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The Wall Street Journal - May 14, 2018

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GUIDANCE STARTS WITH HEARING YOU OUT.
Our Financial Consultants listen before they help you plan. Flip to page B3 to learn more.
MONDAY, MAY 14, 2018 ~ VOL. CCLXXI NO. 112
* * * * * *
Last week: DJIA 24831.17 À 568.66 2.3%
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WSJ.com
10-YR. TREASURY yield 2.971%
OIL $70.70 À $0.98
Churches Targeted by Family of Suicide Bombers in Indonesia
What’s
News
Business & Finance
rump said he was
working with China’s
president to keep ZTE in
business, throwing a lifeline to the Chinese telecom
giant after U.S. firms were
forbidden to sell to it. A1
T
Wall Street is showing
more interest in home flip
loans, projected to swell to
$15 billion in 2018. B1
Less demand for scrap,
especially by major importer China, is threatening the viability of the U.S.
recycling industry. B1
Hearings will give U.S.
companies a forum to object to proposed U.S. tariffs on Chinese goods. A2
Trade friction is emerging as a threat to the dollar’s central role in the
global financial system. B6
FIERY ASSAULT: Motorcycles burned after a blast Sunday at one of three Christian churches targeted by a family of suicide bombers in
the city of Surabaya in East Java, Indonesia. Police said seven people were killed. Islamic State claimed responsibility. A7
Italy Begins Uncertain New Era
Anti-elite 5 Star joins
hard-right League in
coalition that shakes
Europe’s establishment
CTG plans a $10.8 billion
offer to acquire the rest of
a Portuguese utility, boosting its European reach. B3
BY GIOVANNI LEGORANO
AND MARCUS WALKER
Trump raised the pressure on auto makers to increase production and jobs
in Rust Belt states. B3
ROME—A movement that
channeled Italians’ rage at
mainstream politicians struck
a pact with a hard-right na-
World-Wide
Paper Tiger
Italy’s 5 Star Movement
said it had agreed on the
outlines of a political program with the anti-immigration League, clearing
the way for a likely coalition government. A1
Middle East tensions
grew ahead of the opening
of the relocated U.S. Embassy in Jerusalem. A6
Rising rates of violent
crime in rural areas are
putting a strain on law-enforcement resources. A3
A severe drought is
being felt through much
of West Texas and parts
of four other states,
threatening crops. A3
BY REBECCA BALLHAUS, PETER NICHOLAS,
MICHAEL ROTHFELD AND JOE PALAZZOLO
100
50
When Michael Cohen came knocking after
the 2016 election, touting himself as the president’s lawyer, the man who could decipher the
new administration, Ford Motor Co. said no. So
did Uber Technologies Inc.
He managed to notch AT&T Inc. and Novartis AG. And Squire Patton Boggs, a law and lobbying firm, hired him for a sizable fee—though
he felt it wasn’t enough.
Mr. Cohen talked to associates about building a huge practice. He mused about approach-
Mixed paper
2017
Some conservative
House Republicans face
electoral headwinds from
their voting records. A4
’18
Rock Collections Aren’t Complete
Without One Resembling Brisket
i
i
ing foreign governments and foreign firms. But
a broad review of his Washington dealings
since they first surfaced last week shows his
efforts were scattershot and met only with
mixed success—both for Mr. Cohen and his clients.
His work did have an impact in one way. It
dragged some of the world’s largest corporations and other firms into Special Counsel Robert Mueller’s investigation: Novartis, Ford and
AT&T have responded to information requests
from Mr. Mueller’s office, according to people
familiar with the matter.
Please see COHEN page A10
INSIDE
i
The Chinese think specimens that look
like meat are juiciest; fat and skin help
China’s first domestically produced aircraft
carrier began sea trials to
test its power system. A7
BY TE-PING CHEN
Iraqi voters gave strong
support to a coalition of
communists and followers
of cleric Sadr, in partial
preliminary results. A6
Life & Arts...... A11-13
Opinion.............. A15-17
Sports....................... A14
Technology............... B4
U.S. News............. A2-4
Weather ................. A14
World News......... A6-8
>
Italians and the European
Union will watch closely
whether the pair of rebel parties can overcome the deep
malaise in one of Europe’s biggest but most-troubled economies. The expected new government’s performance will
show whether alternative remedies can solve the legacies of
Europe’s economic and migration crises and assuage Europeans’ widespread discontent
Please see ITALY page A8
Handful of firms signed up seeking his insight; Uber and Ford said no
Corrogated
cardboard
150
Source: Paper Stock Report
The WHO is pushing to
eliminate trans fats from
diets globally to improve
cardiac health. B2
s Copyright 2018 Dow Jones &
Company. All Rights Reserved
U.S. average price for
scrap paper, per ton
$200
said they would slash and simplify taxes while boosting
spending on pensions and antipoverty benefits. They were
due to present their program
on Monday to President Sergio
Mattarella, who formally appoints the government.
“We are writing history
and we need a bit more time,”
said Luigi Di Maio, 5 Star’s
leader, as he left talks with
League leaders in Milan on
Sunday afternoon.
Michael Cohen’s Consulting
Career Met Mixed Success
The U.S. recycling industry is
struggling as Chinese imports fall
and prices for scrap plunge. B1
0
A family of suicide
bombers attacked three
churches in Surabaya, Indonesia, killing seven. A7
CONTENTS
Business & Finance B2,6
Business News... B3,5
Crossword.............. A14
Heard on Street..... B9
Markets................... B10
Markets Digest..... B7
tionalist party to govern the
country, a major prize for the
political insurgencies that
have been shaking Europe’s
establishment.
The 5 Star Movement, an
eclectic upstart group driven by
scorn toward Italy’s ruling
elites, on Sunday evening said
it had agreed on the outlines of
a governing program with the
anti-immigration League party,
clearing the way for a likely coalition government. The parties
JOE RAEDLE/GETTY IMAGES
Tesla is dealing with
losing two executives as it
struggles to boost output
and faces doubts about its
ability to raise cash. A1
EURO $1.1942
YEN 109.39
Trump
Throws
Lifeline
To Chinese
Tech Firm
BY DAN STRUMPF
AND JOHN D. MCKINNON
SURABAYA GOVERNMENT/ANTARA/REUTERS
Xerox said it would
back out of its merger deal
with Fujifilm as it reached
a new accord with two of
its biggest holders. B1
HHHH $4.00
hundreds over the years.
They originate on “MeatLUSHAN, China—Some Chi- Rock Mountain.” When storms
nese rock collectors prefer jade, come, the rocks are swept down
others prettily crenelated lime- to the river, where they are
stone. Jiang Sui’an prefers picked up by the many collectors
stones that look like pieces of here in the hills of central China.
Lushan boasts
pork.
a museum dedStones that
icated to meat
turn up in rivrocks and plans
erbeds around
another. A local
Mr.
Jiang’s
meat-rock rehome have a
search commitrosy or caratee was formed
m e l - c o l o re d
last year and
hue, making
now has hunthem resemble
Meat or rock?
dreds of mempieces of meat.
They “look just like pieces of bers. Mr. Jiang’s expertise has
pork freshly plucked from a been called on to develop official
pot, some stewed, others classifications for what makes a
braised or deep fried,” says good meat rock.
Please see MEAT page A10
Mr. Jiang, who has collected
GASOLINE
PRICES ON
THE RISE
U.S. NEWS, A2
TROPHY ART
DISRUPTS
AUCTIONS
LIFE & ARTS, A11
President Donald Trump
said he was working with Chinese President Xi Jinping to
keep ZTE Corp. in business,
throwing an extraordinary lifeline to the Chinese telecommunication giant that has been
laid low by U.S. moves to cut
off its suppliers.
The surprise intervention
comes less than a month after
ZTE was hit with an order banning U.S. companies from selling components to the Chinese
business. The U.S. Commerce
Department directed companies to stop exporting to ZTE
in mid-April, saying the Chinese firm violated the terms of
a settlement resolving evasion
of U.S. sanctions against Iran
and North Korea.
The Commerce Department
is reviewing ZTE’s request for
a stay of that order.
Mr. Trump said in a tweet
that he is working with Mr. Xi
to get ZTE “a way to get back
into business, fast. Too many
jobs in China lost.” He said the
Commerce Department has
been instructed to “get it
done!”
Mr. Trump’s comments
about the company and concern about Chinese jobs come
as the U.S. and China are
locked in high-stakes negotiations over trade and intellectual property. Both countries
are threatening to slap tariffs
on tens of billions of dollars of
the other’s products. Mr.
Trump has regularly blamed
China for U.S. job losses and
Beijing’s policies for the U.S.
trade deficit, making his shift
in tone notable.
U.S. concerns about ZTE go
beyond its evasion of sanctions. For years, the U.S. has
claimed that equipment made
by Shenzhen-based ZTE and
its larger crosstown rival Huawei Technologies Co. is a national security threat, an accusation that both companies
have denied.
The U.S. has largely
blocked both companies from
selling telecommunications
gear in the U.S., and the PenPlease see ZTE page A2
U.S. firms given forum to
object to China tariffs.......... A2
Big Test for Tesla as
Officials Step Away
BY TIM HIGGINS
AND SAM GOLDFARB
Tesla Inc. will be without
two important executives just
as the electric-car maker
struggles to boost production
of its first mass-market vehicle
and faces doubts about its
ability to raise cash.
Matthew Schwall, who was
the company’s main technical
contact with U.S. safety investigators as the Silicon Valley
auto maker races to develop
driverless-car technology, left
the company for rival selfdriving car company Waymo
LLC. His departure comes as
the National Transportation
Safety Board has been investigating multiple crashes involving Tesla vehicles.
Mr. Schwall’s exit comes after Tesla said Friday that its
engineering chief, Doug Field,
was taking a leave of absence
to recharge and spend time
with his family.
Mr. Field is stepping away
from the company for several
weeks, according to people familiar with the matter. One
person described the absence
as a “six-week sabbatical”
while Tesla declined to say
when he would come back.
“He has not left Tesla,” a
company spokesman said.
Mr. Field, a key leader at
the auto maker since joining in
2013 from Apple Inc., oversees
the engineering of Tesla’s vehicles, and last year he was
also given oversight of production to better align those efforts. That changed this
spring, when Chief Executive
Please see TESLA page A4
Christopher Mims: Drivers
become guinea pigs................ B1
.
A2 | Monday, May 14, 2018
THE WALL STREET JOURNAL.
* ***
U.S. NEWS
THE OUTLOOK | By Stephanie Yang and Alison Sider
Rising Gas Prices Could Brake Growth Trend
D
rivers gearing up for
trips this summer face
escalating prices at the
gasoline pump, an early sign
that $70-a-barrel oil is reaching into consumer wallets and
could pinch economic growth.
Average U.S. retail gasoline
prices are climbing toward $3
a gallon, the most expensive
in more than three years. The
national average was around
$2.87 on Sunday. In states
such as California and Washington, prices have already
breached the $3 level after
rising 24% and 17%, respectively, from a year earlier.
Gasoline price spikes coincided with depressed consumer spending and recessions in 1980, 1990, 2001 and
2007-2008, but the two don’t
always go hand in hand. A
spike in 2011 didn’t stop the
expansion.
The economy is vulnerable
when hit by gas price rises
driven by supply shocks, such
as Iraq’s invasion of Kuwait in
1990. The economy is also
vulnerable when it faces
other challenges, such as the
global financial crisis of 2007
or the tech bubble burst of
2000.
The economy now is
buoyed by several factors, including a strong job market,
stable financial system and
tax cuts—one of the underpinnings of the recent rise in
oil and fuel prices. Moreover,
U.S. shale producers benefit
from rising prices.
Still, growth might not
measure up to expectations if
consumers pull back.
“Prices at the pump are
quite high especially as we
enter the driving season,”
said Gregory Daco, chief U.S.
economist at Oxford Economics. “That’s going to be one of
the channels where you see a
hit to people’s disposable income and spending.”
R
ising fuel costs can also
feed inflation and pressure interest rates. The
Federal Reserve typically
looks past volatile energy
prices in the short term, but
the central bank is already
poised to raise interest rates
this year and next and this
can contribute to its incentives to keep going.
Morgan Stanley estimates
that if gas averages $2.96 this
year, it would take an annualized $38 billion from spending elsewhere, an upward revision from the bank’s $20
billion estimate in January.
That would wipe out about
a third of the additional takehome pay coming from tax
cuts this year, the analysts
said.
When oil prices collapsed
in 2014, gasoline prices followed. People took advantage,
On the Road
Drivers are seeing $3 gas again after years of low prices and logging more miles than ever.
U.S. average regular gas price
Most expensive states for gas
Vehicle miles traveled
$4 a gallon
3.20 trillion miles
California
$3.67 a gallon
3.15
$3.66
3.10
3
Hawaii
2
3.05
Washington
$3.36
Alaska
$3.32
1
0
1990
2000
’10
Nevada
$3.29
driving more than ever and
buying larger, less fuel-efficient cars. At one point in
2016, prices tumbled toward
$1 in parts of the country.
That era may be coming to
an end.
As gasoline rose above
$2.50 in November, Adam
Mincey started to worry. His
commute in North Carolina is
about 60 miles round trip,
and his old Chevrolet truck
got about 8 miles to the gallon. Recently, he traded the
truck in for a vehicle with
better mileage. “I make decent money—I’m a scientist.
But it’s cutting into our disposal income,” he said.
The steadily rising fuel
prices brought back bad
memories: “There were times
I couldn’t fill up my tank in
2008 and 2009. I don’t want
that to happen again.”
Robert Lozano—a car
salesman in Los Angeles,
where some gas prices are already above $4—said the
dealership’s gas bill has
climbed from about $9,000 to
$12,000 a month recently.
Customers are inquiring
more about electric vehicles,
he said.
Some analysts are predicting another jolt to the market
as President Donald Trump’s
decision to withdraw from
the 2015 Iran nuclear deal
could limit the country’s
crude exports.
Other factors outside the
U.S. are pushing oil prices
higher. The Organization of
LARRY BENVENUTI/THE TURTLE HOSPITAL/ASSOCIATED PRESS
SHELL GAME: A loggerhead sea turtle named ‘Judy’ was released off the coast of Marathon, Fla., on
Saturday, about three months after the 150-pound reptile was found injured in a fish trap line.
Continued from Page One
tagon recently pulled mobile
phones made by both competitors from stores on U.S. military bases.
ZTE continues to sell
phones in the U.S. through a
number of retail channels, including through Best Buy Co.
stores and through AT&T Inc.
stores and its website, representatives from both companies said last week.
Phones made by Huawei, the
world’s No. 3 handset maker,
are more difficult to find in the
U.S. The company was set to
launch a high-end handset earlier this year with AT&T, but
the U.S. carrier pulled out of
the deal at the last minute
without explaining why.
Nodding to security concerns, Rep. Adam Schiff of California, the top Democrat on
the House Intelligence Committee, responded on Twitter
to the president’s remarks:
“Our intelligence agencies have
warned that ZTE technology
and phones pose a major cybersecurity threat.”
Senate minority leader Chuck
Schumer (D., N.Y.) tweeted in response to Mr. Trump: “How
about helping some American
The ban placed ZTE
at the sharp end of a
trade dispute between
the U.S. and China.
dent judgment, consistent with
applicable laws and regulations, to resolve the regulatory
action involving ZTE based on
its facts.”
The Commerce Department
declined to comment.
Some Wall Street observers
have speculated that the administration hoped to use the
ZTE sanctions as leverage to
soften Chinese resistance in
other trade negotiations. One
2010 ’11 ’12 ’13 ’14 ’15 ’16 ’17
possible indication of that was
the Commerce Department’s
failure to impose about $300
million in fines it was eligible
to collect when it announced
the penalties on ZTE earlier
this year.
The Commerce Department
also has signaled in recent
days that it was trying to expedite ZTE’s appeal, suggesting the agency was sensitive to
the urgency of ZTE’s situation.
ZTE, which relies on billions
of dollars in component imports
from U.S. tech titans such as
Qualcomm Inc. and Intel Corp.,
has warned that the ban threatened its survival. Last week, the
company said it had ceased major business operations.
A person close to ZTE said
Sunday: “ZTE has noticed the
tweet from President Trump,
and welcomes this latest progress. Next, under the guidance
of the Chinese government,
ZTE will continue to communicate with relevant parties including the U.S. Department of
Commerce to facilitate the final resolution.”
The Wall Street Journal reported Saturday that in its efforts to have the ban stayed,
ZTE has told U.S. authorities
that process and human-resource errors, not a plan of
systematic deception, were responsible for the lapses in
THE WALL STREET JOURNAL.
the Petroleum Exporting
Countries, along with other
major oil producers including
Russia, agreed in 2016 to curb
output in the hopes of eliminating a global glut. Their efforts have been helped by a
steep decline in production in
Venezuela as the country has
fallen into political and economic turmoil.
Airlines and shipping companies also will be paying
more for jet fuel and diesel—
costs that may be passed
along to consumers. Even
companies such as Whirlpool
Corp. have noted that higher
oil prices have boosted the
cost of materials.
But some economists say
the growing importance of
energy to the U.S. economy
G
as prices are still a long
ways off from when
they reached as high as
$4.11 in 2008. And demand
hit its highest levels ever last
year even as prices rose.
“It’s not only the price
point, but it’s how long that
price point stays,” Karl Fails,
chief commercial officer at
Sunoco LP, a wholesale fuel
distributor, said during an
earnings call Thursday.
“We’re very comfortable
with the U.S. economy right
now. And I think that will
also have a bearing on any
demand impacts.”
U.S. Firms Given Forum
To Object to China Tariffs
BY ANDREW TANGEL
AND WILLIAM MAULDIN
ZTE
2.95
2.90
Sources: Energy Information Administration (average); AAA (states); Department of Transportation (miles)
A Reptilian Success Story in the Florida Keys
companies first?”
Late Sunday, amid confusion about the meaning of Mr.
Trump’s comments, the White
House issued a statement saying that the ZTE matter would
be decided independently by
the Commerce Department.
“The administration is in
contact with China on this issue, among others in the bilateral relationship,” a White
House spokeswoman said. She
said that Mr. Trump expects
Commerce Secretary Wilbur
Ross to “exercise his indepen-
3.00
could blunt some of the impact from rising oil prices.
The country has become a
more prominent supplier of
crude oil and fuel. Domestic
production has reached record weekly levels of 10.7 million barrels a day, and a lot of
it is being exported.
Refiner Valero Energy
Corp. said it wouldn’t expect
consumer demand to drop off
until oil prices are at $80 to
$100.
“Three dollars is like a
small fence. You can get
through it, you can get over
it,” said Patrick DeHaan, petroleum analyst at GasBuddy,
a fuel-tracking app. “But $4 is
like the electric fence in Jurassic Park. There’s no getting
over that.”
The Trump administration
is set to face criticism this
week from a large cross section
of corporations, including U.S.
giants like General Electric Co.,
over how the administration’s
proposed tariffs on Chinese imports will affect American
manufacturing.
The U.S. trade representative’s office will hold three
days of hearings from Tuesday on the proposed tariffs.
The hearings will not only feature businesses facing supplychain disruptions because of
the tariffs proposed for $50
billion of Chinese imports, but
also exporters—from farmers
to manufacturers—which are
likely to suffer from retaliatory
tariffs on U.S. exports threatened by China.
The U.S. business community has often been skeptical of
the Trump administration’s
trade initiatives, particularly
its threats of tariffs, which are
being contemplated under Section 301 of the Trade Act of
1974. Executives from big companies, from electronics retailer Best Buy Co. to Swedish
appliance maker Electrolux AB,
have asked to testify at the
hearings and are expected to
raise complaints.
fully complying with its 2017
settlement, according to a person familiar with the matter.
The sudden sales ban placed
ZTE at the sharp end of a rising trade dispute between
Washington and Beijing that
has included tit-for-tat tariffs.
Technology has become a focus of tensions, with the U.S.
accusing China of transferring
key technologies back home
and unfairly supporting domestic champions.
Chinese
representatives
complained to their U.S. coun-
CORRECTIONS AMPLIFICATIONS
In some editions Saturday,
the first paragraph of a World
News article about military
exercises in South Korea was
garbled. The paragraph should
have read: RODRIGUEZ LIVE
FIRE COMPLEX, South Korea—Fifteen miles south of
the demilitarized zone, a U.S.
tank battalion is preparing for
the possibility that the detente on the Korean Peninsula
doesn’t last.
Readers can alert The Wall Street
Journal to any errors in news articles
by emailing wsjcontact@wsj.com or
by calling 888-410-2667.
Some manufacturers support the tariffs, and are calling
on the Trump administration
to add more to the list of Chinese imports that would face
duties. Supporters of the tariffs
include manufacturers facing
barriers to selling goods in the
Chinese market.
The Trump administration
argues that the threat of tariffs
is necessary to bring China to
the negotiating table over what
businesses generally agree are
Chinese economic practices in
need of reform. But business
groups worry Washington may
accept a pledge from Beijing to
buy U.S. goods without addressing Chinese practices
such as erecting barriers to
China’s domestic market or
forcing U.S. concerns to transfer technology as a condition of
entering into partnerships in
China.
“The administration has attempted to assure Americans
that it has a strategy to resolve
trade frictions with China
without excessive collateral
damage to U.S. economic interests,” the U.S. Chamber of
Commerce said in a written
submission ahead of the hearings. “However, these assurances lack the coherence that
would provide comfort to those
businesses, farms and workers
whose livelihoods are being
put at risk.”
General Electric is representative of the sort of discontent
the Trump administration will
hear from the corporate sector.
Company officials say that,
should the U.S. follow through
on the threats to charges tariffs on Chinese imports, GE will
face potential tariffs on parts
the company’s imports into the
U.S. to manufacture a range of
products from aircraft engines
to medical machinery.
GE officials plan to raise
specific examples of the challenges. One instance: magneticresonance-imaging machines
that GE makes in Wisconsin
will suffer if tariffs are placed
on parts imported from China.
High standards for quality, and
the need to keep parts sterile,
mean it would take “well over
a year” to find new suppliers of
the MRI parts outside China,
according to Karan Bhatia, GE’s
president for government affairs and policy.
terparts about the ban during
a recent visit by a U.S. trade
delegation to Beijing. The export ban was expected to figure in another round of trade
talks between the two sides in
Washington.
In a subsequent tweet at
midafternoon Sunday, Mr.
Trump said that China and the
U.S. “are working well together
on trade” but “it is hard for
them [China] to make a deal
that benefits both countries.”
He added: “But be cool, it will
all work out!”
The U.S. and China are also
in talks with North Korean
leader Kim Jong Un about the
regime’s nuclear-weapons program. Mr. Trump is set to
meet Mr. Kim in person in
Singapore on June 12 to discuss denuclearization.
ZTE
employs
roughly
75,000 people world-wide and
is the fourth-largest mobile
phone vendor in the U.S., selling 19 million phones in America last year.
—Peter Nicholas
contributed to this article.
$50B
Value of Chinese imports for
which tariffs are proposed.
THE WALL STREET JOURNAL
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THE WALL STREET JOURNAL.
Monday, May 14, 2018 | A3
MADDIE MCGARVEY FOR THE WALL STREET JOURNAL (2)
U.S. NEWS
Rural Crime
Strains Law
Enforcement
BY SHIBANI MAHTANI
CHILLICOTHE, Ohio—Ross
County, with its rolling forested green hills and two-century-old county seat, is an image of idyllic rural America.
But as night fell here on a
warm Tuesday in May, chaos
descended on the Ross County
Sheriff’s Office. A neighbor
called to report a disturbance,
likely a violent domestic dispute, and another called to report a man slumped over the
steering wheel of his pickup,
likely an overdose. Calls of
other suspicious vehicles came
flooding in.
“It is nothing but you and
the cows and the sirens,” said
Sgt. Brenton Davidson, a patrol
sergeant at the sheriff’s office.
“You are seeing more violence,
and you never know where
Officers in Ross County, Ohio, above, responded to a call earlier this month of an unresponsive man in a car with his daughter. Above
left, female inmates left their section before a search for reported contraband at the county Jail in Chillicothe.
your backup is coming from.”
The violent-crime rate in rural areas rose above the national average for the first time
in a decade, according to the
most recently available data
from the federal government.
Though cities, on average, still
have a higher violent-crime
rate, large metropolitan areas
are safer than they have been
in decades, while small communities in some states are
getting more dangerous.
In at least 10 U.S. states,
most in the Midwest and
Northeast, the rate of violence
in rural counties has increased
over the past two decades,
even as it has fallen or stayed
the same in those states’ metropolitan areas, according to a
Wall Street Journal analysis of
federal crime data.
In these less-populated ar-
eas, increased drug use and associated crimes, like drug trafficking, prostitution and theft,
as well as domestic violence,
are fueling the rise. New crimefighting strategies are designed for urban policing, and
sheriffs who police small towns
say they are playing catch-up.
Small departments, where
budgets and the number of
deputies have remained stagnant, are overwhelmed. The
number of sheriff’s deputies
patrolling 691 square miles in
Ross County, which sits some
50 miles south of Columbus,
has remained at four over the
past two decades. The population over the same period has
increased to 77,000 from about
72,000. Starting pay for deputies is $35,000 a year, compared with the Ohio average of
about $60,000.
“Every year I’ve asked for
more officers—for patrol, for
the jail. Every year,” said Ross
County Sheriff George Lavender Jr.
The county’s violent-crime
rate has tripled in the past
two decades. The jail, built to
house 92 people, routinely
holds 200. The sheriff’s department has received nearly
3,000 calls this year—more
than six times the number at
the same point in the year a
decade ago.
In Tennessee, urban gangs
are moving out into the country to be closer to their customers, said TJ Jordan of the
Tennessee Bureau of Investigation. “They start pushing
their wares out into the rural
areas,” said Mr. Jordan.
“Drugs breed guns, guns breed
violence.”
Law-enforcement officers
play the role of EMTs because
firefighters and ambulance
squads are mostly staffed by
volunteers. Sheriff’s deputies
across states like Iowa, Ohio
and Kentucky spend hours
searching for a free hospital
bed in their area, which can
take them off their regular
jobs for an entire day.
In recent years, Sheriff Lavender has piloted a series of
programs for the jail inmates,
including GED courses and anger-management programs
that incorporate cognitive behavioral training—borrowing
ideas from his big-city counterparts. A former junk storage room in a corner of the jail
now serves as a training room.
The sheriff’s office also has
formed a post-overdose response team with the Chilli-
cothe Police Department. Every week, the group, which
includes social workers, visits
people who have overdosed in
the past seven days, providing
materials on treatment, offering to bring them to the hospital and underscoring that their
addiction could lead to death.
A visit in early May included dropping in on homeless addicts, living out of a
corrugated metal shack in the
middle of the woods and
sleeping on a garbage bag tied
between two trees.
“We did this by the seat of
our pants,” said David Weber,
a deputy at the sheriff’s office,
noting that they had little
training. “It is a completely
different capacity than we’ve
ever dealt with before.”
—Zusha Elinson
contributed to this article.
L.A. Mayor Ties Political Future to Homeless Plan
Seeking Shelter
City of Los Angeles
homeless population
40,000
Unsheltered
Sheltered
30,000
20,000
10,000
0
2007 ’09 ’11
Mayor Eric Garcetti has made
housing the homeless a priority.
more aggressively to address a
spiraling humanitarian emergency. The homeless population has grown nearly 49%
’13 ’15 ’17
Source: Los Angeles Homeless
Services Authority
THE WALL STREET JOURNAL.
since 2013. Last year, there
were about 900 more people
in shelters than in 2013, according to the Los Angeles
Plains Farmers Prepare for Drought
BY JIM CARLTON
LAMESA, Texas—This time
of year, Shawn Holladay usually is laying cotton seeds into
rows of red soil on his farm
here on the High Plains.
But less than two inches of
rain has fallen across much of
West Texas since last October,
compared with an average of
about 10 inches over the same
period last year. With fields
bone dry, many farmers in the
Texas Cotton Belt have held
off putting seeds in all but
patches of irrigated ground
out of fear they will dry up.
“The way it’s going right
now, the chances are slim to
none we will have a crop,” Mr.
Holladay, 49, said as he inspected his fields this month.
After three fairly wet years,
a drought ranging from “severe” to “exceptional” has descended on the southern Great
Plains of Colorado, Kansas,
New Mexico, Oklahoma and
Texas, according to the U.S.
Drought Monitor at the University of Nebraska-Lincoln.
Home to one of the nation’s
most fertile farming areas—
crop production in the Texas
region alone generates about
$12 billion in economic activity—observers say the drought
could affect cotton, cattle and
farming-equipment
sales,
among others.
“It’s going to be in the billions in terms of crop loss,”
said Darren Hudson, director
of the International Center for
Agricultural Competitiveness
at Texas Tech University.
A semiarid region, the
southern Plains region has
seen drought conditions for
much of the past decade, but
the severity of this latest dry
spell is of particular concern.
For many farmers here, the
sudden falloff in precipitation
is reminiscent of the drought
of 2011 when Texas agriculture
incurred a loss of $7.6 billion.
Already, the Plains drought
has dealt a blow to two other
pillars of the region’s agricultural economy: winter wheat
and cattle. An estimated 60%
Drying Up
Drought conditions are hitting one of the nation’s most fertile areas
for wheat and cotton.
Winter wheat and cotton crops, 2017
Drought conditions for the week ending May 8
Abnormally dry
Moderate
CO LO .
Severe
Extreme
Exceptional
KA N .
OKLA.
N.M.
TEXAS
100 miles
100 km
Sources: U.S. Drought Monitor; USDA
THE WALL STREET JOURNAL.
of the 4.7 million acres of winter wheat in Texas as of May 7
was considered “poor to very
poor,” according to Texas
Wheat Producers, a trade
group, meaning the crops are
likely unusable. Kansas, the
top winter-wheat-producing
state, is expected to have its
smallest crop in almost 30
years.
The economic ripples in
Ochiltree County, Texas, is typical of what is happening
across the southern Plains, said
Scott Strawn, a Texas A&M agriculture extension agent. He
estimated this county in the far
northeastern corner of the
Texas Panhandle this year
could lose half of a wheat crop
that is normally valued at as
much as $20 million.
“Look how bad this is—no
roots,” Mr. Strawn said, pulling a shriveled stalk of wheat
out of dried ground on a farm
outside Perryton, Texas.
Local ranchers have begun
selling cows, which have
grazed down what little grass
is left. Reece E. Taylor said he
may have to sell many of his
100 cows because they have
grazed down the wheat crop
he had used for forage on his
1,600-acre farm near Perryton.
Three hundred miles south
in Lamesa, Mr. Holladay tried
to savor little victories like the
recent drizzle that helped
keep dust down on his 10,000acre farm. “I figure we’ll survive it,” Mr. Holladay said.
“But it won’t be easy.”
Homeless Services Authority.
Homeless
encampments
have spread in L.A. in recent
years, and city officials have
sought to fund more affordable housing to combat the
problem. But until now, there
has been no comprehensive
plan to build more shelters.
“This is our Katrina,” said
Jill Stewart, executive director
of the Coalition to Preserve
LA, a social-justice group that
has opposed the mayor’s handling of the homeless issue.
“Where are the shelters?”
Under the mayor’s plan, the
city would build out a more
expansive shelter system, hoping to draw more homeless
into temporary shelters until
they get on their feet, and
speed up affordable housing
construction.
Mr. Garcetti said people are
falling into homelessness at a
clip faster than the city can
handle. He pointed to a convergence of factors—surging
rents, the opioid crisis and
lighter criminal penalties—
that have pushed people onto
the streets.
“It is a bigger problem than
it’s ever been,” Mr. Garcetti
said. “We’ve had the right
strategies, but we’ve never
had the master plan, and
we’ve never had the resources,” he said.
The mayor has directed
$430 million of the city budget to tackle homelessness, including allocating $20 million
to City Council districts to
build emergency shelters
within a six-month window.
The plan is a break from
past policies that have focused
largely on affordable housing.
“We had to work to listen
to people on the street and
change our approach,” Mr.
Garcetti said.
©T&CO. 2018
LOS ANGELES—Since taking office five years ago,
Mayor Eric Garcetti has marketed this city as a model of
how an American metropolis
can dream big: wooing the
2028 Olympics, courting hightech companies and pushing
for a “subway to the sea.”
But last month, the mayor
tied his political future to a
goal that has long vexed policy
makers here: housing the
city’s homeless, which he publicly declared his “No. 1 issue.”
Homelessness has exploded
during his tenure, leaving Los
Angeles with a fast growing
population of people living in
cars, parks and on the streets.
Mr. Garcetti aims to get half
of the more than 25,000 unsheltered homeless population
into shelters or housing by
2022, his last year as mayor.
The 47-year-old Democrat has
made no secret of his interest
in running for the presidency
in 2020, and whether his new
plan succeeds will bear heavily
on his political future, critics
and supporters say.
“If there’s any hope of running for president, that’s the
problem he has to fix,” said
Sherry Bebitch Jeffe, a publicpolicy professor at the University of Southern California.
Mr. Garcetti won his first
election as mayor in 2013 on a
“back to basics” pledge to fix
potholes and improve trash
pickup, and rode a wave of
popularity into a second term
last year. In recent months, he
has raised his national profile,
traveling the country, talking
jobs, and taking aim at President Donald Trump.
At home, he has come under pressure for not moving
MARK RALSTON/AGENCE FRANCE-PRESSE/GETTY IMAGES
BY NOUR MALAS
AND ALEJANDRO LAZO
FRESH FROM THE
GARDEN
INTRODUCING
TIFFANY PAPER FLOWERS™
800 843 32-9
|
TIFFANY.COM
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A4 | Monday, May 14, 2018
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U.S. NEWS
GOP’s Right Flank Gears Up for a Fight
November headwinds
bring competition to
some House Freedom
Caucus members
BY KRISTINA PETERSON
RICHMOND, Va.—The House
Freedom Caucus, a group of
the most conservative Republicans, doesn’t shy away from
bucking the leadership or demanding ideological fealty.
That stance could become a
liability this year, as Republicans acknowledge they are facing political headwinds in the
November midterms.
At least five members of the
roughly three dozen caucus
members face competition in
the midterm elections. That is
a smaller percentage than
within the whole House GOP,
but Democrats need to net just
23 seats to retake control, and
they are fighting for them everywhere.
And, unlike many of the
more centrist Republicans who
are accustomed to battling
Democrats, many of the most
vulnerable Freedom Caucus
members are running with less
money in the bank and in districts where their deeply conservative voting records might
not be welcome.
In Pennsylvania, redistricting in February added more
Harrisburg suburbs to GOP
Rep. Scott Perry’s district, instantly tightening his race.
There are four Democrats competing in Tuesday’s primary to
take him on in November.
In Virginia, both Republican
Reps. Dave Brat and Tom Garrett face well-funded Democratic challengers.
In North Carolina, freshman
Republican Rep. Ted Budd is
trying to expand his name recognition in a district he won
two years ago after capturing a
17-way primary with just over
6,000 votes. And in Iowa, Rep.
Rod Blum is working to keep
his seat in a district that President Donald Trump won by
less than four points.
The Freedom Caucus’s chairman, Rep. Mark Meadows (R.,
N.C.) said he believes his colleagues will be rewarded for
sticking to their principles, but
he didn’t dismiss the competition. “Every member of Congress, not just Freedom Caucus
members, are trying to prepare
more,” he said.
Last week’s primary elections highlight the challenges
facing House Republicans. Two
from Indiana lost the Senate
primary to a businessman. Rep.
Evan Jenkins lost the West Virginia Senate primary, and Rep.
Robert Pittenger (R., N.C.) became the first incumbent this
year to lose his own primary.
In Mr. Brat’s district, which
includes the suburbs of Richmond, both redistricting and
demographic change are making the race more competitive.
In 2013, former Democratic
Gov. Terry McAuliffe picked up
38% of the vote in Mr. Brat’s
district. Last fall, Ralph
Northam, now the state’s Democratic governor, picked up
47% of the district’s support.
Two Democrats are considered front-runners in the June
12 primary: former undercover
Central Intelligence Agency
agent Abigail Spanberger and
Dan Ward, a retired Marine
colonel who later worked for
the State Department.
Bill Landsidle, a Henrico,
Va., resident and independent,
voted previously for former
GOP Rep. Eric Cantor but said
he would be supporting Ms.
Spanberger. Mr. Brat “is to the
right of the right of the Republican Party,” he said. “He’s doctrinaire, and I don’t like doctrinaire people.”
But Henrico resident Dana
Smith, a Republican publicschool teacher supporting Mr.
Brat, said the GOP-controlled
Congress had put more money
in his pocket through the new
tax law.
Trump’s Hard Line on Iran Could Test Alliances
WASHINGTON—The Trump
administration’s decision last
week to pull out of the nuclear
deal with Iran will create an
economic policy challenge for
the U.S.: How does it enforce
sanctions that the rest of the
world no longer backs?
The White House last week
announced a plan to reimpose
economywide sanctions on Iran
in two stages over six months,
banning any financial or business dealings with blacklisted
entities. Any non-Iranian bank,
firm or person who violates
that ban risks penalties themselves, including the possibility
of losing access to U.S. markets
and the ability to use the U.S.
dollar in trade and finance.
Few U.S. firms had re-entered the Iranian market after
the 2015 nuclear accord gave
Tehran sanctions relief across
most of the economy in exchange for halting its nuclear
development. But the rest of
the world ramped up buying
Iranian crude and restarted
trade relations, pulling the Mideast economy out of recession.
The world largely supported
the sanctions regime used during the Obama administration,
including America’s Western allies and China, a major pur-
Economic Warfare
Iranian oil exports surged as
sanctions eased...
...but bank lending from rich
countries has failed to recover...
...while the country battles
double-digit inflation and
unemployment
$3.0 trillion
$3.0 billion
40 %
2.5
2.0
1.5
Other
France
Italy
Japan
South Korea
India
China
France
Germany
Italy
South Korea
U.K.
Spain
2.5
2.0
1.5
1.0
1.0
0.5
0.5
30
20
Inflation
10
0
0
0
2013 ’14
Unemployment
’15
’16
’17
’18
2012
’13
’14
’15
’16
’17
2000
’10
Sources: Kpler (oil exports); Bank for International Settlements (loan data); International Monetary Fund (unemployment and inflation)
THE WALL STREET JOURNAL.
chaser of crude from Iran.
Now, all of the other parties
to the 2015 agreement that
President Donald Trump pulled
the U.S. out of last week say
they are committed to sticking
with the accord.
John Bolton, the White
House national security adviser,
said in televised appearances
Sunday that European countries
could face U.S. sanctions if they
keep doing business with Iran.
That means the U.S. may end
up strong-arming European allies to abide by a sanctions regime they disagree with and
challenging other world powers,
such as China, that have proven
reluctant to implement sanctions they say are unilateral and
extraterritorial.
Western allies alone account
for more than 30% of Iran’s oil
exports. Adding China and India
brings that total to 80%.
Some of Europe’s largest
companies, including France’s
Total SA and Airbus SE, have
billion-dollar projects on the
line with Iran. France’s financial
system had $163 million in
cross-border claims on Iranian
banks in the last quarter of the
year, according to the Bank for
International Settlements.
Lending to Iran by advanced
economies fell under the old
sanctions regime and never recovered even after sanctions relief, in part because banks were
still wary of facing U.S. action.
But there were signs it could
pick up. According to the Iran
Labour News Agency, the country’s Bank of Sepah collectively
secured $10 billion in credit
lines from three banks in South
Korea, Austria and Denmark.
All those transactions, from
oil to shipping to finance, will
be banned by the U.S. sanctions
by early November.
Treasury has some flexibility
in whether to penalize countries and their firms. If a country has made “significant reductions” in oil purchases of crude
over the next several months,
the U.S. can issue an exemption
from penalties. But issuing
waivers and exemptions, or failing to penalize noncompliance,
undermines the intent of the
strategy: to pressure Iran to the
negotiating table. Those actions
also encourage others to flout
U.S. sanctions, undermining
Washington’s credibility.
“The U.S. cannot prevaricate,” said Behnam Ben Taleblu,
an Iran expert at the Foundation for Defense of Democracies, a think tank that has criticized the nuclear deal. If the
U.S. falters, failing to penalize
noncompliant European companies or banks, the U.S. casts
doubt over its competence and
capability to enforce sanctions.
Even if Europe largely com-
plies, other countries with foreign-policy aims often at odds
with the U.S. may see an opportunity. Total, for example, is
considering transferring its
stake in a joint venture with the
National Iranian Oil Co. to
China National Petroleum Corp.
The best-case scenario is
that the Europeans and Americans are able to craft a new
deal that addresses U.S. concerns over Iran’s nuclear development, missile program and
support for regional proxies,
said Jonas Parello-Plesner, a
former Danish diplomat who is
a senior fellow at the conservative Hudson Institute.
“Worst-case, we have a spat
around whether European governments try to protect their
companies, do counterlegislation, or challenge it at the
WTO,” he said, referring to the
European Union’s use of the
World Trade Organization’s to
defy the U.S. embargo against
Cuba in 1996.
Despite a decadeslong U.S.
embargo on Cuba, the world’s
rejection of the U.S. position,
including Europe, meant Washington wasn’t able to dislodge
the Communist Castro government’s grip on the nation.
Heard on the Street: Risk for
French car makers in Iran....B9
TESLA
Continued from Page One
Elon Musk said he retook control of production.
Tesla is at a critical juncture as it tries to produce
enough of its mass-market
Model 3 cars to generate cash
to fund the business and instill
confidence in investors that
the company can move beyond
being a niche-product maker.
Excitement about Tesla’s
ability to bring electric vehicles to the masses and then to
develop autonomous vehicle
technology helped push the
company’s stock to record levels last year and give it a market value that rivals that of
General Motors Co.
But Tesla has struggled to
crank up Model 3 output since
it began last July in Fremont,
Calif. It has twice delayed a
critical goal of producing 5,000
Model 3s a week, more than
double the pace the company
said it reached at the end of
the first quarter. Tesla now
says it expects to make that
many cars by around the end
of the second quarter.
Mr. Musk has said Tesla
won’t need to raise more
money this year, but the longer
it takes Tesla to meet its production targets the “greater
the financial risk,” said Efraim
Levy, a senior equity analyst at
CFRA Research. Tesla shares
have fallen roughly 2.2% this
year to $301.06.
Tesla finished the first quarter with $2.7 billion in cash on
hand, versus $3.4 billion at the
end of last year. Analysts surveyed by FactSet predict the
company will burn through $1.2
billion in the rest of the year. It
will need to pay down a $230
million convertible bond this
November if its stock doesn’t
reach a conversion price of
$560.64, and a $920 million
convertible note next March if
the stock doesn’t reach $359.87.
Issuing new shares would
dilute shareholders and likely
drive down the share price,
potentially rattling creditors
and pushing up borrowing
costs. And the falling price of
Tesla’s unsecured bond means
new debt could lead to significant added interest expense.
Tesla also could sell convertible bonds, a hybrid of
debt and equity that has been
BRET HARTMAN/ASSOCIATED PRESS
BY IAN TALLEY
Matthew Schwall, shown in 2010 when he was a Toyota Motor
executive, left Tesla for self-driving car company Waymo.
the company’s favored means
of raising cash in recent years.
But that could prove more
challenging. Many investors,
such as hedge funds, will buy
convertible bonds only if they
can also bet against, or short,
the issuer’s shares. But Tesla is
now the most shorted stock in
the U.S. by dollar volume, making it increasingly costly and
difficult to borrow its shares, a
necessary move for shorting.
“If there isn’t enough stock
available, or the rate is so
high, the hedge becomes untenable,” said Ihor Dusani-
Tesla has long been
known as a difficult
place to work, given
its demanding CEO.
wsky, managing director of
predictive analytics at S3 Partners, who previously worked
on the stock-loan desk at Morgan Stanley.
Neither Mr. Schwall nor Mr.
Field could be reached for
comment. Waymo confirmed
Mr. Schwall has begun working
for the Alphabet Inc. unit.
Tesla has long been known
as a difficult place to work,
given its demanding CEO, and
key leaders have departed in
the past year or so.
In early 2017, Jason
Wheeler left as chief financial
officer after less than two
years. He had previously been
vice president of finance at Alphabet unit Google, and some
Wall Street analysts thought
he might be able to instill
more conservative targets for
the auto maker, which under
Mr. Musk’s leadership have
been wildly off.
Mr. Wheeler was succeeded
by Deepak Ahuja, a longtime
Musk confidant who spent
more than seven years as Tesla
financial chief.
Then, this past February,
Jon McNeill, Tesla’s president
of global sales, marketing and
delivery and service, left to become chief operating officer at
ride-hailing service Lyft Inc.
In April, Tesla lost Jim Keller, the head of the company’s
driver-assistance system called
Autopilot, which can handle
speed and steering in certain
situations. That business has
been hit with several departures, as Mr. Musk has pushed
the team to put a self-driving
car on the road.
Tesla has also recently lost
its corporate treasurer and
chief accounting officer.
Mr. Schwall, who was director of field-performance engineering, served as “primary
technical contact” at Tesla
with safety-regulation agencies
including the NTSB and the
National Highway Traffic
Safety Administration, according to his LinkedIn biography.
The NTSB last week opened
its fourth investigation into a
crash involving a Tesla vehicle
after a Model S sedan veered
off the road in Florida. The
agency has said it was initially
reviewing the emergency response to the vehicle’s battery
fire that occurred after the
crash. Tesla has said it hadn’t
retrieved the vehicle logs but
that it appeared it crashed at a
very high speed and that Autopilot wasn’t engaged.
.
THE WALL STREET JOURNAL.
Monday, May 14, 2018 | A5
The future of wealth since 1818.
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A6 | Monday, May 14, 2018
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WORLD NEWS
New Embassy Clouds Peace Bid Early Vote Returns
In Iraq Suggest
Political Shake-Up
JERUSALEM—The opening
of the relocated U.S. Embassy
here this week fulfills a campaign promise of President
Donald Trump’s while dialing
up tension around another administration goal: peace in the
Middle East.
Mr. Trump’s decision to relocate the embassy to Jerusalem from Tel Aviv has faced
fierce criticism from European
and Arab officials who say it
could hamper any future peace
negotiations. Palestinians are
refusing to meet with representatives of the Trump administration and say they no
longer recognize the U.S. as the
main broker of peace talks
with Israel.
U.S. officials said they would
press on with their still-secret
plan to secure what Mr. Trump
has called “the ultimate deal”
for Middle East peace. The
plan is mostly finished, they
said, and the administration is
seeking the right time and
place to present it.
“The peace process is most
decidedly not dead,” Secretary
of State Mike Pompeo said on
Fox News on Sunday. “We’re
hard at work on it. We hope we
can achieve a successful outcome there as well.”
U.S. officials have said recognizing Jerusalem as Israel’s
capital reflects the reality on
the ground. Israel’s parliament,
the Knesset, and much of its
government is in Jerusalem.
The international community
doesn’t recognize Jerusalem as
Israel’s capital.
In an interview that aired
Sunday on ABC, White House
national-security adviser John
Bolton said the embassy location would help the peace process.
“I think recognizing reality
BY ISABEL COLES
AND ALI NABHAN
RONEN ZVULUN/REUTERS
BY FELICIA SCHWARTZ
A worker prepares for Monday’s opening ceremony at the U.S. Embassy compound in Jerusalem.
always enhances the chances
for peace,” he said.
A peace deal has eluded Mr.
Trump’s three most recent predecessors as president, and the
most recent round of talks collapsed in 2014.
The U.S. Embassy opening
on Monday culminates nearly
six months of preparations.
The State Department spent
about $400,000 to retrofit a
consular building in Jerusalem’s Arnona neighborhood,
straddling West Jerusalem and
what is called No Man’s Land, a
contested area that lies in between the 1949 armistice lines.
Ahead of the opening, new
road signs for the embassy appeared near the site.
Israel captured East Jerusalem and the West Bank from
Jordan in the 1967 Arab-Israeli
war. Palestinians want East Jerusalem as the capital of a future state. The Trump administration has said the final
boundaries of Jerusalem would
be left up to final status negotiations.
The embassy move exacerbated tensions with Palestinian
leaders, with the Palestine Liberation Organization calling for
protests on Monday at the new
embassy. The issue of the U.S.’s
recognizing Jerusalem has also
drawn repeated condemnation
from Arab rulers, including
Saudi Arabia’s King Salman,
Jordan’s King Abdullah and
Egypt’s president Abdel Fattah
Al Sisi, staunch U.S. allies.
While the move announcement didn’t initially spark as
much violence as predicted by
some opponents of the move, it
U.S. officials say
they will press on
with their plan to
secure Mideast peace.
has helped fuel protests in the
Gaza Strip, where thousands of
Palestinians have turned out
each Friday at the border fence
to call for their right to return
to what is now Israel. So far,
more than 40 Palestinian protesters have died in repeated
clashes with Israel’s military.
The Gaza protests are expected to culminate the day after Monday’s embassy opening,
on what Palestinians call Na-
kba Day, or Day of the Catastrophe, marking the day after
the anniversary of Israel’s
founding on May 14, 1948.
Yahya Sinwar, leader of Hamas
in Gaza, which controls the territory, suggested last week that
more than 100,000 people
could storm the fence.
Nearly all European ambassadors skipped a reception
Sunday evening in honor of the
embassy move held by Israeli
Prime Minister Benjamin Netanyahu. Representatives from
33 countries including Nigeria,
Vietnam, Paraguay and Guatemala were there, and the latter
two have said they would also
move their embassies.
Mr. Trump won’t attend
Monday’s ceremony but will
address the proceedings by
video. The U.S. delegation is
being led by Deputy Secretary
of State John Sullivan and includes Mr. Trump’s son-in-law
and senior adviser Jared Kushner, daughter and senior adviser Ivanka Trump and Treasury
Secretary
Steven
Mnuchin.
—Dov Lieber in Jerusalem
and Kate O’Keeffe
in Washington
contributed to this article.
MOSUL, Iraq—Voters appeared to deal a blow to Iraqi
Prime Minister Haider alAbadi in this weekend’s election,
giving
surprisingly
strong support to an unlikely
coalition of communists and
followers of populist cleric
Moqtada al-Sadr in partial
preliminary results.
Mr. Sadr, a firebrand whose
militias once fought openly
with U.S. forces and were implicated in sectarian bloodshed, has since entered the political mainstream. His new
alliance with Iraq’s communists
did well in a contest in which
many Iraqis stayed home and
those who did vote said they
wanted to shake up a political
status quo known for corruption and bad governance.
With preliminary results
counted in 10 of Iraq’s 18 provinces, Mr. Sadr’s coalition came
in first in four of them, including the country’s most populous city, Baghdad, and was
near the top in all of them, according to preliminary results.
Mr. Abadi’s coalition didn’t
finish first in any of the provinces for which results were
released,
suggesting
his
chances of re-election may be
slim even after his government led the country to victory over Islamic State last
year. Neither Mr. Abadi’s coalition, seen as being implicitly
supported by the U.S., nor
Iran-backed groups were as
successful as Mr. Sadr.
The predominantly Shiite
provinces for which results
were released account for
around one-third of the seats
in Iraq’s parliament.
The early results don’t necessarily mean that Mr. Sadr
will become prime minister, a
post chosen in a round of political horse trading between
political parties after the vote.
But the vote gives him a powerful voice in the coming negotiations.
In recent months, Mr. Sadr
has criticized Iranian influence
in Iraq and received overtures
from Saudi Arabia, a Sunni
Muslim country that sees him
as a possible bulwark against
its rival Tehran. In 2016, Mr.
Sadr was one of the few politicians with the ability to mobilize a protest movement against
corruption that culminated in
the storming of the fortified
Green Zone and broke into parliament. His Sairun coalition
was born from that movement.
Mr. Abadi is expected to win
more seats than his Shiite rivals in Sunni provinces that
were occupied by Islamic State,
for which results have yet to
be announced. The outcome of
the vote in the Kurdish north
is also yet to be announced
amid claims of fraud that may
force a manual recount.
—Ghassan Adnan
in Baghdad
contributed to this article.
HAIDAR HAMDANI/AGENCE FRANCE-PRESSE/GETTY IMAGES
Trump keeps his word
to shift Israel mission to
Jerusalem, but draws
Arab, European criticism
Moqtada al-Sadr’s new alliance
with communists did well.
• Dominating Basic Cable - 22 Consecutive Months in Total Day •
Real News.
.
THE WALL STREET JOURNAL.
Monday, May 14, 2018 | A7
* *
WORLD NEWS
Three Indonesian Churches Are Bombed
Indonesians gather at a vigil for victims of the bombings, carried out by members of a family suspected of supporting Islamic State.
one of the attacks, the mother
and her two daughters, ages 9
and 12, were killed when they
detonated one or more bombs
at the entrance to the Indonesian Christian Church, a Protestant church. He said he believed
all three had bombs wrapped
around their waists.
In another attack, he said,
two sons, 16 and 18, rode a motorcycle onto the grounds of
the Immaculate Santa Maria
Catholic Church and detonated
a bomb. A witness speaking on
local television said a volunteer
security coordinator was killed
when he tried to stop the two
from entering the compound.
The biggest blast was at
Pentecost Church Central Surabaya, where police believe the
father detonated a car bomb.
Islamic State claimed re-
China Tests First Aircraft Carrier
BY TE-PING CHEN
BEIJING—China’s first domestically produced aircraft
carrier began sea trials, the
latest step forward in the
country’s quest to advance its
military footprint.
The carrier set out from
Dalian in northeast Liaoning
province on Sunday, China’s
state-run news agency, Xinhua,
reported. The trials are intended to test the reliability
and stability of its power system, Xinhua reported.
While China trails the U.S.
in its technological capacity,
Beijing is rapidly modernizing
its forces under President Xi
Jinping and has ramped up efforts to build a world-class
navy that can safeguard its interests at home and abroad.
On Sunday morning, China’s
state
broadcaster
CCTV
showed footage of the carrier
on a gray day at sea. Hu Wenming, the aircraft carrier’s
chief engineering commander,
told the broadcaster that the
newly launched vessel was
smaller than the U.S.’s Nimitz
class, which can sail longer
without refueling and accommodate more planes. However,
the launch was a sign that the
country had the ability to
build more similarly sized aircraft carriers in the future,
and larger ones as well, the
broadcaster said.
The carrier’s sea trials come
as China has continued to expand its military presence in
the South China Sea, including
runway construction and the
recent deployment of military
jamming equipment in the
area, sparking concern among
neighbors and in the U.S. In recent years, China has also dispatched ships and submarines
deep into the Indian and Pacific oceans.
“It’s raising the cost of an
intervention, particularly by
the U.S., in any conflict off
China’s coast,” Michael Kovrig,
senior adviser for North East
Asia at the International Crisis
Group, said of the carrier, citing China’s recent shows of
force directed at Taiwan in
particular. “It’s one more step
in shifting the strategic balance in the western Pacific
and in creating a Chinese
sphere of influence.”
China’s first aircraft carrier,
the Liaoning, was based on the
refurbished hull of an old Soviet model purchased from
Ukraine in 1998.
—Fanfan Wang
contributed to this article.
sponsibility for what it described as “three martyrdom
operations.”
Indonesia, the world’s largest Muslim-majority nation, has
more than 25 million Christians, representing about 10% of
the population, according to a
2010 census.
President Joko Widodo
called the attacks “barbaric“
and said he would “uproot the
cells entirely.” Police placed Jakarta, the capital, on high alert
as terrorism experts warned of
more attacks, with extremists
rallying followers ahead of the
Muslim fasting month of Ramadan, which begins this week.
The bombings come amid a
wave of bloodshed largely targeted at police. Last week, inmates killed five officers in a
36-hour siege of a terrorist-detention center in Jakarta.
Islamic State claimed responsibility for that uprising,
the second at the jail since
Aman Abdurrahman, the de
facto leader of the group’s supporters in Indonesia, was transferred there last year to stand
trial on charges of inciting followers to carry out attacks.
Hundreds of Indonesians
have traveled to the Middle
East to support Islamic State,
and authorities worry their influence and possible return
could lead to new attacks, a
concern shared by Indonesia’s
neighbors. Last year, militants
seized the Philippine town of
Marawi for several months.
—Anita Rachman
and Joko Hariyanto
contributed to this article.
An Endorsement Undone
TONY FERNANDES
JAKARTA,
Indonesia—A
family of suicide bombers carried out coordinated attacks on
three churches in the Indonesian city of Surabaya, police
said, in the country’s deadliest
act of terrorism in almost a decade.
The attack Sunday on members of Indonesia’s Christian
minority, claimed by Islamic
State, comes amid a rise in extremist violence and security
lapses in the country, where
supporters of the Islamist
group have sought to wage
large-scale attacks. It was the
first time children have been involved in a terrorist attack in
Indonesia.
Police said seven churchgoers and security personnel were
killed and dozens were injured
in the near-simultaneous morning bombings at the three
churches in Surabaya, Indonesia’s second-largest city, on the
island of Java.
National Police Chief Tito
Karnavian said the attackers
came from a single family that
had spent time in Syria in support of Islamic State. All six
family members died in the
bombings, police said.
Mr. Karnavian said that in
ROBERT RIZKY/EPA/SHUTTERSTOCK
BY BEN OTTO
AND I MADE SENTANA
AirAsia chief Tony Fernandes apologized for ‘buckling’ to
government pressure to support former Prime Minister Najib
Razak, who lost last week’s election in Malaysia, where political
connections often determine whether businesses succeed or fail.
• Number One in all of Cable News – 196 Consecutive Months •
Real Honest Opinion.
Source: Nielsen, Live+SD, FNC #1 Cable News Network for 196 consecutive months in M-S Total Day (6A-6A) and Prime (8P-11P) with P2+
(Jan’02-April’18). FNC #1 for the month in M-S total day (6A-6A) now 22 months in a row in basic cable with P2+ (July’16-April’18).
Subject to qualifications which will be made available upon request.
.
A8 | Monday, May 14, 2018
THE WALL STREET JOURNAL.
* *****
WORLD NEWS
Lights Going Out in ‘Desperate’ Caracas
Just 15 years ago,
Venezuela’s capital
was one of Latin
America’s jewels
CARACAS, Venezuela—The
young family bought their
dream home six years ago, a
five-bedroom triplex with
marble floors in a luxurious
building with a swimming pool
in this city’s fashionable La
Castellana district.
They paid $1.5 million, including renovations, for the
penthouse apartment, according to the real-estate company
that handled the deal, and got
a 360-degree view over Caracas, for decades one of Latin
America’s most expensive urban gems.
No more. This city is unraveling fast: Water doesn’t reach
most homes, mass transit is
grinding to a halt and businesses are closing in the face
of hyperinflation expected to
top 13,000% this year. Shotgun-toting troops wearing
camouflage and balaclavas run
checkpoints. Cash is so scarce
people can’t pay for the smallest necessities like bus fare.
Last year, the family fled
their apartment in La Castellana, sold it for a third of
what they paid and moved to
the U.S. Since then, the exodus
from this city has only accelerated, as Venezuelans escape
an increasingly authoritarian
government and an economy
that has contracted by 40% in
five years.
Few here see much hope for
change as President Nicolás
Maduro seeks re-election in a
WIL RIERA FOR THE WALL STREET JOURNAL
BY RYAN DUBE
An empty Palos Grandes area of Caracas. The city is unraveling under an authoritarian government and a crumbling economy.
vote on May 20 that the U.S.
and other governments say
will be rigged.
“There are an enormous
number of properties [for
sale] because everyone wants
to leave,” said Aura Corzo,
who was a real-estate agent
here until fleeing to Colombia
recently. “They’re desperate to
go.”
Just 15 years ago, Caracas
was one of Latin America’s
most modern capitals, home to
the region’s tallest skyscrapers, a sleek subway system
and a university campus described by Unesco as a “mas-
terpiece of modern city planning.” Its museums displayed
works by Pablo Picasso and
Luciano Pavarotti performed
at the renowned Teresa Carreño theater. Some Venezuelans dined here at world-class
restaurants, sipped imported
whiskey and flew to Paris on
the Concorde to shop.
Now, the city’s lights are
going off.
“Living in Caracas is hellish
and inhumane,” said Ángel
Luis Lecuna, 32, a lawyer who
has seen 10 relatives flee Venezuela. “It’s so bad it makes
you think the government is
open sewer searching for
scraps of metal to sell. State
employees, unable to get to
their offices because of a dilapidated transportation system, are increasingly abandoning work; their salaries have
been rendered all but worthless by inflation anyway.
Yulimar Toala, 26, says the
lack of means to pay for the
bus has left her unable for
weeks to show up at work or
take her two small boys to
school.
“Oh, dear, this city isn’t the
same,” she said. “I used to go
out. I could give things to my
being negligent just to humiliate us.”
Most international flights
have been canceled, leaving
the airport’s runways nearly
empty.
The Teresa Carreño, now a
theater in decay, is used for
Socialist Party rallies. And the
once bustling nightlife has
gone quiet in a city with roving bands of kidnappers and
one of the world’s highest
murder rates.
In today’s Caracas, malnourished families rummage
through garbage for food, and
young men wade into a toxic
NORTH KOREA
BY JONATHAN CHENG
AND YUN-HWAN CHAE
Continued from Page One
with their political class.
The old center-right and
center-left parties that built today’s EU are losing popular
support across most of the
Continent, as new rivals seize
on voter frustrations including
unemployment and fears about
societal cohesion amid largescale immigration from the
Middle East and Africa, which
has brought 750,000 migrants
to Italy since 2011. The main
beneficiaries are politicians
who argue self-serving elites
are robbing ordinary people of
their livelihood or cultural
identity—a narrative political
scientists call populism.
While many of Europe’s rising populists are on the nativist
right, others have roots in the
anticapitalist left. Some—notably the 5 Star Movement—are
an ideological hodgepodge
united by their claim to offer a
new politics. In a continent battered by a decade of crises, es-
YONHAP/NEWSCOM/ZUMA PRESS
North Korea said it would dismantle its nuclear test site in
less than two weeks, an event
that would set up leader Kim
Jong Un’s summit with President Donald Trump in June.
Pyongyang plans to destroy all
the tunnels at its northeastern
testing ground with an explosion
and remove observation and research facilities and ground-based
guard units, the Foreign Ministry
said. “A ceremony for dismantling
the nuclear test ground is now
scheduled between May 23 and
25,” depending on weather conditions, the ministry said.
The announcement comes days
after the U.S. said the summit between Messrs. Kim and Trump will
be held June 12 in Singapore.
—Associated Press
South Korean marines return to their barracks in Pohang after a joint drill with U.S. troops.
has raised questions in recent
months about the terms of the
U.S. relationship with South
Korea. He has said Seoul should
pay for a $1 billion U.S. missiledefense system, and threatened
to abandon their bilateral freetrade pact. This month, Mr.
Trump said that “troops are
not on the table,” but added:
“At some point into the future,
I would like to save the money.”
Lawmakers in Seoul have
argued for years that the U.S.
is getting a better deal on its
Korean bases than it might appear.
Figures from the South Korean Defense Ministry and U.S.
budget appropriations often
tablished parties have often
tried to copy such insurgents’
policies or to enlist them as junior governing partners.
In Italy, however, antiestablishment groups are poised to
take power on their own for the
first time in one of the EU’s
major countries.
The reasons aren’t hard to
find: Italy has yet to recover
fully from the global financial
crisis. Industrial output and
business investment remain depressed, bad loans burden
banks, youth unemployment is
among the highest in Europe,
and many educated people are
emigrating. Years of austere fiscal policies have shored up the
budget but further alienated
voters. High undocumented immigration from Africa and the
Middle East has piled cultural
angst on economic woes.
It wasn’t clear late Sunday
how the parties would tackle
irregular immigration, which
was a major election issue.
The League has called for
faster deportations of undocumented immigrants who don’t
qualify for asylum, which
would require reaching agreements with countries of origin
to take them back.
The status quo’s most effective critics, the 5 Star Movement and League, together won
just over 50% of the vote in
Italian parliamentary elections
in March. Italy has been without a government since then
because of the parties’ tactical
and policy differences. With
new elections looming, the two
populist groups overcame the
impasse in recent days.
The parties won the elections by offering opposite
kinds of fiscal largess. The 5
Star Movement pledged to introduce a universal basic income aimed at protecting the
poor and unemployed, winning
widespread support in Italy’s
economically blighted south.
The League proposed a flatrate income tax of 15%.
Both parties vowed to scrap
or dilute an unpopular pension
overhaul from 2011 that
steadily raises the retirement
age. Economists say the parties’ fiscal promises, if enacted
in full, would greatly add to It-
show Seoul’s contribution at
less than half—as low as 42%
of the combined $2 billion stationing cost this year, by one
standard measure.
The calculation is “unfair”
because it doesn’t incorporate
land-rent waivers Seoul grants
the U.S. military, said Kim
Jong-dae, a lawmaker with the
left-leaning Justice Party. “It
leaves all the big parts out.”
Lee Jae-myung, a former
mayor who rose to prominence
last year as an upstart challenger for the presidency, has
calculated South Korea’s share
at 77% and called for Seoul to
cut its contribution. He declined
to comment for this article.
5 Star leader Luigi Di Maio
aly’s budget shortfall, likely
breaking EU rules that cap
deficits at 3% of gross domestic product. Italy’s public debt,
at 132% of GDP, is the EU’s
highest after Greece.
It isn’t clear how fast or
how fully the expected new
government will implement
the promised measures. So far,
financial markets have reacted
calmly to the prospect of a 5
Star-League government.
man had been flagged as a potential terror risk in one of
France’s security databases,
where the government keeps
the names of thousands of people who have expressed sympathy for radical Islam.
Islamic State claimed responsibility for the assault.
—Matthew Dalton
BURUNDI
Attack Ahead of Vote
Leaves 26 Dead
A French national of Chechen
origin stabbed a person to death
in central Paris on Saturday and
wounded four others, in an assault that investigators were
treating as a terrorist attack.
Police shot and killed the
man shortly after the attack,
French authorities said.
Paris prosecutor François Molins said the man yelled “Allahu
akbar!”—“God is great” in Arabic—during the stabbing.
A judicial official said the
Twenty-six people were killed
and seven others wounded in an
attack by an unidentified group
in rural Burundi, the country’s
security minister said Saturday.
The attack came shortly before Burundians vote May 17 in
a referendum that could extend
the president’s term. It wasn’t
immediately clear if the attack
was related.
Security Minister Alain Guillaume Bunyoni said 24 people
were killed in their homes Friday
night and two others died of
their wounds at a hospital. He
gave no further details about
the attack in Ruhagarika community in the northwestern
province of Cibitoke.
Burundi has seen deadly political violence since early 2015
when President Pierre Nkurunziza successfully pursued a disputed third term. He later survived a coup attempt by army
and police officers, including
some who fled and announced
they had launched a rebel group
against the government.
—Associated Press
For now, the European Central Bank’s interventions in
bond markets in recent years
have removed fears of capital
flight from indebted Southern
European countries. But a
sharp Italian departure from EU
commitments to fiscal discipline could cast doubt on the
ECB’s willingness to keep markets steady.
Mr. Di Maio, 5 Star’s 31-yearold leader, has tried to reassure
Italians, investors and the EU
that his party would behave
prudently in government, countering critics’ charge that it is
more suited to rabble-rousing
than running the state.
Mr. Di Maio said a 5 Star-led
government would maintain
budget discipline and stay
within EU rules. His prospective junior partner, League
leader Matteo Salvini, continues to say he would break EU
fiscal rules if they are hurting
Italians.
“Populists are normal people,” said Alberto Bagnai, a
member of Italy’s Senate for
the League. “They have a defect: They love their country
and look with great sorrow at
the problems caused by the
economic policies of recent
years.” Mr. Bagnai, an economist strongly critical of the
euro, said the common currency remains a bad idea—but
the League won’t push to leave
it. “Our top priority is growth.
Exiting the euro is not at the
top of our list of priorities.”
In Italy, the prevailing mood
is that it is time to try something new.
“The flat tax is an interesting proposal,” said Beppe Fumagalli, chief executive of homeappliance maker Candy Group.
Although he doubts it can be
enacted in full, given Italy’s financial reality, he said: “Anything that leads to simplification is positive.”
The prospective coalition is
“a jump in the dark,” Mr. Fumagalli said. “But I think these
parties are reaching a certain
political maturity. These groups
seized on the desire for change,
and how they have to translate
that into policies.”
—Eric Sylvers in Milan
contributed to this article.
FRANCE
Paris Attacker Was
Flagged as Risk
MAULE/FOTOGRAMMA/ROPI/ZUMA PRESS
ITALY
Pyongyang Plans to
Destroy Nuclear Site
of South Korean land for its
military bases—costs borne by
Seoul that aren’t included in
either side’s recent published
financial assessments.
South Korea, like Japan, relies on the U.S. security umbrella to contain regional
threats. The country hosts
more than 20 U.S. bases and
28,500 U.S. troops, who enjoy
a strategic location on the
Asian mainland.
Mr. Trump has said “we get
practically nothing” for the
roughly $1.2 billion a year the
U.S. spends to station forces
there, and has said allies
should pay 100% of costs.
More broadly, Mr. Trump
Heard: Venezuela’s oil
meltdown worsens................. B9
WORLD WATCH
U.S. Gets South Korea Rent Break
SEOUL—President Donald
Trump’s demand that South
Korea foot more of the cost for
basing U.S. troops on the peninsula reflects calculations that
leave out one of Seoul’s biggest
contributions to the American
presence: rent-free land.
U.S. and South Korean officials are set to meet in Washington on Monday for a third
round of negotiations on costsharing terms.
The White House’s push for
better terms in its agreements
with Seoul comes at a critical
time for the alliance. Since the
leaders of North and South Korea met in April—and ahead of
a June 12 meeting between Mr.
Trump and North Korean leader
Kim Jong Un—senior officials
and advisers in Washington and
Seoul have raised the possibility that U.S. troops might be
withdrawn from South Korea in
the event of a peace treaty.
South Korean officials have
been quick to swat down the
possibility of a withdrawal,
and Mr. Trump’s new nationalsecurity adviser, John Bolton,
had warned before joining the
administration in April that a
failure of denuclearization
talks could open the door to
allied military action against
Pyongyang.
The Pentagon aims for host
nations to bear half of stationing costs, which exclude soldiers’ wages. A 1966 agreement grants the U.S. free use
kids. I could buy them shoes.
Now, I can’t buy them anything.”
Particularly vexing to Caraqueños, as residents here are
known, is the breakdown in
services. Garbage piles up on
streets. Streetlights are out,
leaving many of the city’s byways in total darkness at
night. The city’s decrepit waterworks has largely broken
down, creating the cruel irony
of a lack of water in a country
replete with rain forests and
raging rivers.
As Mr. Lecuna’s neighborhood enters its third month
without water, he says he has
to skip work so he can visit
friends and relatives in other
parts of the city to load plastic
jugs with water. “It’s draining
to live this way,” he said.
Those who say they can no
longer withstand the hardship
are selling homes at a fraction
of what they paid, desperate
for cash to start fresh elsewhere.
A 66-year-old therapist remembered falling in love with
her three-bedroom apartment
when she first walked into the
hilltop building on a quiet,
residential street more than
40 years ago. She recently
turned down an offer of
$150,000—less than what she
paid for the place in 1975.
“The country I grew up in is
no more,” she said. “It will
take at least two generations
to get the country back on its
feet. I don’t think I’ll see it in
my lifetime.”
—Maolis Castro, Kejal Vyas
and Juan Forero
contributed to this article.
.
THE WALL STREET JOURNAL.
NY
Monday, May 14, 2018 | A9
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.
A10 | Monday, May 14, 2018
THE WALL STREET JOURNAL.
* ***
IN DEPTH
COHEN
Mr. Cohen repeatedly pitched
Uber, which said no, citing Mr.
Cohen’s ownership of New York
taxi medallions as a potential
conflict of interest with the
ride-hailing firm, a person close
to the company said. He modified his pitch in response those
objections, reminding the company he was “the president’s
lawyer,” this person said.
The company, this person
said, was “bemused.”
Severe losses on his New
York City taxi investments had,
in fact, fueled Mr. Cohen’s desire
to make money from his ties to
the president. A friend described his financial situation as
“precarious” and said Mr. Cohen
was having trouble maintaining
his family’s upscale Manhattan
lifestyle.
“I want you to know I’m
looking out for deals,” Mr. Cohen told his friend Mark Cuban
in April 2017 as he pitched the
owner of the Dallas Mavericks
on hiring a health-industry firm
Mr. Cohen took on as a client,
according to Mr. Cuban. “Michael is a hustler,” Mr. Cuban
said. “That’s who he is, that’s
what he does.”
Mr. Cohen didn’t register himself as a lobbyist, which wasn’t
required provided he only gave
companies advice and didn’t seek
to influence policy on Capitol Hill
or in the White House. His clients largely remained quiet
about having added him to their
payrolls. Lobbyists connected to
the companies that hired Mr. Cohen said they were unaware
their clients had done so.
His successful consulting
deals were made through Essential Consultants LLC, the same
company he had used months
earlier to arrange a secret pay-
U.S. Chamber of Commerce
$82.2 million
National Association of Realtors
54.5
Business Roundtable
27.4
Pharmaceutical Research &
Manufacturers of America
25.8
Blue Cross/Blue Shield
Continued from Page One
Not so fast. Lushan’s bid to
be the center of meat-rock culture is landing with a thud with
collectors in other parts of China
whose rocks also resemble meat.
They say Mr. Jiang’s classification system favors Lushan’s
rocks.
“Of course we object,” says
Zhang Yaowen, 59, a meat-rock
collector in a north China county
also vying for recognition. “If
Lushan wants to spread their
standard throughout the country, that’s not possible.”
More is at stake than bragging rights. Lushan and other local governments hope meat
rocks will draw investment and
tourists. Across China, various
governments seeking both have
seized on monikers ranging
from “Land of Donkey-Hide Gelatin”—a traditional Chinese
remedy—to “Land of Big
Drums,” which a southern region known for its plus-size
drums has embraced.
Development has lagged in
Lushan, a mountainous region
where farmers hawk mushrooms
and honey roadside. “Meat rocks
22.1
American Medical Association
21.5
Alphabet
18.1
AT&T
16.8
Boeing
Michael Cohen, who tried to launch a Washington consulting business, arrives at Capitol Hill in 2017.
ment of $130,000 to former
adult film star Stephanie Clifford, professionally known as
Stormy Daniels, in exchange for
her silence about an alleged sexual encounter with Mr. Trump.
He denies the affair.
When contacted by the Journal for this article, Mr. Cohen
said in a written statement:
“These falsehoods and gross inaccuracies are only being written in the hopes of maligning
me for sensationalistic purposes. The truth will prevail and
will ultimately be proven in
court and not by pundits.” He
didn’t respond when asked what
he was disputing.
It is common for people close
to a new administration to offer
their services based on their
proximity to power. “The more
you can be seen as an intimate
of the president, the more important you become to prospective clients,” said Tom Daschle,
the former Senate Democratic
leader and head of a company
that provides strategic counsel
to large companies and other
clients.
Last month, federal prosecutors raided Mr. Cohen’s properties as part of an investigation
into possible bank fraud and
campaign-finance violations in
his efforts to raise cash and conceal negative information about
Mr. Trump during the 2016
campaign, according to people
familiar with the matter. Mr. Cohen has denied wrongdoing.
The investigation, being led
by the U.S. Attorney for the
Southern District of New York,
stemmed in part from Mr. Muel-
Ford’s Ziad Ojakli, right, was queried over Mr. Cohen’s approach.
MEAT
24.3
American Hospital Association
are a resource we can develop to
promote the economy,” says
Xing Chunyu, vice-chair of a local political advisory body.
Nationwide, prices for meatrock specimens have boomed,
helped in part by the country’s
state broadcaster, which in recent years has aired multiple
segments spotlighting meat
rocks. Stones bearing the most
striking resemblance to meat
can sell for thousands of dollars.
“Everyone can appreciate
meat rocks,” says Yuan Ziming, a
collector from the northeast city
of Tianjin who, like many, prefers to photograph his treasures
on plates with real vegetables to
boost their verisimilitude. (He
also has a favorite stone that resembles a potato.)
Lushan’s guidelines, which
were published by the provincial
government late last year, classify meat rocks into more than a
dozen subcategories. These include definitions for what kinds
of rocks look like beef, bacon
and chicken and suggest stones
should appear to have fatty
meat, lean meat and skin, with
pores, to be considered highquality. Rocks are graded on a
100-point scale.
Few places may be able to
match all those attributes, crit-
ler, who is probing Russian
meddling in the 2016 election
and whether the Trump campaign colluded with Moscow.
The president has denied any
collusion and Moscow denies
meddling. A spokesman for Mr.
Mueller’s office declined to comment.
From the campaign days, Mr.
Cohen made an effort to establish his reputation as a confidant of Mr. Trump, whom he referred to as “the boss”
regardless of whether he was
speaking to the president or to
others, according to people familiar with the matter.
In the first weeks after the
election, Mr. Cohen maintained
an office in Trump Tower in
‘I’m not being fairly
compensated,’ Mr.
Cohen said of his
law-firm deal.
New York, close to the transition offices. On Jan. 18, 2017,
two days before the inauguration, he announced in a Fox
News interview that he was
leaving the Trump Organization,
where he had worked since
2007, to serve as Mr. Trump’s
personal lawyer.
By that time, however, he
knew he wouldn’t achieve his
biggest goal: a prominent role in
the new White House, where he
hoped he would serve as chief
of staff.
Mr. Cohen doesn’t appear to
have played a major role early
in the administration as the
president’s personal legal counsel, despite his new title. Several
current and former White
House officials said they don’t
recall ever dealing with Mr. Cohen in that capacity.
Mr. Cohen soon began saying
he was “going to build up a
huge practice” finding investments for clients, said one associate. “He’d use words like, ‘Big
guys are going to hire me.’ ”
Mr. Cohen began trying to
strengthen his relationships
with others in Mr. Trump’s orbit, including Donald Trump Jr.,
the president’s eldest son who
was serving on the transition
team, and Elliott Broidy, a top
Trump fundraiser who was
serving on the inaugural comics of Lushan’s standards say.
Some, like Liuzhou, in the south,
carve their rocks, which purists
like Mr. Jiang frown on. Size
also matters in Lushan’s standards. “Some claim their rocks
are pork shoulders, but they
aren’t even as big as a fist!” says
Mr. Jiang.
China’s appreciation of meat
rocks is centuries old, part of a
tradition among scholars and
connoisseurs who seek out
stones in the service of meditation or beauty, prized for their
resemblance to everything from
mountains to mythical creatures. In the case of meat rocks,
the stones contain varying degrees of quartz and silica; highiron content in some brings out
a reddish hue. Riverbeds and hot
springs add polish to the finishes.
The world’s most famous
meat rock is a piece of jasper
carved to resemble a slice of
braised pork belly. A gift to a
Qing Dynasty emperor some 300
years ago, it rests on a gold
stand in Taiwan’s National Palace Museum and is featured on
postcards and museum memorabilia.
Many Chinese meat-rock collectors say Taiwan’s meatshaped stone is inferior to local
mittee, according to people familiar with the matter.
In January, Mr. Cohen signed
two of the wealthy donors to
the president’s inaugural committee as his clients: AT&T and
the investment management
firm Columbus Nova. AT&T had
donated $2 million to the inauguration; Columbus Nova CEO
Andrew Intrater had donated
$250,000. Mr. Cohen solicited
Mr. Intrater’s donation, according to a person involved in the
inauguration.
Columbus Nova’s biggest investor is a company called Renova Group that was founded by
Russian oligarch Viktor Vekselber, Mr. Intrater’s cousin and
one of the richest men in Russia, who has close ties to the
Kremlin. At Mr. Intrater’s invitation, Mr. Vekselberg attended
inauguration festivities, where
Mr. Cohen networked with the
crowd and spent time with Mr.
Intrater, according to people
who witnessed his interactions.
He pitched potential clients
on what he said was his ability
to help them understand the administration, according to people familiar with the strategy.
AT&T agreed to pay him
$50,000 a month. Columbus
Nova paid $500,000 last year.
“It was never that he could
talk to Trump” about a client’s
particular policy interests, one
person familiar with Mr. Cohen’s
pitch said. “It was more that he
could decipher what the orbit
was thinking because of his
long-term relationships and understanding of how the president operates.”
In February 2017, Mr. Cohen
began discussing with Mr.
Broidy, a venture capitalist who
had helped raise money for Mr.
Trump during the campaign, the
possibility of going into the foreign-consulting business together, and told associates
about those plans, according to
people familiar with his discussions. A spokesman for Mr.
Broidy denied there were any
plans to work together. That
partnership didn’t pan out, but
Mr. Cohen kept trying, the people said. He proposed pitching
foreign governments, including
from the Middle East and Asia.
One of his early clients, Swiss
drugmaker Novartis, paid Mr.
Cohen $100,000 a month for a
year, even after a March 2017
meeting in which it determined
the attorney’s services wouldn’t
16.7
Open Society Policy Center
16.1
DowDuPont
15.9
Growing frustration
National Association of Broadcasters
As 2017 passed, Mr. Cohen
grew frustrated with his lack of
access to the administration. In
calls with associates of the president, Mr. Cohen often asked:
“Have you heard from the
boss?” One person who saw Mr.
Cohen at a restaurant over the
winter said Mr. Cohen voiced
unhappiness about the state of
his relationship with Mr. Trump,
complaining that the president
was “not calling him and not
helping him,” this person said.
In November, he landed another client, Korea Aerospace
Industries Ltd., which said it
hired him to provide “legal consulting concerning accounting
standards on production costs.”
Mr. Cohen proposed to associates pitching foreign governments and companies with a big
U.S. presence, including Samsung Electronics Co. Samsung
says it wasn’t approached.
“I’m going to try to go out
and get as many foreign clients
as I can,” one former associate
recalled him saying.
Toward the end of the year,
Mr. Cohen’s Washington efforts
started to unravel. AT&T and
Novartis have since called hiring
him a mistake.
In March, Mr. Cohen confided
in friends that he felt undervalued by Mr. Trump and questioned whether he should continue his work as lawyer for the
president, said a person familiar
with the matter. About a week
later, Mr. Cohen’s ambivalence
seemed to have vanished. He
called associates seeking contributions for a legal-defense fund
for White House aides who had
been subpoenaed by investigators, the person said. A person
familiar with the fund said Mr.
Cohen was never asked to raise
money for it, and didn’t do so.
Less than a month later, the
FBI raided his home, a hotel
room where he and his family
were staying temporarily and
his office at Squire Patton
Boggs. The law firm, which had
notified Mr. Cohen earlier in
March that it was terminating
his contract, announced the
split that day.
—Michael C Bender, Drew
FitzGerald and Julie Bykowicz
contributed to this article.
15.5
Comcast
15.3
Lockheed Martin
14.5
Source: Center for Responsive Politics
THE WALL STREET JOURNAL.
be useful. Monthly retainers for
such services in Washington
typically run from $15,000 to
$30,000, lobbyists say.
In April 2017, Mr. Cohen
signed a consulting contract
with 4C Health Solutions, a Virginia-based startup. David Adams, the chief executive of 4C,
previously told the Journal he
met Mr. Cohen through another
consultant. Mr. Adams said last
month that the company, which
agreed to pay Mr. Cohen 5% of
business he generated, hadn’t
paid Mr. Cohen in connection
with the contract because he
hadn’t brought in any business.
Mr. Cohen’s deal with law
and lobbying firm Squire Patton
Boggs was for $500,000 a year,
and gave him a cut of any fees
the law firm collected from clients he referred. Among the five
clients he delivered to the firm
was U.S. Immigration Fund LLC,
a company with ties to Mr.
Kushner. The Florida company
connects businesses with foreign investors through a U.S.
visa program.
A friend of Mr. Cohen said
that Squire Patton Boggs
worked “hand in hand” with Mr.
Cohen, and the firm’s leaders
“paraded him around like a
model” for many of their clients.
Mr. Cohen had an office in
the firm’s Rockefeller Center
space in New York. He exchanged pleasantries with other
lawyers in the hallway, but his
office door was closed about
90% of the time, said one person close to the firm. At Mr. Cohen’s request, Squire Patton
Boggs installed a lock on his
door for which only he had the
key, the person said.
About his relationship with
the president, he told lawyers at
the firm he could call “the boss
at any time,” the person said.
YUAN ZIMING
Uber pitch
Top lobbyists by 2017 spending
PABLO MARTINEZ MONSIVAIS/ASSOCIATED PRESS (2)
Continued from Page One
More fortunate are the dozens of Fortune 100 companies
who, when contacted by The
Wall Street Journal, said they
hadn’t received any overtures
from Mr. Cohen or had any contact with him.
Mr. Cohen’s pitch was blunt.
He would tell prospective clients—large corporations worried about their lack of connections to President Donald
Trump’s incoming administration—that he didn’t know who
was advising them, but that
they “should fire them all,” a
person familiar with Mr. Cohen’s
approach said. “I have the best
relationship with the president
on the outside, and you need to
hire me,” Mr. Cohen told them,
according to this person.
People close to the White House
say there was little contact between the two and, unlike other
longstanding advisers to the
president who wandered in and
out of the White House in the
early weeks, Mr. Cohen was
more often found at the bar and
restaurant of the new Trump International Hotel in Washington.
Over time, Mr. Cohen became
frustrated with the relationship,
telling one associate he believed
he deserved more money, because Squire Patton Boggs was
capitalizing on his ties to the
president to sell clients on the
firm.
“Every one of these motherf—ers is going around the
world and using my relationship
in order to acquire clients, but
I’m not being fairly compensated,” the associate recalled
Mr. Cohen saying.
The firm declined to comment on Mr. Cohen remarks.
He told associates he wanted
to seek partnerships with other
consulting and lobbying firms,
including Baker Botts and FTI
Consulting, both international
firms, according to people familiar with the matter. Both firms
said they weren’t aware of talks
with Mr. Cohen and never entered partnerships with him.
Lobbying Leaders
A collection of meat rocks on platters, arranged banquet style.
specimens. Taiwan’s stone
“doesn’t have any lean meat,”
notes Mr. Zhang, the collector
from northern China. By contrast, he says, stones from his
county, Kangbao, contain darker
stripes of lean meat, as well as
pale stripes suggesting succulent layers of fat. They are
deeper in color, Mr. Zhang says,
than those found in Lushan.
Like other enthusiasts, he is
fond of reminiscing about the
first time he saw meat rocks, in
his case back in the countryside
in 1981: “It was like the whole
field was covered with pieces of
pork!”
Drafting Lushan’s rock standards wasn’t easy, says Mr. Jiang, 65. The task involved
heated debates over nomenclature, including whether the
rocks should be referred to as
“meat rocks”—as they have long
been called—or “meat-shaped
rocks.” The latter, he says, won
out: “It sounds more scientific
that way.”
He says Lushan’s standards
can be a reference point for others but aren’t intended to be
prescriptive.
Huang Weiping, from Liuzhou, says meat rocks shouldn’t
have any standards at all, and
that they are firmly a matter of
taste. While Liuzhou’s rocks
wouldn’t hold up well by
Lushan’s standards, given that
they are carved, he says that
doesn’t diminish their quality.
“For those who’ve just begun
playing with meat rocks, ours
are very good for their price.”
He boasts of their deep red
color, saying that they look like
raw meat. “Cooked-meat rocks
aren’t so appealing, they aren’t
so bright and beautiful,” he says.
Back in Lushan, meat-rock
aficionado Liang Peng says he
hopes their stones can help put
the county on the map. In 2015,
he founded the China Lushan
Meat-Rock Museum, where
slabs of rocks—some the size of
small boulders—sit carefully
plated inside glass cases. It sees
a slow trickle of visitors, mostly
meat-rock enthusiasts from elsewhere in China.
“We aren’t a big city like Beijing or Shanghai,” Mr. Liang
says. “But our meat rocks are
the country’s finest. We should
be proud.”
—Kersten Zhang
contributed to this article.
.
THE WALL STREET JOURNAL.
May 22, 2018
Monday, May 14, 2018 | A10A
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|
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How innovation is revolutionizing
the business of health
This spring, the editors of The Wall Street Journal will convene experts from across the health and health-care
industries to focus on the innovations transforming this critical sector.
SPEAKERS
Scott Gottlieb, M.D.
Commissioner,
U.S. Food and Drug Administration
Rear Adm. Anne Schuchat,
M.D.
Acting Director,
Centers for Disease Control
and Prevention
Steven H. Collis
Andrew Bremberg
Chairman, President and CEO,
AmerisourceBergen Corporation
Assistant to the President and Director,
Domestic Policy Council,
The White House
Mark T. Bertolini
Alex Gorsky
Chairman and CEO,
Aetna Inc.
Chairman and CEO,
Johnson & Johnson
David A. Ricks
Mary E. Klotman, M.D.
Chairman and CEO,
Eli Lilly and Company
Dean, School of Medicine and Vice
Chancellor for Health Affairs,
Duke University
Michael A. Mussallem
Steven J. Corwin, M.D.
Chairman and CEO,
Edwards Lifesciences
President and CEO,
NewYork-Presbyterian
Anthony S. Fauci, M.D.
Regina M. Benjamin, M.D.
Director, National Institute of
Allergy and Infectious Diseases,
The National Institutes of Health
Founder and CEO,
BayouClinic, Inc.
Peter B. Bach, M.D.
Alexis Borisy
Director, Center for Health Policy
and Outcomes and Faculty Member,
Department of Epidemiology and
Biostatistics,
Memorial Sloan Kettering Cancer Center
Partner,
Third Rock Ventures
George M. Church, Ph.D.
Stephanie Domas, P.E.,C.E.H.
Professor of Genetics,
Harvard Medical School
Vice President of Research,
MedSec
Surgeon General of the United
States (20092013)
Director,
PersonalGenomes.org
Thomas McLellan, Ph.D.
David N. Osser, M.D.
Co-Founder and Scientiic Director
(19922015),
Treatment Research Institute
Associate Professor of Psychiatry,
Harvard Medical School
Deputy Director and Senior Scientist
(20092011), White House Ofice of
National Drug Control Policy
Attending Psychiatrist, Domiciliary
Treatment Program for Homeless Veterans,
Veterans Affairs Boston Healthcare System
Eric Topol, M.D.
Sarah E. Wakeman, M.D.
Founder and Director,
Scripps Translational
Science Institute, Professor
of Molecular Medicine and
Executive Vice President,
The Scripps Research Institute
Medical Director, Substance
Use Disorders Initiative,
Massachusetts General Hospital
Feng Zhang, Ph.D.
Daphne Zohar
Core Institute Member,
Broad Institute of MIT
and Harvard
Co-Founder and CEO,
PureTech Health plc.
Assistant Professor of Medicine,
Harvard Medical School
PROUDLY SPONSORED BY:
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May 14-18, be a part of Skip Lunch Fight Hunger.
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GREATER NEW YORK
Candidates for Job
Of Temporary AG
To Face Legislators
A ‘glamping’ site is being built on a part of Governors Island, the latest effort to draw more visitors and make the park self-sustaining.
Taming Governors Island
BY MELANIE GRAYCE WEST
It isn’t much more than a
dirt lot with wood platforms
right now, but in less than a
month’s time Governors Island
will host guests willing to pay
as much as $500 a night to
stay in luxury tents with hotel
amenities and views that can’t
be matched.
The “glamping” experience
will include king-size beds,
rain-style hot showers, farmto-table dinners, morning yoga
and evening s’mores. Sometime
during the summer, the camp
will add shipping containers refashioned as hotel rooms that
can be used 365 days a year.
“I think of it as a sleepover
on a private island,” said Peter
Mack, the chief executive of
Denver-based Collective Retreats, which will operate the
campsite.
Over the years the 172-acre
oasis off the southern tip of
Manhattan has been a military
property used to store artillery
and house infantry troops in the
War of 1812 and in recent decades for the U.S. Coast Guard.
In 2003, the federal government sold 150 acres of the island to the city and state, with
the remaining 22 acres staying
under the control of the National Park Service. Visitors
from May 1 to Oct. 31 can stroll
the grounds, rent bikes, picnic,
hit up food trucks or just read
Ambitious Goals
To Fill the Space
The long-term plan is for
the island to be open yearround, but Michael M. Samuelian, president and chief executive of the Trust for Governors
Island, thinks that requires two
or three different draws.
With 50 vacant buildings
totaling some 1.5 million
a book on the grass.
Now, with the 100-person
campsite, which will open in
stages beginning on June 1, and
an 80,000-square-foot European-style spa set to begin construction soon, Governors Island is taking a luxe turn. It
offers a glimpse into how a
park can be self-sustaining
while continuing to serve as a
resource for public enjoyment.
Michael M. Samuelian, president and chief executive of the
Trust for Governors Island, the
city-controlled independent
nonprofit that runs the island,
said the campsite is an experiment to prove to the hotel
market that people will want to
stay overnight on an island
that lacks some basic amenities, such as a drugstore.
“We’ve toured around every
hotelier you can think of,” said
square feet, the Trust is shopping for a major cultural institution—perhaps a gallery or
museum—to take space. Mr.
Samuelian declined to say who
is looking.
A bigger hotel using some
of the old barracks or a university with a dormitory are also
options. So, too, is an outdoor
concert space.
“One of my fantasies is to
be the Tanglewood of New
York,” Mr. Samuelian said.
Mr. Samuelian in an interview.
“I think hospitality, conference
center, convening is a very natural next step for us.”
It has only been in the past
15 years that tourists have
come to poke around the island’s landmarked buildings or
lounge on the grass. Some
800,000 people visited last
year and a million are expected
over the next six months.
This year the island will add
an artificial skating rink and a
film series. Wi-Fi is on the way,
and the island will remain open
late on Friday nights to draw
more weekday visitors.
The Trust has roughly $51
million in operating and capital
sources today. The city pays
85% of the Trust’s $16 million
annual operating budget, and
nearly all of its capital expenditures. The park’s biggest single
New Jersey Preps for Court
To Rule on Sports Gambling
BY KATE KING
The Supreme Court hasn’t
yet ruled on the future of
sports betting, but New Jersey
is already gearing up to cash in.
State officials, casinos,
racetracks and sports-betting
operators have been making
preparations and investments
in anticipation of the court’s
decision. They want to be
ready for the first wagers if
the justices side with New Jersey in its challenge to a 1992
federal law that effectively
blocked gambling on sporting
events outside of Nevada and
a handful of states.
DraftKings Inc., the webbased fantasy sports firm, has
been hiring staff for a new office it opened in Hoboken in
February. Chief Executive Jason Robins said the company
has also held discussions with
officials at the New Jersey Division of Gaming Enforcement,
which would need to approve
the company’s license and
gambling software.
“We think we’ll be ready
Day 1 and we think it will be a
real big success,” Mr. Robins
said, adding that he believes
the company could see “hundreds of millions in revenue”
from sports betting in New
Jersey.
New Jersey has been trying
to legalize sports betting at
racetracks and casinos since
2011, when 63% of the state’s
voters approved a ballot referendum that allowed the state
The state has been
trying to legalize sports
betting at racetracks
and casinos since 2011.
constitution to be changed to
permit sports betting. Major
professional and college sports
leagues have sued to block the
state from allowing sports betting, and the ensuing legal
battles have cost New Jersey
taxpayers more than $8.5 million since 2012, according to
state records.
Supreme Court justices
heard oral arguments in the
case in December and expressed skepticism over the
federal law, called the 1992
Professional and Amateur
Sports Protection Act, which
prohibits states from sponsoring, operating, licensing or authorizing sports gambling. Nevada, the only state to allow
legal wagering on individual
sports contests, and Oregon,
Delaware and Montana, which
offer more limited versions of
sports betting, were grandfathered in. New Jersey has argued that the law violates
states’ rights.
Daniel Wallach, a sports
and gambling-industry attorney with the Florida-based
law firm Becker & Poliakoff,
predicts that the court will
rule narrowly, issuing a decision that would allow New
Jersey to decriminalize sports
betting without striking down
the federal law as unconstitutional.
“That will have significant
consequences in that it could
create, at least for New Jersey,
a short-term monopoly on
sports-betting outside of NePlease see BET page A10D
expense is the ferry, the way
visitors get to and from the island. It now costs $3 roundtrip, up from $2 last year.
Some $300 million in capital
spending has already taken
place, and another $100 million
is in the pipeline for infrastructure, according to the Trust’s
spokeswoman. The island’s
many dilapidated buildings,
mostly on the Brooklyn-facing
side, eventually will be torn
down.
Geoffrey Croft, founder of
NYC Park Advocates, an advocacy group, applauded the
Trust’s decision to allow for
overnight stays and said the
park has done a good job with
its programming. But he is concerned that in providing highend camping that there will be
a “two tier park system.”
“I’m worried about these
blatant commercial ventures
taking over the park and ruining it,” he said.
Yet big park spaces need
revenue to provide nice free
things, said Adrian Benepe, a
former parks commissioner
and now a senior vice president of the nonprofit Trust for
Public Land.
“I always felt that the restrictions placed on the island’s
use were a little bit too onerous,” Mr. Benepe said. “Parks
function best with cheek-byjowl use with 24-hour communities.”
New York lawmakers are set
to interview more than a dozen
candidates as possible temporary successors to former Attorney General Eric Schneiderman, who resigned last week
following allegations of abuse.
Assemblyman Joseph Lentol, a Democrat from Brooklyn,
will head a bipartisan committee of eight lawmakers from
the state Senate and Assembly
that is scheduled to begin public hearings Tuesday to question candidates for the post of
interim attorney general.
Some prominent figures
who are considering running
for the job in the November
election have decided to sit out
the current legislative process.
One such potential candidate,
New York City Public Advocate
Letitia James, wrote on Twitter Friday that she decided to
skip the legislative interviews.
Among the applicants to be
interviewed by lawmakers is
acting Attorney General Barbara Underwood, a Democrat
who served as the state’s solicitor general until she replaced
Mr. Schneiderman following
his abrupt resignation. Lawmakers will also interview
Congressman Sean Patrick Maloney, a Democrat from the
Hudson Valley who unsuccessfully ran for attorney general
in 2006, and Lloyd Constantine, a close adviser to former
New York Gov. Eliot Spitzer.
Some, worried the interim
position could be decided by
backroom deal making, have
called for lawmakers to keep
Ms. Underwood in charge of
the attorney general’s office until November. Zephyr Teachout,
a former primary opponent of
New York Gov. Andrew Cuomo
who isn’t scheduled to be interviewed by the legislature but is
considering running for Mr.
Schneiderman’s former seat,
said Ms. Underwood should
stay on until the election.
State Sen. Brad Hoylman, a
Democrat from Manhattan
serving on the interview committee, said “of course” any
legislative appointment would
have politics behind it, but the
state constitution is clear that
the legislature is supposed to
appoint a replacement for the
attorney general position. He
said there is a “vigorous debate” about whether Ms. Underwood should be appointed
for the remaining months of
Mr. Schneiderman’s term.
Mr. Cuomo, a Democrat,
said in an interview on the TV
station NY1 on Sunday that he
would be “just fine” with Ms.
Underwood continuing to lead
the attorney general’s office
until the November election.
Ms. Underwood wrote in a
letter to Assembly Speaker
Carl Heastie that she wished to
fill out the remainder of Mr.
Schneiderman’s term. She said
she wouldn’t run in the November election.
Rutgers Rolls Out Its Graduates
SETH WENIG/ASSOCIATED PRESS
ELIZABETH SHAFIROFF FOR THE WALL STREET JOURNAL
BY KATE KING
FINISH LINE: Thousands of students received their degrees at a
commencement ceremony on Sunday in Piscataway, N.J.
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An Office
WeWork provides refreshingly designed workspaces,
access to an inspiring community, and meaningful
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GREATER NEW YORK
Chef’s Doughnuts Are a Labor of Love
One of New York’s most celebrated and innovative chefs
is whipping up a new career
selling doughnuts.
Wylie Dufresne, who became a leading practitioner of
a scientific cooking style
known as molecular gastronomy in the 2000s, now slings
cake doughnuts, crullers and
coffee at Du’s Donuts inside
the William Vale Hotel in Williamsburg, Brooklyn.
Mr. Dufresne opened up
shop in April 2017 after being
forced out of his groundbreaking Lower East Side gastronomic laboratory, WD-50, in
2014 by a real-estate developer who planned to tear
down the building.
Now, Mr. Dufresne is
branching out, selling his
sweet treats in all Whole
Foods stores in New York City
as well as coffee shops around
Manhattan.
Mr. Dufresne, who won the
James Beard Foundation’s Best
NYC Chef award in 2013, spent
three months perfecting his
made-from-scratch
cake
doughnut recipe and glazes.
Eccentric flavors include
pomegranate tahini, peanut
butter yuzu, pistachio pink
lemonade and grapefruit camomile. The doughnuts cost
$3.50 each, or $38.50 for a
dozen.
Mr. Dufresne discussed the
inspiration for his new career,
scaling the new business from
doughnut destination to
wholesale enterprise, and
what goes into the creation of
such a pricey doughnut.
What made you decide to
go from fine dining to making doughnuts?
Wylie Dufresne: I wanted to
pursue this a number of years
ago. My great-grandfather was
a doughnut maker, so doughnuts have always factored
heavily into my childhood and
left a deep mark. Doughnuts
are like a blank slate waiting
to be adorned. How can we
use our pseudoscientific approach to cooking to make a
great doughnut and also use
our creativity to make delicious, fun, flavorful glazes?
That’s where our creativity
process hopefully is serving us
well.
ELIZABETH SHAFIROFF FOR THE WALL STREET JOURNAL (2)
BY JEANETTE SETTEMBRE
Acclaimed chef Wylie Dufresne, left, and his shop in Williamsburg where the sweet magic happens.
New York loves its sweets.
When Du’s Donuts opened,
people were lining up like it
was the new Cronut. Are you
aiming to be the next doughnut king?
I would love that. I would
love for those crowds to come
back. We certainly do great
business here, and we’re very
happy, and we’ve expanded
our wholesale business tremendously since those early
days when the line was around
the corner, but if you were to
come here on a Saturday
there’s no longer lines around
the corner. It would be lovely
to be some sort of doughnut
king, but I think we’re currently just trying to make it a
good doughnut and get it in
front of as many people as we
can.
How did you scale your
business so quickly?
Every time I see a coffee
shop I make a note of it. I say,
‘Hey, why don’t we reach out to
them?’ I was down walking by
the Whole Foods on Houston
Street and I noticed there was a
coffee shop inside and I reached
out. Turns out it was their inhouse brand and they offered
us an opportunity. Now we’re in
all New York City locations.
A dozen Du’s Donuts cost
$38.50. How do you justify
the price?
There’s a lot of labor that
goes into our doughnuts. A lot
of doughnut shops around the
country are using pre-mixes
where you just add water the
same way you’d go buy boxed
cake. We’re making it all from
scratch and we’re using highquality ingredients. We’re using
really good flour, cage-free
eggs, non-GMO this and that,
and those ingredients can be
expensive. We’re certainly not
trying to gouge people, but you
know, to me, it’s not that expensive when you see what people
are paying for other baked
goods. You can go buy commodity ice cream, or you can buy
ice cream that’s $14 a pint.
Downtown Tower Lands New Tenant in Tough Market
BY KEIKO MORRIS
Talk about flipping the
script.
The office tower at 180
Maiden Lane, a 1.2 millionsquare-foot
PROPERTY building
in
downtown Manhattan that once
housed insurance giant American International Group Inc., is
getting a new tenant: consumer-debt resolution company
National Debt Relief.
The property is a short
stroll from 33 Maiden Lane, a
building owned by the Federal
Reserve Bank of New York,
which played a crucial role in
stabilizing the banking system
during the financial crisis.
Maiden Lane also was the
name of a series of companies
created by the New York Fed to
help control the damage from
AIG and other wobbly firms
during the crisis. AIG was
among the companies rescued
during the financial crisis with
bailout packages from the federal government.
National Debt Relief, which
got its start in 2009, helps consumers restructure personal
debt, collecting fees for its service. The company signed a
lease to take roughly 95,000
square feet of office space at
180 Maiden Lane, which has
undergone about $100 million
in renovations in recent years
and added amenities.
Owners MHP Real Estate
Services and Clarion Partners
bought the building in 2015
with about 750,000 square feet
of space left vacant after AIG
relocated to another downtown tower.
The lease deal with the
growing debt-resolution firm
follows a lease for 276,000
square feet signed last fall
with New York City’s Department of Investigation, as well
as other midsize deals with financial technology firms, media companies, law firms and
nonprofit organizations. National Debt Relief expects to
move its offices to floors 29,
30 and 31 from 11 Broadway by
the end of the year.
“The momentum depended
on the investment the owner-
ship made up front,” said
Jesse Rubens, a partner at
MHP’s brokerage services department. “You have to put in
the work. You have to put in
the renovations and invest the
money up front.”
The building’s location, capacity to handle the company’s
technology requirements, and
its amenities, which include a
conference facility, new cafeteria, fitness center, bike room
and a revamped, enclosed public space, were a draw for National Debt Relief, which now
has more than 900 employees
at 11 Broadway, where it has
seven floors, said Grant Eckert,
the company’s chief marketing
officer.
A robust economy, high con-
sumer confidence and low unemployment have revived consumer lending, making it easier
for people to take on debt, he
said. Some take on too much.
National Debt Relief’s new
offices will be able to accommodate the company’s growth,
provide the sort of space to attract workers and offer a convenient transportation hub to
draw employees from the tristate area, Mr. Eckert said. The
firm intends to hire hundreds
of employees over the next 12
months, he said.
“This shows how much tenants truly value these amenity
spaces and areas,” said Tara
Stacom, executive vice chairman at Cushman & Wakefield
and part of the team leasing
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JERSEY CITY
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the tower. “Companies need to
put employees in spaces that
can attract the talent.”
Built in 1983, the tower,
which is about 85% leased, still
faces a tough downtown leasing market. Coming off a busy
2017 marked by a number of
large lease deals, the first-quarter availability rate for office
space rose to 14%, up 2.7 percentage points from the previous year, according to CBRE
Group Inc. Large blocks of office space for sublease could
also add to the competition.
But the team leasing 180
Maiden Lane said they are in
discussions with potential tenants for many of the six full
floors remaining available. “We
see the light,” Mr. Rubens said.
The Haskell Invitational at Monmouth Park Racetrack in 2016.
BET
Continued from page A10C
vada,” said Mr. Wallach, who
doesn’t represent any of the
parties in this case.
If the court rules the way
Mr. Wallach expects, sports
gambling would become legal
in New Jersey but not regulated, so the state wouldn’t be
able to tax sports betting.
In anticipation of legalized
sports betting, Monmouth
Park Racetrack operator Dennis Drazin has been making investments. The racetrack
signed a 2013 contract with
William Hill US, to spend millions building a sports bar and
other facilities to accommodate customers who want to
place bets on basketball and
football games as well as
horse races.
The facility could start accepting wagers within two
weeks of the Supreme Court’s
ruling, said Mr. Drazin, who
hopes sports betting will help
the state’s struggling horseracing industry survive. He
predicts Monmouth Park’s
profits from sports gambling
could range from $25 million
to $50 million annually, which
would be split evenly with
William Hill.
Joe Asher, chief executive
of William Hill US, said he invested early in New Jersey because the state was committed
to going the distance to legalize sports betting. He believes
the state’s market could grow
to more than twice that of Ne-
vada’s, reaching a handle, or
total amount wagered, of $10
billion or more a year.
“There’s a lot of people in
New Jersey and also the
sports culture is so deeply ingrained in that region,” said
Mr. Asher. “We just made a
bet, that’s all. It seemed like a
good bet at the time.”
In northern New Jersey,
Meadowlands Racetrack operator Jeff Gural said he has
taken a wait-and-see approach
to sports betting. He believes
sports wagers could help plug
a $3 million annual deficit his
racetrack is operating with
due to competition from
higher purses in New York and
Pennsylvania.
“It would bring me probably to a break-even, which
would be helpful,” he said.
In the event that the Supreme Court goes further and
decides to strike down the
federal law as unconstitutional, Mr. Gural believes that
operators will have to wait for
the state legislature to pass a
law that would regulate and
tax the industry.
State lawmakers are also
preparing for this possibility,
and earlier this month introduced legislation providing for
an 8% gross revenue tax on inperson wagering and a 12.5%
levy on online sports bets.
One of the bill’s primary
sponsors, Democrat Assemblyman John Burzichelli, said the
legislation is a “placeholder”
that was introduced to make
sure lawmakers can move
quickly following the Supreme
Court’s ruling.
A battle over plans to move a
waterfront statue commemorating the 1940 massacre of Poles
has ended.
Jersey City Mayor Steve Fulop and local Polish groups said
they reached an agreement on
relocating the Katyn Memorial.
Details on the deal will be announced Monday.
Mr. Fulop wrote in a tweet
that the goal was one that “respects/cares/keeps the monument in an extremely prominent
location to honor sacrifices”
while also giving the city “a
chance to re-purpose our waterfront.”
City officials wanted to move
the statue as part of a renovation of the plaza where it currently stands on the waterfront
across from lower Manhattan.
The Polish groups opposed that
and had sought a court order in
recent days to block the move.
The bronze statue depicts a
Polish soldier bound, gagged and
impaled by a bayonet. The planned
move sparked strong emotions in
Poland, where Katyn is remembered as one of the worst tragedies to befall the nation.
—Associated Press
NEW YORK
Tappan Zee Panels
To Be Used Elsewhere
Fourteen deck panels salvaged from the old Tappan Zee
Bridge are heading north for use
in new projects.
Orange County’s Department
of Public Works plans to use the
panels in four bridge and two
rail-trail projects. The deliveries
of the old Hudson River bridge
panels to New Hampton more
than 40 miles away will start on
Monday.
Thruway Authority officials
sold 150 of the concrete-andsteel panels for $1 each to public-works agencies willing to recycle them. The 50-ton panels
measure 13 feet wide by 50 feet
long.
Orange County officials say
the panels will save taxpayers
about $770,000.
—Associated Press
.
THE WALL STREET JOURNAL.
LIFE&ARTS
Monday, May 14, 2018 | A11
What to Do
When a Man’s
Sex Drive Flags?
Have reasonable expectations. Don’t buy into the
stereotype that says men
are always ready to have
sex.
Be open to talking, and try
not to get offended. Think
of it as a chance to improve
the relationship.
Consider therapy. If the
male partner is reluctant to
go, the woman can suggest
he talk to the therapist on
the phone.
Have the woman initiate.
Often couples have a “sexual script” where the man
always initiates. The woman
can take some of the pressure off him by starting the
interaction.
Pick your timing. Don’t
have the conversation when
you’re in the middle of a
sexual situation.
Focus on the positive.
Rather than a criticism—“we
never have sex anymore”—
tell your partner you miss
being intimate.
Do new nonsexual things
together. Take up a new
hobby, try a new cuisine,
ride a roller coaster.
Change your environment.
Try the shower, the guest
room, in front of the fire.
JON KRAUSE
Be nice to each other. Kind
partners desire each other
more, research shows.
BONDS: ON RELATIONSHIPS | By Elizabeth Bernstein
When Your Husband ‘Has a Headache’
CONTRARY to conventional wisdom, sometimes it’s men who first
lose sexual desire in a long-term
relationship, a new study finds.
Men’s desire for sex can be as
tricky as women’s, according to researchers at the University of Kentucky. Men often lose interest
when they feel insecure, when
they worry they are losing autonomy in a relationship, or when
physical changes cause embarrassment. Pressure to be the initiator
compounds the stress.
“We expect male desire to always be high and to be simple, like
an on and off switch, while we expect women’s desire to be a complicated switchboard, but they are
both complex,” says Kristen P.
Mark, associate professor of health
promotion and director of the Sexual Health Promotion Lab at the
University of Kentucky and the
lead researcher on study, a broad
look at men and women that analyzed 64 studies on sexual desire
conducted since the 1950s.
Psychologists say desire in both
sexes ebbs and flows. And it’s natural for it to decline after the heady
honeymoon period, which typically
lasts about 18 months to two years.
Still, almost 80% of married cou-
ples have sex a few times a month
or more: 32% reported having sex
two to three times per week; 47%
reported having sex a few times a
month, according to “The Social
Organization of Sexuality: Sexual
Practices in the United States,” a
1994 University of Chicago study
considered the most comprehensive in the field.
Women do lose desire more often
than men: Research shows that
about one out of three women—regardless of age—report a lack of interest in sex for at least several
months in the past year, compared
with one in five men, according to
Edward Laumann, a professor of sociology at the University of Chicago,
who has studied sexual desire and
dysfunction for 25 years. But experts say that men are often reluctant to talk about sexual troubles, so
the problem may be more prevalent.
Dr. Mark’s research, published
in March in the Journal of Sex Research, found that the reasons for
a drop in desire generally fit into
three main categories—individual,
interpersonal and societal. Some
issues, such as stress, a drop in
self-esteem or changes in their attraction to their partner, affect
both men and women.
But men’s desire also wanes for
different reasons. Men have trouble when they expect their desire
to always remain high and it does
not, or when they fail to make
their relationship a priority. Sometimes men’s desire drops when a
couple has sex for negative reasons—to avoid a fight, for example—rather than positive ones,
such as to increase intimacy. Men
Men have trouble when
they expect their desire
to always remain high
and it does not.
also feel pressure to always be
ready for sex and to initiate it.
There are often physical issues,
as well. A man’s less-efficient
blood flow as he ages, diseases
such as depression, or medicines
for issues such as high blood pressure or mood disorders can all
hurt a man’s sex drive.
And these physical changes can
cause emotional distress. Embarrassment is a big issue for men
who have trouble getting or maintaining an erection, and so they
may stop initiating sex. “For the
guys who don’t like to do what
they don’t do well, there will be
avoidance, because they feel
ashamed,” says Michael A. Perelman, co-director of Weill Cornell
Medicine’s Human Sexuality Program.
Unlike women, men often lose
interest in sex when they are unhappy or insecure, Dr. Laumann
says. Stress about a promotion,
worry about a child, the transition
to retirement “all undercut a
man’s sense of his abilities and
prowess,” he says.
And sometimes the problem
does stem from the relationship.
Sex can become routine in a longterm marriage, or partners grow
apart. A man may harbor resentments, often about money. Or he
may de-eroticize his wife. “He sees
her as a good person, mother, supporter, but not as an exciting
lover,” says Barry McCarthy, a psychology professor at American
University.
Is the relationship doomed
when a man—or a woman, for that
matter—loses interest in sex? Not
necessarily. But it’s definitely a
signal that you need to evaluate
what is going on. And there is the
possibility that a decrease in desire for your partner may indicate
that the person is no longer right
for you, says Gurit Birnbaum, a social psychologist and associate
professor of psychology at the Interdisciplinary Center, a private
university in Herzliya, Israel. You
may have grown too far apart, or
your goals, values or interests may
have changed. “Your body may be
telling you something,” she says.
But often the problems can be
solved. This will require talking,
the experts say, and it’s important
to do that before it is too late. “A
relationship becomes more fragile
when it loses its sex aspect,” says
Dr. Birnbaum.
Start by having a conversation
outside of a sexual situation—go
for a walk or have a glass of wine.
Tell your spouse you miss having
sex rather than criticizing. Both
partners should ease pressure by
accepting that men, not just
women, don’t want sex all the
time. “Approaching hard conversations by being vulnerable up front
automatically creates a safer environment for a tough talk,” says Dr.
Mark.
ART
BY KELLY CROW
WHAT’S THE GOING RATE for a
masterpiece? As Sotheby’s, Christie’s and Phillips kick off a week of
spring auctions Monday, the market for trophy art is in flux.
The historic sale of a $450 million Leonardo da Vinci painting
last fall continues to shake up art
values at the marketplace’s high
end, as auctioneers seek to manage collectors’ expectations and
recalibrate price levels for dozens
of other blue-chip artists.
Until recently, $100 million was
a gasp-inducing price for any work
at auction. Six years ago, Sotheby’s New York saleroom
erupted with shouts and applause
when the house sold Edvard
Munch’s “The Scream” for $119
million. Yet last week during
Christie’s sale of the estate of
Peggy and David Rockefeller, the
packed room was silent as Pablo
Picasso’s “Young Girl with a
Flower Basket”—which had a $100
million estimate—sold for $115
million after a single telephone
bid.
Afterward, dealers said it was
unclear whether the lackluster bidding hinged on the Picasso’s dour
subject matter—a poor, nude girl—
or reflected an audience that has
grown accustomed to seeing, and
paying, nine-figure prices for art.
Please see ART page A12
SOTHEBY’S
TROPHY WORKS
DISRUPT AUCTIONS
David Hockney’s ‘Pacific Coast Highway and Santa Monica’ oil painting goes on the block at Sotheby’s on Wednesday.
.
THE WALL STREET JOURNAL.
A12 | Monday, May 14, 2018
LIFE & ARTS
WHAT’S YOUR WORKOUT? | By Jen Murphy
Lifting Golf Bags? That’s the Easy Part
A retired PGA instructor puts in serious hours at the gym to serve as a caddie at clubs in Georgia and Massachusetts
The Workout
Mr. Tennant turned an old barn at
his Farmington, Conn., home into a
gym, complete with kettlebells, a
TRX Suspension Trainer, battle
ropes and tires. In his off-season,
January through March, he works
out for 1 to 2½ hours, four days a
week.
“I’m like a kid in a playhouse,”
he says. “I have music for speakers
and will go in and hit some golf
shots into a net and slam around
ropes and medicine balls.” His wife
joins him once or twice a week.
Mr. Tennant focuses on his
lower body, doing squats, dead
lifts and one-legged squats using
the TRX. He pulls a 200-pound tire
30 yards, flips it 10 times and repeats. Golf requires a lot of trunk
rotation, so Mr. Tennant also incorporates exercises like tossing a
medicine ball against the wall, ini-
tiating the throw from his side
body.
Last fall he bought a SuperSpeed Golf Training System, which
consists of three weighted shafts
designed to increase golf swing
speed and power. He alternates
weights and will swing them for
20 minutes as hard and fast as he
can, alternating sides.
He tries to get to a 90-minute
Bikram yoga class twice a week.
“The instructor is very militant,”
he says. “I thought I might pass
out the first class, but she insisted
we could not leave the room. I survived.”
When he caddies in Georgia, he
goes to a gym on his day off for
maintenance. He frequently gets
knots in the shoulder he uses to
carry the bag. Stretching 15 minutes in the morning and at night
helps ease the aches.
In the summer, he does yoga
and goes to a local gym. He tries
to play five holes of golf two to
three nights a week. “If I wasn’t in
shape, I’d be coming home from
caddying and falling on the
couch,” he says.
MELISSA GOLDEN FOR THE WALL STREET JOURNAL (3); JIM TENNANT (CENTER)
JIM TENNANT STARTED caddying at age 12 and carried clubs
through his teens as a way to save
some fun money. Now retired, he’s
hauling 40-pound golf bags around
the green again.
Mr. Tennant, 51, retired in 2016
after working 25 years as a PGA
golf professional teaching juniors
and women. Looking to stay connected to the game, he began caddying that fall at private clubs in
Augusta, Ga., and near his Massachusetts summer home on Cape
Cod.
“I chose caddying as a later-life
job more for the lack of stress and
joy of the game,” he says. “It’s how
I started and got hooked on this
industry, and ironically how I’ll
finish. The money is a nice benefit.”
Mr. Tennant caddies nine
months a year—February through
early May and October through
early December in Georgia and late
May to early October in Massachusetts. It isn’t unusual for him to
work 15 summer days in a row.
“Show up, shut up and keep up
is the caddie creed,” Mr. Tennant
says.
“And I’m definitely a few decades older than most of the other
caddies.”
Caddies carry one or two 40to-50-pound golf bags for 18 or 36
holes in all weather. He was surprised how sore the job made him,
especially in his legs.
To build his endurance and
strength, Mr. Tennant developed a
CrossFit-style training routine and
started taking Bikram yoga classes.
“The yoga prepares your body and
mind to focus under physical duress,” he says. “It duplicates the
stress of caddying when its 95 degrees outside.”
The Diet
Mr. Tennant eats the same breakfast six days a week: a mix of
Cream of Wheat and Quaker Oats.
One day a week he goes out for
breakfast with his wife and
splurges on eggs and waffles. He
eats a Clif Bar pre-workout or on
the sixth hole if caddying. He tries
to always have a peanut butter
and jelly sandwich in his cooler
and plenty of water. He refuels
post-workout with a protein shake.
After 18 holes he’ll have a chef
salad. Dinners include shrimp,
salmon or steak accompanied by
broccoli and sweet potato.
Jim Tennant works out at Gold’s Gym outside Augusta, Ga., above, below left
and bottom. Below right, Mr. Tennant, left, caddies in Plymouth, Mass. With
him are Bob Rotella and pro golfer and instructor Bob Toski.
The Golfer’s Workout
Versus the
Caddie’s Workout
Golfers are the star athletes,
but their caddies often exert at
least as much physical effort.
“The two roles are very different, but both require a certain fitness level,” says Corey Hug, a
physical therapist with the PGA
Player Performance Center. Caddies have to carry a 50-pound
bag, sometimes on a very hilly
course and in extreme heat for
up to 7 miles, he says. “It’s like
putting on a heavy backpack and
going for a hike,” Mr. Hug says.
You don’t have to be a golfer
or have experience to be a caddie, says Tim Orbon, director of
Caddie Services at Western Golf
Association in La Grange Park, Il.
As people get older, fitness can
be a barrier to entry, though he
says most golf bags are much
lighter than they were years ago.
Caddies, Mr. Hug says, are
more like long-distance runners.
He says it isn’t unusual to see
caddies in the gym with the players, doing a full workout and
stretching after a six-hour workday. “Caddies need endurance to
carry a load for a long time,
whereas golfers have a quiet
body and then a fast swing,” he
says.
The Gear & Cost
Mr. Tennant estimates he owns
more than 100 golf clubs. Ping is a
favorite brand. “If I didn’t have a
barn, my wife would get rid of
them,” he jokes. His SuperSpeed
Golf Training System cost $200.
Mr. Tennant caddies in Adidas Superstar shoes ($80). He works out
in ON waterproof trail shoes
($150). He wears Oakley Half
Jacket sunglasses ($133).
“They’re so light, you forget you
have them on, but they are indestructible,” he says. His 10-class
yoga punch card costs $150. He
pays $30 a month for his membership at Gold’s Gym.
The Playlist
“I’m a big fan of singer songwriters like Phil Vassar, Bruce
Springsteen, Eric Church and, I’ll
admit it, even Taylor Swift.”
ART
Among the high-profile works going up for auction in New York this month are, clockwise from above, a 1917 nude by
Modigliani, a bronze and marble portrait by Constantin Brâncuși and an untitled sculpture mask by Mark Grotjahn.
has pledged to buy the work if no
one else steps up during the sale.
That is a risk-offsetting maneuver
that aims to reassure the seller
but can also damp competition because rivals know they will need to
outbid the investor to win the
work. (Christie’s $115 million Picasso sold to its so-called guarantor.)
Overall, the houses will try to
sell at least $1.7 billion worth of
impressionist, modern and contemporary art during this series.
Other potential trophy works to
watch:
Constantin Brâncuși
Christie’s reset the record for this
Romanian sculptor last May when it
sold “Sleeping Muse” for $57.4 million. On Tuesday, it will ask around
$70 million for “Portrait of a Young
Sophisticated Girl (Portrait of
Nancy Cunard),” a 1932 work of polished bronze and marble that pays
homage to the shipping heiress.
Christie’s said he sold it in 1955
when an American couple, Frederick and Elizabeth Stafford, stopped
by his Paris studio while on vacation. The couple paid $5,000 and
later lent it to the Metropolitan Museum of Art for four decades. Now,
their children are selling the work.
David Hockney
At age 80, this British-born painter
is hotter than ever. The Metropolitan Museum of Art just closed a
retrospective of his colorful landscapes and portraits, and earlier
this month, another Hockney
show, “82 Portrait and 1 Still-Life,”
opened at the Los Angeles County
Museum of Art. Sotheby’s hopes to
capitalize on the attention to
break the artist’s $11.7 million auc-
tion record, set two years ago with
“Woldgate Woods, 24, 25 and 26
October, 2006,” a forest scene. On
Wednesday, Sotheby’s estimates it
will sell “Pacific Coast Highway
and Santa Monica,” a rainbow-colored mountain vista from 1990 for
at least $20 million.
Mark Grotjahn
This Los Angeles artist’s paintings
of masks have sold for as much as
$16.8 million at auction. Phillips
plans to test another aspect of Mr.
Grotjahn’s market by offering one
of his lesser-known sculptures,
“Untitled (Free Standing Large
Garden Sculpture Mask M24.g).”
Mr. Grotjahn started experimenting with sculpture in 2010, and
deputy chairman Jean-Paul Engelen said this 2014 work is a “mask
you can walk around.” Asking
price: $500,000.
CLOCKWISE FROM LEFT: SOTHEBY’S; CHRISTIE’S IMAGES LTD.; PHILLIPS
Continued from page A11
“Maybe $100 million is the new $10
million,” said dealer Larry Gagosian.
Christie’s said the Rockefeller
family was pleased by the Picasso
price, adding that the estate sale
totaled $832.6 million overall, a
sum that fell short of predictions
it might top $1 billion yet surpassed its own estimates.
Simon Shaw, Sotheby’s co-head
of impressionist and modern art
world-wide, said, “It’s becoming
more and more difficult to price
these masterpieces because people
focus so much on them but only a
few people in the world wind up
competing for them.”
On Monday, Sotheby’s will need
to convince a few of the world’s
roughly 1,500 billionaires to chase
after its priciest offering: Amedeo
Modigliani’s “Reclining Nude,”
which it expects to sell for at least
$150 million, the highest estimated
price an auction house has ever
asked for a work of art. The 1917
portrait depicts a nude brunette
looking languidly over her shoulder
as she lounges on disheveled
sheets.
It’s the largest example in a series of at least 35 portraits of nude
models that Modigliani painted for
his dealer between 1916 and 1919.
This one, which has a hunter-green
background, is being sold by Irish
horse breeder John Magnier, who
paid Christie’s $26.9 million for it
in 2003. Bloomberg identified Mr.
Magnier as the seller.
Mr. Shaw said Sotheby’s strategically priced “Reclining Nude” at
$150 million so that it looked like
a “great value” compared with a
smaller Modigliani nude from this
same series that Christie’s sold for
$170.4 million three years ago.
That work had an asking price
around $100 million. Sotheby’s
also found an outside investor who
.
THE WALL STREET JOURNAL.
Monday, May 14, 2018 | A13
LIFE & ARTS
View of ‘Heavenly Bodies’ in
The Met’s Medieval Europe
Gallery
EXHIBITION REVIEW
A Gift From the Sartorial Gods
BY LAURA JACOBS
(for Valentino), Jean Paul
Gaultier, Christian Lacroix,
John Galliano, Alexander McQueen and Thom Browne—
the younger generation. Elsa
Schiaparelli, Coco Chanel,
Madame Grès and Cristobal
Balenciaga—from the midcentury. These designers
dominate, but the exhibition’s more than 150 ensembles come from 50-plus designers and grace more space
than any Costume Institute
show has thus far: 60,000
square feet at the Met Fifth
Avenue and the Met Cloisters. Large as it is, “Heavenly
Bodies” is so disciplined in
its choices and laid out with
such a light touch that it
feels unforced, airy, as if the
Met’s art and architecture
were enjoying a visitation
from kindred spirits.
The exhibition begins with
processions in the parallel
Byzantine Galleries, where
shimmeringly beaded and sequined dresses by Versace
(autumn/winter 1997-98) and
Dolce & Gabbana (autumn/
winter 2013-14) nod to the
Byzantine mosaics and metalwork that influenced their
creation. Andrew Bolton, who
organized the show and is
the Wendy Yu curator in
charge of the Costume Institute, has said he wanted “to
evoke both the concept and
the experience of a religious
pilgrimage,” and he achieves
this in the hall of Medieval
and Byzantine Art. Here the
classic silhouettes of Catholicism’s earthly personae and
celestial pantheon—the
bishop’s soutane, the nun’s
habit, the pope’s “cappa
magna,” the Virgin Mary’s
spire-like sheath, the armor
of Joan of Arc and the orders
of angelology—find themselves poetically acknowledged and exquisitely, sometimes outrageously,
reinvented. Simultaneously,
we are invited to look again
at the specific artwork that
frames the dresses—paintings
and sculptures we’ve walked
by for years without noticing.
THE METROPOLITAN MUSEUM OF ART (2); THE METROPOLITAN MUSEUM OF ART, DIGITAL COMPOSITE SCAN BY KATERINA JEBB (MITER)
New York
CHASUBLE. Chalice. Crosier. Monstrance. Miter. The
words themselves are dipped
in gold, and each has its glittering place in a hierarchy of
symbolic dress and timeless
imagery. Sun rays like
spears, piercing the flock
with light. Sacred wounds
spilling blood, sacrificial and
ecstatic. The cross, a design
genuflection that is both abstract and transcendent. The
martyred saints. The winged
angels. Gilt reliquaries housing bits of bone. Renunciation clothed in costume of
material luxe. Catholicism!
“Catholics live in an enchanted world,” writes the
theologian and novelist Andrew Greeley in “The Catholic Imagination,” published
in 2000, “a world of statues
and holy water, stained glass
and votive candles, saints
and religious medals, rosary
beads and holy pictures.”
These are mere hints, Greeley continues, of a “religious
sensibility which inclines
Catholics to see the Holy
lurking in creation.” Enter
the Met. Its spring exhibition
“Heavenly Bodies: Fashion
and the Catholic Imagination” places couture and
ready-to-wear from the 20th
and 21st centuries amid the
museum’s religious triptychs,
altars and artifacts, an idea
so right, so inevitably majestic, that it’s amazing it never
happened here before.
As it turns out, most of
the designers whose work
cried for inclusion in this
show were raised Catholic.
No matter if they lapsed; the
church’s iconography,
steeped into the soul, remains a reference and inspiration, voluptuous and transporting. Gianni Versace,
Domenico Dolce and Stefano
Gabbana, Pierpaolo Piccioli
View of ‘Heavenly Bodies: Fashion and the Catholic Imagination’ in the Romanesque Hall at the Met
Cloisters, above; 1929 miter of Pius XI (reigned 1922–39), center
Make sure to look up.
Thierry Mugler’s diamanté
gown in virgin blue (autumn/
winter 1984-85), invoking
the Assumption of Mary,
floats above an archway and
blesses the long view into
the Robert Lehman Wing,
where a tableau of angels
awaits. These gowns, two
made by Jean Lanvin in the
1930s and the rest from a
2011 capsule collection by
Rodarte, suggest an earlyRenaissance rainbow, their
colors the saturated pastels
of Giotto and the lapis lazuli
of Fra Angelico.
The coup of the exhibition
resides downstairs in the
Anna Wintour Costume Center. Approximately 40 vestments from the Sistine Chapel Sacristy—rarely (if ever)
released papal mantles and
chasubles, priceless tiaras,
rings and crosses—speak to
the way sumptuous earthly
beauty engages the divine.
Marvel at embroidered biblical stories, the stitching so
fine and nuanced it dissolves
into an almost photographic
sheen. Here is an echelon of
embellished artistry that any
czar, king or emperor would
envy. Upstarts all, they’ve
been trumped by God.
Do not forgo a trip to the
Cloisters, where Mr. Bolton’s
choices are in such intimate
dialogue with the art they
look like they could live
here. The mood is often
playful—Craig Green’s
knight-like suits of bold medallions (autumn/winter
2017-18) seem to have
stepped out of the “Nine Heroes” tapestries that surround them. It is sometimes
severe: Olivier Theyskens,
using four long slits held in
place by simple hooks and
eyes, produces a black taffeta gown fit for a goth
princess, a cross of bare skin
on her chest (spring/summer
1999). And the Passion prevails amid the Unicorn tapestries, where Thom Browne’s
wedding dress of 2018,
wrought from ribbons of
white tulle, hovers like a
strange cloud. On the bodice,
the creature’s head and horn
are formed with twisted tulle
and gold bullion. On the
back, yes, there they are, the
subtle stab wounds (Father,
forgive them, for they know
not what they do) that we
see in the tapestries.
Another lone vision in
white—the holy grail of fashion purists—is Balenciaga’s
wedding dress of spring 1967.
It is posed in glorious isolation, back to the viewer, in a
stone apse. This glacial cone
of satin has long been one of
the most revered designs in
fashion history, a mysterious
evocation of untouchedness.
It was long believed to be
conceived with one seam. Mr.
Bolton discovered it actually
has three. The Trinity.
Heavenly Bodies: Fashion
and the Catholic Imagination
The Met Fifth Avenue and The
Met Cloisters, through Oct. 8
Ms. Jacobs writes about
culture and fashion for
Vanity Fair.
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THE WALL STREET JOURNAL.
A14 | Monday, May 14, 2018
SPORTS
SOCCER
WENGER
TAKES
FINAL BOW
BY JOSHUA ROBINSON
CLOCKWISE FROM TOP LEFT: REUTERS, AP (2), GETTY (3)
HUDDERSFIELD, England—A
contrarian until the end, Arsène
Wenger took his curtain call before
the game even started.
On a bright afternoon in Yorkshire, 22 years after his reign in
English soccer began, he strode
out of the tunnel here and made
his way to the section of traveling
fans. Ahead of his 1,235th and final
appearance as Arsenal manager, he
wanted to share one last moment
with them in the strange intimacy
of a soccer stadium.
That’s when, amid the applause
and the chanting, the 68-year-old
Frenchman did something unexpected: he took a bow. “It was
spontaneous,” Wenger said after
his side’s 1-0 victory. “I know that
we disappointed the away fans
this season…They had disagreements with me that I can accept.
But we had one thing in common:
we loved Arsenal Football Club.”
That love has been tested in recent seasons, as Arsenal’s decline
became more difficult to ignore.
Until Wenger announced his exit
last month, the consensus among
the club’s supporters was that
Wenger had to go—a fact that
Huddersfield fans were happy to
bring up during Sunday’s love-in
by singing, “You wanted him out.”
The club has yet to name a successor, but the British rumor mill
has generated names such as Mikel
Arteta, the 36-year-old former Arsenal player who has spent the
past two years learning the trade
as an assistant to Pep Guardiola at
Manchester City. Other candidates
are believed to include Juventus’
Massimiliano Allegri or New York
City FC’s Patrick Vieira.
Whichever manager Arsenal settles on faces an enormous task. He
will have to repair a broken squad
that finished sixth in the league
with its lowest points total since
the mid-1990s, and function in an
environment that is reinventing itself while untangling from Wenger.
The Western Conference Finals begin on Monday. Clockwise from top left, Stephen Curry, James Harden, Steve Kerr, Chris Paul, Kevin Durant and Mike D’Antoni.
NBA PLAYOFFS
Myths About Warriors, Rockets
ranked 16th of the 30 teams in the
NBA. The Rockets were No. 1 with
42.3 per game. And threes accounted for 33.9% of Golden
State’s field-goal attempts. That
was almost exactly the league average. But it isn’t like the Warriors
have completely abandoned the
shot. They still lead the NBA in 3point-shooting percentage, which
is what happens when Curry, Klay
Thompson and Kevin Durant play
for the same team.
BY BEN COHEN
The Golden State Warriors and
Houston Rockets have been the
two best and most fascinating
teams in the NBA for the last two
years. They have model front offices, superb coaches and electrifying star players. They reshaped
the league. They redefined the
sport. And then they reinvented
themselves.
That’s the thing about their
seductive matchup in the Western
Conference Finals, which begins
with Game 1 on Monday: The
Warriors and Rockets have
changed so much this season
they now defy much of the conventional wisdom about the
Warriors and Rockets.
Here is how Golden State and
Houston turned four popular notions into myths.
The Rockets play too fast and
don’t play enough defense.
They don’t. And they do.
Houston coach Mike D’Antoni
was basketball’s patron saint of
pace when his Phoenix Suns experimented with their “Seven Seconds
or Less” offense in the mid-2000s,
and he still believes good offense
is the result of taking the first
good shot. Last year’s Houston
team played faster than any NBA
playoff team in decades.
Which only makes this year’s
Houston team all the more unusual: The Rockets win fast and
slow. They’re brutally efficient in
transition, averaging more points
per possession than any team, but
they’re also ruthlessly boring in
the halfcourt, where James Harden
destroys the poor defender he
picks to isolate. Their methodical
offense is built around getting the
mismatch they want every single
time down the court and exploiting it until the other team has no
choice but to adjust. The Rockets’
tempo actually ranked 14th this
The Warriors are a 3-pointshooting team.
ANDREW BOYERS/REUTERS
They’re not.
Golden State is always going to
be the face of the league’s 3-point
revolution, at least for as long as
the Warriors have Stephen Curry,
and there is no denying they
weaponized the 3-pointer on their
way to winning an NBA championship in 2015 and the most regularseason games in the history of the
league in 2016.
The only problem with that idea
is that it isn’t true anymore.
The Warriors attempted 28.9
threes per game this year. That
Arsène Wenger took his curtain call.
Weather
d
Edmonton
30s
40s
V
Vancouver
80s
Calgary
90s
g
Billings
Eugene
Boise
i
40s
50s
70s
80s
70s
Helena
l
Portland
Portla
d
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Sacramento
50s
50s
Angeles
Los A
Ange
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60s
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h y
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90s
El P
Paso
FFt.. Worth
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90s
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Mobile
80s
New
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Ta
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70s
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60s
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34
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Ph
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Washington
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h
DC
80s
38
Warm
80s
Miami
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.
Tomorrow
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International
City
Amsterdam
Athens
Baghdad
Bangkok
Beijing
Berlin
Brussels
Buenos Aires
Dubai
Dublin
Edinburgh
Today
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62 47 c
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65 43 pc 66 40 pc
City
Frankfurt
Geneva
Havana
Hong Kong
Istanbul
Jakarta
Jerusalem
Johannesburg
London
Madrid
Manila
Melbourne
Mexico City
Milan
Moscow
Mumbai
Paris
Rio de Janeiro
Riyadh
Rome
San Juan
Seoul
Shanghai
Singapore
Sydney
Taipei City
Tokyo
Toronto
Vancouver
Warsaw
Zurich
8
9
18
30
24
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79 55 pc
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60 48 pc
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63 52 r
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28
SHARE AND SHARE ALIKE | By Celia Smith
Across
1 Winter blanket?
5 Hen pen
9 •Card game with
sets and
sequences
14 Uber alternative
15 Need a massage
16 Speak
pompously
17 Prayer-ending
word
18 Office fill-in
19 Insurance
company staffer
20 •Place with a
wide variety of
goods for sale
23 Towering
structure on a
farm
24 Reverent wonder
25 Min. part
28 Bank lobby sight
31 •Cowhand’s
workplace
34 Relax, as
restrictions
36 Approves
37 Refrain bit
38 Respect, in slang
39 P.O. boxes have
them
40 Mamas’ mates
41 Case for a
dermatologist
42 All the rage
43 Mame or Em
44 •Cold comfort?
47 Hockey great
Bobby
48 Affirmative, on
board
49 Distinct period
50 Jazz combo,
sometimes
52 Share owners,
and, broadly,
what the starred
answers all are
57 In progress
60 Cake layer
61 Track shape
62 Insubstantial
63 Gumbo
vegetable
64 Puerto ___
65 •Biathlon need
66 Stand
67 Murdered
Down
1 Antlered animal
2 Application form
line
Solve this puzzle online and discuss it at WSJ.com/Puzzles.
s
s...sunny; pc... partly cloudy; c...cloudy; sh...showers;
t...t’storms; r...rain; sf...snow flurries; sn...snow; i...ice
Today
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City
Hi Lo W Hi Lo W
Anchorage
52 39 c
50 39 c
Atlanta
90 70 c
79 68 t
Austin
90 68 pc 91 66 pc
Baltimore
83 68 t
93 68 pc
Boise
77 51 pc 77 52 pc
Boston
70 59 pc 75 56 t
Burlington
79 58 c
75 46 c
Charlotte
92 67 pc 80 66 t
Chicago
78 60 t
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Cleveland
76 62 r
75 55 t
Dallas
89 72 pc 91 72 pc
Denver
63 46 t
69 48 t
Detroit
76 62 t
73 53 t
Honolulu
83 72 sh 82 71 sh
Houston
91 69 pc 92 69 pc
Indianapolis
91 70 r
85 65 t
Kansas City
88 64 t
82 62 t
Las Vegas
87 67 s
91 68 s
Little Rock
93 67 pc 92 66 s
Los Angeles
68 55 pc 68 54 pc
Miami
81 76 r
85 76 t
Milwaukee
70 56 c
64 49 t
Minneapolis
77 59 pc 80 61 c
Nashville
93 68 pc 93 67 c
New Orleans
94 74 s
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72 64 c
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Oklahoma City
89 65 pc 81 62 t
Rain
5
15
44
70s
U.S. Forecasts
It might not be.
The Warriors became a team
that could become a dynasty when
Kerr installed a beautiful offense
predicated on the idea that basketball is an egalitarian sport. They
consistently rank near the top of
the league in passes per game, and
the percentage of their offense
that comes from cuts and off-ball
screens is astounding.
The Rockets believe in the exact
opposite style as the Warriors’
symphony of motion. They were
dead last in the NBA in passing.
And that’s because they were first
in isolation.
Harden isolated defenders on
35% of his possessions this season,
and he scored 1.22 points on those
possessions. No one else in the
league was above 29.3% or 1.1
points. That’s how good he was:
52
70s
t
Houston
San
an Antonio
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80s
50s
90s
4
20
80s Boston
t
100+
3
17
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A
Atlanta
Atl
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Birmingham
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Dallas
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Austin
A
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Raleigh
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Memphis
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80s
Kansas St.. Lou
LLouis
City
Louisville
Oklahoma
k hom
oma City
90s
30s
Charles
h
Charleston
80s
40s
50s
T
Toronto
T
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Topeka
Wichita
h
hit
Santaa FFe
Albuquerque
Alb
q q
T
c
Tucson
Ottawa
k
Milwaukee
Detroit
t
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Buffalo
Cleveland
Cleve
Cl
l d
C
h g
Chicago
Des
es Moines
Pit
b h
Pittsburgh
d
p
Spring
p i fi ld Indianapolis
Springfield
C
d
Colorado
p
Springs
80s
70s
60s
Phoenix
Ph
60s
Omaha
h
10s
20s
oux FFalls
ll
P
Pierre Sioux
50s Denver
80s
60s
Mpls./St.. Paul
Pau
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Vegas
60s
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Bismarckk
Salt
alt Lake
L e City
C y
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Winnipeg
Seattle
ttl
Isolation basketball is stupid.
Harden led the league in volume
and efficiency. The Rockets were
such outliers in this regard that
they even had the league’s other
high-volume, high-efficiency isolation guard. That player above
29.3% and 1.1 points? Chris Paul.
The mid-range jumper is a
bad shot.
Except when it isn’t.
The mid-range is the most inefficient part of the basketball court.
As it turns out, though, the Warriors see it as something of a market inefficiency.
While long twos are never
going to be as valuable as layups
and 3-pointers, other teams
have adapted to the game’s evolution, and defenses are increasingly
willing to give the Warriors open
mid-range jumpers to avoid giving
them layups and 3-pointers. And
they have taken advantage. Golden
State shot 47% in the mid-range
this season. Which means they got
more value from the least valuable
shot than any team in 20 years.
Houston prides itself on its midrange disdain. It relied on midrange shots less than any team
this year—and for the five seasons
before this season. But in an ironic
twist, the mid-range was surprisingly useful for Houston in the last
round against the Jazz, when
Utah’s defense made Paul shoot,
and he made them pay by shooting
14-of-26.
The Rockets, like the Warriors,
were great enough to make a bad
shot good.
The WSJ Daily Crossword | Edited by Mike Shenk
Shown are today’s noon positions of weather systems and precipitation. Temperature bands are highs for the day.
70s
season and 27th since February.
The other hallmark of D’Antoni’s
past teams is that they weren’t
particularly good on defense. But
the Rockets blast that assumption
to smithereens. Because this D’Antoni team is excellent on defense.
That was the plan all along. “Our
whole focus now is to make sure
our defense is solid and tight,”
D’Antoni said in an interview before
the season. And the players Houston general manager Daryl Morey
acquired as he engineered a roster
to beat the Warriors—Chris Paul,
P.J. Tucker and Luc Mbah a
Moute—have turned the Rockets
into a defensive force.
30 Unification
Church member,
informally
32 Horn honks
33 Rickman of “Die
Hard”
35 Blueprint figure
39 Extra, perhaps
40 Iris opening
42 Medal recipient
43 Colorful sky
phenomena
45 Kitchen whistler
46 Those not
previously
mentioned
51 Smells
52 Flower bed fill
53 Dee who
duetted with
Elton John
54 Force fighting
good
55 Track event
56 Poky
57 Continent south
of Eur.
58 Work wk. end
59 Bumbling sort
3 Yoked team
4 Sommelier’s
suggestions
5 Language of
northern Spain
6 Spotty cat
7 Units of
resistance
8 Coaches
give them at
halftime
9 Lion, at times
10 Yen
11 West of
“My Little
Chickadee”
12 High-elev. place
13 Thus far
21 Some side
dishes
22 Needs to repay
25 Become sharply
attentive
26 Bakery treat
27 Beer after
bourbon, say
28 Llama’s cousin
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The contest answer is TENNIS. Each of the six
starred answers conceals the surname of a person
famous for a sport: William TELL of Archery, Ben
HOGAN of Golf, Al UNSER of Auto racing, Lionel
MESSI of Soccer, Lindsey VONN of Skiing and
Bobby ORR of Ice hockey. The first letters of those
six sports spell AGASSI, suggesting the contest
answer.
.
THE WALL STREET JOURNAL.
Monday, May 14, 2018 | A15
OPINION
The Argentine Peso’s Death Spiral
A sharp selloff of the Argentine peso
is
sparking
new inflation
fears in South
AMERICAS America’s seco n d - l a rge s t
By Mary
economy. For
Anastasia
a country that
O’Grady
is heavily dependent on
foreign capital and has a history of repeatedly destroying
its currency, this is no passing
storm.
The return of the International Monetary Fund to Argentina last week with a $30
billion emergency aid package is proof that the government is in panic mode. But
outsiders can’t fix this problem, and IMF austerity is
likely only to rekindle isolationist sentiment.
Any rescue has to start
with President Mauricio Macri
explicitly backing the central
bank’s independence so that
the monetary authority can
restore its credibility. That effort was under way in the first
year of his presidency, which
began in December 2015. But a
persistent fiscal deficit, inadequate regulatory reform and
slow growth have put increasing pressure on the central
bank to print money and
lower interest rates.
The idea that easy money
can substitute as a fix for underlying structural problems
wasn’t born in Argentina. Barack Obama and Federal Reserve Chairs Ben Bernanke and
Janet Yellen tried it for eight
years after the 2008 financial
crisis. Yet U.S. growth didn’t
pick up until the Trump administration began to cut taxes
and reverse an antibusiness
bias.
It’s astounding that Argentina would administer something similar to the ObamaBernanke elixir, and not only
because the U.S. dollar’s reserve-currency status is a
unique privilege. Argentina
has a terrible monetary reputation that can be overcome
only by demonstrating a firm
commitment to price stability.
Germany learned this lesson
in the period between World
War I and World War II. Argentina keeps reliving it.
The peso is down more
than 15% against the dollar in
the past three weeks. The central bank has responded by
hiking overnight interest rates
to 40%. Since April 19 it has
sold around $8 billion in international reserves in a futile attempt to reverse the slide.
Credit-default swaps spiked
last week.
Mr. Macri is blaming the
peso rout on rising dollar interest rates, higher oil prices
and “other variables that we
don’t manage.” But as I noted
in a February column on this
topic, Argentina’s deeply
rooted culture of populism is
the original sin, and Mr.
Macri’s reluctance to confront
it threatens his success.
The president inherited a
fiscal mess from his predecessors, Cristina Kirchner, who
was president from 2007-15,
and her husband, Néstor,
president from 2003-07. But
the Kirchners also sowed deep
social division with hateful,
vicious rhetoric as a strategy
for remaining in power. Mr.
Macri has sought to heal the
nation with a kinder, gentler
message from the Casa Rosada
presidential office.
Yet sugarcoating the grim
economic reality is no way to
build consensus for change. It
is impossible to generate
To solve the problem,
President Macri needs
to get aggressive in
challenging Peronism.
support for better policy without a conversation in the public square about how economic
nationalism—a k a Peronism—
has cost the country.
Only a leader willing to
make the case for smaller government and greater economic
liberty—every day—can begin
to right the ship. If Mr. Macri
can’t do this, he should hire a
team of communicators who
can.
The president has instead
opted for gradualism, which is
a code word for soft-pedaling
the sad facts. More than two
years into a four-year term, he
hasn’t made a dent in aggregate government spending,
and, as important, tax, labor
and trade policy remain too
restrictive.
In 2002, the year before
Néstor Kirchner took the reins
of power, the consolidated government budget was less than
23% of gross domestic product.
When Mrs. Kirchner left it was
over 41% of GDP. In other
words, there is plenty of fat to
cut. Yet the overall fiscal deficit in 2017 was 6.5% of GDP,
slightly larger than when Mrs.
Kirchner stepped down.
Mr. Macri’s first year in office was promising. By October 2016 the exchange rate
had been freed, and the central bank was gaining credibility. Inflation was annualizing at more than 44% but the
government was able to issue
10-year bonds with a 15.5%
coupon.
That may have been because the bank had set an inflation target of 10% for 2018.
But in December it raised that
target to 15% and subsequently began cutting the
overnight lending rate. At the
same time the government
lobbied, not so subtly, for a
weaker peso. The idea was to
spur growth to generate more
government revenue. It was a
mega-miscalculation.
Financing a fiscal deficit in
a country without national
savings means importing capital, which naturally generates
a current-account deficit and a
currency that is stronger than
it would otherwise be. Creditors were willing to finance
the large budget deficit. But
the peso devaluation has them
heading for the exits, setting
off a death spiral and raising
inflationary expectations.
Mr. Macri wants Argentina
to return to normalcy. But asking the central bank to bear
the cost of runaway populism
is no way to get there.
Write to O’Grady@wsj.com.
A Better Alternative to Payday Loans
By Todd H. Baker
And Snigdha Kumar
M
ore than 50 million
Americans in low-income working families struggle to manage everyday cash flow. That means
they have the resources to
pay monthly bills but can’t
handle small financial shocks
or timing mismatches because
they lack the savings buffer
the more affluent take for
granted. Most lack access to
reasonably priced credit and
can’t stretch out medical,
home and auto expenses over
time. The result is a damaging
cycle of reliance on high-cost
payday loans, auto-title loans
and bank overdrafts that often leads to financial ruin.
While interest groups squabble over whether more or less
regulation is the answer, people suffer.
There is a solution with
benefits for employers and
employees. In a new working
paper published from Harvard’s Mossavar-Rahmani Center for Business and Government, we show that mobile
and online financial products
sponsored by employers can
cover a wider range of borrowers and charge them less
money than those available to
individuals in the market. Use
of these FinTech products may
also significantly reduce employee turnover and save employers millions. The key to
their success is the “salary
link”—meaning the money
provided to employees is automatically repaid through
salary deduction. Large employers can make these benefits available today without
changes in law or government
intervention.
Our paper examined two
employer-sponsored FinTech
products—a short-term installment loan from SalaryFinance and an “early wage
access product” provided by
PayActiv. The SalaryFinance
online loan is available to
Using a ‘salary link,’
employers can help
low-income workers
get access to credit.
employees in the U.K. (and
starting next month in the
U.S.) at a fraction of the cost
of competing market products. The cost difference is
most significant for borrowers with poor credit.
SalaryFinance’s
typical
loan, made to a borrower
with a 480 to 500 U.S. FICO
score, bears an 11.8% annualized interest rate. A borrower with such a low credit
score wouldn’t qualify for a
standard loan in the U.S.
market at any price and
would be forced to turn to a
payday-type loan or bank
overdraft at more than 200%
interest. An employer that
offers SalaryFinance can be
sure it is providing much
lower borrowing costs and
broader credit access to its
employees.
The same is true of PayActiv, which allows employees
access to earned but unpaid
salary through a mobile app
before their normal payday.
PayActiv costs the employee
$5 in any month the product
is used (although employers
frequently subsidize all or
part of the fee). Meanwhile,
the typical overdraft or payday loan costs around $35.
And PayActiv is available to
all employees regardless of
past credit history.
These dramatically lower
rates are possible because repayment comes directly from
the employee’s paycheck. For
PayActiv, this almost entirely
eliminates risk.
For SalaryFinance, the link
to payroll provides better information on employment status than the credit bureaus
used by market lenders. The
automatic deduction turns the
employee’s salary into de
facto collateral; SalaryFinance
always gets repaid if the employee remains employed at
the same company. And many
employees who would otherwise default decide against
leaving a job that pays eight
to nine times the value of
their loan. These factors lead
to markedly superior loan
performance, with default
rates running at less than 20%
the rate predicted by credit
scoring.
Our preliminary research
also found that such employer-sponsored
financial
products may improve employee retention, with annual
turnover rates 19% to 28%
lower among users of PayActiv
or SalaryFinance. While more
research is needed to fully establish a causal relationship,
these findings have significant
implications for business. We
estimate turnover costs at
Target, for example, are
around $567 million annually,
or $3,300 every time a retail
employee leaves the company
(half do every year). Even a 5%
reduction in turnover is worth
around $28 million to a company like Target—and a full
28% reduction would be worth
close to $160 million a year.
That would be a gold mine for
shareholders.
One encouraging sign is
that Walmart, one of the largest employers of low-wage
workers, recently made PayActiv available to its employees. From December to March,
80,000 Walmart employees
received more than $30 million through PayActiv.
It’s time for more American
employers to help low-wage
employees deal with liquidity
and credit challenges. There’s
no excuse for waiting when
products are available that
will save money for workers
and their bosses.
Mr. Baker is a senior fellow
at the Mossavar-Rahmani Center for Business and Government at the Harvard Kennedy
School. Ms. Kumar is a 2018
recipient of a master’s degree
in public policy at the Harvard
Kennedy School and a former
intern at PayActiv. This op-ed
is based on their recent working paper.
My Long Recovery From Kindergarten
By Pamela Jane Bell
F
or a long time I puzzled
over how I managed to go
from a hopeless screw-up
in school to a hardworking, disciplined writer as an adult. After considering it for 50 years
or so, I came to the realization
that I had been a very hardworking little girl. In fact I was
a workaholic, striving, in my 4year-old way, to decipher the
mysteries of the universe and
the meaning of life. What was
real? What was illusory?
Sometimes, in the middle of
the night, it seemed as if nothing was real, that sunlight and
houses and stop signs were pictures painted on a curtain. Behind the curtain was a black
hole—nothingness. We kids
weren’t supposed to know
about the nothingness. Late at
night, when we were asleep, the
grown-ups touched up or repaired any wrinkles or tears in
the curtain so that we wouldn’t
suspect what lay behind the
seamless surface. Even my
consciousness, my essential being, might be part of the illusion. I lay in the dark, prickling
with panic, praying for daylight
and the sounds of activity and
life to dispel the terrifying
specter of nonexistence.
Then, in the middle of wrestling with these dilemmas—I
admit I wasn’t making much
progress—something terrible
happened.
As a girl I played with
ideas. The teachers
had other ideas.
My parents sent me to kindergarten.
Kindergarten came as a
rude interruption to my existential preoccupations. What
did finger painting or building
blocks have to do with the
questions that haunted me? It
wasn’t that I didn’t want to
play; I just didn’t want to play
with blocks and finger paint, at
least not exclusively. I wanted
to play with ideas.
I felt hamstrung. This didn’t
bode well for future academic
achievement.
And,
sure
enough, by third grade I was in
the slow reading group.
Though I loved to read, I
hadn’t read the stories or answered the questions in the
workbook. I didn’t want to answer those questions. I had too
many of my own.
Numbers were even more
infuriating, especially when
concealed in story-problems
about children going to the
store to buy candy. Just when
you were getting interested in
the candy-store adventure,
they yanked the narrative out
from under you and presented
you with a math problem involving money laundering.
I hated school so much that
I took to heating up the thermometer on the radiator so my
parents would think I had a
temperature and let me stay
home. This worked well, except
for the time the thermometer
registered 105 degrees and my
mother took me to the emergency room.
Because no one talked about
the ideas that absorbed me,
and because I couldn’t begin to
articulate them, I felt invisible,
as though I didn’t exist. The
more ignored and invisible I
felt, the richer my interior life
became. Standing on the beach
during summer vacations, I
imagined that I alone understood the secret language of
waves as each one broke,
breathing its brief tale before
sinking back into oblivion. I
might be flunking out of school,
but in my inner life I reigned
supreme—author of existence,
teller of tales, master of tides.
Through it all I was striving to
transform reality, answer impossible questions, and create a
story out of a big mess.
In other words, I was working to become a writer.
Mrs. Bell writes children’s
books, memoirs and essays under the pen name Pamela Jane.
BOOKSHELF | By Melanie Kirkpatrick
Ambitious,
Shrewd, Ladylike
Phoebe Apperson Hearst
By Alexandra M. Nickliss
(Bison Books, 630 pages, $39.95)
O
rson Welles’s “Citizen Kane” is famously based on the
life of William Randolph Hearst, the flamboyant
newspaper publisher and politician of the first half of
the 20th century. But there’s at least one detail that Welles
made up: Kane’s parents. In the film, Kane’s mother, played
by Agnes Moorehead, inherits a fortune and abandons her
young son to the care of a banker to protect him from his
abusive father. In real life, Hearst’s mother, a San Francisco
philanthropist and socialite, doted on him, while his
workaholic father was largely absent. Hearst mère is the
subject of “Phoebe Apperson Hearst: A Life of Power and
Politics” by Alexandra M. Nickliss, an instructor of history at
City College of San Francisco.
Phoebe Apperson was born in a tiny town near St. Louis in
1842, the eldest child of parents who made sure that their
daughter got a good education and who taught her the value
of hard work. When she was 19, she married George Hearst,
22 years her senior. George,
the son of a neighbor and a
successful miner in
California, was on a visit
home. Phoebe saw him as her
ticket to a better life.
Her rise from schoolteacher in rural Missouri to
one of the country’s wealthiest
and most powerful women is
worthy of examination, and I
wish I could say I liked Ms.
Nickliss’s book. But it is
overlong, over-footnoted and
overly PC in its perspective. It is
also repetitive. If only I had a Susan
B. Anthony dollar for every time the reader
is informed that Hearst was a member of the “elite,” or
“wealthy,” or “white.”
That said, “Phoebe Apperson Hearst” is deeply researched,
and the persistent reader will be rewarded with a vivid
portrait of the challenges faced by women with ambitions
outside the home in the latter part of the 19th century. Rich
women like Hearst “built distinguished reputations as wellknown philanthropists,” Ms. Nickliss writes. “But few
Americans, especially men, acknowledged and recognized
their power.”
It didn’t hurt that Hearst was a shrewd businesswoman
with a “masculine grasp of financial affairs,” in the words of
one of her friends. Her husband entrusted most of his
business finances to her and left her full control over his vast
estate at the time of his death in 1891. The wealthier Phoebe
Hearst became, the better she learned to direct the recipients
of her largess. In public, as Ms. Nickliss describes, she
maintained a “ladylike” demeanor with men—quiet, reserved
and dignified. In private, however, she was far more
assertive, in order to “gain acceptance, achieve her goals, and
be effective.” Men who worked with her often made the
mistake of underestimating her capabilities.
With control over the Hearst estate, she had
leverage over William Randolph, to whose money
requests she usually, if not always, acceded.
Hearst focused her philanthropic interests on education,
especially the education of women. She championed the
establishment of free kindergartens in Washington, D.C.,
where her husband served as a senator in the 1880s, and she
was a founder of the National Cathedral School, then only for
girls. Back home on the West Coast, she was the first woman
to serve on the University of California’s Board of Regents,
where she used her influence and money to create an
architectural plan for the Berkeley campus after a highly
publicized international competition. Harvard, Princeton,
Yale and other universities drew on her creative model.
Her grants to women to attend the University of California
may have been the first scholarships based on financial need.
She encouraged the university to hire women faculty
members; she established a handicraft program so that
working-class women could earn money to pay for their
studies; and she persuaded the University of California at
Berkeley to hire a female doctor and provide physical
education for women, who had previously been considered
too fragile for such exertions.
Hearst’s impulse to do good was shaped by her evangelical
upbringing as a member of the Cumberland Presbyterian
denomination and by parents who pushed her to “find a
useful role in life with meaning and purpose beyond the
traditional domestic role,” the author relates. In Ms.
Nickliss’s telling, Hearst was often caught between conflicting
desires to give away money and to spend it on expensive
homes and lavish entertaining in a manner that befitted what
she saw as her proper station in life. The medieval-style
castle she built on the McCloud River in California, Ms.
Nickliss says, “left little doubt about Hearst’s craving to be
viewed and treated like a queen.” She apparently passed
along the castle gene to her son, whose sumptuous Hearst
Castle in San Simeon, Calif., is a popular tourist site today.
Which brings me to an odd omission—her relationship
with her famous son. William Randolph Hearst puts in only a
few appearances in Ms. Nickliss’s narrative. We learn that
Will accompanied his mother to Europe as a boy, that his
father considered him a spendthrift and refused to leave him
any money, and that Phoebe made an agreement with him
not to interfere in the management of his newspapers. Since
she controlled the Hearst estate, she had significant
economic leverage over Will, to whose requests for money
she usually—but not always—acceded. It would have been
interesting to know whether his mother’s business acumen
had an influence on the more famous Hearst.
Phoebe died in 1919, at age 76, a victim of the influenza
epidemic. For most of her life she distanced herself from the
rough-and-tumble of politics, preferring to work with
nonpartisan voluntary organizations. Toward the end of her
life, she came to support women’s suffrage. Breaking her
usual rule about not appearing in public, she dressed in
suffragette white and marched in the women’s division of a
parade for war readiness in San Francisco in 1916.
Hearst died before the adoption of the 19th Amendment in
1920. Her life story shows how women—especially rich
women—exercised power before they had the right to vote.
Ms. Kirkpatrick, a former deputy editor of the Journal’s
editorial page, is a senior fellow at the Hudson Institute and
the author of “Thanksgiving: The Holiday at the Heart of the
American Experience.”
.
THE WALL STREET JOURNAL.
A16 | Monday, May 14, 2018
OPINION
REVIEW & OUTLOOK
The African Terror Fight
F
ighters loyal to Islamic State killed four holy war might do better in Africa.
American soldiers in Niger last fall, surAfrican “jihadist operations have generally
prising even some Members of Congress become more sophisticated,” according to a
who apparently had no idea
February report from the
The U.S. should stay on Foundation for Defense of Dethe U.S. is fighting ISIS in Africa. Last week the Pentagon
“Between January
the continent despite mocracies.
published a highly critical
2007 and December 2011, jisummary of its investigation the failed Niger mission. hadists conducted 132 sucinto the incident, but it should
cessful, thwarted, or failed atlead to military improvements
tacks
against
Western
not a U.S. retreat from Africa.
interests in Africa.”
The report blamed the deaths on “individual,
That number almost tripled between 2012
organizational, and institutional failures and de- and 2017. U.S. strategy has shifted accordingly.
ficiencies.” On Oct. 4 a platoon-size force of Ni- There are now about 7,200 Americans working
geriens, accompanied by 11 U.S. Special Forces for the U.S. on the continent, according to Gen.
soldiers, was ambushed by a larger and better- Waldhauser. The U.S. conducts drone strikes,
equipped terrorist force outside the village of surveillance flights, training missions and occaTongo Tongo. In addition to not being properly sional raids against many jihadist groups.
integrated with the Nigeriens, the Americans
The Islamist group al-Shabaab controls
hadn’t completed rehearsals to prepare for en- swaths of Somalia and plots attacks across
emy contact. By the time French aircraft arrived, East Africa. It has actively recruited foreignfour Americans were dead.
ers, including dozens of Americans. President
The incident has prompted reforms to how Trump loosened use-of-force restrictions in
dangerous missions are approved, and Ameri- Somalia, where American troops assist Somali
cans will now have heavier weapons and ar- and African Union troops. U.S. forces launched
mored vehicles. Gen. Thomas Waldhauser, who 31 strikes in Somalia last year, according to the
leads the U.S. Africa Command (Africom), ac- Long War Journal, up from 15 in 2016 and
knowledged in a press conference last week that three in 2015. Americans are also deployed in
while the U.S. mission is to advise and assist, it’s nearby Kenya.
“a little bit of an art, not necessarily a science.”
The U.S. operates a drone base in Cameroon,
Americans have since accompanied Africans on conducting missions against Boko Haram, the
fewer risky missions, which are vetted higher on Nigerian terrorist group that has killed thouthe chain of command, and protective aircraft sands. Then there’s Niger, which shares a borare required to join them.
der with lawless Libya, where the U.S. has conIt’s reassuring that the U.S. military and the ducted airstrikes against Islamists. Boko Haram
White House have chosen to reform—not to cut is on Niger’s southeastern border, while an Isand run. Most Americans associate Islamist ter- lamic State offshoot operates to the west.
rorism solely with the Middle East, but the American personnel also assist from nearby
threat has spread to Africa.
Chad and Nigeria.
The Bush Administration created Africom in
About 800 American military personnel are
2007 to deal with growing threats in the region. based throughout Niger, with many working at
President Obama made progress against al a drone base outside the central Nigerien city of
Qaeda in his first term—until he declared the Agadez. Most troops are involved with drone opgroup effectively defeated and gave Islamic erations, though some Special Forces soldiers—
State an opening in Iraq and Syria. The Islamist like those who died in October—remain.
menace grew in Africa and around the world as
A Presidential speech laying out the threat
the U.S. disengaged, and Mr. Obama had to play and a strategy would provide some clarity and
catch up late in his Presidency.
prepare Americans for potential casualties. Mr.
ISIS has captured America’s attention since Trump can rightly say that Americans are fight2014. But after the caliphate’s collapse as a geo- ing today to prevent new jihadist sanctuaries
graphic power in Syria and Iraq, aspiring jihad- that could be used to launch attacks against the
ists are looking elsewhere for safe havens and U.S. homeland, and so that our African allies can
softer targets. Today someone looking to wage eventually manage their own security.
Contradicting Comey on Flynn—Again
T
he contradictions of former FBI director James Comey keep piling up. The
latest came Friday when Senate Judiciary Chairman Chuck Grassley provided new
evidence that Mr. Comey told Congress a different story last year about the truthfulness of
former White House national security adviser
Michael Flynn than Mr. Comey is now telling
the public.
In a letter to the FBI and the Justice Department seeking documents, Mr. Grassley relates that
Mr. Comey “touched on” the Flynn case before the
Judiciary Committee on March 15, 2017. A “career,
non-partisan law enforcement officer” was present and took notes. “According to that agent’s contemporaneous notes,” Mr. Grassley writes, “Director Comey specifically told us during that briefing
that the FBI agents who interviewed Lt. General
Michael Flynn, ‘saw nothing that led them to believe [he was] lying.’”
Mr. Grassley says this contradicts Mr.
Comey’s “public statements during his current
book tour denying any memory of those com-
R
ments,” and that Mr. Comey “led us to believe
during that briefing” that “the Justice Department was unlikely to prosecute [Mr. Flynn] for
false statements made in that interview.”
The House Intelligence Committee has released a transcript of Mr. Comey saying the same
thing about Mr. Flynn, so this is the second time
Mr. Comey has been contradicted on the point.
In December Mr. Flynn pleaded guilty to making
false statements to the FBI, and the question is
whether special counsel Robert Mueller pressured him to plead to a crime he didn’t commit.
Attorney John Dowd asks the same question in
a nearby letter and says Congress should seek
the 302 forms filed by FBI agents who did the
interviewing.
This is presumably among the documents Mr.
Grassley is seeking from Justice and the FBI,
which have no good reason to resist cooperating
now that Mr. Flynn has pleaded guilty. This
would help Americans learn whether Mr. Flynn
was telling the truth—and whether Mr. Comey
is lying now.
A Useful Spending Debate
epublicans in this Congress have failed fund, but only spent a bit more than $14 billion.
to tame federal spending—on either en- No child will lose health care.
titlements or the discretionary accounts
That won’t stop Democrats from claiming
that won a big increase in this
the worst, and Senate MinorRepublicans can win a ity Leader Chuck Schumer
year’s omnibus bill. Perhaps
they can now impose at least
wasted no time saying Repub‘rescissions’ battle if
a little restraint on money
licans are “looking to tear
they make their case.
that the government isn’t
apart” the program, “hurting
even spending.
middle-class families and lowCongress can claw back
income children.” Republicans
spending with a simple majority through a pro- have to call out the Democrats for wanting to
cedure in the Congressional Budget and Im- keep these funds in reserve so they can spend
poundment Control Act of 1974, and last week it later on pork.
the White House sent such a $15 billion “rescisThe current package avoids cuts from the
sions” package to Capitol Hill. The Administra- omnibus bill because Senate Majority Leader
tion proposes cuts, and the accounts are frozen. Mitch McConnell fears that would make it
Congress has 45 days to act, or the spending harder to negotiate another deal with Demoproceeds.
crats when the budget year ends in September.
The package zeros out $4.3 billion from the Mr. McConnell is right that some conservatives
Advanced Technology Vehicle Manufacturing are too quick to denounce the tradeoffs in the
loan program, an Energy Department outfit that omnibus bill; a military spending increase was
hasn’t made a loan since 2011. The program lent urgently needed. Democrats used the leverage
your tax dollars to the likes of Fisker Automo- of the 60-vote filibuster to extract more domestive, the electric car maker of the Obama years tic spending in return.
that went bust.
But the GOP now has the leverage of the reSome $133 million would be cut from a scission process to claw some back. This isn’t
lapsed railroad unemployment insurance pro- “reneging” on the deal. Republicans are
gram, and $252 million from an Ebola response merely using the tools of the majority to pass
account, as apparently the money outlived the their agenda, much as Democrats used the
outbreak. The proposal would cut more than tools of the Senate minority to pass theirs in
$100 million in Hurricane Sandy funds that the omnibus. Democrats will do that again in
states haven’t put up the matching money to September no matter what Republicans do on
tap. The nickels and dimes include farm market- rescissions.
ing cash that had been used in at least one case
The larger political point is that the GOP has
to promote chocolate-covered peanuts, which an opportunity to make the sensible case to votwe’ll eat even without subsidies.
ers that defending the country is more imporAbout half the package is a rescission to the tant than other spending and transfer proChildren’s Health Insurance Program. Every year grams. The Administration says this is the first
Congress dedicates more money to the program of “several” rescission packages to come, and
than is spent, and appropriators pocket the rest if Republicans want to motivate their voters to
to spend elsewhere. In 2016 Congress appropri- come out in November they’ll argue for and
ated about $23 billion, including a contingency pass these cuts.
LETTERS TO THE EDITOR
Tribalism Threatens the Great Melting Pot
Regarding Jason Whitlock’s
“Kanye Had One of the Best Tweets
of All Time” (op-ed, May 8): There is
a debate today over whether anyone
should be entitled to independent
thought and free speech. That is,
should anyone be entitled to think
and say things that the established
purveyors of “correct” thought and
speech deem inappropriate? The outrage among African-American “leaders” toward Kanye West is palpable.
How could he, an African-American,
possibly tweet such things? It is obviously an outrage to his race, no?
This is very similar to the debate
about a woman’s right to free
thought and speech. As Madeleine
Albright said regarding women who
didn’t support Hillary Clinton,
“there’s a special place in hell” for
them.
Increasingly, it seems, we are required to identify with our tribe and
then fall lockstep in line with the
views established by the chiefs of
the tribe. Our tribal leaders are, of
course, a jealous lot that fight over
their fiefdoms of women, AfricanAmericans, Hispanics, immigrants,
etc. And the turf fighting seems to
get nastier and more bitter as the
chiefs’ selfish interests are whetted.
It’s truly ugly stuff.
I am proud to be a member of the
only group that apparently doesn’t
have a politically correct tribe: European-American males. In this group,
I am allowed to think freely and express my First Amendment right of
free speech without being criticized
for “abandoning my tribe.” It is a
good group to be in and I welcome
all others who wish to leave their
tribes and enjoy the liberation of independent thought and free speech.
HENRY SCOTT
Potomac, Md.
In the 1960s I often sent letters of
support to white people in the
Southern states who bravely stood
up against segregation, often at the
risk of their lives and acceptance in
their communities. Now I must applaud Kanye West for his eloquent
expression of the need for cultural
change and political independence
from the yolk of government-support
addiction—an equally brave stand
that has brought him similar pressures and reactions from his peers.
Thank God there are a few brave
souls who see beyond the safety of
conformance and are willing to start
another march for freedom.
BRAD BENNETT
Binghamton, N.Y.
The greatest form of racism and
bigotry is to assume by looking at
someone you know who they are,
what they think and how they
should act.
STEVE RESTAINO
Chesapeake, Va.
That Population Bomb Dud Is Still a Danger
William McGurn presents a great
overview of the argument for why
“The Population Bomb Was a Dud”
(Main Street, May 1). However, there
is a reason people should not pick up
a dud bomb—some blow up unexpectedly. Paul Ehrlich’s “The Population
Bomb” was that kind of dud; its problem was one of timing. As someone
who studies natural resources, I’ve
never had a problem seeing the population problem described in that book.
The original title was “Population, Resources, and the Environment,” and
that’s the way it needs to be read. The
publisher insisted on the catchier title. Casually keeping up with the news
last week, I noted a garbage dump in
the middle of the Pacific twice the
size of Texas, another smaller one in
the Atlantic, microplastics in the water I drink and immigrants scaling
border walls—all parts of that
“bomb.” Population and consumption
need to be jointly considered, but you
have to be pretty naive not to think
that dud might still go off.
PROF. THOMAS J. STRAKA
Clemson University
Clemson, S.C.
If there is anything to be learned
from that famous bet Julian Simon
made against Paul Ehrlich, it’s that
they bet on the wrong things—metals. Any farm boy (or thinking person) could tell you that what’s in increasingly scarce supply in an
overpopulated world are the very
things life depends on—potable water
and arable land. Since that 1980 bet,
the price of these have dramatically
increased while the supply continues
to diminish.
JIM WALTERS
Iowa City, Iowa
President Trump Should Pardon Gen. Flynn
Regarding your editorial “The Mystery of Michael Flynn’s Plea” (May 7):
If I were Rudy Giuliani, I would advise
President Trump to immediately issue
a full pardon to Gen. Michael Flynn
based on the sworn testimony of both
the director and deputy director of the
FBI. News organizations could hardly
ignore the pardon and, given the testimony of James Comey and Andrew
McCabe, would be hard pressed to call
it obstruction of justice.
Once pardoned, Gen. Flynn should
then be asked, under oath, if he was
coerced, due to lack of funds or by a
threat to his family, to plead guilty to
making a false statement. There is a
growing smell of “swamp gas” and it
appears to be rising from the top
echelons of the FBI and Justice Department. The good people who make
up the core of those agencies must be
furious with their leadership for the
disgrace they all are forced to share.
JIM BARBER
Mesa, Ariz.
The Sale of Manhattan
In Balance of Trade Terms
I enjoyed the exchange between
Profs. Jason Furman (“Worry About
the Trade Deficit—a Bit,” op-ed, May
2) and Donald Boudreaux (Letters,
May 8) on the meaning of “currentaccount deficit.” Mr. Furman says: “If
a country saves less money than it
puts toward things like factories and
equipment, then it has to finance the
difference with foreign borrowing.”
Mr. Bourdreaux argues: “It is simply
untrue that the difference between
total investment in the U.S. and total
savings in the U.S. must be financed
with borrowed funds.” He then gives
a number of examples of redressing
the balance by transferring U.S. assets to foreign creditors.
The correct formula is (investment
- disinvestment) = (saving + borrowing). A classic example is the transfer
of Manhattan from American Indians
to the Dutch for 60 guilders. I am not
sure who got the better deal, but the
Indians’ current account remained in
balance.
STEVEN CROW, PH.D.
Boulder, Colo.
Letters intended for publication should
be addressed to: The Editor, 1211 Avenue
of the Americas, New York, NY 10036,
or emailed to wsj.ltrs@wsj.com. Please
include your city and state. All letters
are subject to editing, and unpublished
letters can be neither acknowledged nor
returned.
Congress needs the FBI “302” report of the Flynn interview. There
are reports that Gen. Flynn referred
to the FISA wiretap of the Ambassador Sergey Kislyak conversation at
the outset of the FBI interview. If
those reports are true, his reference
to the complete and accurate wiretap precludes any charge of false
statement.
The Flynn plea on Dec. 1, 2017
was improvident and should not
have been accepted by the court. A
provident plea to 18 USC § 1001
(false statement to FBI) has two elements: A) that it be false; B) that it
be material to the inquiry. The
Mueller investigation concerned
possible collusion with Russia during the 2016 election campaign that
ended Nov. 8, 2016.
The questions and answers in the
Flynn FBI interview occurred in December 2016 and involved conversations with the Russian ambassador in
December 2016—after the 2016 election campaign, and are thus immaterial to the stated inquiry of collusion
during the 2016 campaign. Gen. Flynn
kept his security clearance.
Neither DAG Sally Yates nor Mr.
Comey recommended charging Gen.
Flynn. Thus, the improvident plea as
drafted and signed by Special Counsel
Robert Mueller was defective on its
face and should have been unacceptable by the court. The special counsel
and the court failed us.
JOHN M. DOWD
Washington
Mr. Dowd formerly served as counsel to President Trump.
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Monday, May 14, 2018 | A17
OPINION
By Steven G. Calabresi
J
udge T.S. Ellis has expressed
skepticism about the scope of
special counsel Robert Mueller’s
investigation. “What we don’t want
in this country is . . . anyone with unfettered power,” Judge Ellis, who is
to preside over the trial of former
Trump campaign manager Paul
Manafort, told prosecutor Deputy Solicitor General Michael Dreeben May
4. “So it’s unlikely you’re going to
persuade me that the special prosecutor has unlimited powers.”
Judge Ellis is right to be skeptical.
Mr. Mueller’s investigation has
crossed a constitutional line, for reasons the U.S. Supreme Court made
clear in the 1988 case Morrison v. Olson. That case is best known for Justice Antonin Scalia’s powerful lone
dissent arguing that the post-Watergate independent counsel statute was
unconstitutional. But Chief Justice
William Rehnquist’s opinion for the
court, while upholding the statute,
set forth limits that the Mueller investigation has exceeded.
It’s unconstitutional under
Morrison v. Olson—the
decision, not the dissent.
At issue is the Constitution’s Appointments Clause, which provides
that “principal officers” must be appointed by the president with the
Senate’s consent. Rehnquist wrote
that independent counsel Alexia Morrison qualified as an “inferior officer,” not subject to the appointment
process, because her office was “limited in jurisdiction” to “certain federal officials suspected of certain serious federal crimes.”
Mr. Mueller, in contrast, is investigating a large number of people and
has already charged defendants with
many different kinds of crimes, including—as in Mr. Manafort’s case—
ones unrelated to any collaboration
between the Trump campaign and
Russia. That’s too much power for an
inferior officer to have. Only a principal officer, such as a U.S. attorney,
can behave the way Mr. Mueller is behaving. Mr. Mueller is much more
powerful today than any of the 96
U.S. attorneys. He is behaving like a
principal officer.
Rehnquist’s majority opinion has
never been overturned. In Edmund v.
U.S. and in Free Enterprise Fund v.
Public Company Oversight Board, the
justices said that an officer cannot be
inferior unless he has a boss—as Mr.
Mueller does in Deputy Attorney General Rod Rosenstein, who appointed
him. But that’s not a sufficient condition. As a principal officer, Mr. Rosenstein could legally have brought all
the indictments Mr. Mueller has. But
he may not delegate that authority to
Mr. Mueller, any more than President
Trump could delegate his veto power
to Mr. Rosenstein.
The Framers struggled long and
hard over the Appointments Clause.
For better or worse, they arrived at
the process of presidential nomination with senatorial consent. The Justice Department’s Office of Legal
Counsel should confirm the analysis
set forth above in a legal opinion to
guide Mr. Rosenstein in the exercise
of his duties. Judge Ellis should dismiss the indictment against Mr.
Manafort on Appointments Clause
grounds. All other defendants Mr.
Mueller charges, and witnesses he
subpoenas, should challenge the constitutionality of his actions on Appointments Clause grounds.
Mr. Calabresi served as a special
assistant to Attorney General Edwin
Meese (1985-87) and a law clerk to
Justice Antonin Scalia (1987-88). He
is a co-author of “The Unitary Executive: Presidential Power from Washington to Bush.”
America Recognizes One Jerusalem
By Eugene Kontorovich
T
he U.S. on Monday will officially open its new embassy to Israel in Jerusalem. This will correct a
surreal policy whereby,
since Israel’s independence 70 years
ago, the U.S. and other nations have
refused to recognize its sovereignty
over its capital city. President Trump
announced in December he would reverse the old policy. By moving the
embassy he now translates words
into deed.
The embassy’s exact location
within Jerusalem has gotten much
less attention, but it is equally consequential. It will be housed in buildings used by the American Consulate, as well as in an adjacent former
hotel purchased by the State Department in 2014. Most of that complex
is located on the far side of the armistice line that divided Jerusalem
from 1949 to 1967. Thus the embassy
site demonstrates that the U.S. not
only sees Jerusalem as Israel’s capital, but also—consistent with bipartisan calls from Congress—recognizes the city as unified.
The “Green Line” was created in
the wake of Israel’s 1948-49 War of
Independence. Upon the country’s
founding, Jordan and its allies invaded, with the goal of preventing
the creation of a Jewish state. Although they failed at that goal, the
Arab armies did occupy significant
territory when the armistice was
called, including what is now widely
referred to as the West Bank and
East Jerusalem. Jordan subsequently
expelled all Jews from the areas under its control.
In 1967, during the Six Day War,
Israel recaptured these places. But
in the war’s aftermath the United
Nations invested the temporary
1949 armistice line with talismanic
significance. The U.N. claimed Israel
was “occupying” the territory that
Jordan had forcibly seized not two
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Outside the U.S. Consulate in Jerusalem—now the embassy—on May 8.
decades earlier. Thus the international community came up with a
unique demand: Israel had to keep
the areas under its control, including East Jerusalem and the Old City,
free of Jewish inhabitants. Any
move to unify Jerusalem would be
considered a war crime.
The new U.S. Embassy
straddles the ‘Green Line,’
refusing to dignify claims
of Israeli ‘occupation.’
In international law, armistice
lines are not borders; they merely
mark breaks in the fighting. The
claim that the Green Line created a
permanent “Judenrein” zone in the
area occupied by Jordan, or that it in
any way changed the legal status of
the territory on the far side, is
unique and illiberal.
By ignoring the armistice line today, the U.S. is showing that it attaches no legal significance to this
outdated demarcation. Having an embassy that straddles the Green Line
means recognizing as Israel’s capital
a unified Jerusalem that includes the
Old City and other eastern areas. It
means categorically rejecting the notion that Israel has no sovereign
claims across the Green Line.
President Trump made this explicit last week, announcing his delegation to attend the embassy opening “in Jerusalem, Israel.” In another
sign of change, the State Department’s annual human-rights report
on Israel, released last month, for
the first time dropped the word “occupied” from its discussion of East
Jerusalem and the West Bank.
Skeptics, including the foreignpolicy experts who blanched when
the president announced the embassy move, are trying to construe
his actions as narrowly as possible.
They often cite a sentence from his
December speech: “We are not taking a position on any final status issues, including the specific boundaries of the Israeli sovereignty in
Jerusalem or the resolution of contested borders.” Their interpretation
is that Mr. Trump did not say Jerusalem consists of any specific physical area, and certainly not anything
across the Green Line.
But that sentence does not mean
what they claim. The president was
leaving open “final status” borders—
those that might be negotiated in
the future. Mr. Trump was saying
that American recognition of today’s
Jerusalem, with its well-known municipal boundaries, in no way would
prevent Israel and the Palestinians
from later agreeing on different
lines.
Most proposed peace plans contemplate Israel ceding parts of its undisputed sovereign territory to a future Palestinian state. In that sense,
all of Israel’s “specific boundaries,”
far beyond Jerusalem, are subject to
change by a final status agreement.
That possibility, however, does not
negate American recognition of Israel’s current borders.
Others who wish to obfuscate the
significance of the new embassy’s location note that it sits in a pocket of
land that was a U.N.-administered
demilitarized zone from 1949-67. But
the legal theory that paints Israel as
an “occupier” is not based on who
controlled the land during that period. Rather, the argument is that Israel does not have the right to any
territory on the Green Line’s far side.
The former DMZ is exactly such a location. In 1958 a U.N. Security Council resolution explicitly declared that
the DMZ was “beyond” the 1949 armistice line.
All this can mean only one thing:
The U.S. no longer buys into the legal theory behind claims of Israeli
“occupation.” Other countries may
soon follow, just as they are now announcing their intention to recognize Jerusalem. America’s affirmation of a unified city may be only the
first fissure in the ossified international consensus.
Mr. Kontorovich is a director at
the Kohelet Policy Forum, a Jerusalem think tank, and a professor at
Northwestern University’s Pritzker
School of Law School.
Managed Trade? I’m Back in the U.S.S.R.
By Daniel M. Price
T
he current U.S.-China trade
talks have a historical parallel,
with an odd role reversal. On
June 1, 1990, seven months after the
Berlin Wall fell, Presidents George
Bush and Mikhail Gorbachev met at
the White House to sign an agreement
normalizing trade relations between
the U.S. and the Soviet Union.
The agreement capped a year of
intense negotiations, during which
Ambassador Julius Katz, a legendary
trade diplomat, led the U.S. delegation, and I served as his legal counsel. Katz had negotiated with the Soviets in the 1970s and was charged
with reaching a modern agreement
that could be signed at the June
summit.
The negotiations began with the
two sides exchanging initial drafts.
The U.S. draft proposed rules for reciprocal market access, nondiscriminatory treatment of U.S. companies,
protections for intellectual property,
and various other standard trade and
investment rules. It stated that trade
should proceed on the basis of contracts between parties “concluded in
the exercise of their independent
commercial judgment and on the basis of customary commercial considerations such as price, quality, delivery and terms of payment.”
The Soviet draft was essentially a
series of proposed purchase and sale
orders, indicating the types and volumes of products the parties were to
buy from each other. Not terribly
surprising for a centrally planned
economy where government fiat and
so-called state orders dominated
commercial life.
Ambassador Katz explained to the
Soviet side that the goal was to reach
an accord on rules for a fair trading
relationship, not prescribe the precise
commercial outcomes. That is, government’s role was not to manage
trade but to set the legal framework
for fair and open trade.
As for the Soviet delegation, they
were split. Some favored the U.S.
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approach as helping the transition
to a market economy. Others reflected the older Soviet approach,
insisting on immediate transactional
benefits.
Almost 30 years later, the U.S.
again finds itself in difficult trade
talks in a changing world. Yet it faces
a similar choice: to reach agreement
with China on a set of rules for the
trade relationship, or, Soviet-style, to
dictate commercial outcomes by prescribing purchases and sales.
But this time it’s the U.S. that is
internally divided. The recent meeting in Beijing was meant to address
escalating trade frictions brought on
by U.S. threats and Chinese counterthreats of tariffs. President Trump
proposed the U.S. actions in response
to the U.S. trade representative’s
Section 301 report, which exhaustively catalogued China’s unfair and
discriminatory practices that impede
reciprocal market access, appropriate
U.S. intellectual property, and compel
technology transfer by foreign companies doing business in China.
Reflecting the president’s preoccupation, the U.S. team in Beijing led
with a demand that China agree to a
numerical trade-deficit reduction target of $200 billion by 2020. Last
Thursday Commerce Secretary Wilbur
Ross confirmed the administration’s
fidelity to the Soviet managed-trade
script: “Our approach has been to request individual products on which we
could sell more to them . . . as opposed to them selling us less.”
Instead of threatening tariffs that
U.S. consumers would ultimately
have to pay, or prioritizing deficit-reducing purchases by China that
Soviet negotiators’
1990 demands find
echoes in the Trump
administration today.
would temporarily help only a small
group of U.S. companies, the administration should seek commitments
for systemic change. Once an agreement is reached, it should be recorded in a set of enforceable rules
tailored to address China’s unique
challenges.
The U.S. is more likely to be successful if it works with its allies. And
they would readily join in pressing
China for such commitments as their
companies suffer from the same unfair practices.
First, unlike U.S. trade deficit-reducing measures that would likely
come at our allies’ expense—China
can simply substitute U.S. products
for other foreign imports—rules for
market access and fair treatment
would benefit all.
Second, good models for such
rules are already reflected in recent
trade and investment agreements
concluded by the U.S., the European
Union, Japan, South Korea, Australia,
Canada, Singapore and many others.
Moreover, China itself has shown
a willingness to negotiate similar
rules in various agreements, including in talks begun under the George
W. Bush administration, advanced
during the Obama administration,
but never concluded.
As negotiations continue this week
in Washington, Mr. Trump should remember that real and sustainable
change in trade relationships comes
from agreement on rules, not purchase targets. He has a historic opportunity to secure new commitments
from China and charter the new rules
that eluded his predecessors. To succeed, he must turn away from old Soviet-style trade priorities.
Mr. Price is managing director of
Rock Creek Global Advisors LLC.
A Mayor Tries to Zone Out Free Speech
By Margot Cleveland
T
South Bend, Ind.
he U.S. Supreme Court is considering a constitutional challenge to a California law targeting pro-life pregnancy centers.
The so-called FACT Act requires the
centers to tell clients they may qualify for subsidized abortions—a clear
example of compelled speech. But
such laws aren’t the only threats to
the centers’ freedom of speech. At
the local level, activists have begun a
quiet push to protect the abortion industry through zoning.
Last month the Women’s Care
Center, which operates 28 pregnancy
and family-resource centers in 10
states, became the latest target. A
Texas-based abortion-clinic chain,
Whole Women’s Health, convinced
the mayor of South Bend, Ind., to
veto a decision by the city’s Common
Council rezoning a house for a
Women’s Care Center next to a
planned abortion clinic.
Mayor Pete Buttigieg made clear
the veto was motivated by the center’s pro-life message: “In my judgment, the neighborhood would not
benefit from having the zoning law
changed in order to place next door
to each other two organizations with
deep and opposite commitments on
the most divisive social issue of our
time,” he wrote. “It is far from clear
that a neighborhood benefits from
co-locating facilities with such opposite views.” He added that while the
Department of Community Investment staff approved the rezoning,
“the recommendation did not contemplate broader concerns about the
health and welfare of the area, given
the deep opposition in values between the petitioner and its existing
neighbor.”
The mayor also cited his purported concern over violence. He
wrote that “research” provided by
Whole Women’s Health indicates
“clinics in close proximity to a crisis
At the behest of an
abortion clinic, Pete
Buttigieg of South Bend
targets a pro-life center.
pregnancy center experience significantly higher rates of violence,
threats, and harassment (21.7%) than
those not near such a center (6.8%).”
The Supreme Court has allowed local
zoning laws to survive constitutional
scrutiny based on negative secondary
effects, such as higher crime rates
near strip clubs. But that precedent
will not save Mr. Buttigieg, for several reasons.
First, the so-called research consisted of one unscientific survey distributed to abortion clinics, which
self-reported any incidents of violence, threats and harassment. The
Supreme Court has said that
“shoddy data” cannot be used to justify viewpoint discrimination. Second, in the survey the abortion clinics consider “harassment” to include
peaceful protests. Since such demonstrations are constitutionally protected, they cannot be considered a
“negative secondary effect.”
The survey also does not distinguish between the types of pro-life
organizations and the activities they
sponsored. While some crisis pregnancy centers may picket abortion
clinics or engage in confrontational
tactics, the Women’s Care Center
does not engage in political activity
or allow others to do so on its property. There has never been an instance of violence connected to the
Women’s Care Center—the nation’s
largest such organization—although
22 of its 28 centers are adjacent to
abortion clinics.
Mr. Buttigieg’s veto is not surprising. He is 36 and ambitious: Last year
he ran for Democratic National Committee chairman. Given the party’s extreme pro-abortion position, he had
to comply with the demands of the
abortion lobby in order to keep his
national political hopes alive.
But his first responsibility is to
the people of South Bend. Mr. Buttigieg’s decision will subject the city
to legal liability under the First
Amendment—that is, unless the
Common Council overrides the veto
when it meets Monday. That would
be a victory for choice, for South
Bend—and for the Constitution.
Ms. Cleveland is a lawyer and an
adjunct instructor at the University
of Notre Dame. She served on the
Women’s Care Center board from
1996-2003.
.
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Xerox Pulls Out of Fujifilm Deal
BY CARA LOMBARDO
Xerox Corp. said it would
back out of its merger deal with
Fujifilm Holdings Corp. as it
reached a new settlement with
two of its biggest shareholders,
the latest twist in a monthslong
tug of war over the future of the
iconic American company.
The printer and copier company said it reached a settlement
to replace its chief executive and
overhaul its board after it ended
a plan to combine with its joint
venture with Fujifilm. This is
Xerox’s second settlement with
activist shareholders Carl Icahn
and Darwin Deason; the company had earlier struck a deal
with the two billionaires to oust
Chief Executive Jeff Jacobson
and flip the board, but that
agreement abruptly expired ear-
lier this month before receiving
court approval.
The new settlement marks a
win for Messrs. Icahn and Deason, who agreed to table their
proxy fight after several months
of drama. They opposed the plan
to combine with the joint venture
Fuji Xerox, arguing it undervalued Xerox, and had planned to
run their own slate of directors
for Xerox’s board.
Xerox appointed five new
members to the board and five
existing members resigned, plus
Mr. Jacobson. One of the newly
appointed members, Icahn Enterprises CEO Keith Cozza, is
expected to be chairman.
Now, the new Xerox board—
the majority of which is made up
of directors backed by the activists—will immediately begin examining strategic alternatives.
Messrs. Icahn and Deason have
said Xerox could be sold to a
competitor or private-equity
firm.
As part of the settlement,
John Visentin will succeed Mr.
Jacobson as chief executive, the
company said Sunday. Mr.
Visentin is a former executive at
several technology companies
and had been working with the
Please see XEROX page B2
Recycling Firms Hit by Crushing Economics
Plunging prices for
scrap paper, plastics
prompt cities to send
some items to landfills
Before and After
The average price paid by
house flippers has risen faster
than the average sales price
of rehabbed houses.
Sale price
Price paid
$300,000
250,000
200,000
150,000
100,000
50,000
0
2000
’05
’10
’15 ’17
Source: ATTOM Data Solutions
THE WALL STREET JOURNAL.
KKR
Ups Ante
On Home
Flippers
BY BOB TITA
BY RYAN DEZEMBER
AND PETER RUDEGEAIR
MAX WHITTAKER FOR THE WALL STREET JOURNAL
The U.S. recycling industry
is breaking down.
Prices for scrap paper and
plastic have collapsed, leading
local officials across the country to charge residents more
to collect recyclables and send
some to landfills. Used newspapers, cardboard boxes and
plastic bottles are piling up at
plants that can’t make a profit
processing them for export or
domestic markets.
“Recycling as we know it
isn’t working,” said James
Warner, chief executive of the
Solid Waste Management Authority in Lancaster County,
Pa. “There’s always been ups
and downs in the market, but
this is the biggest disruption
that I can recall.”
U.S. recycling programs
took off in the 1990s as calls
to bury less trash in landfills
coincided with China’s demand
for materials such as corrugated cardboard to feed its
economic boom. Shipping lines
eagerly filled containers that
had brought manufactured
goods to the U.S. with paper,
Please see RECYCLE page B2
See more at WSJMarkets.com
Many trash haulers and city agencies that paid for curbside collection by selling scrap are now losing money on almost every ton they handle.
INSIDE
ABU DHABI JOINS BOOM
IN MIDEAST OIL REFINING
ENERGY, B9
KEYWORDS | By Christopher Mims
Drivers Become Guinea Pigs
Even if you
don’t own a
Tesla, you
are, or might
soon become,
part of the
company’s experiment in
automotive safety.
There are already more
than 200,000 Teslas on the
road, and all of them built
after early 2015 are capable
of Autopilot—that is, semiautonomous driving. This
makes drivers, and anyone
encountering these cars on
the road, guinea pigs who
are helping to train the artificial intelligence Tesla
hopes to use for a fully au-
tonomous driving system.
During this experiment,
at least two people have
died in driver’s seats of
Teslas that crashed while
Autopilot was engaged, but
Chief Executive Elon Musk
argues the system continues
to improve and, overall,
Teslas are safer than they
would be without the technology.
U
ber Technologies
and Alphabet’s
Waymo, among others, are also road-testing on
public streets. They’re experimenting at much
smaller scales, though an
Uber autonomous vehicle
struck and killed a pedestrian in March. Subsequently, Uber suspended its
self-driving-car program.
CEO Dara Khosrowshahi has
said it will resume within a
few months.
These experiments are
based on assumptions about
the abilities of AI, and the
compatibility of humans
and partially autonomous
driving systems. If automobile companies are wrong
about any of them—and
there’s reason to believe
they are—we’ll almost certainly see more self-drivingPlease see MIMS page B4
KKR & Co. is raising its bet
on high-interest, short-term
home loans, the latest sign that
Wall Street firms are aiming to
cash in on the risky but lucrative house-flipping market.
Borrowers of residential
transitional loans—or flip
loans, as they are better
known—use the money to buy
a property, renovate it and
then try to quickly resell at a
profit. They have become a
lucrative and growing niche
of finance in recent years.
Nomura Holdings Inc. estimates that flippers will borrow some $15 billion this
year, nearly 25% more than
last year.
KKR is the latest example of
Wall Street’s growing interest
in the area. The private-equity
house is boosting its commitment to Toorak Capital Partners LLC, a New Jersey concern that buys up loans made
to home flippers and other
residential-rehabilitation specialists from originators
throughout the U.S. and the
U.K. Toorak has been able to
so far buy more than $1 billion
of this debt.
KKR had previously invested $75 million in equity
in Toorak. Now, the firm says
it is increasing that to $250
million.
Goldman Sachs Group Inc.
is another big financial player
that has entered the business
of writing and buying flip
loans.
Toorak and other firms like
it buy flip loans from originators, often online operations
like Peer Street Inc. and
LendingHome Corp. Those
companies have backing from
Silicon Valley venture firms
Andreessen Horowitz and
Please see KKR page B6
.
B2 | Monday, May 14, 2018
INDEX TO BUSINESSES
BUSINESS & FINANCE
A
F-G
Abu Dhabi Natl Oil.....B9
Airbnb..........................B4
Alphabet................A4,B1
Andreessen Horowitz.B1
Apple...........................A1
Archer Daniels............B2
AT&T......................A1,A2
Fiat Chrysler...............B3
First Round Cap.....B1,B6
Ford Motor ............ A1,B3
Fujifilm Holdings........B1
Geely Holding Group .. B3
General Mills...............B2
General Motors.....A4,B3
Goldman Sachs...........B1
B
C
Cargill..........................B2
China Three Gorges....B3
Citigroup......................B4
Comcast.......................B5
D-E
Daimler........................B3
EDP-Energias de
Portugal .................... B3
Novartis ...................... A1
P-R-S
H-I-K
Peer Street ................. B1
Peugeot.......................B9
P.F. Chang's.................B6
Renault........................B9
Rhône Group...............B4
Samsung...................A10
Saudi Aramco..............B9
Squire Patton Boggs..A1
Huawei Technologies . A1
Hudson's Bay..............B4
Icahn Enterprises........B1
InterActiveCorp...........B9
Kellogg.........................B2
KKR..............................B1
Korea Aerospace.......A10
Tesla.......................A1,B1
Time Warner...............B5
Toorak Capital.............B1
Toyota Motor..............B3
Unilever.......................B2
Volkswagen.................B3
L-M-N
LendingHome..............B1
Match Group...............B9
McDonald's..................B2
Mondelez Internatl.....B2
Nestle..........................B2
Nissan Motor..............B3
T-U-V
W-X-Z
Walt Disney................B5
Waste Mngemt ..... B1,B2
WeWork ...................... B4
Window Rock.........B1,B6
Xerox ........................... B1
ZTE..............................A1
INDEX TO PEOPLE
B
I-J
Osanloo, Michael........B6
Barry, Michael.............B2
Beacham, John............B6
Briede, Kristen............B6
Browne, Warren..........B3
Icahn, Carl...................B1
Jacobson, Jeff.............B1
Jones, Nick..................B5
Pagliari, Joseph .......... B4
Pettiford, Jeffrey........B6
C
Khosrowshahi, Dara ... B1
Krafcik, John...............B4
Cozza, Keith................B1
Cuban, Mark..............A10
D
Deason, Darwin .......... B1
Deseglise, Christian ... B6
DiClemente, Anthony
.....................................B9
K
L
Langman, Steven........B4
Lee, Jennifer 8............B6
M
F-G
Marcus, Gary...............B4
Moore, Steve .............. B2
Musk, Elon..................B1
Frieden, Tom...............B2
Gopinath, Gita ............ B6
Goss, Jon.....................B5
Neumann, Adam.........B4
Nordvig, Jens..............B6
N-O
XEROX
Continued from the prior page
activist investors at Xerox.
Xerox said it opted to back
out of the deal with Fujifilm because the Japanese company
didn’t deliver Fuji Xerox’s audited financial statements by
April 15, and there were material
deviations in the audited financials when compared with the
unaudited financials.
Fujifilm didn’t immediately
respond to a request for comment.
Xerox in January struck the
complex merger deal with Fujifilm, which would have traded
Xerox’s 25% ownership of their
60-year joint venture to Fujifilm
for 49.9% of a new company that
combines all of Xerox with the
joint venture. Xerox shareholders
RECYCLE
Continued from the prior page
scrap metal and plastic bottles
for the return trip to China.
As cities aggressively expanded recycling programs
to keep more discarded
household items out of landfills, the purity of U.S. scrap
deteriorated as more trash
infiltrated the recyclables.
Discarded food, liquid-soaked
paper and other contaminants recently accounted for
as much as 20% of the material shipped to China, according to Waste Management Inc.’s estimates, double
from five years ago.
The tedious and sometimes dangerous work of
separating out that detritus
at processing plants in China
prompted officials there to
slash the contaminants limit
this year to 0.5%. China early
this month suspended all
imports of U.S. recycled materials until June 4, regardless of the quality. The recycling industry interpreted
the move as part of the
growing rift between the U.S.
and China over trade policies
and tariffs.
The changes have effectively cut off exports from the
U.S., the world’s largest generator of scrap paper and plastic. Collectors, processors and
the municipal governments
that hire them are reconsidering what they will accept to
recycle and how much homeowners will pay for that ser-
Processing Costs
For Waste Pile Up
China stopped taking shipments of U.S. mixed paper and
mixed plastic in January. Mixedpaper shipments to other Asian
countries now fetch $5 a ton,
down from as much as $150
last year. Other buyers such as
Vietnam and India have been
flooded with scrap paper and
plastic that would have been
sold to China in years past.
Dave Vaccarezza, president of
Cal-Waste Recovery Systems
near Sacramento, Calif., intends
to invest more than $6 million in
new sorting equipment to produce cleaner bales of recyclables.
P
R
Renaldi, Rocco.............B2
Rosa, David De La......B4
S
Sloan, Doug.................B2
Stender, Steen............B2
T-V-W
Tosi, Laurence.............B4
Vaccarezza, Dave........B2
Vain, Frank..................B5
Verleger, Philip ........... B9
Visentin, John.............B1
Warner, James............B1
would also have been paid $2.5
billion in aggregate via a special
dividend.
Messrs. Icahn and Deason
have been seeking to kill the
merger, and Mr. Deason had filed
a lawsuit against it, alleging Mr.
Jacobson raced to seal the deal
to protect his own job. Documents and communications disclosed in the suit showed the Xerox board in November had
nearly replaced Mr. Jacobson
with Mr. Visentin, and that it
had told Mr. Jacobson to halt negotiations with Fujifilm. Instead,
Mr. Jacobson struck the deal.
In late April, a judge temporarily blocked the deal, saying
the transaction was negotiated by
a “massively conflicted” Mr. Jacobson and that he was looking
out for his own interests over
those of Xerox shareholders.
—David Benoit
contributed to this article.
WHO Attacks Trans Fats
U.N. health arm urges
industry, governments
to accelerate effort
against heart disease
BY BETSY MCKAY
AND JACOB BUNGE
The World Health Organization is launching an initiative to eliminate trans fats
from diets globally, pressing
makers of foods and oils, and
governments, to accelerate
work to prevent hundreds of
thousands of deaths from
heart disease each year.
The public health arm of
the United Nations said it will
urge governments to ban or
restrict those fats and replace
them with healthier fats and
oils. WHO Director-General
Tedros Adhanom Ghebreyesus
said eliminating trans fats
from human diets would be “a
global win in the fight against
cardiovascular disease.”
Multinational companies
that make trans fats and have
used them as ingredients
said they have largely eliminated those oils from foods in
the U.S., parts of Europe and
Canada, where governments
already restrict their use. But
trans fats remain widely
used where regulators and
food makers have been slower
to take action. Many of the
fats are in foods or oils made
by local producers.
The International Food and
Beverage Alliance—a Geneva
group representing food companies including Kellogg Co.,
General Mills Inc., McDonald’s
Corp. and Unilever NV—said
its members have removed industrially produced trans fat
from 98.8% of their global
product portfolios.
“We welcome this action by
the World Health Organization,” said Rocco Renaldi, the
group’s secretary-general.
Nestlé SA is working toward “complete removal of all
trans fats” originating from
partially hydrogenated oils, a
spokeswoman said. She said
Nestlé has eliminated these
vice. Many trash haulers and
city agencies that paid for
curbside collection by selling
scrap said they are now losing
money on almost every ton
they handle.
The upended economics
are likely to permanently
change the U.S. recycling
business,
said
William
Moore, president of Moore &
Associates, a recycled-paper
consultancy in Atlanta.
“It’s going to take domestic demand to replace what
China was buying,” he said.
“It’s not going to be a quick
turnaround. It’s going to be a
long-term issue.”
The waste-management
authority
in
Lancaster
County this spring more than
doubled the charge per ton
that residential trash collectors must pay to deposit recyclables at its transfer station, starting June 1. The
higher cost is expected to be
passed on to residents
though a 3% increase in the
fees that haulers charge
households for trash collection and disposal.
The additional transferstation proceeds will help
offset a $40-a-ton fee that
the authority will start paying this summer to a company to process the county’s
recyclables. Before China
raised its quality standards
at the beginning of this year,
that company was paying
Lancaster County $4 for every ton of recyclables.
Mr. Warner may limit the
recyclable items collected
from Lancaster County’s
500,000 residents to those
that have retained some
value, such as cans and corrugated cardboard. He said
mixed plastic isn’t worth
processing.
Pacific Rim Recycling in Benicia, Calif., slowed operations
at its plant early this year to
meet China’s new standard.
But company President Steve
Moore said the more intensive
sorting process takes too long
to process scrap profitably. Pacific Rim idled its processing
plant in February and furloughed 40 of its 45 employees.
“The cost is impossible.
We can’t make money at it,”
Steve Moore said. “We quit
accepting stuff.”
“It’s going to cost the rate payer
to recycle,” he said. “They’re going to demand we make our
best effort to use those cans
and bottles they put out.”
Sacramento County, which
collects trash and recyclables
from 151,000 homes, used to
earn $1.2 million a year selling
the scrap to Waste Management and another processor.
Now, the county is paying what
will amount to about $1 million a
year, or roughly $35 a ton, to defray the processors’ costs.
Waste Management paid the
county $250,000 to break the
revenue-sharing contract and negotiate new terms. County
waste-management director
Doug Sloan expects costs to
keep climbing. “We’ve been put
on notice that we need to do
our part,” he said. The county
hasn’t yet raised residential fees.
Some recyclers said municipalities need to give up the “single-stream” approach of lumping
used paper and cardboard together with glass, cans and plastic in one collection truck. Singlestream collections took hold
about 20 years ago. Collecting paper separately would make curbside recycling service more expensive but reduce contamination.
“We’re our own worst enemies,” said Michael Barry, president of Mid America Recycling,
a processing-plant operator in
Des Moines, Iowa, of singlestream recycling. “It’s almost
impossible to get the paper
away from the containers.”
Compacted
U.S. recyclable exports
from California ports
20 million tons
15
Other countries
10
5
China
0
2006
’10
’15
’17
Source: Cal Waste
THE WALL STREET JOURNAL.
VINCENT MUNDY/BLOOMBERG NEWS
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.
Bayerische Motoren
Werke........................B3
Best Buy.....................A2
Brookfield Property....B4
Bunge .......................... B2
THE WALL STREET JOURNAL.
* ***
Food makers like Mondelez say they are eliminating harmful oils.
Countries Cutting Fat
The number of countries limiting trans fats is growing,
but most are high-income or upper-middle-income.
Total countries with
trans-fat bans or limits*
Canada, U.S.
20
North America
Middle East
Asia
Africa
Central/South America
Europe
15
10
5
Denmark
2003
’05
’10
’15
’18
*Mandatory bans or limits on industrially produced trans fat
THE WALL STREET JOURNAL.
Source: World Health Organization
from 99.8% of fats and oils the
company uses. Snack giant
Mondelez
International,
maker of Oreo cookies, is on
track to eliminate partially hydrogenated oils from its products by the end of the year, a
spokeswoman said.
Trans fats, often in the
form of partially hydrogenated
food oils, played a leading role
in the post-World War II popularization of packaged foods
in the U.S. and elsewhere. Gen-
erally made from soybeans,
partially hydrogenated oils are
similar in consistency to
Crisco shortening and replaced animal lard in many
recipes. Food makers used
them to make longer-lasting
cooking oils, stabilize margarine and help packaged cookies retain their taste.
For food-oil manufacturers
like Archer Daniels Midland
Co., Bunge Ltd. and Cargill
Inc., the challenge has been
replacing partially hydrogenated oils without altering the
taste, texture and consistency
that diners expect. Minnesotabased Cargill has replaced partially hydrogenated oil with
products like a new doughnut
shortening, which blends palm
oil with healthier versions of
canola or sunflower oil.
Consumers didn’t miss trans
fats when they were replaced in
Denmark, the first country to
eliminate them, said Steen
Stender, professor of nutrition,
exercise and sports at the University of Copenhagen. “No one
is addicted to trans fatty acids,”
said Dr. Stender, who was involved in the effort in Denmark.
Some of the alternate oils
that food makers use carry
their own potential drawbacks,
including health concerns and,
in the case of palm oil, deforestation.
More than 20 nations have
restricted trans fats because
they raise LDL or “bad” cholesterol, a marker for heart
disease, while lowering HDL,
or “good” cholesterol.
The WHO recommends
trans fat intake be limited to
less than 1% of total energy intake, meaning less than 2.2
grams a day in a 2,000 calorie
diet. Trans fats are linked to
537,000 deaths from heart disease globally each year, or
about 7.7% of all heart-disease
deaths, according to a 2016
study in the Journal of the
American Heart Association.
The WHO is promoting a
six-point blueprint called “Replace” to help governments
eliminate trans fats. It was developed with Resolve to Save
Lives, part of the public health
nonprofit Vital Strategies.
“There’s no doubt that artificial trans fat can and should
be replaced,” said Tom Frieden, president and chief executive of Resolve to Save Lives.
As New York City’s health
commissioner from 2002 to
2009, he led implementation
of a ban on trans fats in restaurant foods there.
“It’s one of the easiest ways
to prevent heart-disease-related deaths,” Dr. Frieden said.
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THE WALL STREET JOURNAL.
Monday, May 14, 2018 | B3
BUSINESS NEWS
Chinese
Trump Presses Car Makers to Hire AUtility
Bid
Auto executives urged
to boost factory jobs;
20% tariff proposed
for imported vehicles
Generates
Scrutiny
The auto industry is juggling a range of policy priorities in Washington, from tariffs to tailpipe emissions. But
one item remains firm atop
President Donald Trump’s
agenda for the industry: more
jobs for Rust Belt states that
helped elect him.
Mr. Trump made clear at a
White House meeting Friday
with top auto-industry executives that he wasn’t done
prodding them on jobs—including foreign manufacturers.
During a televised portion
of the meeting, Mr. Trump
told the executives he wants
to see “manufacturing of millions of more cars within the
U.S.—for Michigan, for Ohio,
for Pennsylvania.”
Mr. Trump’s pressure on
car companies could mount as
midterm elections draw closer,
especially because the auto
sector has been a central focus
in his effort to generate American factory jobs.
Last year, as Mr. Trump
urged auto makers to shift
manufacturing to the U.S.,
some committed to fresh U.S.
investments collectively worth
billions of dollars and thousands of jobs. But Detroit’s car
companies are more focused
on the future, as U.S. sales
have stalled. General Motors
Co. and Ford Motor Co. have
unused U.S. factory space and
are steering more capital toward advanced technology
such as driverless cars.
Mr. Trump lately has been
putting more pressure on foreign auto makers. During Friday’s session, he proposed a
20% tariff on imported autos,
people briefed on the session
said. He also raised the prospect of subjecting imported
vehicles to Obama-era emissions standards while domestic vehicles would get more lax
BY BEN DUMMETT
JONATHAN ERNST/REUTERS
BY MIKE COLIAS
General Motors CEO Mary Barra at the White House Friday. President Trump is seeking more automotive jobs in Rust Belt states.
standards, the people said.
The proposal rattled executives from European and Asian
auto makers, including Germany’s Volkswagen AG, BMW
AG and Daimler AG and
Japan’s Toyota Motor Corp.
and Nissan Motor Co., according to people familiar with the
matter. The session had been
billed as a discussion of emissions rules but was dominated
by trade talk, the people said.
“It was a reminder that his
priority is manufacturing and
jobs,” said a person briefed on
the meeting. “More job wins
will continue to be the theme.”
Mr. Trump is targeting foreign auto makers at the same
time much of the growth in
U.S. vehicle production is being fueled by factories built by
Japanese and European car
companies. In the past decade,
Toyota, Nissan, Volkswagen,
BMW, Geely Holding Group
Co.’s Volvo Cars and others
have opened or significantly
expanded U.S. plants, or outlined plans to do so.
European auto makers are
on pace to make one million
vehicles in the U.S. this year,
said Warren Browne, a consultant and former GM executive.
In the first quarter of 2018,
foreign auto makers were expected to have matched American auto makers in U.S. production for the first time,
according to WardsAuto.com.
In January, Fiat Chrysler
Automobiles NV said it would
relocate production of some
trucks to a Detroit-area factory from a plant in Mexico,
creating about 2,500 jobs.
During introductions at the
meeting with auto executives,
Mr. Trump interrupted to call
out FCA Chief Executive Sergio Marchionne for “leaving
Mexico, going to Michigan,”
even though FCA will continue
to operate three plants south
of the border. “He’s my favorite man in the room,” Mr.
Trump said.
—Chester Dawson
and Adrienne Roberts
contributed to this article.
Optimism Grows
For Emissions Deal
Auto makers were walking
a fine line on emissions regulations heading into last week’s
White House meeting with
President Donald Trump, lobbying for a limited relaxation of
rules that risked unraveling
once administration officials
began working on changes.
Most important, car companies have wanted any rule
changes to be acceptable to
California, which has an Environmental Protection Agency
waiver to set its own, tougher
emissions standards that a
dozen states follow. Auto makers want to avoid a patchwork
of regulations across the U.S.
During Friday’s meeting, Mr.
Trump initially suggested engaging in a legal battle with
California, a move that could
prolong regulatory uncertainty
auto makers want to avoid. By
meeting’s end, he suggested
EPA Administrator Scott Pruitt
and Transportation Secretary
Elaine Chao would be assigned
the task of reaching a deal
with California on emissionsrule changes.
Auto makers fear a rollback
would force California and
other states making up more
than one-third of the U.S. car
market to go their own way,
resulting in conflicting regulations nationwide that could
wreak havoc on vehicle designs
and business plans mapped
out years in advance..
Industry representatives
left the meeting cautiously optimistic they could still achieve
their nuanced goal of relaxing
emissions regulations without
antagonizing California. Mr.
Trump was open to a deal
with California during the
meeting, according to a person
familiar with the gathering.
—Mike Spector
China Three Gorges Corp.
late Friday said it plans to
launch a €9.07 billion ($10.8
billion) offer for the almost
77% it doesn’t already own of
Portugal’s main energy utility, a bold move to expand further into Europe’s power sector that will likely attract
scrutiny from the U.S. and
other Western governments.
By consolidating its ownership of Energias de Portugal
SA, or EDP, China Three Gorges,
or CTG, would gain exposure to
EDP’s operations in other European countries, including
Spain, France, Italy and the U.K.
In the Americas, the Lisbonbased company is present in
Brazil, Mexico and the U.S.,
where it operates wind farms.
As one of the world’s largest sources of greenhouse
gases, China has pushed construction of alternative energy
sources, while adopting policies designed to drive the purchase of electric vehicles.
CTG’s interest EDP underscores that effort.
CTG said it is offering €3.26
in cash for each EDP share it
doesn’t own, or a 5% premium
to EDP’s share price Friday.
The biggest challenge CTG
could face may come from regulators in the U.S. and the European Union, which are scrutinizing
acquisitions
by
foreigners in sectors such as
energy infrastructure to guard
against security breaches.
The Committee on Foreign
Investment in the U.S., a multiagency panel is required to
rule on the proposed deal
since EDP operates wind farms
in that country. A simmering
trade war between China and
the U.S. could also complicate
matters for CTG in winning
regulatory approval in the U.S.
—Michael Wright in London
contributed to this article.
Guidance starts with hearing you out.
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B4 | Monday, May 14, 2018
THE WALL STREET JOURNAL.
* *
BUSINESS & TECHNOLOGY
WSJ.com/Tech
WeWork Wants to Be Its Own Landlord
New investment fund
aims to buy buildings
where the company
would be a tenant
On the Rise
WeWork's quarterly revenue has
shown consistent growth.
Funds Try to Avoid
Potential Conflicts
according to people familiar
with the matter.
But unlike the WeWork
fund, that plan called for the
fund’s management to report
to an independent board, a
measure meant to limit
potential conflicts, the people
said.
An Airbnb spokesman said
the company isn’t pursuing the
fund plan.
WeWork appears to have
benefited from the fund with a
low-interest loan.
WeWork debt documents
show it borrowed $26 million
at 1.52% annual interest from
its real-estate fund last year.
It is uncommon for tenants
to borrow millions from their
landlords.
The debt documents
didn’t state the purpose of
the loan.
WeWork faces higher
interest rates on the private
market; the company borrowed
$702 million at nearly 8% last
month.
$300 million
BY ELIOT BROWN
250
In mid-2017, the giant landlord Brookfield Property
Partners LP was in advanced
talks to buy the Lord & Taylor
department-store building in
New York City for about $700
million, when an unexpected
buyer swooped in and sealed a
deal, according to people familiar with the matter.
Behind the deal was WeWork Cos., which put together
the $850 million purchase
with a hefty premium, a surprising move for a firm that
leases buildings and subleases
the office space to other companies.
WeWork didn’t put up the
money. Instead, it came from
a new real-estate fund comanaged by WeWork and one
of its early shareholders, private-equity firm Rhône
Group. The fund aims to
raise tens of billions of dollars from investors in coming
years to buy buildings where
WeWork would become a tenant, people familiar with the
fund said.
The unusual arrangement
effectively makes WeWork
its own landlord using other
investors’ money, raising
questions about how it will
make deals with itself as a
tenant while co-managing
the fund.
“There’s huge potential for
conflicts,” said Nori Lietz, a lecturer at Harvard Business
200
SHANNON STAPLETON/REUTERS
150
100
50
0
2016
’17
Source: the company
WeWork assembled a deal for the retailer’s New York address.
THE WALL STREET JOURNAL.
School and longtime adviser to
investors in real-estate funds.
“They’re using other people’s
money, and they’re on both
sides of the transaction at the
end of day.”
WeWork has made these
ties clear to investors in offering documents, and the fund
has established some measures to mitigate conflicts of
interest, people familiar with
the matter say; specifics
couldn’t be learned. In other
cases, real-estate funds might
have outside groups negotiate
certain issues to avoid conflicts.
WeWork’s pitch to investors
is that its role as both tenant
and landlord could yield better
investment returns than conventional real-estate funds.
The fund largely aims to buy
buildings that WeWork would
then lease, at least in part, to
itself. The value of a building
some of the office space to
customers. The company also
secured the ability to lease
some other department stores
owned by Lord & Taylor’s parent, Hudson Bay Co.
The fund has sought to
raise money from wealthy clients of Citigroup Inc., which
circulated a presentation
about the fund that stated a
plan to “capitalize on the
growing demand for flexible
community-based
office
space,” according to a copy reviewed by The Wall Street
Journal.
The fund is run by WeWork
and Rhône executives including WeWork Chief Executive
Adam Neumann and Rhône
Chairman and Co-founder Steven Langman, according to the
Citigroup presentation.
Real-estate experts say
WeWork’s involvement raises
concerns the fund could tilt
with a tenant in place tends to
be significantly higher than an
empty building.
WeWork rose from a tiny,
one-office location in Manhattan to a global player in
part by leasing property,
rather than spending more to
buy it. The company, valued
at $20 billion by investors, is
under pressure to secure
more real estate after pledging continuing rapid expansion. Last year, it formed WeWork Property Investors,
which has disclosed raising
$400 million and has struck
deals for at least four properties. It is seeking $767 million
in debt to fund the purchase
and renovations of the Lord &
Taylor building, and expects
to complete the purchase by
the fall.
WeWork has said it would
make the Lord & Taylor building its headquarters and lease
Investment funds in the
real-estate world—like the
property ownership arm of a
casino or a senior living
company—typically have
management that is
independent of the operating
business, according to David
De La Rosa, who is an adviser
to real-estate investors for
Green Street Advisors.
The layer of independence
is meant to avoid conflicts
that could hurt investors, he
said.
Another well-funded private
company, Airbnb Inc., considered
a similar concept to WeWork’s
fund last year.
Under then-financial chief
Laurence Tosi, Airbnb planned
to create a real-estate
investment trust that would
have rented its houses and
apartments on Airbnb,
decisions on items like lease
rates in favor of the company, or pursue riskier behavior than a normal landlord would in order to
benefit WeWork.
Generally with conflicts,
“you’re going to push profits
to the side [where] you have
the greatest financial interest,” said Joseph Pagliari, a
professor at University of
Chicago’s business school,
who has studied real-estate
funds.
The Citigroup documents,
listing risks about the fund,
say WeWork and Rhône are
“expressly permitted” to engage in activities that may be
“adverse” to the fund.
Rhône executives are meant
to take the lead when some
conflicts arise, according to a
person familiar with the fund.
Rhône’s Mr. Langman sits on
WeWork’s board, in a seat
controlled by Mr. Neumann.
Entities tied to Mr. Langman
and Rhone held 2.2 million
shares of WeWork private
stock worth over $100 million,
based on the latest valuation,
according to documents from
a bond offering made public
last month.
MIMS
T
esla says its cars with
autonomous-driving
technology are 3.7
times safer than the average American vehicle. It
isn’t clear how much of this
safety is because of the
driving habits of enthusiast
owners or other factors,
SEONGJOON CHO/BLOOMBERG NEWS
Continued from page B1
car accidents, as semiautonomous technology becomes
commonplace.
That isn’t to say we
shouldn’t be on this path.
Every year, some 40,000
people die in the U.S. in
traffic-related accidents—a
situation made worse by
distracted driving.
We have established
methods for responsibly
rolling out life-saving new
technologies before—think
of clinical trials for new
drugs—and we can do it
again. But it might mean
pumping the brakes on the
rollout of self-driving cars.
When engaged, Autopilot
keeps the car within in its
lane, can automatically
change lanes, and maintains
a safe distance from cars
ahead and behind. When it
senses a dangerous situation it alerts the driver,
whether or not Autopilot is
engaged. Sometimes, however, it’s up to the driver to
realize the Autopilot system
isn’t doing what it should.
Gary Marcus, a professor of
psychology and neural science at New York University
and the former head of
Uber’s AI lab.
AI is brittle because it
can’t carry over insights
from one context to another,
opaque because humans
can’t evaluate its neuron-like
tangle of connections, and
shallow because it’s easy to
fool. You can’t just throw
more deep learning at a
problem and expect it to be
as good as a human, says Dr.
Marcus.
Tesla displayed one of its Model S electric vehicles in Seoul last month. Over 200,000 of the company’s vehicles are on the road.
such as the cars’ crashavoidance technology,
rather than Autopilot.
After a fatal 2016 crash,
which happened when Autopilot was engaged, Tesla
cited a report by the National Highway Traffic Safety
Administration as evidence
that Autopilot mode makes
Teslas 40% safer. NHTSA recently clarified the report
was based on Tesla’s own
unaudited data, and NHTSA
didn’t take into account
whether Autopilot was engaged. Complicating things
further, Tesla rolled out an
auto-braking safety feature—
which almost certainly reduced crashes—shortly before it launched Autopilot.
There isn’t enough data
to independently verify that
self-driving vehicles cause
fewer accidents than human-driven ones. A Rand
Corp. study concluded that
traffic fatalities already occur at such relatively low
rates—on the order of one
per 100 million miles traveled—that determining
whether self-driving cars
are safer than humans could
take decades.
What we do have is evidence—acknowledged in
Tesla’s own user manuals—
that Tesla’s semiautonomous driving system is
fooled by bright sunlight,
faded lane markings or
seams in the road. Researchers continue to document other ways to trick
these systems, as well.
Tesla emphasizes its system is driver-assist technology, not full autonomy, and
blamed the driver in the
most recent crash that occurred when the system
was engaged. Yet Tesla
drivers and news reports
suggest that in some cases,
the only thing keeping drivers from getting into Autopilot-related accidents is
their own reflexes.
None of this surprises experts who understand the
AI at the heart of autonomous driving systems. Deep
learning—the so-called intelligent component of
these systems—is “brittle,
opaque and shallow,” says
A
lphabet’s Waymo decided it was too dangerous to let drivers
take control when needed,
and skipped to a fully selfdriving ride-share service,
Waymo CEO John Krafcik
has said. According to the
company, a system that
never asks a driver to take
over is safer than making
potentially tricky machinehuman handoffs.
Tesla promised to release
safety data on its self-driving technology starting next
quarter. It isn’t clear what
kind of data it will release,
but experts say public sharing of data, from all makers
of autonomous vehicles, is
the only way to ensure
proper evaluation of the
safety of these technologies.
Given that we already evaluate the safety of every
other part of a motor vehicle in this way, it just
makes sense.
Jack Otter, Associate Publisher at
Dow Jones Media Group, will moderate
a panel of cybersecurity professionals
As cyber attacks increase in number and sophistication,
how can companies stay one step ahead to protect
their data? Join our informative live discussion as we
explore the possibilities of AI as a potentially powerful
cybersecurity solution.
Tomorrow at 2 p.m. EDT.
Kiersten Todt
Charlie Jacco
President and
Managing Partner,
Liberty Group Ventures
Principal, KPMG LLP
Cybersecurity Services,
Financial Services Leader
Principal, KPMG LLP
Innovation & Enterprise
Solutions
!"#$!
WSJ. Custom Studios is a unit of The Wall Street Journal advertising
department. The Wall Street Journal news organization was not
involved in the creation of this content.
.
THE WALL STREET JOURNAL.
Monday, May 14, 2018 | B5
BUSINESS NEWS
‘Avengers’ Notches Huge China Opening
BY ERICH SCHWARTZEL
Estimated Box-Office Figures, Through Sunday
SALES, IN MILLIONS
FILM
DISTRIBUTOR
WEEKEND* CUMULATIVE % CHANGE
Disney
$61.8
$547.8
-46
2. Life of the Party Warner Bros.
3. Breaking In
Universal
$18.5
$16.5
$18.5
$16.5
---
4. Overboard
5. A Quiet Place
$10.1
$6.4
$29.6
$169.6
-31
-18
1. Avengers:
Infinity War
Lions Gate
Paramount
*Friday, Saturday and Sunday
HOPPER STONE/WARNER BROS./ASSOCIATED PRESS
LOS
ANGELES—Three
weeks after setting records
with its opening in the U.S.,
“Avengers: Infinity War”
opened to gargantuan returns
in China.
The premiere of Walt Disney Co.’s superhero epic took
in an estimated $200 million
in the world’s second-largest
box-office market, surpassing
the record set by the local release “Monster Hunt 2” by
about $13 million. Measured in
local currency, the “Infinity
War” opening was second to
last year’s “The Fate of the Furious.”
The China gross brings the
“Infinity War” global haul to
$1.61 billion, making it the
fifth-highest-grossing film of
all time after three weeks of
release.
Domestically, the movie had
no trouble holding the No. 1
spot over the weekend with an
additional $61.8 million in the
U.S. and Canada. Its cumulative domestic gross of $547.8
million puts it at No. 8 on the
all-time chart.
“Infinity War” will face its
first serious competitor next
weekend with “Deadpool 2,”
but the movie’s start in China
puts it on track to potentially
‘Life of the Party,’ starring Melissa McCarthy, made its debut in second place in the U.S. and Canada.
cross the $2 billion mark
world-wide.
In the past decade, China’s
box office has gone from an
afterthought to a priority for
Hollywood studios.
The country continues to
construct theaters at a fast
clip, and its box office is ex-
pected to surpass the U.S.
within the next few years.
Chinese consumers haven’t
always been aligned with
Western audiences in what
they want to see, but Marvel
Studios titles have performed
notably well. Disney’s “Star
Wars” franchise, for instance,
hasn’t caught on in China to
the extent it has in other foreign markets.
But the massive Chinese
grosses come with a significant caveat. Under the terms
of China’s import agreement,
studios get about 25% of ticket
sales from most exports, com-
Source: comScore
pared with approximately 60%
for major releases in the U.S.
The U.S. and Chinese governments are currently in negotiations to update that agreement, and boosting that
percentage is a priority for the
studios.
“Infinity War” has already
collected more in its opening
weekend there than the total
Chinese grosses of other Marvel releases such as “The
Avengers” and “Captain America: Civil War.” After the weekend results, it is already the
ninth-highest-grossing Hollywood export in the market.
IMAX Corp., which has developed China into a major
market for its auditoriums,
said it posted a new company
record with “Infinity War” in
the country. IMAX auditoriums
grossed $20.5 million in China,
far exceeding the previous record of $13.3 million set by
“The Fate of the Furious.”
In the U.S., two new wide
releases tied to Mother’s Day
opened to solid returns. Melissa McCarthy’s “Life of the
Party,” starring the comedian
as a mom who returns to college, collected $18.5 million in
second place. The movie was
released by Time Warner
Inc.’s Warner Bros.
“Breaking In,” starring Gabrielle Union as a mother
who stops at nothing to protect her children from intruders, grossed $16.5 million in
third place. It was released
by Comcast Corp.’s Universal
Pictures.
This announcement is neither an offer to purchase nor a solicitation of an offer to sell Shares and/or ADSs (both, as defined below). The U.S. Offer
(as defined below) is made only by the Offer to Purchase, dated April 4, 2018, the related Share Acceptance Form, the related ADS Letter
of Transmittal and the related Share Withdrawal Form and any amendments or supplements thereto, and is being made to all U.S. holders of
Shares and all holders of ADSs, wherever located. The U.S. Offer is not being made to (nor will tenders be accepted from or on behalf of)
holders of Shares in any jurisdiction in which the making of the U.S. Offer or the acceptance thereof would not be in compliance with
the securities,“blue sky” or other laws of such jurisdiction. In those jurisdictions where applicable laws or regulations require the
U.S. Offer to be made by a licensed broker or dealer, the U.S. Offer shall be deemed to be made on behalf of Offeror (as defined
below) by one or more registered brokers or dealers licensed under the laws of such jurisdiction to be designated by Offeror.
Results of the Initial Acceptance Period of the U.S. Offer to Purchase
All Outstanding Ordinary Shares, No Nominal Value, Held By U.S. Holders
and
All Outstanding Ordinary Shares Represented By Outstanding American
Depositary Shares, Held by All Holders, Wherever Located,
of
BESS ADLER FOR THE WALL STREET JOURNAL
Ablynx NV
for
€45.00 Per Share,
Net To The Seller In Cash, Without Interest
and
€45.00 Per American Depositary Share,
Net To The Seller In Cash, Without Interest
Pursuant to the Offer to Purchase dated April 4, 2018
by
Sanofi
Soho House’s 20th members club is set to open later this month at 55 Water St. in Brooklyn, N.Y.
Exclusive Club Goes Global
BY CHRIS KIRKHAM
AND ERICH SCHWARTZEL
Soho House & Co., known
for chic, members-only properties catering to those in creative industries such as entertainment and media, is in the
midst of a counterintuitive
strategy: expanding its limited-entry club model into a
global empire.
The 23-year-old London operation says its 19 locations in
nine markets around the world
currently have 71,000 members, who pay $1,050 to
$3,200 each in annual dues for
access to the club and its hip
events and social networks.
(Food and drink not included.)
The company plans to open
as many as five new clubs
each year in major cities
around the world, and is considering a public stock offering in the U.S. as a way to
fund that expansion, said
founder and Chief Executive
Nick Jones. The company’s
The Rise of the
‘Anticlub’ Scene
The popularity of the new
breed of urban social clubs like
Soho House comes amid a decline in private club membership across the U.S. over the
past decade, as the babyboomer generation ages and
some suburban country clubs
are in decline. Membership in
private clubs overall has fallen
slightly since 2011, according to
data from consulting firm Club
Benchmarking, though membership in urban or athletic
clubs not tied to golf has
grown over the same period.
Frank Vain, president of the
McMahon Group, which consults for private clubs, said the
new generation of urban clubs
has found a way to create a
mystique around membership
without being overtly exclusive
or stuffy.
“People always want what
they can’t have, and they want
something that’s special,” said
current locations include London, New York and Istanbul,
and new sites are planned in
Amsterdam, Hong Kong and
Mumbai, among others.
“We really do feel there are
some good, long legs here,”
said Mr. Jones, who opened
the first Soho House in London in 1995.
Soho House’s core business
model isn’t new. Private social
clubs have been around for
centuries, popularized in British high society in the 19th
century and later in university
and city clubs tailored to elite
businessmen in the U.S.
Membership in Soho House
is selective. Admission requires a lengthy application
and interview process, and the
waiting list hovers around
27,000, the company said. But
unlike elite private clubs of
the past, membership isn’t
based primarily on wealth or
family status.
There’s no set formula for
new admissions. Membership
Mr. Vain. The new clubs “have
redefined special. There’s an
anticlub aspect to them that is
creating a buzz.”
The Wing, a women’s social
club and co-working space,
started in New York in 2016
and has four locations, with
plans to expand to seven new
sites around the world. Its
Dumbo site is near the soonto-open Soho House.
NeueHouse, a co-working
company founded four years
ago, is borrowing aspects of
the Soho House model at its
locations in New York and Los
Angeles. But the company is
focused on building spaces
more oriented toward work
than socializing, said Jon Goss,
the company’s chief commercial officer.
Like Soho House, NeueHouse holds events for members. About 1,600 members
pay anywhere from $150 to
several thousand dollars a
month for a space big enough
for multiple employees. NeueHouse doesn’t offer overnight
rooms.
committees for each house
meet quarterly and decide
how many new members to
admit.
Soho House has purged its
ranks when members don’t fit
the image it wants to portray.
In New York after the financial
crisis, it removed about 100
bankers from its rolls, the
company said. Membership
committee decisions are final.
Its average member is 36
years old and getting younger,
the company said, compared
with an average age of above
50 for the typical U.S. private
club, according to data from
the National Club Association.
Executives say Soho House is
tapping into a desire for flexible workplace arrangements
such as those offered by WeWork Cos.
“There’s plenty of proof
that people are less corporate,
more entrepreneurial. The 9 to
5 is disappearing,” said Mr.
Jones, who said the company’s
model provides spaces for social gatherings, meetings or
workouts throughout the day,
along with options to stay
overnight at many locations.
Soho House is majorityowned by Ron Burkle’s Yucaipa Cos., which took a 60%
stake in the company in 2012.
London fashion and restaurant
impresario Richard Caring has
a 30% stake, and Mr. Jones
owns the rest.
The company posted $371
million in operating revenue in
2016, up 21% from a year earlier, according to data provided to the U.K. government.
As it has pursued global expansion plans in recent years,
Soho House has taken on significant debt that led to ratings downgrades in 2016.
In early 2017, the company
agreed to a consolidation of
its debt with one of its bondholders, Permira Debt Managers, according to a person familiar with the matter.
“We were going down the
motorway a few years ago and
skimmed the central barrier. It
was a brief skid,” said Mr.
Jones. “We’ve been growing at
a heavy pace, which takes capital.”
On April 4, 2018, Sanofi, a French société anonyme (“Offeror”), commenced an offer to purchase up to 100%
of the issued and outstanding ordinary shares, no nominal value (“Shares”) of Ablynx NV, a Belgian naamloze
vennootschap (the “Company”) from U.S. holders (within the meaning of Rule 14d-1(d)) under the U.S. Securities
Exchange Act of 1934, as amended, and up to 100% of the Shares of the Company represented by outstanding
American Depositary Shares of the Company (each, an “ADS” and collectively, “ADSs”) issued by JPMorgan
Chase Bank, N.A., acting as depositary (the “Depositary”), pursuant to that certain Deposit Agreement, dated as of
September 5, 2014, among the Company, the Depositary and all holders from time to time of American depositary
receipts issued thereunder (as amended, the “Deposit Agreement”), from all holders, wherever located, upon the
terms and subject to the conditions set forth in the Offer to Purchase, dated April 4, 2018 (the “Offer to Purchase”),
the related Share Acceptance Form, the related ADS Letter of Transmittal and the related Share Withdrawal Form,
as applicable (which, together with the Offer to Purchase, as they may be amended or supplemented from time to
time, collectively constitute the “U.S. Offer”).
The U.S. Offer is being made pursuant to that certain Heads of Agreement Relating to a Friendly Tender Offer
for Ablynx NV, dated January 28, 2018 (as it may be amended from time to time, the “Heads of Agreement”), by and
between Offeror and the Company. Under the Heads of Agreement, Offeror agreed to commence the U.S. Offer and a
contemporaneous offer under the laws of Belgium (the “Belgian Offer” and, together with the U.S. Offer, the “Offers”)
to purchase all of the Company’s Shares, ADSs, warrants (the “Warrants”) and 3.25% Senior Unsecured Convertible
Bonds due on May 27, 2020 (the “Bonds,” and together with the Shares, ADSs and Warrants, the “Securities”). The
offer price in the Offers is €45.00 per Share and per ADS, net to the seller in cash, without interest (the “Offer
Price”). The Offer Price paid to holders of ADSs will be paid in U.S. dollars converted in the manner described
in the Offer to Purchase and will be distributed, net of expenses (including a fee related to the foreign exchange
conversion and a fee of $0.05 per ADS for the cancellation of the American depositary receipt evidencing such
tendered ADS, in each case, as contemplated by the Deposit Agreement), to such holders.
The initial acceptance period of the Offers expired at 5:00 p.m., New York City time, on May 4, 2018 (the
“Initial Expiration Date”). As of the Initial Expiration Date, a total of 71,972,994 Shares (including 7,446,312 Shares
represented by ADSs), 2,594,841 Warrants and 975 Bonds have been validly tendered into the Offers and not
withdrawn. The Shares (including Shares represented by ADSs and underlying Warrants) validly tendered into the
Offers and not withdrawn represent approximately 95.60% of the outstanding Shares on the settlement date of the Offers.
The minimum tender condition has been satisfied. All conditions to the Offers having been satisfied, Offeror
has accepted for payment all Securities validly tendered pursuant to the Offers and not validly withdrawn. The
Securities accepted for payment are expected to be settled on or about May 18, 2018.
In accordance with applicable Belgian law, Offeror has determined to commence a squeeze-out period (the
“Squeeze-Out Period”) on May 22, 2018. U.S. holders of Shares and holders of ADSs who did not previously tender
their Shares and/or ADSs into the U.S. Offer may tender their Shares and/or ADSs into the U.S. Offer during the
Squeeze-Out Period, on the terms and conditions as set forth in the Offer to Purchase, the related Share Acceptance
Form, the related ADS Letter of Transmittal and the related Share Withdrawal Form.
THE SQUEEZE-OUT PERIOD AND RELATED WITHDRAWAL RIGHTS
WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON JUNE 12, 2018.
As set forth in the Offer to Purchase, any Shares (including Shares represented by ADSs) not tendered
during the Squeeze-Out Period (including Shares and/or ADSs withdrawn and not properly re-tendered) will be
transferred to Offeror by operation of Belgian law for the Offer Price at the end of the Squeeze-Out Period. The
funds necessary to pay for the Offer Price of such untendered Shares will be deposited with the Bank for Official
Deposits (Deposito- en Consignatiekas / Caisse des dépôts et consignations) in favor of the holders of Shares who
did not previously tender into the U.S. Offer. Holders of ADSs who did not previously tender into the U.S. Offer
prior to the end of the Squeeze-Out Period will have the right to receive the Offer Price.
Upon, or as soon as possible after, completion of the Squeeze-Out Period, the Shares will be delisted from the regulated
market of Euronext Brussels by operation of Belgian law, and the Company shall cause the delisting of the ADSs from the
NASDAQ Global Select Market and the delisting of the Bonds from the open market Frankfurt MTF (Freiverkehr).
Notice of the results of the Squeeze-Out Period will be published in the U.S. via press release and an amendment
to the Tender Offer Statement on Schedule TO related to the U.S. Offer, which, when filed by the Offeror, will be
available at the Securities and Exchange Commission’s (the “SEC”) website at www.sec.gov.
Offeror has filed a Tender Offer Statement on Schedule TO with the SEC and the Company has filed a
Solicitation/Recommendation Statement on Schedule 14D-9 with the SEC. Holders of Securities are urged
to carefully review these documents and other documents filed by the Offeror and the Company, including
the Offer to Purchase, the related Share Acceptance Form, the related ADS Letter of Transmittal and the
related Share Withdrawal Form, because they contain important information. U.S. holders of Shares and
holders of ADSs should carefully read all documents in their entirety before any decision is made with respect
to the U.S. Offer. These documents are available for free at the SEC’s website at www.sec.gov. Requests for
copies of these documents may be directed to the Information Agent (as defined below) or to brokers, dealers,
commercial banks or trust companies. Such copies will be furnished promptly at Offeror’s expense.
Questions or requests for assistance may be directed to MacKenzie Partners, Inc. (the “Information Agent”) at
the address and telephone numbers set forth below.
The Information Agent for the U.S. Offer is:
1407 Broadway
New York, New York 10018
(212) 929-5500
or
Call Toll Free (800) 322-2885
Email: tenderoffer@mackenziepartners.com
May 14, 2018
.
B6 | Monday, May 14, 2018
THE WALL STREET JOURNAL.
NY
BUSINESS & FINANCE
BY CHELSEY DULANEY
AND JOSHUA ZUMBRUN
Trade friction is emerging
as the latest threat to the dollar’s position at the heart of
the global financial system.
For decades, central banks
have held the bulk of their foreign-exchange reserves in the
dollar, reflecting the dominant
role the U.S. and its currency
have played in global trade. As
the U.S. pulls back from partnerships while countries like
Mexico and Japan strike their
own trade deals, the dollar’s
dominance could be undermined, investors and analysts
said. That dominance has been
referred to as an “exorbitant
privilege,” allowing the U.S. to
borrow cheaply and run persistent deficits.
Though a less U.S.-centric
trade system would take years
to fully evolve, it would have
significant implications for
global central bankers charged
with allocating some $11 trillion in reserves. Many are now
ramping up investment in such
currencies as the euro and Chinese yuan, reflecting the effects of such moves as the U.S.
retreat from the North American Free Trade Agreement and
Trans-Pacific Partnership.
While the U.S. and Mexico
remain in negotiations over
Nafta, which could come to a
head in the coming days as
House Speaker Paul Ryan, R.,
Wis., has set a Thursday deadline to receive paperwork,
Mexico has struck major trade
deals in recent months with
the European Union and the
group of Pacific Rim nations
that make up the TPP.
Alejandro Díaz de León,
governor of Mexico’s central
bank, said that while the U.S.
remains Mexico’s most important trade partner, he expects
the euro to play a bigger role
in the country’s foreign-exchange holdings in coming
years as the balance of the na-
KKR
Continued from page B1
First Round Capital, respectively.
These loans command juicy
interest rates of 8% to 12% and
often have maturities of
around 12 months, though
many borrowers repay earlier.
A one-year U.S. Treasury, by
comparison, yields, around
2.27%.
But flip loans come with
risks. If a renovated property
doesn’t sell for a higher price
or the borrower can’t refinance, the lender may wind up
owning a house. That can happen if the housing market
sours mid-flip, if remodelers
misjudge their costs or the
tastes of potential buyers, or if
appraisals value properties too
richly at the onset.
Because home prices have
risen steadily since 2012 and
new
construction
hasn’t
flooded the market with inventory, flippers haven’t had
much trouble repaying loans
in recent years.
So far defaults have been
few. Window Rock Capital
Partners LLC, a private investment firm that focuses on
real-estate-backed credit, took
tral bankers tend to adjust reserves slowly, “the flows that
potentially come out of this
are really big.”
Few are calling for an immediate end to the dollar’s
reign as the world’s primary
reserve currency.
Central banks held about
63% of their reserves in dollars
at the end of last year, the
lowest level in four years, according to data from the International Monetary Fund.
Meanwhile, allocations to the
euro rose to 20% and reserves
held in the Japanese yen rose
to 4.9%.
“What’s sure is that over
the long term, if trade relations change, it will have an
implication on the currency
makeup of the reserves,” said
Christian Deseglise, global
head of central banks for
HSBC. “As trade becomes more
denominated in euros [and
yuan], they’ll need to have currencies to match.”
Central banks have long
been encouraged to hold
enough foreign currency in reserve to cover a few months of
imports, and often debt obligations, in case money stopped
flowing into the country.
Changes to the currencies
those imports are denominated in would encourage reserve managers to reshuffle
their allocations, while analysts say a recent uptick in
debt issued in currencies such
as the euro could amplify the
need for more diversified reserves.
That comes as investors
worry that the global economy
has become too closely tied to
the U.S. economy and its currency. Roughly 40% of all
global trade is invoiced in dollars, according to a 2015 paper
from Harvard University economist Gita Gopinath, and many
countries have borrowed heavily in the currency in recent
years.
The risks of the dollar’s
dominance have come into focus in recent weeks as a modest dollar rally raised concerns
about the ability of some
emerging-market nations to
service their dollar debt and
pay for imports. Argentina,
whose currency has fallen to
record lows against the dollar,
is seeking a credit line from
the International Monetary
Fund to help stabilize its economy.
While the dollar’s biggest
competitors remain plagued by
economic and structural questions—including the long-term
viability of the euro system
and the economic risks of
China’s debt-fueled growth
and aging society—analysts
believe both the euro and yuan
could benefit from recent
shifts in global trade.
meet the demands of a huge
generation starting families
and buyers whose credit has
Many homes bought to be
renovated and promptly resold, or recently recovered from the
flipped, are paid for with all cash. foreclosure crisis. They also
reason that there are plenty of
Amount spent on U.S. flip homes house hunters who would
Financed purchases
Rest
struggle to get a loan to remodel or repair an older home
$80 billion
on top of a mortgage.
70
The wager by KKR and
other big investors also de60
pends on the continued demo50
graphic shift to big cities,
where houses tend to be older
40
and more in need of upgrades
30
than those in suburbs and
swathes of the Sun Belt.
20
In 2017, Memphis, Tenn.,
10
was the U.S. city with the
highest proportion of sales in0
volving a flipped house at
2000 ’02 ’04 ’06 ’08 ’10 ’12 ’14 ’16
12.8%, compared with a naSource: ATTOM Data Solutions
tional average of about 6%, acTHE WALL STREET JOURNAL.
cording to ATTOM Data Solutions. Flipping activity also
possession of only four prop- peaked last year in Cleveland,
erties and has yet to record three Wisconsin cities and
any losses on roughly 200 flip along the Interstate 35 corriloans that it has bought, said dor in Texas, according to ATJeffrey Pettiford, head of busi- TOM.
ness development.
In the years leading up to
But today’s crop of loans 2007’s crash, speculators
has yet to be tested in a down flipped droves of homes. They
market.
often took on second and third
Wall Street firms are bet- mortgages to buy them while
ting that home prices can keep doing little more than poundclimbing. They reason that ing for-sale signs into the
home construction alone won’t lawns. That strategy backfired
spectacularly when home
prices crashed and over-extended flippers couldn’t sell
them.
Following the meltdown,
big investors gobbled up nonperforming loans and foreclosed homes. Some of the
houses were spruced up and
sold while others were turned
into rentals. In recent years,
flippers have shifted from
homes in financial distress to
those suffering physical deterioration.
Renovations can be as simple as replacing worn flooring
or as involved as adding entire
new floors, from replacing
outdated kitchens in suburban
homes to gutting inner-city
brownstones and converting
them into small apartment
buildings.
Historically fix-and-flip jobs
have been funded by regional
investors, known as “hard
money lenders.” Toorak Chief
Executive John Beacham said
that left open an opportunity
to institutionalize the business.
He took a similar approach to
the rental-home business as a
senior banker at Deutsche
Bank AG’s commercial real-estate lending business.
“The market has been local
lenders, usually not banks,
lending inefficiently,” he said.
Trade Blocks
As the U.S.’s trade rhetoric has intensified, other countries
have worked to build alternative trade relationships.
Trans-Pacific Partnership
• Size of economies:
$9.9 trillion
• Signed March 2018
Canada
EU-Japan Economic
Partnership Agreement
• Size of economies:
$21.9 trillion
• Negotiations finalized
December 2017
Japan
Vietnam
EU-Canada
Comprehenesive
Economic and
Trade Agreement
• Size of economies:
$18.5 trillion
• Provisionally in force
September 2017
Brunei
Malaysia Singapore
United
States
European
Union*
New
Australia Zealand
GDP, 2018
$10 trillion
5
EU-Mexico Global
Agreement
Mexico
1
Peru Chile
Sources: IMF (GDP); staff reports
*Excludes the U.K.
tion’s bilateral trade shifts in
that direction.
“It is Mexico’s conviction to
be a very open economy, open
to trade and financial flows,”
Mr. Díaz de León said. Trade
deals with Europe “will definitely at the margin continue
to diversify our external accounts and increase the relevance of the euro.”
Jens Nordvig, chief executive of analytics firm Exante
Data, estimates global central
banks could shift $200 billion
to $300 billion in reserves into
the yuan, euro and a handful
of other foreign currencies this
year as a result of trade
changes. His estimate is based
on central banks’ increased
buying of Chinese bonds in the
first few months this year.
While he cautions that cen-
Sweat Equity
• Size of economies:
$17.9 trillion
• Agreement in
principle April 2018
THE WALL STREET JOURNAL.
In China, P.F. Chang’s
Serves Up Chinese
Food American-Style
BY WAYNE MA
AND LIZA LIN
SHANGHAI—P.F. Chang’s
may be seen as an upscale
Chinese-food restaurant in
the U.S. But the chain is calling its debut location in
China “an American bistro”—
which is exactly how its early
customers there see it.
“The food looks similar,
but you eat the food and you
know instantly it’s not Chinese,” said Zhang Ji, 35 years
old, who works in finance.
The restaurant had a soft
opening last month in a highrise shopping mall in a tourist area here. On a recent
Saturday night, fewer than
half the tables were occupied,
and no one was mistaking the
Mongolian Beef or Dynamite
Shrimp for the Real McCoy.
Animation designer Zhang
Xue said she came because
P.F. Chang’s got a shoutout on
“The Big Bang Theory,” the
U.S. sit-com popular in China.
“In U.S. films and TV
shows, everyone is eating
American Chinese takeout,”
she said. “They eat noodles
out of these paper cartons,
slurp the noodles down with
chopsticks, and look like they
are enjoying themselves very
much…it made me wonder
what Chinese American food
was like.”
After sampling the food,
Ms. Zhang’s curiosity was
sated.
“I don’t think this is Chinese food,” she said. “I think
it’s what Americans think
Chinese food should taste
like.”
Executives at P.F. Chang’s
China Bistro headquarters in
Scottsdale, Ariz., aren’t arguing—which is why they came
up with the idea to call the
restaurant, the first of several they are planning here,
an American bistro.
“We did focus groups, and
what we learned was, don’t
pretend to be something
you’re not,” said Kristen
Briede, head of the restaurant’s international business.
With a rising affluent middle class, China has plenty of
people able to pay for pricey,
protein-rich dishes, said P.F.
Chang’s Chief Executive Michael Osanloo.
“We’re taking advantage of
the law of large numbers,” he
said. “I don’t need adoption
by 10% of China’s consumers;
I just need 2% to like my
food.”
Although the restaurant
wasn’t busy on a recent visit,
traffic might pick up after
the grand opening on May 17.
Like many upscale restaurants in China, the restaurant
is in a shopping mall. There
is a prominent white P.F.
Chang’s sign on the 8th-floor
entrance, but the company
wasn’t able to secure permission for the terra cotta horse
that is a fixture at its U.S.
outlets.
Inside, the décor looks like
a mix of old Shanghai meets
American diner, with booths
and tables. A large mural of a
Chinese woman wearing a
traditional cheongsam smiles
down on customers.
P.F. Chang’s created 10 new
dishes for Shanghai customers, including Dusk ’Til Dawn
Honey Chicken and Scallion
Pancake, an Asian take on
chicken and waffles that puts
crispy chicken on top of a
buttermilk pancake. The Duck
Spring Roll features mozzarella, something a Chinese
chef might consider sacri-
‘I think it’s what
Americans think
Chinese food should
taste like.’
lege.
Prices are on par with the
U.S., although portion sizes
are smaller, so Chinese customers can order more dishes
and share them. Diners bring
home leftovers in white takeout boxes, which aren’t a
thing in China.
Jennifer 8 Lee, an author
and producer of “The Search
for General Tso,” a documentary about Chinese-American
food, thinks the big question
is P.F. Chang’s staying power
in China.
“Chinese people might try
it for the novelty, but I don’t
know if they would embrace
it,” she said. “Sweet, fried
and chicken. Those are things
that Americans love.”
Industry professionals say
P.F. Chang’s American bistro
might appeal to Chinese people who have sampled its fare
overseas, including the hundreds of thousands of those
who return each year after
studying abroad.
DAVE TACON FOR THE WALL STREET JOURNAL
Dollar Reign Faces Threat
Diners in Shanghai at the first China outlet of P.F. Chang’s
Discover what the world of mining can do for the world of the people.
.
THE WALL STREET JOURNAL.
Monday, May 14, 2018 | B7
MARKETS DIGEST
Dow Jones Industrial Average
New to the Market
S&P 500 Index
Last Year ago
24831.17 s 568.66, or 2.34% last week Trailing P/E ratio 24.44
P/E estimate *
16.41
High, low, open and close for each of
Dividend yield
2.14
the past 52 weeks
2727.72 s 64.30, or 2.41% last week
High, low, open and close for each of
the past 52 weeks
20.38
17.72
2.35
All-time high 26616.71, 01/26/18
Current divisor 0.14523396877348
Last
Trailing P/E ratio * 24.28 23.83
P/E estimate *
17.05 18.45
Dividend yield
1.91
1.97
All-time high 2872.87, 01/26/18
26400
2900
Week's high
t
DOWN
Monday's open
t
Friday's close
Year ago
65-day moving average
UP
Friday's close
Monday's open
Public Offerings of Stock
IPOs in the U.S. Market
Initial public offerings of stock expected this week; might include some
offerings, U.S. and foreign, open to institutional investors only via the
Rule 144a market; deal amounts are for the U.S. market only
Expected
pricing date Filed
Symbol/
Pricing
primary Shares Range($)
exchange (mil.) Low/High
Issuer/business
Bookrunner(s)
25200
2800
24000
2700
22800
2600
Lockup Expirations
21600
2500
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.
20400
2400
5/16
4/16
Pluralsight
Develops a cloud-based
technology learning
platform.
20.7
PS
Nq
10.00/ MS, JPM,
12.00 Barclays, BofA ML
Week's low
65-day moving average
200-day moving average
200-day moving average
19200
2300
Lockup
expiration Issue date
J
J
A
S
O
N
D
J
F
M
A M
t
Primary
market
NYSE weekly volume, in billions of shares
M
t
M
2200
Composite
J
J
A
S
O
N
D
J
F
M
J
A
S
O
N
D
J
F
M
A M
Pimco reported net outflows of $21.7 billion for the first
three months of year after earlier management reshuffle
resulted in departure of CEO Mohamed El-Erian.
A M
*Weekly P/E data based on as-reported earnings from Birinyi Associates Inc.
Major U.S. Stock-Market Indexes
High
% chg
52-Week
Close (l)
Low
Dow Jones
Industrial Average 24868.65 24198.34 24831.17
Transportation Avg 10751.39 10329.38 10713.57
Utility Average
705.71 676.25
689.49
Total Stock Market 28370.35 27610.68 28312.79
731.86
Barron's 400
734.34 714.45
568.66
343.34
-14.89
667.63
17.41
2.34 20606.93
3.31 8783.74
647.90
2.42 24391.29
2.44
624.99
-2.11
l
l
l
l
l
26616.71
11373.38
774.47
29630.47
757.37
18.8
19.0
-1.5
14.4
14.9
0.5
1.0
-4.7
2.3
2.9
11.1
7.0
5.9
8.8
8.6
7588.32
7131.12
20.9
22.3
7.2
8.7
14.0
16.1
last week
7417.67 7224.70
6969.30 6770.30
7402.88
6952.56
193.27
183.45
2.68
2.71
64.30
41.64
27.95
2.41
2.19
2.91
l
6011.24
5580.55
l
7450
7300
7150
S&P
2732.86 2655.20
1945.07 1901.77
989.79 961.16
500 Index
MidCap 400
SmallCap 600
2727.72
1939.09
986.87
l
2357.03
1691.67
817.25
l
2872.87
1995.23
l
986.87
2.0
2.0
5.4
14.1
12.8
17.7
1565.73 1606.79
12458.25 12761.82
551.97
562.65
4483.12 4663.80
514.23
532.12
106.19
110.83
81.08
83.86
153.90
161.66
1301.87 1350.46
12.65
12.65
41.19
268.47
10.68
180.69
13.55
4.33
1.46
5.75
53.73
-2.12
2.63
2.15
1.93
4.03
2.61
4.06
1.77
3.69
4.14
-14.35
l
1355.89
11423.53
503.24
3507.64
514.66
88.87
76.42
117.79
1020.51
9.14
Nasdaq PHLX
1610.71
13637.02
l
589.69
l
4939.86
l
593.12
l
116.52
l
93.26
l
165.78
l
1445.9
l
37.32
l
s 667.63, or 2.42%
Region/Country Index
Close
DJ Americas
Sao Paulo Bovespa
S&P/TSX Comp
S&P/BMV IPC
Santiago IPSA
Latest Week
% chg
52-Week Range
Close
Low
3108.41
402.22
267.71
2.17
2.02
1.65
2722.96
352.67
237.56
653.98
85220.24
15983.32
46728.92
4252.10
2.34
2.53
1.61
567.12
60761.74
14951.88
45826.64
3593.92
The Global Dow
DJ Global Index
DJ Global ex U.S.
–0.56
1.13
Stoxx Europe 600
Stoxx Europe 50
Eurozone
Euro Stoxx
Euro Stoxx 50
Austria
ATX
Belgium
Bel-20
France
CAC 40
Germany
DAX
Greece
Athex Composite
Israel
Tel Aviv
Italy
FTSE MIB
Netherlands AEX
Portugal
PSI 20
Russia
RTS Index
South Africa FTSE/JSE All-Share
Spain
IBEX 35
Sweden
OMX Stockholm
Switzerland Swiss Market
U.K.
FTSE 100
392.40
3132.46
395.56
3565.52
3522.17
3884.40
5541.94
13001.24
822.37
1472.19
24159.34
562.27
5613.82
1193.98
58422.86
10271.40
585.83
8993.51
7724.55
363.18
2894.75
366.11
3278.72
3058.09
3793.62
–0.26
5031.92
0.47
11787.26
1.42
701.36
–0.18
1363.50
0.22
20584
–0.72
507.15
1.18
5073.89
2.30
973.33
4.13
50831.89
1.34
9381.0
1.66
545.83
1.38
8509.29
1.01
6888.69
2.08
Asia-Pacific
Australia
China
Hong Kong
India
Japan
Malaysia
Singapore
South Korea
Taiwan
6116.20
3163.26
31122.06
35535.79
22758.48
1846.51
3570.17
2477.71
10858.98
5651.8
0.88
3061.95
2.34
3.99 25136.52
30188.15
1.78
19274.82
1.27
1713.13
0.25
3201.77
0.70
2286.02
0.66
9947.62
3.13
EMEA
S&P/ASX 200
Shanghai Composite
Hang Seng
S&P BSE Sensex
Nikkei Stock Avg
FTSE Bursa Malaysia KLCI
Straits Times
Kospi
TAIEX
•
•
•
•
•
1.39
1.15
0.72
0.42
2.01
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
High
YTD
% chg
3323.74
425.41
285.34
0.7
1.3
0.4
687.75
87652.64
16412.94
51713.38
4442.56
1.8
11.5
–1.4
–5.3
1.0
402.81
3276.11
404.86
3697.40
3688.78
4176.88
5545.95
13559.60
886.54
1554.30
24544
570.82
5791.88
1324.62
61684.77
10982.4
600.20
9611.61
7778.64
0.8
–1.4
2.6
1.8
3.0
–2.3
4.3
0.6
2.5
–2.5
10.6
3.2
4.2
3.4
–1.8
2.3
3.0
–4.1
0.5
6135.8
3559.47
33154.12
36283.25
24124.15
1895.18
3615.28
2598.19
11253.11
0.8
–4.4
4.0
4.3
–0.0
2.8
4.9
0.4
2.0
Source: SIX Financial Information;WSJ Market Data Group
Consumer Rates and Returns to Investor
Selected rates
A consumer rate against its
benchmark over the past year
New car loan
27950
Sunshine Savings Bank
Tallahassee, FL
2.49%
850-219-7200
3.50
Think Mutual Bank
Rochester, NY
2.49%
800-288-3425
3.00
Cambridge Savings Bank
2.69%
Cambridge, MA
888-418-5626
4.00
New car loan
t
2.50
J J A S O ND J FMAM
2017
2018
Farmers State Bank
Waterloo, IA
Yield/Rate (%)
Last (l)Week ago
Federal-funds rate target
1.50-1.75 1.50-1.75
Prime rate*
4.75
4.75
Libor, 3-month
2.37
2.34
Money market, annual yield
0.41
0.45
Five-year CD, annual yield
1.68
1.69
30-year mortgage, fixed†
4.55
4.56
15-year mortgage, fixed†
4.01
4.03
Jumbo mortgages, $424,100-plus† 4.83
4.82
Five-year adj mortgage (ARM)† 4.54
4.58
New-car loan, 48-month
4.25
4.26
2.90%
877-FSB-1879
4 7 8 9 10 11
May
3-yr chg
52-Week Range (%)
Low 0 2 4 6 8 High (pct pts)
0.75 l
l
4.00
l
1.17
0.25 l
l
1.31
l
3.73
l
2.99
l
4.21
l
3.22
l
2.85
1.50
4.75
2.37
0.45
1.69
4.63
4.11
4.96
4.70
4.27
DJ Commodity
TR/CC CRB Index
Close
Net chg
655.84
203.56
1.67
0.30
%Chg
YTD
% chg
0.25
0.15
4.87
5.00
70.70
0.98
1.41 17.01
0.095
3.50 -4.98
1.50
1.50
2.07
0.10
0.22
0.63
0.90
0.55
1.27
1.34
Bankrate.com rates based on survey of over 4,800 online banks. *Base rate posted by 70% of the nation's largest
banks.† Excludes closing costs.
Sources: SIX Financial Information; WSJ Market Data Group; Bankrate.com
276.0
93.9
180 days
Nov. 16, ’17 scPharmaceuticals
SCPH
14.00
102.1
0.5
180 days
Nov. 16, ’17 Sterling Bancorp
SBT
12.00
207.0
13.8
180 days
Nov. 16, ’17 Stitch Fix
SFIX
15.00
137.6
54.1
180 days
BXG
14.00
104.6
44.9
180 days
% Chg From
Friday3s Offer 1st-day
close ($) price close
HUYA
HUYA May 11/$12.00
16.06
33.8
...
Carbon Black
CBLK May 4/$19.00
23.44
23.4
–2.1
AXA Equitable Hldgs
EQH May 10/$20.00
21.39
7.0
5.2
Construction Ptnrs
ROAD May 4/$12.00
12.03
0.2
–0.6
Evelo Biosciences
EVLO May 9/$16.00
16.00
...
–1.5
Spirit of Texas Bancshares 21.38
STXB May 4/$21.00
1.8
–2.2
Origin Bancorp
OBNK May 9/$34.00
37.16
9.3
–0.9
Inspire Med Sys
INSP May 3/$16.00
26.74
67.1
7.0
ASLAN Pharmaceuticals 6.50
ASLN May 4/$7.03
–7.5
15.9
Unity Biotechnology
UBX May 3/$17.00
15.49
–8.9
–7.0
Primary Amount
exchange ($mil.)
Expected Issuer/Business
May 14
Friday’s
price ($) Bookrunner(s)
Evofem Biosciences
Healthcare
EVFM
Nq
35.7
6.40
RBC Cptl Mkts,
Cantor Fitzgerald & Co
Nemaura Medical
Healthcare
NMRD
Nq
n.a.
3.10
Roth Cptl Ptnrs
Taiwan Liposome
Healthcare
TLC
Nq
35.0
n.a.
Cantor Fitzgerald & Co
“Shelf registrations” allow a company to prepare a stock or bond for
sale, without selling the whole issue at once. Corporations sell as
conditions become favorable. Here are the shelf sales, or takedowns,
over the last week:
Issuer/Industry
Takedown date/ Deal value Registration
Registration date ($ mil.)
(mil.)
Inuvo
Computers & Electronics
May 11
Sept. 1,317
$2.0
$15.0
0.48
0.97
0.47
Public and Private Borrowing
0.07
0.08
0.29
Euro, per dollar
0.8374 0.0015
0.18
0.51
Treasurys
Yen, per dollar
U.K. pound, in dollars
109.39
0.25 -2.94
92.56
WSJ Dollar Index
86.23
6.30
0.27
1.35 0.0010
0.07
0.21
52-Week
Low Close(l) High
% Chg
DJ Commodity
532.01
l
659.25 17.62
TR/CC CRB Index
166.50
l
204.52 12.04
Crude oil, $ per barrel 42.53
l
71.36 47.78
Natural gas, $/MMBtu
Gold, $ per troy oz.
2.55
3.63 -18.05
l
l
1208.60
U.S. Dollar Index
88.59
WSJ Dollar Index
82.70
Euro, per dollar
0.80
Yen, per dollar
1362.40
7.57
l
99.19 -6.68
l
90.14 -4.34
0.91 -8.46
l
104.73
l
1.26
l
U.K. pound, in dollars
1.43
5.08
Plus, get deeper money-flows data and
email delivery of key stock-market
data.
All are available free at
WSJMarkets.com
Friday
t
One year ago
10
5
1.50
0
0.75
–5
0.00
–10
30
Yen
WSJ Dollar index
2017
Sale
Final
maturity Issuer
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
2.971
3.886
3.330
5.983
3.470
2.542
6.421
34
297
20
5
289
Total
($mil.)
May 15 May 1, 2038 Boston City-
Rating
Bookrunner/
Fitch Moody’s S&P Bond Counsel(s)
150.0 N.R.
N.R.
May 15 prelim.
250.0 N.R.
NYC Transitional
N.R.
N.R. Preliminary/Norton
Rose Fulbright
Finance Auth.
May 15 prelim.
N.R. Preliminary/
Locke Lord LLP
Massachusetts
850.0 N.R.
NYC Transitional
N.R.
N.R. Preliminary/Norton
Rose Fulbright
Finance Auth.
May 15 March1,2039 Pennsylvania
1,247.0 N.R.
N.R.
N.R. Preliminary/Ballard
Spahr LLP/Turner
Law PC
May 18 prelim.
Grand Parkway
1,521.9 N.R.
N.R.
N.R. Goldman & Co
150.0 N.R.
N.R.
N.R. BoA Merrill
Transport
Northampton Gen
Closed-End Funds | WSJ.com/funds
Listed are the 300 largest closed-end funds as
measured by assets. Closed-end funds sell a limited
number of shares and invest the proceeds in securities.
Unlike open-end funds, closed-ends generally do not
buy their shares back from investors who wish to cash
in their holdings. Instead, fund shares trade on a stock
exchange. NA signifies that the information is not
available or not applicable. NS signifies fund not in
existence of entire period. 12 month yield is computed
by dividing income dividends paid (during the previous
twelve months for periods ending at month-end or
during the previous fifty-two weeks for periods ending
at any time other than month-end) by the latest
month-end market price adjusted for capital gains
distributions.
Source: Lipper
Friday, May 11, 2018
Fund (SYM)
Corporate Borrowing Rates and Yields
n.a.
312
n.a.
16
347
Deals of $ 150 million or more expected this week
2018
Sources: Ryan ALM; Tullett Prebon; WSJ Market Data Group
2.946
3.902
3.310
6.044
3.440
2.578
6.465
Public and Municipal Finance
Source:Thomson Reuters/Ipreo
Euro
Bond total return index
Tuesday, April 15
Auction of 4 week bill;
announced on May 14, settles on May 17
Purpose Auth
15%
2.25
Bookrunner(s)
Roth Cptl Ptnrs
Thursday, April 17
Auction of 10-year TIPS;
announced on May 10, settles on May 31
May 18 prelim.
Yen, euro vs. dollar; dollar vs.
major U.S. trading partners
3.00
Monday, April 7
Auction of 13 and 26 week bills;
announced on May 10, settles on May 17
114.17 -3.50
Real-time U.S. stock
quotes are available on
WSJ.com. Track mostactive stocks, new
highs/lows, mutual
funds and ETFs.
WSJ
.COM
% Chg From
Friday3s Offer 1st-day
close ($) price close
Company SYMBOL
IPO date/Offer price
-0.01 -0.01
U.S. Dollar Index
3.75%
1 2 3 5 710
years
maturity
12.00
Off the Shelf
Natural gas, $/MMBtu 2.806
Gold, $ per troy oz.
1319.00
Crude oil, $ per barrel
Yield to maturity of current bills,
notes and bonds
1
3 6
month(s)
180 days
Nov. 16, ’17 SailPoint Technologies Holdings SAIL
Sources: Dealogic; WSJ Market Data Group
27050
s
2.37%
407-422-7129
...
May 16 Nov. 17, ’17 Bluegreen Vacations
27500
s
TrustCo Bank
Orlando, FL
4.50%
t
300.0
Symbol/
28400
s
Prime rate
10.00
Other Stock Offerings
Benchmark Yields and Rates
Treasury yield curve Forex Race
4.26%
Bankrate.com avg†:
LGC.U
Secondaries and follow-ons expected this week in the U.S. market
Commodities and
Currencies
Last Week
t
U.S. consumer rates
Interest rate
9.1
4.6
3.2
5.3
-3.1
13.8
4.8
-9.6
24.4
-3.0
Sources: SIX Financial Information; WSJ Market Data Group
International Stock Indexes
Americas
Brazil
Canada
Mexico
Chile
4.6
-0.4
0.1
10.5
-2.4
3.9
-1.7
8.1
7.8
14.6
16.2
10.5
8.5
28.8
2.3
21.2
-1.3
9.6
29.2
21.6
180 days
Nov. 16, ’17 Legacy Acquisition
Sources: WSJ Market Data Group; FactSet Research Systems
last week
Russell 2000
1609.45
NYSE Composite
12788.75
Value Line
564.15
NYSE Arca Biotech 4673.68
NYSE Arca Pharma
532.99
KBW Bank
111.42
PHLX§ Gold/Silver
84.54
PHLX§ Oil Service
165.24
PHLX§ Semiconductor 1363.04
CBOE Volatility
15.56
180 days
–26.9
DJ US TSM
Other Indexes
World
7000
4 7 8 9 10 11
May
9.0
8.5
11.5
113.8
180.0
Company SYMBOL
IPO date/Offer price
Nasdaq Stock Market
Nasdaq Composite
Nasdaq 100
46.0
8.00
Performance of IPOs, most-recent listed first
s 193.27, or 2.68%
% chg
YTD 3-yr. ann.
% chg
High
10.00
JT
IPO Scorecard
Nasdaq Composite
Latest Week
Close
Net chg
Low
May 15
Financial Flashback
The Wall Street Journal, Monday, May 14, 2014
30
20
10
0
M
J
ASNS
Nov. 15, ’17 Jianpu Technology
May 14 Nov. 15, ’17 Arsanis
Bars measure the point change from Monday's open
18000
Offer Offer amt Through Lockup
Symbol price($) ($ mil.) Friday (%) provision
Issuer
44
376
34
18
362
Total Return
52-wk
3-yr
-3.39 -0.14
0.11 2.69
-0.02 1.36
2.548 3.352
-0.01 1.09
1.333 2.210
-0.774 4.050
Sources: J.P. Morgan; Ryan ALM; S&P Dow Jones Indices; Barclays Capital; Merrill Lynch
Prem
NAV Close /Disc
52 wk
Ttl
Ret
General Equity Funds
Adams Divers Equity Fd ADX 17.54 14.99 -14.5
Boulder Growth & Income BIF NA 10.80 NA
Central Securities CET 32.89 27.03 -17.8
CohSteer Opprtnty Fd FOF 13.45 12.58 -6.5
Cornerstone Strategic CLM 12.74 15.83 +24.3
Cornerstone TR Fd CRF 12.38 15.80 +27.6
EtnVnc TaxAdvDiv EVT 22.79 22.21 -2.5
Gabelli Dividend & Incm GDV 23.80 21.97 -7.7
Gabelli Equity Trust GAB 6.22 6.10 -1.9
Genl American Investors GAM 40.04 33.74 -15.7
Guggenheim Enh Fd GPM 8.55 8.37 -2.1
HnckJohn TxAdv HTD 24.31 22.60 -7.0
Liberty All-Star Equity USA 6.65 6.20 -6.8
Royce Micro-Cap RMT 10.63 9.67 -9.0
Royce Value Trust RVT 17.21 15.95 -7.3
Source Capital SOR 44.20 39.78 -10.0
15.7
18.5
13.6
4.6
16.7
16.5
9.4
8.3
10.5
9.1
13.0
-3.7
24.0
18.9
15.9
6.7
Fund (SYM)
Prem
NAV Close /Disc
52 wk
Ttl
Ret
Tri-Continental TY
29.80 26.64 -10.6
Specialized Equity Funds
Adams Natural Rscs Fd PEO 23.39 19.61 -16.2
AllnzGI NFJ Div Interest NFJ 14.44 12.73 -11.8
AlpnGlblPrProp AWP 7.07 6.43 -9.1
BlkRk Enh Cap Inco CII 16.64 15.93 -4.3
BlkRk Engy Res Tr BGR 15.72 14.63 -6.9
BlackRock Enh Eq Div Tr BDJ 9.52 8.96 -5.9
BlackRock Enh Gl Div Tr BOE 12.03 11.30 -6.1
BlkRk Intl Grwth&Inco BGY 6.52 6.01 -7.8
BlkRk Health Sci BME 35.06 34.89 -0.5
BlackRck Rscs Comm Str Tr BCX 10.26 9.58 -6.7
BlackRock Science & Tech BST 29.70 31.50 +6.1
BlackRock Utilities Infr BUI 20.56 20.02 -2.6
CBREClarionGlblRlEstIncm IGR 8.47 7.41 -12.5
Sprott Physical Gold CEF NA 13.27 NA
ClearBridge Amer Engy CBA NA 7.25 NA
ClearBridge Engy MLP Fd CEM NA 13.74 NA
Clearbridge Engy MLP Opp EMO NA 11.00 NA
Clearbridge Engy MLP TR CTR NA 10.69 NA
Cohen & Steers Infr Fd UTF 24.26 22.17 -8.6
C&S MLP Incm & Engy Opp MIE 10.23 9.82 -4.0
Cohen & Steers Qual Inc RQI 12.28 11.49 -6.4
CohnStrsPfdInco RNP 21.11 18.51 -12.3
Cohen & Steers TR RFI 12.38 12.28 -0.8
CLSeligmn Prem Tech Gr Fd STK 21.18 21.86 +3.2
Duff & Phelps DNP
9.08 10.98 +20.9
Duff&PhelpsGblUtilIncFd DPG 16.26 14.30 -12.1
16.7
8.8
5.0
18.8
14.1
15.0
9.3
2.8
5.3
5.4
23.5
51.6
4.0
5.3
9.0
-15.7
-8.7
-7.2
-11.9
4.8
-3.8
-2.6
-0.4
5.6
7.7
8.6
-6.3
Continued on Page B8
.
THE WALL STREET JOURNAL.
B8 | Monday, May 14, 2018
CLOSED-END FUNDS
wsj.com/funds
Continued From Page B7
52 wk
Prem Ttl
NAV Close /Disc Ret
Fund (SYM)
Eaton Vance Eqty Inco Fd EOI 14.87 15.19 +2.2
Eaton Vance Eqty Inco II EOS 16.24 16.59 +2.2
EtnVncRskMngd ETJ 9.66 9.21 -4.7
Etn Vnc Tax Mgd Buy-Write ETB 15.60 15.80 +1.3
Eaton Vance BuyWrite Opp ETV 14.72 14.95 +1.6
Eaton Vance Tax-Mng Div ETY 12.04 12.10 +0.5
EatonVanceTax-MngdOpp ETW 11.25 11.60 +3.1
EtnVncTxMngGlDvEqInc EXG 9.23 9.24 +0.1
Fiduciary/Clymr Opp Fd FMO 11.71 11.60 -0.9
FT Energy Inc & Growth Fd FEN 21.75 22.46 +3.3
FstTrEnhEqtIncFd FFA 16.07 14.98 -6.8
First Tr Engy Infr Fd FIF 16.39 15.79 -3.7
First Tr MLP & Engy Incm FEI 12.64 12.56 -0.6
Gabelli Hlthcr & Well GRX 11.26 9.51 -15.5
Gabelli Utility Tr GUT 5.02 6.01 +19.7
GAMCOGlblGoldNatRscs&Inc GGN 5.20 5.07 -2.5
GoldmanSachsMLPIncOpp GMZ 8.96 8.71 -2.8
Goldman Sachs MLP Energy GER 6.11 6.11 -0.1
John Hancock Finl Opps Fd BTO 38.05 39.04 +2.6
Macquarie Glbl Infrstrctr MGU 26.25 22.83 -13.0
NeubergerBermanMLPIncm NML 9.10 8.61 -5.4
Neubrgr Brm Rl Est Sec Fd NRO 5.04 4.82 -4.4
Nuveen Dow 30 Dynamic DIAX 18.36 18.75 +2.1
Nuveen Core Eq Alpha JCE 14.78 14.53 -1.7
Nuveen Diversified Div JDD 12.04 12.19 +1.3
Nuveen Engy MLP Fd JMF 10.58 10.29 -2.7
NuvNASDAQ100DynOver QQQX 23.12 25.83 +11.7
Nuveen Real Est Incm Fd JRS 10.25 9.83 -4.1
Nuveen Real Asset Income JRI 18.59 16.47 -11.4
NuvS&P500DynOverwrite SPXX NA 18.51 NA
NuveenS&P500Buy-Write BXMX 13.81 14.07 +1.9
Reaves Utility Fund UTG 30.77 28.32 -8.0
21.7
24.0
9.5
3.5
5.2
17.1
12.3
13.9
-12.9
-8.0
9.4
-8.6
-12.6
-3.1
-0.1
5.5
-7.2
-14.3
15.6
2.4
-4.9
1.9
24.1
19.9
11.7
-12.5
28.9
-4.4
1.9
28.4
8.1
-12.4
Prem
NAV Close /Disc
Fund (SYM)
52 wk
Ttl
Ret
Tekla Hlthcr Investors HQH 22.54 20.72 -8.1
Tekla Healthcare Opps Fd THQ 18.19 16.39 -9.9
Tekla Life Sciences HQL 19.10 18.29 -4.2
Tekla World Hlthcr Fd THW 13.84 12.79 -7.6
Tortoise Energy TYG 25.45 28.04 +10.2
Tortoise MLP Fund NTG 16.25 17.86 +9.9
Voya Gl Equity Div IGD 7.76 7.23 -6.8
Income & Preferred Stock Funds
Calamos Strat Fd CSQ 12.74 11.95 -6.2
Cohen & Steers Dur Pfd LDP 26.21 25.90 -1.2
Cohen & Strs Sel Prf Inco PSF 26.48 25.78 -2.6
FT Interm Duration Pfd FPF 23.80 22.12 -7.1
Flaherty & Crumrine Dyn DFP 24.96 23.70 -5.0
Flaherty & Crumrine Pfd FFC 19.51 18.83 -3.5
John Hancock Pfd Income HPI 20.82 20.73 -0.4
John Hancock Pfd II HPF 20.53 20.17 -1.8
John Hancock Pfd Inc III HPS 18.34 17.95 -2.1
JHancock Pr Div PDT 14.62 15.43 +5.5
LMP Cap & Inco Fd SCD 14.09 12.79 -9.2
Nuveen Pfd & Incm Opps Fd JPC 10.27 9.93 -3.3
Nuveen Pfd & Incm Secs Fd JPS 9.90 9.43 -4.7
Nuveen Preferred & Incm JPI 24.76 24.03 -2.9
Nuv Tax-Adv Div Gr JTD 17.30 16.71 -3.4
TCW Strategic Income Fund TSI NA 5.40 NA
Virtus Global Dividend ZTR 11.14 11.05 -0.8
Convertible Sec's. Funds
AdvntClymrFd AVK 16.91 15.24 -9.9
AllianzGI Conv & Incm NCV 6.29 6.85 +8.9
AllianzGI Conv & Incm II NCZ 5.65 5.99 +6.0
AllianzGI Equity & Conv NIE 23.38 21.21 -9.3
Calamos Conv Hi Inco Fd CHY 11.63 12.19 +4.8
Calamos CHI
11.04 11.46 +3.8
World Equity Funds
Alpine Tot Dyn Div AOD 10.07 9.03 -10.3
Prem
NAV Close /Disc
Fund (SYM)
-10.0
1.2
-2.0
-2.7
-8.3
-2.2
7.3
52 wk
Ttl
Ret
Calamos Glbl Dyn Inc CHW 9.02 9.30 +3.1 24.8
Cdn Genl Inv CGI
34.20 23.50 -31.3 14.3
China Fund CHN
23.73 21.23 -10.6 24.7
Clough Global Opp Fd GLO 11.86 10.82 -8.8 13.6
EtnVncTxAdvGblDiv ETG 18.16 16.84 -7.3 6.4
EatonVance TxAdv Opport ETO 24.24 25.66 +5.9 16.5
First Trust Dynamic Eur FDEU 18.82 17.50 -7.0 3.4
Gabelli Glbl Multimedia GGT 8.81 9.33 +5.9 21.0
GDL Fund GDL
11.17 9.35 -16.3 -1.4
India Fund IFN
28.64 25.01 -12.7 9.4
Japan Sml Cap JOF 13.99 12.42 -11.2 29.7
Korea Fund KF
46.08 41.51 -9.9 16.5
Mexico Fund MXF
17.87 15.62 -12.6 -2.6
Morgan-Stanley Asia-Pac APF 20.60 17.71 -14.0 12.9
MS China a Shr Fd CAF 29.14 24.70 -15.2 32.2
MS Emerging Fund MSF 19.84 17.40 -12.3 12.2
MS India Invest IIF
34.19 30.73 -10.1 7.5
New Germany Fund GF 21.81 19.52 -10.5 25.2
Swiss Helvetia Fund SWZ 13.47 12.28 -8.8 2.0
Templeton Dragon TDF 25.14 21.67 -13.8 25.0
Templeton Emerging EMF 17.65 15.61 -11.6 15.7
Virtus Total Return Fund ZF 11.35 11.07 -2.5 5.8
Voya Infr Indls & Matls IDE 15.97 15.29 -4.3 10.2
Wells Fargo Gl Div Opp EOD NA 5.81 NA 7.5
Prem12 Mo
Fund (SYM)
NAV Close /Disc Yld
U.S. Mortgage Bond Funds
BlackRock Income Trust BKT 6.37 5.76 -9.6 5.5
Nuveen Mtg Opp Term Fd JLS 24.28 23.48 -3.3 8.0
Investment Grade Bond Funds
Blackrock Core Bond Tr BHK 14.09 12.89 -8.5 6.0
BlkRk Credit Alloc Incm BTZ 14.15 12.46 -11.9 6.5
John Hancock Income Secs JHS 14.65 13.63 -7.0 5.7
11.2
7.0
0.5
0.3
1.0
-4.3
1.3
0.6
2.4
4.0
-1.9
5.1
2.4
3.7
14.9
5.2
-0.1
2.2
9.6
8.8
15.2
15.6
13.6
13.0
Cash Prices | WSJ.com/commodities
Friday, May 11, 2018
These prices reflect buying and selling of a variety of actual or “physical” commodities in the marketplace—
separate from the futures price on an exchange, which reflects what the commodity might be worth in future
months.
Friday
Energy
0.8919
1.0201
2.750
2.730
2.500
1.910
1.650
0.910
2.590
60.400
12.450
Propane,tet,Mont Belvieu-g
Butane,normal,Mont Belvieu-g
NaturalGas,HenryHub-i
NaturalGas,TranscoZone3-i
NaturalGas,TranscoZone6NY-i
NaturalGas,PanhandleEast-i
NaturalGas,Opal-i
NaturalGas,MarcellusNE PA-i
NaturalGas,HaynesvilleN.LA-i
Coal,C.Aplc.,12500Btu,1.2SO2-r,w
Coal,PwdrRvrBsn,8800Btu,0.8SO2-r,w
Metals
1327.90
1427.49
1324.35
1470.02
*1314.80
*1318.80
1373.37
1386.58
1386.58
1600.19
1297.40
1386.58
Silver, troy oz.
Engelhard industrial
Engelhard fabricated
Handy & Harman base
Handy & Harman fabricated
LBMA spot price
Friday
SoybeanMeal,Cent IL,rail,ton48%-u
Soybeans,No.1 yllw IL-bp,u
Wheat,Spring14%-pro Mnpls-u
Wheat,No.2 soft red,St.Louis-bp,u
Wheat - Hard - KC (USDA) $ per bu-u
Wheat,No.1soft white,Portld,OR-u
Other metals
LBMA Platinum Price PM
*923.0
Platinum,Engelhard industrial
929.0
Platinum,Engelhard fabricated
1029.0
Palladium,Engelhard industrial
1009.0
Palladium,Engelhard fabricated
1109.0
Aluminum, LME, $ per metric ton
*2327.0
Copper,Comex spot
3.0950
Iron Ore, 62% Fe CFR China-s
n.a.
Shredded Scrap, US Midwest-s,m
n.a.
Steel, HRC USA, FOB Midwest Mill-s
n.a.
16.8300
20.1960
16.7620
20.9530
*£12.2400
0.5800
0.8362
*94.35
61.500
6.00
Burlap,10-oz,40-inch NY yd-n,w
Cotton,1 1/16 std lw-mdMphs-u
Cotlook 'A' Index-t
Hides,hvy native steers piece fob-u
Wool,64s,staple,Terr del-u,w
Grains and Feeds
n.a.
108
3.6850
135.9
518.4
258
108
305
2.8150
25.75
7.0000
Barley,top-quality Mnpls-u
Bran,wheat middlings, KC-u
Corn,No. 2 yellow,Cent IL-bp,u
Corn gluten feed,Midwest-u,w
Corn gluten meal,Midwest-u,w
Cottonseed meal-u,w
Hominy feed,Cent IL-u,w
Meat-bonemeal,50% pro Mnpls-u,w
Oats,No.2 milling,Mnpls-u
Rice, Long Grain Milled, No. 2 AR-u,w
Sorghum,(Milo) No.2 Gulf-u
388.10
9.6700
7.3250
4.9450
5.0300
5.8300
Food
Beef,carcass equiv. index
choice 1-3,600-900 lbs.-u
select 1-3,600-900 lbs.-u
Broilers, National comp wghtd-u,w
Butter,AA Chicago
Cheddar cheese,bbl,Chicago
Cheddar cheese,blk,Chicago
Milk,Nonfat dry,Chicago lb.
Cocoa,Ivory Coast-w
Coffee,Brazilian,Comp
Coffee,Colombian, NY
Eggs,large white,Chicago-u
Flour,hard winter KC
Hams,17-20 lbs,Mid-US fob-u
Hogs,Iowa-So. Minnesota-u
Pork bellies,12-14 lb MidUS-u
Pork loins,13-19 lb MidUS-u
Steers,Tex.-Okla. Choice-u
Steers,feeder,Okla. City-u,w
Fibers and Textiles
Gold, per troy oz
Engelhard industrial
Engelhard fabricated
Handy & Harman base
Handy & Harman fabricated
LBMA Gold Price AM
LBMA Gold Price PM
Krugerrand,wholesale-e
Maple Leaf-e
American Eagle-e
Mexican peso-e
Austria crown-e
Austria phil-e
Friday
*16.6000
12314
(U.S.$ equivalent)
Coins,wholesale $1,000 face-a
201.88
182.71
1.1642
2.3500
162.00
163.25
85.00
n.a.
1.1882
1.3933
0.9150
16.00
n.a.
63.84
n.a.
1.0336
122.00
171.44
Fats and Oils
29.5000
0.2400
n.a.
0.2966
0.2400
n.a.
Corn oil,crude wet/dry mill-u,w
Grease,choice white,Chicago-h
Lard,Chicago-u
Soybean oil,crude;Centl IL-u
Tallow,bleach;Chicago-h
Tallow,edible,Chicago-u
Prem12 Mo
Fund (SYM)
NAV Close /Disc Yld
MFS Inc Tr MIN
4.19 3.87 -7.6 9.7
Western Asset Infl Incm WIA 12.94 11.45 -11.5 3.6
Western Asset Infl Opps WIW 12.62 11.33 -10.2 3.8
Loan Participation Funds
Apollo Sr Fltg Rate Fd AFT 17.81 16.75 -6.0 6.5
BlkRk Debt Strat Fd DSU 12.58 11.37 -9.6 7.1
BlackRock FR Incm Strat FRA 14.96 14.49 -3.1 5.0
Blkrk FltRt InTr BGT 14.43 13.76 -4.6 5.0
BlackstoneGSO Strat Cred BGB 16.96 15.92 -6.1 7.8
Blackstone GSO Sr Float BSL 17.77 17.81 +0.2 6.6
Eagle Point Credit ECC NA 18.45 NA 11.8
Eaton Vance FR Incm Tr EFT NA 15.06 NA 5.4
EatonVnc SrFltRate EFR NA 14.75 NA 5.8
Eaton Vance Sr Incm Tr EVF NA 6.66 NA 5.4
First Trust Sr FR Fd II FCT 14.06 13.15 -6.5 5.7
FT Sr Floating Rate 2022 FIV 9.65 9.47 -1.9 5.3
Highland FR Opps Fd HFRO 15.19 NA NA NA
Invesco Credit Opps Fund VTA 13.16 11.78 -10.5 6.8
Invesco Senior Income Tr VVR 4.90 4.45 -9.2 5.5
Nuveen Credit Strt Inc Fd JQC 9.06 8.12 -10.4 7.1
NuvFloatRteInco Fd JFR 11.50 10.85 -5.7 7.3
Nuv Float Rte Opp Fd JRO 11.42 10.78 -5.6 7.6
Nuveen Senior Income Fund NSL 6.85 6.63 -3.2 7.1
Pioneer Floating Rate Tr PHD 12.41 11.57 -6.8 6.2
Voya Prime Rate Trust PPR 5.68 5.18 -8.8 5.4
High Yield Bond Funds
AllianceBernstein Glbl AWF NA 11.72 NA 7.1
Barings Glbl Short Dur HY BGH 20.49 18.70 -8.8 9.6
BlackRock Corp Hi Yd Fd HYT 11.89 10.61 -10.8 7.9
BlackRockDurInco Tr BLW 16.74 14.98 -10.5 6.4
Brookfield Real Assets RA 24.35 22.26 -8.6 10.7
Credit Suisse High Yld DHY 2.70 2.63 -2.6 9.8
DoubleLine Incm Solutions DSL NA 20.39 NA 8.9
Dreyfus Hi Yd Strat Fd DHF 3.43 3.18 -7.3 9.1
Fst Tr Hi Inc Lg/Shrt Fd FSD 17.10 15.05 -12.0 9.7
Guggenheim Strat Opps Fd GOF 19.14 21.03 +9.9 10.4
Ivy High Income Opps Fund IVH 15.93 14.27 -10.4 9.6
Neuberger Berman HYS NHS 12.78 11.02 -13.8 7.8
NexPoint Strat Opps Fund NHF 26.42 24.23 -8.3 10.0
Nuveen Credit Opps 2022 JCO 9.84 9.52 -3.3 5.9
Nuveen Gl Hi Incm Fd JGH 17.97 16.04 -10.7 8.9
Nuveen High Incm Dec18 JHA 9.98 9.84 -1.4 4.3
Nuveen High Incm Dec19 JHD 10.06 9.83 -2.3 5.4
Nuveen Hi Incm Nov 2021 JHB 9.98 9.59 -3.9 6.2
Pioneer High Income Trust PHT 10.53 9.46 -10.2 8.2
Prud Gl Shrt Dur Hi Yd GHY 16.17 13.81 -14.6 7.7
Prudentl Sh Dur Hi Yd Fd ISD 16.33 14.11 -13.6 7.8
Wells Fargo Incm Opps Fd EAD 9.00 8.09 -10.1 8.4
Wstrn Asset Glbl Hi Inco EHI NA 9.47 NA 8.3
Wstrn Asset High Inco II HIX NA 6.58 NA 8.8
Wstrn Asset Opp Fd HIO 5.43 4.85 -10.7 7.0
West Asst HY Def Opp Fd HYI NA 14.81 NA 7.6
Other Domestic Taxable Bond Funds
Ares Dynamic Credit Alloc ARDC NA 16.35 NA 7.0
Barings Corp Investors MCI NA 15.16 NA 5.9
BlackRock Multi-Sector IT BIT 18.91 16.93 -10.5 9.0
BlackRock Taxable Mun Bd BBN 23.07 21.93 -4.9 7.1
Doubleline Oppor Credit DBL NA 21.06 NA 9.5
Duff & Phelps Utl & Cp Bd DUC 9.26 8.47 -8.5 6.3
EtnVncLtdFd EVV
NA 12.96 NA 7.4
Franklin Ltd Duration IT FTF 11.80 11.03 -6.5 12.3
GuggenheimTaxableMuni GBAB 22.60 21.55 -4.6 7.0
Invesco High Incm 2023 IHIT 10.03 9.94 -0.9 6.0
KKR Income Opps Fund KIO NA 15.99 NA 9.7
MFS Charter MCR
8.85 8.04 -9.2 9.2
MFS Multimkt MMT 6.30 5.68 -9.8 9.2
Prem12 Mo
NAV Close /Disc Yld
Fund (SYM)
Nuveen Build Am Bd Fd NBB 21.61 20.36
PIMCO Corporate & Incm PTY NA 18.07
PIMCO Corporate & Incm PCN NA 17.40
PIMCO HiInco PHK
NA 8.19
PIMCO Inco Str Fd PFL NA 12.04
PIMCO Incm Strategy Fd II PFN NA 10.61
Putnam Mas Inco PIM 5.07 4.78
Putnam Premier Income Tr PPT 5.65 5.40
Wells Fargo Multi-Sector ERC 13.92 12.93
World Income Funds
Abeerden Asia-Pacific FAX 5.12 4.48
Brandywine Global Incm BWG NA 12.43
Etn Vnc Short Dur Fd EVG 15.03 13.32
MS EmMktDomDebt EDD 8.66 7.41
PIMCO Dynamic Credit PCI NA 23.12
PIMCODynamicIncomeFund PDI NA 31.04
PIMCO Income Opportunity PKO NA 27.47
PIMCO Strat Income Fund RCS NA 9.54
Templeton Emerging TEI 12.09 11.14
Templeton Global GIM 7.28 6.41
Wstrn Asset Emerg Mkts EMD NA 13.94
Wstrn Asset Gl Def Opp Fd GDO NA 16.60
National Muni Bond Funds
AllianceBrnstn NtlMun AFB 14.27 12.46
Blackrock Invest BKN 15.42 13.69
BlackRockMun2030Target BTT 23.58 21.14
BlackRock Municipal Trust BFK 14.06 12.79
BlackRockMuni BLE 14.61 13.71
BlackRockMuni Tr BYM 14.73 13.09
BlkRk MuniAssets Fd MUA 14.07 13.22
BlkRk Munienhanced MEN 11.57 10.54
BlkRk MuniHldgs Inv MFL 14.18 12.79
BlkRk MuniHldgs Qlty II MUE 13.57 12.15
BlkRk MuniVest MVF 9.40 8.66
BlkRk MuniVest II MVT 14.83 14.07
BlkRk MuniYield MYD 14.46 13.15
BlkRk MuniYld Quality MQY 15.36 13.90
BlkRk MuniYld Qlty II MQT 13.50 11.98
BlRkMunyldQltyIII MYI 13.98 12.51
Deutsche Mun Income Tr KTF 12.15 11.12
Dreyfus Mun Bd Infr Fd DMB 13.97 12.58
Dreyfus Strat Muni Bond DSM 8.17 7.54
Dreyfus Strategic Munis LEO 8.39 7.63
Eaton Vance Mun Bd Fd EIM 13.21 11.75
Eaton Vance Mun Income EVN 12.96 11.79
EV National Municipal Opp EOT 21.26 20.39
Invesco Adv Mun Incm II VKI 11.75 10.59
Invesco Mun Incm Opps Tr OIA 7.44 7.45
Invesco Mun Opportunity VMO 13.12 11.70
Invesco Municipal Trust VKQ 13.10 11.91
Invesco Qlty Mun Inco IQI 13.21 11.88
Invesco Inv Grade Muni VGM 13.56 12.30
Invesco Value Mun Incm Tr IIM 15.78 14.32
MainStayMacDefinedMuni MMD 19.99 18.96
MFS Munl Inco MFM 7.25 6.53
NuveenAMT-FreeMunValue NUW 16.38 15.71
Nuveen AMT-Free Quality NEA 14.65 12.94
Nuveen AMT-Free Mun NVG 16.02 14.89
Nuveen Mun Credit Incm Fd NZF 15.58 14.33
Nuveen Enhncd Mun Val Fd NEV 14.59 13.37
Nuveen Intermed Dur Mun NID 13.54 12.53
NuveenMuniIncoOpp Fd NMZ 13.21 12.43
Nuveen Muni Value Fund NUV 10.06 9.49
Nuveen Qual Mun Incm Fd NAD 14.95 13.20
Nuveen Sel TF NXQ 14.51 13.54
PIMCO MuniFd PMF
NA 13.01
-5.8 6.0
NA 8.9
NA 7.9
NA 12.3
NA 9.0
NA 9.1
-5.7 6.5
-4.4 5.8
-7.1 9.9
-12.5
NA
-11.4
-14.4
NA
NA
NA
NA
-7.9
-12.0
NA
NA
9.1
8.0
6.7
8.1
8.6
8.6
8.4
9.2
9.0
4.4
8.4
8.1
-12.7
-11.2
-10.3
-9.0
-6.2
-11.1
-6.0
-8.9
-9.8
-10.5
-7.9
-5.1
-9.1
-9.5
-11.3
-10.5
-8.5
-9.9
-7.7
-9.1
-11.1
-9.0
-4.1
-9.9
+0.1
-10.8
-9.1
-10.1
-9.3
-9.3
-5.2
-9.9
-4.1
-11.7
-7.1
-8.0
-8.4
-7.5
-5.9
-5.7
-11.7
-6.7
NA
4.8
5.3
4.1
6.0
6.0
5.5
5.1
6.1
6.4
6.1
6.2
6.1
6.2
5.9
5.7
6.2
6.2
5.1
6.3
6.4
5.2
5.5
5.0
6.1
5.5
5.9
6.0
5.6
6.2
5.2
5.7
5.8
4.5
5.5
5.9
6.1
6.0
4.9
6.2
4.0
5.5
3.7
5.6
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 568.66 points, or 2.34%, 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 $30,316, or a gain of 1.05%, on the $30,000
investment, including reinvested dividends.
The Week’s Action
Pct Stock price Point chg
chg (%) change in average* Company
$1,000 Invested(year-end '17)
$1,000
Symbol Close
KEY TO CODES: A=ask; B=bid; BP=country elevator bids to producers; C=corrected; E=Manfra,Tordella & Brooks; G=ICE; H=Hurley Brokerage; I=Natural Gas Intelligence;
M=monthly; N=nominal; n.a.=not quoted or not available; R=SNL Energy; S=Platts-TSI; T=Cotlook Limited; U=USDA; W=weekly, Z=not quoted. *Data as of 5/10
Source: WSJ Market Data Group
5.80
8.49
58.46
Caterpillar
CAT $154.86
5.70
4.38
30.16
Exxon Mobil
XOM
5.01
5.43
37.39
JPMorgan Chase
Insider-Trading Spotlight
4.16
4.97
34.22
3.82
2.46
16.94
JPM 113.86
United Technologies UTX 124.48
DowDuPont
DWDP 66.93
3.58
1.89
13.01
Intel
INTC
54.67
1,199
3.55
0.50
3.44
General Electric
3.43
4.31
29.68
Chevron
1,047
3.40
7.98
54.95
Goldman Sachs
GE
14.60
CVX 129.84
GS 242.92
3.36
1.94
13.36
Merck
MRK
59.69
1,070
AXP 101.42
MMM 205.16
V 131.82
1,029
Trading by ‘insiders’ of a corporation, such as a company’s CEO, vice president or director, potentially conveys
new information about the prospects of a company. Insiders are required to report large trades to the SEC
within two business days. Here’s a look at the biggest individual trades by insiders, based on data received by
Thomson Financial on May 11, and year-to-date stock performance of the company
KEY: B: beneficial owner of more than 10% of a security class CB: chairman CEO: chief executive officer CFO: chief financial officer
CO: chief operating officer D: director DO: director and beneficial owner GC: general counsel H: officer, director and beneficial owner
I: indirect transaction filed through a trust, insider spouse, minor child or other O: officer OD: officer and director P: president UT:
unknown VP: vice president Excludes pure options transactions
Biggest weekly individual trades
Based on reports filed with regulators this past week
Date(s)
Company
Symbol
Insider
Title
No. of shrs in Price range ($) $ Value
trans (000s) in transaction (000s)
Close ($) Ytd (%)
Buyers
May. 7-9
Tempur Sealy International
R. Jaffer
May. 3
Achaogen
AKAO
R. Duggan
B
May. 3
Second Sight Medical Products
EYES
G. Williams
DOI
TPX
BI
2.85
5.28
36.36
Home Depot
2.67
2.54
17.49
Microsoft
2.59
4.76
32.77
Apple
2.46
3.05
1,147
1,123
21.00
1,218
PG
73.37
TRV 131.25
UnitedHealth Group UNH 238.28
812
4.54
Pfizer
0.63
4.34
Cisco Systems
9,851 301.06
-3.3
1.30
0.94
6.47
Procter & Gamble
1.19
1.54
10.60
1.01
2.38
16.39
CFR
G. Weston
DI
43
113.36-116.04
Sientra
SIEN
T. Haines
FOI
281
13.50
May. 8-9
Sohu.com
SOHU
C. Zhang
CEOI
100
35.16-35.51
May. 8-10 Entercom Communications
ETM
J. Field
May. 9
May. 9
Dentsply Sirona
XRAY
N. Alexos
D. Casey
May. 8
Fluor
FLR
May. 7-9
American Assets Trust
AAT
973
Travelers
1,084
4,904 118.86
25.6
0.91
0.92
6.33
Walt Disney
DIS
102.07
3,800
16.54
17.6
0.89
0.43
2.96
Verizon
VZ
48.62
941
3,534
35.70 -17.6
0.48
0.33
2.27
Nike
NKE
68.43
1,097
MCD 165.39
IBM 144.14
967
949
R
303
7.65-9.64
2,478
7.50 -30.6
0.22
0.36
2.48
McDonald’s
CFOI
CEOI
50
23
44.71
44.52
2,236
1,002
46.93 -28.7
0.16
0.23
1.58
IBM
–0.22
–1.51
Coca-Cola
KO
42.14
P. Fluor
44.51-45.29
2,227
46.55
-9.9
927
D
50
–0.52
–4.15
–28.57
WalMart
WMT
83.38
E. Rady
CEOI
48
34.73-34.96
1,660
35.25
-7.8
–4.74
855
May. 4
May. 4
CVS Health
CVS
D. Dorman
C. Brown
D
D
24
10
62.22
61.99
1,512
620
64.41 -11.2
May. 7-9
MACOM Technology Solutions Holdings
MTSI
J. Ocampo
CBI
60
21.93-22.18
1,319
22.77 -30.0
Sellers
A. Borisy
1,818
78.43-78.73
CEOI
CEOI
677
437
177.71-182.88
172.79-176.47
DI
M. Zuckerberg
M. Zuckerberg
ORCL
T. Kurian
O
979
45.15-45.85
May. 3
Mastercard
MA
A. Banga
CEO
239
184.56-187.35
May. 7
May. 7
Tableau Software
DATA
C. Chabot
C. Stolte
CB
OD
400
285
91.04-91.43
91.04-91.44
May. 4-8
Garmin
GRMN
M. Kao
H
450
May. 4-7
May. 9
May. 8
Charles Schwab
SCHW
C. Schwab
C. Schwab
C. Schwab
CBI
CBI
CBI
450
300
250
May. 9
Salesforce.com
81.51
8.1
121,360 186.99
76,506
6.0
46.82
-1.0
142,642
44,461
44,450 193.35
27.7
36,438
25,977
95.00
37.3
59.28-59.97
26,870
59.29
-0.5
56.19-57.01
57.99
57.23
25,492
17,397
14,307
59.46
15.7
CRM
A. Dayon
P
166
May. 8-10 HealthEquity
HQY
S. Neeleman
OD
241*
May. 7
Chevron Corporation
CVX
M. Wirth
CEO
130
May. 8-9
NVR Inc
NVR
D. Schar
D
May. 3-4
Andeavor
ANDV
P. Foster
DI
100
May. 3
Anthem
ANTM
B. Griffin
O
59
May. 4-7
Kirby
J. Pyne
D
138
88.05-88.36
129.08
69.59-70.66
128.00
5 3011.45-3101.56
21,467 130.63
27.8
71.48
53.2
16,640 129.84
3.7
16,835
U.S. consumer price index
250.546
257.025
All items
Core
Latest
13,999 140.16
22.6
224.32-225.35
13,334 232.05
3.1
90.20
35.0
U.S.
Canada
Japan
Week
ago
Finance
Health care
Industrial
Media
Technology
Transportation
Utilities
10,620,709
3,885,179
391,963
1,980,955
4,581,696
299,550
156,042
150,493,269
108,873,332
56,459,015
1,674,456
179,542,711
28,194,652
5,579,164
Sources: Thomson Financial; WSJ Market Data Group
2.5
2.1
-12.7 5.3
-12.4 5.3
-12.7 5.8
-13.1 5.3
-11.4 5.4
-12.7 5.4
-12.7 5.6
-13.3 5.1
-13.7 5.4
-10.2 5.4
-13.6 5.4
-9.4 5.4
-12.1 5.6
-8.1 4.1
-12.1 5.6
-14.5 4.9
-15.5 4.8
-14.9 5.3
-14.1 4.9
-14.0 5.3
-15.3 5.0
-15.3 5.4
-13.3 4.5
NA 6.2
NA 6.3
52 wk
Prem Ttl
Fund (SYM)
NAV Close /Disc Ret
General Equity Funds
Specialized Equity Funds
Griffin Inst Access RE:A 26.82 NA NA 6.5
Griffin Inst Access RE:C 26.29 NA NA 5.7
Griffin Inst Access RE:I 27.01 NA NA 6.7
Griffin Inst Access RE:L 26.77 NA NA 6.3
Griffin Inst Access RE:M 26.62 NA NA 5.9
NexPointRlEstStrat;A 20.35 NA NA 6.3
NexPointRlEstStrat;C 20.41 NA NA 6.1
NexPointRlEstStrat;Z 20.43 NA NA 7.2
NorthStar RE Cap Inc:Adv NA NA NA NS
PREDEX;T
26.13 NA NA NS
PREDEX;W
26.13 NA NA NS
Resource RE Div Inc:A 10.18 NA NA 6.2
Resource RE Div Inc:C 10.17 NA NA 5.4
Resource RE Div Inc:D 10.34 NA NA 5.8
Resource RE Div Inc:I 10.61 NA NA 6.6
Resource RE Div Inc:L 10.18 NA NA NS
Resource RE Div Inc:T 10.16 NA NA 5.5
Resource RE Div Inc:U 10.19 NA NA 6.2
Resource RE Div Inc:W 10.34 NA NA 6.3
SharesPost 100;A
28.37 NA NA 10.3
SharesPost 100:I
28.40 NA NA NS
Tot Inc+ RE:A
29.84 NA NA 7.5
Tot Inc+ RE:C
28.95 NA NA 6.7
Tot Inc+ RE:I
30.22 NA NA 7.8
Tot Inc+ RE:L
29.77 NA NA NS
USQ Core Real Estate:I USQIX 25.35 NA NA NS
USQ Core Real Estate:IS USQSX 25.35 NA NA NS
Versus Cap MMgr RE Inc:I 27.66 NA NA NE
Versus Capital Real Asst VCRRX 25.38 NA NA NS
Wildermuth Endwmnt Str 13.28 NA NA 11.1
Wildermuth Endwmnt S:C 13.06 NA NA 10.4
Wildermuth Endwmnt S:I 13.36 NA NA 11.9
Income & Preferred Stock Funds
MultiStrat Gro & Inc:A 14.54 NA NA -0.8
MultiStrat Gro & Inc:C 14.18 NA NA -1.5
MultiStrat Gro & Inc:I 14.74 NA NA -0.6
MultiStrat Gro & Inc:L 14.30 NA NA -1.3
The Relative Value:CIA VFLEX 24.95 NA NA NS
Convertible Sec's. Funds
Calamos Dyn Conv & Incm CCD 21.01 20.68 -1.6 13.9
World Equity Funds
BMO LGM Front ME 11.40 NA NA 17.1
Calamos Global Tot Ret Fd CGO 13.34 14.10 +5.7 15.5
Prem12 Mo
Fund (SYM)
NAV Close /Disc Yld
U.S. Mortgage Bond Funds
Vertical Capital Inc:A 12.18 NA NA 3.2
Vertical Capital Inc:C 12.24 NA NA NS
Vertical Capital Inc:I 12.30 NA NA NS
Vertical Capital Inc:L 12.30 NA NA NS
Loan Participation Funds
504 Fund
9.63 NA NA 4.0
Angel Oak Strategic Crdt ASCIX NA NA NA NS
Blackstone/GSO FR EI I 25.05 NA NA NS
FedProj&TrFinanceTendr 10.04 NA NA 3.1
FS Global Crdt Opptys D NA NA NA 5.3
Invesco Sr Loan A
6.72 NA NA 3.9
Invesco Sr Loan C
6.73 NA NA 3.2
Invesco Sr Loan IB
6.72 NA NA 4.2
Invesco Sr Loan IC
6.72 NA NA 4.0
Invesco Sr Loan Y
6.72 NA NA 4.2
RiverNorth MP Lending RMPLX 24.02 NA NA 9.2
Sierra Total Return:T SRNTX 24.98 NA NA NS
Voya Senior Income:A 12.56 NA NA 4.9
Voya Senior Income:C 12.54 NA NA 4.5
Voya Senior Income:I 12.52 NA NA 5.2
Voya Senior Income:W 12.57 NA NA 5.2
High Yield Bond Funds
Griffin Inst Access Cd:A NA NA NA 4.9
Griffin Inst Access Cd:C NA NA NA 4.9
Griffin Inst Access Cd:F NA NA NA NS
Griffin Inst Access Cd:I NA NA NA 4.9
Griffin Inst Access Cd:L NA NA NA NS
PIMCO Flexible Cr I;Inst NA NA NA 6.7
PionrILSInterval
9.63 NA NA 1.4
WA Middle Mkt Dbt 736.76 NA NA 10.3
WA Middle Mkt Inc WMF764.88 NA NA 10.3
Other Domestic Taxable Bond Funds
BlackRock Mlt-Sctr Oppty 99.05 NA NA NS
Capstone Church Capital 11.65 NA NA 3.4
CION Ares Dvsfd Crdt;A NA NA NA 5.4
CION Ares Dvsfd Crdt;C NA NA NA NS
CION Ares Dvsfd Crdt;I NA NA NA NS
CION Ares Dvsfd Crdt;L NA NA NA NS
CNR Select Strategies 9.66 NA NA NS
GL Beyond Income
2.72 NA NA NE
Palmer Square Opp Income 19.51 NA NA 4.6
Resource Credit Inc:A 11.13 NA NA 6.4
Resource Credit Inc:C 11.25 NA NA 5.6
Resource Credit Inc:I 11.16 NA NA 6.6
Resource Credit Inc:L 11.12 NA NA NS
Resource Credit Inc:W 11.13 NA NA 6.4
National Muni Bond Funds
Tortoise Tax-Adv Soc Inf 10.00 NA NA NS
0.00
0.50
0.50
1.50
0.00
0.50
0.50
1.50
1.79
U.S.
1.76
0.00
0.50
0.50
1.50
0.00
0.50
0.25
1.50
2.18
0.76
U.S. government rates
Discount
2.25
2.25
2.25
1.50
1.7300
1.9000
1.6500
1.6800
1.7200
1.7300
1.9500
1.7100
1.7200
1.7400
0.8600
1.0625
0.7000
0.8200
0.8300
Federal funds
Effective rate
High
Low
Bid
Offer
1.7300
1.9500
1.6900
1.7200
1.7400
—52-WEEK—
High Low
1.660 1.650 1.720 0.695
1.840 1.835 1.840 0.900
2.000 1.990 2.000 1.015
4 weeks
13 weeks
26 weeks
Secondary market
Fannie Mae
52-Week
High
Low
Policy Rates
Overnight repurchase
25,722,380
25,678,357
0
12,120,341
16,131,967
49,548,282
38,678,427
6.1
5.8
5.7
5.4
5.5
5.4
5.8
4.5
May 11, 2018
Treasury bill auction
30-year mortgage yields
30 days
60 days
Latest
Week
Latest ago
Week
ago
2.51500 2.52019 2.52375 1.39906
2.76579 2.77666 2.78031 1.69511
Six month
One year
Euro Libor
-0.399
-0.351
-0.315
-0.241
One month
Three month
Six month
One year
-0.371
-0.327
-0.271
-0.189
One month
Three month
Six month
One year
52-Week
high
low
3.50
Latest
3.50
3.50
2.75
Treasury
MBS
-0.397
-0.351
-0.274
-0.143
-0.420
-0.389
-0.339
-0.263
-0.372
-0.328
-0.269
-0.190
Value
Traded
-0.366
-0.325
-0.250
-0.127
-0.374
-0.332
-0.279
-0.194
52-Week
High
Low
2.19
2.17
2.31
1.04
Libor
1.91871 1.92770 1.92851 0.99244
2.34250 2.36906 2.36906 1.17172
1.800
1.816
40.100 2.068 0.791
97.010 1.971 0.794
Open Implied
Settle Change Interest Rate
Commercial paper (AA financial)
One month
Three month
-0.401
-0.353
-0.314
-0.243
DTCC GCF Repo Index
Call money
90 days
—52-WEEK—
High Low
Euro interbank offered rate (Euribor)
4.200 4.177 4.275 3.253
4.227 4.206 4.304 3.281
Other short-term rates
4.75 4.75 4.75 4.00
3.45 3.45 3.45 2.70
1.475 1.475 1.475 1.475
Based on actual transaction dates in reports received this past week
Selling
0.40
0.16
International rates
137.24-141.41
Buying
Week
Latest ago
Inflation
April index
Chg From (%)
level March '18 April '17
Buying and selling by sector
Sector
NA
NA
-6.6
-9.6
-9.8
-10.5
NA
+5.9
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.
Euro zone
Switzerland
Britain
Australia
Selling
Pimco Muni Inc II PML NA 12.82
PIMCO Muni Inc III PMX NA 11.38
Pioneer Mun Hi Inc Adv Tr MAV 11.60 10.83
Pioneer Mun Hi Incm Tr MHI 12.56 11.35
Putnam Tr PMM
7.82 7.05
PutnamMuniOpportunities PMO 13.00 11.64
Wstrn Asset Mngd Muni MMU NA 12.89
WesternAssetMunTrFund MTT 20.74 21.96
Single State Muni Bond
BlackRock CA Municipal Tr BFZ 14.81 12.93
BlkRk MuniHldgs CA Qlty MUC 15.01 13.15
BlkRk MunHl NJ Qlty MUJ 15.21 13.28
BlRk MuHldg NY Qlty MHN 14.33 12.45
BlkRk MuniYld CA Fd MYC 15.08 13.36
BlkRk MuniYld CA Quality MCA 15.24 13.30
BlkRk MuniYld MI Qlty MIY 15.04 13.13
BlRk Muyld NY Qlty MYN 13.73 11.90
Eaton Vance CA Mun Bd EVM 11.93 10.29
Invesco CA Value Mun Incm VCV 12.99 11.66
Invesco PA Value Mun Incm VPV 13.62 11.77
Invesco Inv Grade NY Muni VTN 14.09 12.77
Nuveen CA AMT-Free Qual NKX 15.30 13.45
Nuveen CA Muni Value NCA 10.23 9.40
Nuveen CA Quality Muni NAC 15.20 13.36
Nuveen MD Qual Muni NMY 14.20 12.14
Nuveen MI Qual Muni NUM 14.94 12.62
Nuveen NJ Qual Muni NXJ 15.40 13.11
Nuveen NY AMT-Free NRK 14.02 12.05
Nuveen NY Qual Muni NAN 14.60 12.56
Nuveen OH Qual Muni NUO 16.12 13.66
Nuveen PA Qual Muni NQP 14.81 12.54
Nuveen VA Qual Muni NPV 14.10 12.22
PIMCO California Muni PCQ NA 15.13
PIMCO California Mun II PCK NA 8.18
Borrowing Benchmarks | WSJ.com/bonds
Money Rates
Prime rates
12,186
960
*Based on Composite price. DJIA is calculated on primary-market price.
Source: WSJ Market Data Group; FactSet.
15,447 3053.61 -13.0
* Half the transactions were indirect **Two day transaction
p - Pink Sheets
3,683,584
55,700
0
0
750,522
2,891,498
0
999
45.93
0.66
1.39
Cullen/Frost Bankers
Basic Industries
Business services
Capital goods
Consumer durables
Consumer nondurables
Consumer services
Energy
35.50
1.89
-1.6
May. 7
Buying
PFE
CSCO
17.1
May. 3-4
Sector
342.46
1.88
7.49 -16.4
916
1,173
BA
12.58
6,208
4,315
3,008
877
1,158
AAPL 188.59
Johnson & Johnson JNJ 127.24
10,000
7.17-7.25
7.27-7.39
7.35
956
1,010
11,072
295.03-302.13
844
97.70
1.48
33
945
190.31
11.31-11.54
859
588
409
981
HD
977*
DO
DO
DO
1,076
MSFT
6,757
CEOI
KEX
Visa
Boeing
A. Otto
A. Otto
A. Otto
Oracle
25.20
55.29
E. Musk
May. 2-4
3.66
8.03
DDR
FB
2.86
2.40
TSLA
BPMC
3M
48.30 -23.0
Tesla
Facebook
American Express
39.94
30,719
DDR Corp
Blueprint Medicines
21.14
5.80
43.85-44.92
May. 7
May. 7-9
May. 3-4
3.07
689
May. 2-3
May. 4-7
May. 8
May. 4-7
3.12
2.91
$992
992
81.28
Prem12 Mo
NAV Close /Disc Yld
Fund (SYM)
DTCC GCF Repo Index Futures
Treasury May
Treasury Jun
Treasury Jly
98.210 0.002 1155 1.790
98.035 -0.005 732 1.965
97.935 unch. 464 2.065
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 March 22, 2018. Other prime rates aren’t directly comparable; lending practices vary
widely by location; Discount rate is effective March 22, 2018. 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.
.
THE WALL STREET JOURNAL.
HEARD ON THE STREET
FINANCIAL ANALYSIS & COMMENTARY
Email: heard@wsj.com
What French
Car Makers
Risk in Iran
Once bitten, twice shy—
unless you are a French car
maker.
Peugeot and Renault are
among the few companies
that have bet on Iran since
the 2015 nuclear deal. Their
history risks repeating itself.
Peugeot has been a big
brand in Iran for decades, but
it quit the country in 2012
under pressure from General
Motors. The U.S. manufacturer had bought a 7% stake
in its French peer with a view
to sharing costs but sold it in
2013.
Peugeot’s aggrieved local
partner Iran Khodro kept
making cars under the French
brand; Peugeot just didn’t
count them. That explains its
speedy return after sanctions
lifted and it patched things
up with Iran Khodro. Last
year it sold 444,600 vehicles
in the country, some 30% of
the market. Peugeot’s French
rival Renault, which never
left Iran, sold 162,000.
Both have committed big
sums to new joint ventures.
Renault wants to roughly
double sales in the country
by 2022.
President Donald Trump’s
decision to reimpose sanctions raises the risk of impairments, though much of
the money committed won’t
have been spent yet.
The European Union may
yet succeed in persuading
Iran to stick with the 2015
deal, but early signs aren’t
promising. Even if it does,
though, the outlook is hardly
sunny. The country’s economic recovery is under
threat, calling bullish growth
plans into question. Peugeot
also will have to rethink its
U.S. expansion—a market it
quit in 1991 but wants to get
back into. Meanwhile, Renault will have to hope its
tightening global alliance
with Nissan doesn’t threaten
the latter’s valuable U.S. business.
—Stephen Wilmot
Monday, May 14, 2018 | B9
* *
Venezuela’s Oil
Meltdown Worsens
Match-Making
Tinder subscriber additions,
quarterly
600,000
500,000
400,000
300,000
200,000
100,000
0
2016
’17
WSJ.com/Heard
’18
Sources: the company; Bloomberg News (photo)
Room for 2 in Date Game
The search for a soul mate
has become a big business.
In the U.S., one in three
dates now begins online. The
global market for online dating services—about 500 million people—is expected to
reach 672 million by 2019,
according to research by Jefferies.
The business has been lucrative for the biggest player,
InterActiveCorp and its
listed subsidiary, Match
Group, which owns Tinder,
OkCupid and Match.com.
That explains why shares of
IAC and Match nose-dived
20% and 25%, respectively,
when Mark Zuckerberg said
Facebook would enter the
dating scene.
IAC and Match just offered
a strong retort, posting firstquarter earnings that beat
analysts’ expectations. IAC,
which owns 22% of Match
and brands including ANGI
Homeservices and Vimeo, reported revenue of $995 million, topping estimates for
$922 million. Match Group,
its largest subsidiary, grew by
36% year over year to $407
million, notching the highest
quarterly revenue growth
since it went public in November 2015. Tinder, which
added 1.6 million subscribers
since the same period last
year, is now at 3.5 million.
The good news boosted
their shares—IAC is up
nearly 15% from its postFacebook low. But both re-
main well below where they
were before the social network’s May 1 announcement.
The conventional wisdom
among investors is that Facebook can do to IAC and
Match what it did to Snapchat when it began Instagram Stories. There certainly
are risks, but Facebook has a
tougher task in the dating
business.
Facebook, like Snapchat, is
all about sharing. But not everyone wants to share details
of their love life, especially
with friends and family on
3.5M
Number of subscribers to Tinder
dating app
their news feed. (Facebook
has promised to keep them
separate.) Facebook also
needs to win users’ trust—no
minor feat given its recent
privacy and data scandals.
There is already evidence
to suggest users don’t like to
mix Facebook and dating:
Signing up for Tinder was
initially only possible
through a Facebook account.
But two months after Tinder
started offering an alternative, non-Facebook sign-up,
75% of new users opted not
to sign up through Facebook.
“Users quickly and decisively separated Facebook
from their dating experience,” said Mandy Ginsberg,
CEO of Match.
Many young people are
also using Facebook less frequently. And even if they do
look for dates on Facebook,
that doesn’t mean they will
leave Tinder.
The biggest risk for Match
may be the erosion of its
pricing power. On Tinder, users can swipe free of charge
but they can also pay to
“boost” their profile or “super-like” potential mates.
Facebook has said its service
will be free. After strong rallies in the past couple of
years, shares of IAC and
Match, while not wildly overvalued, could be vulnerable
to a downturn.
Still, IAC has a huge headstart on Facebook, and it
plans to use it. One response
could be to consolidate by
making further acquisitions.
“What the market is saying is that scale really matters,” said Anthony DiClemente, an analyst at
Evercore ISI. IAC’s management team, led by Chairman
Barry Diller has the financial
flexibility right now to make
a new move.
Investors shouldn’t be so
quick to jump ship on IAC. If
anything, Facebook’s interest
in dating confirms that it is
an industry worth watching.
—Elizabeth Winkler
Death spiral is an overused
term, but it is justified when
describing Venezuela’s oil
industry now. Energy
consumers and investors
should pay attention.
Though production at
national oil company
Petróleos de Venezuela SA has
been falling fast, investors
have assumed the company
could keep global markets
supplied and hard currency
flowing to the country. Those
assumptions are starting to
unravel.
ConocoPhillips has moved
to take control of PdVSA
facilities in the Caribbean
after winning a $2 billion
legal judgment tied to
Venezuela’s seizure of its
assets in 2007. That move
alone hurts Venezuela because
that storage and refining
infrastructure is needed to
blend the country’s heavy
crude with lighter varieties
and make it suitable for sale
abroad. Energy economist
Philip Verleger estimates the
issue could cut off exports of
as much as 500,000 barrels a
day out of the 1.4 million
Venezuela produces. Coupled
with renewed sanctions on
Iran, the cutback could push
oil prices above the current
multiyear highs.
Now Conoco’s gambit has
set off a rush by others to
seize the assets that PdVSA
holds outside of Venezuela,
including tankers and oil
cargoes. Canadian gold mining
firm Rusoro, for example, is
going after Citgo Holding, the
Venezuelan-owned U.S.
refiner. Citgo is a vital link to
the U.S. market for Venezuela
and one of its only assets not
shielded by being physically
within its borders.
While the legality of
seizing these assets is
questionable, the uncertainty
is already affecting
operations. PdVSA
representatives couldn’t be
reached for comment, but a
Reuters report cites nine
vessels that appeared to be
headed to the PdVSA facilities
in the Caribbean but were
diverted to Venezuelan or
Cuban waters in the past
week, probably to avoid
having their cargoes seized.
PdVSA has a much bigger
creditor than ConocoPhillips.
China has lent the company
roughly $50 billion and a
grace period on repayment of
some loans was agreed to in
2016 when oil prices were
around half of today’s level.
Should China demand that
payments resume, the
company would have to send
it nearly a quarter of the oil it
produces, cutting the amount
of revenue it gets from
exporting oil.
Even without a further
push from China or from
possible U.S. sanctions to
protest the May 20
presidential election, the
latest woes are choking off
the regime’s already scarce
foreign currency earnings and
increasing the odds of more
serious domestic unrest.
Reports about Venezuela’s
oil output put it at
multidecade lows with the
exception of a strike in 20022003 that sent world oil
prices surging. A repeat of
that episode is looking more
likely.
—Spencer Jakab
Stuck in the Ground
Proved oil reserves, billion barrels
301
Venezuela
261
Saudi Arabia
170
Canada
158
Iran
143
Iraq
80
Russia
35
U.S.A.
Source: U.S. Energy Information
Administration
THE WALL STREET JOURNAL.
MARKETS
THE TICKER | Market events coming this week
Monday
EIA report: natural gas
Earnings expected*
Previous change in stocks in billions
of cubic feet
Estimate/Year Ago*
Estimate/Year Ago($)
Agilent Technologies
0.64/0.58
Invitation Homes 0.03/
(0.14)
Tuesday
Business Inventories
Feb.., previous
up 0.6%
March, expected
up 0.2%
Empire Manufacturing
April, previous
15.8
May, expected
14.9
Eagle Materials 1.05/0.88
Home Depot
2.06/1.67
up 89
ANDREW KELLY/REUTERS
Earnings expected*
Retail sales
March, previous
April, expected
Currencies
Wednesday
Mort. bankers indexes
Purch., previous down 0.2%
Refinan., prev.
down 1%
EIA status report
Previous change in stocks in millions
of barrels
Crude oil
Gasoline
Distillates
down 2.2
down 2.2
down 3.8
up 0.6%
up 0.3%
Building permits
March, previous 1.354 mil.
April, expected
1.35 mil.
Retail sales ex autos
March, previous
up 0.2%
April, expected
up 0.5%
Capacity Utilization
March, previous
78.0%
April, expected
78.4%
Macy’s is expected to report earnings Wednesday.
Housing starts
March, previous 1.319 mil.
April, expected
1.32 mil.
Industrial production
March, previous
up 0.5%
April, expected
up 0.6%
Earnings expected*
Estimate/Year Ago($)
Cisco Systems
0.65/0.60
Macy’s
0.37/0.24
Take-Two Interactive
0.63/0.68
Leading indicators
March, previous
up 0.3%
April, expected
up 0.4%
Philadelphia Fed survey
April, previous
23.2
May, expected
20.5
Earnings expected*
Estimate/Year Ago*
Applied Materials
1.14/0.79
Nordstrom
0.43/0.37
Walmart
1.12/1.00
Friday
Thursday
Initial jobless claims
Previous
211,000
Expected
215,000
Earnings expected*
Estimate/Year Ago*
Campbell Soup
Deere & Co.
0.61/0.59
3.30/2.49
* FACTSET ESTIMATES EARNINGS-PER-SHARE ESTIMATES DON’T INCLUDE EXTRAORDINARY ITEMS (LOSSES IN PARENTHESES) ADJUSTED FOR STOCK SPLITNOTE: FORECASTS ARE FROM DOW
JONES WEEKLY SURVEY OF ECONOMISTS
U.S.-dollar foreign-exchange rates in late New York trading
Country/currency
in US$
US$vs,
YTDchg
Fri
per US$ (%)
Country/currency
Americas
Europe
Argentina peso
.0435 23.0120 23.7
Brazil real
.2778 3.6002 8.7
Canada dollar
.7815 1.2797 1.8
Chile peso
.001614 619.60 0.7
Ecuador US dollar
1
1 unch
Mexico peso
.0515 19.4224 –1.3
Uruguay peso
.03449 28.9900 0.7
Venezuela b. fuerte .00001469900.0001 675794.5
Czech Rep. koruna
Denmark krone
Euro area euro
Hungary forint
Iceland krona
Norway krone
Poland zloty
Russia ruble
Sweden krona
Switzerland franc
Turkey lira
Ukraine hryvnia
UK pound
Asia-Pacific
Australian dollar
.7539 1.3264
China yuan
.1579 6.3341
Hong Kong dollar
.1274 7.8497
India rupee
.01484 67.405
Indonesia rupiah .0000717 13950
Japan yen
.009142 109.39
Kazakhstan tenge .003049 327.97
Macau pataca
.1236 8.0887
Malaysia ringgit
.2531 3.9505
New Zealand dollar
.6965 1.4358
Pakistan rupee
.00865 115.600
Philippines peso
.0191 52.459
Singapore dollar
.7484 1.3362
South Korea won .0009365 1067.86
Sri Lanka rupee
.0063367 157.81
Taiwan dollar
.03360 29.764
Thailand baht
.03133 31.920
Vietnam dong
.00004392 22770
3.6
–2.6
0.5
5.5
3.5
–2.9
–1.4
0.5
–2.7
1.8
4.5
5.0
–0.1
0.1
2.8
0.3
–2.1
0.3
in US$
US$vs,
YTDchg
Fri
per US$ (%)
.04685 21.345
.1603 6.2395
1.1942 .8374
.003787 264.08
.009771 102.34
.1250 8.0026
.2799 3.5727
.01615 61.915
.1163 8.5972
.9997 1.0003
.2318 4.3136
.0381 26.2125
1.3542 .7384
0.3
0.6
0.5
2.0
–1.2
–2.5
2.7
7.3
5.0
2.7
13.7
–6.9
–0.2
Middle East/Africa
Bahrain dinar
Egypt pound
Israel shekel
Kuwait dinar
Oman sul rial
Qatar rial
Saudi Arabia riyal
South Africa rand
2.6525 .3770 –0.03
.0565 17.7020 –0.4
.2797 3.5757 2.8
3.3171 .3015 0.01
2.5971 .3850 0.02
.2743 3.645 –0.1
.2666 3.7507 0.01
.0815 12.2642 –0.8
Close Net Chg % Chg YTD%Chg
WSJ Dollar Index 86.23 –0.03–0.03
0.29
Sources: Tullett Prebon, WSJ Market Data Group
Abu Dhabi’s national oil
company said Sunday it would
spend $45 billion over the
next five years to join other
giant, state-run petroleum giants, like Saudi Aramco, in reBy Nicolas Parasie in
Dubai and Summer
Said in Abu Dhabi
fining much of their own
crude instead of just exporting
it.
Abu Dhabi National Oil
Co., or Adnoc, said it aims to
create the world’s largest refining and petrochemicals
complex about 150 miles west
of Abu Dhabi, the capital of
the United Arab Emirates and
one of the world’s top oil exporters.
The initiative allows Abu
Dhabi to join an oil refining
boom in the Middle East,
where, until recent years, petroleum-rich countries simply
pumped crude and then exported it for processing else-
where.
Adnoc follows Saudi Arabian Oil Co., known as Aramco,
in building a refining empire.
Aramco has boosted its
global refining capacity by
more than a third to 5.4 million barrels a day, according to
Scottish energy consultancy
Wood Mackenzie. The kingdom has commissioned an additional refinery in its southwest region set to come online
in 2019. Kuwait also plans a
boost in its refining capacity
though on a smaller scale.
Along with new Asian refineries, the Middle East facilities
have pressured older, less
competitive refiners in Europe
and led to widespread closures
there. Saudi Arabia is now
among the top suppliers of
diesel fuel to Europe.
Adnoc said it wants to
boost its refining capacity to
1.5 million barrels of crude a
day, about half the crude it
pumps, by 2025. That is lower
than the percentage big oil
companies like Exxon Mobil
Corp. refine of their own
crude but it would be up substantially from the 922,000
barrels a day that ADNOC refines today.
Focusing on refined products such as gasoline and petrochemicals and gives petrostates like the U.A.E. a
buffer when oil prices drop.
Refineries and chemical factories make more money when
oil prices are low because
crude is among their highest
costs. Profit margins are generally higher on refined products than a barrel of crude.
Adnoc’s plans also fits into
a broader play by Gulf governments to diversify their economies and to end their historic
reliance on selling crude oil to
generate the bulk of their revenues. With the new investment, Adnoc and Abu Dhabi
hope to position themselves as
a more attractive investment
destination and a generator of
high-skilled jobs.
SATISH KUMAR/REUTERS
Abu Dhabi Joins Rush Into Oil Refining in Middle East
Adnoc’s headquarters in Abu Dhabi. The oil company has laid out plans to boost refining capacity.
.
THE WALL STREET JOURNAL.
B10 | Monday, May 14, 2018
MARKETS
Stocks Regain Calm After Bout of Turbulence
Volatility is falling again
after weeks of tumult
By Gunjan Banerji
and Peter Santilli
Wall Street’s fear gauge
has been getting less scary by
the week.
The Cboe Volatility Index,
or VIX, closed below its
200-day moving average last
Wednesday for the first time
since January and has
remained there since.
The VVIX, a measure of
how volatile the VIX itself is,
dipped under its average
weeks ago. The VVIX, also
known as “the VIX of the
VIX,” is based on options
prices on the volatility index.
The fear gauge has fallen
in each of the past five weeks,
the longest streak since a
six-week stretch in the
summer of 2016, according to
The Wall Street Journal’s
Market Data Group.
The VIX tends to fall when
stocks rise. It uses options on
the S&P 500 index to spit out
a measure of expected stock
swings over the next month.
The prospect of calm in
markets marks a sharp
reversal from the weeks of
turbulence that followed a
spike in volatility in early
February that sent the VIX on
its biggest one-day move ever
and U.S. stocks into
correction territory.
Despite the recent drop,
volatility remains elevated
across sectors from year-ago
levels.
Some say that the current
expectations for future
volatility are too low, after
the S&P 500’s gyrations this
year. The equity index has
gained or lost at least 1% this
year 32 times, the most since
2009.
Time will tell whether the
recent calm will persist.
Cboe Volatility Index
With 200-day moving average
Record one-day jump
Last year was the calmest on record for the VIX.
30
VIX dips
below its
200-day
average
20
oving
200-day m
10
average
Record low
0
Jan.
2017
Feb.
March
April
May
June
July
Aug.
Sept.
Oct.
Nov.
Dec.
Jan.
2018
Feb.
March
April
May
75%
Weekly changes in the VIX
Longest
streak of
weekly
declines
since the
summer
of 2016
50%
25
0
–25
–50
2016
2017
Exepected volatility by sector*
May 10, 2017
2018
May 10, 2018
S&P 500
Consumer staples
Utilities
Consumer disc.
Health care
Technology
Materials
Industrials
Financial
Telecom
Energy
Expected volatility, next 30 days†
Frontier Communications
66.8%
Mallinckrodt
64.2
Signet Jewelers
Macy’s
52.5
5
10
15
20
60 sessions
40
51.7
30
50.9
20
Southwestern Energy
50.4
10
Best Buy
49.6
0
L Brands
48.8
*Based on corresponding sector ETFs †As of May 10
Sources: WSJ Market Data Group (VIX, daily moves); FactSet (VVIX, VIX weekly changes); Trade Alert (expected volatility)
Most
since
2009
50
Kohl’s
Chesapeake Energy
0
60.5
Number of S&P 500 daily moves of
at least 1% through May 11 of each year
2000
’05
’10
’15
’18
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