield 19.00/ GS, BofA ML, Citi, 22.00 Cantor Fitzgerald, PNC Bank, Mizuho 6875 Benchmark Yields and Rates Treasury yield curve Forex Race Epic Funding Fort Myers, FL 3.00 30.0 Lockup Expirations s 5-year adjustablerate mortgage t (ARM) Interest rate 18.4 13.9 10.8 17.3 11.7 8.2 1544.14 9.6 12643.06 13.0 559.05 7.1 4304.77 34.5 560.52 14.2 106.84 14.7 96.72 -3.9 192.66 -29.3 1341.69 38.7 16.04 -18.5 High • • • • • • 2527.82 325.34 211.72 n- Close The Global Dow DJ Global Index DJ Global ex U.S. Asia-Pacific Australia China Hong Kong India Japan Malaysia Singapore South Korea Taiwan l l 1345.24 11056.89 503.24 3075.02 469.13 88.02 73.03 117.79 885.46 9.14 -0.21 -0.54 -0.70 International Stock Indexes Americas Brazil Canada Mexico Chile 2651.5 1899.18 944.1 1 4 5 6 7 8 December Sources: SIX Financial Information; WSJ Market Data Group Region/Country Index NMRK Nq Other Stock Offerings 10.9 4.8 8.0 8.7 9.6 last week Philadelphia Stock Exchange World l 2238.83 1660.58 815.62 -0.20 -0.98 Other Indexes Russell 2000 1559.61 NYSE Composite 12724.50 Value Line 563.35 NYSE Arca Biotech 4313.97 NYSE Arca Pharma 545.29 KBW Bank 107.77 PHLX§ Gold/Silver 79.37 PHLX§ Oil Service 141.14 PHLX§ Semiconductor 1268.66 CBOE Volatility 11.86 10/23 Newmark Group Full-service commercial real estate services business. 12/14 co Fo m rp m e er rs ci on al a us l, e on 2665.19 2624.75 1916.71 1869.98 952.10 923.02 15.00/ MS, Barclays, 17.00 Raymond James & Assoc, Stifel Sources: WSJ Market Data Group; FactSet Research Systems last week Standard & Poor's 500 Index MidCap 400 SmallCap 600 8.4 t 7.51, or -0.11% % chg YTD 3-yr. ann. % chg High Nasdaq Stock Market Nasdaq Composite Nasdaq 100 CASA Nq Company SYMBOL IPO date/Offer price Financial Flashback The Wall Street Journal, December 11, 2008 30 20 10 0 D 11/17 Casa Systems Provider of cable edge devices and services. 12/13 IPO Scorecard Bars measure the point change from Monday's open J 9.00/ Aegis Cptl, 11.00 Maxim Grp, Dawson James Sec Adial Pharmaceuticals Manufacturer and developer of medications for addiction. None expected this week 200-day moving average D 1.4 9/7 Week's low Bookrunner(s) ADIL Nq 12/12 2475 Symbol/ Pricing primary Shares Range($) exchange (mil.) Low/High Issuer/business ly . 24329.16 s 97.57, or 0.40% last week High, low, open and close for each of the past 52 weeks Last Dec. 15 Dec. 15 American Municipal Power prelim. Chicago CityIllinois prelim. Jacksonville Electric Authority prelim. Jacksonville Electric Authority prelim. Maine State Housing Authority prelim. NYS Housing Fin-Mortgage Agcy prelim. Nassau CoNew York prelim. NewJerseyTurnpikeAuthority prelim. Philadelphia City-Pennsylvania prelim. Pittsburgh Water & Sewer Auth prelim. Suffolk CoNew York prelim. Washington (Hillsboro) SD #1J prelim. Washington Health Care Facs Au Aug. 15, 2045 West Travis Pub Util Agency N.R. Preliminary/ HawkinsDelafield &Wood/Pullman&Comley/ Robinson&Cole/SchiffHardinLLP N.R. Preliminary/ DayPitney/HawkinsDelafield&Wood/ Pullman&Comley/Squire PattonBoggsLLP/Soeder&AssociatesLLC N.R. Preliminary/ McKennon Shelton & Henn N.R. Preliminary/ Harris Beach N.R. Preliminary/ Harris Beach N.R. Raymond James/— N.R. J P Morgan Securities LLC/— N.R. BoA Merrill/— N.R. BOK Financial Securities Inc/ Andrews Kurth Kenyon LLP Source:Thomson Reuters/Ipreo For personal, non-commercial use only. Do not edit, alter or reproduce. For commercial reproduction or distribution, contact Dow Jones Reprints & Licensing at (800) 843-0008 or www.djreprints.com. THE WALL STREET JOURNAL. B8 | Monday, December 11, 2017 FINANCE WATCH MUTUAL FUNDS SEC Grants Delay on Portfolio Disclosures Mutual funds will get a ninemonth reprieve from sending detailed portfolio information to their regulator as the government reviews how to ensure the valuable data aren’t hacked. The Securities and Exchange Commission said Friday that mutual funds won’t have to send forms starting July 2018 that would reveal their positions in stocks, bonds and derivatives as well as monthly performance. The forms would have been sent to the SEC’s Edgar system, which was hacked in 2016. Some of the portfolio information in the new forms is confidential, with investors being able to see only a slice of the data on a delayed basis. The SEC imposed new disclosure rules because for years the agency lacked complete data on mutual funds’ investments, securities lending activity and cash flows in and out of portfolios. Under the changes outlined Friday, mutual funds will have to collect the data and store it internally. It must be given to the SEC upon the regulator’s request. —Dave Michaels LEVERAGED LENDING Regulators Consider Reissuing Guidelines U.S. banking regulators have told Congress they are considering reissuing guidelines that were the basis for a crackdown on leveraged lending. The Federal Reserve, Office of the Comptroller of the Cur- rency and Federal Deposit Insurance Corp. in letters to Rep. Blaine Luetkemeyer (R., Mo.), a senior member of the House Financial Services Committee, said they may revise and reissue for public comment a 2013 policy document laying out lending standards for leveraged loans to highly indebted companies. The Wall Street Journal viewed copies of two of the letters and spoke with a person who viewed the third. The leveraged-lending policy document had been thrown into legal limbo recently when a government auditor ruled that regulators didn’t meet their obligations to notify Congress about it. Fed Chairwoman Janet Yellen told Mr. Luetkemeyer on Dec. 5 that the central bank is “considering soliciting public comment on the [leveraged lending] guidance in the near term with a view to improving the clarity of the guidance and reducing any unnecessary burden.” Acting Comptroller of the Currency Keith Noreika wrote Mr. Luetkemeyer on Nov. 16: “I favor soliciting further public comment on the [leveraged lending] guidance in the near term. We would then revise the [leveraged lending] guidance as necessary to reduce ambiguity and promote additional transparency.” Mr. Noreika has since been replaced by Joseph Otting. A spokesman for Mr. Otting had no comment. “The FDIC is open to soliciting further public comment on the Leveraged Lending Guidance and revising it as appropriate to reduce ambiguity and promote additional transparency,” FDIC Chairman Martin Gruenberg wrote Mr. Luetkemeyer on Dec. 5. —Ryan Tracy Prem12 Mo Fund (SYM) NAV Close /Disc Yld Nuveen Hi Incm Nov 2021 JHB 10.13 10.00 -1.3 6.0 Pioneer High Income Trust PHT 10.82 9.73 -10.1 8.2 Prud Gl Shrt Dur Hi Yd GHY 16.35 14.44 -11.7 7.9 Prudentl Sh Dur Hi Yd Fd ISD 16.55 14.79 -10.6 7.9 Wells Fargo Incm Opps Fd EAD 9.31 8.40 -9.8 8.8 Wstrn Asset Glbl Hi Inco EHI NA 10.01 NA 8.7 Wstrn Asset High Inco II HIX NA 6.94 NA 8.9 Wstrn Asset Opp Fd HIO NA 5.03 NA 7.2 West Asst HY Def Opp Fd HYI NA 15.24 NA 7.9 Other Domestic Taxable Bond Funds Apollo Tactical Incm Fd AIF 17.54 15.67 -10.7 8.9 Ares Dynamic Credit Alloc ARDC NA 16.50 NA 6.9 Barings Corp Investors MCI NA 15.89 NA 1.9 BlackRock Multi-Sector IT BIT 19.99 18.14 -9.3 9.8 BlackRock Taxable Mun Bd BBN 24.04 23.28 -3.2 6.8 Doubleline Oppor Credit DBL NA 22.49 NA 9.0 Duff & Phelps Utl & Cp Bd DUC 9.66 8.92 -7.7 6.6 EtnVncLtdFd EVV 14.98 13.47 -10.1 7.3 Franklin Ltd Duration IT FTF NA 11.61 NA 11.9 GuggenheimTaxableMuni GBAB 23.45 22.94 -2.2 6.7 Invesco High Incm 2023 IHIT 10.06 9.89 -1.7 5.5 John Hancock Investors JHI 18.34 17.23 -6.1 7.4 KKR Income Opps Fund KIO NA 15.60 NA 10.0 MFS Charter MCR 9.27 8.51 -8.2 8.9 MFS Multimkt MMT 6.63 6.10 -8.0 8.8 Nuveen Build Am Bd Fd NBB 22.63 21.83 -3.5 5.6 PIMCO Corporate & Incm PTY NA 16.50 NA 10.4 PIMCO Corporate & Incm PCN NA 17.03 NA 10.6 PIMCO HiInco PHK NA 7.42 NA 13.6 PIMCO Inco Str Fd PFL NA 11.66 NA 9.4 PIMCO Incm Strategy Fd II PFN NA 10.46 NA 9.2 Putnam Mas Inco PIM 5.03 4.64 -7.8 6.5 Putnam Premier Income Tr PPT 5.58 5.17 -7.3 6.0 Wells Fargo Multi-Sector ERC 14.25 13.07 -8.3 9.6 World Income Funds Abeerden Asia-Pacific FAX 5.39 4.88 -9.5 8.5 Etn Vnc Short Dur Fd EVG NA 14.03 NA 7.1 Legg Mason BW Glbl Incm BWG NA 12.86 NA 8.4 MS EmMktDomDebt EDD 8.87 7.71 -13.1 8.6 PIMCO Dynamic Credit PCI NA 22.59 NA 11.5 PIMCODynamicIncomeFund PDI NA 30.62 NA 13.4 PIMCO Income Opportunity PKO NA 26.22 NA 10.1 PIMCO Strat Income Fund RCS NA 8.75 NA 10.1 Templeton Emerging TEI 13.11 11.63 -11.3 4.5 Templeton Global GIM 7.47 6.55 -12.3 6.0 Wstrn Asset Emerg Mkts EMD NA 15.30 NA 7.7 Wstrn Asset Gl Def Opp Fd GDO NA 17.91 NA 7.5 National Muni Bond Funds AllianceBrnstn NtlMun AFB 14.94 13.76 -7.9 4.6 Blackrock Invest BKN 16.10 14.81 -8.0 5.3 Prem12 Mo Fund (SYM) NAV Close /Disc Yld BlackRockMun2030Target BTT 24.41 22.64 -7.3 4.1 BlackRock Municipal Trust BFK 14.54 14.13 -2.8 5.7 BlackRockMuni BLE 15.09 14.55 -3.6 6.1 BlackRockMuni Tr BYM 15.31 14.44 -5.7 5.3 BlkRk MuniAssets Fd MUA 14.20 15.26 +7.5 4.6 BlkRk Munienhanced MEN 12.01 12.14 +1.1 5.6 BlkRk MuniHldgs Inv MFL 14.78 14.81 +0.2 5.7 BlkRk MuniHldgs Qlty II MUE 14.11 14.08 -0.2 5.5 BlkRk MuniVest MVF 9.70 9.80 +1.0 5.7 BlkRk MuniVest II MVT 15.30 15.57 +1.8 5.7 BlkRk MuniYield MYD 14.93 14.55 -2.5 5.9 BlkRk MuniYld Quality MQY 15.95 15.74 -1.3 5.5 BlkRk MuniYld Qlty II MQT 14.00 13.20 -5.7 5.6 BlRkMunyldQltyIII MYI 14.55 14.21 -2.3 5.8 Deutsche Mun Income Tr KTF 12.69 12.02 -5.3 6.5 Dreyfus Mun Bd Infr Fd DMB 14.33 13.26 -7.5 4.9 Dreyfus Strat Muni Bond DSM 8.38 8.45 +0.8 5.9 Dreyfus Strategic Munis LEO 8.60 8.79 +2.2 5.9 Eaton Vance Mun Bd Fd EIM 13.72 12.70 -7.4 5.0 Eaton Vance Mun Income EVN 13.40 12.36 -7.8 5.4 EV National Municipal Opp EOT 22.02 22.93 +4.1 4.4 Invesco Adv Mun Incm II VKI 12.20 11.51 -5.7 5.8 Invesco Mun Incm Opps Tr OIA 7.65 8.12 +6.1 5.1 Invesco Mun Opportunity VMO 13.57 12.40 -8.6 6.1 Invesco Municipal Trust VKQ 13.57 12.57 -7.4 5.9 Invesco Qlty Mun Inco IQI 13.68 12.59 -8.0 5.4 Invesco Inv Grade Muni VGM 14.06 13.43 -4.5 5.8 Invesco Value Mun Incm Tr IIM 16.36 14.95 -8.6 5.0 MainStay DefinedTerm MMD 20.21 20.18 -0.1 5.5 MFS Munl Inco MFM 7.38 6.92 -6.2 5.6 Nuveen AMT-Free Quality NEA 15.23 13.85 -9.1 5.4 Nuveen AMT-Free Mun NVG 16.64 15.68 -5.8 5.7 Nuveen Mun Credit Incm Fd NZF 16.21 15.46 -4.6 5.8 Nuveen Enhncd Mun Val Fd NEV 15.15 14.32 -5.5 5.7 Nuveen Intermed Dur Mun NID 13.87 13.38 -3.5 4.9 NuveenMuniIncoOpp Fd NMZ 13.68 13.87 +1.4 5.9 Nuveen Muni Value Fund NUV 10.36 10.24 -1.2 3.8 Nuveen Qual Mun Incm Fd NAD 15.58 14.17 -9.1 5.5 Nuveen Sel Tax Free NXP 15.52 14.85 -4.3 3.7 Nuveen Sel TF NXQ 14.90 14.24 -4.4 3.5 PIMCO MuniFd PMF NA 12.98 NA 5.8 Pimco Muni Inc II PML NA 13.36 NA 5.8 PIMCO Muni Inc III PMX NA 11.77 NA 5.8 Pioneer Mun Hi Inc Adv Tr MAV 11.95 11.65 -2.5 5.3 Pioneer Mun Hi Incm Tr MHI 12.89 11.84 -8.1 5.0 Putnam Tr PMM 8.01 7.53 -6.0 5.4 PutnamMuniOpportunities PMO 13.40 12.53 -6.5 5.2 Wstrn Asset Mngd Muni MMU NA 14.25 NA 5.3 WesternAssetMunTrFund MTT NA 21.46 NA 5.0 Single State Muni Bond Prem12 Mo Fund (SYM) NAV Close /Disc Yld BlackRock CA Municipal Tr BFZ 15.31 14.19 -7.3 5.2 BlkRk MuniHldgs CA Qlty MUC 15.56 14.72 -5.4 5.0 Blkrck MunHl NJ Qlty MUJ 15.76 14.44 -8.4 5.7 BlRk MuHldg NY Qlty MHN 14.89 13.85 -7.0 5.0 BlkRk MuniYld CA Fd MYC 15.64 15.29 -2.2 5.1 BlkRk MuniYld CA Quality MCA 15.80 14.79 -6.4 5.2 BlkRk MuniYld MI Qlty MIY 15.54 14.27 -8.2 5.5 BlRk Muyld NY Qlty MYN 14.27 13.08 -8.3 5.0 Eaton Vance CA Mun Bd EVM 12.36 11.79 -4.6 4.9 Invesco CA Value Mun Incm VCV 13.47 12.73 -5.5 5.1 Invesco PA Value Mun Incm VPV 14.11 12.18 -13.7 5.2 Invesco Inv Grade NY Muni VTN 14.61 13.78 -5.7 5.0 Nuveen CA AMT-Free Qual NKX 15.95 15.56 -2.4 5.1 Nuveen CA Muni Value NCA 10.51 10.57 +0.6 3.9 Nuveen CA Quality Muni NAC 15.75 14.63 -7.1 5.5 Nuveen MD Qual Muni NMY 14.67 12.79 -12.8 5.0 Nuveen MI Qual Muni NUM 15.47 13.46 -13.0 4.8 Nuveen NJ Qual Muni NXJ 15.96 13.79 -13.6 5.2 Nuveen NY AMT-Free NRK 14.48 13.03 -10.0 4.9 Nuveen NY Qual Muni NAN 15.12 13.95 -7.7 5.1 Nuveen OH Qual Muni NUO 16.73 14.82 -11.4 5.0 Nuveen PA Qual Muni NQP 15.34 13.47 -12.2 5.3 Nuveen VA Qual Muni NPV 14.56 13.02 -10.6 4.3 PIMCO California Muni PCQ NA 17.40 NA 5.3 PIMCO California Mun II PCK NA 10.19 NA 5.6 52 wk Prem Ttl Fund (SYM) NAV Close /Disc Ret General Equity Funds Specialized Equity Funds Griffin Inst Access RE:A 27.00 NA NA 6.3 Griffin Inst Access RE:C 26.54 NA NA 5.5 Griffin Inst Access RE:I 27.16 NA NA 6.6 Griffin Inst Access RE:L 26.97 NA NA NS Griffin Inst Access RE:M 26.86 NA NA 5.8 NexPointRlEstStrat;A 20.33 NA NA 6.1 NexPointRlEstStrat;C 20.40 NA NA 5.9 NexPointRlEstStrat;Z 20.41 NA NA 7.2 NorthStar RE Cap Inc:Adv NA NA NA NS Resource RE Div Inc:A 10.11 NA NA 5.4 Resource RE Div Inc:C 10.10 NA NA 4.7 Resource RE Div Inc:D 10.26 NA NA 4.9 Resource RE Div Inc:I 10.54 NA NA 5.5 Resource RE Div Inc:L 10.11 NA NA NS Resource RE Div Inc:T 10.08 NA NA 4.6 Resource RE Div Inc:U 10.12 NA NA 5.4 Resource RE Div Inc:W 10.27 NA NA 5.4 SharesPost 100;A 26.49 NA NA -2.5 SharesPost 100:I 26.49 NA NA NS Tot Inc+ RE:L NA NA NA NS USQ Core Real Estate:I USQIX 25.30 NA NA NS USQ Core Real Estate:IS USQSX 25.30 NA NA NS Versus Cap MMgr RE Inc:F 27.64 NA NA 5.8 Versus Cap MMgr RE Inc:I 27.71 NA NA 6.1 Versus Capital Real Asst VCRRX 25.13 NA NA NS Wildermuth Endwmnt Str 12.84 NA NA 10.6 Wildermuth Endwmnt S:C 12.67 NA NA 9.8 Wildermuth Endwmnt S:I 12.90 NA NA NS Income Preferred Stock Funds MultiStrat Gro & Inc:A 15.19 NA NA 3.4 MultiStrat Gro & Inc:C 14.86 NA NA 2.7 MultiStrat Gro & Inc:I 15.38 NA NA 3.7 MultiStrat Gro & Inc:L 14.97 NA NA 2.9 The Relative Value:CIA VFLEX 25.57 NA NA NS Convertible Sec's. Funds Calmos Dyn Conv and Inc CCD 20.68 20.39 -1.4 15.3 World Equity Funds BMO LGM Front ME 10.53 NA NA 16.2 CalamosGlbTotRet CGO 13.43 14.66 +9.2 21.6 Prem12 Mo Fund (SYM) NAV Close /Disc Yld U.S. Mortgage Bond Funds Vertical Capital Income 12.59 NA NA 3.0 Loan Participation Funds 504 Fund 9.79 NA NA 3.7 FedProj&TrFinanceTender 10.08 NA NA NS Invesco Sr Loan A 6.66 NA NA 4.2 Invesco Sr Loan B 6.66 NA NA 4.2 Invesco Sr Loan C 6.67 NA NA 3.4 Invesco Sr Loan IB 6.66 NA NA 4.4 Invesco Sr Loan IC 6.66 NA NA 4.3 Invesco Sr Loan Y 6.66 NA NA 4.4 RiverNorth MP Lending RMPLX 24.60 NA NA 9.1 Sierra Total Return:T SRNTX 24.88 NA NA NS Voya Senior Income:A 12.51 NA NA 5.3 Voya Senior Income:C 12.49 NA NA 4.8 Voya Senior Income:I 12.47 NA NA 5.5 Voya Senior Income:W 12.52 NA NA 5.5 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 9.43 NA NA 10.5 WA Middle Mkt Dbt NA NA NA 11.3 WA Middle Mkt Inc WMF NA NA NA 11.2 Other Domestic Taxable Bond Funds Capstone Church Capital 11.48 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 9.60 NA NA NS GL Beyond Income 3.69 NA NA NE Palmer Square Opp Income NA NA NA 5.0 Resource Credit Inc:A 11.23 NA NA 6.4 Resource Credit Inc:C 11.34 NA NA 5.6 Resource Credit Inc:I 11.25 NA NA 6.6 Resource Credit Inc:L 11.22 NA NA NS Resource Credit Inc:W 11.22 NA NA 6.3 Notice to Readers We have made some minor changes in our daily listings. The names of companies listed in the Biggest 1,000 Stocks and New Highs and Lows tables are now listed alphabetically and not separated by exchange. We also shortened some corporate names and tightened up our footnotes to make them more readable. Finally, we will continue to report on corporate dividends but will exclude ETFs and Closed End fund dividend changes. This information remains available free on markets.wsj.com. Please send comments to email@example.com. Friday, December 8, 2017 52 wk Prem Ttl Fund (SYM) NAV Close /Disc Ret General Equity Funds Adams Divers Equity Fd ADX 17.38 14.83 -14.7 28.0 Boulder Growth & Income BIF 12.89 10.76 -16.5 24.3 Central Securities CET 32.44 26.86 -17.2 28.2 CohSteer Opprtnty Fd FOF 13.80 13.00 -5.8 19.4 Cornerstone Strategic CLM 13.58 15.18 +11.8 20.2 EtnVnc TaxAdvDiv EVT 23.71 22.70 -4.3 21.0 Gabelli Dividend & Incm GDV 24.68 22.54 -8.7 19.8 Gabelli Equity Trust GAB 6.52 6.33 -2.9 24.9 Genl American Investors GAM 40.24 33.44 -16.9 16.9 Guggenheim Enh Fd GPM 9.15 8.86 -3.2 23.5 HnckJohn TxAdv HTD 25.88 25.11 -3.0 24.7 Liberty All-Star Equity USA 6.79 6.11 -10.0 30.3 Royce Micro-Cap RMT 10.43 9.30 -10.8 19.8 Royce Value Trust RVT 17.57 15.93 -9.3 22.6 Source Capital SOR 44.69 39.84 -10.9 14.2 Tri-Continental TY 29.95 26.61 -11.2 25.4 Specialized Equity Funds Adams Natural Rscs Fd PEO 22.21 18.82 -15.3 -1.6 AllnzGI NFJ Div Interest NFJ 14.87 13.50 -9.2 14.9 AlpnGlblPrProp AWP 7.32 6.45 -11.9 35.5 ASA Gold & Prec Metals ASA 12.31 10.71 -13.0 -0.1 BlkRk Enh Cap Inco CII 17.04 15.93 -6.5 24.8 BlkRk Engy Res Tr BGR 15.08 13.61 -9.7 -0.3 BlackRock Enh Eq Div Tr BDJ 9.91 9.07 -8.5 19.4 BlackRock Enh Gl Div Tr BOE 14.44 13.43 -7.0 23.6 BlkRk Intl Grwth&Inco BGY 6.95 6.42 -7.6 24.9 BlkRk Health Sci BME 35.45 36.09 +1.8 18.9 BlackRck Rscs Comm Str Tr BCX 10.07 8.92 -11.4 12.6 BlackRock Science & Tech BST 27.47 26.32 -4.2 50.4 BlackRock Utilities Infr BUI 21.39 21.34 -0.2 23.6 CBREClarionGlblRlEstIncm IGR 8.86 7.70 -13.1 14.9 Central Fund of Canada CEF 13.01 12.69 -2.5 7.9 ClearBridge Amer Engy CBA 7.87 NA -1.8 ClearBridge Engy MLP Fd CEM 13.51 NA -1.8 Clearbridge Engy MLP Opp EMO 10.87 NA -5.9 Clearbridge Engy MLP TR CTR 11.34 NA 0.1 Cohen & Steers Infr Fd UTF 26.02 23.34 -10.3 30.2 C&S MLP Incm & Engy Opp MIE 10.22 9.60 -6.1 0.3 Cohen & Steers Qual Inc RQI 13.65 12.46 -8.7 13.3 CohnStrsPfdInco RNP 22.91 20.72 -9.6 18.8 Cohen & Steers TR RFI 13.46 12.47 -7.4 11.1 CLSeligmn Prem Tech Gr Fd STK 21.77 22.99 +5.6 36.6 Duff & Phelps DNP 10.08 11.31 +12.2 19.9 Duff&PhelpsGblUtilIncFd DPG 17.85 15.78 -11.6 12.4 Eaton Vance Eqty Inco Fd EOI 15.00 14.13 -5.8 23.2 Eaton Vance Eqty Inco II EOS 15.72 14.99 -4.6 22.5 EtnVncRskMngd ETJ 10.07 9.24 -8.2 14.6 52 wk Prem Ttl Fund (SYM) NAV Close /Disc Ret Etn Vnc Tax Mgd Buy-Write ETB 16.40 16.63 +1.4 8.6 Eaton Vance BuyWrite Opp ETV 15.03 15.24 +1.4 11.0 Eaton Vance Tax-Mng Div ETY 12.30 12.09 -1.7 28.2 EatonVanceTax-MngdOpp ETW 11.58 11.82 +2.1 25.8 EtnVncTxMngGlDvEqInc EXG 9.43 9.32 -1.2 26.3 Fiduciary/Clymr Opp Fd FMO 11.66 11.32 -2.9 -12.9 FT Energy Inc & Growth Fd FEN 22.82 22.75 -0.3 -3.1 FstTrEnhEqtIncFd FFA 16.72 15.75 -5.8 25.0 First Tr Engy Infr Fd FIF 18.63 17.66 -5.2 4.5 First Tr MLP & Engy Incm FEI 14.08 14.28 +1.4 -2.1 Gabelli Hlthcr & Well GRX 11.50 9.91 -13.8 11.3 Gabelli Utility Tr GUT 5.51 7.01 +27.2 25.9 GAMCOGlblGoldNatRscs&Inc GGN 5.27 5.01 -4.9 11.4 GoldmanSachsMLPIncOpp GMZ 8.37 NA -2.2 Goldman Sachs MLPEnergy GER 5.77 NA -10.0 John Hancock Finl Opps Fd BTO 37.02 37.40 +1.0 9.3 Macquarie Glbl Infrstrctr MGU 28.07 24.80 -11.6 34.4 NeubergerBermanMLPIncm NML 9.28 8.59 -7.4 -0.9 Neubrgr Brm Rl Est Sec Fd NRO 5.76 5.45 -5.4 11.1 Nuveen Dow 30 Dynamic DIAX 19.07 18.47 -3.1 31.5 Nuveen Core Eq Alpha JCE 16.52 15.85 -4.1 28.2 Nuveen Diversified Div JDD 13.14 12.24 -6.8 18.6 Nuveen Engy MLP Fd JMF 11.01 10.71 -2.7 -11.0 NuvNASDAQ100DynOver QQQX 23.05 24.19 +4.9 37.5 Nuveen Real Est Incm Fd JRS 11.51 11.00 -4.4 13.4 NuvS&P500DynOverwrite SPXX 17.08 NA 29.6 NuveenS&P500Buy-Write BXMX 14.52 14.13 -2.7 17.7 Reaves Utility Fund UTG 33.82 31.40 -7.2 15.5 Tekla Hlthcr Investors HQH 23.88 22.25 -6.8 12.7 Tekla Healthcare Opps Fd THQ 19.32 17.51 -9.4 20.1 Tekla Life Sciences HQL 19.69 18.95 -3.8 21.4 Tekla World Hlthcr Fd THW 14.63 13.39 -8.5 9.7 Tortoise Energy TYG 24.06 25.35 +5.4 -8.9 Tortoise MLP Fund NTG 16.05 15.66 -2.4 -9.7 Voya Gl Equity Div IGD 8.25 7.70 -6.7 20.8 Income Preferred Stock Funds Calamos Strat Fd CSQ 12.91 12.19 -5.6 28.9 Cohen & Steers Dur Pfd LDP 27.33 26.09 -4.5 16.2 Cohen & Strs Sel Prf Inco PSF 28.01 28.20 +0.7 18.9 FT Interm Duration Pfd FPF 24.98 24.98 0.0 24.3 Flaherty & Crumrine Dyn DFP 26.47 26.73 +1.0 26.9 Flaherty & Crumrine Pfd FFC 20.45 20.60 +0.7 15.8 John Hancock Pfd Income HPI 21.34 21.41 +0.3 17.1 John Hancock Pfd II HPF 21.08 21.32 +1.1 17.7 John Hancock Pfd Inc III HPS 18.81 18.62 -1.0 17.2 JHancock Pr Div PDT 15.46 16.61 +7.4 28.4 LMP Cap & Inco Fd SCD 13.74 NA 13.2 Nuveen Pfd & Incm Opps Fd JPC 10.80 10.51 -2.7 18.4 Nuveen Pfd & Incm Secs Fd JPS 10.38 10.46 +0.8 28.6 Nuveen Preferred & Incm JPI 26.03 25.43 -2.3 20.2 TCW Strategic Income Fund TSI 5.53 NA 11.5 Virtus Global Dividend ZTR 12.82 13.18 +2.8 34.8 Convertible Sec's. Funds AdvntClymrFd AVK 17.49 15.77 -9.8 17.8 AllianzGI Conv & Incm NCV 6.64 7.05 +6.2 19.3 AllianzGI Conv & Incm II NCZ 5.95 6.18 +3.9 20.4 AllianzGI Div Incm ACV 22.54 21.63 -4.0 28.0 AllianzGI Equity & Conv NIE 23.26 21.04 -9.5 21.2 Calamos Conv Hi Inco Fd CHY 11.75 11.92 +1.4 25.1 Calamos CHI 11.15 11.41 +2.3 25.2 World Equity Funds co Fo m rp m e er rs ci on al a us l, e on 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. 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 52 wk Prem Ttl Fund (SYM) NAV Close /Disc Ret Alpine Tot Dyn Div AOD 10.14 9.15 -9.8 30.5 Cdn Genl Inv CGI 31.90 22.99 -27.9 25.9 China Fund CHN 23.19 21.30 -8.2 41.0 Clough Global Opp Fd GLO 12.04 10.67 -11.4 33.1 EtnVncTxAdvGblDiv ETG 18.37 17.20 -6.4 31.2 EatonVance TxAdv Opport ETO 24.79 24.73 -0.2 32.2 First Trust Dynamic Eur FDEU 19.59 18.35 -6.3 30.6 Gabelli Glbl Multimedia GGT 9.18 8.58 -6.5 29.4 GDL Fund GDL 11.55 9.82 -15.0 8.3 India Fund IFN 31.28 27.34 -12.6 29.7 Japan Sml Cap JOF 14.97 13.55 -9.5 40.8 Korea Fund KF 48.78 43.01 -11.8 31.2 Mexico Fund MXF 18.05 15.59 -13.6 8.3 Morgan-Stanley Asia-Pac APF 20.50 17.85 -12.9 31.0 MS China a Shr Fd CAF 27.88 23.29 -16.5 28.5 MS Emerging Fund MSF 19.64 17.22 -12.3 29.6 MS India Invest IIF 40.28 35.75 -11.2 41.3 New Germany Fund GF 21.73 19.46 -10.4 54.6 Swiss Helvetia Fund SWZ 13.86 12.63 -8.9 27.4 Templeton Dragon TDF 23.73 20.49 -13.7 32.9 Templeton Emerging EMF 19.01 16.95 -10.8 43.2 Virtus Total Return Fund ZF 13.53 12.68 -6.3 25.2 Voya Infr Indls & Matls IDE 16.77 16.01 -4.5 25.6 Wells Fargo Gl Div Opp EOD 6.70 6.17 -7.9 24.3 Prem12 Mo Fund (SYM) NAV Close /Disc Yld U.S. Mortgage Bond Funds BlackRock Income Trust BKT 6.63 6.17 -6.9 5.1 Nuveen Mtg Opp Term Fd JLS 26.63 25.91 -2.7 5.3 Investment Grade Bond Funds Blackrock Core Bond Tr BHK 14.90 13.90 -6.7 5.5 BlkRk Credit Alloc Incm BTZ 14.83 13.29 -10.4 6.3 John Hancock Income Secs JHS 15.34 14.56 -5.1 5.4 MFS Inc Tr MIN 4.42 4.11 -7.0 9.4 WstAstClymr InfLnkd Fd WIW NA 11.33 NA 3.7 WstAssetClymr InflLnk Sec WIA NA 11.61 NA 3.4 Loan Participation Funds Apollo Sr Fltg Rate Fd AFT 18.01 16.52 -8.3 7.5 BlkRk Debt Strat Fd DSU 12.73 11.67 -8.3 7.1 BlackRock FR Incm Strat FRA 14.96 13.99 -6.5 5.8 Blkrk FltRt InTr BGT 14.43 13.86 -4.0 5.5 BlackstoneGSO Strat Cred BGB 17.01 16.04 -5.7 8.5 Blackstone GSO Sr Float BSL 17.70 17.37 -1.9 6.7 Eagle Point Credit ECC NA 18.53 NA 8.6 Eaton Vance FR Incm Tr EFT 15.53 14.44 -7.0 5.8 EatonVnc SrFltRate EFR 15.20 14.38 -5.4 6.1 Eaton Vance Sr Incm Tr EVF 7.14 6.48 -9.2 5.7 First Trust Sr FR Fd II FCT 14.02 13.09 -6.6 6.2 FT Sr Floating Rate 2022 FIV 9.70 9.14 -5.8 NS Invesco Credit Opps Fund VTA 13.05 11.62 -11.0 7.3 Invesco Senior Income Tr VVR 4.87 4.43 -9.0 5.9 Nuveen Credit Strt Inc Fd JQC 9.06 8.20 -9.5 7.5 NuvFloatRteInco Fd JFR 11.51 11.34 -1.5 7.4 Nuv Float Rte Opp Fd JRO 11.42 11.29 -1.1 7.8 Nuveen Senior Income Fund NSL 6.82 6.51 -4.5 7.4 Pioneer Floating Rate Tr PHD 12.42 11.60 -6.6 6.3 Voya Prime Rate Trust PPR 5.64 5.10 -9.6 5.9 High Yield Bond Funds AllianceBernstein Glbl AWF 13.87 12.69 -8.5 6.8 Barings Glbl Short Dur HY BGH 20.95 19.39 -7.4 9.5 BlackRock Corp Hi Yd Fd HYT 12.24 11.09 -9.4 8.1 BlackRockDurInco Tr BLW 17.04 15.93 -6.5 7.8 Brookfield Real Assets RA 25.12 23.47 -6.6 NS Credit Suisse High Yld DHY 2.78 2.80 +0.7 9.6 DoubleLine Incm Solutions DSL 21.73 20.20 -7.0 8.9 Dreyfus Hi Yd Strat Fd DHF 3.52 3.30 -6.3 9.1 Fst Tr Hi Inc Lg/Shrt Fd FSD 17.96 16.25 -9.5 8.8 Guggenheim Strat Opps Fd GOF 19.82 21.64 +9.2 10.1 Ivy High Income Opps Fund IVH 15.93 14.64 -8.1 10.0 Neuberger Berman HYS NHS 13.24 11.75 -11.3 7.6 NexPoint Credit Strat Fd NHF 26.04 23.86 -8.4 10.1 Nuveen Credit Opps 2022 JCO 9.93 10.04 +1.1 NS Nuveen Gl Hi Incm Fd JGH 18.55 16.78 -9.5 8.7 Nuveen High Incm Dec18 JHA 10.07 9.90 -1.7 5.1 Nuveen High Incm Dec19 JHD 10.24 10.00 -2.3 5.8 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 December 8, and year-to-date stock performance of the company Biggest weekly individual trades Based on reports filed with regulators this past week Company Symbol Dec. 1 Nov. 6-8 Nov. 20-21 Dec. 4-6 Nov. 27-29 Dec. 1 Dec. 5 Dec. 4 Nov. 30 Nov. 29 Dec. 1-5 Nov. 30 Dec. 6 Dec. 5 Dec. 6 Dec. 5-7 Dec. 1 Dec. 4 Insider Title no Buyers n- 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 Date(s) Barnes & Noble American Assets Trust BKS AAT Prospect Capital PSEC Versartis ClearOne Delphi Technologies Allergan VSAR CLRO DLPH AGN Tile Shop Holdings TiVo Kimco Realty TIVO Wal-Mart Stores WMT TTS KIM L. Riggio E. Rady E. Rady E. Rady E. Rady J. Barry J. Barry J. Barry J. Barry J. Barry S. Akkaraju E. Bagley K. Clark C. Coughlin B. Saunders P. Jacullo E. Rodriguez M. Cooper CB CEOI CEOI CEOI CEOI CEO CEO CEO CEO CEO DI B CEOI D CEO DI CEO OD S. Walton A. Walton J. Walton S. Walton A. Walton J. Walton J. Connaughton J. Danhakl M. Midle R. Schulze R. Schulze E. Williams B. Krzanich J. Fisher A. Malkin J. Sokoloff R. Gonzalez W. Rhodes DOI BI BI DOI BI BI DI DI DI BI BI D CEO BI CEO DOI CEO CEO No. of shrs in Price range ($) $ Value trans (000s) in transaction (000s) 1,000 85 40 28 27 435 266 250 170 141 976 290 23 10 5 188 56 50 6.80 38.62-38.95 39.32-39.38 38.40-39.49 39.20-39.48 6.82 6.73 6.77 6.86 6.80 2.00-2.21 6.95-7.00 87.88 163.30 164.71-165.35 8.37-8.59 17.68-17.86 19.20 Close ($) Ytd (%) 6.55 -41.3 6,803 3,308 38.49 -10.7 1,580 1,072 1,046 6.76 -19.0 2,968 1,792 1,693 1,169 961 2.25 -84.9 2,115 8.90 -21.9 2,027 1.0 1,977 51.00 1,633 167.80 -20.1 758 9.20 -52.9 1,592 1,000 16.00 -23.4 960 18.29 -27.3 Sellers Dec. 4-5 Dec. 4-5 Dec. 4-5 Nov. 29-30 Nov. 29-30 Nov. 29-30 Nov. 30 Nov. 30 Dec. 5 Dec. 1-4 Nov. 29 Nov. 28-29 Nov. 29 Nov. 29-30 Dec. 4 Nov. 29-30 Nov. 21 Dec. 6-7 IQVIA Holdings IQV Limelight Networks Best Buy LLNW BBY Twitter Intel Gap Empire State Realty Trust Shake Shack AbbVie AutoZone TWTR INTC GPS ESRT SHAK ABBV AZO 1,865 97.09-97.61 1,865 97.09-97.61 1,865 97.09-97.61 1,488 97.04-98.04 1,488 97.04-98.04 1,488 97.04-98.04 1,163 102.00 800 102.00 15,000 4.35 1,000 60.17-61.08 1,000 58.68-59.12 1983* 20.72-21.82 890 44.05-44.56 850 31.77-32.50 1243* 20.45 523 39.63-41.06 218 94.01 27 700.37-707.18 181,719 96.55 181,719 181,719 145,144 145,144 145,144 118,645 101.35 81,628 4.69 65,250 60,242 63.79 58,804 41,891 21.10 39,323 43.35 27,472 33.49 25,423 20.37 21,081 46.30 20,512 95.95 18,599 721.89 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 97.57 points, or 0.40%, 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 $36,998, or a gain of 23.33%, on the $30,000 investment, including reinvested dividends. The Week’s Action Pct Stock price Point chg chg (%) change in average* Company 99.98 9.78 18.52 12.88 20.59 Boeing Nike United Technologies Visa Home Depot BA NKE UTX V HD $285.90 61.30 122.81 112.60 183.41 $1,888 1,222 1,147 1,453 1,399 1.65 1.09 0.71 0.56 0.44 2.34 1.14 0.69 1.40 0.61 16.11 7.85 4.75 9.64 4.20 Caterpillar J.P. Morgan Chase American Express Goldman Sachs Johnson & Johnson CAT JPM AXP GS JNJ 143.86 105.93 98.55 250.35 140.59 1,598 1,255 1,352 1,059 1,252 0.34 0.16 0.03 0.03 0.01 0.41 0.28 0.05 0.01 0.01 2.82 1.93 0.34 0.07 0.07 Chevron McDonald’s IBM Cisco Systems Procter & Gamble CVX 119.92 MCD 173.15 IBM 154.81 CSCO 37.61 PG 90.37 1,060 1,459 969 1,289 1,108 –0.12 –0.31 –0.39 –0.54 –0.82 –0.10 –0.16 –0.28 –0.30 –0.80 –0.69 –1.10 –1.93 –2.07 –5.51 Microsoft Verizon DowDuPont Merck Wal-Mart Stores MSFT VZ DWDP MRK WMT 84.16 51.09 70.73 55.57 96.55 1,384 1,004 1,270 965 1,433 –0.95 –0.96 –0.97 –0.98 –1.25 –0.17 –0.80 –1.02 –1.68 –3.02 –1.17 –5.51 –7.02 –11.57 –20.79 General Electric Exxon Mobil Walt Disney Apple 3M GE 17.71 XOM 82.66 DIS 104.23 AAPL 169.37 MMM 238.13 575 951 1,016 1,486 1,365 –1.27 –1.44 –1.68 –1.81 –2.98 –2.87 –0.66 –0.61 –2.46 –1.33 –19.76 –4.54 –4.20 –16.94 –9.16 UnitedHealth Group Coca-Cola Pfizer Travelers Intel UNH 223.91 KO 45.31 PFE 35.74 TRV 133.75 INTC 43.35 1,420 1,130 1,143 1,118 1,229 *Based on Composite price. DJIA is calculated on primary-market price. Source: WSJ Market Data Group; FactSet. Borrowing Benchmarks | WSJ.com/bonds Money Rates Latest Week ago Basic Industries Business services Capital goods Consumer durables Consumer nondurables Consumer services Energy 241,500 76,426 0 0 209,755 7,485,297 1,398,046 27,785,485 24,370,723 0 17,117,429 62,261,890 43,001,191 20,246,702 Finance Health care Industrial Media Technology Transportation Utilities 10,978,037 8,171,691 339,336 1,001,824 4,426,454 75,641 8,413 Selling 187,505,291 88,984,175 66,959,415 680,230 161,396,805 8,671,174 12,368,032 Sources: Thomson Financial; WSJ Market Data Group 2.0 1.8 U.S. Canada Japan Treasury bill auction 1.180 1.170 1.300 0.340 1.290 1.285 1.290 0.490 1.450 1.435 1.450 0.590 4 weeks 13 weeks 26 weeks Secondary market 30-year mortgage yields 30 days 60 days 4.25 4.25 4.25 3.50 3.20 3.20 3.20 2.70 1.475 1.475 1.475 1.475 Latest 0.00 0.50 0.50 1.50 0.00 0.50 0.50 1.50 1.08 1.14 0.00 0.50 0.50 1.50 0.00 0.50 0.25 1.50 0.24 Six month One year —52-WEEK— High Low 1.72988 1.67425 1.72988 1.29600 2.01075 1.96044 2.01075 1.64844 Euro Libor One month Three month Six month One year -0.405 -0.387 -0.317 -0.256 -0.399 -0.383 -0.312 -0.256 -0.376 -0.329 -0.220 -0.083 -0.405 -0.387 -0.322 -0.259 One month Three month Six month One year 52-Week high low -0.369 -0.326 -0.271 -0.191 Latest -0.369 -0.326 -0.271 -0.188 Value Traded -0.366 -0.313 -0.216 -0.081 -0.375 -0.332 -0.276 -0.192 52-Week High Low DTCC GCF Repo Index 3.00 3.00 3.00 2.25 Treasury MBS 1.44 1.39 1.44 0.72 Libor 1.44438 1.37938 1.44438 0.68000 1.54878 1.49463 1.54878 0.95650 1.103 1.139 33.470 1.366 0.264 94.430 1.506 0.284 Open Implied Settle Change Interest Rate Commercial paper (AA financial) One month Three month U.S. government rates Week ago Call money 90 days 1.38 Week Latest ago Euro interbank offered rate (Euribor) 3.470 3.488 3.865 3.253 3.487 3.512 3.899 3.281 Other short-term rates Policy Rates Euro zone Switzerland Britain Australia —52-WEEK— High Low Fannie Mae 52-Week High Low Prime rates U.S. Buying –0.06 0.28 International rates Overnight repurchase Sector Chg From (%) Sept. '17 Oct. '16 246.663 253.638 All items Core Based on actual transaction dates in reports received this past week Selling Week Latest ago Inflation Oct. index level 86.1 49.5 29.4 19.5 49.2 0.9 29.4 53.2 -8.6 December 8, 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. U.S. consumer price index 33.3 $1,000 Invested(year-end '16) $1,000 14.52 1.42 2.69 1.87 2.99 Buying and selling by sector Buying Symbol Close 5.35 2.37 2.24 1.69 1.66 39.7 * Half the transactions were indirect **Two day transaction p - Pink Sheets Sector ly . Closed-End Funds | WSJ.com/funds DTCC GCF Repo Index Futures Treasury Dec Treasury Jan Treasury Feb 98.680 0.010 2515 1.320 98.565 unch. 1286 1.435 98.560 0.005 577 1.440 Discount 1.75 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 0.4200 0.5625 0.2500 0.4000 0.4200 Federal funds Effective rate High Low Bid Offer 1.1700 1.3125 1.0500 1.1600 1.1700 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; Tullett Prebon Information, Ltd. For personal, non-commercial use only. Do not edit, alter or reproduce. For commercial reproduction or distribution, contact Dow Jones Reprints & Licensing at (800) 843-0008 or www.djreprints.com. THE WALL STREET JOURNAL. Monday, December 11, 2017 | B9 MARKETS Electric Cars Disrupt Metal Market Chinese Imports Investors dive into commodities, companies likely to benefit from trend Feeling Electric Investors bullish on electric vehicles are scooping up a wide range of metals, supporting several mining stocks and bringing less well-known raw materials into the spotlight. Materials used by car type* Copper BY AMRITH RAMKUMAR AND IRA IOSEBASHVILI Cobalt Electric vehicles as a percentage of demand† Lithium 2016 23 kilograms Conventional car Lithium 0 0 Plug-in hybrid 15% 77 Copper 37 65% 1% Nickel Battery electric vehicle 9 17% 37% 4 19 2025 7% Cobalt 51 1% 4% Shares of lithium and cobalt miners large and small have swung on their way up this year. 300% 200 First Cobalt 100 Lithium and Battery Tech ETF Glencore 0 J F M A M J J A S O N D *For a conventional lithium-ion battery with a nickel-cobalt-manganese cathode †Based on projection that fully electric vehicles account for 9.2% of global auto sales in 2025 THE WALL STREET JOURNAL. Some investors think the long-term losers from electric cars could include palladium and platinum, which are used to scrub emissions in gasoline and diesel engines. Even perceived winners like cobalt could be vulnerable if battery companies find cheaper alternatives, a process some skeptics say has already started. These analysts say there are plenty of other reasons to be cautious. Forecasts on the use of electric vehicles are vulnerable to many factors, from a slowdown in global growth to low gasoline prices, and it is difficult to predict how readily consumers will buy the vehicles when governments slash incentive programs. Tesla Inc.’s sales in Hong Kong came to a standstill in the month after authorities slashed a tax break for electric vehicles on April 1. Higher metals prices also typically spur increased production, which eventually forces prices lower as supply floods the market. “It’s very speculative,” said Nick Page, a global emergingmarket analyst for assetmanagement firm Fiera Capital’s European division. “Everyone is jumping on this bandwagon because people are scared of missing out.” Mr. Page said his firm hasn’t made investments based on electric-vehicle-related bets but is monitoring their adoption rate. Other challenges include a sparse infrastructure of charging stations, needed to keep vehicles powered. Analysts say there is little chance oil will soon return to its 2014 level above $100 a barrel, keeping gasoline relatively inexpensive. co Fo m rp m e er rs ci on al a us l, e on A completely burned lithium-ion car battery before its dismantling by a German recycling firm “We’re at a tipping point where this next generation of commodities becomes more significant for industry and growth,” said Maxwell Gold, director of investment strategy at ETF Securities. 2.64% The weekly decline in gold for February delivery, the worst weekly drop since May Analysts said the metal priced in the near certainty that the Federal Reserve will boost short-term interest rates this week. Higher interest rates and the stronger dollar that tends to follow are both bad news for the precious metal. The higher rates go, the greater the opportunity cost for owning the metal in lieu of interest-bearing bonds. A stronger greenback, meanwhile, makes the metal costlier for overseas buyers. no It was an ugly week for gold. The most actively traded Comex futures for February delivery slumped 2.6% an ounce last week, the biggest weekly slide for the metal since May. n- Gold Bugs Get Squished MONEYBEAT Gold’s weekly price drop followed a quiet November stretch that had been the narrowest trading range in dollar terms in over a decade. However, “it is so early in the process that it is difficult to determine who the winners and losers will be,” he said. As sales of electric vehicles ramp up, so will the need for a spectrum of metals that are But traders couldn’t help but consider additional factors that might have contributed to the selling. A portion of investors have long preferred gold as a hedge to global chaos and market turmoil. Anecdotally, the rise of bitcoin seems to have lured some of this cohort. Gold’s weekly decline coincided with a huge surge in the cryptocurrency. Gold prices recently fell below their 200-day moving average for the first time since June. Breaking through long-term momentum levels tends to usher in additional buying on the way up, or in this case, selling on the way down. —Chris Dieterich ONLINE WSJ .COM For more MoneyBeat blog posts, go to blogs.wsj.com/ MoneyBeat used to make everything from batteries to wiring, some investors said. Automotive demand for lithium is set to climb 35% each year through 2021, according to Citigroup Inc. projections. Cobalt used in electric vehicles will increase roughly 450% from this year to 2025, Morgan Stanley said. Electric vehicles will become the second-largest nickel-consuming sector by that year, with demand rising nearly 10-fold, while copper demand for cars and infrastructure is also expected to grow steadily, a JPMorgan Chase & Co. forecast showed. Ralph Aldis, director of research and fund manager at U.S. Global Investors, said he has picked up shares of several lithium producers for the firm’s World Precious Minerals fund. “I just know that’s the direction that the world seems to be going, and I’m not going to fight it,” Mr. Aldis said. Shares of Lithium Americas Corp. have soared 202% this year on the Toronto Stock Exchange. First Cobalt Corp., which is exploring cobalt mines in Canada, has notched a 215% gain. “People are following the money,” said Trent Mell, chief executive of First Cobalt, which has yet to extract any cobalt and recently began drilling in a group of 50 mines that once produced cobalt and silver. “I’m able to raise a lot of capital I wouldn’t have been able to even a year ago.” The gains have accompanied a surge in global electric and hybrid-vehicle sales, which rose 50% in the first 10 months of 2017 from the same period a year earlier, according to EV-Volumes, a research group that tracks electric-car sales. And growth is expected to continue. Sales of electric and hybrid vehicles are slated to surge to 31.5 million units in 2035 from 1.2 mWillion units in 2017, according to Jefferies Group. Driving that growth is China, which will demand auto makers meet gradually escalating quotas for energy-efficient cars starting in 2019. The U.K. and France are set to phase out sales of diesel and gasoline vehicles by 2040, while India plans to sell only electric vehicles by 2030. In the U.S., auto makers are investing billions of dollars in electric vehicles despite expensive technology costs and lukewarm customer demand. THE TICKER | Market events coming this week Gasoline Distillates Short-selling reports Ratio, days of trading volume of current position, at Nov. 15 NYSE Nasdaq 4.6 4 Tuesday Fed 2-day meeting starts up 6.8 up 1.7 Consumer price index All items, Oct. up 0.1% Nov., expected up 0.4% Core, Oct. up 0.2% Nov., expected up 0.2% Earnings expected* Estimate/Year Ago($) Producer price index All items, Oct. up 0.4% Nov., expected up 0.3% Core, Oct. up 0.4% Nov., expected up 0.2% Wednesday Fed policy meeting ends Target rate 1.00-1.25 Mort. bankers indexes Purch., previous up 2% Refinan., prev. up 9% EIA status report Previous change in stocks in millions of barrels Crude oil down 5.6 Nordson 1.33/1.39 Thursday Initial jobless claims Previous 236,000 Expected 237,000 EIA report: natural gas Previous change in stocks in billions of cubic feet up 2 Business inventories Sept., previous 0.0% Oct., expected down 0.1% Import price index Oct., previous up 0.2% Nov., expected up 0.7% Retail sales Oct., previous Nov., expected up 0.2% up 0.3% Retail sales, ex. autos Oct., previous up 0.1% Nov., expected up 0.6% BY CHRISTOPHER ALESSI Oil prices rose Friday, supported by elevated geopolitical tensions and data showing an increase in Chinese crude imports. Light, sweet crude for January delivCOMMODITIES ery advanced 67 cents, or 1.2%, to $57.36 a barrel, on the New York Mercantile Exchange. Brent, the global benchmark, rose 33 cents, or 0.5%, to $63.40 a barrel. Prices were buoyed by official Chinese customs data released Friday, showing crude imports rose in November to over 9 million barrels a day from 7.3 million the month before, according to Giovanni Staunovo, commodity analyst at UBS Wealth Management. Mr. Staunovo said crude prices, which had fallen to a three-week low Wednesday, also benefited from “positive equity markets around the world.” The Chinese import data for November represent the second-highest monthly figure on record, while crude imports rose 12% year over year during the first 11 months of 2017, according to analysts at Commerz bank. “Consequently, China will supersede the U.S. as the world’s largest crude importer this year,” the analysts wrote. Geopolitical tensions in the Middle East—including President Donald Trump’s decision to recognize Jerusalem as the official capital of Israel and the death of former Yemeni President Ali Abdullah Saleh— also helped to lift prices Thursday and Friday, analysts said. “Speculation that there might be some problems in the region” that could lead to supply disruptions has supported crude prices, Ehsan UlHaq, director for crude oil and refined products at consultancy Resource Economist Ltd. The shifting factors behind prices comes just over a week after the Organization of the Petroleum Exporting Countries agreed with other major producers, including Russia, to extend a deal to hold back nearly 2% of crude output through the end of next year. The accord, first adopted a year ago, was meant to rein in a global oil supply glut and boost prices. —Stephanie Yang contributed to this article. Estimate/Year Ago($) 1.16/0.90 1.33/1.17 0.68/0.61 Friday Capacity utilization Oct., previous 77.0% Nov., expected 77.2% Empire Manufacturing Nov., previous 19.4 Dec., expected 16.5 Industrial production Oct., previous up 0.9% Nov., expected up 0.3% * FACTSET ESTIMATES EARNINGS-PER-SHARE ESTIMATES DON’T INCLUDE EXTRAORDINARY ITEMS (LOSSES IN PARENTHESES) ADJUSTED FOR STOCK SPLITNOTE: FORECASTS ARE FROM DOW JONES WEEKLY SURVEY OF ECONOMISTS U.S.-dollar foreign-exchange rates in late New York trading Country/currency in US$ US$vs, YTDchg Fri per US$ (%) Americas Argentina peso .0580 17.2560 8.7 Brazil real .3038 3.2918 1.1 Canada dollar .7783 1.2849 –4.4 Chile peso .001525 655.60 –2.1 Ecuador US dollar 1 1 unch Mexico peso .0529 18.9210 –8.7 Uruguay peso .03447 29.0100 –1.2 Venezuela b. fuerte .093210 10.7285 7.3 Asia-Pacific Australian dollar .7509 1.3317 China yuan .1511 6.6179 Hong Kong dollar .1281 7.8053 India rupee .01551 64.488 Indonesia rupiah .0000738 13545 Japan yen .008813 113.47 Kazakhstan tenge .002984 335.11 Macau pataca .1243 8.0423 Malaysia ringgit .2450 4.0811 New Zealand dollar .6835 1.4631 Pakistan rupee .00945 105.850 Philippines peso .0198 50.491 Singapore dollar .7393 1.3527 South Korea won .0009151 1092.75 Sri Lanka rupee .0065270 153.21 Taiwan dollar .03331 30.018 Thailand baht .03066 32.620 Vietnam dong .00004403 22711 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 Earnings expected* Adobe Costco Oracle Currencies –4.1 –4.7 0.6 –5.1 0.1 –3.0 0.4 1.6 –9.0 1.3 1.4 1.8 –6.5 –9.5 3.2 –7.5 –8.9 –0.3 Europe .04606 21.711 –15.5 .1582 6.3218 –10.6 1.1774 .8494 –10.7 .003749 266.71 –9.4 .009565 104.55 –7.4 .1205 8.2963 –4.0 .2804 3.5663 –14.8 .01693 59.064 –3.6 .1184 8.4457 –7.3 1.0074 .9927 –2.6 .2607 3.8364 8.9 .0369 27.1160 0.1 1.3384 .7472 –7.8 Middle East/Africa SCOTT MCINTYRE/BLOOMBERG NEWS Monday Boost Oil ly . Sources: Citigroup (materials by car type); Morgan Stanley (demand); FactSet (shares) WOLFGANG RATTAY/REUTERS A boom in electric vehicles is stoking demand for a wide range of metals, a shift some investors believe will have a far-reaching impact on commodity prices around the world. Investors eager to get in early have doubled the price of lithium and cobalt—key components of electric-car batteries—in the past two years. Shares of companies that claim to sit on deposits of the metals have soared this year, too, even though some have yet to bring any production to market. Many investors also have found fresh reasons to love some of the better-known metals, which are used more heavily in electric and hybrid vehicles than in ordinary cars. Prices for nickel, copper and other base metals have hit multiyear highs in 2017, although some have receded in recent weeks. Meanwhile, analysts expect a host of minor metals such as manganese, vanadium and molybdenum to become more important in coming years. It is a bet that coincides with Tesla Inc.’s soaring market value and the surge of bitcoin, the latest wager tied to disruptive technology with uncertain ramifications. As more countries pave the way for electric vehicles to supplant gasoline-powered ones, the most bullish investors are convinced the world is about to experience its biggest shift in commodities demand since the 19th century, when petroleum replaced whale oil as lamp fuel. More skeptical observers see echoes of the late 1990s dot-com era, when most investors correctly predicted the internet would change the world, but few found the handful of companies that would survive the sector’s brutal crash and thrive in the 21st century. Plenty of Reasons To Be Cautious Bahrain dinar Egypt pound Israel shekel Kuwait dinar Oman sul rial Qatar rial Saudi Arabia riyal South Africa rand 2.6529 .3770 –0.1 .0562 17.7865 –1.9 .2837 3.5248 –8.4 3.3137 .3018 –1.3 2.5976 .3850 unch .2750 3.636 –0.1 .2667 3.7501 –0.02 .0732 13.6570 –0.3 Close Net Chg % Chg YTD%Chg WSJ Dollar Index 87.29 A Costco Wholesale Corp. location in Miami. The big-box retailer posts results Thursday. 0.10 0.12 –6.08 Sources: Tullett Prebon, WSJ Market Data Group For personal, non-commercial use only. Do not edit, alter or reproduce. For commercial reproduction or distribution, contact Dow Jones Reprints & Licensing at (800) 843-0008 or www.djreprints.com. THE WALL STREET JOURNAL. B10 | Monday, December 11, 2017 MARKETS The New Face of Treasury Auctions In the depths of the ﬁnancial crisis, the borrowing needs of the U.S. more than tripled, and now surpass $2 trillion on an annual basis each year since 2009. Foreign investors and Wall Street banks bought most of the debt at government bond auctions. As the U.S. stiffened its ﬁnancial regulations and the crisis atmosphere abated, demand from those quarters waned. Individual investors—through their stakes in ﬁxed-income mutual funds—have stepped up to ﬁll the gap. Purchases of U.S. Treasurys $2.5 trillion 2.0 Other Foreign 1.5 Brokers and dealers 1.0 0.5 16% 19% 18% 2009 ’10 ’11 25% 31% ’12 ’13 ’14 Less than 15% of Treasury purchases in October auctions were made by foreign investors, down from nearly 43% in June 2009. Today, domestic bondholders account for greater than half of the more than $14 trillion in marketable debt outstanding. Total domestic holdings $7.88 trillion Other domestic $5.41 trillion Other domestic Total foreign holdings $6.32 trillion 44% ’15 ’16 ’17* 40% 30 20 10 2009 ’10 ’12 ’13 China Belgium France 1.18 Switzerland India Many large investors, including hedge funds, domicile in places with legacies of being light on regulations, favorably disposed toward privacy or as a haven from taxes. 0.15 Thailand 0.07 Deal Making Challenges Netflix The Show Must Go On Estimated share of 2017 programming expense by category Sports Film Fox Disney TV n- TWX Netﬂix no Amazon Hulu Apple 0 25 50 75 100 THE WALL STREET JOURNAL. Source: MoffettNathanson Disney already has said that it is planning to pull its movies from Netflix in 2019 and it is likely to relaunch them on its own family-entertainment streaming service. By buying out Fox’s stake in streaming service Hulu, it also would take majority control of a Netflix competitor, bolstering it with content from Fox’s television studio and FX cable shows like “The Simpsons.” Similarly, AT&T hopes to use Time Warner content, including on a new internet TV service, to gain a competitive edge among distributors. Another digital threat comes from Amazon.com and Apple, which have spent $4.5 billion and $1 billion, respectively, on original programming in the past year. That is small compared with the studios, but they are sure to ramp up those investments. Still, Netflix shouldn’t be underestimated. Netflix’s troves of data on viewing habits helped it create shows like “House of Cards” and “The Crown.” On the surface, those looked like risky investments, some $100 million per season, but they have paid off. While the deal making may not dethrone Netflix, the company faces risks. High audience numbers will be driven by blockbuster shows, not loyalty, which helps explain why content exclusivity on platforms is rising. But hits come and go. Research by MoffettNathanson suggests that winners won’t just be the players with the best content, but those who can build a consumerfriendly interface with a deep reservoir of library programming alongside constantly refreshed, original content. Deals or no deals, consumers care about content and price. That will be a challenge for everyone. —Elizabeth Winkler OVERHEARD It isn’t easy being green. Avocados haven’t been this menacing since they were called “alligator pears.” Earlier this year they became something of an economic meme when an Australian property mogul seemed to blame millennials’ spendthrift ways, singling out a penchant for “smashed avocado,” as the obstacle to getting on the housing ladder. Avocado toast is now a sarcastic answer to many money problems. Now physical self-injury, not financial, is making headlines. “Avocado hand” is the phenomenon of people cutting themselves when slicing the fruit, which has a tough skin and pit. The solution? One British medical group suggested adding safety labels to protect the inept public. British retailer Marks & Spencer has a better idea. It is selling a seedless avocado with edible skin imported from Spain. Now if they could just slash the price, the world might finally be safe. Big Paint Companies Still Look Primed for an M&A Wave One might be forgiven for thinking that some paints just don’t mix. Three megadeals in the global paint industry have failed this year: PPG Industries ended its three-month pursuit of European leader Akzo Nobel in June; Akzo aborted its subsequent suggestion of a merger of equals with Axalta Coatings Systems after Japan’s Nippon Paint made its own cash bid; and recently the Nippon-Axalta talks broke down. Yet the strategic logic driving big deals has only grown. Debt remains cheap, and paint producers have been caught this year between lackluster sales and Taiwan 0.18 All other foreign holders 1.10 0.13 Reporting by Daniel Kruger, graphic by Peter Santilli/THE WALL STREET JOURNAL. FINANCIAL ANALYSIS & COMMENTARY The biggest winner in the battle to win the fracturing television audience has been Netflix. Will it become a loser amid the deal making roiling the media industry? Disney’s TV operation dwarfs Netflix in size, but the two companies are heading in opposite directions. Netflix’s revenue increased 32% in the first nine months of its current fiscal year, reaching $8.4 billion, and operating income rose 163% to $593.4 million. Disney’s TV revenue for the same period was $18 billion. Yet its growth was flat compared with last year, and its operating income fell 11% to $6 billion. Viewers increasingly are cutting the cord in favor of streaming content online or on mobile devices. The AT&T-Time Warner merger, announced last year, and the potential 21st Century FoxDisney deal, which may be announced as soon as late this week, are signals of an industry searching for ways to adapt to changing consumer habits. Japan 1.10 Singapore HEARD ON THE STREET Email: firstname.lastname@example.org ’17 0.19 0.14 0.27 ’16 Hong Kong 0.25 Brazil ’15 0.09 0.10 Saudi Arabia 0.08 0.27 South Korea Russia 0.21 0.10 ’14 Treasury holdings help bolster these economies against shocks such as those experienced during the 1997 currency crisis. co Fo m rp m e er rs ci on al a us l, e on 0.31 Cayman Islands *Through October †As of September Sources: Treasury Department (purchases, holdings); Federal Reserve (Fed holdings) ’11 All other foreign 0.07 0.24 Investment funds Foreign share of U.S. Treasury purchases, monthly Germany Luxembourg 0.08 Federal Reserve $2.47 trillion U.K. Ireland Canada Top 20 foreign 40% 0 Holders of U.S. Treasurys† Federal Reserve 42% ly . 0 35% Blending Problem Big paint companies by enterprise value $48.8 billion Sherwin-Williams 32 PPG 24.2 Akzo Nobel Axalta 11.3 Nippon Paint 10.5 RPM 9 Kansai 7.8 Source: FactSet spiraling raw-material costs. The savings available from combining purchasing budgets look more attractive than ever. It is tempting to bet a deal will happen. Akzo used to be the obvious target, but now a takeover of Axalta looks more plausible. Nippon’s offer came in around $37 a share. This looks low. Last year industry leader Sherwin-Williams paid 14.2 times expected earnings before interest, taxes, amortization and depreciation for Valspar. Applying that multiple to Axalta’s 2018 forecast Ebitda gives a share price of roughly $43. Akzo’s all-share offer for Axalta would have been worth more than $37 a share, but only assuming optimistic cost savings estimates of over $700 million. By comparison, Sherwin-Williams estimated only $280 million of savings through its combination with Valspar, which is roughly twice the size of Akzo-Axalta. Not only do the savings look unrealistic, but extracting them would have been up to Akzo’s new chief, who was slated to lead a combined entity, according to people familiar with the talks. Shareholders, including activist Elliott Management, failed to bring Akzo’s management into talks with PPG earlier this year; they might also fail to hold them to enforce those savings. It is hard to see why Axalta’s investors, led by Berkshire Hathaway, would accept this governance downgrade. That leaves the question of whether Nippon is prepared to pay more. Synergies could be up to $300 million, and combining big Japanese and U.S. automotive-paint players makes strategic sense. But Nippon has issued mixed messages about its appetite for the necessary leverage or equity dilution. Axalta’s stock languishes at roughly $32—up from about $28 before Akzo’s interest became public in late October but well below a takeout price. Nothing is predictable in M&A, but there is probably enough chance that Axalta again becomes a target to justify a bet. —Stephen Wilmot WSJ.com/Heard This Gaming Deal Has a Side Wager Doing deals for gaming companies when the government is cracking down on gambling is tough. But two U.K.-listed companies, Ladbrokes Coral and GVC, have come up with a novel way to pursue their up-to-£4-billion ($5.3 billion) merger announced Thursday, even as the government looks to crack down on what experts see as a particularly addictive and dangerous form of betting. The problem is fixed-odds betting terminals, electronic slot-machines on which people bet up to £100 every 20 seconds on roulette and other games with a chance to win up to £500, or a greater chance to lose hundreds more. These machines, sprinkled in betting shops across the U.K., can be particularly damaging to people who have gambling problems. In 2008, they brought in about 38% of betting shop revenue. Since then revenues have grown more than 70% to £1.8 billion last year, which was more than 56% of shop revenues, according to the U.K. Gambling Commission. Spurred on by growing public concern, the government is promising to cut the maximum stake to a range from £2 to £50. To get around the threat to this huge business, Isle of Man-based GVC is splitting its offer for Ladbrokes into three parts: a cash payment, some new GVC shares and a “contingent value right.” That last part will be worth nothing if the government limits machine bets to £2 and rises through a scale to £827 million if the maximum bet is £50. That is an odds maker’s solution to this gambling problem. —Paul J. Davies For personal, non-commercial use only. Do not edit, alter or reproduce. For commercial reproduction or distribution, contact Dow Jones Reprints & Licensing at (800) 843-0008 or www.djreprints.com. JOURNAL REPORT w Follxoperts The E nline THE WALL STREET JOURNAL. © 2017 Dow Jones & Company. All Rights Reserved. Monday, December 11, 2017 | R1 An Oersation Conv AILS, R4 co Fo m rp m e er rs ci on al a us l, e on ly . D ET The Secret to Getting Workers to Save More for Retirement no n- If we make it easy for people to do the right thing, more of them will...do the right thing BY SHLOMO BENARTZI AND RICHARD H. THALER IN THE MID-1990S, we began thinking about how to solve an emerging problem: American workers weren’t saving enough for retirement. At the time, traditional pension plans were starting to disappear (they have since become increasingly rare), and it was clear that most workers would need help saving enough on their own. Flash forward to today and that inability to save has become a serious societal problem: More than half of American workers might not have enough money in retirement to maintain their Dr. Benartzi, a frequent contributor to the Journal Reports, is a professor and co-head of the behavioral decision-making group at UCLA Anderson School of Management and a senior academic adviser to Voya. Dr. Thaler was awarded the 2017 Nobel Prize in Economic Science. He is a professor of behavioral science and economics at the University of Chicago. standard of living, according to an estimate from the Center for Retirement Research at Boston College. Why is it so hard for people to save? In our research, we focused on two main behavioral causes: a lack of willpower and inertia. By identifying the problems, we were able to create a toolbox of nudges designed to make saving far easier. In examining the successes and failures of those nudges over the years, one thing has become clear: Making it easy to do the right thing (in this case, save more money) is often the best way to help people reach their goals. Saving on autopilot We all have self-control problems of various sorts when it comes to things we “should do” but don’t. Limited willpower creates what behavioral scientists call “present bias,” or our tendency to favor more immediate payoffs at the expense of longer-term goals. In a study published in 1998, subjects were asked to choose between two snacks: a healthy banana or some unhealthy chocolate. When asked to choose a snack to eat the following week, three quarters of people JOHN KUCZALA chose the banana. However, when those same subjects were later asked which snack they wanted to eat right now, nearly three-quarters chose the indulgent chocolate. The same logic applies to our money decisions. We know we should save for the future—it’s just hard to resist the spending temptations of the present. Inertia, meanwhile, refers to our tendency to accept the status quo, especially when change requires attention and effort. When it comes to financial decisions, inertia can be an extremely powerful force. Data from the U.K. showed how strong this force can be. Researchers looked at enrollment rates in 25 traditional pension plans that didn’t require employees to contribute anything to get their benefits; it was the definition of free money. Nevertheless, only half of eligible employees signed up! Our challenge was to find ways to help people overcome these deeply rooted tendencies. The solution we came up with was modeled on the airplane autopilot, a system in which smart softPlease turn to the next page INSIDE Why Most New Retirees Need Time to Grieve Even people who are prepared for life after work inevitably suffer withdrawal pains R2 Documents That You Need When a Child Turns 18 Parents often don’t realize they can no longer make legal decisions, until it is a crisis R6 What to Consider Before Joining a Nonprofit Board Investing in 2018 Alternative to Donating Art Don’t Get Hit by Estimated-Tax Penalties Three advisers offer their thoughts on the opportunities and risks R4 Some wealthy collectors opt for opening their own museum to maintain control of a collection R6 Even for the Very Rich, More Money Brings Happiness Charity, Near vs. Far But a study also shows it depends on where the wealth comes from R4 Fiduciary: It’s the word independent advisors live by. Distance makes the giving heart grow weaker R7 Independent Registered Investment Advisors are held to the highest standard of care. As fiduciaries, they are required to act in the best interests of their clients at all times. That’s why we support independent financial advisors. And why we think it’s worth your time to learn more. FindYourIndependentAdvisor.com Charles Schwab is committed to the success of over 7,500 independent financial advisors who are passionately dedicating themselves to helping people achieve their financial goals. This information is provided to educate investors about working with an independent Registered Investment Advisor—for further information please visit FindYourIndependentAdvisor.com. ©2017 Charles Schwab & Co., Inc. All rights reserved. Member SIPC. (0416-F1LX) (ADP92136-00) (06/16) The position can be rewarding— but loaded with work and expense R8 What taxpayers need to know R9 More Local Programs Help Students Pay for College While the ‘free-college’ idea is on the back burner on a national level, states and cities boost efforts R10 For personal, non-commercial use only. Do not edit, alter or reproduce. For commercial reproduction or distribution, contact Dow Jones Reprints & Licensing at (800) 843-0008 or www.djreprints.com. THE WALL STREET JOURNAL. R2 | Monday, December 11, 2017 JOURNAL REPORT | WEALTH MANAGEMENT ASK ENCORE | GLENN RUFFENACH Why Most New Retirees Need Time to Grieve Even people who are prepared for life after work inevitably suffer withdrawal pains Mr. Ruffenach is a former reporter and editor for The Wall Street Journal. His column examines financial issues for those thinking about, planning and living their retirement. Send questions and comments to email@example.com. Older and More Satisﬁed Two-thirds of surveyed adults age 60 and older describe themselves as “satisﬁed” or “very satisﬁed” with their lives, a larger percentage than younger age groups. Extremely/very satisﬁed Not too/not at all satisﬁed 18-39 32% 40-59 28% 29% 32% Satisﬁed 40% 41% So…if retirement isn’t all you thought it would be, you aren’t alone. You have just gone through one of the biggest changes in your life—walking away from a job or career that might have occupied 30 years or more of your time. If you loved (or even simply liked) your work and your colleagues, it would be surprising not to feel that something is amiss. Give it time. Continue to do the things that give meaning to your days. Retirement usually ends up being more than satisfying. At first, though, it can throw you some curves. i i i I am 62 years old; my husband died at 49. I am aware that I am eligible to collect a reduced survivor benefit now and then switch to my benefit at some point in the future. However, the local Social Security office tells me that, since I earned substantially more than my husband, if I collect his benefit now it will negatively impact my future payouts. If, on the other hand, I wait until I reach my full retirement age to collect a survivor’s benefit, it will have no impact on my benefit at age 70. Is any of this true? ly . Baseball great Nolan Ryan, pictured at his ranch in Gonzales, Texas, has admitted to having withdrawal pangs when he first retired from the sport. be exceedingly difficult. I would advise you and anyone in a similar situation to “run the numbers” with a good financial adviser before approaching Social Security. In this case, someone appears to be mistaken or confused. So let’s clear up, first, how switching from a survivor’s benefit to a retirement benefit works, and, second, what might be behind these “conflicting explanations.” To start: You’re correct. You can file for a reduced survivor’s benefit now, at 62, (actually, you could have done this as early as 60) and switch to your retirement benefit, the one based on your earnings history, at some point in the future. Doing so will allow your retirement benefit to grow significantly. Most important: Whenever you decide to switch, there will be no penalty. The fact that you are claiming a survivor’s benefit “early”— before reaching full retirement age, as defined by Social Security—won’t reduce your retirement benefit. The latter will be calculated independently of when you first claim a survivor’s benefit. And the fact that you earned more than your husband shouldn’t affect that equation. So…why the conflicting messages? Two possibilities: Social Security’s “earnings test” and spousal benefits. If you claim a survivor’s benefit now—and if you’re currently working— Social Security could withhold some, or all, of your benefits if your earnings exceed certain levels. That’s the earnings test. But any penalties associated with the earnings test end once you reach your full retirement age. So that’s where this idea of “waiting” could be coming into play. If you wait until your full retirement age to begin collecting a survivor’s benefit (and, again, if you’re earning a salary), you wouldn’t see any reduction in your benefits. That’s because the earnings test no longer applies at full retirement age. Second, the “Social Security representative could be confusing spousal benefits with widow’s benefits,” suggests Andy Landis, author of “Social Security: The Inside Story.” For instance: If your husband had lived, and if you were applying for a retirement benefit at 62, that benefit would be reduced from what you would receive at your full retirement age—and the reduction would carry over to a spousal benefit in the future. But survivor benefits are different. Any reduction of a survivor benefit won’t carry over to a retirement benefit. “I know several people who are taking the survivor payment now, and who are counting on a fully increased retirement payment at 70,” Mr. Landis notes. co Fo m rp m e er rs ci on al a us l, e on Perhaps you should allow yourself to do something that most people don’t associate with retirement: a bit of grieving. No matter how well you prepare for life after the office, and despite taking the “right” steps after leaving work, withdrawal pangs frequently are part of the process. That’s what we learned in an interview we did a number of years ago with a retiree you might have heard of: Nolan Ryan. Mr. Ryan, of course, was one of the most celebrated fastball pitchers in the history of baseball. Over the course of his 27 years in the major leagues, he set numerous records, including number of career no-hitters (seven) and strikeouts (5,714). What got our attention was the way he approached retirement. “I always had the attitude that there was life after baseball,” he told us. “And I tried to prepare for it.” To that end, he began fulfilling a childhood dream of becoming a cowboy by building a ranching operation. When we met him, that operation included 1,500 head of cattle on three ranches (one of which covered 18,000 acres), which allowed him to enjoy an active outdoor life after walking away from sports. But even when he was busy—traveling with his family or tending his ranch operations— “there was this feeling that I needed to be somewhere else,” he said. What was missing, he concluded, was “the competition—the feeling of being a member of a team.” He added: “It doesn’t matter if you’re the 25th player or one of the stars. When you walk in that clubhouse, when you put on that uniform, you are a member of that team.” Actually, this theme pops up fairly regularly among retirees. It isn’t that we miss our work, NOLAN RYAN BEEF I have been retired for just over a year. It’s going OK, but not as well as I had hoped. I’m doing (I think) many things “right”: I spend time volunteering with organizations that are important to me; I have taken a couple of classes; my wife and I have taken some nice trips. But I still feel as if something is missing. Have you seen or heard about this with other retirees? 60+ 35% 32% 33% Note: Numbers might not total 100% due to rounding. Source: AARP Disrupt Aging Research: Aging Conﬁdence Survey THE WALL STREET JOURNAL. per se; rather, we miss being part of a group and the excitement that comes from working toward a common goal. “I didn’t realize I was going to have such a tough transition emotionally,” Mr. Ryan told us. “It took two years,” he said, before he started to feel comfortable in his new life. Decisions about when and how to claim survivor benefits and retirement benefits can The Secret to Saving More for Retirement no n- Continued from the prior page Save More Tomorrow was a huge success. Beware controls most of the detailed movements fore the intervention, the workers in the samof the plane. Airplane autopilots reduce human ple had an average savings rate of 3.5%. After error, which makes flying far safer. four years in the program, their average savIn much the same way, we developed retire- ings rate had nearly quadrupled to 13.6%. ment-saving autopilots, which are designed to In the real world, however, most workers make it as easy as possible for people to don’t have access to a financial adviser like achieve a secure financial future. After all, re- Brian; instead, their enrollment process takes tailers are really good at making it painless for place online. To help these workers save people to spend their money, from credit cards enough for retirement, it is most effective to to one-click purchases online. Our goal was to make savings increases automatic, with incremake saving effortmental boosts taking less. place every year. AlThe first step was Who Saved More though workers can “automatic enroll- Savings rate over four years among workers who opt out, research sugment.” Employees agreed to a one-time 5-percentage-point savings gests 80% to 90% will are enrolled in the increase vs. workers who committed to saving choose to remain in company retirement more at a future time. the program. (By plan unless they take changing the default, Saving more in the future inertia is turned into One-time increase the active step of opting out. This sysa positive force.) For 15% tem is highly effeccomparison, a study tive, generally getwe conducted with ting about 90% of Ehud Peleg of UCLA workers to particiusing data from Van10 pate in a plan by guard Group found eliminating the inerthat only about 25% tia. The bad news is of workers were enthat automatic enrolled in a savings es5 rollment doesn’t encalator before Save sure workers are savMore Tomorrow was ing enough. In fact, made the default the majority of rechoice. 0 tirement plans sugThe autopilots de1998 1999 2000 2001 2002 gest an initial savveloped in Save More ings rate of no more Source: Shlomo Benartzi and Richard Tomorrow have gone than 3%, which is Thaler; Save More Tomorrow THE WALL STREET JOURNAL. on to become an indramatically less strumental part of the than what most workers need to save to main- American retirement-savings system. In 2006, tain their standard of living in retirement. the Pension Protection Act passed by Congress To fix that problem, it is necessary to help encouraged employers to adopt automated people surmount present bias, which can make savings escalators. According to our latest calit difficult to give up money today for the sake culations, Save More Tomorrow has helped apof future savings. We came up with an idea we proximately 15.5 million Americans significalled Save More Tomorrow, which we tested cantly boost their savings. with the help of Brian Tarbox, a financial adThe takeaway is clear: By making the pruviser. In that early trial, Brian talked one-on- dent path easy to follow, behavioral autopilots one with workers. Armed with appropriate can help people reach their desired destination. software, he was able to determine how much each employee should be saving. In nearly ev- Details matter But there is a very important caveat to ery case, it wasn’t enough. But when Brian asked the workers if they would be willing to these results: If you are going to automate a increase their savings rate by 5 percentage decision-making process, you need to pay carepoints, most rejected the offer—they felt that ful attention to the details. If the plane is on they couldn’t afford to give up that much of autopilot and the crew pays less attention, then a flaw in the software could be catatheir paycheck. But Brian then asked the workers if they strophic. With that in mind, we devised a checklist would commit to saving more in the future. Framing the question that way led to far that includes seven key factors that can ensure higher levels of commitment, with 78% of the that a retirement-savings program is a success. reluctant savers agreeing to increase their savings at a later date in much the same way the 1. Is the initial savings rate sufficient? When you ask employers why they suggest people in the snack study were willing to choose the healthy option for a later time. an initial savings rate that is far too low, they Once the workers joined the program, their often express concerns about employee blowsavings rate automatically increased every back. A higher savings rate, they say, will inyear to ensure inertia was working for them crease the opt-out rate, or anger employees who end up with smaller-than-expected payand not against them. The real test of the program was whether it checks. New research by John Beshears, Shled to higher savings rates. By this measure, lomo Benartzi, Katherine Milkman and Rick Mason, however, suggests these concerns may be misplaced. The researchers, using data from 401(k) provider Voya Financial, found that it is possible in many cases to enroll workers in a plan with an initial suggested rate of 7% or more with little blowback and a significant boost to worker savings. 2. Does it contain an automatic auto-escalator? It isn’t enough to help people start saving. If a retirement program is going to succeed, it needs to help them save enough to maintain their standard of living in retirement. This typically requires an automatic escalator, which gradually raises savings rates to a sufficient level. We compared those enrolled in Save More Tomorrow to those who accepted a recommendation from a financial adviser to increase their savings rate by 5 percentage points today. The result? Those in the program with the automatic escalators had a savings rate that was higher than those in the other group within less than two years. To make saving even easier, we recommend automatically enrolling workers into the savings escalator, provided it’s also easy to opt out. 3. When does automatic escalation stop? Nearly half of companies with a savings escalator stop the automatic increases when the employee reaches a 6% savings rate. That rate is way too low: One useful rule of thumb is that workers should be saving at least 10% of their income annually, and considerably more if they got a late start. This means we need retirement plans with far higher savings targets. 4. Are the savings increases properly structured? Automatic escalators should increase savings rates in 2-percentage-point increments, not the 1-percentage-point increments commonly used today. While the additional point might not make a big difference for workers who stay in the same job for many years, it’s an essential feature for those who change jobs frequently, since that typically means starting over at the initial rate. And since people seem to have identical reactions to proposed 1- and 2-percentage-point increases, why not get to the target saving rate faster? 5. Do the savings increases take place at the right time? Research shows that people are more willing to take action toward a goal when it takes place around a calendar landmark. This suggests that retirement plans could be more effective if they boost workers’ savings rates at specific times, such as Jan. 1 or on a worker’s birthday. Another idea is to tie savings increases to pay raises, so that employees never see a smaller paycheck or have to cut their spending. This minimizes the impact of loss aversion. 6. Does the new savings plan cover all employees? Many retirement plans using Save More Tomorrow apply the program only to new work- ers, not existing employees. This is a major mistake. Given the effectiveness of Save More Tomorrow, limiting the intervention to new hires can create dramatic differences in the financial security of employees. Is it fair that someone who joined the company a few days before Save More Tomorrow went into effect has half the retirement savings of someone who joined right after it went into effect? More generally, we recommend that all plans have periodic “restarts” to nudge everyone to take a fresh look at their saving and investment strategies. 7. Is the savings plan personalized? Retirement plans currently offer all enrolled employees the same recommended savings rate, escalator and cap. This one-size-fits-all approach works well enough, but just imagine the possibilities if these plan features were instead personalized to suit the financial needs of the individual. Perhaps you started saving early, and thus can enroll at a lower rate; or maybe you have no savings at all, and need to accumulate a nest egg in less than two decades. If Amazon can personalize shopping recommendations, and Netflix can predict our new favorite show, savings plans ought to be able to come up with personalized nudges. Updating nudges Save More Tomorrow demonstrates the power of behavioral science to help address serious societal problems. But as the nature of work evolves and new technologies appear, we need to keep updating the features of the nudge. A large number of workers today don’t have a workplace retirement plan available to them, either because they work for a small firm that doesn’t offer the option, or because they are self-employed. According to the Government Accountability Office, more than 40% of American workers are no longer traditional employees. Some are known as contingent workers, a category that includes the self-employed, independent contractors and freelancers. These people need a savings program that builds on the insights of Save More Tomorrow but relies on new digital tools. One such tool is the “round up,” which takes the spare change from an electronic transaction and deposits it in a savings account. A Lyft driver, for example, could begin by putting aside the change from each fare toward savings—a ride that generates $9.50 would lead to $9 in income and 50 cents in savings— and then escalate the amount diverted toward savings each year. Over time, this could help a freelancer amass a significant nest egg, especially if the money is properly invested. It is easy to get discouraged about the state of society; many of our biggest problems feel intractable. We aren’t quite so pessimistic. We believe that behavioral change is possible—we just need to use autopilots in our daily lives that are properly designed, tested and implemented. To paraphrase American designer Charles Eames: The details aren’t details. They make the nudge. For personal, non-commercial use only. Do not edit, alter or reproduce. For commercial reproduction or distribution, contact Dow Jones Reprints & Licensing at (800) 843-0008 or www.djreprints.com. THE WALL STREET JOURNAL. Monday, December 11, 2017 | R3 FIDELITY WEALTH MANAGEMENT co Fo m rp m e er rs ci on al a us l, e on ly . A WEALTH OF OPPORTUNITIES When you come to Fidelity, you get a dedicated advisor who gives you straightforward advice with the goal of helping you grow and protect your wealth. We can: Help you invest and plan for your full financial picture Lay out your options and make clear recommendations no n- Offer strategies designed to reduce the impact of taxes Schedule an appointment with a Fidelity advisor today. FIDELITY.COM/WEALTH | 800.FIDELITY Investing involves risk, including risk of loss. Fidelity Brokerage Services LLC, Member NYSE, SIPC © 2017 FMR LLC. All rights reserved. 817924.1.0 For personal, non-commercial use only. Do not edit, alter or reproduce. For commercial reproduction or distribution, contact Dow Jones Reprints & Licensing at (800) 843-0008 or www.djreprints.com. THE WALL STREET JOURNAL. R4 | Monday, December 11, 2017 JOURNAL REPORT | WEALTH MANAGEMENT Where to Put Your Money in the Next Year Three financial advisers offer their thoughts on the opportunities—and risks—for 2018 Expect volatility WSJ: What do you expect for markets next year? MS. EUSEY: We believe the economy and the developed markets should continue their steady advance in 2018. However, the markets are priced for perfection and we think any disappointing news will increase volatility. The reason for the continued growth is that profits are strong. Employment continues to be strong. But that hasn’t translated into higher infla- Stretched Valuations WSJ: How should investors position fixed-income portfolios amid expected rate increases? MR. PAGNATO: Investors should not abandon fixed income. We feel it is important to continue to maintain the discipline and have exposure there. The Federal Reserve raising shortterm rates doesn’t necessarily mean long-term rates will go up. We view bonds that are longer term as a hedge against a potential market correction or decline in equity markets. WSJ: What effects will the cor- STEPHANIE AARONSON/THE WALL STREET JOURNAL MS. EUSEY: Investors with a short time horizon should consider taking some money off the table if they don’t think they can weather a market correction. Cash positions for us are a passive byproduct of where valuations are, not an active decision to de-risk the portfolio. So cash will be raised as we can’t find value in this market environment. MR. PAGNATO: Valuations have been elevated for some time. And investors would have been penalized if they would have sold and went to cash. So we would not reduce equity exposure unless the client’s portfolio is unbalanced. MS. EUSEY: We’re not raising cash solely based on valuation, but we want make sure every investment that we invest in has a margin of safety to the intrinsic value of the company. We are still finding value in the market in certain spaces. MR. NEILD: Stocks are expensive. U.S. stocks, the S&P 500, more specifically, is trading around 18 times forward-fourquarter earnings—which, if you look at historical perspectives, is well above average. But investors should recognize that high valuations are a notoriously bad predictor of market corrections. Shannon Eusey, Ted Neild and Paul Pagnato discuss tax reform and other factors that could boost or roil the markets next year. ommend that either they avoid fixed income or hold near the bottom of the allowable range that’s consistent with their broader investment policy parameters. ratio is at 32, above where it was in 1929. The only time it has been higher was 1999. MR. NEILD: You have elevated valuations across multiple markets. It’s not just isolated equity markets. MR. PAGNATO: The biggest risk is if we get an inverted yield curve [when long-term rates are lower than shorter term]. The last nine times the yield curve has inverted, we’ve gone into a recession. WSJ: Which stock-market sectors do you prefer now? MS. EUSEY: Sectors that should relatively outperform if [President Donald Trump’s] progrowth initiatives go through are financials and materials. Other cyclicals, such as energy, should also benefit. MR PAGNATO: Banks will benefit from the tax-policy changes, deregulation and higher interest rates. A great way to invest in the banking sector is through preferred stocks. Technology should continue to deliver above-average earnings and sales growth in sectors like retail, automobile, energy, hospital, hospitality, transportation and leisure. It is those companies that are digitizing, that are embracing the technologies that are quickly rising to the top. Looking Abroad WSJ: How much should inves- WSJ: Should investors cut back on stocks or boost their cash? MR. NEILD: We continue to rec- porate tax cut have on the economy and for investors? MR. NEILD: There will be a positive effect on earnings for many publicly traded and privately owned businesses. It will have a significant effect on the perception of market valuations. In theory, companies will have additional capital for investment and hiring, but there is no requirement to deploy capital in this manner. But it could have a substantial beneficial impact on stockmarket levels. MR. PAGNATO: We are advising business clients to be on the lookout for any potential business expenses that can be escalated into the 2018 tax year. [The lower corporate tax rate] will be a stimulus for the economy. Consumers will have more discretionary income to spend. Businesses will have more cash flow and net income. This will lead to increased distributions to shareholders and more capital to reinvest in the business. MS. EUSEY: While it should increase business and consumer confidence, the positive impact on the overall economy will likely be marginal at best. Corporations have quite a bit of cash. To spur economic growth, corporations will need to reinvest in their companies. Will they take the profit for themselves as bonuses, or pay dividends, buy back shares, or will they hire, pay higher wages and make capital investments? We haven’t seen increased profits in recent years necessarily being used to grow businesses by investing in people or capital. ly . WITH 2017 coming to a close, can investors expect another stellar year for stocks? Not so fast. The Dow Jones Industrial Average surpassed 24000 points this year thanks to solid earnings, steady economic growth, subdued inflation and a careful Federal Reserve. Next year, market watchers say, tax reform, possible pro-growth initiatives from the Trump administration and an improving global economy could all prolong the current bull market in stocks, though likely at a more muted pace. There are risks, however, that could upend this upbeat scenario. These include increased stock-market volatility, an unexpected spike in inflation or geopolitical turmoil. The Wall Street Journal spoke at length with three financial advisers about how investors can prepare: Shannon Eusey, founder and chief executive officer at Beacon Pointe Advisors in Newport Beach, Calif.; Ted Neild, president and chief investment officer at Gresham Partners in Chicago; and Paul Pagnato, founder and chief executive officer at PagnatoKarp in Reston, Va. Here are edited excerpts of that conversation: tion. These all point to steady growth. We aren’t seeing any signs of recession soon. We’re at historic lows in terms of volatility. So if we see any signs of an uptick of inflation, unemployment or any geopolitical concerns, we will see increased volatility. MR. PAGNATO: We expect higher volatility. This year, the S&P 500 didn’t have a single day when it was up or down more than 2%. That’s incredibly low volatility. We expect the increased volatility to come from the central banks reducing the liquidity from the system. We feel domestic equities could see single-digit returns, primarily driven by a global synchronized economy, continued earnings growth and outside surprises to come from tax reform. We do expect some deregulation to occur, particularly in the financial industry, which would be a positive tailwind to the markets. MR. NEILD: The economy’s fundamentals are fairly positive. We just completed two consecutive quarters where GDP growth was over 3%. We’re finally getting to a stronger fundamental place from a corporate earnings perspective. And, unlike earlier years in the cycle, what we’re seeing now is revenue growth. So this isn’t just about productivity and cost cuts. We’re seeing some headroom for earnings to grow because topline revenue is growing. Never say never, but it would be really hard for volatility not to increase. Think about all the geopolitical risk in the world today. The markets are shrugging off things that they probably shouldn’t shrug off. And there is a sense of complacency out there that is a little bit troubling. tors allocate to foreign? MS. EUSEY: We are recom- mending increases in that asset class. Parts of Southern Europe may still have underlying problems, but overall, the economies are improving there. The longer time horizon a client has for emerging markets, the better off they are, because the demographics are changing in a positive fashion. MR. PAGNATO: We’re recommending the average investor put 35% in foreign investments. Emerging markets are trading around 12 times earnings, whereas the U.S. is 18, 19. MR. NEILD: We have a significant portion of our clients’ portfolios allocated to interna- co Fo m rp m e er rs ci on al a us l, e on BY DAISY MAXEY tional. In a traditional equity portfolio today, well over half. At the core, valuations in the U.S. are more stretched than in other places in the world. WSJ: What’s the biggest risk investors face in 2018? MS. EUSEY: Equity valuations are stretched. The S&P cyclically adjusted price/earnings Ms. Maxey is a Wall Street Journal reporter in New York. Email her at firstname.lastname@example.org. Even for the Very Rich, More Money Brings Happiness But a study also shows that happiness depends on where the wealth comes from around $75,000—in part because increases beyond that point likely don’t exert as large an impact on people’s ability to live comfortably. But nearly all of this existing research comes with one caveat: Millionaires, who are not as motivated to complete surveys as people with average incomes, have been underrepresented in the results. By contrast, our study is the first to have a large sample of millionaires. With our colleagues Tianyi Zheng at the University of Mannheim and Emily Hais- SELMAN DESIGN no ANDREW CARNEGIE—one of the richest people to have ever lived—was troubled about the potential effects of his enormous wealth on one particular constituency: his heirs. He opined that a parent leaving their child “enormous wealth generally deadens the talents and energies of the child, leading to a less useful and less worthy life” than they otherwise would have. Mr. Carnegie’s anxiety raises two questions: Does wealth actually lead to greater happiness for the very wealthy? And, does inheriting wealth—versus earning it yourself—play a role in how happy that wealth makes us? The relationship between money and happiness has been studied for decades, and typically shows that money matters for well-being, but with diminishing returns: the difference in happiness between people with incomes of $50,000 and $75,000 is larger, for example, than between people with incomes of $75,000 and $100,000. The more we have of it, it seems, the more money wears off. Indeed, research by Nobel laureates Daniel Kahneman and Angus Deaton suggests that the happiness benefits of increased income diminish n- BY GRANT E. DONNELLY AND MICHAEL NORTON ley at BlackRock, we surveyed a financial institution’s highnet-worth customers—a sample of more than 4,000 millionaires—about their wealth and happiness. Such a large group potentially makes the data more accurate as to how wealth influences happiness among the very wealthy—who have been underrepresented in past studies. It also gave us the ability to explore whether the accumulation of dozens or hundreds of additional $25,000 sums might push the needle toward real 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 investing, wealth-management and personal-finance issues raised in this and future reports. Read what they have to say at WSJ.com/Experts. Posts featured throughout the week include: “Why Tax Reform Makes This the Best Time to Open a Donor-Advised Fund,” by Kent Smetters, a professor at the Wharton School of the University of Pennsylvania, faculty director of The Penn Wharton Budget Model, blogger at KentOnMoney.com and regular on “Your Money” on SiriusXM Radio. “How Much Should You Save for Retirement? Why the 10% Rule Could Work,” by Derek Tharpe, founder of Conscious Capital and a research associate at Kitces.com. differences in happiness. Our respondents answered questions about their happiness with their life in general, and about their current net worth, which we calculated as the total value of their savings, investments and assets, minus any debt. So, do many $25,000s add up? The very wealthy in our sample—respondents who reported having a net worth of roughly $10 million or more— reported greater happiness than those with a net worth of “only” $1 million or $2 million. 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 The effect is significant, but small, with the very wealthy roughly one-quarter of a point happier on a 10-point scale. Additional millions are associated with additional happiness, but not in life-changing magnitude. We also explored whether the manner in which wealth was acquired predicted our millionaires’ happiness. Does the well-being that people derive from their wealth depend on whether it was earned or inherited? Our respondents also reported the primary source of their wealth as either earned, which could mean through investing, business profits, wages and bonuses; or unearned, through inheritance, for example, or marrying into wealth. Although increased wealth was associated with greater happiness for both groups, those who earned their wealth reported significantly greater happiness than those who primarily inherited or married into it. Of course, there are likely other differences between people who earned versus inherited their wealth that may contribute to these different levels of happiness, but these results do offer support for Carnegie’s conjecture. Taken together, our research suggests that the very wealthy are moderately happier than the “regular” wealthy, and that the manner in which wealth is acquired— earning or inheriting it—influences the happiness derived from that wealth. Can millionaires extract more happiness from their wealth? Carnegie came up with one solution: He donated the vast majority of his fortune to charities, foundations and universities during the last few years of his life, keeping it from his heirs in an apparent effort to lead them to useful, worthy lives. And his solution has greater wisdom as well: Because research shows that giving to others leads to greater happiness than spending on oneself, Carnegie was also employing his wealth in a manner likely to maximize his own happiness. His strategy has caught on: More than 170 millionaires and billionaires have signed on to The Giving Pledge, a campaign started in 2010 by Bill Gates and Warren Buffett to encourage the wealthy to contribute a majority of their wealth to philanthropic causes. Our research suggests that this strategy has benefits not only for the recipients of that charity, but for the wealthy and their heirs as well. Mr. Donnelly is a doctoral student at Harvard Business School. Dr. Norton is a professor at Harvard Business School. They can be reached at email@example.com. REPRINTS AVAILABLE FULL PAPER: The entire Wall Street Journal issue that includes the Wealth Management report can be obtained for $10 a copy. Order by: Phone: 1-800-JOURNAL Fax: 1-413-598-2259 Mail*: Wealth Management Report Dow Jones & Co. Attn: Back Copy Department 84 Second Ave. Chicopee, Mass. 01020-4615 JOURNAL REPORT ONLY: Bulk orders of this Journal Report section only may take up to six weeks for delivery and can be obtained for $5 for one copy, $2 for each additional copy up to 50, and 25 cents for each copy thereafter. 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Our advisors work with you to create a long-term financial strategy that’s built around your life and your priorities. That way you’re ready for no n- whatever comes next. Learn more or talk to an advisor today. ML.com I 888.339.9417 I @MerrillLynch Investing involves risk. Products are offered through Merrill Lynch,Pierce,Fenner & Smith,Incorporated,Member SIPC. Investment products: Are Not FDIC Insured Are Not Bank Guaranteed May Lose Value © 2017 Bank of America Corporation. All rights reserved. ARKHFLWQ For personal, non-commercial use only. Do not edit, alter or reproduce. For commercial reproduction or distribution, contact Dow Jones Reprints & Licensing at (800) 843-0008 or www.djreprints.com. THE WALL STREET JOURNAL. R6 | Monday, December 11, 2017 JOURNAL REPORT | WEALTH MANAGEMENT Documents That You Need When a Child Turns 18 Parents often don’t realize they can no longer make legal decisions, until it is a crisis HEALTH-CARE POWER OF ATTORNEY Most people think of using a health-care power of attorney with an older parent, but it’s equally important for their college-age adult children. Also known as a health-care proxy, this document gives parents the ability to make decisions about their child’s health care. Typically, that MARGARET RIEGEL EDUCATION RECORD RELEASE whomever the student chooses. Some children may be hesitant about sharing private medical information with their parents, but students can set limits on how much or what type of information parents can receive, says Carolyn Reinach Wolf, executive partner at Abrams, Fensterman, Fensterman, Eisman, Formato, Ferrara, Wolf & Carone LLP and director of the firm’s mental-health law practice. Mr. Medina recommends that students fill out a blanket HIPAA authorization, giving parents full access to the student’s health information in any circumstances, which is especially valuable in situations that can’t be anticipated. “This authorization should be kept in a handy place, because you’ll need to show it to a local doctor, hospital or college if you need to access that private information,” he says. Jodi Rosenshein Atkin, a college-admissions consultant in Rochester, N.Y., had an experience that taught her the importance of a HIPAA authorization and the value of a blanket authorization. Soon after her twin daughters left for an out-of-state college, one of the girls became very sick and was hospitalized. It was extremely difficult for Ms. Atkin, who lived about four hours away, to assess the situation from afar, in part because the daughter was in and out of consciousness. She contacted the daughter’s physician, who had a HIPAA authorization on file that allowed him to share the daughter’s health information with her parents. As a result, the doctor was able to get information on the mother’s behalf. Having a blanket authorization, allowing any doctor or medical facility to fill her in on her daughter’s condition, would have made the process much smoother, Ms. Atkin says. Even with a blanket authorization, students might still need to sign a release that’s specific to their college student health center, Ms. Wolf says. Different colleges have different policies, procedures and releases based on the confidentially laws in their state, she says. become effective immediately, or at a future point. It can authorize parents to act on the child’s behalf in all financial matters, or it can set limits. Financial power of attorney can be useful in many situations—for instance, if a student has a car accident or falls ill, leaving him or her either temporarily or permanently unable to make financial decisions. If bank accounts, a car or other assets are titled in the name of the student, the power of attorney avoids the expensive and drawn-out court process of having a parent appointed a guardian for the student, says William Crouch Jr., a former president of Georgetown College in Kentucky, now chief executive at Crouch & Associates, a consultancy for nonprofit-fundraising professionals. Power of attorney also could be useful if the student plans to travel abroad, or if he or she has a bank account and is overdrawn—maybe due to fraud—but the student isn’t acting responsibly and addressing the issues promptly, he says. Financial power of attorney can be useful in certain circumstances after children leave school, as well. Adult children are responsible for HIPAA AUTHORIZATION HIPAA authorization allows doctors to speak about a student’s medical condition with FINANCIAL POWER OF ATTORNEY This document is a way to allow parents to manage their child’s finances. Depending upon how it is worded, it can The Family Educational Rights and Privacy Act, or FERPA, requires that students age 18 or older provide written consent before education records such as grades, transcripts and disciplinary records can be shared with their parents, with limited exceptions. Colleges commonly notify parents of this requirement. Even so, parents don’t always understand what’s at stake or they might forget, says Todd Gambill, vice chancellor for student affairs and enrollment management at Indiana University Kokomo. His university talks to students and parents about the educational-records authorization process at orientations for new students, but not everyone signs a release, he says. That can cause problems down the road. Ms. Nicklas, the financial adviser, says she had a client whose child ignored a notification that financial-aid documents weren’t complete. When the parents received the tuition bill for the coming semester, they were shocked to see the scholarship missing, Ms. Nicklas says. When they called the school for an explanation, they were told to contact their child, because the school couldn’t provide information to the parent. Ultimately, the situation was resolved and the scholarship reinstated. But if there had been a letter of authorization on file, the family would have received the notice and avoided a lot of grief and anxiety, Ms. Nicklas says. ly . A LOT OF THINGS change when a child turns 18. But one of the biggest is also one of the most surprising to a lot of parents: Once children turn 18, parents can no longer make legal decisions for them or receive information about them that is considered private, unless they have the children’s permission. And not having that permission can be particularly problematic when a child is away at college. For instance, parents can’t be notified of a student’s grades at college or enrollment status without written permission from the student. Parents also won’t necessarily know about any bills in the student’s name that are outstanding. Most disturbing, without express consent from the child, parents can’t get details of their child’s medical condition “and they no longer have the [legal] ability to make decisions” regarding the child’s health-care treatment, says Therese R. Nicklas, a certified financial planner and president of Wealth Coach for Women Inc. in Rockland, Mass. Some colleges do a better job than others in advising parents and students on these matters. But families can take the initiative by having documents in place. Here are the primary ones a family needs: power doesn’t kick in unless the child physically or mentally is incapable of making medical decisions, but each state has its own criteria. If a student goes to school out of state, it’s prudent to have a health-care power of attorney from both states, since some health-care professionals may be hesitant to accept a form they don’t recognize, says Victor Medina, an estate-planning and elder-law attorney with Medina Law Group in Pennington, N.J. Joe Orsolini, president of College Aid Planners in Glen Ellyn, Ill., recalls a family he worked with who dropped off their 18-year-old daughter at college for her freshman year and didn’t hear from her for days. The school suggested the parents call the local hospital, but the information they received over the phone was severely limited by privacy rules. They drove frantically to the hospital and discovered their daughter had been bitten by a spider and had been in a coma for three days. The daughter eventually recovered, but it was eye-opening for Mr. Orsolini, who now routinely counsels clients about how the financial, academic and legal rights of their children change once they turn 18. Having a power of attorney for health care is especially important because college is a time when mental-health issues can manifest, says Kim Lee Kenawell-Hoffecker, a founding partner of Avantra Family Wealth in Mechanicsburg, Pa. She also recommends that clients draft a living will for the child, which specifies what medical treatments are desired at the end of life. co Fo m rp m e er rs ci on al a us l, e on BY CHERYL WINOKUR MUNK paying their student loans, even if the child is incapacitated in an accident or has a mental-health issue. Power of attorney would allow parents to act on their child’s behalf to make the payments or facilitate a deferral or forbearance of the loan, says Mr. Orsolini. Ms. Winokur Munk is a writer in West Orange, N.J. She can be reached at email@example.com. n- Part of the Margulies Collection at the Warehouse in Miami, Fla. THE MARGULIES COLLECTION AT THE WAREHOUSE For Students in Grad School, Undergrad Debt Poses Issues no An Alternative to Donating Art BY DANIEL GRANT WHAT CAN ART collectors do with a collection that has outgrown its space? Or a collection that they don’t want heirs to sell off piecemeal? One possibility: open a museum. The move allows very well-heeled donors to know their legacy will be kept intact, rather than split up or displayed by another museum in a way they wouldn’t like. They also get to control which works are displayed and how in their own lifetime, and to see them in an institution with their name above the door. There’s also the financial benefit of a tax deduction, and the museums themselves are exempt from taxes. But controlling their art’s fate matters most to some collectors. “It’s really not tax-driven,” says Diana Wierbicki, a partner at the law firm of Withers Bergman, a number of whose clients have set up museums. Setting up shop Among the more established private museums are the Brant Foundation Art Study Center in Greenwich, Conn.; the Linda Pace Foundation in San Antonio; the Broad in Los Angeles; the Hess Collection in Napa, Calif.; and the Rubell Family Collection in Miami. Real-estate developer Martin Margulies set up the Margulies Collection in a refurbished warehouse in Miami in 1999. The collection, which consists of 3,000-plus works of modern and contemporary art, is open to the public Tuesday through Saturday, April through October. Mr. Margulies says he “did this to enjoy my collection and educate young people.” “At an existing museum, the director may change, the curators may change, the board members may change,” he adds. “The people who promise you one thing, well, they’re gone, and new people come in. They don’t like this, they want to change that. Pretty soon, everything you donated to them is in storage.” Of course, creating a museum is a step only the very wealthy can afford. Setup can cost millions of dollars, and annual maintenance can be hundreds of thousands. Mr. Margulies estimates his annual operating budget to be $350,000. The San Antonio-based Linda Pace Foundation expects its annual operating budget, now $275,000, to top $1 million when its new space opens in 2019, says Kathryn Kanjo, a foundation trustee. One of the first steps in creating a museum is for donors to set up a private operating foundation to run it, and then gift their art to it. Just like other art donors, they get a tax deduction. As part of that initial gift, they often give cash to the foundation as well. The money goes toward the rental or purchase of a building in which to place the artwork, which likely will need to be refurbished, and equipped with climate controls and security, all of which can cost millions of dollars. And the artwork will need continuing maintenance and insurance. (The cash outlay is deductible at up to 50% of the donor’s adjusted gross income.) One ongoing aspect of running a private museum is currently under debate. The Internal Revenue Service requires collectors who set up museums to allow the public to come in to look at the artwork, which requires the hiring of one or more curators and art handlers, as well as other staff. (The artwork must also be available for loan to other museums.) But the rules don’t specify how often private museums must be open to visitors. And most aren’t open much, compared with public institutions. Most private facilities are open a few months out of the year for three days a week or so, sometimes by appointment only. Just how often? Last year, in a letter to IRS Commissioner John Koskinen, Senate Finance Committee Chairman Orrin Hatch (R., Utah) questioned whether some of these institutions merit their tax exemption. Among other reasons, he referred to “lightly advertised museums that require reservations made weeks or months in advance,” narrowing the visitor pool. Now the Senate Finance Committee has been gathering information on privately held museums “as part of a wider inquiry into the activities of the tax-exempt sector,” according to a committee spokeswoman. It’s still unclear how the tax overhaul being finalized in Washington will affect rules for private museums. The House’s bill would require foundations that operate as art museums to be open during normal business hours to the public for at least 1,000 hours during the taxable year, says Ms. Wierbicki of Withers Bergman, while the Senate version of the bill makes no change of this sort. She adds that neither bill indicates any changes in the tax deductions that donors may receive. Mr. Grant is a writer in Amherst, Mass. Email firstname.lastname@example.org. BY DEMETRIA GALLEGOS FOR STUDENTS pursuing graduate degrees, there’s a big financial question that many don’t give much thought to: What happens to their undergraduate student debt? About 60% of all bachelor’s degree recipients have borrowed to pay for their education, and the College Board says their debt averages $28,400. Meanwhile, an estimated three million people attend graduate school each year and most enroll within 10 years of their undergraduate studies, according to the Urban Institute. Some grad students choose to keep paying down their debt to meet personal financial goals. Another incentive: In many cases, for those with unsubsidized loans, deferring the loan can increase its total cost. That’s because during deferment, unpaid interest accumulates and is added to the principal when payments restart. Lots of borrowers don’t realize the interest “meter is still running” even though the loan appears to be parked while in deferment, says Patricia Nash Christel, vice president of corporate communications with Navient, a federal loan servicer. Here are some issues for grad students with previous loans to consider: When a student enters graduate school, existing federal student loans are automatically deferred. The nine companies contracted with the Department of Education to service federal student loans keep tabs on who is enrolled in college or graduate school. They assume that grad students who have unpaid undergraduate loans, and are enrolled at least half-time in graduate school, want their loans to be deferred. Thus, the servicers notify the students by letter or email that their loans are scheduled to be deferred, and put the loans on hold unless a student tells them not to well before the term begins. Automatic debt payments can stop without the student realizing. If students have declined deferment in a timely manner or if they have independently arranged automatic payments through their own bank, their regularly scheduled loan payments won’t stop. For most, it’s a different story. Despite notification efforts by the servicer, many students don’t read the notice, or they misunderstand it. And because borrowers in most cases put their servicer in charge of automated payments, in return for a small reduction in their rate, their payments can stop without their realizing it. It can take months for the student to become aware and to get the payments started again. Making partial payments can help keep costs down. In the cases of deferred loans where the unpaid interest accumulates, there is an option in which the student can keep costs down and still defer their payments: The borrower just has to pay off the accumulated interest before the deferment ends, thus preventing the owed interest In Debt Average annual federal-loan amounts taken per borrower in 2016-2017 Undergraduate Graduate Subsidized/unsubsized $6,590 $18,720 PLUS $15,880 $23,990 Source: The College Board's Trends in Student Aid 2017 THE WALL STREET JOURNAL. from being added to the principal. Older debt may be more difficult to keep in repayment mode. Students who borrowed more than seven years ago and have not recently consolidated that debt may face a more complicated situation in declining a deferment if their loan was a Federal Family Education Loan Program, or FFELP, loan. These loans may involve more parties, says William C. Shaffner, director of business development and government relations for Mohela, one of the servicing companies. “It’s one of the reasons borrowers need to stay in touch with their servicers,” he says. Ms. Gallegos is a Wall Street Journal news editor in New York. Email: email@example.com. For personal, non-commercial use only. Do not edit, alter or reproduce. For commercial reproduction or distribution, contact Dow Jones Reprints & Licensing at (800) 843-0008 or www.djreprints.com. THE WALL STREET JOURNAL. Monday, December 11, 2017 | R7 JOURNAL REPORT | WEALTH MANAGEMENT CHARITY DOES seem to begin at home. Last year, Americans gave $390 billion to U.S.-based charitable organizations, according to the Giving USA Annual Report on Philanthropy. But only 6% of this amount went to nonprofits that do work outside the country. There are many reasons for this disparity, including lack of awareness and a preference for tackling local or personally relevant issues. There could be, however, a more mundane reason: the language the nonprofits use in describing where help is needed. In our recent research published in the Journal of Personality and Social Psychology, we find that merely describing a place (Haiti, for example) as “far away” rather than “nearby” can make people less likely to give to a charity helping this place. Our research shows people tend to believe that their charitable donations will have a greater impact when they perceive the intended beneficiaries as near. In turn, potential donors are more willing to help those who are described as close, compared with those described as far away. It is certainly true that we can more directly experience the impact of helping in our own communities. However, the belief that a dollar will do more when it stays close to home is mostly erroneous. There is nothing that makes a charitable organization more efficient just because it is based in one’s hometown. Nor is there any reason to assume that dollars spent to help the poor in one’s own community have a greater impact on poverty than dollars spent to help the poor anywhere else. The misconception about local donations having more impact is, in part, a reflection of people’s strong tendency to think in terms of metaphors; in this case, thinking about charitable impact in the same terms as physical impact. It may be true that a snowball thrown from 10 feet away will have a greater impact than one thrown from 50 feet, but the rules of physics don’t apply to charitable giving. Nevertheless, the intuition that distance matters kept emerging in our data, whether for charities doing work to relieve poverty overseas, or, within the U.S., for donations to support one’s alma mater. In one of our studies, we analyzed a data set of about 170,000 alumni included in university fundraising over the course of a year. We found a positive relationship between distance and annual giving; the closer alumni were to the university, the more they had given that year. But just because shorter distances were associated with greater giving doesn’t mean they caused greater giving. Hence, we needed a stronger test to establish a causal link. Our idea was simple: use language to make people perceive the distance to their alma mater as long or short, regardless of what it was. We conducted a large field experiment as part of the annual giving campaign of another institution. Alumni of a business school got a letter soliciting a gift for the school and describing the school as either “far away” or “nearby.” We randomly assigned the alumni to receive one of these letters regardless of their actual distance from the school. We found that alumni gave more, and that a greater percentage of alumni gave, when the letter described their alma mater as “nearby” as opposed to “far away.” And this effect occurred regardless of the actual distance between alumni and the university. Expanding the actual geographic distance, and moving to a different cause, we next devised a study to look at the willingness of Americans to donate to a cause helping residents of a foreign country. We chose Ivory Coast, the original home of one of the co-authors. To change participants’ perceptions of distance, we had half of them read a short article about globalization and shrinking distances between countries. The other half read about long distances between countries and long-haul flights. Then, all participants saw a charitable appeal from an organization working to fight poverty in the Ivory Coast. We found people were more willing to donate to the organization after reminders of short distances than after reminders of long distances. Thus, whether a place was objectively near or far, subjective perceptions of distance influenced giving. We found similar results in related studies we conducted; looking at donations to causes in Haiti, Guatemala, and Honduras, we found that descriptions of distance influenced giving by changing potential donors’ expectations that they will have an impact. Distance is becoming a matter of perspective, which in turn can be influenced by the language charitable organizations use to communicate with potential donors. We should remind ourselves that in times of need, no country, city or town should be too far away to help. BY LISA WARD Bill and Maryrose Izzo would like to start working part time when they turn 60, but the couple is unsure if their nest egg will be big enough—since they plan to have an active retirement and travel regularly. “We would like to go abroad every other year,” says the 54-year-old Mr. Izzo. Mr. Izzo works in the food-procurement industry, while Ms. Izzo, age 53, is an underwriter for an insurance firm. They live in the Chicago metropolitan area and have no children. Their combined income is $250,000. They have two 401(k) accounts with a combined value of $860,000. They also have a traditional IRA valued at about $350,000, a Roth IRA valued at $79,000 and a brokerage account valued at $139,000. The couple also has about $170,000 in cash. They own a primary residence worth about $900,000, with a mortgage of $325,000, and three condominiums that they use as rental properties. Most of the income from the rental properties is used to pay the mortgages, maintenance, insurance, taxes, assessments and neighborhood association fees. Mr. and Ms. Izzo’s monthly expenses include about $3,000 for the mortgage on their main residence, $80 for utilities, $90 for insurance on the primary residence, $375 for car payments and insurance and about $3,000 for food, entertainment and other living expenses. They also pay about $420 a month for health insurance from their employers, from whom they also receive life insurance. The couple wants to know if it makes sense to buy long-term-care insurance. The Izzos need to account for health-care costs before Medicare kicks in, says an adviser. long-term-care insurance until they are about to leave their full-time jobs. Even then, he says, it may not be necessary. The premiums for long-term-care insurance probably won’t increase significantly over the next few years, and if they remain in good financial and physical shape over that time, they may be able to self-insure, Mr. Long says. Once the Izzos estimate how much they are likely to spend each year during retirement, they should use that information to analyze their portfolio, he says. Tax-advantaged accounts such as 401(k)s and IRAs require that a certain amount of money be withdrawn annually once the beneficiary turns 70½. But the mandated withdrawals plus Social Security payments could be more than the Izzos want to spend each year. Therefore, they should plan on converting some of the money in these accounts into a Roth IRA, which lacks a mandatory withdrawal provision, Mr. Long says. But they should wait until after they stop working full time and are in a lower tax bracket to convert the accounts. During the conversion, any gains within the account are taxed as ordinary income. Mr. Long says that $60,000 is probably enough for an emergency fund, so the couple should use some of their cash holdings to pay off their car loan of approximately $6,000. They also might want to invest some of that cash in the market, where the return potential is greater. As for their real-estate holdings, Mr. Long says the couple should think hard about whether to keep the rental properties, pointing out that the condos currently are generating a 2.7% return after rent and maintenance expenses are factored in. co Fo m rp m e er rs ci on al a us l, e on BY MAFERIMA TOURETILLERY AND AYELET FISHBACH THE GOAL: WORK SOME AND TRAVEL IZZO FAMILY Distance makes the giving heart grow weaker THE GAME PLAN ly . Charity, Near vs. Far Ms. Toure-Tillery is an assistant professor of marketing at Northwestern University’s Kellogg School of Management, and Ms. Fishbach is the Jeffrey Breakenridge Keller Professor of Behavioral Science and Marketing at University of Chicago’s Booth School of Business. Email them at firstname.lastname@example.org. ADVICE FROM A PRO: Chris Long of Long Financial Planning in Chicago says the couple is on track to begin retirement around age 60, but they should use the next few years to get organized. First, the couple should closely track what they spend now and then think realistically about what they will spend in retirement. One big expense they likely will have to account for is health insurance before Medicare kicks in at age 65. Mr. Long estimates that premiums for a private, individual plan will cost them about $20,000 a year. He advises the couple to hold off on buying Ms. Ward is a writer in Mendham, N.J. She can be reached at email@example.com. Philanthropy and Narcissists What soliciting charities need to know ALS ice-bucket challenge people were motivated to take part in the challenge not because they cared about the issue—even though on the surface it may have seemed like they did—but because they wanted the attention that came with posting a video. That said, the videos themselves helped increase awareness of ALS, so it is likely that even those who posted videos without donating played a role in the campaign’s success. The takeaway for charities is that narcissistic people may prefer engaging in charitable activities that are easy, don’t cost anything and that involve a one-time commitment. An example would be so-called slacktivism activities, such as sharing social-media posts, which can be used to draw attention to certain important issues. But more research is needed. Other studies, meanwhile, have found that narcissistic people are more likely to donate time or money if the helping occurs in the presence of others or if the helping results in some sort of personal benefit. These examples suggest that charities might want to consider increasing the rewards or benefits that come ISTOCKPHOTO/GETTY IMAGES no NARCISSISTIC PEOPLE aren’t known for being generous. But emerging research suggests that narcissistic people may be willing to engage in charitable activities in certain situations, a finding that could have implications for nonprofits seeking to design more effective appeals. While narcissism’s dark side is well-documented, with dozens of studies showing narcissists’ difficulty with close relationships and their tendencies to lash out aggressively when someone insults them, comparatively little is known about how and why narcissistic people do good. However, new research on this topic, including some of my own, suggests that narcissistic people may be the ultimate “rational actors” when it comes to charitable giving. That is, they tend to weigh the costs and benefits to themselves before acting, unlike other people, who often make emotionally driven or automatic decisions to help and give. Sometimes, this can make narcissists look generous, at least on the surface. A recent example was the ice-bucket challenge, in which people could film themselves pouring a bucket of ice water over their heads, and donate money in support of amyotrophic lateral sclerosis, or ALS, research. More than 17 million ice-bucket videos were posted on Facebook during the challenge, which took place in the summer of 2014. The videos were viewed more than 10 billion times by more than 440 million people that summer, according to Facebook, and the ALS Association said donations surged by more than $90 million compared with the same period a year earlier. We ran a study in which we asked more than 9,000 Americans about their participation in the ice-bucket challenge, and measured their narcissism by asking them to what extent they agreed with the statement, “I am a narcissist.” (Narcissist was defined as meaning egotistic, self-focused and vain.) We found that those who self-identified as narcissistic were more likely to post a video of themselves doing the challenge but less likely to actually donate money. That suggested to us that narcissistic n- BY SARA KONRATH from donating, especially in populations that tend to score higher in narcissism, such as males and younger adults. These benefits could be tangible, such as a small gift, although intangible benefits such as attention and reputation might matter even more to narcissistic people. People might assume that those who regularly volunteer for nonprofit organizations score lower on narcissism, yet in one of our studies we actually found no difference between volunteers and nonvolunteers. It’s important to understand that not everyone gives and helps because they care. Concerns about recipients’ needs may be an especially low priority for narcissists. Not only do they score lower on measures of empathy, research finds that they report less altruistic motives for volunteering. Instead, narcissistic people focus on how they might personally gain from it, perhaps by making important career connections. This suggests that managers in helping professions need to strategically frame opportunities to reflect such motives. So what should people take away from this new research? Most would agree that truly generous people don’t need to broadcast their good deeds. That said, there may be a place for all kinds of givers, and understanding what drives narcissistic people to do good could help charitable groups be more strategic in how they appeal for help. Finally, some research suggests that there is hope for miserly narcissists. Just as in the classic holiday Scrooge story, studies show that there are dozens of ways to promote more empathy and generosity in people. One simple technique is to remind the narcissist to take the perspective of those in need. Dr. Konrath is an assistant professor of philanthropic studies at Indiana University’s Lilly Family School of Philanthropy. She can be reached at firstname.lastname@example.org. IN THE WAKE OF A HURRICANE YOUR DOLLARS ARE HARD AT WORK Even a small donation can make a big difference SupportHurricaneRelief.org For personal, non-commercial use only. Do not edit, alter or reproduce. For commercial reproduction or distribution, contact Dow Jones Reprints & Licensing at (800) 843-0008 or www.djreprints.com. THE WALL STREET JOURNAL. R8 | Monday, December 11, 2017 JOURNAL REPORT | WEALTH MANAGEMENT What to Consider Before Joining a Nonprofit Board The position can be rewarding. But it also can be a lot of work, as well as expensive. 1. What’s the financial commitment? Unlike directors of forprofit companies, nonprofit board members are typically called on to make financial contributions. “Everyone on the board should contribute, so make sure you’re aligned about the amount,” says Nicole Sebastian, director, U.S., UBS Optimus Foundation. For example, the minimum contribution for a certain board may be $100,000 whereas you were planning to give $25,000, says Ms. Sebastian, who is also senior strate- 2. What’s the duration of my term? Sometimes people think they’ll be on a board for a year, but the commitment can Candidate Qualiﬁcations Importance board executives assign to the following items when recruiting members: High Medium Low/not a priority 4% Passion for the mission 82% 14% Community connections 53% 34% Desired skills 47% 40% Occupation 36% THE GAME PLAN 13% 37% 32% 46% 30% Soure: BoardSource's Leading With Intent: 2017 National Index of Nonproﬁt Board Practices be much longer. Karen Altfest, principal adviser at Altfest Personal Wealth Management, says at the end of her first year on a board, she was surprised to find out she was expected to stay on for another year. “No one asked if I was available,” she says. Ms. Altfest enjoyed the work and ultimately agreed to renew several times. She tells clients to make sure they are clear on the nonprofits’ expectations before they sign on to prevent any THE WALL STREET JOURNAL. misunderstandings or lastminute requests. 3. How active are your board members? It’s important to know what kinds of jobs you will be expected to perform, says Ms. Altfest. Knowing such details will help you gauge your level of interest in the work and see if you have enough time to devote to it. For example, will you be assigned to a committee or can you select your own projects? 4. Does the organization have proper liability insurance coverage? In the past 10 years, 63% of nonprofits experienced a directors and officers liability claim, according to a 2012 Towers Watson survey. While not all claims have merit, the cost to defend the claims can often be more than the actual damages, says Steve Wittenberg, director, legacy and philanthropy at SEI Private Wealth Management. It’s particularly important for board members with significant assets to make sure the nonprofit has a Directors and Officers insurance policy, he says. This policy should protect the assets of the organization, the assets of its directors and officers and those of spouses, domestic partners and estates, if a director or officer has died, he says. If the D&O policy is inadequate, consider personal umbrella coverage, Mr. Wittenberg says. BY LISA WARD MORGAN RODDY An adviser suggests Cheri Ellefson (left) and Morgan Roddy start by tackling credit-card debt. n- “But,” Ms. Roddy says, “that’d be something we’d want to do once we’re reaching that mythical stability stage.” ADVICE FROM A PRO: Ellen Webber, a Seattle-based certified financial planner, says the couple has made a good start by cutting their budget way back, and “putting a bunch of money into paying off their credit cards.” Next she recommends a five-year plan. In the first year, they should transfer their credit-card balances to a card with zero interest for a year, which could save them $5,000. If that isn’t possible, she advises paying down as much of the debt as they can on the card with the highest rate, while paying the minimum amounts allowed on the others. In year two, assuming positive cash flow from the business, they’ll resume making payments on the student loans, and if they add $275 to their existing card payments, the cards should be paid off by the end of that year. They can add a few hundred dollars to spending, but Ms. Webber also wants them each to put $250 a month into a Roth IRA. And even before the credit cards are paid off, she’d like to see them put $500 a month into an emergency fund. “Sometimes people, if they’re putting everything into their credit-card debt and then they do have something come up, they just end up adding to the credit-card debt,” she says. “And it’s a bit demoralizing to see that go backward.” In year three, Ms. Webber wants them each to contribute $5,500 to their Roth IRAs, and start paying an extra $600 a month toward the private student loan. After they pay off their car, if they pay an additional $300 a month—a full $900 over the minimum payments due— they should have the private student loan paid off by the end of year four. If they follow these steps, their car, credit cards and private student loan will be paid off by year five. Ms. Webber also suggests they pay $600 a month extra that year toward the large government student loan. That will help them pay it off in 13 years rather than 30, she says. “If they can keep their nose to the financial grindstone for five years,” she says, “they’ll have some decent cash flow.” Then “they’ll be in a position where they can start thinking about accumulating for other family goals.” no When they married two years ago, this couple was making close to $100,000 in Minneapolis. But they felt like they were treading water. So, Morgan Roddy, 37, and Cheri Ellefson, 34, moved to Muncie, Ind., where they can live off Ms. Ellefson’s salary while Ms. Roddy focuses on their new small business, Queer Chocolatier. The company sells chocolate truffles on their website, at farmers markets and in a retail storefront above a coffee shop downtown. They pay $250 a month for 250 square feet. “We knew that it would be difficult to do it in Minneapolis because the rent would just be too high,” says Ms. Ellefson. Now the couple wants to focus on climbing out of debt. Queer Chocolatier has been grossing around $1,500 a month. But Ms. Roddy hasn’t been drawing a salary. She hopes to bring home about $2,000 a month in salary by this time next year. Ms. Ellefson brings home about $4,000 a month on the roughly $65,000 she estimates she’ll make in 2017 through her fulltime job at Ball State University as a women’s and gender studies instructor. She also gets grants that finance her research. Monthly expenses include $575 for their duplex, $400 for a Toyota RAV4 with a $20,000 balance, and $1,300 for the roughly $30,000 they owe on seven credit cards. Ms. Roddy has $104,000 in studentloan debt: $15,000 in private loans with an 8.9% interest rate, with the rest in a government loan at 4.8%. She is currently in deferment on the student loans. When she is not, she pays $535 a month. Between rent and other expenses, they put about $325 a month into the business. Groceries, bills, utilities and living expenses eat up $1,460 a month. They put $100 in Ms. Ellefson’s Health Savings Account each month and give about $20 to charity. Once they’re out of debt, they both would like to be able to travel more and perhaps be part of the foster-care system with LGBT youth or even adopt. Mr. Kornelis is a writer in Seattle. Email him at email@example.com. 5. Where is the board working well and where does it need to improve? Have a clear understanding of any problem areas before you join, says Matthew Wesley, director at Merrill Lynch Private Banking and Investment Group. For example, a Merrill Lynch client got recruited to a board but found out later that the board was indecisive. Because she was a “go-getter,” she found the board’s lack of direction very annoying, Mr. Wesley says. Mr. Wesley advises finding out if the decision-making process of the board is one that fits your own approach and personality. Attend a meeting, he suggests. Understand the strengths and weakness of the executive director and professional staff too, he says. “Ask yourself if the weaknesses in the leadership of the organization are likely to generate drama in your life, and if the strengths will support your sense of enjoyment,” he says. Speaking to a few people in the organization can help you determine if it’s the right fit. Ms. Dagher is a Wall Street Journal reporter in New York and host of the Secrets of Wealthy Women podcast. Email her at veronica. firstname.lastname@example.org. In the Next Housing Crisis, Lessons From the Last One A FIVE-YEAR PLAN TO CUT DEBT AND EXPENSES, AND SAVE MORE BY CHRIS KORNELIS 13% 51% Ability to fundraise 31% Demographics 24% 13% In addition, will you have a voice or will you be rubber stamping others’ ideas? “It can be uncomfortable when you join a board and find yourself seated on a committee that holds no interest for you,” she says. The longer you remain silent, the more difficult it is to change later on, she says. ly . IT MAY FEEL like an honor to be invited to join the board of a nonprofit. But don’t let ego cloud your decision. While being a board member can be rewarding—especially if you’re passionate about the charity—it’s important for potential members to first understand what’s expected of them. Don’t be afraid to ask questions before committing, nonprofit experts say. It’s crucial to make sure you’re comfortable with the organization’s mission, governance and finances before you sign on. Here are five key questions to ask: gist-family and philanthropy advisory at UBS Americas. There also may be fundraising expectations, she says. If you have a prominent position in a corporation, for example, the group may assume that you have the ability to secure donations from your company, or that you have wealthy friends whom you will ask for help, Ms. Sebastian adds. Some organizations have a “give or get” number, which means a target for each board member to hit in terms of direct contributions or money raised through friends. Ask if an introduction to other donors will count to your overall give-or-get number, says Laura Fredricks, a fundraising consultant in New York. Ask if other board members will know how much you give, and, if your organization hosts a gala, whether your contribution for the gala counts toward your yearly gift, Ms. Fredricks says. If you have an expertise, the board also may be hoping to enlist those skills. Make sure you’re on the same page as to what your talents really are, and what demands will be placed on your time. co Fo m rp m e er rs ci on al a us l, e on BY VERONICA DAGHER COULD A NEW STUDY ease the next housing crisis? When the housing bubble burst in 2008, federal policy makers thought they could limit the economic damage by helping to reduce amounts of principal owed on many mortgages, thus preventing foreclosures—especially for the millions of people who saw the value of their homes fall below the value of their mortgages. But, according to a new working paper, lowering principal had very little effect on defaults for underwater borrowers. Moreover, it turned out to be a very expensive initiative. The federal government spent about $4.6 billion on principal reduction to prevent foreclosures from 2010 to 2016, but the policy’s impact was so small, each avoided foreclosure ended up costing taxpayers at least $800,000, says Pascal Noel, an assistant professor at University of Chicago Booth School of Business, and coauthor of the paper with Peter Ganong, an assistant professor at University of Chicago’s Harris School of Public Policy. This new research sheds light on what went wrong with the government’s efforts to help underwater borrowers in the 2007-09 recession, which by early 2010 included more than 11 million people or about 24% of residential properties with mortgages, according to Core Logic, a data and analytics company. “If borrowers’ mortgage balances were much higher than their home value, policy makers and academic researchers worried the borrowers might decide to walk away, ” says Dr. Noel. But a more effective policy to help those homeowners and give the economy a boost, he says, might have been to temporarily lower the underwater homeowners’ mortgage payments, freeing up cash flow and thus spurring consumer spending. The Wall Street Journal spoke to Dr. Noel about the research. Edited excerpts follow. WSJ: Why did you decide to pursue this topic? DR. NOEL: I was working in the Obama White House, helping design the government’s response to the foreclosure crisis, but we didn’t have the right research to make the most informed policy decisions. That motivated me to figure out what exactly would have been the most effective response to that and future crises. WSJ: Explain the study? DR. NOEL: It has always been difficult to tease apart the effect of principal and monthly payment reductions because prior research had studied them together. But we were able to exploit policy variation in the government’s Home Affordable Modification Program, which modified about 1.6 million mortgages between 2009 through 2016. One group of borrowers, which became our control group, received a modification temporarily reducing their mortgage payments for five years. The second group received the exact same short-term pay- Each avoided foreclosure cost taxpayers at least $800,000, says one study. ment reduction, but also received about $70,000 in mortgage principal reduction, writing down, on average, a third of their mortgage balance. WSJ: What did you find? DR. NOEL: The principal re- duction had no statistically significant effects on borrowers’ short-term default rates. Reducing borrowers’ loan-to-value ratio by about 11 percentage points affected default rates by less than 1 percentage point. That is within the first three years of receiving the modification. It also had very little effect on consumption. A $70,000 reduction in mortgage principal increased borrowers’ monthly credit-card expenditures by less than $1 and their auto spending by less than $5. The main message is that underwater borrowers during the financial crisis were much less sensitive to changes in their housing wealth than the average borrower during normal times, and that was very surprising. WSJ: Why was it so surpris- ing? DR. NOEL: The link between housing wealth and consumption is very well documented empirically. But we find that relationship completely broke down. In most cases, the mortgage-principal reduction wasn’t enough to bring homeowners above water. If, for example, a borrower owes $80,000 more on their mortgage than their home is worth and $70,000 is forgiven, the home is still underwater. There is no collateral. So a homeowner can’t take out a home-equity line of credit or a second mortgage, which is typically how housing wealth increases consumption. We calculate that if the government spent $4.6 billion—the amount of money it used to subsidize principal reductions during the financial crisis—and used it instead to reduce short-term mortgage payments, the spending response would have been 10 times greater. It would have increased consumer spending by about $1.4 billion. WSJ: How big a role did a homeowner’s leverage play in default rates? DR. NOEL: During the crisis, many experts looked at the historical relationship between leverage ratios and default rates and believed there was a causal relationship between them. But our findings suggest short-term income shocks, like job loss, rather than leverage in and of itself, primarily drive mortgage defaults. We have a new version of the paper coming out soon where we look at a different source of variation in the Home Affordable Modification Program over the same period and find a 1% reduction in monthly mortgage payments reduces default rates by about 1%. That is a much bigger effect than we get from reducing mortgage principal without changing payments. WSJ: What lessons does the paper suggest in hindsight? DR. NOEL: The main lesson looking back is that the government would have been better off if it had used the same amount of money to finance deeper reductions in mortgage payments or reduce more borrowers’ monthly payments. Still, writing down mortgage debt before borrowers are underwater might be an effective policy and is worth further investigation. Ms. Ward is a writer in Mendham, N.J. Email her at email@example.com. For personal, non-commercial use only. Do not edit, alter or reproduce. For commercial reproduction or distribution, contact Dow Jones Reprints & Licensing at (800) 843-0008 or www.djreprints.com. THE WALL STREET JOURNAL. Monday, December 11, 2017 | R9 JOURNAL REPORT | WEALTH MANAGEMENT TAXES | TOM HERMAN Don’t Get Hit by Estimated-Tax Penalties There is a lot of confusion about the rules. Here’s what you need to know. Mr. Herman is a writer in New York City. He was formerly The Wall Street Journal’s Tax Report columnist. Send comments and tax questions to firstname.lastname@example.org. Proliferating Penalties More ﬁlers are getting hit by civil estimated-tax penalties for not having paid enough in taxes throughout the year. 2010 7.2 million 2015 Although “it can be difficult to estimate how much tax you will owe in the current year,” says Mark Luscombe, principal federal tax analyst at Wolters Kluwer Tax & Accounting in Riverwoods, Ill., “there are a number of safety nets available.” In general, taxpayers don’t have to pay a penalty if they meet any of several conditions, Mr. Luscombe says. The first is if they owe less than $1,000 in tax with their tax return, according to the IRS. Most taxpayers also typically don’t have to pay a penalty if they paid throughout the year at least 90% of the tax for the current year, or 100% of the tax shown on their return for the prior year, whichever is less. But that 100% requirement typically rises to 110% for higher-income taxpayers, defined as those with adjusted gross income of more than $150,000 (or $75,000 if your filing status for 2017 is married and filing separately from your spouse). There are special rules for fishermen and farmers. Here are a few other suggestions from tax pros: ders’s column in August. But, as Mr. Luscombe points out, don’t expect much sympathy if you cite such things as ignorance of the law or forgetfulness. LIFE CHANGES: Many people may need to tweak their withholding, estimated payments, or both for a variety of reasons, including some they might not have anticipated. For example, life changes such as “marriage, divorce, working a second job, running a side business or receiving any other income without withholding can affect the amount of tax you owe,” the IRS says on its website. If you work as an employee, “you don’t have to make estimated tax payments if you have more tax withheld from your paycheck. This may be a convenient option if you also have a side job or a parttime business.” THE WALL STREET JOURNAL ANNUALIZED METHOD: Some people don’t receive money in equal amounts throughout the year. For example, a law firm might wait until the closing months of the year to distribute most of its profits for that year to its partners. In such cases, the IRS says, taxpayers can make “unequal tax payments, based on when they receive their income, rather than four even payments.” This subject “may be particularly useful and timely for your readers who receive largerthan-customary payments, not subject to withholding, before the end of 2017,” says Eric Smith, an IRS spokesman. NUMBER CRUNCHING: The IRS has a withholding calculator on its website. This works for most taxpayers, the IRS says. “However, if you owe self-employment tax, alternative minimum tax, or certain other taxes, you should use the instructions in Publication 505, Tax Withholding and Estimated Tax.” Also see the instructions to Form 1040-ES. ly . LLOYD MILLER Source: Internal Revenue Service Fact Sheet 10.0 million DEADLINES: Even these can be tricky. Just because they’re called “quarterly” estimatedtax payments, don’t assume the deadlines fall at the end of each calendar quarter. For the first three months of the year, the deadline for estimated-tax payments typically is April 15. For the April 1-May 31 period, it’s typically June 15, even though that’s only two months later. For the June 1-Aug. 31 period, it’s usually Sept. 15. And for the Sept. 1-Dec. 31 period, it’s Jan. 15 the following year. But if these dates fall on a Saturday, Sunday or legal holiday, the deadline moves to the next business day. Thus, the first payment for the 2017 tax year was due April 18. The fourth and final payment for 2017 will be due Jan. 16 of next year. However, the IRS says you don’t have to make that payment “as long as you file your tax return for 2017 by Jan. 31, 2018, and pay the entire balance due with your return.” co Fo m rp m e er rs ci on al a us l, e on Instead of dreaming about how the new tax package will affect them next year, millions of taxpayers might want to focus on a more immediate issue: How to avoid getting hit needlessly by estimated-tax penalties for 2017. If you’re confused by the rules, you have plenty of company. The latest Internal Revenue Service statistics show a surprisingly large increase in the number of taxpayers ensnared by these penalties. While the rules can be tricky, most people who haven’t paid enough taxes during the year can avoid trouble by doing some basic homework. That includes focusing on how to sail into what tax professionals refer to as “safe harbors,” says Eric L. Green, a lawyer at Green & Sklarz LLC in New Haven, Conn. About 10 million people were penalized for 2015, up nearly 40% from 2010, as my colleague Laura Saunders reported in The Wall Street Journal in August. The IRS assessed penalties totaling about $1.3 billion in the latest year for which data is available. This fall, the IRS followed up on that subject by issuing a fact sheet leading with those penalty numbers. Another IRS guide: “Pay As You Go, So You Won’t Owe.” Many people are confused about the mechanics and even the basics, says Sidney Kess, senior consultant at Citrin Cooperman and of counsel at the Kostelanetz & Fink law firm. Some taxpayers even assume—mistakenly— they don’t need to pay anything throughout the year as long as they pay everything they owe by the mid-April deadline the following year. “There may be a shock when they file their return and the IRS assesses a penalty,” Mr. Kess says. That isn’t the way it works. Taxpayers generally are required to pay most of what they owe throughout the year by having taxes withheld from their pay, pension or certain government payments, or by sending quarterly estimated tax payments—or both. “It’s definitely a big deal” for many small-business owners, investors, retirees and others with significant amounts of income that isn’t subject to withholding requirements, says Amy V. Hollander, a certified public accountant in Clarks Summit, Pa. This is a good time to take a fresh look at the rules to see if you should take action before New Year’s Day. Some people may figure it isn’t worth the time and aggravation. But why pay a penalty that typically is avoidable with better planning? PARDON ME: In some cases, the IRS will be merciful on penalties. For example, the IRS says “all or part” of the penalty for an underpayment will be waived under certain circumstances, such as if the underpayment was due to “a casualty, disaster, or other unusual circumstance, and it would be inequitable to impose the penalty.” For more on who might qualify for a penalty waiver, see the IRS website and Laura Saun- WITHHOLDING EXCEPTIONS: Many people receive income that isn’t subject to withholding. This may include capital gains, interest income, dividends, rent, alimony and self-employment earnings. In such cases, send in estimated tax payments throughout the year, the IRS says. “You may also make estimated tax payments if the withholding from your salary, pension or other income doesn’t cover your income tax for the year.” In addition, “if you do not elect voluntary withholding, you should make estimated-tax payments on other taxable income, such as unemployment compensation and the taxable part of your Social Security benefits.” Rethinking your charitable giving strategy could help lift your impact. no n- We call a realization like this an Unlock. 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. CAR061705322 For personal, non-commercial use only. Do not edit, alter or reproduce. For commercial reproduction or distribution, contact Dow Jones Reprints & Licensing at (800) 843-0008 or www.djreprints.com. THE WALL STREET JOURNAL. R10 | Monday, December 11, 2017 JOURNAL REPORT | WEALTH MANAGEMENT More Local Programs Help Students Pay for College The underlying message: Finances won’t get in the way of attending school. of students’ tuition after all other state and federal grants and scholarships are taken into account, according to the College Promise Campaign, a nonprofit that advocates for making the first two years of community college free and accessible. That’s up from about 50 programs in 2009. State governments also are picking up on the idea. In the year since the election, more than half a dozen states—including New York and Rhode Island—have moved toward offering programs, says Morley Winograd, the president of the Campaign for Free College Tuition, a nonprofit organization seeking to make public colleges tuition-free. “The day of the election the wind came out of the national sails, but it doesn’t mean that the movement slowed down,” says Michelle MillerAdams, a research fellow at the W.E. Upjohn Institute for Employment Research who has studied these programs for years. “It just kind of dropped back down to the state and local level.” Lots of variables new businesses to Richmond,” says Mayor Tom Butt. “It’s a win-win all around.” Eligibility rules, such as income requirements, also vary. New York, for instance, offers free college to families with income under $100,000 a year, which will rise to $125,000 when the program is fully phased in. Other programs have a merit-based component, which requires students achieve a certain GPA in high school to be eligible for the funding. Some offerings require students to maintain a certain GPA while in college, or to participate in certain financial-literacy or financial-aid classes. In Tennessee, students have to participate in a mentoring program to help them navigate the financial-aid process to be eligible for the program. Sources of funding for the efforts also can vary. Some local programs get money, at least in part, from bequests or other private sources. The advantage, the localities say, is that the money can’t be cut off on the whims of politicians or taxpayers. Since Richmond started its program in February 2016, it has pushed local nonprofits, high schools and colleges to work together to get more students to and through school, says Jessie Stewart, the executive director of the program. The program was made possible through a 10-year, $35 million seed investment in the city by Chevron Corp., an environment and community investment deal that includes funding of other community programs by the company. A program in Buchanan, Mich., was established through a major bequest from a longtime resident. That combination of public and private efforts sets these programs apart from proposals at the state or national level, says Robert Habicht, chief executive officer of the Michigan Gateway Community Foundation, which manages the promise program for Buchanan, Mich. Every local promise program “is unique” and “addresses its specific community’s needs and issues, which I think is a good way to approach it,” Mr. Habicht says. eas, the results are promising so far. In Tennessee, first-time community-college students in the program are more likely to continue in college for a second year than those who aren’t participating, according to research published by the state. Tennessee also has the highest completion rate of the Free Application for Federal Student Aid (Fafsa) of any state. “It has been interesting to see the national conversation evolve and certainly we take note of it, but we’ve just been doing the work,” says Mike Krause, the executive director of the Tennessee Higher Education Commission. The state’s promise program is part of Drive to 55, a broader effort on the part of the state’s Republican governor, Bill Haslam, to equip more residents with the kinds of credentials necessary to compete in today’s job market. “Right now, economic development and recruiting new industries to the state as well as retaining current industry is solely about workforce pipeline,” Mr. Krause says. Solid results For all the differences, what the programs typically have in common is the underlying message: letting students know—particularly those who believe they can’t afford college—that finances won’t get in the way of attending school. In some ar- Ms. Berman is a reporter at MarketWatch. Email email@example.com. no n- The programs generally fall into three buckets, according to Dr. Miller-Adams. The first are local, Tennessee’s ‘free-college’ initiative, launched in the 2015-2016 academic year, includes Volunteer State Community College and other eligible two-year programs. ly . STATES AND CITIES are trying to give students a leg up on college—by helping to pay their way through school. The idea of government covering college costs was a big part of the Democratic campaign last year. But it had been building steam across the country before then, and has continued growing locally since the presidential election. More than 200 localities now offer “promise programs” that vow to cover a chunk place-based scholarship programs, which provide some kind of tuition help to residents of a certain region. These emanate directly out of the community, and typically officials are looking to provide amenities that will both improve their locales for current residents and also attract new ones. In many cases, community-based promise programs provide an incentive for elementary and secondary schools, nonprofits and other organizations to work together to get the area’s students prepared to go on to college and take advantage of the scholarships offered by the community. Dr. Miller-Adams says she gets a call every couple of weeks from an area looking to start one of these programs. The second category are statewide programs, which are often part of an economic-development agenda, Dr. Miller-Adams says. Finally, there are community college-based programs. These initiatives are funded by community colleges or community-college systems and typically promise that eligible students will be able to attend those specific schools tuition-free. Promise programs are often called “free” college, but these programs don’t always intend to cover the entire cost of tuition, and they vary widely in terms of what it takes to qualify. Some of the programs function as “last-dollar” scholarships, which means they help fill the gap in tuition costs for students after state and federal grants are applied. Tennessee was the first state to offer some form of this arrangement, launching a program during the 2015-2016 academic year to cover community college or other eligible two-year programs. Similarly, New York Gov. Andrew Cuomo earlier this year announced an Excelsior Scholarship to help qualifying students in the state attend two-year and fouryear public colleges tuition-free. Other efforts cover only part of the cost. Richmond, Calif., provides qualifying students $1,500 a year for four years to put toward postsecondary education. “It helps attract residents to Richmond, it helps to attract co Fo m rp m e er rs ci on al a us l, e on BY JILLIAN BERMAN KATE DERRICK The ‘free-college’ idea may be on the back burner on the national level, but states and cities are boosting efforts Make Futures a part of your present. Trade over 50 futures products on your desktop or mobile device with thinkorswim®. With interactive in-platform education, access to former floor traders, and the ability to test-drive strategies risk-free, the time for futures trading is now. Visit tdameritrade.com/tradefutures to learn more. subject to review and approval. Not all clients will qualify. This is not an offer or solicitation in any jurisdiction where we are not authorized to do business. TD Ameritrade, Inc., member FINRA/SIPC. © 2017 TD Ameritrade.