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Romanian Demonstrators Show Their Colors

Flynn’s
What’s Position
News Grows
Business & Finance

nvestors are taking a

Tenuous
I sober look at Snap
ahead of its IPO pitch. WASHINGTON—The White
Among their concerns are House is reviewing whether to
a slowdown in daily user retain National Security Adviser
growth and competition Mike Flynn amid a furor over
from Facebook. A1 his contacts with Russian offi-
cials before President Donald
 Verizon will start sell-
Trump took office, an adminis-
ing unlimited-data plans
tration official said Sunday.
on Monday for the first
time since 2011, a sign of
intense competition. B1 By Carol E. Lee,
Shane Harris
VADIM GHIRDA/ASSOCIATED PRESS

 Cyberattacks in Poland and Peter Nicholas

appear to be part of a global
effort targeting banks, hack- Mr. Flynn has apologized to
ing that shares traits with White House colleagues over
the 2014 Sony attack. B4 the episode, which has created
a rift with Vice President Mike
 The Dow ETF has pulled
Pence and diverted attention
in $2.6 billion in new as-
from the administration’s mes-
sets so far this year, more
sage to Mr. Flynn’s own deal-
than any other U.S. stock
FLASH RALLY: Antigovernment protesters customize the flashes of their mobile phones to mimic Romania’s flag in Bucharest on Sunday. ings, the official said. “He’s
exchange-traded fund. B1
It was the 13th consecutive day a crowd had demanded the government’s resignation over changes to anticorruption legislation. A9 apologized to everyone,” the of-
 The U.S. energy sector, ficial said of Mr. Flynn.
the market’s best-performing Mr. Trump’s views toward

Trump Faces Missile Test

in 2016, has cooled this year, the matter aren’t clear. In re-
due in part to overly optimis- cent days, he has privately told
tic crude-price forecasts. B10 people the controversy sur-
rounding Mr. Flynn is unwel-
 Japanese firms are rais-
come, after he told reporters on
ing their profit forecasts as
Friday he would “look into” the
a weaker yen helps exports,
but many are wary about White House response By Peter Nicholas in
fenses and tough new cials consider a promising con- disclosures.
sanctions. A senior adminis- versation between Mr. Trump But Mr. Trump also has said
Trump’s trade policies. B3 to North Korea launch West Palm Beach, Fla., tration official said the White and President Xi Jinping of he has confidence in Mr. Flynn
Carol E. Lee in
 Swiss voters rejected a over weekend could Washington and
House is unlikely to use au- China, which could prove a and wants to “keep moving
corporate-tax-overhaul plan thority it has to go after Chi- crucial partner in dealing with forward,” a person familiar
backed by the government set template Jonathan Cheng in nese companies that do busi- the threat from North Korea, with his thinking said. Close
due to concerns it was too Seoul ness with North Korea’s among other issues. Please see FLYNN page A4
generous to business. B3 President Donald Trump is weapons sector. The missile landed in the
facing calls for a show of a foreign leader and an awk- The launch was a potent Sea of Japan on Sunday in  Travel ban hits doctor
 Abby Joseph Cohen,
strength toward North Korea ward balancing act with China. and troubling reminder of Asia while Mr. Trump was programs...................................... A3
the longtime Goldman
after Pyongyang’s weekend U.S. lawmakers called for Pyongyang’s nuclear weapons Please see LAUNCH page A6  Mnuchin poised to secure
Sachs strategist known as
launch of a ballistic missile, military exercises with re- ambitions as well as the limits confirmation............................... A4
the “Prophet of Wall
posing the first major chal- gional allies, a rapid deploy- of U.S. options. It came days  Trump backs off some early  Trump tests technology
Street,” is retiring. B7
lenge to his administration by ment of regional missile de- after what White House offi- foreign-policy stances........... A6 industry......................................... B4
World-Wide

 The White House is re-

viewing whether to retain
SPEED LIMITS AWAIT Gusher Turns to Trickle Performance

National Security Adviser

Flynn amid a furor over his
contacts with Russia be-
INFRASTRUCTURE SPREE 25%

20
S&P 500
energy
fore Trump took office. A1 sector
 Trump is facing calls for 15
a show of strength toward Environmental, historical and other rules will likely delay Trump wish list
North Korea after its missile 10
launch, in the first major
BY DAVID HARRISON “I am totally for the national and state- S&P 500
challenge to his administra-
wide environmental laws,” said Hasan 5
tion by a foreign leader. A1
Almost sixty years ago, officials at Califor- Ikhrata, executive director of the Southern
 Thousands were evacu- nia’s transportation department unveiled a California Association of Governments, who 0
ated in Northern Califor- plan to build a six-mile freeway extension in supports the extension project. Still, “some-
nia for fear of flooding as Los Angeles County. times it gets to be ridiculous.”
a reservoir spillway ap- They are still working on it. Many lawmakers and economists agree –5
peared close to failing. A3 During the 1960s, the road plan appeared with President Donald Trump that America 2016 2017
Through Feb. 10
on track. In the 1970s, new environmental needs to fix a backlog of infrastructure
 Sessions has signaled Source: FactSet THE WALL STREET JOURNAL.
laws required voluminous studies and needs, which the Transportation Department
that the Justice Department
sparked legal fights between the neighboring pegs at $926 billion. There’s a similar agree- SLIPPERY: U.S. energy stocks, which outperformed the market in
may back away from an
towns of South Pasadena and Alhambra, ment that conservation and preservation 2016, have cooled, even as oil prices are holding their gains. B10
Obama initiative on trans-
which lie along its intended path. The project laws have helped mitigate damage on neigh-
gender bathroom use. A3
remains under review. Please see ROADS page A10
 A Mexican leftist is wid-
ening his lead in polls
ahead of next year’s presi-
dential election, helped by
an anti-Trump backlash. A6
Bollywood’s Answer to India’s INSIDE
 The Senate is expected Cash Mess: Boycott Money
to confirm Mnuchin as
i i i
Treasury secretary as soon
ASSOCIATED PRESS

as Monday night. A4
To some derision, stars are trying to do
GETTY IMAGES

 A top Trump adviser

repeated unsubstantiated their part to tackle bill shortage
and widely discredited
claims of voter fraud. A4
 Trump and Trudeau are
BY ERIC BELLMAN new economy,” goes the oath.
“We pledge to use less cash to
ADELE THE BIGGEST YALE’S
expected to discuss Nafta
during a visit Monday by
NEW DELHI—The commer- make it available to those more SWEEPS SURPRISES IN INCONSISTENT
the Canadian leader. A8
cial loops all day long on select needy in our villages.”
television channels throughout Since late last year, when In-
GRAMMYS RETIREMENT NAME-DROPPING
 Died: Al Jarreau, 76, India. In it, dia’s govern-
Grammy-winning singer. A2 some of Bolly- ment voided LIFE & ARTS, A11 JOURNAL REPORT, R1 OPINION, A17
wood’s most its large-de-
CONTENTS Opinion.............. A15-17 glamorous nomination

Investors Seem Skeptical of Snap

Business News.. B3,7 Outlook....................... A2
Crossword.............. A14 Sports....................... A14 stars, looking currency notes
Heard on Street. B10 Technology............... B4 resplendent in in hopes of
Journal Report R1-10 U.S. News............. A2-4 evening wear, battling the ills
Life & Arts....... A11-13 Weather................... A14
Markets............... B9-10 World News....... A6-9
take turns in of tax evasion, BY CORRIE DRIEBUSCH Ahead of the company’s pitch have post-IPO.
front of the counterfeiting AND MAUREEN FARRELL for its initial public offering, It isn’t unusual for prospec-
camera sol- A new 2,000 rupee note and terrorism, which could value it at $25 bil- tive investors to try to find
> emnly promis- there has been Snap Inc., parent of the hot lion, investors are taking a so- faults with a company ahead of
ing to support what has be- a shortage of paper bills. The disappearing-message app ber look at the numbers. Among a deal, to evaluate their own in-
come the newest cause célèbre squeeze has been particularly Snapchat, has a lofty valuation, their concerns: a slowdown in terest or even push bankers to
among India’s elite. painful for the poor, who often hoards of coveted young users daily user growth, competitors lower the initial share price.
s Copyright 2017 Dow Jones &
They want rich people to don’t have bank accounts and and social cachet. It also has a such as Facebook Inc. and the On Snap’s side is scar-
Company. All Rights Reserved boycott money. until now have only ever been lot of Wall Street investors who implications of near-total con- city—2016 was the slowest year
“We are the soldiers of our Please see CASH page A10 aren’t buying the hype. trol that Snap’s founders will Please see SNAP page A2
 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 | Monday, February 13, 2017 THE WALL STREET JOURNAL.

U.S. NEWS
Trump’s Hard Line on Mexico Casts Shadow
P
resident Donald Mexico’s central bank has Some in Mexico’s export in- and telecommunications in-
Trump’s threats to re- Losing Currency raised interest rates six times dustries see a silver lining in dustry and successfully at-
write the North Ameri- Mexico’s peso has weakened sharply in recent years, limiting over the last year in response the fall of the peso, which has tracted billions in foreign in-
can Free Trade Agreement consumer purchasing power but making exports more competitive. to a weakening peso and con- lost 16% of its value against vestment, Mexico still faces
and build a wall at the U.S. cerns that its decline is push- the dollar since the beginning significant barriers and risks
southern border are causing a 10 How many Mexican pesos ing inflation higher. Econo- of May. Any border tax im- associated with relying more
reckoning for the Mexican U.S. dollar
one U.S. dollar buys*
buys mists at PNC Financial posed by the U.S., the thinking on its domestic market, in-
economy before a single ce- 12 Services Group warn that a goes, will be met with a deval- cluding high rates of orga-
ment block has been set or recession is likely in 2017. uation that will be more than nized crime, weak rule of law,
trade negotia- 14 Angst over the longer term enough to keep Mexican a lackluster education system
THE tion scheduled. is tied to Mexico’s dependence goods competitive. and political corruption.
16 June 2015: Mr. Trump announces
OUTLOOK Mexican out- on exports, which account for But the weak currency has

O
candidacy for the presidency
ROBBIE put growth is 18 a third of its economic activ- a downside: Annual inflation thers, including many
WHELAN projected to Dec. 2015: Fed raises interest rates ity. Some 80% of exports go to jumped to 4.72% last month, of Mexico’s top indus-
slow to a near 20 for first time in a decade the U.S. the highest in more than four trialists, believe the
halt in 2017, in- Nov. 2016: Mr. Trump is elected president “Any economy, in order to years. Rising inflation is likely country’s best chance is to di-
ward investment has tumbled, 22 be healthy, has to be based on to prompt the central bank to vert Mr. Trump’s attention to
the peso is down, interest Dec. 2016: Fed raises interest rates two engines of growth: the keep raising interest rates, China, with which the U.S. ran
rates and inflation are rising, 24 domestic market and the ex- which crimps domestic de- a trade deficit of $347 billion
and the nation’s business and 2011 ’12 ’13 ’14 ’15 ’16 ternal market,” said Economy mand. in goods alone last year.
political leaders are asking *Scale inverted to show weakening peso Minister Ildefonso Guajardo in One school of thought Eduardo Garza T. Fernán-
whether they need a new eco- Source:Tullett Prebon THE WALL STREET JOURNAL. an interview Tuesday in his holds that Mr. Trump’s pro- dez, president of Grupo Frisa
nomic model less dependent Mexico City office. “What do tectionist stance might be the Industrias, a steel maker that
upon their northern neighbor. mism among businesses. Cit- U.S. election. Since 1999, the you do to strengthen the ex- reality check Mexico needs to exported roughly half of its
Before the U.S. presidential ibanamex predicts gross fixed U.S. has accounted for 46% of ternal engine? You have to di- turn inward and invest in bol- $500 million in sales last year
election in November, Citiban- investment in Mexico will all foreign direct investment versify trade.” stering the domestic economy. to the U.S., says Mexican pro-
amex forecast that Mexico’s contract 0.8% this year, after in Mexico, according to Mex- Nafta’s critics south of the ducers should source more

T
gross domestic product would rising 4.6% in 2015. ico’s Economy Ministry. o that end, Mexico’s border point to the fact that from North America, rather
grow 2.3% in 2017. Since In the first nine months of “The key word for 2017 is leaders have recently Mexico’s annual GDP growth than Asia, to reduce the defi-
then the bank has twice low- 2016, foreign direct invest- uncertainty,” said Sergio sped up negotiations to since the deal took effect has cit and sidestep Mr. Trump’s
ered growth expectations, ment fell 24% compared with Luna, chief economist for Cit- expand trade deals with the averaged 2.6%, compared with ire. The idea is central to
first to 1.8% and more re- a year earlier, according to ibanamex. “Manufacturers are European Union and opened 4.2% during the previous two Mexico’s approach to renego-
cently to a paltry 1.2%, in part the Bank of Mexico, as busi- going to prefer to have more talks with Argentina and Bra- decades. Poverty levels have tiating Nafta. “Things are go-
because of uncertainty over nesses that rely on cross-bor- clarity before they make any zil about buying corn, wheat remained roughly the same as ing to be more expensive for
trade and investment rela- der commerce grew spooked investments.” and soybeans to ease depen- before the free-trade era. Mexican companies,” Mr.
tions with the U.S. by campaign criticism of free- Another drag on growth dence on U.S. grain—advanta- And despite recent reforms Garza said, “but there has to
Surveys show rising pessi- trade deals even before the has been higher interest rates: geous in case of a trade war. that opened up the energy be more integration.”

ECONOMIC CALENDAR
Federal Reserve Chairwoman
Janet Yellen will present the
Fed’s semiannual monetary re-
port to the new Congress this
week, while data on inflation, re-
tail sales, industrial production
and housing will provide clues on
how the U.S. economy is re-
sponding to the change in Wash-
ington. Also due are figures on
U.K. unemployment and minutes
from the European Central Bank.
MONDAY: The Senate faces a
busy week as it considers eco-
nomic policy makers tapped by
President Donald Trump to join
his administration. A confirma-
tion vote for Steven Mnuchin as
Treasury secretary is set for
Monday, while a committee
hearing for Labor Secretary nom-
inee Andrew Puzder and a con-
firmation vote for Wilbur Ross to
NASA
head the Commerce Department
could come later in the week.
TUESDAY: Ms. Yellen begins
two days of testimony in Con-
gress about monetary policy. She
could provide signals as to
whether the Fed is seriously
considering a March interest-
rate increase and whether offi-
cials’ economic outlook is set to
improve. She also could face
tough questions over the Fed’s
regulatory regime, as Republi-
cans in Congress and the new
administration want to reign in
financial regulation.
WEDNESDAY: U.S. reports on
January retail sales, consumer
prices and industrial production
are due to be released. Econo-
mists’ expectations are some-
what tempered. Both retail sales
and industrial production rose
U.S. WATCH
sharply in December, and econo-
mists are expecting industrial
production to be flat and retail
sales to be up just 0.1% in Janu-
ary, largely as payback for the
big increases the prior month.
Also Wednesday, the U.K.’s
labor-market report could show
whether economic momentum
there continues. The last report
showed unemployment at a
more than 10-year low.
THURSDAY: In the U.S., hous-
ing starts are expected to have
been buffeted by competing
forces—stronger sentiment on
the one hand, but higher interest
rates on the other. On balance,
most economists are expecting
housing starts to be slightly
down. And the European Central
Bank releases accounts of its
Jan. 18-19 policy meeting.
SNAP
Continued from Page One
for U.S.-listed tech companies
since 2009 in terms of number
of deals and dollar volume, ac-
cording to Dealogic. That factor
alone could help support the
shares in their debut.
Even Facebook, whose shares
have soared in recent years,
faced skepticism at the start. Its
shares fell below their offering
price soon after they began
trading and only moved above it
more than a year later.
Snap’s bankers now have to
persuade investors they
wouldn’t be buying into a fad.
The roadshow could start as
soon as Friday.
Nearly a dozen fund manag-
ers and analysts across the U.S.,
including several who focus spe-
cifically on tech, say they found
Snap’s regulatory filing, made
public on Feb. 2, frustrating and
disappointing.
“It’s not a Facebook, nor do I
think it’ll ever be a Facebook,”
said Nabil Elsheshai, senior eq-
uity analyst at Thrivent Finan-
cial, who is considering whether
to recommend that the mutual-
fund firm invest in the IPO.
“Their strategy is going to have
to fit that knowledge.”
The skepticism is notewor-
thy, considering the fanfare that
has surrounded highly valued
tech startups in the past, as well
as how long it has been since
there was one of this size.
Snap in its IPO is planning to
seek a target valuation of be-
tween $20 billion and $25 bil-
lion, The Wall Street Journal
has reported, which at the high
end would make it the largest
U.S.-listed tech offering since
Alibaba Group Holding Ltd.
Will Snap Pop?
Snap’s slowing user growth has some investors wondering
if its post-IPO future will mirror Facebook or Twitter.
4Q 2016
Snapchat daily active users, quarterly average
158 million
150 million users
125
100
75
50
25
0
2014 ’15 ’16
Performance since IPO
Facebook Twitter
250%
200
150
S&P 500
100
(Since May 17, 2012)
50
0
–50
2012 ’13 ’14 ’15 ’16 ’17
Sources: the company (users); FactSet (stocks);
WSJ Market Data Group (index) THE WALL STREET JOURNAL.
what they consider to be a so- Stories on Instagram—direct
cial network. Snap defines the competition to a Snapchat fea-
camera as the screen that is the ture which lets users create a
starting point for most products series of videos and images that
on smartphones. disappear after 24 hours. Five
Reading further down the months after the launch, the
document didn’t mollify inves- new Instagram feature reached
tors, some said. 150 million daily active users,
Many are concerned about Facebook Chief Executive Mark
slowing user growth, particu- Zuckerberg said on an early
larly since the rapid rise in pop- February earnings call.
ularity of the Snapchat social- Mr. Meeks said he also
messaging platform has been a wanted Snap to address an ele-
top justification for the com- phant in the room. “If daily ac-
pany’s valuation. tive users flatten, that’s what
In the most recent quarter, took Twitter down,” he said.
Snap had 158 million daily ac- When Twitter debuted, the
tive users on average, according number of monthly active users
to the company’s filing. That had grown 6%, 7% and 10% in
figure rose by 3.3% from 153 the prior three quarters. In the

priced its IPO in 2014, according million users for the quarter 12 months through Sept. 30,
White House advisers are considering a manned mission to refurbish the Hubble Space Telescope. to Dealogic. ended Sept. 30. Daily active us- Twitter’s user growth has fluc-
People close to Snap have re- ers grew by 7% in the third tuated between zero and 1.7%.
HIGHER EDUCATION SPACE White House hasn’t nominated a iterated their confidence that quarter from an average 143 Twitter shares fell 12% after the
new head for the space agency. they will be able to hit their million daily active users in the company reported its tenth con-
Yale Renames College Hubble Telescope —Andy Pasztor range. second quarter. secutive quarter of slowing rev-
For Computer Pioneer Mission Considered Should Snap stumble in its “The argument here is, enue growth on Thursday, al-
MUSIC debut, bankers, lawyers and in- ‘We’re going to build this huge though the company said its
Yale University will rename President Donald Trump’s ad- vestors say that could deter audience and monetization will daily user base jumped. Twitter
Calhoun College, a residential visers are considering an indus- Al Jarreau, Jazz other tech companies from follow,’” said Rett Wallace, chief shares closed Friday at $15.58 a
college named for an ardent try proposal to send a manned Singer, Dies at 76 moving forward with IPOs. executive at Triton Research share, down 40% from their IPO
supporter of slavery, to honor spacecraft to repair and upgrade There were at least 154 private LLC, whose firm collects and price of $26 apiece.
the late computer scientist the Hubble Space Telescope, said Jazz singer Al Jarreau died in companies valued by venture- analyzes data on companies. He Though investors said they
Grace Murray Hopper. people familiar with the matter. Los Angeles Sunday, just days capital firms at $1 billion or added that before looking at were focused on the company’s
University trustees voted Fri- The talks are preliminary, no after announcing his retirement more as of January, according Snap’s prospectus, many inves- financials and growth pros-
day to reverse a decision made specific plans have been drafted from touring. He was 76. to Dow Jones VentureSource, tors were hoping for answers pects, an unusual ownership
last year to keep the name. John and those currently overseeing The Milwaukee native won including ride-hailing company about how to make money off structure also hangs over the
C. Calhoun was a Yale graduate, the National Aeronautics and seven Grammys over his 50-year Uber Technologies Inc. and Snapchat’s growing user base. company’s roadshow.
senator, secretary of war, secre- Space Administration could veto career. His biggest single was room-rental website Airbnb Inc. Now there is a question about Snap will issue nonvoting
tary of state and vice president. the concept. 1981’s “We’re in This Love To- Snap put off some prospec- whether Snap can build that shares in its IPO, which the
Ms. Hopper, also a Yale grad- An administration representa- gether,” and he sang the theme tive investors in the first line of huge audience, he said. company said was unprece-
uate, helped develop the com- tive declined to comment, except to TV’s “Moonlighting.” its IPO filing: “Snap Inc. is a Snap has attracted advertis- dented for a U.S. debut. Co-
puter language COBOL. She was to say that transition officials He is one of the few artists camera company.” ers in part because of its cov- founders Evan Spiegel and
awarded a posthumous Presi- lacked power to approve new to have won Grammys in three Fund managers said they eted user base of teens and Bobby Murphy currently hold
dential Medal of Freedom by projects and “it will be the re- separate categories—jazz, pop found the description surprising young adults. The majority of about 89% of the voting shares.
former President Barack Obama. sponsibility of the NASA admin- and R&B. because it implies Snap is a Snapchat’s users are 18 to 34 If either founder dies or is inca-
—Melissa Korn istrator to set NASA policy.” The —Associated Press hardware maker, rather than years old, according to the com- pacitated, according to the pro-
pany’s filing. spectus, the other could control
“No matter how cool Snap’s nearly all the voting power of
THE WALL STREET JOURNAL (USPS 664-880)
(Eastern Edition ISSN 0099-9660) (Central Edition ISSN 1092-0935)
(Western Edition ISSN 0193-2241)
CORRECTIONS  AMPLIFICATIONS users are, the advertisers will the stock.
go black and white and look at Some investors said they
Editorial and publication headquarters: 1211 Avenue of the Americas, New York, N.Y. 10036
Published daily except Sundays and general legal holidays. the numbers,” said Paul Meeks, were put off by the structure,
Periodicals postage paid at New York, N.Y., and other mailing offices. Timothy Piazza, the Penn The airport codes for New chief investment officer of Sloy, particularly those who said they
POSTMASTER: Send address changes to The Wall Street Journal, 200 Burnett Rd., Chicopee, MA 01020. State student who died after Jersey’s Teterboro airport and Dahl & Holst. don’t know the co-founders well
All Advertising published in The Wall Street Journal is subject to the applicable rate card, copies of
which are available from the Advertising Services Department, Dow Jones & Co. Inc., 1155 Avenue of a fall down the stairs at his Paris Le Bourget are TEB and Mr. Meeks said he would enough to entrust them with so
the Americas, New York, N.Y. 10036. The Journal reserves the right not to accept an advertiser’s order. fraternity house, was a mem- LBG, respectively. The Short consider the Snap IPO depend- much power. These investors
Only publication of an advertisement shall constitute final acceptance of the advertiser’s order.
Letters to the Editor: Fax: 212-416-2891; email: wsj.ltrs@wsj.com ber of Beta Theta Pi. A U.S. Answer chart in the Business & ing on the price, and wanted to said they hoped the company’s
News article Saturday incor- Finance section on Thursday in- hear more about how Snap marketing roadshow would pro-
NEED ASSISTANCE WITH YOUR SUBSCRIPTION? rectly gave the name of the correctly gave them as TAB and would deal with building up vide an opportunity to warm up
CONTACT CUSTOMER SUPPORT. fraternity as Tau Kappa Epsi- LGB, and incorrectly said Teter- daily active users and compet- to the idea of concentrated
By web: customercenter.wsj.com lon. boro airport was in New York. ing with Facebook. power.
By email: wsjsupport@wsj.com Snap’s slowdown in user “When I see things like that,
By phone: 1-800-JOURNAL (1-800-568-7625) growth coincided with rival it doesn’t get me too jazzed,”
Readers can alert The Wall Street Journal to any errors in news articles by
Or by live chat at wsj.com/livechat emailing wsjcontact@wsj.com or by calling 888-410-2667. Facebook’s launch in August of Mr. Meeks said.
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. * * * * * * Monday, February 13, 2017 | A3

U.S. NEWS

©T&CO. 2017
Ban Ails Doctor Programs
Hospitals play a Security and State departments
to grant work-visa waivers for
guessing game as foreign doctors under consider-
foreign physicians ation for residency programs Love is...

JENNIE MATTHEW/AGENCE FRANCE-PRESSE/GETTY IMAGES

and affected by the ban.
seek U.S. training slots A spokeswoman for Home-
land Security said the agency A SMILE THAT
BY MELANIE EVANS is adhering to a court order
temporarily halting enforce- LIGHTS UP
President Donald Trump’s
travel ban has thrown U.S. hos-
ment of the travel ban. A State
Department official said the THE ROOM
pitals and medical schools into agency has resumed process-
TIFFANY T COLLECTION
confusion ahead of a deadline ing visas in response to the
to select fledgling doctors for court ruling.
highly competitive training Some residency officials
spots known as residencies. said the travel ban won’t alter
Roughly 1,000 doctors who their rankings, though they say
applied for U.S. residency slots their programs could be left
this year are from the seven short-staffed if one of their
countries included in the Kamal Fadlalla of Sudan, center, a medical resident, returned to the picks is denied entry to the U.S.
White House’s travel ban, out U.S. Feb. 5 after his trip had been blocked by Mr. Trump’s travel ban. Disrupting the pipeline of
of a total of 56,530 applicants, foreign medical graduates
according to the Association tive order on immigration, on proceed on its immigration could make it harder to find
of American Medical Colleges, hold after a federal appeals policy following the appeals doctors in coming years in U.S.
which manages the application court ruling last week, leaves court setback. The executive communities where physicians
process. In recent years, about them with a difficult choice: order barred travel to the U.S. are already scarce. Interna-
14% of the more than 20,000 forgo strong candidates from from seven predominantly tional doctors can apply to re-
doctors who join U.S. training countries included in the ban Muslim countries—Iran, Iraq, main in the U.S. if they agree to
programs aren’t U.S. citizens. or risk vacancies should rap- Libya, Somalia, Sudan, Syria work in high-need communities
The final, pressure-filled idly shifting U.S. immigration and Yemen—for at least 90 for three years, a program that
decisions about who will train policies bar foreign doctors days. The administration said “has worked exceptionally well
where begin this month, when from entering the country. the ban was made out of na- for American communities,”
doctors and residency pro- At Cook County Health & tional-security considerations. said Dr. Darrell Kirch, president
grams rank each other in or- Hospitals System in Chicago, Hospital officials said they and CEO of the AAMC.
der of preference. The rank- “We try to be relatively blind took little comfort from the Sudanese physician Mo-
ings, due Feb. 22, are fed to the nation of origin or the court ruling because their hamed Osman, who has applied
through a computer algorithm visa status of an applicant” for ranking deadline is approach- for U.S. residency programs,
800 843 3269 | TIFFANY.COM
that matches applicants with about 120 training spots open ing quickly and they don’t said he was anxious when he
hospitals. Residents are the each year, said Chief Executive know if any additional immi- learned of the executive order.
workhorses of many U.S. hos- Officer Jay Shannon. “But this gration-related executive or- “That was a very hard mo-
pitals, heavily relied upon to has added a huge layer of ders could be down the road. ment,” he said. Now he is wait-
evaluate and treat patients. complexity” to the process. The Greater New York Hos- ing to learn whether he will
Hospital officials say Mr. The White House is examin- pital Association in a letter match with a program. “I want
Trump’s late-January execu- ing several options for how to Thursday asked the Homeland to start my career,” he said.

CaliforniaReservoirRaisesConcern
BY JIM CARLTON

Authorities issued emer-

gency evacuation orders for
tens of thousands of people
living downstream from
Northern California’s Lake
Oroville late Sunday, after an
auxiliary spillway that was put
into service over the weekend
appeared in danger of failure
due to erosion.
State and local officials said
they were racing to plug a
hole that opened up in the
backup spillway Sunday, while
at the same time increasing
the amount of water being re-
leased from California’s sec-
ond-largest reservoir after it
was filled by rains and snow
that have hit the state.
WILLIAM CROYLE/CALIFORNIA DEPARTMENT OF WATER RESOURCES/ASSOCIATED PRESS

“I am hopeful that the lake

level will drop significantly in
a very timely fashion to re-
lieve pressure on the spill-
way,” Sheriff Kory Honea of
the local Butte County said
Sunday night. Sheriff Honea
ordered evacuations of parts
of Oroville and other commu-
nities along the Feather River
downstream of the big lake,
which is held back by a 770-
foot dam. The area is about 70
miles north of Sacramento.
Lake Oroville’s main, con-
crete spillway ruptured last
week as state water officials
tried to keep the lake from
overflowing, forcing them to
use the emergency spillway, a
mostly tree-covered hillside
which hadn’t been used since
the reservoir was built in the The main, concrete spillway at Northern California’s Lake Oroville ruptured last week. Officials were
1960s. worried Sunday that a backup spillway, upper left, a mostly tree-covered hillside, could also fail.

Sessions Signals Pullback in Transgender Policy

BY SARA RANDAZZO Others welcomed the move.
“I think the Obama admin-
Newly instated U.S. Attor- istration had distorted federal
ney General Jeff Sessions has law,” said Gary McCaleb, se-
shown an early sign of backing nior counsel with conserva-
away from an Obama adminis- tive advocacy group Alliance
tration initiative that directs Defending Freedom. He said
schools to allow transgender schools shouldn’t face the loss
students to use the bathrooms of federal funding if they re-
and locker rooms of the sex fuse to comply with the
with which they identify. guidelines. “It’s a matter of
JIM LOSCALZO/CNP?ZUMA PRESS

The signal came in a Friday respecting the differences be-

court filing from Justice De- tween boys and girls and pro-
partment lawyers withdrawing tecting the privacy for all stu-
a request made last year by dents.”
the Obama administration. Texas Attorney General Ken
That request came in response Paxton and a Justice Depart-
to a judge’s ruling in a lawsuit ment spokesperson couldn’t
challenging federal guidance immediately be reached for
to states on accommodating Jeff Sessions last week after being sworn in as attorney general. comment Sunday.
transgender students. In July, 10 other states
The guidance, issued by After a district court judge and that, “The parties are cur- filed a separate legal chal-
President Barack Obama last in August temporarily blocked rently considering how best to lenge to the transgender-
May, said transgender stu- the directive, Mr. Obama proceed in this appeal.” It is rights guidance. That case is
dents are protected under Ti- sought to limit the scope of unclear whether the Trump pending in Nebraska.
tle IX of the Education the court’s ruling to only apply administration will ultimately The development comes as
Amendments of 1972, a federal to those states pushing the ap- stop defending the directive. transgender-rights challenges
law that bars discrimination in peal. Doing so would mean the Gay-rights advocates said continue to embroil many
education based on sex at transgender-rights guidance the filing could be a sign of parts of the country. The U.S.
schools that accept federal would remain in effect in the things to come. “What we can Supreme Court is scheduled
money. Some states dispute rest of the country. A group of infer from it is that the De- to hear oral arguments in late
that interpretation of Title IX. 12 states and the District of partment of Justice and March in the case of Gavin
The filing, in the Fifth U.S. Columbia had sided with Mr. Trump administration are un- Grimm, a transgender high
Circuit Court of Appeals, Obama and said they wanted likely to robustly pursue rights school student whose Virginia
stems from a lawsuit filed by the directive to apply to them. for transgender people,” said school district stopped allow-
Texas and a coalition of 12 The Friday filing said the Sarah Warbelow, legal director ing him to use the male rest-
other states opposing the Justice Department is no lon- for Human Rights Campaign, room. Gavin was born female
memo. ger seeking to limit the ruling an LGBTQ-rights organization. but identifies as male.
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 | Monday, February 13, 2017
Mnuchin Poised to Secure Confirmation
The new Treasury
secretary would shape
a tax-code overhaul
and regulation revamp
BY NICK TIMIRAOS
WASHINGTON—The Senate
is expected to confirm Steven
Mnuchin as the 77th Treasury
secretary as soon as Monday
night, which would end one of
the most protracted confirma-
tion battles for the position
and place the 54-year-old fi-
nancier in a leading position
to advance President Donald
Trump’s promises to refashion
the U.S. tax code and financial
regulation.
Mr. Mnuchin has faced op-
position from Democrats for
several reasons, including his
role rehabilitating the failed
IndyMac Bank, later rebranded
OneWest Bank, by moving
thousands of defaulted mort-
gages through foreclosure.
Senators also have raised
concerns about answers he
provided the committee dur-
ing the confirmation process
pertaining to his complex fi-
nancial disclosures and his re-
cord at OneWest.
FLYNN
Continued from Page One
Trump adviser Steve Bannon
had dinner with Mr. Flynn
over the weekend, according
to another senior administra-
tion official, and Mr. Bannon’s
view is to keep him in the po-
sition but “be ready” to let
him go, the first administra-
tion official said.
Mr. Trump’s son-in-law and
senior adviser, Jared Kushner,
as of Sunday evening hadn’t yet
weighed in, the official said.
Mr. Flynn initially said that
in a conversation on Dec. 29
with the Russian ambassador,
Sergey Kislyak, he didn’t dis-
cuss sanctions imposed that
day by the outgoing Obama
administration, which were
levied in retaliation for alleged
Russian interference in the
2016 presidential election. Mr.
Flynn now concedes that he
did, administration officials
said, after transcripts of his
phone calls show as much. He
also admits he spoke with the
ambassador more than once
on Dec. 29, despite weeks of
the Trump team’s insisting it
was just one phone call, offi-
cials said.
Mr. Pence, in television in-
terviews, vouched for Mr.
Flynn, based on a private con-
versation, and he was angered
he repeated information pub-
licly that turned out to be un-
true, administration officials
said. Messrs. Pence and Flynn
spoke twice on Friday, one of-
ficial said.
If Mr. Flynn had promised
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Steven Mnuchin could be confirmed Monday as Treasury secretary.
Already, his confirmation
has faced the longest delay of
any recent Treasury secretary,
and he appears likely to win
confirmation for the position
with a historically weak mar-
gin of support, a pattern re-
flected with other high-profile
Trump nominees.
Mr. Trump was set to meet
with Mr. Mnuchin on Sunday
afternoon at his private club
in Palm Beach, Fla. With Mr.
Mnuchin not in office during
the first three weeks of the
administration, Gary Cohn, the
National Security Adviser Mike Flynn, top, followed by Steve Bannon, boarded Air Force One in West Palm Beach, Fla., on Sunday.
any easing of sanctions once
Mr. Trump took office, he may
have violated a law that pro-
hibits private citizens from en-
gaging in foreign policy, legal
experts have said. That would
mark the first instance of a
person close to Mr. Trump
found to have inappropriate
links to Russia, a subject U.S.
officials have been investigat-
ing for months.
Mr. Flynn’s calls to the Rus-
sian envoy came amid a push
by Mr. Trump more broadly to
warm U.S. ties to Moscow, a
tenet of the new administra-
tion’s foreign policy. Mr. Flynn
TM
P W L C 10 11 12
former Goldman Sachs banker
named as the director of the
White House National Eco-
nomic Council, has played an
increasingly influential role
shaping policy on tax, regula-
tion and infrastructure. Mr.
Mnuchin spent 17 years at the
New York investment bank,
leaving in 2002.
The vote will take place as
senators work to approve re-
maining Trump administration
cabinet appointees. The Sen-
ate on Monday also is ex-
pected to confirm Dr. David
has more staunchly advocated
Mr. Trump’s views than have
some of the president’s top
cabinet officials, which could
complicate any White House
decision to cut ties with the
security adviser.
A senior White House policy
adviser, Stephen Miller, de-
clined on NBC Sunday to say
whether the White House main-
tained confidence in Mr. Flynn,
a retired general, in the wake of
questions over his phone calls.
“That’s the question that I
think you should ask the presi-
dent, the question you should
ask Reince [Priebus], the chief
TopAdviser
RepeatsVote-
FraudClaims
BY REBECCA BALLHAUS
Top White House adviser
Stephen Miller repeated unsub-
stantiated and widely discred-
ited claims of voter fraud made
by President Donald Trump and
said the White House would be
examining the issue.
In a contentious interview
Sunday with ABC’s “This
Week,” host George Stephanop-
oulos asked Mr. Miller to pro-
vide evidence for claims of
fraud in New Hampshire that
Mr. Trump made in a recent
meeting with senators.
“It’s very real, it’s very seri-
ous,” Mr. Miller said, adding
that the issue was “widely
known” in New Hampshire. He
added, “This morning on this
show is not the venue for me to
lay out all the evidence.”
State election officials and
independent reviews repeatedly
have undercut suggestions of
widespread illegal voting.
Mr. Trump last month called
for an investigation into
whether U.S. elections are
tainted by fraud, following his
widely criticized assertion that
illegal ballots deprived him of a
popular-vote victory over Dem-
ocrat Hillary Clinton.
Mr. Miller sidestepped re-
peated requests by Mr. Stepha-
nopoulos for any evidence to
back up his claims, which the
president also hasn’t provided.
H T G K B F A M 1 2 3 4 5 6 7 8
U.S. NEWS
Shulkin as Mr. Trump’s secre-
tary of Veterans Affairs. Dr.
Shulkin currently serves as the
head of the VA’s health-care
system.
That would leave six more
Trump cabinet picks whose
confirmations are pending, in-
cluding Commerce Secretary-
designate Wilbur Ross, Energy
Secretary-designate Rick Perry
and Interior Secretary-desig-
JOSHUA ROBERTS/REUTERS
nate Ryan Zinke. One of the
pending nominees, Labor Sec-
retary-designate Andy Puzder,
is set to have a confirmation
hearing on Thursday.
Mr. Mnuchin cleared the
Senate Finance Committee
earlier this month after Demo-
crats boycotted the vote.
Democrats said they wanted
more information from the
nominee, though some had al-
ready announced their opposi-
tion, and Republicans subse-
quently suspended the rules to
advance his nomination with-
out any Democrats in atten-
dance.
Mr. Mnuchin has rejected
Democrats’ critiques of his re-
cord, and a spokesman has
said he has provided truthful
answers to their questions.
“Since I was first nominated
to serve as Treasury secretary,
of staff. I’m here today as a pol-
icy adviser,” Mr. Miller said.
Mr. Priebus is leading the re-
view. Some administration offi-
cials are hopeful Mr. Flynn
would resign on his own, a per-
son familiar with the matter
said. Some people close to Mr.
Trump already are speculating
on possible successors, includ-
ing retired Lt. Gen. Keith Kel-
logg, who advised Mr. Trump
during the campaign and who
is chief of staff of the National
Security Council.
U.S. intelligence services
routinely intercept and moni-
tor conversations with Russian
Court Pick Scales Back
Details of Pro Bono Work
BY BETH REINHARD
Supreme Court nominee
Neil Gorsuch has scaled back a
description of his pro bono
work while at Harvard Law
School after questions arose
about the extent of his involve-
ment with two volunteer crim-
inal-justice programs.
President Donald Trump
highlighted Judge Gorsuch’s
volunteer work when he intro-
duced him nearly two weeks
ago, saying he had “demon-
strated a commitment to serv-
ing the less fortunate” by
working in the Harvard Prison
Legal Assistance Project and
the Harvard Defenders.
The Wall Street Journal last
week raised questions about
the scope of Judge Gorsuch’s
work with the two groups, cit-
ing former students, adminis-
trators and supervising attor-
neys in the programs.
Democrats on the Senate Judi-
ciary Committee said they
would question Judge Gorsuch
about the issue.
In a questionnaire released
Saturday by the Judiciary
Committee, Judge Gorsuch
said he “participated” in the
two programs. In a 2006 Sen-
ate form as a federal appeals
court nominee, he was more
specific: He cited those two
programs and said he repre-
sented “defendants in criminal
9 O I X X ****** THE WALL STREET JOURNAL.
I have been maligned as taking ment, bank regulation and the
advantage of others’ hardships implementation of interna-
in order to earn a buck. Noth- tional sanctions.
ing could be further from the One pressing need for the
truth,” Mr. Mnuchin said at his new Treasury secretary will be
Jan. 19 confirmation hearing. to raise the government’s bor-
The partisan row illustrates rowing limit, currently sus-
the challenge facing Mr. pended through March 15, af-
Mnuchin in fashioning a tax- ter which the department
code overhaul, infrastructure must use emergency measures
package, financial-regulation to prevent the country from
revamp and housing-finance being unable to pay certain
legislation that can attract bi- bills. Independent analysts be-
partisan support. lieve those measures can last
For example, Democrats through the summer.
have pressed Mr. Mnuchin to At his confirmation hearing,
explain how he will uphold a Mr. Mnuchin said he hoped
pledge delivered hours after lawmakers would move soon
Mr. Trump announced his to increase the borrowing
nomination to revamp the tax limit.
code in a way that provides He said he believed existing
“no absolute tax cut” for the sanctions on Russia should be
upper class. maintained and he called for a
“He has failed to commit to boost in staffing at the Inter-
following his own rule or to nal Revenue Service, where
provide any specific answers ranks have thinned partly due
on how we would reduce the to spending cuts driven by
tax burden on middle-class congressional Republicans.
and working families,” said Delays in Mr. Mnuchin’s
Sen. Mark Warner (D., Va.) on confirmation also have pushed
the Senate floor last Friday. back the process of approvals
The responsibilities of the for top Treasury deputies,
Treasury secretary, who is meaning it could be weeks or
fifth in the presidential line of months before those positions
succession, include everything are filled.
from tax collection and fiscal —Siobhan Hughes
policy to public-debt manage- contributed to this article.
the White House might be hesi-
tant to cut ties to Mr. Flynn,
they added.
Mr. Flynn’s travails come
amid turmoil in the NSC, where
some longtime career officials
have asked to leave their posts
and return to their home agen-
cies earlier than planned, and
others say their inability to in-
fluence policy decisions has
been demoralizing. NSC offi-
cials say there is no process in
place by which decisions are
run past council professionals,
and some said discussions
about policy decisions in their
areas of focus have excluded
them.
As pressure has built on
White House officials, Demo-
crats on Sunday pressed for an
independent investigation into
CARLOS BARRIA/REUTERS
Mr. Flynn’s conversations with
Russia’s ambassador.
“Either he was lying about
discussing it or he forgot,” said
Sen. Al Franken (D., Minn.),
speaking Sunday on CNN.
Mr. Franken called for an in-
dependent investigation into
diplomats, officials have said. the Trump campaign’s and the
The transcripts of the conver- administration’s ties to Russia,
sations don’t show Mr. Flynn citing allegations of Kremlin in-
made any sort of promise to terference in the 2016 U.S. elec-
lift the sanctions once Mr. tion and Mr. Trump’s refusal to
Trump took office, the officials release his tax returns, as can-
said. Rather, they show Mr. didates have done since the
Flynn making more general 1970s.
comments about relations be- Sens. Lindsey Graham (R.,
tween the two countries im- S.C.) and Sheldon Whitehouse
proving under Mr. Trump, peo- (D., R.I.), who lead the Senate
ple familiar with them said. Judiciary Committee’s subpanel
Jettisoning Mr. Flynn might on crime and terrorism, already
end one controversy, but would have launched an investigation
potentially feed perceptions of of Russia’s efforts to influence
a disorganized White House, the U.S. election.
some people close to Mr. —Donna Borak
Trump said. That’s one reason contributed to this article.
SHAWN THEW/EUROPEAN PRESSPHOTO AGENCY
Judge Neil Gorsuch, right, with Sen. Chuck Schumer (D., N.Y.).
proceedings in Massachusetts guage from the 2006 question-
state courts” and helped repre- naire were not intended to re-
sent inmates “with respect to, flect any material change,” the
among other things, hearings spokeswoman said.
on disciplinary actions taken Ahead of the report on the
against them.” judge’s volunteer work, the
A spokeswoman for the White House referred the
judge said the new question- Journal to a law-school gradu-
naire “naturally focuses” on ate who corroborated Judge
more recent pro bono work Gorsuch’s participation in the
and “condenses” earlier work. Harvard Defenders but didn’t
Judge Gorsuch added that he provide any details. The White
had written and spoken in re- House also provided a brief
cent years on “ways to ensure 2008 email exchange between
greater access to justice and the judge and the alumni di-
legal services.” He also added rector for Harvard Defenders.
that he had worked with col- After the Journal report, a
leagues to “enhance the qual- former law student said she
ity of legal representation for remembered making phone
death-row prisoners.” calls with Judge Gorsuch for
“Any differences in lan- the prison program.
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. Monday, February 13, 2017 | A5
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 | Monday, February 13, 2017
Trump Opponent Gains Ground in Mexico
Tough-talking leftist
leads opinion polls
ahead of next year’s
presidential election
BY SANTIAGO PÉREZ
AND JUAN MONTES
Leftist presidential hopeful
Andrés Manuel López Obrador is
gaining momentum in the race
to lead Mexico, tapping into a
nationalist backlash against the
U.S. as President Donald Trump
upends bilateral relations.
The former Mexico City
mayor, narrowly beaten in Mex-
ico’s two previous presidential
elections, is now widening his
lead in opinion polls ahead of
next year’s contest.
A survey recently conducted
by El Financiero newspaper gave
Mr. López Obrador, the founder
and leader of Mexico´s National
Regeneration Movement, 33%
voter support, up 4 percentage
points since November and 6
percentage points ahead of for-
mer first lady Margarita Zavala,
a leading presidential contender
within the conservative National
Action Party.
On Sunday, Mr. López Obra-
dor, who hasn’t officially de-
clared his candidacy, addressed
hundreds of Mexicans, migra-
tion activists and supporters
gathered at Olvera Street Square
in downtown Los Angeles, in the
first of what he said would be
visits to seven U.S. cities over
the next two months. There are
an estimated 35 million people
of Mexican descent in the U.S.
The visit comes as the new
U.S. administration ramped up
an immigration crackdown and
launched deportation raids of
undocumented immigrants in
several U.S. cities over the past
week. Mr. Trump also has an-
gered Mexicans with his insis-
tence that Mexico will pay for a
President Backs Off Some Early Foreign-Policy Stances
BY PETER NICHOLAS
AND CAROL E. LEE
WEST PALM BEACH, Fla.—
President Donald Trump ap-
pears to be adopting more-
conventional positions aligned
with decades of U.S. foreign-
policy making and diplomacy,
pulling back from some of the
more unorthodox promises he
advanced as a candidate.
In recent dealings with Asia
and the Middle East, Russia
and European allies, Mr.
Trump has shown more defer-
ence to the consensus views
taken by past Republican and
Democratic administrations.
The coming week provides an-
other set of tests, with visits
by the leaders of Canada and
Israel scheduled.
A weekend missile launch
Anti-Trump protests in Mexico City on Sunday reflect anger that has elevated presidential hopeful Andrés Manuel López Obrador, right.
Undocumented
Migrants Vow
To Fight Deportation
PHOENIX—All but one of
about 50 undocumented Mexi-
can migrants at a meeting on
Saturday indicated they would
rather risk detention and long
court battles in the U.S. than
return to Mexico voluntarily.
The majority of migrants at
the meeting in Phoenix, which
included Mexican officials, sig-
new border wall, and his at-
tacks on U.S. companies that
open factories in Mexico.
“We must confront this
campaign of hate and human-
rights violations,” Mr. López
President Donald Trump en route to his Mar-a-Lago resort Sunday
from North Korea offered a
vivid illustration of how Mr.
Trump has abandoned crowd-
pleasing campaign rhetoric in
the face of real-world threats.
As a candidate, Mr. Trump said
* ***** THE WALL STREET JOURNAL.
WORLD NEWS
SASHENKA GUTIERREZ/EUROPEAN PRESSPHOTO AGENCY
RONALDO SCHEMIDT/AGENCE FRANCE-PRESSE/GETTY IMAGES
known, “speaks truth to the
power and is close to the peo-
ple,” said Salvador Irigoyen, a
21-year-old university student.
The visceral personality of
Mr. López Obrador has often
been compared with that of Mr.
Trump. “His weakest point is his
intolerance and arrogance. Who-
ever doesn’t agree with him is
his enemy. He is in the tradition
of the Latin American strong-
man,” said Fernando Belaun-
zarán, a lawmaker with the left-
he said, since most Mexican ist Democratic Revolution Party.
naled in a show of hands that moval stoked panic and protests exports to the U.S. have signif- Yet this time around, he is
they were ready to fight depor- in immigrant communities. icant U.S. components. “If adopting a more moderate tone.
tation in U.S. courts. Ms. García was convicted of Mexico was unfairly benefit- Mr. López Obrador has prom-
“Even if that means detention identity theft, a felony, after ting from [the North American ised to triple growth rates to an
for weeks?” asked former Foreign being arrested in 2009 with a Free Trade Agreement], then annual 6% and broaden welfare
Minister Jorge Castañeda. false Social Security card. She Mexico wouldn’t suffer eco- plans. He also wants to lower
“Even if it takes months,” had been released into the nomic stagnation and emigra- Mexico’s high dependency on
shouted one woman. “Even if it community with the require- tion, as it is right now.” U.S. corn and gasoline imports,
takes years,” another yelled. ment of checking in with immi- In Mexico City earlier Sun- goals that have been criticized
“We are here to fight.” gration agents every six day, thousands took to the capi- as unrealistic and protectionist.
The Phoenix meeting took months. Last week, when she tal’s central thoroughfare to Not everyone is convinced
place two days after the deporta- reported to the Immigration protest the border-wall plan, the third time will be a charm
tion of Guadalupe García, a 36- and Customs Enforcement of- while criticizing Mexican Presi- for the leftist politician.
year-old Mexican who lived in the fice in Phoenix, she was de- dent Enrique Peña Nieto and “What surveys show at this
U.S. for 22 years and has two tained and deported to Mexico. the ruling PRI party. Mr. Peña stage is how well-known a politi-
U.S.-born children. Ms. García’s re- —José de Córdoba Nieto faces rising political pres- cian is, because there are no for-
sure to defend Mexico’s national mal presidential candidates yet,”
pride, even as both countries said Ulises Beltrán, head of local
Obrador said, adding that the employment isn’t the result of get ready to renegotiate Nafta. polling firm BGC. “Mr. López Ob-
crackdown on migration is the hiring Mexican workers, but of Mr. López Obrador’s visit to rador always begins the race up
result of unrest, unemploy- flawed government policies.” the U.S. appears to be designed high because of this factor, and
ment and low income that Mr. Trump’s complaints to send a clear message: He will also because of his populist
fueled a nationalist backlash in about the U.S. trade deficit stand up to Mr. Trump. rhetoric. But then his lead tends
the U.S. “Low income and un- with Mexico are misleading, AMLO, as he is widely to narrow as the election nears.”
ter Shinzo Abe visiting the During the campaign, Mr. China” policy that has under-
president’s Mar-a-Lago estate Trump had maintained a com- pinned Sino-American rela-
in Florida, the two men made a bative approach to China, and tions.
joint appearance Saturday broke protocol after his victory White House officials said
night in response to the mis- by accepting a congratulatory Mr. Trump did so to reset rela-
sile launch. Mr. Trump pro- phone call from Taiwan’s tions with the Chinese.
claimed that the “United States leader. He described the “One Mr. Trump has taken a simi-
of America stands behind China” policy that grants dip- lar posture toward U.S. alli-
Japan, its great ally, 100%.” lomatic recognition to Beijing ances in Europe, particularly
JOE RAEDLE/GETTY IMAGES
Mr. Trump’s evolution but not Taiwan as up for nego- the North Atlantic Treaty Or-
comes as his foreign-policy tiation, a possible bargaining ganization. After meeting with
team has taken shape, with chip as he pressed for conces- British Prime Minister Theresa
Jim Mattis and Rex Tillerson sions from the Chinese in its May, he said he would strongly
confirmed by the Senate and currency practices. back the alliance. His adminis-
firmly in place at the Defense “Everything is under negoti- tration is expected to support
and State departments, respec- ation, including ‘One-China,’ ” Montenegro’s bid to join NATO,
tively. Mr. Trump told The Wall though Russia opposes the
“He’s getting more advice Street Journal in an interview move.
a U.S. defense agreement with and he seems to see wisdom in a week before he was sworn in. Before taking office, Mr.
Japan was unfair, permitting greater orthodoxy,” said Jon But on Thursday, Mr. Trump Trump described the NATO al-
the Japanese to sit home and Alterman, who runs the Middle spoke to Chinese President Xi liance as “obsolete.”
watch “Sony” TV while the U.S. East program at the Center for Jinping and acquiesced to the
was attacked. Strategic & International Stud- status quo, confirming he  Trudeau, Trump to talk trade
With Japanese Prime Minis- ies, a think tank. would abide by the same “One at Monday meeting............... A8
LAUNCH
Continued from Page One
hosting Japanese Prime Minis-
ter Shinzo Abe at his Mar-a-
Lago estate in Palm Beach,
Fla., prompting the leaders to
make an unscheduled, late-
KIM HEE-CHUL/EUROPEAN PRESSPHOTO AGENCY
night joint appearance.
Mr. Abe called the launch
“absolutely intolerable” and de-
manded North Korea “fully
comply” with United Nations
resolutions banning such activ-
ity. Mr. Trump made no men-
tion of North Korea, South Ko-
rea or possible retaliatory
plans, saying, “I just want ev-
erybody to understand and
fully know that the United
States of America stands be- In Seoul, people stopped to watch a television news broadcast about the missile launch.
hind Japan, its great ally,
100%.” had made advances in various statement to “immediately pur- one occasion last year, but law-
World leaders are watching rocket technologies and said sue a series of tough mea- makers have urged a broader
how Mr. Trump responds to the missile could be “tipped sures,” including sanctions, mil- application, given that U.S. offi-
Pyongyang’s move, which could with a nuclear warhead.” itary exercises with U.S. allies cials believe 90% of North Ko-
provide clues to how the new A former administration of- in the region and the acceler- rea’s trade is with China.
U.S. administration will react to ficial said the Obama White ated deployment in South Ko- “I think we have to tell the
a range of other foreign-policy House left the Trump team a rea of an advanced missile sys- Chinese that they have to put
challenges and hot spots playbook of options, anticipat- tem known as the Terminal the wood to North Korea in a
around the world. ing a provocative action was High Altitude Area Defense sys- much more serious way than
U.S. defense officials believe likely immediately following tem, or Thaad. they have done so far,” Senate
the launch was of a medium- or the presidential inauguration A bill passed last year and Democratic Leader Chuck
intermediate-range missile, ac- last month. That included pos- signed into law by former Pres- Schumer of New York said Sun-
cording to the Pentagon. sible multilateral and unilateral ident Barack Obama allows the day in an interview on CBS’
Early Monday, North Korea’s moves encompassing sanctions, administration to go after Chi- Face the Nation.
official Korean Central News United Nations action, state- nese companies that do busi- South Korea’s acting Presi-
Agency called the launch a suc- ments with South Korea and ness with North Korea’s weap- dent Hwang Kyo-Ahn said he
cessful test of a “surface-to- Japan, and speeding up the de- ons complex. The law in effect and the government would
surface medium long-range bal- ployment of missile defenses. forces companies to cut their push for a strong international
listic missile,” which it called The senior Trump adminis- ties to Pyongyang or suffer pu- response to punish North Ko-
the Pukguksong-2. The North tration official said Sunday the nitive financial consequences, rea, according to a written
said that leader Kim Jong Un White House is in the midst of such as restricted access to statement from his office.
personally guided the missile a policy review regarding North banking systems and financial —Kwanwoo Jun in Seoul
launch. Korea. networks. and Gordon Lubold in
In the report, Mr. Kim said Sen. Cory Gardner (R., Colo.) The Obama administration Washington contributed to
the launch proved the North urged Mr. Trump in a written used its provisions on at least this article.
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A8 | Monday, February 13, 2017
Trudeau Visits to Talk Trade British Minister
BY PAUL VIEIRA
AND WILLIAM MAULDIN
A meeting between President
Donald Trump and Canadian
Prime Minister Justin Trudeau
in Washington on Monday is ex-
pected to provide a glimpse into
how the Trump administration
will seek to overhaul the 23-
year-old economic framework
of North America.
Mr. Trump wants to renego-
tiate the North American Free
Trade Agreement, or Nafta, and
has vowed to extract new, bet-
ter terms for the U.S. So far
most of his focus has been on
Mexico and the $63 billion U.S.
trade deficit there.
Mr. Trudeau, the leader of
Nafta’s other partner, has indi-
cated that he is intent on build-
ing a smooth relationship and
finding common ground with
Mr. Trump despite their many
policy differences on issues in-
cluding immigration.
“We both got elected on
commitments to strengthen the
middle class and support those
working hard to join it, and
that’s what we are going to fo-
cus on in these meetings,” Mr.
Trudeau, leader of the centrist
Liberal Party of Canada, said
during a tour of Canada’s North
last week.
The prime minister had a
smooth and easy relationship
with former President Barack
Obama, with whom he shared
Soaring Inflation
Monthly Egyptian consumer
prices, change from a year earlier
January
30%
28.1%
Nov. 3: Egypt
devalues pound
20
10
0 world’s most-populous nation.
2016
Sources: Egypt’s central bank (2016);
statistics agency (January)
THE WALL STREET JOURNAL.
CHRIS WATTIE/REUTERS
Canadian Prime Minister Justin Trudeau will meet with President Donald Trump in Washington Monday.
views on a number of issues in-
cluding the goal of fighting cli-
mate change. They did differ on
TransCanada Corp.’s proposed
Keystone XL pipeline, which Mr.
Obama opposed and for which
Mr. Trump has indicated his
support.
Officials haven’t disclosed de-
tails about the Trump-Trudeau
meeting, although the future of
Nafta and ramifications of a po-
tential border-adjusted tax are
expected to be a focus, U.S.-Can-
ada experts say. White House
press secretary Sean Spicer said
Wednesday that “trade and se-
curity and commerce” would be
on the agenda.
So far, Mr. Trump has en-
countered setbacks in his bid to
Egypt’s Rising Prices Fan Economic Concerns
Inflation in Egypt hit its
highest level this decade be-
cause of a weaker currency
and slashed state assistance,
By Nikhil Lohade
in Dubai and
Dahlia Kholaif in Cairo
escalating concerns about the
economic health of the Arab
’17 The annual urban inflation
rate increased to 28.1% in Janu-
ary on higher food and beverage
prices, Egypt’s statistics agency
NY
WORLD NEWS
get started on revamping Nafta,
including slow confirmation for
his leading trade officials and
the cancellation of a previous
trip to Washington by Mexico’s
President Enrique Peña Nieto
after a bitter public dispute
over a proposed wall on the
southern border.
Mr. Trudeau’s arrival begins
the delicate maneuvering that
will set the tone for formal talks
to update the pact, which would
require the cooperation of all
three countries, including their
lawmakers. Mr. Trump hasn’t
yet formally notified Congress
of plans to hold talks on Nafta,
a step that is required 90 days
before negotiations can begin
on any trade deal eligible for
said on Saturday. Egypt’s head-
line inflation was at 23.3% a
month earlier, according to data
from the central bank, up from
19.4% in November, when Egypt
floated its currency and allowed
it to fall more than 50% against
the U.S. dollar.
The steep drop in the Egyp-
tian pound’s value has made
imports more expensive, while
other recent government mea-
sures such as a cut in subsidies
for fuel, the introduction of a
value-added tax and increases
in import tariffs have sharply
expedited consideration on Cap-
itol Hill.
“To me, what we’ve seen so
far continues to confirm that
Mexico and Canada have not
yet agreed to renegotiate any
particular provision of Nafta,”
said Matt Gold, a Fordham Uni-
versity adjunct law professor
and former deputy assistant
U.S. trade representative. “I
think it’s predictable that Can-
ada and Mexico are going to
slow down that process.”
To date, Mr. Trudeau and
other Canadian officials have
been cautious in their com-
ments about the Trump admin-
istration and Nafta, conveying
instead a readiness to discuss
improvements to the deal.
increased the cost of living for
the country’s largely working-
and middle-class people.
The Egyptian government
adopted tough measures re-
quired to secure funds from
the International Monetary
Fund and other creditors to
turn around an economy bat-
tered by years of political un-
rest and a recent spate of ter-
rorist attacks. Economic
growth has averaged about
2.5% on average over the past
five years, according to the
IMF, even as inflation, the fis-
Residents of Surigao City, the Philippines, inspected a damaged bridge on Sunday. The southern
part of the country was hit with aftershocks following a powerful earthquake on Friday.
JAPAN
Economic Growth
Slowed in Quarter
The economy slowed again in
the final quarter of 2016 as fee-
ble spending by consumers took
the shine off a pickup in exports
and business investment, leaving
growth lagging behind the pace
targeted by Prime Minister
Shinzo Abe’s administration.
Japan’s real gross domestic
product grew 1.0% on an annual-
ized basis in the three months
through December for the fourth
consecutive quarter of expan-
sion, the longest stretch of gains
since 2013, according to Cabinet
Office data.
The expansion was slightly
smaller than a 1.1% forecast
from economists surveyed by
The Wall Street Journal.
While the latest figures point
to steadier if unremarkable
growth in Japan over the past
year, the outlook for the econ-
omy over the coming months re-
mains unclear. Hopes that a
stronger U.S. economy under
President Donald Trump might
fuel global demand are giving
way to concerns that a possible
rise in U.S. protectionism could
weaken international trade.
Mr. Trump has pledged to re-
duce the U.S. trade deficit, and
has criticized Japan for gaining
an unfair trading advantage
through alleged nontariff barri-
ers and a weakened yen.
—Eleanor Warnock
THE WALL STREET JOURNAL.
Praises U.S. Ties
BY BEN KESLING
ERBIL, Iraq—U.K. Defense
Minister Michael Fallon said
the British-American defense
partnership had never been
stronger and that President
Donald Trump had likely gal-
vanized the two countries’ ef-
forts to strengthen the North
Atlantic Treaty Organization
and push allies to contribute
more to mutual defense.
Mr. Fallon, who is sched-
uled to speak with U.S. Secre-
tary of Defense Jim Mattis in
coming days, said in an inter-
view on Saturday that the de-
fense alliance between the U.S.
and U.K. hadn’t been affected
by turmoil within the U.S. or
internationally following Mr.
Trump’s election.
Mr. Fallon became the most
recent U.K. official to publicly
support Mr. Trump’s adminis-
tration despite widespread
concern among Britons over a
broad range of domestic and
foreign stances. Prime Minis-
ter Theresa May was criticized
at home after she invited Mr.
Trump to visit London, making
the offer during a January
visit to Washington.
Mr. Fallon said during a trip
to the Iraqi Kurdish capital
that the U.S. and U.K. agreed
that NATO partners must do
cal deficit and unemployment
rates jumped to double digits.
But Egypt’s moves to cut
subsidies, trim public-sector
wages and raise taxes have
helped the country raise billions
of dollars in recent months.
The cash will help support
its strained finances and pay
for vital imports such as
wheat and medicine. The fiscal
adjustments will assist in nar-
rowing Egypt’s budget deficit,
which was about 12% of gross
domestic product last year,
and reduce government debt
WORLD WATCH
THE PHILIPPINES
Strong Aftershocks
Continue in South
Philippine officials on Sunday
warned survivors of Friday’s
powerful earthquake in the
south to ensure homes and
buildings are sturdy enough be-
fore venturing back amid strong
aftershocks.
The magnitude-6.7 quake late
Friday killed at least eight peo-
ple, injured more than 200 and
damaging the main provincial
airport and about 1,000 houses
in Surigao, officials said.
Officials appealed for volunteer
engineers to check damaged
schools, hospitals, malls, hotels and
other buildings, especially in the
provincial capital of Surigao City.
Power was restored on Sunday in
some parts of the city.
“Our call is, do not return
hastily after the strong quake,”
said Romina Marasigan, spokes-
woman for the government’s
National Disaster Risk Reduction
and Management Council.
Renato Solidum, who heads
the Philippine Institute of Seis-
mology and Volcanology, said at
least 137 aftershocks have been
recorded.
Mr. Duterte had to make a
detour following the closure of
Surigao City's airport due to
deep cracks in its runway. He ex-
pressed sympathy and pledged
financial help to quake survivors
needing medical treatment.
—Associated Press
more to contribute to the alli-
ance. Mr. Fallon was due to
visit British troops training
Iraqi and Kurdish forces.
“The president’s remarks
have clearly turbocharged that
process,” Mr. Fallon said of the
push for increased defense
commitments. “If President
Trump has galvanized the alli-
ance, then we’re in his debt.”
Mr. Fallon said the histori-
cally strong relationship be-
tween the U.S. and the U.K.
continued to this day.
He said Mr. Trump was
looking at ways “to accelerate
the campaign against Daesh,”
using a synonym for the Is-
lamic State extremist group.
Mr. Fallon said NATO had
boosted its role in Iraq, open-
ing a new training program in
the country earlier this month
which both Britain and the
U.S. support.
The defense minister said
that while Britain wouldn’t go
as far as Mr. Trump, who had
described NATO as “obsolete,”
he agreed the alliance needed
to bring itself up to date.
“There is work to be done
to modernize NATO,” Mr.
Fallon said, adding that the
organization’s bureaucracy
had to be streamlined and the
alliance made more attentive
to current threats.
that is approaching 100% of
GDP, some analysts said.
GDP growth is expected to
rebound to 6% by 2021 if over-
hauls are properly imple-
mented, the IMF said. That
will help create more jobs and
tackle high unemployment.
Investors have backed
Egypt on the steps it has taken
to reshape its economy.
Officials have sought to calm
nerves by assuring Egyptians of
the benefits the austerity mea-
sures and economic overhauls
will bring in the longer term.
CERILO EBRANO/EUROPEAN PRESSPHOTO AGENCY
NEW ZEALAND
Stranded Whales
Swim Back to Sea
More than 200 stranded
whales managed to refloat
themselves overnight from Sat-
urday to Sunday and swim
away, while volunteers in New
Zealand managed to save an-
other 17 whales at high tide.
More than 650 pilot whales
have beached themselves along
Farewell Spit at the tip of New
Zealand’s South Island in two
separate mass strandings over
recent days. About 350 have
died, including 20 that were eu-
thanized. Another 100 have been
refloated by volunteers and
more than 200 have swum
away unassisted.
Hundreds of volunteers have
spent days at the beach dousing
the whales with buckets of wa-
ter and trying to refloat them.
Department of Conservation
spokesman Herb Christophers
said everyone hopes the strand-
ings are over. Farewell Spit, a
sliver of sand that arches like a
hook into the Tasman Sea, has
been the site of previous mass
strandings. Sometimes described
as a whale trap, the spit’s long
coastline and gently sloping
beaches seem to make it diffi-
cult for whales to navigate away
from once they get close.
New Zealand has one of the
highest rates of whale strand-
ings in the world.
—Associated Press
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For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
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THE WALL STREET JOURNAL. Monday, February 13, 2017 | A9

WORLD NEWS

Romanians Split Over Corruption Fighter

Younger citizens
Crisis of Confidence
embrace prosecutor’s Trust in Romania's government plummeted as the number of cases
campaign, but older brought by the anticorruption directorate rose.
10,000
generation is more wary Percentage of Romanians who Corruption cases
say they trust public institutions 9,000
Total
BY DREW HINSHAW Court
80% Prison 8,000
BUCHAREST, Romania—Not National
7,000
long ago, the prosecutors at
DANIEL MIHAILESCU/AGENCE FRANCE-PRESSE/GETTY IMAGES

Anticorruption
Romania’s anticorruption of- Directorate
60 6,000
fice rarely took on a bribery
suspect bigger than a school- 5,000
teacher or a small-town cop.
Often, the criminal gift was a 40 4,000
pig, a lamb or a turkey. Government
These days, the National An- 3,000
ticorruption Directorate is in-
vestigating some 2,100 abuse- 20 2,000
of-office cases, many against
top politicians. Senators, par- 1,000
liamentarians and ministers
0 0
have had to stand trial, and al-
leged damages investigated 2013 ’14 ’15 ’16 ’10 ’11 ’12 ’13 ’14 ’15
last year totaled €1 billion Sources: INSCOP Research (trust); National Anticorruption Directorate (cases)
THE WALL STREET JOURNAL.
($1.06 billion). Whistleblowers Antigovernment protesters demonstrated at government headquarters in Bucharest on Sunday.
have started walking in daily.
“Things are completely dif- marched here on Feb. 5. An- justice minister who intro- leery of totalitarian rule. a celebrity adored and ab- of globalists trying to weaken
ferent now,” said the director- other 100,000 rallied on Sunday. duced the measure resigned. At the crux of that difference horred across a defining de- Romania and take its oil. It is a
ate’s chief prosecutor, Laura The protesters are railing in That hasn’t calmed the is the anticorruption director- mographic divide. view echoed on the country’s
Codruta Kövesi, an ex-basket- part against a recent emer- crowds, who demand that ate—and its leader, the 43-year- Younger, educated profes- political news television.
ball champion who has be- gency ordinance by the gov- more ministers step down. old Ms. Kövesi, the daughter of sionals marching in the capital The ruling Social Democratic
come a popular figure for her ernment that would cut maxi- Romania joined the European a small-town prosecutor. muse on her running for presi- Party says the anticorruption
role in battling corruption. mum prison sentences for Union in 2007. Millions of young Ms. Kövesi grew up watch- dent. “She’s like a symbol to fight has become too zealous.
The resistance Ms. Kövesi corruption to three years from Romanians studied, worked or ing communist bureaucrats sty- us…close to our ideal person,” Many in Parliament feel the po-
has encountered from the gov- seven—and make it all but im- traveled in Western Europe, and mie her father’s investigations. said Adriana Balan, a psychol- litical drama over graft has
ernment has sparked Roma- possible for Ms. Kövesi’s direc- returned home with higher ex- Since she took over the di- ogist. “We’ve put her on a eclipsed the business of lifting
nia’s biggest protests since the torate to have politicians ar- pectations of their government. rectorate, and became the coun- very high pedestal.” Romanians out of poverty.
fall of Communism. Demon- rested or wiretapped for To meet those demands, try’s first female chief prosecu- And yet many of those pro- “We have talk shows every
strations against corruption alleged abuse of office. money and oversight from the tor in 2013, it has sent 3,000 testers say they can no longer day, many hours, talking about
have broken out every night The protests have pushed EU boosted the authority of people to prison. At any given talk about Ms. Kövesi with anticorruption,” said Petre
since Jan. 31, each met by the government to revoke the anticorruption police. But time, many of her prosecutors their parents and family in the Florin Manole, a parliamentar-
counter-demonstrations. ordinance while Parliament those measures have collided handle 100 or more cases. countryside without an argu- ian with the SDP. “It’s the only
Hundreds of thousands debates it. On Thursday, the with an older generation still That caseload has made her ment. Many believe she is a tool topic in our society now.”

Spanish Leftist Party Hews to Antiestablishment Roots

BY JEANNETTE NEUMANN head of Podemos and handed had seemed a strong contender entists and others who worked to juggle the interests supporters deepened concerning
his allies control of 37 of the 62 to take over the government. founded Podemos in 2014. The of an amalgamation of left-lean- the best strategy to overtake the
MADRID—Podemos, the left- seats on the party’s governing Podemos’s troubles have party brought together fac- ing groups across the country. Socialists as the party of choice
ist party that disrupted Spanish body. “The winds of change con- underscored the resilience of tions that had occupied Podemos surged in the polls for Spain’s left-leaning voters.
politics only to fall far short of tinue to blow,” Mr. Iglesias told Spain’s two establishment par- Spain’s streets and public in the year after its founding, Mr. Iglesias and his allies
electoral victory and descend hundreds of party members. ties at a time when upstarts squares three years earlier to challenging the decadeslong called for Podemos to main-
into internal feuding, opted Sun- The bitter feud between the on the far right and far left demand an end to austerity dominance of the center-right tain its outsider roots and
day to hew to its antiestablish- ponytailed Mr. Iglesias, 38 are challenging mainstream policies that many blamed for Popular Party and the center- treat the Socialists skeptically.
ment roots as party members years old, and his deputy, Íñigo leaders across Europe, with deepening a painful recession. left Socialists. But it fell short of Mr. Errejón’s faction advo-
defeated a bid by its No. 2 leader Errejón, 33, had played out in varying degrees of success. Those origins bestowed Po- expectations, finishing a distant cated a more moderate tack,
to steer a more moderate course. public for months, a frustrat- Mr. Iglesias, who won with demos, which means “We can” third in Spain’s election last calling for greater cooperation
A party congress overwhelm- ing spectacle for an anti-aus- about 89% of the vote, was in Spanish, with an energized June. Meanwhile, divisions with the Socialists to pass leg-
ingly re-elected Pablo Iglesias terity party that two years ago part of a group of political sci- base of voters as its leaders among Podemos leaders and islation both parties agree on.

IMF Stand on Greek Bailout

Leaves Europeans on Guard
IMF is the villain of this cri- rule out any program with
sis. Eurozone officials accuse such unrealistic targets?
it of using overly pessimistic The IMF’s problem is
forecasts and being unfairly there is no reason in theory
gloomy about Greece’s capac- Greece can’t deliver such a
ity for reform. They point to surplus. Other countries
recent data that show Athens have managed, and some in
EUROPE FILE on track to deliver an unex- the eurozone will need to do
SIMON NIXON pectedly robust primary bud- so for many years.
get surplus before interest The IMF considers Greece
payments in 2016 of at least a special case because of the
As a new Greek debt crisis 2%. As far as the European weakness of its governance
gathers pace, one of the major Commission was concerned, and political system. But the
players in the drama has re- this was evidence Greece fund also accepts that it is
mained remarkably calm: the could hit its 3.5% primary hard for the eurozone to ac-
International Monetary Fund. surplus target in 2018 and knowledge this publicly.
European governments maintain it thereafter with no The fund’s response has
and institutions are desper- extra fiscal tightening. been to accept such tough
ate to resolve a standoff over surplus targets only if ac-

S
the next phase of Greece’s ome European govern- companied by far-reaching
bailout program. The win- ments would be happy reforms of its pension and
dow for a to go along with the tax systems as well as
deal is fast Commission’s forecasts, not growth-friendly overhauls of
closing with least because there is little product and labor markets,
the imminent appetite for imposing further legislated in advance as a
start of the belt-tightening on Greece. condition of financial aid.
Dutch elec- But the IMF counters that That is a high political bar.
tion cam-
paign and may not reopen
until after the French elec-
tion in May. But the IMF is
the budget data are provi-
sional and flattered by one-
off factors. It also notes that
Greek budget figures are in- N
ot surprisingly, many
Europeans—not least
in Athens and Brus-
The #1 heart care
proving impervious to politi-
cal pressure.
Some European govern-
variably revised down every
quarter. If the eurozone
wants to insist on tough tar-
sels—would like nothing
more than to get rid of the
IMF altogether. But this has
in the nation.
22 years in a row.
ments have said they won’t gets, the IMF will insist they proved politically impossible,
give more money to Greece are credibly met. too.
unless the IMF gives it The IMF’s critics are on The German and Dutch
money, too. But the IMF is stronger ground when they governments have promised
sticking to its mantra that it accuse it of inconsistency. Af- their parliaments that the
won’t participate in any new ter all, the fund has been vo- IMF would participate, and
Greek bailout unless it is sat- cal with doubts that Greece its absence would send a
isfied the numbers add up. can ever achieve a primary clear signal the numbers
Meanwhile the clock is
ticking toward two major
surplus of 3.5%, or sustain
such a surplus, or that it
don't add up. Nor will the
IMF simply walk away.
Same-day appointments available.
bond redemptions in July would be in Greece’s interests Greece is an IMF share-
that Greece is unlikely to be to do so. So why not simply holder, and a core IMF prin-
able to meet without aid. ciple is that it never hangs
A crisis meeting in Brus- up the phone.
sels on Friday failed to break If the IMF is relaxed, it is
the impasse. The IMF and Eu- because there is nothing Euro-
ropean institutions did agree peans can do to force its hand.
to demand further austerity European officials com-
measures to be legislated now plain the IMF is failing to
to ensure Athens hits its take account of the implicit
JASPER JUINEN/BLOOMBERG NEWS

short-term budget targets. solidarity the eurozone con-

But it isn’t clear whether tinues to provide Greece. But Call 1.855.299.APPT l clevelandclinic.org /heartcare
Athens is willing or able to if the eurozone wants the
deliver; meanwhile the credi- IMF on board, it will have to
tors are no closer to a deal on make that solidarity explicit.
what Greece’s midterm aus- If it wants another short-
terity targets should be, nor term fudge designed to kick
U.S. News & World Report 2016-17
how much relief is needed to the can safely down the road
put the country’s debts on a again until after this year’s
sustainable footing. Poul Thomsen, director of the elections, it will have to find
For many Europeans, the IMF’s European department a way to do so on its own.
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
A10 | Monday, February 13, 2017 THE WALL STREET JOURNAL.

IN DEPTH

ROADS Road Work Ahead

U.S. government infrastructure spending has waned since the late
1960s…
ered cracks on a 79-year-old
bridge between Purcell and
Lexington, about 45 minutes
south of Oklahoma City. State
Continued from Page One officials launched an expedited
borhoods and the environment. Public capital investment as a share of GDP effort to replace it. Because of
A tour through of the na- Interstate Highway National Environmental the bridge’s historical signifi-
tion’s thorniest infrastructure System created Policy Act enacted cance as a Depression-era proj-
struggles shows how these two 3.0% ect, they first needed to con-
goals are often in conflict. As a sult Oklahoma’s historical-
result, long, costly reviews and 2.5 preservation office under the
legal battles will likely confront 1966 federal preservation act.
Mr. Trump’s efforts, just as 2.0 Then officials needed to find
they delayed much of President a way to protect the Arkansas
Barack Obama’s 2009 eco- 1.5 River shiner, a threatened min-
nomic-stimulus efforts. now under the endangered-
“You would have to fix some 1.0 species act. The state plans to
of these issues” said McKinsey begin work in 2018. “It’s hard
& Co. partner Tyler Duvall, a 0.5 to explain that to our constitu-
DOT assistant secretary for ency,” said Mike Patterson, di-
policy in the George W. Bush 0 rector of Oklahoma’s transpor-
administration, “in order to get tation department, “because
the money into the system in a 1950 ’60 ’70 ’80 ’90 2000 ’10 for them it’s illogical.”
productive way.” …as GDP and productivity growth have slowed.
The president has yet to re-
veal details of his plan. On Jan. Average annual growth rate Tale of one bridge
24, Mr. Trump issued an execu- 5% As an example of how things
tive order calling for expedited should work, Mr. Porcari, the
reviews on “high priority” GDP Productivity former Maryland transporta-
4
projects. Before signing, he tion chief, cites the renovation
said: “We can’t be in an envi- of the Woodrow Wilson Bridge
ronmental process for 15 years 3 connecting Maryland and Vir-
if a bridge is going to be falling ginia. After years of lawsuits
down or if a highway is crum- 2 almost killed the project, offi-
bling.” cials revived it in 1999, inviting
Any significant new infra- environmentalists and commu-
1
structure-spending package nity groups to planning meet-
would have to clear Congress. ings to discuss how to offset
And executive orders alone 0 the new bridge’s effects.
won’t do much to change a 1950–59 ’60–69 ’70–79 ’80–89 ’90–99 2000–09 ’10–16 They agreed to restore the
well-entrenched four-decade- nearby Anacostia River, includ-
old regulatory process, said It takes longer to complete …and roads are getting older. ing cleaning up an illegal land-
Philip Howard, chairman of environmental reviews… fill. The revamped review was
Common Good, a think tank fa- Average Environmental Impact Average age of U.S. highways completed in 2000 and the
voring looser federal regula- Statement preparation times and streets new bridge opened in 2006.
tion. The White House didn’t Today, the landfill is a wetland
MELISSA LYTTLE FOR THE WALL STREET JOURNAL (2)

respond to requests for com- 10 years 30 years where wild rice and cattails
ment. Federal Highway thrive. Cormorants, herons and
8 24 egrets populate the cleaner
Administration
river.
Not so shovel-ready 6 18 In Southern California, plan-
Presidents Obama and ning for the State Route 710
George W. Bush sought to ac- 4 12 extension continues to divide
celerate projects with executive South Pasadena and Alhambra.
orders. The Obama administra- 2 All federal agencies 6 During the 1960s, the state
tion was concerned prolonged prepared by buying homes
reviews could hold back stimu- 0 0 along its proposed route. After
lus spending under the 2009 2000 ’05 ’10 ’15 2000 ’05 ’10 ’15 the 1970 environmental law,
American Recovery and Rein- Sources: Commerce Department (capital investment, GDP growth, road age);
South Pasadena sued to block
vestment Act, said Gary Guzy, Joanne Nuckols, 73, above, has been fighting the extension of Labor Department (productivity growth); Piet deWitt, Carole A. deWitt (preparation times) construction, saying the state
general counsel at the White State Route 710, below. The project was proposed in the 1960s THE WALL STREET JOURNAL. hadn’t followed the act’s re-
House Council on Environmen- view process. Residents feared
tal Quality under Mr. Obama, mits are issued. bile, which runs the new facil- tion boom eventually faced Environmental groups have the highway would split the
now a lawyer for Covington & Completing the process took ity. “When prospective backlash among people who found themselves making the town in two. Neighboring Al-
Burling LLP. an average of almost 10 years companies look at the eastern objected to the impact on same case, on the grounds that hambra argued the highway
The act devoted about $48 for major highway projects side of Mobile Bay and into neighborhoods, sensitive envi- more efficient reviews would would ease congestion.
billion to transportation, with a that received their final review Florida, the tunnel is always a ronmental locations and histor- let planners devote more en- The 1973 lawsuit touched off
priority on “shovel-ready” in 2015, up from about five topic of concern for them.” ical sites. ergy to mitigating damage, ac- a 25-year effort to revise the
projects. Getting money out years in 2005, according to a The proposed $850 million The 1970 National Environ- cording to Deron Lovaas, se- proposal, which succumbed to
the door took longer than ex- study by Piet and Carole A. de- bridge would generate $173 mental Policy Act, or NEPA, nior policy adviser at the another lawsuit in 1999 by
pected. By January 2012, about Witt, retired Interior Depart- million to $690 million annu- made planners issue environ- National Resources Defense South Pasadena.
$33.5 billion had been spent. In ment officials who have com- ally in increased economic ac- mental-impact statements for Council, an environmental Planning efforts since have
2015, Congress exempted some piled some of the most tivity, the state estimates. After their most significant projects group “I don’t think unneces- focused on a tunnel, which
bridge replacements from envi- comprehensive and frequently 14 years of reviews, it is years detailing how they would alter sary delay serves anyone.” state officials estimate would
ronmental reviews. cited data on infrastructure- away from construction. surroundings while offering Almost 100 NEPA-related generate up to $1.59 billion in
Economists say well-de- project reviews. ways to mitigate damage. NEPA lawsuits hit federal agencies net benefits over 20 years. The
signed infrastructure invest- It took 16 years to get per- gave environmentalists and every year. One, filed by North state is starting to sell the
ments could increase economic mits for the Army Corps of En- Life before 1970s conservationists a voice in Carolina environmental groups, homes it bought 50 years ago
productivity in the long term gineers to dredge the harbor in It is hard to compare project planning, allowing them to sue spent four years in court be- for the roadway.
by making it easier for busi- Savannah, Ga. At least 10 fed- timelines before and after the if they believed developers fore a resolution last year let Opponents in South Pasa-
nesses to ship products and for eral and state agencies in Geor- 1970 environmental law be- weren't properly following the the state replace the deterio- dena worry a tunnel could
employees to get to work. In gia and South Carolina cause earlier projects weren’t law. rating Herbert C. Bonner weaken the ground under its
advanced economies, boosting weighed in. Work began in subject to the same reporting Today, the law has become Bridge, which links Hatteras Is- historic Craftsman houses.
infrastructure investment by 2015. requirements. Anecdotally, it so deeply ingrained that offi- land to the mainland. “This is something that can
1% of gross domestic product In Mobile, Ala., local offi- appears projects before that cials often spend years working Since opening in 1963, the never be built,” said Joanne
can raise overall GDP by 1.5% cials say a state proposal to year moved more quickly. through every detail to avoid 2.7-mile bridge on the Outer Nuckols, 73, a board member of
four years later, an Interna- bridge the Mobile River could Ten years after the Inter- suits, even if an environmental- Banks has been scoured by a local preservation group who
tional Monetary Fund study expand business. Now, more state Highway System’s 1956 impact statement isn’t re- wind, water and hurricanes. has been fighting the road for
found. than 73,000 cars daily cram a creation, the government had quired. State officials said it has 30 years.
It can take decades to bring tunnel built for 36,000. inaugurated 21,000 Interstate “There’s a lot of defensive reached the end of its life. En- Alhambra Council member
such investments to fruition. The Port of Mobile, on the miles. That drove public capital medicine built into it,” said vironmental groups challenging Barbara Messina, 76, has been
Reviews under the National bay’s western side, opened a spending to record levels and John D. Porcari, Maryland’s a $246 million replacement advocating for the extension
Historic Preservation Act of new container terminal in helped boost the country’s pro- former transportation secre- said the new bridge would ille- since 1978. “God forbid we had
1966, the National Environmen- 2008. A less-congested cross- ductivity, according to research tary, who served in the Obama gally disturb a wildlife refuge. people like that when we had
tal Policy Act of 1970, the En- ing could entice businesses to by John Fernald, a senior re- administration and is now an Construction, begun in 2016, our major infrastructure proj-
dangered Species Act of 1973 use the port, said Brian Harold, search adviser at the Federal executive at Parsons Brincker- is scheduled for 2019 comple- ects done,” she said. “We
and other laws can involve managing director of APM Ter- Reserve Bank of San Francisco. hoff Inc., an engineering and tion. would never have gotten any-
multiple agencies before per- minals, a port operator in Mo- The postwar U.S. construc- consulting firm. In 2014, Oklahoma discov- thing done.”

CASH household operate without

cash but realized things were
tougher in rural areas, when he
struggled to shop and pay his
Continued from Page One employees at his country
paid or spent in cash. home.
These well-heeled and self- Volunteers are holding
proclaimed patriots—a group camps across the country to
that includes bankers, bureau- help people open bank ac-
crats and bikers—are vowing to counts and teach them how to
use electronic payments so use checks, online banking and
there will be more cash in cir- e-wallets. “As Indian IT compa-
ALTAF QADRI/ASSOCIATED PRESS
“I am depending on them, so
I can’t have them struggling
unnecessarily,” Mr. Limaye
said. “I am the starting point in
the [supply] chain for them to
go cashless.”
Earlier this month, a motor-
cycle gang more than 30 riders
deep roared to a stop in front
of a sari store in a busy shop-
ping district of India’s capital
and unfurled banners. “What

culation for the poor. nies we tend to do a lot outside will we make India?” shouted
As the no-cash movement the country,” said Jagdish Mi- the leader. “Cashless!” an-
plunges forward, it’s being met tra, chief strategy officer of swered the rest.
with a wave of grimly comic Tech Mahindra Ltd., software The 20-somethings sur-
videos, cheeky tweets and and outsourcing company that rounded ATMs and tried to
songs that mock the inept roll- volunteered its call centers to convince people not to with-
out of the new currency pro- answer questions. “This is the draw cash. At Sarojini Nagar
gram, which had citizens wait- time for us to contribute back.” Market, one of the city’s busi-
ing hours in line to exchange People lined up to exchange currency at a bank in New Delhi in November Companies say some people est clothing markets, the activ-
notes under constantly revised are asking basic questions such ists applauded stands that ac-
rules. Smaller notes, some with Narendra Modi. One YouTube The Bollywood stars and as “What is an e-wallet?” “How cepted digital payments and
“These poor people are the value of less than a dime, video portrayed the prime min- others have decided to make do I sign up to transfer tried to school the others.
lucky,” says a comedian playing have been sucked up to replace ister as the Terminator to out- the best of it, and are urging money?” and “How do I open a Other young men, attracted by
a member of India’s upper the bigger bills, and are being line all the evils the cash ex- others to kick their use of cash. bank account?” their matching T-shirts and
class in “The Demonetization held on to by hoarders. It could change has helped eliminate. They call themselves the “Re- Accountant Milind Limaye, sense of purpose, joined the
Circus” viral video. “They can take until the end of the year A more popular meme por- monetise India Movement.” 49, in the western city of Pune, rally along the way.
just relax at home because they for the full cash transfusion, trayed Mr. Modi as Marie An- “Going cashless is the new had lots of noncash options but At the market, vendor Mo-
don’t have any money to ex- economists say. toinette: “If they don’t have Pa- cool,” tweeted starlet Sunny still struggled because his cook hammed Alam said sales are
change.” The long-term benefit of the per, let them use Plastic!” Leone in November. and the neighborhood vegeta- the worst he has seen in 15
The South Asian nation took program is hotly debated. The daily annoyances of life Times Network, which runs ble and laundry guys didn’t years because customers don’t
the unprecedented step of forc- “How will you hide black without cash are the main fod- 10 English-language television have the ability to get paid by have spare rupees, and digital
ing citizens to turn in larger money?” asks a man sitting on der for satire. One video has a channels in India, is leading the e-wallet or credit card. payments aren’t an option for
rupee notes, equivalent to a gold throne in front of a gold goofy song and dance—with charge, hoping its viewership Mr. Limaye helped teach the him. He doesn’t have a smart-
about $7.50 and above and shelf displaying his gold tele- some of Bollywood’s favorite of more than 100 million peo- vegetable seller—he usually phone, a credit card swiping
close to 90% of the country’s phone and gold fire extin- moves—about how no one can ple, who tend to have high in- buys onions, tomatoes, chilies, machine or even a store. He
cash, in November and Decem- guisher in “The Demonetiza- find change. comes, could make a difference coriander and garlic from him sells socks—four pairs for
ber last year in exchange for tion Circus.” He jingles his The office of Rahul Gandhi, by using less cash while teach- for less than a dollar—how to $1.50—off a blanket on the
new notes. But as replacement heavy gold necklace and gold a leader of the opposition in ing others how to convert to receive the payments. But the ground. “I am just waiting for
bills were still being printed, watch, raises his gold chalice Parliament, retweeted a photo cashless transactions. cart owner needed rupees to the cash to come back,” he
people had to leave their funds with a smirk and says “cheers.” with a tangle of contradictory Times Network chief execu- pay his own supplier, so Mr. Li- said.
on deposit and take out only Others defend the program, traffic lights: “Government or- tive M.K. Anand said he had no maye had to teach the whole- —Karan Deep Singh
rationed amounts. rolled out by Prime Minister ders after demonetisation.” trouble making his Mumbai saler as well. 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.
GREATER NEW YORK
Queens Apartment Blaze Injures 14 Residents
PETER J. SMITH FOR THE WALL STREET JOURNAL
COLD JOB: A fire broke out Sunday in a four-story apartment building at 56-14 Waldron St. in the Queens neighborhood of Corona.
One resident suffered a serious, non-life-threatening injury; the others had minor injuries. Fire marshals are investigating the cause.
Grappling With the Drug Crisis
BY KATE KING
New Jersey Gov. Chris
Christie has staked his final
year as governor on tackling
the state’s addiction epidemic,
but efforts under way show
how difficult that task is.
Citing long waiting lists at
many treatment centers, Mr.
Christie wants to increase the
availability of both inpatient
and outpatient treatment pro-
grams. The governor has
urged the state Legislature to
pass laws limiting the quantity
of opioids that doctors can
prescribe and mandating in-
surance coverage for addiction
treatment.
“With the rest of the time
that I have as governor, a little
less than a year, most of my
time is going to be spent on
this,” Mr. Christie said earlier
this month in Trenton. “Trying
to make sure that we get peo-
ple access to care and treat-
ment, trying to make sure that
we talk, most importantly,
about this issue in a much dif-
ferent way than it’s been
talked about before.”
Substance-abuse experts
agree that expanding access to
services is critical but say fig-
uring out how to get addicts
to enter—and stay in—treat-
ment is a challenge in itself.
In Camden County, a pro-
gram offers hospital patients
who have been revived by the
heroin antidote naloxone free
vouchers for $15,000 of detox
and intensive outpatient treat-
ment. Of the nearly 50 pa-
tients offered vouchers since
October 2015, only nine en-
tered treatment and four of
them quickly dropped out,
county officials said.
“Nobody makes anybody
get clean,” said Bob Baxter,
who is project director for a
five-year federal study on ad-
diction intervention in New-
ark. People suffering from ad-
diction “have to want the kind
of treatment that’s being of-
New Jersey Senate Sets Vote on Equal-Pay Bill
BY KATE KING
New Jersey’s attorney gen-
eral is accusing Homewood
Suites by Hilton in Edgewater
of paying two female cleaners
less than their male co-workers.
The attorney general’s of-
fice launched an investigation
after one of the cleaners, Rosa
Lopez, filed a complaint with
the New Jersey Division on
Civil Rights, saying she was
fired after asking the hotel’s
owner about the pay discrep-
ancy. The investigation found
probable cause to file a civil
complaint on both gender dis-
crimination and retaliation.
“In the 21st century, the no-
tion of any employer—let
alone one that is part of a na-
tional hotel chain—paying
women less than men for the
identical work is appalling, and
cannot be allowed to stand,”
Attorney General Christopher
Porrino said Friday.
A spokeswoman for Hilton
* *
Connie Greene, vice president at RWJBarnabas Health's Institute
for Prevention, with Dr. Victor Almeida, chairman of emergency
medicine at Monmouth Medical Center in Long Branch, N.J.
Threat of Prison
Motivates Addicts
For some addicts who have
resisted rehab, New Jersey’s
drug-court system has provided
motivation. Superior courts give
criminal defendants the chance
to avoid prison by entering
court-supervised treatment.
Norberto Rosario, a 48-
year-old Newark native, was in
and out of prison for years be-
fore the threat of seven years
behind bars for burglary con-
fered, and the kind of treat-
ment that’s being offered has
to be appropriate.”
Mr. Baxter said many in the
field no longer view total elim-
ination of substance use as the
only measure of success. Re-
duction in frequency and
amount of drug use and asso-
ciated risky behaviors is in
many cases seen as a victory.
Mr. Christie increased fund-
ing for addiction treatment
29% between his first year in
office and the end of last fiscal
year, according to his spokes-
referred inquiries to the fran-
chise’s attorney, who didn’t re-
spond to a request for com-
ment. The hotel’s general
manager didn’t respond to a re-
quest for comment.
The complaint comes as the
state Senate is scheduled to
hold a vote Monday to override
a conditional veto by Gov. Chris
Christie of legislation that
would have expanded protec-
tions for female workers and
compensation for victims of
discrimination. The vote will
mark the Democratic-led Sen-
ate’s second attempt to over-
ride Mr. Christie’s conditional
veto.
Mr. Christie, a Republican,
sent the bill back to the Legisla-
ture in May with recommended
changes. At the time, the gover-
nor wrote that gender discrimi-
nation “has no place in our
modern workforce” but said the
proposed legislation was too far
out of step with state and fed-
eral laws.
NY
program despite the low par-
ticipation rate but will make it
available to all overdose pa-
tients, said Lou Cappelli, a
Democrat who sits on the
county’s Board of Freeholders.
“We’re trying to find ways
to expand the program, talking
BRYAN ANSELM FOR THE WALL STREET JOURNAL
to experts and finding the best
way to put to use the limited
resources that we have,” he
said.
The county allocates
$150,000 in annual funding to
the program, which is one of
several initiatives lawmakers
there have tried since 2014 to
combat its growing heroin
problem.
At RWJBarnabas Health,
the state’s largest hospital sys-
tem with 11 acute care hospi-
tals, substance-abuse special-
ists offered treatment to 200
patients in Ocean County who
vinced him to get help. had their overdoses reversed
“If I wasn’t pressured, I by naloxone over the span of
don’t think I would be here two years at one Ocean
right now,” said Mr. Rosario, County hospital. Only two
who has been clean three years. agreed to enter detox pro-
Of the nearly 14,200 people grams and both dropped out
who have entered drug court, within a couple of days.
state statistics show 30% com- The hospital tried a new
pleted the program and 57% approach to bedside interven-
went back before a judge after tions last year, when it used a
violating court conditions. An- state grant to hire former
other 13% were discharged for drug users who had been in
reasons such as medical or recovery for at least five years
psychological reasons or immi- and trained them to hold the
gration proceedings. interventions, said Connie
—Kate King Greene, vice president of the
Institute for Prevention at
RWJBarnabas. These recovery
man. He has budgeted $536 specialists met with 700 pa-
million for this fiscal year, a tients across five hospitals
23% increase over 2016. since January 2016, and more
New Jersey residents seek- than 400 agreed to enter
ing treatment through Medic- treatment. Nine months later,
aid and state-funded services nearly half were still in treat-
see an average wait time of 18 ment.
days for long-term residential “The fact that we’ve been
programs and 26 days for in- there and we understand what
tensive outpatient treatment, they’ve gone through, that’s
according to state records. The
state doesn’t track wait times
90% of the battle right there,”
said Eric McIntire, RWJBarna-
for privately funded treat- bas’s recovery coordinator,
ment. who has been in recovery from
Camden County plans to heroin and crack addiction for
continue running its voucher 13 years.
The bill, for example, “pro- tasks, the complaint said.
vides absolutely no limitation In 2013, Ms. Lopez began
on the amount of back pay an driving a shuttle in addition to
employee can recover when her housekeeping duties. The
claiming wage discrimination.” hotel paid Ms. Lopez $10 an
The federal Lilly Ledbetter Fair hour for the shifts she drove
Pay Act, by contrast, limits back the shuttle and $8.20 for her
pay to two years. hours as a housekeeper, ac-
cording to the complaint. Ms.
Lopez’s male co-workers were
paid $10 an hour regardless of
Gov. Chris Christie whether they were shuttle
vetoed the measure, drivers or housekeepers, the
complaint said.
saying it overstepped State Sen. Loretta Weinberg,
existing laws. a Democrat from Bergen
County, said the case illustrates
New Jersey’s need for more
stringent equal-pay laws.
Mr. Christie’s office didn’t Ms. Weinberg said that
respond to a request for com- broader back pay would make a
ment. big difference to low-wage em-
According to the state’s com- ployees like Ms. Lopez.
plaint, Ms. Lopez was hired in “That also reflects on her
August 2011 and paid $8 an Social Security payments,” Ms.
hour. Her pay was increased to Weinberg said. “She will, when
$8.20 an hour the following she collects Social Security, get
year, when her son was hired at a diminished payment based on
$9 an hour. Both had the same being shortchanged.”
Monday, February 13, 2017 | A10A
Hefty Spending
Tough to Curb
At City Hall
De Blasio, lawmakers
Going Up, Up, Up
fortify fiscal ’18 budget New York City’s budget has been
for White House cuts; steadily increasing.
GOP rival pushes back $100 billion
BY MARA GAY
One New York City Council
member wants to expand a
summer-jobs program for
youth.
Another is seeking millions
to push the city’s bike-share
program deeper into poor
neighborhoods.
And another wants to in-
crease funding to legal services
for immigrants and adult liter-
acy programs.
Such is budget season at
City Hall, where the budget is
expected to grow substantially
for the fourth year in a row, to
$84.67 billion from about $70
billion for fiscal 2014, which
was negotiated before former
Mayor Michael Bloomberg left
office in 2013.
“They are addicted to spend-
ing,” said Doug Muzzio, a pub-
lic-affairs professor at Baruch
College. “It’s their natural incli-
nation as progressives to in-
crease spending.”
Mayor Bill de Blasio and the
51-member council have en-
joyed years of a heady econ-
omy, allowing them to hire
about 16,000 employees, create
agencies like the Department of
Veterans’ Services and spend
heavily to fight homelessness,
with debatable success.
This year, the mayor and
council Speaker Melissa Mark-
Viverito, both Democrats, have
sought to strike a different
tone, urging caution amid early
signs of economic uncertainty
and concerns about potential
federal cuts under President
Donald Trump. About 10% of
the city’s economy comes from
the U.S. government.
In his preliminary budget
proposal last month, Mr. de
Blasio directed city agencies to
find $500 million in savings.
The mayor also wants to
add $250 million to the $5.5
billion in budget reserves and
increase the savings amount
in future years.
Councilwoman Julissa Fer-
reras-Copeland, who chairs
the finance committee, has
said the city should put aside
even more with Mr. Trump in
the White House.
“We know there’s a storm
coming. We don’t know how
big it’s going to be,” said Ms.
Ferreras-Copeland, a Queens
Democrat.
Yet, Mr. de Blasio still seeks
to increase spending by more
than $1 billion in fiscal 2018,
which begins July 1. And many
council members have shown
little taste for cutting back.
“I’m very concerned if we
don’t expand these programs
Salt Shakers Stay on the Menu
New York City restaurants
must place warning symbols
next to high-sodium foods on
menus, a Manhattan appeals
court has ruled.
A panel of justices from the
Appellate Division’s First Depart-
ment wrote that the salt-shaker
warnings provide information
but don’t restrict what consum-
ers can buy. The rule, enacted by
the city’s Board of Health, re-
quires restaurants with at least
15 locations nationwide to post
salt-shaker icons next to items
with more than 2,300 milligrams
of sodium, the daily recom-
mended limit.
The National Restaurant As-
FY 2018
$84.67*
80
60
40
20
0
FY2003 ’05 2010 ’15
*Mayor's preliminary budget proposal
Note: Fiscal year ends June 30.
Source: NYC Office of Management
and Budget
THE WALL STREET JOURNAL.
now what will happen in future
years,” said Councilman Ju-
maane Williams, a Brooklyn
Democrat who has pushed for
more summer jobs for young
people. “And we should do it
while we have it.”
At the New York City
Housing Authority, where of-
ficials fear they could see
painful cuts under Mr. Trump,
already urgent initiatives un-
der way have become even
more critical, said Shola Ola-
toye, the agency’s chair-
woman and chief executive.
“I just want to get as much
done in this window as possi-
ble,” Ms. Olatoye said last
week. “We need to do as much
now as we can.”
Paul Massey, a Republican
candidate for mayor, said Mr.
de Blasio should have pre-
pared the city better for a po-
tential downturn.
“They have no plan-B bud-
get,” he said.
A de Blasio spokesman
called the criticism “entirely
hollow.”
“Our reserves are at record
levels and because of the
mayor’s cautious budgeting
and aggressive savings plans
we continue to earn top
grades from ratings firms,”
Eric Phillips, the spokesman,
said in an email.
De Blasio administration
officials and others have de-
fended the spending, saying
the city needed a correction
from the Bloomberg years.
They also negotiated con-
tracts with the city’s labor
unions that included pay
raises that added billions to
the budget but were largely
praised by ratings firms.
At the council, which holds
large sway over the budget,
some lawmakers want to grow
the safety net to blunt possible
cuts under the president.
“Trump just makes me want
to expand the program more,”
Mr. Williams said.
ALLISON PASEK/THE WALL STREET JOURNAL
sociation, a trade group, sued
the city in 2015, arguing that
the Board of Health exceeded
its authority in requiring restau-
rants to post the symbols. The
association appealed a decision
by trial court judge last Febru-
ary.
Cicely Simpson, the National
Restaurant Association’s execu-
tive vice president, said the
group would explore all its legal
options. Local sodium rules are
costly and onerous, she said.
Mayor Bill de Blasio said: “It
is smart, effective and important
to inform people of the sodium
content of their food.”
—Corinne Ramey
 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
A10B | Monday, February 13, 2017
Midtown Firm
Renews Lease
For Less Space
BY PETER GRANT
A prominent New York law
firm has renewed its lease in a
Midtown office tower for less
square footage than it currently
occupies, in the latest sign that
businesses are using space
more efficiently.
Kramer Levin Naftalis &
Frankel LLP has signed a 15-
year lease for 265,000 square
feet in the 47-story tower at
1177 Sixth Avenue. It currently
occupies about 50,000 square
feet more than that, according
to Moshe Sukenik, vice chair-
man of Newmark Grubb Knight
Frank, which represented
Kramer Levin in the deal.
The trend of businesses
using real estate more
efficiently concerns
commercial landlords.
Law firms these days are
able to accommodate the same
number of lawyers in less space
because amenities such as law
libraries have migrated online.
A quarter-century ago, it was
common for firms to have a le-
gal assistant for each lawyer.
Today the ratio is more like
one to seven, Mr. Sukenik said.
“Businesses can be very
healthy and vibrant and they’re
still taking 10% less space to
accommodate the same num-
ber of employees,” he said.
Still, Kramer Levin’s deci-
sion to renew is good news for
the corporate office canyon
that runs along Sixth Avenue
north of 42nd Street. After the
recession, the area saw a rise
in vacancies as a number of
tenants, such as Time Inc., de-
parted for hipper or less ex-
pensive parts of Manhattan.
Lately, though, some big
tenants, such as Kramer Levin,
PETER J. SMITH FOR THE WALL STREET JOURNAL
The office tower at 1177 Sixth Ave. in Midtown Manhattan.
ANNUAL
WATCH & JEWELRY
SALE
January 27th through
February 18th*
*greenwich location only
have opted to remain after
considering moves.
Others that have stayed in
the area include UBS Group
AG, 21st Century Fox and News
Corp, publisher of The Wall
Street Journal. Major League
Baseball is planning to move to
the space at 1271 Sixth Avenue
that had been vacated by Time.
The neighborhood of Sixth
Avenue and Rockefeller Center
had an availability rate—which
includes vacant space and
space coming on the market—
of 12.4% in January, down
from 13.5% in the fourth quar-
ter of 2016, according to New-
mark. But that is still well
above the 9.1% availability rate
in the fourth quarter of 2007,
the peak of the last economic
expansion, Newmark said.
The trend of law firms and
other businesses using space
more efficiently is worrisome
for landlords because space
isn’t being filled at the same
rate the city’s economy is
growing. Overall, the availabil-
ity rate in Midtown was 12% in
January, compared with 8.5%
in the fourth quarter of 2007,
Newmark said. Meanwhile, av-
erage asking rents have fallen
to $81.64 a square foot from
$87.52 a decade earlier.
“Even though the overall
economy in the city remains
quite vibrant, that doesn’t
mean every move doesn’t ef-
fectively free up a bit of
space,” Mr. Sukenik said.
The 1 million-square-foot
tower at 1177 Sixth Ave. was
bought in 2007 for about $1
billion by a group including
Silverstein Properties Inc. and
the California State Teachers’
Retirement System. In 2014, a
real-estate fund managed by
UBS Global Asset Management
purchased a stake in the prop-
erty.
Chris Mongeluzo and Brian
Cohen were part of the leasing
team at Newmark that worked
on the Kramer Levin deal.
NY
GREATER NEW YORK
Jeremy Browning, right, at Prolific Interactive, a mobile agency located at 77 Sands St. in Brooklyn’s Dumbo area, seen below.
Brooklyn’s High-Tech Pull
BY KEIKO MORRIS
Like many expanding tech-
nology companies in New
York, 2U Inc. had been on a
hunt for office space in a
neighborhood setting sur-
rounded by like-minded busi-
nesses. It fi-
PROPERTY nally found its
spot—not in
the usual tech
precincts of Manhattan, but
over the bridge in Brooklyn’s
Dumbo area.
The education-technology
company this week is expected
to sign a lease for almost
80,000 square feet on the up-
per floors of 55 Prospect St., a
building that is part of a 1.2
million-square-foot redevelop-
ment of former industrial
buildings called Dumbo
Heights. In December, 2U will
vacate its 20,000 square feet
of space at Chelsea Piers and
make the move.
The deal is one of several in
the past year that are stoking
optimism among Brooklyn de-
velopers betting that compa-
nies in the tech, advertising
and media sectors will choose
the borough. In all, more than
7 million square feet of space
have been proposed or are in
the works to come onstream
in the next two years.
“It’s a big move coming
from the cool part of Chelsea
to Dumbo, but I think it sort of
celebrates how Brooklyn has
not only grown but has been
established as a creative
class,” said Asher Abehsera,
chief executive of LIVWRK,
which has partnered with
Kushner Cos. and RFR Holding
to redevelop the Dumbo
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Heights buildings.
To be sure, the moves don’t
add up to the mass migration
from Manhattan some devel-
opers and brokers had ex-
pected in 2016. But the batch
of lease deals bringing compa-
nies from neighborhoods such
as SoHo and Union Square
suggests steady growth over
the next few years.
“It was a much more mea-
sured market than what our
expectations were in February
of 2016,” said Michael Shenot,
managing director of real-es-
tate services firm JLL.
In the past few years, a
number of big developers have
jumped into Brooklyn with sig-
nificant redevelopment proj-
ects and plans for new
ground-up towers from the
Brooklyn Navy Yard to down-
town Brooklyn and Bushwick.
The Dumbo area, in particu-
lar, has pulled a number of
tenants from Manhattan’s hot
Midtown South neighbor-
hoods. In 2016, advertising
* * THE WALL STREET JOURNAL.
agency 72andSunny signed a
lease to move from about
13,000 square feet at 30 Coo-
per Square in Manhattan to
63,000 square feet in the 19th-
century warehouse complex
called Empire Stores on the
Dumbo waterfront. Media
firms Laundry Service and Cy-
cle also have signed deals to
relocate to Empire Stores this
year from 40 W. 25th St. in
Manhattan.
Though the pace of office
leasing in Brooklyn slowed last
year, as it did throughout New
York City, the borough’s office
market was still strong com-
pared with previous years,
said Joseph Cirone, senior di-
rector at real estate services
firm Cushman & Wakefield.
Overall new leasing activity
for the year was 818,861
square feet, 2.5% below the
2015 level of 839,338 square
feet, the highest on record
since 2010, when Cushman &
Wakefield started tracking of-
fice data in the borough.
PROPERTY WATCH
NEW JERSEY
Office Campus
Fetches $26 Million
Mack-Cali Realty Corp. has pur-
chased a 17-acre campus of three
office buildings in Red Bank, N.J.
Mack-Cali paid $26 million for
the buildings sold by M. Alfieri
Co., said Andrew Merin, who led
the Cushman & Wakefield team
that arranged the sale. The pur-
chase includes 100 and 200
Schulz Dr. as well as 230 Half
Mile Rd., totaling about 280,500
square feet of space, said Mr.
Merin, a Cushman vice chairman.
The buildings are located near
Mack-Cali’s One River Centre, a
nearly full office campus also in
Red Bank, said Michael J. De-
Marco, Mack-Cali’s president.
The company intends to reno-
vate both the newly purchased
campus and the One River Cen-
tre buildings, creating one cam-
pus with shared amenities.
NEW JERSEY
Financing Lined Up
For Merrill Offices
An affiliate of Capital Com-
mercial Investments Inc. and
Atalaya Capital Management LP
have obtained $103.6 million in
financing to acquire three office
buildings in Hopewell, N.J., ac-
cording to Cushman & Wake-
field, which arranged the deal.
Barclays was the lead lender,
with Morgan Stanley also partic-
ipating as a lender, said John
Alascio, executive director in
CLAUDIO PAPAPIETRO FOR THE WALL STREET JOURNAL (2)
Developers say they are ex-
pecting an uptick in interest
and leasing as the projects get
closer to completion. Dock 72,
a Brooklyn Navy Yard project
anchored by co-working space
giant WeWork Cos., will be
ready for tenants to build out
spaces in 2017. The developers
behind it, Rudin Development
and Boston Properties Inc., are
expecting activity to pick up
this spring.
Tenants are signing on
when they can “stand on
floors and see the project is
real,” said Jeremiah Kane, di-
rector of the New York region
for Rubenstein Partners, a co-
developer of a 504,000-
square-foot commercial build-
ing at 25 Kent Ave. in
Williamsburg. “The Brooklyn
market is a show, don’t tell
market,” he said.
Manhattan’s Midtown South
office market has one of the
lowest vacancy rates in the
U.S. Rising prices there have
made Brooklyn’s new or like-
new developments, which of-
ten come with views and am-
ple outdoor space, attractive.
Brooklyn buildings generally
have lower asking rents, and
companies moving to certain
designated revitalization areas
can receive city tax credits,
further lowering costs.
Another draw: the hordes of
Brooklyn residents who work
in the tech, advertising and
media sectors. About 90% of
the staff at B-Reel, an advertis-
ing agency, live in Brooklyn.
The firm will double the size
of its office when it leaves
Tribeca and relocates to 13,500
square feet in the Dumbo
Heights complex in May.
Cushman’s equity, debt and
structured finance group.
The partners bought the
building for $148 million, accord-
ing to public filings.
The buildings at 1300, 1350
and 1400 Merrill Lynch Dr. are
fully occupied by Merrill Lynch,
which has seven years remaining
on its lease.
They are part of an intercon-
nected, 12-building campus with
amenities such as basketball
courts, cafeterias and pedestrian
walkways, Mr. Alascio said.
NEW YORK
Rockefeller Group
Hires Megumi Brod
Rockefeller Group has named
Megumi Brod to head its North-
east development efforts as the
developer and landlord begins to
refocus on potential deals in
Manhattan.
Ms. Brod, previously a principal
at Bedrock Real Estate Partners,
will hold a senior vice president
position and guide Rockefeller’s
development in the Northeast re-
gion, the company said.
She will oversee Rockefeller’s
existing New York region proj-
ects, including the $600 million
redevelopment of 1271 Sixth
Ave.
In addition to expanding
Rockefeller’s development in the
region, Ms. Brod will scout for
development opportunities in
Manhattan beyond Rockefeller
Center, the first time in decades
for Rockefeller, the company said.
—Keiko Morris
 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. * * * * * * Monday, February 13, 2017 | A11

LIFE&ARTS
MUSIC

Adele Sweeps
Grammy Awards
Chance the Rapper Is Named Best New Artist
In a Recognition That Promises to Boost Subscription Services
BY HANNAH KARP
AND NEIL SHAH

BRITISH MEGASTAR Adele swept

the 59th annual Grammy Awards,
winning three of the top prizes
with her album “25” and its hit
single “Hello.”
Organized by the Recording
Academy and emceed by “Late, Late
Show” host James Corden in Los
Angeles Sunday night, the politi-
cally charged show opened simply
with the 28-year old chanteuse
singing “Hello,” which won the
prizes for song of the year and re-
cord of the year. Her “25” was

named album of the year, having
sold 8.5 million copies to date in the
U.S., according to BuzzAngle Music.
Her rival in the top three cate-
gories, R&B queen Beyonce,
flaunted her pregnant belly in a
sheer, sparkling gold gown and a
halo-like headdress as she per-
formed an ode to motherhood. In-
troduced by her own mother, the
35-year-old pop singer, who re-
cently announced that she is ex-
pecting twins, sang two slower
cuts from last year’s album “Lem-
onade” and took home awards for
best urban contemporary album
and best music video.
Adele said in one of her accep-
tance speeches of the night that
Beyonce was her idol.
“I want you to be my mommy,”
she said.
The show grew more politically
charged as the night progressed,
with rapper Busta Rhymes thank-
ing “President Agent Orange” for
his “unsuccessful attempt at the
Muslim ban,” while performers
knocked down a wall chanting “we
the people.” At the end of the hip-
hop collaboration, A Tribe Called
Quest frontman Q-Tip called on
the crowd to “resist,” a word that
also appeared on an armband
worn by pop star Katy Perry.
Spotlighting the growth of
streaming services, Chance the
Rapper was named best new art-
ist, while his mixtape “Coloring
Book,” was also awarded best rap
album, even though it was first
released only on Apple Inc.’s
streaming service Apple Music
and still isn’t for sale as a CD or
even a download in Apple’s
iTunes Store. The 23-year-old
hip-hop artist’s mixtape beat
competitors including Kanye
West’s “The Life of Pablo,” which
isn’t for sale as a CD, either. That
collection was first released only
on Jay Z’s streaming service
CLOCKWISE FROM TOP LEFT: MATT SAYLES/INVISION/ASSOCIATED PRESS; LUCY NICHOLSON/REUTERS; CHRISTOPHER POLK/GETTY IMAGES; KEVORK DJANSEZIAN/GETTY IMAGES
The music industry turned out for the 59th Annual Grammy Awards in Los Angeles Sunday night. Clockwise from top left: Adele opened the show with her hit
‘Hello,’ Chance the Rapper accepted the best new artist award, James Corden hosted the ceremony and Beyonce performed an ode to motherhood.
Tidal, and Mr. West continued re-
working some of the album’s mu-
sic for weeks after it was first is-
sued last February.
The award show’s recognition of
such modern releases could raise
awareness of subscription stream-
ing services and potentially drive
subscriptions, said Nielsen Music
analyst Dave Bakula. That would
help the music industry, which is
counting on $10-a-month stream-
ing services such as Apple Music
and Spotify AB to sustain its re-
cent growth as CD and download
sales continue their yearslong de-
clines.
“If I’m not an Apple Music sub-
scriber, I’m probably not even
aware of this record,” said Mr. Ba-
kula, referring to “Coloring Book.”
The Grammy telecast, he added,
might spark an “awakening for
fans” because “they’re not going
to be able to buy it.”
An array of stars also used the
night to make political statements,
with Mr. Corden—known for “Car-
pool Karaoke,” in which he drives
around with musicians as they belt
out tunes—performing a rap that
included the line: “with President
Trump we don’t know what comes being a “time when artists must test,” a reference to demonstra- update music laws and renew
next.” go to work.” Paris Jackson, daugh- tions by Native American tribes “America’s commitment to the
Singer-actress Jennifer Lopez ter of the late pop star Michael and environmental groups against arts.” In his speech, Mr. Portnow
also told the crowd not to suc- Jackson, told the audience that the the Dakota Access Pipeline. said one of the country’s most im-
cumb to fear or self-pity, quoting world could “really use this type Recording Academy President portant exports was “American
the writer Toni Morrison on now of excitement at a pipeline pro- Neil Portnow called on Congress to music.”

PARENTING

PARENTS, YOU CAN ACE

THE SLEEPOVER
BY ANNE MARIE CHAKER
AT 11 P.M. young girls’ giggles echo
through the house even though you
already said it was ‘lights out’ three
times. You give in and deliver a
bowl of caramel-drizzled popcorn to
the pajama-clad gang.
Sleepovers are a parent’s dread
and a child’s dream come true.
Parents suddenly have more chil-
dren to look out for. Screaming
fills the house and listening ears
go out the window. For a child, it
is the chance to host a party all
night long. For parents, it is 24
hours of many parenting dilem-
mas. Do you let bedtimes go? Is
video-chat for an hour suddenly
OK? It is also a test of a child’s be-
havior, from acting polite with
grown-ups to following house
rules amid a heady mix of hor-
mones and peer pressure.
After months of pleading for a
sleepover, Grace Kasten’s wish be-
came a reality this past weekend,
with two friends staying overnight
on her 10th birthday. Planning took
KAGAN MCLEOD
movie (7:30).
“We’re going to hang out and I
have some new nail polish,” says
Grace, who adds that extra mat-
tresses and a fort-building kit will
come in handy for the basement
sleepover.
Her mother, Julie Kasten, a 43-
year-old career counselor in Falls
Church, Va., has also had a lot on
‘It’s so easy to go to a
video on cats to…
something else,’ says one
mother of a preteen.
her mind leading up to the big day.
For one thing: Should children be
allowed their cellphones? “We’ve
been talking about technology and
sleepovers with parents of similarly
aged kids,” she says. In the fourth
grade, Ms. Kasten says, some chil-
dren have their own smartphones
while others don’t. “Some have in-
In the end, she says, she called
the girls’ parents to ask them to
leave their phones at home. “It’s
so easy to go to a video on cats
to…something else,” she says.
Ms. Kasten also weighed in on
Grace’s movie selection, which ini-
tially was “Miss Peregrine’s Home
for Peculiar Children”—a dark fan-
tasy directed by Tim Burton. “I
said, ‘Is this a movie you want to
watch at night before bed?’” she
says. They consulted Common
Sense Media, which rates films’ ap-
propriateness for children at differ-
ent ages, even suggesting ones for
a sleepover. Afterward, they agreed
on “The Secret Life of Pets.”
Parenting experts say that it is
important to be involved—providing
guidance—but letting pre-adoles-
cents feel like they are making their
own decisions. “The ideal is ‘author-
itative,’” says Laura Kastner, a pro-
fessor of psychiatry at the Univer-
sity of Washington specializing in
children and teens, which is some-
where between “authoritarian” (i.e.
no sleepover allowed) and “permis-
sive” (i.e. the parent disappears).

several weeks, with Grace creating ternet access and some don’t. Some One way to do that, she says is
a list of planned activities that in- parents are interested in monitor- to collaborate on planning and let
clude doing nails (4:45); personaliz- ing and others aren’t,” she says. “It the child feel like they get to make
ing pizzas (5:15); and watching a is all over the place.” Please see SLEEPOVER page A13
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
A12 | Monday, February 13, 2017
LIFE & ARTS
ART REVIEW
West Coast Punk-Rock Draftsman
Raymond Pettibon brings a raw, aggressive visual voice to his works, and clearly knows how to draw when he needs to.
BY PETER PLAGENS
New York
PEE-CHEE FOLDERS, I was surprised
to find, are still sold in stationery
stores. When I was in high school back
Explore Costa Rica on a Caravan fully guided tour in the antediluvian age, these paper
carriers of quite a limited amount of
CostaRica
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homework were the choice of the
cooler guys dressed in narrow jeans
and white shirts (with packs of Lucky
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the pocket to irritate the
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Day 1. Your tour begins in San José, Costa Rica. drawings—of football
players, cheerleaders
Day 2. Explore the active Poás Volcano. and the like.
Day 3. Cruise the Rio Frio. Soak in hot springs. The erstwhile Los An-
geles artist Raymond
Day 4. Hike the Hanging Bridges. Pettibon—who moved to
New York in 2011—was
Day 5. Free time to fully enjoy your beach resort. born in 1957, a year be-
Day 6. Birdwatching cruise on Tárcoles River. fore I mustered out of
secondary education, but
Day 7. Explore Manuel Antonio National Park. he somehow fell into, as
a self-taught artist, what
Day 8. Return with great memories. one might call a fever-
The #1 dream version of the Pee-Chee style.
In Value Mr. Pettibon (whose assumed last
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name derives from the nickname, “Pe-
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maniacally (his output to date is about
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nicely hand-printed text from his own
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high-end sources as William Blake and
Lord Byron. The title of this exhibition
at the New Museum of Contemporary
Art in New York—“A Pen of All
® Work”—is in fact taken from Byron’s
poem “The Vision of Judgement.”
Fully Guided Tours Since 1952 Mr. Pettibon—who holds a degree
in economics from UCLA—started out
by teaching math in a junior high
school, but soon a visceral, anti-estab-
lishment appetite for art got the bet-
ter of him. He first made posters for
such L.A. punk bands as the Circle
Jerks and Black Flag (the front man
for the latter was the artist’s brother,
SHOP STRAIGHT FROM Greg Ginn), then began creating stand-
T H E R U N WAY W I T H alone drawings, eventually and sub-
versively inspired by everything from
SEE IT.
Goya to Gumby, from Reginald Marsh
to Ronald Reagan. This retrospective
exhibition—which fits the New Mu-
seum in temperament like the prover-
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bial glove—is similarly inclusive. It
contains some 700 drawings and lots
of ancillary video, occupies three
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CLOCKWISE FROM TOP RIGHT: ROBERT BERMAN GALLERY; ARCHIVE HAUSER & WIRTH COLLECTION; REGEN PROJECTS; DAVID ZWIRNER, NY (2)
whole floors, and tackles (or slashes
at) everything from Elvis and the
Beatles to the atomic bomb and the
war in Iraq. The exhibition makes a
pretty good case that Mr. Pettibon—
despite his sometimes-wearying ado-
lescent rebelliousness—is indeed a
major artist. His visual voice is more
raw than, say, R. Crumb’s, more ag-
gressive than William Wiley’s, and his
impact is right up there with that of
his late friend Mike Kelley.
Mr. Pettibon is not a particularly
good draftsman in any orthodox sense.
His human figures are disproportioned
and boneless, his compositions decid-
edly offhand, his brush-and-pen work
woefully inconsistent, and his fin-
ish…well, there’s usually no sense of
finish at all. But that’s where Mr. Petti-
bon gets his considerable clout; his
drawing eschews any kind of academic
gloss, but he clearly knows how to
draw for his own purposes, like Francis
Picabia or Grandma Moses knew how
to paint for theirs. Genuinely enraged,
Mr. Pettibon maintains his West Coast
punk pedigree. He can knock you back
on your heels more powerfully with a
piece of paper in a frame than other
artists can with a whole installation
piece of frightening detritus.
This is not your father’s—or your
THE WALL STREET JOURNAL.
Works by Raymond Pettibon: far left: ‘No
Title (They Are innocent?)’ (1960s/2000s);
from top: ‘No Title (To a Tune)’ (1991); ‘No
Title (It Entirely Changes?)’ (1988); ‘No
Title (1.12 Bob Gibson)’ (2015); ‘No Title (I
thank the?)’ (2005)
grandfather’s, for that matter—draw-
ing exhibition. A 1986 drawing of a
woman in the Charles Manson cult dis-
plays her nude and holding a switch-
blade knife; it’s hand-captioned “Kan-
sas prepares them for it perfectly,”
with the clear implication that middle
America creates gullible followers. A
portrait—broadly speaking—of Osama
bin Laden equates him with bedrock
Republicans of the Sen. Robert Taft va-
riety; and more or less romantic state-
ments in a grid of drawings are each
undermined by the silhouette of an
erection. On the other
hand, Mr. Pettibon has a
calmer, more benevolent
side that surfaces in his
renditions of baseball
players—a perfect Pee-
Chee subject, by the way.
The artist reportedly
loves the game, and a big
drawing featuring the
Hall of Fame St. Louis
Cardinals pitcher Bob
Gibson is the closest Mr.
Pettibon will probably
ever get to hero worship.
“A Pen of All Work” is
not, however, without
faults, both large and
small. Mr. Pettibon’s
huge drawings of small
surfers negotiating big
blue waves are ambitious but, com-
pared with everything else, empty. His
adding after-the-fact texts to childhood
drawings is uncharacteristically vain.
And the video is—except as sociologi-
cal context for the punkish L.A. art
scene of the late 20th century—border-
line insufferable. But the most serious
misstep is simply the size of the show.
Mr. Pettibon is an artist best absorbed
in doses much smaller than several
hundred works. It doesn’t help, either,
to be asked by the installation to read,
without benefit of a stepladder, the
print in drawings mounted high up on
the New Museum’s walls.
Still, Mr. Pettibon deserves to be cu-
ratorially rewarded for simply letting it
all rip, shooting first as it were and ask-
ing questions later. That the work in
the show sometimes slips from pat-
ented and potent Pettibon-bad to truly
bad doesn’t hurt the show that much.
It’s as unpretentiously American as a
Pee-Chee folder.
Mr. Plagens is an artist and writer in
New York.
Raymond Pettibon: A Pen of All Work
New Museum of Contemporary Art,
through April 9
 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.
SIMON SIMARD FOR THE WALL STREET JOURNAL
A Race So Tough,
He Needs a Year to Train
BY AMY DOCKSER MARCUS
AS A SCIENTIST and business-
man, Nessan Bermingham spends
most days thinking about data.
The numbers surrounding his lat-
est venture are daunting.
Dr. Bermingham, 44, has em-
barked on a yearlong training pro-
gram to prepare for the Roving
Race, a grinding, weeklong out-
door competition that changes lo-
cation every year. In November, Dr.
Bermingham heads to Patagonia,
where he will run 25 miles a day
over rough terrain for four days—
followed by a 50 mile overnight
stretch. (The final day is a mere 6
miles.) Organizers expect 250 to
SLEEPOVER
Continued from page A11
a lot of decisions. “Things
like, ‘Should we have the
popcorn at 7 or at 8?’ ” says
Dr. Kastner, author of “Wise-
Minded Parenting.” “Or,
‘Should we put the air mat-
tresses over here or there?’ ”
She advises parents pay
attention to the children
your child hangs out with
because those personalities
may intensify at the slee-
pover. In the carpool, she ad-
vises parents “lay low, wear
beige” to listen and get a
sense of the dynamic in the
social group.
“You need to know a little
bit to intervene when things
go south,” she says. Bad
things can happen, such as
unwanted picture-taking to
social-media oversharing.
Dede Parker, a 48-year-old
modeling agent in Los Ange-
les, has hosted a handful of
sleepovers for her 10-year-
old daughter Frankie. She
tries to check in every hour,
by poking her head in and
saying things like, “What are
you girls doing out here?”
Or, “What’s up?”
“The answer is usually
‘nothing’ or they barely even
respond,” says Ms. Parker.
But the message she is try-
ing to convey is “I’m still
around,” she says.
Patti Cancellier, education
director at the Parent En-
couragement Program in
Kensington, Md., which runs
parenting classes, suggests
an easy way for parents to
keep tabs on sleepovers with-
out appearing intrusive is to
serve food that requires “a
certain amount of upkeep and
maintenance,” such as tacos,
where meat and toppings get
frequently replenished.
“It allows you in an ac-
ceptable way to go in and
freshen up the food,” she
says. “Don’t comment or join
in on the conversation. But it
gives you the chance to
check in.”
When your child stays at
someone else’s house, a par-
ent has far less control. Dana
Palmieri, a stay-at-home mom
in Sanford, Fla., picked up her
9-year-old daughter Maddison
from a sleepover that esca-
lated uncomfortably into a
WHAT’S YOUR WORKOUT?
300 participants from 40 coun-
tries.
Competitors are required to
carry their own gear on their
backs. Only water and a communal
rest tent are provided. The terrain
is rough, the weather unpredict-
able and the elevations a challenge
during a race that takes place
amid the foothills of the Andes in
Argentina.
“A race like this, it’s not one I
know I can finish,” Dr. Berming-
ham says. “The uncertainty is very
motivational.”
Science is all about uncertainty,
particularly at startups like Intellia
Therapeutics Inc., the biotech com-
pany in Cambridge, Mass. where
Dr. Bermingham is a founder and
Grace Kasten planned her slumber party schedule to the minute.
game of “would you rather”
involving a parent’s cellphone.
The incident provided an
opportunity for mother and
daughter to talk about tough
topics like peer pressure and
internet content. “We had a
long talk about what’s appro-
priate and not appropriate,”
she says.
Joanna Warden, a Wash-
ington, D.C.-area, health-
care consultant hosted a
“sleep-under” for her
daughter Emily’s eighth
birthday last month, giving
her daughter the excitement
and anticipation of a slee-
pover—without anybody ac-
tually sleeping over.
Eight second-grade
friends came at 5:30 p.m. on
a Saturday evening in their
pajamas. They sang karaoke,
played with temporary tat-
toos, ate ice cream sundaes,
decorated pillowcases and
snuggled in sleeping bags.
Then, everyone left at 8 p.m.
“The girls thought it was
so novel and cool to go out
to a nighttime birthday
party,” says Ms. Warden.
JULIE KASTEN
“But they weren’t ready for
a sleepover, and neither
were we.”
LIFE & ARTS
CEO. The company is using a gene-
editing technology called Crispr-
Cas9 to try to cure diseases.
Dr. Bermingham approached his
longtime trainer, friend and boxing
partner, Shane Genakos, about cre-
ating a workout to get ready for
the race. Mr. Genakos says that
when he creates workout regimens,
Dr. Bermingham “always wants me
to explain the science behind it.”
This time, Mr. Genakos told him,
the focus wasn’t only going to be
on the number of pull-ups and
push-ups or miles run, but also
training to push through blisters,
sore muscles and fatigue.
The Workout
To train for a long-distance race
SLEEPOVER
SOLUTIONS
Let your child plan with
you. Set a schedule
of activities.
Choose a movie
in advance.
Ask friends to leave cell
phones at home or to turn
them over to the host’s
parents for the night.
Make snacks that
require you to check in Acclaimed as one of the world’s greatest landscape painters and widely
and replenish. regarded as the first Impressionist, Corot’s paintings served as inspiration for
Get to know the
entire generations of artists who followed him. Signed (lower left). Canvas:
personalities of your child’s 36”h x 521/2”w; Frame: 453/4”h x 62”w. #30-5760
friends in advance, so
you can be smart about
whether to intervene if
the party goes south.
Talk about what is
appropriate with your child
in advance of a party.
630 Royal Street, New Orleans, Louisiana • 877-677-2801 • ws@rauantiques.com • rauantiques.com
Consider a “sleep-under,”
where guests come in Since 1912, M.S. Rau Antiques has specialized in the world’s finest art, antiques and jewelry.
Backed by our unprecedented 125% Guarantee, we stand behind each and every piece.
pajamas, hang out in
sleeping bags, but go
home at night before bed.
Monday, February 13, 2017 | A13
Nessan Bermingham, above right, runs with his trainer and friend, Shane
Genakos, above left, in Boston and works a heavy punching bag, left, to
prepare for an endurance race in Argentina.
that requires lugging a heavy back- pull-ups and 20 push-ups, he will
pack, Dr. Bermingham bought a 20- do 12 pull-ups and 25 push-ups
pound HumanX weight vest that he for the next repetition.
wears twice a week during 10-mile
runs along the Charles River, The Reading
capped by a sprint up and down To get inspired, Dr. Bermingham’s
the stairs of Harvard Stadium. “I first assignment was to read Diana
get a lot of stares,” he says. Nyad’s book “Find A Way,” which
He plans to work up to a 25- offers insights into the psychology
pound vest while increasing his of her three attempts to swim
daily mileage. He also wears the from Cuba to Florida. Dr. Berming-
weight vest while doing strength ham says he has listened to a Ted
training in the gym. To stay moti-
vated and mimic the race condi-
tions, every three months, Dr. Ber-
mingham runs five days in a row,
talk by Ms. Nyad four times.
He admires her courage and en-
durance, particularly in dealing
with jellyfish. Although he’s biked
no matter the weather, wearing
the vest. He starts out with 10-
mile runs and is working up to a
goal of 20 miles.
Mr. Genakos says they are using
across Tanzania and down a don-
key trail in Peru, he says the big-
gest challenge was swimming 1.2
miles in jellyfish-infested waters
during a Half-Ironman competition
the Training Peaks app to monitor in Miami. He had welts on his
and tweak Dr. Bermingham’s work- body for weeks after being stung
out program, which started Dec. 1. so many times.
They want to ensure he maintains
80% to 85% of his maximum heart The Gear
rate whenever he exercises. For sparring sessions, Dr. Berming-
During the week, Dr. Berming- ham uses Cleto Reyes gloves
ham usually works out from 7 to ($169) and a Buddy Lee jump rope
8:30 a.m. in a home gym. On week- (around $28).
ends, he trains two to three hours Outdoor running in Boston re-
a day, and tries to vary his work- quires lots of layers, mainly from
outs to include mountain biking, the Arc’Teryx line, including the
boxing and snowboarding. Incendo hoodie ($139). Dr. Ber-
Mr. Genakos says daily work- mingham prefers Asics GT-1000
outs change but focus on the running shoes ($100), and an es-
glutes, improving flexibility and sential piece of gear for any work-
building up strength in the core, out in Boston, a Red Sox baseball
shoulders and biceps. All the cap.
workouts are built on the concept Dr. Bermingham says in the Pat-
of reverse drop-sets, meaning that agonia race he will also make room
if Dr. Bermingham starts with 10 for his go-to treat, Snickers bars.
Poetry in Paint
Camille Corot
Revered artist. Luminous palette. Tranquil
scene. One of the world’s most important
artists, Camille Corot’s contributions to
the history of art are immeasurable. In
this monumental, original work entitled
Le Passeur (The Ferryman), Corot deftly
captures the monumentality of the
French landscape with his renowned
lyricism and impressionistic luminosity.
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
A14 | Monday, February 13, 2017 THE WALL STREET JOURNAL.

SPORTS

ETHAN MILLER/GETTY IMAGES

UFC president
Dana White,
center, separates
Nate Diaz, left, and
Conor McGregor.

UFC | Jason Gay

Dana White Continues the Fight

When the life-chang- won the race? White House. White believes the UFC is well- this exists on the women’s side
ing deal came together, It was then White realized: he He also slyly noted he’d had a positioned to reach younger audi- without [her].”
Dana White admits he didn’t feel like he’d won the race. nice streak playing blackjack. ences. He said he’s taken motiva- White prides himself on such loy-
briefly fell apart. Not yet at least. “I’m on a run right now that is f- tion from chatter that the league’s alty. It was the reason White—who
Last summer, a group “I feel there’s so much more to --ing epic,” White said, smiling. “I’m new owners paid too much for the said he is not a Republican, and
led by the talent agency WME-IMG do in this sport,” he said. up, like, a million three.” UFC, and he’s eager to prove the voted for Obama in 2008—chose to
purchased the Ultimate Fighting White sat back in his chair. It was The humble early days when skepticism wrong. speak on behalf of then-candidate
Championship for $4 billion—mak- Friday afternoon, Feb. 10, at a TV White worried about keeping the “I kind of live for that,” he said. Trump at the GOP convention, de-
ing White, who held a chunk of the studio in midtown Manhattan. The UFC afloat felt like ancient history. It helps that in McGregor, the spite a lot of advice to stay away
company primarily owned by his UFC boss was dressed in trademark On the verge of collapse when the UFC currently has a brash, loqua- from his friend’s campaign.
friends Lorenzo and Frank Fertitta, casual attire: jeans, sneakers, and a Ferrtitas bought it for $2 million in cious talent who has become not “Everybody told me not to do it,”
a very wealthy man. White’s per- grey long sleeved baseball shirt. 2001, the brand’s reach is now only one of the most magnetic stars White said. “That guy’s never been
sonal haul was reported to be north The next night, White would be global. White said he is particularly in MMA, but in sports, period. “A anything but good to me, he’s ask-
of $350 million. in Brooklyn for a UFC card at Bar- focused on developing the UFC in unicorn,” is how White describes ing me to come speak, and I’m go-
And yet the sale provoked a kind clays Center, the league’s second Russia and China. the 28-year-old, who is ruthless ing to tell him no? No way.”
of existential crisis for the colorful, sold-out event in New York since At the same time, mixed-martial with both his mouth and inside the The night of the election, White
blunt-tongued president of the the state lifted its controversial arts are not immune to the issues UFC “Octagon.” was in New York City, celebrating
mixed-martial arts league. prohibition last year. facing every sport as they try to At the moment, McGregor is his wedding anniversary with his
“I was a mess,” White confessed. adapt to changing audiences and waiting on the birth of a child with wife, Anne. After dinner, they
What would White chase now? habits, especially with television. his longtime girlfriend, Dee Devlin, headed back to the Peninsula Ho-
The head-shaven former boxer with White joked about how, as a kid, but is on track to fight the winner tel—where Hillary Clinton was stay-
Boston roots, now 47, had spent
After a giant sale and he raced home by 8 p.m. to watch of March’s fight between Khabib ing, as it turned out—and watched
more than a decade and a half re- payday—and a surprise his favorite show, the highway mo- Nurmagomedov and Tony Ferguson, the results come in.
lentlessly selling, pushing, and ca- torcycle cop program “CHiPs.” By White said. Regarding the relentless In the early hours of the morning,
joling a nascent combat sport from
speech for Trump, the contrast, White said his teenage speculation that McGregor might White’s phone rang. It was Trump
the margins into the mainstream. UFC boss is reenergized. sons don’t watch TV, at all, prefer- box Floyd Mayweather, White said son-in-law Jared Kushner, he said.
The mega sale was a confirma- ring devices to traditional cable, both men were “very, very good at “He said, ‘We’re going to win this
tion of White’s success. The UFC and watching content whenever keeping themselves relevant when thing, man…meet us at the Hilton,’”
had arrived. Yet to White, it also they want. they’re not doing anything.” White recalled. “I was in my under-
felt like an end. He compared the “We’re rolling, man,” White said, “I think all of cable is going to fall As for Rousey, White acknowl- wear, laying in bed! I jumped up,
sale to a divorce. He didn’t like talk- enthusiastically. “I’ve got a whole apart,” White said. “These kids don’t edged it was difficult to again see got dressed and went down there.”
ing about it. list of potential new stars who are even have cable, the younger gener- the breakthrough women’s cham- As for Trump’s contentious
“The money side f----ed me up, up and coming.” ation. And when I say younger, I’m pion lose another one-sided fight, first month in the White House,
too,” White said. “People ask me, He was back at it, reenergized, talking 28, too….28-year-olds, who this one in late 2016 to Brazil’s White—who knows a thing or two
‘Now that you have all this money, after a wild six months for the UFC: don’t have cable television.” Amanda Nunes. “To watch someone about tough talk and public bat-
what are you going to do?’ Well, a landmark 200th event, the dra- This was a pronounced change. you care about lose that way is al- tles—urged everyone to “take
it’s not like I didn’t have money matic sale, the New York debut, the White recalled how essential cable ways tough,” White said. At the a deep breath.”
before. I wasn’t some dude continued ascension of Irish fighter was to himself and his roommate in same time, Rousey’s impact is unde- “His style is a style that’s never
who…hit the lottery. There’s noth- Conor McGregor, and another cruel Boston, decades ago. niable, White said. Saturday’s pay- been seen in the Presidency,”
ing else I need or want.” loss for White’s friend, the women’s “If you were flat f---ing broke, per-view event in Brooklyn was White said. “And to be honest with
White said his friend, skate- MMA pioneer Ronda Rousey. didn’t have a dime, you had every headlined by a pair of women fight- you, as weird as this sounds, his
boarder and TV personality Rob Meanwhile, White had spoken at f---ing channel on cable,” he said, ers. Germaine de Randamie beat style is the style of the new world
Dyrdek, asked him: How do you the Republican National Conven- laughing. “You couldn’t live without Holly Holm in a unanimous decision. we live in.” The man who helped
get up and put on your shoes to tion, and watched his longtime cable. These kids, they can’t live “This is the f---ing house that reinvent fighting in America
run the race, when you’ve already friend Donald Trump capture the without their phones.” Ronda built,” White said. “None of sounded certain. “It really is.”

Weather The WSJ Daily Crossword | Edited by Mike Shenk

Shown are today’s noon positions of weather systems and precipitation. Temperature bands are highs for the day.
Edmonton
d <0 1 2 3 4 5 6 7 8 9 10 11 12 Down 28 Painter Paul
50s
0s 1 Fiction’s 29 Rough guess
Vancouver
V Calgary
C l y 10s 13 14 15
counterpart
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Winnipeg
ip 16 17 18
Seattle
ttl 20s 2 Soothing
31 Jai ___
Portland
Por
P tl d 20s 30s 19 20 21 plants
Helena 40s 30s Ottawa
Montreal 32 Material for
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Billings Augusta
A 22 23 24 25 the Empire
Eugene
g Boise
i heaven
Mpls./St.. Pa
Mpls./St Paul Toronto
T Albany
A b y Boston 50s State Building’s
26 27 28 29 4 Sub shot
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rtford 60s facade
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ll
Milwaukee
k Detroit
t Buffalo
Chicago
Ch
Chic g Cleveland
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h imperfect Hank Aaron
Omahah Pittsburgh
Pittsb g h 80s 35 36 37
Sacramento
Denver p g d Indianapolis
Springfield
Spring 6 JFK guess
San
an Francisco Kansas St.. Lo Washington
h
hi
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D C 90s 39 Voted into
Colorado
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Louis Charles
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Richmond
h d 100+ 7 Goblet part
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hit
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h ill Raleigh
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Los A
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C h l tt
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Ph Albuquerque
A b q q Oklahoma
k ho
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Atl t 44 “Zip-a-Dee-
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n Antonio
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20s Anchorage
A h g Honolulu
l l 80s Showers Flurries 62 63 64
30s 40s 80s Miami 12 Hourglass fill 49 Ominous
70s
14 Ellis of the memo from the
Ice
PLAY GROUNDS | By Harold Jones Pacers boss
U.S. Forecasts City
Today
Hi Lo W
Tomorrow
Hi Lo W City
Today
Hi Lo W
Tomorrow
Hi Lo W
Across 26 Outermost 43 Team 17 Easy basketball 50 “We Three
s...sunny; pc... partly cloudy; c...cloudy; sh...showers; 1 Like bullet fences where commander two-pointer Kings” subjects
Omaha 52 27 pc 50 25 s Frankfurt 47 32 s 50 31 s baseball is where football is
t...t’storms; r...rain; sf...snow flurries; sn...snow; i...ice trains 51 Guinness of
Orlando 77 58 sh 78 59 pc Geneva 49 36 pc 52 35 s 21 Boxer’s punch
Today Tomorrow Philadelphia 44 28 s 45 33 s Havana 82 57 s 86 58 s played? played? “Star Wars”
City Hi Lo W Hi Lo W 5 Net material 23 Graceful
Phoenix 73 56 pc 74 56 pc Hong Kong 67 60 s 68 61 s 30 Cut-and-dry 46 Clothing line
Anchorage 35 31 sn 38 27 sn Pittsburgh 36 24 sf 45 32 s Istanbul 41 34 c 38 33 pc 9 Hydroelectric antelope 52 Flank
Atlanta 63 38 s 67 45 pc Portland, Maine 31 16 sn 30 17 c Jakarta 87 77 t 87 74 t
business 47 Audiophiles’
structures 24 Barrel builders 54 Amorous
Austin 69 58 sh 62 39 r Portland, Ore. 49 31 pc 51 39 pc Jerusalem 49 41 r 48 39 sh 33 Robin Hood’s investments
Baltimore 45 27 s 49 33 s Sacramento 63 41 pc 65 44 pc Johannesburg 82 62 pc 82 60 t 13 Choir member archer
beneficiaries 50 Tennis contests 27 ___ Strips
Boise 43 25 s 44 27 s St. Louis 51 39 pc 57 33 pc London 48 35 s 51 43 pc 57 Fresh
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18 Oven for firing of 2014
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MO U S E O I L S

Today Tomorrow pottery 37 “Glee” star

T R AM S P AWN
Houston 72 60 c 70 49 r Riyadh 75 51 s 69 57 pc H A I R U S A G E T R E
Indianapolis 45 31 s 50 29 s City Hi Lo W Hi Lo W Rome 61 43 pc 60 41 s 19 Tough pickup ___ Michele 60 Notions S C O T T I S H T E R R I E R
T O T A S S E S E L L A
Kansas City 50 31 c 53 28 s Amsterdam 41 29 s 43 31 s San Juan 81 73 sh 82 72 sh for bowlers 38 Flimsy, as an 61 Nautilus captain I G O R WE T L Y
Las Vegas 69 49 s 69 49 pc Athens 48 39 c 48 36 pc Seoul 41 22 sh 39 22 s B A S E I F I D O
Little Rock 57 39 pc 50 40 r Baghdad 63 45 pc 66 45 pc Shanghai 57 34 s 58 40 s 20 Specialized (in), excuse 62 Coffee option C U B A N R E V O L U T I O N
Los Angeles 75 56 s 71 53 pc Bangkok 89 69 s 89 71 s Singapore 84 77 t 82 76 t in college 40 Downwind, 63 Small
A S B A D A S B A D C A N B E
S T A C S T A L E L A O S
Miami 83 66 s 83 65 pc Beijing 54 25 s 47 24 s Sydney 79 66 s 74 67 pc S A S S H A G S S T E T
Milwaukee 44 33 s 44 27 pc Berlin 34 24 s 41 30 s Taipei 67 56 pc 69 57 pc 22 Doubting sort to sailors salamander
Minneapolis 45 28 pc 40 22 pc Brussels 47 32 s 49 37 s Tokyo 50 37 s 49 37 pc The contest answer is BINGO CARDS. By taking
25 Running 41 Paparazzi 64 Very, at the letters of the theme answers indicated by the
Nashville 55 35 pc 57 40 c Buenos Aires 74 62 t 78 64 c Toronto 28 18 sf 37 25 c
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Solve this puzzle online and discuss it at WSJ.com/Puzzles.
s

Oklahoma City 52 36 r 47 32 r Edinburgh 44 35 c 47 36 c Zurich 43 28 pc 46 30 s contest answer.

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.
Trump’s ‘So-Called’ Judgment
By Sai Prakash
And John Yoo
P
resident Trump can’t
seem to control his im-
pulse to question his
critics’ legitimacy. On Twitter
he denounced the “so-called
judge” who issued a tempo-
rary restraining order against
his immigration policy. Then,
as the Ninth U.S. Circuit Court
of Appeals reviewed the case,
he complained that “courts
seem to be so political.” He
declared that even “a bad
high school student” would
understand why his executive
order was legal. When the
Ninth Circuit ruled against
him, he called it “a disgraceful
decision.”
Meanwhile, Judge Neil Gor-
such, Mr. Trump’s Supreme
Court nominee, told senators
that he found “any criticism of
a judge’s integrity and inde-
pendence disheartening and
demoralizing,” according to a
statement on his behalf.
Yet the president has
crossed no constitutional red
lines. True, federal judges en-
joy unique constitutional pro-
tections and thus a measure of
independence. They serve for
life so long as they maintain
“good behavior.” Congress and
the president can never reduce
their salaries.
But there is no law that si-
lences the American people,
including the president, or
shields judges from criticism
outside the courtroom. No
principle of democracy or judi-
cial independence demands
that we check our tongues,
pens or tweets because the ob-
ject of critique wears a robe.
Texas and the Real Forgotten Man
Donald Trump
pledged in his
inaugural ad-
dress to stand
up for the for-
gotten man
AMERICAS and woman.
But if the 45th
By Mary
president de-
Anastasia
stroys the
O’Grady
North Ameri-
can Free Trade
Agreement in an attempt to
rescue some Americans, mil-
lions more—including many
who voted for him—could be
added to the nation’s economi-
cally forgotten souls.
The very red state of Texas
could suffer the most. Over 23
years it has worked to adapt
to open commerce with its
southern neighbor. Production
sharing in manufacturing with
counterparts across the Mexi-
can border has boosted pro-
ductivity, and a sharp increase
in U.S.-Mexico trade at Texas
land and sea ports has gener-
ated big export gains for the
Lone Star State.
Nafta has made Texas
more globally competitive. It
hasn’t happened without
some pain, particularly in
border cities. Yet without the
agreement, Texas arguably
would have found it more dif-
ficult, on the employment
front, to adjust to the acceler-
ation in manufacturing auto-
mation that hit the U.S. dur-
ing the same period.
President Trump, who was
a Democrat for most of his
life, uses the metaphor of the
forgotten man in much the
same way President Franklin
Stock Options for the Little Guy
By William M. Isaac
And Richard M.
Kovacevich
O
ne message from last
year’s election is that
American workers are
discouraged and angry that
the “system” is not working
for them. The standard of liv-
ing for low- and middle-in-
come Americans is not keep-
ing pace with historical
growth. Worse, there seems
to be a widening income gap
between average workers and
corporate executives whose
income is increased by stock
options and other benefits
available to them.
Many people see this as a
lack of respect for the contri-
butions of the average
worker. An important first
step in turning around this
perception would be to de-
velop an affordable way for
corporations to provide stock
options to all employees.
That wouldn’t solve income
The fundamental right to criti-
cize government applies no
less to jurists than to presi-
dents or members of Congress.
Mr. Trump’s attacks on the
judiciary are mild compared
with some of his predecessors’.
Upon assuming the presidency,
Thomas Jefferson ordered all
prosecutions under the Sedi-
tion Act dropped and par-
doned everyone convicted un-
der it, even though the courts
had upheld its constitutional-
ity. Andrew Jackson reportedly
It’s legitimate to
criticize the judiciary,
but unwise to do it
so injudiciously.
said of the chief justice that
“John Marshall has made his
decision; now let him enforce
it.” Jackson vetoed reauthori-
zation of the Bank of the
United States because he be-
lieved the Constitution did not
give Congress the power to
create a bank, despite the Su-
preme Court’s decision to the
contrary in McCulloch v.
Maryland (1819).
Our greatest presidents
have gone even further. Abra-
ham Lincoln declined to apply
the court’s infamous 1857 deci-
sion in Dred Scott v. Sandford
to any new cases. At the out-
set of the Civil War, he defied
Chief Justice Roger Taney’s or-
der releasing a Confederate
prisoner. Franklin D. Roosevelt
accused justices who struck
down his New Deal of living in
the “horse-and-buggy” era and
Roosevelt did during the
1930s. Both can be viewed as
champions of the fellow who
has fallen on hard times and
cannot seem to recover. The
Trumpian approach to helping
the “little guy” would also be
familiar to FDR: Make the
economy less free.
Yet as Amity Shlaes ex-
plains in her 2007 book, “The
Forgotten Man,” that term
originated with Yale professor
William Graham Sumner. In
his 1883 essay the forgotten
man is the one who is passed
the bill—unnoticed—when do-
gooders propose “measures of
relief for the evils which have
caught public attention.”
Sumner didn’t name
names. He simply described
the injustice of A and B get-
ting together to help X with
some new law. C isn’t in on
the plan but he carries the
burden. “Such is the Forgot-
ten Man,” Sumner wrote. “He
works, he votes, generally he
prays—but he always pays—
yes, above all, he pays.”
In Mr. Trump’s war on
globalism, Texas is brimming
with Cs—hard-working Ameri-
cans who have adjusted to
freer trade and now find that
A and B want to change the
rules as a favor to X. There
are millions more Cs all over
the U.S.
Federal Reserve Bank of
Dallas economist Jesus Cañas
provides a useful profile of
post-Nafta Texas in a 2016 re-
port “Texas Border Cities Il-
lustrate Benefits and Chal-
lenges of Trade.” The report
says 710,000 U.S. jobs were
inequality, but it would help.
Stock options weren’t al-
ways reserved for those at
the top of the corporate lad-
der. It used to be rather nor-
mal for employees to have the
option of purchasing shares in
the company for which they
were working. But in 2006
the Financial Accounting
Helping companies
give ownership to
average workers is as
easy as repealing 123.
Standards Board issued a rule
called FAS 123, which requires
companies to account for
stock options as if they were
a cash expense, therefore re-
ducing the net income of the
company. FAS 123 also re-
quires stock options to be
recognized as more shares
outstanding, thus diluting
OPINION
acting “not as a judicial body,
but as a policy-making body.”
He tried to persuade Congress
to add six seats to the high
court so that he could pack it
with pro-New Deal justices.
Lawmakers refused.
Nor was Mr. Trump’s imme-
diate predecessor shy about
attacking the courts. President
Obama inveighed against Citi-
zens United v. Federal Election
Commission, a landmark free-
speech case, during his 2010
State of the Union address,
with several justices sitting
right in front of him. Two
years later, when the court
was considering a constitu-
tional challenge to the Patient
Protection and Affordable Care
Act, the president publicly de-
clared that it would be an “un-
precedented, extraordinary
step” to strike it down, be-
cause it was passed by a ma-
jority of Congress. Mr.
Obama’s critics saw that as an
attempt to pressure Chief Jus-
tice John Roberts—who ulti-
mately supported the adminis-
tration’s position.
But if presidential attacks
on the courts are nothing new,
the history also underscores
the smallness of Mr. Trump’s
vision. Jefferson, Lincoln and
FDR knew when to speak and
when to keep silent. They in-
voked the great powers of the
presidency to oppose the Su-
preme Court only when funda-
mental constitutional ques-
tions were at stake: the
punishment of political dis-
sent; secession and slavery;
Congress’s power to regulate
the economy. The occasion for
Mr. Trump’s fury is a tempo-
rary restraining order of a
lost between 1994 and 2014
“as a result of increased im-
ports from Mexico and Canada
or due to shifts in produc-
tion.” Texas, Mr. Cañas writes,
was the second most-affected
state—in absolute numbers of
jobs lost—behind North Caro-
lina and ahead of California.
Texas border cities, where
manufacturing had been
“heavily concentrated in low-
value-added industries,” were
hit hard.
If Trump destroys
Nafta, millions
of Americans will
pay the price.
Yet with more competition
came increased trade, invest-
ment and technological
change, all of which helped re-
shape the Texas economy. And
cities along the border “went
on to gain far more employ-
ment than what they lost” due
to changes from Nafta.
Texas’ exports to Mexico—
measured not by where the
products are made but by
where their journey abroad be-
gins—increased by 236% from
1994 to 2015. “A significant
share of this trade,” Mr. Cañas
writes, “is in intermediate
products—goods destined for
assembly or other processing
after which they are imported
back into the U.S.” Mexico is
Texas’ top export market, tak-
ing 40% of what the state
sends abroad.
share values for the com-
pany’s existing stockholders.
This double cost became so
expensive that nearly all cor-
porations eliminated stock
options for employees making
less than $100,000 a year.
Congress should override
FAS 123 so that it isn’t so
expensive for companies to
allow employees whose cash
compensation is less than
$100,000 to have access to
stock options. Current ac-
counting treatment for those
employees earning more
than $100,000 would not
change.
Allowing all employees ac-
cess to stock options would
inevitably dilute earnings per
share, but this is a cost com-
panies and executives should
be willing to pay in order for
employees to have a stake in
the company’s earnings.
Giving all workers access
to stock options would recog-
nize the contributions they
make to their companies’
temporary suspension of im-
migration from seven coun-
tries. Mr. Trump still has the
opportunity to prevail on the
merits. He hasn’t lost the
case—at least not yet.
The Trump administration
will often appear in court over
the next four or eight years. It
will lose plenty of cases, be-
cause, like its predecessors, it
will push the legal envelope. If
the president publicly vents
every time he loses a ruling,
his complaints will recede into
background noise.
Questioning judicial deci-
sions, and even the judiciary’s
legitimacy, is entirely proper.
But a wise president will re-
serve such attacks for extraor-
dinary matters of state involv-
ing the highest constitutional
principles. To do otherwise
risks dissipating the execu-
tive’s energy, weakening the
president’s agenda, and wast-
ing his political capital. When
criticizing the Supreme Court
for upholding the Bank of the
United States, declaring Dred
Scott a slave, or striking down
the New Deal, presidents were
advancing constitutional agen-
das worthy of a fierce attack
on the courts. Mr. Trump is
upset about losing a minor
procedural test of a temporary
executive order. If he doesn’t
learn to be more judicious,
we’re in for a long four years.
Messrs. Prakash and Yoo
are law professors at the Uni-
versity of Virginia and the Uni-
versity of California, Berkeley,
respectively.
L. Gordon Crovitz is away.
Mr. Cañas notes that the
blue-collar workers most af-
fected by Mexican imports
have “experienced substan-
tially lower wage growth than
their counterparts in other in-
dustries.” But he observes
that the metropolitan areas
that lost the most jobs due to
Nafta have benefited the most
from increases in foreign di-
rect investment. They also
benefit from “rising living
standards on the Mexican side
of the border,” i.e., new cus-
tomers with money.
Like the rest of the country,
Texas’ employment is shifting
from manufacturing to “other
sectors such as business ser-
vices,” Mr. Cañas writes. The
state’s manufacturing employ-
ment is down 9% since Nafta
implementation but manufac-
turing output grew 4.1% per
year between 1997 and 2015.
“Manufactured goods ex-
ports supported an estimated
990,000 jobs in Texas in
2015,” the report says. The
state “gained” more than four
million jobs from 1994 to
2015, a period of rising auto-
mation and free trade, while
real per capita incomes grew
to $47,000 from $30,000.
Mr. Trump’s proposal to
build new barriers to trade
with Mexico ignores the harm
that is sure to come to the
armies of American factory
workers, entrepreneurs and
suppliers of business services
who buy and sell across the
border. Mr. Trump forgets
these men and women at his
own political peril.
Write to O’Grady@wsj.com.
success, increase the wealth
and retirement benefits for
low- and middle-income
workers, and improve em-
ployee morale, all at no cost
to the government.
For these reasons, we be-
lieve legislation to override
FAS 123 would receive strong
bipartisan support in Con-
gress. The plan is also consis-
tent with President Trump’s
desire to “make America
great again.” After all, there
is no other way to achieve
economic growth than
through successful compa-
nies. What better way is
there to motivate employees
than to align their personal
interests with the success of
their companies?
Mr. Isaac, a former chair-
man of the Federal Deposit
Insurance Corp., is senior
managing director of FTI
Consulting. Mr. Kovacevich is
retired chairman and CEO of
Wells Fargo & Co.
Monday, February 13, 2017 | A15
BOOKSHELF | By Stephen J. Morris
Crusading for the
Communists
Hell No
By Tom Hayden
(Yale, 159 pages, $25)
Tom Hayden was a radical left-wing American activist
who died in October 2016. He initially became famous as the
principal author of the 1962 Port Huron Statement, a found-
ing document of the Students for a Democratic Society,
which promoted a vague notion of “participatory democ-
racy” and criticized U.S. Cold War foreign policy. He became
more famous as an anti-Vietnam War leader, first by making
a pilgrimage to Hanoi in 1965, next by helping to organize
what became violent demonstrations at the Democratic
Party’s 1968 convention in Chicago, and later by marrying
and working with Jane Fonda to defeat American policy in
Vietnam. The consistent obsession of Hayden’s life was what
he considered his virtuous and courageous role in opposing
the Vietnam War policies of
the United States.
In “Hell No,” his rambling
farewell testament, Hayden at-
tempts to rescue the antiwar
movement from what he sees
as denigration and obscurity.
He is particularly angry at the
lack of respect for the “peace
activists” who opposed Ameri-
can policies, in light of a new-
found public respect for the vet-
erans of the Vietnam War. “Hell
No” has something of a stream-
of-consciousness quality, as the
author jumps from one topic to
another, from declarations about the politics
of the war to personal memoir, with no analytical or narra-
tive coherence. The writing is full of assertions of his move-
ment’s virtue and concern for the truth.
Yet for someone with such an ostensible concern with
truthfulness, the author reveals his own knowledge of the
Vietnam War to be grotesquely defective. In discussing the
war’s origin Hayden trots out discredited sources from
1965, like I.F. Stone, who claimed that the Viet Cong insur-
gents were not dependent on Hanoi but were an indepen-
dent force relying on captured South Vietnamese weapons.
Hayden seems blissfully unaware that more than 30 years
ago the Hanoi leaders themselves admitted that, following a
1959 decision by the politburo, they had started the war.
The men who infiltrated the south from the north carried
American weapons captured not by the Viet Cong from the
South Vietnamese but by the Chinese from Americans in
the Korean War.
There is a fundamental self-contradiction in Hayden’s
analysis of the Vietnam War. He incessantly praises the anti-
war movement for bringing the war to an end through its
protests and lobbying. But at the same time he wishes to
condemn those who blame the “peace movement” for Amer-
ica’s defeat: “The Vietnamese never relied upon the Ameri-
can peace movement to deliver a victory for them, as long
insisted by American neoconservatives.” Yet Hayden seems
disingenuous when he claims that the aim of the “peace
movement” was merely ending the war. Neither he nor his
fellow radicals wanted the war ended with South Vietnam
remaining as a non-communist independent nation, on the
model of South Korea.
When Joan Baez organized a petition to protest
Hanoi’s racist pogrom against Vietnam’s ethnic-
Chinese minority, Hayden defended Hanoi.
The most illuminating part of “Hell No” is Hayden’s ac-
count of the lobbying of Congress that the “peace move-
ment” undertook from 1973 to 1975. Several thousand activ-
ists in certain key states pressured congressmen to cut off
funding for South Vietnam, and though Hayden is ambigu-
ous about the effects of the lobbying, which he largely di-
rected, its success in fact turned out to be the key factor in
Hanoi’s victory. As North Vietnamese Gen. Van Tien Dung
wrote shortly after the war’s end, congressional aid cut-
backs meant that South Vietnamese President Thieu was
forced to fight “a poor man’s war.”
The fact is that Hayden’s life was in large part a crusade
for the cause of the Vietnamese communists. He returned
from his trip to Hanoi in 1965 singing the praises of North
Vietnam. At Bratislava, Czechoslovakia, in 1967, he was at
the center of a meeting of two dozen American peace activ-
ists with 30 representatives from the Hanoi regime, at
which they discussed coordinated action to ensure an
American defeat and a communist takeover in Vietnam. Ac-
cording to a then-left-wing activist present at the meeting,
Sol Stern, Hayden declared to his fellow activists: “We are
all Viet Cong now.” In 1979, when pacifist Joan Baez orga-
nized a petition to protest Hanoi’s racist pogrom against
Vietnam’s ethnic-Chinese minority—a pogrom that resulted
in the deportation of hundreds of thousands of “boat peo-
ple”—Hayden and his wife, Jane Fonda, organized a coun-
terstatement defending Hanoi.
In his 1988 memoir “Reunion,” Hayden seemed to express
a partial reconsideration of his past views of communism.
He admitted: “Time has proved me overly romantic about
the Vietnamese revolution.” He regretted having felt “mini-
mal concern” about Viet Cong atrocities toward Vietnamese
civilians and admitted being “blind to the core of authoritar-
ianism” that drove the regime. He concluded: “I think many
of Vietnam’s postwar problems originated in the nature of
Marxism-Leninism itself.” No such criticism is to be found in
“Hell No.” By 2016, Hayden had retreated to the radical left’s
default position of justifying communist crimes perpetrated
in victory: “Many will resort to their own moral compass to
judge this outcome. My own view is that it was a predictable
result of a war beyond any negotiating.”
This statement points toward a fundamental problem for
Hayden. He worked hard for the victories of the communist
forces in Indochina but cannot come to terms with his moral
responsibility for the disasters that followed at the hands of
his favored regimes. He speaks in passing, for instance, of
what he calls the “insanity” of the Khmer Rouge. But no-
where in his book does he confess that he testified before
Congress in early 1975 against any further military or eco-
nomic aid to the Cambodian government—the only barrier
to the country’s takeover by the Khmer Rouge—and claimed
that a cutoff would diminish the possibility of a bloodbath.
In other words, “truth teller” and “peace lover” Tom Hayden
himself peddled untruths in the service of military conquest
by brutal totalitarian dictatorships.
Mr. Morris is the author of “Why Vietnam Invaded Cam-
bodia: Political Culture and the Causes of War.”
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
A16 | Monday, February 13, 2017 THE WALL STREET JOURNAL.

OPINION
REVIEW & OUTLOOK LETTERS TO THE EDITOR

Hank Greenberg’s Vindication Is Dr. Paul’s ObamaCare Treatment Optimal?

T
he taxpayers of New York State should berg notes that the two transactions “were The proposal in Sen. Rand Paul’s None of the proposed fixes face
be furious. After 12 years of chasing for- not material to AIG’s financial statements or Jan. 27 letter essentially turns the the reality that 70% of Americans
health-care reimbursement system have under $1,000 in savings (USA
mer AIG CEO Hank Greenberg by three its shareholders.” Mr. Schneiderman makes
back to pre-ACA times. It fosters indi- Today, Oct. 9, 2016). Pay in advance
state Attorneys General, cur- much of AIG’s 2005 earnings vidual insurance plans and erodes in- and get reimbursed with tax credits?
rent AG Eric Schneiderman New York’s AIG fraud restatement, after Mr. Green- dividual state insurance department Really? With what?
settled on Friday for $9 mil- case sputters to a berg had been forced out as requirements. For example, an insurer LARRY NEAL
lion and the legal equivalent CEO by Mr. Spitzer, but AIG with situs in Alabama could sell its Charlottesville, Va.
of a lousy T-shirt. pathetic settlement. said at the time that restat- policies in New York without meeting
Discredited former state ing the transactions had little New York requirements for policy If Medicare can pay a hospital-af-
AG Eliot Spitzer began the effect on AIG’s earnings or forms or capital surplus require- filiated cardiologist $453 for a car-
civil fraud case in 2005 as part of his revenge balance sheet. ments. This will result in consumers diac sonogram compared with the
campaign against Mr. Greenberg for daring to The real lessons of the Greenberg case start being subject to abuse in the pur- $189 that the same cardiologist made
criticize his prosecutions against business. The with the absurd lengths that progressive prose- chase of worthless insurance prod- when he was independent, no wonder
ucts and loss of coverage due to in- independent doctors face pressure to
initial charges sought restitution and punitive cutors will go to punish capitalists they don’t
surer insolvency. sell their practices to hospitals.
damages on multiple counts that Mr. Spitzer like. As a rich CEO who built AIG into the world’s Another part of this proposal pro- Sen. Paul’s plan addresses patients’
called criminal fraud on national TV. Mr. most successful insurance company, Mr. Green- tects consumers with individual in- choices but omits that independent
Greenberg was never charged with a crime, and berg was an easy target amid the anti-business surance from pre-existing illness ex- doctors are suffering, and the past
by the end Mr. Schneiderman had given up mood of the post-Enron 2000s. Mr. Spitzer clusions only if they sign up within patient-doctor relationship is rapidly
seeking monetary damages in court and was threatened to indict AIG—a financial death sen- two years of the implementation of disappearing. Independent doctors
left trying to bar Mr. Greenberg from the secu- tence—lest the board dump Mr. Greenberg, who Dr. Paul’s legislation. In addition, lim- are open late on weekdays and often
rities business and corporate boards. had little choice but to retire. ited-benefit policies will be available, see patients on Saturdays. That is not
The settlement didn’t deliver even that That was a tragedy for Mr. Greenberg, but meaning consumers who can least af- true with hospital-owned doctors.
much as the AG’s case unraveled once it went far worse for AIG shareholders and the U.S. fi- ford medical bills will again be re- They work 40 hours a week and if
to trial last year. The testimony of a key prose- nancial system. The managers who succeeded sponsible for more of them. That is a you call them on weekends or after 5
giant step backward. p.m., the answering service suggests
cution witness, Richard Napier, was shown to him ramped up AIG’s housing bets, and the U.S. We need to bring all of the play- you go to the ER.
have changed over time and an appellate court government eventually needed nearly $185 bil- ers—health-care providers, actuaries, SATINDER MULLICK, PH.D.
had judged that he may “well have testified lion to nationalize AIG during the 2008 finan- health insurers, employers as well as Johns Hopkins University
falsely.” In December Mr. Schneiderman fi- cial panic. Compare that $185 billion to Mr. Congress—to discuss what should be Baltimore
nally agreed to accept mediation in the case, Schneiderman’s $9 million settlement. eligible for reimbursement. Like it or
which Mr. Greenberg had long sought. Both Another lesson is the abusive nature of New not, the next step is to discuss and Sen. Paul’s ACA replacement plan
sides agreed to accept the findings of media- York’s Martin Act, which lets prosecutors prove come to a consensus on the limits of contains an entirely new government
tor Kenneth Feinberg. civil fraud without showing intent to deceive. care. entitlement. His $5,000 tax credit will
The $9 million fine amounts to pin money Prosecutors can portray mere inaccuracies as Why can’t our politicians realize go to millions who currently pay
for Mr. Greenberg, and we’re told is $7.5 mil- fraud, which typically forces businesses and in- that one of the reasons for the popu- nothing in federal income taxes. This
larity of VA health benefits and Medi- makes it an unfunded government en-
lion less than he offered to settle before the dividuals to settle or plead guilty. Mr. Green-
care is they work, at least most of titlement. By allowing deductions
trial started. It won’t come close to covering berg was a rare individual with the financial re- the time. Is it too hard to see that we against payroll taxes, it will defund
the state’s costs for pursuing the case over so sources and tenacity to fight back. The Martin need to have these kinds of plans for Social Security, essentially borrowing
many years. Mr. Schneiderman nonetheless is- Act is an affront to basic fairness and contra- everyone and to chip away at health from Dr. Peter to pay Dr. Paul. Is this
sued a press release—his favorite legal maneu- dicts federal securities law. The courts should expenditures to begin to solve our the senator’s version of entitlement
ver—late Friday claiming that “Greenberg Ad- strike it down if New York’s politicians are too health-care mess? reform?
mits To Initiating, Participating, and rapacious to repeal it. MICHAEL DRESSENDORFER STEVE WALDE
Approving Two Fraudulent Transactions Com- Mr. Greenberg says he will continue his defa- Antioch, Ill. Rancho Santa Fe, Calif.
mitted by AIG While CEO.” mation suit against Mr. Spitzer, who certainly
But Mr. Greenberg did not admit to fraud. He deserves the legal attention. The former AG
admitted to accounting errors. His settlement skirted justice when he wasn’t indicted for
statement admitted merely to approving two courting prostitutes as New York Governor, Chile’s Fires Have Nothing to Do With Politics
transactions in 2000 the result of which was though he showed no such leniency to his many Regarding Mary Anastasia puche territory to the fires, nor are
that “AIG’s publicly-filed consolidated financial business targets. O’Grady’s “Fire and Terrorism in there any linking South American
statements inaccurately portrayed the account- The entire sorry episode shows how easily Chile” (Americas, Feb. 6): Chile is guerrillas to Mapuche. Furthermore,
ing.” That’s all, folks. Captain Ahab pursued the the law can be abused when prosecutors pursue beginning to overcome the tragedy the fires occurred in regions where
great white whale for 12 years and came home cases for political fame rather than justice. Con- of a fire which covered an area of there are no Mapuche. There are in-
with Baby Nemo. gratulations to Mr. Greenberg and his legal hundreds of thousands of acres as a vestigations under way regarding ar-
In a separate statement Friday, Mr. Green- team for fighting for the truth. result of global warming that has sonist acts, but none of these are re-
led to an increase in temperature lated to Mapuche activism.
and a notorious decrease in rainfall Violence in the Mapuche territo-
Voter Fraud and Punishment in Chile.
The suffering of the affected popu-
ries is a matter too serious to be
transformed into conspiracies of the

V
lation, the loss of human life and the far left. It expresses a dilemma to-
oter fraud is a bigger problem than the all the evidence, but there is still the matter of destruction of forest, land, agricul- tally unrelated to this summer’s fires:
media claim, but even if you think the proportion. Ortega was indicted in November ture and animals have profoundly that of a country striving to build a
government should do more to stop it, 2015, but her trial and sentencing come amid the moved our country.The international beneficial coexistence with its indige-
does fraudulent voting deserve polarized national debate over community has provided generous nous peoples. The insult that Ms.
eight years in prison? That’s the Illegal voting should voter fraud since Donald aid, for which we express gratitude O’Grady directed to President Mi-
sentence that a permanent U.S. be sanctioned but not Trump’s election. Ortega’s law- and enthusiasm, and has permitted chelle Bachelet by saying that she
resident in Texas received last yer told the press that he had us to gradually control the fire. The puts her political interests above the
week for illegally voting. like a violent felony. worked out a deal with Texas aid provided by the United States, tragedy of the wildfires is gratuitous
A Tarrant County (Fort Attorney General Ken Paxton both public and private, must be and unworthy.
highlighted—including a supertanker AMBASSADOR JUAN GABRIEL VALDÉS
Worth) jury convicted 37- to drop the charges in return
plane, technical experts and financial Embassy of Chile
year-old Rosa Maria Ortega on two felony for Ortega testifying to the state legislature on aid reaching almost $1 million. Washington
counts, and the punishment is eight years in the voting procedures, but local district attorney Ms. O’Grady makes a flaming cari-
slammer and a $5,000 fine. Ortega was born in Sharen Wilson nixed it. cature of this tragic episode, encour-
Mexico and brought illegally to the U.S. as a Someone needs to revisit this harsh punish- aging a conspiratorial rumor that has Forget the Hospitals, What
baby before she became a green-card holder as ment. Whatever the deterrent effect on others circulated on Chilean social networks
an adult. Her lawyer says Ortega has a sixth- from such a severe sentence, an individual case during the last few weeks. It is a per-
About the Penalized Insured?
grade education and didn’t understand that le- of voter fraud is not a violent felony. Ortega fect example of post-truth politics: I get very frustrated when I read
gal residents don’t have the right to vote. “If I wasn’t running a voter-fraud ring. If a judge There is not a single police report that “more than 20 million Ameri-
knew, everything would have been done the can’t intervene, Governor Greg Abbott should that links acts of violence in the Ma- cans gained health insurance” under
correct way,” Ortega testified. “All my life I was commute Ortega’s sentence to time served after the Affordable Care Act (“Hospitals
Fear Changes to ACA,” Business & Fi-
taught I was a U.S. citizen.” a decent interval with a warning that Texas is
The jury clearly didn’t believe that, and it saw taking fraud seriously.
Obama Had Little to Do nance, Feb. 6). Twenty million Ameri-
cans may be insured through the law,
With the Great Bull Market but many lost the insurance they had

Trump’s Winning Asia Diplomacy James Mackintosh’s “Streetwise:

Obama’s Run Will Be Tough to Beat”
and therefore gained nothing. My
family falls into this category. In

P
(Business & Finance, Jan. 20) proves 2014 my husband and I received a
resident Trump has had a busy few sensitive as Taiwan’s independence, Mr. Trump two points. Sluggish economies and letter from our insurer informing us
days of Asia diplomacy, including his will now be able to secure more support for a no-growth policies take a back seat it wouldn’t renew the plan we’d had
first post-inauguration phone call with cautious but still expanded Taiwan agenda from to the power of intelligent corporate for years because we were no longer
China’s Xi Jinping on Thurs- leaders in Taipei, Tokyo and governance. At day’s end investors eligible—with no further explanation.
day, a White House summit Promising signs from a other friendly capitals. buy companies they believe will re- After investigating for several days, I
ward them through rising share found out that under the ACA, hus-
with Japan’s Shinzo Abe on call with Xi Jinping and Which brings us to Mr. prices and escalating dividends—even band-and-wife businesses no longer
Friday and 27 holes of golf Trump’s strikingly friendly when the overall economy is in the qualified as groups and had to switch
with Mr. Abe on Saturday, golf with Shinzo Abe. summit with Mr. Abe, a display tank, as ours has been. When govern- to the individual market. Since then
followed by a joint press con- surely not lost on Chinese lead- ment policy, in this case the continu- we have been in and out of at least
ference on North Korea’s lat- ers who rightly identify the ance of artificially low interest rates, four plans, each more expensive than
est missile launch. Unlike some of his earlier Japanese Prime Minister as a devoted opponent makes bonds relatively unattractive, the one before, until finally there
encounters with foreign leaders, this round of their ambitions to dominate Asia. “We have investors will flock to equities with was no option left for us other than
demonstrated sobriety, careful planning and a very, very good bond—very, very good chemis- their disposable and investible in- ObamaCare. There may be millions of
respect for allies. try,” Mr. Trump gushed at a joint press confer- come. While his acolytes will praise Americans on the exchanges, but
The news out of the Xi call is that Mr. Trump ence. “When I greeted him at the car, I shook investor rewards and attribute the many of us would have preferred to
same to his tenure in office, the real- be among those who, to paraphrase
affirmed the longstanding U.S. “One China pol- hands, but I grabbed him and hugged him be-
ity is that former President Obama former President Obama, got to keep
icy” concerning Taiwan, which he previously cause that’s the way we feel.” This is a turn- played a very minor part in the stock our plan if we liked our plan.
said would be “under negotiation” with Beijing around from Mr. Trump’s campaign-trail criti- market’s performance. FRANCES ERLEBACHER
along with trade and other issues. Some of our cisms of Japan as a freeloading ally. RICHARD KLITZBERG Rye, N.H.
friends in the media have portrayed this as evi- “We’re committed to the security of Japan,” Princeton, N.J.
dence that the U.S. President is a “paper tiger,” Mr. Trump declared. He also echoed his de-
citing Chinese officials who say Mr. Xi refused fense secretary, Jim Mattis, in reaffirming that Pepper ...
to speak with Mr. Trump until he softened his the U.S.-Japan security treaty covers the It Should Be the Harry Reid And Salt
stance. But the substance of Mr. Trump’s shift Japan-administered Senkaku Islands that Rule, Not the Nuclear Option
isn’t surprising or dramatic. China has swarmed with civilian and paramili- THE WALL STREET JOURNAL

Rather than embrace Beijing’s “One China tary ships in recent years. On trade, a potential Regarding E. Donald Elliott’s “For
Moderate Democrats, Judge Gorsuch
principle,” which insists that Taiwan is part of sore point with Mr. Trump even in the best of
Is as Good as It Gets” (op-ed, Feb. 7):
China, Mr. Trump only endorsed the U.S. policy circumstances, the two leaders punted to a bi- The Senate should not call changing
of acknowledging a Beijing-Taipei disagreement lateral working group to be led by U.S. Vice the vote for the Supreme Court nomi-
over Taiwan’s status, reserving U.S. judgment President Mike Pence and Japanese Finance nee the “nuclear option.” It should be
on the issue and calling for the peaceful settle- Minister Taro Aso. called “Reid’s Rule.” After all, Harry
ment of disputes with the consent of Taiwan’s North Korea helped underscore the stakes of Reid created it and was the first to
people. As has been true for decades, this U.S.-Japan cooperation Saturday by shooting use it.
amounts to little more than agreeing to dis- a Musudan intermediate-range ballistic missile ELLIOT FEIT
agree. It certainly doesn’t stop the U.S. from sup- into the Sea of Japan, its first test on Mr. Deerfield Beach, Fla.
porting Taiwan with means other than official Trump’s watch. Though not the intercontinental
recognition as an independent state. missile launch Pyongyang has promised, this Letters intended for publication should
Nor does it stop Mr. Trump from building on was a reminder that its nuclear program is ad- be addressed to: The Editor, 1211 Avenue
of the Americas, New York, NY 10036,
his December phone call with Taiwanese Presi- vancing on many fronts. Mr. Trump, fresh off or emailed to wsj.ltrs@wsj.com. Please
dent Tsai Ing-wen by boosting economic, diplo- the golf course and a candlelight dinner with include your city and state. All letters
matic and military ties with the island. On the Mr. Abe and their wives, offered a brief state- are subject to editing, and unpublished
contrary, by signaling that he won’t risk a de- ment: “The United States of America stands be- letters can be neither acknowledged nor “Real news is so depressing – can’t
returned.
stabilizing clash with Beijing over a matter as hind Japan, its great ally, 100%.” Hear, hear. they make fake news happy?”
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THE WALL STREET JOURNAL.
Yale’s Inconsistent Name-Dropping
By Roger Kimball
Y
ale University announced
Saturday that it would
change the name of Cal-
houn College, one of its
original 12 residential col-
leges that opened in the early 1930s.
Henceforth, the college will be
named in honor of Grace Hopper, an
early computer scientist and naval
officer.
No sentient observer of the Amer-
ican academic scene could have been
surprised by the move to ditch John
C. Calhoun, the 19th-century South
Carolina statesman after whom the
Several campus names
are more objectionable
than John C. Calhoun—
including Elihu Yale.
college was originally named. On the
contrary, the unspoken response was
“What took them so long?”
Since last August, when Yale’s
president, Peter Salovey, announced
that he was convening a Committee
to Establish Principles for Renam-
ing—yes, really—the handwriting
had been on the wall for Calhoun, a
distinguished Yale alumnus who
served as a congressman, senator,
secretary of war, secretary of state
and vice president.
Like Belshazzar before him, Cal-
houn had been weighed and found
wanting. He may have been a brilliant
orator and a fierce opponent of en-
croaching federal power, but he was
also a slave holder. And unlike many
of his peers, Calhoun argued that slav-
ery was not merely a necessary evil
but a “positive good,” because it pro-
vided for slaves better than they could
provide for themselves.
Washington Protects Wall Street at Ordinary Citizens’ Expense
By Alan S. Blinder
P
resident Trump seems to be
looking for places to direct his
ire. Among his recent targets
were consumers of financial ser-
vices. That includes anyone with an
individual retirement account, a
bank account or a credit card.
His point man was Gary Cohn,
director of the National Economic
Council and former president and
chief operating officer at Goldman
Sachs. A fact-based outfit, many of
us thought. So maybe Mr. Cohn
would be the grown-up in the
room. No such luck. It looked like
Kellyanne Conway sent him out to
face the press with “alternative
facts.”
Mr. Cohn’s interviews previewing
and lauding Mr. Trump’s expansive
Feb. 3 executive order on financial de-
regulation were the first steps toward
undermining Congress’s 2010 finan-
cial reform law, the Dodd-Frank Act.
An accompanying presidential memo-
randum directed the secretary of la-
bor (a post still vacant because the
nominee only recently submitted his
paperwork) to revise or rescind Presi-
dent Obama’s rule establishing a fidu-
ciary standard for retirement ac-
counts.
Trump’s New Start With Russia May Prove Better Than Obama’s
By John Bolton
M
edia tittle-tattle about Presi-
dent Trump’s telephone calls
with foreign counterparts
received new fuel last week after de-
tails leaked of a conversation with
Russia’s Vladimir Putin. The usual
anonymous sources alleged that
when Mr. Putin raised the 2010 New
Start arms-control treaty, Mr. Trump
asked his aides what it covered—and
then, once briefed, declared it to be
one of those bad Obama deals he
planned to renegotiate.
If so, Mr. Trump got the treaty
right. From America’s perspective,
New Start is an execrable deal, a
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You might, like me, think that Cal-
houn was wrong about that. But if
you are Peter Salovey, you have to
disparage Calhoun as a “white su-
premacist” whose legacy—“racism
and bigotry,” according to a univer-
sity statement—was fundamentally
“at odds” with the noble aspirations
of Yale University (“improving the
world today and for future genera-
tions . . . through the free exchange
of ideas in an ethical, interdepen-
dent, and diverse community”).
During a conference-call press
briefing Saturday, and throughout
the documents related to the Cal-
houn decision, officials have been
careful to stress that the university
operates with a “strong presumption
against” renaming things. Because
they do not seek to “erase history,”
the officials insist, renaming things
for ideological reasons would be “ex-
ceptionally rare.”
When you study the four principles
Mr. Salovey’s committee came up with
to justify a renaming, you can see why
it took so long. The task, it seems
clear, was to find a way to wipe away
Calhoun College while simultaneously
immunizing other institutions at Yale
from politicized rebaptism.
Did the principal legacy of the
honored person “fundamentally con-
flict” with the university’s mission?
Was that legacy “contested” within
the person’s lifetime? Were the rea-
sons that the university honored him
at odds with Yale’s mission? Does the
named building or program play a
substantial role in “forming commu-
nity at Yale”?
Readers who savor tortuous ver-
bal legerdemain will want to ac-
quaint themselves with the “Letter
of the Advisory Group on the Renam-
ing of Calhoun College,” which is
available online. It is a masterpiece
of the genre.
Is it also convincing? I think the
best way to answer that is to fill out
That rule, which was six years in
the making, was to go into effect in
April. It requires brokers and advis-
ers who manage retirement accounts
like 401(k)s to adhere to what is
called the fiduciary standard—which
means acting in their clients’ best in-
terests instead of their own. If you
haven’t followed this issue, you may
be amazed that this is not already
the law of the land. It isn’t. They can
(and do) fleece you legally.
What do Mr. Cohn and his boss
think about the fiduciary standard?
“We think it is a bad rule,” he told
the Journal. “This is like putting
only healthy food on the menu, be-
cause unhealthy food tastes good
but you still shouldn’t eat it because
you might die younger.” Read those
words again, and be glad Mr. Cohn
doesn’t run the school lunch pro-
gram.
The new executive order on fi-
nancial deregulation, he said, is “a
table setter for a bunch of stuff that
is coming.” His boss was blunter.
During a meeting with business ex-
ecutives this month, Mr. Trump said
he expects “to be cutting a lot out of
Dodd-Frank.” Watch out America.
Congress enacted Dodd-Frank to en-
sure that we never suffer through a
financial crisis like 2008-09 again.
product of Cold War nostrums about
reducing nuclear tensions. Arms-con-
trol treaties, properly conceived and
drafted, should look like George W.
Bush’s 2002 Treaty of Moscow: short
(three pages), with broad exit ramps
and sunset provisions.
Although President Obama had
considerable help from then-Secretary
of State Hillary Clinton in this diplo-
matic failure, Russia was hardly
blameless. Moscow subsequently ex-
ploited the treaty’s weaknesses to re-
build and modernize its arsenal of nu-
clear warheads and ballistic missiles,
while Mr. Obama stood idly by. Repub-
lican senators opposed New Start’s
ratification, 26-13 (three of them
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OPINION
John C. Calhoun served as U.S. vice president, 1825-32.
the historical picture a bit. Nearly
every Yale official who spoke at Sat-
urday’s press briefing had to de-
scribe John Calhoun (1782-1850) as a
“white supremacist.” Question: Who
among whites at the time was not?
Take your time.
Calhoun owned slaves. But so did
Timothy Dwight, Calhoun’s mentor
at Yale, who has a college named in
his honor. So did Benjamin Silliman,
who also gives his name to a resi-
dential college, and whose mother
was the largest slave owner in Fair-
field County, Conn. So did Ezra
Stiles, John Davenport and even
Jonathan Edwards, all of whom
At 2,319 pages, it’s an imperfect
piece of legislation, to be sure. But it
achieved many important goals.
Since space is limited, I’ll mention
just three.
Title II of the act provides a
sorely needed mechanism for put-
ting a dying financial giant out of its
misery peacefully—in contrast to the
From the fiduciary
standard to Dodd-Frank,
Trump belies his
populist campaign.
violent way Lehman Brothers died,
leaving so much collateral damage
behind. Yet Mr. Cohn insists that the
Trumpian deregulation of financial
markets “has nothing to do with
Goldman Sachs” or other giants. Re-
ally? He even claimed that Dodd-
Frank fails to provide “a solid pro-
cess” for winding down a faltering
financial giant. Sorry, it does.
According to Mr. Cohn, lending by
American banks is inhibited because
they are hamstrung “with literally
hundreds of billions of dollars of
regulatory costs every year.” Well,
didn’t vote), as did 2012 presidential
nominee Mitt Romney. Mr. Trump’s
remarks are therefore squarely in the
party’s mainstream.
Not so, however, are some of Mr.
Trump’s comments—or at least the
inferences drawn from them—on Mr.
Putin’s political and military adven-
turism in Europe. Many Republicans
worry that, rather than strengthen-
ing the international economic sanc-
tions imposed on Russia for its bel-
ligerent incursions into eastern
Ukraine and its 2014 annexation of
Crimea, Mr. Trump may reduce or re-
scind sanctions entirely.
This apparent difference is no
small matter. Legislation to codify
the existing sanctions is pending in
Congress. It has overwhelming—
most analysts think veto-proof—bi-
partisan support. Commentators
wonder whether the remarkable Re-
publican solidarity on Mr. Trump’s
cabinet nominations might be shat-
tered if Russia policy is the first area
in which the new administration
faces off with the Republican con-
gressional majorities.
The sanctions on Russia for its in-
terference in Ukraine are already un-
der assault in Europe: Germany,
France and others appear close to
succumbing to their apparently hard-
wired inclination to sacrifice geostra-
tegic imperatives for economic ones.
Elections across the Continent this
year may produce results even more
favorable to Moscow (possibly, in
part, because of Russian meddling).
By contrast, the Baltic republics and
other NATO members in Eastern and
Central Europe are alarmed that Rus-
sia’s adventurism would increase if
Monday, February 13, 2017 | A17
ALAMY
have colleges named in their honor
at Yale.
Writing in these pages last sum-
mer, I suggested that Yale table the
question of John Calhoun and tackle
some figures even more obnoxious to
contemporary sensitivities. One ex-
ample was Elihu Yale, the American-
born British merchant who, as an ad-
ministrator in India, was an active
participant in the slave trade.
President Salovey’s letter an-
nouncing that Calhoun College would
be renamed argues that “unlike . . .
Elihu Yale, who made a gift that sup-
ported the founding of our univer-
sity . . . Calhoun has no similarly
it’s true that banks must comply
with more rules now. They must also
hold more capital. Those require-
ments are indeed burdensome to
banks. To the rest of us, they are in-
surance against a runaway financial
system tearing down the economy
again.
As for Mr. Cohn’s specific claims,
they are absurd on their face. Here
are some real facts.
First, banks do not pay anything
close to “hundreds of billions of dol-
lars” per year to comply with regu-
lations. The Federal Deposit Insur-
ance Corp. reports that total
noninterest costs of all banks over
the first three quarters of 2016 were
$315 billion. Well under 10% of that
cost goes for compliance, according
to a survey by the Conference of
State Bank Supervisors.
Second, bank lending is not shriv-
eling up. Those same FDIC data
show that total bank lending grew
7% over the past four quarters, more
than twice as fast as nominal gross
domestic product. Among commu-
nity banks, growth was even faster:
9.4%. The lending was profitable,
too; net income rose 12%.
None of this is to argue against
regulatory relief for smaller banks.
They need some. (Goldman Sachs
its Ukraine aggression were brushed
aside and sanctions lifted.
Yet amid the breathless press ac-
counts about Mr. Trump’s purported
fancy for Mr. Putin, one thing is
clear: The Trump administration’s
The new president’s
reported disdain for his
predecessor’s arms deal
is an encouraging sign.
policy toward, and even its strategic
assessment of, Russia is still under
construction. Most important, if the
substance of Mr. Trump’s comments
on New Start was accurately re-
ported, it shows him resisting items
on Mr. Putin’s wish list, and not for
the first time.
Mr. Trump has, for example, un-
equivocally opposed Mr. Obama’s
Iran nuclear deal. On Feb. 1, National
Security Adviser Mike Flynn put Iran
“on notice” that the deal was on life
support. New U.S. sanctions against
Iran underlined the point. The White
House is reportedly considering list-
ing Iran’s Revolutionary Guard Corps
as a foreign terrorist organization,
which should have been done de-
cades ago. Such a move would have a
significant political and economic ef-
fect on Moscow’s military-industrial
complex, particularly Rosoboronex-
port, its international arms-sales
agency.
Washington should be also push
back against Russia’s inserting itself
militarily and politically into the
strong association with our campus.”
What can that mean? Calhoun gradu-
ated valedictorian from Yale College
in 1804. Is that not a “strong associ-
ation”? (Grace Hopper held two ad-
vanced degrees from the university
but had no association with the un-
dergraduate Yale College.)
As far as I have been able to de-
termine, Elihu Yale never set foot in
New Haven. His benefaction of some
books and goods worth £800 helped
found Yale College, not Yale Univer-
sity. And whereas the 11th edition of
the Encyclopaedia Britannica praises
Calhoun for his “just and kind” treat-
ment of slaves and the “stainless in-
tegrity” of his character, Elihu Yale
had slaves flogged, hanged a stable
boy for stealing a horse, and was
eventually removed from his post in
India for corruption. Is all that not
“fundamentally at odds” with the
mission of Peter Salovey’s Yale?
Mr. Salovey stepped out of a
board meeting briefly to join the
conference call on Saturday. More in
sadness than in anger he disparaged
John Calhoun, praised Grace Hopper,
and affirmed his commitment to di-
versity, free inquiry, etc. Then one of
the reporters asked why he was re-
naming Calhoun College for a white
woman, especially since February
was Black History Month. Oh dear.
Thanks so much, must get back to
that board meeting now.
In “The Crack-Up,” F. Scott
Fitzgerald comments that “the test
of a first-rate intelligence is the abil-
ity to hold two opposed ideas in the
mind at the same time, and still re-
tain the ability to function.” First-
rate or not, the evolving politically
correct circus at Yale does not offer
a lot of support for that proposition.
Mr. Kimball is editor and pub-
lisher of the New Criterion and presi-
dent and publisher of Encounter
Books.
doesn’t.) It is pretty clear, however,
that the U.S. banking industry is not
being choked by regulation.
Dodd-Frank also established the
Consumer Financial Protection Bu-
reau to make it harder for financial
institutions like Goldman to cheat
their customers. If you don’t think
consumers need such protection,
read this newspaper daily. Yet Re-
publicans have been looking to evis-
cerate the CFPB since before it
opened its doors in July 2011.
As Mr. Cohn correctly observed,
the administration doesn’t need
legislation to neuter the bureau. It
needs only to replace its deter-
mined director, Richard Cordray,
with a fox who won’t guard the
proverbial chicken coop. “Personnel
is policy,” Mr. Cohn warned. Hens
beware.
Congress passed Dodd-Frank to
protect ordinary citizens from rapa-
cious Wall Streeters. Turns out that
in Trumpworld, Wall Street needs
protection from ordinary citizens.
Who knew?
Mr. Blinder, a former Federal Re-
serve vice chairman, is a professor
of economics and public affairs at
Princeton University and a visiting
fellow at the Brookings Institution.
Middle East by using the Syria con-
flict as a wedge. While Ukraine may
seem an unrelated issue, it is not.
Moscow’s diplomatic efforts to
“solve” the Syrian conflict are in sub-
stantial part an effort to “help” Eu-
rope with the Syrian refugee prob-
lem, providing yet another
inducement to wobbly Europeans to
roll back sanctions. Any perceived
American weakness on the sanctions
would embolden Russian efforts to
further penetrate the Middle East,
increasing the dangerous, destabiliz-
ing effects of Moscow’s tacit alliance
with Iran.
Significantly, Mr. Trump has said
he doesn’t know what his relation-
ship with Mr. Putin will ultimately
be, and he must surely recognize that
national interests, not personal
chemistry, underlie great-power for-
eign policies. America doesn’t sacri-
fice its national-security bottom line
just because a foreign leader “may
smile, and smile.”
So let’s raise our glasses to Mr.
Trump’s disdain for New Start, not to
mention the Iran nuclear deal, and
hope for more of the same. The new
president ought to strengthen the
sanctions, reassure NATO allies
(while juicing them to meet their
commitments on military spending),
and then have coffee with Vlad. Ne-
gotiate only from positions of
strength.
Mr. Bolton is a senior fellow at the
American Enterprise Institute and
author of “Surrender Is Not an Op-
tion: Defending America at the United
Nations and Abroad” (Simon &
Schuster, 2007).
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
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A18 | Monday, February 13, 2017 THE WALL STREET JOURNAL.

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BUSINESS & FINANCE
© 2017 Dow Jones & Company. All Rights Reserved.
Last Week: S&P 2316.10 À 0.81%
Verizon Returns to Unlimited Plans
BY RYAN KNUTSON
Verizon Communications
Inc. will start selling unlimited
data plans on Monday, the
first time it has offered such a
service since 2011 and a sign
that intense competition is
forcing the nation’s largest
carrier to respond.
Sprint Corp. and T-Mobile
US Inc. have been chipping
away at Verizon’s customer
growth, thanks in part to those
carriers’ aggressive pricing for
unlimited data. Last year, AT&T
Inc. started offering unlimited
data plans to customers who
also sign up for its DirecTV sat-
ellite service.
Verizon added 2.3 million
of the most lucrative type of
monthly customers in 2016—
only about half the 4.5 million
it added in 2015. The company
recently cautioned that profit
and sales growth this year will
be flat from 2016.
The new plan is a stark
change in strategy for Verizon,
It’s (Not) Electric
With low gas prices spurring
demand for trucks and SUVs,
electric and plug-in hybrid vehicles
garnered a sliver of U.S. sales
Light
trucks Cars
17.5M
light vehicles
sold in 2016
Electric/
plug-in hybrid
Cars 124,820
Light trucks 26,424
Source: WardsAuto.com
THE WALL STREET JOURNAL.
California Steers Agenda on Cleaner Cars
State has power to set its own mandate for zero-emission vehicles, separate from Washington’s rules
BY MIKE SPECTOR
Ford Motor Co. Chief Ex-
ecutive Mark Fields used a
recent White House break-
fast with President Donald
Trump to argue for relaxing
U.S. car-emissions standards.
But Mr. Fields and other
auto executives need to
travel 2,700 miles west of
Washington to find the gov-
ernment officials who are
pushing them the most on
environmental regulations.
When it comes to forcing
auto makers to build cleaner
cars, California is in the
driver’s seat.
Car executives, under
pressure from Mr. Trump to
relocate manufacturing to
the U.S., have often sought
The Real Risks of Ending Net-Neutrality Rules
O
ne of the most basic
principles of the inter-
net is, depending on
whom you ask, either in
mortal peril or undergoing a
rapid evolution.
Advocates for “net neu-
trality”—
the princi-
ple that all
data trans-
mitted
through
the inter-
KEYWORDS net should
CHRISTOPHER be treated
MIMS equally—
argue it is
needed for
America to cultivate innova-
tive web-focused startups.
Critics say that alternatives
to net neutrality could lead
to innovation and competi-
tion in the country’s commu-
nications infrastructure,
where they are badly
needed.
This is a battle of titans.
Major internet companies—if
not the hardware manufac-
turers that enable them—
TECHNOLOGY: TRUMP TAKES ON SILICON VALLEY B4
S&P FIN À 0.26% S&P IT À 1.23%
which has spent years trying
to get customers to pay for
data based on usage and re-
cently raised prices on certain
fees. Last month, Verizon’s fi-
nance chief, Matthew Ellis,
said on a conference call with
analysts that unlimited data
plans were “not something we
feel the need to do.”
At $80 a month for a single
smartphone, Verizon’s new un-
limited plan is only $10 more
than a current Verizon plan
that includes just 4 gigabytes
of monthly data. By compari-
son, T-Mobile is selling unlim-
ited data for $70 for one line,
including taxes and fees.
Four Verizon devices with
unlimited data will cost $180 a
month. Under its previous pric-
ing, plans in that price range
typically required families to
share around 20 gigabytes.
Sprint and T-Mobile have
been targeting Verizon’s cus-
tomer base with unlimited of-
ferings, which they began ad-
vertising heavily last fall. In
Volkswagen executives presented an electric prototype resembling its classic microbus at Detroit’s auto show last month.
relief from national fuel-
economy and emissions reg-
ulations. But California, the
largest car market in the
U.S., has its own rules that
mandate auto makers sell
more zero-emission vehicles
powered with batteries, re-
quirements that will endure
even if federal rule makers
relax other national environ-
mental regulations.
“The conclusion is ines-
capable: California’s vehicle
future is electric,” said Mary
Nichols, head of California’s
Air Resources Board, or
CARB, upon the release of a
state report supporting the
mandate in January.
CARB is the state agency
that polices tailpipe emis-
sions, and nine other states
Ajit Pai, the Trump-appointed FCC chairman, recently closed an
investigation into ‘zero-rating’ practices by internet service providers.
have vocally supported the
prerogative of the Federal
Communications Commis-
sion to enforce strict net
neutrality, while most tele-
communications companies
have opposed regulation that
preserves it. As President
Donald Trump’s FCC appoin-
tees appear set to target cur-
THE WALL STREET JOURNAL.
DJ TRANS À 1.65%
Comparing Unlimited Data Plans
In a reversal, Verizon said it will join rivals in selling unlimited data plans.
Price of unlimited plans
smartphone
*AT&T requires customers to sign up for DirecTV to get unlimited data.
Notes: Only T-Mobile's pricing includes taxes and fees; Excludes promotions;
All four carriers may temporarily slow speeds for heaviest data users.
Source: the companies
recent Super Bowl commer-
cials, both carriers slammed
Verizon for its expensive bills.
But Sprint and T-Mobile’s
unlimited plans typically come
with some caveats—such as
only allowing for lower quality
video streaming. Verizon says
follow its standards. Califor-
nia’s influence is a main rea-
son auto makers are devel-
oping electric cars and plug-
in hybrids even though such
vehicles are unpopular
among buyers responding to
low gas prices.
Ford is spending $4.5 bil-
lion on new vehicles that in-
clude a hybrid sports car and
an electric SUV, despite
banking most of its profits
on meaty pickup trucks and
sport utilities.
At Detroit’s annual auto
show in January, German
auto giant Volkswagen AG,
rehabbing its image after a
costly emissions scandal,
showed off an electric proto-
type resembling its classic
microbus and pledged to sell
rent net-neutrality rules,
companies on both sides
may be taking a wait-and-see
approach.
Microsoft Corp., Alphabet
Inc.’s Google, Netflix Inc., Ve-
rizon Communications Inc.
and Amazon.com Inc. de-
clined to comment. AT&T
Inc. didn’t respond.
WSJ $ IDX À 0.66% LIBOR 3M 1.036 NIKKEI 19378.93 À 2.44%
With one With four
smartphones
$80 $180
$100* $180*
$70 $160
$60 $160
THE WALL STREET JOURNAL.
its unlimited plan allows users
to stream high-definition
video.
Like other unlimited plans
in the industry, Verizon says it
might slow data speeds for
some users on congested cell
towers if they have consumed
a million electric cars by
2025.
General Motors Co. in De-
cember started selling its
Bolt electric car in Califor-
250,000
Rough number of zero-emission
vehicles on the road in California.
nia, and sold more than
1,000 in the first two months
on the market.
California rules dictate
that zero-emission cars rep-
resent roughly 15% of sales
by 2025, though the recent
This debate is likely to per-
sist, but in the near term it
looks like advocates of net
neutrality will be dealt a ma-
jor blow. That’s because con-
sumers are going to love the
Trump administration’s poten-
tial first steps at dismantling
net neutrality. It starts with
an ever-widening array of ser-
vices that are “zero-rated.”
Zero-rating involves inter-
DANIEL ACKER/BLOOMBERG
net service providers giving
customers free data services,
such as unlimited video
streaming.
Big carriers including
AT&T, Verizon, T-Mobile,
Comcast and Sprint already
offer some forms of zero-
rated services. T-Mobile’s
Binge On program allows
customers to stream Netflix,
for instance, and AT&T lets
subscribers stream its own
DirecTV Now service, each
without eating into their
monthly data allowances.
The FCC appeared to be in
the process of banning the
practice in some instances,
Please see MIMS page B4
Monday, February 13, 2017 | B1
more than 22 gigabytes of
data in a single month. Veri-
zon says two-thirds of custom-
ers don’t use more than 5 gi-
gabytes of data a month.
Verizon spokesman Jeffrey
Nelson said the new plan wasn’t
a response to competition,
rather it was a sign of network
quality.
Verizon’s pricing change will
likely be seen by many public-
interest groups as evidence
against further consolidation in
the wireless industry.
Since regulators blocked
AT&T’s planned acquisition of
T-Mobile in 2011, prices have
come down while carriers
have spent billions of dollars
investing in their networks.
Regulator opposition also
quashed a potential merger
between Sprint and T-Mobile
in 2014.
That competition has
pushed carriers to offer larger
and larger data allowances to
compete—culminating with
the return of unlimited plans.
CARB report suggested com-
panies could comply with a
roughly 8% share.
That’s a steep order given
zero-emission vehicles were
less than 1% of the record
17.5 million-plus light vehi-
cles sold in 2016, according
to data provider Ward-
sAuto.com. Most sales of
zero-emission vehicles were
in California. Nearly twice as
many were sold there as in
all the other states combined
over the past several years.
Auto makers are seeking
relief from Environmental
Protection Agency rules
mandating automobiles sold
in the U.S. average 54.5
miles a gallon, or 40 mpg in
real-world driving, by 2025.
Please see CAR page B2
INSIDE
BATTLE ROYALE
RAGES OVER
PRINCE ESTATE
MUSIC, B3
FERTILIZER
INDUSTRY
IS BOOMING
COMMODITIES, B8
See more at WSJMarkets.com
ANDREW HARRER/POOL/GETTY IMAGES
Director of the National
Economic Council Gary Cohn
Goldman
Veteran
Takes Lead
For Trump
WASHINGTON—At Donald
Trump’s first meeting with
Gary Cohn in late November,
he appeared so impressed with
the then-president of Goldman
By Nick Timiraos,
Michael C. Bender
and Damian Paletta
Sachs Group Inc. that he joked
about offering him the post of
Treasury secretary, said a per-
son who recalled the moment.
Sitting nearby was the odds-on
favorite for the job, Steven
Mnuchin, who got the nod.
Mr. Mnuchin’s confirmation
has since been delayed. In the
meantime, Mr. Cohn, in office
as director of the National
Economic Council since the
start of the Trump administra-
tion, has emerged as the most
powerful economic policy
maker in its early days.
The White House has desig-
nated Mr. Cohn to play a cen-
tral role on taxes, infrastruc-
ture, financial regulation and
replacing the Affordable Care
Act. He stood over the presi-
dent’s shoulder as Mr. Trump
signed executive orders on fi-
nancial regulation. The White
House says it is preparing a
tax-overhaul plan for release
within weeks, giving Mr. Cohn
a prime role when several top
economic posts remain vacant.
Though these will eventually
be filled, Mr. Cohn is rapidly
assembling a growing portfolio
that could solidify his influence
in the administration for the
long term.
He met with senators who
would shape tax policy two
days before Mr. Mnuchin, his
fellow Goldman alumnus, faced
the same lawmakers for his
confirmation hearing. Typi-
cally, the Treasury secretary
and his senior staff spearhead
those discussions. Mr. Trump
began a recent meeting by re-
ferring to Mr. Cohn as one of
“my geniuses.”
Mr. Trump rode to office
Please see COHN page B8
 Goldman’s Abby Joseph
Cohen to retire.......................... B7
Dow ETF
Attracts
Crowd of
Investors
BY CHRIS DIETERICH
One of the oldest brands in
the U.S. stock market is sud-
denly a hot trend.
No U.S. stock exchange-
traded fund has pulled in more
money in 2017 than the
SPDR Dow Jones Industrial
Average ETF, a relatively small
fund that is nonetheless the
most popular means of wagering
on the 120-year-old Dow Jones
Industrial Average.
That ETF grabbed $2.6 billion
in new assets this year
through Thursday, more than
the $2.4 billion that has gone
into the Vanguard S&P 500 ETF,
according to data firm XTF.
Recent popularity
the Dow-tracking ETF began
of
after Election Day and per-
Please see DOW page B2
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
B2 | Monday, February 13, 2017
INDEX TO BUSINESSES
These indexes cite notable references to most parent companies and businesspeople
in today’s edition. Articles on regional page inserts aren’t cited in these indexes.
A G
Activision Blizzard....B10
Airbnb..........................A2
Alibaba Group Holding
.....................................A2
Alphabet......................B4
Amazon.com ............... B4
Apple......................B3,B9
AT&T............................B4
B Entertainment..........B2
BAE..............................B4
Berkshire Hathaway...B9
Bharat Petroleum.......B8
C N
Cappex.com.................R9
Charter Communications
.....................................B4
Comcast.......................B2
F Saudi Aramco..............B8
Facebook................A1,B4
FirstBank.....................R5
Ford Motor..................B1
INDEX TO PEOPLE
B H
Baker, Omarr...............B3
Bartolini, Matt............B2
Beck, Ted.....................R6
Bermingham, Nessan
...................................A13
Beshears, John...........R2
Biswas, Rajiv .............. B8
C Puzder, Andy...............R4
Castaneda, Jorge........A6
Chien, Eric...................B4
Choi, James.................R2
Cohen, Abby Joseph...B7
Cohn, Gary.............B1,B7
Cordish, Reed..............B4
Cormier, Warren.........R2
D Sessions, Jeff.............B4
Del Rossi, Alison........R4
E 3. John Wick:
Elsheshai, Nabil..........A2
Errejón, Íñigo .............A9
F Meeks, Paul................A2
Farrell, Peter...............R9
Fazzino, James ........... B8
G
Giordano, Shelley ....... R5
Golub, Jonathan..........B2
Gorsuch, Neil..............A4
Gupta, Sushant...........B8
Guttentag, Jack M......R5
Samsung Heir Called In
For Fresh Questioning
BY EUN-YOUNG JEONG
SEOUL—South Korean
prosecutors summoned Lee
Jae-yong, the third-generation
heir of the Samsung conglom-
erate, for a fresh round of
questioning Monday, seeking
answers about his role in a
political corruption scandal.
Special prosecutors had
previously summoned Mr.
Lee, the 48-year-old vice
chairman of Samsung Elec-
tronics Co., as a bribery sus-
pect in the scandal, as au-
thorities attempted to zero in
on payments made by Sam-
sung to organizations linked
to the impeached president’s
confidante.
Last month,
prosecutors grilled
Lee Jae-yong
for 22 hours.
Prosecutors have accused
Samsung of having contrib-
uted about 43 billion Korean
won ($36.6 million) in bribes
to entities linked to President
Park Geun-hye’s longtime
friend, Choi Soon-sil, in ex-
change for the government’s
backing on a contentious
merger of two Samsung affili-
ates in 2015.
Last month, prosecutors
grilled Mr. Lee for 22 hours
and subsequently sought an
arrest warrant for him. They
accused Mr. Lee of bribery,
embezzlement and perjury.
CAR
Continued from the prior page
About a week before Inau-
guration Day, the EPA made
a final determination that
the emissions and mileage
targets should remain un-
changed. An adviser to Mr.
Trump previously pledged
the standards would be re-
viewed, but changing them
could take time and face le-
gal obstacles.
Regardless, California will
still force auto makers’ hand
over the same time span.
California environmental
regulators have a waiver
from the EPA that allows the
state’s separate rule on zero-
* **** THE WALL STREET JOURNAL.
BUSINESS & FINANCE
Entertainment..........B4
Goldman Sachs Group SPDR Dow Jones
Industrial Average ETF
............................... B1,B7
.....................................B1
J Spiegel ........................ A2
JPMorgan Chase.........B9 Sprint .......................... B1
L Symantec .................... B4
Lego.............................B2 T
Lions Gate Thrivent Financial ...... A2
Time Warner...............B2
M T-Mobile US................B1
Moonlighting Toyota Motor..............B3
Marketplace..............R5 Twitter.................A2,B10
U
Nestle..........................B3 Uber Technologies......A2
Netflix.........................B4 UBS Group...................B3
S V
Samsung Electronics..B2 Verizon Communications
.....................................B1
Snap ............................A1 Vivendi ........................ B3
Sony.............................B4 W
Sony Pictures Warner Music Group..B3
WARNER BROS.
Nelson, Sharon ........... B3
Harris, Christopher.....R2 O
Hersch, Joni................R4 Obrador, Andrés Manuel
Hopkins, Jamie...........R5 López.........................A6
Batman’s popularity in ‘The Lego Movie’ led to a spinoff movie. ‘Lego Batman’ made a $55.6 million debut in the U.S. and Canada.
J P
‘Lego Batman’ Film Opens on Top
Jackson, Alfred...........B3 Pachter, Michael.......B10
Jones, Van...................B3 Pai, Ajit.......................B4
K Patrick Harker.............B9
Kantrowitz, Mark ....... R9
Klein, Steven .............. R5 R ‘Fifty Shades Darker,’ try for kids to properties that
are normally PG-13,” said Mr.
Kostin, David .............. B7 Rubin, Robert..............B8 ‘John Wick: Chapter 2’ Estimated Box-Office Figures, Through Sunday Lin. “It’s not meant to com-
Kroll, Sue .................... B2 SALES, IN MILLIONS
L
S also begin strongly; pete with other versions.”
FILM DISTRIBUTOR WEEKEND* CUMULATIVE % CHANGE “Lego Batman,” rated PG,
Laibson, David ............ R2
Sacks, Barry H............R5
Warner taps synergies cost $80 million to make.
Sacks, Stephen R ....... R5 1. Lego Batman Warner Bros. $55.6 $55.6 —
Lee Jae-yong...............B2 Another spinoff, “Ninjago,”
Sakong, Jung .............. R2 Movie
Lin, Dan.......................B2 BY BEN FRITZ is scheduled for September,
2. Fifty Shades Universal $46.8 $46.8 — and a sequel, “The Lego
Lusardi, Annamaria....R6 Sherwood, Michael.....B7
Time Warner Inc.’s War- Darker Movie 2,” is expected to come
M Singla, Rajesh.............B8 ner Bros. won a crowded and out in two years. Other mov-
Lions Gate $30 $30 —
Maddalone, Guy..........R4 Slok, Torsten...............B9 broadly successful weekend Chapter 2 ies are in development under
Madrian, Brigitte........R2 Summers, Lawrence...B8 at the box office with a new a partnership between War-
4. Split Universal $9.3 $112.3 -35
McMillan, L. Londell...B3 T movie featuring Legos, Bat- ner and Lego A/S that allows
man, Robin, Superman, King 5. Hidden Figures Twentieth $8 $131.5 -21 for at least three more films.
Tillerson, Rex..............A6 Century Fox
Mehra, Sanjeev...........B7 Kong, villains from “Harry “Lego” has given Warner a
Mnuchin, Steve...........B1 W Potter” and “Lord of the *Friday, Saturday and Sunday Source: comScore foothold in the lucrative ani-
Moeller, Philip...........R10 Wallace, Rett..............A2 Rings,” and more. mation genre. The studio had
Mulvaney, Mick...........R4 Wang, Nelson ............. B8 “The Lego Batman Movie,” distinct advertising cam-
which made its debut to a $469 million world-wide. Its books, but other DC Comics paigns aimed at children and
Mulyani Sri Indrawati B9 Will, Tony....................B8
healthy $55.6 million in the transformation into one of superheroes and villains from young adults, besides one for
Murphy, Bobby ........... A2 Wren, Scott...............B10
U.S. and Canada, according to Warner Bros.’ key franchises is the Warner-controlled “Harry general audiences.
N Z studio estimates, beat the se- an example of how studios Potter” and “Lord of the “These films seem to tran-
Nelson, Norrine...........B3 Zuckerberg, Mark.......A2 quels “Fifty Shades Darker,” pounce on any hit they can to Rings”—and “King Kong” and scend age and gender,” said
from Comcast Corp.’s Univer- try to give it sequels and “Doctor Who,” made by other the studio’s president of
sal Pictures, and “John Wick: spinoffs on the big screen and companies. world-wide marketing and
Chapter 2” from Lions Gate
Entertainment Corp., which
also opened well with $46.8
synergies in other businesses.
Warner already makes a
line of “Lego” videogames,
“The idea is to replicate a
child’s play experience, which
means you don’t just use a
distribution, Sue Kroll.
Stronger competition was
also a factor in a lower start
million and $30 million, re-
spectively.
It was the first time in
and it is releasing toys and
other products in partnership
with Lego A/S. Warner used
single franchise, but you mix
it up,” said Dan Lin, a pro-
ducer of the “Lego” films.
for “Fifty Shades Darker”
than its predecessor, “Fifty
Shades of Grey,” which made
But a South Korean court de- seven years that three movies Lego-animated versions of Unlike the serious tone its debut to $85 million two
nied the warrant, saying it opened to more than $30 mil- some of its television shows, prevalent in many big-budget years ago.
couldn’t see the “reason, ne- lion on the same weekend, ac- such as “The Big Bang films, the “Lego” movies are “Fifty Shades Darker” per-
cessity and appropriateness of cording to measurement and Theory,” to promote the “Bat- self-aware and silly. Batman, formed better than its ani-
an arrest.” analytics company comScore. man” release. voiced by Will Arnett, is mated competition interna-
On Sunday, a spokesman The “Batman” opening was A key to its success seems preening and obnoxious to tionally, however, grossing
for the special prosecutor said lower than the $69 million to be the interactions of char- the outside world while se- $100 million, compared with
Mr. Lee would be questioned start on the same weekend acters from different fran- cretly lonely. The film mocks a $37 million overseas start
based on additional findings three years ago for the first chises. Batman was a support- previous versions of the char- for “Lego Batman.”
from the past few weeks. “Lego Movie,” a surprise hit. ing character in “The Lego acter from the 1960s televi- The second “John Wick,” an
Prosecutors could consider That film faced weaker com- Movie” whose popularity sion series through last year’s action series starring Keanu
seeking another arrest war- petition, however. earned him a spinoff. His new “Batman v Superman: Dawn Reeves, more than doubled the
rant for Mr. Lee, said the The first “Lego” was a sur- film features not only friends of Justice.” $14.4 million opening of the
spokesman. prise success that grossed and enemies from the comic “This is meant to be an en- original in 2014.
Mr. Lee arrived at the
prosecutor’s office Monday
with a grim look on his face.
“I will sincerely tell the
whole truth to the special
prosecutor today,” he said in
DOW ronment, where investors ex-
pect relaxed regulations,
higher interest rates and in-
creased spending on infra-
Dow Riding High
The blue-chip index has outperformed the S&P 500 since Election Day.
southern Seoul. A protester Continued from the prior page structure under the Trump ad- 10%
could be heard shouting in sisted after the blue-chip ministration.
the distance, “Put Lee Jae- benchmark last month topped Jonathan Golub, chief eq-
yong in jail.” 20000 for the first time in its uity strategist at RBC Capital 8
Shortly after Mr. Lee’s ar- history. Renewed demand for Markets, last month recom-
rival, Park Sang-jin, a Sam- the Dow comes although more mended that investors tar-
sung Electronics president fund dollars hew to indexes in- get ETFs linked to Dow instead 6
and head of the Korea cluding the S&P 500. of the S&P 500 for the foresee-
Equestrian Federation, en- Some $36 billion in assets able future because the Dow is
tered the prosecutor’s office were indexed directly to top-heavy with financial and 4
for questioning. the Dow at the end of 2015 in industrial stocks that are likely Dow Jones
A day earlier, prosecutors funds and products, less than to benefit most from policy Industrial Average
also summoned Chang 2% of the $2.1 trillion for the changes. The Dow is up 11% ▲11% since Nov. 8
2
Choong-ki, deputy director of S&P 500, according to since Nov. 8, versus 8.3% for
S&P 500
Samsung’s corporate strategy S&P Dow Jones Indices. the S&P 500.
▲8.3%
office, the conglomerate’s con- Money continues to flow Component stocks of
trol tower. into the Dow ETF though the Dow are selected by the 0
On Monday morning, pros- many financial professionals index committee that includes Nov. Dec. Jan. Feb.
ecutors said they had fin- consider the Dow to be editors of The Wall Street Source: WSJ Market Data Group THE WALL STREET JOURNAL.
ished questioning Mr. Chang anachronistic because it uses Journal, which is published
but haven’t yet decided an unusual methodology to or- by Dow Jones & Co., a part example, some $992 million gests that at least one large in-
whether to seek a warrant dering its stocks: The Dow’s of News Corp. Dow Jones sold poured into the Dow ETF on stitution jumped on board.
for his arrest. price weighting gives greater a majority stake in its index Feb. 3, the biggest one-day in- “Given the voracity of the
Samsung has denied its in- influence to components with business in 2010 and the re- flux since April 2008, accord- fund flows, these appear to be
volvement throughout the the highest prices. maining stake in 2013. ing to data from FactSet. from all walks of life, from re-
scandal. “Samsung did not Strategists say that Recent flows indicate that While there is no way to know tail to institutional,” said Matt
make contributions to receive the Dow’s quirky composition the Dow ETF is stoking inter- for sure, the one-day windfall Bartolini, head of SPDR Ameri-
favors,” the company said of 30 stocks is uniquely placed est from mom-and-pop and in- is so far beyond the typical de- cas research at State Street
again last week. to excel in the current envi- stitutional investors alike. For mand for the ETF that it sug- Global Advisors.
emission cars.
“I don’t see how Mr.
Trump can change the mind
of California,” said Mike
there is. “The facts on the
ground aren’t anywhere
close to” suggesting people
want electric cars, said John
car sales even when higher
fuel prices boosted pur-
chases. Many shoppers opted
for cheaper small cars with
A CARB spokesman said
demand for zero-emission
vehicles “continues to
grow,” and pointed to more
sions targets “will not ulti-
mately lead to the [green-
house gas] reductions
needed to reach our climate
Jackson, chief executive at Bozzella, head of a Washing- conventional gas engines than 250,000 on the road in and our air-quality targets,”
AutoNation Inc., the largest ton group representing for- when fuel prices rose. California and more than a he said. “That is why we
dealership chain in the U.S. eign car companies with U.S. Mitch Bainwol, head of an- half million across the U.S. need our separate and dis-
“There may be a Trump rev- operations. other Washington lobbying over the past five years. tinct policy.”
olution in America. But Sac- “With fuel prices where group representing a dozen “We disagree with the char- California and the states
ramento has carved out a they are, there isn’t demand auto makers, estimated com- acterization that consumers that follow its vehicle-emis-
mandated position.” for these vehicles that plying with CARB’s regula- don’t want these cars,” he sion guidelines represent
California’s waiver dates matches the requirements tion adds an estimated $356 said. 40% of Audi AG’s U.S. busi-
to 2012. The state would under the mandate,” he said. on average to the price of a The Obama administration ness, said Scott Keogh, the
need another waiver to con- “It’s just math.” vehicle, including conven- once targeted putting a mil- luxury manufacturer’s top
tinue and toughen its cur- Auto makers have received tional gasoline-engine mod- lion electric vehicles on U.S. American executive. He is
rent vehicle-emissions regi- criticism for years from envi- els, according to congressio- roads by 2015. hopeful electric cars will
men beyond 2025. ronmentalists, officials and nal testimony. That in part The CARB spokesman said catch on as more hit show-
Auto-industry lobbyists some customers for failing to comes from increasing prices the zero-emission cars pro- rooms.
contend California should produce electric cars and of gasoline-powered vehicles gram is needed to buttress “There is going to be a
look at sales results and take other alternative-fuel vehicles to subsidize losses from elec- “modest” nationwide regula- market for people who want
into account that govern- in swelling numbers. But tric cars sold at prices that tions the agency joins the to drive the future,” he said.
ment tax credits play a role such vehicles have remained can attract customers but EPA in crafting. —Adrienne Roberts
spurring what little demand a tiny share of overall U.S. don’t cover production costs. U.S. mileage and emis- 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.
Weaker
Yen Buoys
Japanese
Companies
BY MEGUMI FUJIKAWA
TOKYO—Japanese compa-
nies are raising their earnings
forecasts thanks to the recent
sharp weakening of the yen, al-
though many are wary of being
knocked off course by the trade
policies and comments of U.S.
President Donald Trump.
More than 200 companies
listed on the first section of the
Tokyo Stock Exchange—many of
them large exporters such as
Toyota Motor Corp.—upgraded
their profit forecasts for the fis-
cal year through March 31 when
reporting results for the latest
quarter in recent days, accord-
ing to data compiled by SMBC
Nikko Securities. Only 76 firms
lowered their predictions.
Of 1,446 first-section com-
panies with fiscal years ending
in March, 81% had reported
their third-quarter results as
of Thursday.
“Japanese companies tend
to be cautious about profit
projections. But they’re revis-
ing their full-year projections
early, suggesting that near-
term momentum for profits is
strong,” said Masayuki
Kubota, chief strategist at Ra-
kuten Securities.
More than 200
companies upgraded
their profit forecasts
for the fiscal year.
The main driver of the shift
is a surge in the dollar to a 10-
month high against the yen.
Late Friday in Asia, the dollar
bought around ¥113.70, com-
pared with a low of nearly ¥101
during the December quarter.
The dollar’s rebound has been
spurred by expectations that
Mr. Trump’s policies will boost
U.S. inflation and growth.
Japanese companies have
been trying to build up toler-
ance to the yen’s fluctuations
by currency hedging and mov-
ing some of their production
sites outside of Japan. Firms
don’t typically disclose their
hedging strategy in detail.
Besides the yen, Japanese
companies are gaining a tail-
wind from improvements in the
U.S. and Chinese economies, a
recovery in commodity prices
and increasing private-sector in-
BENJAMIN MANSER/ASSOCIATED PRESS
vestments, such as in the Inter-
net of Things, Mr. Kubota said.
Despite the rosy outlook,
some corporate executives
have expressed concerns
over unpredictability in the
currency market and global
economy stemming from the
Trump administration’s poli-
cies. Mr. Trump has accused
Japan of unfair trade advan-
tages and manipulation of ex-
change rates.
“It is very difficult to fore-
cast the impact of the Trump
administration. We will con-
tinue to monitor the situation,”
Toyota Motor Chief Accounting
Officer Tetsuya Otake said at a
recent news conference.
The closely watched meet-
ing Friday between Mr. Trump
and Japanese Prime Minister
Shinzo Abe in Washington
gave a relief to Japanese ex-
porters, at least for now.
In addition to having potential
effects in the foreign-exchange
market, Mr. Trump’s antagonism
toward free trade could be a blow
to air carriers, said Yuji Hirako, ex-
ecutive vice president at ANA
Holdings Inc., the parent of All
Nippon Airways Co.
Mr. Trump has also raised
the prospect of a border tax
on products arriving from out-
side the U.S., a move that
would likely hit hard in Japan,
whose economy relies heavily
on exports.
—Mayumi Negishi
and Sean McLain
contributed to this article.
Currency Impact
The dollar has strengthened since
the election, weakening the yen
130 Yen per U.S. dollar
U.S. election
120
110
100
2016 ’17
Source: WSJ Market Data Group
THE WALL STREET JOURNAL.
Monday, February 13, 2017 | B3
BUSINESS NEWS
Prince’s Estate Is Roiled Again
Lawyers who advise
the pop singer’s heirs
differ over best way
to manage his legacy
BY HANNAH KARP
LOS ANGELES—Two law-
yers who have been vying for
control over the estate of the
late pop star Prince were de-
nied official roles by a judge
last month. But neither man is
going anywhere.
Veteran entertainment at-
torney L. Londell McMillan
and CNN political commenta-
tor Van Jones were close ad-
visers to Prince at different
times in his life. Following the
reclusive artist’s drug-over-
dose death on April 21, the
two have ignited a family feud
among his six known heirs—a
sister and five half-siblings—
PHOTOSHOT/EVERETT COLLECTION
over issues including the
singer’s legacy, a memorial
concert and the lawyers’ own
conflicts of interest.
Both men were in Los Ange-
les this week ahead of the music
industry’s Grammy Awards on
Sunday. The same day, Prince’s
catalog started becoming avail-
able for the first time since be- Prince’s estate includes nearly $1 million in gold bars and $25 million in real estate. It now belongs to his six estranged heirs.
fore his death on major music-
streaming services such as listing help from fans, even
Spotify AB and Apple Inc.’s Ap- though “it would have cost a Prince’s ‘Vault’ bought licensing rights to Prince’s copyrights on some of them
ple Music, said Access Indus- lot.” 25 independently released al- will expire in coming years and
tries’ Warner Music Group, the “I’m here to make sure the Finds New Home bums and most of his “highly an- will now go to Universal Music
record label that issued most of legacy of Prince does not go ticipated trove” of unreleased as part of its deal.
his hits. afoul from how he lived his Universal Music purchases works known as “the vault.” In June, Warner Music will
The development comes life,” he said. Prince hadn’t licensing rights to most of the The record company spent also release its own two albums
nearly a year after Prince’s wanted to license his music to late artist’s unreleased works about $30 million on the deal, of music from the vault—tunes
death and offers a window into most streaming services—save which is good for at least five Prince recorded while under con-
Mr. McMillan’s vision for how Jay Z’s Tidal—during his life, years, according to people fa- tract there but never released.
best to manage the estate—a Mr. McMillan and others close Entertainment attorney L. miliar with the matter. It also Global Music Rights, the
view that differs in some re- to him said. Londell McMillan and music in- made a deal last year to admin- three-year-old performing-rights
spects from that of Mr. Jones. Mr. Jones, 48, on the other dustry veteran Charles Koppel- ister the publishing rights on group launched by music man-
“Prince did not rush to put hand, has seen more urgency man have helped sell rights to his entire catalog world-wide. ager Irving Azoff, was chosen by
all of his music on streaming— in introducing Prince’s music license various aspects of Warner Music Group, which the estate last year to collect
why should we?” said Mr. to new fans to keep his legacy Prince’s music to several differ- issued his first 18 albums, songwriting royalties when
McMillan, 50 years old, in an in- alive, especially as the anni- ent companies. maintains its majority owner- Prince’s works are played on the
terview, having helped negotiate versary of his death ap- Vivendi SA’s Universal Music ship of those works in perpetu- radio and streaming services.
the latest licensing deals on the proaches, people familiar with Group said Thursday that it had ity overseas, though its U.S. —Hannah Karp
estate’s behalf as one of the two the matter said. He could also
court-appointed advisers to the parlay his own current fame
estate’s interim administrator, as a pundit and documentar- Mr. McMillan said that the mated at roughly $200 mil- one of his record deals, began
Bremer Trust. He no longer has ian into opportunities for the sold-out show was a success. lion—about half of that after representing the late singer’s
that title with Bremer’s replace- estate, these people added. Prince loathed the notion of taxes—and now belongs to his half-brother Omarr Baker in
ment, Comerica Bank & Trust, In a court filing last month, entertainment executives ex- six estranged siblings, under August and his younger sister,
which took over in January. Mr. Jones’s team said that the ploiting his music for their Minnesota state law. Assets in- Tyka Nelson, in December. Mr.
Mr. McMillan added that if Prince tribute concert Mr. own gain and opted whenever clude nearly $1 million in gold McMillan, who considered
he had been in control from McMillan organized in October possible to manage his own af- bars, $25 million in real estate himself Prince’s “co-pilot” and
the get-go, he would have was mismanaged and “has not fairs, according to many who and a “vault” of recordings “COO” in the ‘90s, has won the
more aggressively policed the been produced into a televi- knew him. Nonetheless he left that Prince never released, ac- allegiance of Prince’s other
videos of Prince’s music that sion event or documentary no will, leading to the current cording to court filings. half-siblings: Sharon Nelson,
popped up without the estate’s that could enhance and build fights over his estate. The es- Mr. Jones, who met Prince Alfred Jackson, John Nelson
permission after his death, en- the Prince brand.” tate’s value has been esti- in 2008 and helped negotiate and Norrine Nelson.
2016 ANNUAL RESULTS
The Nouvelle Route du Littoral on Reunion Island, Francis Vigouroux/VINCI photo library
A Swiss municipal worker prepared to count votes on Sunday.
Swiss Vote Defeats
Corporate Tax Plan
Revenue: € 38.1 billion A remarkable performance
"VINCI’s overall performance in 2016 was remarkable:
BY BRIAN BLACKSTONE He said it was unlikely that Ebit margin (operating income
a new program would be in while consolidated revenue stabilised, VINCI achieved
from ordinary activities/revenue)
ZURICH—Swiss voters re- place by January 2019, which strong growth in operating income and net income
improved 120 bp to 11.0 %
jected a corporate-tax-over- is when the tax overhaul was and maintained free cash flow at a high level.
haul plan backed by the gov- scheduled to go into effect. In Contracting, business levels were down slightly but
ernment and business, in a Swissmem, an association Growth of net income
order volumes grew in all three business lines in
blow to the wealthy Alpine of mechanical- and electrical- attributable to owners of the
country’s hopes to bring its engineering companies, said in France. In Concessions, VINCI Autoroutes saw firm
parent: € 2,4 million (up 16.2 %)
1
tax policies in line with in- a written statement after the traffic growth. VINCI Airports became one of the
ternational norms while vote: “The rejection of this re- world’s top 5 airport operators due to strong organic
maintaining its global com- form leads to legal uncertainty Strong free cash flow: € 2.9 billion
growth and further expansion in Japan, the Dominican
petitiveness. which could have negative
In rebuffing the govern- consequences on the invest-
Republic and France. VINCI Highways also stepped up
Order book at 31/12/2016: its international expansion, with a contract in
ment’s proposals, voters were ment activities of enterprises.”
€ 27.4 billion, i.e. about 10 months
swayed by concerns the plan The rejection of the govern- Colombia and an acquisition in Peru. Lastly, testing
was too generous to corpora- ment’s tax plan was wide- of average business activity
started on the new high-speed rail line between Tours
tions at the expense of indi- spread across nearly all of and Bordeaux; the line is expected to come into
vidual taxpayers. Proponents Switzerland’s 26 cantons, or Dividend : € 2.10 per share
2
of the plan said its rejection individual states. One of the service in July 2017.
places Switzerland’s econ- few to vote in favor was Vaud Despite uncertainty regarding the global economy,
omy—home to corporate gi- in western Switzerland, which (1) Excluding non-recurring changes in deferred tax. VINCI has started 2017 with confidence and aims to
ants including Nestlé SA and is home to Nestlé. (2) Dividend proposed to the Shareholder’s General achieve further growth in its results."
UBS Group AG—at risk. Switzerland faces pressure Meeting on 20 April 2017. Since an interim
dividend of €0.63 per share was paid Xavier Huillard,
According to preliminary from the European Union to in November 2016, a final dividend of €1.47
results released by the govern- get rid of the special deals per share will be paid in cash on 27 April 2017. Chairman and CEO
ment, 59% of voters cast bal- that individual cantons strike
lots against the proposed with multinational companies
changes, which parliament ap- that reduce their tax burdens.
proved in 2016, while 41% Switzerland’s average cor-
Agenda
were in favor. The referendum porate tax, about 21%, is lower
results are binding, meaning than in other developed econ- 20 April: Shareholders’ General Meeting at the Carrousel du Louvre, in Paris
parliament must come up with omies including the U.S., Ger- The 2016 annual results press release and presentation are available in French
a new tax-overhaul plan. many and Japan, according to and English on VINCI’s website: www.vinci.com
Swiss Finance Minister Ueli the Organization for Economic
Maurer said Sunday that Swit- Cooperation and Development.
zerland was committed to Switzerland isn’t in the EU,
changing its corporate tax sys- but it agreed with it in 2014 to A global player in concessions and construction
tem but that there wasn’t abolish the special arrange-
much wiggle room to revise ments that taxed foreign and
the plan that was voted down. domestic revenue differently.
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 | Monday, February 13, 2017 THE WALL STREET JOURNAL.

TECHNOLOGY WSJ.com/Tech

Trump Tests Tech Industry Bank Hacks Are

Changes are possible
for U.S. regulations
Similar to Sony’s
governing web traffic BY ROBERT MCMILLAN banking attacks. The group’s
bank hacking previously had
and customer privacy Cybersecurity specialists focused on Asia, said Eric
have found evidence suggest- Chien, technical director of Sy-
BY JOHN D. MCKINNON ing that recent attacks on in- mantec’s Security Technology
stitutions in Poland are part of and Response division.
In his first weeks in office, an international hacking effort “We never saw them do
U.S. President Donald Trump targeting financial institutions anything, for example, to the
has shown a readiness to take in the U.S., Mexico and the U.S., let alone Europe,” he
on the technology industry, United Kingdom—a breach said. “Now we see them tar-
clashing with Silicon Valley in that shares traits with the geting the U.S. and Europe.”
ways that his tech-friendly 2014 attack on Sony Corp. In November, the Federal
predecessor hardly ever did. The hacks began late last Bureau of Investigation
The president’s executive year, installing unauthorized warned U.S. financial institu-
order on immigration, which code on websites belonging to tions that it was “monitoring
generated an outcry from the financial regulators, then us- emerging reports indicating
industry, was only the start. ing those to attack computers that well-resourced and orga-
Trump-appointed regula- belonging to a select list of nized malicious cyber actors
tors have begun scaling back global financial institutions, have intentions to target the
CHRIS KLEPONIS/CNP/ZUMA PRESS

net-neutrality regulations that according to researchers who U.S. financial sector.”

marked one of the tech indus- have examined the attacks at The FBI didn’t respond to
try’s most significant victories security vendors Symantec requests for comment about
during the Obama era. That Corp. and BAE Systems PLC. the latest attacks.
rule requires that internet-ser- It is unclear to the re- The attacks started in Octo-
vice providers don’t give pri- searchers exactly how many ber by compromising the web-
ority to some traffic—a policy banks were compromised or site of the Polish Financial Su-
that companies such as Face- whether any suffered financial pervision Authority, an
book Inc. and Netflix Inc. like, losses. incident that was reported last
because it assures them the Intel will invest $7 billion in an Arizona facility. CEO Brian Krzanich at the White House last week. But the researchers say it week by the Badcyber.com
same basic treatment that ri- appears to be part of a well- blog.
vals would get. come to Silicon Valley. allow American business to 3,000 high-skill jobs. organized and broad hacking The hackers programmed
Regulators also are likely to Firms from other sectors of have an environment in which Intel officials praised Mr. effort that shares links to that website to attack banking
undo customer-privacy restric- the economy have had high-pro- it can be unleashed.” Trump’s tax and regulatory other attacks including the computers that visited the
tions imposed under the Obama file clashes with the new admin- He added that while the ad- policies for promising to make devastating 2014 hack that de- site, the researchers say.
administration that critics say istration, particularly the big ministration believes there the U.S. an “advantageous” stroyed systems and exposed A Polish Financial Supervi-
disadvantaged cable and wire- U.S. auto companies. Still, some have been “flaws” in the visa place to manufacture. email messages at Sony Pic- sion Authority spokesman
less companies such as Charter executives fear the number of program for high-skilled work- Despite the upbeat meeting, tures Entertainment. confirmed that the regulator
Communications Inc. and potential issues dividing the ers, necessary changes can be conflict over immigration policy U.S. officials have said had “identified an external at-
AT&T Inc. in their competition Trump administration and the made “in a way that supports continues to play out between North Korea was responsible tempt to interfere in the oper-
with internet firms. tech community could make the what these [high-tech] compa- the administration and the high- for that attack. North Korea ating IT system,” and had
New Attorney General Jeff industry a target. nies currently need.” tech community including Intel, has denied that, though said turned over evidence of the in-
Sessions, like Mr. Trump, has The administration, seeking one of numerous companies its supporters might have cident to law enforcement af-
been a critic of the tech indus- to minimize the conflict, has that filed court papers to op- done it. ter restoring the website.
try’s ability to keep customers’ underscored its aggressive ef- pose the executive order. Researchers at BAE Sys- The Polish National Police
communications and data from forts to improve the business
Trump is clashing Scores of tech companies, tems and Symantec say that Agency didn’t immediately re-
the government. Many tech- climate, including for Silicon with Silicon Valley in along with a few nontech com- some of the software and in- spond to a request for com-
and privacy-policy experts ex- Valley, and to boost job cre- panies, joined in a friend-of-the- ternet infrastructure in the ment Friday.
pect the new administration to ation.
ways that Obama court brief opposing the order. global effort also was used in The hackers programmed
be aggressive in its efforts to “Big picture, we’re not go- hardly ever did. Alphabet Inc. unit Google, Ama- the Sony attack and—more re- the hacked web servers to at-
broaden the government’s au- ing to agree on everything” zon.com Inc. and Facebook all cently—other attacks on banks tack computers only if they
thority, particularly where na- with the tech sector, “and it’s declined to comment. in Asia. originated from a short-list of
tional security is involved. not our job to agree on every- Many tech firms want to Security researchers call about 75 institutions—an ap-
Moreover, given some past thing,” Reed Cordish, an ad- Mr. Trump showcased his minimize the potential for con- the North Korea-linked group parent effort to keep a lower
comments by Mr. Trump and viser to the president on tech- emerging strategy on Wednes- flicts. “Certainly there’s broad they believe is behind these profile and help evade detec-
his aides, many companies nology initiatives, said in an day in a meeting with execu- concern from this week-one ex- attacks “Lazarus.” It has been tion, the researchers say.
worry that the administration interview. “It’s our job to pro- tives of semiconductor maker ecutive order, but we recognize active since 2009, according to This list includes 19 finan-
plans new restrictions on visas tect the American people and Intel Corp. in the Oval Office. that the first week will not de- Kaspersky Lab ZAO, a Russian cial institutions in Poland, 15
for high-skilled workers from the American worker to the The executives announced a $7 fine this presidency,” said Mi- cybersecurity company. in the U.S., nine in Mexico, and
abroad, among other potential full extent possible. We think a billion investment in an Ari- chael Beckerman, president of If the recent attacks are in- seven in the U.K., said BAE
changes to the immigration great way to do that is sup- zona manufacturing facility the Internet Association, an on- deed by Lazarus, it suggests Systems, which declined to
system that could be unwel- port American business and that they said will create some line-trade group. the group is broadening its name the institutions.

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zero-rating practices.
blue, black, Critics of zero-rating say it
red, yellow, presents consumers with a
green, orange choice they can’t refuse. Who
would say no to video they
can stream free or for a flat
fee when the alternative is
video from competing services
that may eat up all their ex-
pensive data? This is the rea-
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Facebook’s attempts to give
free data to users as tanta-
mount to colonialism.
Zero-rating resembles
the carrier has an interest.
The real risk isn’t that in-
ternet giants would be un-
able to pay for telecom play.
Rather, it’s that any would-
be next big thing will instead
be smothered in the cradle.
In Snapchat creator Snap
Inc.’s IPO filing, the company
listed the end of net neutral-
ity as a potential threat to
its long-term prospects. If a
company potentially valued
at $25 billion is worried
about having to pay carriers
to be competitive with other
zero-rated peers, imagine
what these changes might
mean to a startup.
Headlines and news con-
ferences aside, even most
opponents of net neutrality
don’t believe we should do
away with it completely.
Based on Mr. Pai’s public
statements and recent ac-
tions, the FCC chairman ap-
pears to oppose the Obama-
era FCC judgment that the
commission has the power to
regulate internet service pro-
viders the way it regulates
carriers make rules together.
In Ms. Layton’s view, the
rules should be set by Con-
gress, not the FCC.
Investors are proceeding
with caution. “We’re assum-
ing that net neutrality in its
wired and wireless fashion is
gone,” says Andy Weissman,
a venture capitalist at Union
Square Ventures who has
been an outspoken defender
of net neutrality. He’s invest-
ing in Tucows, an internet
service provider that is be-
ginning to roll out fiber in
some areas. Tucows will be
“pure pipes” he says, which
means in the future, it could
differentiate from incumbent
carriers by committing to
equal treatment for all data.
The consumer impact is
more difficult to predict.
What makes it so hard to
calculate is that we’ve never
really lived in a world with-
out net neutrality. Even be-
fore the FCC’s 2015 rules on
net neutrality, fear of those
regulations kept internet
service providers in check,

paulfredrick.com/special “paid prioritization,” in

which companies pay to have
their data delivered first, a
telecoms more broadly. Mr.
Pai’s office declined to make
him available for comment.
says Michael Cheah, general
counsel at video-streaming
company VHX and its parent

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Roslyn Layton, a visiting
fellow at the American En-
terprise Institute who stud-
ied net-neutrality practices
in other countries, was part
of Mr. Trump’s transition
team. She believes we need
what she calls “soft net neu-
trality,” where multiple
stakeholders, including both
big internet companies and
company Vimeo. Video-in-
tense businesses such as his
are most threatened.
Doing away with the FCC’s
power to enforce net neutral-
ity is, he says, like lawmakers
tossing away an umbrella just
because it isn’t raining, forget-
ting that big carriers have ev-
ery incentive to make it rain—
for themselves.
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. NY Monday, February 13, 2017 | B5

THE
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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
B6 | Monday, February 13, 2017 THE WALL STREET JOURNAL.

MARKETS DIGEST
Dow Jones Industrial Average S&P 500 Index New to the Market
Last Year ago Last Year ago
20269.37 s 197.91, or 0.99% last week Trailing P/E ratio * 20.58 16.78 2316.10 s 18.68, or 0.81% last week Trailing P/E ratio * 24.48 20.58 Public Offerings of Stock
High, low, open and close for each of P/E estimate * 17.38 14.59 High, low, open and close for each of P/E estimate * 17.75 15.25
Dividend yield 2.41 2.79 Dividend yield 2.04 2.39
IPOs in the U.S. Market
the past 52 weeks the past 52 weeks
All-time high 20269.37, 02/10/17 All-time high: 2316.10, 02/10/17 None expected this week
Lockup Expirations
Current divisor 0.14602128057775
20600 2300 None expected this week
65-day moving average
19800 2225
IPO Scorecard
Performance of IPOs, most-recent listed first
% Chg From % Chg From
19000 2150 Company SYMBOL Friday3s Offer 1st-day Company SYMBOL Friday3s Offer 1st-day
IPO date/Offer price close ($) price close IPO date/Offer price close ($) price close
Foundation Building Materials 15.50 10.7 ... Invitation Homes 21.02 5.1 5.1
18200 2075 FBM Feb. 10/$14.00 INVH Feb. 1/$20.00
200-day moving average Clipper Realty 13.50 ... ... Laureate Edu 13.26 –5.3 0.1
CLPR Feb. 10/$13.50 LAUR Feb. 1/$14.00
Week's high 17400 2000
Sachem Capital 5.04 0.8 ... Jagged Peak Energy 14.48 –3.5 1.0
DOWN UP SACH Feb. 10/$5.00 JAG Jan. 27/$15.00
t

Monday's open Friday's close Kimbell Royalty Ptnrs 20.00 11.1 –3.1 JELD-WEN Holding 29.77 29.4 14.0
16600 1925
KRP Feb. 3/$18.00 JELD Jan. 27/$23.00
Friday's close Monday's open
t

200-day moving average 65-day moving average Ramaco Resources 11.89 –11.9 –12.3 Jounce Thera 20.73 29.6 20.2
15800 1850 METC Feb. 3/$13.50 JNCE Jan. 27/$16.00
Week's low
Bars measure the point change from Monday's open Sources: WSJ Market Data Group; FactSet Research Systems

15000 1775 Other Stock Offerings

F M A M J J A S O N D J F F M A M J J A S O N D J F
Secondaries and follow-ons expected this week in the U.S. market
Primary Symbol/
NYSE weekly volume, in billions of shares market Composite
t
t

Financial Flashback Expected Issuer/Business

Primary Amount
exchange ($mil.)
Friday’s
price ($) Bookrunner(s)
30
20 The Wall Street Journal, February 13, 2001 Feb. 13 Hiddn Solutions HIDDN 5.7 n.a. Arctic Securities,
Consumer Products Intl DNB Markets
10 After years of disappointing earnings, Lechters Inc. said it
0 is closing down 166 “underperforming” U.S. stores and
F M A M J J A S O N D J F laying off 725 people, or 30% of its total work force. Off the Shelf
* P/E data based on as-reported earnings from Birinyi Associates Inc.
“Shelf registrations” allow a company to prepare a stock or bond for
sale, without selling the whole issue at once. Corporations sell as
Major U.S. Stock-Market Indexes Nasdaq Composite
conditions become favorable. Here are the shelf sales, or takedowns,
Latest Week 52-Week % chg s 67.36, or 1.19% over the last week:
High Low Close Net chg % chg Low Close (l) High % chg YTD 3-yr. ann.
Dow Jones
last week Takedown date/ Deal value Registration
Issuer/Industry Registration date ($ mil.) (mil.) Bookrunner(s)
Industrial Average 20298.21 20002.81 20269.37 197.91 0.99 15973.84 l 20269.37 26.9 2.6 8.7
Biotime Feb. 10 $17.5 $100.0 Raymond James & Assoc.
Transportation Avg 9411.18 9158.78 9393.79 152.23 1.65 7048.69 l 9468.77 33.3 3.9 9.4 Healthcare Feb. 2,315
5740
Utility Average 670.94 660.33 669.68 7.61 1.15 610.87 l 723.51 9.6 1.5 9.7 Sierra Oncology Feb. 9 $26.3 $150.0 Jefferies
Total Stock Market 24139.73 23743.58 24107.53 197.55 0.83 19029.42 l 24107.53 26.7 3.6 8.4 Healthcare Aug. 1,316
Barron's 400 621.17 605.02 620.30 6.71 1.09 455.95 l 620.3 36.0 3.1 8.1 5700
Helius Medical TechnologiesFeb. 9 $8.2 $100.0 Canaccord Genuity,
Nasdaq Stock Market Healthcare Dec. 23,316 Raymond James &
5660 Assoc.
Nasdaq Composite 5743.43 5649.39 5734.13 67.36 1.19 4337.51 l 5734.13 32.2 6.5 11.4
1.26 l 5226.69 xG Technology Feb. 9 $3.5 $30.0 Aegis Cptl
Nasdaq 100 5234.27 5148.06 5226.69 65.09 4019.19 30.0 7.5 13.4 Telecommunications Aug. 1,314
5620
Standard & Poor's 3 6 7 8 9 10 Houlihan Lokey Feb. 8 $234.0 $610.4 BofA ML, GS, JPM, UBS,
500 Index 2319.23 2285.38 2316.10 18.68 0.81 1864.78 l 2316.1 24.2 3.5 8.8 February Finance Jan. 27,317 Stifel, Houlihan Lokey
MidCap 400 1723.42 1683.69 1720.84 14.20 0.83 1261.89 l 1720.84 36.4 3.6 9.5 DJ US TSM Galena Biopharma Feb. 8 $17.0 $100.0 Canaccord Genuity
SmallCap 600 850.74 822.64 849.64 8.30 0.99 598.52 l 857.5 42.0 1.4 10.4 s 197.55, or 0.83% Healthcare Dec. 4,315

Other Indexes last week Parsley Energy Feb. 7 $1,116.0 $1,175.5 Credit Suisse, MS,
Oil & Gas June 5,315 BMO Cptl Mkts, JPM,
Russell 2000 1391.18 1349.43 1388.84 11.01 0.80 971.99 l 1388.84 42.9 2.3 7.5 RBC Cptl Mkts, UBS,
NYSE Composite 11390.89 11196.93 11377.72 66.98 0.59 9229.68 l 11377.72 23.3 2.9 4.2 Scotiabank, Perella
Value Line 522.27 509.67 521.84 4.83 0.93 392.00 l521.84 33.1 3.1 3.4 24150 Weinberg Prtnrs

NYSE Arca Biotech 3357.75 3259.43 3337.03 34.23 1.04 2750.71 l 3477.87 21.3 8.5 8.9 AMC Entertainment HoldingsFeb. 7 $600.0 ... Citi, BofA ML, Barclays,
NYSE Arca Pharma 493.44 482.55 491.91 7.27 1.50 463.78 l 554.66 1.9 2.2 0.8 Leisure & Recreation Dec. 21,316 Credit Suisse
24000
KBW Bank 93.49 90.94 93.14 -0.003 -0.003 59.54 l 93.71 56.4 1.5 11.1 Coherus BioSciences Feb. 7 $125.0 $400.4 JPM, Citi
PHLX§ Gold/Silver 97.20 92.85 95.42 2.50 2.69 57.24 l 112.86 57.3 21.0 0.1 Healthcare Dec. 18,315
23850
PHLX§ Oil Service 183.85 173.21 180.22 -2.90 -1.58 133.63 l 192.66 34.9 -1.9 -11.9 Golar LNG Partners Feb. 7 $119.0 ... MS
PHLX§ Semiconductor 976.43 953.91 963.05 -0.97 -0.10 571.90 l 972.14 68.4 6.2 21.4 Transportation Oct. 26,316
CBOE Volatility 11.84 10.55 10.85 -0.12 -1.09 10.58 l 25.76 -57.3 -22.7 -10.7 23700
3 6 7 8 9 10

Philadelphia Stock Exchange Sources: SIX Financial Information; WSJ Market Data Group February Public and Private Borrowing
Treasurys
International Stock Indexes Commodities and Monday, February 13 Tuesday, February 14

Latest Week 52-Week Range YTD

Currencies Auction of 13-week & 26-week bills; Auction of 4-week bills;
Region/Country Index Close % chg Low Close High % chg Last Week YTD announced on Feb.9; settles on Feb.16 announced on Feb.13; settles on Feb.16
Close Net chg %Chg % chg
World The Global Dow 2622.53 0.29 2070.15 • 2626.44 3.6
DJ Commodity 589.81 14.77 2.57 3.98
Thursday, February 16
DJ Global Index 339.70 0.62 274.54 • 339.70 4.2 Auction of 30-year tips;
194.04 0.43
DJ Global ex U.S. 224.08 0.40 184.52 • 224.08 4.7 TR/CC CRB Index 0.84 0.79 announced on Feb.9; settles on Feb.28
Global Dow Euro 2324.44 1.85 1733.59 • 2324.44 2.9 Crude oil, $ per barrel 53.86 0.03 0.06 0.26
Public and Municipal Finance
DJ TSM Global 3499.58 0.61 2819.41 • 3499.58 4.1 Natural gas, $/MMBtu 3.034 -0.029 -0.95 -18.53
Deals of $ 150 million or more expected this week
Global ex U.S. 2263.44 0.38 1863.63 • 2263.44 4.8 Gold, $ per troy oz. 1234.40 15.90 1.30 7.34
Final Total Rating Bookrunner/
Developed ex U.S. 2197.15 0.10 1843.94 • 2197.15 3.9 U.S. Dollar Index 100.71 0.98 0.98 -1.47 Sale maturity Issuer ($mil.) Fitch Moody’s S&P Bond Counsel(s)
Global Small-Cap 4820.89 0.55 3677.57 • 4820.89 4.3
WSJ Dollar Index 90.94 0.59 0.66 -2.15
Global Large-Cap 3313.61 0.62 2692.25 • 3313.61 4.1
Euro, per dollar 0.9397 0.0125 1.35 -1.15
Feb. 14 Feb. 1, 2038 Las Vegas 152.8 N.R. Aa1 AA Preliminary/
Valley Water Sherman &
Americas DJ Americas 561.78 0.86 442.01 • 561.78 4.0
Yen, per dollar 113.20 0.62 0.55 -3.25 Dt Howard
Brazil Sao Paulo Bovespa 66124.53 1.80 39808.05 • 66190.62 9.8
U.K. pound, in dollars 1.25 ... unch. 1.14
Canada S&P/TSX Comp 15729.12 1.63 12381.24 • 15729.12 2.9 Feb. 14 Aug. 1, 2047 Los Angeles 450.0 AAA Aa2 N.R. Preliminary/
Mexico IPC All-Share 47797.04 1.21 42416.44 • 48694.90 4.7 52-Week
Low Close(l) High % Chg
(Long Beach) Hawkins Delafield
Chile Santiago IPSA 3337.53 1.18 2925.50 • 3358.44 3.5 USD & Wood
DJ Commodity 441.11 589.81 32.58
Europe Stoxx Europe 600 367.39 0.91 308.75 • 367.50 1.7 l
Feb. 17 prelim. Connecticut 210.0 N.R. N.R. N.R. BoA Merrill/—
Stoxx Europe 50 3039.14 1.02 2636.71 • 3051.81 0.9 TR/CC CRB Index 158.87 l 195.82 21.00
Housing
Eurozone Euro Stoxx 351.27 –0.06 288.98 • 355.72 0.3 Crude oil, $ per barrel 29.04 l 54.06 82.95 Finance Auth
Euro Stoxx 50 3270.83 –0.07 2697.44 • 3326.15 –0.6 Natural gas, $/MMBtu 1.64 l 3.93 54.32
Belgium Bel-20 3590.95 –0.42 3141.13 • 3665.69 –0.4
Gold, $ per troy oz. 1127.80 l 1364.90 -0.38
Feb. 17 prelim. Multnomah 291.2 N.R. N.R. N.R. Piper Jaffray
France CAC 40 4828.32 0.06 3984.72 • 4922.49 –0.7 (Gresham-Barlow)
SD #10JT
Germany DAX 11666.97 0.13 8967.51 • 11848.63 1.6 U.S. Dollar Index 92.57 l 103.25 4.94
Israel Tel Aviv 1418.08 0.26 1382.34 • 1502.66 –3.6 WSJ Dollar Index 84.64 l 93.56 2.19 Feb. 17 prelim. NYS Dorm 190.6 N.R. N.R. N.R. Goldman
Italy FTSE MIB 18862.11 –1.33 15104 • 19688 –1.9
Euro, per dollar 0.87 l 0.96 5.77 Authority & Co
Netherlands AEX 489.56 0.75 391.86 • 489.56 1.3
Yen, per dollar 99.88 l 118.18 -0.05 Source:Thomson Reuters/Ipreo
Spain IBEX 35 9378.10 –0.89 7645.5 • 9549.3 0.3
Sweden SX All Share 552.68 0.56 445.00 • 552.68 3.4 U.K. pound, in dollars 1.20 l 1.49 -13.91
Switzerland Swiss Market 8456.22 1.26 7593.20 • 8456.22 2.9
Real-time U.S. stock A Week in the Life of the DJIA
U.K. FTSE 100 7258.75 0.98 5707.60 • 7337.81 1.6
Asia-Pacific
Australia
DJ Asia-Pacific TSM 1513.70
S&P/ASX 200 5720.60
1.22
1.76
1190.45
4765.3 •
• 1513.70
5807.4
6.4
1.0
WSJ
.COM
quotes are available on
WSJ.com. Track most-
active stocks, new
A look at how the Dow Jones Industrial Average component stocks
did in the past week and how much each moved the index. The DJIA
gained 197.91 points, or 0.99%, on the week. A $1 change in the price
China Shanghai Composite 3196.70 1.80 2687.98 • 3282.92 3.0
highs/lows, mutual of any DJIA stock = 6.85-point change in the average. To date, a
Hong Kong Hang Seng 23574.98 1.93 18319.58 • 24099.70 7.2
funds and ETFs. $1,000 investment on Dec. 31 in each current DJIA stock component
India S&P BSE Sensex 28334.25 0.33 22976.00 • 29045.28 6.4
would have returned $30,757, or a gain of 2.50%, on the $30,000
Japan Nikkei Stock Avg 19378.93 2.44 14952.02 • 19594.16 1.4 Plus, get deeper money-flows data and
investment, including reinvested dividends.
Singapore Straits Times 3100.39 1.92 2539.95 • 3100.39 7.6 email delivery of key stock-market
South Korea Kospi 2075.08 0.09 1835.28 • 2087.14 2.4 data. The Week’s Action
Taiwan Weighted 9665.59 2.22 8053.69 • 9665.59 4.5 All are available free at
Pct Stock price Point chg
chg (%) change in average Company Symbol Close
$1,000 Invested(year-end '16)
$1,000
Source: SIX Financial Information;WSJ Market Data Group WSJMarkets.com 7.37 3.86 26.43 Nike NKE $56.22 $1,106
3.25 3.03 20.75 Caterpillar CAT 96.31 1,047
2.36 3.83 26.23 Boeing BA 166.23 1,078
Consumer Rates and Returns to Investor Benchmark Yields and Rates 2.36 3.04 20.82 Apple AAPL 132.12 1,146
U.S. consumer rates Selected rates Treasury yield curve Forex Race 2.29 1.52 10.41 Wal-Mart Stores WMT 68.02 984
A consumer rate against its Home Equity Yield to maturity of current bills, Yen, euro vs. dollar; dollar vs. 2.26 3.96 27.12 3M MMM 179.00 1,002
benchmark over the past year notes and bonds major U.S. trading partners 1.66 1.95 13.35 Travelers TRV 119.73 978
Bankrate.com avg†: 4.69%
1.63 2.86 19.59 IBM IBM 178.68 1,086
First Citizens Bank 2.24% 5.00% 18%
6.00% Rancho Santa Margari, CA 949-459-8250 1.41 1.60 10.96 Johnson & Johnson JNJ 115.24 1,000
4.00 12 1.36 1.87 12.81 Home Depot HD 139.85 1,043
Home equity loan FirstNorthernBankandTrustCompany 3.20%
t 5.00
Palmerton, PA 800-242-4671 3.00 1.28 1.40 9.59 United Technologies UTX 111.05 1,013
6 s
4.00 Berkshire Bank 3.25% Euro Yen
s 1.27 1.58 10.82 McDonald’s MCD 125.82 1,034
Friday 2.00
t

New Hartford, NY 315-735-6106 0 1.02 0.78 5.34 DuPont DD 77.21 1,052

t
3.00 InstitutionforSavingsinNewburyport 3.25% 1.00 0.82 0.40 2.74 Verizon VZ 48.98 928
–6 s
Prime rate One year ago 0.81 1,006
t

Newburyport, MA 978-462-2344 WSJ Dollar index 0.26 1.78 Pfizer PFE 32.35
2.00 0.00 –12
MAM J J A S ON D J F Salem Five 3.25% 0.73 1.77 12.12 Goldman Sachs GS 242.72 1,014
1 3 6 1 2 3 5 710 30 2016 2017
2016 2017 Salem, MA 978-745-5555 0.64 0.56 3.84 Procter & Gamble PG 87.97 1,055
month(s) years
0.61 0.19 1.30 Cisco Systems CSCO 31.51 1,052
maturity
Yield/Rate (%) 52-Week Range (%) 3-yr chg 0.56 0.44 3.01 American Express AXP 78.48 1,064
Interest rate Last (l)Week ago Low 0 2 4 6 8 High (pct pts) Sources: Ryan ALM; Tullett Prebon; WSJ Market Data Group 0.50 0.32 2.19 Microsoft MSFT 64.00 1,030
Federal-funds rate target 0.50-.75 0.50-.75 0.25 l 0.75 0.50 0.07 0.02 0.14 General Electric GE 29.72 941
Prime rate* 3.75 3.75 3.50 l 3.75 0.50 Corporate Borrowing Rates and Yields –0.21 –0.18 –1.23 Visa V 85.90 1,101
Libor, 3-month 1.04 1.03 0.62 l 1.04 0.80 Spread +/- Treasurys, –0.21 –0.18 –1.23 J.P. Morgan Chase JPM 87.00 1,014
Yield (%) in basis pts, 52-wk Range Total Return
Money market, annual yield 0.31 0.31 0.22 l 0.32 -0.10 Bond total return index Last Wk ago Last Low High 52-wk 3-yr –0.22 –0.14 –0.96 Merck MRK 64.15 1,090
Five-year CD, annual yield 1.24 1.22 1.17 l 1.32 -0.08 –0.46 –0.52 –3.56 Chevron CVX 113.05 960
30-year mortgage, fixed† 4.06 4.19 3.43 l 4.29 -0.27 10-yr Treasury, Ryan ALM 2.409 2.496 -4.28 3.03
DJ Corporate 3.224 3.266 5.70 3.86 –0.69 –1.12 –7.67 UnitedHealth Group UNH 160.75 1,004
15-year mortgage, fixed† 3.26 3.38 2.70 l 3.50 -0.13
Aggregate, Barclays Capital 2.600 2.650 44 43 70 0.98 2.63 –0.94 –1.04 –7.12 Walt Disney DIS 109.26 1,048
Jumbo mortgages, $424,100-plus† 4.36 4.62 4.02 l 4.88 -0.09
High Yield 100, Merrill Lynch 5.332 5.418 347 341 719 20.399 3.524 –1.22 –1.02 –6.99 Exxon Mobil XOM 82.52 922
Five-year adj mortgage (ARM)† 3.44 3.66 2.97 l 4.03 -0.11
New-car loan, 48-month 3.16 3.15 2.87 l 3.38 0.25 Fixed-Rate MBS, Barclays 2.870 2.930 21 10 30 0.25 2.55 –2.31 –0.96 –6.57 Coca-Cola KO 40.58 979
HELOC, $30,000 4.69 4.69 4.29 l 4.84 -0.41 Muni Master, Merrill 2.135 2.180 9 -8 12 -0.872 3.043 –3.23 –1.18 –8.08 Intel INTC 35.34 981
Bankrate.com rates based on survey of over 4,800 online banks. *Base rate posted by 70% of the nation's largest EMBI Global, J.P. Morgan 5.744 5.821 337 337 525 14.332 6.505
banks.† Excludes closing costs. Sources: WSJ Market Data Group; S&P Dow Jones Indices. For more information on the Dow Jones
Sources: SIX Financial Information; WSJ Market Data Group; Bankrate.com Sources: J.P. Morgan; Ryan ALM; S&P Dow Jones Indices; Barclays Capital; Merrill Lynch Industrial Average and the 30 industrials, please visit www.djindexes.com
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B6B | Monday, February 13, 2017 NY THE WALL STREET JOURNAL.

NEW OPPORTUNITIES AND RISKS

MAY 2, 2017 | WASHINGTON, D.C.

This spring, The Wall Street Journal will bring together leading figures in business, finance and government to
discuss the opportunities and risks shaping the future of America’s middle market—the engine of U.S. growth,
job creation and competitiveness. The Journal’s senior editors will lead dynamic discussions with experts on
top business issues, and explore how the legislative, regulatory and trade policies of the new administration
and Congress will impact the sector.

SPEAKERS

J.W. MARRIOTT, JR. MIKE FOLEY

EXECUTIVE CHAIRMAN AND CEO
CHAIRMAN OF THE BOARD ZURICH NORTH AMERICA
MARRIOTT INTERNATIONAL, INC.

TOM RICE KYRSTEN SINEMA

U.S. REPRESENTATIVE (R., S.C.); CO-CHAIR, U.S. REPRESENTATIVE (D., ARIZ.);
CONGRESSIONAL CAUCUS FOR MIDDLE CO-CHAIR, CONGRESSIONAL CAUCUS
MARKET GROWTH FOR MIDDLE MARKET GROWTH

SUSAN C. SCHWAB MARCO ANNUNZIATA

U.S. TRADE REPRESENTATIVE (2006–09) CHIEF ECONOMIST AND EXECUTIVE
PROFESSOR, UNIVERSITY OF MARYLAND DIRECTOR OF GLOBAL MARKET INSIGHT
SCHOOL OF PUBLIC POLICY GENERAL ELECTRIC COMPANY

DREW ALTMAN RICHARD EDELMAN

PRESIDENT AND CEO PRESIDENT AND CEO
HENRY J. KAISER FAMILY FOUNDATION EDELMAN

THOMAS A. STEWART PETER CAPPELLI

EXECUTIVE DIRECTOR PROFESSOR OF MANAGEMENT AND
NATIONAL CENTER FOR DIRECTOR, CENTER FOR HUMAN
THE MIDDLE MARKET RESOURCES, THE WHARTON SCHOOL
UNIVERSITY OF PENNSYLVANIA

RICHARD BEJTLICH ANDREW KEYT

CHIEF SECURITY STRATEGIST CLINICAL PROFESSOR OF FAMILY
FIREEYE, INC. BUSINESS MANAGEMENT
QUINLAN SCHOOL OF BUSINESS
LOYOLA UNIVERSITY CHICAGO

TO REQUEST AN INVITATION, PLEASE VISIT MIDDLEMARKET.WSJ.COM

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THE WALL STREET JOURNAL. Monday, February 13, 2017 | B7

MARKETS

‘The Prophet of Wall Street’ to Retire Currencies

U.S.-dollar foreign-exchange rates in late New York trading
US$vs, US$vs,
BY PAUL VIGNA in the midst of a recession, and ish on the economy,” She pre- Fri YTDchg Fri YTDchg
her faith in equities would be re- dicted two to three years of Country/currency in US$ per US$ (%) Country/currency in US$ per US$ (%)
One of the best-known bulls warded amply. profit and dividend growth. Americas Vietnam dong .00004404 22705 –0.3
on Wall Street is retiring. She was made a Goldman “Bonds will do well, but stocks Argentina peso .0644 15.5255 –2.2 Europe
Abby Joseph Cohen, the long- partner in 1998 and was one of will do better.” It was, in retro- Brazil real .3209 3.1160 –4.3 Czech Rep. koruna .03938 25.395 –1.1
time Goldman Sachs Group Inc. dwindling number of executives spect, the very beginning of a Canada dollar .7644 1.3083 –2.7 Denmark krone .1431 6.9878 –1.2
strategist, is retiring after more who had attained Goldman’s historic bull market, and with Chile peso .001563 639.60 –4.5 Euro area euro 1.0642 .9397 –1.1
Colombia peso .0003505 2853.17 –5.0 Hungary forint .003453 289.64 –1.6
than a quarter of a century at highest rank ahead of the firm’s Ms. Cohen coming to it early, 1 1 .008833 113.21
Ecuador US dollar unch Iceland krona 0.2
the firm. Ms. Cohen is stepping 1999 initial public offering. she quickly developed a reputa- Mexico peso .0492 20.3373 –1.9 Norway krone .1195 8.3688 –3.2
down from her current post, Others from that group to tion on the Street. Peru new sol .3073 3.254 –3.0 Poland zloty .2477 4.0369 –3.6
president of Goldman’s Global leave in the past year include —In 1999, she said that the Uruguay peso .03508 28.5100 –2.9 Russia ruble .01717 58.233 –5.0
Markets Institute, which does Gary Cohn, who had been presi- market’s big gains couldn’t con- Venezuela b. fuerte .100150 9.9851 –0.1 Sweden krona .1121 8.9199 –2.1

ROB KIM/GETTY IMAGES

research into topics such as de- dent and chief operating officer; tinue indefinitely and advised Asia-Pacific Switzerland franc .9975 1.0025 –1.6
Turkey lira .2705 3.6964 4.9
mographic changes, labor-force London executive Michael Sher- clients to “take a little bit off the Australian dollar .7675 1.3029 –6.2
Ukraine hryvnia .0367 27.2300 0.5
development, pension plans, wood and private-equity pioneer table,” projecting a moderating China yuan .1454 6.8776 –1.0
UK pound 1.2486 .8009 –1.1
Hong Kong dollar .1289 7.7581 0.03
health-care expenditures, capi- Sanjeev Mehra. Just over a growth rate. But the market Middle East/Africa
India rupee .01496 66.844 –1.6
tal-markets structure, regulation dozen remain out of an original wasn’t moderating, with the Indonesia rupiah .0000751 13320 –1.5 Bahrain dinar 2.6532 .3769 –0.1
and the environment. It also 220 or so. S&P 500 up nearly 20% that Japan yen .008834 113.20 –3.2 Egypt pound .0559 17.8965 –1.3
consults with foreign govern- Ms. Cohen became famous in Abby Joseph Cohen year. Kazakhstan tenge .003099 322.64 –3.3 Israel shekel .2666 3.7508 –2.5
ments. She will remain an advi- the dot-com boom of the 1990s —In 2008, she missed the Macau pataca .1249 8.0089 1.2 Kuwait dinar 3.2773 .3051 –0.2
sory director at Goldman. for her prescient—and bullish— group of Wall Street analysts warning signs of the financial Malaysia ringgit .2253 4.4388 –1.1 Oman sul rial 2.5982 .3849 –0.02
New Zealand dollar .7202 1.3885 –3.8 Qatar rial .2746 3.641 0.03
Ms. Cohen, who started calls on the market as the tech who were quasicelebrities. crisis, as many did. She pre- Pakistan rupee .00954 104.850 0.5 Saudi Arabia riyal .2666 3.7505 –0.01
working on the Street in the bubble was taking off. She Here are some calls she dicted that the S&P 500 would Philippines peso .0200 49.915 0.6 South Africa rand .0749 13.3564 –2.5
1970s, landed at Goldman in missed later downturns, which made: hit 1675 in 2008. It closed at Singapore dollar .7039 1.4206 –1.8
1990, becoming co-chairman of somewhat dimmed her star. —At the end of 1992, as the 903, nearly 50% off from her South Korea won .0008723 1146.40 –5.1 Close Net Chg % Chg YTD%Chg

the firm’s investment-policy By 1998, she was hailed as new administration of Bill Clin- prediction. After that, she was Sri Lanka rupee .0066375 150.66 1.5 WSJ Dollar Index 90.94 –0.04–0.04 –2.15
committee. She was bullish on the “Prophet of Wall Street” and ton was putting its stamp on the Taiwan dollar .03229 30.967 –4.6 Sources: Tullett Prebon, WSJ Market Data Group
replaced as Goldman’s senior
Thailand baht .02851 35.070 –2.1
stocks even as the economy was was included among a small economy, she said: “We are bull- forecaster by David Kostin.

CLOSED-END FUNDS
Listed are the 300 largest closed-end funds as 52 wk 52 wk 52 wk Prem12 Mo Prem12 Mo
measured by assets. Prem Ttl Prem Ttl Prem Ttl Fund (SYM) NAV Close /Disc Yld Fund (SYM) NAV Close /Disc Yld
Closed-end funds sell a limited number of shares and Fund (SYM) NAV Close /Disc Ret Fund (SYM) NAV Close /Disc Ret Fund (SYM) NAV Close /Disc Ret
invest the proceeds in securities. Unlike open-end Wells Fargo Multi-Sector ERC 14.43 13.23 -8.3 8.0 Nuveen CA Muni Value NCA 10.22 10.30 +0.8 4.3
funds, closed-ends generally do not buy their shares BlackRock Science & Tech BST 21.87 19.97 -8.7 51.0 Tekla Hlthcr Investors HQH 24.23 23.73 -2.1 18.7 Swiss Helvetia Fund SWZ 12.26 10.93 -10.8 17.8 World Income Funds Nuveen CA Quality Muni NAC 15.27 14.56 -4.6 6.0
back from investors who wish to cash in their holdings. BlackRock Utility & Infr BUI 19.98 19.93 -0.3 26.4 Tekla Healthcare Opps Fd THQ 18.49 17.11 -7.5 33.0 Templeton Dragon TDF 20.51 17.85 -13.0 32.0
Instead, fund shares trade on a stock exchange. Abeerden Asia-Pacific FAX NA 4.91 NA 6.9 Nuveen MD Qual Muni NMY 14.17 12.70 -10.4 5.2
a-The NAV and market price are ex dividend. b-The CBREClarionGlblRlEstIncm IGR 8.74 7.62 -12.8 20.8 Tekla Life Sciences HQL 19.49 18.32 -6.0 25.4 Templeton Emerging EMF 15.04 13.20 -12.2 48.3 Etn Vnc Short Dur Fd EVG NA 13.98 NA 7.7 Nuveen MI Qual Muni NUM 15.09 13.53 -10.3 5.3
NAV is fully diluted. c-NAV is as of Thursday’s close. d- Central Fund of Canada CEF 12.48 NA 2.9 Tekla World Hlthcr Fd THW 15.06 14.27 -5.2 27.4 Legg Mason BW Glbl Incm BWG NA 12.53 NA 9.5 Nuveen NC Qual Muni NNC 14.63 13.05 -10.8 4.4
Prem12 Mo
NAV is as of Wednesday’s close. e-NAV assumes rights ClearBridge Amer Engy CBA 10.41 NA 124.6 Tortoise Engy Ind Fd NDP 17.24 16.87 -2.1 109.2 Fund (SYM) NAV Close /Disc Yld MS EmMktDomDebt EDD 8.55 7.69 -10.1 9.8 Nuveen NJ Qual Muni NXJ 15.12 13.30 -12.0 5.7
offering is fully subscribed. f-Rights offering in process.
g-Rights offering announced. h-Lipper data has been ClearBridge Engy MLP Fd CEM 17.70 NA 85.0 Tortoise Energy TYG 33.09 35.18 +6.3 86.8 MS Emerging Mkts Debt MSD 10.82 9.43 -12.8 6.7 Nuveen NY AMT-Free NRK 14.19 12.99 -8.5 5.2
14.06 NA 115.5 Tortoise MLP Fund NTG 21.68 21.32 -1.7 76.3 Voya Infr Indls & Matls IDE 15.34 13.80 -10.0 40.5
adjusted for rights offering. j-Rights offering has Clearbridge Engy MLP Opp EMO PIMCO Dynamic Credit PCI NA 20.82 NA 12.5 Nuveen NY Qual Muni NAN 14.83 13.84 -6.7 5.5
expired, but Lipper data not yet adjusted. l-NAV as of Tortoise Pipeline & Engy TTP 24.56 21.89 -10.9 126.7 Wells Fargo Gl Div Opp EOD 6.38 5.65 -11.4 14.9
Clearbridge Engy MLP TR CTR 14.03 NA 109.1 PIMCODynamicIncomeFund PDI NA 28.90 NA 14.3 Nuveen OH Qual Muni NUO 16.31 15.10 -7.4 5.0
previous day. o-Tender offer in process. v-NAV is
Cohen & Steers Infr Fd UTF 22.99 20.87 -9.2 34.7 Voya Gl Equity Div IGD 7.94 7.12 -10.3 32.0 U.S. Mortgage Bond Funds
converted at the commercial Rand rate. w-Convertible PIMCO Income Opportunity PKO NA 24.75 NA 10.8 Nuveen PA Qual Muni NQP 14.79 13.34 -9.8 5.7
Income Preferred Stock Funds BlackRock Income Trust BKT 6.76 6.26 -7.4 5.1
Note-NAV (not market) conversion value. y-NAV and C&S MLP Incm & Engy Opp MIE 13.29 11.88 -10.6 127.9 PIMCO Strat Income Fund RCS NA 9.21 NA 10.1 Nuveen VA Qual Muni NPV 14.03 13.10 -6.6 4.7
market price are in Canadian dollars. NA signifies that Calamos Strat Fd CSQ 11.02 NA 46.3 Nuveen Mtg Opp Term Fd JLS 25.51 24.29 -4.8 5.7
Cohen & Steers Qual Inc RQI 13.62 12.84 -5.7 32.1 Stone Harbor Em Mkts Fd EDF 14.68 15.59 +6.2 13.8 PIMCO California Muni PCQ NA 16.44 NA 5.6
the information is not available or not applicable. NS Cohen & Steers Dur Pfd LDP 26.11 25.45 -2.5 26.1 Investment Grade Bond Funds
CohnStrsPfdInco RNP 22.20 20.02 -9.8 32.4 Templeton Emerging TEI 12.68 11.52 -9.1 7.0 PIMCO California Mun II PCK NA 9.82 NA 6.1
signifies fund not in existence of entire period.
Cohen & Strs Sel Prf Inco PSF 26.60 26.74 +0.5 23.5 Blackrock Core Bond Tr BHK 14.42 13.33 -7.6 6.1
12 month yield is computed by dividing income Cohen & Steers TR RFI 13.52 12.62 -6.7 21.7 Templeton Global GIM 7.45 6.61 -11.3 4.6 52 wk
FT Interm Duration Pfd FPF 23.82 23.38 -1.8 25.2 BlkRk Credit Alloc Incm BTZ 14.50 13.12 -9.5 6.8
dividends paid (during the previous twelve months for CLSeligmn Prem Tech Gr Fd STK 19.55 20.49 +4.8 40.7 John Hancock Income Secs JHS 15.26 14.51 -4.9 6.0 Wstrn Asset Gl Def Opp Fd GDO NA 17.48 NA 7.8 Prem Ttl
periods ending at month-end or during the previous Flaherty & Crumrine Dyn DFP 25.22 25.00 -0.9 22.0
fifty-two weeks for periods ending at any time other Divers Real Asset Incm Fd DRA 18.92 16.91 -10.6 32.3 MFS Inc Tr MIN 4.66 4.39 -5.8 9.1 National Muni Bond Funds Fund (SYM) NAV Close /Disc Ret
Duff & Phelps DNP 9.72 10.70 +10.1 24.9 Flaherty & Crumrine Pfd FFC 19.38 20.03 +3.4 14.9
than month-end) by the latest month-end market price
WstAstClymr InfLnkd Fd WIW NA 11.20 NA 3.5 AllianceBrnstn NtlMun AFB 14.52 13.58 -6.5 5.1 General Equity Funds
adjusted for capital gains distributions. Duff&PhelpsGblUtilIncFd DPG 19.23 16.57 -13.8 43.2 John Hancock Pfd Income HPI 21.59 21.00 -2.7 14.5
WstAssetClymr InflLnk Sec WIA NA 11.43 NA 3.3 Blackrock Invest BKN 15.23 14.81 -2.8 5.7 Specialized Equity Funds
Source: Lipper
Eaton Vance Eqty Inco Fd EOI 13.98 12.94 -7.4 14.7 John Hancock Pfd II HPF 21.32 21.07 -1.2 19.8
John Hancock Pfd Inc III HPS 18.99 18.40 -3.1 14.2 Loan Participation Funds BlackRockMun2030Target BTT 22.94 22.61 -1.4 4.2 CUSHING MLP INFRA I MLP850.67 NA NA NA
Friday, February 10, 2017 Eaton Vance Eqty Inco II EOS 14.42 13.50 -6.4 25.7
JHancock Pr Div PDT 15.66 15.96 +1.9 29.0 Apollo Sr Fltg Rate Fd AFT 18.14 17.49 -3.6 7.0 BlackRock Municipal Trust BFK 14.19 14.26 +0.5 6.0 Griffin Inst Access RE:A 26.70 NA NA 7.4
52 wk EtnVncRskMngd ETJ 10.12 9.66 -4.5 17.5
Prem Ttl LMP Cap & Inco Fd SCD 13.94 NA 49.1 BlackRock FR Incm Strat FRA 15.03 14.82 -1.4 5.5 BlackRockMuni BLE 14.89 15.05 +1.1 6.1 Griffin Inst Access RE:C 26.41 NA NA 6.5
Etn Vnc Tax Mgd Buy-Write ETB 15.80 16.86 +6.7 28.1 Blkrk FltRt InTr BGT 14.51 14.40 -0.8 5.2 BlackRockMuni Tr BYM 14.93 14.05 -5.9 5.7 Griffin Inst Access RE:I 26.80 NA NA 7.6
Fund (SYM) NAV Close /Disc Ret Eaton Vance BuyWrite Opp ETV 14.31 15.42 +7.8 24.4 Nuveen Preferred & Incm JPI 24.67 23.87 -3.2 15.5
Nuveen Pfd Incm Opps Fd JPC 10.45 10.09 -3.4 22.9 BlackstoneGSO Strat Cred BGB NA 16.15 NA 8.4 BlkRk MuniAssets Fd MUA 13.96 14.20 +1.7 4.9 Griffin Inst Access RE:M 26.67 NA NA NS
General Equity Funds Eaton Vance Tax-Mng Div ETY 11.67 10.93 -6.3 22.5 Blackstone GSO Sr Float BSL NA 18.12 NA 6.3 BlkRk Munienhanced MEN 11.79 11.66 -1.1 5.9
Nuveen Pfd Secs Incm Fd JPS 9.76 9.60 -1.6 20.1 NexPointRlEstStrat;A 21.21 NA NA NS
Adams Divers Equity Fd ADX 15.93 13.36 -16.1 27.6 EatonVanceTax-MngdOpp ETW 10.97 10.88 -0.8 26.4 Eagle Point Credit ECC NA 17.58 NA 13.8
TCW Strategic Income Fund TSI 5.86 5.50 -6.1 12.9 BlkRk MuniHldgs Inv MFL 14.64 14.64 0.0 5.8 NexPointRlEstStrat;C 21.15 NA NA NS
Boulder Growth & Income BIF 11.23 9.18 -18.3 40.2 EtnVncTxMngGlDvEqInc EXG 9.18 8.83 -3.8 29.7 Eaton Vance FR Incm Tr EFT NA 15.38 NA 5.9
Virtus Global Dividend ZTR 12.43 11.39 -8.4 21.7 BlkRk MuniHldgs Qlty II MUE 14.05 13.36 -4.9 5.8 NexPointRlEstStrat;Z 21.16 NA NA NS
Central Securities CET 28.52 23.05 -19.2 44.2 Fiduciary/Clymr Opp Fd FMO 16.07 17.31 +7.7 110.0 EatonVnc SrFltRate EFR NA 15.03 NA 6.2
Convertible Sec's. Funds BlkRk MuniHldgs MHD 16.78 17.16 +2.3 5.9 Resource RE Div Inc:A 10.30 NA NA 22.4
CohSteer Opprtnty Fd FOF 13.66 12.39 -9.3 37.6 FT Energy Inc & Growth Fd FEN 26.55 27.27 +2.7 62.5 Eaton Vance Sr Incm Tr EVF NA 6.73 NA 5.9
AdvntClymrFd AVK 17.45 16.23 -7.0 54.5 BlkRk MuniVest MVF 9.62 10.01 +4.1 6.0 Resource RE Div Inc:C 10.29 NA NA 21.5
Cornerstone Strategic CLM 13.58 15.49 +14.1 53.4 FstTrEnhEqtIncFd FFA 15.83 14.04 -11.3 28.5 First Trust Sr FR Fd II FCT 14.28 13.87 -2.9 6.0
AllianzGI Conv & Incm NCV 6.82 6.79 -0.4 70.7 BlkRk MuniVest II MVT 15.18 16.25 +7.0 5.9 Resource RE Div Inc:D 10.46 NA NA 21.9
EtnVnc TaxAdvDiv EVT 22.42 21.83 -2.6 39.7 First Tr Engy Infr Fd FIF 20.09 19.27 -4.1 61.0 Invesco Credit Opps Fund VTA 13.22 12.47 -5.7 7.1
AllianzGI Conv & Incm II NCZ 6.10 6.12 +0.3 70.1 BlkRk MuniYield MYD 14.65 14.74 +0.6 6.1 Resource RE Div Inc:I 10.76 NA NA 21.4
Gabelli Dividend & Incm GDV 22.80 20.61 -9.6 38.6 First Tr MLP & Engy Incm FEI 16.14 16.60 +2.9 83.2 Invesco Senior Income Tr VVR 4.92 4.70 -4.5 6.3
AllianzGI Equity & Conv NIE 21.78 19.44 -10.7 29.2 BlkRk MuniYld Quality MQY 15.53 15.04 -3.2 5.9 Resource RE Div Inc:T 10.27 NA NA 21.5
Gabelli Equity Trust GAB 6.12 5.89 -3.8 40.9 Gabelli Utility Tr GUT 5.40 6.62 +22.6 32.0 Nuveen Credit Strt Inc Fd JQC 9.41 8.93 -5.1 7.0
Calamos Conv Hi Inco Fd CHY 11.22 NA 41.6 BlkRk MuniYld Qlty II MQT 13.66 13.00 -4.8 5.8 Resource RE Div Inc:U 10.31 NA NA 22.5
Genl American Investors GAM 38.88 33.09 -14.9 34.6 GAMCOGlblGoldNatRscs&Inc GGN 5.89 5.64 -4.2 38.1 NuvFloatRteInco Fd JFR 11.82 12.09 +2.3 6.2
Calamos CHI 10.94 NA 48.3 BlRkMunyldQltyIII MYI 14.23 13.95 -2.0 6.0 Resource RE Div Inc:W 10.46 NA NA 21.9
HnckJohn TxAdv HTD 25.35 24.21 -4.5 30.6 GoldmanSachsMLPIncOpp GMZ 12.27 11.55 -5.9 123.8 Nuv Float Rte Opp Fd JRO 11.77 12.75 +8.3 6.4
World Equity Funds Deutsche Mun Income Tr KTF 12.62 13.69 +8.5 6.1 RvrPrk Comm Rl Est:Inst RCRIX 10.10 NA NA NS
Liberty All-Star Equity USA 6.39 5.46 -14.6 34.0 Goldman Sachs MLPEnergy GER 9.10 8.80 -3.3 137.7 Nuveen Senior Income Fund NSL 7.01 6.97 -0.6 6.3
Alpine Tot Dyn Div AOD 9.31 8.16 -12.4 34.5 Dreyfus Mun Bd Infr Fd DMB 13.58 12.75 -6.1 5.6 SharesPost 100 27.06 NA NA 8.6
Royce Micro-Cap RMT 9.82 8.46 -13.8 50.4 John Hancock Finl Opps Fd BTO 35.01 36.03 +2.9 82.8 Pioneer Floating Rate Tr PHD 12.61 12.17 -3.5 5.9
Calamos Glbl Dyn Inc CHW 7.59 NA 41.7 Dreyfus Municipal Income DMF 9.28 9.08 -2.2 5.6 Tot Inc+ RE:A 29.12 NA NA 6.9
Royce Value Trust RVT 16.45 14.24 -13.4 54.7 KayneAndersonEngyTRFd KYE 13.46 12.95 -3.8 141.4 Voya Prime Rate Trust PPR 5.76 5.55 -3.6 5.7
Cdn Genl Inv CGI 29.32 19.37 -33.9 26.3 Dreyfus Strat Muni Bond DSM 8.33 8.39 +0.7 5.9 Tot Inc+ RE:C 28.53 NA NA 6.2
Source Capital SOR 42.53 37.19 -12.6 16.3 Kayne Anderson MLP Invt KYN 21.19 21.65 +2.2 103.6 High Yield Bond Funds
China Fund CHN 18.82 16.07 -14.6 29.0 Dreyfus Strategic Munis LEO 8.54 8.67 +1.5 5.9 Tot Inc+ RE:I 29.40 NA NA 7.2
Tri-Continental TY 26.77 23.05 -13.9 34.4 Kayne Andrsn Midstr Engy KMF 18.14 16.74 -7.7 123.7 Clough Global Opp Fd GLO 11.13 9.89 -11.1 24.1 AllianceBernstein Glbl AWF 13.77 12.76 -7.3 7.6 Versus Cap MMgr RE Inc:F 27.36 NA NA 7.8
Barings Glbl Short Dur HY BGH 21.40 20.10 -6.1 9.1 Eaton Vance Mun Bd Fd EIM 13.51 12.55 -7.1 5.4
Specialized Equity Funds Macquarie Glbl Infrstrctr MGU 24.98 21.80 -12.7 37.1 EtnVncTxAdvGblDiv ETG 16.68 15.28 -8.4 27.4 Versus Cap MMgr RE Inc:I 27.42 NA NA 8.1
BlackRock Corp Hi Yd Fd HYT 12.13 11.10 -8.5 8.0 Eaton Vance Mun Income EVN 13.00 12.66 -2.6 5.9
Adams Natural Rscs Fd PEO 23.76 20.10 -15.4 33.3 NeubergerBermanMLPIncm NML 11.56 10.53 -8.9 99.6 EatonVance TxAdv Opport ETO 22.88 22.34 -2.4 33.7 Wildermuth Endwmnt Str 12.16 NA NA 23.1
BlkRk Debt Strat Fd DSU 12.65 11.60 -8.3 6.5 EV National Municipal Opp EOT 21.73 21.60 -0.6 4.8
AllnzGI NFJ Div Interest NFJ 14.80 13.14 -11.2 32.6 Neubrgr Brm Rl Est Sec Fd NRO 5.96 5.37 -9.9 36.1 First Trust Dynamic Eur FDEU 18.07 16.64 -7.9 27.9 Wildermuth Endwmnt S:C 12.07 NA NA NS
BlackRockDurInco Tr BLW 16.89 15.90 -5.9 9.2 Invesco Adv Mun Incm II VKI 12.02 11.25 -6.4 6.4
AlpnGlblPrProp AWP 6.50 5.60 -13.8 33.5 Nuveen Dow 30 Dynamic DIAX 16.93 15.72 -7.1 31.4 India Fund IFN 26.48 23.25 -12.2 26.9 Income Preferred Stock Funds
Brookfield Real Assets RA 25.59 NA NA NS Invesco Mun Incm Opps Tr OIA 7.41 7.62 +2.8 5.3
ASA Gold & Prec Metals ASA 15.25 13.46 -11.7 45.0 Nuveen Diversified Div JDD 12.81 12.22 -4.6 43.8 Japan Sml Cap JOF 11.80 10.42 -11.7 34.0 MultiStrat Gro & Inc:A 15.74 NA NA 12.2
Credit Suisse High Yld DHY 2.78 2.75 -1.1 10.2 Invesco Mun Opportunity VMO 13.41 13.06 -2.6 6.5
BlkRk Enh Cap Inco CII 15.60 14.18 -9.1 27.8 Nuveen Engy MLP Fd JMF 14.24 14.16 -0.6 132.9 Korea Fund KF 39.03 34.89 -10.6 19.7 MultiStrat Gro & Inc:C 15.49 NA NA 11.4
DoubleLine Incm Solutions DSL 21.28 20.30 -4.6 9.0 Invesco Municipal Trust VKQ 13.37 12.65 -5.4 6.1
BlkRk Engy Res Tr BGR 16.01 14.55 -9.1 35.9 NuvNASDAQ100DynOver QQQX 20.32 20.36 +0.2 34.6 Mexico Fund MXF 16.83 15.00 -10.9 4.3 MultiStrat Gro & Inc:I 15.91 NA NA 13.0
Dreyfus Hi Yld Fd DHF 3.55 3.42 -3.7 9.5 Invesco Qlty Mun Inco IQI 13.38 12.53 -6.4 6.0
BlackRock Enh Eq Div Tr BDJ 9.33 8.40 -10.0 30.7 Nuveen Real Est Incm Fd JRS 11.63 11.30 -2.8 33.9 MS China a Shr Fd CAF 21.68 18.24 -15.9 30.2 MultiStrat Gro & Inc:L 15.57 NA NA 11.7
Blackrock Global Trust BOE 13.95 12.41 -11.0 26.0 Fst Tr Hi Inc Lg/Shrt Fd FSD 18.05 16.54 -8.4 6.3 Invesco Inv Grade Muni VGM 13.88 13.14 -5.3 6.2
NuvS&P500DynOverwrite SPXX 14.89 NA 32.0 MS Emerging Fund MSF 16.32 14.19 -13.1 24.8 Convertible Sec's. Funds
BlkRk Health Sci BME 32.77 33.46 +2.1 13.3 Guggenheim Strat Opps Fd GOF 19.58 20.36 +4.0 10.8 Invesco Value Mun Incm Tr IIM 15.89 14.96 -5.9 5.4
NuveenS&P500Buy-Write BXMX 13.81 13.21 -4.3 22.3 MS India Invest IIF 33.28 29.45 -11.5 41.6 Calmos Dyn Conv and Inc CCD NA 19.05 NA NA
BlkRk Intl Grwth&Inco BGY 6.50 5.89 -9.4 18.2 Reaves Utility Fund UTG 32.93 33.89 +2.9 44.5 Ivy High Income Opps Fund IVH 16.26 15.31 -5.8 9.99 MainStay DefinedTerm MMD NA 19.10 NA 5.8
New Germany Fund GF 15.72 13.79 -12.3 21.7 MFS Munl Inco MFM 7.24 6.86 -5.2 5.3 World Equity Funds
BlackRck Rscs Comm Str Tr BCX 10.42 8.89 -14.7 48.2 Salient Midstream & MLP SMM 15.09 14.16 -6.2 164.8 Neuberger Berman HYS NHS 13.45 12.05 -10.4 8.0
NexPoint Credit Strat Fd NHF 25.85 23.54 -8.9 12.0 NuveenAMT-FreeMunValue NUW 16.71 16.88 +1.0 4.5 BMO LGM Front ME 9.28 NA NA 23.0
Nuveen Gl Hi Incm Fd JGH 18.35 16.78 -8.6 9.2 Nuveen AMT-Free Quality NEA 14.55 13.48 -7.4 5.7 Prem12 Mo
Nuveen High Incm Dec18 JHA 10.17 10.20 +0.3 5.9 Nuveen AMT-Free Mun NVG 15.55 14.62 -6.0 5.9 Fund (SYM) NAV Close /Disc Yld
Nuveen High Incm Dec19 JHD 10.28 10.23 -0.5 NS Nuveen Mun Credit Incm Fd NZF 15.28 14.39 -5.8 6.1
Insider-Trading Spotlight Nuveen Hi Incm Nov 2021 JHB 10.07 10.11 +0.4 NS Nuveen Enhncd Mun Val Fd NEV 14.77 14.29 -3.2 6.4
U.S. Mortgage Bond Funds
Vertical Capital Income 12.33 NA NA 2.8
Trading by ‘insiders’ of a corporation, such as a company’s CEO, vice president or director, potentially conveys Pioneer High Income Trust PHT 10.67 10.00 -6.3 10.3 Nuveen Intermed Dur Mun NID 13.39 13.35 -0.3 5.1 Loan Participation Funds
new information about the prospects of a company. Insiders are required to report large trades to the SEC Prud Gl Shrt Dur Hi Yd GHY 16.62 15.07 -9.3 8.4 NuveenMuniIncoOpp Fd NMZ 12.96 13.11 +1.2 6.7 504 Fund 9.81 NA NA 3.1
Prudentl Sh Dur Hi Yd Fd ISD 16.86 15.98 -5.2 8.1 Nuveen Muni Value Fund NUV 10.06 9.88 -1.8 4.0 FedProj&TrFinanceTender 10.02 NA NA NS
within two business days. Here’s a look at the biggest individual trades by insiders, based on data received by Wells Fargo Incm Opps Fd EAD 9.29 8.53 -8.2 9.0 Nuveen Qual Mun Incm Fd NAD 14.92 13.94 -6.6 6.0 Invesco Sr Loan A 6.66 NA NA 4.9
Thomson Financial on February 10, and year-to-date stock performance of the company Wstrn Asset Glbl Hi Inco EHI NA 10.19 NA 11.1 Nuveen Sel Tax Free NXP 14.92 14.07 -5.7 3.8 Invesco Sr Loan B 6.66 NA NA 4.9
KEY: B: beneficial owner of more than 10% of a security class CB: chairman CEO: chief executive officer CFO: chief financial officer Wstrn Asset High Inco II HIX NA 7.28 NA 10.0 Nuveen Sel TF NXQ 14.40 13.54 -6.0 3.8 Invesco Sr Loan C 6.67 NA NA 4.2
CO: chief operating officer D: director DO: director and beneficial owner GC: general counsel H: officer, director and beneficial owner Wstrn Asset Opp Fd HIO NA 5.13 NA 8.1 PIMCO MuniFd PMF NA 13.89 NA 6.3 Invesco Sr Loan IB 6.66 NA NA 5.2
West Asst HY Def Opp Fd HYI NA 15.36 NA 8.5 Pimco Muni Inc II PML NA 12.52 NA 6.2 Invesco Sr Loan IC 6.66 NA NA 5.0
I: indirect transaction filed through a trust, insider spouse, minor child or other O: officer OD: officer and director P: president UT: Other Domestic Taxable Bond Funds PIMCO Muni Inc III PMX NA 11.44 NA 6.2 Invesco Sr Loan Y 6.66 NA NA 5.2
unknown VP: vice president Excludes pure options transactions Apollo Tactical Incm Fd AIF 17.41 15.92 -8.6 9.5 RiverNorth MP Lending RMPLX NA NA NA NS
Pioneer Mun Hi Inc Adv Tr MAV 11.79 11.12 -5.7 7.0
Ares Dynamic Credit Alloc ARDC NA 15.76 NA 8.1 Pioneer Mun Hi Incm Tr MHI 12.66 11.83 -6.6 6.3 Voya Senior Income:A 12.80 NA NA 5.4
Barings Corp Investors MCI NA 14.65 NA 6.1 Voya Senior Income:B 12.73 NA NA 4.9
Biggest weekly individual trades BlackRock Multi-Sector IT BIT 18.78 17.29 -7.9 11.1
Putnam Tr PMM 7.76 7.31 -5.8 5.8
Voya Senior Income:C 12.77 NA NA 4.9
PutnamMuniOpportunities PMO 12.92 12.37 -4.3 5.6
Based on reports filed with regulators this past week BlackRock Taxable Mun Bd BBN 22.90 22.69 -0.9 7.1 Voya Senior Income:I 12.76 NA NA 5.7
Wstrn Asset Mngd Muni MMU NA 14.07 NA 5.5
Doubleline Oppor Credit DBL 22.25 24.01 +7.9 8.6 Voya Senior Income:W 12.81 NA NA 5.7
No. of shrs in Price range ($) $ Value WesternAssetMunTrFund MTT NA 22.88 NA 4.8
Duff & Phelps Utl & Cp Bd DUC 9.98 9.40 -5.8 6.4 High Yield Bond Funds
Date(s) Company Symbol Insider Title trans (000s) in transaction (000s) Close ($) Ytd (%) Single State Muni Bond
EtnVncLtdFd EVV NA 14.14 NA 8.1 PionrILSInterval 10.33 NA NA 9.8
Franklin Ltd Duration IT FTF NA 12.24 NA 6.8 BlackRock CA Municipal Tr BFZ 15.13 14.87 -1.7 5.5
WA Middle Mkt Dbt NA NA NA 11.0
Buyers GuggenheimTaxableMuni GBAB 23.03 22.28 -3.3 7.3 BlkRk MuniHldgs CA Qlty MUC 15.32 14.25 -7.0 5.2
Blkrck MunHl NJ Qlty MUJ 15.19 14.18 -6.6 5.8
WA Middle Mkt Inc WMF NA NA NA 11.2
John Hancock Investors JHI 18.24 17.17 -5.9 7.8 Other Domestic Taxable Bond Funds
Feb. 7 Walgreens WBA O. Barra CO 124 80.48-80.96 10,036 83.31 0.7 BlRk MuHldg NY Qlty MHN 14.48 13.92 -3.9 5.3
KKR Income Opps Fund KIO 18.00 NA NA 9.5 Capstone Church Capital 11.52 NA NA 1.1
Feb. 3 Macquarie Infrastructure MIC J. Hooke CEO 15 74.15 1,112 80.08 -2.0 MFS Charter MCR 9.43 8.64 -8.4 8.5 BlkRk MuniYld CA Fd MYC 15.29 15.90 +4.0 5.2 CION Ares Dvsfd Crdt Fd NA NA NA NS
Feb. 3 M. Stanley D 4 74.15 297 MFS Multimkt MMT 6.73 6.22 -7.6 8.6 BlkRk MuniYld CA Quality MCA 15.47 14.65 -5.3 5.4 GL Beyond Income 4.39 NA NA NE
Feb. 3 L. Stewart CFOI 3 74.15 185 Nuveen Build Am Bd Fd NBB 21.69 21.05 -3.0 6.2 BlkRk MuniYld MI Qlty MIY 15.18 13.71 -9.7 5.7 Palmer Square Opp Income 19.06 NA NA 6.6
Feb. 3 Qualcomm QCOM C. Amon O 19 53.13 1,000 54.00 -17.2 PIMCO Corporate & Incm PTY NA 15.48 NA 11.2 BlkRk MuniYld NJ Fd MYJ 15.54 15.43 -0.7 5.7 Resource Credit Inc:A 11.13 NA NA 4.7
PIMCO Corporate & Incm PCN NA 15.85 NA 11.3 BlRk Muyld NY Qlty MYN 13.88 12.97 -6.6 5.2 Resource Credit Inc:C 11.24 NA NA 4.2
Feb. 7 Murphy USA MUSA C. Deming D 15 65.39 981 66.13 7.6 PIMCO HiInco PHK NA 9.04 NA 12.5 Eaton Vance CA Mun Bd EVM 12.30 11.59 -5.8 5.5 Resource Credit Inc:D 11.10 NA NA 4.4
Feb. 3 Enterprise Products Partners EPD J. Hackett DI 33 28.65 945 28.69 6.1 PIMCO Inco Str Fd PFL NA 11.01 NA 9.9 Invesco CA Value Mun Incm VCV 13.25 12.49 -5.7 5.6 Resource Credit Inc:I 11.16 NA NA 4.8
PIMCO Incm Strategy Fd II PFN NA 9.93 NA 9.8 Invesco PA Value Mun Incm VPV 13.83 12.32 -10.9 5.7 Resource Credit Inc:T 11.09 NA NA 4.2
Feb. 1 Opus Bank OPB M. Meyer D 40 20.62 825 21.05 -30.0
Putnam Mas Inco PIM 5.06 4.70 -7.1 6.6 Invesco Inv Grade NY Muni VTN 14.36 13.56 -5.6 5.7 Resource Credit Inc:U 11.13 NA NA 4.7
Feb. 6 Tuesday Morning TUES S. Becker CEO 200 3.66 732 4.00 -25.9 Putnam Premier Income Tr PPT 5.58 5.23 -6.3 5.8 Nuveen CA AMT-Free Qual NKX 15.31 14.92 -2.5 5.6 Resource Credit Inc:W 11.12 NA NA 4.4
Feb. 3 Dominion Resources D M. Szymanczyk DI 10 71.69 717 73.37 -4.2
Feb. 2-3 Consol Energy CNX B. Lanigan D 41* 16.82-17.28 698 17.02 -6.6
Feb. 7 Newell Brands NWL M. Tarchetti P 13 45.22 588 46.99 5.2 Borrowing Benchmarks | WSJ.com/bonds
Feb. 2 Unifi UFI R. Bishop DI 20 26.74 535 28.31 -13.2
Feb. 8 Lakeland Financial LKFN M. Welch D 7 42.55 288 44.03 -7.0 Money Rates February 10, 2017
Feb. 3 New Residential Investment NRZ M. Nierenberg CEO 19* 15.00 279 15.90 1.1
Key annual interest rates paid to borrow or lend money in U.S. and international markets. Rates below are a
Feb. 3 Edwards Lifesciences EW K. Gallahue DI 3 90.10 270 90.34 -3.6
guide to general levels but don’t always represent actual transactions.
Feb. 2 Howard Bancorp HBMD R. Arnold D 16 15.00 240 17.90 18.5
29 7.85 8.42 -3.3 Week —52-WEEK— Week —52-WEEK—
Feb. 8 USA Truck USAK J. Craig O 228 Inflation Latest ago High Low Latest ago High Low
Dec. index Chg From (%)
Sellers level Nov. '16 Dec. '15 Secondary market Libor
Feb. 1-3 Microsoft MSFT G. Morfit DOI 11,000 63.12-63.72 696,540 64.00 3.0 One month 0.77111 0.77556 0.78000 0.42830
U.S. consumer price index Fannie Mae Three month 1.03622 1.03400 1.04344 0.61820
Feb. 1-2 W. Gates D 4,000 63.11-64.49 253,920
All items 241.432 0.03 2.1 30-year mortgage yields Six month 1.33822 1.34989 1.36183 0.85785
Feb. 1 TriNet Group TNET D. Hodgson DOI 17,691 25.00 442,283 24.74 -3.4 Core 249.134 –0.04 2.2 One year 1.70261 1.71344 1.73289 1.11560
Feb. 7 Credit Acceptance CACC D. Foss B 660 194.00 128,040 200.05 -8.0 30 days 3.644 3.695 3.828 2.806
Feb. 2 MACOM Technology Solutions Holdings MTSI P. Chung DI 1,202 46.55 55,936 46.14 -0.3 International rates 60 days 3.674 3.728 3.862 2.832 Euro Libor
Feb. 2-3 Evercore Partners EVR R. Schlosstein CEOI 264 77.68-79.28 20,793 78.55 14.3 One month -0.391 -0.383 -0.249 -0.394
Week 52-Week Other short-term rates Three month -0.349 -0.344 -0.201 -0.350
Feb. 3-6 American Financial Group AFG C. Lindner CEOI 200 90.88-91.00 18,182 91.55 3.9 Latest ago High Low
Six month -0.248 -0.241 -0.118 -0.248
Feb. 7 Boeing BA J. Luttig GC 102 166.74-167.22 17,022 166.23 6.8 Week 52-Week One year -0.110 -0.106 -0.005 -0.110
Prime rates Latest ago high low
Feb. 1 Danaher DHR T. Joyce CEO 196 83.74 16,439 83.98 7.9 U.S. 3.75 3.75 3.75 3.50 Euro interbank offered rate (Euribor)
Feb. 8 Alphabet GOOGL S. Brin P 17 826.33-834.04 13,851 834.85 5.4 Canada 2.70 2.70 2.70 2.70 Call money
Feb. 7 S. Brin P 17 824.91-831.29 13,812 One month -0.371 -0.373 -0.240 -0.374
Japan 1.475 1.475 1.475 1.475
Jan. 30 L. Page CEO 17 821.82-835.92 13,750 2.50 2.50 2.50 2.25 Three month -0.329 -0.328 -0.183 -0.329
Feb. 3 L. Page CEO 17 819.95-824.84 13,711 Policy Rates Six month -0.240 -0.244 -0.116 -0.244
Feb. 6 S. Brin P 17 815.39-831.55 13,659 Commercial paper One year -0.101 -0.101 -0.001 -0.103
Euro zone 0.00 0.00 0.05 0.00
Feb. 2 L. Page CEO 17 812.92-823.80 13,647
Switzerland 0.50 0.50 0.50 0.50 30 to 270 days n.q. ... ... ... Value 52-Week
Jan. 31 L. Page CEO 17 814.43-822.22 13,636
Feb. 1 L. Page CEO 17 813.32-822.63 13,588 Britain 0.25 0.25 0.50 0.25 Latest Traded High Low
Australia 1.50 1.50 2.00 1.50 Commercial paper (AA financial)
Feb. 1 ServiceNow NOW F. Slootman CEO 150 89.87-90.75 13,490 92.46 24.4 DTCC GCF Repo Index
90 days 0.89 0.91 1.03 0.45
* Half the transactions were indirect **Two day transaction Overnight repurchase Treasury 0.621 58.200 1.266 0.244
p - Pink Sheets U.S. 0.59 0.60 1.30 0.15 Euro commercial paper MBS 0.639 91.800 1.328 0.257
30 day n.q. n.q. -0.13 -0.14 Open Implied
U.S. government rates Settle Change Interest Rate
Buying and selling by sector Discount
Two month n.q. n.q. n.q. n.q.
Three month n.q. n.q. n.q. n.q. DTCC GCF Repo Index Futures
Based on actual transaction dates in reports received this past week 1.25 1.25 1.25 1.00 Four month n.q. n.q. n.q. n.q. Treasury Feb 99.395 -0.005 9231 0.605
Sector Buying Selling Sector Buying Selling Federal funds Five month n.q. n.q. n.q. n.q. Treasury Mar 99.340 0.005 4707 0.660
Effective rate 0.6800 0.6800 0.7000 0.2700 Six month n.q. n.q. n.q. n.q. Treasury Apr 99.285 0.005 2224 0.715
Basic Industries 0 29,383,111 Finance 3,680,605 199,654,704
High 0.8125 0.8125 0.8125 0.5600
Business services 0 26,886,882 Health care 653,336 58,203,290
Low 0.5000 0.5000 0.6600 0.2000 Notes on data:
Capital goods 0 0 Industrial 88,762 89,955,475 Bid 0.6500 0.6600 0.6800 0.2000 U.S. prime rate is effective December 15, 2016. Discount rate is effective December 15, 2016. U.S.
Consumer durables 10,910 13,468,190 Media 0 430,012 Offer 0.7500 0.7500 0.7500 0.2600 prime rate is the base rate on corporate loans posted by at least 70% of the 10 largest U.S. banks;
Other prime rates aren’t directly comparable; lending practices vary widely by location; DTCC GCF
Consumer nondurables 1,197,575 34,616,217 Technology 1,135,917 220,427,102 Repo Index is Depository Trust & Clearing Corp.'s weighted average for overnight trades in applicable
Treasury bill auction
Consumer services 963,614 47,909,642 Transportation 398,927 8,722,189 CUSIPs. Value traded is in billions of U.S. dollars. Futures on the DTCC GCF Repo Index are traded on
4 weeks 0.530 0.490 0.530 0.160 NYSE Liffe US.
Energy 1,735,391 9,481,974 Utilities 836,918 16,669,382 13 weeks 0.530 0.515 0.555 0.220 Sources: Federal Reserve; Bureau of Labor Statistics; DTCC; SIX Financial Information;
Sources: Thomson Financial; WSJ Market Data Group 26 weeks 0.620 0.625 0.660 0.340 General Electric Capital Corp.; Tullett Prebon Information, Ltd.
 For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
B8 | Monday, February 13, 2017
TAKAAKI IWABU/RALEIGH NEWS & OBSERVER/ZUMA PRESS
Fertilizer is sprayed on a North Carolina wheat field. U.S. fertilizer producers are benefiting from a shift in global energy markets.
U.S. Fertilizer Sector Grows
While President Donald
Trump vows to reinvigorate
struggling American industries
and regain ground lost to rivals
like China, the process is al-
ready under way in the U.S.’s
booming fertilizer industry.
By Lucy Craymer in
Hong Kong
And Rhiannon Hoyle in
Sydney
U.S. output of urea, a key ni-
trogen-based fertilizer, surged
by around 10% last year,
boosted by a number of new
and expanded plants in states
from Iowa to Louisiana that
helped increase total capacity
by 24%. Meanwhile, output in
China, the world’s No. 1 fertil-
izer producer, slumped by 7%
in 2016, and its exports
dropped by more than a third.
These shifting fortunes
aren’t due to government in-
tervention such as higher im-
port tariffs or entreaties to
“buy American.” Instead, they
are largely due to trends in
global energy markets.
U.S. fertilizer producers are
benefiting from the long-brew-
ing shale revolution. The com-
bination of hydraulic fracturing
and horizontal drilling has sig-
nificantly boosted production,
bringing down the cost of gas.
And in the U.S., gas is the
key ingredient of nitrogen-
based fertilizers like urea—
which is mainly applied di-
rectly to soils—and ammonia,
which is typically mixed with
other products, or further re-
fined to make urea.
Meanwhile, their rivals in
China have suffered from a sharp
rise in the price of coal following
Beijing’s decision to limit pro-
duction last year, restricting nor-
mally ample supplies of the fuel.
Roughly three-quarters of
China’s urea is produced by first
turning coal into gas.
“Low-cost shale gas in the
U.S. has transformed the com-
petitiveness of a number of in-
dustries for which energy ac-
counts for a high share of input
costs,” said Rajiv Biswas, Asia-
Pacific chief economist at IHS
Global Insight. “One of the big-
gest winners has been the U.S.
chemicals industry.”
Oil Companies’ Most Lucrative Market Is Low on Fuel
BY DAN STRUMPF
AND YANTOULTRA NGUI
Oil companies’ big bet on
demand in their fastest-grow-
ing market is getting less lu-
crative.
Energy companies are in-
vesting billions of dollars over
the next several years in new
and existing refineries across
Asia, where consumption of
refined fuels like gasoline, jet
fuel and petrochemicals has
been increasing more rapidly
than in any other region.
But those plans are butting
up against a glut in refined fu-
els that analysts say could last
for years—a side effect of
slowing demand in China and
a surfeit of refining capacity.
This year, production of
gasoline and diesel in the re-
gion will exceed demand by
about 750,000 barrels, or 5%
of annual Asian consumption,
according to a forecast by BMI
Research.
The imbalance, which began
to balloon in 2008, is set to
persist until at least 2021, BMI
says.
That overhang is a hurdle
for refiners, whose biggest
markets are in Asia. Roughly
COMMODITIES
Changing Seasons
Production is growing in the U.S. while China’s exports are declining.
Estimates of top global urea
capacity additions in 2017
In million metric tons
U.S.
Nigeria 0.7
Malaysia 0.6
Algeria 0.6
Indonesia 0.5
Sources: Citi Research (urea capacity); CEIC (China exports); U.S. Census Bureau (U.S. imports)
The surge in U.S. fertilizer
production will likely continue
this year, as a number of long-
planned new plants—which typ-
ically take around four years to
build—come online. U.S. ammo-
nia production capacity could
jump by 2 million metric tons
this year to around 11.4 million
metric tons, Rajesh Singla, head
of agriculture research at So-
ciété Générale, estimates.
Urea production capacity
could rise by 4.1 million metric
tons this year, with at least five
massive new plants or expan-
sions due to start operating, ac-
cording to ICIS, a market-infor-
mation provider, put-ting the
U.S. on track to have 50% more
capacity by 2020 from 2015.
Illinois-based fertilizer man-
ufacturer CF Industries has
just finished one of these proj-
ects, an expansion of its Port
Neal nitrogen plant in Sioux
City, Iowa.
“Given where we viewed the
long-term cost of gas in the
U.S., we thought this is the
right place to invest,” said
Chief Executive Tony Will. The
plant is expected to produce
816,466 metric tons of ammo-
nia and 1.27 million metric tons
of urea annually.
As more fertilizer output
moved to the U.S., urea im-
ports in 2016 slumped, drop-
ping by 34% last year. Although
China remains the largest ex-
porter, its share of global urea
one out of every three barrels
of oil is refined in Asia, and
the global refining sector pro-
duced an estimated 42.5% of
its revenue in the region last
year, according to FactSet,
down from 46.5% the year be-
fore. Late last year, Nomura
cut its forecast for Asian refin-
ing margins—the amount of
profit that refiners squeeze
out of a barrel of oil—by 17%
to $6.50 a barrel. Margins
have shrunk world-wide in re-
cent months as oil prices have
risen.
The latest sign of the
tougher landscape: Saudi
Aramco’s abandonment of a
joint venture with Malaysia’s
Petroliam Nasional Bhd, or
Petronas, for a $20 billion re-
fining and chemical complex
in the Malaysian state of Jo-
hor. Saudi Arabia’s national oil
company decided against the
project after concluding it
wouldn’t generate sufficient
returns, people familiar with
the matter told The Wall
Street Journal.
“We really don’t need one
more giant refining complex”
in the region, said Nelson
Wang, energy analyst at CLSA
in Hong Kong. “Many of these
China’s urea exports
In million metric tons
15
2.7
10
5 1
0 0
2012 ’13 ’14 ’15
production fell to 39% in 2016
from 43% a year earlier, ac-
cording to CRU Group, a com-
modities consultancy.
The U.S.’s cost advantage is
crucial. Producing a metric ton
of urea using gas in the U.S.
costs $130 on average, CRU es-
timates. That same trailer load
costs between $180 and $210 a
metric ton using anthracite
coal in China. Gas makes up
about 60% to 80% of produc-
tion costs, depending on the ef-
ficiency of a plant and the
price of gas, according to pro-
ducer OCI Americas Inc.
“Many inefficient [Chinese]
plants have quit from the in-
dustry…12.6 million [metric]
tons of urea capacity have been
closed from the industry from
2013 through to 2016,” said
Gavin Ju, a senior consultant
for CRU in Beijing.
Cheap energy costs have en-
ticed foreign companies like Aus-
tralia’s Incitec Pivot Ltd., which
decided in 2013 to set up an
$850 million ammonia plant in
Waggaman, La. The plant, which
has a capacity of 800,000 metric
tons, started operating in Octo-
ber and will ramp up this year.
“Because of the energy ad-
vantage through the shale gas
revolution, U.S. fertilizer pro-
ducers are globally among the
most competitive,” said Incitec
Pivot Chief Executive James
Fazzino, who said the Wagga-
man investment now stacks up
projects were proposed four
or five years ago. That’s a lot
of lead time, and the oil mar-
ket is really different from five
years ago.”
State-owned Petronas now
plans to forge ahead with the
project alone, after unsuccess-
fully approaching other poten-
tial partners, according to a
person familiar with the mat-
ter. The project, which is set
to refine 300,000 barrels of oil
a day, could take 10 to 20
years to become profitable,
the person said.
Aramco declined to com-
ment. Petronas didn’t respond
to a request for comment.
For years, Asia has been the
center of global oil demand
growth, led by China. From
2008 to 2016, Chinese oil de-
mand rose an average of 5.1%
a year, while U.S. oil demand
was virtually flat, said Sushant
Gupta, a research director at
energy consulting firm Wood
Mackenzie.
But Chinese demand has
slowed as the country’s eco-
nomic growth lags behind, and
as policy makers seek to move
China away from dependence
on infrastructure spending,
which tends to employ diesel-
U.S. urea imports by value
In billions
$3
2
’16 2012 ’13 ’14 ’15
THE WALL STREET JOURNAL.
even better than when it was
approved.
“If the current [Trump] ad-
ministration delivers on the
commitments around energy
advantage, cutting unnecessary
red tape and developing an at-
tractive taxation environment,
that advantage will become
even more pronounced,” he
said.
Dutch-owned OCI Americas
is meantime near completion
on a 1.5-million-to-2-million-
metric-ton nitrogen fertilizer
plant in Wever, Iowa, that
alone will increase U.S. urea
capacity by more than 10%.
Proximity to U.S. customers is
another important factor.
“Foreign producers have
significant logistical costs to
deliver product to the U.S., in-
cluding ocean and land freight,
storage and throughput fees,
which can amount to over $100
a [metric] ton depending on
the product,” said Ahmed El-
Hoshy, chief executive of OCI
Americas.
Rising urea prices as Chi-
nese exports decline are an-
other positive for the fertilizer
industry.
U.S. producers should con-
tinue enjoying margins better
than most rivals elsewhere,
keeping the industry boom in-
tact and leading the U.S. to sig-
nificantly cut its import bal-
ance in the years ahead,
analysts at Citigroup Inc. said.
All Filled Up
Refining margins on Dubai crude, the benchmark for oil shipped to Asia, have
fallen sharply this year amid a glut of fuel. Analysts expect Asia's production
of gasoline and diesel to exceed consumption through at least 2021.
Refining margins on Dubai Crude, Gasoline and diesel surplus
change from previous year
200%
150
100
50
0
–50
–100
2015 ’16
Sources: BMI Research (surplus);
International Energy Agency (margins)
hungry equipment and plants.
Wood Mackenzie expects
China’s demand growth to
slow to an average 1.7% a year
through the next eight years.
Demand in India and South-
east Asia is picking up, but
those markets are a fraction of
China’s.
Meanwhile, refiners are
planning a number of new
Asian projects in the next sev-
THE WALL STREET JOURNAL.
BANKING & FINANCE
COHN
Continued from page B1
taking hard-edge stands on
trade and immigration. Mr.
Cohn describes himself in non-
ideological terms and has sig-
naled a softer edge on globali-
zation.
“When you’re dealing with
the economy, which is my
realm, you have to be prag-
matic,” Mr. Cohn said in an in-
terview Wednesday. “You have
to be realistic to what’s going
on in the world and you have to
be willing to adapt. I think that’s
my job, to advise the president
on what is the right solution.”
A representative for Mr.
Mnuchin, who is awaiting con-
firmation as soon as Monday,
didn’t respond to interview re-
quests.
Mr. Trump’s critics are trying
to turn Mr. Cohn’s background
against the new administration.
On Friday, Sens. Elizabeth War-
ren (D., Mass.) and Tammy
Baldwin (D., Wis.) sent a letter
to Mr. Blankfein asking whether
Goldman officials have been in
contact with Mr. Cohn or other
Goldman alumni in the White
House and whether the firm ex-
pects to benefit from changes to
financial regulation Mr. Cohn is
pushing through executive or-
ders.
A spokesman for Goldman
said it had no involvement in
drafting executive orders.
In an interview before the
executive orders were signed,
Mr. Cohn said the administra-
tion’s goal of deregulating fi-
nancial markets “has nothing
to do with Goldman Sachs” but
was focused on maintaining
the nation’s dominant position
in global banking.
Several gaps remain in the
administration’s policy team.
There is still no Senate-con-
’16
firmed Commerce secretary or
U.S. Trade Representative. The
White House hasn’t named any
members to the three-person
Council of Economic Advisers.
The vacancies and Mr.
Cohn’s proximity to the Oval
Office—the National Economic
Council director works in the
West Wing, unlike Cabinet sec-
retaries—enhance his influ-
ence, both inside the White
House and throughout Wash-
ington, several lawmakers and
administration officials said.
The NEC post was created
by President Bill Clinton in
1993 and has been inhabited by
powerful figures such as Rob-
ert Rubin and Lawrence Sum-
mers.
On Feb. 3, Mr. Cohn went on
cable television to pitch the
president’s financial regulatory
plan and huddled with Republi-
cans on the House Financial
Services Committee, promising
to support their efforts to re-
write banking rules.
Lawmakers said Mr. Cohn
briefed them on the executive
orders and took questions, a
contrast with the much-criti-
cized immigration-order roll-
out that left elected GOP offi-
cials flat-footed.
“There’s no question in the
early phases of the administra-
tion, he’s in the catbird seat.
He’s going to play an outsize
role,” said Jeb Mason, a Trea-
sury policy adviser in the
George W. Bush administration.
Mr. Cohn is charming when
dealing with clients, but also
can be brusque, former Gold-
in millions of barrels a day
1.0 ESTIMATE
0.8 FORECAST
0.6
0.4
0.2
0
2006 ’10 ’20
THE WALL STREET JOURNAL.
eral years. Saudi Aramco has
held talks with state-owned
China National Petroleum
Corp. to build a refinery in
China’s Yunnan province. That
would join a 260,000-barrel-a-
day CNPC refinery slated for
Kunming province.
A consortium of firms is set
to open a 200,000-barrel-a-
day refinery in Vietnam later
this year, and India’s Bharat
man colleagues say. “He’s rapid
fire. Lots and lots of activity,”
said one. A Republican law-
maker who has spoken to The
Wall Street titan said he hasn’t
yet adapted to Washington’s
slower pace and myriad con-
stituencies.
Mr. Cohn bristles at the
“brusque” description, sug-
gesting his directness may be
unusual in a city whose culture
includes filibusters—endless
talking to prevent any action.
“In D.C., no one when you
meet them says, ‘Nice to meet
you,’” Mr. Cohn said. “They say,
‘Good to see you.’ That’s because
they pretend like they might
have met you before.... Everyone
says, ‘Good to see you.’ Well, I
know you can see me.”
Among the ways he is
amassing influence is inter-
viewing candidates for a range
of White House appointments,
including top posts at the Fed
and regulatory agencies. He
sidelined some campaign ad-
visers, including Larry Kudlow,
the CNBC commentator who
had been considered last year
for the still-unfilled CEA post,
according to people familiar
with the matter.
Taking over at the NEC, in a
role that didn’t need Senate
confirmation, Mr. Cohn quickly
staffed the agency with veter-
ans of finance and government,
making the council one of the
most highly functioning power
centers in the administration.
A potential rival influence
on economic policy, the Na-
tional Trade Council, has yet
to clearly define its role. The
trade council’s chairman is
Peter Navarro, who is among
Mr. Cohn has
buttressed his position
by interviewing job
candidates.
the few economists in the ad-
ministration but one with lit-
tle experience navigating
Washington.
In the first two weeks, Mr.
Navarro has made some com-
bative statements on trade and
currency, such as accusing Ger-
many of using an undervalued
euro to seek a trade advantage
that provoked concern from
business leaders. Several called
Mr. Cohn to find out what was
happening, a person familiar
with the matter said. Mr. Na-
varro declined to comment.
Washington and Wall Street
are waiting to see how Mr.
Cohn carves up the policy port-
folio with the 54-year-old Mr.
Mnuchin at Treasury. Both
worked at Goldman in fixed in-
come and made partner in
1994. Mr. Cohn became the
head of the fixed-income divi-
sion in 2002, the same year
Mr. Mnuchin left the firm to
work for hedge funds.
White House officials dis-
miss talk of any budding ri-
valry, and the two men were
seen lunching together last
week in the White House’s
mess hall.
“I’m talking to Steve two,
three times a day,” Mr. Cohn
said. “I’m working as well with
him as I can in what he’s al-
lowed to do under the statutes
and not being sworn in yet. I’m
convinced we’ll work even bet-
ter when he’s sworn in.”
Petroleum Corp. is expanding
a refinery in Kerala province
to more than 300,000 barrels
a day.
Altogether, refiners are set
to add 932,000 barrels a day
in new refining capacity
across six countries in Asia
this year, according to re-
search firm Energy Aspects,
roughly equivalent to Austra-
lia’s daily oil use.
China has become a major
fuel exporter for the region,
thanks to rising output by in-
dependent refiners, known as
“teapots,” which took advan-
tage of looser oil-import rules
to churn out more fuel. China’s
fuel exports soared 34% last
year to 973,000 barrels a day.
“There’s already a lot of
competition in the Asian re-
fined-fuels market,” said Peter
Lee, a BMI Research analyst.
Analysts say they expect
more delays or cancellations
of projects in the works. China
Petrochemical Corp. and
CNPC—the country’s two big-
gest energy companies—have
delayed plans to build or ex-
pand 10 refineries, according
to CLSA. Mr. Wang, the bank’s
energy analyst, says those fa-
cilities likely won’t be built.
 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.
Inside J.P. Morgan’s Indonesia Hubbub
Dealings show the
fine line banks walk in
publishing research
clients don’t like
On the Sunday after Donald
Trump won the U.S. presidential
election, sparking turmoil in
emerging markets, J.P. Morgan
Chase & Co. downgraded Indo-
nesia’s stock market. The move
set off a chain reaction that re-
sulted in the New York bank los-
By Ben Otto,
Rachel Rosenthal
and I Made Sentana
ing Indonesia as a client.
J.P. Morgan tried to smooth
relations with Indonesia, as it
had done several times in the
past. At stake for the bank was
a lucrative and decadeslong
partnership. Bank executives
spoke with officials through
back channels, pushed for meet-
ings and pointed to subsequent
reports with more-positive
views on Indonesia’s economy,
said several people familiar
with the efforts.
Analysts turned over to the
finance ministry past market-
research reports, and higher-
level managers began to sign off
on Indonesia research, accord-
ing to one of the people. In Jan-
uary, the bank’s analysts partly
reversed their Indonesia equi-
ties call, bumping their recom-
mendation up to “neutral” from
“underweight.”
But Indonesian officials were
unmoved. They insisted that
banks like J.P. Morgan, which
were primary dealers for gov-
ernment-bond sales, have a re-
sponsibility to support the in-
497
The number of trading days since Apple’s
share price has hit a new high, the longest
stretch without a record since 2005
Apple Gets Shine Back
From January 2005 through
February 2015, shares of Apple
Inc. closed at a record 264
times. Since then, not once. But
that run could end this week.
Shares of the nearly $700
billion company closed Friday at
MONEYBEAT
$132.12, the third consecutive
day they have finished within
$1 of their $133 record. The
technology giant has gone 497
trading sessions without set-
ting a new high. That is the
longest stretch without a re-
cord for Apple since a 1,217-day
run from March 2000 to Janu-
ary 2005.
A new record would be the
capstone of a recovery in the
shares after a prolonged down-
turn from July 2015 to May
2016.
The stock fell 30% over that
period, as investor concern
mounted over the pace of
iPhone sales, soft demand from
China and speculation that the
company would never develop a
product as successful as the
CHRIS RATCLIFFE/BLOOMBERG NEWS
PepsiCo, maker of snacks and soft drinks, reports results on Wednesday.
* *
terests of the Southeast Asian
nation. They were open to criti-
cism, the officials said, but they
felt J.P. Morgan’s report wasn’t
accurate or credible. Indonesia’s
finance ministry declined to
comment for this article.
Investment banks have long
weathered complaints that their
research departments, which
make calls on stocks, bonds and
other assets, aren’t truly inde-
pendent from their investment-
banking operations, which pitch
deals to companies and govern-
ments.
But in Indonesia and other
parts of Asia, government offi-
cials’ expectations for positive
research are unabashed and un-
apologetic. That means global
banks walk a fine line when
publishing research their invest-
ment-banking clients don’t like.
In Asia, some bankers say
they are routinely quizzed
about their research teams’ re-
ports when bidding for govern-
ment business. In Indonesia,
central-bank employees roam
trading rooms, urging traders to
be patriotic by refraining from
selling the rupiah when the cur-
rency is under pressure, traders
say.
A Bank Indonesia spokesman
confirmed the bank sends offi-
cials to trading rooms during
times of heavy selling pressure
on the rupiah. He said he
doesn’t know what they say to
dealers.
Rarely is the push to be posi-
tive as pronounced—and pub-
lic—as it was with Indonesia’s
reaction to J.P. Morgan’s No-
vember report. Nor are the con-
sequences typically as severe.
J.P. Morgan lost its Indone-
sian primary-dealer and under-
writing business for govern-
iPhone.
Apple shares began climbing
again last May, when Warren
Buffett’s Berkshire Hathaway
Inc. revealed that it had taken a
stake worth nearly $1 billion.
Shares rose 3.7% that day and
have largely been on an upward
trend since.
The stock has gained about
40% over the past 12 months
and more than 9% since Apple’s
earnings on Jan. 31.
Apple also got a boost after
November’s presidential elec-
tion. Investors began to bet
that a Donald Trump adminis-
tration and a Republican-con-
trolled Congress would allow
companies with large overseas
cash holdings, as Apple does, to
repatriate their cash at lower-
than-usual corporate tax rates.
—Ben Eisen
ONLINE
For more
WSJ
.COM
MoneyBeat blog
posts, go to
blogs.wsj.com/
MoneyBeat
MARKETS
Volatile Reaction
In the wake of the U.S. election, Indonesia’s stocks and currency fell
sharply and bond yields surged.
2%
0 Ms. Mulyani didn’t publicly
–2
–4
–6
–8
1 2 3 4
8%
6 BOND YIELDS*
4 bonds
2
0 investment recommendation on
–2
Nov. 7
1 Nov. 8 3 Nov. 13
U.S. election J.P. Morgan Chase
2 Nov. 11 issues downgrade
on Indonesian
Bank Indonesia
equities.
pours about $1
billion into market
Sources: Thomson Reuters; staff reports
ment bonds, as well as its
ability to receive payments
made under the country’s tax-
amnesty program.
The dealer role gave J.P.
Morgan important visibility into
the much larger business of
matching buyers and sellers of
Indonesian government debt
and currency, which brings in
an estimated tens of millions of
dollars in revenue for J.P. Mor-
gan each year, analysts say. The
bank can still trade government
bonds and the rupiah as well as
continue to underwrite stock
and debt for private companies.
J.P. Morgan says that its In-
donesia business is operating as
usual, that impact on clients
from the government ban is
minimal and that it is working
EQUITIES
AHEAD OF THE TAPE | Steven Russolillo
Investors Are Rethinking the Trump Trade
One of the
big Trump-
related trades
is showing
some cracks.
Inflation
expectations,
which surged immediately
following the presidential
election, have stalled in
recent weeks. That suggests
investors are questioning the
economic growth the new
administration hopes to
deliver. The strong dollar has
also prompted import prices
to cool. And investors have
recently dialed back
expectations that the Federal
Reserve will raise interest
rates at least three times this
year.
A slew of economic data
this week as well as Fed
Chairwoman Janet Yellen’s
semiannual testimony before
Congress will likely reinforce
these modest expectations.
The Humphrey-Hawkins
hearings, beginning Tuesday,
will mark Ms. Yellen’s first
appearance before
lawmakers since Donald
Trump was sworn in as
president. Mr. Trump
criticized her sharply during
his campaign, and GOP
lawmakers have considered
taking steps to subject the
Fed to greater congressional
scrutiny, topics which Ms.
Yellen will undoubtedly face.
Ms. Yellen’s testimony
comes as inflation, half of
THE TICKER | Market events coming this week
Monday
Earnings expected*
Estimate/Year Ago($)
Arch Capital 0.97/1.15
Brixmor Prop. 0.20/0.18
Federal Realty 0.77/0.73
HCP 0.24/(1.29)
Noble Energy (0.10)/0.44
Vornado Realty 0.50/1.22
Tuesday
Producer price index
All items, Dec. up 0.3%
Jan., expected up 0.3%
Core, Dec. up 0.2%
Jan., expected up 0.2%
Earnings expected*
Estimate/Year Ago($)
AIG (0.61)/(1.10)
Devon Energy 0.21/0.77
Express Scripts
1.87/1.56
Incyte 0.13/0.29
* FACTSET ESTIMATES EARNINGS-PER-SHARE ESTIMATES DON’T INCLUDE EXTRAORDINARY ITEMS (LOSSES IN PARENTHESES)  ADJUSTED FOR STOCK SPLITNOTE: FORECASTS ARE FROM
DOW JONES WEEKLY SURVEY OF ECONOMISTS
PERFORMANCE:
Rupiah against dollar
Jakarta Composite Index
MSCI Emerging
Markets Index
5 portfolio weighting, a person fa-
10-year government
*Yields rise as prices fall.
4 Nov. 15 5 Nov. 17
Indonesian Indonesia decides
finance officials to sever ties with
speak with J.P. J.P. Morgan
Morgan analyst
THE WALL STREET JOURNAL.
with the finance ministry to re-
solve the matter.
J.P. Morgan’s first big run-in
with Indonesia came after the
collapse of Lehman Brothers in
2008, when lawmakers there
blamed a bank recommendation
to sell rupiah-denominated gov-
ernment bonds for accelerating
a flow of money out of the
country. Officials under Finance
Minister Sri Mulyani Indrawati,
a well-regarded, U.S.-trained
economist who was almost
three years into her first stint in
the job, were primarily worried
about controlling market reac-
tion to the report, according to
a person familiar with the mat-
ter.
Shortly thereafter, J.P. Mor-
gan presented the ministry with
Federal Reserve Chairwoman Janet Yellen will speak to Congress.
the Fed’s dual mandate, has
shown signs of life. Growth
in the consumer-price index
poked above 2% in
December, the first time it
topped this mark in 2½
years.
Ms. Yellen has acknowled-
ged that inflation is “moving
toward our goal.” Updated
producer and consumer-price
data for January are
expected Tuesday and
Wednesday, with economists
expecting inflation to tick up
slightly.
But investors aren’t
banking on another strong
leg up in inflation. Take the
10-year breakeven inflation
rate. Measuring the yield
spread between Treasury
notes and Treasury inflation-
protected securities, it
currently reflects investors’
expectations of 1.96%
Quintiles IMS 1.05/0.90
T-Mobile US 0.28/0.34
Wednesday
Mort. bankers indexes
Purch., previous up 2%
Refinan., prev. up 2%
EIA status report
Previous change in stocks in
millions of barrels
Crude oil up 13.8
Gasoline down 0.9
Distillates 0.0
Business inventories
Nov., previous up 0.7%
Dec., expected up 0.3%
Capacity utilization
Dec., previous 75.5%
Jan., expected 75.5%
Consumer price index
All items, Dec. up 0.3%
Monday, February 13, 2017 | B9
a plan on how the bank would
handle negative press and con-
trol the release of future re-
ports, the person said, and flew
in its Asia-Pacific chief to meet
with Indonesia’s vice president.
penalize J.P. Morgan. The bank’s
analysts toned down the lan-
guage in Indonesian bond re-
ports, changing “sell” calls to
recommendations to reduce
miliar with the research said.
In 2015, during the market
tumult that followed a Chinese
move to effectively devalue the
yuan, the bank again lowered its
rupiah government bonds. A
new finance minister, Bambang
Brodjonegoro, called the move
“unethical” and threatened
sanctions, including, he joked,
100 push-ups.
Haryanto Budiman, a 48-
year-old veteran of McKinsey &
Co. and Indonesia’s largest state
bank who had become J.P. Mor-
gan’s local chief four years be-
fore, led a blitzkrieg response,
said people familiar with the
matter. Mr. Budiman and col-
leagues met and texted with
longtime friends and former
colleagues at Bank Indonesia,
the finance ministry and the fi-
nancial-sector regulator. Mr.
Brodjonegoro was eventually
appeased and recalls telling Mr.
Budiman to be careful about re-
search.
By the time Mr. Trump’s
election roiled emerging mar-
kets, Ms. Mulyani was back as
finance minister, charged with
building credibility for Indone-
sia’s financial system. On the
Friday after the election, the ru-
piah dropped as much as 2.7%,
the Indonesian stock market fell
Take a Hike
Probability of at least three
interest-rate increases in 2017
50%
40
30
20
10
0 on pushing up market
2016 ’17
Note: Based on federal funds futures
Source: Deutsche Bank Research
annualized inflation on
average over the next
decade. It jumped from 1.71%
right before the election to
above 2% last month for the
first time since September
2014. Its decline since has
been modest, but it did halt
Jan., expected up 0.3% Kraft Heinz
Core, Dec. up 0.2% Marriott Intl.
Jan., expected up 0.2% PepsiCo
Empire Manufacturing Thursday
Jan., previous 6.5
Initial jobless claims
Feb., expected 7.0
Previous
Expected
Industrial production
Dec., previous up 0.8%
EIA report: natural gas
Jan., expected 0.0%
Previous change in stocks in
billions of cubic feet
Retail sales
Dec., previous up 0.6%
Jan., expected up 0.1% Building permits
Dec., previous 1.21 mil.
Retail sales, ex. autos Jan., expected 1.24 mil.
Dec., previous up 0.2%
Jan., expected up 0.5% Housing starts
Dec., previous 1.23 mil.
Earnings expected* Jan., expected 1.21 mil.
Estimate/Year Ago($)
CBS 1.10/0.92 Philadelphia Fed survey
Cisco Systems 0.56/0.57 Jan., previous
Equinix 0.75/0.18 Feb., expected
4% and Bank Indonesia poured
an estimated $1 billion into ru-
piah purchases and bond buy-
backs. Behind the selloff were
investor worries that emerging-
market economies would suffer
from Mr. Trump’s protectionist
trade policies, a strengthening
U.S. dollar and outflows due to
rising U.S. interest rates.
On the Monday after J.P.
Morgan’s equities downgrade, a
media story on the report began
circulating “like a virus” on
WhatsApp, one Indonesian
banking executive said. The
stock market slid a further 2%.
That Tuesday morning, Ms.
Mulyani’s officials called one of
the report’s co-authors to quiz
him about the downgrade, ac-
cording to people familiar with
the call.
Ms. Mulyani declined to com-
ment for this article.
Before the week was out,
with the stock market, rupiah
and bonds all down steeply, Ms.
Mulyani wrote to Mr. Budiman.
In the letter, she said Indonesia
was cutting ties with the bank,
according to people familiar
with the letter.
Western diplomats met Indo-
nesian finance ministry repre-
sentatives to explain the divi-
sion between research and
investment banking and were
told: “Yes, but they are the
same. They are J.P. Morgan,” ac-
cording to a person briefed on
the conversation.
On Jan. 12, Ms. Mulyani
hosted a meeting with analysts
and economists. At the meeting,
she cautioned them to be care-
ful with their research reports,
according to several attendees.
Since the meeting was only
for primary dealers, J.P. Morgan
wasn’t invited.
the strong postelection
move.
Expectations for future
Fed rate increases are
slipping. When the central
bank raised interest rates in
December for only the second
time in a decade, it indicated
that three more rate
increases would come in 2017.
GARY CAMERON/REUTERS
At the time, the federal-
funds futures market showed
a nearly 50% chance of that
happening. That probability
has fallen in recent weeks,
dropping to 30% last week,
the lowest since before the
Fed’s December meeting.
Even so, at least one Fed
official said he could support
a rate increase at next
month’s meeting. “I think
March is on the table,”
Federal Reserve Bank of
Philadelphia President
Patrick Harker said last
week.
But such timing could
prove too soon. “If the Fed
wants to raise rates…then
they need to start working
expectations soon,” said
Torsten Slok, chief internat-
ional economist at Deutsche
Bank Securities. “Markets are
feeling less certain that the
assumptions underlying the
ongoing Trump trades will
be realized.”
If past practice holds true,
Ms. Yellen won’t change her
tone this week. Investors
need to watch the numbers.
0.87/0.62 Earnings expected*
0.84/0.77 Estimate/Year Ago($)
1.16/1.06 Alexion Pharma.
1.25/1.13
Charter Comm.
1.05/(1.21)
Duke Energy 0.82/0.87
234,000
Liberty Global 0.19/(0.25)
243,000
PG&E 1.34/0.50
Waste Mgmt. 0.77/0.71
Friday
down 152
Leading indicators
Dec., previous up 0.5%
Jan., expected up 0.5%
Earnings expected*
Estimate/Year Ago($)
Applied Materials
0.66/0.26
Campbell Soup 0.88/0.87
Deere & Co. 0.54/0.80
J.M. Smucker 2.00/1.62
23.6 Moody’s 1.14/1.09
17.0 V.F. Corp. 0.98/0.95
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
B10 | Monday, February 13, 2017
Energy Goes From First to Worst
Sector’s stocks trail
after performing as
the S&P 500’s best
segment in 2016
BY AKANE OTANI
AND STEPHANIE YANG
U.S. energy shares have
cooled in 2017 following a
market-beating performance
last year, wrong-footing many
investors who bet the sector
would benefit from oil-price
stability.
Energy was the best-per-
forming sector in the S&P 500
last year, rising 24% as oil
prices rebounded from multi-
year lows reached last Feb. 11.
A year later, crude prices
are holding their gains, with
New York crude rising Friday
to close at $53.86 a barrel. But
the S&P energy sector is down
3.6% in 2017, trailing the 3.5%
gain in the S&P 500 index and
putting energy shares near the
bottom of the sector list.
The reversal in energy
shares, according to analysts
and investors, reflects overly
optimistic expectations for
crude prices, the realization
that it may take a few quarters
before higher energy prices
translate into improved earn-
ings and signs that the stocks
are already overvalued.
“People just seem a little fa-
tigued at this point,” said Bill
Costello, a portfolio manager
and energy analyst at West-
wood Holdings Group. “After
we built all that momentum
last year, we’ve just fallen flat.”
The slide is the latest exam-
ple of a sudden reversal in a
popular trade. The utilities
sector of the S&P 500 in-
creased 21% in the first half of
last year as investors sought
safety, before the gains were
nearly halved by the end of the
year as the rest of the market
improved. U.S. gold prices
climbed to a two-year high in
2016 but erased most of those
gains by year-end.
Email: heard@wsj.com
Trade Talk Is
No Spur Yet
To Inflation
Investors think President
Donald Trump’s tough talk
on trade will fan inflation.
But if anything it has so far
exerted a cooling effect on
prices.
The Labor Department on
Friday said that import
prices rose 0.4% in January
from December, putting
them 3.7% higher than a year
earlier. That gain was due to
the increase in fuel prices—
oil averaged about $53 a bar-
rel last month versus $32 a
year earlier. Nonfuel imports
experienced their third con-
secutive monthly decline and
were flat on the year.
Some of the deterioration
in import prices is due to the
strength of the dollar, which
despite some weakening
over the past month remains
above where it was on Elec-
tion Day. Economic weak-
ness, some of it stemming
from worries about Mr.
Trump’s policies, may also
have played a role.
Yet if Mr. Trump imposes
tariffs or trade restrictions
on certain countries, import
prices will almost certainly
go up. But if those things
start to look more likely, the
dollar will probably resume
its push higher. And import
prices would keep falling.
Worries alone about coming
trade restrictions would
probably dent overseas econ-
omies. So import prices
could face economic as well
as currency pressure.
Investors also need to
weigh the risk of Mr. Trump
and congressional Republi-
cans moving toward policies
that would raise import
costs, and then stand down
in the face of resistance from
businesses. That could set
off turbulence that would
make forecasting inflation
even more of a mug’s game
than it already is.
—Justin Lahart
A Slow Start
The S&P 500 energy sector has lagged behind
this year, even as investors are betting
that oil prices will continue to rise.
Percentage change
since previous year
S&P 500 (2017)
First 28 days
s 3.5% YTD
Energy sector (2017)
t 3.6% YTD
1 T R A D I N G D AY S
Net long positions on oil rose to a record high in January.
400,000 contracts
300,000
200,000
100,000
0 20
2016
Sources: Thomson Reuters (indexes); FactSet (crude oil); Commodity Futures Trading Commission (net long positions)
Despite the sliding energy
stocks, investors expect oil
prices to rise. Net bullish bets
by speculative investors on oil
reached a record in January,
according to Commodity Fu-
tures Trading Commission
data going back to 2006,
though those net bets pulled
back slightly in the week
ended Tuesday. The U.S. oil
price has been flat this year af-
ter doubling from its lows in
2016.
Meanwhile, energy stocks
remain pricey, noted Scott
Wren, senior global equity
strategist at Wells Fargo In-
vestment Institute. The sector
HEARD ON THE STREET
Activision’s Game Still Isn’t Over
Activision Blizzard Inc.
has shown there is life be-
yond “Call of Duty”—not
that it is in a big rush to get
there.
The videogame publisher
reported earnings for what
should have been a difficult
year. The latest iteration of
its key franchise—“Call of
Duty: Infinite Warfare”—sold
poorly relative to expecta-
tions. Michael Pachter of
Wedbush estimates revenue
from the game fell 30% com-
pared with its predecessor
from the year before. The
company was up against a
strong pair of shooters from
Electronic Arts, and the new
space theme of “Infinite
Warfare” fell flat with gam-
ers and critics alike, drawing
some of the lowest review
scores in the franchise’s his-
tory.
Still, Activision managed
to raise consolidated net rev-
enue by nearly 8% for the
year even when excluding
the new contribution of mo-
bile-game maker King Digi-
tal, which was acquired last
Investors Will Need Patience as Markets Seek Direction
The experience of 2017 so
far in markets suggests
investors will need a quality
that can be in short supply
in today’s fast-moving world:
patience.
Many popular trades
inspired by the hope of
stronger growth have faced a
test in the opening weeks of
the year.
The dollar has weakened,
with the WSJ Dollar Index
falling 2.3%. Long-dated
government bonds, which
plummeted last year, have
recovered some poise, with
Bank of America Merrill
Lynch’s index of U.S.
Treasurys maturing in 15
years or more up 1.3%.
Stocks have made
headway, but it has been a
jerky process, with swift
MARKETS
2017
trades at 32 times the profits
analysts expect them to earn
over the next 12 months, while
the broader S&P 500 trades at
18 times earnings estimates,
according to FactSet.
Earnings are expected to re-
cover, but the rebound hasn’t
yet begun. Analysts expect en-
ergy companies to return to
earnings growth in the first
quarter of 2017.
The energy sector has been
the biggest drag on the
broader S&P 500’s earnings
growth for eight consecutive
quarters, according to FactSet.
The sector is expected to re-
port earnings contraction
FINANCIAL ANALYSIS & COMMENTARY
Game Theory
Activision Blizzard's annual segment revenue
$3.5 billion
3.0
2.5
2.0
1.5
1.0
0.5
0 franchise is a key part of the
2010 ’11 ’12
Source: the company
year. That came mostly from
a very strong year at its Bliz-
zard unit, home to “World of
Warcraft” and its latest hit,
“Overwatch.” In fact, reve-
nue at Blizzard for the year
exceeded that of the Activi-
sion side for the first time
since the two companies
merged in 2008. The surpris-
ingly strong results drove up
Activision’s shares by 19%
Friday.
Waiting Game
S&P 500 performance
2350
2325
2300
2275
2250
2225
2200
January February
Source: WSJ Market Data Group
gains followed by extended
periods of sideways motion.
In the past three months, the
S&P 500 has only moved by
more than 1% on one
occasion—back in December.
Credit markets have been
becalmed, with corporate-
bond spreads over risk-free
U.S. crude-oil prices have steadied this year.
$60 a barrel
Oil hits
50 its low at
$26.21
40 a barrel
30
2016
again in the fourth quarter,
with analysts estimating a de-
cline of around 5% from the
year-earlier period.
Last month, energy stocks
closed out the strongest 12-
month outperformance com-
pared with the recovery in oil
prices since at least the 1980s,
according to Goldman Sachs.
The relative strength of shares
across oil companies puts eq-
uities “now at risk of disap-
pointment,” the bank said in a
February note.
Shares of Exxon Mobil
Corp., the world’s largest pub-
licly traded oil company, have
fallen 8.6% this year after gain-
Activision
Blizzard
’13 ’14 ’15
THE WALL STREET JOURNAL.
Diversity bodes well for
Activision, which long has
depended on “Call of Duty”
for a big chunk of its annual
sales. Because “Infinite War-
fare” was the 13th sequel in
as many years, it is likely
that some fatigue has set in.
But Activision won’t be rais-
ing the white flag on the
franchise anytime soon. The
company has another sequel
in store this year, which it
rates hardly budging.
The end of this week has
brought new fuel for the
market. Investors have been
waiting for some word from
the new U.S. administration
on a key element of the
growth trade: President
Donald Trump’s plans for tax
and spending.
On Thursday, Mr. Trump
said there would be a “phe-
nomenal” tax announcement
within the next three weeks.
That helped the S&P 500
inch up to a record and
pushed both bond yields and
the dollar up, although they
are still below their recent
peaks.
Still, the market pattern
shows the risk of a gap
emerging between
expectations and reality. The
* ***
Energy sector (2016)
s 23.7%
U.S.
election
S&P 500 (2016)
s 9.5%
–10
–15
252
Oil jumps 9.3% to
$49.44 a barrel after
OPEC reaches a deal
to cut production
2017
THE WALL STREET JOURNAL.
ing 16% in 2016. The company
posted its lowest yearly earn-
ings in 20 years in January,
citing the downturn in com-
modity prices and a $2 billion
impairment charge.
Chevron Corp. shares, which
gained 31% last year, are down
4% in 2017. While the company
posted its second consecutive
quarterly profit in January, its
financial results came in
sharply below estimates. A
Chevron spokesman said the
company expects earnings to
improve this year as it tight-
ens spending and potentially
pulls in more revenue from
production growth.
told analysts Thursday will
take the game “back to its
roots.”
How that will play out re-
mains to be seen. But the
strength of “Call of Duty”
now lies beyond the unit
sales of one particular year.
Digital expansion packs and
in-game transactions are key
areas driving growth at vid-
eogame publishers these
days. The older “Call of
Duty: Black Ops 3” generated
strong returns on both for
Activision in 2016. And the
’16 company’s drive into e-
sports, essentially competi-
tive gaming leagues, a mar-
ket expected to grow to $1.2
billion by the end of next
year, according to SuperData.
Even with the decline in
sales, “Call of Duty: Infinite
Warfare” still ranked as the
top-selling game in the U.S.
for the year, according to
NPD. So while Activision
now has other strong games
to load in its clip, “Call of
Duty” still counts as a pretty
big bullet. —Dan Gallagher
market has been buoyed by
evidence of stronger global
growth at the end of 2016
and the start of 2017, but
this is likely to have been
generated by forces and
events that were in play at
the start of last year, in
particular stimulus from
China.
That makes the handover
from monetary policy to
fiscal policy—one of the
factors that has shifted
markets away from last
year’s panic about deflation
toward a focus on rising
growth and inflation—a
potentially fragile period.
Politics don’t operate to the
same timetables as monetary
policy and have a multitude
of competing priorities.
While investors have been
THE WALL STREET JOURNAL.
Oil Prices
Gain as
25%
20
OPEC
15
Complies
BY TIMOTHY PUKO
AND BENOIT FAUCON
10
Oil prices rose Friday af-
ter a top energy watchdog
5
said exporters are following
through on promises to cut
oil production to end a long-
0 standing glut in the market.
The International Energy
Agency reported Friday that
–5
production from the Organi-
zation of the Petroleum Ex-
porting Countries fell to
32.06 million barrels a day
in January, a decline of
about 1 million barrels com-
pared with
COMMODITIES OPEC’s Oc-
tober base-
line. The
cut “is certainly one of the
deepest in the history of
OPEC,” the agency said, with
the countries that agreed to
it reaching a record compli-
ance of 90%.
Light, sweet crude for
March delivery gained 86
cents, or 1.6%, to $53.86 a
barrel on the New York Mer-
cantile Exchange.
Most of the price gains
came overnight after the IEA
released its report during
European trading, and then
prices stayed mostly flat
during traditional U.S. trad-
ing hours.
The gains pushed oil to
its ninth winning week in
the last 13, up 3 cents, or
0.1%.
Brent, the global bench-
mark, settled up $1.07, or
1.9%, at $56.70 a barrel. It
still ended the week down 11
cents, or 0.2%, snapping a
three-week winning streak.
OPEC’s early compliance
rate came in beyond what
even some of the most bull-
ish analysts and traders had
expected.
WSJ.com/Heard
OVERHEARD
They say don’t take plea-
sure in the misfortunes of
others, but Wall Street ana-
lysts have been having their
fun after Twitter’s dismal
fourth-quarter results.
“Bye Bye Birdie?” asked
SIG Susquehanna Financial
Group analysts in the title of
a research note that argued
that there was no relief in
sight for the ailing social me-
dia company.
“Flying South (but Just for
the Winter?)” quipped Citi-
group, which downgraded
Twitter to “sell.”
UBS, which also down-
graded the stock, titled its re-
port, “Can’t Fly With Broken
Wings.”
Other analysts focused on
Twitter’s inability to capitalize
on President Donald Trump’s
frequent use of its platform.
“Trapped…Not Trumped,” de-
clared RBC Capital Markets.
Some of the analysts
made the right call on Twit-
ter’s stock.
Not so much on their
choice of words.
waiting for signals from the
U.S. on fiscal policy, it has
been a dispute about
immigration policy that has
dominated the headlines.
Meanwhile, markets will
be vulnerable to any signs
that momentum in the
economy is fading. New
policy measures will take
time to come into effect.
Meanwhile, European
politics are heating up, with
the end of the first quarter
and start of the second likely
to see investors’ attention
grabbed by the Dutch and
French elections.
This mix risks more stop-
and-go action in markets.
The path for stock prices,
bond yields and the dollar
looks like a bumpy one.
—Richard Barley
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
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JOURNAL REPORT

F
© 2017 Dow Jones & Company. All Rights Reserved. THE WALL STREET JOURNAL. The Eollow Monday, February 13, 2017 | R1
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BY GLENN RUFFENACH

L
IKE SURPRISES? Retirement—for
better and worse—will change
your life more than you anticipate.
That’s the consensus of those
who should know best: retirees
themselves. Recently, as part of a
discussion in these pages about
changes in later life, we asked
readers for help: Tell us what has surprised
you in retirement. What did the experts ne-
glect to mention? What would you tell would-
be retirees to watch for?
The answer, in short: almost everything.
The surprises ran the gamut, from the won-
derful to the devastating. Many readers told us
they were surprised that their savings are
holding up just fine, although several said that
household expenses—and Medicare premiums,
in particular—have been steeper than they an-
ticipated.
Relationships? Conventional wisdom holds
that making friends in later life is difficult, but
numerous retirees told us the conventional
wisdom is simply wrong. They also told us,
however, that they miss being part of a team
at work, much more than they imagined.
Fitness and health? Far from turning into
couch potatoes, many readers told us they are
in the best shape of their lives. “I feel better
than I have in years,” says William Wilson, a
doctor who lives in Atlanta and Portland, Ore.,
cycles daily and has lost 40 pounds since retir-
ing in mid-2015. “I sleep well at night now, too.
What a treat.”
Most wrenching of all: stories of retire-
ments cut unexpectedly short. “The biggest
surprise has been mortality,” notes Richard
Sandaas, a retired engineer and project man-
ager, in Kirkland, Wash. “My wife took early
retirement in 2003—and less than 10 years
later passed away. We thought we had many
years of post-retirement ahead of us.”
What follows is a closer look at a number of
these surprises. (You can read a sampling of
the emails we received at wsj.com/wealthre-
port and look for “Readers’ Biggest Retirement
Surprises.”) On balance, at least from those
who wrote to us, there has been more joy than
pain, more satisfaction than frustration. In-
deed, most readers told us they are surprised
ment—even if retirement isn’t always what
they expected.
The Joys of Taking a Risk
Walking away from work, as with any major
transition, can be overwhelming. After all, al-
most everything is changing: finances, daily
We asked readers to tell us about the
things they didn’t anticipate when they
stopped working. They had plenty to say.
routines, social networks. As such, some retir-
ees are inclined to stick with the familiar, the
activities and interests they know best.
But the biggest, and best, surprise in retire-
ment, according to many readers, is what hap-
pens when you take risks. More to the point:
Trying or learning something new, and risking
your time and energy (and perhaps your pride)
in the process, just might change your life.
Patricia Plumeri, age 69 and a retired ac-
countant, has found a “second career” and
“lifetime occupation” as, improbably, a guitar
player in a four-person ensemble near her
home in South Pasadena, Calif. The seed, she
explains, was planted during her teenage years
in southern England, where she grew up,
watching fledgling bands—the Beatles, the
Kinks, the Rolling Stones—perform in local
music halls. A guitar, she recalls, “seemed to
be an instrument that could really express
feelings of joy and sadness.”
Six months after retiring in 2010—when “I
could make a major time commitment [to] do-
ing something purely for my pleasure”—she
signed up for her first guitar lesson. Progress,
she notes, was painful; hours of practice each
week left her fingers numb. “I would go to my
gym and swim in the pool, gently massaging
my left hand to get feeling back into it.”
Today, her group (which includes her hus-
band, also retired, on bass) plays two hours
weekly. Performing in public, at least for the
moment, isn’t part of the plan. But other re-
wards suffice.
“I wanted something in my life that wasn’t
complishment—and the realization that I can
actually play a guitar—is pretty heady stuff.”
Of course, change is difficult, and happy
endings aren’t guaranteed. But reader after
reader made the same point: Retirement is tai-
lor-made for a leap in the dark.
“I thought of hobbies and other interests
that I was ‘expected’ to do, but in the end did
something totally different,” notes Bart Corm-
ier, a retired engineer in Fernandina Beach,
Fla. That “something” is volunteering full time
with children’s programs, college students (as
a mentor), senior home repair and his church.
Even “doing good” involves risks, Mr. Corm-
ier notes. Tasks will come your way that, to
your thinking, are a waste of your talents—or
an affront to your dignity. Mr. Cormier, on
more than one occasion, found himself “ad-
dressing waste-plumbing systems in homes
that were a phone call away from being con-
demned.” There’s also a “risk of getting too
committed and not being able to say ‘no,’ ” he
adds. “The more you do, the more is wanted.”
Such hazards, though, tend to pale beside
the payoffs, he notes. “There’s a deep satisfac-
tion from knowing that you have changed
someone else’s life for the better.”
Ah, Free Time at Last
“My surprise in retirement was discovering
the unexpected luxury of time.”
That observation, from Vicki Robb, a retired
real-estate agent in La Jolla, Calif., was echoed
in dozens of the responses we received. Even
though retirement today, as opposed to 20 or
30 years ago, is seen as more “active”—more
“purpose-filled”—many readers told us that
“active” isn’t mandatory. That it’s fine simply
to…chill.
Ms. Robb, for one, says there is now “time
to take an extra moment to exchange pleasant-
ries, and time to let someone in a hurry go
me.) Time to play with a child at their pace,
and to meander when shopping, instead of
power-walking to find the item and get ’er
done. Time for slow cooking and to drive a
friend to the airport. Time to ‘waste’ a morn-
ing at your first art class, even though you’ll
never sell anything.”
A companion theme was the idea of “con-
trol”: retirees discovering that they are in
charge of their daily routines—not their boss,
their clients nor their children.
“The biggest surprise was realizing how
much of our time when working was deter-
mined/dictated by someone or something
else,” one couple told us. “In retirement,
though, almost everything we do is because we
decided to do it. It’s exhilarating.”
Brian McDonald, a retired pilot in Dillsburg,
Pa., told us his days are filled with an eclectic
mix of projects and chores: working in a small
orchard on his property, shopping (“walking
the aisles of deserted stores midmorning dur-
ing the workweek is pure joy”), taking in the
occasional movie matinee and, for good mea-
sure, building a small airplane. The point: He
manages the schedule, rather than vice versa.
“I challenge myself daily with work of my
own choosing,” he notes. “I get satisfaction
from a well-built fence or a blemish-free re-
stored piece of furniture.”
And the airplane? “The kit came with
10,000 rivets in a large cardboard box, so I use
the level of remaining rivets as a thermometer
of progress,” Mr. McDonald explains. “At last
count, I have 9,000 to go.”
Careful Planning Pays Off
Financial surprises, not surprisingly, popped
up in many of the responses we received. Fre-
quently, a sigh of relief was audible: Nest eggs
are working as planned. A number of readers
noted that a healthy amount of self-discipline
before retiring has a bigger impact afterward
than most people realize.
“I’ve lived in the same house since 1972,
keep cars for 10 years, exercise regularly for
good health and, basically, live within my
means,” says Rick Abell, a retired engineer who
divides his time between Colorado and Ohio. If
“you want to have a comfortable retirement,
sacrifices are necessary while working.”
Please turn to the next page

INSIDE

The Key to Saving More
Research suggests policy
makers should consider
making retirement accounts
more restrictive.
R2
The ‘Nanny Tax’
Everything employers need
to know about the tax
governing household
employees.
R4
The Benefits of
Double Majors?
One study says that
the advantage is less than
many people believe.
R4
New Thinking About an Q&A on New Fafsa Movies to Watch About
Old Tool Timetable Retirement
Younger retirees could College applicants can These films give viewers
benefit from using reverse- apply earlier for financial aid an inspiring message
mortgage lines of credit. than in the past. for later life.
R5 R9 R10
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
R2 | Monday, February 13, 2017 THE WALL STREET JOURNAL.

JOURNAL REPORT | WEALTH MANAGEMENT

The Key to Saving More: Make Accounts Hard to Tap

Research suggests that policy makers should limited self-control—it’s hard
to save in a world that’s al-
make retirement accounts more restrictive ways trying to get you to
buy—and so they chose finan-
cial products that made it easy
to make the prudent choice. In
BY SHLOMO BENARTZI
short, they wanted to protect
AND JOHN BESHEARS
their future selves from their
present selves.
IMAGINE THIS SCENARIO: Behavioral economists refer
Somebody offers you $5,000 to such restricted accounts as
to save for a future financial “commitment devices.” Al-
goal, such as a vacation or though commitment devices
home purchase. You can allo- might violate the predictions
cate the money across three of classical economics, they al-
accounts, all with the same in- ready are a staple of our fi-
terest rate. The first account nancial lives.
comes with no restrictions, Take retirement savings:
meaning you can withdraw the Americans currently have
money whenever you want. nearly 15 trillion in assets in
The second account comes accounts such as 401(k) plans
Appeal of Penalties
How boosting early-withdrawal
penalties affected deposits to
401(k)-style accounts, according
to one study
Percentage of money allocated
to a restricted account when it…
Has a 10% early withdrawal penalty
38.9%
Has a 20% early withdrawal penalty
44.8%
Doesn't allow early withdrawals
56.0%
Source: Self Control and Commitment: Can
Decreasing the Liquidity of a Savings Account
Increase Deposits?, September 2015
THE WALL STREET JOURNAL.
decision, with 60% saying it
was a “major” source of re-
gret. Given this data, it
shouldn’t be too surprising
that many people want highly
restricted savings accounts.
This returns us to the origi-
nal question: How did you al-
locate your $5,000?
If you allocated a signifi-
cant amount of money to the
illiquid accounts, then you
may want to consider making
commitment devices part of
your financial life. Whatever
your goal—maybe it’s saving
for a kitchen remodel, or fi-
nally paying off those credit
cards—you can generate your
own commitment device by
imposing a penalty on yourself

with a 10% penalty if you with-
draw the money within the
first year. The third account
prohibits withdrawals within
the first year.
How would you allocate the
$5,000? Economic theory pre-
dicts that most people, not
wanting to limit access to
their own money, would put
the entire amount in the unre-
stricted account.
However, a new working
paper (by John Beshears,
James Choi, Christopher Har-
ris, David Laibson, Brigitte
Madrian and Jung Sakong),
suggests the opposite—that
people actually prefer putting
some of their money into ac-
counts with severe restric-
tions. When these researchers
asked a sample of Americans
the same question posed
above, approximately 80% put
at least some of their money
in one of the two accounts
that made it much more costly
(if not impossible) to with-
draw the funds early.
In another version of the
study, the researchers offered
people only two accounts to
choose from: the account with
no withdrawal restrictions and
a single restricted account.
They now allocated nearly half
of their money to the re-
stricted account. What’s more,
the amount of money they al-
located increased with the
level of restrictiveness. They
even allocated money to the
restricted account when it of-
fered a lower interest rate
than the unrestricted one.
In other words, restricted
accounts are so appealing that
people appear to be willing to
give up money just to get one.
And that willingness holds im-
portant clues to ways individ-
uals, lawmakers and institu-
tions may be able to close the
gap between what experts say
people should be saving for re-
tirement and other financial
RICHARD BORGE
goals and what they actually
are saving.
Protection from yourself
To understand why, you
need to understand what ac-
counts for the appeal of re-
stricted accounts. One piece of
evidence comes from a similar,
older field study of Filipino
households: After one year, the
Filipino families that chose to
use a restricted account in-
creased their savings by 337%
compared with a control group.
They saved more because they
weren’t able to spend; the re-
strictions were a necessary
protection against the usual
failures of self-control.
The same logic applies to
the American subjects in the
Beshears study. Many of the
people who chose to allocate
money to the restricted ac-
counts were aware of their
and IRAs, according to data
from the Investment Company
Institute, a trade group. Those
types of accounts come with a
10% tax penalty if funds are
withdrawn before a person
turns 59½ years old. (Of
course, these retirement sav-
ings accounts offer tax bene-
fits, so the source of their pop-
ularity is multidimensional.)
This latest research suggests
that it might be possible for
lawmakers to make retirement
accounts even more restric-
tive—and increase retirement
savings—without reducing the
appeal of such accounts to con-
sumers. In the Beshears study,
for instance, accounts with a
10% penalty were less desirable
than accounts with a 20% pen-
alty, which were less desirable
than accounts that prohibited
early withdrawals altogether.
These people seemed to realize
that a 10% early-withdrawal
penalty wouldn’t be sufficient
protection for their savings:
they needed stronger restric-
tions to keep their savings safe.
Commitment devices
The pull of immediate grati-
fication is reflected in the data
from existing 401(k) accounts.
Consider 401(k) cash outs,
which occur when people liq-
uidate their retirement ac-
counts before they reach re-
tirement age. Research from
Aon Hewitt, a human-re-
sources consulting firm, shows
that among people changing
jobs, about one-third keep
their 401(k) account at the
original employer, one-third
roll over the account into an
IRA and another third liqui-
date it.
While people liquidate their
accounts for a variety of rea-
sons—some need the money,
others just find liquidation
easier than rolling it over—the
vast majority of workers come
to regret that decision. One
recent survey by Warren
Cormier of the Boston Re-
search Group found that ap-
proximately 80% of people
who liquidated their last re-
tirement account regretted the
if you don’t follow the plan,
and finding another person
who can enforce the penalty if
you break your promise to
yourself. (There also are web-
sites that can help you do
this.)
However you create it, a
commitment device makes it
possible to leverage your dis-
like of losses to increase your
chances of future success.
Sometimes, the best way to
boost self-control is to ac-
knowledge how little we have.
Dr. Benartzi, a frequent
contributor to the Journal
Report, is a professor and
co-head of the behavioral de-
cision-making group at UCLA
Anderson School of Manage-
ment. Dr. Beshears is an as-
sistant professor of business
administration at Harvard
Business School. David Laib-
son, chairman of the depart-
ment of economics at Har-
vard University, contributed
to this article. Email them at
reports@wsj.com.

The Biggest Surprises in Retirement

Continued from the prior page
Interestingly, several readers pointed to the
same factor as playing a critical role in their
financial success: eliminating debt before leav-
ing the workforce. (The Federal Reserve’s most
recent survey of consumer finances found that,
among older adult households with debt, me-
dian total debt increased to $40,900 in 2013
from $18,385 in 2001.)
“I was surprised how important it was to
have no substantial debt,” notes Jonathan
Stolz, a retired physician in Williamsburg, Va.
“Having retired in 2004 without any money
owed to the bank made riding out the stock
market downturn and recession four years
later easier to withstand. And I was able to
sleep at night.”
Hit by High Costs
All that said, a number of readers com-
plained about two disagreeable financial sur-
prises: steep Medicare premiums and house-
hold expenses that were larger than
anticipated.
With regard to Medicare, several readers
said they simply didn’t realize how sizable
and/or sudden changes in their income (exam-
ple: taking a buyout) can make them vulnera-
ble to Medicare “surcharges,” the larger-than-
normal premiums that some individuals pay
for Medicare Part B and prescription-drug cov-
erage. “The same change [in premiums] can
result from the sale of stocks, bonds, etc.,”
notes Elizabeth Gillette, a retired communica-
tions manager in Ossipee, N.H. “This was
something we had never heard about.”
As for household budgets, some readers told
us that one of the best-known rules of thumb
in retirement planning—expect to spend about
80% of your preretirement income in retire-
ment—is, well, hogwash.
“The big reality is that you will spend 100%
of your preretirement income after you retire,”
says Steven Fechner, a retired geologist in
Reno, Nev. Yes, some expenses are lower, he al-
lows, including commuting costs and clothing.
But those savings, he adds, are “eaten up by
costs associated with having more time.”
events that you always had an
excuse to avoid. Examples:
weddings, funerals, baptisms,
anniversary and birthday par-
ties.”
• Vehicle maintenance.
“The vehicles always seem to
need something that you al-
ways ignored because you
never had time to deal with
it.”
The Pain of Mortality
For all the “good” sur-
prises in retirement, several
readers said would-be retir-
ees should beware of unex-
pected jolts. The most devas-
tating: the loss of a spouse.
Bill Sears, a retired con-
tractor in Greenwood Village,
Colo., lost his wife last year
to Alzheimer’s. He had spent
five years as her caregiver.
“Don’t wait until you retire
to start enjoying life,” he cau-
tions. “Appreciate that every
day you’re as healthy as
you’re ever likely to be.”
That sentiment was echoed
by Mr. Sandaas in Washing-
ton, who lost his wife early in
their retirement. The two had
hoped to plant a vegetable
garden in their yard and take
cooking classes together to
“get out of the rut of a re-
volving menu each evening,”
he recalls. “But that didn’t
happen.” And while they
managed to travel extensively
early in retirement, they had
hoped for more.
“To those who might think there may be too
much postretirement travel, I say: Don’t hold things are still evolving, but my need to ‘work’ who mentor entrepreneurs) and serving on his
back,” Mr. Sandaas says. It “may not be possi- is fulfilled, [and] self-esteem is back to normal.” community’s board of directors.
ble in later years for a variety of reasons.”
Mr. Sears added that he is remarrying, The Ties That Bind
ing executive in Carefree, three years.
Boomer Attitudes Ariz. “Having burned both Today, “I have a better social life than I can
Health and money top concerns ends of the candle for 40 recall ever having during my working years,”
of baby boomers as they years, it was a shock to the Ms. Lockhart says.
approach retirement system to suddenly find my- Readers said retirement offers countless op-
self and my calendar no lon- portunities to meet people if you’re willing to
WHAT KEEPS ger in demand.” be proactive: exercise classes, coffee-shop get-
YOU UP AT NIGHT To deal with this, Mr. togethers, shared hobbies and interests (“get-
48% Blakely eventually took a ting my two dogs [in retirement] has been the
Financial concerns part-time po- best thing I have ever done;
sition with a
42%
consulting
Physical health challenges
firm, a posi- “Discovering the un
expected
21% tion that of- luxury of time”
Relationship issues fered a mix Vicki Robb, who
of purpose now has
time for slow co
15% and freedom. oking and
art classes
Work worries Bill Fenton, a
BIGGEST FINANCIAL retired doc-
CONCERN tor in Fol-
som, Calif.,
36% says he took
Paying for basic needs a “slight
23% self-esteem
Saving enough for retirement hit” when
he walked
19% away from
Having enough money for medicine.
emergencies His response, he says, has
been to “redefine” what con- I have met so many wonderful
12%
stitutes “work.” people when I take the dogs for walks”), volun-
Paying for health-care expenses
“My former definition of teer groups, nonprofits. The list goes on.
3% work was to earn money to Bill Heitz, former chief executive officer of
Paying for extras pay bills. My current defini- a design and construction management com-
(travel, large purchases) tion is any activity that bene- pany, remembers vividly the day he retired. He
fits me or society and [that] walked out of his office in Atlanta and drove
6% has a goal. After a little trial directly to a new home in South Carolina,
Something else and error, I came up with ex- where the moving van was waiting.
Source: AARP's Fantasies and Fears: ercising every morning as my “What surprised me most about retirement
Attitudes of Adults Ages 35-Plus, June 2016 ‘work,’ with the goals being to was how quickly and completely I left behind
THE WALL STREET JOURNAL. stay healthy and to reduce my a 37-year career,” he recalls. His days filled up
time in the local sprint triath- immediately: golf and cycling with new neigh-
lon to under two hours.” bors, photography, woodworking, volunteering
He has “no idea where this will end up, as (with Score, a national organization of retirees
“I learned the truth in what I had heard:
Happiness in retirement is directly related to
PHOTO ILLUSTRATION BY LINDSAY HOLMES

Among them:
• Travel and recreation. “Instead of a
yearly trip, now you take two or more.”
“I feel better than I
have in years”
William Wilson, who
cycles daily and has lost
40 pounds
• Medical. “Instead of putting off medical
tests because you didn’t have the time, you
now try to figure out every ache and pain as-
sociated with aging.” And you often don’t have
the same comprehensive insurance coverage
you had through an employer.
• Family duties. As in: “Attending social
much to his surprise. “It never occurred to me Finally, reader after reader told us that, de- the people you spend time with,” he says.
to think about marrying again,” he notes. But spite concerns to the contrary, they are finding “What I found remarkable is that, in a commu-
he credits his wife-to-be with “saving me from new friends in retirement. nity full of extremely successful retirees, very
giving up.” The two have “Maybe the biggest surprise was the change few talk about their careers. People here are fo-
known each other since in my social life,” says Erika Lockhart, a for- cused on each other and in learning new skills
the 1960s. mer fire investigator in Albany, Calif. Her work and exploring new adventures. What a life!”
“She and my wife had typically had involved long hours, and, after
been friends all those retiring, “I was feeling isolated,” she recalls. Mr. Ruffenach is a former reporter and editor
years, so my wife is still Her solution: She organized two meetup for The Wall Street Journal and former editor
part of our life,” Mr. groups—a walking group and a cooking group, of the paper’s “Encore” retirement reports. He
Sears notes. “Her name both of which have been active for two to can be reached at askencore@wsj.com.
comes up often and com-
fortably.”
And Mr. Sandaas, after
his wife died, eventually The Journal Report welcomes REPRINTS AVAILABLE
bought an Airstream your comments—by mail, fax or
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THE WALL STREET JOURNAL. Monday, February 13, 2017 | R3

INDEX INVESTORS
PAY LESS
AT FIDELITY
In a head-to-head comparison of 16 similar Fidelity and Vanguard stock and bond
index mutual funds and 11 sector ETFs, Fidelity beats Vanguard on expenses
nearly every time. Add in our powerful tools, research, and support and you have
some pretty compelling reasons to do your index investing at Fidelity.
Please see Fidelity.com/IndexInvesting for a full comparative product listing.

FIDELITY INDEX FUNDS & ETFS VANGUARD INDEX FUNDS & ETFS

FUND NAME EXPENSE

RATIO 1
EXPENSE
RATIO 1
FUND NAME
PREMIUM SHARE CLASS—$10,000 MINIMUM INVESTMENT† ADMIRAL SHARE CLASS—$10,000 MINIMUM INVESTMENT†

Mutual Funds

Fidelity 500 Index (FUSVX) .045% .050% Vanguard 500 Index (VFIAX)

Fidelity Total Market Index (FSTVX) .045% .050% Vanguard Total Stock Market Index (VTSAX)

Fidelity Extended Market Index (FSEVX) .070% .090% Vanguard Extended Market Index (VEXAX)

Fidelity International Index (FSIVX) .080% .090% Vanguard Developed Markets Index (VTMGX)

Fidelity U.S. Bond Index (FSITX) .050% .060% Vanguard Total Bond Market Index (VBTLX)

ETFs

Fidelity MSCI Health Care Index ETF (FHLC) .084% .100% Vanguard Health Care ETF (VHT)

Fidelity MSCI Information Technology

Index ETF (FTEC) .084% .100% Vanguard Information Technology ETF (VGT)

Fidelity MSCI Energy Index ETF (FENY) .084% .100% Vanguard Energy ETF (VDE)

Fidelity MSCI Financials Index ETF (FNCL) .084% .100% Vanguard Financials ETF (VFH)

Fidelity MSCI Industrials Index ETF (FIDU) .084% .100% Vanguard Industrials ETF (VIS)

Fidelity beat Vanguard on expenses on 13 of 16 comparable stock and bond index funds and 11 of 11 comparable sector ETFs. Comparisons based on fund expense
ratios only. Please consider other important factors including that each fund’s investment objectives, strategy, and index tracked to achieve its goals may differ, as well as
each fund’s features and risks.
Please see below for additional important details.

See for yourself and compare.

Fidelity.com/indexinvesting | 800.FIDELITY or call your advisor.

Expense ratio information is as of January 26, 2017.

IMPORTANT FEE INFORMATION: Certain of Fidelity’s stock and bond index mutual funds have max short-term redemption fees of up to 1.5% for eligible shares held less than a maximum of 90 days. Fidelity
may deduct a small-balance maintenance fee of $12 from a fund balance with a value of less than $2,000 in shares, while Vanguard funds may charge an annual account service fee of $20 for fund balances
below $10,000.
Third-party trademarks and service marks are the property of their respective owners. All other trademarks and service marks are the property of FMR LLC or its affiliated companies.
†
Fidelity and Vanguard offer other share classes of these funds with different investment minimums and expense ratios.
For new investors, funding investment minimums may be different.
It is not possible to invest directly in an index.
IMPORTANT: Comparisons based on funds’ expense ratio only. Please see Fidelity.com/Indexinvesting for important fund objective comparison information.
ETFs are subject to management fees and other expenses.
1
Expense ratio is the total annual fund operating expense ratio from the fund’s most recent prospectus.
Investing involves risk, including risk of loss.
Before investing in any mutual fund or exchange-traded fund, you should consider its investment objectives, risks, charges, and expenses.
Contact Fidelity for a prospectus, an offering circular, or, if available, a summary prospectus containing this information. Read it carefully.
Fidelity Brokerage Services LLC, Member NYSE, SIPC. © 2017 FMR LLC. All rights reserved. 706429.11.0
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
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R4 | Monday, February 13, 2017 THE WALL STREET JOURNAL.

JOURNAL REPORT | WEALTH MANAGEMENT

TAXES | TOM HERMAN
The Benefits From a Double Major? Everything You Really
The advantage Should Know About
is less than the ‘Nanny Tax’
many believe After a long absence, nanny taxes are back in the headlines.
Nanny taxes don’t just apply to nannies. The term is short-
hand for federal and state employment taxes required of many
BY LISA WARD
people who hire nannies, housekeepers, cooks, drivers and
other household employees and who pay them more than a
THE BENEFITS OF a double certain amount. The subject rarely draws much attention until
major in college seem obvi- someone in the news admits a problem. The latest stories to
ous. By gaining expertise in emerge involve Rep. Mick Mulvaney (R., S.C.), President Donald
two different areas, many Trump’s choice to run the Office of Management and Budget,
believe, students will have a and Andy Puzder, nominated to be labor secretary.
significant edge when it Shortly after Mr. Mulvaney was nominated, he disclosed he
comes to launching and ad- hadn’t paid more than $15,000 in taxes for a household em-
vancing a career. ployee hired from 2000 to 2004 to help care for the family’s

That may be especially
true, the thinking goes, if a
student can combine a
higher-paying degree in sci-
ence, technology, engineer-
ing or math (STEM) with the
creative and cultural benefits
that come from a liberal-arts
education.
But a recent paper pub-
lished in the Journal of Ben-
efit-Cost Analysis casts
doubt on that thinking.
Part of the problem, the
study’s authors say, is that
while double-majoring is
fairly common (at about
20%, according to the 2010
National Survey of College
Graduates) most double ma-
jors are in related areas that
provide limited educational
trying to get credentials.
That led to the question: Is
there really is any merit to
spreading yourself so thin?
WSJ: What did you find?
DR. HERSCH: We found
some evidence that certain
combinations of double ma-
jors confer advantages over
a single major, but they
weren’t overwhelming. For
example, there is some sup-
port to the notion that being
able to look at problems
from different perspectives
WSJ: What combination
earned the most money?
DR. DEL ROSSI: Generally the
highest paying majors are
within STEM fields or in-
clude STEM as one of the
majors. But the combination
of liberal arts and STEM
fields don’t have higher esti-
mated returns than for sin-
gle STEM or double-STEM
majors.
WSJ: Were there gender dif-
ferences when it came to
earnings?
YAREK WASZUL
triplets. He said he hadn’t realized the worker qualified as an
employee. He also said he recently paid the federal taxes and
promised to take care of everything else owed. Mr. Puzder,
chief executive of CKE Restaurants, didn’t pay taxes for an un-
documented worker he employed as a housekeeper for a few
years but did so after he was nominated, a spokesman for the
Great Recession when wages executive said recently. Mr. Puzder said he had been unaware
were stagnant. The second the housekeeper wasn’t legally permitted to work in the U.S.
paper used data from 2010. In the past, nanny-tax-related issues have cost prominent
We wondered whether the figures their chance to serve in high-profile jobs. What happens
versatility and skills associ- with the Mulvaney and Puzder nominations remains to be
ated with a double major seen. But tax experts say many readers should pay attention
protect against recessionary whether or not they dream of landing a top job in Washington.
pressure. I don’t think they It can be dangerous for employers to assume they won’t get
did. caught. For example, trouble sometimes erupts when employ-
WSJ: Do you think it makes
sense to double major?
DR. HERSCH: Students who
double major don’t take lon-
ger to graduate, so the costs
associated with double-ma-

AARON P. BERNSTEIN/BLOOMBERG NEWS

diversity. What’s more, even
combining a liberal-arts ma-
jor with a STEM or business
degree typically doesn’t in-
crease earnings or job satis-
faction, they found.
The Wall Street Journal
spoke with the paper’s au-
thors, Joni Hersch, a profes-
sor of law and economics at
Vanderbilt University’s Law
School, and Alison Del Rossi,
associate dean of faculty af-
fairs and associate professor
of economics at St. Lawrence
University in Canton, N.Y.,
about their research.
Edited excerpts follow.
Insignificant advantage
WSJ: Why did you decide to
study double-majoring?
DR. HERSCH: We noticed that
many students think they
need more than one major to
be competitive in the labor
market and they’re scattered
across many different fields
enhances creativity, as advo-
cates of liberal arts suggest.
But students who combine
liberal arts with a business
or STEM major don’t earn
more money than if they ma-
jored in business or STEM
alone.
WSJ: Are there other incen-
tives to double major?
DR. HERSCH: Double-majoring
didn’t affect job satisfaction.
Job match—reflecting the
extent students use their ed-
ucation on the job—mostly
had no association or a neg-
ative association with dou-
ble-majoring.
DR. DEL ROSSI: For instance,
students majoring in STEM
alone had a higher job match
then students majoring in
both STEM and liberal arts.
It makes sense; if students
major in math and theater
they are unlikely to find a job
that uses all of those skills.
DR. DEL ROSSI: For men the
most lucrative combination
is business and STEM, but
for women there seems to
be no additional advantage
of adding a business major
to a STEM degree. The find-
ing may reflect the fact that
more men major in STEM
and the added business de-
gree creates a mark of dis-
tinction. Whereas so few
women major in STEM [by
comparison] that their ma-
jor already distinguishes
them.
Too rigid
WSJ: How do these findings
fit with an earlier paper you
wrote on the subject?
DR. HERSCH: In the first pa-
per, we found that double
majors added about 2% to
earnings. That was using
data from 2003. The discrep-
ancy between the two papers
may have to do with the
joring are low, but as our re-
search shows there isn’t a
huge payoff either.
I personally think double-
majoring becomes too rigid.
There are requirements for
both majors, limiting the
number of elective courses
such as political science, art
and philosophy, that stu-
dents can take. Most double Rep. Mick Mulvaney drew criticism after acknowledging a
majors are within a single nanny-tax issue involving a former household employee.
discipline, like two business
majors or two STEM majors.
So, that’s where there is a Fewer Filers…But Bigger Payments
loss. The number of people filing Schedule H, the IRS form for
DR. DEL ROSSI: We call it cre- household employment taxes, has decreased over the years,
dentialization. Students have but the amount of household employment taxes has increased.
two majors, three minors
and work to earn a bunch of Forms filed Taxes paid
certificates, but all that in-
terferes with the ability to 300 thousand $1.5 billion
explore different topics that
250
interest them.
200 1.0
Ms. Ward is a writer in
Mendham, N.J. Email 150
reports@wsj.com.
100 0.5

50

0 0
THE GAME PLAN 1999 2004 2009 2014 1999 2004 2009 2014

Source: Internal Revenue Service THE WALL STREET JOURNAL.

A LOT OF REAL ESTATE, NOT ENOUGH SAVINGS ers and employees part ways. Nevertheless, the number of
people who file the Internal Revenue Service’s “Schedule H” for
BY LISA WARD
household employment taxes has fallen sharply. The nanny tax
“appears to have fallen off the compliance radar screen” for
Allen Wittert and Celia Dyer own two many taxpayers, says Martin Hall, a partner at the Ropes &
homes and are considering buying a Gray law firm in Boston and head of its private client group.
third. But does tying up more of their Ignorance of the law may play a role in noncompliance. Peo-
assets in real estate make financial ple who hire household workers for the first time may not be
sense? aware of all the rules, such as how to define a household “em-
Last year, the couple and their two ployee,” says Guy Maddalone, founder and chief executive offi-
children, ages 10 and 14, moved to cer of GTM Payroll Services Inc. and author of “How to Hire a
Houston where Ms. Dyer began a new Nanny: A Household HR Handbook.”
job as a business analyst for a software Here’s a suggestion for busy people who want to comply
company. Mr. Wittert, 51, is a painter but can’t stand all the time-consuming paperwork hassles:
who sells his work through a network of Turn to a professional company, such as GTM or many others,
galleries. He also freelances for ad agen- to handle the job. For the do-it-yourself crowd, keep in mind
cies. The couple’s combined wages are that the rules “can be tricky” and include important exceptions,
about $210,000 a year. Mr. Wittert’s says Greg Rosica, a tax partner at Ernst & Young LLP in
STEPHEN GOLDBERG

monthly’ earnings vary greatly but aver-
age about $3,000.
Originally from South Africa, the cou-
pled moved to London in 1994, buying a
flat for £93,000 (about $116,000 at cur-
rent rates). Six years later, they moved
to Connecticut, where they bought a
house in which they lived for 14 years.
Before winding up in Houston, they also
lived in San Francisco, where they con-
sidered buying a home but were priced
out of the market, Ms. Dyer says.
They kept the two homes mainly for
the rental income, which they believe
could be useful when they retire. Ms. Dyer,
who is 47, adds she is a bit leery of finan-
cial markets. The house in Connecticut is
now worth about $400,000 and rents for
$2,700 a month. The flat in London is
valued at the equivalent of about
$385,000 and rents for about $1,250.
The two properties have big expenses.
The couple pays $1,700 a month to cover
the mortgage and a home-equity line on
the Connecticut home. They owe
$205,000 on the mortgage and $61,000
on the home-equity line. Both loans have
floating rates, resetting annually.
For the London apartment, they pay
£360 a month for two mortgages whose
rates reset annually. One loan is interest
only. They have about six years of pay-
ments left on about $75,000 in remain-
ing debt. They also pay about $190 a
month to maintain and insure the apart-
ment.
They have no credit-card debt. But
other monthly expenses include: $3,000
in rent; $250 on utilities; $1,700 on gro-
ceries; $1,400 eating out; $600 on a pri-
vate school; $285 to finance a second
car, on which about $16,000 is still
owed; $150 on gas; and about $1,100 on
policies for health, car, home, rental and
Since Celia Dyer and Allen Wittert have assets that are mostly illiquid, an adviser
suggests they build up a six-month emergency cash reserve.
umbrella insurance.
Ms. Dyer has a 401(k) from a former
employer worth about $170,000. The
couple also has an investment account
worth $15,000, a savings account with
$15,000 and a 529 college-savings ac-
count worth $19,000. They contribute
$500 monthly to the investment ac-
count and $300 to the 529.
ADVICE FROM A PRO: Jean Keener
of Keller, Texas-based Keener Financial
Planning, suggests the couple build up
their cash reserves and retirement ac-
counts before buying another home.
“A lot of their assets are illiquid, which
poses some risk,” says Ms. Keener. With
real estate they earn income from rent, but
they can’t immediately access the principal,
the capital invested in the property.
She recommends increasing their
emergency fund to six months of living
expenses or $50,000 in cash on hand.
The couple should be able to put away
between $1,000 and $2,000 each
month. They should closely look at their
budget, identifying any missing items
and rethinking discretionary spending.
The monthly contributions to the emer-
gency fund should be automatically with-
drawn.
Ms. Dyer should open a new 401(k)
and maximize her contributions, investing
$1,500 a month. Mr. Wittert, too, should
save for retirement in a tax-advantaged
account, mostly likely a Simple IRA de-
signed for self-employed people. He
should try to invest at least $6,500 an-
nually, Ms. Keener says, though he could
invest as much as $15,500.
Saving for retirement and college
would be ideal, but if that isn’t possible,
Ms. Keener recommends prioritizing an
emergency fund and saving for retire-
ment. “There are many ways to finance
college, but not retirement,” she says.
Once they build their emergency fund
and boost retirement savings, they should
see how much is left over for housing.
Property taxes and insurance must be
part of their calculation. She recommends
refinancing the mortgages to a fixed rate
before interest rates rise again.
They should also determine the true
cost of the rental properties they own, ac-
counting for nonrecurring expenses, like
vacancies, repairs and maintenance costs
over time. They should try to predict the
lifetime return on the properties and com-
pare that with what they are likely to
earn in an investment account.
“If the properties appreciate at 4%,
total return, including income and appre-
ciation, would be about 7%. That might
be comparable to a liquid stock and bond
portfolio,” she says. If they decide to sell
their real-estate holdings, she advises
putting the profit toward retirement, not
buying another property.
Ms. Ward is a writer in Mendham, N.J.
Email her at reports@wsj.com.
Tampa, Fla., and a contributor to the “EY Tax Guide.”
Here are a few key points:
 Nanny tax rules apply to household “employees,” but not
“independent contractors.” What’s the difference? “The worker
is your employee if you can control not only what work is done,
but how it is done,” the IRS says in Publication 926. “If only
the worker can control how the work is done, the worker isn’t
your employee but is self-employed. A self-employed worker
usually provides his or her own tools and offers services to the
general public in an independent business.”
Also, if an agency provides the worker and controls what
work is done and how, “the worker isn’t your employee.”
 Generally, for 2016 and 2017, an employer needs to pay
Social Security and Medicare taxes for “cash wages” of
$2,000 or more paid to any one employee. Cash wages refer
to checks, money orders and the like. They don’t include “the
value of food, lodging, clothing, transit passes and other non-
cash items you give your household employee.” But cash given
to an employee in place of those items counts as cash wages.
 Don’t count wages paid to your spouse or your child un-
der 21, the IRS says. Wages paid to your parent typically don’t
apply, either, although there are exceptions.
 Don’t count wages paid to an employee under 18 at any
time during the year, unless providing household services is
“the employee’s principal occupation,” the IRS says. If the em-
ployee is a student, “providing household services isn’t consid-
ered to be his or her principal occupation.”
 For details on how much to pay and on the federal unem-
ployment tax, known as FUTA, see Table 1 on page 4 of Publi-
cation 926. Table 2 has a handy household employer’s checklist
of what to do for those with a household employee.
 Ask your state unemployment-tax agency for the rules on
state unemployment tax. Also check out the rules on other
state employment taxes or requirements for workers’ compen-
sation insurance.
 Don’t focus solely on tax issues. Make sure you have ar-
ranged for all the proper insurance coverage needed to protect
you and people working in your home, says Mr. Hall of Ropes
& Gray. “There’s an awful lot more to this than just filling out
tax forms. Shortcuts can prove expensive,” he warns.
Mr. Herman is a writer in New York City. He was formerly The
Wall Street Journal’s Tax Report columnist. Send your comments
and tax questions to taxquestions@wsj.com. Please include
your full name, address and phone number in case we need to
contact you to get more details about your question.
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
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THE WALL STREET JOURNAL. Monday, February 13, 2017 | R5

JOURNAL REPORT | WEALTH MANAGEMENT

New Thinking
About an Old Tool
Financial experts say younger
retirees—starting at age 62—
could benefit from using reverse-
mortgage lines of credit
BY JEFF BROWN
RISING INTEREST rates could
make reverse-mortgage lines
of credit more appealing to
younger retirees.
A reverse mortgage is a
type of loan taken against eq-
uity in a home, available to
borrowers who are at least 62.
It requires no monthly pay-
ments, with interest charges
the credit line grows over
time, by amounts tied to the
course of interest rates, and
the unused portion can be
converted to a substantial
monthly income years later.
And today, with inflation and
interest rates widely expected
to rise, these credit lines could
be particularly valuable.
“Now is an exceptionally
good time to be considering
adding a [reverse-mortgage]

CARL WIENS
instead added to the loan bal- credit line to the retirement
ance and paid only after the blueprint,” says Shelley Gior-
homeowner sells or dies. The dano, chair of the Funding
loan can be taken as a lump Longevity Task Force at the
sum or as monthly income, or American College of Financial tapping into the line of credit Another proponent is Jack wishes to leave a home free verted to a monthly income of
as a line of credit, with no in- Services. Interest rates are when needed can substantially M. Guttentag, professor emeri- and clear [of debt] to their nearly $5,000—less if any of
terest charges on unused low, which increases the credit improve the long-term sus- tus of finance at the Wharton heirs,” says Steven Klein, re- the credit has been used—
amounts. limit on reverse mortgages, tainability of a retirement-in- School of the University of verse-mortgage director with based on standard industry
Many homeowners wait un- she notes, and if rates rise come portfolio, meaning you Pennsylvania, who provides in- AmCap Mortgage, in Green- formulas. If interest rates go
til well beyond 62 to take a re- over the life of the loan, that can make your money last lon- formation on mortgages on his ville, S.C. higher, the credit line would
verse mortgage, because gen- will add to the growth of the ger,” says Jamie Hopkins, as- education website, the Mort- But over many years, the be larger; if they fall, it
erally the older the borrower credit line. Since interest rates sociate professor of taxation gage Professor. “It’s a can’t- credit line can grow to be wouldn’t grow as much.
is the more he or she will be tend to rise alongside infla- at the American College of Fi- miss deal,” so long as the bor- quite large, especially if inter- Taking a credit line at an
qualified to borrow. tion, the growing line of credit nancial Services. rower can resist plundering est rates rise. Here’s how it early age could also mitigate
In recent years, though, would provide an inflation The strategy—called a the credit line for nonessen- works: These credit lines carry the danger of the home’s value
more financial advisers have hedge, she says. standby reverse mortgage, or tials, he says. adjustable interest rates that falling, a decline that would
warmed up to the idea of SRM, by some—has been typically reset every month or reduce the amount of credit
homeowners taking a reverse- Running the numbers pushed in financial journals by Not for everyone every year. Once the initial available through a reverse
mortgage line of credit when “Research has shown that a number of academics, start- The chief downside: Sums credit limit is set—based on mortgage taken later. And the
they are as young as 62, as a setting up a line of credit as ing with a 2012 paper by Barry taken through any reverse interest rates, the home- credit line grows regardless of
way to boost their nest egg. soon as possible, age 62, in or- H. Sacks, a tax attorney in San mortgage, including any owner’s age, the home’s value changes in the home’s value. If
The key to this strategy is that der to let it grow and only Francisco, and his brother Ste- amount actually borrowed and its location—it grows each the home’s value soars, the
phen R. Sacks, a professor through a line of credit, re- year by the current interest homeowner could scrap the
emeritus of economics at the duce the equity available for rate on the loan plus 1.25 per- old credit line and take out a
Tapping Equity University of Connecticut. other purposes—like moving centage points, which is the new, larger one against the
The number of home-equity conversion mortgages made since the They recommend drawing to another home or buying loan’s annual mortgage-insur- higher value.
program's inception, for each fiscal year ended Sept. 30. HECMs are from the credit line when in- into an assisted-care facility— ance charge. “A reverse-mortgage line of
reverse mortgages insured by the Federal Housing Administration vestments like stocks and or for the homeowner’s heirs. For example, FirstBank, a credit can be a saving grace
and account for nearly all reverse mortgages made. bonds are down, so the home- Also, the fees to set up a re- lender in Birmingham, Ala., of- for the baby boomers who
owner enjoys a steady income verse mortgage can be steep— fers a 62-year-old borrower simply do not have enough re-
120 thousand and gives other investments roughly $9,000, for instance, with a $400,000 home in the tirement savings” if home eq-
time to recover, allowing them for a line of credit of about Philadelphia suburbs a credit uity is ignored, Prof. Hopkins
100 to last longer. $200,000 in the example be- line starting at $200,668, at an says. “If home equity is incor-
They said the strategy was low—and erode the equity in initial rate of 5.70%—a 4.45% porated more strategically in
80 successful in 1,000 Monte the home if they are financed interest rate on the loan plus the future, we will see vast
Carlo simulations, which run through the credit line. the 1.25% insurance charge. If improvements in the financial
60 calculations over and over “It may not be best for a the interest rate doesn’t security of retirees.”
while varying key factors like short-term play” because of change, the credit line will
40 interest rates and investment the time it will take for the grow 5.70% a year, reaching Mr. Brown is a writer in
returns. Not only did it im- growth of the credit line to more than $600,000 in 20 Livingston, Mont. He can be
20 prove the borrower’s chances offset the fees, “or if one years. It could then be con- reached at reports@wsj.com.
157 of enjoying steady income to
0
an advanced age, it could also
1990 ’95 2000 ’05 ’10 ’15 produce a larger income along
Source: National Reverse Mortgage Lenders Association THE WALL STREET JOURNAL. the way, they reported.

THE GAME PLAN

TIME TO REVISIT THE 401(K)

BY VERONICA DAGHER

Jeff Tennery hasn’t contributed to his 401(k)

in more than two years.
The 48-year-old isn’t happy about it, but
he’s using the money to invest in his business,
Moonlighting Marketplace, a mobile com-
pany that helps people buy and sell their ser-
vices and products peer-to-peer.
Mr. Tennery, a husband and father of five,
ANDY STAFFORD

founded the company about three years ago

in Charlottesville, Va. Before that he was an

early employee or co-founder of two compa-
nies that were acquired. The sales of those
companies, he says, netted him several mil-
lion dollars.
Those sales didn’t prompt him to retire or
to spend lavishly. Rather, after the first sale,
about 14 years ago, Mr. Tennery and his wife,
Denise, moved their young family from New
York City to Charlottesville. They liked the
lower cost of living. They also like Virginia’s
colleges. “We’re frugal,” he says.
With the five children ages 9 to 20,
there’s no shortage of expenses. The cell-
phone bill is about $500 a month. Mr.
Tennery says his company doesn’t yet offer
health insurance so he is paying about
$1,800 a month for coverage for his family.
The insurance has a $2,000 deductible, but
with someone in the family always sick,
breaking a bone or having some other minor
health issue, they reach the deductible
quickly, he says.
“The cost of health care is absolutely my
biggest pain point,” he says.
While Ms. Tennery works full time looking
after the family and household, Mr. Tennery
gets a roughly $90,000 salary from Moon-
lighting—far lower than what he was earning
at prior jobs.
He has less than $1 million saved in his
401(k) and 529 college-saving plans for the
children. About 70% of that money is in-
vested in stock mutual funds, 20% is in-
vested in bond mutual funds and the remain-
ing 10% is in cash. Mr. Tennery also has
seven years’ worth of family expenses saved
in cash to help supplement his salary.
The family has no credit-card debt and al-
most owns their home outright.
Mr. Tennery hopes the business will break
even this year. He also hopes he’ll eventually
be able to increase his salary, offer health in-
surance to his employees and start saving
for retirement again.
ADVICE FROM A PRO: “The health insur-
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The One
An adviser suggests Jeff Tennery look into a
higher-deductible insurance plan.
a senior financial planner and managing direc-
tor at Altfest Personal Wealth Management in
New York.
Mr. Palazzo says the premiums seem high
and he recommends checking the price of a
higher-deductible plan in conjunction with a
health-savings account. Mr. Palazzo recom-
mends seeing whether the higher deductible
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Your Wealth podcast. Email
veronica.dagher@wsj.com.
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JOURNAL REPORT | WEALTH MANAGEMENT

After Artists Die, ADVISERS’ VOICES

DAN YU

Their Molds and ESTATE

Plates Live On PLANNING FOR
CHILDLESS
The posthumous output can vary COUPLES
greatly in quality—and in price

SOTHEBY’S NEW YORK

BY DANIEL GRANT
LIFE AFTER DEATH can be common
in the workshops of famous sculp-
tors and printers. Sometimes, way
too common.
For years after an artist’s demise,
the same molds and plates the artist
used to produce original works can
be re-used by their heirs or ap-
pointed licensees to continue in the
artists’ footsteps, making copies in-
definitely.
Indeed, the posthumous output of
some artists can greatly exceed the
number of works they produced
while living. What’s more, the qual-
ity of the posthumous work tends to
vary—as do the differences in value.
So, for collectors of sculpture and
fine prints, it is essential not only to
know whether a work was created
during the artist’s lifetime, but when
and where it was cast or printed,
and, if it is a posthumous piece, by
whose hand.
Records vary
Pinning down details about 20th-
century and more recent works typi-
cally is not difficult because modern
printmakers and sculptors have kept
better records than their forebears,
and tend to produce more limited
editions. But for artists from the
18th and 19th centuries, it’s a com-
pletely different story. In many
cases, numerous editions have been
produced over decades, if not centu-
ries, without much of a paper trail of
what was done and when.
Take Francisco de Goya, one of
Spain’s most treasured artists. Goya
died in 1828 at the age of 82. In 1799,
he oversaw the printing of a set of
80 etchings and aquatints known as
“Los Caprichos,” or “Whims,” scenes
mocking the ignorance and supersti-
tion in Spanish society. Only one edi-
tion of “Los Caprichos” was printed
during Goya’s lifetime. But Goya
willed the plates to the Prado Mu-
seum in Madrid, which has periodi-
cally leased them since that time to
different publishers as a fundraiser.
By 1937 there were 12 known edi-
tions. There’s no record of how many
editions have been printed since.
For most fine prints in general,
earlier editions are the most sought-
after, because they more closely re-
flect the artist’s intentions. Printing
plates tend to wear out, producing
less-distinct images over time; the
Earlier editions are
the most sought-
after since they
more closely reflect
the artist’s
intentions
lines cut into the plates get clogged
with dried ink and need to be re-in-
cised by someone else. Later, post-
humous-edition prints no longer
clearly reflect the hand of the artist,
have less prestige and usually bring
lower prices.
Prices range
An undamaged print from the first
edition of “Los Caprichos” would be
priced at $3,000 to $5,000, says
James Goodfriend, owner of New
York’s C&J Goodfriend Drawings and
Prints. Prints from the posthumous
second and third editions, dated 1855
and 1868, respectively, “are very
good and very hard to tell apart,” he
adds, but sell for $1,500 to $2,000.
Mr. Goodfriend says he sells prints
from later editions for $150.
“I only keep them around to
show people what not to buy,” he
Estate casts of Remington sculptures run $100,000 to $1 million, says Sotheby’s
Liz Sterling. A lifetime cast of ‘Wounded Bunkie’ reached $5.6 million in 2008.
says. The lines are not as sharp. The
shading weakens or is uneven or has
just disappeared.” Still, he says, “I
see some people pay $800 to $900
for these things at auction.”
A principal source for identifying
artworks is a catalogue raisonné, an
annotated listing of all the known
artworks by an artist. Catalogues
raisonnés, found in museum and uni-
versity libraries, provide illustrations
that can be checked against an art-
work. They also note when certain
editions were produced, numbers of
copies (if that information was avail-
able), which print publisher or
foundry made the edition, changes
made and the quality of the work.
Alice Duncan, director of New
York’s Gerald Peters Gallery, recom-
mends always asking for an art-
work’s history of ownership, or prov-
enance, and the date the work was
produced, as well.
Art advisers will do this kind of
research for a collector, but such
help doesn’t come cheap. Advisers
usually charge around 10% of the
value of the art being acquired,
though they may set fees on a per-
hour basis. Wendy Cromwell, a Man-
hattan adviser, puts the hourly range
at between $75 and $250, depending
upon the experience of the adviser.
Casts off
To judge the value of good detec-
tive work, consider the works of an
artist as well known as Frederic
Remington. Posthumous sculptures
attributed to Remington are so nu-
merous that art dealers are particu-
Childless couples have special
needs when it comes to wealth
management and estate planning.
While they often have more fi-
nancial flexibility than families
with children, they still need to
plan early for the future and con-
sider what will happen if one of
them dies.
larly wary of their histories. Reming- Take long-term care insurance.
ton, who lived from 1861 to 1909, is Childless couples who are finan-
famed for his lifelike depictions of cially secure may be willing to pay
the American West, particularly his out of pocket for long-term care if
bronze statues of cowboys and caval- preserving assets for heirs isn’t a
rymen on horseback. “Ninety percent priority. But if the couple isn’t
of the things that say ‘By Frederic wealthy, then this insurance may
Remington’ I wouldn’t get near, and be necessary as a surrogate to
90% may be a low estimate,” says the care a family could provide.
Ms. Duncan, who says her gallery Childless couples also need to
will only take on consignment Rem- think about who gets their assets
ington sculptures that can be proved after they die. Some choose to
to have been produced during the leave all of their money to charity.
artist’s lifetime or by authority of his If that is the case and they are in
widow, Eva, who died in 1918. a high tax bracket, they may want
After 1918, unknown quantities of to set up a donor-advised fund to
“Remingtons” were produced as the maximize deductions and disperse
foundry used by Remington himself the funds over many years.
cast more bronzes using his molds, Another option is to make a
and other foundries created their charity the contingent beneficiary
own molds using existing sculptures on individual retirement accounts
as models. The copies may look and 401(k) plans. This simplifies
close, but when compared with doc- the probate process because
umented Remington sculptures, the these assets don’t pass through
differences become evident. the couple’s will.
Liz Sterling, senior vice president As for life insurance, childless
and head of American art at So- couples may not need as much as
theby’s, says the median price of life- couples with children. And unless
time casts of Remington’s sculptures their estates are very large or
are “several million dollars,” reaching complicated, they probably won’t
a high of $5.6 million at Sotheby’s in need a permanent policy such as
2008 for the artist’s 1896 “Wounded whole life. Permanent policies are
Bunkie.” Prices for estate casts, those often used for estate-planning
made under Eva Remington’s author- purposes when people want
ity, of the same pieces range from money to go to their children and
$100,000 to $1 million, she says, and to cover any estate-tax liability.
the auction house doesn’t handle
castings later than 1918. Mr. Yu is managing principal of
EisnerAmper Wealth Advisors
Mr. Grant is a writer living in LLC in New York City. He can be
Amherst, Mass. He can be reached reached at reports@wsj.com.
at reports@wsj.com.

THE EXPERTS

Insights on Savings and Target-Date Funds

The Experts are an
online group of
industry and thought
leaders who blog about
topical issues in their
fields of expertise.
Edited excerpts follow.
For more, go to
WSJ.com/Experts.
Six Questions to Gauge Financial Health
Many people, when thinking about their finan-
cial health, focus on a single indicator, such as
whether they are saving enough for retirement
or carrying too much student-loan debt.
The questions that follow, based on a body of
national and international research, provide a
broader perspective. How you answer can pro-
vide a starting point for better understanding
and improving your personal finances. (More in-
depth questions from a national survey on finan-
cial capability are available online at www.usfi-
nancialcapability.org.)
1. How confident are you that you could come
up with $2,000 if an unexpected need arose
within the next month?
A. I am certain I could come up with it.
B. I could probably come up with it.
C. I could probably not come up with it.
D. I am certain I could not come up with it.
This question looks at one’s balance-sheet (not
just assets) and how one manages resources. Re-
search links the lack of resources or the inability
to access them when facing a midsize shock with
indicators of financial distress.
2. Yes or No: Have you ever tried to figure out
how much you need to save for retirement?
Academic research shows that those who an-
swer affirmatively have up to three times the
amount of wealth as they near retirement as
those who have not made any plans.
3. On a scale from 1 to 7 (1 = strongly disagree
and 7 = strongly agree), how strongly do you
agree or disagree with the following state-
ment: I have too much debt right now.
The answer to this question reveals both the
extent of the respondent’s debt burden and his or
her management of finances. Those who choose a
value above the median (4) are found to carry
not only several forms of debt, both short term
and long term, but also to use high-cost methods
of borrowing, such as payday loans.
The next three questions measure understand-
ing of the ABCs of personal finance. Those who
correctly answer all three (you’ll find the an-
swers at the end) are less likely to be financially
fragile and over indebted, and are more likely to
plan for the future and engage in many other be-
haviors conducive to higher retirement savings.
4. Suppose you had $100 in a savings account
and the interest rate was 2% a year. After five
years, how much would you have in the ac-
count if you left the money to grow?
A. More than $102 B. Exactly $102
C. Less than $102 D. Don’t know
5. Imagine that the interest rate on your sav-
ings account was 1% a year and inflation was
2%. After one year, with the money in this ac-
count, would you be able to buy…
A. More than today
B. Exactly the same as today
C. Less than today
D. Don’t know
6. True or false: Stock in a company usually
gives a safer return than a stock mutual fund.
(Answers: 4. A.; 5. C.; 6. False.)
As companies and others look for ways to help
employees become financially fit, this test may
provide them with a tool to measure, assess and
reconsider what they are doing. Perhaps it is
something to add to employee benefits in 2017.
—Annamaria Lusardi, Denit Trust Chair of
Economics and Accountancy, George
Washington University School of Business
i i i
Look Beyond Target-Date Funds
Target-date funds have exploded over the
past few years as they’ve become the most
common default investment option in defined-
contribution plans such as 401(k)s.
But that doesn’t mean they’re always the
best option.
Target-date funds are one of three invest-
ment types “qualified” to be used as the default
option for participants in a 401(k) plan who are
automatically enrolled. The other two are tar-
get-risk funds (like a balanced fund) and man-
aged accounts (such as a robo advice solution).
Managed accounts are a gem that hasn’t yet
gotten the acclaim that target-date funds have.
Target-date funds are a notable improvement
to allowing plan participants to pick a few op-
tions without giving much thought to portfolio
strategy. They aren’t without their faults,
though.
A key problem is that they are a “one-size-
fits-all” approach to risk, where everyone the
same age has the same equity allocation. Can
you imagine a doctor’s office that prescribed a
medication based only on your age?
This is where managed accounts come in. Us-
ing a rules-based approach, managed accounts
for defined-contribution plans build a custom-
ized portfolio for each person using the invest-
ment options available in the plan. The costs
are typically far lower than those of a human
adviser. A managed-accounts service also can
include advice on required savings levels, ideal
retirement age, and other factors that contrib-
ute to reaching your retirement goals.
To determine the truly optimal portfolio, the
solution needs information about plan partici-
pants that will exist outside what is available
from the plan sponsor. Therefore, the more en-
gaged the individual is with the tool the more
valuable the managed accounts solution can be.
While often preferable to a target-date fund,
managed accounts aren’t perfect. Two impor-
tant considerations are cost and engagement.
The cost can vary significantly by provider,
from free to an annual fee exceeding 0.5% of
portfolio assets. For some participants, this fee
may be well worth the costs; don’t assume that
a more customized service will magically im-
prove your retirement picture. If you’re already
doing the right things—saving enough, looking
at your total wealth holistically, etc.—then the
benefit of a managed account might be reduced.
—David Blanchett, head of retirement research,
Morningstar Investment Management
i i i
Time to Rethink Emergency Savings
Why aren’t more people saving for emergen-
cies? Or, when people are saving, why do so
many not use those savings wisely?
It isn’t like people don’t know what to do.
I’ve been to many meetings where financial ex-
perts tell each other, “If we could just get peo-
ple to save six to nine months of income.” This
advice seems so sensible, so economically
sound, my peers believe that if they repeat it
often enough, people eventually will act on it.
But it isn’t resonating. Some 50% of Ameri-
cans don't have a “rainy day” fund, according to
the 2015 National Capability Study.
Here are four mental traps that stop people
from saving for and wisely using emergency funds:
It’s just too much money. Preaching six to
nine months for many is unrealistic. Instead,
let’s be encouraging—even $500 is meaningful.
It’s achievable and validates progress. Imagine
what $1,000 or $2,000 feels like? Hit that start-
ing goal, raise the bar higher and never stop.
I don’t believe I’ll need it. People have to un-
derstand it isn’t a question of if unexpected
events will happen, but when they will happen.
There is a 60% probability that you will experi-
ence a financial shock in 2017, and these odds are
consistent from year to year. How old is that car
you’re driving? When was the last time you had
to replace an appliance? Do you really think you
can anticipate the high costs of an injury or med-
ical emergency, even with insurance?
I don’t want to use what I’ve saved. Diligent
savers who squirrel away emergency savings of-
ten don’t want to use it when hit with an un-
avoidable financial shock. It feels like failure,
watching those hard-earned savings drain away.
They instead turn to credit cards and help from
family or friends—alternatives that can be much
more costly financially or psychologically. We
need to reassure people that using emergency
savings is a mark of financial competence.
I spent it and I don’t want to start over. It
hurts losing your safety net, but you have to ac-
knowledge this will be the case—perhaps sev-
eral times throughout your life. It’s true that
even six to nine months of savings can be
wiped out with an unforeseen event. We have
to concede that when this happens our emer-
gency savings must serve its purpose. And then
start rebuilding for the next unforeseen event.
—Ted Beck, president and CEO, National
Endowment for Financial Education
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THE WALL STREET JOURNAL. Monday, February 13, 2017 | R7

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THE WALL STREET JOURNAL. NY Monday, February 13, 2017 | R9

JOURNAL REPORT | WEALTH MANAGEMENT

The Opportunities—and Pitalls—of New Fafsa Timing

College applicants can now apply earlier for financial aid. Here is what you ought to know.
BY JILLIAN BERMAN
THE COLLEGE-APPLICATION
and decision process just got a
bit more complicated.
That’s because the
2017-2018 college-application
cycle marks the first time stu-
dents and families could apply
for federal financial aid in the
fall, several months earlier
than in the past. The govern-
ment’s goal in opening the
Free Application for Federal
Student Aid, or Fafsa, on Oct.
1 was to give students and
families more time to evaluate
their financial-aid options.
Students and families file a
Fafsa, which includes their in-
come and other financial in-
formation, as part of the col-
lege-application process.
Colleges and other institutions
that provide financial aid,
such as state governments, use
the form to determine how
much a family can reasonably
contribute, how much the in-
stitution will provide in grants
next several months. quired to use their tax infor-
If financial-aid offers come Time Management mation from two years prior.
in from some schools earlier How college enrollment managers say schools are dealing with the earlier availability of the Fafsa Thus they’re using 2015 tax-
than in years past, applicants year information for the
may be tempted to commit to Early Fafsa activity When are need-based offers being Are need-based financial 2017-2018 application year.
a school earlier, before they’ve sent out, compared with last year? aid offers being sent out Doing it this way encour-
received financial-aid offers with acceptances? ages families to use the IRS
Around the
from all of the schools where Yes, with some data retrieval tool—since few
Moderate same time 2-3 weeks earlier
they applied. will have filed their 2016 faxes
Some say that colleges, too, 43% already—and so increases the
may consider adjusting the 21% odds that their tax informa-
No No
ways in which they extend of- 20% tion is accurate. Also, Mr. Kan-
31% 67% 79%
fers. For instance, with more trowitz says, if applicants
Significant
applications coming in earlier, were given the option to sub-
41%
the schools will have to decide 24% Private Public schools mit tax data from either one
whether to make offers ear- 26% or two years prior, they would
lier—and consider how an ear- Yes, with all | 14% likely choose the year most
lier offer might affect a stu- Minimal | 8% None | 7% Yes, with most | 13% beneficial to them. Thus, he
dent’s decision. Families may Don’t know | 1% Later 4-8 weeks earlier Yes, with some | 6% says, requiring that the data
have to be patient as the be from two years earlier en-
schools navigate this uncertain Source: EAB Early Fafsa/ISIR Activity, November 2016 poll THE WALL STREET JOURNAL. sures consistency.
terrain. If a family’s financial situa-
Here are answers and ad- be sending their offer letters provide an estimate of a stu- the glossy brochures provided tion has changed considerably
vice for questions that parents weeks earlier than in the dent’s financial-aid package to them by college staff. “It re- in the time between the filing
and prospective college stu- past), students and families with their admission, says Mr. moves that gauze in the re- of its tax data and its applying
dents may have as a result of should be wary of jumping on Kantrowitz. Under the new cruiting relationship,” Mr. Far- for financial aid—including the
the new, longer process: the first decent-looking offer timeline, they’ll be able to in- rell says of the earlier award loss of a job or a divorce—the
that comes their way. The clude more definitive finan- letters. In the past, the gap be- family should alert the col-
Q. What is different about
the aid-application pro-
cess this year?
deadline to choose a school is
still typically the same: May 1.
“The last thing you want to
cial-aid information at the
time of acceptance, he says,
provided the students took ad-
tween when students applied
to a school and when they
found out how much it would
leges, which may be willing to
create a better aid package.

or other “free money,” and

how much they will ask the
family to pay out of pocket or
take on in loans.
So far, it appears that many
families are applying for fed-
eral aid earlier, says Peter Far-
rell, a managing director of
enrollment services at EAB, a
Washington, D.C.-based com-
pany that helps colleges man-
age their enrollment. In a re-
cent survey of EAB’s clients,
41% of participants reported
“significant” early activity in
Fafsa filing and 43% said they
had moderate early Fafsa ac-
tivity.
But while financial-aid ex-
perts agree that initiating the
Fafsa process earlier will ulti-
mately be a boon to students,
by making it possible to re-
A. For the first time, stu-
dents can apply for fi-
nancial aid in the fall, much
do is accept one school’s offer
and then have buyer’s remorse
four days later when you get
vantage of the earlier aid-ap-
plication provisions.
cost them meant that often
college recruiters found them-
selves trying to push students
Q. What should families do
if they simply want a
better award?
earlier on in the broader col-
lege application process. Ide-
ally, that means that students
another aid offer that’s much
more generous,” says Mark
Kantrowitz, the publisher of
Q. If not all schools give
aid offers earlier than in
the past—despite receiv-
to fall in love with a school,
while knowing that at the end
of that process the students
A. Families who seek to ne-
gotiate an aid offer
should appeal to the schools
should have a better sense of Cappex.com, a college and ing the applications earlier— may find themselves disap- they’re interested in as soon
whether they can afford a scholarship search site. what can students do to best pointed because they couldn’t as they receive their award
school earlier in the process, It appears that at least make use of the offers they afford it, Mr. Farrell says. letter, says Mr. Farrell. But if
assuming schools extend offers some students are already ac- have received before they hear “That’s still going to hap- the offer comes early, families
earlier as well. The reality is cepting the earlier offers. Mr. from the rest? pen, but the likelihood of that should be prepared to be pa-
that the new process will take
some adjusting. Students need
to more closely monitor aid-
Farrell says more families are
sending in their deposits ear-
lier than in the past at a broad
A. Having offers in-hand
earlier does give stu-
dents and families the oppor-
happening as much goes
down” with the earlier time-
line, he says.
tient as financial-aid officers
work through the new finan-
cial-aid landscape.
application deadlines and get array of schools working with tunity to more thoroughly Families should update
their requests in sooner. But
they won’t necessarily receive
timely aid offers from all of the
EAB. But he adds that even a
relatively small difference in
financial-aid packages, say
evaluate their options, says
Mr. Kantrowitz. For example,
if students get a generous aid
Q. What should students
do if their families’ fi-
nances change between
schools with any new informa-
tion, such as test scores,
awards or competitive financial
schools where they applied. $1,000, can balloon over time package from a school that the time they applied for fi- offers from other colleges.
if a student opts for the less wasn’t initially at the top of nancial aid and the time they Families may also have a better
Q. Does the new Fafsa
deadline change when
students have to make
generous package and is forced
to assume $1,000 in debt.
their list, they now have more
time to take another (or their
first) look at the campus and
receive their award?

A. This year, it is more

ceive more detailed offers
from schools sooner in the
whole application and admis-
sions process, families that
have been through the process
before may now need to alter
the way they approach the
likely than in the past
shot at getting schools to listen
to their appeal if they identify
exactly what it would take—say
decisions about which school
to attend? Q. How does the new aid
timeline affect early-ap-
re-evaluate it in this new light.
Having potentially more
that families’ financial circum-
stances will have changed be-
an extra $5,000—for the stu-
dent to attend the school.
A. Even though students
may see some financial-
aid offers trickling in early A.
plication options?
It can be helpful. In the
past, many colleges of-
time between receiving an of-
fer and having to accept an of-
fer also gives students more
tween when they filed the
Fasfa and when they received
their award. That’s because for
Ms. Berman is a reporter for
MarketWatch. She can be
(more than half of schools sur- fering early notifications of time to consider a school with the first time, in this applica- reached at jberman@mar-
veyed by EAB said they would admission were only able to concrete information beyond tion cycle, families are re- ketwatch.com.

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R10 | Monday, February 13, 2017 THE WALL STREET JOURNAL.

JOURNAL REPORT | WEALTH MANAGEMENT

ASK ENCORE | GLENN RUFFENACH
ADVISERS’ VOICES
Great Movies to Watch About Life in Retirement PAUL BOYD

These films give viewers an inspiring message for later life
What are some good movies
about retirement? Can you point
to some films that offer an inspir-
ing message about later life?
Films about retirement and ag-
ing, despite Hollywood’s obsession
with youth, have enjoyed a good deal of success.
The common thread seems to be characters who
are both resilient and defiant, women and men
who refuse to go gentle into that good night.
Among the best:
GETTING A PIECE
“Up” (2009) and “Toy Story 3”
(2010). Two animated gems from Dis- OF VC-BACKED
ney’s Pixar about letting go of the past
and embracing the future.
FIRMS
Investing in late-stage venture-
Redemption capital-backed companies can be
“Tender Mercies” (1983) and “Crazy an attractive proposition because
Heart” (2009). In each, an aging, down- of the return potential.
and-out musician turns his life and work However, the general attitude
around. Academy Awards for, respec- around the venture-capital market
tively, Robert Duvall and Jeff Bridges. these days is one of relative cau-
“Birdman” (2014). Michael Keaton tion. Even companies with suc-

Drama
“The Lion in Winter” (1968). An inspired les-
son in how not to transfer a family business from
one generation to the next. Peter O’Toole, as an
aging King Henry II, spars with his calculating
queen, played by Katharine Hepburn, over which of
their three sons will inherit the throne.
“On Golden Pond” (1981). Henry Fonda is a re-
tired college professor grappling with his mortality (with his cat in tow), meets many of the challenges
and with his estranged daughter, played by Jane
Fonda. But the film belongs to the older Fonda and
Katharine Hepburn, who plays his indomitable wife.
“Unforgiven” (1992) and “Gran Torino”
(2008). Clint Eastwood stars in and directs both
films. Two men—a retired gunman in the former,
an aging Korean War veteran in the latter—who
have lost their sense of purpose find it again in
frightening fashion.
plays a washed-up actor trying to resus-
citate his career on Broadway. (The film
proved to be something of a real-life
comeback for Mr. Keaton.)
Road Trips
“Harry and Tonto” (1974). Art Car- In ‘Still Alice,’ Alec Baldwin and Julianne Moore play a
ney is a widower and retired teacher couple dealing with the wife’s Alzheimer’s diagnosis.
who, in a journey across the country
and disappointments common to later life with un-
common grace and humor.
“The Straight Story” (1999). Alvin Straight,
played by Richard Farnsworth, is an elderly vet-
eran in Iowa who is determined to visit his ailing
brother in Wisconsin—and drives a riding lawn
mower to get there. A journey of atonement.
“About Schmidt” (2002). What happens when
you lose everything that has defined you? Jack
Nicholson, as a newly retired (and newly
widowed) insurance actuary, has no job,
no wife and no purpose. What he does
have is a 35-foot Winnebago, which car-
ries him toward a new life.
“Nebraska” (2013). Funny and pain-
ful. Bruce Dern plays an aging crank
who is convinced that he has won a $1
million sweepstakes and has his son
drive him 900 miles, to Lincoln, Neb., to
collect his winnings. Difficulties and dis-
coveries ensue.
UNIVERSAL/EVERETT
SONY PICTURES/EVERETT
cessful track records are being
asked for evidence of how fast
they’re growing before being
awarded additional funding. The
result: It can be hard for investors
to identify good opportunities.
Still, the space remains viable
and potentially valuable—espe-
cially given the low returns on
fore you reach 65, the Social Security Administra- fixed income. Instead of trying to
tion (which handles Medicare applications) will au- invest in individual companies, I
tomatically enroll you in Medicare Part A (and Part would look at some of the ven-
B) when you hit that age. Most people, if they ture-capital funds available today.
have paid Medicare taxes while working, don’t have These funds tend to be lim-
to pay a monthly premium for Part A, which covers ited-partnership funds available to
hospital expenses. accredited investors, or those with
Second, if you aren’t collecting Social Security a net worth of at least $1 million
and you retire before turning 65, and if you have (excluding the value of their pri-
retiree health insurance through your former em- mary residence) or income of at
ployer, you will need to enroll in Medicare at 65. least $200,000 a year for the
Your retiree plan will become a “secondary payer” past two years ($300,000 com-
and Medicare will become your primary insurance. bined if married). They also must
Third, if you aren’t collecting Social Security at have the expectation to make the
65 and you’re still employed and have a group same amount this year.
health plan, your employer might require that you These funds, run by firms with
sign up for Medicare. extensive experience in late-stage
Fourth: You’re 65, no Social Security benefits, VC and access to high-profile op-
still working, have a group health plan, and your portunities, can provide the higher
employer doesn’t require that you enroll in Medi- growth potential individual inves-
care. In this case, there’s no outside mandate to tors want, along with the portfolio
sign up for Part A. But there’s a good reason to do diversification they really need.
so. If you need hospital care, your work insurance That said, these funds aren’t

Love and Loss
“Away From Her” (2006); “Amour”
(2012); “Still Mine” (2012) and “Still Al-
ice” (2014). Four unflinching films about
how illness (mental and physical) can play
‘On Golden Pond’ features Henry Fonda as a retired professor havoc with aging lives and relationships—
grappling with his mortality and estranged daughter. and how individuals are able to rise above
their suffering.
Comedy/Fantasy
i i i
“Cocoon” (1985). Retirement meets science fic-
tion. With help from some affable aliens, a listless I’m about to turn 65. Am I required to sign up for
group of retirees find their mojo in this Ron How- Medicare Part A?
ard film.
“Lost in America” (1985). How early retirement You might be. But even if you aren’t, you might
can go wrong—and how a nest egg can disappear benefit from doing so.
in a single night. Writer, director and actor Albert There are several possible scenarios here. First,
Brooks at his best. if you begin collecting Social Security benefits be-
might not cover all expenses. In which case, you for everyone. Late-stage venture
could turn to Part A, which would act as a second- capitalists typically look for a two-
ary payer. to four-year time horizon, so in-
All that said, there is a caveat, notes Philip vestors must be willing to tie up
Moeller, author of “Get What’s Yours for Medi- their money for the near future.
care.” A person enrolled in Medicare can’t contrib- Also, not all of these funds are
ute to a health savings account, a tax-advantaged equal. Many have high fees and
vehicle that can be used to pay for health-care ex- costs, poor investment execution
penses. If you have an HSA, and wish to keep and limited, if any, upside. As
funding it, you’ll need to decide: sign up for Part A, such, investors need to research
or stick with your HSA. them thoroughly.
Mr. Ruffenach is a former reporter and editor for Mr. Boyd is managing partner
The Wall Street Journal and co-author of “The Wall of ClearPath Capital Partners in
Street Journal Complete Retirement Guidebook.” You San Francisco. He can be
can email questions and comments to reached at reports@wsj.com.
askencore@wsj.com.

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