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The Wall Street Journal December 18 2017

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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 18, 2017 ~ VOL. CCLXX NO. 143
* * * * * *
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WSJ.com
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Chile’s Voters Return a Conservative Billionaire to Power
What’s
News
Tax-Code
Changes
Set Up
Years of
Challenge
Business & Finance
he death of CSX’s CEO
Harrison leaves one of
the biggest U.S. railways
in the midst of a restructuring with a depleted
leadership team. A1
T
Food costs are ticking
up after a multiyear glut
of many staples, but retailers are holding down
prices to win business. B1
GM faces a potential
payout of $1 billion in
stock to address claims related to the company’s ignition-switch crisis. B2
Humana is in talks to
join with two private-equity firms in a deal to acquire home-care provider
Kindred Healthcare. B3
BY RICHARD RUBIN
Big U.S. property-casualty insurers succeeded in
closing a loophole permitting rivals to move jobs to
Bermuda, Switzerland and
other low-tax locales. B10
“Star Wars: The Last
Jedi” opened to $220 million in the U.S. and Canada, the second-biggest
opening of all time. B4
Bloomberg Media is
launching the first roundthe-clock streaming television service on Twitter. B3
Trump Plans Security Shift
New strategy, which
stresses confronting
unfair practices, puts
China, Russia in focus
BY MICHAEL R. GORDON
WASHINGTON—President
Donald Trump will put his domestic economic and trade
policies at the heart of a new
national-security strategy that
depicts the world as one of
heightened rivalries and potentially dangerous competition.
The new strategy, with an
emphasis on confronting unfair trade practices and precluding rivals from stealing
American technology, holds
potentially far-reaching implications for relations with
China, which is described as a
“revisionist power” that is
seeking to undermine U.S. security and prosperity.
Russia is portrayed as a
dangerous rival that is trying
to restore its status as a great
power and establish spheres of
influence by dividing the U.S.
from its allies and is using
state-funded media and cyber
elements to undermine West-
Grocers Keep a Lid on Food Prices
The GOP tax plan could
usher in a period of instability in the tax code because
of its one-party support and
expiration dates that guarantee it will be revisited. A1
Trump’s new nationalsecurity strategy depicts
the world as one of heightened rivalries and dangerous competition. A1
A lawyer for the Trump
transition team said Mueller’s investigators improperly reviewed some emails
from transition officials. A4
As prices rise for food such as vegetables, beef and eggs, grocers
are eating up the higher costs rather than passing them onto
consumers, worried they could lose customers to aggressive rivals. B1
Change from a year ago in consumer and producer-price inflation
Food
3.5%
4%
2
0
Voters in Chile put former president and conservative billionaire Piñera back in power in an
election runoff. A6
Voters increasingly
want Democrats to control
Congress after the 2018
elections, according to a
new WSJ/NBC poll. A4
Lawmakers in the Philippines are scrutinizing official decisions to approve
the introduction of the
world’s first dengue vaccine
over objections from government experts. A6
Apotex’s chairman and
his wife were found strangled in their Toronto home,
and homicide detectives
were investigating. A6
Two suicide bombers
struck a church in Pakistan, killing nine people
and wounding more than
50 others. A9
Opinion.............. A15-17
Outlook....................... A2
Sports....................... A14
Technology............... B4
U.S. News............. A2-6
Weather................... A14
World News... A5-6,9
>
Consumer
price index
–2
no
Congress begins its
likely final week of 2017
with lawmakers forced to
grapple with tough issues,
including immigration and
the federal budget. A4
ern democracies.
“China and Russia challenge
American power, influence and
interests,” states the 67-page
strategy, which Mr. Trump plans
to formally unveil in a speech in
Washington Monday afternoon.
“They are determined to make
economies less free and less
fair, to grow their militaries,
and to control information and
data to repress their societies
and expand their influence.”
The drafting of the nationalsecurity strategy is mandated
by Congress, and some past
strategies have been derided
as heavy on platitudes and
short on policy prescriptions.
Mr. Trump’s strategy has
attracted particular interest
because it comes early in the
administration and presents
an opportunity for the White
House to systematically outline views that have often
been espoused in Twitter messages and sometimes have appeared contradictory.
“The act of writing it is
useful because it forces the
administration to confront
contradictions that arise when
you just deal with problems as
they come up,” said Peter
Please see TRUMP page A6
Ben Leubsdorf: High-tax
exodus appears unlikely...... A2
Funding deadline complicates
week............................................... A4
Tax cut for refiners unlikely
to trickle to the pump........ B11
Friends of Overdose Victims
Become Prosecutors’ Targets
November:
Producer price index
n-
World-Wide
s Copyright 2017 Dow Jones &
Company. All Rights Reserved
co Fo
m rp
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Chinese auto startups
are betting they can leapfrog existing auto makers
to make a new world of
electric, networked cars. B4
ly
.
BUSINESS APPEAL: Chile’s former President Sebastián Piñera, with his wife, Cecilia Morel, celebrated his victory in the presidential election
runoff Sunday. The conservative billionaire promised to reinvigorate the country’s flagging economy, after four years of subpar growth. A6
Japan’s central bank is
likely to raise one or more of its
interest-rate targets in 2018. A5
CONTENTS
Business & Finance B2
Business News........... B3
Crossword.............. A14
Heard on Street.... B12
Life & Arts....... A11-13
Markets...............B11-12
WASHINGTON—Republicans are on the cusp this week
of passing a historic overhaul of
the U.S. tax system but might
also be ushering in a new period
of instability in the tax code, because the plan is advancing
without bipartisan support and
with expiration dates that guarantee it will be revisited for
years.
A $1.5 trillion reduction in
the overall tax burden over a
decade accompanies the most
sweeping rewrite of U.S. business and income taxes since the
Reagan era, achieving goals long
sought by many conservative
economists and politicians. But
to get the bill through a closely
divided Congress, Republicans
made many of its pieces timelimited.
Individual tax cuts and a new
20% deduction for millions of
businesses are scheduled to
vanish after 2025. A corporatetax-rate cut and international
tax rules are permanent, but
other business provisions arrive, then disappear.
One-time revenue sources
like a $339 billion tax on stockpiled foreign profits pay for
long-running tax cuts, making
the bill more costly in the future. Key features—including
the $2,000 child tax credit and a
Please see TAXES page A2
MARTIN BERNETTI/AGENCE FRANCE-PRESSE/GETTY IMAGES
CME Group began trading bitcoin futures on Sunday, seeking to capitalize
on the mania for the booming digital currency. B1
YEN 112.61
2014
Food at home
0.6%
–4
’15
’16
’17
Source: Labor Department
CEO’s Death Puts
Focus on CSX Board
CSX Corp. hired the renowned railroad turnaround
artist Hunter Harrison in March
with much fanfare and investor
support, despite concerns about
his undisclosed illness. Now,
that decision has backfired,
By Paul Ziobro,
David Benoit and
Joann S. Lublin
leaving one of the biggest U.S.
railways with a depleted leadership team in the midst of a restructuring.
Mr. Harrison’s sudden death
Saturday raises questions about
the board’s decision to wager its
future on the 73-year-old and an
activist investor’s high stakes
campaign earlier this year to
shake up the CSX board and
bring in Mr. Harrison as chief
executive.
“It was a classic triumph of
short-term thinking over longterm sustainability,” said Renny
Ponvert, CEO of Management
CV Inc., which analyzes top
hires for money managers. The
board, he said, “took a high-beta
risk that appeared to pay off for
the first six months. Now,
they’re stuck with a consequence that could expose longterm shareholders.”
CSX, based in Jacksonville,
Fla., said it would stick with Mr.
Harrison’s strategy and was
confident in the executive team
he left behind.
Two months ago, according
to people familiar with the
matter, the CSX board faced a
gut check on its ailing CEO,
who had been using a portable
oxygen tank and mostly working from home. Despite his illness, Mr. Harrison had quickly
moved to streamline CSX,
idling hundreds of locomotives
and closing facilities, moves
that disrupted shipments and
Please see CSX page A8
Railroad CEO led overhaul of
industry......................................... A8
Investigators treat opioid deaths as homicides and go after suppliers
BY JOSEPH WALKER
CINCINNATI—After Daniel Eckhardt’s
corpse was found on the side of a road in
Hamilton County, Ohio, last year, police determined he died of a heroin overdose.
Not long ago, law enforcement’s involvement would have ended there. But amid a
national opioid-addiction crisis fueling an
unprecedented wave of overdose deaths, the
investigation was just beginning.
Detectives interrogated witnesses and obtained search warrants in an effort to hold
someone accountable for Mr. Eckhardt’s
death. The prosecutor for Hamilton County,
which includes Cincinnati and its suburbs,
charged three of Mr. Eckhardt’s companions,
including his ex-wife and her boyfriend, with
crimes including involuntary manslaughter,
an offense carrying a maximum prison sen-
INSIDE
tence of 11 years.
Mr. Eckhardt voluntarily took the heroin
that killed him, but prosecutors alleged the
trio were culpable because they bought and
used heroin with him that they knew could
result in death.
The indictments were part of a nationwide push to investigate overdose deaths as
homicides and seek tough prison sentences
against drug dealers and others deemed responsible. It’s an aggressive tactic law-enforcement officials say they’re using in a
desperate attempt to stanch the rising tide
of overdose deaths.
Fueled by a flood of heroin laced with
fentanyl and other powerful synthetic opioids, the overdose death rate in Hamilton
County more than tripled between 2006 and
2016 to 50 per 100,000 people, or four times
Please see OPIOIDS page A10
Chinese Entrepreneurs Pine For
U.S. Shoppers on Amazon
i
i
i
Merchandise is ready to ship, but sellers first
must learn what hooks buyers on website
ATLANTA
POWER OUTAGE
HITS FLIGHTS
U.S. NEWS, A3
NETFLIX GOES
VINYL FOR
GRAMMYS
LIFE & ARTS, A11
BY TE-PING CHEN
YIWU, China—On the third
floor of a nondescript office
building in this eastern Chinese city, Huang Wenyan is
hoping to sell satin headbands
to Americans
for Christmas,
if she can crack
the
Amazon
code.
Ms. Huang
frowns through
her
maroon
glasses at the
home page of
A tiara sold
her Amazon
shop, Candygirl, trying to find
the apt product description.
“Look,” says Tao Xin, an instructor in a daylong training
session for would-be Amazon
sellers. He points at Ms.
Huang’s elaborate product listing, which describes the size
of her headbands (36 centimeters) and their shape (circle).
“No one will search that,” Mr.
Tao says, as some among the
two dozen student-sellers
crowd around.
“Covered headbands?” Ms.
Huang
suggests. Mr. Tao,
who goes by
the nickname
“Uncle Sam,”
which
he
chose in tribute to the U.S.
icon, shakes
his head.
on Amazon
After a few
more tries to see what Amazon’s autocomplete reveals as
the most common search
terms, the class arrives at the
right one: “Girls’ headbands!”
China has been exporting
goods to the U.S. for decades.
Please see CHINA page A10
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.
A2 | Monday, December 18, 2017
U.S. NEWS
THE OUTLOOK | By Ben Leubsdorf
ECONOMIC
CALENDAR
High-Tax Exodus Appears Unlikely
Ten states plus the District of
Columbia, most but not all of
them Democratic-leaning, saw
over a third of tax returns claim
the state and local deduction in
2015.
Percentage of tax returns
claiming the state and local
deduction
Maryland
46%
Connecticut
41%
New Jersey
41%
D.C.
40%
Virginia
37%
Massachusetts 37%
Oregon
36%
Utah
35%
Minnesota
35%
New York
35%
California
34%
Source: Tax Policy Center
THE WALL STREET JOURNAL.
many affluent households
that itemize rather than take
a standard deduction. Limiting it could prompt some of
those families to consider relocating to lower-tax areas.
“It’s absolutely coming up
in conversations,” said John
Voltaggio, a managing director at Northern Trust Corp.
who advises wealthy individuals and families on financial
U.S. WATCH
Deadline for Some
Applicants Extended
After a rush of last-minute
sign-ups, the Trump administration said it is extending the
deadline for some people to finish health insurance applications
under the Affordable Care Act.
Callers to the HealthCare.gov
service center Saturday morning
got a recorded message saying
“don’t worry”—if they had called
and left their phone number before the deadline, they will get a
call back and still can enroll for
2018. HealthCare.gov issued similar extensions under the Obama
administration.
—Associated Press
NEVADA
Memo: BLM Agents
Provoked Standoff
no
Federal agents provoked a
showdown with Nevada rancher
Cliven Bundy that might have
turned deadly, a former government investigator assigned to
examine the 2014 armed standoff wrote in a memo.
The memo’s content could
impact Mr. Bundy’s trial now under way in Las Vegas.
In the November 2017 memo
to the Justice Department, Bureau of Land Management Special Agent Larry “Clint” Wooten
said a BLM supervisor oversaw
a “punitive and egodriven” law-enforcement buildup
at Mr. Bundy’s ranch. The memo
came to light last week when
Washington state Rep. Matt
Shea—a supporter of Mr.
Bundy—posted it on Facebook
after obtaining it anonymously.
Mr. Wooten said in the memo
he resorted to filing his claims
with the Justice Department after his BLM supervisors declined
to act on his findings. He said
he was removed from the investigation after nearly three
years last February.
Officials at the Justice Department and the BLM declined
to comment on the memo. Mr.
Wooten couldn’t be reached for
comment.
Justice Department prosecutors submitted the memo last
week to defense lawyers in Mr.
Bundy’s trial, said a defense attorney in the case.
—Jim Carlton
n-
HEALTH INSURANCE SIGN-UPS
planning. “On the margins, it
will affect people’s decisions
about where to domicile.”
Decades of research have
concluded that state tax burdens and other fiscal policies
matter for some Americans in
determining where they live,
though the evidence is mixed
on just how much people care
about tax rates relative to
other factors like schools,
housing and jobs.
A
study published this
summer in the American Economic Review
found tax increases at the
state level led to top scientists relocating to lower-tax
states.
University of California,
Berkeley economist Enrico
Moretti, who co-authored the
study, said the same pattern
should be true for other
highly paid and educated
workers, though he said it
can take years for the relocation response to fully kick in
after a tax increase.
“We don’t think that taxes
are the only factor that determine where workers and employers locate, but it seems to
be a reasonably important
factor,” Mr. Moretti said.
Relying on that study and
other research, economists at
Goldman Sachs & Co. last
month estimated that eventually, the number of high earners in New York City could
fall by 2% to 4% due to the
limited deduction, though
that was based on an earlier
form of the bill.
Over time, relatively higher
individual tax burdens in
some states may deter companies from locating or expanding there, especially if it
becomes difficult to attract
workers to those areas.
“If you’re looking at a situation where you have to recruit talent and they have
other options, then it becomes a very salient factor
indeed,” said Christopher
Steele, chief operating officer
at Investment Consulting Associates, which advises companies on site selection.
The ripple effects could be
felt by state and local governments, especially in places
where relatively high state
and local tax burdens have
supported more extensive
government expenditures on
social and other programs.
Taxpayers in those areas
could resist further increases.
But there are reasons to
think the effects of curbing
the deduction could turn out
to be limited.
While high-income individuals would have an incentive
to relocate and lower their
tax burden, they could have
other ties to their communities that keep them in place:
a working spouse, owning a
home instead of renting, local
clients and business contacts.
“All of these things make
people less mobile and more
tied to place,” said Stanford
University sociologist Cristobal Young.
Moreover, though some
high-tax urban areas might be
susceptible to flight over
taxes, many offer other powerful draws. Cities like New
York or San Francisco, for example, are cultural centers
and dynamic engines of economic growth that attract
young workers to tech and finance jobs.
“If you’re in your working
years and making your career,
you shouldn’t let those few
percentage points dictate the
decision,” said Mr. Voltaggio.
F
or many high earners in
high-tax areas, he
added, the benefits of
the state and local deduction
have already been limited by
the alternative minimum tax,
a parallel tax that narrows
the benefits of deductions for
people with high incomes
who itemize.
Papers co-authored by Mr.
Young found tax increases on
high earners in New Jersey in
2004 and California in 2005
had little or no effect on how
many high-earning taxpayers
left those states. Nor did a
1996 tax cut on high-earning
Californians spark an inflow
of the wealthy.
ly
.
Blue State Blues
co Fo
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A provision
in the Republican tax plan
could dim the
appeal of living in high-tax
states like New York in favor
of low-tax states like Florida.
But research on the subject
suggests high-tax regions
won’t see a sudden or mass
exodus. That’s because taxes
are only one of the many factors that play into where individuals choose to live.
Tax legislation now approaching the finish line in
Congress would roll back the
deduction that taxpayers enjoy on their federal tax returns for paying state and local tax bills. The latest
version would cap the deduction at $10,000.
That’s less than the
$12,471 average that Americans who took the deduction
claimed in 2015, according to
the Tax Policy Center. Rolling
back the deduction would
thus raise the cost of living
for some taxpayers in hightax states like New York, New
Jersey and California—particularly in urban areas in
these states with their own
local taxes.
It’s one of the largest individual tax breaks in current
law. Nearly 30% of tax returns
took advantage of the deduction in 2015, according to the
Tax Policy Center, benefiting
TAXES
Continued from Page One
$10,000 cap on the state and local deduction—aren’t indexed to
inflation, eroding their real
value over time.
Congress will need to make
substantive and technical corrections as problems arise, said
Martin Sullivan, chief economist
at Tax Analysts, a nonprofit
publisher of tax notes.
“It’s just the beginning. It’s a
whole new chapter,” he said.
“It’s built on unstable financial
foundations and on unstable political foundations. And it was
built in great haste.”
Deals with wavering lawmakers late last week left Republicans lined up to pass their bill
as soon as Tuesday and send it
to President Donald Trump’s
desk. With a 52-48 majority in
the Senate, Republicans can lose
two votes and still pass the
measure. One complication
emerged Sunday when Mr.
Trump said Sen. John McCain,
who is battling brain cancer,
was headed home to Arizona.
The president said Mr. McCain
would return to Washington if
his vote was needed for the bill
to pass.
The party-line vote echoes
the Democrats’ passage of the
Affordable Care Act in 2010, and
the bill’s expiring provisions
echo the Republicans’ passage
of tax cuts in 2001 and 2003.
Both provide a roadmap for the
political and fiscal path that
looms for the tax bill.
Like the tax cuts championed
by President George W. Bush,
large pieces of the tax legislation are scheduled to lapse under a future president. That
means every campaign until
THE WALL STREET JOURNAL
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THURSDAY: The Commerce
Department releases its third estimate for third-quarter U.S.
gross domestic product. The second estimate showed GDP, a
broad measure of the goods and
services produced in the U.S., expanded at a 3.3% annual rate in
the quarter, adjusted for inflation
and seasonality. This marked an
upward revision from the government’s initial estimate of 3%
growth. Economists surveyed by
The Wall Street Journal expect
the figure to remain unchanged
from the last estimate.
FRIDAY: The Commerce Department releases the November
U.S. durable-goods report, offering the latest snapshot of business investment, which has
trended upward this year. Orders
for durable goods—products designed to last at least three
years—fell a revised 0.8% in October from the prior month, but
economists surveyed by the
Journal expect orders rose 2% in
November.
The Commerce Department
also releases the November personal income report, offering a
fresh glimpse at consumer spending and inflation. Consumer
spending rose 0.3% in October
from a month earlier. Meanwhile,
the price index for personal-consumption expenditures—the Federal Reserve’s preferred inflation
gauge—rose 0.1% in October, the
smallest gain since July. Economists surveyed by the Journal
forecast personal income and
consumer spending both rose
0.4% in November.
Sunset Boulevard
Republicans scheduled many of their tax cuts to expire, to stay within the $1.5 trillion,
10-year budget they set for the plan.
$100 billion
Projected total net change in
tax revenue annually
0
’18
’19
’20
’21
’22
’23
’24
’25
’26
’27
–100
–200
–300
Key provisions
Year provision begins
Year provision ends
Individual tax rates and brackets
Corporate tax rate cut
Larger standard deduction
Repeal personal exemption
20% deduction for pass-through businesses
Alcohol tax policy changes
$10,000 cap on state and local tax deduction
Medical expense deduction available over
7.5% of adjusted gross income
Full writeoff for business investments
Doubled child tax credit
Amortization of research expenses
Eliminate penalty for not having health insurance
Change to inflation adjustments in tax code
Estate tax exemption doubling
Individual alternative minimum tax narrowing
Corporate alternative minimum tax repealed
Repeal alimony deduction*
*This date is for divorces, not returns
Source: Joint Committee on Taxation
Note: Provision dates are shown as years
Dec. 31, 2025, can be fought
over the tax legislation, and
Democrats will look for lessons
from victories in 2006, 2008
and 2012.
Like the health law championed by President Barack
Obama, the GOP tax bill is expected to become law without a
single vote from the opposing
party. That, too, makes it unstable and a target. Democrats can
look back on Republicans’ successful campaigns in 2010, 2014
and 2016 to see how to capitalize on an unpopular, complicated law.
“We will emphasize the fact
that Republicans made the big
corporate tax cuts permanent,
while tax cuts for middle-class
families are small and temporary, and that’s for families that
aren’t seeing an increase,” said
Sen. Chris Van Hollen (D., Md.),
who heads Senate Democrats’
campaign arm.
Democrats eventually succeeded in scaling back the Bush
tax cuts for high-income households. Moreover, the GOP tax
bill will strike a blow against
CORRECTIONS AMPLIFICATIONS
Hunter
Harrison
was
brought to CSX Corp. as chief
executive from Canadian Pacific
Railway. A Heard on the Street
article on Saturday incorrectly
said he had come from Canadian National Railway, where
he had previously worked.
Readers can alert The Wall Street
Journal to any errors in news articles
by emailing wsjcontact@wsj.com or
by calling 888-410-2667.
the health law, ending the penalty for not having insurance.
Yet large portions of both the
Bush tax cuts and the ACA remain intact, in part because
erasing old laws is just as hard
as making new ones.
“In the short term, the bills
are unpopular because the losers scream the loudest,” said
Brian Riedl, a senior fellow at
the free-market-focused Manhattan Institute. “And in the
long term, they are hard to repeal because the beneficiaries
are the loudest.”
It would be hard for a future
Congress to shrink the new tax
bill’s $2,000 child tax credit or
the bigger standard deduction,
for example.
“People are going to see this
in their paychecks,” Treasury
Secretary Steven Mnuchin said
on CBS Sunday.
But other pieces—a doubled
estate-tax exemption, a new tax
break for pass-through business
owners, the 21% corporate tax
rate, limits on the state and local tax deduction for individuals—are ripe to be reversed or
scaled back.
A future Democratic Congress and president could also
dial up tax rates on high-income
households and businesses.
“Anything that benefits the
middle class or low-income families will be made permanent,”
Mr. Riedl said. “But anything
that benefits exclusively upperincome families is in danger.”
Making some provisions permanent means the bill might be
more expensive than advertised
in the long run.
The bill cuts taxes by
$1.5 trillion over a decade, but
74% of that cost is in the first
five years. The true 10-year cost
THE WALL STREET JOURNAL.
of the Republican policies, without the expirations, would be at
least $2 trillion and even more
beyond 2027, according to the
Committee for a Responsible
Federal Budget.
That threatens to add to deficits already slated to rise because of growing spending on
entitlements like Medicare.
Republicans had to cap the
size of the tax cut and write the
measure so it didn’t increase
budget deficits beyond 2027.
When their biggest revenueraising ideas fell flat, they jettisoned expensive ideas like full
repeal of the alternative minimum tax or a 35% top individual
tax rate. They also turned to the
same kind of expirations Mr.
Bush used.
The choice of temporary provisions let Senate Republicans
avoid some of the most politically toxic pieces in the Housepassed bill.
As a result, the bill leaves
pockets of uncertainty for business and individuals.
The tax breaks for passthrough firms expire after 2025.
If they are allowed to expire, a
large gap would open up between the new permanent 21%
corporate tax rate and top passthrough rates.
For individuals, the potential
uncertainty is further out but
larger. Two big pieces are permanent. One changes to a generally slower measure of inflation, which leaves more
households in higher brackets
than they would be under current law. The other ends the
health-insurance mandate.
Nearly everything else ends
after eight years, putting the individual tax system into suspended animation.
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 18, 2017 | A3
* * * * * *
U.S. NEWS
Factories Tap Parents to Recruit Workers
With employees scarce,
plants seek younger
ones; ‘You can’t have
everybody be a lawyer’
Re-Examining the
University Track
In South Carolina, the
Greenville Chamber of Commerce recently invited parents
of high school seniors to a
manufacturing-themed “Parents’ Night” where mothers
and fathers networked directly
with companies.
There, recruiters from Michelin North America Inc. promoted a program in which the
tire maker covers costs for
students to complete a twoyear program in mechatronics
at a technical college, while
they work 20 hours a week.
After finishing the program,
the students are eligible to be
hired as full-time technicians.
Annual pay starts around
16-year-old son, Spencer, are
evolving. At first, Mr. Catus,
who felt his status as a university graduate gave him added
security in the recession,
wasn’t thrilled Spencer enrolled
in a building and trades class at
school because it meant less
time for academic subjects.
But then Mr. Catus saw his
son’s passion for hands-on
work. With four children, Mr.
Catus said he isn’t in a position
to finance all of college and
worries about debt. At the parents’ night at the Kreg company, he felt encouraged after
meeting workers who seemed
to have fulfilling careers.
“I just thought, well, you
know, not everyone is an accountant,” he said.
The number of U.S. manufacturing employees has been
steadily rising since the recession, and open manufacturing
positions are at their highest
level since 2001.
The push to directly market
to parents came after surveys
showed they held dated views,
envisioning manufacturing as
grimy factories and productionline jobs, said Erin Streeter of
the National Association of
Manufacturers.
In February, the trade group
began a social-media campaign
aimed at wooing parents. “Parents are the missing part of
this. Parents have a lot of influence,” said Jacob Castillo, the
economic development manager for the workforce agency
in Larimer County, Colo., where
the unemployment rate is 2.3%.
The agency helped organize the
parents’ night, hosted by a coalition of manufacturers, at
Woodward in Fort Collins.
Across the country, earnings
for production and other nonsupervisory workers in manufacturing averaged $21.06 an
hour in November, according to
federal data.
Still, some parents have a
“deep well of anxiety” about
the sector, worrying about employers shipping jobs to Mexico
or China, said Josh Weissman,
a technology-education teacher
at Poudre High School in Fort
Collins, Colo.
In Slater, Iowa, Don Catus, a
management information consultant, said his views on manufacturing as an option for his
ly
.
volved moms and dads that
manufacturing work can lead to
satisfying—and lucrative—careers for their children with the
added benefit of keeping them
nearby. It also reflects the
strain low unemployment has
put on manufacturers, which
have 400,000 open positions,
according to data from the Bureau of Labor Statistics.
In a time when many parents are worried about the cost
of college, employers are
spreading the message that
teens with skills to fix machinery or design products are
highly valued and that companies will even pay for them to
attend school. Still, barriers to
persuading parents can be high
given skepticism about manufacturing as a stable career.
©T&CO. 2017
A Fort Collins, Colo., factory tour during a ‘parents’ night’ hosted by area manufacturers last month.
co Fo
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Nearly 200 parents of highschool students in Fort Collins,
Colo., recently gathered for
“Parents’ Night.” Their children, they were told, could
have great, well-paying careers
while being “the next generation of makers.”
The venue? Woodward Inc.,
an engine and equipment components plant looking for ways
to line up younger employees
amid a dearth of manufacturing
workers nationwide.
“We’re really trying to get
after the parents—the parents
are influential with their kids,”
said Keith Korasick, Woodward’s vice president of operations, who started as a machinist 26 years ago. “Our message
to the parents was ‘there’s another option.’ You can’t have
everybody be a lawyer.”
To attract America’s youth,
manufacturers have tried tactics ranging from hosting high
school tours to providing apprentice programs. Their latest
strategy is to target parents.
In Story County, Iowa, where
the unemployment rate is 1.4%,
Kreg Enterprises Inc. held its
first “Parents’ Night” earlier
this year to tout careers in
toolmaking. Toyota Motor
Corp.’s plant in Indiana held its
first “Parents’ Night Out” in October and plans events for January and March.
The recruiting tactic aims to
persuade today’s highly in-
LARIMER COUNTY WORKFORCE CENTER
BY JENNIFER LEVITZ
$53,000, with eligibility for
overtime and benefits that include tuition reimbursement for
future degrees, said Leesa Owens, Michelin’s director of state,
local government and community relations.
Nester McSween-Abel, who
attended the event, said she is
now re-examining her expectations for her 17-year-old son,
Avery. Ms. McSween-Abel, who
works in accounting, took
some college courses but
didn’t earn a bachelor’s degree
and wanted better for her son.
But now, she is talking to Avery about possibly starting at a
technical college.
“A lot of times we send our
kids to college but they don’t
have a skill to fall back on,”
she said. “When they come
out, it’s like, ‘what do I do?’”
—Jennifer Levitz
THE NEW HOME & ACCESSORIES
COLLECTION
Power Outage Hits Atlanta Airport
Inside Hartsfield-Jackson Atlanta International Airport on Sunday.
n-
be accommodated.
As a result of Sunday’s outage, the Federal Aviation Administration ordered all flights
bound for Atlanta held on the
ground. International flights
bound for the airport were diverted elsewhere, according to
U.S. Customs and Border Protection.
“The cause of the incident
remains under investigation,”
according to a message on the
airport’s Twitter page, posted
Sunday afternoon. “ATL officials are working with Georgia
Power to identify the cause
and remedy the situation.”
In a statement, the FAA
said, “The FAA Tower can operate normally, however, departures are delayed because
airport equipment in the terminals is not working.”
no
A power outage at Hartsfield-Jackson Atlanta International Airport unleashed havoc
on travelers Sunday, leading to
hundreds of flight cancellations during one of the most
hectic travel periods of the
year.
The power went out at
Hartsfield-Jackson—the busiest airport in the world by passenger traffic, with an average
of 275,000 passengers daily—
shortly after 1 p.m. Sunday, according to airport officials.
Georgia Power said in a
press release that the outage
may be linked to a fire that
caused extensive damage to
one of the utility’s underground electrical facilities.
Georgia Power said it expects
to have the electricity restored
to the airport by midnight.
The effects of the outage
are likely to spill into Monday’s
flights, given that aircraft and
crew won’t be in position to
operate as scheduled and displaced passengers will need to
ERIK LESSER/EPA/SHUTTERSTOCK
BY IAN LOVETT AND SUSAN CAREY
The outage affected “all
concourses and terminal buildings,” according to Twitter
posts from Delta Air Lines Inc.,
which has a major hub in Atlanta.
Delta said it canceled 900
flights on Sunday. The airline
said in a tweet that it expected
to operate a nearly full schedule on Monday, pending the resumption of power.
Southwest Airlines canceled
all flights to or from Atlanta
for the rest of the day on Sunday.
American Airlines Group
Inc., the largest airline by traffic, isn’t big in Atlanta. The
airline said it had 47 fights
scheduled to depart Sunday
from the city, 24 of which were
canceled, and a similar number
of arrivals. Three arriving
planes were unloaded and
three planes were diverted to
other airports.
Airlines for America, atrade
group, estimated 51 million
passengers would fly on U.S.
carriers globally from Dec. 15
to Jan. 4.
BY LAURA KUSISTO
When Emilie Hayes and her
husband bought a home in St.
Louis in 2005, they weren’t
worried that it was in a 100year floodplain. She took it to
mean the property would get
flooded once a century.
But when Ms. Hayes, an order-management specialist for
a media company, and her husband, who owns a hardwood
flooring business, applied for a
permit to do work on the property, a county official broke the
news to them that the home sat
in a floodway.
Runoff from rain storms regularly flows through their
nearly 1-acre property. After it
flooded more than half-dozen
times in seven years, a 2015
deluge destroyed the house and
their possessions. “We lost everything,” said Ms. Hayes, who
is 44 years old. “We knew it
was in a zone of flooding but
it’s very deceptive how it’s portrayed…The information provided was very minimal.”
The couple tore down the
$154,000 bungalow but still
own and pay taxes on the land.
They bought another house and
would like to sell the land, but
that will be difficult.
Hurricanes in Florida, Texas
and Puerto Rico this year underscored the risks of flooding,
and the lengthy and costly process of rebuilding. In all, about
1.9 million homes worth $916
billion are at risk due to rising
EMILIE HAYES
Flood Hazards Aren’t Always Disclosed
The St. Louis house of Emilie Hayes and her husband that
repeatedly flooded. The couple says they weren’t told of the risk.
sea levels during the next century, according to an analysis
by home-listings tracker Zillow.
Yet no federal law requires
home sellers to disclose if
properties have flooded. Instead, state laws govern what
sellers must tell buyers and
when, and the rules vary from
strict-disclosure requirements
to practically none at all.
Home buyers in Florida, Missouri and North Carolina have
little or no explicit legal guarantee they will be told if their
new property has ever flooded.
In other states, such as New
York, some buyers find out
their home is a flood risk when
they are at the closing and the
bank tells them they must get
flood insurance. There is a dis-
closure form in New York that
asks about standing water, but
sellers can offer a $500 credit
instead of submitting the document, which real-estate agents
say is common practice.
Home inspections don’t always turn up evidence of water
damage, either.
Advocates for stricter development rules in flood zones say
the lack of transparency perpetuates a system in which
properties are flooded again
and again, with limited information passed from one owner
to another about the risks.
“It’s basically a game of musical chairs,” said Robert
Moore, a Natural Resources Defense Council senior policy analyst. “You can’t expect people
to make the right choices when
they’re denied information.”
A 100-year floodplain is a
designation for the purposes of
insurance that a property has a
1 in 100 chance of flooding in
any given year.
One of the few disclosures
required in Missouri is whether
sellers know that a property
has been used for methamphetamine production. A voluntary
disclosure form asks whether
the seller is aware of flood
problems.
North Carolina sellers must
fill out a disclosure form that
asks if their property is in a
flood zone, but they have the
right to select “yes,” “no” or
“no representation.” Cady
Thomas, senior vice president
of government affairs at North
Carolina Realtors, said that in
hot markets sellers more often
select the “no representation”
option.
A bill passed by the House of
Representatives would require
states participating in the National Flood Insurance Program
to impose requirements by October 2022 that sellers disclose
incidents of flooding and requirements that a property
carry flood insurance.
The bill also would give
homeowners access to information from the Federal Emergency Management Agency
about previous flood-insurance
claims for their property.
Such changes have stalled in
the Senate.
800 843 3269
|
TIFFANY.COM
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A4 | Monday, December 18, 2017
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THE WALL STREET JOURNAL.
U.S. NEWS
Lawyer Presses Mueller on Emails Revamp
Of Fannie,
BY ARUNA VISWANATHA
Freddie Is
Reworked
BY ANDREW ACKERMAN
AND NICK TIMIRAOS
SAUL LOEB/AGENCE FRANCE-PRESSE/GETTY IMAGES
The Trump transition team accuses a federal office of ‘unlawfully’ giving transition emails to Special Counsel Robert Mueller’s investigators.
fice, acknowledged in June the
Trump transition organization
owned and controlled the
emails, and that “GSA had no
right to access or control the
records.” Mr. Langhofer said
the transition office was a “private organization,” and its records should be considered
“private records.”
According to the letter, the
GSA instead produced to the
FBI in August copies of the
emails, laptops, and other materials associated with the
transition, without telling the
transition group or removing
privileged materials.
The GSA didn’t respond to
requests to comment.
Officials from former President Barack Obama’s transition
team said in Twitter messages
that there was “no expectation
of privacy” in transition emails,
given their .gov email address.
Mr. Langhofer’s letter cited a
Justice Department document
from 1988 that found presidential transition teams “are not
federal agencies” subject to the
federal Freedom of Information
Act, as well as a 1983 case that
found transition documents
were “personal records.”
Since Mr. Mueller was appointed special counsel in May,
the investigation has led to
guilty pleas by two Trump
campaign advisers, including
former national security adviser Michael Flynn, who admitted to misleading the FBI
about his contacts with Russia
during the transition, and the
public indictment of two other
campaign officials, including
Trump campaign manager Paul
Manafort, for alleged financial
misdeeds in work that predated
the campaign.
Democrats Widen Lead for 2018, Poll Shows
Public opinion on which party should control Congress has been a
predictor of past ‘wave’ elections. Democrats have needed
double-digit leads to make big gains, due to turnout trends and
district lines that often favor Republicans.
When Republicans
gained many seats
When Democrats
gained many seats
Currently
YEAR
HOUSE SEATS
FLIPPED
1994
52 seats
2010
63 seats
2006
31 seats
Dem.+10
2008
21 seats
Dem.+14
2017
TBD
Dem.+11
CONGRESSIONAL PARTY
PREFERENCE IN POLLING
GOP+4
GOP+2
Source: WSJ/NBC News polls most recently of 900 adults surveyed Dec. 13-15, 2017. Margin of
THE WALL STREET JOURNAL.
error +/- 3.27 pct pts.
rating ticked up 3 percentage
points in the new survey from
October, to 41%, due in part to
higher marks from members of
his own party. Some 56% in the
new poll disapproved of his job
performance.
In the past, a Democratic advantage on the question of who
should control Congress hasn’t
translated into electoral gains
unless the lead reached double
digits. The party led by 10 percentage points on average in
2006, ahead of retaking control
of the House and Senate that
year, and it led by 14 points on
average in 2008, when Democrats gained more than 20
House seats.
For Democrats, smaller leads
haven’t accompanied significant
pickups in congressional elections, in part because voter
turnout among some Democratic groups is lower than
among Republican groups, and
due to congressional district
lines that in many places favor
Republicans.
For Republicans, a small lead
on this question can signal big
electoral gains. The party’s advantage was only 2 percentage
points on average in 2010 ahead
of a 63-seat pickup that gave
the party control of the House.
The 10-point Democratic advantage on the second measure
of enthusiasm—the share of
voters highly interested in the
next election—was expected,
said Bill McInturff, a Republican
pollster who conducted the survey with Democrat Fred Yang.
Mr. McInturff said the party out
of power usually shows the
greater enthusiasm to vote in
the next election.
Still, he said, “even if expected, a double-digit margin
here is an important indicator
of Democratic intensity.”
Mr. Yang said the Democratic edge in election interest
“reaffirms” the party’s experience in last week’s special election for Senate in Alabama and
the Virginia gubernatorial election last month.
Democrats won both, due in
part to strong turnout in Democratic-leaning suburban areas
close to cities and among African-American voters.
Democrats need to pick up
24 seats in the House to take
the majority. In the Senate they
need a net gain of two seats, after new Alabama Sen. Doug
Jones is sworn in, but must also
defend many seats in Republican-leaning states.
In a warning for the GOP in
the long term, the poll found
that young adults prefer a Democratic Congress by a 48-point
margin. Among 18- to 34-yearolds, some 69% prefer a Democratic-led Congress, with 21%
favoring Republican control.
Women with a four-year college degree skew heavily away
from the GOP, favoring a Democratic Congress by 62% to 30%,
the new survey found.
Republicans
also
trail
among men—a group that
rarely favors Democrats—by
46% to 44%, though the party
retains a double-digit lead
among white men.
no
Voters increasingly want
Democrats to control Congress
after the 2018 elections, according to a new Wall Street Journal/NBC News poll that offers
several warning signs for the
Republican Party.
Asked which party they prefer to lead Congress after next
year’s midterms, 50% said the
Democrats and 39% said Republicans. That 11-point lead is
wider than the 7-point advantage Democrats held in October,
and it is the first double-digit
advantage for the party since
late 2008, ahead of the Democrats’ win in the presidential
election that year.
The poll also found that 59%
of Democratic voters are showing the highest levels of interest
in the coming midterms, compared with 49% of Republicans.
Pollsters who conducted the
survey said that taken together,
the two findings show that
Democrats have an edge in enthusiasm at this early stage of
the campaign.
At the same time, President
Donald Trump’s job approval
Flipping Houses
n-
BY JANET HOOK
WASHINGTON—Congress
begins its likely final week of
2017 with lawmakers from
both parties forced to grapple
with tough questions they
have deferred all year, including immigration and the federal budget.
The government’s current
funding expires Saturday at
12:01 a.m., with no clear plan
in sight on how to extend it. In
one major obstacle, GOP and
Democratic leaders have yet to
agree with the White House on
where overall spending levels
should be set for the next two
years.
Nor have they struck a deal
on how to handle the so-called
Dreamers, young people living
in the U.S. illegally who were
brought here as children.
President Donald Trump in
September ended an Obamaera program shielding them
from deportation, urging Congress to pass new legislation
by March, when some of these
immigrants begin losing protections.
Some Democrats have said
they would withhold their support from the spending bill
needed to prevent a government shutdown if it doesn’t in-
clude protections for Dreamers, but their leaders haven’t
made the same pledge, and
their signals have left allies
suspicious that they would allow the matter to tick into
next year. Republicans are divided over the issue.
“It’s an open question on
how far we are going to push”
on immigration, said Rep. Rick
Larsen (D., Wash.). “It’s a
tough balance because we have
a broader responsibility to
keep the government open.”
Republicans control both
chambers of Congress, but
Democrats have influence because their votes are usually
needed to pass spending bills
in the House and always in the
Senate. Republicans now hold
52 seats, and that number will
shrink after Sen.-elect Doug
Jones, an Alabama Democrat,
is sworn in early next year.
Both parties want to avoid
the return of across-the-board
spending limits, known as sequestration, that were established in 2011 and are set to
kick back in. A two-year budget deal that set spending
above those caps ended in
September, and the government has been funded at those
levels since then. Republicans
are eager to boost spending
for the military above those
MARK WILSON/GETTY IMAGES
Funding Deadline
Complicates Week
BY KRISTINA PETERSON
AND LAURA MECKLER
Uncle Sam's Club
Immigration activists protested in front of the Capitol Building earlier this month.
limits; Democrats insist that
any defense increase be
matched by a comparable lift
in nondefense spending.
GOP leaders would face anger from conservatives if they
agree to boost nondefense
spending without making deep
cuts elsewhere in the budget.
Passage of a sweeping tax
overhaul, expected to clear
Congress this week, could help
ease the sting of a budget deal.
Still, congressional leaders
have said there wouldn’t be
enough time this week to write
detailed spending legislation
that would fund the government for the rest of the fiscal
year. That means any budget
deal this week would likely be
a short-term spending patch
keeping the government
WASHINGTON—Mortgagefinance giants Fannie Mae and
Freddie Mac are here to stay.
Lawmakers in both parties
and the Trump administration
are negotiating overhauls of
the two companies—critical to
home mortgages but in government conservatorship since the
financial crisis—that could
keep them at the center of the
mortgage market, abandoning
long-stalled proposals to wind
them down, people familiar
with the matter said.
Bipartisan Senate legislation
set to be introduced in early
2018 marks the clearest sign of
this reversal and shows how
the companies, entering their
10th year under federal control,
have proven too risky to attempt replacing. The housing
market has seen strong demand in recent years, driven in
part by steady access for many
Americans to 4% or lower 30year fixed-rate mortgages,
thanks in part to a government
backstop of the companies.
Advancing legislation to refashion the nation’s $10 trillion
mortgage market is a heavy political lift and may yet sputter
during the coming midtermelection year, as a prior Senate
effort did four years ago. One
big difference this time around:
a more incremental approach
largely reliant on the existing
housing-finance framework.
Sens. Bob Corker (R., Tenn.)
and Mark Warner (D., Va.) are
moving to introduce the plan as
early as January. Unlike a failed
effort four years ago to create
an entirely new mortgage-finance system, their plan would
restructure—not eliminate—
Fannie and Freddie and allow
the companies, stripped of
their federal charters, to issue
government-guaranteed mortgage securities, according to
people familiar with the matter.
“We’re looking for a more
simplified approach that protects the taxpayer, preserves
the 30-year fixed mortgage and
includes stronger access and
affordability provisions,” Mr.
Warner said Friday.
The companies would remain under government control until privately backed competitors emerge and gain
market share, a process that
could take years, the people
said. It isn’t clear what companies might be interested in entering the market. But the bipartisan
proposal
would
restrict the amount of investment that could come from
mortgage lenders, a person familiar with the matter said.
The Trump administration
hasn’t formally endorsed any
legislation nor issued a set of
its own overhaul principles.
Treasury officials, however,
have been in close contact with
Senate lawmakers as they develop their plan, according to
people familiar with the discussions.
Washington’s about-face will
come as little surprise to market participants who for years
predicted that efforts to replace Fannie and Freddie,
which together back around
half of all outstanding mortgages, would prove too difficult. But the shift on Capitol
Hill nevertheless illustrates one
way in which policy ideologues
appear to have lost ground to
market realities.
ly
.
yer who had been involved in
the probe, calling Mr. Trump an
“idiot” and a “menace,” and the
disclosure that a Justice Department official had met in
2016 with the author of a controversial dossier on allegations
of Mr. Trump’s links to Russia.
Justice Department officials
have defended the agency and
its probe, as critics have intensified their complaints.
In the Saturday letter, Mr.
Langhofer said a lawyer with
the General Services Administration, a federal agency that
helped set up the transition of-
co Fo
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WASHINGTON—A lawyer for
the Trump transition team said
Robert Mueller’s investigators
improperly reviewed some
emails from transition officials,
an allegation that comes amid
charges of bias by the special
counsel’s probe.
The allegations are the latest
in a series of criticisms from
some Republicans of Mr. Mueller’s investigation into Russian
efforts to meddle in the 2016
election and any possible links
to the Trump campaign.
The lawyer told Congress in
a letter dated Saturday that the
government agency holding
emails from the transition team
had “unlawfully” provided communications to Mr. Mueller’s office. They included ones that
were protected by attorney-client and other privileges, the attorney, Kory Langhofer, wrote.
In a statement, a spokesman
for the special counsel, Peter
Carr, said: “When we have obtained emails in the course of
our ongoing criminal investigation, we have secured either
the account owner’s consent or
appropriate criminal process.”
Some Democrats and other
Mueller defenders have expressed concern President Donald Trump may try to fire Mr.
Mueller as the probe reaches
into Mr. Trump’s inner circle.
Mr. Trump, arriving Sunday
at the White House from Camp
David, was asked if he intended
to fire Mr. Mueller. “No, I’m
not,” he said.
The criticism of Mr. Mueller’s investigation was fueled by
the release of text messages between an FBI agent and a law-
funded into January.
Lawmakers are expected to
leave Washington by Friday,
but if they can’t agree on how
to fund the government, their
departure could be delayed.
Even a short-term spending
bill has become controversial.
House GOP leaders have
said they plan to pass a measure that would fund the military through September, but
the rest of the government
only through Jan. 19. Democrats have labeled that a
“Punt-agon” approach, saying
it would fail in the Senate.
Republican leaders then
may revert to a simple extension of current funding for all
of the government for a few
weeks into January, GOP aides
said. Democrats are pushing to
make sure that some of their
requests hitch a ride to the
year’s final spending bill, including reauthorization of the
Children’s Health Insurance
Program.
But Democrats would face a
backlash from liberals if they
support a year-end spending
bill without resolving the fate
of the Dreamers.
If the matter gets punted to
2018, immigrant-rights advocates are convinced that Republican leverage would grow.
Activists staged protests
last week, hoping to add to the
year-end pressure.
“I am a DACA recipient who
is tired of all the uncertainties
we have faced,” said Cata Santiago, a 20-year-old from
Homestead, Fla.
Mortgages backed by Fannie,
Freddie and U.S. agencies saw
their market share drop during
the housing bubble but have
played a dominant role since the
2008 financial crisis.
Fannie/Freddie
100%
Federal agencies
75
50
25
0
2001
’05
’10
*Through June
Sources: Inside Mortgage Finance,
Urban Institute
THE WALL STREET JOURNAL.
’15 ’17*
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THE WALL STREET JOURNAL.
Monday, December 18, 2017 | A5
WORLD NEWS
Japan Eases Out of Monetary Experiment
Central bank is likely
to raise one or more
of its key interest-rate
targets next year
Foot on the Brake
The Bank of Japan holds 40% of government debt, but is slowing
the pace of bond purchases.
BY MEGUMI FUJIKAWA
JGB purchases by BOJ
Total over previous 12 months
100%
¥100 trillion
80
80
60
60
Held by others
40
KIYOSHI OTA/BLOOMBERG NEWS
40
20
2013 ’14
’15
’16
1
0
2013
’17
Note: ¥100 trillion = $881 billion
1
Sources : Mitsubishi UFJ Morgan Stanley
Securities (purchases), Bank of Japan (share)
2
Haruhiko Kuroda, governor of the Bank of Japan
if done prematurely, could
drive the yen up and freeze
consumers’ spirits, which are
just beginning to recover. With
core inflation still at 0.8%,
well below Mr. Kuroda’s 2%
target, some say there is no
need to rush a decision.
That is why the central
bank’s comments are starting
out in vague territory, say people familiar with its strategy.
By one measure, the central
2
20
Held by BOJ
0
terest rates, and the European
Central Bank and the Bank of
England are following the Fed’s
lead. Japan, which suffered
from deflation and stagnation
dating to the 1990s, is the last
to stick with radical easing.
A BOJ reversal would bring
risks for global markets and
the world’s third-largest economy, which has enjoyed a
seven-quarter growth streak.
Tightening monetary policy,
Target
volume
’14
’15
’16
’17
Haruhiko Kuroda becomes
BOJ governor
Kuroda discusses downside
of easing
THE WALL STREET JOURNAL.
bank is already pulling back
from its easing program. It has
reduced the amount of Japanese government debt it buys
to around ¥60 trillion (about
$530 billion) in the most recent 12-month period from
¥80 trillion at the peak of Mr.
Kuroda’s easing push.
Mr. Kuroda says that
doesn’t represent tightening
because in September 2016 the
bank decided to focus on the
yield of 10-year government
bonds rather than the quantity
of bonds purchased. It continues to target zero for that
yield—with steady success.
But the governor, whose
five-year term expires in April,
has also been mentioning the
downside of extremely low interest rates in what many analysts see as an attempt to prepare the ground for a rate
increase.
ly
.
TOKYO—Japan’s
central
bank has been the world’s
poster child for radical monetary easing. Its stance is
poised to change next year.
After pumping about $4
trillion into the financial system over Gov. Haruhiko
Kuroda’s nearly five years on
the job and dropping rates
into negative territory, the
Bank of Japan is likely to raise
one or more of its key interest-rate targets in 2018, market players say.
Central-bank officials aren’t
saying that publicly. But
rather than rebuff market expectations, some officials are
dropping hints of a new direction for one of central banking’s great experiments.
If it happens in 2018, it
would mark a moment of closure after a decade of crisis
that began with the global
meltdown in 2008. Already, the
U.S. Federal Reserve is well
into its program of raising in-
Share of government
debt holdings
In early November, Mr.
Kuroda noted how profits at
commercial banks were being
squeezed by low rates. He got
more attention with a speech
later that month at the University of Zurich referring to
the reversal rate—a new name
for the point at which low
rates set by a central bank
start to hurt the banking industry and undermine the
benefits of loose monetary
policy. When market players
started buzzing, the governor
denied that he was saying anything new. Since then, one of
his deputies, Hiroshi Nakaso,
as well as board member
Takako Masai have expressed
concerns over the risks of
prolonged easing.
“Zurich was the starting
point,” said Naka Matsuzawa,
chief Japan rates strategist at
Nomura Securities, characterizing it as a game-changer for
Mr. Kuroda’s image. The 73year-old governor could be
paving the way for a second
five-year term in which he
would implement a smooth
transition from his earlier policy, Mr. Matsuzawa said.
—Suryatapa Bhattacharya
in Tokyo and Saumya
Vaishampayan in Hong Kong
contributed to this article.
Australia Holds Man in North Korea Missile-Parts Offer
By Rachel Pannett in
Sydney and Jonathan
Cheng in Seoul
charges have been brought under a law banning the supply
of goods used in weapons of
mass destruction.
The 59-year-old Sydney
man, identified in court papers as Chan Han Choi, a naturalized Australian citizen of
Korean heritage, allegedly
breached both United Nations
and Australian trade sanctions
in trying to generate income
for the North Korean government, the FBI-equivalent Australian Federal Police said on
Sunday.
The federal police say Mr.
Choi was involved in brokering
the sale of missiles and missile
components—including software for the guidance of ballistic missiles—and North Korean military expertise to
other international entities.
They also allege he attempted
to transfer coal from North
Korea to entities in Indonesia
and Vietnam.
“This case is like nothing
we have ever seen on Australian soil,” AFP Assistant Commissioner Neil Gaughan said.
“This man was a loyal agent of
North Korea who believed he
was acting to serve some
higher patriotic purpose.”
Cash-strapped North Korea
has faced stricter United Nations sanctions this year after
pushing ahead with its missile
and nuclear programs in defiance of international pressure.
That includes a complete halt
on coal shipments.
for more than 30 years, this
year.
Although they are looking
at his activities over the past
decade—the statute of limitations for such cases—the
charges all relate to the past
12 months, a period when the
tougher sanctions took effect.
The police said it was believed the man had been in
contact with high-ranking
North Korean officials, but
gave no other details of how
or when the man was recruited as a North Korean economic agent.
Mr. Choi is one of about
co Fo
m rp
m e
er rs
ci on
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us l,
e
on
Australian police said they
arrested a man for allegedly
selling missile components
and coal on the black market
for North Korea, the first time
Police also say the
suspect tried to move
coal to Indonesian,
Vietnamese entities.
The Trump administration
in November returned North
Korea to the list of terror
sponsors, ratcheting up pressure on Pyongyang.
Australian police said they
began investigating the man,
who had been in the country
100,000 ethnic Koreans living
in Australia, with the largest
concentration in Sydney.
Experts say cases like Mr.
Choi’s are rare, partly because
they’re so difficult to prove. In
this case, no illicit items ever
entered Australia “so essentially this person is just sitting
in Australia making calls,” said
Justin Hastings, a lecturer at
the University of Sydney who
has researched North Korea’s
overseas smuggling networks.
Police say the deals that Mr.
Choi was allegedly involved in
brokering could have been valued in the millions.
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
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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. Visit www.iShares.com or www.BlackRock.com to
view a prospectus, which includes investment objectives, risks, fees, expenses and other information that you should read and consider carefully
before investing. Investing involves risk, including possible loss of principal. Buying and selling shares of ETFs will result in brokerage commissions. TheiShares funds
are distributed by BlackRock Investments, LLC (together with its affiliates, “BlackRock”). © 2017 BlackRock. All rights reserved. iSHARES and BLACKROCK are registered trademarks
of BlackRock. All other marks are the property of their respective owners. 242339
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 18, 2017
THE WALL STREET JOURNAL.
* ****
WORLD NEWS
Piñera Elected President of Chile
Billionaire former
leader returns with a
pledge to reform a
listless economy
SANTIAGO, Chile—Billionaire former president Sebastián Piñera cruised to victory in Chile’s presidential
election runoff Sunday as his
promise to reinvigorate the
country’s flagging economy
resonated with voters after
four years of subpar growth.
With more than 99% of ballots in, Mr. Piñera had 54.6%
of votes to the 45.4% of his rival, center-left television journalist Alejandro Guillier, who
conceded defeat and promised
to form a “constructive” opposition. In a televised phone
call, current President Michelle Bachelet, who had
strongly backed Mr. Guillier
during the campaign, congratulated Mr. Piñera on his win
and, in accordance with a Chilean tradition, accepted an invitation to breakfast at the
president-elect’s home on
Monday morning.
“I am going to propose to
all the political forces and to
all my countrymen great
MARTIN BERNETTI/AGENCE FRANCE-PRESSE/GETTY IMAGES
BY PAUL KIERNAN
Piñera supporters celebrated unofficial exit-poll results at party headquarters in Santiago on Sunday.
agreements to confront and
solve the big problems that
Chileans face,” the presidentelect said. “Together we will
transform Chile into a developed country, a Chile without
poverty, a Chile with opportunities for all.”
The outcome, which had
been far from a given following a late surge in the polls by
Mr. Guillier, will likely animate
the conservative business establishment of a country that
has seen policy drift to the left
in recent years.
On the campaign trail, Mr.
Piñera frequently criticized
Ms. Bachelet for increasing
Chile’s total government debt
to 23.8% of gross domestic
product from 12.7% since taking office in 2014. In their final debate last week, Mr. Piñera accused Mr. Guillier of
vastly underestimating the
cost of his platform, saying it
would be “impossible to finance unless we want to double the public debt like the
current government did and
practically put Chile in an economic crisis.”
In a country that is more
spendthrift than most of its
Latin American neighbors, the
message resonated with voters.
Daniel Castro, a 23-yearold student and security
guard, said he liked many of
the social reforms—free
higher education, legalized
abortion in some cases, better pensions—that Ms. Bachelet has either proposed or implemented. But he worried
about their cost.
“They need to be slow, or
else the state will barely be
able to pay off its debt,” Mr.
Castro said at a polling station
where he planned to vote for
Mr. Piñera.
“The center-left has been
governing for almost 28 years,
so we need change.”
BY PREETIKA RANA
co Fo
m rp
m e
er rs
ci on
al a
us l,
e
on
Hard Hit
Dengue infections,
by country 2016
Indonesia
150
Paraguay
Mexico
100
Vietnam
India
50
Colombia
Malaysia
Nicaragua
0 million 0.5
0
1.0
1.5
Source: WHO
fected with dengue to an elevated risk of severe dengue,
the potentially lethal form of
the virus.
The government found in
late 2016 that there were unspecified “adverse events following immunization” in the
five months leading up to Aug.
20, 2016, for at least 997 children out of more than 400,000
who had received a dose in
that period, according to a
document prepared for the
congressional investigation
and reviewed by The Wall
Street Journal.
The document said that at
least 30 of those children were
hospitalized because of “serious illnesses” and at least two
died. The two deaths weren’t
attributed to dengue. It hasn’t
been established that the
Dengvaxia inoculation resulted
in any cases of severe dengue
ness with each successive
dose, the company said; effectiveness also varies against
each of the four strains of
dengue, according to Sanofi.
The Philippines didn’t test
for previous dengue infection
as part of the vaccination program, according to the document prepared for the congressional investigation.
Mr. Aquino told lawmakers
on Thursday that he acted in
good faith when deciding to
use the vaccine in a mass drive,
and that no concerns had been
raised directly with him.
President Duterte said he
welcomed the investigation by
Congress. “If there is a failure,
let them sort it out,” he said
Wednesday.
For 10-year-old Christine
Mae de Guzman, her symptoms began with a throbbing
headache one day in October
n-
A nurse gave a girl a vaccine in Manila in April of last year.
sisting climate-change policies
that are considered detrimental to economic growth.
“Rebuilding
economic
strength at home and preserving a fair and reciprocal international economic system will
enhance our security,” the
strategy says.
The heavy emphasis on economics reflects Mr. Trump’s
campaign promise to put
American first and his aides’
insistence that the U.S. has entered an era in which geopolitical rivalries have intensified
and great power collaborations are at an end.
Philip Zelikow, a professor at
the University of Virginia who
served as the State Department
counselor during the George W.
Bush administration, said there
was risk in trying to wrap much
of the Trump administration’s
domestic agenda in the mantle
of national security.
The preparation of the
strategy document was overseen by Lt. Gen. H.R. McMaster, Mr. Trump’s national-security adviser, and one of Gen.
McMaster’s key deputies, Nadia Schadlow.
In contrast to the nationalsecurity strategy promulgated
by former President Barack
Obama, climate change isn’t
presented as a national-security danger and there is no
talk of seeking a world with-
or deaths in the Philippines.
Sanofi said last month that
after additional analysis it had
determined that the vaccine
isn’t suitable for people who
hadn’t been infected previously
with dengue. For those people,
“more cases of severe disease
could occur” if they receive the
vaccine and later contract the
virus, the company said.
Lawmakers last week began
questioning former and current officials, doctors, publichealth experts and Sanofi executives in an effort to
determine, among other things,
why Manila didn’t suspend the
program until this month.
Sanofi said the vaccine is
still effective for people who
have previously contracted
dengue. Dengvaxia, a live-virus
vaccine, is administered in
three doses, taken six months
apart, and gains in effective-
2000
’10
’16
THE WALL STREET JOURNAL.
2016, according to her parents.
Within days she had died, succumbing to severe dengue, according to a medical record
reviewed by the Journal.
Her mother, Marivic de
Guzman, said she couldn’t understand why her daughter got
the disease because Christine
had received a dose of
Dengvaxia earlier that year
and had no prior history of the
virus. Christine died shortly
before she was due to get her
second dose.
Sanofi said it wasn’t in a position to comment on Christine’s case because it hadn’t
been reported to the company.
The company said its studies
showed it takes three years for
any increased risk to surface after the first shot. Christine died
six months after receiving hers.
—Aricel Saludo-Garcia
contributed to this article.
Putin Thanks Trump
For U.S. Intelligence
On Planned Attacks
ERIC BARADAT/AGENCE FRANCE-PRESSE/GETTY IMAGES
Continued from Page One
Feaver, a Duke University professor who served on the National Security Council under
former President George W.
Bush. “This is especially important when you have a president like this one who did
very little set-piece messaging
on his worldview during the
campaign and only a handful
of big speeches since then.”
Much of the emphasis in
the document is on economics,
including domestic policy. The
strategy casts the tax-overhaul
plan and reductions in regulations as essential steps to
strengthen the U.S.
It defines homeland security
expansively, to include the protection of intellectual-property
rights, which it suggests can be
defended by tightening procedures for granting visas to suspected intelligence agents, including foreign students.
The document broadens the
notion of safeguarding the defense industrial base to protecting American advantages in research and technology.
It also urges a series of
measures to help the U.S.
achieve “energy dominance,”
including easing regulations
on energy production and re-
200 thousand
Philippines
no
TRUMP
Annual dengue infections
in the Philippines
Brazil
DONDI TAWATAO/GETTY IMAGES
MANILA—Lawmakers in the
Philippines are scrutinizing official decisions to pursue the
wide-scale introduction of the
world’s first dengue vaccine despite objections from government experts, and continue its
use after a subsequent warning
from the World Health Organization.
Former President Benigno
Aquino III’s administration
launched the vaccination drive
in April 2016 with the goal of
immunizing one million children against dengue, which is
caused by a mosquito-borne
virus. The potentially fatal disease can cause fever, headaches, joint pain and possibly
internal bleeding.
In a congressional hearing
on Thursday, Mr. Aquino told
lawmakers that he had seen
the disease as a significant
enough problem in his country
that he met with executives
from French pharmaceutical
maker Sanofi SA two times
before his government approved its vaccine, Dengvaxia.
The government drive proceeded against the wishes of
an advisory panel of doctors
at the Department of Health,
which raised concern over the
lack of long-term safety data
for the vaccine.
In the 20 months that followed the launch of the drive,
the Philippines vaccinated
over 800,000 children.
President Rodrigo Duterte’s
administration picked up the
program after he took office at
the end of June 2016.
The WHO said the following
month that the vaccine could
expose people previously unin-
Toronto police said Apotex
Inc. founder Barry Sherman
and his wife, Honey, who were
found dead in their mansion
last week, suffered “ligature
neck compression,” a type of
strangulation, and homicide
detectives were taking over
the investigation.
By Paul Vieira,
David George-Cosh
and Vipal Monga
Police formally identified
Mr. Sherman, 75 years old, and
Ms. Sherman, 70, as the pair
found dead at their home in a
wealthy enclave in north Toronto on Friday. A police
spokeswoman didn’t elaborate.
A spokesman for Apotex
said late Sunday neither the
company nor the Sherman
family had further comment.
Responding to previous media reports suggesting a possible murder-suicide, the family
called on Toronto police “to
conduct a thorough, intensive
and objective criminal investigation.”
The family said they didn’t
believe such a theory to be
true.
Mr. Sherman founded Apotex in 1974 as a pharmaceutical company that specializes
in generic medicine.
The privately held company
started with two employees
and grew to more than 11,000
people world-wide, producing
approximately 25 billion doses
a year, according to the company’s website. Its annual revenue is estimated to top $1 billion.
Mr. Sherman’s net worth
was recently estimated to be
$3.7 billion by Canadian Business, an online magazine.
In recent years, Mr. Sherman found himself and his
company at the epicenter of a
legal uproar in the U.S. after
Apotex launched a cheaper,
generic version of Plavix, a
best-selling blood thinner.
In late 2011, a court ordered
Apotex to pay about $440 million in damages to Bristol-Myers Squibb Co. and Sanofi in a
patent-infringement case.
Late Friday, Canadian Prime
Minister Justin Trudeau offered his condolences to the
couple’s friends and family on
Twitter.
“We’ve been informed of
the tragic news that Barry and
Honey Sherman have unexpectedly passed away,” Apotex
said in its statement Friday.
“All of us at Apotex are deeply
shocked and saddened by this
news and our thoughts and
prayers are with the family at
this time.”
The Shermans recently
were honored by the Canadian
Senate for their philanthropy,
which focused on Toronto-area
hospitals and support of a
Kenyan charity that helped orphans.
ly
.
Manila Investigates Dengue Vaccination Drive
Toronto
Couple’s
Death Now
Homicide
Probe
MOSCOW—Russian President Vladimir Putin thanked
President Donald Trump by
telephone for intelligence that
the Kremlin said had helped
prevent a series of terrorist
bombings in St. Petersburg, Mr.
Putin’s office said.
The Kremlin said that Mr.
Putin had asked Mr. Trump to
convey his appreciation to the
Central Intelligence Agency director for the information,
which allowed Russian authorities to locate and detain the alleged plotters who had intended
to set off explosions at a cathedral and other public places.
The Kremlin said Mr. Putin
assured Mr. Trump that Russian intelligence services would
share any information they received concerning terrorist
threats to the U.S. and its citizens.
The White House confirmed the call Sunday.
—James Marson
While the administration
has so far taken little economic action against China,
officials have over the past
year laid the groundwork for
measures that could be implemented fairly quickly.
The most prominent antiChina economic action under
consideration is an investigation
into widespread business complaints that China improperly
pressures foreign companies to
turn over valuable intellectual
property as the price for entry.
Trump aides also have been
working closely with Congress
to toughen rules that allow
Washington to block foreign
investments in the U.S. seen as
harming national security.
As for Russia’s ambitions,
the strategy says the Kremlin
is developing new military
systems, cyber capabilities and
subversive tactics, including
the use of paid social-media
actors, to interfere in the internal political affairs of other
nations.
American intelligence officials have concluded that Russia interfered in the 2016 U.S.
presidential election.
Russia’s actions have led to
an increased risk of a military
conflict as a result of Russian
miscalculation, according to
the strategy.
—Jacob M. Schlesinger
and Chris Gordon
contributed to this article.
National Security Advisor H.R. McMaster in Washington last week
out nuclear weapons.
It isn’t clear how the Trump
administration will meet some
of its goals. The strategy describes the expanding national
debt as a serious threat to the
U.S.’s long-term economic security and underscores the
need for the federal and state
governments to work with private industry to update the
nation’s infrastructure.
Despite planned cuts of
more than 30% to the State
Department budget, it calls for
upgrading U.S. diplomatic capabilities to foster more “competitive diplomacy.”
The White House released
excerpts from the text of the
new strategy, and other as-
pects of the document were
described by officials who
have reviewed the plan.
Mr. Trump has maintained
cordial relations with Russian
President Vladimir Putin and
Chinese President Xi Jinping.
That has prompted some observers to question whether the
tough criticism of Russia and
China in the strategy are more
a reflection of the views of Mr.
Trump’s national-security team.
Senior officials insisted to
reporters that China was seen
as a strategic competitor, not
an adversary, and that the
White House was still seeking
to cooperate with Beijing over
North Korea and with Moscow
on the Middle East.
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 18, 2017 | A7
We manufacture prescription opioids.
How could we not help fight the
prescription and illicit opioid abuse crisis?
co Fo
m rp
m e
er rs
ci on
al a
us l,
e
on
ly
.
Two doctors founded a company in 1892 now known as Purdue Pharma.
Continuing the strong heritage of a research-driven, science-based
company, another doctor is currently at the helm as CEO. We’re the
pharmaceutical company that manufactures OxyContin®. Patients’ needs
and safety have guided our steps. It’s what led us to research and develop
medications to help patients. Today, it’s what has spurred us to redouble
our efforts in the fight against the prescription and illicit opioid abuse
crisis. It’s why we’re taking action.
We support recommendations in The President’s Commission on
Combating Drug Addiction and the Opioid Crisis and the FDA’s Opioid
Action Plan. There are too many prescription opioid pills in people’s
medicine cabinets. We support initiatives to limit the length of first opioid
prescriptions. Reducing the number of excess tablets won’t end the
epidemic, but we believe it will help rein in the problem. We believe doctors
should check their state Prescription Drug Monitoring Program (PDMP)
databases before writing an opioid prescription, to guard against doctorshopping by those trying to game the system. Information sharing between
state databases must improve.
no
n-
Our industry and our company have and will continue to take meaningful
action to reduce opioid abuse. We focused our talented research scientists
and applied our innovative thinking to making opioids with abuse-deterrent
properties, making them harder to crush and, therefore, harder to be
abused by snorting or injection. With this investment, we pioneered
the pharmaceutical industry’s movement toward developing opioids
with abuse-deterrent properties when we were the first to receive FDA
approval.1 Developing new formulations is risky and there are never any
guarantees, but we did it anyway. Our company also took the initiative
to distribute the CDC Guideline for Prescribing Opioids to thousands of
prescribers and pharmacists shortly after it was released.
As we continue to fight the prescription opioid and illicit substance abuse
crisis, we are applying our resources and our best scientific minds to
discover and develop new, non-opioid pain medicines for patients.
No one solution will end the crisis, but multiple, overlapping efforts will.
We want everyone engaged to know you have a partner in Purdue Pharma.
This is our fight, too.
www.purduepharma.com
1
Opioids with abuse-deterrent properties are not abuse-proof and don’t prevent addiction,
but they are part of a multifaceted approach to addressing the prescription opioid abuse crisis.
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.
A8 | Monday, December 18, 2017
FROM PAGE ONE
CSX
Railroad CEO
Led Overhaul
Of Industry
Continued from Page One
BY JACQUIE MCNISH
Hunter Harrison, addressing the Canadian Pacific Railway annual meeting in 2015.
Some governance experts
had questioned if the board was
abdicating authority over what
many consider a central responsibility: hiring and paying leaders.
“They didn’t pursue the due
diligence that they should have
done...ahead of hiring this guy,”
said Mr. Chia.
Shortly before the vote, The
Wall Street Journal reported
that Mr. Harrison was using a
portable oxygen machine and
working mostly from home. The
company and Mr. Harrison declined to discuss his illness, but
said he was up to the task and
that CSX directors were aware
of his medical condition.
“Don’t judge me by my medical record, judge me by my performance,” he told the Journal
in May. He said he had curtailed
travel and headquarters appointments since he recovered
from pneumonia and other
health issues in 2015, when he
was CEO of Canadian Pacific
Railway Co.
Investors approved the pay
package with more than 93% of
shares cast in support.
CSX declined Sunday to respond to the criticisms. In May,
a company spokesman said “the
board fully considered Mr. Harrison’s age as well as his experience in hiring him as for this
position, and addressed the associated risks in his employment agreement.”
As part of his contract, Mr.
Harrison received the $84 million cash payment and was
granted options to buy nine million shares, at $49.79, that
vested over four years. Under
the terms of the agreement, the
options will be forfeited since
Mr. Harrison didn’t serve a full
year.
Taylor Glasebrook, a portfolio manager at Neuberger Berman, one of the investors that
had publicly supported Mr. Harrison’s hiring, said Sunday he
still believes it was the right decision and CSX will eventually
achieve Mr. Harrison’s vision.
“He’s done a lot in his brief
tenure here and he’s brought in
a lot of people he worked with,”
Mr. Glasebrook said. “Those are
the people that on the day to
day basis are living and breathing Hunter.”
The task of steadying CSX’s
operations now falls to acting
CEO Jim Foote, 63, who was
brought on in October as chief
operating officer. Mr. Foote had
worked under Mr. Harrison during the turnaround of Canadian
National Railway Co., leading
sales and marketing.
—Jacquie McNish
contributed to this article.
co Fo
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his illness has never been revealed.
The activist investor behind
the CEO coup and board
changes, Paul Hilal, had promised to pay Mr. Harrison $84
million to leave his old job to
take over CSX. He then got CSX
to agree to reimburse the costs.
For Mr. Hilal, the move represented an unusual gamble for
his new fund, Mantle Ridge LP.
He had raised $1 billion specifically for the CSX plan, pitching
potential investors on Mr. Harrison’s abilities and locking them
in for up to five years to ensure
time for the turnaround.
Mr. Hilal, who is also a CSX
director, declined to comment
Sunday.
The board ultimately bowed
to Mantle Ridge and other investors who supported Mr. Harrison. News of his campaign for
the job had sent the company’s
shares surging 30% in January,
adding more than $10 billion in
market value. CSX agreed to replace five directors, put Mr.
Harrison in control and give him
a four-year contract.
But the board took the unusual step of putting the contract and the $84 million payment, up to a shareholder vote
in June. Mr. Harrison threatened to quit if his package
wasn’t approved.
When Hunter Harrison
wanted to impress business
associates, he arranged meetings in the trophy room of his
sprawling Double H horse
farm near Palm Beach, Fla.
Rows of shelves are stuffed
with ribbons, medals and trophies earned by
OBITUARY his
jumping
HUNTER
horses.
HARRISON
By the time
1944-2017
visitors left the
room, Mr. Harrison had usually made his point. “I want
people to understand that I
am accustomed to winning,”
he told a reporter in 2015.
After taking the helm at
troubled Illinois Central Railway in the 1990s, Mr. Harrison
earned a reputation as a
driven and disruptive force in
a centuries-old industry.
His ability to rapidly pare
railway budgets, speed up
freight deliveries and challenge union-backed work rules
at Illinois Central, Canadian
National Railway Co. and Canadian Pacific Railway Ltd.
brought him many fans on
Wall Street. Unions and customers frequently challenged
his harsh tactics.
Mr. Harrison tempered the
sting of that contrarian strategy with a caramel-rich Southern drawl and folksy stories
drawn from his childhood in
Tennessee, where his father, a
one-time policeman, earned a
living as a traveling preacher.
At the time of his death on
Saturday at the age of 73, Mr.
Harrison had left unfinished
his fourth and most challenging assignment: the turnaround of CSX Corp. He joined
the Jacksonville, Fla., railway
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in March as CEO after he ignited a shareholder revolt by
aligning forces with a Wall
Street activist to replace CSX’s
long-serving boss and some
directors.
Ewing Hunter Harrison was
born in Memphis on Nov. 7,
1944. He started his railroad
career while still in college in
1963 as a 19-year-old carman
squirting oil under train carriages for the St. Louis-San
Francisco Railway.
His father’s gift for sermons
helped shape Mr. Harrison’s
management style as he rose
through the ranks. To spread
the gospel about his new ap-
Mr. Harrison called
on employees to
reduce costs and
speed up deliveries.
proach, Mr. Harrison organized retreats called Hunter
Camps. At these pep talks he
would ask managers and employees to challenge longstanding industry practices to
strip away costs and speed up
the trains.
When he teamed up with
activist Bill Ackman to change
the leadership of Canadian Pacific in 2012, Mr. Harrison set
the tone by telling a reporter:
“There is a new sheriff in
town. … He may be mean and
ugly, but he knows about railroading and he is going to
make this company successful.”
Mr. Harrison is survived by
his wife Jeannie and daughters
Elizabeth (Libby) Julo and
Cayce Judge.
ly
.
LARRY MACDOUGAL/ASSOCIATED PRESS
sparked customer complaints.
Several top executives complained to directors about Mr.
Harrison’s leadership, the people said. Among the concerns
were his health, one of the people said. They were also upset
with changes to the railroad
that had rattled customers and
Mr. Harrison’s push to scrap
several projects CSX had pursued with government funding,
others said.
The board was divided over
the issue, but ultimately sided
with Mr. Harrison, the people
said. Three top executives quit,
including Chief Operating Officer Cindy Sanborn and Chief
Marketing Officer Fredrik Eliasson. Mr. Eliasson had been in
line to become CSX’s chief executive before Mr. Harrison came
on the scene.
Mr. Harrison’s death weeks
later leaves the railroad searching for a permanent leader and
with a newly hired executive
holding its three top roles. On
Saturday, CSX Chairman Edward
Kelly said the board was confident its acting CEO and executive team “will capitalize on the
changes that Hunter has made.”
Shares of the company tumbled on Friday after CSX disclosed Mr. Harrison had taken a
medical leave. The stock lost 7%
to $52.93, well above the
roughly $35 level where it was
trading in January before Mr.
Harrison became involved.
Douglas Chia, executive director of corporate governance
at the Conference Board, wondered how much CSX board
members knew when they announced the medical leave.
"If they did know he was on
his deathbed, they really have
some explaining [to do] at this
point.’’
Questions about Mr. Harrison’s health before he was hired
led the CSX board to initially
ask for an independent physician to review his medical records, the company said. Mr.
Harrison refused, presenting instead a letter from his physician
saying he was healthy enough
for the job. The exact nature of
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 18, 2017 | A9
* * * * *
WORLD NEWS
Vatican Revises Rules Governing Relics
Commercial and ritual
abuse of saints’ body
parts prompts new
precepts for Catholics
The casket with the relics of St. Padre Pio is carried in Pietralcina, the village where he was born in Italy, on Feb. 11, 2016.
seek to address the growing
traffic in relics on eBay,
and a rise in the use of relics
in satanic black masses, said
Msgr. Robert Sarno, an official
of the Vatican’s Congregation
for the Causes of Saints, which
issued the rules.
A search on eBay on Saturday turned up 1,940 items under the category “saint relics,”
including an ampul supposedly
containing some of the Virgin
Mary’s breast milk with an
asking price of $3,000.
The rules lay new emphasis
on the traditional prohibition
against selling relics or displaying them in “profane or
unauthorized locations.”
“The Vatican is trying to respond to real-world problems,
and unfortunately there are
people who misuse and abuse
relics,” said the Rev. James
Martin, author of “My Life
With the Saints.”
Another novelty is the stipulation that church officials
may not begin with the process of certifying relics or
making them available for
ly
.
VATICAN CITY—The Vatican on Saturday published updated rules on the authentication and conservation of the
body parts of saints, which
Catholics venerate as holy relics, addressing the growing
problem of the sale of such
items on online platforms as
well as their use in sacrilegious rites.
For millennia, Catholics
have venerated relics because
the body of a deceased holy
person is considered to have
been a “living temple of the
Holy Spirit” during his or her
time on earth. But modern cultural changes affecting the ancient devotional practice required new rules on the
veneration, ownership and
protection of relics.
The rules announced Saturday include a new reference
to the veneration of human
ashes derived from cremation,
reflecting the increased popularity among Catholics of cremation, which was long discouraged by the church but
has been permitted since the
1960s.
The new regulations also
CIRO FUSCO/EUROPEAN PRESSPHOTO AGENCY
BY FRANCIS X. ROCCA
veneration without obtaining
consent from the heirs of the
deceased, according to the relevant civil laws.
In recent years, Msgr. Sarno
said, there have been several
cases in which family members have denied permission
to church officials to move the
remains of a saint or a candidate for sainthood for the purpose of veneration.
The family of the late Archbishop Fulton J. Sheen is currently in a legal battle with
the Archdiocese of New York
over the proper venue for the
body of the archbishop, who is
being considered for beatification, the last step before sainthood.
The archbishop’s family
want to move his body to his
childhood hometown of Peoria, Ill., but the Archdiocese of
New York wants it to stay
where it now lies, under the
high altar of St. Patrick’s Cathedral. The Supreme Court of
the State of New York ruled in
favor of the family last year,
but the Archdiocese of New
York is appealing.
The issue of relics has
grown with the recent surge in
the number of saints. The last
three popes, beginning with
St. John Paul II, have declared
thousands of deceased Catholics saints or blessed—more
than all of their predecessors
for several centuries combined.
ROME—The remains of Italy’s exiled King Victor Emmanuel III, praised by some for his
rule during World War I but
criticized for permitting the
rise of fascism in the years
leading up to the second world
war, were returned from Egypt
for burial in his homeland.
His body was interred Sunday in a family mausoleum in a
sanctuary in Vicoforte, south of
Turin; he died in 1947, a year
after he and his wife, Queen Elena, left Italy for exile in Egypt.
Queen Elena’s remains were
transferred on Friday to the
mausoleum from Montpellier,
France, where she lived after
her husband’s death, and died
in 1959.
Some descendants of the
monarchy, which had a relatively brief tenure in Italy, from
1861 to 1946, said they were angered that the king’s remains
were returned to Italy without
fanfare and that they were de-
nied a burial in the Pantheon,
the former Roman temple that
is now a church, where other
royals, including two kings and
a queen, are interred.
The role of Victor Emmanuel, one of Italy’s last kings, has
long been controversial in his
country. While he was hailed as
a courageous leader during
World War I, he was condemned for not having opposed
the rise of fascism under Benito
Mussolini.
Victor Emmanuel also was
criticized for having signed the
promulgation of racial laws that
ultimately resulted in the deportation of about 10,000 people, the vast majority of whom
perished, principally in the Nazi
death camps in Auschwitz, Poland, according to the U.S. Holocaust Memorial Museum. The
king approved laws, such as
those effectively suppressing
freedom of the press, that were
pushed by Mussolini and which
paved the way for consolidation
of the fascist dictatorship.
In a 1946 referendum, Italians voted to make Italy a republic, forcing Victor Emmanuel and his son Umberto II—
Italy’s last king, who ruled little
more than a month in 1946—
into exile.
Victor Emmanuel fled to
Egypt and died in 1947 in Alexandria, where his remains resided until Sunday.
Umberto died in 1983 in Geneva, Switzerland where other
members of the royal family
lived.
AR/ROPI/ZUMA PRESS
BY GIOVANNI LEGORANO
co Fo
m rp
m e
er rs
ci on
al a
us l,
e
on
King’s Remains Return to Italy After Long Exile
King Victor Emmanuel III
ANC Move Clouds Leadership Vote
no
SOWETO, South Africa—
Concerns over vote rigging
and other irregularities hung
over the ruling African National Congress as it prepared
to elect a new party leader to
succeed scandal-plagued President Jacob Zuma and chart
the future course of Africa’s
most-developed economy.
The ANC on Sunday said it
disqualified nearly 500 delegates from voting at its leadership conference because their
credentials couldn’t be verified
or had been struck down by
courts. The move confirmed
concerns among officials and
analysts that factions backing
opposing candidates to take
the helm of the party that has
ruled South Africa since 1994
had been trying to get their
own supporters into the leadership conference.
The remaining 4,776 delegates started casting ballots
for a new leadership late Sunday. The removal of the unverified candidates means the
voting process won’t be compromised, said Jessie Duarte,
the ANC’s deputy secretarygeneral.
The ANC has won an absolute majority in all national
elections since the end of
apartheid, and although opposition parties have been making inroads in recent years,
the new party leader is likely
to become South Africa’s next
president in 2019.
The two candidates—Nkosazana Dlamini-Zuma, Mr.
Zuma’s ex-wife and a former
n-
BY GABRIELE STEINHAUSER
chairperson of the African
Union, and Deputy President
Cyril Ramaphosa—have campaigned on starkly different
solutions for a country that is
suffering weak growth, high
unemployment and escalating
corruption allegations.
Ms. Dlamini-Zuma has
echoed her ex-husband’s attacks on “white monopoly capitalism” and promised “radical
economic transformation” for
South Africa, where the white
minority controls much of the
wealth. Mr. Ramaphosa has
called for a commission of inquiry into allegations Mr. Zuma
has allowed the Gupta family
to wield undue influence over
the government and steal millions from state-owned companies. Mr. Zuma and the Guptas
have denied wrongdoing.
WORLD WATCH
Your full
retirement picture.
In one place.
When you plan for retirement with Fidelity,
you’ll have instant access to all your retirement
savings details and goals, including:
• How much you may need in retirement
• How much you’re on track to have
• How retirement fits with all your other
savings and investing goals
SHAMIL ZHUMATOV/PRESS POOL
• Steps you can take to help strengthen
your plan
It’s your retirement. Know where you stand.
EARTH TO ORBIT: Crew members of the International Space Station board their craft for the
Soyuz MS-07 mission launch at the Baikonur Cosmodrome in Kazakhstan on Sunday.
PAKISTAN
Attackers Kill Nine
At Church in Quetta
Two suicide bombers struck a
church in Quetta, Balochistan
province, killing nine people and
wounding 57 others, authorities
said, in the first attack on a
church claimed by the country’s
Islamic State group affiliate.
Hundreds of worshipers were
attending services on Sunday
ahead of Christmas when the
attackers struck.
—Associated Press
GERMANY
Small Blast Damages
Property in Hamburg
A small explosion on Sunday
evening at a Hamburg train station left no injuries and a sus-
pect on the run, police said.
The explosion of what Hamburg police described as a “pyrotechnic device in a shopping
bag” destroyed a glass windshield on the train platform in
Veddel, an island borough in the
north German port city.
Police said on Twitter that
they were investigating, and following leads on the suspect’s
identity.
—Zeke Turner
800.FIDELITY | Fidelity.com
IMPORTANT: The projections or other information generated by the Planning & Guidance Center’s
Retirement Analysis regarding the likelihood of various investment outcomes are hypothetical in
nature, do not reflect actual investment results, and are not guarantees of future results. Your results
may vary with each use and over time.
Investing involves risk, including the risk of loss.
Fidelity Brokerage Services LLC, Member NYSE, SIPC, 900 Salem Street, Smithfield, RI 02917
© 2017 FMR LLC. All rights reserved. 812684.1.0
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.
A10 | Monday, December 18, 2017
IN DEPTH
Continued from Page One
Now Chinese entrepreneurs
want to sell directly to Americans, and Amazon is giving
them a way to do so. But
American shoppers and their
favorite e-commerce site
aren’t so easy to figure out.
Picking the right product is
the first challenge. Ms. Huang
says she ended up with loads
of unsold fidget spinners after
she mistimed the craze.
And Americans can be demanding; a seller of Christmas
tiaras had to add more glue to
keep her products’ fake jewels
from falling off after customer
complaints.
“I don’t understand what
Americans want,” says Huang
Xiaoting, another classmate,
who is trying to sell camping
tents at Christmastime.
Businesses like Mr. Tao’s SR
Work are trying to help. In the
past year, Mr. Tao has held
around 100 Amazon training
sessions. Hundreds of other
courses have cropped up. In
Drug-overdose deaths
500
400
300
200
0
2006
2010
*As of August 20
Source: Hamilton County Coroner’s
Office/Crime Laboratory
ly
.
100
’15 ’17*
THE WALL STREET JOURNAL.
THE WALL STREET JOURNAL.
guilty earlier this year to
charges of trafficking heroin.
The task force members, on
call 24 hours a day, include officers from local police departments, the state Highway Patrol and the federal Drug
Enforcement Administration.
When Detective Mark Bohan’s cellphone woke him just
before midnight one October
night, he thought it must be
his 4 a.m. alarm rousing him
for the gym. Instead, it was a
text message alerting him to a
suspected heroin overdose.
He got dressed and drove to
the scene, hoping to gather evidence that might lead him to
whoever sold the fatal dose to
the 26-year-old male victim.
On the porch of the twostory white house, Halloween
decorations hung from the rafters and the dead man’s girlfriend smoked a cigarette. “I
thought he was clean,” she
sobbed. Detective Bohan, 49,
searched the man’s cellphone
for text messages that might
point to where he bought the
drugs. He asked the woman
the name of the dealer; she
could only give an address.
A few years ago, when Detective Bohan was investigating rapes and murders, he
wouldn’t have dragged himself
out of bed for an overdose.
The most attention a drug
death received then was a
brief visit from a uniformed
patrolman to check for foul
play, he said.
Earlier that day, a group of
task-force officers tried to
gather evidence against an alleged dealer linked to a different death. In a police station
parking lot north of Hamilton
County, Lt. Joe Boyatt and his
colleagues affixed a wire to an
informant who barely survived
an overdose after taking drugs
from the same alleged dealer.
miles back to Mr. Williams’
house in West Harrison, Ind.,
where they spent the night
getting high.
Ms. Davidson, 19, told police she awoke around 4 a.m.
to find that Mr. Eckhardt was
lying next to her dead from an
overdose. After carrying his
body and possessions into Mr.
Williams’ car, the group drove
around for a short while, then
crossed back into Hamilton
County and dumped the body
on the side of a road, according to the investigative report.
The coroner later found the
heroin Mr. Eckhardt used also
contained fentanyl.
After the task force completed its investigation, the
detectives handed the case to
Seth Tieger, a veteran Hamilton County prosecutor, who
charged the trio with tampering with evidence, abusing a
corpse, corrupting another
with drugs and involuntary
manslaughter.
Ms. Bode and Ms. Davidson
each pleaded guilty to involuntary manslaughter and tampering with evidence, and
were sentenced to three years
in prison. Mr. Williams
pleaded guilty to tampering
with evidence and also received a three-year sentence.
The sentences weren’t
harsh enough to satisfy Mr.
Eckhardt’s mother, Pamela
Eckhardt, who says she was
blindsided by the plea agreements. “It was a slap in the
face,” Ms. Eckhardt says, sitting in her sister’s upholstery
shop on Cincinnati’s west side.
“It was shoved under the rug
like his life didn’t matter.”
Mr. Tieger says sending all
three defendants to prison
was a good outcome, and that
sometimes victims’ families
are “looking for more from the
justice system than we’re able
the southern export and tech
hub of Shenzhen, the Monkey
King E-Commerce School offers to help students achieve
their “cross-border e-commerce dreams.”
“The pictures must speak!”
Mr. Tao exhorts his students
in a classroom decorated with
giant Facebook, Amazon and
Google logos. “You need to
think about how they’ll use
your product,” he says, gesturing at Ms. Huang. “Can you
get 100 people at a party
wearing your headbands? That
would look good in a photo.”
Half a billion Chinese shop
online. For Chinese businesses,
the American consumer is
prized quarry, seen as freerspending than the Chinese.
Chinese sellers have flocked
to Amazon, which holds regular conferences in China to
promote its platform, explaining the logistics and support
services it offers. Business-intelligence group Marketplace
Pulse estimates that Amazon
has roughly one million active
sellers and that one-third are
from China, 250,000 having
joined this year.
An Amazon spokeswoman
said the company has sellers
from more than 130 countries
but wouldn’t comment on sellers by region.
Along with rising production costs, the influx of so
many Chinese sellers is a
challenge for Qingdao Ray
Trading Co. Business manager
Yao Wei says profit margins
have dropped from around
40% in 2014 to closer to 20%
today for the maker of pillowcases, including one featuring
a saxophone-playing Santa, a
common way Mr. Claus is depicted in China.
Mr. Yao isn’t sure why
Santa is paired with a sax. “It
may be to represent a very
cheerful mood,” he says.
Shenzhen-based Agoal sold
about $50,000 worth of products on Amazon last month,
including a Wi-Fi-equipped
smart plug, says sales manager Zhou Jialing. With several hundred Chinese sellers
offering products similar to
their plug, Ms. Zhou says she
is looking for other products
that might appeal to Americans, such as measuring tapes
Cracking Down
Number of defendants
sentenced in federal court for
trafficking drugs that resulted in
death or serious bodily injury, by
fiscal year ending Sept. 30.
90 defendants
80
70
60
50
40
30
20
10
0
2012
’13
’14
’15
’16
Note: Data represents defendants whose
highest offense levels were for trafficking
resulting in death or serious injury.
Source: U.S. Sentencing Commission
His friend wasn’t as lucky and
died from a fatal combination
of fentanyl and other synthetic
opioids.
Lt. Boyatt, 61, recruited the
26-year-old man to be a confidential informant while he
was recovering in the hospital
a few months earlier. “We
want to find the people who
are selling the stuff,” Lt. Boyatt told the young man.
“There’s nobody but you that
has as much information.”
The informant, a college
graduate with dirty-blond hair,
said he agreed to cooperate
with the police “to bring closure to [the] family” of his
friend. “I’m just gonna try to
do right by him,” he said.
In a nearby suburban
neighborhood, officers observed from parked cars as the
dealer approached the informant’s car and allegedly sold
Prosecutors are going
after drug suppliers
to overdose victims,
including friends.
him fentanyl worth $60. The
investigation is continuing.
The task force presents its
cases to either the county
prosecutor or the U.S. attorney in Cincinnati, who decide
whether to press charges.
On the night of Daniel Eckhardt’s death last year, he was
with his ex-wife, Bridget Bode,
and her boyfriend, Wesley
Dean Williams. Also there was
Destany Davidson, who was on
a first date with Mr. Eckhardt,
according to the task force’s
investigative report. After
buying $120 of heroin in Cincinnati, the quartet drove 30
TE-PING CHEN/THE WALL STREET JOURNAL
CHINA
The Toll in Hamilton
County, Ohio
Cincinnati has a growing problem with opioid addiction.
no
In some states, such laws
were rarely enforced until recently. Benjamin J. Agati, a
veteran prosecutor in the New
Hampshire Attorney General’s
office, has helped train police
departments throughout the
state in how to build cases under the state’s drug-induced
homicide law, which carries a
maximum penalty of life in
prison. The law was enacted in
the late 1980s but was rarely
applied before the surge in
opioid deaths, Mr. Agati says.
Before the overdose crisis,
the typical police response to
a drug death was “ ‘OK, I gotta
call the medical examiner, notify next of kin, make sure
there’s no foul play and dispose of the needle. And then
I’m outta here,’ ” Mr. Agati
says. “It’s just another person
who’s died from addiction.”
In late 2015, a Justice Department task force recommended that law enforcement
“prioritize prosecutions of
heroin distributors, especially
when the drug causes
death.” Since 2013, Kansas and
Delaware have passed laws
that punish dealers for distributing drugs that result in
death, and 13 state legislatures
have introduced bills that
would do the same, according
to the Drug Policy Alliance.
The prosecutions sometimes nab members of drugdistribution gangs like that of
Navarius Westberry. Last year,
Mr. Westberry pleaded guilty
in federal court in Kentucky to
operating a drug-trafficking
ring that distributed up to a
kilogram of heroin and 50
grams of fentanyl over an 18-
month period that killed at
least one person. He was sentenced to life in prison.
But in courtrooms around
the country, prosecutors are
also sweeping up low-level
dealers who are addicts trying
to support their habit, as well
as friends and family members
of overdose victims who
bought or shared drugs with
the deceased. Some critics of
the prosecution tactic say
these users need treatment,
not harsh prison sentences.
Critics see the prosecutions
as more of the same drug-war
tactics that have filled America’s prisons with nonviolent
criminals but done little to
stop illicit drug use. There’s
scant evidence that fear of
prison deters addicts from using, and for every dealer put
behind bars, another is ready
to take his place, says Lindsay
LaSalle, an attorney with the
Drug Policy Alliance.
Law-enforcement officials
say they’ve seen some signs
the prosecutions may be deterring dealers, including jailhouse phone calls they say
they’ve overheard in which inmates warn associates that
police are pressing homicide
charges against drug traffickers. They say drug-death prosecutions are just one piece of
a strategy that includes urging
addicts into rehab and taking
down large-scale traffickers.
In Hamilton County, heroin
addiction looms large. Cmdr.
Fallon is raising his grandson
because his adult child is
hooked. The daughter of another officer barely survived a
heroin overdose earlier this
year. A former county prosecutor, Allison Hild, pleaded not
co Fo
m rp
m e
er rs
ci on
al a
us l,
e
on
Newly enforced laws
An overdose victim’s body is moved from a Cincinnati hotel room; prosecutors are going after suppliers, including friends of the dead.
n-
Continued from Page One
as many as those killed in traffic accidents. Nationally, some
64,000 Americans died from
overdoses last year, up 86%
from 2006, according to the
Centers for Disease Control
and Prevention.
A newly created heroin task
force in Hamilton County has
investigated hundreds of
deaths in the past two years,
resulting in a dozen involuntary manslaughter indictments
in state court and 13 federal
indictments for distribution of
controlled substances resulting in death.
“The deaths—that’s why. All
the people dying,” Cmdr.
Thomas Fallon, who leads the
county task force, says of the
prosecution push. “Even in the
cocaine and crack days, people
didn’t die like this.”
At least 86 people nationwide received federal prison
sentences last year for distributing drugs resulting in death
or serious injury, up 16% from
2012, according to the U.S.
Sentencing Commission, a federal agency that determines
sentencing guidelines for
judges. An analysis of news reports found 1,200 mentions
nationally about drug-death
prosecutions in 2016, three
times the number in 2011, according to a recent report by
the Drug Policy Alliance, a
nonprofit group that supports
decriminalizing drug use.
The prosecutions often employ tough-on-crime legislation born of the crack-cocaine
epidemic of the 1980s and
1990s. These state and federal
laws hold drug distributors liable for overdose deaths. Selling even small amounts can
result in decades in prison.
TY WRIGHT FOR THE WALL STREET JOURNAL (2)
OPIOIDS
‘Uncle Sam’ with graduates of his class in how to sell on Amazon.
or other tools.
She also considered dog accessories; she heard Americans like to dress like their
pets.
Mr. Tao, a.k.a. Uncle Sam,
previously worked for an online Chinese retail startup that
targeted the global market.
Having worked with international customers, he began
selling jewelry and women’s
apparel on Amazon in 2011.
Yiwu offers a natural cus-
to give.”
A two-hour drive south
from Hamilton County, Kerry
B. Harvey, the mustachioed
U.S. attorney for eastern Kentucky from 2010 to early 2017,
made prosecuting drug-deaths
a priority around 2015. He
used a 1986 federal law that
had rarely been applied in the
district, which established a
mandatory 20-years-to-life
sentence for distributing
drugs that resulted in death or
serious injury. The penalty
grew to life in prison for defendants with prior felony
drug convictions.
He saw the approach as a
way to bring solace to families
devastated by the increasing
number of heroin-related
deaths in the area. Plus, the
law’s stiff penalties helped
persuade dealers to cooperate
against bigger suppliers, he
said.
“When someone is looking
at 20 years to life, they’re
gonna tell you whatever they
know to save themselves,” he
said.
Mr. Harvey assigned three
prosecutors to work on the
cases and began working with
local police to investigate
overdose deaths as homicides.
Since 2015 one of the prosecutors, Todd Bradbury, has convicted 16 people for selling
drugs that resulted in death,
two of whom received life sentences.
One of those convicted was
Fred Rebmann, who in 2016
sold $60 of fentanyl to Kathleen Cassity. Ms. Cassity was
six months pregnant and died
within hours of buying the
drugs. Doctors performed an
emergency C-section, but
failed to save the life of her
unborn child.
At the time, Mr. Rebmann
was 31 and spent his days
scheming to obtain enough
heroin to avoid withdrawal. “I
would
work
odd
jobs
…steal…hold up signs for
money,” he said in an email
from prison. Also, “There were
days I’d sell heroin to get my
own, and there were days I
sold scrap metal,” he said in a
telephone interview.
Addiction doesn’t “disqualify” small-time dealers like Mr.
Rebmann from prosecution,
says Mr. Bradbury, the prosecutor. “He knew he was selling
something extremely dangerous to a pregnant woman,” he
says. Mr. Rebmann says he
didn’t know Ms. Cassity was
pregnant.
tomer base for him. The area’s
factories and businesses supply toys and more than half of
the world’s Christmas decorations, according to Chinese
state medias. Many of his students have small factories producing for foreign brands and
now want to cut out the middleman.
Among those attending Mr.
Tao’s class last month, some
were selling apparel, others
LED lamps or outdoor gear.
Plea deal
Mr. Bradbury offered him a
deal. If Mr. Rebmann pleaded
guilty, prosecutors would recommend a 20-year sentence
that, with credit for good behavior, could be cut by three
years. If he went to trial and
lost, Mr. Rebmann faced mandatory life in prison because
of a 2012 heroin-possession
conviction.
Mr. Rebmann took the deal
and pleaded guilty in August
2016, but U.S. District Judge
Joseph M. Hood, a Vietnam
veteran named to the bench in
1990, rejected the sentencing
recommendation. Ms. Cassity
died “because you wanted to
stick a needle in your arm,”
Judge Hood told Mr. Rebmann,
according to a hearing transcript. He sentenced Mr. Rebmann to 30 years in prison.
“I want it to be known here
in Lexington… if you get convicted of dealing in heroin and
a death results, 20 years isn’t
enough,” Judge Hood said.
“Time for coddling is over.”
In the run-up to December,
Liu Yantao, 28, spent $15,000
on Christmas baubles, hats
and novelty items such as
reindeer ears. On a recent day
in Yiwu, he stood in a rented
office with walls covered with
inspirational slogans and a
whiteboard with scribbledover Amazon headlines he has
tried to perfect.
“We don’t have this Christmas culture,” he says. Still,
with the help of training and
online tips (he hears identical
family pajamas are popular),
“I’m learning.”
Mr. Tao brings the class to
a close after a 13-hour day,
and one by one calls students
to the front of the room to
collect their graduation certificates. He reminds students
the path of the entrepreneur
isn’t easy. Mr. Tao suggests
they read inspirational books
and listen to podcasts to improve their minds.
“Go home, get some rest,”
he tells them, as they file out
into the night. “Tomorrow will
be better. Merry Christmas.”
—Zhang Chunying
contributed to this article.
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THE WALL STREET JOURNAL.
Monday, December 18, 2017 | A10A
NY
* * * * * *
GREATER NEW YORK
Private Schools
Wary of Changes
To State Guidelines
Jessica Torres and her son at her parents’ Yonkers home. They moved to New York after storms destroyed their home in Puerto Rico.
Mom, Son Strive to Rebuild Lives
BY MELANIE GRAYCE WEST
A few days after Hurricane
Maria hit Puerto Rico in September, Jessica Torres, drove
her car to the one passable
highway, climbed a mountain
to get mobile reception, borrowed a stranger’s phone and
called her parents in Yonkers.
Between tears, she let them
know that she and her 5-yearold son Manuel were safe, and
all extended family were accounted for, too. But her home
in the central town of Cayey
was destroyed.
Her family had a message
as well. “They told me, ‘You’re
leaving,’ ” she recalled.
On Oct. 7, Ms. Torres, 30
years old, and her son arrived
at John F. Kennedy International Airport with the clothes
on their back, personal documents and a few items. Ms.
Torres said she anticipates living in New York for some time.
“I see my son doing well
here,” she said while at her
parents home. “If I can see me
being stable here, I will stay.”
There is no official figure on
how many people landed in the
New York area from Puerto
Rico this fall and stayed. Research from the Center for
Puerto Rican Studies at Hunter
College, part of the City University of New York, shows that
the majority of Puerto Ricans
displaced after back-to-back
hurricanes—Irma and Maria—
migrated to Florida, Pennsylvania and Texas, avoiding New
York, mostly because of the
high cost of housing.
According to a spokeswoman
for the office of New York Gov.
Andrew Cuomo, about 4,700
displaced Puerto Ricans have
checked in at JFK airport’s welcome tables since mid-October.
Twenty-five displaced people
have enrolled at City University
of New York colleges and another 50 are at State University
of New York schools.
The New York City Emergency Management reports that
some 2,000 people have visited
a Hurricane Service Center on
Manhattan’s Upper East Side,
which also opened in mid-October. There, clients are referred
for social services offered by
the city or through charities.
On Monday, city officials
are expected to announce a
donation of about $1.5 million
in goods for those who were
displaced by Hurricane Maria
and are living in the city.
Items will include coats, bedding and other household
goods. Another $200,000 in
donations have been given or
pledged, and mostly will support aid organizations working
in Puerto Rico.
Ms. Torres has received
help from her family, the city
and Catholic Charities. Still, a
black coat, borrowed from her
mother, is just a little too
short and her mittens a bit too
thin. These are minor inconveniences, she says, noting that
the people in her hometown
are still without power.
During Hurricane Irma,
which hit Puerto Rico in early
September, Ms. Torres and her
son were without electricity
for nine days. When the power
returned for a few days, she
prepared for Hurricane Maria,
abandoning her wooden home
for a friend’s cement house.
There, she and Manuel weathered the storm and tried to
carry on in its aftermath. They
returned to Cayey and found
their home “blew off,” Ms.
Please see MOM page A10B
‘When we talk about
the expectations…for
all students to be
ready, it’s all students.’
co Fo
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Storms in Puerto Rico
left them with little,
but with family’s help
see future in New York
New York officials are revising the state’s guidelines for instruction at private K-12
schools, sparking concern
among some religious and independent school leaders about
possible government overreach.
State Education Commissioner MaryEllen Elia told a
conference of private-school
leaders this month that her
agency is clarifying guidance
that says children in these
schools must receive a “substantially equivalent” education
to students in public schools.
Some advocates for private
schools are concerned that
changes could intrude on their
freedom.
“The state’s efforts to oversee the education of children in
religious and independent
schools has the potential of
overreaching in a way that
threatens the autonomy, independence and mission of the
schools that parents choose for
their children,’’ said James Cultrara, co-chairman of the New
York State Coalition for Independent and Religious Schools.
Nearly 1,800 private schools
operate statewide, serving about
460,000 children, the coalition
says. The schools can tap taxpayer dollars for various services, such as textbooks, teacher
training and security. State
guidance says that if a district
decides a private school isn’t delivering substantially equivalent
education, such funding is withdrawn and public-school authorities can ask Family Court to
deem its students to be truant.
Betty Rosa, chancellor of the
Board of Regents, which sets education policy for the state, said
the revisions aim to make its expectations more transparent,
help local district leaders understand their role in determining
compliance, and spell out consequences for inadequate instruc-
tion. She said the state would
consider the views of privateschool leaders, and she would
like a draft ready in February.
This revision comes as New
York City officials say they are
investigating 39 yeshivas that
critics accuse of failing to
teach enough secular studies
or prepare students for higher
education and life in general.
Representatives for the yeshivas, which are Hasidic and ultraorthodox, have said they
are cooperating with the investigation.
Ms. Rosa said in an interview
she believed some yeshivas
aren’t meeting the mandate to
provide substantially equivalent
educations, based on her discussions with parents and former
yeshiva students, as well as information from fellow Regents.
ly
.
KHOLOOD EID FOR THE WALL STREET JOURNAL
BY LESLIE BRODY
“I am very concerned,” she
said. “When we talk about the
expectations we have for all students to be ready, it’s all students,” she said. “Some of those
schools do fall in the category
of not fulfilling that obligation.”
Rabbi David Niederman, who
is on the executive committee of
a Hasidic coalition called Parents
for Educational and Religious
Liberty in Schools, said they welcomed a dialogue with the Regents to show them the “beauty
and success” of their schools.
“The Regents can’t get an accurate picture of our yeshivas
by speaking to a handful of disaffected graduates, just as the
public schools can’t be judged
by their most vocal critics,” he
said by email.
YANA PASKOVA FOR THE WALL STREET JOURNAL
no
New York Gov. Andrew
Cuomo unveiled an $11.5 million plan on Sunday that aims
to curtail recruitment of new
gang members to MS-13 on
Long Island.
The proposal, part of the
governor’s 2018 agenda, focuses on social and education
programs for at-risk youth in
Suffolk County.
“The key to our comprehensive plan…is to target gang
activity by attacking the root
cause—youth recruitment—
through programs and outreach to protect vulnerable
students from being preyed
on,” Mr. Cuomo said.
MS-13, short for Mara Salvatrucha, is an international
gang that has had a presence
for several years on Long Island where there is a large
population of immigrants
from El Salvador, Honduras
and Nicaragua. Law-enforcement officials say MS-13 is re-
n-
BY MELANIE GRAYCE WEST
A police officer patrolled a tunnel near the Port Authority Bus
Terminal last Tuesday, a day after a bombing in the area.
sponsible for at least 27 murders in Suffolk County since
2013.
Earlier this month, five suspected MS-13 gang members
and associates, all teenagers,
were arrested as they tried to
abduct a boy from a rival
gang, Suffolk County police
said. Three of the suspects are
unaccompanied minors from
El Salvador, police said.
The governor’s proposal allocates $5 million to job and
vocational training, and $2
million to help expand established after-school programs
in at-risk areas of Long Island.
About $1.5 million over
three years would go to gangprevention programs and $3
million would be used over
three years for case management for immigrant youth.
Mr. Cuomo also has proposed forming a team of state
troopers, investigators and a
supervisor to join local law
enforcement to identify gang
hot spots.
STEVE REMICH FOR THE WALL STREET JOURNAL
Cuomo Plan Targets Gang Recruitment
Educational Institute Oholei Torah, a yeshiva in Brooklyn.
Schumer Wants Bomb Technology in New York
BY MELANIE GRAYCE WEST
A screening technology that
can detect a suicide vest or
other explosive devices is being tested in the Los Angeles
transit system, and Sen. Chuck
Schumer on Sunday called for
the Transportation Security
Administration to bring that
technology to New York City.
The device, generally called
a standoff explosive-detection
unit, scans a person’s body to
spot potential threats, such as
metal, that block the natural
emissions coming from a person’s body, the TSA has said.
The detection equipment undergoing testing at a downtown
train station of the Los Angeles
County Metropolitan Transportation Authority is monitored
remotely and operated by transit employees, officials said.
In a statement Sunday, Mr.
Schumer urged the TSA to
bring these devices to New
York City’s airports, subways
and New York Penn Station.
“The fact that we have this
new, potentially life-saving technology at our fingertips—an
ability to detect concealed explosives worn by cowards looking to do us harm—demands
the federal government put
both the testing and the perfecting of this technology on the
fast-track,” Mr. Schumer said.
The TSA is exploring testing
options in other cities, a spokes-
man said Sunday. He couldn’t
say specifically what imaging
system is used in the device being tested in Los Angeles.
The Democratic senator’s
call comes after ISIS supporters circulated material online
that threatened more holiday
attacks, according to the SITE
Intelligence Group, which
monitors and tracks radical
groups online.
Last Monday, Akayed Ullah,
a 27-year-old Bangladeshi immigrant living in Brooklyn, detonated a homemade pipe bomb
strapped to his body in one of
the New York City’s busiest
transit hubs near the Port Authority Bus Terminal, authorities said. The device caused se-
rious injury to Mr. Ullah, and
minor injuries to three others.
Mr. Ullah told investigators
that he carried out the attack
for “Islamic State,” according
to a federal complaint.
A 2010 report from the U.S.
Government Accountability Office said the detection of a dangerous explosive relies on “a
temperature differential between a warmer human body
and the colder threat object next
to it.” Such technology has been
in development since 2004 with
partners including Amtrak and
NJ Transit, Mr. Schumer said.
The technology has been used at
the Super Bowl, he said. Standoff devices also have been tested
in PATH stations, the GAO noted.
Elegance is an attitude
Longines Symphonette
Kate Winslet
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A10B | Monday, December 18, 2017
NY
THE WALL STREET JOURNAL.
* *
GREATER NEW YORK
Tax Bill Is a Boon for Some in State
Met, City Ballet Tap
Outsiders on Probes
no
While law firms have long
conducted internal investigations for both companies and
nonprofits, doing so amid today’s wave of sexual-misconduct allegations raises new
questions about what to look
for, how far to dig and how to
handle conduct that isn’t illegal
but has a negative effect on
workplace culture, Mr. Peregrine said.
In the case of the Metropolitan Opera, its former music director and longtime star James
Levine has been accused of
sexual misconduct, including
abusing a teenager decades
ago. The Met has suspended its
relationship with the 74-yearold Mr. Levine, who has called
the allegations unfounded.
A Met spokesman said a law
firm would conduct a “full and
complete investigation” that
would take “as long as necessary.” Robert Cleary, a former
U.S. attorney for New Jersey
20%
Deduction on taxable income for
some pass-through businesses
Francis Greenburger, chief
executive of real-estate company Time Equities Inc., fears
that provisions increasing individual taxes in high-tax states
could prompt some wealthy
residents to leave the state, taking their businesses, jobs and
tax revenues with them. “I’d
rather have a healthy economy
than have a bad economy and
pay a lower tax,” Mr. Greenburger said.
Giants Make It Close, but Come Up Short Against Eagles
MISSTEP: Kamu Grugier-Hill of the Eagles blocked a punt from the Giants’ Brad Wing at MetLife Stadium Sunday. Philadelphia won 34-29.
MOM
Continued from page A10A
Torres said. “It’s done.”
“The hurricane, it take everything and made noise,” Manuel explained.
Ms. Torres endures daily
questions from her son about
the hurricane. He is mature
enough to understand the severity of the storm, and recalls
how he swept up branches and
distributed water to neighbors.
But there is a trauma in
surviving a hurricane, she
says, and in adjusting to a new
school, peers, home and routine. Teachers have said the
kindergartner sometimes is
“too playful” or distracted,
Ms. Torres said. Other times,
he has been afraid to eat lunch
in the bustling cafeteria and
he is terrified of some alarms.
Ms. Torres is worried about
her son falling behind in
school. On a particularly rough
day, he broke down in tears
and asked to return to Puerto
Rico. Still, there are things in
Ms. Torres’s favor that have
made the transition easier.
She and Manuel are bilingual, speaking Spanish and English. A large, extended family in
New York helps with child care,
and grandparents shower Manuel with attention and small
gifts. A cousin in East Harlem is
providing a room where they
live. She and her son are healthy
and they have health care.
Ms. Torres’s employers in
Puerto Rico, Advance Auto
Parts, helped her get a job
within the company at a location blocks from her parents’
home in Yonkers. She likes the
work pulling auto parts and
delivering them to local ga-
KHOLOOD EID FOR THE WALL STREET JOURNAL
The cost can range
from thousands of
dollars to, in some
cases, millions.
For commercial property
owners, the final bill presents a
bigger victory than many expected.
In the previous Senate version of the bill, high-income
partners in private real estate
partnerships were limited from
taking advantage of the passthrough deduction with a restriction based on the wages
the business paid. The final bill
added another formula that
uses the acquisition of a depreciable property, such as an office building, in calculating how
much income qualifies for the
deduction, said Mr. Rosenthal.
That helps property owners
who don’t necessarily have
many employees.
Some developers were
buoyed by the overall tax plan
and, more specifically, measures
they say could spur growth for
businesses that lease commercial properties and higher
wages to offset the sting of
higher individual taxes some
would face.
The provision allowing for
businesses to fully expense certain investments immediately
rather than deducting them over
time could make it easier for
companies to consider expanding offices, said Mr. Witkoff.
co Fo
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Two of New York City’s major cultural institutions have
hired outside law firms to conduct internal investigations after sexual-harassment allegations were lodged against
powerful figures at their organizations.
For the Metropolitan Opera
and the New York City Ballet,
hiring these investigators bolsters public accountability, protects an institution’s reputation
and evaluates whether laws
were broken or board duties
breached, legal experts say.
“This is a brave new world
in terms of pursuing those investigations,” said Michael Peregrine, a corporate-governance
lawyer at McDermott Will &
Emery in Chicago.
and southern Illinois who
works at law firm Proskauer
Rose, is leading the probe, the
spokesman said.
The New York City Ballet
said it and the School of American Ballet “immediately engaged an experienced independent law firm to launch a
comprehensive inquiry” due to
an anonymous letter containing sexual-harassment allegations about Peter Martins, its
71-year-old ballet master-inchief, who also teaches at the
company’s school. Attorney
Barbara Hoey, of firm Kelley
Drye, is leading the investigation, a spokeswoman for the
law firm said.
Mr. Martins, who couldn’t
be reached, and hasn’t previously commented on the allegations, has taken a leave of
absence from the company.
In a typical investigation,
lawyers review documents
such as emails and human-resource files and conduct interviews. When reported incidents
occurred decades ago, investigators looked for documents or
multiple witnesses to substantiate claims, said Nancy Kestenbaum, a lawyer at Covington & Burling who has
conducted such investigations.
“You can be left with situations where you believe misconduct took place but you
have insufficient evidence to
make findings,” she said.
Investigations aren’t cheap.
Lawyers say the cost can range
from thousands of dollars to, in
some cases, millions.
Some liability-insurance carriers have expanded their policies to cover such investigations, although the amount of
money allotted usually is
capped, said Kevin LaCroix, an
attorney who advises companies on directors and officers
insurance.
Budget aside, such probes
can lead to workplace tension,
as internal communications are
laid bare and everyday conduct
comes under scrutiny. “It’s a
horrible thing to be a part of,”
said Mr. Peregrine, the Chicago
lawyer.
n-
BY CORINNE RAMEY
where to locate employees and
their inclination to put them in
major central business districts
such as New York City, said
Jonathan Mechanic, a partner
at law firm Fried, Frank, Harris,
Shriver & Jacobson LLP.
“While I am not suggesting
a mass exodus, this impacts
how they allocate people to
major central business districts in gateway cities,” Mr.
Mechanic said.
BILL KOSTROUN/ASSOCIATED PRESS
Peter Martins, left, has taken a leave from the New York City Ballet.
The Met has cut ties with former music director James Levine, right.
The final Republican tax bill
coming up for a vote this week
promises to hit some high-income New York
PROPERTY area taxpayers
hard. But commercial real estate owners have reason to
cheer.
The bill, which includes deep
tax cuts for corporations, reduces the tax rate and provides
a steep deduction for some
businesses structured as partnerships, limited-liability companies and other so-called passthrough companies, which is
how most real estate businesses
are set up.
In fact, real estate businesses
appeared to fare better than
other pass-through businesses,
which pay taxes through individual returns. Not only does
the proposal drop the top individual marginal tax rate, but
the plan also gives a 20% deduction on taxable income to
pass-through businesses owned
by individuals making less than
$157,500 and joint filers making
less than $315,000.
In addition, the bill gives
some owners of pass-through
companies who exceed those
income levels another method
of qualifying for that deduction
that benefits private real estate
partnerships with few employees and large real estate holdings, tax lawyers noted.
“If enacted, the commercial
real-estate industry will have
hit the jackpot,” said Steven M.
Rosenthal, a senior fellow at
the Urban-Brookings Tax Policy
Center, a joint venture of the
Urban Institute and the Brookings Institution.
The tax package’s main goal
is to provide incentives for
businesses to move away from
the mentality of “preservation
of capital” to growth, said New
York developer Steve Witkoff.
Some developers worried
that the tax bill’s broader
changes, such as residents losing the ability to fully deduct
state and local taxes, could
weigh on the region’s economy.
The final version caps the deduction, which can run well into
the tens of thousands of dollars
for high earners, at $10,000.
The standard deduction, used
by people who don’t itemize
their tax returns, almost doubles under the tax bill, however.
Higher federal tax bills for
some workers likely will weigh
on companies’ decisions of
ly
.
L-R: EVAN AGOSTINI/AP; BEN GABBE/GETTY IMAGES
BY KEIKO MORRIS
Jessica Torres’s employer in Puerto Rico, Advance Auto Parts,
helped her get a job within the company at a New York location.
rages. Her son’s school isn’t
far from her job.
Every night, Ms. Torres
says she jots down in her journal a list of “gratitudes” which
include: Living one more day,
her son’s education, a roof
over her head and a job.
Still, Ms. Torres will take a
day to “cry it out completely,”
she says. She isn’t sure when
she will resume her studies in
cinematography. She worries
about leaning too much on
family. The cost of a small studio apartment near her parents in Yonkers, roughly
$1,200, is beyond her means.
New York City Mayor Bill
de Blasio in October discouraged evacuees from coming to
the city unless they had family, citing the lack of available
housing. The city would only
be able to provide health care
and educational support, he
said at the time.
Ms. Torres remains determined. “The reason why I’m
here, my son is my priority
100%,” she said.
GREATER NEW YORK WATCH
NEW YORK CITY
Four People Dead
In Spate of Shootings
Four people have been killed
in separate shooting incidents
in New York City in the past
RADIOMIR 1940
3 D AYS G M T P O W E R R E S E R V E A U TO M AT I C
ACC I A I O - 4 5 M M
( R E F. 6 5 8 )
AMERICANA MANHASSET . TEL. 516 627 7475
EAST HAMPTON . TEL. 631 329 3939
CORRECTIONS AMPLIFICATIONS
A photo that ran with an
article Friday about Broadway
producer Ken Davenport
showed a scene from the show
“Once on This Island.” The
caption incorrectly said it was
a scene from “Godspell.”
WESTFIELD AT WORLD TRADE CENTER . TEL. 212 381 9455
Readers can alert The Wall Street
Journal to any errors in news articles
by emailing wsjcontact@wsj.com or
by calling 888-410-2667.
several days.
Police responding to
Patchen Avenue in Brooklyn for
a 911 call around 10 p.m. on
Friday night found a 24-year
old man who had been shot
several times in the leg and
groin.
Around 12:30 a.m. Saturday,
police responded to a report of
an assault at West 109th
Street and Columbus Avenue,
and found Damian Ramirez, 48,
of New Milford, N.J., with gunshots to the chest.
Also in Brooklyn, police
found John Barnes, 32, with a
gunshot wound to the head
around 1:40 a.m.
Separately, police found Mohale Ralekhetho, 39, in his car
on a Queens street around
4:30 a.m. with a gunshot
wound to the neck.
No arrests have been made.
—Associated Press
NEWARK
NEW JERSEY
Booker Gets More
Over 400 Bears Killed
Security After Threat In Extended Hunt
The mayor of Newark says
the city is helping to provide extra security following a threat on
the life of U.S. Sen. Cory Booker.
Mayor Ras Baraka said Newark police were notified by U.S.
Capitol police about the threat
against Mr. Booker, formerly
mayor of Newark, and his family.
Members of the police division’s executive protection unit
have been assigned to provide
security at the senator’s home in
Newark.
Mr. Baraka said city police are
working with Capitol police to
ensure that the senator “is able
to carry out his duties.” He said
the security detail will have no
impact on police services.
—Associated Press
A total of 407 bears were
killed during New Jersey’s extended bear hunt, which
ended Saturday, according to
state environmental officials.
This year’s 16-day hunt was
the longest of the 10 hunts
held since 2003, when the
state ended a three-decade
moratorium on bear hunting.
A record 636 black bears
were killed during the 2016
hunt.
Gov.-elect Phil Murphy, a
Democrat, who takes office
next month, has said he
would halt the hunt pending
research into other methods
for managing the state’s bear
population.
—Associated Press
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THE WALL STREET JOURNAL.
Monday, December 18, 2017 | A11
LIFE&ARTS
COMEDY SPECIALS
Netflix’s Vinyl Plan
For the Grammys
ly
.
ing platforms. This year, 176 comedy albums have been released so
far, according to Nielsen Music,
ranging from a $400 box set from
Weird Al Yankovic to a raunchy release by an internet star who records under the name Pink Guy.
Last year there were 178 comedy
releases, up from from 123 in 2015.
Few comedy fans noticed when
Netflix released 12 of its comedy
specials on vinyl. Mat Milinkovich,
a 39-year-old foster-home coordinator in Duluth, Minn., stumbled
on the Amazon listing for a record
compiling both of Mr. Chappelle’s
Netflix comedy specials. He immediately ordered a copy of the fourLP set for $38, picturing it as a
nice addition to his collection of
some 2,000 LPs.
Knowing that vinyl releases are
often given deluxe treatment, with
lavish cover art and liner notes,
Mr. Milinkovich was surprised to
receive his Chappelle album packaged only in plain white paper
sleeves. “This is supposed to be an
art piece, but there’s no art,” he
says, adding that the records
themselves feel flimsy. “They just
wobble in my hand.”
He ordered a replacement copy
but it, too, arrived without a cover.
Netflix worked with a company
called Comedy Dynamics, an established producer of comedy specials, to make and distribute the
vinyl releases.
Comedy Dynamics says the thin,
cover-less records were test copies
produced before artwork was complete and “should not have gone to
market.” Indeed, Grammy-nominated Seinfeld and Silverman LPs
purchased by The Wall Street
Journal had records of standard
thickness and covers with colorful
art and Netflix catalog numbers.
Comedy Dynamics says fewer
than 10 test copies of each title
were produced, meaning that Netflix may have inadvertently contributed to an additional genre of
vinyl: collector’s items.
NETFLIX (4)
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nated the comedy album
category for the first
time.
Unlike the other limited Netflix album releases, Mr. Gaffigan’s
special, “Cinco,” got a
broad rollout on digital,
CD and vinyl formats.
The fifth Grammy nod
went to Kevin Hart, who
was nominated for
“What Now?”—a recording from a comedy film
released in theaters.
The Recording Academy confirms the Netflix
submissions adhered to
Grammy guidelines, including the dictate that
“recordings must be
commercially released in
general distribution in
the United States.”
Releasing vinyl in token
amounts to qualify for Grammys
was once a strategy used by some
musicians who streamed their music exclusively online. Then, last
year, the Recording Academy
changed its rules to allow streaming-only releases to be eligible for
Grammys. (Streaming Netflix videos wouldn’t be included under
no
AFTER MAKING INROADS at
the Emmys and Oscars, Netflix
broke into the Grammy Awards
this year. Of the five nominees for
best comedy album, four—Dave
Chappelle, Jim Gaffigan, Jerry
Seinfeld, and Sarah Silverman—
were nominated for Netflix shows.
To make sure they could qualify
for the Grammy, Netflix used a
surprising tool for a streaming
video company—vinyl records.
Netflix submitted a dozen of its
original stand-up comedy specials to
compete as comedy albums. However, the majority of these entrants
didn’t get a conventional album release. The live comedy sets, including performances by Marc Maron,
Trevor Noah and Amy Schumer,
aren’t available on CD or on streaming music sites such as Spotify.
Instead, Netflix released audio
versions of its video specials on vinyl only. The primary purpose was
to qualify for Grammy nominations.
Withholding the comedy specials
from other streaming sites also
helped the company maintain the
exclusivity of its content. A side
benefit: Vinyl records are less susceptible to pirating than CDs.
The company says “all Grammy
submission guidelines were followed and all of our specials are
also available for streaming on
Netflix.”
Netflix didn’t announce the records’ release, and they’re being
sold only through Amazon in small
batches. They came out on Sept. 29,
the day before the Grammy eligibility period ended. Early shipments
of some, including recordings of
comedy superstars Dave Chappelle
and Tracy Morgan, emerged without covers or track listings.
The company’s strategy for getting its big guns in the game
worked. When Grammy nominations were announced recently,
Netflix stand-up specials domi-
n-
BY JOHN JURGENSEN
Netflix snagged four
of five best comedy
album nominations,
from left: Jerry
Seinfeld, Jim
Gaffigan and Sarah
Silverman, and Dave
Chappelle, below.
that rule change, hence the company’s vinyl drop.)
The Academy says there is no
rule specifying how many copies
of a release must be available for
sale. Netflix says additional copies
of some records are being pressed
now, but declined to specify how
many were originally printed.
More than just an unlikely inter-
section of new and oldschool media, Netflix’s
quiet foray into vinyl is
an example of how the
streaming media company has roiled the comedy business. In recent
years, Netflix has released a steady barrage
of stand-up comedy specials and recruited the
industry’s biggest stars.
Mr. Seinfeld, for example, brought his interview series “Comedians
In Cars Getting Coffee”
to Netflix as part of a
deal that also included
two video stand-up specials. The first of them,
“Jerry Before Seinfeld,”
premiered in September
and, in vinyl form,
earned the comedian his
third Grammy nomination.
Netflix’s power play has put the
spotlight on stand-up comedy
video. However, the comedy album
genre—once a vehicle for hits by
Bob Newhart, Cheech & Chong and
more—has also gotten a new life,
thanks to the way people are listening to stand-up comedians on
Spotify, Pandora and other stream-
TELEVISION
‘AGNELLI’: ITALY’S
COMPLICATED TYCOON
FROM LEFT: HBO; THE LIFE IMAGES COLLECTION/GETTY IMAGES
BY BRENDA CRONIN
Agnelli’s appetite for women and danger would be considered corporate liabilities today.
HE JUMPS OUT OF HELICOPTERS, goes
naked on his yacht in the Mediterranean and
is a James Bond-level Casanova. Would you
want this man running your company?
Gianni Agnelli was a restless, seductive
Italian aristocrat and industrialist. For three
decades, starting in the 1960s, he reigned
over Fiat, the manufacturing and auto giant
founded by his grandfather in 1899 in Turin.
“Agnelli,” a documentary premiering Dec.
18 on HBO, remembers Fiat’s charismatic
leader and his colorful life. It also reflects
how the mores for the corporate elite have
changed since his heyday.
In his native Italy, Agnelli’s rakish reputation added to his mystique. At his death in
2003, at age 81, flags across the country flew
at half mast. But the HBO documentary arrives in very different era, one in which public
figures face more intense scrutiny, sparked in
part by sexual-harassment allegations against
businessmen, entertainers, politicians and
others. Taki Theodoracopulos, a friend of Agnelli, says the Fiat chairman and president
“never forced himself on any woman.”
“I think it was a different time in terms of
the paparazzi and the press,” with some of
Agnelli’s escapades kept out of the spotlight,
says Graydon Carter, the documentary’s executive producer. By contrast, “today, everything’s out in the open.”
Agnelli may have had more leeway than
other executives, Mr. Carter says, because his
family was Fiat’s majority owner. If he were
running a major company now, he “might
have had a little bit of difficulty in these days.
He would have to tone it down,” Mr. Carter
Please see AGNELLI page A13
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 18, 2017
LIFE & ARTS
WHAT’S YOUR WORKOUT? | By Jen Murphy
AMANDA EMMES FOR THE WALL STREET JOURNAL
Flexing
the Mind,
Diving Deep
eran divers who practice a single
target dive in the ocean, Mr. Chambers performs many repetitions of a
drill. Instead of diving to 200 feet
once, he may dive to 100 feet 10
times, focusing on his entry, performing the first few strokes as
quickly as possible, and trying to
minimize the number of strokes.
This is the first year he’s added
strength and flexibility to his training. “In the gym, I avoid musclebuilding exercises like the bench
press,” he says. “More muscle mass
requires more oxygen.” He focuses
on strengthening the back and abdominals, both key to an efficient
dolphin kick and no fins stroke, as
well as small stabilizing muscles
around the shoulders and back to
help him swim efficiently with his
arms overhead. “That position is
challenging with limited shoulder
flexibility,” he says.
One of the hardest parts of training, he says, is recovery. “You’re
breaking down your body in a different way from running a marathon,” he says. “After two deep
dives, you need to be lazy to rebuild
your red blood cells. I have to force
myself to relax and watch movies.”
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The Diet
chest and ears.
Mr. Chambers, who also teaches
freedive courses at home on the
Kona coast of the Big Island, believes anyone can learn to hold
their breath. The benefits, he says,
translate to other sports, like surfing and rowing, and even day-today life when we need to stay calm
under pressure. “Freediving is like
meditation,” he says. “We focus so
much on working the physical body
we forget to work our mind.”
The Workout
n-
“There is a notion that the source
of our secret powers, the mammalian dive reflex, is strengthened by
frequent stimulation,” he says, referring to the natural physiological
no
MOST ATHLETES embrace the
Olympic motto “faster, higher, stronger.” Kurt Chambers used to be one
of them. He spent 10 years competing in marathons and Olympic-distance triathlons. Looking for a new
challenge, he turned to freediving
and adopted the philosophy “slower,
deeper, calmer.” Holding your
breath “requires a level of fortitude
I’ve never had to muster,” he says.
Mr. Chambers, now 36 years old,
grew up in Texas. In 2003, he
moved to Hawaii to attend graduate
school and began dabbling in
spearfishing, which required him to
hold his breath underwater for sustained periods. “I didn’t display any
special talent early on,” he says. Intrigued by the idea of diving
deeper, he signed up for a freedive
course and educated himself on the
science of breath-hold diving.
Five years later, he started competing. In May 2016, he set two U.S.
records at the Caribbean Cup in
Roatán, Honduras. In the constant
weight discipline, where divers are
aided by the use of fins, Mr. Chambers dove to a depth of 331 feet in
just under 3 minutes. In the free
immersion discipline, which doesn’t
allow fins but does allow divers to
pull themselves down by a guide
rope, he reached 308 feet. His personal record for holding his breath
underwater without swimming is 7
minutes, 18 seconds.
“All humans have an inherent
mental reflex to breathe,” he says.
“Advanced divers learn not to ignore that urge, but to tolerate it
amidst discomfort.” He attributes
the mental fortitude he developed
finishing brutal track workouts,
masters swim workouts and cycling
hill repeats for giving him an edge
in negotiating the intense discomfort, which includes pressure in the
ly
.
Freediver Kurt
Chambers, left, lives in
Hawaii, where he works
on repetitive surfacing
exercises, below, and
incorporates long-blade
fins, right, into his
training regimen.
reaction that occurs when mammals are submerged in water. When
this reflex kicks in, the heart slows,
peripheral blood vessels constrict
so that more blood reaches the
brain and vital organs and the
spleen contracts to release more
red blood cells. These reactions, he
explains, help to reduce a diver’s
consumption of oxygen while continuing to provide sufficient quantities of oxygen to the vital organs. “I
try to exercise that reflex every day
in the water,” he says.
Mr. Chambers alternates between
ocean and pool. “Supplemental
tools, such as monofins, assist
freedivers so much that a thorough
understanding of swimming technique and muscle patterns isn’t even
required to be competitive,” he says.
“Many professional freedivers have
technique so poor it would make a
high school swimmer cringe.”
Technique and strength work are
key to his routine. A pool workout
might include 10 reps of 100 yards
going every 2 minutes and 30 seconds. Within each 100, he swims
the first 50 yards entirely underwater in the “no-fins” discipline, basically an underwater breaststroke.
He’ll then surface, take a single
breath, and continue with another
50 yards on the surface breathing.
“That second part is like how a
swimmer feels when he takes the
hand paddles off and resumes
swimming without the added resistance,” he says. Unlike many vet-
At a freedive camp, Mr. Chambers
was roommates with William Trubridge and Ken Kiriyama, two top
freedivers who are both vegetarians. “I had to live with them for a
week and thought I’d be a jerk to
stock our fridge with meat,” he
says. He adopted their diet and performed well. A few months later he
met his girlfriend, a dedicated vegetarian. He’s been vegan for nearly
three years now. “We don’t eat stereotypical rabbit food,” he says.
For breakfast he makes oatmeal
with a plant-based milk. Lunch is a
sandwich of sliced cucumbers, onion, tomato, avocado and vegan
mayo. “Mexican food is extremely
adaptable to being vegan,” he says.
“We make black bean or tofu tacos
for dinner a couple nights a week.
The Gear & Cost
Mr. Chambers recommends a mask
and high resistance long-blade fins.
“You get a lot colder than expected
underwater, even in Hawaii,” he
says. “When you swim, you create
heat, but breath-holding you lose
heat, so you want to invest in a
good, buoyant wetsuit,” he says. He
trains in a 3mm wetsuit by Merman
Custom Gear. He also suggests a
snorkel, weight belt and nose clips.
His membership at Pacific Island
Fitness is $70 a month. He uses
free public pools.
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THE WALL STREET JOURNAL.
Monday, December 18, 2017 | A13
LIFE & ARTS
EXHIBITION REVIEW
Beauty’s Cup
Overflows
(and by implication, Habsburg
rule) in a favorable light. Suetonius’ accounts of imperial excesses
and outright brutality (which enliven his chapters on such notorious figures as Caligula, Nero and
Galba) were ignored.
Nevertheless, in passing down
through successive owners, the
component statuettes, dishes and
bases (all of which screw together)
were disassembled, misidentified,
incorrectly reassembled and ultimately separated. Moreover, during
the 19th century, the silver tazze
were not only gilded, but a Parisian
dealer fitted six of them with new
and more elaborate feet in Neo-Re-
CASA-MUSEU MEDEIROS E ALMEIDA, LISBON (2)
naissance taste.
Except during a period
of study at the Met in 2014,
the complete set has not been
gathered together since the
mid-19th century, when it was disassembled and dispersed. In this
first public display in over 150
years, the Met’s exhibition now reunites the set. Moreover, for this
show each Caesar figure has been
temporarily reunited with its original related dish (eventually each
tazza will be returned to its owner
in the historic mismatching).
In the gallery, each tazza is in
its own vitrine, allowing it to be
intimately examined from four
sides, with the relevant passage
from Suetonius presented below
each narrative scene. Among the
splendid ancillary displays are ancient coins and important Renaissance engravings that the silversmiths may have used as visual
sources for their Caesarean figures
and scenic compositions. In addition, two wall-mounted videos featuring high-resolution photography
and written narration provide detailed bird’s-eye views of the Nero
View of the Caligula dish from the
Aldobrandini Tazze, above, and the
Galba figure on the Caligula dish, left
and Vitellius tazze and help visitors understand the iconography.
Exemplifying the highest standard of Renaissance silversmithing,
each Caesar figure is meticulously
cast and finished—visitors should
examine the subtle embellishment
of the Caesars’ costumes, especially
their detachable capes, which are
separately cast and fastened with
tiny screws that appear to suggest
shoulder rosettes. The scenes on
each dish are magnificent examples
of chasing, a supreme art of silversmithing, in which the surface is
worked—but not engraved or
carved—with a variety of steel
tools, punches and chasing hammers to form a low-relief sculptural
design. Every narrative scene, with
its figures, animals, vehicles and
complex architectural backdrops,
was painstakingly
modeled on the flat silver surface using these
simple hand tools. And in our
own era of die-stamped reproductions and 3-D printing, one cannot
but marvel at such exemplary hand
craftsmanship by these unknown
virtuosos.
Over the centuries, similar luxurious objects were routinely
melted down. Yet these tazze escaped the crucible. The Met’s show
amply illustrates why successive
generations understood that their
artistic value transcended their
worth as mere commodities.
And for those who wish to investigate the mystery further, the
accompanying book, edited by Ms.
Siemon, is a must-read, featuring
detailed photography and fascinating essays by leading scholars.
ly
.
New York
THE ITALIAN TERM tazza
(TAHT-zah) refers to a relatively
shallow cup or dish raised on a tall
foot. Inspired by ancient designs,
hand-made silver tazze (plural)
were used by Renaissance nobility
as sumptuous table ornaments or
display pieces. A matched set of
12, known as the “Aldobrandini
Tazze,” are among the most dazzling works of 16th-century silversmithing.
Nineteenth-century scholars
gave them their name because six
of the set bear the Aldobrandini
family crest, and the most
recent research attests to
ownership by the powerful
and wealthy arts patron
Cardinal Pietro Aldobrandini
(1571-1621), nephew of Pope Clement VIII (born Ippolito Aldobrandini). No one really knows why or
precisely when they were created,
or even by whom—though current
thinking leans toward a workshop
of silversmiths in the Habsburgruled Netherlands.
Shrouded in their alluring veil
of obscurity, these masterpieces
share the spotlight in the Met
Fifth Avenue’s new exhibition “The
Silver Caesars: A Renaissance Mystery.” Each of the Aldobrandini
tazze is topped with a finely cast
silver statue of a Roman emperor—from Julius Caesar to
Domitian—inspired by the colorful
biographies in the ancient classic
“The Lives of the Twelve Caesars,”
by the historian Suetonius.
Complementing the Caesar statues, each dish is opulently embellished with four Suetonian scenes
illustrating the respective ruler’s
life, and the scenes reflect so sophisticated a knowledge of Suetonius’ book that the show’s organizer, Julia Siemon, assistant
research curator in the Met’s Department of European Sculpture
and Decorative Arts, firmly believes that the group of silversmiths who created these works
collaborated with a learned antiquarian scholar in selecting and
planning the specific episodes. As
such an elaborate set was possibly
intended as a royal or ambassadorial gift, the scenes on each plate
were selected to show the Caesars
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BY BARRYMORE LAURENCE
SCHERER
AGNELLI
Mr. Scherer writes about music
and the fine arts for the Journal.
GLOBE PHOTOS/ZUMA PRESS
no
n-
to be dismayed by that,” journalist Gianni Riotta says in the documentary.
Mr. Theodoracopulos recalls how as a very
young man, he was dazzled by Agnelli, who
Continued from page A11
took him under his wing as they prowled the
says. “But he wouldn’t have to tone down the
casinos and clubs of the Côte d’Azur in the
charm and the charisma and the style.”
1950s. Cocaine was on the scene, Mr. TheodoThe documentary follows Agnelli from his
racopulos says, and Agnelli took part but
service in World War II and his coming-of-age “never showed it—he was very careful with
as a jet-setting playboy and unapologetic one- the drugs.” In an interview published in 1991
percenter to his rise as a global statesman.
in Vanity Fair, Agnelli said he hadn’t been
Many considered him Italy’s uncrowned sovtempted by cocaine.
ereign, the steward of the country’s economic
The industrialist’s relatives cooperated
renaissance from the postwar period through
with the documentary, Mr. Hooker says, sitthe turbulent 1970s.
ting for on-camera interviews and opening up
Between 1966 and 1996, Agnelli led the
photo archives and family albums. “I told the
Fiat conglomerate, which included Ferrari
family: ‘We’re going to talk about women,
cars and Juventus, Turin’s soccer team. “He
we’re going to talk about drugs.’ And they
was involved with everything Italians love:
were like, ‘That’s all water under the
sex, cars and sports,” his niece, Isabel Ratbridge,’ ” the director says.
tazzi, says in the film.
Agnelli’s 1950s-era high jinks would be unthinkable for a tycoon today, says Mr. Theodoracopulos, because “you’d
lose your job!” Back then,
men who inherited family
businesses had personalities, he says, while today,
many executives work
their way up through the
ranks. Climbing the corporate ladder makes one
“develop a different sort
of personality,” Mr. Theodoracopulos says, “You
have to be nice to everybody. You have to be
bland and to blend in.”
A fitful sleeper, Agnelli
rose at dawn to have tea
and muesli and call
Agnelli’s 1950s-era high jinks would be unthinkable for a CEO today.
friends around the world,
peppering them for gosAgnelli, who trained as a lawyer, never
sip, Mr. Hooker says. He stage-managed every
professed to have his grandfather’s business
detail of his life, from the cut of his suits to
acumen. Instead, director Nick Hooker says,
dinner menus.
he joked that if he ran the newspaper stand
Agnelli’s vision—not his exquisite taste or
outside Fiat’s headquarters in Turin, it would
daring—distinguished him from other leaders,
be bankrupt in a day. Even so, deploying insays Robert Dilenschneider, founder of the
stinct and charm, he shepherded the comDilenschneider Group, a New York-based company, becoming an international symbol of
munications firm. “I have met hundreds of
Italian success.
CEOs in my career, and I have worked for
A collector of houses, art and ravishing
dozens,” he says, but none had Agnelli’s gift
women, including his wife, Marella, he
for inspiring others and raising employees’
dressed impeccably and lived recklessly. He
creativity and performance.
cheated death repeatedly, skiing despite shat“The climate today doesn’t allow for a guy
tering a leg in a car accident. He tore around
like Agnelli,” Mr. Dilenschneider says. “It’s too
Turin in a souped-up Fiat with a Ferrari enfocused on performance...CEOs focus on doing
gine. In the film, former colleagues and exthis. It’s hard for them to get out of their
girlfriends shudder at the memory of Agskin.
nelli’s driving, how he dodged pileups by
“I think Agnelli wanted to live,” he adds. “I
speeding into oncoming traffic. “I think he
think most CEOs today, they want to survive.
felt very alive when there was the chance
It’s a very different mind-set.”
that he might get killed,” Mr. Hooker says.
Business leaders now are too focused on
That included having his helicopter pilot
the bottom line to have fun, says fashion declimb high above a friend’s villa so he could
signer Jackie Rogers, who caught the eye of a
splash down into the swimming pool.
young Agnelli in the South of France. “There’s
Before taking the helm at Fiat, Agnelli
nobody around like him anymore,” she says in
spent time on the French Riviera, sailing and
the film. “Because they’re so involved with
romancing women such as Swedish actress
making money, they’re boring as hell.... GiAnita Ekberg. “He had been a playboy when
anni was funny and exciting. He was incredihe was young, but no decent Italian is going
bly alive.”
The Silver Caesars:
A Renaissance Mystery
The Met Fifth Avenue, through
March 11, 2018
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A14 | Monday, December 18, 2017
THE WALL STREET JOURNAL.
* ****
SPORTS
NFL
Bowl games are content
—and every television
network covets content.
PANTHERS
PUT UP
FOR SALE
It’s Zombie Bowl Season
I call them Zombie Bowls because they don’t really serve a purpose anymore. The college football
playoff has effectively killed off the
big bowls at the top (they still exist,
but come on), making the couple of
dozen or so satellite bowls in December less relevant than ever.
In other words: Zombie Bowls.
Weather
The holidays are here—
and so are the
meaningless games with
ridiculous names.
This is the part where you scold
me, saying: Look, Jason, you snobby
dingbat—just because the Cheribundi Tart Cherry Boca Raton Bowl
has a funny name doesn’t mean it’s
not a meaningful experience for the
young men who are playing.
And that’s true. If I were a college kid, I’m sure I’d be psyched to
go to Boca Raton. I’d be psyched to
go to Boca Raton right now. Get out
of this frigid New York winter, and
walk around in my handsome dad
cargo shorts.
But that’s not why they play
these games. They play them for
TV. Networks like ESPN want the
programming.
In 21st century parlance, Zombie
Bowls are content. And every network covets content—especially the
live kind.
ESPN is under no illusion that 50
million people are going to watch
Seattle
P
d
Portland
ip
Winnipeg
50s
g
Eugene
no
d
Edmonton
Calgary
l
Helena
20s
Billings
i
Boise
0s
20s
10s
10s
30s
Ottawa
Bismarckk
50s
<0
0s
20s
30s
Montreal
40s
A g
Augusta
T
Toronto
A b ny
Albany
Boston
k
Milwaukee
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Detroit
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Chicago
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Salt
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60s
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Philadelphia
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Indianapolis
Sacramento
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DC
Washington
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an Francisco
San
Kansas
Charles
Charleston
C
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h
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Richmond
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St.. Louis
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San Diego
Atl
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Atlanta
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Tucson
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Birmingham
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Dallas
60s
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Jackson
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Austin
t
Houston
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Mobile
50s
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U.S. Forecasts
l d
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Tampa
80s
Miami
80s
70s
50s
60s
70s
80s
90s
100+
Rain
T-storms
Stationary
Snow
Showers
Flurries
70s
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.
Hi
54
83
47
68
45
26
49
62
57
40
61
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48
47
55
Today
Lo W
29 s
59 pc
38 c
44 s
40 c
20 sf
45 r
33 s
43 pc
28 pc
43 s
18 s
41 r
27 pc
42 pc
Tomorrow
Hi Lo W
51 26 s
83 61 pc
56 42 pc
68 43 s
52 30 c
41 29 c
51 36 r
63 45 pc
60 39 s
47 36 pc
59 49 s
48 19 s
49 37 r
43 22 s
61 47 pc
International
City
Amsterdam
Athens
Baghdad
Bangkok
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Berlin
Brussels
Buenos Aires
Dubai
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Edinburgh
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46
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73
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44
Today
Lo W
37 pc
44 c
44 pc
59 s
18 s
26 c
36 pc
59 s
62 s
42 pc
40 pc
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Hi Lo W
45 40 pc
55 43 pc
73 48 pc
79 59 pc
40 24 s
34 29 pc
42 38 pc
71 61 c
74 64 s
54 48 pc
52 46 pc
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
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37
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64 54 s
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61 58 r
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36 31 pc
4 “It’s beginning to 29 Mil. branch in
look a ___ like
the Dept. of
Christmas...”
Homeland
Security
5 Place for geese
15
16
17
30 Turkey sandwich
a-laying, say
18
19
20 21
spread
6 Otherwise
31 Mogul on a
7 Film’s Farrow
22
23
24
ski slope,
8 “Definite maybe”
25
26 27
28 29 30
essentially
or “open secret,”
32 Jacob’s twin
e.g.
31 32
33
34
36 90° north, for
9 Like many a
35
36
37
the North Pole
Christmas
39 Christmas tree
sweater
38
39
40
41 42
decoration
10 Barcelona bull
41 Basic belief
43
44
45
11 “White
42 Top card
Christmas”
46
47
48 49
weather
44 Maiden name
label
13 Alpine heroine
50 51 52
53 54
55
45 Petits ___ (small
14 “’Tis the ___ to
56
57 58
59
cakes)
be jolly...”
48 Really shine
16 Missouri River
60
61
62
49 Within walking
tributary
63
64
65
distance
21 Nog ingredient
50 Small change
23 Amer. currency
24 Ask to be excused 51 Popular cookie
STOCKING STUFFERS | By Harold Jones
52 Irritate
26 Holy Trinity
Across
33 “The Hunchback 55 Rose of Guns
53 Up to the task
member
N’
Roses
of
Notre-Dame”
1 Comet part
54 Strike out, in
27 Belly bulge
author
56 Port in the
5 Captain aboard
proofing
28 “Christmas
Keystone State
34 Launcher of
the Nautilus
58 Swabber’s tool
Oratorio”
Voyager
probes
57
“The
Name
of
the
9 Ens.’s superiors in
composer Camille 59 Assent in France
Rose” writer
35 2002 Winter
the 29-Down
Olympics host
Previous Puzzle’s Solution
60 “The Old Curiosity
12 Danish shoe
P O P E
A L A R M
J A R
nat.
Shop” girl
company with
E L U D E
R O G U E
U R I
36 Pretend
61 Classic Christmas
stores in many
G E N E R A T I O N X
D R S
N AM I N G S
G A K
presents
malls
37 Like some slick
Q I D
T O E
T OMM Y
roads
13 Corkscrew shape
62 Arles articles
U S E S O N
F O R C E
A S A P
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38 Sail supporter
14 Before long
63 Stocking stuffer
F E D E X
T I T
A F T E R
F I B R E
A L E C
E D N A
found in the long
15 Visual feature in 40 “Oh, you wish!”
E R N E S
T H E A S P
Across answers
Time, perhaps
41 Dancer’s fiery
MA Y A N
S R I
Y E S
H A T
D E S A L T S
64 Fencing sword
17 Continental coin
performance
I N D
J E R R Y Q U A R R Y
65 Destination for
18 Charged bit
43 Enact, as a law
G I A
A A L T O
P R I U S
H A D WR E A K
A B E L
many winter
19 Place
46 Denial in
The contest answer is SUE GRAFTON, PERIL and
vacations
Deutschland
20 Grazing area
WASTED. The grid’s long answers include the
Down
22 Trivial ornament 47 “Be right with
keyword from four titles in the author’s “alphabet
you...”
1
Lukewarm
24 Swampy spots
mysteries” book series: X, QUARRY, JUDGMENT
and DEADBEAT. In addition, clues to 12
50 Foundation
2 Sound from a
25 Descartes
symmetrically placed words include keywords:
garment
cold sufferer
observation
Innocent, Burglar, Yesterday, Zero, Malice, Corpse,
3 Attacker of
31 “Beauty and the 53 To be sung by
Vengeance, Homicide, Killer, Lawless, and the
accepted ideas
two, in music
Beast” beauty
unclued PERIL and WASTED. That leaves the
1
2
12
3
4
5
13
6
7
8
9
10
11
14
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
21 15 pc 32 26 sn
Atlanta
63 51 c
66 60 r
Austin
64 56 c
69 47 r
Baltimore
51 36 pc 59 42 pc
Boise
37 30 c
40 34 c
Boston
36 33 sf 46 34 c
Burlington
31 29 sf 43 30 sn
Charlotte
64 43 c
68 55 c
Chicago
48 40 pc 51 27 pc
Cleveland
45 39 c
51 30 c
Dallas
63 54 pc 63 49 r
Denver
57 30 c
56 31 s
Detroit
42 36 c
46 26 pc
Honolulu
83 68 pc 81 68 c
Houston
69 64 r
76 54 r
Indianapolis
51 41 c
56 32 s
Kansas City
56 37 s
54 32 s
Las Vegas
59 39 pc 62 37 s
Little Rock
63 49 c
63 50 r
Los Angeles
71 49 s
69 46 s
Miami
83 69 pc 83 69 s
Milwaukee
44 36 c
46 25 pc
Minneapolis
39 28 c
36 19 s
Nashville
59 45 c
61 50 r
New Orleans
74 64 r
76 65 c
New York City
44 38 c
53 38 pc
Oklahoma City
63 44 pc 62 40 sh
that could work. If IKEA gives us a
good price, we could change the
name to the The Wall Street Journal
Sports Section Discount Muffler
Kangaroo Jerky Two Days After
Christmas Bowl presented by IKEA.
Over time, of course, sponsors
will change. Companies go out of
business, or decide that sponsoring
a Zombie Bowl game makes no
sense. Even if the Journal stays on,
we will probably have to change our
name to things like The Wall Street
Journal Sports Section Organic
Chemical-Free Baby Wipes Two
Days After Christmas Bowl. Or the
The Wall Street Journal Sports Section Sparkling Apple Cider Compact
Socket Wrench Two Days After
Christmas Bowl.
I know none of this is as glamorous sounding as the Rose Bowl. Of
course, the Rose Bowl isn’t even
called the Rose Bowl anymore. This
year, its full name is the College
Football Playoff Semifinal at the
Rose Bowl Game Presented by
Northwestern Mutual.
I’m not kidding. If you’re a rose,
it’s enough to make you throw up.
But I do think a network will be
interested in televising The Wall
Street Journal Sports Section Discount Muffler Kangaroo Jerky Two
Days After Christmas Bowl.
And the players? Wow, will those
kids be excited when they open up
their goody bags with a print copy
of The Wall Street Journal, a discount muffler and a delicious bag of
Kangaroo Jerky.
After all, the college football season does eventually end. But Kangaroo Jerky lasts forever.
The WSJ Daily Crossword | Edited by Mike Shenk
Shown are today’s noon positions of weather systems and precipitation. Temperature bands are highs for the day.
V
Vancouver
the Bad Boy Mowers Gasparilla
Bowl between Temple and Florida
International. But they figure it’s
vaguely interesting enough to justify putting it on television—and as
long as something is on television,
it has meaning. Besides, those Zombie Bowls can be mildly entertaining, especially if the competing option is socializing at your
neighbor’s terrible cocktail party.
Think about it. Your choices are:
A. Standing in your neighbor’s
living room talking about the tax
reform plan with three boring people you don’t know.
B. Hiding in the den eating
cheese puffs and watching the Bad
Bowl Mowers Gasparilla Bowl.
See? Zombie Bowls do have a
purpose. They’re not important—
but every so often, you’ll be grateful
they exist. That’s why I think the
Zombie Bowls could live forever,
like true Zombies.
And it’s why I’m urging the
sports section at The Wall Street
Journal to get involved.
Why not lend our name to a
Zombie Bowl? We could share the
naming rights fees with a couple
of other sponsors. I already have a
name picked out: The Wall Street
Journal Sports Section Discount
Muffler Kangaroo Jerky Two Days
After Christmas Bowl.
Just rolls off the tongue, no? I
love it.
The Wall Street Journal Sports
Section Discount Muffler Kangaroo
Jerky Two Days After Christmas
Bowl doesn’t have a location yet. But
there’s an IKEA not far from me that
has a gigantic parking lot. I think
ly
.
I don’t need to ask
what you’re doing on
Tuesday night. I know
where you’ll be.
Like most everyone
in America, you—and your family
and friends—will be riveted to the
television, watching every second of
the 2017 Cheribundi Tart Cherry
Boca Raton Bowl.
Maybe you’ll actually be there
on Dec. 19, enjoying the Cheribundi Tart Cherry Boca Raton
Bowl live in person.
Then two days later, on Thursday
Dec. 21, it’s the Bad Boy Mowers
Gasparilla Bowl.
The Cheribundi Tart Cherry
Boca Raton Bowl—then the Bad
Boy Mowers Gasparilla Bowl—
within 48 hours?
That’s too much grand tradition,
college football. Take it easy on us!
I’m being a jerk, of course. I’m
under no illusion that you’re fired
up for the Cheribundi Tart Cherry
Boca Raton Bowl. Or the Bad Boy
Mowers Gasparilla Bowl. Or the
Frankin American Mortgage Music
City Bowl. Or the NOVA Home
Loans Arizona Bowl. Or the TaxSlayer Bowl.
Whoa, that is some ring on your
finger. Where’d you get it?
Me and my team won the 2017
TaxSlayer Bowl.
That’s a real name of an actual
thing that exists?
Yes it is.
The arrival of the holidays
doesn’t just mean shopping and
weird trays of cold cuts at the office
party—it also means it’s Ridiculously-Named Zombie Bowl Season.
co Fo
m rp
m e
er rs
ci on
al a
us l,
e
on
Panthers owner Jerry Richardson
COLLEGE FOOTBALL
n-
BOB LEVERONE/ASSOCIATED PRESS
Carolina Panthers owner Jerry
Richardson said Sunday he will
sell the team he founded, a move
that comes close on the heels of
the team’s announcement that it
was beginning an investigation
into Richardson’s alleged workplace misconduct.
The fast decision caps a whirlwind 72 hours for the 81-year-old
Richardson, the franchise’s owner
since its first season in 1995. On
Friday, the Panthers announced it
had hired a law firm to investigate
the team’s boss. Then Sunday, the
league said it was taking over the
investigation.
Also Sunday, Sports Illustrated
reported that at least four former
team employees have received financial settlements resulting from
Richardson’s conduct. One of those
incidents was for using a racial
slur at a black team scout. Three
involved sexual comments and
conduct directed toward women.
The Panthers said it cannot comment on the specific allegations
because “this matter is under an
ongoing legal review.”
In Richardson’s statement, he
said, “I believe that it is time to
turn the franchise over to new
ownership. I hope everyone in this
organization, both on and off the
field, will be firmly focused on just
one mission: to play and win the
Super Bowl.”
Richardson said he would not
entertain inquiries or begin the
sale process until after the season.
He is the first owner of a major
American sports franchise to face
this type of scrutiny since the
heightened spotlight on sexual harassment and workplace conduct
in recent months. In that vein, his
decision to sell the team could be
seen as a major relief for the NFL.
After the league investigated the
matter, commissioner Roger Goodell would have broad authority to
discipline Richardson under the
NFL’s personal conduct policy.
FOTOARENA/ZUMA PRESS
BY ANDREW BEATON
letters A, E, F, G, N, O, R, S, T and U, which can be
anagrammed into the author’s name.
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 18, 2017 | A15
OPINION
easy. Put another correct
prediction in the book for
me.
4. Bitcoin appreciation
will slow. The cryptocurrency is up around 1,700%
this year. Again in 2018?
Store canned goods if it
does. Cryptobulls claim bitcoin is a store of value, and
to handle the world economy, it must be valued in
the trillions. That’s a leap of
faith wider than the Grand
Canyon. Currencies were
once backed by gold but now
derive value from faith in
governments and their ability to tax citizens and boost
the economy. This became
evident during the 2009 financial crisis, when bank
bailouts in dollars didn’t crater the currency. Remember
Zimbabwe’s $100 trillion
note? I’ve calculated bitcoin
being worth no more than a
few hundred dollars. I’ll stick
with that.
5. No, 2018 will not be the
year of augmented reality.
Techies salivate over the facial-recognition sensors in
the iPhone X. But animoji
karaoke is just not that big
a deal. Augmented reality
will come of age when I can
go to Gettysburg, look
through glasses toward
Cemetery Ridge, and watch
Pickett’s Charge play out in
real time. Wake me when
that happens.
6. Donald Trump and
Vladimir Putin will still be in
power. The Russian will rig
the system, and the Russia
investigation won’t stop the
Trump train from rolling
over the resistance.
7. The best-performing
market in 2018 will be out of
Africa. No real insight here.
Some downtrodden market,
most likely in sub-Saharan
Africa, will come out of its
slumber and double in value.
Maybe Zimbabwe.
A dozen predictions
that have the benefit
of being inevitable
or nearly so.
8. Net-neutrality regulations will be repealed, customers will be happy, and
the internet won’t collapse.
George Orwell would chuckle
at neutrality proponents
who doublethink a free and
open internet through regulations. In reality, net neutrality comes free with competition
and
without
regulators. I hope the same
energy can be instead harnessed promoting fiber and
5G and any other competition-expanding technologies.
As soon as the regulations
go away, watch providers offer new discounted plans.
Free internet with Amazon
Prime?
9. China will experience financial indigestion. The International Monetary Fund is
nervous about China. So am
I. Property prices are inflated. Debt has become a
bad drug. I’ve heard of consumer-goods companies that
don’t pay their suppliers for
a year, but then offer them
financing so they can get
cash. They then sell that
supplier debt to the public—
the same customers that buy
the consumer goods. What
could go wrong? Even a
small glitch becomes a
disaster.
10. The U.S. economy will
do better than expected in
2018. Bit of a low hurdle
here. After years of Obamaburdened 2% growth, a
combo of regulatory reform
and corporate tax cuts will
unleash the animal spirits. I
can see GDP growth over 3%
each quarter in 2018, perhaps even surpassing the
naysayer 4% barrier. And it’s
exactly why interest rates
will rise—see prediction
No. 1.
11. The first disease will be
cured with Crispr technology.
Gene editing is very cool,
and Crispr tools will reshape
health care over time. But all
I need is one disease to be
cured. Heck, I’ll settle for canine flatulence or even colorblindness.
12. Two self-driving cars
will collide with each other.
It’s inevitable. Why not predict it?
There you have it. I’m already batting .500 and it’s
still 2017.
An Election Watershed in Chile
n-
Programme. Yet Chile is increasingly polarized thanks
to a public discourse dominated by the left.
Chile’s right has spent
more than three decades
building institutions and refining policies in law and economics to create wealth. It
imagined that the results of
its work would be enough to
build and sustain support.
But the socialists have been
busy too. They have spent
their time and money organizing factions and going to the
streets to denounce, as unjust,
a society in which some have
more than others. Organized
labor, especially in education,
has been central to this strategy. This campaign season—
including the strong showing
of hard-left candidate Beatriz
Sánchez in the first round—
shows how successful it has
been.
Some months ago Mr. Piñera was heavily favored to
win, in part because during his
first term as president from
2010 to 2014 Chile’s gross domestic product grew at an average annual rate of 5.3%.
Odds also were with him because of the record of Socialist
President Michelle Bachelet,
who has been in office since
2014 and currently heads the
New Majority—which includes
the Communist Party—that
was backing Mr. Guillier.
Ms. Bachelet is an avid admirer of the late Fidel Castro
and the Cuban military dictatorship. She has spent her
presidency working to dismantle Chile’s liberal economic model and using the
no
Chileans
voted on Sunday in a runoff presidential election
that was arthe
AMERICAS guably
nation’s most
By Mary
important
Anastasia
vote since the
O’Grady
1990 return to
democracy.
Center-right former President Sebastián Piñera, of the
“Let’s Go Chile” coalition, ran
on a platform to deepen market reforms and restore economic growth. Leftist Sen.
Alejandro Guillier, candidate
for the socialist “New Majority” coalition, promised to put
social justice and government
intervention in the economy
above individual liberty.
Ahead of the balloting Mr.
Piñera—who got 36.6% of the
vote in the first round against
Mr. Guillier’s 22.7%—was narrowly favored. But pollsters
said the race was too close to
call. In the end Mr. Piñera won
with some 54.5% of the vote;
Mr. Guillier admitted it was “a
tough defeat.” Yet the socialists gave Chileans who treasure freedom a scare. This
election season ought to be
seen as a shot across their
bow.
The failure of socialism in
South America—particularly
in Venezuela—is no secret.
Nor is the success of the
market economy in Chile,
where the percentage of the
population living in poverty
fell to 11.7% in 2015 from
68% in 1990, according to the
United Nations Development
bully pulpit to rail against
private initiative.
Growth has suffered. GDP
growth during her tenure, including the estimate for this
year, is expected to average a
paltry 1.8% annually. This
means that during her presidency Chile grew less than
the world average for the
first time in 23 years—with
the exception of 1999.
The center-right’s
Piñera coasts to
victory on a pledge
of market reform.
Her defenders blame soft
copper prices. But falling
commodity prices include oil,
which Chile imports. Low interest rates have also been a
mitigating factor.
In a Dec. 12 column in the
Chilean daily El Mercurio, Mr.
Piñera’s former finance minister Felipe Larraín pointed out
that the International Monetary Fund attributes one percentage point a year of the
slowdown in growth to the
end of the commodities boom.
When the Bachelet tenure is
compared with the Piñera tenure, noted Mr. Larrain, that
leaves “2.5 annual points [of
the loss] ‘made in Chile.’ ”
One problem is that Chile
is no longer a destination for
capital. By the end of 2017,
“investment will have fallen
. . . for four consecutive
years, the worst performance
of our country in at least half
a century, and this without
any external recession,” Mr.
Larraín observed. Productivity “will most likely complete
its fourth consecutive year of
decline in 2017.”
Job creation has been anemic and is now “concentrated
in self-employment (largely in
the street) and public jobs.”
Salaried jobs that come with
a contract and social security
are harder to come by.
It’s no coincidence that
growth, productivity and employment slumped as the
government raised taxes, increased spending, and passed
a labor reform that places a
heavy burden on hiring. The
World Bank’s ease-of-doingbusiness survey ranked Chile
37th in the world in 2013.
This year it came in at 57th.
Mr. Guillier promised to
continue Bachelet-nomics and
substantially increase the
role of government in pensions. He also promised to
push for a popular referendum to allow a rewrite of the
1980 constitution, which is
not within the existing legal
framework.
Low-income Chileans suffered the most from Ms.
Bachelet, which could be why
Mr. Piñera won in nine of the
country’s 10 poorest districts
in the first round.
Yet Mr. Piñera has a history of unwillingness to defend the morality of the market economy. This is why the
middle class is drifting left.
Now that he has another
chance, Chileans have to hope
he has learned his lesson.
Write to O’Grady@wsj.com.
My Husband Died, but I’m No Widow
By Pamela Jane Bell
honest, neither did I. But I
didn’t want a stranger on the
ecently I called my in- telephone to tell me what I
vestment company to was. Especially that I was a
make a withdrawal. The widow.
representative, who sounded
quite young, introduced himself as Matthew and reminded ‘Till death do us
me that we were on a re- part’ means both
corded line.
“Let me look up your ac- of us, doesn’t it?
count,” I recall him saying after the preliminaries. “I see
your husband passed away re“But I thought—” Matthew
cently. I’m sorry for your began.
loss.”
“Don’t worry about my
After I murmured some- marital status,” I interrupted.
thing noncommittal, he said “The IRS knows my husband
he would change my marital passed away, and there are no
status to widow. Something in tax implications for withme balked. “Don’t change my drawing money from a Roth
status,” I responded. “I’m not account.” The thought flashed
a widow.”
through my mind that our reThere was a puzzled silence corded conversation might
on the other end of the line. soon make an excellent train“I’m sorry,” said Matthew. ing tape: “How to Deal With
“But my records indicate your Crazy Widows.”
husband passed away.”
Unlike others who have
“He did,” I said, “but I’m survived their spouses, I did
not a widow.” Matthew mum- not change my marital status
bled something unintelligible. on Facebook when my husI knew he had no idea what band died. Whenever friends
I was talking about. To be posted condolences messages,
R
From Barry
To Donald
Just Right
By Lee Edwards
(ISI, 378 pages, $29.95)
W
hat it means to be a conservative is a hotly debated
question at the moment, with many self-described
conservatives saying that they don’t feel at home in
their political base, the Republican Party, or under the
party’s titular leader, Donald Trump.
Should conservatives be welcoming of immigrants or should
they try to conserve a cultural balance that mass immigration
could disrupt? Is conservatism the ideology of American global
leadership or a temperament that is skeptical of foreign
entanglements? What to do when free markets produce outcomes that are corrosive of traditional values?
At a time when longtime political comrades are turning
against each other—pro-Trump, anti-Trump, anti-antiTrump—it is instructive to be reminded of an earlier epoch
of conservatism, one that
appears to be more cohesive
than the one today but that
endured its own fissures and
internal debates.
Lee Edwards’s delightful
memoir “Just Right: A Life in
Pursuit of Liberty” offers just
such a reminder—a perspective
on our current moment that is
informed by the past. A softspoken distinguished fellow in
conservative thought at the
Heritage Foundation and an adjunct professor at Catholic
University, Mr. Edwards has not only
chronicled the modern American conservative movement’s
history. He has lived it.
“I was born under the sign of FDR, on December 1, 1932,
on the South Side of Chicago,” Mr. Edwards begins. Of
course, the handiwork of Franklin Roosevelt and his fellow
liberals would guide Mr. Edwards’s life only by inspiring
opposition. His father was the award-winning—and, Mr.
Edwards is quick to add, “hard-drinking”—reporter Willard
Ambrose Edwards. His mother once ran for the local school
board and was savaged by an area political columnist as a
“radical right” candidate married to a reporter for the
“ultra-conservative” Chicago Tribune.
“Her bitter experience influenced my decision never to be a
political candidate—my skin was not thick enough for electoral
politics,” Mr. Edwards writes. Yet politics was in his blood, and
he would advise and serve candidates over the years. Most
notably, he was there from the start with Barry Goldwater’s
1964 presidential campaign, a doomed effort that laid the
groundwork for a conservative takeover of the heretofore
milquetoast Republican Party. He notes that Goldwater was a
reluctant candidate, personally friendly with the Democratic
incumbent, John F. Kennedy, and fearful that he did not have a
presidential-caliber intellect. Mr. Edwards chronicles the campaign’s highs and lows, not least the Democratic attacks on the
GOP nominee as a mentally unstable man bent on nuclear war.
co Fo
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It’s that time
again:
Get
ready for lists
of year-end
predictions.
My
prediction? You hate
INSIDE
them. Me too.
VIEW
The old game
By Andy
on Wall Street
Kessler
and
Silicon
Valley is for
members of the bloviating
class to polish their crystal
balls and tout their brilliance
by predicting how the next 12
months will unfold.
The worst predictors are
those who hedge. They produce lists of worthless predictions that can be considered correct no matter what
happens. You know them:
“Unless there are exogenous
economic shocks, stocks will
rise next year.” Or, “Outside
of OPEC intervention or tight
supplies, oil prices are
headed down.” Then a year
later, these prognosticators
will claim their predictions
are uncannily correct, while
they roll out new hedged
mush for the next year.
I want in on this game
too. Here are mine:
1. Interest rates will go up
in 2018. I’m already 1-0.
2. The stock market will
underperform 2017’s returns.
See what I did there? Stocks
are up around 24% this year.
Even if they are up again by
23.99%, I’m right.
3. Tesla will miss production forecasts again. This is
BOOKSHELF | By W. James Antle III
ly
.
2018: You Read It Here First
like “Our hearts go out to you
during this difficult time,” I
quickly deleted them.
I did sign into my husband’s
Facebook account to “redecorate” his page. Nothing major,
I just fixed it up a little. Well,
maybe more than a little.
Maybe I accidentally friended
someone while I was in there.
It seemed like a normal thing
to do, at the time.
Shortly afterward my
daughter sent me a text.
“Dom is really freaked out,”
she wrote. “He said Dad tried
to friend him on Facebook.” I
pretended it was all a big mistake, but I was glad I hadn’t
friended Dom’s girlfriend, too.
One friend request from a deceased person is a plausible
mistake, but two would be
hard to explain.
The truth is, I don’t feel
like a widow. Our vows, after
all, said, “till death do us
part.” To me that means “till
death do us both part” or
“till double-death do us
part.”
I realize that my status as
a widow has no relationship
to how I feel about it. Probably lots of widows don’t feel
like it. And vice versa: When
I googled “I don’t feel like a
widow,” I found multiple references to lonely women who
were married but said they
felt like widows.
Who has the final say? If
you google “Is a widow married?” this pops up from the
Internal Revenue Service:
“The year of death is the last
year for which you can file
jointly with your deceased
spouse.”
This decree by the IRS definitively seals the marital
bond beyond death. The Bible,
too, has my back: “bring justice to the fatherless, plead
the widow’s cause.”
God, the government and
Google all speaking with one
voice! This is a seminal moment, a moment of transcendent truth, of absolution. I am
not a widow—at least not yet.
Mrs. Bell writes children’s
books, memoirs and essays
under the pen name Pamela
Jane.
A close-up, firsthand view of conservatism,
starting with the Goldwater campaign and
ending at the current quarrelsome moment.
Mr. Edwards was with Ronald Reagan long before the White
House years, when the erstwhile Hollywood actor considered
his first run for governor of California. The Reagan of those
years, Mr. Edwards shows, was a mix of the commanding
personality that the country would come to know and a man
with a quiet but deep interest in the writings of the
conservative intellectuals who would gradually win him over
from his youthful liberalism.
It was the “Red Menace” of the Soviet Union that first
drew Mr. Edwards to serious conservatism. The “three
pillars” of his political and cultural outlook, he says, were
“my Catholicism, my anticommunism, and my individualism,
but my anticommunism came first.” As for his sense of the
broad direction of the conservative moment, he took his
cues, he says, from M. Stanton Evans, the witty and genial
editor of Human Events, the Washington-based publication
for which Mr. Edwards still writes. But it was William F.
Buckley who published his first article, in National Review,
the flagship publication of the conservative movement.
What is especially remarkable is what a varied career Mr.
Edwards has had within the movement: practical politics;
journalism, including the editorship of Conservative Digest; a
shelfful of books, including biographies of Buckley, Goldwater
and Reagan; and an almost nonstop activism, including his
work to memorialize the victims of communism after the
Free World defeated the Soviets in the Cold War.
Beyond the autobiographical details, “Just Right” is a
survey of the disparate elements that have made up the
conservative movement and a reminder of how perilous
conservatism’s future has often seemed. The conservative
story is often told through the prism of Creation (Buckley
founding National Review), Fall (Goldwater’s loss to Lyndon
Johnson) and Redemption (Reagan’s victories in 1980 and
1984). That standard account is retold here in detail, but
there is a lot of intervening history.
If conservatism seems like an incoherent rabble in the age
of Never Trump and Roy Moore, consider some of the
important figures of its past. Robert Taft’s priorities were as
different from Goldwater’s as Goldwater’s were from Reagan’s
and Reagan’s from Jesse Helms’s, to say nothing of figures
outside the political realm, ranging from Phyllis Schlafly to
Milton Friedman. Taft was as skeptical of warfare as welfare,
while Goldwater believed a robust military was essential to
American leadership. Goldwater rejected the strong social
conservatism that defined Helms’s politics. Schlafly’s antifeminism resonated for many evangelicals but was seen as a
liability by party stalwarts seeking to close the gender gap.
Mr. Edwards acknowledges the seeming lack of purpose that
has at times gripped conservatism since its triumph over
communism. Yet he traces commonalities between early
conservatism and its later iterations, like the Contract With
America and the Tea Party. He is not without insights on the
current president. “Trump clearly spoke for the kinds of
disaffected Americans who have long supplied a ready
audience for conservative ideas and candidates,” he observes.
“But he also pushed aside key tenets of the conservative
approach to governing, including some that unify essentially all
the various factions of the conservative movement.” Whoever
can reconcile it all will write conservatism’s next chapter.
Mr. Antle is politics editor of the Washington Examiner
and the author of “Devouring Freedom: Can Big Government
Ever Be Stopped?”
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.
A16 | Monday, December 18, 2017
OPINION
LETTERS TO THE EDITOR
Democrats Against Tax Reform
Emotion and Feeling Beat Critical Thinking
T
Dictators and U.N. Standards
an example of Jordan, which in March hosted
an Arab League summit that Bashir attended.
This is a strange way to treat a country that has
absorbed and cared for millions of Syrian refugees and punched above its weight in the fight
against Islamic State. Jordan has a law that protects visiting heads of state on its soil, and its
National Assembly is already crafting a legal
challenge to the ICC’s decision.
All of which points to the ICC’s arbitrary
power, which answers to no political authority
beyond its own legal whim. It can pursue its
cases without regard for larger security or political interests, such as Jordan’s crucial role as
a moderating force in the region. Bashir is a bad
dude, but he has improved his behavior in recent years and cooperated with the U.S. in fighting terrorism. Presidents Obama and Trump
both loosened sanctions on Sudan.
Absent Security Council action, the referral
will go nowhere. But it presents an opportunity
for the U.S. to do a favor for a Middle East ally
by vowing to veto any punishment against Jordan. If the ICC can arbitrarily harass Jordan, the
U.S. and Israel will surely become targets.
no
n-
he U.S. has never joined the International
Criminal Court in the Hague, and the
court’s strange attack on Jordan last week
explains why. The court said it will refer Jordan
to the United Nations Security Council for failing
to arrest Sudanese President Omar al-Bashir after
years of giving other countries a pass.
Jordan is one of 123 countries that have
joined the ICC since it came into force 15 years
ago, and the Hashemite Kingdom may now regret it. Parties grant the court jurisdiction over
war crimes, genocide or crimes against humanity, and members are obligated to act on its international arrest warrants. In 2009 the ICC issued an arrest warrant for the Sudanese
president for his manifest depredations in the
country’s Darfur region.
This was mostly grandstanding, since the
U.N. has done nothing to enforce its warrant.
Bashir was traveling in the Middle East within
months of the warrant, and he has flown across
Africa in recent years without ICC intervention.
No other country has earned a referral from the
ICC over Bashir.
Yet suddenly the court has decided to make
A
In “Lorde of the Flies: Why College Students Reject Reason” (op-ed,
Dec. 9), Jillian Kay Melchior bemoans the apparent willingness of
American university students to buy
into dubious social theories, suggesting that at least one-third of college
seniors are incapable of weighing evidence to make a reasoned conclusion or a cohesive, evidence-based
argument. What explains this breathtaking credulity?
As a 30-year educator of American
university students, I can summarize
the reason in one word: ideology. In
his essay on education, Bertrand Russell wrote: “The prevention of free inquiry is unavoidable so long as the
purpose of education is to produce
belief rather than thought, to compel
the young to hold positive opinions
on doubtful matters rather than to let
them see the doubtfulness and be encouraged to independence of mind.
Education ought to foster the wish
for truth, not the conviction that
some particular creed is the truth.”
Students come to us having already been indoctrinated since birth
with “truth,” be it social, economic,
political or religious. So comfortable
are they in these truths that they are
not inclined to reconsider them, even
in the face of underwhelming evidence in their support or overwhelming evidence in opposition. If we want
university students who are willing
and able to demonstrate critical
thinking, then we need to provide
them with the necessary tools and
freedom to be fearless seekers of the
truth, wherever that may lead, from
the very beginning of their lives.
Don’t expect silk purses from those of
us in academia when you are sending
us sows’ ears as raw material.
MICHAEL T. RUPP, PH.D.
Midwestern University
Glendale, Ariz.
If college students reject reason
and have difficulty thinking critically,
it’s because their professors who
should be instructing them in the art
of argumentation have taken to
preaching the mantra of victimization. As a result, at many elite and
overly privileged campuses, pampered students can get away with
barring speakers with alternative
agendas from their campus and replacing a picture of Shakespeare with
the pop icon of the day, claiming that
the West is overly represented. The
elite institutions will continue to encourage such behavior under the
guise of freedom of expression, graduating class after class with limited
communication skills, faulty grammar
and emotional responses to anything
that requires thoughtful investigation. Sadly, with the right combination of undeserved grades, luck and
an Ivy League degree, they may find
themselves in the executive suite. Pity
the employees who may know more
than their undereducated bosses.
EM. PROF. BERNARD F. DICK
Fairleigh Dickinson University
Teaneck, N.J.
It seems Ms. Lorde intended to relocate “the hidden sources” of “true
knowledge.” But beneath her pretentious language what does her attitudinizing result in but yet another rehash of Rousseau’s critique of
Descartes, seasoned to be sure with a
dash of the sillier side of D.H. Lawrence (white gods, dark gods).
Isn’t this a capital instance of cultural appropriation?
BRIAN BARBOUR
Smithfield, R.I.
As I read the piece about Audre
Lorde, it became obvious to me that
Lorde and her work perfectly mirrored a treatise written by Harry
Frankfurt, emeritus professor of phiThe sneering takedown of Audre
losophy at Princeton University. The
Lorde by Ms. Melchior is troubling
title of the best-selling treatise is “On
not only because Lorde was an impor- Bullshit” (2005), published by Princetant public intellectual but also beton University Press.
cause the voices of black women poJust one quote from this work will
ets or activists are seldom heard in
describe what Ms. Melchior calls
mainstream America.
“Lorde’s campus acolytes”: “ConThe claim that Lorde rejected reavinced that reality has no inherent
son, based on several remarks taken
nature, which he might hope to idenout of context, is indefensible. Ms.
tify as the truth about things, he deMelchior does not like the popularity votes himself to being true to his own
of Lorde’s writing on college camnature. It is as though he decides that
puses. If she had read Lorde beyond
since it makes no sense to try to be
snippets, she might have gotten a few true to the facts, he must therefore
clues.
try instead to be true to himself.”
MARGARET CRUIKSHANK
DON POWELL
Corea, Maine
Ponte Vedra Beach, Fla.
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epublicans are poised this week to cut ing the Obama years—on economics nearly as
taxes for most American workers and much as on identity politics. They have made
businesses, fulfilling a core campaign income inequality their main economic priority
promise. But before the House
rather than growth, and the
Unlike the past, the
and Senate vote, it’s worth
fact that the slow-growing
noting that they may do so
Obama economy increased inGOP has had no help
without a single Democrat in
equality hasn’t changed that
passing these tax cuts. obsession.
support. How has the party of
the Kennedy tax cuts of the
One result is that there
1960s and the co-writers of
isn’t a pro-business Democrat
the Reagan reform in the 1980s become impla- left in the Senate, except perhaps on energy
cably opposed to pro-growth tax policy?
policy in fossil-fuel states like West Virginia
A little history shows how remarkable this and North Dakota. Democrats are now the
is. The Kennedy marginal tax-rate cuts were party of Thomas Piketty, the French economist
pushed by White House economist Walter Hel- who thinks tax rates should return to pre-Kenler and powered the economic expansion for nedy levels to reduce inequality.
another half-decade. In the 1981 tax debate,
Democratic economists who might have ofWilliam Brodhead of Michigan and other Ways fered an alternative view have no choice but
and Means Democrats offered an amendment to go along if they ever want to serve in anthat cut the top rate on investment income to other Democratic administration. They all saw
50% from 70% in the first year.
what Elizabeth Warren and the Democratic
The 1986 tax reform was driven as much left did to block Larry Summers from getting
by Democrats as by Ronald Reagan. Dick Gep- the job of Federal Reserve Chairman.
hardt and Dan Rostenkowski helped move it
The other explanation is the political calcuthrough the House, and Bill Bradley was a lation that opposition will help Democrats releading architect in the Senate. Thirty-three take the House and Senate in the 2018 midDemocrats voted for the bill that passed the term elections. President Trump is unpopular,
Senate 74-23 and cut the top marginal income and they figure his polarizing behavior will
tax rate to 28%.
drive enough Democrats in the polls to save
Bill Clinton raised taxes in 1993, but after Senate incumbents even in states that Mr.
his re-election he compromised with Newt Trump carried in 2016. Heidi Heitkamp (North
Gingrich in 1997 to cut the capital-gains tax Dakota), Joe Donnelly (Indiana) and Claire
rate to 20% from 28%. That drove investment McCaskill (Missouri) figure that the safer play
and growth through the rest of the decade. is to oppose all things Trump and mobilize the
Even as recently as 2001, a dozen Democrats base vote.
in the Senate and 28 in the House comproPerhaps that bet will pay off, but then they
mised with George W. Bush to cut the top in- are also betting that tax reform will fail to income-tax rate to 35%.
crease growth and wages. If it does succeed
Yet this year not a single Senate Democrat in spurring the economy, they will have had
seems willing to vote to cut the top rate a mere no stake in that success. Republicans will
2.6-percentage points to 37% or reform a cor- surely point that out, especially if the popularporate tax code that Democrats have long rec- ity of the tax bill rises once voters see the reognized is anti-competitive. Had they engaged sults in higher after-tax income.
with Republicans to provide 60 votes, they
Whatever the political results next year,
surely could have influenced the bill.
this Democratic left turn isn’t good for the
They might have saved most of the state- country. The U.S. has historically prospered
and-local tax deduction that helps Democratic when there is a growth wing in both major postates keep taxes high. Now Democrats in New litical parties. A Democratic growth wing is
Jersey and California are left to moan that all the more important because the GOP is deperhaps they’ll have to stop raising taxes on veloping an income-redistribution wing led by
high-earners. Or perhaps Democrats could Florida Senator Marco Rubio that has watered
also have proposed eliminating the corporate down the growth elements of this tax reform
tax in return for a long-time progressive pri- and almost scuttled it.
ority like a carbon tax. Instead they chose toAfter the slowest expansion in decades and
tal resistance, and policy irrelevance.
tepid wage growth, Americans should want
Part of the explanation is ideological. The this tax reform to succeed and it’s a shame
Democrats as a party moved sharply left dur- Democrats are rooting for failure.
ly
.
R
REVIEW & OUTLOOK
A Joint-Employer Redo
mericans had more good news to cheer by adopting the indirect control standard for
last week when the National Labor Re- enforcing minimum-wage and overtime rules—
lations Board reversed the Obama-era’s a political donation to trial lawyers. As a result,
joint-employer rule that was
many businesses have been reThe House passes a fix luctant to offer assistance to
a law-stretching political gift
to unions.
subcontractors and franfor Obama’s Browning- their
The Obama National Labor
chisees, which could trigger
Ferris power play.
Relations Board overturned
joint-employer liability.
30 years of labor law in 2015
Labor Secretary Alexander
with its Browning-Ferris deAcosta has withdrawn Mr.
cision that established a new “indirect con- Perez’s guidance. And on Thursday a majority
trol” standard for determining joint-employ- of the NLRB overturned Browning-Ferris,
ment. Under the board’s long-held direct which the board called “a distortion of comcontrol standard, businesses could only be mon law” that prevents it from “discharging
held responsible for workers directly under one of its primary responsibilities under the
their control—i.e., those they could hire, fire, Act, which is to foster stability in labor-mandiscipline and set other essential conditions agement relations.”
of employment.
That solves the problem in the near term,
Browning-Ferris said businesses only need but Democrats could resurrect the indirect
to exercise indirect control over workers to be control standard the next time they take the
deemed joint employers. The board’s ruling White House. The more durable solution is for
could have ensnared businesses that contract Congress to write the direct control standard
with temp-employment agencies, home build- into statute, and last month House Republicans
ers that employ subcontractors, corporations passed legislation to codify the “direct conthat provide tech support for franchisees, and trol” joint-employer standard. Eight Demotech companies that set corporate responsibil- crats who represent competitive districts
ity practices for subcontractors.
voted with Republicans.
The Obama NLRB’s political goal was to let
Chuck Schumer will lead a Democratic filiunions drag deep-pocketed businesses into the buster in the Senate, but Republicans could try
labor disputes of its franchisees and subcon- to attach the measure to a spending bill. At the
tractors. Unions could also expand their bar- very least they ought to force Democrats facing
gaining units by combining workers of subcon- tough elections next year to declare themtractors and contractors.
selves on an issue that is a priority of small and
But the ruling created a legal minefield for large businesses and was the accepted stanbusinesses. And Obama Labor Secretary Tom dard for decades before President Obama’s era
Perez escalated the damage, as he usually did, of rule by diktat.
Economy’s Up Because It Expects Better Rule
Regarding your editorial “The
Economy Revs Up” (Dec. 9): Three
months before last year’s presidential
election, a page-one Journal headline
was “U.S. in Weakest Economic Recovery Since ’49” (July 30, 2016). Annualized GDP growth rates in 10 recoveries before the one under President
Obama’s stewardship averaged 4.6%—
and the sharper the prior downturn,
the more robust the subsequent re-
covery. GDP growth during President
Obama’s eight years in the White
House averaged just over 2% a year,
less than half of a normal post-World
War II recovery rate. Apologists for
the Obama administration last year
latched onto the “secular stagnation”
narrative that you mention is still in
vogue this year. Globalization and labor-reducing technology were excuses
offered by economists last July who
were forecasting that “the U.S. could
join Europe and Japan as economies
struggling to achieve more than the
most modest growth.” As the U.S.
economy revs up during the Trump
Regarding Bruce Jones and Michael administration, economists on the left
O’Hanlon’s “Democracy Is Far From
are, for now, putting the stagnation
Dead,” op-ed, Dec. 11): Although I
story on ice.
share the authors’ enthusiasm for
In capitalist economies, positive or
democratic nations and am pleased to negative sentiment drives capital inlearn that, “if one adjusts for popula- vestment decisions. After eight years
tion,” there has been no reversion to
of antibusiness rhetoric and stifling
authoritarianism, it seems there is lit- economic policies, it appears that the
tle else to celebrate about the state of animal spirits of capitalism have rethe world.
vived. If we are on the cusp of an inAccording to Transparency Interna- vestment surge in real assets, includtional’s Corruption Perceptions Index ing productivity-enhancing
from 2016, an overwhelming superm- technology, faster economic growth
ajority of the world’s nations have ex- will be trickling down into faster
tensive problems with public-sector
wage growth, as you noted; and if
corruption. On a scale from 0 “highly that happens, the Trump resistance
corrupt” to 100 “highly clean,” the av- and social-justice brigades will have
erage index score is 43, with most na- to pray for a Mueller investigation
tions’ citizens experiencing “the tanbombshell to shock the economy back
gible impact of corruption on a daily
into secular stagnation. Secular
basis.” Democracy is made up of more growth is bad for the Democrats’ pothan periodic elections; it requires a
litical business.
quality of civic life that most nations
BEN PATTERSON
Laurel, Md.
fail to provide.
More worryingly, the key global
trend since the beginning of the century is the brazen authoritarianism
and renewed expansionism of nations.
China, Russia, Turkey, Iran, North Korea and Venezuela have taken turns
THE WALL STREET JOURNAL
for the worse. All of these nations
have diminished their citizens’ civil
rights and some have increased the
threats posed to their neighbors,
global security and stability. Democracy may not be dead, but it faces renewed threats from old nemeses,
which gives little to celebrate and
much to fear.
IAN J. DRAKE
Nutley, N.J.
Democracy Is Threatened
As Authoritarianism Grows
Pepper ...
And Salt
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“Okay, we’ll begin boarding with
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THE WALL STREET JOURNAL.
Monday, December 18, 2017 | A17
OPINION
W
ith last week’s confirmations of Don Willett
and James Ho to the
Fifth U.S. Circuit Court
of Appeals, President
Trump set a record for most appellate judges confirmed in a president’s
first year. Twelve judges have joined
the federal circuit courts in 2017,
beating by one the record previously
held by Presidents Kennedy and
Nixon. The quality of these new appointees is exceptional, with seven
having clerked at the U.S. Supreme
Court and six appearing on Mr.
Trump’s impressive list of potential
high-court candidates.
What will happen when
a Senate majority votes
in unison against every
presidential nominee?
Add Justice Neil Gorsuch’s confirmation, and that’s quite a year.
Even after Candidate Trump released his list of prospective justices, conservative legal elites were
not at all confident that President
Trump would—or would be able
to—execute a concerted plan to put
a stamp on the judicial branch.
Credit goes to White House counsel
Don McGahn, Senate Majority
Leader Mitch McConnell and Judiciary Committee Chairman Chuck
Grassley—and to the president, who
deferred to their legal expertise and
political strategy.
At the same time, with only six
confirmed district-court judges, Mr.
Trump’s total number of judicial appointments stands at 19, not even
close to a record. While President
Obama didn’t prioritize judges in his
first term, George W. Bush filled 28
slots on the federal bench his rookie
year and Bill Clinton 27 (plus Justice
Ruth Bader Ginsburg). Ronald Reagan had 40 lower-court judges confirmed his first year, along with Justice Sandra Day O’Connor.
Many executive-branch positions
remain vacant because Mr. Trump
has not put forth nominees. Not so
for judges. With 58 judicial nominations, Mr. Trump is second to George
W. Bush at this point. Instead, the
problem is that Senate Democrats
have demanded “cloture” votes on all
but one of the nominees. That is, Minority Leader Chuck Schumer has
forced votes on whether to proceed
to a final vote, each of which eats up
30 hours of Senate floor time. That’s
been the case even for district-court
nominees, the closest of whose confirmation votes was 79-16 (the nays
notably including potential 2020
presidential contenders Kirsten Gillibrand, Kamala Harris, Bernie Sanders and Elizabeth Warren).
Not surprisingly, the votes on
most of the circuit judges were
much closer. Ralph Erickson sailed
through to the Eighth Circuit 95-1,
with only Ms. Warren in the negative. Kevin Newsom of the 11th Circuit somehow drew 16 Democratic
ayes, for a 66-31 tally. But the others
Don Willett and Jim Ho were confirmed to the Fifth Circuit last week.
have faced a blue wall. With the occasional exception of Democrats representing states Mr. Trump won
overwhelmingly, the votes were essentially party-line. While the average Bush and Obama circuit nominee
received about 90% of senators’
vote—many confirmed unanimously
or by voice vote—Mr. Trump’s have
averaged less than 60%, and have all
been subjected to both cloture and
roll-call votes.
A nominee with the support of
fewer than three-fifths of senators
can get confirmed today only because then-Senate Majority Leader
Harry Reid did away with the filibuster for lower-court nominees in 2013.
So Mr. Reid gets a share of credit for
Mr. Trump’s success too.
This year Senate Republicans abolished the filibuster for Supreme Court
nominees, the culmination of a titfor-tat escalation. The Democrats’
attempt to filibuster Justice Gorsuch was retaliation for the Republicans’ blockade of Judge Merrick
Garland’s nomination in 2016, which
in turn followed Mr. Reid’s nuclear
option.
That came a decade after Mr. Reid
filibustered Bush nominees—using
that tactic for the first time on a partisan basis—most notably Miguel Estrada, whom Democrats didn’t want
to become the first Hispanic justice.
Before that was the partisan fallout
from Bush v. Gore, Justice Clarence
Thomas’s “high-tech lynching,” and
the smearing of Judge Robert Bork,
led by Sen. Ted Kennedy. Attempts at
obstruction and delay will continue,
with pointless cloture votes and
“blue slip” battles, as Mr. Grassley
erodes home-state senators’ abilities
to stall nominees.
The one escalation that has yet to
occur is for a Senate majority to
block a president’s nominees wholesale. One of the consequences of
Doug Jones’s election in Alabama is
that it becomes more likely that Justice Anthony Kennedy will retire in
2018—assuming he wants a Republican to appoint his successor, or
doesn’t want to leave his seat vacant
indefinitely.
It seems inevitable that Americans will follow the politicians’ lead
and think of judges in increasingly
partisan terms. That’s not healthy
for an independent judiciary, but
it’s to be expected given that we
now have starkly contrasting methods of constitutional and statutory
interpretation that largely track
partisan polarization by ideology.
Add the “resistance” to the Trump
presidency—which regards as illegitimate everything the president
does, including his appointment of
Justice Gorsuch—and there’s no
wonder judicial nominations are so
fraught.
I see no way out other than the
gradual unwinding of federal power
or the establishment of a consensus
around judicial methods that stick to
the original public meaning of written legal texts. In other words, be
prepared for the war over judges to
continue.
Mr. Shapiro is a senior fellow in
constitutional studies at the Cato Institute and editor in chief of the Cato
Supreme Court Review.
ly
.
By Ilya Shapiro
CAROLYN KASTER/ASSOCIATED PRESS (2)
Another Escalation in the Judicial War
By Andrew Hammond
T
wenty-seven European Union
countries have approved an
initial Brexit deal between
Brussels and London, and Friday’s
agreement has been painted as a diplomatic victory for Prime Minister
Theresa May. Yet her government has
actually suffered negotiating defeat
after defeat. And the backtracking
probably won’t end soon.
Consider Brussels’ decision to delay substantive talks on the future
U.K.-EU relationship, including over
trade, until March. While Mrs. May
and her team hoped for a January
start, the EU-27 have insisted that the
prime minister first provide clarity on
what the U.K. wants from this second
phase of negotiations. Astonishingly,
Chancellor of the Exchequer Philip
Hammond admitted last month that
the cabinet has not even discussed, let
alone agreed, what the final form of
this Brexit deal should be.
The EU’s negotiating fortitude has
surprised many in the U.K., given
the widespread skepticism about the
co Fo
m rp
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er rs
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on
As It Leaves the EU, Britain Suffers Setback After Setback
supranational organization and its political process. But the EU entered negotiations with several favorable circumstances: the significant advantages
the EU-27 enjoy in the Article 50
(withdrawal) process, the potentially
existential threat that some Continental leaders perceive Brexit to be, and
divisions within the British government following June’s elections, which
were disastrous for Mrs. May.
Once she triggered Article 50 in
March—prematurely, given the absence of a discernible negotiating
strategy—the initiative shifted to the
EU. Under Article 50 Brussels alone
could decide whether “sufficient
progress” was made in the first-phase
divorce talks to justify moving to the
next stage of negotiations.
Brussels has also controlled the
timing. To put maximum pressure on
the U.K., chief EU negotiator Michel
Barnier has insisted talks move
swiftly and end by October 2018.
Succeeding in this massively ambitious task would allow any completed agreement to be ratified before March 2019, when the Article 50
period ends. The two-year process
can be extended only with unanimous consent of the EU-27.
Mr. Barnier flexed his power early
by setting the timetable. In May, British Brexit secretary David Davis promised the “row of the summer” over
this issue. Yet on the first day of formal negotiations in June, Mr. Barnier
It was premature to trigger
the withdrawal process in
March, absent a coherent
negotiating strategy.
brushed off attempts to start talks on
a future trade deal immediately. Instead divorce issues—including the
U.K.’s “exit bill”—came first. This gave
the EU even greater bargaining power,
forcing London to make early, significant concessions without reciprocation from Brussels.
Another factor encouraging EU
unity: Key European politicians, in-
cluding French President Emmanuel
Macron, genuinely regard the U.K.’s
exit as an act of political vandalism.
The tough, aligned approach of the
27 countries therefore reflects an
overall belief by the Continent’s leaders that last year’s Brexit referendum
cannot become an existential threat
to the bloc. The fear is that an easy
exit ride for the U.K. will fuel support
for euroskeptic parties in key countries such as Italy.
Given this political context, any
U.K. government would have had an
uneven hand to play in the Brexit
talks. But Mrs. May’s weakness at
home has made negotiations noticeably more difficult.
Many anticipated that much of the
blustering from Mrs. May and leading
Brexiteers, like Foreign Secretary Boris Johnson, would be exposed in the
negotiations. Yet the disarray has
been surprising. The cabinet’s postelection infighting has sent signals
that it is not remotely united over
Brexit. Nor has it accepted the reality
of Brexit, with some ministers still
wanting key benefits of close relations
with the EU without the inevitable
costs.
Take the divorce price tag. While
Mr. Johnson said Brussels could “go
whistle” on this issue several weeks
ago, he and Mrs. May have essentially
kowtowed to the EU. The text of the
phase one agreement includes no figures, but British commitments to
meet all EU financial requests point
to a total divorce bill of around $50
billion. This underlines how disingenuous it was for some Brexiteers to
claim the country could leave the EU
and secure a new trade deal virtually
cost-free. Remember when the Leave
campaign suggested the U.K. could
start pocketing hundreds of millions
of pounds a week in savings for the
National Health Service?
Far from taking back control,
Brexiteers have witnessed capitulation after capitulation by the May
government. More of the same is
likely in 2018.
Mr. Hammond is an associate at
LSE IDEAS at the London School of
Economics.
How to Get American Men Back Into the Workforce
T
no
he U.S. has experienced a record 86 consecutive months of
job growth. But some nine
million men of prime age—that is,
between 25 and 54—still are not
working. Most have given up looking
for jobs. Helping these men get back
into the workforce should be a leading public-policy priority.
The GOP is using the problem as
a pretext for cutting spending to
help pay for tax cuts. Policy makers
should start with the goal of getting
people into jobs—not saving money.
Accomplishing this will require more
investments, including tax credits
that benefit workers, removal of institutional obstacles to employment,
and efforts to connect workers to
jobs.
The overall unemployment rate is
low, but the employment rate for
prime-age men still hasn’t climbed
back to its prerecession high. This is
not unique to this recovery: In all but
one economic recovery since the
1960s, this group failed to recover
fully from the previous recession. The
result has been a downward ratchet
with large declines during recessions
and small gains during recoveries.
Overall the employment rate among
men 25-54 has dropped from 96% in
the 1950s to 86% today.
The GOP often blames disability
insurance for keeping men on the
couch. Yet the number of prime-age
men on disability has increased only
1.6 percentage points since 1967,
while the fraction of men not working
has increased by 8.4 points. The rise
of disability insurance is partly due to
the aging of the population. Many of
the people on disability would not
have worked anyway, and at least
some of the rise of disability insurance is caused by the lack of jobs. Adjusting for these factors, the Council
of Economic Advisers in 2016 estimated that the expansion of disability
insurance accounts for no more than
0.5 percentage point of the reduction
in employment rates.
Taking a broader view, the fraction
of prime-age men receiving any federal cash assistance—including disability insurance and other cash payments—has fallen to 10% in 2016
from 20% in 1975. Noncash benefits
like Medicaid and nutrition assistance
n-
By Jason Furman
PUBLISHED SINCE 1889 BY DOW JONES & COMPANY
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have increased over the past decade,
but the employment rates for primeage men were declining steadily long
before this increase began. Moreover,
many of these programs have adopted increasingly strict work requirements over time.
When it comes to prime-age men
working, the U.S. compared unfavorably with other advanced economies,
falling in the bottom half of the Organization for Economic Cooperation
and Development despite having the
second-least-generous
disability
benefits in the group and nearly the
shortest duration of unemployment
insurance benefits.
The largest issue facing American
men is not that they are rewarded for
remaining in a recliner, but that they
cannot find rewarding work. The bulk
of the decline in employment has
been for men with a high-school diploma or less, who have seen their
employment rates fall from 97% in
1964 to 83% today. This has coincided
with a decline in their relative wages:
High-school grads in the 1970s
earned two-thirds what their collegeeducated counterparts took home.
Today it’s around half.
Reversing the withdrawal of men
from the workforce will require rising wages. This can be achieved by
improving the skills of workers
through education and training and
improving the bargaining power of
workers to raise wages. Direct steps
like expanding the earned-income
tax credit could also make a difference, though the policy is absent
from the current tax-reform bill—despite Speaker Paul Ryan’s past support for it.
Rethink unemployment
insurance and increase
public investment
in improving skills.
The escalation of incarceration
rates also has made it harder for
millions to re-enter the workforce.
Today, around five million men between 25 and 54 are formerly incarcerated, a much higher fraction than
in the past. Sentencing reductions
for nonviolent offenders could go a
long way to resolving this.
The longstanding withdrawal of
men from the workforce has entered
into a vicious spiral with another
major social problem: the opioid epidemic. Forty-four percent of the
prime-age men who have left the labor force are on pain medication, according to Princeton economist Alan
Krueger. The Council of Economic
Advisers recently estimated this epidemic is costing the U.S. economy
$500 billion annually. Spending even
a tiny fraction of that sum on treatment, counseling and prevention
could be a profitable investment.
Cutting Medicaid would make it
harder for those suffering from addiction to receive the treatment necessary to overcome it and get back
to work.
While it is worth continuing the
dialogue on reforms to encourage
work, many of the most promising
changes require more spending.
This includes establishing “wage insurance” to encourage older workers to take a new job that pays less
than their last career step. Transitional unemployment insurance for
the long-term unemployed could
help keep people off disability. During downturns, public programs
that hire the long-term unemployed
could keep millions in the labor
force.
Millions of men are missing the
dignity and community that comes
with work. Shredding social-safety
nets might help pay for tax cuts, but
it won’t help these men. What they
really need are policies that address
why they’re out of the labor force to
begin with.
Mr. Furman, a professor of practice at the Harvard Kennedy School,
was chairman of the White House
Council of Economic Advisers, 2013-17.
Notable & Quotable: ‘Affinity Groups’
From a Nov. 14 staff email from
Adrian Harries, principal of Nichols
Middle School in Evanston, Ill., obtained by the North Cook News:
During this Thursday’s staff meeting we will continue on our journey of
equity with the focus on how to make
Nichols a more equitable environment. This staff meeting we will be
incorporating a new resource from
Everyday Democracy as we explore
the concept of equity through affinity
groups. For those unfamiliar affinity
groups are a group formed around a
shared interest or common goal, to
which individuals formally or informally belong. For this Thursday’s session our affinity groups will be based
around racial identification, with one
of our two groups consisting of staff
that identify as individuals of color
and our other group consisting of
those that identify as White. Race is a
lived experience so you should attend
the group that best represents how
you feel you live your life, racially.
The Rational [sic]:
Affinity groups are an effective
means through which people can
explore and affirm aspects of their
identity, as well as provide each
other guidance and support for interacting with those who might not
share, understand, or respect that
identity. Although members of the
group may share a common identity, it does not mean that everyone
in that group has had the same
experiences. . . .
Room Assignments:
Staff that identifies as individuals
of color will meet in Room 226
Staff that identifies as white will
meet in Room 126
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
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ly
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A18 | Monday, December 18, 2017
Lease for $625 per month*
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Maserati dealer for details. Model shown: 2018 Ghibli 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: CHINESE STARTUPS RACE AFTER TESLA B4
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CME Launches Bitcoin Futures
Lowering the Volume
Trading in Cboe Global Markets’
bitcoin futures has slumped,
creating an opening for its rival
CME Group.
BY ALEXANDER OSIPOVICH
AND GUNJAN BANERJI
Number of contracts traded
5,000
4,000
3,000
2,000
1,000
0
Dec. 11
12
13
14
Exchange giant moves
into hot area after its
smaller rival Cboe
debuts similar offering
15
Sources: FactSet; Cboe
THE WALL STREET JOURNAL.
The world’s largest exchange company launched bitcoin futures on Sunday, seeking
to capitalize on the mania for
the booming digital currency.
Chicago-based CME Group
Inc. began trading bitcoin futures at 6 p.m. Eastern Time.
The first contract for January
expiration surged nearly 6% to
$20,650 in the first trade but
dropped to $18,760 after sev-
eral hours of trading.
Bitcoin itself tumbled after
the futures began trading. At
about 9 p.m. Eastern Time, it
was at $18,576.53, according to
CoinDesk, after having approached the $20,000 mark
earlier Sunday.
CME’s launch came one
week after its smaller rival,
Cboe Global Markets Inc.,
launched a similar contract.
Cboe’s futures sputtered in
their initial week, creating an
opening for CME.
Bitcoin has soared around
1,800% this year—an extraordinary run-up that has lured investors world-wide. Futures on
bitcoin allow traders to bet on
whether its price will rise or
fall, and they offer Wall Street
firms a way to trade it on wellknown, regulated markets.
Volumes on Cboe’s bitcoin
futures have dropped off precipitously since Dec. 11. After
more than 4,100 contracts
changed hands on the first day
of trading, volume averaged
around 1,640 contracts the rest
of the week—a 60% slide. Cboe
said its volumes are healthy
for a brand-new product and
expects them to pick up.
CME’s launch went more
smoothly in the early hours of
trading than Cboe’s, said
Bobby Cho, head of over-thecounter trading at Cumberland, the cryptocurrency unit
of Chicago trading firm DRW
Holdings LLC.
Mr. Cho noted there was
less of a gap between the price
of CME’s futures and the price
of bitcoin, which indicated
there were more big traders
ironing out anomalies between
the two markets. The spread
between CME’s main January
contract and the CoinDesk
price of bitcoin narrowed from
more than $1,200 to less than
$400 in the first two hours of
trading.
“It definitely felt like there
were more market participants
ready for the CME launch than
there were for Cboe,” Mr. Cho
said.
Compared with Cboe’s bitcoin futures, CME’s offering
may appeal more to hedge
funds and big financial firms
Please see BITCOIN page B2
KEYWORDS
By Christopher Mims
MEL MELCON/GETTY IMAGES
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Food retailers are under increasing pressure as they try to manage shrinking margins without losing their customers to competitors.
Grocers Absorb Rise in Food Prices
BY HEATHER HADDON
n-
Food costs are ticking up
after a multiyear glut of many
staples. But consumers aren’t
paying much more yet because
grocers, discounters and online retailers are all holding
down prices to win business.
Higher prices for vegetables, beef and eggs helped
push the food portion of the
producer-price index up 3.5%
annually in November, according to the Labor Department.
Meanwhile consumers paid
just 0.6% more for groceries
that month than a year earlier,
the department said Wednesday. The gap in accelerating
producer and retail prices is
the greatest it has been in
more than three years, according to Barclays.
That gap is putting grocers
under increasing pressure as
they try to manage shrinking
no
The Federal
Communications Commission’s abandonment of
net-neutrality
regulations—which had promised retribution for companies
that didn’t treat all internet
traffic the same—only reinforces trends that have been in
motion for years: Alliances are
being forged and dissolved,
and companies once known as
giants are being swallowed up
by even bigger behemoths.
Just look at the intrigue:
Disney buys up a big piece of
21st Century Fox, AT&T and
Time Warner continue their
courtship, Verizon—bulked up
with AOL and Yahoo—scores
NFL streaming rights, Amazon
is said to be toying with offering “free” TV service while users of its streaming device
temporarily lost YouTube in
Amazon’s spat with
Google…and so on.
It was certainly telling that
tech’s giants were subdued in
their protest of the net-neutrality rule changes compared
with their past reactions. Even
Netflix, the ostensible victim
of an unfair internet, apparently bought its own safe passage.
For you and me, the media
consumers, the result of all of
these power struggles could
soon be an internet where we
get what we pay for. Rising
costs could be contained, however, by increased competition
in ways we connect to the internet.
The internet is far removed
Please see MIMS page B4
BY ANNAMARIA ANDRIOTIS
This fall, Visa Inc. Chief Executive Alfred Kelly received a
troubling, anonymous email:
Jim McCarthy, one of his most
senior and high-profile executives, had been involved in romantic relationships with
women at the card company,
according to people familiar
with the email’s content.
The email, which didn’t include the company’s humanresources department, proved
a test for Mr. Kelly. He had
been in the CEO’s post less
than a year and had made a
point from the get-go of
stressing the importance of
company culture and how executives manage staff.
Mr. Kelly launched an internal investigation, the people
familiar with the email said,
including a review of Mr.
McCarthy’s emails. The probe
revealed what were considered
inappropriate comments made
to a female employee in his division, some of the people
said. The inquiry also resurfaced issues dating to 2012,
when Mr. McCarthy was reprimanded by Visa for not informing the company of his
romantic relationships with
employees and his compensation was docked as a result,
the people said.
Weeks after Mr. Kelly received the email tip, Visa fired
Mr. McCarthy on Dec. 1.
At a staff meeting that
morning, Visa President Ryan
McInerney told employees of
Mr. McCarthy’s termination,
according to a person who
heard his remarks. Later that
day, Mr. McInerney sent an
email to Visa staff that cited
“behavior…that runs counter
to our leadership principles
and culture,” according to a
copy of the email reviewed by
The Wall Street Journal.
Please see VISA page B2
ly
.
Get Ready
For Faster
And Pricier
Internet
Visa Fired
Executive
After Tip
In Email
margins without losing customers.
Some executives say they
are looking for new ways to
cut costs, fearing they can’t
afford to raise prices at a time
when deals are getting easier
to find online.
Many grocers are investing
in e-commerce operations to
keep up with Amazon.com
Inc., which has slashed prices
on products including avocados, organic milk and chicken
since it acquired Whole Foods
Market this summer.
“Price competition is getting more severe,” said Kemper Isely, co-president of the
Colorado-based Natural Grocers by Vitamin Cottage Inc.,
a health-food chain that competes with Whole Foods in the
West. The chain has cut prices
this year in part to try to beat
Whole Foods discounts.
Inflation began to return to
meat, pork, eggs and some
other farm prices earlier this
year as demand started to
catch up with production in
some commodities and oil
prices increased.
Volatile weather in California, Mexico and Florida has
‘Price competition is
getting more severe,’
says an executive at a
health-food chain.
also contributed to rising
prices of produce.
Farmers should benefit
from the inflation, though the
price rise isn’t close to levels
that triggered the previous
buildup in commodities and
the effects for many growers
will be muted, said Ryland
Maltsbarger, associate director of the Agriculture Pricing
and Purchasing Service at IHS
Markit.
“It’s good, not great,” Mr.
Maltsbarger said about the
price increases for farmers so
far. “It’s not the best time for
grocers either.”
Grocers say they are focused on holding down the
price of staples like milk, eggs
and meat that shoppers watch
closely. Kroger Co., the nation’s largest grocery chain by
stores and sales, told investors
last month that it was “aggressively managing” operating expenses to hold down
prices, in part by fining suppliers for late orders.
“Our inflation at cost is still
above our inflation at retail,”
Mike Schlotman, chief financial officer of grocer Kroger,
Please see PRICE page B2
INSIDE
BOB WILMERS,
BANKER BEHIND
M&T, DIES
FINANCE, B10
SPY
LIQUIDITY
RESILIENCY
PERFORMANCE
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B2 | Monday, December 18, 2017
* ***
INDEX TO BUSINESSES
C
Canadian National
Railway.....................A2
Canadian Pacific
Railway.....................A2
CA Technologies ......... B4
Cboe Global Markets..B1
Charles Schwab .......... B2
Cheesecake Factory....B2
Chevron ..................... B11
Chubb.........................B10
CME Group..................B1
Comcast.....................B12
CSX........................A1,A2
D-E
Didi Chuxing Technology
.....................................B4
DRW Holdings ............ B1
Exxon Mobil..............B11
F
Facebook......................B4
G
Nissan Motor..............B4
P
PBF Energy ............... B11
Phillips 66.................B11
Q
General Motors...........B2
Goldman Sachs Group B2
Qingdao Ray TradingA10
H
Royal Bank of Canada B2
Sanofi..........................A6
SAS..............................B4
Smart & Final Stores.B2
Societe Generale.........B2
SoftBank Group..........B4
SpartanNash...............B2
SR Work....................A10
Sysco...........................B2
Hartford Financial
Services Group ....... B10
HBO...........................A11
H&M Hennes & Mauritz
...................................B12
Hulu...........................B12
Humana.......................B3
I
Imax.............................B4
Inditex.......................B12
Interactive Brokers
Group.........................B2
J-K
JPMorgan Chase.........B2
Kindred Healthcare.....B3
Koninklijke Ahold
Delhaize....................B2
Kreg Enterprises.........A3
Kroger..........................B1
L
Liberty Mutual
Insurance ................ B10
Lidl...............................B2
M
Marathon Petroleum B11
M&T Bank ................. B10
N
Natural Grocers by
Vitamin Cottage.......B1
Netflix..................B1,B12
NEVS ........................... B4
NIO .............................. B4
R-S
T
Target..........................B2
TD Ameritrade Holding
.....................................B2
Tencent Holdings........B4
Time Warner........B1,B12
Toyota Motor..............A3
TPG..............................B3
Travelers....................B10
Twitter ........................ B4
21st Century Fox.B1,B12
U-V-W
UBS Group...................B2
United Parcel Service.B3
Valero Energy ........... B11
Verizon Communications
.....................................B1
Visa..............................B1
Volkswagen.................B4
Wal-Mart Stores...B2,B4
Walt Disney ... B1,B4,B12
Welsh, Carson,
Anderson & Stowe...B3
WM Motor .................. B4
Woodward...................A3
INDEX TO PEOPLE
A
M
Greenfield, Rich........B12
C
Cheng, Paul...............B11
Cho, Bobby..................B1
Hansen, Ole...............B11
Harrison, Hunter...A1,A2
Hecke, Joe Van...........B2
I-J
Iger, Robert...............B12
Jones, Rene...............B10
E-F
K
Espelien, Joel..............B4
Ford, Bill......................B4
Ford, Ron.....................B2
Kelly, Alfred................B1
Kuroda, Haruhiko........A5
G
Gold, Richard.............B10
L
Li, William...................B4
Long, David H...........B10
VISA
Continued from the prior page
Visa didn’t detail the circumstances of Mr. McCarthy’s
firing or Mr. Kelly’s involvement in the decision to let the
executive go, which haven’t
been previously reported.
Mr. McCarthy has become
one of the highest-ranking
men in finance to lose his job
because of issues of alleged
sexual impropriety, joining the
ranks of others in the fields of
media, entertainment, technology and politics.
In response to questions
from the Journal, Mr. Kelly declined to address the circumstances around Mr. McCarthy’s
firing. In a statement, he said:
“At Visa, we lead by example.
We have the courage to stand
up for what is right, we act
with the highest integrity, and
everyone is held accountable
for their actions and behaviors, no matter their title.”
The firing stunned many
Visa staff, said people familiar
P
Pearson, Kevin..........B10
Persson, Karl-Johan . B12
S-W
Smith, Justin..............B4
Warrior, Padmasree....B4
Williams, Brendan....B11
Wilmers, Bob............B10
For some of the time relationships took place, Mr.
McCarthy was married to his
first wife, one of the people
said. The two separated in
2011 and were divorced in
2014, according to court records.
Mr. McCarthy remarried
this past January. His current
wife was also a Visa employee
with whom he had a relationship while both were working
at the company, according to
people familiar with the matter. Mr. McCarthy’s wife has
left the company, according to
one of the people.
Some former and current
employees said Mr. McCarthy’s
relationships went back at
least as far as 2008, when Visa
was preparing for an initial
public offering. A work-hard,
play-hard atmosphere prevailed in that era, the people
said.
“In order to be in the inner
circle, you needed to party
with the inner circle,” which
often meant going out for
drinks, one of the people said.
Most of the women who joined
the circle “were go-getters.
[They] wanted face time with
people who make decisions.
There was a desire to spend
time with these men to be
looked upon as a rising star,”
the person said.
Mr. McCarthy was in charge
of high-profile divisions at
Visa. He ran the consumerand business-products unit,
which included the company’s
debit- and credit-card businesses. He later led the innovation and strategic-partnerships division.
Mr. McCarthy’s teams focused on getting Visa’s payments software into a set of
Internet-enabled devices.
Visa’s technology also
helped advance so-called tokenization, a way of speeding
up online and mobile commerce where a cardholder’s
account number is replaced by
a unique digital code, or token.
The system would eventually power Apple Pay, Samsung Pay and other payment
schemes and would play a part
in Visa partnerships with rivals such as PayPal.
The anonymous email to
Mr. Kelly this fall ended Mr.
McCarthy’s rise. Besides the
prior relationships, the ensuing investigation unearthed
recent emails between Mr.
McCarthy and a lower-level female employee. In an email
conversation, Mr. McCarthy
told the employee, who had
gone through a breakup, that
she was good looking and
would meet someone else, a
person familiar with the matter said. Mr. Kelly considered
that to be poor judgment by
Mr. McCarthy, another person
said.
—Peter Rudegeair
and Lisa Schwartz
contributed to this article.
no
Jim McCarthy
led Visa’s
innovation and
strategicpartnerships
division before
his firing.
O
O'Brien, Sean..............B3
n-
B
Brady, Robert............B10
Bundy, Cliven..............A2
Maloni, David..............B2
Maltsbarger, Ryland...B1
McCarthy, Jim.............B1
with the matter. Until that day,
the 18-year veteran was the
most well-known executive after Mr. Kelly at Visa, a payments titan with a more than
$250 billion market value.
Mr. McCarthy, 53 years old,
was the face of the company’s
partnerships with technology
giants such as Apple Inc. and
PayPal Holdings Inc. Within
the company, Mr. McCarthy,
who reported directly to Mr.
McInerney, had a reputation as
a rainmaker, according to a
person familiar with the thinking of top executives.
But people who know or
worked with Mr. McCarthy
said he had another side. He
had engaged in relationships
with women on staff over the
past decade, according to
these people. The affairs were
consensual, the people said,
and were with women in
midlevel positions. Even so,
the women were in jobs lower
than Mr. McCarthy in the corporate hierarchy. In one instance, an employee worked
for Mr. McCarthy, some of the
people said.
The relationships with employees led to an investigation
by Visa, said people familiar
with the matter. In 2012, Mr.
McCarthy was reprimanded by
the company’s human-resources department, according
to one of those people. He lost
his bonus and his pay was reduced, the person said.
BY MIKE SPECTOR
General Motors Co. faces a
potential payout of $1 billion
in stock to address claims related to the Detroit auto company’s ignition-switch crisis,
depending on the outcome of a
looming trial.
The trial, set to start Monday in a Manhattan federal
bankruptcy court, centers on
whether General Motors can
stop a deal reached in August
between igniTHE
tion-switch
WEEK
plaintiffs and a
AHEAD
trust representing creditors of
so-called
Old
GM, the assets the auto maker
left behind in 2009 as part of
its $50 billion government rescue and restructuring. The
terms of the August deal contemplated forcing General Motors to pay the Old GM trust
$1 billion in stock.
An adverse result for GM,
which isn’t assured, would
likely be challenged in court
well into 2018. A settlement is
possible before or during the
proceedings, though lawyers
on all sides were preparing to
square off days before the
trial’s kickoff.
The legal skirmish comes as
investors have bid up the auto
maker’s stock amid enthusiasm for plans for electric and
self-driving cars. GM faced
criminal charges and has paid
legal settlements totaling over
$2 billion after conceding in
2014 that it failed for more
than a decade to recall mil-
Sen. Edward Markey with a faulty GM ignition switch in 2014.
lions of vehicles with defective
switches now linked to 124
deaths, despite internal evidence of a safety problem. The
switch can slip from the run
position, cutting engine power
and disabling safety features
including air bags.
GM earlier accused parties
in the August deal of “secretly
plotting” and has reached a
separate pact with the Old GM
trust that would help it avoid
the payment and render the
earlier deal invalid.
“Our legal team…feels that
we are positioned well,” GM
Chief Executive Mary Barra
said of the coming court battle, in a recent interview. She
added she was “not going to
speculate on what’s going to
happen.”
Ms. Barra played down the
potential financial consequences for the auto maker
should the bankruptcy judge
overseeing the trial uphold the
earlier settlement, reiterating
steps the company has taken
to put the ignition-switch crisis behind it.
“When you look at that and
how we continue to close that
chapter, I don’t think it has an
impact on what we’re doing to
transform the future,” she
said.
In the current legal fight,
plaintiffs’ lawyers contend the
Old GM trust completed a settlement with them and therefore couldn’t strike a separate
deal with the auto maker, often called New GM. Lawyers
for the Old GM trust contend
the first settlement with plaintiffs wasn’t signed, freeing it
to negotiate another deal with
New GM.
A bankruptcy judge will
evaluate whether the earlier
settlement is valid. Under the
settlement’s terms, the Old
co Fo
m rp
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er rs
ci on
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us l,
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on
H
al-Falih, Khalid..........B11
GM Tries to Stop $1 Billion Payout
JIM WATSON/AGENCE FRANCE-PRESSE/GETTY IMAGES
B
Baidu ........................... B4
Bayerische Motoren
Werke........................B4
Berkshire Hathaway
........................... B10,B11
Bloomin' Brands ......... B2
Boeing ....................... B12
Byton...........................B4
Fannie Mae.................A4
FedEx...........................B3
Fiat............................A11
Ford Motor..................B4
Freddie Mac................A4
BITCOIN
tially putting a damper on
trading activity.
JPMorgan Chase & Co.,
Royal Bank of Canada, Société Générale SA and UBS
Group AG didn’t plan to offer
their customers access to CME
bitcoin futures initially, although they are monitoring
the situation and could rethink
their stance later, people familiar with the situation said.
The same banks sat on the
sidelines for Cboe’s launch, according to the people.
All of them are so-called
clearing firms at CME, meaning that they sit between the
exchange and traders and help
move cash from market participants with losing bets to
those whose bets pay off. Bitcoin futures are risky for clearing firms because the extreme
volatility of the cryptocurrency increases the odds of
traders being unable to cover
their losses. If that happens,
the clearing firm itself can suffer losses.
“A lot of clearing firms were
very nervous about this
launch. They throttled back
the risk quite a bit,” said Joe
Van Hecke, a trader at Grace
Hall Trading.
Goldman Sachs Group Inc.
Continued from the prior page
and less to retail investors,
some traders said. That is because of its larger size; each
CME contract represents five
bitcoins, whereas Cboe’s represents just one. That means it
will require more cash upfront
to trade the CME contract.
But CME still faces many of
the same hurdles as Cboe, including a reluctance by many
banks and futures brokerages
to touch the notoriously volatile cryptocurrency.
Conceived as a purely digital currency not backed by any
government, bitcoin has gone
from a curiosity beloved by
libertarians and software
geeks to a mainstream investing fad. But skeptics call it a
bubble, and its reputation remains clouded by its association with money laundering
and other illicit activity.
CME’s heft and close ties to
big trading firms could give it
an edge over Cboe. But some
of the largest banks and brokerages won’t be providing
their customers with access to
CME’s bitcoin futures, poten-
GM trust would pay a total of
$15 million to car-accident victims and customers seeking
compensation for declining vehicle values resulting from the
faulty switches. The trust
would then accept additional
claims from those plaintiffs
exceeding an estimated $10
billion, triggering a requirement from GM to pay the trust
shares valued at roughly $1
billion.
The trigger is part of a
complex formula in a bankruptcy sale that sent assets to
a government-owned company
to create the current, revitalized New GM. Its less-desirable parts were discarded in
bankruptcy court.
The effort to extract another payout from General
Motors, which is now publicly
traded, traces roots to battles
spanning multiple federal
courts. When the ignitionswitch crisis emerged in early
2014, GM asserted a legal
shield that blocked consumers
from pursuing claims that predated the company’s July
2009 court-approved bankruptcy sale.
A federal appeals court
later undid that legal shield,
opening the door for additional claims.
GM had waived the shield
for ignition-switch victims involved in crashes before the
company’s bankruptcy restructuring who were seeking
money from a compensation
fund the auto maker established that eventually paid out
about $600 million.
and ABN Amro Group are clearing both CME and Cboe bitcoin
futures but only for certain clients, representatives of the
banks said.
Interactive Brokers Group
Inc., a clearing firm and online
brokerage, is offering access to
both CME and Cboe bitcoin futures. In a disclosure form, it
warns customers that trading
CME’s heft and close
ties to big trading
firms could give it an
edge over rival Cboe.
bitcoin futures is “especially
risky” and “there may be no fundamental or economic basis for
valuation of Bitcoins and their
prices may move randomly.”
Popular retail brokerages
Charles Schwab Corp. and TD
Ameritrade Holding Corp.
said they were studying CME’s
bitcoin futures but wouldn’t be
allowing customers to trade
them at launch. TD Ameritrade will enable trading of
Cboe’s futures starting Monday, a spokeswoman said.
Ally Invest, the online brokerage arm of Ally Financial
Inc., said earlier this month
that it would give its customers access to CME bitcoin futures “on day one,” but on
Thursday, an Ally spokeswoman said the firm was evaluating the situation and “cannot confirm the timing of
availability to our customers.”
A CME spokeswoman said a
number of trading firms were
ready to support its new bitcoin futures at launch.
Bitcoin’s price swings led
CME to rein in the riskiness of
its new contract. Last Tuesday,
citing a “normal review of
market volatility,” CME raised
the so-called initial margin requirement for its bitcoin futures to as much as 47% of the
value of a contract for speculative traders, from 35% earlier.
That means such traders
will need to deposit cash
worth nearly half the value of
the contract to place bets, effectively limiting the size of
the bets they can place. By
comparison, initial margin for
CME’s main oil futures contract is about 4%.
—Alison Sider
and Emily Glazer
contributed to this article.
PRICE
Continued from the prior page
told investors this month. “We
didn’t pass all of it on.”
The price of a comparable
basket of goods at chains such
as Kroger, Target Corp. and
Albertsons Co.’s Randalls
stores in Houston fell 1% last
month compared with the previous November, according to
a Wolfe Research note to investors.
In Virginia Beach, Va., where
growing deep-discount chains
Aldi and Lidl have opened five
stores recently, Wal-Mart
Stores Inc. cut prices for its
store brands by an average of
6%, Wolfe found.
Jeff Carr, chief financial officer at Koninklijke Ahold Delhaize NV, said the price war
between Lidl and Wal-Mart is
holding down grocery prices in
the Southeast. “The shelf price
inflation is a little lower,” he
said.
Analysts say they expect retailers’ margins to suffer if they
stand by lower prices as their
own costs rise. Grocers will
have to cut more costs to absorb the expense, said Mr.
Maltsbarger.
“They are having to get
much better at negotiating with
their suppliers. They are going
to have to go after them,” he
said.
Grocery executives say eventually they will have to pass
along rising prices to customers. Some have slowly started.
David Hirz, chief executive
of California-based Smart & Final Stores, Inc., said the warehouse-style grocer has raised
some prices as long as their ad-
PATRICK T. FALLON/BLOOMBERG NEWS
A
ABN Amro Group........B2
Agoal.........................A10
Airbus........................B12
Albertsons...................B2
Aldi..............................B2
Alibaba Group Holding
.....................................B4
Ally Financial..............B2
Amazon.com..........A1,B1
Andeavor...................B11
AT&T.......................B1,B4
BUSINESS & FINANCE
ly
.
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.
THE WALL STREET JOURNAL.
Cheesecake Factory is locking in supply contracts for next year after paying more for food.
vantage over competitors remains.
Food distributors and restaurants are facing rising food
prices, too. Sysco Co., the
world’s largest food distributor,
said more expensive meat, poultry and dairy helped push its
supply costs up 4% during the
quarter ending in September.
SpartanNash Co., a food
distributor and the largest grocery provider to military commissaries, said costs in its fooddistribution segment are rising
for the first time in a year.
Competition in food retail is
making it difficult to pass along
increases there, company finance chief Mark Shamber said.
Restaurants already were
fighting tepid traffic and rising
wages before food costs began
to rise. Now restaurants expect
food prices to rise to 3% next
year, said David Maloni, president of the American Restaurant Association, a consultancy.
Cheesecake Factory Inc. is
locking in supply contracts for
next year after paying more for
poultry, dairy, bread and seafood.
Bloomin’ Brands Inc., owner
of Outback Steakhouse and
other chains, is cutting costs to
withstand higher labor and
commodity prices, particularly
in dairy, produce and beef cuts.
Prices have been rising
faster at restaurants than at
grocery stores since 2015, encouraging customers to get
more of their meals at supermarkets.
“Prices have been good
lately,” said Ron Ford, a 73year-old office manager from
North Vernon, Ind. Mr. Ford has
been buying more items on sale
lately at Wal-Mart and Kroger.
But he has noticed the price of
beef beginning to climb, and
switched to buying chicken and
pork instead.
“We don’t buy nearly as
much beef as we used to,” he
said.
—Julie Jargon
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 18, 2017 | B3
BUSINESS NEWS
Packages are sorted at a U.S. Postal Service facility in Florida. USPS expects more than 850 million packages this holiday season.
Crunch Time for Deliveries
FedEx, UPS and USPS
wrestle with logistics
as busiest week of
holiday season begins
BY PAUL ZIOBRO
Package-delivery companies
are bracing for their busiest
week of the holiday season,
and one with less room for error.
FedEx Corp., United Parcel
Service Inc. and the U.S.
Postal Service expect to process a record number of packages this peak season, many of
them e-commerce orders, and
the week before Christmas is
usually the heaviest period.
The Postal Service, which
makes more deliveries to
homes than its two commercial rivals, already plans to exceed its initial forecast of
nearly 850 million packages
between Thanksgiving and
New Year’s Day, a Postal Service spokesman said.
FedEx may provide a
glimpse of how the holiday
season is shaping up when it
reports earnings on Tuesday.
The company said it expects to
handle as many as 400 million
packages this season and that
it has upgraded its network
with a new hub for its ground
deliveries and the expansion of
two existing hubs.
Patrick Fitzgerald, a senior
vice president of marketing
and communications at FedEx,
said the carrier has a “pretty
good idea” of how many items
it will receive ahead of Christmas, along with where it will
need to deploy trucks and
planes, thanks to ongoing contact with retailers.
He said FedEx is monitoring
for any possible changes so it
can react quickly. “We just
need to be clear in setting expectations on how much our
networks can handle on any
given day,” he said.
UPS, meanwhile, is under
particular scrutiny this holiday
season after it said earlier this
month that a crush of online
orders was contributing to delivery delays. It said that some
packages were taking a day or
two longer than scheduled to
reach their destinations but
that the backlog has since
been cleared.
The Atlanta-based company
says it has taken some steps to
ensure that similar problems
don’t occur this week, deploying “ready teams” to cities
such as Atlanta, Denver and
Houston to help with processing and delivery. Those teams
are also on call for deployment
to areas that experience bottlenecks.
UPS has also told drivers
that they may be asked to
work more hours—70 hours
over an eight-day period, up
from 60 over seven days—to
meet the heightened demand,
drawing objections from union
leaders who represent about
250,000 UPS employees. Sean
O’Brien, president of Teamsters Local 25 in Boston, said
the change shows that UPS
didn’t hire enough workers
this season.
“UPS dropped the ball this
year,” said Mr. O’Brien. “Our
members are out there working harder and longer than
ever and it’s not healthy.”
A UPS spokesman said that
even with the change that allows for more hours, 88% of its
drivers still worked less than
60 hours for the week ended
Dec. 9. The company has said
the change complies with federal requirements.
UPS expected to hire 95,000
seasonal workers for the holiday period and is still hiring in
some markets to offset employee turnover. That is
around the same level of seasonal hiring as last year, despite a forecast that it will
ship 750 million parcels this
season, a 5.3% increase. UPS
said it hasn’t needed to increase its seasonal hiring because it is relying more on automated equipment and hired
more workers earlier in the
year to meet demand.
no
n-
would add to a cascade of transactions aiming to bring together
insurance operations with other
health-care businesses.
As part of the complex deal,
Kindred, a sprawling company
with $7.2 billion in revenue last
year, is to be divided, according
to people familiar with the matter. Welsh, Carson, Anderson &
Stowe and TPG would take over
Kindred’s facility-focused business, which includes long-term
acute-care hospitals and rehabilitation centers, while the private-equity firms together with
Humana would get its homeand hospice-care operation.
The deal would value Kindred at $9 a share, the people
said, a modest premium to
where the shares currently
trade after rallying sharply in
recent weeks. Kindred stock
closed Friday at $8.60, giving
the debt-laden company a
market value of about $750
million. Factoring in debt, Kindred has an enterprise value
of about $4 billion.
Though a deal could be announced soon, it is still possible the talks could fall apart.
Kindred is the biggest homehealth and hospice operator in
the U.S. Its facilities business,
meanwhile, includes around 77
long-term care hospitals and 19
rehabilitation hospitals.
Its shares have lagged amid
skepticism about the future of
some of the company’s core
businesses, which rely heavily
on reimbursements from the
federal Medicare program. Kindred’s 2015 acquisition of Gentiva Health Services Inc. also left
ly
.
By Anna Wilde
Mathews, Dana
Mattioli and Dana
Cimilluca
the company with a heavy debt
load. To help improve its finances, Kindred has been selling
off its nursing homes.
Humana, like Kindred based
in Louisville, Ky., already has
some home-health operations
and has said it wants to get
deeper into that business as a
way to better manage the
health of its Medicare enrollees. The insurer has said it believes closer ties to homehealth services and physicians
will help it improve care and
hold down costs. “Home is often a superior clinical environment to deliver care and reduce
high-cost
hospital
admissions,” Chief Executive
Bruce Broussard said during
Humana’s third-quarter earnings call on Nov. 8.
Rivals are making similar
moves. UnitedHealth Group
Inc. has been on a yearslong
campaign to purchase doctor
groups, urgent-care clinics and
surgery centers. The company
announced earlier this month
it would buy the physiciangroup unit of DaVita Inc. for
$4.9 billion.
Meanwhile, Aetna Inc. recently agreed to be acquired by
drugstore giant CVS Health Corp.
for nearly $70 billion. CVS and
Aetna have said they want to use
the pharmacies as a source of
care and coordination for members, including in the home.
The insurers’ moves into
the health-care provider businesses, often with the goal of
reducing patients’ use of hospitals, are being countered by
hospital companies. Major
nonprofit hospital operators
Dignity Health and Catholic
Health Initiatives have announced they are combining.
Ascension and Providence St.
Joseph Health, also nonprofits,
are in talks about a potential
merger that would create the
biggest U.S. hospital owner.
—Laura Cooper
contributed to this article.
co Fo
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Humana Inc. is in advanced
talks to join with two privateequity firms in a deal to acquire
home-care provider Kindred
Healthcare Inc., a move that
JOE RAEDLE/GETTY IMAGES
Humana in Talks
To Buy Kindred
With Equity Firms
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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.
B4 | Monday, December 18, 2017
TECHNOLOGY
WSJ.com/Tech
China Startups Take Aim at Tesla MIMS
Shanghai-based NIO, backed by Tencent and Baidu, presents its ES8 as a rival to Tesla’s Model X.
lion last month in a funding
round led by social-media
company Tencent Holdings
Ltd. Baidu Inc., which dominates Chinese internet search,
is another investor.
NIO Chairman William Li
presents the ES8 as a rival for
Tesla’s Model X.
During the launch event, the
ES8, which responds to voice
commands and has limited
self-driving capability, reverseparked itself into a batteryswapping facility that can
switch the car’s battery pack
in under three minutes, said
Mr. Li. The battery can also be
fully charged in one hour, and
gives the car a 220-mile range.
The ES8 starts at around
$68,000 before subsidies,
while Tesla’s Model X, which is
subject to import tariffs and is
ineligible for subsidies in
China, costs roughly twice that
here. Mr. Li said the ES8,
which is now on presale, is expected to be with buyers in the
first half of 2018.
Most Chinese auto startups
aim to launch in China in 2018
and expect to tackle the U.S.
and Europe by around 2020.
But their window of opportunity might be narrow; Tesla
has confirmed plans to build a
factory in Shanghai, which is
likely to start producing cars
around 2021, and most traditional auto makers have committed to producing electric
vehicles and are experimenting
with autonomous technology
and in-car internet services.
In a sign of the changing
times in the auto business,
Ford Motor Co. Executive
Chairman Bill Ford said at a
news conference in Shanghai
in December that the centuryold auto maker was transforming itself into a “mobility company, designing smart vehicles
for a smart world.”
Ford is in talks with Alibaba Group Holding, China’s
co Fo
m rp
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ci on
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e
on
Backed by billions from influential investors and armed
with global talent, over a
dozen Chinese startups want
to make dinosaurs of incumbent auto makers. As they
start production, their determination is raising the pressure to innovate at traditional
auto makers.
“Tesla paved the way, now
we’re taking this a step further,” said Padmasree Warrior,
who runs the U.S. arm of
Shanghai-based NIO, one of
the Chinese startups that want
to drive the convergence of the
automotive and technology industries. “We have a mission
to transform mobility.”
Chinese auto startups—
many of them founded just
two or three years ago—are
betting they can leapfrog existing auto makers in creating
a new world of electric, networked cars that drive themselves. But they must make
enough of a splash at a time
when some of the game-changing technologies they advocate, notably self-driving software, are still in the testing
lab.
NIO launched its first production car—the ES8 sportutility vehicle—in Beijing on
Saturday, having raised $1 bil-
ANDY WONG/ASSOCIATED PRESS
BY TREFOR MOSS
dominant e-commerce company, to develop advanced mobility services, while Volkswagen
AG
is
holding
discussions with Didi Chuxing
Technology Co., the local
equivalent of Uber, to design
new service models.
Like many Chinese technology companies and auto startups, NIO has an operation in
California, with more than 300
employees developing autonomous driving and other critical
software.
Rivals to NIO are making
similar strides. Byton, which is
run by former BMW AG and
Nissan Motor Co. executives,
opened a California base in December. Like NIO, Byton plans
to develop software in the U.S.,
but manufacture in China in
time for a 2019 launch.
NEVS, a Sino-Swedish venture that acquired the assets
of bankrupt Swedish auto
maker Saab in 2012, started
production on an electric version of the Saab 9-3 in Tianjin
in December. A spokesman
said NEVS isn’t aiming to sell
its cars to ordinary consumers,
but to platform operators such
as Didi Chuxing, which like
Uber Technologies Inc. and
other ride-share companies
might develop fleets.
WM Motor, also backed by
Baidu and Tencent, finished
building a plant in eastern
China in September and plans
to start production in early
2018. WM aims to offer a
cheaper alternative to both
Tesla or NIO, with mass-market EVs for under $30,000.
MEDIA
‘Last Jedi’ Blasts Its Way to Stellar Opening
n-
Malaysian fans at a showing of ‘Star Wars: The Last Jedi’ on Friday. The film’s $450 million global opening is the fifth-biggest ever.
Estimated Box-Office Figures, Through Sunday
no
Three films into Walt Disney Co.’s planned string of
never-ending sequels and
spinoffs, “Star Wars” remains
in a box-office universe of its
own.
“Star Wars: The Last Jedi”
opened to $220 million in the
U.S. and Canada this weekend,
according to studio estimates.
That is the second-biggest
box-office opening of all time,
not counting inflation. The
only one bigger was 2015’s
“Star Wars: The Force Awakens,” the return of the series
to the big screen after a 10year absence and the first released by Disney, which made
$248 million in its domestic
opening.
Overseas, “The Last Jedi”
took in $230 million, compared with the $281 million international debut of “The
Force Awakens.”
The $450 million global
opening of “The Last Jedi” is
the fifth-biggest ever. It would
have been higher, but the new
“Star Wars” sequel hasn’t
opened yet in China, where it
will start playing on Jan. 5.
The massive debut indicates that “Star Wars” remains a pop-culture phenomenon like nothing else, with
“must-see” status among every demographic. Fanboys,
adults and children all want to
see a new “Star Wars” movie,
particularly a sequel to the
main ongoing story like “The
Last Jedi,” both out of personal excitement and to be
part of a global conversation.
In a year when other major
franchises stumbled, like
“Transformers,” “Cars” and
“Justice League,” “Star Wars”
is showing no signs of weakness.
That is stellar news for Disney, which paid $4 billion in
2011 to buy “Star Wars” owner
Lucasfilm Ltd. The purchase is
not only paying off for the
SADIQ ASYRAF/ASSOCIATED PRESS
BY BEN FRITZ
FILM
SALES, IN MILLIONS
DISTRIBUTOR
WEEKEND* CUMULATIVE % CHANGE
1. Star Wars: The Disney
Last Jedi
2. Ferdinand
Twentieth
Century Fox
$220
$220
--
$13.3
$13.3
--
3. Coco
4. Wonder
$10
$5.4
$150.8
$109.3
-46
-36
$4.2
$219.5
-57
Disney
Lions Gate
5. Justice League Warner Bros.
*Friday, Saturday and Sunday
Source: comScore
company’s movie studio, but
its consumer-products business that pumps out related
toys and pajamas and its
theme parks, where “Star
Wars” lands are under construction in both Florida’s
Walt Disney World and California’s Disneyland.
Other companies are benefiting too. IMAX Corp. reported that “The Last Jedi”
was its second-biggest opening ever, excluding China, with
$40.6 million of box office at
its digital and large-format
screens.
It only helped that “The
Last Jedi,” written and directed by Rian Johnson, was
overwhelmingly praised by
critics. It earned the series’
highest score on review aggregation site Metacritic since
the original “Star Wars” in
1977. Many praised it for taking more risks than “The Force
Awakens,” with a story that
was less similar to the original
trilogy.
Audiences gave the movie
an average score of A, according to market research firm
CinemaScore. Domestic ticket
sales dropped only 39% on
Saturday compared with the
total of Thursday night and
Friday screenings. The equivalent number for “The Force
Awakens” was 43%, a sign that
buzz about the new movie
may be even stronger.
Dave Hollis, Disney’s head
of theatrical distribution, said
that he had expected an opening weekend gross of about
$203 million on Friday based
on the early grosses, but that
“walk-up” business, people
who didn’t buy tickets in advance online, was surprisingly
high.
“The film is set up for unbelievable word-of-mouth and
repeat viewing,” said Mr. Hollis.
If so, it could eventually rival the nearly $2.1 billion
global box-office total of “The
Force Awakens,” the third-highest of all time behind “Avatar”
and “Titanic.” Domestically,
“The Force Awakens” holds the
record for highest gross of all
time with $936.7 million.
Last year’s “Rogue One: A
Star Wars Story,” a spinoff with
lower expectations, grossed
$532.2 million domestically
and over $1 billion globally.
Bloomberg Launches Television Service on Twitter
BY LUKAS I. ALPERT
The world is about to see
what a mashup of Twitter’s
frenetic feed and Bloomberg’s
news judgment looks like.
Bloomberg Media is launching on Monday the first roundthe-clock streaming television
service on Twitter, as the social-media platform seeks to
become a bigger player in the
world of online video.
Dubbed
“TicToc
by
Bloomberg,” the channel will
focus more on general news
and less on the hard financial
reporting for which the news
service is best known.
“We have been looking really closely at how one replaces or disrupts a traditional
TV news outlet like CNN. We
see the answer as an amalgamation of digital, social and
television,” said Bloomberg
Media’s chief executive officer,
Justin Smith. “The essential
inspiration for this is Twitter
itself.”
The channel will broadcast
a hybrid of breaking news reporting by its own staff
around the world, mixed with
curated video, images and text
taken from Twitter users and
vetted for authenticity. At the
top of each hour, it will feature a roundup of events.
Bloomberg currently airs
three of its daily Bloomberg
Television programs on Twitter, but the new channel won’t
feature rebroadcasted footage
from its existing cable TV operation. Instead, it will air
footage produced and curated
by a staff of about 50 people
in New York, London and
Hong Kong, supplemented by
the news services’ 2,700 editorial employees world-wide,
Bloomberg said.
The company said branded
content will be woven into the
programming, and the channel
will launch with several sponsors, including AT&T, CA
Technologies, CME Group,
Infiniti, SAS and TD Ameritrade. The ad buys range from
$1.5 million to $3 million, Mr.
Smith said. The company declined to say how much investment it has made in the venture.
For Twitter, the partnership
is part of its effort to bolster
live video offerings as it has
struggled to find a successful
formula for converting its sizable audience of 330 million
Continued from page B1
from the ideal many held dear
at its genesis, a place where
any startup can be a disrupter.
The biggest barrier to a company becoming the next
Google, Facebook, Netflix or
Amazon isn’t the end of net
neutrality—it’s Google, Facebook, Netflix and Amazon
themselves, says Joel Espelien,
senior adviser at Diffusion
Group, which forecasts the future of TV and video.
These companies are spending vast sums to push their
ever-higher-bandwidth content
to consumers. Forcing them to
pay carriers to use so-called
internet fast lanes—or to be
exempt from data caps in
“zero-rating” schemes—only
solidifies their lead, says Mr.
Espelien.
Blocking or throttling content—the biggest fear of those
concerned about an internet
without neutrality—could
mean mutually assured destruction, as conglomerates retaliate against one another,
AT&T Senior Executive Vice
President Bob Quinn wrote in
a recent blog post.
None of this means an internet sans net neutrality will
turn out just fine. In fact, the
end of net neutrality will exacerbate an already messy situation.
The future, Mr. Espelien
says, is a wider variety of
broadband and cellular plans
offering you faster access to
particular services if you are
willing to pay more. If you
can’t pay, you might still get
fast access to services that can
pay to reach you, while the remainder of your broadband
streams are subject to an annoying data cap.
“Look at the dollar stores,
look at Wal-Mart, think about
how this country works,” Mr.
Espelien says. As America’s
corporations change pricing
and services, he says, “you’re
going to see a significant portion of the population on supercheap internet services that
ly
.
Host of well-financed
developers are racing
to bring smart electric
vehicles to market
monthly users into a fastgrowing ad business.
Both sides declined to discuss the financial aspects of
the arrangement in detail, but
said the service would be adsupported and that Bloomberg
would have full control of programming the feed.
Twitter has struck deals
with sports leagues, BuzzFeed,
Cheddar TV and a variety of
other media companies to
broadcast hundreds of hours
of content, but the Bloomberg
partnership marks the first
24-hour-a-day, seven-day a
week arrangement.
The end of net
neutrality will
exacerbate an already
messy situation.
just have a ton of strings attached, like advertising, to
make them economically viable.”
This is the sort of competition that FCC Chairman Ajit
Pai has said the end of netneutrality rules will bring
about. What isn’t clear is
whether the rule change will
lead to more investment by
service providers, as Chairman
Pai has argued.
Half of all U.S. households
have either one or zero choices
for broadband access at the
FCC standard of 25 megabits
per second, according to a
June 2017 analysis by academics and experts. If the goal of
net neutrality is to preserve
competition among internet
services and consumer access
to them, then the remedy is to
increase the quality and quantity of options to connect to
the internet. If customers can
easily jump from one carrier to
another, those carriers will be
less likely to block any desirable content or service.
Verizon and AT&T are both
working on new access options
in the form of 5G fixed wireless broadband. The idea is
that instead of spending heavily to wire up every home or
apartment, consumers can
simply hang a receiver out
their window and point it at
the nearest 5G-equipped utility
pole.
Another option is internet
from space. SoftBank has invested $1.5 billion in satellite
internet provider OneWeb
which has said it is on track to
begin launching its first satellites next year to create an
eventual fleet of 700. The plan
is to make fiber-optic-speed
internet service available
world-wide by 2020. Optimistic claims about satellite internet have been made many
times before, however, and no
matter how fast the connection, signals take longer when
they have to travel into outer
space.
Will an unfettered market
just lead to more conglomeration? Or will it breed the competition required to maintain
the internet as a hotbed of invention? We might not find
out that answer for many
years.
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 18, 2017 | B5
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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 18, 2017
CLOSED-END FUNDS
Listed are the 300 largest closed-end funds as
measured by assets. Closed-end funds sell a limited
number of shares and invest the proceeds in securities.
Unlike open-end funds, closed-ends generally do not
buy their shares back from investors who wish to cash
in their holdings. Instead, fund shares trade on a stock
exchange. NA signifies that the information is not
available or not applicable. NS signifies fund not in
existence of entire period. 12 month yield is computed
by dividing income dividends paid (during the previous
twelve months for periods ending at month-end or
during the previous fifty-two weeks for periods ending
at any time other than month-end) by the latest
month-end market price adjusted for capital gains
distributions.
Source: Lipper
Friday, December 15, 2017
52 wk
Prem Ttl
Fund (SYM)
NAV Close /Disc Ret
General Equity Funds
Adams Divers Equity Fd ADX 17.57 14.99 -14.7 27.9
Boulder Growth & Income BIF 12.96 10.88 -16.0 25.4
Central Securities CET 32.79 26.94 -17.8 27.7
CohSteer Opprtnty Fd FOF 13.89 13.10 -5.7 20.8
Cornerstone Strategic CLM 13.49 15.17 +12.5 22.0
EtnVnc TaxAdvDiv EVT 23.86 22.89 -4.1 20.6
Gabelli Dividend & Incm GDV 24.80 22.79 -8.1 20.8
Gabelli Equity Trust GAB 6.55 6.17 -5.8 21.6
Genl American Investors GAM 40.58 33.81 -16.7 18.0
Guggenheim Enh Fd GPM 8.93 8.72 -2.4 23.8
NEW TO THE MARKET
52 wk
Prem Ttl
Fund (SYM)
NAV Close /Disc Ret
HnckJohn TxAdv HTD 25.84 25.47 -1.4 25.5
Liberty All-Star Equity USA 6.84 6.21 -9.2 31.6
Royce Micro-Cap RMT 10.36 9.29 -10.3 23.1
Royce Value Trust RVT 17.27 15.70 -9.1 25.1
Source Capital SOR 44.96 40.45 -10.0 15.5
Tri-Continental TY
30.12 26.99 -10.4 28.0
Specialized Equity Funds
Adams Natural Rscs Fd PEO 22.19 19.07 -14.1 -1.8
AllnzGI NFJ Div Interest NFJ 14.92 13.58 -9.0 15.7
AlpnGlblPrProp AWP 7.33 6.63 -9.5 41.7
ASA Gold & Prec Metals ASA 12.42 10.83 -12.8 7.1
BlkRk Enh Cap Inco CII 17.15 16.07 -6.3 25.5
BlkRk Engy Res Tr BGR 15.20 13.53 -11.0 -1.7
BlackRock Enh Eq Div Tr BDJ 9.94 9.09 -8.6 18.3
BlackRock Enh Gl Div Tr BOE 14.50 NA NA NA
BlkRk Intl Grwth&Inco BGY 6.98 6.47 -7.3 26.8
BlkRk Health Sci BME 35.65 36.20 +1.5 19.3
BlackRck Rscs Comm Str Tr BCX 10.24 9.25 -9.7 19.4
BlackRock Science & Tech BST 27.68 26.81 -3.1 55.6
BlackRock Utilities Infr BUI 21.39 21.57 +0.8 26.0
CBREClarionGlblRlEstIncm IGR
7.84 NA 17.9
Central Fund of Canada CEF 13.08 12.81 -2.1 12.0
ClearBridge Amer Engy CBA
8.35 NA 3.8
ClearBridge Engy MLP Fd CEM
13.99 NA 2.0
Public Offerings of Stock
Lockup Expirations
IPOs in the U.S. Market
Below, companies whose officers and other insiders will become eligible
to sell shares in their newly public companies for the first time. Such
sales can move the stock’s price.
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
12/19
12/19
12/20
9/7
Issuer/business
Symbol/
Pricing
primary Shares Range($)
exchange (mil.) Low/High
1.4
Adial Pharmaceuticals
Manufacturer and
developer of medications
for addiction.
ADIL
Nq
11/16 Advantage Insurance
Provider of life insurance
policies.
AVI
N
10.0
11/13 LexinFintech Holdings
Technology company
offering an online loans
broker platform.
LX
Nq
24.0
Lockup
expiration Issue date
Dec. 18
Bookrunner(s)
9.00/ Aegis Cptl,
11.00 Maxim Grp,
Dawson James
Sec
Dec. 23
ATUS
30.00
2151.7
–36.6
180 days
June 21, ’17 Safety Income Growth SAFE
20.00
205.0
–10.0
180 days
June 21, ’17 Altice USA
June 21, ’17 SG Blocks
SGBX
5.00
8.6
9.0
180 days
June 26, ’17 Avenue Therapeutics
ATXI
6.00
33.0
–25.3
180 days
June 26, ’17 Esquire Financial Holdings ESQ
14.00
38.1
35.7
180 days
15.00
75.8
16.5
180 days
Dec. 24 June 27, ’17 Mersana Therapeutics MRSN
Sources: Dealogic; WSJ Market Data Group
9.00/ Raymond James & Assoc,
11.00 JMP Sec, B Riley
FBR
IPO Scorecard
9.00/ GS, BofA ML,
11.00 DB, China
Renaissance
Prtnrs
Company SYMBOL
IPO date/Offer price
Continued on Page B8
ADVERTISEMENT
Legal Notices
To advertise: 800-366-3975 or WSJ.com/classifieds
Offer Offer amt Through Lockup
Symbol price($) ($ mil.) Friday (%) provision
Issuer
Performance of IPOs, most-recent listed first
% Chg From
Friday3s Offer 1st-day
close ($) price close
Denali Thera
DNLI Dec. 8/$18.00
19.04
GigCapital
GIG.U Dec. 8/$10.00
9.99
–0.1
–0.1
Luther Burbank
LBC Dec. 8/$10.75
11.92
10.9
1.4
CURO Grp Hldgs
CURO Dec. 7/$14.00
14.00
...
–1.4
Odonate Thera
ODT Dec. 7/$24.00
23.00
–4.2
...
% Chg From
Friday3s Offer 1st-day
close ($) price close
Company SYMBOL
IPO date/Offer price
5.8 –11.2
Quanterix
QTRX Dec. 7/$15.00
17.75
18.3
1.6
Leisure Acquisition
LACQU Dec. 1/$10.00
9.90
–1.0
–0.6
Regalwood Global Energy
RWGE.U Dec. 1/$10.00
9.95
–0.5
–0.5
RETO Eco-Solutions
RETO Nov. 29/$5.00
9.30
86.0 –12.0
Big Rock Ptnrs Acquisition 10.25
BRPAU Nov. 20/$10.00
2.5
2.4
NOTICE OF SALE
Sources: WSJ Market Data Group; FactSet Research Systems
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“Shelf registrations” allow a company to prepare a stock or bond for
sale, without selling the whole issue at once. Corporations sell as
conditions become favorable. Here are the shelf sales, or takedowns,
over the last week:
Issuer/Industry
Takedown date/ Deal value Registration
Registration date ($ mil.)
(mil.)
Univar
Chemicals
Dicerna Pharmaceuticals
Healthcare
Chefs' Warehouse
Food & Beverage
Bristow Group
Transportation
Nordic American Tankers
Transportation
Proteostasis Therapeutics
Healthcare
TD Ameritrade Holding
Finance
bluebird bio
Healthcare
Iron Mountain
Real Estate/Property
Dec. 14
Dec. 12,316
Dec. 14
Oct. 13,316
Dec. 14
June 3,316
Dec. 13
Aug. 4,315
Dec. 13
June 22,317
Dec. 13
June 7,317
Dec. 12
Sept. 18,317
Dec. 12
Feb. 22,317
Dec. 12
Feb. 29,316
Blueprint Medicines
Healthcare
Noble Midstream Partners
Oil & Gas
Fate Therapeutics
Healthcare
Acer Therapeutics
Healthcare
Oasis Petroleum
Oil & Gas
GMS
Construction/Building
NCI Building Systems
Metal & Steel
Unitil Corp
Utility & Energy
Pershing Gold
Mining
Dec. 12
March 9,317
Dec. 12
Nov. 1,317
Dec. 12
Aug. 15,317
Dec. 12
Dec. 2,317
Dec. 11
July 14,317
Dec. 11
Dec. 11,317
Dec. 11
March 30,316
Dec. 11
Nov. 3,317
Dec. 11
June 8,316
$287.9
...
$40.0
$150.0
$35.2
...
Bookrunner(s)
GS
Stifel, Evercore
Jefferies
$143.8
...
$110.0
$500.0
$40.0
$125.0
Credit Suisse, Barclays,
BofA ML
MS, Clarkson, DNB Markets,
Seaport Global Sec, SEB
Leerink Prtnrs,
RBC Cptl Mkts
GS
$1,425.8
...
$600.0
...
$536.5
...
$300.0
...
GS, BofA ML, JPM,
Cowen & Co
JPM, BofA ML, WFS,
Barclays, Evercore, GS,
MS
GS, MS, Cowen & Co
$154.2
...
Citi
$46.0
$102.9
$11.0
$100.0
$305.6
...
GS, Credit Suisse
$191.3
...
MS
$117.3
$571.3
$33.3
$75.0
RBC Cptl Mkts, BofA ML
$6.8
$100.0
Canaccord Genuity,
BMO Cptl Mkts, Cantor
Fitzgerald & Co
Leerink Prtnrs,
Piper Jaffray
W. Blair
GS, RBC Cptl Mkts
Public and Private Borrowing
Tuesday, December 19
Auction of 13 and 26 week bills;
Auction of 4 week bill;
announced on December 14; settles on December 21announced on December 18; settles on December 21
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Thursday, December 21
LEGAL
NOTICES
Auction of 5 year TIPS;
announced on December 14; settles on December 29
Public and Municipal Finance
Deals of $ 150 million or more expected this week
Sale
Final
maturity Issuer
Rating
Bookrunner/
Fitch Moody’s S&P Bond Counsel(s)
California
Health Facs Fin Auth
California
Infrstr & Eco Dev Bank
462.0 N.R.
N.R.
N.R. M. Stanley/—
171.5 N.R.
N.R.
N.R. Wells Fargo
& Co/—
Dec. 22 prelim.
Connecticut
Hlth & Ed Facs Auth
400.0 N.R.
N.R.
N.R. J P Morgan
Securities LLC/—
Dec. 22 prelim.
Georgia
Housing Finance Authority
325.0 N.R.
N.R.
N.R. Citi/—
Dec. 22 prelim.
Harbor Pt
Infrastructure Imp Dt
150.7 N.R.
N.R.
N.R. Citi/—
Dec. 22 prelim.
Houston CoTexas
1,007.0 N.R.
N.R.
N.R. Barclays/—
Dec. 22 prelim.
Indiana
Finance Authority
340.1 N.R.
N.R.
N.R. BoA Merrill/—
(800) 366-3975
Dec. 22 prelim.
Metropolitan
Transport Auth
(MTA)
608.8 N.R.
N.R.
N.R. Goldman &
Co/—
sales.legalnotices
@wsj.com
Dec. 22 prelim.
Montana
Board of Housing
180.0 N.R.
N.R.
N.R. RBC Cptl
Mkt/—
Dec. 22 prelim.
Nebraska
Invest Fin Auth (NIFA)
448.1 N.R.
N.R.
N.R. J P Morgan
Securities LLC/—
Dec. 22 prelim.
New Jersey
Economic Dev Auth
183.2 N.R.
N.R.
N.R. RBC Cptl
Mkt/—
Dec. 22 prelim.
New Jersey
Economic Dev Auth
286.3 N.R.
N.R.
N.R. Wells Fargo &
Co/—
Dec. 22 prelim.
New Jersey
Hlth Care Fac Fin Au
175.0 N.R.
N.R.
N.R. Goldman &
Co/—
Dec. 22 prelim.
Palomar
Health
206.4 N.R.
N.R.
N.R. Citi/—
Dec. 22 prelim.
RailsplitterTobSettlementAu
678.6 N.R.
N.R.
N.R. Jefferies LLC/—
Dec. 22 prelim.
Riverside
Transportation Comm
393.4 N.R.
N.R.
N.R. Goldman &
Co/—
Dec. 22 prelim.
San Francisco
City/Co Public Util Comm
409.0 N.R.
N.R.
N.R. M. Stanley/—
Dec. 22 prelim.
South Miami
Health Facs Auth
789.8 N.R.
N.R.
N.R. BoA Merrill/—
Dec. 22 prelim.
Tempe
Industrial Dev Authority
233.0 N.R.
N.R.
N.R. Cain
Brothers/—
Dec. 22 prelim.
Virginia
CommonwealthUnivHlthSys
199.9 N.R.
N.R.
N.R. Wells Fargo &
Co/—
Dec. 22 prelim.
Ward CoNorth Dakota
363.1 N.R.
N.R.
N.R. Raymond
James/—
Dec. 22 prelim.
Dec. 22 prelim.
ADVERTISE
TODAY
For more
information visit:
wsj.com/classifieds
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© 2017 Dow Jones & Company, Inc. All Rights Reserved.
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.
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Monday, December 18, 2017 | B7
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B8 | Monday, December 18, 2017
THE WALL STREET JOURNAL.
NY
CLOSED-END FUNDS
Dow Jones Industrial Average
Last Year ago
24651.74 s 322.58, or 1.33% last week Trailing P/E ratio 21.70
P/E estimate *
20.09
High, low, open and close for each of
Dividend
yield
2.13
the past 52 weeks
21.65
18.64
2.41
All-time high 24651.74, 12/15/17
Current divisor 0.14523396877348
S&P 500 Index
Year ago
Trailing P/E ratio 25.12 24.98
P/E estimate *
19.82 19.06
Dividend yield
1.90
2.07
All-time high: 2675.81, 12/15/17
24000
2700
23000
2600
Week's high
UP
Friday's close
t
DOWN
Monday's open
Monday's open
t
Friday's close
65-day moving average
22000
2500
Week's low
21000
2400
20000
2300
65-day moving average
200-day moving average
19000
200-day moving average
2200
2100
18000
Bars measure the point change from Monday's open
2000
17000
F
M
A
M
J
J
A
S
O
N
Primary
market
NYSE weekly volume, in billions of shares
D J
D
t
D J
Composite
30
20
10
0
D J
F
M
A
M
J
J
A
S
O
N
D
F
M
A
M
J
J
A
S
O
N
D
Financial Flashback
The Wall Street Journal, December 18, 1996
Safeway Inc. said it signed a $1.57 billion agreement to
acquire Vons Cos. after revising a previous offer to offset
the falling price of Safeway shares.
Weekly P/E data based on as-reported earnings from Birinyi Associates Inc.
Benchmark Yields and Rates
Benchmark Yields and Rates
Treasury yield curve Forex Race
Consumer Rates and Returns to Investor
U.S. consumer rates
Selected rates
A consumer rate against its
benchmark over the past year
Money market accounts
1.20%
t
t
1.30%
888-720-8756
0.60
Capital One 360
Glen Allen, VA
1.30%
877-464-0333
0.30
Discover Bank
Riverwoods, IL
1.30%
877-505-4051
Goldman Sachs Bank USA
1.30%
New York, NY
855-730-7283
Friday
t
1
3 6
month(s)
J F MAM J J A S O N D
2017
15%
3.00
10
2.25
5
1.50
One year ago
0.75
–5
0.00
–10
1 2 3 5 710
years
maturity
Euro
s
Yen
0
30
co Fo
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0.00
3.75%
ableBanking,adivisionofNortheastBank
1.30%
Lewiston, ME
877-505-1933
Barclays
Wilmington, DE
0.90
Money market
account yields
0.34%
Bankrate.com avg†:
Yen, euro vs. dollar; dollar vs.
major U.S. trading partners
ly
.
Federal-funds
target rate
Yield to maturity of current bills,
notes and bonds
s
Continued on Page B9
Last
2675.81 s 24.31, or 0.92% last week
High, low, open and close for each of
the past 52 weeks
t
52 wk
Prem Ttl
Fund (SYM)
NAV Close /Disc Ret
MS India Invest IIF
40.64 35.97 -11.5 45.8
New Germany Fund GF 21.71 19.70 -9.3 55.5
Swiss Helvetia Fund SWZ 13.85 12.51 -9.7 26.4
Templeton Dragon TDF 23.78 20.75 -12.7 39.0
Templeton Emerging EMF 17.75 15.88 -10.5 44.1
Virtus Total Return Fund ZF 13.53 12.80 -5.4 26.1
Voya Infr Indls & Matls IDE 16.65 16.29 -2.2 29.4
Wells Fargo Gl Div Opp EOD 6.48 6.04 -6.8 24.8
Prem12 Mo
Fund (SYM)
NAV Close /Disc Yld
U.S. Mortgage Bond Funds
BlackRock Income Trust BKT 6.61 6.12 -7.4 5.1
Nuveen Mtg Opp Term Fd JLS 26.63 25.88 -2.8 5.3
Investment Grade Bond Funds
Blackrock Core Bond Tr BHK 14.93 13.91 -6.8 5.5
BlkRk Credit Alloc Incm BTZ 14.80 13.43 -9.3 6.3
John Hancock Income Secs JHS 15.38 14.60 -5.1 5.4
MFS Inc Tr MIN
4.42 4.15 -6.1 9.4
WstAstClymr InfLnkd Fd WIW NA 11.36 NA 3.7
WstAssetClymr InflLnk Sec WIA NA 11.67 NA 3.4
Loan Participation Funds
Apollo Sr Fltg Rate Fd AFT 17.98 16.35 -9.1 7.5
BlkRk Debt Strat Fd DSU 12.66 11.57 -8.6 7.1
BlackRock FR Incm Strat FRA 14.90 13.81 -7.3 5.8
Blkrk FltRt InTr BGT 14.38 13.75 -4.4 5.5
BlackstoneGSO Strat Cred BGB NA 15.89 NA 8.5
Blackstone GSO Sr Float BSL 17.71 17.41 -1.7 6.7
Eagle Point Credit ECC NA 17.96 NA 8.6
Eaton Vance FR Incm Tr EFT 15.52 14.46 -6.8 5.8
EatonVnc SrFltRate EFR 15.19 14.36 -5.5 6.1
Eaton Vance Sr Incm Tr EVF 7.14 6.42 -10.1 5.7
First Trust Sr FR Fd II FCT 14.03 12.92 -7.9 6.2
FT Sr Floating Rate 2022 FIV 9.71 9.22 -5.0 NS
Invesco Credit Opps Fund VTA 12.96 11.52 -11.1 7.3
Invesco Senior Income Tr VVR 4.85 4.35 -10.3 5.9
Nuveen Credit Strt Inc Fd JQC 9.02 8.16 -9.5 7.5
NuvFloatRteInco Fd JFR 11.48 11.10 -3.3 7.4
Nuv Float Rte Opp Fd JRO 11.39 11.24 -1.3 7.8
Nuveen Senior Income Fund NSL 6.80 6.41 -5.7 7.4
Pioneer Floating Rate Tr PHD 12.36 11.48 -7.1 6.3
Voya Prime Rate Trust PPR 5.64 5.07 -10.1 5.9
High Yield Bond Funds
AllianceBernstein Glbl AWF 13.89 12.72 -8.4 6.8
Barings Glbl Short Dur HY BGH 21.03 19.50 -7.3 9.5
BlackRock Corp Hi Yd Fd HYT 12.18 10.95 -10.1 8.1
BlackRockDurInco Tr BLW 16.98 15.85 -6.7 7.8
Brookfield Real Assets RA 25.28 23.33 -7.7 NS
Credit Suisse High Yld DHY 2.76 2.80 +1.4 9.6
DoubleLine Incm Solutions DSL NA 20.12 NA 8.9
Dreyfus Hi Yd Strat Fd DHF 3.53 3.31 -6.2 9.1
Fst Tr Hi Inc Lg/Shrt Fd FSD 17.99 16.42 -8.7 8.8
Guggenheim Strat Opps Fd GOF 19.69 21.63 +9.9 10.1
Ivy High Income Opps Fund IVH 15.92 14.77 -7.2 10.0
Neuberger Berman HYS NHS 13.18 11.65 -11.6 7.6
NexPoint Credit Strat Fd NHF 26.28 24.27 -7.6 10.1
Nuveen Credit Opps 2022 JCO 9.90 9.74 -1.6 NS
Nuveen Gl Hi Incm Fd JGH 18.42 16.68 -9.4 8.7
Nuveen High Incm Dec18 JHA 10.05 9.93 -1.2 5.1
Nuveen High Incm Dec19 JHD 10.21 10.03 -1.8 5.8
Nuveen Hi Incm Nov 2021 JHB 10.09 9.96 -1.3 6.0
Pioneer High Income Trust PHT 10.74 9.70 -9.7 8.2
Prud Gl Shrt Dur Hi Yd GHY 16.25 14.30 -12.0 7.9
Prudentl Sh Dur Hi Yd Fd ISD 16.44 14.77 -10.2 7.9
Wells Fargo Incm Opps Fd EAD 9.26 8.36 -9.7 8.8
Wstrn Asset Glbl Hi Inco EHI NA 10.00 NA 8.7
Wstrn Asset High Inco II HIX NA 6.96 NA 8.9
Wstrn Asset Opp Fd HIO NA 5.02 NA 7.2
West Asst HY Def Opp Fd HYI NA 15.33 NA 7.9
Other Domestic Taxable Bond Funds
Apollo Tactical Incm Fd AIF 17.50 15.69 -10.3 8.9
Ares Dynamic Credit Alloc ARDC NA 16.30 NA 6.9
Barings Corp Investors MCI NA 15.63 NA 1.9
BlackRock Multi-Sector IT BIT 19.91 18.04 -9.4 9.8
BlackRock Taxable Mun Bd BBN 24.10 23.27 -3.4 6.8
Doubleline Oppor Credit DBL NA 22.57 NA 9.0
Duff & Phelps Utl & Cp Bd DUC 9.63 8.80 -8.6 6.6
EtnVncLtdFd EVV
14.98 13.45 -10.2 7.3
Franklin Ltd Duration IT FTF NA 11.66 NA 11.9
GuggenheimTaxableMuni GBAB 23.39 22.54 -3.6 6.7
Invesco High Incm 2023 IHIT 10.06 9.79 -2.7 5.5
John Hancock Investors JHI 18.34 17.35 -5.4 7.4
KKR Income Opps Fund KIO NA 15.72 NA 10.0
MFS Charter MCR
9.28 8.50 -8.4 8.9
MFS Multimkt MMT 6.64 6.08 -8.4 8.8
Nuveen Build Am Bd Fd NBB 22.67 21.85 -3.6 5.6
PIMCO Corporate & Incm PTY NA 16.33 NA 10.4
PIMCO Corporate & Incm PCN NA 16.95 NA 10.6
PIMCO HiInco PHK
NA 7.39 NA 13.6
PIMCO Inco Str Fd PFL NA 11.64 NA 9.4
t
52 wk
Prem Ttl
Fund (SYM)
NAV Close /Disc Ret
Clearbridge Engy MLP Opp EMO
11.13 NA -3.6
Clearbridge Engy MLP TR CTR
11.47 NA 1.2
Cohen & Steers Infr Fd UTF 25.83 23.42 -9.3 29.2
C&S MLP Incm & Engy Opp MIE 10.59 10.18 -3.9 6.1
Cohen & Steers Qual Inc RQI 13.84 12.55 -9.3 15.2
CohnStrsPfdInco RNP 23.08 20.94 -9.3 19.7
Cohen & Steers TR RFI 13.60 12.74 -6.3 14.7
CLSeligmn Prem Tech Gr Fd STK 21.11 22.43 +6.3 38.7
Duff & Phelps DNP
10.06 11.29 +12.2 17.7
Duff&PhelpsGblUtilIncFd DPG 17.49 15.77 -9.8 13.1
Eaton Vance Eqty Inco Fd EOI 15.13 14.32 -5.4 24.2
Eaton Vance Eqty Inco II EOS 15.90 15.16 -4.7 23.9
EtnVncRskMngd ETJ 10.11 9.39 -7.1 13.6
Etn Vnc Tax Mgd Buy-Write ETB 16.46 16.90 +2.7 8.4
Eaton Vance BuyWrite Opp ETV 15.14 15.42 +1.8 11.9
Eaton Vance Tax-Mng Div ETY 12.37 12.21 -1.3 27.5
EatonVanceTax-MngdOpp ETW 11.64 11.86 +1.9 27.1
EtnVncTxMngGlDvEqInc EXG 9.44 9.43 -0.1 27.8
Fiduciary/Clymr Opp Fd FMO 12.04 12.04 0.0 -6.1
FT Energy Inc & Growth Fd FEN 23.24 23.90 +2.8 2.4
FstTrEnhEqtIncFd FFA 16.83 16.17 -3.9 25.7
First Tr Engy Infr Fd FIF 18.84 18.33 -2.7 8.5
First Tr MLP & Engy Incm FEI 14.30 14.90 +4.2 1.3
Gabelli Hlthcr & Well GRX 11.72 10.15 -13.4 13.5
Gabelli Utility Tr GUT 5.45 7.04 +29.2 27.6
GAMCOGlblGoldNatRscs&Inc GGN 5.30 5.16 -2.6 13.9
GoldmanSachsMLPIncOpp GMZ
8.88 NA 2.3
Goldman Sachs MLP Energy GER
6.17 NA -3.7
John Hancock Finl Opps Fd BTO 37.22 38.28 +2.8 12.7
Macquarie Glbl Infrstrctr MGU
24.69 NA 31.5
NeubergerBermanMLPIncm NML 9.55 8.89 -6.9 4.1
Neubrgr Brm Rl Est Sec Fd NRO 5.77 5.45 -5.5 13.7
Nuveen Dow 30 Dynamic DIAX 18.98 18.41 -3.0 30.4
Nuveen Core Eq Alpha JCE 16.26 15.70 -3.4 28.3
Nuveen Diversified Div JDD 12.96 12.23 -5.6 20.0
Nuveen Engy MLP Fd JMF 11.18 11.27 +0.8 -6.0
NuvNASDAQ100DynOver QQQX 23.00 24.05 +4.6 38.1
Nuveen Real Est Incm Fd JRS 11.42 10.94 -4.2 14.8
NuvS&P500DynOverwrite SPXX
16.64 NA 25.8
NuveenS&P500Buy-Write BXMX 14.33 13.98 -2.4 17.5
Reaves Utility Fund UTG 34.02 31.30 -8.0 13.4
Tekla Hlthcr Investors HQH 24.13 22.43 -7.0 11.9
Tekla Healthcare Opps Fd THQ 19.55 17.68 -9.6 21.5
Tekla Life Sciences HQL 19.77 19.26 -2.6 20.3
Tekla World Hlthcr Fd THW 14.75 13.46 -8.7 13.4
Tortoise Energy TYG 24.89 26.85 +7.9 -2.6
Tortoise MLP Fund NTG 16.56 16.57 0.0 -2.0
Voya Gl Equity Div IGD 8.26 7.87 -4.7 23.5
Income Preferred Stock Funds
Calamos Strat Fd CSQ 12.93 12.18 -5.8 28.3
Cohen & Steers Dur Pfd LDP 27.32 26.27 -3.8 18.3
Cohen & Strs Sel Prf Inco PSF 28.02 28.57 +2.0 20.8
FT Interm Duration Pfd FPF 24.96 24.89 -0.3 23.3
Flaherty & Crumrine Dyn DFP 26.41 27.20 +3.0 28.7
Flaherty & Crumrine Pfd FFC 20.43 20.89 +2.3 19.9
John Hancock Pfd Income HPI 21.47 21.60 +0.6 18.6
John Hancock Pfd II HPF 21.23 21.39 +0.8 17.8
John Hancock Pfd Inc III HPS 18.92 18.60 -1.7 17.0
JHancock Pr Div PDT 15.47 16.98 +9.8 26.9
LMP Cap & Inco Fd SCD
13.92 NA 14.7
Nuveen Pfd & Incm Opps Fd JPC 10.72 10.38 -3.2 17.4
Nuveen Pfd & Incm Secs Fd JPS 10.31 10.35 +0.4 24.6
Nuveen Preferred & Incm JPI 25.88 24.94 -3.6 18.8
TCW Strategic Income Fund TSI
5.58 NA 11.4
Virtus Global Dividend ZTR 12.92 13.20 +2.2 34.3
Convertible Sec's. Funds
AdvntClymrFd AVK 17.42 15.70 -9.9 15.8
AllianzGI Conv & Incm NCV 6.65 7.06 +6.2 20.7
AllianzGI Conv & Incm II NCZ 5.97 6.20 +3.9 21.4
AllianzGI Div Incm ACV 22.72 21.81 -4.0 27.3
AllianzGI Equity & Conv NIE 23.49 21.30 -9.3 21.6
Calamos Conv Hi Inco Fd CHY 11.71 11.88 +1.5 23.2
Calamos CHI
11.11 11.39 +2.5 25.0
World Equity Funds
Alpine Tot Dyn Div AOD 10.17 9.18 -9.7 30.4
Cdn Genl Inv CGI
32.15 23.68 -26.3 28.4
China Fund CHN
23.34 21.66 -7.2 47.6
Clough Global Opp Fd GLO
10.83 NA 34.0
EtnVncTxAdvGblDiv ETG 18.41 17.48 -5.1 33.9
EatonVance TxAdv Opport ETO 24.83 25.12 +1.2 33.2
First Trust Dynamic Eur FDEU 19.50 18.76 -3.8 34.1
Gabelli Glbl Multimedia GGT 9.26 8.93 -3.6 35.4
GDL Fund GDL
11.51 9.80 -14.9 6.7
India Fund IFN
31.47 27.50 -12.6 34.0
Japan Sml Cap JOF
11.84 NA 24.2
Korea Fund KF
49.49 43.78 -11.5 35.4
Mexico Fund MXF
18.07 15.77 -12.7 13.6
Morgan-Stanley Asia-Pac APF 20.68 18.00 -13.0 35.4
MS China a Shr Fd CAF 28.32 23.79 -16.0 39.3
MS Emerging Fund MSF 19.83 17.33 -12.6 33.4
WSJ Dollar index
s
Continued From Page B6
MARKETS DIGEST
2017
2
Sources: Ryan ALM; Tullett Prebon; WSJ Market Data Group
Interest rate
Yield/Rate (%)
Last (l)Week ago
Federal-funds rate target
1.25-1.50 1.00-1.25
Prime rate*
4.25
4.50
Libor, 3-month
1.55
1.61
Money market, annual yield
0.34
0.34
Five-year CD, annual yield
1.49
1.49
30-year mortgage, fixed†
3.88
3.88
15-year mortgage, fixed†
3.29
3.30
Jumbo mortgages, $424,100-plus† 4.26
4.30
Five-year adj mortgage (ARM)† 3.70
3.71
New-car loan, 48-month
3.20
3.32
3-yr chg
52-Week Range (%)
Low 0 2 4 6 8 High (pct pts)
0.50 l
l
3.75
0.99 l
0.26 l
1.19 l
l
3.73
l
2.99
l
4.21
l
3.20
l
2.85
1.50
4.50
1.61
0.36
1.49
4.33
3.50
4.87
4.03
3.74
1.25
1.25
1.37
-0.09
-0.03
0.07
0.22
0.05
0.45
0.17
Bankrate.com rates based on survey of over 4,800 online banks. *Base rate posted by 70% of the nation's largest
banks.† Excludes closing costs.
Sources: SIX Financial Information; WSJ Market Data Group; Bankrate.com
Corporate Borrowing Rates and Yields
Bond total return index
Spread +/- Treasurys,
Yield (%)
in basis pts, 52-wk Range
Last Wk ago
Last
Low High
Total Return
52-wk
3-yr
10-yr Treasury, Ryan ALM
DJ Corporate
Aggregate, Barclays Capital
High Yield 100, Merrill Lynch
Fixed-Rate MBS, Barclays
Muni Master, Merrill
EMBI Global, J.P. Morgan
2.353
3.105
2.680
5.587
2.860
2.140
5.528
4.44 1.17
7.50 3.96
4.69 2.29
7.210 5.337
3.55 1.95
5.447 2.499
10.439 8.002
2.383
3.140
2.700
5.621
2.900
2.107
5.565
n.a.
343
n.a.
15
315
35
307
15
5
303
46
394
34
18
368
Sources: J.P. Morgan; Ryan ALM; S&P Dow Jones Indices; Barclays Capital; Merrill Lynch
no
n-
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New Year’s Day
and every day from 10 am - 5 pm
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THE WALL STREET JOURNAL.
Monday, December 18, 2017 | B9
CLOSED-END FUNDS
High
Latest Week
Close
Net chg
Low
Dow Jones
Industrial Average 24688.62 24314.74 24651.74
Transportation Avg 10467.92 10302.37 10393.01
Utility Average
762.97 743.90
753.38
Total Stock Market 27705.07 27396.18 27656.76
708.18
Barron's 400
710.83 697.79
322.58
-9.50
-4.31
221.52
4.05
Nasdaq Stock Market
Nasdaq Composite 6945.82 6844.88
Nasdaq 100
6470.92 6347.91
96.50
121.75
Standard & Poor's
500 Index
MidCap 400
SmallCap 600
2679.63 2651.47
1896.59 1866.45
937.51 914.79
Other Indexes
Russell 2000
1538.06
NYSE Composite
12739.80
Value Line
559.11
NYSE Arca Biotech 4255.20
NYSE Arca Pharma
550.49
KBW Bank
107.77
PHLX§ Gold/Silver
80.53
PHLX§ Oil Service
138.20
PHLX§ Semiconductor 1254.61
CBOE Volatility
10.54
% chg
-0.09
-0.57
52-Week
Close (l)
Low
1.33 19732.40
8783.74
651.14
0.81 23276.73
0.58
600.24
l
High
l 24651.74
l 10402.51
2675.81
1886.67
932.63
1.41 5383.12
1.92 4863.62
l 27656.76
l
708.56
774.47
24.2
13.4
14.5
17.9
17.5
24.7
14.9
14.2
18.8
17.7
12.8
5.5
8.3
10.2
10.9
l 6936.58
l 6466.32
27.6
31.6
28.9
33.0
14.6
15.9
0.92
2238.83
1660.58
815.62
l 2675.81
l 1899.18
l
944.1
18.5
13.1
10.8
0.57 1345.24
8.70
0.45 11056.89
56.62
0.21
503.24
1.15
3075.02
-59.61 -1.41
1.48 469.13
7.96
-0.38
88.02
-0.40
4.28
3.29
73.03
-0.66
117.79
-0.89
1.02
12.64
900.85
-0.16 -1.67
9.14
l 1544.14
l 12699.68
l
559.05
l
4304.77
l
560.52
l
107.33
12.2
14.2
9.0
30.5
13.7
15.8
9.3
-28.8
38.9
-22.8
24.31
-4.19
4.52
-0.22
0.49
l
l
l
l
Philadelphia Stock Exchange
96.72
192.66
1341.69
16.04
Americas
Brazil
Canada
Mexico
Chile
DJ Americas
Sao Paulo Bovespa
S&P/TSX Comp
S&P/BMV IPC
Santiago IPSA
640.12
72607.70
16041.98
48081.55
3963.71
388.19
3184.47
388.41
3560.53
3279.24
3992.27
5349.30
13103.56
767.76
1461.34
22094.04
548.67
5385.63
1148.27
57412.76
10150.40
572.36
9394.71
7490.57
Asia-Pacific
Australia
China
Hong Kong
India
Japan
Malaysia
Singapore
South Korea
Taiwan
5997.00
3266.14
28848.11
33462.97
22553.22
1753.07
3416.94
2482.07
10491.44
S&P/ASX 200
Shanghai Composite
Hang Seng
S&P BSE Sensex
Nikkei Stock Avg
FTSE Bursa Malaysia KLCI
Straits Times
Kospi
Weighted
Latest Week
% chg
3040.96
392.04
259.84
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
EMEA
6950
6900
19.5
13.6
11.3
0.90
0.58
0.34
Low
52-Week Range
Close
•
•
•
•
2527.82
325.34
211.72
540.31
57110.99
14951.88
44895.29
1.07
7.00 3137.71
0.76
–0.17
–0.34
–0.27
0.24
–0.91
–0.86
–1.45
–0.83
–0.92
–0.38
3.65
1.08
–2.98
0.26
0.47
2.57
–1.03
–1.65
–0.66
0.81
1.31
0.04
–0.73
0.73
0.64
–1.13
1.85
–0.22
0.73
0.89
10.4
10.7
12.3
DJ US TSM
s 221.52, or 0.81%
last week
12.8 10.3
14.9
6.8
10.1
5.3
35.7
7.9
13.7
1.3
15.8 14.3
1.7
7.8
-27.5 -12.0
38.0 23.4
-32.9 -22.7
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
YTD
% chg
3040.96
392.04
263.11
20.1
20.2
21.4
640.12
76989.79
16136.59
51713.38
4255.93
18.5
20.6
4.9
5.3
23.0
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
9394.71
7562.28
7.4
5.8
10.9
8.2
25.2
10.7
10.0
14.1
19.3
–0.6
14.9
13.6
15.1
–0.4
13.3
8.5
7.1
14.3
4.9
6049.4
3447.84
30003.49
33731.19
22938.73
1792.35
3468.77
2557.97
10854.57
5.8
5.2
31.1
25.7
18.0
6.8
18.6
22.5
13.4
27750
27600
27450
8 11 12 13 14 15
December
Commodities and
Currencies
Last Week
Close
Net chg
%Chg
YTD
% chg
0.62 0.10 5.21
-0.49 -0.27 -4.15
-0.06 -0.10 6.66
-0.16 -5.77 -29.86
9.10 0.73 9.07
596.81
184.52
TR/CC CRB Index
Crude oil, $ per barrel 57.30
Natural gas, $/MMBtu 2.612
Gold, $ per troy oz.
1254.30
DJ Commodity
93.93 0.03 0.03 -8.10
87.10 -0.19 -0.22 -6.28
0.8512 0.0019 0.22 -10.45
112.61 -0.85 -0.75 -3.75
1.33 -0.0062 -0.46 7.91
U.S. Dollar Index
WSJ Dollar Index
Euro, per dollar
Yen, per dollar
U.K. pound, in dollars
52-Week
Low Close(l) High
DJ Commodity
532.01
TR/CC CRB Index
166.50
l
l
Crude oil, $ per barrel 42.53
Natural gas, $/MMBtu
Gold, $ per troy oz.
27300
2.56
l
616.58
% Chg
5.24
195.14 -3.61
58.95 10.40
3.93 -23.51
l
l
1128.80
1346.00 10.48
U.S. Dollar Index
91.35
l
103.25 -8.76
WSJ Dollar Index
84.49
l
93.56 -6.39
5532.9
3052.79
21574.76
25807.10
18335.63
1617.15
2871.05
2024.49
9078.64
•
•
•
•
•
•
•
•
•
•
•
•
•
Euro, per dollar
Yen, per dollar
U.K. pound, in dollars
0.83
107.84
1.20
0.96 -11.04
l
117.92 -4.50
l
l
1.36
6.70
Real-time U.S. stock
quotes are available on
WSJ.com. Track most.COM
active 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
WSJ
Prem12 Mo
Fund (SYM)
NAV Close /Disc Yld
Nuveen OH Qual Muni NUO 16.64 14.82 -10.9 5.0
Nuveen PA Qual Muni NQP 15.25 13.26 -13.0 5.3
Nuveen VA Qual Muni NPV 14.47 12.90 -10.9 4.3
PIMCO California Muni PCQ NA 17.31 NA 5.3
PIMCO California Mun II PCK NA 10.27 NA 5.6
52 wk
Prem Ttl
Fund (SYM)
NAV Close /Disc Ret
General Equity Funds
Specialized Equity Funds
Griffin Inst Access RE:A 27.08 NA NA 6.6
Griffin Inst Access RE:C 26.63 NA NA 5.8
Griffin Inst Access RE:I 27.25 NA NA 6.9
Griffin Inst Access RE:L 27.06 NA NA NS
Griffin Inst Access RE:M 26.94 NA NA 6.1
NexPointRlEstStrat;A 20.51 NA NA 7.1
NexPointRlEstStrat;C 20.58 NA NA 6.9
NexPointRlEstStrat;Z 20.59 NA NA 8.2
NorthStar RE Cap Inc:Adv NA NA NA NS
Resource RE Div Inc:A 10.18 NA NA 6.5
Resource RE Div Inc:C 10.16 NA NA 5.6
Resource RE Div Inc:D 10.33 NA NA 6.0
Resource RE Div Inc:I 10.61 NA NA 6.6
Resource RE Div Inc:L 10.18 NA NA NS
Resource RE Div Inc:T 10.14 NA NA 5.6
Resource RE Div Inc:U 10.19 NA NA 6.6
Resource RE Div Inc:W 10.34 NA NA 6.5
SharesPost 100;A
26.73 NA NA -1.5
SharesPost 100:I
26.74 NA NA NS
Tot Inc+ RE:A
29.75 NA NA 6.9
Tot Inc+ RE:C
28.95 NA NA 6.1
Tot Inc+ RE:I
30.09 NA NA 7.1
Tot Inc+ RE:L
29.70 NA NA NS
USQ Core Real Estate:I USQIX 25.33 NA NA NS
USQ Core Real Estate:IS USQSX 25.33 NA NA NS
Versus Cap MMgr RE Inc:F 27.72 NA NA 6.1
Versus Cap MMgr RE Inc:I 27.80 NA NA 6.5
Versus Capital Real Asst VCRRX 25.13 NA NA NS
Wildermuth Endwmnt Str 12.88 NA NA 11.4
Wildermuth Endwmnt S:C 12.70 NA NA 10.6
Wildermuth Endwmnt S:I 12.94 NA NA NS
Income Preferred Stock Funds
MultiStrat Gro & Inc:A 15.23 NA NA 3.8
MultiStrat Gro & Inc:C 14.89 NA NA 3.0
MultiStrat Gro & Inc:I 15.42 NA NA 4.0
MultiStrat Gro & Inc:L 15.00 NA NA 3.2
The Relative Value:CIA VFLEX 25.56 NA NA NS
Convertible Sec's. Funds
Calmos Dyn Conv and Inc CCD 20.65 20.39 -1.3 16.3
World Equity Funds
BMO LGM Front ME 10.52 NA NA 18.7
CalamosGlbTotRet CGO 13.37 14.29 +6.9 22.4
Prem12 Mo
Fund (SYM)
NAV Close /Disc Yld
U.S. Mortgage Bond Funds
Vertical Capital Income 12.67 NA NA 3.0
Loan Participation Funds
504 Fund
9.80 NA NA 3.7
FedProj&TrFinanceTender 10.10 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 NA NA NA 9.1
Sierra Total Return:T SRNTX 24.90 NA NA NS
Voya Senior Income:A 12.49 NA NA 5.3
Voya Senior Income:C 12.47 NA NA 4.8
Voya Senior Income:I 12.46 NA NA 5.5
Voya Senior Income:W 12.50 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
9.45 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 11.52 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 9.61 NA NA NS
GL Beyond Income
3.48 NA NA NE
Palmer Square Opp Income 19.65 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 11.26 NA NA 6.6
Resource Credit Inc:L 11.22 NA NA NS
Resource Credit Inc:W 11.23 NA NA 6.3
no
n-
Source: SIX Financial Information;WSJ Market Data Group
359.59
2979.48
346.53
3230.68
2618.43
3542.27
4748.90
11404.01
608.79
1363.50
18591
476.71
4467.94
973.33
49400.56
9304.8
531.09
8219.87
7011.64
•
•
•
High
6800
8 11 12 13 14 15
December
co Fo
m rp
m e
er rs
ci on
al a
us l,
e
on
Close
The Global Dow
DJ Global Index
DJ Global ex U.S.
s 96.50, or 1.41%
Prem12 Mo
Fund (SYM)
NAV Close /Disc Yld
PIMCO Incm Strategy Fd II PFN NA 10.45 NA 9.2
Putnam Mas Inco PIM 5.03 4.68 -7.0 6.5
Putnam Premier Income Tr PPT 5.59 5.19 -7.2 6.0
Wells Fargo Multi-Sector ERC 14.21 12.98 -8.7 9.6
World Income Funds
Abeerden Asia-Pacific FAX 5.44 4.86 -10.7 8.5
Etn Vnc Short Dur Fd EVG NA 14.00 NA 7.1
Legg Mason BW Glbl Incm BWG NA 13.01 NA 8.4
MS EmMktDomDebt EDD 8.90 7.77 -12.7 8.6
PIMCO Dynamic Credit PCI NA 22.28 NA 11.5
PIMCODynamicIncomeFund PDI NA 29.90 NA 13.4
PIMCO Income Opportunity PKO NA 26.01 NA 10.1
PIMCO Strat Income Fund RCS NA 8.75 NA 10.1
Templeton Emerging TEI 12.82 11.41 -11.0 4.5
Templeton Global GIM 7.32 6.47 -11.6 6.0
Wstrn Asset Emerg Mkts EMD NA 15.39 NA 7.7
Wstrn Asset Gl Def Opp Fd GDO NA 18.10 NA 7.5
National Muni Bond Funds
AllianceBrnstn NtlMun AFB 14.91 13.58 -8.9 4.6
Blackrock Invest BKN 15.85 14.72 -7.1 5.3
BlackRockMun2030Target BTT 24.29 22.48 -7.5 4.1
BlackRock Municipal Trust BFK 14.46 14.12 -2.4 5.7
BlackRockMuni BLE 15.02 14.36 -4.4 6.1
BlackRockMuni Tr BYM 15.23 14.19 -6.8 5.3
BlkRk MuniAssets Fd MUA 14.15 14.96 +5.7 4.6
BlkRk Munienhanced MEN 11.94 11.86 -0.7 5.6
BlkRk MuniHldgs Inv MFL 14.69 14.70 +0.1 5.7
BlkRk MuniHldgs Qlty II MUE 14.03 13.86 -1.2 5.5
BlkRk MuniVest MVF 9.65 9.64 -0.1 5.7
BlkRk MuniVest II MVT 15.21 15.41 +1.3 5.7
BlkRk MuniYield MYD 14.85 14.42 -2.9 5.9
BlkRk MuniYld Quality MQY 15.86 15.53 -2.1 5.5
BlkRk MuniYld Qlty II MQT 13.93 12.98 -6.8 5.6
BlRkMunyldQltyIII MYI 14.46 13.97 -3.4 5.8
Deutsche Mun Income Tr KTF 12.60 11.92 -5.4 6.5
Dreyfus Mun Bd Infr Fd DMB 14.32 13.21 -7.8 4.9
Dreyfus Strat Muni Bond DSM 8.33 8.41 +1.0 5.9
Dreyfus Strategic Munis LEO 8.55 8.68 +1.5 5.9
Eaton Vance Mun Bd Fd EIM 13.69 12.50 -8.7 5.0
Eaton Vance Mun Income EVN 13.38 12.38 -7.5 5.4
EV National Municipal Opp EOT 22.01 22.74 +3.3 4.4
Invesco Adv Mun Incm II VKI 12.14 11.33 -6.7 5.8
Invesco Mun Incm Opps Tr OIA 7.61 8.00 +5.1 5.1
Invesco Mun Opportunity VMO 13.51 12.36 -8.5 6.1
Invesco Municipal Trust VKQ 13.50 12.48 -7.6 5.9
Invesco Qlty Mun Inco IQI 13.61 12.39 -9.0 5.4
Invesco Inv Grade Muni VGM 13.99 13.28 -5.1 5.8
Invesco Value Mun Incm Tr IIM 16.27 14.79 -9.1 5.0
MainStay DefinedTerm MMD 20.12 20.04 -0.4 5.5
MFS Munl Inco MFM 7.38 6.93 -6.1 5.6
Nuveen AMT-Free Quality NEA 15.15 13.72 -9.4 5.4
Nuveen AMT-Free Mun NVG 16.54 15.41 -6.8 5.7
Nuveen Mun Credit Incm Fd NZF 16.11 15.20 -5.6 5.8
Nuveen Enhncd Mun Val Fd NEV 15.03 14.36 -4.5 5.7
Nuveen Intermed Dur Mun NID 13.79 13.23 -4.1 4.9
NuveenMuniIncoOpp Fd NMZ 13.60 13.65 +0.4 5.9
Nuveen Muni Value Fund NUV 10.30 10.08 -2.1 3.8
Nuveen Qual Mun Incm Fd NAD 15.50 14.04 -9.4 5.5
Nuveen Sel Tax Free NXP 15.45 14.68 -5.0 3.7
Nuveen Sel TF NXQ 14.82 14.08 -5.0 3.5
PIMCO MuniFd PMF
NA 13.02 NA 5.8
Pimco Muni Inc II PML NA 13.32 NA 5.8
PIMCO Muni Inc III PMX NA 11.75 NA 5.8
Pioneer Mun Hi Inc Adv Tr MAV 11.88 11.43 -3.8 5.3
Pioneer Mun Hi Incm Tr MHI 12.83 11.85 -7.6 5.0
Putnam Tr PMM
8.00 7.40 -7.5 5.4
PutnamMuniOpportunities PMO 13.39 12.45 -7.0 5.2
Wstrn Asset Mngd Muni MMU NA 14.40 NA 5.3
WesternAssetMunTrFund MTT NA 21.35 NA 5.0
Single State Muni Bond
BlackRock CA Municipal Tr BFZ 15.24 13.95 -8.5 5.2
BlkRk MuniHldgs CA Qlty MUC 15.48 14.47 -6.5 5.0
Blkrck MunHl NJ Qlty MUJ 15.67 14.39 -8.2 5.7
BlRk MuHldg NY Qlty MHN 14.81 13.63 -8.0 5.0
BlkRk MuniYld CA Fd MYC 15.51 15.01 -3.2 5.1
BlkRk MuniYld CA Quality MCA 15.72 14.71 -6.4 5.2
BlkRk MuniYld MI Qlty MIY 15.45 13.93 -9.8 5.5
BlRk Muyld NY Qlty MYN 14.20 12.90 -9.2 5.0
Eaton Vance CA Mun Bd EVM 12.32 11.70 -5.0 4.9
Invesco CA Value Mun Incm VCV 13.39 12.63 -5.7 5.1
Invesco PA Value Mun Incm VPV 14.04 12.10 -13.8 5.2
Invesco Inv Grade NY Muni VTN 14.53 13.53 -6.9 5.0
Nuveen CA AMT-Free Qual NKX 15.86 15.51 -2.2 5.1
Nuveen CA Muni Value NCA 10.46 10.34 -1.1 3.9
Nuveen CA Quality Muni NAC 15.66 14.43 -7.9 5.5
Nuveen MD Qual Muni NMY 14.59 12.64 -13.4 5.0
Nuveen MI Qual Muni NUM 15.39 13.38 -13.1 4.8
Nuveen NJ Qual Muni NXJ 15.87 13.65 -14.0 5.2
Nuveen NY AMT-Free NRK 14.38 12.93 -10.1 4.9
Nuveen NY Qual Muni NAN 15.03 13.77 -8.4 5.1
last week
Sources: SIX Financial Information; WSJ Market Data Group
International Stock Indexes
World
% chg
YTD 3-yr. ann.
Continued From Page B8
6850
6936.58
6466.32
1504.89 1530.42
12629.07 12699.68
551.24
557.14
4098.91 4173.14
539.24
547.58
104.86
106.25
76.45
80.23
132.72
133.21
1229.30 1250.89
9.42
9.21
Region/Country Index
% chg
Nasdaq Composite
ly
.
Major U.S. Stock-Market Indexes
THE MOMENT YOU HELP US
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MALAWI 2015 © Luca Sola
MARKETS DIGEST
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.
B10 | Monday, December 18, 2017
THE WALL STREET JOURNAL.
BANKING & FINANCE
Banker Created a Regional Powerhouse
Bob Wilmers, who turned a
small Buffalo, N.Y., bank into
one of the largest U.S. regional
lenders, died on Saturday night. He was 83 years
old.
When Mr. Wilmers became
chief execuBOB WILMERS tive
of
1934-2017
M&T Bank
Corp.
in
1983,
he
was a little-known investor
just back from Europe, and it
was a struggling lender with
$2 billion in assets and 51
branches. During his reign, the
firm expanded to $120 billion
in assets and 783 branches
across the eastern U.S.
For Mr. Wilmers, who controlled roughly 6% of M&T,
banking was a simple business
of lending to high-quality borrowers in communities the
bank knew. M&T shares were
among the sector’s strongest
performers over recent decades, even though M&T’s expansion focused on slowgrowth markets in upstate
New York and the Rust Belt.
He was a contrarian at
heart. A billionaire who often
rode to his New York City office on a decrepit bike with
mismatched tires, he referred
to M&T as a community bank
even as it expanded into the
ranks of the largest U.S. financial firms through two dozen
acquisitions.
His manner was low-key
and he spoke in public only
rarely. But he didn’t mince
words. In annual letters to
shareholders akin to those
written by his friend and fellow M&T investor Warren Buffett, Mr. Wilmers lambasted
Wall Street greed and government overreach alike. “Trading
brings out the worst in humanity,” he said in an interview this year.
“He was a remarkable
banker, an even more remarkable citizen and a wonderful
friend,” Mr. Buffett said in a
statement.
M&T said Mr. Wilmers, who
had served as chairman and
chief executive, died unexpectedly at home on Saturday night. The bank said that
the board’s lead outside direc-
MICHAEL BUCHER/THE WALL STREET JOURNAL
BY CHRISTINA REXRODE
Bob Wilmers in April. He rarely spoke publicly but didn’t mince words, lambasting Wall Street greed.
tor, Robert Brady, the former
CEO of Moog Inc., an aerospace company based in upstate New York, will take over
as chairman. M&T’s three vice
chairmen, Richard Gold, René
Jones and Kevin Pearson, will
oversee day-to-day operations.
Mr. Wilmers was born in
1934 to a well-off family and
raised in New York and Europe. As a young man he
worked in the finance administration for New York City
Mayor John Lindsay. He later
worked in Belgium at a predecessor of JPMorgan Chase &
Co. before returning to the
U.S.
Mr. Wilmers came to run
M&T almost by accident. In
the early 1980s, he noticed
that the shares of a tiny Buffalo bank were faltering after
a foray into international lending.
Mr. Wilmers started buying
up shares, and in 1983 he persuaded the board to make him
CEO.
In Buffalo, there is hardly
an institution that doesn’t
have his fingerprints on it. He
rescued a number of organizations, from the zoo to the orchestra, helped persuade the
Buffalo Bills football team to
stay in town and expanded his
bank to one of the region’s
biggest employers.
Mr. Wilmers is survived by
his wife of 20 years, Elisabeth
Roche Wilmers, his son, Christopher, and stepchildren,
grandchildren and step-grandchildren.
U.S. Casualty Insurers Win on Bermuda Tax Loophole
Insider-Trading Spotlight
non-U.S. companies to persuade
Congress that their American
peers have flawed analysis and
are trying to drive them out of
some lines of business—and
raise premium rates on businesses and consumers.
Bradley Kading, president of
the Association of Bermuda In-
Bermuda has
developed into an
international
reinsurance center.
surers & Reinsurers, said new
“punitive taxes” could gut an
arrangement in which foreign
reinsurance firms help pay
claims in the U.S. from hurricanes, earthquakes, wildfires
and other disasters.
Reinsurance is a type of coverage taken out by insurers to
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 15, and year-to-date stock performance of the company
KEY: B: beneficial owner of more than 10% of a security class CB: chairman CEO: chief executive officer CFO: chief financial officer
CO: chief operating officer D: director DO: director and beneficial owner GC: general counsel H: officer, director and beneficial owner
I: indirect transaction filed through a trust, insider spouse, minor child or other O: officer OD: officer and director P: president UT:
unknown VP: vice president Excludes pure options transactions
Company
Symbol
Insider
Buyers
Title
No. of shrs in Price range ($) $ Value
trans (000s) in transaction (000s)
Inflation
Nov. index
level
DISCA
Medicines
MDCO
Dec. 7
2U Inc
Dec. 11
Fibrocell Science
T. Chen
T. Chen
T. Chen
BI
BI
BI
21,927
4,000
1,647
J. Malone
DO
F. Eshelman
OD
no
Discovery Communications
Dec. 7-8
n-
LC
Dec. 13
Nov. 22-27 Entercom Communications
Dec. 11-13 Biglari Holdings
U.S. consumer price index
246.669
253.492
Close ($) Ytd (%)
3.69-4.30
3.79-3.81
3.88
85,475
15,194
6,393
4.03 -23.2
333
19.72
6,556
21.04 -23.2
200
26.46-26.65
5,311
27.30 -19.6
60.07-61.66
4,168
65.51 117.3
.77
2,100
0.66 -65.0
1,986
11.60 -24.2
68*
TWOU
P. Maeder
D
FCSC
R. Kirk
BI
2,727
ETM
J. Field
OD
168
11.73-11.88
BH
S. Biglari
DOI
5
377.29-393.56
PSEC
J. Barry
J. Barry
J. Barry
J. Barry
CEO
CEO
CEO
CEO
265
123
110
110
6.80-6.82
6.72-6.75
6.70
6.67
E. White
1,926 417.15 -11.8
1,807
831
737
734
6.82 -18.3
Dec. 12
Dec. 8
Dec. 6
Dec. 7
Prospect Capital
Dec. 11
Zayo Group Holdings
DI
43
34.99
1,508
36.56
11.3
Dec. 7
Annaly Capital Management
NLY
W. Denahan-Norris CB
125
11.97
1,500
12.24
22.8
Dec. 6
Argo Group International Holdings
AGII
G. Woods
20
61.28
1,226
61.35
-6.9
Dec. 8
CenturyLink
CTL
J. Storey
Dec. 12
RH
RH
G. Friedman
ZAYO
Week
ago
Latest
2.2
1.7
52-Week
High
Low
D
4.50 4.25 4.50 3.75
3.20 3.20 3.20 2.70
1.475 1.475 1.475 1.475
U.S.
Canada
Japan
Policy Rates
0.00
0.50
0.50
1.50
0.00
0.50
0.50
1.50
Euro zone
Switzerland
Britain
Australia
1.08
1.41
U.S.
P
71
14.30
1,015
16.99 -28.6
CEO
10
97.09
1,000
99.63 224.5
1.75
2.00
Effective rate
High
Low
Bid
Offer
1.4200
1.5625
1.3000
1.4100
1.4200
1.1700
1.3125
1.0500
1.1600
1.1700
334,640
48.97
40.1
Treasury bill auction
D. Humphrey
DOI
8,500
30.26
257,216
32.22
32.4
PFGC
W. Dawson
DI
6,273
29.68
186,149
31.45
31.0
At Home Group
HOME
G. Clark
DOI
2,640
23.46
4 weeks
13 weeks
26 weeks
Workday
WDAY
D. Duffield
DOI
482
103.03-104.56
Dec. 7
BlackLine
BL
W. Griffith
DOI
1,416
34.07
Dec. 12
Cloudera
CLDR
P. Li
DI
2,676
Dec. 12
Globalstar
GSAT
J. Monroe
CEOI
Dec. 7
Time Warner
TWX
J. Bewkes
Dec. 6-8
Best Buy
BBY
Dec. 7
OneMain Holdings
OMF
Nov. 20
Genpact
G
Dec. 7
Performance Food Group
Dec. 11
Dec. 7
Tabula Rasa Healthcare
Dec. 12-14 Seritage Growth Properties
Facebook
R. Kimball
61,938
29.84 104.0
50,016 103.47
56.6
48,227
34.74
25.7
16.50
44,149
17.51
-3.3
38,000
1.16
44,080
CEO
329
90.63-90.99
29,866
90.25
-6.5
R. Schulze
BI
475
61.26-64.00
29,773
65.32
53.1
W. Edens
DOI
1,000
26.00
26,000
25.50
15.2
1.15 -27.2
TRHC
E. Arnson
G. Bressner
M. Gausling
D. Lubin
BI
DOI
BI
DOI
994
994
994
657
25.85
25.85
25.85
28.59-28.60
25,695
25,695
25,695
18,789
28.16
88.0
SRG
B. Berkowitz
BI
529
40.33-40.79
21,522
39.74
-7.0
CEOI
CEOI
118
119
179.13-182.05
176.59-180.30
21,250 180.18
21,250
56.6
FB
M. Zuckerberg
M. Zuckerberg
50,661
222,795
0
0
41,414
2,292,810
356,164
1.25
1.4200
1.6125
1.3000
1.4100
1.4200
0.5900
0.8125
0.4000
0.4000
0.5800
Secondary market
Fannie Mae
30-year mortgage yields
30 days
60 days
3.450 3.470 3.865 3.253
3.469 3.487 3.899 3.281
Other short-term rates
Week
Latest ago
52-Week
high
low
3.25
3.00
3.25
2.50
Commercial paper (AA financial)
1.54
1.44
1.54
0.72
Libor
One month
Three month
Six month
One year
Based on actual transaction dates in reports received this past week
Basic Industries
Business services
Capital goods
Consumer durables
Consumer nondurables
Consumer services
Energy
2.00
1.240 1.180 1.300 0.400
1.320 1.290 1.320 0.505
1.460 1.450 1.460 0.590
90 days
Buying and selling by sector
Buying
0.48
Call money
* Half the transactions were indirect **Two day transaction
p - Pink Sheets
Sector
1.41
Federal funds
47.12
GDDY
0.00
0.50
0.25
1.50
Discount
7,103
GoDaddy
0.00
0.50
0.50
1.50
Overnight repurchase
DI
Dec. 7
Dec. 8
Dec. 7
0.002
–0.06
U.S. government rates
Sellers
Dec. 8-11
Dec. 8-11
Dec. 8-11
Dec. 8-11
Chg From (%)
Oct. '17 Nov. '16
Prime rates
Dec. 11-12 LendingClub
Dec. 7
Dec. 13
Selling
8,317,267
13,556,602
0
15,191,462
9,317,003
103,853,616
13,554,868
Sector
Buying
Finance
Health care
Industrial
Media
Technology
Transportation
Utilities
9,225,675
5,765,825
243,304
10,654,313
4,591,865
217,492
100
Selling
81,800,995
100,667,762
26,927,175
37,598,245
92,975,494
1,126,007
640,997
Sources: Thomson Financial; WSJ Market Data Group
playing field will mean all U.S.
companies, including Liberty
Mutual, will be eager to compete for a share of U.S. reinsurance business,” said David H.
Long, chief executive of Liberty
Mutual Insurance.
The U.S. coalition this fall
hired CGCN Group LLC and
Capitol Hill Consulting Group,
two lobbying shops with Republican ties, according to disclosure filings.
The team lobbied dozens of
congressional offices, including
Sen. Rob Portman (R., Ohio),
whose state is home to large
U.S. insurers, and Rep. Ted
Budd (R., N.C.), a member of
the conservative House Freedom Caucus, these people said.
“I got involved because I believe in American jobs, and the
American insurance industry,”
Mr. Budd said in a statement.
Mr. Portman’s spokesman said
the bill is designed to make
“sure there is a level playing
field.”
December 15, 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.
International rates
Based on reports filed with regulators this past week
home and business insurer
Chubb Corp. of New Jersey.
In a recent earnings call,
Chubb Ltd. CEO Evan Greenberg, who previously ran ACE,
had harsh things to say about
those pushing for the offshore
tax changes.
“Don’t be fooled by claims of
the U.S. insurers who’re trying
to hide behind a false patriotism,” he said.
Foreign insurers are contributing to the U.S. economy, he
said, recalling how ACE had expanded the Cigna operations
and turned “a tax loser into a
major taxpayer.”
In contrast, he said, many
U.S. rivals have used capital to
buy back stock.
If the U.S. corporate tax rate
is reduced, Chubb expects to be
better off than it is today, but
Mr. Greenberg said Friday in an
emailed comment he still opposes the changes involving use
of affiliated offshore insurers.
“Lower tax rates and a level
Money Rates
All items
Core
Biggest weekly individual trades
Date(s)
reduce some of the risk in policies they sell to consumers and
businesses.
The debate traces to the
1990s as Bermuda developed
into an international reinsurance center. The island doesn’t
levy an income tax on insurers,
though they do currently pay
an excise tax to the U.S. on certain business pertaining to the
U.S., as well as payroll taxes
and tariffs in Bermuda, said Mr.
Kading.
Over the years, numerous
Bermuda-based carriers grew
big enough to acquire U.S. insurers, as other foreign insurers also made acquisitions.
These include ACE Ltd., originally based in Bermuda and
since 2008 domiciled in Switzerland, another lower-tax location. In 1999, ACE acquired the
U.S. and international propertycasualty-insurance business of
Cigna Corp.
In 2016, ACE closed on the
nearly $30 billion purchase of
ly
.
Big U.S. property-casualty
insurers succeeded in closing
what they say is a loophole permitting rivals to rack up profits
and move jobs to Bermuda,
Switzerland and other low-tax
locales, according to lobbyists
for both sides.
The U.S. carriers have spent
the past couple of months
pushing for tougher tax treatment in the Republican tax plan
poised for approval in the coming days. The goal was to end
what their Coalition for American Insurance says are incentives for insurers “to move
their headquarters to low or
no-tax jurisdictions, while still
operating in the U.S., to avoid
paying taxes here at home,” according to a November letter to
the Senate Finance Committee.
Members of the coalition include Berkshire Hathaway
Inc., Hartford Financial Ser-
vices Group Inc., Liberty Mutual Insurance and Travelers
Cos.
These U.S. firms have spent
months making their case to
Republicans, including House
Speaker Paul Ryan (R., Wis.),
for tax-code changes that would
make U.S. insurers more competitive when up against rivals
with lower-tax offshore units.
After an October deal involving the combination of a U.S.
insurer with a Bermuda one,
Mr. Ryan’s office issued a news
release saying “Bermuda. Great
beaches. Great weather. And, as
it turns out, a great place to
move your business to avoid
the U.S. corporate tax code.”
It isn’t clear how the proposed change would affect U.S.
tax revenue. A similar proposal
in 2014 was estimated by the
Joint Committee on Taxation to
increase revenue by $8.7 billion
over 10 years.
The U.S.-based insurers won
the debate despite efforts by
co Fo
m rp
m e
er rs
ci on
al a
us l,
e
on
BY LESLIE SCISM
AND RYAN TRACY
1.49500
1.61331
1.77443
2.04763
1.44438
1.54878
1.72988
2.01075
1.49500
1.61331
1.77443
2.04763
0.73900
0.99428
1.31600
1.68456
-0.409
-0.386
-0.322
-0.261
-0.405
-0.387
-0.317
-0.256
-0.376
-0.329
-0.227
-0.083
-0.417
-0.387
-0.322
-0.261
Euro Libor
One month
Three month
Six month
One year
Euro interbank offered rate (Euribor)
One month
Three month
Six month
One year
-0.371
-0.329
-0.272
-0.193
-0.369
-0.326
-0.271
-0.191
-0.366
-0.313
-0.216
-0.081
-0.375
-0.332
-0.276
-0.193
Value
Traded
Latest
DTCC GCF Repo Index
1.498
1.541
Treasury
MBS
Open Implied
Settle Change Interest Rate
52-Week
High
Low
25.900 1.498 0.448
92.150 1.541 0.483
DTCC GCF Repo Index Futures
Treasury Dec
Treasury Jan
Treasury Feb
98.655 -0.025 2870 1.345
98.560 -0.005 1653 1.440
98.550 -0.010 726 1.450
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 December 14, 2017. Other prime rates aren’t directly comparable; lending practices
vary widely by location; Discount rate is effective December 14, 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.
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 322.58 points, or 1.33%, 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 $37,576, or a gain of 25.25%, on the $30,000
investment, including reinvested dividends.
The Week’s Action
Pct Stock price Point chg
chg (%) change in average* Company
Symbol Close
$1,000 Invested(year-end '16)
$1,000
6.75
7.04
48.47
Walt Disney
DIS $111.27
5.69
3.49
24.03
Nike
NKE
4.09
1.46
10.05
Pfizer
3.20
2.69
18.52
Microsoft
3.09
1.58
10.88
2.81
8.04
55.36
2.79
1.21
8.33
2.74
3.36
2.72
64.79
$1,084
1,292
PFE
37.20
1,190
MSFT
86.85
1,429
Verizon
VZ
52.67
1,035
Boeing
BA
293.94
1,941
INTC
44.56
1,263
23.14
United Technologies UTX 126.17
1,178
6.82
46.96
Goldman Sachs
257.17
1,088
2.72
4.60
31.67
Apple
AAPL 173.97
1,526
1.97
2.83
19.49
Caterpillar
CAT 146.69
1,629
1.94
0.88
6.06
Coca-Cola
KO
46.19
1,151
1.68
1.52
10.47
Procter & Gamble
PG
91.89
1,127
1.54
0.58
3.99
CSCO
38.19
1,309
1.33
1.87
12.88
142.46
1,268
Intel
Cisco Systems
GS
Johnson & Johnson JNJ
1.21
0.67
4.61
Merck
1.08
1.22
8.40
Visa
MRK
56.24
985
V
113.82
1,469
0.85
1.14
7.85
0.62
0.11
0.76
Travelers
TRV 134.89
1,127
General Electric
GE
17.82
0.58
0.56
579
3.86
Wal-Mart Stores
WMT
97.11
1,441
1,467
0.53
0.91
6.27
McDonald’s
MCD 174.06
0.45
0.37
2.55
Exxon Mobil
XOM
83.03
955
0.20
0.21
1.45
J.P. Morgan Chase
JPM 106.14
1,258
–0.03
–0.03
–0.21
American Express
–0.05
–0.13
–0.90
3M
–0.16
–0.19
–1.31
–0.45
–0.83
–5.71
–0.93
–2.09
–14.39
–1.03
–0.73
–5.03
–1.49
–2.31
–15.91
98.52
1,351
MMM 238.00
1,364
Chevron
CVX 119.73
1,058
Home Depot
HD
182.58
1,393
UnitedHealth Group UNH 221.82
1,407
70.00
1,257
IBM 152.50
954
DowDuPont
IBM
AXP
DWDP
*Based on Composite price. DJIA is calculated on primary-market price.
Source: WSJ Market Data Group; FactSet.
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 18, 2017 | B11
MARKETS
OPEC’s Trouble:
Oil Prices May Be
Rising Too Sharply
President Donald Trump visited a North Dakota Andeavor refinery this fall. Refiners are expected to return tax savings to investors.
Tax Cut Unlikely to Trickle to Pump
U.S. fuel makers are
poised to reap billions under a
sweeping Republican overhaul
of the tax code. But don’t expect them to expand, go on a
hiring binge or lower prices at
the pump.
Refiners haven’t built
any major new plants in the
U.S. since the 1970s. Instead,
they have been returning profits to shareholders en masse in
recent years, because the
country has more gasoline and
diesel than it can consume.
That strategy is expected to
continue if refiners, which
have largely been paying the
current 35% corporate tax rate,
see their rate drop to 21% under the proposed tax cut, according to analysts and people
familiar with the companies’
plans. The brunt of the savings—an extra $1.5 billion next
year alone—likely would wind
up benefiting the companies’
investors, including billionaire Warren Buffett.
The case study of U.S. refiners shows that for many industries, the impact of the tax cut
on capital investment and job
growth will be limited for a
simple reason: Pouring the
money back into expansion
wouldn’t make business sense.
Andeavor Corp., one of the
country’s largest independent
refiners, said last week that it
would reinvest 25% to 35% of
cash flow back into its business over the next three years
and could increase dividends
and share buybacks.
Gregory Goff, chief executive of the company formerly
known as Tesoro, said much of
the cash from tax cuts would
go back to investors.
“At the end of the day, it
probably frees up more for
shareholders,” Mr. Goff told
analysts earlier this month.
President Donald Trump
touted his ideas for cutting
taxes during a visit to an Andeavor refinery in North Dakota in September.
Valero Energy Corp. also
is likely to direct much of the
cash from tax cuts to dividend
payments and stock buybacks,
according to people familiar
with the company’s plans. It
returned $600 million to investors through dividends and
stock buybacks in the third
quarter of 2017 and has said it
would buy back an additional
$1.6 billion in shares.
Analysts say the strategy
makes sense for refiners,
which face longer-term uncertainties about demand for gasoline and diesel, due to the
emergence of electric vehicles
and improving fuel efficiency.
“You don’t want more capacity in an industry where there
is already overcapacity,” said
Paul Cheng of Barclays PLC.
Mr. Cheng projects the legislation would provide a boost
of around 20% to refiners’
earnings per share and an increase of 9% or more to cash
flow from operations. Many of
the companies likely would opt
to return more than half of
that cash to investors, he said.
Phillips 66 would have a
cash-flow increase of $227
n-
no
The proportion of investors who are
pessimistic about equity markets for the
next year, the highest since the financial
crisis, according to a survey conducted by
Boston Consulting Group
Investors Sour on 2018
annual survey conducted by
Boston Consulting Group. That
means big investors are headed
into the new year with the most
bearish perspective on stocks
since the financial crisis. Last
year, just 32% were bearish.
With prices rising day after
day, the biggest hang-up for
investors is, predictably,
valuation. Some 68% of
respondents said the equity
market is “overvalued,” more
than double the 29% of
MONEYBEAT
respondents who thought as
much last year.
As bears perk up, the return
investors expect from the stock
market is falling. The average
respondent called for the total
return for equities, including
dividends, to be 5.5% over the
next three years, the same as
last year and tied for the lowest
return expectation since the
survey was initiated in 2009.
Diminished expectations
haven’t slowed down the
galloping pace of stock gains
yet. An improving global
economy, rising corporate profits
and low interest rates have
conspired to keep prices rising.
The survey, conducted over
two weeks starting in late
October, queried 250 investors
with a collective $500 billion in
assets.
—Chris Dieterich
ONLINE
WSJ
.COM
For more
MoneyBeat blog
posts, go to
blogs.wsj.com/
MoneyBeat
‘You are attracting
problems’ at these
prices, an OPEC
official says.
Intermediate ended up 26
cents at $57.30 a barrel.
Oil prices fell on Wednesday after U.S. data showed a
buildup in gasoline placed in
storage, with Brent crude falling about 1% to $62.72.
Still, an OPEC official said,
“you are attracting problems
for yourself” at these prices.
“If prices are attractive for
other producers, we will be
going back to square one,” the
official said.
OPEC members depend on
higher oil prices to balance national budgets that depend on
revenue from crude sales. Nigeria needs Brent prices at
$139 a barrel to cover its national spending this year,
while Saudi Arabia needs $84
a barrel.
The effect of the cartel’s
production cuts have been amplified in recent weeks by a
tide of unintentional disruptions to oil supplies in the U.S.,
the U.K., Venezuela and Iraq.
Currencies
U.S.-dollar foreign-exchange rates in late New York trading
Country/currency
46%
Investors aren’t so sure
about 2018.
Fully 46% of investors were
pessimistic about equity
markets for the next year in an
capital investments.
Since 2012, U.S. refiners including Valero, Andeavor, MarSince 2012, refiners have given
athon Petroleum Corp., PBF
most of the cash they generate
Energy Inc., Phillips 66
back to investors. In billions:
and others provided $53 bilCash from
Dividends lion in cash to shareholders in
$35
operations paid
dividends and buybacks, more
than half the cash they generShare
buybacks ated from operations in that
25
time, according to a Wall
Street Journal analysis of FactSet data.
While the industry has
15
spent billions upgrading existing refineries, in the past five
years, the biggest four fuel
10
processors that don’t produce
oil or gas delivered a total return of 180% to shareholders,
5
including dividends, beating
the S&P 500 index by almost
75 percentage points, according to FactSet.
0
Unlike major oil companies
2012 ’13 ’14 ’15 ’16 ’17*
like Exxon Mobil Corp. and
*Year to date
Chevron Corp., which both
Source: FactSet
produce and refine oil, indeTHE WALL STREET JOURNAL.
pendent refiners have largely
been unable to use other tax
million from the tax change, provisions to avoid paying the
according to Barclays. If all of current 35% tax rate. That is
those funds were returned to because they can’t take advanshareholders, more than $34 tage of offsets such as deducmillion would go to Mr. Buf- tions for drilling costs.
fett’s Berkshire Hathaway,
“The vast majority of indebased on his roughly 15% stake pendent refiners are actually
in the refiner.
American companies that can’t
A spokesman for Phillips 66 take advantage of various tax
declined to comment. A loopholes around the world
spokeswoman for Berkshire and are stuck with America’s
Hathaway didn’t respond to a tax code,” said Brendan Wilrequest for comment.
liams, vice president of govFor investors, U.S. refiners ernment affairs for PBF. He
have been one of the best bets said PBF supports tax overhaul
among oil-and-gas companies but declined to discuss the
recently due to their relatively company’s capital expenditure
high profits compared with plans.
Cash Machines
co Fo
m rp
m e
er rs
ci on
al a
us l,
e
on
BY CHRISTOPHER M. MATTHEWS
AND BRADLEY OLSON
OPEC is grappling with an
unusual conundrum: Oil prices
are going higher than it wants.
A rise in Brent crude to $65
a barrel could undermine a
fragile coCOMMODITIES alition of 24
oil-producing nations,
led by the Organization of the
Petroleum Exporting Countries, that says it is withholding almost 2% of global oil
supply. Their production cuts
were meant to reduce an oversupply of oil—and by extension boost prices—but prices
going too high could cause
some to abandon the effort
and cash in, analysts and OPEC
members said.
Further increases in oil
prices “would be an open invitation to cheat” on agreed production cuts, said Ole Hansen,
head of commodity strategy at
Denmark’s Saxo Bank. “That
could lead to a collapse of the
deal.”
Some OPEC members are
concerned about Russia, which
isn’t a member but has led a
group of countries helping to
cut production. Russian oil
companies are eager to take
advantage of rising prices and
have clamored for Moscow to
find an exit strategy from its
alliance with OPEC.
Rising prices could also
provide a shot in the arm for
U.S. shale companies, which
saw their production decline
during the three-year downturn. Now, they are locking in
today’s prices for their 2018
production, and the U.S. Energy Information Administration says American output will
reach a record 10 million barrels a day next year.
“Do we want [prices] to
continue upwards indefinitely?
Not really,” Nigerian Oil Minister Emmanuel Ibe Kachikwu
told The Wall Street Journal,
citing shale as a concern.
Historically, OPEC has had a
poor track record at achieving
the price its members want.
The cartel officially gave up on
influencing prices in the
1980s, when its efforts to tame
a flood of oil from Alaska and
the North Sea failed.
OPEC and its biggest member, Saudi Arabia, say their
role is to keep prices stable by
ensuring oil supplies don’t get
out of whack with consumption trends. “We will leave
prices to the markets,” said
Khalid al-Falih, Saudi Arabia’s
energy minister, at the group’s
Nov. 30 meeting in Vienna.
However, individual members say $60 a barrel for Brent
crude, the international benchmark, is the ideal price to
cover their financial needs
without excessively subsidizing costly U.S. production. In
particular, Saudi Arabia wants
that price level to carry out a
successful listing of state oil
giant Saudi Aramco next year
and invest in industries to diversify from oil.
Some OPEC members became alarmed this week as
Brent rose above $65 a barrel
for the first time since June
2015. West Texas Intermediate, the U.S. benchmark, lags
about $6 behind but has stabilized at levels where shale producers can make money.
On Friday, Brent crude settled down 8 cents at $63.23 a
barrel, while U.S. West Texas
ly
.
CHARLIE NEIBERGALL/ASSOCIATED PRESS
BY BENOIT FAUCON
in US$
US$vs,
YTDchg
Fri
per US$ (%)
Country/currency
Americas
Europe
Argentina peso
.0571 17.5105 10.3
Brazil real
.3035 3.2951 1.2
Canada dollar
.7772 1.2867 –4.3
Chile peso
.001570 636.80 –4.9
Ecuador US dollar
1
1 unch
Mexico peso
.0523 19.1233 –7.8
Uruguay peso
.03463 28.8800 –1.6
Venezuela b. fuerte .100150 9.9851 –0.1
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
Asia-Pacific
Australian dollar
.7643 1.3084
China yuan
.1515 6.5989
Hong Kong dollar
.1280 7.8109
India rupee
.01561 64.075
Indonesia rupiah .0000737 13575
Japan yen
.008880 112.61
Kazakhstan tenge .002976 336.01
Macau pataca
.1243 8.0477
Malaysia ringgit
.2451 4.0795
New Zealand dollar
.6992 1.4302
Pakistan rupee
.00910 109.858
Philippines peso
.0198 50.438
Singapore dollar
.7417 1.3483
South Korea won .0009180 1089.38
Sri Lanka rupee
.0065295 153.15
Taiwan dollar
.03336 29.976
Thailand baht
.03075 32.520
Vietnam dong
.00004403 22713
–5.8
–5.0
0.7
–5.7
0.4
–3.8
0.7
1.7
–9.1
–1.0
5.3
1.7
–6.8
–9.8
3.2
–7.6
–9.2
–0.3
in US$
US$vs,
YTDchg
Fri
per US$ (%)
.04575 21.860 –14.9
.1578 6.3361 –10.4
1.1748 .8512 –10.5
.003740 267.40 –9.1
.009489 105.38 –6.7
.1193 8.3829 –3.0
.2794 3.5795 –14.5
.01700 58.837 –4.0
.1176 8.5042 –6.6
1.0093 .9908 –2.8
.2590 3.8612 9.6
.0363 27.5325 1.7
1.3322 .7506 –7.3
Middle East/Africa
Bahrain dinar
Egypt pound
Israel shekel
Kuwait dinar
Oman sul rial
Qatar rial
Saudi Arabia riyal
South Africa rand
2.6530 .3769 –0.1
.0560 17.8700 –1.4
.2846 3.5136 –8.7
3.3110 .3020 –1.2
2.5947 .3854 0.1
.2742 3.647 0.2
.2667 3.7501 –0.02
.0763 13.0996 –4.3
Close Net Chg % Chg YTD%Chg
WSJ Dollar Index 87.10
0.22 0.25 –6.28
Sources: Tullett Prebon, WSJ Market Data Group
THE TICKER | Market events coming this week
Red Hat
No major events are
scheduled
Wednesday
Tuesday
Mort. bankers indexes
Purch., previous down 1%
Refinan., prev. down 3%
Gross domestic product:
EIA status report
3rd qtr. , sec. est. up 3.3%
3rd qtr., third est. up 3.3%
Building permits
Oct., previous 1.30 mil.
Nov., expected 1.26 mil.
Current account
2nd qtr., previous
$123.14 bil. deficit
3rd qtr., expected
$115.0 bil. deficit
Housing starts
Oct., previous 1.29 mil.
Nov., expected 1.25 mil.
Earnings expected*
Estimate/Year Ago($)
Carnival
Darden
FactSet
FedEx
Micron Tech.
0.51/0.67
0.70/0.64
1.97/1.75
2.89/2.80
2.19/0.32
0.70/0.61
Previous change in stocks in
millions of barrels
EIA report: natural gas
Previous change in stocks in
billions of cubic feet
down 69
Percentage change, annual rate
down 5.1
up 5.7
down 1.4
GDP deflator
3rd qtr. sec. est. up 2.1%
3rd qtr., third est. up 2.1%
Existing-home sales
Oct., previous 5.48 mil.
Nov., expected 5.51 mil.
Philadelphia Fed survey
Nov., previous
22.7
Dec., expected
20.0
Earnings expected*
Earnings expected*
Crude oil
Gasoline
Distillates
Estimate/Year Ago($)
General Mills
0.82/0.85
Thursday
Initial jobless claims
Previous
225,000
Expected
230,000
Friday
Bond market closes early, at 2 p.m
ET
Durable-goods orders
Oct., previous down 0.8%
Nov., expected
up 2.0%
U.Mich. consumer index
Dec., prelim.
96.8
Dec., final
97.0
New-home sales
Oct., previous
685,000
Nov., expected 650,000
Personal income
Oct., previous
up 0.4%
Nov., expected
up 0.4%
DHIRAJ SINGH/BLOOMBERG NEWS
Monday
Estimate/Year Ago($)
Accenture
CarMax
Cintas
Conagra
Nike
Paychex
1.67/1.58
0.81/0.72
1.24/1.13
0.52/0.49
0.40/0.50
0.59/0.56
Personal spending
Oct., previous
up 0.3%
Nov., expected
up 0.4%
Monday
U.S. markets are closed for
Christmas
* FACTSET ESTIMATES EARNINGS-PER-SHARE ESTIMATES DON’T INCLUDE EXTRAORDINARY ITEMS (LOSSES IN PARENTHESES) ADJUSTED FOR
STOCK SPLIT
NOTE: FORECASTS ARE FROM DOW JONES WEEKLY SURVEY OF ECONOMISTS
Analysts expect sportswear maker Nike to post quarterly earnings of 40 cents a share on Thursday.
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.
B12 | Monday, December 18, 2017
THE WALL STREET JOURNAL.
MARKETS
THE DAILY SHOT By Lev Borodovsky and Peter Santilli
Tepid Prices Alter Jobs Equation
It has been an article of faith among central bankers that falling unemployment would inevitably
ignite a rise in inflation. But certainty has ebbed lately, with the failure of broad price measures
to pick up in the Western world despite loose monetary policy and declining joblessness.
July 1990March 1991 (recession)
6%
High inflation
and low
unemployment
July 1990
1
July 1990March 1991
(recession)
2
April 1991February 2001
Technological advances
and automation combined
with offshoring to keep
inflation down despite
low unemployment.
High inflation,
Low unemployment
5
Inflation
Oil prices rose during
the Gulf War, keeping
inflation elevated
despite rising
unemployment.
December 2001November 2007
The Phillips curve, named after
economist A.W. Phillips, refers to
the traditionally inverse link between
inflation and unemployment. The
trend seems to have vanished.
Low inflation,
high unemployment
Unemployment
4%
3
March 2001November 2001 (recession)
Oil prices fell and the
global workforce
expanded—driving
inflation lower.
4
December 2001November 2007
December 2007- June 2009
(The Great Recession)
3
Inflation*
April 1991February 2001
Unemployment spiked and
wage growth collapsed
pushing inflation lower.
December 2007June 2009
(The Great Recession)
ly
.
5
2
November
Joblessness rose
during the short
recession in 2001.
co Fo
m rp
m e
er rs
ci on
al a
us l,
e
on
July 2009-November 2017
March 2001November 2001 (recession)
JanuaryNovember 2017
7
6
July 2009December 2016
1
Analysts, economists and policy makers now
struggle to explain it all. Some point to the
cumulative impact of technological advances,
offshoring and cheap imports. Others say inflation
measurements are hopelessly outdated and don't
reflect the world we live in.
Some suggest the recent downward pressure on
4%
5
and automakers lowering prices to gain market
share. But Fed Chairwoman Janet Yellen seems less
convinced it’s temporary, with sluggish inflation
showing no signs of picking up. One thing is certain,
the specter of ‘lowflation’ now shadows every
Federal
Reserve
policy
discussion,
U.S.
economic-data release and bond-market wobble.
6
7
8
Labor markets have
recovered but cheap
imports and more
automation have helped
keep inflation down.
Low inflation
and high
unemployment
9
10
0
2017
Unemployment rate
*Core consumer-price index, change from year earlier
Sources: Bureau of Economic Analysis (consumer prices) and Bureau of Labor Statistics (unemployment rate) via Federal Reserve Bank of St. Louis
HEARD ON THE STREET
Email: heard@wsj.com
FINANCIAL ANALYSIS & COMMENTARY
Bank Stocks Can Fight the Fed, for Now
Who's Afraid of Some Flattening?
Spread between two-year and 10-year U.S. Treasury yields
1.4 percentage points
1.2
n-
1.0
0.8
0.6
no
At some point, higher interest rates may become a
negative for banks, but not
for a while.
The Federal Reserve has
been steadily raising shortterm rates even as long-term
rates have barely budged.
The result has been a flattening of the yield curve, which
conventional wisdom says
should be strongly negative
for banks. Banks make
money by taking short-term
deposits and extending longer-term loans, the reasoning
goes. So when short-term interest rates are rising and
long-term rates aren’t, it
ought to squeeze bank margins.
The most closely watched
gauge of the curve is the
spread between two-year and
10-year Treasurys. This year,
the spread has more than
halved from 1.23 percentage
points to just 0.56 percentage point.
Yet over this time bank
stocks have performed well,
with the KBW Nasdaq Bank
0.4
J
F
M
A
M
J
Source: FactSet
index rising 16%, including
8% in the past month as the
spread fell further.
This recent outperformance could be partly due to
excitement over the tax overhaul, which will cut banks’
relatively high tax rates. But
it also points to an important
and little understood point:
The yield curve’s steepness
simply doesn’t matter as
J
A
S
O
N
D
THE WALL STREET JOURNAL.
Federal Reserve in Washington
much for banks as many investors think, at least under
present conditions.
Indeed, despite the flattening of the yield curve,
banks’ net interest margins
have risen to 3.3 percentage
points on average for all
banks in the third quarter
from 3.16 in the fourth quarter of 2016, according to data
from the Federal Deposit In-
surance Corp.
There are two reasons:
First, many bank loans, including most consumer and
business loans, are priced off
short-term benchmarks like
Libor, not long-term ones.
This means they generally
adjust upward when the Fed
raises rates. Other important
lending rates are going up,
too. On Thursday, the prime
Airbus Is Having Trouble in the Cockpit
The investment case for
airplane giant Airbus is simple: It has nine years’ worth
of aircraft orders to fulfill.
All it has to do is execute.
The trouble is the people
meant to execute it are leaving. And the people replacing
them are either not identified or unproven. The turmoil is leaving Airbus shareholders once again in rival
Boeing’s slipstream.
Most significantly, Airbus
said Friday that Fabrice Brégier, who heads the commercial aircraft division, is leaving. Once seen as a possible
future chief executive, he is
credited with overseeing the
mostly snafu-free development of the long-haul A350
and for ensuring Airbus has
kept pace on producing the
wildly popular A320neo.
His boss, Tom Enders, has
agreed to leave at the end of
his current term in 2019. A
search has started for his replacement, with no obvious
internal candidates. Corruption investigations into past
Airbus sales practices are
seen as a pretext for the
shuffle, though some of these
issues had already been acknowledged by the company.
Mr. Enders was among several Airbus employees being
investigated in Austria over
fighter-jet sales. Airbus has
said the allegations were unsubstantiated.
It is also possible the two
executives had reached the
end of what had at times
been a competitive working
relationship.
Stepping into Mr. Brégier’s
shoes running the commer-
cial aircraft division is helicopters head Guillaume
Faury. He may yet prove
equally up to the task of
churning out airplanes and
mercilessly squeezing costs
along the way. But his tenure
in Airbus’s much-smaller helicopter division—which has
faced an industrywide slump
and crash issues that predate
his tenure—hasn’t proved
out those skills.
There is still a good
chance Airbus delivers on its
promise to turn its 6,000plus plane backlog into cash
in a way that rewards shareholders. In the past six
weeks, however, its stock has
been moving sideways while
Boeing’s keeps going higher.
A protracted crew change
may only slow things down.
—Alex Frangos
rate, a key benchmark for
credit card and other loans,
rose a quarter point to 4.5%.
The second reason is that
deposit rates have been very
slow to adjust upward, particularly at big banks in big
markets. JPMorgan Chase,
for instance, is currently offering just 0.01% on ordinary
savings accounts in the New
York metro area, according
to Bankrate.com, compared
with a national average of
0.25%.
Analysts at Keefe,
Bruyette and Woods estimate
that just 15% of the total increase in the Fed’s benchmark rate so far in 2017 has
filtered through to deposit
rates for the median bank.
They figure this passthrough rate will rise to 34%
next year, but low enough
that Fed rate increases still
will be a net positive for
most banks.
At least for the next few
rate increases, holders of
bank stocks will have cause
for good cheer. —Aaron Back
OVERHEARD
There is nothing more dangerous than a cable company
spurned.
One result of Walt Disney
Co.’s $52.4 billion agreement
with 21st Century Fox is that
streaming service Hulu will for
the first time have a majority
owner. The deal will double
Disney’s stake in Hulu to 60%,
leaving the remaining stakeholders Comcast Corp.’s NBCUniversal (30%) and Time
Warner Inc. (10%) as powerless minorities. Or so thinks
Disney Chief Executive Robert
Iger, who has said the acquisition “will enable us to greatly
accelerate Hulu…and become a
more viable competitor to
those already out there.”
Comcast might think otherwise. The cable and content
company, which was vying
with Disney for the Fox assets,
is one of those viable competitors that is already out there.
“If I was Comcast, I’d go into
this thing as, we’ll torture you
unless you give us your stake,”
says Rich Greenfield of BTIG
Research. He thinks Comcast
may try to buy Disney out of
Hulu. It is an offer Disney
should consider.
Desperate to catch up to
Netflix, Disney already has
plans to launch two other
streaming services—a Disneybranded family-friendly service,
and an ESPN sports-streaming
service. Will it have resources
to invest in a third? If Comcast
is going to be a grumpy partner, Disney may be wise to end
the relationship.
THE WALL STREET JOURNAL.
WSJ.com/Heard
H&M Has an
Ugly Start to
The Holidays
Too late for this holiday
shopping season, the owner
of mall fashion stalwart
H&M is finally getting serious about resizing its store
footprint for the digital age.
The move is long overdue,
and will be painful.
Hennes & Mauritz sales
fell 4.3% year over year for
the quarter through November, the Stockholm-based retail giant warned Friday.
This is the worst quarterly
performance since at least
2001, according to FactSet
data. The stock plunged 15%
and is down 35% over the
year.
For years, H&M operated
a hugely successful store
rollout model. Planting flags
in new cities and countries
required a lot of capital but
seemed to guarantee top-line
growth and healthy returns.
But the model has come under intensifying strain from
online retail and new bricksand-mortar competitors.
CEO Karl-Johan Persson
as recently as September
was targeting 9% net growth
in store count for the year
through November. From
now on there will be more
closures and fewer openings,
the company said Friday.
Meanwhile, Zara owner
Inditex continues to pull
away. Third-quarter results
published Wednesday
showed sales up 10%. Zara
competes with H&M in malls
across the world, but its logistically sophisticated operations have proved much
more adaptable to an era of
click-and-collect and changing fashion trends.
Shifting resources out of
bricks and mortar is the
right long-term strategy, but
in the medium term it will
remove the only prop to
H&M’s growth. Investors
should brace for further declines.
—Stephen Wilmot
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