For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.

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TUESDAY, MAY 23, 2017 ~ VOL. XLI NO. 184 WSJ.com ASIA EDITION
As of 12 p.m. ET DJIA 20882.63 À 0.37% NIKKEI 19678.28 À 0.45% STOXX 600 391.14 g 0.09% BRENT 53.87 À 0.48% GOLD 1252.00 g 0.06% EURO 1.1235 À 0.25% DLR ¥111.15 g 0.10%

What’s Ford Motor Changes Leadership

News As car maker’s stock
slumps, Mark Fields is
Mobility innovation unit. The He said Mr. Hackett needs to
shuffle ends Mr. Fields’s take “hard actions” to address
three-year tenure at the helm underperforming parts of the
auto maker faces challenges as
the industry pivots from con-
ventional cars and trucks to
market value slipped behind
that of Tesla Inc., the electric-
vehicle startup. That develop-
out as CEO and of the Dearborn, Mich., auto business and he needs to “re- new forms of manufacturing, ment, along with tension in
Business & Finance maker, where during 28 years ally invest in the performing including parts made with 3-D management ranks, shook di-
Jim Hackett moves up at the company he developed parts of the business.” Mr. Ford printers, and new types of rectors’ confidence in the com-
a reputation as didn’t address transportation, including au- pany’s direction and prompted

F ord’s board of directors

is replacing CEO Mark
Fields with industry outsider
Wary of Silicon Valley’s
push into the car business,
Ford Motor Co. Chief Executive
a hard-charg-
ing manager.
Ford Chair-
By John D. Stoll,
Christina Rogers
and Joann S. Lubin
specific depart-
ments or regions.
The chairman
tonomous vehicles.
Mr. Ford, long a supporter
of Mr. Fields, didn’t directly
discussion of a leadership
change, according to people fa-
miliar with the matter.
Jim Hackett amid a sagging Mark Fields hired industry out- man Bill Ford said Mr. Hackett, comment on the departing Ford shares were ahead by
stock price. A1 sider Jim Hackett to help coun- Jr. said the car company his a onetime Ford board member, CEO’s performance, but ac- 1.5% at $11.03 in midday trading
ter the threat in early 2016. great-grandfather started in is expected to “be in this job knowledged the company has on Monday.
 Huntsman and Switzer-
Now Mr. Hackett is taking over 1903 needs a fresh set of eyes. for a good long period—he’s room for improvement in com- Mr. Hackett is known for
land’s Clariant struck a
the corner office. In an interview, Mr. Ford said got the energy for it.” municating with Wall Street clear communication and tak-
deal to merge, creating a
Ford on Monday handed he expects the 62-year-old Mr. Mr. Ford noted “part of the and other constituents. Ford’s ing bold action. He made
chemical giant worth
the CEO role to Mr. Hackett, a Hackett to reinvent and re-en- job will be to teach and groom share price is down nearly waves in the Detroit area in
about $14 billion. B1
former head of office-furni- ergize the business. the next generation.” 40% from when Mr. Fields suc- 2014 when, as interim athletic
 OPEC is likely to extend ture maker Steelcase Inc. who “We need speed [in] deci- Himself a former chief exec- ceeded Alan Mulally in 2014. director for the University of
its production cuts because has been leading Ford’s Smart sion making,” Mr. Ford said. utive of Ford, Mr. Ford said the This year, the company’s Please see FORD page A2
it failed to drain high levels
of oil in storage enough to
raise prices significantly. B11
 Dairy farmers fear a
Thai Military Hospital Is Targeted on Coup Anniversary Trump,
trade squabble with Can-
ada, jeopardizing $150
million in sales, is a pre-
lude to disruptions to
In Israel,
come if Trump renegoti-
ates Nafta. B1 Presses
 Arconic struck a deal to
give hedge fund Elliott
Management seats on its
For Peace
board of directors. B3
BY CAROL E. LEE
 Chinese e-commerce AND RORY JONES
provider JD.com is devel-
oping drones capable of
JERUSALEM—President
delivering payloads weigh-
Donald Trump met with Israeli
ing a ton or more. B4
Prime Minister Benjamin Ne-
 Cathay Pacific Airways tanyahu in an attempt to build
will lay off about 600 peo- on two days of talks in Saudi
ple as it grapples with Arabia about a regional thaw
tough competition and bad between Arabs and Israelis,
bets on oil prices. B4 but the effort faces early
headwinds amid concerns
 Citigroup and Nasdaq
among some Israeli officials
have been working to link
about new U.S. arms deals
Citigroup’s business pay-
with Persian Gulf states.
ments services to Nasdaq’s
Mr. Trump became on Mon-
DARIO PIGNATELLI/GETTY IMAGES

blockchain platform. B11

day the first serving U.S.
leader to visit the Western
Wall, a shrine holy to Jews
World-Wide that has emerged as a source
of discord between the U.S.
 Trump met with Netan- and Israel.
yahu in an attempt to “We have before us a rare
build on two days of talks opportunity to bring security
in Saudi Arabia about a re- BOMB BLAST: More than 20 people were injured by an explosion that struck Phramongkutklao Hospital in Bangkok on the third and stability to this region and
gional thaw between Ar- anniversary of a military coup that overthrew a democratically elected government. Remnants of wires and batteries were found. A5 to its people,” Mr. Trump said
abs and Israelis. A1 after arriving at Tel Aviv’s Ben
 The Middle East visit Please see TRUMP page A4
achieved a measure of for-
eign-policy success by
shoring up U.S. alliances
and distracting from the
president’s domestic diffi- THE QUANTS Flynn Won’t Give Senate
NOW RUN
culties. A3
 Flynn will decline to
cooperate with a U.S. Sen- Records in Russia Probe
WALL STREET
ate subpoena in the inves-
tigation of alleged Russian
BY BYRON TAU tion. Mr. Flynn was expected ald Trump who have been
interference in the 2016
to inform the committee of his asked by congressional inves-
election. A1
WASHINGTON—Former na- decision in a letter, through a tigators to provide interviews
 Rouhani’s re-election tional security adviser Mike representative. or documents.
threatens to put the U.S. Flynn will decline to cooperate Mr. Flynn had previously Both the House and Senate
on a collision course with
Software-driven trading, long predicted, is with a Senate subpoena, in- said through an attorney he intelligence committees are
Europe over future policy becoming dominant voking his constitutional right was willing to cooperate in conducting probes into al-
toward Tehran. A3 against self incrimination and exchange for some guarantee leged Russian interference in
BY GREGORY ZUCKERMAN first year, say people famil- setting off a legal showdown that he could avoid criminal the 2016 election, including
 Kim Jong Un’s call to
AND BRADLEY HOPE iar with the contract. with Congress over a key wit- prosecution, this person whether any U.S. political
mass produce a new mis-
The Russian-born software ness in its investigation of al- said. No such immunity has campaign coordinated with
sile underscores North Ko-
Alexey Poyarkov, a former engineer, who declined to leged Russian interference in been granted by Congress. foreign operatives. Russia
rea’s rapid progress in
gold-medal winner of the In- comment, as did the hedge the 2016 election. That means Mr. Flynn might has denied any interference
building up a range of ca-
ternational Mathematical funds, had almost no finan- According to a person close now attempt to trade his in the election, and Mr.
pabilities for its growing
Olympiad for high-school stu- cial experience. What TGS to him, Mr. Flynn planned to testimony and cooperation Trump has called the investi-
missile arsenal. A5
dents, spent most of his early wanted was his wizardry at tell the Senate Intelligence in exchange for immunity. gation a “witch hunt.”
 A bomb exploded at an career honing designing al- Committee on Monday that he The former national secu- Mr. Flynn is the only Trump
army-run hospital in algorithms at gorithms, won’t comply with the panel’s rity adviser and Army lieu- associate who has been sub-
Bankok on a coup anniver- technology sets of rules request for documents, citing tenant general is part of a poenaed by Congress.
sary, wounding more than companies used to the Fifth Amendment’s protec- widening circle of aides and The Senate Intelligence
20 people. A5 such as Mi- power calcu- tions against self incrimina- associates of President Don- Please see FLYNN page A6
crosoft Corp., lations and
 The rush of young peo-
where he Machines and their mas- problem-
ple to American cities is
partly to blame for the
helped make
the Bing
ters are the undisputed new
kings of Wall Street
solving,
which in the
This Toddler
country’s worsening hous-
search engine investment
ing shortage. A7
smarter at
ferreting out pornography.
world can
quickly parse data and de-
Just Loves
Inside Last year, a bidding war
for Mr. Poyarkov broke out
cide what to buy and sell.
Up and down Wall
To Eat
among hedge-fund heavy- Street, algorithmic-driven i i i
CEO COUNCIL: weights Renaissance Tech-
nologies LLC, Citadel LLC
trading and the quants who
use sophisticated statistical Xiaoman, 2½ years
ASIA, B5 and TGS Management Co. models to find attractive
When it was over, he went trades are taking over. old, is an online
Japan’s Abe to work at TGS in Irvine, On many trading floors,
Calif., and could earn as quants are gaining respect, sensation in China
Talks Trump much as $700,000 in his Please see QUANTS page A8
BY KATHY CHU
AND MENGLIN HUANG
CONTENTS
Business News..... B3
Capital Journal...... A2
Life & Arts......... A9,12
Markets.................... B12
Opinion.............. A10-11
Beijing Unveils Changes in Energy The cherub-cheeked toddler
Crossword.............. A12 Technology............... B4 Workforces of China's energy companies dwarf global competitors' licked her bowl clean, then care-
Finance & Mkts.. B11 U.S. News............. A6-7 fully picked out each noodle
Heard on Street... B12 Weather................... A12 that had fallen into her bib, pol-
Journal Report... B5-9 World News........ A2-5
PetroChina 509,000 ishing them off one by one.
China: RMB28.00; Hong Kong: HK$23.00;
Indonesia: Rp25,000 (incl PPN);
“More, more!” cried Bai
Japan: Yen620 (incl JCT); Korea: Won4,000; Sinopec 451,611 Cairan, a 2½-year-old girl in
Malaysia: RM7.50; Singapore: S$5.00 (incl GST)
Beijing who is famous to Chi-
KDN PP 9315/10/2012 (031275); MCI (P)
NO. 066/01/2017; SK. MENPEN R.I. NO: 01/ Royal Dutch Shell 92,000 nese as Xiaoman, her name in
SK/MENPEN/SCJJ/1998 TGL. 4 SEPT 1998
online videos where she de-
Exxon Mobil 71,000 vours everything from whole
fish to watermelon.
Saudi Aramco 65,000 A video posted last month of
Xiaoman biting off tender mor-
Note: Figure for Saudi Aramco as of end-2015; figures for other companies as of end-2016. sels of yellow durian, an Asian
Source: the companies THE WALL STREET JOURNAL. fruit with a pungent smell that
s Copyright 2017 Dow Jones & makes many people recoil, has
Company. All Rights Reserved
CUTTING BACK: Leaders are considering action to make state oil piled up more than 2.8 million
firm more like global peers. Job cuts could be part of the plan. A5 Please see FOODIE page A8
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
A2 | Tuesday, May 23, 2017 THE WALL STREET JOURNAL.

WORLD NEWS

Lessons for Trump in a Reagan Scandal

cant makeover of his team, brought along Mr. Duberstein
bringing in a new set of as his deputy, and, eventu-
Washington pros. He adopted ally, Gen. Colin Powell as na-
a disciplined approach of al- tional security adviser and
lowing the Iran-Contra inves- longtime national-security
tigations—painful though figure Frank Carlucci as de-
they were—to play out with- fense secretary.
out interference, while focus-
CAPITAL JOURNAL

T
ing his own energies on he new team sought to
By Gerald F. Seib achieving some modest do- resolve the Iran-Contra
mestic legislative victories questions while also
and more significant diplo- separating Mr. Reagan from

I
n late 1986, Ronald Rea- matic achievements. them. A special channel was
gan was overseeing a Equally important, his set up in the White House
presidency in deep trou- aides and his wife convinced counsel’s office to handle
ble. a reluctant president to tell Iran-Contra issues, freeing
Because of the Iran-Contra the nation, not once but the rest of the White House
scandal, his job-approval rat- twice, that he accepted re- to focus on the other pieces

BOB DOUGHERTY/ASSOCIATED PRESS

ings had plunged 16 percent- sponsibility for the Iran-Con- of the Reagan agenda.
age points in less than two tra problem. “We convinced The new team also con-
months. His administration Reagan—and it was worse vinced Mr. Reagan to stop
was under investigation by than 10 root canals—that he making offhand comments
both an inde- had to do a mea culpa to the about Iran-Contra, which
pendent com- American people,” recalls kept the controversy swirl-
mission and a Ken Duberstein, who was ing. Increasingly, presidential
court-ap- among the group brought in attention was focused on re-
pointed inde- to revive the Reagan presi- shaping relations with the
pendent coun- dency and later became President Ronald Reagan during a White House news conference on Nov. 25, 1986. Soviet Union, which pro-
sel, and there White House chief of staff. duced historic summit meet-
was serious talk of impeach- There are, of course, sig- appears eager to derail in- ment of Nicaragua. Both ends exploding in late 1986. At the ings with Mikhail Gorbachev
ment. nificant differences between quiry into the Russian ques- of this transaction—selling end of November, the Reagan and a landmark 1987 agree-
Yet by the time he left of- the problems facing Mr. Rea- tion—firing FBI director arms to Iran and giving mili- administration publicly ac- ment on intermediate-range
fice two years later, Mr. Rea- gan then and President Don- James Comey amid his inves- tary assistance to the Con- knowledged that money had nuclear arms.
gan had pulled out of the ald Trump now. The Iran- tigation and regularly belit- tras—contravened prevailing gone to the Contras; fired Ol- Along the way, congressio-
ditch and overseen a historic Contra scandal erupted well tling the idea that there is laws, so the whole operation iver North, the National Se- nal investigations were
makeover of relations with into Mr. Reagan’s second anything worth examining at was an elaborate effort to curity Council staff member launched alongside the inde-
the Soviet Union. He rode term and involved a substan- all—Mr. Reagan came to con- defy congressional intent. behind the operation; and pendent-counsel inquiry.
out of office with a robust tive policy disagreement clude that the air would be Mr. Reagan, it turned out, appointed a special commis- Eventually a handful of Rea-
63% job-approval rating. with Congress, while the cleared only if he allowed approved the sale of arms to sion to examine what had gan aides were indicted and
What happened? And are questions over Russian’s both Justice Department and Iran out of a humanitarian happened. convicted of various trans-
there any lessons in this re- election-year role turn on subsequent congressional impulse: In return for the But real damage control gressions—and later par-
bound for the Trump admin- what happened during the probes to play out. weaponry, the Iranians began a couple of months doned by President George
istration as it stumbles campaign and shortly after “Iran-Contra” was short- helped free American hos- later, when Mr. Reagan H.W. Bush.
through the inquiry into Rus- he entered office. hand for a covert effort by tages held in Lebanon. But he cleaned house. He accepted Mr. Reagan, though, sur-
sia’s role in the 2016 presi- the Reagan national-security appeared to be unaware the the forced resignation of his vived, and even thrived.

T
dential election? he key lesson, though, team to sell weapons to Iran, proceeds were being used to White House chief of staff, Whether Mr. Trump can
The key to Mr. Reagan’s may be one that Mr. and then funnel the proceeds arm Nicaraguan rebels. Donald Regan, and replaced adopt a similarly open yet
survival came in early 1987, Trump seems to be re- to arm the Contra rebels Little of that was clear as him with former Sen. How- disciplined approach is the
when he launched a signifi- sisting. Whereas Mr. Trump fighting the leftist govern- word of the operation was ard Baker. Mr. Baker, in turn, question of the hour.

Ford CEO’s Spat With Trump Highlighted Troubles

BY JOHN D. STOLL troit’s Big 3. Belt car facilities have closed.
The spotlight came at a bad Mr. Fields fielded questions
Ford Motor Co.’s board of time for Mr. Fields because he about the Mexico strategy on
directors is replacing Chief Ex- was working to change the earnings calls and at auto
ecutive Mark Fields with in- perception of Ford by making shows, occasions where he
dustry outsider Jim Hackett a slew of announcements would rather talk about profit
amid a sagging stock price. It about so-called mobility proj- growth prospects or new
is not just poor communica- ects (such as ride hailing or products and moonshot proj-
tion with Wall Street that cost car sharing) at a time when ects like autonomous cars. In
SAUL LOEB/AGENCE FRANCE-PRESSE/GETTY IMAGES

Mr. Fields his job—he also the auto maker is primarily December, he told The Wall
struggled with Washington. dependent on pickups and Street Journal the Mexico plan
A longtime Ford executive, sport-utility vehicles. The tim- was set even after Mr. Trump
Mr. Fields is seen as having ing of Mr. Fields’s Mexico an- was elected and turned up
unnecessarily put the car com- nouncement was seen inter- pressure on Ford. Mr. Fields
pany on President Donald nally as a major gaffe, insisted it was too late to stop
Trump’s radar during last reinforcing a growing percep- a construction project because
year’s campaign, according to tion internally that his man- small Focus sedans needed to
a person familiar with the agement team struggled to start rolling off the line in
board’s thinking. As then-can- connect with constituents 2018.
didate Mr. Trump was railing ranging from wealthy inves- Then, Mr. Fields abruptly
on companies that make prod- tors to everyday Americans, changed course, announcing
ucts in Mexico and ship them according to the person. the $1.6 billion San Luis Potosi
to U.S. stores, Mr. Fields The actions Mr. Fields took A Ford Focus vehicle is shown on an assembly line at a plant in Michigan in 2015. factory project would be
boldly told shareholders about in the span between Mr. stopped, and the small cars
a plan to move production of Trump’s nomination as the Re- Fields worked to clarify it, at the company, and pointed Mr. Trump didn’t solely tar- would be built at an existing
the Ford Focus from Michigan publican candidate for presi- saying the company would in- out that the trucks taking the get Ford, having taken aim at Mexico facility. The company
to San Luis Potosí. dent and Inauguration Day vest heavily to retool the compact Focus model’s place the overseas manufacturing had earlier told Mr. Trump
What Mr. Fields didn’t only created more confusion, Michigan factory for produc- on the Michigan assembly line plans of Carrier Corp., Whirl- that it was also reversing
make clear was that the auto the person said, and ended up tion of more popular trucks ad are more profitable for Ford. pool Corp. and the makers of course on sending a Lincoln
maker had specific products costing the company hundreds SUVs. The company also Mr. Trump, however, Oreo cookies and Sentry Safe. product to Mexico.
in mind to replace the Focus of millions of dollars in lost worked to highlight its North wouldn’t let Ford off the hook, Criticism of Ford reflected The auto maker booked a
and preserve jobs, the person investment due to the cancel- American footprint, providing highlighting Ford’s strategy in wider concern about a U.S. $200 million hit related to the
said. Mr. Trump pounced, lation of the San Luis Potosi statistics that showed an over- debates with Democratic rival manufacturing base in which factory cancellation, but said
painting the 114-year-old auto plant. whelming amount of the prod- Hillary Clinton, at campaign car factories have long been some of the money saved on
maker founded by Henry Ford Mr. Fields couldn’t be ucts sold in America were stops and on Twitter. The the backbone. Ford, GM and the overall investment would
as the poster child for out- reached to comment. A Ford built in the U.S. United Auto Workers union, several other major auto mak- be used to create hundreds of
sourcing and Exhibit A of why spokeswoman declined to The company, for instance, long seen as cooperating with ers committed more than $26 jobs in Flat Rock, Mich. Mr.
the North American Free comment on management said it had created 28,000 new Ford more than it typically co- billion to investment in Mex- Trump has since highlighted
Trade Agreement was bad for moves. jobs in the U.S. since 2011, part operated with General Motors ico since 2013, sparking a fac- Ford as one of the companies
American workers, including Almost as soon as he an- of $12 billion worth of invest- Co. or Fiat Chrysler Automo- tory-building spree there at a investing in America due to
the roughly 150,000 factory nounced the Mexico strategy ments. Employees also high- biles NV, supported Mr. time when new U.S. vehicle political pressure he applied
workers employed by De- for outsourcing small cars, Mr. lighted 488 open U.S. positions Trump’s sentiments. plants are rare and some Rust during and after the campaign.

THE WALL STREET JOURNAL.

FORD longtime Boeing Co. executive

recruited to run Ford in 2006.
Mr. Mulally addressed the tur-
moil that permeated Ford’s
has made some initial moves
under Mr. Hackett’s direction,
hiring van-shuttle service Char-
iot and joining with a bike-
Dow Jones Publishing Company (Asia)
25/F, Central Plaza, 18 Harbour Road,
Hong Kong
Tel: 852 2573 7121 Fax 852 2834 5291

Andrew Dowell, Asia Editor

Continued from Page One management ranks at the time, sharing firm. Troy McCullough, Senior News Editor, Asia
Michigan, he recruited NFL sold off business units and In an interview with the Darren Everson, International Editions Editor
coach Jim Harbaugh to lead shored up the balance sheet. Journal last year, Mr. Hackett Hugo Restall, Editorial Page Editor
Michigan’s vaunted football Mr. Mulally left Ford in 2014 said he wasn’t interested in be- Mark Rogers, Advertising Sales
program. as the company was on a win- ing a chief executive again but Jacky Lo, Circulation Sales
CARLOS OSORIO/ASSOCIATED PRESS

Over 30 years at Steelcase, ning streak. He benefited from was available to help Mr. Fields Jacquelyn Drozdoff, Communications
Simon Wan, Technology
Mr. Hackett reshaped the com- a revamped product line that think through tough challenges.
pany’s workplace offerings, dis- was built while avoiding the During the interview, Mr. Jonathan Wright,
Managing Director Asia & Publisher
pensing with cubicles and em- bankruptcies that hit Detroit ri- Hackett explained that tradi-
Advertising through Dow Jones Advertising
bracing open offices. vals General Motors Co. and tional car-building consumes Sales: Hong Kong: 852-2831 2504; Singapore:
At Ford he has overseen the Fiat Chrysler Automobiles NV’s substantial capital and returns 65-6415 4300; Tokyo: 81-3 6269-2701;
formation of the unit responsi- Chrysler unit in 2009. relatively slim margins. In so- Frankfurt: 49 69 29725390; London: 44 207
842 9600; Paris: 33 1 40 17 17 01; New York:
ble for experimenting with car- Mr. Fields, a turnaround art- called mobility services, he said 1-212 659 2176.
sharing programs, self-driving ist known for overseeing reviv- Ford could eventually earn far Or email: [email protected]
ventures and other programs als in Ford’s operations on sev- Mark Fields, above, hired Jim Hackett, his successor as CEO. more attractive margins if it Printers: Hong Kong: Euron Limited, 2/F., Block 1,
Tai Ping Industrial Centre, 57 Ting Kok Road, Tai
aimed to help the 114-year-old eral continents and within hired the right software engi- Po, Hong Kong; Indonesia: PT Gramedia Printing
auto maker better compete various business units, was a Mr. Fields had been planning coming as GM exited that re- neers and designers. Group, Jalan Palmerah Selatan 22-28, Jakarta
10270; Japan: The Mainichi Newspapers Co., Ltd.,
with Uber Technologies Inc., top lieutenant under Mr. Mu- to launch driverless cars early gion due to persistent losses The auto maker has been 1-1-1 Hitotsubashi, Chiyoda-ku, Tokyo, 100-8051;
Alphabet Inc. and other tech gi- lally and Bill Ford’s pick as the next decade, but Ford is far be- and a lack of confidence in its projecting 20% margins in the Korea: JoongAng Ilbo. 100 Seosomun-ro, Jung-gu,
Seoul, 100-814. Publisher/ Printer: Song, Pil-Ho;
ants looking to edge in on the successor. hind Tesla and GM on electric- German Opel unit. mobility-services business, but Malaysia:Dasar Cetak (M) Sdn Bhd, Lot 2, Jalan
Sepana 15/3, Off Persiaran Selangor, Seksyen 15,
auto industry. Mr. Fields couldn’t be car development. Mr. Fields, however, has hasn’t outlined when that 40200 Shah Alam, Selangor. (ROC No: 048885)6;
Jim Farley, recruited by Ford reached for comment. Executives also have strug- struggled with Wall Street. An- would be achieved. Its North Singapore: Singapore Press Holdings Limited, 82
Genting Lane Media Centre Singapore 349567
from Toyota Motor Corp. and When Tesla overtook the gled to explain how Ford will alysts and investors have rou- American unit is Ford’s most
credited with turning around market capitalizations of GM as make money on services other tinely questioned the com- profitable, returning about 10% Trademarks appearing herein are used under
license from Dow Jones & Co.
European operations, will also well as Ford earlier in this year, than developing, producing and pany’s ability to weather the operating margins under the ©2017 Dow Jones & Company. All rights reserved.
be given a new prominent role. it underscored how far behind selling automobiles. next industry downturn. Criti- best conditions. USPS 337-350; ISSN 0377-9920

Mr. Farley, 54, will work di- Detroit is perceived to be in the Ford has posted a series of cism has increased as U.S. auto
NEED ASSISTANCE WITH
rectly under Mr. Hackett as a race to develop new technol- solid profits under Mr. Fields, sales plateau and Ford’s market
CORRECTIONS 
YOUR SUBSCRIPTION?
potential successor, according ogy. aided by renewed demand for share slides. By web: http://wsj-asia.com
to multiple people briefed on Uber, Google, Tesla and oth- pickups and sport utilities that One of several auto-industry By email: [email protected]
Ford’s plans.
A group of other executives
ers are racing ahead with pro-
grams, including electric vehi-
deliver higher margins and do
well in an era of cheaper gaso-
outsiders recruited by Mr.
Fields, Mr. Hackett was in-
AMPLIFICATIONS By phone: Hong Kong: 800 901 216; Australia:
0011 8000 322 8482; China: 400 991 1174;
India: 000 800 440 1938; Indonesia: +62 21
2970 2702; Japan: 0120 779 868; Korea: 0030
will be reassigned. cles, ride-hailing services and line. Mr. Farley, meanwhile, stalled to be instrumental in Readers can alert The Wall Street 844 0063; Malaysia: 1800 804 612; New
Mr. Hackett is known for an the development of vehicles en- helped deliver more than $1 bil- helping Ford’s moves into Journal to any errors in news Zealand: 0800 442 434; Philippines: 1800 1441
articles by emailing 0033; Singapore: 1800 823 2042; Taiwan:
easy and straightforward style tirely capable of driving with- lion in profit in Europe last transportation-related services. [email protected]. 00801 444 141; Thailand: 001800 441 8323
reminiscent of Mr. Mulally, a out human intervention. year, with the favorable result Ford’s Smart Mobility unit
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
THE WALL STREET JOURNAL. Tuesday, May 23, 2017 | A3

WORLD NEWS
Trump’s Visit Wins Saudi Support Europe,
U.S. Face
Speech in Riyadh isn’t
expected to gain
Mr. Trump points from
Rift Over
other Muslims Iran Policy
BY WILLIAM MAULDIN BY JAY SOLOMON

WASHINGTON—President WASHINGTON—The land-

Donald Trump’s visit to Saudi slide re-election of Iranian
Arabia achieved a measure of President Hassan Rouhani
foreign-policy success by shor- threatens to put the Trump
ing up U.S. alliances, distract- administration on a collision
ing from the president’s do- course with Europe over fu-
mestic difficulties, and ture policy toward Tehran.
sidestepping some of the European officials hailed
thornier problems simmering the news of Mr. Rouhani’s win
SAUDI PRESS AGENCY/EUROPEAN PRESSPHOTO AGENCY

in the region, according to law- as heralding a more moderate

makers and Mideast experts. path for Iran over the next
In a speech in the Saudi four years. But President Don-
Arabian capital, Mr. Trump ald Trump, speaking to Muslim
challenged the heads of state leaders in Saudi Arabia, sought
in the region to help in “hon- to rally the international com-
estly confronting the crisis of munity behind a new cam-
Islamist extremism and the Is- paign to push back Iran’s influ-
lamist terror groups it in- ence in the Middle East.
spires,” saying terrorists Indeed, Mr. Trump signaled
should be driven “out of this a significant hardening of the
earth.” Mr. Trump also said U.S. position toward Iran, sug-
“all nations of conscience gesting only the removal of its
must work together to isolate theocratic leadership could
Iran, deny it funding for ter- President Donald Trump, first lady Melania Trump, Saudi King Salman bin Abdulaziz Al Saud, center, and Egyptian President Abdel stabilize the region.
rorism,” without providing Fattah Al Sisi, left, gathered around a globe Sunday at the opening of the Global Center for Combating Extremist Ideology in Riyadh. “Until the Iranian regime is
concrete details of U.S. strat- willing to be a partner for
egy toward Tehran. peace, all nations of conscience
“This is someone who is Two Speeches Are long speech lasted an hour. Mr. popular war in Iraq, had tens of by experience and judgment” to must work together to isolate
making it clear that we’re Trump’s, which was 3,401 thousands of troops in Afghani- the terrorism fight. Iran…and pray for the day when
making common cause with Study in Contrasts words, took 34 minutes. stan, and America’s image in Mr. Trump’s speech came the Iranian people have the just
those who are prepared to At the time of their speeches, the Muslim world was in tat- just months after he was and righteous government they
take on ISIS and the Iranians,” RIYADH, Saudi Arabia—Presi- both leaders were seeking ters after the implementation elected president on a promise deserve,” Mr. Trump said.
said Dennis Ross, a former U.S. dent Donald Trump’s first major warmer relations with the Mus- of some post-9/11 policies. to focus on domestic concerns, Mr. Rouhani, a pragmatic
envoy in the region and senior speech to the Muslim world lim world, which had become “Unlike Afghanistan, Iraq was challenge the global status quo Islamic cleric, secured a sec-
fellow at the Washington Insti- was an opportunity to formally strained under their predecessors a war of choice that provoked on trade and security alliances, ond term on a campaign plat-
tute for Near East Policy. turn the page on an approach for different reasons. strong differences in my country and escalate the fight against form to promote an Iran that
Mr. Trump’s messages were his predecessor had outlined Mr. Obama took office fac- and around the world,” Mr. Obama terrorism. He spoke amid is more open to the West and
received warmly by the leaders just months into his presidency. ing a war-wary country. The said, while Mr. Trump promised to strained U.S. relations with allies willing to embrace political
in the region because their Mr. Trump’s speech in Riyadh U.S. was embroiled in an un- “apply new approaches informed in the Middle East, largely over and economic changes.
governments are some of the and President Barack Obama’s Mr. Obama’s diplomatic out- Many European govern-
biggest targets for terrorism 2009 speech in the Egyptian capi- reach with Iran, their archrival. ments hope he will use his
and are also under pressure tal Cairo differ dramatically in sub- Their speeches underscore next four years to moderate
from Iran, which supports mili- stance and style. Yet their goals the starkly different approaches Tehran’s overseas policies,
MANDEL NGAN/AGENCE FRANCE-PRESSE/GETTY IMAGES

tants in Iraq, Syria and Yemen. were essentially the same. each adopted toward Iran early particularly its support for
“It is to some extent “I’ve come here to Cairo to in their presidencies. Mr. Trump Shiite militias fighting in
preaching at the choir,” said seek a new beginning between was combative, saying “Iran Syria, Iraq and Yemen. Few of
Anthony Cordesman, strategy the United States and Muslims funds, arms, and trains terrorists, the U.S. president’s top aides,
chair at the Center for Strate- around the world, one based on militias and other extremist however, believe Mr. Rouhani
gic and International Studies. mutual interest and mutual re- groups that spread destruction can deliver serious change in a
“All of this sends a kind of spect,” Mr. Obama said in 2009. and chaos across the region.” political system dominated by
message about American re- Mr. Trump told Muslim lead- Mr. Obama offered diplomatic hard-line Supreme Leader Aya-
solve and American concern ers that their gathering together talks to the Iranian regime. “There tollah Ali Khamenei and its
for its Arab allies.” in Riyadh “is a symbol to the will be many issues to discuss elite military unit, the Islamic
The visit served as reassur- world of our shared resolve and between our two countries, and Revolutionary Guard Corps.
ance for Saudi Arabia and al- our mutual respect” and could we are willing to move forward They say Iran’s regional ag-
lied nations after former Pres- mark the beginning of “a new re- without preconditions on the ba- gression increased over the past
ident Barack Obama appeared naissance” in the Middle East. sis of mutual respect,” he said. four years, despite Mr. Rou-
to seek closer relations with Mr. Obama’s 6,036 words- Barack Obama addressing the Muslim world from Cairo in 2009. —Carol E. Lee hani’s more pragmatic politics
Iran while negotiating a nu- and the landmark nuclear agree-
clear agreement with the ment, called the Joint Compre-
country, and after the 2016 litical headaches back home speech conundrum fairly vocacy organization. militant extremists. The ab- hensive Plan of Action, or
presidential campaign raised that may hamper his domestic well,” Mr. Miller said. “He Some of Mr. Trump’s political sence of a human-rights dis- JCPOA, forged between global
questions about the U.S. appe- goals, said Aaron David Miller, a made a few of the right points, partners also were turned off. cussion drew quick criticism powers and Iran in 2015. They
tite for foreign entanglements. former senior State Department missed many of the bad ones, Roger Stone, a Republican oper- from Democratic and Republi- point to Mr. Khamenei and the
Mr. Trump’s decision to visit official now at Washington’s dodged the bullet on formula- ative who was closely involved can lawmakers. IRGC as pushing these policies.
Saudi Arabia and Israel before Woodrow Wilson International tions of ‘radical Islamic terror- with Mr. Trump’s campaign, re- “I think this is a broader el- “#EU ready to continue
other countries—and his warm Center for Scholars. ism’ that could be seen as ter- sponded to a photograph of ement of the administration’s work for full JCPOA implemen-
rhetoric for their leadership— In his speech Sunday, Mr. ribly offending.” King Salman bin Abdulaziz Al policy, that they’re going to tation, bilat engagement, re-
signals a shift away from Mr. Trump had to strike a balance The speech in Riyadh isn’t Saud placing a medal around de-emphasize issues of human gional peace, and meet expec-
Obama’s policy in the region, between cooperation with the likely to win Mr. Trump sup- the president’s neck by writing rights—that what countries do tations of all people in #Iran,”
which Mr. Trump has blamed majority-Muslim countries and port among Muslims. “One on Twitter: “Candidly, this within their own boundaries, European Union foreign-policy
for the turmoil there. loyalty to his domestic politi- speech cannot outweigh years makes me want to puke.” we’re essentially going to look chief, Federica Mogherini,
The trip also shows Mr. cal base, which includes sup- of anti-Muslim rhetoric and Mr. Trump avoided sensi- the other way,” said Rep. tweeted on Saturday.
Trump appears eager to use his porters who backed his cam- policy proposal,” said Nihad tive issues of human rights, Adam Schiff (D., Calif.). The Trump administration
international authority to work paign promise to ban Muslims Awad, the executive director repressive regimes and official —Kate O’Keeffe is currently conducting an in-
with allies and court success on from entering the U.S. of the Council on American-Is- support for Muslim clerics in and Tamer El-Ghobashy teragency review of its overall
the global stage as he faces po- “He got in and out of the lamic Relations, a Muslim ad- the region who inspire some contributed to this article. Iran policy.

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WORLD NEWS

Israel Extends an Aid Offer

BY RORY JONES and examine an extension of a sures would be sustained by wing Jewish Home party voted
train line from Israel to the Israel, or improve the lives of against the measures at the
TEL AVIV—Israel agreed to Palestinian territory that could ordinary Palestinians. cabinet meeting, according to
economic measures to improve increase commerce and the Husam Zomlot, the Pales- a person familiar with the
the lives of Palestinians in the flow of people between them. tinian diplomatic representa- matter.
West Bank ahead of a visit by The security cabinet said it tive to Washington, welcomed Influential Jewish Home
U.S. President Donald Trump, would create a committee to the Israeli moves as long as leader Naftali Bennett doesn’t
whose administration has manage the measures over a they are genuinely enacted. support the establishment of a
pushed for such initiatives to three-year period. But he expressed skepticism Palestinian state, and has said
help restart peace talks. White House officials have that Israel would follow that he will support U.S.-bro-

EVAN VUCCI/ASSOCIATED PRESS

The measures were decided said that improving the lives through with the measures kered talks only if they don’t
Sunday at a meeting of the of Palestinians is a key policy given that Mr. Netanyahu include offering concessions to
government’s security cabinet. goal, as the Trump administra- won’t express support for the Palestinians.
They include allowing con- tion looks to bring the two two-state solution. He has made implicit
struction of Palestinian resi- sides together. The president “Whenever there is an in- threats to pull out of Mr. Ne-
dences in the area of the West has made such concessions a ternational movement towards tanyahu’s coalition govern-
Bank under Israeli control, key tenet of his peace plat- political solution, Israel ap- ment should the Israeli leader
Prime Minister Benjamin Ne- form since taking office in proves a set of reversible mea- make overtures to Palestinians
tanyahu’s office said Monday, January. sures,” Mr. Zomlot said. “If or commit to Palestinian state- Donald Trump visited the Western Wall, a shrine holy to Jews
a controversial issue for right- Mr. Trump arrived in Israel Netanyahu really wants to hood. that has become a source of discord between the U.S. and Israel.
wing Israelis who don’t want on Monday afternoon for a show goodwill, [he could] en- His party’s departure from
to give up the land.
The government

border crossings from the

also
agreed to smooth operation of
two-day visit. He was expected
to meet with Mr. Netanyahu in
Jerusalem, then on Tuesday
with Palestinian Authority
dorse a peace agenda and the
two-state solution.”
Israeli conservative opposi-
tion to the measures illus-
the coalition could precipitate
its collapse.
Mr. Netanyahu didn’t com-
mit to a Palestinian state in a
TRUMP known as “Qualitative Mili-
tary Edge.” The Obama ad-
ministration agreed to $3.8
billion in annual military aid
West Bank into Israel; deter- President Mahmoud Abbas. trates the delicate task facing February meeting with Mr. Continued from Page One last year, increasing the size
mine land that could be used Palestinians expressed Mr. Trump. Trump, the last time the two Gurion Airport. “We can only of the package for a 10-year
for Palestinian industrial use; skepticism that the new mea- Lawmakers from the right- leaders met. get there by working together. period.
There is no other way.” Israel’s energy minister
In a meeting later on Mon- Yuval Steinitz on Sunday
day with Mr. Netanyahu, Mr. questioned the size and
Trump said of Saudi leaders, scope of the Saudi deal.
“Their feeling toward Israel “Hundreds of millions of
is really very positive,” and dollars in arms deals is
said that relations between something we need to get an
the two countries are being explanation for,” he told Is-
shaped by a mutual desire to raeli media in comments con-
counter Iranian aggression. firmed by his spokeswoman.
“It’s forcing people to- “We need to ensure Israel’s
gether in a very positive qualitative military edge is
way,” Mr. Trump said. “I maintained.”
could see a much deeper path Secretary of State Rex Til-
to friendship with Israel lerson said that the deal
and...a lot of it’s spurred on wouldn’t affect the long-
by what’s happening in Iran.” standing U.S. commitment to
Mr. Netanyahu credited Israel’s security and that the
JAAFAR ASHTIYEH/AGENCE FRANCE-PRESSE/GETTY IMAGES

Mr. Trump’s hard line toward threat of Iran and radical ex-
Iran with creating an atmo- tremism is helping bring Is-
sphere more ripe for peace. rael closer to Arab states.
Earlier in the day, Mr. Ne- “That is unifying,” Mr. Til-
tanyahu also expressed hope lerson told reporters during
that one day he could fly be- Mr. Trump’s flight. “I think it
tween Tel Aviv and Riyadh, does allow countries that
as Mr. Trump had. Saudi Ara- have had deep differences to
bia doesn’t recognize Israel’s look at the situation and re-
right to exist, even though it alize that in many respects
has privately worked with our threats are common to
the country in recent years. all of us.”
“The peace we seek is a
genuine and durable one,”
Mr. Netanyahu said.
An Israeli soldier Monday fired tear gas toward protesters during clashes after a demonstration backing Palestinians in Israeli jails. In his first overseas trip as
Mr. Trump said
president, Mr. Trump aims to Saudi leaders’
advance his administration’s

Pope Seeks Truce With Rebel Priests

goal of helping to broker a
attitude toward Israel
peace deal between Israelis is positive.
and Palestinians after de-
cades of conflict, and to prod
Pontiff moves to bring Society of St. Pius X back into the fold Israel and its Arab neighbors
to agree to new security co- Mr. Tillerson said the
operation measures in an at- president and other U.S. offi-
BY FRANCIS X. ROCCA have worked to bring SSPX tempt to counter Iran’s influ- cials could address any con-
back. Pope Benedict XVI ence in the region. cerns the Israeli government
ROME—Pope Francis is lifted restrictions on celebra- Mr. Trump is focusing on has about the deals.
edging closer to reconcilia- tion of the Latin Mass, which pressing Israelis and Pales- “There has been nothing
tion with a breakaway tradi- had been replaced by wor- tinian leaders to negotiate in entered into with the arms
tionalist group, a possible ship in local languages in an good faith. White House offi- sales agreements with the
coup for a liberal pope who effort to increase lay partici- cials say leaders from both Kingdom of Saudi Arabia or
could succeed where his pation. Pope Benedict also sides have agreed in princi- any of the other countries
more conservative predeces- lifted the excommunications ple to direct talks, though it that do not fully allow us to
sors failed. of the four illicitly ordained is unclear if or when those fulfill our commitments to Is-
It is the pope’s Nixon-to- bishops. would begin. rael and the longstanding se-
China moment: His credibility But SSPX leaders and Mr. Trump met with Is- curity arrangements we have
with progressive Catholics members remained wary of raeli President Reuven Rivlin with Israel,” he said.
ASSOCIATED PRESS

has given him more leeway losing their autonomy under and plans to have dinner Ties between the U.S and
to reach out to the other Vatican jurisdiction and ada- with Mr. Netanyahu at the Is- Israel under Mr. Trump,
side, like President Richard mant about their opposition raeli leader’s residence in Je- while far warmer than in re-
Nixon’s historic overture to to certain tenets of Vatican II. rusalem. On Tuesday, Mr. cent years, have been tested
Communist China. The rehabilitation of SSPX Trump will travel to the West since revelations this month
But the prospect of bring- French Archbishop Marcel Lefebvre, a critic of modernization of bishops led to an explosive Bank for a meeting with Pal- that the president shared
ing the Society of St. Pius the church, founded the breakaway group SSPX in 1970. controversy after one of the estinian Authority President classified information with
X—known as SSPX—back prelates, Bishop Richard Wil- Mahmoud Abbas. Russian officials that Israel
into the church has alarmed dividuals, such as divorced the church’s millennial tradi- liamson, turned out to be a Despite the hopeful words, had provided.
some conservatives and lib- and remarried Catholics, tions—and the Vatican’s vocal Holocaust denier. progress on the budding rap- Mr. Trump has said he was
erals, for different reasons. back into the church. more open stance to other A reconciliation seemed prochement between Israel “absolutely right” to share
SSPX has vexed the Vati- Yet it would also risk an- religions. He argued that Ca- imminent in 2012, the last and the Arab world risks the information, and his na-
can since French Archbishop tagonizing liberals and even tholicism is the only true full year of Pope Benedict’s coming undone by a growing tional security adviser, H.R.
Marcel Lefebvre, a critic of some conservatives who faith and that Catholic of- reign, until talks broke down. list of disagreements be- McMaster, described the dis-
the modernizing changes worry that legitimizing a ficeholders are duty Now, under Pope Fran- tween Israel and the U.S. closures as “wholly appropri-
brought to the church by the group skeptical of the Vati- bound to make sure it is fa- cis, who has been more will- During Mr. Trump’s visit to ate.” Asked about the issue on
1962-65 Second Vatican can’s dialogue with other vored by the state. ing to overlook differ- Riyadh, the U.S. and Saudi Monday, Mr. Tillerson said: “I
Council, founded it in 1970. faiths and opposed to modern In 1988, Archbishop Le- ences, prospects for Arabia signed a new $109 bil- don’t know that there’s any-
Reconciliation would ideas of religious freedom febvre and another prelate reunification are more favor- lion arms deal and agreed to thing to apologize for.”
avoid a permanent schism could undermine the progres- ordained four SSPX bishops able. commit to a further $350 bil- Israeli officials last week
with a group that today sive legacy of Vatican II and without permission from “There is reason to believe lion over a decade. played down the impact.
claims hundreds of priests the very unity of the church. Pope John Paul II, incurring the moment of full reconcili- The U.S. has long commit- They said the U.S. and Israel
and hundreds of thousands Archbishop Lefebvre op- automatic excommunication ation is not far off,” said ted to maintaining Israel’s hadn’t agreed the informa-
of followers. It would fit the posed the end of the Latin for themselves and the new Archbishop Guido Pozzo, a superior defense capabilities tion could be passed on, but
pope’s agenda of bringing Mass—a move he regarded bishops. Vatican official assigned to compared with its neighbors that Israel had confidence in
marginalized groups and in- as a damaging rupture with Since then, all three popes deal with the SSPX. in the Middle East in a policy the intelligence relationship.

New Bribe Allegations Shake Brazilian Meat Processor, Government

BY SAMANTHA PEARSON are increasingly betraying for- money from the latest scandal politicians they will be received the audio file could be verified.
AND LUCIANA MAGALHÃES mer allies in government in by buying $1 billion in dollar with open arms in Western fi- JBS has said its planned Beefing Up
plea deals in a desperate at- contracts and selling the com- nancial markets,” he said, re- U.S. IPO is part of its global Net revenue of JBS,
SÃO PAULO—Allegations by tempt to keep themselves and pany’s shares before leaking the ferring to testimony cited by reorganization plan. This in billions of reais
executives at meat processor their families out of prison. allegations to the press. He ac- local media in which JBS said it month, it said it is delaying
JBS SA that they paid bribes Executives at JBS—which is cused the company’s billionaire paid bribes to 1,829 politicians. the listing because of the com- 150
to the president and his two planning a U.S. initial public of- chairman of insider trading. Part of the latest allegations pany’s legal troubles.
predecessors mark an escala- fering of its international unit— JBS denies illegal trades. are based on a recording that JBS has been increasingly
tion of the clash between Bra- told prosecutors they had paid If Brazilian market regulator Joesley Batista, JBS chairman enveloped by scandal. Aside
zil’s political establishment $4.6 million to President Michel CVM finds JBS guilty of insider and part of the family that from allegedly bribing the coun- 100
and its business magnates, Temer in recent years and $30 trading, prosecutors may ask for controls the beef-and-chicken try’s presidents, a JBS em-
putting the company and the million and $50 million, respec- more than the $3.4 billion they empire, secretly made of a ployee was accused of involve-
government at further risk. tively, into offshore accounts demand as part of a promised conversation he had with Mr. ment in a scheme that emerged
JBS’s allegations, leaked by held by his predecessors, Dilma leniency deal with JBS, a person Temer at the president’s home. in March in which health in- 50
Brazil’s O Globo newspaper on Rousseff and Luiz Inácio Lula close to the negotiations said. “You can count on me!” Mr. spectors were allegedly bribed
Wednesday and released by da Silva. All three have denied Luis Octavio da Motta Batista can be heard saying, to allow sales of rotten meat.
the Supreme Court on Friday, receiving illicit payments in ex- Veiga, CVM’s former head, cozying up to the president. JBS itself wasn’t accused.
come a month after the court change for state-backed fund- said even if JBS is cleared, he Mr. Temer accused JBS of The same month, Brazil’s
ordered investigations into ing and other favors. believes the group will strug- doctoring the recording and environmental regulator ac- 0
one-third of sitting ministers In a defiant televised address gle to find new business and asked the Supreme Court on cused JBS of knowingly buying ’06 ’08 ’10 ’12 ’14 ’16
following disclosures by con- on Saturday, Mr. Temer vowed launch its U.S. IPO. Saturday to suspend the cor- cattle raised on illegally defor- Note: 1 real = 31 cents
struction giant Odebrecht SA. he was innocent, alleging JBS “I think it’s unlikely that af- ruption probe of the president, ested land in the Amazon. JBS Source: the company
Brazil’s business magnates doctored evidence and made ter corrupting more than 1,800 which began on Thursday, until denied wrongdoing. THE WALL STREET JOURNAL.
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THE WALL STREET JOURNAL. Tuesday, May 23, 2017 | A5

WORLD NEWS

North Korea’s Tests Boost Threat China

Unveils
Speedy development
of new missile reflects
Pyongyang’s mastery Oil-Sector
of key technologies
BY JONATHAN CHENG
Changes
BY BRIAN SPEGELE
SEOUL—North Korean
leader Kim Jong Un’s call to BEIJING—Seeking to build
mass produce a relatively new national champions to rival
missile it test-launched for the the likes of Exxon Mobil
first time just three months ago Corp., China is moving to
underscores the isolated coun- boost private investment in its
try’s rapid progress in building vast oil companies—and may
up a range of capabilities for its be willing to slash their work
growing missile arsenal. forces in the process.
While most U.S. policy mak- China’s oil and gas sector
ers remain concerned about has been struggling under a
North Korea’s ability to deliver combination of low energy
KCNA/REUTERS

a nuclear-tipped missile to the prices and a weaker economy,

continental U.S., the speedy sapping the sales and profit of
development of the Pukguk- its state-owned energy giants.
song-2, or the Polaris-2, high- A new policy road map, un-
lights how quickly North Ko- North Korean leader Kim Jong Un inspects the intermediate-range ballistic missile Pukguksong-2’s launch test in this undated photo. veiled late Sunday and backed
rea is mastering other critical by the Communist Party’s Cen-
missile technologies that are launched last year. and sanctions pressure. capable of carrying nuclear fueled missile. Traditional liq- tral Committee and the gov-
making Pyongyang a bigger It test-launched the Po- “The North Koreans put warheads, North Korea said. uid-fueled missiles require ernment’s cabinet, indicated
threat to the U.S. military and laris-2 again in April, the same their best brains on this one,” The Polaris-2 has a shorter substantial fueling time, mak- leaders are considering more-
its allies in East Asia. month it paraded the missile said Joshua Pollack, a senior range than the Hwasong-12, ing them potential targets for aggressive action to make
The missile, while not de- through the streets of central research associate at the Mid- flying roughly 310 miles in a pre-emptive U.S. airstrike. state-owned companies oper-
signed to reach beyond most of Pyongyang for the first time. dlebury Institute of Interna- each of its two successful In contrast, solid-fueled ate more like global peers.
the U.S. bases in South Korea On Monday, Mr. Kim de- tional Studies in Washington. launches. The Polaris-2 missile missiles such as the Polaris-2 Market forces “should play
and Japan, can be fired with al- clared the Polaris-2 “very ac- The declaration of success was fired on Sunday at a can be wheeled out on the back a decisive role in resource al-
most no preparation time from curate” and ordered mass pro- with the Polaris-2, which the steeper-than-usual trajectory, of a truck and fired with virtu- location,” the state-run Xinhua
the back of a mobile launcher, duction of the missile for U.S. calls the KN-15, comes just and would have flown 780 ally no fueling time. That gives News Agency quoted the over-
giving North Korea more stealth military deployment, the a week after North Korea miles if it were launched at a North Korea more capabilities. haul plan as saying.
in its launches, as well as the state-run Korean Central News launched a new missile, the lower angle, David Wright, co- If the Polaris-2 is reliable, The government offered
ability to retaliate in the case of Agency reported. Hwasong-12—which experts director of the Global Security said Daniel Pinkston, a North eight general targets, includ-
a strike against it, experts say. The head-turning progress, say is capable of flying 2,800 Program at the Union of Con- Korea expert and professor at ing better managing oil im-
The North first publicly just three months from first miles, more than enough to cerned Scientists, wrote in an Troy University in South Ko- ports and exports, upgrading
tested the Polaris-2 in Febru- public test to mass produc- reach the U.S. base in Guam analysis of the launch. rea, “it gives them greater refineries and boosting re-
ary, in a successful launch of a tion, is a reminder of North and farther than any weapon But unlike the Hwasong-12 survivability since the launch serves. Details are expected in
missile that it said it had Korea’s commitment to its that North Korea has success- and the vast majority of the preparation time is greatly re- the coming months, said Lin
adapted from a submarine- missile program, in defiance of fully fired to date. Both the missiles in North Korea’s arse- duced compared to liquid- Boqiang, who researches en-
launched ballistic missile it international condemnation Polaris-2 and Hwasong-12 are nal, the Polaris-2 is a solid- fueled missiles.” ergy policy at Xiamen Univer-
sity in southeast Fujian prov-
ince.
Bomb Blast at Bangkok Hospital Injures More Than 20 on Coup Anniversary According to Xinhua’s ac-
count, the newly released plan
BANGKOK—A bomb exploded name of the ruling junta. pledges to solve “problems left
at an army-run hospital in Bang- But he cautioned that “we over from history” and allow
kok on Monday, the third anni- shouldn’t conclude anything yet” state-owned oil-and-gas com-
versary of a military coup, and about who was behind the at- panies “to lose weight and be
authorities said more than 20 tack. fit”—suggesting job reduc-
people were wounded. The blast wounded 21 people, tions, Mr. Lin said.
Investigators found remnants one of them severely, said Lt.
of batteries and wires at the Gen. Saroj Kiewkajee, a hospital
scene of the blast on the ground official.
floor of Phramongkutklao Hospi- Phramongkutklao is a military-
The government is
tal, said Srivara Ransibrah- run hospital that is also open to moving to boost private
manakul, Thailand’s deputy na- civilians. At right, Thai soldiers
tional police chief. secured the hospital as a patient
investment in state-
It wasn’t clear who was be- was escorted out. owned energy firms.
hind the explosion or if it was Since the 2014 coup, at least
linked to the anniversary of the six explosions have occurred in
2014 military coup that over- Bangkok.
threw a democratically elected Last week, a bomb went off Cutting oil-sector jobs,
government. in front of the National Theater, whether through layoffs, re-
RUNGROJ YONGRIT/EUROPEAN PRESSPHOTO AGENCY

But the army chief, Gen. Chal- wounding two people. In April, a structuring or attrition, would
ermchai Sittisart, said it appeared similar explosion took place in mark a change for China’s gov-
that the explosion and two ear- front of an old government lot- ernment, which has hesitated
lier blasts in recent weeks used tery office, also wounding two. to do that for fear of social in-
similar explosive materials and Those blasts used similar ex- stability.
were likely part of an attempt to plosives but did far less physical PetroChina Co., the listed
disrupt the government. damage than Monday’s bomb, arm of China National Petro-
“All of this was conducted the army chief said. leum Corp., employs around
with the goal of creating disorder “This bomb was meant to 500,000 people—about seven
to the administrative work of the cause casualties as it was times as many as Exxon, de-
government and NCPO,” he said, packed with a large number of spite reporting similar reve-
referring to the National Council nails,” Gen. Chalermchai said. nue in 2016.
for Peace and Order, the official —Associated Press “It’s the first time they
talked about allowing the oil

WORLD WATCH
companies to really cut their
force,” Mr. Lin said of the gov-
ernment’s plan.
The oil sector was an early
TURKEY Gul Islam Seyal, spokesman news agency TT that one of its months of 2016, a slowdown the second quarter, while avail- target of an anticorruption
for the provincial governor in workers was missing. from the 0.7% rate of growth re- able indicators of activity for the drive led by President Xi Jin-
Suspects Go on Trial Zabul province, said the battles —Associated Press corded at the end of last year. U.K. and France point to more ping that significantly reduced
Over Failed Coup began late Saturday, when doz- The slowdown underlines the modest revivals. It is therefore the political clout of state oil
ens of Taliban fighters launched OECD still-anemic nature of the recov- unlikely to affect the policy deci- giants such as PetroChina and
A trial opened near the capital coordinated attacks on security ery from the global financial crisis sions of the leading central China Petroleum and Chemical
Ankara for 221 suspects, includ- posts in the Shah Joy district. At Developed Economies and the recession that followed. banks over coming months. Corp. It diminished their abil-
ing 27 former generals, accused least 10 other security forces, in- See Slower Growth The weakening of growth was —Paul Hannon ity to resist opening the indus-
of being the instigators of last cluding national and local police largely due to the U.S., which has try to more competition.
summer’s failed military coup. officers, were wounded, he said. Economic growth in devel- regularly recorded tepid first SPAIN Changes since Presdient Xi
The main defendants are Gen. The Taliban didn’t claim re- oped countries slowed sharply in quarters over recent years. took over include allowing pri-
Akin Ozturk, a former air force sponsibility but they have the first three months of 2017, While the U.K. and France Socialist Vote Points vately owned refiners to im-
commander, and other alleged stepped up attacks in Afghani- as the U.S., the U.K. and France also saw first-quarter slow- To Early Election port crude oil directly, a break
members of the so-called Peace stan since announcing their experienced weak starts to a downs, they were partly offset with the past that brought
at Home Council—a group on spring offensive in April. year that is widely expected to by pickups in Germany and The country’s Socialists re- them into tighter competition
whose behalf a coup declaration Authorities also said a Ger- yield an acceleration of the Japan. elected a former party leader with state-owned companies.
was read on state television. man woman and an Afghan se- global recovery. The first-quarter slowdown who had taken a hard line That shift has rippled world-
Other defendants include the curity guard were killed and a The Organization for Eco- across developed economies isn’t against conservative Prime Min- wide as foreign oil suppliers
former military aide to President Finnish woman kidnapped from nomic Cooperation and Develop- expected to persist through the ister Mariano Rajoy, increasing and trading houses from Rus-
Recep Tayyip Erdogan as well as a Kabul guesthouse. ment said the combined eco- rest of 2017, with the Federal the possibility of new parliamen- sia to Europe lined up to do
the brother of a ruling-party leg- Scott Breslin, a worker at nomic output of its 35 members Reserve Bank of Atlanta’s mea- tary elections within the next business with the new custom-
islator. Sweden-based organization Op- during the first quarter was 0.4% sure of U.S. economic growth year. ers.
The suspects face life in eration Mercy, told Swedish higher than in the final three pointing to a sharp rebound in Spanish bond yields rose Under the newly released
prison if found guilty of charges slightly on Monday in response. plan, the government also said
that include attempting to de- Spain’s 10-year bond yield in- it is committed to carrying out
stroy the government and the creased to 1.58% from 1.56% at more “mixed-ownership re-
parliament, leading an armed Friday’s market close. The form” sectorwide. The govern-
terror group, attempting to as- spread over German paper, a ment has been experimenting
sassinate the president and kill- measure of how risky Spain’s for several years with letting
ing some 250 people, the state- debt is deemed to be, also in- more outside investors take mi-
run Anadolu Agency reported. creased, while spreads in other nority stakes in parts of state-
U.S.-based cleric Fethullah eurozone countries compared owned industry. In one early
Gulen, wanted by Turkey for al- with Germany didn’t move or example, China Petroleum and
legedly orchestrating the coup, is tightened slightly, with the ex- Chemical, known as Sinopec,
also named among the defen- ception of Greece. sold off a nearly 30% stake in
dants and will be tried in absen- About half of the nearly its gas-stations unit in 2014.
ADEM ALTAN/AGENCE FRANCE-PRESSE/GETTY IMAGES

tia along with eight other defen- 190,000 Socialist party mem- Yet the private stakes have
dants who are on the run. Mr. bers who voted in Sunday’s pri- generally been small, and Gor-
Gulen has denied any involve- mary cast their ballots for Pedro don Kwan, an oil and gas ana-
ment in the coup attempt. Sánchez, a surprise win for a lyst at Nomura Holdings Inc.,
—Associated Press man who had been ousted as says it is too early to know
party leader in October amid bit- whether the openings are
AFGHANISTAN ter infighting. The Socialist party enough to achieve the goal of
in Spain, like other center-left boosting efficiency in the sec-
Militants Kill Forces parties in Europe, has been tor. Nevertheless, he said the
At Security Posts struggling to shake its image as plan sent a positive signal to
an establishment party and to investors about the govern-
Militants launched attacks on respond to the rise of a new far- ment’s intent.
several southern checkpoints, left party that has drawn away
killing at least 20 security forces, some of its voters.  Heard on the Street: China oil
a provincial official said. Turkish police escorted Akin Ozturk, the accused leader of last year’s coup plot, from prison on Monday. —Jeannette Neumann giants need overhaul............. B1
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A6 | Tuesday, May 23, 2017 THE WALL STREET JOURNAL.

U.S. NEWS
White House to Focus on Taxes, Budget
Russia investigation is Trump’s 2018 budget plan be- appear before the House Intel- Michael Flynn.
fore the House Ways and ligence Committee this week Asked whether he had said
a distraction as the Means Committee. The same as part of the panel’s investi- any such thing to Mr. Comey,
administration tries to congressional panel will hold a gation into alleged Russian in- Mr. Trump told reporters at a
separate hearing devoted to a terference in the 2016 elec- news conference last week:
push its policy agenda tax overhaul aimed at reduc- tion, including questions about “No. No.”
ing rates and speeding job whether anyone from Mr. Last week, the Justice De-
BY PETER NICHOLAS growth—a centerpiece of Mr. Trump’s campaign colluded partment named former FBI
AND BYRON TAU Trump’s campaign message. with the Kremlin. Director Robert Mueller as a
Following revelations about John Brennan, the former special counsel to head the in-
WASHINGTON—President Mr. Trump and Russia over the Central Intelligence Agency di- vestigation arising from alle-
Donald Trump is thousands of past two weeks, the White rector under President Barack gations that Russia interfered
miles away, but his policy House and congressional Re- Obama, will testify publicly on in the presidential race.

DAVID PAUL MORRIS/BLOOMBERG NEWS

agenda faces tests at home publican leaders are eager to Tuesday—a hearing that is ex- Inside the White House,
this week as he looks to shift show that they can deliver on pected to shed new light on Trump aides say they have
the focus from Russia investi- policy promises. how the intelligence agencies been discussing ways to com-
gations to his plans for boost- “People in the country need under the Obama administra- partmentalize tasks so that
ing American military power to know that we are busy at tion decided that Russia inter- the probe doesn’t consume the
and overhauling the tax code. work trying to solve their prob- fered in the 2016 election. building and doom various
The White House on Tues- lems,” House Speaker Paul The Senate Intelligence policy goals. Some veterans of
day will roll out a budget pro- Ryan (R., Wis.) said. “So I real- Committee is also preparing past administrations believe
posal in a blueprint that calls ize that there’s a lot in the me- for a hearing with former Fed- such concerns are justified.
for large cuts to social-safety- dia these days. That doesn’t eral Bureau of Investigation “We don’t have a lot of
net programs such as Medic- seize up Congress. That doesn’t Former CIA Director John Brennan will testify in Moscow probe. Director James Comey after weeks to spare if serious [tax]
aid and food assistance while stop us from doing our jobs, to Memorial Day. The hearing is reform is going to get
increasing Pentagon and bor- work on people’s problems.” the health-care bill the House ture of how much the measure expected to be a moment of through,” said Joshua Bolten,
der-security spending. A potential danger for the narrowly passed on May 4 af- will cost and how many people high drama, with Mr. Comey a former White House chief of
While Mr. Trump visits Trump administration is a re- ter an intense lobbying push might lose insurance coverage. facing questions about a staff under George W. Bush
Pope Francis in Rome on port coming out this week by the White House. Meanwhile, the congressio- memo he wrote saying that and chairman of the Business
Wednesday, Treasury Secre- from the Congressional Budget The analysis could influence nal machinery devoted to the Mr. Trump asked him to back Roundtable, a trade group rep-
tary Steven Mnuchin in Wash- Office. The nonpartisan CBO the bill’s fate in the Senate by Russia probe continues. off an investigation into for- resenting some of the biggest
ington will testify about Mr. will release its evaluation of giving lawmakers a fuller pic- A high-profile witness will mer national security adviser U.S. firms.

Trump Proposal Will Kick Off the Next Fiscal Fight

BY RICHARD RUBIN What does Congress do The resolution is likely to rewrite of the U.S. tax system, What does the budget do was April 15. But there is no
first? contain what are known as and the budget resolution is for annual spending bills? real penalty for delay. And ac-
President Donald Trump is The House and Senate bud- reconciliation instructions. like the key to the door that The budget sets the outline tually, this year, Congress has
releasing his fiscal-2018 bud- get committees will write their Those are directions to certain unlocks that prize. The in- for what is known as discre- a strong incentive to wait be-
get on Tuesday, the beginning own plans, known as budget committees telling them to structions will set the maxi- tionary spending for 2018, fore finishing its budget. That
of what could be a challeng- resolutions. They are broad write legislation on taxes or mum size of tax cuts over the which covers national defense is because lawmakers are still
ing, lengthy battle in Con- blueprints and won’t necessar- mandatory spending programs next decade. and programs ranging from trying to complete work on
gress. Here is a guide to the ily detail specific agency bud- that don’t have to be funded housing to the National Insti- the reconciliation bill allowed
budget path ahead: gets or programs that would anew each year, such as fed- Will it be easy for Republi- tutes of Health. With the bud- under the fiscal-2017 budget.
be expanded or cut. To be ad- eral employees’ retirement cans to agree on a budget? get complete, the appropria- That bill, which would repeal
What happens next? opted, the same version of the benefits, Medicare and Medic- No. The party is divided tions committees could start parts of the 2010 Affordable
Administration officials, in- budget must get through the aid. If a budget is adopted, among those who prioritize writing their bills. Those bills Care Act, has passed the
cluding budget director Mick full House and Senate. Both those reconciliation bills can military spending, balancing could be filibustered in the House but not the Senate. If
Mulvaney and Treasury Secre- chambers are controlled by speed through the Senate with the budget and cutting taxes. Senate, so Democrats could Congress adopts a fiscal-2018
tary Steven Mnuchin, will tes- Republicans. simple majority votes. Placating each of those groups shape the ultimate outcome. budget before the 2017 bud-
tify on Capitol Hill this week will be very challenging, espe- get, the 2017 reconciliation
to explain and defend the plan. What else is in the con- Why do Republicans want cially in the Senate, where any Is there a deadline for the protections that allow a Re-
Congress will get to work after gressional budget resolu- reconciliation instructions? three Republicans can derail budget? publican-only vote would no
the Memorial Day recess. tion? Republicans plan a major the process. Technically, the deadline longer apply.

Democrats Enlist Veterans Ahead of Midterms FLYNN

BY REID J. EPSTEIN Continued from Page One
Committee has been seeking
WA S H I N G T O N — D e m o - documents from Mr. Flynn
crats now believe more con- since late April, first asking
gressional districts will be for voluntary cooperation and
competitive in next year’s then sending a subpoena on
midterm elections than once May 10.
thought and they have a strat- The Senate now has several
egy to try to capture at least options to try to enforce its
some of them: run military subpoena and assert its insti-
veterans as candidates. tutional authority to conduct
Democrats must win at oversight and investigations of
least a net 24 seats in 2018 to the executive branch.
take a majority in the House. It could vote to hold Mr.
With Republican President Flynn in contempt and take
Donald Trump less popular at the matter to civil court, or it
this point in his term than any could ask the Justice Depart-
president in modern history, ment to consider criminal
Democratic officials believe prosecution. Another rarely
TOM WILLIAMS/CONGRESSIONAL QUARTERLY/ZUMA PRESS

between 75 and 100 House dis- used procedure allows Con-

tricts will be in play then— gress to jail an uncooperative
dozens more than previous es- witness.
timates. Representatives for Senate
As candidates, veterans can Majority Leader Mitch McCon-
frame their effort as a contin- nell and Senate Intelligence
uation of their national ser- Committee Chairman Richard
vice. They also allow Demo- Burr didn’t respond to re-
crats to appeal to parts of the quests for comment.
electorate that have fled the In addition to being sought
party in recent elections. It re- as a witness in several con-
calls their strategy in 2006, gressional investigations, Mr.
when they took control of the Flynn has been under scrutiny
House by fielding candidates by federal investigators for
who could appeal to voters in lobbying work he performed
more-conservative districts. Sen. Tammy Duckworth is coordinating the recruitment of fellow veterans and Democrats to contest House seats in 2018. before joining Mr. Trump’s ad-
Already, the party is run- ministration.
ning veterans in competitive Vets, which in the past has ple were saying, ‘We didn’t tism,” said Chrissy Houlahan, It is by no means certain Mr. Flynn was hired by a
congressional districts across backed Democratic veterans in know there were Democrats in a former Air Force captain that the veterans would Turkish businessman on a lob-
the country: Fifteen veterans primary challenges, is now the military,’ ” said Ms. Duck- who is challenging GOP Rep. emerge from Democratic pri- bying contract. He later regis-
have launched 2018 House targeting competitive general worth, who lost both of her Ryan Costello in a suburban maries that are expected to be tered with the Justice Depart-
campaigns, and 10 more may election races. legs in Iraq and was first Philadelphia district that Hil- crowded, which could force ment under the Foreign Agent
enter races by this summer, “Veterans have a chance to elected to the House in 2012. lary Clinton carried in Novem- candidates to the left. Ms. Registration Act, an acknowl-
Democratic officials said. carry districts that other Dem- Of the 80 military veterans ber. Houlahan, like each of the four edgment that some of his
“It is time that Democrats ocrats won’t be competitive serving in the House, just 19 While the DCCC has re- VoteVets-backed candidates, work may have been on behalf
genuinely show that we can in,” said Jon Soltz, the Vote- are Democrats, and the overall mained neutral in primaries already has Democratic oppo- of the Turkish government.
have a bigger tent and not just Vets founder and chairman. number of veterans in Con- that don’t involve incumbents, sition.
be entirely defined by the old “They’re less political and gress is the lowest since be- VoteVets is set this week to “There’s a renewed empha-
liberal left,” said Massachu- they’re not career politicians fore World War I, according to endorse Ms. Houlahan, along sis on ideological purity in an
setts Rep. Seth Moulton, a Ma- and they’re not Washington.” Seth Lynn, executive director with Jason Crow against Re- age when everybody gets a
rine combat veteran of the Last month, Illinois Sen. of Veterans Campaign, a non- publican Rep. Mike Coffman in primary,” said Ian Russell, a
Iraq war who is leading the Tammy Duckworth convened a partisan group that trains vet- Colorado. And it will endorse former DCCC political director.
party’s recruiting effort meeting with Mr. Moulton, erans to run for office. Doug Applegate and Josh But- “With veterans, there’s a de-
among veterans. VoteVets and the DCCC to co- “There’s a real fiction in ner against GOP Reps. Darrell cent chance they wind up be-
Told that Democrats believe ordinate recruiting and finan- our national narrative that the Issa and Duncan Hunter in ing nonideological.”
75 to 100 districts will be in cial efforts. Republican Party has the cor- Southern California. All the And for all the new energy
play next year, Matt Gorman, “Ever since I first ran, peo- ner on the market on patrio- Democrats are veterans. on the political left since Mr.
the National Republican Con- Trump’s election, Republicans
gressional Committee commu- won a House special election
nications director, laughed. Ex-Soldier Readies that voted for Barack Obama in City, where he works for a tech in Kansas and remain favored
“They are undefeated in moral 2012 and Donald Trump last company. Mr. Ryan said he and to win contests in Montana on
victories,” Mr. Gorman said. Challenge to GOP year. “It’s a slightly Republican his wife plan to move to the Thursday and in Georgia and
The Democratic Congressio- district, so people are going to district in coming weeks. South Carolina in June.
CAROLYN KASTER/ASSOCIATED PRESS

nal Campaign Committee has Pat Ryan will run for a seat in have to feel that the candidate “I’ve never felt a stronger Veterans face other political
spoken with about 300 poten- Kingston, N.Y., his former home is doing this for something be- calling to step up and fight challenges. Their military ser-
tial 2018 candidates, an offi- yond just party for a greater than I have in the past vice often takes them far from
cial said, though dozens will purpose,” Mr. Ryan said. months,” he said. “The lack of home and the voters there.
compete against each other in In upstate New York, former Mr. Ryan, who was raised in trust and faith in the basic in- They don’t come with a politi-
primary contests. Army intelligence officer Pat the district in Kingston, N.Y., stitutions of our government is cal base like previously elected
For the first time this year, Ryan, a Democrat, is preparing was a sophomore at the U.S. growing to the point that I’m officials. Few can tap a net-
the DCCC is working with to challenge GOP Rep. John Military Academy at West very concerned.” work of wealthy friends.
VoteVets, a liberal political-ac- Faso. Mr. Ryan, 35 years old, Point during the Sept. 11 at- An aide to Mr. Faso declined “If they’ve been on active
tion committee with which the said his military background tacks. He served two tours in to comment. duty, they may not have lived Congress hasn’t granted Mike
party’s House campaign arm would be an asset in a district Iraq and now lives in New York —Reid J. Epstein in their hometowns for 15 to Flynn’s request for immunity in
has often been at odds. Vote- 20 years,” Ms. Duckworth said. exchange for his cooperation.
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THE WALL STREET JOURNAL. Tuesday, May 23, 2017 | A7

U.S. NEWS

A Century Later,
Sailor Is Saluted
BY SCOTT CALVERT from European shores, he died
in “outside waters” in wartime
One of the earliest Ameri- and was technically on the
can casualties of World War I battlefield.
will soon have his name Seaman Renshaw’s 70-year-
etched in stone at an overseas old niece, Gail Renshaw Black-
U.S. military cemetery, a cen- well, was born 30 years after
tury after the 20-year-old her uncle’s death and didn’t
sailor’s death. know there was a memorial to
Seaman Herbert Renshaw the missing in England. Still,
fell overboard off the coast of she said she is grateful his
South Carolina during a naval name will be added. “I just re-
patrol on May 22, 1917, weeks ally appreciate it,” she said.
after the U.S. entered the war. For Mr. Laplander, this is
But probably due to a clerical the biggest success yet of the
error by Navy officials, he was Doughboy MIA project, a citi-

RICHARD B. LEVINE/ZUMA PRESS

never listed on a monument to zen-led effort he launched in
the missing at Brookwood 2015 to investigate cases of
American Cemetery in Eng- the 4,223 service members
land. listed as missing in World
War I. About half died on the
battlefield, the rest were lost
at sea.
‘We want to make While the Defense Depart-
sure every American ment has a unit dedicated to New developments rise in Long Island City, N.Y., in May. Housing construction in the urban core of cities has been stronger than normal.
accounting for missing per-
is appropriately

Why Millennials Are (Partly)

sonnel, that effort applies only
commemorated.’ to conflicts since World War
II. One goal of Doughboy
MIA—doughboy was a com-
mon term for troops deployed

Cited for Housing Shortage

That is about to change af- to Europe—is to put a name to
ter Robert Laplander, a Wis- soldiers buried in graves
consin songwriter-turned-his- marked unknown. In the Ren-
torian, documented the shaw case, it instead found
omission with help from a bi- that one of the missing never
ology professor in Maryland. received his due recognition. BY LAURA KUSISTO where they were in 2000 when
The federal agency responsible “It’s a different kind of dis- City Living you go more than 10 miles out.
for U.S. cemeteries and memo- covery, but we look at it as be- The rush of young people to Housing developers are putting much more focus on urban markets The year 2000 is often used as
rials overseas says it will cor- ing a major victory since the U.S. cities over the past few and less on the suburbs and exurbs than they did in 2000. a benchmark for a normal
rect the oversight. job is to remember them, and years is partly to blame for market, before the boom and
“We want to make sure ev- here we’ve done it,” said the America’s worsening housing Distance from Number of residential new construction sales bust of the mid-2000s.
city center 2000 2015
ery American is appropriately 51-year-old Mr. Laplander, who shortage. To be sure, the study looks
commemorated,” said Timothy lives in Waterford, Wis. In some of the country’s 3,249 only at for-sale housing. More
5m

il e s 3,908
Nosal, external affairs chief at Mr. Laplander said people largest and most prosperous of what tends to be produced
the American Battle Monu- often ask why he does this markets, such as New York, 10 8,596 in city centers is for rent.
m il e s 5,901
ments Commission. Its acting work, given that no one alive San Francisco, Boston and Los What’s more, demand for
secretary last month approved today knew these service Angeles, housing construction starter homes has been bounc-
engraving the seaman’s name, members. has been stronger than normal 32,903 ing back in recent months, as
possibly this summer. “Why not?” he said. “This in the urban core but weaker 12,301 millennials get married, have
20 m
The Brookwood chapel’s in- man went and lost his life in in the suburbs, where new ile s children, and get fed up with
terior walls are inscribed with the service of the country. We housing can be built abun- rising rents.
the names of more than 560 bring our dead home, and the dantly and more cheaply, ac- 26,593 The BuildZoom analysis
U.S. soldiers, sailors and Coast best we can hope for is to give cording to an analysis set to 12,223 shows that in metro areas
3 0 m il e s
Guardsmen lost at sea during him a named grave. If we be released Monday by Build- where land is less expensive
World War I, many near the could do that, why wouldn’t Zoom, a website for construc- and there are fewer land-use
U.K. and France. Though Sea- we? I don’t think time dulls tion contractors. restrictions, exurban starter
man Renshaw perished far that.” That is a problem because 32,097 homes are making a come-
suburbs are typically the main 15,550 back.
drivers of housing construc- In Austin, Texas, for exam-
tion. ple, 35.6% of new residential
For decades during the 50 miles sales in 2015 was located more
late-20th century, suburbs than 20 miles from the center,
were the place to build, as ur- 18,405 up from 12% in 2000. Indeed,
8,026
ban cores suffered from high exurban areas saw a threefold
crime, poor schools and stag- Note: Homes for sale only increase in new home sales
nant or shrinking populations. Source: BuildZoom THE WALL STREET JOURNAL. between 2000 and 2015 with
But preferences have areas five to 20 miles from the
changed among young people, to be shifting toward a para- pushed developers to focus on urban core experiencing a
many of whom want to live digm that says having a better higher-end housing geared to- drop.
closer to transit, restaurants location is better than having ward high earners instead of The takeaway, Mr. Romem
and their workplaces. The a fresher, greener, newer younger people just starting says, is that pricey cities need
share of young, educated peo- place,” said Issi Romem, chief out. to loosen land-use restrictions
ple living in the urban core of economist at BuildZoom. The shift helps explain one in core areas where there is
Washington, D.C., for example, As builders have shifted fo- of the most vexing aspects of more demand. Allowing for
increased 8.6 percentage cus toward trendier urban the housing recovery: New more high-rise condo build-
points between 2000 and markets and away from homes are getting more ex- ings would make it economical
2014, according to Jed Kolko, cheaper suburbs, they have pensive and yet there are to produce starter homes in
chief economist at job-search produced less housing overall fewer of them being built than these areas as well.
site Indeed and senior fellow than they otherwise might in past cycles. “Do you care about preserv-
at the Terner Center for Hous- have. While starter-home con- While new home sales ing things the way they are, so
ing Innovation at the Univer- struction has bounced back in within 5 miles of the centers that only wealthy people can
WICOMICO NEWS

sity of California, Berkeley. recent months, it remains far of 10 of the country’s priciest continue buying in, or do you
Portland, Ore., and Chicago from reversing this long-term and most densely populated want to [encourage more den-
each saw increases of 6.4 per- trend. metropolitan areas have sur- sity], so that housing is more
centage points. At the same time, high land passed levels from 2000, they affordable for everyone?” he
Seaman Herbert Renshaw in a newspaper photo from 1918. “The expensive cities tend costs in central cities have remain more than 50% below asked.

U.S. WATCH
Jury Selection Begins in Bill Cosby’s Trial SUPREME COURT ents on water-enhancer prod-
BY KRIS MAHER nocent and that any sexual come forward saying they court filing. ucts, filing the lawsuit in a
contact that occurred was con- were assaulted by the enter- His lawyers also said pro- Limits Where Patent Delaware federal court, another
PITTSBURGH—Jury selec- sensual. He faces up to 10 tainer. He has denied the alle- spective jurors in Montgomery Suits Can Be Filed Set frequent venue for patent cases.
tion in the sexual assault case years in prison if convicted. gations, and the statutes of County had been subjected to TC Heartland argued the case
of comedian Bill Cosby began Mr. Cosby said in an inter- limitations in many cases have negative publicity about the The Supreme Court limited belonged in Indiana, where it
Monday, hundreds of miles view on SiriusXM radio last expired. case when it was featured in the ability of patent holders to was based.
across Pennsylvania from week that he doesn’t plan to Mr. Cosby’s lawyers sought campaign ads in the 2015 elec- bring infringement lawsuits in —Brent Kendall
where the trial is scheduled to take the stand during his trial. an outside jury in a filing late tion for Montgomery County courts that have plaintiff-friendly
begin in two weeks. He declined to discuss the al- last year, arguing that media district attorney. reputations, a notable decision STATE DEPARTMENT
Judge Steven O’Neill, who legations against him and said coverage in New York and Prosecutors didn’t oppose that could provide a boost to
will preside over the trial, is some of his legal troubles elsewhere had branded him a choosing jurors from another companies that defend against Firms Urge Tillerson
overseeing the selection of ju- “may very well be” the result “monster” and “sexual preda- location but they objected to patent claims. To Protect Funds
rors at the Allegheny County of racism. tor,” among other things. shifting the trial to a new lo- The high court, in an opinion
Courthouse in Pittsburgh fol- On Monday, the former star “The pitchforks came out in cation. They argued because by Justice Clarence Thomas, ruled More than 200 business lead-
lowing concerns raised by Mr. of 1980s hit sitcom “The full force in fall of 2014, when “he is a celebrity who is al- unanimously that a lower court ers sent a letter to Secretary of
Cosby’s lawyers that he Cosby Show” entered the comic Hannibal Buress called leged to have committed has been following an incorrect State Rex Tillerson urging him
couldn’t get a fair hearing courthouse wearing a tan Mr. Cosby a rapist during a nearly 50 sexual assaults” Mr. legal standard for almost 30 to strongly support the State
from people in the Philadel- sport coat and walking with stand-up show in Philadel- Cosby couldn’t expect to find a years that made it possible for Department and U.S. Agency for
phia area, which has been sat- the aid of a cane. phia,” Mr. Cosby’s lawyers site where people are “com- patent holders to sue companies International Development bud-
urated with coverage of the Nearly 50 women have wrote in a December 2016 pletely oblivious” to the case. in almost any U.S. jurisdiction. get.
case. Instead, the Supreme Court The letter comes a day ahead
Twelve jurors and six alter- said, claims of patent infringe- of the release of President Don-
nates will be bused 300 miles ment must be brought in the ald Trump’s 2018 budget and
east to Norristown, Pa., for the state where a corporate defen- follows a preliminary proposal
trial scheduled to begin June dant is incorporated. under which the Trump adminis-
5. Mr. Cosby, 79, was charged The ruling could significantly tration is looking to cut up to
by the Montgomery County shift patent infringement law- 31% of the State Department
District Attorney with aggra- suits out of some federal dis- and USAID budget.
vated indecent assault for al- tricts, including in east Texas, The U.S. Global Leadership
legedly assaulting Andrea Con- which have been home to large Coalition, which has helped orga-
stand in his Cheltenham, Pa., numbers of patent cases be- nize other letters in support of
home outside Philadelphia in cause patent holders believed maintaining State Department
2004. those courts provided a favor- funding, assisted with putting
GENE J. PUSKAR/ASSOCIATED PRESS

Ms. Constand, a for- able venue for their claims. the letter together.
mer Temple University em- Monday’s ruling sided with TC The letter’s signatories in-
ployee, has said she was there Heartland LLC, which argued clude top officials at Wal-Mart
to ask for career advice but that the previous rules had Stores Inc., Pfizer Inc., Coca-Cola
that Mr. Cosby assaulted her spurred abusive patent litigation. Co., Procter & Gamble Co., Du-
after giving her wine and pills The firm had been sued for pat- Pont Co., Dow Chemical Co. and
in order to help her relax. A ent infringement by a subsidiary Marriott International Inc., as
civil case was settled for un- of Kraft Heinz Co. well as local chambers of com-
disclosed terms in 2006. Kraft Foods alleged TC Heart- merce.
Mr. Cosby has said he is in- Bill Cosby arrives at the Allegheny County Courthouse for jury selection in his sex-assault trial. land infringed three of its pat- —Felicia Schwartz
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A8 | Tuesday, May 23, 2017 THE WALL STREET JOURNAL.

IN DEPTH

QUANTS understand companies and the

economy in real time.
Quants are different from
high-frequency traders, who
Continued from Page One tend to focus on trades that
clout and money as investment might last just milliseconds.
firms scramble to hire mathe- High-frequency traders have
maticians and scientists. Tradi- been under pressure as volatil-
tional trading strategies, such ity dips and competition grows.
as sifting through balance Exchange-traded funds also
sheets and talking to compa- use algorithms but are geared
nies’ customers, are falling more to investors who want ex-
down the pecking order. posure to certain industries or
“A decade ago, the brightest sectors.
graduates all wanted to be Quantitative-driven trades
traders at Wall Street invest- can last anywhere from a few
ment banks, but now they’re minutes to a few months. The
climbing over each other to get biggest quant firms, including
into quant funds,” says An- Renaissance, Two Sigma In-
thony Lawler, who helps run vestments LLC, D.E. Shaw
quantitative investing at GAM Group, PDT Partners and TGS,
Holding AG. The Swiss money make thousands of trades and
manager last year bought Brit- manage tens of billions of dol-
ish quant firm Cantab Capital lars in investor assets.
Partners for at least $217 mil- Some analysts worry that
lion to help it expand into com- firms and investors stampeding
puter-powered funds. into the quant business might
Guggenheim Partners LLC be disappointed. The most suc-
built what it calls a “supercom- cessful quants have been oper-
puting cluster” for $1 million at ating for years. And hiring
the Lawrence Berkeley National Ph.D.s doesn’t guarantee profits.
Laboratory in California to help More competition could hurt
crunch numbers for Guggen- returns and give a false sense
heim’s quant investment funds, of security about the market’s
says Marcos Lopez de Prado, a stability. In 2007, what became April’s meeting of the Thalesians, a group of quants, above. Marc Henrard, below, head of quantitative research at OpenGamma.
Guggenheim senior managing known as the “quant melt-
director. Electricity for the down” was caused largely by Alexandru Agachi, chief operat-
computers costs another $1 the similarity of strategies ing officer at Empiric Capital
million a year. among quants, who simultane- Ltd., a startup quant hedge
Algorithmic trading has ously rushed to sell, causing fund in London. “They say with
been around for a long time losses at other firms and more pride: ‘Over there is our quant.
but until recently was an over- selling. He’s building signals.’ ”
looked presence on Wall Street. Mathematician William By- It’s common for hedge funds
An article in The Wall Street ers, who wrote the 2010 book to retool themselves to fit the
Journal in 1974 featured quant “How Mathematicians Think,” latest popular strategy. Many
pioneer Ed Thorp. In 1988, the warns that rendering the world funds dove into mortgages af-
Journal profiled a little-known in numbers can give investors a ter the financial crisis ebbed.
Chicago options-trading firm deceptive belief that predic- Some turned into “macro” in-
that had a secret computer sys- tions churned out of computers vestors in anticipation of global

IMMO KLINK FOR THE WALL STREET JOURNAL (2)

tem. Journal reporter Scott are more reliable than they economic shifts.
Patterson wrote a best-selling truly are. The more investors Hedge-fund billionaire Ste-
book in 2010 about the rise of flock to complicated algorith- ven A. Cohen’s investment firm,
quants. mic models, the more likely it Point72 Asset Management,
Prognosticators imagined a is some algorithms will be sim- with $12 billion in assets, is
time when data-driven traders ilar to one another, possibly fu- shifting about half of its portfo-
who live by algorithms rather eling larger market disruptions, lio managers to what it calls a
than instincts would become some analysts say. “man plus machine” approach.
the kings of Wall Street. So far, though, nothing has Teams that use old-school
That day has arrived. In one stopped the quant arms race, research are working alongside
sign of their power, quantita- which is creating new jobs pre- data scientists. Financial ana-
tive investment firms are re- viously unheard of in the fi- lysts are taking classes to learn
sponsible for 27% of all U.S. nance industry. data-science basics. Point72 is
stock trades by investors, up Citadel, of Chicago, has a plowing tens of millions of dol- don School of Economics stu- tion faster than traditional in- considered “very niche” for
from 14% in 2013, according to chief scientist to run its analyt- lars into a group that analyzes dents to learn basic vestors. most of his 14-year career.
the Tabb Group, a research ics and quantitative strategies. reams of data, including credit- programming languages, like R Hedge funds with quant-fo- He organized social events
firm. In August, Balyasny Asset Man- card receipts and foot traffic and Python, to become more cused strategies have been por- for quants, including occasional
Quants have almost caught agement LP hired data scientist captured by apps on smart- competitive when they gradu- ing over private Chinese and gatherings of a group called the
up to individual investors, Gilbert Haddad, formerly of phones. The results are passed ate. Investors are shifting their Russian consumer surveys, il- Thalesians after ancient Greek
which collectively have 29% of Schlumberger Ltd. and General on to traders at the Stamford, preference from “artisan to en- licit pharmaceutical sales on geometer Thales of Miletus.
all stock-trading volume. Electric Co., to overhaul data Conn., investment firm. gineer,” he said. the dark web—a network of The beer and conversation
At the end of the first quar- and analytics at the New York Point72 lost money in most Billionaire Paul Tudor Jones websites used by hackers and sometimes attracted fewer than
ter, quant-focused hedge funds hedge-fund firm. He studied of its traditional trading strate- is one of the best-known inves- others to anonymously share a dozen people.
held $932 billion of invest- nanoparticles at the University gies last year, say people famil- tors in history. The former cot- information—and hotel book- Mr. Amen’s phone has
ments, or more than 30% of all of Wisconsin and has a Ph.D. in iar with the results. The firm’s ton trader anticipated the 1987 ings by U.S. travelers, according started ringing with calls from
hedge-fund assets, estimates engineering. quant investors made about stock-market crash and made to Quandl Inc., a platform for hedge-fund managers in the
HFR Inc. In 2009, quant funds “You take tours of offices, $500 million. gigantic profits with quick such data. U.S. and Europe. They don’t all
held $408 billion, or 25%. and everyone is always point- Matthew Granade, Point72’s bursts of trading, averaging an- In the late 1990s, an algo- want automated investing algo-
Quants received $4.6 billion ing out some guy off in a cor- chief market-intelligence offi- nual gains of more than 17% rithm might have simply tried rithms, but they are trying to
of net new investments in the ner, working on his own,” says cer, recently encouraged Lon- since then. His hedge-fund to ride the momentum of a figure out how to make better
first quarter, while the overall firm, Tudor Investment Corp., stock’s price rise, buying at a predictions, he says.
hedge-fund business saw with- barely made any money in 2014 certain price level and selling Much of that push is coming
drawals of $5.5 billion. Rising Quants and 2015, though. at a predetermined moment. from investors such as Pepper-
Quantitative hedge funds are responsible for a record By last year, Mr. Jones was Today’s algorithms can make dine University in Malibu, Calif.
27% of U.S. stock trading by investors, up from 14% in 2013. feeling pressure from more continuous predictions based Last year, the college placed
Beating humans successful quant traders, ac- on analysis of past and present about 10% of its $750 million
The computers are outper- Share of stock trading by type of investor Quant hedge funds cording to people close to the data while hundreds of real- portfolio in big quant funds, in-
forming humans at picking in- 30% Other hedge funds firm. In October, Mr. Jones time inputs bombard the com- cluding those run by Man
vestments. Over the past five chose Dario Villani, an Italian puters with various signals. Group PLC of London and AQR
years, quant-focused hedge with a doctorate in theoretical Capital Management LLC,
funds gained about 5.1% a year 20 physics who was hired in 2015, Greenwich, Conn.
on average. The average hedge to help rejuvenate Tudor. Machine learning Until then, Pepperdine had
fund rose 4.3% a year in the Traditional Hunkered down with a team Some investment firms are “essentially zero” quant invest-
same period. asset managers of quants and other employees, pushing into machine learning, ments, says Michael Nicks, its
10
In the first quarter, quant Bank trading Mr. Villani began developing which allows computers to ana- director of investments. “The
funds rose about 3%, compared (principal) computer programs to replicate lyze data and come up with narrative of fundamental in-
with 2.5% for the average 0 trading positions of Tudor’s their own algorithms. Those vesting is much more comfort-
hedge fund. portfolio managers using in- machines no longer rely on hu- able to digest,” he says. “Find-
2010 ’11 ’12 ’13 ’14 ’15 ’16 ’17
Quants have been helped by struments that better allow the mans to write the formulas. ing a company with good
two transformative forces. Reg- Clients pulled more than $83 billion from traditional hedge funds firm to increase risk to improve Algorithms and quants even- prospects makes sense, since
ulatory scrutiny has made it last year, while computer-driven funds had net inflows of $13 billion. returns without endangering tually could sharply reduce the we look for undervalued things
hard for investors to obtain an Net flow into hedge funds the hedge fund or Tudor, people need for large investment in our daily lives, but quant
edge through methods such as familiar with the matter say. staffs. A machine-driven algo- strategies have nothing to do
prodding company executives Quant Non-quant Despite the changes, Tudor’s rithm might help quantitative with our lives.”
for information or tapping ex- $60 billion two key funds were flat in 2016 researchers discover dozens of After “years and years of self-
pert networks that included as well as so far this year, even new algorithms in the time it education” and dozens of meet-
employees of public companies. 30 as markets have climbed. used to take to create one. ings with quant managers, says
Even more important, inves- Humans have long searched In the battle for talent, Mr. Nicks, Pepperdine decided it
tors now have at their finger- 0 relentlessly for ways to gain an quant-focused firms often are was ready to make the leap.
tips an expanding ocean of data information edge. Legend has it reluctant to call themselves —Rob Copeland
–30
about the global economy and that financier Baron Rothschild hedge funds. Quant firms contributed to this article.
financial data, such as changes –60 built a network of field agents would rather emphasize their
in earnings estimates and ac- and carrier pigeons in 1815 that similarities to companies in Sil-
counts receivable. –90 may have given him a jump on icon Valley. ONLINE
The next frontier: tapping the Battle of Waterloo out- Saeed Amen, a quantitative Read more of our series
2010 ’11 ’12 ’13 ’14 ’15 ’16
data from drones and other come. Today’s quants hope to researcher in London, says his on the rise of quants at
cutting-edge sources to help Source: Tabb Group (stock trading); HFR (flows) THE WALL STREET JOURNAL. digest—and act on—informa- investment strategies were wsj.com/markets

FOODIE tion to watching people eat,”

says Xiaoyu Zhuang, Meipai’s
operations manager.
Xiaoman is perhaps the
wishing their children were less
picky. Others worry about the
dangers of overindulgence.
The toddler’s mother, Duan
At mealtimes, Xiaoman usu-
ally gets three large spoons of
rice along with a serving of
meat or fish and vegetables.
big in the video, but it is very
little,” says Ms. Duan. “The lens
is a wide lens.”
As China’s fascination with
guest on popular Chinese vari-
ety-TV shows.
A live-streaming event held
this month by Alibaba Group
Continued from Page One youngest eating sensation in Yu, a makeup artist in Beijing, There are no second helpings, Xiaoman has grown, so have her Holding Ltd. to promote its
views. She licks the juice off her China. Viewers are transfixed by says she didn’t set out to make no matter how much Xiaoman opportunities. She has an agent, shopping festival featured Xiao-
fingers, reaches out her arms her expressive face, bangs, high- Xiaoman famous. Ms. Duan cries, her mother says. Candy Chan, a director at Mod- man eating a bowl of fish, to-
and cries “More durian!” pitched voice, chewing sounds started posting the eating vid- One video shows Xiaoman at mato and green pepper with a
In China, about 800 million and good manners. Fans call her eos a year ago to document her a restaurant feasting on an In- blue Pampers crown perched
people carry a smartphone. A the “cute baby foodie.” daughter’s life, just like any donesian salad of vegetables, atop her head.
lot of them are fascinated by She eats methodically with a proud parent would, she says. eggs, tofu and potatoes
Online, some parents “Xiaoman is eating so well,”
watching other Chinese eat. spoon and fork, and sometimes The mother stays off camera. drenched in peanut sauce. She praise Xiaoman gushed the announcer. “If she
An eating channel launched her fingers, washing food down Other parents soon sought doesn’t look up when two fans were my daughter, I’d give her a
last year by Meipai, an app that with swigs of milk or water. She her advice about how to pre- come up behind her to take self-
for her vigorous sticker or a flower as a prize!”
hosts Xiaoman’s videos, has re- leaves little mess. Her online pare the same foods that Xiao- ies, even when one drapes her appreciation of food. Forks and bowls playing on
ceived more than 12 billion name translates into “little man eats and how to get their hand on the toddler’s shoulder. her celebrity status are sold on-
views. Competitive eater Miz- man.” kids to eat vegetables. Ms. Duan Some viewers wrote that Xi- line but weren’t approved by Xi-
ijun gobbles down everything As she chomps and slurps, says the trick is: Don’t let them aoman’s food bowls look larger aoman’s parents, her mother
from pig feet to cream cakes. Xiaoman has sparked a debate eat too many snacks. than her head and that she eats els International, who also rep- says.
It’s the Chinese version of about eating habits in a country Ms. Duan says she is no food too much. Ms. Duan says the resents Hong Kong supermodel It’s a lot to stomach. Ms.
“mokbang,” or “eating broad- where the culture is closely tied expert and reads lots of parent- portion sizes are normal for her Qi Qi. Duan says she isn’t seeking to
cast,” which gained popularity to food and feeding the popula- ing blogs. Instead of spoon- daughter’s age. She made a Xiaoman just had a starring profit from her toddler daugh-
in South Korea a few years ago tion of 1.3 billion is a challenge. feeding, which is common in video of Xiaoman’s visit to the role in an online advertisement ter’s fame. Besides, the way on-
with streaming late-night chow- On social media, some par- China and elsewhere in Asia, doctor to show the toddler is in China for Pampers diapers, line fame comes and goes, “I
downs shown live. ents praise Xiaoman for her vig- Ms. Duan simply gives Xiaoman healthy. made by U.S. company Procter don’t think she’s going to be fa-
“There’s a spiritual satisfac- orous appreciation of food, utensils so she can feed herself. The amount of food “looks & Gamble Co., and has been a mous for long,” the mom says.
 For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
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THE WALL STREET JOURNAL. Tuesday, May 23, 2017 | A9

LIFE&ARTS
FITNESS

Five Small Steps

To Keep Sweating
They are consistent but not rigid. They have
BY RACHEL BACHMAN
open minds about what defines “exercise.”
And they have different motivations than
Many of us vow to get to the gym—then the weary conscripts who enroll at the gym
life intervenes. But 21% of U.S. adults do on New Year’s Day.
manage to get enough exercise, and these Here are habits of those who exercise fre-
people have some common traits and habits. quently that just might help the rest of us:

They have a streamlined pre-exercise routine a dresser. The plan is that when a runner wakes up,
with visual cues. he sees the cues, dresses and dashes out the door.
In another study published in 2017 and led by Dr. After eight weeks, members of the study’s ex-
Kaushal, new gym members were asked to create perimental group were 1.7 times more likely to
cues to prompt them to exercise. A cue might be meet physical-activity guidelines than those in a
laying out running clothes, shoes and headphones on control group.

They work out at the same time most days. need to invest in much thought,” says the study’s
A study published in April in the British Journal of lead author, Navin Kaushal, a postdoctoral fellow
Health Psychology examined 181 people who exer- in preventive medicine at the Montreal Heart In-
cised an average of 300 minutes a week—twice stitute, University of Montreal.
the federally recommended minimum. Putting yourself in a certain environment at a
Most of those people picked a regular time to certain time every day “brings up a mental
work out and stuck with it. script of the behaviors and you go into autopi-
“When things become predictable you don’t lot.”

They’re more flexible than infrequent exercis- study’s lead author, Michelle Segar, director of
ers about how long or vigorously they exercise. the University of Michigan’s Sport, Health, and
Active people are less likely to have all-or- Activity Research and Policy Center. “But life is
nothing definitions of physical activity, according messy. When you’re more flexible, you’re able to
to a study soon to be published in BMC Public shift your position, your stance, do something
Health. The study looked at 40 women, 11 of less. It removes the psychological punishment of
whom said they exercised at least three times or ‘Oh, I failed.’ ”
two hours a week. If a frequent exerciser’s workday spills into her
“The old-school belief was, you set a goal, it’s hourlong spin class, for instance, she might still
a bull’s-eye. You hit it or you miss it,” says the hit the gym to pedal 20 minutes on her own.

They’re more likely to exercise for pleasure two groups chose similar exercises with similar
ILLUSTRATIONS BY MITCH O’CONNELL

than for weight loss or other long-term health amounts of weight.

goals. “If I really care about having a healthy heart,
A study published in 2016 in the Journal of that’s what gets me to the gym,” says Kaitlin Wool-
Consumer Research recruited 61 gymgoers at a ley, the study’s lead author and a Ph.D. candidate at
University of Chicago weight room. Researchers the Booth School of Business at the University of
randomly sorted them into two groups and gave Chicago. “But that’s not what keeps me there.”
each group six exercise options, such
as biceps curls or dead lifts.
People in one group were told to
choose the exercise they most en-
An increasing number of active people are wid- outs using a free site called Fitness Blender, but joyed, while the people in the other
ening their definition of exercise. recently tried Pilates and ballet-inspired barre group were told to choose the exer-
Many people think exercise has to last at least workouts and enjoys them. cise most useful for their health goals.
30 minutes and make you sweaty and exhausted. “I push myself when I feel like I can, but when Both groups were instructed to do as
Dr. Segar’s ongoing research suggests that fre- I can’t, that’s OK too,” he says. “I really try to lis- many sets of their selected exercise
quent exercisers increasingly view things like ten to my body.” as they could.
walking meetings and family bike rides as things During a recent work training he attended, People who chose an exercise for
that “count” as exercise. Mr. Rabinowitz climbed five floors of stairs to a enjoyment completed an average of
Steve Rabinowitz, a 41-year-old government meeting room eight times over two days— 29 reps, compared with 19 reps for
analyst in Greenbelt, Md., has been working out sometimes sprinting, sometimes walking. He those who chose the exercise they
about five days a week since he turned 40. He says he enjoys exercise more since he’s ex- thought would help them with health
mostly does high-intensity interval training work- panded his options. goals. That was true even though the

BURNING QUESTION

CAN HANDLING MONEY SPREAD GERMS?

rial signature can be transferred person who touched it than every- “You shouldn’t touch any-
BY HEIDI MITCHELL
onto the bill and feast on residual one who ever touched it,” she thing that’s handled often
oils from sticky fingers. says. One slightly concerning bug and then touch an open
MONEY LAUNDERING is typically A recent study found more than found on dollar bills is Acineto- wound or put your hand in
meant to describe the process of 3,000 types of bacteria on bills in bacter baumannii, which can lead your mouth,” Dr. Martin
scrubbing funds of their origin. circulation, though the epidemiol- to pneumonia or meningitis, but says. Washing hands
That term could also be applied to ogist says most of what was found it’s mostly a cause for concern in frequently with soap
the literal cleaning of Benjamins. is part of our world’s bacterial hospital settings. and water should get
According to a recent study, bacte- ecosystem. “We carry so much “Typically the numbers of bac- rid of any residual
ria of many forms cling to dollar bacteria, we are used to fighting teria found on a bill aren’t large germs—or other sub-
bills. One expert, Emily Martin, an them,” Dr. Martin says. Problems enough to cause infection, and stances, like cocaine, which
assistant professor of epidemiol- arise, she says, “when bacteria get these aren’t necessarily the same has been found on money in
ogy at the University of Michigan into places they shouldn’t.” strains that are resistant to antibi- many studies—that may hitch-
School of Public Health, explains otics anyway,” Dr. Martin says. hike on bills.
which bugs may be money-hungry Tiny Little Buggers Plus, “our skin is an excellent bar- Dr. Martin runs a lab and is
and when it’s worth worrying Among the critters found are the rier.” Healthy people shouldn’t surrounded by germs all day. She
about critters in the ATM. germs that cause acne. Typically worry about their dirty money doesn’t give a second thought to
the skin cells a person sheds onto causing disease, she says, unless who is riding the coattails of Abe,
A Pathway for Pathogens inanimate objects are laced with the skin is broken. Andrew or Benjamin. “I’d worry
American paper money is made bugs, but with little nutritional more about what flu virus is being
from a blend of linen and cotton, value in a dollar bill, they can ‘Don’t Lick the Bill’ sneezed in your direction,” she
iSTOCK

which makes notes porous, with only survive a couple of days on People whose immune systems are says. Still, she cautions, money
“lots of nooks and crannies for deposited skin scales and oil, Dr. compromised due to chemother- doesn’t belong everywhere.
things to get stuck in,” says Dr. Martin says. apy or other illnesses should take “Please don’t lick the bill or put it
Martin. As dollars move from per- “The bacteria you’ll find on a some precautions when thumbing up your nose,” which is a breeding
son to person, each owner’s bacte- bill is more reflective of the last a stack of worn $20 bills. ground of microbes, she says.
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
A10 | Tuesday, May 23, 2017 THE WALL STREET JOURNAL.

OPINION
REVIEW & OUTLOOK
Venezuela on the
Trump’s Middle East Reset Verge of Civil War
P
resident Trump visited Saudi Arabia on U.S. in more low-key fashion. But they laid on a
his first trip abroad this weekend even summit of regional Arab leaders, announced sub- Venezuelan strongman gates and doors, rampage through apart-
Nicolás Maduro is re- ment complexes, fire tear-gas canisters
as Iran re-elected Hassan Rouhani in a stantial ($110 billion) new arms purchases and in-
sponding to mass dem- through windows and loot homes.
sham presidential vote. The vestment in the U.S., and of- onstrations by selec- On May 7 the Venezuelan newspaper
timing may have been coinci- His visit revives the fered Mr. Trump the chance to tively killing civilians. El Nacional reported that between April
dental but the symbolism is U.S.-Saudi alliance and deliver his first speech as Presi- If, as a result, some 4 and May 5 the National Guard, to-
potent. Mr. Trump is reviving dent on U.S. relations with the
the traditional U.S. alliance sends a message to Iran. Muslim world. AMERICAS branch of the military gether with National Bolivarian Police
breaks with the regime, and chavista militia, invaded 11 differ-
By Mary
with the Sunni Arab states The two countries also is- Anastasia
the country will de- ent residential areas in Caracas. One
even as Tehran reaffirms its in- sued a public “joint strategic vi- scend into civil war. family of four in the El Paraíso district,
O’Grady
tentions to dominate the Middle East. sion declaration” that called for “a robust, inte- But until then it’s a requesting anonymity, told of how they
The timing comes full circle from the start of grated regional security architecture.” The test one-sided slaughter. cowered together in a bathroom for
Barack Obama’s eight-year tilt toward Iran. That of this vision will come in places like Syria and Ye- It’s also a Cuban proxy war. More eight hours to keep from being asphyxi-
than a dozen high-ranking Cuban offi- ated by the tear gas that had inundated
tilt began with Mr. Obama’s silence as Iranian men, but one early sign was the weekend launch
cers are said to be in Venezuela, along the rest of their apartment.
leaders stole the 2009 presidential election while of Saudi Arabia’s new Global Center for Combat- with thousands of Cuban intelligence It wasn’t the first blitz on the
arresting and killing democratic protesters. He ing Extremist Ideology. This is a welcome devel- agents. Their job is to keep Venezuelan building complex known as Terrazas
then spent two terms courting Iran in pursuit of opment in the heart of Wahhabi Islam that nur- army officers under constant surveil- del Paraíso. On April 19 pro-govern-
his nuclear deal while downgrading relations tured Osama bin Laden and other jihadists. lance to prevent the feared military up- ment thugs smashed an iron grille to
with the Gulf Arabs, Israel and Egypt. Mr. Trump’s Mr. Trump’s speech on Sunday was notable rising to restore democracy. If the in- get in and rob one of the neighbors.
weekend meetings and Sunday speech show he for its conciliatory tone, calling for a “partner- ternational community wants to head On April 26 civilian-clothed militia en-
is reversing that tilt as he tries to revive U.S. alli- ship” with moderate Muslim states. The arch off disaster, a good place to start would tered the complex and fired rubber
ances and credibility in the Middle East. rhetoric of his campaign was gone as he invoked be in Havana. bullets, injuring some residents. “But
Friday’s vote in Iran was more recoronation the shared desire of Muslims, Christians and On Thursday Miami’s El Nuevo Her- it was to frighten us, because they
ald reported it has a recording of Vene- didn’t steal anything,” one of the vic-
than re-election. The unelected Guardian Coun- Jews to live without fear of religiously moti-
zuelan generals—at a meeting in tims told the newspaper.
cil of mullahs disqualified more than 1,600 can- vated violence. Barquisimeto three weeks ago—“giving
didates. The remaining six represented the nar- He was also blunt in addressing Iran as “a orders to use snipers to control demon-
row ideological spectrum approved by Supreme government that speaks openly of mass murder, strators.” According to the Herald they The commitment to Maduro
Leader Ali Khamenei and the Revolutionary vowing the destruction of Israel, death to Amer- did so “with the argument that they
Guards. That includes Mr. Rouhani, who is often ica, and ruin for many leaders and nations in this find themselves on the threshold of a among soldiers and police
called a moderate in the West but has presided room.” Until Iran’s regime “is willing to be a civil war.” is breaking down while Cuba
over continuing domestic repression and re- partner for peace,” he added, “all nations of con- Maybe the generals know something
gional aggression. science must work together to isolate Iran, deny not yet acknowledged publicly—that continues to call the shots.
Mr. Rouhani will probably honor the broad it funding for terrorism, and pray for the day the commitment to Mr. Maduro among
terms of the 2015 nuclear deal, not least because when the Iranian people have the just and righ- the nation’s soldiers and police is
breaking down. On May 11 El Nacional reported that
it has provided the mullahs a much-needed fi- teous government they deserve.”
It happened once before, in April since this most recent wave of protests
nancial reprieve from sanctions. The regime is i i i
2002, when snipers backing the regime began, state security forces and para-
likely to exploit the accord at the margins, how- All of this will reassure the Gulf Arabs and picked off protesters during a demon- military have engaged in similar vio-
ever, including ballistic-missile launches and other U.S. allies who questioned America’s com- stration in Caracas. When some mem- lence and theft against 13 condomini-
technical progress in secret that could allow a mitment during the Obama years of retreat. The bers of the army refused to help then- ums in six cities including Maracay,
nuclear breakout when most of the accord’s ma- Saudis are imperfect allies, but they are linch- President Hugo Chávez crack down on Valencia, Barquisimeto and Merida.
jor restrictions sunset in eight to 13 years. pins of the U.S.-led order in the Middle East, and the crowd, he was forced to step aside, Forty-seven people have been killed in
Contrary to Mr. Obama’s hopes, there is no their assistance is essential to defeating Islamic albeit temporarily. the violence perpetrated by the antiriot
evidence that the nuclear deal has changed State in Syria. Once back in power, Chávez acceler- squads and paramilitary madmen since
Iran’s hostility to the U.S. or its designs for re- In 31-year-old Deputy Crown Prince Moham- ated the recruitment and arming of early April.
gional dominance. The Revolutionary Guards mad bin Salman, Saudi Arabia also finally has a paramilitaries. Thousands now show up This is state terrorism. But it may not
at antigovernment protests, firing have its intended effect. Most of the
continue to support Bashar Assad’s marauding serious modernizer who wants to diversify the
weapons into crowds and using their country is solidly against the govern-
in Syria, Shiite militias in Iraq, the Lebanese ter- economy from oil, expand the public space of motorcycles to run down demonstra- ment, and this includes low-income Ven-
ror group Hezbollah, and Houthis in Yemen. Teh- women and ease other cultural strictures. The tors. If the Cubans remain the power ezuelans, once the base for chavismo.
ran sees the Gulf states as a collection of illegiti- U.S. has a stake in his success and in particular behind the throne, there will be no one Paradoxically the repression seems to be
mate Sunni potentates who must bow before should help him prevail as soon as possible to stop these trained killers from slit- strengthening opposition resolve. Per-
Shiite-Persian power—and the U.S. as the only against the Houthis in Yemen. ting the throats of the opposition. haps Venezuelans have reached a tipping
power that can stop its ambitions. The eight-year decline of U.S. credibility in The possibility of a break inside the point. They will get new elections and
This is the strategic backdrop for Mr. Trump’s the Middle East can’t be reversed in a single armed forces seems to be on the rise. freedom for political prisoners, or are
visit to Riyadh, which was remarkable for the summit, but Mr. Trump’s weekend in Riyadh is As the Journal’s Anatoly Kurmanaev re- ready to die trying.
public display of support for the U.S. alliance. The a promising start that will be noticed from Teh- ported on Wednesday, National Guard The brutality also may be eroding
riot police are worn down from taking the confidence of the men and women
Saudis have long preferred to cooperate with the ran to Damascus to Moscow.
on thousands of street protesters al- in uniform. Many seem not to have the
most daily since the beginning of April. stomach for the cruelty their Cuban

China’s Hero Lawyers Rank-and-file soldiers also are not im-

mune to the hardship and hunger
handlers expect from their South Amer-
ican protégés. On May 5 opposition

C
caused by Mr. Maduro’s senseless eco- leader Henrique Capriles said 85 mem-
hina’s crackdown on human-rights law- vented Mr. Chen’s son from enrolling in pri- nomic policies. They say they too are bers of the armed forces, including
yers is revealing details of how the re- mary school. underpaid and underfed. some young captains and sergeants,
gime uses torture to force confessions Mr. Xie’s wife also condemned the trial as a The dictatorship is clearly worried had been detained by the regime for
from political prisoners. This sham. Chen Guiqiu was pre- about this and recognizes it will lose a criticizing the repression. On May 19 a
month a court in Changsha Torture and forced vented from seeing her hus- war of attrition. One source in Caracas member of the National Guard was ar-
staged a show trial of a lawyer band since his arrest in 2015. who marched in the streets Thursday rested in Táchira for having crossed
who earlier this year released
confessions continue She and the couple’s children observed a noted increase in regime over to defend protesters.
repression. The international community has the
an account of mistreatment in almost as a routine. fled to Thailand in February, In recent weeks government enforcers power, through sanctions, to rein in
prison. Another lawyer was re- where they were detained. Ac- also have launched attacks on lower Cuba. If it fails to do so, the Venezuelan
leased after being abused and cording to the Associated middle-class neighborhoods where opposition will be massacred.
tried in secret in Tianjin. Press, U.S. diplomats managed to secure their re- Maduro critics live. They break down Write to O’[email protected].
In Changsha, Xie Yang pleaded guilty to sub- lease in March. After a tense airport confronta-
version and retracted allegations he made in tion with Chinese officials who wanted to take
January through his lawyers that he had been them back to China, they flew to Texas and are
beaten, deprived of sleep and held in stress posi- applying for asylum.
tions. In a statement read to the court, he said In the Tianjin case, lawyer Li Heping was re-
Israelis and Palestinians,
he had been “brainwashed” by foreign agents. leased this month after a secret trial handed
“Everyone should take me as a lesson: You must down a three-year suspended jail term for sub- Working Together in Peace
behave within the boundaries of the law, avoid version. He was accused of defaming the govern- By Oded Revivi raeli presence in Judea and Samaria is
being used by anti-China Western forces,” the ment in interviews with foreign media, as well

P
an impediment to peace.
lawyer said. He made a similar confession on as conspiring with religious workers and others resident Trump has described the Prime Minister Benjamin Netanyahu
state-run television. seeking to overthrow the government. Like Mr. conflict between the Israelis and has proposed to restart negotiations
In Mr. Xie’s January statements, he antici- Xie, his guilty plea led to a more lenient sen- the Palestinians in terms of a with the Palestinian Authority and of-
pated this outcome: “If, one day in the future, I tence. business negotiation. Days after taking fered the possibility of further invest-
do confess, whether in writing or on camera or Mr. Li’s frail and emaciated appearance shocked office he told The Wall Street Journal ment in industrial zones bordering Pal-
on tape, that will not be the true expression of his family and colleagues. He lost a significant that Middle East peace would be “the estinian towns and villages. Businesses
my own mind. It may be because I’ve been sub- amount of weight in prison and his hair turned ultimate deal.” like Lipski Plastics may not be as glam-
Mr. Trump might be onto something. orous as an international peace sum-
jected to prolonged torture, or because I’ve been gray. According to his wife Wang Qiaoling, Mr. Li
Conventional wisdom for almost a cen- mit, but they are far likelier to yield se-
offered the chance to be released on bail.” Writ- was force-fed medicine that made his vision blurry tury has dictated that for peace to pre- rious dividends in the long run.
ing or recording pre-emptive disavowals of and his hands were shackled to his legs 24-hours vail, Israelis and Palestinians must be
forced confessions has become common among a day for a month. Like Mr. Xie, Mr. Li was pre- physically separated. But separation is
Chinese lawyers. vented from having his lawyer represent him in one of the main reasons the conflict Opportunity, not separation,
Mr. Xie’s lawyer, Chen Jiangang, was de- court and was barred from seeing his family. drags on interminably. Peace is fos-
tained to prevent him from attending the trial. The Chinese government breaks its own laws tered over generations, through per- will bring order to the region.
Afterward he told the Journal, “This wasn’t a when it mistreats prisoners and fails to follow due sonal bonds and even business rela-
trial, it was a transaction.” He said government process. Despite knowing they will suffer further tionships.
officials had struck a deal in which Mr. Xie abuse, scores of lawyers like Messrs. Xie and Li Most Israelis and Palestinians don’t The new White House has already
would be released and keep his law license if bravely continue to expose Beijing’s flouting of the interact with someone from the other brought a fresh perspective to the
side on a daily basis. The exceptions Middle East. Mr. Trump’s special en-
he confessed. Last week Beijing police pre- rule of law. Their sacrifices deserve to be honored,
are the 450,000 Israelis and more than voy, Jason Greenblatt, broke with de-
one million Palestinians who live side cades of failed U.S. State Department

Los Angeles Charter Uprising by side in Judea and Samaria, or what

many call the West Bank. The tens of
policy by meeting in March with a del-
egation of Israeli residents of Judea

O
thousands who work together every and Samaria. He also met with young
ne reason public schools in big cities state legislature in Sacramento that aim to limit day in the area’s 14 industrial zones Palestinians and Israelis from across
are so lousy is union control of local autonomy for charter schools. One would pre- have built the closest bonds. the political, religious and socioeco-
school boards. This has long been true vent charters from appealing rejections by local During his visit to Israel this week, nomic spectrum.
in Los Angeles, but last week charter-school ad- school boards to county and state boards. The Mr. Trump should drop in on a busi- These meetings demonstrated a gen-
vocates dealt a major blow to the failing status appeals process is one reason charters in Los An- ness like Lipski Plastics in the Barkan uine attempt to understand the reality
quo by winning a majority on the district’s geles have been able to expand despite school- Industrial Park, some 15 miles east of on the ground, something that has
Tel Aviv. Half the company’s workers been lacking in international diplo-
Board of Education. board resistance.
are Palestinian and half are Israeli. matic efforts for decades. This is how
The Los Angeles Unified School District has Anti-charter board members have tried to They eat, laugh and solve problems to- peace will be built.
some of the country’s lowest-performing public convince parents that rising graduation rates gether. The Palestinians at Lipski make Millions of Americans voted for Mr.
schools. In 2015 only one in five fourth-graders show that traditional public schools are improv- four times the average wage in the au- Trump because they were tired of busi-
rated proficient on the National Assessment of ing. But the real explanation is that the board tonomous Palestinian areas. Many are ness as usual. They saw him as a blue-
Educational Progress. While Los Angeles boasts dumbed down graduation requirements and al- in senior management, with dozens of collar billionaire who empathized with
more charter schools than any district in the lowed students to pass courses with a D grade. Israeli employees beneath them. Mus- them and could get them back to work.
country, they still account for merely 16% of en- Half of last year’s graduating seniors were ineli- lim, Christian or Jew, these people re- If Mr. Trump really wants to broker
rollment. Two years ago the Great Public Schools gible for state public universities, according to turn home each day with a sense of ac- peace between the Israelis and the Pal-
Now initiative, which is backed by the Eli and the education nonprofit The 74. complishment knowing that they can estinians, he will need a lot of patience.
provide for their families with dignity Like the skyscrapers that bear his name,
Edythe Broad Foundation, set a goal of enrolling Unions tried to vilify pro-charter candidates
and pride. this deal will have to be built from the
50% of the district’s students in charters. The Nick Melvoin and Kelly Gonez by portraying them Islands of peace like Barkan show ground up, one brick at a time.
unions naturally went nuts. as tools of Donald Trump, though both were en- what could be achieved on a massive
As union schools lose students (and thus tax- dorsed by President Obama’s Education Secretary scale by a leader with true vision. Mr. Revivi is chief foreign envoy of
payer funds) to charters, the school board has Arne Duncan and the state’s progressive former Sadly, for decades these examples have the Yesha Council, which represents
become even more reactionary. Last month the Senator Barbara Boxer. There’s nothing progres- been largely ignored or boycotted be- the 450,000 Israeli residents of Judea
board voted to support three bills before the sive about failing low-income minority kids. cause of the flawed notion that any Is- and Samaria.
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
THE WALL STREET JOURNAL. Tuesday, May 23, 2017 | A11

OPINION

The Unraveling Trump-GOP Bargain Anti-Trump

By Alan S. Blinder would fall by $5 trillion to $6 tril-
Democrats

R
epublicans in Congress
appear to have struck a
lion over 10 years—and a lot more
thereafter. Republicans will doubt-
less try to cover up this huge cost
Invite Chaos
Faustian bargain with with trumped-up growth forecasts
President Trump: They and legislative chicanery. By Ted Van Dyk

‘A
turn a blind eye to his an- Then there’s the crowded con-
tics, ethical lapses, possible Russian gressional calendar again. Big tax jackass can kick down a
ties and sheer incompetence. In re- proposals are hugely contentious and barn,” said the legendary
turn, he supports their hard-right require enormous congressional time Speaker Sam Rayburn. “But it
agenda to shred the social safety net and energy. How, amid the Trumpian takes a carpenter to build one.”
and cut taxes on the rich. chaos, the health-care debate and Democrats should reflect on that
But now—after the clumsy firing more, will the House and especially wisdom as they consider the special
of FBI Director James Comey, the al- the Senate find time to agree on a counsel now appointed to investigate
leged obstruction of justice, the un- tax bill? A month ago, I was con- President Trump’s alleged ties to
conscionable revelation of sensitive vinced Republicans would find a way Russia. In the short term, the inquiry

ASSOCIATED PRESS
intelligence to Russia, assorted other to pass tax cuts, though not tax re- will probably hurt Mr. Trump and
Trump misdeeds and gaffes, and the form. Now, even that is in doubt. feed attempts to drive him from of-
appointment of Robert Mueller as Finally, the parts of the GOP’s am- fice. But in the end the president’s at-
special counsel—the bargain may be bitious deregulatory agenda that re- tackers will pay a price.
unraveling. Thank heaven. quire legislation may also fall by the The political and media hysteria
The pact’s last best hope may be White House budget director Mick Mulvaney, right, at the U.S. Government wayside. One important victim, I surrounding the Trump administra-
the American Health Care Act, a Publishing Office plant in Washington on May 19. hope, is the 591-page Choice Act, the tion lies somewhere on the repulsive-
truly cruel piece of legislation al- “repeal and replace” of the Dodd- ness scale between the Jacobin ex-
ready passed by the House. Getting of the House version are anathema proposal is expected to include sharp Frank financial reforms. The legisla- cesses of the French Revolution and
the bill or something similar through to GOP moderates. Further, the Sen- cuts in social spending, just as a suc- tion passed the House Financial Ser- the McCarthy era. Thus far the public
the Senate would fulfill Republicans’ ate has notoriously narrow band- cession of budgets suggested by vices Committee on a straight party- knows of no presidential action that
pledge to “repeal and replace width and relatively few legislative now-Speaker Paul Ryan have done line vote on May 4, but that may be would justify impeachment. Never
ObamaCare”—though not with days to deal with what’s already, or for years. Why? Well, there’s plain as far as it gets. mind, the crowd cries, let us have the
“something great,” as President soon will be, on its plate. mean-spiritedness. But Republicans The big “choice” the bill makes is verdict now. We can do the trial later.
Trump promised. Such as the budget. In March the also want the cuts to pay a fraction to allow Wall Street to return to the
White House released its “skinny of the cost for what Mr. Trump has Wild West atmosphere that existed
budget,” so named because it covers called “the biggest tax cut in the his- before the financial crisis. It would If they succeed in bouncing
How, amid the chaos, will only appropriated funds (a minority tory of our country”—though it exempt big banks from many regula-
the president from office,
of spending) and is extremely light would also be the most regressive tions if they hold 10% capital; it
the House and especially on details. For example, it calls for tax cut in its history. imagines that a bankruptcy court they may find that what
the Senate find time slashing U.S. State Department fund- The one-page tax reform “plan” could handle a gigantic financial fail-
comes next is even worse.
ing by 28% but doesn’t say how. Pre- the administration released last ure like Lehman Brothers; it would
to agree on legislation? sumably the answers will come in month was mostly empty space. If cripple the Consumer Financial Pro-
the real budget, due out Tuesday. you omit the hortatory language at tection Bureau; and it would push
Will the president’s budget, or the top and bottom of the page, it in- the Federal Reserve to follow a me- What about discussions between
Rather, the AHCA would be some- any budget, pass? Bet against it. Re- cluded exactly 107 substantive words chanical rule for monetary policy. Trump campaign advisers and Rus-
thing horrible for tens of millions of member, for years Congress has been about tax reform. (I counted.) Exam- And more. sian or other foreign leaders? Don’t
Americans who would lose their too tied up in knots to pass a budget. ple: Under “Business Reform,” the The Choice Act never would be they count as high crimes and misde-
health insurance or have their Med- Besides, another foolish confronta- administration says it will “eliminate missed. Neither would the rest of the meanors? No, such conversations
icaid coverage eviscerated. Only the tion over the debt ceiling looms this tax breaks for special interests.” Oh? Faustian bargain. take place all the time in national
richest would get “something great”: fall. Lawmakers will somehow have Which ones? campaigns.
hundreds of billions in tax cuts. to squeeze these and other matters Experts cannot estimate the ef- Mr. Blinder is a professor of eco- What about the firing of FBI Direc-
Fortunately, the AHCA now looks into schedules crowded with investi- fects, such as how much tax revenue nomics and public affairs at Prince- tor James Comey? Wasn’t that suspi-
like a long shot. Republican senators gations, maybe even impeachment would fall, since the plan is mostly ton University and a visiting fellow cious? No, Mr. Comey disregarded the
say they won’t accept the House bill proceedings. blank space. But heroic guessti- at the Brookings Institution. He was Justice Department chain of command
but will write their own from The debate over the president’s mates based on Mr. Trump’s cam- formerly vice chairman of the Fed- and the normal proprieties of his of-
scratch, and several major provisions budget will be highly partisan. The paign proposals suggest tax revenue eral Reserve. fice. He made public statements about
active investigations. He allowed it to
leak that the president had suggested

The Market’s Tough Love Delivers leniency for Mike Flynn, the former
White House adviser now under inves-
tigation. A presidential suggestion of
By Andy Kessler “reaccommodated” a passenger, in peaked in 2007 and has since been We used to have the same enforcer that nature would be neither illegal

F
the wording of its CEO. Twitter’s starved of capital. Macy’s peaked in in the debt market. When federal def- nor unprecedented.
oot Locker’s stock imploded on stock is down almost 75% from its July of 2015. J.C. Penney halved in icits got too large, the so-called bond What about Mr. Trump’s disclosure
Friday—crashing down $12, or 2014 peak and has been in the pen- the past six months. Both Target vigilantes would squawk, driving in- of classified information during a
17%. It happens all the time, alty box since early last year after and Dick’s Sporting Goods were terest rates up and forcing some bud- meeting with Russian leaders? It’s a
one of the great features of the revelations of lame user growth. down last week, and both are get discipline on Washington. tempest in a teapot. The president has
stock market. A week earlier, Snap, Yelp was pummeled by a 28% drop a scrambling to upgrade stores and Those days are long gone, aren’t the authority to classify or declassify
which went public two months ago, few weeks back and is now exploring increase digital sales. they? The Ben Bernanke-Janet Yellen information as he wishes. I have wit-
saw a chunk of value disappear. It markets beyond reviews. The stock The enforcer shakes up politi- regime at the Federal Reserve main- nessed other presidents doing it.
dropped almost 25% overnight after market gets the job done. cians, too. On Sept. 29, 2008, the tained interest rates at virtual zero. What about Mr. Trump’s executive
the social-media firm revealed that Dow Jones Industrial Average fell As Phil Gramm and Thomas Saving order declaring a short-term pause on
sales were up only 5% and the num- 777.68 points on news that Congress pointed out on these pages last immigration from countries with ac-
ber of users was a little light—oh, If only government had had rejected the bank-bailout bill. week, the Fed bought more than half tive terrorist movements? It may have
and that it had lost $2.2 billion. the discipline that traders Message sent. The Troubled Asset of Obama-era Treasury debt. With been poorly handled, but other presi-
That’s billion with a “b.” Even if you Relief Program was signed into law no discipline, Congress spent like a dents have done similar things.
take out one-time costs, the com- impose on companies. Oct. 3. That’s action. The Brazil Snapchatting teen with a stolen What about all Mr. Trump’s flip-
pany lost $200 million on $150 mil- stock market dropped 10% on Thurs- credit card. We need the enforcer flopping? Shouldn’t a president be
lion in sales. Impressive. day with troubles surrounding the back on that wall, giving Congress trustworthy and reliable? Yes, but
Did I mention CEO Evan Spiegel Going public also provides CEOs country’s president. In the U.S. the the Foot Locker treatment. when Mr. Trump has reversed his
got a $750 million bonus for taking the cheapest form of capital: You is- Trump bump hasn’t let up, but in- campaign pledges it has been mostly
the company public? Investors who sue pieces of paper giving claim to a vestors got queasy on news of a spe- Mr. Kessler writes on technology for the good.
bought the stock didn’t want to ruin share of future profits. You can use cial prosecutor. and markets for the Journal. If Mr. Trump were a conventional
the party, figuring it was going turn that capital to do anything and don’t president, these missteps would be
into the next Facebook. Snap’s stock ever have to pay it back. But if you shrugged off as growing pains or con-
was selling at 44 times future sales,
on the expectation that growth and
profits were coming. Or not. After
want more, you’d better get yourself
on a path to growth and profits. It’s
that simple.
The U.S. Can Get Assange sidered worthy of only mild reproof.
President Trump, it is true, lacks the
knowledge, experience and tempera-
lousy earnings, investors basically But the Faustian bargain is that By Seth Lipsky district court and the Ninth Circuit ment for the office. His crude narcis-

J
shouted, “Enough!” you live by the rules of the enforcer: appeals bench were prepared to sism is grating. He has carelessly
No one sits around and says, “we Feed success, starve incompetence. ulian Assange is all smiles after free Dr. Alvarez. contributed to his problems with
need to teach Snap a lesson.” Rather, That’s it. Markets provide cheap Sweden dropped its rape charge The Supreme Court was made of heedless public statements. He none-
it’s the collective selling that sends capital to those that can grow pro- against him. He may be hoping sterner stuff. It did cite a precedent, theless was duly elected and should
the message. That same day, CEO ductively and profitably, and make to make it to Ecuador, which is un- U.S. v. Rauscher, which blocked the be given the leeway that new presi-
Travis Kalanick of Uber, another funds expensive for the rest. This is likely to extradite him to America. prosecution of a defendant brought dents are traditionally afforded.
company with gargantuan losses and how capital is allocated efficiently. Then again, we could always seize to America from England for a crime Critics, moreover, misread the
personnel issues, tweeted and then The more human hands touch the him and spirit him to the U.S. to face not covered in the extradition treaty temper of the American people. Most
deleted, “Thank God we’re not pub- process, the worse the outcome (see justice. We wouldn’t have to resort between the two countries. The court voters don’t much like Mr. Trump.
lic.” But Uber should be public. If Chrysler, Solyndra). to the extradition process. The Su- took the view that once the U.S. pro- But they like chaos less.
only for the discipline of the public No one likes layoffs. No one preme Court might even prefer it ceeded under an extradition treaty, it I spoke recently to a Democratic
markets that its board of directors looks forward to closing divisions that way. was bound by its terms. group consisting mainly of Bernie
refused to impose. or firing CEOs. Instead, the stock Take it from Chief Justice William But the court also cited Ker v. Illi- Sanders supporters. Many were
Many people think the stock mar- market does the dirty work, mim- Rehnquist, who wrote the opinion in nois (1886), which involved a thief, searching for a constructive response
ket is a cesspool of Wall Street icking Col. Jessup—Jack Nicholson’s U.S. v. Alvarez-Machain (1992). It Frederick Ker, who’d been convicted to the Trump presidency. They were
greed. I look at it differently. To me, character in “A Few Good Men”— suggests that if America has a hand in Illinois but fled to Peru, only to be people, as the saying goes, seeking to
the stock market is the greatest en- who says, “You don’t want the truth in kidnapping a culprit from foreign brought back to court by a Pinkerton light a candle rather than curse the
forcer ever invented. No person con- because deep down in places you shores to bring him to justice in the agent. Rehnquist wrote that Ker’s darkness.
trols the market. Investors sepa- don’t talk about at parties, you U.S., the Supreme Court isn’t going “presence before the court was pro- I suggested that they concentrate
rately make decisions every day to want me on that wall. You need me to be too particular. cured by means of forcible abduction on developing alternatives to Mr.
buy and sell. But collectively they on that wall.” I’ve written about this over the from Peru.” But because he wasn’t Trump’s proposals—on health care,
enforce discipline on corporations. As Amazon stock hits all-time years, including in 2009, when Scot- brought back via extradition, the taxes, the budget. “You mean we
Buy and sell orders have more sway highs 20 years after its initial pub- land freed Abdelbaset Ali al-Megrahi court rejected his claims to rights should help Trump?” someone asked.
over CEOs than corporate boards, lic offering, retailers are getting to go home to Libya. He’d been con- under extradition law. “No,” I answered, “you should help
Congress or any White House. whacked. You’d think they’d have victed for his role in bringing down Which brings us to Mr. Assange. If your country.” I was surprised by the
United Airlines stock fell 6.3% be- seen it coming, but the stock mar- Pan Am 103 in 1988. It struck me his plan is to slink to Ecuador and if outburst of applause that followed.
fore the market even opened after it ket sent the wake-up call. Sears that America ought to capture the U.S. really wants him, it might do Democrats, in their all-out opposi-
Megrahi and bring him before an a better by avoiding extradition and tion to Mr. Trump, are missing real
U.S. court. President Obama could turning to its secret services to air- opportunities to influence policy. The
have acted under the precedent in lift him to stand trial in America. tax-reform debate is a prime example.
PUBLISHED SINCE 1889 BY DOW JONES & COMPANY the case of Humberto Alvarez- Even if America kidnaps him, that If Democrats were shrewd, they would
Rupert Murdoch Robert Thomson Machain, a Mexican physician. might not be the end of the story. try to negotiate a grand compromise,
Executive Chairman, News Corp Chief Executive Officer, News Corp The doctor was indicted for his al- Witness the denouement of the saga in which loopholes are scrubbed from
Gerard Baker William Lewis leged role in the murder of a U.S. of Dr. Alvarez-Machain, who was put the code and Social Security and
Editor in Chief Chief Executive Officer and Publisher Drug Enforcement Administration on trial in the same district court Medicare put on sounder long-term
Matthew J. Murray DOW JONES MANAGEMENT: agent, Enrique Camarena Salazar. He that shrank from trying him origi- footing. But to get there, purposeful
Deputy Editor in Chief Mark Musgrave, Chief People Officer; was accused, as Rehnquist put it, of nally. The judge acquitted him before polarization must give way to con-
Edward Roussel, Innovation & Communications;
DEPUTY MANAGING EDITORS:
Anna Sedgley, Chief Operating Officer & CFO;
“prolonging agent Camarena’s life so the case went to the jury. Dr. Alva- structive engagement.
Michael W. Miller, Senior Deputy;
Thorold Barker, Europe; Paul Beckett, Katie Vanneck-Smith, President that others could further torture and rez-Machain then sued America and Trump haters disregard an old
Washington; Andrew Dowell, Asia; OPERATING EXECUTIVES: interrogate him.” On April 2, 1990, the Mexicans who’d kidnapped him rule of politics and history: In the
Christine Glancey, Operations; Ramin Beheshti, Product & Technology; the doctor was, as Rehnquist put it, in league with the DEA. That case, end, voters always choose order over
Jennifer J. Hicks, Digital; Jason P. Conti, General Counsel;
Neal Lipschutz, Standards; Alex Martin, News; Frank Filippo, Print Products & Services; “forcibly kidnapped from his medical too, went to the Supreme Court, disorder. Kicking Mr. Trump to the
Shazna Nessa, Visuals; Ann Podd, Initiatives; Steve Grycuk, Customer Service; office in Guadalajara, Mexico, to be where in 2004 Dr. Alvarez-Machain curb wouldn’t return the country to
Matthew Rose, Enterprise; Kristin Heitmann, Transformation; flown by private plane to El Paso, lost unanimously. the pre-Trump status quo. It would
Stephen Wisnefski, Professional News Nancy McNeill, Advertising & Corporate Sales;
Jonathan Wright, International Texas, where he was arrested by DEA It’s not clear the U.S. wants to put likely bring forth new law-and-order
Paul A. Gigot, Editor of the Editorial Page;
Daniel Henninger, Deputy Editor, Editorial Page
DJ Media Group: officials.” Mr. Assange on trial. If it does, leadership more disciplined and con-
Almar Latour, Publisher; A U.S. district court concluded though, the moral of Alvarez-Machain servative than Mr. Trump’s.
WALL STREET JOURNAL MANAGEMENT: Kenneth Breen, Commercial
Suzi Watford, Marketing and Circulation; Professional Information Business: that the DEA was responsible, even is that it doesn’t have to be squea-
Joseph B. Vincent, Operations; Christopher Lloyd, Head; though its agents weren’t person- mish about how it gets him here, even Mr. Van Dyk was active for more
Larry L. Hoffman, Production Ingrid Verschuren, Deputy Head ally involved. Dr. Alvarez claimed if he’s hiding south of the border. than 40 years in Democratic adminis-
EDITORIAL AND CORPORATE HEADQUARTERS: his abduction, in Rehnquist’s para- trations and campaigns, including as
1211 Avenue of the Americas, New York, N.Y., 10036 phrase, “constituted outrageous Mr. Lipsky is editor of the New Vice President Humphrey’s assistant
Telephone 1-800-DOWJONES
governmental conduct.” A dainty York Sun. in the White House.
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
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A12 | Tuesday, May 23, 2017 THE WALL STREET JOURNAL.

LIFE & ARTS

BONDS: ON RELATIONSHIPS | By Elizabeth Bernstein

How to Manage a Long Wait for News

Taking a pessimistic view is actually best, researchers say; ‘You’ve done a lot of the psychological work already’
EVERYONE—moms, thera- end of a waiting period. Take
pists, rock stars—says the advantage of the middle and
waiting is the hardest part. get absorbed in an activity
It turns out there is a way that forces you into the
to “wait well,” researchers “flow”—that feeling of time
say. flying by. This will be distinc-
People who feel anxious or tive to each person, but
pessimistic or who ruminate strive for an activity you find
while awaiting news fare bet- absorbing. Mindfulness medi-
ter than others when it fi- tation has been proven to
nally arrives, the researchers work. Or you could focus on
say. They’re more prepared your breath or a mantra.
for bad news and more ex- Delay your worry for as
cited about good news. long as you can. Set a date
“If you are blindly optimis- close to when you will learn
tic and you haven’t steeled the news and don’t allow
yourself for the possibility of yourself to worry before
failure, you might be caught then. If you find yourself be-
flat-footed,” says Kate coming pessimistic sooner,
Sweeny, an associate profes- remember that your worries
sor of psychology at the Uni- are a natural part of the wait-
versity of California, River- ing process, not necessarily
side, who studies how people based in reality. Picture a
cope with waiting. “But if stop sign.
you’ve worried, you’ve done a Give in to pessimism at
lot of the psychological work the end. Remind yourself
already, no matter the out- that everyone feels more anx-
come.” ious at the end of a waiting
Most people find it tortur- period, right before they hear
ous to wait for personal the news. And it is healthy to
news—the results of a job in- prepare for bad news. Picture
terview, a pregnancy test, a how you’d physically brace
medical exam or a bid on a yourself if you were about to
home—whether they antici- take a fall. Now imagine shor-
pate it to be good or bad. In ing up your psychological re-
multiple studies people re- sources. What will you do if

JON KRAUSE
port that the anticipation the news is bad?
makes them feel sick and Reason with yourself if
sleep poorly. They also say all else fails. Ask yourself if
they felt psychologically par- there is anything else you can
alyzed, because they couldn’t plan The researchers surveyed 230 distract themselves. They refused A better way to wait, the re- be doing to be proactive, rather
for the future, and that this made law school graduates from 27 law to think about the outcome at all. searchers found, is when partici- than just worrying. (Waiting for
them anxious. Some studies have schools, all of whom were awaiting They also used a strategy called pants agonized through their wait- the result of a medical test? Check
shown that people feel better after their result on the California bar “proactive coping,” where they ing period, ruminating and feeling your insurance. Expecting to hear
receiving bad news than they did exam. Participants completed planned how they’d cope if the anxious and pessimistic rather whether your bid on a house was
while they were waiting for it. questionnaires about their stress news was bad. (Who would they than attempting to minimize their accepted? Look at other houses in
In a study published in the jour- levels and anxiety at several points call for support? What would they anxiety and worry. Those who did the neighborhood.)
nal “Emotion” in February, 2016, and reported how they attempted do to move on?) this responded more productively “You’ll feel like you’ve taken a
Dr. Sweeny and colleagues at the to cope: They braced to fail, espe- None of these coping mecha- to bad news and more joyfully to little bit of control back from the
University of California, Riverside, cially as they got closer to hearing nisms worked, according to the good news than participants who universe,” says Dr. Sweeny.
showed that people resort to a the news. They hoped for the best. study. They failed to reduce the suffered little during the wait. This
number of coping strategies to They looked for silver linings in a participants’ distress—and some is “waiting well.”
manage their discomfort while potential bad outcome or at- even made it worse. The problem How do you do it? Write to Elizabeth Bernstein at
waiting for an outcome. Dr. tempted to play down its implica- is that they all kept the law gradu- Stay in the present. Research [email protected] or
Sweeny calls this “misery manage- tions. (“The bar exam isn’t impor- ates’ attention on the upcoming shows that people feel more pessi- follow her on Facebook, Twitter or
ment.” tant anyway.”) They tried to news they were to receive. mistic at the beginning and the Instagram at EBernsteinWSJ

Weather 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.
-15 1 2 3 4 5 6 7 8 9 10 11 12 55 “Maybe” 24 Campbell’s
-10 offering
-5 13 14 15 56 Vault
0 25 Steinbeck novel
16 17 18 57 Path to
5 with a title from
Beijing enlightenment
10 19 20 21 Genesis
Seoul
Toky
Tokyo 15 58 Letter before
iota 26 Unstressed
20 22 23
vowels
New D h
Delhi Shanghai 25 24 25 26 27 28 29 59 Aboard
y dh
h
Riyadh 30 27 One of 500 in
k
Kolkata Taipei Down
h
Karachi 35 30 31 32 a ream
Hong Kong 1 Nods, perhaps
Hanoi
Manila 33 34 35 28 Barista’s creation
Ban k k
Bangkok
Warm 2 “Zip-___-Doo-
36 37 38
29 Order to Spot
Cold Dah”
la LLumpur
Kuala p 30 Caiman’s cousin
Stationary 39 40 41 3 Boat’s backbone
p
Singapore 34 Almost
42 43 4 Youthful time
Showers 35 Musical that
JJakarta
k
44 45 46 47 48 49 5 Narrow cut includes the song
Rain
50 51 52 53
6 Brewery “The Name’s
T-storms product LaGuardia”
54 55 56
Snow
7 Junior, to Senior 37 Like some poker
57 58 59 games
Sydney
yd eyy
8 The curb is often
Flurries painted next to 38 Up to
lb
Melbourne
Ice OUT OF THE WOODS | By Tracey Gordimer them 40 Crow cry
Global Forecasts City Hi
Today
Lo W
Tomorrow
Hi Lo W City Hi
Today
Lo W
Tomorrow
Hi Lo W
Across 22 Deborah’s 37 Post supporting 9 Nods, perhaps 41 Prodigious pipes
s...sunny; pc... partly cloudy; c...cloudy; sh...showers; 1 Whip up some “The King and I” a banister 10 Brand whose
Geneva 26 13 pc 25 12 s Ottawa 21 10 c 23 13 c
co-star 44 Singer Joan
t...t’storms; r...rain; sf...snow flurries; sn...snow; i...ice Hanoi 33 27 t 33 25 c Paris 25 12 s 26 14 s cookies 38 Like some jokes first flavor was
Havana 33 23 pc 31 23 pc Philadelphia 21 14 r 24 15 pc 23 Check points? and some cops Pep-O-Mint 45 Electrically hot
Today Tomorrow Hong Kong 29 25 pc 29 24 t Phoenix 40 24 s 41 25 s 5 Malia Obama’s
City Hi Lo W Hi Lo W younger sister 11 Muffin material 46 Eva’s “Green
Honolulu 29 21 sh 29 22 sh Pittsburgh 23 12 pc 24 14 sh 24 Food and a den, 39 Dark brown
Amsterdam 20 11 pc 21 11 c Houston 28 15 t 28 17 s Port-au-Prince 34 24 pc 35 24 pc for a forest Acres” role
10 His presidential forest creature? 12 Singer Joan
Anchorage 13 7 c 10 6 r Istanbul 20 12 s 20 14 c Portland, Ore. 27 10 s 18 9 c
Athens 25 16 t 24 15 t Jakarta 33 26 t 33 24 t Rio de Janeiro 27 20 pc 27 21 pc library is in creature? 47 Have ___ for
42 Yosemite and 14 As ___
Atlanta 24 18 t 23 13 t Johannesburg 22 4 s 21 4 s Riyadh 40 28 s 41 26 s Austin, Tex. (crave)
30 Climber’s Bridalveil, in (generally)
Baghdad 39 23 pc 35 20 s Kansas City 19 9 pc 18 7 r Rome 25 15 pc 26 15 s
Baltimore 19 12 r 23 15 pc Las Vegas 37 23 s 39 24 s Salt Lake City 26 15 s 29 13 s 13 Notion challenges Yosemite 48 Teensy pest
17 Lowish cards
Bangkok 35 27 t 35 26 t Lima 23 18 pc 22 18 pc San Diego 23 16 pc 21 16 pc National Park
14 Brass and 31 Shoots the 49 Trade show
Beijing 29 14 s 34 18 s London 22 13 pc 25 14 pc San Francisco 23 11 s 20 12 pc 21 Take to the
Berlin 23 10 pc 18 10 sh Los Angeles 28 16 pc 23 14 pc San Juan 32 27 pc 33 26 s bronze breeze 43 Scuba tank fill
slopes 52 Take to court
Bogota 19 10 r 19 11 c Madrid 32 16 pc 33 16 s Santiago 15 7 c 13 5 r 32 Brewery sight 44 Arrived
Boise 30 15 s 22 7 pc Manila 34 27 t 34 28 t Santo Domingo 32 25 pc 32 24 pc
15 Seething 23 John or Paul 53 Match division
Boston 20 13 pc 19 12 pc Melbourne 18 12 sh 16 10 pc Sao Paulo 21 14 pc 25 17 pc state unexpectedly
33 Got to one’s
Brussels 22 10 t 23 11 c Mexico City 30 14 pc 28 14 pc Seattle 25 9 s 18 9 c feet Previous Puzzle’s Solution
Seoul 24 16 sh 27 15 s
16 Amicable forest 46 Genealogist’s
Buenos Aires 19 12 c 19 13 c Miami 32 26 s 33 25 t
Cairo 30 18 s 31 19 s Milan 29 15 pc 31 16 s Shanghai 29 20 r 25 18 c creatures? determination H M S O B AMA W R O T E
34 Sharpens O O H L U P I N H O N O R
Calgary 27 7 s 10 6 r Minneapolis 16 8 c 19 9 pc Singapore 31 27 c 32 28 c S T A N D S P A T I T E M S
18 Tallow source 50 Lend a hand
Caracas 31 26 t 31 26 pc Monterrey 34 20 pc 28 19 t Stockholm 17 5 pc 19 8 sh 35 Cheese usually T E P E E S I O T A
Charlotte 21 16 r 22 16 t Montreal 22 12 pc 24 14 c Sydney 22 14 s 24 12 s S L EWS P O C K E T P E T
19 Fellow who made with 51 Forest creature S T E R N S H E A V E
Chicago 20 11 sh 16 10 sh Moscow 18 9 sh 21 11 sh Taipei 31 25 t 30 22 r
Dallas 23 13 sh 27 15 s Mumbai 35 26 pc 36 27 pc Tehran 32 19 pc 33 19 pc
compromises sheep’s milk that’s I T S Y G E T S O S C A R
S U P M O S H P I T E D S
Denver 16 4 sh 25 10 s Nashville 27 15 sh 22 12 sh Tel Aviv 25 19 s 25 16 s his values unaccounted A R OMA S E L L T R E E
36 Mel who was a
Detroit 24 13 c 21 12 sh New Delhi 39 29 s 41 28 pc Tokyo 25 19 s 25 20 pc for? A B O U N D G I L D A
Dubai 37 26 s 38 28 s New Orleans 27 19 t 25 16 pc Toronto 22 12 pc 22 11 c
20 Take offense New York Giant C O F F E E P O T E R A S E
at for 22 seasons 54 First female F A C E H A R M O N
Dublin 21 12 c 20 11 pc New York City 22 15 pc 23 14 pc Vancouver 19 8 s 16 10 s S H A L T N I C E L Y P U T
Edinburgh 17 13 c 19 11 pc Omaha 16 8 sh 20 8 sh Washington, D.C. 20 15 r 24 17 pc E M C E E A D O R E U S E
Solve this puzzle online and discuss it at WSJ.com/Puzzles.
s

Frankfurt 26 12 pc 23 12 pc Orlando 31 22 t 29 20 t Zurich 24 11 pc 24 10 pc T O E R R L OWE R P A R

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TECHNOLOGY: CHINESE ONLINE RETAILER IS DEVELOPING HEAVY-DUTY DELIVERY DRONES B4

BUSINESS & FINANCE

© 2017 Dow Jones & Company. All Rights Reserved. THE WALL STREET JOURNAL. Tuesday, May 23, 2017 | B1

Yen vs. Dollar 111.1500 g 0.10% Hang Seng 25391.34 À 0.86% Gold 1252.00 g 0.06% WTI crude 50.67 À 0.68% 10-Year JGB yield 0.050% 10-Year Treasury yield 2.243%

Huntsman in Deal With Clariant OPEC

Tie-up forms $14 billion
chemicals giant with
sentation evenly split, will be
called HuntsmanClariant.
companies said, is a broader,
more balanced geographic
Faces
Shares of Huntsman fell
potential synergies of
$400 million annually
1.5% to $26.35 in early trading,
while shares of Clariant
climbed 3.1% in Swiss trading.
footprint. The so-called annual
synergies from putting the
companies together could
reach $400 million.
Iraqi
Huntsman Corp. and Swit-
zerland’s Clariant AG struck a
The deal would create a
trans-Atlantic company valued
at about $20 billion including
U.S. paint and coatings
maker PPG Industries Inc. is in
a battle to acquire Dutch rival
Hurdle
deal to merge, creating a debt, offering an array of chemi- Akzo Nobel NV for $27 billion
chemicals giant worth about cals such as polyurethanes, pig- in cash and stock. Its advances BY BENOIT FAUCON

ARND WIEGMANN/REUTERS
ments, automotive fluids, addi- have been repeatedly rebuffed, AND SUMMER SAID
By Ben Dummett, tives and resins that are used and the next week or so is ex-
Dana Mattioli across industries ranging from pected to be crucial in deter- VIENNA—Iraq has become a
and Dana Cimilluca aerospace to agriculture to mining whether the deal hap- potential obstacle to OPEC’s
household cleaning. pens. Meanwhile Praxair Inc. efforts to continue cutting
$14 billion as companies in the Together Huntsman, which and Germany’s Linde AG are output into next year, repre-
industry seek ways to cut is based in Woodlands, Texas, trying to complete their sentatives of the cartel said
costs and boost revenue. and its Switzerland-based ri- Peter Huntsman, left, and Clariant’s Hariolf Kottmann in Zurich Monday. merger to create the biggest Monday, prompting Saudi Ara-
The deal, which comes after val would operate in more industrial-gas player with a bia’s energy minister to fly to
The Wall Street Journal re- than 100 countries and employ cals industry as companies and steady earnings, in- market value of more than Baghdad for meetings.
ported the talks Sunday, will about 32,000. Combined they seek to cut costs by eliminat- creased margins and new $66 billion. The Organization of the Pe-
see Clariant shareholders own- would generate annual reve- ing overlapping operations growth opportunities,” Mr. The lack of major revenue troleum Exporting Countries
ing about 52% of the new en- nue of more than $13 billion. and products, and identify Huntsman said in an inter- growth last year by Huntsman is set to meet Thursday to
tity, and Huntsman investors Huntsman, as previously an- new sources of revenue by view. “For either side to get and Clariant demonstrated the discuss an extension of pro-
owning the rest—based on nounced, still plans to spin off tapping new markets and cus- to a $20 billion enterprise challenging environment that duction cuts of 1.8 million
their current values. Hunts- its Venator pigments and addi- tomers. The deals are also value would take many, many the chemicals industry faces. barrels a day that were
man Chief Executive Peter tives business through an ini- meant to help the companies years of organic growth.” He Huntsman reported a 6% reve- agreed upon last year with al-
Huntsman will retain his job tial public offering this sum- combine resources to bolster added that the deal will “dou- nue decline to $9.66 billion in lies outside the group, such as
title at the new company, with mer. the research and develop- ble our reach without stress- 2016, hurt in part by soft de- Russia. An extension is widely
Clariant CEO Hariolf Kottmann The Huntsman-Clariant tie- ment for new products. ing the balance sheet.” mand and difficulty raising expected and, until now, there
taking the chairman role. The up comes amid a period of “Combining our companies Another benefit of the prices for some products. The had been few known obstacles
new group, with board repre- consolidation in the chemi- should give us more stable Huntsman-Clariant tie-up, the Please see DEAL page B2 to an agreement.
OPEC officials say Iraq—the
cartel’s second-largest mem-

Got Milk? Way Too Much, Say Farmers

ber—has expressed support
for renewing the agreement
for only the next six months,
not the nine-month extension
Many bulked up their U.S. herds when prices were high, but then trouble struck in the global market that Saudi energy minister
Khalid al-Falih has endorsed.
Russia, Kuwait and Venezuela
have also expressed support
Creamed for a nine-month extension.
U.S. dairy exports have declined amid growing product stockpiles. Mr. Falih flew to Baghdad
Monday to persuade Iraqi oil
Value of dairy exports Dairy production exported officials to get on board with
$8 billion 20% the longer agreement, OPEC
officials said.
6 15 The quibbling demonstrates
how the debate at the cartel’s
4 10 Vienna meeting this week will
be over how long to extend
2 5 the cuts for, not whether to
extend them. “All producers
0 0
agree on the idea of extending
1995 2000 ’05 ’10 ’15 1995 2000 ’05 ’10 ’15 the deal but the duration will
be decided during the meet-
Butter stockpiles* American-cheese stockpiles*
ing,” said OPEC Secretary-Gen-
300 million pounds 800 million pounds eral Mohammed Barkindo at a
news conference on Monday.
600 Iraq was among the most
200
reluctant countries to join pro-
DANIEL ACKER/BLOOMBERG

400 duction-cutting efforts in No-

100 vember last year, agreeing
200 only at the last minute.
The country needs as much
0 0 oil revenue as possible to
1995 2000 ’05 ’10 ’15 1995 2000 ’05 ’10 ’15 maintain a war against Islamic
*As of end-March State. Its oil production is ser-
Sources: Agriculture Department; U.S. Dairy Export Council THE WALL STREET JOURNAL. The U.S. dairy industry is taking a hit from weaker-than-expected demand and abundant supplies. viced by multinational energy
companies that are trying to
BY HEATHER HADDON promised. But China, Russia, Venezuela and years, USDA data show. The value of recover billions of dollars of
“There was a perfect storm,” said other importers scaled back their U.S. dairy exports was $4.8 billion investments in Iraq by pump-
U.S. dairy farmers’ big bet on Jaime Castaneda, senior vice presi- dairy purchasing in recent years be- last year, down 50% from 2014. ing as much as possible.
global demand for milk is souring. dent of trade policy at the National cause of domestic troubles. The Euro- Milk prices in March stood at The nine-month extension
The industry was in trouble long Milk Producers Federation. pean Union, meanwhile, greatly in- $17.30 per hundred pounds, the USDA has become part of talks since
before a trade squabble with Canada Dairy farmers aggressively ex- creased its dairy production after said, down $1.20 from a month ear- oil-market experts realized
last month that reduced demand for panded their herds three years ago lifting 30-year-old quotas in 2015. lier. That industry benchmark is an this month that the OPEC-led
ultrafiltered milk, a cheese ingredi- when milk prices were driven up by Then came a world-wide surge in ag- average of prices farmers receive. It production cuts wouldn’t drain
ent. Dairy farmers fear a spat that growing demand from middle-class ricultural production that has pushed is based on a variety of dairy prod- high levels of oil in storage by
has jeopardized roughly $150 million consumers in North America, Asia down prices for grains and meat as ucts including butter, cheese and the end of this year. Extending
in sales for Wisconsin, New York and and other markets. By March, there well as for dairy. skim-milk powder. the cuts into 2018 also reduces
Minnesota producers is just a prelude were 9.4 million commercial dairy The dollar has also been on a mul- Commodities markets such as the uncertainty that OPEC
to disruptions to come if President cows in the U.S., a 20-year high, ac- tiyear climb, making U.S. exports less dairy are prone to booms and busts could reverse the decision at
Donald Trump renegotiates the North cording to the country’s Agriculture competitive. Milk prices have plum- because of the long lead time to its next expected meeting be-
American Free Trade Agreement as Department. meted by one-third in the past two Please see DAIRY page B2 fore Christmas.

HEARD ON THE STREET | By Nathaniel Taplin

China Oil Giants Need Fast Overhaul

Massive ficial-speak for eliminating particularly with an impor-
ADRIENNE GRUNWALD FOR THE WALL STREET JOURNAL

market redundant workers and tant Communist Party meet-

shares, easy bringing in more flexible fuel ing looming this fall.
access to pricing. Reformers will have Economic data from April
cheap capital, to move fast, however, if hinted that China’s business
and the power they don’t want to run afoul cycle is already peaking.
of the government behind of China’s political calendar. Price controls are the
you—being a Chinese state- And the document’s rela- other big drain on Chinese
owned oil major must be tively tough language on oil majors’ earnings. Regu-
fantastic, right? “slimming down” is balanced lators periodically adjust
In reality, while China’s by waffling on price controls. domestic fuel prices, usu-
three listed oil giants— Slimmer workforces could ally with a lag to global
PetroChina, Sinopec and make an enormous differ- price movements, leading to
Cnooc—enjoy many advan- ence. PetroChina had more big losses when crude rises
tages, they spend too much than half a million workers sharply. Sunday’s document
employing too many peo- in 2016, but produced only called for a bigger role for Blake Harvey, CEO of a communications firm, works in a leased office down the hall from his employees.
ple while being expected to slightly more oil and less market prices, but added
sell fuel at a discount
when prices rise sharply.
In recent years, they have
natural gas than Exxon Mo-
bil, which struggled by with
71,000 employees. The com-
the government should keep
the right to control “abnor-
mal” price movements. As
CEOs Want Their Offices Back
also come under political pany’s labor costs clocked in long as the government re- BY VANESSA FUHRMANS The floors, it turned out, pany from Portland, Ore., to
attack thanks to Beijing’s at nearly $17 billion, more tains discretion to inter- damped none of the sound. In- New York, Mr. Hamad has
crackdown on graft. than three times its actual vene on pricing, share- The lofty building Jordan stead of constantly trading joined a cadre of bosses
Their sorry state makes a earnings. Partly as a result, holder returns will remain Hamad moved his tech-advi- ideas, he and his team often chucking the egalitarianism of
reform blueprint released PetroChina trades at only 0.8 hostage to Beijing’s broader sory firm into four years ago wore noise-canceling head- working alongside their em-
over the weekend by the times its book value—against worries regarding inflation. had the trappings of a startup phones to block out the din. ployees for the old-fashioned
State Council, China’s cabi- 2 times for Exxon and 1.2 This weekend’s blueprint idyll: open floor plan, polished For private meetings or calls, private office. Their open-of-
net, of potentially great in- times for Royal Dutch Shell. contains some hopeful sig- concrete floors, custom-built he would sequester himself in fice revolt, they say, is less
terest to investors. Areas Still, if China’s economy nals. But if Beijing doesn’t communal tables. the noisy printer room or at about reclaiming the corner
highlighted for change in- slows sharply in the second roll out further details Soon, the 33-year-old home. “It was, ‘Yay, we have office than about needing a
clude shedding “societal half of 2017, shepherding quickly, investors shouldn’t founder of Chairseven says he this great space, but I can’t re- quiet place to think.
functions” and resolving through any big layoffs will expect too much from this craved something else: walls ally use it,’” he said. “People will say it’s so cool
“legacy issues”—Chinese of- become politically difficult— latest reform broadside. and a door. Now as he moves the com- Please see CEO page B2
 For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
B2 | Tuesday, May 23, 2017 THE WALL STREET JOURNAL.

INDEX TO BUSINESSES BUSINESS & FINANCE

These indexes cite notable references to most parent companies and businesspeople
in today’s edition. Articles on regional page inserts aren’t cited in these indexes.

Alibaba Group
A
Akzo Nobel ............ B1,B4

Holding......................A8
Alphabet....................B12
Group ....................... B2
G
General Electric..........A8
H
PPG Industries............B4
Procter & Gamble.......A8
Q
Quandl.........................A8
Mining Tycoon Digs Deep
BY ROB TAYLOR
HFR..............................A8 R
B
Huntsman....................B1 Renault........................B9 CANBERRA, Australia—An-
Berkshire Hathaway...B2
Boston Scientific........B3 J S drew Forrest, a onetime alpaca
C JBS..............................A4 Schlumberger..............A8 importer, recast the global
JD.com.........................B4 Sherwin-Williams.......B4 iron-ore industry by building a
Chairseven...................B1
Sinopec Shanghai tiny Australian company into
CircleCI ........................ B2 M
Petrochemical...........B1 the world’s fourth-biggest
Citigroup....................B11 Medtronic....................B3 Steelcase.....................A1 miner of the commodity. Now,
Clariant........................B1 Microsoft .................... A1 SunRun......................B12 inspired by American billion-
CNOOC.........................B1 Models International..A8 T aires Mark Zuckerberg and
Coca-Cola.....................B3
N Tabb Group..................A8
Warren Buffett, he wants to
E energize philanthropy in his
Nissan Motor..............B9 Tencent Holdings......B12

MICK TSIKAS/EUROPEAN PRESSPHOTO AGENCY

Elliott Management ... B4 country.
Exxon Mobil................A5 O V Mr. Forrest, the 56-year-old
F Odebrecht....................A4 Valspar ........................ B4 founder and chairman of
Ford Motor............A1,A2 P Y Fortescue Metals Group Ltd.,
Fortescue Metals PetroChina...................B1 Youku Tudou ............. B12 said Monday he would give
400 million Australian dollars

INDEX TO PEOPLE (US$298 million) to fund cam-

paigns against cancer and
slavery, as well as improving
A Forrest, Andrew..........B2 Kuroda, Haruhiko........B5 child education. It represents
Augustin, Sally...........B2 G L the largest philanthropic do-
B Ghosn, Carlos..............B9 Laine, Ben...................B2 nation ever made by a living
Barshefsky, Charlene..B6 Granade, Matthew ..... A8 Lawler, Anthony.........A8 Australian. Andrew Forrest, founder of Fortescue Metals, said he and his wife have joined the Giving Pledge.
Batista, Joesley..........A4 Grant, Hugh ................ B4 Long, Yongtu...............B6 Mr. Forrest, widely known
Büchner, Ton...............B4 H M as “Twiggy,” said his donation billion fortune for philan- For a short time, he was Aus- cancer research, higher educa-
Bellairs, Chris ............. B2 Hackett, Jim..........A1,A2 McGarry, Michael........B4 would be in cash and wouldn’t thropy. He then joined with tralia’s richest man, worth al- tion and childhood research,
Bloomberg, Michael....B2 Haddad, Gilbert .......... A8 require him to reduce his more Mr. Gates and other donors in most A$13 billion at the height while A$50 million will go to
Byers, William............A8
N
Hamad, Jordan............B1
Nicks, Michael ............ A8
than 30% stake in Fortescue, 2010 to form the Giving of a China-led mining boom in help alleviate poverty among
C Harvey, Blake..............B2 valued at around A$5 billion. Pledge, urging other ultrarich mid-2008. indigenous people. Another
Nobis, Ken...................B2
Campbell, Kurt............B6 Huntsman, Jon ........... B2 “I am encouraged by what Americans to donate at least Fortescue racked up an esti- A$75 million will be channeled
Castaneda, Jaime ....... B1 Huntsman, Peter........B1 S
has been happening in Amer- 50% of their wealth. mated A$10 billion in debt on to fight modern slavery.
Cohen, Steven A.........A8 J Silversteyn, Dmitry....B4
ica,” Mr. Forrest said in an in- Mr. Forrest said he and his a bet that iron ore would con- Mr. Crowe, a longtime
D Stephenson, Mark ...... B2
Jones, John Tudor......A8 terview. “I can say candidly wife, Nicola, have joined the tinue to command high prices, friend of Mr. Forrest, said Aus-
T
De Prado, Marcos K that they have helped lead us Giving Pledge. buoyed by Chinese demand. tralia needs to change policies
Lopez.........................A8 Thorp, Ed.....................A8 and I would love to see that Australian corporate donors The company has survived to “accelerate and expand”
Kausikan, Bilahari.......B9
F Klarman, Seth...........B12 V culture spread right across have lagged behind their several turbulent periods, no- philanthropy to match Amer-
Fields, Mark ...............A2 Kottmann, Hariolf ...... B1 Villani, Dario...............A8 Australia.” American counterparts, ac- tably during the 2008 finan- ica. “But this is an extraordi-
Mr. Zuckerberg, Facebook cording to lobby group Philan- cial crisis and in September nary example to put up in
Inc.’s founder, announced in thropy Australia. That is de- 2012, when it was forced into front of people,” he said.

DAIRY Meanwhile, U.S. dairy prod-

ucts are piling up. The U.S. has
more than 800 million pounds
of American cheese in reserve,
2015 that he would give away
99% of his family’s net worth
to fund public education. Mi-
crosoft Corp. co-founder Bill
spite Australia’s economy
navigating 25 years without
recession—the longest con-
tinuing growth streak in the
emergency talks with lenders.
Fortescue’s debt has since
come down sharply, helping
the company’s stock price to
Global commodities trader
and billionaire Graham Tuck-
well last July made Australia’s
largest philanthropic contribu-
Continued from the prior page the most since 1984, according Gates and his wife in 2000 set developed world. hit a six-year high in February. tion to a single university, do-
ramp up supply. But the cur- to the USDA. The amount of up one of the world’s largest Mr. Forrest’s road to riches Mr. Forrest was flanked by nating A$200 million over
rent glut—and the accompany- butter in reserve totals 272 private foundations—worth hasn’t been without its bumps. celebrities and political lead- several decades to the Austra-
ing downswing in exports— million pounds, the most since US$39 billion—to help fight Some of his early ventures— ers, including actor Russell lian National University in
might pose one of the biggest 1994. Some U.S. farmers are global poverty and underpin importing alpacas from the Crowe and Prime Minister Canberra. Separately, health-
challenges yet to the U.S. dairy dumping millions of pounds of health research. Andes to sell in Australia and Malcolm Turnbull, when he care magnate Paul Ramsay left
industry. excess milk onto fields. In the In 2006, Mr. Buffett, chief using Cuban technology to announced his donation at A$3 billion in a foundation to
“A lot relies on exports, and Midwest and Northeast, nearly executive of Berkshire Hatha- build a nickel plant—failed, Australia’s parliament on fund health research and pov-
that’s why swings are such a 78 million gallons of milk have way Inc., said he would give but he rebounded after Monday. Around A$225 mil- erty alleviation following his
big deal,” said Ben Laine, an been dumped so far this year, away the bulk of his US$73 launching Fortescue in 2003. lion will be divided between death in 2014.
economist at CoBank Acb, an up 86% from the same period
agriculture cooperative bank. last year.
“That’s where any surplus
goes.”
The glut is likely to grow
this spring, the most produc-
Lawmakers from Wisconsin
and New York are asking the
USDA to buy excess cheese
again. Last year, the agency
CEO
tive time of the year as tem- spent $20 million to purchase Continued from the prior page
peratures rise and days grow cheese from private invento- to have the CEO right next to
longer. An unusually mild win- ries for food banks and pan- you, but at the end of the day
ter started this year’s milking tries. your team sometimes needs
season months early at some The USDA already spent all their space and you need
dairies, further contributing to authorized funds to buy up ex- yours,” says Mr. Hamad, who
the milk crush. cess dairy this fiscal year, but has leased a private office for
“You can’t turn the cows the new request is under con- himself and co-working space
off,” said Ken Nobis, president sideration, an agency spokes- for other staff.
of a dairy cooperative in Mich- woman said. Bosses like him are swim-
igan, where the busy season Some big purchasers such ming against the workplace
started three months early. as Dean Foods Co. say they tide. Nearly 70% of U.S. office
In a recent interview, Agri- don’t even try to predict milk spaces are open-concept, ac-
culture Secretary Sonny Per- prices anymore. cording to the International
due said renegotiating Nafta “We learned our lesson back Facility Management Associa-
could improve access to Can- in 2014,” said Chief Financial tion, compared with 64% two
STEELCASE

ada for U.S. farmers. “We’re Officer Chris Bellairs, referring decades ago. Led by CEOs such
going to try and balance the to a year when spiking milk as Michael Bloomberg, AB In-
scorecard in a number of costs drove losses for Dean. Bev NV’s Carlos Brito and Zap-
ways,” he said. “The market was volatile, and pos.com Inc.’s Tony Hsieh, Steelcase’s Jim Keane, right, in his prototype office pod, where he retreats when he needs to focus.
Tom Vilsack, agriculture it remains that way today.” more executives have ditched
secretary during the Obama To cope, farmers need to the corner office for an open was worried about the busi- sulting firm Design With Sci- “It’s not about status or
administration and current stop expanding their herds, desk to project camaraderie ness, there was no hiding. “If I ence. privilege,” he says of the pod,
president of the U.S. Dairy Ex- said Mark Stephenson, director with the masses. was a little down, they could Even watching a boss and a prototype with still-exposed
port Council, urged the Trump of the Center for Dairy Profit- But as employees and man- see that, and that affects the co-worker move into a sepa- two-by-fours. “This is a space
administration to find new for- ability at the University of agers squeeze closer together, whole team,” he says. rate space for a meeting can where you do certain kinds of
eign buyers for American milk. Wisconsin-Madison. “That’s productivity and morale have So when the firm signed a be distracting, she adds. work.”
“To keep pace with those ef- something we don’t want or suffered. few new clients this year, he “People’s minds never go to Open offices are so popular
ficiencies in productivity, we need,” Mr. Stephenson said. In a review of more than leased an office from office- ‘Bob must be getting a promo- among tech companies that
have to look for additional —Jacob Bunge 100 studies of work environ- space provider Servcorp Ltd. tion,’ ” she says. “It’s, ‘Bob when CircleCI’s founders
markets,” Mr. Vilsack said. contributed to this article. ments, British researchers just down the hall from his must be in trouble. This is the moved the software-testing
found that despite improving employees. Having his own beginning of the end for startup from an open space in
communication in some in- space, he says, makes him feel Bob.’ ” San Francisco to one with 25
stances, open-office spaces more like a leader. After brain- For some bosses, though, closed offices in 2014, it paid
hurt workers’ motivation and storming or regrouping with the future may resemble the half the market rental rate,
ability to focus. some music or even watching setup of Jim Keane, CEO of says co-founder Paul Biggar. In
HEATHER AINSWORTH FOR THE WALL STREET JOURNAL

Employees seeking privacy an inspirational video, “I can Steelcase Inc., maker of office Silicon Valley, many people are
resort to conference-room get back out there with my Su- furnishings. Last year, he and “playing startup,” he says, em-
squatting or ducking into “fo- perman cape on,” he says. the rest of Steelcase’s leader- ulating the open spaces of
cus” booths, quiet refuges that Another upside: His pedom- ship team worked in their own tech giants such as Google Inc.
companies are increasingly eter registers at least 10,000 open-style wing, his desk In reality, he says, engi-
building into open offices. steps by the end of the work- semi-enclosed by partitions. neers need quiet places to
CEOs have the license to go day, thanks to the to and fro He has since moved to a 5- concentrate—and so does he.
further. For seven years, Blake from his office to employees’ by-8-foot pod in the com- “I love the private office,” he
Harvey and his employees at desks. pany’s innovation center. He says. Alas, CircleCI outgrew its
his New York communications “When you’re in a territory retreats to it when he needs to private-office oasis and, after
firm, Lawrence Blake Group, that’s clearly yours, you per- focus or switch mental gears failing to find a larger one, re-
toiled together in co-working form better,” says Sally Augus- between meetings. Otherwise, turned to the open fray last
spaces. His staff sometimes tin, an environmental psychol- he is out on the floor, with fall. “There is a lot of [search-
felt self-conscious working un- ogist and principal at La customers and employees, or ing for] empty conference
A New York dairy farm. The milk glut is expected to get worse. der their boss’s gaze. When he Grange Park, Ill.-based con- in other enclaves for meetings. rooms now,” he says wistfully.

DEAL
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weaker performance in North Mr. Kottmann said. tures in Europe, India and
The Mart America, Europe and Latin
America. The company said
The deal brings together
two of the most-recognized
China as part of its global ex-
pansion plans.
demand for higher-margin names in the chemicals indus- Clariant was formed in
ANNOUNCEMENTS TRAVEL Continued from the prior page specialty industrial and con- try. And both have incorpo- 1995, a spinoff from the chem-
company’s additives and other sumer chemicals used in prod- ical company Sandoz, whose
performance-enhancing chem- ucts such as laundry detergent history dates back to Basel in
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Businesses For Sale. Swiss francs ($5.96 billion) miliar with the matter said. rated deal-making as a key lieb Steen & Hamilton were
 


  

  
  

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For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
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THE WALL STREET JOURNAL. Tuesday, May 23, 2017 | B3

BUSINESS NEWS

Firms Win on Adjusted Earnings

BY TATYANA SHUMSKY
Arconic
Sets Truce
Companies are winning
over the U.S. Securities and
With Fund
Exchange Commission in BY DAVID BENOIT
their use of unofficial account- AND DANA MATTIOLI
ing figures, a year after a
crackdown on the practice. Arconic Inc. struck a deal to
Medtronic PLC, Coca-Cola give hedge fund Elliott Man-
Co. and Boston Scientific agement Corp. seats on its
Corp. are among the 35 out of board of directors, a settle-
51 companies ment that ends a bruising five-
CFO that have suc- month battle days before a
JOURNAL cessfully demon- shareholder vote.
strated to the According to the agreement
regulator that announced Monday, Elliott will
their adjusted earnings figures receive board spots for three
aren’t misleading investors. of its nominees, while Arconic
That track record highlights keeps three of its own nomi-
how the complexities and nu- nees, with one current director
ances in corporate accounting stepping down.
are complicating the SEC’s job Elliott, which is pushing for
in policing earnings. For exam- an overhaul of the $12 billion
ple, some companies are vul- maker of parts for airplanes
nerable to regular customer and automobiles, had wanted
lawsuits that blur the line be- four of the seats. Arconic was
tween an occasional expense formerly part of aluminum gi-
GEORGE FREY/GETTY IMAGES

and a regular cost necessary ant Alcoa.

to operate the business. Prior attempts at a settle-
Similarly, a restructuring ment broke down over the
plan announced in one year roles Elliott’s nominees would
can bleed across several years, play on board committees and
clouding the distinction be- how long Elliott would agree
tween a discrete cost and a re- not to wage another fight. The
curring expense. Coca-Cola has convinced U.S. regulators that its adjusted results aren’t misleading to investors. Above, a company plant in Utah. two sides were negotiating
An SEC spokeswoman de- over the weekend ahead of
clined to comment. ness expenses and could be not necessary to generate rev- fall into a gray area. in an email that the company Thursday’s annual meeting,
Large companies have the misleading, according to an enue,” said Karen Parkhill, Coca-Cola told the SEC that “responded directly and where shareholders are set to
money and resources to lay Audit Analytics analysis for CFO of the medical-technology what may at first appear to be openly” to the SEC. fill five seats on the company’s
out a detailed defense of dis- The Wall Street Journal. In company, in a letter to the recurring business expenses SEC correspondence be- 13-member board.
puted accounting practices. 69% of cases the SEC backed regulator. are in fact unique charges. The comes public about 20 days Elliott appeared poised to
Chief financial officers can tap down and concluded its con- The SEC scored many victo- beverage maker adjusted its after the regulator judges the win at least two at Thursday’s
a vast brain trust of internal versations with the company ries early in its push against 2016 results for costs from an matter closed, although con- meeting in Purchase, N.Y. The
finance teams, consultants and without forcing a significant the proliferation of non-GAAP overhaul and subsequent di- versations can last for months hedge fund had locked up
legal counsel, as well as the change to its adjusted earn- metrics. More than a quarter vestment of its bottling plants and cover multiple topics. It around 20% of the vote and
board’s audit committee, to re- ings presentation. of S&P 500 companies volun- in Germany. It also added back isn’t known how many matters won endorsements from influ-
spond to SEC concerns. “What is reasonable to ex- tarily changed their press re- nonroutine charges such as are pending, as the SEC ential proxy-advisory firms.
The agency last May issued clude and how do you decide leases to report standard re- severance pay, consulting fees doesn’t comment on cases. The settlement brings to a
new guidelines on the use of what is normal?” said Paula sults first after the SEC and write-offs linked to a cost- Companies should establish close one of the most intense
adjusted earnings and other Hamric, national assurance updated its guidance last year. cutting program expected to a policy for how they calculate activist battles in recent years.
figures inconsistent with U.S. partner at accounting firm Moreover, 29 out of 42 end in 2019. non-GAAP figures to ensure Elliott launched its campaign
Generally Accepted Accounting BDO USA LLP. “Even SEC staff companies that were ques- “We believe these restruc- the practice is consistent from in January and immediately
Principles. The move came haven’t been able to answer tioned about their use of so- turing charges and charges re- one period to another, said called on the company to fire
amid concerns that these fig- that, other than on a case-by- called tailored revenue met- lated to our productivity and Beth Paul, partner at account- longtime Chief Executive Klaus
ures can misrepresent com- case basis.” rics, another non-GAAP figure reinvestment program are not ing firm PwC. Executives Kleinfeld, citing missed profit
pany performance and often Medtronic in a Nov. 4 letter forbidden by the new rules, representative of the com- should work through the nu- forecasts and lackluster stock
furnish investors with a rosier defended omitting restructur- changed their presentation of pany’s underlying operating ance and judgment and be performance.
picture of results by excluding ing costs from adjusted earn- results to satisfy the SEC’s performance and thus are ap- prepared to defend it to the Mr. Kleinfeld resigned unex-
unusual charges or the impact ings after the SEC asked concerns, according to Audit propriately excluded,” said audit committee. pectedly in April after sending
of currency swings. whether it was misleading be- Analytics data. Larry Mark, controller, in a “That makes responding to a vaguely threatening letter to
The regulator questioned cause it excludes regular busi- The challenge for the SEC letter to the SEC in October. a comment letter easier be- Elliott founder Paul Singer.
dozens of companies on ness expenses. “Restructuring lies in drawing a distinction A Coca-Cola spokeswoman cause you’ve talked through Arconic shares were ahead
whether some of these adjust- charges are not necessary to between outliers and regular declined to comment. A why it is you’ve made the ad- less than 1% at $27.78 in mid-
ments exclude regular busi- operate the business and are business expenses, when many spokesman for Medtronic said justment,” Ms. Paul said. day trading Monday.

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B4 | Tuesday, May 23, 2017 THE WALL STREET JOURNAL.

TECHNOLOGY WSJ.com/Tech

Retailer Focuses on Heavy-Duty Drones

JD.com’s goal is to nology’s proponents predict- been in use for decades, Mr.
ing they won’t see widespread Marcus said, but it is only re-
deliver shipments use until at least 2020. Regu- cently that companies have
weighing one ton or lations are less of an issue in begun exploring their com-
China, home to the world’s mercial use. However, the bulk
more in Shaanxi largest civilian drone maker of investment is going toward
and where commercial drones smaller drones because “last-
BY BRIAN BASKIN AND LIZA LIN are already widely used in mile” delivery to customers’
farming. Local governments homes is usually the most ex-
China’s Shaanxi province is have offered up their airspace pensive leg of the supply
famous for being the start of for drones and helped fund re- chain, he said.
the Silk Road, an ancient trade search. An arm of Shaanxi’s In China, unauthorized
network where silk and spices government is covering part of drones have caused flight de-
were transported by camel the roughly $150 million JD lays in several cities this year,
across the Asian continent. plans to invest in the province, leading authorities to intro-
Soon, the central Chinese where the retailer will also lo- duce tighter regulation.
province will be recognized for cate the headquarters for its JD’s Chairman Richard Liu
a different form of transport. logistics operations. sees drones as a way to reach
Chinese e-commerce pro- Heavyweight drones have millions of potential custom-
vider JD.com said Monday it their own set of problems. ers outside China’s major cit-
is developing heavy-duty Where a small drone can be ies, an enormous market in
drones capable of delivering launched from almost any- which it competes fiercely

XING GUANGLI/XINHUA/ZUMA PRESS

payloads weighing one ton or where, larger models need with Alibaba. In one Chinese
more, which it plans to deploy dedicated landing pads. Big, province, Mr. Liu said he plans
in Shaanxi. heavy drones can also be to build 150 drone delivery
JD, China’s No. 2 e-com- noisier, making them unwel- sites within the next three
merce company after Alibaba come in residential neighbor- years.
Group Holding Ltd., in 2016 hoods. Their extra size and Delivery costs in Chinese
started delivering small pack- weight also raise the poten- cities are inexpensive, as or-
ages via drone as a way to tial damage from a crash, re- der densities are high and la-
bring online orders to shop- quiring extra motors, backup bor costs are low. However,
pers in remote rural villages. JD.com drone transports goods between distribution centers in China’s Jiangsu province in mid-2016. flight control systems and in the rural areas, shipments
Its fleet of about 30 drones other fail-safes. are fewer and the road infra-
have already been bringing ers looking to reach far-off ur- on moving small, high-value ton in September. Earlier in “The larger the vehicle and structure is less developed,
shipments to customers in the ban markets could quickly ship packages, such as electronics May, Airbus SE said it would the higher the potential risk to making deliveries inefficient
remote areas of Beijing, and in fruit and vegetables that or medicine. Amazon.com Inc. start selling commercial people or property, the more and costly. JD, which oper-
Sichuan, Jiangsu, Shaanxi and would have expired on a lon- made its first delivery to a drones in the U.S. for purposes redundancy and reliability you ates its own logistics net-
Guizhou provinces, which are ger journey by truck, said Josh customer in December, in rural such as monitoring crops and need,” said Ben Marcus, chief work, first sends order par-
home to more than 230 mil- Gartner, a JD spokesman. England, but is limiting the inspecting cellphone towers. executive of AirMap, which cels from its warehouses to
lion people. E-commerce and logistics service to items under 5 Efforts to launch large-scale helps drone operators navigate delivery stations, where the
The larger drones would companies around the world pounds. A United Parcel Ser- drone service in the U.S. have airspace. drones pick them up and
also ferry goods in the other are experimenting with drone vice Inc. drone dropped off an run into regulatory road- Giant military drones and send them to villages for dis-
direction. For example, farm- delivery, but most are focused inhaler to an island near Bos- blocks, with many of the tech- other unmanned aircraft have tribution.

BUSINESS NEWS

PPG Chief Makes Noise in Akzo Hunt

BY ANDREW TANGEL cluding Akzo Chief Executive that the combined company rising materials costs, a posi-
Ton Büchner, and take his would struggle to meet, said tion supported by some ana-
Michael McGarry gets ex- pitch directly to shareholders. Dmitry Silversteyn, an analyst lysts who back the deal.
cited about paint drying. After The generally quiet paint at Longbow Research in Cleve- He said he is approaching
all, that is his job as the leader industry is an unlikely source land. the Akzo deal like other acqui-
of a paint-and-coatings giant of high-stakes corporate A court hearing was sched- sitions he helped orchestrate,

JASPER JUINEN/BLOOMBERG NEWS

that prizes staying under the drama. And Mr. McGarry, a 59- uled for Monday, in an activist despite its far greater size. He
radar. year-old described by one col- investor’s bid to force Akzo to was a behind-the-scenes point
“We don’t need to see our- league as a Southern gentle- hold a special shareholder person in PPG’s 2008 acquisi-
selves in the newspaper,” said man, might seem an unlikely meeting, could influence PPG’s tion of Dutch coatings maker
the chief executive and chair- figure to lead what could be a decision on whether to pursue SigmaKalon Group for $3 bil-
man of PPG In- bruising fight. But the ingredi- a hostile takeover. If Mr. Mc- lion, still the largest ever for
INDUSTRY dustries Inc. in ents have been long in the the company.
FOCUS a recent inter- making as the industry under- In 2014, the company paid
view. “This is goes consolidation. PPG rival $2.3 billion for Mexican paint
not our style.” Sherwin-Williams Co. is in the
The generally quiet company Consorcio Comex SA. Michael McGarry is an unlikely figure to be at the center of a
Now, though, Mr. McGarry final stages of a $9 billion ac- paint industry is an PPG bought Akzo’s North takeover fight. He says the deal would trim $750 million in costs.
is at the center of what could quisition of Valspar Corp. American paint business that
be one of the biggest and riski- A deal involving Akzo
unlikely source of year for $1 billion. Lake Charles, La. He has been than that.”
est corporate takeover battles brings with it unique chal- corporate drama. “We’re always going to be at the company ever since. In the Akzo battle, Mr. Mc-
in recent memory—a cross- lenges. Dutch laws make a hos- measured in the way we do it,” Still a regular league bowler Garry also has help from U.S.
border pursuit of Dutch rival tile takeover difficult and he said, referring to acquisi- in Pittsburgh, Mr. McGarry activist investor Elliott Man-
Akzo Nobel NV. some observers view the po- tions. “We’re not going to be maintains what colleagues de- agement Corp., which wants
In the past two months, he tential bid as a long shot. Anti- Garry decides to pursue such a radical.” scribe as a common touch. He to strong-arm Akzo into sale
has made three separate of- trust regulators may force the bid, he would have to do so by Early in his career, Mr. Mc- is known for getting to know talks with PPG.
fers, ultimately valuing the combined company to sell off a June 1 regulatory deadline or Garry became interested in customers, from house paint- Elliott was the party asking
Dutch company at up to ap- businesses. wait at least six months under running businesses and under- ers to auto-industry execu- the Dutch court to force Akzo
proximately $27 billion, only Even if Mr. McGarry is vic- Dutch rules. standing how things worked. tives. Colleagues describe Mr. to hold a special shareholder
to be rejected publicly each torious, combining the compa- Mr. McGarry argues joining He worked as a mechanic at a McGarry as a methodical man- meeting, which also seeks to
time. nies would be risky. The latest forces would help save the bowling alley while he was ager who carefully studies de- remove the supervisory board
After the last brushoff two offer by Pittsburgh-based PPG combined companies $750 mil- growing up in New Orleans. cisions and their potential out- chairman. Akzo has defended
weeks ago, Mr. McGarry said for Akzo—$27 billion, approxi- lion in costs, strengthen their After studying mechanical en- comes. “He’s a smart risk taker itself and questioned how dis-
he was considering whether to mately equal to PPG’s own global foothold and boost or- gineering at the University of —he’s not reckless,” said Hugh missing the company’s super-
go around the company’s market capitalization—could ganic growth amid sluggish Texas at Austin, his first job in Grant, PPG’s lead director. visory chairman would benefit
board and management, in- carry expectations to cut costs demand in some markets and 1981 was at a PPG plant in “He’s much more calculated stakeholders.

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years. In March, the Hong Kong- outside help to clean up its in- Debuts at No. 1
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nual loss in eight years and em- gations surfaced. Some of the Ridley Scott’s “Alien” series
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China A-Share Fund Cls A AUD H OT
China A-Share Fund Cls A AUD UnH OT
China A-Share Fund Cls A CAD H OT
OT HKG
OT HKG
OT HKG
05/19 AUD
05/19 AUD
05/19 CAD
12.84
11.96
11.87
8.9
9.4
8.7
18.9 -5.1
13.3 -4.4
17.6 -6.4
LIST YOUR
China A-Share Fund Cls A EUR H OT OT HKG 05/19 EUR 12.42 8.1 16.2 -6.2
nonmanagerial jobs, representing more than $1 billion to sell Euro- preliminary estimates. China A-Share Fund Cls A EUR UnH OT OT HKG 05/19 EUR 12.17 5.6 16.6 NS

25% and 18% of each category,

respectively. No pilots or cabin
fighter Typhoon combat jets to
Austria a decade earlier.
That was enough for “Alien:
Covenant” to eke out a first-
China A-Share Fund Cls A GBP H OT
China A-Share Fund Cls A GBP UnH OT
China A-Share Fund Cls A HKD H OT
China A-Share Fund Cls A HKD UnH OT
OT HKG
OT HKG
OT HKG
OT HKG
05/19 GBP
05/19 GBP
05/19 HKD
05/19 HKD
12.44
14.16
12.66
12.60
8.0
5.7
8.5
13.0
20.2 -5.1
30.1 1.3
17.8 -5.9
15.6 -6.7
FUNDS
crew will be affected, it said, and The panel, which will report place finish. The new release China A-Share Fund Cls A NZD H OT
China A-Share Fund Cls A NZD UnH OT
OT HKG
OT HKG
05/19 NZD
05/19 NZD
12.65
11.33
9.1
13.8
19.3 -4.7
14.6 -4.2
the restructuring will be com- to Chief Executive Tom Enders barely bested Walt Disney Co. China A-Share Fund Cls A RMB (CNH) OT OT HKG 05/19 CNH 13.85 10.4 21.6 -2.9
China A-Share Fund Cls A USD OT OT HKG 05/19 USD 12.54 12.7 16.7 -6.7
pleted by the end of the year. and the board, will have an holdover “Guardians of the Gal- China A-Share Fund Cls A USD H OT OT HKG 05/19 USD 12.63 8.7 18.1 -5.8
—Joanne Chiu open-ended advisory role. axy,” which added $35.1 million China Greenchip-A Units
China Greenchip-A Units AUD H AS
AS EQ CYM
EQ CYM
05/19 HKD
05/19 AUD
60.39
10.23
18.7
19.1
30.5 -7.8
31.5 -8.2
for a three-week total of $301.8 China Greenchip-A Units CAD H AS
China Greenchip-A Units NZD H AS
EQ CYM
EQ CYM
05/19 CAD
05/19 NZD
9.92
10.49
18.7
18.9
30.0 -9.1
31.9 -7.5
million. China Greenchip-A Units USD AS EQ CYM 05/19 USD 9.96 18.3 30.2 -8.8
China Greenchip-A2 QDIs Units AS EQ CYM 05/19 HKD 10.95 18.7 30.5 -7.9
“Everything, Everything,” an
ANTHONY WALLACE/AGENCE FRANCE-PRESSE/GETTY IMAGES

GC Hi Yield Inc - Cls A MDIs GBP H OT OT CYM 05/19 GBP 9.77 5.6 16.3 9.0
inexpensive young-adult ro- GC Hi Yield Inc-Cls A MDIs AUD H OT
GC Hi Yield Inc-Cls A MDIs CAD H OT
OT CYM
OT CYM
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9.35
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5.9
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17.1 9.4 In print & online. Contact:
mance from Time Warner Inc.’s GC Hi Yield Inc-Cls A MDIs NZD H OT OT CYM 05/19 NZD 9.70 6.7 19.2 11.8
GC Hi Yield Inc-Cls P HKD Acc sh OT OT CYM 05/19 HKD 15.02 6.5 17.8 9.9
Warner Bros. and Metro-Gold- GC Hi Yield Inc-Cls P HKD MDIs sh OT OT CYM 05/19 HKD 9.34 6.5 17.8 10.0
GC Hi Yield Inc-Cls P MDIs SGD H OT OT CYM 05/19 SGD 10.23 5.9 17.2 10.0
wyn-Mayer Studios, opened to a GC Hi Yield Inc-Cls P USD Acc sh OT OT CYM 05/19 USD 15.09 6.2 17.6 9.7
fine $12 million in third place. GC Hi Yield Inc-Cls P USD MDIs sh OT OT CYM 05/19 USD 9.37 6.2 17.6 9.7 [email protected]
GC Hi Yield Inc-ClsA MDIs EUR H OT OT CYM 05/19 EUR 10.21 5.4 15.4 8.4
Overseas returns for “Alien” Hi-Div Stk Cls A RMB H Acc OT OT HKG 05/19 CNH 11.54 15.4 27.0 0.4
Hi-Div Stk Cls A RMB UnH Acc OT OT HKG 05/19 CNH 13.72 12.0 28.9 2.8
have brought its world-wide box Hi-Div Stk Cls A1 OT OT HKG 05/19 USD 81.60 13.8 24.1 -1.8
office to $117.8 million. “Alien” Hi-Div Stk Cls A2 AUD H MDIs OT
Hi-Div Stk Cls A2 CAD H MDIs OT
OT HKG
OT HKG
05/19 AUD
05/19 CAD
9.73
9.84
13.9
13.6
24.3 -1.6
23.1 -2.8
has been approved for release in Hi-Div Stk Cls A2 GBP H MDIs OT OT HKG 05/19 GBP 9.32 14.8 23.4 -3.0
Hi-Div Stk Cls A2 HKD MDIs OT OT HKG 05/19 HKD 10.15 14.2 24.5 -1.8
China, the world’s second-largest Hi-Div Stk Cls A2 MDIs OT OT HKG 05/19 USD 11.07 13.5 23.8 -2.0
Hi-Div Stk Cls A2 NZD H MDIs OT OT HKG 05/19 NZD 9.95 13.9 24.9 -0.7
box-office market behind the Hi-Div Stk Cls A2 RMB H MDIs OT OT HKG 05/19 CNH 9.71 16.2 27.7 0.4
U.S., on June 16. Some of the R- Hi-Div Stk Cls A2 RMB UnH MDIs OT
Hi-Div Stk Cls A2 SGD H MDIs OT
OT HKG
OT HKG
05/19 CNH
05/19 SGD
10.08
10.68
12.2
NS
30.1
NS
3.1
NS
rated movie’s most violent Intel-China Converg Fund-A AUD H AS EQ CYM 05/19 AUD 10.24 16.4 25.6 NS
Intel-China Converg Fund-A CAD H AS EQ CYM 05/19 CAD 11.25 10.6 20.4 NS
scenes were cut for approval by Intel-China Converg Fund-A NZD H AS EQ CYM 05/19 NZD 11.47 11.8 19.6 NS
Chinese state censors. Intel-China Converg Fund-A Units AS
Intel-Chinese Mainland Foc Fund AS
EQ CYM
EQ CYM
05/19 USD
05/19 USD
152.66
44.09
14.4
19.0
24.8 -11.5
32.0 -8.5
Cathay expects to complete the restructuring by the end of 2017. —Erich Schwartzel VP Classic-A Units AS EQ HKG 05/19 USD 302.95 19.0 34.8 -3.5
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JOURNAL REPORT

© 2017 Dow Jones & Company. All Rights Reserved. THE WALL STREET JOURNAL. Tuesday, May 23, 2017 | B5

Japan’s Abe Talks Trump UPHEAVAL AND GROWTH

For decades, Asia has been the wellspring of growth for
global companies, a chief beneficiary of the world’s embrace
How the prime of free trade and economic integration.
But what happens when voters in some of the world’s
minister views ‘I am convinced… biggest markets turn against that trend, rejecting globaliza-
the way forward we can build a tion and open markets? That was top of mind at the inau-
gural Asia meeting of The Wall Street Journal’s CEO Council
win-win in Tokyo last week. Executives from across the globe wres-
Japan has seen an eco- relationship.’ tled with the implications of Britain’s withdrawal from the
nomic revival in recent years. European Union, America’s abandonment of the Trans-Pa-
But now it faces an uncertain cific Partnership, and political tumult driven by the rise of
world, as North Korea makes nationalism in other corners of the globe.
increasingly aggressive moves Where, amid this backlash, will companies and nations
and the mood in the U.S. turns find growth? Experts and officials ranging from Japan’s
against free-trade deals. prime minister to the two U.S. and Chinese trade officials
To assess the progress who helped negotiate China’s entry into the World Trade Or-
Japan has made and look ganization charted a path through the political upheaval.

ARON KREMER/DOW JONES (2)

ahead, The Wall Street Jour- The executives didn’t seem entirely reassured. So far, the
nal’s Gerard Baker sat down global economy appears to be muddling through, and in
with the prime minister of some regions even picking up steam. But, they wondered,
Japan, Shinzo Abe, who spoke are traditional global leaders like the U.S. still reliable? And
through a translator. Edited are long-simmering hot spots like North Korea now boiling
excerpts follow. over? Will growth be assured or upended?
—John Bussey
The path of progress
MR. ABE: It has been more
than four years since I retook four years. The unemployment operate and collaborate with elected. By all accounts you fluctuate. I explained to Presi- ministration began, I think the
the government. Japan before rate is at 2.8%, almost full em- the global economy. struck up a good relationship, dent Trump that the trade and commitment to the security of
that was enveloped in a mood ployment. Wage levels will Ensuring peace and security and you’ve talked about the economic environment be- Northeast Asia has in a sense
of pessimism, a sense of resig- rise and the exit from defla- is the foundation for this. To importance of the U.S.-Japan tween Japan and the U.S. has strengthened. For example, in
nation. The economy was in tion will draw nearer. that end, my consistent posi- relationship. But you weren’t greatly changed in this way, the case of North Korea, the
deflation. I promised to bring My policy is to put the tion is to strengthen the able to persuade him to back and he understood me well. Trump administration is truly
Japan back. What have the re- economy first, to exit from de- Japan-U.S. alliance and to off his campaign promise to We agreed that Japan and the tackling the situation seri-
sults been? flation and to keep pursuing broaden the range of diplo- withdraw the U.S. from the U.S. should work toward free ously.
During the past four years, the three arrows of monetary, macy with nations of the Asia- Trans-Pacific Partnership. And and fair rules.
through our economic policies, fiscal and structural reform to Pacific. Last month, Vice Presi- he’s spoken very critically MR. BAKER: In the last three
nominal GDP has grown by those ends. This policy is ab- dent Pence and Deputy Prime about TPP, indeed about inter- MR. BAKER: Is there a possibil- years, North Korea has tested
9.5%. Employment, which de- solutely unchanged. Economic Minister Aso held the first national trade arrangements ity for a bilateral U.S.-Japan more missiles than it had in
creased by 290,000 jobs in the growth in Japan and a stable Japan-U.S. economic dialogue with other countries. free-trade agreement at some the previous 30 years. The U.S.
previous administration, rose livelihood for our people can- and agreed to continue consul- Japan still has a very, very time in the Trump administra- seems to be still relying on
by 1.85 million during these not be realized unless we co- tation on common strategy on large trade surplus with the tion? China to exert pressure on
trade and investment rules United States. Are you confi- MR. ABE: We need to discuss North Korea. Is the approach
and issues. dent that you can get a con- what is best, keeping various through China the most effec-
Reaching Out Of course, we cannot allow structive trading relationship options in mind. I fully ac- tive way to get North Korea to
How Japanese feel about some aspects of global engagement ourselves to let down our with the United States? knowledge President Trump’s back off this increasingly ag-
guard. Despite strong warn- MR. ABE: I am convinced that position on multilateral ar- gressive posture?
In matters of foreign policy, Japan's involvement in the ings by the international com- economic cooperation can be rangements. But I have ex- MR. ABE: Already Japan, the
Japan should… global economy is… munity, North Korea once expanded between Japan and plained many times to him United States and many other
Take into account the interests A good thing because it again has pushed ahead with the United States and that we why it matters to create free countries impose economic
of its allies, even if it means provides the country the launch of a ballistic mis- can build a win-win relation- and fair rules in a multilateral sanctions on North Korea
making compromises with new markets and sile. The threat from North ship. I explained to him the setting given the supply through United Nations reso-
48% opportunities for growth Korea has risen one step fur- current status of Japan-U.S. chains that exist today. Presi- lutions. Today, it is said that
58% ther. Terrorism is spreading trade. For example, in the past dent Trump listened earnestly, China accounts for more than
Follow its own national across the world. We shall there was trade friction be- without any expression of an- 80% of overall trade with
interests, even when its allies A bad thing because it lowers have to maintain our alert and tween Japan and the U.S. in noyance. North Korea. I believe that
strongly disagree wages and costs jobs in Japan reinforce global collaboration the automotive industry. But China, by playing its role
40% 32% in an unprecedented way. now Japanese companies are MR. BAKER: There’s a lot of properly, can change North
Without peace and stability, building factories in the U.S., concern that the U.S. may not Korea’s policies. If a nuclear
Neither/both equally Neither there can be no growth or ensuring many jobs in the U.S. be as engaged in these impor- test is conducted, we will need
4% 2% prosperity. and contributing to the devel- tant Asian economic and secu- additional economic sanctions.
opment of the U.S. economy. rity conversations as its tradi- We will have to pursue further
Don't know/didn't answer Don't know/didn't answer
Talking with Trump Or to take another example, tional allies, Japan perhaps U.N. resolutions. On this count
9% 9% MR. BAKER: You’ve had a you won’t find cases of us ex- most of all, would like it to be. as well, China should properly
Source: Pew Research Center survey of 1,000 adults chance to meet twice with panding market share by sell- Are you concerned about that? take action and China should
in Japan, conducted April 26 to May 29, 2016 THE WALL STREET JOURNAL. President Trump since he was ing cheaply when currencies MR. ABE: Since the Trump ad- understand fully.

The Banker’s Viewpoint ‘I really don’t

Haruhiko Kuroda on economic inequality, think WTO has
created the huge
protectionism and monetary policy problems.’
Monetary policy can stymie global trade, and that would detailed economic analyses al-
or enhance free trade and dampen global growth. With- ready made by trade econo-
global economic growth. And out growth, living standards mists and they show that the
one of the biggest influencers cannot be raised. I think it is WTO round of negotiations to
of monetary policy in the well understood that free improve free trade in the
world is the Bank of Japan. trade is key for global growth world actually haven't resulted
Gerard Baker, editor in chief of and continued improvement of in any major negative impact
The Wall Street Journal, sat living standards of the people. on the U.S. economy.
down with the bank’s current At the same time, in the But some economists argue
governor, Haruhiko Kuroda, to last couple of decades, a very that after China joined the
discuss the populist backlash defined, delicate, intertwined WTO, China expanded its
against globalization, the rise global supply chain has devel- global trade, and, in some
of economic nationalism, and oped, not just in Asia, but in countries, a too-rapid expan-
the economic health of the the Western Hemisphere as sion of Chinese exports to
world. Edited excerpts of their well as Europe. And without their economies might have
discussion follow. this extensive supply chain, had some negative impact. has anticipated that under the monetary policy is targeted at slightly changed monetary-
any economy cannot prosper. But, that said, I really don’t new administration more ag- price development. That is to policy framework.
MR. BAKER: Governor, you just If any country introduced a think WTO has created the gressive economic policies say to achieve the 2% price- But the main target is to
got back from a G-7 finance protectionist measure, that huge problems. In general, I would be implemented so that stability target at the earliest maintain low long-term inter-
ministers and central bank would hurt that country and think free trade has contrib- the U.S. economy could grow possible time. est rates, which would be con-
governors meeting in Bari, It- hurt the world economy. So I uted. And I don’t think any faster. That also means inter- ducive to economic growth
aly. Economists such as your- don’t think that protectionists particular economy has made est rates might rise faster MR. BAKER: You’ve had this and eventually attaining that
self have argued for a very are likely to prevail in the a negative impact on the U.S. than expected before. That target for a long time now. 2% price target. We expect
long time that global economic world. economy. might also have implications Admittedly, you’re out of de- that sometime in fiscal 2018
integration and cooperation for exchange rates. flation. But wage growth we would be able to reach
has been very good for global MR. BAKER: To be fair, the crit- MR. BAKER: In the past six But if you carefully look at seems very weak, despite this around 2% inflation.
growth and has lifted incomes, ics—especially people like months, there has been signifi- those market data, interest incredibly aggressive mone-
particularly in parts of the Donald Trump—say they’re cantly increased optimism rates and the dollar haven't tary policy that you’ve been
world like Asia. If we’re going
to see a revival of economic
not protectionists. They want
to encourage trade. What they
about the U.S. economy in par-
ticular. The stock market has
risen so much. pursuing, keeping 10-year
yields at zero and short yields INSIDE
nationalism, a rolling back of argue is that the trade deals done extremely well. There are MR. BAKER: Not since that ini- just a little bit above that.
economic integration, what over the past 20 years, many expectations of much stronger tial rise— Does the Bank of Japan need
does that mean for the econ- of them—the World Trade Or- growth on the back of a tax MR. KURODA: That’s right. to do even more? Long Yongtu and Charlene
omy, Japan’s economy in par- ganization, the North Ameri- cut, and maybe infrastructure MR. KURODA: After we intro- Barshefsky dissect the
ticular? can Free Trade Agreement— spending and various other MR. BAKER:—in November. duced quantitative monetary impact of China joining the
MR. KURODA: In Italy we dis- have been unfair, because they things associated with deregu- MR. KURODA: The Federal Re- easing in April 2013, the un- World Trade Organization
cussed economic growth and haven’t been genuinely free- lation and the Trump adminis- serve would normalize its employment rate reduced to B6
inequality. This is a very topi- trade deals. Countries have tration. That seems to have monetary policy in view of a the order of less than 3%, and
cal agenda faced by many been able to exploit opportuni- helped the background for the very strong U.S. economic out- the corporate sector enjoys a Kurt Campbell says
countries, including G-7 coun- ties. China in particular. Japan Federal Reserve, which has look, this year, next year, and historic high level of profit. increased financial sanctions
tries, and we agree that free is also criticized in this way. been tightening policy and that would be good not just The economy is growing well may be the best way to deal
trade actually contributed to Whereas the U.S. in particular looks like it’s going to be tight- for the U.S. economy but for above its potential. As you with the rising threat from
reducing global inequality. runs a massive trade deficit ening possibly further. the world economy. So I’m not said, wages and prices appear North Korea
But at the same time, it is and has seen a lot of manufac- Where does that leave the very much concerned. Because somewhat slow to respond to B6
true that in the last couple of turing jobs disappear. rest of the world and, in par- that reflects a strong eco- this substantial improvement.
decades, inequality within So people are arguing that ticular, Japan? nomic recovery. But now I think wages are re- Carlos Ghosn sees the rise of
each country has increased. trade itself is maybe not the MR. KURODA: Actually, the On the other hand, Europe sponding. nationalism as a call to action
We discussed how to address problem. It’s actually unfair world economy, including the and Japan are lagging behind. in defense of globalization
this issue in each country. trade and the fact that some U.S. economy, started to re- The Japanese economy is MR. BAKER: So you’re comfort- B9
Now, protectionism, I don’t countries give themselves un- cover from the bottom by the growing by about 1.5% now, able with the current ap-
think it will contribute to re- fair advantages. How do you middle of last year—well be- and is expected to continue to proach? Plus: Bilahari Kausikan says
ducing inequality. Trade re- address that? fore the U.S. presidential elec- grow like that. Our inflation MR. KURODA: That’s right. We North Korea can be deterred
striction would decelerate MR. KURODA: There are many tion. I agree that the market rate is still quite low. So our introduced last September a B9
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B6 | Tuesday, May 23, 2017 THE WALL STREET JOURNAL.

JOURNAL REPORT | CEO COUNCIL: ASIA

The Impact of China

Joining the WTO
Charlene Barshefsky and Long Yongtu say there

ARON KREMER/DOW JONES (3)

are misconceptions about the effect of the
country’s entry on both China and the U.S.
China’s entry into the World ample, unexpected surges of isn’t that China increases its
Trade Organization in 2001 imports? And indeed, there trade. The most important
was the beginning of a new were—a mechanism almost thing is that the trade agree- Long Yongtu Charlene Barshefsky
era of globalization. But now never used by the very indus- ment triggered and acceler-
there’s a popular backlash tries Steve Bannon is pointing ated internal domestic reform. pened is that WTO accession On the question of job loss, there are 200 million Chinese
against globalization in the to, although it would’ve been At the time, all the Chinese marked the high-water mark there is no question that trade in the middle class. We can
West. What happened? And entirely protective of their in- import-exports were monopo- of liberalization in China. is, in part, responsible for job hardly make any serious mis-
what comes next? terests. lized by a few dozen state- What happened? loss in the United States, but a takes to upset the growth.
The Wall Street Journal’s owned trading companies and MS. BARSHEFSKY: First of all, it tiny fraction relative to auto- Second, before China’s WTO
Andrew Browne spoke with MR. BROWNE: The U.S. had a ministries. But once we ac- can’t be U.S. policy that poor mation and innovation in the accession, we were short of
two of the central actors in the trade deficit of something like cepted the terms of liberaliz- countries should remain poor U.S. When people lose their laws and rules in many places,
WTO drama, Charlene $80 billion in 2000. And ing, then tens of thousands, because that is somehow ad- jobs, either for trade or for so senior officials would make
Barshefsky, trade representa- within a decade, it is tripled. hundreds of thousands of Chi- vantageous to the United technology but no fault of a decision: “Yes, this we can
tive under President Bill Clin- What did you get wrong? nese enterprises start getting States. And it can’t be U.S. their own, the United States do.” But now, you have to see
ton, and Long Yongtu, China’s MS. BARSHEFSKY: Remember into the business of import-ex- policy that we should discour- has an obligation to undertake whether the decision is incon-
vice minister of commerce that we have a substantial ser- port. You can trade directly age poor countries from re- programs that assist them. sistent with laws and rules.
from 1997 to 2003. Edited ex- vices surplus with China. with Americans, with Europe- forming and making their And people say, “No, this re-
cerpts follow. That’s point one. Second point ans, with all these Asians. So market more attractive for A stalled reform? form measure isn’t inconsis-
is that the trade deficit is a that gave a great acceleration fear that the U.S. can’t com- MR. BROWNE: Minister Long, tent with laws.”
Globalization’s effects function of macroeconomic of the trade volume of Chinese pete with low-wage countries. do you agree with Ambassa- With the internet also, peo-
MR. BROWNE: Steve Bannon, factors. Principally, the differ- import-export. So what happens when dor Barshefsky’s contention ple are getting so many differ-
the senior White House ad- ence between what Americans poor countries become more that reform in China has sput- ent views. That gives a lot of
viser, says globalists gutted save, which is nada, and in- MR. BROWNE: One of the cen- attractive venues? No. 1, trade tered out or is sputtering? pressure to allow reform mea-
the American working classes vestment, which is plentiful. tral complaints from the flows increase, which is MR. LONG: I don’t believe that sures.
and created a middle class in Americans could save more. Trump administration has clearly the case. The question economic reform in China has I think the Chinese leader-
Asia. And he’s right, isn’t he? The deficit would go down. been that China manipulates for the United States is, how been stopped or slowed down. ship is still very determined to
MS. BARSHEFSKY: No, I don’t We could discourage inward its currency. They’re wrong in do we maintain our competi- For instance, the size of the push for economic reform. But
think he’s right. If you go back investment. The deficit would the sense that China hasn’t tiveness, recognizing that economy of China is now eight we have to ensure it will bene-
to the mid-1990s, you saw a go down. I can’t imagine why manipulated for some years. trade flows do increase aggre- times larger than the time that fit most of the people. It isn’t
China that was already grow- we would discourage inward But they were right in the gate GDP? China acceded to WTO. And reform for reform’s purpose.
ing at about 8%, 8.5% a year, investment. What does have to sense that, for some years af-
with the world’s largest stand- be fixed is a China that has ter WTO accession, China arti-
ing army, a nuclear power, a stopped the process of eco- ficially kept the value of its
permanent member of the U.N. nomic reform and opening and currency low to boost exports.
Security Council, a fifth of the that, instead, has put in place Was that the plan all along? we do well in Asia. One of
world’s population, a reformist a spate of measures that are MR. LONG: I do not believe them is our security commit-
premier, Zhu Rongji, and will- zero sum. They’re highly mer- that. The trade terms give a ‘This is the… ments. And we’ve got to be
ing to orient toward the West. cantilist and discriminate free hand to Chinese compa- most difficult able to signal that we are pre-
In the course of doing the against U.S. and foreign com- nies to compete with the rest pared to take the necessary
WTO negotiation, China panies. That’s what has to be of the world. Other countries diplomatic steps to defend South Korea in
opened its market. The U.S. fixed. are facing very, very strong problem on the event of an attack or
didn’t alter its trade regime, competition from their Chi- threats from the North.
nor did any other country al- The path of reform nese counterparts. I think this the planet.’
ter its trade regime. As in any MR. BROWNE: Minister Long, is their problem. MR. SEIB: Which is the better
WTO negotiation, it is the ac- can you take us back to the approach right now, confron-
ceding country that needs to years leading up to China’s ac- MR. BROWNE: Bill Clinton sug- tation or attempted engage-
reform its economy. cession to the WTO? There gested that China’s accession ment?
The key point is that, in the was huge resistance from con- to the WTO was the start of a MR. CAMPBELL: Honestly, I
context of a country as large servatives within the Chinese period of liberalization, that think that’s simplistic. What
as China entering, were there system to opening up. the country would become you try to do in a situation
protections built into the MR. LONG: The benefit of the more open, more transparent, like this, first of all, is you
agreement to prevent, for ex- WTO agreement for China more rules-based. What hap- keep your allies together. You
make sure that there’s no de-
fecting, no going off and, “I’m
gonna cut my own deal with

Where to Go Next
the North Koreans.” That has
been very effective.
Our deterrent capabilities

on North Korea
on the Korean Peninsula are
remarkable. Twenty-five years
ago, if there was a conflict on
the Korean Peninsula, you had
worries about how it would
Kurt Campbell suggests end up. Now, there can be no
doubt. It will end with rubble
increased financial sanctions in the North, right? That’s still
unacceptable, but our capabili-
Kurt Campbell, U.S. assis- cease and desist from what ties are enormous.
tant secretary of state for East they’re doing. Third, we have tried diplo-
Asian and Pacific Affairs from What North Korea wants is macy numerous times. I was
2009 to 2013, was involved in recognition as a nuclear power involved in some of those ef-
setting policy for North Korea and a military power in North- forts. These are the most diffi-
under President Barack east Asia, and they want to be cult people in the world to ne-
Obama. treated accordingly. And for us gotiate with. But we have to
Now the chief executive of to do that would essentially continue to leave that door
advisory firm Asia Group, Mr. tip over every fundamental ap- open.
Campbell sat down with Ger- proach that the U.S. and other The problem is that all the
ald Seib, The Wall Street Jour- countries in Asia have used in agreements that the North Ko-
nal’s executive Washington ed- creating order in Asia for 40 reans have made with the out-
itor, to discuss how the Trump or 50 years. side world, they have violated.
administration is handling the
rising threat from that nation, MR. SEIB: But the predicate for Sense of impatience
as well as diplomacy with Trump policy is that strategic MR. SEIB: You mentioned that
China and other Asian nations. patience, the policy of the against all odds President
Edited excerpts follow. Obama administration, your Trump and Chinese President
administration, failed, so Xi seem to have developed a
No easy answers something else has to be tried. good rapport. What are the
MR. SEIB: An article in The Did strategic patience fail? implications of that?
Wall Street Journal indicates MR. CAMPBELL: I think undeni- MR. CAMPBELL: I don’t think
that the North Koreans have ably, it failed. And it isn’t sim- the president has fundamen-
now tested more missiles in ply the policy of the Obama tally settled on how he views
EXPERIENCE the past three years than they administration. It has been the the relationship with China,
did in the previous 30 years policy the U.S. has followed but I will tell you that the per-
combined. What are they try- for almost 30 years. So we’ve sonal diplomacy was quite ef-

Congratulations
ing to tell us? And what tried diplomacy. We’ve tried fective. And I think President
should we be trying to tell pressure. We’ve tried a variety Xi laid out a game plan.
them in return? of different tactics. They ha- “We’re going to work with you
MR. CAMPBELL: Among the ven’t been terribly successful. on economic issues.” We’ll see
Asia watchers in the Trump I think the next phase, in- how it plays out. This is a long

Gareth Barker
administration—and there are variably, involves using the game. And what is so interest-
very few of them to begin kinds of financial sanctions ing about the Trump adminis-
with, probably no more than that were actually quite effec- tration, I think the sense of
about four or five—most of tive against Iran. But to do impatience is remarkable. The
them who are working on this that means targeting Chinese Asians can sense it.
have never thought about it banks and financial institu-

You’ve Won a Three-Night Getaway very much. Their approach is,

“Look, I’m very smart. I’ve
tions. MR. SEIB: But is that a good
thing or a bad thing, a sense

to COMO Point Yamu* been very successful at busi-

ness. Put me in, coach, and I’ll
show you how to do this.”
MR. SEIB: How important is
[the U.S. antiballistic missile
system known as] Thaad to
of impatience?
MR. CAMPBELL: For longer-
term deals, probably not such
Now that they’re in power, the relationship with South a good thing. It suggests that
they realize that this is the Korea? Is it of symbolic value you’re ready to settle quickly,
thorniest, most difficult diplo- or real value? and you don’t understand the
matic problem on the planet. MR. CAMPBELL: Both, very issues. Given the options, I
There are no easy answers. deeply both. think it’s terrific that Presi-
The current strategy is to dent Xi and President Trump
put almost all of our eggs in MR. SEIB: And when President appeared to hit it off. But the
the China basket. Clearly, Trump says, “You should pay key is going to be how it plays
@wsjplus #wsjplus there has to be a partnership for it,” is he deeply hurting the out. There have to be lower-
between Beijing and Washing- chances the new South Korean level people who really work
ton in terms of focusing atten- president will let the system the machinery of the U.S.-
Applicable to Hong Kong only: Trade Promotion Competition Licence No.: 48626.
Applicable to Australia only: NSW Permit No. LTPS/17/12973.
tion and pressure on North go forward? China relationship. And to
Applicable to Australia only: ACT Permit No. ACT TP 17/00634. Korea, but we will be funda- MR. CAMPBELL: I think the date, we just don’t have those
WSJ+ access is complimentary for Wall Street Journal members. © 2017 Dow Jones & Co., Inc. mentally disappointed if we Thaad system has proven to kind of midlevel officials that
Explore more at wsjplus.com using your wsj.com username and password. All rights reserved. 3DJ5482 believe that China is prepared be extraordinarily militarily are responsible for sort of
to put so much pressure on effective manning the decks of the U.S.
North Korea that they will We’ve got a few things that relationships in Asia.
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B8 | Tuesday, May 23, 2017 THE WALL STREET JOURNAL.

JUNE 8–9, 2017

HONG KONG & SHENZHEN
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PROGRAM HIGHLIGHTS
2050: A TECH ODYSSEY
YURI MILNER Founder
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INSIDE FACEBOOK’S BUILDING 8

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Director, DARPA (2009–2012)

BEYOND SEARCH
LU QI Vice Chairman, Group President and COO
Baidu

THE SINGULARITY AGE

ANDREW NG Adjunct Professor, Stanford University
Co-Chairman and Co-Founder, Coursera

DOUG PARKER COO

Nutonomy

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AI Lab, Tencent

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THE WALL STREET JOURNAL. Tuesday, May 23, 2017 | B9

JOURNAL REPORT | CEO COUNCIL: ASIA

In Defense of Globalization
market and then you bring a respect for identities, and, at
new car. So every six years the same time, going for a
you have investments to be global market, which means
made. And if you have three or developing synergies.” You
four cars in the plant, every have to do both. If you miss
Carlos Ghosn says the rise of nationalism is a call to action one or two years.
So for the moment, we said,
one of them, you’re doomed.
Today, what’s needed is
“We have no reason to change more cultivating and respect-
Asia, it’s hard to say, “Well, our policy,” knowing that we ing the identities existing in
this scorecard is question- don’t know what is after the world for this to be a good
able.” It’s not questionable. Brexit. That’s why we have de- pillar for the development of
‘We need to defend Now, it may be questioned cided to maintain the status globalization. Globalization is
and explain and by some people. It may be quo in Sunderland, at the always at risk when people’s
questionable in some catego- same time, explaining to the identities are felt as being at
market globalization ries. But it’s up to us to de- U.K. government that there risk.
much more.’ fend, based on the scorecard, are a lot of things at stake.
the fact that this is something We are not engaging in any MR. BUSSEY: How do you make
good, recognizing, again, the political discussion. The only sure the factory workers feel
excesses, some of the short- thing we worry about is the that they’re part of not just a
falls, and accepting the fact fact that this is a European global company, but of a na-
that it’s not going to be linear. plant based in the U.K. We tional enterprise?
You’re going to have some in- care about its competitiveness. MR. GHOSN: People down the
flections, and we need to help As long as we all agree on the line, the people in the plants
the correction of the inflec- fact that, no matter what is or people on the sales force,
tion. the solution after Brexit, it they identify through their
preserves the competitiveness brand. They identify to their

ARON KREMER/DOW JONES (2)

MR. LANDERS: What is your of the industrial investments team. For them, the headquar-
company’s view of the U.K. af- in the U.K., we are fine. ters are something which is
ter Brexit? very fictional. They identify to
MR. GHOSN: It’s a good ques- MR. BUSSEY: Given the voter their plant.
tion, except that nobody pushback on globalization re- For example, we are the
knows what is after Brexit. We cently in some countries—a re- major shareholder of [Russian
are businesspeople. We can’t version to a bit of national- auto maker] AvtoVAZ, with
assume. We need to judge ism—if this had been the the Lada brand. The people in
based on indexes, facts— situation back when you AvtoVAZ working in Tolyatti,
The Renault-Nissan Alli- And you’ve been involved with globalization. We need to de- things which are solid. Be- formed the Renault-Nissan al- they know they work for Lada.
ance, a pairing of French and Japan, very extensively, for 18 fend and explain and market cause we’re talking about mas- liance, would you still feel They don’t work for Renault.
Japanese automotive giants years. When people question globalization much more. We sive investments. In our case, comfortable going ahead with And their management, as
Renault SA and Nissan Motor the value of globalization, assume it’s so obvious that ev- it’s thousands of people em- this cross-border alliance? much as possible, is Russian.
Co., has long been in the van- when they say trade is bad for erybody’s going to understand ployed in the U.K. MR. GHOSN: I would not We are still the major brand in
guard of companies pushing their country, what does that these benefits. But we have change anything. I don’t think Russia. We are not trying to
for more open markets glob- mean for you personally? been wrong in many cases, MR. LANDERS: You decided to this is the end of globaliza- compete against our own
ally. But, as voters in several MR. GHOSN: I think it’s a call and cases which are surpris- make a new model of the tion. I think there are some brand. We say, “Lada is the
recent elections have shown, for action. When you try to ing. Because today, we are in Qashqai in Sunderland, Eng- corrections taking place. But I main brand in Russia. And
there is significant public dis- look at the facts about what an interesting situation, where land. wouldn’t change anything. Ten we’re going to defend it.” So
pleasure with some of the globalization has brought to globalization seems to be MR. GHOSN: As a car manufac- years ago, I said, “The key of even the project we have as an
more local effects of globaliza- humankind in general, it’s very more defended in emerging turer, we have a cycle. A car success of the alliance is make alliance is something which
tion, including unemployment difficult to contest the fact countries and emerging econo- lasts five to six years on the two things at the same time: sticks with identity.
and a sense of diminished sov- that it has been a very good mies and has more resistance
ereignty. trend. Obviously, it has not in some of the developed
Carlos Ghosn, chairman and been perfect. It hasn’t been countries.
chief executive of the alliance, very good for every single en-
sat down to talk with Peter tity everywhere. And it has MR. LANDERS: What’s the mar- VOICES FROM THE CONFERENCE
Landers, Tokyo bureau chief of also had some excesses, maybe keting slogan? What’s the
The Wall Street Journal, and not due to globalization but pitch? “North Korea is very bad. But it is not mad. It is
John Bussey, associate editor generated by globalization. MR. GHOSN: The big difference a rational country. Therefore, it can be de-
of The Wall Street Journal, I think it’s a call to answer, between businesspeople and terred.…While it is bound to become a nuclear-
about how the recent push- to try to understand why we other categories of people is
back against globalization have this pushback in some that we look at scorecards.
weapon state, and that will precipitate a rethink-
could affect the ability of com- countries, why people don’t And a lasting, positive score- ing of options in all Northeast Asia, it is not
panies to reach across bor- understand, and what are the card cannot be generated by necessarily going to be a less stable Northeast
ders. Edited excerpts of the in- corrections we need to bring something bad. Frankly, when Asia at the end of the day. You can deter North
terview follow. or clarify. you look at globalization, the
Because without any doubt, scorecard is absolutely tre-
Korea because it—what does it essentially want?
MR. LANDERS: You were born this trend is going to continue. mendous. If you look at what It wants, the regime wants, to survive.”
in Brazil, educated in French Look at the young generation, happened from China to India
in Lebanon, went to university at people’s aspirations. They to Russia to Brazil to what will Bilahari Kausikan, Ambassador-at-Large,
in France, had business suc- all want to continue, one way happen, we think, to Africa, Ministry of Foreign Affairs, Singapore
cess at Michelin in the U.S. or the other, in some kind of what’s happening in Southeast
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B10 | Tuesday, May 23, 2017 THE WALL STREET JOURNAL.

MARKETS DIGEST
Nikkei 225 Index STOXX 600 Index S&P 500 Index Data as of 12 p.m. New York time
Last Year ago
19678.28 s 87.52, or 0.45% Year-to-date s 2.95% 391.14 t 0.37, or 0.09% Year-to-date s 8.22% 2391.13 s 9.40, or 0.39% Trailing P/E ratio 23.44 23.49
High, low, open and close for each 52-wk high/low 19961.55 14952.02 High, low, open and close for each 52-wk high/low 396.45 308.75 High, low, open and close for each P/E estimate * 18.41 17.51
trading day of the past three months. All-time high 38915.87 12/29/89 trading day of the past three months. All-time high 414.06 4/15/15 trading day of the past three months. Dividend yield 1.98 2.20
All-time high: 2402.32, 05/15/17

Weekly P/E data based on as-reported earnings from Birinyi Associates Inc.

20000 400 2400

65-day moving average

19500 390 2370

19000 380 2340

18500 370 2310

Session high
DOWN UP 18000 360 2280
t

Session open Close

65-day moving average
Close Open 65-day moving average
t

17500 350 2250

Session low
Bars measure the point change from session's open
17000 340 2220
Feb. Mar. Apr. May Feb. Mar. Apr. May Feb. Mar. Apr. May

International Stock Indexes Data as of 12 p.m. New York time Global government bonds
Latest 52-Week Range YTD Latest, month-ago and year-ago yields and spreads over or under U.S. Treasurys on benchmark two-year
Region/Country Index Close NetChg % chg Low Close High % chg and 10-year government bonds around the world. Data as of 12 p.m. ET
World The Global Dow 2758.65 10.32 0.38 2193.75 • 2769.38 9.1 Country/ Spread Over Treasurys, in basis points Yield
MSCI EAFE 1891.75 9.00 0.48 1471.88 • 1956.39 10.2 Coupon Maturity, in years Yield Latest Previous Month Ago Year ago Previous Month ago Year ago
MSCI EM USD 1003.75 8.08 0.81 691.21 • 1044.05 26.4 5.250 Australia 2 1.624 35.0 34.8 47.8 75.8 1.623 1.666 1.639
4.750 10 2.496 25.2 25.6 30.1 47.2 2.492 2.549 2.315
Americas DJ Americas 574.16 2.07 0.36 480.90 • 578.17 6.3
3.000 Belgium 2 -178.3 -180.4 -171.4 -136.9 -0.530 -0.525 -0.488
-0.509
Brazil Sao Paulo Bovespa 61205.71 –1433.59 –2.29 48066.67 • 69487.58 1.6
0.800 10 0.774 -146.9 -148.5 -143.8 -143.8 0.752 0.811 0.405
Canada S&P/TSX Comp 15458.46 … Closed 13609.58 • 15943.09 1.1
0.000 France 2 -0.419 -169.4 -172.6 -149.1 -128.6 -0.452 -0.303 -0.405
Mexico IPC All-Share 49041.62 –25.85 –0.05 43902.25 • 50154.33 7.4
1.000 10 0.849 -139.4 -142.8 -130.9 -133.3 0.809 0.939 0.510
Chile Santiago IPSA 3639.61 –21.96 –0.60 2998.64 • 3786.05 12.9
0.000 Germany 2 -0.670 -194.5 -196.4 -197.9 -137.7 -0.690 -0.790 -0.497
U.S. DJIA 20882.63 77.79 0.37 17063.08 • 21169.11 5.7
0.250 10 0.398 -184.5 -186.7 -199.3 -167.6 0.369 0.255 0.167
Nasdaq Composite 6120.38 36.68 0.60 4574.25 • 6170.16 13.7
0.300 Italy 2 -0.234 -150.9 -152.9 -120.0 -92.2 -0.254 -0.012 -0.042
S&P 500 2391.13 9.40 0.39 1991.68 • 2405.77 6.8
2.200 10 2.140 -10.3 -10.5 3.2 -35.6 2.131 2.280 1.487
CBOE Volatility 11.53 –0.51 –4.24 9.56 • 26.72 –17.9
0.100 Japan 2 -0.164 -143.9 -143.2 -140.8 -111.7 -0.157 -0.220 -0.237
EMEA Stoxx Europe 600 391.14 –0.37 –0.09 308.75 • 396.45 8.2 0.100 10 0.050 -219.4 -219.5 -223.2 -194.8 0.042 0.016 -0.105
Stoxx Europe 50 3232.29 –3.63 –0.11 2626.52 • 3279.71 7.4 4.000 Netherlands 2 -0.595 -187.0 -188.8 -186.8 -138.4 -0.613 -0.679 -0.504
France CAC 40 5322.88 –1.52 –0.03 3955.98 • 5442.10 9.5 0.750 10 0.608 -163.5 -166.6 -173.8 -158.6 0.571 0.510 0.257
Germany DAX 12619.46 –19.23 –0.15 9214.10 • 12841.66 9.9 4.750 Portugal 2 0.249 -102.6 -99.9 -79.1 -58.7 0.275 0.398 0.294
Israel Tel Aviv 1421.59 –0.89 –0.06 1372.23 • 1490.23 –3.3 4.125 10 3.133 89.0 93.6 148.4 125.5 3.173 3.732 3.098
Italy FTSE MIB 21318.58 –248.94 –1.15 15017.42 • 21828.77 10.8 2.750 Spain 2 -0.283 -155.7 -157.5 -136.9 -96.5 -0.300 -0.180 -0.085
Netherlands AEX 527.85 0.93 0.18 409.23 • 537.84 9.2 1.500 10 1.606 -63.8 -67.8 -55.3 -26.2 1.559 1.695 1.581
Russia RTS Index 1083.58 –4.17 –0.38 873.58 • 1196.99 –6.0 4.250 Sweden 2 -0.706 -198.0 -197.2 -186.6 -131.5 -0.698 -0.677 -0.435
Spain IBEX 35 10793.40 –42.00 –0.39 7579.80 • 11184.40 15.4 1.000 10 0.519 -172.5 -172.6 -170.2 -104.8 0.511 0.546 0.795
Switzerland Swiss Market 9084.78 62.27 0.69 7475.54 • 9136.95 10.5 1.750 U.K. 2 0.115 -115.9 -115.7 -108.9 -43.3 0.117 0.099 0.447
South Africa Johannesburg All Share 54517.06 89.76 0.16 48935.90 • 54704.22 7.6 4.250 10 1.089 -115.5 -114.2 -121.3 -39.0 1.095 1.036 1.453
Turkey BIST 100 96400.03 1252.69 1.32 70426.16 • 96629.15 23.4 1.250 U.S. 2 1.275 ... ... ... ... 1.274 1.188 0.880
U.K. FTSE 100 7496.34 25.63 0.34 5788.74 • 7533.70 4.9 2.375 10 2.243 ... ... ... ... 2.236 2.248 1.843
Asia-Pacific DJ Asia-Pacific TSM 1600.32 14.25 0.90 1308.52 • 1601.62 12.5
Australia S&P/ASX 200 5771.20 43.80 0.76 5103.30 • 5956.50 1.9 Commodities Prices of futures contracts with the most open interest 12 p.m. New York time
China Shanghai Composite 3075.68 –14.96 –0.48 2815.09 • 3288.97 –0.9 EXCHANGE LEGEND: CBOT: Chicago Board of Trade; CME: Chicago Mercantile Exchange; ICE-US: ICE Futures U.S.; MDEX: Bursa Malaysia
Hong Kong Hang Seng 25391.34 216.47 0.86 19809.03 • 25391.34 15.4 Derivatives Berhad; TCE: Tokyo Commodity Exchange; COMEX: Commodity Exchange; LME: London Metal Exchange;
NYMEX: New York Mercantile Exchange; ICE-EU: ICE Futures Europe. *Data as of 5/19/2017
India S&P BSE Sensex 30570.97 106.05 0.35 25230.36 • 30658.77 14.8 One-Day Change Year Year
Indonesia Jakarta Composite 5749.45 –42.44 –0.73 4710.79 • 5791.88 8.5 Commodity Exchange Last price Net Percentage high low
376.75 4.25 1.14% 393.75 360.75
Japan Nikkei Stock Avg 19678.28 87.52 0.45 14952.02 • 19961.55 3.0 Corn (cents/bu.) CBOT
Soybeans (cents/bu.) 958.75 5.75 0.60 1,092.50 941.25
Malaysia Kuala Lumpur Composite 1774.95 6.67 0.38 1614.90 • 1778.65 8.1
Wheat (cents/bu.)
CBOT
CBOT 441.25 6.00 1.38 488.75 416.00
New Zealand S&P/NZX 50 7409.50 17.39 0.24 6664.21 • 7571.11 7.7
Live cattle (cents/lb.) CME 123.025 1.975 1.63 127.500 99.400
Pakistan KSE 100 51373.51 631.48 1.24 36061.56 • 52387.87 7.5
Cocoa ($/ton) ICE-US 2,030 2 0.10 2,270 1,756
Philippines PSEi 7806.57 38.95 0.50 6563.67 • 8102.30 14.1
Coffee (cents/lb.) ICE-US 130.05 -2.05 -1.55% 161.55 128.65
Singapore Straits Times 3213.57 –3.35 –0.10 2729.85 • 3271.11 11.6
Sugar (cents/lb.) ICE-US 16.55 0.17 1.04 20.81 15.24
South Korea Kospi 2304.03 15.55 0.68 1925.24 • 2304.03 13.7
Cotton (cents/lb.) ICE-US 73.16 -0.29 -0.39 75.72 69.81
Taiwan Weighted 9997.26 49.64 0.50 8300.66 • 10036.82 8.0 Robusta coffee ($/ton) ICE-EU 1935.00 -42.00 -2.12 2,283.00 1,871.00
Thailand SET 1557.73 8.09 0.52 1381.69 • 1591.00 1.0
Copper ($/lb.) COMEX 2.5885 0.0070 0.27 2.8400 2.4725
Source: SIX Financial Information;WSJ Market Data Group Gold ($/troy oz.) COMEX 1259.60 6.00 0.48 1,297.40 1,152.20
Silver ($/troy oz.) COMEX 17.115 0.319 1.90 18.725 16.060
Currencies London close on May 22 Aluminum ($/mt)* LME 1,938.00 32.00 1.68 1,972.00 1,688.50
Tin ($/mt)* LME 20,335.00 -140.00 -0.68 21,225.00 18,760.00
Yen, euro vs. dollar; dollar vs. major U.S. trading partners US$vs,
Mon YTDchg Copper ($/mt)* LME 5,617.50 109.50 1.99 6,156.00 5,491.00
Country/currency in US$ per US$ (%) Lead ($/mt)* LME 2,102.00 44.50 2.16 2,445.00 2,022.00
20%
Europe Zinc ($/mt)* LME 2,579.00 109.00 4.41 2,958.50 2,470.00
s Bulgaria lev 0.5751 1.7388 –6.4 Nickel ($/mt)* LME 9,205.00 165.00 1.83 11,095.00 8,980.00
10 Yen WSJ Dollar index
s Croatia kuna 0.1511 6.618 –7.7 Rubber (Y.01/ton) TCE 227.70 2.80 1.25 n.a. n.a.
Euro zone euro 1.1235 0.8901 –6.4
0 Palm oil (MYR/mt) MDEX 2,659.00 24.00 0.91 2,790.00 2,421.00
Czech Rep. koruna-b 0.0423 23.630 –8.0
s Denmark krone 0.1509 6.6268 –6.3 Crude oil ($/bbl.) NYMEX 51.03 0.36 0.71 58.15 44.13
–10 Euro 0.003642 274.54 –6.7
Hungary forint NY Harbor ULSD ($/gal.) NYMEX 1.6046 0.0162 1.02 1.7901 1.3846
Iceland krona 0.010031 99.69 –11.7 RBOB gasoline ($/gal.) NYMEX 1.6550 0.0072 0.44 1.8859 1.4543
–20 Norway krone 0.1197 8.3525 –3.4
0.2674 3.7393 –10.7
Natural gas ($/mmBtu) NYMEX 3.410 0.057 1.70 3.5770 2.8880
2016 2017 Poland zloty
Russia ruble-d 0.01766 56.632 –7.6 Brent crude ($/bbl.) ICE-EU 54.09 0.33 0.61 60.21 46.98
US$vs, US$vs,
YTDchg YTDchg Sweden krona 0.1149 8.7007 –4.5 Gas oil ($/ton) ICE-EU 478.00 4.50 0.95 529.00 415.75
Mon Mon
Country/currency in US$ per US$ (%) Country/currency in US$ per US$ (%) Switzerland franc 1.0269 0.9738 –4.4
Turkey lira 0.2803 3.5670 1.2 Sources: SIX Financial Information; WSJ Market Data Group
Americas Hong Kong dollar 0.1285 7.7849 0.4
Ukraine hryvnia 0.0380 26.3388 –2.7
Argentina peso-a 0.0622 16.0851 1.4
India rupee
Indonesia rupiah
0.0155
0.0000752
64.5351
13303
–5.0
–1.6
U.K. pound 1.3004 0.7690 –5.1 Cross rates London close on May 22
Brazil real 0.3040 3.2893 1.1 Middle East/Africa
Japan yen 0.008997 111.15 –5.0
Canada dollar 0.7405 1.3505 0.5 USD GBP CHF JPY HKD EUR CDN AUD
Kazakhstan tenge 0.003216 310.93 –6.8 Bahrain dinar 2.6522 0.3770 –0.03
Chile peso 0.001497 668.10 –0.3 Australia 1.3373 1.7393 1.3734 0.0120 0.1718 1.5024 0.9904 ...
Macau pataca 0.1250 7.9969 1.0 Egypt pound-a 0.0554 18.0477 –0.5
Colombia peso 0.0003463 2887.91 –3.8 Canada 1.3505 1.7562 1.3868 0.0121 0.1735 1.5170 ... 1.0097
Malaysia ringgit-c 0.2323 4.3045 –4.0 Israel shekel 0.2790 3.5837 –6.9
Ecuador US dollar-f 1 1 unch
New Zealand dollar 0.6992 1.4302 –1.0 Kuwait dinar 3.2955 0.3034 –0.7 Euro 0.8901 1.1575 0.9141 0.0080 0.1143 ... 0.6592 0.6656
Mexico peso-a 0.0536 18.6586 –10.0
Pakistan rupee 0.0095 104.825 0.4 Oman sul rial 2.5977 0.3850 –0.003 Hong Kong 7.7849 10.1234 7.9951 0.0700 ... 8.7451 5.7646 5.8207
Peru sol 0.3056 3.2720 –2.4
Philippines peso 0.0201 49.772 0.3 Qatar rial 0.2746 3.641 0.03 Japan 111.1500 144.5500 114.1300 ... 14.2780 124.8600 82.3100 83.1100
Uruguay peso-e 0.0355 28.180 –4.0
Singapore dollar 0.7213 1.3864 –4.2 Saudi Arabia riyal 0.2666 3.7506 –0.003 0.9738 1.2664 ... 0.0088 0.1251 1.0940 0.7211 0.7280
Venezuela bolivar 0.098504 10.15 1.6 Switzerland
South Korea won 0.0008966 1115.33 –7.7 South Africa rand 0.0757 13.2081 –3.5
U.K. 0.7690 ... 0.7896 0.0069 0.0988 0.8639 0.5694 0.5750
Asia-Pacific Sri Lanka rupee 0.0065449 152.79 2.9 Close Net Chg % Chg YTD % Chg
0.7478 1.3373 –3.7 Taiwan dollar 0.03332 30.014 U.S. ... 1.3004 1.0269 0.0090 0.1285 1.1235 0.7405 0.7478
Australia dollar –7.5 WSJ Dollar Index 88.58 –0.11 –0.12 –4.69
China yuan 0.1451 6.8906 –0.8 Thailand baht 0.02914 34.320 –4.2 Sources: Tullett Prebon, WSJ Market Data Group Source: Tullett Prebon

Key Rates Top Stock Listings 12 p.m. New York time

Latest 52 wks ago % YTD% % YTD% % YTD%
Libor Cur Stock Sym Last Chg Chg Cur Stock Sym Last Chg Chg Cur Stock Sym Last Chg Chg Asia Titans 50
One month 1.02939% 0.44600% ¥ TakedaPharm 4502 5733.00 0.40 18.57 £ RoyDtchShell A RDSA 2109.50 -0.40 -5.93 Last: 157.11 s 1.67, or 1.08% YTD s 11.4%
Three month 1.19200 0.66230 Asia Titans HK$ TencentHoldings 0700 275.40 2.61 45.18 € SAP SAP 94.00 -0.11 13.51
Six month 1.41933 0.95790 HK$ AIAGroup 1299 54.70 ... 25.03 ¥ TokioMarineHldg 8766 4798.00 -0.62 0.04 € Sanofi SAN 87.75 -0.71 14.11 High 165
One year 1.72650 1.30300 68.36 -0.20 3.40 50–day
¥ AstellasPharma 4503 1416.00 -0.39 -12.78 ¥ ToyotaMtr 7203 5997.00 0.54 -12.81 € SchneiderElectric SU Close 160
Euro Libor AU$ AustNZBk ANZ 28.39 -0.39 -6.67 AU$ Wesfarmers WES 42.79 -0.51 1.54 € Siemens SIE 126.55 -1.25 8.35 Low moving average
155
One month -0.40286% -0.35286% AU$ BHP BHP 24.63 1.44 -1.72 AU$ WestpacBanking WBC 31.09 0.78 -4.63 CHF Syngenta SYNN 463.00 0.06 15.03 t
Three month -0.36857 -0.27814 HK$ BankofChina 3988 3.88 0.78 12.79 AU$ Woolworths WOW 25.90 0.19 7.47 € Telefonica TEF 9.94 -0.08 12.65 150
Six month -0.27714 -0.15929 HK$ CKHutchison 0001 99.65 0.05 13.37 € Total FP 48.38 -0.03 0.31 145
One year -0.14829 -0.02957 HK$ CNOOC 0883 9.17 0.44 -5.46 Stoxx 50 CHF UBSGroup UBSG 15.93 -0.13 -0.13
140
Euribor AU$ CSL CSL 130.27 -0.60 29.74 € Unilever UNA 49.66 0.87 26.97
CHF ABB ABBN 24.37 0.29 13.45
One month -0.37400% -0.34900% ¥ Canon 7751 3787.00 0.72 14.93 £ Unilever ULVR 4194.50 1.37 27.40 24 3 10 17 24 31 7 14 21 28 5 12 19
€ ASMLHolding ASML 119.15 -1.08 11.72
Three month -0.32900 -0.25800 ¥ CentralJapanRwy 9022 18325 -0.11 -4.71 € Vinci DG 76.50 -0.20 18.24 Mar. Apr. May
€ AXA CS 23.82 0.11 -0.71
Six month -0.25100 -0.14400 HK$ ChinaConstructnBk 0939 6.33 0.16 6.03 £ VodafoneGroup VOD 224.35 1.84 12.26
€ AirLiquide AI 110.60 -0.18 4.69
One year -0.12900 -0.01200 HK$ ChinaLifeInsurance 2628 24.85 2.47 23.02 CHF ZurichInsurance ZURN 286.50 ... 2.18
171.10
Yen Libor HK$ ChinaMobile 0941 86.45 0.82 5.17
€
€
Allianz
AB InBev
ALV
ABI 105.30
0.77
-0.38
8.98
4.72 DJIA Stoxx 50
One month -0.01236% -0.05029% HK$ ChinaPetro&Chem 0386 6.29 0.48 14.36 £ AstraZeneca AZN 5130.00 0.21 15.61 Last: 3232.29 t 3.63, or 0.11% YTD s 7.4%
Three month -0.01279 -0.02414 AU$ CmwlthBkAust CBA 81.27 1.30 -1.38 € BASF BAS 85.18 -0.65 -3.54
$ AmericanExpress AXP 76.80 ... 3.67
Six month 0.02329 0.00157 ¥ EastJapanRailway 9020 10620 0.43 5.15 € BNP Paribas BNP 65.46 -0.32 8.11
$ Apple AAPL 153.71 0.42 32.71 3275
One year 0.12643 0.09643 ¥ Fanuc 6954 21940 0.30 10.72 £ BT Group BT.A 314.85 1.06 -14.19
$ Boeing BA 182.69 1.07 17.35
$ Caterpillar CAT 102.15 -0.27 10.15 3200
Offer Bid ¥ Hitachi 6501 674.20 1.29 6.68 € BancoBilVizAr BBVA 7.33 -1.16 15.39
TW$ Hon Hai Precisn 2317 102.50 0.99 21.73 $ Chevron CVX 105.86 -0.62 -10.06 3125
Eurodollars € BancoSantander SAN 5.71 -2.14 15.10
¥ HondaMotor 7267 3085.00 1.15 -9.66 $ CiscoSystems CSCO 31.61 1.30 4.62
One month 1.1000% 1.0000% £ Barclays BARC 213.65 -0.02 -4.39 3050
KRW HyundaiMtr 005380 170000 ... 16.44 $ Coca-Cola KO 43.95 0.13 6.02
Three month 1.2000 1.1000 € Bayer BAYN 116.60 -0.30 17.62
2975
HK$ Ind&Comml 1398 5.11 0.79 9.89 $ Disney DIS 107.56 0.04 3.20
Six month 1.3500 1.2500 £ BP BP. 473.95 0.38 -7.00
$ DuPont DD 77.68 -0.18 5.83
One year 1.6000 1.5000 ¥ JapanTobacco 2914 4114.00 0.05 7.02 £ BritishAmTob BATS 5467.00 1.22 18.29 2900
¥ KDDI 3067.00 0.20 3.63
$ ExxonMobil XOM 81.98 0.06 -9.17
Latest 52 wks ago 9433 € Daimler DAI 67.74 -0.22 -4.21 $ GeneralElec GE 28.09 0.12 -11.12 24 3 10 17 24 31 7 13 21 28 5 12 19
¥ Mitsubishi 8058 2263.50 -0.37 -9.10 € DeutscheTelekom DTE 18.05 1.38 10.33 $ Mar. Apr. May
Prime rates GoldmanSachs GS 216.00 0.28 -9.79
¥ MitsubishiElectric 6503 1586.00 -0.06 -2.67 £ Diageo DGE 2306.00 0.61 9.29 $
U.S. 4.00% 3.50% HomeDepot HD 156.35 0.03 16.61
¥ MitsubishiUFJFin 8306 695.60 0.83 -3.42 € ENI ENI 15.02 -0.13 -2.91 $
Canada 2.70 2.70 Intel INTC 35.65 0.71 -1.71
1507.50 0.10 -6.19 1642.00
Japan
Hong Kong
1.475
5.00
1.475
5.00
¥
¥
Mitsui
Mizuho Fin
8031
8411 197.00 0.46 -6.10
£
£
GlaxoSmithKline
HSBC Hldgs
GSK
HSBA 666.60
-0.33
0.17
5.12 $
1.48 $
IBM
JPMorganChase
IBM
JPM
152.33
84.75
0.23 -8.23
-0.03 -1.78
Dow Jones Industrial Average P/E: 20
¥ NTTDoCoMo 9437 2734.50 0.48 2.68 € INGGroep INGA 15.05 -0.27 12.57 $ J&J JNJ 127.36 0.28 10.55 Last: 20882.63 s 77.79, or 0.37% YTD s 5.7%
Policy rates
ECB 0.00% 0.00%
AU$ NatAustBnk NAB 30.40 0.07 -0.88 £ ImperialBrands IMB 3700.00 0.82 4.45 $ McDonalds MCD 148.48 0.22 21.98
Britain 0.25 0.50
¥ NipponTeleg 9432 5226.00 -0.04 6.39 € IntesaSanpaolo ISP 2.68 2.36 10.63 $ Merck MRK 64.16 0.60 8.99 21700
Switzerland 0.50 0.50
¥ NissanMotor 7201 1090.00 -0.32 -7.27 € LVMHMoetHennessy MC 228.25 -0.37 25.83 $ Microsoft MSFT 68.21 0.77 9.77
¥ Panasonic 6752 1368.50 0.18 15.05 £ LloydsBankingGroup LLOY 71.79 0.01 14.85 $ Nike NKE 51.52 -0.48 1.36
21150
Australia 1.50 1.75
HK$ PingAnInsofChina 2318 48.20 4.10 24.23 € LOreal OR 187.50 0.21 8.13 $ Pfizer PFE 32.16 -0.94 -1.00
U.S. discount 1.50 1.00 20600
Fed-funds target 0.75-1.00 0.25-0.50
$ RelianceIndsGDR RIGD 40.75 0.25 29.16 £ NationalGrid NG 1063.50 ... ... $ Procter&Gamble PG 86.17 -0.08 2.49
Call money 2.75 2.25
KRW SamsungElectronics 005930 2255000 0.85 25.14 CHF Nestle NESN 83.40 1.28 14.17 $ 3M MMM 198.23 1.24 11.01 20050
¥ Seven&I Hldgs 3382 4787.00 0.27 7.50 CHF Novartis NOVN 79.40 0.83 7.15 $ Travelers TRV 121.72 0.77 -0.57
Overnight repurchase rates 19500
U.S. 0.80% 0.30%
¥ SoftBankGroup 9984 8535.00 1.86 9.92 DKK NovoNordiskB NOVO-B 277.10 1.73 8.79 $ UnitedTech UTX 121.64 0.40 10.97
Euro zone n.a. n.a.
¥ Sony 6758 3943.00 0.15 20.40 £ Prudential PRU 1735.50 -1.17 6.64 $ UnitedHealth UNH 174.16 0.91 8.82 24 3 10 17 24 31 7 13 21 28 5 12 19
¥ Sumitomo Mitsui 8316 4066.00 0.35 -8.83 £ ReckittBenckiser RB. 7635.00 0.20 10.88 $ Visa V 93.14 0.71 19.38 Mar. Apr. May
Sources: WSJ Market Data Group, SIX HK$ SunHngKaiPrp 0016 113.80 -0.52 16.12 £ RioTinto RIO 3211.00 1.37 1.66 $ Verizon VZ 45.41 -0.02 -14.93 Note: Price-to-earnings ratios are for trailing 12 months
Financial Information, Tullett TW$ TaiwanSemiMfg 2330 205.00 0.99 12.95 CHF RocheHldgctf ROG 267.90 0.34 15.18 $ Wal-Mart WMT 78.68 -0.11 13.83 Sources: WSJ Market Data Group; Birinyi Associates
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THE WALL STREET JOURNAL. Tuesday, May 23, 2017 | B11

FINANCE & MARKETS

Citigroup, Nasdaq Team on Blockchain

Objective is to link For blockchain, the move payments if traditional settle- and other assets between two startup in their blockchain ef- for Citigroup, which for now is
represents a notable chapter in ment or invoice systems are parties much more cheaply forts. Citigroup invested in working with Nasdaq and
bank’s business its development. disrupted. than with existing systems. Chain through its venture arm, Chain, but could develop it for
payments with Blockchain is the peer-to- Overall, banks, exchanges, But without bitcoin or an- Citi Ventures, which worked other clients as well, the bank
peer networking technology and other financial firms have other digital currency, how- with its treasury unit on the said.
exchange’s platform. developed to transfer owner- poured more than $1 billion ever, those systems might be project. The new system “will lead
ship of the virtual currency into projects and startups us- missing a crucial ingredient: The new system links Citi- to relatively greater maturity
BY TELIS DEMOS bitcoin between people. money. Connect, a tool that can be of blockchain technology, and
Bitcoin’s value has soared Efforts to create digital ver- used to manage large-sum pay- integrate it into our existing fi-
Citigroup Inc. and Nasdaq this year, crossing over $2,000 sions of dollars and other gov- ments across borders and nancial infrastructure,” said
Inc. are forging a partnership in recent days. But it still
The new system ernment-backed currencies are across currencies, to block- Naveed Sultan, Citigroup’s
to match up the blockchain hasn’t found widespread trac- would speed up a key in their infancy. chains—in this case Nasdaq’s global head of Treasury and
with real money. tion in traditional banking. Starting last year, Citigroup Linq. This speeds up a key part Trade Solutions. “That may
The two companies said The recent WannaCry com-
part of the settlement and Nasdaq began working to- of the usual multiday settle- lead to greater adoption of
they have been working to- puter attack asked for ransom process for trades. gether to match up Nasdaq’s ment process for trades. venues powered by block-
gether, along with technology payments in bitcoin. Linq blockchain platform to The companies have already chain.”
startup Chain Inc., for months With the partnership, a Citigroup’s Treasury and Trade used the new system to make Chain, led by Chief Execu-
to link Citigroup’s business- blockchain is connecting to Solutions unit, which moves payments on trades, they said. tive Adam Ludwin, said last
payments services to Nasdaq’s one of the largest and most es- ing forms of blockchain tech- trillions of dollars globally in Citigroup would earn standard year it was working with Visa
blockchain platform that has tablished bank money-transfer nology, according to Green- business payments. fees to facilitate the payments Inc. on a blockchain network
been used for activities such systems. And it gives big banks wich Associates. Both firms are investors in just as it would for any busi- to connect businesses with the
as buying and selling shares of a way to earn fees helping new The aim is to be able move San Francisco-based Chain, ness-to-business transfer. credit-card network for cross-
private companies. networks facilitate business things like stocks, derivatives, and have worked with the The new system is a pilot border payments.

SAUDI ARAMCO/REUTERS
A Saudi Aramco facility. Nearly six months after OPEC and other big producers pledged to cut crude output, global oil inventories have only recently begun falling and remain at historically high levels.

Oil in Storage Is the Problem OPEC Just Can’t Solve

OPEC is likely to extend said Antoine Halff, senior re- crude oil from OECD stocks,
and perhaps even deepen its searcher at Columbia Univer- which reached records of Crude Prices Reach and crude prices are up 12% Saudi and Russian leaders ha-
production cuts for one main sity’s Center on Global En- over three billion barrels last since a six-month low May 4. ven’t received as much atten-
reason: It has failed to drain ergy Policy. “By choosing a year. Highest in a Month U.S. crude for June delivery tion as they might have de-
superhigh levels of oil in stor- storage target, they set them- But OECD stocks continued was up 34 cents, or 0.7%, at served, analysts at Credit
age enough to raise prices selves up for failure.” increasing in early 2017 and $50.67 a barrel at midday on Suisse Group AG said in a note
significantly. Almost six months after fell in March by just 32 mil- Oil prices rose to a fresh the New York Mercantile Ex- Monday morning.
OPEC’s 13 members and 11 lion barrels, according to the one-month high Monday, with change. The more actively They are “fully aware that
By Georgi Kantchev, other big producers pledged International Energy Agency, traders expecting this week’s traded July contract gained 36 their efforts so far have
Sarah McFarlane to cut about 2% of global oil a global adviser to oil-con- OPEC meeting to end with an cents, or 0.7%, to $51.03. Brent, broadly failed and that either
and Benoit Faucon supply, stored crude has only suming places such as the extension or even deepening of the global benchmark, rose 32 the group abandons active sup-
recently begun falling and re- U.S., India and Europe. Even the group’s recent output cuts. cents, or 0.6%, to $53.93 a bar- ply management entirely, or it
On Sunday, Khalid al-Falih, mains at historically high lev- if the OPEC and non-OPEC Monday’s gains would be rel on ICE Futures Europe. becomes more serious. It looks
energy minister for the Or- els. cuts are extended into the the 10th in 12 sessions, one of OPEC meets Thursday to as if producers will get serious,”
ganization of the Petroleum Brent crude, the global second half of 2017, stocks several lengthy rallies in recent discuss its continuing, six- the analysts said.
Exporting Countries’ top pro- benchmark, was up 0.6%, at won’t draw down to the five- months largely tied to the Or- month deal to drop production “Crude is increasingly pricing
ducer, Saudi Arabia, said $53.93 a barrel, on Monday year average this year, the ganization of the Petroleum Ex- by 1.8 million barrels, which in expectations that production
OPEC and its production-cut- afternoon but prices remain IEA said. porting Countries. Falling stock- leaders have said might get an cuts will be rolled over into
ting allies need to keep hold- below the levels reached in An OPEC official said the piles this month in the U.S. extension through next winter. 2018,” consultancy JBC Energy
ing back output for another the days after the production group’s plan was beginning to have some convinced that cuts Comments along those lines said in a note.
nine months. The group’s top cut’s announcement and short work and needed more time. from OPEC are affecting supply, from OPEC officials and from —Timothy Puko
leaders meet in Vienna on of the $60-a-barrel target “Stocks are now coming
Thursday to make a decision. that Saudi Arabia wants. down,” the official said.
“We are all ready to con- OPEC leaders say they The official said OPEC was One of the main culprits India, where accurate storage based in Riyadh that compiles
sider other creative sugges- want to reduce storage levels also concerned about high in- might be OPEC itself. The data is difficult to come by. oil-industry information. Ac-
tions that may emerge to be- in the Organization for Eco- ventories in 2008 and 2009, group ramped up output just China made significant in- cording to Kpler, stocks ap-
tween now and May 25,” Mr. nomic Cooperation and Devel- when the global economic cri- before the cuts were slated to ventory drawdowns early in pear to be falling in major
Falih told reporters in Riyadh. opment—a club of industrial- sis depressed demand and start in January, adding to the year followed by large in- oil-storage hubs in the Carib-
OPEC’s predicament under- ized countries like the U.S.— prices, sending storage levels the world’s already vast over- ventory builds to recover to bean and South Africa.
scores the powerful role to a five-year average. About higher. supply. According to data an oil stock level of 783 mil- There is also less oil being
global oil inventories now 550 million barrels of crude Storage levels eventually from oil-tanker tracking firm lion barrels as of May 17, ac- held in giant tankers at sea,
play, after years of being a and oil products have been fell, and prices rose, in 2009 Kpler, OPEC’s January-to- cording to data from global an expensive way to hoard oil
technical detail that some added to the world’s stocks as the crisis abated and oil- April exports were in line storage-monitoring firm Ursa but one that became common
traders ignored. With more since 2014, when prices be- demand growth returned. with the same period last Space Systems Inc., which during the glut. According to
data available than ever, oil gan sinking, said Christopher OPEC’s focus on storage year. monitors 75% of China’s stor- Kpler, the volume of oil held
storage has joined shale pro- Bake, a member of the execu- levels comes as U.S. shale OECD storage is only a age capacity. on ships had fallen about 23%
duction as a symbol of a tive committee at large oil producers are able to with- slice of what investors are Saudi Arabia’s stocks rose from December to 91.1 million
global glut of crude that has trader Vitol Group. stand low prices. The group looking at. More than half of 2.3%, or six million barrels, barrels at the end of April.
knocked OPEC on its heels. OPEC leaders have said has found that its power to the world’s oil-refining capac- over February and March, ac- —Summer Said
“The production deal was a they want to siphon off more flush oil out of storage is lim- ity is outside the OECD, in cording to the Joint Organisa- and Margherita Stancati
risky maneuver by OPEC,” than 300 million barrels of ited. countries such as China and tions Data Initiative, a group contributed to this article.

FINANCE WATCH
China’s Bond-Yield Curve Gets Distorted CITIGROUP or criminal guilty pleas.
BY SHEN HONG this fall. pivotal to Beijing’s effort to Citigroup said in a written
Yield Signs Instead, the market’s latest modernize the way its econ- Bank in Settlement statement that it was “pleased
SHANGHAI—China’s $1.7 Yield curve of China's quirk has come about partly omy is financed. Of U.S. Investigation to resolve these matters.”
trillion government-bond mar- government bonds because trading in Chinese Contributing to the lack of —Emily Glazer
ket is turning ever weirder. government bonds of some demand in seven-year bonds, Citigroup Inc. has agreed to and Telis Demos
In a fresh sign of the nerves 3.8% maturities, such as the seven- for example, is the fact China’s pay less than $100 million to
among investors caused by year, tends to be quite low in government-bond futures mar- settle a yearslong money-laun- SUGAR
Beijing’s campaign this spring 3.7 volume. ket, where investors can hedge dering investigation, the bank
to make Chinese markets less That trend has been exacer- their cash bondholdings, has and government agencies said China’s Tax Surges
risky, the yield on seven-year
3.6
bated in recent weeks amid contracts for five-year and 10- Monday. On Some Imports
government bonds rose to strenuous efforts by Chinese year bonds only, Mr. Wang The bank reached a settle-
3.79% on Monday, above the regulators to tame speculative said. Similarly, trading in ment with the U.S. Justice De- Beijing is nearly doubling its
yield on both five-year and 10- 3.5 investment using heavy levels China’s interest-rate swaps, partment and U.S. attorney’s of- tax on some imported sugar.
year bonds. of borrowed funds. As inves- another popular derivatives fice in Boston for $97.44 million, Saying that an investigation
The highly unusual move tors have sold off their bonds, product, is active only up to with no sanctions against Citi- had found that imports have
3.4
means that China’s govern- or simply stopped trading five years, said a Shanghai- group and a so-called nonprose- damaged China’s sugar industry,
ment-bond yield curve now re- 1 2 3 4 5 6 7 8 9 10 them, price movements have based senior trader at a local cution agreement, according to the Ministry of Commerce said
sembles a triangle, with the YEARS TO MATURITY become more erratic. mutual fund. the bank and Justice Depart- the tax on imports beyond the
seven-year yield at its highest Source: Wind Info “It’s mostly due to the fact In contrast, the prices of ment. The investigation centered first 1.95 million tons a year will
since October 2014. Yield THE WALL STREET JOURNAL. that the seven-year bond is benchmark 10-year govern- on activity in the bank’s Bana- be raised to 95% from the cur-
curves show the interest rates less liquid. That’s why its yield ment bonds are cushioned by mex USA unit. rent 50%, effective immediately.
investors are willing to receive vestors demand higher yields can be easily pushed up in a demand from long-term inves- As part of the agreement, After a year, the rate will fall to
when they buy bonds of differ- on bonds that have longer to selloff,” said Wang Jing, dep- tors such as insurance firms Citigroup admitted that Bana- 90%; after two years, to 85%.
ing maturities. go until maturity. uty general manager of the and banks, said Suan Teck Kin, mex USA violated the Bank Se- The tax on the first 1.95 mil-
The shift comes less than An inverted yield curve fixed-income department at an economist at United Over- crecy Act from at least 2007 un- lion tons will remain 15%.
two weeks after the govern- usually reflects investor pessi- Shenzhen-based China Securi- seas Bank in Singapore. til at least 2012. China is the world’s largest
ment-bond yield curve became mism about a country’s long- ties Credit Investment Co. The recent price distortions The agreement is far less sugar importer. Combined official
inverted for the first time on term growth and inflation The yield-curve anomalies in China’s bond market also than previous money-laundering and illegal imports rose 60% in
record, with 10-year yields— prospects. But in China, few also have their roots in long- betray structural issues such settlements with large banks. the three years through Sept.
now at 3.65%—lower than are predicting prolonged de- standing structural flaws in as the lack of a diverse group Other deals have often topped 30, the U.S. Department of Agri-
those for five-year bonds, cur- flation or recession, despite China’s bond market, already of participants, including for- $1 billion and involved so-called culture estimates.
rently at 3.68%. Normally in- signs the economy could slow the world’s third-largest and eign investors, Mr. Suan said. deferred prosecution agreements —Lucy Craymer
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B12 | Tuesday, May 23, 2017 THE WALL STREET JOURNAL.

MARKETS
Solar Sales Data Allegedly Manipulated
Sunrun delayed Sunrun went public in Au-
gust 2015 at $14 a share, giv-
reporting canceled ing it a market value of about
contracts near its IPO, $1.4 billion. Since then, its
market value has fallen to
former managers say about $534 million, hit by fac-
tors including new regulations.
BY KIRSTEN GRIND Mr. Jennings, the former
Hawaii sales manager, said
Former managers at one of about three months ahead of
the largest U.S. solar-energy the IPO, he and other sales
companies say they manipu- managers were told by Sunrun
lated a key sales metric superiors that they shouldn’t
around the time of the com- process customer cancella-
pany’s August 2015 initial pub- tions until after the company
lic offering. went public.
The former managers of “The joke around Sunrun
Sunrun Inc. say they were told was that it was easier to get
by their superiors to hold off fired than to cancel a project,”
on internally reporting hun- Mr. Jennings says.
dreds of customers who can- Employees say they weren’t
celed their contracts during a aware they were doing any-
roughly five-month period in thing wrong at the time.
the middle of 2015. Mr. Jennings says he
Sunrun and other solar changed current cancellations

NASDAQ
companies typically give in the company’s sales system
homeowners at least several for he and his 14 employees to
days to back out of a contract Sunrun Chief Executive Officer Lynn Jurich celebrated the company’s initial public offering, at $14 a share, in August 2015. the date 12/31/2099. After the
before their home-energy sys- IPO, around October 2015, Mr.
tems are installed. Delaying this article. of Elon Musk’s Tesla Inc., have direction to our employees is low more stringent guidelines, Jennings says that over a sev-
the internal reporting of can- In a statement, Ms. Jurich adequately disclosed to inves- to make these calls with integ- which reduced the previously eral-week period, he input the
celed contracts would make didn’t directly address the tors the number of cancella- rity and always focused on the reported size of its customer cancellations into Sunrun’s
the company’s sales figures question of whether employ- tions they have experienced in customer,” Ms. Jurich said in a base by about 4%. customer-management soft-
appear stronger. ees delayed reporting cus- recent years, according to a follow-up statement. If Sunrun didn’t report can- ware “in a slow drip,” so as
“The big internal push was tomer cancellations but said person familiar with the mat- Around the time of the IPO, cellations that could have af- not to call attention to a rise
to cram as many sales as we the company had “reviewed ter. An SEC spokesman de- Sunrun’s cancellation data in- fected sales figures in its fi- in cancellations.
could through the pipeline,” the digital audit trail in our clined to comment. fluenced at least two of the nancial disclosures, “the SEC That increase prompted
says Darren Jennings, who systems” and “turned up no At Sunrun, cancellations company’s key financial met- probably has a very good case Sunrun to rescind previously
says he was a Sunrun regional evidence that our sales em- reached as high as 40% of all rics: its number of customers in saying the company com- paid commissions from some
sales manager in Hawaii from ployees changed cancellation deals earlier this year, people and its amount of “megawatts mitted a material misrepre- salespeople across the com-
February 2015 until February dates in our systems to delay familiar with the matter said. booked,” which describes the sentation of how their busi- pany.
2017. “If those deals canceled, the reporting of cancella- At SolarCity, 50% of customers amount of energy production ness is performing,” says Evan Stockdale, who says
we would not report it.” tions.” in early 2016 were canceling, generated by home energy James Cox, a securities law he was a Sunrun regional
Mr. Jennings says in Ha- Ms. Jurich said in the state- said people familiar with the systems sold to customers. expert at Duke Law School. manager in Fresno, Calif., be-
waii, one of the San Francisco ment that “I proudly stand by data. Salespeople and home- For example, Sunrun re- Ms. Jurich, 37 years old, tween April 2015 and January
company’s largest markets, Sunrun’s workplace culture, owners have blamed the high ported that in the third quar- and Mr. Fenster, 40, met while 2016, says managers weren’t
sales employees didn’t process our values and our unwavering rate on aggressive sales tac- ter of 2015, it had booked 94 attending Stanford Univer- processing customer cancella-
about 200 cancellations, which commitment to customer sat- tics, as some customers say megawatts, a 115% increase sity’s Graduate School of Busi- tions in the months immedi-
represented about 40% of total isfaction and the principle of they backed out of deals they compared with the prior year’s ness and founded Sunrun in ately before and after the IPO.
orders in Hawaii during the integrity upon which our com- didn’t realize they were agree- quarter, net of cancellations— 2007. He says the company also
May 2015-October 2015 pe- pany was founded.” ing to. meaning that a delay in re- The company grew rapidly. rushed installations around
riod. Sunrun, backed by venture- A spokeswoman for Solar- porting cancellations would It raised $295 million in fund- the end of the third quarter of
Three other former manag- capital firm Sequoia Capital, is City has said the company have the potential to inflate ing from venture-capital firms 2015 to make sure Sunrun hit
ers also say they were aware the biggest publicly traded “has remained focused on re- the figure. Sunrun said at the Sequoia, Accel Partners and its internal growth targets.
of or took part in delaying the rooftop solar-energy company. porting the quality of our in- time that its customer base Foundation Capital, which to- “We were pushed for sales
reporting of hundreds of cus- The industry has grown into a stalled assets, not pre-install had reached 100,000, which in- gether control about 23% of numbers,” he says. “Everybody
tomer cancellations. $33 billion force that powers cancellation rates.” Sunrun de- cluded clients who had signed the company. Foundation Capi- was on pins and needles.”
Lynn Jurich, Sunrun’s chief 1.5 million homes. clined to comment on the SEC a contract but hadn’t yet had tal declined to comment. A Se- The Journal asked Sunrun
executive and co-founder and The Securities and Ex- investigation. their systems installed. quoia spokesman declined to about the rushed installations,
Edward Fenster, Sunrun’s co- change Commission is investi- “There is some judgment in Earlier this year, Sunrun re- comment, and a representa- but the company didn’t ad-
founder and chairman, de- gating whether Sunrun and ri- determining when an installa- vised its definition of what tive for Accel didn’t respond dress it in Ms. Jurich’s state-
clined to be interviewed for val SolarCity Corp., now part tion might not proceed—my constitutes a customer to fol- to requests for comment. ments.

Email: [email protected]
HEARD ON THE STREET FINANCIAL ANALYSIS & COMMENTARY WSJ.com/Heard

Big Tech’s Not-So-Easy Money OVERHEARD Baidu Falls

Behind in
There are some things 14% and 9%, respectively, ex- You can learn more about
Offshore Stash
even half a trillion dollars
can’t buy.
One of those is freedom
Cash and equivalents held by foreign subsidiaries, in billions
cluding their net cash.
It is also worth remem-
bering that bulging bank ac-
investing at the racetrack
than most people think.
That lesson was reinforced
Video Race
from Washington politics. counts aren’t the only good over the weekend when long- Millions in China already
Apple $230
Tax-overhaul promises from reason to buy into big tech shot thoroughbred Cloud spend much of their day
the Trump administration Microsoft 116 right now: Google, Microsoft, Computing was the surprise staring at smartphone apps
had lit up technology inves- Amazon.com and Facebook winner at the Preakness from the country’s online gi-
tors considering a rather Cisco 65 have capitalized effectively Stakes. Cloud Computing is ants. Still, Alibaba, Tencent
large purse. The 10 largest on their scale and continue co-owned by Baupost Group and Baidu want to occupy
Alphabet 52
tech companies by market to widen the lead over founder and value investor more of users’ time—with
cap are sitting on a total of Oracle 52 smaller rivals. Apple seems Seth Klarman. videos. As the race intensi-
$545 billion in offshore on the cusp of returning its Those hoping to learn fies, Baidu could continue to
cash—money seemingly just Intel 15 iPhone business to growth. from Mr. Klarman typically lag behind.
waiting for U.S. politicians to And while repatriated have to pay up. His letters to The big three have spent
agree on a plan that would Amazon 9 cash could boost deal mak- limited partners are private, billions of dollars on video in
allow those funds to be repa- Facebook 5 ing, large-scale M&A hasn’t while used copies of his out- recent years. Each owns por-
triated for something signifi- been a major factor in big of-print book “Margin of tals that initially were like
cantly less than the current Source: the companies THE WALL STREET JOURNAL. tech’s resurgence. Microsoft Safety” list for hundreds of YouTube, hosting user-gen-
35% tax rate. is still in the early days of dollars on Amazon. erated, sometimes pirated,
The dim prospects for be fueled with that money. counts. For those four com- building on its $26 billion But average investors can content. Now, like Netflix,
such a deal now had a no- Such chatter tends to inflate panies, offshore cash ac- purchase of LinkedIn last still learn from the finance they are funding original
ticeable effect in the selloff valuations of smaller public counts for 28% of their year, and that deal isn’t part theme of the names Mr. Klar- content to boost subscrip-
last week, which handed the and private companies bank- combined market cap. of the company’s growing man chooses for his horses. tions. Content costs and
Nasdaq Composite its worst ing on a buyout. Cash also helps moderate Commercial Cloud opera- The rise to prominence of agency fees at Tencent,
day in nearly a year. Apple But cash stranded off- high valuations of big tech tions. Google and Amazon cloud computing, for instance, China’s most valuable com-
was among the hardest hit, shore still has some uses at companies. Apple’s current have largely been avoiding is arguably one of the most pany, rose 44% to $1.1 billion
falling 3.4% that day. It is no home. In the case of Apple, multiple of nearly 16 times big deals of late. important investing develop- last quarter. Alibaba in-
coincidence that Apple has it has backed a growing debt forward earnings is a five- That doesn’t mean an ac- ments in recent history. Past curred a loss of nearly $1.5
$230 billion sitting off- load that finances the com- year high, but that drops to tual repatriation tax break names for his horses include billion on digital entertain-
shore—by far the largest pany’s dividend and share 12.7 times excluding the won’t be welcome. But the Pricedtoperfection, Takeover ment in the past year.
overseas stockpile in tech. buybacks. Microsoft, Oracle company’s net cash. Google biggest tech companies right Target, Balance the Books, Baidu, which runs China’s
That should at least curb and Cisco Systems also have parent Alphabet’s and Mi- now are in the advantageous and Sum of the Parts, accord- biggest search engine, argu-
some speculation about a made use of debt backed by crosoft’s forward earnings position of not having to ing to America’s Best Racing. ably has the most at stake. It
deal-making boom that could their overseas bank ac- multiples get discounted by bank on it. —Dan Gallagher trails its rivals in investor
popularity: Tencent’s share
price has almost tripled over

Why a Rebound in U.S. Lending Isn’t Easing Anxieties three years, yet Baidu’s stock
has risen only 20%.
Baidu, whose outlay on
Despite a slight rebound lier in the latest data. more in line with underlying in the first quarter, he said content rose 91% in the first
in loan growth, political and Not Encouraging Historically, C&I lending is economic growth, but if at an investment conference quarter, intends to double
economic uncertainty still Total U.S. commercial and industrial tightly correlated with eco- lenders and borrowers alike in London. spending by year-end. Its
seems to be holding back loans, change from year earlier nomic growth, said Credit are unsure of what economic Corporate and industrial video unit plans to distribute
lending by U.S. banks. Suisse analyst Susan Katzke. policies are coming, they clients, he said, are optimis- some of Netflix’s original
Weekly data from the Fed- 12% Because it was running much can’t gauge the likely pace of tic about tax reform, infra- content.
eral Reserve show that total 10 faster than gross domestic growth going forward. structure spending and other Still, the odds seem tilted
loans and leases by commer- 8 product growth, at an aver- While reporting their potential policies. But he against Baidu. While revenue
6
cial banks rose nearly 1% age rate of 9% over the past first-quarter earnings, many added that these clients are rose 7% in the first quarter,
4
over the first six weeks of five years, she argued some bankers said publicly that still waiting to see what ac- Alibaba and Tencent posted
2
the second quarter. That in- slowdown was inevitable. their clients were holding tually happens. “So a lot of gains of more than 50%.
0
crease, which was versus the However, the sharpness of back on borrowing for big optimism, hopefully translat- That duo’s stronger core
end of the first quarter, is 2016 ’17 the slowdown and its timing, projects until they were ing into confidence and then businesses should allow for
encouraging because lending Note: Data are seasonally adjusted beginning around the time of more certain about the pol- action. We’re not seeing that more splurging on videos,
was basically flat in the be- Source: Federal Reserve the presidential election, icy outlook. action yet.” even if they prove unprofit-
ginning of 2017. have unnerved many analysts Last week, Terrance Last week’s eruption of able for a while, and their
However, compared with That compares with 6.4% and suggested that political Dolan, the chief financial of- political turmoil won’t large user communities
the level of loans a year ear- growth for all of 2016 and uncertainty is playing a role. ficer of large regional lender soothe borrowers’ nerves. should provide a leg up.
lier, that still looks anemic. 7.6% year-over-year growth The two explanations U.S. Bancorp, reiterated that Banks might not start lend- Baidu came up short at
Total loans and leases as of seen in late October. Com- don’t necessarily conflict. message. Loan growth in ing at full force again until China’s prior internet party.
the week ended May 10 rose mercial and industrial loans Lending might have been due April has been “a little bit Washington gets its act to- It might miss out on the
just 3.8% from a year earlier. rose just 2% from a year ear- for a slowdown to bring it stronger” than its 0.2% pace gether. —Aaron Back next one, too. —Jacky Wong