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WEDNESDAY, APRIL 5, 2017 ~ VOL. XLI NO. 151 WSJ.com ASIA EDITION
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Suspected Chemical Attack Kills Dozens in Syria U.S. Mulls

What’s Variety of
News ‘Extreme
Business & Finance

oeing agreed to sell up

Vetting’
B to 60 of its most popu-
lar jets to an Iranian airline,
despite uncertainty over
the Trump administration’s
Methods
tolerance for U.S. business BY LAURA MECKLER
dealings in Iran. A1
Foreigners who want to
 Gillette, which domi-
visit the U.S., even for a short
MOHAMED AL-BAKOUR/AGENCE FRANCE-PRESSE/GETTY IMAGES

nates the global razor

trip, could be forced to dis-
business, is slashing prices
close contacts on their mobile
and putting a new focus
phones, social-media pass-
on its cheaper products. B1
words and financial records,
 AmTrust revised its and to answer probing ques-
last three years’ worth of tions about their ideology, ac-
earnings downward by cording to Trump administra-
about $136 million due to tion officials conducting a
accounting errors. B6 review of vetting procedures.
The administration also
 Exxon Mobil is in talks
wants to subject more visa ap-
to gain access to Brazil’s
plicants to intense security re-
prized deep-water re-
views and have embassies
sources. B2
spend more time interviewing
 Ultra’s CEO stands to get
$35 million in stock when the
firm exits from bankruptcy, UNDER CARE: Children receive treatment after a suspected gas attack in the town of Khan Sheikhoun. At least 58 people were killed. A3 President Tweaks
due to higher gas prices. B1
Health Proposal
 Fox News contributor
The Trump administration is
Julie Roginsky filed a law-
floating a new health-care
suit alleging she was sexu-
ally harassed by former
chairman Roger Ailes. B3
U.S. AND CHINA FIND SOFTER TONE overhaul after the collapse of
a bill last month. A7

 J. Crew’s creative chief

is leaving the apparel firm, each applicant. The changes
which is struggling with soft After public posturing, Donald Trump and Xi Jinping prepare for their first summit in Florida could apply to people from all
sales and heavy debt. B6 over the world, including al-
A month after tough talk on Kingdom, Germany and other lies like France and Germany.
 Google unveiled steps to
China helped win Donald allies criticizing China over The measures—whose full
help marketers track where
Trump the presidency, Bei- the alleged torture of human- scope haven’t yet been publicly
YouTube ads appear. B4
jing’s top diplomat visited rights lawyers. discussed—would together
 Toshiba will buy out part- Trump Tower and delivered a After challenging China on represent the “extreme vet-
ner Engie’s 40% stake in a stern lecture on the need to its most sensitive issue—U.S. ting” President Donald Trump
GETTY IMAGES AND ASSOCIATED PRESS

proposed U.K. nuclear power respect Chinese interests. ties with Taiwan, which Bei- has promised. The changes
project for $138 million. B3 jing considers a rebel prov- would be sure to generate sig-
 High-grade corporate By Jeremy Page, ince—Mr. Trump reversed nificant controversy, both at
bonds surged when the Felicia Schwartz course in February, clearing home, from civil libertarians
ECB added them to its and Carol E. Lee the way for the two-day gath- and others who see the ques-
ering at Mar-a-Lago, the presi- tions as overly intrusive, and
$2.45 trillion purchase
It didn’t go over well. A day dent’s private club in Palm abroad, with experts warning
program last year. B7
later, Mr. Trump challenged Beach, Fla., which starts that other nations could im-
Beijing with a veiled threat to Thursday. pose similar requirements on
World-Wide bolster U.S. ties to the demo- In Beijing last month, Sec- U.S. citizens seeking visas.
cratic island of Taiwan. President Xi Jinping of China and President Donald Trump of the U.S. retary of State Rex Tillerson “If there is any doubt about
Since then, both sides have described the basis for U.S.- a person’s intentions coming
 Foreigners looking to maneuvered, largely behind they choose to take it, to re- summit could plunge ties China ties as “non-conflict, to the United States, they
visit the U.S. may be the scenes, to lower the tem- calibrate relations and re- back into turmoil. non-confrontation, mutual re- should have to overcome—re-
forced to disclose phone perature, setting the stage for duce the risk of flare-ups Mr. Trump’s administration spect, and win-win coopera- ally and truly prove to our sat-
contacts, social-media Mr. Trump’s first meeting with over trade, North Korea or in recent weeks has dropped tion,” the exact language used isfaction—that they are com-
passwords and other per- China’s leader, President Xi the South China Sea. With talk of blocking Chinese access in the past by Mr. Xi. The U.S. ing for legitimate reasons,”
sonal information. A1 Jinping, later this week. both presidents deeply in- to its South China Sea out- Please see MEET page A8 said Gene Hamilton, senior
The summit now offers a vested in projecting strength posts and toned down its at- counselor to Homeland Secu-
 A suspected chemical at-
test of that strategy and a and the promise of national tacks on China’s currency pol-  U.S. trade gap shrinks.......... A7 rity Secretary John Kelly.
tack killed at least 58 people
chance for the two leaders, if rejuvenation, a disappointing icy. It didn’t join the United  Opinions of China improve... A8 Please see VETTING page A5
in an opposition-held town
in northwestern Syria. A3
 McConnell was ex-
pected to use a procedural
tool to limit debate on the Boeing Lines Up INSIDE Seoul Denounces
Supreme Court nomina-
tion and set the stage for a
final vote by Friday. A5
 Trump is pushing for a
More Iran Orders China Trade Moves
probe into whether Obama
Boeing Co. agreed to sell up Donald Trump, an outspoken BY KWANWOO JUN Among South Korea’s re-
administration officials im-
to 60 of its most popular jets critic of closer ties with Teh- cent responses: Its ambassa-
properly spied on members
to an Iranian airline, doubling ran. Boeing said it had received SEOUL—South Korea is dor to China sent China’s for-
of his transition team. A7
down on the country despite permission from the U.S. gov- ratcheting up official protests eign, commerce and public-
 The U.S. government
began accepting H-1B visa
uncertainty over the Trump
administration’s tolerance for
ernment to negotiate the sale.
It was unclear if the authori-
THE WEIRDNESS against China for what many
here regard as unlawful eco-
security ministries a formal
letter last week calling for an
applications but pledged U.S. business dealings in Iran. zation came from the Trump or OF WORKING nomic pressure over Seoul’s end to retaliatory measures
to target outsourcing
firms. A5 By Robert Wall
Obama administration. Boeing
representatives weren’t imme-
OUT AT WORK plan to host an American mis-
sile-defense system.
against Lotte Group, a South
Korean conglomerate that
in London diately available to comment. A In recent days, government has become the focus of Chi-
 Russian authorities
and Asa Fitch in Dubai final deal still needs signoff LIFE & ARTS, A9 agencies, lawmakers and se- nese anger since it leased
raised the death toll of the
from the U.S. Treasury’s Office nior officials have begun land to Seoul to deploy the
subway blast to 14 and
Boeing said on Tuesday that of Foreign Assets Control. If speaking out more frequently missile shield. Also last week,
said the suicide bomber,
it signed a memorandum of approved, the first planes and forcefully against what South Korean lawmakers ad-
Akbarjon Jalilov, was a na-
agreement with privately would arrive in Iran by 2022. they say are likely violations opted a rare resolution de-
tive of Kyrgyzstan. A4
owned Iran Aseman Airlines Even with early consent of international trade stan- nouncing Chinese restrictions
 The U.S. trade gap with for the sale of 30 Boeing 737 from Washington, the deal dards by China. on tour packages to South
China shrank in the first Max single-aisle planes, with could become a high-profile It marks a shift from South Korea and regulatory mea-
two months of the year options for another 30. The list test case for the Trump admin- Korea’s more-delicate ap- sures against South Korean
EPA

but remains far higher price for all 60 jets is $6 bil- istration over how much lee- proach of recent months as it companies as breaches of in-
than a decade ago. A7, A1 lion. Plane makers typically of- way Washington will allow U.S. balanced ties between the ternational rules.
 Haley said that the U.S.
fer steep discounts, and the
real value of the deal could be
companies doing business in
Iran. Western powers more
MONEYGRAM U.S., its longtime ally, and
China, its biggest trade part-
The resolution, backed by
188 of 189 lawmakers in atten-
would closely scrutinize the
U.N.’s peacekeeping and hu-
significantly lower. than a year ago removed sanc- FIGHT GOES TO ner. Beijing frequently use its dance in the 299-member leg-
man-rights functions. A3
Still, the sale is the first ma-
jor deal between a U.S. com-
tions on Iran in return for the
country agreeing to constrain
CAPITOL HILL economic clout to push its for-
eign-policy goals, but rarely
islature, expressed “deep con-
cern and regret” over the
 Trump welcomed Egyp- pany and an Iranian one since its nuclear program. with such a broad set of retal- Chinese actions, which it
tian President Sisi, as the the inauguration of President Please see IRAN page A2 BUSINESS & FINANCE, B1 iatory measures. Please see KOREA page A2
U.S. administration focuses
its relationship with Cairo
on security cooperation. A3
Foragers Draw Outcry, ‘Stop Eating My Yard!’ The ECB Effect
Corporate bonds have benefited from ECB stimulus,
CONTENTS Markets................... B10
Business News...... B3 Opinion.............. A10-11 i i i and could be hurt by its withdrawal. B7
Crossword.............. A12 Streetwise................. B1 Credit spreads* on the iBoxx Euro Non-Financials corporate bond index
Heard on Street... B10
Int’l Property.......... B9
Technology............... B4
U.S. News............. A5-7
Demand for wild veggies sparks standoff; ‘fry it up and eat it’ 2.0 percentage points
Life & Arts......... A9,12 Weather................... A12 BY JENNIFER LEVITZ theft,” he sighed. “It’s and centuries-old tra-
Management.......... B5 World News....... A2-4
ridiculous.” dition of allowing 1.8
China: RMB28.00; Hong Kong: HK$23.00;
Indonesia: Rp25,000 (incl PPN);
In late April, Tim Marks’s Such tensions are public access to pri-
Japan: Yen620 (incl JCT); Korea: Won4,000; 40 acres of Maine forest land becoming more com- vate property. June 8
Malaysia: RM7.50; Singapore: S$5.00 (incl GST)
faces an infestation: fiddle- mon in Maine, where For Mr. Marks, the 1.6 Program begins
KDN PP 9315/10/2012 (031275); MCI (P)
NO. 066/01/2017; SK. MENPEN R.I. NO: 01/ head foragers. the rise in popularity fiddleheads on his
SK/MENPEN/SCJJ/1998 TGL. 4 SEPT 1998
The retired state trooper of wild vegetation like property if not dug
spots dozens of them traipsing fiddleheads, ramps, up by foragers can 1.4
across his property, stuffing mushrooms and sea- generate as much as
burlap sacks with the greens to weed for uses from $600 at local mar- 1.2 March 10
sell at farmers markets. He has gourmet cooking to kets, which he uses to ECB announces corporate
shooed them off, and even put nutritional supple- help pay his property bond buying program
up trail cameras. But they’ll go ments is causing fric- tax. “Some people 1.0
fiddlehead
s Copyright 2017 Dow Jones & as far as to sneak back in at tion between foragers pickle them, make 2016 ’17
Company. All Rights Reserved
night, with headlamps. and landowners. It is also quiche out of them,” he said. “I *Yield premium to German government bonds
“I’m a victim of fiddlehead threatening the state’s unusual Please see FORAGE page A8 Source: IHS Markit THE WALL STREET JOURNAL.
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 | Wednesday, April 5, 2017
Japan’s Next High-Tech Export: Carrots
Abe wants food makers
to follow other science-
based export sectors
like high-speed rail
BY ELEANOR WARNOCK
SODEGAURA, Japan—Taro
Takagi has helped develop
nine breeds of carrots in-
tended to feed millions in
Asia—a prime example of
how Japan now aims to use
new technology to become an
agricultural powerhouse.
One of them, dubbed
“Amelie,” has extra beta caro-
tene for a brighter orange
color that consumers find at-
tractive. Another, “Christine,”
yields a uniform cylindrical
shape and thrives in colder
climates. And “Emma” is re-
sistant to the fungal disease
black rot.
“What constitutes a good
carrot is different for every
market,” Mr. Takagi said re-
cently. “In France, this would
be considered a good carrot,”
he added, holding up a me-
dium-length variety with a
slight bend in the middle,
“while in Japan this is
good”—a shorter, stubbier
model with no bend.
Prime Minister Shinzo Abe
says he wants to turn the
food business, where Japan
has a $70 billion annual trade
deficit, into an export-growth
sector along the lines of
other science-heavy Japanese
businesses such as high-
speed rail and carbon-fiber
materials.
The fruits of Mr. Takagi’s
effort to become the world’s
carrot king come from the
kind of expensive, research-
intensive work that Tokyo
hopes will increasingly power
Japan’s economy after it
stumbled in some traditional
technology areas such as con-
sumer electronics.
Agricultural exports could
also help offset any rise in
imports if Japan yields to
pressure from the Washing-
ton. U.S. Vice President Mike
IRAN
Continued from Page One
After the nuclear accord, un-
der the Obama administration,
Boeing and rival Airbus SE won
billion-dollar deals to sell
planes to Iran Air, the Islamic
Republic’s flag carrier.
Boeing won a $16.6 billion
deal to sell 80 planes to Iran
Air in December. Airbus se-
cured a deal for 100 planes.
The Toulouse, France-based
plane maker has started deliv-
ering the first of those planes
to Iran Air. Boeing deliveries
to the airline aren’t due until
next year.
The two plane transactions
with the state-owned carrier
were among the most high-
profile contracts Iran signed
after sanctions were removed.
They have also been controver-
sial in Washington, where law-
makers critical of the deals
have tried to block them. Mr.
Trump, during his election
campaign, threatened to end
KOREA
Continued from Page One
called “a big stumbling block”
to relations.
“There is an attempt in the
Northeast Asia to weaponize
its market for political and
security purposes,” South Ko-
rean Vice Foreign Minister
Ahn Chong-ghee said at a
seminar in Seoul on interna-
A Thaad interceptor is launched during a test, in a photo provided by the U.S. Department of Defense.
Carrots developed by Mikado Kyowa Seed Co. in a company warehouse, left. Japanese carrot-seed breeder Taro Takagi, right, hopes to become the world’s carrot king.
Pence, who is set to visit
Japan as soon as this month
for economic talks, is likely to
press Tokyo to reduce agri-
cultural tariffs in a new two-
way trade deal.
Japan’s agriculture sector,
long dominated by aging fam-
ily farmers working tiny plots
of land, is already making
high-tech strides. One com-
pany, Spread Co., is develop-
ing a farm exclusively
manned by robots, where let-
tuce could be grown making
optimal use of water and re-
sources, good for countries
where water is scarce. An-
other, Umitron, is using satel-
lite data to optimize feeding
on aquatic farms. Gra Inc.
produces perfect-looking
strawberries in greenhouses.
And the chip maker Fu-
jitsu is growing lettuce in a
sterile, dust-free room that
once built the brains of high-
tech gadgets. Semiconduc-
tors need to be produced in
clean rooms, and now pro-
ducing lettuce in a clean
room allows Fujitsu not to
the nuclear agreement.
U.S. government representa-
tives weren’t immediately
available to comment on the
latest plane deal.
Boeing has emphasized the
job-creating potential of any
new orders, including from
Iran. The company Tuesday
said that based on U.S. govern-
ment data, “an aerospace sale
of this magnitude creates or
sustains approximately 18,000
jobs” in the U.S. That figure
likely would include jobs
through the supply chain. It
was unclear if the Iran deal, on
its own, would justify creating
new positions.
Uncertainty over Mr.
Trump’s stance on Iran has
dogged decision making by U.S.
and other Western executives
who have considered business
in Iran. Western banks have
largely refused to handle trans-
actions to Iran for fear of being
fined for running afoul of
banking sanctions that remain.
American firms have been
especially reticent in diving
into Iran without clearer guid-
tional trade last week. “It is
highly likely that China’s re-
taliatory measures, related to
[the Terminal High-Altitude
Area Defense system], run
counter to the spirit and reg-
ulations of the World Trade
Organization.”
The feud centers on South
Korea’s plan to deploy the
Thaad system to counter the
growing nuclear and missile
threat from North Korea. The
system’s first components ar-
WORLD NEWS
use any pesticides.
“Given domestic market
shrinkage and the rapidly
growing market of middle-
class consumers elsewhere in
Asia, Japanese agriculture
needs to become more ex-
port-oriented,” said James
Brady, an agricultural policy
researcher at the Asia Pacific
Institute of Research, an in-
dependent think tank in
Osaka.
In Mr. Takagi’s case, his
company doesn’t actually
farm carrots, but rather, de-
velops seeds, in what is a
study of how Japan can lever-
age local technology into a
global presence.
For the past 15 years at the
French-owned company now
known as Mikado Kyowa Seed
Co., he has obsessively fo-
cused on the carrot, saying he
doesn’t mind if it takes time
to see results.
Carrots are a vegetable
vulnerable to diseases that
can wipe out a crop, and, for
all its familiarity, it also has
many regional varieties. That
ance from Washington. Euro-
pean and Asian companies,
meanwhile, have flocked there
since the nuclear deal, in some
cases leaving U.S. competitors
on the sidelines.
France’s two auto giants,
Peugeot maker Groupe PSA
and Renault SA, for example,
signed local production ven-
tures that are expected to turn
out their first cars this year.
European oil and gas giants
including and Royal Dutch
Shell PLC and France’s Total
SA have also entered prelimi-
nary agreements to develop
energy resources.
New Customers
Boeing and Airbus have found Iranian airlines eager buyers.
Iran Air Boeing
737 Max
777-300ER 15
777-9 15
Aseman Airlines*
737 Max
*preliminary Source: the companies
rived in South Korea in March.
China is said to fear that its
powerful radar will peer deep
into its territory and threaten
its security.
China’s Ministry of Foreign
Affairs didn’t respond to a re-
quest for comment on Tues-
day, a public holiday in China.
Beijing has at times denied
pressuring Seoul and other
times acknowledged it indi-
rectly. Its actions have in-
cluded blocking shipments of
gives breeders plenty of traits
to work with, but also the
challenge of fitting the carrot
to the market.
Early in Mr. Takagi’s ca-
reer, he apprenticed with a
Farm Gap
Japan's agricultural exports are
rising but still a small fraction
of imports.
Agricultural, fishery and forestry
exports imports
¥10 trillion
8 Building on the Inner Mongo-
6
4 dong and Fujian.
2 biggest carrot grower and an
0 wealthier consumers are a
2011 ’12 ’13 ’14 ’15
Note: ¥10 trillion = $91 billion
Source: Ministry of Agriculture,
Forestry and Fisheries
THE WALL STREET JOURNAL.
Boeing so far is the only U.S.
company to sign a major deal
with Iran since the nuclear ac-
cord, and Mr. Trump’s stri-
dently anti-Iran attitude has
cast a cloud over the business
environment generally.
“Pessimism in comparison
with the time before the U.S.
election has obviously in-
creased,” said Pedram Soltani,
the vice president of the Iran
Chamber of Commerce, in a re-
cent interview before the Boe-
ing. But he said deals signed
before Mr. Trump took office
were largely moving forward,
and that businesspeople felt
Airbus
50 A320
A330
A350 16
60
THE WALL STREET JOURNAL.
Korean products including
cosmetics and bidets, reject-
ing visas for Korean pop sing-
ers and artists, cutting Chi-
nese tourist flows to South
Korea and halting many of
the Chinese operations of
Lotte Group.
The U.S., which is pushing
strongly for Thaad deploy-
ment, has ramped up the rhet-
oric, too. When U.S. Secretary
of State Rex Tillerson visited
the region in March, he called
on China to stop retaliating
against Seoul and instead rein
in its North Korean ally.
Pyongyang’s nuclear and
missile programs are high on
the agenda during meetings
this week between U.S. Presi-
dent Donald Trump and Chi-
US DEPARTMENT OF DEFENSE, MISSILE DEFENSE AGENCY/REUTERS
nese President Xi Jinping.
South Korea has stopped
short of threatening a formal
WTO complaint against
China—a declaration of a full-
on trade war. South Korean Fi-
nance Minister Yoo Il-ho said
last week that there wasn’t
enough firm proof, but added,
“if solid evidence comes out,
we will act squarely.”
South Korea’s trade minis-
try has said it plans to reduce
the country’s reliance on
China by cultivating markets
like India and Southeast Asia.
And Seoul has raised informal
complaints about China’s be-
THE WALL STREET JOURNAL.
French breeder whom he de-
scribes as the original carrot
king, and he started experi-
menting with French-Japa-
nese hybrids.
In 2009, he visited two vil-
lages in the Chinese region of
Inner Mongolia to experiment
with some seeds he had origi-
nally developed for the Japa-
nese market. It blossomed
into a full-fledged business,
and when he visited last year,
he says farmers from the two
villages told him his carrots
had sold for higher prices de-
spite a depressed market.
lia experience, Mikado
Kyowa’s carrot seeds have ex-
panded to other parts of
China including Hebei, Shan-
China is by far the world’s
example of a market whose
’16 prime target for Japanese ag-
riculture. Already almost 40%
of the world’s $3.6 billion
vegetable seed market is in
Asia including Japan, accord-
protected by the multilateral
nature of the nuclear deal.
Should Mr. Trump signal
support for the Boeing deal—
or simply not criticize it—that
could encourage other Ameri-
can executives to push ahead in
other fields.
The U.S. joined the U.K.,
France, Germany, Russia and
China in reaching the deal with
Iran. Mr. Trump during his
presidential campaign had
promised to rip up the deal, a
foreign-policy priority of the
Obama administration.
Shortly after taking office,
Mr. Trump took a confronta-
tional posture toward the
longtime U.S. adversary, tweet-
ing in early February that Iran
was “on notice” for carrying
out ballistic missile tests. The
Trump administration fol-
46 lowed up by sanctioning 25
38 people and entities allegedly
connected to Iran’s missile
program. Iran responded last
month by sanctioning 15
American companies, mostly
arms manufacturers.
Mr. Trump also included
havior twice in the past
month at WTO panel meetings
in Geneva.
On March 17, South Korean
officials said China had
banned tour agencies from
selling package tours to South
Korea and orchestrated a
trade boycott of South Korean
businesses in China.
Then last week, the state-
run Korean Agency for Tech-
nology and Standards took is-
sue with Chinese nontariff
barriers, including on pow-
dered milk and cosmetics, that
it said limit South Korean
companies’ access.
CORRECTIONS 
AMPLIFICATIONS
Each of Royal Caribbean’s
Oasis-class ships has a volume
of more than 225,000 gross
registered tons, while Ponant’s
Le Lyrial has a volume of
10,700 gross registered tons.
An Off Duty article March 24
about small cruise ships incor-
rectly said the Oasis-class
ships weigh more than
227,000 tons and Le Lyrial
weighs 10,700 tons.
Readers can alert The Wall Street
Journal to any errors in news articles
by emailing wsjcontact@wsj.com.
MIHO INADA/THE WALL STREET JOURNAL (2)
ing to Japanese seed maker
Takii & Co.
As with many high-tech
goods such as televisions and
cars, the seeds are developed
in Japan and Europe, then
mass-produced abroad where
labor and other costs are
cheaper. Mikado Kyowa
Seed’s products are made in
places such as Chile, Argen-
tina and Australia.
Mikado Kyowa Chief Exec-
utive Vincent Supiot, who is
French, said the challenge is
persuading customers over-
seas to pay extra for Japa-
nese technology. “We have to
convince the farmers that our
carrots have better yield and
better disease resistance, that
they should pay more for
added value,” he said.
—Miho Inada
contributed to this article.
Notice to Readers
Andrew Browne’s China’s
World column will resume
next week.
Iran among a list of Muslim-
majority countries whose cit-
izens were barred from en-
tering the U.S. under two
executive orders that the ad-
ministration said aimed to
keep terrorists out. Those or-
ders have been stayed by
federal judges after legal
challenges.
Iranian carriers operate
among the world’s oldest
fleets after years of sanctions,
some imposed in the wake of
its revolution in 1979.
Aseman Airlines late last
year was placed on the Euro-
pean Union’s so called aviation
safety blacklist because of “de-
ficiencies.” The ban blocks the
carrier from serving EU cities.
The carrier didn’t offer such
routes.
The EU aviation safety list
imposes limits on airlines that
don’t meet standards, either
because of their own deficien-
cies or a lack of government
oversight at home. It also is in-
tended to warn citizens when
flying overseas which airlines
may not be considered safe.
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THE WALL STREET JOURNAL.
Syrians Say Dozens Killed in Gas Attack
Bombs hit town, killing
at least 58, doctors
rescue workers and
residents said
BY RAJA ABDULRAHIM
AND NOAM RAYDAN
BEIRUT—A suspected chemi-
cal attack killed at least 58 peo-
ple in an opposition-held town
in northwestern Syria on Tues-
day, according to local doctors
and rescue workers who said
they believed it was carried out
by the Syrian regime.
Bombs dropped by warplanes
hit the town of Khan Sheikhoun
with an unknown chemical gas
that caused people to faint,
foam at the mouth and suffo-
cate, according to doctors, res-
cue workers and residents.
Among the dead were at least 11
children and some entire fami-
lies, they said.
Neither the death toll nor the
allegation that chemicals were
used in the attack could be inde-
pendently confirmed. The Syr-
ian army denied using “any
chemical or toxic substances” in
the town, according to Syrian
state media, and held what it
called “terrorist groups and
those behind them” responsible.
The defense ministry in Russia,
a major regime ally, called the
reports of the use of chemical
weapons “absolutely fake.”
White House press secretary
Sean Spicer condemned the at-
tack, saying it “cannot be ig-
nored by the civilized world.”
Why Trump
Spared Baghdad
From Travel Ban
President Donald Trump’s
national-security team had
many reasons to be wary of his
travel ban aimed at seven ma-
jority-Muslim nations, even
though it followed through on a
signature campaign pledge.
By Tamer El-Ghobashy,
Peter Nicholas,
Felicia Schwartz
and Ben Kesling
They had been left out of the
deliberations; there were con-
cerns the executive order
couldn’t pass muster legally;
and they disagreed with some
of its provisions—above all the
inclusion of Iraq, a key ally in
the fight against Islamic State,
among countries whose citizens
were temporarily denied entry
in a bid to prevent terrorists
from coming to the U.S.
When federal-court rulings
put the executive order on hold
in February, the national-secu-
rity team saw an opportunity to
test their clout, and Iraq’s lead-
ers to make their case.
In meetings in Baghdad,
Washington and Munich, offi-
cials including Defense Secre-
tary Jim Mattis, Secretary of
State Rex Tillerson and Home-
land Security Secretary John
Kelly talked through the travel
ban and laid down arguments
U.S. Resets Ties With Egypt’s Leader White House to Review
BY FELICIA SCHWARTZ
WASHINGTON—President
Donald Trump provided a
boost to Egyptian President
Abdel Fattah Al Sisi, giving him
a warm welcome to the White
House as his administration
shifts the U.S. focus in its rela-
tionship with Cairo away from
human rights while emphasiz-
ing security cooperation.
Neither Mr. Trump nor White
House press secretary Sean
Spicer made any public mention
of Egypt’s spotty human-rights
record. “I’m not going to get into
what they discussed privately,”
Mr. Spicer said Monday. “But I
will tell you we understand the
concern and I think those are
the kinds of things that I think
progress is made privately.”
Mr. Trump praised Mr. Sisi
throughout the day, saying that
he has “done a fantastic job in
a very difficult situation” as
they sat side by side in the
Oval Office. “We agree on so
many things,” Mr. Trump said.
Mr. Sisi said Egypt will al-
ways be a “strong partner” in
Wednesday, April 5, 2017 | A3
WORLD NEWS
AMMAR ABDULLAH/REUTERS
The body of a child is carried from the site of a suspected chemical attack on Tuesday. Among the dead were at least 11 children, witnesses said.
He added, “These heinous ac- sponsible for the attack. “What gas attack by the regime on the vincial council. Since then the government
tions by the [Syrian President] we have understood, it was a Damascus suburb of Eastern Gh- A nurse who worked in one has repeatedly been accused of
Bashar al-Assad regime are a chemical attack and it came outa, which killed 1,429 people, hospital which received 20 deploying chemical weapons,
consequence of the past admin- from the air,” he said. including at least 426 children, wounded children said the vic- with a U.N.-led investigation
istration’s weakness and irreso- Mr. de Mistura urged the in- according to a U.S. government tims exhibited contracted pu- blaming it for at least three
lution.” ternational chemical weapons assessment. pils, cold limbs, loss of con- chlorine attacks in 2014 and
Tuesday’s attack comes days agency to investigate the attack, Rescue workers and resi- sciousness and low blood 2015. “The reports we are re-
after senior Trump administra- which he said would likely be dents who arrived in the neigh- pressure and heart rates. ceiving strongly suggest the use
tion officials formally declared raised at the Security Council. borhood of Tuesday’s attack Residents described the of chemical weapons,” Britain’s
that Mr. Assad’s fate is up to the “All pieces of evidence indi- soon afterward described eerily neighborhood as home to civil- Foreign Secretary Boris Johnson
Syrian people and that the U.S. cate that the raid was carried empty streets, with none of the ians—some of them displaced said Tuesday. “And although we
focus in Syria is primarily on out by the regime,” said Raed chaos normally following an air- from other parts of Syria be- cannot yet be certain about
fighting Islamic State. Former Saleh, director of the White Hel- strike. Instead, the victims were cause of the war—with no rebel what has happened, this bears
President Barack Obama for sev- mets, a civil-defense organiza- mostly still in their beds—al- outposts in the area. all the hallmarks of an attack by
eral years had called for Mr. tion that operates in parts of ready dead or passed out behind Following the 2013 sarin gas the regime which has repeatedly
Assad’s immediate ouster. rebel-controlled Syria. locked doors, residents said. attack, the Assad regime joined used chemical weapons.”
The U.N.’s special envoy on If the use of chemicals in Rescuers had to break down the Chemical Weapons Conven- —Rebecca Ballhaus,
Syria, Staffan de Mistura said Tuesday’s attack is confirmed, it doors and windows to pull them tion and relinquished its chemi- Laurence Norman and
there was no “official or reliable would be the deadliest such as- out, said Abdulwahab Safar, a cal arsenal as part of a deal to Nathan Hodge contributed to
information” yet on who was re- sault in Syria since a 2013 sarin member of the opposition pro- avert U.S. military action. this article.
for a significantly revised one
that could address Mr. Trump’s
terrorism concerns but align
better with national security
strategy and stand up in court.
Throughout the process,
they kept private their discus-
sions, both with Iraqi leaders
CHRIS HONDROS/GETTY IMAGES
and with the mercurial new
president, so as not to ratchet
up public pressure on Mr.
Trump while they prodded
him toward action.
Ultimately, Mr. Trump ac-
cepted changes to his travel
order, including leaving Iraq
out of it. For the first time in An Iraqi translator who worked with U.S troops greeted local Iraqi police and army district heads in east Baghdad in 2008.
his short period in office, Mr.
Trump moved from his pre- his presidency. It barred Syr- began, Mr. Mattis learned that military officers were baffled minutes. Mr. Abadi brought up
ferred option to something ian refugees indefinitely and a second order would be by the inclusion of Iraq, and the order at the end of the con-
less sweeping. suspended all immigration for signed, one that suspended said “it would increase resent- versation, according to a person
He immediately complained 90 days from “terror prone” travel to the U.S. by Iraqi inter- ment of the U.S. throughout familiar with the call, telling Mr.
to his staff that a replacement Iran, Iraq, Yemen, Somalia, Su- preters, people whose safety is the Muslim world.” Trump the restrictions would
order was “watered down.” dan, Libya, and Syria. The of paramount importance to Mr. Silliman declined to undermine the shared goal of a
One of many unknowns of seven had been singled out for the U.S. military in Iraq. comment on specifics of the secure and prosperous Iraq.
the Trump administration is special treatment by Congress The former general hadn’t discussions, saying only that he Mr. Mattis, visiting Iraq two
how a president with no gov- and the Obama administration, been consulted. He stood by as was in frequent contact with days later, assured Mr. Abadi
erning experience, in particular imposing stricter rules on cer- the president signed the order. Iraqi officials and Washington. the issue would be rectified,
no military or foreign-affairs tain foreigners looking to U.S. Ambassador to Iraq A week after the signing, the said a person familiar with
experience, would interact with come to the U.S. Douglas Silliman spent hours on federal district judge in Wash- their discussions.
advisers steeped in such mat- Mr. Mattis, whose Marine the phone with Iraqi Prime Min- ington state’s suit blocked im- “The good thing is that it be-
ters. The story of the travel ban Corps career included oversee- ister Haider al-Abadi the next plementation of the order na- came clear that the key Ameri-
shows a president who proved ing the wars in Iraq and Af- day, while also struggling to tionwide. About a week later, a can establishment, including
willing to defer to a parade of ghanistan as head of the U.S. learn the full scope of the ban. federal appeals-court panel in defense, foreign and national
advisers pushing a different Central Command, went to the “The impact of the Execu- San Francisco declined to over- security sides, were for the de-
line, yet one who remained con- Pentagon that day expecting to tive Order will be felt dispro- rule him and reinstate the ban. cision to remove Iraq,” said Ab-
fident in his own instincts. see Mr. Trump sign an order portionately here,” Mr. Silliman The day of the appellate rul- dulbari al-Zebari, head of the
Mr. Trump signed the exec- on military readiness. Fifteen cabled the State Department. ing, Messrs. Trump and Abadi foreign-relations committee in
utive order just one week into minutes before the ceremony He said Iraqi legislators and spoke by phone for about 15 Iraq’s parliament.
confronting terrorism.
“We will do that together,
Core U.N. Functions
we will fight terrorism and BY FARNAZ FASSIHI U.N. with fresh eyes.”
other things,” Mr. Trump said. When pressed on a critical
“I look forward to a very long UNITED NATIONS—United challenge facing the U. N.—the
and strong relationship.” States Ambassador Nikki Haley conflict in Syria—Ms. Haley said
AGENCE FRANCE-PRESSE/GETTY IMAGE
The visit marked a step for- said that the U.S. would closely the U.S. priority in the country
ward for Mr. Sisi, analysts said. scrutinize two prominent U.N. was to fight Islamic State.
“He has longed for a big hug functions—peacekeeping and The White House has said it
from Washington as a sign of human rights—as the U.S. as- is considering defunding cer-
his broadening international sumes the Security Council’s ro- tain U.N. programs and has
legitimacy and he got that to- tating presidency this month. suggested it could pull out of
day,” said Eric Trager, an Egypt In her first news conference the organization’s Geneva-
expert at the Washington Insti- at the U.N., Ms. Haley on Mon- based Human Rights Council
tute. “The key question moving day appeared softer in tone and and dial back support for the
forward is whether Trump can more praising of the U.N. and its 2015 Paris agreement to limit
translate this big hug for Sisi Abdel Fattah Al Sisi with President Trump in the Oval Office Monday. core mission in her one-hour- climate change.
into better and deeper cooper- long press encounter than when Late Monday, the U.S. State
ation with Egypt.” have a few things we don’t agree process, as the Trump admin- she arrived in January pledging Department said it was cutting
In a meeting in the Cabinet on,” Mr. Trump said. istration is seeking to bring to overhaul the world body. funding to the United Nations
Room, where Mr. Trump was Egypt is one of the largest the Israelis and Palestinians She said Monday’s attack at a Population Fund, which sup-
joined by Secretary of State Rex recipients of U.S. military and back to the negotiating table. subway station in St. Petersburg ports maternal and reproduc-
Tillerson, Defense Secretary Jim foreign aid, getting about $1.5 Mr. Sisi’s trip is the first underscored the importance and tive health programs, stripping
Mattis, White House strategist billion a year. The Trump ad- state visit of an Egyptian leader role of the U.N. and the Security it of contributions amounting
Steve Bannon and other officials, ministration’s budget blueprint to Washington since 2009. He Council, and she dismissed the to $69 million in 2016.
Mr. Trump nodded to U.S. con- doesn’t guarantee aid to Egypt, won an election in 2014, sev- perception among many diplo- The UNFPA said the move
cerns with Egypt’s human-rights and State Department officials eral months after the military, mats and U.N. officials that the was based on what it called
abuses. Experts and former offi- have said aid to every country then under his command, led a Trump administration was a “erroneous claims” by the
cials say rights conditions have except Israel is under review. coup to oust Egypt’s first freely threat to the institution. “I want Trump administration that UN-
deteriorated significantly over Also on Mr. Trump’s agenda elected leader, President Mo- to show that there is value to FPA supports or participates in
the past several years. “We have for the meeting was a discus- hammed Morsi of the Muslim this place,” Ms. Haley said. “The coercive abortion programs
many things in common; we sion of the Middle East peace Brotherhood. administration is looking at the and sterilization in China.
 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
A4 | Wednesday, April 5, 2017 HK JP KO ML SI IN UK FR MN PR THE WALL STREET JOURNAL.

WORLD NEWS

Russia Sees Possible Suicide Blast Hungary

Death toll rises to 14 in
St. Petersburg subway
Targets
blast thought to have
been caused by a bomb
A Soros
BY NATHAN HODGE Institute
ST. PETERSBURG, Russia—
Russian authorities identified BY DREW HINSHAW
a 22-year-old man from the
Central Asian republic of Kyr- BUDAPEST—Hungary’s par-
gyzstan as the suicide bomber liament approved legislation
who caused a deadly subway- that provides the grounds for
train blast in Russia’s second- the government to shut down
largest city on Monday. a university founded by bil-
The death toll rose to 14. lionaire George Soros, whose
In a statement Tuesday, liberal philanthropy has in-
Russia’s Investigative Com- creasingly made him a target
mittee identified the attacker of nationalist governments in
as Akbarjon Jalilov. Europe.
The explosion occurred In an emergency measure,
Monday on a train between parliament voted on Tuesday
Sennaya Ploshchad, a busy that any university operating
downtown subway intersec- solely in Hungary but regis-
tion, and Technological Insti- tered outside the European
tute station. Union must secure an interna-
GRIGORY DUKOR/REUTERS

According to the state- tional agreement from both

ment, forensic experts found
genetic traces of Mr. Jalilov
on a bag containing an explo-
sive device that was found
and disarmed at Ploshchad
Vosstaniya, another subway
station not far from the site
of Monday’s explosion. Inves-
tigators also drew their con-
clusions based on surveil-
lance-camera footage, the
statement said.
Earlier Tuesday, the Inves-
tigative Committee said that
an explosive device could
have been detonated by a
man whose fragmented re-
mains were found in the third
carriage of the subway train.
Rakhat Sulaimanov, the of-
ficial representative of the
Kyrgyz security agency, said
the person responsible was
likely a native of Kyrgyzstan
who then became a Russian
citizen. Mr. Sulaimonov said
nations’ governments to con-
tinue.
Only one institution would
be affected, the government
says: Budapest’s Central Euro-
A man grieves next to a memorial for the victims of the blast at the Technological Institute station in St. Petersburg. pean University, which was
founded in 1991 by the Ameri-
Kyrgyz security services were ted at the time the head of made their way into the ranks from Russia and the former can-Hungarian currency trader.
in contact with Russian au- state was in the city makes of Islamic State in the Middle U.S.S.R. were fighting along- The move underscores how
thorities over the matter, but one think, and raises ques- East. side Islamic State. the 86-year-old Mr. Soros finds
declined to provide further tions,” said Kremlin spokes- The militant group has at- Russian airplanes, subway himself under scrutiny by Cen-
details. man Dmitry Peskov. tracted a large number of re- trains and transport hubs tral and Eastern European gov-
No group has claimed re- Russian Foreign Minister cruits from impoverished for- have in the past two decades ernments that want him to
sponsibility for the blast. Sergei Lavrov rejected sug- mer Soviet republics of been a frequent target for stop financing charities that
Russian Health Minister gestions that the blast may Central Asia. Many people terrorist attacks that officials advocate for refugees. That in-
Veronika Skvortsova said have been carried out in re- from the region work in Rus- have blamed on Islamist mili- cludes Hungary, which the
Tuesday morning that 14 peo- venge for Russia’s military ac- sia as migrant labor, and tants and separatists. Jewish Mr. Soros fled at 16 af-
ple had been killed and 49 re- tion in Syria, calling them counterterrorism experts say The blast around 2:30 p.m. ter surviving the Holocaust.
mained in hospital. “cynical and foul,” according the workers—who often work Monday stunned Russia’s sec- The nationalist Prime Min-
It occurred during a visit to Interfax news agency. in poor conditions and face ond-largest city. St. Peters- ister Viktor Orban, who has
to the city by Russian Presi- While details of the appar- alleged police harassment— burg, with around five million fenced off the southern border
dent Vladimir Putin, raising ent attack are still emerging, are particularly vulnerable to inhabitants, is known as the to stop the flow of refugees
official concerns that the at- Russian officials have long radicalization. country’s cultural capital and from Syria and elsewhere, has
tack was timed to his stay. said they believe that several Mr. Putin estimated in Oc- most European city for its el- campaigned against Mr. Soros.
“Undoubtedly, the fact that thousand citizens from the tober 2015 that between egant facades and relaxed at- “In the coming year, Soros and
this terrorist act was commit- former Soviet Union have 5,000 and 7,000 individuals mosphere. his forces will be squeezed
out,” he vowed in a recent ra-
dio speech.

A School Reels From Landslide in Colombia

BY KEJAL VYAS
MOCOA, Colombia—Wilmar
Benavides, 37, was one of hun-
dreds of shattered residents
milling about outside Mocoa’s
cemetery on Monday.
Mr. Benavides had come to
claim the bodies of his wife
and 11-year-old daughter Ali-
son, who were swept away
Saturday when this city’s
three rivers swelled, trigger-
In the next week, Mr. Orban
will ask parliament—where his
party has a commanding ma-
jority—to vote on legislation
specify what kind of aid the requiring aid agencies to regis-
U.S. would provide. ter with the government if
Teachers and administra- they receive significant foreign
tors at the Educational Insti- funding. Virtually all of the
tute of Mocoa City have been agencies that would be af-
putting together a registry to fected are at least partially
confirm the whereabouts of funded by Mr. Soros, a govern-
the students. About 80% of the ment spokesman said.
school’s 1,200 students—from
prekindergarten to high
school—have been affected by
the disaster, having been
Mr. Soros is being
killed or having lost a loved pressed to stop funding
LUIS ROBAYO/AGENCE FRANCE-PRESSE/GETTY IMAGES

ing an avalanche of rocks and one or their home, said vice

trees that killed at least 273
people.
What has been particularly
searing here is the loss of so
many children, snatched from
their beds in the middle of the
night. At least 60 of them, like
Alison, were students of the
same school, the Educational
Institute of Mocoa City, ac-
cording to its administrators.
“Everything has been de-
stroyed in my life and my
heart, split in two,” Mr. Bena-
vides said.
Like others at the cemetery,
he wore a surgical mask, a
precaution among so many de-
composing bodies in the
muggy heat. “Even my clothes
are borrowed. Everything is
rubble,” he said.
Rescue crews on Monday
continued to find and retrieve
bodies that were taken far
downstream. President Juan
Manuel Santos, in giving the
latest death toll, described the
shock of so many dead as tor-
ture.
Mr. Santos, who called for
food, medicine, and clothing
donations to the Red Cross,
said he received a call from
U.S. President Donald Trump
offering his sympathies and
support. Mr. Santos didn’t
principal Erwin Ordoñez.
charities that advocate
Survivors have found shel- for refugees.
ter in brick buildings uphill
from the school, where volun-
teers are providing the dis-
placed with food, water and “Mr. Soros has started to
toilet paper. But many are still get himself into something
missing. more than education, and that
“It could be a lot more,” Mr. is going for a political agenda,”
Ordoñez said. “No one could said government spokesman
have imagined a tragedy of Zoltan Kovacs, himself a grad-
such magnitude.” uate of the school. “He’s an in-
The disaster has been a ternationalist.”
cruel turn of events in this A girl waits for medical attention at a shelter in Mocoa in southern Colombia. The death toll from Leaders in Slovakia, Poland,
corner of Colombia, where the the landslides rose to at least 273, with at least 60 of those killed children from the same school. and Macedonia have proposed
prospect of peace after de- similar regulations, aimed they
cades of armed conflict had Sangoyaco River’s rocky, ders, knocked out the house’s school would never be the say specifically at Mr. Soros.
given many people here hope. muddy banks seven months supports. same. “So many people are Those measures are compara-
This state, Putumayo, was ago. It was the last time Mr. Be- talking about moving away,” ble with ones passed in Russia,
one of the most battered dur- Mr. Benavides liked that it navides saw his wife or daugh- she said. “They have nothing where state media frequently
ing a long guerrilla conflict, was close to the school for his ter. left, so why stay here?” blame Mr. Soros for provoking
with armed groups fighting daughter and his 17-year-old “She always had a smile on The school, which is on Europe’s migrant crisis.
for control of drug crops and son, who also survived the her face,” Mr. Benavides said higher ground uphill from one The university, which
poor farmers caught in the flood. And his salary as an ac- of his little girl, recalling how of the city’s rivers, Taruca, houses about 1,500 students
middle. countant was enough to cover she liked to dress like a prin- was spared from the disaster. from 120 countries, may relo-
Many of those displaced the $100 monthly rent. cess. Families and staff gathered cate, and has been invited to
from the countryside had “We thought we had finally Former students who now there Monday for shelter and Lithuania, staff said. “This is
come to Mocoa, the state capi- made it,” Mr. Benavides said, live in the larger city of to seek comfort as they clearly an attack on academic
tal, and their children had breaking down in tears. “We Popayan to the west were de- grieved. Marta Castañeda, who freedom,” said its provost,
found new possibilities at the thought the school would be livering donated food and runs a concession stand on Liviu Matei. “What kind of
school, Mr. Ordoñez said. good for the kids.” medical supplies to the school, school grounds, was living in a government is it that is ready
“This was a chance for Then, on Saturday they Mr. Ordoñez said, though break-room for teachers after to push its own citizens into
them to rebuild, reconstruct were awakened by a thud—the much more is still needed as her house was destroyed. exile by the hundreds, by the
their lives,” he said. wall of water that slammed the city tries to dig out and “I can’t imagine what it will thousands?”
Mr. Benavides’s family was into their home. They ran to take stock. be like coming back to school Mr. Soros wasn’t available
one of those. They moved to a the second floor. A second Ninth-grader Maria Paula without all of those children,” to comment. Mr. Soros’s Open
house built on stilts along the wave, this time carrying boul- Buenaventura feared her she said. Society Foundation said Hun-
gary would strengthen its cul-

WORLD WATCH
ture by being more open to
foreign investment and ideas.
Several thousand students
and protesters marched
SOUTH AFRICA that the president is the right That pickup suggests 2017 around the university hours af-
person to unite and lead the will be a watershed year for cen- ter parliament approved the
Trade Unions Urge movement,” the federation’s gen- tral bankers, many of whom law, carrying placards that
President to Resign eral secretary, Bheki Ntshalint- added to stimulus measures last said “Don’t Sign It.” Mr Orban,
shali, said on Tuesday. “The time year to fend off the threat of de- who faces election next year, is
The powerful federation of has arrived for him to step flation. But while the Federal Re- almost certain to sign.
JONNES EISELE/AGENCE FRANCE-PRESSE/GETTY IMAGES

trade unions called on President
Jacob Zuma to step down, be-
coming the latest ally of the rul-
ing African National Congress to
abandon the embattled president.
The Congress of South African
Trade Unions, or Cosatu, is part
of the alliance that has kept the
ANC in power for the past 23
years. The South African Commu-
nist Party, the other member of
that alliance, on Friday called on
Mr. Zuma to quit, the same day
the president dismissed the
ANNUAL RITE: People paid respect to their ancestors at Tomb country’s popular finance minister.
Sweeping Day at a public cemetery in Shanghai on Tuesday. “Cosatu no longer believes
down and allow the country to
be led by a new collective.”
—Gabriele Steinhauser
OECD
Inflation Keeps Rising
In Developed Nations
The annual rate of inflation
across developed economies rose
for the sixth straight month in
February, to reach its highest level
in just short of five years, the Or-
ganization for Economic Coopera-
tion and Development said.
serve has raised short-term in-
terest rates twice in the past
four months, its counterparts
elsewhere are likely to remain
cautious about reducing support
for still-modest economic growth.
One reason for their caution is
that the pickup in inflation has
largely been driven by energy and
food prices, which can reverse
quickly. The OECD said energy
prices rose 11.1% in the 12 months
through February, up from 8.5% in
the 12 months through January.
Food-price inflation also picked up.
—Paul Hannon
Hungary’s clash pits its
well-traveled wealthiest citizen
against a prime minister who
has remade this country into
Europe’s leading example of a
new-century nationalism.
Both fought Communism to-
gether: The Open Society
Foundation once helped fi-
nance Mr. Orban’s Fidesz party
and awarded the future prime
minister a six-month scholar-
ship at Oxford University. Mr.
Orban printed his early politi-
cal pamphlets on printers do-
nated by Mr. Soros.
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.
Debate Over
Judge Set to
Advance in
The Senate
Expected procedural
tool by the majority
leader sets stage for
rule change, full vote
BY BYRON TAU
WASHINGTON—An acrimo-
nious Senate floor battle over
the confirmation of Supreme
Court nominee Neil Gorsuch
was to get under way Tuesday
with Majority Leader Mitch
McConnell’s expected use of a
procedural tool to limit debate
on the nomination and set the
stage for a final vote by Fri-
day.
That, in turn, was to set off
a series of moves and counter-
moves by the two parties that
is likely to end with Judge
The likely rules
change is causing
consternation in both
political parties.
Gorsuch’s confirmation Friday.
But the skirmishing could also
leave behind a residue of ill
will that senators of both par-
ties say could be hard to move
past in the traditionally colle-
gial Senate.
Monday’s vote by the Sen-
ate Judiciary Committee to
advance the nomination paved
the way for the standoff on
the floor. The panel voted to
approve Judge Gorsuch, Presi-
dent Donald Trump’s pick for
a lifetime appointment to the
high court, on a straight
party-line vote.
A motion on Mr. McCon-
nell’s expected “cloture peti-
tion” would be voted on later
this week, most likely on
Thursday.
Forty-one senators have
said they will vote “no” on the
procedural motion. That
leaves Republicans with 59
VETTING
Continued from Page One
Administration officials said
fighting terrorism is an urgent
task that justifies tough rules.
The review under way aims to
replace what officials in Mr.
Trump’s administration view as
a predisposition toward letting
people into the country toward
a more skeptical outlook.
The review was called for in
an executive order that the GOP
president signed last month
banning travel from six-major-
ity Muslim countries, which Mr.
Trump said was needed to
guard against terrorism. The or-
der also directed security offi-
cials to implement a vetting
program that allows for a “rig-
orous evaluation” of whether
applicants support terrorism or
present a risk of causing harm.
While much of the order
was put on hold by a federal
judge in Hawaii, the work to
enhance vetting procedures
was allowed to proceed.
Homeland Security officials
say the agency is planning to
significantly increase demands
for information from all visa
applicants, including visitors,
refugees and others seeking to
immigrate.
The changes might even ap-
ply to visitors from the 38
countries that participate in the
Visa Waiver Program, which re-
quires adherence to strict U.S.
standards in data sharing, pass-
port control and other factors,
one senior official said. That in-
cludes some of the U.S.’s closest
allies, such as the United King-
dom, Japan and Australia.
The biggest change to U.S.
policy would be asking appli-
cants to hand over their tele-
phones so officials could ex-
amine their stored contacts
and perhaps other informa-
tion. Visitors have had their
phones examined at ports of
entry, but a phone review isn’t
routinely requested during the
votes at most, and they would
need 60 votes to end debate
on the nomination.
So GOP leaders are threat-
ening to trigger a rules change
that would eliminate the 60-
vote threshold entirely and
change how the Senate consid-
ers Supreme Court nominees.
Republicans would do that
by employing a maneuver of-
ten called the “nuclear option”
that would alter the Senate
rules with a simple majority.
Democrats made a similar
change in 2013 on cabinet
nominees and lower-court
judges, frustrated that more of
then-President Barack Obama’s
nominations weren’t being ap-
proved.
The likely rules change is
causing consternation in both
parties about the health of the
Senate as an institution, but
few members can see a way
out of the partisan showdown.
Democrats are especially
angry that GOP leaders de-
clined to consider Mr. Obama’s
pick for the Supreme Court va-
cancy, Judge Merrick Garland,
who was nominated in March
2016. Republicans said voters
should get to weigh in through
the presidential election.
Republicans also say Demo-
crats started the Senate down
this path with their 2013 rules
change.
“We will regret sometime
what we’re doing,” said Sen.
John McCain (R., Ariz.), who
has been in the Senate for 30
years and is considered one of
the body’s most ardent insti-
tutionalists.
Mr. McCain said he was
prepared to support the pend-
ing rules change to get Judge
Gorsuch confirmed. But asked
if it was the beginning of the
end of the Senate as it has
long existed, Mr. McCain said:
“Yes.”
He said he expected the fili-
buster on legislation to even-
tually be abolished and for the
Senate to operate under the
same tightly controlled rules
that govern the much larger
application stage.
The goal is to “figure out
who you are communicating
with,” the senior DHS official
said. “What you can get on the
average person’s phone can be
invaluable.”
A second change would ask
applicants for their social-me-
dia handles and passwords so
that officials could see infor-
mation posted privately in ad-
dition to public posts. Home-
land Security has already
experimented with asking for
people’s handles so they can
read public posts, but not
those restricted to friends.
“We want to say for in-
stance, ‘What sites do you
visit? And give us your pass-
words,’ so that we can see what
they do on the internet,” Home-
land Security Secretary John
Kelly said at a congressional
hearing in February. “If they
don’t want to give us that infor-
mation then they don’t come.”
In response to Mr. Kelly’s
hearing, a coalition of about
50 civil-liberty groups and
other organizations issued a
statement that month saying
requiring passwords is “a di-
rect assault on fundamental
rights,” including freedom of
expression. They also com-
plained that the policy could
be mirrored by foreign gov-
ernments demanding pass-
words from U.S. citizens.
Former department officials
who worked on these issues
during former President Barack
Obama’s administration said
that the information gleaned
from telephones and social me-
dia could be helpful in assess-
ing threats posed by applicants,
but they said there are down-
sides, too. The effort—particu-
larly the social-media hunt—
would be time-consuming, they
said, and it could drive people
with bad intentions to change
their practices.
“The real bad guys will get
rid of their phones. They’ll
show up with a clean phone,”
Wednesday, April 5, 2017 | A5
U.S. NEWS
Where Democratic Senators Stand
In their quest to gain the 60 necessary votes to confirm Supreme White House Curb
On Visas to Affect
Court nominee Neil Gorsuch and avoid a filibuster, Senate
Republicans have so far gained three Democratic ‘yes’ votes, all from
heavily Republican states with Senate races in 2018.
Trump vote share in November
Senator vote share in most recent election
Gorsuch position: Yes No Reviewing
Outsourcing Firms
Three senators up for election next year in states Trump won
handily are voting yes:
Senator
Joe Manchin
Heidi Heitkamp
State
W.V.
N.D.
0 10 20 30 40 50 60 70 80% BY LAURA MECKLER
WASHINGTON—The federal
House, for instance, would
punish companies seeking
H-1B visas by imposing bur-
Joe Donnelly Ind.
government began accepting densome requirements if they
visa applications for a fresh don’t pay workers at least
Most others up for election in 2018 are voting no: round of high-skilled foreign $100,000 a year. The current
workers, without the whole- threshold to avoid those re-
Claire McCaskill Mo.
sale changes President Donald quirements is $60,000.
Jon Tester Mont.
Sherrod Brown Ohio
Trump promised in his cam- With no major changes to
paign. His administration did, the program announced, the
Bill Nelson Fla. though, announce one shift administration instead said
Robert Casey Pa.
Debbie Stabenow Mich.
that could put pressure on that it would work to better de-
outsourcing companies that tect fraud and abuse in the pro-
Tammy Baldwin Wis. typically win a large share of gram by changing how it tar-
Amy Klobuchar Minn. the coveted visas. gets companies for inspection.
Tim Kaine Va. The U.S. Citizenship and Under the new rules, com-
Angus King Maine Immigration Service said it panies will be prioritized
Thomas R. Carper Del. would direct more inspectors when they have a high ratio of
Robert Menendez N.J. in the H-1B program to the H-1B workers employed and
Christopher Murphy Conn. controversial outsourcing when the employees work off
Martin Heinrich N.M. companies, many of them site at another company’s lo-
Sheldon Whitehouse R.I. based in India. Those firms cation. Both of those criteria
Maria Cantwell Wash. have drawn scrutiny because would lead to targeting of out-
Kirsten E. Gillibrand N.Y. their U.S. subsidiaries some- sourcing companies. The
Benjamin L. Cardin Md. times import employees to do agency said it also would pri-
Elizabeth Warren Mass. work once performed by oritize companies where busi-
Dianne Feinstein Calif. Americans. ness information can’t be vali-
Bernard Sanders Vt. The companies say they are dated through commercially
Mazie K. Hirono Hawaii
adhering to the program’s rules available data.
and hire foreigners only be- The immigration agency
Senators with elections in 2020 and 2022 are also mostly voting no: cause they can’t find Americans also said it was establishing a
for the jobs, but they are under new email address for people
Gary C. Peters Mich.
substantial political scrutiny. to report allegations of fraud
Margaret Hassan N.H.
Demand for the program or abuse. It said it would con-
Jeanne Shaheen N.H.
Catherine Masto Nev.
badly outstrips the supply, so
the government plans a lottery
tinue random inspections, too,
which has been past practice.
Al Franken Minn. to decide which companies get The Justice Department on
Mark R. Warner Va.
Michael F. Bennet Colo.
them, as it has in past years.
Last year, the government
Monday issued a statement
cautioning employers partici-
Christopher A. Coons Del. received more than 236,000 pating in the program against
Cory A. Booker N.J. applications for the 85,000 vi- discriminating against Ameri-
Richard Blumenthal Conn. sas, of which 20,000 are re- can workers. “U.S. workers
Tom Udall N.M. served for people with ad- should not be placed in a dis-
Jeff Merkley Ore. vanced degrees. That exceeded favored status, and the depart-
Ron Wyden Ore. the previous year’s record and ment is wholeheartedly com-
Jack Reed R.I. was the fourth year in a row mitted to investigating and
Richard J. Durbin Ill. in which the cap was vigorously prosecuting these
Tammy Duckworth Ill. reached within five days. claims,” acting Assistant At-
Patty Murray Wash. During his presidential cam- torney General Tom Wheeler
Charles E. Schumer N.Y. paign, Mr. Trump promised to of the Civil Rights Division
Chris Van Hollen Md. reduce legal as well as illegal said.
Edward J. Markey Mass. immigration, saying foreign At the White House, press
Kamala D. Harris Calif. workers drive down wages and secretary Sean Spicer cast the
Patrick J. Leahy Vt.
threaten American jobs. At announcement as a change in
times, he was particularly criti- policy. But he also nodded to
Brian Schatz Hawaii
cal of the H-1B program, though the fact that the administration
Republicans still need five Democrats to vote yes to avoid a filibuster at other times he praised it. hasn’t announced any signifi-
“These are temporary for- cant administrative changes or
eign workers, imported from legislative proposals that
abroad, for the explicit pur- would change the visa alloca-
Democrats Republicans pose of substituting for Amer- tion system.
ican workers at lower pay,” he “The White House acknowl-
Source: House of Representatives Office of the Clerk THE WALL STREET JOURNAL.
said in a statement in March edges that there are issues
2016. “I remain totally com- with the program as it cur-
U.S. House of Representatives. pected confirmation on Friday, mitted to eliminating rampant, rently stands,” he said. “How-
Thursday is likely to be a requiring only a simple major- widespread H-1B abuse.” ever, there are several laws
day of lively debate and politi- ity, could be in a sense anticli- There is also pressure in that are on the books that
cal maneuvering debate on the mactic after Thursday’s de- Congress for changes. One bi- went unenforced in the previ-
Senate floor. Mr. Gorsuch’s ex- bate. partisan bill pending in the ous administration.”
said Leon Rodriguez, who
headed the U.S. Citizenship and
Immigration Services until Jan-
ing to documents posted by
Reuters. The department hasn’t
disputed their contents. He also
working to implement an idea
first raised by Mr. Trump as a
presidential candidate last Au-
filter out people with contrary
thoughts but people who
might act on them. That no-
uary and was deeply involved directs offices to limit the num- gust for an “ideological test” tion draws criticism from civil
in refugee screening. “Over ber of interviews scheduled for people coming to the U.S. libertarians.
time, the utility of the exercise each day to ensure each appli- Such tests have been used be- “It could deprive American
will diminish.” cation is properly scrutinized. fore—for instance, to screen citizens with the ability to in-
Still, one Obama official said, Mr. Tillerson instructed offi- out anarchists, or members of teract and gain knowledge
telephone contacts could be cials to ask visa applicants addi- the Communist Party. from the full spectrum of indi-
particularly helpful in identify- tional questions, such as listing The Homeland Security of- viduals and people who hold
ing terrorist ties, as their phone all email addresses and social- ficial working on the review diverse beliefs world-wide,”
numbers could be run against media handles used in the past said the types of questions un- said Hugh Handeyside, a staff
various U.S. databases. five years, as well as the appli- der consideration now include attorney with the American
Already, the State Depart- cant’s travel history, employers whether visa applicants be- Civil Liberty Union’s national
ment has taken small steps to- and addresses over the past 15 lieve in so-called honor kill- security project.
ward tighter vetting, according years. But after the federal ings, how they view the treat- “Our views and beliefs and
to cables sent from Secretary of court put the travel ban on ment of women in society, opinions are protected,” Mr.
State Rex Tillerson to embas- hold, Mr. Tillerson said in an- whether they value the “sanc- Handeyside said. “Those same
sies and consulates. In them, he other message that to be cau- tity of human life” and who principles should drive our de-
orders officials to identify “ap- tious, those instructions should they view as a legitimate tar- cisions about whether people
plicant populations” that war- be put on hold as well. get in a military operation. would be permitted to visit
rant additional scrutiny, accord- The administration is also The goal, he said, isn’t to the United States.”
JOE RAEDLE/GETTY IMAGES
International travelers arriving at Miami International Airport head to the mobile passport control window.
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A6 | Wednesday, April 5, 2017 THE WALL STREET JOURNAL.

U.S. NEWS

Tech Founders Want IPO Cash—And Control

‘Dual-class’ shares, which give majority to a few, spread in Silicon Valley; Snap’s new shareholders get no say
BY MAUREEN FARRELL
Doubling Up
Companies that go public Percentage of companies that
on the New York Stock Ex- went public with more than
change usually celebrate by one class of shares
ringing the opening bell 20%
from a balcony crowded with Technology companies
executives and employees. Non-tech companies
Snap Inc. had only two: co- 15
founders Evan Spiegel and
Bobby Murphy, who control
about 90% of the voting 10
power in Snapchat’s parent.
Snap was the first major
company since at least 2000 5
to do an initial public offer-
ing in the U.S. that gave new
shareholders no voting rights 0
whatsoever, and earlier inves- 1990 2000 ’10
tors got one vote for every 10 Note: Figures are five-year rolling averages
held by the two co-founders. Source: University of Florida Prof. Jay Ritter
Their viselike grip on the THE WALL STREET JOURNAL.
MICHAEL NAGLE/BLOOMBERG NEWS

disappearing-message app is
an extreme example of a Evan Spiegel, chief executive of
growing power grab by tech- Snap Inc., center, and Bobby
nology companies when they Murphy, the firm’s chief
go public. technology officer, left, ring the
Those companies are opening bell at the New York
structuring their IPOs so that Stock Exchange during the
founders and executives wind company’s initial public offering
up with far more votes than last month.
actual shares. The exagger-
ated voting power gives cording to Dealogic, and 2016 and boards with good corpo- worry about appeasing inves- classes of shares, which allow Murphy were intent on keep-
those few shareholders domi- was the slowest year for tech rate governance,” said Dan tors who are fixated on short- Executive Chairman Rupert ing as much control of the
nance over all corporate deci- IPOs since the financial crisis. Ernst, a senior analyst at as- term gains. Murdoch and his family to company as possible, accord-
sions, ranging from the elec- Since Snap’s stock sale, set manager Welch Capital maintain greater influence ing to people familiar with the
tion of directors to whether though, investment bankers Partners LLC in New York. over the media company. matter. Mr. Spiegel is chief ex-
to sell the company someday. and lawyers who work with “But if you’re dogmatic, you Have it both ways Class A shares that make ecutive, and Mr. Murphy is
About 15% of the tech tech companies said they have won’t get a chance to partici- Spencer Rascoff, chief ex- up about two-thirds of News chief technology officer.
companies that went public been fielding phone calls from pate in Facebook or Google.” ecutive of Zillow Group Inc., Corp’s equity base have no They wanted to decide
in the U.S. between 2012 and closely held companies that Vivek Wadhwa, a distin- which has three classes of voting power, while Mr. Mur- what Snap should do and
2016, including Facebook are considering going public guished fellow at Carnegie stock, wrote in a LinkedIn doch and his family trust hold which products to create
Inc., Fitbit Inc. and Twilio and are eager to explore simi- Mellon University’s College of post in 2015 that supervot- about 39% of the Class B vot- whether or not anyone else
Inc., did so with at least two lar share-class structures. Engineering, said the “winner- ing shares should assuage ing shares. agreed, the people said.
classes of stock, up from 8% The shift troubles some in- take-all” culture in which a private-company CEOs who Supervoting shares have Messrs. Spiegel and Murphy
between 2007 and 2011, ac- vestors, corporate-governance few tech companies emerge as are wary about going public. been around for more than a also don’t want to be pushed
cording to data compiled by advocates and even Silicon hugely profitable from among “There is a way to have the century and began to prolifer- to accept a takeover offer,
University of Florida finance Valley executives. They said a far-larger number that fail benefits of being public ate in the 1920s. Dodge Broth- which would eliminate the
professor Jay Ritter. watered-down voting power encourages investors to give while keeping a company ers Inc., the auto maker that chance to build Snap for the
That ownership structure hurts shareholder democracy tech executives more leeway. quick to move and focused later became part of Chrysler, long term.
makes it possible for compa- and leaves those investors As a result, “CEOs in Sili- on the long term,” he wrote. raised more than $100 million
nies to assign different vot- vulnerable. “It reduces the con Valley now have God Numerous academic stud- in an offering that limited the
ing rights to different groups role of a board member to complexes,” he said. ies show no statistical differ- voting power of new inves- No one says ‘no’
of shareholders, as Facebook that of an adviser who works Google parent Alphabet ence between the stock-price tors. In 1940, the NYSE lim- In mid-October, Snap offi-
did in its IPO in 2012. Class B at the behest or pleasure of Inc. and Facebook have gained performance of companies ited the use of multiple cials held a meeting to initiate
shares held by Chief Execu- the founder,” said Mark Lon- nearly $800 billion in com- with supervoting shares and classes of stock. the IPO process, the people
tive Mark Zuckerberg and ergan, founder and managing bined stock-market value those without, according to Some companies responded said. Snap’s investment bank-
other early investors have 10 partner of executive-search since their initial public offer- Mr. Ritter, the Florida finance by listing their shares on ers, from securities firms that
votes per share, while Class A firm Lonergan Partners in ings. Alphabet shares are up professor. His own study other exchanges, and the included Morgan Stanley and
shares sold to the public have Redwood City, Calif. nearly 1,900% since their de- came to a similar conclusion. NYSE made a few exceptions Goldman Sachs Group Inc.,
one vote per share. Snap has The Council of Institu- but in 2004, while Facebook Zynga Inc. founder Mark to its own curbs. Ford Motor were told to arrive at one of
three classes of shares. tional Investors, which rep- is up nearly 300%, trouncing Pincus held a class of shares Co. went public in 1956 in Snap’s warehouses in Venice,
The tech industry’s use of resents large pension funds the overall stock market. with 70 votes per share when what was then the largest IPO Calif., in any vehicle but a
so-called supervoting shares and other shareholders, has When Google went public, the videogame company went ever. The sale gave the Ford black car and without suits to
has climbed so much in the proposed barring Snap from co-founders Sergey Brin and public in 2011. Its share price family control far in excess of ensure that word of the meet-
past five years that it is stock-market indexes such as Larry Page and CEO Eric fell from $10 to about $3 as its financial stake, and the ing wouldn’t leak.
roughly in line with IPOs as the S&P 500 because the Schmidt held 33% of the inter- Zynga’s user base declined. structure is still in place. Snap told the dozens of in-
a whole. company’s structure “will net search giant’s shares and Mr. Pincus is Zynga’s chair- The advent of corporate vestment bankers at the
The percentage of newly undermine the quality and 38% of the voting power. Mr. man and has been its chief ex- raiders in the 1980s led to a meeting that it wanted the
public tech companies with confidence of public share- Brin is now Alphabet’s presi- ecutive twice. He still holds resurgence in supervoting IPO to include only nonvoting
supervoting shares is likely to holders in the market.” dent, Mr. Page is chief execu- 70% of the total voting power. shares as companies sought shares, people familiar with
climb even higher if the mar- Snap could become eligible tive and Mr. Schmidt is execu- Some investors have com- to protect themselves from the meeting said. No one
ket for new offerings contin- to join the S&P 500 after the tive chairman. plained that his huge voting unwanted takeovers. The raised objections or questions
ues to rebound and corporate company is profitable for four Facebook’s Mr. Zuckerberg stake has made it difficult for NYSE sought to abandon its about the plan, a sign that
executives are emboldened by quarters in a row. Analysts held 28% of the shares and another leader to emerge and policy, but the Securities and the bankers believed few pro-
the successful stock-market and investors don’t expect 58% of the voting power at the take Zynga in a new direction. Exchange Commission put spective investors would balk.
debuts so far this year, in- that to happen for at least time of the social-networking Frank Gibeau, Zynga’s forth a rule that would have At a lunch meeting with
cluding Snap. two years. company’s IPO in 2012. chief executive since March prohibited dual-class shares. potential IPO investors in
Investment bankers and Officials at S&P Dow Jones Google now sells a nonvot- 2016, said in February that It was invalidated by an ap- New York in late February,
lawyers expect that the vast Indices, which manages the ing class of stock, and Face- the company has “made sig- peals court. Mr. Spiegel and Snap’s chief
majority of the highest-val- stock benchmark, have said book plans to issue nonvoting nificant progress this year in By the time Google went financial officer and chief
ued companies that are now they would consider Snap’s stock. The companies have our turnaround.” public in 2004, the dual- strategy officer were asked
private would use some form corporate governance as part said different types of stock News Corp, the owner of class structure was widely mostly about the company’s
of dual-class structure if they of their overall review. help executives manage for The Wall Street Journal’s par- accepted by stock exchanges, growth prospects and ability
decide to go public. The most Matt MacInnis, chief execu- the long run, rather than ent, Dow Jones & Co., has two investors and regulators, in- to ward off competition, ac-
valuable companies include tive of Inkling Systems Inc., cluding the NYSE. Google’s cording to people who went
Uber Technologies Inc., Pal- based in San Francisco, has debut encouraged other tech to the meeting.
antir Technologies Inc. and qualms about creating two More Controlling companies to do the same. Snap’s near-absolute con-
Airbnb Inc. classes of stock but wouldn’t In a prospectus, Google trol by Messrs. Spiegel and
Snap's largest shareholders have far more voting power than those
On Friday, Snap shares rule it out if the labor-man- cited media companies such Murphy and their decision to
at Facebook and Google's parent, Alphabet.
closed at $22.53, up a third agement software company Change since IPO: as Dow Jones, then a stand- sell shares with no voting
from their $17-a-share offer- eventually decides to go pub- Company / Founders Year Percentage of votes held Stock price alone company, and New power came up only in a
ing price March 1, valuing the lic. Inkling has raised $95 mil- and/or executives of IPO Percentage of shares held S&P 500 York Times Co. and said small number of private
five-year-old company at lion from venture-capital in- their separate classes of meetings with potential in-
about $27 billion. Snap raised vestors since its launch in Snap 2017 33% shares made it possible to vestors, the people said.
90.5
$3.9 billion in the IPO, ac- 2009. Evan Spiegel, concentrate on “core, long- A person familiar with the
cording to Dealogic. “There’s an element of: Bobby Murphy 38.4 -1% term interest in serious news initial public offering said he
Snap declined to comment ‘We’ll take money from com- coverage, despite fluctua- knows of only one investment
on why Messrs. Spiegel and mon shareholders, but we’re tions in quarterly results.” fund that could have bought
Facebook 2012 57.6 274%
Murphy were the only em- not accountable to them,’ ” Mark
Lately, a wave of share- Snap shares but decided not
ployees on the NYSE balcony Mr. MacInnis said. Zuckerberg 27.6 81% holder activism, driven occa- to because of the 90.5% vot-
when the stock began trading. It is hard for investors to sionally by investors like bil- ing stake held by the two co-
In the first quarter, there resist promising tech IPOs lionaire Carl Icahn, has helped founders, who hold 38.4% of
were 29 IPOs of U.S.-listed even if that means they will Alphabet 2004 37.6 1,893% prompt some companies to the company’s shares.
companies, up from nine a wind up with little or no voice Sergey Brin, Larry consider creating new share Snap got orders for more
Page, Eric Schmidt 33.3 117%
year earlier. Just four of the at the company. “As a firm, classes as protection. than 10 times as many
IPOs in the latest quarter we much prefer shareholder- Note: Percentage changes in stock prices and S&P 500 are as of Friday's close. Long before Snap went shares as the number that
were by tech companies, ac- friendly management teams Sources: the companies (votes, shares); FactSet (change) THE WALL STREET JOURNAL. public, Messrs. Spiegel and were for sale in the IPO.

Court to Weigh Extent of Firms’ Liability in Terror Attacks

BY BRENT KENDALL ages for attacks that took place Arab Bank said it has been a Lawyers for the plaintiffs in
in the West Bank and Gaza dur- constructive partner with the the Arab Bank case said they
WASHINGTON—The Su- ing a 10-year span beginning in U.S. in preventing terrorist fi- are representing about 6,000
preme Court agreed to con- 1995. They say the case has nancing. “The bank did not people affected by terrorist at-
sider whether corporations can connections to the U.S. because cause plaintiffs’ injuries, and tacks in Israel and the Palestin-
be sued by foreign individuals Arab Bank operated a branch in there is no basis under interna- ian territories.
in U.S. courts for alleged viola- New York that was accused of tional law or the Supreme “This decision has impor-
tions of international law, in- knowingly processing transac- Court’s [Alien Tort Statute] de- tant implications for the fight
KAREN BLEIER/AGENCE FRANCE-PRESSE/GETTY IMAGES

cluding giving aid to terrorists. tions in aid of terrorists. cisions to reinstate these dis- against global terrorism. Dis-
The high court on Monday The victims brought claims missed claims,” the bank said arming clients from their right
said it would review an appeal under the federal Alien Tort in a statement. to bring civil lawsuits is a vic-
by citizens of Israel and other Statute, a 1789 law passed by The high court has waded tory for terrorist financiers,”
nations who filed U.S. lawsuits the first U.S. Congress. The law into the same issue but never said Michael Elsner of law firm
against Jordan-based Arab allows foreign citizens to file has fully resolved legal ques- Motley Rice, one of the lawyers
Bank, alleging it provided fi- U.S. lawsuits based on alleged tions about corporate liability. for the victims.
nancial services to terrorist or- violations of “the law of nations In a 2013 ruling that threw The justices will hear the
ganizations and terrorist front or a treaty of the United States.” out international law claims case in their new term, which
groups posing as charities. A federal appeals court, against Royal Dutch Shell PLC, begins in October. It will likely
The plaintiffs are victims however, ruled in 2015 that the the Supreme Court sharply lim- be among the early notable busi-
who were injured or captured bank couldn’t be sued because ited lawsuits against compa- ness cases for Judge Neil Gor-
in attacks, or family members corporations can’t be held liable nies under the Alien Tort Stat- such, President Donald Trump’s
of victims who were injured or under the statute. The Supreme ute, but it didn’t foreclose nominee, who is expected to re-
killed. They are seeking dam- Court will review that ruling. corporate liability altogether. ceive confirmation this week. The Supreme Court has never fully resolved the issue.
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THE WALL STREET JOURNAL. Wednesday, April 5, 2017 | A7

U.S. NEWS

President Pushes the ‘Real Story’

BY PAUL SONNE
Trump
Tweaks
AND SHANE HARRIS

WASHINGTON—President
Donald Trump and his support-
Health
ers in Congress said they hoped
investigators scrutinize whether
Obama administration officials
Proposal
improperly spied on members BY STEPHANIE ARMOUR
of his team during the transi- AND KRISTINA PETERSON
tion and requested that the
identities of Trump staff mem- The Trump administration
bers be revealed, or “un- is floating a new health-care
masked,” in intelligence reports proposal aimed at winning
chronicling the surveillance. over House conservatives that
Mr. Trump said on Twitter could allow states to opt out
Monday that the “real story” is of some requirements in the
improper surveillance of his Affordable Care Act.
team by the Obama administra- The administration’s pro-
tion during the transition. posal, if it secures the support
White House press secre- of the House conservatives,
tary Sean Spicer said that the could be turned into legisla-
administration’s concerns tion that would be part of a
about the Obama administra- broader Republican effort to
tion’s role in unmasking iden- knock down key parts of the
MARK WILSON/GETTY IMAGES

tities in the intelligence re- Obama-era health law.

ports is moving in a “troubling
direction.” He declined to
comment further.
Mr. Spicer declined to com-
ment specifically on allega-
tions published by
Bloomberg News columnist
and by Fox News that former
President Barack Obama’s na-
tional security adviser, Susan
Rice, requested to unmask the
names of Mr. Trump’s associ-
ates caught up in incidental
surveillance collection. Ms.
Rice declined to comment.
Mr. Trump is facing two
congressional investigations
into Russia’s alleged meddling
in the election—one that has
faltered amid partisan acri-
mony in the House and another
that is proceeding apace in the
Senate. The Federal Bureau of
Investigation is also conduct-
ing its own investigation.
Russia has repeatedly de-
nied meddling in the election.
Mr. Trump and his aides have
denied any collusion with Rus-
sia. And a representative for
Mr. Obama has declined to
a of conservative GOP lawmak-
White House press secretary Sean Spicer fielded questions Monday about the president’s aides being identified in intelligence reports.
comment on the White House’s
allegation that Mr. Obama’s
team engaged in efforts to leak
sensitive intelligence informa-
tion for political purposes.
FBI Director James Comey
has said there is no evidence
backing an allegation last
month by Mr. Trump, a Repub-
lican, that Mr. Obama, a Dem-
ocrat, ordered surveillance of
Trump Tower. But Rep. Devin
Nunes, a California Republican
and chairman of the House In-
telligence Committee, has al-
leged that Trump associates
were subject to incidental sur-
veillance while talking to for-
eign officials and in certain
cases had their names un-
masked improperly.
Mr. Trump said in a tweet
in early March that his cam-
paign was ordered “wire-
tapped” by Mr. Obama. After
the allegation was criticized as
baseless, White House staffer
Ezra Cohen-Watnick began ex-
amining policies on surveil-
lance and started to “stumble
on stuff,” said a person famil-
iar with the matter.
Mr. Cohen-Watnick told
White House colleague Mi-
chael Ellis and others, this
person said, but White House
general counsel Don McGahn
told them to stand down and
to give anything they found to
Congress, said a second per-
son familiar with the matter.
Soon after, Mr. Nunes went
to the White House to examine
what he has called new evi-
dence of improprieties under
Mr. Obama. He hasn’t produced
any of the evidence, while infu-
riating committee Democrats,
who said he undermined the
probe. Mr. Nunes has apolo-
gized to Democrats, while re-
fusing calls to recuse himself.
The first person familiar with
the matter said the documents
showed “a lot of incidental in-
formation that was unmasked”
and seemed to have been done
“for only one reason.”
Mr. Nunes has denied White
House staffers were his source
for the material.
On Monday, Mr. Trump pro-
moted a report on the Fox
News morning show “Fox &
Friends” saying that Mr.
Trump and people close to
him were surveilled for up to a
year before the end of the
Obama administration.
“Such amazing reporting on
unmasking and the crooked
scheme against us by @foxan-
dfriends,” Mr. Trump tweeted.
“ ‘Spied on before nomination.’
The real story.”
GOP members of the
House Intelligence Committee
are pushing to find out what
role top Obama administration
officials played in requesting
that names of Trump associ-
ates be unmasked from U.S.
intelligence reports, according
to a Republican lawmaker fa-
miliar with the committee’s
deliberations.
—Carol E. Lee
contributed to this article.
The proposal would let
states obtain waivers from
some federal requirements
that were opposed by the
House Freedom Caucus, a bloc
ers, according to a GOP staff
member on Capitol Hill.
States could get exemptions
from a requirement that most
insurers offer specific health
benefits such as maternity care,
for example. They may also get
exemptions from a provision
that bans insurers from charg-
ing higher premiums to people
with health conditions.
The House Freedom Caucus
was critical to the collapse last
month of the Republican
health bill intended as an
overhaul of the Affordable
Care Act. Members of the con-
servative faction said that ear-
lier bill, which was pulled
from the House floor before a
vote could be taken, didn’t do
enough to bring down pre-
mium costs and wasn’t aggres-
sive enough in its repeal of the
ACA.
States can already apply to
the U.S. Department of Health

U.S. Trade Gap Shrinks as Exports Increase

BY JOSH MITCHELL timing of the Lunar New Year.
Despite the shift, the U.S.
The U.S. trade gap with has a trade gap with China
China shrank in the first two that is far bigger than it has
months of the year but re- with other nations. The deficit
mains far wider than a decade has grown more than 40%
ago, part of a mixed trade out- during the past decade. The
look that sets the stage for po- saving rate in the U.S. is rela-
tentially tense talks between tively low and consumer
President Donald Trump and spending high, and many U.S.
President Xi Jinping of China households and companies
this week. have imported goods from
The overall U.S. trade gap China as they step up spend-
with other countries narrowed ing on household items and
nearly 10% in February from a other materials.
month earlier to $43.6 billion, Messrs. Trump and Xi are
the Commerce Department set to meet on Thursday.
said Tuesday. The gap was Trade is expected to be a big
slightly smaller than econo- part of the presidents’ discus-
mists surveyed by The Wall sion, a Commerce Department
Street Journal had projected. official said on Tuesday.
Meanwhile, the U.S. trade Other figures show that
gap with one of its biggest the yuan has been rising this
trading partners, China, has year against the dollar. That
narrowed nearly 5% in the complicates a central criti-
first two months of this year cism that Mr. Trump has
compared with the year-ear- made of China: that it is ma-
lier period. Economists cau- nipulating its currency down-
tioned that trade data is par- ward at the expense of U.S.
ticularly volatile and the exporters.
latest month of figures may The trade outlook in the
have been distorted by the U.S. has improved slightly
overall this year.
One big factor behind the
smaller gap: Stronger growth
in Asia and Europe is pushing
up demand for U.S.-made
goods and services, causing a
recent surge in exports. Ex-
ports climbed 0.2% in Febru-
ary from January and have
risen 7.2% this year compared
with the year-earlier period.
Exports of goods hit the high-
est level on record in Febru-
ary, after adjusting for infla-
tion.
The decline in imports in
February reflected reduced
purchases of consumer goods,
such as cellphones, and auto-
mobiles.
Economic growth remained
sluggish overall in the first
three months of the year, in
part because of the persistent
trade deficit. Private-sector
economists estimate the econ-
omy grew at about a 1% an-
nual rate in the first quarter,
down from the fourth quar-
ter’s 2.1% expansion.
But growth is expected to
rebound in the second quarter
and Human Services for waiv-
ers that give them flexibility
in how they implement the
health law. But under the cur-
rent law, states that pursue
Trade Imbalance such waivers must still pro-
The U.S. trade deficit with China is larger than any other country. U.S. vide access to coverage that is
trade in goods with China, 12-month rolling total at least as comprehensive and
as affordable as under the
$200 billion ACA. The new proposal would
100 give states more flexibility and
latitude.
0
Talks have been under way
–100 about rekindling a repeal ef-
–200 fort since the GOP on March
24 pulled the bill pushed by
–300
House Speaker Paul Ryan of
–400 U.S. exports to China Wisconsin. The White House
–500
U.S. imports from China has been talking to members
of both parties.
–600 Any legislation that revives
1998 2000 2010 the failed House GOP bill is
Note: Imports shown as negative to illustrate trade balance still going to need more work
Sources: Commerce Department, WSJ calculations THE WALL STREET JOURNAL. before coming to the floor, Mr.
Ryan said Tuesday. The White
in part due to the recent in- ing activity expanded in March House declined to comment on
crease in exports, which is for the seventh consecutive reports of the new proposal.
leading factories to ramp up month. Several factors are working
hiring and production to meet The U.S. economy runs a against a resurrection of the
higher demand. trade gap because U.S. house- Republican bill. There is little
Other reports suggest U.S. holds and companies buy evidence the rifts have healed
factories are registering a many goods and commodi- between the party’s conserva-
pickup in business. The Insti- ties—including cars, oil and tives and centrists. And Con-
tute for Supply Management beef—from other regions like gress faces a crowded calen-
on Monday said its closely Asia, Europe and South Amer- dar, including plans to shortly
watched index of manufactur- ica. dive into a tax overhaul.

U.S. WATCH
Agency Acts to Delay Police Oversight MEDICARE VETERANS AFFAIRS
BY ARUNA VISWANATHA mote officer safety and morale, The Justice Department stops, searches and arrests are
AND SCOTT CALVERT protect and respect the civil cited that memo in seeking the constitutional, and to use de- Insurers to See Rise Agency Says Problems
rights of all members of the delay in Baltimore. escalation techniques to try to In Payment Rates At Crisis Hotline Fixed
The U.S. Justice Department public, respect local control of The 227-page agreement, resolve incidents without force.
has sought to delay an agree- law enforcement, are rooted in reached Jan. 12, would require The proposed consent de- Federal regulators will give a The Department of Veterans
ment with Baltimore aimed at timely and reliable statistics on the Baltimore Police Depart- cree, which still requires a larger-than-expected average Affairs told skeptical lawmakers
eliminating racially biased po- crime and criminals, and do not ment to put in place new poli- judge’s approval, spells out in payment increase to insurers it has already fixed problems
lice practices, saying it needed impede recruitment and train- cies and training programs to detail when officers can use that offer private Medicare plans. with its suicide hotline that
more time to review the deal ing of officers.” take steps to ensure that all force and how such actions are The boost will aid companies were highlighted in an internal
reached in the final days of the to be reported to supervisors. that offer the plans under Medi- watchdog’s report released two
Obama administration. The agreement came after the care Advantage, the program in weeks ago.
Monday’s move was the lat- 2015 death of Freddie Gray, a which beneficiaries can get A March 20 audit by the VA
est sign the Justice Department black man who died of injuries Medicare policies from private inspector general had found that
under the Trump administra- sustained in a police van after companies. The insurers are then nearly a third of calls to the Vet-
tion is intent on reversing his arrest for allegedly possess- paid by the federal government. erans Crisis Line as recently as
Obama-era policies and priori- ing an illegal knife. Mr. Gray’s Insurers selling the plans will November were bounced to
ties, and in the criminal-justice death caused rioting and see their payment rates go up backup centers run by an out-
arena is focusing on an uptick spurred a lengthy Justice De- by 0.45% on average next year, side contractor. The rollover calls
in violent crime while pulling partment investigation that according to the Centers for happen when phone lines are
back on scrutiny of local police. found the city’s police depart- Medicare and Medicaid Services. busy, leading to possible waits
Attorney General Jeff Ses- ment routinely engaged in ra- That is higher than the 0.25% in- of 30 minutes or more.
sions said in his first major cially biased and unconstitu- crease the government had It was unwelcome news for
speech on the job that he tional practices. floated this year. VA Secretary David Shulkin, who
planned to pull back from in- Baltimore’s police depart- “These programs have been has made suicide prevention a
vestigations into alleged civil- ment, its mayor and city council successful in allowing innovative signature issue at the troubled
rights abuses by local police de- didn’t agree to a delay, accord- approaches that give Medicare agency, riven with scandal since
PATRICK SEMANSKY/ASSOCIATED PRESS

partments. He said he was ing to the Justice Department enrollees options that best fit reports of delays in treatment at
concerned about whether the filing asking for the delay. The their individual health needs,” veterans’ hospitals last year.
interventions were causing po- court had previously scheduled CMS Administrator Seema Verma. Testifying before a House
lice to be less aggressive and a hearing for Thursday to con- Beneficiaries of Medicare can panel, Steve Young, VA’s deputy
contributing to an increase in sider public comments on the choose to opt for these private undersecretary for health for op-
violent crime in some cities. deal. The filing sought a 90-day alternatives to traditional gov- erations and management,
Earlier Monday, Mr. Sessions delay for that hearing. ernment-run coverage. The pay- pointed to a dramatic turn-
issued a memo that instructed “We strongly oppose any de- ments are closely watched by in- around in calls answered by the
Justice Department lawyers to lay in moving forward,” Balti- surers, which lobby to keep them hotline since November, indicat-
“ensure” that any such settle- more Mayor Catherine Pugh from dropping since the plans ing that the most serious issues
ments “advance the safety and Baltimore Police Commissioner Kevin Davis and Mayor Catherine Pugh said in a statement Monday are a major line of business. have been resolved.
protection of the public, pro- during a Jan. 12 news conference on overhauling police practices. evening. —Stephanie Armour —Associated Press
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
A8 | Wednesday, April 5, 2017
MEET
Continued from Page One
has long avoided echoing those
words, fearing they amount to
an agreement to steer clear of
such contentious issues as Tai-
wan and the South China Sea,
one of the world’s busiest trade
routes. Mr. Tillerson’s hosts
were delighted. Many U.S. offi-
cials were stunned.
The tone has been set in part
by a charm offensive by China’s
U.S. ambassador, Cui Tiankai,
toward Jared Kushner, Mr.
Trump’s son-in-law and a senior
adviser, according to officials
and government advisers in the
two countries.
The White House declined to
comment on Mr. Kushner’s con-
tacts with Mr. Cui but said he
had worked with Mr. Tillerson
on persuading Mr. Trump to re-
verse course on Taiwan after
other officials failed. China’s for-
eign ministry declined to com-
ment.
White House officials said
Mr. Trump will press Mr. Xi to
agree to a “results-oriented” re-
lationship with action on two
significant issues: curbing Chi-
nese exports to shrink the U.S.
trade deficit, and policing Chi-
nese companies that trade with
North Korea to hobble Pyong-
yang’s nuclear and missile pro-
grams.
Mr. Xi’s priority is to stabilize
relations as he focuses on assur-
ing his dominance in a Commu-
nist Party leadership reshuffle
later this year, Chinese political
XINHUA/ZUMA PRESS
insiders said. A crisis in U.S. re-
lations, especially a trade war
that slows China’s economy,
presents one of the few threats
to his authority.
China, however, has become
accustomed to Mr. Trump’s rhe-
torical posturing and given no
public signs of concession. It
has reiterated demands for the
U.S. to lift restrictions on tech-
nology exports to China and re-
peated a proposal, already re-
jected by Washington, for North
Korea to suspend its nuclear
program in exchange for a halt
to U.S.-South Korean military
drills.
Beijing’s strategy, Chinese
government advisers said, is to
offer to buy more U.S. goods
and to invest more in the U.S.,
while pressing Mr. Trump to en-
dorse a new framework for rela-
tions that acknowledges China’s
status and territorial interests.
“We’ve moved from a period
of great uncertainty, when the
Chinese were very insecure
about what Trump might do to
harm their interests, to the Chi-
nese potentially thinking they’ve
got this guy in their pocket,”
said Bonnie Glaser, a China ex-
pert at the Center for Strategic
and International Studies.
Many veterans of negotiating
with China, inside and outside
the U.S. government, said Mr.
Trump’s administration has lost
leverage by backtracking on its
own positions, as well as on
longstanding tenets of U.S. pol-
icy, without extracting signifi-
cant concessions from Beijing.
Some of these specialists feel
the summit may be premature.
The White House has neither re-
solved internal disputes over its
China policy nor filled key posts
to oversee it.
Confronting China, especially
on trade, was central to Mr.
Trump’s nationalist platform,
but foreign-policy and pro-busi-
ness officials now seek a more
pragmatic approach.
Officials in both countries
hope the meeting will allow
Messrs. Xi and Trump to estab-
FORAGE
Continued from Page One
eat them, but my wife won’t
touch them. She thinks they
look like a fern.”
State Senator Thomas
Saviello thinks it is time to stop
this free-range foraging, saying
many are abusing the state’s
land-access culture.
“There is the perception here
that we are allowed to go onto
someone else’s land,” he said.
“What’s changed is some of the
value of some of the natural re-
sources that are on this land
that I don’t think some of our
forefathers really thought
about. I mean, fiddleheads?”
The Republican lawmaker
understands the appeal of re-
gional delicacies like fiddle-
heads, which he likens to a
very hard green bean.
“They’re crunchy. They’re full
of fiber and help keep you reg-
ular,” he said. “Put a little ol-
ive oil on it, butter, fry it up
and eat it. It’s delicious.”
Even so, he has sponsored a
bill, still being tweaked, that
would require written permis-
Secretary of State Rex Tillerson, above left, with Xi Jinping last month in Beijing. The tone for the coming summit has been set in part
by a charm offensive by China’s U.S. ambassador, Cui Tiankai, below left, toward Jared Kushner, below right with President Trump.
lish a personal rapport. The first
ladies are invited, and the two
leaders are expected to stroll in
the grounds, similar to Mr. Xi’s
2013 summit with former Presi-
dent Barack Obama in Califor-
nia.
One fear for China is that Mr.
Trump could embarrass Mr. Xi if
the summit fails to live up to ex-
pectations, according to people
on both sides briefed on negoti-
ations.
“The Chinese should be well
advised not to underestimate
President Trump, and where he
could lead things if he feels he’s
being played,” said one U.S. offi-
cial briefed on trade negotia-
tions.
Mr. Xi, on the other hand,
“can’t be seen making any major
concessions on this trip” that
might be construed as a trade-
off for Mr. Trump’s observing
the longstanding agreement on
Taiwan, said a Chinese official
close to the leadership. Even so,
“China can always buy more
Boeing planes,” the official said.
Rocky start
During the presidential cam-
paign, Mr. Trump, a Republican,
promised to label Beijing a cur-
rency manipulator his first day
in office and to slap a 45% tariff
on imported Chinese goods. His
win plunged U.S.-China ties into
chaos.
Mr. Trump, as president-
elect, broke decades of diplo-
matic protocol on Dec. 2 by tak-
ing a congratulatory phone call
from Taiwan’s President, Tsai
Ing-wen.
A week later, Mr. Xi sent
State Councilor Yang Jiechi,
China’s top foreign-policy offi-
cial, to meet with members of
the future administration at Mr.
Trump’s signature building in
sion from landowners for com-
mercial foraging on private
property.
Pushback has sprouted like
weeds. “Oh no! That would
completely destroy the fiddle-
head economy!” wrote one
Mainer on the Facebook page
for the group “Foraging in
Northern Maine.”
David Spahr, a farmer and
author of “Edible and Medicinal
Mushrooms of New England
and Eastern Canada,” said the
bill bothers him as a forager
and a landowner who freely lets
people pick berries and mush-
rooms on his 95 acres in Maine.
“I don’t want people lining up
at my door for permission
slips,” he said.
Robert Richardson, a profes-
sional forager in Wytopitlock,
Maine, gathers ramps—wild on-
ions—and fiddleheads from pri-
vate property each spring and
said he can make more than
$200 a day selling his haul to
markets and restaurants.
“There has always been a
tradition that people would al-
low you to go on their land,”
he said.
Mr. Richardson has finely
tuned his foraging techniques.
IN DEPTH
New York City. Both Mr. Cui and
Mr. Kushner attended, said peo-
ple briefed on the meeting.
Mr. Yang, who is known for
his abrasive style, told his audi-
ence—which included Steve
Bannon, Mr. Trump’s chief strat-
egist—about respecting China’s
core interests, especially regard-
ing Taiwan, said the people
briefed.
“That lecture and its well-
practiced server did have a neg-
ative impact on those he deliv-
ered it to,” said a person who
spoke with those who attended.
Americans’ Views
Of China Improving
Survey says 44% this year
had a favorable view; job-loss
concerns also recede
While President Donald
Trump promises tough nego-
tiations this week with Chi-
nese President Xi Jinping to
stop American job losses, a
new survey suggests Ameri-
cans’ negative views of China
are receding.
In findings released Tues-
day, the Pew Research Center
said 44% of Americans sur-
veyed this year held a favor-
able view of China, up from
37% a year ago. Unfavorable
views of China fell to 47%,
from 55% last year, it found.
“The growth in positive rat-
ings for China may be due in
part to declining concerns
about economic threats from
China,” Pew said in a report on
the survey.
The survey of 1,505 respon-
dents in the U.S. was con-
ducted in February and March
and is being released just be-
He pulls on his rubber boots—
since fiddleheads sprout along
rivers—and ventures out as
early as 4:30 a.m., equipped
with onion sacks, five-gallon
buckets and a few cans of Coke.
“You try to get there early when
the pickin’ is good,” he said.
He also has teamed up with
other foragers to approach
patches by boat. “You can fill a
whole canoe right through with
fiddleheads in half a day,” he
said. He notices a lot more pick-
ers wearing earbuds to listen to
music, but he prefers to focus
on the task and watch the wild-
life. “You see geese, ducks, bea-
ver, muskrat, fish jumping.”
Such foraging comes across
as less peaceful to landowners
like Mr. Marks. He’ll be sitting
in his recliner watching televi-
sion when he glances out the
window and spots foragers
walking through his property—
at times moving carefully so as
not to draw attention. “Some of
them are sneaky,” he said.
One morning last spring, Mr.
Marks was at one end of his
property when he got a call
from a neighbor. Some pickers
had headed onto the other side
of Mr. Marks’s land. He jumped
A senior administration offi-
cial said the attendees told their
Chinese guests to expect a fresh
perspective in relations but it
was “ultimately for the presi-
dent to decide.”
A day later, Mr. Trump sug-
gested in a TV interview he
might not abide by the long-
standing one-China policy, an
agreement by the U.S. not to
pursue diplomatic relations with
Taiwan.
China’s foreign-policy estab-
lishment quickly met to brain-
storm a fresh approach, accord-
fore a summit with Mr. Xi at
President Trump’s Mar-a-Lago
estate in Palm Beach, Fla., on
Thursday and Friday.
The lower unfavorability re-
sult is the best for China since
2011, the year before Mr. Xi
took power, when just over half
of Americans took a positive
view of the emerging power,
according to Pew’s figures.
White House statements
have said public frustration is
swelling with China’s role in
undermining the American
economy. In the campaign, Mr.
Trump “we can’t continue to
allow China to rape our coun-
try” and vowed to negotiate a
new relationship with China to
protect American jobs.
While Pew found that a
majority, or 53%, of Ameri-
cans see the loss of U.S. jobs
to China as a serious problem,
that number is down from
60% in 2015 and 71% in 2012.
It fell to No. 4 on the list of
Americans’ biggest concerns
with China, behind the coun-
try’s large holdings of Ameri-
can debt, cyberattacks and its
impact on the global environ-
ment.
—Josh Chin
into his four-wheeler with his
black lab Vader and rode up to
the foragers—who didn’t seem
too worried, he recalls.
“Nice dog,” they said.
The Pine Tree State has long
prided itself on an “open lands”
culture, rooted in Colonial-era
law giving anyone the right to
walk through private unim-
proved land to reach a pond
bigger than 10 acres.
The rise in popularity
of wild vegetation like
fiddleheads is
causing friction.
Now, because Maine’s land is
94% privately owned, the state’s
economy is dependent on the
generosity of landowners for
places to hunt, fish, snowmobile
and more.
Property owners can erect
signs to keep out visitors, but it
isn’t easy because of “onerous”
regulations about the number
of signs required, said Mr.
Saviello. And posting is often
THE WALL STREET JOURNAL.
“Trump’s son-in-law is key,”
said Wu Xinbo, director of the
Center for American Studies at
Fudan University in Shanghai.
“First, he’s our ambassador’s
main point of contact with
Trump. Second, he’s the main
figure for passing ideas and sug-
gestions on China policy.”
On Feb. 1, Mr. Cui persuaded
Ivanka Trump, Mr. Kushner’s
wife and the president’s elder
daughter, to attend a Lunar New
Year party at Beijing’s embassy
in Washington.
The next day, Ms. Trump
posted a video of her daughter,
Arabella, singing a New Year’s
song in Mandarin. The clip went
viral in China, helping tamp
down public criticism over Mr.
LINTAO ZHANG/ASSOCIATED PRESS
Trump’s failing to send a Lunar
New Year message, an annual
White House courtesy.
Mr. Trump sent a holiday
greeting to Mr. Xi a week later,
in time for the last day of the
New Year’s festivities.
The following day, Mr. Trump
spoke with Mr. Xi by telephone
for the first time since his inau-
guration, and pledged to follow
the one-China policy.
Whether Beijing offered any-
thing in return was unclear.
When asked that at a news
briefing, White House spokes-
man Sean Spicer said: “The
president always gets some-
thing.”
U.S. policy experts have ex-
pressed concern that Mr. Kush-
THE WASHINGTON POST/GETTY IMAGES
ner, a 36-year-old former real-
estate developer, doesn’t have
the experience or expertise to
effectively negotiate with Mr.
Cui, a 64-year-old career diplo-
mat.
The Kushner family’s real-es-
tate firm was in advanced talks
with a politically connected Chi-
nese insurance firm, Anbang In-
surance Group. Co., for an in-
ing to people who took part. vestment of as much as $1.25
They studied copies of Mr. billion in a New York real-estate
Trump’s book “The Art of the project. Those ended last month
Deal.” Several Chinese think after an outcry over possible
tanks were commissioned to file conflicts of interest. Mr. Kush-
reports on Mr. Trump’s person- ner had earlier sold his stake in
ality. the project and other properties
Opinion was divided. One to family members.
group saw Mr. Trump as a deal Mr. Kushner, who also has
maker less interested in main- been asked to work on relations
taining U.S. alliances in Asia and with Mexico and the Middle
who could work with Beijing. East, may be stretched thin. He
Others regarded him as a seri- traveled to Baghdad this week
ous threat to China’s economy with U.S. officials, where he met
and security. the Iraqi prime minister at a
The consensus emerged that military briefing on the fight
Mr. Trump cared most about against Islamic State.
trade and U.S. jobs—areas There is one measure of Mr.
where Beijing could offer com- Kushner’s influence that will be
promise—and that he could be closely watched by Chinese offi-
persuaded to maintain the sta- cials during this week’s summit:
tus quo with Taiwan. whether Mr. Trump, like Mr. Til-
Mr. Xi sent a New Year’s lerson last month, speaks of a
greeting card to Mr. Trump in relationship based on “non-con-
early January. Mr. Trump didn’t flict, non-confrontation, mutual
immediately reciprocate. On respect, and win-win coopera-
Jan. 13, Mr. Trump told The tion.”
Wall Street Journal he consid- The phrase was first used by
ered the one-China policy nego- Mr. Xi in 2013 to define a “new
tiable. model of great power relations”
Chinese government advisers between the U.S. and China. It
saw a possible path to Mr. was never endorsed by Mr.
Trump through his family. Lead- Obama’s administration be-
ing the way was Mr. Cui, whose cause, officials said, it implied
easy manner contrasted sharply acceptance of Chinese domi-
with Mr. Yang’s. nance of Asia.
“Personal diplomacy mat- Mr. Tillerson’s use of the
ters,” said a person who has phrase in Beijing was a surprise,
dealt with both men. “And in according to U.S. officials. “It
this White House, personal rela- wasn’t in the talking points, so I
tionships are especially impor- guess it remains a mystery,” one
tant.” official said, adding that Mr. Til-
lerson had been “warned
against the traps when the Chi-
nese try to get you to buy into
Family ties their formulations.”
Beijing found in Mr. Kushner Chinese state media has
a more direct line between Mr. since applauded Mr. Tillerson,
Trump and Mr. Xi. Both presi- as have some Chinese officials.
dents rely on a small circle of “Happily surprised,” one adviser
trusted advisers. Since Mr. to the Communist Party leader-
Kushner became involved, U.S. ship said.
officials have toned down their —Lingling Wei in Beijing
language. contributed to this article.
frowned upon because many
Mainers cling to the “open” tra-
dition, he said.
The bill would afford land-
plant is no more a fishing ac-
tivity...than is harvesting a
tree the same as hunting or
trapping wildlife,” he wrote.
owners with fiddleheads the The company said it is appeal-
same protection awarded to ing the decision.
those with rockweed, a brown James Black said that he
seaweed draped over the rocks did post signs asking people
on Maine’s coast. Rockweed has who want to visit his family’s
become part of a multimillion- 700-acre “Black Acres Farm”
dollar industry for organic fer- in Wilton, Maine, to get per-
tilizer and other products. mission from the owners
In 2015, two brothers whose first—but the foragers think it
family has owned coastal prop- doesn’t apply to them.
erty since the 1900s joined with They are after chaga, a
a homeowners association to mushroom species reputed to
stop a Canadian company called be an immune-boosting super-
Acadian Seaplants, Ltd. from food. “Some of them can be
harvesting rockweed there pretty pushy,” Mr. Black said.
without permission. Some forest gleaners say it is
At the crux of the debate was sad but understandable that
differing interpretations of an gathering wild plants is facing
ordinance that dates to the more regulation. Too many for-
1600s and granted public access agers have gotten greedy to
for “fishing, fowling and naviga- keep up with consumer de-
tion” in the land that is exposed mand, said Michael Douglas,
between low and high tides— program director of Maine
where rockweed grows. Primitive Skills School, which
On March 14, a Superior focuses on outdoor education.
Court judge ruled in favor of “It’s really new and kitsch to
the brothers. The defendant had go out and order wild leeks,” he
argued that gathering rockweed said, as an example. “Our cul-
fell into the fishing category, ture seems to have this super-
but the judge didn’t bite. star- or super-fungus-of-the-
“Harvesting a terrestrial week mentality.”
 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. Wednesday, April 5, 2017 | A9

LIFE&ARTS
FITNESS

Your Awkward Company Gym

You can enjoy the convenience of getting fit while at work, and there are ways to avoid uncomfortable moments
BY RACHEL BACHMAN

Brandon Siegesmund strained

over his spread legs as he’d seen
baseball players do on TV during
warm-ups. The operations man-
ager at Milwaukee-based More
Than Rewards, which creates cus-
tomer-loyalty programs for retail-
ers, usually took walks outside.
But he thought he’d start a winter
routine in the office gym.
A colleague spotted him
through a giant window on the
gym door.
“What are you doing?” she
asked. “You’re going to hurt your-
self.” She showed him some gen-
tler moves. When Mr. Siegesmund
left the gym, the office was al-
ready ribbing him about his
stretching routine.
Working out at work can get re-
ally awkward. Does it look like
you’re slacking off if you hit the
company gym midafternoon? Do
you talk to the woman from hu-
man resources one treadmill over?
Change machines when your boss
eyes his favorite StairMaster?
A work-gym routine requires
strategy, from getting used to
sweating in front of co-workers to
practicing good shower etiquette.
But the upside is big. Office
gyms can provide a cheap or free
place to squeeze in a workout, of-
ten just an elevator ride from your
desk.
Employees who exercise during
the workday manage time more ef-
fectively, have smoother interac-
tions with colleagues and go home

feeling more satisfied than col-
leagues who don’t, research has
found. About a quarter of U.S.
companies have an on-site fitness
center, according to a 2016 survey
by the Society for Human Re-
source Management.
In Milwaukee, soon after Mr.
Siegesmund’s embarrassment,
company owner Jason Brethorst
covered the glass window with a
motivational poster to create some
privacy. More employees started
using the gym. They got so com-
fortable they pasted up a drawing
of Mr. Brethorst’s face on Arnold
Schwarzenegger’s bemuscled,
lounging body on the gym’s bright-
red wall.
“I wanted to make it really fun
and silly and awkward, so it takes
down that stuffiness of ‘Oh my
gosh, it’s the gym,’ ” Mr. Brethorst
says.
Some bosses make a point of
working out during the day to en-
courage others to follow. While
working in Procter & Gamble’s Cin-
cinnati office years ago, Chip
Bergh worked out at lunchtime be-
fore a company gym existed. “I
borrowed a locker in the janitor
locker room and brought my own
towel!” Mr. Bergh, now president
and CEO of Levi Strauss & Co.,
says, in an email.
He scrapped initial plans to
build a gym at Levi’s San Francisco
headquarters (“A great gym is not
cheap!”) and opted for corporate
memberships for $50 monthly at
the nearby Bay Club, whose facili-
ties include a swimming pool and
a large selection of classes. Unsub-
sidized memberships there start at
about $200.
Mr. Bergh wrote that exercising
during the workday “leads to hap-
pier and more engaged employ-
ees.”
Grant Moos found other re-
wards for stepping out of his com-
fort zone.
He had never tried yoga when,
about eight years ago, he and his
then-boss organized a class in a
conference room at General Mills’s
Minneapolis headquarters. At first
the yoga class was all women and
him.
“We kind of called the group
the Ya-Ya Sisterhood,” recalls the
61-year-old Mr. Moos, who works
in internal communications.
He picked a spot in the back so
people wouldn’t see the sweat
pooling on his mat during the
challenging vinyasa class. A few
co-workers teased him.
“People would walk by that I
knew and would make faces at
me,” he recalls. But he loved how
yoga limbered and strengthened
the muscles he used for cycling
and cross-country skiing. He re-
cruited people to help keep the
class going, and now it’s about half
men, he says.
A few months into his job as a
data scientist at Verizon, Paulius
Mikalainis got an email from a co-
worker he hadn’t met. It was
about Mr. Mikalainis’s perfor-
mance on a stationary bike.
“Looks like you have to have the
initials of P.M. to make the top two
on the Expresso Leaderboard,”
wrote co-worker Paul Macchia,
who works in internal communica-
tions, also at Verizon’s Basking
Ridge, N.J., office. Mr. Macchia en-
closed a screen-grab of two recent
times from internet-connected Ex-
presso bikes at the company gym,
with Mr. Mikalainis in the lead.
“I was kind of flattered,” says
Mr. Mikalainis, who has since met
MARK MATCHO
Mr. Macchia and developed a
friendly rivalry with him. On a re-
cent day at the gym, Mr. Macchia
saw Mr. Mikalainis walking toward
a bike.
“I kind of waved to him and
said, ‘Do arms today,’ ” Mr. Mac-
chia says.
Intense classes can bring out
the competitiveness even in the
most professional setting. About a
decade ago, Mike James’s boxing
class at the World Bank’s office
gym in Washington, D.C. was in
full swing when he heard a ruckus.
In a corner, two men who were
supposed to be practicing soft
punches were “going at it ham-
mer-and-tong in a full fist-type
fight,” recalls Mr. James, manager
of the World Bank Fitness Centers.
He separated the men and they
apologized.

BOOKS

THE WSJ BOOK CLUB TAKES ON ‘TUMBLING’

BY CHRISTOPHER JOHN
FARLEY
AUTHOR ROXANE GAY first
picked up a copy of Diane McKin-
ney-Whetstone’s novel “Tumbling”
because of the jazzy-looking cover,
and the writing has stayed with
her for some 20 years.
Ms. McKinney-Whetstone
“knows the people she writes in-
side and out and she lets us see
them at their best and worst,” Ms.
Gay said in an email interview.
“There is real humanity on every
page of this novel and so much
heart. I also love how she evokes
place so distinctly.”
Ms. Gay, whose works include
the essay collection “Bad Femi-
nist,” the novel “An Untamed
State” and the short-story collec-
tion “Difficult Women,” is the host
of the WSJ Book Club for April.
She picked “Tumbling,” which is
set in an African-American neigh-
borhood in South Philadelphia, as
this month’s read.
“This is an unforgettable, gor-
geously written book,” Ms. Gay
said.
“Tumbling,” Ms. McKinney-
Whetstone’s debut, drew critical
acclaim when it was published in
1996.
The story focuses on Noon, a
preacher’s daughter, and her hus-
band Herbie, a former jazz drum-
JAY GRABIEC
relationship. They share so much
love, but cannot quite make it to
each other as fully as they both
want. The ache of that is so com-
pelling to read.”
In June, Ms. Gay will publish
“Hunger: A Memoir of (My) Body,”
about her relationship
with food. Edited from
the email interview.
Why did you select Diane
McKinney-Whetstone’s
novel “Tumbling”?
I first read “Tumbling”
in my 20s, and the
book has stayed with
me for 20 years—Her-
bie and Noon and how
they tried so hard to
love each other and
protect each other while being im-
perfect people. It’s a novel about
how a family can be made in the
most unexpected way and there
are so many secrets that unfold so
elegantly over the course of the
novel.
“Tumbling” takes place in Philadel-
phia in the 1940s and 1950s. Is there
anything about the setting that read-
ers should be thinking about as they
read the book?
The time period in which this
novel is set and the city of Phila-
delphia itself are as much charac-
ters as any of the people in this
novel.
and forget about absolutely every-
thing but the words on the page.
“Tumbling” was McKinney-Whet-
stone’s debut novel, and some critics
might argue that it’s still her best. Is
there something about debuts that
makes them stand out
from books released at
other times in a writer’s
career?
People are always look-
ing for the next “It”
writer, and debut nov-
els offer that kind of
hope. I also think there
is something unique
about a debut novel—
they are generally writ-
ten as labors of love.
The focus of the writer
is entirely on the work. The results
are always fresh and imperfect and
bold because the writer isn’t writ-
ing for an audience or a “market.”
That said, most great writers are
not defined solely by their debut.
McKinney-Whetstone’s debut was
brilliant, but so are the other nov-
els she has written.
You’ve written fiction and nonfiction.
Which do you prefer to write and
why?
Fiction is my first love. I am
thrilled by getting to remake the
world as I see fit in fiction.
What should readers keep in mind as

mer who works as a porter at a they dive into “Tumbling”?

train station. Ms. Gay said “there Why does “Tumbling” still have a Readers should keep in mind that
is something so moving and heart- hold on you two decades later? there are so many different ways
Roxane Gay says Diane McKinney-Whetstone’s ‘Tumbling,’ is ‘unforgettable.’ breaking about Herbie and Noon’s This is one of those novels I read for marriage and family to work.
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 | Wednesday, April 5, 2017 THE WALL STREET JOURNAL.

OPINION
REVIEW & OUTLOOK
A World Unsafe
Mr. Trump Meets Mr. Xi For Democracy
P
resident Trump has warned that the having trouble getting approval from the Penta-
Mar-a-Lago summit with Chinese Pres- gon to conduct freedom of navigation patrols. This week marks the covering only too late the direction in
centenary of America’s which they are being steered. That was
ident Xi Jinping this week will be “dif- Mr. Trump needs to decide on his red lines,
entry into World War the tragedy of Venezuela under Hugo
ficult,” and it’s hard to know communicate them to Mr. Xi I, when Woodrow Wil- Chávez and of Russia under Vladimir
what that means. Mr. Trump China’s strongman will and stick to them. son vowed that “the Putin. In both cases it helped to have an
likes to stake out tough nego- be taking the measure room On trade there is greater world must be made oil boom grease the way.
tiating positions but back for compromise, al- safe for democracy.” In 1991 the political scientist Samuel
down later, while the Chinese of the new President. though an immediate break- GLOBAL
He and his fellow Huntington proposed the thesis that
VIEW
like to offer cosmetic conces- through is unlikely. Mr. By Bret
statesmen failed to do democracy advanced and retreated in
sions to mollify foreigners Trump brandished big sticks so in their day. We are waves—a long “Jacksonian” wave that
Stephens
while relentlessly advancing their interests in the campaign by promising to declare China failing in ours. began in the early 19th century and
over time. The real measure of this summit a currency manipulator and impose punitive Snapshots from a only collapsed after Mussolini’s rise to
will be whether Mr. Xi comes away thinking tariffs. But this would hurt the U.S. as much week in the news: In Russia, opposi- power in 1922; a brief postwar wave
tion leader Alexei Navalny is in jail for that crashed in the 1960s as post-
Mr. Trump means what he says or can be as China. U.S. officials now concede that a bet-
leading last month’s anticorruption colonial states fell prey to dictatorship;
pushed around like President Obama. ter approach is to target areas where China protests. In Venezuela, the Supreme and then a “Third Wave” that began
In that sense Mr. Trump’s warning not to ex- fails to grant Americans the market access Court stepped back from seizing the with the restoration of democracy in
pect immediate deliverables is a positive sign. that Chinese enjoy in the U.S. powers of the legislature but handed Portugal in 1974 and crested with the
After eight years of the Obama Administration So if China declares internet industries off- President Nicolás Maduro broad con- Soviet collapse 17 years later.
papering over major disagreements between limits to foreign investors, Chinese companies trol over the country’s oil revenues. In
the U.S. and China, Mr. Trump may win Chinese will be blocked from buying similar American Ecuador, a candidate with the telling
respect with a tougher approach. But subtlety, firms. If Tesla is hit with high tariffs on its U.S.- name of Lenín Moreno claimed victory Freedom rests on wings of
hardly the U.S. President’s strong suit, will be made cars, then Chinese cars will face higher in a runoff vote Sunday with pledges butterflies—and the moral
needed to keep the relationship constructive duties in the U.S. Exports from firms that re- to carry forward the populist-authori-
while pressuring Beijing to change its aggres- ceive state assistance under the “Made in China tarian policies of departing President confidence of America.
Rafael Correa.
sive and mercantilist ways. 2025” industrial-policy plan could be blocked In Turkey, President Recep Tayyip
On North Korea, the most pressing issue, or subject to countervailing duties. Erdogan is campaigning for constitu- Huntington’s thesis suggests that
the two sides are poles apart. Mr. Trump says That won’t change the bilateral trade bal- tional changes that would extend his what is happening today is inevitable:
correctly that China could use its economic ance much, and tit for tat exchanges have a lease of office till 2029. In the Philip- that democracy has a way of over-
leverage to rein in North Korea’s nuclear and way of escalating. But such a policy would ad- pines, President Rodrigo Duterte has extending itself before it later succeeds
missile programs but has failed to do so. Bei- dress the reality that after benefitting from promised to pardon and promote 19 in sinking deep roots. It also offers the
jing believes the U.S. forced Pyongyang to access to Western markets, China in the past police officers implicated in murdering comfort that the current trend can’t
build nuclear weapons by threatening its exis- decade began to harass or close its door to a politician while jailing the former last forever: that most dictatorships
tence. The Chinese view is that Washington foreign companies. The recent report by the head of the country’s human-rights will eventually be undermined by their
can and should resolve the standoff by making European Union Chamber of Commerce in commission. internal contradictions, while most de-
In Hong Kong, Carrie Lam, Beijing’s mocracies will bounce back thanks to
the Kim regime feel more secure. China is a non-American summary of this sys-
favored candidate, was “elected” as their ability to correct mistakes
Mr. Trump is trying to overcome Beijing’s tematic bias. The Chinese should recognize chief executive with the votes of 0.03% through elections.
reluctance to help by suggesting that if it re- that America’s political tolerance for such of the territory’s population; nine de- Maybe. Or maybe the cause of de-
fuses the U.S. will solve the problem itself—a mercantilist behavior is waning, and the reso- mocracy activists were arrested the mocracy just got lucky in 1931 when
hint of potential military force. The U.S. will nance of Mr. Trump’s protectionist campaign next day. In France, presidential front- Winston Churchill wasn’t killed by a
also continue to improve Japanese and South is a warning. runner Marine Le Pen sought to boost New York City cab, and lucky again in
Korean missile defenses and other capabili- i i i her appeal among voters by paying a 1942 when American pilots hit their
ties, which infuriates Beijing. Mr. Trump is The Obama Administration often rewarded flattering visit to Vladimir Putin in targets at Midway, and lucky a third
justified in impressing on Mr. Xi that the China’s poor behavior, or protested rhetorically Moscow. time in 1985 when the Soviet Union
American people can’t accept the North de- without taking credible action. Meanwhile, al- These stories aren’t just a string of chose a leader foolish enough to think
ploying a nuclear missile capable of hitting lies like Japan, South Korea and Taiwan were anecdotes. The year 2016 “marked the communism could be reformed. The
11th consecutive year of decline in march of freedom rests on wings of
San Francisco. given too little attention. Mr. Trump has begun
global freedom,” reports Freedom butterflies.
It’s hard to predict how China will react to to rectify this mistake, for instance, by inviting House in its latest annual survey. “A It also rests on the moral example
this pressure. It could recognize that the risk Japanese Prime Minister Shinzo Abe as his first total of 67 countries suffered net de- and ideological confidence of the
of war between two nuclear powers in its foreign guest at Mar-a-Lago. clines in political rights and civil liber- strongest democratic powers. The U.S.
neighborhood is too dangerous and try to in- The U.S. goal this week should be to show ties in 2016, compared with 36 that now has as a president a man who ex-
stall a more pliable regime in Pyongyang. But Mr. Xi that the new Administration will be registered gains.” Just 39% of the plicitly renounces the concept of
even in that case Mr. Xi will avoid the appear- hard-nosed but constructive. If Mr. Trump world’s people live in free countries to- American exceptionalism, shows no in-
ance of acting under U.S. duress. He is more masters his briefing books, he could lay the day, down from 46% a decade earlier. terest in denouncing authoritarian
likely to push back hard and accuse the U.S. foundation for future deals. But nobody, least How did the world become unsafe crackdowns or championing demo-
of destabilizing the Korean Peninsula. of all Mr. Trump, should expect the Chinese for democracy? cratic dissidents, draws parallels be-
The striking finding in the Freedom tween the practices of the Putin re-
On the South China Sea, Trump officials have to agree to new bilateral terms at the first
House report is that the global erosion gime and those of the U.S. government,
made hawkish statements about rolling back meeting. The Chinese are impressed by firm- of political liberty is largely taking and has fanned conspiracy theories
China’s base-building, yet the U.S. Navy is still ness and consistency, not rhetoric. place in the democracies. People are about a “deep state” that pulls the
losing faith in freedoms that no longer strings in Washington.
seem to deliver on the promise of a If Americans can’t be persuaded of
Susan Rice Unmasked safer, richer, fuller, fairer life. the merits and decency of our system,

W
In some cases, long-term political why should anyone else? If the winner
ell, what do you know. On the mat- masking request are held at the National Se- polarization leads to ineffectual gover- of a U.S. presidential election is a man
ter of who “unmasked” the names curity Council. nance, which in turn whets the public who embarrasses—or terrifies—much
of Trump transition officials in U.S. Where are the civil libertarians when you appetite for leaders promising fast re- of the free world, how do we make the
intelligence reports, we now really need them? These col- sults irrespective of legal niceties. In case to ordinary Russians or Chinese
others, a stale form of consensus poli- that the road of democracy isn’t sim-
have one answer: Susan Rice, Obama’s security umns support broad surveil-
tics leads to ideological polarization as ply the way of the buffoon?
Barack Obama’s national se-
curity adviser.
adviser sought the name lance powers for national se-
curity, but executive officials
mainstream parties fail to address Americans used to care deeply
mainstream concerns. about the future of freedom in the
A U.S. intelligence official of a Trump official in need to be accountable if And sometimes people fall under the world. Lose the care, risk the freedom.
confirms to us the bombshell those powers are abused. If sway of charismatic demagogues, dis- Write bstephens@wsj.com.
news, first reported Monday
intelligence reports. congressional oversight of
by Bloomberg, that Ms. Rice
requested the name of at least
U.S. intelligence operations is
going to be worth the name,
LETTERS TO THE EDITOR
one Trump transition official listed in an intelli- then it should include the unmasking of a po-
gence report in the months between Election litical opponent by a senior official in the ShouldRobotsBeSubjecttoTaxesLikeWorkers?
Day and Donald Trump’s inauguration. White House.
Regarding Andy Kessler’s “Bill imposes more taxes and regulations.
Ms. Rice received summaries of U.S. eaves- Democrats certainly raised a fuss during the
Gates vs. the Robots” (op-ed, This will drive out still more manu-
dropping either when foreign officials were Bush years and after Edward Snowden kicked March 28): Bill Gates has suggested facturers and further reduce factory
discussing the Trump team, or when foreign off the debate about “metadata,” which are that we tax the robots in propor- employment. This demonstrates the
officials were conversing with a Trump transi- merely telephone numbers without names. Ore- tion to the jobs they displace. It heavy propensity to use taxation
tion member. The surveillance was legally au- gon Senator Ron Wyden went so far as to intro- isn’t clear if this is intended to and tax breaks as a solution to too
thorized, but the identities of U.S. citizens are duce a bill in 2013 to strengthen the ban on “re- compensate for the lost income many problems while remaining
typically masked so they cannot be known out- verse targeting”—in which intelligence taxes no longer paid by the work- blind to the damage caused. All too
side intelligence circles. Ms. Rice asked for and agencies surveil foreigners but with the goal of ers who were replaced or to dis- often higher taxes lead to lower tax
learned the identity of the Trump official, capturing U.S. citizen communications. courage the use of robots. Given revenue as business and industry
whose name hasn’t been publicly disclosed Yet now that there’s evidence that the the consistency of robots’ output are demotivated.
and our source declined to share. and their ability to function in dan- WALTER S. CICIORA, PH.D.
Obama Administration may have unmasked
gerous and unpleasant environ- Southport, Conn.
Our source did confirm that Ms. Rice also Trump officials, Democrats couldn’t care less. ments, they may still be a better
examined dozens of other intelligence summa- Adam Schiff, the ranking Democrat on House choice in many circumstances. The Mr. Kessler rallies around the
ries that technically masked Trump official Intelligence, has spent the past week denounc- calculation of a “robot tax” will be blessing of robotics in the form of
identities but were written in such a way as ing Mr. Nunes for revealing that a name was complex and will constantly change computers, the internet and Micro-
to make obvious who those officials were. This unmasked and for having sources at the White as the robots take on more and soft. And so it should be. But ro-
means that the masking was essentially mean- House. But he hasn’t raised a peep about the more functions. Likely a whole new botics have a downside in human
ingless. All this is highly unusual—and trou- unmasking itself or who was behind it. Washington building will be impact that Mr. Kessler skims over.
bling. Unmasking does occur, but it is typically The news about Ms. Rice’s unmasking role needed, filled with bureaucrats cal- Robotics has led to much of the un-
done by intelligence or law-enforcement offi- raises a host of questions for the Senate and culating the robot tax and imposing employment in the Rust Belt. Don-
cials engaged in antiterror or espionage inves- House intelligence committees to pursue. more regulations on American in- ald Trump campaigned to restore
dustry. Some categories of employ- the Rust Belt and to “bring back
tigations. Ms. Rice would have had no obvious What specific surveillance information did Ms.
ment will increase. How far will the jobs.” But the robots have the
need to unmask Trump campaign officials Rice seek and why? Was this information re- this go? What about washing ma- jobs. What does that mean for the
other than political curiosity. lated to President Obama’s decision in January chines and dishwashers? Those jobs people who are no longer useful?
We’re told by a source who has seen the un- to make it possible for raw intelligence to be used to be done by humans. They are in need, and America’s
masked documents that they included political widely disbursed throughout the government? Rather than making American in- Republican president has come to
information about the Trump transition team’s Was this surveillance of Trump officials “inci- dustry more competitive by reduc- help those people.
meetings and policy intentions. We are also dental” collection gathered while listening to ing business- and corporate-income LINDSAY RALPHS
told that none of these documents had any- a foreigner, or were some Trump officials di- taxes and regulations, this approach Oakland, Calif.
thing to do with Russia or the FBI investiga- rectly targeted, or “reverse targeted”?
tion into ties between Russia and the Trump We were unable to locate Ms. Rice Monday
campaign. While we don't know if Ms. Rice re- to ask for comment, and she hasn’t ad- Dutch Face a More Universal Refugee Concern
quested these dozens of reports, we are told dressed the unmasking as far as we know.
Leon de Winter’s suggestion that Thanks to the collapse of American
that they were only distributed to a select But asked last month on the “PBS NewsHour” Dutch citizens want “immigrants [to] influence in stabilizing the Middle
group of recipients—conveniently including that Trump officials might have been sur- practice tolerance, work and study East and the subsequent refugee crisis
Ms. Rice. veilled, she said, “I know nothing about this” hard, and teach their children to be that resulted, we may soon find out
All of this helps to explain the actions in the and “I was surprised to see reports from proud and contributing members of how much that tolerance has frayed,
past week of House Intelligence Chairman Chairman Nunes on that account today.” She this society” seems like a reasonable not only in the Netherlands but
Devin Nunes, the one official in Washington certainly deserves her turn under oath on set of expectations for their newly ar- throughout Europe.
who seems interested in pursuing the evidence Capitol Hill. rived neighbors (“The Dutch Find TOM O’HARE
of politicized surveillance. Mr. Nunes was None of this should deter investigators Welfare and Immigration Make an Un- Charlestown, R.I.
roundly criticized by Democrats and the media from looking into the Trump-Russia connec- easy Mix,” op-ed, March 15).
The question is what should govern-
last week for publicly revealing at least one tion. By all means follow that evidence where Letters intended for publication should
ments do when immigrants arrive from be addressed to: The Editor, 1211 Avenue
instance of Obama White House unmasking, it leads. But the media have been running like war-torn countries that are breeding of the Americas, New York, NY 10036,
albeit without disclosing any names. wildebeest after that story while ignoring grounds for terrorists, and European or emailed to wsj.ltrs@wsj.com. Please
Now we know he is onto something. And how the Obama Administration might have host countries begin to pay a heavy include your city and state. All letters
we know that Mr. Nunes had to go to the abused domestic surveillance for its political price for those who choose not to as- are subject to editing, and unpublished
White House to verify his information be- purposes. Americans deserve to know the similate and in some cases bite the letters can be neither acknowledged nor
returned.
cause the records containing Ms. Rice’s un- truth about both. generous hand that feeds them.
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
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THE WALL STREET JOURNAL.
How Trump Became a Russia Skeptic
By Adrian Karatnycky
A
Kremlin spokesman told
ABC News on Friday that
despite the new adminis-
tration in Washington,
Russian-American rela-
tions remain “at the lowest possible
point.” Yet the spokesman also sug-
gested that if Donald Trump and
Vladimir Putin were to meet in per-
son “there will be chance for our
volatile relations to get better.”
These are telling remarks, given
that only a few months ago Mr. Pu-
tin was salivating at the thought of
a Trump presidency. Mr. Trump had
extolled the Russian leader, declared
the North Atlantic Treaty Organiza-
tion “obsolete” and hinted that the
The conventional wisdom
about a Kremlin-friendly
White House is dated.
Reality forced a change.
U.S. might accept Russia’s annexa-
tion of Crimea. A few years ago
Steve Bannon, an influential Trump
adviser, promoted the idea of a
grand alliance between the West and
a traditionalist Russia against secu-
larism and Islam. Mike Flynn, a Pu-
tin-friendly recipient of Moscow’s
largess, was appointed national se-
curity adviser.
Yet as the investigations continue
into Trumpworld’s Russia connec-
tions, the White House has replaced
these friendly soundings with a so-
ber, decidedly hawkish stance.
As the atmosphere shifts, Russia’s
state-controlled and state-directed
media have begun to turn against
Mr. Trump, suggesting that Moscow
no longer expects a cooperative rela-
By Eswar Prasad
D
onald Trump and Xi Jinping
are set to meet this week in
an informal setting, rightly
lowering expectations of any ma-
jor meeting of minds or concrete
outcomes. Yet there’s a lot riding
on prospects of the U.S. and Chi-
nese presidents smoothing over a
war of words that, if it escalated,
could hurt both countries’ eco-
nomic interests. The stakes for the
global economy are high, as a
rocky relationship between the
two leading economic powers
could prove disruptive to interna-
tional trade and add to volatility
in financial markets.
The key challenge for Mr.
Trump will be to pick the right
fights with Mr. Xi, rather than re-
vert to talking points from the
campaign trail. His continued at-
tacks on China since taking office
are not healthy portents.
Mr. Trump seems determined to
put China on the back foot, ostensi-
bly giving the U.S. a better negoti-
ating position for the many eco-
The Minimum Wage Should Be Called the Robot Employment Act
By Andy Puzder
E
ntry-level jobs matter—and you
don’t have to take my word for
it. In a speech last week on
workforce development in low-in-
come communities, Federal Reserve
Chair Janet Yellen said that “it is cru-
cial for younger workers to establish
a solid connection to employment
early in their work lives.”
Unfortunately, government policies
are destroying entry-level jobs by
giving businesses an incentive to au-
tomate at an accelerated pace. In a
survey released last month, the publi-
cation Nation’s Restaurant News
asked 319 U.S. restaurant operators to
name their biggest challenge for 2017.
Nearly a quarter of them, 24%, said
rising minimum wages.
It’s no surprise that restaurants
are rolling out the robots.
PUBLISHED SINCE 1889 BY DOW JONES & COMPANY
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tionship. Gazeta.ru, a Kremlin
mouthpiece, called Mr. Trump a nar-
cissist not long after he took office.
Another, Lenta.ru, announced in
February the “end of illusions”
about a warming in relations, re-
porting that some of President
Trump’s “most ardent boosters” in
the Russian media were turning on
him. Prime Minister Dmitry Medve-
dev told Russian television viewers
to expect the international sanctions
on their country to remain in place
“indefinitely.”
The shift has moved beyond rhet-
oric: Mr. Putin has escalated violence
in eastern Ukraine. Since early Feb-
ruary, his proxies and fighters have
dropped a significant number of
missiles and ordnance on towns and
cities in the Donbas region. Moscow
has deployed a new cruise missile in
violation of treaty obligations. And
Russian pilots have resumed the
practice of buzzing U.S. ships de-
ployed in the Black Sea.
Mr. Trump’s friendly comments
toward Mr. Putin have also brought
resistance from a unique coalition:
Republican hawks, Democrats angry
over Russia’s election meddling, the
national-security establishment and
intelligence community, and key Eu-
ropean leaders. Together they have
applied enough pressure to pro-
foundly shift U.S. administration
policy. For one thing, the president
was compelled by the weight of evi-
dence to acknowledge in January
that Russian hacking had indeed in-
fluenced the American political pro-
cess, even as he insisted this inter-
ference didn’t affect the election’s
outcome.
The expert consensus about Mr.
Putin is so negative that Mr. Trump
couldn’t have put together a Krem-
lin-friendly national-security team
even if he had tried. As a result, se-
rious-minded Russia hawks are
Push Xi Jinping to Open China’s Market
nomic and geopolitical tussles that
lie ahead. In itself, this strategy
may have some merit.
However, Mr. Trump is focusing
on high-profile but weak lines of
attack, such as his misguided
charge of Chinese currency manip-
ulation and the size of the bilat-
eral trade deficit. These issues res-
onate with Mr. Trump’s political
base, adding to the temptation to
claim a win by getting tough on
China, particularly to ease the
sting of the recent health-reform
debacle. Mr. Trump has repeated
the currency-manipulation charge
even as his Treasury Department
attempts a more deliberate and
calibrated approach.
The accusation that China is ma-
nipulating its currency to gain an
unfair advantage for its exports
isn’t supported by economic facts.
For nearly three years, China’s cen-
tral bank has been intervening in
currency markets to prevent the
yuan from falling too sharply in
value against the dollar. Thus, if
anything, China has been doing the
U.S. a favor by not letting the yuan
McDonald’s said in November that it
would install self-order kiosks in all
14,000 of its U.S. restaurants.
Wendy’s announced in February it
would add kiosks at about 1,000 loca-
tions to “appeal to younger custom-
ers and reduce labor costs.”
The trend toward automation is
particularly pronounced in U.S. areas
where the local minimum wage is
high. Eatsa, a 21st-century version of
the automat, now lists seven loca-
tions in four cities, each of which will
be subject to a $15 minimum wage
within the next 36 months.
Taking automation to the next
step, Miso Robotics and the owner of
CaliBurger announced in March they
have developed a robotic arm, called
Flippy, that can turn burgers and
place them on buns. CaliBurger plans
to install them over the next two
years in 50 restaurants world-wide.
Robert Thomson
Chief Executive Officer, News Corp
William Lewis
Chief Executive Officer and Publisher
DOW JONES MANAGEMENT:
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Jonathan Wright, International
DJ Media Group:
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Kenneth Breen, Commercial
Professional Information Business:
Christopher Lloyd, Head;
Ingrid Verschuren, Deputy Head
OPINION
emerging in key posts. When Mr.
Flynn was forced to resign as na-
tional security adviser, H.R. McMas-
ter took his place. The appointment
of Putin critic Fiona Hill to be the
National Security Council’s Russia
expert is pending.
Mr. Trump’s most senior appoin-
tees, including the vice president
and defense secretary, began criti-
cizing Russian actions almost imme-
diately after taking office. Secretary
of State Rex Tillerson and United
Nations Ambassador Nikki Haley
made clear that America will con-
tinue to back Ukraine. Last week Mr.
Tillerson declared that the U.S. and
its allies would remain “steadfast”
in their “support of Ukraine’s sover-
eignty and territorial integrity.” A
senior government official in Kiev
told me that Ukrainian President
Petro Poroshenko has been reas-
sured by his direct discussions with
Mr. Trump.
Sanctions against Russia over its
annexation of Crimea and occupa-
depreciate as much and as fast as
the markets seem to want.
China currently meets only one
of the three criteria identified by
the U.S. Treasury in 2016 as neces-
sary conditions to formally accuse
Liberalization of foreign
investment in key sectors
could help American firms
set up operations in China.
a U.S. trading partner of currency
manipulation: It has a bilateral
trade surplus with the U.S. of more
than $20 billion.
Among America’s trading part-
ners, China has the biggest bilat-
eral merchandise trade surplus
with the U.S., nearly $350 billion.
This is certainly a big imbalance,
but the battle should be fought
with the right weapons, rather
than with unsupported allegations
and protectionist measures. A for-
mal charge of currency manipula-
By encouraging automation, cit-
ies that significantly raise the mini-
mum wage destroy opportunities
for the least-skilled workers. In
2015 a scholar at the Federal Re-
serve Bank of San Francisco re-
leased a paper summarizing the
available research on this effect.
“The most credible conclusion,” he
wrote, “is a higher minimum wage
results in some job loss for the
least-skilled workers—with possibly
larger adverse effects than earlier
research suggested.”
The loss of entry-level jobs also
worsens racial disparities. In a 2011
report from the nonpartisan Employ-
ment Policies Institute, two univer-
sity economists examined nearly 20
years of data containing 600,000 ob-
servations. They compared how each
10% increase in the minimum wage
affected the employment of young
males without a high-school di-
ploma. For whites, the drop was
2.5%. For blacks, it was 6.5%.
These are jobs America cannot af-
ford to lose. In 2014 nearly 40% of
Notable & Quotable: Filibuster
From a floor speech by Sen. Eliza-
beth Warren (D., Mass.), Nov. 13,
2013:
We need to call out these filibus-
ters for what they are—naked at-
tempts to nullify the results of the
last Presidential election, to force us
to govern as though President Obama
had not won the 2012 election.
President Obama did win the 2012
election—by 5 million votes. He has
done what the Constitution requires
him to do—nominated highly quali-
fied people to fill open vacancies on
the Federal bench. If Republicans con-
PHIL FOSTER
tion of eastern Ukraine have also
been reaffirmed. Mr. Trump has pro-
posed a $54 billion increase in
Washington’s defense budget. He has
made clear that he wants NATO al-
lies to significantly boost their own
military spending. These moves can-
not be welcome in Moscow.
The idea that Mr. Trump could
strike some sort of grand bargain
with Mr. Putin isn’t dead. Ques-
tions remain about whether Mr.
Trump or some of his advisers may
be vulnerable to Russian blackmail.
But so far the White House has
proved more susceptible to the
pressures that come from press
scrutiny, congressional oversight
and the elite consensus.
Mr. Trump’s early view of Mos-
cow as potentially a close ally has
been routed. The president is now
beginning to articulate a policy to-
ward Russia rooted in American
strength, albeit with predictable
digs at his White House predecessor.
He tweeted last month: “For eight
tion or the imposition of tariffs on
imports from China would likely
elicit an immediate and aggressive
counterstrike.
The risk is that such actions
could spiral into a tit-for-tat series
of restrictions on bilateral trade
and investment that would hurt
both economies. China is likely to
take overt as well as covert retalia-
tory actions that could include re-
stricting American companies’ ac-
cess to markets and investment
opportunities, as well as disrupting
the supply chains of American busi-
nesses that rely on Chinese inter-
mediaries. The U.S. economy, espe-
cially multinational corporations
that operate in China in one form
or another, could suffer significant
collateral damage if a trade war
were to break out.
U.S. economic and business inter-
ests would be better served by Mr.
Trump’s greater attention to issues
of real economic significance in the
bilateral economic relationship.
China could be prodded to provide
U.S. exporters greater access to its
large and growing markets.
black men age 20 to 24 in Chicago
and almost 30% in New York and Los
Angeles were neither working nor in
school, according to a report last
year from the Great Cities Institute.
Mandating $15 an hour
doesn’t help poor youth.
It helps Flippy, the new
burger-grilling machine.
For white men, it was about 10%. Na-
tionally, February’s unemployment
rate among white males age 16 to 19
was 14.1%; for young black males it
was 24.1%.
Bernie Sanders articulately de-
scribed the solution to this problem
in 2013 when he spoke on the Senate
floor about the negative effect that
entry-level foreign workers have on
youth employment. “The best anti-
poverty program is a paycheck. Well,
let us give the young people of this
tinue to filibuster these highly quali-
fied nominees for no reason other
than to nullify the President’s consti-
tutional authority, then Senators not
only have the right to change the fili-
buster rules, Senators have a duty to
change the filibuster rules.
We cannot turn our back on the
Constitution. We cannot abdicate our
oath of office. We have a responsibil-
ity to protect and defend our democ-
racy, and that includes protecting the
neutrality of our courts and preserv-
ing the constitutional power of the
President to nominate highly quali-
fied people to court vacancies.
Wednesday, April 5, 2017 | A11
years Russia ‘ran over’ President
Obama, got stronger and stronger,
picked-off Crimea and added mis-
siles. Weak!”
The bad news for Mr. Putin
doesn’t stop there. Despite Brexit,
the U.K. seems to be taking a hard
line, with Prime Minister Theresa
May and Foreign Minister Boris
Johnson championing Ukraine’s in-
terests. In Germany’s election this
September, voters will choose be-
tween Angela Merkel, the tough-
minded chancellor, and Martin
Schulz, a Social Democrat with a
record of criticizing Mr. Putin. In
France, the likely winner in May’s
presidential runoff appears to be
the pro-European centrist Emanuel
Macron, who is comfortably ahead
of two pro-Russian candidates from
the right.
The American investigations re-
main critical. All leads concerning
Russian cyberattacks on U.S. politi-
cal targets should be investigated.
Any contacts between Trump cam-
paign advisers and Russia should be
followed up. Potential vulnerabilities
of administration personnel should
be fully explored. But it’s also im-
portant to understand that Russia’s
effort to gain an advantage from
meddling in the election appears to
have abjectly failed.
American institutions are work-
ing well. The security policies that
were shaped in the aftermath of
World War II and the Cold War re-
main firmly in place. Although it’s
unlikely that Mr. Putin helped
swing the vote in Michigan, Penn-
sylvania or Wisconsin, his hapless
meddling appears only to have
awakened American and European
hawkishness.
Mr. Karatnycky is co-director of
the Ukraine in Europe Initiative at
the Atlantic Council.
Liberalization of foreign invest-
ment in key sectors, including fi-
nancial services, could help Ameri-
can firms that want to set up or
expand operations in China. Sooth-
ing other irritants in the bilateral
relationship, such as theft of intel-
lectual property, would also benefit
U.S. businesses.
Focusing on these issues would
garner broader international sup-
port for Mr. Trump in wresting
from China the narrative about
how to structure the global trad-
ing system in a way that spreads
the benefits more evenly across
countries. Taking the high road by
pushing for freer trade rather
than engaging in a protectionist
street fight would better help Mr.
Trump expand American jobs and
promote a more vibrant and dy-
namic economy.
Mr. Prasad, a professor in the SC
Johnson College of Business at Cor-
nell University and a senior fellow
at the Brookings Institution, is au-
thor of “Gaining Currency: The Rise
of the Renminbi” (Oxford, 2016).
country a paycheck. Let’s put them
to work,” Mr. Sanders said. “But
even more importantly, let us allow
them to gain the job skills they need
so that they know what an honest
day’s work is about, and can move
up the economic ladder and get bet-
ter jobs in the future.” I couldn’t
have said it better.
The importance of entry-level
jobs is hard to overstate. I can still
recall when the franchise owner of
the Baskin-Robbins where I worked
as a teen called me into her office
and handed me a key, telling me to
open up the place in the morning. It
was perhaps the proudest day of my
professional career. I felt the kind of
pride and self-confidence that can
keep a person working (or in
school) and off the streets. But to
get that experience you need the
first job.
In her speech, Ms. Yellen praised
the potential of a pilot program ap-
propriately called Pocket Change. It
was designed to reduce youth unem-
ployment in Somerville, Mass.,
“through internships, training in job
skills, and reinforcement of impor-
tant soft skills such as punctuality
and effective communication.” If
high minimum wages didn’t price
young people out of the job market,
they could learn these skills in en-
try-level jobs, without yet another
government program.
Avoiding significant increases in
the minimum wage won’t solve all
the problems that face today’s job-
seeking youth. But one thing is cer-
tain: If government policies substan-
tially increase the cost of entry-level
labor, there will be more automation,
fewer jobs and less opportunity for
young people trying to get ahead.
Mr. Puzder is a former CEO of
CKE Restaurants.
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
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A12 | Wednesday, April 5, 2017 THE WALL STREET JOURNAL.

LIFE & ARTS

MY RIDE

The Star of the Family?

Grandma’s Corvette
Carol Horowitz, 74, an assistant school li- and Bridgehampton. The extended Horowitz family with their 1964
brarian from Westhampton Beach, N.Y., on When we had babies, Chevrolet Corvette Sting Ray, with Carol
her 1964 Chevrolet Corvette Sting Ray, as the Corvette became a Horowitz in the driver’s seat.
told to A.J. Baime. family car, even
Every Father’s Day, our family gathers at though it only had two
my son David’s house in Westchester seats. There were no
County, N.Y.—my kids and my many grand- car seats at the time,
kids. Some of us who are old enough to and I would put a
drive take turns in the old Corvette. child on a little bed
I love the power and a little speed, but next to me, propping
it’s the memories I love more—how it all the bed in safely with
started, my husband, our family, the racing a spare wheel. (It

ADRIENNE GRUNWALD FOR THE WALL STREET JOURNAL

trophies, what a great life it has been. seems crazy now, but
My late husband Robbie and I went to that’s how I did it at
high school and Brooklyn College together. the time.)
We were fans of the TV show “Route 66,” We even used the
about two adventurers in a Corvette. So a Corvette as a ski car in Vermont, with a rack pictures you see here, we made it a family
couple months after we got married in Jan- on the roof. event, with the kids, grandkids, a table full
uary 1964, we bought a new Corvette Sting In the 1960s, there was nothing else like of food, and Champagne cocktails. We pulled
Ray at Curry Chevrolet in Scarsdale, N.Y., for the Corvette—a real American sports car. out the old racing trophies and the car’s
$4,150.20. Today, it feels as exotic as it did then. When original bill of sale. Robbie was a wonderful
Off we went to California on Route 66. I park it on the street, people will pass Fer- guy (he passed away in 2012), and he would
We had no cellphones, no GPS. We just had raris to see our car. We get asked if our have loved it.
each other. family would sell the car. Not a chance. It
Robbie loved racing as a hobby, and he will stay with us forever. Contact A.J. Baime at
raced this car at Lime Rock, Watkins Glen When the photographer came to take the Facebook.com/ajbaime.

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.
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21 Great Leap intelligence 1 Resistance Previous Puzzle’s Solution
Buenos Aires 26 10 s 23 16 s Miami 31 25 pc 32 17 pc Seoul 15 10 r 15 10 c P E S O S WA G S T A G
Cairo 31 17 s 30 16 s Milan 18 7 sh 21 9 s Shanghai 23 16 c 26 15 sh Forward leader 43 “Outta my way!” figures E X T R A I C O N S R U E
Calgary 13 1 c 15 2 c Minneapolis 13 2 pc 11 0 pc Singapore 32 26 pc 32 25 pc 22 There are seven 46 Manipulated 2 Team with a C H A R M S C H O O L I S T
Caracas 32 25 s 32 26 s Monterrey 28 13 pc 27 12 pc Stockholm 10 2 t 10 1 pc K A Y B I C WA I S T S
Charlotte 24 13 t 16 5 pc Montreal 8 1 r 7 2 r Sydney 21 17 sh 22 17 pc
in una semana one flaming E L S A L A R M S Y S T E M
basketball logo D E A D N O A H R A R A
Chicago 6 2 r 8 1 c Moscow 11 7 c 14 6 c Taipei 27 19 s 28 21 pc 23 Scorch 47 Tapered tuck S T I N G S L O T R E D
Dallas 22 8 s 24 10 s Mumbai 32 25 pc 32 26 pc Tehran 16 5 s 18 8 s 3 Kyoto quaff F A R M S T E A D
Denver 12 -1 s 18 3 s Nashville 26 6 t 14 5 sh Tel Aviv 29 15 s 26 15 pc 25 Chow ___ 48 Not in a private P E P MA U I S P E A R
Detroit 12 5 r 6 1 sn New Delhi 37 23 pc 38 19 pc Tokyo 18 14 pc 18 14 pc area? 4 Pirate’s purview A L E E P I N E S T A T
27 Incredibly WA R M S P R I N G S L I E
Dubai 29 22 s 32 23 s New Orleans 27 13 t 22 12 s Toronto 12 4 c 8 1 r P I S T O L T I E A N N
Dublin 12 3 c 12 3 pc New York City 18 7 s 12 7 r Vancouver 12 7 r 12 6 r divisive 50 Join a jury 5 To boot A N I B E A R I N G A R M S
Edinburgh 12 4 c 13 5 pc Omaha 14 2 c 14 0 pc Washington, D.C. 22 13 s 19 8 r WE S E R R O R A L G A E
Solve this puzzle online and discuss it at WSJ.com/Puzzles.
s

Frankfurt 16 5 pc 13 5 c Orlando 35 21 c 28 12 c Zurich 15 5 c 11 1 pc S S T S K Y E L I E N S

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BUSINESS & FINANCE

© 2017 Dow Jones & Company. All Rights Reserved. THE WALL STREET JOURNAL. Wednesday, April 5, 2017 | B1

Yen vs. Dollar 110.7570 g 0.13% Hang Seng 24261.48 Closed Gold 1253.10 À 0.18% WTI crude 50.99 À 1.49% 10-Year JGB yield 0.065% 10-Year Treasury yield 2.354%

Bankruptcies Enrich Energy CEOs Ma Firm BY RYAN DEZEMBER
When Ultra Petroleum
Corp. emerges from bankruptcy
protection in coming weeks, as
expected, the natural-gas pro-
ducer’s chief executive is on
track to be rewarded with
MATTHEW STAVER/BLOOMBERG NEWS
to stick around. Companies
usually issue new stock when
they emerge from bankruptcy,
replacing the old shares.
What’s unusual in Ultra’s
case is the size of the pie from
which that slice is coming: The
company’s postbankruptcy eq-
“In a surprising number of
cases, the most lucrative job in
spelled out in agreements with
creditors.
Battles
the oil-and-gas industry in the
last year is a senior executive
at a bankrupt company,” said
Mr. Watford declined to
comment through a spokes-
woman. Ultra has said it ex- For Deal
In U.S.
Brian Williams, managing di- pects to emerge from bank-
rector at investment banking ruptcy by mid-April.
and restructuring advisory In 2015, the latest figures

roughly $35 million of its stock,
more than 10 times his annual
compensation in recent years.
Michael Watford, the CEO,
and other employees at the
Houston company are sharing
7.5% of Ultra’s new shares, a
fairly typical cut awarded to
managers of companies
emerging from bankruptcy
Ultra CEO Michael Watford protection to incentivize them
uity value has been set at
about $4 billion, meaning that
its employees are due some
$300 million of stock, 40% of it
to be doled out the day its new
shares are launched, according
to court filings and people fa-
miliar with the matter.
The rest would be distrib-
uted at the discretion of its
board.
Carl Marks Advisors. that are available and before
It is rare for an equity pot the company filed for bank-
that size to exist after bank- ruptcy, Mr. Watford received BY KATE O’KEEFFE
ruptcy. It resulted largely from compensation valued at $3.06
gas prices roughly doubling million. WASHINGTON—The battle
from a year ago. Similar scenarios are play- between Chinese billionaire
Ultra filed for bankruptcy ing out among producers of Jack Ma’s Ant Financial Ser-
protection in April last year oil, which also is fetching vices Group and a Kansas ri-
after historically low gas about twice what it did early val to acquire MoneyGram In-
prices pushed its earnings rel- last year, and at companies ternational Inc. has sparked a
ative to debt below thresholds Please see ULTRA page B2 lobbying war over a deal set
to test the Trump administra-
tion’s view of Chinese invest-

The Dollar How the Sausage Is Made

ment in the U.S.
Ant Financial, China’s big-
gest online-payments com-

Gets Its A Chinese pork factory adopts Western food-safety practices to cut any fears of the wurst
pany, in January signed an
$880 million deal to buy the
Dallas-based money-transfer

Flow Back firm. It was the first—and still

the only—public-company
takeover announced by a Chi-

—Almost nese company since the elec-

tion of President Donald
Trump, who has promised to
A global shortage of dol- crack down on China’s trade
lars that distorted the practices.
money markets for the past Then last month, Euronet
two years is easing, even as Worldwide Inc. of Leawood,
the Federal Reserve is trying Kan., put in a bid valued at
to tighten monetary policy. roughly $1 billion for Money-
The money markets are Gram, igniting the prospect of
the plumbing of the financial a bidding war.
system, and they sprang a Euronet would be hard-
leak in 2015 when banks be- pressed to fend off its colossal
gan to limit balance sheet-in- Chinese rival in such a con-
tensive ac- test. But it sees an opening in
tivities to growing concern in Congress
MENGLIN HUANG/THE WALL STREET JOURNAL

satisfy new about surging Chinese invest-

regulatory ment in the U.S. The Ant deal
require- will be subject to review by
ments. The the Committee on Foreign In-
STREETWISE shortage of vestment in the U.S., a multi-
JAMES dollars was agency body led by the Trea-
MACKINTOSH made even sury that can recommend the
worse by re- president block foreign deals
strictions in- on national-security grounds.
troduced last fall on money- Euronet Chief Executive Mi-
market funds, as these chael Brown has been making
“shadow banks” are used by the case to lawmakers and the
Japanese and European The pork plant run by China’s WH Group. The factory can produce over 90,000 kilograms of bacon, sausages and ham each day. Treasury that an Ant acquisi-
banks to finance themselves tion of MoneyGram would
overnight in dollars. BY KATHY CHU nies struck partnerships to present national-security risks
Dollar shortages are now Appetite for Pork gain Western expertise. In- because Ant might not do
going away, helped by expec- ZHENGZHOU, China—A As its middle class grows, China’s demand for pork is surging. creasingly, they are looking to enough to prevent money
tations that U.S. regulation poster at the entrance to this buy foreign technology out- laundering, terrorist financing
will be relaxed, the success meat factory in central China Pork imports, in million metric tons right as Beijing tries to trans- and the compromise of cus-
of overseas banks in finding shows American families eat- 2.5 China Japan Mexico South Korea form its export-dependent tomers’ personal data.
alternative sources of fi- ing ham sandwiches beneath economy into one powered by “Everybody keeps thinking
nance and greater appetite the slogan, “Enjoy an Ameri- 2.0 research and innovation. the next war is all gonna be
from investors to pick up can-style life.” Chinese companies spent a about missiles. It’s already a
what looks like free money Inside the plant run by 1.5
record $226 billion last year war, and it’s all about data,”
left lying around by the China’s WH Group, a similar on assets abroad, according to Mr. Brown said. If Ant’s deal
global financial system. principle applies. Dealogic, capped by China Na- goes through, “you’ve got ba-
The lack of stress in the Steel vats mix pork while 1.0 tional Chemical Corp.’s record sically a Chinese company
dollar money markets was industrial-strength micro- $43 billion agreement for controlling a lot of personal fi-
evident Friday when the waves unfreeze blocks of meat 0.5 Swiss seed giant Syngenta AG. nancial information of Ameri-
quarter ended: More or less in 20 minutes, a task that Even as China scrutinizes cans,” he said.
nothing happened. takes eight to 16 hours at 0 overseas investments because Ant and MoneyGram offi-
Contrast that with Decem- other Chinese pork factories. 2013 ’15 ’17* 2013 ’15 ’17* 2013 ’15 ’17* 2013 ’15 ’17* of concerns about outflows, cials rebut such claims, saying
ber, when there was a rush It is about 18 degrees colder *Forecast deals that modernize the agri- that Ant would continue to in-
for dollars as foreign banks than other meat plants and Source: Foreign Agricultural Service/USDA Office of Global Analysis cultural industry will remain a vest in MoneyGram’s compli-
tried to dress up their bal- the ceilings are one-third THE WALL STREET JOURNAL. priority for now, according to ance program and that the
ance sheets to meet regula- higher, helping to control con- Danian Zhang, chief represen- company stores what little
tory demands, and the cost densation and limit the spread out more than 90,000 kilo- “We’ve adopted the way tative of the Baker & McKen- personal data it collects at a
of the standard hedging in- of bacteria. And the facility grams of bacon, sausages and that Smithfield approaches zie law firm’s Shanghai office. secure facility in Minneapolis.
strument, the cross-currency uses only U.S. meat imported ham every day, is at the fore- food safety,” said Wan Long, In January, WH Group’s Smith- “This process would con-
basis swap, soared. The extra from Smithfield Foods Inc., front of a shift in how China is chairman of WH, formerly field unit purchased California tinue under our agreement
payment—on top of already which WH bought in 2013 for using Western practices and known as Shuanghui Interna- pork processor Clougherty with Ant Financial as a means
stressed levels—meant those $4.7 billion. technology to advance its tional Holdings Ltd. Packing LLC and two affiliates of ensuring that transactions
willing to supply dollars The plant, which can churn economy. For years, Chinese compa- Please see PORK page B2 are fully safeguarded and not
could earn much more by misused or accessed by any
holding Japanese T-bills and government—including the
hedging the yen risk than by
buying U.S. T-bills, even
though Japanese interest
rates are negative.
Gillette, in Change of Tactic, Cuts Prices Chinese government,” Money-
Gram Chief Executive Alex
Holmes said in a statement.
Ant’s head of international
The easing of money-mar- BY SHARON TERLEP ing firm Euromonitor. P&G giant finds itself under the mi- will push for at P&G. business, Douglas Feagin, de-
ket stress this year has al- says its internal numbers croscope after Trian Fund “We are very aware of what fended the deal in a recent in-
most halved the cost of Gillette, which dominates show a lesser decline. Management, one of the big- happening in the North Ameri- terview in Washington. “We’re
cross-currency basis for Jap- the global razor business, has Gillette razors and blades gest activist investors, an- can landscape and we are very business people, and we ap-
anese borrowers of dollars, long followed a simple and lu- are important, high-margin nounced in February it had focused on addressing some of proach this as a very attrac-
and the change at quarter- crative strategy: Add new fea- products for P&G, which built up a $3 billion stake in the challenges that we face,” tive transaction for Money-
end on Friday was minuscule. tures and raise prices. bought the business for $57 the company. Trian has yet to Gillette spokeswoman Kara Please see FIGHT page B2
The Bank of Japan’s deci- But the 115-year-old brand billion in 2005. The Cincinnati say what changes, if any, it Buckley said.
sion to soak up some excess is changing tactics this month The decision on pricing, she
yen liquidity helped, reduc-
ing the pressure on Japa-
nese banks to find yield in
by slashing prices and putting
a new focus on its cheaper
products. The Procter & Gam-
said, came as the company re-
alized the drawbacks of its
singular focus on creating ev-
INSIDE
the U.S. ble Co. unit hopes to stop de- ermore sophisticated razors
But the flow of dollars fections of its U.S. customers with higher and higher prices.
around the system is work- to online startups like Dollar “We need to do a better job of
ing better elsewhere, too. Shave Club and Harry’s that telling guys we are available
The cross-currency basis sell lower-priced razors and for them at a multitude of
against euros has also al- blades. Gillette’s plan to cut price points,” she said.
most halved, taking it back prices by as much as 20% Refills for Gillette men’s ra-
to where it was a year ago. jolted Wall Street. “An act of zors range from around $2 to
The extra cost over Treasury desperation on Gillette?” $6 per cartridge, depending on
yields of swapping fixed for asked Barclays analyst Lauren the features, when not bought
floating interest rates—used Lieberman, in a research note in bulk. That compares with
DANIEL ACKER/BLOOMBERG NEWS

for hundreds of billions of soon after the announcement Schick’s $2 to $2.75 per car-
dollars of corporate deals a in February by P&G. tridge, when not bought in
year and known as the swap New data show Gillette has bulk. The cheapest Dollar
spread—is almost back to
normal after two years of
lost U.S. market share for six
straight years. Its share of the
Shave Club option features re-
fills for 20-cents a cartridge.
MIGRANTS FUEL
being deeply negative. Even men’s-razors business fell to Even as lower-cost shave HOUSING BOOM
the willingness of banks to
lend to each other has im-
54% in 2016, down from 59%
in 2015 and more than 70% in
clubs entered the scene, P&G
continued to roll out new,
IN GERMANY
proved: The spread between 2010, according to figures re- pricier products, such as a ra-
Please see STREET page B2 leased Tuesday by data-track- Gillette is putting a new focus on its cheaper products. Please see RAZORS page B2 PROPERTY, B9
 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 | Wednesday, April 5, 2017
INDEX TO BUSINESSES
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.
A
Airbnb..........................A6
Alibaba Group Holding
.....................................B2
Alphabet................A6,B4
Ant Financial Services
Group.........................B1
Aurizon Holdings........B7
B J. Crew Group.............B5
Baker & McKenzie......B1
Barclays.....................B10
Barclays Africa Group
...................................B10
Blackstone Group ....... B9
Boeing....................A1,B3
C Lotte Group.................A1
CG Gruppe...................B9
Clougherty Packing.....B1
E Morgan Stanley.....A6,B2
Euronet Worldwide.....B1
F-G
Facebook ..................... A6
Fifth Third Bancorp....B5
Fitbit ........................... A6
Ford Motor .......... A6,B10
Goldman Sachs GroupA6
Google ......................... B4
INDEX TO PEOPLE
A L
Ailes, Roger ................ B2
B .....................................B4
Brin, Sergey................A6
C
Carlson, Gretchen.......B2
Chan, Chunshek........B10
E Murdoch, Rupert.........A6
Ernst, Dan...................A6
Estrich, Susan.............B2
G O
Gibeau, Frank..............A6
Gonzalez, Arturo.........B4
I Page, Larry..................A6
Icahn, Carl...................A6
K Wheeler, Tom ............. A5
Kang, Steve.................B2
Kelly, John .................. A3
Koh, Lucy.....................B4
MENGLIN HUANG/THE WALL STREET JOURNAL
China accounts for almost half the world’s pork consumption, and
imports are surging as its demand outstrips its supply of pork.
PORK
Continued from the prior page
for $145 million.
The Smithfield deal, China’s
largest acquisition of a U.S.
company at the time, was a
“wake-up call” to other Chi-
nese firms that they could ac-
quire foreign companies, said
James Tam, head of Asia Pa-
cific mergers and acquisitions
for Morgan Stanley, WH
Group’s adviser on the deal.
State-owned Bank of China,
which led a group of lenders
in approving a $4 billion loan
for WH’s purchase of Smith-
field in 2013, described the
loan in its annual report then
as its “social responsibility” to
support domestic companies
expanding abroad.
“The government talks
about food safety and food se-
curity, and having the ability
to feed your people is impor-
tant to security,” said Robert
Wan, Mr. Wan’s son and ad-
viser.
Already, China accounts for
almost half the world’s pork
consumption, and imports are
surging as China’s demand
outstrips its supply of pork. In
the past decade, U.S. pork ex-
ported to China has increased
nearly 10-fold to 675,224 met-
ric tons.
To help design the Zheng-
zhou plant, U.S.-based Smith-
field engineers, plant manag-
ers and food-safety officials
decamped to China for months
at a time, said Ken Sullivan,
Smithfield’s chief executive.
On a television inside the fa-
cility, a Chinese-language com-
mercial depicts Smithfield
pork being served to Western-
Going Half Hog
China consumes nearly half the
world’s pork.
Share of consumption, 2016
China
47%
World
118.4
million
metric
tons
Others
39%
Source: OECD
THE WALL STREET JOURNAL.
THE WALL STREET JOURNAL.
BUSINESS & FINANCE
Green Street Advisors
.....................................B9
Procter & Gamble.......B1
Q RAZORS Razor Wars
Long dominant, Gillette has seen sales of its men's razors decline in
Exxon Is
In Talks
I Qualcomm...................B4 the face of competition from online startups that charge less.
Inkling Systems..........A6 Continued from the prior page
R
Iran Air........................A2 zor featuring a swiveling-ball P&G year-over-year change Sales
To Invest
Russell Investments...B7 hinge that allows the blade to
Iran Aseman Airlines.A1 in grooming unit $1.48 billion
S pivot. Last month, the com- Gillette
J Net Sales Net Sales $1.40 billion
Shuanghui International pany filed a patent application from Price* from Volume†
In Brazil
Holdings....................B1 for a razor cartridge that
Jones Lang LaSalle.....B9 4% 0.38
Smithfield Foods ........ B1 heats up. Schick
K Snap............................A6 Among the items getting a 0.39
price cut: cartridges for the 2
KKR..............................B5 SpaceX.........................B3
L T Fusion razor that features five 0 Dollar 0.13 2015 BY BRADLEY OLSON
Lockheed Martin.........B3
blades in a single head and a Shave Club 0.20 2016 AND PAUL KIERNAN
Tesla..........................B10
Lonergan Partners......A6
special trimmer on the back –2
Twilio...........................A6
for hard-to-reach areas. Exxon Mobil Corp., the
Tyto Lidar....................B4 0.05
A four-pack that was selling FY FY FY FY FY Harry's only big oil company without a
M U for around $19.50 will now go ’12 ’13 ’14 ’15 ’16 0.11 major foothold in Brazil, is in
Mickey Drexler............B5 Uber Technologies.A6,B4 for closer to $15. On average, *Percentage of sales gains for the fiscal year attributable to changes in pricing and volume. talks to gain access to the
Ultra Petroleum..........B1 prices will fall by 12%, P&G †Excluding acquisitions and divestitures Note: Fiscal year 2016 ended June 30, 2016 country’s prized deep-water
N says. P&G in recent years also Source: Euromonitor; P&G THE WALL STREET JOURNAL. resources, according to people
W
News Corp...................A6 launched its own competitor familiar with the matter.
Waymo........................B4
New York Times.........A6 to online razor services, the Harry’s continued to grow has been methodically over- The talks have included dis-
Weber Shandwick.......B5
O Gillette Shave Club. substantially last year. charging them for decades.” cussions about a joint-venture
WH Group ................... B1
Ms. Buckley said P&G will Combined, the two compa- Dollar Shave Club declined partnership through which
Odin Wave .................. B4 Z still offer and develop high- nies’ share of the U.S. market to comment on Gillette’s price Exxon would invest in proj-
P Zillow Group...............A6 end products, but also will put rose to 12.2%, up from 7.2% in drop. The company said its in- ects with state-oil firm Petró-
Palantir Technologies.A6 Zynga .......................... A6 more resources into marketing 2015, according to Euromoni- ternal data show a higher leo Brasileiro SA, or Petro-
and expanding lower-priced tor, which estimates both on- market share than Euromoni- bras, as well as
product lines. The company’s
upgrade last year of its lower-
end Mach 3 razors and blades
line or in-store sales.
U.S. sales at Harry’s,
launched in 2013, more than
tor.
Edgewell Personal Care
Co.’s lower-priced Schick is
potentially buying stakes in
offshore tracts the Brazilian
government plans to lease out
S was the first in many years. doubled to $113 million last most vulnerable to Gillette this year, the people said.
Levandowski, Anthony Schindler, Philipp........B4 Ms. Lieberman, the Bar- year, according to Euromoni- price cuts given that the The specific terms of any
Schmidt, Eric .............. A6 clay’s analyst, called Gillette’s tor. The growth in part came brands are sold side-by-side at agreement have yet to be com-
Long, Wan...................B1 Shine, Bill....................B2 move a “full capitulation on from a deal with Target Corp. retailers, according to ana- pleted. One person cautioned
Lyons, Jenna...............B5 Sikhounmuong, Somsack price,” and said she doubted it to sell razors in its nearly lysts. The company also sells that talks between Exxon and
M .....................................B5
would stem the company’s 1,800 stores, the company’s private-label razors, which are Petrobras remained at a pre-
Spiegel, Evan..............A6
McSweeny, Terrell......B4
Sullivan, Ken...............B2
market-share erosion in the founders said last month. in growing demand. Edgewell liminary stage. But Exxon,
long run. “We think it will be Harry’s co-founder Jeffrey Chief Executive David Hatfield which has eyed deep-water re-
Murphy, Bobby ........... A6 T
very tough to switch users Raider said he was confident said in a January earnings call sources in Brazil for at least a
Musk, Elon...........B3,B10 Tam, James.................B2
back from Dollar Shave Club & Harry’s could retain customers that P&G “continues to do pro- decade, is working with Hess
V Harry’s,” she wrote. even as Gillette cut prices. motion levels that we’ve never Corp. in seeking to expand in
Ohlhausen, Maureen .. B4 Verastegui, Ramon...B10 Both Dollar Shave Club—ac- “People trust that our pric- seen” for Gillette. the country after Brazil re-
P W quired last year by P&G rival ing is fair,” he said. “And there An Edgewell spokesman de- vised its regulations last year
Wan, Robert................B2 Unilever PLC for $1 billion— is significant pent-up frustra- clined to discuss Gillette’s to attract more foreign invest-
R Watford, Michael........B1 and smaller competitor tion among guys that Gillette move or Edgewell’s plans. ment, the people said.
Representatives for Exxon,
Rascoff, Spencer.........A6
Z Hess and Petrobras declined to
STREET
Roginsky, Julie............B2
Ron, Lior......................B4 Zhang, Danian.............B1 said one big fixed-income in- the distortions. comment.
Rosenberg, Don .......... B4 Zuckerberg, Mark.......A6 vestor. Moving back toward what Exxon would join French gi-
Steve Kang, U.S. rates used to count as normal ant Total SA and Norwegian
strategist at Citigroup, says functioning in money mar- state-controlled Statoil ASA,
Continued from the prior page there is a lot of uncertainty kets should be good for in- both of which have formed
Libor borrowing costs and about regulatory changes vestors, reducing the risk of partnerships with Petro-
risk-free overnight indexed promised by the new White the system blowing a leak as bras and expanded in Brazil
swaps has halved from its House, but adds: “Arguably, the Fed raises interest rates. over the past year.
August peak. we’ve reached the peak regu- The flip side for those Royal Dutch Shell PLC has
All this fits with anecdotal lation point in terms of the worrying about rate in- said it plans to invest $10 bil-
evidence of investment U.S.” If restrictions on bank creases is that the Fed un- lion in the country over the
banks loosening their purse balance sheets are relaxed, derstands this, too, and the next five years as part of a
strings and becoming more banks will be more willing to Fed’s surely more likely to push to double its global deep-
willing to lend to clients. “I pick up the free money by raise rates now that there is water production.
have banks calling up and taking the other side of swap less risk of creating scary The race to expand in Brazil
saying they’re going to allo- spreads and cross-currency dollar shortages elsewhere in comes as Petrobras is selling
cate me more balance sheet,” basis swaps, helping reduce the world. tens of billions of dollars in
assets in a bid to work off the
largest debt burden in the
FIGHT clude the headquarters of Eu-
ronet and MoneyGram, the
Within a week of announc-
ing the deal, lobbyists repre-
global oil industry.
Brazil’s conservative gov-
ers at a dinner party.
In a country where cad-
mium-tainted rice, melamine-
infused milk and other food
Continued from the prior page
Gram itself but also for the
lawmakers last week wrote a
joint letter to Treasury Secre-
tary Steven Mnuchin to raise
national-security concerns
senting Mr. Ma’s New York-
listed e-commerce giant
Alibaba Group Holding Ltd.,
from which Ant was spun off
ernment, in power since the
impeachment of former Presi-
dent Dilma Rousseff last year,
sees foreign investment in the
scares have alarmed consum- United States,” said the former about the Ant deal. in 2011, met with the office of oil sector as key to an eco-
ers, imported products are Goldman Sachs banker driving The letter echoed the issues Rep. Robert Pittenger, a North nomic recovery after Brazil’s
seen as safer, according to the Ant’s expansion. He said that Mr. Brown had highlighted to Carolina Republican who is
elder Mr. Wan. the company plans to continue Mr. Mnuchin, who heads working to strengthen CFIUS’s
WH hasn’t been immune to investing in MoneyGram, cre- CFIUS, in a communication authority.
China’s food-safety problems, ating jobs in the U.S. two days earlier that copied 16 In an initial hourlong meet-
Oil giant is looking
however. Mr. Brown is playing up the lawmakers. The Treasury de- ing, Alibaba cited Mr. Ma’s to gain access to
In 2011, Chinese state- Kansas headquarters of his partment didn’t comment on January meeting with Mr.
owned TV revealed that pigs company, which he co-founded either letter, both of which Trump in which the Chinese
the country’s prized
purchased by a Shuanghui in Budapest in 1994. “I’m new were reviewed by the Journal. billionaire pledged to create deep-water resources.
subsidiary had been fed a to this whole Washington The MoneyGram deal is im- U.S. jobs, according to a per-
chemical that increased the thing,” he said in an interview. portant to Ant’s global strat- son familiar with the matter.
animals’ lean-meat content. His efforts are bearing egy. Ant is already huge in The meeting took place a cou-
One such additive, racto- some fruit. After he met with China, and buying MoneyGram ple of weeks before Ant an- worst recession on record.
pamine, has been deemed safe Reps. Kevin Yoder, a Kansas would give it a brand name in nounced the MoneyGram deal. Risks abound for the big oil
by U.S. regulators but has Republican, and Eddie Bernice the American market as well The lobbyists also pre- companies. Petrobras, the
been restricted by more than Johnson, a Texas Democrat, as access to the U.S. com- sented materials touting Ali- dominant player in Brazil, is at
100 countries, including China, whose respective districts in- pany’s 200-country network. baba’s role in helping North the center of a corruption
because of safety concerns. Carolina-based companies sell scandal and is financially crip-
The European Food Safety Au- apparel brands to Chinese cus- pled by its $118 billion debt
thority found that racto- tomers, according to docu- load. While the business envi-
pamine causes elevated heart ments reviewed by the Jour- ronment has improved over
rates and heart-pounding sen- nal. They returned twice more, the past nine months, political
sations. finally meeting Mr. Pittenger, analysts say the 2018 presi-
WH Group now tests the the person familiar with the dential election could easily
urine of each pig that passes meetings said. Alibaba de- reverse that trend.
through all of its facilities—it clined to comment. Still, Brazil is one of the
has more than 30 factories in After the lobbyists’ depar- most important oil fron-
MAURITZ ANTIN/EUROPEAN PRESSPHOTO AGENCY
China that prepare both fresh ture, the North Carolina con- tiers, with as much as 50 bil-
pork and packaged products gressman fired off a Wall lion barrels of recoverable re-
for sale—to ensure there is no Street Journal op-ed, co-au- sources. Some analysts say the
illegal additive. thored by Rep. Chris Smith, a country has the opportunity to
Food safety, though, is a New Jersey Republican and emerge as the world’s fifth-
systemic issue that requires co-chair of the Congressional- largest crude producer by
changes from the breeding Executive Commission on 2025, behind only Saudi Ara-
through the production pro- China, blasting the deal. bia, Russia, the U.S. and Iraq.
cess, said Feng Yonghui, chief Mr. Feagin rebutted the “Everybody wants to get a
analyst from the Zhongke Yi- lawmakers’ criticisms in his piece of the pie,” said Kjetil
heng Modern Farming Infor- own letter to the Journal. Solbraekke, senior vice presi-
mation and Technological In- —Liz Hoffman dent for South America at
stitute. The MoneyGram deal is key to Ant’s global strategy. contributed to this article. consultancy Rystad Energy.
“Just depending on the ac- “These are probably the most
quisitions of one or two com- prolific, high-returning oil as-
panies won’t solve the prob-
lem,” Mr. Feng said.
To satisfy China’s appetite
for foreign pork, WH Group is
ULTRA val Patterson-UTI Energy Inc.
announced a deal to buy Sev-
enty Seven for $1.76 billion.
The deal values Seventy
industry.
Investors in companies that
sought bankruptcy protection
last year when energy prices
sets available in the world.”
Exxon’s interest in a part-
nership is the latest example
of a strategy the company has
preparing to build a second Continued from the prior page Seven’s stock higher than it were at their lowest levels pursued in recent years to
Smithfield-branded plant to that provide drilling and other had ever been before its June caught the rebound and have gain access to state-controlled
produce sausages, bacon and services to energy producers. bankruptcy filing, and it has generally fared better, com- oil and gas resources. To gain
other packaged pork products. Natural-gas prices closed at given Mr. Winchester’s shares pared with those invested in entry to certain areas, the Ir-
It hopes to open the plant in $3.128 per million British ther- a value of more than $15 mil- companies that succumbed to ving, Texas, company has of-
the next few years. mal units on Monday, much lion. the oil bust early on and grap- fered foreign players a chance
The company has a power- higher than the price that Seventy Seven representa- pled with prices that kept to diversify their holdings and
ful supporter: the Chinese gov- pushed Ultra into bankruptcy tives didn't respond to re- plunging even after they had invest alongside Exxon
ernment. but down about 20% from quests for comment. filed. in other projects.
In Luohe, WH’s headquar- their 52-week highs. As for Ultra, some of the More than 250 U.S. and Ca- Joining forces with Petro-
ters in central China, customs Jerry Winchester, CEO of shares due to be distributed to nadian oil-and-gas companies bras in a similar fashion on a
agents began on-site inspec- Seventy Seven Energy Inc., executives are subject to vest- have filed for bankruptcy pro- series of investments may be
U.S.
8% tions of imported pork in 2015, was awarded 440,000 shares ing schedules, and the num- tection since 2014, when a the only way to build an off-
bypassing checks at the port. in August, valued at about bers may change subject to global glut of crude caused en- shore position in Brazil, ana-
Vietnam
3%
This “saves half a month’s $6.6 million, when the drilling pending litigation. The values ergy prices to collapse. Those lysts said. “If you don’t have a
time” and 150 to 200 yuan contractor emerged from also might swing significantly companies, which include oil relationship with a dominant
Russia ($22 to $29) per metric ton of bankruptcy protection, accord- higher or lower depending on and gas producers, pipeline state player, such as Petrobras
3%
pork, Mr. Wan said. ing to securities filings. how the company’s stock operators and oil-field-service in Brazil, it’s very difficult to
—Lucy Craymer, The shares immediately trades. providers, collectively re- go anywhere,” said Ruaraidh
Jacob Bunge climbed from their initial price The situation shows how ported about $118 billion of Montgomery, an analyst at en-
and Junya Qian of $15 and on Dec. 13 made a timing and the ability to hang debt, according to law firm ergy consulting firm Wood
contributed to this article. huge leap above $40 when ri- on can be everything in the oil Haynes & Boone LLP. Mackenzie.
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. Wednesday, April 5, 2017 | B3

BUSINESS NEWS

U.S. Explores Scaled-Down Plans Toshiba’s

Nuclear
NASA and companies laboratory, which was assem-

recalibrate strategy to
reflect push for public-
bled over many years at a cost
of some $100 billion, is slated
to continue operations until at
private partnerships
least 2024.
There is no international
consensus to go beyond that,
BY ANDY PASZTOR though NASA and Boeing,
among others, are pushing to
COLORADO SPRINGS, keep it open until 2028. Mean-
Colo.—With European and while, Russia and Europe are
Russian space agencies look- considering an end to their
ing to bow out of the interna- partnership in the space sta-
tional space station, the U.S. is tion to save money and partly
stepping up plans for a because they want to concen-
smaller-scale replacement in- trate on exploring the moon.
tended to be a base for plane- But with NASA expected to
tary exploration after the firm up its post-space station
mid-2020s. strategy by 2019, there also
At the space industry’s pre- are considerations of recruit-
mier global conference here, ing foreign countries and com-
Load Gets
Heavier
BY TAKASHI MOCHIZUKI
TOKYO—Toshiba Corp. said
Tuesday it would buy out part-
ner Engie SA’s 40% stake in
the operator of a proposed
U.K. nuclear power project for
¥15.3 billion ($138 million) af-
ter Engie asked for the step
under the terms of their con-
tract.
The purchase means that
for now Toshiba will be more
deeply involved in a business

Boeing Co. unveiled this week
a proposal that partly re-
flected these scaled-down am-
bitions.
The company’s concept,
smaller and simpler than a
previous proposal, includes a
crew module serving as a
jumping-off point for a reus-
able vehicle able to reach
Mars. It also features solar-
electric powered propulsion
based on technology devel-
oped for commercial satellites;
and envisions some manufac-
turing activities in space to
maintain the habitat.
A nighttime view of Western Europe captured by crew aboard the international space station.
The announcement, which
largely mirrors the National
Aeronautics and Space Admin-
istration’s latest strategy,
highlights that Boeing, NASA
and industry leaders are all
seeking to recalibrate expecta-
tions to reflect new agency
budget constraints and the
principle of public-private
partnerships championed by
President Donald Trump’s ad-
ministration.
The goal is to “fit within a
funding curve and try to get
something up there that’s op-
erational” by roughly 2025, ac-
cording to Peter McGrath, a
senior Boeing exploration ex-
ecutive.
The Trump administration
has signaled that NASA’s total
budget is likely to stay flat or
decline somewhat, with signif-
icant cuts in earth-observation
and climate change programs.
Under a previous NASA
study contract, Boeing, Lock-
NASA
heed Martin Corp. and other
companies are devising alter-
nate plans for what are called
deep-space gateways. Experts
say that a number of contrac-
tors are likely to participate in
the final program to deploy a
functioning gateway.
The ultimate goal of the
full-fledged program is putting
the technology in place to
safely send astronauts on the
dangerous journey to Mars.
The orbiting international
mercial partners for a follow-
on program envisioned to cost
$1 billion or more annually.
William Gerstenmaier, who
heads NASA’s manned explora-
tion efforts, emphasized the
importance of international
cooperation on a replacement
platform. Striving to take hu-
mans to Mars entails “a scale
that’s more than a single
country” can handle, he said
during one panel.
NASA currently spends
roughly $3 billion a year sup-
plying, manning and otherwise
operating the space station.
it is hoping to exit—nuclear
power projects outside Japan.
Last week, Toshiba’s U.S.
nuclear unit, Westinghouse
Electric Co., filed for bank-
ruptcy protection following
huge cost overruns at nuclear-
reactor projects in the U.S.
Southeast. Toshiba said the fil-
ing triggered a clause in its
contract with Engie that gave
the France-based company the
right to sell its stake in Nu-
Generation Ltd. or NuGen.
Toshiba already owns 60% of
the U.K. joint venture. The tim-
ing of the deal is under discus-
sion, Toshiba said.
NuGen has been trying to

Fox News Faces Another Sex-Harassment Claim
BY JOE FLINT
Fox News contributor Julie
Roginsky filed a lawsuit alleg-
ing she was sexually harassed
by the cable-television net-
work’s former chairman, Roger
Ailes, and that he and other
executives retaliated when she
rejected his unwanted sexual
advances.
The gender-discrimination
suit, filed Monday in New York
state court, claims Mr. Ailes
repeatedly harassed her and
that because she refused to en-
gage in a sexual relationship
with him, she didn’t receive a
promised promotion to host
the afternoon show “The Five.”
Ms. Roginsky alleges the
network retaliated against her
further when she refused to
join other on-air Fox News tal-
ent in defending Mr. Ailes af-
ter a sexual-harassment suit
was filed against him by for-
mer anchor Gretchen Carlson.
Ms. Roginsky’s suit names
as defendants Mr. Ailes, Fox
News and Bill Shine, the net-
work’s current co-president.
In a written statement, a
lawyer for Mr. Ailes, Susan Es-
trich, denied the allegations,
describing Ms. Roginsky’s
characterizations of her meet-
ings with Mr. Ailes as “total
hogwash” and an attempt at
“character assassination.”
“The idea that Mr. Ailes
would pressure Ms. Roginsky
or any other women to have
sexual relations with him is to-
tal nonsense,” Ms. Estrich said.
Mr. Ailes resigned from Fox
News in July in the midst of a
probe by parent company 21st
Century Fox into claims he ha-
rassed multiple women. He has
denied all such allegations.
Representatives of Fox
News and 21st Century Fox de-
clined to comment. 21st Cen-
tury Fox and Wall Street Jour-
nal parent News Corp share
common ownership.
Ms. Roginsky, who last ap-
peared on Fox News this past
Saturday, has the same attor-
ney as Ms. Carlson, who set-
tled her case for $20 million.
On Monday, Kevin Lord, Fox
News executive vice president
of human resources sent an
email to staff noting that “in
light of some of the accounts
published over the last few
days,” he wanted to re-empha-
size what the company has
said in internal training ses-
sions: that employees con-
cerned about workplace behav-
ior should contact him or
other designated individuals.
Ms. Roginsky’s suit adds to
mounting legal and workplace
drama at Fox News. In a No-
vember filing, 21st Century Fox
said it had costs of about $35
million in the quarter ended in
September related to “settle-
ments of pending and poten-
tial litigations” related to Mr.
Ailes. Federal prosecutors are
investigating if the company
made insufficient financial dis-
closures about settlements.
And the controversy has ex-
tended to star anchor Bill
O’Reilly, who is now under in-
creased scrutiny after a New
York Times report that he or
21st Century Fox have paid $13
million to women who claimed
they were sexually harassed by
him. Fox said in a written
statement in response to that
article that it takes “workplace
behavior very seriously” and
that Mr. O’Reilly denies the
merits of the claims against
him but “has resolved those he
regarded as his personal re-
sponsibility.”
build three reactors using
Westinghouse’s AP1000 model
in West Cumbria, in northwest
England. On March 30, NuGen
said U.K. nuclear regulators
approved the AP1000 design.
However, it is unclear
whether the reactors will be
built. Toshiba said that despite
taking full ownership of Nu-
Gen, it ultimately wants to sell
the company. Toshiba’s chief
executive has made clear that
it wants to withdraw fully
from the nuclear power plant
business overseas to guard
against further losses.
Toshiba said after the West-
inghouse bankruptcy that it
expects to record a loss of $9
billion in the year ended
March 31. The firm is trying to
sell its computer memory-chip
business to fill the hole cre-
ated by the nuclear losses.

JOHN CARREYROU INVESTIGATIVE REPORTER

The Face of
Real News

John Carreyrou’s nearly year-long investigation

into blood-testing startup Theranos drew
widespread public attention to the excesses
of the Silicon Valley boom and voided tens of
thousands of blood samples that could have
endangered public health.

Real journalists and real news from America’s

most trusted newspaper.

Watch the film illustrating this story

at WSJ.com/John

#TheFaceOfRealNews

Source: Pew Research Center, Political Polarization & Media Habits, 2014

© 2017 Dow Jones & Company, Inc. All rights reserved. 6DJ5132
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
B4 | Wednesday, April 5, 2017
Chip Firm
Requests
Lawsuit’s
Dismissal
BY TED GREENWALD
AND BRENT KENDALL
Qualcomm Inc., whose
chips can be found in virtually
every smartphone, asked a
U.S. federal judge to dismiss a
lawsuit by the Federal Trade
Commission that accused the
company of engaging in anti-
competitive behavior to main-
tain market dominance.
The chip maker filed the re-
quest with U.S. District Judge
Lucy Koh, saying the FTC’s le-
gal complaint failed to support
even basic elements of an an-
titrust violation. “The com-
plaint does not contain any
factual allegations of anticom-
petitive harm to Qualcomm’s
rivals in the supply of modem
chips,” the company said in a
30-page legal submission it
filed late Monday night in
Northern California.
The motion to dismiss aims
to “take on each one of [the
FTC’s] theories and explain
why the theories don’t support
a proper claim,” said Don
Rosenberg, Qualcomm execu-
tive vice president and general
counsel.
An FTC spokesman didn’t
respond to a request for com-
ment.
The FTC in January sued
Qualcomm, alleging the chip
maker used unlawful tactics to
maintain its hegemony in the
market for chips that enable
cellphone communications.
The FTC’s complaint says
Qualcomm used its dominant
position to block competitors
and impose onerous terms on
handset makers. It asked the
court to prohibit Qualcomm’s
alleged misconduct and to
seek redress for parties that
were treated unfairly.
Qualcomm has vowed to
fight the FTC’s suit, saying the
allegations were based on
flawed legal theory and mis-
conceptions about the mobile-
technology industry.
Mr. Rosenberg said Qual-
comm’s motion asserts the
FTC provided no evidence for
allegations that Qualcomm’s
patent-licensing practices cur-
tailed competition; that royal-
ties the company charged for
patents essential to cellular
communications weren’t fair,
reasonable and nondiscrimina-
tory; and that it charged dif-
ferent royalty rates to differ-
ent parties.
“Every one of these things
is off the mark or without any
kind of supporting factual un-
derpinning, even if the theory
was a correct one,” he said.
Qualcomm’s motion to dis-
miss the FTC’s case is a rou-
tine early move in what could
be a lengthy legal process. To
persuade Judge Koh to dismiss
Qualcomm objects
to U.S. complaint
accusing the firm
of antitrust offenses.
the FTC’s case, Qualcomm
must convince her that the
commission’s case is so with-
out merit that no further pro-
ceedings are required.
The FTC’s response to the
motion is due May 12, accord-
ing to a schedule agreed to by
the parties. It is likely that
Judge Koh would want to hear
oral arguments before making
a decision on the motion.
A question hanging over
the litigation is whether the
leadership change in Washing-
ton, D.C., will affect the case.
The FTC filed its suit in the
waning days of the Obama ad-
ministration, when Democrats
held a majority on the com-
mission. Its new acting chair-
woman, Republican Maureen
Ohlhausen, dissented from the
FTC’s decision to file the suit.
However, Ms. Ohlhausen
doesn’t yet preside over a Re-
publican majority despite the
party’s victory in November.
The five-member FTC has
three vacancies, and the other
sitting commissioner, Demo-
crat Terrell McSweeny, voted
in favor of the lawsuit.
The FTC action is one of a
series of international regula-
tory and legal challenges to
Qualcomm targeting the pat-
ent-licensing business that ac-
counts for most of its profit.
Google Pushes Driverless-Car Suit
Court filings offer
details on claims
that former employee
stole technology
BY JACK NICAS
AND TIM HIGGINS
Google Inc. accused its for-
mer driverless-car executive,
Anthony Levandowski, of qui-
etly developing a competing
company for more than three
years before he left the inter-
net giant and eventually sold
the business to Uber Technol-
ogies Inc., according to legal
documents released Monday.
Mr. Levandowski earned
more than $120 million at Al-
phabet’s Google “for his sup-
posed contributions” to develop
the company’s self-driving car
program, now called Waymo,
according to a Google suit
against Mr. Levandowski in-
cluded in the documents.
The court filings offer new
details about an alleged
scheme by Mr. Levandowski
and other former Google em-
ployees to steal technology
that is at the center of a seven-
week-old battle between Uber
and Waymo in U.S. District
Court in San Francisco.
Neither Mr. Levandowski
nor his lawyers responded to
requests for comment.
Waymo sued Uber in February
for allegedly stealing trade se-
crets to jump-start its own self-
driving-car program last year.
Uber is fighting the lawsuit and
has argued in legal documents
that many of the claims should
be instead brought against Mr.
Levandowski in employment-ar-
bitration proceedings.
New details of Mr. Levan-
dowski’s alleged moves to start
competing companies were re-
vealed in two separate arbitra-
tion suits Google filed against
him in October. Uber attorneys
disclosed the suits Monday as
part of their petition to move
some of the claims to arbitra-
tion.
Two years after Mr. Levan-
Google Rolls Out New Ad-Monitoring Tools
BY JACK MARSHALL
AND JACK NICAS
Google unveiled measures
meant to help marketers track
where advertisements appear
across YouTube, in the wake
of the controversy over the
company’s placement of ads
alongside videos with objec-
tionable content.
The tech giant, a unit of Al-
phabet Inc., told marketers
and advertisers on Monday
that it plans to allow third-
party measurement companies
to monitor where ads appear
on YouTube and to report back
to marketers on the “brand
safety” of its videos.
Google already offers simi-
lar functionality allowing mar-
keters to track whether their
ads were “viewable” or not,
meaning whether they actually
appeared on users’ screens.
According to executives at
ad agencies, Google also has
promised to offer video-level
reporting across YouTube by
the third quarter of this year.
That feature would give ad-
vertisers a full list of specific
videos against which their ads
appeared and how many times
their ads were displayed on
each, perhaps making market-
ers more comfortable with ad-
vertising on the service.
BOEING
Aerospace Firm Adds
Seat-Maker Deals
Boeing Co. has struck addi-
tional deals with aircraft-seat
makers, including one for a busi-
ness-class line, in an effort to
ease supply-chain logjams as it
increases jetliner production.
The company said Tuesday it
agreed to purchase premium
seats for its twin-aisle 787 from
Japan’s Jamco Corp. and expand
a deal for California-based
startup Lift to supply economy-
class seating for the Dreamliner.
Boeing and rival Airbus SE
are expanding partnerships with
seat makers to gain more con-
trol over their supply chains and
prevent partially completed jets
from being left on the ground
awaiting fittings.
The U.S. company last year
signed an exclusive deal with
TECHNOLOGY
Anthony Levandowski is at the center of a suit filed by Google, which accuses him of not disclosing efforts to build a rival company.
dowski joined Google in April
2007, the company began de-
veloping a self-driving car and
he became an early member of
the team.
Around August 2012, the
Google suit alleges, he incorpo-
rated a business named Odin
Wave LLC at an address he
owned in Berkeley, Calif. The fol-
lowing summer, a Google vendor
told the company that Odin
Wave ordered a similar custom
part for proprietary laser-sensor
technology that Google built for
its driverless cars, according to
the court documents.
By February 2014, Odin
Wave merged with another
firm named Tyto Lidar LLC,
which was managed by a
friend of Mr. Levandowski, ac-
cording to the documents. In
early 2015, the documents say,
Google noticed Tyto’s laser
technology appeared to over-
Google plans to allow third-party companies to monitor where ads appear on YouTube.
A Google spokeswoman said
the company hasn’t announced
the timing for video-level re-
porting.
Marketers and advertising
agencies had been pushing
Google for more transparency
even before the recent uproar
over controversial ad place-
ments.
Other changes Google sent
to advertisers relate to poli-
cies it announced last month,
including faster reviews of
Lift, a unit of EnCore Group, to
buy economy-class seats for
Boeing’s new single-aisle 737
Max jets. Lift’s rivals include in-
dustry heavyweights such as
B/E Aerospace Inc. and Zodiac
Aerospace SA.
Boeing said carriers would
still order seats directly from its
partners but the jet maker’s own
deals would offer it more input
into the design of the products
and further confidence that they
will be delivered on time.
—Doug Cameron
STAPLES
U.S. Retailer Is
Exploring a Sale
Staples Inc. is exploring a
sale, less than a year after its
effort to merge with rival re-
tailer Office Depot Inc. failed on
antitrust grounds.
The Framingham, Mass., of-
lap with its own, so Google
says it considered whether to
use Tyto’s technology or pur-
chase the company.
Mr. Levandowski aided that
inquiry, even visiting Tyto’s
headquarters on behalf of
Google, the company alleges,
yet “throughout this process,
Levandowski never disclosed a
relationship with Tyto and its
employees.”
In 2015, the suit alleges, a
Google driverless-car colleague
began helping Mr. Levandowski
create a competitor. One of the
Google arbitration suits names
this colleague as a defendant.
The name is redacted in much
of the document released Mon-
day, but on the last page the
name is mistakenly revealed:
Lior Ron, a Google driverless-
car engineer who along with
Mr. Levandowski founded Otto,
the self-driving truck company
problematic ad placements
and the use of artificial intelli-
gence technology to help de-
tect objectionable content.
The company said it would
have new default settings that
set a higher bar for the videos
that qualify for running ads,
and said it would expand its
guidelines to block ads from
more videos.
For instance, previously
Google prohibited ads on You-
Tube videos advocating vio-
BUSINESS WATCH
fice-supplies seller is in talks
with a small number of possible
private-equity bidders, according
to people familiar with the mat-
ter. The talks are early and it is
possible they won’t lead to a
deal, the people cautioned.
Should there be one, given a
typical takeover premium, it
could value the retailer at
roughly $7 billion or more.
Staples has been closing
stores and in December agreed
to sell a majority stake in its Eu-
ropean operations to private-eq-
uity firm Cerberus Capital Man-
agement LP, seeking a
turnaround after a federal judge
blocked its proposed $6 billion
tie-up with Office Depot.
The retailer reported its fifth-
straight drop in annual sales,
and has lost more than one-fifth
of its market value in the past
year.
—Matt Jarzemsky
and Dana Mattioli
THE WALL STREET JOURNAL.
WSJ.com/Tech
ANDREJ SOKOLOW/DPA/ZUMA PRESS
they sold it to Uber. dowski downloaded thousands
Mr. Ron didn’t respond to of confidential documents be-
requests for comment. fore leaving Google and bring-
In late 2015, while still ing them to Uber after the
working at Google, the pair Otto acquisition.
founded a firm called 280 Sys- But he may find himself
tems and repeatedly attempted fighting some of the claims of
to lure Google colleagues to Waymo’s federal suit on his
join their new venture, accord- own. Uber’s attorneys are peti-
ing to the suit. Mr. Levan- tioning to have many of the
dowski pitched direct reports federal suit’s claims moved to
in meetings at Google offices, the arbitration proceedings
and the two men also tried to where Google initially sued Mr.
persuade colleagues at two Levandowski. Uber’s lead at-
meetings at Mr. Levandowski’s torney, Arturo Gonzalez, said
home, according to the docu- in an interview Friday that
ments. Google’s employment agree-
The pair quit Google about ment with Mr. Levandowski
two weeks apart in January mandates that such disputes
2016 and renamed the com- are handled via arbitration.
pany 280 Systems as Otto and Mr. Levandowski has hired his
merged it with Tyto, the suit own personal attorneys who
alleges. In August 2016, Uber recently told the federal judge
acquired Otto for $680 million that Mr. Levandowski was in-
in stock. voking the Fifth Amendment
Waymo alleges Mr. Levan- to avoid self-incrimination.
eos and websites on which
Google places ads. The com-
pany told tech website Recode
that videos advertisers have
flagged for inappropriate con-
tent account for less than one
thousandth of a percent of ad-
vertisers’ total views.
The Google spokeswoman
said the company is now using
smart software to automati-
cally detect inappropriate con-
tent and is capturing five
times more objectionable vid-
RICHARD VOGEL/ASSOCIATED PRESS
eos than it did previously.
Observers said reliance on
such software is rife with chal-
lenges, in part because com-
puters often struggle to under-
stand the context and nuance
required to determine whether
a video violates YouTube’s ad
policies.
Indeed, YouTube hasn’t em-
ployed such software to screen
lence against people based on videos to see whether they
race, religion, gender or simi-
lar categories. But now it
should be pulled down from
the site. Instead, it generally
plans to ban ads on any videos required a human reviewer to
that are demeaning or incendi- weigh in on any such moves.
ary toward such groups. Google’s efforts to pull ads
Google Chief Business Offi- from more videos risks anger-
cer Philipp Schindler said in ing its community of YouTube
interviews with several news video creators, some of whom
outlets that the company can’t have complained publicly in
guarantee ads will never ap- recent days that they have lost
pear alongside objectionable revenue because of the contro-
content, in part because of the versy over Google’s ad place-
sheer number of YouTube vid- ments.
RALPH LAUREN and customer experience in
place.”
Company to Close a The moves are part of a pre-
Main New York Store viously announced plan to rein-
vigorate the business, shep-
Ralph Lauren Corp. plans to herded by Stefan Larsson, who
close its largest retail shop, a in February said he would depart
Polo store on Fifth Avenue in as chief executive after less
Manhattan, the latest sign of than two years at the helm
the pressure on brick-and-mortar amid a dispute over control of
stores in the U.S. as consumers the creative side of the business.
turn to online shopping. Ralph Lauren on Tuesday also
The struggling fashion house said it would switch to a new e-
said it plans to close the Polo commerce platform that is more
store at 711 Fifth Avenue and cost-effective and will “deliver a
move its products to the Ralph more consistent customer expe-
Lauren men’s and women’s rience” thanks to a new partner-
stores on Madison Avenue and ship with Salesforce.com Inc.’s
its downtown locations. Ralph cloud services.
Lauren said it would continue to The company said the moves
operate seven additional store announced Tuesday, along with
locations and its Polo Bar Res- other actions, will lead to about
taurant in New York City. $140 million in annual savings.
Jane Nielsen, chief financial The company expects to incur
officer, said the closure of the restructuring charges of about
Polo store was meant “to ensure $370 million.
we have the right distribution —Joshua Jamerson
 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.
FABRICE COFFRINI/AGENCE FRANCE-PRESSE/GETTY IMAGES
Google co-founder Sergey Brin.
The firm gave to aid refugees.
TravelBan
DroveUp
Activism
ByCEOs
BY VANESSA FUHRMANS
From gay rights to race re-
lations, chief executives are
speaking out in growing num-
bers on social policies that go
beyond issues directly affect-
ing their businesses. But the
massive response to the White
House’s initial travel ban ear-
lier this year marked a water-
shed moment in CEO activism,
a new analysis suggests.
In the days after President
Donald Trump signed the Jan.
27 order temporarily banning
U.S. entry to people from
seven Muslim-majority coun-
tries (since revised to six),
business leaders protested the
move on an unprecedented
scale, calling the order un-
American and potentially
harmful to employees and cus-
tomers. The White House has
said the ban was necessary to
help prevent terrorists from
coming into the country.
According to researchers at
communications firm Weber
Shandwick, which tracked
corporate reactions to the ban,
at least 153 large and midsize
companies spoke out; in 84%
of instances, it was the CEO
directly who took the stand.
The firm’s analysis didn’t in-
clude dozens of smaller-com-
pany leaders who also spoke
out or signed open letters op-
posing the now-stayed ban.
“There’s been nothing like
this travel ban that has cre-
ated such a furor before”
among companies, said Leslie
Gaines-Ross, Weber Shand-
wick’s chief reputation strate-
gist. It signals “going forward,
there is a new kind of CEO ac-
tivism rising up.”
What marked a particular
shift from previous instances
of executive activism was the
large number of compa-
nies—48% of them—that took
specific action in response to
the ban, rather than simply is-
suing a corporate statement,
she said.
Alphabet Inc.’s Google, Lyft
Inc. and Twitter Inc., for in-
stance, altogether pledged or
donated millions of dollars to
the American Civil Liberties
Union and other groups sup-
porting immigrants and refu-
gees.
Starbucks Corp. then-CEO
Howard Schultz said the com-
pany would hire 10,000 refu-
gees over the next five years.
*Currently available on Google Pixel and Moto Z
A Concierge
To Plan Your
Baby Shower
Employers add perks for the pregnant
to keep mothers at work
BY RACHEL FEINTZEIG
When Lexus Smith found
out that her second child
would likely arrive weeks be-
fore his due date, she tapped
an unlikely source to help
with last-minute baby prepa-
rations: her employer.
A concierge provided by
her company, Fifth Third
Bancorp, helped the 25-
year-old customer service
representative reschedule
her baby shower, locate pho-
tographers for pregnancy
portraits and order birth an-
nouncements.
Companies have been add-
ing new benefits for working
parents in the past few years
as they seek to attract and
hang on to employees bal-
ancing family and work.
Johnson & Johnson pays
to ship mothers’ breast milk
home from business trips,
and investment firm KKR &
Co. allows employees to
bring nannies along for work
travel; tech company Gusto
provides new parents meal-
delivery services and house-
cleanings. To add to the
growing list are Fifth Third’s
two maternity concierges,
who have been on duty at
the Cincinnati-based bank
since January. Fifth Third’s
concierges tend to the needs
of expectant employees and
those with infants, recom-
mending strollers, ordering
breast pumps and research-
ing fitness options for new
mothers seeking ways to get
back in shape.
They even plan parties
where parents reveal the
gender of their unborn child
to family and friends, some-
times by cutting into a cake
with blue or pink crumb; a
concierge arranged one
J. Crew’s Creative Director to Step Down
BY KHADEEJA SAFDAR
J. Crew Group Inc.’s long-
time creative director, Jenna
Lyons, is leaving the embattled
apparel retailer, which has
been struggling with weak
sales and a heavy debt load.
Once seen as a potential
successor to Chief Executive
Mickey Drexler, Ms. Lyons has
been credited as the creative
force behind J. Crew’s signa-
ture looks. The company high-
lighted must-have “Jenna’s
Picks” on its website and fea-
tured her in its marketing, in-
cluding a video clip Friday that
was published on Facebook,
Instagram and Twitter. Ms. Ly-
ons, a 26-year employee, even
became a pop-culture figure in
her own right, playing an ad-
vertorial executive in the third
season of HBO’s “Girls.”
Ms. Lyons will serve as a
MANAGEMENT
mother-to-be to spread the
news by releasing a balloon
as opposed to cutting a cake.
Fifth Third’s perk is in-
tended to keep more women
advancing at work during a
critical turning point. Em-
ployees who have taken ma-
ternity leave in the previous
12 months leave the com-
pany at nearly twice the rate
of all women at the firm, ac-
cording to the bank. The
bank’s leave program is six
weeks at either 100% or 60%
pay, depending on how long
the employee has worked
there. Fifth Third says it
plans to increase its leave
program later this year.
Nearly 140 employees are
taking part in the three-
month-old concierge pro-
gram, open to expectant
mothers and those with in-
fants under a year old. The
bank said it is spending six
figures on the workers, who
are contracted via concierge
company Best Upon Request
and work full-time in Fifth
Third’s Cincinnati office.
Teresa Tanner, a Fifth
Third executive, developed
the program after hearing
from expectant and new
mothers in the bank’s ranks
who were overwhelmed by
all they had to get done be-
fore a baby’s arrival.
“We have to get more
women in leadership posi-
tions in our company,” Ms.
Tanner said. Some 60% of
Fifth Third’s 18,000 employ-
ees are women, but that
share drops to 23% for its
executives and senior man-
agers.
So far, Fifth Third employ-
ees are keeping concierge
Jessica Hanson busy. She has
scoured a local Target for
items for a pregnant em-
Jenna Lyons will serve as a consultant until her contract expires.
consultant until her contract
expires in December, the com-
pany said Monday.
She won’t be replaced, and
her duties will be given to
other members of Mr. Drexler’s
Wednesday, April 5, 2017 | B5
Maternity concierges Michelle Long and Jessica Hanson, left and center, with Fifth Third Bancorp
employee Delisha Murray, right, during a consultation in Cincinnati.
ployee’s hospital bag, surprise pregnancy and one
planned a St. Patrick’s- who ended up with two sets
themed first birthday of twins after undergoing in-
party—which involved locat- fertility treatments. The con-
ing a shamrock headband cierges keep a list of coun-
from Etsy.com and ordering selor recommendations on
a pastel green cake from a hand for those suffering
local bakery—and compiled a from postpartum depression.
dossier of 10 different The program is targeted
churches for an employee to women, but the maternity
unsure where to have her concierges have received a
baby baptized. Once, she few requests from fathers.
even helped an indecisive They direct those to the
worker select a baby name. company’s main concierge
“We’re like a wedding program, which offers gro-
planner, but we’re your baby cery shopping and other ser-
planner,” Ms. Hanson said. vices for all employees.
The duo receives two to Assistance for expecting
three inquiries a day from and new parents may help
employees exploring the ser- new mothers stay on when
vice for the first time; some they’re at risk for “dropping
mothers and moms-to-be al- out and then regretting it
ready email them as many as later,” said Kenneth Matos,
10 times a day, Ms. Hanson an executive at consultancy
said. The most common re- Life Meets Work. Mr. Matos
quests: child-care advice and says it’s part of a broader
assistance. trend among companies to
Ms. Hanson and her part- lighten the burden of chores
ner also provide some emo- for both male and female
tional support and connec- employees, as firms try to
tion. She has heard from a stay lean while expanding
woman overwhelmed by a work duties.
Ms. Lyons didn’t respond to
a request for comment. In a
ANDREW FRANCIS WALLACE/TORONTO STAR VIA GETTY IMAGES
news release she said, “I am
excited about the next chapter
for J. Crew as well as the op-
portunity for other creative
leaders within the organiza-
tion to step up and take on
new responsibilities.”
The retailer and its inves-
tors have been gearing up to
battle over a potential restruc-
turing of its roughly $2 billion
in debt. The company was
taken private in 2011 in a lev-
eraged buyout by a group of
private-equity firms with the
support of Mr. Drexler.
In December, S&P Global
Ratings warned that the com-
team. Somsack Sikhounmuong, pany’s capital structure was
who has been with the com- unsustainable. J. Crew sued its
pany since 2001 and is head of lenders in February, attempt-
women’s design, will be pro- ing to prevent them from
moted to chief design officer blocking the company’s trans-
and report to Mr. Drexler. fer of intellectual property to
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JESSICA EBELHAR FOR THE WALL STREET JOURNAL
“That’s the last thing you
can kind of do to get more
time out of [workers] before
you just need to hire more
people,” he said.
American Express Co. also
has a concierge program for
parents navigating company
benefits, and Stanford Uni-
versity’s hospitals and health
clinics offer emergency de-
partment physicians meal
delivery, laundry and house-
cleaning services when they
work extra shifts.
Ms. Smith, the customer-
service representative, said
that delegating tasks to Ms.
Hanson allowed her to focus
on work in the weeks leading
up to the birth of her son,
Zavier.
As she prepared to return
to the office in late March
after a six-week maternity
leave, the concierge had
helped her find day-care op-
tions. Now back at work,
she’s glad to have someone
to fall back on. “In a way
they’re like my mom,” she
said.
an offshore subsidiary and out
of their grasp.
J. Crew Group, which in-
cludes the Madewell chain, re-
ported a $23.5 million loss for
the fiscal year ended Jan. 28,
as revenue fell 3% to $2.43
billion.
“We have taken important
steps to improve our perfor-
mance and are confident that
the team in place will continue
these efforts,” Mr. Drexler said
in Monday’s release. The com-
pany said several initiatives
are under way to improve its
sourcing and supply chain, and
it is reviewing other ways to
improve its operations.
Ms. Lyons “made the brand
appealing and have a strong
point of view,” said fashion in-
vestor Gary Wassner, “but that
consumer has now changed
and is looking for something
different.”
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
B6 | Wednesday, April 5, 2017 THE WALL STREET JOURNAL.

FINANCE & MARKETS

Traders Sample a Disruptive Technology

Merchants and banks
test blockchain to
record transactions
for commodities
BY STEPHANIE YANG
Banks and traders are ex-
perimenting with the technol-
ogy behind bitcoin in an effort
to solve longstanding prob-
lems in the trading of physical
commodities.
Blockchain, the technology
used to record ownership of
the cryptocurrency bitcoin,
has been making inroads re-
cently in the financial world.
Central banks and other insti-
tutions are exploring it for
payments and data sharing.
Big banks including J.P. Mor-
gan Chase & Co. and Citigroup
Inc. have tested the technol-
ogy in recording financial
transactions.
Now commodities players
are trying out blockchain to
help buy and sell goods and
raw materials.
French bank Natixis and
commodity trading firm Tra-
figura Pte. Ltd. unveiled a
platform in late March with
International Business Ma-
chines Corp. to carry out U.S.
crude-oil transactions elec-
tronically using blockchain
technology.
A group of participants in
the cotton market is also eval-
uating the use of blockchain in
trading and plans to release
its results in May. The consor-
tium, which has collaborated
with IBM to use its blockchain
platform, includes big agricul-
tural commodities traders Car-
gill Inc. and Louis Dreyfus Co.
gold bar or bale of cotton, and Another challenge is per-
Blockchain Breakdown records all points of sale on an suading an industry that has
How a traditional oil trade encrypted list that is verified been resistant to change to
is executed using blockchain by multiple parties. embrace a new system, espe-
technology “I’m more and more con- cially one that has had some
7 Buyer and seller vinced that this technology is miscues. While the underlying
exchange title and going to be disruptive for the protocol for bitcoin has never
payment industry,” said Patrick Arnaud, been hacked, apps and ser-
1 Buyer creates managing director of trade vices built on top of it have
letter of credit for BA
NK and commodity finance at ING been plagued by privacy and
NK
BA payment Groep NV. ING, Société Gé- intrusion scandals.
nérale SA and commodities- Mallory Alexander Interna-
Car trading house Mercuria In- tional Logistics has run two
go
lett
er Inv vestment Co. in February shipping trials with blockchain
oice
of it
d executed the first delivery of this year, but its president re-
cre
crude oil to run entirely on a mains skeptical about new
blockchain platform. The trade trading technologies.
6 Oil ships to 2 Seller collects
tracked the transport of crude Over the past 15 years or
destination Each step is cargo files and from Africa to China. more, attempts to modernize
recorded using invoice ING found that the use of data in shipping “always seem
blockchain blockchain, instead of paper to hit a snag,” said Neely Mal-
smart contract certification, reduced its in- lory, a Mallory executive.
volvement in each transaction “There are a lot of countries
to about 25 minutes from an that U.S. agriculture is shipped
5 Vessel agent Ori
gin
3 Oil is loaded average of three hours. Block- to that are not ready to em-
documents origin Bill onto the vessel chain also cut costs by about brace it.”
o
Lad f
and receipt ing
30%, the bank said. Another concern for com-
The banks are in discus- modity traders is how much
4 Inspector sions to conduct a similar proprietary information would
documents trade in liquefied natural gas, be shared with others if block-
quantity and according to Mr. Arnaud. chain is used. Those experi-
quality Despite the eagerness of menting with the technology
some traders to adopt the say there is still discussion on
technology, blockchain faces what data would be limited
obstacles to its widespread and to which parties.
use in commodities trading. “No one would want their
Regulatory requirements information on who’s trading
Source: ING Hanna Sender/THE WALL STREET JOURNAL. for exchanging goods are dif- what” to be seen on the block-
ferent from country to country chain, said Mark Pryor, chief
The technology records Firms are turning to block- producers, especially when and may need to change to be- executive of commodities trad-
each transaction in a ledger of chain because the exchange of payments or deliveries are de- come compatible with cross- ing software provider Seam,
which every computer has an physical goods is plagued by layed or interrupted. It can border blockchain trades. which is leading the cotton
identical copy. This makes pitfalls that have existed for also frustrate those unable to “It’s going to brush up consortium.
counterfeiting virtually impos- decades in these notoriously track where their materials against an existing compliance Mr. Pryor said using block-
sible because every transac- opaque markets. come from. regime as well as regulation or chain could change the mind-
tion can be checked against Trades are routinely bogged By establishing a decentral- legislation in its own right,” set of some hardened com-
the other records. It also obvi- down by paper documents ized system, traders think they said Emma Weston, co- modities traders. “People are
ates the need for costly and that take time to verify and can cut down on time, ex- founder of AgriDigital, a com- not used to working in an en-
time-consuming back-office can be lost or forged during penses and opportunities for modity-management platform vironment where they trust
record-keeping by third par- ownership changes. This can fraud. Blockchain can create that has used blockchain to the data, where they trust the
ties like finance companies. be costly for consumers and digital codes for, say, each trade grain. systems,” he said.

AmTrust W.L. Ross in China Steel Venture Hedge Fund

Sound Point
Revises BY JAMES T. AREDDY Though his name remains at-
tached to the private-equity
To Sell Stake
3 Years of SHANGHAI—The private-
equity firm founded—but long
ago sold—by U.S. Commerce
firm, he sold W.L. Ross to At-
lanta-based Invesco Ltd. more
than a decade ago. When he BY ROB COPELAND

Earnings Secretary Wilbur Ross Jr. is

BY MICHAEL RAPOPORT
AmTrust Financial Ser-
forming a venture to invest in
China’s steel industry with one
took the helm at the Com-
merce Department this year,
Mr. Ross pledged to dispose of
Hedge fund Sound Point
Capital Management LP
of the country’s largest pro- many investment interests but agreed to sell a minority stake
ducers, according to a state- retain some. to Neuberger Berman Group
ment. A spokesman for Mr. Ross LLC’s Dyal Capital Partners
CHRIS KLEPONIS/PRESS POOL

vices Inc. revised its last three
years of earnings downward
by about $136 million because
of accounting errors, notably
in how the company booked
revenue from the warranty
contracts it provides.
The New York property-
and casualty-insurance com-
pany filed its delayed 10-K an-
nual report with the Securities
and Exchange Commission. In
addition to the restatement of
earnings dating back to 2014,
the company reiterated that it
had weaknesses in its internal
accounting safeguards.
AmTrust said it was now
current on all exchange listing
requirements, which had been
W.L. Ross & Co. plans to declined to comment. Execu- arm, people familiar with the
join an arm of Shanghai-based tives at W.L. Ross didn’t re- matter said.
China Baosteel Corp. and spond to requests for com- The sale is an indication of
other investors to acquire ment. sustained demand among as-
steel-industry assets in China U.S. investors continue to set managers to own pieces of
with an aim to improve the see opportunity in rapidly hedge-fund firms, despite re-
sector’s long-term “commer- growing China even while cent poor performance and in-
cial viability,” according to an Commerce Secretary Wilbur Ross founded and sold W.L. Ross. American businesses and vestors’ withdrawals that have
invitation to a signing cere- Washington politicians criti- beset the highly paid industry.
mony reviewed by The Wall China’s steel industry ac- ufacturing and now an archi- cize its economic policies. Sound Point is one of the
Street Journal. The Friday counts for half of world output tect of Trump administration While China’s steel industry larger credit-focused hedge-
event in Shanghai coincides and is a source of economic plans to toughen U.S. trade causes trade friction, Beijing is fund firms. Dyal has emerged
with Chinese President Xi Jin- tension with the U.S. and policy, has been a persistent also targeting the sector for as a voracious buyer of hedge-
ping’s two-day summit in the other countries that say its and vocal critic of what he has cuts in overcapacity, environ- fund and private-equity stakes.
U.S. with President Donald massive exports harm interna- called Chinese state support mental improvements and re- Dyal agreed to take a
Trump, who has said the tional trade with government- for its steel sector. structuring, creating opportu- roughly 15% stake in Sound
meeting will feature difficult subsidized overproduction. Mr. Ross would have no nities for investors. Point Capital, in the range of
discussions on trade—a sector Mr. Ross, himself a past com- role in the new venture being —William Mauldin its prior transactions, the peo-
where steel takes center stage. petitor of China’s in steel man- formed to invest in China. contributed to this article. ple said.

FINANCE WATCH
jeopardized by the delay in the
company’s filing. “We are well
positioned in the markets we
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8.6
-1.6
-2.5
0.9
FUNDS
China A-Share Fund Cls A NZD UnH OT OT HKG 03/31 NZD 10.97 10.1 7.9 NS
ment would be needed, but it be confirmed by the full Senate. effect on competition as branch China A-Share Fund Cls A RMB (CNH) OT OT HKG 03/31 CNH 13.64 8.8 15.7 1.3
China A-Share Fund Cls A USD OT OT HKG 03/31 USD 12.33 10.8 9.3 -2.5
was rebounding Tuesday after —Andrew Ackerman sales. —Natalie Drozdiak China A-Share Fund Cls A USD H OT OT HKG 03/31 USD 12.45 7.1 12.4 -1.6
China Greenchip-A Units AS EQ CYM 03/31 HKD 57.13 12.3 18.7 -5.7
the restatement and 10-K fil- China Greenchip-A Units AUD H AS EQ CYM 03/31 AUD 9.65 12.3 19.3 -6.2
ing. AmTrust shares were at China Greenchip-A Units CAD H AS
China Greenchip-A Units NZD H AS
EQ CYM
EQ CYM
03/31 CAD
03/31 NZD
9.38
9.92
12.2
12.5
18.0
20.1
-7.3
-5.4
$22.18 in midday trading China Greenchip-A Units USD AS EQ CYM 03/31 USD 9.44 12.1 18.4 -6.6
China Greenchip-A2 QDIs Units AS EQ CYM 03/31 HKD 10.36 11.8 18.1 -5.9
Tuesday on Nasdaq, up 21%. GC Hi Yield Inc - Cls A MDIs GBP H OT OT CYM 03/31 GBP 9.87 5.9 19.4 NS
AmTrust revised its previ- GC Hi Yield Inc-Cls A MDIs AUD H OT
GC Hi Yield Inc-Cls A MDIs CAD H OT
OT CYM
OT CYM
03/31 AUD
03/31 CAD
9.42
9.50
6.3
6.2
21.5
20.3
14.1
12.8
ously reported 2016 net in- GC Hi Yield Inc-Cls A MDIs NZD H OT OT CYM 03/31 NZD 9.77 6.6 22.3 15.3 In print & online. Contact:
GC Hi Yield Inc-Cls P HKD Acc sh OT OT CYM 03/31 HKD 15.01 6.5 20.9 13.0
come downward by $51.9 mil- GC Hi Yield Inc-Cls P HKD MDIs sh OT OT CYM 03/31 HKD 9.39 6.4 20.9 13.0
GC Hi Yield Inc-Cls P MDIs SGD H OT OT CYM 03/31 SGD 10.31 6.1 20.3 13.2
lion, or 12.5%. Net income in GC Hi Yield Inc-Cls P USD Acc sh OT OT CYM 03/31 USD 15.10 6.3 20.6 12.9
2015 was restated downward GC Hi Yield Inc-Cls P USD MDIs sh OT
GC Hi Yield Inc-ClsA MDIs EUR H OT
OT CYM
OT CYM
03/31 USD
03/31 EUR
9.44
10.31
6.3
5.7
20.6
18.5
12.9
11.6 wsja.advertising@dowjones.com
by $52.9 million, or 11.2%. Net
MATTHEW LLOYD/BLOOMBERG NEWS

Hi-Div Stk Cls A RMB H Acc OT OT HKG 03/31 CNH 11.28 12.8 17.7 4.4
Hi-Div Stk Cls A RMB UnH Acc OT OT HKG 03/31 CNH 13.45 9.8 21.4 6.7
in 2014 was restated down- Hi-Div Stk Cls A1 OT OT HKG 03/31 USD 80.07 11.6 15.4 2.0
ward by $31.3 million, or 7.2%. Hi-Div Stk Cls A2 AUD H MDIs OT
Hi-Div Stk Cls A2 CAD H MDIs OT
OT HKG
OT HKG
03/31 AUD
03/31 CAD
9.57
9.70
11.4
11.5
15.4
14.2
2.2
1.0
The restatement didn’t re- Hi-Div Stk Cls A2 GBP H MDIs OT OT HKG 03/31 GBP 9.17 12.4 14.5 0.6
Hi-Div Stk Cls A2 HKD MDIs OT OT HKG 03/31 HKD 9.99 12.0 15.8 2.0
sult in changes to gross writ- Hi-Div Stk Cls A2 MDIs OT OT HKG 03/31 USD 10.91 11.4 15.2 1.8
Hi-Div Stk Cls A2 NZD H MDIs OT OT HKG 03/31 NZD 9.80 11.6 16.0 3.2
ten premium, net earned pre- Hi-Div Stk Cls A2 RMB H MDIs OT OT HKG 03/31 CNH 9.50 13.2 18.0 4.3
mium, loss and loss adjustment Hi-Div Stk Cls A2 RMB UnH MDIs OT
Hi-Div Stk Cls A2 SGD H MDIs OT
OT HKG
OT HKG
03/31 CNH
03/31 SGD
9.93
10.53
10.1
NS
22.6
NS
7.0
NS
expense and loss ratio, and loss Intel-China Converg Fund-A AUD H AS EQ CYM 03/31 AUD 10.04 14.1 14.9 NS
Intel-China Converg Fund-A CAD H AS EQ CYM 03/31 CAD 10.16 -0.1 1.4 NS
and loss adjustment expense Intel-China Converg Fund-A NZD H AS EQ CYM 03/31 NZD 11.33 10.4 11.0 NS
reserves for 2016, AmTrust Intel-China Converg Fund-A Units AS
Intel-Chinese Mainland Foc Fund AS
EQ CYM
EQ CYM
03/31 USD
03/31 USD
150.10
42.73
12.5
15.3
14.4
18.6
-3.7
-1.1
said. The EU required Royal Bank of Scotland to sell branches. VP Classic-A Units AS EQ HKG 03/31 USD 285.47 12.1 20.7 0.2
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.
Coking Coal Soars After Cyclone
Damage to railroads in
Australia hinders
shipments from mines
to ports; a 15% surge
BY RHIANNON HOYLE
SYDNEY—The price paid for
Australian steelmaking coal
rocketed 15% to its highest
point since January as ship-
ments from the world’s top ex-
port hub were disrupted fol-
lowing a ferocious storm.
Last week, Tropical Cyclone
Debbie lashed the eastern Aus-
tralia state of Queensland with
destructive winds of more
than 160 miles an hour, caus-
ing floods and landslides and
forcing the closure of many
port-and-mining operations.
Queensland accounts for about
60% of global shipments of
coking coal.
Aurizon Holdings Ltd.,
Australia’s largest rail freight
operator, says it could take
weeks to get some routes be-
tween inland mines and export
terminals running again. UBS
estimates about 5% of supplies
could be lost from the global
export market as a result.
European Debt’s Top Buyer Is Now Key Risk
BY CHRISTOPHER WHITTALL
High-grade corporate bonds
surged when the European
Central Bank added them to
its €2.3 trillion ($2.45 trillion)
purchase program last year.
Now, with a slowdown in ECB
buying on the horizon—along-
side potentially risky Euro-
pean elections—some inves-
tors are bracing for a selloff.
The ECB started paring its
monthly purchases of Euro-
pean debt from €80 billion to
€60 billion in April, meaning it
will buy around €1.9 billion
fewer corporate bonds every
month, assuming it keeps the
allocation of its purchases
steady.
Some analysts think there
is more tapering to come from
Cyclone Debbie hit Queensland’s far north coast at the end of March with winds of more than 160 mph.
On Monday, the price of
Australian coking coal exports
surged $23.40 to $175.70 a
metric ton, according to the
Steel Index, a data provider.
That was the highest price
paid since Jan. 18. As Australia
is the top global supplier of
steelmaking coal, the price for
its exports is viewed as an in-
the ECB, potentially turning
the largest source of demand
for the European corporate-
bond market over the past
year into its greatest risk.
It feels like “the quiet be-
fore the storm,” said Hans
Lorenzen, head of European
investment-grade credit strat-
egy at Citigroup, listing a
string of potential risks in-
cluding Brexit negotiations
and the threat of euroskeptic
candidate Marine Le Pen win-
ning the French presidency.
“But what really worries
people is what happens when
asset classes like credit no
longer have the outright sup-
port of the ECB,” he added.
The ECB has said it would
continue buying bonds at its
current pace until at least the
FINANCE & MARKETS
ternational benchmark.
The increase in coking coal
prices broke what had been an
“eerie silence” in global coal
markets in recent days, Aus-
tralia & New Zealand Banking
Group Ltd. said. ANZ said
traders are racing to secure
supplies in case storm-caused
disruptions are lengthy.
end of 2017. Many economists
expect a fledgling eurozone
economic recovery will allow
the ECB to signal this year it
will further reduce its pur-
chases from 2018 onward.
They include strategists at
J.P. Morgan, who wrote in a
recent note that they expect
the ECB to end its purchases
by the middle of next year.
That could prompt investors
to pull out their money, the
strategists said.
As the dominant figure in
European credit markets, the
ECB had snapped up €75 bil-
lion of high-grade, euro-de-
nominated nonfinancial debt
as of March 31, having started
buying these securities in June
2016. That compares with
roughly €79 billion of net issu-
Wednesday, April 5, 2017 | B7
said its four major rail routes
through the central Queens-
land coal hub are still closed
and some lines could take up
to five weeks to repair.
“The damage to rail net-
works is worse than we had
expected,” UBS said.
Glencore said that, although
its mines are running, exports
“will be significantly impacted
until floodwaters recede and
repairs to the rail systems are
DAN PELED/EUROPEAN PRESSPHOTO AGENCY
completed.”
Analysts say the price paid
for coking coal—which is
heated to create coke that is
then used to melt iron in the
steelmaking process—could
surge further if traders panic
about supply availability.
UBS, which says it will be
tricky to find alternative ways
to transport coal from mining
operations in remote parts of
Queensland, estimates the dis-
The cyclone, which was the ruptions could add $100 a ton
most powerful storm to hit or more to the value of the
Australia since Cyclone Yasi fuel.
made landfall in February “With a significant amount
2011, caused the evacuation of of the world’s premium hard
thousands of people and left coking coal now marooned on-
hundreds of homes uninhabit- site [at mines], prices are
able. Aurizon, which hauls coal likely to continue to push
for miners including BHP Billi- higher,” ANZ said in a note on
ton Ltd. and Glencore PLC, Tuesday.
ance of debt eligible for the French drugmaker Sanofi SA
ECB program since then, ac- priced bonds at negative
cording to Citigroup. yields in September. U.S.
That demand pushed up firms—most of which cannot
corporate-bond prices sharply, issue bonds eligible for the
and lowered borrowing costs ECB’s program—got in on the
across the eurozone. The act this year, with Coca-Cola
credit spread investors de- Co. and Pfizer Inc. recently
mand to hold investment- selling floating-rate euro debt
grade corporate bonds rather at negative yields.
than government debt fell to Many investors believe val-
1.1 percentage points in Sep- uations leave little room for
tember from 1.7 percentage bonds to gain further.
points before the ECB an- “Even if you’re super bull-
nounced its buying plans in ish on credit, there’s not a lot
March 2016, according to IHS further you can go,” said Ben
Markit’s iBoxx Euro Non-Fi- Bennett, head of credit strat-
nancials corporate bond index. egy at Legal & General Invest-
Some investors even began ment Management, who said
paying for the privilege of the fund’s investment-grade
lending money to companies. portfolios were holding high
German consumer-products proportions of cash and gener-
company Henkel AG and ally favored U.S. bonds.
Dow Rises
Slightly as
Industrial
Firms Gain
BY AKANE OTANI AND RIVA GOLD
The Dow Jones Industrial
Average edged higher Tuesday,
led by a rise in shares of in-
dustrial companies.
The blue-chip index was up
16 points, or 0.1%, at 20666 in
early afternoon
TUESDAY’S trading, with
MARKETS shares of Cat-
erpillar leading
gains. The S&P
500 and the Nasdaq Compos-
ite both were down 0.1%.
Stocks have made few big
moves in recent sessions, with
major indexes recently closing
out their quietest quarter in
decades. Some investors and
analysts have attributed the
sluggish trading in stocks to a
reluctance to make new bets
ahead of a number of key
events this week, including
minutes from the Federal Re-
serve’s March meeting, due
Wednesday, Friday’s U.S. jobs
report and a meeting between
President Donald Trump and
Chinese leader Xi Jinping on
Thursday and Friday.
“We’re returning to more of
a muddled-up market, like we
had before the election,” said
Thomas Martin, senior portfolio
manager at Globalt in Atlanta.
Dow component Caterpillar
jumped 2.6% after Goldman
Sachs reiterated a “buy” rat-
ing for the company’s stock.
United Technologies rose 1%
and Boeing added 0.9%.
Elsewhere, the Stoxx Eu-
rope 600 swung between
small gains and losses before
closing up 0.2%.
In Asia, growing investor un-
certainty about U.S.-China
trade sapped demand for
stocks. Korea’s Kospi index
edged down 0.3%, while mar-
kets in China, Taiwan, India and
Hong Kong were closed for hol-
idays. Japanese stocks lagged
behind, as a stronger local cur-
rency sent the index down 0.9%
to a 10-week low.
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
B8 | Wednesday, April 5, 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
18810.25 t 172.98, or 0.91% Year-to-date t 1.59% 380.03 s 0.74, or 0.20% Year-to-date s 5.15% 2357.65 t 1.19, or 0.05% Trailing P/E ratio * 24.75 23.82
High, low, open and close for each 52-wk high/low 19633.75 14952.02 High, low, open and close for each 52-wk high/low 381.14 308.75 High, low, open and close for each P/E estimate * 18.28 17.49
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 1.97 2.20
All-time high: 2395.96, 03/01/17

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

20000 385 2390

19500 375 2350

19000 365 2310

18500 355 2270

Session high
65-day moving average
DOWN UP
18000 345 2230
t

Session open Close

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

17500 335 2190

Session low
Bars measure the point change from session's open
17000 325 2150
Dec. Jan. Feb. Mar. Dec. Jan. Feb. Mar. Dec. Jan. Feb. Mar.

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 2686.26 2.01 0.07 2193.75 • 2720.47 6.3 Country/ Spread Over Treasurys, in basis points Yield
MSCI EAFE 1785.38 –0.65 –0.04 1471.88 • 1956.39 4.0 Coupon Maturity, in years Yield Latest Previous Month Ago Year ago Previous Month ago Year ago
MSCI EM USD 963.98 –1.17 –0.12 691.21 • 1044.05 21.4 5.250 Australia 2 1.718 46.4 52.2 52.4 115.7 1.752 1.833 1.893
4.750 10 2.614 25.6 36.4 33.5 71.5 2.687 2.815 2.477
Americas DJ Americas 568.63 –0.20 –0.04 480.90 • 577.65 5.2
3.000 Belgium 2 -180.5 -178.5 -185.0 -118.1 -0.555 -0.541 -0.445
-0.551
Brazil Sao Paulo Bovespa 65509.51 298.04 0.46 47873.65 • 69487.58 8.8
0.800 10 0.788 -157.1 -150.4 -167.5 -139.7 0.820 0.805 0.365
Canada S&P/TSX Comp 15646.84 62.44 0.40 13217.17 • 15943.09 2.3
0.000 France 2 -0.476 -173.0 -173.4 -179.7 -116.7 -0.504 -0.488 -0.431
Mexico IPC All-Share 49081.54 262.47 0.54 43902.25 • 49523.94 7.5
0.250 10 0.923 -143.5 -137.2 -153.0 -130.1 0.951 0.950 0.461
Chile Santiago IPSA 3705.10 6.47 0.17 2998.64 • 3764.58 15.0
0.000 Germany 2 -0.796 -205.0 -203.3 -212.3 -120.8 -0.803 -0.813 -0.472
U.S. DJIA 20686.91 36.70 0.18 17063.08 • 21169.11 4.7
0.250 10 0.262 -209.6 -204.5 -212.8 -162.8 0.278 0.352 0.134
Nasdaq Composite 5891.00 –3.68 –0.06 4574.25 • 5928.93 9.4
0.300 Italy 2 -0.074 -132.8 -130.7 -135.8 -74.1 -0.077 -0.049 -0.005
S&P 500 2357.65 –1.19 –0.05 1991.68 • 2400.98 5.3
1.250 10 2.095 -26.3 -18.0 -37.6 -51.9 2.144 2.104 1.243
CBOE Volatility 12.14 –0.24 –1.94 9.97 • 26.72 –13.5
0.100 Japan 2 -0.178 -143.2 -139.7 -159.4 -95.9 -0.167 -0.285 -0.223
EMEA Stoxx Europe 600 380.03 0.74 0.20 308.75 • 381.14 5.1 0.100 10 0.065 -229.3 -224.8 -240.6 -184.2 0.075 0.074 -0.080
Stoxx Europe 50 3156.13 10.27 0.33 2626.52 • 3174.79 4.8 4.000 Netherlands 2 -0.740 -199.4 -198.9 -209.7 -122.8 -0.759 -0.788 -0.492
France CAC 40 5101.13 15.22 0.30 3955.98 • 5132.93 4.9 0.750 10 0.502 -185.6 -178.4 -187.7 -155.0 0.539 0.603 0.212
Germany DAX 12282.34 25.14 0.21 9214.10 • 12375.58 7.0 4.450 Portugal 2 -0.146 -140.0 -139.6 -132.4 -49.8 -0.166 -0.015 0.239
Israel Tel Aviv 1394.11 –0.54 –0.04 1372.23 • 1504.42 –5.2 2.875 10 3.598 124.0 124.2 143.1 98.7 3.565 3.911 2.749
Italy FTSE MIB 20257.10 14.22 0.07 15017.42 • 20540.39 5.3 2.750 Spain 2 -0.221 -147.5 -144.9 -161.1 -73.4 -0.219 -0.302 0.002
Netherlands AEX 514.05 0.60 0.12 409.23 • 518.88 6.4 1.500 10 1.603 -75.5 -68.6 -88.1 -36.4 1.637 1.599 1.398
Russia RTS Index 1135.98 13.00 1.16 839.62 • 1196.99 –1.4 4.250 Sweden 2 -0.616 -187.0 -183.6 -190.3 -137.9 -0.606 -0.594 -0.643
Spain IBEX 35 10361.20 35.90 0.35 7579.80 • 10462.90 10.8 1.000 10 0.569 -178.9 -173.0 -178.8 -102.5 0.593 0.692 0.737
Switzerland Swiss Market 8646.99 13.13 0.15 7475.54 • 8710.26 5.2 1.750 U.K. 2 0.131 -112.3 -112.1 -121.6 -30.0 0.109 0.093 0.436
South Africa Johannesburg All Share 52660.74 202.98 0.39 48935.90 • 54704.22 4.0 4.250 10 1.074 -128.4 -125.7 -129.6 -33.0 1.066 1.184 1.432
Turkey BIST 100 88612.55 –56.92 –0.06 70426.16 • 91497.00 13.4 1.250 U.S. 2 1.254 ... ... ... ... 1.230 1.309 0.736
U.K. FTSE 100 7321.82 39.13 0.54 5788.74 • 7447.00 2.5 2.250 10 2.358 ... ... ... ... 2.323 2.480 1.762
Asia-Pacific DJ Asia-Pacific TSM 1548.77 –6.77 –0.44 1308.52 • 1570.38 8.9
Australia S&P/ASX 200 5856.60 –16.10 –0.27 4924.40 • 5896.20 3.4 Commodities Prices of futures contracts with the most open interest 12 p.m. New York time
China Shanghai Composite 3222.51 … Closed 2806.91 • 3282.92 3.8 EXCHANGE LEGEND: CBOT: Chicago Board of Trade; CME: Chicago Mercantile Exchange; ICE-US: ICE Futures U.S.; MDEX: Bursa Malaysia
Hong Kong Hang Seng 24261.48 … Closed 19694.33 • 24593.12 10.3 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 4/3/2017
India S&P BSE Sensex 29910.22 … Closed 24673.84 • 29910.22 12.3 One-Day Change Year Year
Indonesia Jakarta Composite 5651.82 45.03 0.80 4704.22 • 5651.82 6.7 Commodity Exchange Last price Net Percentage high low
364.00 -3.75 -1.02% 387.25 354.25
Japan Nikkei Stock Avg 18810.25 –172.98 –0.91 14952.02 • 19633.75 –1.6 Corn (cents/bu.) CBOT
Soybeans (cents/bu.) 940.50 2.25 0.24% 1,088.25 936.50
Malaysia Kuala Lumpur Composite 1747.19 1.70 0.10 1614.90 • 1754.67 6.4
Wheat (cents/bu.)
CBOT
CBOT 428.00 0.25 0.06 477.00 416.25
New Zealand S&P/NZX 50 7244.54 19.53 0.27 6664.21 • 7571.11 5.3
Live cattle (cents/lb.) CME 109.350 -1.350 -1.22 114.200 103.150
Pakistan KSE 100 48088.37 –139.38 –0.29 33566.22 • 50192.36 0.6
Cocoa ($/ton) ICE-US 2,107 unch. unch. 2,273 1,869
Philippines PSEi 7446.49 104.84 1.43 6563.67 • 8102.30 8.9
Coffee (cents/lb.) ICE-US 138.00 0.15 0.11 159.30 136.20
Singapore Straits Times 3179.06 –8.45 –0.27 2729.85 • 3187.51 10.4
Sugar (cents/lb.) ICE-US 16.27 -0.27 -1.63 21.21 16.17
South Korea Kospi 2161.10 –6.41 –0.30 1925.24 • 2178.38 6.6
Cotton (cents/lb.) ICE-US 74.77 -0.70 -0.93 79.46 71.55
Taiwan Weighted 9811.52 … Closed 8053.69 • 9972.49 6.0 Robusta coffee ($/ton) ICE-EU 2139.00 -11.00 -0.51 2,279.00 2,093.00
Thailand SET 1583.82 2.96 0.19 1356.69 • 1591.00 2.6
Copper ($/lb.) COMEX 2.6140 0.0105 0.40 2.8360 2.4800
Source: SIX Financial Information;WSJ Market Data Group Gold ($/troy oz.) COMEX 1256.60 2.60 0.21 1,268.10 1,152.20
Silver ($/troy oz.) COMEX 18.295 0.083 0.46 18.540 16.000
Currencies London close on April 4 Aluminum ($/mt)* LME 1,959.00 4.50 0.23 1,960.00 1,688.50
Tin ($/mt)* LME 20,130.00 130.00 0.65 21,225.00 18,760.00
Yen, euro vs. dollar; dollar vs. major U.S. trading partners US$vs,
Tue YTDchg Copper ($/mt)* LME 5,847.00 -18.50 -0.32 6,156.00 5,518.00
Country/currency in US$ per US$ (%) Lead ($/mt)* LME 2,307.00 -12.00 -0.52 2,445.00 2,022.00
20%
Europe Zinc ($/mt)* LME 2,767.50 -34.50 -1.23 2,958.50 2,555.00
Bulgaria lev 0.5450 1.8349 –1.3 Nickel ($/mt)* LME 10,030.00 75.00 0.75 11,095.00 9,430.00
10 WSJ Dollar index
s Croatia kuna 0.1433 6.979 –2.7 Rubber (Y.01/ton) TCE 236.70 -8.30 -3.39 n.a. n.a.
sYen Euro zone euro 1.0663 0.9379 –1.3
0 Palm oil (MYR/mt) MDEX 2632.00 -30.00 -1.13 3068.00 2627.00
Czech Rep. koruna-b 0.0394 25.363 –1.3
s Euro Denmark krone 0.1434 6.9750 –1.3 Crude oil ($/bbl.) NYMEX 50.94 0.70 1.39 57.50 47.01
–10 0.003442 290.52 –1.3
Hungary forint NY Harbor ULSD ($/gal.) NYMEX 1.5905 0.0271 1.73 1.7770 1.4825
Iceland krona 0.008929 112.00 –0.8 RBOB gasoline ($/gal.) NYMEX 1.7159 0.0222 1.31 1.9065 1.5824
–20 Norway krone 0.1164 8.5942 –0.6
0.2510 3.9838 –4.9
Natural gas ($/mmBtu) NYMEX 3.266 0.138 4.41 3.5070 2.7370
2016 2017 Poland zloty
Russia ruble-d 0.01780 56.174 –8.3 Brent crude ($/bbl.) ICE-EU 54.00 0.88 1.66 59.89 50.00
US$vs, US$vs,
YTDchg YTDchg Sweden krona 0.1110 9.0058 –1.1 Gas oil ($/ton) ICE-EU 479.00 7.25 1.54 525.00 446.25
Tue Tue
Country/currency in US$ per US$ (%) Country/currency in US$ per US$ (%) Switzerland franc 0.9980 1.0020 –1.7
Turkey lira 0.2727 3.6675 4.1 Sources: SIX Financial Information; WSJ Market Data Group
Americas Hong Kong dollar 0.1287 7.7709 0.2
Ukraine hryvnia 0.0369 27.1350 0.2
Argentina peso-a 0.0650 15.3742 –3.1
India rupee
Indonesia rupiah
0.0154
0.0000750
65.1099
13330
–4.2
–1.4
U.K. pound 1.2431 0.8044 –0.7 Cross rates London close on Apr 4
Brazil real 0.3210 3.1153 –4.3 Middle East/Africa
Japan yen 0.009029 110.76 –5.3
Canada dollar 0.7454 1.3416 –0.2 USD GBP CHF JPY HKD EUR CDN AUD
Kazakhstan tenge 0.003196 312.94 –6.2 Bahrain dinar 2.6531 0.3769 –0.1
Chile peso 0.001514 660.40 –1.4 Australia 1.3215 1.6429 1.3193 0.0119 0.1701 1.4089 0.9851 ...
Macau pataca 0.1250 8.0004 1.1 Egypt pound-a 0.0552 18.1195 –0.1
Colombia peso 0.0003490 2865.21 –4.6 Canada 1.3416 1.6677 1.3389 0.0121 0.1726 1.4302 ... 1.0151
Malaysia ringgit-c 0.2257 4.4315 –1.2 Israel shekel 0.2738 3.6528 –5.1
Ecuador US dollar-f 1 1 unch
New Zealand dollar 0.6974 1.4339 –0.7 Kuwait dinar 3.2788 0.3050 –0.2 Euro 0.9379 1.1661 0.9360 0.0085 0.1207 ... 0.6991 0.7097
Mexico peso-a 0.0531 18.8151 –9.3
Pakistan rupee 0.0095 104.823 0.4 Oman sul rial 2.5973 0.3850 0.01 Hong Kong 7.7709 9.6599 7.7561 0.0702 ... 8.2857 5.7924 5.8802
Peru sol 0.3077 3.2497 –3.1
Philippines peso 0.0199 50.193 1.2 Qatar rial 0.2747 3.641 0.02 Japan 110.7570 137.6700 110.5400 ... 14.2530 118.0800 82.5600 83.8000
Uruguay peso-e 0.0351 28.520 –2.8
Singapore dollar 0.7150 1.3986 –3.4 Saudi Arabia riyal 0.2666 3.7506 –0.003 1.0020 1.2455 ... 0.0090 0.1289 1.0684 0.7469 0.7581
Venezuela bolivar 0.100150 9.99 –0.1 Switzerland
South Korea won 0.0008895 1124.19 –6.9 South Africa rand 0.0738 13.5543 –1.0
U.K. 0.8044 ... 0.8029 0.0073 0.1035 0.8577 0.5996 0.6087
Asia-Pacific Sri Lanka rupee 0.0065815 151.94 2.4 Close Net Chg % Chg YTD % Chg
0.7567 1.3215 –4.8 Taiwan dollar 0.03281 30.483 U.S. ... 1.2431 0.9980 0.0090 0.1287 1.0663 0.7454 0.7567
Australia dollar –6.1 WSJ Dollar Index 90.49 0.15 0.17 –2.63
China yuan 0.1451 6.8926 –0.8 Thailand baht 0.02901 34.470 –3.7 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 s
One month 0.98611% 0.43850% ¥ TakedaPharm 4502 5272.00 0.44 9.04 £ RoyDtchShell A RDSA 2099.50 1.13 -6.38 Last: 152.52 0.52, or 0.43% YTD s 8.2%
Three month 1.14983 0.62660 Asia Titans HK$ TencentHoldings 0700 225.20 1.08 18.71 € SAP SAP 92.27 0.39 11.42
Six month 1.42572 0.89190 HK$ AIAGroup 1299 49.40 0.82 12.91 ¥ TokioMarineHldg 8766 4659.00 -0.87 -2.86 € Sanofi SAN 85.30 0.97 10.92 High 155
One year 1.79178 1.20530 68.63 0.45 3.81
¥ AstellasPharma 4503 1488.50 -0.23 -8.32 ¥ ToyotaMtr 7203 5984.00 -1.03 -13.00 € SchneiderElectric SU Close 150
Euro Libor AU$ AustNZBk ANZ 31.83 -0.44 4.64 AU$ Wesfarmers WES 44.78 -0.71 6.26 € Siemens SIE 128.75 0.90 10.23 Low t
145
One month -0.40071% -0.33357% AU$ BHP BHP 23.92 -0.33 -4.55 AU$ WestpacBanking WBC 34.87 -0.97 6.96 CHF Syngenta SYNN 447.50 0.34 11.18
Three month -0.35929 -0.25143 HK$ BankofChina 3988 3.80 -1.55 10.47 AU$ Woolworths WOW 26.73 0.22 10.91 € Telefonica TEF 10.44 0.48 18.37 50–day 140
Six month -0.25371 -0.13600 HK$ CKHutchison 0001 95.45 -0.16 8.59 € Total FP 47.75 1.67 -1.01 moving average 135
One year -0.12829 -0.01757 HK$ CNOOC 0883 9.30 0.22 -4.12 Stoxx 50 CHF UBSGroup UBSG 15.73 -0.44 -1.38
130
Euribor AU$ CSL CSL 126.49 0.21 25.97 € Unilever UNA 46.48 0.03 18.82
CHF ABB ABBN 23.42 0.56 9.03
One month -0.37200% -0.33900% ¥ Canon 7751 3501.00 -0.23 6.25 £ Unilever ULVR 3937.50 0.40 19.59 6 13 20 27 3 10 17 24 3 10 17 24 31
€ ASMLHolding ASML 124.35 0.57 16.60
Three month -0.33000 -0.24800 ¥ CentralJapanRwy 9022 18450 1.82 -4.06 € Vinci DG 73.80 -0.89 14.06 Jan. Feb. Mar.
€ AXA CS 23.86 -0.29 -0.54
Six month -0.24200 -0.13200 HK$ ChinaConstructnBk 0939 6.32 1.12 5.86 £ VodafoneGroup VOD 206.55 -0.05 3.35
€ AirLiquide AI 106.90 -0.05 1.18
One year -0.11100 -0.00400 HK$ ChinaLifeInsurance 2628 23.95 0.42 18.56 CHF ZurichInsurance ZURN 263.80 0.61 -5.92
173.25
Yen Libor HK$ ChinaMobile 0941 85.95 1.06 4.56
€
€
Allianz
AB InBev
ALV
ABI 103.80
0.73 10.35
0.44 3.23 DJIA Stoxx 50
One month 0.02600% -0.05357% HK$ ChinaPetro&Chem 0386 6.32 0.32 14.91 £ AstraZeneca AZN 4955.00 0.92 11.66 Last: 3156.13 s 10.27, or 0.33% YTD s 4.8%
Three month 0.03521 -0.00314 AU$ CmwlthBkAust CBA 85.93 -0.53 4.27 € BASF BAS 93.82 0.83 6.24
$ AmericanExpress AXP 78.57 -0.03 6.06
Six month 0.04443 0.02264 ¥ EastJapanRailway 9020 9783.00 0.64 -3.14 € BNP Paribas BNP 60.71 -0.83 0.26
$ Apple AAPL 144.41 0.50 24.69 3175
One year 0.14643 0.10557 ¥ Fanuc 6954 22530 -1.51 13.70 £ BT Group BT.A 313.95 -0.65 -14.43
$ Boeing BA 178.10 0.82 14.40
$ Caterpillar CAT 94.51 2.43 1.91 3100
Offer Bid ¥ Hitachi 6501 597.00 -1.11 -5.54 € BancoBilVizAr BBVA 6.98 0.52 9.94
TW$ Hon Hai Precisn 2317 91.00 -0.44 8.08 $ Chevron CVX 108.05 0.23 -8.20 3025
Eurodollars € BancoSantander SAN 5.66 0.32 14.20
¥ HondaMotor 7267 3262.00 -2.66 -4.48 $ CiscoSystems CSCO 33.28 -0.03 10.13
One month 1.1000% 1.0000% £ Barclays BARC 217.75 -1.67 -2.55 2950
KRW HyundaiMtr 005380 152000 -2.88 4.11 $ Coca-Cola KO 42.52 0.27 2.57
Three month 1.3000 1.2000 € Bayer BAYN 107.50 -0.28 8.44
2875
HK$ Ind&Comml 1398 5.11 0.59 9.89 $ Disney DIS 113.18 -0.02 8.60
Six month 1.4000 1.3000 £ BP BP. 463.65 1.66 -9.02
$ DuPont DD 79.59 -0.10 8.43
One year 1.7500 1.6500 ¥ JapanTobacco 2914 3657.00 0.97 -4.86 £ BritishAmTob BATS 5290.00 ... 14.47 2800
¥ KDDI 2911.50 1.15 -1.62
$ ExxonMobil XOM 82.08 0.01 -9.07
Latest 52 wks ago 9433 € Daimler DAI 67.74 -1.04 -4.21 $ GeneralElec GE 29.91 0.10 -5.35 6 13 20 27 3 10 17 24 3 10 17 24 31
¥ Mitsubishi 8058 2397.50 1.33 -3.71 € DeutscheTelekom DTE 16.37 -0.18 0.09 $ Jan. Feb. Mar.
Prime rates GoldmanSachs GS 230.01 0.46 -3.94
¥ MitsubishiElectric 6503 1588.50 -1.34 -2.52 £ Diageo DGE 2286.50 0.33 8.36 $
U.S. 4.00% 3.50% HomeDepot HD 146.65 0.02 9.37
¥ MitsubishiUFJFin 8306 683.30 -1.58 -5.12 € ENI ENI 15.23 0.73 -1.55 $
Canada 2.70 2.70 Intel INTC 36.11 -0.15 -0.45
1603.00 -0.50 -0.25 1661.00
Japan
Hong Kong
1.475
5.00
1.475
5.00
¥
¥
Mitsui
Mizuho Fin
8031
8411 199.10 -0.99 -5.10
£
£
GlaxoSmithKline
HSBC Hldgs
GSK
HSBA 649.40
0.24 6.34 $
0.43 -1.14 $
IBM
JPMorganChase
IBM
JPM
174.85
87.52
0.20
0.57
5.34
1.43
Dow Jones Industrial Average P/E: 21
¥ NTTDoCoMo 9437 2632.00 0.36 -1.16 € INGGroep INGA 13.95 -0.25 4.34 $ J&J JNJ 124.41 -0.22 7.99 Last: 20686.91 s 36.70, or 0.18% YTD s 4.7%
Policy rates
ECB 0.00% 0.00%
AU$ NatAustBnk NAB 33.14 -0.93 8.05 £ ImperialBrands IMB 3856.00 -0.27 8.85 $ McDonalds MCD 129.30 -0.24 6.23
Britain 0.25 0.50
¥ NipponTeleg 9432 4829.00 -0.08 -1.69 € IntesaSanpaolo ISP 2.52 0.72 4.04 $ Merck MRK 63.70 0.36 8.20 21100
Switzerland 0.50 0.50
¥ NissanMotor 7201 1040.00 -2.89 -11.53 € LVMHMoetHennessy MC 206.20 1.05 13.67 $ Microsoft MSFT 65.70 0.24 5.74
¥ Panasonic 6752 1263.00 -0.63 6.18 £ LloydsBankingGroup LLOY 65.51 -0.79 4.80 $ Nike NKE 55.26 -0.54 8.72
20450
Australia 1.50 2.00
HK$ PingAnInsofChina 2318 43.30 -0.46 11.60 € LOreal OR 180.30 0.45 3.98 $ Pfizer PFE 34.43 0.55 6.00
U.S. discount 1.50 1.00 19800
Fed-funds target 0.75-1.00 0.25-0.50
$ RelianceIndsGDR RIGD 42.50 -0.23 34.71 £ NationalGrid NG. 1009.00 ... 6.03 $ Procter&Gamble PG 89.75 0.08 6.75
Call money 2.75 2.25
KRW SamsungElectronics 005930 2104000 1.54 16.76 CHF Nestle NESN 76.75 ... 5.07 $ 3M MMM 190.36 -0.19 6.60 19150
¥ Seven&I Hldgs 3382 4485.00 0.70 0.72 CHF Novartis NOVN 74.75 0.54 0.88 $ Travelers TRV 120.60 0.18 -1.49
Overnight repurchase rates 18500
U.S. 0.84% 0.43%
¥ SoftBankGroup 9984 7751.00 -1.67 -0.18 DKK NovoNordiskB NOVO-B 250.70 4.94 -1.57 $ UnitedTech UTX 112.95 0.91 3.04
Euro zone n.a. n.a.
¥ Sony 6758 3674.00 0.27 12.18 £ Prudential PRU 1672.00 1.15 2.73 $ UnitedHealth UNH 165.67 0.05 3.52 6 13 20 27 3 10 17 24 3 10 17 24 31
¥ Sumitomo Mitsui 8316 3967.00 -1.20 -11.05 £ ReckittBenckiser RB. 7246.00 -0.14 5.23 $ Visa V 88.99 -0.41 14.06 Jan. Feb. Mar.
Sources: WSJ Market Data Group, SIX HK$ SunHngKaiPrp 0016 115.30 0.96 17.65 £ RioTinto RIO 3264.50 2.45 3.36 $ Verizon VZ 49.16 -0.05 -7.91 Note: Price-to-earnings ratios are for trailing 12 months
Financial Information, Tullett TW$ TaiwanSemiMfg 2330 189.00 -1.31 4.13 CHF RocheHldgctf ROG 257.00 0.31 10.49 $ Wal-Mart WMT 71.86 0.03 3.96 Sources: WSJ Market Data Group; Birinyi Associates
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THE WALL STREET JOURNAL.
KRISZTIAN BOCSI/BLOOMBERG NEWS
German cities such as Munich are expected to be resilient even if political shifts within Europe bring a disintegration of the euro.
Real Estate Offers a Haven
Investors increasingly
turn to Germany’s
property as source of
safety in risky Europe
BY PETER GRANT
AND ART PATNAUDE
Last fall, when a planned
€3.3 billion ($3.5 billion) initial
public offering of a German of-
fice-building company was
pulled due to weak demand,
market observers expected pri-
vate-equity giant Blackstone
Group LP to move in for the
kill.
Blackstone had previously
expressed interest in Office-
First Immobilien AG, which
owns about 100 properties in
Frankfurt, Berlin and other
German cities. When the IPO
was shelved, “I was expecting
Blackstone to look them deep
into their eyes and say, ‘What
is the discount?’” said Peter
Papadakos, an analyst with
real-estate research firm
Green Street Advisors, who
tracked the deal closely.
Instead, Blackstone last
week closed on its purchase of
OfficeFirst in a deal valuing
the company at roughly the
same €3.3 billion price tag that
caused IPO investors to balk.
The firm felt the price was fair
given rent and occupancy
trends in Germany, according
to people familiar with the
matter.
Blackstone and some other
Hotel Left in Holding Pattern Migrants
As Airport Completion Delayed Fuel Surge
BY FRIEDRICH GEIGER
BERLIN—A few steps away
from the German capital’s new
airport stands the Steigen-
berger Airport Hotel Berlin, an
exclusive getaway with 322
rooms and suites, restaurants,
a spa and a full-time cleaning
staff.
What the four-star hotel
hasn’t had since it was com-
pleted in 2012 is guests. The
reason is that the airport, ini-
tially scheduled to open 10
years ago, never did, and it is
unclear when it will welcome
its first passenger plane.
The opening of the €6 bil-
lion ($6.4 billion) Berlin Bran-
denburg Airport, or BER, some
20 miles to the south of the
German capital, has receded
every time it has appeared to
inch closer. Some of the air-
port’s technical installations
had flaws, and the insolven-
cies of companies working on
the construction site caused
KRISZTIAN BOCSI/BLOOMBERG NEWS
The Berlin Brandenburg Airport’s opening ran into multiple delays.
INTERNATIONAL PROPERTY: GERMANY
investors also increasingly see
Germany as a haven in a tur-
bulent Europe, where risks in-
clude a disintegration of the
euro.
“If the euro remains, [Ger-
many] will remain in the same
strong position it is now,” said
Lars Huber, chief executive of
property giant Hines’s Euro-
pean operation. “If the euro
breaks up, when the dust set-
tles Germany will probably be
even stronger.”
Last year, Germany led Eu-
rope in commercial-property
sales volume for the first time,
displacing the U.K., which has
topped charts since 2007, ac-
cording to data firm Real Capi-
tal Analytics. The values of of-
fice buildings, shopping
centers and warehouses are
continuing to rise in many
markets, experts say.
Foreign investors new to
European property markets
typically have looked at Lon-
don and Paris before Germany,
which has had a reputation for
plodding growth. But these
days Germany appears more
attractive to many investors
given uncertainty in the U.K.
due to its coming divorce from
the European Union, and in
France ahead of elections.
“Boring is sexy in a world
where you have more volatility
and political risk,” said Marcus
Lemli, head of European in-
vestment for Savills PLC.
Germany’s relative strength
comes as investors around the
world grapple with the chal-
delays. For ECE Projektman-
agement GmbH, owner of the
Steigenberger hotel, and other
local investors who are nurs-
ing losses caused by the air-
port’s delayed opening, it is a
cautionary tale about tying
one’s fortunes to a prestigious
but troubled project.
“The hotel will open only
when the airport assumes op-
erations,” said Lukas Nemela,
spokesman for ECE.
Some investors resisted the
urge to take the plunge before
2012, when it seemed BER’s
opening was around the cor-
ner, as advertised on bill-
boards around the city. They
have been standing on the
sidelines ever since but ha-
ven’t put away their wallets,
said Jürgen Kuse, head of the
regional committee of prop-
erty valuation experts. “One
gets the impression that
they’re all still waiting and
will [invest] when the airport
opens,” he said.
lenges of investing in commer-
cial property after years of
steady price increases in most
markets. Overall, investment
volume is down in Europe and
the U.S. mostly because the
values of top properties in
many cities are at or near re-
cord levels.
German sales volume has
slumped, but far less than in
the rest of Europe. In the last
six months of 2016, transac-
tion volume was roughly €38.3
billion, down 4.8% from the
same period in 2015, according
to Real Capital Analytics. By
comparison, volume in all of
Europe was down 13.1% during
the same time frame, RCA
said.
Prices are rising in Ger-
many, as evidenced by the will-
ingness of investors to accept
lower yields—or “capitaliza-
tion rates” as they are known
in the industry—when they
buy buildings. In the past
three years, yields of prime
high street retail have declined
an average of 0.7 percentage
point in the top seven cities,
according to Savills.
Berlin office buildings are
especially hot thanks to the
city’s growing population, lim-
ited supply and booming tech
scene. Prime office capitaliza-
tion rates there are at 3.25%, a
record low, according to CBRE
Group Inc.
U.K.-based Rockspring
Property Investment Managers
has made three acquisitions in
Berlin in the past six months,
Initially slated for 2007,
BER’s takeoff was pushed back
several times due to fire-
safety flaws. Deficient smoke-
extraction systems and other
technical mishaps caused the
next scheduled opening dates
in March and October of 2013
to come and go without an
opening. Eventually, the state-
owned company in charge of
the airport, Flughafen Berlin
Brandenburg GmbH, stopped
announcing new launch dates.
The company said recently it
could provide a date only
when the BER building was
completed.
Berliners and visitors have
had to make do with two
smaller airports—Berlin-Tegel
Otto Lilienthal Airport, a
1960s concrete hexagon in the
northern district of Tegel, and
Schönefeld Airport to the
southeast of the capital. A
steady increase in visitors to
Berlin—overnight stays dou-
bled in the past 10 years—and
the closure of the city-center
Tempelhof airport in 2008
have pushed Tegel and
Schönefeld to capacity.
New problems with BER’s
automatic doors and sprin-
klers mean there is a 73%
chance the airport will open
by the fall of 2018, a recent
study by consulting firm Ro-
land Berger concluded.
Instead of the boom many
real-estate experts were ex-
pecting a decade ago, commer-
cial property and land prices
in the area have stagnated as
prices rocketed in the rest of
Berlin.
—Peter Grant
contributed to this article.
including a €59 million deal
last week for Coca-Cola Co.’s
German headquarters. “The
standout location for tenant
demand is Berlin,” said Stuart
Reid, a Rockspring partner.
Investments in other Ger-
man cities also have been do-
ing well. In 2013, a venture of
Hines and an Asian investor
purchased Siemens AG’s for-
mer headquarters in Munich
as a redevelopment project.
Today, it is 40% preleased to
media company Condé Nast
and about a year ahead of
schedule, according to Mr.
Huber.
The growing foreign de-
mand has made it tougher for
German investors to compete,
especially for trophy proper-
ties.
“I don’t expect that…inves-
tors will accept much lower
yields than where we are now,”
said Jochen Schenk, a board
member at German property
firm Real I.S. AG.
Patrizia Immobilien AG, an
Augsburg, Germany-based
real-estate investor with €12
billion of assets under man-
agement in Germany, has been
looking more for fixer-upper
properties outside the prime
markets attracting many for-
eign investors. Pricing in those
markets has become “a bit ir-
rational” lately, said Konrad
Finkenzeller, Patrizia’s head of
international capital markets.
“If this continues for the next
two or three years, then I’m
really worried,” he said.
In Prices
Of Homes
BY WILLIAM WILKES
FRANKFURT—Develop-
ment of middle-class housing
in Germany is increasing, but
the pace isn’t fast enough to
meet booming demand.
The number of new homes
built in Germany last year hit
its highest level since 1999, at
about 320,000 units. But re-
cord levels of immigration
helped boost demand, leading
to soaring rents and home
prices.
That has been mostly good
for investors in public compa-
nies that focus on German
housing. Three-year annual-
ized returns are about 25%,
well ahead of other sectors,
according to research firm
Green Street Advisors.
Meanwhile, developers like
Berlin-based CG Gruppe,
which has projects valued at
€2.2 billion ($2.34 billion) in
the pipeline, are chugging
ahead on all cylinders.
“The market is endless,”
said Christoph Gröner, chair-
man of CG Gruppe. “You have
practically no risk if you invest
in the middle class.”
Germany would need to
build 100,000 more homes an-
nually to keep up with de-
mand, according to Ralph
Henger, a real-estate expert at
the Cologne Institute for Eco-
nomic Research.
Low borrowing costs, a re-
sult of ultralow European Cen-
tral Bank interest rates and
Wednesday, April 5, 2017 | B9
Frankfurt Tries to
Woo Brexit Banks
BY WILLIAM WILKES
AND ART PATNAUDE
FRANKFURT—The office
market in Germany’s financial
capital is emerging as one of
the winners from Brexit less
than a year after the U.K.’s his-
toric vote to quit the European
Union.
British Prime Minister The-
resa May last week began the
process by formally notifying
the EU of the U.K.’s intention
to withdraw. That began a
two-year divorce process.
But major financial institu-
tions with offices in London al-
ready have begun to plan for
difficulties with doing business
across the English Channel.
For instance, banks in London
currently can sell products to
clients in mainland Europe.
Brexit is likely to change that.
Competition among Euro-
pean cities and countries to
lure business from post-Brexit
Britain has been heating up,
with Paris, Dublin, Milan and
even Wroclaw, Poland, making
their cases heard.
But Frankfurt appears to be
in pole position: About 15 ma-
jor banks from the U.S., Japan,
China and Britain are in talks
with German officials about
relocating to Frankfurt, ac-
cording to people familiar with
the matter.
Banks could shift up to 900
staff each from London to
Frankfurt to ensure they can
continue operations when the
U.K. quits the EU, as soon as
2019.
Russia’s second-largest
bank, VTB, in February said it
would establish a new head-
quarters in Frankfurt, which it
said will likely gain in impor-
tance after Brexit. Deutsche
Bank AG and Goldman Sachs
Group Inc. said they could re-
locate staff to Frankfurt.
Additionally, other tenants
in Frankfurt’s market have
been getting more aggressive
in leasing space, partly with an
eye toward coming competi-
tion from across the English
Channel. Last year, businesses
leased 525,000 square meters
(5.6 million square feet) in the
city, the most since 2007 and
34% more than in 2015, ac-
cording to JLL.
Prime office rents at the
end of the fourth quarter
were €37 ($39.50) per square
meter a month, up 4.2% from
a year earlier, JLL said. Frank-
furt has a limited supply of
very large offices, so newcom-
ers will likely drive prices
higher.
By contrast, the London
market has been softening. Of-
Workers prepared to build apartments in Berlin in February.
easy-money policies, are spur-
ring demand for homes from
Germans hunting for places to
park investment cash.
But record immigration is
the main driver of stellar price
gains. More migrants flocked
to Germany in 2015 than in
any previous year, as people
fled war and economic hard-
ship in Asia, Africa and the
Middle East. A strong German
economy, against a backdrop
of high unemployment else-
where in Europe, also is fuel-
ing a strong inflow of immi-
grant workers.
Both factors pushed net im-
migration to a record of 1.14
million people in 2015, the lat-
est official data show. The
flow of migrants slowed some-
what in 2016, but pressure on
housing remains high.
While Germany’s planning
laws allow it to build houses
more easily than some Euro-
pean countries, such as the
U.K., property development
typically runs a couple of
years behind demand, accord-
ing to real-estate services firm
JLL.
Data from German property
fice tenants there leased 10.1
million square feet in 2016,
down from more than 11.7 mil-
lion in 2015, according to JLL.
London landlords have been
increasing their offers of free
rent and other incentives to
lure tenants. Some also have
begun to cut rents, a trend
that would be exacerbated if
firms start leaving en masse.
But big financial services
firms still want a London pres-
ence. German lender Deutsche
Bank—even as it talks about
moving jobs home to Frank-
furt—is also negotiating to
lease office space in a new
London development from
Land Securities PLC, one of the
U.K.’s biggest landlords.
London also still has advan-
tages over Frankfurt. While
leasing trends are less favor-
able, London’s vacancy rate re-
mains lower: 4.2% compared
with 9.1% for Frankfurt, JLL
says.
Meanwhile, it is easier to
build in Frankfurt than in Lon-
don, partly because there is
more available land and other
redevelopment opportunities,
Lenders could shift
as many as 900 staff
each to the city from
London
analysts say. More Frankfurt
projects are moving off the
drawing board, raising the
likelihood of more competi-
tion.
New Frankfurt projects that
are under way include Tish-
man Speyer’s Omiturm, a 45-
story tower that will include
472,000 square feet of office
space. It is scheduled to be
completed by the beginning of
2019.
No office leases have been
announced, but negotiations
are intensifying with several
financial-services firms, ac-
cording to Florian Reiff, a
Tishman Speyer senior manag-
ing director. “You can see now
the market is firming up,” he
said.
PGIM Real Estate, a unit of
Prudential Financial Inc., also
sees Brexit-related demand
picking up for its Junghof
Plaza project in Frankfurt. A
venture led by PGIM acquired
the 14-year-old office building
late last year and is converting
it into a mixed-use project
with office, retail and a hotel.
—Peter Grant contributed to
this article.
SEAN GALLUP/GETTY IMAGES
research group F+B indicate
purchase prices for affordable
apartments rose 32% in the
past five years. Rental prices
have risen almost 20% in the
same period.
Germany’s five largest cit-
ies—Berlin, Cologne, Frank-
furt, Hamburg and Munich—
face the greatest pressure.
These cities saw new-home
purchase prices jump 20% to
30% in February from the
same month a year earlier, ac-
cording to online property
listing firm Scout24 AG.
Policy makers are con-
cerned about the sharp gains
in housing costs. The country’s
central bank, the Bundesbank,
in February warned that house
prices in Germany’s largest
cities are up to 30% over-
valued.
Prices in Frankfurt, which
city officials expect will at-
tract a large chunk of financial
jobs leaving London after
Brexit, rose strongly over the
past 12 months, Scout24 data
show. House prices rose more
than 30% in February com-
pared with a year ago, and
rents rose 10%.
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
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B10 | Wednesday, April 5, 2017
Trades Change With Political Tide Chinese
Shun Debt
Biotech loses favor
but retail stocks find
new fans as traders
assess policy currents
BY GUNJAN BANERJI
As the White House works
to enact policy changes, inves-
tors have shifted positions,
dropping more bullish stances
on U.S. financial and midcap
stocks and adopting more
bearish views on investment-
grade bonds and biotechnol-
ogy companies.
Derivatives and short posi-
tions on exchange-traded
products that track stock sec-
tors and asset classes com-
piled by Société Générale SA
depict fluctuating views on fu-
ture growth and potential
changes to tax, trade and
health-care policies. The data
compare positioning two
weeks after the election, as
the so-called Trump trade was
getting into full swing, with
positioning on March 28,
about four months later.
“We’ve seen a rotation of
market sentiment,” said Ra-
mon Verastegui, the New York-
based head of flow strategy
and solutions at Société Gé-
nérale. “We’ve moved from the
optimism of the campaign
message into the reality of
governing.” Investors have re-
alized the difficulty of passing
new laws, he said.
Options give investors the
right to buy or sell securities
at an agreed-upon price at a
later date. They can be used to
place outright bets that an as-
set will go up or down, but
also as a protective hedge on
existing holdings.
Options traders displayed
bullish views on some corners
of the market, such as the
euro currency and Canadian
equities.
Mr. Verastegui examined
the ratio of bearish put op-
tions versus bullish call con-
tracts, the relative cost of op-
Email: heard@wsj.com
New President, Same Economy
When it comes to the U.S.
economy, investors might be
best off expecting more of
the same, only less so.
Until recently, it appeared
that President Donald Trump
was destined to engineer a
boost. Even if he wasn’t able
to entirely deliver on his
campaign pledges, with Re-
publicans controlling Con-
gress, a meaningful tax-cut
and infrastructure-spending
package seemed like a
gimme. That should have
been good enough for at
least a bump and many envi-
sioned a lasting lift to the
economy’s growth trajectory.
After the failure of the
health-care bill and the rifts
it exposed among Republi-
cans, the chances of tax re-
form—much less an infra-
structure bonanza—are
looking lower. An easy-to-
pass, low-bore tax cut looks
more likely.
A good exercise in what to
expect is to consider what
things might look like with-
out a tax cut and spending
boost with a further assump-
tion that any salutary effects
that reduced regulation have
Don’t Write Off Pharmaceuticals’ Nightmare Scenario
Dismissing drug-price con-
cerns could leave investors
with a surprise bill.
Sixteen Senate Democrats
sponsored the Improving Ac-
cess to Affordable Prescrip-
tion Drugs Act, a new legisla-
tive proposal that was
introduced last week. It con-
tains a familiar list of policy
prescriptions such as en-
abling Medicare to dictate
pricing more aggressively
than is currently allowed, re-
laxing rules that govern im-
portation of drugs and elimi-
nating tax breaks for direct
advertising to consumers.
There are new wrinkles as
well: The bill would require
more disclosure from chari-
ties that help patients pay
for high-cost medicines.
Shifting Sentiment
Options traders and short sellers have repositioned themselves across asset classes
since the election's wake. They are more bullish on exchange-traded products that
track retail and agriculture stocks and more bearish on biotechnology shares and
investment-grade bonds.
Nov. 22, 2016
The 10 most bullish
Assets
1. REITs
2. Financials
3. Retailers
4. Industrials
5. Regional banks
6. Health care
7. Midcap stocks
8. DJIA
9. Discretionary
10. Gold miners
The 10 most bearish
45. Japanese stocks
46. Euro Stoxx 50
47. Small-cap miners
48. Materials
49. Emerging markets
50. Technology
51. Japanese yen
52. Home builders
53. High yield
54. Oil and gas stocks
Note: Options can be used to make bets that an asset will go up or down or to hedge an existing holding.
*All options and short positions are on exchange-traded products tracking the stock group, except in the case of the CBOE Volatility Index, or VIX.
Source: Société Générale
tions—a measure known as
skew—and wagers that bet the
price of an equity will fall. He
also looked at net positioning
on futures for some assets.
After the November elec-
tion, derivatives and short po-
sitions signaled investors fa-
HEARD ON THE STREET
Two-Speed Economy
Gross domestic product,
change from a year earlier*
6%
4 4
2 2
0 0
–2
–4
–6
1990 2000
*Fourth-quarter GDP
Sources: Commerce Department (GDP); Labor Department
on growth are balanced by
the drag from Mr. Trump’s
tough stances on immigra-
tion and trade. What is left is
an economy that, despite
some lofty stock valuations,
isn’t exhibiting a lot of ex-
cesses that precede reces-
sions.
For example, forecasting
firm Macroeconomic Advis-
ers—which hasn’t incorpo-
rated any tax-cut or fiscal
stimulus estimates into its
estimates—reckons that
These proposals, were
they to become law, would
harm middlemen who profit
from higher prices. It is also
quite possible, as industry
trade groups argue, that they
would stunt development of
new drugs. An almost guar-
anteed outcome is that phar-
maceutical manufacturer
stocks would be slammed.
Investors, however, have
lately brushed off drug-pric-
ing risks. Pharma and bio-
tech indexes are higher on
the year, after policy uncer-
tainty weighed on the sector
before the 2016 election.
It is easy to ignore the
risk outright given the politi-
cal calculus. For starters, the
bill doesn’t have a Republi-
can co-sponsor and that
MARKETS
As retail shares
have fallen,
Options Cost of Bearish investors
put-call puts vs. short bets sought bullish
ratio calls against ETF*
positions.
vored sectors such as financial
and smaller U.S. stocks on
hopes that looser regulations
and tax cuts would benefit
banks and more domestically
oriented companies. But a
setback for the Trump admin-
istration in repealing the Af-
FINANCIAL ANALYSIS & COMMENTARY
Nonfarm payrolls,
change from a year earlier
6 million jobs
–2
–4
–6
’10 1990 2000
THE WALL STREET JOURNAL.
gross domestic product in
the fourth quarter of 2017
will be 2.3% above its year-
earlier level. That would
count as an improvement
from the 2% registered in
2016. That is enot all that
different from the 2.1%
growth GDP has averaged
over the past three years.
Furthermore, the firm fore-
casts growth will cool again
in 2018.
The risk is that as the job
market tightens, the econ-
party maintains a strong ma-
jority in the House of Repre-
sentatives. Furthermore,
health-care laws are notori-
ously difficult to pass even
for the majority party. The
Republican-sponsored Ameri-
can Health Care Act failed to
even clear the House. Criti-
cism of drug prices has been
a feature of American poli-
tics for decades.
And while the Trump ad-
ministration has repeatedly
vowed to crack down on
prices, the administration’s
ability to build a coalition is,
at best, unproven. These fac-
tors point to a minimal
chance that this bill will be-
come law in its current form.
But that doesn’t mean pol-
icy risk has vanished. Demo-
March 28, 2017
The 10 most bullish
Assets
1. Retailers
2. Euro currency
Financials, a
3. Agriculture stocks
postelection
favorite, have 4. Transportation
fallen from the
most-bullish 5. Materials
list. 6. Consumer staples
7. Gold miners
8. Hong Kong stocks
9. Canadian stocks
Materials stocks
had a reversal in 10. Health care
sentiment.
The 10 most bearish
45. Oil and gas stocks
46. VIX index
47. Energy stocks
48. Developed markets
49. Natural gas
50. Emerging markets
Biotech stocks 51. Japanese stocks
have rallied in
2017, pushing 52. Investment grade
investors
53. High yield
to hedges.
54. Biotech
fordable Care Act has led some
investors to re-evaluate expec-
tations of policy changes.
The Société Générale data
brought a few surprises, such
as bullish positioning on the
downtrodden retail sector.
Meanwhile, investors main-
omy won’t even be able to
sustain its recent pace for
very long. The economy has
added an average of 225,000
jobs a month over the past
three years. If that were to
continue, it wouldn’t take
long for the job market to
get very tight, prompting the
Federal Reserve to pick up
the pace on rate increases in
an effort to prevent an over-
heating episode.
True, there might still be a
little wiggle room on jobs.
Even though the unemploy-
’10 ment rate is at a low 4.7%,
there are probably still some
people who have been out of
the labor force (and there-
fore aren’t counted in the un-
employment rate) who might
still be enticed into the job
hunt. And with some effi-
ciency gains, the economy
might not need quite as
much job growth to meet
growing demand.
But at this point those are
things that count more as
wishes than things upon
which to base a forecast—
sort of like tax-cuts and
spending pledges.
—Justin Lahart
Growth Story
Annual increase in pharmaceuticals
producer price index
10%
8 ald Trump has an unpredict-
6 able streak. It is conceivable
4 he could issue executive or-
2 ders to chip away at prices
0
2012 ’13 ’14 ’15
Source: Federal Reserve Bank of St. Louis
THE WALL STREET JOURNAL.
crats could try to attach
drug-pricing measures to
bills that would require Dem-
ocratic support, such as a re-
authorization of funding for
the State Children’s Health
Insurance Program, accord-
THE WALL STREET JOURNAL.
Positioning scale
Percentile
groupings
Most
bullish
Most
bearish
Options Cost of Bearish
put-call puts vs. short bets
ratio calls against ETF*
THE WALL STREET JOURNAL.
tained bearish views on high-
yield bonds, the data show.
A historically calm first
quarter also drove them to bet
against future market turbu-
lence. They placed bearish wa-
gers on the CBOE Volatility In-
dex, known as the VIX.
OVERHEARD
Talk about laughing all the
way to the bank.
Tesla shareholders were
all smiles Monday after bet-
ter-than-expected first-quar-
ter deliveries pushed the
stock up by 5% to a record.
Tesla’s market value passed
that of Ford Motor, which
has more than 20 times its
revenue.
CEO Elon Musk certainly
noticed his stock’s perfor-
mance. “Stormy weather in
Shortville…” he said in
a Monday afternoon tweet.
The post was retweeted
more than 300 times within
minutes.
That should ring a bell for
Tesla watchers. Mr. Musk
posted a message with al-
most the identical wording to
his account In April 2013.
Shareholders will certainly
forgive Mr. Musk for recycling
an old joke; the stock is up
nearly sixfold since the origi-
nal post. A sizable portion of
Wall Street likely wasn’t
laughing as 27% of Tesla
shares available were sold
short as of last count, accord-
ing to FactSet.
ing to analysts at Cowen &
Co. That program’s funding
is set to expire at the end of
September.
Investors also should keep
in mind that President Don-
or even shock the world and
support the Democratic plan.
’16 ’17 The extended run in
health-care stocks, mean-
while, means investors ha-
ven’t priced in an adverse
policy outcome. The low
probability of a tougher reg-
ulatory environment should
be weighed against the se-
vere consequences for inves-
tors of further surprises in
Washington. —Charley Grant
In Europe’s
Currencies
BY NINA TRENTMANN
Chinese corporate bonds is-
sued in European currencies
lag far behind their dollar
counterparts, a trend expected
to continue as the U.K.’s exit
from the European Union
threatens to shake financial
markets on the continent.
During the first quarter,
Chinese companies issued five
internationally marketed euro-
bonds worth $3.8 billion, giv-
ing the common European cur-
rency a 7% market share,
according to Dealogic.
Around 90% of all Chinese
overseas bonds during the
first quarter were issued in
dollars, the data show.
Issuance in U.K. pounds was
even more limited, with a sin-
gle bond launch worth $322
million. The pound only repre-
sents 1% of Chinese interna-
tionally marketed bonds.
There was no issuance in
Swiss francs or other Euro-
pean currencies during the
first quarter.
Raising capital overseas is
one of the solutions that Chi-
nese companies have come up
with amid increased regula-
tory scrutiny on capital trans-
fers out of China. The Chinese
government at the end of 2016
introduced tighter rules on
capital outflows, targeting
both transactions by subsid-
iaries of foreign companies as
well as those by Chinese firms
attempting to acquire overseas
M&A targets.
There are more advantages
to greenback debt. “Issuing a
U.S. dollar-denominated bond
lets the issuer tap a larger in-
vestor base, making these
bonds more attractive than
euro-denominated bonds,”
said Chunshek Chan, head of
M&A research at Dealogic.
WSJ.com/Heard
Barclays’s
Well-Timed
Africa Exit
Barclays’s decision to get
out of Africa is looking
smarter as economic and po-
litical risks churn away. In-
vestors can take comfort
that the bank has some cush-
ion against further trouble.
The U.K. lender said a
year ago that it would sell
down its 62% stake in Bar-
clays Africa Group, which is
listed in South Africa.
Barclays chose to sell be-
cause although the subsid-
iary is among the group’s
most profitable businesses,
the returns were diluted by
regulatory costs. For exam-
ple, Barclays has to carry
100% of the equity of Bar-
clays Africa even though it
gets 62% of the profits.
South Africa, which ac-
counts for about 80% of the
subsidiary’s profits, has hit a
period of turmoil with a rat-
ing downgrade from Stan-
dard & Poor’s on Monday
following the firing of its fi-
nance minister last week.
Further pressure on the
economy would be bound to
hurt growth and loan quality
at Barclays Africa Group.
Barclays has cut its stake
to 50.1% already and has
agreed to pay the Africa unit
£765 million ($959.6 million)
to cover things like the cost
of its own computer systems.
That deal awaits regula-
tory approval in South Af-
rica, which may be delayed.
Until then, Barclays can’t sell
down to the roughly 20%
stake that would allow it to
get Africa off its balance
sheet and unlock the capital
held against it.
Despite the turmoil, Bar-
clays has some comfort: In
pound terms, Barclays Af-
rica’s shares are still 30%
higher than when the bank
announced its sale plan in
March 2016.
For Barclays’s investors,
there is no need to fret yet.
—Paul J. Davies