THURSDAY, MARCH 30, 2017 ~ VOL. XXXV NO. 43
com EUROPE EDITION
DJIA 20659.32 g 0.20%
What’s
News
Business & Finance
W estinghouse Electric
filed for chapter 11
bankruptcy protection,
setting off a showdown be-
tween its Japanese parent
and a major U.S. utility. A1
 The EU blocked the tie-up
between Deutsche Börse and
LSE, which had promised a
stronger competitor against
U.S. rivals and greater stability
in Europe’s capital markets. B1
 Samsung unveiled a new
flagship smartphone, the
Galaxy S8, its first launch
in the wake of last year’s
product-safety issues. B1
 The FDA approved the
first drug treatment for
the most severe type of
multiple sclerosis. B3
 Snap signed a pact with
NBCUniversal for the 2018
Winter Olympics that will
make the app a home for
Olympic-themed content. B3
 A partner at hedge fund
Paulson & Co. whose former
firm invested with Madoff
died in an apparent suicide. B5
 Ford said a $295 million
charge for recalls would
contribute to a lower first-
quarter profit. B3
 China’s tech titans are
bolstering India’s startups,
creating headwinds for U.S.
firms’ ambitious plans. B1
 PwC will remain in
charge of the balloting for
the Academy Awards despite
the firm’s high-profile snafu
at this year’s ceremony. B7
 Two black women filed
a lawsuit against Fox News
Channel, 21st Century Fox and
a former senior executive al-
leging racial discrimination. B3
World-Wide
 The U.K. formally began
the process of exiting the EU,
embarking on an unprece-
dented path from which May
said there would be no
turning back. A1, A4, B1
 Banks such as J.P. Mor-
gan are trying to figure out
their post-Brexit futures. A1
 New commercial-satellite
imagery suggests North
Korea is preparing to test
its sixth nuclear device. A3
 The Trump administra-
tion is poised to demonstrate
its promised tough approach
to trade rules in a dispute
with the EU over beef. A6
 Germany is weighing al-
ternative locations to Tur-
key for its forces involved
in fighting Islamic State
amid rising tensions be-
tween the two countries. A6
 Another round of appli-
cations for H-1B visas to
the U.S. is set to open Mon-
day using existing rules de-
spite Trump’s pledge to
change the program. A7
 Indian lawmakers ap-
proved a revamp of the tax
system, handing Modi a
victory in his push to mod-
ernize the economy. A3
 The U.S. fired people
from its embassy in Kabul
for allegedly using and sell-
ing drugs on the premises. A6
 Talks between Kushner
Cos. and Anbang over a Man-
hattan tower have collapsed
amid an outcry over possible
conflicts of interest. A7
 The U.S.’s HHS chief
said he is obligated to up-
hold the health law. A7
CONTENTS
Business News.......... B3
Capital Account.... A2
Crossword.............. A12
Finance & Mkts... B5,7
Heard on Street.... B8
Life & Arts......... A9,12
€3.20; CHF5.50; £2.00;
U.S. Military (Eur.) $2.20
s Copyright 2017 Dow Jones &
Company. All Rights Reserved
WSJ.
NASDAQ 5897.55 À 0.38% NIKKEI 19217.48 À 0.08% STOXX 600 378.53 À 0.33% BRENT 52.42 À 2.12% GOLD 1253.40 g 0.15% EURO 1.0756 g 0.54%
U.K. Starts the Clock on EU Exit
Prime Minister May
opens two-year
window for talks on
leaving the bloc
The U.K. formally began the
process of exiting the European
Union on Wednesday, embark-
ing on an unprecedented path
from which British Prime Min-
ister Theresa May said there
would be no turning back.
By Jenny Gross in
London and Laurence
Norman in Brussels
Nine months after Britain
voted to leave the EU, Tim
Barrow, Britain’s ambassador
YVES HERMAN/PRESS POOL/ASSOCIATED PRESS
to the bloc, hand-delivered a
letter to European Council
President Donald Tusk for-
mally notifying the bloc that
the U.K. will be the first mem-
ber state ever to leave it.
“This is an historic moment
from which there can be no
turning back,” Mrs. May said
in Parliament. “Britain is leav-
ing the European Union.”
Managing Britain’s exit will
be a major political test for European Council President Donald Tusk, left, receives formal notice from Tim Barrow, Britain’s ambassador to the bloc, in Brussels.
Mrs. May, who has only a small
majority in Parliament. She cians in Scotland, who say they nations of the EU—which have Striking a conciliatory tone, make the U.K. home.
faces competing pressure from will secede from the U.K. if different priorities—and the en- Mrs. May attempted to reach She promised to “represent
lawmakers on the right wing of Mrs. May fails to cut a deal durance of the bloc as a whole. out broadly—offering assur- every person in the United King-
her Conservative Party who that maintains close trade ties. The U.K.’s exit, and the shape ances of goodwill to the bloc, dom” and added that “we will do
want a complete cutting of ties The negotiations will also test of any new deal, will dramati- to fellow Britons however they all we can to help the European
with Brussels and from politi- the unity of the remaining 27 cally shift its internal dynamics. voted, and to EU citizens who Please see BREXIT page A4
J.P. Morgan Weighs GLOBALIZATION ERA
Post-Brexit Homes HEADS INTO RETREAT
BY MAX COLCHESTER
The Breakup Begins Nations and companies scramble to adapt to bigger barriers to trade, finance
LONDON—A group of 75 J.P.  U.K. split between joy,
Morgan Chase & Co. staff resignation............................ A4
spent the past nine months  Divorce talks’ first order of BY BOB DAVIS AND JON HILSENRATH the U.S. and Western Europe faces a deepen-
evaluating European cities on business: money................ A4 ing public backlash.
factors ranging from employ-  Heard: Investors face calm After World War II, the global economy Nationalist politicians are on the ascent.
ment law to the frequency of before storm......................... B1 rose on a wave of trade and finance, lifting On Wednesday, the United Kingdom formally
flight delays at local airports. hundreds of millions of people out of pov- started proceedings to remove itself from
They are picking the bank’s erty in developing countries and providing the European Union. In the U.S., President
new homes after Britain’s exit censes. It has scouted for real rich countries with cheaper goods, lucra- Donald Trump pulled out of a Pacific trade
from the European Union. estate in locations including tive investments and hopes for a more pact on his first working day in the Oval Of-
The bank is checking out as Dublin and Frankfurt. A final peaceful planet. fice, declaring, “Great thing for the Ameri-
many as eight cities including decision on its Brexit plans That tide is now receding. can worker, what we just did.”
Paris, Frankfurt, Luxembourg will be made in the coming Nine years after the financial crisis, For traditional economists, globalization
and Dublin, people familiar months. global trade is barely growing when com- is a pathway to prosperity. Rooted in the
with the plans say. Its staffers J.P. Morgan is a U.S. giant, pared with overall economic output. Cross- works of Adam Smith in 1776 and David Ri-
have begun pulling together but it employs 16,000 people border bank lending is down sharply, as are cardo in 1817, the classical canon has em-
paperwork to apply for li- Please see BANKS page A4 international capital flows. Immigration in Please see GLOBAL page A8
Westinghouse Seeks Bankruptcy
Little Change to Controversial Visas
Westinghouse Electric Co. runs related to four nuclear angry customer in Tom Fan-
filed for chapter 11 bankruptcy reactors it is building in the ning, CEO of Southern Co., the
protection Wednesday, setting southeastern U.S. The run- Atlanta power company and
off a showdown between the away costs from the half-fin- primary owner of two of the
nuclear power company’s Jap- ished reactors threatened the reactors being built in Geor-
anese parent and a major U.S. viability of its Japanese parent gia. Mr. Fanning on Wednes-
ABHISHEK CHINNAPPA/REUTERS
company, Toshiba Corp., the day characterized the comple-
By Russell Gold in precarious finances of which tion of the reactors as an
Austin, Texas, have attracted attention of international political issue,
and Takashi Mochizuki Japan’s government. calling it a test of Prime Min-
in Tokyo “This is a de facto with- ister Shinzo Abe’s commit-
drawal from the overseas nu- ments with President Donald
utility, and threatening to clear business for us. There- Trump at a summit in Febru-
drive a wedge between allied fore, we don’t see any more ary to help create American
governments over the fate of risk,” said Toshiba Chief Exec- jobs. “The commitments are TECH FAVORITE: Donald Trump promised changes to H1-B visas,
industries each considers vi- utive Satoshi Tsunakawa on not just financial and opera- which firms like Infosys covet, but current rules remain in place. A7
tal. Westinghouse had in- Wednesday. tional, but there are moral
curred billions in cost over- But Toshiba now faces an Please see POWER page A2
INSIDE How NASA Artists Draw Planets
That No One Can See
Oracle #1
i i i
As astronomers discover unseen worlds,
illustrators try to capture a plausible reality SaaS Enterprise
Applications Revenue
BY ROBERT LEE HOTZ istration from creating posters
RICHARD DREW/ASSOCIATED PRESS
that extol the attractions of 1,000+ Employees Segment, 2015
The way David Delgado sees Trappist-1e—and other unseen
it, the exotic seashore on a worlds orbiting distant stars.
newly discovered planet On a planet called Kepler-16b,
around a star called for instance, which
#1
Trappist-1 would orbits two stars, a
dazzle any tourist, space-suited Earth-
not to mention the ling revels in the nov-
Markets...................... B8
Middle Seat............ A9
Opinion.............. A10-11
sight of six other
alien worlds hang-
elty of casting two
shadows, before a #2
Technology............... B4
U.S. News.................. A7
SAMSUNG ing in its sky like
Christmas balls.
vista of red lands giv-
ing way to purple
Weather................... A12 LOOKS TO Mr. Delgado has mountains beneath a Oracle Salesforce
World News....... A2-6 Cloud Cloud
RESTORE TRUST never actually seen
the planet. No one
Trappist-1e tangerine sky.
Mr. Delgado is a 14.5% 12.4%
has. Astronomers who an- visual strategist at The Studio
BUSINESS & FINANCE, B1 nounced the discovery in Feb- of NASA’s Jet Propulsion Lab-
ruary measured only the tell- oratory in Pasadena, Calif.,
FRANCE’S tale wink of starlight as it one of the many artists, de-
passed in front of the cool signers and illustrators work-
IDEOLOGICAL reddish star 39 light years ing to produce a picture of the oracle.com/applications
STANDOFF from Earth. But that hasn’t cosmos that in some ways
stopped Mr. Delgado and his doesn’t actually exist. “We are
Source: IDC “Worldwide SaaS Enterprise Applications Market Shares, 2015: The Top 15 by Buyer Size,”
doc #US41913816, Dec. 2016; Table 4. For the purposes of this report, SaaS enterprise applications include
the following application markets: CRM, engineering, ERP, operations and manufacturing, and SCM.
colleagues at the National trying to present a plausible Copyright © 2017, Oracle and/or its affiliates. All rights reserved.
CAPITAL ACCOUNT, A2 Aeronautics and Space Admin- Please see ART page A2
A2 | Thursday, March 30, 2017
France’s Ideological Standoff
I
n France as in most of the
West, politics has long
been dominated by a left-
wing and a right-wing party.
This year an earthquake is in
the making: If current polls
are borne out, neither the
left-wing Socialists nor right-
wing Republicans will make it
past the first round of the
presidential election in April.
Instead, two parties that
have never held power will
proceed to May’s runoff. And
both agree
their contest
isn’t over tra-
ditional issues
of right and
left, such as
CAPITAL taxes and
ACCOUNT spending. Ma-
GREG IP rine Le Pen,
leader of the
National Front,
says it’s between “globalists
and patriots,” or, as support-
ers of Emmanuel Macron,
leader of the upstart En
Marche (“Forward”) put it,
“open and closed.”
That makes the French
election the starkest and
most consequential contest
yet in the world’s ideological
divide between nationalism
and globalism.
The nationalists who led
the British vote to leave the
European Union and put
Donald Trump in the White
House operate within estab-
lished conservative parties
and thus coexist uneasily
with traditional free traders.
The National Front arose
outside the mainstream and
POWER
Continued from Page One
commitments as well,” Mr.
Fanning said in an interview
from Tokyo, where he had
traveled to lobby for a resolu-
tion to the mounting dispute.
He has said there are 5,000
jobs directly at stake at the
two Georgia reactors, jobs
that could be lost if Toshiba
doesn’t commit to paying bil-
lions in future costs.
Trump administration offi-
cials were largely quiet on the
bankruptcy Wednesday. The
U.S. Department of Energy,
which has provided an $8 bil-
lion loan guarantee for the
Georgia reactors, said it was
in discussions with various
companies. “We are keenly in-
terested in the bankruptcy
proceedings and what they
mean for taxpayers and the
nation,” said Lindsey Geisler,
an agency spokeswoman.
Mr. Abe’s top aide, Chief
cabinet Secretary Yoshihide
Suga, said Tokyo would work
closely with U.S. officials on
the issue but declined to say
what support the Japanese
government might offer.
Based on a new Westing-
house design, the reactors, the
first to be constructed in the
U.S. in nearly four decades,
ART
Continued from Page One
reality,” he says.
Astronomers are finding
thousands of worlds outside
our solar system, known as exo-
planets. In the absence of di-
rect images, the public knows
these alien worlds only
through lavish illustrations
produced by NASA and by the
observatories that discovered
them, in an audacious blend-
ing of science and art.
So far, astronomers know
the mass, density and orbits of
the seven worlds around the
Trappist-1 star. They haven’t
detected water or atmospheres
but several might be warm
enough that, in theory, liquid
water could exist there. So the
artists added oceans to their il-
lustrations, which are posted
on NASA websites and repub-
lished in newspapers and mag-
azines world-wide.
Sometimes, these visions
spur arguments about artistic
liberties and misleading first
impressions. “They are assum-
ing more about these planets
than we can possibly, possibly
know,” says planetary scientist
Lindy Elkins-Tanton, director of
the School of Earth and Space
Exploration at Arizona State
University and principal inves-
tigator for the space agency’s
Psyche asteroid mission.
Other researchers worry
about a public backlash if real-
ity can’t live up to its image.
“Ultimately there is a danger
espouses a more uncompro-
mising rejection of eco-
nomic, geopolitical and cul-
tural integration. Ms. Le Pen
wants to take France out of
the EU and the euro, which
could precipitate the col-
lapse of both.
F
rance makes a singu-
larly appropriate battle-
field over nationalism.
The modern nation state can
be traced to the Peace of
Westphalia in 1648 when
France, putting national inter-
est ahead of religion, sided
with Germany’s protestant
princes to contain the power
of the Catholic Holy Roman
Empire. Three centuries later
it switched places, choosing,
with Germany, to subordinate
sovereignty to an ever closer
European Union.
Jean-Marie Le Pen led the
National Front from its cre-
ation in the 1970s as an au-
thoritarian reaction to wan-
ing French colonial power,
but his xenophobia and anti-
Semitism repelled main-
stream voters. His daughter
Marine has sought to ex-
punge those elements and
now focuses on European in-
tegration as the source of
France’s ills.
French unemployment, at
10%, is more than double
Germany’s. The National
Front zeroes in on the euro’s
role. Between the euro’s cre-
ation in 1999 and 2011,
French labor costs rose three
times as quickly as Ger-
many’s thanks to the latter’s
were supposed to be an an-
swer to cost overruns and de-
lays that have dogged the nu-
clear power industry.
But already these plants are
years behind schedule and
have caused huge losses for
Toshiba.
Toshiba said it expected to
lose about $9 billion in the fis-
cal year ending March 31,
largely because it guaranteed
nearly $6 billion in Westing-
house’s obligations to South-
ern and Scana Corp.—the
company for which Westing-
house is building the other
two reactors in South Caro-
lina. After the bankruptcy fil-
ing, Southern said it would fi-
nance continued construction
of the reactors for 30 days,
but wasn’t clear where con-
struction funding would come
from after that time.
Mr. Fanning, who said he
has spoken to Vice President
Mike Pence, Commerce Secre-
tary Wilbur Ross and Energy
Secretary Rick Perry about the
importance of completing the
reactors, argued that more
was at stake economically
than the direct future of the
facilities. “Westinghouse de-
claring bankruptcy has na-
tional security implications,”
said Mr. Fanning, who also is
chairman of the Federal Re-
serve Bank of Atlanta’s board.
He said the estimated cost
An artist’s conception of the exoplanet Trappist-1f. Astronomy relies on images to make data come to life.
that it could backfire, when we
spend billions of dollars build-
ing a telescope to examine
those worlds more closely and
discover that each one is a bar-
ren, crummy planet,” says as-
trobiologist Caleb Scharf at Co-
lumbia University in New York.
But when scientific under-
standing falls short, imagina-
tion will fill the void. Thus, a
Trappist-1 exoplanet features
seaside caverns of ice and me-
andering streams under cloudy
skies, according to images re-
leased by NASA and the Euro-
pean Southern Observatory.
Kepler-22b—which might
have a volatile liquid or gas-
eous shell—is shown as a
cloud-swept swirl of tur-
quoise-colored seas. The world
cataloged as “55 Cancri e”
first appeared in public as a
WORLD NEWS
labor market overhauls and
export-friendly tax changes.
With an independent cur-
rency, France might devalue
to eliminate its cost disad-
vantage. In the euro, it
couldn’t. This transformed a
French trade surplus equal to
3% of GDP in 1998 to a defi-
cit of 2% in 2016.
“The euro has not only
killed one of the engines of
the French economy…it
caused our economy to bleed
one million industrial jobs,”
says Mikael Sala, an economic
adviser to Ms. Le Pen. The
euro, he says, is a “political
experiment” that forces the
wages, corporate taxes and
welfare policies of member
states to converge. “Our wel-
fare state may be costly but
it’s part of our identity.”
The National Front yearns
for a return to the state-di-
rected capitalism, or diri-
gisme, of the 1960s. It would
require life insurers to devote
2% of their assets to French
venture capital, let the French
central bank print money to
finance government deficits,
favor French firms in govern-
ment purchasing, require
“Made in France” labels and
impose “smart protectionism”
against cheap imports. All of
that is illegal within the EU.
Analysts predict a Le Pen
victory would tank stocks
and cause interest rates to
rise as investors, fearing re-
denomination, flee. Mr. Sala
disagrees, and predicts a 5%
to 10% depreciation by a
free-floating franc is “rea-
The Vogtle Unit 3 and 4 site, a Westinghouse project, near Waynesboro, Ga., in February.
of the entire project was
roughly $16 billion, but cau-
tioned that the companies
were unsure of how much
more was needed to finish the
partially built reactors. The
current target dates for com-
pletion of the Georgia reactors
are 2019 and 2020, three years
behind the original schedule.
Richard Nephew, a fellow at
the Center on Global Energy
Policy at Columbia University,
said Mr. Fanning appeared to
be using the Trump adminis-
tration’s reputation for de-
fending U.S. jobs and taking a
tough stance even with allies,
planet composed of dazzling
diamond crystals because sci-
entists speculated it could be
mostly carbon. Now, based on
recent infrared readings, it is
depicted as a world engulfed
in fiery lava flows.
Astronomy relies on images
to make data come to life. In
their research, modern astron-
omers work with data re-
corded in infrared, ultraviolet,
microwave, or X-ray wave-
lengths beyond the capacity of
the human eye—or with subtle
differences in light intensity
that are too fine for the hu-
man eye to discern. A pixel
may represent a single planet
or a galaxy of a million stars.
While striving for accuracy,
astronomers, too, embellish
the images of stars, nebulas
and far away galaxies that
THE WALL STREET JOURNAL.
The Center Cannot Hold
Support for France’s traditional left- and right-wing parties has
collapsed, making room for the nationalist National Front and upstart
En Marche.
sonable.” Still, he doesn’t
rule out capital controls to 2017 OPINION POLL AVERAGE
deter capital flight. A If François Fillon and Marine Le Pen win the first round
H
2017 Round 1 voting
istory and theory sug-
gest that this won’t re- Socialist
Conservative*
store France’s indus- National Front
trial glory. Like Mr. Trump’s, En Marche
Ms. Le Pen’s plan to bring
B If Emmanuel Macron and Marine Le Pen win the first round
back factory jobs is fighting
the march of automation and 2017
Socialist
shifting consumption. The Conservative*
competitive benefit of devalu- National Front
ation is eventually neutral- En Marche
ized by inflation. 0% 10 20
“Suppose France gets out The National Front is poised for a record showing in France’s
of the euro,” says Philippe election as support for the Socialist and Conservative
Martin, an economist at Sci- parties slides.
ences Po university advising 2012
Mr. Macron. “Do you think Socialist
for one second Italy and Conservative*
Spain will remain? Of course National Front
not. So we devalue by 20% 2007
and they will devalue by Socialist
30% or 40%. In the end it Conservative*
won’t have any effect on National Front
long-term growth or produc- 2002
tivity and will deter invest- Socialist
ment. France’s structural Conservative*
problems—education, train- National Front
ing, rigidities of the labor 1995
market—have nothing to do Socialist
with the euro.” Conservative*
With support for the con- National Front
servative candidate François
Fillon undermined by scandal, 0% 10 20
establishment hopes are rid- * In 1995-2002, Jacques Chirac; in 2007-2012, Nicolas Sarkozy; in 2017, François Fillon
The data exclude third party candidates except National Front and, in 2017, En Marche;
ing on Mr. Macron, a former in 1995, two conservatives ran in the first round
economy minister who quit Sources: NSD–Norwegian Centre for Research Data (1995-2012, actual results);
the socialist government last OpinionWay, Ifop-Fiducial, Ipsos (2017 polls)
year. He would seek to
deepen eurozone integration It won’t be easy. Germany
and press Germany to adopt has rebuffed calls to bend its
fiscal policies that reduce its fiscal policies to its neigh-
trade surplus, while liberaliz- bors’ needs, and French legis-
ing French labor markets to lators watered down labor
bolster competitiveness. market revisions once cham-
to his advantage. “This is General Nuclear Power Group
someone who knows what the and the junk-bond status of
triggers are for this adminis- Russia’s Atomenergoprom as
tration,” Mr. Nephew said. evidence of turmoil in the
The bankruptcy filing will business.
likely cast a pall over future “I don’t see how this can
nuclear projects. mean anything but even
Mycle Schneider, a Paris- greater cost growth for the
based independent consultant plants under construction and
on nuclear and energy policy, an unacceptable risk for any
noted that it is just the latest that are under consideration,”
global nuclear builder to pull said Fred Beach, assistant di-
back or run into deep prob- rector of the Energy Institute
lems. He pointed to Siemens at University of Texas at Aus-
AG’s decision to abandon the tin.
industry, Areva SA’s financial In filings, Westinghouse
and safety problems, the fall- said it obtained $800 million
ing market value of China in debtor-in-possession fi-
Institute of Technology, who
works on exoplanet illustrations
for NASA with Caltech com-
puter graphics expert Tim Pyle.
Don’t make the ocean too
azure blue, lest it seem too
much like Earth. Don’t ever
use the color green, which
hints at vegetation. “We try to
avoid anything that might im-
ply there is life,” Mr. Pyle says.
In illustrations of a Trap-
pist-1 exoplanet, astronomers
NASA/JPL-CALTECH/T. PYLE (IPAC)
wanted the landscape dark
red, to match the light from
the red dwarf star it orbits.
The artists objected. “Artisti-
cally, we are not fond of deep
red because it washes out all
the colors,” says Mr. Pyle.
Mr. Delgado’s team made a
poster that showed tourists
arriving on the exoplanet,
they display to the general which is labeled the “best Hab
public, says Stanford Univer- Zone vacation within 12 par-
sity visual scholar Elizabeth secs of Earth.” They stylized
Kessler, author of “Picturing the image to resemble a vin-
The Cosmos.” Structure and
colors in Hubble Space Tele-
scope or Spitzer Space Tele-
scope images, for example, CORRECTIONS 
AMPLIFICATIONS
may hew to scientific observa-
tions, but cosmic landmarks
are enhanced digitally to be
made brighter, bolder, and
more florid. A Page One chart Tuesday
“There is a bit of a tug of with an article about eurozone
war between the artist and the stocks showed total returns
astronomer,” says anthropolo- for 2017 through March 24 of
gist Lisa Messeri at the Uni- the S&P 500 and Euro Stoxx
versity of Virginia. indexes. The chart was incor-
When choosing colors for a rectly labeled to say it showed
planetary close-up, artists and the returns’ change from a
astronomers can argue for days year earlier.
over “thousands of artistic
Readers can alert The Wall Street
choices,” says visualization art- Journal to any errors in news articles
ist Robert Hurt at the California by emailing wsjcontact@wsj.com.
Round 2 voting
30 40 50 60 70 80 90
30 40 50 60 70 80 90
THE WALL STREET JOURNAL.
pioned by Mr. Macron.
Polls suggest Ms. Le Pen
will lose. If the globalist Mr.
Macron fails to revive France,
the nationalists will be ready
to pounce again.
nancing, allowing it to con-
tinue operations.
A person familiar with
Toshiba’s planning said the
company is interested in
handing control of Westing-
house to Korea Electric Power
Corp., known as Kepco.
A Kepco spokesman said
“we have received no official
offer from Toshiba. If any of-
fer comes, we will put it under
careful review.”
Even if such a deal is ar-
GEORGIA POWER/REUTERS
ranged, Kepco is expected to
be mostly interested in West-
inghouse’s profitable business
of servicing existing reactors,
selling new fuel rods and de-
commissioning retired plants.
The potential for a growing
nuclear industry, fed by a re-
naissance of new plants, is
dimming quickly.
Edwin Lyman, who tracks
the nuclear industry for the
Union of Concerned Scientists,
said a government interested
in pollution-free power could
still build nukes, but no one
should assume it can be done
more cheaply than other
power sources, or underesti-
mate the potential problems
that can occur.
“If a government wants nu-
clear power, it is going to have
to pay for it,” he said.
—Matt Jarzemsky and Peg
Brickley contributed
to this article.
tage travel poster from the
1930s and unveiled it during
NASA’s public announcement
of the discovery.
Within days, NASA and the
European Southern Observatory
posted 3-dimensional virtual re-
ality tours offering different
perspectives of the Trappist-1
worlds, based on artists’ con-
ceptions. “We are one step
closer to the science fiction we
all grew up on,” says Mr. Del-
gado. “It’s all coming true.”
THE WALL STREET JOURNAL.
Europe Edition ISSN 0921-99
The News Building, 1 London Bridge Street,
London, SE1 9GF
Thorold Barker, Editor, Europe
Grainne McCarthy, Senior News Editor, Europe
Cicely K. Dyson, News Editor, Europe
Darren Everson, International Editions Editor
Joseph C. Sternberg, Editorial Page Editor
Anna Foot, Advertising Sales
Jacky Lo, Circulation Sales
Andrew Robinson, Communications
Jonathan Wright, Commercial Partnerships
Katie Vanneck-Smith,
Global Managing Director & Publisher
Advertising through Dow Jones Advertising
Sales: Hong Kong: 852-2831 2504; Singapore:
65-6415 4300; Tokyo: 81-3 6269-2701;
Frankfurt: 49 69 29725390; London: 44 207
842 9600; Paris: 33 1 40 17 17 01;
New York: 1-212-659-2176
Printers: France: POP La Courneuve; Germany:
Dogan Media Group/Hürriyet A.S. Branch; Italy:
Qualiprinters s.r.l.; United Kingdom: Newsprinters
(Broxbourne) Limited, Great Cambridge Road,
Waltham Cross, EN8 8DY
Registered as a newspaper at the Post Office.
Trademarks appearing herein are used under
license from Dow Jones & Co.
©2017 Dow Jones & Company. All rights reserved.
Editeur responsable: Thorold Barker M-17936-
2003. Registered address: Avenue de Cortenbergh
60/4F, 1040 Brussels, Belgium
NEED ASSISTANCE WITH
YOUR SUBSCRIPTION?
By web: http://services.wsje.com
By email: subs.wsje@dowjones.com
By phone: +44(0)20 3426 1313
THE WALL STREET JOURNAL.
Pyongyang
Is Said
To Prepare
New Test
BY JONATHAN CHENG
SEOUL—New commercial-
satellite imagery suggests
North Korea is preparing to
test its sixth nuclear device, as
the U.S. and Chinese leaders
plan to meet in April on how
to contain Pyongyang’s weap-
ons program.
An analysis of commercial-
satellite imagery released on
Tuesday by North Korea ex-
perts showed signs of activity
at the nuclear test site at
Punggye-ri in the country’s
northeast, where North Korea
had previously conducted tests.
Joseph Bermudez and Jack
Liu, analysts for 38 North, said
the imagery, taken on March
25, suggested that communica-
tions cables had recently been
laid and water had been
drained at an entrance to an
underground site.
That evidence “strongly
suggests that test prepara-
tions are well under way,”
they wrote for 38 North, a
North Korea-focused website
run by the U.S.-Korea Institute
of the Johns Hopkins School
for Advanced International
Studies in Washington.
The analysts cautioned,
however, that the apparent ac-
tions may be an effort to de-
ceive experts monitoring
North Korea’s nuclear test site
for signs of activity.
In January, Pyongyang
launched a ballistic missile into
the Sea of Japan as President
Donald Trump met with Japa-
nese Prime Minister Shinzo
Abe at the American leader’s
Mar-a-Lago estate in Florida.
Mr. Trump is tentatively
scheduled to meet with Chi-
nese President Xi Jinping in
Florida in April.
North Korea conducted two
nuclear tests last year, suggest-
ing it is ramping up activity.
We are a new company resulting from the merger of BM&FBOVESPA and CETIP. One of the largest
and the most successful financial market infrastructure companies in the world. We offer clients a
diversified portfolio of products and services with unique benefits. Our merger will take the
Brazilian capital and financial markets, already recognized for their strength, resilience and
India Streamlines Its Tax System
BY RAJESH ROY
AND RAYMOND ZHONG
NEW DELHI—Indian law-
makers approved a landmark
revamp of the country’s
messy tax system, hand-
ing Prime Minister Narendra
Modi a legislative victory in
his push to modernize the
fast-growing economy.
The lower house of Parlia-
ment on Wednesday approved
bills to replace the present
tangle of federal and state
sales taxes with a nationwide
goods-and-services tax, or
GST.
Local and international
companies have long com-
plained about the labyrinth
of red tape and lev-
ies that gets in the way of do-
ing business in India. Each of
India’s states has its own re-
gime for taxing goods.
The central government taxes
services and manufactured
products. Another levy applies
when goods cross state lines.
To avoid the hassles and
costs of interstate trade—
truck drivers are regularly
stuck for hours at state bor-
ders awaiting official inspec-
tions—many companies set up
production and warehousing
facilities in more states than
they otherwise would.
“These are revolutionary
bills which will benefit
all,” said Finance Minister
Arun Jaitley during the nine-
hour debate in Parliament
leading up to Wednesday eve-
ning’s vote.
Mr. Modi’s team has hailed
the tax overhaul as India’s
biggest since it gained inde-
pendence from Britain in
1947. Others have compared
it, as a large-scale disman-
tling of trade barriers, with
China joining the World Trade
Organization or the European
Union abolishing border con-
trols.
Coming on the heels of the
prime minister’s abrupt can-
cellation of high-value cur-
rency notes late last year to
discourage cash hoarding by
BM&FBOVESPA AND CETIP.
TOGETHER, WE’RE NOW B3.
security, to a whole new level. B3. All the power of the market.
B3: the result of the merger between BM&FBOVESPA and CETIP.
More information B3.COM.BR.
WORLD NEWS
Prime Minister Narendra Modi, right, is seeking to replace a tangle of federal and state sales taxes.
His team calls the plan the biggest tax overhaul since India gained independence in 1947.
Amnesty Drive
Falters in Indonesia
JAKARTA, Indonesia—A tax-
amnesty program designed to
bring home billions of dollars
stashed overseas by wealthy
Indonesians is falling far short
of expectations, officials said
Wednesday, dealing a blow to
President Joko Widodo’s ambi-
tious spending plans.
Taxpayers had pledged as of
Tuesday to repatriate 146 tril-
lion rupiah ($11 billion), barely a
quarter of the government’s
target with two days left be-
tax evaders, the GST is ex-
pected to deal another blow
to the underground economy
by bringing more small busi-
nesses into the tax net.
By some estimates, imple-
menting the new tax could
deliver an immediate jolt of
as much as 2% to India’s GDP.
fore the offer expires.
The haul is far below the
560 trillion rupiah ($42 billion)
Indonesia’s central bank hoped
would be repatriated when the
program began in July.
The government is aiming
to boost money available for in-
vestment nationwide and to
pay for infrastructure projects.
Revenues have taken a hit as
prices have dived for oil and
commodities.
“This is a lot less than what
we expected, probably because
some of the money had been
brought back home before the
tax-amnesty program was in-
“GST would deliver signifi-
cant benefits to business and
the economy,” though it could
take a couple of years for
those to be fully realized, said
M.S. Mani, a senior direc-
tor at Deloitte Haskins & Sells
LLP.
The GST is akin to the
Thursday, March 30, 2017 | A3
GST or VAT in some form.
Adopting a GST in India
was hardly straightforward,
however. Wednesday’s vote
represented the culmination
of more than a decade of ne-
gotiating and wrangling.
Some of the changes made to
secure political support for
the GST could limit its de-
sired economic benefits—an
illustration of the challenges
to enacting far-reaching
change in India’s decentral-
ized federal system.
After the constitution was
amended last year to clear
SONU MEHTA/HINDUSTAN TIMES/GETTY IMAGES
the way for the change, a
council of federal and state
representatives had to ham-
mer out such details as the
GST’s rates, exemptions and
rules for administration.
Among the compromises:
Petroleum products, alcohol
and real estate will continue
to be taxed separately from
the GST.
For everything else, there
will be as many as four differ-
ent rates, ranging from 5% to
28%, each applying to differ-
ent kinds of goods and ser-
troduced,” an official from the vices. Almost all of the coun-
Tax Directorate General said. tries that have adopted a GST
The total value of declared since 2000 have chosen to
assets kept out of Indonesia—in have a single tax rate.
havens like Singapore—was The result of the tinkering,
$77.2 billion, the official said. economists say, is that the
Finance Minister Sri Mulyani new system won’t represent
Indrawati, a former executive as radical a tax simplification
director of the World Bank, re- as many had hoped for. Still,
cently expressed disappoint- any change will likely be an
ment with the relatively low improvement over the current
numbers of people taking part system. In the World Bank’s
in the amnesty program. She latest survey of the ease of
said she believed many doctors, paying taxes in 190 econo-
lawyers and other professionals mies, India ranked 172nd.
haven’t fully paid tax in the Now that Parliament’s
past and ignore the amnesty. lower house has given its as-
—I Made Sentana sent, the upper house—which
isn’t controlled by Mr. Modi’s
party—is allowed to offer
value-added taxes that in re- suggestions but can’t veto the
cent decades have become a bill. Each state assembly also
common way for governments will need to approve separate
to tax consumption. Such lev- legislation imposing the tax
ies largely police themselves, on transactions within its
as a buyer can claim a refund borders. The Modi adminis-
only if the seller issues an in- tration hopes to have the new
voice. More than 150 coun- system up and running
tries—but not the U.S.—use a by July 1.
A4 | Thursday, March 30, 2017
U.K. Divided
Between Joy,
Resignation
Launch of EU divorce
talks draws disparate
reactions but leaves no
doubt Brexit is coming
BY WIKTOR SZARY
LONDON—James Wade
voted for Britain to remain in
the European Union, but after
nine long months of lawsuits,
parliamentary wrangling and
wall-to-wall news coverage, he
has grown resigned to a clean
break with the bloc.
“I don’t see what good pro-
testing would do,” said Mr.
Wade, a 30-year-old university
administrator from London’s
leafy Greenwich district, which
strongly favored the EU in last
year’s Brexit referendum. “It
just feels like you’d be swim-
ming against the tide.”
As Prime Minister Theresa
May on Wednesday triggered
historic divorce negotiations
with the EU, the mood among
many backers of Brexit was con-
fident, even jubilant. The Daily
In Divorce Talks, First Order of Business Is Money
How much Britain owes the European Union is likely to be a major bone of contention in Brexit negotiations
BY STEPHEN FIDLER
One of the big fights in the
negotiations over the U.K.’s
exit from the European Union
will be over money: the EU’s
so-called “divorce bill.”
The idea of having to pay
the EU to leave is controver-
sial in the U.K. after a refer-
endum campaign in which the
British contribution to the
bloc was an important argu-
ment used by campaigners
for Brexit.
The Leave campaign
claimed erroneously that the
U.K. sent the EU £350 million
($435 million) a week, money
it suggested could be better
used to finance Britain’s
state-run health service. The
BREXIT
Continued from Page One
Union prosper and succeed.”
Mr. Tusk, speaking in Brus-
sels, expressed regret about
Britain’s decision to leave, say-
ing that “in essence, this is
about damage control.”
“There is no reason to pre-
tend that this is a happy day,
neither in Brussels nor in Lon-
don,” he said. “We already
miss you.”
The triggering of Article 50
of the Lisbon Treaty, which gov-
erns EU law, opens a two-year
window for Britain to negotiate
the terms of its exit from the
bloc, unraveling 44 years of ties.
Many of Britain’s anti-EU
politicians have been waiting
for this moment for years.
“The impossible dream is hap-
pening,” said Nigel Farage, one
of the leaders of the Brexit
movement, in a message from
his Twitter account. “Today we
pass the point of no return.”
The negotiations are ex-
pected to be tough. Early indi-
cations are that Britain and
the EU are far apart. Mrs. May
has said Britain would pursue
a clean break from the EU, re-
gaining control over immigra-
tion, leaving the jurisdiction of
the bloc’s courts and exiting
its common market.
British officials said they
want to negotiate the best
deal they can for trade with
the EU. European leaders have
said they don’t want to punish
the U.K. for leaving, but won’t
grant Britain a better deal out-
side the club than it had in it.
In her letter to Mr. Tusk,
Mrs. May said she wanted a
free-trade agreement “of
greater scope and ambition
than any such agreement be-
fore it,” covering sectors such
as financial services.
Mrs. May said she accepted
warnings that Britain can’t
choose what it would like to
keep from the EU while drop-
ping obligations it doesn’t.
“We understand that there
will be consequences for the
U.K. of leaving the EU,” she
Mail trumpeted “Freedom!”
across its front page. Douglas
Carswell, an independent law-
maker and prominent cam-
paigner to leave the EU, tweeted
a picture of himself jumping in
the air with his thumb up.
Pro-EU activists, meanwhile,
were grasping for a new strat-
egy. Many of their voters feel
helpless to sway the Conserva-
tive government’s plans for a
tough course in exit negotia-
tions. Mrs. May has said the
country will leave the EU and
the single market by early 2019
and negotiate the best new deal
it can.
Britain remains split after
the referendum, in which 52% of
voters chose to leave the EU.
Recent survey data from Ipsos
MORI showed only 4% of total
voters said they have since
changed their minds, in a pro-
portion that wouldn’t have sig-
nificantly altered the outcome.
In a speech before Parlia-
ment, Mrs. May acknowledged
the referendum was “divisive at
times.”
“I know that this is a day of
actual net U.K. budgetary con-
tribution in 2016 was about
£165 million a week.
The EU’s case is that Lon-
don should honor the com-
mitments it has made as an
EU member but which haven’t
yet paid out. Even if there is
agreement in principle that
the U.K. will pay into the bud-
get for those past commit-
ments, there will be argu-
ments over how much.
British Prime Minister The-
resa May has said future bud-
getary contributions by the
U.K. after Brexit would be rel-
evant only if there are specific
EU programs in which the U.K
would want to participate.
In her letter Thursday to
European Council President
Mind the Gap
Britain imports more from most EU countries than it exports to them.
The U.K.’s 2015 trade with its top 10 EU partners
Height of each segment reflects trade value in billions
U.K. imports from Goods
Trade balance
61% (£70.24)
54% (£37.32)
56% (£36.93)
40% (£17.66)
63% (£24.72)
61% (£23.25)
55% (£20.66)
55% (£10.27)
64% (£10.04)
46% (£4.63)
Source: HMRC (goods); ONS (services)
said. “We know that U.K. com-
panies that trade with the EU
will have to align with rules
agreed by institutions of
which we are no longer a part,
just as we do in other over-
seas markets. We accept that.”
One of the first—and likely
most contentious—issues in
the negotiations is set to be
how much the U.K. will have
to pay to exit from the bloc.
While some U.K. officials
have said London shouldn’t
have to pay anything, EU offi-
cials say the bill, which would
include payments for pro-
grams the U.K. committed to
before it voted to leave, could
be as high as €55 billion ($59
billion) to €60 billion.
Mrs. May said in the letter
the U.K. wants talks on the fu-
ture relationship to take place
alongside negotiations over
terms of its exit, acknowledg-
ing that reaching a compre-
HK JP KO ML SI
WORLD NEWS
A TV in Edinburgh, Scotland, shows Tim Barrow, Britain’s envoy to the EU, left, delivering notice to European Council President Donald Tusk.
celebration for some and disap-
pointment for others,” she said.
A rally on Saturday drew
thousands of people to central
London under the banner “Unite
for Europe.” But there isn’t
strong opposition to Brexit in
Parliament, and 45% of voters
say they would back the Conser-
vatives if a general election
were held tomorrow, compared
with only 26% behind the belea-
guered Labour Party, according
to an ICM poll conducted in
mid-March.
The poll showed that Remain
Donald Tusk notifying him of
the U.K.’s intention to leave
the EU, she hinted that the
U.K. would be willing to make
some payments. She wrote
that the two sides “will need
to discuss how we determine
a fair settlement of the U.K.’s
rights and obligations as a de-
parting member state, in ac-
cordance with the law and in
the spirit of the United King-
dom’s continuing partnership
with the EU.”
EU officials’ rough calcula-
tions for the exit bill are
based on the U.K.’s share of
the total unpaid commitments
of all EU countries. That share
can be calculated in different
ways, for example including
or excluding the roughly £4
Services U.K. exports to
39% (£44.76) Germany
46% (£32.07) France
44% (£29.33) Netherlands
60% (£26.09) Ireland
37% (£14.62) Spain
39% (£15.14) Belgium
45% (£16.72) Italy
45% (£8.54) Sweden
36% (£5.61) Poland
54% (£5.47) Denmark
THE WALL STREET JOURNAL.
hensive deal within that time
would be difficult.
She warned that if the two
sides fail to wrap up an agree-
ment within two years, secu-
rity could be affected.
“In security terms, a failure
to reach an agreement would
mean our cooperation in the
fight against crime and terror-
ism would be weakened,” she
wrote. “In this kind of scenario,
both the United Kingdom and
the European Union would of
course cope with the change,
but it is not the outcome that
either side should seek.”
German Chancellor Angela
Merkel said the negotiations
have to be concluded before
talks about the future can be-
gin. “During the negotiations,
we first have to clarify how to
untie these links in an orderly
way,” she said. “Only then—
but hopefully soon—can we
address questions about our
IN UK FR MN PR
voters described themselves as
worried, resigned, confused or
terrified. Leavers, meanwhile,
chose words like pleased, re-
lieved, happy and excited.
The U.K.’s economic perfor-
mance in the months since the
referendum has been a boost
for Brexit backers and taken
wind out of the sails of pro-EU
campaigners, many of whom
predicted an immediate Brexit-
related hit to the economy.
Economists caution that Brit-
ain has yet to feel the full im-
pact of last year’s vote, which
billion a year rebate that the
U.K. receives on its gross bill.
Assuming the rebate is fac-
tored in, the EU calculates a
total bill of about €55 billion
($60 billion) to €60 billion.
That is roughly equivalent to
about 40% of Britain’s annual
outlay for the National Health
Service.
About half of the EU’s bill is
based on commitments made
in previous budgets that ha-
ven’t yet been spent, roughly
a third on spending commit-
ments that would be carried
out after the U.K. leaves, and
the rest, of up to €10 billion,
to pay pensions for EU offi-
cials who served during the
U.K.’s years in the bloc.
There are also potentially
future relations.”
Mrs. May has said one of
her priorities is to guarantee
EU citizens living in Britain
and U.K. citizens living in
other parts of Europe continue
to have the right to stay even
after the U.K. leaves. The EU
has said talks on that issue
alone would likely take at least
several months.
The U.K. and the EU will
also have to decide what to do
with unspent EU funds that
were supposed to go to U.K.
farmers, how to implement
cross-border security arrange-
ments including access to EU
security databases, and
whether the U.K. will stay un-
der the jurisdiction of EU regu-
latory agencies for issues, such
as nuclear power, now handled
by the bloc’s institutions.
U.K. politicians who sup-
ported staying urged Mrs. May
to keep close ties. “It is crucial
that in this two-year period the
voices and concerns of those
who want to preserve close
links between Britain and Eu-
rope are not shouted down and
silenced, and that those with
power over this process are
held to account,” said Anna Sou-
bry, a Conservative lawmaker.
Within the next two days,
Mr. Tusk is expected to send
draft guidelines to the 27 re-
maining capitals framing the
talks from the EU’s side. Those
guidelines should be finally
agreed upon at a Brussels
summit on April 29.
After that, EU governments
and the European Commission,
which is set to lead day-to-day
negotiations, will likely take
several weeks to set a detailed
negotiating mandate for
Michel Barnier, the EU’s Brexit
negotiator. Only then, possibly
in late May, are negotiations
set to begin in earnest.
“The task before us is mo-
mentous but it should not be
beyond us,” Mrs. May wrote in
her letter, saying that the U.K.
and EU could build a partner-
ship “that contributes toward
the prosperity, security and
global power of our continent.”
—Jason Douglas
contributed to this article
* THE WALL STREET JOURNAL.
caused the pound to fall steeply
against the U.S. dollar, noting
that accelerating inflation could
cause Britons to rein in their
spending. But proponents of
Brexit say the pound’s weaken-
ing is likely to boost the U.K.’s
exports and revive the country’s
manufacturing, offsetting the
fall in domestic consumption.
Even if the economy crashed,
no swing in public mood is
likely to happen within the two-
year Brexit negotiation window,
said Anand Menon, professor of
European politics and foreign
some assets to offset this,
such as EU buildings and
shareholdings in the EIB and
other EU institutions.
The EU is depicting the
bill as an issue of trust,
maintaining that a country
hoping to leave the bloc in
good standing wouldn’t re-
nege on past commitments.
It is a key issue for the bloc
because the departure of
one of the largest contribu-
tors to the EU budget—con-
tributing about 12% of the
total—will make budget de-
liberations among the other
27 governments even more
fraught.
The EU has said it won’t
move on to negotiate ques-
tions such as the future trad-
BANKS
Continued from Page One
in the U.K., and in 2015 a third
of its $33.5 billion of invest-
ment-banking revenue came
from Europe, the Middle East
and Africa. That makes it Eu-
rope’s largest investment bank
and one of the most prominent
among scores of foreign lend-
ers trying to figure out their
post-Brexit futures.
Like its American peers, J.P.
Morgan concentrated much of
its European corporate and in-
vestment-banking activities in
London. J.P. Morgan Chief Ex-
ecutive James Dimon has said
up to a quarter of the com-
Breaking Up: The
Sticking Points
These are some of the is-
sues the European Union and
Britain must hash out.
1. The ‘Divorce’ Bill. EU offi-
cials say the U.K. will have to
pay about €55 billion ($59 bil-
lion) to €60 billion ($65 billion)
to leave the bloc. This would
cover U.K. commitments that it
hasn’t paid for yet. U.K. officials
will be reluctant to agree to that.
One of the Brexit camp’s argu-
ments for leaving the EU was
ending payments to the bloc.
2. The Process. While Prime
Minister Theresa May says she
wants to wrap up talks on Brit-
ain’s future relationship with
the bloc within two years, EU
officials say this isn’t possible.
They also say during the initial
talks the two must first settle
issues on the terms of the di-
vorce before they can map out
trading relationships, which
would require a separate deal
after Britain leaves.
3. Citizens’ Rights. The U.K.
and the EU have said granting
British citizens in the EU and EU
citizens in Britain the right to
stay after Brexit should be a pri-
ority. But the U.K. may not want
to offer the full range of rights
ANDY BUCHANAN/AGENCE FRANCE-PRESSE/GETTY IMAGES
affairs at King’s College London,
offering little hope for those
who wish to reverse course.
Walking her dog on a Mon-
day morning, June Morris, a 70-
year-old former science teacher
in the Richmond area of Lon-
don, said she was largely happy
with how things have moved
since the vote, though she
wishes the government would
go faster.
She isn’t concerned that
Brexit could be diluted, let along
derailed. “Too many people are
behind Brexit now,” she said.
ing arrangements until the
budget and citizens’-rights
questions are settled in prin-
ciple. But there has been a de-
bate in the U.K. over whether
such financial obligations are
enforceable.
The European Union
Committee of the House of
Lords concluded that Article
50—the EU treaty’s exit
clause—“allows the U.K. to
leave the EU without being
liable for outstanding finan-
cial obligations...”
However, this position is
disputed by other legal ex-
perts and academics.
Some amount will almost
certainly be paid, assuming
there is an exit agreement,
over several years.
pany’s staff in the U.K. may
have to move.
Fixing the bank’s structure
for Brexit isn’t easy. Maintain-
ing an office on the Continent
isn’t enough to insulate the
bank from Brexit’s effects.
Once the divorce talks be-
gin, banks will embark on a
balancing act. The longer they
wait to adjust operations, the
more clarity they will have re-
garding the Brexit deal the
U.K. may get. But if they wait
too long, they may not have
enough time to implement
changes before the two-year
negotiations finish.
“It’s complex and there is
no easy solution to this,” said
Joe Cassidy, a partner at con-
sultancy KPMG.
and benefits to EU citizens per-
manently, whereas some EU gov-
ernments with large communities
in Britain will likely demand
that. U.K. officials also say they
are considering restricting the
rights of newcomers who arrive
before Britain leaves the bloc. EU
officials say that would undercut
U.K. obligations..
4. Market Access. Mrs. May
has said she wants the U.K. to
have wide access to the single
market. EU officials say Britain
cannot enjoy the benefits it has
as a member after Brexit, and
that tariff-free access is depen-
dent on recognizing the right of
free movement of EU workers.
The EU will also want Britain to
maintain EU regulations—or meet
equivalent standards—to main-
tain broad zero-tariff access to its
markets. The U.K. has said that in
the future, it wants freedom to
set its own rules.
5. Financial Services. Under
current EU laws, banks can sell
products to European clients
from London with minimal reg-
ulation. While the U.K. wants to
keep these rights, leaving the
single market will likely mean
losing those rights. Mrs. May
spelled out that she wants a fi-
nancial services deal as part of
a trade deal with the EU.
—Jenny Gross
and Laurence Norman
THE WALL STREET JOURNAL. Thursday, March 30, 2017 | A5

Pratt
Manufacturing
American Jobs
On March 20th, Pratt opened America’s most modern corrugated box factory in Beloit, Wisconsin.

“We’re excited about

great employers
like Pratt Industries
making this kind
of commitment to
creating well-paying
manufacturing
jobs right here in
Wisconsin.
As a leader in paper
and packaging,
Pratt Industries’ new
manufacturing facility
is another indication
Wisconsin is open
for business. ”
— Wisconsin Gov.
Scott Walker

Wisconsin Governor Scott Walker and Anthony Pratt tour the new box plant.

Congratulations and thank you to everyone on the Pratt team on last week’s
opening of our 68th factory — the $60 million box plant in Beloit.

Thanks also to our customers and the local, state and federal governments
for making America the world’s greatest manufacturing environment.

We at Pratt Industries are fully committed to the Trump administration’s

vision of creating manufacturing jobs in America.

Our company has invested $2.5 billion to employ 7,000 Americans in

well-paying manufacturing jobs.

Sincerely,

Anthony Pratt
Executive Chairman, Pratt Industries

Pratt Industries is one of the largest corrugated box manufacturers in the United States.
Our boxes save money and save the environment.

www.prattindustries.com
A6 | Thursday, March 30, 2017 THE WALL STREET JOURNAL.

WORLD NEWS

U.S. Trade Tensions Heat Up With EU

Trump administration
Lean Trade
considers tariffs on U.S. beef exports to the European Union in 2016 trailed other major
European goods in a economies due to EU restrictions and a trade battle. Exports, in billions:
dispute over beef
Japan
BY WILLIAM MAULDIN South Korea
Mexico
WASHINGTON—The Trump
administration is poised to Canada
demonstrate its promised tough
EU
approach to trade rules in a
long-simmering dispute with $0 0.25 0.50 0.75 1.00
the European Union over beef. Source: U.S. International Trade Commission THE WALL STREET JOURNAL.
ALESSIA PIERDOMENICO/BLOOMBERG NEWS

The U.S. is considering im-

posing tariffs of 100% on Per- man, president of the American Still, the next move in the
rier mineral water, Vespa motor Motorcyclist Association. dispute may shed light on U.S.
scooters and Roquefort cheese “They’re going to go destroy strategy. Washington developed
in response to the EU’s long- this one industry and hope that a powerful tool called “carousel
standing ban of American beef that’s enough to alter the trade retaliation” that targets other
from hormone-treated cattle. preferences on the agricultural countries’ industries a few at a
Prompting that menu of puni- side.” time, to broaden the impact.
tive tariffs are complaints from High-end grocers are also “The way trade disputes get
U.S. beef producers that the EU complaining, worried possible resolved is that stakeholders
hasn’t held up its end of a deal tariffs on dozens of products within Europe talk to their
the two sides cut in 2009. Vespa motor scooters, seen in Rome in December, could be subject to 100% tariffs in the U.S.. could hurt sales and drive cus- member governments, and
The beef case is expected to tomers away. then their member govern-
provide a window into how ag- years earlier to punish Euro- rival of a new administration— where the possible targets for “It is going to hurt the ments talk to the commis-
gressive the administration will pean products over the beef along with the unraveling of retaliation were discussed. small mom-and-pop specialty sion,” said William Busis, the
be with trading partners. Presi- ban, which it said violated in- broad negotiations with Europe The prospect of retaliation cheese shops,” said Chris Pey, official from the U.S. trade
dent Donald Trump tapped into ternational trade rules. on a free-trade agreement— is provoking a backlash at a lawyer who represents the representative’s office who led
a vein of discontent over U.S. Washington suspended such mean the time may be ripe for home. cheese group Confédération the February hearing. “And
trade policy in the 2016 cam- tariffs, however, after Brussels imposing duties on European Motorcycle enthusiasts have Générale de Roquefort. “It then there is enough, I don’t
paign and has repeatedly agreed on a plan, implemented products to bring Brussels back launched a campaign to stop could potentially double the know if the word is pressure,
threatened to hit major econo- in 2009, to allow American to the table on the beef dis- possible tariffs on light EU mo- prices of cheese that they have but there is enough input that
mies with stiff tariffs for alleged beef not treated with hormones pute, farm lobbyists say. torcycles, including Piaggio’s to get from their suppliers.” the commission then decides,
violation of trade rules, saying into Europe. But American beef Whether to impose those Vespa scooters and dirt bikes A lawyer for Nestlé USA Inc., ‘Oh, yes, maybe I should re-
he would take a sharper stance producers say that deal has retaliatory tariffs is expected made by Sweden’s Husqvarna which sells Perrier and San Pel- solve this dispute.’”
on economic ties with China, soured because the EU hasn’t to be among the first major Group and Austria’s KTM- legrino mineral waters, de- A spokesman for the Euro-
Mexico and other countries. adequately opened up its mar- decisions facing Mr. Trump’s Sportmotorcycle AG. The U.S. clined to comment on the case. pean Commission, the EU’s ex-
The case has been in and kets to non-hormone U.S. beef pick for U.S. trade representa- has received 11,571 comments Trade experts say the case ecutive, said it is closely follow-
out of dispute resolution at as outlined in that deal. tive, Robert Lighthizer, after on the case, with concerned is small compared with the ing the U.S. review but declined
the World Trade Organization Congress passed legislation he is confirmed by the Senate, motorcyclists the most vocal. major trade cases the Trump to comment further. Kate Lin-
for years. In 2008, the Geneva- in 2015 making it easier for the lawyers say. The trade repre- “To basically jeopardize an administration has signaled it ton, the U.S. official overseeing
based trade body said the U.S. U.S. to impose retaliatory tar- sentative’s office held a hear- entire industry for leverage is would initiate on manufac- the case, didn’t respond to a re-
could maintain tariffs imposed iffs. That legislation and the ar- ing on the issue in February, inappropriate,” said Rob Ding- tured goods and metals. quest for comment.

Germany Weighs Alternatives to Turkey Base U.S. Says

BY RUTH BENDER Drugs Sold
BERLIN—The German gov-
ernment is weighing alternative
locations to Turkey for its
At Kabul
forces involved in fighting Is-
lamic State amid rising tensions
between the two countries.
Embassy
Berlin has identified eight BY JESSICA DONATI
possible alternatives to Incir-
lik Air Base in Jordan, Kuwait KABUL—The U.S., which
and Cyprus, according to an has spent billions of dollars on
official document seen by The counternarcotics in Afghani-
Wall Street Journal. Germany stan, fired a number of people
has about 250 soldiers, six re- from its embassy in Kabul for
TOBIAS SCHWARZ/AGENCE FRANCE-PRESSE/GETTY IMAGES

connaissance planes and a re- allegedly using and selling

fueling aircraft in Incirlik, drugs on its premises, a U.S.
where other countries in- State Department official said
volved in fighting Islamic Wednesday.
State are represented, includ- Embassy personnel said the
ing from the U.S., Saudi Ara- investigation was launched af-
bia, Denmark and Qatar. ter staff noticed one person
While Berlin has yet to ap- wandering around in a state of
proach any country about a confusion and appearing to be
move, the revelation that it has intoxicated.
been researching other loca- “The guy was stoned in the
tions underlines the rapid loss street,” one person familiar
of trust between the two North with the investigation told The
Atlantic Treaty Organization Wall Street Journal. “That’s
allies over recent months. how it blew everything up.”
Wednesday’s news came a Turkish President Recep Tayyip Erdogan has inflamed tensions with Germany, leading Berlin to consider alternatives to Incirlik Air Base, A State Department official
day after German officials this from which it bases its anti-Islamic State forces. Above, a technician worked on a German Tornado jet at the air base in 2016. said six people have been dis-
week accused Turkey of con- ciplined, denying accounts
ducting extensive spying in Ger- sparked a backlash in Germany. troops there, according to the it had NATO-level safety stan- Boris Pistorius, interior from several people familiar
many and weeks after Turkish The German Defense Minis- document. dards and was more easily ac- minister of the state of Lower with the investigation who
President Recep Tayyip Erdo- try prepared the document list- Parliament must authorize cessible than the alternatives. Saxony, said the list, compiled claimed that up to 22 people
gan accused German politicians ing alternatives to Incirlik for all German military deploy- German politicians pushed by MIT, included the names of had been fired.
of Nazi practices for banning opposition lawmakers. The list ments abroad, and several back this week against Ankara’s some 300 Turks—including Most of those fired were
electoral rallies by members of was drafted in November, after lawmakers have warned they aggressive pursuit on German about 200 suspected followers Americans, according to peo-
his ruling AKP in Germany. Turkey and Germany clashed could rescind the mandate if soil of suspected supporters of of Mr. Gulen—and Turkish in- ple familiar with the investiga-
The spat comes amid over Ankara’s refusal to let they can’t visit the base. the putsch—in particular fol- stitutions here. tion.
months of rising tension since German parliamentarians visit “The government must act lowers of U.S.-based cleric Instead of following
last summer’s failed coup the base, a ministry spokesman fast now,” said Jan van Aken, Fethullah Gulen, a former ally through with Ankara’s request
against Mr. Erdogan. said. Germany largely provides a lawmaker with the Left turned nemesis of Mr. Erdogan. that the individuals be put un-
The president’s subsequent surveillance to the coalition. party, who was refused a visit Germany’s federal prosecu- der surveillance, German offi-
Despite U.S. efforts,
crackdown on opponents at After the German Parlia- this month to German troops tor said on Tuesday it was in- cials warned some of the peo- Afghanistan supplies
home, the recent arrest of a ment voted last June to label stationed at another Turkish vestigating potential spying ple on the list not to travel to
prominent German-Turkish the Ottoman-era massacre of air base in Konya. activities by Turkey’s intelli- Turkey, Mr. Pistorius said.
more than 90% of the
journalist in Turkey, and a Armenians as genocide, An- The ministry stressed that gence agency MIT in Germany. A spokesman for Turkey’s world’s heroin.
campaign by the AKP to urge kara barred German lawmak- Berlin wasn’t in negotiations The decision came after Turk- Ministry of Foreign Affairs
some three million Turks based ers from visiting the base. It with other potential host na- ish officials handed the Ger- didn’t immediately respond to
in Germany to vote in a refer- appeared to relent later, au- tions and had no plans to leave man foreign-intelligence a request for comment. The
endum this month that would thorizing a visit in early Octo- Incirlik. Logistically, the Turk- agency, known as the BND, a BND declined to comment. The Afghan government
considerably extend the Turk- ber, but six lawmakers are still ish base remained the pre- list of suspected Gulen follow- —Ned Levin in Istanbul said it didn’t have any infor-
ish presidency’s power have waiting to be allowed to visit ferred option, it said, because ers in the country. contributed to this article. mation about the incident.
Afghanistan is one of the
world’s biggest drug-produc-
WORLD WATCH ing countries and supplies
more than 90% of the world’s
heroin.
MONTENEGRO AUSTRALIA SOUTH AFRICA Despite U.S. and coalition
efforts to combat the narcotics
U.S. Senate Backs Cyclone Causes Politics Attends industry, production has
Bid to Join NATO Moderate Damage ANC Leader’s Burial soared over the years, reach-
ing near record levels in 2016,
The U.S. Senate ratified legis- Cyclone Debbie caused wide- The burial of a revered anti- according to the United Na-
lation backing Montenegro’s bid spread but moderate damage in apartheid luminary became a tions.
to become the 29th member of Australia’s northeast, authorities stage for the conflict tearing at The U.S. alone has spent
the North Atlantic Treaty Organ- said, as flooding, rain and fallen the party he helped propel from about $8.5 billion on counter-
ization, a move that threatens to trees slowed troops and emer- insurgency into government. narcotics efforts since the war
increase tensions with Russian gency workers attempting to Ahmed Kathrada, an African against the Taliban started in
DAN PELED/AAP/REUTERS

President Vladimir Putin. reach the worst-hit areas. National Congress stalwart who 2001.
Montenegro’s bid received bi- No deaths were reported a spent 26 years in jail, was laid The embassy personnel who
partisan support from the Sen- day after Debbie smashed tour- to rest in Johannesburg with were fired included those
ate, which voted 97-2 in favor ist resorts, flattened cane fields state honors on Wednesday. working as contractors for the
of the measure. Leading Repub- and shut coal mines in tropical President Jacob Zuma, the security company Aegis
licans and Democrats described Queensland state as a Category party leader, stayed away, honor- Worldwide, a subsidiary of
the vote as a signal to Mr. Putin Cyclone Debbie washed ashore a yacht in Airlie Beach. 4 storm, one rung below the ing a dying wish of Mr. Kath- GardaWorld, a person familiar
of U.S. resolve to defend Eu- most-dangerous wind-speed rada. with the investigation said.
rope. bors and seeks to upend the in- Lee of Utah. level. Senior ANC figures laced The Aegis website refers all
“Montenegro’s membership in ternational order,” said Sen. Ben Russia opposes NATO mem- Resorts along the world-fa- their tributes to Mr. Kathrada media inquiries to Garda-
NATO will serve to strengthen Cardin of Maryland, the ranking bership for Central and Eastern mous Great Barrier Reef and with criticism of Mr. Zuma, ac- World, whose executives
the organization, enhance Ameri- Democrat on the Senate Foreign European countries and the Bal- coastal areas bore the brunt of cusing him of cronyism and cor- didn’t respond to an emailed
can national security and send a Relations Committee. The no tics, saying that expansion of the storm with wind gusts ruption, repeating longstanding request to comment.
strong message of resolve to votes came from Republicans the alliance threatens it on its stronger than 160 mph. allegations that the president —Ehsanullah Amiri
Russia as it invades its neigh- Rand Paul of Kentucky and Mike own border. —Jay Solomon —Reuters has rejected. —Joe Parkinson contributed to this article.
THE WALL STREET JOURNAL. Thursday, March 30, 2017 | A7

U.S. NEWS
Visa Lottery Readied Under Old Rules
Trump attacked H-1B win any. was the fourth year in a row
Changing that distribution in which the cap was reached
passes for skilled would require a time-consum- within five days.
workers, but system ing rewrite of regulations gov- During his presidential
erning the program, experts campaign, Mr. Trump prom-
proceeds unchanged said. Given that no action was ised to reduce legal as well as
launched right away, the new illegal immigration, saying
BY LAURA MECKLER administration has been ex- foreign workers drive down
pected to maintain existing wages and threaten American
WASHINGTON—President rules for this year. jobs. At times, he was particu-
Donald Trump ran for office “There was a window in larly critical of the H-1B pro-
promising changes to the H-1B which the White House could gram, though at other times
visa program, which brings have made serious reforms,” he praised it.
highly skilled foreign workers said Russ Harrison, director of “These are temporary for-
to the U.S. But on Monday, the government relations for the eign workers, imported from
government will open another Institute of Electrical and abroad, for the explicit pur-
round of applications using Electronics Engineers-USA, a pose of substituting for Amer-
rules that have long been in professional society that lob- ican workers at lower pay,” he
place. bies for changes in the pro- said in a statement last year.
Demand for the program gram. “For whatever reason, “I remain totally committed to
grossly outstrips the supply they decided not to take it.” eliminating rampant, wide-
so, as in past years, the gov- Michael Short, a White spread H-1B abuse.”
ernment will use a lottery to House spokesman, said “re- Much of the criticism has
decide which companies get forms of the H-1B visa system focused on Indian outsourcing

ABHISHEK CHINNAPPA/REUTERS
them. The visas are coveted by are something that the admin- firms, which receive many of
tech companies, which have istration is actively consider- the available H-1Bs. Their U.S.
unsuccessfully lobbied Con- ing and working through.” subsidiaries bring in workers
gress to increase the cap, set Some lobbyists have been ex- that typically perform work at
at 85,000. The new visas be- pecting Mr. Trump to an- American firms that in some
come available each year in nounce changes to the pro- cases was once performed by
early April. gram around this time, but American workers at higher
Large outsourcing firms nothing appears to be immi- wages. Some U.S. outsourcing
typically scoop up a substan- nent. Tech firms in particular covet H-1B visas, which allow them to bring foreign talent into the U.S. companies have a similar busi-
tial share of the visas, and Arwen Consaul, a spokes- ness model. The companies
they have drawn scrutiny for woman for U.S. Citizenship plan. If it changes, we will let well-being of United States least $100,000 a year. The cur- say they are unable to find
importing foreign workers, and Immigration Services, the public know.” workers.” But that order rent threshold to avoid those Americans to do these jobs.
particularly in cases where said Tuesday the agency plans Early this year, a draft of an hasn’t been signed by the requirements is $60,000. Employers pay fees to sub-
they are hired to do work once to use the lottery system if de- executive order for Mr. president. Last year, the government mit each application, though
performed by Americans. mand again outstrips supply, Trump’s consideration was In Congress, a bipartisan received more than 236,000 only a fraction of the applica-
Smaller companies that re- and this week, the American widely circulated and directed bill pending in the House applications for the 85,000 vi- tions is expected to win visas.
quest just a few visas have Immigration Lawyers Associa- the government to re-examine would punish companies seek- sas, of which 20,000 are re- Universities and nonprofits,
said they have a hard time tion sent a notice advising its a range of visa programs to ing H-1B visas by imposing served for people with ad- which aren’t subject to a cap,
planning because of uncer- members of the same. Still, ensure they prioritize and burdensome requirements if vanced degrees. That exceeded also use H-1Bs to hire many
tainty about whether they will Ms. Consaul said: “This is the protect “the jobs, wages and they don’t pay workers at the previous year’s record and workers each year.

Kushner Family Ends Deal Talks

BY PETER GRANT dominium and hotel tower at granddaughter of former Chi- verting the existing boxy 1.45
AND ESTHER FUNG the site of Kushner’s office nese leader Deng Xiaoping. million square foot structure
building at 666 Fifth Ave. Their most recent meeting into a slender 1,400 foot tower.
Negotiations between New Anbang had been in talks to occurred this month, according Under city law, developers can

J. SCOTT APPLEWHITE/ASSOCIATED PRESS

York real-estate developer provide as much as half of the to people close to the talks. redistribute mass in that fash-
Kushner Cos. and a large Chi- $2.5 billion in equity for the The Kushner investment in ion without extensive approv-
nese company over a planned planned project designed by 666 Fifth Ave. has had a roller- als as long as a portion of the
$7.5 billion tower in Manhat- Zaha Hadid, the late Pritzker coaster history. The family steel structure is maintained.
tan have collapsed amid an Prize-winning architect, ac- bought the office tower for The plan called for the first
outcry over possible conflicts cording to people close to the $1.8 billion in 2007, just before nine floors to include retail,
of interest involving the negotiations. the financial crisis, which entertainment and dining
Trump administration. Kushner has been negotiat- hammered property values and space. The building also would
The talks with Anbang In- ing with other possible inves- demand for commercial real have an 11-story hotel and
surance Group Co. about the tors and still hopes to move estate. 464,000 square feet of resi-
project at 666 Fifth Ave. had ahead with the project. The At one point, Kushner was dential space.
become a lightening rod for firm “remains in active, ad- struggling to make mortgage The Kushners face numer- Tom Price’s testimony did little to calm concerns over what will
critics of the Trump adminis- vanced negotiations around payments. The family was able ous hurdles besides raising happen to the Affordable Care Act after the GOP health bill’s demise.
tration, who have said Presi- 666 Fifth Ave. with a number to shore up the building’s bal- $2.5 billion in equity. The com-
dent Donald Trump and some
of his top advisers haven’t
taken sufficient steps to avoid
of potential investors,” the
spokesman said.
The Kushners and Anbang
ance sheet after Vornado Re-
alty Trust purchased a 49.5%
stake in the office portion of
pany also would have to refi-
nance $1.15 billion of debt on
the property and cut deals to
HHS Chief Says He
possible conflicts between
their government roles and
their former businesses.
began talks in July and moved
into advanced talks in recent
months, with Charles Kushner
the property in late 2011.
The family started planning
the massive redevelopment
buy out Vornado and tenants
in the building.
If all goes well, Kushner
Will Uphold Health Law
Jared Kushner, a senior meeting multiple times with more than two years ago. It hopes to start demolition in BY STEPHANIE ARMOUR cut payments to insurers and
White House official and Mr. Anbang Chairman Wu Xiaohui. believed it could greatly add 2019 and construction in AND THOMAS M. BURTON relax requirements that insur-
Trump’s son-in-law, had been Mr. Wu is married to the value to the property by con- mid-2021. ers cover specific benefits.
running the Kushner business Health and Human Services Rep. Rosa DeLauro (D.,
before last year’s election and Secretary Tom Price said he is Conn.) said she was “dis-
was involved in the early dis- obligated to uphold the Af- turbed” at comments Mr.
cussions with Anbang. Lately, fordable Care Act as long it is Trump had made about letting
his father, Charles Kushner, in place but he didn’t commit the ACA implode following the
has been leading the talks. to specific actions, including collapse of the House GOP bill.
The younger Mr. Kushner enforcing the requirement that She pressed Dr. Price on the
has since taken steps to pro- most Americans pay a penalty agency’s intentions.
tect against potential conflicts. if they don’t have health cov- Dr. Price indicated he
For example, he has sold his erage. doesn’t support the federal
personal stake in 666 Fifth “So long as the law is on mandate that insurance poli-
Ave. to other family members. the books, we at the depart- cies must include specific ben-
But critics said that didn’t ment are obligated to uphold efit categories, such as mater-
go far enough. They pointed the law,” Dr. Price said on nity and mental health care,
out that Jared Kushner was in- Wednesday at a hearing on saying consumers should be
ERIC BARADAT/AGENCE FRANCE-PRESSE/GETTY IMAGES

volved in foreign policy and President Donald Trump’s HHS able to choose what type of
might be influenced by a deal budget proposal. coverage they want.
with a Chinese company that The collapse last week of a Still, he added, “We are
enriched his family. Republican bill that would committed to carrying out the
The criticism of the deal have toppled much of the ACA law of the land.”
played a big role in the col- created uncertainty over ACA supporters also worry
lapse of talks, said people fa- whether the Trump adminis- the administration won’t en-
miliar with the matter. tration will work to shore up force the law’s requirement
A Kushner Cos. spokesman the law or to undermine it. Dr. that most Americans obtain
on Wednesday said the family- Price’s responses did little to
owned firm and Anbang “have calm the concerns of Demo-
mutually agreed to end talks” crats who fear the latter.
regarding Kushner’s plans to House Republicans canceled
‘We are committed to
develop a soaring retail, con- The family of President Trump’s son-in-law, Jared Kushner, owns 666 Fifth Avenue in Manhattan. a vote on their health proposal carrying out the law
because it lacked enough sup-
of the land,’ Dr. Price
U.S. WATCH
port to pass, a major blow to a
GOP repeal push that began said.
seven years ago with the ACA’s
passage and culminated with
TRUMP ADMINISTRATION ment extended a Wednesday ing interest are also several major LAW ENFORCEMENT tense negotiations.
deadline to submit preliminary construction companies with past Despite the assurances that health insurance, which insur-
Builders Raise Their pitches for the wall until April 4, ties to President Donald Trump, New Form of Fentanyl he will uphold the ACA, Dr. ers have said is necessary so
Hands for Border Wall because many companies had who spent decades working with Hits New York City Price left open the possibility younger, healthier consumers
questions about the project, ac- the construction industry as a that he could pursue changes can offset the costs of older,
More than 200 companies cording to U.S. Customs and Bor- real-estate developer. Authorities say a new form of under his legal authority to sicker individuals.
have expressed interest in sub- der Protection, the agency over- The hustle to submit applica- the deadly drug fentanyl has pare back aspects of the law. Dr. Price said “the proof is
mitting plans to help design and seeing the bidding. tions came in response to re- made its way to New York City When asked if Republicans not there” that such a man-
build a wall along the U.S. border While some businesses were quests for proposals posted on- by way of China, exploiting a gap will continue trying to repeal date coverage is effective.
with Mexico, as the Trump ad- scrambling to finish their propos- line by U.S. Customs Border and in drug laws. They said 34 people, the health law, Dr. Price said, Rather, he said, the ACA is
ministration seeks to fulfill a key als, others that indicated interest Protection on March 17. mostly Bloods gang members, “We have to fix the problem.” driving up costs.
campaign promise despite signif- are simply tracking the project The agency called for two de- were charged with distributing The 2018 Trump budget, Some Democrats worry
icant obstacles. The companies, and may not follow through. Still signs for a wall “physically im- heroin, cocaine and furanyl fenta- which is likely to see a major such sentiments will prompt
whose names were published on other companies are subcontrac- posing in height”—one made of nyl—a drug almost 50% more po- rewrite in Congress, would cut HHS to try to weaken the ACA.
a federal contracting website, tors who listed themselves be- concrete and one of alternative tent than heroin. New York Police HHS spending by about $15 “I’m concerned your agency,
vary widely in size and capability. cause they want to be hired by material—to be built across the Department chief of detectives billion, or 18%, to about $69 through its budget and poli-
Among those interested at a winning bidder. nearly 2,000-mile border. It said Robert Boyce said it was the first billion. cies, are really trying to make
this early stage are more than Close to half of the potential companies must design a wall time he had seen the new form But at Wednesday’s hear- it explode,” Rep. Barbara Lee,
three dozen businesses owned bidders are located in border that is at least 18 feet high and of fentanyl in New York City. ing, members of the House a California Democrat, said.
by minorities, a Wall Street Jour- states, including nearly 50 in Cal- fashioned with anticlimbing de- While the drug is listed as a con- Appropriations subcommittee Republicans on Wednesday
nal analysis shows. Roughly 13% ifornia, whose political leaders vices. A spokesman said the trolled substance under federal on health and education fo- also continued to talk about
of the companies expected to are fighting the wall. One bidder agency would release more in- law, it isn’t covered by New York cused largely on potential the possibility of reviving
submit proposals for the wall, auspiciously bears the name of formation on the bidding process state law because of its slightly plans by Dr. Price to change their legislative efforts on
for example, are owned by His- Roman emperor and famous as it continues. different chemical composition. Medicaid and narrow the ACA. health care. Mr. Trump has
panics. wall-builder Hadrian. —Dan Frosch —Zolan Kanno-Youngs Democrats are especially con- suggested such an effort could
This week, the federal govern- Among the businesses signal- and Andrew Tangel and Jeanne Whalen cerned the administration will be bipartisan.
A8 | Thursday, March 30, 2017
GLOBAL
Continued from Page One
braced the idea that trade is
the basis for wealth because it
makes nations more efficient
by allowing each to specialize
at what its workers do best.
Few of them fully grasped
globalization’s downsides in a
modern economy. Tying to-
gether disparate nations eco-
nomically also expanded the
labor pool globally, pitting
workers in wealthy nations
against poorly paid ones in de-
veloping nations. That greatly
boosted the fortunes of the
world’s poor, but also created
a backlash in the U.S. and Eu-
rope. At the same time, free-
ing financial flows led to de-
bilitating financial excesses
that ended in crisis.
“Globalization is in retreat,”
Larry Fink, the chief executive
of the big investment firm
BlackRock Inc., said in a Feb-
ruary memo to employees,
outlining a new corporate
strategy. “We need to be Ger-
man in Germany, Japanese in
Japan and Mexican in Mexico.”
An earlier era of globaliza-
tion, which stretched from
1870 to 1913, ended when the
world descended into war.
Rising trade barriers later
played a role in the Great De-
pression of the 1930s. The
present era may not turn out
as catastrophically, but na-
tions, companies, multilateral
institutions and ordinary citi-
zens are already scrambling to
adapt to a world with bigger
barriers to trade and finance
as blowback builds.
Big banks, such as Citigroup
and HSBC, have reduced their
global footprints. Industrial
firms like General Electric are
developing strategies for a
more localized world. Guard-
ians of globalization, like the
World Trade Organization,
struggle with challenges from
China and other emerging
powers. Poor nations are find-
ing it harder to count on ex-
ports for economic develop-
ment. Wealthy nations face
less hospitable overseas mar-
kets, while their workers grap-
ple with the demands of auto-
mated workplaces.
Critics of globalization said
a slowdown in cross-border
trade and finance will help
ease pressure on wages of un-
skilled workers in wealthy na-
tions, stem the threat of finan-
cial bubbles and reduce the
influence of multinational
companies in developing na-
tions.
“Maybe the U.S. will supply
more of its demand by itself,”
said Clyde Prestowitz, presi-
dent of the Economic Strategy
Institute, a policy research
group in Washington, D.C.,
who has long urged the U.S.
adopt more aggressive trade
policies. “That could be a good
thing and create jobs.”
During the globalization ep-
och that started after World
War II, trade growth usually
far outpaced—and helped
drive—overall economic out-
put. Now it is barely keeping
up. The slowdown has long
outlasted the financial crisis of
2007 to 2009, which helped
set it off.
Between 2011 and 2015, the
value of global merchandise
exports contracted 10%, ac-
cording to the WTO, marking
the largest drop over a four-
year period in post-World War
II history, driven in part by
tumbling commodities prices.
Merchandise export growth
over a 10-year time frame is
also the slowest of this era.
“We have a deflationary
mind-set,” Jakob Stausholm,
chief financial officer of Mae-
rsk, the Danish shipping giant,
told investors in February,
while reporting a $1.9 billion
loss. A few days earlier a court
in Seoul declared that Hanjin
Shipping Co., the world’s sev-
enth-largest shipper, was
heading for liquidation.
Among the hottest trends
in the industry last year was
the dismantling of giant con-
tainer ships for scrap
metal—862 in all—along the
beaching yards of Pakistan,
Bangladesh and India.
Annual movement of capital
across borders—in the form of
stock and bond purchases, for-
eign direct investment and
lending—fell more than two-
thirds, to $3.3 trillion in 2015
from $11.9 trillion in 2007, ac-
cording to McKinsey & Co.
Overseas bank lending, partic-
ularly from Europe, has been
hard hit. The stock of cross-
border loans held at banks
around the world contracted
21%, to $28.2 trillion in the
third quarter of 2016 from
$35.5 trillion in 2008, accord-
ing to the Bank for Interna-
THE WALL STREET JOURNAL.
IN DEPTH
sense,” he said.
China, once an assembly
platform that sucked in com-
modities and manufactured
goods from abroad, put them
together and reshipped them,
is now producing much of
what it needs domestically.
Benjamin Dolgin-Gardner,
founder of Hatch Interna-
tional Ltd., an electronics
manufacturer in Shenzhen,
China, said he now uses Chi-
nese-made LCD screens rather
than ones made elsewhere in
Asia for the tablets he pro-
duces. Memory chips for MP3
players are also made in
China rather than imported
from Japan and South Korea.
“China is increasingly can-
nibalizing supply chains,” said
Alex Wolf, a London economist
at the investment firm of
Standard Life Investments, re-
ducing exports from Korea,
Taiwan and other nations
whose economies are tightly
linked to China’s.
The reaction to the finan-
cial crisis in many countries
included new banking rules,
adopted globally, which re-
quire banks to hold bigger
PPI /ZUMA PRESS
capital buffers against securi-
ties and loans. That has cut
into their willingness to take
risks across borders.
One of the hottest trends in the shipping industry last year was the dismantling of giant container ships for scrap metal. Regulators in China, Cy-
prus, Iceland, Brazil and other
countries imposed capital con-
Changing Attitudes INTERCONTINENTAL Global crisis 40
trols to limit the waves of po-
tentially destabilizing money
and aftermath
Stifle the Flow of Trade EUROPE
AMERICAS
35 washing into and out of their
financial systems. In all, 31 out
30 of 108 countries tracked by
The surge of international agreements that ASIA
economists Menzie Chinn and
followed the Cold War has waned signifi- AFRICA 25
Hiro Ito became less open to
cantly since the global financial crisis. OCEANIA 20 global capital flows between
2008 and 2014, while 13 be-
Preferential trade agreements signed 15 came more open.
each year, by continent That is a sharp reversal
10
from the five-year precrisis
5 period, when 40 countries be-
came more open to global
0
capital flows and 12 became
1950 ’60 ’70 ’80 ’90 2000 ’10 ’15 less open.
Europe is the epicenter of
As popular sentiment has turned against globalization, the once-steady reduction in tariff levels has stalled and many the global lending crunch.
countries have turned to protectionist measures. Hungary privatized most of its
banks after the fall of Commu-
Average tariff rates, by country’s level of Products subject to World-trade
nism in 1989, drawing inves-
economic development temporary trade barriers policies
tors from Austria, Italy, Bel-
30% 3.0% implemented* 300 gium and beyond. By the mid-
LIBERALIZING 2000s, Hungarian
25 2.5 150
homeowners had become avid
20 2.0 0 consumers of mortgages is-
sued by Austrian banks de-
15 1.5 150 nominated in Swiss francs,
10 DEVELOPING 1.0 emblematic of the rapid glob-
300
alization of European finance.
5 0.5
DIS-
450 After the financial crisis,
the Swiss franc soared, push-
0 ADVANCED 0 CRIMINATORY 600
ing up the cost of those mort-
1980 ’90 2000 ’10 ’15 1990 2000 ’10 ’15 2010 ’15 gages. Nearly one-third of
Hungarian borrowers went 90
At the same time as both opinions and regulations turned against trade, the global flow of goods and finance itself has days or more delinquent on
begun to shrink. Cross-border finance has stalled as banks and other investors retrench, making it tougher for emerging their mortgages, inviting a po-
litical backlash.
markets to grow. Hungarian Prime Minister
Merchandise trade as a share of global GDP Cross-border capital inflows Viktor Orban’s nationalist Fi-
desz party won parliamentary
55%
FOREIGN DIRECT LENDING AND elections with a landslide in
50 INVESTMENT OTHER 2010 and Mr. Orban set out to
INVESTMENTS increase Hungarian owner-
45 DEBT ship of the banking sector to
SECURITIES EQUITY at least 50%. His administra-
40
tion imposed taxes and fees
35 $12 trillion on the sector and demanded
10
banks convert Swiss franc
30
loans into local currency de-
25 8 nominations. Foreign bank
lending contracted for eight
20 6
straight years through 2016,
15 4 according to the Institute of
International Finance, a bank-
10 2 ing trade association in
5 0 Washington.
As foreign banks departed,
0 –2 the country’s economy minis-
1960 ’70 ’80 ’90 2000 ’10 ’15 2000 ’10 ’15
ter, Mihaly Varga, told local
reporters that the policy
*Counts policies documented between Jan. 1 and Oct. 31 of a given year to correct for reporting lags. “boosts economic sover-
Sources: Design of Trade Agreements Database (agreements); IMF and World Bank (tariff rates); World Bank (trade barriers, trade to GDP); Global Trade eignty.” A 2016 review by the
Alert (policies); IMF via McKinsey Global Institute (capital flows) Bob Davis, Jon Hilsenrath and Andrew Van Dam/THE WALL STREET JOURNAL. IMF, while lauding Hungary’s
rebound from the recession,
tional Settlements. Hailemariam Desalegn, said reductions have been “mini- strategy to focus on regional said the government had sim-
Peterson Institute for Inter- the debt is a price he is willing mal,” after falling by about 1 centers. In explaining the ply shifted risks from private
national Economics trade to pay. “If you want to move in percentage point a year be- move last year, GE Chief Exec- hands to the public sector be-
economist Gary Hufbauer cal- an easy way, then you can’t tween 1986 and 1995 and 0.5 utive Jeff Immelt said he cause the Hungarian govern-
culates that U.S. output in achieve double-digit growth,” percentage points annually for would prefer to operate by ment took big stakes in banks
2016 was $2 trillion greater he said in a recent interview. the following 13 years. free-trade principles, but “a and other companies.
than it otherwise would have “We have to carefully manage Multinational companies localization strategy can’t be In wealthy nations, the big
been because of greater trade it, but there is a way out also. used the 1990s and 2000s to shut down by protectionist hope is that a reversal in glob-
and financial integration since We have a huge potential in build global supply chains—for politics.” alization will lift wages of un-
1950. Slowing the pace of terms of exports.” instance linking rubber planta- In practice, that means GE skilled workers by reducing
globalization will actually slow The lethargic recovery from tions in Malaysia to tire manu- is building up its manufactur- competition from low-wage
U.S. income gains, he said. the global recession, especially facturers in China and retail- ing capacity in China and India nations. That hasn’t been the
No less is at stake for a weak demand for capital ers in the U.S., or coffee and other big markets to sup- case so far. Globally, wage
country such as Ethiopia, goods and big investment growers in Colombia to Star- ply customers there, rather growth slowed to an average
which has averaged growth projects, helps to explain the bucks restaurants. than counting on exports and 2.1% in the past five years,
rates in excess of 10% for the global trade slowdown. These webs of commerce global links. As part of the compared with 2.4% in the five
past decade as part of a push strategy, GE signed a deal in years leading up to the
toward industrialization and 2015 to build locomotives in 2007-2009 financial crisis, ac-
greater international expo- India, rather than relying on a cording to the International
sure. The country has little to
‘We need to be German in Germany, global production site in the Labor Organization.
fall back on if its globalization Japanese in Japan and Mexican in Mexico.’ U.S., as it once did. In the U.S., wages and sala-
bet sours. Surveying the global econ- ries of workers rose 2% a year
Hoping to emulate China’s omy from Beijing, where he in the past five years. That is
ride on the globalization wave, co-owns eight electronics and down from 2.9% in the five
Ethiopia is building a half- Protectionism is another supercharged trade but have medical equipment factories, years before the crisis.
dozen manufacturing zones to cause. Global Trade Alert, a begun to retrench, as compa- Dwight Nordstrom, chairman That hasn’t stilled globali-
produce garments, textiles and trade monitoring group, nies localize their production of Pacific Resources Interna- zation’s many critics. “Globali-
shoes for multinational firms, counts nearly 7,000 protec- and import fewer compo- tional LLC, said he is “waiting zation has made the financial
along with railroads and tionist measures enacted nents for assembly. The to see how the politics shake elite who donate to politicians
power plants. The construc- world-wide since the recession World Bank said global sup- out” before building any Chi- very, very wealthy,” Mr. Trump
tion spree, which keeps the air of 2009. About half of the ply chains stopped growing nese plants aimed at the ex- said last June at a Rust Belt
in Addis Ababa thick with measures are aimed at China. around 2011 after expanding port market. stop in Pennsylvania, “but it
dust, has created rising exter- It has been 23 years since about 4% annually for the That is because local-con- has left millions of our work-
nal debt loads, which jumped the completion of the last previous two decades. tent rules may require firms ers with nothing but poverty
to $20.4 billion in 2015 from global trade deal in 1994 and General Electric Co., which like his to build factories in and heartache.”
$2.3 billion in 2006, according no other is on the horizon. since the 1980s has expanded different countries. “We may —Matina Stevis, Anjani
to the World Bank. Since 2008, the International its global footprint, said it is be forced to have more facto- Trivedi and Margit Feher
Ethiopia’s prime minister, Monetary Fund reports, tariff time for a “bold pivot” in ries than makes economic contributed to this article.
THE WALL STREET JOURNAL. Thursday, March 30, 2017 | A9

LIFE&ARTS
TURNING POINTS | Clare Ansberry

When College Rejections Land

If college decision letters arrive with bad news, let children vent, call it ‘the wrong fit’ and see opportunities
HOW DO YOU DEAL with your
child’s first real rejection?
It is a question that Priscilla
Sands, head of the Marlborough
School, an elite girls school in Los
Angeles, addresses every year
when students learn they didn’t
make it into their top colleges.
She knows they are disappointed
and distraught. She also knows
that what looks like a setback
might not be.
“It’s an issue for parents. They
need to understand the pain, but
also not rob their child of an op-
portunity to use it as a growth ex-
perience,” says Dr. Sands, who

KENDRICK BRINSON FOR THE WALL STREET JOURNAL (2); LOUISA SAUNDERS (ART)
didn’t attend her dream college,
worked in a diner as a single mom
to support her children and didn’t
get jobs she thought she deserved.
By the end of March, most high-
school students will have heard
from colleges whether or not they
have been accepted. Competition
to get into top schools has been
getting stiffer nearly every year.
Many colleges and universities, in-
cluding Yale University, Brown
University, Duke University and
Cornell, reported record high early
application numbers for the class
of 2021, according to IvyWise, an
educational consulting company.
Most students have until May 1 to
decide where to go.
Claudia Vulliamy, of London,
had several rounds of interviews
and an overnight stay at Oxford
University, where she wanted to Dr. Priscilla Sands, below, head of the Marlborough School in Los Angeles, meets with a group of seniors, above. Art,
study classics. right, made with the rejection letter received by Claudia Vulliamy.
While hopeful, she prepared
herself for bad news, but was to make an awful announcement tant one to help kids learn that riences that are rewarding in the
“quite disappointed” when the let- that I didn’t get into Oxford,” she while painful, they aren’t the end long run, something she herself
ter from Oxford arrived saying she explains. Friends, who likewise of the world,” she says. discovered. After high school, she
didn’t make it. She texted her received rejection letters, were Anisha Shah, a 19-year-old says she “sort of bounced around
mother, Louisa Saunders. “I cheered, says Claudia, who will freshman at Washington Univer- and didn’t know what I wanted to
thought, ‘Be ready to be sympa- either go to Durham University in sity, who attended the Marlbor- do.” She took continuing education
thetic and feel disappointed on her England or take an art ough school, discovered classes at a junior college. When
behalf,’ ” says Ms. Saunders. foundation course for a just that. She was her then-husband, who was in the
When Ms. Saunders arrived year. Her mother crushed when she military, was stationed in Panama,
home, she said Claudia was “rela- tweeted it, saying: didn’t get into Yale, she left school, went with him and
tively chipper.” She had taken the “Yesterday, my but remembers her started a dinner theater, which
Oxford letter and cut out key daughter learned parents’ comfort- didn’t require a college education.
phrases—“after careful consider- that she hadn’t ing message, the Later, when he was out of the
ation” … “sorry not to have bet- got into Oxford. most important be- military, she wanted to attend
ter news” …. “not been possible By the time I got ing it wasn’t about Brown University and study the-
to offer you a place” … “no lon- in from work, she’d her, or anything she ater arts. Instead she went to, and
ger under consideration”—and in- made this from her did or didn’t do. It graduated from, the University of
corporated them into a painting. rejection letter.” It was more that Yale Rhode Island because her husband own schools and obtained her
“I suppose when you are rejected was retweeted 52,000 wasn’t the right place for taught there and tuition was free. doctorate in Educational Leader-
by something, your first instinct times at last count. her particular talents. Her She waitressed, wrote for a lo- ship from the University of Penn-
is to slightly mock it,” says Clau- Diane Barth, a clinical social dad likened her to a “trumpet cal newspaper and taught theater sylvania.
dia, who called the painting ther- work psychotherapist, reminds player” and said Yale didn’t need a to support her children after get- “I talk with parents and the
apeutic. Her mother called it parents that helping their child trumpet player in its freshmen ting a divorce. Dr. Sands ended girls about how my life took all
“brilliant.” manage this disappointment will class but that another school did up moving to North Carolina and sorts of twists and turns, how I
Claudia wasn’t going to show help when they don’t get the job and when she found that school, it teaching drama at a private girls’ was disappointed and didn’t go to
it to anyone else, but when her or promotion they wanted, or are would be the perfect fit. school, where her mother was the college I wanted or get the job
mother reacted so positively, she jilted by a girlfriend or boyfriend. Dr. Sands says not getting into headmistress. She eventually re- I wanted,” she says. Each disap-
decided to share it with friends “There are a lot of disappoint- the “best school” in terms of rank- alized she wanted to become a pointment, she tells them, put her
on Facebook. “Then I won’t have ments in life and this is an impor- ings can lead to choices and expe- school administrator and run her on a new path forward.

THE MIDDLE SEAT | Scott McCartney

WILL YOUR LOST BAG STILL COUNT AS LOST?

AN INNOVATION AIMING to streamline at the baggage-service office to file a claim.
how air passengers reconnect with their lost “We view that as one of the worst cus-
luggage comes with a major asterisk: Airlines tomer experiences, because the minute that
would no longer count that luggage as lost. plane took off, American Airlines knew that
Several carriers already alert travelers bag wasn’t going to fly with the customer,”
when their checked baggage doesn’t make says Julie Rath, managing director of cus-
their flight. Those texts or emails save pas- tomer service recovery.
sengers from waiting needlessly at baggage The system means the mishandled bag
carousels. Customers can go straight to the won’t be reported to the DOT unless the
baggage-service office and fill out paper- customer files a separate complaint. “Our
work, including where to deliver the bag goal here is really make it as easy as possi-
when it does show up. ble for the customer and don’t make them
But soon United, Delta and American and wait,” Ms. Rath says.
others say they’ll be able to not only alert Alaska says only that it will have more to
travelers but also let them give electronic say about baggage changes later this year.
PATRICK SEMANSKY/DENVER POST/GETTY IMAGES

instructions for where they want the lost Delta is downright guarded on the topic:
bag delivered. “We will comply with direction from the
That’s a huge timesaver for passengers. DOT,” a Delta spokeswoman says.
It’s also a quiet, clever way for airlines to United says its electronic-response sys-
improve their baggage-handling stats. tem will launch later this spring. Text mes-
No stop at the baggage office means no sages will allow customers to immediately
paperwork. No paperwork means no report set up delivery options by clicking on a link
to the Transportation Department. Those that connects to United’s website, spokes-
lost bags will never be found in government man Charles Hobart says. The alerts are
statistics. likely to be delivered to customers in-flight,
Baggage handling is one of the biggest if they use the plane’s Wi-Fi service, or upon
sources of travel hassle and complaints. Pas- landing.
sengers still chafe at the $4 billion annually United confirms the change will reduce
paid to U.S. airlines in baggage fees. Law- Airlines say they’ll soon be able to let you electronically send delivery instructions for lost luggage the number of mishandled bags reported to
makers have forced airlines to alter baggage so you don’t have to wait in line at the baggage office. That also means your mishandled bag the DOT.
rules, such as requiring refunds of those won’t get counted in government statistics. “That’s not why we are doing this,” Mr.
fees when bags aren’t delivered in a timely Hobart says. “We’re offering this option
manner. thors of the annual airline ranking. “If they ing the situation. purely as a way to improve the customer ex-
The DOT statistics, which count the num- start hiding what they are doing, how can American, Delta, United and Alaska air- perience and provide more self-service op-
ber of mishandled bags on domestic trips, you make a good consumer decision?” lines say they will implement mishandled-bag tions.”
are a factor in the Middle Seat’s annual The DOT says current regulations require response systems for customers this year. United bought equipment to increase the
scorecard of airline performance. The Airline airlines to count only passenger-filed mis- American says its system will eventually number of times a bag tag gets scanned
Quality Rating, an annual study based on handled baggage reports. If a passenger sync with its baggage-delivery company so along its journey to five from three, enabling
analysis of DOT data, also relies on mishan- agrees to a rerouting of the bag on a later customers can track bags after the airline the airline to have better information on each
dled baggage reports to compare airlines. flight and doesn’t file a report with the car- turns them over. The first version, which bag’s location and send alerts about mishan-
“This would create a false impression in rier, the late bag won’t be counted. Asked if American is rushing to launch before sum- dled bags to customers, Mr. Hobart says.
the performance of an airline,” says Dean the DOT is concerned that its data will no mer, will let customers give delivery instruc- United has contact information on about
Headley, associate professor of marketing at longer reflect the true number of mishan- tions and avoid waiting for the last bag to 90% of its customers, so many get alerts
Wichita State University and one of the au- dled bags, the department says it’s monitor- come up the carousel and then wait in line now when bags miss flights, he says.
A10 | Thursday, March 30, 2017 THE WALL STREET JOURNAL.

OPINION
REVIEW & OUTLOOK
The Too-Darn-Bad
Trump’s Energy Progress Scandal at Google
O
ne area where President Trump is bon, as Bracewell & Giuliani’s Scott Segal ex-
notching early victories is unleashing plained to Congress at a 2015 hearing. The Selling ads against Which is fine, but it also means en-
user-generated con- during the limitations inherent in the
American energy, which for years has Obama Administration rolled out these new cal-
tent was always a possibility of monetizing such content.
been held hostage to progres- culations with no public com- risky proposition, in This passing storm, in fact, is one
sive climate obsessions. On A new executive ment, and the models surely which Google and its that Google has long anticipated. Some
Tuesday Mr. Trump signed an order stops Obama’s wouldn’t survive a rigorous advertisers indulged of its big initiatives have been aimed at
executive order to rescind peer review. with their eyes open finding ways, preferably without paying,
many of the Obama Adminis- war on fossil fuels. Our contributor Paul Tice BUSINESS
on Google’s YouTube of getting traditional television-style
WORLD
tration’s energy directives, makes an intriguing case nearby By Holman W.
platform. content, made with pleasing potential
and he deserves credit for that the Trump Administration Now this predict- advertisers in mind, against which to
Jenkins, Jr.
ending punitive policies that harmed the econ- should go further to bring regulatory certainty for able challenge has use its ad-targeting skills.
omy for no improvement in global CO2 emis- energy investment. He argues that the EPA should produced an alleged These include its Google Fiber proj-
sions or temperatures. revisit its 2009 “endangerment finding,” which crisis for the internet, as businesses as ect, its attempt (with the Obama ad-
diverse as Hyundai, L’Oréal and ministration) to force new set-top box
The order directs the U.S. Environmental Pro- blacklisted carbon dioxide as a pollutant.
McDonald’s march off in a huff and rules on the cable-TV industry, and its
tection Agency to review the Clean Power Plan, The Trump Administration could update this say they can no longer advertise on current effort to develop a YouTube-
which the Supreme Court stayed last year in an finding, as recent literature has revealed a pause YouTube. based cable-TV substitute.
extraordinary rebuke. The plan essentially in rising global temperatures that can’t be ex- That ads are ending up next to
forces states to retire coal plants early, and the plained by carbon reductions. Meantime, pro- content they find inappropriate and
tab could top $1 trillion in lost output and gressives will continue to flog the endangerment offensive might seem a big yawn. Hey, advertisers, some of
125,000 jobs, according to the American Action finding in court as long as it exists, and then use Google’s algorithms are good at pick- us supply content that’s
Forum. Also expected are double-digit increases it as a pretext for more regulation when a Demo- ing out which viewers are likely to
in the price of electricity—and a less reliable crat returns to the White House. bite on which ads, then good at tasteful and family-friendly.
power grid. All for nothing: A year of U.S. reduc- Another question is whether President tracking these users across the web
even when they linger on sites de-
tions in 2025 would be offset by Chinese emis- Trump will withdraw from the Paris climate
voted to anti-Semitic rants or terror- For his part, Facebook’s Mark
sions in three weeks, says Rice University’s deal, which would—in theory—force annual U.S. ism promotion. Zuckerberg has also made it clear
Charles McConnell. emissions reductions of 26% over 2005 levels by Understandably, though, advertis- that somehow getting Facebook into
The rule also fulfills a campaign promise to 2025. That decision is “still under discussion,” ers, especially those with a brand to the TV business is his next big prior-
end Barack Obama’s war on coal. It’s true that according to a White House official who briefed promote, aren’t keen when this fact is ity. Again, the goal is professionally
market forces are reducing coal’s share of U.S. reporters Monday night. rubbed in their faces. That was always produced content against which to
electric power—to some 30% from about 50% a Yet the Clean Power Plan would only fulfill a a risk they took. And lord knows, deploy Facebook’s copious ad-target-
decade ago—thanks mainly to fracking for natu- fraction of the U.S. Paris commitments at an ex- plenty of content producers are willing ing information gleaned from its 1.8
ral gas. Yet Mr. Obama still deployed brute gov- orbitant cost. Not even Mr. Obama’s entire regu- and eager to produce content that fits billion users.
ernment force to bankrupt the coal industry. Mr. latory agenda would have reached the targets. the needs of advertisers. You are look- Show us how it’s done, boys. For all
Trump is right to end that punishment and let Already other countries with no intention of re- ing at one right now. the moaning about cable bills, Ameri-
Not without poetic significance, the cans have been willing to pay them. In
the market, not federal dictates, sort out the ducing their emissions are demanding U.S. com-
YouTube fury was kicked off by a fact, Americans suddenly seem almost
right energy mix for the future. pliance and threatening tariffs, so a prompt exit newspaper, the Times of London, endlessly willingly to pay for content.
The story is similar on a methane rule that may minimize the damage. whose investigation found numerous Millions not only fork up for cable but
the executive order will begin to roll back. Total Environmental groups are accusing Mr. cases of respected brands showing up for Amazon Prime, HBO, Netflix,
U.S. methane emissions have dropped 15% since Trump of “reversing climate progress,” even as against unacceptable videos. Worse, Showtime, etc. They fork up for Spo-
1990, as Bernard Weinstein of Southern Method- they call the order “symbolic” because the regu- technically a few pennies of the pro- tify’s ad-free music service. To assure
ist University told the House last fall, even latory damage to the coal industry—from rules ceeds even flowed to the unacceptable access to all this content, they pay
though domestic oil-and-gas production has on mercury, ozone, dust—is mostly irreversible. content’s creator. two broadband bills, one at home and
doubled over the past decade. One reason is that In any event, Scott Pruitt’s EPA can expect law- Is it me or are certain Google part- one for mobile.
energy companies have a financial incentive to suits that may take years to untangle. ners, like newspapers, taking a muf- On top of this, Americans are still
capture the stuff and sell it. Still, the EPA pro- The Trump order is a promise in the bank for fled delight in this scandal? Print keen to pay for content in yet an ad-
publishers have long chafed under ditional way, via their tolerance for
mulgated expensive new emissions targets, the voters who elected the President because he
Google’s business model, which con- ads. Sorting out the right ad-sup-
equipment rules and more. promised to focus on jobs and revving up the sists of collecting 100% of the reve- ported business models for the future
The order also dumps the “social cost of car- economy. It’s also a welcome return to regula- nue from selling ads against content will be a challenge. Linear TV—the
bon,” which is a tool the Obama Administration tory modesty: One of the more outrageous as- that someone else bore 100% of the kind pouring out of your cable box—is
employed to junk mandatory cost-benefit analy- pects of the Obama anticarbon agenda is that cost of producing. largely doomed, except for sports and
ses for regulations. agencies rammed through what Congress re- The parent of Britain’s Guardian news. Or so insists Netflix CEO Reed
For example: An EPA power-plant rule pre- fused to pass in legislation. newspaper positively chortled amid Hastings.
dicted net benefits from $26 billion to $46 bil- As for climate change, President Trump’s or- its crocodile tears: “It is completely Facebook, Google and their col-
lion, but as much as 65% of that derived from der will have the same practical effect on rising unacceptable that Google allows ad- leagues presumably are inventing a
guesswork about the positives of reducing car- temperatures as the Clean Power Plan: none. vertising for brands like the Guardian brave new future for the ad-backed
to appear next to extremist and hate- consumer services. Ads would become
filled videos.” less cluttery. They would be more pre-

Yellen’s Labor Forces Noisily marching off too were AT&T

and Verizon Wireless, both currently
cisely targeted, serving both market-
ers and consumers better. In the pro-

F
adapting their business models to cess, incalculable opportunities
ederal Reserve Chair Janet Yellen set munities and in distressed, white-majority compete with the dominant duo in supposedly would be created to dun
aside her monetary-policy cap Wednes- towns across the U.S. digital advertising, Google (or its par- the masses with valuable new services
day to give an interesting talk about the What to do? Ms. Yellen of course led her list ent, Alphabet) and Facebook. The on a free, ad-supported basis.
importance of getting the with improving general edu- wireless carriers would do so, notice, Google and Facebook should get on
least well-off Americans into The Fed Chair elevates cation, which has faltered, by giving advertisers professionally with it. That means refraining from ex-
decent jobs. she modestly noted, “for a produced content to serve as backdrop cessively censoring their users. It also
She bluntly cited data on
a good cause beyond wide variety of reasons that for their ads. means providing advertisers with en-
interest rates. Confronted with such challenges, forceable guarantees about what type
the people who the economy’s are beyond the scope of this
Google and Facebook have long in- of content their ads will appear next
recovery passed by. From talk.” She emphasized the im- sisted they are tech companies, not to. Neither likes the idea of opening its
2011 through 2015, unemploy- portance of work, noting the media companies. They shouldn’t be systems to third-party monitoring.
ment in low- and moderate-income communi- long-term benefits of high-school seniors who held responsible for the content that Maybe that’s the place to start. Also,
ties averaged 13%. worked 20 hours a week. users generate. Their role is to enable maybe one or both should think about
She described the lifetime income dispari- Her speech had other good ideas, but we communication, not censor it. buying and running a newspaper.
ties that exist between those with a college ed- were struck by how virtually all of Ms. Yellen’s
ucation and individuals who don’t complete remedies flowed from government institutions.
high school. Between 2011 and 2015, the high- Maybe it’s asking too much to think the head
LETTERS TO THE EDITOR
school drop-out rate in less well-off communi- of the Federal Reserve would mention public-
ties was an awful 23.5%. school alternatives, and perhaps she believes Neil Gorsuch and Crossing the Last Great Bar
Let us note here that one of the indisput- charter schools and vouchers are bad ideas.
Regarding Sohrab Ahmari’s “A Read Oregon’s aid-in-dying law went into
able realities pressed home in the 2016 elec- But nonprofits funded by the private sector are on the Conscience of Neil Gorsuch” effect in 1997) as reported in a 2007
tion is that these destructive, downwardly doing strong work. Noting them would have (op-ed, Mar. 21): The article conflates study in the Journal of Medical Ethics.
mobile pressures exist both in minority com- benefited the Fed Chair’s good cause. aid in dying (or what opponents erro- To the contrary, for 19 years the law
neously term “assisted suicide”), an in Oregon has proved that aid in dying
issue seriously being debated across is a safe practice, rarely used (only in
Lack of House Intelligence America, and euthanasia, which isn’t
an issue being debated in the U.S. in
about one in 300 deaths) and causes
no harm. About 70% of Americans

D
evin Nunes is refusing Democratic calls tapped him in Trump Tower. Mr. Nunes has said any meaningful way. support aid in dying, as do doctors by
to resign as chairman of the House In- he’s seen no evidence of that. But the issue of To be clear, aid in dying is the about a two-to-one margin, according
telligence Committee, and rightly so. If whether and why the Obama Administration process by which a mentally compe- to a 2016 poll.
tent, terminally ill patient may ob- There is no evidence of coercion or
Mr. Nunes is going to step was listening to Trump offi- tain a prescription of medications abuse. With regard to people with dis-
down for speaking out of If Devin Nunes has to cials is important for the pub- which the patient may take (and abilities, as of last year Disability
school to the White House resign, then so lic to know. The U.S. govern- must self-administer) if he or she Rights Oregon had “not received a
about his probe, then ranking ment must have a very good chooses, to end suffering and achieve [single] complaint of exploitation or
Democrat Adam Schiff should should Adam Schiff. reason for eavesdropping on a peaceful death. coercion of an individual with disabili-
also resign for spreading innu- political opponents, and civil Aid in dying has not had a dispro- ties in the use of Oregon’s Death with
endo without evidence across libertarians would be shouting portionate impact on vulnerable popu- Dignity Act.”
the airwaves. if Mr. Flynn were a Democrat. lations (a legitimate concern before Aid in dying is an option that dying
Mr. Nunes blundered when he informed the Which brings us to Mr. Schiff, who while pos- patients should have when they de-
White House about some information he received ing as a truth-teller is becoming more partisan cide that their suffering has become
without first telling committee Democrats. The by the hour. The California Democrat started It May Make the World Go unbearable.
DAVID C. LEVEN
intelligence panel is one of the least partisan on out telling everyone that there is “circumstan- Round, but What’s Money? Executive Director Emeritus
Capitol Hill, and Mr. Nunes handed Democrats tial evidence of collusion” between Mr. Trump’s “On Inflation, Assumptions May Be End of Life Choices New York
an opening to cast doubt on his fairness. He presidential campaign and Russia. He later es- All Wrong” (March 7) misses the most New York
should protect his own credibility more than he calated to claiming “there is more than circum- critical issue regarding the determina-
protects the White House, which has nothing to stantial evidence now,” without providing any tion of prices. Monetary measurements If our so-called best and brightest
worry about if President Trump’s claims about such evidence. If Mr. Schiff is so confident of are wrong, not the theory. Milton political elites were to marry govern-
his lack of Russian ties are true. the Russia-Trump connection, why not wait for Friedman argued that money supply is ment-run, single-payer health care
But the main reason Democrats are mad at the evidence to come out? the sum of currency and bank depos- with the extreme result of the “right
Mr. Nunes is because he’s raising an issue they’d Meanwhile, Mr. Schiff evinces no interest in its—not simply how much money a to die” movement as outlined in Judge
rather avoid—to wit, that he’s seen documents discussing, or even investigating, what hap- central bank prints. Since Friedman’s Neil Gorsuch’s writings (that is, forced
day, the construct of money has euthanasia), at what young age might
showing that U.S. intelligence agencies may pened to Mr. Flynn and why. Maybe he’s shout-
changed as distant substitutes for such a government then deem certain
have “incidentally” collected information about ing so much about Mr. Nunes because he money have evolved. people “unproductive,” “parasitical”
people connected to Mr. Trump. doesn’t want to know the answers to the ques- Today, Prof. William A. Barnett ad- or even “unworthy of existence” be-
We know from leaks to the media that one tions the Republican is asking. vocates an even more expansive defi- cause of their political views?
of those people was former national security One question to ask about the eavesdropping nition of money as well as quantita- This miserable stew could be a ty-
adviser Mike Flynn, who lost his job over the on Mr. Flynn is whether there was “reverse tar- tively differentiating among various rannical regime’s greatest dream
news. These columns have been asking since the geting”—that is, whether a FISA order was put contributors to money in the economy. come true.
Flynn news broke whether there was a proper on the Russian ambassador Mr. Flynn spoke with When evaluated through the proper LAURELLA A. CROSS
FISA court order for this eavesdropping, or why in order to listen to Trump officials. We ask be- lens, the absence of inflation coinci- Irvine, Calif.
if it was incidental was it spread widely enough cause reverse targeting was a big concern among dent with quantitative easing is read-
ily explained. Money growth was ei-
to leak? Such information is supposed to be Democrats like Senator Ron Wyden when sur- Letters intended for publication should
ther negative or well below rates be addressed to: The Editor, 1211 Avenue
“minimized” and not widely shared so innocent veillance legislation was last debated. associated with inflation. Similarly, to- of the Americas, New York, NY 10036,
Americans are protected if they happen to There’s plenty of partisanship on both sides day with money growth over 5%, or emailed to wsj.ltrs@wsj.com. Please
speak to a foreigner who is surveilled. of House Intelligence, and we wish they be- global reflation should be no surprise. include your city and state. All letters
Mr. Trump was wrong to claim that Mr. haved better. But the larger goal is to find out, LAWRENCE GOODMAN are subject to editing, and unpublished
Nunes has vindicated his famous tweet of three and tell the public, what happened, and that’s Center for Financial Stability letters can be neither acknowledged nor
returned.
weeks ago that President Obama had wire- what they ought to focus on. New York
THE WALL STREET JOURNAL.
Trump’s Next Step on Climate Change
By Paul H. Tice
T
he executive orders on cli-
mate change President
Trump signed this week
represent a step in the
right direction for U.S. en-
ergy policy and, importantly, deliver
on Mr. Trump’s campaign promise to
roll back burdensome regulations af-
fecting American companies. But it
will take more than the stroke of a
pen to make lasting progress and re-
verse the momentum of the climate-
change movement.
On Tuesday, in a series of orders,
Mr. Trump instructed the U.S. Envi-
ronmental Protection Agency to re-
work its Clean Power Plan, which
Reconsider the EPA’s
labeling of carbon dioxide
as a pollutant, based on
now-outdated science.
would restrict carbon emissions from
existing power plants, mainly coal-
fired ones. Last year the U.S. Su-
preme Court stayed enforcement of
the CPP pending judicial review.
Mr. Trump also directed the Inte-
rior Department to lift its current mor-
atorium on federal coal leasing and
loosen restrictions on oil and gas de-
velopment (including methane flaring)
on federal lands. And he instructed all
government agencies to stop factoring
climate change into the environmen-
tal-review process for federal projects.
The federal government will recalcu-
late the “social cost of carbon.”
A Single Market That Is Worth Fighting For
By Elisabeth Braw
E
urope’s defense spending is un-
der scrutiny as U.S. President
Trump demands more such in-
vestment and European leaders at-
tempt to respond to that call—and to
new strategic threats—with talk of a
European defense force and other mea-
sures. This could at last present an op-
portunity to deal with Europe’s other
pressing defense-spending problem:
not only how much Europe spends, but
to whom it gives the money.
Consider that when the French
government’s defense-procurement
agency announced in January that it
would buy 339 new armored person-
nel carriers, or APCs, from a consor-
tium of three French defense compa-
nies, few were surprised. Though the
European Union has a single market
for defense equipment, in reality gov-
ernments can ignore the rule, known
as Directive 81.
Directive 81’s escape clause, Arti-
cle 346, allows countries to award de-
fense contracts to domestic compa-
nies where national security is at
stake. But the 140-page directive
lacks a clear definition of national se-
curity. As Daniel Fiott, a security-
and-defence editor at the EU Institute
for Security Studies, recently told
How Trump Can Break the Washington Gridlock
Donald Trump wasn’t
elected to perpetuate
the ideologically
driven gridlock of the
past six years. But his
decision to pursue a
POLITICS one-party approach
& IDEAS on health care threat-
ened to do just that.
By William
Now that this ap-
A. Galston
proach has failed, Mr.
Trump has an oppor-
tunity to begin again with a more in-
clusive strategy, as many members of
his own party are urging.
Pennsylvania Rep. Charlie Dent, a
leader of the center-right Republican
Tuesday Group, told NBC on Sunday
that “in order to reform health care
in this country, we are going to have
to do it in a durable, sustainable way
and in a bipartisan manner.”
Ohio’s Gov. John Kasich declared
the same day on CNN that “you can-
PUBLISHED SINCE 1889 BY DOW JONES & COMPANY
Rupert Murdoch
Executive Chairman, News Corp
Gerard Baker
Editor in Chief
Matthew J. Murray
Deputy Editor in Chief
DEPUTY MANAGING EDITORS:
Michael W. Miller, Senior Deputy;
Thorold Barker, Europe; Paul Beckett,
Washington; Andrew Dowell, Asia;
Christine Glancey, Operations;
Jennifer J. Hicks, Digital;
Neal Lipschutz, Standards; Alex Martin, News;
Shazna Nessa, Visuals; Ann Podd, Initiatives;
Matthew Rose, Enterprise;
Stephen Wisnefski, Professional News
Paul A. Gigot, Editor of the Editorial Page;
Daniel Henninger, Deputy Editor, Editorial Page
WALL STREET JOURNAL MANAGEMENT:
Suzi Watford, Marketing and Circulation;
Joseph B. Vincent, Operations;
Larry L. Hoffman, Production
EDITORIAL AND CORPORATE HEADQUARTERS:
1211 Avenue of the Americas, New York, N.Y., 10036
Telephone 1-800-DOWJONES
These actions are a good start, but
all they do is reverse many of the ex-
ecutive orders President Obama
signed late in his second term. While
easy to implement and theatrical to
stage, such measures are largely su-
perficial and may prove as temporary
as the decrees they rescind.
Because they don’t attack the cli-
mate-change regulatory problem at
its root, Mr. Trump’s orders won’t
provide enough clarity to U.S. energy
companies—particularly electric util-
ities and coal-mining companies—for
their long-term business forecasting
or short-term capital investment and
head-count planning.
To accomplish that, the Trump ad-
ministration, led by EPA Administra-
tor Scott Pruitt, needs to target the
EPA’s 2009 “endangerment finding,”
which labeled carbon dioxide as a
pollutant. That foundational ruling
provided the legal underpinnings for
all of the EPA’s follow-on carbon reg-
ulations, including the CPP.
It also provided the rationale for
the previous administration’s anti-
fossil-fuel agenda and its various cli-
mate-change initiatives and pro-
grams, which spanned more than a
dozen federal agencies and cost the
American taxpayer roughly $20 bil-
lion to $25 billion a year during Mr.
Obama’s presidency.
The endangerment finding was the
product of a rush to judgment. Much
of the scientific data upon which it
was predicated—chiefly, the 2007
Fourth Assessment Report of the
United Nations’ Intergovernmental
Panel on Climate Change—was al-
ready dated by the time of its publica-
tion and arguably not properly peer-
reviewed as federal law requires.
me, “although clearly counter to EU
law, some countries define job pro-
tection as national security.”
Some EU members make liberal
use of Article 346 and its national-se-
curity clause. Though EU officials are
unwilling to name and shame, France
and Italy are most commonly blamed
for subverting Directive 81.
“France and some other countries
could show that they have imple-
mented the directive in a serious
way,” says Anders Sjöborg, general
counsel at the Swedish Defence Mate-
riel Agency. “But they seem to have
national considerations in awarding
a substantial portion of defense con-
tracts to domestic contractors.”
Aude Fleurant, director of the arms
and military expenditure program at
the Stockholm International Peace Re-
search Institute, told me that “France
promotes European defense integra-
tion, but it would prefer European
countries to buy from French compa-
nies instead of buying from other Eu-
ropean suppliers and U.S. companies.”
EU defense tenders can often be writ-
ten in such a way that only the desired
winners fit the bill.
According to Sam Perlo-Freeman,
an arms-trade expert at Tufts Univer-
sity’s Fletcher School of Law and Di-
plomacy, Directive 81 has had mini-
not have major changes in major pro-
grams affecting things like health
care without including Democrats
from the very beginning.” Mr. Kasich
placed this point in a broader con-
text: “The Republicans tried to do it
with just Republicans. It doesn’t work
like that in our country. We are not a
parliamentary system.”
Sen. Lindsey Graham, speaking
Saturday at a town hall in Columbia,
S.C., said that what should happen
next is that “the president should
reach out to Democrats, I should
reach out to Democrats, and we
should say ‘Let’s get a shot at doing
this together, because it ain’t working
doing it by ourselves.’ ”
Maine’s Sen. Susan Collins ex-
pressed optimism about this strat-
egy: “With the demise of the House
bill, there’s a real window of opportu-
nity for a bipartisan approach to
health care.”
Robert Thomson
Chief Executive Officer, News Corp
William Lewis
Chief Executive Officer and Publisher
DOW JONES MANAGEMENT:
Mark Musgrave, Chief People Officer;
Edward Roussel, Innovation & Communications;
Anna Sedgley, Chief Operating Officer & CFO;
Katie Vanneck-Smith, President
OPERATING EXECUTIVES:
Ramin Beheshti, Product & Technology;
Jason P. Conti, General Counsel;
Frank Filippo, Print Products & Services;
Steve Grycuk, Customer Service;
Kristin Heitmann, Transformation;
Nancy McNeill, Advertising & Corporate Sales;
Jonathan Wright, International
DJ Media Group:
Almar Latour, Publisher;
Kenneth Breen, Commercial
Professional Information Business:
Christopher Lloyd, Head;
Ingrid Verschuren, Deputy Head
OPINION
Signing an executive order eliminating climate-change regulations on Tuesday.
With the benefit of hindsight—in-
cluding more than a decade of actual-
versus-modeled data, plus the in-
sights into the insular climate--
science community gleaned from the
University of East Anglia Climategate
email disclosures—there would seem
to be strong grounds now to recon-
sider the EPA’s 2009 decision and is-
sue a new finding.
In 2013, the IPCC issued a more cir-
cumspect Fifth Assessment Report,
which noted a hiatus in global warm-
ing since 1998 and a breakdown in cor-
relation between the world’s average
surface temperatures and atmospheric
carbon dioxide levels, causing the U.N.
body to revise down its 2007 projec-
tions for the rate of planetary warming
over the first half of the 21st century.
Although this initially reported
“pause” was subsequently eliminated
through the downward manipulation
mal effect on the way in which
Europe’s major military powers buy
major weapons systems.
But Mr. Sjöborg also points out
that countries have a legitimate rea-
son for choosing domestic providers:
It helps keep vital expertise in the
country. And Ms. Fleurant, previously
Consolidation on defense
spending would create
efficiencies and improve
competitiveness.
director of arms and defense econom-
ics at the French Defense Ministry’s
think tank, Irsem, told me that the
French government buys from French
companies not just to secure jobs but
to keep strategic arms capabilities in
France. Of the three defense compa-
nies in the consortium of APC manu-
facturers, the French government is a
part-owner of Nexter and Thales, and
is eager to help Renault Truck De-
fence, which Volvo plans to sell.
The European Commission doesn’t
know how many times Directive 81’s
escape clause has been invoked.
Though the EU maintains a database
Why didn’t the House Freedom
Caucus support the GOP health bill?
“I have no idea,” Mick Mulvaney,
President Trump’s budget director,
told NBC on Sunday. “I know the
Freedom Caucus. I helped found it. I
never thought it would come to this.”
Mr. Mulvaney must have slept
through the events that culminated
in John Boehner’s resignation.
The question now is whether the
Trump administration will allow its
entire agenda to be held hostage by
a minority faction of Republicans
who will accept nothing less than
policy purity—as they define it. This
is the inevitable consequence of try-
ing to legislate with the votes of
only one party. But there are signs
that the White House is contemplat-
ing a course correction. “This presi-
dent is not going to be a partisan
president,” Chief of Staff Reince
Priebus told Fox News. “It’s time to
potentially get a few moderate Dem-
ocrats on board.”
It isn’t clear, however, that Mr.
Priebus understands the implications
Notable & Quotable: Tax Cuts
From James Freeman’s Best of the
Web, WSJ.com, March 27:
There will be many opportunities
for bipartisanship and Republicans
should seize them whenever sensi-
ble. But Republicans should first
agree among themselves to stop
playing by Washington budget rules
that were largely written by Demo-
crats and were created in part to
prevent tax cuts.
This means that House Republi-
cans should abandon the idea that
their pending tax relief effort must
be “revenue-neutral” according to
the chronically flawed projections of
Thursday, March 30, 2017 | A11
REUTERS
of historical temperature data, this
latest IPCC assessment calls into
question both the predictive power
and input-data quality of most global
climate models, and further high-
lights the scientific uncertainty sur-
rounding the basic premise of an-
thropogenic climate change.
An updated EPA endangerment
finding based on an objective review
of the latest available scientific data
is warranted, along with a more so-
ber discussion of the threat posed by
carbon dioxide and other greenhouse
gases to the “public health and wel-
fare of current and future genera-
tions,” in the words of the original
endangerment finding.
As long as the 2009 finding re-
mains on the books, it will provide le-
gal ammunition for environmental-
ists, academics and state government
officials seeking to sue the adminis-
for arms procurements, not every
tender is logged there. And when a
country awards a defense contract to
one of its own companies, it doesn’t
have to specify why. As a result, even
though the commission measures ev-
erything from Europeans employed
in sport and Europeans’ self-per-
ceived health and well-being, it has
no hard figures on weapons.
The commission is aware of the
problem. In its November 2016 De-
fence Action Plan, it vowed to “push
ahead with the effective application”
of Directive 81. But it didn’t say what
that would entail. “Even with the di-
rective it’s extremely difficult to fully
liberalize the market,” Mr. Fiott said.
For now, there’s little the commission
can do to force a single defense mar-
ket on Europe.
But an EU where defense contractors
are propped up by arbitrary national-
security needs is unsustainable. The
arms-producing countries that by and
large comply with Directive 81—pri-
marily Sweden and the soon-to-be-de-
parting U.K.—are unhappy that others
can effectively ignore the arms single
market. But their fair play comes with
some calculation, too. Their defense
companies want to export more.
A functioning single market for
weapons would, in fact, benefit the Eu-
of his statement. Real bipartisanship
means getting the parties together
around a table at the beginning of the
legislative process. Asking Democrats
to sign on to bills that Republicans
The answer is to get
both sides together
from the outset of the
legislative process.
have already drafted won’t work; not
enough of them will break ranks to
change the dynamic.
In today’s polarized climate, real bi-
partisanship needs to make it impossi-
ble for the most intransigent forces to
veto potential agreements. This means
building coalitions from the center out,
beginning with the forces in both par-
ties that do not reject the very legiti-
macy of compromise.
If the White House gets serious
about this approach, it won’t need to
Washington’s Joint Committee on
Taxation and Congressional Budget
Office. U.S. workers—and those who
would like to find work—need the
economy to grow faster than the me-
diocre pace of the Obama era. . . .
Across-the-board cuts for individ-
uals and a big cut in the corporate
rate are reforms to which the Free-
dom Caucus won’t object. Such a
program is bound to spoil the cele-
bratory mood at DNC headquarters,
but a big tax cut will turn frowns up-
side down for a broad swath of the
electorate, and begin the growth
break-out that investors have been
hoping for since Election Night.
tration for any actions related to cli-
mate change, including this week’s
executive orders.
Issuing a new endangerment find-
ing would be a bold move requiring
thorough work, but the Trump EPA
would be well within its legal rights
to undertake such an updated review
process. In Massachusetts v. EPA
(2007), the Supreme Court ruled that
the Clean Air Act gives the EPA the
authority, but not the obligation, to
regulate carbon dioxide and other
greenhouse gases. The EPA needs to
“ground its reasons for action or in-
action” with “reasoned judgment”
and scientific analysis.
Addressing the 2009 endanger-
ment finding head-on would show
that Mr. Trump is serious about chal-
lenging climate-change orthodoxy.
Thus far he has sent a mixed message,
as demonstrated by this week’s am-
bivalence on CPP (reworking rather
than repealing) and his administra-
tion’s silence on U.S. participation in
the U.N.’s 2015 Paris Agreement.
Simply standing down on regula-
tory enforcement, cutting govern-
ment funding for climate-change re-
search and stopping data collection
for the next four years will not suf-
fice. Ignoring the EPA’s 2009 endan-
germent finding would mean that it
is only a matter of time before an-
other liberal-minded occupant of the
White House reasserts this regula-
tory power, bringing the country and
the domestic energy sector back
where Mr. Obama left them.
Mr. Tice is an executive-in-resi-
dence at New York University’s Stern
School of Business and a former Wall
Street energy research analyst.
ropean defense industry. Europe’s large
number of national-defence contrac-
tors is a legacy of centuries of conflict,
but domestic contracts are no longer
enough to sustain defense companies.
In large foreign markets such as China,
local defense companies are catching
up with the product quality of Euro-
pean firms. Simply put, Europe makes
too many frigates and fighter jets.
But there’s good news: The private
sector can succeed where the com-
mission has failed. Because a func-
tioning single market would allow
European defense companies to con-
solidate, the industry is pushing for it
more enthusiastically than EU policy
makers. For example, Nexter, the APC
manufacturer partially owned by the
French government, merged with
Germany’s KMW in 2015.
For industry consolidation to work,
Europe needs to consolidate demand
too. Governments must put national
pride aside and get serious about joint
procurement. As the French govern-
ment is acutely aware, with a single
market some companies will lose con-
tracts. But Europe’s best defense
equipment will survive. That’s better
than pretend procurement needs.
Ms. Braw is a nonresident senior
fellow at the Atlantic Council.
start from scratch. Thirty-six repre-
sentatives, evenly balanced between
Democrats and Republicans, have
formed the independent Problem
Solvers Caucus, co-chaired by New
Jersey Democrat Josh Gottheimer
and New York Republican Tom Reed.
(Full disclosure: I am a co-founder of
No Labels, a bipartisan group that
some years ago set in motion the
process that led eventually to the for-
mation of this caucus.)
Many of these elected officials
have been working together across
party lines for years and can boast
some modest legislative successes.
Now they are developing common ap-
proaches to many of the forthcoming
issues, beginning with the resolution
to continue government funding be-
yond its current expiration date of
April 28.
On Feb. 8, all 36 Problem Solvers
sent President Trump a letter re-
questing a meeting to discuss where
they could work together with his ad-
ministration. The signatories pointed
out that “the most consequential and
long-lasting reforms are usually bi-
partisan, from the passage of Social
Security and Medicare to the last
time comprehensive tax reform in
1986 was achieved.”
They declared their willingness to
begin working immediately with the
White House on tax reform and infra-
structure legislation. “Addressing ei-
ther issue on a broad bipartisan ba-
sis,” they said, could “give a
significant boost to our economy and
provide Americans with confidence
that government can work for them.”
As Rep. Adam Kinzinger (R., Ill.), a
member of the Problem Solvers, re-
cently said: “I think that’s going to
have to be the new coalition.”
If Mr. Trump wants a strategy that
can break the gridlock and promote
the common good, he knows where
he can start.
 A12 | Thursday, March 30, 2017 THE WALL STREET JOURNAL.

LIFE & ARTS

Though a couple decades off, his
prediction proved prescient. In the
1970s classical artists and academi-
cians like Gunther Schuller and
Joshua Rifkin rediscovered his mu-
sic. Mr. Rifkin’s disc for Nonesuch
became the classical label’s first mil-
lion-seller. Director George Roy Hill
used his music in 1973 for the film
“The Sting,” propelling Joplin’s rag
“The Entertainer” to No. 3 on Bill-
board’s “Hot 100” chart. He received
a posthumous Pulitzer Prize in 1976.
CLOCKWISE FROM LEFT: GETTY IMAGES (3); EVERETT COLLECTION

Interest in Joplin is still robust.

Clockwise from far left: sheet
music for ‘The Entertainer’;
Scott Joplin, c. 1903; sheet
music for ‘Maple Leaf Rag’; a
scene from ‘The Sting’
CULTURAL COMMENTARY
The latest entry in Joplin’s catalog
is the four-disc set of all of his piano
music by pianist William Appling
that was recorded shortly before his
death in 2008 and will be released
Saturday (available from William
Appling Singers & Orchestra). Mr.
Appling was a sensitive artist, ever
mindful of Joplin’s admonition, “It is
never right to play ragtime fast.”
Joplin demanded that his music be
treated not in the usual slapdash
way, but with proper attention, re-
spect and charm. Mr. Appling’s pre-
vious focus on
early American
hymns and
spirituals in-
forms these in-

Hail the King of Ragtime

A new album of all Scott Joplin’s piano music reminds us of his genius
BY STUART ISACOFF light parlors that lined the town’s
main streets. The musical coin of
the realm was ragtime, a style that
APRIL 1 MARKS THE centenary of borrowed its structure from the
the death of Scott Joplin (1867 or March, Polka and Schottische, with
1868-1917), the “King of Ragtime,” 16-bar strains and an “oompah”
and to mark the occasion there’s a bass, but highlighted syncopa-
new recording of his complete piano tion—the “weird and intoxicating”
music by William Appling that re- effect, in Joplin’s words, that hap-
minds us of Joplin’s genius. As one pens when the normal pattern of
of many brilliant talents who strong and weak beats in a piece is
emerged from the country’s under- disrupted by means of an errant
class as the 20th century was just accent. In classical music, that
getting under way, he shepherded topsy-turvy device is often used as
an American musical genre to new a way of toying with expectations
heights of sophistication. Despite his and temporarily heightening ten-
life’s string of successes, in death he sion; in popular music, it settles in
resided in a pauper’s grave that re- as a jittery permanent condition.
mained unmarked for 57 years. Yet ragtime was far more genteel
This son of a former slave, born than the “hot” music that soon blos-
near Texarkana, Texas, was raised somed in New Orleans, Chicago and
in Sedalia, Mo., where encounters New York—it was not rowdy but
with a beat-up old piano obtained charming, bouncy yet refined, and
by his parents led him early on to ever graceful as it sabotaged the
pursue musical opportunities in metrical foundations of its senti-
the saloons, dance halls and red- mental ditties. This approach per-
fectly suited Joplin’s natural inclina-
tions. While absorbing the jazzy
rhythms from his surroundings, he
inherited a love of both classical
music and opera from a German-
Jewish immigrant named Julius
Weiss who gave him free lessons. It
lent his music a rare lyricism. Stud-
ies followed at Sedalia’s George R.
Smith College, established for the
education of black students. Along
the way he formed and toured with
a vocal quartet, and played cornet
as well as piano (notably leading a
band at the 1893 Chicago World’s
Fair). He was a serious, studied mu-
sician and it showed.
Joplin’s affinity for combining
folk sounds and European art mu-
sic is apparent in much of his out-
put. Even his earliest works, like
“Original Rags” (1897), have both
contrapuntal gestures like contrary
motion—a classic technique of
having the hands move in opposite
directions—and blues licks. He was
a standout from the beginning,
and when “Maple Leaf Rag” (1899)
appeared, the public caught on.
The piece eventually sold half a
million copies.
But the pianist had even higher
aspirations. He composed two op-
eras, yet couldn’t manage to suc-
cessfully stage them, facing seri-
ous financial losses in the attempt.
Sadly for him, by the 1920s, rag-
time was becoming old hat, re-
placed by new styles like “Novelty
Piano,” with virtuosic, intricate
figurations and peppier rhythms.
At his lowest point he died of
syphilis, in the mental ward of a
New York hospital. But not before
he predicted that he would be rec-
ognized 25 years after his death.
terpretations,
which are
heartfelt, often
delicate, and
filled with sub-
tle rhythmic
shadings.
And having
all of Joplin’s
rags in one
place allows us
to feast on the
variety: We
marvel at
pieces like “Scott Joplin’s New
Rag,” with themes in minor keys,
touched by the sounds the com-
poser surely heard in New York’s
Yiddish Theater district, and “Great
Crush Collision March,” with dense
dissonances commemorating the
purposeful head-on collision of two
trains north of Waco, Texas in
1896. On the 100th anniversary of
his death, it’s good to report that
Scott Joplin is very much alive.
Mr. Isacoff, who writes on classical
music for the Journal, is the author
of “When the World Stopped to
Listen: Van Cliburn’s Cold War
Triumph and Its Aftermath,” out
this April from Alfred A. Knopf.

Weather The WSJ Daily Crossword | Edited by Mike Shenk

Shown are today’s noon positions of weather systems and precipitation. Temperature bands are highs for the day.
-15 1 2 3 4 5 6 7 8 9 10 11 12 69 “Bullets Over 26 15-year-old
-10 Broadway” Oscar player
-5 13 14 15
Riga winner 28 The buck stops
w
Glasgow Copenhagen
Copenh
p 0
Moscow 16 17 18 70 Tick’s kin here
5
10 19 20 21 Down 32 Show indecision
15 1 Contemptuous
D bli
Dublin
arsaw
Warsaw 22 23 24 25 26 34 Gilbert of “The
A d
Amsterdam Berlin 20 snort
London
London Talk”
25 27 28 29 30
Pra
Prague 30
2 Metallurgist’s 37 Summoned the
Brussels k
Frankfurt
ev
Kiev
35 31 32 33 34 specimen butler
Paris i h
Munich 35 36 37 38 39 40 41 3 One might do 39 Japanese glaze
Vienna
V Warm some banking
d p
Budapest 42 43 44 45 40 Designer Jacobs
Geneva Cold 4 Hindu
46 47 48 49 50 51 embodiment of 41 Dunvegan Castle
Milan Bucharest
h Stationary setting
chivalry
52 53 54 55
Showers 5 Florentine poet 43 Poker night
Rome t b
Istanbul 56 57 58 declaration
Madrid
d id Rain 6 Brand with a bull
59 60 61 62 63 64 mascot 45 “Dawson’s Creek”
Lisbon
T-storms network
65 66 67 7 Camp accessory
Al i
Algiers T i
Tunis Ath
Athens 46 Speculative
Snow 8 198 inches question
68 69 70
Flurries 9 Italy’s backbone 47 Oxygen-
Rabat
Ice LEADING LADIES | By Dan Fisher 10 “Parade de dependent
Cirque” painter bacterium
Global Forecasts City
Today
Hi Lo W
Tomorrow
Hi Lo W City
Today
Hi Lo W
Tomorrow
Hi Lo W
Across 24 Cave roundup 52 A silvery color
11 Be sympathetic 48 Felt in the dark
s...sunny; pc... partly cloudy; c...cloudy; sh...showers; 1 Game hunter’s activity? (or red, in a
Geneva 20 6 s 20 7 pc Ottawa 5 -2 pc 3 -2 c whodunit)? 50 Ratio separators
t...t’storms; r...rain; sf...snow flurries; sn...snow; i...ice Hanoi 27 22 pc 23 18 t Paris 22 11 pc 19 9 t quarry 27 Fuming 12 Menacing words
Havana 30 16 s 30 18 s Philadelphia 14 3 s 9 7 r 5 Messing with 55 Sculpting 15 Thoroughly 53 Shows its age,
Today Tomorrow Hong Kong 25 21 c 24 16 t Phoenix 31 15 s 23 12 s 29 Copper cousin
City Hi Lo W Hi Lo W an Emmy medium defeat in a way
Honolulu 29 23 sh 29 23 pc Pittsburgh 13 9 c 16 7 r 30 Ball-bearing
Amsterdam 20 11 pc 21 9 pc Houston 25 13 pc 30 18 s Port-au-Prince 33 21 s 33 21 s 10 Smash letters 56 In the vicinity 17 Phoenix setting 54 The Muses, e.g.
Anchorage 5 2 r 8 4 c Istanbul 17 9 s 12 6 c Portland, Ore. 13 4 sh 14 6 pc
device
Athens 20 13 pc 18 10 t Jakarta 32 25 t 31 24 t Rio de Janeiro 28 20 s 27 20 r 13 Piece for 57 Humble 21 “Heavens!” 58 Shuttle’s spot
31 Go “poof!”
Atlanta 27 16 c 24 12 t Johannesburg 27 12 s 30 12 s Riyadh 31 20 t 33 20 pc Placido 61 Peyton’s
Baghdad 29 15 s 27 16 pc Kansas City 12 4 r 12 5 c Rome 21 7 s 20 8 s 33 Koi containers 59 At the very 22 Brawny
Baltimore 13 6 pc 13 7 r Las Vegas 27 12 pc 22 15 pc Salt Lake City 14 3 r 13 3 c 14 You might be most competitor brother
Bangkok 34 26 pc 34 26 pc Lima 28 22 pc 28 22 pc San Diego 21 15 s 21 13 pc thrown for it 35 Second child
60 Group of 23 Many a Yemeni 62 Future school
Beijing 17 5 pc 17 5 s London 19 11 pc 17 9 t San Francisco 18 11 pc 20 12 s 36 Destroy over
Berlin 15 9 pc 21 10 pc Los Angeles 24 12 s 23 11 s San Juan 27 22 s 28 23 s 15 Game hunter’s commissioners 63 Piper’s follower
Bogota 19 11 r 18 10 sh Madrid 23 9 pc 19 6 pc Santiago 26 9 s 26 10 s quarry time 25 It’s taken into
overseeing account 64 Salon stock
Boise 8 2 r 15 2 s Manila 34 25 pc 35 26 c Santo Domingo 31 20 s 31 20 s 38 Bill producers Everglades
Boston 9 1 pc 5 2 c Melbourne 17 11 pc 17 10 pc Sao Paulo 23 15 pc 22 15 sh 16 Like Jerry’s
Brussels 21 11 pc 20 9 pc Mexico City 28 10 pc 27 10 s Seattle 12 5 sh 13 8 pc “Hello, Dolly!” 42 Succotash avians? Previous Puzzle’s Solution
Buenos Aires 26 18 c 26 17 s Miami 28 21 s 30 21 pc Seoul 15 4 pc 15 4 pc songs? beans
Cairo 27 16 s 24 15 s Milan 23 9 s 22 9 pc Shanghai 14 8 sh 15 7 c
65 Skeptical M
I
I
N
N
G
C
A
G
W
L AM
I K I
D
A
OWE L
R O S E
Calgary 12 -2 pc 13 -1 c Minneapolis 9 0 c 12 1 pc Singapore 31 25 pc 31 25 c 18 Dominion 44 Sign of a bad utterance C H A
R Y B D I S T E N T S
Stockholm 6 2 r 8 2 r A D A
G E R E B A D A S
Caracas 31 24 pc 31 25 pc Monterrey 30 12 s 35 13 s
19 Cut counterpart window washer 66 No longer with L OW C A R B D I E T
Charlotte 20 14 c 23 11 t Montreal 6 -2 s 5 -1 r Sydney 24 16 r 21 16 pc P E E WE E S Q U I R E S
Chicago 8 4 r 7 2 r Moscow 0 -8 pc 3 -4 sf Taipei 26 19 pc 27 14 r 46 Funny fellow the company?
20 Like brain C O L D A R M M I D S T
Dallas 23 12 pc 30 15 s Mumbai 33 27 pc 34 27 pc Tehran 19 11 pc 21 11 s O L E C R A B D I P R A E
Denver 19 2 pc 10 -1 sh Nashville 25 12 t 20 8 c Tel Aviv 26 14 pc 22 13 pc activity 49 Frenzied 67 Sanction M A C R O A I R G U L P
A R T E M I S G A R A G E
Detroit 6 5 r 10 3 r New Delhi 39 23 pc 39 22 pc Tokyo 16 9 pc 12 6 c 22 Kilmer of 51 Uncle to George 68 Racketeers’ B R O B D I N G N A G
Dubai 30 21 s 31 23 s New Orleans 25 15 t 27 17 s Toronto 4 0 sn 5 1 r C E O I O N E C R E D O
Dublin 14 9 t 13 6 t New York City 12 6 s 8 4 r Vancouver 11 4 s 11 6 c
“Willow” and Charlotte nemeses H A D O N B E A D Y E Y E S
Edinburgh 15 8 r 15 6 sh Omaha 9 1 r 12 3 c Washington, D.C. 13 7 pc 16 10 r I R E N E I D L E E R A S
Solve this puzzle online and discuss it at WSJ.com/Puzzles.
s

Zurich 21 4 pc 21 6 pc A S S E S N Y E T L E N O
Frankfurt 21 9 pc 23 9 pc Orlando 32 18 pc 28 17 t

THE DAILY SHOT

Micro Trends, Macro Context. In Minutes.

Get a complete look at the trends moving global markets
with The Daily Shot. WSJ’s latest member-exclusive
newsletter delivers a sophisticated, impartial view in 30-plus
charts, every morning. Sign up at WSJ.com/dailyshot

© 2017 Dow Jones & Co., Inc. All rights reserved. 6DJ5059

BUSINESS & FINANCE
© 2017 Dow Jones & Company. All Rights Reserved.
Euro vs. Dollar 1.0756 g 0.54%
Exchanges Plot Path as Deal Dies
LSE, Deutsche Börse
must seek way ahead
after regulators block
their proposed merger
BY BEN DUMMETT
London Stock Exchange
Group PLC’s bet on the
growth of passive investing
stands to give it an edge over
Deutsche Börse AG as the two
go it alone after European reg-
ulators blocked their plan to
create Europe’s largest ex-
change operator.
The proposed merger,
blocked Wednesday by the
European Union, had prom-
ised a stronger competitor
against encroaching U.S. ri-
vals, greater stability in Eu-
rope’s capital markets and
hundreds of millions of dol-
Investors
Face Brexit
Calm Before
The Storm
For nine months, the U.K.
has been living the Brexit
dream. Even with the trig-
gering Wednesday of the for-
mal process for leaving the
European Union, the lull can
continue for a while. But as
the clock ticks on negotia-
tions, the real shape of
Brexit will emerge for inves-
tors—and for the pound, still
the key U.K. barometer.
The fate of the pound and
the U.K. economy are inter-
twined in Brexit. So far, that
has led to some curious ef-
fects. The fall
in sterling of
some 17%
against the
dollar since
the June vote
HEARD reflects inves-
ON THE tors’ concerns
STREET about the
RICHARD U.K.’s outlook.
BARLEY Yet the
economy
hasn’t wors-
ened. The U.K. is still in the
EU, meaning for now it gets
the benefits of the cheaper
currency and all the trade
and regulatory conditions for
businesses remain the same.
The ceremonial handing-
over of a letter from Prime
Minister Theresa May to Eu-
ropean Council President
Donald Tusk triggering Arti-
cle 50 won’t change any-
thing immediately. It will
likely take a couple of
months for negotiations to
start in earnest, with the
EU’s 27 other members
needing to agree formally
how they will approach the
talks. Further delaying mat-
ters, both sides will need to
see the outcome of German
elections in September.
That doesn’t mean the
status quo goes on forever.
Please see HEARD page B2
Chinese Help Counter Amazon and Facebook in India
BY NEWLEY PURNELL
As the U.S.’s top technology
brands ramp up operations in
India, they are running into
unexpected resistance: Their
Chinese equivalents are step-
ping in to bolster their Indian
rivals with billions of dollars
in investments and expertise.
In recent years, Ama-
zon.com Inc., Facebook Inc.,
Uber Technologies Inc. and
others have announced ambi-
tious plans and rapid rollouts
in India, calling it one of the
last great untapped internet
economies.
The U.S companies plan to
use their war chests to domi-
nate India’s market of more
than 1.2 billion people, most of
whom are just now connecting
to the internet. The companies
have been able to use their
capital to capture significant
market share, but local start-
TECHNOLOGY: ISRAELI STARTUP FREIGHTOS RAISES $25 MILLION B4
FTSE 100 7373.72 À 0.41%
lars of cost savings and addi-
tional revenue.
The EU worried the pro-
posed $30 billion tie-up, more
than a year in the making,
risked giving the combined
entity too much influence
over the clearing of fixed-in-
come trading after the U.K.
exchange refused to comply
with conditions, including the
sale of LSE’s Italian credit
trading platform.
Now the challenge for the
LSE and Deutsche Börse is to
prove they can drive earnings
higher independently without
the advantages a merger
would have brought.
Some analysts argue the
outlook for LSE is brighter be-
cause of its bigger index busi-
ness and new rules that could
favor its clearing business. In
support of that view, the LSE’s
stock traded up 2.7% Wednes-
Emirati company NIMR Automotive, which makes armored vehicles, is looking to export to both Eastern European and Asian markets.
Arab States Cultivate Arms Makers
Wealthy Gulf Arab states
have a warning for Western
suppliers of military equip-
ment: If they want business,
they have to transfer technical
knowledge to local companies
that are part of a rising, home-
grown defense sector.
By Margherita
Stancati in Riyadh,
Saudi Arabia, and
Nicolas Parasie in
Dubai
Saudi Arabia and the United
Arab Emirates, with troops
fighting in neighboring Yemen
and participating in allied air-
strikes against Islamic State, al-
ready have some of the region’s
most advanced forces. But they
are limited in their ability to
maintain and repair sophisti-
cated military equipment let
alone manufacture it.
The rulers want to become
less dependent on the U.S. and
other Western countries, and
they see defense as a sector
that can help diversify their
ups have put up a good fight,
challenging the U.S. giants
thanks to help from China.
More U.S. tech companies
are pouring money into their
Indian subsidiaries, expanding
their offerings directly into
the market as it starts to ma-
ture, and largely without the
regulatory challenges found in
China. Amazon is investing $5
billion in its operations in In-
dia, while Uber is putting over
$1 billion into the country. In-
dia is Facebook’s second-big-
gest market in terms of users,
after the U.S., and more peo-
ple use its WhatsApp messag-
ing platform in the country
than anywhere else.
But joining the battle for
India’s internet newcomers are
China’s tech titans—including
Alibaba Group Holding Ltd.
(e-commerce), Tencent Hold-
ings Ltd. (social networking)
and Didi Chuxing Technology
THE WALL STREET JOURNAL.
Gold 1253.40 g 0.15%
day compared with a 1.7% gain
for Deutsche Börse.
As fees from operating ven-
ues for buying and selling
stocks are driven lower by
new competition and comput-
The growth of passive
investing should give
LSE an edge over
Deutsche Börse.
erized trading, exchanges are
diversifying. Two of the LSE’s
biggest revenue businesses are
selling market data and licens-
ing indexes for institutional
investors and developers of
exchange-traded funds, and
the clearing of trades in deriv-
atives and other securities.
Big Spenders
Countries with the world’s largest military expenditures in 2015.
U.S.
China
Saudi Arabia
Russia
U.K.
India
France
Japan
Germany
South Korea
$0 $100 $200
Military expenditures, in billions
Source: Stockholm International Peace Research Institute
oil-based economies.
The Saudi government, the
world’s No. 3 defense spender
after the U.S. and China, last
year said it wants half the
money it allots for military
equipment to go to local firms
by 2030, up from 2% today.
Even if the kingdom only
partly achieves its goal, the im-
An Amazon office in India, where local rivals get Chinese aid.
Co. (ride-hailing)—all of which
are providing muscle to their
Indian counterparts.
Alibaba this month led a
$200 million round of fund-
raising into a new e-commerce
WTI crude 49.51 À 2.36%
Together, these operations
represent more than 60% of
the £1.52 billion ($1.89 billion)
in revenue the LSE generated
last year.
The exchange’s information
services business, which in-
cludes indexes, grew organic
revenue by 7% last year from
2015 excluding currency im-
pact. And demand for index
products is expected to con-
tinue, driven by investors di-
verting more money into low-
cost funds that mimic
benchmarks from higher cost
mutual funds. Of the $533 bil-
lion of net flows into all mu-
tual funds and exchange-
traded funds last year, 54%, or
$289 billion, went to funds
managed by Vanguard Group,
the big U.S. index money man-
ager, according to research
firm Morningstar Inc.
Meanwhile, LSE’s majority-
$300 $400 $500 $600
THE WALL STREET JOURNAL.
pact will reverberate through
the global defense industry. In
2015, Saudi Arabia military ex-
penditures totaled around $87.2
billion, according to research
firm Stockholm International
Peace Research Institute.
“We spend more than Britain,
and France, and don’t have in-
dustry. We have a strong de-
arm of Indian mobile-pay-
ments and online-shopping
startup Paytm. That followed
its 2015 investment, with its
financial-services affiliate Zhe-
jiang Ant Small & Micro Finan-
Thursday, March 30, 2017 | B1
German Bund yield 0.344%
owned LCH Group, the domi-
nant clearinghouse for inter-
est-rate swaps traded off-
exchange, generated organic
revenue growth of 10% last
year from the prior year ex-
cluding currency impact. Un-
derpinning that growth is a
push by regulators for the use
of central counterparties or
clearinghouses to help prevent
marketwide collapse.
Although Deutsche Börse
also has an index business, its
biggest sources of revenue are
the Eurex derivatives trading
and clearing operation, and
the Clearstream securities de-
pository unit. While Eurex
grew revenue by 16% last year,
Clearstream posted a 5% reve-
nue rise over the period. To-
gether those two divisions
generated almost 76% of
Deutsche Börse’s revenue in
Please see DEAL page B2
NICOLAS PARASIE/THE WALL STREET JOURNAL
mand that we should meet in-
side Saudi Arabia,” Saudi
Arabia’s defense minister, Dep-
uty Crown Prince Mohammed
bin Salman, said in a televised
interview last year.
The prince added that, un-
der new official policies, the
Saudi government would agree
to defense deals with foreign
providers “only if they are
linked to local industry.”
That message is trickling
down. AM General, the South
Bend, Ind.-based maker of the
Humvee, said in February it
was starting to export com-
mercial chassis abroad. That
allows customers, including
partners in the Gulf, to assem-
ble customized versions of ar-
mored vehicles locally.
“The bottom line is they
want to spend more of their
money in their country,” said
Nguyen Trinh, an executive at
AM General.
Saudi Arabia’s Advanced
Electronics Co., a Riyadh-based
supplier of defense equipment
Please see GULF page B2
cial Services Group, of more
than $500 million for a 40%
stake in One97 Communica-
tions Ltd., Paytm’s parent
company.
“India is an important
emerging market with great
potential,” said an Alibaba
spokesman.
Chinese interest in Indian
ABHISHEK N. CHINNAPPA/REUTERS
startups has shot up just as
U.S. investment has waned. In
2015 and 2016, Chinese tech
companies invested a total of
$3.2 billion in Indian startups,
more than twice the $1.4 bil-
lion invested in Indian start-
ups by U.S. companies during
those years, according to AVCJ
Research in Hong Kong.
Indian startups—sometimes
clones of the American trail-
blazers—thrived for years as
Western companies showed
little interest in emerging
markets. When U.S. companies
Please see INDIA page B2
10-Year Treasury yield 2.385%
Smaller Share
Portion of Samsung Electronics’
profit from the mobile division
80%
4Q 2016
27%
60
40
20
0
2011 ’12 ’13 ’14 ’15 ’16
Source: the company
THE WALL STREET JOURNAL.
Samsung
Looks to
Restore
Trust
BY TIMOTHY W. MARTIN
NEW YORK—Samsung Elec-
tronics Co. unveiled a new
flagship smartphone
Wednesday, its first launch in
on
the wake of product-safety is-
sues that beset the South Ko-
rean technology giant last year.
The Samsung Galaxy S8 is
longer and slimmer than prior
premium models. Its screen
now extends to the device’s
top and bottom edge, and it
has no physical home button.
Unlocking is now done
through a touch-screen home
button, full-face recognition or
a fingerprint scanner on the
back of the device.
Samsung, the world’s larg-
est smartphone maker, needs a
controversy-free rollout fol-
lowing last year’s recall of Gal-
axy Note 7 devices, after faulty
batteries caused some devices
to catch fire. The episode
bruised Samsung’s chic brand
and ended up costing the com-
pany $5 billion.
The Galaxy S8 is the com-
pany’s most closely watched
product launch in years. “If
the product is really good, it
will help bring back the loy-
alty and trust in the Galaxy
brand,” said Samsung’s mo-
bile chief, D.J. Koh, in a meet-
ing at the Galaxy S8 launch
event here.
AT&T Inc. and T-Mobile US
Inc. plan to offer the phone at
a starting price of $750 for the
Galaxy S8 with a smaller-sized
screen; a bigger model would
go for $850. It will hit shelves
on April 21. A Samsung
spokeswoman said preorders
would begin Thursday.
The Galaxy Note 7 fiasco
allowed rival Apple Inc.’s
iPhone to vault past Samsung
in global smartphone ship-
ments during the final three
months of 2016, the first time
the South Korean firm slipped
to No. 2 in five years, accord-
ing to Strategy Analytics, a
market researcher. But for the
full year, Samsung remained
the leader, shipping 309.4 mil-
lion devices versus Apple’s
215.4 million.
A smartphone recovery
isn’t Samsung’s only challenge
of the moment. The conglom-
erate’s de facto leader, Lee
Jae-yong, has been jailed for
his alleged role in a bribery
Please see PHONE page B4
 Samsung goes to greater
lengths to impress.................. B4
INSIDE
LONDON
OFFICES LURE
FOREIGN CASH
FINANCE & MARKETS, B7
B2 | Thursday, March 30, 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
Access Industries ....... B2
Advanced Electronics . B1
Alibaba Group Holding
.....................................B1
Alphabet......................B3
Amazon.com ............... B1
AM General.................B1
B
Baidu ........................... B8
Bayerische Motoren
Werke........................A6
Boeing ......................... B2
Bremer Financial.........B2
C Tesaro..........................B8
Citizens Financial Group
.....................................B5
Clovis Oncology .......... B8
Comcast.......................B3
Comerica......................B2
D L
Deutsche Börse...........B1
Didi Chuxing Technology
.....................................B1
E M
easyJet........................B3
F P
Facebook...........B1,B3,B8
INDEX TO PEOPLE
A J
Abernethy, Jack..........B3
C Jensen, Marcia............B2
Condon, Tim................B8
D Trinh, Nguyen ............. B1
Deora, Madhur............B2
Dunn, Bernard.............B2
E Murphy, Charles..........B5
Evans-Pritchard, Julian
.....................................B8
H P
Hauser, Stephen L......B3
INDIA
Continued from page B1
turned their attention and
money to the Asian subconti-
nent, they made rapid gains
and might have expected to
easily outspend and outlast
their tiny local rivals, said
Neha Dharia, a Bangalore, In-
dia, analyst with London tech-
nology research firm Ovum.
But Indian startups have
fought back with strong local
brands and Chinese backing.
U.S. companies likely “didn’t
expect the local guys to give
them such a run for their busi-
ness,” she said.
Didi, Uber’s Chinese
rival, is helping Ola
untangle its problems
in India.
An Amazon spokeswoman
declined to comment on how
Chinese investments have
changed the playing field in
India, but said the company
has made rapid strides in the
country and is “committed to
long-term investment” in e-
commerce infrastructure and
technology in India.
Uber and WhatsApp de-
clined to comment. Facebook
didn’t respond to requests for
comment.
Many Chinese companies
have launched their own
brands directly in India, but
most have failed to take off.
The English-speaking populace
that dominates India’s internet
is more familiar with Ameri-
can and local names. As a plan
ADVERTISEMENT
The Mart
BUSINESS OPPORTUNITY
BUSINESS OPPORTUNITY
à As with all investments,
appropriate advice should
be obtained prior to
entering into any
binding contract. à
THE WALL STREET JOURNAL.
BUSINESS & FINANCE
Fairfield Greenwich
Group.........................B5
G
Garda World Security A6
Piaggio & C.................A6
Publicis Groupe...........B3
R
Raytheon.....................B2
Prince Sale Stirs Discord
Genentech...................B3
General Electric .......... B4
Restoration Hardware B8
Roche Holding.............B3
Universal signs three
H S deals with Prince’s
Hike ............................. B2 SAIC Motor.................B8 estate, including rights
Husqvarna...................A6 Samsung Electronics..B1
I Snap.......................B3,B8 to unreleased music
Sony Music
International Entertainment..........B2
Consolidated Airlines BY HANNAH KARP
T
Group.........................B3
J Tencent Holdings...B1,B8 Universal Music Group in
J.P. Morgan Chase......A1 January won the licensing
Tesla............................B8 rights to Prince’s “vault,” a
K Thales..........................B2 trove of the late pop star’s un-
KTM-Sportmotorcycle A6 21st Century Fox........B3
released music, but there
Kuehne Nagel U
International.............B4
wasn’t much of a bidding war.
Uber Technologies.B1,B8 The auction process is rais-
Universal Music Group ing questions among people
Lockheed Martin.........B2 .....................................B2 close to Prince’s estate about
CHRIS O’MEARA/ASSOCIATED PRESS
London Stock Exchange V whether the estate could have
Group...................B1,B3
Vivendi ........................ B2 earned more for the rights
W than the $30 million that they
Master (HK) Toys.......B4 said Universal ended up agree-
Warner Music Group..B2
Wells Fargo.................B5 ing to pay.
Paulson........................B5 WPP.............................B3 The deal for the rights to
Prince’s independently re-
corded music was sealed less
than a year after the artist
died in April of an opioid over- Prince, seen at the Super Bowl XLI halftime show in 2007, died of an opioid overdose in April.
dose without leaving a will. All
S three major record labels—Vi- bums, was the last of three eral lack of transparency was didn’t want him to stay on.
Jackson, Alfred...........B2 Schreiber, Zvi..............B4 vendi SA’s Universal, Sony signed by Prince’s estate with typical for such high-profile Ms. Nelson and Mr. Baker,
Sprecher, Jeffrey........B2 Corp.’s Sony Music Entertain- Universal Music in the past six dealings and that there was a who are represented by a team
K T ment and Access Industries’ months. particular dearth of informa- that includes former Prince
Koh, D.J.......................B1 Warner Music Group—had All three deals were guided tion on Prince’s musical assets. adviser and CNN political com-
Koppelman, Charles....B2 voiced interest in the rights, by the advisers in charge of The process has deepened mentator Van Jones, alleged in
Tusk, Donald...............B1
M but his estate’s interim admin- making deals for the estate: the divide between the artist’s a January court filing that Mr.
V istrator submitted only a pro- Prince’s former lawyer Londell six heirs, who splintered into McMillan had been making
McMillan, Londell.......B2
Van Saun, Bruce.........B5 posed deal with Universal to McMillan and entertainment two groups following the art- other deals that prioritized his
W the court overseeing the executive Charles Koppelman. ist’s death, butting heads over own interests over maximizing
N
Prince estate, people familiar With a combined value of issues from a tribute concert revenue for the estate. Mr.
Nelson, Tyka ............... B2 Wright, Tabrese..........B3
with the matter said. about $60 million, the three to the singer’s legacy. McMillan denied those
Z Sony Music executives were deals netted each man about Mr. McMillan is acting as a charges. The heirs declined to
Pulitzer, Jonathan ...... B4 Zagieboylo, Cyndi ....... B3 excluded from bidding despite $3 million, people familiar business adviser to three of the comment through their repre-
repeated attempts to engage with the negotiations said. six heirs, though he doesn’t sentatives.
with the estate, people familiar Messrs. Koppelman and have an advisory role with the Mr. McMillan said he and
B, the Chinese leaders are now
buying into Indian startups ea-
ger for money as they try to
survive the competition from
with the negotiations said.
Warner Music, which released
Prince’s first 18 albums, also
voiced interest but received
McMillan said Sony, Warner
and Universal had ample
chance to bid on all licensing
deals, and that they made the
estate’s new administrator,
Comerica Bank & Trust.
Prince’s half-brother Alfred
Jackson recently ended his
Mr. Koppelman presented all
the offers in all three bidding
contests to interim adminis-
trator Bremer Trust, a unit of
U.S. companies. minimal information in re- best possible deals for the es- business relationship with Mr. Bremer Financial Corp.,
Chinese ride-hailing app sponse, some of the people tate. Mr. Koppelman called the McMillan, according to a rep- which made the final deci-
Didi, which proved it could said. Estate representatives complaints “sour grapes.” resentative for Mr. Jackson. sions.
beat a global leader last year said Universal didn’t get much Mr. McMillan said that it Mr. McMillan had pushed to Bremer Trust spokeswoman
when it forced Uber to give up information about the assets was “not all about the money”: stay on as an adviser to Marcia Jensen said that the
on China, has had a stake in either—because there wasn’t He said that he and Mr. Kop- Comerica, but a judge decided company’s “fiduciary role as
ANI Technologies Pvt. Ltd.— much available. pelman weighed factors such otherwise. Two of the heirs the court-supervised special
the company behind India’s The deal, which concerned as each company’s size, scope, Mr. McMillan doesn’t repre- administrator of the Prince
largest Uber competitor, Ola— the unreleased music in “the expertise, copyright-manage- sent—Tyka Nelson, the late Rogers Nelson estate was to
since 2015. vault” and the licensing rights ment ability and executives. singer’s younger sister, and preserve, protect and maxi-
Last year, Tencent, which is to Prince’s independent al- Mr. McMillan said the gen- half-brother Omarr Baker— mize the value of the assets.”
behind China’s popular WeChat
social-networking app, led a
$175 million fundraising round
in New Delhi-based messaging
app Hike Ltd., which competes
with WhatsApp.
DEAL tion of where to clear trades.
“LSE seems to have less to
lose and even some to gain”
because of the new rules, said
The Chinese companies are Continued from page B1 Eric Compton, an analyst at
offering more than cash. They 2016. Morningstar.
are giving Indian companies The LSE and Deutsche Still, market pressures
expertise in how to tailor ser- Börse, meanwhile, both ex- could end up pushing the com-
vices to a vast, diverse and pressed confidence in their in- panies to abandon their stand-
CHRIS RATCLIFFE/BLOOMBERG NEWS
less-affluent populace. dividual strategies after the alone strategies and consider
Alibaba frequently hosts deal was blocked Wednesday. merging with a large U.S. ex-
Paytm employees at its offices The LSE also announced a change operator despite the
and sends staff to India to en- £200 million share buyback proven challenges of trans-At-
courage the exchange of ideas, and indicated it will continue lantic deals.
said Madhur Deora, Paytm’s to explore potential deals to In March 2016, Interconti-
chief financial officer. “It’s re- help fuel growth. Deutsche nental Exchange Inc., owner of
ally the scale and the scope” Börse noted over the medium the New York Stock Exchange,
of operating in a billion-per- term it expects to increase an- said it was studying a possible
son economy that Alibaba is nual profit by 10% to 15%. Last The proposed LSE-Deutsche Börse tie-up sparked monopoly fears. bid for the LSE before decid-
able to help with, he said. year it achieved that target, ing against a move because of
Alibaba’s senior managers increasing earnings by 14% those one-time costs, the ex- tives business. The German ex- its inability to confirm the
have provided input as Paytm from a year ago adjusted for change’s earnings rose 17%. change operator currently market and shareholder merits
has grown, offering insight on the sale of a business and ben- “The LSE owns higher- links trading on its Eurex trad- of such a deal.
the right way to engineer efiting in part from cost-cut- growth businesses like over- ing platform to its clearing op- In February, ICE Chief Exec-
Paytm’s app, for instance, ting and gains from its deriva- the-counter clearing and the eration. The new rule will al- utive Jeffrey Sprecher played
based on ways mobile usage tives trading venue. The LSE FTSE Russell” index business, low traders to clear their down interest in making a big
surged in China. reported a 6% jump in earn- said Arnaud Giblat, an analyst transactions through a facility deal, indicating the focus will
China’s Uber rival, Didi, is ings in 2016, partly weighed at Exane BNP Paribas. of their choice, representing a be toward “smaller comple-
helping Ola untangle the prob- down by costs incurred as a In addition, regulatory potential loss of future clear- mentary transactions rather
lems that come from the scale result of an acquisition and changes set to take effect next ing business for Deutsche than the larger ones of past
of serving a billion-person the sale of an asset manage- year pose a potential challenge Börse. By comparison, the LSE years,” according to a tran-
economy while juggling hun- ment operation. Excluding for Deutsche Börse’s deriva- already gives investors the op- script of his comments.
dreds of thousands of drivers.
The “enormous and complex”
ride-sharing demands require
“creative solutions,” said a
Didi spokeswoman. GULF official told potential Gulf buy-
ers and industry executives that
they wouldn’t be allowed in the
foreseeable future to buy Lock-
earlier this month with China to
jointly manufacture drones.
“It’s a very important mar-
ketplace, and we have to adapt
HEARD
Continued from page B1 heed Martin Corp.’s radar- to it,” said a Gulf-based execu- Continued from page B1
such as signal jammers and la- evading F-35 Joint Strike tive with a U.S. defense firm. The task ahead of the negoti-
sers, recently entered a new
partnership with Raytheon Co.
Fighter, according to Danny
Sebright, president of the U.S.-
Many Gulf-based defense
companies were established de-
ators is daunting in its tech-
nical, legal and political scale.
for a Saudi government contract U.A.E. Business Council and a cades ago under offset programs From the issue of whether the
to develop cybersecurity capa- former Defense Department offi- that required foreign suppliers U.K. owes many billions of
bilities. Raytheon declined to cial, who was there. to invest part of their compensa- euros to the EU to settle obli-
comment on the contract. The official alluded to rules tion locally. The push into manu- gations undertaken as a mem-
Local defense firms cite the to ensure Israel maintained a facturing, however, is new. ber, to the Northern Irish
deal as evidence foreign suppli- competitive military edge in the Alsalam Aerospace Indus- border, to questions around
ers are scouting for new or ex- region. tries, a firm based in Riyadh and the U.K. financial industry
panded partnerships. “Instead of partly owned by Boeing, wants outside the single market, the
us pulling them, they are the to manufacture its first com- complexity of the talks is
ones pushing, they are ap- plete aircraft by 2030. Last year, clear. The process is sup-
proaching us,” said Mohammed
Many Gulf-based with Boeing’s help, the company posed to take two years, but
Al Khalifa, vice president of AEC, defense companies started assembling wings and in reality that period will be
which is jointly owned by British forward fuselages in its factory shortened by Europe’s politi-
weapons maker BAE Systems
were established to upgrade F-15 jet fighters for cal calendar and the need to
PLC and Saudi investors. decades ago. the Royal Saudi Air Force. allow time for ratification.
Big global contractors such as “We want to be the Lockheed The question for the pound
Boeing Co. say they see oppor- Martin or the Boeing of Saudi and investors is whether there
tunities for opening new pro- Arabia,” said Yehya Al Ghoraibi, are any good reasons to bet on
duction lines in the Middle East. The Emiratis decided to turn the company’s chief executive. a rebound.
“Boeing will continue to look for to Russia. The U.A.E.’s defense The company is expanding By purchasing power parity
potential partnership opportuni- ministry said in February it into helicopter maintenance and and other measures, at $1.24,
ties for mutual growth of busi- would jointly develop a light repair. In the more distant fu- the pound is undervalued, No-
ness,” Bernard Dunn, president combat fighter with Russia’s ture, Mr. Ghoraibi is considering mura notes. Yet there are too
of Boeing Middle East, North Af- state-run defense corporation expanding into areas ranging many moving parts for that to
rica and Turkey, said in an email. Rostec. from tank manufacturing to be a comfortable position,
TRAVEL But such opportunities are no “It was completely a state- bomb making. with the economic data start-
simple matter for foreign con- ment to the Americans and to The U.A.E. is already produc- ing to show hints of Brexit
tractors. Policy rules in the U.S. the Europeans that, if you don’t ing armored vehicles. In Febru- strain. Inflation has risen and
Save Up To 60% and Europe would allow the give us what we need, if you ary, the country’s armed forces will rise further.
First & Business manufacturing of some compo- don’t help us with what we awarded a contract of 1,750 ar- A messy negotiation, in-
INTERNATIONAL nents to be outsourced, but the need, we have no choice but to mored vehicles to an Emirati cluding an outcome in which
Major Airlines, Corporate Travel
Never Fly Coach Again!
rules are stricter for sensitive try to get it somewhere else to company, NIMR Automotive. It the U.K. gets no special trade
www.cooktravel.net military technology. protect our legitimate security was a rare example of a local deal with the EU upon exit,
(800) 435-8776 In Abu Dhabi two years ago, a needs,” said Mr. Sebright. business securing a deal of such would require a much lower
senior U.S. Defense Department Saudi Arabia reached a deal size. pound to compensate.
THE WALL STREET JOURNAL. Thursday, March 30, 2017 | B3

BUSINESS NEWS

Charting Post-Brexit Route Snap, NBC Team Up

For ’18 Winter Games
U.K. airlines face
BY SHALINI RAMACHANDRAN
challenges related AND MAUREEN FARRELL
to EU market access
Snap Inc. signed a pact
and ownership rules with NBCUniversal for the
2018 Winter Olympics that
BY NINA TRENTMANN will make the popular messag-
ing app a home for Olympic-
U.K. airlines could face ma- themed content and allow NB-
jor upheaval as the country CUniversal to sell Games-
untangles itself from the Eu- related geofilters and “lenses”
ropean Union. to advertisers for the first
Prime Minister Theresa time.
GARETH FULLER/PA WIRE/ZUMA PRESS
two companies since NBCUni-
versal invested $500 million in
Snap as part of its March ini-
tial public offering. Filters and
lenses let marketers overlay
their brand imagery on users’
faces, photos or videos.
Mr. Zenkel noted that
nearly 35 million people in the
U.S. viewed NBC’s Rio Olympic
coverage on Snapchat, con-
suming more than 230 million
minutes of content on the

May on Wednesday officially The deal for next year’s platform. He said the vast ma-
triggered the Winter Games in Pyeongchang, jority of that audience were
CFO two-year divorce South Korea, expands upon a viewers under the age of 35.
JOURNAL process, a move similar partnership between “We will take to the market
that would take the two companies for the and into our Olympic discus-
the U.K. out of 2016 Rio Olympics. It will al- sions that unique opportunity
the European Common Avia- low Snapchat to share clips of to get in front of a very young
tion Area, or ECAA, agreement NBC’s Olympics content in a audience during the period of
that allows airlines to operate live story that will also feature the Games,” Mr. Zenkel said.
across EU countries. user content. Snap’s ability to show mo-
British carriers such as easy- EasyJet and others could be hurt if Britain and the EU fail to reach a pact preserving liberal market access. In addition, Snapchat will mentum in attracting ad dol-
Jet PLC face the prospect of carry coverage of the Games lars is key to its growth and to
having to cease serving some 49% of shareholders domiciled company reported a before-tax company said it doesn’t provide that BuzzFeed will co-produce supporting its valuation of
markets should Britain and the in the EU. Around 34% of those profit of £495 million in 2016. a breakdown of the nationalities with NBC for the Snapchat over $24 billion. Some ana-
EU fail to negotiate an accord to shares are owned by founder EasyJet plans to keep its of its shareholders. Discover media hub. lysts expect the company will
preserve the liberal market ac- Stelios Haji-Ioannou and his listing on the London Stock Among the IAG institutional Advertising commitments reach revenue of $1 billion in
cess provided by the European family. The company wouldn’t Exchange and its U.K. head- shareholders are Capital Re- related to this deal could come 2017, more than double the
air-traffic agreement. Passen- disclose what percentage of its quarters, the spokesman said. search & Management Co., in between $50 million and $404 million it generated last
gers could be confronted with investors are British. The ownership issue could Standard Life Investments Ltd. $75 million in the first quarter year. But it is operating in a
higher ticket prices. The discount carrier has be circumvented. Institutional and Deutsche Asset Manage- of 2018, people familiar with highly competitive environ-
Ms. May has stated her de- about 110 airplanes across 27 investors tend to hold airline ment GmbH, according to data the matter said. Executives ment in which giants Face-
sire for continued airline flexi- EU countries, excluding Britain. stocks for short periods, and provider FactSet. with Comcast Corp.’s NBCUni- book Inc. and Alphabet Inc.’s
bility. However, the ECAA is EasyJet plans to set up an EU might sell their shares or For Dublin-based Ryanair versal unveiled the Snap part- Google are sucking up digital
governed by the European operating company and will an- move them to one of their own Holdings PLC, Europe’s largest nership to advertisers ad dollars.
Court of Justice, and the U.K. nounce the location in the com- EU entities, said Robin Byde, airline by passenger numbers, Wednesday as part of the an- Ahead of the IPO, the com-
has said it no longer wants to ing weeks, a spokesman said. an equity analyst at Cantor 20% of its EU investors are Brit- nual ad sales presentations pany had been courting Madi-
be subject to that court. That company would need a Fitzgerald in London. Other, ish, said Kenny Jacobs, the com- known as the “upfronts.” son Avenue aggressively. It
British airlines would have to majority of EU shareholders, he long-term shareholders could pany’s chief marketing officer. As in the prior deal, NBC met with media-buying arms
set up an operating company in said. have their shares held by an Ryanair operates on a European will be able to sell ad slots on of ad giants including WPP
the EU to be covered by the An additional airline operat- investment division in the EU. license but could apply for a its Snapchat content. PLC, Omnicom Group Inc.,
ECAA agreement in the future. ing certificate could require International Consolidated British one for its domestic U.K. While NBC’s game highlights Publicis Groupe SA, and In-
But there is a catch: European easyJet to change the registra- Airlines Group SA, the holding flights following Brexit, the will likely appear on many on- terpublic Group of Cos., seek-
aviation regulations state that tion location on some planes, company of British Airways, company said. It doesn’t dis- line platforms, including Face- ing ad-spending commitments
EU investors must hold a major- most of which are registered in Iberia and Vueling, is registered close Brexit-related costs. book and YouTube, Snap will ex- of $100 million to $200 mil-
ity of such a company’s shares. Britain. That could cost around in Madrid, which may give it —Robert Wall clusively have some original lion from each firm for 2017,
EasyJet currently has around £10 million ($12.4 million). The more flexibility post-Brexit. The contributed to this article. Olympics-related content cocre- roughly double or triple what
ated by BuzzFeed and NBC on these firms spent on the plat-
its platform. form in 2016.

U.S. Clears Genentech’s MS Drug

In an interview, NBC Olym- Snap went public at $17 a
pics President Gary Zenkel share this month. While its
said Snap has never before al- stock has been volatile in re-
lowed a partner to sell na- cent weeks, it has stayed
BY THOMAS M. BURTON and reduce the number and se- tional filters and lenses to above the IPO price and was at
verity of flare-ups. However, as marketers, a sign of the deep- $22 in midafternoon trading
The U.S. Food and Drug Ad- the name suggests, primary ening relationship between the Wednesday.
ministration approved a multi- progressive MS follows a fairly
ple-sclerosis drug called Ocre- constant course, either by sud-
vus, the first treatment for the den onset of symptoms and
most severe type of the disease, rapid decline, or through sev-
known as primary progressive eral years’ advance. “It’s just a
MS. steady worsening,” said Ms.
The medicine, from Genen- Zagieboylo.
PAUL SAKUMA/ASSOCIATED PRESS

tech Inc., is generically called Ocrelizumab was developed

ocrelizumab. Primary progres- for MS based upon many years
sive MS affects about 15% of of basic scientific work in the
the estimated 2.3 million MS lab of Stephen L. Hauser, chief
patients in the world. The pa- of neurology at the University
tients with this severe type of California, San Francisco,
KIM HONG-JI/REUTERS

have watched for years as and director of the UCSF Weill

more than a dozen treatments Institute for Neurosciences. Dr.
have emerged for other MS pa- Hauser also was the principal
tients. The FDA also approved California-based Genentech is part of Switzerland’s Roche Group. investigator in pivotal studies
the drug for the more common of the drug published in the
type of MS. tional MS Society hopes this is the name suggests, it can go New England Journal of Medi-
Genentech, which is based just the beginning of the devel- away and then flare up with lit- cine in December. A ceremony in South Korea for the coming Winter Olympics.
in South San Francisco, Calif., opment of the next generation tle predictability. The drug was a product of
plans to charge $65,000 a year of treatments for MS.” The majority of MS suffer- collaboration between Dr.
for the treatment, likely add-
ing fuel to the debate over
drug prices.
MS typically strikes people
between the ages of 20 and 50,
though it can begin far earlier,
ers don’t become severely dis-
abled or paralyzed, but many
will need a cane or crutches,
Hauser’s team, other academic
partners and scientists at Ge-
nentech, part of Roche Group
Ford Says Recall Costs
“This is an historic day for
the MS community with the
approval of the first-ever
or as late as 75. Its course is
highly unpredictable, hence the
name of the more common form
or even a scooter or wheel-
chair, to aid in mobility. There
are 14 different medicines that
of Switzerland. Ocrelizumab
interferes with a type of white
blood cell that can course from
Will Slice Its Earnings
treatment for people living called relapsing-remitting multi- are generally called disease- the bloodstream into the brain, BY CHRISTINA ROGERS hood fires. The vehicles af-
with primary progressive MS. ple sclerosis, for which the drug modifying, because they aren’t leading to inflammation in the AND MIKE SPECTOR fected include the 2014 Es-
This is a real game changer,” also was approved. It can cause cures. They include Avonex, myelin covering of nerve cells. cape, 2014-2015 Fiesta ST,
said Cyndi Zagieboylo, presi- a wide range of symptoms, like Copaxone, Tysabri and others. Damage to the myelin sheath Ford Motor Co. said a 2013-2014 Fusion and 2013-15
dent and chief executive of the loss of balance and poor coordi- These help to reduce central- and to the underlying nerve fi- $295 million charge for recalls Transit Connect models with
National MS Society. “The Na- nation, fatigue and weakness. As nervous-system inflammation ber are facets of the disease. covering vehicles with fire 1.6-liter GTDI engines.
risks and faulty door latches Ford says lack of coolant
would contribute to a lower circulation puts the engine at

FoxNewsIsAccused first-quarter profit, the second

time in less than a year that
safety concerns have hurt the
U.S. auto maker’s bottom line.
risk of overheating, which can
crack the cylinder head and
cause oil to leak.
In the second campaign,

Of Discrimination The additional expense dis-

closed Wednesday covers two
separate recalls totaling
441,000 vehicles and was in-
BY JOE FLINT prompt and effective remedial cluded in Ford’s guidance last
action,” adding “there is no week that it expects a leaner
DREW ANGERER/GETTY IMAGES
Ford added 211,000 vehicles to
a recall involving faulty door
latches that can cause doors to
swing open. The newly af-
fected vehicles include Fiesta,
Fusion and Lincoln MKZ cars

Two black women have place for inappropriate verbal profit for the first three with model years spanning
filed a lawsuit against Fox remarks like this at Fox News.” months of 2017, the auto 2013 and 2014. Ford said it
News Channel, its parent com- The complaint cites exam- maker said. One of the recalls wasn’t aware of any accidents
pany 21st Century Fox and a ples of racist remarks includ- expands a door-latch cam- or injuries related to the
former senior executive at the ing Ms. Slater asking Ms. paign disclosed last year that newly recalled cars.
cable network alleging racial Wright if her children were all cost the company $640 million
discrimination. fathered by the same man and in third-quarter operating
Tichaona Brown and Ta-
brese Wright worked in the
telling Ms. Brown that blacks
routinely mispronounce words. The company says manager’s dismissal renders suit ‘needless.’
profit and forced Ford to
lower full-year pretax profit
The auto maker
payroll department for the ca- According to the suit, Ms. guidance by 6%. expects full-year
ble news channel and allege
that for years they were sub-
Slater once asked Ms. Brown
to say certain words including
its reputation,” the suit says.
The Fox News spokes-
stood by its suit.
News Corp, owner of The
Ford Chief Financial Officer
Bob Shanks last week sur-
pretax earnings
ject to racial slurs and insults “ask,” “mother” and “father” woman said the company Wall Street Journal, and 21st prised Wall Street with earn- to fall 14% in 2017.
by Judith Slater, the longtime out loud in a meeting. “took the appropriate action in Century Fox share common ings-per-share guidance for
comptroller of Fox News. Ms. Slater, who had been investigating and firing Ms. ownership. the first-quarter that fell well
In a complaint filed in New employed at Fox News for al- Slater within two weeks of The suit is the latest legal below analysts’ expectations,
York State Supreme Court in most 20 years, declined to this being brought to our at- headache for Fox News and citing higher warranty repair Auto makers in recent years
Bronx County, the two said comment. tention.” 21st Century Fox. costs as one reason. Ford de- have endured record recalls
they “suffered yearslong re- Ms. Brown and Ms. Wright The suit also claims that The company is still dealing clined to comment further. and widespread resulting liti-
lentless racial animus at the say in the suit that their com- Ms. Brown was fired and Ms. with the fallout from com- The recall expenses, repre- gation. Besides those ex-
hands of their white supervi- plaints about Ms. Slater’s be- Wright demoted. Fox News plaints from multiple women senting nearly $1 billion in lost penses, a U.S. government
sor.” Ms. Slater, the suit al- havior were long ignored and countered in a statement that who say they were sexually profit over three quarters, are crackdown on auto-safety
leges, peppered her conversa- Fox News only dismissed her Ms. Brown is still employed al- harassed by former Fox News playing a disproportionate problems has resulted in sig-
tions with Ms. Brown and Ms. after the network learned of though she has tendered a res- Chairman and Chief Executive role in Ford’s ability to keep nificant financial penalties.
Wright with remarks about their plans to file a lawsuit. ignation effective April 30. Ms. Roger Ailes, who resigned last up with investors’ expecta- General Motors Co., for in-
racist stereotypes, creating a “To be clear, Ms. Slater was Wright was transferred to an- July in the midst of a probe tions. The company, coming stance, has reached settle-
hostile work environment. not terminated because she other finance division at the into his behavior. Mr. Ailes has off a string of record profits, ments with the U.S. Justice
A Fox News spokeswoman engaged in discriminatory company with the same title, denied the harassment accusa- forecast full-year pretax earn- Department, shareholders and
called the suit “needless litiga- conduct—Fox was willing to salary and benefits, the net- tions. ings in 2017 will fall 14% from thousands of consumers total-
tion” since the company had let her get away with that for work said, since her suit in- In November, 21st Century the prior year to $9 billion. ing more than $2 billion stem-
dismissed Ms. Slater on Feb. years. Rather, Slater was ter- volves the division she had Fox disclosed it had paid $35 In one campaign, Ford said ming from defective ignition
28. She said the network minated because Fox knew been working in. million in settlements related it is recalling more than switches on older cars recalled
“takes complaints of this na- this would become a public The firm representing Ms. to Mr. Ailes during the most 230,000 vehicles in North in 2014 that were linked to nu-
ture very seriously and took matter and wanted to salvage Brown and Ms. Wright said it recent quarter. America for risk of under-the- merous deaths and injuries.
B4 | Thursday, March 30, 2017 THE WALL STREET JOURNAL.

TECHNOLOGY WSJ.com/Tech

Samsung Makes Edgy Bid to Impress PHONE

When was the last time
Continued from page B1
scandal that has rocked the
any new smartphone really nation’s business and political
looked different from last elite. Mr. Lee has denied
year’s model? Well, the Sam- wrongdoing and his trial re-
sung Galaxy S8 that made its mains in the early stages, with
debut today looks like it a verdict expected by May.
beamed in from the year Samsung’s tangled web of
2025. ownership has drawn height-
This thing is nearly all ened criticism by South Ko-
screen. The S8’s bright pixels rean politicians, regulators
curve all the way to its and foreign investors. Those
edges, with critics are urging a shake-up
just a sliver for family-run conglomerates
of metal at like Samsung. If those efforts
the top and prove successful, they could
bottom. In- loosen the grip Mr. Lee—the
side, there’s grandson of the company’s
PERSONAL Bixby, a vir- founder—has over the total
TECHNOLOGY tual assis- empire.
GEOFFREY A. tant that Despite those battles,
FOWLER promises to shares of Samsung Electronics,
operate any the conglomerate’s crown
MARK KAUZLARICH/BLOOMBERG NEWS

aspect of jewel, are trading near all-time

your phone by voice. And if highs. The Suwon, South Ko-
you want, the S8 can double rea-based firm in January
as—get this—a desktop com- posted its best quarter of op-
puter. erating profit in three years,
What’s this feeling? Oh driven by booming sales at its
yeah, gadget envy… some- components business.
thing many iPhone owners Its Galaxy S8 release will
will struggle with for the give Samsung at least five
next few months. months of sales before Apple’s
I haven’t had a chance to D.J. Koh, president of mobile communications at Samsung Electronics, with the Galaxy S8 smartphone on Wednesday in New York. expected release of the much-
test Samsung’s claims to de- anticipated 10th-anniversary
termine whether the S8 is a half a million more pixels.) unlock an S8 with your face ample, you can ask Bixby to version of Android called iPhone this September. The
good buy; I’ll do that ahead Not big enough? A second or by using a front-facing in- show you the last photo you DeX, which creates a desk- speculative frenzy around the
of its arrival in stores April model, the S8+, at about frared camera to scan your took, change the screen top-like experience including iPhone has been heightened by
21. (It’ll start at $750 $100 more, follows the same iris. brightness or beam what resizable windows. analysts’ predictions that it
through AT&T, Sprint and T- squeezed design but mea- Other aspects of the S8 you’re watching to your TV. Is it a Chromebook or an will be one of the company’s
Mobile, and $720 at Verizon.) sures 6.2 inches diagonally. hardware will be less sur- (You can even ask her to Android tablet? There are a most revolutionary devices,
But from my first look, it’s Longer screens make a ton prising to Samsung follow- change her voice to male.) lot of unanswered questions. with some suggesting it will
clear the S8 is Samsung at of ergonomic sense. Within a ers. It now uses USB-C plugs, There’s a dedicated Bixby Samsung says Microsoft Of- come in a new size, feature an
its most ambitious, pushing year, I expect many—even a the new standard plug for button on the side of the fice and Adobe Lightroom upgraded display and offer
both its hardware chops and new iPhone—to join this phones and laptops. It’s wa- phone. She also uses the have been optimized for DeX, functions such as wireless
its investments in software trend. LG kicked it off last ter-resistant. The standard camera to visually identify but notably Google’s Chrome charging and facial recogni-
to keep Android people in month by elongating the headphone jack remains, and products and even famous browser hasn’t. Nonsup- tion.
the fold. screen in its G6 phone, you can expand storage. places. ported Android apps simply To counter Apple, plus
The question is: Will it be though it doesn’t curve There’s one hardware dis- I didn’t get to test many appear as they do on a lower-cost rivals gobbling up
enough to douse memories of around the sides like the appointment: The back cam- Bixby functions. Samsung phone, as rectangles. market share in China and In-
the fiery end of its last big Samsung. era is largely the same as says she’ll work with a hand- Although Microsoft has dia, Samsung will lean heavily
phone, the Galaxy Note 7? The new shape does come last year’s S7. That was a re- ful of Samsung’s own apps promoted the idea that on a new virtual assistant,
What stands out most is with a few compromises. ally good camera, but others when the S8 comes out in phones are powerful enough Similar to Apple Inc.’s Siri,
how much Samsung has Battery life, a problem with like Apple have moved on to April. It plans to add Bixby to replace laptops, its mobile Samsung’s Bixby, which is
evolved phone design beyond past Samsung phones, isn’t multiple lenses that let you to other connected Samsung Windows 10 is available only turned on and off with a but-
Apple. Its ace in the hole is likely to improve now that zoom or do interesting devices, like TVs and wash- on phones that almost no- ton on the phone’s side, uses
screen tech. Samsung was there’s more screen to light things with depth. ing machines. body uses. With DeX, Sam- artificial intelligence to field
able to do away with most of up. The long screen, whose The S8’s biggest ambi- But Samsung faces gigan- sung might have the distri- more-complex tasks than do
the frame around the screen, aspect ratio is 18.5:9, looks tions—and biggest risks—are tic competition in getting bution power to make the rivals’ offerings.
and bend its edges so it great if you’re watching an in its software. It runs An- other apps, services and de- idea finally catch on. Samsung’s monthslong in-
seemingly floats in your ultra-widescreen movie, but droid N, but Samsung wants vices to join in. Bixby com- That’s assuming Samsung vestigation into the Galaxy
hand. will give you black bars on to give reasons to choose its petes with Apple’s Siri, doesn’t blow it again. The Note 7 debacle concluded in
This isn’t a gimmick: Be- the sides of more common phones over Android rivals Google’s Assistant, Amazon’s memory of the fires that January that the overheating
cause of design, this bigger 16:9 HD videos. like the Pixel, a high-end Alexa and Microsoft’s Cor- caused an unprecedented re- could be traced to battery
phone doesn’t feel bigger. Since there’s no frame to phone created by Google it- tana. There just won’t be call of the Note 7 are still manufacturing problems and
Now there’s a 5.8-inch screen hold a physical home button, self. enough space on the island raw. design flaws.
in a form only slightly taller it is now part of the screen, This is the first Samsung for all of them—and Bixby is Samsung said the S8 will To avoid a repeat, Samsung
than last year’s S7 with a 5.1- and responds with a little product to include the virtual last to arrive. go through its new 8-point adopted an eight-point quality
inch screen—the old fore- haptic jiggle when you press. assistant dubbed Bixby. The S8 has one other un- battery quality system but plan and added other safety
head and chin are now barely The fingerprint reader has She—yep, another AI that de- expected software talent: didn’t have further specifics. measures for the Galaxy S8.
there. (Measuring screens is moved to the back of the faults to a female voice—can With an adapter, the S8 can For example: How many The device, in a break with
so confusing we had to make phone, and you’ll have to take voice commands for transform into a computer, phones will be X-rayed for previous launches, doesn’t fea-
a chart, but rest assured, the learn not to accidentally anything you’d normally ac- capable of driving a monitor, battery problems? If just one ture a more powerful battery.
new phone has significantly smudge the camera when complish by touching your mouse and keyboard. It’s ac- phone combusts, Samsung is —Tripp Mickle contributed
more screen area—and about reaching for it. You can also phone, Samsung says. For ex- tually a Samsung-modified toast—pun intended. to this article.

Shipping-Tech Startup
ADVERTISEMENT

Legal Notices
  
       
  ' #- )-   +   -  ) /0(11,
BANKRUPTCIES
 % ( * A
! *. 7
6- <=>
* A
A
>$>GF 8 8 6
9' +,,%%-.-,
Gets $25 Million Boost
 ) + 2 ! #%  #

     

   
%%,:4!$01
6

8
8  ;3 39 8
6 BY ERICA E. PHILLIPS
 
  
 
  6
  <
 3 )

  

   
 
   $ $ $  % : 4( ( .- -%+  # * 
 
   

    :.%F  .  .- - -  B % ..%F  Shipping-technology
   
        (- %#%..' *  4( ( .- 9-  #'  # 
            8=# D :)0C   
    #  ! $ $'C  ' startup Freightos raised $25
 !"  " #$%&'  (!!)  * 
  % #'  .-  (  .- %   .
#'  H
 "        ' " (!!)   (  .-F   . % - 
( % million in a funding round led
+" ,         !"   #$
 %% & ' (     !  # %%  
- % .-%
.  %--' ( % - 
 1. %  *' % - %  .#.
by General Electric Co.’s GE
#%) % *#%
%+,,%%-.-,%%,  =   $ 8   % ! % 9 $ $  % ! Ventures, the company said
/-$01  % >   = #-  $ -  %  $ $  %  #
2    ! 3% .. %  .-%" . >   # 3 
#     $    3    Wednesday.
 *%  %%  .-  %  % -   %   
4   .-%" %   - (  #% .%  
$ "   #-  #- # 7 # $%     % 
 
         ?  The Series B round brings
#. #.*     #%"  %#-  ( ( .- 4( $ $  % >      +- #   # 3   - the Israel-based company’s to-
( .-" % %  # ..'  #' 4- .
55 4- ."
    !- #       $ "  # # $% ! # 
#%) .-%   
  #(      #  #    ! >       %- #   #   tal funding to $50 million—
 %" 2 #. #.* .%%     #%                @ ?
 %+       -    ! #   $  one of the most well-funded
 # 3   ) 2    #%
. * 
    # $'> B  =# '  #; !#"
 %    " $     #   %)
6  " $ 6    %  %  
entities in a group of technol-
6*#.% /.%
55  F 7- 8 /.%
55 ,&F  %. # % %  * (     #%)  + ogy startups trying to take the
6.% 9. /.%
55 ,&F -% 8 /.%
55 ,&F :             =
   

8* /.%
55 ; < F :  .-
55 G;F :    I#   #       '  #$ booking of freight transporta-
AMIR COHEN/REUTERS

=# C ' '      #

  
.- /.%
55 <=GGF : % /.%
55 G; F
 29- 4 /.%
55 <;;=   .3F   *% -  .% tion online.
 # 4   3  *   (5*+*1+  %+) &.. .-%

  -. %

.  *%  %%  .- -%
## $% 0( '  ' 3%%   .-%
%% , ( ' *%  #  ' (     ! *
Freightos operates an on-
%#- ( ( % .- % %  # ..'  #' 4- . #' ' #      #      =    line marketplace that it likens
>
  <+ - . :% 2-   7.  " .-
 ( ( .- (-  . -% ' -'  % #' 
63%% ( '-  '  % <=#; -% .% # 4- . +  G<< =GG$>< <F #  #%) % *#% to travel-booking websites,
%#- % %  # ..'  #' 4- . #'   7.
 
%+,,%%-.-,%%,/-$01 4.%   4-

" #      =     =   
, where shippers can compare
 # 4" %  3  ) &.. -. % .  
2 #%  %   %%
. *  .% ( % ( rates and book transportation
*%  %%  .- -% %#- ( ( % .- %  # ..' # $'> B  =# '   ;  <  ( #, *.1.C
 #' ? >
  <+ - . :% 2-   :% 7
55 ,&F B: 8 /.%
0  >>F B: /* . for their cargo. Freightos spe- The Jerusalem offices of Freightos, an online marketplace for
7-.  " /.%
55 ;;>F 9% 8 . 4(.
55 <>F 9% 8 .($
 # % # #  #  3  ) 0       /.%
55  ; F :% /.%  G;F :$ cializes in trans-Pacific air and booking cargo transport. The company has doubled its funding.
 # -%  %.-% % %.% ( %%%  .#.%
...'
 .%  #  #   #=# 
% B.' /.%
0 >>=F :% 0.
0 ><<F B:
5 
55 == F : 4%
0 < =GF .1 ;;F :%
ocean shipments. Shortly after
   .-
    #% %..   ( ' % 
55 =G;F J2
55 <= F J2 5%%
55 <>><F 2-$ launching its online platform cargo on ships and planes. Mr. close the amount.
--   .% ( ' .- (( #'
 % .%  ( #, ..D6C  <
 
16D.C < IB
 **)*C
%.. # ((  . ( ' = '% (-    * %  9* 6*#. J%
0  GGF . 6 4* /.%
55 last July, Freightos bought Schreiber said Freightos is In an email, GE Ventures
%     7.     7-.  
%
.#.
 %#-  4( ( .- * %  % - .- 
<GGF :% 0.
55 < F  :% 55 ><F :$
% 4%  4 5  = =F :% 6%. %
55 Spanish startup WebCargoNet, providing its software in some Director Jonathan Pulitzer
 &- .%  "  # ( # (-  %
 # 6 7  3  )
   =    #  
*.D.C E-  ( #, 770DC <E  ' ( #, %E3C  I 5 $
#. /.% 
55  =F . ' 8% .
55  ; F 9% 8
adding its database of global capacity to several top global said, “As a global shipper with
(-     #)% @ ( ' 1'   8"= 
7.))C D A     4  (((
:67DC airfreight rates. freight forwarders. significant operations tied to
1 .% #'  . (   7.    <+ -
4 6*#.%
55 <<=F / 6*#.% /.%
55 ,&F
. :% 2-
    % = '% (  ' (  :- /. 9 0
55 ;<>F  6*#.% /.%
55 Freightos and other freight- He said with Amazon.com shipping and logistics, freight
. 6@   6@  "
8   $ $  % &.. 4(% ( .- -% # %#- % %  #
 F 7- 8 /.%
55 ,&F 6.% 9. /.%

55 ,&F -% 8 /.%

55 ,&F : 8* /.%
55
booking platforms compete Inc. planning a freight-booking digitalization is a strong stra-
 !   " #  .  <+ - . :% 2-   .$ ; < F :  .-
55 G;F :  .- /.%
with traditional forwarders, service of its own, established tegic complement” for GE. He
#.      (..* %%+ 8 39 ' :%
0 55 <=GGF : % /.%
55 G; F  29- 4
.-% 4%% 
, 4- .
55
G= = &
= 9.
* /.%
55 <;;= 2 %% (  #%)  3% % though the startups have yet forwarders will need software added, “Freightos has helped
A
A  F 8 :6 39  ' B % ' 
= = 6 
'. /%
%% =>=
to grab significant market like Freightos’s to remain com- many logistics providers oper-
share. The world’s largest petitive. “Amazon is starting ate more efficiently and we
BANKRUPTCIES freight forwarders, such as to threaten this industry, and are excited to support them in
  
   
    

     
      DHL Global Forwarding and we see ourselves as an answer their journey.”
Kuehne + Nagel International to that,” he said. Also among the new inves-
LEGAL
    
     
   

 
  
            
    
              AG, ship millions of containers The investment in Freightos tors in Freightos is Master
! "#
    $#  % &"  #      
each year and often pay signif- is the second this month for (HK) Toys, a Hong Kong toy
NOTICES
  $'     
 (    # )*   +,, ! "#
 
        #    +    
 (  # 
     '  #   
 (  '  $'    
icantly lower rates for ocean GE Ventures in the shipping manufacturer. Toy shipments
    #   , - # '  )./)012*      , freight than smaller competi- market. Last week, GE Ven- are among the most common
ADVERTISE TODAY 3           '  '  4 '  , ! 
 5 .67 8  !  9  % &" %& )000:  3 6. 60).  )0;00 ,, <$-  tors, according to the supply- tures and Goldman Sachs Prin- on the Freightos marketplace,
 , -
    #    #    #  #  #  
=#     
 )*
, - 4   '       #
chain consultants Armstrong & cipal Strategic Investments led and the company says it
(44) 20-7572-2124    , Associates. an $8.5 million Series A fund- shipped more than 100 million
3  '#        '  =  
> # # # = 
Robert.Monaghan@wsj.com  '   
'   4 '  , !   +   ! "# With the new funding, Chief ing round on the New York tons of toys by air ahead of
?   #   $ " @ A  :*0 B  3  % &" %& )00).
3 ; - 9#   $ , C       #      Executive Zvi Schreiber said Shipping Exchange, a startup the holiday season last year.
For more information visit:
#       
 #      !   " # !  $  % 
   &'(( )%) *+   ,(- ,(., (     '#   =    
Freightos aims to expand the helping containership opera- Master (HK) Toys isn’t a
wsj.com/classifieds ! "#
           #   , number of routes available, in- tors and shippers create en- Freightos customer but plans

            #  =   B'   
#           '   ! "#
> '  cluding more services to and forceable contracts. to start using the service, Mr.
<
D,%&!,+
,    '   '  $'          ,
C&    # !,#E#E  /  , from Europe. The company GE Ventures will receive a Schreiber said. Master (HK)
© 2017 Dow Jones & Company, Inc. -   #         #   +  , #   '
     +   '     B     
also wants to provide its soft- nonvoting seat on the Freigh- Toys is also a member of an
All Rights Reserved. +,, # 3#  )277   , %  $'     =       ware to freight forwarders, tos board. A spokeswoman for Asian toy-manufacturer asso-
                 # #  '#   
#   +  , companies that help retailers GE Ventures confirmed the in- ciation that ships a large per-
and manufacturers book their vestment but declined to dis- centage of the world’s toys.
THE WALL STREET JOURNAL. Thursday, March 30, 2017 | B5

FINANCE & MARKETS

Citizens Financial Checkups Turn Up Ills

Current and ex-bankers
Checkup Time
say data from some Customer consultations at
customer meetings Citizens Bank, cumulatively
were fabricated 400,000 appointments

BY RACHEL LOUISE ENSIGN

300,000
As part of its turnaround
plan, Citizens Financial
Group Inc. has touted a pro-
gram that invites customers 200,000

RICK FRIEDMAN/CORBIS/GETTY IMAGES

into branches for what the
bank calls a financial checkup.
It said 400,000 such meetings
were scheduled last year. 100,000
Eleven current and former
Citizens branch employees in
five states claim that informa- 0
tion about some meetings was
fabricated by those employees 2016 ’17
Source: company earnings and investor
or others as they struggled to presentations
meet goals set by the bank. THE WALL STREET JOURNAL. The employees say they falsified information because of pressure to meet expectations related to the ‘Citizens Checkup’ program.
“For a week or so, I had my
bankers [try to make] real ap- they believed that doing so practices and the public fall- call customers, the bank said. ing. But no matter how he for 30 calls and two kept ap-
pointments. No one was pick- wouldn’t hurt customers. out led its chief executive to The goal, current and former pitched it in calls in the spring pointments a week to be ex-
ing up the phone,” said a for- In response, Citizens said, retire. employees said, was to even- of 2016, “people still felt it pected of bankers.
mer branch manager in “While all of our colleagues go But the claims by current tually sell more banking prod- was a telemarketer call,” said Nine current and former
Massachusetts, recalling when through significant training to and former employees that in- ucts. When meetings occurred, the banker. employees said they or others
the “Citizens Checkup” pro- be prepared for conducting a formation was falsified at Citi- bankers were told to ask ques- “We feel good about our would typically enter false in-
gram was introduced in Febru- checkup, this new approach zens could raise questions tions such as: “Are you a care- sales practices, and the formation into two computer
ary 2016. “So we put random may not suit everyone, which about the accuracy of data the taker for an aging parent?” or checkup approach is an impor- systems, one tracking calls to
people’s names down and said, may explain why you identi- bank presented to investors “Are you planning for an up- tant element of why we do,” customers, the other for ap-
‘We have an appointment.’ ” fied a handful of detractors.” and about the bank’s corporate coming divorce?” the bank said. pointments made, former
After a fake appointment Providence, R.I.-based Citi- culture and internal controls. Citizens’ push for customer Bankers, who were often bankers said. First, employees
was supposed to have oc- zens has more than $149 bil- “Investors are potentially appointments reflects Chief told by managers to make 25 would mark that they called
curred, bankers would either lion in assets and 1,200 hurt if executives go out and Executive Bruce Van Saun’s cold calls a day, were given a customers even though they
sometimes mark that the cus- branches in 11 states, primarily talk to the Street about basi- stated desire for branches to script, some of the current hadn’t. Next, the employees
tomer didn’t show up or at- in the Northeast; it is the cally phantom appointments become advice centers. and former bankers said. This said, they or others would en-
tended but didn’t sign up for 10th-largest U.S. commercial that don’t exist,” said Clifford included wording to “over- ter fake appointments into the
any new products, the former bank by assets. Since going Rossi, a professor at the Uni- come objections” to a poten- system using the names of ac-
employees said. One former public in 2014, Citizens, a for- versity of Maryland’s business tial meeting, according to a tual customers.
Citizens branch manager in mer unit of Royal Bank of school and a former bank risk-
The program was copy of the script reviewed by Two former Citizens bank-
New York state recalled put- Scotland Group PLC, has management executive. part of a broader the Journal. If a customer ers said they often marked
ting stars or exclamation worked to turn around its The appointment-setting wasn’t interested, the bank that a customer didn’t show
points on falsified forms to business by improving profit- program was part of a broader
push by the bank to suggested in the script that up for the checkup or didn’t
make them look like authentic ability and increasing revenue. push to bring in more than bring in more revenue. the banker say: “Just like you buy any products. Some bank-
meeting notes. Banks, investors and regula- $60 million in new revenue for would meet with a doctor or ers said they pulled up cus-
Citizens said in a statement tors have been scrutinizing 2016. Citizens had total reve- dentist every six months or tomer financial records so
that it has “no data to suggest bank-sales programs since a nue of $5.3 billion last year. year it is important to review they could create believable
that any aspect of the Citizens scandal over sales tactics Last June, Mr. Conner told in- The bank said a two-part your financial health as well.” answers to put on paper forms
Checkup program was fabri- erupted last fall at Wells vestors at a conference that phone survey—conducted first At some branches, calls about the supposed meetings.
cated or falsified” and has Fargo & Co. Some firms have the initiative was “near the in late 2015 during a pilot of were expected to yield be- The bank said it had
“strict controls and standards played down sales goals since top of the things that we’re the program and from late tween 10 and 15 checkup ap- worked with a consultant to
to ensure that inappropriate then, though Citizens has con- most excited about.” 2016 to early 2017—of nearly pointments per banker per track the progress of its pro-
behavior is detected and ad- tinued to emphasize its ap- Mr. Conner added at that 1,000 customers who were week, some of the current and gram against those of other
dressed.” pointment program and other time, “We’ve contacted over called for a checkup appoint- former bankers said. These ap- banks with similar arrange-
Brad Conner, head of con- sales goals, according to cur- 300,000—about 325,000 of ment found 95% who kept the pointments were tracked as ments. It added this didn’t
sumer banking at Citizens, rent and former employees. our customers. We’ve been appointment said the meeting part of a performance-mea- show anything amiss.
said in a separate statement In late March, bankers in able to schedule 80,000 ap- was useful. The bank also said surement system One former banker said
that, “We take every allegation Pennsylvania learned that they pointments for a checkup, and in response to questions from Bankers said there was an there was encouragement
seriously, and our chief con- were expected to up their we’re getting really great feed- the Journal that surveys of its intense focus on checkup ap- from managers to lie about
duct officer will lead a thor- number of checkup appoint- back from both our customers own branch employees haven’t pointment statistics. “Corpo- calls and appointments by
ough review.” ments in April. The bank said and our colleagues in terms of turned up evidence of wide- rate only looked at the num- their managers. “We didn’t
The bank added any new “there was no formal raising the receptivity from our cus- spread staff dissatisfaction bers,” another former New have any time to make calls,”
program entails change and of appointment expectations tomer base.” with the checkups. York state banker said. “As one former banker in Rhode
that, “as expected, a small that we are aware of and no Citizens has also presented The 11 current and former long as those numbers looked Island said. This banker esti-
number of colleagues have monthly targets are set across data on the appointments in branch employees, however, presentable, the pressure was mated making four real
struggled in making the tran- the bank.” materials accompanying quar- said the program ran into off.” Like other former em- “checkup” calls over the
sition to having deep needs- The information that the terly earnings. The bank told problems. For starters, few ployees, this banker said the course of 2016 but reported
based conversations.” current and former Citizens The Wall Street Journal that customers picked up the false appointments would help making hundreds within the
The former Citizens em- employees said was falsified figures on the program pre- phone—and of those that did, bankers “look good without bank’s system, the banker
ployees said they falsified in- doesn’t involve opening cus- sented to investors weren’t not many wanted an appoint- any customers being hurt.” said. “We were told how many
formation because of pressure tomer accounts without con- overstated and that those met- ment, the bankers said. The bank disputes the goal appointments we would have
to meet expectations related sent, the practice that led to rics were “not a key financial A former Citizens banker in figures for calls and appoint- to have and how many con-
to the program and time con- Wells Fargo’s problems. That measure.” New York state said he was ments. It said that, while indi- tacts we had to make it believ-
straints from other banking bank entered into a $185 mil- To make appoint- initially enthusiastic after go- vidual branches set their own able by the branch manager,”
responsibilities. They also said lion settlement over its sales ments, Citizens’ staffers cold- ing through specialized train- expectations, it is more typical the person said.

Biotech Shares Boost Nasdaq Paulson Partner Dies

BY RIVA GOLD
AND AARON KURILOFF

The Nasdaq Composite rose

In an Apparent Suicide
Wednesday, posting a fourth BY NICOLE FRIEDMAN losses for customers around
consecutive session of gains. AND ZOLAN KANNO-YOUNGS the world. He is currently
The tech-heavy index rose serving a 150-year sentence in
0.4% on Wednesday, putting it Charles Murphy, a partner federal prison.
up 1.2% in March, boosted by at hedge fund Paulson & Co. Fairfield Greenwich agreed
an advance in biotechnology whose former firm invested to pay $8 million to settle the
ERIC PIERMONT/AGENCE FRANCE-PRESSE/GETTY IMAGES

shares. billions with Bernard Madoff, civil-fraud charges and neither

The Dow Jones Industrial died Monday in an apparent admitted nor denied wrong-
Average lost 42.18 points, or suicide. doing. Fairfield Greenwich’s
0.2%, to 20659.32. The S&P Police received a report of a founding partners agreed to be
SYLVAIN GABOURY/PATRICK MCMULLAN

500 climbed 0.1%. jumper at the Sofitel New York part of an $80 million settle-
In Europe, the Stoxx Europe Hotel in Midtown Manhattan ment with some of its inves-
600 gained 0.3% to 378.53 af- at 4:40 p.m. Monday, accord- tors.
ter Tim Barrow, Britain’s am- ing to law-enforcement offi- More recently, Mr. Murphy,
bassador to the EU, delivered cials. The man, who was later 56 years old, was a key archi-
a letter to European Council identified as Mr. Murphy, tect behind Paulson’s invest-
President Donald Tusk for- jumped from the 24th floor, ments in insurance companies
mally notifying the bloc that one of the officials said. He American International Group
the U.K. will be the first coun- landed on the fourth floor ter- Inc. and Hartford Financial
try ever to leave. race. Services Group Inc. Mr. Mur-
In the U.S., the Nasdaq’s Sanofi rose in Paris after a new drug was approved on Tuesday. Emergency Medical Services Charles Murphy phy pushed for the companies
gains came even as other in- responded and pronounced the to break apart as a way to im-
dexes wobbled after the failure strong demand. U.S. crude and business confidence and man dead at the scene. at several investment banks. prove shareholder returns.
of a health-care overhaul climbed 2.4% to $49.51 a bar- readings on real economic out- “We are extremely sad- Mr. Murphy had joined Fair- Both companies resisted the
spurred concerns that Presi- rel. put, such as retail and housing dened by this news,” John field Greenwich in 2007 from breakup plans that Mr. Murphy
dent Donald Trump would Financial shares were sales, that have roughly Paulson, founder of Paulson & Credit Suisse. In 2009, Fair- advocated, but the firms did
struggle to enact key corpo- among the biggest laggards in matched expectations. Co., said in a statement. field Greenwich faced lawsuits proceed with other changes,
rate-friendly policies such as the S&P 500, falling 0.4% by “We appear to have quite a “Charles was an extremely and civil-fraud claims for help- including divestitures.
tax cuts, deregulation and in- late afternoon. U.S. govern- robust simultaneous economic gifted and brilliant man, a ing to steer billions of dollars Last year, Mr. Paul-
frastructure spending. ment-bond prices rose as the recovery…but survey results great partner and a true of investments into Mr. Mad- son gained a board seat
The Nasdaq Biotechnology yield on the benchmark 10- are reflecting political opti- friend.” off’s firm over nearly two de- at AIG alongside a representa-
Index rose 0.8% by late after- year Treasury note fell to mism which might be running Mr. Murphy’s stint at Paul- cades. tive of activist investor Carl
noon. Vertex Pharmaceuti- 2.385%, according to somewhat ahead of economic son followed his work at in- Mr. Madoff was convicted of Icahn.
cals soared 20% after the Tradeweb, from 2.411% the reality,” said Guy Monson, vestment firm Fairfield running a Ponzi scheme that —Leslie Scism
company Tuesday reported prior day. chief investment officer at Greenwich Group and, earlier, cost about $17.5 billion in contributed to this article.
positive study data for one of Expectations for market- Sarasin & Partners.
its experimental cystic fibrosis friendly politics from the new The pound, which has fallen
drugs. Regeneron Pharma-
ceuticals rose 3.2% and
administration had helped
send U.S. stocks to record
around 17% since the June
Brexit referendum, steadied
Advertisement INTERNATIONAL INVESTMENT FUNDS
Sanofi gained 0.7% in Paris af- highs earlier this year and Wednesday after a brief de-
ter the Food and Drug Admin- have continued to keep many cline during Asian trading [ Search by company, category or country at europe.WSJ.com/funds ]
istration on Tuesday an- investors optimistic about U.S. hours and was down 0.07%
nounced approval for their stocks. against the dollar at $1.2441. NAV —%RETURN—
FUND NAME GF AT LB DATE CR NAV YTD 12-MO 2-YR
new dermatitis drug. Upbeat economic data have Earlier, Australia’s S&P/ASX
n Chartered Asset Management Pte Ltd - Tel No: 65-6835-8866
Energy shares helped buoy also helped lift stocks and 200 climbed 0.9% to its high- Fax No: 65-6835 8865, Website: www.cam.com.sg, Email: cam@cam.com.sg
the S&P 500, climbing 1.3% by shortened pullbacks in recent est level since 2015. Hong CAM-GTF Limited OT OT MUS 03/24 USD 310782.95 2.6 7.3 -2.1
late afternoon after larger- months. Still, some investors Kong’s Hang Seng Index added
than-anticipated declines in have pointed to a modest di- 0.2%. Data as shown is for information purposes only. No offer is being made by
Morningstar, Ltd. or this publication. Funds shown aren’t registered with the
For information about listing your funds,
stockpiles of crude products vergence between survey- — Stephanie Yang U.S. Securities and Exchange Commission and aren’t available for sale to United
States citizens and/or residents except as noted. Prices are in local currencies.
please contact: Freda Fung tel: +852 2831
including gasoline suggested based measures of consumer contributed to this article. All performance figures are calculated using the most recent prices available. 2504; email: freda.fung@wsj.com
B6 | Thursday, March 30, 2017 THE WALL STREET JOURNAL.

MARKETS DIGEST
Nikkei 225 Index STOXX 600 Index S&P 500 Index Data as of 4 p.m. New York time
Last Year ago
19217.48 s 14.61, or 0.08% Year-to-date s 0.54% 378.53 s 1.23, or 0.33% Year-to-date s 4.73% 2361.13 s 2.56, or 0.11% Trailing P/E ratio * 24.52 23.53
High, low, open and close for each 52-wk high/low 19633.75 14952.02 High, low, open and close for each 52-wk high/low 378.53 308.75 High, low, open and close for each P/E estimate * 18.27 17.55
trading day of the past three months. All-time high 38915.87 12/29/89 trading day of the past three months. All-time high 414.06 4/15/15 trading day of the past three months. Dividend yield 1.97 2.23
All-time high: 2395.96, 03/01/17

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

20000 385 2390

19500 375 2350

19000 365 2310

18500 355 2270

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

Session open Close

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

17500 335 2190

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

International Stock Indexes Data as of 4 p.m. New York time Global government bonds
Latest 52-Week Range YTD Latest, month-ago and year-ago yields and spreads over or under U.S. Treasurys on benchmark two-year
Region/Country Index Close NetChg % chg Low Close High % chg and 10-year government bonds around the world. Data as of 3 p.m. ET
World The Global Dow 2697.19 –4.51 –0.17 2193.75 • 2720.47 6.7 Country/ Spread Over Treasurys, in basis points Yield
MSCI EAFE 1804.05 –8.01 –0.44 1471.88 • 1956.39 5.1 Coupon Maturity, in years Yield Latest Previous Month Ago Year ago Previous Month ago Year ago
MSCI EM USD 972.46 2.14 0.22 691.21 • 1044.05 22.4 5.250 Australia 2 1.751 46.9 44.0 55.0 118.4 1.746 1.814 1.972
4.750 10 2.725 33.7 29.1 34.3 78.0 2.711 2.737 2.586
Americas DJ Americas 569.71 1.11 0.20 480.90 • 577.65 5.4
3.000 Belgium 2 -182.6 -184.0 -123.8 -0.507 -0.576 -0.450
-0.545 -181.3
Brazil Sao Paulo Bovespa 65485.06 844.61 1.31 47873.65 • 69487.58 8.7
0.800 10 0.825 -156.3 -156.2 -169.3 -142.1 0.858 0.701 0.384
Canada S&P/TSX Comp 15645.70 47.13 0.30 13217.17 • 15943.09 2.3
0.000 France 2 -0.506 -178.8 -178.9 -179.7 -121.5 -0.483 -0.533 -0.426
Mexico IPC All-Share 49077.98 –261.26 –0.53 43902.25 • 49523.94 7.5
0.250 10 0.927 -146.1 -144.9 -150.6 -132.4 0.971 0.888 0.481
Chile Santiago IPSA 3747.27 –11.04 –0.29 2998.64 • 3764.58 16.3
0.000 Germany 2 -0.747 -202.9 -200.3 -216.5 -127.6 -0.698 -0.901 -0.488
U.S. DJIA 20659.32 –42.18 –0.20 17063.08 • 21169.11 4.5
0.250 10 0.344 -204.4 -202.9 -218.6 -166.6 0.391 0.209 0.139
Nasdaq Composite 5897.55 22.41 0.38 4574.25 • 5928.06 9.6
0.300 Italy 2 -0.087 -136.8 -138.3 -129.2 -78.3 -0.078 -0.028 0.005
S&P 500 2361.13 2.56 0.11 1991.68 • 2400.98 5.5
1.250 10 2.131 -25.7 -26.5 -30.6 -56.6 2.154 2.089 1.239
CBOE Volatility 11.43 –0.10 –0.87 9.97 • 26.72 –18.6
0.100 Japan 2 -0.251 -153.2 -156.7 -153.4 -101.2 -0.261 -0.270 -0.224
EMEA Stoxx Europe 600 378.53 1.23 0.33 308.75 • 378.53 4.7 0.100 10 0.055 -233.3 -236.0 -234.0 -189.2 0.060 0.055 -0.087
Stoxx Europe 50 3149.03 13.28 0.42 2626.52 • 3151.89 4.6 4.000 Netherlands 2 -0.772 -205.4 -202.8 -209.7 -129.7 -0.723 -0.833 -0.509
Austria ATX 2836.65 29.85 1.06 1981.93 • 2867.67 8.3 0.750 10 0.588 -180.0 -179.2 -191.5 -157.6 0.628 0.480 0.230
Belgium Bel-20 3787.54 18.69 0.50 3127.94 • 3802.01 5.0 4.450 Portugal 2 -0.134 -141.6 -144.8 -128.4 -54.2 -0.142 -0.020 0.246
France CAC 40 5069.04 22.84 0.45 3955.98 • 5073.23 4.3 2.875 10 3.676 128.7 131.1 147.2 91.9 3.730 3.866 2.724
Germany DAX 12203.00 53.58 0.44 9214.10 • 12233.76 6.3 2.750 Spain 2 -0.212 -149.4 -151.8 -152.5 -77.6 -0.212 -0.261 0.012
Greece ATG 668.55 4.03 0.61 517.10 • 672.93 3.9 1.500 10 1.635 -75.3 -76.1 -85.6 -43.3 1.659 1.539 1.372
Hungary BUX 32232.95 –61.08 –0.19 25126.36 • 34334.92 0.7 4.250 Sweden 2 -0.602 -188.4 -190.0 -193.6 -144.0 -0.595 -0.672 -0.652
Israel Tel Aviv 1400.48 –0.52 –0.04 1372.23 • 1504.42 –4.8 1.000 10 0.615 -177.3 -178.7 -186.5 -129.6 0.632 0.529 0.509
Italy FTSE MIB 20276.80 –53.62 –0.26 15017.42 • 20388.87 5.4 1.750 U.K. 2 0.143 -113.8 -112.3 -117.8 -31.9 0.183 0.086 0.469
Netherlands AEX 513.58 1.43 0.28 409.23 • 518.88 6.3 4.250 10 1.152 -123.7 -122.5 -124.3 -39.1 1.195 1.151 1.414
Poland WIG 58709.72 –229.04 –0.39 42812.99 • 60631.65 13.4 1.250 U.S. 2 1.282 ... ... ... ... 1.305 1.264 0.788
Russia RTS Index 1124.91 –0.67 –0.06 839.62 • 1196.99 –2.4 2.250 10 2.388 ... ... ... ... 2.420 2.394 1.805
Spain IBEX 35 10367.60 –21.40 –0.21 7579.80 • 10424.50 10.9
Sweden SX All Share 560.19 2.40 0.43 443.66 • 564.93 4.8 Commodities Prices of futures contracts with the most open interest 3:30 p.m. New York time
Switzerland Swiss Market 8661.53 64.51 0.75 7475.54 • 8704.11 5.4 EXCHANGE LEGEND: CBOT: Chicago Board of Trade; CME: Chicago Mercantile Exchange; ICE-US: ICE Futures U.S.; MDEX: Bursa Malaysia
South Africa Johannesburg All Share 52444.78 135.55 0.26 48935.90 • 54704.22 3.5 Derivatives Berhad; TCE: Tokyo Commodity Exchange; COMEX: Commodity Exchange; LME: London Metal Exchange;
NYMEX: New York Mercantile Exchange; ICE-EU: ICE Futures Europe. *Data as of 3/28/2017
Turkey BIST 100 89269.72 –912.01 –1.01 70426.16 • 91497.00 14.2
One-Day Change Year Year
U.K. FTSE 100 7373.72 30.30 0.41 5788.74 • 7447.00 3.2 Commodity Exchange Last price Net Percentage high low
358.00 0.25 0.07% 387.25 354.25
Asia-Pacific DJ Asia-Pacific TSM 1567.74 –1.09 –0.07 1308.52 • 1570.38 10.2 Corn (cents/bu.) CBOT
Soybeans (cents/bu.) 969.50 -2.50 -0.26% 1,088.25 967.25
Australia S&P/ASX 200 5873.50 52.30 0.90 4924.40 • 5873.50 3.7
Wheat (cents/bu.)
CBOT
CBOT 425.00 0.50 0.12 477.00 416.25
China Shanghai Composite 3241.31 –11.63 –0.36 2806.91 • 3282.92 4.4
Live cattle (cents/lb.) CME 111.825 0.225 0.20 114.200 103.150
Hong Kong Hang Seng 24392.05 46.18 0.19 19694.33 • 24593.12 10.9
Cocoa ($/ton) ICE-US 2,084 -45 -2.11 2,273 1,869
India S&P BSE Sensex 29531.43 121.91 0.41 24673.84 • 29648.99 10.9
Coffee (cents/lb.) ICE-US 139.10 0.25 0.18 159.30 136.20
Japan Nikkei Stock Avg 19217.48 14.61 0.08 14952.02 • 19633.75 0.5
Sugar (cents/lb.) ICE-US 17.02 -0.54 -3.08 21.21 17.00
Singapore Straits Times 3184.57 26.75 0.85 2729.85 • 3184.57 10.5
Cotton (cents/lb.) ICE-US 76.10 -0.78 -1.01 79.46 71.55
South Korea Kospi 2166.98 3.67 0.17 1925.24 • 2178.38 6.9 Robusta coffee ($/ton) ICE-EU 2167.00 -1.00 -0.05 2,279.00 2,093.00
Taiwan Weighted 9856.25 –20.20 –0.20 8053.69 • 9972.49 6.5
Copper ($/lb.) COMEX 2.6750 -0.0010 -0.04 2.8360 2.4800
Source: SIX Financial Information;WSJ Market Data Group Gold ($/troy oz.) COMEX 1256.00 -2.80 -0.22 1,268.10 1,152.20
Silver ($/troy oz.) COMEX 18.240 -0.012 -0.07 18.540 16.000
Currencies London close on March 29 Aluminum ($/mt)* LME 1,928.50 4.00 0.21 1,939.00 1,688.50
Tin ($/mt)* LME 19,900.00 365.00 1.87 21,225.00 18,760.00
Yen, euro vs. dollar; dollar vs. major U.S. trading partners US$vs,
Wed YTDchg Copper ($/mt)* LME 5,800.00 106.00 1.86 6,156.00 5,518.00
Country/currency in US$ per US$ (%) Lead ($/mt)* LME 2,314.00 -4.00 -0.17 2,445.00 2,022.00
20%
s Europe Zinc ($/mt)* LME 2,783.00 5.00 0.18 2,958.50 2,555.00
Yen Bulgaria lev 0.5499 1.8186 –2.1 Nickel ($/mt)* LME 9,785.00 35.00 0.36 11,095.00 9,430.00
10
Croatia kuna 0.1447 6.911 –3.7 Rubber (Y.01/ton) TCE 244.00 5.80 2.43 n.a. n.a.
s
Euro Euro zone euro 1.0756 0.9298 –2.2
0 Palm oil (MYR/mt) MDEX 2723.00 16.00 0.59 3068.00 2642.00
Czech Rep. koruna-b 0.0398 25.125 –2.2
s WSJ Dollar index Denmark krone 0.1446 6.9178 –2.1 Crude oil ($/bbl.) NYMEX 49.43 1.06 2.19 57.50 47.01
–10 0.003474 287.86 –2.2
Hungary forint NY Harbor ULSD ($/gal.) NYMEX 1.5465 0.0264 1.74 1.7770 1.4825
Iceland krona 0.008973 111.45 –1.3 RBOB gasoline ($/gal.) NYMEX 1.6727 0.0363 2.22 1.9065 1.5824
–20 Norway krone 0.1173 8.5235 –1.4
0.2548 3.9243 –6.3
Natural gas ($/mmBtu) NYMEX 3.219 0.042 1.32 3.5070 2.7370
2016 2017 Poland zloty
Russia ruble-d 0.01764 56.695 –7.5 Brent crude ($/bbl.) ICE-EU 52.47 1.05 2.04 59.89 50.00
US$vs, US$vs,
YTDchg YTDchg Sweden krona 0.1126 8.8807 –2.5 Gas oil ($/ton) ICE-EU 465.50 5.75 1.25 523.50 444.00
Wed Wed
Country/currency in US$ per US$ (%) Country/currency in US$ per US$ (%) Switzerland franc 1.0028 0.9972 –2.1
Turkey lira 0.2733 3.6590 3.8 Sources: SIX Financial Information; WSJ Market Data Group
Americas Hong Kong dollar 0.1287 7.7694 0.2
Ukraine hryvnia 0.0370 27.0150 –0.3
Argentina peso-a 0.0647 15.4476 –2.7
India rupee
Indonesia rupiah
0.0154
0.0000752
64.8799
13305
–4.5
–1.6
U.K. pound 1.2404 0.8062 –0.5 Cross rates London close on Mar 29
Brazil real 0.3207 3.1181 –4.2 Middle East/Africa
Japan yen 0.009001 111.09 –5.1
Canada dollar 0.7477 1.3375 –0.5 USD GBP CHF JPY HKD EUR CDN AUD
Kazakhstan tenge 0.003169 315.59 –5.4 Bahrain dinar 2.6525 0.3770 –0.05
Chile peso 0.001508 663.30 –1.0 Australia 1.3057 1.6198 1.3094 0.0118 0.1681 1.4043 0.9763 ...
Macau pataca 0.1246 8.0282 1.4 Egypt pound-a 0.0551 18.1543 0.1
Colombia peso 0.0003465 2885.82 –3.9 Canada 1.3375 1.6590 1.3410 0.0120 0.1721 1.4383 ... 1.0243
Malaysia ringgit-c 0.2263 4.4190 –1.5 Israel shekel 0.2761 3.6220 –5.9
Ecuador US dollar-f 1 1 unch
New Zealand dollar 0.7024 1.4237 –1.4 Kuwait dinar 3.2841 0.3045 –0.4 Euro 0.9298 1.1534 0.9323 0.0084 0.1197 ... 0.6952 0.7120
Mexico peso-a 0.0531 18.8320 –9.2
Pakistan rupee 0.0095 104.835 0.4 Oman sul rial 2.5974 0.3850 0.01 Hong Kong 7.7694 9.6378 7.7918 0.0699 ... 8.3570 5.8091 5.9505
Peru sol 0.3081 3.2452 –3.2
Philippines peso 0.0199 50.163 1.1 Qatar rial 0.2746 3.642 0.04 Japan 111.0940 137.8100 111.4100 ... 14.2990 119.4800 83.0700 85.0800
Uruguay peso-e 0.0351 28.450 –3.1
Singapore dollar 0.7164 1.3958 –3.6 Saudi Arabia riyal 0.2666 3.7503 –0.01 0.9972 1.2371 ... 0.0090 0.1283 1.0727 0.7457 0.7638
Venezuela bolivar 0.100100 9.99 –0.1 Switzerland
South Korea won 0.0008977 1113.97 –7.8 South Africa rand 0.0766 13.0480 –4.7
U.K. 0.8062 ... 0.8083 0.0073 0.1038 0.8670 0.6027 0.6174
Asia-Pacific Sri Lanka rupee 0.0065725 152.15 2.5 Close Net Chg % Chg YTD % Chg
0.7659 1.3057 –6.0 Taiwan dollar 0.03309 30.220 –6.9 U.S. ... 1.2404 1.0028 0.0090 0.1287 1.0756 0.7477 0.7659
Australia dollar WSJ Dollar Index 90.19 0.14 0.16 –2.96
China yuan 0.1451 6.8899 –0.8 Thailand baht 0.02905 34.420 –3.9 Sources: Tullett Prebon, WSJ Market Data Group Source: Tullett Prebon

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

Latest 52 wks ago % YTD% % YTD% % YTD%
Libor Cur Stock Sym Last Chg Chg Cur Stock Sym Last Chg Chg Cur Stock Sym Last Chg Chg Asia Titans 50
One month 0.98222% 0.43400% ¥ TakedaPharm 4502 5139.00 -0.73 6.29 £ RoyDtchShell A RDSA 2130.00 0.90 -5.02 Last: 154.77 t 0.20, or 0.13% YTD s 9.8%
Three month 1.14678 0.62510 Asia Titans HK$ TencentHoldings 0700 228.00 0.88 20.19 € SAP SAP 91.09 0.53 10.00
Six month 1.41989 0.89890 HK$ AIAGroup 1299 49.80 1.01 13.83 ¥ TokioMarineHldg 8766 4814.00 0.85 0.38 € Sanofi SAN 84.51 0.68 9.90 High 155
One year 1.79400 1.21415 67.60 1.30 2.25
¥ AstellasPharma 4503 1505.00 0.60 -7.30 ¥ ToyotaMtr 7203 6124.00 -0.39 -10.96 € SchneiderElectric SU Close 150
Euro Libor AU$ AustNZBk ANZ 32.30 1.13 6.18 AU$ Wesfarmers WES 44.88 1.13 6.50 € Siemens SIE 125.80 0.52 7.71 Low t 145
One month -0.39786% -0.32714% AU$ BHP BHP 23.97 0.29 -4.35 AU$ WestpacBanking WBC 35.14 1.27 7.79 CHF Syngenta SYNN 439.50 1.29 9.19
Three month -0.35786 -0.24900 HK$ BankofChina 3988 3.93 0.51 14.24 AU$ Woolworths WOW 26.35 0.38 9.34 € Telefonica TEF 10.42 -0.86 18.14 50–day 140
Six month -0.25014 -0.13657 46.62 0.43 -3.36 moving average
HK$ CKHutchison 0001 96.35 -0.57 9.61 € Total FP 135
One year -0.11900 -0.01586 HK$ CNOOC 0883 9.34 0.32 -3.71 Stoxx 50 CHF UBSGroup UBSG 15.78 1.15 -1.07
130
Euribor AU$ CSL CSL 124.33 1.08 23.82 € Unilever UNA 46.80 0.65 19.65
CHF ABB ABBN 23.22 0.30 8.10
One month -0.37300% -0.33200% ¥ Canon 7751 3486.00 -0.17 5.80 £ Unilever ULVR 4031.00 0.62 22.43 30 6 13 20 27 3 10 17 24 3 10 17 24
€ ASMLHolding ASML 123.60 ... 15.89
Three month -0.33000 -0.24300 ¥ CentralJapanRwy 9022 18500 -0.96 -3.80 € Vinci DG 73.75 -0.24 13.99 Jan. Feb. Mar.
€ AXA CS 24.05 0.71 0.25
Six month -0.24200 -0.13200 HK$ ChinaConstructnBk 0939 6.41 0.47 7.37 £ VodafoneGroup VOD 210.70 0.21 5.43
€ AirLiquide AI 107.05 0.80 1.33
One year -0.10900 -0.00400 HK$ ChinaLifeInsurance 2628 24.05 ... 19.06 CHF ZurichInsurance ZURN 281.90 -0.56 0.53
172.25
Yen Libor HK$ ChinaMobile 0941 86.40 -0.46 5.11
€
€
Allianz
AB InBev
ALV
ABI 102.85
0.41
-0.10
9.71
2.29 DJIA Stoxx 50
One month 0.01157% -0.06743% HK$ ChinaPetro&Chem 0386 6.35 1.11 15.45 £ AstraZeneca AZN 4954.50 -0.11 11.65 Last: 3149.03 s 13.28, or 0.42% YTD s 4.6%
Three month 0.02436 -0.00429 AU$ CmwlthBkAust CBA 86.14 1.03 4.53 € BASF BAS 92.10 0.61 4.29
$ AmericanExpress AXP 78.26 -0.48 5.64
Six month 0.04214 0.02350 ¥ EastJapanRailway 9020 9850.00 0.50 -2.48 € BNP Paribas BNP 62.04 0.19 2.46
$ Apple AAPL 144.12 0.22 24.43 3175
One year 0.14757 0.10457 ¥ Fanuc 6954 23235 1.82 17.26 £ BT Group BT.A 322.35 -0.59 -12.14
$ Boeing BA 177.63 0.15 14.10
$ Caterpillar CAT 92.86 -0.10 0.13 3100
Offer Bid ¥ Hitachi 6501 620.30 0.80 -1.85 € BancoBilVizAr BBVA 7.18 -1.14 11.99
TW$ Hon Hai Precisn 2317 91.50 0.33 8.67 $ Chevron CVX 108.06 0.83 -8.19 3025
Eurodollars € BancoSantander SAN 5.72 -0.66 15.39
¥ HondaMotor 7267 3436.00 1.69 0.61 $ CiscoSystems CSCO 33.74 -0.82 11.65
One month 1.1000% 1.0000% £ Barclays BARC 227.30 -0.35 1.72 2950
KRW HyundaiMtr 005380 156000 -2.50 6.85 $ Coca-Cola KO 42.41 -0.05 2.29
Three month 1.3000 1.2000 € Bayer BAYN 106.90 ... 7.84
2875
HK$ Ind&Comml 1398 5.17 0.39 11.18 $ Disney DIS 112.54 -0.45 7.98
Six month 1.4000 1.3000 £ BP BP. 461.20 1.71 -9.50
$ DuPont DD 81.88 0.05 11.55
One year 1.7500 1.6500 ¥ JapanTobacco 2914 3701.00 -0.67 -3.72 £ BritishAmTob BATS 5318.00 1.90 15.07 2800
¥ KDDI 3001.00 1.01 1.40
$ ExxonMobil XOM 82.03 0.23 -9.12
Latest 52 wks ago 9433 € Daimler DAI 72.36 1.02 2.32 $ GeneralElec GE 29.68 0.20 -6.08 30 6 13 20 27 3 10 17 24 3 10 17 24
¥ Mitsubishi 8058 2456.00 1.28 -1.37 € DeutscheTelekom DTE 16.36 0.28 0.03 $ Jan. Feb. Mar.
Prime rates GoldmanSachs GS 228.46 -0.38 -4.59
¥ MitsubishiElectric 6503 1632.00 1.71 0.15 £ Diageo DGE 2316.00 0.43 9.76 $
U.S. 4.00% 3.50% HomeDepot HD 147.05 -0.10 9.67
¥ MitsubishiUFJFin 8306 712.30 1.05 -1.10 € ENI ENI 15.12 0.47 -2.26 $
Canada 2.70 2.70 Intel INTC 35.57 -0.08 -1.93
1652.00 1.54 2.80 1678.50
Japan
Hong Kong
1.475
5.00
1.475
5.00
¥
¥
Mitsui
Mizuho Fin
8031
8411 208.90 0.84 -0.43
£
£
GlaxoSmithKline
HSBC Hldgs
GSK
HSBA 656.40
0.09 7.46 $
0.17 -0.08 $
IBM
JPMorganChase
IBM
JPM
173.95
88.24
-0.32
-0.41
4.80
2.26
Dow Jones Industrial Average P/E: 21
¥ NTTDoCoMo 9437 2651.50 -0.49 -0.43 € INGGroep INGA 13.92 0.07 4.11 $ J&J JNJ 124.92 -0.59 8.43 Last: 20659.32 t 42.18, or 0.20% YTD s 4.5%
Policy rates
ECB 0.00% 0.00%
AU$ NatAustBnk NAB 33.24 1.22 8.38 £ ImperialBrands IMB 3825.50 -0.04 7.99 $ McDonalds MCD 128.84 -0.47 5.85
Britain 0.25 0.50
¥ NipponTeleg 9432 4924.00 0.08 0.24 € IntesaSanpaolo ISP 2.52 -0.79 3.87 $ Merck MRK 63.63 0.46 8.09 21100
Switzerland 0.50 0.50
¥ NissanMotor 7201 1114.00 0.36 -5.23 € LVMHMoetHennessy MC 202.60 0.57 11.69 $ Microsoft MSFT 65.47 0.28 5.36
¥ Panasonic 6752 1267.50 3.72 6.56 £ LloydsBankingGroup LLOY 66.54 -0.37 6.45 $ Nike NKE 56.68 0.11 11.51
20450
Australia 1.50 2.00
HK$ PingAnInsofChina 2318 43.80 ... 12.89 € LOreal OR 179.80 0.62 3.69 $ Pfizer PFE 34.34 0.53 5.73
U.S. discount 1.50 1.00 19800
Fed-funds target 0.75-1.00 0.25-0.50
$ RelianceIndsGDR RIGD 38.60 0.78 22.35 £ NationalGrid NG. 1013.00 -0.05 6.45 $ Procter&Gamble PG 90.62 -0.15 7.78
Call money 2.75 2.25
KRW SamsungElectronics 005930 2089000 0.72 15.93 CHF Nestle NESN 77.60 0.71 6.23 $ 3M MMM 190.69 -0.16 6.79 19150
¥ Seven&I Hldgs 3382 4436.00 1.05 -0.38 CHF Novartis NOVN 74.50 1.02 0.54 $ Travelers TRV 120.56 -1.02 -1.52
Overnight repurchase rates 18500
U.S. 0.82% 0.48%
¥ SoftBankGroup 9984 8034.00 1.57 3.46 DKK NovoNordiskB NOVO-B 236.00 0.38 -7.34 $ UnitedTech UTX 112.09 -0.58 2.25
Euro zone n.a. n.a.
¥ Sony 6758 3704.00 3.03 13.10 £ Prudential PRU 1708.00 -0.84 4.95 $ UnitedHealth UNH 163.49 -1.12 2.16 30 6 13 20 27 3 10 17 24 3 10 17 24
¥ Sumitomo Mitsui 8316 4134.00 0.15 -7.31 £ ReckittBenckiser RB. 7311.00 -0.12 6.17 $ Visa V 89.20 0.09 14.33 Jan. Feb. Mar.
Sources: WSJ Market Data Group, SIX HK$ SunHngKaiPrp 0016 114.10 -0.26 16.43 £ RioTinto RIO 3258.50 1.20 3.17 $ Verizon VZ 49.13 -0.34 -7.96 Note: Price-to-earnings ratios are for trailing 12 months
Financial Information, Tullett TW$ TaiwanSemiMfg 2330 191.50 -1.54 5.51 CHF RocheHldgctf ROG 255.40 0.91 9.80 $ Wal-Mart WMT 70.74 0.60 2.34 Sources: WSJ Market Data Group; Birinyi Associates
 THE WALL STREET JOURNAL. Thursday, March 30, 2017 | B7

FINANCE & MARKETS

Pound Dips, Rises

On Brexit Move
BY CHELSEY DULANEY
The pound fell and then re-
gained ground Wednesday as
the U.K. formally began the
process to exit the European
Union.
The British currency was at
$1.2438 late Wednesday in
New York, down from $1.2450
late Tuesday but up from
$1.2377 during Asian trading
Wednesday.
Nine months after Britain
voted to leave the EU, the U.K.
formally notified the bloc that it
will leave, becoming the first
country to do so. The triggering
TOBY MELVILLE/REUTERS
gotiations do not begin until
late Q2, leaving the market
with a bit of a grace period.”
Meanwhile, the WSJ Dollar
Index, measuring the U.S. cur-
rency against 16 others, was lit-
tle changed. The U.S. currency
fell to a four-month low earlier
this week after Friday’s failure
to repeal the Affordable Care
Act raised doubts that the
Trump administration will be
able to push through its tax-re-
form and stimulus plans. The
dollar had rebounded after data
Tuesday showed a measure of
U.S. consumer confidence at its
highest level in 16 years.

of Article 50 of the Lisbon The euro fell to $1.0768 late

Treaty, which governs EU law,
opens a two-year window for
Britain to negotiate the terms of
its exit from the bloc.
Investors had been expect-
Construction in East London. This year, 85% of the $4.8 billion in central London office deals have come from overseas investors. ing the formal negotiations for
weeks, which is likely limiting
Wednesday from $1.0814 late
Tuesday after media reports
suggested that markets have
misread the European Central
Bank’s March meeting as
overly hawkish. At the March
9 meeting, ECB President Ma-

Foreigners Still Buy London

Overseas investors,
led by Chinese, show
continued demand for
the show,” said Walter
Boettcher, director of research
at Colliers.
The U.K. government for-
ever real-estate deals.
Investors from China and
Hong Kong bought more than
£3 billion of central London
expected to drop in 2017, ac-
cording to property brokers.
Office rents are also ex-
pected to fall. Landlords have
the pound’s weakness, analysts
said. “Much of the bad news
and uncertainties are priced in
the currency,” said analysts at
TD Securities in a research
note. “What’s more, actual ne-
rio Draghi said further stimu-
lative measures, like an expan-
sion of bond-buying programs
or further interest-rate cuts,
were unlikely, propelling the
euro higher.

office buildings
BY ART PATNAUDE
As the U.K. officially files
for divorce from the European
Union, one British asset re-
mains fashionable for foreign
investors: shiny London office
buildings.
Investors from outside the
U.K., especially those from
China and Hong Kong, have
dominated a London commer-
cial real-estate market that
has otherwise gone quiet this
year amid caution over Brexit.
Since the start of January,
85% of the £3.86 billion ($4.8
billion) of central London of-
fice deals have been from
overseas investors, according
to property broker Colliers In-
ternational.
“It’s foreign money driving
mally kicked off Brexit on
Wednesday, delivering a letter
to Brussels officially saying it
intends to be the first country
ever to leave the bloc. The
well-flagged event marks the
start of a two-year window for
negotiations with the EU over
matters like trade and immi-
gration.
Foreign property buyers in
London have been selective
amid uncertainty about how
these talks will proceed. De-
mand has focused on large
buildings with low vacancy
levels, and therefore less per-
ceived risk, brokers said.
CC Land Holdings Ltd.,
backed by a Hong Kong prop-
erty tycoon, this month agreed
to pay £1.15 billion for the
“Cheesegrater,” the nickname
of the tallest tower in Lon-
don’s main financial district. It
was one of the city’s biggest-
property last year, more than
those from the U.S. or Europe,
according to real-estate broker
JLL.
The drop in the value of
sterling has been a major fac-
tor.
While the yuan has lost
value against the dollar, it is
up 15% versus sterling since
the Brexit vote last June.
In addition to making prop-
erty cheaper, there is a view
that sterling “may appreciate
once there is more clarity
around Brexit and its eco-
nomic implications,” said Ben
Burston, head of U.K. office
and capital markets research
at JLL.
Caution around the impact
of Brexit has been com-
pounded by falling London of-
fice values after a multiyear
property boom. Office values
in central London are widely
been increasingly offering in-
centives to tenants, such as
rent-free periods or fitting out
office space free, brokers and
analysts said.
Now, with Brexit negotia-
tions just starting, “nothing is
certain. As a result, caution is
likely to remain a prevalent
theme among investors and
occupiers,” said Colin Wilson,
head of U.K. and Ireland at
broker Cushman & Wakefield.
Some foreign investors are
taking a longer-term view,
brokers and analysts said.
Private investors from the
Far East are “just looking to
play the safe-haven card,” said
Mr. Boettcher at Colliers.
While institutions like pension
funds want to show positive
returns over the next few
years, many from places like
China “think they can ride out
the cycle,” he said.
PwC to Keep Oscars Role
BY MICHAEL RAPOPORT
Accounting firm Pricewa-
terhouseCoopers LLP will re-
main in charge of the balloting
for the Academy Awards de-
spite the firm’s high-profile
snafu at this year’s ceremony
that led to the announcement
of the wrong film as the Best
Picture winner.
The Academy of Motion
Picture Arts and Sciences has
decided to retain PwC for its
Oscar work, a person familiar
with the situation said
Wednesday. The decision was
made at a meeting of the
Academy’s board of governors
Tuesday night.
However, the firm’s work
will be subject to new safe-
guards to avoid a repeat of
this year’s error: a PwC part-
ner gave a presenter the
wrong envelope, leading to the
announcement of “La La Land”
as the winner of Best Picture
instead of the actual winner,
“Moonlight.” The mistake was
corrected minutes later.
The news that the Academy
would keep PwC was first re-
ported by the Hollywood Re-
porter.
Previously, the Academy in-
dicated that it was reviewing
its 83-year relationship with
PwC in the wake of the error.
The Academy and PwC had in-
dicated that Brian Cullinan and
Martha Ruiz, the PwC partners
in charge of Oscar balloting,
would no longer work on the
awards. Mr. Cullinan and Ms.
Ruiz have declined to com-
ment since the Oscars. They
are still employed by PwC.

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

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

SPEAKERS

ELIZABETH DENHAM JENNIFER JANSON RT HON BARONESS

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

DAVID OMAND CHARLES PALMER THOMAS REAGAN

Visiting Professor, Senior Managing Cyber Practice Leader

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

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

© 2017 Dow Jones & Co., Inc. All rights reserved. 6DJ5137
B8 | Thursday, March 30, 2017
Money Markets Gain Sway in China Oil Jumps
After Data
Central bank leans on
How Money Flows Through China's Financial System
sector via interest
rates to control
The complexity of financial linkages in China is rising.
liquidity in the country
BY SHEN HONG
SHANGHAI—Money mar-
kets are often described as the
financial system’s plumbing.
When they work, which is
most of the time, hardly any-
one notices, but when they get
blocked up, it creates quite a
stink.
That is why China’s money
market—in which banks and
other financial institutions
borrowed some $6.4 trillion
from each other last month
alone to fund their daily
needs—is becoming one of the
world’s most important mar-
kets to watch.
China’s central bank has
raised interest rates twice
since early February. That im-
mediately pushed funding
costs to the highest in two
years, hitting smaller banks
that have come to rely on the
market particularly hard. Last
week, some small rural banks
failed to make good on short-
term loans from other lenders.
And while anxiety in the
market has eased somewhat
this week, short-term borrow-
ing rates are still high. Broker-
ages and asset managers are
having to pay interest of as
much as 6% on short-term bor-
rowings, more than double the
central bank’s benchmark rate.
Tightness in money markets
is a worry because if banks
stop lending to each other,
they soon stop lending to the
broader economy, too. A sharp
rise in interbank borrowing
costs thanks to a liquidity
crunch in major Western mar-
kets in 2007 heralded the
global financial crisis. China’s
money market has become just
as central to the country’s fi-
nancial system as those of its
U.S. and European counter-
parts after rapid expansion
this century.
Email: heard@wsj.com
Tencent Hits a Tesla Speed Bump
China’s most valuable
company, Tencent Holdings,
has become global tech giant
in less than two decades
thanks to its dominance of
China’s computer gaming in-
dustry and the phenomenal
success of its instant-mes-
saging app WeChat. So its
$1.8 billion investment in
electric-vehicle maker Tesla
for a 5% stake is a bit of a
head-scratcher.
There is an element of
“me too” about this; Tencent
is often grouped with search-
engine company Baidu and e-
commerce giant Alibaba as
the holy trinity of Chinese
tech.
The latter two have al-
ready made strides in electric
vehicles: Baidu aims to roll
out commercially viable au-
tonomous vehicles next year,
while Alibaba is developing
“internet-connected cars” in
a joint venture with local car
maker SAIC.
The three companies have
all invested in Didi Chuxing,
China’s successful answer to
Uber.
Tencent itself has invested
in several domestic electric-
RH’s Hard-to-Believe Restoration
The company formerly
known as Restoration Hard-
ware has turned a corner, or
so its recent share-price per-
formance would suggest. But
a closer look at the numbers
suggests an actual comeback
may not be imminent.
RH, which adopted the
shorter name Jan. 1, re-
ported fiscal fourth-quarter
results late Tuesday. The
company had already prean-
nounced better-than-ex-
pected results on Feb. 23.
Fueled by heavy short in-
terest, the shares climbed by
one-fifth through Tues-
day’s close and then an addi-
tional 16% midday Wednes-
day after the announcement.
The latter jump stemmed
PEOPLE’S BANK OF CHINA
(Assets: 34 trillion yuan)
lends to banks
POLICY BANKS
(24 trillion yuan)
JOINT-STOCK
BANKS
(43 trillion yuan)
Note: 10 trillion yuan = $1.455 trillion. Assets as of Dec. 2016 (PBOC, policy banks), 3Q 2016 (big four and joint-stock banks),
2Q 2016 (small city/rural banks)
Source: Deutsche Bank
That has handed a new le-
ver to the Chinese central
bank, which is using money-
market interest rates as its
main tool to control the
amount of money in the coun-
try, a big change from the days
when it ran the economy by
directly controlling banks’ to-
tal lending.
But as the money market
becomes more influential, so
has the risk of widespread
damage to the world’s second-
largest economy when it jams
up.
“Because there’s been a
trend for small banks and non-
bank institutions to play a
larger role in the money mar-
ket in recent years, the risk of
a liquidity crisis is growing,”
said Julian Evans-Pritchard, a
Singapore-based economist at
Capital Economics.
China’s banks for years re-
lied on deposits from ordinary
customers. As the economy ex-
panded and banks lent more
aggressively, they borrowed
more from each other in
money markets to get extra
funding. Typical borrowers are
smaller banks, which have
lower deposit bases, while
large banks flush with funds,
HEARD ON THE STREET
Fully Charged
Sales of new energy
vehicles in China
500 thousand
400
300
200
100
0 mediately snapped 3% higher
2011 ’12 ’13 ’14
Sources: CEIC; Zuma Press (photo)
THE WALL STREET JOURNAL.
vehicle startups. It is a
backer of Shanghai-based
NextEV, which is aiming to
bring its autonomous electric
vehicles to the United States
by 2020.
But it is unclear how taking
a minority stake in Tesla, with
no specific plans for joint ven-
tures or other projects with
the Elon Musk-run outfit, will
help Tencent crack the elec-
tric-vehicle scene.
Mr. Musk may hope Ten-
cent will aid Tesla in navigat-
from the home-furnishings
retailer’s guidance for the
current fiscal year, dis-
closed Tuesday, which called
for adjusted earnings per
share of $1.78 to $2.19. But
the guidance range assumed
a lower share count. Adjust-
ing for that, the range fell to
$1.58 to $1.95, mostly below
analysts’ consensus estimate
of $1.92.
While fourth-quarter re-
sults may have exceeded low
expectations, they weren’t
exactly stellar. RH’s adjusted
earnings per share of 68
cents excluded 31 cents of
“product-line impairments”
that the company described
as impairment of inventory
and selling; general and ad-
THE WALL STREET JOURNAL.
MARKETS
Higher and Higher
Volume of interbank lending
in China, in trillions of yuan
On Healthy
LENDING TO BORROWING FROM
250
1Q 2Q 3Q 4Q
Demand
BY STEPHANIE YANG
200 AND NEANDA SALVATERRA
CHINA’S deposits
BIG FOUR BANKING 150
Oil prices closed at a three-
BANKS SYSTEM week high Wednesday, boosted
(81 trillion yuan) 100 by signs of strong demand for
all banks lend to
CONSUMERS/ crude products and renewed
50 commitments by major oil pro-
CORPORATIONS
SMALL CITY/ ducers to rein in production.
RURAL BANKS 0 Light, sweet crude for May
(44 trillion yuan) 2006 ’10 ’16
delivery gained $1.14, or 2.4%,
10 trillion yuan = $1.455 trillion to $49.51 a barrel on the New
Source: Wind Info. York Mercantile Exchange.
NON-FINANCIAL INSTITUTIONS THE WALL STREET JOURNAL. Brent crude, the global oil
(Trusts, brokers, funds, insurers, etc.) benchmark, rose $1.09, or
Beijing has set reducing the 2.1%, to $52.42 a barrel.
country’s debt buildup and On Wednesday, data from
THE WALL STREET JOURNAL. high leverage in financial mar- the U.S. Energy Information
kets as a top policy priority. Administration showed a
such as Industrial & Commer- central bank is that lenders The central bank has raised its larger-than-expected decline
cial Bank of China Ltd., act as are plowing the funds they seven-day repo rate twice re- in gasoline and distillate
lenders. raise in these markets into cently, its first increases since stocks, while refiners pro-
The volume of interbank speculative investments, fuel- October 2015. cessed crude oil at a higher
lending, usually uncollateral- ing asset bubbles. As interbank borrowing rate. Crude inventories rose
ized, hit a record with the One big problem is the rise rates soar, they are feeding 900,000 barrels in the week
equivalent of $34 trillion in of what are euphemistically through to hurt China’s al- ended March 24, lower than
loans last year, nearly 100 called wealth-management ready slowing economy, as the average forecast from ana-
times the amount of lending in products. The products bundle banks pass on the higher lysts and traders surveyed by
2002 when data provider together all sorts of assets or costs. The Wall Street Journal.
Wind Info’s full-year records debt, even other wealth-man- A quarterly record of 104 The positive data helped oil
began. agement products, and aren’t companies have dropped or recoup losses, after previous
Banks also use large transparent. These are sold to delayed the equivalent of $14.1 reports that showed invento-
amounts of repurchase agree- bank customers offering much billion of bond-issuance plans ries rising to record levels
ments, or repos, in which one higher returns than ordinary since the start of this year, ac- sent prices tumbling below
bank borrows in the short deposits, by making big, lever- cording to Wind Info. $50 a barrel in early March.
term from another, typically aged bets on everything from The central bank’s control Signs of healthy demand have
using a Chinese government government bonds to garlic. over China’s markets is also also eased concerns that an in-
bond as collateral. Turnover in Critics consider them a big being tested. After the latest crease in U.S. production will
the repo market surged to the risk to banks and individual rises, its seven-day repo rate keep supply elevated, even as
equivalent of $216 trillion last savers, with the outstanding remains a low 2.45%. But big the Organization of the Petro-
year, about 24 times its vol- amount issued having bal- state-owned banks that bor- leum Exporting Countries has
ume a decade ago. looned to the equivalent of row directly from the central cut production to help end a
China’s central bank plays a $3.8 trillion, or 35% of gross bank are charging much higher global supply glut.
big role, using daily open-mar- domestic product. rates when they lend to “The market was starting to
ket operations to adjust the Because the products are smaller institutions. turn a corner,” said Ric Navy,
supply and cost of funds in the often short term, there is a “That means the transmis- senior vice president for en-
financial system. When there risk investors won’t be repaid sion mechanism is not well de- ergy futures at brokerage R.J.
is a cash shortage, it offers if the value of the investments veloped, which can dilute the O’Brien & Associates LLC. “I
loans to banks, usually ranging drops sharply. At that point, effectiveness of policy think people are feeling just
from seven to 28 days. Its the issuers of wealth-manage- changes,” said Tim Condon, that much more comfortable
seven-day repo rate has be- ment products often look to economist at ING. China’s buying into it again.”
come its main policy tool, the tap the money market to get money market is distorted by Also, United Arab Emirates
equivalent of the fed-funds the funds they need to pay the big five state banks that announced plans to reduce its
rate. back investors, a problem if dominate the supply of funds, production by about 200,000
What is worrying China’s rates have risen. he said. barrels from March to May.
FINANCIAL ANALYSIS & COMMENTARY WSJ.com/Heard
OVERHEARD Facebook
Moves Onto
Who said day trading was
easy money?
Certainly not biotech in-
vestors after Monday after-
Snap’s Turf
noon’s price action. Shares of Facebook couldn’t buy
cancer drug developer Tesaro Snapchat, but it can afford
were halted for pending news to build its own. That is
late in the trading day. Inves- making Snapchat parent
tors had long speculated Snap look vulnerable.
about Tesaro, whose shares Facebook said Tuesday it
have more than tripled over is launching three new fea-
the past year, as an acquisi- tures on its main app that
tion target. Shares of Clovis mirror key features of the
Oncology, a biotech develop- Snapchat messaging app.
ing a similar cancer drug, im- In doing so, Facebook
threatens to curb growth
’15 ’16 as traders sensed an immi- for Snapchat, which Facebook
nent flurry of deals. tried and failed to buy for
An electric concept car is shown in Beijing last year. The good times for Clovis more than $3 billion in 2013.
traders vanished quickly, how- For Snap, whose shares
ing the Middle Kingdom, but nice $490 million paper ever; Tesaro’s news turned fell nearly 7% Tuesday be-
Beijing has a bias toward sup- profit on its Tesla stake. out to be an early Food and fore regaining 1.2% by late
porting local car makers and But Tencent’s investors Drug Administration approval Wednesday, the relative ease
battery producers. The cash- aren’t buying its shares for for its drug to treat ovarian with which the much larger
hungry electric-car company its stock-market acumen. cancer—good news, but not Facebook can encroach on its
may happily take Tencent’s in- Having built a reputation as the sort of thing that triggers turf raises questions about
vestment dollars, but may not one of China’s best-run tech a deal frenzy. the depth of its competitive
offer much in return if it businesses, Tencent should Within minutes, Clovis moat. Instagram, which
doesn’t get any further bene- be careful to avoid becoming shares plunged 5% before re- Facebook owns, introduced
fit. known as just another bounding. On the bright side, in a “stories” feature last
Sure, Tencent can afford sprawling Chinese company perhaps the episode helped a August that mimicked Snap-
this: The company generated wasting its money on vanity few traders see the wisdom chat Stories and may be re-
nearly $10 billion of cash investments with little obvi- of a buy-and-hold investment sponsible for the decelera-
from operations last year, ous strategic value. strategy. tion in Snap’s user growth
and it is already sitting on a —Jacky Wong over the past two quarters.
To the extent its efforts
result in limiting Snap’s user
growth, Facebook will also
be preventing future ad dol-
lars from shifting to its
ministrative expenses at RH smaller rival. The ability to
Contemporary Art, which is capture a growing slice of ad
no longer a separate divi- budgets matters for both
EVE EDELHEIT/TAMPA BAY TIMES/ZUMA PRESS
sion; and impairment of in- companies’ valuations. But
ventory at RH Kitchen, Facebook is already a major
where an acquisition led to a destination for brands, and
change in strategy. Snap’s $32.5 billion diluted
RH may have had good market capitalization rests
reason to write down this in- heavily on expectations for
ventory, but its inability to growth.
sell it is reflective of its un- Facebook’s announcement
derlying business. It shouldn’t came a day after a barrage
be treated as an afterthought of mostly positive analyst
by being backed out of ad- notes on Snap as banks that
justed earnings. served as underwriters for
Even beyond that, the A Restoration Hardware store in Tampa, Fla., shown in 2015. the company’s IPO initiated
numbers looked bad. Reve- coverage of its shares. Inves-
nue in the quarter fell 9% as flow this year is encouraging. up falling by more than half. tors should question whether
sales at comparable brands But last year the company said RH investors are getting the rosier estimates among
fell 18%. adjusted earnings per share too comfortable with this them properly account for
Granted, RH’s plan to gen- would be “flat to slightly trust-me story. the Facebook risk.
erate “meaningful” free-cash down” in fiscal 2016. It ended —Miriam Gottfried —Miriam Gottfried