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DJIA 20950.10 0.54%
Whats
News
Business & Finance
he Fed said it would
T raise short-term rates
by a quarter point and re-
mained on track to keep
lifting them this year. A1
 U.S. stocks extended
their gains while bond
yields and the dollar fell
on the Fed decision. B8
 Bank loans are growing
4.6% annually, the slowest
pace since 2014, despite a
stronger U.S. economy. B1
 U.S. retail sales rose just
0.1% in February from a
month earlier, the smallest
gain since last summer. A6
 The buyer of BSI, the
Swiss bank caught up in
1MDB corruption probes, is
seeking to cut the purchase
price, citing withdrawals. B5
 Auto executives say they
can adapt to Trumps pro-
posed import tariffs, but in-
dustry advocates insist
they would hurt sales. B2
 A flood of natural gas in
the U.S. is turning into a
global glut, pushing prices
down 20% this year. B1
 Oil prices rallied from
Tuesdays three-month
lows, helped by a surprise
drop in U.S. stockpiles. B7
 Volcan Investments, the
family trust of Indian min-
ing company Vedantas
founder, is investing $2.44
billion in Algo American. B5
 The key chemical in
Monsantos flagship herbi-
cide, doesnt cause cancer,
European regulators said. B3
 Audi said police raided ex-
ecutives homes and offices
in connection with the VW
diesel-emissions probe. B3
World-Wide
 Russian spies hacked Ya-
hoos computers in 2014 and
stole information from over
a half-billion accounts, U.S.
authorities said as they an-
nounced indictments. A1
 Most of the assets that
Trumps cabinet members
are obliged to sell are illiq-
uid, likely extending the time
needed for divestiture. A1
 A U.S. judge considered
whether to block Trumps
new order on visas and refu-
gees, one of several legal
tests of the travel ban. A1
 U.S. House lawmakers
rejected Trumps allegation
that his phone line was or-
dered tapped by Obama. A6
 Trump reported income
of about $153 million in
2005 and paid $38 million
in federal taxes, according
to a leaked tax return. A6
 Suicide bombers attacked
a courthouse and restaurant
in Damascus, killing at least
39 people, as Syrias conflict
entered its seventh year. A5
 Venezuelan is probing al-
leged corruption in a $1.3 bil-
lion contract between state
oil firm PdVSA and private
contractor PetroSaudi. A3
 Nine U.S. Navy officers
were charged with offenses
related to trading classified
defense information to a
foreign contractor. A7
 Trump met with Saudi
Arabias deputy crown
prince as the kingdom aims
to reset ties with the U.S. A5
 A comment by Chinas
premier at a news confer-
ence sparked questioning
about his political future. A4
CONTENTS
Business News.......... B3
Crossword.............. A12
Finance & Mkts... B5,7
Heard on Street.... B8
Life & Arts......... A9,12
3.20; CHF5.50; 2.00;
U.S. Military (Eur.) $2.20
s Copyright 2017 Dow Jones &
Company. All Rights Reserved
NASDAQ 5900.05 0.74%
Russians Charged in Yahoo Hack
YVES HERMAN/REUTERS
their city center last month, Romania out of it.
Markets...................... B8
Opinion.............. A10-11
Technology............... B4
U.S. News............. A6-7
Weather................... A12
World News....... A2-4
sively Romanias.
THURSDAY, MARCH 16, 2017 ~ VOL. XXXV NO. 33 WSJ.com EUROPE EDITION
NIKKEI 19577.38 g 0.16% STOXX 600 375.10 0.44% BRENT 51.81 1.75% GOLD 1200.10 g 0.15% EURO 1.0630 0.24%
Four men, including
two spies, committed
sian government.
Two of the men, Dmitry
Dokuchaev and Igor Sushchin,
Kazakh national, was taken
into custody on Tuesday in
Canada, authorities said. The
lack of specifics in this case,
suggest the next round of rais-
ing the theme of Russian
and private-sector employees
of financial, transportation
and other companies, the Jus-
the huge breach, U.S. are officers at Russias secre- other men are believed to be hackers in the domestic polit- tice Department said in a
tive Federal Security Service in Russia. There is no extradi- ical squabbles in the U.S. statement Wednesday.
authorities say who protected, directed, facili- tion treaty between Russia The men used unauthorized Other personal accounts be-
tated, and paid others to col- and the U.S., so U.S. authori- access to Yahoos systems to longed to employees of com-
BY ARUNA VISWANATHA
AND ROBERT MCMILLAN
lect information through com-
puter intrusions in the U.S.
ties would only be able to get
them in custody if they travel
steal information from about
at least 500 million Yahoo ac-
mercial entities, such as a Rus-
sian investment banking firm,
and elsewhere, authorities overseas to another country counts, starting in January a French transportation com-
Federal authorities have said. that is willing to send them to 2014, according to the indict- pany, U.S. financial services
charged four men, including Authorities said the two the U.S. ment. They then used some of and private equity firms, a
two officers from Russias spy men worked with co-conspira- Washington did not com- that stolen information to ob- Swiss bitcoin wallet and bank-
agency, with hacking computer tors Alexsey Belan and Karim municate with Moscow tain unauthorized access to ing firm and a U.S. airline, the
systems at Yahoo Inc. and Baratov to hack into comput- through the channels available the contents of accounts at Ya- Justice Department said.
stealing personal data that af- ers of American companies to address issues related to cy- hoo, Google and other webmail The criminal conduct at is-
fected hundreds of millions of providing email and internet- bersecurity in this case, a providers, including accounts sue, carried out and otherwise
Yahoo users, in the first such related services. Russian official said Wednes- of Russian journalists, U.S. and facilitated by officers from an
case to directly target the Rus- Mr. Baratov, a Canadian and day. This fact, as well as the Russian government officials Please see YAHOO page A6
Dutch Political Establishment Leads in Exit Polls Fed Lifts
Rates and
Signals
Confidence
BY NICK TIMIRAOS
AND KATE DAVIDSON
WASHINGTONThe Federal
Reserve said it would raise
short-term interest rates a
quarter percentage point and
keep lifting them later this
year, signaling the central bank
is moving into a new phase in
which it will more aggressively
withdraw easy money from the
financial system as the econ-
omy improves.
Officials said they would in-
crease their benchmark federal-
funds rate to a range between
0.75% and 1% and penciled in
two more quarter-point rate in-
creases this year. We have
some confidence in the path the
economy is on, Fed Chair-
woman Janet Yellen said in a
ONE WOMAN, ONE VOTE: A woman arrived to cast her vote in the Dutch election in The Hague on Wednesday. The results of exit press conference following the
polls appeared to indicate Prime Minister Mark Rutte has succeeded in finishing ahead of anti-Islam firebrand Geert Wilders. A5 Feds two-day policy meeting.
If we continue to feel that, we
will likely regard it as appropri-
ate to make some further moves
INSIDE Trump Aides Work to Get
to scale back accommodation.
One reason for the decision:
The Fed said inflation in recent
quarters was moving close to
BLOOMBERG NEWS
Rid of a Billion in Assets
the central banks long-run ob-
jective of 2% after running be-
low it for years. It also said that
target remains a symmetric
BY JEAN EAGLESHAM rules requiring them to recuse childhood education, digital goal, implying officials might
AND RYAN DEZEMBER themselves from issues that textbooks and online tools tolerate inflation rising slightly
GLUT OF GAS Members of Donald Trumps
might benefit them financially.
Some of the assets being sold
for special education. Funds
in which Mrs. DeVos is in-
above the target for a time.
Officials median expectation
SPREADS cabinet are obliged to sell more involve investments in indus- vested also own companies for the federal-funds rate
BEYOND U.S. than $1 billion worth of assets
to prevent conflicts of interest,
tries that cabinet members
are now charged with oversee-
that sell parking and laundry
services to colleges and uni-
showed few changes from pro-
jections released in December.
a process that is proving diffi- ing. versities. The projections put short-term
BUSINESS, B1 cult and time-consuming. Senior members of the ad- Those investments are rates between 2.0% and 2.25%
A Wall Street Journal re- ministration with assets that among the 102 assets, worth at the end of 2018, implying
view of those needed sales pose potential conflicts of in- at least $158 million, that Mrs. three more quarter-point in-
shows almost three-quarters terest agreed with govern- DeVos agreed to sell before creases next year. Projections
of the total is held in illiquid ment ethics officials to sell she was confirmed to her for rate increases edged up
JON KRAUSE
assets such as real estate, flagged investments within set post. slightly after that, with the me-
closely held companies and periods, often within 90 About two-thirds of those dian expectation showing rates
stakes in private-equity funds, days of taking office. assets have yet to be divested, at 3% by the end of 2019.
likely extending the time nec- While those deadlines have but the pledged sales are ac- Such projections arent set
RETREATS FOR essary to unwind the posi-
tions.
not passed, the illiquid nature
of many officials assets could
tively in progress and will be
completed by her May 8 dead-
in stone and reflect how the
Please see FED page A2
DIALING DOWN The process is leaving some make compliance a challenge. line, said Greg McNeilly, chief
THE TENSION Trump administration officials
facing potential restrictions
Secretary of Education
Betsy DeVos, for example, is
operating officer of Mrs. De-
Voss family office.
 Many analysts, until recently,
missed Fed signals................. A6
on the work they can do until selling investments in com- The scale of the selloff by  ECB treads carefully on
LIFE & ARTS, A9 the sales are completed, under panies that provide early Please see DIVEST page A8 possible stimulus retreat.... A2
Pole Position: Countries Fight Sides Spar
Color Wars Over Similar Flags
Oracle #1
i i i
Over Move
With no world-wide arbiter to settle To Block
flaps, banner achievements can turn testy Travel Ban SaaS Enterprise
Applications Revenue
BY DREW HINSHAW were aware that Chad was al- BY BRENT KENDALL
ready using the same blue- 1,000+ Employees Segment, 2015
BUCHAREST, Romania yellow-red tricolor. Frances GREENBELT, Md.A federal
When protesters spread a president at the time, Fran- judge here asked tough ques-
massive Romanian flag across ois Mitterrand, tried to talk tions as he considered
whether to temporarily block
#1
colorful photos of the scene But there were more im- President Donald Trumps new
rippled through so- portant things to executive order on visas and
cial mediaall the care about, said refugees, a key test of the
way to the Sahara.
Which is where
Romanias then-
president, Ion Ili-
scaled-back version after the
initial order was suspended by #2
the people of Chad, escu. courts.
again, noted a Since then, The hearing was one of sev-
problem: Romanias Chads parliament eral potentially important le- Oracle Salesforce
Cloud Cloud
EPA
flag isnt exclu- has thrown up dis- gal tests for the travel ban
tant protests, and Wednesday. A hearing was 14.5% 12.4%
Chad put dibs on it. A Romanian flag some vexillolo- scheduled in Hawaii later in
For 27 years, the gistsexperts in the day on a different chal-
Central African country, one flag studieshave accused lenge to the ban brought by
of the worlds most isolated Romania of flag theft. state officials there, and a
places, has been quietly com- Romanians remain unflus- judge in Seattle also was con-
plaining that the Eastern Eu- tered: Why should we care? sidering whether to allow the oracle.com/applications
ropean nation of Romania said one of the protesters new ban to take effect. Source: IDC Worldwide SaaS Enterprise Applications Market Shares, 2015: The Top 15 by Buyer Size,
copied its flag. Romanian pol- marching through central Bu- Refugee assistance groups doc #US41913816, Dec. 2016; Table 4. For the purposes of this report, SaaS enterprise applications include
the following application markets: CRM, engineering, ERP, operations and manufacturing, and SCM.
iticians, who adopted the charest last month. Chad is and others, represented by the Copyright 2017, Oracle and/or its affiliates. All rights reserved.
banner in 1989, said they Please see FLAGS page A8 Please see BAN page A8
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
A2 | Thursday, March 16, 2017
Deficits Are a Flawed Guide to Unfair Trade
P T
resident Donald Trump
seems to be spoiling for
a fight with some of
Americas biggest trade part-
ners. The problem is how he
judges victory. Im trying to
find a country where we actu-
ally have a surplus of trade as
opposed to a deficit, Mr.
Trump groused last month.
If bilateral deficits are the
marker hes using to make
America great, Mr. Trump has
set his team up
to fail. Its a
deeply flawed
gauge of trade
behavior that
could lead the
CAPITAL U.S. to pick the
ACCOUNT wrong fights.
GREG IP The U.S. has
a trade deficit
because it con-
sumes more than it produces.
Lacking sufficient savings, the
U.S. sells assets such as
stocks, bonds or other IOUs to
foreigners to finance con-
sumption and capital spend-
ing. A trade deficit always
equals an inflow of foreign
capital.
This deficit arithmetic isnt
controversial; the dispute is
over what causes it. Mr.
Trump and Peter Navarro, di-
rector of his National Trade
Council, blame unfair trade,
arguing that other countries
are cheating in the global
trade arena. His critics say its
the appeal of the U.S. as a
destination for investment.
Both arguments are an
oversimplification. Trade defi-
cits and capital inflows result
from a combination of U.S.
and foreign saving, consump-
tion, and investment behavior,
much of it benign but some of
it not.
Mr. Trumps argument im-
plies there should be some
correlation between protec-
tionist barriers and the trade
balance. There isnt. Brazil
and India are highly protec-
tionist yet run persistent
trade deficits because they
ECB Walks Fine Line on Cutting Economic Stimulus
BY TOM FAIRLESS
FRANKFURTThe Euro-
pean Central Bank is entering
uncharted territory as it pre-
pares to signal a possible re-
treat from monetary stimulus
without triggering a violent
market reaction.
Bond markets reeled last
week on reports that ECB offi-
cials had discussed how they
might wind down their easy-
money policies, which include
large-scale bond buying and
subzero interest rates.
Top officials have since
closed ranks around a uni-
formly dovish message. But as
the blocs economy strength-
ens and inflation picks up, in-
vestors are watching for any
sign of a U-turn.
The risk is that even a
small change in communica-
tions in response to improved
economic data could trigger a
rout as investors quickly price
in higher interest rates. That
in turn could upset the euro-
FED
Continued from Page One
views of Fed officials have
shifted. In recent weeks, offi-
cials said they see opportuni-
ties to raise rates due to a
brightening economic outlook
and easing financial conditions.
The current policy stance
should support some further
strengthening in labor-market
conditions and a sustained re-
turn to 2% inflation, the Fed
statement said.
Fed officials economic pro-
jections were little changed
from December, with the me-
dian projection of 2.1% growth
in gross domestic product this
year and next year. Officials
median projection of the long-
run unemployment rate ticked
down to 4.7% from a prior pro-
jection of 4.8%.
Minneapolis Fed President
Neel Kashkari cast a dissenting
vote Wednesday because he
wanted to hold rates steady.
That was the first dissent at a
committee meeting since No-
vember, when Kansas City Fed
President Esther George and
Cleveland Fed President Loretta
Mester objected to the decision
then to maintain existing rates.
The central bank had held
short-term rates steady since
December, when it raised them
save less than they invest.
Conversely, Germany and
Switzerland have low tariffs
yet run persistent trade sur-
pluses because of their high
saving relative to investment.
In an upcoming book, Jo-
seph Gagnon and Fred Berg-
sten of the Peterson Institute
for International Economics
studied 125 countries and
found that between 2003 and
2014, those with higher tariffs
generally had bigger current-
account deficits or smaller
surpluses than others. (The
current account includes
goods and services trade and
income such as interest and
dividends.) They couldnt find
any statistically meaningful
link between the two.
Some trade barriers dont
appear as tariffs, such as local
content requirements, but
that doesnt appear to alter
the overall relationship.
T
he reason is that ex-
change rates adjust. If
the U.S. imposed an
across-the-board tariff, it
would tend to reduce demand
for foreign currency, strength-
ening the dollar, making im-
ports cheaper and exports
more expensive and canceling
out the effects of the tariff. If
it imposed tariffs on just one
country, that countrys cur-
rency would fall. Its exports
would be diverted to other
countries, as would U.S. im-
ports. The U.S. bilateral deficit
might change; the overall def-
icit much less, if at all.
But this isnt to say that
unfair trade practices dont
matter. When another country
subsidizes its exports and re-
stricts imports, it benefits
American consumers at the
expense of domestic factory
workers. U.S. imports of for-
eign goods or acquisitions of
U.S. firms by foreign compa-
nies can cost the U.S. know-
how, intellectual property and
future high-wage jobs. A study
by David Autor of the Massa-
zones recovery.
At a policy meeting last
week, ECB officials left the
stimulus unchanged but up-
graded their economic fore-
casts and indicated they saw
less urgency about taking ac-
tion to support growth.
Since then, the message has
been uniformly No change.
When people talk of regime
change, we are not yet there,
Peter Praet, who sits on the
ECBs six-member executive
board, said Wednesday. Bel-
gian central-bank Governor Jan
Smets had a similar message
on Friday, arguing in an inter-
view the ECB hadnt taken even
a small step toward ending
easy-money policies.
The comments indicate that
the worlds two most powerful
central banks remain on diver-
gent paths even as the euro-
zone economy picks up. In the
U.S., the Federal Reserve has
signaled its intention to raise
interest rates aggressively.
But with eurozone inflation
by a quarter-point to a range
between 0.5% and 0.75%, just
the second increase since June
2006. The Fed held rates at
near zero from the end of
2008 through most of 2015,
before lifting the benchmark
rate once in late 2015 and once
in late 2016.
This new phase for the Fed
could pose hard new questions,
including when to start shrink-
ing its large portfolio of securi-
ties, something Ms. Yellen said
was discussed at the meeting.
The Fed boosted its portfo-
lio, or balance sheet, after the
2008 crisis with several rounds
of asset purchases aimed at
stimulating the economy by
Fed Chairwoman Janet Yellen at a Senate hearing last month.
THE WALL STREET JOURNAL.
WORLD NEWS
he Trump team is cor-
Tariffs and Trade: a Weak Link rect in believing that
sometimes trade imbal-
Tariffs are a poor predictor of whether a country will run a trade decit or surplus. ances reflect government tam-
pering, though in the capital
10.0% markets. Messrs. Gagnon and
Weighted Bergsten found that countries
average who buy foreign currency to
applied suppress the value of their
tariff, own tend to have larger trade
2006-15 surpluses.
Brazil In the past Chinese cur-
rency intervention and tight
7.5 India controls on capital inflows
kept the yuan artificially
South Korea cheap and its trade surpluses
inflated. Brad Setser of the
Council on Foreign Relations
Russia says Taiwan and South Korea
have held down their curren-
cies via currency intervention
5.0
and by encouraging domestic
investors to buy foreign assets
and discouraging foreign in-
China vestors from buying domestic
Mexico assets.
These actions are legiti-
mate cause for complaint. Yet
2.5 finding an effective deterrent
Australia has eluded previous presi-
dents and its not clear what
U.S. Canada Germany Mr. Trump can do differently.
Punishing China for manipu-
U.K. France lating its currency makes less
Higher sense now that China is trying
tariffs Switzerland Singapore to prop it up, rather than
0 push it down as in the past.
10% 0 10 20 30 Mr. Trump might use def-
icits to pick the wrong
Decit Trade surplus fights. Mexico runs a trade
Average merchandise trade balance as % of GDP, 2006-15 surplus with the U.S. Mr.
Source: World Bank THE WALL STREET JOURNAL. Trump seems determined to
fix it by renegotiating the
chusetts Institute of Technol- usually reflect structural fac- to saving and thus surpluses. terms of the North American
ogy and four others found tors. The U.S. is virtually Robert Lighthizer, Mr. Free Trade Agreement and
that U.S. firms hit hardest by forced to run a trade deficit Trumps pick for U.S. trade slapping tariffs on compa-
competition with Chinese im- because safe-haven demand representative, signaled in nies that outsource produc-
ports reduce not just employ- for its securities boosts both congressional testimony this tion to Mexico, but Mexico
ment, but also patents and re- the dollar and capital inflows. week that he appreciates runs a trade deficit with the
search and development. Japans high-saving workers some of these nuances. world as a whole. Mr.
These are all legitimate fueled its trade surplus; as When I look at deficits, I try Trumps strategy would at-
concerns for policy makers; those workers have retired to ask myself, What does it tack a country that on net is
yet fixing them wont neces- and spent their savings, the tell me about the rules of reducing the worlds excess
sarily correct the overall defi- surplus has disappeared. trade? he told Congress. of saving, not contributing
cit. In the 1980s voluntary ex- Persistent trade deficits Our objective is not just to to it. If the economic and
port restraints on Japan usually reflect structural fac- get the trade deficit down. diplomatic damage werent
helped create a thriving auto tors. Safe-haven demand for Our objective is to get more enough, thats one more rea-
transplant sector, but the U.S. U.S. Treasurys almost forces efficiency in the market, is to son for the president to be
trade deficit still grew. the U.S. to run a deficit; get rid of trade barriers ev- careful about how he is pick-
Persistent trade deficits Chinas aging work force adds erywhere. ing his battles.
calls in Germany for a swift We dont see a big sur-
exit from the ECBs stimulus. prise in the data, he said. The
Eurozone business surveys are bank has changed its commu-
at multiyear highs, the unem- nications a little to acknowl-
ployment rate is at a seven- edge stronger growth, but the
year low, and inflation is at recovery remains reliant on
2%, slightly above target. easy money, he said.
Yet German Bundesbank If the ECB did decide to
President Jens Weidmanna move toward the exit soon,
vocal opponent of the ECBs economists say it might find a
stimulushas been conspicu- propitious window. Sentiment
SUSANA VERA/REUTERS
ously silent since last weeks among investors is buoyant
decision. In a speech at ahead of expected economic
Wednesdays conference, Mr. policy changes by the new U.S.
Weidmann contented himself administration, and they are
with a single line on monetary taking Europes packed elec-
policy, urging the worlds cen- tion calendar in their stride.
ECB official Peter Praet says easy money is still needed. tral banks not to overstretch. But in a sign investors are
The ECB argues that the re- sensitive to any talk of an exit
now above the ECBs target debt levels in countries such gions economy remains reli- from the ECB, the euro rose on
and its arsenal of policy tools as Italy, and the ECBs use of ant on a significant amount of Friday and eurozone bonds
almost spent, most economists subzero interest rates, which monetary stimulus, and that tumbled on reports that policy
expect the ECB to announce an werent introduced in the U.S., underlying inflationexclud- makers had considered
exit from easy money over the said Frederik Ducrozet, an ing volatile food and energy whether to raise interest rates
next few months. economist with Pictet. pricesis still too weak. before ending their bond-pur-
Communicating that change Recent dovish statements While recent economic indi- chase program. A person fa-
could be precarious, econo- by ECB officials appear at cators have been robust, hard miliar with the matter said
mists said. The eurozone mon- odds with evidence of a robust data have yet to improve sub- there was no substantive dis-
etary authority faces a partic- economic recovery in the eu- stantially and inflation re- cussion of that topic at last
ularly delicate task due to high rozone. That has prompted mains subdued, Mr. Praet said. weeks meeting.
lowering long-term rates. The
central bank maintains the
portfolios sizenow at $4.5
trillionby reinvesting the pro-
to the risks that the economy
might underperform. It shows
how the Fed has grown more
confident that the economy has
other top Fed officials have
bent over backward to avoid
throughout the course of the
expansiontaking their foot
abroad. The Fed appears more
confident so far this year be-
cause the economy is finally co-
operating. Stock markets have
ceeds of maturing Treasury neared its goals of low unem- off the gas pedal too abruptly advanced to records in recent
bonds and mortgage-backed se- ployment and price stability. or too soon. weeks and consumer- and busi-
curities. Once it decides to The economys more stable In recent years, officials ness-confidence surveys have
shrink the balance sheet, the footing could bring a new set of faced a recurring predicament jumped higher.
Fed plans to scale back those challenges. One danger is the in which they signaled a desire
reinvestments to allow the ma- Fed, wary of allowing the econ- to tighten policy only to hold THE WALL STREET JOURNAL.
turing assets to run off. omy to overheat, could clash off after the economy under- Europe Edition ISSN 0921-99
This new stage of monetary with President Donald Trump, performed or faced risks from The News Building, 1 London Bridge Street,
London, SE1 9GF
policy is being driven by a cen- who has said his administration
tral bank more focused than it can deliver substantially stron- Thorold Barker, Editor, Europe
Grainne McCarthy, Senior News Editor, Europe
has been in the past on the
probability that the economy
ger growth than the economy
has seen over the past decade. CORRECTIONS  Cicely K. Dyson, News Editor, Europe
Darren Everson, International Editions Editor
will outperform its forecasts.
That alone is a sign of more
The Trump administration
wants to rev up growth, in part
AMPLIFICATIONS Joseph C. Sternberg, Editorial Page Editor
Anna Foot, Advertising Sales
confidence, because over several to draw millions of idled work- Jacky Lo, Circulation Sales
years the Fed has pointed more ers off the sidelines and into the Andrew Robinson, Communications
Jonathan Wright, Commercial Partnerships
labor force. During the presi- AP Moeller Maersk A/S
dential campaign last year, Mr. spends $2.1 billion a year on Katie Vanneck-Smith,
Trump repeatedly criticized Ms. fuel costs. A Technology arti- Global Managing Director & Publisher
Yellen and accused the Fed of cle Wednesday about high- Advertising through Dow Jones Advertising
keeping rates low to help then- tech sails incorrectly said the Sales: Hong Kong: 852-2831 2504; Singapore:
65-6415 4300; Tokyo: 81-3 6269-2701;
President Barack Obama. Fed companys Maersk Tankers Frankfurt: 49 69 29725390; London: 44 207
officials have said the central unit spent that amount. 842 9600; Paris: 33 1 40 17 17 01;
New York: 1-212-659-2176
bank doesnt take politics into
Printers: France: POP La Courneuve; Germany:
account when setting policy. The renovation of a Brook- Dogan Media Group/Hrriyet A.S. Branch; Italy:
Mr. Trump hasnt publicly lyn brownstone featured in an Qualiprinters s.r.l.; United Kingdom: Newsprinters
(Broxbourne) Limited, Great Cambridge Road,
discussed the Fed since his Off Duty article in the Friday- Waltham Cross, EN8 8DY
election victory. The Fed has Sunday edition was completed Registered as a newspaper at the Post Office.
been doing a good job in by Brooklyns CWB Architects. Trademarks appearing herein are used under
license from Dow Jones & Co.
JOSHUA ROBERTS/REUTERS
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THE WALL STREET JOURNAL.
Venezuela Alleges Fraud in Oil-Rig Lease
Officials at PdVSA
accused of embezzling
public funds in contract
with PetroSaudi
BY ANATOLY KURMANAEV
AND BRADLEY HOPE
CARACAS, VenezuelaThe
Venezuelan government is in-
vestigating alleged corruption
in a $1.3 billion contract be-
tween the state oil company
and a private contractor co-
founded by a Saudi prince, ac-
cording to law-enforcement of-
ficials and related documents.
Venezuelas inspector gen-
erals office on March 6 recom-
mended that the Public Prose-
cutors Office investigate and
charge five current and former
executives at Petrleos de Ven-
ezuela SA, or PdVSA, for alleg-
edly embezzling public funds by
paying inflated fees for the
lease of an oil rig, according to
a copy of the request seen by
The Wall Street Journal.
The rig, the PetroSaudi Sat-
urn, was the second drillship
leased by PdVSA from Petro-
Saudi International Ltd. to de-
velop natural-gas reserves that
the Venezuelan company said
would make the country a
global gas superpower.
The entire offshore project,
Mariscal Sucre, has yet to pro-
duce any gas. Mariscal Sucre is
PdVSAs eternal white ele-
phant, said Antero Alvarado,
Caracas-based analyst at con-
sultancy GasEnergy Latin Amer-
ica. They sank billions on it
with nothing to show for it.
A PdVSA spokesman de-
clined to comment on the con-
tracts with PetroSaudi, citing
legal disputes between the two
companies.
Mariscal Sucres troubles are
amplified by the countrys eco-
nomic crisis. U.S. law-enforce-
ment officials say PdVSA
wasted billions of dollars during
the oil boom of the past decade.
When the boom turned to bust
in 2014, production crumbled,
triggering the deepest recession
in Venezuelas history. PdVSA
didnt respond to accusations of
waste and corruption.
The Public Prosecutors Of-
fice and Venezuelan Congress in
the past month launched sepa-
rate investigations into the Sat-
urn contract, said officials at
both entities.
The offices of inspector gen-
eral, whose role is to ensure the
Economic Anchor
State oil rm PdVSA was a key
driver of the Venezuelan
economy; they collapsed in
tandem.
PdVSAs revenue
$150 billion
100
50
0 which was founded in 2005 by a
12 13 14 15 16*
Venezuelas real GDP growth
10%
0 nection to the 1MDB case.
10
20
12 13 14 15 16*
*Estimate
Sources: Torino Capital, PDVSA, Ecoanalitica
THE WALL STREET JOURNAL.
Dutch Leader Holds Off Populists,
Anti-Immigrants, Exit Polls Suggest
THE HAGUE, Netherlands
The Dutch political establish-
ment looked set to hold on to
power, despite losing votes on
Wednesday to anti-immigrant
nationalists and other upstart
parties, according to an exit poll
published after the countrys
most closely watched election in
recent times.
If official results match the
exit polls, Dutch Prime Minister
Mark Ruttes conservatives will
again be the Netherlands stron-
gest party, putting Mr. Rutte in
a strong position to form a new
ruling coalition. Mr. Rutte ap-
pears to have achieved his goal
of finishing ahead of anti-Islam
firebrand Geert Wilders, whose
Party of Freedom wants to halt
Muslim immigration and leave
the European Union.
The exit poll, published by Ip-
sos, put the premiers center-
right party on track to win 31
The former PetroSaudi Discoverer, above in 2015, is now being scrapped at a junkyard. The companys Saturn rig, below, in 2014.
proper use of state assets, and
the public prosecutor, which
would be responsible for bring-
ing charges, didnt respond to
requests for comment.
The inspector generals
probe is focused on state-
owned PdVSA, and neither Pet-
roSaudi nor any of its employ-
ees are accused of wrongdoing.
Lawyers for PetroSaudi said
they werent aware of any in-
vestigation of their client in
Venezuela. The lawyers said
Venezuelan government probes
into the contracts are politically
motivated and aimed at damag-
ing its client in its commercial
disputes with PdVSA.
A London court on Monday
ordered PdVSA to pay Petro-
Saudi $130 million in unpaid
bills, according to PetroSaudi
lawyers. PdVSA had said before
the decision that it would ap-
peal the case in the U.K. Su-
preme Court. Separately, PdVSA
is suing PetroSaudi in the
United Nations arbitration court
in Paris for allegedly failing to
meet the terms of the Saturn
contract.
PetroSaudi financed the pur-
chase of the first rig, the Nep-
tune Discoverer, with money it
received from 1Malaysia Devel-
opment Bhd, or 1MDB, the em-
battled Malaysian state invest-
ment fund, according to
financial records and people fa-
miliar with the transactions.
The U.S. Justice Department
alleges that $700 million that
1MDB sent in September 2009
to a joint venture with Petro-
Saudi was diverted, and never
arrived at PetroSaudi. The Jus-
tice Department didnt accuse
PetroSaudi of any crime, and
PetroSaudis lawyers said the
company has done nothing
wrong. The Malaysian fund
hasnt been accused, denies any
wrongdoing and pledged to co-
operate with any lawful investi-
gation.
Lawyers for PetroSaudi,
member of the Saudi royal fam-
ily, Turki Bin Abdullah Al Saud,
and a Saudi citizen, Tarek
Obaid, said no one in the com-
pany has been charged in con-
PetroSaudi entered Venezu-
ela in 2009 when it bought the
Discoverer, a ship built in 1977
that was already in use drilling
for PdVSA. PetroSaudi took
over the contract leasing the
ship to PdVSA for $490,000 a
day until 2012.
The Saudi company, which at
seats, a 10-seat drop compared
with 2012 but still ahead of Mr.
Wilderss group, which comes in
second together with two other
partiesthe centrist D66 and
the conservative Christian Dem-
ocratic Alliance, all expected to
win 19 seats.
The contest has drawn global
attention as a bellwether for Eu-
ropes string of elections this
year, in France, Germany and po-
tentially Italy. Across the conti-
nent, mainstream political par-
ties are facing challenges from
populist and antiestablishment
forces, many of them opposed
to immigration and the EU.
Similar themes are echoing
around the region including mi-
gration, security, and alienation
from governing parties.
(At right, a voter leaves Kerk-
hovense Molen, a windmill turned
polling station in Oisterwijk.)
Valentina Pop
WORLD NEWS
ALEXEY SEMENYUK
the time had no experience op- the inspector generals March 6
erating rigs, took over the oper- request.
ation of the Discoverer. When A PdVSA official said the
another of PdVSAs rigs sank in lack of a tender for the rig
2010, the company tapped Pet- wasnt unusual, as the search
roSaudi without going through took place a year after late
a bidding process, according to President Hugo Chvez expro-
PetroSaudi Used with any lawful investigation.
U.S. authorities last year
Funds From 1MDB gave a senior PetroSaudi exec-
utive involved in the 1MDB
Startups partners scrutinized deal, Patrick Mahony, a sub-
in two separate cases poena ordering him to testify
about the alleged 1MDB fraud,
and some of PetroSaudis Swiss
Venezuelas investigation assets have been frozen by
into executives of its state oil Swiss authorities, according to
company over a contract that people familiar with the matter.
the firm entered into with Pet- Mr. Mahony hasnt yet testified.
roSaudi International Ltd. marks PetroSaudis lawyers, re-
the second time that investiga- sponding to questions on be-
tors are known to have scruti- half of the company and Mr.
nized a business partner of the Mahony, said the firm denies
Riyadh-based energy-invest- any wrongdoing and no one
ment startup. from PetroSaudi has had to ap-
The U.S. Justice Department pear before a grand jury.
last summer alleged in civil While the Venezuela investi-
lawsuits that more than $1 bil- gations are unrelated to con-
lion was diverted from the joint tinuing probes in six countries
venture between PetroSaudi over 1MDBs missing fortune,
and embattled Malaysian state they focus on the decision by
fund 1Malaysia Development Petrleos de Venezuela SA, or
Bhd., over several years. PdVSA, to lease a ship that
The Justice Department PetroSaudi financed with a por-
lawsuit doesnt target either tion of the funds in the joint
PetroSaudi or 1MDB. venture with 1MDB.
Investigators from the Fed- The Justice Department
eral Bureau of Investigation are says $700 million meant for
also conducting a criminal inves- the joint venture was instead
tigation into the alleged 1MDB diverted to a company called
frauds, according to people fa- Good Star Ltd. in the Sey-
miliar with the matter. The Ma- chelles, which distributed
laysian fund has denied wrong- money to several beneficiaries
doing and pledged to cooperate of the alleged fraud.
Thursday, March 16, 2017 | A3
JIM CROUCHER
priated hundreds of oil barges
and boats, and no major foreign
drilling companies were inter-
ested in bidding for PdVSA ten-
ders.
That September, PdVSA
struck a deal with PetroSaudi
for the Saturn rig, which was
built in 1983, at $485,000 a day
for seven years, according to a
copy of the contract reviewed
by The Wall Street Journal.
Opposition lawmaker Luis
Parra said in the February con-
gressional report that the rig
should have cost about
$230,000 a day. Theres no
reason whatsoever to justify the
difference between the average
price and the exorbitant price
PetroSaudi charged PdVSA for
the Saturn, he said.
PetroSaudis lawyers said the
rate was justified by Venezu-
elas difficult working condi-
tions. The rate was almost 20%
more than the average for a
similar rig signed in the adja-
cent Gulf of Mexico that year,
according to the RigLogix data-
base.
In 2010, one of the accused
former executives, Romer Val-
Part of the remaining $300
million was used by PetroSaudi
to finance the purchase of the
Neptune Discoverer drillship
working in Venezuela in 2009,
according to financial records
and people familiar with the
transaction. The rig was then
rented to PdVSA.
PetroSaudi was founded in
2005 by a Saudi citizen, Tarek
Obaid, and a member of the-
Saudi royal family, Turki Bin Ab-
dullah Al Saud. The Discoverer
and the subsequent purchase of
the Songa Saturn drillship in
2010 were among the biggest
investments PetroSaudi made
and constituted a major part of
the companys operations.
As PetroSaudis business
picked up, it opened offices in
London and Geneva and hired
high-profile associates. It hired
former MasterCard Inc. Chair-
man Richard Haythornthwaite as
an executive in the London of-
fice. Mr. Haythornthwaite has at
no point encountered any cause
for concern about PetroSaudis
governance, PdVSA or other-
wise, PetroSaudis lawyers said.
Malaysia itself has closed all
but one investigation into 1MDB,
with no wrongdoing found.
Bradley Hope
and Anatoly Kurmanaev
dez, said PetroSaudi was the
only company that was able to
provide the right type of rig for
the required period, according
to minutes seen by The Wall
Street Journal of the state com-
panys meeting on Aug. 21,
2010. Mr. Valdez has since re-
tired from PdVSA and left Vene-
zuela, according to company of-
ficials, and wasnt reachable to
comment.
PdVSA documents show five
available rigs with similar char-
acteristics in that period.
The inspector generals office
also recommended charges
against a sixth official for alleg-
edly peddling influence to sway
PdVSA into signing the contract
for the PetroSaudi Saturn.
PetroSaudi had no relation-
ship with the official, never
used him to peddle influence
and wasnt aware that he had
any influence in the decision, its
lawyers said.
While PetroSaudi was nego-
tiating the contract, it didnt
have a rig to rent. It paid $260
million for the Songa Saturn 10
days before signing the con-
tract, according to the contract
and the sellers corporate fil-
ings.
The Discoverer and the Sat-
urn were barely adequate for
the job and completed fewer
than 10 wells out of about 70
planned, oil workers involved in
the drilling told The Wall Street
Journal. The Discoverer spent
most of its contract term in re-
pairs, according to former
workers.
PdVSA said in the Saturn
contract that the rig had been
inspected and was in perfect
condition.
After the Saturn collided
with a ferry in April 2011, the
rig spent most of the following
year in repairs, according to a
report on the collision by Pd-
VSAs investigation committee.
The committee declared the rig
obsolete and said damage to
the well resulting from the col-
lision was caused by faulty
equipment on the Saturn.
The committee absolved Pet-
roSaudi of fault in the collision
but said the company couldnt
present most of the required
[safety] documents and that
the rig lacked some basic work-
ing equipment.
PetroSaudis lawyers said the
Saturn had its required interna-
tional certifications, that both
rigs were in good working order
and accepted by PdVSA, and
that drilling delays were caused
by PdVSAs operational failures
and cash-flow difficulties.
The Saturn rig drilled three
of 16 planned wells in almost
seven years, slowed by repairs
and lack of supplies from Pd-
VSA, according to former work-
ers. An average rig working in
similar conditions and depths
completes a well in two months,
said Tony Paul, managing direc-
tor of Association of Caribbean
Energy Specialists.
The Saturn is now laid up in-
definitely off Venezuelas coast,
according to Mariscal Sucre
workers. The Discoverer is be-
ing scrapped at a junkyard.
Venezuelan President Nicols
Maduro, facing empty public
coffers and low popularity, in
January started an anticorrup-
tion campaign. The purge is
aimed at detractors and will do
nothing to address endemic
corruption, said Anabella Abadi,
a public policy analyst at Cara-
cas-based ODH Grupo Consul-
tor.
Mayela Armas
and Maria Ramirez
contributed to this article.
PETER DEJONG/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
A4 | Thursday, March 16, 2017 HK JP KO ML SI IN UK FR MN PR THE WALL STREET JOURNAL.

WORLD NEWS

Trump Shift Imperils South Korea Pact

Seoul worries the U.S. deal was signed a year later
only to be renegotiated in 2010.
is set to overturn trade The new administrations
agreement they see as more U.S.-centric perspective
on trade and skepticism to-
the gold standard ward Korus has alarmed Ko-
rean officials and industry.
BY JONATHAN CHENG Joo Hyung-hwan, South Ko-
AND KWANWOO JUN reas top trade official, traveled
to Washington last week to try
SEOULAmerican and to sway Commerce Secretary
South Korean captains of in- Wilbur Ross over Koruss bene-
dustry gathered in a conven- fits, pledging to buy more U.S.
tion center here to mark the shale gas to help address the
fifth anniversary of the U.S.- trade imbalance. Mr. Joo also
South Korean trade pact. But dismissed comparisons be-
it was a nervous celebration. tween Korus and the North
Many on Wednesday were American Free Trade Agree-
worried the U.S. will try to re- ment, which took effect in
negotiate or even abrogate the 1994.
hard-fought agreement, which The Korea-U.S. Free Trade
many tout as the gold stan- Agreement is just turning five
dard, after U.S. President Don- years old, Mr. Joo said after his
ald Trump deemed it detrimen- talks with Mr. Ross. It is not
LEE JAE-WON/AFLO/ZUMA PRESS

tal to American interests. Mr.
Trump already scrapped Amer-
ican participation in the Trans-
Pacific Partnership, which was
structured on the Korean deal.
On Tuesday, their worries
deepened when Mr. Trumps
nominee for U.S. Trade Repre-
sentative singled out Mexico and
South Korea during his Senate
confirmation hearing as spark-
ing American trade deficits.
In some cases, the rules
dont seem to be working as
well as others, Robert Light-
hizer said.
Critics say the deal has led to
a flood of South Korean cars,
auto parts, memory chips, mo-
tors and pumps into the U.S. A
U.S. Trade Representative report
this month said the pact, the
largest one implemented during
the Obama era, doubled the U.S.
trade deficit in goods with
South Korea despite projections
when it took effect in 2012 that
the deficit would narrow.
The pacts defenders say
the Korea-U.S. Free Trade
Agreement, known as Korus,
should be safe: It is a bilateral
deal, the kind that Mr. Trump
favors, and incorporates wis-
dom Washington has accumu-
lated from prior pacts.
These people, both in the
U.S. and in South Korea, say a
more holistic view is needed,
one that considers not only the
benefits of more than $100 bil-
lion in annual bilateral trade,
but also those of a vital strate-
gic alliance. South Korea
home to 28,500 U.S. troops
serves the U.S. as a bulwark
The Myeongdong shopping street in Seoul, seen this month, attracts tourists from China, Japan and other countries.
against North Koreas military
threat and Chinas geopolitical
rise. The military ties are set to
deepen with the deployment of
a costly U.S.-built missile-de-
fense array this year.
Korean officials say the
pactwhich eliminated 95% of
tariffs on consumer and indus-
trial products over a five-year
periodbenefits the U.S. even
on a narrow economic basis. The
deal, supporters say, has helped
both sides withstand a sluggish
global trade environment, re-
sulting in an increase in U.S. ex-
ports of aircraft, vehicles, beef
and natural gas to South Korea.
The pact allowed American
shipments of cars to South Ko-
rea to rise an annual average
of 36% for the past five years
to $1.7 billion in 2016, Korean
officials say, and helped Hyun-
dai Motor to invest billions of
dollars in U.S. plants.
American auto makers com-
plain over what they see as
unclear and burdensome envi-
ronmental and certification
procedures, which they blame
for limiting their market share
to roughly 15% in South Korea,
less than half of their share in
many developed countries.
The Trump administration
fair that the deal is treated the
same way as 23-year-old Nafta.
Next week, Sung Ki-hak,
chairman of the Korea Federa-
tion of Textile Industries, will
lead a delegation to North Caro-
lina to discuss possible partner-
ships, but is bracing for a po-
tential shift in the trade
landscape.
has signaled the importance of But any optimism over Mr. State Department diplomat ac- There is a fear of unpredict-
the U.S.-Korean alliance, sending Tillersons trip was tempered companying Mr. Tillerson on ability, Mr. Sung said. We
Secretary of State Rex Tillerson by unease over his mission. the trip. She said the U.S. dont know exactly what is the
to Seoul for meetings on Friday The U.S. will seek economic wanted to find a way of level- intention of the new administra-
with the acting president and engagement with Asia in a ing the playing field. tion.
the foreign ministry. That fol- way that not only promotes Any Korus renegotiation is William Mauldin
lowed a stopover by U.S. Defense growth, but also promotes the bound to be complex. The pact in Washington and
Secretary Jim Mattis to Seoul in interests of the United States, took six years to complete. Ne- Timothy W. Martin in Seoul
February. said Susan A. Thornton, a top gotiations began in 2006 and a contributed to this article.
Presidential Vote litical-corruption scandal that
toppled Ms. Park said they
Is Set for May 9 would summon the former pres-
ident for questioning on Tuesday
YONHAP/EUROPEAN PRESSPHOTO AGENCY
Snap election wont include over her alleged role in the case.
the acting head of state Prosecutors allege Ms. Park
had aided a longtime friend in
extorting money from large cor-
SEOULSouth Korea will porations, including the Sam-
hold a snap election to replace sung conglomerate, in exchange
former President Park Geun-hye for government favors. Ms. Park
on May 9, the countrys acting has denied those allegations.
president said at a cabinet Ms. Park lost her immunity
meeting, formally setting a date to criminal prosecution after she
for a poll that is expected to was removed from her position
usher in a government with dra- Prime Minister Hwang Kyo-ahn, the acting president, wont run. on Friday by the countrys Con-
matically different political priori- stitutional Court, following an
ties. bearer and strengthening the Hwang said at the meeting, a impeachment vote by South Ko-
The acting president, Prime position of opposition leader government spokesman said. reas National Assembly in De-
Minister Hwang Kyo-ahn, also Moon Jae-in. South Korea will designate cember.
said on Wednesday that he After much thought, I came May 9 as a temporary public It is unclear whether prose-
wont run in the presidential to the conclusion that I should holiday. cutors will request an arrest
race, depriving Ms. Parks conser- not delay or neglect managing Separately on Wednesday, warrant for Ms. Park.
vative ranks of an obvious flag the current national crisis, Mr. prosecutors investigating the po- Eun-Young Jeong

Part-Time Work Pays Off in Japan Rich Man, Poor Man

Wages for Japan's part-time workers have been increasing faster
than those for full-time, salaried employees.
BY ELEANOR WARNOCK contract workers were getting with slow-growing or falling that labor markets are tighten-
larger boosts. In January, part- prices for so longabout two ing, said Capital Economics Base wage, change from a year earlier
TOKYOA labor shortage is time hourly wages rose 2.6% decadesthat even during oc- economist Marcel Thieliant. In
3%
helping Japans temporary and from the previous year, com- casional upturns executives the U.S., were clearly seeing
Part-time,
part-time workers win greater pared with a 0.4% increase for kept a tight lid on wages for all signs of stronger wage growth hourly pay
pay increases than its full-tim- full-time workers base wages. workers, including part-timers. and thats one reason why we 2
ers, a reversal that adds to On b-style, a listing site for Now that is beginning to think the Fed will be quite ag-
signs of gains by lower-wage part-time jobs, the average po- change, and the consequences gressive in raising rates. 1
workers globally. sition was offering 1,087 an are greater, as irregular work- In a report released this
On Wednesday, some of hour in February, up by more ers in part-time, temporary or month, the Economic Policy In- 0 Full-time
Japans largest companies said than 7% in two months. contract jobs are a bigger part stitute, a Washington, D.C., think
they would give only modest There is a labor crunch of the economy. These employ- tank, found some of the fastest 1
increases to their full-time em- overall due to the falling birth- ees made up 37.5% of the work- wage growth in 2016 took place
ployees, in many cases smaller rate. If you dont raise hourly force in 2016, compared with among the bottom tier of Amer- 2012 13 14 15 16 17
than last year. Toyota Motor wages, you cant secure peo- 33% a decade earlier, according ican workers. Hourly wages for Source: Ministry of Health, Labor and Welfare THE WALL STREET JOURNAL.
Corp., seen as a bellwether for ple, said Keitaro Kawakami, to the Labor Ministry. Social people in the bottom 20%
wage negotiations, gave em- head of b-styles research unit. scientists say many of these gained 6.4%, while those in the trend. After Germany intro- full-time employees and irreg-
ployees a 1,300 ($11) bump Companies tend to find it workers hesitate to get married 95th percentile and above duced a minimum wage for ular workers suffering from
up in monthly payexcluding easier to raise part-time wages and start a family, a worry in a gained 1.7%, the institute found. the first time in 2015, wage low pay and uncertainty. He
certain family allowances and in response to economic condi- country where the population What stands out in this last growth for unskilled workers has attempted to push big
seniority increaseslower tions since they can quickly re- has begun shrinking. year of data is that the eco- outpaced average wage companies to raise wages for
than the 1,500 raise given verse course in a downturn, Recent signs suggest that in nomic recovery appears to be growth, according to a report both classes of workers to
last year. Big electronics mak- whereas the wages of full-tim- the U.S. and Europe as well, finally reaching a broad swath by Germanys Institute of Eco- spur growth. Japans national
ers such as Panasonic Corp. ersespecially in Japan, workers at the bottom of the of American workers, wrote nomic and Social Research. average minimum wage was
and NEC Corp. gave 1,000 where lifetime employment re- pay scale are beginning to institute economist Elise Gould. Prime Minister Shinzo Abe raised to 823 an hour in 2016
raises, down from 1,500. mains prevalent at large com- make gains after decades of A rising minimum wage in pointed to the downsides of from 798 the previous year,
By contrast, data last week paniesare harder to cut. worry about rising inequality. Japan, Germany and some U.S. Japans two-track labor mar- and Mr. Abe has said he wants
showed that part-time and Still, Japan has been stuck Generally its a global trend states is contributing to the ket, divided among protected to make it 1,000 by 2020.

Chinese Premiers Aside Stirs Chatter About His Future

BY CHUN HAN WONG characterize it in their inter- ples Congress, where officials come a casualty in this pro-
nal reports. sought to project party unity cess, remaining a senior leader
BEIJINGIn a yearly rit- It wasnt clear what, if and stability by pledging fe- but losing the premiership,
ual for Chinas No. 2 leader, anything, Mr. Li meant with alty to the leadership of Presi- said Willy Lam, an expert on
Premier Li Keqiang fielded his signoff in an otherwise dent Xi Jinping, keeping con- Chinas elite politics at the
WU HONG/EUROPEAN PRESSPHOTO AGENCY

questions from reporters fo- scripted presentation. The troversial policy issues off the Chinese University of Hong
cused on economic policy reactions underlined how a agenda, and tightening con- Kong. Given such rumors, Li
and China-U.S. relations for dearth of information about trols over media access to pro- Keqiang could be sending a
two hours. It was his signoff maneuverings within Chinas ceedings. Apart from review- signal to his supporters, Mr.
that grabbed attention. party leadership prompts the ing annual government Lam said. Or it could be a
See you again, if theres a parsing of seemingly offhand reports, Chinas largely rub- Freudian slip.
chance, Mr. Li said at the end remarks for the slightest of ber-stamp parliament passed a In Wednesdays news con-
of Wednesdays news confer- clues. preamble document for a po- ference, Mr. Li appeared to of-
ence, a nationally televised The opacity of the Chinese tential civil code of lawthe fer a firm defense of his four
event that concluded Chinas political system invites gross only major item on its legisla- years as premier, a post that
annual legislative session. speculation in place of data- tive agenda this year. has traditionally come with re-
His comment fed public See you again, if theres a chance, Li Keqiang told reporters. driven analysis, said Jude Speculation over Mr. Lis fu- sponsibility over Chinas econ-
questioning about his politi- Blanchette, a Beijing-based re- ture has festered over the past omy. While Mr. Xi has diluted
cal fate, as the ruling Com- true, that there will be a One view is that Mr. Li de- searcher who is writing a book year or so as he has lost influ- Mr. Lis role in economic man-
munist Party prepares for a personnel change for the liberately avoided sounding about Mao Zedongs legacy. ence over economic policy to agement, the premier spoke
leadership shuffle this fall. next term? one user wrote certain of keeping his job. Mr. Li couldnt be reached Mr. Xi, who has steadily con- animatedly about policy initia-
Party insiders say a second on the popular Weibo micro- Premiers serve five-year to comment. The State Council centrated power in his own tives he has been closely asso-
five-year term for Mr. Li blogging service. Another terms, so saying it like this Information Office, which han- hands since taking the helm of ciated with: efforts to cut gov-
isnt a sure thing. Some po- said the premier may be ex- appears more strictly cor- dles publicity for Chinas cabi- Chinas Communist Party in ernment red tape and
litically minded Chinese pressing pessimism about rect, a Weibo user wrote. net, didnt respond to a re- late 2012. encourage innovation and
wondered whether the pre- his chances of staying on. Some diplomats who quest to comment. Party insiders expect Mr. Xi business startups.
mier was telegraphing his Seems like the political heard Mr. Lis remark de- The news conference came to try to promote allies and Charles Hutzler
future. struggles are very fierce, bated whether it had any at the end of a stage-managed sideline rivals in the fall lead- and Fanfan Wang
Could those rumors be she wrote. hidden meaning, and how to session of the National Peo- ership shuffle. Mr. Li could be- contributed to this article.
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. Thursday, March 16, 2017 | A5

WORLD NEWS

Damascus Suicide Bombings Kill Dozens

Rebel group suspected
in attacks at court,
restaurant, as conflict
enters its seventh year
BY NOAM RAYDAN
BEIRUTSuicide bombers
attacked a courthouse and res-
taurant in Damascus, killing at
least 39 people and wounding
dozens more, state media and
an opposition monitoring
group said, as Syrias conflict
entered its seventh year.
There was no immediate
claim of responsibility for
Wednesdays blasts, but one of
the myriad rebel groups op-
posed to the regime of Presi-
dent Bashar al-Assad was sus-
pected of carrying out the rare
attacks on government strong-
monitoring group, the U.K.-
based Syrian Observatory for
Human Rights.
The official Syrian Arab
News Agency posted video
purporting to show blood-cov-
ered victims of the attack, near
the capitals Old City, receiving
treatment at a hospital.
The death toll from the ex-
plosion at the restaurant in
the al-Rabweh neighborhood
of Damascus wasnt immedi-
ately known. The district was
a popular tourist destination
before the war, and the Obser-
vatory said the area has con-
tinued to draw Syrian security
officials and politicians.
By late Wednesday, addi-
tional security forces and
more checkpoints had ap-
peared on Damascus streets.
Roads were blocked, and traf-
fic in some areas was stalled.
those attacks, saying they
were intended as a message
for Iran, a mainly Shiite Mus-
lim country that is an ally of
Iraq and one of the Assad re-
gimes chief supporters.
As the Assad regime contin-
ues to regain significant terri-
tory, rebels appear to be re-
sorting increasingly to
guerrilla tactics, including
bombings inside government-
controlled areas and attacks
on government buildings.
Elsewhere in Syria on
Wednesday, airstrikes on the
rebel-held city of Idlib in
northwestern Syria killed at
least 25 people, including 14
children, the Observatory said.
Russian warplanes were likely
behind the airstrikes, it added.
At least 465,000 people have
been killed or have disappeared
since the start of the conflict in

holds in the capital.
At least seven security per-
sonnel were among those
killed in the blast in central
Damascus at the main judicial
building, known as the Justice
Palace, said the opposition
Wednesdays explosions fol-
lowed twin blasts at Shiite
shrines near Damascus on Sat-
urday that killed at least 40
people, most of them Iraqis.
A former al Qaeda group
claimed responsibility for
OMAR SANADIKI/REUTERS
March 2011, according to the
monitoring group. What began
as peaceful demonstrations
against Mr. Assad flared into
armed rebellion after the gov-
ernment security forces
cracked down on protesters. Security personnel stand near the damaged entrance of the Justice Palace in Damascus.

Saudis Seek to Reset Ties as Trump Meets Prince

BY MARGHERITA STANCATI precision-munitions guidance meddle in Arab affairs, stoking Mohammed said it would be
systems to the kingdom that Mr. sectarian tensions. much larger, Mr. Katulis said.
Saudi Arabias powerful dep- Obama suspended in December Mr. Trump and senior aides Investing in the U.S. and list-
uty crown prince met with Pres- over the mistaken bombing of have vowed to take a tough ing Aramco shares in the coun-
ident Donald Trump as the king- civilians by the Saudi-led coali- stance on Iran. Confronting try could cement political ties
dom aims to reset ties with tion in Yemen, said people fa- what Washington and Riyadh between the two countries at a
Washington and dangles the miliar with the discussions. say is Irans destabilizing behav- time when rising U.S. oil output
prospect of major job-creating At the same time, Saudis are ior was a central topic of discus- has made the U.S. less depen-
investments in the U.S. seeking amendments to the Jus- sion of an hourlong call between dent on imports, including from
The visit of Prince Moham- tice Against Sponsors of Terror- King Salman and Mr. Trump in Saudi Arabia.
med bin Salman, the 31-year-old ism Act, which lets Americans January. The kingdom plans to make
son of King Salman and second- sue foreign governments over Prince Mohammed is the an initial public offering of as
in-line to the throne, marks the terrorist acts. So far, the efforts architect of the kingdoms much as 5% of Aramco. Details
EVAN VUCCI/ASSOCIATED PRESS

highest-level visit by a Saudi
royal since Mr. Trumps election.
It comes as Riyadh weighs
whether to list shares of giant
state-owned Saudi Arabian Oil
Co., or Aramco, in the U.S.
Mr. Trump was joined in
Tuesdays meeting with Prince
Mohammed by Vice President
Mike Pence and aides including
the presidents son-in-law and
senior adviser, Jared Kushner;
Lt. Gen. H.R. McMaster, the na-
tional security adviser; White
House chief of staff Reince Prie-
bus; and Steve Bannon, the
presidents chief strategist.
The Saudi government has
high hopes that relations with
Washington will be warmer than
they were under President Ba-
rack Obama, who reached a nu-
clear deal with Iran in 2015 that
President Donald Trump shook hands with Saudi Arabias Prince
Mohammed bin Salman on Tuesday at the White House.
Riyadh opposed.
I am very optimistic about
the Trump administration, Adel
al Jubeir, Saudi Arabias foreign
minister and a former ambassa-
dor to the U.S., said last month.
We see a president who is
pragmatic and practical, a busi-
nessman, a problem-solver, a
man who is not an ideologue.
Mr. Jubeir and U.S. Secretary
of State Rex Tillerson discussed
havent yielded success. Fifteen
of the 19 hijackers involved in
the Sept. 11 terrorist attacks
were Saudis.
Mr. Jubeir has spent consid-
erable time since Mr. Trumps
election in Washington trying
to persuade Congress to
amend the law, which exposes
Saudi Arabia to lawsuits from
families of 9/11 victims. During
counterterrorism cooperation, his trip, Prince Mohammed
ending the war in Yemen and also is expected to meet con-
the desire to strengthen eco- gressional leaders.
nomic and commercial ties in a Members of the Saudi dele-
meeting on Monday. gation are likely to raise the
The Saudi government is also subject of Iran during the visit,
optimistic the new administra- said people briefed on the trip.
tion will be more willing to al- Saudi Arabia has warned that
low the transfer of sophisticated the deal, which eased economic
military technology to the king- sanctions on Iran in exchange
dom. The Trump administration for limits on its nuclear pro-
is expected to resume a sale of gram, has empowered Tehran to
plan for economic and social for the listing are still being
transformation that aims to hashed out, but possible sites
reduce Saudi Arabias depen- include New York and London.
dence on oil sales. The royal court signaled in a
During the visit, Prince Mo- recent briefing by the deputy
hammed is also expected to pur- crown prince with Saudi econo-
sue discussions about invest- mists and local media that
ment opportunities. He recently strengthening ties with the U.S.
indicated he plans to present a would be one reason to list
package to the Trump adminis- Aramco in New York, according
tration aimed at creating Ameri- to a person at the gathering.
can jobs, said Brian Katulis, a There have been some real
senior fellow at the Center for concerns that the U.S. energy in-
American Progress, a liberal dependence means less involve-
think tank, who met the prince ment in the Middle East, partic-
in Riyadh last month. ularly Saudi Arabia, and less
Japan last month outlined a effort to protect the country and
vision for an investment pack- its oil resources, the person
age that could generate 700,000 said. A U.S. listing or having
U.S. jobs and create markets U.S. investors holding shares in
worth $450 billion over the next Aramco could change that.
decade. When asked if the Saudi Summer Said
plan would be similar, Prince contributed to this article.

WORLD WATCH
CHINA package was spotted in the
morning.
Beijing Restarts Work Tests later found the package
On Disputed Island to contain an explosive mix of-
ten used in pyrotechnics that
China has started fresh con- could have caused substantial
struction work in the disputed injuries if the package had been
South China Sea, new satellite opened, Berlin police said.
images show, a sign that Beijing Police declined to say where
is continuing to strengthen its the package came from or to
military reach across the vital whom it was addressed. Investi-
trade waterway. gations are ongoing.
Regional military attachs A spokesman for the finance
and experts believe the work ministry declined to comment.
shows Chinas determination to Ruth Bender
build up its network of reefs and
THE INTERNATIONAL FEDERATION OF RED CROSS AND RED CRESCENT SOCIETIES/REUTERS

islets, even if it is seeking to MALAYSIA

avoid a fresh confrontation with
the new administration of U.S.
President Donald Trump.
An image of North Island in
the Paracels group taken on
March 6 shows recent work in-
cluding land clearing and possi-
ble preparation for a harbor to
support what experts believe
may be eventual military instal-
lations.
Reuters
UNITED KINGDOM
Unemployment Falls,
Wage Growth Slows
The U.K. unemployment rate
fell unexpectedly in the three
months through January, hitting
its lowest level in more than
four decades, but wage growth
after inflation slowed sharply,
data showed, signaling Britain
may be facing a squeeze on liv-
ing standards despite its robust
labor market.
The figures add to signs the
U.K. economy, which last year
grew at a healthy clip largely
thanks to resilient consumer
spending, is now poised to slow
as British shoppers start watch-
ing their pennies. This would
come at an awkward time for
Prime Minister Theresa May,
who is due to begin divorce pro-
ceedings with the European
Union by the end of this month.
The unemployment rate in
the November-January period
inched down by 0.1 percentage
A man in Somalia stands near the carcass of an animal that died in a severe drought affecting a large swath of Africa. The United
Nations said last week that more than 20 million people in four countries, including Somalia, face starvation and famine.
point to 4.7%, the Office for Na-
tional Statistics said, as employ-
ment rose by 92,000, the high-
est level on record.
Unemployment was last lower in
the summer of 1975, it said.
But accelerating inflation,
which hit a more than two-year
high of 1.8% in January, had be-
gun to eat into real wage
growth, data also showed. Ad-
justed for inflation, regular
wages grew by only 0.8% in the
three months through January,
the slowest pace of growth
since late 2014.
Wiktor Szary
and Jason Douglas
VENEZUELA instate laws that were passed
by the opposition-controlled
OAS Chief Urges congress but annulled by his
Caracas Suspension government.
It is rare for the OAS to
The head of the Organization openly criticize its member
of American States on Tuesday states. But since taking over
recommended suspending Vene- the Washington-based regional
zuela from the 34-nation body diplomacy organization in 2015,
unless President Nicols Ma- Mr. Almagro, a leftist who is a
duros government moves former foreign minister from
quickly to hold general elections. Uruguay, has been a leading
Secretary-General Luis Al- critic of Mr. Maduros increas-
magro urged the Maduro ad- ingly authoritarian rule.
ministration to call elections There was no immediate re-
within 30 days, free political sponse from Caracas. In the
prisoners, appoint independent past, Mr. Maduro and other offi-
Supreme Court justices, and re- cials have characterized Mr. Al-
Family DNA Used
To Confirm Kims ID
Authorities revealed that Ma-
laysia has been in contact with
family members of Kim Jong
Nam who have been in hiding
since shortly after the half
brother of North Koreas dictator
was killed here in February.
Officials described on
Wednesday how they had previ-
ously identified the body of Kim
Jong Nam, saying it was based
on a DNA sample taken from
one of his children.
Authorities earlier had de-
clined to say how the identifica-
tion was made.
Malaysian authorities didnt
say how they obtained the DNA
sample and didnt indicate
whether there had been direct
contact with family members,
magros criticisms of Venezuela but said it was taken in accor-
as part of a Washington-led at- dance with forensic procedures.
tempt to destabilize the leftist That sample has been placed
government. in accordance with forensic and
Kejal Vyas DNA procedures and I once
again wish to formally confirm
GERMANY that the corpse belongs to Kim
Jong Nam, Deputy Prime Minis-
Explosives Found in ter Ahmad Zahid Hamidi said
Ministry Mailroom Wednesday.
On Monday, North Koreas en-
A package containing explo- voy to the United Nations, Kim
sives was found in the German In Ryong, denied that the man
finance ministrys mailroom killed in Malaysia was Mr. Kim
Wednesday, police said. and said the U.S. and South Ko-
Police evacuated parts of the rea should be blamed for the
ministry situated in Berlins killing.
Mitte district after a suspicious Yantoultra Ngui
 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
A6 | Thursday, March 16, 2017
Lawmakers:
TrumpDidnt
GetTapped
President alleged
earlier this month that
Obama wiretapped
Trump Tower
BY SIOBHAN HUGHES
AND BYRON TAU
WASHINGTONThe top
lawmakers on the House Intel-
ligence Committee rejected
Wednesday an allegation made
by President Donald Trump
earlier this month that his
phone line was ordered tapped
by his predecessor.
Mr. Trump, without offering
any evidence, wrote on Twitter
early this month that then-
President Barack Obama, a
Democrat, had tapped Trump
Tower, where Mr. Trump lived
and worked during the 2016
campaign. It was an extraordi-
nary claim of illegal activity by
a former president.
I dont think there was an
actual tap of Trump Tower,
Rep. Devin Nunes (R., Calif.)
said on Capitol Hill on Wednes-
day. You have to decide, are
you going to take the tweets lit-
erally, and if you are, then
clearly the president is wrong.
Trump Paid $38 Million in 05 Taxes, Return Shows
BY RICHARD RUBIN
AND MICHAEL C. BENDER
President Donald Trump re-
ported about $153 million in in-
come in 2005 and paid $38
million in federal taxes, accord-
ing to a leaked tax return that
was published on Tuesday.
The documents and White
House confirmation show that
Mr. Trumpoften criticized for
overstating his wealth and in-
comedid make significant in-
come in 2005. They also show
that most of his taxes were be-
cause of the alternative mini-
mum tax, a parallel tax system
YURI GRIPAS/REUTERS
Federal authorities charged four men on Wednesday, including two officers from Russias spy agency, with hacking computer systems at Yahoo.
YAHOO
Continued from Page One
FSB unit that serves as the
FBIs point of contact in Mos-
cow on cybercrime matters, is
beyond the pale, Acting As-
sistant Attorney General Mary
McCord said in a statement.
Yahoo last year had linked
its 2014 breach to state-spon-
sored hackers. Yahoos serv-
ers also were compromised by
hackers in a separate incident
in 2013, which the company
Growth Lags Behind Consumer Confidence
BY JOSH MITCHELL
The stock market is boom-
ing and businesses and house-
holds are near their most con-
fident in years. Yet the U.S.
economy shows few signs of
breaking out of its long
stretch of subpar growth.
The latest evidence
came Wednesday when the
government reported that
sales at the nations retailers
a key measure of consumer
spendingrose just 0.1% in
Mr. Trumps administration
has asked Congress to investi-
gate the presidents accusa-
tion, which White House offi-
cials have been unable to
substantiate.
Over the weekend, White
House adviser Kellyanne Con-
way suggested that the gov-
ernment had other ways to
surveil Americans and men-
tioned the use of microwaves
and phones as spying devices.
By Monday, the White
House had partly walked back
Mr. Trumps allegation. White
House spokesman Sean Spicer
said Mr. Trump, a Republican,
didnt believe that Mr. Obama
had personally tapped his
phone, but instead was talking
broadly about surveillance.
Theyve been all over the
map, said Rep. Adam Schiff of
California, the ranking Demo-
crat on the panel. The reality
is, I dont think they have the
foggiest idea of what was be-
hind the presidents claim ex-
cept maybe something he
watched on TV. And I think the
rest is designed to downplay,
minimize or obfuscate the fact
that the president said some-
thing that was patently untrue.
Presidents cant personally
designed to make sure that
high-income individuals cant
use legal deductions and credits
to avoid all income taxes.
The returns were obtained
by DCReport.org, a website
that tracks government action,
and revealed in conjunction
with a broadcast on MSNBCs
The Rachel Maddow Show.
Ms. Maddow held up a 2005
copy of Mr. Trumps Form
1040 and said it had been ob-
tained by DCReport.org, a
news site.
Before being elected presi-
dent, Mr. Trump was one of
the most successful business-
said led to data on more than
1 billion accounts being stolen.
The hacking incidents at
Yahoo, both among the larg-
est-ever reported thefts of
personal data, presented a ma-
jor stumbling block to Verizon
Communications Inc.s efforts
to acquire Yahoos core busi-
ness assets. Yahoo disclosed
both breaches months after
Verizon made its initial bid on
the internet company in July
2016. Last month, the compa-
nies revised the terms of their
deal, with Verizon now paying
$4.5 billiona $350 million
February from a month earlier.
Americans cut spending on
clothing, sporting goods, elec-
tronics and restaurant outings,
leading to the smallest gain in
retail sales since last summer.
Earlier reports showed a
surging trade deficit in Janu-
ary and a recent drop in home
sales, as measured by contract
signings. Taken together, the
economy appears to be stum-
bling once again in the first
months of the year, despite
unusually warm weather that
U.S. NEWS
House Intelligence panel leaders Devin Nunes, right, and Adam Schiff said on Wednesday there was no evidence of wiretapping.
order wiretaps, and intelli-
gence experts have said that if
Mr. Trumps claims were true,
it would amount to a gross vi-
olation of decades-old law.
Speaking to reporters on
Wednesday in Richmond, Va.,
Attorney General Jeff Sessions
was asked if he had given Mr.
Trump any reason to believe
that Trump Tower, the presi-
dents business headquarters
and residence in New York
City, was wiretapped.
The answer is no, Mr. Ses- paign. The contact with a Rus-
men in the world with a re-
sponsibility to his company, his
family and his employees to
pay no more tax than legally
required, said a White House
official, who confirmed the
numbers and criticized media
outlets for publishing them.
In a tweet Wednesday
morning, Mr. Trump said:
Does anybody really believe
that a reporter, who nobody
ever heard of, went to his
mailbox and found my tax re-
turns? @NBCNews FAKE
NEWS!
Mr. Trumps tweet was re-
ferring to David Cay Johnston,
price reductionand both
companies agreeing to split
any future costs related to the
breaches.
Yahoo executives were ap-
parently unaware of the 2013
breach until December of last
year, but the company knew of
the 2014 incident soon after it
occurred. It is unclear why Ya-
hoo waited approximately two
years to disclose that breach,
and this delay is now the sub-
ject of an investigation by fed-
eral authorities, including the
Securities and Exchange Com-
mission.
might otherwise boost spend-
ing and the absence of major
crises overseas, as happened
in the past.
Forecasting firm Macroeco-
nomic Advisers on Wednesday
downgraded its projection of
economic growth in the cur-
rent quarter to an annual rate
of 1.3%, from 1.4%. Barclays
projected 1.4% growth, com-
pared with 1.6% earlier. The
Federal Reserve Bank of At-
lantas GDPNow model low-
ered its estimate to 0.9% from
sions said. I have recused my-
self and Im not talking to the
president or the people who
are investigating the case and
am unable to comment on any
of these details.
Mr. Sessions was referring
to his move early this month
to step aside from involvement
in any probe tied to the 2016
presidential race, after reports
that he had been in contact
with a Russian official while
advising Mr. Trumps cam-
the founder of DCReport.org
and a former New York Times
journalist, who provided the
tax documents to Ms. Maddow
and appeared on her show
Tuesday night. Mr. Johnston
said he received the documents
unsolicited in his mailbox.
The release of one partial
return seems unlikely to stop
the controversy surrounding
the presidents tax returns, and
Democrats repeated their calls
for Mr. Trump to release more
returns or for Congress to re-
view them. During the presi-
dential campaign, Mr. Trump
broke with a bipartisan tradi-
Last month, Yahoos top
lawyer, Ronald Bell, resigned
in the wake of the hacks, and
Yahoos board elected not to
award Chief Executive Marissa
Mayer her 2016 cash bonus
and accepted her offer to
forgo her 2017 equity awards.
A Yahoo board investigation
blamed the mishandling of the
hacking incident on failures
in communication, manage-
ment, inquiry and internal re-
porting and a lack of proper
comprehension, the company
said in an SEC filing earlier
this month.
1.2%. Growth has averaged
about 2% in the current ex-
pansion. Economic output ex-
panded at a 1.9% rate in the
fourth quarter.
The data highlight a dichot-
omy of how people and busi-
nesses say they feel and how
the economy is actually per-
forming. Measures of opti-
mism such as the University of
Michigans consumer senti-
ment reading are pointing up
while measures of economic
output are slowing.
THE WALL STREET JOURNAL.
sian official appeared at odds
with his testimony during his
Senate confirmation hearing to
become attorney general.
Separately, James Comey, di-
rector of the Federal Bureau of
Investigation, was expected to
brief the top two lawmakers on
the Senate Judiciary Commit-
tee, who have been asking for
updates on whether there is an
investigation into reported ties
between Mr. Trumps aides and
Russian officials. The commit-
tees Crime and Terrorism sub- the FBI.
tion of disclosure by refusing
to release his tax returns. He
has cited a number of different
reasons, the most frequent of
which is his lawyers advice
that he shouldnt do so during
an audit.
No law prohibits him from
releasing his tax returns, even
when they are under review by
the Internal Revenue Service.
The AMT is complex. With-
out seeing all of the support-
ing information that isnt part
of the leaked documents, it is
hard to know exactly why he
paid AMT, or his sources of in-
come, investments and finan-
Why Analysts
Missed Fed Signals
On Raising Rates
BY DAVID HARRISON
Investors rely on analysts
to tell them how the Federal
Reserve is likely to move in-
terest rates. Until just a few
days ago, however, many of
those experts missed signals
that the central bank would
lift borrowing costs on
Wednesday.
Strong hiring, firming infla-
tion, buoyant stock markets, a
placid global economic outlook
and Chairwoman Janet Yel-
lens upbeat congressional tes-
timony last month didnt fun-
damentally alter Wall Streets
view that the Fed would hold
rates steady until later this
year. This despite Fed officials
saying they anticipated three
moves in 2017.
Neither did it seem to mat-
ter to the markets when, three
weeks ago, minutes of the
Feds most recent meeting on
Jan. 31-Feb. 1 showed that offi-
cials thought they would likely
move fairly soon. many others concluded, well,
It wasnt until Feb. 28,
when Fed officials launched a
barrage of public comments
clearly signaling an imminent
rate increase, that analysts
and markets began expecting
the move on Wednesday.
We have completely
flipped our position, Brett
Ewing, chief market strategist
for First Franklin Financial
Services, wrote in a note to
clients Tuesday.
How did so many get it
wrong? Analysts point to a
number of reasons. Some say
they were expecting the
Trump administration to im-
pose trade curbs that could
stifle economic growth. Others
thought Fed officials would
prefer to sit tight until they
got a clearer picture of the
new presidents policies. And
J. SCOTT APPLEWHITE/ASSOCIATED PRESS
committee has oversight and
jurisdiction over the FBI.
Mr. Comey was expected to
brief Sen. Chuck Grassley of
Iowa, the Republican chairman
of the committee, and his
Democratic counterpart, Sen.
Dianne Feinstein of California,
as early as Wednesday, accord-
ing to a Capitol Hill aide. Mr.
Grassley has threatened to
hold up the nomination of a
top Justice Department official
unless he gets an update from
cial ties.
Mr. Trump and Republicans
have proposed to repeal the
AMT as part of their plans to
revamp the tax system.
The AMT can interact in
complicated ways with depre-
ciation deductions and net op-
erating losses, both of which
Mr. Trump was already known
to have. A previously leaked
state tax return published by
the New York Times in October
showed that he had more than
$900 million in losses in 1995.
He then would have had years
to use those losses to soak up
future income.
several pointed to the experi-
ence of 2015 and 2016, when
the cautious central bank de-
livered fewer rate increases
than it had projected. Officials
penciled in three rate in-
creases for 2015 and four for
2016, but delivered just one in
each year.
That left investors feeling
burned, Mr. Ewing said.
Before each of the rate in-
creases in 2015 and 2016, Fed
officials used the statement re-
leased at the preceding meeting
to send a strong signal that an
increase was coming, but they
didnt do this on Feb. 1, after
the latest meeting concluded.
It appeared there was a
pattern developing, said Mi-
chael Feroli, chief U.S. econo-
mist at J.P. Morgan. Mr. Feroli
originally predicted the Fed
would raise rates twice in
2017, with the first move com-
ing in May. There was no sig-
nal like that in the February
statement, so I think we and
theres an economic case for
March, but theyre just not
saying it, he said. Thats why
we went to May.
After hearing the recent
comments from Fed officials,
Mr. Feroli revised his forecast
to include three rate increases
for 2017in March, June and
September.
Michael Gapen, chief U.S.
economist at Barclays, said he
thought the Trump adminis-
tration would put in place tar-
iffs or other trade restrictions
early in the year. That would
cause a short-term boost to
inflation but also curb growth,
he said. Mr. Gapen predicted
the Fed would look past that
temporary inflation increase
and focus on lower growth as
a reason to hold off on raising
rates in March.
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.
Build a Wall? In Arizona, Its Complicated
Ranchers embrace
more security, but say
areas terrain calls for
multifaceted approach
BY DAN FROSCH
DOUGLAS, Ariz.Standing
6 feet tall, Kelly Glenn-Kimbro,
a rancher and hunting guide,
can see easily over the low-
slung fence that separates her
familys 22,000-acre ranch
from Mexico.
I dont care what they
build. Theyll climb it or theyll
go under it, Ms. Kimbro said
during a break from hunting
javelina, an animal akin to a
wild boar. No matter what
they build on the border, it
isnt going to stop all traffic.
Ranchers across Arizonas
375-mile southern border have
long called for more security
to stem the flow of drugs and
people crossing their land. In
President Donald Trump,
many feel like they finally
have a champion. But when it
comes to his promise to
build a wall along the nearly
2,000-mile border with Mex-
ico, Arizona ranchers have a
somewhat unexpected answer:
Its complicated.
They favor an approach
that takes into account the
varied terrain and location of
their land.
Ms. Kimbro says she wants
more U.S. Border Patrol agents
who periodically maneuver
their SUVs along the dirt road
that skirts her four-mile prop-
erty line with Mexico.
Some 50 miles west, fellow
rancher John Ladd prefers the
18-foot tall, steel fencing that
shields a small segment of his
ranch near Naco, which he
says is a favorite corridor for
drug couriers who navigate
through plumes of high desert
grass and mesquite shrubs.
Dan Bell, who grazes his
cattle around the rugged hills
above Nogales, envisions a
combination of more technol-
ogylike sensorsmanpower
and fencing on the U.S. Forest
Service land he leases.
Access is the most impor-
tant issue that we faceso we
can get to the border and pa-
GOP Senators Balk at Health Plan Nine Naval Officers
WASHINGTONRepubli-
can senators, alarmed by a
nonpartisan report showing
millions would lose insurance
under the GOP health-care
plan, warned that the bill
wouldnt become law without
fundamental changes.
By Kristina Peterson,
Michelle Hackman
and Louise Radnofsky
At least a dozen Republican
senators, including some who
had previously kept a low pro-
file in the health debate, made
clear that they had concerns
over the bills policy propos-
als, complicating House lead-
ers hopes that the bills mo-
mentum would overpower
internal GOP infighting over
legislative details.
Flashpoints included the
potential loss of insurance
coverage, changes to Medicaid,
the trajectory of premium
prices and the bills impact on
costs paid by older, low-in-
come and rural Americans.
Concerns mounted this
week on Capitol Hill after the
Congressional Budget Office,
the independent legislative an-
alyst, released a report on
Monday that estimated the
GOP health plan would reduce
deficits by $337 billion over
the coming decade and in-
crease the number of unin-
sured by 24 million in 2026,
compared with current law.
While many Republicans
Health-Exchange Enrollment Drops for 2017
BY MICHELLE HACKMAN
WASHINGTONAbout 12.2
million Americans signed up for
health insurance through the
Affordable Care Acts exchange
marketplaces by the Jan. 31
open-enrollment deadline, the
government said Wednesday.
The number of people who
signed up through state and
federal exchanges was shy of
the 13.8 million-person projec-
tion made by the Obama ad-
ministration in October, which
counted on more young people
signing up for insurance than
Cattle rancher John Ladd says he prefers the 18-foot tall, steel fencing that shields a small segment of his ranch near Naco, Ariz.
Immigration Debate
Belies Security
Improvements
DOUGLAS, Ariz.Private
property, much of it used for
ranching, makes up just 10% of
Arizonas border. But these ar-
eas for years have been a
flashpoint of the conflict over
illegal immigration in the state.
Presidents George W. Bush
and Barack Obama deployed
National Guard troops to the
Arizona border. And groups of
vigilantes like the Minutemen
have patrolled here in Cochise
County, where ranchland runs
alongside Mexico.
But the number of undocu-
trol the border, said Mr. Bell,
pointing to a hillside where a
Border Patrol fence abruptly
ends as the terrain steepens.
Then, we can look at what
Cost Comparison
The impact of the GOP health-care plan on consumers would vary based
on age, with the biggest changes coming to older people, many of whom
would pay more, according to the Congressional Budget Ofce.
Examples of subsidies in 2026
Affordable Care Act (current law): Tax credit
House Republican health-care plan: Tax credit
Single, income of $26,500
Age 21
$3,400 $5,100
$2,450 $3,900
Age 40
$4,800 $6,500
$3,650 $6,050
Age 64
$13,600 $15,300
$4,900 $19,500
Source: Congressional Budget Ofce
lauded the plans impact on
the deficit and the high cost of
premiums, the rising chorus of
concerns means congressional
GOP leaders and the White
House will have to delicately
balance modifying the bill in
ways that appease one faction
of Republicans without alien-
ating another.
On Tuesday, the White
House sought to discredit the
reports projections as unreli-
able, while Republican sena-
tors said they would push for
an array of changes, including
more assistance for older and
low-income people to buy
health insurance.
This is difficultits 18% of Republicans could mean GOP
in previous years.
The enrollment total de-
clined slightly from 2016,
when 12.7 million people pur-
chased health plans during
that years open-enrollment
period. About 31% of enrollees
were buying plans on the ex-
changes for the first time.
The decline, analysts said,
was partially due to rising
premiums and waning insurer
participation in the program,
which may have deterred
many of the young consumers
whom former President Ba-
rack Obama was attempting
U.S. NEWS
mented immigrants caught here
trying to cross from Mexico has
declined sharply. In 2000, more
than 616,000 people were ap-
prehended in the Border Patrols
Tucson sector, which covers
most of Arizona. In the latest
fiscal year, 64,891 people were
apprehended, according to Bor-
der Patrol data.
The number of people
caught trying to cross the en-
tire Southwest border dropped
in February to the lowest
monthly total in at least five
years, the Department of
Homeland Security said.
Apart from ranches, most
of Arizonas borderlands span
vast rural areas owned by In-
dian tribes and various state
and federal agencies, like the
works best, he
added, whether that is tech-
nology in a certain area or an
actual physical barrier.
All three ranchers sup-
Premium
Premium
Single, income of $68,200
Age 21
$0 $5,100
$2,450 $3,900
Age 40
$0 $6,500
$3,650 $6,050
Age 64
$15,300
$0
$4,900 $19,500
THE WALL STREET JOURNAL.
the economy, said Sen. John
Boozman (R., Ark.). My con-
cern is not with the timeline;
my concern is doing it right.
Democrats said the CBO re-
port validated their concerns
that the GOP plan would cause
millions of Americans to lose
their health insurance cover-
age.
To date, about a dozen sen-
ators have signaled some level
of wariness of the bill. Losing
more than two would kill the
legislation, presuming all
Democratic senators remained
opposed.
Reworking the bill to ad-
dress the concerns of Senate
to woo in his final days in of-
fice.
Enrollment figures show the
population of consumers
skewed slightly older than last
year, with the number of 18- to
34-year-olds dropping by 1
percentage point to 27%.
The figures come as the
Trump administration and
congressional Republicans say
the Affordable Care Act is im-
ploding, with not enough
young people buying insurance
to cover the costs of older,
less-healthy people. Democrats
say the law successfully helps
U.S. Forest Service.
The Trump administration
has divulged only some basic
plans for its projected border
wall. A memo from the DHS said
the wall should be planned for
the most appropriate locations,
and internal estimates put the
cost of building a full border wall
at more than $20 billion.
A DHS planning document
posted online for potential con-
tractors says the administration
envisions concrete wall struc-
tures, nominally 30 feet tall, that
will meet requirements for aes-
thetics, anti-climbing and resis-
tance to tampering or damage.
A DHS spokeswoman didnt
respond to requests to comment.
Dan Frosch
and Laura Meckler
ported Mr. Trump and said
they hope he ultimately em-
braces a multifaceted ap-
proach to border security.
Most of Arizonas border
leaders wont meet their goal
of clearing it through Con-
gress by early April. And add-
ing provisions more generous
to older and low-income peo-
ple could make the bill unac-
ceptable to many conserva-
tives in the House, which
would have to approve the
changes.
The CBO analysis projected
that the House health-care bill
would cause an additional 14
million people to be uninsured
next year, compared with con-
ditions if the current law,
known as Obamacare, were al-
lowed to stand.
Many of those people would
give up insurance because it
would eliminate a requirement
in the current law that most
people buy health insurance or
pay a penalty. In 2026, that
figure would reach 24 million,
due in large part to changes in
Medicaid, the health program
for low-income Americans and
the disabled.
House Speaker Paul Ryan
(R., Wis.) said leaders would
make some changes respond-
ing to lawmakers concerns,
but he wanted to preserve the
bills momentum.
Were keeping this bill in-
tact. Were obviously going to
make some modifications, Mr.
Ryan said on Fox News on
Tuesday, noting that senators
would be able to amend the
bill.
Siobhan Hughes
contributed to this article.
people with low incomes to af-
ford coverage, though some
say adjustments to the law
could be needed.
These results illustrate the
challenges the marketplaces
face, assuming the law stands.
But it is hardly a picture of a
collapsing insurance market,
said Larry Levitt, a senior vice
president at the Kaiser Family
Foundation, a nonprofit health-
policy think tank.
The enrollment period came
during a period of significant
uncertainty on the future of
the health law.
Thursday, March 16, 2017 | A7
border, but also wants more
resources and manpower,
spokesman Daniel Scarpinato
said. Following the trip, the
governor was left with the im-
pression that the Department
of Homeland Security is open
to using a variety of methods,
Mr. Scarpinato said.
A spokeswoman for the
DHS didnt respond to re-
quests for comment.
Some who live along the
border say boosting security
alone isnt the answer. Busi-
ness owners say a wall could
damage commercial relation-
ships with Mexico, while oth-
ers worry about the humani-
tarian impact.
I think the desire to build
the wall is misguided. It
doesnt really address the fun-
damental reasons why people
migrate, said Rev. Sean Car-
roll, executive director of the
ASTRID GALVAN/ASSOCIATED PRESS
Kino Border Initiative, a group
that advocates for deportees
and is based both in Nogales,
Ariz. and Nogales, Mexico.
Those issues are economic
need, family and separation
and violence in the areas
where they are living.
Rev. Carroll said that while
he understands the concerns
of Arizona ranchers over
with Mexico already has some safety, it would be a better use
type of barrier. In some loca- of resources to address the
tions that might only be barbed root cause of such issues
wire, or the short post-and-rail rather than add agents and
fence that snakes across some equipment to a border that is
of Ms. Kimbros land. already heavily militarized.
Patrick Bray, executive vice Some Arizona ranchers ac-
president of the Arizona Cattle knowledge the situation has
Growers Association, which improved. They say they no
represents 1,000 ranchers, longer see large groups of mi-
praised the new administra- grants crossing their land each
tion for taking border secu- day, but instead are on the
rity seriously. lookout for small crews of
He said in practical terms, drug smugglers. They attri-
however, ranchers foresee a bute the change to beefed-up
mix of physical structures, ad- Border Patrol manpower, bet-
ditional Border Patrol officers ter surveillance technology,
and more technology like and the influence of Mexican
drones or helicopters. I dont cartels who experts say charge
think we expect a wall to hap- exorbitant fees for anyone
pen, he said. The wall in our wanting to cross the border.
mind will look different than A spokeswoman for the
what people assume. Border Patrols Tucson sector
Arizonas Republican gover- said newer Bollard-style fenc-
nor, Doug Ducey, toured the ing, which is fashioned with
border here last month with steel columns and was in-
Homeland Security Secretary stalled over the past six years,
John Kelly. along with fixed towers that
Mr. Ducey supports some use cameras, have helped in
structural barriers on the the Nogales and Douglas areas.
Charged in Scandal
BY BEN KESLING have been charged.
Federal investigators charge
WASHINGTONNine upper- that Mr. Francis bribed officers
level Naval officers, including with money, favors and prosti-
an admiral, were charged in a tutes for help in getting Navy
federal indictment unsealed ships to pay to use ports he
Tuesday with offenses related controlled. The Navy officers
to trading classified and inter- allegedly passed along classi-
nal defense information to a fied information, including
foreign defense contractor in ship schedules, to Mr. Francis
exchange for expensive din- and ensured he obtained high-
ners and prostitutes. price Navy contracts as they
The Justice Department purposely sabotaged other po-
charged that the officers ac- tential contractors bids.
cepted cigars, dinners, hotel The officers involved in the
rooms and prostitutes from a alleged scheme were part of
Singapore-based defense con- the U.S. Navys Seventh Fleet,
tractor, the latest in a long- which has about 40,000 per-
running corruption investiga- sonnel, 60 ships and more
tion in which a total of 25 than 200 aircraft in areas in-
people, many of them military cluding Russia, Southeast Asia
personnel, now face charges or and the Indian Ocean.
have pleaded guilty. The highest-ranking officer
Its unconscionable that charged in the latest indict-
some individuals choose to en- ment, retired Rear Adm. Bruce
rich themselves at the expense Loveless, was arrested in Cali-
of military security, said An- fornia on Tuesday. He appeared
drew Traver, director of the before a federal magistrate in
Naval Criminal Investigative San Diego and was released
Service, in a statement. without bond after the magis-
The probe centers on al- trate entered a not guilty plea
leged favors to Navy officers on his behalf. He couldnt be
by defense contractor Leonard reached to comment.
Glenn Francis and his firm, The indictment also charged
Glenn Defense Marine Asia. four retired Navy captains, a
Mr. Francis pleaded guilty to retired Marine colonel, a re-
bribery and conspiracy tired Navy chief warrant offi-
charges in 2015 and is await- cer, an active-duty lieutenant
ing sentencing. Two other commander, and an active-
company executives have duty commander with offenses
pleaded guilty, while two more related to the scandal.
U.S. WATCH
PUBLISHING TEXAS
Ivana Trump Memoir Bathroom Bill
To Be Published Clears Senate
Ivana Trump, the first wife of The Texas Senate passed a
President Donald Trump, is writ- North Carolina-style bathroom
ing a memoir that will focus on bill that targets transgender
the couples three children. people, but the proposal still
Raising Trump will be pub- faces big obstacles from becom-
lished Sept. 12, Gallery Books ing law. The vote on Wednesday
said. According to Gallery, Ivana came over opposition from big
Trump is writing a story of business, the National Football
motherhood, strength and resil- League and hundreds of people
ience and also reflect on her who packed the Texas Capitol
personal experiences. last week during 13 hours of
Associated Press public testimony. AP
 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 | Thursday, March 16, 2017 THE WALL STREET JOURNAL.

FROM PAGE ONE

DIVEST James Rockas, a spokesman

for Mr. Ross, declined to say
whether he has yet sold any
assets. Mr. Ross is currently
Continued from Page One working toward the timely di-
the cabinet, the wealthiest in vestiture of the assets he
recent history, is likely un- agreed to divest, he said.
precedented, according to eth- Even easy-to-sell assets ap-
ics experts. pear to be taking time to dis-
Assets that cabinet mem- pose of, causing potential con-
bers have pledged to sell are flicts to linger longer than
worth some $1.1 billion, based expected.
on their financial disclosure Treasury Secretary Steven
forms. Those forms give only Mnuchin has until mid-May to
approximate values as greater sell more than $100 million of
than a certain amount, or shares in CIT Group Inc., the
within a range, rather than ex- financial firm he helped lead.
act figures. Treasury officials declined to
That total doesnt include say if the shares have been
assets of senior White House sold. A spokesman said Mr.
officials, most of whom have Mnuchin will fully comply
SUSAN WALSH/ASSOCIATED PRESS

not yet disclosed their hold- with his ethics agreement. As

ings. For example, a company part of that agreement, Mr.
owned by the family of Jared Mnuchin agreed to recuse

Kushner, Mr. Trumps son-in-
law and senior adviser, is in
talks to divest itself of hun-
dreds of millions of dollars of
real-estate assets.
Cabinet members are at
risk of being unable to do
swaths of their jobs because if
matters arise that affect those
companies [they have yet to
sell], they have to recuse,
said Trevor Potter, a Republi-
can former chairman of the
Federal Election Commission.
They are better off, and the
country is better off, the
quicker they sell these assets.
Officials are required to get
a certificate of divestiture
from the Office of Government
Ethics before selling an asset
if they want to be able to de-
fer paying capital gains tax on
the sale.
A White House spokes-
woman said this process is
still under way for many peo-
ple. A spokesman for the Of-
fice of Government Ethics de-
Education Secretary Betsy DeVos, left, and Commerce Secretary Wilbur Ross have to sell millions in assets to avoid possible conflicts.
clined to comment.
Mr. Trump, who is exempt
from conflicts of interest
rules, isnt selling his assets.
He has said he wont be per-
sonally involved in his busi-
ness organization, which is
being run by his two adult
sons, but he remains an owner
and has rejected calls to put
his assets in a blind trust.
Sales of private-equity in-
vestments take about three
months on average, and some-
times much longer, said Solo-
mon Owayda, a founding part-
ner of Mozaic Capital
Advisors, which advises indi-
viduals and institutions seek-
ing to sell private-equity
stakes in the so-called second-
ary market.
Selling stakes in private-eq-
uity funds, which lock up in-
vestors cash for 10 years or
more and often buy entire
companies, is made more diffi-
cult by the need for fund man-
agers to approve transfers to
new investors. Mr. McNeilly
called that a complicated pro-
cess that often requires the
approval of partners.
Kenneth Juster, one of Mr.
Trumps top trade negotiators,
still owns stakes in four pri-
vate-equity funds run by War-
burg Pincus LLC, where Mr.
Juster used to work, according
to people familiar with the
matter.
Those funds own pieces of
companies including an opera-
tor of oil-shipping terminals,
an Indian supplier to U.S. auto
makers and a company that
makes airplane components in
Mexico and Europe.
Warburg Pincus is in the
process of buying out Mr.
Justers stakes. Meanwhile, he
has worked only on high-level
policy and hasnt had to re-
cuse himself from any mat-
ters, said a spokesman for the
National Security Council, of
which Mr. Justers office is a
part.
Energy Secretary Rick Perry
has yet to sell interests he val-
ues at as much as $500,000 in
two funds managed by his
sons firm, which invests in oil
ERIC THAYER/REUTERS
and gas wells. Griffin Perry,
who co-founded Grey Rock En-
ergy Partners, which manages
about $200 million, said work
is under way to cash his father
out.
An Energy Department
spokesman said Mr. Perrys di-
vestitures are well under
way.
Wilbur Ross Jr., the bil-
lionaire private-equity inves-
tor, agreed to sell 80 assets
worth at least $92 million,
half within 90 days of his Feb.
27 confirmation as Commerce
secretary and the rest within
180 days. Some of those as-
sets, including his stake in
steel company ArcelorMittal
SA, overlap with his new job.
himself from matters involving
CIT Group through July 2018.
Former Exxon Mobil Corp.
Chief Executive Rex Tillerson,
who was confirmed Feb. 1 as
secretary of state, said he
would sell shares and options
of 149 companies including oil
companies, auto makers,
global banks, airlines and
Asian stock-exchange opera-
tors.
State Department represen-
tatives wouldnt say whether
Mr. Tillerson has yet sold any
of the shares, valued between
$3.3 million and $8.8 million.
The secretary promised to
divest by a certain date [May
2] and that is what he is going
to do, a spokeswoman said.
The S&P 500 stock index,
which includes many of the
companies in which Mr. Tiller-
son is invested, has risen 3.8%
since Mr. Tillerson was con-
firmed.
Coulter Jones
contributed to this article.

FLAGS signers they couldnt use a

double-headed eagle because
neighboring Albania had it
first.
catching wind. Both Fiji and
New Zealand debated deleting
the British Union Jack from
their flags. They have kept it.
versions of it.
Then the Communists took
power and tweaked the flag
in 1948. They added: a star,
Continued from Page One A country cant trademark Moldovas president has several chaffs of wheat,
CRAIG F. WALKER/THE BOSTON GLOBE/GETTY IMAGES

too far away.
For all the institutions the
modern world order has es-
tablished to tame the furies
of nationalism, there is no or-
ganization authorized to step
in when one country doesnt
like another countrys flag.
It is a recurrent issue. Ath-
letes from Haiti arrived to the
1936 Berlin Olympics to find
Liechtenstein had adopted
the same banner. The chas-
A mother and child, members of a refugee family, at a tened European microstate
Manchester, N.H., airport on Feb. 3. changed its flag the next year.
The Balkan flag flap of
a flag, per international prop-
erty law, though a group of
Jamaicans looked into it:
They didnt like foreign shoe-
makers selling flip flops with
images of the Jamaican flag
and complained to a United
Nations agency.
That so many flags fail a
basic function of a flagto be
distinctis one of the more
vexing issues in vexillology.
The founding fathers of flag
scholarship were purists: Like
heraldists, they focused on
history.
proposed changing his coun-
trys flag, which is the same
as Chads and Romanias but
with a coat of arms. The pres-
ident proposed the idea last
month but faces strong resis-
tance in parliament. And of
course, Romania is sticking
by its colors.
Right up to the present
day, nothing has been done,
and its a failure of the United
Nations, said Chadian na-
tional assemblyman Ngarlejy
Yorongar, president of its Ac-
tion Federation for the Re-
mountains, trees, a sunrise,
and a power line. Citizens
werent asked for their input.
Eleven years later, as new
African nations broke free, the
young leaders of Chad met in
the sand-swept capital of
NDjamena to pick a flag. They
chose red for the blood theyd
spilled fighting World War II,
yellow for the Sahara and blue
for Lake Chad. The flag was
adopted in 1959, then flown
upon independence in 1960.
Everything was straight until
1989.

BAN Jeffrey Wall, the adminis-

trations new acting solicitor
general, said the harms
claimed by the challengers
Continued from Page One from the travel restrictions
American Civil Liberties were speculative, and that
Union, asked U.S. District wasnt enough to give them a
Judge Theodore D. Chuang in right to sue the president.
Maryland to block immediate The plaintiffs have run into
enforcement of the presidents court too soon, he said.
ban on travel to the U.S. for When the judge cited Mr.
people from six Muslim-major- Trumps previous campaign
ity countries. statements in support of a
The groups said immigrants Muslim ban, Mr. Wall said cir-
and refugees would face im- cumstances were different
mediate harm if the executive now that he had taken the
order was allowed to go into oath of office. He noted that
effect as scheduled at 12:01 the presidents new executive
a.m. Thursday. That deadline order makes no mention at all
added a bit of drama to the of religion, and that Mr.
Maryland hearing and the Trump issued the new policy
broader daylong legal skir- after consulting with three
mishing over the new order. cabinet-level officials whose
While the advocacy groups motives have not been im-
pressed their arguments that pugned.
the travel restrictions What if Mr. Trump had
amounted to unlawful discrimi- made statements in support of
nation against Muslims, Judge a Muslim ban during a White
Chuang asked how he should House news conference, the
view the new national security judge asked. I think it would
justifications Mr. Trump pro- be a harder case, Mr. Wall re-
vided when issuing the new sponded.
ban on March 6. The president Judge Chuang said he
said his approach was designed hoped to issue a decision
to address potential terrorist Wednesday but didnt promise
threats. to do so.
Generally courts defer, at The judge wont be making
least to some degree, to those a full and final decision on
type of national security de- whether the travel ban is le-
terminations, Judge Chuang gal.
said. Instead, he is considering
The judge noted that the whether the challengers have
Trump administration had al- a good chance of ultimate suc-
tered the travel ban in a num- cess in their lawsuit and
ber of ways since Mr. Trumps whether they will be irrepara-
original Jan. 27 effort was bly harmed if the travel ban is
halted by courts, and they allowed to go into effect dur-
have offered additional infor- ing the litigation on its under-
mation in support of the ex- lying legality.
ecutive order. The judge asked several
ACLU lawyer Omar Jadwat questions about how broadly
said the presidents revised or- or narrowly he should rule if
der, like the first one, wasnt he decides the challengers
1992 still haunts the region.
That is when the freshly inde-
pendent nation of Macedonia
hoisted a new flag featuring a
16-ray star, the royal symbol
of Alexander the Great.
But Alexander was Greek,
argued Greece, which re-
sponded with an economic
blockade. Macedonia eventu-
ally dropped the star and is-
sued an official statement
that its people didnt descend
from Alexander.
The Greeks were kind of
hysterical on the subject,
said David F. Phillips, an
American vexillologist.
Elsewhere, the Nether-
lands and Luxembourg have
had to salute essentially
identical banners, as have In-
donesia and Monaco, both of
which claim theyve been us-
ing the red-white color
scheme since the 14th cen-
tury.
Kosovo ended up with a
map of Kosovo on its flag, af-
ter the government told de-
A new generation wants to
inject creativity into the lit-
tle-known science. Many are
That so many flags fail to be distinct is one
of the more vexing issues in vexillology.
young, cosmopolitan, art
school graduatesso-called
flag activiststroubled by
the monotony of the worlds
flags, particularly Americas:
24 of the 50 states fly a seal
on a blue background.
Those are all what I call
S.O.B. flags: seal on bed
sheet, said author Ted Kaye
of Good Flag, Bad Flag,
who has advised dozens of
city, state and national gov-
ernments on bettering their
banners. I like to say in ev-
ery bad flag theres a good
flag trying to get out, he
said.
So far, the movement isnt
public party. Effectively, this
is unjust.Two countries can-
not have the same flag.
In an email, a spokesman
for the office of the U.N. sec-
retary-general said: It is up
to Member States to select
their own flags.
To hear the Romanians tell
it, they have been flying red,
blue and yellow streamers
since at least the ancient
years of Thracian settlers.
Roman forts flew the colors,
too, a popular story holds.
There is no proof of any of
that, historians said.
What is well established:
Dissidents in 1800s Romania
began waving the tricolor
during protests. A series of
monarchal governments used
That is when furious Ro-
manian dissidents began rip-
ping and scissoring holes in
their flag, tearing out the
communist symbols. For a
few revolutionary months,
Romanias de facto flag was
the same as Chads, but with
a big hole through the mid-
dle.
Months later, Petre Roman,
the first prime minister of
post-Communist Romania,
met with Frances Mr. Mitter-
rand at the lyse Palace in
Paris. The late French leader,
Mr. Roman recalled, sug-
gested keeping the hole, say-
ing it would help distinguish
the nations flag from Chads.
A former aide to Mr. Mitter-
rand didnt respond to a re-
quest for comment.
Romanias parliament shot
down the idea. And flag ex-
perts said it wouldnt fly:
Wind would tear it apart.
So Romania raised Chads
flag. Mr. Roman said: It was
not at all a concern.
ANDREI PUNGOVSCHI/ANADOLU AGENCY/GETTY IMAGES

motivated by an actual immi- should win.

nent threat of terrorist attack.
Adding new national security
language to the order doesnt
divorce it from its original
purpose, he said, which was
to implement a ban on Muslim
immigrants as Mr. Trump
promised during the presiden-
tial campaign.
In a sign of the high stakes,
the Justice Department, which
is defending the travel restric-
tions, sent its top lawyers to
the Maryland court.
Mr. Wall said that if the
government were to lose, the
judge shouldnt issue a re-
straining order or preliminary
injunction that is nationwide
in scope. At most, the chal-
lengers would be entitled to a
ruling that bars implementa-
tion of the travel restrictions
against their specific clients,
he said.
The challengers, as ex-
pected, advocated for a broader
ruling. Romanians flew the nations tricolor flagwhich is quite similar to Chadsat a demonstration in Bucharest in February.
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
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THE WALL STREET JOURNAL. Thursday, March 16, 2017 | A9

LIFE&ARTS
ART REVIEW

Aesthetics Are Alive Downtown

BY PETER PLAGENS

New York
WHILE THERE MAY not be as
many ways to look at the Whitney
Biennial as there are to skin a cat,
several come to mind. The most
popular is to consider the show as
a big work of art and compare it
with previous Biennials. Another,
for the culturati, is suggested in
one of the wall texts this year,
which states that the exhibition
provid[es] deep thinking and re-
flection on cultural concerns.
Dealers, collectors and ambitious
students try to tote up whos up or
down and whats in fashion or out.
Finally, unusual as it may be these
days, theres going through the
show in search of works that offer
a genuine aesthetic experience.
The 2017 Biennial offers rewards
to all those groups. Selected by
Christopher Y. Lew and Mia Locks,
both in their mid-30s, the show is
concise (only 63 artists), and in its
spacious new digs, the Renzo Piano
building that opened in May 2015, it
can breathe. High-end gimcrack-
erypractically a Biennial trade-
marklooks more dignified than
usual, and despite the shows socio-
logical bent, theres little temptation
to see how the number of women
and minority artists squares with
our ideas of progress. The old game
of assessing commercial galleries Clockwise from top: Ral De Nievess
clout also seems irrelevant. This Bi- installation at the Whitney Biennial;
ennial is decorously political while Aliza Nisenbaums La Talaverita,
at the same time good-looking. Sunday Morning NY Times (2016);
Choosing individually meritori- Celeste Dupuy-Spencers Fall with
ous works of art in a trendily ency- Me for a Million Days (My Sweet
clopedic exhibition such as thises- Waterfall), (2016)
pecially with the pixie dust of
recently departed art fairs still in Mr. De Nieves has installed a faux-
the airis highly subjective. I stained-glass window across the
would go with Jessi Reavess ele- entire surface of the huge Whitney
gantly distressed assemblage Lamp window that overlooks the city
for Rancid Tree House (2017)al- and, in front of it, has positioned
most for the title aloneand Body some larger-than-life-size, vaguely
Sized Shelf With Zippers (2017). figurative sculptures coated in
That both are redolent of the beads and glitter. Whatever their
greatand arcaneBruce Nauman meaning, glare coming through the
isnt bothersome. His immaterial colored acetate obscures it.
presence looms over the entire Part of the impressiveness of this
show. of something else.) Biennial comes from its high pro-
I also spent a lot of time in Lyle One perennial problem with the duction values. I asked a Whitney
Ashton Harriss room, Once (Now) Biennial is that many new works official about the budget, mention-
Again (2017), which contains sepa- have such obvious antecedents. ing that movie companies provide
rately labeled video works, a three- Matt Brownings carved wooden that information. The response,
channel projection of conspicuously grids allude to the obsessive, But what about painting, that against the sounds and vibrating which came with a smile, was, We
un-arty photographs of people, par- senseless labor of Tim Hawkin- old uncle we inquire about at ev- walls of nearby installations. dont give that out, but it was cer-
ties and dinners, some silk panels, son. Tala Madanis smallish noctur- ery Biennial get-together? Theres Every Biennial contains a couple tainly much less than the $300 mil-
and a music soundtrack. Despite a nal paintings contain the kind of a lot of it in the show, mostly figu- of popular hits. In 2017, the two lion Disney spent on its remake of
seemingly cobbled-together instal- bad taste (they hinge on anal mat- rative and expressionist, andif are likely to be by Pope.L and Ral Beauty and the Beast. Which
lation, the Warholian spirit is capti- ters) thats overrun the art world. you look closely through the un- de Nieves. Claim (Whitney Ver- might be, by the way, not a bad
vating. Also recommended are the And the great big work of art that academic drawingskilled. (Think sion) 2017, Pope.Ls large box working title for the 2019 Biennial.
large-format color photographs of includes other peoples works of Alice Neel and Maria Lassnig as room, is festooned on the outside
Louisiana by An-My L, and Kaari artfor example, Occupy Museums patron saints.) Several of the with slices of real bologna drip- Whitney Biennial 2017
Upsons pigmented aluminum-and- Debtfair, an expos of how much paintersCeleste Dupuy-Spencer, ping grease and arranged in a grid, Whitney Museum of American Art,
urethane abstract sculptures. (If money aspiring artists need to bor- Henry Taylor and the dependable mimicking round dots on a chart. March 17June 11
theres a disappearing mode in con- row to earn art degrees and main- Dana Schutzare quite good; with The artists jibe at coldly translat-
temporary art, its the single-object tain themselves afterwardis get- the new building, painting no lon- ing flesh-and-blood beings into Mr. Plagens is an artist and writer
sculpture that isnt an ironic replica ting a little tired. ger has to fight for survival data spots registers immediately. in New York.

CLOCKWISE FROM TOP: RAL DE NIEVES/COMPANY GALLERY, NEW YORK; ALIZA NISENBAUM/T293 GALLERY, ROME/MARY MARY, GLASGOW; CELESTE DUPUY-SPENCER/MIER GALLERY, LOS ANGELES

TURNING POINTS | Clare Ansberry

RETREATS TO DIAL
DOWN THE TENSION
ALEX GILCHRIST NEEDED a break from the
pressures of life. An economist with the Fed-
eral Deposit Insurance Corp. in New York City,
he commutes four hours a day from Wap-
pingers Falls, N.Y. He teaches classes one night
a week. He is married and has three grown
children. There is a lot going on, he says.
He also needed a break from talking or
hearing about politics, saying dialogue had
become toxic.
Mr. Gilchrist checked the retreat offerings
special program off campus called (Mis)In-
formation Overload: Living in Truth in a
Post-Truth Age presented by a psycholo-
gist, a data scientist, a journalist, and a con-
templative teacher. Garrison also plans to
offer special retreats for refugees and the
people caring for them.
Anne Luther, a professor of spiritual di-
rection who conducts retreats in South
Bend, Ind., says retreats have traditionally
been a time and place to step away from the
JON KRAUSE

at nearby Holy Cross Monastery in West
Park, N.Y. One stood out: Agents of Peace in
a Time of Fear led by Masud Ibn Syedullah
and Garrett Mettler, both Episcopal priests.
It promised to create safe and constructive
dialogue among those who have not had
much positive conversation with each other
regarding race, politics, class or religion.
I thought it was pretty relevant, says
Mr. Gilchrist, 54.
Retreat centers, which traditionally focus
on timeless themes of contemplation, mind-
fulness and spirituality, are responding to
current anxieties.
We have a profound duty to meet people
where they are at this moment, says Andrew
Zolli, chair of the Garrison Institute, which
develops and hosts contemplative retreats in
a renovated former Capuchin monastery on
the banks of the Hudson River in New York.
Attendance is up 20% at Garrison pro-
grams such as Mindfulness and Compas-
sion Practices that Release the Trance of
Fear, since the election last November, he
says. With many programs filled, the Insti-
tute is going to offer in coming months a
world and its problems. But now people
want a safe place to talk about them, with-
out being judged, and figure out a good way
to respond, says Dr. Luther. Her annual
Lenten retreat will focus on: What are the
present-day world challenges and opportu-
nities that require our response and partici-
pation as citizens of a wounded world?
Rev. Syedullah and Rev. Mettler came up
with the idea of Agents of Peace last sum-
mer after a string of shootings in the U.S. It
evolved as the year progressed and public
discourse grew polarized. They will be giv-
ing the same retreat this summer at the
Taconic Retreat Center, in Milan, N.Y.
One of their main goals is to help people
establish a sense of empathy and under-
standing even if people hold a radically dif-
ferent position, says Rev. Syedullah.
That appealed to Mr. Gilchrist, who found
himself and others getting wound up when
people had different political or ideological
stands. He recalls thinking: It would be nice
to dial it down and encourage other people
to dial it down. How do you do that?
One way is by listening, a skill he thought
he had developed well.
He and others at the retreat were pre-
sented with five categories and opposing
preferences for each: City living versus
country; foreign cars versus domestic; pub-
lic schools versus private; Homeownership
versus rental; and dogs versus cats.
Each person was directed to listen for
two minutes, without interrupting, to some-
one with a different opinion on a subject
and then present that persons opinion to
others in the group. Dont start to form
your own argument and say Yeah, but, and
dont tolerate what they say and wait until
they are done to make your point, advised
Rev. Mettler, who says they deliberately
avoided more emotionally charged subjects.
Mr. Gilchrist favored private schools, say-
ing they arent as constrained by budgets,
which allows them to do crazy wonderful
things. His partner said public schools serve
her and her family well and offered more di-
versity and better reflected the community.
We are waiting for the person to pause
because we want to make our point, which
of course is better than theirs, says Mr. Gil-
christ. We need to listen without an
agenda. Most of his friends dont go on re-
treats. I mention these things periodically
and get quizzical looks, says Mr. Gilchrist,
who went to a retreat a year ago at Holy
Cross Monastery on silence and contempla-
tion and has gone on other retreats over the
years with his church.
Sarah Witmer, a 21-year-old Columbia Uni-
versity student, didnt fully realize until the
retreat how often we listen with the intention
of changing the other persons mind. Were
just hearing their words but thinking of how
to convince them to think another way.
Mr. Gilchrist thinks he is a better listener
now. I know how to detach myself and get
into a listening mode and try to understand
the other person.
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
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A10 | Thursday, March 16, 2017 THE WALL STREET JOURNAL.

OPINION
REVIEW & OUTLOOK
The Two Trumps
The Health Bills Fiscal Bonus On the French Ballot
T
he furor over the U.S. Congressional tion-adjusted cash welfare spending has re-
Budget Offices report on the House GOP turned to a level nearly as high today as the Delayed by a blizzard, Bannon has the EU in his cross hairs,
Angela Merkel arrives the report says.
health bill is concentrated on predic- years before the 1996 reform. That measure
this week in Washing- Talk about gazing through the wrong
tions about insurance cover- caused a 60% decline in wel- ton, an emissary of a end of the telescope. Mr. Bannon is a na-
age, which suits Democrats Its Americas best fare dependents over the de- worried Europe. But tionalist opponent of globalization, all
fine. Lost amid the panic is
that CBO shows the bill is a
chance in a generation cade after it passed, reflecting
both its work requirements
its the presidential
election in France next
right. But if Europeans think hes their
major problem, consider it a symptom of
far-reaching advance for the to control a runaway and the tight labor markets of BUSINESS
month that Americans their real trouble. The EUs problems are
WORLD
market principles and limited the late 1990s. As with wel- really should be massive and self-made, beginning with
government that conserva-
government. fare, we should want fewer
By Holman W.
watching. its inability to reconcile the euro with a
Jenkins, Jr.
tives usually favor. Americans to need Medicaid. With the coming crying need for economic growth.
The CBO is not omniscient, The health-care bill also ze- and going of candi- No, the European Union neednt fail. It
but if its projections are even close to accurate roes out almost all ObamaCare tax increases. dates and near-candidates, the French can survive as a common organization of
race has suddenly shaken out in a re- European states, serving the interests of
then ObamaCare repeal and replacement is the The targets include the 10-year, $144.7 billion
markably auspicious way. In the con- its members without imposing so much
most significant government reform in perhaps tax on the health insurance industry, which is frontation between Emmanuel Macron regulatory overreach from Brussels.
three decades. Under conventional (static-reve- merely passed through to consumers, and the and Marine Le Pen, we basically have a The euro itself can survive without
nue) scoring, the bill cuts spending on net by $19.6 billion medical device excise tax, which confrontation of the two sides of Trump- the politically impractical, and likely im-
$1.22 trillion and eliminates a raft of new taxes undermines life-saving innovation. ism: pro-growth Donald Trump versus possible, dream of member states ceding
worth $883 billion through 2026. Perhaps ObamaCares most damaging tax is protectionist Donald Trump. control of taxes and spending to Brus-
Despite this tax reform and new refundable the 3.8 percentage point surcharge on capital While it remains uncertain which way
tax credits for individual insurance purchases, gains, dividends and other forms of unearned the actual Mr. Trump will jump (or tum-
the bill still reduces the deficit by $337 billion. income. Liberals and some big-government ble), just possibly the French outcome How France might influence
Reducing spending, the tax burden and further conservatives are claiming hypocrisy, because could be more immediately decisive for the White Houses debate
the U.S. than for France.
debt generation is an enormous pro-growth fis- President Trump supposedly didnt run on tax of protection vs. growth.
Mr. Trump himself likes to associate
cal bonus. breaks for wealthy investors. But he did run on with whatever side is winning. He prac-
President Obama sought to permanently in- raising incomes and increasing growth, and tically took credit for Brexit last spring.
crease the governments share of the economy slashing the top marginal tax rate on capital to He occasionally likes to see himself as sels-based Eurocrats. To survive, the eu-
to redistribute income to reduce inequality. 20% from 23.8% will improve incentives and the progenitor of a global swing toward rozone would only have to become a
ObamaCare was his spending wedge to force tax help raise labor productivity and wages. economic nationalism. If Mr. Macron, currency zone in which members fully
increases long after he had left office. The The tax also hurts middle-class savers and with his pro-euro, pro-reform, pro-open- and truly accept the discipline of the
House health-care bill is the first crucial step small-business job creators more than the ness policies, squashes Ms. Le Pen, with markets over their borrowing, including
to limit that wedge and restore the federal fisc superrich. A couple that earns even a single dol- her National Front agenda of Frexit, it the possibility of national default.
to a more sustainable long-term path. lar more than $250,000 gets the tax slapped on would amount to a psychological blow OK, a metamorphosis into adulthood
Absent reform, the brutal budget math is every dollar of their investment income, creat- against Mr. Trumps protectionist duo of is unlikely to happen. It would require a
Steve Bannon and Peter Navarro. Thatcherite, even Milton Friedman-
that the U.S. is headed for a debt crisis; major ing a marginal-rate spike.
If not Mr. Bannons banishment, it esque, revolution in how Europeans run
tax increases that subtract from GDP and living Conservative critics are discounting these might at least result in Mr. Trump their domestic economies. But the end
standards; or deep and immediate cuts to enti- and other benefits because the bill isnt every- doubting whether the disheveled one re- of the euro in its present form would
tlements that Americans have planned their thing they imagine, but theyre missing the ally inhabits the global zeitgeist. only be a bow to reality, strengthening
lives aroundor maybe all three. The longer larger and rarer opportunity. ObamaCare was Wall Street likes pro-growth Trump. the EU by helping prosperity return to
Washington waits, the more painful and politi- designed to expand over time, reaching deeper It doesnt like protectionist Trump. And its weaker members.
cally convulsive the corrections will be. and deeper into the middle class and displacing as multiple reports tell us, the White Europeans have long sold themselves
We keep reading that President Trump and ever-more private health insurance. This pri- House is riven by a civil war, with the a bill of goods. They tell themselves that
Speaker Paul Ryan are on a collision course over vate market decomposition has been slower internationalists, led by Goldman Sachs the EU and euro somehow have been the
entitlements, though when was Medicaid de- than expected because the Obama Administra- alums Gary Cohn and Steven Mnuchin, creators and keepers of the peace after
moted from entitlement status? The bill transi- tion botched the laws design. lately gaining influence with everybody World War II.
except Mr. Trump himself. Such flummery is irresistible for
tions the programs funding formula to block But if ObamaCare continues on present
Mr. Trump is not a man of deeply those trying to hold the rickety struc-
grants starting in 2020for the first time, lim- trend, the result will inevitably be much higher held ideological convictions, even on ture together, but it has always been
iting the automatic and open-ended commit- levels of taxation across society. As the entitle- trade, about which he has ranted for 30 nonsense. It was the East-West divide,
ment that defines an entitlement. ment states obligations consume more GDP, the years. Hes a deal maker, an opportunist the NATO alliance and, more fundamen-
Taxpayers will save $880 billion in Medicaid economys long-term growth trend will further (in the nondefamatory sense), a man tally, the invention of nuclear weapons
alone over the decade as states search for effi- decline and there will be fewer jobs, as the Eu- who understands the flow of events and that imposed peace on Europe.
ciencies. Relative to current law, thats a 17.6% ropean welfare-state experience demonstrates. works within it. And it matters in this A Le Pen victory is deemed unlikely
cut over 10 years. In 2026 Medicaid will be 25% If conservatives fumble this repeal-and- case, because a president has powers by pollsters, for whatever thats worth.
smaller than the CBO otherwise projects on replace moment, they wont get another chance. over trade that Congress and the courts A decisive Le Pen defeat, however,
present trend. And theyll have squandered their best opening are not well-positioned to counter. might be the truly consequential out-
Thus, more than any foreign election come if it arrives in time to tilt the
When was the last time a government pro- in a generation to control the size and scope of
in a long time, the French presidential White House debate against the Banno-
gram got 25% smaller? By comparison, infla- the federal Leviathan. race lands at what might be a crucial nites in favor of the Goldmanites. That
moment in the internal White House de- is, against an anti-internationalism that

The Middlebury Aftermath bate over the future of trade and eco-
nomic policy.
reflects a passing if understandable neu-
ralgia, in favor of a grown-up view of

A
Turned on its head here is much fe- our problems.
mid the icy Noreaster that hit the east ray of the American Enterprise Institute. That verish reporting that suggests Europes Western electorates naturally resist
coast Tuesday, a clear ray of intellectual protest turned into a mob action, including an future instead is being decided in Wash- an inconvenient truth. Foreigners arent
sunshine emerged: Professors Robert assault on Middlebury professor Allison ington. Its not. the cause of their problems. Those have
George of Princeton Univer- Stanger, who had questioned A Politico cover story claims that the a lot more to do with the natural limits
sity and Cornel West of Har- Robert George and Mr. Murray on stage. European togetherness project is at the of the regulatory and welfare states that
mercy of the Trump White House. Eu- we in the West have let blossom over
vard University posted online, Cornel West issue a For years, Professors
ropeans are starting to worry that Steve the past 70 years.
for national signatures, a peti- George and West, the former
tion in defense of freedom of defense of free speech. a conservative and the latter
speech. You may find it at a socialist, together taught a LETTERS TO THE EDITOR
http://jmp.princeton.edu/ class at Princeton on how to
statement. listen to contrary points of view. Middleburys
Their statementTruth Seeking, Democ- violence drove home what many in academia
Beware the Dismissal of Germanys Nazi Past
racy, and Freedom of Thought and Expres- have come to see more clearly nowthat the Germanys far-right Alternative for prisoners to die of hunger in the camps
sionfollows on the heels of last weeks re- most basic tenets of free inquiry and exchange Germany isnt the first to lament the on the Rhine meadows. I was a first
markable free-speech statement by professors are under unprecedented pressure in the U.S., Nazi pasts dominance in German lieutenant in those forces with responsi-
at Middlebury College, which now has more not least at universities. memory and identity politics (The bility for coordination and treatment of
German Right Believes Its Time to Germans exactly in the Rhine meadows.
than 100 signatures at that small Vermont insti- The George-West statement stands as a
Discard Historic Guilt, page one, In chaotic circumstances, masses of
tution. forceful rebuttal to the all-too-frequent attempt March 3). This complaint has seen nu- Germans were thrust under our author-
Both efforts come in the aftermath of a pro- to stigmatize opponents into silence. We hope merous booms, especially since the ity starting in February 1945, before the
test at Middlebury against scholar Charles Mur- it gains the national support it deserves. 1980s. What is new and worrisome is war ended in May of that year. Ameri-
that far-right attempts to dismiss crit- can soldiers made enormous efforts to
ical views on the Nazi past are no lon- feed and shelter displaced Germans in a
Floridas Trial Bar Hurricane ger contained by deliberately demo-
cratic parties but given free rein to
humane manner. Some Germans did die
in an outbreak of typhoid. All of this

G
overnor Rick Scott has done heroic more annually just to break even. In Miami- ally with demands to revise the inclu- stands in utter contrast to the German
work to shore up the finances of Flor- Dade County, an owner of a $150,000 home sive political agenda Germany has ob- murderous gassing of millions of peo-
idas catastrophic insurer before the pays, on average, a $2,678 annual premium for served over the past seven decades. ple. Any comparison is beyond moral
THOMAS KHNE relativismit is simply not true.
next big hurricane makes Citizens multi-peril insur- Director, Strassler Center Revived German pride, buttressed
landfall. But storm or no Legal abuse threatens ance, more than twice the na- for Holocaust and Genocide Studies with revisionist false history, is dan-
storm, taxpayers will still get insurers that absorb tional average, and thats ris- Clark University gerous. It is precisely what alarms
whacked with Category 5 bills ing to $2,926 soon. Citizens Worcester, Mass. those few of us still alive who were
if Tallahassee doesnt shut extreme-weather risk. isnt allowed to raise rates there. And it should concern Germans
down the states latest plain- more than 10% a year, but pri- Frauke Petry of the Alternative for and German watchers the world over.
tiffs attorney get-rich-quick vate insurers can. Germany party asserts that U.S. forces HARRY M. FLEISCH
scheme. How long can homeowners bear double-digit after World War II allowed German war Rye, N.Y.
Sunshine State lawyers, in cahoots with local premium hikes? Floridas insurance commission
contractors, are crisscrossing the state encour- is worried that consumers will eventually drop
aging homeowners to sign away their insurance private insurance, or private insurers will close Militarys Damaged Morale and Readiness
rights, a practice known as assignment of ben- up shopor both, especially in Southeast Flor- Regarding Trumps Defense correct, but I am telling the truth.
efits, or AOB. In exchange, the lawyers promise ida, where AOB abuse is concentrated. Citizens Buildup (Review & Outlook, March 6), There is no room for societal exper-
to handle property repairs and fight with the would then be forced by law to step in and offer I am a retired U.S. Air Force officer now imentation in the military, for it low-
insurance company for settlement paydays. a below-market rate policy. Taxpayers would serving the force as a civilian employee. ers standards, introduces division and
What the lawyers arent telling homeowners absorb the losses. I see every day the damage that has enables the possibility of total failure.
is what happens next. A 1950s-era Florida stat- This man-made fiscal hurricane is swirling been done to Americas readiness and This will result in death for our sol-
ute dictates that insurers are liable for all attor- even as Citizens has offloaded more than a mil- morale. Our military was decimated by diers, sailors and airmen. There is no
neys fees if they lose in court or settle for an lion policies to private insurers and shrunk its the actions of our former commander mystery why there is a retention prob-
amount more than the insurers initial offer. So market share over the past few years. In 2011 in chief. People are unprepared, unable lemit is the direct result of the po-
the trial bar is filing inflated claims to coerce the insurer estimated it would have to levy a or unwilling to do proper training, liticized insanity forced on the mili-
while precious time is wasted on kin- tary by the progressive Democrats.
pre-emptive settlements from insurers that $11.6 billion tax on Florida policy holders to
dergarten-like sessions called Green They have rendered us weaker than
want to avoid even more expensive, protracted cover claims from a catastrophic hurricane. To- Dot, when personnel are taught to rec- we were before World War II. We
legal battles. day, Citizens is running a surplus and could ab- ognize so-called aggressions and hostil- must have a budget that funds the
State courts have turned a blind eye to this sorb the cost itself thanks to recent weather ities that might offend someone who military, now. Curtail the societal
abuse, and insurance costs are predictably soar- luck and Gov. Scotts reforms. probably doesnt have the fortitude to training and refocus on the real mili-
ing. Citizens Property Insurance Corp., Floridas That sunny scenario wont last if AOB abuse be in the military in the first place. tary mission, to fight and win.
state-owned insurer of last resort, has seen liti- continues. Floridas legislative session started The aircraft are cannibalized to get WILLIAM J. MCCRINDLE
gated claims jump to 45% of all claims in 2016, last week, and a bill introduced by Republican the parts needed to get others flying, as Lt. Col. USAF (ret.)
up from 12% in 2011. The average paid loss on Senator Dorothy Hukill proposes common- parts are in short order. Fifty-pound Calhan, Colo.
all nonwind water claims clocked in at $19,966 sense reforms. But legislative fixes have been boxes are labeled two person lift
news flash, if you need help lifting 50
last year, up from $10,301 in 2011and that thwarted in recent years by the states powerful Letters intended for publication should
pounds, youre unqualified for combat. be addressed to: The Editor, 1211 Avenue
number is expected to climb this year as more plaintiffs-lawyer lobby, and competing bills Driving through the gate onto the base of the Americas, New York, NY 10036,
AOB lawsuits are filed. would bless the trial bars practices. Florida inspires little confidence for my safety, or emailed to wsj.ltrs@wsj.com. Please
Private insurers are seeing similar trends homeowners already face risks from hurricanes, for I must be unarmed and the gate include your city and state. All letters
and are passing the costs along to policyhold- hail storms and other natural phenomena. Do guard is a petite woman who couldnt are subject to editing, and unpublished
ers. Floridas Office of Insurance Regulation they need to face the unnatural disaster known stop a Radio Flyer wagon on a good letters can be neither acknowledged nor
returned.
says insurers may need to raise rates 10% or as plaintiffs attorneys too? day. I know I am not being politically
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THE WALL STREET JOURNAL.
A New Strategy Against ISIS and al Qaeda
By Frederick Kagan
And Kimberly Kagan
T
he Trump administration
is set to supersize Presi-
dent Obamas strategy to
defeat Islamic State, send-
ing more U.S. forces to the
region and lifting restraints on di-
rect participation in combat and
when to use armed force. Yet any
victory under the current approach
will be ephemeral. Even if American
proxies, backed by U.S. military
forces, wrest Raqqa, Syria, and Mo-
sul, Iraq, away from Islamic State,
success will be fleeting.
The U.S. has been relying
too heavily on Shiites and
Kurds. It needs to cultivate
Sunni Arab partners.
The most important error is the
near-exclusive focus on Islamic
State at the expense of serious ef-
forts against al Qaeda. Destroying
Islamic State is necessary but not
sufficient. As the Obama adminis-
tration turned its attention toward
Islamic State, al Qaeda learned from
its failures. It has temporarily de-
prioritized spectacular attacks on
the global stage and focused on em-
bedding itself within Sunni commu-
nities in Syria, Yemen, North Africa
and elsewhere to develop long-term
strength and resilience.
Al Qaeda also has become more
cautious in imposing its radical ver-
sion of Shariah. It now indoctrinates
populations over years rather than
The U.S. Doesnt Have Europes Immigration Problems
Back in the 1980s
John Tanton, a little-
known activist be-
hind several of
Americas most well-
known nativist out-
fits, including the
UPWARD
MOBILITY Federation for Amer-
ican Immigration Re-
By Jason L.
form and the Center
Riley
for Immigration
Studies, sent a memo
to supporters expressing alarm about
high Latino birthrates.
As whites see their power and
control over their lives declining,
will they simply go quietly into the
night? Or will there be an explo-
sion? Mr. Tanton, a retired physi-
cian, wrote. He added: Perhaps
this is the first instance in which
those with their pants up are going
to be caught by those with their
pants down!
Those comments came to mind af-
ter Rep. Steve Kings weekend en-
dorsement of Geert Wilders, the
Dutch politician known for his in-
flammatory remarks about immigra-
tion and Islam. The Iowa Republican
wrote Sunday on Twitter that
Wilders understands that culture
Blaming the Umpire Is a Loser for the GOP
When I was a boy, I
loved yelling The
ump is blind! at
baseball games when
an important call
went against my
POLITICS team. Apparently
some boys like me
& IDEAS
grew up to become
By William
senior Trump ad-
A. Galston
ministration offi-
cials, because they
are flinging this epithet at the U.S.
Congressional Budget Office. Only
now that theyre adults, they begin
the chant before the game even
starts.
The CBOs just-released analysis of
the Republican plan to replace the Af-
fordable Care Act has the administra-
tion detractors in full cry. The CBO is
not infallible. But the organization,
now headed by a conservative econo-
mist whom Health and Human Ser-
vices Secretary Tom Price helped se-
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forcing immediate compliance with
strict Islamic law. It doesnt demand
that fighters place themselves for-
mally and publicly under its com-
mand. Its affiliates in Syria dont
even insist that local groups accept
its ideology as long as they fight
common foes. Al Qaeda today intro-
duces its beliefs slowly and carefully,
and the false message that it is more
moderate than Islamic State reso-
nates around the world.
The second major flaw in Amer-
icas strategy against Islamic State,
which is Sunni, is Washingtons reli-
ance on non-Sunni and non-Arab
partners. That amplifies the terror
groups message. In Iraq the U.S.
works with the Shiite-dominated
government, whose past persecu-
tion of Sunni Arabs fueled Islamic
States rise. Meanwhile, Americas
Kurdish partners in both Iraq and
Syria are pursuing an independent
Kurdistan, a political goal that is
unacceptable to most Arabs.
The U.S. has no meaningful pres-
ence among the Sunni Arab tribes in
Iraq and Syria that Islamic State, al
Qaeda and others are vying to con-
trol. This appears to confirm al
Qaedas claim that it is the only ef-
fective armed force dedicated to
protecting Sunni populations from a
combined assault by all the worlds
powers. That message may win out
if Washington doesnt rapidly change
its approach.
The current strategy also empow-
ers Iran and Russia, which have done
little to fight Islamic State. Instead
they have focused on destroying the
moderate Syrian opposition that
threatened the regime of Bashar
Assad. Iran and Russia made great
progress toward that aim in Decem-
and demographics are our destiny.
We cant restore our civilization with
someone elses babies.
The message was attached to a
retweet of a political cartoon depict-
ing Mr. Wilders using his finger to
plug a damaged dike labeled West-
ern Civilization. Behind him, a
group of scowling Islamistsone
wears a suicide vestapproach,
holding signs that read, Infidels,
Know Your Limits, and, Freedom of
Speech Go to Hell.
Mr. King later told CNN that Id
like to see an America thats just so
homogeneous that we look a lot the
same. He said that Western civiliza-
tion in Europe and the U.S. is under
threat due to low birthrates among
natives and from immigrants who
are refusing to assimilate. Fellow
Republicans quickly distanced them-
selves from the remarks, while Dem-
ocrats and the media started in with
white-supremacist accusations. In
todays environment, anyone to the
right of Black Lives Matter gets ac-
cused of making common cause with
David Duke.
Mr. King, first elected to Congress
in 2002, has made a career out of
being politically incorrectmost of-
lect when he was head of the House
Budget Committee, has an unsullied
reputation for integrity. The CBOs
only mission is to call balls and strikes
as its professional analysts see them,
a claim that neither the Trump team
nor its critics can make.
As it happens, this boy grew up to
become an official in Bill Clintons
White House. I remember vividly how
CBO reports complicated that admin-
istrations ultimately unsuccessful ef-
fort to pass health-care reform. To
my successors, I can say only, Wel-
come to the big leagues, and enough
booing already. Batter up.
Ever since the Republican leader-
ship, led by House Speaker Paul
Ryan, released its plan to replace the
Affordable Care Act, conservatives
have been complaining that it is
ObamaCare Lite. Instead, they in-
sist, Republicans should re-enact the
straight repeal bill that President
Obama vetoed in 2016 and then
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Ingrid Verschuren, Deputy Head
OPINION
Sunni fighters in Mosul, Iraq, on March 10.
ber when they helped forces loyal to
Mr. Assad seize Aleppo.
The U.S. has done nothing to limit
Irans increased military activity in
Syria or Iraq. Tehran has sent
ground forces from the Islamic Rev-
olutionary Guard Corps to fight in
Syria. It has also recruited thou-
sands of Afghans and Pakistanis, de-
ployed fighters from Lebanese Hez-
bollah, and brought in Iraqi Shiite
militiamen. Iran has penetrated
Syria so thoroughly that if it with-
drew the Assad regime couldnt sur-
vive. Unless the U.S. acts soon, Teh-
rans expanded military presence
will become permanent.
Americas backing of Kurdish-led
forces to take Raqqa exacerbates
these problems and offers little gain.
Its capture wont shatter Islamic
State, which retains control of south-
eastern Syria, from the city of Deir ez
Zour to the Iraqi border. Raqqas fall
ten on matters dealing with immigra-
tion. The Almanac of American Poli-
tics says he is best known for his policy that made sense for the U.S. of
outrageous rhetoric and gets a fair
amount of national press for contro-
versial remarks.
If you know of Mr. King at all,
you likely know him as the guy who
Assimilation works in
America because the
emphasis is on shared
ideals instead of tolerance.
compares immigrants to dogs and
livestock, or who once said of ille-
gal aliens: For every one whos a social-welfare programs.
valedictorian, theres another 100
out there that, they weigh 130
pounds and theyve got calves the
size of cantaloupes because theyre
hauling 75 pounds of marijuana
across the desert.
Conservatives are right to stress
national sovereignty and respect for
the rule of law. They are also correct
that U.S. immigration policies ought
to prioritize the interests of America
write their own replacement on a
blank slate.
The Republican leadership re-
jected this option for two reasons.
One is well-known: In line with the
overwhelming majority of Americans,
President Trump insisted that repeal
and replacement occur at the same
time. The second is less understood
but equally important: The bill Re-
publicans passed in late 2015 was a
political gesture they knew would
never take effect, so they wouldnt
have to take responsibility for its
consequences, which would have
been disastrous.
If a repeal without replacement
becomes law, CBO estimates the
number of uninsured Americans
would rise by 32 million over the
next decade. In addition, the cost of
premiums in the individual market
would double during this period. The
reason: Eliminating the individual
mandate and the penalties associated
with it would reduce the number of
younger, healthier people buying cov-
erage, leaving a pool of older, sicker
Notable & Quotable: Brunie
Myron Magnet, writing March 11
at City Journal in memory of Charles
H. Brunie, a former chairman of the
Manhattan Institute who died Feb. 23
at age 86:
There are as many kinds of inves-
tors as there are ice cream flavors.
Chuck was the highest and rarest
kind of all: the intellectual investor.
Thats why he so revered Milton
Friedman, who could explain eco-
nomic and financial cycles not as
some occult magic but as the rational
outcomes of describable forces.
. . . You knew that Chuck was about
to utter some proposition that would
brook no disagreement when he
AFP/GETTY IMAGES
will represent only a tactical vic-
toryand al Qaeda, Iran, the Assad
regime and the Kurds will compete
for the spoils. Sunnis will lose, dimin-
ishing the chance of forging a strong
Sunni leadership opposed to Islamic
State and al Qaeda.
Whats needed is a new ap-
proachand we have one. The In-
stitute for the Study of War joined
with the Critical Threats Project at
the American Enterprise Institute
for an intensive planning exercise
beginning in November 2015. Our
analysts tested more than 15 differ-
ent courses of action before arriv-
ing at the one that offers the best
chance of changing the momentum
in Syria.
The key is finding new Sunni
partners and taking the fight to
new terrain, specifically, southeast-
ern Syria, where Islamic State lead-
ers have refuge. American military
and her citizens. National interests
can and do evolve. An immigration
the 18th or 19th century may not be
whats best today. Should Americas
immigration system place less em-
phasis on family ties and more on
skills? Should schools and hospitals
in the border states that see the bulk
of illegal immigrants get more help
from the federal government to han-
dle the upfront costs?
These are debates worth having,
and without one side impugning the
motives of the other. Mr. King is right
that low birthrates in Western Eu-
rope present a problem for the Conti-
nent. But its mainly because those
countries are running out of workers
to pay for their large and expensive
ferent groups progress at different
That the immigrant populations
with higher fertility rates dont feel
particularly welcome in Europe also
is demographically troubling. Coun-
tries like France, Italy and the
Netherlands may pay lip service to
inclusion, but the ethos in those
places is that immigrants can never
really become French, Italian or
Dutch, no matter what their pass-
ports say. The emphasis is on toler-
people with much higher average
costs, forcing premiums up.
When it comes to insurance costs,
the new Republican bill does much
better than its predecessor, according
to the CBO analysis released Monday.
The CBOs mission is
to call balls and strikes
no more, no less.
Although premiums would rise by 15%
to 20% relative to current law during
the first two years, reflecting the
elimination of the individual mandate,
features of the new bill taking effect in
2020 would push premiums in the
other direction. By 2026, the cost of
average premiums would be roughly
10% lower than they are projected to
be under current law.
But premiums are only part of the
costs individuals must bear. Deduct-
ibles would be higher than under cur-
rent law, and cost-sharing subsidies
began a sentence with, Milton
says . . . But those Delphic utter-
ances explain no small part of the
Manhattan Institutes success. Mil-
ton says that a think tank should not
draw up a list of policies it wants to
advance and then find scholars to ex-
pound them, Chuck pronounced. In-
stead, find very smart people who
share your worldview, and let them
choose their own issues. Then youll
come up with new and creative ideas,
not dogma. Or: Milton says that the
information revolution allows organi-
zations to be flatter and leaner, with
fewer layers of costly and change-in-
hibiting bureaucrats. We should be
like that. Well, it worked.
Thursday, March 16, 2017 | A11
forces will be necessary. But the
U.S. can recruit new Sunni Arab
partners by fighting alongside them
in their land. The goal in the begin-
ning must be against Islamic State
because it controls the last areas in
Syria where the U.S. can reasonably
hope to find Sunni allies not yet un-
der the influence of al Qaeda. But
the aim after evicting Islamic State
must be to raise a Sunni Arab army
that can ultimately defeat al Qaeda
and help negotiate a settlement to
the war.
The U.S. will have to pressure the
Assad regime, Iran and Russia to end
the conflict on terms that the Sunni
Arabs will accept. That will be easier
to do with the independence and le-
verage of a secure base inside Syria.
America should also liberate itself
from the troublesome reliance on
Turkey by shifting its base of opera-
tions south, where a reliable ally,
Jordan, is fully committed to fight-
ing Salafi jihadism. Both these
moves would give Washington ac-
cess to Sunni partners not heavily
infiltrated by al Qaeda.
No single military operation can
achieve victory in Syria. But an oper-
ation against the enemys heartland,
freed of the constraints imposed by
problematic proxies, would change
the assumptions of Americas friends
and enemies. President Trump should
break through the flawed logic and
poor planning that he inherited from
his predecessor. He can transform
this struggle, but only by transform-
ing Americas approach.
Mr. Kagan directs the Critical
Threats Project at the American Enter-
prise Institute. Ms. Kagan is president
of the Institute for the Study of War.
ance and respect, but theres no
real expectation that foreign na-
tionals fit in.
America doesnt have that prob-
lem because it has done things dif-
ferently. In the U.S. the emphasis is
on shared ideals rather than shared
cultural artifacts. The American
model for assimilation has been
more successful because of the
countrys value framework, which is
the real immigrant magnet. Longi-
tudinal studies, which measure the
progress of the same individuals
over time, show that U.S. immi-
grants today continue to assimilate
despite the best efforts of bilingual
education advocates and anti-Amer-
ican Chicano Studies professors. As
with previous immigrant waves, dif-
rates, but over time English usage,
educational attainment and incomes
do rise.
Mr. King may fear immigrant ba-
bies, but he should be more careful
not to confuse his personal problems
with Americas. Given the coming
flood of baby-boomer retirees over
the next two decades, those high
birthrates are just what the pediatri-
cian ordered.
would be reduced, significantly in-
creasing out-of-pocket costs, espe-
cially for lower-income enrollees.
Cost pressures in the insurance
market are one reason why the CBO
projects that by 2026 24 million fewer
individuals would enjoy insurance cov-
erage under the Republican leader-
ships bill than under current law. But
far more significant are the cuts to
Medicaid, which would total $880 bil-
lion over the next decade. In 2026 out-
lays for Medicaid would be 25% lower
than under current law. As a result,
Medicaid would cover 14 million fewer
Americans, accounting for nearly 60%
of the total reduction.
We can have a long empirical ar-
gument about incentive effects in the
individual insurance market the Re-
publican bill would create. We can
have an even longer moral argument
about requiring people to buy health
insurance. But there is one element
of the Republican bill that permits no
argument: Medicaid.
From the start, most Republicans
were dead-set against the Medicaid
expansion under ObamaCare. More
than that, they oppose the program
in its current form. A Better Way,
the 2016 House Republican platform
drafted under Speaker Ryans leader-
ship, denounced Medicaid as fiscally
unsustainable and advocated turning
it over to the states as either a block
grant or a per capita allotment.
It is no surprise that the current
Republican bill does just this. Nor
should it come as a surprise to anyone
that it would lead to a substantial re-
duction in Medicaid enrollment. This
outcome is not a bug in the Republi-
can program; it is a feature.
An honest debate would be a wel-
come change. If Medicaid shrinks and
millions of people lose coverage they
cannot afford to replace in the indi-
vidual market, where exactly will
they get health care, and who will
pay for it?
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
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A12 | Thursday, March 16, 2017 THE WALL STREET JOURNAL.

LIFE & ARTS

MY RIDE

The Clunker That Turned

Into a Classic

Ken Lammert, 82, a retired mechanic and

service station owner from Affton, Mo., on
his 1959 Edsel Corsair, as told to A.J. Baime.

WHITNEY CURTIS FOR THE WALL STREET JOURNAL

This past Saturday, crowds braved winter
weather in St. Louis to watch the 48th an-
nual St. Patricks Day Parade. In the parade,
I drove my 1959 Edsel with Ms. Senior
America Peggy Lee Brennan in the car. By
my estimate, it had to be the 500th parade
my Edsel has been in.
The Edsel started out as probably the
most infamous car ever known. Ford
launched the Edsel line in September 1957,
with the biggest advertising campaign I re-
member ever seeing, at the time. The car
was named after Henry Fords only son, Ed-
sel. By November 1959, Ford announced the Ken Lammert with his Edsel Corsair. The car was unpopular when he bought it in 1959, but it has developed a cult following over the years.
end of Edsel production, and it was consid-
ered a huge failure. vertible wasnt practical. The car was expen- running. Even my father came around. I cana, which is why I drive it in so many pa-
I owned a service station and I had a con- sive and she was furious. When my father moved my family to Houston and he would rades. I have had numerous dignitaries in
tract for all the warranty work at a Lincoln- saw the car, he said, Why did you go and come down and want to see the car. this carmayors, congressmen, even an as-
Mercury dealership, and in December 1959, I buy that piece of junk? It felt like the talk When I drive it now, every eye on the tronaut. I keep an American flag on the car
saw an Edsel sitting on the dealership lot. I of the town. Everyone thought I was a fool street turns. The older generation knows all the time. I guess buying the Edsel back
liked it so much I bought it on a whim, for for buying an Edsel. what the car is, so these people get excited. in 1959 was not such a bad idea after all.
$2,245 plus my 1954 Ford. Over the years, the response has changed. Young people do not know what it is, but
When I got home, my wife gave me hell. My Edsel has proven to be a great vehicle. It they love it too. Contact A.J. Baime at
We were expecting our third child. A con- has over 359,000 miles on it and it is still The Edsel has become a piece of Ameri- Facebook.com/ajbaime.

Weather The WSJ Daily Crossword | Edited by Mike Shenk

Shown are todays noon positions of weather systems and precipitation. Temperature bands are highs for the day.
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TECHNOLOGY: MOBILEYE DEAL PUTS INTELS RECORD OF ACQUISITIONS ON THE LINE B4
BUSINESS & FINANCE
2017 Dow Jones & Company. All Rights Reserved.
Euro vs. Dollar 1.0630 0.24%
Bigger Bricks, More Clicks for Zara Growth
Retailer focuses on
larger stores and
online expansion to
stay ahead of rivals
BY PATRICIA KOWSMANN
LA CORUA, SpainZaras
new flagship store in its
hometown here illustrates part
of the fashion retailers strat-
egy to stay ahead of its rivals:
focusing on bigger brick-and-
mortar stores and an online
expansion.
Zaras new store, with over
54,000 square feet and five
stories, opened in September
and replaced four smaller ones
spread around town.
It serves as the model for
other Zara flagship stores the
company is rolling out around
The Clues
To Winners
Of iPhone
Supercycle
Investors are hoping for
another iPhone supercycle,
as Apple is expected to roll
out significant updates for
the smartphones 10th anni-
versary. If the thesis plays
out, that could mean a big
payday for a new crop of
iPhone suppliers.
Apple is typically cagey
about what features the next
iPhone, due out later this
year, might brandish. But
several advancements seem
likely, given
what competi-
tors are doing
and hints from
component
suppliers.
HEARD Some possible
ON THE new features: a
STREET flexible display
JACKY
using organic
WONG light-emitting
diode, or
OLED, a USB-C
port or wireless charging.
The smartphone also looks
likely to include something
called 3-D sensors.
3-D sensors, similar to
what is in Xboxs motion
sensor Kinect, are actually
already in the iPhone 7 and
other smartphones, but are
mostly used for less sophis-
ticated purposes such as a
range finder for cameras or
detecting how close the user
is to the phone. More ad-
vanced sensors that provide
added features seem likely.
The sensors work by
sending invisible light beams
that bounce back from ob-
jects nearby. This can be
useful for facial recognition
or for gesture control, like
deleting an email by waving
in front of the phone. The
ability to map the surround-
ing three-dimensional envi-
ronment could prove useful
for augmented reality appli-
cations. Smartphone-game
sensation Pokmon Go be-
came a hit partly because of
its unique gameplay that
meshes the users actual sur-
roundings with the games
fantastical world.
The biggest hint that the
iPhone could include such
features came from Lumen-
tum, a supplier of compo-
nents to such sensors. We
shipped our first revenue
into what we believe to be a
high-volume mobile-device
application, said Alan Lowe,
chief executive of the Cali-
fornia-based company, in its
earnings call last month. He
said the company could
imagine quarters of $100-
plus million type of market-
place growing to over $1 bil-
lion.
STMicroelectronics, a
maker of 3-D sensors, said in
January that it ramped up
its capital expenditure be-
cause of a newly won pro-
gram with substantial rev-
enue in the second half this
year.
Whether these specific or-
Please see HEARD page B2
FTSE 100 7368.64 0.15%
Inditex, Zaras parent, is rolling out new flagship stores globally.
the world. The retailer hopes
the new stores, which will
contain a full range of its col-
lections, will persuade cus-
Natural-gas futures have fallen sharply this year, reversing one of 2016s profitable trades. Above, gas tanker docks at Rochester, U.K.
Global Natural-Gas Glut Deepens
BY TIMOTHY PUKO
A flood of natural gas
swamping the U.S. is turning
into a global glut, sinking
prices and dimming the hopes
of American producers to ex-
port their way out of an over-
supplied domestic market.
Natural-gas futures have
fallen 20% this year on the
New York Mercantile Ex-
change. Shares of gas-produc-
tion companies are among this
years worst performers.
Investors right now across
the board just hate natural
gas, said Pearce Hammond, an
analyst at Simmons & Co. In-
ternational in Houston.
The recent declines re-
verse one of last years most
profitable trades: Gas futures
rose 59% in 2016, and shares
of producers including Ches-
apeake Energy Corp. and Rice
Energy Inc. doubled between
Marchs lows and year-end.
Many investors wagered
Startup Serves Up Chicken Produced in Lab
BY JACOB BUNGE
A Bay Area food-technology
startup says it has created the
worlds first chicken strips
grown from self-reproducing
cells without so much as ruf-
fling a feather.
And the product pretty
much tastes like chicken, ac-
cording to people who were of-
fered samples Tuesday in San
Francisco, before Memphis
Meats Inc.s formal unveiling
on Wednesday.
Scientists, startups and
animal-welfare activists be-
lieve the new product could
help to revolutionize the
roughly $200 billion U.S.
meat industry. Their goal:
Replace billions of cattle,
hogs and chickens with ani-
mal meat they say can be
grown more efficiently and
humanely in stainless-steel
bioreactor tanks.
THE WALL STREET JOURNAL. Thursday, March 16, 2017 | B1
Gold 1200.10 g 0.15% WTI crude 48.86 2.39% German Bund yield 0.417% 10-Year Treasury yield 2.500%
struggling to catch up with
rapidly changing consumer
and the worlds largest fashion
retailer by sales, hasnt said
Of Bank
purchasing habits, with more
shoppers shunning stores in
favor of online purchases.
Such pressure helped prod
how many of the larger stores
it will open.
The companys strategy,
supported by a rapid-fire pro-
Lending
Neiman Marcus Group Ltd.
into its decision this week to
begin talks to sell itself to the
duction system that lets it re-
plenish its stores more quickly
than rivals, is aimed at setting
Slows
parent of Saks Fifth Avenue. itself apart in an industry
And some analysts have sug- struggling to identify the right BY RACHEL LOUISE ENSIGN
gested that it is time for Gap brick-and-mortar strategy.
Inc. to explore strategic alter- Inditex seeks to have full Hopes that a stronger econ-
ALBERT GEA/REUTERS natives for Banana Republic, integration of the brick-and- omy would lead to more lend-
including a potential sale or mortar stores and online busi- ing and further Federal Reserve
shutting down the brand. nesses, with store openings rate increases have helped push
An urgent issue for most that are increasingly more rel- bank stocks to postcrisis highs.
retailers is deciding the right evant, Inditex Chairman and But new data show loan
brick-and-mortar strategy to Chief Executive Pablo Isla said growth is slowing instead,
adopt. For instance, Macys during a news conference on raising questions about
Inc. is shutting hundreds of Wednesday. whether investors expecta-
tomers to browse and ulti- stores even as Gap is expand- Please see ZARA page B2 tions will be realized.
mately buy more. ing its network after a big re- Bank loans across all cate-
The changes at Zara come trenchment.  Heard: Zara outperforms gories are increasing 4.6% an-
as traditional retailers are Inditex SA, Zaras parent H&M, for now............................ B8 nually, the slowest pace since
2014, according to weekly Fed
lending data from March 1.
The trend is particularly
marked in business loans,
which are increasing 3.9% an-
nually, a rate that is a nearly
six-year low.
A number of factors are at
play, including rising interest
rates; bankers also said some
business clients put borrowing
on hold before the U.S. elec-
tion and arent confident
enough to jump back in.
The slowdown is notewor-
thy because it is occurring
when many metrics show the
U.S. economy strengthening.
Job growth is picking up,
broader stock-market indexes
have reached records and the
Fed said Wednesday that it
would raise its key short-term
interest rate to a range be-
tween 0.75% and 1%.
Metrics of consumer and
small-business confidence are
JASON ALDEN/BLOOMBERG NEWS
up.
But so far, businesses and
consumers arent rushing to
take on new debt. Many banks,
such as BB&T Corp. and U.S.
Bancorp, have projected mini-
mal loan growth in the first
quarter of 2017, some after
years of significant gains.
Many bankers said the slow-
down is just a blip.
Some analysts, though, said
bank investors may have to
start worrying about the loan
that new gas-fired power metrics soon, particularly be-
plants and record exports Cooling Trend cause shares have risen so
would help burn off much of Natural-gas prices have slumped this year as U.S. production much since President Donald
the excess supply in the U.S. has picked up, deepening a global gas glut. Trumps victory.
But a historic level of ex- After a rally in November
Front-month Nymex natural-gas price
ports hasnt been enough to and December, bank shares
transform a market dominated $5 per million BTUs Wednesday: $2.98 have moved roughly in line
1.5% since
by unpredictable weather and previous close with the S&P 500 index in
huge new supplies from frack- 4 2017. The KBW Nasdaq Bank
ing. Index is up 28% since the elec-
One issue for U.S. producers tion and this month reached
is their own growing influ- 3 its highest level since 2007.
ence: More gas for sale world- So far, banks have largely
wideoften floating on 2 gotten a free pass on well-
shipseases bottlenecks that publicized decelerating loan-
once drove big local price November to March, the winter growth trends, Sandler
1 heating season, is shaded
spikes. ONeill + Partners analysts re-
Global prices for natural cently wrote. At some point,
gas have plummeted, down by we have to imagine that inves-
0
half in some places in recent tors will begin to express
years. 2014 15 16 17 more concern.
Mild U.S. weather in Febru- Source: WSJ Market Data Group THE WALL STREET JOURNAL. Business loans are a partic-
ary also has reduced demand. ular weak spot. While Mr.
Warm winter temperatures added, according to Platts An- Co., a commodities-trading Trump has said the 2010
sapped about 2.9 billion cubic alytics, a unit of S&P Global firm. Until they grow mean- Dodd-Frank financial overhaul
feet a day of demand from the Platts. ingfully largerprices will be weighed on banks willingness
market this season, compared Exports are the infant, heavily influenced by mother to lend to businesses, commer-
with just the 2.3 billion cubic said J. Alexander Blackman, an weather. cial loans often increased at
feet a day of new exports executive at Standard Delta Please see GAS page B2 Please see BANK page B2
INSIDE
vine cells and made into a
burger and a meatball. Until
now, chicken hasnt been pro-
duced using the method.
Big meat companies have
taken notice. Tyson Foods Inc.,
JASON HENRY FOR THE WALL STREET JOURNAL
the largest U.S. meat company
by sales, launched a venture-
capital fund in December that
it says could invest in meat
grown cell-by-cell. Kevin My-
ers, head of product develop-
ment for Hormel Foods Corp.,
last fall called the startups re-
search into the cultured-meat
technology a good long-term
proposition.
On Tuesday, Memphis
Memphis Meats created a product grown from self-reproducing cells. Meats invited a handful of
taste-testers to a San Fran-
Startups including Mem-
phis Meats and Mosa Meat,
technique would help the
food industry avoid the costs
cisco kitchen and cooked and
served them chicken strips,
FED RATE PATH
based in the Netherlands, of grain, water and waste- along with a piece of duck pre- LOOMS OVER
have been pursuing the con-
cept. They call it clean
disposal associated with live-
stock. Scientists from those
pared lorange style.
Some who sampled the
CHINA
meat, a spin on clean en- companies have already pro- stripbreaded, deep-fried and
ergy, and they argue the duced beef, grown from bo- Please see MEAT page B4 MARKETS, B8
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 | Thursday, March 16, 2017 THE WALL STREET JOURNAL.

INDEX TO BUSINESSES BUSINESS & FINANCE

These indexes cite notable references to most parent companies and businesspeople
in todays edition. Articles on regional page inserts arent cited in these indexes.

A
Adient..........................B2
Alphabet......................B4
Altera .......................... B4
Apple...........................B1
H
Hennes & Mauritz......B8
Himax Technologies....B2
Huawei Technologies..B2
Hyundai Motor............A4
P
PetroSaudi International
.....................................A3
Q
Auto Firms Adapt to Trump
BY JOHN D. STOLL
Qualcomm...................B4
Audi.............................B3 I AND CHESTER DAWSON Growth Engine
R
B Inditex....................B1,B8
Intel........................B4,B8 Rice Energy.................B1 Mexico's share of North
Banana Republic.........B2 Auto executives say they
S America's total car and truck
BB&T............................B1 L can adapt to taxes or other
BTG Pactual Saks Fifth Avenue......B1 production has more than tripled
Lear..............................B2 curbs on imports, even as in-
Participations ........... B5 Lumentum Holdings...B1 STMicroelectronics.....B1 since Nafta was enacted in 1994.
dustry advocates insist such
C M T 20 million vehicles
moves will dent sales and eat
Chesapeake Energy .... B1 Macys ......................... B1 Tesla............................B4 into profit.
E Memphis Meats..........B1 Texas Capital 2016
President Donald Trump,
Mobileye ................ B4,B8 Bancshares ............... B2 North
EFG International.......B5 traveling to Detroit Wednes- 15
E.ON ............................ B4 Monsanto....................B3 U day to say his administration
America
N-O Uber Technologies ...... B4 total
F will reopen a review of fuel- 18.1M
Neiman Marcus Group Uniper..........................B4
Falcon Private Bank....B5 economy targets, has threat-
.....................................B1 U.S. Bancorp ............... B1 10
Fingerprint Cards........B2 ened to upend the North Amer-
Nike.............................B3 V ican Free Trade Agreement.
G Nvidia..........................B4
Volkswagen.................B3 The 23-year-old pact led to tens
Gap .............................. B1 NXP Semiconductors..B4
Goldman Sachs Group B5 1Malaysia Development X of billions of dollars in new 5
Mexico investments by car

TORU HANAI/REUTERS
Google ......................... B4 .....................................A3 Xiaomi.........................B2 Share
companies and their suppliers. from

INDEX TO PEOPLE Analysts, including the Cen- Mexico

0 19.8%
ter for Automotive Research,
say border taxes or other pro- 90 95 00 05 10 15
A K R posed tariffs could add $2,000 Source: WardsAuto.com
to the average price of a vehi- Carlos Ghosn said tax changes could lead to a new Nissan U.S. plant. THE WALL STREET JOURNAL.
Alvarado, Antero........A3 Kavonic, Saul..............B5 Rasgon, Stacy.............B4
cle, or about 5%. A dealer asso-
B Krzanich, Brian ........... B4 S ciation traveled to Washington For every car built in North more content to be made in the tomotive sales said.
Blackman, J. Alexander L Schorr, Glenn .............. B2 last week to warn lawmakers of America there are typically U.S. could also shift more jobs Not everything will be easy
.....................................B1 Lipacis, Mark...............B8 Seah, Yvonne..............B5 a 2.5% sales decline predicted if hundreds of companies supply- from Mexico to the U.S., but to change.
C Lowe, Alan..................B1 Shelton, Scott.............B7 policy makers proposed ing everything from steel body that wouldnt be painless, Bruce Delphi Automotive PLC says
Cargill, Keith...............B2 Low, Jho......................B5 Shuang Ding................B8 changes take hold. panels to radio knobs. Many lo- McDonald, the CEO of vehicle- the industry wont be able to
Smith, Andrew............B5 House Republicans have pro- cate near assembly plants in seat maker Adient PLC, said in adapt as quickly on some parts,
G Lowe, Alan..................B1
Gottlieb, Scott............B8 M V posed a so-called border adjust- part to minimize shipping a recent interview. It is quite such as automotive wire har-
Valeti, Uma.................B4 menttaxing imports but not costs. easy to move, its just got to be nesses, or bundles of electrical
H McDonald, Bruce.........B2
W exportsas part of a plan to If executives like Mr. Ghosn economic to do so, he said. cables, which are labor inten-
Hammond, Pearce.......B1 Musk, Elon..................B5
cut the corporate tax rate. Mr. start shifting more work to the Matt Simoncini, chief execu- sive and considered a cheap
Heydens, William ....... B3 Myers, Kevin...............B1 Willox, Innes...............B5
Trump has separately talked U.S., many components makers tive of Lear Corp., an Adient ri- commodity. Any disruption to
I P Y about a border tax targeted at say they will go along with val, said relocating certain com- that quite frankly is going to
Isla, Pablo ................... B1 Pitzer, John.................B8 Yew, Yak Chee ............ B5 companies that move jobs out- themeven if that means phys- ponents to the U.S. would take add significant cost, Delphi
side the U.S. and then ship ically relocating manufacturing between a year and 18 months, CEO Kevin Clark told analysts
products back in. operations from Mexico to the and add as much as 10% to cap- on a conference call last month.

GAS Information Administration. It

has been nearly 60 years since
the U.S. last shipped out more
natural gas than it brought in
Auto-industry officials say
sticker shock is a nonstarter,
and insist they can deal
with disruptioneven if they
U.S. Ford Motor Co. scrapped
plans for a new Mexican factory
in January, forcing parts mak-
ers who had contracts to supply
ital expenditures. Nothing re-
ally too incredibly dramatic on
the investment side, he said
during a conference call to dis-
Mr. Zukowskis gloves and
certain other protective gear
play by the same rules.
More labor-intensive mate-
Continued from the prior page annually. dont welcome it. the abandoned plant to reas- cuss earnings in January. rials, such as leather gloves
Bernstein Research, Mac- But the impact of that ex- The last thing you want to sess their plans. Even noncomponent suppli- that require intense human fo-
quarie Group Ltd. and energy port growth could be canceled do is to adjust your price, Car- American Axle & Manufac- ers to the auto industry, such as cus, likely still need to be pro-
investment bank Tudor, Picker- out by new supply. U.S. gas los Ghosn, heading the Renault turing Inc., a Detroit auto sup- Illinois-based Magid Glove & duced in lower-cost markets
ing, Holt & Co. all are warning producers have nearly doubled SA/Nissan Motor Co. alliance, plier, said tariffs or other Safety Manufacturing, are outside the U.S., he said.
that oversupply may weigh on their number of rigs from a said in an interview. Youre changes at the border could re- ready if sourcing requirements The industry manufactur-
the market for years. historic low last year. going to absorb the cost the verse the flood of work it has are pushed deep into the supply ing process is still in the Stone
The trend could allay some Global supply is likely to in- best way you can. sent to Mexico in recent years. chain. Manufacturing a variety Age when it comes to produc-
of the biggest fears about ex- crease by 44% in 2020 from Mr. Ghosn, speaking after a Advances in automation and of equipment for factory work- ing certain items such as cut
porting the countrys new- 2015 levels and outpace new short trip to Washington, en- the ability to transport tooling ers, including cut-resistant and sew products and regula-
found bounty of gas. Major in- demand through the end of couraged the Trump adminis- from one factory to another clothing, Magid is using 80,000 tions related to shell-coated
dustrial consumers publicly this decade, according to tration to move fast on Nafta could aid the shift. square feet of production space gloves, Mr. Zukowski said. He
lobbied against export approv- Moodys Investors Service. changes. Nissan is short on ca- Weve got the flexibility to near Chicago, but has a further says Magid offers relatively
als in recent years, warning of Some investors think pacity, he said, and new rules move our equipment, Chief Ex- 300,000 square feet on standby. good wages and benefits in the
higher prices. growth projections for U.S. ex- for lower corporate taxes or ecutive David Dauch said in a If Donald Trump is going to U.S., and the companys cus-
Instead, U.S. prices for con- ports look a little too rosy. higher tariffs at the border conference call with analysts kick open the door, were ready tomers decide if a Made in the
sumers of all types are holding Pipeline delays in Mexico could bolster the case for a new last month. to walk through it, Dan Zu- U.S.A. label is worth investing
around decade lows even as and President Donald Trumps U.S. factory. A border tax that requires kowski, Magids director of au- in.
exports take off, according to pledge to change trade terms
the U.S. Energy Information with that country could under-
Administration. mine sales to the most impor-
tant export market for U.S.
producers. BANK bank executives also publicly
blamed risk aversion around the
U.K.s vote to leave the Euro-
and analysts have noted a
cooling in credit cards and
auto loans.
may become clearer.
Some companies may have
been borrowing from debt in-
Many see sales of Mexico last year received
nearly 60% of U.S. gas exports, Continued from the prior page
pean Union and the U.S. presi-
dential election, but the trend
Bankers said they are still
expecting a pickup in business
vestors in the first quarter
rather than banks. After a
U.S. gas to overseas according to EIA. double-digit-percentage an- has continued. lending from the stronger slowdown at the end of last
buyers as the biggest Australia and the Middle
East put so much gas on the
nual rates after the financial
crisis, well above their average
The last five, six years,
youve had actually decent in-
economy and looser regula-
tions that they hope Republi-
year, companies outside the fi-
nancial sector had sold $255
shift in the market. global market that it leaves lit- of nearly 6% over the past dustry loan growth despite can lawmakers will implement, billion of bonds this year
tle room for more U.S. export four decades, according to Fed somewhat weak gross-domes- but said it may not be for a through Monday, the second-
terminals that could help erase data. tic-product figures, Evercore while. highest total at this point on
the domestic glut, said Robin Those gains were in part ISI analyst Glenn Schorr said At Dallas-based Texas Cap- record, according to data pro-
Many see sales of U.S. gas Wehb, portfolio director at catching up with the recently. Now, we have opti- ital Bancshares Inc., Chief Ex- vider Dealogic.
to overseas buyers as the big- Boston Company Asset Man- 2009-2010 period, when busi- mism that some policy change ecutive Keith Cargill recently Also, loan growth isnt the
gest shift in the market. A mix agement. ness loans outstanding fell will bring higher GDP growth. took an informal poll of the only reason investors are opti-
of global oil companies, en- He spent 2016 buying sharply. Yet, every bank is talking business outlook of 50 clients mistic about bank profits; ris-
ergy traders and startups have shares of oil, metal and other The profitability of the down expectations for loan from privately held small and ing interest rates make lend-
proposed around two dozen commodity-producing compa- loans was also muted by the growth. It seems a little back- midsize businesses. ing more profitable even if
new coastal export terminals. nies, but not producers of nat- superlow interest-rate policy wards. All but one of them said banks arent expanding their
One terminal is already open ural gas. Its too easy to find, set by the Fed and other cen- Consumer-lending gains they planned to expand in portfolios as quickly.
in Louisiana, and up to five said Mr. Wehb, whose com- tral banks internationally. also have cooled in recent 2017, the most optimistic Banks typically make the
more are expected to open pany is a unit of Bank of New Some thought relatively weeks, though the 6.9% annual showing in years. majority of their revenue from
soon. York Mellon Corp. Weve got muted U.S. economic-growth growth rate in this category is Mr. Cargill said he isnt ex- the interest that customers
As recently as a few years plenty of it coming out of our rates in recent years made the still relatively high compared pecting that to translate into a pay on loans, so any prolonged
ago, U.S. exports amounted to ears. boom in lending unsustainable. with recent years. marked increase in loan slowdown could be a serious
nothing. Now, new pipelines to Not everyone is that bear- Indeed, business lending started In addition, banks have growth for at least three to six issue for the bank-stock rally.
Mexico and a terminal on the ish: Mr. Hammond at Simmons slowing abruptly in the third warned about a slowdown in months, when plans for tax Sam Goldfarb
Gulf Coast send about 8% of & Co. notes that many U.S. ex- quarter of last year. At the time, mortgage lending as rates rise, overhaul and regulatory relief contributed to this article.
U.S. output abroad. That could porters have long-term con-
climb to nearly 18% in five tracts guaranteeing buyers for
years, Platts Analytics said.
Exports from the U.S. to
Mexico could grow from nearly
4 billion cubic feet a day today
their gas.
Mexico also doesnt have a
good alternative to U.S. gas. It
would probably need higher
ZARA Vast Fashion
Zara owner Inditex is throttling back on store expansion, but it continues to report strong sales growth.

to nearly 6 billion in the same prices and years to build new Continued from the prior page INDITEX H&M GAP
Total number 7,500
period, Platts Analytics said. infrastructure to replace U.S. Despite a difficult year for
of stores
Overall, the U.S. is expected gas with new domestic pro- retailers, Inditexs net profit
to be a net exporter by 2018, duction, according to Sim- jumped 10% last year, while its 5,000
according to the U.S. Energy mons. sales hit a record of 23.31 bil-
lion ($24.72 billion), according
to figures released Wednesday. 2,500

HEARD iPhone 5s in 2013. Finger-

print Cards, a Swedish fin-
gerprint-sensor maker that
supplies to Chinese smart-
That momentum has contin-
ued this year, with 13% growth
in store and online sales in
constant currency terms over
0
2012 13 14 15 16 2012 13 14 15 16 2012 13 14 15 16
Continued from the prior page phone makers like Huawei the past six weeks. Sales growth 20 %
ders are coming from Apple Technologies and Xiaomi, Sales at Inditex stores Change from
15
or not may not matter as has surged almost 20-fold open at least a year rose 8% a year earlier
much as whether Apple in- since 2013. in the first six weeks of this in sales 10
cludes this type of technol- Apart from Lumentum fiscal year, according to cal-
5
ogy in the next iPhone. Ap- and STMicroelectronics, Hi- culations by Socit Gnrale
ples adoption is crucial for max Technologies, a Tai- analyst Anne Critchlow. The 0
bringing the technology into wanese chip designer listed Spanish retailers main fast-
the mainstream. The iPhone on the Nasdaq, could also fashion rival, Hennes & Mau- 5
wasnt the first one with a benefit as it designs parts ritz AB, meanwhile, recorded 2012 13 14 15 16 2012 13 14 15 16 2012 13 14 15 16
fingerprint sensor. But the used in 3-D sensors. The a 1% decline in same-store Note: Inditex and Gap scal years end in January of the following year. H&M scal years end in November.
feature is now standard after next iPhone could be big op- sales in February. Source: the companies THE WALL STREET JOURNAL.
Apple included it in its portunity in all dimensions. For years, H&M and Inditex
raced around the world open- smaller ones. In 2016, the Inditex, which doesnt For all of 2016, Inditex re-
ADVERTISEMENT
ing stores. But last year, Indi- company opened a net 279 break down online and store ported an increase in sales at
tex started to slow down its stores, bringing its total to sales, is trying to integrate all of its eight brands, includ-

The Mart expansion. H&M, instead, kept

up the pace, but the push
failed to pay off, with the
nearly 7,300.
Analysts say that Inditexs
new strategy leaves plenty of
the two services. For in-
stance, customers can pick up
and return online store-
ing Pull&Bear and Bershka,
and across all regions. Zara
alone was responsible for 66%
Swedish retailer rolling back space for the online platform bought purchases. They can of total sales.
TRAVEL
store openings in January af- to expand without cannibaliz- also order online with the Analysts welcomed a plan
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 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.
JASPER JUINEN/BLOOMBERG NEWS
Monsantos Roundup weedkiller received a favorable safety ruling in Europe, but a lawsuit in the U.S. continues to stir debate.
Questions Dog Herbicide
BY JACOB BUNGE
The European Chemicals
Agency on Wednesday said
glyphosate, the key chemical
in Monsanto Co.s flagship
herbicide, doesnt cause can-
cer, but the agricultural giant
is facing new questions in the
U.S. over the safety of the
weedkiller.
Emails among company em-
ployees, released this week as
part of a continuing lawsuit
over the herbicide, reflect
what the plaintiffs attorneys
say was the companys inap-
propriate role in shaping re-
search and a cozy relationship
with regulators at the U.S. En-
vironmental Protection
Agency. Monsanto argues the
emails were taken out of con-
text.
Glyphosate, which Mon-
santo invented and has mar-
keted since 1974 under the
Roundup brand, is the worlds
most widely used herbicide.
Its use proliferated with the
advent of corn and soybeans
genetically engineered to sur-
vive the spray. It has been de-
ployed to destroy everything
China Targets Nike Ads in Complaints
BY LIZA LIN
SHANGHAIChinas state
broadcaster on Wednesday ac-
cused Nike Inc. of making
false advertising claims in
connection with its basketball
shoes, the second time the
country has leveled such a
complaint against the worlds
largest sportswear maker.
The claims were leveled
during CCTVs annual March
15 or 315 broadcast, which
coincides with World Con-
sumer Rights Day. The broad-
caster said that a model of
Nikes Kobe basketball shoes
was advertised as containing
its signature zoom air cush-
ion.
In social-media forums, Chi-
nese consumers have com-
plained about the discomfort
of the shoes. One buyer ap-
proached Nike and was told
the shoes didnt contain an air
cushion and offered a refund,
CCTV reported.
Nikes China representa-
tives didnt reply to requests
for comments late Wednesday.
The companys spokesmen in
New York and Oregon also
didnt reply to requests for
Police Raid Audi
In Emissions Probe
BY WILLIAM BOSTON
BERLINPolice raided the
offices and homes of Audi AG
executives in two southern
German cities in connection
with a criminal investigation
of the auto maker in the wake
of Volkswagen AGs emis-
sions-cheating scandal, Audi
said on Wednesday.
Investigators are probing
whether engineers and execu-
tives at Audi, the luxury-car
maker owned by Volkswagen,
were involved in carrying out
or covering up the plot by
management at Volkswagen to
rig nearly 11 million diesel cars
world-wide for emissions
tests.
We are cooperating fully
with officials because we have
great interest in clearing up
BUSINESS NEWS
from illegal coca crops in Co-
lombia to weeds sprouting
among railroad tracks. Mon-
santo generated $3.5 billion in
sales last year from its agri-
cultural-productivity division,
which largely reflects its
Roundup business.
Scrutiny of glyphosate has
grown since 2015, when the
International Agency for Re-
search on Cancer, an arm of
the World Health Organiza-
tion, said glyphosate likely can
cause cancer in humans. That
finding ran counter to earlier
conclusions by the EPA and
other chemical regulators, and
was rejected by Monsanto and
agriculture groups.
On Wednesday, Monsanto
said the European Chemicals
Agencys finding matched the
view of every other chemical
regulatory body world-wide.
Monsantos internal emails
were released as part of a
case, brought in a federal
court in California by a group
of farmers and farm workers,
that alleges that Monsanto
failed to warn of glyphosates
alleged cancer risks. In one
email chain, a Monsanto em-
Chinese consumers have reported problems with some Nike shoes.
comment.
Nike faced similar accusa-
tions in 2012, when state me-
dia said the sportswear
brand was fined 4.87 million
yuan ($704,000) based on
claims that it was overcharg-
ing consumers and advertis-
ing its high-end basketball
shoes as having a double air-
cushion, when the shoes
were found to only have one.
Nike China apologized and
offered refunds for the con-
sumers who bought the af-
the matter, an Audi spokes-
man said in a statement on
Wednesday.
The spokesman said he
couldnt comment further in
light of the continuing investi-
gation.
Audi designed and manu-
factured some of the engines
that were manipulated to
show compliance with envi-
ronmental standards in lab
tests, while in normal road use
they emitted higher levels of
smog-causing nitrogen oxides.
Volkswagen designed and
manufactured the 2-liter diesel
engines that were used in the
lions share of the tainted ve-
hicles: smaller cars sold by
VW, Audi, Skoda and SEAT.
Audi produced larger 3-liter
diesel engines that were used
in bigger cars and sport utility
Thursday, March 16, 2017 | B3
ployee related how a senior ments, rather than as an au-
EPA official told Monsanto thor.
how he wanted to block a These were unfortunate
planned glyphosate review by words, but this is not substan-
another government agency tive, said Scott Partridge,
EPA representatives didnt Monsantos vice president of
comment immediately. global strategy. He said Mon-
Other emails include a 2015 santo would continue to fight
message from William Hey- the case.
dens, a senior Monsanto regu- In a separate case spurred
latory scientist, who suggested by the IARC classification, the
to colleagues that we ghost- California Office of Environ-
write sections of a potential mental Health Hazard Assess-
study on glyphosate. He sug- ment, which evaluates hazard-
gested a 2000 study had been ous substances, moved to list
handled similarly. Lawyers glyphosate among chemicals
pursuing the case against known to cause cancer and re-
Monsanto argue that the com- quire a warning label on jugs
munications prove the com- containing the chemical.
panys deceptive authorship Monsanto contested that
practice for scientific re- move in state court, but suf-
views. fered a setback on Friday
Monsanto denied that its when a judge dismissed Mon-
scientists secretly wrote re- santos case.
view papers. In court testi- A company spokeswoman
mony released by Monsanto, said Monsanto plans to appeal.
Mr. Heydens said he made The allegation that gly-
minor editorial contributions phosate can cause cancer in
to that 2000 paper that do not humans is inconsistent with
mount to the level of a sub- decades of comprehensive
stantial contribution or an in- safety reviews by the leading
tellectual contribution. Mon- regulatory authorities around
santo said he was recognized the world, a Monsanto
in the papers acknowledg- spokeswoman said.
and faulty products, or poor
customer service.
In the past, CCTV has is-
sued accusations against for-
eign businesses including
Volkswagen AG, Apple Inc.,
McDonalds Corp. and retailer
Carrefour SA on issues rang-
ing from food safety to quality
defects and subpar customer
MAIKA ELAN/BLOOMBERG NEWS
service. In 2013, the broad-
caster accused VW of selling
cars in China with substan-
dard direct-shift gearbox sys-
tems that caused acceleration
problems and car accidents for
an unspecified number of con-
sumers. Volkswagen said then
that it planned to fix gears
with problems for customers
fected shoes, according to in China.
the state-run Xinhua News China has been one of
Agency. Nikes fastest-growing regional
Although scarcely noticed segments in recent years, and
in the U.S., March 15 has be- a priority as the Beaverton,
come something of an unoffi- Ore.-based company faces
cial holiday in China, thanks stiffer sales competition there
to the annual two-hour from chief rival Adidas AG.
broadcast by China Central Nike reported sales in Greater
Television spotlighting corpo- China of $1 billion for its most
rate misdeeds. The show has recent quarter, up 13% from
hit a chord in a country the previous year.
where consumers have few Wayne Ma in Beijing and
avenues for redress when it Sara Germano in New York
comes to dealing with fake contributed to this article.
CHRISTIAN BRUNA/EUROPEAN PRESSPHOTO AGENCY
Audi is the luxury-car unit of Volkswagen, which rigged tests.
vehicles global recall of all vehicles af-
Police from Munich and fected by the diesel manipula-
Stuttgart searched the offices tion and has pleaded guilty to
and private homes of Audi em- conspiracy to commit fraud in
ployees in Ingolstadt, where the U.S., agreeing to pay fines,
Audis headquarters are lo- penalties and consumer com-
cated, and in Neckarsulm. pensation of around $25 bil-
Volkswagen has issued a lion.
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 | Thursday, March 16, 2017
Intel Faces Test Melding Mobileye
BY TED GREENWALD
Intel Corp.s $15.3 billion
planned purchase of Mobileye
NV propels the chip maker
into a stronger position in the
booming market for autono-
mous-vehicle technology, but
it also comes with potential
hazardsincluding the Silicon
Valley stalwarts limited expe-
rience successfully integrating
big acquisitions.
The combined company will
face stiff competition in its
quest to supply sensors, com-
munications, processing and
software systems for the com-
ing era of fully self-driving
cars, a market that Intel Chief
Executive Brian Krzanich reck-
ons is worth at least $70 bil-
lion. Intel will need to build
aggressively on Mobileyes
strong early position in the
burgeoning supply chain for
such technology to make good
on its lofty valuation for the
Israeli company.
Intel has done relatively
few big deals in its 48-year
historyand has a mixed re-
cord trying to sync those busi-
nesses with its core operations
and make them grow.
Mobileye is its second-larg-
est deal after the 2015 pur-
chase of Altera for $16.7 bil-
lion. Alteras product, a
programmable chip that can
be altered on the fly, comple-
ments Intels business in
server chips by potentially
speeding up emerging comput-
ing tasks. That can give data-
E.ON
Energy Giant Posts
Biggest Loss Ever
German energy giant E.ON SE
reported the biggest loss in its
history, reflecting the scars of the
countrys clean-energy revolution
and nuclear phaseout.
E.ON on Wednesday said that
its net loss deepened 21% in
2016 to 8.45 billion ($8.96 bil-
lion), or 4.33 a share, from a
loss of 6.99 billion, or 3.60 a
20 - 24 March 2017, Hannover, Germany
CeBIT - Global Event for Digital Business
Experience all the key technologies for the digital
transformation in one place at CeBIT in Hannover,

Intels Brian Krzanich says mergers have gone better under him.
center operators a jump on
performance and power effi-
ciency as their software
evolves. Analysts say it is too
early to know whether the in-
tegration of Altera into Intel is
successful.
Intels next biggest deal was
widely viewed as a disappoint-
ment: the $7.68 billion acquisi-
tion of cybersecurity-software
company McAfee in 2010. In-
tel, which paid a 60% premium
for McAfee, this past Septem-
ber said it would sell 51% of
the company to private-equity
firm TPG in a transaction that
valued the entire business at
$4.2 billion and spin it out as
an independent company.
Like the Mobileye deal, the
McAfee purchase was a long-
term bet, focused significantly
on Intels expectation that the
burgeoning Internet of Things
would create a demand for se-
BUSINESS WATCH
share, in 2015. Sales fell 11% to
38.17 billion from 42.65 billion.
The company incurred restruc-
turing costs last year when it
spun off its conventional coal and
gas power plants into Uniper SE,
seeking to recast itself as a com-
pany refocused on forward-look-
ing technologies such as wind,
solar and grid infrastructure.
The company announced it
could need to raise as much as
2 billion from capital markets
and through a hybrid bond issue.
Zeke Turner
TECHNOLOGY
Bernstein Research analyst
Stacy Rasgon says the valua-
tion is lofty even compared
with analysts projections for
Mobileyes results several
years from now. Its going to
be 10 to 15 years before we
know if this is actually going
RICHARD DREW/ASSOCIATED PRESS
to pay dividends for [Intel] or
not, he said.
Mr. Krzanich, CEO since
2013, on Monday said mergers
and acquisitions have gone
better during his tenure. Its
about picking the right lead-
ers, putting my personal at-
tention on it, and having clear
measurables within the first
six to 12 months, he told
curing billions of newly con- CNBC. He added he expects
nected devices. Intel hoped many autonomous cars to be
combining with McAfee would on the road by 2023 or 2024.
help it sell specialized chips The Mobileye deal makes
and other products to keep
smartphones, tablets and
other connected devices se-
cure, but it has struggled to
sense because it gives Intel a
way to serve car manufactur-
ers from the data center to
the headlight at various price
gain traction in that market. points, Mr. Krzanich told The
Mobileye, founded in 1999, Wall Street Journal. It will
is still relatively small. It re- start adding to its adjusted
ported net profit last year of earnings immediately, Intel
$108 million on revenue of said.
$358 million. Both those num- Still, the Mobileye deal is
bers showed big growthsales largely a bid on the future of
were up nearly 50% and earn- fully autonomous cars that
ings up 58%. But they still may be a decade or more
mean Intel, which was trading away, Mr. Rasgon said. And In-
around 17 times last years tel faces entrenched, deep-
earnings before the deal, is pocketed companies commit-
paying around 140 times earn- ted to being big players in the
ings and more than 42 times market. That group includes
total sales for the past year auto makers and other tech gi-
for Mobileye. Those are far ants like Google parent Alpha-
larger multiples than Intel bet Inc., Tesla Inc., and Uber
paid for Altera or McAfee. Technologies Inc.
TWITTER Hackers have hijacked a
number of Twitter profiles
Hackers Laud Turkey amid a diplomatic feud be-
On Hijacked Accounts tween Turkey and two Euro-
pean nations, Germany and the
Twitter Inc. said it revoked Netherlands.
access to block a third-party Media reports said a number
app apparently used to hack a of accounts as varied as Unicef,
number of accounts to broad- Duke University, Amnesty Inter-
cast pro-Turkish messages. national and Starbucks Argen-
Twitter Counter, an Amster- tina had their accounts com-
dam-based third-party Twitter promised by hackers who used
analytics company, said it had them to broadcast pro-Turkish
started an investigation into messages.
the matter. Associated Press est consumer, France, accord-
www.cebit.de
Chicken Run
Scientists have produced chicken from self-reproducing cells, looking
to harness the meat's rising popularity.
U.S. per capita consumption of meat
100 pounds
80
60
40
20
0
1965 70 75 80 85
*Commercial sh, includes shellsh
Source: USDA via National Chicken Council
MEAT
Continued from page B1
spongier than a whole chicken
breastsaid it nearly nailed
the flavor of the traditional va-
riety. Their verdict: They
would eat it again.
Uma Valeti, Memphis
Meats co-founder and chief
executive, said the cell-culture
poultry luncheon represented
a technological leap, and
opened up an important mar-
ket. Chicken is the most pop-
ular protein in our country, he
said.
U.S. consumers ate an aver-
age of 90.9 pounds of chicken
apiece in 2016, according to
the U.S. Department of Agri-
culture. That is nearly as much
as beef and pork combined.
World-wide, about 61 billion
chickens are raised for meat
annually. The U.N. Food and
Agriculture Organization has
projected that chickenrela-
tively cheap to produce and
with few religious and cultural
barrierswill soar past pork
as the worlds most-consumed
meat by 2020.
Duck is relevant for a differ-
ent reason. China, which tops
the list in global consumption,
consumes 2.7 million metric
tons of duck meat annually,
nearly 10 times the next-larg-
THE WALL STREET JOURNAL.
WSJ.com/Tech
2015
Chicken
90 lbs.
Beef
53.9
Pork
49.7
Turkey
16
Fish*
15.5
90 95 00 05 10 15
THE WALL STREET JOURNAL.
ing to data from the Interna-
tional Poultry Council. The
average Chinese consumer eats
4.5 pounds a year.
The cell-cultured meat
startups are a long way from
replacing the meat industrys
global network of hatcheries,
chicken barns, feed mills and
processing plants. But they say
they are making progress.
Memphis Meats estimates its
current technology can yield
one pound of chicken meat for
less than $9,000. That is half
of what it cost the company to
produce its beef meatball
about a year ago. The startups,
however, aspire to produce
meat that can be cost-competi-
tive with the conventionally
raised kind. Memphis Meats
hopes to begin selling its meat
commercially by 2021.
The product already has
met with skepticism from live-
stock groups, who remain con-
fident that carnivores will con-
tinue to seek out farm-raised
meat. But the startups have
won fans among animal-wel-
fare advocates, including those
that typically oppose all meat
consumption.
Ingrid Newkirk, president of
People for the Ethical Treat-
ment of Animals, has said her
group was very much in favor
of anything that reduces or
eliminates the slaughter-
house, and PETA helped fund
some early research.

      

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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.
Bank Seeks Price Cut for Purchase Anglo
Swiss buyer for BSI
cites asset withdrawals
following disclosure
of links to 1MDB
BY JOHN LETZING
ZURICHThe buyer of a
Swiss bank caught up in cor-
ruption probes tied to Malay-
sias state investment fund is
seeking to cut the purchase
price by about a quarter after
the bank had nearly $5 billion
in withdrawals in just two
months.
BSI had 4.9 billion Swiss
francs ($4.9 billion) in net as-
set outflows in the last two
months of 2016, according to
EFG International AG, the Zu-
rich-based bank that an-
nounced its purchase of BSI
last November.
EFG International, which is
buying BSI from Brazilian
bank BTG Pactual SA, said it
is seeking to pay 277.5 million
francs less for BSI than the
1.06 billion franc purchase
price disclosed in November.
Rate Rise Wont Help Savings Accounts
BY CHRISTINA REXRODE
At some point, the Federal
Reserves rate increases will
trickle down to savers, who
have been getting next to
nothing on their deposits for
years. But it will continue to
be a slow and uncertain pro-
cess.
When the Fed raises short-
term interest rates, as it
did Wednesday, that increase
usually flows through right
away to the rates banks charge
on credit cards, home-equity
lines of credit and some other
types of loans.
Deposits work differently.
The rates that banks offer de-
positors on certificates of de-
posit, savings accounts and
checking accounts are more a
function of what the banks are
willing to pay.
So far, that isnt much. The
Fed raised interest rates twice
in the recent past, in Decem-
ber 2015 and December 2016
the only two increases in a de-
cade of near-zero rates. That
made little difference to de-
posit rates. You wouldnt
even notice them, said Gagan
Singh, chief investment officer
of PNC Financial Services
Group Inc., at a conference
last week.
The reason is twofold: First,
by raising short-term lending
rates along with the Fed, and
lagging behind on deposits,
which cost them money, banks
hope to bolster profit margins.
These have been squeezed in
recent years by the Feds zero-
rate policy as banks couldnt
lower short-term deposit costs
any further even as the
amounts they earned on lon-
ger-term assets were ground
down.
Second, most banks dont
Australia Puts the Squeeze on Natural-Gas Exporters
BY ROBB M. STEWART
AND ROB TAYLOR
Australia threatened to im-
pose restrictions on natural-
gas exports as it extracted a
commitment from global en-
ergy companies to supply
enough gas to meet increasing
domestic demand and prevent
a shortage.
In a meeting with Prime
Minister Malcolm Turnbull on
Wednesday, domestic and in-
ternational energy companies
agreed to make more domestic
gas available as soon as possi-
ble. They also vowed to supply
gas in periods of high demand,
such as during heat waves, to
prevent more of the wide-
spread blackouts that hit parts
of the countrys south late last
year.
Mr. Turnbull offered no de-
tail on how much additional
gas would be required or
where it would come from, but
said the new arrangements to
ensure sufficient supplies to
meet surges in demand would
be in place before next sum-
mer. He said the government
wouldnt hesitate to regulate
exportspossibly even estab-
lishing a legislated reservation
for domestic useif the indus-
try isnt able to guarantee ade-
quate supply.
All of the powers that we
have under the constitution
American
EFG International had origi-
nally announced plans early
last year to pay roughly 1.33
billion francs for BSI, at a time
when alleged ties between BSI
employees and the corruption
scandal at 1Malaysia Develop-
ment Bhd., known as 1MDB,
werent clear.
EFG International said its
latest valuation is subject to
BTGs expected objection and,
if necessary, verification by an
independent expert.
BTG said it refutes EFG
Internationals revised pur-
chase price.
Authorities in several coun-
tries are investigating the al-
leged misappropriation of up
to $6 billion from 1MDB using
banks such as BSI as conduits,
The Wall Street Journal has
previously reported.
Last year, Swiss authorities
disclosed a criminal investiga-
tion of BSI related to its busi-
ness with 1MDB. BSI said at
the time that it was cooperat-
ing with the probe.
Separately, Switzerlands fi-
nancial regulator, Finma,
found last May that BSI vio-
The Federal Reserves rate rise means little for deposits held at Bank of America and other banks.
need more deposits, so they
dont feel compelled to rush to
pay more for them. Deposits
at U.S. banks in the fourth
quarter of 2016 totaled $12.9
trillion, 65% higher than a de-
cade earlier, according to Fed-
eral Deposit Insurance Corp.
data. Meanwhile, loans havent
grown anywhere near as
quickly: Banks loan-to-deposit
ratio stood at 72%, versus 92%
10 years ago, meaning banks
can afford to shed deposits.
To be fair, banks usually
move slowly on deposit rates
when the Fed first starts rais-
ing rates. Because banks make
less money on lending when
rates are low, they tend to
view the first few rate in-
creases as their own compen-
sation.
Each rate hike is a little bit
we reserve to be able to use as
and when the national interest
demands it, Mr. Turnbull said
after the meeting. What
weve sought from the indus-
try is the commitment to en-
sure that the domestic market
has the gas supplies it needs.
It marks a change in tack
for Australias conservative
government, which has previ-
ously argued a reservation
policy could raise sovereign
risk issues for producers and
deter investment in new gas
projects.
Mr. Turnbull was moved to
respond after the operator of
the countrys gas and electric-
ity markets last week warned
of a shortfall in gas-power
electricity generation in the
populous southeast states as
soon as next summer if no ac-
tion is taken. He said Wednes-
day that it was utterly unten-
able, unacceptable that
Australian businesses and
families couldn't access af-
fordable gas.
The issue came to a head
late last year when South Aus-
tralia state was hit by several
blackouts, including a state-
wide outage after a violent
storm that left many homes
and business without power
for several days.
Last week, alarm at the
prospect of further blackouts
across the countrys south
FINANCE & MARKETS
EFG International CEO Joachim Straehle, left, addresses a news
conference last year. Stefano Coduri, then-chief of BSI, looks on.
lated money-laundering regu-
lations in its dealings related
to the Malaysian fund.
BSI has appealed that rul-
ing.
In Singapore, where a BSI
unit allegedly served as a tran-
sit point for money siphoned
from 1MDB, as the Journal
previously has reported based
more water building behind
the dam, said Greg McBride,
chief financial analyst at Bank-
rate.com, a personal finance
website.
This time around banks
may try to hold out for longer,
given the long period of sup-
pressed profits they just went
through.
John McDonald, an analyst
at Sanford C. Bernstein who
discussed the expected Fed in-
crease with executives from
several banks last week, said
there is little consensus. Some
banks believe they could be
one or two hikes away from
the start of deposit competi-
tion. Others believe it will take
longer, depending on how
quickly and how often the Fed
raises rates.
Its all about when do cus- also play a role. Rules around
prompted Tesla Inc.s Elon
Musk to offerinitially via
Twitter, and later during
phone calls with political lead-
ers including Mr. Turnbull
his companys energy-storage
technology as a solution to
South Australias electricity
woes.
Yet Australias fears of a
looming gas shortage and
soaring prices come as the
country is on track to overtake
Qatar as the worlds top ex-
porter of liquefied natural gas
in coming years.
Major projects are ramping
up output for export. Three
big plants on Curtis Island in
northeastern Queensland
state, which together cost
about $60 billion, are tapping
methane buried in inland
seams of coal and chilling it to
a liquid to send to Asia.
These projectsoperated
by Royal Dutch Shell PLC, Or-
igin Energy Ltd. and Santos
Ltd., along with partnersare
viewed by analysts as the
most viable near-term solution
to meet domestic demand. Mr.
Turnbull said Wednesday that
the Shell and Origin-led proj-
ects agreed to supply more
gas from the projects to the
domestic market than they
take out of it. The third proj-
ect had taken the matter on
notice, he said.
Following the meeting, gas
on court records, documents,
and people familiar with the
matter, the central bank has
revoked BSIs banking license.
This week, Singapores cen-
tral bank said it plans to ban
one former BSI employee, Yak
Yew Chee, from operating in
the financial sector for life and
to impose a 15-year ban on
tomers start begging, and
when does one bank break
ranks? Mr. McDonald said.
After you get a few rate
hikes, people start to ask,
Hey, what am I getting on my
checking account?
Marianne Lake, chief finan-
cial officer at J.P. Morgan
Chase & Co., at the companys
investor day last month hinted
that banks might need to in-
crease deposit rates more
quickly than they did during
the last round of Fed rate in-
creases, from 2004 to 2006.
One reason, Ms. Lake said, is
that it is easier for customers
to move their money thanks to
technological advances. Cus-
tomers are also more rate
aware, she said.
Capital requirements could
Prime Minister Malcolm
Turnbull wants to ensure
sufficient domestic supplies.
companies said they were
committed to working with
the federal government.
We understand that if we
Advertisement
[ Search by company, category or country at europe.WSJ.com/funds ]
Data as shown is for information purposes only. No offer is being made by
Morningstar, Ltd. or this publication. Funds shown arent registered with the
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Thursday, March 16, 2017 | B5
former BSI employee Yvonne
Seah, related to investigations
into 1MDB-related matters.
Mr. Yak and Ms. Seah were
both convicted last year after
pleading guilty to failing to re-
port suspicious transactions
and forging reference letters
on behalf of Malaysian finan-
cier Jho Low, who has been
linked by U.S. prosecutors to
allegations that hundreds of
millions of dollars were misap-
ARND WIEGMANN/REUTERS
propriated from 1MDB. Mr.
Low has denied any wrongdo-
ing.
In addition to the BSI em-
ployees, Singapores central
bank said it would ban a for-
mer employee of Switzerland-
based Falcon Private Bank AG
for life, related to 1MDB is-
sues, and that it had banned a
former Goldman Sachs Group
Inc. employee for 10 years.
EFG International previ-
ously disclosed that BSI suf-
fered the loss of 7 billion
francs in revenue-generating
assets under management be-
tween June and September of
last year, due to what it called
the Malaysia matter.
the liquidity coverage ra-
tio could make banks more
inclined to raise deposit rates
for individuals over commer-
cial customers because the re-
tail deposits are worth more
in certain regulatory tests.
That would be a departure
from the usual template, when
banks tend to raise deposit
rates first for large commer-
cial customers.
Zions Bancorp Chief Finan-
cial Officer Paul Burdiss indi-
cated last week that he
thought as much. I think this
next cycle is going to look dif-
ferent, Mr. Burdiss said. Not
SCOTT MCINTYRE/BLOOMBERG NEWS
every deposit is treated
equally.
But others think the banks
will be less inclined to raise
deposit rates than in previous
rounds.
This time, the banks dont
need to compete for deposits
given how flush they areso
much so that some banks are
asking certain customers to
take their deposits elsewhere.
Money-market funds, which
can compete with banks for
customers deposits, are less
of a rival now too, said Steven
Alexopoulos, an analyst at J.P.
Morgan. Regulatory over-
hauls have made them a less-
appealing option for investors
shopping around for higher
deposit rates.
The years of low interest
rates have been difficult on
savers. Bob Wilmers, the chief
executive of M&T Bank Corp.,
wrote in his annual letter to
shareholders last week that
the Feds long era of ultralow
rates was hurting the average
U.S. household, which relies on
equity in its home, retirement
savings and bank deposits
more than stock-market in-
vestments.
want a long-term export in-
dustry we need to make sure
Australians have gas available
at competitive prices, said
Andrew Smith, Shells Austra-
lia chairman. He said the com-
MICK TSIKAS/EUROPEAN PRESSPHOTO AGENCY
pany had already reduced ex-
port shipments from one
Australian project to supply
more gas to the domestic mar-
ket and recently signed supply
contracts with utilities.
Executives from Santos and
Origin said they too would as-
sist in addressing the coun-
trys energy challenges and
help to boost domestic gas
supply.
Still, to ensure it can meet
future demand Australia needs
to develop new onshore gas
fields, but this would take
years and require fresh invest-
ment by companies that have
pulled back on exploration and
new projects with the slump in
INTERNATIONAL INVESTMENT FUNDS
FUND NAME
n Chartered Asset Management Pte Ltd - Tel No: 65-6835-8866
Fax No: 65-6835 8865, Website: www.cam.com.sg, Email: cam@cam.com.sg
CAM-GTF Limited
For information about listing your funds,
please contact: Freda Fung tel: +852 2831
2504; email: freda.fung@wsj.com
Attracts
Investor
BY SCOTT PATTERSON
LONDONThe family trust
of the founder of Indias larg-
est mining company is invest-
ing $2.44 billion in Anglo
American PLC, the British
mining company that a year
ago was in a desperate strug-
gle to recover from a sharp de-
cline in commodity prices.
The investment will give
Volcan Investments Ltd., the
family trust of Vedanta Re-
sources PLC founder and
Chairman Anil Agarwal, own-
ership of about 12% of Anglo
American.
That will make Volcan the
second-biggest investor in An-
glo American behind Public
Investment Corp., South Af-
ricas state-run pension fund,
which owns $2.7 billion worth
of Anglos stock, according to
FactSet. The next biggest in-
vestor is Silchester Interna-
tional Investors LLP, which
owns $1 billion worth of Anglo
shares, according to FactSet.
The investment could give
Mr. Agarwal and his family
trust a commanding voice at
Anglo American, the worlds
fifth-largest public mining
company by market value. An-
glo American is a great com-
pany with excellent assets and
a strong board and manage-
ment team who are executing
a focused strategy, Mr. Agar-
wal said in a statement.
Volcan said it has no plans
to acquire Anglo American,
which declined to comment.
The investment is a big vote
of confidence in Anglo Ameri-
cans fortunes, which revived
dramatically in 2016 amid a
sharp recovery in commodity
prices. The company had a
profit of $1.6 billion in 2016, a
dramatic rebound from 2015,
when it lost $5.6 billion.
Mining companies broadly
are in much better shape now
than they were two years ago,
when the slump in commodity
prices sent shares tumbling,
analysts say. Firms such as An-
glo American sold off under-
performing mines, laid off
workers and paid down debt.
The rebound has brought a
reprieve for struggling chief
executives such as Anglo
Americans Mark Cutifani, who
a year ago unveiled a plan to
sharply reduce the mining gi-
ants assets and cut its work-
force by more than half.
Vedanta, led by former Rio
Tinto PLC CEO Tom Albanese,
is largely focused on Indian
mining operations in commod-
ities such as iron ore, copper
and zinc. Like other mining
companies, it has benefited
from the continuing commod-
ity rally. In February, it re-
ported third-quarter earnings
before interest, taxes, depreci-
ation and amortization jumped
79% to $882.3 million on a
50% gain in revenue.
world oil prices.
Some regions, fearful of en-
vironmental impacts and polit-
ical backlash, have also im-
posed restrictions on gas
exploration and development.
Mr. Turnbull on Wednesday
reiterated his call on state and
territory governments to lift
such restrictions.
Encouraging commercial ar-
rangements to channel gas
from the export market to do-
mestic supply is a move in the
right direction, said Innes Wil-
lox, chief executive of Austra-
lian Industry Group, which
represents more than 60,000
businesses.
The risk, according to Saul
Kavonic at Perth-based energy
consulting firm Wood Macken-
zie, is a knee-jerk policy that
would do more damage to the
industry and worsen the long-
term supply problem.
NAV %RETURN
GF AT LB DATE CR NAV YTD 12-MO 2-YR
OT OT MUS 03/10 USD 301680.52 -0.1 5.1 -5.1
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 | Thursday, March 16, 2017 THE WALL STREET JOURNAL.

MARKETS DIGEST
Nikkei 225 Index STOXX 600 Index S&P 500 Index Data as of 4 p.m. New York time
Last Year ago
19577.38 t 32.12, or 0.16% Year-to-date s 2.42% 375.10 s 1.64, or 0.44% Year-to-date s 3.79% 2385.26 s 19.81, or 0.84% Trailing P/E ratio * 24.68 23.02
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 375.69 308.75 High, low, open and close for each P/E estimate * 18.27 16.72
trading day of the past three months. All-time high 38915.87 12/29/89 trading day of the past three months. All-time high 414.06 4/15/15 trading day of the past three months. Dividend yield 1.98 2.27
All-time high: 2395.96, 03/01/17

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

20000 385 2380

19500 375 2340

19000 365 2300

Session high 18500 355 2260

DOWN UP 65-day moving average

t

Session open Close 65-day moving average

18000 345 2220
Close Open
t

65-day moving average

Session low 17500 335 2180

Bars measure the point change from session's open

17000 325 2140
Dec. Jan. Feb. Mar. Dec. Jan. Feb. Mar. Dec. Jan. Feb. Mar.

International Stock Indexes Data as of 4 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 3 p.m. ET
World The Global Dow 2690.45 26.79 1.01 2193.75 2694.43 6.4 Country/ Spread Over Treasurys, in basis points Yield
MSCI EAFE 1785.78 20.72 1.17 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 951.09 11.12 1.18 691.21 1044.05 19.8 5.250 Australia 2 1.890 58.2 50.5 62.0 105.8 1.890 1.871 2.030
4.750 10 2.926 41.7 32.9 30.5 70.8 2.931 2.799 2.679
Americas DJ Americas 574.51 5.85 1.03 480.90 577.65 6.3
3.000 Belgium 2 -182.1 -187.7 -178.1 -133.9 -0.493 -0.530 -0.367
-0.513
Brazil Sao Paulo Bovespa 66227.26 1527.80 2.36 46520.81 69487.58 10.0
0.800 10 0.893 -161.5 -164.1 -159.2 -140.5 0.961 0.901 0.566
Canada S&P/TSX Comp 15523.68 144.07 0.94 13217.17 15943.09 1.5
0.000 France 2 -0.490 -179.7 -186.8 -176.9 -138.3 -0.484 -0.519 -0.411
Mexico IPC All-Share 47468.99 381.02 0.81 43902.25 48956.06 4.0
0.250 10 1.033 -147.5 -150.3 -143.3 -138.1 1.100 1.060 0.590
Chile Santiago IPSA 3520.68 16.46 0.47 2998.64 3526.48 9.2
0.000 Germany 2 -0.826 -213.3 -219.3 -203.9 -142.1 -0.809 -0.788 -0.449
U.S. DJIA 20950.10 112.73 0.54 17063.08 21169.11 6.0
0.250 10 0.417 -209.1 -215.5 -211.7 -165.2 0.447 0.377 0.319
Nasdaq Composite 5900.05 43.23 0.74 4574.25 5911.79 9.6
0.300 Italy 2 -0.026 -133.3 -135.5 -128.7 -95.8 0.029 -0.036 0.014
S&P 500 2385.26 19.81 0.84 1991.68 2400.98 6.5
1.250 10 2.290 -21.9 -24.5 -24.6 -59.4 2.358 2.248 1.377
CBOE Volatility 11.43 0.87 7.07 9.97 26.72 18.6
0.100 Japan 2 -0.256 -156.3 -164.1 -148.3 -112.3 -0.257 -0.232 -0.151
EMEA Stoxx Europe 600 375.10 1.64 0.44 308.75 375.69 3.8 0.100 10 0.095 -241.3 -251.2 -240.3 -199.2 0.090 0.091 -0.022
Stoxx Europe 50 3115.40 13.44 0.43 2626.52 3120.09 3.5 4.000 Netherlands 2 -0.814 -212.2 -216.9 -196.6 -141.5 -0.784 -0.715 -0.443
Austria ATX 2816.77 1.13 0.04 1981.93 2845.05 7.6 0.750 10 0.666 -184.2 -188.6 -195.3 -155.7 0.716 0.540 0.414
Belgium Bel-20 3759.81 8.98 0.24 3127.94 3778.90 4.3 4.450 Portugal 2 -0.056 -136.4 -141.7 -127.7 -66.1 -0.032 -0.026 0.311
France CAC 40 4985.48 11.22 0.23 3955.98 5022.10 2.5 2.875 10 3.973 146.5 134.4 157.7 82.2 3.946 4.070 2.793
Germany DAX 12009.87 21.08 0.18 9214.10 12082.59 4.6 2.750 Spain 2 -0.166 -147.3 -148.1 -152.9 -94.8 -0.096 -0.279 0.024
Greece ATG 632.97 5.95 0.93 517.10 670.21 1.7 1.500 10 1.806 -70.3 -73.3 -79.6 -45.7 1.870 1.697 1.514
Hungary BUX 32636.18 Closed 25126.36 34334.92 2.0 4.250 Sweden 2 -0.573 -188.0 -194.2 -180.0 -159.1 -0.558 -0.550 -0.619
Israel Tel Aviv 1438.12 3.03 0.21 1372.23 1504.42 2.2 1.000 10 0.737 -177.2 -185.2 -175.1 -132.2 0.750 0.743 0.649
Italy FTSE MIB 19774.02 236.62 1.21 15017.42 19810.77 2.8 1.750 U.K. 2 0.045 -126.3 -131.2 -115.6 -43.2 0.072 0.095 0.541
Netherlands AEX 511.66 1.60 0.31 409.23 514.04 5.9 4.250 10 1.215 -129.4 -137.6 -110.1 -43.3 1.226 1.392 1.538
Poland WIG 59109.17 192.15 0.32 42812.99 60021.25 14.2 1.125 U.S. 2 1.308 ... ... ... ... 1.385 1.251 0.972
Russia RTS Index 1062.61 1.08 0.10 821.19 1196.99 7.8 2.250 10 2.509 ... ... ... ... 2.602 2.493 1.971
Spain IBEX 35 9983.20 78.10 0.79 7579.80 10091.40 6.7
Sweden SX All Share 560.86 0.92 0.16 443.66 564.93 4.9 Commodities Prices of futures contracts with the most open interest 3:30 p.m. New York time
Switzerland Swiss Market 8688.86 25.32 0.29 7475.54 8702.62 5.7 EXCHANGE LEGEND: CBOT: Chicago Board of Trade; CME: Chicago Mercantile Exchange; ICE-US: ICE Futures U.S.; MDEX: Bursa Malaysia
South Africa Johannesburg All Share 51701.60 2.14 0.00 48935.90 54704.22 2.1 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 3/14/2017
Turkey BIST 100 89445.55 309.02 0.35 70426.16 91437.77 14.5
One-Day Change Year Year
U.K. FTSE 100 7368.64 10.79 0.15 5788.74 7394.61 3.2 Commodity Exchange Last price Net Percentage high low
363.50 1.25 0.35% 387.25 357.50
Asia-Pacific DJ Asia-Pacific TSM 1547.65 13.80 0.90 1308.52 1548.34 8.8 Corn (cents/bu.) CBOT
Soybeans (cents/bu.) 997.25 -2.00 -0.20% 1,088.25 992.00
Australia S&P/ASX 200 5774.00 14.90 0.26 4924.40 5816.30 1.9
Wheat (cents/bu.)
CBOT
CBOT 435.75 5.25 1.22 477.00 416.25
China Shanghai Composite 3241.76 2.43 0.08 2806.91 3282.92 4.5
Live cattle (cents/lb.) CME 108.175 1.275 1.19 109.625 103.150
Hong Kong Hang Seng 23792.85 35.10 0.15 19694.33 24201.96 8.1
Cocoa ($/ton) ICE-US 2,050 -8 -0.39 2,273 1,869
India S&P BSE Sensex 29398.11 44.52 0.15 24673.84 29442.63 10.4
Coffee (cents/lb.) ICE-US 140.80 -0.45 -0.32 159.30 136.70
Japan Nikkei Stock Avg 19577.38 32.12 0.16 14952.02 19633.75 2.4
Sugar (cents/lb.) ICE-US 18.21 0.05 0.28 21.21 17.96
Singapore Straits Times 3137.43 5.97 0.19 2729.85 3147.15 8.9
Cotton (cents/lb.) ICE-US 78.10 0.95 1.23 79.46 71.55
South Korea Kospi 2133.00 0.78 0.04 1925.24 2133.78 5.3 Robusta coffee ($/ton) ICE-EU 2181.00 12.00 0.55 2,279.00 2,093.00
Taiwan Weighted 9740.31 3.90 0.04 8053.69 9799.76 5.3
Copper ($/lb.) COMEX 2.6685 0.0335 1.27 2.8360 2.4800
Source: SIX Financial Information;WSJ Market Data Group Gold ($/troy oz.) COMEX 1217.80 15.20 1.26 1,264.90 1,149.70
Silver ($/troy oz.) COMEX 17.275 0.352 2.08 18.540 16.000
Currencies London close on March 15 Aluminum ($/mt)* LME 1,862.50 -32.00 -1.69 1,939.00 1,688.50
Tin ($/mt)* LME 19,605.00 355.00 1.84 21,225.00 18,760.00
Yen, euro vs. dollar; dollar vs. major U.S. trading partners US$vs,
Wed YTDchg Copper ($/mt)* LME 5,772.00 -33.00 -0.57 6,156.00 5,518.00
Country/currency in US$ per US$ (%) Lead ($/mt)* LME 2,222.00 -74.00 -3.22 2,445.00 2,022.00
20%
s Europe Zinc ($/mt)* LME 2,718.00 -39.50 -1.43 2,958.50 2,555.00
Yen 0.5434 1.8401 1.0 10,130.00 -70.00 11,095.00 9,430.00
10
Bulgaria lev Nickel ($/mt)* LME -0.69
s Croatia kuna 0.1431 6.987 2.6 Rubber (Y.01/ton) TCE 266.00 4.00 1.53 n.a. n.a.
Euro Euro zone euro 1.0630 0.9408 1.0
0 Palm oil (MYR/mt) MDEX 2816.00 64.00 2.33 3,123.00 2,697.00
Czech Rep. koruna-b 0.0393 25.421 1.0
sWSJ Dollar index Denmark krone 0.1430 6.9935 1.1 Crude oil ($/bbl.) NYMEX 49.36 1.01 2.09 57.50 47.71
10 0.003425 291.98 0.8
Hungary forint NY Harbor ULSD ($/gal.) NYMEX 1.5185 0.0196 1.31 1.7770 1.4858
Iceland krona 0.009105 109.83 2.8 RBOB gasoline ($/gal.) NYMEX 1.6043 0.0024 0.15 1.9065 1.5824
20 Norway krone 0.1164 8.5944 0.6
0.2466 4.0553 3.1
Natural gas ($/mmBtu) NYMEX 3.023 0.030 1.00 3.5070 2.7370
2016 2017 Poland zloty
Russia ruble-d 0.01694 59.043 3.6 Brent crude ($/bbl.) ICE-EU 51.81 0.89 1.75 59.53 50.25
US$vs, US$vs,
YTDchg YTDchg Sweden krona 0.1116 8.9615 1.6 Gas oil ($/ton) ICE-EU 456.50 8.50 1.90 523.50 446.75
Wed Wed
Country/currency in US$ per US$ (%) Country/currency in US$ per US$ (%) Switzerland franc 0.9917 1.0084 1.0
Turkey lira 0.2687 3.7214 5.6 Sources: SIX Financial Information; WSJ Market Data Group
Americas Hong Kong dollar 0.1287 7.7686 0.2
Ukraine hryvnia 0.0371 26.9435 0.5
Argentina peso-a 0.0643 15.5596 2.0
India rupee
Indonesia rupiah
0.0152
0.0000748
65.6075
13364
3.5
1.2
U.K. pound 1.2217 0.8185 1.0 Cross rates London close on Mar 15
Brazil real 0.3162 3.1624 2.8 Middle East/Africa
Japan yen 0.008717 114.72 2.0
Canada dollar 0.7434 1.3452 0.1 USD GBP CHF JPY HKD EUR CDN AUD
Kazakhstan tenge 0.003138 318.69 4.5 Bahrain dinar 2.6525 0.3770 0.0
Chile peso 0.001494 669.20 0.1 Australia 1.3170 1.6084 1.3058 0.0115 0.1695 1.3995 0.9787 ...
Macau pataca 0.1247 8.0171 1.3 Egypt pound-a 0.0548 18.2400 0.59
Colombia peso 0.0003367 2970.20 1.1 Canada 1.3452 1.6433 1.3342 0.0117 0.1732 1.4298 ... 1.0216
Malaysia ringgit-c 0.2247 4.4497 0.8 Israel shekel 0.2743 3.6461 5.3
Ecuador US dollar-f 1 1 unch
New Zealand dollar 0.6953 1.4382 0.4 Kuwait dinar 3.2696 0.3058 0.1 Euro 0.9408 1.1493 0.9330 0.0082 0.1211 ... 0.6993 0.7145
Mexico peso-a 0.0514 19.4490 6.2
Pakistan rupee 0.0095 104.800 0.4 Oman sul rial 2.5975 0.3850 0.01 Hong Kong 7.7686 9.4916 7.7054 0.0677 ... 8.2591 5.7752 5.9010
Peru sol 0.3062 3.2654 2.6
Philippines peso 0.0199 50.280 1.4 Qatar rial 0.2746 3.642 0.04 Japan 114.7150 140.1300 113.7600 ... 14.7650 121.9300 85.2800 87.1300
Uruguay peso-e 0.0353 28.290 3.6
Singapore dollar 0.7080 1.4124 2.4 Saudi Arabia riyal 0.2666 3.7503 0.01 1.0084 1.2318 ... 0.0088 0.1298 1.0719 0.7495 0.7658
Venezuela bolivar 0.100100 9.99 0.1 Switzerland
South Korea won 0.0008733 1145.07 5.2 South Africa rand 0.0767 13.0373 4.8
U.K. 0.8185 ... 0.8118 0.0071 0.1054 0.8702 0.6085 0.6217
Asia-Pacific Sri Lanka rupee 0.0065746 152.10 2.5 Close Net Chg % Chg YTD % Chg
0.7593 1.3170 5.1 Taiwan dollar 0.03244 30.826 U.S. ... 1.2217 0.9917 0.0087 0.1287 1.0630 0.7434 0.7593
Australia dollar 5.0 WSJ Dollar Index 91.68 0.24 0.26 1.35
China yuan 0.1446 6.9144 0.4 Thailand baht 0.02837 35.250 1.6 Sources: Tullett Prebon, WSJ Market Data Group Source: Tullett Prebon

Key Rates Top Stock Listings 4 p.m. New York time

Latest 52 wks ago % YTD% % YTD% % YTD%
Libor Cur Stock Sym Last Chg Chg Cur Stock Sym Last Chg Chg Cur Stock Sym Last Chg Chg Asia Titans 50
One month 0.94278% 0.43990% TakedaPharm 4502 5365.00 0.09 10.96 RoyDtchShell A RDSA 2097.00 0.24 -6.49 Last: 152.07 s 0.15, or 0.10% YTD s 7.9%
Three month 1.14817 0.63900 Asia Titans HK$ TencentHoldings 0700 214.60 ... 13.13 SAP SAP 89.73 0.41 8.36
Six month 1.43822 0.91740 HK$ AIAGroup 1299 48.45 ... 10.74 TokioMarineHldg 8766 5183.00 0.43 8.07 Sanofi SAN 82.32 0.13 7.05 High 155
One year 1.82761 1.24470 66.06 1.38 -0.08
AstellasPharma 4503 1534.00 -0.49 -5.51 ToyotaMtr 7203 6475.00 0.33 -5.86 SchneiderElectric SU Close 150
Euro Libor AU$ AustNZBk ANZ 32.05 0.50 5.36 AU$ Wesfarmers WES 43.88 -1.06 4.13 Siemens SIE 123.55 0.37 5.78 Low t 145
One month -0.39286% -0.32414% AU$ BHP BHP 24.22 1.47 -3.35 AU$ WestpacBanking WBC 34.80 -0.23 6.75 CHF Syngenta SYNN 443.10 0.41 10.09
Three month -0.35429 -0.24571 HK$ BankofChina 3988 3.89 -1.02 13.08 AU$ Woolworths WOW 26.35 0.08 9.34 Telefonica TEF 10.24 0.79 16.16 50day 140
Six month -0.24729 -0.12943 HK$ CKHutchison 0001 96.90 0.78 10.24 Total FP 46.98 1.47 -3.57 moving average 135
One year -0.11471 -0.00829 HK$ CNOOC 0883 8.81 -1.12 -9.18 Stoxx 50 CHF UBSGroup UBSG 16.17 1.19 1.38
130
Euribor AU$ CSL CSL 124.58 0.58 24.07 Unilever UNA 46.09 -0.01 17.84
CHF ABB ABBN 22.90 0.70 6.61
One month -0.37100% -0.31700% Canon 7751 3491.00 0.46 5.95 Unilever ULVR 4040.00 -0.05 22.70 16 23 30 6 13 20 27 3 10 17 24 3 10
ASMLHolding ASML 117.30 0.43 9.99
Three month -0.32900 -0.23000 CentralJapanRwy 9022 18545 -0.46 -3.56 Vinci DG 69.45 -0.46 7.34 Jan. Feb. Mar.
AXA CS 23.83 0.42 -0.65
Six month -0.24100 -0.12900 HK$ ChinaConstructnBk 0939 6.30 -0.79 5.53 VodafoneGroup VOD 205.20 0.34 2.68
AirLiquide AI 104.00 0.43 -1.56
One year -0.11000 -0.00400 HK$ ChinaLifeInsurance 2628 23.90 -0.42 18.32 CHF ZurichInsurance ZURN 284.60 0.64 1.50
169.50
Yen Libor HK$ ChinaMobile 0941 83.55 -0.65 1.64


Allianz
AB InBev
ALV
ABI 100.95
0.21
-0.05
7.96
0.40 DJIA Stoxx 50
One month -0.06800% -0.06700% HK$ ChinaPetro&Chem 0386 5.81 -0.68 5.64 AstraZeneca AZN 4850.00 -0.09 9.30 Last: 3115.40 s 13.44, or 0.43% YTD s 3.5%
Three month -0.01671 -0.00314 AU$ CmwlthBkAust CBA 84.82 0.39 2.92 BASF BAS 89.28 0.37 1.10
$ AmericanExpress AXP 79.23 -0.58 6.95
Six month 0.02429 0.02107 EastJapanRailway 9020 10060 -0.30 -0.40 BNP Paribas BNP 60.09 0.40 -0.76
$ Apple AAPL 140.46 1.06 21.27 3100
One year 0.12686 0.11400 Fanuc 6954 22260 -0.45 12.34 BT Group BT.A 331.95 -0.63 -9.53
$ Boeing BA 178.68 -0.03 14.77
$ Caterpillar CAT 93.31 1.58 0.61 3025
Offer Bid Hitachi 6501 638.50 0.28 1.03 BancoBilVizAr BBVA 6.84 0.66 6.66
TW$ Hon Hai Precisn 2317 90.10 0.11 7.01 $ Chevron CVX 108.84 1.38 -7.53 2950
Eurodollars BancoSantander SAN 5.43 1.36 9.56
HondaMotor 7267 3574.00 1.07 4.66 $ CiscoSystems CSCO 34.23 0.32 13.27
One month 1.0500% 0.9500% Barclays BARC 227.50 0.42 1.81 2875
KRW HyundaiMtr 005380 149500 0.34 2.40 $ Coca-Cola KO 42.12 0.36 1.59
Three month 1.3000 1.2000 Bayer BAYN 106.30 -0.89 7.23
2800
HK$ Ind&Comml 1398 5.06 -0.59 8.82 $ Disney DIS 111.84 -0.42 7.31
Six month 1.4000 1.3000 BP BP. 456.15 -0.19 -10.49
$ DuPont DD 81.49 1.33 11.02
One year 1.7500 1.6500 JapanTobacco 2914 3831.00 -0.23 -0.34 BritishAmTob BATS 5185.00 0.27 12.19 2725
KDDI 3006.00 0.50 1.57
$ ExxonMobil XOM 81.97 1.21 -9.18
Latest 52 wks ago 9433 Daimler DAI 70.98 0.31 0.37 $ GeneralElec GE 29.75 0.71 -5.85 16 23 30 6 13 20 27 3 10 17 24 3 10
Mitsubishi 8058 2477.00 -0.96 -0.52 DeutscheTelekom DTE 15.99 -0.19 -2.23 $ Jan. Feb. Mar.
Prime rates GoldmanSachs GS 246.78 -0.38 3.06
MitsubishiElectric 6503 1694.50 -0.29 3.99 Diageo DGE 2286.00 -0.57 8.34 $
U.S. 3.75% 3.50% HomeDepot HD 147.95 0.54 10.34
MitsubishiUFJFin 8306 774.10 0.83 7.48 ENI ENI 14.67 1.38 -5.17 $
Canada 2.70 2.70 Intel INTC 35.10 -0.23 -3.23
1688.00 -0.50 5.04 1682.50
Japan
Hong Kong
1.475
5.00
1.475
5.00


Mitsui
Mizuho Fin
8031
8411 213.20 0.09 1.62


GlaxoSmithKline
HSBC Hldgs
GSK
HSBA 670.80
-0.36
0.12
7.71 $
2.12 $
IBM
JPMorganChase
IBM
JPM
175.78
91.69
0.03
0.20
5.90
6.26
Dow Jones Industrial Average P/E: 21
NTTDoCoMo 9437 2716.50 0.43 2.01 INGGroep INGA 14.40 0.56 7.74 $ J&J JNJ 128.91 1.46 11.89 Last: 20950.10 s 112.73, or 0.54% YTD s 6.0%
Policy rates
ECB 0.00% 0.00%
AU$ NatAustBnk NAB 32.75 -0.49 6.78 ImperialBrands IMB 3859.00 -0.53 8.93 $ McDonalds MCD 127.87 0.05 5.05
Britain 0.25 0.50
NipponTeleg 9432 4947.00 -0.22 0.71 IntesaSanpaolo ISP 2.45 1.07 0.91 $ Merck MRK 64.70 0.78 9.90 20900
Switzerland 0.50 0.50
NissanMotor 7201 1157.50 0.13 -1.53 LVMHMoetHennessy MC 197.80 -0.28 9.04 $ Microsoft MSFT 64.75 0.53 4.20
Panasonic 6752 1270.00 -0.16 6.77 LloydsBankingGroup LLOY 68.23 0.56 9.15 $ Nike NKE 57.64 0.63 13.40
20250
Australia 1.50 2.00
HK$ PingAnInsofChina 2318 42.00 0.12 8.25 LOreal OR 177.30 -0.14 2.25 $ Pfizer PFE 34.63 1.20 6.62
U.S. discount 1.25 1.00 19600
Fed-funds target 0.50 0.25
$ RelianceIndsGDR RIGD 38.65 -0.39 22.50 NationalGrid NG. 976.80 -0.79 2.65 $ Procter&Gamble PG 91.40 0.44 8.71
Call money 2.50 2.25
KRW SamsungElectronics 005930 2070000 0.10 14.87 CHF Nestle NESN 76.60 0.72 4.86 $ 3M MMM 191.16 0.44 7.05 18950
Seven&I Hldgs 3382 4411.00 1.52 -0.94 CHF Novartis NOVN 75.45 -0.20 1.82 $ Travelers TRV 122.96 0.28 0.44
Overnight repurchase rates 18300
U.S. 0.58% 0.44%
SoftBankGroup 9984 8380.00 -0.64 7.92 DKK NovoNordiskB NOVO-B 234.90 -0.84 -7.77 $ UnitedTech UTX 113.07 1.11 3.15
Euro zone n.a. n.a.
Sony 6758 3604.00 -0.85 10.05 Prudential PRU 1736.50 1.25 6.70 $ UnitedHealth UNH 171.70 1.56 7.29 16 23 30 6 13 20 27 3 10 17 24 3 10
Sumitomo Mitsui 8316 4360.00 0.07 -2.24 ReckittBenckiser RB. 7309.00 -0.33 6.14 $ Visa V 89.90 0.39 15.23 Jan. Feb. Mar.
Sources: WSJ Market Data Group, SIX HK$ SunHngKaiPrp 0016 112.00 -0.09 14.29 RioTinto RIO 3346.50 0.95 5.95 $ Verizon VZ 50.14 1.58 -6.07 Note: Price-to-earnings ratios are for trailing 12 months
Financial Information, Tullett TW$ TaiwanSemiMfg 2330 186.50 0.27 2.75 CHF RocheHldgctf ROG 257.90 -0.54 10.88 $ Wal-Mart WMT 70.54 -0.25 2.05 Sources: WSJ Market Data Group; Birinyi Associates
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. Thursday, March 16, 2017 | B7

FINANCE & MARKETS

A Game for Budding Deal Lawyers Oil Rallies

As U.S.
U.S. competition gives
law students chance to
hone negotiating skills;
Stockpiles
not just courtrooms Decline
BY SARA RANDAZZO BY TIMOTHY PUKO

LOS ANGELESThe four Oil prices gained Wednes-

deal advisers walked into a day, as bargain hunting and a
drab room, shook hands and drop in U.S. stockpiles sup-
got to work. They had just ported a rally from Tuesdays
under an hour to negotiate three-month lows.
the terms of a kombucha tea U.S. crude for April delivery
companys asset sale to a gained $1.14, or 2.4%, to
beverage conglomerate, and $48.86 a barrel Wednesday on
the two sides were still far the New York Mercantile Ex-
apart. change.
After disagreeing on the Brent, the global bench-
finer points of net working mark, added 89 cents, or 1.7%,
capital, naming rights and as- to $51.81 a barrel on ICE Fu-
sumed liabilities, they put tures Europe.
down their pens. Crude levels in U.S. storage
Immediately, two judges fell by 237,000 barrels in the
began sizing up the quartets week ended Friday, the U.S.
performance. Energy Information Adminis-
The negotiators, still law tration said Wednesday. That
students, didnt have any real was a surprise compared with
clients to consult. Instead, expectations of a 3-million-
they and a few hundred oth- barrel increase in stockpiles
ers across the country spent from analysts surveyed by The
ZACHARY BLAKE SCHAEFFER

a recent Friday pretending to Wall Street Journal. On Tues-

be deal lawyers. For fun. day, industry estimates were
Moot-court competitions released that showed a
have been a law-school fix- 531,000-barrel decline, which
ture for decades, giving had sent crude prices higher.
would-be litigators a chance Storage levels are often a
to hone courtroom skills. But widely watched measure of
until recently, budding deal Law students negotiate the mock sale of a tea companys assets at a recent competition at Drexels Thomas R. Kline School of Law. supply and demand, but have
lawyers had no similar shot drawn more interest in recent
at a national title. Even though at least half junior lawyers earning 2010 founding, and LawMeet cause it is competitive but weeks as traders try to gauge
I had students whod of practicing lawyers at most $180,000 a year, making it contests in other topics have its not as much of a zero- the impact of cutbacks
come to me and say, Wheres large law firms handle deals essential to equip graduates emerged to crown the best sum game as you have in liti- pledged by the worlds biggest
my trip? said Karl Oka- and transactions, law school with practice-ready skills. drafters and negotiators of gation. exporters.
moto, director of the busi- still tends to skew toward a Many law schools have re- intellectual-property agree- Elizabeth Roberts, a 24- Oil began a slide of 10% in
ness and entrepreneurship courtroom-based curriculum. sponded and have beefed up ments, bankruptcy deals and year-old student at University just five sessions last week af-
law program at Philadelphia- Going into law school, I clinical and other offerings startup documents. of Southern California Gould ter the same data showed an
based Drexel University didnt realize how litigation- that attempt to simulate real- This year, 84 teams partic- School of Law, said she ini- unexpectedly large increase in
Thomas R. Kline School of focused it was, said Jeffrey life practice. The moves have ipated in seven regional com- tially wanted to work after U.S. stockpiles at a time when
Law. Brandt, a first-year deal law- come despite some pushback petitions in the transactional graduating with children going many had expected production
That led to a revelation yer at Sidley Austin LLP who from academics who say a le- meet. through the family-court sys- cuts would start to shrink
seven years ago by Mr. Oka- credits LawMeet and a few gal education should teach le- My mom calls it chess tem. Then she learned more those additions.
moto that spawned Transac- training-focused transac- gal scholarship and its under- club because she says its a about business and finance, Wednesdays report of a
tional LawMeet, an annual tional courses with preparing pinnings, not the nuts-and- nerd competition, said Jor- including through the deal drain on stockpiles will help
deal negotiating face-off that him for his current job. bolts of workaday practice. dan Hartman, a third-year competition, and was hooked. ease those concerns, said
culminates this month at The programs can be espe- The shift has meant a law student who is on a team I went to law school think- Scott Shelton, a broker at
Wall Street law firm Sullivan cially useful to students, and boost in the number of clin- advancing to the final in New ing I wanted to help people, ICAP PLC. He noted that crude
& Cromwell LLP in New York. their future employers, as ics focused on advising small York. Theres only so much she said. Id like to tell myself imports fell 9.1% to 7.4 million
The competition points to law firms increasingly face businesses and entrepre- you can learn in class. Im still going to help people barrels a day, close to their
a larger trend in legal educa- scrutiny over the fees they neursand competitions like University of Texas law by becoming a mergers-and- 2017 lows.
tion: teaching students that charge for junior associates. LawMeet. student Amanpreet Arora acquisitions and debt-finance David Hodari
every lawyer isnt destined to Corporate clients resist ab- Interest in the deals pro- said he enjoys the art of a lawyer. But in any event, its and Jenny W. Hsu
be the next Perry Mason. sorbing the cost of training gram has grown since its successful negotiation be- really interesting work. contributed to this article.

T H U R S D AY, M AY 2 5 , 2 0 1 7 | L O N D O N

WSJ Pros Cybersecurity Executive Forum will bring together senior figures from industry and government to discuss
how senior executives can best prepare for hacking threats, manage breaches and work with government cybersecurity
authorities and regulators. The forum will offer insights, practical advice, case studies and workshops tailored to the
needs of executives and managers.

SPEAKERS

ELIZABETH DENHAM JENNIFER JANSON RT HON BARONESS

PAULINE NEVILLE-JONES
UK Information Chairman
Minister of
Commissioner Six Degrees Security and Counter
Terrorism (2010-2011)

DAVID OMAND CHARLES PALMER THOMAS REAGAN

Visiting Professor, Senior Managing Cyber Practice Leader

Dept. of War Studies Director and Global Marsh
Kings College, London Head of TMT
FTI Consulting

To request an invitation, go to CYBER.WSJ.com

2017 Dow Jones & Co., Inc. All rights reserved. 6DJ5137
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To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
B8 | Thursday, March 16, 2017
The Feds Path Sways PBOC Stocks Rise Further
Beijing must heed U.S.
trajectory as it seeks
to tame financial risk
and tighten credit
Central banks in the U.S.
and China are both on the
road to higher interest rates.
While their reasons might look
different, their moves are also
closely linked.
By Rachel Rosenthal in
Hong Kong and Shen
Hong in Shanghai
In the U.S., a burst of posi-
tive economic data spurred
the Federal Reserve to raise
rates for the second time in
three months on Wednesday,
and it penciled in two more
rate increases for this year.
Wages are climbing and unem-
ployment is falling, while con-
sumer and business confi-
dence is strengthening.
In China, officials are con-
cerned about asset bubbles,
fed by a gush of cheap, post-
financial-crisis cash that
found its way to investments
from stocks and bonds to art-
work and real estate. The
Peoples Bank of China has
put taming financial risks and
tightening the spigot of
credit at the top of its to-do
list for 2017.
But the Fed still looms large
behind the Chinese central
banks domestic agenda. As
the U.S. raises rates, expecta-
tions that the dollar will
strengthen against the Chinese
yuan have solidified, a force
that could accelerate capital
outflows from China. Beijing
has spent nearly one-quarter
of its foreign-exchange re-
serves since mid-2014 to keep
the yuans decline from spiral-
ing out of control, and officials
have taken measures to re-
strict the flow of money head-
ing overseas.
This weeks Fed rate in-
crease could pressure the
PBOC to step up its own pace
of tightening, analysts say, and
Email: heard@wsj.com
Will U.K.s
Vigor Last
Past Brexit?
As Britain prepares to
leave the European Union,
historically low unemploy-
ment raises a troubling ques-
tion: Is the U.K. economy re-
silient precisely because it is
still part of the EU? Strong
growth since Junes vote is
encouraging, but threats
clearly remain.
The U.K. unemployment
rate fell to 4.7% in January,
data released Wednesday
showed, matching precrisis
lows. It hasnt been lower
since 1975, the Office for Na-
tional Statistics says, a re-
markable feat.
But less encouragingly, an-
nual growth in weekly wages
excluding bonuses was just
2.3%. With inflation rising
sharply, in part because of
the Brexit-induced fall in the
pound, real wage growth is
slowing quickly, and is back
below 1%. A renewed squeeze
on wages poses a potential
threat to U.K. growth.
This mixed picture means
that the Bank of Englands
policy settings can remain
accommodative. While un-
employment has moved to-
ward the BOEs recently re-
vised 4.5% estimate of the
rate that ignites inflation,
wage data provide leeway.
For investors, the wage
picture appeared to matter
more than the decline in un-
employment, with the latter
traditionally a lagging indi-
cator. Sterling and gilt yields
ticked lower after the data.
The U.K. government may
be painting a picture of the
opportunity springing from
Brexit. But reading too much
into the economys apparent
strength raises the risk of
complacency; the Brexit pro-
cess has yet to start in real-
ity. Markets are sending a
different signal: They are
rightly worrying about the
challenges the U.K. faces.
Richard Barley
The Peoples Bank of China is concerned about asset bubbles.
signal a shift in priorities for
Chinas inward-looking market
players.
Local investors used to
only pay attention to domestic
factors, said Ken Hu, chief in-
vestment officer for Asia-Pa-
cific fixed income at Invesco in
Hong Kong. Now, theyve wo-
ken up and suddenly realize
they need to pay attention to
U.S. monetary policy.
The impact of tighter mon-
etary conditions inside China
is already evident in the do-
mestic bond market. In early
February, when China raised
key short-term borrowing
rates, the yield on Chinas
benchmark 10-year govern-
ment bond surged to 3.486%,
its highest in a year and a half,
according to Thomson Reu-
ters.
As bond yields rise it be-
comes more costly for Chinese
companies to borrow at home.
Some are currently finding it
cheaper to raise debt outside
China, denominated in U.S.
dollars.
Chinese companies have
raised $16.7 billion offshore so
far this year, up 8% from the
fourth quarter of 2016, accord-
ing to Dealogic. That compares
with $23.5 billion of debt is-
sued inside China, down about
80% from the prior quarter.
HEARD ON THE STREET
Zara Outperforms H&Mfor Now
How can two chains as
similar as H&M and Zara
which both sell affordable
fashion globally, but with a
geographical bias toward Eu-
ropeperform so differ-
ently? Financial data dont
come with ready explana-
tions, but it may be a good
time to bet that the compa-
nies fortunes reconverge.
Zaras parent group Indi-
tex on Wednesday reported
same-store sales growth of
10% for the 12 months
through January, even after
8.5% growth in the previous
year. The growth rate shows
little sign of slackening into
the current period. Mean-
while, H&M said February
sales were up 3% year over
year, adjusting for the leap
year, even though it finished
the month with 11% more
stores.
One explanation for this
divergence is e-commerce.
Inditexs faster growth sug-
gests that its more central-
ized distribution model
works better for the complex
logistics of home delivery
Generic Drugmakers Can Live With a Faster-Moving FDA
Rather than a bonanza, a
faster U.S. Food and Drug
Administration would be a
double-edged sword for bat-
tered generic-drug stocks.
Fortunately, there are some
glimmers of hope for inves-
tors in the sector.
Scott Gottlieb, the Trump
Administrations pick to run
the FDA, has been vocal in
his belief that government
policy is somewhat culpable
for high prices of old drugs
that dont have enough com-
petition. He wrote in The
Wall Street Journal last year
that the rising costs and
complexity of filing a generic
drug application with the
FDA has helped prevent new
competition for certain drugs
from coming online.
Simplifying the application
MARKETS
Xinhu Zhongbao Co., a
Hangzhou-based property de-
veloper, sold its maiden $700
million dollar bond in late
February. The three-year bond,
issued via the companys spe-
cial purpose vehicle Xinhu
(BVI) Holding Co., was priced
with a coupon of 6%. That
compares with a 5 billion yuan
($786 million) four-year bond
it issued inside China in Octo-
ber 2015 with a coupon of
6.99%.
The company definitely
got a good deal in the dollar
bond market this time, said a
senior bond underwriting ex-
ecutive at a Chinese broker-
age. If it issued a similar
bond in the domestic market
around this time, the coupon
rate would be close to 7%.
Xinhu Zhongbao couldnt
immediately be reached for
comment.
A big reason for the drop-
off in Chinas domestic bond
market is an official crack-
down on financing to the
property sector. On Tuesday,
Chinese property developer
Guorui Properties Ltd. issued
its first U.S. dollar bond, a
$300 million, three-year bond
with a coupon of 7%, to refi-
nance existing debt.
The pressure on Chinas
central bank to raise interest
FINANCIAL ANALYSIS & COMMENTARY
Cheap Clothes
Forward price/earnings ratios
35 times
Inditex
30
25
20
H&M
15
2012 13 14 15 16
Sources: FactSet; Bloomberg News (photo)
THE WALL STREET JOURNAL.
and returns than H&Ms
more store-based approach.
Another is fashionability:
Inditexs supply chain is set
up to respond rapidly to cus-
tomers purchase patterns,
allowing the company to stay
on trend and sell more items
without resorting to the dis-
counts that have eroded
H&Ms margins in recent
years.
Finally, Zara stores are
Gathering Steam
Generic-drug approvals by the
Food and Drug Administration
600
400
200
0 FDA approved more than 600
2002 04 06 08 10 12 14 16
Source: RBC Capital Markets
THE WALL STREET JOURNAL.
process would be good news
for patients and payers. Such
a policy would help push
drug prices generally lower
likely reducing the incidences
of now-familiar exponential
price increases on older
drugs that lack sufficient
Feast to Famine
Chinese rms onshore bond
issuance has dried up this year
as borrowing costs rise.
$200 billion
150
ZHANG PENG/LIGHTROCKET/GETTY IMAGES
100
50
0 MARKETS
2015 16 17*
*Year to date
Source: Dealogic
THE WALL STREET JOURNAL.
rates comes as officials are
trying to strike a balance be-
tween tamping down on exces-
sive credit while sustaining
growth at around Beijings
6.5% target.
Chinese officials started to
raise short-term borrowing
costs last year, aiming to make
it more expensive for inves-
tors to obtain cash to plow
into investments from bonds
to commodities.
Regulators have made some
progress. Banks now do
around 65% of their borrowing
in overnight markets, down
from 90% last summer, ac-
cording to data from BNP
Paribas. That suggests short-
term lending for market spec-
ulation may have fallen.
But while the amount of le-
verage in Chinas financial
markets has decreased, the
broader economy remains
heavily reliant on debt. Chinas
total corporate debt stood at
nearly 150% of GDP at the end
of last September, up from
90% in 2008, according to J.P.
Morgan.
Financial market leverage
is a problem that can be re-
solved in months, said Sh-
uang Ding, chief China econo-
mist at Standard Chartered in
Hong Kong. The leverage in
the economy is unlikely to be
resolved in years.
17
The caption text goes here.
More text to follow
typically only in the largest
shopping hubs. H&Ms ag-
gressive store-opening pro-
gram has saturated some big
markets, such as Germany
and the U.K.
Yet it is hard to see H&Ms
underperformance continu-
ing indefinitely. Management
is plowing resources into e-
commerce, and in January fi-
nally replaced its old store-
growth target in favor of a
competition. Welcoming a
lighter regulatory touch, the
Association for Accessible
Medicines, a generic drug in-
dustry trade group, has indi-
cated its support for Dr.
Gottliebs nomination.
Despite the industrys wel-
come, a speedier FDA also
presents a risk to pricing
power on existing drugs. The
new generic applications last ranging federal investigation
year, according to analysts at
RBC Capital Markets, a 15-
year high. Under a swifter
FDA, that approval rate could
grow further still; roughly
4,000 applications are either
pending with the FDA or
have been sent back to com-
panies after an initial denial.
That would seem to bode
poorly for generic drug
THE WALL STREET JOURNAL.
After Rate Decision
BY RIVA GOLD Many have viewed rising rates
AND AARON KURILOFF as a sign of economic
strength, amid fresh hopes for
U.S. stocks extended gains tax cuts and increased govern-
while bond yields and the dollar ment spending under the
fell after the Federal Reserve Trump administration.
decided to raise interest rates. The yield on the benchmark
The Dow Jones Industrial 10-year U.S. Treasury note fell
Average rose 112.73 points, or to 2.500%, from 2.595% Tues-
0.5%, to 20950.10. The S&P day, with some analysts saying
500 added 0.8%, and Nasdaq the Feds policy statement of-
Composite fered a cautious tone toward
WEDNESDAYS rose 0.7%. the pace of rate increases.
In Eu- Yields move inversely to prices.
rope, the The Fed has pretty well
Stoxx Eu- telegraphed ahead of time
rope 600 rose 0.4% to 375.10, theyd be pushing for a rate
led by energy and basic-re- rise here, acknowledging the
sources companies, as voters in labor market has been quite
the Netherlands headed to the strong and inflation has been
polls in a general election seen ticking up to their goal, said
by some as a gauge of populist Tony Bedikian, head of global
sentiment in Europe. markets for Citizens Bank.
In the U.S., stocks gains Remarks by central-bank
were broad, with all but one of officials in the weeks leading
the S&P 500 sectors up after up to the Fed meeting largely
Fed officials indicated they still centered on how the case for
expect to raise short-term inter- raising rates had become more
est rates three times this year. compelling in light of eco-
With investors already antici- nomic strength. That had
pating Wednesdays rise, several sparked concern among some
said they were analyzing the investors who worried the Fed
central banks plans for future might be more aggressive and
rate increases, its assessment of raise rates four times in 2017.
the economy and any hints A recovery in oil prices
about its balance-sheet plans. spurred some of Wednesdays
Stock investors had been gains after declines in crude
calm in the lead-up to the futures weighed on stocks in
meeting, even as ultralow in- recent sessions. Oil rose 2.4%
terest rates have underpinned to $48.86 a barrel after data
stock markets in recent years. showed a reduction in U.S.
stockpiles.
Shares of energy companies
in the S&P 500 rose 2.2%,
aided by a 6.5% climb from
Southwestern Energy by late
afternoon in New York.
The WSJ Dollar Index fell
1.2% as European currencies
CHUCK MYERS/TNS/ZUMA PRESS
recovered from a weak session
on Tuesday. The euro was up
1.2% at $1.0732, while the
pound rose 1.1% to $1.2294.
Earlier, Japans Nikkei Stock
Average fell 0.2%, and Hong
Kongs Hang Seng Index lost
0.1%. Australian shares added
U.S. Treasury building. The 10- 0.3%, however, boosted by a
year notes yield slid to 2.500%. climb in mining companies.
WSJ.com/Heard
OVERHEARD
sales-growth one. Poor judg- Did they just love it for its
ment of fashion trends isnt
usually a long-term problem.
Meanwhile, Inditex isnt
money?
After Intel said it would
plunk down $15.3 billion of its
immune to the sectors chal- cash pile on self-driving car
lenges, notably currency. Dol- technology company Mobil-
lar-priced cotton is the cru- eye, the chip maker lost a
cial raw material for clothing couple of its biggest fans on
brands, making the strong Wall Street.
greenback a problem for Analysts for Jefferies and
those that make sales in eu- Credit Suisse have down-
ros or, worse, sterling. graded the stock from buy
The strong dollar is a to neutral despite having
problem for H&M, too. The among the highest target
difference is that expecta- prices on the company.
tions are lower: H&M shares John Pitzer of Credit Su-
fell 5% in morning trading. isse says he likes the strate-
They now trade on a forward gic rationale behind the Mobi-
earnings multiple of 18 leye move but notes that
times, compared with 26 clients just arent comfortable
times for Inditex stock and a with a long-term bet like au-
five-year average of 22 tonomous vehicles.
times. Mark Lipacis of Jefferies
Crucially, they are under- was even more concerned,
pinned by a dividend yield of noting that the companys re-
4.2%. Performance wont im- cent string of acquisitions
mediately improve, but long- could be a signal of a broader
term value investors should market shift away from In-
do nicely buying at todays tels main area of strength in
level and waiting out the the x86 computing standard.
turnaround. Selling H&M is For these gentlemen, cash is
so last season. king.
Stephen Wilmot
stocks. Large manufacturers multiple competitors. A less-
like Teva Pharmaceuticals In- crowded field should help di-
ternational, Mylan and Per- versified companies endure a
rigo have lost more than 50% tough pricing environment.
of their value in the past two In addition, generic drug
years amid greater deflation businesses are cyclical and
of generic drug prices than depend in part on key new
analysts had expected. Faster branded drugs losing patent
approvals conceivably could exclusivity. New opportuni-
exacerbate that dynamic. ties in biosimilarssimilar
Other problems, such as too versions of complex biologic
much leverage and a wide- drugs that tend to carry
much higher prices than tra-
into possible drug-price col- ditional medicationsfigure
lusion, also have weighed on to give the sector a boost in
the sector. coming years.
But there is good news for It will take some time for
investors too: Recent consoli- the sector to emerge from its
dation in the sector leaves funk, and a speedier FDA
companies better equipped could postpone a share-price
to handle new competition. revival. But investors with
At Mylan, for instance, the enough patience could make
majority of products the the most of a challenging sit-
company offers already face uation. Charley Grant