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The Wall Street Journal December 26 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.
TUESDAY, DECEMBER 26, 2017 ~ VOL. CCLXX NO. 149
* * * * *
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WSJ.com
10-YR. TREASURY g 1 5/32 , yield 2.486%
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Christmas Celebrants Gather Around the World
What’s
News
Retail
Holiday
Sales Go
Ka-Ching
Business & Finance
egulators are proposing to roll back safety
measures put in place after the 2010 Deepwater
Horizon oil spill. A1
R
BY SUZANNE KAPNER
Retailers are enjoying some
extra Christmas cheer.
Fueled by high consumer
confidence and a robust job
market, U.S. retail sales in the
holiday period rose at their
best pace since 2011, according to Mastercard SpendingPulse, which tracks both online and in-store spending.
Sales, excluding automobiles, rose 4.9% from Nov. 1
through Christmas Eve, compared with a 3.7% gain in the
same period last year, according to the Mastercard Inc.
unit, which tracks all forms of
payment. E-commerce continued to drive the gains, rising
18.1%.
“It started with a bang in
the week leading up to Black
Friday,” said Sarah Quinlan, a
senior vice president of marketing insights at Mastercard.
She said retailers also benefited from Christmas Day falling on a Monday, giving shoppers a full weekend to scoop
up last-minute purchases. Dec.
23 ranked next to Black Friday
in terms of spending, according to Mastercard. “Overall,
this year was a big win for retail,” Ms. Quinlan said.
That newfound buoyancy is
a relief to retailers, from department-store giants like
Macy’s Inc. to mall favorites
like Gap Inc., which struggled
Please see RETAIL page A2
A tax-overhaul provision
is expected to release a tide
of U.S. corporate cash from
abroad, a development
likely to jolt the dollar. B1
Theranos told investors it
has secured a $100 million
loan from Fortress Investment
Group, averting for now a
possible bankruptcy filing. B1
Changes in the tax code
are expected to create winners
and losers in housing markets,
potentially fueling demand in
the middle of the country. A2
Economists are revising up
estimates of U.S. economic
growth in the coming two years
due to tax cuts and government
spending increases. A2
Sequoia Capital is moving to raise about $5 billion for its third global
growth fund. B4
YOUNG MAGI: Children performed before a Mass at a church in Dyatlovo, Belarus, as Christians world-wide celebrated the birth of Jesus.
Drilling Plan Eases Rules
Proposal would lower
industry costs, relax
some measures taken
after 2010 spill in Gulf
BY TED MANN
WASHINGTON—Regulators in the Trump administration are proposing to roll back
safety measures put in place
after the 2010 Deepwater Horizon oil spill, a revision that
would reduce the role of government in offshore oil production and return more responsibility
to
private
companies.
The Bureau of Safety and
Environmental Enforcement,
which regulates offshore oil
and gas drilling, estimates its
proposed changes could save
the industry more than $900
million over the next 10 years
and reverse some risk-reduction measures that drillers
consider burdensome.
A Cancer Drug’s Soaring Cost
The price of lomustine, sold originally as CeeNU by Bristol-Myers
Squibb, rose steeply after NextSource Biotechnology began
selling the drug in 2013, rebranded as Gleostine. B1
The Saudi government
in recent days has released
at least two dozen high-profile suspects held in a crackdown on corruption. A6
States are grappling
with how to continue the
popular Children’s Health
Insurance Program after
Congress failed to renew its
long-term funding. A3
The White House’s push
for an infrastructure-rebuilding plan will begin in
earnest early next month. A3
$800 per capsule
100
milligrams
600
The U.S. Mission to the
United Nations said the
U.N.’s 2018-19 budget would
be slashed by more than
$285 million, including cuts
to management. A2
Trump’s legal team reasserted that the parts of
the Russian election-interference investigation involving the president would
conclude quickly. A4
A federal judge ruled
the military must provide
immediate access to legal
counsel for a U.S. citizen
being held as an enemy
combatant in Iraq. A6
A nuclear-power project
being built by Russia in Belarus is fueling safety fears
in nearby Lithuania. A16
400
200
0
40 mg
10 mg
2009 ’10
’11
’12
’13
Source: Truven Health Analytics
’14
’15
’16
’17
THE WALL STREET JOURNAL.
BY SARA GERMANO
BALTIMORE—Temperatures were near freezing earlier
this month when Under Armour
Inc.’s management convened a
town-hall meeting in a parking
garage at the company’s headquarters here. With minimal
heat and some executives donning winter hats to keep warm,
Chief Executive Kevin Plank got
straight to the point. “2017
sucked,” he said.
This year, the athletic-gear
company posted two consecutive quarters of net losses, including its first-ever quarterly
sales decline, laid off nearly 300
employees and lost several top
executives. Entering the final
week of the year, the stock had
dropped about 45%, erasing
more than $5 billion in market
value. Meanwhile, rival Nike
Inc. gained almost 25% and the
S&P 500 nearly 20%.
But if it was a tough year to
be CEO of a sportswear company, Mr. Plank had another
s Copyright 2017 Dow Jones &
Company. All Rights Reserved
Economists brighten
forecasts for growth............. A2
At UPS, it’s all hands on deck
for holiday deliveries............. B3
A year after the OPEC pact,
oil prices firm.......................... B10
Banks abandon small towns to focus on booming urban markets
ROXOBEL, N.C.—Danielle Baker wanted a
$324,000 loan last year to expand the peanut-processing business she ran from the
family farm. She had a longstanding relationship with the Roxobel branch of Southern Bank, and she thought Southern would
help fund the peanut operation she had spun
off, too.
But that branch—the town’s only bank—
closed in 2014. A Southern banker based in
Ahoskie, 19 miles away, said Bakers’ Southern Traditions Peanuts Inc. was too small
and specialized, she says. A PNC bank
business project that was on a
roll: his private investment
firm. In 2017, Plank Industries
opened a boutique hotel and a
whiskey distillery and secured
an additional $233 million in
funding for a multibillion-dollar
real-estate project in Baltimore.
The contrast in fortunes of
the two companies controlled
by Mr. Plank prompts the question of how well an executive
can juggle corporate and personal projects, analysts say.
Please see PLANK page A6
INSIDE
Markets Digest.......B7
Opinion.............. A13-15
Sports........................ A12
Media & Technology B4
U.S. News............. A2-4
Weather.................. A10
World News...... A5,16
>
proposal Dec. 8 to the White
House budget office that reviews new regulations but
hasn’t made it public. The
Wall Street Journal reviewed
the proposal. A BSEE spokeswoman declined to comment
while the rule-making is in
progress.
After Mr. Trump took office, industry groups such as
Please see OIL page A4
Rural Business Owners Face
Dwindling Pool of Lenders
Feeling Pressure, Under Armour
CEO Says Side Job Is Just That
Maine can’t find enough
snowplow drivers, a sign
that low unemployment
has its downsides for state
governments competing
with private employers. A3
CONTENTS
Banking & Finance B8
Business News.... B3,5
Crossword.............. A10
Heard on Street... B10
Life & Arts......... A9-11
Markets............... B9-10
Among the changes, the
proposed rule would relax requirements to stream realtime data on oil-production
operations to facilities onshore, where they now are
available for review by regulators. It also would strike a
provision requiring that thirdparty inspectors of critical
equipment—like the blowout
preventer that failed in the
Deepwater Horizon case—be
certified by BSEE.
The agency submitted the
BY RUTH SIMON AND COULTER JONES
NextSource
Biotechnology
begins selling
the drug
no
Trump’s decision to provide antitank missiles to
Ukraine reflects a new assessment of the threat
posed by Moscow’s military
intervention there. A16
Price of cancer drug lomustine
n-
World-Wide
ly
.
Trading in bitcoin and
other cryptocurrencies is
testing many in the Trump
administration who had
hoped to embrace financial innovation. B1
co Fo
m rp
m e
er rs
ci on
al a
us l,
e
on
UPS used hundreds of its
accountants, marketers and
other office staff to deliver
a crush of holiday shipments before Christmas. B3
VASILY FEDOSENKO/REUTERS
The price of a drug used
to treat brain tumors and
Hodgkin lymphoma has
risen 15-fold since 2013. B1
Holiday retail sales rose
at their best pace since
2011, according to a survey
that tracks both online and
in-store spending. A1
YEN 113.29
HEALTH
PROGNOSIS
FOR 2018
THE LOUD,
WEIRD WORLD
OF SPORTS
HOW TO
DEFUND
THE U.N.
LIFE & ARTS, A9
JASON GAY, A12
OPINION, A15
branch also turned her down.
“If you are not a big company with tons
of assets and a big bank account,” Ms. Baker
says, “they just overlook you.”
She finally got a loan from a nonprofit in
Raleigh two hours away that provides financing to small businesses but not other
traditional banking services. She must drive
19 miles every afternoon to make cash deposits or get change for her cash register,
and expects to make a two-hour trip when
she wants to refinance. Without a local
branch close to her business, she says, “it’s
very aggravating on a day-to-day basis.”
Please see RURAL page A8
That Smokestack Is a Treasure!
China Gets Nostalgic for Mao Era
i
i
i
Idle chimney wins a reprieve as city folks
pine for simpler times; ‘red tourists’
BY TE-PING CHEN
“We once earnestly believed smokestacks were the
BEIJING—Just outside the definition of beautiful,” says
Second Ring Road in south- Xie Li, of Icomos China, a culwest Beijing sits the delicately tural-heritage group. A chilchiseled Tianning Pagoda, one dren’s song from that era
of the capital’s oldest struc- called “Little Swallow,” still
tures. After 900 years, it is a sung today, praises factories
for making cities more
little worse for wear,
beautiful and appealwith many of its Buding to migrating birds.
dha carvings roughed
How to give the
up by Cultural Revoluchimney new life as a
tion marauders.
cultural touchstone
But pan away from
has been the subject
the pagoda. It is a 40of a governmentyear-old
concrete
backed competition.
smokestack, 100 yards
The topic surfaced as
away, that is at the
a recent essay quescenter of a poignant
tion on Beijing highdebate over how BeiBeijing
school exams.
jing should remember
chimney
The nostalgia for a
its past.
40-year-old chimney
The 590-foot-tall
chimney hasn’t been in use is in keeping with the wistfulsince 2009, when the Beijing ness many in China feel for
No. 2 Thermal Power Plant the era of the Great Helmswas closed and relocated to man. Despite the tumult of
reduce smog in the city. Tear- that period, some recall it as a
ing it down, though, would be simpler, more equal time in
an abomination to those who which people toiled side by
see it as a symbol of nation- side to build a new China.
In Beijing, old-timey restaubuilding, a relic of Mao Zedong’s call to turn Beijing into rants decorated with farm imPlease see CHINA page A8
a “forest of smokestacks.”
For personal, non-commercial use only. Do not edit, alter or reproduce. For commercial reproduction or distribution, contact Dow Jones Reprints & Licensing at (800) 843-0008 or www.djreprints.com.
A2 | Tuesday, December 26, 2017
* *
THE WALL STREET JOURNAL.
U.S. NEWS
Low-Tax States See Housing Market Boon
U.S. WATCH
The new law is expected to speed migration from areas like Brooklyn, above, to lower-cost areas as housing costs grow in urban centers.
Mr. Zandi cautioned the
changes are modest. Even areas likely to see an additional
increase in home prices are
expecting a boost of around
1%. Overall, the national impact is likely to be negative.
“What this is going to do is it’s
going to throw a wet blanket
on [the housing market]. It’s
still going to move forward,
but more slowly,” he said.
People are already migrating from high-cost states to
lower-cost areas as home
prices and rents in large urban
centers skyrocket and it becomes easier to work remotely. The tax law is likely to
accelerate that trend, economists said. Idaho, Nevada and
Utah saw the largest percentage growth in population in
the country from July 2016 to
July 2017, according to U.S.
Census data released this
month. New York, New Jersey
and California, meanwhile,
ranked below the top 20 for
percentage growth.
Economists said the tax impact is likely to be felt more by
businesses deciding to expand
operations in lower-cost
states, viewing local taxes as
an even greater hindrance.
“There’s a neon billboard
now [and] the critical mass to
induce companies to leave, to
induce employees to leave.
2018 is going to see a lot of
pressure on this,” said Edward
McCaffery, a professor of law
and economics at the University of Southern California.
The average New York
household that itemizes its tax
return pays roughly $17,500 in
state income and property
taxes—well above the $10,000
limit, according to an analysis
by Robert Dietz, chief economist at the National Association
of Home Builders. A typical California household that itemizes
pays close to $14,000 in taxes.
Even in slightly less pricey
states, such as Illinois, Maryland, Oregon and Vermont, the
average taxpayer who itemizes
exceeds the new cap.
For some homeowners, the
differences can be stark. A top
income earner in New York
who owns a home in the topthird price tier of the metro
area pays more than $23,000
in property and state income
taxes a year, according to an
analysis by Zillow. Meanwhile,
an affluent homeowner with
an expensive home in Raleigh
would pay just over $10,000.
A homeowner in similar circumstances in Chicago would
pay about $12,000 in property
and state income tax, while
one in the same circumstances
in Nashville would pay about
one-quarter that much.
Steve Bellone, county executive of Suffolk County on
New York’s Long Island, said
he worries the law will hurt
the area economically in the
form of lower home values
and less consumer spending.
Long Island has struggled to
retain younger residents.
“The cost of living is high
and that’s something we’re always grappling with to try to
keep people in the region and
keep young people in the region.
This is really a devastating blow
to all those efforts,” he said.
ly
.
mies and to home prices
thanks to the bill, including
parts of North Carolina, Alabama, Nebraska, Indiana and
Tennessee.
“They don’t get nailed by
the elimination of the [state
and local tax] deduction, but
they do benefit in the change
from the standard deduction
and some of the manufacturers
benefit from the lower marginal rates for businesses,”
said Mark Zandi, chief economist at Moody’s Analytics.
co Fo
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The tax overhaul is expected to create winners and
losers in housing markets
across the U.S., dealing a blow
to high-cost coastal regions
but potentially fueling demand
in the middle of the country.
The law caps the amount of
property and state income tax
filers can deduct, a provision
that hits states like New Jersey, New York, Connecticut
and California especially hard.
It also limits the size of a loan
on which homeowners can deduct mortgage interest to
$750,000, down from $1 million, which could put a dent in
pricey markets.
On the other hand, real-estate agents and economic-development officials in less-expensive states believe they can
benefit if the tax-law changes
encourage people to reconsider
their home address.
“At some point this draws
attention to the cost gap in
high-cost areas and growing
areas with growing resources
like Raleigh, Austin and Charlotte,” said Scott Hoyt, a realestate agent in North Carolina.
“That’s going to be a boon.”
At peak impact in the summer of 2019, home prices in
Essex and Union counties in
New Jersey and Westchester
County in New York could be
about 10.5% lower than they
would have been without the
tax bill, according to Moody’s
Analytics. For roughly 80% of
counties in the country, the effect of the bill on home prices
is likely to be negative, the
firm estimates.
But some markets could see
a slight boost to their econo-
MICHAEL HEIMAN/GETTY IMAGES
BY LAURA KUSISTO
Economists Brighten Forecasts for Growth
BY NICK TIMIRAOS
The U.S. government says it
negotiated a significant cut in
the United Nations budget.
The U.S. Mission to the
United Nations said on Sunday
that the U.N.'s 2018-19 budget
would be slashed by more than
$285 million. The mission said
reductions would also be made
to the U.N.’s management and
support functions.
The announcement didn’t
make clear the entire amount of
the budget or specify what effect the cut would have on the
U.S. contribution.
U.S. ambassador to the U.N.
Nikki Haley said that the “inefficiency and overspending” of the
organization was well known.
—Associated Press
FLORIDA
Five People Killed in
Crash of Small Plane
chief U.S. economist at Nomura Securities LLC. He estimates increased government
spending could account for
half of that boost next year.
“One reason for our relatively optimistic 2018 growth
outlook stems from generous,
and historically unprecedented, late-cycle fiscal stimulus,” Mr. Alexander said. The
change in the federal spending
outlook, as opposed to the tax
cut, is “a factor not yet fully
appreciated by markets.”
Nomura expects the fiscal
stimulus to drag on growth af-
ter 2019 because it will help
induce higher short-term and
long-term interest rates.
Economists at Goldman
Sachs last week revised up
their 2018 and 2019 growth
forecasts by 0.3 percentage
point and 0.2 percentage
point, respectively, to 2.6%
and 1.7%. They expect the
boost in demand, primarily
from increased consumption,
to spur more hiring that
pushes the unemployment rate
down to 3.5% next year, from
an earlier forecast of 3.7%, and
to 3.3% in 2019, from 3.5%.
RETAIL
Continued from Page One
through a difficult year of
store closures, declining foot
traffic and bankruptcies by
chains including the Sports
Authority, Toys ‘R’ Us and
Payless Shoes.
Investors, who have abandoned many retail stocks even
amid a broader stock-market
surge, have started to return.
Shares of Macy’s and Gap have
jumped 24% and 18%, respectively, in the past month, compared with a 3% gain in the
S&P 500. Wal-Mart Stores Inc.
has rallied 40% on the year
and, just like its online nemesis Amazon.com Inc., is trading near its highs.
In past years, spending was
driven by high-income shoppers. This holiday season a
broader swath of the population opened their wallets, encouraged by rising wages and
low unemployment, analysts
and economists said.
“Fewer people are living
paycheck to paycheck,” said
Chris Christopher, executive
director of economic-research
firm IHS Markit. “There is a
lot more spending from the
lower- and middle-income
groups, while the upper-income groups are splurging.”
Consumer credit-card debt
reached its highest level since
the end of 2008, jumping 11%
from a year earlier to $757 billion in the third quarter of
2017, according to Experian
PLC, a credit-reporting agency.
This time around, the surging
debt levels are due to economic confidence, said Alan
Ikemura, a senior product
manager with Experian’s analytics unit.
Consumer confidence rose
to a 17-year-high in November,
while unemployment fell to a
17-year low in October. Personal-consumption expenditures, a measure of household
spending on items such as air-
no
A small plane headed to Key
West for the Christmas holiday
crashed Sunday at the end of a
runway at a Florida airport, killing five people, authorities said.
The twin-engine Cessna 340
crashed shortly after takeoff at
Bartow Municipal Airport, immediately killing the 70-year-old pilot and his four adult passengers,
according to Polk County Sheriff's Office spokeswoman Carrie
Horstman.
The sheriff's office identified
the pilot as Lakeland attorney
John Shannon. The passengers
included his two daughters, his
son-in-law and a family friend.
The private plane was heading into heavy fog when it took
off, according to the sheriff's office. The National Transportation
Safety Board and the Federal
Aviation Administration will be
investigating the crash.
Bartow is about 50 miles
southwest of Orlando.
—Associated Press
Economists on Wall Street
are revising up their estimates
of U.S. economic growth over
the coming two years due to
Washington’s embrace of tax
cuts and government spending
increases.
Another impact of Washington’s fiscal stance will be larger
budget deficits in future years,
which could constrain the government’s ability to respond to
future downturns or crises.
The final version of a $1.5
trillion tax cut signed into law
by President Donald Trump
last week provides a slightly
more front-loaded round of
fiscal stimulus than earlier
versions passed by Congress.
Meanwhile, Congress is
likely to consider a deal in
January to boost federal
spending caps and spend
heavily on disaster relief.
The combined tax cuts and
spending increases are likely
to add around 0.7 percentage
point to gross domestic product growth in 2018 and an additional 0.2 percentage point
in 2019, said Lewis Alexander,
n-
U.S. Negotiates Cut
In U.N.’s Budget
RICHARD B. LEVINE/NEWSCOM/ZUMA PRESS
UNITED NATIONS
DELAWARE RIVER
Staging of Famous
Crossing Is Scuttled
Despite the best efforts of
some Philadelphia schoolchildren,
Mother Nature blew in and scuttled the annual re-enactment of
George Washington's crossing of
the Delaware River during the
Revolutionary War.
Organizers said high winds
forced them to cancel Monday's
planned crossing, the highlight of
a re-enactment that draws thousands of people to the banks of
the river in Washington Crossing,
Pa., and Titusville, N.J.
—Associated Press
Christmas shoppers at the checkout line at Toys ‘R’ Us in New York City on Friday, Dec. 22.
fares and washing machines,
increased 4.5% in November
from a year earlier, an increase from year-over-year
gains of 4% during the summer.
In a cautionary sign, however, credit-card delinquency
rates jumped 16% in the third
quarter, indicating consumers
may be spending above their
means and could slow their
purchasing next year.
For now, consumer balance
sheets are in good shape, according to Jack Kleinhenz, the
National Retail Federation’s
chief economist. “The stock
market has been rising, and
the wealth effect has kicked
in,” he continued. “People are
saving less because they feel
they have some job security.”
Marie Fernandez, a 52-yearold nurse practitioner, said
she is using a work bonus to
renovate her pool and add
more landscaping to her Miami home. She also splurged
on items for herself this year,
including handbags, shoes,
clothes and perfume.
“Things are better,” Ms.
Fernandez said. “The economy
is picking up.”
Sales of electronics and appliances grew 7.5%, the strongest increase of the past decade, according to Mastercard.
Home furnishings and home
improvement grew 5.1%. And
jewelry sales grew 5.9%,
driven by last minute purchases.
Pockets of weakness remain, a reminder of the challenges facing traditional retailers as they grapple with
consumers’ shift to e-commerce. Online shopping typically accounts for roughly 10%
of U.S. spending. IHS Markit
expects it will account for
nearly one-fifth of holiday
sales this year, and much of
those sales go to Amazon.
Ashley Wilkins, who lives in
Brooklyn, says she hasn’t felt
much
economic
relief.
“Money’s just as tight this
year as it was last year,” said
the 24-year-old stay-at-home
mom as she browsed racks of
apparel with her husband at
Macy’s flagship store in Manhattan on the Friday before
Christmas.
Apparel retailers have been
among the hardest hit by the
changes in consumer shopping
behavior. Overall, apparel
sales rose 2.7%, but women’s
apparel didn’t contribute to
the gain, according to Mastercard.
A silver lining for department stores and other apparel
retailers is that they entered
this season with less inventory
than last year, reducing the
need for companies to cut
prices more than planned.
This year there was less
discounting of computers,
electronics and toys and
games, according to Market
Track LLC, which analyzed
50,000 printed promotions
that ran between Nov. 1 and
Dec. 16 and compared them
with similar ads a year ago.
Apparel promotions were
slightly deeper. Overall, the
average level of discounting
was unchanged from a year
ago at 39%.
The final tally for individual
retailers won’t be known until
they begin reporting results
CORRECTIONS AMPLIFICATIONS
The first name of reporter
Harriet Torry was misspelled
as Harriett in some editions
Saturday in the byline of a
U.S. News article about Americans spending more and saving less.
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 unemployment rate, at
4.1% in November, last fell to
3.3% in 1952.
Many economists see the
tax cut boosting growth by
spurring household consumption, and reductions in corporate tax rates could lift capital
spending. Economists at J.P.
Morgan see about a 0.2 percentage point increase in the
growth rate next year from
higher consumer spending and
a further 0.1 percentage point
from business investment. J.P.
Morgan expects economic output to grow 2.1% next year.
early next year. And one of the
biggest shopping weeks of the
season is still to come.
During the week between
Christmas and New Year’s,
consumers are expected to
spend $69 billion, or about 11%
of the season’s total, according
to the consulting firm Customer Growth Partners, as
they return unwanted presents
and redeem gift cards.
Retailers will be ready, dangling more deals as well as
spring merchandise. By the
first week in January, J.C. Penney Co. will refresh its entire
store with new goods, including sunglasses and flip-flops.
Kohl’s Corp. is offering 15% off
most purchases that week.
“The week after Christmas
is really big,” said Kohl’s chief
marketing officer, Greg Revelle.
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THE WALL STREET JOURNAL.
Tuesday, December 26, 2017 | A3
U.S. NEWS
Long on Snow, Maine Is Short of Drivers
A small labor pool and
low wages crimp the
state’s ability to fill
jobs clearing roads
A truck and plow await assignment in Scarborough, Maine. Crew leader Troy Leonard, right, says
‘winter is 20 weeks here and you are totally committed to work’ during long and uncertain shifts.
department is constrained in
what it can do because any
meaningful wage increase
needs legislative approval. A
measure that would have
raised starting wages for plow
drivers in Maine recently
stalled in the Legislature, a
spokesman for the transportation department said.
Portland hasn’t specifically
raised wages to find plow
drivers, but hourly rates have
risen, including one on July 1
this year based on terms of a
negotiated union contract,
said Chris Branch, Portland’s
public-works director.
“We’ve seen a significant
decrease in the number of applications we’ve been getting,”
but the city has managed to
find enough drivers, Mr.
Branch said. He noted that the
city hasn’t hired away state
transportation department
drivers in recent years.
Northern New England
Children’s Health Program in Limbo
YURI GRIPAS/REUTERS
Sen. Chuck Schumer spoke about the program’s fate last week.
n-
rector.
Alabama had planned to
freeze CHIP enrollments on
Jan. 1, but the short-term
funding from Congress allowed Ms. Caldwell to put off
such action. Still, “it really is
just kicking the can down the
road for a number of weeks,”
Ms. Caldwell said.
Congress let funding for
CHIP lapse on Sept. 30 amid
the partisan fight over health
care. The program has broad
bipartisan support, but the
parties are at odds over how
to pay for it.
Republicans proposed paying for CHIP by cutting other
health spending, including a
public-health fund in the Affordable Care Act, an idea rejected by Democrats.
no
States across the country are
grappling with how to continue
the popular Children’s Health
Insurance Program after Congress, at least for now, failed to
renew its long-term funding.
Lawmakers approved last
week a $2.85 billion short-term
funding extension for the program, after CHIP supporters
criticized Congress for letting
insurance aimed at children
lapse while they hammered out
a far-reaching tax overhaul.
But state officials said the
short-term funding, meant to
fund the program through late
January or early February, isn’t
enough to allow states to plan
more than a few weeks at a
time. At least one state, Connecticut, has frozen enrollment
in its program, while several
others have sent notices to
families warning that benefits
could be curtailed in January.
CHIP, created in 1997, provides health coverage to about
nine million children whose
families make too much to qualify for Medicaid but face financial pressure in buying coverage
for their children. It is jointly
funded by the federal government and the states, though
each state administers its own
program slightly differently.
“We desperately need to get
this resolved. We need longterm funding,” said Cathy
Caldwell, Alabama’s CHIP di-
White House Upbeat
On Infrastructure Plan
BY CHRIS GORDON
WASHINGTON—A senior
White House official said the
Trump administration’s push
for an infrastructure-rebuilding plan would begin in earnest early next month, and the
president has invited GOP congressional leaders to Camp
David to nail down their
agenda for 2018.
“There’s no doubt there’s a
pathway forward on this,” Marc
Short, the White House director
of legislative affairs, said on Fox
News Sunday. “I’m very confident. We’ve had conversations
with Democrats. I think there’s
a willingness on the policy to
get there. The question remains
will politics prevent it.”
Mr. Short said President
Donald Trump has invited
Senate Majority Leader Mitch
McConnell (R., Ky.) and House
Speaker Paul Ryan (R., Wis.) to
Camp David, a presidential retreat in Maryland, the first
weekend in January “to make
sure we’re all on the same
page about where our priorities are for 2018.”
Mr. Trump has been touting
an overhaul of the nation’s infrastructure since his campaign began, and the administration considers it one of its
top objectives. The White
House is readying a $1 trillion
plan that includes direct federal spending of around $200
ity of enacting tax cuts for primarily wealthier Americans
while allowing a health-insurance program for low-income
children to expire.
“The idea that you have a
bunch of people going to the
White House to yuk it up and
tell the president how great he
is, but they’ve cut off nine million children from health care,
makes no sense at all,” Connecticut Gov. Dannel Malloy, a
Democrat, said last week after
Republican lawmakers celebrated passage of their tax bill
at the White House.
House Republicans rejected
that characterization, saying
their tax plan would help people of all income levels and that
CHIP would be funded early
next year. Many Republicans
have said the matter is urgent.
“We’ve got to get this done,”
said Rep. Fred Upton (R.,
Mich.). “It’ll happen next month
for sure—no question about it.”
Health analysts said the infusion of short-term funding
likely staved off far-reaching
action that would otherwise
have been inevitable. As many
as 23 states were considering
terminating their programs at
the end of January, potentially
cutting off coverage for two
million children, according to a
report released last week by
the Georgetown University Center for Children and Families.
—Kristina Peterson
contributed to this article.
co Fo
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BY MICHELLE HACKMAN
states—which have the highest
median ages in the nation—
are also challenged by people
retiring out of the workforce.
Local employers have been
scrambling, looking to everyone from immigrants to recovering addicts to fill jobs.
In Maine, plow driving is a
demanding job that doesn’t
pay very well. The season is
long and drivers may work
shifts stretching well beyond
12 hours. There are no days off
ly
.
national rate for the month of
4.1%, according to federal data.
Jobless rates in its southern
counties are even lower.
Portland, the state’s largest
city, offers drivers starting
wages that are about $5 more
an hour than the state Department of Transportation, which
pays drivers between $13.54
and $18.46 an hour with a potential $1,000 winter bonus,
according to officials.
The state’s transportation
©T&CO. 2017
Here’s a chilling sign that
low unemployment has its
downsides: Maine can’t find
enough snowplow drivers.
The state Department of
Transportation has about 50
openings among about 700 positions and expects 30 snowstorms in the season that
stretches from mid-November
to mid-April. Exacerbating the
problem, some cities such as
Portland hire their own drivers and pay more. Private sector demand for experienced
drivers is also high.
“It’s really the shortage of
workers,” said Dale Doughty,
the Maine transportation department’s director of maintenance and operations.
Like other states, Maine is
contending with low unemployment that has made it hard
to find enough workers everywhere from fire houses to technology startups. Maine’s unemployment rate of 3.5% was
among the lowest in the country in October, and is below the
TRISTAN SPINSKI FOR THE WALL STREET JOURNAL (2)
BY JON KAMP
when flakes are falling even if
it is Christmas. Drivers do
highway work year round, but
the winter months are particularly demanding.
The worker shortage means
the DOT doesn’t have two
drivers per truck like it prefers. When squeezed, the DOT
has been shifting drivers
around the state, putting supervisors behind the wheel
and paying for contractors to
keep the snow at bay.
It recently enlisted a contractor, First Vehicle Services,
to help fill positions. The
driver shortage “is a nationwide issue found across all
sectors of the transportation
industry,” said Jay Brock, a
spokesman for the company,
which is part of U.K.-based
FirstGroup PLC.
Workers require commercial truck-driving licenses to
pilot massive vehicles, including Maine’s “wheelers,” which
weigh up to 65,000 pounds
fully loaded and have plows
with wings stretching 18.5 feet
across.
“The winter is 20 weeks
here and you are totally committed to work,” said Troy
Leonard, a crew leader who
drives a Maine transportation
department plow on a local interstate.
billion, funds they say that
would be offset by cuts elsewhere in the federal budget.
The rest of the spending
would come from cities, states
and private investment.
Many congressional Democrats agree with Mr. Trump’s
view that the state of America’s infrastructure is a drag
on the economy and in need of
an overhaul. But they say the
$1 trillion investment should
come largely from the federal
government.
Speaking on the same show
as Mr. Short, Sen. Ben Cardin
(D., Md.) indicated his party
was willing to negotiate on infrastructure, though he said the
prospect was complicated by
$1.5 trillion in tax cuts, which
will add to deficit pressures.
“Absolutely we want to get
an infrastructure bill done,”
Mr. Cardin said. “It’s more
challenging because of the tax
bill and the revenues that have
been taken off the table, but
we can work together and get
something done on that.”
With disagreements in their
ranks and a slim 51-49 majority in the Senate once Sen.elect Doug Jones (D., Ala.) is
sworn in, Republicans likely
will have to strike a compromise with Democrats to pass a
bill. Speaking in the Oval Office on Friday, Mr. Trump indicated he expected the effort to
be bipartisan.
In 2016, the program cost
the federal government about
$16 billion. Some states may
have more flexibility than others because they have more
funding in reserve.
Lawmakers could have
hammered out their differences by year’s end, but Democrats decided to push the dispute into January, when a
longer-term spending bill and
an immigration agreement are
also expected to be completed.
As the minority party, Democrats hope combining these issues will increase their leverage in negotiations with
Republicans, since GOP leaders
will need their votes.
Even so, Democrats used
the delay to highlight what
they said was the GOP’s prior-
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A4 | Tuesday, December 26, 2017
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THE WALL STREET JOURNAL.
****
U.S. NEWS
Both Parties Deft at Ignoring Rising Deficit
CAPITAL JOURNAL
By Gerald F. Seib
At a time of deep partisan
divides, the two parties appear to be in agreement on
one thing: They can’t decide
whether they care about red
ink or not.
More precisely, each
party pretends to care
about rising
federal deficits and accumulating national debt when
that suits its interests, and
then shrugs off those concerns when it doesn’t.
The latest example comes
with the Republicans’ passage
of a big new tax cut that, regardless of its other merits,
will significantly add to the
deficit in the next few years.
Indeed, the Committee for a
Responsible Budget estimates
that the tax cut will help drive
the annual budget deficit from
today’s $600 billion level to $1
trillion by 2019.
What’s more, the center
estimates that these deficit
increases will drive the accumulated national debt to
98% of the nation’s annual
gross domestic product in
the next 10 years. Add on expected health and other tax
changes, and the debt the
government has piled up
may well climb to 99% of
GDP. Put another way, if that
forecast is correct, the nation’s accumulated debt will
be equal to its entire annual
economic output in a decade.
R
epublicans, who professed shock at rising
deficits during the tenure of President Barack
Obama, now show little concern. Most simply say the tax
cuts over time will produce
enough economic growth to
pay for themselves, though
few economic models or historical precedents, including
the effects of big tax cuts in
1981 and 2001, indicate that
will be the case.
Meanwhile, Democrats
profess shock at this rising
tide of deficits and debt, after dismissing precisely
those same concerns over
the Obama term. During
those years, the accumulated
national debt rose to $19
trillion from $12 trillion.
Democrats argue, with significant justification, that a lot
of that increase was the result
of the financial crisis of 2008,
which produced a slumping
economy and a need for a
sharp rise in spending on federal-assistance programs,
which helped drive the annual
federal deficit over the magic
trillion-dollar mark for four
straight years. The deficit
then declined after the crisis
eased, but was rising again by
the last year of the Obama
term.
Democrats worry that Republicans will simply use the
rising deficits they are creating as an excuse to cut government spending on domestic programs important to
Democrats—in the vernacular, that the tax bill will
“starve the beast” of the federal government of the
money it needs to keep
Hitting a Trillion
After passage of the new tax-cut
bill, the federal budget deficit is
expected to reach $1 trillion
annually in coming years:
$1.5 trillion
1.0
0.5
0
FY2008 ’10
’15
’20
Note: Fiscal year ends Sept. 30.
Sources: Office of Management and Budget
(FY2008 - ’17); Committee for a Responsible
Federal Budget (FY2018 - ’20)
THE WALL STREET JOURNAL.
spending at current levels. In
particular, they fear Republicans will use rising deficits
as a rationale for going after
spending on Medicare and
Social Security.
That is possible. Indeed,
House Speaker Paul Ryan has
said that change in those entitlement programs is high
on the agenda for 2018, and
President Donald Trump
says he wants to move on to
welfare reform.
B
ut is an effort to go after the two most politically appealing government programs, Social
Security and Medicare, likely
in an election year? Senate
Majority Leader Mitch
McConnell already says that
isn’t happening unless Democrats are interested.
Democrats won’t be interested, particularly not in cutting their most cherished
programs to help pay for a
Republican tax cut. And in
truth, heading into a midterm election in which control of Congress hangs in the
balance, most Republicans
won’t really be interested either. More likely, the net effect of the new tax bill will
be to establish that both parties have settled upon what
they consider solid reasons
to ignore the deficit.
“People say this is the
starving of the beast,” said
Maya MacGuineas, president
of the Committee for a Responsible Federal Budget. “I
don’t think so. This is the
breaking of the fiscal dam.
People will say, ‘If we don’t
pay for tax cuts, why should
we pay for new spending?’ ”
The two parties are essentially mirror images of one
another when it comes to deficits. Democrats are better at
acknowledging that there is a
need to pay as you go for new
federal programs; the Obamacare health program, after all,
was paid for with new taxes.
But they are loath to acknowledge that rising costs for entitlement programs are driving
long-term deficits.
Republicans are far more
willing to acknowledge the
broader fiscal challenge and
the need to rein in long-term
entitlement programs. But
they simply don’t apply the
same standard to tax cuts.
Debts always come due,
and in this case they will do
so in the form of rising interest payments on federal
debt that will crowd out
other things the government
should be investing in. “It is
eating away at the foundation of our economy, and you
don’t see it until it’s too
late,” said Ms. MacGuineas.
ly
.
Quick End to Probe,
Team Lawyer Says
President Donald Trump boards Air Force One after visiting his Palm Beach, Fla., resort for the Thanksgiving holiday last month.
Trump Drawn to Trump Properties
land, or rented accommodations, as former President Barack Obama did in Hawaii.
As a businessman who
made his fortune in residential
and commercial real estate,
Mr. Trump’s considerations
are more complicated because
his visits can create the appearance of a conflict of interest in highlighting a Trump
property—from which Mr.
Trump
draws
revenue—
on a visit paid for by taxpayer
dollars, ethics experts said.
Last month, at a refueling
The White House didn’t
return a request to comment.
Mr. Trump’s air travel
to Mar-a-Lago has cost the
government about $6 million
so far this year, according
to a Journal review of Department of the Air Force records
obtained by the conservative
group Judicial Watch. That $6
million doesn’t include other
costs incurred during a president’s stay, such as Secret
Service and Coast Guard protection.
Over the course of his eight
years in the White House,
travel by Mr. Obama and his
family cost $96.9 million—or
an average of $1 million a
month, according to Judicial
Watch’s analysis of Secret Service and Air Force documents.
Before Mr. Trump started traveling to Bedminster in June—
the cost of that travel hasn’t
been disclosed—his air-travel
costs to Mar-a-Lago averaged
about $1.5 million a month.
While staying at his Florida
estate, Mr. Trump has spent
about 20 days playing golf at
his nearby golf courses in
West Palm Beach and Jupiter.
On the weekends Mr. Trump
has spent in Washington, he
has played golf on nearly two
dozen days at the Trump golf
course in Potomac Falls, Va.
The revisions fit into an effort by the Trump administration to loosen regulatory restrictions.
The
Interior
Department is moving to expand offshore drilling on millions of acres previously offlimits. In addition, the tax
overhaul Mr. Trump signed
Friday includes a provision to
open the Arctic National Wildlife Refuge to oil production, a
goal long sought by oil companies and GOP lawmakers.
At the Bureau of Safety
and Environmental Enforcement, the administration’s focus has been on countering
Obama-era
policies
that
sought to expand government
oversight of oil exploration
and production, in the hopes
of preventing future spills.
The agency’s current director, Scott Angelle, said earlier
this year, when the review of
the rule was in its early
stages, that the previous ad-
ministration’s response to
Deepwater Horizon had been
too broad and didn’t account
for the fact that other operators in the Gulf had learned
from the economic pain BP
PLC suffered in its aftermath.
“It was obvious to me that
back then there was a conclusion that it was a systemic
problem, and yet I don’t believe there was evidence at the
time that it was a systemic
problem,” he told reporters in
June.
The result is what Mr. Angelle—a longtime advocate for
the Gulf Coast oil industry—
and Interior Secretary Ryan
Zinke promised in taking office this year: a pendulum
swing back from the government’s response to Deepwater
Horizon in allowing industry,
not regulators, more say on
what constitutes safe operation in U.S. waters. That accident, the largest oil spill in
U.S. history, killed 11 workers
and spilled more than 200 million gallons of oil into the Gulf
of Mexico.
“That is literally going back
to business as usual,” a former
federal official said.
In the section on drilling
pressure, the industry had
Days President Trump spent at
his properties
Mar-a-Lago
40 days
Trump National
Golf Club
Bedminster
39
Trump National
23
Golf Club
Washington
Trump
International Hotel 6
Washington
Trump Tower
5
Source: WSJ analysis of White House pool
reports
no
President Donald Trump,
who is currently spending a
10-day Christmas vacation at
the Florida luxury resort he
owns, has visited one of his
company’s properties on
nearly one-third of the days he
has been in office, according
to a Wall Street Journal review of the president’s travel.
Of the more than 100 days
Mr. Trump has visited one of
his properties, he spent nearly
40 at his golf course in Bedminster, N.J., which he visited
for much of his two-week August vacation. And he spent 40
days at Mar-a-Lago, his luxury
resort in Palm Beach, Fla.,
where he arrived Friday.
When it comes to presidential travel, Mr. Trump is an unusual case because he spends
much of his time away from
the White House at places that
he owns but where other
guests pay to stay. Other presidents have traveled frequently to spend time at their
own homes.
Former President George W.
Bush often traveled to his
Texas ranch, and his father
spent time at the family’s compound in Maine. Others have
vacationed at Camp David, the
White House retreat in Mary-
stop in Hawaii on his way
to a 12-day trip through Asia,
for instance, Mr. Trump
paused to visit the Trump International Hotel Waikiki.
White House press secretary
Sarah Huckabee Sanders released a statement to reporters on the trip calling the hotel a “tremendously successful
project.”
“George W. Bush went to
his ranch in Crawford,
Texas, a lot, but it’s not like
you could rent the bedroom
next to his,” said Jordan Libowitz, a spokesman for the
transparency advocacy group
Citizens for Responsibility and
Ethics in Washington.
The group filed a lawsuit in
January alleging that Mr.
Trump violates the Constitution when his businesses receive payments from foreign
and state governments, and
was later joined in the case by
the Restaurant Opportunities
Centers United Inc., whose
members are restaurants that
compete with Mr. Trump’s. But
a federal judge in Manhattan
threw out the suit on Thursday, saying the suit failed to
show the alleged violations
caused them harm or that
their alleged injuries fell
within “the zone of interests”
that the Constitution protects.
Trump’s Travels
n-
BY REBECCA BALLHAUS
OIL
Continued from Page One
the American Petroleum Institute, the Offshore Operators
Committee and the National
Ocean Industries Association
flooded the agency with suggestions for changing the socalled well-control rule, BSEE’s
response to Deepwater Horizon, as part of a painstaking
five-year process undertaken
by the Obama administration.
The industry would get
much of what it has sought.
BSEE is proposing leaving in
place a standard for how much
pressure drillers must maintain atop a well to prevent a
blowout. But it would delete
language from this section of
the rule that allows regulators
to withhold certain drilling
permits if they deem their
plans to be unsafe.
THE WALL STREET JOURNAL.
Agency would return
more authority for
offshore-oil fields
to private companies.
asked for an elimination of a
specified “drilling margin,” referring to the minimum
amount of mud and fluid that
must sit over a well as it is being drilled to guard against a
surge in pressure that could
lead to a blowout, as hap-
WEST PALM BEACH, Fla.—
President Donald Trump is
poised to enter the new year
with the Russia investigation
still unfolding, but his legal
team reasserted Monday that
the parts involving the president would conclude quickly.
Attorneys for the president
had at one point maintained
the investigation led by special counsel Robert Mueller
into alleged Russian interference in the 2016 presidential
election would wrap up by
year’s end, if not sooner. More
recently, as Mr. Mueller’s team
secured indictments and guilty
pleas, they have said the date
could stretch to the end of
January.
In an interview Monday, Jay
Sekulow, a member of the
president’s legal team, stood
by the prediction that the part
of the inquiry involving Mr.
Trump would end soon. Still,
he avoided any mention of
specific dates.
“I know we, collectively, the
lawyers, are looking forward
to an expeditious wrapping up
of this matter,” Mr. Sekulow
said.
A spokesman for Mr. Mueller’s office declined to comment.
An outside legal expert said
Monday he was dubious that
Mr. Mueller’s inquiry is barrel-
ing toward a swift conclusion.
On Dec. 1, the president’s
former national security adviser, Michael Flynn, pleaded
guilty to lying to the FBI and
struck a deal to cooperate
with government investigators
looking into ties between Mr.
Trump’s associates and Russian officials.
“Flynn is cooperating, and
that cooperation is likely to
lead to further subjects or
targets of the investigation….If this wraps up by the
end of 2018, I’d be amazed,”
said Stephen Gillers, professor
of legal ethics at New York
University.
Mr. Trump has cast the investigation as a “witch hunt”
that can’t end soon enough.
While his attorneys have
avoided direct criticism of Mr.
Mueller, the GOP president has
been calling attention to what
he sees as bias on the part of
FBI officials involved in a politically sensitive investigation.
Democrats have said that
attacks on the FBI from Mr.
Trump and other Republicans
serve to erode public confidence in Mr. Mueller’s investigation.
Some worry that the larger
aim is to create conditions for
eventually firing Mr. Mueller—
a charge the White House has
denied—or undermining any
new criminal cases he might
bring.
STEVE HELBER/ASSOCIATED PRESS
ALEX BRANDON/ASSOCIATED PRESS
co Fo
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BY PETER NICHOLAS
AND DEL QUENTIN WILBER
Jay Sekulow has spoken of an ‘expeditious’ end to the inquiry.
pened in Deepwater Horizon.
Industry groups say modern
drilling techniques and the
need for flexibility argue
against government setting a
firm standard.
In the end, BSEE says those
requirements will be “mostly
unchanged” from where they
were set under Obama, though
the agency noted it now is approving drilling permits that
deviate from the standard. It
said it intends to delete language that said agency staff
would determine if a company’s planned drilling margin
was “safe” when reviewing applications to drill.
“Based on BSEE experience
during the implementation of
the original [well control
rule], BSEE has concluded that
the term ‘safe’ creates ambiguity in that it could be read to
suggest that additional unspecified standards, beyond
those expressly stated, may be
imposed in the approval of
proposed drilling margins,” a
preamble attached to the proposed rule reads.
The use of the term is “redundant,” the agency said.
The revision also would reverse other requirements, including one that third-party
vendors who test critical
safety equipment like blowout
preventers be certified by
BSEE. As such vendors are
well-established, the proposal
says, the certification requirement “would increase procedural burdens and costs without giving rise to meaningful
improvements to safety or environmental protection.”
Under the new rules, operators of offshore facilities also
wouldn’t be required to assist
certified inspectors in the submission of reports to BSEE
about the “mechanical integrity” of equipment like the
blowout preventer.
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THE WALL STREET JOURNAL.
Tuesday, December 26, 2017 | A5
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A6 | Tuesday, December 26, 2017
THE WALL STREET JOURNAL.
WORLD NEWS
Saudis Free Suspects Held in Crackdown
The Saudi government in
recent days has released at
least two dozen high-profile
suspects held in a wide-ranging crackdown on corruption,
a sign that those accused of illegally amassing wealth are increasingly agreeing to settle
as authorities push to expedite
the investigation process.
By Summer Said in
Dubai and Margherita
Stancati in Turin, Italy
Among those released in
the past week is Ibrahim alAssaf, a former finance minister and board member of the
state oil giant Saudi Aramco,
who was accused of embezzlement related to the expansion
of Mecca’s Grand Mosque and
taking advantage of his position, people familiar with the
matter said Sunday.
Others released include for-
mer assistant minister of finance Mohammed bin Homoud
Al Mazyed, Saoud al-Daweesh,
former chief executive of
Saudi Telecom, Prince Turki
bin Khalid, and Mohy Saleh
Kamel, a businessman, the
people said. None of the suspects freed could be reached
to comment.
“They all settled to get
out,” a senior adviser to the
Saudi government said. “At
least two dozens were released if not more.” He added
that “we will see more getting
released soon and court trials
for those who want to clear
their names. The government
want this over sooner than
later.”
Representatives for the
Saudi government didn’t respond to requests to comment.
The anticorruption campaign began in early November and has swept up more
than 200 people, including senior government officials,
prominent businessmen and
members of the ruling family,
many of whom have been confined to the opulent Ritz-Carlton hotel in western Riyadh.
thorities of relinquishing part
of their wealth in exchange for
freedom rather than going to
court.
The government already
freed in the past month several of those arrested after
they agreed to surrender a
part of their assets.
That included Prince Miteb
bin Abdullah, the most politically influential royal detained
in the campaign who was once
seen as a leading contender to
the throne, after he agreed to
pay more than $1 billion to
settle corruption allegations
against him. Prince Miteb
couldn’t be reached to comment.
The antigraft campaign has
largely been welcomed in
Saudi Arabia, where many
people are angry at what they
see as rampant corruption
among the wealthy.
It has helped burnish Prince
Mohammed’s popular image as
a champion of fairness, though
some analysts and observers
outside the kingdom see the
crackdown as part of a centralization of power in the
hands of the young crown
KONSTANTIN SALOMATIN/PRESS POOL
The recent releases
suggest high-profile
targets are agreeing
to settlements
Former Saudi Finance Minister Ibrahim al-Assaf, shown here in
2013, was among those released by the government.
The investigation is being
led by a newly established anticorruption agency headed by
the kingdom’s crown prince,
Mohammed bin Salman, who
is pushing to overhaul Saudi
Arabia’s oil-dependent econ-
omy as well as its conservative
society.
The detainees, who face accusations that range from procurement fraud to money
laundering and bribery, were
given the option by Saudi au-
prince. He became next in line
to the throne this summer.
The release of some detainees has also been cheered on
social media, irking others.
It isn’t clear how many
people are still detained as
part of the government crackdown. Other high-profile detainees who remain at the
Ritz include billionaire tycoon
Prince al-Waleed bin Talal, a
major investor in companies
including Citigroup Inc. and
Apple Inc. through his firm
Kingdom Holding Co., and
Adel Fakieh, who until he was
detained was Saudi Arabia’s
economy minister.
Saudi authorities are demanding at least $6 billion
from Prince al-Waleed to free
him from detention, people
familiar with the matter
said, potentially putting the
global business empire of
one of the world’s richest
men at risk.
Prince al-Waleed is talking
with the government about instead accepting as payment
for his release a large piece of
Kingdom Holding, people familiar with the matter said.
U.S. officials are seeking to
determine if the man has links
to Islamic State fighters battling U.S.-backed forces in Iraq
and Syria, according to the
government and court filings.
“This is a critical ruling that
rejects the Trump administration’s unprecedented attempt
to block an American citizen
from challenging his executive
imprisonment,” said Jonathan
Hafetz, the lead ACLU lawyer
on the case, in a statement after the ruling. He said the decision was “essential to preserving the Constitution and the
rule of law in America.”
The Justice Department
didn’t respond to a request to
comment on whether it would
appeal the order.
GEORGE OURFALIAN/AGENCE FRANCE-PRESSE/GETTY IMAGES
WASHINGTON—A federal
judge ruled the military must
provide immediate access to legal counsel for a U.S. citizen
being held as an enemy combatant at a secret location in
Iraq.
The unnamed U.S. citizen
was captured in September by
Syrian opposition forces fighting Islamic State and transferred to U.S. custody in Iraq,
court records show. He has yet
to be granted access to a lawyer. Following his arrest,
the American Civil Liberties
Union filed a habeas corpus petition on behalf of the detainee.
In a 12-page ruling issued
late Saturday, Judge Tanya S.
Chutkan said the government
should provide the ACLU with
immediate and unmonitored
access to the prisoner. The
prisoner could then choose to
be represented by the ACLU or
court-appointed counsel.
Since the man’s detention,
the U.S. military has kept secret the details of the case.
The prisoner has been granted
access to the International
Committee of the Red Cross,
which monitors the well-being
of prisoners and can deliver
messages to relatives.
The ICRC has twice visited
the detainee, but has kept confidential the details of those
meetings and whether the
prisoner’s family has been notified.
co Fo
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on
BY JESSICA DONATI
ly
.
Judge Orders Legal Access for U.S. Detainee in Iraq
Syrian pro-regime forces advanced in Idlib province last month. The American was seized in Syria.
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Continued from Page One
The founder-CEO’s multitasking this year has been “a
big source of discussion. Investors are concerned,” said Jim
Duffy, an analyst at investment
firm Stifel. “They want to know
he isn’t distracted, that it isn’t
taking away from appropriately
running Under Armour.”
Mr. Plank said there is no
link between his involvement
in Plank Industries and Under
Armour’s troubles. The 45year-old billionaire said he is
focused on turning around Under Armour and spends only a
few hours a week on his private investments.
“My job is running Under
Armour, period,” he said in an
interview earlier this year at
his office.
Plank Industries is run from
the same floor as Under Armour’s executive suite. It is
“helpful to be nearby for occasional brief check-ins,” Tom
Geddes, Plank Industries’ chief
executive, said, adding that
Mr. Plank is “fully focused on
Under Armour” and formally
reviews his other projects only
quarterly.
Under Armour and Plank
Industries’ close office arrangement isn’t disclosed in
the apparel company’s regulatory filings. An Under Armour
spokeswoman said Plank Industries pays office rent that
doesn’t hit the disclosure
threshold.
In June, Mr. Plank hired an
apparel and shoe veteran, Patrik
Frisk, to help him run Under
Armour. The 54-year-old executive, who has the titles president and chief operating officer,
has replaced several senior executives and now is handling
many day-to-day duties, according to employees.
Mr. Frisk also has taken on a
more-public leadership role,
joining Under Armour’s earnings calls and, during this
month’s town hall, delivering
remarks to employees about the
future of the company.
“We are clearheaded and
well aware of the issues at
hand and the tremendous
amount of work ahead of us,”
Mr. Frisk said on an earnings
call in October.
‘I like lighting tiny
fires and then
throwing 100 gallons
of gasoline on them.’
2012 to manage his investments
and pursue new ventures. The
following year, he founded two
more businesses, Sagamore
Spirit whiskey and real-estate
firm Sagamore Development.
With sales accumulating and
endorsement bets paying off at
Under Armour, Mr. Plank moved
his office from a common workspace at Under Armour headquarters into a secluded executive suite. A spokeswoman for
Under Armour said the office
was relocated to be near executive and communications teams.
In 2016, Mr. Plank unveiled
Plank Industries’ biggest project: a $5.5 billion redevelopment of a 235-acre industrial
peninsula in Baltimore’s Port
Covington neighborhood that
would create a mini-city in-
cluding a new headquarters
for Under Armour. He later secured $660 million in financing from the city.
Mr. Plank and Mr. Geddes
said the project, like Mr. Plank’s
other personal investments, will
benefit the Under Armour
brand; it isn’t clear how profitable the various other investments are. Of his myriad initiatives, Mr. Plank said, “I like
lighting tiny fires and then
throwing 100 gallons of gasoline on them.”
By the start of 2017, the fire
at Under Armour was ebbing.
The company shocked investors
in January when it disclosed
sales growth had stalled. One
week later, Mr. Plank voiced
support in an interview for
newly inaugurated President
Donald Trump, calling him “a
real asset”—and sparking a
backlash from some customers
and two of the brand’s stars,
NBA player Stephen Curry and
ballerina Misty Copeland.
The fallout from the interview, Mr. Plank said, was his
first indication that Under Armour was no longer a growing
upstart but a mature corporation. “All of a sudden it was the
first time that became, you
know, people telling us that
you’re not the underdog anymore,” he said.
In October, the company reported its first quarterly sales
decline since going public and
cut its growth forecasts. Between October and December,
Under Armour’s co-founder, its
chief marketing officer and
the heads of its women’s and
youth, footwear and sportfashion divisions all left or announced plans to leave.
PATRICK T. FALLON/BLOOMBERG NEWS
PLANK
Mr. Plank founded Under Armour in his grandmother’s
basement in 1996; he started
selling sweat-wicking compression apparel and the business
took off. After its first public
stock offering in 2005, Wall
Street analysts lauded it as a
growth machine, as it posted
quarter after quarter of doubledigit revenue gains.
Two years after the IPO, Mr.
Plank bought Sagamore Farm in
rural Maryland, where he began
breeding and racing horses. He
founded Plank Industries in
Under Armour’s Kevin Plank at the 2017 Consumer Electronics Show.
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THE WALL STREET JOURNAL.
Tuesday, December 26, 2017 | A7
Speakers Include:
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San Francisco, CA
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Annual
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Rodney Brooks
Founder, Chairman and Chief Technology Officer, Rethink
Robotics; Professor Emeritus of Robotics, MIT
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Author, “The Age of Cryptocurrency: How Bitcoin and the
Blockchain Are Challenging the Global Economic Order”
Rosanna Durruthy
Head of Diversity, Inclusion and Belonging, LinkedIn
Ben Fried
CIO, Google
Daniel Goldin
Founder and CEO, KnuEdge, Inc.
Vijay Gurbaxani
Professor of Business and Computer Science and Director
of the Center for Digital Transformation, Paul Merage
School of Business, University of California, Irvine
n-
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THE WALL STREET JOURNAL.
A8 | Tuesday, December 26, 2017
IN DEPTH
The site of an old bank in Rich Square, N.C., pop. 884. The town no longer has a bank branch, making it hard to attract business.
Continued from Page One
plements serve up fare intended to evoke the 1950s.
City slickers trek to the countryside to stay at rustic guesthouses promising to “make
you feel the atmosphere of the
’60s and ’70s.”
“Red tourists” have flocked
to join themed tours to revolutionary sites, even dressing up
in Red Army costumes and
donning Mao pins.
On a recent day in Beijing,
Zhu Jianping, 60, sat with
friends drinking grain alcohol
at Coarse Grains Family, a
chain restaurant decorated
with tractors and sewing machines and old-fashioned posters of Mao Zedong and hardworking peasants.
“It makes my heart happy,”
said Mr. Zhu of the simple
spread of steamed buns, fish
and noodles with cabbage. Behind him, bits of straw stuck
out of faux-countryside walls.
“Back then, it didn’t matter if
we were poor,” he said, pounding the table for emphasis.
very high-quality chimney,”
but says the closeness to the
pagoda presents a conundrum.
“They look incredibly awkward
together.”
Declared a nationally pro-
tected site in 1988, the Tianning pagoda—built three centuries
before
Beijing’s
Forbidden City—has sat in the
shadow of the smokestack for
decades. In a city packed with
The decline of community banks has disproportionately affected rural
U.S. counties, where relationship banking plays an outsize role. There
are now 625 rural counties without a community bank based in the
county.
Percentage of counties without a local bank
35%
Rural areas and
small towns 32%
Total 29%
Suburb of
large metro 27%
Medium or
small metro 26%
30
25
ly
.
20
15
10
5
Center of
large metro 6%
0
1995
The gap’s effect
n-
Around Roxobel, population
220, and other parts of rural
northeastern North Carolina,
the banking gap is hurting
business. Three months after
PNC closed a bank branch in
Colerain, population 187,
Tommy Davis closed his Nationwide Insurance office
there. Losing the bank branch
meant he had to drive 25 minutes each way daily to make
deposits. And he lost foot traffic from people who once
dropped by on their way to
and from the bank.
“It’s really like a death sentence for a small town because
the bank is the center of all
activity,” says Mr. Davis, who
owned the Colerain location
for 20 years. He moved the
business to Windsor, a larger
town 25 miles away.
Twelve miles north of Roxobel in Woodland, population
729, Sharon Ramsey closed the
DeJireh Grill because, she
says, she couldn’t get bank financing. At first, she says, the
restaurant “was turning a
profit, but it was just enough.”
She was told she didn’t
have enough credit history to
qualify for a loan, Ms. Ramsey
says. She closed DeJireh in
2013 after three years to focus
on her variety store in nearby
Conway, which lost its only
bank branch several years ago.
Southern closed its Woodland branch three years ago.
Then the local grocery store
shut down. The loss of both
means “most people drive
through here” without stop-
“We were struggling for the
country!”
President Xi Jinping has
helped set the sentimental
mood with his “China Dream”
of national rejuvenation and
by lavishing attention on landmarks from the party’s glory
days.
Officials have sought to obtain Unesco World Heritage
status for a hand-dug canal
that began construction during the Great Leap Forward, a
Mao-led campaign during
which millions died in manmade famines.
The canal is one of 300
Communist “classic scenery
spots” that the government
enumerated on a list last year.
Wang Fengtao, a 30-yearold Beijing architect who lives
near the now-dormant chimney, has put forth an idea for
how to give it distinction.
One of the top 10 suggestions selected in a government-backed contest, it involves turning the chimney
into a pollution meter, with
lights on its surface changing
colors according to smog levels. Blue skies would turn the
chimney blue; orange or red
2000
’05
’10
’15
Source: WSJ analysis of Federal Deposit Insurance Corp., Community Banking Initiative,
and National Center for Health Statistics Urban-Rural Classification Scheme for Counties
THE WALL STREET JOURNAL.
data
Danielle Baker had to travel two hours to secure a business loan.
ping, says Joe Lassiter, owner
of Lassiter’s Used Cars. He
keeps no more than 10 cars on
his lot, down from about 20.
Woodland Mayor Kenneth
Manuel says Southern rejected
the town’s ATM request, saying it needed 4,000 transactions a month to justify one.
Southern Senior Vice President John Heeden declines to
comment on Woodland. “It is
never easy to make such decisions that impact our friends
and neighbors in these closeknit communities,” he says.
The bank, with $2.6 billion
in assets, was started by local
investors in 1901 as Bank of
Mount Olive. It has 61
branches, including the only
bank in Woodland’s Northampton County. Southern says
would signify heavy smog.
“We’d transform it from
something that used to pollute
into something that benefits
the people,” he said.
Across town, Huo Chunlong
of Tsinghua University’s Architectural Design and Research
Institute, shakes his head at
the idea. Given the chimney’s
proximity to the pagoda, he
says, “That’s like mixing Beijing Opera and a bikini show.”
Mr. Huo is one of the designers commissioned to redesign the chimney. His proposition is to chop off the
chimney’s top to make it just
26 feet tall. On his laptop, he
shows an image of the chimney as a “viewing platform”
from which people can gaze at
the pagoda from about twostory height.
“It will still be huge and it
will still be easy to remember
it,” he said, adding that the
chimney’s inside could be
turned into an exhibition
space that could display historical photos of the power
plant it served.
Mr. Huo calls the chimney
an important testimony to
China’s development and “a
that 36 of its branches are in
towns with populations under
6,000 and that in most areas
where the bank has closed
branches, there is another
bank fairly close. “Southern
Bank embraces its ongoing
commitment to serve rural
communities that are overlooked by many of our larger
competitors,” Mr. Heeden says.
In considering closures, he
says, “profitability and market
dynamics are primary drivers.”
Economic ills
TE-PING CHEN/THE WALL STREET JOURNAL
CHINA
Rural communities in parts
of the U.S. have become less
attractive to local banks because they are suffering from
a variety of economic ills.
Weak school systems have
made many rural communities
less attractive to employers,
says Peter Skillern, executive
director of Reinvestment Partners, a nonprofit based in Durham, N.C., that works with rural communities.
Dollar stores and big-box
retailers drained customers
from some local shops. The financial crisis left some residents with battered credit.
Populations have dropped.
These communities have
been hurt by declines in the
textile and furniture industries, consolidation in agriculture and decreased government support for tobacco.
Average annual employment in
North Carolina’s 80 rural
counties fell 6% between 2007
and 2016, according to the Raleigh-based NC Rural Center,
compared with a gain of 11% in
its six urban counties.
“It would be great if there
were branches and people in
all these rural communities,”
says Kel Landis, former CEO of
RBC Centura, which once
owned the rural North Carolina bank locations purchased
by PNC in 2012. “But I do understand, as a former banker,
the economics. If you have a
place that used to be thriving,
but the downtown has closed
up, having a branch there is a
money-losing proposition.”
Another headache for bankers in rural areas, says Jerry
Rexroad, CEO of Carolina Financial Corp., is that “it’s very
hard to find highly competent
commercial loan officers who
want to live in these small
towns and can produce an adequate amount of production.”
He said rural businesses often
have less sophisticated reporting systems that make their finances tougher to analyze.
Carolina
Financial,
of
Charleston, S.C., in November
acquired First South Bank, of
Washington, N.C. “The smaller
towns are really more for deposit-gathering that gives you
funds to lend to larger towns,”
says Nick Nicholson, chief
credit officer First South Bank.
Carolina Financial’s Mr.
Rexroad says it is “equally
committed to growing our
market share in rural and urban markets,” and recently assigned senior loan officers to
help cover rural areas.
Small-town businesses say
bank pullbacks weaken local
economies further.
PNC installed an ATM 6
miles from Woodland in Rich
Square, population 884, when
it closed its branch there in
2016, leaving the area without
a bank branch for the first
time since 1902.
Losing Community
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in rural areas and deploying
them in urban communities,
he says. “It sucks the capital
out of rural communities.”
Between 2009 and June
2017, North Carolina counties
considered rural by the Centers for Disease Control and
Prevention lost 131 bank
branches, banking-regulator
data show. That 18% drop
compared with a 2% drop in
Mecklenburg and Wake counties, home to Charlotte and
Raleigh.
The gap is the more striking because North Carolina is
a banking center, home to
Bank of America Corp. and
BB&T Corp. Bank of America
has eight branches in seven
rural counties in the state,
down from 21 in 17 rural counties three years ago. “As the
U.S. population continues to
move to larger population centers,” a Bank of America
spokesman says, “we want to
insure that our branch coverage matches where people are
moving.”
no
Continued from Page One
The financial fabric of rural
America is fraying. Even as
lending revives around cities,
it is drying up in small communities. In-person banking,
crucial to many small businesses, is disappearing as
banks consolidate and close
rural branches. Bigger banks
have been swallowing community banks and gravitating toward the business of making
larger loans.
Distant banks with few ties
to local communities—which
often rely heavily on algorithms to gauge creditworthiness—are also less likely to
have the personal relationships that have helped local
bankers judge which borrowers were a good bet.
The phenomenon is getting
worse. Bankers say they don’t
see enough business in small
towns. Small towns say bank
closings make it harder to do
business.
“We’d like to make loans in
all the markets we are in,”
says R. Lee Burrows Jr., chairman of Union Bank in Greenville, N.C., population 91,495.
“But sometimes the demand
isn’t there.” Banks’ “risk tolerance is substantially lower
than it was pre-2008,” he says.
Union was called “the little
bank” until July, when it acquired another bank and
moved from Kinston, population 20,923.
Southern Bancshares Inc.
and PNC Financial Services
Group Inc., the lenders Ms.
Baker contacted, say they
don’t comment on specific
customers.
The value of small loans to
businesses in rural U.S. communities peaked in 2004 and
is less than half what it was
then in the same communities,
when adjusted for inflation,
according to a Wall Street
Journal analysis of Community
Reinvestment Act data. In big
cities, small loans to businesses fell only a quarter during the same period, mainly
due to large declines in lending activity during the financial crisis. Adjusted for inflation, rural lending is below
1996 levels.
Of America’s 1,980 rural
counties, 625 don’t have a locally
owned
community
bank—double the number in
1994, federal data show. At
least 35 counties have no
bank, while about 115 are now
served by just one branch.
“There’s been a slow seep, a
slow letting air out of a balloon over a long period of
time,” says Camden Fine, chief
executive of Independent
Community Bankers of America, a small-bank trade organization. “There’s less demand
for credit. There’s less supply.”
Colorado State University
economist Stephan Weiler
found that declines in smallbusiness lending in rural areas
were linked to declines in the
number of new businesses two
to three years later—a phenomenon he didn’t find in urban areas. The falloff in lending is particularly important,
he says, because other types
of startup capital are typically
scarcer in rural areas.
“To say that I am concerned
is an understatement,” says
Ray Grace, North Carolina’s
commissioner of banks. The
number of community banks is
shrinking, and larger banks
are taking deposits gathered
VEASEY CONWAY FOR THE WALL STREET JOURNAL (2)
RURAL
“It’s hard to get a business
to come in” when there is no
bank to cash workers’ paychecks, says Rich Square Town
Commissioner Reginald White.
Rich Square has a barber shop,
grocery, hardware store, pharmacy, post office and three
restaurants. But the storefronts on one side of Main
Street are vacant.
Horace Robinson, owner of
Upper Cutz Barber Shop on
Main Street, makes weekly deposits at the ATM. When he
needs change, he unlocks his
soda machine or one of the
shop’s arcade games rather
than drive to a PNC branch 17
miles away.
A PNC spokeswoman says
the bank, “continuously evaluates its branch network to assure we are meeting customer
needs in a cost effective way.”
Customers, she says, “are
banking very differently today” with online and mobile
channels and ATMs.
After deciding to close the
Rich Square branch, PNC “contacted 15 banks, in some cases
multiple times,” in an unsuccessful effort to find another
financial institution to take it
over, she says.
Ms. Baker, the peanut-business owner, says 45 years ago,
when her mother moved her
ceramics classes from home to
a storefront, a local banker
took a personal interest in the
business and gave her a loan.
In Ms. Baker’s 15,000square-foot operation, workers
make peanut brittle and water-blanch and fry peanuts,
then season them or cover
them in chocolate. It employs
up to 18 during peak season.
When she sought a loan to
expand into a new building,
she figured the family’s decades-old relationship with
Southern would help get her
one. Instead, she says, a
banker at Southern “told me I
should close the business
down” or operate it just during the busy Christmas season.
PNC, she says, told her there
wasn’t enough foot traffic to
support a store.
She received a loan from
Carolina Small Business, a
nonprofit lender a two-hours’
drive away in Raleigh. It offers
financing, education and training to small businesses but
doesn’t collect deposits or offer checking accounts, wire
transfers and other traditional
banking services.
The chimney, left, stands near the Tianning Pagoda in Beijing.
Small-town firms say
bank pullbacks
weaken local
economies further.
Because it takes so long to
get to the closest PNC branch,
where she does her business,
Ms. Baker sometimes makes
deposits at a Southern branch
about 8 miles down the road.
Doing business with two
banks, “you end up having
double fees.”
Employees must leave earlier to cash their paychecks,
says Ms. Baker, who plans to
add automatic deposit next
year. When the peanut business runs out of change, Ms.
Baker and employees go
through their pocketbooks.
Moving to a town with
more foot traffic might have
made sense, but her business
“was like that last thing in our
town,” she says, and “I didn’t
want to take it away.”
de rigueur destinations like Tiananmen Square and the Great
Wall, it attracts few tourists.
A block away, two neighbors in their late 50s, Cui Jianming and Nie Minsheng,
stood glowering at the chimney, which hovered like an ungainly brother over the pagoda.
The smokestack was once
part of a system that supplied
heat and power to Zhongnanhai, Beijing’s walled-off leadership compound, and the Great
Hall of the People on Tiananmen Square.
With such a storied past,
Mr. Cui said, it won’t go away.
“If you tear it down,” he
said, “it’s like saying that the
leadership was wrong.”
“It affects our scenery,” Mr.
Nie chimed in unhappily. “It
doesn’t respect the pagoda.”
Mr. Nie recalled the temple’s past glories, saying that
before the Cultural Revolution,
the pagoda’s eaves bore bells
that tinkled in the breeze.
He had never heard them,
he said, but older neighbors
still remembered.
—--Xiao Xiao contributed to
this article.
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THE WALL STREET JOURNAL.
Tuesday, December 26, 2017 | A8A
NY
* *
GREATER NEW YORK
Judge Turned
Author Brings
Courtroom to Life
Booze Battle Stirs Up Town
no
It has been a bitter battle
to allow booze to be served in
Barrington, N.Y.
The township of about
1,600 residents tucked into the
Finger Lakes region—renowned for its rolling hills,
lakes and wineries—last
month voted to become the
latest place in New York state
to go from dry to wet.
Of the roughly 430 ballots
cast, about 80% of the voters
said ‘yes’ to allowing alcohol
to be sold in taverns, restaurants or hotels.
The 40-square-mile town
perched on Keuka Lake
doesn’t have a restaurant or
hotel, so the vote really was
about whether Seth Olney—
the 37-year-old proprietor of
the town’s only market and
deli—has the support of residents to serve beer, which he
has been doing for years.
Though he was successful,
the fierce fight divided the
community and left scars. “It’s
grimy local politics at its
best,” Mr. Olney said. “The
store became too successful.”
Fred Goossen, a member of
the town-council ethics committee, said the saga “ceased
to be a procedural, legal-filing
issue and became one of other
problems…It got all out of
hand,” he said.
Prohibition was repealed
more than 80 years ago, but
across the U.S. states and
communities have a variety of
regulations governing the
serving and selling of alcohol.
There are hundreds of towns
nationwide that are either
tagers,” his neighbor Michael
Grant sees it differently.
The 56-year-old, who was
once an Olney Place patron,
installed a camera last summer to prevent trespassing on
his lawn and boat-dock parking lot. He also objected to the
music.
“I’m all for small business
and I like to drink beer,” said
Mr. Grant, who has since been
barred from the Olney Place.
“Granted, if you put a bar in
someone’s backyard it certainly diminishes property values.”
Mr. Olney says he doesn’t
condone trespassing, and
noted that he has always
played music at his business.
There is no noise ordinance in
Barrington. The music issue,
however, was a turning point.
Since then, relations between Mr. Olney and some
factions of the community began to unravel. The State Liquor Authority was notified of
the tap room and Mr. Olney
was fined $3,000 in 2015 and
$6,000 in 2016. He didn’t sell
beer in the new tap room this
year. The violations, which
have been paid, had to do with
paperwork problems, according to his attorney.
Mr. Olney is still seeking
the state’s permission to serve
alcohol in the tap room. Litigation is pending in two separate cases. One involves a zoning-issue appeal brought by
Barrington officials and others
in state court, which contends
that the Olney Place is a restaurant and should be banned
from the residential area.
Mr. Olney says the November vote to make the town wet
is a “clear mandate, a signal to
both the State Liquor Authority and local government that
Barrington is willing to join
the 21st century by adhering
to the 21st amendment.”
CANADA
NEW
YORK
Rochester
VT.
Syracuse
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BY MELANIE GRAYCE WEST
completely or partially dry, according to a 2016 report from
the National Alcohol Beverage
Control Association, an Alexandria, Va.-based trade group.
Up until this year, many
residents in Barrington didn’t
know their lake community
was among dozens of towns in
the state where it is tough to
tie one on. Even Mr. Olney,
whose family presence in Barrington goes back 200 years,
didn’t know his kin helped to
outlaw booze in 1967.
Before the November “wet”
vote, Barrington—home to two
wineries and a distillery—was
partially dry or moist, as they
say. The Barrington Rifle Club,
a nonprofit, serves beer in exchange for donations. And for
decades, it has been legal to
buy a six-pack to-go at the Olney Place, Mr. Olney’s store.
During the past 10 years, he
has taken what was once a
small, seasonal bait shack and
dock that sold gas for boats,
and turned it into a destination where people can get everything from gourmet sandwiches to milk and a T-shirt
from roughly May through
September.
In 2013, Mr. Olney upgraded a decades-old cashand-carry beer license to an
“eating-place beer” license
with the New York State Liquor Authority. That license
was approved, but technically
conflicted with Barrington’s
semi-dry local laws, unbeknown to Mr. Olney, town officials and the State Liquor Authority.
The
beer-and-sandwich
business was a boon for Mr.
Olney, and in 2014 he got town
approval to build the 700square-foot addition to his
store.
Mr. Olney says he believed
he was in compliance with local and state booze laws, and
n-
Barrington voters opt
to go wet, but fight
divided community and
still ties up proprietor
Buffalo
Barrington Albany
P E N N S Y LV A N I A
50 miles
N.J.
New
York
THE WALL STREET JOURNAL.
Why Some Places
Prefer to Stay Dry
In New York state, where
there are eight completely dry
municipalities and about three
dozen partially dry towns,
communities decide to remain
dry for a variety of reasons.
Older residents in Jasper,
for example, remember a terrible alcohol-related accident in
town and continue to vote
down measures to take the
town wet, according to Lucille
Kernan, the town’s supervisor.
“When it was brought up both
times it was very divisive,” she
said. “We’re dry, that’s it.”
In teetotaling Argyle, every
20 years or so the issue is defeated, according to Town Supervisor Robert Henke.
“People think it is kind of
cool being a dry town,” he
said.
that his “eating-place beer” license covered the new expanded tap room. The legality
of that is the crux of the conflict among Mr. Olney, the
town and the State Liquor Authority.
While some residents believe Mr. Olney’s business has
been a boon to the town,
which attracts summer “cot-
Museums Counter-Program on Christmas
Around New York, for Jews
on Christmas, a common way
to mark the day is to dine at a
Chinese restaurant and catch a
movie. But Hilton Raw had a
different pairing in mind this
year: bagels and Modigliani.
Mr. Raw, a Jewish visitor to
New York from Brazil, came to
the Jewish Museum on Monday to see its exhibit of work
by the Italian-born painter and
sculptor Amedeo Modigliani
(1884-1920). And while he was
at the museum on Manhattan’s
Upper East Side, he couldn’t
resist stopping for a bagel and
lox at its restaurant, operated
by Russ & Daughters, the Jewish appetizing specialist.
“It’s a pretty good combination, isn’t it?” said Mr. Raw of
the art and food.
The music producer had
plenty of company. The museum attracted hundreds of
visitors on Monday as it continued a tradition going back
more than 20 years of staying
open on Christmas.
How crowded was it? A
wait for a table at the restaurant reached 90 minutes by
PETER FOLEY FOR THE WALL STREET JOURNAL
BY CHARLES PASSY
The Friedman family at a concert at the Jewish Museum on Monday.
midday—hence, Mr. Raw’s decision to have his bagel to go.
While most other museums
in the city, such as the Metropolitan Museum of Art and the
American Museum of Natural
History, were closed for the
holiday, a number of Jewish
institutions stayed open and
saw similarly large crowds.
At the Lower East Side’s
Museum at Eldridge Street,
which is home to the restored
built-in-1887 Eldridge Street
Synagogue, more than 500 visitors came throughout the
day—at least five times the
number for a standard weekday.
The decision to open the
doors, says Hanna Griff-Slevin,
the Museum at Eldridge
Street’s director of cultural
programming, is fairly obvious: Jews welcome more options.
“It’s nice to come to a beautiful space and learn about
your heritage,” said Ms. GriffSlevin.
As an added incentive, most
of the Jewish museums in the
city offered special programming on Christmas. The Jewish Museum and the Museum
at Eldridge Street both featured concerts with performers steeped in the Jewish
klezmer tradition.
Not that you have to be
Jewish to visit a Jewish museum on Christmas. A case in
point: Cherry Tai, a native of
Singapore who now lives on
Manhattan’s Upper West Side
and came to the Eldridge
Street museum with her husband and some friends.
Ms. Tai said she visited
simply because she was looking for something to do on the
holiday. But as she took in the
space, with its striking Moorish-inspired architecture and
stained-glass windows galore,
she found herself moved, particularly because she had
never been inside a synagogue
before.
“It’s very eye-opening for
me,” she said.
U.S. District Judge Frederic Block. His novel was just published.
A new
way,
a better
way
to buy a wedding suit.
AGATON STROM FOR THE WALL STREET JOURNAL
The Olney Place in Barrington, N.Y. The town until recently was one of about three dozen partially dry municipalities in the state.
U.S. District Judge Frederic
Block presides over a federal
courtroom in Brooklyn, where
he has heard cases ranging
from this year’s 5Pointz graffiti litigation to the 2003 trial
of former Gambino crime boss
Peter Gotti. When not on the
bench, the 83-year-old writes
books and plays jazz piano.
Judge Block’s first novel,
“Race to Judgment,” was published by SelectBooks this fall.
It tells the story of a crusading
lawyer against the backdrop of
actual legal cases. He co-wrote
the 1985 off-Broadway musical
“Professionally Speaking” and
wrote the 2012 nonfiction
book “Disrobed: An Inside
Look at the Life and Work of a
Federal Trial Judge.”
Judge Block, born in Brooklyn, was nominated to the federal bench in the Eastern District of New York by President
Bill Clinton in 1994. He chatted about his new book, and
then jammed on his keyboard,
in his chambers this month.
Why begin writing books?
I felt there was a dichotomy
between judges who don’t
want to be heard and judges
who feel we have a responsibility to reach out to the public. I used to get questions all
the time: “What do you do? Do
you do traffic tickets?” There
is a lack of knowledge from
even educated people about
the judicial system.
What about your novel?
I got a call from a colleague
of mine, a Massachusetts
judge. He called to tell me he
had just read “Disrobed,” and
said, “Why don’t you try to
write a book of fiction?” He
said, “You’ll enjoy freeing
yourself up from the strictures
of legal writing.” I said, “I’m
80 years old, I never did any
work of fiction before.” He
said, “Give it a try.”
Then the story line came to
me because of a handful of
cases I had at the time. I call it
“reality fiction.”
The book’s main character
is based on Ken Thompson,
the former Brooklyn district
attorney who died of cancer
last year. Why him?
He was a natural protagonist. His rise, and his defeat of
[former District Attorney
Charles] Hynes, was what really intrigued me. I didn’t know
him that well. When he was dying, I found out about it, and I
called up [attorney] Doug Wigdor, and he told me it was terminal. I gave him a binder of
the book. I said, “Give it to Ken.
Maybe he’ll enjoy reading it.” I
decided to dedicate it to him.
Doug Wigdor calls me up,
two days after Ken passed
away, and said he was with
Ken the day before he died
and gave him a copy of the
book. He said Ken said to
thank the judge for it.
The book includes a handful of tunes that are integrated into the story. Why
include the music?
The music part came about
because it’s my hobby. I made
[protagonist] Ken Williams a
country musician, and he
writes country songs.
Do you have any formal
musical training?
My mother forced me to
play the piano when I was a little kid. Over the years I was
able to become fairly proficient
and get into some jazz riffs.
Some of my best legal decisions came about as a result of
playing the piano. As a federal
judge it doesn’t sound too good
to say you hear sounds in your
head every night. But I do! I get
these hooks, I get these ideas.
What’s next? Any more
fiction?
I have another one, about
terrorism cases in the courtroom. I have 38 pages done.
ly
.
SPENCER TULIS / FINGER LAKES TIMES
BY CORINNE RAMEY
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.
A8B | Tuesday, December 26, 2017
NY
THE WALL STREET JOURNAL.
* *
MARGARET RIEGEL
GREATER NEW YORK
Seventeen questions to test your knowledge of the region’s notable stories
2. New York City parents gulped
when annual tuition and fees at
some private day schools topped
what price tag this year?
A. $20,000
B. $40,000
C. $50,000
D. $75,000
A. Rats
B. Squirrels
C. Raccoons
D. Dogs
CHEETOS; MARK MAKELA/GETTY IMAGES (AMAZON)
6. Upper West Side parents were
outraged this summer amid complaints that what animal was
jumping into strollers and invading playgrounds?
ation to describe the neighborhood commonly known as Central
Harlem?
n-
no
4. Which municipality is the second-most congested city per capita after Los Angeles?
A. Paris
B. Tokyo
C. San Francisco
D. All of the above
9. Lawmakers and locals have decried the spread of what abbrevi-
12. The man accused of driving a
truck into pedestrians and cyclists
on a West Side bike lane in a terror attack on Halloween lived in
which city in New Jersey?
A. Newark
B. Jersey City
C. Paterson
D. Hackensack
11. The Gateway Program to dig
a new rail tunnel under the Hudson River isn’t progressing as
planned because:
A. New Jersey Gov. Chris
Christie canceled it.
B. New York Gov. Andrew
Cuomo set up a task force to re-
9
BESS ADLER FOR WSJ; ANDREW MILLS/NL ADVANCE MEDIA/ASSOCIATED PRESS (CHRISTIE)
evaluate it.
C. Anticipated federal funds
for the program haven’t materialized.
D. New York and New Jersey
can’t agree on which state
should pay for it.
A. A trained squad
who, among other
things, catches cows.
B. An officer who
specializes in wrangling bees.
C. A diving
squad.
7
D. All of the
above.
8. As of 2017,
which locale has
more three-star Michelin restaurants
than New York?
A. ESPN
B. The Hartford Financial Services Group Inc.
C. General Electric Co.
D. Aetna Inc.
15. Which tri-state governor has
the lowest approval rating in the
U.S.?
10. The NYPD has approximately 36,000
officers including:
A. Island Beach State
Park
B. Sandy Hook Beach
C. Long Beach
D. Seaside Park
14. What major company said in
2017 that it was moving its headquarters from Connecticut to New
York City?
5
A. HotHa
B. Charm
C. SoHa
D. Southem
7. What is the name of the New
Jersey beach where Gov. Chris
Christie was photographed while
it was closed to the public during
a state government shutdown?
3. This summer, a pop-up restaurant specializing in a popular
snack-food brand sold out all 300
of its reserved slots in six hours.
Which brand was it?
A. Newark, N.J.
B. Stamford, Conn.
C. New York City
D. Hempstead, N.Y.
A. $700 million
B. $7 billion
C. Nothing
D. A parking lot for electric
cars, special terminal at Newark
Airport and season tickets to the
Devils NHL games.
13. Subway riders endured a series of traumas in 2017. Which of
these incidents didn’t happen?
ST. CHARLES COUNTY DEPARTMENT OF CORRECTIONS (SAIPOV); RM DESIGN (BUILDING RIGHT)
A. Two years
B. Five years
C. 10 years
D. Closing the jail complex
isn’t possible.
A. Fritos
B. Cheetos
C. Doritos
D. Utz
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SETH WENIG/ASSOCIATED PRESS
5. How much did New Jersey
Gov. Chris Christie offer Amazon
to put its second headquarters in
Newark?
1. How many years do city officials say it will take to close the
Rikers Island jail complex?
C. Hundreds of riders trapped
on a disabled train with no air
conditioning.
D. Thousands of riders delayed following a power outage
during the morning rush hour.
3
A. Several riders stranded after a subway car decoupled, leavving them in a tunnel.
B. Dozens of riders injured
after a train derailed and
sparks caused a track fire.
A. Connecticut Gov. Dannel
Malloy
B. New York Gov. Andrew
Cuomo
C. New Jersey Gov. Chris
Christie
D. A three-way tie
16. Which place did Mayor Bill de
Blasio not visit in 2017?
A. Germany
B. Puerto Rico
C. Iowa
D. Florida
17. Where was the most expensive townhouse deal in New York
City in 2017?
A. The Upper East Side
B. West Village
C. Tribeca
D. Brooklyn Heights
14
12
ANSWERS: 1.C; 2.C; 3.B; 4.B; 5.B;
6.A; 7.A; 8.D; 9.C, 10.D; 11.C; 12.C;
13.A; 14.D; 15.C. Mr. Malloy has the
second-lowest.; 16.B; 17.A
1
ly
.
The New York 2017 Quiz
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.
Tuesday, December 26, 2017 | A9
LIFE&ARTS
YOUR HEALTH | By Sumathi Reddy
The Health Stories to Watch in 2018
DON’T BE SURPRISED IF 2018 proves to be a big year for health
in good ways and bad.
While experts foresee trouble ahead for influenza and potential measles outbreaks, the areas of targeted breast cancer therapies, gene editing and migraine medicines offer new promise.
The high price tag of some of the new therapies and technology
will remain a concern for U.S. consumers. Here are some of the
most intriguing health stories to watch for in 2018:
Migraine Milestones?
The more than 35 million Americans who suffer from migraines may have some headache-reducing news in 2018. A
new class of migraine drugs is in development that would help
prevent attacks. Teva Pharmaceutical Industries and Amgen, in
conjunction with Novartis, reported positive data in November.
Most medications now on the market are for attacks already
under way. The prevention drugs that sufferers take are approved for other uses and don’t always work or cause side effects, such as rebound headaches, fatigue and weight gain.
The experimental drugs are part of a class of mostly
injectable treatments that target a chemical known
as CGRP, which is involved in the brain’s pain
signaling during migraines. Alder BioPharmaceuticals, Allergan and Eli Lilly are
also working on new migraine drugs.
Influenza season, which is
just starting and not expected to peak until early
2018, will likely be a bad
one. Based on the Southern
Hemisphere’s brutal season
and the fact that this year’s
vaccine was likely not a
good match for the circulating strain, some experts are saying protection could be inadequate.
Infectious disease experts are also fearful
about the possibility of
more measles outbreaks,
particularly in Texas.
This may be due in
part to the number of
parents exempting
their children from
vaccines in the Lone
Star State. There has
been a 19-fold increase between 2003
and 2016. Peter Hotez,
a pediatrician at Baylor College of Medicine
in Houston, says at
some private schools in
the Austin area exemption
rates are as high as 40%.
FITNESS
YOUR GYM’S LONELY
CARDIO MACHINES
ALLISON CONWAY
BY RACHEL BACHMAN
FOR DECADES, rows of cardio and
weight machines have filled U.S.
gyms like platoons of a robot army.
But their ranks are thinning.
Traditional health clubs are removing some machines to open
floor space for more personal and
small-group training, often popular high-intensity or strength-focused workouts. Some gyms also
are increasing the number of fitness classes, as experienced gymgoers seek more engaging workouts and less time staring ahead
on an elliptical or push-pulling on
weight machines.
“No question there’s been a
movement away from those pieces,”
says Charles Huff, vice president of
facilities for 24 Hour Fitness. In recent years the 420-location chain
has scaled back cardio and weight
machines to 50% of floor space from
about 66%, Mr. Huff says. The gym
devotes the other half of floor space
to free weights and functional training, which includes things like kettlebell swings and body-weight exercises with TRX suspension straps. It
has also expanded its studio groupexercise classes.
The company isn’t alone. Ecofit
of Victoria, British Columbia, tracks
equipment use at about 1,000 gym
locations across the U.S., from lowprice chains to luxury clubs. Among
the firm’s most common recommendations to the gyms it advises is to
remove underused cardio and specialized weight machines, says Dave
Johnson, co-founder and vice president of business development.
Stair-steppers in particular are
waning—but not stepmills—along
with some elliptical machines, Mr.
Johnson says. While some machines
Please see CARDIO page A11
OLIVER BURSTON
Focus on Flu and
Measles
no
The emergence of superbugs—
antibiotic-resistant infections—will continue to pose a
problem. Agencies, including
the Centers for Disease Control and Prevention and the
World Health Organization,
will continue to focus on
them in 2018. More than a
dozen infections—including MRSA and a strain of
gonorrhea—are resistant
to antibiotics.
The CDC estimates that
at least two million people in the U.S. get an antibiotic-resistant infection every year. Such
infections cause 23,000
deaths a year.
The CDC is slated to
offer a new containment
approach in April, with
plans to detect and respond to emerging cases
of resistance.
Drug companies and researchers will continue their quest to get
gene-editing tech from clinical trials into practice. The use of Crispr/
Cas9 gene editing—a technology that acts like molecular scissors to cut and edit DNA—to treat individuals with lifethreatening illnesses is expected to move forward,
with a number of clinical trials in the works, including one by Crispr Therapeutics, which is
planning to start a clinical trial for an inherited blood disorder in Europe in 2018.
Other gene-editing technologies are
also taking off. Sangamo Therapeutics
announced in November that its scientists had edited a gene inside the body
of a man with Hunter syndrome, a genetic disorder. Sangamo has two other
clinical trials under way looking at genome editing for patients with two
other genetic diseases. News in December that Spark Therapeutics got approval for a therapy to replace a faulty
gene in people with retinal dystrophy, a
rare form of vision loss, will fuel further consumer interest in geneticsbased medicine. And expect plenty of
headlines when Spark announces the
therapy’s price early in 2018. Experts
expect it to be very expensive.
Meanwhile, the more controversial use of Crispr-Cas9 gene editing
in altering the genetic makeup of
embryos—which poses many ethical questions—will also likely be
a topic of great debate.
n-
Antibiotic Overuse
and Resistance
Advances in Genetics-Based Medicine
co Fo
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Targeted therapies to treat breast
cancer are evolving to provide additional and less toxic treatment options. These drugs attack specific
pathways in cancer cells. PARP inhibitors have been found to show promise in patients with mutations in the
BRCA1 and BRCA2 genes.
These drugs are already on the
market for ovarian cancer. The hope
is the U.S. Food and Drug Administration will approve them for use in
breast cancer in 2018. A class of
drugs called CDK 4/6 inhibitors has
already been shown to significantly improve the length of time
postmenopausal women live without their breast cancer worsening, when used in combination
with anti-estrogen therapy.
With new data showing they
also work in premenopausal
women, they will likely be used
to treat more such women.
All eyes in the cardiology world will be on the results of a clinical trial expected to be announced in early 2018. ODYSSEY is
the longest clinical cardiovascular outcomes trial done of heart
patients on PCSK9 inhibitors, powerful new drugs that can
dramatically lower LDL, or bad cholesterol levels, when drugs
like statins can’t do the job. The drugs have been hampered by
their price tag—around $14,000 a year—and insurance companies’ high rates of refusal to pay for them.
The trial is of alirocumab (Praluent), a drug made by Sanofi
and Regeneron Pharmaceuticals, and follows 18,000 high-risk
patients for up to five years. Patients hope strong trial results
will make insurance companies more apt to approve them.
ly
.
Targeted Breast
Cancer Treatments
A Possible Cholesterol Breakthrough
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THE WALL STREET JOURNAL.
A10 | Tuesday, December 26, 2017
LIFE & ARTS
WHAT’S YOUR WORKOUT? | By Jen Murphy
She’s One Step Ahead
A factory boss joins her employees on a strenuous set of Los Angeles stairs during lunch
Elizabeth Kaplan, center left and
above, says lunch-hour workouts
have helped her bond with employees
in the company’s Culver City factory.
The Workout
TOP: MICHAL CZERWONKA FOR THE WALL STREET JOURNAL (2)
Ms. Kaplan joins a group of about
15 co-workers for an afternoon
workout at least twice a week.
They run to the Culver City Stairs,
located blocks from the office. She
doesn’t run. “My knees can’t handle that. But I kept my heart rate
up by speed walking,” she says.
She alternates between climbing a
section of stairs and hiking a dirt
trail alongside them. She usually
cuts back a little early to shower
at the factory.
Twice a week she takes a dance
class or goes to Zumba. On weekends she tries to go to spin class,
play tennis or hike in Runyon Canyon or Franklin Canyon Park. “Hiking is my go-to way to decompress,” she says. She also does
yoga-inspired stretches and meditates at home.
The Diet
ly
.
Five Superlative
Sets of Stairs
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FROM LEFT: REBECCA STUMPF FOR THE WALL STREET JOURNAL; JOSH ANDRUS FOR THE WALL STREET JOURNAL; ISTOCK
SOME EMPLOYEES bond over
drinks after work. Elizabeth Kaplan believes she can create a stronger connection by sharing a workout with colleagues.
Ms. Kaplan, 51, is a partner at
Paul Ferrante, a family-owned custom lighting design company in Los
Angeles. After working out of the
company’s Melrose Place showroom
for 20 years, she moved to its Culver City factory in May 2016. Lighting pieces are handcrafted there by
artisans, many from Mexico and
Guatemala. As one of three women
on a team of 60, and the boss, she
struggled to feel like “one of the
guys.”
When she discovered that many
of the men used the lunch hour to
exercise, she asked to join. They
use the Culver City Stairs, 282
steps that form a steep climb, as a
gym. “I started working out at
lunch, because I didn’t want to
waste an hour doing nothing,”
says Victor Mancia, a 45-year-old
in the glass department. “When
Elizabeth joined, I think it motivated others.”
Ms. Kaplan says she noticed a
few of her colleagues struggled
with health issues, such as diabetes. “I’m a working mother, so I
get it’s hard to carve out time to
exercise. But I also realize your
habits—diet, activity level—rub off
on your family,” she says. Her children are 23, 22 and 18. “I hoped
that if people saw me joining the
workouts, they’d feel more inclined
to join.”
Ms. Kaplan has coffee when she
arrives to work at 6:30 a.m., followed by a banana. Her eldest
daughter is a “hard-core vegan”
and as a result, Ms. Kaplan has adopted a mostly plant-based diet.
“The lady at the roach coach
knows my lunch order by heart,
vegetable tostadas,” she says, referring to the food truck that
parks outside her office building.
Dinner is usually fish with rice and
roasted vegetables or soup and
bread.
“I’m not a petite person, and I
like my food and wine,” she says.
“There’s junk food around all of
the time at the factory, and if
there are doughnuts in the morning or if someone brings in fries
from the truck, I partake.”
You don’t need an expensive gym
membership to get your heart rate
up and your glutes firing. Just find
an interesting set of stairs.
Harvard Stadium Boston
Set next to the Charles River, this stadium has 31 levels of concrete-block
seats across 37 sections. Runners typically ascend along the larger seats
(15 inches high), and come down the
smaller steps (7.5 inches high) between each section. It’s a popular
workout venue for the November
Project, a free public exercise group.
Red Rocks Park and
Amphitheatre, Morrison, Colo. Covering the 70 rows of bleacherstyle seats at the center of the Red
Rocks Amphitheatre—up and down,
and end to end—is the equivalent of
running just over 3 miles. The elevation, at 6,450 feet above sea level,
makes this venue a popular training
spot for professional sports teams.
Another popular spot on Colorado’s
Front Range: The Manitou Incline.
Philadelphia Museum of Art
Philadelphia
The 72 stone steps leading to the entrance of the Philadelphia Museum of
Art have become known as the
“Rocky Steps,” a reference to the famous scene in the movie “Rocky”
where Sylvester Stallone’s boxer triumphantly completes his morning jog.
Manuel Rodriguez, 35, who
works in the transportation and
shipping department, says he
knew he needed to lose weight but
could never find time after work.
“Now that I started doing the
stairs, I feel healthier and have a
Filbert Steps, San Francisco Nearly 400 steps rise in three sections from Sansome Street to Coit
Tower in San Francisco’s Telegraph
Hill neighborhood. The steep climb rewards the climber with panoramas of
the city and sometimes even a
glimpse of the area’s resident parrots.
Mount Bonnell, Austin, Texas
Just over 100 stone stairs lead to
the top of Austin’s famous 775-foot
tall promontory, Mount Bonnell.
lot more energy,” he says. “And
when Elizabeth joins we all seem
to laugh a lot more.”
“It’s such a great 45 minutes
of exercise and bonding with my
employees, who I consider my coworkers,” says Ms. Kaplan, who
has lost 10 pounds since starting
the stair workouts. “I learn about
their families, children, what
they have planned for the weekend, their vacation time. You
can’t form those bonds on the
factory floor.”
Her Nike Air Zoom Vomero sneakers retail for $140. “I need a
sneaker with extra shock absorption and ankle support,” she says.
She wears $60 Ryka Grafik training shoes for dance and Zumba.
“They have pivot points on the
bottoms of the soles and that extra
traction helps with lateral movement,” she says.
Her go-to workout apparel is
Lululemon, Athleta, Nike and Adidas. Monthly dues for classes and
court time range from $200 to
$300 a month.
The Playlist
“I need upbeat stuff to get me up
those hills,” she says. “I have younger kids, so I’m exposed to a lot of
new stuff. I really like Rihanna, Calvin Harris and Pink, and I’m a big
Broadway musical fan.”
The WSJ Daily Crossword | Edited by Mike Shenk
n-
Weather
The Gear & Cost
Shown are today’s noon positions of weather systems and precipitation. Temperature bands are highs for the day.
d
t
Edmonton
Calgary
10s
Por
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tl d
Portland
l
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30s
30s
0s
20s
40s
Reno
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C y
Salt Lake
70s
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Los A
Angeles
60s
San Diego
Denver
50s
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D
Dallas
Jack
Jackson
El P
Paso
20s
Anchorage
A
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30s
0s
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Toronto
A
Austin
U.S. Forecasts
bil
Mobile
Houston
70s
80s
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.
International
City
Amsterdam
Athens
Baghdad
Bangkok
Beijing
Berlin
Brussels
Buenos Aires
Dubai
Dublin
Edinburgh
Today
Hi Lo W
45 38 r
60 48 s
67 45 s
75 68 sh
37 16 s
48 35 pc
45 39 r
90 68 pc
78 65 c
40 32 c
37 26 pc
Tomorrow
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43 36 r
60 53 s
69 46 pc
78 72 sh
39 19 s
42 36 c
43 33 r
89 67 s
79 66 pc
39 29 pc
36 28 pc
10
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42
43
44
47
48
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49
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Stationary
Snow
55
56
57
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Flurries
58
59
60
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
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Tokyo
Toronto
Vancouver
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44 35 r
83 59 pc
69 62 pc
54 50 s
89 75 pc
58 42 s
78 56 t
47 36 r
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87 77 c
84 61 pc
72 45 pc
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91 71 pc
46 40 c
84 73 r
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59 48 sh
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28 11 s
53 39 s
86 77 c
74 70 pc
70 61 c
56 35 s
13 4 c
36 27 c
44 32 pc
44 30 pc
Tomorrow
Hi Lo W
42 36 r
41 29 r
84 62 s
69 64 pc
58 50 s
87 76 sh
60 45 pc
76 59 c
41 32 sn
52 41 pc
85 76 pc
91 71 s
72 44 pc
41 37 r
35 32 c
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43 32 r
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28 19 s
56 47 c
86 77 c
78 68 pc
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46 36 s
12 -8 pc
36 32 r
43 39 pc
37 32 r
51
52
53
54
5 Facing the
pitcher
10 Green Jedi
master
14 Notion
15 Kangaroo
carrier
16 Grand-scale
movie
17 Decisively
defeated
20 Parcels (out)
21 Name shared
by 11 pharaohs
25 Scoop, say
30 Be of one
mind
31 Abhors
32 Attila, for one
34 Officially
disallows
35 Plow pullers
36 Transportation
to the red
carpet
37 Boxing great
38 Hefty books
39 Molded ice
cream dessert
22 Growl
aggressively
40 “Phew, what
fortuitous
intervention!”
24 Capitol Building
capper
43 Hieroglyphics
bird
38 Quarterback Tim
39 Floppy top
41 Baseball cap
features
42 Washington’s
Mount St. ___
11 Musical
composition
12 Enjoy a banquet
13 “Hamlet” has
five
44 Diminish by
degrees
48 “Give ___ me
straight”
19 “The Stranger”
author
22 Erich and George
45 Much
23 Aslan’s kingdom
48 Speck on the
map
24 Abhor
50 Give up
55 Couturier
Christian
56 Like some
kitchens
57 Burrowing
mammal
58 Tipplers
59 Subway map
indications
60 Connector for
oxen
Down
1 Took cover
2 Fuss
Solve this puzzle online and discuss it at WSJ.com/Puzzles.
45 Some old Fords
46 Birthplace of
seven presidents
47 Moderate pace
18 Strong suit
BOXING DAY | By Mae Woodard
Across
1 “Mad Men” star
Jon
36 Old
psychosurgical
procedure
8 Exclamation
from an
Austrian
10 Naval petty
officers
Cold
50
35 Alters
9 Bad thing for a
boxer to be on
39
41
33 Christmas, in
Cannes
7 “No ifs, ands
or ___”
29
32
38
29 Unpresuming
5 Rocky foe ___
Creed
6 Ripped
35
37
28 Sounded the
hour
3 Kitten’s cry
4 Official orders
24
70s
46
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12
16
23
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11
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13 8 pc
79 60 pc
28 18 s
75 47 s
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57 43 s
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26 9 pc
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50 34 s
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53 37 r
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37 22 pc 30 14 pc
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Boston
27 13 pc 21 7 s
Burlington
17 -1 c
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Charlotte
48 30 pc 46 23 c
Chicago
11 0 c
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Cleveland
18 7 sf 14 8 c
Dallas
44 34 r
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Denver
25 9 s
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Detroit
16
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81 69 r
80 67 pc
Houston
55 43 r
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Indianapolis
17
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Kansas City
15 0 c
19 16 pc
Las Vegas
63 43 pc 66 45 s
Little Rock
45 24 pc 36 21 c
Los Angeles
69 51 pc 73 52 s
Miami
82 70 pc 83 70 pc
Milwaukee
7 -1 s
10 3 s
Minneapolis
1 -8 s
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42 22 pc 34 20 c
New Orleans
59 45 r
53 44 r
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32 19 pc 27 17 pc
Oklahoma City
36 18 pc 34 26 c
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Vancouver
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49 Freighter or
frigate
51 D.C. baseballer,
for short
52 Pursue
romantically
25 Rummy cake
26 Texting tools
27 U.S. ambassador
to the United
Nations Nikki
53 Caribou’s cousin
54 Spike with a
camera
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The contest answer is O CHRISTMAS TREE (or O
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in the grid, you can make the shape of a Christmas
tree, leading to the contest answer.
For personal, non-commercial use only. Do not edit, alter or reproduce. For commercial reproduction or distribution, contact Dow Jones Reprints & Licensing at (800) 843-0008 or www.djreprints.com.
THE WALL STREET JOURNAL.
Tuesday, December 26, 2017 | A11
LIFE & ARTS
PHOTOGRAPHY REVIEW
Documents of Decay
JUSTIN KIMBALL
Providence, R.I.
THE PRISTINE small
towns of Massachusetts,
New York, Pennsylvania
and West Virginia—the
spiffy villages of Colonial
and Federal red-brick architecture and Victorian
homes with gingerbread
ornamentation—are not
the ones Justin Kimball
documented in “Elegy,”
the exhibition of his
work at the RISD Museum. His are the mill
towns in those states in
various degrees of decay.
Mr. Kimball (b. 1961) visited these victims of
deindustrialization between 2012 and 2016.
The individual towns are
not identified; instead,
just the names of the
streets on which the nine
pictures were taken are
used as titles suggesting
the generic nature of
their problems. And the
individual pictures are
not dated, suggesting the
continuing nature of
those problems.
“Liberty Street” presents an example of the
destruction that nature
and neglect are capable
of; the siding is peeling
off the back of a building and exposing the insulation
underneath. Whatever the siding
material is (probably vinyl, but
maybe aluminum), it is twisting,
sagging, separating and not protecting the building.
That gray siding runs across the
middle of the image. In front of it
is a row of fir trees turning brown;
in front of the trees is a wire fence;
and in front of the fence is some
rubbish—scraps of metal, lumber
and a pink mattress. Behind the
gray siding is a dormer covered
with pale-green asbestos shingles, a
cinderblock chimney, a large wall of
co Fo
m rp
m e
er rs
ci on
al a
us l,
e
on
‘North Greenbush Road’ by Justin Kimball, part of his 2012-2016 ‘Elegy’ project
the right of the red wall
is a vista down a street; a
man of about 40 with
thick dark hair and a
neatly trimmed beard
stands on the sidewalk
looking down at the cellphone he holds in both
hands. The picture hints
at anomie, that this is a
community where people
do not talk to each other.
On the other hand, the
two people in one of the
windows in “West Frack
Street” could not be closer.
The aluminum siding on
this house is in pretty
good shape although the
white paint on the scalloped wooden trim seen at
the bottom of the picture
is badly peeled. There is a
prominent TV dish. The
window on the right has a
cloth stuffed on top, presumably to keep out
drafts; the upper pane is
covered inside with gray
cloth and the bottom with
pink. A man wearing a
white tank-top undershirt
and with a tattoo on his
right arm leans out the
left window; he looks
down at the cellphone he
holds in both hands. Unlike the disengaged couple
in “Spruce Street,” the
woman here squeezes her
head out the window and,
with her blond hair hanging down, rests her chin and one
hand on the man’s left upper arm. It
is whimsical and affectionate.
Prosperity is never evenly distributed, and Mr. Kimball’s “Elegy” mourns for the sites it has
passed by.
ly
.
BY WILLIAM MEYERS
weathered red brick, an electrical
pole supporting three large transformers and wires running in several directions, and, in the distance,
a hill covered with autumnal trees.
The sky is a featureless gray.
All of the building materials and
their present conditions have socio-economic implications, and all
the details contribute to a sense of
desuetude. “Liberty Street,” like all
the pictures, is a large (but not
huge) inkjet print, and Mr. Kimball, who has degrees in photography from RISD and Yale, is meticulous about composing images that
CARDIO
include significant details.
“North Greenbush Road,” a picture of a single house, is similar in
that the house is falling apart. The
bottom level is cinderblock covered with what appears to be
green mold; the white paint is
peeling off the wood siding on the
middle floor, and some of the siding has fallen off; the strips of aluminum siding on the top floor are
separating. An outside door on the
middle floor has no staircase to
the ground. Windows are falling
out. The roof has imploded exposing a cinderblock chimney. The
grass is unkempt. Two signs tell us
in red capital letters that this is
“PRIVATE PROPERTY.”
“Spruce Street,” one of four pictures that include people, is bifurcated in an interesting way. On the
left, a woman stands against a
wall of red boards. She is 20, more
or less, and has her hands in the
pockets of her hooded jacket. The
tear in the left knee of her jeans is
the result of an accident, not a designer feature. She has a plain but
appealing face, wears no makeup,
and looks off to the left with a
vaguely troubled expression. To
Justin Kimball: Elegy
RISD Museum
Through July 8, 2018
Mr. Meyers writes on photography
for the Journal. See his
photographs at
williammeyersphotography.com.
Healthworks member Judi Gonsalves
works out twice a week with a personal
trainer on a new artificial-turf area in the
club. The 45-year-old, who works in finance
at an insurance company, says she used to
be a “treadmill person” but now uses cardio
machines mainly for short sprints as part of
workouts loaded with body-weight exercises
and lunges with weights.
“The strength workouts here are really interesting,” she says. “You’re really pushing
yourself to muscle fatigue.”
The shift away from machines is even
more pronounced overseas. In 54 gyms of
FROM TOP: 24 HOUR FITNESS; JOSH CAMPBELL PHOTOGRAPH
no
n-
Continued from page A9
like leg and shoulder presses remain popular, he adds, narrow-focus ones like inner/
outer thigh machines gather dust.
“Gyms used to be full of those things, just
the weirdest strength-training pieces,” Mr.
Johnson says.
Several trends are driving the shift away
from machines. Boutique fitness is booming,
and many of those studios focus on guided
workouts with few or no machines. Some members of
CrossFit gyms, meanwhile, are
migrating to less expensive
health clubs with newly added
or expanded barbell weightlifting facilities.
Even beyond competition,
traditional clubs have motivation to push the trend:
Trainer-led sessions generate
extra revenue where a treadmill or weight-machine can’t.
When Amy Wrenn joined a
YMCA in Winter Park, Fla.,
about six years ago, she would
churn out workouts on an ellip- 24 Hour Fitness locations, including this one in Ramsey, N.J.,
are devoting more space to free weights.
tical machine or a treadmill, in
part because she wasn’t sure
varying price levels in the U.K., members’
what else to do. But when the 41-year-old
time spent on cardio machines dropped 7%
nurse tried her first exercise class at the Y,
between 2013 and this year, even as the toshe was hooked.
tal number of gym visits increased, accordEventually, she joined a nearby 24 Hour
ing to an analysis from Edinburgh-based
Fitness and now mainly takes classes like
tracking firm GYMetrix.
kickboxing, ballet-style barre and a weightCommercial cardio machines still outsell
lifting class called Bodypump.
weightlifting equipment, but the pace is
“I prefer to do classes, because the
slowing. The ratio of cardio machines to
teacher pushes me farther than I would
weightlifting equipment sold internationally
push myself,” she says. “I get bored on cardropped to 64-to-36 last year, from 71-to-29
dio machines or on the weight machines.”
in 2008, according to the Fitness Industry
As part of a major renovation in the past
Suppliers Association.
year, the Back Bay location of Boston-based
The ratio has been steadier in the U.S. over
Healthworks Fitness Centers for Women got
the same span, but dropped 3 percentage
rid of most of its weight machines and
points last year to 74-26. Weightlifting equipnearly doubled the square footage for funcment includes machines and free weights.
tional training and free weights, company
For its part, industry giant Planet Fitness
president Mark Harrington Jr. says. He’s
is sticking to its focus on machines. Its barseen a sharp rise in demand for squat racks
gain-priced, 20,000-square-foot gyms brisand bench presses—“equipment that was
tle with cardio and strength equipment and
considered men’s equipment, but that
leave out what a spokeswoman calls “nonwomen are coming in droves for.”
essential amenities” like
day-care facilities and juice
bars.
Despite 24 Hour Fitness’s
move away from cardio and
weight machines, at least a
few of the familiar rows of
equipment are here to stay,
Mr. Huff says.
“A ton of people join our
club and have never been to a
club before,” he says. “The
resistance machines and the
cardio equipment is almost
designed for someone to walk
The Healthworks Fitness Center in Boston’s Back Bay cleared out
up to that doesn’t necessarily
weight machines to make room for an open training area.
know that they’re doing.”
Come Sail Away
Silver Nef
Incomparable craftsmanship. Impressive
size. Detailed design. This monumental
nef is a breathtaking example of Spanish
silversmithing. The entire form is executed
with life-like detail that gives the illusion this
three-masted vessel could actually set sail.
“Crew members” are positioned throughout
the fully rigged vessel, while elements such
as cannons and dangling anchors testify to
the painstaking craftsmanship required to
create this silverplate objet d’art. Circa 1890.
27”w x 71/2”d x 31”h. #30-4816
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THE WALL STREET JOURNAL.
A12 | Tuesday, December 26, 2017
SPORTS
THE YEAR IN REVIEW | By Jason Gay
In 2017, Sports Got Loud, Weird
Clockwise from top: Floyd Mayweather Jr. and Conor McGregor during a news conference for their Aug. 26 bout;
Sloane Stephens after winning the U.S. Open; Mississippi State’s Morgan William hit a shot to beat Connecticut.
n-
co Fo
m rp
m e
er rs
ci on
al a
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e
on
sance, as the Journal’s Ben Cohen
has done a stellar job of chronicling (Cohen’s currently enjoying
an actual tropical, tequila-soaked
vacation, the jerk). And the fever
isn’t limited to the Warriors, who
won their second title in three
years with a big assist from new
hire Kevin Durant. There’s a raft of
team talent in places like Houston,
Boston, Philadelphia, Toronto, Indiana, Milwaukee and Minnesota.
Even the desultory Knicks have a
heartbeat! Ratings are up, which is
no surprise, because a random
NBA game right now is a lot more
fun than a random NFL game, especially on a Thursday night. Of
course, shampooing the neighbor’s
dog is more fun than watching the
HARRY HOW/GETTY IMAGES; KEVIN C. COX/GETTY IMAGES; JONATHAN FERREY/GETTY IMAGES; SHAUN BOTTERILL/GETTY IMAGES
Clockwise from top left: Jose Altuve and Alex Bregman after the Astros won the World Series; Tom Brady lifted the
Lombardi Trophy for the fifth time; members of the Texans kneel during the anthem; Roger Federer at Wimbledon.
NFL on a Thursday night.
OBLIGATORY HOCKEY MENTION: The Pittsburgh Penguins
won their second Stanley Cup in a
row. And Nashville proved to be a
rocking hockey town.
I suppose we need to get a little
serious here. Let’s start with the
still-active FBI investigation into
bribery and kickbacks in NCAA
men’s basketball. Once again, big
time college athletics are shown to
be a robust ATM. Cash is everywhere; coaches, networks, sponsors, shoe companies and middle
men are reaching for a piece, and
yet the NCAA insists on a system
in which everyone can take a buck
besides the actual players on the
court or field. The economists call
this a distortion of a market economy—one valve (the money that
should go to the talent) is being
blocked, so the money streams
into a seamier channel.
The NCAA is making noise
about changes, but I’m not holding
my breath about college basketball
or football players getting paid.
What’s more likely is a pro feeder
system, prepping athletes for the
NBA and NFL, both of which have
gotten a free ride on college sports
forever. Basketball stage dad LaVar Ball has announced he’s going to launch such a league, and
laugh at your peril—even if Ball
isn’t the guy who winds up cracking the NCAA (it will likely be the
NBA, with an expansion of its G
League and academy-style program of its own) it’s one of his
least daffy, most sensible ideas.
Between those shameless cord-
cutters, social media dust-ups and
staff layoffs, sports behemoth
ESPN had a rough year. There’s
now an opening at the top of the
network, and I’m available for an
interview, but I’m warning those
folks up in Bristol, Conn.: I’m tired
of studio shows with pot-stirrers
talking about the same five idiotic
tweets and highlights; I want to
get rid of all those garbage bowl
games; and I’ll insist on ditching
the NFL for Monday Night Criterium Bike Racing.
And ESPN should do more dog
shows. Who doesn’t love a dog
show? Besides cats.
There was a fight with Floyd
Mayweather and Conor
McGregor, but I can’t remember
who won, because I was on the
reefer. For work!
I should get on with the NFL.
Phew. Let’s start with the good,
because 2017 did start with an extraordinary Super Bowl—unless, of
course, you were an Atlanta Falcons fan, in which case, I’m sorry
if you’re still sobbing under the
couch. Since that game, the league
has surfed from one uproar to the
next. Americans got mad at the
NFL for being too political, too
dangerous, too boring, too ubiquitous, and also for continuing to
torment the good people of Cleveland with the Browns. The NFL has
been transformed from Swaggering Entertainment Colossus to
National Op-Ed Yowling Target.
It got really weird this fall, when
the President of the United States
jumped into the fray. And nobody
seems to know what a catch is.
I’m hopeful, however. January 1
is coming and the bad NFL teams
will go bye-bye, and we’ll turn the
page to another sports year. Alabama will face Clemson again in
the college football playoffs
(there’s also something between
Oklahoma and Georgia), LeBron
James is playing better than ever,
and those Penguins (struggling a
bit at the moment) will go for a
three-peat. There are Winter
Olympics in Pyeongchang, March
Madness, the Masters and, of
course, Paris-Roubaix, the planet’s
best one-day bike race (you knew I
had to sneak that in there.) THERE
IS A WORLD CUP IN RUSSIA. YOU
THOUGHT I WAS GOING TO FORGET IT BUT I DIDN’T!
There will be surprises. There
will be shocks. There will be
tweets…and there will be lists. I
can’t wait to see them all. I’ll do
anything to stop driving this
smelly car.
MIKE STOBE/GETTY IMAGES; JEWEL SAMAD/AGENCE FRANCE-PRESSE/GETTY IMAGES; LM OTERO/ASSOCIATED PRESS
won a Grand Slam title, and the
honest among us had given up
hope, but this season he won two,
in Australia and Wimbledon. Nadal
took the other two, in Paris and
New York. Injuries to Novak Djokovic, Andy Murray and Stan
Wawrinka thinned the competition, but getting vintage performances from two of the game’s alltime greatest—Rafa and Fed
wound up finishing world No. 1
and 2 on the year—I never thought
I’d see it again. It felt like stealing
time, an absolute treat.
We should also mention here
that the one and only Serena Williams won the Australian Open
pregnant, which Federer and Nadal have yet to do. Also a shout to
Sloane Stephens, who grabbed
her first Slam at the U.S. Open.
North Carolina beat Gonzaga
to win the NCAA men’s basketball title, yes. But no highlight
made me leap off the couch quite
like Morgan William of Mississippi State’s buzzer-beater to
stun Connecticut in the women’s
Final Four. Before then, the Huskies had won 111 games in a row.
One hundred and eleven! Williams
was ice cold while plunging the
dagger—when her shot swished
through, she simply turned and
smiled, before getting
mobbed by her teammates. (I should note
here that South Carolina wound up winning
the title.)
Grumpy old baseball
felt like a thing in 2017.
It was a thing in 2016,
too, with the Cubs triumphing in the World
Series, but this season,
the grip felt more extensive. Maybe that’s the
New York centrism oozing through—the Yankees were good this
year, and oddly likable,
propelled by young stars
like Aaron Judge. But
the World Series between the Houston Astros and the Los Angeles
Dodgers was a wellwatched delight, with
some of the brightest names in the
sport: Jose Altuve, George
Springer, Justin Verlander, Clayton
Kershaw, Cody Bellinger, Yasiel
Puig. It’s easy to mock baseball as
the sports equivalent of Grammy’s
jar of hard candy (and now the
Yankees have reverted to an Evil
Empire, swiping Giancarlo Stanton
from the Marlins) but the aging
game has undeniably fresh life.
The U.S. Men’s National Soccer Team, on the other
hand…yikes. Denied the 2018
World Cup? Can’t we just petition
FIFA to give them a wild card?
What’s it going to take? $25 million? Free Krispy Kremes? FIFA’s
done crazier backroom maneuvers.
We’re amid an NBA renais-
no
Let me confide a secret
about the year-end
lists you see in newspapers and magazines:
maybe 90% of them
are a scam. Writers
like to talk a big, pretentious game
about their year-end lists, how significant they are, how much
thought and agony went into their
choices…
Most of the time, it’s hooey.
Hooey!
Year-end lists mainly exist for
one reason: they allow their authors to flee town for the holidays.
Knock a list off in mid-December,
and your editors can plop it right
there in the dead zone between
Christmas and New Year’s, and you
don’t need to come within 500
miles of the office.
In fact, as you read my year-end
sports list, I’m sitting in a beach
chair on a tropical island right
now, enjoying my third…I actually
don’t know what this is. It has a
lot of rum. I haven’t seen a cloud
in hours. I’ve read a Ludlum and a
half. Gentle waves are lapping at
my feet…
Fine, that’s not true. As you
read this, I’m probably stuck in
holiday traffic somewhere between
my in-laws in Baltimore and home
in New York. My car smells like
cheese sticks and rest-stop
McDonald’s. My wife is fed up with
my taste in music. My daughter’s
eyeballs have fallen out from too
much “Peppa Pig” on the iPad. The
boy is furious Santa Claus didn’t
bring him what he really wanted
for Christmas: a tarantula.
It’s hell on four wheels. I never
should have planned ahead and
written a year-end list. I’d love to
be back at the office, typing
about…anything.
But I guess I should get to my
list. To be clear: this isn’t some
high-minded, thorough accounting
of The Year in Sports. I am picking
out events I think were interesting
or important or funny. As with all
year-end lists, this list isn’t comprehensive. Your job is to read it
and then scream about the things I
forgot. You might be tempted to
throw rocks at me. Sharp, heavy
rocks. There’s no college football
in it, because I’m still mad the
Badgers lost in the Big Ten title
game, and also because it’s fun to
irritate Clemson and Alabama fans
(jk, I love you!).
If I were a legit sports columnist, and not 45 meerkats dressed
in a human costume, I would start
with the travails of the NFL, because that probably is the biggest
sports story of the year. But I’d
rather begin with the revival of
Roger Federer and Rafael Nadal,
since it’s the 2017 sports story
that brought me the most joy—and
my personal happiness is what
matters here, gang.
Entering the year, it had been
nearly half a decade since Federer
ly
.
From the NFL to the NBA and beyond, the myth of games simply being games is over
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.
Tuesday, December 26, 2017 | A13
OPINION
By William
McGurn
elected him.
Since then, of course, President-elect Trump has become
President Trump. Over his 11
months in office, he has put
Neil Gorsuch on the Supreme
Court and four times as many
judges on the appellate courts
as Barack Obama did his first
year; recognized Jerusalem as
the capital of Israel; withdrawn from the Paris climate
accord; adopted a more resolute policy on Afghanistan
than the one he’d campaigned
on; rolled back the mandate
forcing Catholic nuns, among
others, to provide employees
with contraception and abortifacients; signed legislation to
open up drilling for oil in the
Arctic National Wildlife Refuge; initiated a bold, deregulatory assault on the administrative state—and topped it all
off with the first major overhaul of the tax code in more
than 30 years.
And yet that Mr. Trump is a
very stupid man remains the
assumption dominating his
press coverage.
Let this columnist confess:
He did not see Mr. Trump’s
achievements coming, at least
at first. In the worst sense,
populism means pandering to
public appetites at the expense of sound policy. Too often populists who get themselves elected find either that
they cannot implement what
they promised, or that when
they do, there are disastrous
and unexpected consequences.
Add to this the sorry experience America had recently
had with men, also outside
conventional politics, who ran
successfully for governorships: former pro wrestler and
Navy SEAL Jesse Ventura in
Minnesota and actor Arnold
Schwarzenegger in California.
Their respective administrations each began with high enthusiasm but ended in defeat
and disillusionment. What
would make anyone think Mr.
Trump would do better?
Start with Mr. Ventura. His
populism, like Mr. Trump’s,
featured open ridicule of the
press. At one point he issued
press cards listing them as
“official jackals.” Also like Mr.
Trump, he was treated as simple-minded because he was
not a professional pol. When
David Letterman listed his top
10 campaign slogans for Mr.
Ventura, No. 1 was “it’s the
stupidity, stupid.”
In his first year Mr. Ventura’s approval rating soared
to 73%, and while in office he
did manage to push through
tax rebates and a property-tax
reform. By his last year, however, his vetoes were regularly
overridden, spending had shot
up, and the magic was gone. In
the end, he decided against
seeking a second term.
Next came Mr. Schwarzenegger, who in 2003 an-
nounced his run for governor
on “The Tonight Show.” Mr.
Schwarzenegger’s pitch was
essentially Mr. Trump’s: The
state’s politics had been so
corrupted by the political
class that Californians needed
a strongman from the outside
to shake it up.
The Governator did succeed
in getting himself re-elected
three years later, which is
more than Mr. Ventura did. In
the end, however, he was defeated by those he’d denounced as the “girlie men” of
He’s had far more
success than Arnold
Schwarzenegger
or Jesse Ventura.
Sacramento, and his package
of reforms went nowhere. The
man who entered office promising to cut spending and revive the state’s economy
ended up signing a huge tax
increase, while debt nearly tripled under his watch.
Now we have President
Trump. In one sense he is not
unique: Almost all GOP presidents are stereotyped as not
very bright. Ask Ike, or George
W. Bush, or even Lincoln. Nor
is it uncommon, in the headiness of a White House, for
even the lowliest staffer to
come to regard himself as the
intellectual superior of the
president he works for.
In Mr. Trump’s case, critics
equate lowbrow tastes (e.g.,
well-done steaks covered in
ketchup) as confirmation of a
lack of brainpower. It can
make for great sport. But
starting out with the assumption that the president you are
covering is a boob can prove
debilitating to clear judgment.
Quick show of hands: How
many of those in the press
who continue to dismiss Mr.
Trump as stupid publicly asserted he could never win the
2016 election—or would never
get anyone decent to work for
him in the unlikely miracle he
did get elected?
The Trump presidency may
still go poof for any number of
reasons—if the promised economic growth doesn’t materialize, if the public concludes
that his inability to ignore
slights on Twitter is getting
the best of his presidency, or
if Democrats manage to leverage his low approval ratings
and polarizing personality
into a recapture of the House
and Senate this coming November. And yes, it’s possible
to regard Mr. Trump’s presidency as not worth the price.
But stupid? Perhaps the
best advice for anti-Trumpers
comes from one of their own,
a Vermont Democrat named
Jason Lorber. Way back in
April, in an article for the Burlington Free Press, the retired
state politician wrote that
“while it may be good for a
chuckle, calling or even thinking someone else stupid is virtually guaranteed to give them
the last laugh.”
Is that not what Mr. Trump
is now enjoying at the close of
his first year?
Write to mcgurn@wsj.com.
Trump’s ‘Blue Water’ Foreign Policy
M
The administration’s
new security strategy
is reminiscent of
Pax Britannica.
the Cold War allies, as the
template on which a peaceful
global society can and should
be built. From this perspective, the wisest American foreign policy would work
through these international
institutions and with Western
partners to make the rest of
the world look more like
NATO and the European
Union.
The Trump administration
hews closer to the blue-water
school. In the time of Pax Britannica, blue-water partisans
believed Britain could accumulate great strength and
wealth by advancing its interests in the wider world. This
would do more to keep the
country strong and respected
no
ost National Security
Strategy statements
are appallingly platitudinous, numbingly conventional and quickly forgotten.
In the history of the U.S. government, no ranking official in
a moment of crisis has ended
a bitter policy debate by turning to a dog-eared, wellthumbed copy of the current
National Security Strategy
and saying, “Wait, people!
Just calm down! The answer
is right here on page 37.”
Yet the Trump strategy
represents a significant accomplishment. It reconciles
the instincts of an unconventional president with the
views of a more seasoned and
conventional national-security
team. The new approach
breaks with the conventionally globalist assumptions of
American foreign policy and
instead embraces an older
strategic approach.
As recently as the early
20th century, Britain ruled the
waves and took the lead in the
construction of a liberal, capitalist world system. During its
long reign, two foreign-policy
schools faced off over how to
engage with Europe. On one
side were advocates of a “continental” strategy, which prioritized alliances and close
political cooperation with key
European states. On the other
were advocates of a “blue water” policy, who encouraged
Britain to turn away from Europe and toward the open
oceans, using its unique global
position to maximize its
power and wealth.
The bitter fight over Brexit
shows that the blue-water-vs.continentalist divide lives on
in British politics. That division also matters in the U.S.,
Britain’s successor as the
world’s leading naval and
commercial power. In contemporary America, continentalists see the Atlantic world,
and the thick institutional
web that developed among
n-
By Walter Russell Mead
than success in the intricate
games of European diplomacy,
they believed. A strong and
rich Britain could always intervene in European politics if
necessary to preserve the balance of power, and a globally
dominant Britain would always be respected, even if it
failed to make itself loved.
This is the view now driving many of America’s key
foreign-policy decisions. The
Trump administration sees
the Paris climate accord as a
potential obstacle to America’s recent exploitation of unconventional hydrocarbon resources, which has upended
global power politics to America’s advantage. It sees current trade agreements as unfairly privileging commercial
and geopolitical rivals like
China. Above all, it sees itself
embroiled in a geopolitical
competition with China that
cannot be won by invoking
principles of multilateral institution-building and maxims
of international law.
Asia before Europe, realism
before liberal internationalism, American prosperity before global solidarity: This is a
vision that appears to blend
the pragmatic approach of the
professionals in President
Trump’s
national-security
team with the less disciplined
but still sometimes acute insights that helped him win the
election.
A modern blue-water approach to foreign policy need
not entail abandoning the
West, turning away from the
world, or discarding the democratic ideals that resonate so
deeply in American history. To
the contrary, blue-water strategists in the Trump nationalsecurity team believe that it is
American power, not multilateral institutions, that keeps
the West afloat. If challenges
to American power from
countries like China, Russia,
Iran and North Korea are successful, the wider West will
weaken and crumble.
Lt. Gen. H.R. McMaster and
his team deserve credit for
finding ways to narrow the
gap
between
President
Trump’s strongly held personal views about foreign policy and the ideas embraced by
mainstream
Republicans.
Whether they can make the
strategy work in the real
world remains an open question. But they appear to have
done with this document all
that an administration can
hope to accomplish with a National Security Strategy—that
is, to lay out the broad principles and elements of consensus on which the administration will base its work.
The world remains as unstable and crisis-prone as it
did before the publication of
the NSS. The Trump administration’s national security apparatus, on the other hand,
seems to be finding its sea
legs.
Mr. Mead is a fellow at the
Hudson Institute and a professor of foreign affairs at Bard
College.
The Time the Beatles Flopped
It was like a little home
movie, really. An elaborate
f late Beatles fans have home movie.” Even producer
delighted to one golden George Martin called it “preanniversary after an- tentious and overblown.”
other: first single (1962), first
No. 1 record (1963), invasion
of America (1964), final con- ‘The Magical Mystery
cert (1966), and greatest album, “Sgt. Pepper’s Lonely Tour’ didn’t go over
Hearts Club Band” (1967).
well when BBC1 aired
Now comes the 50th anniversary of the Beatles’ first it on Dec. 26, 1967.
flop—the Dec. 26, 1967, airing
of the 52-minute television
movie “The Magical Mystery
The film followed the
Tour” on BBC1. It drew 15 band’s decision to stop tourmillion viewers, who barely ing. “We couldn’t reproduce
tolerated the meandering on stage the type of music
scenes, dodgy cinematogra- we’d started to record,” John
phy and overall weirdness. Lennon told Rolling Stone in
“Beatles’ mystery tour baffles December 1967. “So if stage
viewers,” blared one head- shows were to be out, we
line. NBC withdrew from an wanted something to replace
agreement to air the film in them. Television was the obthe U.S.
vious answer.”
“They hated it,” guitarist
The death of manager
George Harrison acknowl- Brian Epstein in August had
edged in the early 1990s. “It’s the group reeling. Paul McCaunderstandable too, because rtney was eager to get them
it wasn’t a brilliant scripted working again—so eager that
thing that was executed well. he charged ahead without a
By Matthew Hennessey
O
When Barbie
Went to War
You Don’t Own Me
By Orly Lobel
(Norton, 282 pages, $27.95)
L
ike Condoleezza Rice, Ivanka Trump and Michelle
Obama, Orly Lobel played with Barbie dolls when she
was growing up. “Fortunately,” writes the San Diego law
professor in her new book, “I was also encouraged to challenge
the distorted realities of Barbie’s world.”
No toy has been deconstructed so thoroughly as Mattel Inc.’s
iconic plastic doll. But Ms. Lobel’s “You Don’t Own Me” is
something different. The world that she explores is not a dollhouse but a courthouse. Her brisk and engaging book chronicles the decadelong copyright clash between Mattel and MGA
Entertainment Inc., an upstart rival that had a mega-hit with its
“Bratz” doll line but that was nearly obliterated by Mattel’s
scorched-earth legal offensive. Journalists tend to overuse
words like “war” when writing about lawsuits. But if ever there
were an example of a civil dispute meriting military metaphors,
it is Mattel vs. MGA. According to Ms. Lobel, the combined
legal expenses of the battle went north of $600 million.
The idea for Barbie herself
was far from original. The
doll’s story starts in the 1950s,
when a chain-smoking, Jewish
businesswoman named Ruth
Handler was vacationing in
Switzerland and encountered
Bild Lilli, a purse-lipped fashionista doll based on a fictional,
gold-digging prostitute featured
in a German comic-strip. Handler
(who died in 2002) spirited the
doll out of Europe and recruited
an ex-missile engineer, Jack Ryan,
to design an Americanized, childfriendly version of Lilli with less
sensual lips, wider eyes and a less precise anatomy that preserved the doll’s impossible
proportions. For marketing, Handler turned to psychologist Ernest Dichter, who devised a way to sell sex appeal to kids by
pitching Barbie to parents as a role model of grace, poise and
beauty. Handler hired a Japanese firm to forge the original
Barbie, launching the 11-inch bombshell at a New York toy fair
in 1959.
Barbie’s birth was followed by a nasty custody battle. The
era’s reigning toy king, Louis Marx, had the licensing rights to
the German doll in the American market and suspected that
Handler’s knockout was a knockoff. He and the German patent
holder sued in 1961. Handler countersued with an anti-competition claim, scored a cheap settlement, and then bought Lilli’s
rights for $21,000, according to Ms. Lobel. By 1965, Mattel was
a Fortune 500 company. By 2000, more than 1 billion Barbies
had been sold.
Mattel became not just a toy company but also a reputation
manager, shielding Barbie from the sordid deeds of her
creators. Ms. Lobel alludes, for instance, to orgies at Jack
Ryan’s Bel Air sex castle in Los Angeles and the securities
fraud charges leveled against Handler in 1978. But they didn’t
tarnish Barbie’s innocence. As Barbie aged, Mattel also grew
increasingly protective of her copyrights, adopting a deterrence strategy that Ms. Lobel describes as “litigate to death.”
co Fo
m rp
m e
er rs
ci on
al a
us l,
e
on
MAIN
STREET
This time one
year ago, the
assumption
dominating
political coverage
was
that the only
people more
stupid than
Donald Trump
were the deplorables who
BOOKSHELF | By Jacob Gershman
ly
.
The ‘Stupidity’ of Donald Trump
script or even a plot. He drew
a circle and divided it into
eight slices like a pie. The
Beatles then penciled into the
slices abstract ideas such as
“Coach people meet each
other/Song” (“Fool on the
Hill”) and “Laboratory sequence.” The sketch guided
the improvisational two-week
shoot in September 1967,
which the Beatles co-directed
with Bernard Knowles.
“It was very flimsy, and we
had no idea what we were doing,” said Harrison. “At least,
I didn’t. . . . My problem, basically, was that I was in another world.”
In later years the Beatles
would attribute the film’s failure to the BBC’s decision to
air it in black and white, a
format that couldn’t do justice to their psychedelic vision. According to Beatle lore,
it received a more positive reception when BBC2 broadcast
it in color in January 1968.
“It wasn’t the kind of thing
you could do a disclaimer before and say, ‘Ladies and Gen-
tlemen what you are about to
see is a product of our imaginations,’ ” Mr. McCartney
said in 2012. “Believe me, at
this point they were quite
vivid.”
Time has been kind to
“Magical Mystery Tour.” Filmmakers Martin Scorcese and
Terry Gilliam have praised it
as ahead of its time visually.
Scenes in which the group
mimes to songs such as “I Am
the Walrus,” “Your Mother
Should Know” and “Hello,
Goodbye,” stand alone as
early and influential music
videos.
And when viewed in light
of all that was still to come in
the Beatles story, “Magical
Mystery Tour” seems less a
failure than an act of transition. The trips to India, the
White Album, “Abbey Road”
and “Let It Be” were still to
come. The anniversaries start
next year.
Mr. Hennessey is an associate editorial features editor
at the Journal.
When word got out that the trendy Bratz dolls
were the brainchild of a former Mattel designer,
the toy company’s executives went nuclear.
When the pop song “Barbie Girl” became a hit in the late
1990s, Mattel sued (without success) to keep it off the airwaves. And a federal judge deemed “groundless” Mattel’s suit
against a Utah artist and his photos of nude Barbies imperiled
by kitchen appliances. But Mattel did persuade a Mexican
court to ban a short film depicting Ken, Barbie’s male counterpart, as a cheater and Barbie as a gloomy, lesbian housewife.
While Mattel churned out lawsuits, plucky MGA and its
Iranian Jewish chief executive shook up the toy industry in
2001 with its Bratz dolls: cute, wide-eyed, large-headed new
girls on the block, with ethnic identities and a sexualized,
urban style that made Barbie seem like an outdated Sandra
Dee. Bratz dolls drove parents crazy, but kids were crazy for
them. When word got out that the dolls were the brainchild of
Carter Bryant, a former Mattel designer who had defected to
MGA, Mattel executives went nuclear. They alleged that Mattel
was the owner of Mr. Bryant’s prototype doll-design drawings
and the “sculpt” on which the Bratz dolls were based. Mattel
sought monetary damages of close to $2 billion.
Mr. Bryant said that the idea of a bratty, sassier doll came to
him in 1998 while he was driving by a high school in southwest
Missouri, where he was living with his parents during a break
from working at Mattel. “The teenage girls Carter spotted
coming out of the gates of Kickapoo High School were sassy, hip,
and vibrant,” Ms. Lobel writes. “They showed midriff and defied
typecasting.” Later, Mr. Bryant hid his business arrangement
with MGA from Mattel, which seized on this secrecy to paint
him as a disloyal sneak. It looked as if Bratz dolls were goners
when, in 2008, a federal jury found MGA liable for infringing
Mattel’s copyrights. MGA appealed, however, and found a
crucial ally in the bawdy and brilliant Alex Kozinski, then a
judge on the Ninth U.S. Circuit Court of Appeals.
The libertarian Judge Kozinski “was rather comfortable
with contractual expansion over employee creativity, provided
it was drafted diligently,” writes Ms. Lobel, but “he was far
more suspicious of wholesale copyright protection.” In his
2010 opinion reversing the verdict against MGA, Judge Kozinski wrote that, whatever Mr. Bryant’s employment agreement
with Mattel, the company “can’t claim a monopoly over fashion dolls with a bratty look or attitude, or dolls sporting
trendy clothing—these are all unprotectable ideas.” MGA went
on to win a retrial, then grabbed the upper hand by exposing
how dirty Mattel had played, claiming (in still pending) litigation that Mattel used phony IDs and business cards to infiltrate MGA’s private showrooms. Separately, Ms. Lobel says,
Mattel spied on its employees’ emails to ferret out disloyalty.
As for the broad lesson of this nasty episode, Ms. Lobel
contends that the Mattel vs. MGA case underscores concerns
about corporate control over individual creativity. Perhaps. But
the book is more compelling as a cautionary tale for dominant
companies at the top of the food chain: Don’t lean too heavily
on lawsuits to deter smaller rivals rather than investing in
original, fresh ideas. Today’s Barbies have more realistic body
shapes as well as ethnic diversity, but sagging sales. There’s a
line of Barbie “career dolls” featuring the doll as a chef, doctor,
pilot and U.S. president. One profession notably absent is lawyer. It’s an admirable profession, but you can’t blame Barbie if
she’s had enough of lawyers.
Mr. Gershman is a legal-affairs reporter for the Journal.
For personal, non-commercial use only. Do not edit, alter or reproduce. For commercial reproduction or distribution, contact Dow Jones Reprints & Licensing at (800) 843-0008 or www.djreprints.com.
THE WALL STREET JOURNAL.
A14 | Tuesday, December 26, 2017
OPINION
LETTERS TO THE EDITOR
The Great Rules Rollback
Adam Schiff Offers No Evidence of Collusion
T
Javelin Missiles for Ukraine
no
n-
he White House took another useful the conflict, but they will help Ukraine impose
step Friday to get Russia’s attention on a higher cost on Mr. Putin for his aggression.
Ukraine, deciding to sell Javelin anti- The Kremlin reacted with anger and said the
tank missiles to the Kiev govweapons could “derail” the
Russia is unhappy the peace process, but Russia has
ernment trying to defend
against Kremlin-backed inderailing that for four
U.S. is selling antitank been
vaders. Armored vehicles are
years. Mr. Putin continues to
weapons to Kiev.
a major Russian advantage in
violate the Minsk de-escalathe conflict that Vladimir Pution accord of 2015.
tin has been escalating in reCritics say the arms sale
cent weeks.
could increase U.S.-Russian tension, but these
“The United States has decided to provide are some of the same people who say President
Ukraine enhanced defensive capabilities as part Trump colluded with Mr. Putin to win the elecof our effort to help Ukraine build its long-term tion and wants to appease him now. Ukraine is
defense capacity, to defend its sovereignty and a major obstacle to better Russian relations with
territorial integrity, and to deter further aggres- the U.S. and Europe. Mr. Putin won’t take Minsk
sion,” State Department spokeswoman Heather or the West seriously on Ukraine until he is conNauert said Friday.
vinced the price of his imperialism is higher than
The Javelin is America’s most effective por- the political gains it provides at home.
table antitank weapon; it is infrared-guided
Mr. Putin has been waiting to see if Mr.
and maneuvers to hit tanks at the top, where Trump would bend on Ukraine, and the Javelin
the armor is weakest. The Javelins won’t end sale is a strong message that he won’t.
R
Congressman Adam Schiff continues to insist in “What We Know
About the Trump Campaign’s Collusion With Russia” (op-ed, Dec. 19)
that there was “collusion” during the
2016 election, but he has never explained or provided any proof or evidence of what specifically happened.
What could the Russians possibly
have hoped to gain from a Trump administration that couldn’t have been
obtained much more easily from a
President Hillary Clinton, whose actions and temperament the Russians
had observed and benefitted from
while she was secretary of state in
the Obama administration? That
question is now even more compelling given the Trump administration’s
more nationalist and assertive U.S.
foreign and defense policy that does
Russia no favors.
CHRIS J. KRISINGER
Colonel, USAF (Ret.)
Burke, Va.
do the most political damage to President Trump.
If not for these WikiLeaks-leaked
emails, we would not know that the
DNC “colluded” against Bernie Sanders in the 2016 Democratic primary,
or that Donna Brazile, a Democratic
operative and CNN contributor, fed
Mrs. Clinton actual debate questions
prior to the event.
Of course the Trump transition
team spoke with the Russians. The
transition team also spoke with the
French, British, German, Chinese, Canadian, Swiss and even Mexican government officials. It seems that the
DNC emails demonstrate that collusion did occur in the 2016 election, I
just disagree with Mr. Schiff on
which party was actually guilty.
NICK SPEAR
Phoenix
Mr. Schiff closes by saying “collusion is another word for conspiracy,
and conspiracy to violate U.S. elecWhile Mr. Schiff, along with other tion laws is a serious crime.” Mr.
Democrats and the media, are busy
Schiff knows well that collusion is
fabricating the unsubstantiated narnot a crime. Conspiracy, on the other
rative of the Trump campaign’s “col- hand, is a crime. Prove the crime,
lusion” with Russia, their true goal is Mr. Schiff.
to disenfranchise American voters
JERRY CRINER
Brea, Calif.
and electors who gave the presidency to Mr. Trump, and were right
The problem with Mr. Schiff’s
to do so.
The leaked John Podesta and Dem- piece is that “there’s no there there.”
For over a year and a half he has
ocratic National Committee e-mails
been pedaling his story in every
Mr. Schiff refers to showed Americans the true depth of corruption and venue open to him. He’s continuously, and loudly, offered circumcontempt for voters among the elite
Democrats. None of it was a surprise: stantial evidence but with no basis
What the elite Democrats said to one in fact. It appears he, and his colleagues, are now nervous as the
another in private was no different
composition and tactics of Mr. Muelfrom what Mr. Obama and Mrs. Clinler’s investigation shine an unfavorton said openly in their speeches.
They called us “deplorables” and said able light on the entire enterprise.
Mr. Schiff’s reputation is at stake in
we “cling to guns or religion.”
So we voted them out of office and this game.
KENT SCHMIDT
have been watching with delight a
La Canada, Calif.
better man making America great
again.
Mr. Schiff certainly points out a lot
ZDZISLAW MEGLICKI,
Bloomington, Ind. of somewhat suspicious details uncovered in the investigation, mostly
While expressing concern over the and inconveniently after the election,
release of “hacked” emails by
but no smoking gun. It’s been a year,
WikiLeaks, Mr. Schiff fails to mention and despite unimaginable man-hours
that the DNC refused to allow the
and money spent by investigative
FBI access to DNC computers and
bodies and a hostile press, and thouservers in the investigation of this
sands of government workers who
security breach. Had the FBI been al- loathe Mr. Trump, not a single leak,
lowed access, we might actually
memo or witness can be found to atknow who was responsible. But even test to any collusion.
still, Mr. Schiff is comfortable “conARI WEITZNER
New York
necting the dots” in such a way as to
co Fo
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mid the debate over tweets and tax reDemocrats are now dismayed to learn that
form, perhaps the most significant what can be done with the stroke of a pen can
change brought by the first year of the be undone. The Trump Administration has reTrump Presidency has been
scinded Education Department
Reining in regulation
overlooked: reining in and
guidance on transgender bathrolling back the regulatory
rooms, as well as the 2011
is a major success
state at a pace faster than
“Dear Colleague” guidance
of Trump’s first year.
even Ronald Reagan. This is a
that established kangaroo
major reason for the acceleracourts on campus to adjudicate
tion of animal spirits and
sexual assault and harassment.
faster economic growth in the past year.
It has negated Labor Department guidance that
A rules rollback is harder than it sounds be- held businesses legally responsible for their
cause the inertial tendency of bureaucracies is franchisees’ wage-law violations, creating “ento expand, and the modern administrative state forcement traps waiting to spring,” in the words
has expanded almost inexorably under presi- of the Chamber of Commerce.
dents of both parties. New rules are published
Ms. Rao is also requiring agencies to submit
in the Federal Register, and Barack Obama pre- an annual “regulatory budget.” In fiscal 2018
sided over six of the seven highest annual page the budget target is a net reduction in regulacounts ever. In 2016 his regulators left town tory costs. This has been a goal of regulatory
with a record-breaking binge of 95,894 new watchdogs for years because it forces agencies
pages, according to Wayne Crews, who tracks to think twice about proposing new rules. And
the administrative state for the Competitive En- if they do, then they need to eliminate regulaterprise Institute.
tory costs somewhere else. If enforced with
George W. Bush wasn’t much better. His Ad- rigor, this could be the most important check
ministration added 79,435 pages in 2008, its on the bureaucracy since FDR invented the
most expansive regulatory year. By contrast in modern administrative state.
the first year of the Trump Presidency through
Congress has also helped with unpreceSept. 30, 45,678 pages were added to the Fed- dented use of the Congressional Review Act
eral Register. Many were required to follow-up (CRA) to nullify 14 Obama-era rules and one
on legislation and rules from the Obama era, so Consumer Financial Protection Bureau rule prothe Trump trend is even better.
mulgated under Richard Cordray. The CRA had
i
i
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only been used once before, in 2001 to nix a late
Ten days after his inauguration, Mr. Trump Bill Clinton rule.
issued an executive order directing his departThe 2017 list includes a regulation that
ments to scour the books for rules they could would have imposed onerous disclosure rerescind or repeal without damaging the law. He quirements on mining and drilling companies
also directed that for each single regulation is- operating overseas, carrying $700 million in
sued, agencies should identify at least two for initial costs and up to $590 million for annual
elimination. In one his best appointments, he compliance. Congress also nixed rules on educanamed Neomi Rao to run the White House Of- tion, public land and the use of family-planning
fice of Information and Regulatory Affairs that funds. By eliminating these 14 rules, lawmakers
must clear new rules.
spared Americans from $3.7 billion in costs and
The results have been impressive. Ms. Rao re- eliminated 4.2 million hours of paperwork, says
ported this month that through Sept. 30 the the American Action Forum.
i
i
i
Trump Administration had taken 67 deregulatory
The size of the economic impact of all this
actions but only three new significant regulatory
actions. That’s a 22 to 1 ratio. She also reported is hard to measure, though the Trump Administhat since fall 2016 more than 1,500 planned reg- tration projects the regulatory cost savings for
ulatory actions have been withdrawn or delayed. the economy will be $9.8 billion over the next
For fiscal 2018, the current agenda includes 448 fiscal year. Mr. Crews has estimated that reguladeregulatory actions and 131 regulatory actions, tion took a $1.9 trillion annual toll on the economy last year.
a better than 3 to 1 ratio.
But the far larger impact is lifting the pall
One reason for success is forcing agencies to
abide by the Administrative Procedure Act, of government hassle and arbitrary enforcewhich outlines a public comment period for ment from business. In the Obama era, CEOs
proper rule-making and which the Obama Ad- never knew when or how a federal agency might
ministration routinely ignored. Last year Mr. strike for political reasons, no matter the law.
Crews counted at least 480 Obama-issued exec- Simply lifting that constant fear has had a liberutive orders and memoranda, and that’s not ating effect on risk-taking and investment. The
counting guidance, administrative interpreta- deregulation effort ranks with judicial confirtions and other bits of “regulatory dark matter” mations and tax reform as the main Trump
achievements of the year.
used to promulgate policy.
ly
.
A
REVIEW & OUTLOOK
The Uncharitable Charities
epublican tax writers preserved the create a new and separate deduction for charity
deduction for charitable donations in for those taking the standard deduction (which
the reform that President Trump Republicans wisely rejected).
signed last week, but no ecoThe word for this is ungenThe philanthropy
nomic mistake goes unpunerous. These nonprofits want
ished. Despite this political
keep millions of Americans
lobby wins big but still to
favor for charities, the phifiling more complicated tax
trashes tax reform.
lanthropy lobby is still trashforms and paying higher tax
ing the tax bill.
rates. They also sell Ameri“The tax code is now
cans short by assuming that
poised to de-incentivize the heart of civic ac- most donate mainly because of the tax break,
tion in America,” Dan Cardinali, president of rather than because they believe in a cause or
Independent Sector, a left-leaning lobby for want to share their blessings with others. How
philanthropic outfits, told the Washington little they respect their donors.
Post. “It’s deeply disturbing.” The Post story
Republicans could have lowered tax rates
includes a Festivus-worthy list of grievances further if they had killed the charitable deducfrom some not-so-charitable charities, includ- tion, and that would have been the right ecoing the Catholic bishops and United Way.
nomic decision. Americans don’t need a tax
The gripe is that the new law will reduce the break to give to charities, which should be able
incentive for charitable giving by the middle to sell themselves on their merits. Congress
class because it nearly doubles the standard also retained the death tax and the ability of the
deduction to $24,000 for joint filers. Because rich to shelter their income in personal foundafewer filers will itemize their deductions, the tions that also give to charitable causes.
charities fear that fewer Americans will be able
The truth is that Americans will donate
to take advantage of the deduction for charity more if they have more money. And they will
and therefore fewer will give.
have more money if tax reform, including lower
The gripers point to a May 2017 study com- rates and simplification, helps the economy
missioned by the Independent Sector finding and produces broader prosperity. The 1980s
that doubling the standard deduction and cut- were a boom time for charitable giving preting the top marginal tax rate could reduce cisely because so much wealth was created.
charitable giving from $4.9 billion and $13.1 Like so many on the political left, the charity
billion, or by 1.7% to 4.6%. Charities say they lobby doesn’t understand that before Ameriwill now have to rely more on donations from cans can give away private wealth they first
the wealthy. They even lobbied Republicans to have to create it.
Debating the Tax Reform and Jobs Act of 2017
Congress’s Joint Committee on Taxation states that middle-class households (those with incomes of $20,000$100,000) will get only 23% of the tax
bill’s benefits to individuals (“Tax
Cuts’ Impact Assessed,” U.S. News,
Dec. 19). That leaves 77% of the tax
cut accruing to mostly higher-income
households. How in all honesty can
proponents repeatedly call this a middle-class tax cut?
Meanwhile, the household tax savings will accrue only in the early years
and then peter out; this seems convenient for politicians wishing to get reelected. The piper will be paid by an
increase in deficits, and hence the national debt. As history shows, the
much-touted Reagan tax cuts didn’t
pay for themselves.
JOHN SWANEY
Malvern, Pa.
and leave the Treasury and IRS to promulgate regulations that may not reflect congressional intent.
The result will be litigation that
will require the courts to divine what
it is Congress was actually trying to
do. It has lately been said that this is
the “Attorneys’ and Accountants’ Full
Employment Act.” Add the courts to
that.
BARRY B. SHOTT
Piscataway, N.J.
While the bill isn’t perfect, it will
uncork new business investment and
hiring, which will benefit everyone.
U.S. businesses are primed for expansion. Since the 2008 financial crisis,
we’ve gotten leaner, improved corporate governance, and saved. Companies are sitting on record reserves. It
means we’re prepared to put the capital we’ll save from this tax cut to
A large but unmentioned long-term work. This legislation comes at the
challenge is how the courts will inter- perfect time. I see companies preparpret provisions that are challenged ei- ing to hire and expand, my own included. We’ll use our savings to hire
ther by taxpayers or the IRS. There is
usually a very long legislative history, and invest in new projects. Roughly
70% will go to my employees, bedeveloped during debate of major tax
legislation, which guides all stakehold- cause American companies invest in
the future.
ers in tax administration and taxpayTax cuts, this bill included, aren’t
ers.
trickle-down but expansion economWithout understanding what the
ics. In 1962, President Kennedy argued
Congress intended when it developed
his tax plan would lift all boats. He
a specific provision in the law, it is
knew that if entrepreneurs had the inwide open to interpretation. The lack
of legislative history will make the ad- centive to risk, create and build, everyone would benefit. Growth hit 5.8%
ministrator’s job extremely difficult
in 1964, the year JFK’s last tax cut was
signed into law, and 6.5% the next. It’s
going to happen again. Just wait.
TODD HITT
Falls Church, Va.
I share the same concern as Ilya Shapiro in his op-ed “Another Escalation in
the Judicial War” (Dec. 18) that “Americans will follow the politicians’ lead and
think of judges in increasingly partisan
terms,” and I agree that it’s “not
THE WALL STREET JOURNAL
healthy for an independent judiciary.”
One obvious solution is for the Supreme
Court to render fewer 5-4 partisan decisions that so obviously confer electoral
and financial benefit on the GOP and its
corporate benefactors, and so often violate judicial norms to deliver the goods.
Note to emperor: Wear clothes.
SEN. SHELDON WHITEHOUSE
Newport, R.I.
How to Keep the Supreme
Court From Partisanship
Pepper ...
And Salt
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THE WALL STREET JOURNAL.
Tuesday, December 26, 2017 | A15
OPINION
How to Defund the U.N.
This seemingly lopsided outcome
obscured a significant victory and
major opportunity for the president.
Thirty-five countries abstained, and
21 didn’t vote at all. Days earlier the
Security Council had endorsed similar language, 14-1, defeated only by
the U.S. veto. The margin narrowed
significantly once Mr. Trump threatened to penalize countries that voted
against the U.S. This demonstrated
once again that America is heard
much more clearly at the U.N. when it
puts its money where its mouth is.
(In related news, Guatemala announced Sunday it will move its embassy to Jerusalem, a good example
for others.)
While imposing financial repercussions on individual governments is
entirely legitimate, the White House
Ambassador Nikki Haley at the U.N. Security Council, Dec. 18.
should also reconsider how Washington funds the U.N. more broadly.
Should the U.S. forthrightly withdraw
from some U.N. bodies (as we have
from UNESCO and as Israel announced its intention to do on Friday)? Should others be partially or
totally defunded? What should the
government do with surplus money if
it does withhold funds?
Despite decades of U.N. “reform”
efforts, little or nothing in its culture
or effectiveness has changed. Instead,
despite providing the body with a disproportionate share of its funding, the
U.S. is subjected to autos-da-fé on a
regular basis. The only consolation, at
least to date, is that this global virtuesignaling has not yet included burning the U.S. ambassador at the stake.
Turtle Bay has been impervious to
reform largely because most U.N.
budgets are financed through effectively mandatory contributions. Under this system, calculated by a “capacity to pay” formula, each U.N.
member is assigned a fixed percentage of each agency’s budget to contribute. The highest assessment is
22%, paid by the U.S. This far exceeds
other major economies, whose contribution levels are based on prevailing exchange rates rather than purchasing power parity. China’s
assessment is just under 8%.
Why does the U.S. tolerate this? It
is either consistently outvoted when
setting the budgets that determine
contributions or has joined the “consensus” to avoid the appearance of
losing. Yet dodging embarrassing
votes means acquiescing to increasingly high expenditures.
The U.S. should reject this international taxation regime and move instead to voluntary contributions. This
means paying only for what the country wants—and expecting to get what
it pays for. Agencies failing to deliver
will see their budgets cut, modestly
or substantially. Perhaps America will
depart some organizations entirely.
This is a performance incentive the
current assessment-taxation system
simply does not provide.
Start with the U.N. Human Rights
Council. Though notorious for its
anti-Israel bias, the organization has
never hesitated to abuse America.
How many know that earlier this year
the U.N. dispatched a special rapporteur to investigate poverty in the
U.S.? American taxpayers effectively
paid a progressive professor to lecture them about how evil their country is.
The U.N.’s five regional economic
and social councils, which have no
concrete accomplishments, don’t deserve American funding either. If nations believe these regional organizations are worthwhile—a distinctly
dubious proposition—they are entirely free to fund them. Why America is assessed to support them is incomprehensible.
Mr. Bolton is a senior fellow at the
American Enterprise Institute and the
author of “Surrender Is Not an Option: Defending America at the United
Nations and Abroad” (Simon &
Schuster, 2007). He served as U.S.
ambassador to the U.N., 2005-06.
Save the Veterans Choice Program
V
A worthy VA reform
becomes hostage to the
debate over government’s
role in health care.
driven medical care nationally toward smaller, locally based outpatient clinics. For many veterans, the
VA’s large medical facilities are hard
to navigate, bureaucratically complex
and inconvenient to visit.
Politics is partly to blame, but a
bit of nostalgia on the part of veterans service organizations is another
culprit. VSOs have traditionally seen
their role, at least in part, as protecting veterans from bureaucratic neglect. In the past, their actions were
often directed against the VA. But the
VA is now the most visible expression
of the government’s recognition of
veterans’ service and sacrifices. That
symbolism influences VSOs to act as
guard dogs of the VA’s prestige,
which now seems tied to its physical
footprint.
The realities of the changing veteran population, however, will force
a change to that footprint because of
the small size of the all volunteer
force. World War II veterans are dying at a rate of 362 a day. Already,
Gulf War-era veterans are supplant-
no
eterans have become a political
football in the national debate
over government’s role in
health care. In 2014 President Obama
signed the Veterans Access, Choice
and Accountability Act, giving a select number of veterans access to private medical care. Prompted by the
scandal over veterans’ deaths due to
appointment wait times, the bill received bipartisan support. Veterans
Affairs Secretary David Shulkin has
been working on a new, streamlined
Veterans Choice Program since taking
office earlier this year.
But it hasn’t gone smoothly. The
House this summer initially failed to
pass a funding increase to keep the
program afloat, holding it hostage to
a different debate about the role of
government in health care generally.
Last week Congress passed an additional $2 billion, but a long-term fix
still awaits.
The program needs additional
money because its popularity depleted the allocated funds more
quickly than anticipated. Patient visits through the program increased
more than 30% in the first quarter of
fiscal year 2017, according to the VA.
Yet Democrats and several veterans
service organizations oppose further
investment in the program, arguing
that it’s a first step toward privatizing the VA. They demand that funding for VA health-care programs for
veterans outside of VA facilities be
predicated on additional funding for
VA’s in-house care capacity.
Mr. Shulkin and the Republican
chairmen of the Senate and House
Veterans Affairs Committees deny that
the VA Choice program is a backdoor
way to privatization. They say they
simply want to modernize the VA.
Many service organizations and Democratic lawmakers have the same goal.
But modernization requires flexibility—creating the ability for veterans to find the best fit for their needs
from a range of options. Medical advances, convenience and cost have
n-
By Rebecca Burgess
And Jeff Cleland
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By Andy Biggs
Y
ou may be wondering why the
House had to approve the taxreform bill twice last week—
before and after the Senate vote—
even though a committee had
resolved all differences between the
bodies. Your confusion is justified.
Originally each chamber passed a
different tax plan. A committee of
representatives and senators overcame the differences and produced a
compromise bill. The House voted
for the compromise and sent it to
the Senate. But before the Senate
could vote on the agreement, an unelected official required that some
agreed-upon provisions be removed.
Yes, Senate reconciliation rules
require that elected senators submit
their work to an unelected bureaucrat, the Senate parliamentarian, before they can vote on the legislation.
The “Byrd rule,” as it is called,
causes strange contortions as Congress attempts to make law. As one
The upper chamber’s
unelected parliamentarian
forced the House to vote
twice on tax reform.
former representative said, “It forces
us to try to fit 10 pounds of flour
into a 1-pound sack.” He’s right. If
the House is always constrained by
the Byrd rule, we will never be able
to straighten out the mess in Washington and keep the promises we
made to the American people.
The Byrd rule is an enigmatic
statute that governs the contents of
any legislation produced to reconcile
a budget bill. The House and Senate
leadership decided we would use the
reconciliation process for tax reform
because it requires only 51 votes to
pass in the Senate. Any other way
requires 60 votes.
But is the Senate parliamentarian
the final arbiter on all legislation in
the reconciliation process? Not really. There is no language in the statute granting such power to the Senate parliamentarian. The law doesn’t
mention the parliamentarian at all.
The parliamentarian is supposed to
be an expert on all Senate rules. The
current parliamentarian was recommended by former Democratic
Leader Harry Reid. She is, as a fellow
representative told me, “the great Oz
on all things ‘Byrd rule.’ ”
Although the Constitution allows
the Senate to make its own rules,
those rules have to be consistent
with the Constitution. Allowing an
unelected official to regulate the
flow and content of legislation deprives Americans of their fundamental right to representation, undermining
America’s
republican
government.
The first part of the law requires
that the content of a reconciliation
bill meet byzantine parameters, but
the ultimate authority on whether
the reconciliation bill meets the Byrd
test is not the Senate parliamentarian. As with all self-regulating legislative bodies, the Senate itself is the
final judge. It can limit itself by
amending rules, suspending rules,
changing or deleting rules. In this
case, it could make a statutory
change.
A constitutionally sound process
would bypass the parliamentarian altogether, and give each U.S. senator’s
vote its full value. Under the Byrd
rule, the process might look something like this:
After we pass the bill out of the
House, it would proceed through the
Senate. Once it reaches the floor, the
Democrats would make a motion
that the bill was not an appropriate
reconciliation vehicle because it does
not comply with the Byrd rule. The
Senate parliamentarian might opine
that she does not believe that the
bill complies with Byrd. The presiding officer of the Senate would simply deny the Democrats’ motion.
The Democrats would then appeal
the ruling of the presiding officer to
the full Senate. To overturn the ruling requires a majority of those
present and voting. The Democrats
would be unable to cobble together
the votes among themselves, so their
invocation of the Byrd rule would be
defeated.
Some claim treating the Byrd rule
in the manner I’ve described would
harm the institution of the U.S. Senate. I believe it is time to shake up
the old order and start to deconstruct institutions and rules that
are destructive to the constitutional
order of individual freedom, which is
what made America great.
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A few of its agencies do
useful work. American
taxpayers shouldn’t pay
for the many that don’t.
DREW ANGERER/GETTY IMAGES
A
s an assistant secretary of
state in the George H.W.
Bush administration, I
worked vigorously to repeal a hateful United Nations General Assembly resolution
equating Zionism with racism. Foreign diplomats frequently told me the
effort was unnecessary. My Soviet
counterpart, for example, said Resolution 3379 was only a piece of paper
gathering dust on a shelf. Why stir up
old controversies years after its 1975
adoption?
We ignored the foreign objections
and persisted because that abominable resolution cast a stain of illegitimacy and anti-Semitism on the U.N.
It paid off. On Dec. 16, 1991, the General Assembly rescinded the offensive
language.
Now, a quarter-century later, the
U.N. has come close to repeating Resolution 3379’s original sin. Last week
the U.N. showed its true colors with a
128-9 vote condemning President
Trump’s recognition of Jerusalem as
Israel’s capital.
Next come vast swaths of U.N. bureaucracy. Most of these budgets
could be slashed with little or no
real-world impact. Start with the Office for Disarmament Affairs. The
U.N. Development Program is another
example. Significant savings could be
realized by reducing other U.N. offices that are little more than selflicking ice cream cones, including
many dealing with “Palestinian”
questions. The U.N. Relief and Works
Agency for Palestine Refugees could
be consolidated into the U.N. High
Commissioner for Refugees.
Many U.N. specialized and technical agencies do important work, adhere to their mandates and abjure international politics. A few examples:
the International Atomic Energy
Agency, the Food and Agriculture Organization and the World Health Organization. They shouldn’t be shuttered, but they also deserve closer
scrutiny.
Some will argue incorrectly that
unilaterally moving to voluntary contributions violates the U.N. Charter.
In construing treaties, like contracts,
parties are absolved from performance when others violate their
commitments. Defenders of the assessed-contribution model would
doubtless not enjoy estimating how
often the charter has been violated
since 1945.
If the U.S. moved first, Japan and
some European Union countries
might well follow America’s lead.
Elites love the U.N., but they would
have a tough time explaining to voters why they are not insisting their
contributions be used effectively, as
America has. Apart from risking the
loss of a meaningless General Assembly vote—the Security Council vote
and veto being written into the Charter itself—the U.S. has nothing substantial to lose.
Thus could Mr. Trump revolutionize
the U.N. system. The swamp in Turtle
Bay might be drained much more
quickly than the one in Washington.
ly
.
By John Bolton
The Senate’s
‘Byrd Rule’
Undermines
Democracy
William Lewis
Chief Executive Officer and Publisher
DOW JONES MANAGEMENT:
Mark Musgrave, Chief People Officer;
Edward Roussel, Innovation & Communications;
Anna Sedgley, Chief Operating Officer;
Katie Vanneck-Smith, President
OPERATING EXECUTIVES:
Ramin Beheshti, Product & Technology;
Jason P. Conti, General Counsel;
Frank Filippo, Print Products & Services;
Steve Grycuk, Customer Service;
Kristin Heitmann, Transformation;
Nancy McNeill, Advertising & Corporate Sales;
Christina Van Tassell, Chief Financial Officer;
Jonathan Wright, International
DJ Media Group:
Almar Latour, Publisher;
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Professional Information Business:
Christopher Lloyd, Head;
Ingrid Verschuren, Deputy Head
ing Vietnam-era veterans as the largest cohort. This presents VSOs with
an opportunity to spearhead VA reform efforts with a renewed focus on
VA’s purpose—enabling care for the
veteran.
Ultimately, events will force Congress to decide what type of vehicle
for care the VA can reasonably be
asked to maintain. The VA’s health
system can be a Crown Victoria or a
Ferrari, but it can’t be Jay Leno’s entire garage. The veterans health-care
system was never intended to be a
universal system.
Rep. Mark Takano (D., Calif.) argued on the House floor in July that
it’s a “mistaken belief that the private
sector is better equipped to care for
our nation’s veterans than specialized
VA doctors.” But while the VA provides high-quality specialized care in
certain areas, for the most part veterans’ needs are similar to everyone
else’s. A veteran’s heart functions no
differently because of his service, nor
do veterans suffer from special veteran strains of flu unknown to civil-
ians. Such assumptions only further
segregate the veteran from the civilian population, harming veteran integration back into society.
VA Choice legislation has effectively become a proxy battle in the
larger war over the fate of ObamaCare and the government’s general
role in health care. To tackle VA
health-care reform effectively, lawmakers and advocates ought to uncouple VA reform from that debate
and focus instead on what makes the
most sense for veterans today.
The sea of goodwill toward veterans is a sea change from the opprobrium veterans once faced coming
home from Vietnam. But good intentions are not enough. What should
matter is delivering the best care and
the best access reasonably possible
to those who have served.
Ms. Burgess manages the Program
on American Citizenship at the American Enterprise Institute. Mr. Cleland,
a retired Marine corporal, is a veterans advocate.
I, Robot Trump
By Michael Taube
D
onald Trump just got a robot
counterpart, and it’s almost
as controversial as the man
himself. Walt Disney World’s Hall of
Presidents includes a show featuring animatronic figures of every
U.S. president. Starting with Bill
Clinton in 1993, Disney has recorded the sitting president making
an original address.
Robot Trump, which made its debut last week, takes the oath of office, then gives a short speech:
“These are the achievements of the
American spirit—the spirit of a
people who fought and died to
bring the blessings of liberty to all
our people. Above all, to be an
American is to be an optimist, to
believe that we can always do better and that the best days of our
great nation are still ahead of us.
It’s a privilege to serve as the president of the United States, to stand
here among so many great leaders
of our past, and to work on behalf
of the American people.”
Pretty anodyne—but not to Mr.
Trump’s legion of detractors, who
took to Twitter to mock the Disney
version. “The best part of Donald
Trump being in Disney’s Hall of
Presidents will be when they remove him from the Hall of Presidents and put him in the Pirates of
the Caribbean ride’s jail,” Chicago
Tribune columnist Rex Huppke
tweeted. Movie producer John Co-
hen: “Trump robot in the Hall of
Presidents looks like a 71-year-old
Chucky doll.” To CAFE.com host
Matt Binder, “all the other presidents in Disney’s new Hall of Presidents look like they can’t believe
Donald Trump is president either.”
Others mocked the robot’s appearance and the human Mr.
Trump’s misbehavior. “I’m not saying Disney made a Hillary robot and
last minute changed it into Trump
clothes but—” tweeted TV producer
Jesse McLaren. Comedian Abby
Crutchfield: “Disney gets extra
points if the Trump statue’s speech
is just the audio from Access Hollywood.” TV writer Jess Dweck
tweeted: “Imagineer 1: “How do we
capture Trump’s essence for the
Hall of Presidents?” Imagineer 2:
“We’ll show him greeting a female
employee.”
The real Mr. Trump fights back
against detractors through his (and
their) favorite medium, Twitter.
What if Robot Trump figures out a
way to do the same thing? I can see
it now.
@realRobotDonaldTrump: Having finished my #covfefe, I’ve read
the false tweets about me. Sad!
MAKE ANIMATRONICS GREAT
AGAIN!
Mr. Taube, a Troy Media syndicated columnist and political commentator, was a speechwriter for
former Canadian Prime Minister
Stephen Harper.
Mr. Biggs, a Republican, represents Arizona’s Fifth Congressional
District.
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 | Tuesday, December 26, 2017
WORLD NEWS
U.S. Signals Tougher Stance on Ukraine
Trump authorizes
antitank weapons for
Kiev to deter Russian
support for separatists
Government forces shelled the separatist-held city of Yasynuvata in eastern Ukraine last week. Russia has backed the separatists.
MOSCOW—Russian opposition leader Alexei Navalny
threatened protests and called
for a nationwide boycott of
next year’s presidential election
after officials Monday ruled him
ineligible to run against Presi-
dent Vladimir Putin.
“We are declaring a voters’
strike,” said Mr. Navalny, 41
years old, in a video released
after the Central Election Committee said it would bar him
from the March election. Voting
“now is voting for lies and corruption,” he said.
He said on Twitter he would
use his support in Russia’s bigger cities to organize protests
tance, reasoning such a step
wouldn’t determine the outcome of the fighting while
provoking Russia to step up its
military involvement.
What action Mr. Trump
might take remained unclear
until Congress was notified
Friday that the Javelins would
be sent. That decision, re-
against the decision.
The election officials’ decision was widely expected, but
Mr. Navalny took the formal
step of declaring his candidacy
Sunday when he gathered
nearly 16,000 voters in 20 cities across the country to express their support for him.
Russian voting laws demand at
least 500 supporters gather in
one place to nominate a candi-
date.
Mr. Navalny rose to prominence during the protests of
2011-12, when tens of thousands of Muscovites took to
the streets to protest the beginning of Mr. Putin’s third term
as president. The politician still
has street-level support among
opposition-minded Russians
across the country.
—Thomas Grove
ported by The Wall Street
Journal, was recommended by
State Department and Pentagon officials earlier this year.
It came in the wake of an
earlier move that also rankled
Moscow. In November, the
State Department announced
that it had approved the sale
of Javelin missiles to Georgia,
ly
.
Thwarted Navalny
Warns of Backlash
co Fo
m rp
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er rs
ci on
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e
on
WASHINGTON—President
Donald Trump’s decision to
provide Javelin antitank missiles to Ukraine reflects the
broad assessment of his national security advisers that
the shipment of defensive lethal arms is needed to raise
the cost to Russia of its military intervention in the conflict-ridden country and provide the West with fresh
leverage in negotiations over
its future.
But the decision is also
noteworthy for those trying to
divine where the White House
may be headed in its policy toward the Kremlin. While Mr.
Trump has talked about improving relations with Russian
President Vladimir Putin, he
went along with aides who see
Moscow as a revisionist power
that is prepared to upend the
post-Cold War order.
Russian officials assailed
the move, which Deputy Foreign Minister Sergei Ryabkov
said will encourage Ukraine to
undertake “new acts of bloodshed.” Ukrainian President
Petro Poroshenko applauded
the decision and insisted the
arms would be used for defensive purposes.
The question of whether to
provide lethal aid to Ukraine
was debated following Russia’s
seizure in 2014 of Crimea, its
support for separatists in eastern Ukraine and its deployment of Russian military
forces there. President Barack
Obama, eventually decided
against providing lethal assis-
KRAVCHENKO ALEXANDER/TASS/ZUMA PRESS
BY MICHAEL R. GORDON
another former Soviet Republic whose territory has been
partially occupied by Russiabacked separatists and Russian troops.
Philip Breedlove, a retired
Air Force general who served
as the NATO commander from
2013 to 2016, said he supported the decision to provide
Ukraine with the Javelin missile but added that it would
have been better to send the
missiles years earlier, both to
signal U.S. determination to
oppose Moscow’s intervention
and because Russian armor
was especially active then in
eastern Ukraine.
“It will be effective, but it
might have been more effective
had we done this much earlier,”
he said in an interview.
Neither Gen. Breedlove nor
other experts who support the
decision argue the Javelins
will decisively shift the balance of power in the conflict.
Rather, their contention is that
providing the weapons might
deter the Russians from making additional military moves
in Ukraine.
“The Javelin does further
deter them because it presents
a greater risk of casualties and
loss of tanks if they were to
use them in a new offensive,
and Putin is sensitive to casualties,” said Alexander Vershbow, the deputy secretary-general of NATO from 2012 to
2016.
With Mr. Putin running for
re-election and playing to nationalist sentiment at home,
the prospects for a diplomatic
breakthrough in the next several months are bleak, in the
view of many experts. Voting
is scheduled for March 18, the
day when Russians celebrate
the annexation of Crimea.
—Thomas Grove in Moscow
contributed to this article.
Russia NuclearPlantWorriesEurope Argentina Puzzles
Foreign Airlines
BY JULIAN E. BARNES
AND EMRE PEKER
BY TAOS TURNER
SERGEI GAPON/AGENCE FRANCE-PRESSE/GETTY IMAGES
n-
The Ostrovets nuclear project, seen under construction in October, is 30 miles from Lithuania’s capital.
monopoly. A spokesman for the
company dismissed Lithuanian
warnings that the Belarus nuclear plant represents a hybrid
threat as “a patently bogus
claim which doesn’t stand up
to basic scrutiny.”
“The project meets the
highest safety standards,” the
Rosatom spokesman said.
Lithuanian officials, however,
are ringing alarm bells against
the backdrop of Russia’s assertiveness across the globe.
European officials are divided over the potential threat
from the Ostrovets plant. Rosatom has projects around Europe, including nuclear-power
plants under construction in
Hungary and Finland. Accidents
are bad for business, even false
alarms, energy experts say.
“They’re not building a
ticking time bomb,” a European official said. “But, you
will never satisfy the Lithua-
no
BRUSSELS—Power politics
between Russia and the rest of
Europe are once again raising
a question that dogged strategists throughout the Cold War:
Where is the line between prudence and paranoia?
Russia, which for years has
used its vast supply of natural
gas as a political lever with energy-hungry Europe, is building
a nuclear-power plant in Moscow-friendly Belarus. Neighboring Lithuania and Poland are so
determined to escape Russia’s
clutch that they refused to buy
electricity from the plant.
Still, the $11 billion Ostrovets nuclear-power project,
30 miles from Lithuania’s capital, Vilnius, is fueling fears in
the Baltic republic. Lithuanians say they don’t think
Moscow would actually trigger
a nuclear accident but they do
worry about a panic-inducing
warning of a leak—real or not.
“Even a fake message about
the disaster could trigger a lot
of damage to our country,”
said Lithuanian President Dalia
Grybauskaitė. “We treat this as
a national security threat.”
Evacuating Vilnius would be
massively disruptive, lower
the country’s defenses, and increase its vulnerability to potential covert action by Russia.
Lithuania has briefed fellow
North Atlantic Treaty Organization members, arguing Moscow has demonstrated it can
effectively use nontraditional
military techniques to destabilize its neighbors.
Belarusian authorities didn’t
respond to requests to comment, while Russian officials
referred questions to Rosatom,
Russia’s state-owned nuclear
100 miles
ESTONIA
100 km
RUSSIA
LATVIA
LITHUANIA
Ostrovets Nuclear
Power Project
RUS. Vilnius
POLAND
Neris R.
Minsk
BELARUS
UKRAINE
THE WALL STREET JOURNAL.
nians, they simply don’t want
the project.”
But European Union and
NATO officials see a different
kind of threat from the plant.
They say the project is an attempt by Moscow to maintain
its neighbors’ energy dependence. The EU is trying to help
Poland and the Baltic states cut
ties to Russia’s energy grid.
Conventional nuclear risks
such as radioactive contamination also feed Lithuanian fears.
Some 75% of its capital region’s drinkable water comes
from the Neris River that runs
by the Ostrovets plant and
through Vilnius.
Belarusian and Russian officials argue Russia’s interest in
European energy is about economics, not threats. The International
Atomic
Energy
Agency has said Belarus has
shown a strong commitment to
safety standards.
Officials from the EU and its
members have said the bloc can
do little beyond demanding
strict adherence to international accords and regulations.
Belarus has agreed to cooperate with the EU and the IAEA.
The bloc will review Belarus’s
stress test, visiting Ostrovets in
March and unveiling its findings in June, an EU official said.
WORLD WATCH
VATICAN
Pope Urges End to
Middle East Conflict
Pope Francis used his traditional Christmas Day message to
call for a negotiated end to the
Israeli-Palestinian conflict, including the dispute over the status of
Jerusalem, days after the United
Nations rebuked the U.S. for unilaterally recognizing the city as Israel’s capital.
Speaking from St. Peter’s Basilica to around 50,000 people,
the pope prayed for “peace for
Jerusalem and for all the Holy
Land” in the form of “two states
within mutually agreed and inter-
nationally recognized borders.” He
also praised “all those in the international community inspired by
good will” to bring “harmony, justice and security” to the region.
The pope’s message is traditionally a survey of the globe’s
troubled regions. This year, Pope
Francis focused on children in
countries suffering from the
“winds of war” and an “outdated
model of development [that] continues to produce human, societal
and environmental decline.”
Pope Francis voiced hopes for
resumption of a “serene dialogue”
in Venezuela, where children have
been dying of starvation amid an
economic crisis.
—Francis X. Rocca
NORTH KOREA
Down Time
PERU
Pyongyang Calls U.N. Jailed Ex-President
Sanctions a Blockade Fujimori Is Pardoned
North Korea called the latest
United Nations sanctions targeting the country for its ballistic
missile test “an act of war” that
violates its sovereignty. The foreign ministry said in a statement the sanctions are tantamount to a “complete economic
blockade” of North Korea.
“If the U.S. wishes to live
safely, it must abandon its hostile policy and...wake up from its
pipe dream of our country giving
up nuclear weapons,” it said.
—Associated Press
BUENOS
AIRES—Argentina’s pro-business President
Mauricio Macri is inviting lowcost airlines to invest in Argentina’s uncompetitive airtravel market, as long as they
do something they do nowhere
else: keep their prices high.
That caveat is baffling not
only to the companies, but
also to the many Argentines,
like 61-year-old Luís Segato,
who badly want to see more
domestic flights in the world’s
eighth-largest nation.
“Argentina is the strangest
country in the world. We are
capitalist in our rhetoric but
communist in our practices,”
said the Buenos Aires resident,
who mostly uses buses to
travel around the country
training firefighters. “How
else can you explain why a
pro-market government would
tell airlines how much they
can charge for tickets?”
Mr. Macri has slashed taxes,
subsidies and red tape in an
effort to make Argentina more
attractive to investors. But
when it comes to air travel
and many other problematic
zones of the economy, he has
run into hard political realities. The powerful unions, secure in a long tradition of
state protection that reaches
back to the 1940s, often resist
change.
The Macri administration
has given Norwegian Air Argentina and Flybondi, a local
startup, approval for new
flights to scores of cities at
lower fares—but not too low.
The newcomers say they could
offer seats like those sold in
Europe for as little as $15—a
quarter the cost of a typical
13-hour bus ride—if Mr. Macri
would only let them.
The reason he isn’t, government officials and industry executives say, is that allowing
low-cost carriers to compete
too freely might destroy busdriver jobs and hurt dominant
carrier Aerolíneas Argentinas,
a state-run behemoth with
about 12,000 employees.
“It seems a bit crazy that in
a country that’s suffering from
inflation you’ve got a company
that wants to lower prices and
isn’t allowed to,” said Julian
Cook, chief executive of Flybondi, which aims to begin offering domestic and international flights next year.
“If they let these low-cost
carriers in it will be raining
cadavers,” said Pablo Biró,
head of the pilots union,
claiming budget airlines
wouldn’t invest properly in
maintenance.
Bus-driver unions also fear
the worst. Roberto Fernández,
head of the UTA transportation workers union, says budget airlines would deprive
long-distance buses of passengers, killing up to 10,000
ground-transportation jobs.
“Macri needs to tell me where
those people are going to find
work,” Mr. Fernández said.
But carriers like Norwegian
see opportunity in Argentina,
which has Latin America’s biggest middle class but where
people are only half as likely
to fly as residents of countries
with similar incomes, according to Aeropuertos Argentina
2000, which runs 35 airports
in Argentina.
Former Peruvian President Alberto Fujimori received a humanitarian pardon about halfway
through a 25-year prison sentence for human-rights abuses
and corruption during his authoritarian regime in the 1990s.
President Pedro Pablo Kuczynski said he granted the pardon due to Mr. Fujimori’s deteriorating health. Mr. Fujimori has
said he suffers from arrhythmia
and has received treatments for
cancer of the mouth.
—Ryan Dube
Required hours of resting time for flight crews*
36
Argentina
18
Peru
18
Chile
17
Ecuador
17
Colombia
14
U.S.
Brazil
12
Uruguay
12
Paraguay
12
Bolivia
12
EU
12
Guyana
Venezuela
12
11
*After a flight time of 8.5 hours, crossing 5 time zones to the east
Source: Andy Ricover, transportation-industry expert
THE WALL STREET JOURNAL.
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: SEQUOIA HOPES TO CREATE $5 BILLION VC FUND B4
BUSINESS & FINANCE
© 2017 Dow Jones & Company. All Rights Reserved.
Last Week: S&P 2683.34 À 0.28%
THE WALL STREET JOURNAL.
* * * *
S&P FIN À 0.80%
S&P IT g 0.23%
DJ TRANS À 2.71%
WSJ $ IDX g 0.33%
Tuesday, December 26, 2017 | B1
LIBOR 3M 1.686 NIKKEI 22902.76 À 1.55%
Tax Plan Likely to Boost Dollar
Repatriation of profits
is expected to bolster
the currency—but how
long will rally last?
BY IRA IOSEBASHVILI
A provision of the tax overhaul is expected to release a
tide of U.S. corporate cash
from abroad, a development
likely to jolt the dollar and reverberate throughout financial
markets early next year.
Companies could bring back
as much as $400 billion, according to one estimate, as
they take advantage of a onetime cut for repatriation of
earnings and cash held overseas written into the GOP tax
overhaul. That typically requires them to sell foreign
holdings and buy assets denominated in dollars, which
could boost the U.S. currency.
Gauging the dollar’s trajectory is crucial to both investors and corporations. The
currency’s climb over the past
several years has been blamed
for pressuring profits among
U.S. multinational companies
and making exporters’ goods
less competitive abroad.
Its trajectory also influences prices for raw materials
like oil, copper and gold,
which are denominated in dollars and become more expen-
sive to foreign investors when
the dollar rises.
Many investors expected the
dollar to strengthen in 2017,
boosted by the Trump admin-
$400B
Estimate of how much cash
U.S. companies will bring home
istration’s fiscal-stimulus and
infrastructure-spending
pledges. Instead, the currency
as of Friday had fallen nearly
7% against its peers, as key
White House initiatives stalled.
“There should be some kind
of boost to the dollar” from the
tax plan, said Lee Ferridge, head
of macrostrategy for North
America at State Street Global
Markets. “But I will be using
that as a selling opportunity.”
Some analysts said such a
rally could mark a climax for
the dollar’s nearly seven-yearlong bull market, as monetary
policy begins to tighten in
other developed economies.
Many expect more central
banks around the world to
start unwinding nearly a decade of postcrisis stimulus
measures in 2018, a process
already under way in the U.S.
As central banks begin nor-
malizing interest-rate levels,
the dollar may become less
appealing to some investors,
who for years had sought U.S.
assets because they offered
yields that were high compared with other developed
economies.
Bank of America Merrill
Lynch, BNP Paribas and RBC
Capital Markets all believe
the dollar will start 2018
stronger, according to forecasts released in the last several weeks. Out of those banks,
however, only analysts at RBC
predict the currency will hold
Please see DOLLAR page B2
Heard on the Street: Advice
on corporate tax cuts......... B10
Drug
Prices
Soar
Without
Generics
BY PETER LOFTUS
Since 2013, the price of a
40-year-old, off-patent cancer
drug in the U.S. has risen 15fold, putting the life-extending
medicine out of reach for
some patients.
Introduced in 1976 to treat
brain tumors and Hodgkin
lymphoma, lomustine has no
generic competition, giving
seller NextSource Biotechnology LLC significant pricing
power.
The U.S. Food and Drug Administration is seeking to encourage more competition for
drugs like lomustine, one of at
least 319 drugs for which U.S.
patents have expired but
which have no generic copies,
according to a list the agency
published this month.
The FDA says it will speed
up review of any applications
to market generic copies of
the drugs on its list, as part of
a broader effort to encourage
lower drug prices.
An FDA spokeswoman said
the agency has received inquiries from several companies
about products on the list, but
that it is too soon to gauge
overall interest in the products.
But as the 1,400% price rise
with lomustine shows, attracting generic competition to
some older drugs can be hard
to pull off.
For many years, lomustine
was marketed under the brand
name CeeNU by Bristol-Myers
Squibb Co., which charged
about $50 a capsule for the
highest dose, before selling
the product in 2013.
Now, the same capsule
costs about $768, after nine
price increases by a littleknown Miami startup, NextSource, which supplies lomustine in a deal with the drug’s
new owner, manufacturer
CordenPharma.
NextSource, which rebranded the drug as Gleostine,
most recently raised the price
by 12% in November, on the
heels of a 20% increase in August, according to analyses
drug-price tracker Truven
Health Analytics and Elsevier
performed for The Wall Street
Journal. Prices also have increased significantly for other
doses of the drug.
Robert DiCrisci, chief executive of NextSource, said in a
statement the company bases
its pricing on product-development costs, regulatoryagency fees, and the benefit
Please see DRUG page B2
DANIEL ACKER/BLOOMBERG NEWS
co Fo
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ly
.
UPS Presses Its Entire Army Into Service
See more at WSJMarkets.com
RUSH JOB: The package deliverer turned to hundreds of its accountants, marketers and other staff to help meet the crush of holiday shipments. B3
Bitcoin Catches U.S. Regulators Off Guard
no
WASHINGTON—Investors
are frantically trying to learn
everything they can about bitcoin—and so are regulators.
Furious trading in cryptocurrencies is testing many in
the Trump administration who
are eager to embrace financial
innovation, after nearly a decade of tighter clamps on risktaking put in place after the
2008 financial crisis.
The Commodity Futures
Trading Commission, the
agency with closest oversight
of bitcoin trading, began the
year by launching an in-house
lab to encourage advances in
blockchain, the technology
that underpins digital currencies. Yet the regulator recently
sounded an alarm on bitcoin
itself, noting most exchanges
are completely unregulated
while the cryptocurrency is
prone to wild price swings and
potential flash crashes.
The CFTC has labeled bitcoin a commodity, but as with
other commodities, the agency
mostly lacks jurisdiction over
the primary market. It regulates corn futures contracts
but not the buying and selling
of corn itself, for instance. As
n-
BY DAVE MICHAELS
AND GABRIEL T. RUBIN
Blood-Testing Firm
Gets Financial Lifeline
BY JOHN CARREYROU
The embattled Silicon Valley blood-testing company
Theranos Inc. told its investors last week that it has secured a $100 million loan from
Fortress Investment Group
LLC, averting for now a possible bankruptcy filing as its
remaining cash dwindled.
The loan is “subject to
achieving certain product and
operational milestones,” Theranos’s founder and chief executive
officer,
Elizabeth
Holmes, told the company’s
shareholders in an email Friday evening that was reviewed
by The Wall Street Journal. A
spokeswoman for the company
declined to comment.
Theranos was once one of
Silicon Valley’s best-funded
startups, having raised a total
of $900 million at a peak valuation of $10 billion, but an investigation by the Journal that
raised questions about its
technology and practices sent
it into a downward spiral.
The Centers for Medicare
and Medicaid Services banned
Ms. Holmes from owning or
operating clinical laboratories
for two years. In addition, investors and former partners
sued Theranos, alleging fraud,
and the U.S. attorney’s office
in San Francisco and the Securities and Exchange Commission both launched investigations into the company.
Theranos has since settled
lawsuits brought by a San
Francisco hedge fund and by
its former retail partner, Walgreens Boots Alliance Inc., and
it has refunded all of its customers in Arizona under a
deal with the state’s attorney
general after it voided nearly a
million blood-test results.
But the Justice Department
and SEC probes are ongoing.
Theranos also still faces a lawsuit from two investors in California that seeks class-action
status, as well as a separate
suit brought by consumers in
Arizona also seeking class-action status.
In her email to investors Friday, Ms. Holmes said
Theranos was continuing to
Please see FUNDS page B2
a result, bitcoin exchanges
don’t have to tell participants
how they operate, such as
whether they offer preferential access to certain traders.
“A lot of people, retail traders in particular, have gotten
used to securities laws and
commodities laws protecting
them,” said Kipp Rogers, a former proprietary trader who is
now a blogger and researcher.
“And so they don’t just even
know what to be on guard for.”
The Securities and Exchange Commission faces challenges similar to the CFTC’s.
The SEC’s new chairman, Jay
Clayton, wants retail investors
INSIDE
AIRLINES DRAW
SCRUTINY
AS COSTS RISE
INDUSTRY FOCUS, B3
CREDIT UNIONS
SEEK MORE SAY
AT REGULATOR
BANKING, B8
to have better access to highreturn investments, which bitcoin and many of its digital
relatives provide.
But the SEC is cracking
down on initial coin offerings,
a fundraising vehicle that piggybacks off investors’ lust for
bitcoin and in some cases violates core investor-protection laws.
“There is clearly demand
for bitcoin investments, but
the regulators are struggling
with how to balance new tools
for capital formation with the
need for investor protections,”
said Michael Liftik, a partner
Please see BITCOIN page B8
Easy Come, Easy Go
Bitcoin performance this month
100%
90
80
70
60
50
40
30
20
10
0
December
Source: CoinDesk
THE WALL STREET JOURNAL.
HEARD ON THE STREET | By Anjani Trivedi
Risks Lurk in Emerging Markets
Emerging
markets had a
stellar 2017
and investors
are increasingly confident about the future. Amid
the euphoria, there are reminders about how quickly
these markets can turn bad.
Net capital inflows in
emerging markets are at
their highest in two years.
JPMorgan forecasts growth
across emerging countries to
reach 4.8% for the year,
mostly driven by domestic
demand. The asset class
seems better placed to withstand rising U.S. interest
rates than at the time of its
last major selloff in 2013, the
so-called taper tantrum.
Emerging-market stocks and
bonds are among the best assets globally on a total-return basis.
Even as U.S. interest rates
have risen, the gap between
yields on EM sovereign
bonds and U.S. Treasurys—
known as the spread—has
narrowed. Volatility has been
low. Investors have recently
allowed the likes of Pakistan
to raise billions worth of
debt, helping drive U.S. dollar debt issuance by emerging countries to a record this
year. Indonesia, which usually taps debt markets at the
beginning of the year, has
this month raised a total of
$4 billion, paying less than it
paid in July.
Amid all the merriment
however, credit ratings have
trended to their lowest level
since 2010, according to an
index created by the Institute
of International Finance. In
addition to sovereign downgrades for China, South Africa and Turkey, there were
43 corporate downgrades in
emerging markets in the
third quarter, compared with
16 upgrades, according to
S&P. The ratings trend suggests the agencies are still
worried about the sustainability of many emerging
countries’ high levels of debt
and ability to refinance it as
rates rise.
The supposedly gleaming
outlook could be muddied by
other as-yet unheeded factors. One of the biggest,
most unquantifiable risks of
emerging-market investing—
politics—is set for a big year.
At least 18 elections are
scheduled, including in
emerging-market giants like
South Africa and Indonesia.
The risk of unexpected
outcomes is high. As India
has witnessed this year, reformist governments can
slow economies far lower
than investors—or policy
makers—had expected. Then
there is the perennial question around China’s growth.
Investors have been comforted by factors like better
current accounts. But government balance sheets have
deteriorated and are in fact
weaker since 2013, judged by
metrics like their budget
deficits and debt levels.
There is also the looming
risk of high debt maturities
over the next three years.
The gains have been strong,
but investors shouldn’t become complacent.
For personal, non-commercial use only. Do not edit, alter or reproduce. For commercial reproduction or distribution, contact Dow Jones Reprints & Licensing at (800) 843-0008 or www.djreprints.com.
B2 | Tuesday, December 26, 2017
INDEX TO BUSINESSES
B
BNP Paribas................B1
Bristol-Myers Squibb . B1
C
H
Houzz...........................B4
I
Inditex.........................B3
INEOS Group Holdings
...................................B10
Instacart......................B4
J
J.C. Penney ................. A2
JetBlue Airways ......... B3
K
Keppel..........................B5
Keppel Offshore
& Marine...................B5
Kohl's .......................... A2
M
Cerberus Business
Finance......................B2
Cerberus Capital
Management.............B2
Criteo.........................B10
CSX..............................B5
D-F
Delta Air Lines ........... B3
Facebook....................B10
Fortress Investment
Group.........................B1
Macy's.........................A1
Mastercard
SpendingPulse..........A1
N-P
Neuberger Berman.....B2
NextSource
Biotechnology...........B1
Nike.............................A1
Nvidia........................B10
Pershing Square Capital
Management.............B8
Petróleo Brasileiro......B5
PGIM Fixed Income .... B2
Plank Industries ......... A1
Primark........................B3
R
RBC Capital Markets..B1
Rio Tinto ................... B10
Rosatom....................A16
S
Sequoia Capital...........B4
SoftBank Group..........B4
Southwest Airlines .... B3
Spirit Airlines ............. B3
Steinhoff International
Holdings....................B5
Stripe...........................B4
T
Theranos......................B1
U
Under Armour.............A1
United Continental
Holdings....................B3
United Parcel Service.B3
US Airways Group......B3
V-W
Valeant Pharmaceuticals
International.............B8
Virgin America............B3
Wal-Mart Stores........A2
INDEX TO PEOPLE
F-G
Fitzgerald, Brian.......B10
Foote, Jim...................B5
Fouilland, Benoit.......B10
Friedman, Henry S......B2
Gaut, Steve.................B3
H
Harrison, Hunter.........B5
Heller, Dean................B8
Hiley, Michael...........B10
Hoenig, Thomas..........B9
Holmes, Elizabeth ...... B1
I
Inderst, Andreas.........B3
J
Matz, Debbie...............B8
McNally, Robert........B10
McWatters, Mark.......B8
Metsger, Rick..............B8
Moore, Joseph .......... B10
Murphy, Ken................B5
S
Steves, Mitch............B10
Su, Lisa ..................... B10
Sumrall, Ashley .......... B2
Johnson, Craig ............ B3
U
K
Upton, Fred.................A3
W
Kaplan, Elizabeth ..... A10
M
Malloy, Dannel............A3
FUNDS
malformations in infants, with
the device.
Theranos recently got a
paper about the miniLab accepted for publication by the
scientific journal Bioengineering & Translational Medicine, but it doesn’t include
any data from small fingerstick samples—the technological advance Ms. Holmes
had once touted as revolutionary. Instead, the data are
based on blood samples obtained the traditional way,
with a needle in the arm, according to a person familiar
with the paper.
In May, Theranos announced in a press release
that it had hired Cass Grandone, a former Abbott Diagnostics executive, to head its
product development. Ms.
Holmes was quoted in the
press release as saying that
Mr. Grandone’s leadership
would be critical to the company. However, Mr. Grandone
resigned last month after just
six months on the job, according to a person familiar with
his departure.
Mr. Grandone declined to
comment.
To save money, Theranos
recently moved all of its employees and operations from
its pricey headquarters on
Page Mill Road in Palo Alto to
a manufacturing facility across
San Francisco Bay in Newark,
Calif.
no
Continued from the prior page
cooperate with the federal investigations but would defend
itself “vigorously” against the
investor and consumer class
actions.
The loan from Fortress is
collateralized by Theranos’s
patent portfolio and the deal
grants Fortress warrants for
4% of the company’s equity,
Ms. Holmes told investors in
her email. She said she anticipated the loan would provide
Theranos “sufficient liquidity
through 2018.”
One of Fortress’s specialties
is to invest in distressed assets. Earlier this year, the publicly traded private-equity firm
agreed to be acquired by
Japan’s SoftBank Group for
$3.3 billion.
After closing its laboratories in California and Arizona,
Theranos has refocused its
strategy on commercializing a
device called the miniLab that
miniaturizes various lab instruments and packs them
into one box. However, this
strategy requires getting the
box approved by the Food and
Drug Administration. For now,
the only application Theranos
is working on submitting to
the agency is for a test to detect Zika, the mosquito-borne
virus that causes severe brain
Warner, Mark..............B8
Wittner, Michael.......B10
Neuberger Berman
unit purchases a
minority interest in
the credit entity
BY MIRIAM GOTTFRIED
AND DAWN LIM
A unit of investment manager Neuberger Berman has
purchased a minority stake in
the credit business of Cerberus Capital Management
LP, betting on a firm with a
long history of lending to midsize companies.
The deal signed Friday
with Neuberger’s Dyal Capital Partners LP values Cerberus Business Finance at
about $2 billion, according
to people familiar with the
matter. Cerberus Business
Finance will use proceeds
from the sale to fund operations, to partially buy out
stakes held by its general
partners and to reward sev-
eral firm professionals, according to a letter sent to investors seen by The Wall
Street Journal.
Cerberus Business Finance
agreed to the transaction because Dyal’s valuation “represented very attractive multiples of management and
incentive fees,” the letter
states. The stake is passive,
meaning Dyal won’t have a
say over investment decisions.
There has been a boom in
nontraditional lending on Wall
Street in recent years as postcrisis regulations curtail
banks’ ability to do some deals
at a time of strong investor
demand for alternatives to
lower-yielding bonds and
loans.
Cerberus Capital is a private-equity firm with more
than $30 billion in assets that
specializes in distressed investing. The credit unit manages about $14 billion and is
something of a direct-lending
pioneer. Since its predecessor
entities were founded in 1995,
it has invested more than $25
billion in businesses that need
between $50 million and $500
million in financing. Most of
vestment opportunities in
Northern California and the
Pacific Northwest. In March,
the lender closed its latest
fund at $2.05 billion.
Neuberger Berman is an investment firm that managed
more than $280 billion across
stocks, bonds, private equity
and other strategies as of September.
Run by former Lehman
Brothers Holdings Inc. deal
makers Michael Rees and Sean
Ward, Dyal has carved out a
niche buying stakes in privateequity and hedge-fund managers. The strategy gives its own
investors access to the fees
typically reserved for firm
owners.
Earlier this year, Dyal took
a 10% stake in credit investor
TPG Sixth Street Partners. It
has also backed technology-focused firms Silver Lake and
Vista Equity Partners. In 2015,
it bought a 20% stake in activist hedge fund Jana Partners
LLC.
$2B
Value for Cerberus Business
Finance under the deal with Dyal
its borrowers are companies
owned by private-equity firms,
offering a spigot of repeat
business.
The unit’s chief executive,
Daniel Wolf, joined Cerberus
in 1997 after heading business
development at lender Congress Financial Corp.
On Thursday, Cerberus
Business Finance said it had
opened a San Francisco office
dedicated to finding new in-
DRUG
Continued from the prior page
the treatment delivers to patients. The company provides
discounts to uninsured patients and those with financial
limitations, he said.
The price increases after the
change in ownership are similar
to what some other companies
including Valeant Pharmaceuticals International Inc. and Turing Pharmaceuticals have done
in recent years.
Normally, rising prices for a
product should attract more
competition. But Rena Conti, an
assistant professor at the University of Chicago who studies
health policy, said generic-drug
makers have to carefully
choose which drugs to make
because there can be big entry
costs and time commitments
associated with obtaining regulatory approval and dedicating
manufacturing capacity.
“There still may be opportunities for entering other markets that would be more enticing to firms than this market,”
she said. Even for medicines
that have a generic version,
about 40% have only one generic supplier, according to a
study she co-wrote this year.
Many of the drugs on the
FDA’s list are for small patient
populations, and companies
may decide it isn’t worth the
investment to sell generic copies, said Chip Davis, president
and CEO of generic-industry
trade group Association for Accessible Medicines. He said the
FDA’s steps, however, could en-
co Fo
m rp
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er rs
ci on
al a
us l,
e
on
D
Davis, Chip..................B2
Donovan, Ryan............B8
Geddes, Tom...............A6
n-
C
Carter, David O...........B8
Chamberlain, Richard . B3
Clayton, Jay ................ B1
Cohen, Michael ......... B10
Conti, Rena ................. B2
Cerberus Arm Sells Stake
DOLLAR
Continued from the prior page
those gains into year-end.
There is less agreement
among analysts on how much
of the more than $1 trillion
U.S. companies are estimated
to have stashed abroad will be
converted into dollars under
the new tax law and what part
of that amount is already in
the U.S. currency. That makes
it difficult to gauge how the
tax bill will affect the dollar, or
what impact the repatriations
will have on the economy.
A tax-repatriation holiday
enacted under the administration of George W. Bush in late
2004 prompted companies to
bring in $312 billion, according
to the Internal Revenue Service.
The WSJ Dollar Index, which
measures the U.S. currency
against a basket of 16 others,
broke a yearslong downtrend to
rise nearly 13% in 2005, a move
analysts attributed to cash
flowing in the U.S. The S&P
500, which includes many multinationals, rose 3%—a smaller
gain than in either of the two
previous years.
This time around, repatriations could total between
$200 billion and $400 billion,
Bank of America Merrill Lynch
estimates. The firm expects
the euro to fall to $1.10
against the dollar in the first
quarter of 2018 from around
$1.1862 on Friday.
Atul Lele, chief investment
officer at Deltec International
Group, which oversees $5 billion, said repatriation will create demand for U.S. dollars,
driving the currency higher.
He also expects the tax cuts to
juice U.S. growth and stimulate inflation, inducing the
Federal Reserve to raise rates
at a faster clip. Higher rates
“This is simply price gouging,
period,” said Henry S. Friedman, a neuro-oncologist and
professor of neurosurgery at
Duke University School of Medicine. “People are not going to
be able to afford it, or they’re
going to pay a lot of money and
have financial liability.” He cowrote an editorial criticizing lomustine’s pricing in the Cancer
Letter newsletter in September.
Mallika Weant, a clinical
pharmacist in Duke’s brain-tumor clinic, said some of the
clinic’s patients have opted for
less-costly medications because they can’t afford lomustine. The doses are based on
body weight, and some patients must take multiple capsules, adding to the cost. Even
insured patients often have to
pay for a portion of their medicines out of pocket.
Andrea Gratzer of Denver,
N.C., said her husband Gary, a
patient at Duke, was prescribed Gleostine in September to treat a brain tumor. But
a representative from a specialty pharmacy for their
Medicare drug-benefit plan,
EnvisionRx, told them the outof-pocket costs would be
$2,815 for a 30-day supply, Ms.
Gratzer said. EnvisionRx didn’t
return a call seeking comment.
When Ms. Gratzer told her
husband, he said that was too
expensive, she said. She called
Duke, and a doctor changed
the prescription to another
drug, Temodar, that was more
affordable.
“We really can’t afford the
lomustine,” Ms. Gratzer said.
“That was the drug of choice.
He wouldn’t do it.”
Gary Gratzer, seated, was prescribed Gleostine to treat a brain
tumor but decided it was too expensive, said his wife, Andrea, right.
tice more companies to enter
markets for older drugs.
Lomustine isn’t widely prescribed. In 2015, the most recent year for which data were
available, Medicare Part D prescription-benefit plans paid
for 1,694 prescriptions in the
U.S., according to the Centers
for Medicare and Medicaid
Services. But because of the
price increase, Part D spending on the drug jumped to
about $608,000 in 2015 from
tend to boost the dollar, as
they make the U.S. currency
more attractive to investors
seeking yield.
Mr. Lele owns shares of U.S.
financials such as Citigroup
Inc. and Wells Fargo & Co.,
which he believes will benefit
from stronger growth. He has
also increased his dollar holdings to counterbalance assets
he owns that are denominated
in other currencies and would
decline in value if the dollar
strengthened.
The tax plan is likely to have
ramifications for the broader
markets as well, some analysts
said. Analysts at UBS Wealth
Management said the legislation could provide the “icing
on the cake” for an economy
that is already going strong,
contributing as much as 8% to
corporate profits and a further
upside of 5% to the S&P 500.
BMO Capital Markets cut its
2018 gold forecast by 1.5% to an
average price of $1,280 a troy
ounce to account for potential
headwinds from a stronger dollar. The metal settled Friday at
$1275.40 a troy ounce.
The most immediate threat
to a dollar rally, however,
could come from outside the
U.S., where a burgeoning eurozone economy is paving the
way for the European Central
Bank to unwind its monetaryeasing policies and eventually
raise rates. That would be a
boon for investors who have
wanted to diversify their dollar
holdings but have stayed out
of euros because interest rates
in the region are currently
near historical lows. The euro
was up nearly 13% against the
dollar this year as of Friday,
and investors expect that rally
to continue into 2018.
“We are positioned for the
dollar to be a little stronger,
and then we expect to lighten
up on dollars in favor of eu-
$163,000 the year before.
The drug has gained renewed interest among oncologists because recent government-funded studies show its
use with other chemotherapies
can significantly prolong survival in patients with certain
brain tumors, said Ashley Sumrall, section chief of neuro-oncology with Carolinas HealthCare System in Charlotte, N.C.
Some cancer doctors are taking notice of the price increase.
WSJ Dollar Index
95
94
93
92
91
90
89
88
87
86
85
84
J
F
M
A
M
J
Source: WSJ Market Data Group (2017 data)
J
A
S
O
N
D
THE WALL STREET JOURNAL.
CHUCK BURTON/ASSOCIATED PRESS
G
Gap.........................A1,B3
ANDI GRATZER
A
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.
Actavis Group.............B8
Advanced Micro Devices
...................................B10
Airbnb..........................B4
Alaska Air Group........B3
Allergan.......................B8
Alphabet....................B10
Amazon.com...............A2
American Airlines Group
.....................................B3
Apple.........................B10
Associated British
Foods.........................B3
AT&T..........................B10
THE WALL STREET JOURNAL.
* ***
A strengthening of the dollar could lift Wells Fargo and its peers.
ros,” said Nick Gartside, international chief investment officer of fixed income at J.P.
Morgan Asset Management.
He expects the euro to rise as
high as $1.30 against the dollar by the end of 2018.
The shift is one that likely
spells the end for the dollar’s
yearslong rally, during which
the U.S. currency has appreci-
ated more than 30% against its
peers, said Robert Tipp, chief
investment strategist at PGIM
Fixed Income. The dollar has
appreciated more than 30%
against its peers from its lows
of 2011.
“You had a gigantic bull
market in the dollar in recent
years, but now the tide is
turning,” Mr. Tipp said.
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.
Tuesday, December 26, 2017 | B3
* * * *
BUSINESS NEWS
INDUSTRY FOCUS | Airlines
Profit Pressures Show Up on the Radar
U.S. carriers are on track for an eighth straight year in the black, but investors worry about the trajectory of expenses
BY SUSAN CAREY
Climbing Costs
While revenue is up for the nine biggest U.S. carriers,
their expenses are rising faster.
Revenue
$118.6
billion
First nine months
123.1
Other*
$98.6
billion
106.6
Other†
Aircraft
rent
Depreciation/
Amortization
Cargo
Airport
fees
Maintenance
Fuel
Passenger
Labor
2016
2017
2016
2017
*Sales of frequent-flier miles to business partners, pet transportation, in-sourced
aircraft repairs, inflight sales
†Professional fees, food and beverage, ticket distribution, utilities, crew hotels,
payments to regional carrier partners
Southwest and other airlines have been dealing with higher labor costs and rising fuel prices.
Source: Airlines for America
Inc.’s shares have fallen 16%
this year in part because the
carrier is incurring extra
costs as it completes its
late-2016 takeover of Virgin
America Inc., analysts said.
After rising fuel prices,
the biggest cost increase airlines faced this year was
worker compensation. Since
late 2016, Southwest Airlines Co., United, American
Airlines Group Inc. and
Alaska Air have agreed to
costlier labor contracts or
catch-up provisions to match
the pay offered by rivals.
Delta Air Lines Inc. in October realigned its profit-shar-
American, United, and JetBlue also have multiyear initiatives aimed at paring
costs and finding new revenue sources. American hopes
to cut $1 billion in costs,
Chief Financial Officer Derek
Kerr said in September.
JetBlue executives said in
October that they were making progress on plans to cut
$300 million in costs
through 2019. United a year
ago said it intended to produce $4.8 billion in earnings
improvements through 2020.
In October, the company declined to detail its progress
but said most of the initia-
no
n-
BY PAUL ZIOBRO
tives are on track.
Airlines are also countering rising costs by putting
more seats on airplanes or
substituting larger aircraft
to spread fixed costs over
more seats. The practice can
bring in more revenue for
only marginally higher costs,
but more crowded planes
and shrinking legroom aren’t
popular with passengers.
U.S. airlines are still performing well overall. The industry is on track for a record eighth-straight year of
profits in 2017 and executives expect more black ink
next year.
STEVEN SENNE/ASSOCIATED PRESS
attrition.
Delta Chief Executive Ed
Bastian said at an investor
event Dec. 14 that he was
disappointed the carrier’s
unit costs, excluding fuel, are
projected to rise by as much
as 5.5% in the fourth quarter,
year over year. Carriers tend
to look at unit costs excluding fuel as a proxy for core
expenses that they can control.
Mr. Bastian said Delta
plans to cut $1 billion in
costs over the next several
years and contain nonfuel
cost growth to a range of
flat to up 2% annually.
ly
.
ing program to give non-pilot workers the same rich
terms as its aviators. JetBlue Airways Corp. and
Spirit Airlines Inc. are near
new pilot contracts that will
raise their costs.
American said the higher
compensation was necessary
to erase mistrust built up
over the years and to turn
its culture into a competitive
advantage. The nation’s largest carrier also acknowledged that it has too many
employees now that its takeover of US Airways Group
Inc., is nearly complete, and
hopes to slim down through
THE WALL STREET JOURNAL.
co Fo
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At UPS,
It’s All
Hands
On Deck
Mobilizing to handle a
crush of holiday shipments before Christmas, United Parcel
Service Inc. used hundreds of
its accountants, marketers and
other office staff to deliver
packages at the last minute.
UPS normally has “ready
teams,” or office workers that
help to sort, load or deliver
packages, that it sends out to
clear problem spots throughout the network. The initial
signups are voluntary and usually set weeks before the busiest periods.
But UPS had to supplement
those workers this year by calling in employees from various
desk jobs with little notice.
Some delivered packages using
their personal vehicles. A shift
to online shopping coupled with
a tight market for seasonal
workers left gaps in manpower
across the delivery network.
UPS spokesman Steve Gaut
said “several hundred” office
employees were assigned to
various operations roles, from
sorting packages to assisting
drivers as seasonal helpers.
Following congestion that
added a day or two to delivery
promises following Cyber
Monday, UPS sent ready teams
to Atlanta, Denver, Kansas City
and Houston to assist in processing packages. It asked
some of its regular drivers to
work 70 hours over an eightday period, instead of 60
hours over seven days.
This year’s challenges were
amplified by a tighter than
usual market for seasonal
workers. A robust economy
with an unemployment rate of
4.1% in November, the lowest
since December 2000, is
shrinking a pool of workers
who can help fulfill orders for
only a few weeks. “It was more
competitive in some markets
to recruit and retain seasonal
employees,” Mr. Gaut said.
UPS originally targeted hiring 95,000 seasonal employees
this year, about the same level
as the past two years, and
continued to hire some workers late into the season to address turnover. The flat hiring
number came despite projection of a 5% increase in volume to about 750 million
packages. UPS has said that it
kept its hiring figure steady
because of more automated
equipment and additional
workers brought on board earlier in the year.
Expenses
First nine months
DANIEL SLIM/AGENCE FRANCE-PRESSE/GETTY IMAGES
U.S. airlines are paying
more for fuel, labor and
maintenance, drawing scrutiny from investors who fear
the industry’s rising costs
threaten margins during a
record stretch of profitability.
Expenses at the nine largest airlines rose 8.1% in the
first nine months of 2017
compared with the prioryear period, according to the
Airlines for America trade
group, while revenue rose
3.8%. The run-up in expenses
is well above the overall U.S.
inflation rate of 2.2%.
The imbalance caused the
pretax margins of the nine
carriers to slide to 12% in
the nine-month period from
15.5% the year before. The
rising unit costs—the expense to fly a seat a mile—
are a worrisome trend in an
industry that has a spotty
record of reining in expenses.
“We think the airlines
have to some extent lost focus on good cost control,”
said Darryl Genovesi, an airline industry analyst at UBS.
The trend is putting pressure on airline stocks. Shares
in United Continental Holdings Inc. fell 12% in a day in
October when the company
said its fourth-quarter costs
would be at the high end of
earlier forecasts and that the
pressure would extend into
2018. Alaska Air Group
The retailer’s store in the Downtown Crossing neighborhood of Boston was expanded this year, but three other outlets were scaled back due to disappointing results.
Primark’s Shaky U.S. Entry Stirs Doubts
BY SAABIRA CHAUDHURI
Clothing retailer Primark
shuns online shopping and relies on super-cheap prices to
draw customers into its stores,
a strategy that has won it a cultlike following across Europe.
Americans have yet to warm
to it.
The Dublin-based brand sells
skinny women’s jeans or a
men’s crew-neck sweater for as
little as $8. Its cavernous stores
dwarf those of competitors like
Inditex SA’s Zara and Gap Inc.,
and it prices items well below
these bigger fast-fashion players. Shoppers can browse prices
for new arrivals online but have
to go into a store to make a
purchase.
The formula has been a hit
in the U.K., Primark’s largest
market, and increasingly in
other big cities in Europe, like
Paris and Berlin, earning it a
tongue-in-cheek nickname: “Primani,” as in Giorgio Armani.
But cracks have started to
emerge in its bricks-and-mortar-only strategy as Primark
rolls out stores further afield,
including in a handful of U.S.
cities.
Two years on, it is shrinking
the size of three of its eight U.S.
stores after they performed
worse than expected.
Overall, the company oper-
Cheap Chic
Primark undercuts its main competitors on price.
U.K. prices*
Women’s
jeans
Women’s
blazer
Men’s
sweater
Men’s
chinos
12.06
$9.38
22.78
H&M
12.05
33.49
24.11
24.11
Zara
26.79
40.19
30.81
21.43
Primark
*Lowest price of winter collection, excluding follow-on sales
Note: pound figures converted at £1=$1.34
Source: Macquarie
ates more than 300 stores in 11
countries.
The foray in the U.S., where
the brand isn’t well known, so
far has been a “mixed bag,” said
Craig Johnson, president of
consulting firm Customer
Growth Partners. Primark’s
American stores are mostly in
malls, where weekday traffic is
low compared with the bustling
“high streets,” or shopping
thoroughfares, where the brand
has put many of its British
stores.
Primark’s low-margin strategy depends on high volumes to
make money and keep prices
low. “Their model falls apart if
the sales counts are low,” Mr.
Johnson said.
To maximize volumes, it obsesses about sales densities, expanding and contracting stores
until they hit peak sales per
square foot. In the U.S., it expanded its Boston store this
year by 20% year after shoppers flocked to the Downtown
Crossing site.
“We’re fine tuning,” said
John Bason, chief financial officer at Associated British
Foods PLC, Primark’s Londonlisted parent. “Once we get the
store economics right then we’ll
roll out.”
This coming summer, Primark will open its newest U.S.
store: a 60,000-square-foot
space at Kings Mall in Brooklyn.
But Associated British Foods’
shares are down 14% since the
company in November said it
was scaling back the three U.S.
stores, as investors come to
terms with slower-than-expected expansion.
8.04
THE WALL STREET JOURNAL.
“We think it will take a long
time for it to reach critical
mass in the U.S., where it lacks
brand recognition,” says RBC
analyst Richard Chamberlain.
Investors also have grown
more skeptical that any retail
strategy that shuns online
shopping is sustainable for
much longer.
Primark’s refusal to embrace
a model that allows customers
to shop seamlessly, either online or in stores, “leaves a strategic flank wide open,” said
Macquarie analyst Andreas Inderst.
Mr. Bason said the company
doesn’t have a choice.
“The cost to support home
delivery can’t be supported
with our price points,” but the
sales growth from those low
prices is worth it, he said. “Vol-
umes don’t go up by a bit, they
go up by a lot.”
Primark isn’t completely
shunning the internet. It posts
prices for new arrivals on its
websites and touts them on Instagram and other channels for
its 10 million social-media followers.
Mr. Bason said he doesn’t
rule out one day expanding into
click-and-collect, by which customers order online and pick up
in stores.
The brand has attracted
some die-hard fans in the U.S.
“The selection is endless,”
said Paige Delaney, a 25-yearold Chicago-based marketing
coordinator who has visited several Primark stores, including in
Boston, Philadelphia and London. “When I go to a Primark I
know I’m going to stock up.”
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.
B4 | Tuesday, December 26, 2017
THE WALL STREET JOURNAL.
MEDIA & TECHNOLOGY
WSJ.com/Tech
Sequoia
In Talks
For Largest
VC Fund
WALT DISNEY/EVERETT COLLECTION
BY TOMIO GERON
Walt Disney’s ‘Star Wars: The Last Jedi’ is already the third-highest-grossing movie of the year at the domestic box office, with $397.3 million in 11 days of release.
‘Last Jedi,’ ‘Jumanji’ Are Winners
SALES, IN MILLIONS
FILM
1. Star Wars: The
Last Jedi
2. Jumanji:Welcome
to the Jungle
3. Pitch Perfect 3
4. The Greatest
Showman
5. Ferdinand
DISTRIBUTOR
WEEKEND* CUMULATIVE % CHANGE
Disney
$100.7 $397.3
-54
Sony
$50.4
$67
--
Universal
Twentieth
Century Fox
Twentieth
Century Fox
$25.6
$14
$25.6
$18.6
---
$9.7
$29.2
-28
*Friday, Saturday, Sunday and Monday Source: comScore
the four-day weekend. The
movie, starring Dwayne Johnson and Jack Black in a new iteration of the board-game adaptation, has grossed a strong
$67 million since its release on
Dec. 20.
“It’s the all-audience movie
for the holiday season,” said
Adrian Smith, president of domestic distribution at “Ju-
manji” studio Sony Corp.’s
Sony Pictures Entertainment.
Given the increased attendance throughout this week,
“Jumanji” should expect to ultimately gross a hit $180 million or so.
The weekend’s other success story, “Pitch Perfect 3,”
grossed $25.6 million over
four days. The latest install-
no
n-
The Christmas movie season has some Hollywood executives thanking Santa and others wondering what they did
to end up with such lumps of
coal.
As expected, Walt Disney
Co.’s “Star Wars: The Last
Jedi” continued to rule over
returns, collecting an estimated $100.7 million over the
four-day weekend in the U.S.
and Canada. The latest blockbuster installment in the Luke
Skywalker saga has collected
$397.3 million in 11 days of release and is already the thirdhighest-grossing movie of the
year at the domestic box office. “Last Jedi” has grossed
more than $775 million world-
Estimated Box-Office Figures, Through Monday
ment of the a cappella comedy
starring Anna Kendrick and
Rebel Wilson should prove another hit for Comcast Corp.’s
Universal Pictures, which has
developed the series into an
unlikely franchise for the studio.
The original “Pitch Perfect”
opened to $5.1 million in 2012,
but word-of-mouth turned it
into a breakout hit that ultimately grossed $65 million.
“Pitch Perfect 2” was a smash,
grossing $184 million in 2015.
But interest in music-oriented movies seemed to end
with “Pitch Perfect,” since the
original musical “The Greatest Showman” fell flat with
audiences. Starring Hugh
Jackman as circus founder
P.T. Barnum, “Showman”
grossed $14 million over the
long weekend and has collected a paltry $18.6 million
so far. In its favor: Audiences
gave it an “A” grade, according to the CinemaScore market research firm.
ly
.
BY ERICH SCHWARTZEL
wide so far.
Disney’s dominance left
several newcomers fighting
for box-office oxygen, to varying degrees of success.
Audiences were most interested in family-oriented “Star
Wars” counterprogramming
like “Jumanji: Welcome to the
Jungle” and “Pitch Perfect 3,”
both of which made debuts
with to robust results. More
adult-oriented fare like “The
Greatest
Showman”
and
“Downsizing” fizzled.
With school vacations and
many people taking off work,
the time between Christmas
and New Year’s Day is among
the biggest moviegoing weeks
of the year. After a year of
slumping returns and several
big-budget bombs, theater
chains are hoping the holiday
offerings can make up for a
lousy summer.
“Jumanji: Welcome to the
Jungle” fared best of the new
crop, with the family reboot
collecting $50.4 million over
co Fo
m rp
m e
er rs
ci on
al a
us l,
e
on
‘Pitch Perfect 3’ also
has a strong showing,
but ‘Showman’ and
‘Downsizing’ fizzle
KAYA SURVIVED!
She was born 4 months
early and spent more than
5 months in the hospital.
Sign up at marchforbabies.org
© 2017 March of Dimes Foundation
Sequoia Capital is moving
to raise about $5 billion for its
third global growth fund, people familiar with the matter
said, the latest sign of increasing ambition in the venturecapital business amid a flood
of money from investors.
At $5 billion, such a vehicle
would be largest single fund
raised by a U.S. firm. Earlier
this year, New Enterprise Associates closed on $3.3 billion,
the largest to date.
Sequoia’s effort comes after
Japan’s SoftBank Group Corp.
jolted the venture-capital industry with its Vision Fund, a
nearly $98 billion tech-focused
behemoth writing checks that
dwarf most venture investments.
Sequoia’s discussions for
the new fund are still very preliminary and the firm plans to
raise it in 2018, said people
with knowledge of the plans.
The target size of the fund
could still change.
Sequoia’s existing global
growth fund is a $2 billion vehicle that was gathered starting in 2015.
News of the fund was reported earlier by Recode.
The new fund comes as
startup companies increasingly
are opting to stay private longer and need larger checks as
they expand globally. Sequoia’s
late-stage companies include
Airbnb Inc., Houzz Inc., Instacart Inc. and Stripe Inc.
The Softbank Vision Fund
already has invested billions
across a swath of companies
including WeWork Cos., Flipkart, Compass and Didi Chuxing Technology Co. SoftBank is
in the process of making a
multibillion-dollar investment
in Uber Technologies Inc.
—Eliot Brown
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.
Tuesday, December 26, 2017 | B5
THE WALL STREET JOURNAL.
BUSINESS NEWS
Shipyard to Settle Foreign Bribery Probe
Onboard a semisubmersible vessel developed by Singapore’s Keppel Offshore & Marine Ltd.
CSX Drops ‘Acting’ Tag
For New Chief Jim Foote
CSX Corp. has confirmed
Jim Foote as its leader, dropping “acting” from his chief executive title last week, following the death of former Chief
Executive Hunter Harrison.
Mr. Harrison died Dec. 16 at
age 73 from “unexpected severe complications from a recent illness,” CSX said.
Mr. Foote, 63, is faced with
carrying out an operations
overhaul that Mr. Harrison,
who joined the firm March
with fanfare and investor support, set in motion to turn
around the Jacksonville, Fla.based rail company.
In prepared remarks, Mr.
Foote said Mr. Harrison’s “pioneering approach to railroading unlocked significant efficiencies and value,” adding
he would work to deliver on
that vision for CSX.
Mr. Foote joined CSX in October as operating chief, succeeding both the former operating chief and the chief sales
and marketing officer. He pre-
viously had worked for Mr.
Harrison at Canadian National
Railway Co. as head of sales
and marketing.
CSX has said that it would
stick with Mr. Harrison’s strategy and was confident in the
executive team he left behind.
Mr. Foote, a University of
Wisconsin-Superior graduate
with a law degree from John
Marshall Law School in Chicago, has spent 40 years in the
railroad industry, but most of
his time has been in sales and
marketing.
Mr. Foote came to CSX
from Bright Rail Energy Inc.,
where he served as president
and chief executive of a technology company formed in
2012 to develop products that
allow railroads to convert locomotives to run on natural
gas. His railroad career
started in 1972 when he
worked as a laborer in the
mechanical department with
the Soo Line Railroad in Superior, Wis.
—Paul Ziobro
contributed to this article.
ADVANCED
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agents, is wrong and will not
be tolerated,” he said.
In addition to the settlement with the company, prosecutors said they unsealed the
guilty plea of a former senior
member of Keppel’s legal department. The man, who
wasn’t named in a statement
from prosecutors, is awaiting
sentencing.
Of the $422 million penalty,
Brazil will collect half and the
U.S. and Singapore will each
claim one-quarter.
“Today’s resolution once
again underscores the importance of the Department of
Justice’s collaboration with
foreign authorities to hold
corrupt companies and individuals accountable for their
crimes, while ensuring the fair
and appropriate allocation of
fines and penalties,” said Acting Assistant Attorney General
John Cronan.
co Fo
m rp
m e
er rs
ci on
al a
us l,
e
on
BY AUSTEN HUFFORD
Singaporean shipyard firm
Keppel Offshore & Marine
Ltd. agreed to pay $422 million to resolve a foreign bribery investigation involving authorities on three continents.
The company, a unit of conglomerate Keppel Corp., entered into a deferred prosecution agreement with U.S.
authorities charging the firm
with conspiracy to violate the
Foreign Corrupt Practices Act,
which bars the use of bribes to
foreign officials to get or keep
business.
It also reached related settlements with Brazilian and
Singaporean authorities, U.S.
prosecutors said.
Keppel admitted in court
documents that it paid about
$55 million in bribes to officials at Brazilian state-owned
oil company Petróleo Brasile-
iro and the then-governing
party in Brazil from 2001 to
2014 to win 13 contracts with
Petrobras, as the company is
also known, and another company.
It paid the bribes through
outsize commissions to an intermediary, who in turn made
payments to the officials and
the political party, prosecutors
said.
Lee Boon Yang, Keppel’s
chairman, said in a statement
that “we regret and are deeply
disappointed” by the company’s misconduct and that
the company has implemented
stricter controls since the allegations surfaced.
“Global companies such as
Keppel have both a legal and a
moral duty to operate fully
within international laws and
regulations. Any perception
that illegal payments can be
condoned, if they are made by
ly
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Jim Foote faces carrying out an operations overhaul at CSX.
Mattress Firm’s Credit Line
Comes Amid Probe of Parent
BY AUSTEN HUFFORD
Mattress Firm Inc., the U.S.
mattress company owned by
embattled retail giant Steinhoff International Holdings
NV, obtained a new line of
credit as it worked to reduce
concerns among suppliers and
customers while its parent is
dealing with a wide-ranging
accounting probe.
Steinhoff’s
Frankfurttraded shares have dropped
94% this year as its chief executive and chairman resigned
earlier this month after the
company announced an investigation into “accounting irregularities.” Steinhoff, one of
the world’s largest furniture
makers, hired an independent
firm to review possible accounting problems, which it
said could affect billions of
dollars worth of assets.
German
prosecutors
launched an investigation in
August into allegations that
the company’s management
used off-balance sheet entities
to hide losses in its operations
and artificially pump up its
valuation. Steinhoff has previously denied those allegations.
“This new credit facility
provides independent liquidity
and capital to support our
strategy, and demonstrates the
strength of our business, the
value of our assets and the
quality of our brands,” Mattress Firm Chief Executive Ken
Murphy said in a Friday news
release.
Mattress Firm said it
would be able to draw up to
$75 million initially on its
$225 million credit line. The
company said the credit line,
which is backed by company
assets, will be used for working capital and other corporate purposes.
At a presentation designed
to reassure and update investors last week, the company
said lenders were increasingly withdrawing their
credit facilities from both the
parent company and operating subsidiaries.
Mattress Firm also said at
the meeting that it would
close about 200 of its 3,400
stores over the next 18
months.
Steinhoff bought Mattress
Firm for $2.4 billion in 2016,
less than a year after Mattress
Firm itself bought the owner
of Sleepy’s retail stores for
$780 million. Steinhoff has
said it wants to vertically integrate Mattress Firm, controlling both the production and
sale of mattresses.
Earlier this year Steinhoff
acquired majority-control of
Sherwood Bedding Co., the
fifth-largest U.S. mattress
manufacturer.
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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 | Tuesday, December 26, 2017
CLOSED-END FUNDS
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32.78 23.40 -28.6 25.7
China Fund CHN
23.27 21.37 -8.2 50.9
Clough Global Opp Fd GLO
10.95 NA 36.2
EtnVncTxAdvGblDiv ETG 18.52 17.43 -5.9 32.7
EatonVance TxAdv Opport ETO 24.90 25.41 +2.0 35.0
First Trust Dynamic Eur FDEU 19.70 18.95 -3.8 33.1
Gabelli Glbl Multimedia GGT 9.42 9.24 -1.9 39.5
GDL Fund GDL
11.60 9.83 -15.3 6.1
India Fund IFN
31.98 28.48 -10.9 41.9
Japan Sml Cap JOF 13.34 12.20 -8.5 45.8
Korea Fund KF
45.23 NA NA NA
Mexico Fund MXF
17.66 15.40 -12.8 12.8
Morgan-Stanley Asia-Pac APF 20.80 18.05 -13.2 38.2
MS China a Shr Fd CAF 27.73 22.97 -17.2 41.9
MS Emerging Fund MSF 20.08 17.54 -12.6 36.0
MS India Invest IIF
37.10 33.12 -10.7 54.3
New Germany Fund GF 21.95 19.93 -9.2 55.3
Swiss Helvetia Fund SWZ 13.86 12.62 -9.0 26.9
Templeton Dragon TDF 24.40 21.21 -13.1 43.2
Templeton Emerging EMF 18.14 16.10 -11.2 47.8
Virtus Total Return Fund ZF 13.38 12.77 -4.6 24.9
Voya Infr Indls & Matls IDE 16.91 16.80 -0.7 35.5
Wells Fargo Gl Div Opp EOD
5.98 NA 24.0
Prem12 Mo
Fund (SYM)
NAV Close /Disc Yld
U.S. Mortgage Bond Funds
BlackRock Income Trust BKT 6.58 6.11
Nuveen Mtg Opp Term Fd JLS 26.62 26.25
Investment Grade Bond Funds
Blackrock Core Bond Tr BHK 14.79 13.88
BlkRk Credit Alloc Incm BTZ 14.74 13.27
John Hancock Income Secs JHS 15.29 14.76
MFS Inc Tr MIN
4.38 4.16
WstAstClymr InfLnkd Fd WIW NA 11.37
WstAssetClymr InflLnk Sec WIA NA 11.66
Loan Participation Funds
Apollo Sr Fltg Rate Fd AFT 17.84 16.19
BlkRk Debt Strat Fd DSU 12.67 11.54
BlackRock FR Incm Strat FRA 14.91 13.83
Blkrk FltRt InTr BGT 14.39 13.83
BlackstoneGSO Strat Cred BGB NA 15.81
Blackstone GSO Sr Float BSL NA 17.44
Eagle Point Credit ECC NA 17.88
Eaton Vance FR Incm Tr EFT 15.48 14.38
EatonVnc SrFltRate EFR 15.15 14.38
Eaton Vance Sr Incm Tr EVF 7.15 6.50
First Trust Sr FR Fd II FCT 14.06 12.86
FT Sr Floating Rate 2022 FIV 9.72 9.22
Invesco Credit Opps Fund VTA 13.04 11.70
Invesco Senior Income Tr VVR 4.87 4.37
Nuveen Credit Strt Inc Fd JQC 9.03 8.20
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CLASS ACTIONS
Fund (SYM)
Prem12 Mo
NAV Close /Disc Yld
NuvFloatRteInco Fd JFR 11.48 11.09 -3.4 7.4
Nuv Float Rte Opp Fd JRO 11.38 11.17 -1.9 7.8
Nuveen Senior Income Fund NSL 6.80 6.49 -4.6 7.4
Pioneer Floating Rate Tr PHD 12.37 11.51 -7.0 6.3
Voya Prime Rate Trust PPR 5.64 5.08 -9.9 5.9
High Yield Bond Funds
AllianceBernstein Glbl AWF NA 12.75 NA 6.8
Barings Glbl Short Dur HY BGH 20.93 19.33 -7.6 9.5
BlackRock Corp Hi Yd Fd HYT 12.20 10.94 -10.3 8.1
BlackRockDurInco Tr BLW 16.99 15.86 -6.7 7.8
Brookfield Real Assets RA 25.05 23.39 -6.6 NS
Credit Suisse High Yld DHY 2.77 2.83 +2.2 9.6
DoubleLine Incm Solutions DSL NA 20.15 NA 8.9
Dreyfus Hi Yd Strat Fd DHF 3.54 3.33 -5.9 9.1
Fst Tr Hi Inc Lg/Shrt Fd FSD 18.00 16.33 -9.3 8.8
Guggenheim Strat Opps Fd GOF 19.69 21.65 +10.0 10.1
Ivy High Income Opps Fund IVH 15.94 14.90 -6.5 10.0
Neuberger Berman HYS NHS NA 11.76 NA 7.6
NexPoint Credit Strat Fd NHF 26.44 24.94 -5.7 10.1
Nuveen Credit Opps 2022 JCO 9.92 9.66 -2.6 NS
Nuveen Gl Hi Incm Fd JGH 18.49 16.81 -9.1 8.7
Nuveen High Incm Dec18 JHA 10.06 9.89 -1.7 5.1
Nuveen High Incm Dec19 JHD 10.21 9.99 -2.2 5.8
Nuveen Hi Incm Nov 2021 JHB 10.11 9.82 -2.9 6.0
Pioneer High Income Trust PHT 10.76 9.73 -9.6 8.2
Prud Gl Shrt Dur Hi Yd GHY 16.29 14.39 -11.7 7.9
Prudentl Sh Dur Hi Yd Fd ISD 16.47 14.80 -10.1 7.9
Wells Fargo Incm Opps Fd EAD NA 8.37 NA 8.8
Wstrn Asset Glbl Hi Inco EHI NA 10.07 NA 8.7
Wstrn Asset High Inco II HIX NA 6.90 NA 8.9
Wstrn Asset Opp Fd HIO NA 5.00 NA 7.2
West Asst HY Def Opp Fd HYI NA 15.06 NA 7.9
Other Domestic Taxable Bond Funds
Apollo Tactical Incm Fd AIF 17.41 15.61 -10.3 8.9
Ares Dynamic Credit Alloc ARDC NA 16.27 NA 6.9
Barings Corp Investors MCI NA 15.62 NA 3.8
BlackRock Multi-Sector IT BIT 19.92 18.28 -8.2 9.8
BlackRock Taxable Mun Bd BBN 23.71 22.86 -3.6 6.8
Prem12 Mo
NAV Close /Disc Yld
Fund (SYM)
Doubleline Oppor Credit DBL 21.46 22.20
Duff & Phelps Utl & Cp Bd DUC 9.59 8.80
EtnVncLtdFd EVV
14.98 13.56
Franklin Ltd Duration IT FTF NA 11.72
GuggenheimTaxableMuni GBAB 23.20 22.48
Invesco High Incm 2023 IHIT 10.02 9.71
John Hancock Investors JHI 18.29 17.55
KKR Income Opps Fund KIO NA 15.80
MFS Charter MCR
9.20 8.47
MFS Multimkt MMT 6.58 6.08
Nuveen Build Am Bd Fd NBB 22.31 21.79
PIMCO Corporate & Incm PTY NA 16.41
PIMCO Corporate & Incm PCN NA 17.15
PIMCO HiInco PHK
NA 7.48
PIMCO Inco Str Fd PFL NA 11.64
PIMCO Incm Strategy Fd II PFN NA 10.33
Putnam Mas Inco PIM 5.02 4.70
Putnam Premier Income Tr PPT 5.58 5.23
Wells Fargo Multi-Sector ERC NA 13.03
World Income Funds
Abeerden Asia-Pacific FAX 5.45 4.89
Etn Vnc Short Dur Fd EVG 15.24 14.25
Legg Mason BW Glbl Incm BWG NA 12.65
MS EmMktDomDebt EDD 8.81 7.69
PIMCO Dynamic Credit PCI NA 22.33
PIMCODynamicIncomeFund PDI NA 30.23
PIMCO Income Opportunity PKO NA 26.05
PIMCO Strat Income Fund RCS NA 8.80
Templeton Emerging TEI 12.78 11.27
Templeton Global GIM 7.29 6.47
Wstrn Asset Emerg Mkts EMD NA 15.42
Wstrn Asset Gl Def Opp Fd GDO NA 17.92
National Muni Bond Funds
AllianceBrnstn NtlMun AFB 14.79 13.33
Blackrock Invest BKN 15.73 14.67
BlackRock Mun 2030 Target BTT 24.05 22.18
BlackRock Municipal Trust BFK 14.37 14.04
+3.4
-8.2
-9.5
NA
-3.1
-3.1
-4.0
NA
-7.9
-7.6
-2.3
NA
NA
NA
NA
NA
-6.4
-6.3
NA
9.0
6.6
7.3
12.8
6.7
5.5
7.4
10.0
8.9
8.8
5.6
10.4
10.6
13.6
9.4
9.2
6.5
6.0
9.6
-10.3
-6.5
NA
-12.7
NA
NA
NA
NA
-11.8
-11.2
NA
NA
8.5
7.1
8.4
8.6
11.5
13.4
10.1
10.1
4.5
6.0
7.7
7.5
-9.9
-6.7
-7.8
-2.3
4.6
5.3
4.1
5.7
Prem12 Mo
NAV Close /Disc Yld
Fund (SYM)
BlackRockMuni BLE 14.94 14.32
BlackRockMuni Tr BYM 15.12 14.00
BlkRk MuniAssets Fd MUA 14.12 14.87
BlkRk Munienhanced MEN 11.85 11.54
BlkRk MuniHldgs Inv MFL 14.59 14.61
BlkRk MuniHldgs Qlty II MUE 13.95 13.95
BlkRk MuniVest MVF 9.60 9.67
BlkRk MuniVest II MVT 15.14 15.34
BlkRk MuniYield MYD 14.77 14.36
BlkRk MuniYld Quality MQY 15.75 15.10
BlkRk MuniYld Qlty II MQT 13.83 12.97
BlRkMunyldQltyIII MYI 14.36 13.82
Deutsche Mun Income Tr KTF 12.52 11.80
Dreyfus Mun Bd Infr Fd DMB 14.19 12.94
Dreyfus Strat Muni Bond DSM 8.29 8.43
Dreyfus Strategic Munis LEO 8.50 8.63
Eaton Vance Mun Bd Fd EIM 13.55 12.45
Eaton Vance Mun Income EVN 13.27 12.32
EV National Municipal Opp EOT 21.70 22.83
Invesco Adv Mun Incm II VKI 12.06 11.27
Invesco Mun Incm Opps Tr OIA 7.56 8.12
Invesco Mun Opportunity VMO 13.43 12.34
Invesco Municipal Trust VKQ 13.42 12.44
Invesco Qlty Mun Inco IQI 13.52 12.35
Invesco Inv Grade Muni VGM 13.90 13.13
Invesco Value Mun Incm Tr IIM 16.16 14.76
MainStay DefinedTerm MMD 20.05 19.76
MFS Munl Inco MFM 7.32 6.88
Nuveen AMT-Free Quality NEA 15.02 13.63
Nuveen AMT-Free Mun NVG 16.39 15.25
Nuveen Mun Credit Incm Fd NZF 15.97 15.00
Nuveen Enhncd Mun Val Fd NEV 14.91 14.17
Nuveen Intermed Dur Mun NID 13.72 13.03
NuveenMuniIncoOpp Fd NMZ 13.50 13.54
Nuveen Muni Value Fund NUV 10.23 10.02
Nuveen Qual Mun Incm Fd NAD 15.35 13.94
Nuveen Sel Tax Free NXP 15.33 14.67
Nuveen Sel TF NXQ 14.72 13.89
-4.1
-7.4
+5.3
-2.6
+0.1
0.0
+0.7
+1.3
-2.8
-4.1
-6.2
-3.8
-5.8
-8.8
+1.7
+1.5
-8.1
-7.2
+5.2
-6.6
+7.4
-8.1
-7.3
-8.7
-5.5
-8.7
-1.4
-6.0
-9.3
-7.0
-6.1
-5.0
-5.0
+0.3
-2.1
-9.2
-4.3
-5.6
6.1
5.3
4.6
5.6
5.7
5.5
5.7
5.7
5.9
5.5
5.6
5.8
6.5
4.9
5.9
5.9
5.0
5.4
4.4
5.8
5.1
6.1
5.9
5.4
5.8
5.0
5.5
5.6
5.4
5.7
5.8
5.7
4.9
5.9
3.8
5.5
3.7
3.5
Insider-Trading Spotlight
Trading by ‘insiders’ of a corporation, such as a company’s CEO, vice president or director, potentially conveys
new information about the prospects of a company. Insiders are required to report large trades to the SEC
within two business days. Here’s a look at the biggest individual trades by insiders, based on data received by
Thomson Financial on December 22, 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
Biggest weekly individual trades
Based on reports filed with regulators this past week
Date(s)
No. of shrs in Price range ($) $ Value
trans (000s) in transaction (000s)
Company
Symbol
Insider
Global Water Resources
Proteostasis Therapeutics
Reata Pharmaceuticals
GWRS
W. Levine
DOI
M. Barrett
DOI
R. Mcgaughy
DOI
J. Traweek
BI
M. Franklin
DI
J. Barry
CEO
CEO
J. Barry
J. Barry
CEO
J. Barry
CEO
J. Barry
CEO
S. Biglari
DOI
S. Biglari
DOI
J. Malone
DO
R. Duggan
B
F. Leighton
CEOI
R. Van NieuwenhuyseCEO
A. Higgins
CEO
R. Pickup
B
2,827
2,000
200
200
500
450
408
369
357
248
6
2
102
95
18
1,159
75
55*
9.29
5.00
23.98-24.88
23.98-24.88
9.57-9.84
6.92
6.87-6.88
6.82
6.80-6.81
6.87
408.61-414.01
417.03-419.23
19.86
11.13
57.01
.83
8.16
10.05-10.45
W. Edens
D. Glaser
E. Chirico
D. Hamamoto
D. Jonas
F. Luddy
N. Leschly
B. Jellison
R. Mueller
R. Greenberg
T. Hill
R. Schulze
L. Schumacher
R. O Driscoll
E. Williams
J. Peck
L. Leinweber
D. Williams
7,500
619
370
2226*
131*
170
118
82
500
500
1,900
250
146
592
546*
215*
65
300
25.10
82.70-82.96
131.21-133.45
12.04-12.15
181.33-181.46
128.79-130.24
181.72-188.49
258.99-260.59
38.05
37.54-37.69
9.29
66.83
96.71-96.86
20.76-20.97
21.65-22.77
54.74-55.53
180.44-181.43
35.33-35.40
Title
Close ($) Ytd (%)
Buyers
Dec. 18
Dec. 18
Dec. 13-14
Dec. 13-14
Dec. 14-18
Dec. 19
Dec. 18
Dec. 14
Dec. 13
Dec. 15
Dec. 14-18
Dec. 19-21
Dec. 14
Dec. 18
Dec. 15
Dec. 18
Dec. 14
Dec. 19-20
-7.1
-1.4
5.1
5.3
-6.2
-10.0
-3.5
-5.0
NA
NA
5.5
6.3
5.4
9.4
3.7
3.4
-9.2
-8.9
-7.2
-3.9
NA
NA
NA
-7.1
-5.1
-9.1
-8.5
-5.1
-10.3
-10.3
-9.2
7.5
7.1
5.8
5.5
8.5
6.7
8.6
5.8
6.1
5.7
6.2
NS
7.3
5.9
7.5
PTI
RETA
Platform Specialty Products
Prospect Capital
Biglari Holdings
PAH
PSEC
BH
Discovery Communications
Achaogen
Akamai Technologies
Trilogy Metals
DepoMed
IMPAC Mortgage Holdings
DISCA
AKAO
AKAM
TMQ
DEPO
IMH
9.21
1.2
26,245
5.73 -53.3
10,000
4,958 26.29 20.4
4,958
3.1
4,828 10.11
7.26 -13.1
3,116
2,805
2,515
2,428
1,703
2,328 418.73 -11.5
932
2,033 23.73 -13.4
1,057 10.96 -15.8
1,000 65.45 -1.8
1.08 113.0
962
8.58 -52.4
612
9.99 -28.7
561
Sellers
Dec. 18
Dec. 18-19
Dec. 13-14
Dec. 14-18
Dec. 20-21
Dec. 19-20
Dec. 13
Dec. 19-20
Dec. 14
Dec. 19-20
Dec. 18
Dec. 18
Dec. 14-15
Dec. 19-21
Dec. 13-14
Dec. 13-15
Dec. 14-15
Dec. 14-15
OneMain Holdings
Marsh McLennan Cos
PVH
Colony NorthStar
Straight Path Communications
ServiceNow
Bluebird Bio
Roper Technologies
GMS
Skechers USA
Global Water Resources
Best Buy Co
AbbVie
Box
Twitter
TransUnion
Tyler Technologies
Nutanix
OMF
MMC
PVH
CLNS
STRP
NOW
BLUE
ROP
GMS
SKX
GWRS
BBY
ABBV
BOX
TWTR
TRU
TYL
NTNX
DOI
CEO
CEO
OD
CEO
DI
CEO
CEO
CBI
CEOI
D
BI
O
DI
D
CEO
DI
CFO
188,250
51,214
49,092
26,915
23,826
22,002
21,629
21,160
19,025
18,829
17,642
16,708
14,072
12,370
12,079
11,802
11,685
10,609
25.38 14.6
80.69 19.4
135.60 50.3
11.75 -21.2
181.54 435.4
129.19 73.8
179.55 191.0
259.53 41.8
37.12 26.8
38.32 55.9
9.21
1.2
67.11 57.3
98.21 56.8
20.64 48.9
24.46 50.1
55.16 78.3
177.36 24.2
34.84 31.2
* Half the transactions were indirect **Two day transaction
p - Pink Sheets
n-
)*+,-.-,+/0/-& 1&"
2
"! " !
no
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!(
* "" ' $ % !" ! 13 4 3
(42 % +5 6,,7 8 # ( 65 6,++ !"!9 ' 8 &(
( &( !%! : . . ; < : +6 6,+7 +,*,, &.; . #; . . = 66+ ' &< ; /6+,+ ::
;* 1+2 < :: . . >6=,,,,,, 1>+6,60,,,,, . : >++/50,,, .
.? 13 42 1 : : : . 22 ::
@ AB 162 < % #; < @. ; .
< :@.B 1)2 < . A ::B 1=2 < ::. " :
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!% ( $ &' +5
6,,7 # ( 65 6,++ !"!9 (
!8 ( & %%
&( "
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.: <; . "; .E 88 &D +,06F =),+5-,06F <<<.... ! % 1
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. : :
! ; @. . D: ::. <
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' &< =6, ; /6+,+ . . :: .; ! A .. " <*
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70, += %
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16+62 F75-+/7,
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)0, =,,
%.. /=+,=
1=+02 556-=5,,
?;I?:D.
<<<?:D.
&( % ! ! ! ! ! % "!% !
Buying and selling by sector
Based on actual transaction dates in reports received this past week
Sector
Buying
485,913
164,197
0
94,997
80,460
1,084,582
3,225,806
Basic Industries
Business services
Capital goods
Consumer durables
Consumer nondurables
Consumer services
Energy
Selling
22,812,442
3,202,298
0
10,265,100
90,224,427
92,263,541
16,720,137
Sector
Buying
Selling
10,644,869
947,963
100,157
0
2,160,535
0
1,600
Finance
Health care
Industrial
Media
Technology
Transportation
Utilities
Prem12 Mo
NAV Close /Disc Yld
Fund (SYM)
PIMCO MuniFd PMF 12.79 12.94 +1.1 5.8
Pimco Muni Inc II PML 12.05 13.21 +9.6 5.8
PIMCO Muni Inc III PMX 10.99 11.66 +6.1 5.8
Pioneer Mun Hi Inc Adv Tr MAV 11.81 11.38 -3.7 5.3
Pioneer Mun Hi Incm Tr MHI 12.77 11.83 -7.4 5.0
Putnam Tr PMM
7.93 7.34 -7.4 5.4
PutnamMuniOpportunities PMO 13.25 12.35 -6.8 5.2
Wstrn Asset Mngd Muni MMU NA 14.33 NA 5.3
WesternAssetMunTrFund MTT NA 20.94 NA 5.0
Single State Muni Bond
BlackRock CA Municipal Tr BFZ 15.14 13.83 -8.7 5.2
BlkRk MuniHldgs CA Qlty MUC 15.38 14.35 -6.7 5.0
Blkrck MunHl NJ Qlty MUJ 15.56 14.31 -8.0 5.7
BlRk MuHldg NY Qlty MHN 14.71 13.36 -9.2 5.0
BlkRk MuniYld CA Fd MYC 15.39 14.71 -4.4 5.1
BlkRk MuniYld CA Quality MCA 15.61 14.56 -6.7 5.2
BlkRk MuniYld MI Qlty MIY 15.35 13.85 -9.8 5.5
BlRk Muyld NY Qlty MYN 14.09 12.79 -9.2 5.0
Eaton Vance CA Mun Bd EVM 12.18 11.56 -5.1 4.9
Invesco CA Value Mun Incm VCV 13.29 12.45 -6.3 5.1
Invesco PA Value Mun Incm VPV 13.95 12.09 -13.3 5.2
Invesco Inv Grade NY Muni VTN 14.45 13.70 -5.2 5.0
Nuveen CA AMT-Free Qual NKX 15.72 15.26 -2.9 5.1
Nuveen CA Muni Value NCA 10.40 10.12 -2.7 3.9
Nuveen CA Quality Muni NAC 15.53 14.23 -8.4 5.5
Nuveen MD Qual Muni NMY 14.50 12.53 -13.6 5.0
Nuveen MI Qual Muni NUM 15.28 13.14 -14.0 4.8
Nuveen NJ Qual Muni NXJ 15.74 13.51 -14.2 5.2
Nuveen NY AMT-Free NRK 14.28 12.75 -10.7 4.9
Nuveen NY Qual Muni NAN 14.93 13.68 -8.4 5.1
Nuveen OH Qual Muni NUO 16.51 14.70 -11.0 5.0
Nuveen PA Qual Muni NQP 15.13 13.12 -13.3 5.3
Nuveen VA Qual Muni NPV 14.37 12.81 -10.9 4.3
PIMCO California Muni PCQ 14.06 17.28 +22.9 5.3
PIMCO California Mun II PCK 8.59 10.15 +18.2 5.6
52 wk
Prem Ttl
Fund (SYM)
NAV Close /Disc Ret
General Equity Funds
Specialized Equity Funds
Griffin Inst Access RE:A 26.68 NA NA 6.3
Griffin Inst Access RE:C 26.22 NA NA 5.5
Griffin Inst Access RE:I 26.84 NA NA 6.5
Griffin Inst Access RE:L 26.65 NA NA NS
Griffin Inst Access RE:M 26.53 NA NA 5.7
NexPointRlEstStrat;A 20.68 NA NA 7.7
NexPointRlEstStrat;C 20.75 NA NA 7.5
NexPointRlEstStrat;Z 20.77 NA NA 8.7
NorthStar RE Cap Inc:Adv NA NA NA NS
Resource RE Div Inc:A 10.04 NA NA 5.5
Resource RE Div Inc:C 10.04 NA NA 4.7
Resource RE Div Inc:D 10.20 NA NA 5.0
Resource RE Div Inc:I 10.46 NA NA 5.7
Resource RE Div Inc:L 10.05 NA NA NS
Resource RE Div Inc:T 10.02 NA NA 4.7
Resource RE Div Inc:U 10.05 NA NA 5.5
Resource RE Div Inc:W 10.20 NA NA 5.5
SharesPost 100;A
26.76 NA NA -0.1
SharesPost 100:I
26.77 NA NA NS
Tot Inc+ RE:L
NA NA NA NS
USQ Core Real Estate:I USQIX 25.04 NA NA NS
USQ Core Real Estate:IS USQSX 25.04 NA NA NS
Versus Cap MMgr RE Inc:F 27.68 NA NA 5.7
Versus Cap MMgr RE Inc:I 27.75 NA NA 6.1
Versus Capital Real Asst VCRRX 25.09 NA NA NS
Wildermuth Endwmnt Str 12.96 NA NA 12.0
Wildermuth Endwmnt S:C 12.78 NA NA 11.1
Wildermuth Endwmnt S:I 13.03 NA NA NS
Income Preferred Stock Funds
MultiStrat Gro & Inc:A 15.21 NA NA 3.3
MultiStrat Gro & Inc:C 14.87 NA NA 2.6
MultiStrat Gro & Inc:I 15.41 NA NA 3.6
MultiStrat Gro & Inc:L 14.99 NA NA 2.9
The Relative Value:CIA VFLEX 25.59 NA NA NS
Convertible Sec's. Funds
Calmos Dyn Conv and Inc CCD 20.76 20.41 -1.7 16.0
World Equity Funds
BMO LGM Front ME 10.85 NA NA 24.2
CalamosGlbTotRet CGO 13.53 15.03 +11.1 23.5
Prem12 Mo
Fund (SYM)
NAV Close /Disc Yld
U.S. Mortgage Bond Funds
Vertical Capital Income 12.65 NA NA 3.0
Loan Participation Funds
504 Fund
9.70 NA NA 3.7
FedProj&TrFinanceTender 10.10 NA NA NS
Invesco Sr Loan A
6.67 NA NA 4.2
Invesco Sr Loan B
6.67 NA NA 4.2
Invesco Sr Loan C
6.68 NA NA 3.4
Invesco Sr Loan IB
6.67 NA NA 4.4
Invesco Sr Loan IC
6.67 NA NA 4.3
Invesco Sr Loan Y
6.67 NA NA 4.4
RiverNorth MP Lending RMPLX 24.64 NA NA 9.1
Sierra Total Return:T SRNTX 24.90 NA NA NS
Voya Senior Income:A 12.50 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 12.51 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
9.39 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 11.53 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
3.51 NA NA NE
Palmer Square Opp Income 19.45 NA NA 5.0
Resource Credit Inc:A 11.07 NA NA 6.4
Resource Credit Inc:C 11.20 NA NA 5.6
Resource Credit Inc:I 11.09 NA NA 6.6
Resource Credit Inc:L 11.07 NA NA NS
Resource Credit Inc:W 11.07 NA NA 6.3
ly
.
Friday, December 22, 2017
Fund (SYM)
co Fo
m rp
m e
er rs
ci on
al a
us l,
e
on
Listed are the 300 largest closed-end funds as
measured by assets. Closed-end funds sell a limited
number of shares and invest the proceeds in securities.
Unlike open-end funds, closed-ends generally do not
buy their shares back from investors who wish to cash
in their holdings. Instead, fund shares trade on a stock
exchange. NA signifies that the information is not
available or not applicable. NS signifies fund not in
existence of entire period. 12 month yield is computed
by dividing income dividends paid (during the previous
twelve months for periods ending at month-end or
during the previous fifty-two weeks for periods ending
at any time other than month-end) by the latest
month-end market price adjusted for capital gains
distributions.
Source: Lipper
94,018,585
85,355,712
34,555,357
10,003,210
64,107,376
26,084,434
2,568,651
Sources: Thomson Financial; WSJ Market Data Group
Borrowing Benchmarks | WSJ.com/bonds
Money
Rates
Week
Latest ago
Dec. 22, 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.
—52-WEEK—
High Low
Week
Latest ago
Inflation
Nov. index
level
International rates
Chg From (%)
Oct. '17 Nov. '16
U.S. consumer price index
All items
Core
246.669
253.492
—52-WEEK—
High Low
0.002
–0.06
2.2
1.7
4.50 4.50 4.50 3.75
3.20 3.20 3.20 2.70
1.475 1.475 1.475 1.475
Policy Rates
0.00
0.50
0.50
1.50
0.00
0.50
0.50
1.50
Euro zone
Switzerland
Britain
Australia
0.00
0.50
0.50
1.50
0.00
0.50
0.25
1.50
1.49
0.48
The Mart
1.41
1.42
U.S.
U.S. government rates
To advertise: 800-366-3975 or WSJ.com/classifieds
2.00
2.00
1.25
1.4200
1.5625
1.3000
1.4100
1.4200
1.4400
1.6125
1.3000
1.4100
1.4300
0.5900
0.8125
0.4000
0.4000
0.5800
2.00
TRAVEL
$1,000,000 Yearly - $5,000 DAILY
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Major Airlines, Corporate Travel
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(800) 435-8776
Effective rate
High
Low
Bid
Offer
1.4400
1.5625
1.1900
1.4100
1.4300
Treasury bill auction
Secondary market
Fannie Mae
CAPITAL WANTED
Seeking Capital,
THEMART
ADVERTISE TODAY
30-year mortgage yields
30 days
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All Rights Reserved.
3.565 3.450 3.865 3.253
3.597 3.469 3.899 3.281
Other short-term rates
(800) 366-3975
sales.mart@wsj.com
Latest
Week
ago
52-Week
high
low
Call money
3.25
3.25
3.25
2.50
Commercial paper (AA financial)
90 days
1.60
1.49500
1.61331
1.77443
2.04763
1.56375
1.68577
1.83363
2.10216
0.76111
0.99706
1.31656
1.68456
One month
Three month
Six month
One year
-0.417
-0.385
-0.321
-0.245
-0.409
-0.386
-0.322
-0.261
-0.376
-0.334
-0.227
-0.086
-0.417
-0.387
-0.325
-0.261
One month
Three month
Six month
One year
-0.367
-0.329
-0.271
-0.186
Latest
-0.371
-0.329
-0.272
-0.193
Value
Traded
-0.366
-0.317
-0.217
-0.081
-0.375
-0.332
-0.276
-0.194
52-Week
High
Low
DTCC GCF Repo Index
Treasury
MBS
1.532
1.555
38.000 1.532 0.471
99.150 1.555 0.496
Open Implied
Settle Change Interest Rate
DTCC GCF Repo Index Futures
1.245 1.240 1.300 0.400
1.355 1.320 1.355 0.505
1.480 1.460 1.480 0.590
4 weeks
13 weeks
26 weeks
1.56375
1.68577
1.83363
2.10216
Euro Libor
Discount
Federal funds
BUSINESS OPPORTUNITIES
One month
Three month
Six month
One year
Euro interbank offered rate (Euribor)
Overnight repurchase
ADVERTISEMENT
—52-WEEK—
High Low
Libor
Prime rates
U.S.
Canada
Japan
Week
Latest ago
1.54
1.67
0.72
Treasury Dec
Treasury Jan
Treasury Feb
98.650 -0.005 3909 1.350
98.545 -0.015 2028 1.455
98.545 -0.005 813 1.455
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.
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.
Tuesday, December 26, 2017 | B7
MARKETS DIGEST
S&P 500 Index
Dow Jones Industrial Average
Last Year ago
Last
2683.34 s 7.53, or 0.28% last week
High, low, open and close for each of
the past 52 weeks
24754.06 s 102.32, or 0.42% last week Trailing P/E ratio 21.80
P/E estimate *
20.25
High, low, open and close for each of
Dividend yield
2.12
the past 52 weeks
21.74
18.72
2.40
All-time high 24792.20, 12/18/17
Year ago
Trailing P/E ratio 25.25 24.95
P/E estimate *
19.99 19.04
Dividend yield
1.90
2.07
All-time high: 2690.16, 12/18/17
New to the Market
Public Offerings of Stock
IPOs in the U.S. Market
None expected this week
Lockup Expirations
Current divisor 0.14523396877348
24000
2700
23000
2600
Week's high
UP
Friday's close
t
DOWN
Monday's open
Monday's open
t
Friday's close
22000
2500
21000
2400
20000
2300
Week's low
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.
Lockup
expiration Issue date
Offer Offer amt Through Lockup
Symbol price($) ($ mil.) Friday (%) provision
Issuer
Dec. 25 June 28, ’17 Aileron Therapeutics Inc ALRN
15.00
56.3
9.1
180 days
June 28, ’17 Blue Apron Holdings Inc APRN
10.00
300.0
4.0
180 days
19.00
124.6
21.6
180 days
17.00
86.3
28.7
180 days
7.00
67.0
5.1
180 days
Dec. 26 June 29, ’17 Byline Bancorp Inc
65-day moving average
June 29, ’17 Tintri Inc
200-day moving average
18000
2100
17000
2000
Bars measure the point change from Monday's open
F
M
A
M
J
J
A
S
O
N
t
NYSE weekly volume, in billions of shares
D J
D
Primary
market
t
D J
F
M
A
M
J
J
A
S
O
N
F
M
A
M
J
J
A
S
O
N
A federal appeals court cut in half a $5 billion jury award
for punitive damages against Exxon Mobil Corp. in the
1989 Valdez oil spill that affected the Alaskan coastline.
Major U.S. Stock-Market Indexes
Low
Nasdaq Composite
% chg
52-Week
Close (l)
Low
Dow Jones
Industrial Average 24876.07 24697.11 24754.06
Transportation Avg 10691.01 10432.42 10674.97
Utility Average
756.17 714.57
721.05
Total Stock Market 27872.35 27676.19 27768.12
715.04
Barron's 400
717.95 711.69
102.32
281.96
-32.33 -4.29
111.36
6.86
l
0.42 19732.40
2.71 8783.74
651.14
0.40 23276.73
0.97
600.24
High
% chg
24792.2
24.2
16.2
9.1
18.0
17.8
25.3
18.0
9.3
19.3
18.9
11.3
5.5
5.4
8.8
9.7
27.4
30.9
29.3
32.9
13.3
14.6
l 10674.97
l
% chg
YTD 3-yr. ann.
774.47
l 27830.03
l
716.6
s 23.38, or 0.34%
last week
7000
7003.89 6935.42
6522.70 6447.93
6959.96
6465.17
23.38
-1.15
l
6994.76
l 6513.27
5383.12
4863.62
0.34
-0.02
Standard & Poor's
2683.34
1904.58
939.34
7.53
17.91
6.71
1530.81 1542.93
12741.87 12797.44
557.14
563.48
4131.86 4202.95
543.44
544.09
106.63
107.95
80.77
84.01
133.97
146.46
1259.78 1271.17
9.90
8.90
12.50
97.76
6.34
29.80
-3.50
1.70
3.78
13.24
20.28
0.48
l
2238.83
1660.58
815.62
0.28
0.95
0.72
2690.16
1905.3
945.12
l
19.9
14.7
12.1
18.5
13.8
11.2
8.9
9.4
10.8
6900
Russell 2000
1552.32
NYSE Composite
12826.03
Value Line
565.37
NYSE Arca Biotech 4226.95
NYSE Arca Pharma
551.64
KBW Bank
108.61
PHLX§ Gold/Silver
84.13
PHLX§ Oil Service
147.49
PHLX§ Semiconductor 1291.33
CBOE Volatility
10.18
l
l
1345.24
11056.89
503.24
3075.02
469.13
1.60
88.02
4.71
74.23
9.94
117.79
1.62
901.69
5.10
9.14
0.82
0.77
1.14
0.71
-0.64
Nasdaq PHLX
1548.92 12.5
12800.21 15.0
564.24 10.2
4304.77 32.1
560.52 13.2
108.12 15.9
96.72 13.2
192.66 -21.2
1341.69 37.0
16.04 -13.5
l
l
l
l
l
l
l
l
l
13.7
8.7
15.7
5.4
11.3
4.0
36.7
6.2
13.0 -0.1
17.6 13.3
6.5
8.7
-20.3 -11.9
40.2 22.2
-29.5 -13.4
Sources: SIX Financial Information; WSJ Market Data Group
International Stock Indexes on Monday
Region/Country
DJ US TSM
s 111.36, or 0.40%
Index
Close
Latest
Net chg
YTD
% chg
% chg
27850
27700
27550
15 18 19 20 21 22
December
3077.11
DJ Global Index
395.65
DJ Global ex U.S.
263.71
643.28
DJ Americas
Brazil
Sao Paulo Bovespa
75186.53
Canada
S&P/TSX Comp
16165.27
Mexico
S&P/BMV IPC
48387.93
Chile
Santiago IPSA
4190.53
EMEA
Stoxx Europe 600
390.28
Eurozone
Euro Stoxx
389.27
Belgium
Bel-20
3995.05
France
CAC 40
5364.72
Germany
DAX
Israel
Tel Aviv
Italy
FTSE MIB
13072.79
1508.30
22209.05
Netherlands
AEX
Russia
RTS Index
Spain
IBEX 35
Sweden
SX All Share
Switzerland
Swiss Market
U.K.
FTSE 100
548.48
0.02
21.3
0.09
0.03
23.3
…
Closed
24.8
…
Closed
5.7
DJ Commodity
TR/CC CRB Index
…
Closed
6.0
…
Closed
30.0
…
Closed
8.0
…
Closed
11.1
…
Closed
10.8
…
Closed
10.3
…
Closed
13.9
–6.19
…
–0.41
Closed
15.5
…
Closed
2.6
8.24
–0.7
…
Closed
8.9
575.65
…
Closed
7.7
9394.49
…
Closed
14.3
7592.66
…
Closed
6.3
Closed
7.1
3280.46
–16.60
Hang Seng
29578.01
…
Closed
34.4
S&P BSE Sensex
33940.30
…
Closed
27.5
China
Shanghai Composite
Hong Kong
India
0.16
36.42
Japan
Nikkei Stock Avg
Singapore
Straits Times
3385.71
South Korea
Kospi
2440.54
Taiwan
Weighted
10522.49
–14.78
22939.18
5.7
–0.50
…
17.5
…
Closed
20.4
Consumer Rates and Returns to Investor
U.S. consumer rates
Selected rates
A consumer rate against its
benchmark over the past year
5-year CDs
t
1.50
t
J FMAM J J A S O N D
2017
Interest rate
1.14
Natural gas, $/MMBtu 2.667
Gold, $ per troy oz.
1275.40
0.055
2.11 -28.38
21.10
1.68 10.90
U.S. Dollar Index
WSJ Dollar Index
1.50%
Bankrate.com avg†:
EverBank
Jacksonville, FL
8.84
93.32
-0.61 -0.65 -8.70
86.81
-0.29 -0.33 -6.59
0.8431 -0.0082 -0.96 -11.31
Yen, per dollar
U.K. pound, in dollars
113.29
0.67
1.34
0.004
0.60 -3.18
0.31
52-Week
Low Close(l) High
DJ Commodity
532.01
TR/CC CRB Index
166.50
Crude oil, $ per barrel 42.53
Natural gas, $/MMBtu 2.56
Gold, $ per troy oz. 1131.90
U.S. Dollar Index
91.35
WSJ Dollar Index
84.49
Euro, per dollar
0.83
Yen, per dollar
107.84
U.K. pound, in dollars
1.20
% Chg
616.58
l 195.14
l 58.95
3.93
l 1346.00
8.55
-1.39
10.28
-27.17
12.68
103.22
93.56
0.96
117.75
1.36
-9.33
-6.95
-11.85
-3.44
8.77
l
l
8.25
l
l
l
l
l
Real-time U.S. stock
quotes are available on
WSJ.com. Track mostactive stocks, new
highs/lows, mutual
funds and ETFs.
WSJ
.COM
Yield to maturity of current bills,
notes and bonds
2.40%
855-228-6755
2.40%
866-518-0286
Live Oak Bank
Wilmington, NC
0.50
First Internet Bank of Indiana
2.43%
Indianapolis, IN
888-873-3424
Capital One 360
Glen Allen, VA
Federal-funds rate target
1.25-1.50 1.25-1.50
Prime rate*
4.50
4.50
Libor, 3-month
1.61
1.69
Money market, annual yield
0.34
0.34
Five-year CD, annual yield
1.49
1.50
30-year mortgage, fixed†
3.88
3.97
15-year mortgage, fixed†
3.30
3.39
Jumbo mortgages, $424,100-plus† 4.35
4.26
Five-year adj mortgage (ARM)† 4.00
3.70
New-car loan, 48-month
3.32
3.33
1.99
Euro, per dollar
3.75%
2.45%
800-289-1992
3-yr chg
52-Week Range (%)
Low 0 2 4 6 8 High (pct pts)
0.50 l
l
3.75
l
1.00
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
1.69
0.36
1.50
4.33
3.50
4.87
4.03
3.36
1.25
1.25
1.43
-0.09
-0.01
-0.12
0.04
-0.05
0.60
0.31
Bankrate.com rates based on survey of over 4,800 online banks. *Base rate posted by 70% of the nation's largest
banks.† Excludes closing costs.
Sources: SIX Financial Information; WSJ Market Data Group; Bankrate.com
Friday
t
15%
10
2.25
5
1.50
One year ago
0.75
0
0.00
1
3 6
month(s)
Yen, euro vs. dollar; dollar vs.
major U.S. trading partners
3.00
Goldman Sachs Bank USA
2.40%
New York, NY
855-730-7283
Yield/Rate (%)
Last (l)Week ago
1.88 7.18
1.82 -2.41
Benchmark Yields and Rates
Treasury yield curve Forex Race
1.00
0.00
58.47
Crude oil, $ per barrel
t
Federal-funds
target rate
8.31
YTD
% chg
1 2 3 5 710
years
maturity
Euro
s
Five-year CD yields
0.06
0.001
All are available free at WSJMarkets.com
Sources: SIX Financial Information; WSJ Market Data Group
2.00%
-0.04 -0.04 -3.22
1.34
11.20
3.35
13.7
–0.14
YTD
% chg
608.01
187.88
20.0
Closed
113.24
Last Week
Close Net chg %Chg
13.5
0.73
…
S&P/ASX 200
Yen, per dollar
U.K. pound, in dollars
19.0
6069.70
Australia
Euro, per dollar
…
%Chg
86.74 -0.07 -0.08 -6.67
0.8421 -0.0010 -0.12 -11.42
WSJ Dollar Index
...
10182.00
no
Asia-Pacific
21.6
–.00006
0.07
n-
1143.94
-0.002
Monday
Net chg
s
Yen
WSJ Dollar index
–5
s
Americas
The Global Dow
27400
CommoditiesandCurrencies
Close
World
6850
15 18 19 20 21 22
December
last week
Other Indexes
iClick Interactive Asia Grp 9.00
ICLK Dec. 22/$8.00
12.5
...
LexinFintech Hldgs
LX Dec. 21/$9.00
14.20
57.8
Dogness
DOGZ Dec. 20/$5.00
5.85
Casa Sys
CASA Dec. 15/$13.00
Newmark Grp
NMRK Dec. 15/$14.00
–10
30
% Chg From
Friday3s Offer 1st-day
close ($) price close
Company SYMBOL
IPO date/Offer price
Denali Thera
DNLI Dec. 8/$18.00
15.78 –12.3 –26.4
32.7
GigCapital
GIG.U Dec. 8/$10.00
10.00
...
...
17.0
–2.5
Luther Burbank
LBC Dec. 8/$10.75
12.06
12.2
2.6
15.11
16.2
4.9
CURO Grp Hldgs
CURO Dec. 7/$14.00
14.04
0.3
–1.1
15.46
10.4
10.8
Odonate Thera
ODT Dec. 7/$24.00
24.92
3.8
8.3
Off the Shelf
“Shelf registrations” allow a company to prepare a stock or bond for
sale, without selling the whole issue at once. Corporations sell as
conditions become favorable. Here are the shelf sales, or takedowns,
over the last week:
Issuer/Industry
Takedown date/ Deal value Registration
Registration date ($ mil.)
(mil.)
Catalyst Biosciences Inc
Healthcare
Dec. 20
March 16,316
$10.5
$50.0
JonesTradingInstitutionalServicesLLC,
Ladenburg Thalmann
City Office REIT Inc
Real Estate/Property
Dec. 19
June 1,317
$72.5
$500.0
Raymond James & Associates Inc,
RBC Cptl Mkts
ImmuCell Corp
Healthcare
Dec. 19
Oct. 27,315
$3.1
$10.0
$125.0
$300.0
co Fo
m rp
m e
er rs
ci on
al a
us l,
e
on
2694.97 2676.11
1909.26 1894.35
949.07 935.54
500 Index
MidCap 400
SmallCap 600
% Chg From
Friday3s Offer 1st-day
close ($) price close
Company SYMBOL
IPO date/Offer price
Sources: WSJ Market Data Group; FactSet Research Systems
6950
Nasdaq Stock Market
Nasdaq Composite
Nasdaq 100
Secondaries and follow-ons expected this week in the U.S. market
None expected this week
Performance of IPOs, most-recent listed first
Weekly P/E data based on as-reported earnings from Birinyi Associates Inc.
High
Other Stock Offerings
D
Financial Flashback
The Wall Street Journal, December 26, 2006
D
Latest Week
Close
Net chg
Sources: Dealogic; WSJ Market Data Group
IPO Scorecard
Composite
30
20
10
0
D J
TNTR
2200
19000
200-day moving average
BY
June 29, ’17 Dova Pharmaceuticals Inc DOVA
ly
.
65-day moving average
2017
Madrigal Pharmaceuticals IncDec. 18
Healthcare
Aug. 6,315
Bookrunner(s)
Craig-Hallum Group
GS, Evercore Inc
Public and Private Borrowing
Treasurys
Tuesday, December 26
Wednesday, December 27
Auction of 13 and 26 week bills;
Auction of 2 year FRN;
announced on December 21; settles on December 28announced on December 21; settles on December 29
Auction of 4 week bill;
Auction of 5 year note;
announced on December 21; settles on December 28announced on December 21; settles on January 2
Auction of 2 year note;
announced on December 21; settles on January 2
Thursday, December 28
Auction of 7 year note;
announced on December 21; settles on January 2
Public and Municipal Finance
Deals of $ 150 million or more expected this week
Sale
Final
maturity Issuer
Total
($mil.)
Rating
Bookrunner/
Fitch Moody’s S&P Bond Counsel(s)
Dec. 26 prelim.
California
225.0 N.R.
N.R.
N.R. M. Stanley/—
Dec. 26 prelim.
Maryland
Stadium Authority
426.0 N.R.
N.R.
N.R. BoA Merrill/—
Source:Thomson Reuters/Ipreo
A Week in the Life of the DJIA
A look at how the Dow Jones Industrial Average component stocks
did in the past week and how much each moved the index. The DJIA
gained 102.32 points, or 0.42%, 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 $37,743, or a gain of 25.81%, 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
$1,730
6.18
9.06
62.38
Caterpillar
CAT $155.75
4.80
2.14
14.73
Intel
INTC
46.70
1,324
4.38
5.25
36.15
Chevron
CVX 124.98
1,104
3.04
5.55
38.21
Home Depot
HD
188.13
1,435
3.01
2.11
14.53
DowDuPont
DWDP
72.11
1,294
1.23
1.31
9.02
J.P. Morgan Chase
JPM 107.45
1,273
1.13
1.10
7.57
Wal-Mart Stores
WMT
98.21
1,457
1.13
0.94
6.47
Exxon Mobil
XOM
83.97
966
0.99
0.52
3.58
Verizon
VZ
53.19
1,045
0.94
0.36
2.48
Cisco Systems
CSCO
38.55
1,321
United Technologies UTX 127.23
1,188
0.84
1.06
7.30
0.70
1.80
12.39
0.60
1.04
7.16
Apple
0.39
1.16
7.99
Boeing
BA
295.10
1,949
0.26
0.24
1.65
Procter & Gamble
PG
92.13
1,130
Goldman Sachs
258.97
1,095
AAPL 175.01
1,535
GS
0.22
0.22
1.51
American Express
AXP
98.74
1,354
0.21
0.12
0.83
Merck
MRK
56.36
987
0.00
0.00
0.00
IBM
IBM 152.50
954
–0.37
–0.50
–3.44
Travelers
TRV 134.39
1,123
–0.82
–1.82
–12.53
UnitedHealth Group UNH 220.00
1,395
–0.99
–1.13
–7.78
Visa
Sources: Ryan ALM; Tullett Prebon; WSJ Market Data Group
–1.30
–0.60
–4.13
Coca-Cola
Corporate Borrowing Rates and Yields
–1.37
–3.27
–22.52
3M
–1.52
–2.64
–18.18
McDonald’s
MCD 171.42
1,444
Total Return
52-wk
3-yr
–1.54
–1.34
–9.23
Microsoft
MSFT
85.51
1,407
2.68 0.91
5.97 3.70
3.75 2.10
6.660 4.608
2.94 1.80
4.478 2.386
9.407 6.710
–1.64
–2.34
–16.11
Johnson & Johnson JNJ
140.12
1,248
–1.80
–0.32
–2.20
General Electric
GE
17.50
569
–2.32
–1.50
–10.33
Nike
NKE
63.29
1,262
–2.34
–2.60
–17.90
Walt Disney
DIS
108.67
1,059
–2.85
–1.06
–7.30
Pfizer
PFE
36.14
1,156
Bond total return index
Spread +/- Treasurys,
Yield (%)
in basis pts, 52-wk Range
Last Wk ago
Last
Low High
10-yr Treasury, Ryan ALM
DJ Corporate
Aggregate, Barclays Capital
High Yield 100, Merrill Lynch
Fixed-Rate MBS, Barclays
Muni Master, Merrill
EMBI Global, J.P. Morgan
2.486
3.190
2.770
5.635
2.980
2.253
5.580
2.353
3.105
2.680
5.587
2.880
2.140
5.528
36
339
24
14
308
35
307
15
5
303
45
394
34
18
365
Sources: J.P. Morgan; Ryan ALM; S&P Dow Jones Indices; Barclays Capital; Merrill Lynch
V
112.69
1,455
KO
45.59
1,137
MMM 234.73
1,345
*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.
B8 | Tuesday, December 26, 2017
* *
THE WALL STREET JOURNAL.
BANKING & FINANCE
Ackman, Valeant Suffer Legal Hit BITCOIN
Judge’s preliminary
ruling sides with
plaintiffs who alleged
insider trading
ly
.
Trial Could Undo
A Big Ackman Win
The outcome of the
ongoing trial against William
Ackman and his hedge fund,
Pershing Square Capital
Management LP, could rewrite
the story of one of his best
trades when he is already
under pressure.
The hedge fund, roughly
flat this year, is facing its third
consecutive year of
underperformance compared
with the broader market.
Pershing Square funds that
participated in a deal to buy
Allergan PLC could be on the
hook if there are monetary
damages from the suit.
That could further dent
performance and assets if they
exceed the current reserve.
Valeant Pharmaceuticals
International and Pershing
Square partnered in early 2014
to try to buy Allergan, the
maker of Botox, for more than
$50 billion. The hedge fund
took a 9.7% stake in Allergan to
try to win enough support for
the deal.
The bid failed when Actavis
PLC swept in with a $66 billion
offer for Allergan.
The plaintiffs, led by the
State Teachers Retirement
System of Ohio and the Iowa
Public Employees’ Retirement
System, sold Allergan shares as
Pershing Square was buying.
They contend that Pershing
Square and Valeant profited
from inside information.
An adverse outcome for
Valeant would be another
setback for the company as it
labors to get out from under a
sizable debt load.
A spokeswoman for Valeant
said that “no final ruling has
been made” and that the
company is prepared for a trial.
“We remain confident in our
position and will vigorously
defend the company in these
matters,” she said.
ing to people familiar with the
matter. If a settlement were
reached, it could happen soon,
one of these people said.
Valeant and Pershing Square
struck an agreement this year
under which Valeant could be
on the hook for 60% of any
settlement. Valeant must sign
off on any agreement.
Pershing Square has set
aside $75 million in legal reserves related to the case, according to an annual report
filed by a Pershing unit.
Valeant has $153 million re-
served for legal settlements
broadly, according to a securities filing.
If the defendants were to
lose a trial, a jury would determine the damages, but the
plaintiffs would decide whom
to pursue for payment.
In the tentative ruling,
Judge Carter declined to cap
damages at $1 billion, as Pershing Square and the other defendants had requested. The
suit, filed in 2014, seeks $3 billion in damages.
On Dec. 8, Judge Carter be-
gan hearings in the case by
handing out his tentative ruling, which was reviewed by
The Wall Street Journal.
The judge said several times
that he was still weighing the
issues and cautioned the parties that they shouldn’t place
too much weight on the preliminary ruling.
The hearings focused on
several matters, but the case
hangs on whether Valeant and
Pershing Square violated a law
that makes it illegal for someone who has taken “substantial
steps” toward launching a tender offer to tip off another
party, a practice known as
warehousing.
Pershing
Square
and
Valeant say that they were
partners, so Pershing Square
couldn’t have been trading on
another party’s information
and that they originally decided against a tender offer,
so they couldn’t have taken
steps toward one when they
traded. They later launched
one.
The defendants argued, in
part, that what Pershing
Square brought to the table,
including its willingness to
take a lower price than other
Allergan shareholders, was
proof of a partnership.
The judge’s tentative opinion said Pershing Square failed
to qualify as a co-offerer in
part because the firm had no
control over the price of the
bid.
It also said Valeant’s board
meetings, financing work and
plans to launch an unfriendly
offer “can fairly be said to
have been substantial steps
that facilitated their tender offer” even if Valeant believed at
the time the steps were toward
a friendly deal.
—Jonathan D. Rockoff
contributed to this article.
n-
Credit Unions Want More Regulatory Say
State of the Credit Union
no
BY RYAN TRACY
WAS H I N GT O N — S h o u l d
credit unions have a say in
their regulator’s business?
A financial deregulation bill
that could become law next
year would require the U.S.
credit-union regulator to submit its budget to public comment, a change that critics say
gives the industry a platform
for influencing its overseer.
The new budget process for
the National Credit Union Administration has broader implications because it could set
a precedent for other agencies
that watch over the financial
sector, such as the Consumer
Financial Protection Bureau.
The NCUA currently holds
public meetings on its budget
voluntarily, but the bill would
formalize that process.
Financial regulators like
NCUA are generally funded by
fees on the industries they
oversee. Some, such as the
consumer bureau, set their
own budgets, while others
must win approval from Congress. If the bill becomes law,
the NCUA will be the only financial regulator required to
hold a public hearing where industry can weigh in on spending.
“It is like letting the fox
guard the hen house. It is an
attack on the core of independent oversight,” said Debbie
Matz, who was chairman of
the NCUA from 2009 to 2016.
Sen. Dean Heller (R., Nev.)
inserted the provision into a
broader financial-regulation
bill that has bipartisan support. “This would ensure that
Nevada credit union members
Credit unions are showing slow and steady growth across the U.S.
Under
$10 million
ASSET GROUP
$10 million to
$100 million
$100 million to
$500 million
$500 million
and greater
NUMBER OF CREDIT UNIONS
1,562
credit unions
2,524
1,026
530
MEMBERSHIP GROWTH*
-1.5%
0.3%
2.7%
*Based on the same federally insured credit unions reporting at 4Q 2016 and 3Q 2017.
Source: National Credit Union Administration
will always have their voices
heard in Washington, D.C.,” he
said in a statement.
Mr. Heller co-sponsored
similar legislation with Sen.
Mark Warner (D., Va.) in 2015.
Mr. Warner declined to comDean Heller
says his plan
would ensure
Nevada credit
union members
will ‘have their
voices heard.’
ment. He said in 2015 that
public hearings on the regulator’s budget make sense “since
credit union members are ultimately responsible for funding
the NCUA through assessments
on their institutions.”
Credit unions are not-forprofit lenders, owned by their
members.
Mr.
Heller’s
provision
amends the 1934 Federal
Credit Union Act to require the
NCUA to publish a detailed
draft of its budget each year,
and hold a public hearing on
the spending plan where credit
unions or others can comment
on it.
The NCUA held annual
briefings voluntarily on its
budget in the past, starting in
2002, the agency says. Ms.
Matz in 2009 stopped the
practice, which she saw as allowing inappropriate influence. Her decision was criticized by politically powerful
credit unions, which have lobbied Mr. Heller and others to
6.9%
THE WALL STREET JOURNAL.
make budget hearings a legal
requirement. After Ms. Matz
left, the NCUA restarted the
public budget briefings. Its
current governing board,
which has two members and
one vacant seat, is divided on
the Senate bill.
NCUA Chairman Mark McWatters, a Republican, said he
believes the regulator has a
transparent budget process,
but “I appreciate that Congress may question whether
future boards will continue
that approach.”
Rick Metsger, the Democratic NCUA board member,
said “the legislation directs
NCUA to do what we are already doing voluntarily, but increases the cost for credit
unions by requiring everything
to be published in the Federal
Register rather than just posting it on our public website.”
Credit unions see budget
hearings as a way to ensure
the NCUA is accountable for its
spending decisions.
“Credit unions would dispute the fact that we are able
to tell the regulator what to
do,” said Ryan Donovan, chief
advocacy officer at the Credit
Union National Association
trade group. Rather, he says,
the group analyzes the budget
and sheds light on areas where
the agency could be more efficient, like travel expenses.
“I’m not sure we would object to a similar process” at
other agencies, he said.
NCUA’s operating budget
was $178 million in 2009,
when Ms. Matz stopped holding the briefings. It grew rapidly as the agency responded
to the 2008 financial crisis and
at a slower rate in more recent
years. It is set at about $298
million for 2018.
Credit unions generally
have argued the agency spends
too much—at least in recent
history. A 2004 Government
Accountability Office report
said that credit unions, seeking to lower their costs, were
raising concerns about the
number of NCUA staff and
their salaries.
This year, Jim Nussle, president of the credit union trade
group, told the regulator, “We
believe there is immense capacity for NCUA to reduce its
footprint.”
The bill containing Mr. Heller’s provision passed the Senate Banking Committee on Dec.
5 and could be taken up by the
full Senate in 2018.
The power of the
CFTC to curb growth
of cryptocurrency
derivatives is limited.
ing to look at all of the token
offerings,” said Michael Didiuk, a former regulator who
specialized in blockchain technology at the SEC and now is
a partner at Perkins Coie LLP.
The SEC has sued two ICOs
that it said committed fraud
by allegedly taking investors’
money for tokens that didn’t
exist or promising outlandish
returns. This month, the SEC
intervened to halt a $15 million ICO by Munchee Inc., a
restaurant app, saying the deal
should have been registered as
a securities offering.
Many issuers say their tokens will trade, just like cryptocurrencies, on platforms
that function as exchanges.
There are now so many tokens
trading that some securities
lawyers say the landscape resembles the market for microcap companies, thinly traded
stocks that are easily manipulated by promoters and pumpand-dump artists.
“When there is a lot of
money in the space, you get
well-meaning entrepreneurs
and you get charlatans only
looking to scalp, and pump
and dump, and flip ICOs,” said
Chris Padovano, a New York
attorney specializing in advising blockchain-based businesses.
While many cryptocurrency
and token exchanges are based
overseas, SEC officials believe
their authority can extend beyond U.S. borders, according
to people familiar with the
matter. The issue would turn
on whether an exchange solicited U.S. investors or knew its
activity would attract U.S. participants, the people said.
JOSHUA ROBERTS/REUTERS
A judge’s preliminary ruling rejects the argument William Ackman and co-defendants were allowed to trade on their bid for Allergan.
co Fo
m rp
m e
er rs
ci on
al a
us l,
e
on
A preliminary ruling from a
federal judge against William
Ackman, his hedge fund and
Valeant Pharmaceuticals International Inc. in an insidertrading case could trigger a
settlement between the activist investor and shareholders
of Allergan PLC.
In recent days, Mr. Ackman,
his partners and the plaintiffs
have been back in touch with
the mediator in the matter,
according to people familiar
with the situation. There are
several parties who would
have to agree to any deal. It is
unclear how far apart the parties are, and a deal is far from
ensured.
In a recent ruling, federal
Judge David O. Carter sided
with plaintiffs on most of the
issues in the case and rejected
two key legal arguments from
Mr. Ackman, his Pershing
Square Capital Management
LP and Valeant. Allergan
shareholders allege that Mr.
Ackman, Pershing Square and
Valeant improperly traded
ahead of their takeover bid for
Allergan in 2014.
The judge cautioned that he
could change his mind, though
the tentative ruling could increase the risk for Mr. Ackman, Valeant and other defendants of paying major damages
following a trial, which is
scheduled for February.
The judge handed out the
50-page tentative order before
four days of hearings that
wrapped up Dec. 14 in a Santa
Ana, Calif., federal court but
didn’t make it public.
Addressing one of the defendants’ arguments—that
they were partners in the Allergan bid and therefore allowed to trade—the judge
said, “This cannot be correct.” He added that if it
were, it “would undermine
the very purpose” of rules
about who can trade in the
takeover attempt.
Pershing Square’s Allergan
profit was wiped away by a
$4 billion loss it sustained on
a stake it subsequently
bought in Valeant. The firm
reaped a $2.3 billion gain on
the Allergan trade, while
Valeant made more than
$400 million. But both have
struggled following spiraling
losses at the Canadian drugmaker after their Allergan
collaboration ended.
The two sides have held onagain, off-again talks, accord-
CHRISTOPHER GOODNEY/BLOOMBERG NEWS
BY GRETCHEN MORGENSON
AND DAVID BENOIT
Continued from page B1
at Quinn Emanuel Urquhart &
Sullivan LLP and previously a
top aide to former SEC Chairman Mary Jo White.
CFTC Chairman J. Christopher Giancarlo has enthusiastically embraced blockchain
technology and has spoken
positively about how it will
“challenge orthodoxies” in financial-market infrastructure.
He has warned regulators
about stifling innovation by
being overly prescriptive about
how blockchain can be used.
The CFTC has limited power
to constrain growth of cryptocurrency derivatives. Futures
exchanges, which launched
new contracts on bitcoin this
month, can effectively launch
new products without the
CFTC’s approval by declaring
they have controls to guard
against manipulation. The
CFTC has emergency authority
to halt trading of futures but
has used it only five times in
its 43-year history.
The CFTC also can regulate
bitcoin markets that lend traders money to increase their
bets, known as leveraged trading. Last year, the CFTC
reached a $75,000 settlement
with Bitfinex, an exchange that
CFTC said offered leveraged
trading without the commission’s approval. Bitfinex didn’t
respond to requests to comment. Earlier, Bitfinex said it
“made significant changes” to
come in line with CFTC rules.
The SEC is waging its own
cryptocurrency battles. It has
come down hard on initial
coin offerings, or ICOs, a type
of unregulated fundraising in
which people pay in cash or in
cryptocurrencies to get new
digital tokens that can entitle
their owners to future products or services developed by
the company. The SEC has said
many of the deals are actually
securities sales.
“They are just digging in on
a case-by-case basis and try-
J. Christopher Giancarlo,
chairman of the CFTC, has
embraced blockchain technology.
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.
Tuesday, December 26, 2017 | B9
* * * *
MARKETS
A trade group official
called the rule ‘an
ongoing burden’ on
small lenders.
no
n-
ers, since Mr. Hoenig and FDIC
Chairman Martin Gruenberg—
who also has concerns about
the Volcker provision—are
Obama administration appointees and likely to be replaced
in the coming months. If the
bill passes, the FDIC wouldn’t
be able to enforce the Volcker
rule at small banks.
President Donald Trump’s
nominee to lead the FDIC,
banking lawyer Jelena McWilliams, hasn’t addressed the issue but is expected to be more
industry-friendly than the
FDIC’s current leaders. The
Senate is likely to act on her
nomination in 2018.
The 2010 Dodd-Frank law
ordered regulators to write a
rule preventing banks from using taxpayer-insured deposits
for hedge-fund-like activities.
The Volcker rule, named for
former Federal Reserve Chairman Paul Volcker, who proposed the idea, bars banks
from speculative trading or
buying into potentially risky
investment funds.
When regulators completed
Chinese metals futures posted sizable declines. The most actively traded steel-rebar futures contract in Shanghai slumped 3.1%.
ly
.
WASHINGTON—A Senate
proposal to exempt thousands
of small U.S. banks from the
Volcker rule restrictions on
speculative trading is winning
broad support—except from
the regulator that oversees
most of those banks.
Officials at the Federal Deposit Insurance Corp. say the
exemption could let new risks
creep into the banking system.
“I think this would be a
loophole,” said FDIC Vice
Chairman Thomas Hoenig in
an interview. “It does open a
door, if you are oriented to use
deposits to speculate.”
Other bank regulators support the bill by Senate Banking Committee Chairman Mike
Crapo (R., Idaho), which includes
other
regulatory
changes. So do Republicans
and at least 11 Democratic senators, giving it a good chance
of passing in 2018.
The FDIC’s objections might
not carry water with lawmak-
the Volcker rule in late 2013,
they said small banks “do not
have any compliance obligations” tied to the rule if they
aren’t doing risky trading.
In practice, bankers say they
are treated as guilty until
proven innocent. The Volcker
rule allows hedging transactions, for example, but the burden of proof is on bankers to
prove to regulators they are legitimate. That means investing
time or hiring outside help.
“It has been an ongoing
burden,” said Paul Merski, executive vice president at the
Independent Community Bankers of America trade group.
Policy makers are sympathetic, but disagree about how
to solve the problem.
Mr. Crapo’s bipartisan bill
would exempt small banks
from the Volcker rule. To qualify, banks must have less than
$10 billion in assets and limit
trading activity to less than
5% of their balance sheet.
Mr. Hoenig said he sees a
loophole in how the Senate
rule defines the 5% limit on
banks’ trading activity. The
bill’s definition of trading assets and liabilities would include short-term speculative
trades but not longer-term
trades, he says.
In theory, under the Senate
bill a small bank could make
longer-term investments in an
exotic derivative or mortgage
security.
A bank could buy into a
hedge fund, or a hedge fund
could buy a small bank and
use its deposits to speculate,
he said.
“Some want to allow community banks to get into this
casino business,” said Sen. Jeff
Merkley (D., Ore.), a liberal
who helped insert the Volcker
provision into Dodd-Frank. “I
agree with Vice Chair Hoenig
that this is a big mistake.”
Mr. Crapo declined to comment.
To be sure, other laws restrain bank ownership by nonbank companies. If Mr. Hoenig’s scenarios play out,
regulators would still have
power to crack down using
non-Volcker authorities.
Mr. Hoenig said supervisors
typically catch risky trades after they go south, not before:
“That is why you have the Volcker rule in the first place.”
The bill passed the banking
committee Dec. 5. More changes
could be made if the full Senate
considers it next year.
Chinese Stocks Log Small Drop
co Fo
m rp
m e
er rs
ci on
al a
us l,
e
on
BY RYAN TRACY
SI WEI/IMAGINECHINA/ASSOCIATED PRESS
FDIC Wary of Plan
Sparing Small Banks
From Volcker Rule
Chinese stocks fell on
Christmas Day, extending this
year’s underperformance in a
slow session in which most
global markets
MONDAY’S
were closed.
MARKETS
But Japan’s
benchmark
crept up to set
another 26-year closing high.
The Shanghai Composite Index fell 0.5% to 3280.46 amid
continued weakness in small
caps, more than offsetting intraday gains by real-estate
blue chips. The index fell as
much as 0.8% Monday afternoon, with nearly 1,000 stocks
declining. Early Tuesday, the
index was up 0.07%
The Shenzhen market,
which symbolizes China’s new
economy, continued to perform even worse. The Shenzhen Composite shed 0.9%
Monday, having fallen more
than 5% the past year, and hit
a low of more than two weeks.
Early Tuesday, the Shenzen
was down 0.91% The city’s
tech-stock heavy ChiNext index slid 1.3%.
A gauge of the 50 largest
stocks in Shanghai—which has
been a rare bright spot for
Chinese stocks in 2017, rising
26%—slid just 0.02% Monday.
Sizable declines in Chinese
metals futures aided to the
bearish sentiment in stocks.
Dalian-traded iron ore ended
2.2% lower while the most actively traded steel-rebar futures contract in Shanghai
slumped 3.1% amid falling
spot steel prices over the
weekend and muted demand
expectations.
Investors remain concerned
about liquidity stress, a regulatory crackdown involving
speculative trading and an acceleration in initial public offerings, said Deng Wenyuan,
an analyst at Soochow Securities.
China’s securities regulator
has sped up IPO approvals,
adding pressure on once-highflying technology shares in
Shenzhen. More than 400
companies have made their debut on the A-share market this
year, raising more than 225.5
11
Bitcoin has flipped between a bull
and a bear market 11 times in 2017,
one sign of how volatile the
cryptocurrency can be.
Bitcoin Flips Sides Again
JIM BOURG/REUTERS
Bitcoin fell sharply last week,
bringing it into its latest bear
market. That is a familiar place
for the cryptocurrency, which
has swung between bull and
bear markets nearly once a
month this year.
A loss of 20% typically
signals the start of a bear
market, while a gain of 20%
signals a bull market. After
entering one, it takes a 20%
Divergent
Chinese stocks fell while
Japan’s benchmark set a new
26-year closing high
1.0%
Nikkei
0.5
0.0
–0.5
–1.0
–1.5
Shanghai
Composite
Index
–2.0
–2.5
December
Source: WSJ Market Data Group
THE WALL STREET JOURNAL.
billion yuan ($34.3 billion) as
of Monday, compared with
150.4 billion yuan from 227
IPOs in 2016, according to data
from Wind Information Co.
“Liquidity
stress
has
prompted more investors to
divert funds from small caps
move on a closing basis in the
opposite direction to switch
from one designation to the
other. That is considered a big
move for most assets, which is
why entire eras for markets like
stocks are often bookended by
shifts from one type of market
to the other.
MONEYBEAT
But 20% isn’t all that much
for bitcoin. The total of 11 flips
this year from a bull market to a
bear market, or vice versa, is
one sign of just how volatile the
currency has been.
The S&P 500 index, by
contrast, hasn’t suffered a
decline of 20% since 2009. The
market for crude oil had a
particularly volatile year in 2016,
but had only five such flips.
to large blue chips this year to
avoid correction risk. This
phenomenon is likely to continue next year since monetary
policies are expected to remain tight,” Mr. Deng said.
Beijing is likely to set
growth of money supply at a
record low of 9% in 2018 as
government efforts to curb financial leverage continues,
China Daily, a state-run newspaper, said Monday.
Meanwhile, China’s central
bank didn’t hold reverse-repurchase operations in the money
market on Monday, resulting in
a net 120 billion yuan being
withdrawn from the market
following eight straight sessions of net injections.
Elsewhere in Asia, Japan’s
Nikkei closed up 0.2% at
22939.18, setting a fresh 26year closing high. At midday
Tuesday, the Nikkei was flat.
Bitcoin rebounded during
the course of Monday’s Asian
trading, putting it near the
day’s highest levels in recent
trading at $14,200.
—Yifan Xie
Of course, bitcoin’s bull
markets have been a lot
stronger than its bear markets,
which is why the cryptocurrency
has multiplied in value so many
times this year. The strongest of
the bull markets is the most
recent one, which took the
closing price up 230% between
Nov. 12 and Dec. 16.
Bitcoin buyers who have
hung on through the bear
markets are up a lot this year,
but the ride certainly hasn’t
been smooth.
—Ben Eisen
ONLINE
WSJ
.COM
For more
MoneyBeat blog
posts, go to
blogs.wsj.com/
MoneyBeat
FDIC Vice Chairman Thomas Hoenig is wary of allowing new risks.
THE TICKER | Market events coming this week
Currencies
U.S.-dollar foreign-exchange rates in late New York trading
Tuesday
EIA report: natural gas
Previous change in stocks in
billions of cubic feet
No major events scheduled
down 182
Wednesday
EIA status report
Ratio, days of trading volume of
current position, at Nov. 30
5.1
4.5
Mort. bankers indexes
Purch., previous down 6%
Refinan., prev. down 3%
Consumer confidence
Nov., previous
129.5
Dec., expected
128.5
Thursday
Initial jobless claims
Previous
245,000
Expected
240,000
Previous change in stocks in
millions of barrels
Crude oil
Gasoline
Distillates
down 6.5
up 1.2
up 0.8
Friday
Europe
Argentina peso
.0559 17.9045 12.8
Brazil real
.2996 3.3373 2.5
Canada dollar
.7858 1.2727 –5.3
Chile peso
.001606 622.50 –7.1
Ecuador US dollar
1
1 unch
Mexico peso
.0507 19.7378 –4.8
Uruguay peso
.03482 28.7200 –2.1
Venezuela b. fuerte .095071 10.5185 5.2
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
Bond market will close early at 2
p.m. ET
Chicago PMI
Nov., previous
Dec., expected
63.9
61
Monday
U.S. markets are closed for New
Year’s Day
* FACTSET ESTIMATES EARNINGS-PER-SHARE ESTIMATES DON’T INCLUDE EXTRAORDINARY ITEMS (LOSSES IN PARENTHESES) ADJUSTED
FOR STOCK SPLITNOTE: FORECASTS ARE FROM DOW JONES WEEKLY
SURVEY OF ECONOMISTS
Tanks at the crude-oil hub in Cushing, Okla. U.S. stockpile data are due Thursday.
Australian dollar
.7716 1.2960 –6.7
China yuan
.1529 6.5410 –5.8
Hong Kong dollar
.1279 7.8178 0.8
India rupee
.01562 64.020 –5.8
Indonesia rupiah .0000739 13539 0.1
Japan yen
.008831 113.24 –3.2
Kazakhstan tenge .002987 334.84 0.3
Macau pataca
.1242 8.0533 1.7
Malaysia ringgit
.2449 4.0838 –9.0
New Zealand dollar
.7023 1.4239 –1.4
Pakistan rupee
.00900 111.075 6.4
Philippines peso
.0200 49.928 0.6
Singapore dollar
.7440 1.3440 –7.1
South Korea won .0009289 1076.56 –10.9
Sri Lanka rupee
.0065514 152.64 2.8
Taiwan dollar
.03343 29.913 –7.8
Thailand baht
.03053 32.750 –8.5
Vietnam dong
.00004411 22670 –0.4
US$vs,
YTDchg
Mon
in US$ per US$ (%)
Country/currency
Americas
Asia-Pacific
DAN MOLINSKI/THE WALL STREET JOURNAL
Short-selling reports
NYSE
Nasdaq
Country/currency
US$vs,
YTDchg
Mon
in US$ per US$ (%)
.04614 21.675 –15.6
.1595 6.2709 –11.3
1.1876 .8421 –11.4
.003810 262.48 –10.8
.009446 105.87 –6.3
.1199 8.3423 –3.5
.2831 3.5329 –15.6
.01724 58.002 –5.3
.1188 8.4173 –7.6
1.0103 .9898 –2.9
.2626 3.8074 8.1
.0357 27.9730 3.3
1.3371 .7479 –7.7
Middle East/Africa
Bahrain dinar
Egypt pound
Israel shekel
Kuwait dinar
Oman sul rial
Qatar rial
Saudi Arabia riyal
South Africa rand
2.6585 .3762
.0560 17.8420
.2869 3.4854
3.3153 .3016
2.5991 .3848
.2753 3.633
.2670 3.7455
.0793 12.6153
–0.3
–1.6
–9.4
–1.3
–0.1
–0.2
–0.1
–7.9
Close Net Chg % Chg YTD%Chg
WSJ Dollar Index 86.74 –0.07–0.08 –6.67
Sources: Tullett Prebon, WSJ Market Data Group
For personal, non-commercial use only. Do not edit, alter or reproduce. For commercial reproduction or distribution, contact Dow Jones Reprints & Licensing at (800) 843-0008 or www.djreprints.com.
B10 | Tuesday, December 26, 2017
THE WALL STREET JOURNAL.
MARKETS
A Year After OPEC Deal, Oil Prices Firm
BY ALISON SIDER
Investors have bounced back after fleeing from bets on rising oil prices in the middle
of the year, bringing net bullish bets on U.S. crude back to near record highs...
Speculative net position in U.S. crude on the New York Mercantile Exchange
Crude stockpiles rose
at the beginning
of the year but
later fell as OPEC's
production cuts
started to have
an impact.
Weekly U.S. crudeoil stockpiles
500,000 contracts for 1,000 barrels of oil
400,000
300,000
200,000
400
300
200
100
0
2016
0
Jan.
Feb.
March April
May
June
July
Aug.
Sept.
Oct.
Nov.
Dec.
...and to a record net long position in Brent, the global benchmark.
Global oil demand
has been stronger
than many
anticipated...
Quarterly demand
99 million barrels a day
98
97
Speculative net position in Brent on ICE Futures Europe
96
500,000 contracts for 1,000 barrels of oil
95
4Q ‘17 forecast
98.27 million
1Q 2016
400,000
...helping to lift
oil prices.
Brent crude-oil
price
300,000
200,000
100,000
60
55
50
45
0
Jan.
Feb.
March April
May
June
July
Aug.
Sept.
Oct.
Nov.
2017
Dec.
THE WALL STREET JOURNAL.
Sources: CFTC (WTI); ICE (Brent); Energy Information Administration (stockpiles); International Energy Agency (demand); WSJ Market Data Group (price)
in production by OPEC members before their cuts went
into effect. Prices began to sell
off sharply after hitting a
more-than-one-year high in
February.
Investors eventually came
around again, as stockpiles began to drop. In the U.S., about
100 million barrels have been
pulled from storage tanks
since the end of the first quarter.
The overhang of stored petroleum around the world
compared with the five-year
average level has been cut by
more than half, according to
the International Energy
Agency.
“The initial reaction was,
Email: heard@wsj.com
these cuts aren’t doing anything,” said Michael Hiley,
head of over-the-counter energy trading at LPS Futures
LLC. “It took awhile for the
market to see that inventory
was being eroded.”
At the same time, U.S. shale
producers didn’t ramp up as
quickly as some had anticipated. Investors in shale companies began to pressure companies to rein in spending and
focus on returns rather than
simply boosting output.
With supplies tightening,
geopolitical risk reasserted itself as a potentially disruptive
force. Prices rose as conflicts
in the Middle East escalated.
“Oil markets got a real big
reminder of all the different
things that can and will drive
prices—from investor flows to
geopolitics to unplanned disruptions pipelines and refineries,” said Michael Wittner,
global head of oil research at
Société Générale.
And with economies around
the world firing on all cylinders and growing simultaneously, oil demand came in
ahead of what many had expected at the outset of the
year.
“The year featured some
very severe shifts in market
sentiment and investor positioning,” said Michael Cohen,
head of energy markets research at Barclays PLC. “In
some cases, those extremes
didn’t reflect fundamentals—
they set us up for more violent
swings later.”
Still, analysts say some of
the factors that helped lift oil
prices in the second half of the
year may prove fleeting. Hurricane Harvey in August
helped clear out inventories of
fuel, as refiners on the Texas
Gulf Coast were forced to shut
down during the storm and
subsequent flooding.
A leak that led to the shutdown of the Forties Pipeline
System, which carries some
445,000 barrels of crude a day
from the North Sea, pushed
Brent prices to 2½-year highs
in December. But Ineos, the
FINANCIAL ANALYSIS & COMMENTARY
Apple Shifts Online Ad Landscape
Surf Turf War
Market shares of internet
browsers in the U.S.
Chrome
32.0
IE
5.6
Samsung
3.5
Opera
$400
Trade Desk
Criteo
YuMe
Telaria
300
200
1.8
1.3
no
Android
5.3
n-
Edge
Value of $100 invested at IPO
48.8%
Safari
Firefox
100
0.6
UC Browser 0.3
0
Other
2013 ’14
0.8
Source: statcounter (market share); FactSet (value of $100)
tech players, particularly
Paris-based Criteo. It specializes in so-called retargeting: showing ads to consumers who have already looked
at a product online. Its Nasdaq-listed shares have more
than halved since the start
of June, when Apple announced the update.
Meanwhile, the European
legislative machine is rolling
out the General Data Protection Regulation, due to take
effect in May. A related
package of “ePrivacy” rules
’15
’16
’17
THE WALL STREET JOURNAL.
is causing particular worries.
The small print has yet to be
written and probably won’t
be implemented for some
time after the data regulation, but the legislation
could force companies that
plant cookies to obtain much
clearer consent from European internet users. This will
be far easier for Google or
Facebook, given their direct
interface with consumers,
than for unfamiliar platforms like Criteo.
Criteo has adapted to
changes in the ad-tech environment before, notes Jefferies analyst Brian Fitzgerald.
The company initially exploited loopholes in Safari to
come up with a workaround,
but another Apple update
this month closed them,
prompting a Criteo sales
warning.
Criteo is now working on
another fix. If it works, the
shares seem likely to bounce,
given a rock-bottom valuation, but the situation is precarious. As Chief Financial
Officer Benoit Fouilland anticipated in September, it is
playing a “cat and mouse
game” with the world’s largest public company.
Beyond the media giants’
walled gardens, ad tech’s
best hope may be for publishers to better explain to
consumers the value they
derive from retargeting and
other marketing innovations.
Internet users like free media content, but seem only
vaguely aware that it is increasingly funded by their
browsing data. The industry
needs to do a better job of
advertising this bargain.
—Stephen Wilmot
OVERHEARD
Mining companies have
long dreamed of a workforce
with an ironclad commitment
to meeting production targets, courage in the face of
adversity and a stoic attitude
toward overtime.
That is where the robots
come in.
Australian mining giant
Rio Tinto, which already has
pioneered the use of autonomous trucks for hauling rocks,
said in December that it
would seek board approval
for a $2.2 billion “intelligent
mine” fully integrating technologies like robotics and autonomous trucks and trains in
Australia’s Pilbara iron-ore
heartland.
There are sound reasons
for boosting automation in
mining; it remains dangerous
and savings can be substantial. Miners may find their
new colleagues’ water cooler
banter programmatic, but
they could ultimately make
mining a safer and more productive place.
That is good news in the
long run for all carbon- and
silicon-based life-forms involved with the business.
How U.S. Companies Can Take Advantage of Tax Cut Now
Congratulations, chief executive of Major Corporation. After years of lobbying,
Washington has passed the
tax cut of your dreams.
Your shareholders, who
boosted your stock price this
year in anticipation of higher
future profits, didn’t wait
until 2018 to celebrate. Neither should you. While it is
almost time to say good riddance to high corporate tax
rates, there are opportunities to be seized today. With
35 cents of each marginal
dollar you earn going to Uncle Sam this week and just
21 cents next week, it sure
would be nice to shift things
around a little bit.
’17
$65 a barrel
HEARD ON THE STREET
Online advertising is under siege from an unlikely
coalition of privacy campaigners: Apple and European regulators. The only
long-term solution may be
for websites to be more explicit about how they make
money from customer data.
Citing privacy concerns,
Apple launched a feature on
its Safari browser in September called Intelligent Tracking Prevention, which limited the use of cookies to
track users’ browsing histories. These cookies are heavily used by ad-tech companies, which maximize the
value of online ads by
matching them with internet
users most likely to click on
them.
Alphabet and Facebook
dominate this business. For
them, however, the impact of
the Safari update will be
cushioned by their daily contact with consumers. Apple
only blocks intermediaries
from planting cookies; website owners like Google and
Facebook can still use them
to track users.
The big victims of Apple’s
move are independent ad-
’17
100,000
co Fo
m rp
m e
er rs
ci on
al a
us l,
e
on
Oil investors and traders
grew frustrated during the
first half of the year as a pact
made by the Organization of
the Petroleum Exporting
Countries and other major
producers in late 2016 appeared to have little effect on
the global supply glut. Stockpiles remained stubbornly
high and by late June, U.S.
crude futures tumbled into a
bear market.
But
prices
eventually
clawed their way back as production growth in the U.S.
ebbed, geopolitical risks intensified, and supply disruptions
rose.
Brent, the global oil benchmark, took center stage in
2017, rising nearly 15% and
reaching its highest levels
since June 2015. Brent settled
at $65.25 a barrel Friday. U.S.
crude futures lagged behind
but still have risen 8.8% during the year, settling at $58.47
a barrel Friday.
“In the first half of the year,
nothing went right for the Vienna Group,” said Robert McNally, president of Rapidan
Energy Group, referring to
OPEC and the other major producers that signed on to production cuts. “In the second
half, everything went right.”
Oil prices kicked off the
year on a high note. Investors
piled into bets on rising crude
prices, building a record net
bullish position in U.S. crude
futures by February.
But early hopes quickly
gave way to impatience. Stockpiles of crude in the U.S., a
closely watched barometer of
the overall state of global oil
supplies, continued climbing
in the first months of the year,
in part a reflection of a surge
500 million barrels
ly
.
Crude bulls enjoy a
fruitful second half of
2017 as production
pact curbs supply glut
Tribute to Uncle Sam
S&P 500 since presidential election
2700
2600
2500
2400
2300
2200
2100
2016 ’17
Source: FactSet
Take that underfunded
pension plan you’ve been
meaning to contribute more
to for years. This is a good a
time as any to put in a taxdeductible slug of cash.
Companies such as Delta,
FedEx and Verizon have
beaten you to the punch, so
don’t dillydally.
No need to whip out your
checkbook right now if you
don’t have the cash this second. The magic of accounting rules gives you until next
September to make retroactive contributions. And
where will you get it? Fortunately your company will be
able to tap some of the untaxed profit it has been holding abroad as soon as you
pay a one-time 15.5% tax on
liquid assets.
Trapped cash will come in
handy for other odds and
ends to burnish your corpo-
rate image or employee morale. Were you considering a
big employee bonus like
AT&T or perhaps a large
charitable donation? Do it
now and tell them “the
check’s in the mail.”
This is also a great time
to order extra inventory. The
effective after-tax cost of
that $1 widget you were going to buy next month would
be 79 cents while it is just
65 cents if bought today.
Don’t worry; you can pay for
it later. Just don’t confuse
expenses with capital investments. They may both cost
money, but the latter can be
deducted immediately starting next year, so keep that
old forklift for another week.
While your shareholders
will thank you for your foresight, economists are going
to have quite the time forecasting things such as wages,
durable goods, corporate
profits and economic growth
for the next couple of quarters. Analysts will be tearing
their hair out when forced to
slash this year’s earnings estimates and boost forecasts.
Bullish strategists may not
mind, though, as 2018 earnings growth will look even
better.
Make sure to send your
congressman a nice holiday
card—paid for this year, naturally.
—Spencer Jakab
pipeline’s operator, said the
line should be back to normal
early next year.
At the same time, positions
by hedge funds and other
speculative investors have
swung back to bullish extremes, with net bullish positions in both Brent and West
Texas Intermediate, the U.S.
benchmark, hovering at or
near record-high levels.
Those investors could once
again make a rush for the exits
at any sign of weakening
prices, leading to a cascading
selloff.
“The pendulum always
swings and we can’t say 2018
is going to be any different,”
said Mr. Cohen of Barclays.
WSJ.com/Heard
Chip Makers
Hedge Bets
On Crypto
Cryptocurrencies have
been a winning bet this year,
but the chip makers who
play a key role in the market
are still playing their hands
very cautiously.
The exploding value of
cryptocurrencies this year
has created a strong incentive for “miners” who use
high-end computers that
match and update transactions in return for rewards.
Mining for many of the fastest-rising currencies is powered by GPUs from companies like Nvidia and
Advanced Micro Devices.
These chips, also called
GPUs, are the same type used
in high-end gaming PCs.
Nvidia credits about $220
million in revenue over its
past two quarters to crypto
demand, which is a little less
than 5% of the company’s total sales. AMD CEO Lisa Su
estimates the market will account for a mid-single-digit
percentage of the company’s
projected 23% growth this
year, which suggests revenue
around $50 million.
But neither company
wants to bake crypto into
their outlooks. Cryptocurrencies are highly volatile.
Changes to the underlying
technology can sharply affect
the economic value of mining. Joseph Moore of Morgan
Stanley says an expected
shift by ethereum in the next
year or so will render GPUbased mining for the currency “obsolete.”
Still, there were 26 cryptocurrencies with total market values over $1 billion as
of Thursday. Mitch Steves of
RBC Capital notes that several of those rising rapidly
are mined with GPUs. Cryptocurrencies may be unpredictable, but they are likely
here to stay. Which is good
news for those with chips in
the game.
—Dan Gallagher
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