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TUESDAY, JUNE 13, 2017 ~ VOL. XXXV NO. 92 WSJ.


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Whats GEs Immelt to Step Down as CEO

News John Flannery will
assume role in
Flannery, and retire as chair- want to go through a deep re-
man of the board on Dec. 31. view with a sense of urgency.
Mr. Flannery, 55 years old, is a The change comes as GE
Despite its public involve-
ment in GE, Trian executives
werent involved in the CEO
GE Under Immelt
Stock and index performance
August, focusing on 30-year veteran of GE who has been under pressure by succession process and
Business & Finance spent much of his career in the activist investor Trian Fund werent briefed on the change,
boosting firms profit companys once- Management to people familiar with the mat- S&P500
sprawling finan- By Thomas Gryta, slash costs and ter said. Trian declined to 100 124%
E said Jeff Immelt will
G step aside as CEO Aug. 1.
He will be succeeded by John
General Electric Co. said
longtime leader Jeff Immelt
cial business.
Mr. Flannery,
David Benoit
and Joann S. Lublin
boost profits in
the companys
comment Monday on Mr. Flan-
nerys selection. 50
will step aside as chief execu- in a meeting for core industrial Mr. Immelt, 61, sold off GEs
Flannery, who heads GEs
tive on Aug. 1, ending a 16- employees Monday that was business. Mr. Immelt recently media businesses and divested 0
health-care business. A1, A2
year run atop the conglomer- broadcast on Facebook, said laid out two-year cost saving the bulk of the companys
 Tech shares fell around ate that he reshaped after the he would be taking a look at targets and revamped GEs ex- lending businesses after the fi- 50
the world, extending Fri- financial crisis but recently the entire portfolio. ecutive-bonus program. Some Please see GE page A2 -29.6%
days declines in the U.S. has struggled to boost profit. I want to start with a fresh Wall Street analysts had re-
tech giants that have driven GE said Monday that Mr. look around the company cently openly wondered about  CEO leaves a vastly different
the stock-market rally. B1 Immelt will be succeeded by overall, he said, expecting to when Mr. Immelt might retire, firm than he inherited.......... A2 2001 2010
the head of the companys come back in the fall with a but the CEO gave no sign he  Heard: GE must bring good Source: WSJ Market Data Group
 Uber said its chief busi-
health-care business, John set of recommendations. I was ready to step aside. things back to life................... B8 THE WALL STREET JOURNAL.
ness officer has left the firm,
a move apparently tied to a

U.K.s May
report on the ride-hailing
firms workplace culture. B1 Hundreds Detained in Protests Across Russia
 French and Italian bonds
rose in value and the British
pound fell, reflecting inves-
tors views of politics affect-
Vows to
ing the three countries. B1
 Trump was set to urge Fix Mess
From Vote
limits on the U.S. consumer-
finance regulator and a re-
assessment of banking rules
in a Treasury report. B7
 Cybersecurity experts AND JASON DOUGLAS
said they found the malware
that knocked out electricity LONDONPrime Minister
in Ukraine and warned U.S. Theresa May addressed Con-
companies of the risk. B4 servative lawmakers for the
first time since last weeks
 Facebook is building a
election and sought to con-
feature to let users sub-
vince them that she would
scribe to publishers directly
take the party out of the
from the mobile app. B4
mess she created, after a

 GMs Opel unit named a disappointing outcome weak-

new CEO as Peugeot gets set ened her grip on power.
to complete its purchase of Mrs. Mays failure to secure
the European car maker. B3 a majority in the election puts
the countrys objectives in ne-
 Car sales in China fell for
gotiations to leave the Euro-
a second-straight month as
pean Union in flux. With no
higher taxes hurt demand. B3
clear mandate, control over
 Goldman agreed to buy the shape of Brexit is likely to
electricity from a wind farm hang more on lawmakers than
to power its data centers. B7 with Mrs. May, raising the
prospect that the U.K. is head-
 Lotte will sell shares in
ing for a less-abrupt break
its Malaysian petrochemical
CARRIED AWAY: Police detained a protester in St. Petersburg, above. Hundreds of anticorruption demonstrators were held in Russia on with the EU than seemed likely
unit at $1.83 to $1.88. B7
Monday, including opposition leader Alexei Navalny, The protest was the first since large anti-Kremlin demonstrations were held in March. A3 before the election.
The electoral gamble has
World-Wide damaged Mrs. Mays authority
within her party. At the Mon-

Treating PTSD With an Injection

day meeting, she sounded con-
 May told Conservative trite and took responsibility for
lawmakers she would take the disastrous election results.
the party out of the mess Im the person who got us
she created after failing to BY MICHAEL M. PHILLIPS The $2 million Army study ing near-immediate relief of into this mess and Im the one
secure a majority in last constitutes the first large- Ban Blocked anxiety, hyper-vigilance, social who will get us out of it, Mrs.
weeks British election. A1 FORT BELVOIR, Va.The scale randomized control re- withdrawal and other symp- May told a roomful of lawmak-
 Pressure is mounting on U.S. Army has commissioned a search into use of the shots A court declined to reinstate toms, said military doctors who ers, one who was there said.
the prime minister to seek study to determine whether an called stellate ganglion blocks Trumps temporary U.S. travel have administered the treat- David Davis, the minister
closer ties to the EU after anesthetic injection to the to treat PTSD. The injections ban for people from six ment. They include Col. Jim overseeing Britains Brexit ne-
Britain leaves the bloc. A4 neck alleviates symptoms of have been used for decades for Muslim-majority countries. A6 Lynch, command surgeon at the gotiations, told the British
post-traumatic stress disor- arm pain and shingles. joint Special Operations Com- Broadcasting Corp. that bick-
 Russian police detained
dera treatment that, if In recent years, some mili- mand-Africa, which deploys ering over who would succeed
hundreds of anticorruption
proven effective, could be a tary doctors have begun treat- along nerve fibers that control elite troops to train local forces Mrs. May was the absolute
protesters, including oppo-
big step toward easing an af- ing PTSD patients, particularly the fight-or-flight response. and conduct missions in Africa. height of self-indulgence and
sition leader Navalny, who
fliction affecting hundreds of Navy SEALs and Army Green That early clinical experi- Once people have the shot, urged party members to get
hopes to challenge Putin for
thousands of troops who have Berets, with the injections. ence has produced promising they get dramatically better behind her.
the presidency next year. A3
returned from combat. The shots interrupt messages results, with troops experienc- Please see PTSD page A7 Please see U.K. page A4
 The White House asked
Beijing to take action against
Chinese companies and indi-
viduals to curb their trading
Hell on Earth! Satanic Band Files Quake
with North Korea. A5
Suit Citing Dreary Work Conditions Strikes
 The National Front saw
support crumble in the first
i i i Greek
round of Frances parliamen-
tary election, as Macrons
Band members from Ghost squabble Island
party posted big gains. A4
offstage over money, food, stinky costumes SHAKEN: An
 A second appeals court earthquake with a
blocked Trumps executive preliminary
order that banned U.S. travel BY JOHN JURGENSEN In court papers and other doc- magnitude of 6.2 hit
for people from six Muslim- uments, band members dis- the eastern Greek
majority countries. A6 Ghost, a Swedish heavy- cuss such pedestrian matters island of Lesbos,
metal band, built a cult follow- as salaries, tour buses, laun- killing one person,
 The U.S. attorney general
ing over a decade using de- dry arrangements and how injuring at least 10

will testify at a public hear-

monic pageantry and concert venues and damaging
ing Tuesday before a Senate
rhyming lyrics like should prepare the numerous homes.
panel probing Russian med-
hypnotizing horns bananas in their The quake was also
dling in the election. A6
of ram and para- backstage spread. felt in Turkey.
 The U.S. Secret Service lyzing pentagram. Dont put any Rescue workers in
said it has no audio cop- Band members fast food under our the village of
ies or transcripts of any perform in eerie noses, the band Vrissa, left.
tapes recorded within masks and keep tells venues.
Trumps White House. A6 their identities se- In a realm where
cret, adding to the A Nameless Ghoul celebrities market
 Trump was sued over
groups mystique. their personal lives
payments by U.S. and for-
eign governments to his ho-
tels and other businesses. A6
It all worked like a charm as much as their music,
until a recent lawsuit un- Ghosts anonymity was an
masked the satanic musicians anomaly that fans flocked to.
 Several donors are pledg-
ing $790 million in a bid to
eradicate polio by 2020. A3
as a bunch of earthly beings. Please see GHOST page A8
CONTENTS Markets...................... B8 INSIDE
Business News...... B3
Capital Journal...... A2
Opinion.............. A10-11
Technology............... B4 VIX, invented 24 years ago, has spawned a giant trading ecosystem
Crossword.............. A12 U.S. News............. A6-7
Heard on Street.... B8 Weather................... A12
Life & Arts......... A9,12 World News........ A2-5 BY ASJYLYN LODER AND GUNJAN BANERJI Investigation Director James Comey to drop a

probe into former national security adviser Mi-

3.20; CHF5.50; 2.00; Wall Streets fear gauge has neared all- chael Flynn.
U.S. Military (Eur.) $2.20
time lows this year. That hasnt stopped retail As the 40-year-old Mr. Miller recalled, he
investor Jason Miller from making a nice chunk rode out the storm, confident the market
of change betting it will go even lower. would revert to its torpid wayswhich it did.
SESSIONS YOUR GYMS The Boca Raton, Fla., day trader said he has One persons fear is another persons opportu-
made $53,000 since the start of the year by ef- nity, Mr. Miller said.
TO TESTIFY TECH IS GETTING fectively shorting the CBOE Volatility Index, Volatilityor the lack of ithas become the
PUBLICLY SMARTER nicknamed the VIX. That includes a white-
knuckle day on May 17, when the VIX spiked
central obsession of the markets as the S&P
500 trades around its all-time high. Invented
s Copyright 2017 Dow Jones &
Company. All Rights Reserved
46% following reports that President Donald 24 years ago as a way to warn investors of an
U.S. NEWS, A6 LIFE & ARTS, A9 Trump had pressured former Federal Bureau of Please see VIX page A8
A2 | Tuesday, June 13, 2017 THE WALL STREET JOURNAL.


What the U.K. Election Means in America to exit from the European from just 12 months ago, voters. Democrats, in turn, in stark contrast to the find- Party establishment, and
Union, even the downsides of when young voters failure to will be heartenedthough ings among voters aged 50 to some actually would prefer
the prime ministers attach- show up in such numbers the story also carries cau- 64, where Trump approval breaking out on their own.
ment to the American presi- was a significant factor in tionary notes for them. essentially matched disap- The divide was on full dis-
dentall were factors. the vote in favor of Brexit, The election of Republican proval, and with voters aged play over the weekend, when
But the decisive one may the departure from the EU. President Donald Trump 65 and above, where approval Mr. Sanders told a boisterous
have been a surge of support For many of Corbyns sup- brought about in part be- slightly topped disapproval. rally in Chicago: The cur-
for the opposition Labour porters, this was the anti- cause young voters under- Moreover, there are signs rent model and the current
CAPITAL JOURNAL Party among young voters. A Brexit election, writes Rich- performed in key areas for that this Trump disapproval strategy of the Democratic
By Gerald F. Seib postelection analysis by the ard V. Reeves of the Brookings is spilling over into the Re- Party is an absolute failure.
Financial Times found that Institution in his postelection publican Party more broadly.
Support for Labour
young voters backed Labour analysis. Older voters voted The Pew Research Center ut therein also lies a

s Britains Conserva- over the Conservatives by 51 overwhelmingly to leave the tracked the party affiliation of warning for Demo-
tives sift through the points more than the na- EU, while many pro-European hints at promise, but voters from December 2015 crats. The surge in ac-
rubble of their elec-
toral disaster last week, a
tional average. By contrast,
voters over the age of 65
youngsters stayed home. This
time, they turned out. Seats
also risks, for through March of this year,
and found that 23% of voters
tivism by young voters is
fueled not merely by anti-
question with compelling backed the Conservatives by with high numbers of young American Democrats. aged 18 through 29 who origi- Trump sentiment but by a
relevance in Washington 32 points more than the na- voters, including many college nally identified as Republi- drive to push the party to
now arises: tional average. towns, swung strongly to- cans or leaned Republican had the left. That almost cer-
Young voters upended the That is a stunning genera- wards Labour. defected to the Democrats. tainly isnt a formula for
status quo in Britain. Could tion gapand a far wider Indeed, an exit poll by Democrat Hillary Clinton Anecdotal evidence shows picking off some swing con-
they do it in the U.S.? one than seen just a few NME, a music-news organi- has prompted a surge of this move toward the Demo- gressional districts within
Multiple years ago. Over the course zation, indicated that turn- anti-Trump sentiment crats is accompanied by their grasp, such as the one
forces were at of seven years, the partisan out among those aged 18 among young voters, as well stronger activism among to be filled in a special elec-
work, of age gap has rocked from 14 through 24 rose 12 percent- as a rise in activism. young voters. State and local tion for an open House seat
course, in the points to 83, the Financial age points over the last gen- meetings of both the Demo- in Georgia on June 20.

stunning out- Times wrote. eral election two years ago. n the most recent Wall cratic Party and Our Revolu- In such districts, the key
come of the Those young voters pro- Two-thirds of those young Street Journal/NBC News tion, the organization for Democrats is winning
British elec- pelled Labour leader Jeremy voters went for Labour. poll, just 26% of those formed to absorb last years over centrists who may lean
tion, which cost Prime Minis- Corbyn, the trans-Atlantic Such findings are cause aged 18 through 34 said they Sanders supporters, are Republican but are turned
ter Theresa May and her Con- version of Sen. Bernie Sand- for concern for Americas approved of the job Mr. filled with boisterous young off by Mr. Trump. As that
servative Party their majority ers, to his unexpectedly own conservative party, the Trump is doing, while 64% activists of the left. suggests, young-voter fervor
in Parliament. An uninspiring strong challenge to Mrs. Republicans, who face signs said they disapproved. That Significant parts of that is a good thing for Demo-
campaign, terrorism, second May. This all represented a they could be confronting a 38-point gap between ap- youth movement have little crats overallbut not neces-
thoughts about the decision considerable turnaround similar wave among young proval and disapproval stands to no use for the Democratic sarily everywhere.

Immelt Leaves a Different

Firm Than He Inherited
BY THOMAS GRYTA lighted some of the challenges nancial crisis turned its giant
AND AUSTEN HUFFORD he faced over his time, includ- banking business into a liabil-
ing the terrorist attacks of 9/11 ity, forcing GE to cut its divi-
Jeff Immelt will leave Gen- and the financial crisis. dend for the first time since
eral Electric Co. looking a lot Mr. Immelt came to GE in the Great Depression.
different than it did when he 1982, the same year as getting Mr. Immelt ultimately sold
took the helm in 2001: He esti- an M.B.A. from Harvard. In his NBCUniversal because it dis-
mates he sold two-thirds of career, he spent time in the tracted from GEs core mission


the company he inherited. Plastics, Appliances, and and he exited the insurance in-
He shed its plastics, media Healthcare businesses. Like dustry in 2005. He bought in-
and its appliances business. He his successor, John Flannery, dustrial businesses such as En-
shrunk its once massive GE Mr. Immelt was promoted to ron Corp.s wind-power
Capital finance operations and CEO after running the Health- division and life-sciences firm
refocused the company on care division. Amersham PLC. He made ma-
making jet engines and other Mr. Immelt had a tough CEO jor investments to serve oil
heavy machinery. act to follow in Jack Welch, an and gas drillers but was criti-
You could never have pre- empire builder who delivered cized by some for paying up at
dicted the environment of the steady profit growth and sent the peaks of that market. Jeff Immelt in 2016. He will step aside as chief executive on Aug. 1 after 16 years at the helm.
last 16 years, Mr. Immelt said GEs shares soaring during the His moves resulted in a re-
to employees in a town hall
meeting Monday morning. He
became choked up as he
thanked his team and high-
1990s. Four days after Mr. Im-
melt took charge in 2001, the
Sept. 11 attacks flattened GEs
aviation business. Later, the fi-
shaping of the companys
workforcewith the number
of GE workers abroad increas-
ing while the number of em-
GE Shifting Stream
Share of revenue from
ness, and purchased of the
energy business of Alstom SA.
He stepped in to lead the
health-care business in 2014
GE Capital in 2001
ployees in the U.S. declined. Continued from Page One when the unit was struggling
The end of his career as nancial crisis. He took over and some analysts called for
A Transformed Business CEO came under President days before the Sept. 11 terror- GE to spin it off or sell it. In-
GE has moved away from virtually all its consumer facing businesses, Donald Trump and a push ist attacks and GE shares 46.3% stead, Mr. Flannery and GE
dramatically shifting toward making and servicing huge industrial against globalization. Mr. Im- plunged well below $10 during Other $58.4 B have doubled down. The unit,
machines, and away from its once lucrative nance operations. melt has walked a careful line the financial crisis. The stock which makes imaging and di-
by defending global trade has rebounded off its lows but agnostic equipment, has been
General Electric's external segment revenue, in billions and the Paris Accord on cli- lagged behind the returns of expanding into life sciences.
mate change. the S&P 500. Overall, GE GE Healthcares revenue rose
2001 GE Capital $58.0
Mr. Immelt bought and sold shares have fallen about 30% to $18.29 billion in 2016, back
Power Systems $20.1 Share of revenue from
more than $100 billion worth since he took over in 2001. to levels it sustained in the be-
GE Capital in 2016
Industrial Products $10.8 of business in his time as CEO The conglomerate has refo- ginning of the decade, while
$10.9 B
Aircraft Engines $10.1 but said in a letter to investors cused on its industrial busi- 8.8% increasing operating profit.
this year that the GE portfolio nesses, shedding low-margin Mr. Bornstein said he and
Technical Products* $9.0 is pretty well set. units like home appliances Mr. Flannery have worked
Materials $7.0 Mr. Flannery, in a meeting and striking a big oil-and-gas closely for more than 20 years
Appliances $5.8 for employees Monday, made deal with Baker Hughes Inc. Other and have a similar view in
Total it clear that he would be con- last fall. revenue terms of return and capital al-
NBC $5.8 $126.9B ducting his own review. I GE said the leadership 91.2% location. He grew up as a cor-
want to start with a fresh change has been in the works porate finance guy and has a
2016 Power $26.1 look around the company for years, with the board de- Source: The company deep understanding of value
overall, he said. I want to go ciding on the timing in 2013 THE WALL STREET JOURNAL. and value creation, Mr. Born-
Aviation $25.5
through a deep review with a and voting Mr. Flannery as stein said on the call.
Healthcare $18.2 sense of urgency. CEO Friday. Last month, Mr. make any changes to its execu- The new CEO will be fo-
Energy Connections/Lighting $14.1 On Monday, investors Immelt told analysts the board tive-compensation plans to re- cused on cash flow manage-
Oil & Gas $12.5 cheered the news of Mr. Im- had been working on succes- tain other top executives and ment and shareholder value
melts departure, sending sion plans but didnt indicate a was sticking to its recent fi- and will work closely with Mr.
GE Capital $9.6 shares up 3.9%. During his ten- decision was imminent. nancial forecasts. Bornstein on costs, one of the
Renewable Energy $9.0 Total ure, the companys stock price Weve got a disciplined Mr. Bornstein, who has been people familiar with the mat-
$4.7 and total shareholder return process. And I think weve got finance chief under Mr. Im- ter said.
Transportation $119.9 both lagged behind the perfor- it well on track, Mr. Immelt melt, will remain in that role GE said Monday that Kieran
Note: Total does not account for some corporate items and eliminations. mance of the benchmark S&P said at an investor conference. and become vice chairman. Mr. Murphy, one of Mr. Flannerys
*Includes medical systems Source: the company THE WALL STREET JOURNAL. 500 index. GE shares rose 3.8% to Flannery will take over as lieutenants, will take over as
$29.01 in midday trading. chairman of the board next CEO of the health-care unit.
Shares are down more than 8% year. Mr. Immelt described the Mr. Murphy, who joined the
The Next CEO of standard PowerPoint in his for the first 10 years of his life so far this year. new management arrangement company in 2008, has been
2015 presentation, said people with his two older sisters. His The succession planning, as a partnership. CEO of the companys life-sci-
General Electric familiar with the matter. That father worked for the FDIC which included external candi- Mr. Flannery will review ences business.
takes guts because there are Corp. In 1971, Mr. Flannery dates, was narrowed to four in- the businesses and doesnt
Flannery became pick based 600 people in the room, one moved to West Hartford, Conn., ternal candidates in 2015: Mr. come into the job with any sa- THE WALL STREET JOURNAL.
on experience, inclusive style of the people said. where his father was president Flannery, finance chief Jeff cred cows, but no major Europe Edition ISSN 0921-99
of a small bank. He graduated Bornstein, the head of the changes are anticipated at The News Building, 1 London Bridge Street,
London, SE1 9GF
from Fairfield University before power business Steve Bolze, this time, the person said.
John Flannery, the new going to business school at the and the head of the oil and gas There is no mandate to shake Thorold Barker, Editor, Europe

Grainne McCarthy, Senior News Editor, Europe

leader of General Electric Co., University of Pennsylvania. business Lorenzo Simonelli. up the portfolio. Cicely K. Dyson, News Editor, Europe
brings to the corner suite a Like Mr. Immelt, he is a de- Throughout 2016, those four Mr. Flannery is the former Darren Everson, International Editions Editor
professional past that is more voted Allman Brothers fan, go- were interviewed and increas- head of GEs India business and Joseph C. Sternberg, Editorial Page Editor
akin to a private-equity execu- ing to some of the rock groups ingly given public exposure former leader of its deals
Anna Foot, Advertising Sales
tive than an industrial operator. final concerts. He is a voracious and investor interviews and by team. On Mr. Flannerys watch, Jacky Lo, Circulation Sales
The son of a bank execu- reader of fiction and nonfiction the end of the year, the timing GE spun off its consumer- Andrew Robinson, Communications
Jonathan Wright, Commercial Partnerships
tive, Mr. Flannery joined GE by authors including Atul and process for the change was credit business, Synchrony Fi-
Capital in 1987 and worked Gawande and J.D. Vance. set up, according to a person nancial, sold its appliance busi- Katie Vanneck-Smith,
around the globe cutting deals He started working abroad familiar with the matter. Global Managing Director & Publisher

buying and selling portfolios of for GE Capital in 1997 in Latin GE directors made their fi- Advertising through Dow Jones Advertising

undervalued assets. The Whar- America and moved to Asia in nal decision about Mr. Flan- Sales: Hong Kong: 852-2831 2504; Singapore:
65-6415 4300; Tokyo: 81-3 6269-2701;
ton M.B.A. made his mark lead- John Flannery in September 2005. He took a risk in 2009 by nery during a regularly sched- Frankfurt: 49 69 29725390; London: 44 207
ing the $17 billion acquisition of
Alstom SAs power business, One of four internal contend-
moving to India where he ran the
companys first separate profit-
uled board meeting Friday at
its Boston headquarters, ac-
AMPLIFICATIONS 842 9600; Paris: 33 1 40 17 17 01;
New York: 1-212-659-2176
Printers: France: POP La Courneuve; Germany:
the biggest industrial acquisi- ers to succeed Jeff Immelt for and-loss statement for a country. cording to another person fa- Dogan Media Group/Hrriyet A.S. Branch; Italy:
tion in the companys history. the top job, Mr. Flannery became After leaving India, he joined miliar with the matter. Trian Qualiprinters s.r.l.; United Kingdom: Newsprinters
(Broxbourne) Limited, Great Cambridge Road,
Despite his financial back- the boards final pick based on GEs corporate headquarters had zero impact on the pro- In the June/July WSJ. Waltham Cross, EN8 8DY
ground and long tenure at GE, his broad GE experience and in- team in 2013 where he ran cess, this person said. Magazine article about Gibbs Registered as a newspaper at the Post Office.
Mr. Flannery has shown a will- clusive leadership style, said an- mergers and acquisitions. On The three runners-up Farm, one of the farms Brah- Trademarks appearing herein are used under
license from Dow Jones & Co.
ingness to break ranks. other person familiar with the Mr. Flannerys watch as head of didnt know they didnt get it man cattle is pictured next 2017 Dow Jones & Company. All rights reserved.
Editeur responsable: Thorold Barker M-17936-
At GEs annual management matter. Directors took their final GEs mergers and acquisitions until after Fridays board meet- to Bernar Venets 88.5 ARC 2003. Registered address: Avenue de Cortenbergh
retreat in Boca Raton, Fla., vote at a regular board meeting team, he led the spinoff of its ing ended, this person added. x 8 sculpture. The photo 60/4F, 1040 Brussels, Belgium
where the top leaders of the held Friday at GEs headquarters, consumer credit business, Syn- We feel good about how caption incorrectly said it NEED ASSISTANCE WITH
company meet and discuss the this person said. chrony Financial. we prepared for this transi- was a yak. YOUR SUBSCRIPTION?
business, Mr. Flannery stunned Mr. Flannery was born in Al- Joann S. Lublin tion, Mr. Immelt said on a By web: http://services.wsje.com
Readers can alert The Wall Street By email: subs.wsje@dowjones.com
the crowd by abandoning the exandria, Va., and lived there and Kate Linebaugh conference call Monday, add- Journal to any errors in news articles By phone: +44(0)20 3426 1313
ing the company didnt plan to by emailing wsjcontact@wsj.com.
THE WALL STREET JOURNAL. Tuesday, June 13, 2017 | A3

Police Detain Hundreds in Russia Protest
Kremlin critic and rally which uses the internet to
appeal to young voters, said
organizer Alexei electricity at their office was
Navalny is held near cut and their streaming video
stopped, before they moved
entrance to his home to a backup that worked.
Authorities had warned
BY JAMES MARSON that people carrying placards
or who appeared to be pro-
MOSCOWPolice on Mon- testing would be arrested.
day detained hundreds of an- But thousands, many of them
ticorruption protesters across in their late teens and twen-
Russia, including opposition ties, still came to Tverskaya
leader Alexei Navalny, who is Street in Moscow, where they
hoping to harness a surprise swarmed around metal detec-
surge in rallies against the tors that police had set up for
Kremlin to challenge Presi- Russia Day celebrations.
dent Vladimir Putin in elec- People re-enacting events
tions next year. from Russias history, includ-
The protests in cities ing men in metal helmets and
across Russiafrom Vladi- chain mail wielding wooden
vostok in the east to Norilsk shields, mixed with crowds
in the Arcticwere the first shouting, Were in charge!
since the largest anti-Kremlin and Putins a thief! Police
demonstrations in five years tried to hold protesters back
in March. at certain points, beating
Riot police in Moscow some with batons and drag-
dragged protesters out of a ging others from the crowd
crowd carrying Russian flags to waiting police vans.
and shouting Russia without The geographical spread of
Putin! in chaotic scenes on the protests, including cities
one of the capitals main in Russias far east, Siberia
streets, as the unsanctioned and Arctic north, represents
protest mixed with official rare progress for the opposi-

celebrations of Russia Day. tion movement in tapping
More than 100 people were discontent outside Moscow
detained in both Moscow and and St. Petersburg.
St. Petersburg, according to Numbers varied from city
monitor group OVD-Info. to city from dozens to hun-
Mr. Navalny, a 41-year-old dreds to thousands. Russian
anticorruption blogger, has state television largely ig-
energized Russias weak and Riot police detain a man during an anticorruption protest organized by opposition leader Alexei Navalny in central Moscow. nored the demonstrations, in-
divided opposition with videos stead covering official events
and blog posts that expose which he calls politically mo- said in a message on his panies into not providing will face misdemeanor including sports competitions,
what he calls egregious exam- tivated, may prevent him Twitter. equipment for a stage at the charges for calling for the musical performances and the
ples of corruption at the top from running, and opinion Mr. Navalny had received agreed venue. protest and disobeying a po- unfurling of a huge Russian
levels of the Russian state. polls show overwhelming permission to stage a rally in The General Prosecutors lice officers order, police told flag by service members from
He has spread his cam- support for 17-year Kremlin Moscow, but he said Sunday Office said that a protest in Interfax news agency, which the Ministry of Emergency
paign for the presidency to incumbent Mr. Putin. he was switching the venue the new location would be il- could land him a fine and 15 Situations and children in red
cities across Russia in recent Police detained Mr. Na- to the capitals main drag legal, and warned that police days in jail. berets from a government-
months, even though a con- valny on Monday near the en- near the Kremlin, blaming au- would take measures to pre- Members of Mr. Navalnys backed youth military group
viction for embezzlement, trance to his home, his wife thorities for pressuring com- vent disorder. Mr. Navalny Anti-Corruption Foundation, called Yunarmiya.

Groups Move to End Polio by 2020

BY BETSY MCKAY and other organizations, set zation had declared that the for the virus, is increasing its
the cost of polio eradication country had eliminated it. goal for annual contributions
The longstanding quest to activities between 2013 and There have also been six po- to $50 million a year from
eradicate polio is attracting a 2019 at $7 billion. The new lio cases reported this year in $35 million a year, with its
new injection of funds from pledges leave about $300 Syria and the Democratic Re- dollars matched two to one
donors around the world, as million still to be raised. public of the Congo from a by the Gates Foundation.
health leaders grapple with The GPEI has missed pre- form of the virus derived For the 2020 goal to be
obstacles from ridding con- vious deadlines that it set for from the oral vaccine. met, no more cases of polio
flict areas of the virus to a eradicating polio, a highly in- In addition, an injectable could occur after this year,

shortage of vaccine. fectious virus that primarily form of the vaccine is in because the WHO will declare
Rotary International, the affects young children and short supply, forcing health eradication only three years
Bill & Melinda Gates Founda- can cause paralysis. There is officials to prioritize who after the last case. If we
tion and the Canadian govern- reason to hope the latest goal gets it. And future funding dont get some big increase
ment are among several do- can be met, because there from the U.S. government, a in instability in those coun-
nors who are pledging $790 have been only five cases of major contributor, is uncer- tries, we have a very good
million Monday to vaccinate polio in Pakistan and Afghan- tain as Congress must now chance that this would be the
millions of children, conduct istan this year, two countries weigh sharp cuts to foreign last year of cases, Bill Gates,
surveillance for the virus and where transmission of polio aid proposed by the Trump the billionaire philanthropist
other needs until 2020the has never been stopped. Vac- administration. and Gates Foundation co-
year in which health leaders cination campaigns have im- 2020 is feasible, but its chair, said in an interview.
hope to declare that polio has proved, reaching children in probably a best-case sce- Still, he said, were still
been eradicated. The pledges communities hard to access nario, John Hewko, general very worried about Nigeria and
were to be made at a Rotary before. secretary of Rotary Interna- very worried about Syria. A child is given the polio vaccine in Karachi, Pakistan, in May.
International convention in But some areas controlled tional, said in an interview. The most sensitive test for
Atlanta. by insurgent groups are still Rotary, which works through whether polio is circulating ing a lot of positive sewage well this year in order to stay
The Global Polio Eradica- hard to reach. Polio resur- its members in countries on isnt illnesses, but presence samples in various parts of on track, Mr. Gates said. if
tion Initiative, which includes faced in Nigeria last year, af- programs to vaccinate chil- of the virus in sewage sam- Pakistan, he said. we have cases in 2018, then
Rotary, the Gates Foundation ter the World Health Organi- dren and conduct surveillance ples, he said. Were still see- Weve got to execute very we miss 2020.

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May Faces Pressure to Ease Up on Brexit

BY LAURENCE NORMAN courts would also likely con-
AND VALENTINA POP tinue to have oversight of U.K.
rules and regulation.
BRUSSELSPressure is There are two other options
mounting on U.K. Prime Minis- for the U.K. One would be to
ter Theresa May to seek closer join the European Free Trade
ties to the European Union af- Association, an organization
ter Britain leaves the bloc in Britain helped found. That
March 2019, following her could offer some economic
election setback last Thursday. protection by allowing Britain
Some senior Conservatives access to EFTAs 27 trade
say the partys loss of its par- deals covering 38 countries
liamentary majority in last while also allowing the U.K. to
weeks vote was, in part, a re- start negotiating its own trade
jection of Mrs. Mays insis- deals. Yet it isnt clear if EFTA
tence on a clean break with would take Britain back and,
the EU. They say the govern- in any case, it could take some
ment will struggle to pass leg- time for Britain to have full
islation needed to prepare access to those deals.
Britain for exit without a Most significant, the bene-
change in approach. fits in terms of new export
Ruth Davidson, the influen- markets would be relatively
tial leader of the Scottish small compared with the EU
branch of the Conservative single market and EU trade
party, said last weekend the deals. That is why three of
government should look again EFTAs four membersNor-
at its Brexit approach and way, Iceland and Liechten-

move to a consensus within steinall joined the EUs sin-
the country aboutwhat we gle market. Switzerland didnt,
seek to achieve as we leave. though it has some benefits
Yet for Mrs. May, there are and obligations of the single
no easy alternatives. Whether market through bilateral deals
she seeks to maintain closer with the EU.
economic ties with the EU or British Prime Minister Theresa May leaving 10 Downing Street on Friday to ask the Queens permission to form a government. Mrs. May could also drop a
simply drops her threat that stance she repeated before the
no deal is better than a bad poses zero tariffs on trade freedom of movement of EU based consultancy. Nor- landwhich is a specific election, that No deal is bet-
deal, there are risks involved. among EU members and a citizens into the U.K. and con- waypays into the EU budget pledge of the Northern Irish ter than a bad deal, which
For now at least, Mrs. May common set of tariffs on im- tinuing large budget payments amounts that would basically Democratic Unionist Party would signal a commitment to
is suggesting her pre-election ports from nonmembersal- to the EU. be the same were it a full EU that looks set to enter an some kind of agreement dur-
Brexit plans are unchanged. though she has said she is It would also continue to member. agreement to prop up a minor- ing the two-year Brexit talks.
She says her government is open to a future U.K.-EU cus- give EU courts a key role in Another alternative would ity Conservative government. There is also one other op-
ready to start negotiations toms-union arrangement. She shaping British rules. In other be to leave the single market If Britain is in the customs tion Britain could push: nego-
with the EU team next week as also wants an end to the juris- words, Britain would have to but seek customs-union mem- union, major customs checks tiating a long transitional
planned, although no date was diction of EU courts over Brit- accept some of the least at- bership. That would ensure on the border with the Repub- agreement with the EU which
agreed during discussions in ish laws and regulations. tractive parts of EU member- Britain retained the benefits of lic of Ireland wont be needed. allowed one of these alterna-
Brussels on Monday. In the short-term, the least ship while surrendering any the EUs 38 regional and bilat- But staying in the customs tive models to stand for a
Her plan is for Britain to economically disruptive alter- influence over the blocs direc- eral trade deals and nullify union would thwart perhaps number of years before Britain
leave the EUs single market of native would be to remain in tion. one of the biggest risks from the strongest economic argu- fully exited.
goods and services, a zone of the single market either inside Make no mistake, the Nor- Brexitthe imposition of EU ment used by Brexiteers: It That looks difficult. EU offi-
common regulation that al- the customs union or, like Nor- way option is not going to be tariffs and onerous customs would prevent Britain from cials and lawmakers have said
lows a British company to op- way, outside it. an easy sell to euroskeptics, checks on U.K. imports and ex- being able to negotiate and any transitional deal should be
erate and sell its products The Norway model has de- and has never been seen by ports to the EU. sign its own trade deals. The short-lived, no more than
across the bloc. livered strong economic bene- Brussels as a credible model It would also help resolve U.K. would have to continue to three years, according to the
Mrs. May has also pledged fits, yet it would require Brit- for the U.K., said Mujtaba one of the thorniest issues apply the common external European Parliament.
to take the U.K. out of the EUs ain doing two things Mrs. May Rahman, Europe director with sparked by Brexit: how to tariff and rely on Brussels to Jason Douglas in London
customs unionwhich im- has ruled out: maintaining Eurasia Group, a London- avoid a hard border in Ire- negotiate new trade deals. EU contributed to this article.

U.K. National Front Loses Big in France

the main opposition Labour
Party is divided on what Brexit
should look like. Labour leader
Jeremy Corbyn and his close
Continued from page A1 ally John McDonnell, the BY WILLIAM HOROBIN
But rumors swirled over partys finance spokesman, AND STACY MEICHTRY
how long she could last, and have sent a strong signal that
to what extent she could see they believe the U.K. should PARISAfter knocking at
through the definitive break quit the EUs single market for the gates of power only a
with the EU she had set out goods and services, as well as month ago, Marine Le Pen
including leaving the blocs its customs union. saw support for her far-right
single market for goods and Mr. McDonnell, in an inter- party crumble in Sundays
services to get control over view with broadcaster ITV on first round of parliamentary
immigration. Sunday, said a Brexit deal that elections, dashing its hopes of
Scottish leader Nicola Stur- preserves Britains single- becoming Frances opposition

geon said supporters of a clear market membership would be party and an entrenched men-
break with the EU have been interpreted as not respecting ace to the Europe Union.
left dead in the water in the the result of that referen- President Emmanuel Ma-
wake of the election result. dum, referring to last years crons fledgling party, La R-
Ruth Davidson, the leader of Brexit vote. publique en Marche, trounced
the Scottish Conservative Their stance aligns with the mainstream parties across the
party, said she wanted to put partys election platform, political spectrum but forced
economic advancement at the which said a Labour govern- the once-buoyant antiestab-
heart of any Brexit deal. ment would seek to preserve lishment National Front in
Mrs. Mays team continued the benefits of single-market particular into a reckoning.
to seek an agreement with a membership and the EUs cus- Ms. Le Pen on Monday faced a
small Northern Irish party, the toms union, while ending free final election result that
Democratic Unionist Party, movement of people. It showed the momentum that
which it is hoping it can rely pledged to build a close coop- had carried her in to last
on to pass legislation through erative future relationship months second-round presi- National Front leader Marine Le Pen voting in Henin-Beaumont, the district she seeks to represent.
Parliament. with the EU, not as members dential vote had perished.
The DUP is likely to demand but as partners. National Front candidates trast to the National Fronts congress after the parliamen- in the National Assembly,
concessions in exchange for its Yet some in the party have garnered only 13.2% of Sun- high expectations going into tary elections to discuss the winning 34.65% of the first-
support, including guarantees left the door open to a less days vote, compared with the 2017 races. In recent National Fronts anti-euro round vote in a southern
that Brexit wont disrupt trade clear break. Barry Gardiner, 13.6% in the last parliamen- years, the party had drawn stance, which many of the French district.
between Northern Ireland and trade spokesman and one of a tary election five years ago. nearly a third of the vote in rank-and-file blamed for her The National Front candi-
Ireland, an EU member. three-person team driving La- Pollster Ipsos Sopra-Steria local, regional and European presidential loss. date now running for her
Kathrin Muehlbronner, se- bours Brexit policy, said on projected the party would end Parliament elections. All voters have is disap- seat, Herv de Lpinau, won
nior vice president of Moodys, Monday that some kind of up with between one and five This clearly marks a pause pointment from the presiden- 31.81% of the vote on Sunday
said in a research note that reformed membership of seats in the 577-seat National in a very, very strong pro- tial election, and all they hear behind the La Rpublique en
the Conservative Partys re- the single market and cus- Assembly, compared with be- gression, Ms. Le Pen said about is internal difficulties, Marche candidate.
duced share of parliamentary toms union was another pos- tween 415 and 455 for Mr. Monday while campaigning said Jrme Fourquet, a poll- The partys best shot for
seats may mean there is a sibility, though it isnt clear if Macrons party and its cen- for a seat in the north of ster with IFOP. landing a parliamentary seat
higher likelihood that Brexit such an offer would even be trist ally. France. Mr. Fourquet and other an- is in Pas de Calais, an area
will involve compromises that on the table. What caused the collapse, Supporters who expected alysts say Ms. Le Pen is likely hard-hit by migrant flows and
Mrs. May wouldnt have ear- Uncertainty over the direc- pollsters and party officials Ms. Le Pen to win the first to retain leadership of the Na- industrial decline, where Ms.
lier considered. tion of Brexit weighed on busi- say, is that the National round of the presidential race tional Front, because the Le Pen herself is running.
This could potentially in- ness leaders. The U.K.s Insti- Fronts primarily young, work- were disappointed when she partys identity is built around Ms. Le Pen scored 46.02%
clude a request to remain in- tute of Directors said it ing-class base decided to sit finished behind Mr. Macron. her family. They say the only on Sunday, nearly 30 points
side the EU single market or quizzed 700 executives and out the parliamentary races. Her 33.9% score in the runoff figure who might have chal- ahead of her La Rpublique en
the customs union, Mrs. Mue- found a sharp deterioration in Around 57% of people who also fell far short of the 40% lenged her for leadership was Marche rival, Anne Roquet.
hlbronner said. confidence about the U.K. voted for Marine Le Pen in the she was hitting in the polls. her niece, Marion Marchal Le But she and other National
She also said she expected economys prospects following presidential election stayed What followed was soul- Pen, who quit the party Front candidates face the same
the election outcome to delay the election result. The insti- home for the parliamentary searching. Ms. Le Pen floated shortly after the presidential hurdle she tripped over in the
the start of negotiations or tute said 57% of respondents ballot, Ipsos Sopra-Steria said. the possibility of renaming loss, saying she wanted to presidential race: Those who
lead to a period where no sub- were pessimistic about the The abstention rate among and restructuring her party spend time with family. voted for other candidates in
stantive issues are discussed. economy, compared with 37% Macron voters was 38%. before deserting the idea. She In 2012, Ms. Marchal Le the first round are expected to
Like the Conservative Party, before the vote. The numbers stand in con- also promised to hold a party Pen won the partys only seat coalesce behind her rival.

AFGHANISTAN fire after coming under attack PAKISTAN Muhammad and his wives.
but said it hadnt officially heard The verdict comes amid a
U.S. Soldiers Said of civilian casualties. Man on Death Row crackdown on blasphemous
To Kill Three Civilians The violence follows a diffi- To Fight Insult Charge comments on social media.
cult past few days for the U.S. Authorities launched the
U.S. soldiers allegedly killed and Afghan partnership. In the A man sentenced to death by campaign earlier this year, citing
three Afghan civilians after com- south of the country, a U.S. air- a Pakistani court on charges of public anger. Blasphemy is a
ing under fire in eastern Nangar- strike accidentally killed several committing blasphemy on Face- highly sensitive issue in Muslim-
har province, local officials said, Afghan policemen on Friday. A book plans to appeal the convic- majority Pakistan, where even
in the latest violence threatening day later, an Afghan commando tion, his lawyer said, the first an allegation of an insult to Is-

to fuel anger with the govern- killed three U.S. soldiers during such punishment in Pakistan for lam can lead to violence.
ment and its foreign allies. an elite operation in the east. blasphemy on social media. Mr. Razas lawyer, Fida Hus-
The civilians were shot dead So-called insider attacks are A court in the central city of sain Rana, said his client, a Shi-
in Ghani Khel district on Sunday, frequent in Afghanistan, but Bahawalpur on Saturday sen- ite Muslim, was targeted after
according to the provincial gov- very rare among special opera- tenced Taimoor Raza, 30 years he had an argument about a
ernors spokesman, Attaullah tion troops. old, to death, after finding him sectarian matter with two Sunni
Khogyany. The U.S. military con- Jessica Donati guilty of insulting figures revered Muslims on Facebook.
A pro-Brexit backer celebrated the invoking of Article 50 in March. firmed its forces had returned and Ehsanullah Amiri in Islam, including the Prophet Qasim Nauman
THE WALL STREET JOURNAL. Tuesday, June 13, 2017 | A5


Indian Businesses
Face Taxing Changes


India has one of the lowest tax-to-GDP ratios in the world. Policy
MUMBAIIndia is bracing makers hope a new goods-and-services tax could help change that.
for a dramatic but risky over-
haul of the countrys tax sys- Tax-to-GDP levels
tem that authorities hope will Brazil 35.6%
draw millions of businesses
United Kingdom 32.9%
into their tax net and boost
the economy. South Africa 28.8%
The initiative, set to kick United States 25.4% OECD
off on July 1, aims to stream- Russia 23.0% average
line Indias cumbersome net- 34.2%
China 19.4%
work of state and federal lev-
India 16.6%
ies and ease commerce across
state borders. Source: India Economic Survey 2015-2016 THE WALL STREET JOURNAL. Workers post a billboard in Kolkata. Ad agencies and other firms are bracing for a new tax regime.
It is a big part of a larger
effort, including the cancella- elimination of the bank notes the government says, and it that compliance will likely be internet connectivity is poor. There are no clear insights
tion of large-denominated cur- in November. hopes to bring in most of the burdensome, particularly for Businesses invoices will be given on how to process it,
rencies last year, to improve This is one of the biggest rest. The challenge, experts small businesses. matched with those of their said Parag Malde, owner of
tax collection from companies changes we have undertaken say, will be registering mil- HSBC initially projected suppliers or vendors, who Jupiter Impex, a textile com-
that make up Indias huge in- since independence, said lions of other small and mid- that the system would add must provide their tax number pany in Mumbai.
formal economy. Some esti- Neelkanth Mishra, India equity size enterprises in India that 0.8% to Indias GDP growth before they can claim a credit. As the registration deadline
mate the new system will add analyst at Credit Suisse. arent registered. but halved its projection after Analysts commend the use looms, some businesses say
nearly 1 percentage point to The government says it will Among the more than 160 the government announced of peer pressure to make busi- they plan to stop taking orders
Indias growth in gross domes- implement the tax on sched- countries that use a value- the multiple tax brackets. nesses comply. while the tax is implemented.
tic product within a few years. ule, simplifying the tax struc- added tax, Indias is among the Its not ideal, said Pranjul The government has made Others say they will wait to
But the risks could drag on ture and lifting the economy. most complex. It has four tax Bhandari, HSBCs chief econo- you the tax collector, Uday see what happens.
short-term economic growth, India ranks 172nd out of 190 brackets, exemptions for prod- mist for India. Pimprikar, a partner at Ernst Once in place, the system
experts say. Among the hurdles countries in the World Banks ucts like petroleum and addi- The new system requires & Young who specializes in in- will create a single market,
are getting millions of compa- ease-of-paying-taxes index. It tional levies on luxury goods. It most businesses with an- direct taxation, told a seminar potentially allowing global
nies to register, educating has one of the worst tax-to- will split revenue between nual revenue above 2 million hall packed with business companies like Unilever, Ama-
them on how to file online, GDP ratios in the world, at states and the central govern- rupees ($31,000) to upload owners and accountants in zon and Nestl to consolidate
poor internet connections and 16.6%, compared with an OECD ment. The rules are the result their invoices every month to Mumbai this month. operations.
widespread tax avoidance. The average of 34%. That deprives of years of wrangling between a portal that will need to be At scenes like this playing But few expect implementa-
design of the new nationwide the government of revenue for political parties, states and stable enough to accept bil- out across the country, mer- tion to be easy.
Goods and Services Taxwhich much-needed improvements to central government in the lions of documents. chants anxiously ask questions India is trying to attempt
replaces a value-added tax and education, health care, sanita- worlds biggest democracy, a I dont know whether [pol- and voice hopes the govern- what some of the leading
other leviesalso is more com- tion, infrastructure and other country of 1.2 billion people. icy makers] know the compli- ment will delay implementa- economies do not have, said
plex than many expected. state priorities. Kunal Kumar Kundu, ana- cations in a small trade, said tion. Abhay Laijawala, head of India
A chaotic rollout could roil The new tax has already lyst at Socit Gnrale, called Biju John, a rubber dealer in Many businesses say they equities research for Deutsche
an economy still hobbled by a registered 80% of the 7 million it the worlds most compli- the southern state of Kerala. are still awaiting guidance on Bank. Even the United States
cash shortage caused by the current VAT business payers, cated VAT framework, saying We are in rural areas, where how the new tax will work. does not have such a system.

U.S. Presses China to Curb Trade With North Korea

The Trump administration it implements United Nations
has asked Beijing to take ac- sanctions on North Korea, it is
tion against nearly 10 Chinese opposed to unilateral action
companies and individuals to and favors a negotiated solu-
curb their trading with North tion.
Korea, senior U.S. officials Mr. Trump first asked Chi-
nese President Xi Jinping to

By Jay Solomon crack down on North Korean

in Washington trade during a summit at the
and Jeremy Page presidents Florida resort in
in Dandong, China April, U.S. officials said. It re-
mains unclear whether Beijing
said, as part of a strategy to would take action against the
decapitate the key networks Chinese companies of concern
that support Pyongyangs nu- to the U.S.
clear-weapons program. C4ADS said Chinese corpo-
Although there is no firm rate and trade records show
deadline, the U.S. has indi- 5,233 local companies traded
cated the Treasury Depart- with North Korea between
ment could impose unilateral 2013 and 2016. Many of them
sanctions on some of these en- share Chinese owners, ad-
tities before the end of the dresses or other identifying
summer if Beijing doesnt act, A North Korean soldier walks near Sinuiju, opposite the Chinese border city of Dandong. features, it said.
the U.S. officials said. You need to deny these
Without such action, U.S. that China has indicated in the the report include a Chinese Chinese businesswoman and gram, current and former U.S. networks access to Chinese
officials fear that Pyongyang, past that it would punish businessman and his sister Communist Party member ac- officials said. markets and more broadly the
which has conducted nine mis- North Korea, only to dash the said to be connected to a ship cused of aiding Pyongyangs Pyongyang conducts international financial sys-
sile tests since President Don- hopes of successive U.S. ad- intercepted by Egypt last year military programs, current and roughly 90% of its recorded tem, said David Thompson,
ald Trump took office, would ministrations. As a result, the while smuggling 30,000 North former U.S. officials involved foreign trade through China, author of the C4ADS report.
be able to develop a missile Trump administration needs Korean rocket-propelled gre- in the case said. according to Chinese data. The Trump administration
capable of carrying a nuclear to be prepared to act unilater- nades. While thousands of Chinese Weve told the Chinese we has been seeking to increase
warhead as far as the conti- ally, these officials said. U.S. officials say the report firms trade with North Korea, hope theyll act against certain economic pressure on North
nental U.S. within a few years. The U.S. officials declined is in line with part of the many are interconnected companies and people, said a Korea beyond just China, se-
The Trump administration, to name the entities being tar- Trump administrations strat- through parent companies or senior U.S. official briefed on nior U.S. officials said. This
like the Obama administration, geted. egy toward North Korea. While shared ownership, according North Korea policy. But weve has included dispatching top
has voiced hope China would But several Chinese entities C4ADS is a private organiza- to U.S. officials and C4ADS. also said that were prepared diplomats on missions to Eu-
increase pressure on Pyong- of concern are identified in a tion, its reports have been That means shutting down to act alone and can reach rope, the Middle East, South-
yang, and it has praised Bei- report to be released Monday shared widely with U.S. gov- even a handful of these con- North Korea if we choose. east Asia, and Africa, all places
jings moves to reduce coal im- by a Washington nonpartisan ernment agencies and Con- nected networks would make Chinas foreign ministry where the North Koreans have
ports from its communist ally research group, C4ADS, which gress. The Justice Department it harder for North Korean didnt immediately respond to conducted trade.
in recent months. Still, senior works to expose illicit trading used C4ADS findings in its in- leader Kim Jong Un to finance a request for comment. Beijing Kersten Zhang in Beijing
U.S. officials acknowledged networks. Those identified in dictment last September of a and supply his nuclear pro- has said repeatedly that while contributed to this article.

Protests Beijing Scolds Its Censors

Swell Over BY JOSH CHIN AND EVA DOU tics and class warfare.
The discipline inspection
The Cyberspace Adminis-
tration and Central Commis-

Housing BEIJINGThe Chinese

Communist Partys powerful
disciplinary wing is taking
commissions report targeted
the Cyberspace Administration
of China, which is in charge of
sion for Discipline Inspection
didnt reply to requests for

Crackdown aim at the countrys internet regulating internet content, If sustained, the crackdown

censors for not pushing a and had been in the works for on entertainment news would
party-line agenda, saying they months. Analysts say the Cy- mark a dramatic reorientation
Protests against Chinese were irresolute in imple- berspace Administration was of Chinas censorship machin-
property controls have grown menting the policies of Presi- likely aware of its findings be- ery, which has previously ig-
in intensity in recent weeks, dent Xi Jinping and not try- fore taking action last week to nored entertainment while
underscoring the challenge for Newer apartment buildings towered over an older structure in ing hard enough to ensure shut down at least 90 social- grinding away at independent
the government in preventing Shanghais Guangfuli neighborhood in April 2016. political security. media accounts run by celeb- news reporting and expres-
public eruptions of anger as it The rebuke, published on rity news and gossip sites. sions of political dissent.
cracks down on housing spec- Snapshots of the Shanghai 580,000 yuan (about $85,000) Sunday by the Central Com- Among the closed sites was Weibo, which hosted sev-
ulation. protest quickly whirled for her apartment and took mission for Discipline Inspec- the Weibo social-media ac- eral of the closed accounts, is
through mobile-messaging app out a mortgage for the rest. tion, may shed light on cen- count of Chinas self-pro- a vivid example. The platform
By Dominique Fong in WeChat, showing scenes of Now, she feels trapped, she sors surprise shuttering last claimed No. 1 Paparazzo, was left for dead by many ana-
Beijing and James T. protesters clashing with police said: Im really angry. week of dozens of Chinese ce- Zhou Wei, who had amassed lysts after a crackdown in
Areddy in Shanghai and some being dragged away. Shanghais government had lebrity news and gossip sites more than 7 million followers 2013 silenced influential users
So far, no Shanghai leader no official response to Satur- an area previously considered by publishing salacious stories seen as critical of the govern-
In response to skyrocketing has come out to speak to us, days protest. In a statement safe from government scrutiny. about Chinese celebrities. ment, but it revived itself with
home prices, governments in said Li Pinger, a 40-year-old IT released late Monday, a lo- The commissions new re- In meetings last week, au- a focus on entertainment and
Chinas big cities have set lim- contractor at a university who cal housing bureau sug- port, taken together with last thorities told the countrys top is now bigger than Twitter
its on the buying of multiple took part in Saturdays protest. gested a softening of policies weeks action, is also another web portals, video-streaming with 340 million active users.
homes and higher down-pay- Ms. Li said she has been un- applied to developers and buy- sign that the Communist Party sites and social-media plat- Weibo didnt immediately
ment ratios, which has left able to move into an apartment ers, though it stopped short of under Mr. Xi is moving to re- forms that the accounts were respond to a request for com-
many unable to sell their she bought last year at a hotel explicitly saying commercially claim ideological authority it being shut down to comply ment.
homes and others worried project in Shanghais Qingpu zoned units could be permit- surrendered after Mao Ze- with privacy protections in the Squeezing celebrity gossip
they wont be able to buy in District after the Shanghai gov- ted for use as residences. dongs death, analysts said. countrys new cybersecurity and entertainment news
before prices rise further. ernment in May banned the Beijings housing authority The old Communist ideol- law, the Cyberspace Adminis- threatens to deprive the gov-
Protests over the new rules sale of apartments built on said in late May that it would ogy is coming back, said Qiao trations Beijing and Guang- ernment of a useful diversion
started in early May. In the land for commercial or office allow apartments that were Mu, a Beijing-based media zhou branches said. at a time of slowing economic
latest and largest breakout, use and directed developers to bought before March 26 to be scholar and prominent critic of The regulators also encour- growth and increasing social
hundreds of people marched convert thousands of units listed and sold, an apparent government censorship. Com- aged the platforms to do more anxiety, media scholars said.
down a busy Shanghai shop- back to fit those purposes. loosening of the previous blan- munism doesnt like entertain- to promote the spread of core Wayne Ma and Lilian Lin
ping street this weekend. Ms. Li put up half of the ket ban on the sale of them. ment and gossip; it wants poli- socialist values online. contributed to this article.
A6 | Tuesday, June 13, 2017 THE WALL STREET JOURNAL.

Travel Ban Suffers Another Legal Setback
Appeals court rules week the Republican presi-
dent called for a travel ban
Trump exceeded his that is broader than the cur-
powers; White House rent executive order he
signed. The order, signed
says order is lawful March 6, temporarily bars
U.S. entry for people from
BY BRENT KENDALL Iran, Libya, Somalia, Sudan,
Syria and Yemen. It is a
A second federal appeals scaled-back version of a more
court blocked President Don- ambitious effort that Mr.
ald Trump on Monday from Trump pursued in January
enforcing an executive order and dropped after courts is-
that temporarily banned U.S. sued rulings halting its imple-
travel for people from six mentation.
Muslim-majority countries, The revised restrictions
dealing another legal blow to have also fared poorly in
the White House. court, as judges have agreed
The Ninth U.S. Circuit with challengers that Mr.
Court of Appeals in San Fran- Trumps past statements
cisco ruled that Mr. Trump about Muslims and his sup-


exceeded the scope of his port for a so-called Muslim
broad powers to police U.S. ban suggest his order unlaw-
borders. The presidents or- fully targeted people on the
der, which he has said would basis of religion.
reduce the chances of terror- The Ninth Circuit ruled
ist attacks, runs afoul of le- that Mr. Trump violated pro-
gal provisions that prohibit visions in the Immigration
discrimination based on na- and Nationality Act that re-
tionality, a three-judge Ninth quire him to offer sufficient
Circuit panel found. President Donald Trump, right, spoke during a meeting of his cabinet on Monday at the White House in Washington, D.C. findings that travelers from
Immigration, even for the the banned countries would
president, is not a one-person narrow part of an earlier deci- countries being subject to a ing to the Supreme Court, and times and we need every tool harm the U.S., under current
show, the panel wrote in a sion from a federal judge in travel ban. it is possible the justices at our disposal to prevent screening protocols.
78-page opinion. Hawaii. The Ninth Circuit The Ninth Circuit decision could take initial action as terrorists from entering the Among other things, the
The appeals court also pro- ruled the president could follows a May 25 ruling from soon as this week. country, Mr. Spicer said. He court found that the presi-
hibited the president from move forward with part of his the Fourth Circuit in Rich- White House press secre- said the administration is dents order didnt demon-
moving forward with his plan executive order that called for mond, Va., that rejected the tary Sean Spicer said the confident that the executive strate that current U.S.
for a temporary suspension of the federal government to re- Trump administrations re- White House is reviewing the order is fully lawful and ulti- screening procedures for trav-
the U.S. program for admit- view world-wide vetting pro- quest to reinstate the travel latest court decision. mately will be upheld by the elers are inadequate.
ting refugees. cedures for visa applicants, ban. The Justice Department We can all attest that Supreme Court. Rebecca Ballhaus
The court, however, did which could lead to additional has already appealed that rul- these are very dangerous In a series of tweets last contributed to this article.

Sessions Expected to Testify About Comey, Russia

AND PETER NICHOLAS Agency Says It Has probe of former national secu- request from the Journal that
rity adviser Mike Flynn. sought recordings or transcripts
Attorney General Jeff Ses- No Trump Tapes On Friday, Mr. Trump kept of any recordings made after
sions public testimony Tuesday the tapes mystery alive, telling Jan. 20 within the White
will mark a high-stakes mo- WASHINGTONThe U.S. Se- reporters in the White House House.
ment in his tumultuous four- cret Service has no audio cop- Rose Garden, Ill tell you about In response to your re-
month tenure, as lawmakers ies or transcripts of any tapes that maybe sometime in the quest, the Secret Service has
are expected to confront him recorded within President Don- very near future. He added, conducted a reasonable search
with questions ranging from his ald Trumps White House, the Oh, youre going to be very dis- for responsive records, the
interactions with former Fed- agency said on Monday. appointed when you hear the agency wrote. It appears, from
eral Bureau of Investigation Di- The agencys response to a answer, dont worry. a review of Secret Services
rector James Comey to his con- Freedom of Information request White House aides have de- main indices, that there are no
tacts with Russian officials. submitted by The Wall Street clined to answer questions records pertaining to your re-
The Senate Intelligence Journal doesnt exclude the pos- about whether there are tapes, quest that are referenced in
Committee on Monday said sibility that recordings could with press secretary Sean these indices.
Mr. Sessions will appear at an have been created by another Spicer saying he was not Such records would typically
open session Tuesday. That entity. aware. At a cabinet meeting be subject to the Presidential
came after a weekend letter in The question of a White Monday, Mr. Trump didnt re- Records Act and turned over to
which Mr. Sessions canceled House recording system has lin- spond to a shouted question the National Archives and Re-
previously planned testimony gered for more than a month from a reporter about whether cords Administration at the end

before House and Senate ap- since Mr. Trump first raised the there were tapes. of a presidents time in office.
propriations committees and possibility in a tweet about for- And at the White House The National Archives and
said he wanted to go before mer Federal Bureau of Investi- daily briefing on Monday, Mr. Records Administration said in
the intelligence panel instead gation Director James Comey. Spicer said: The president response to a request from the
to address allegations Mr. In recent days, the two men made clear in the Rose Garden Journal that presidential records
Comey raised in remarks to have offered differing accounts last week that he would have arent subject to the Freedom
the committee last week. of whether Mr. Trump asked an announcement shortly. of Information Act while the
The intelligence committee Mr. Comey in private conversa- The Secret Service on Mon- president is in office.
often holds closed hearings, tions to ease off the FBIs day sent its reply to a May 15 Louise Radnofsky
and until the panels an- Jeff Sessions will testify before a Senate panel on Tuesday.
nouncement Monday, there
was uncertainty about Comey, his subordinate. Mr. bassador to the U.S. during the mittee, has had a significant lic. Lawmakers are expected to decision to fire Mr. Comey.
whether the public would have Comey also hinted that there campaign but didnt disclose impact on the Justice Depart- press the attorney general on Mr. Trump fired Mr. Comey
access to the attorney gen- were reasons Mr. Sessions had those meetings in his confir- ment, changing policies on ev- Mr. Comeys account of their last month, suggesting later in
erals testimony. to recuse himself from the Jus- mation hearings. erything from how to charge a interactions, as well as the a television interview that the
The announcement sets up tice Departments investigation A Justice Department case to how to deal with al- reasons for Mr. Sessions re- decision was driven in part by
the second high-drama ses- into Russian interference in spokesman last week rejected leged abuses by local police cusal and his meetings with Mr. Comeys handling of the
sion before the committee the 2016 election beyond what parts of Mr. Comeys descrip- departments. But he also has Russian Ambassador Sergei investigation into alleged Rus-
within a few days, following was publicly known. tions of his interactions with faced repeated questions re- Kislyak during the campaign. sian election meddling.
Mr. Comeys appearance on In March, Mr. Sessions said the attorney general, and a lated to his contacts with Rus- Deputy Attorney General Last week, Mr. Comey de-
Thursday. he would recuse himself from spokeswoman on Monday said sia and his role as a top Rod Rosenstein will take Mr. scribed an Oval Office meeting
In his three hours of testi- any inquiry related to the 2016 Mr. Sessions believes it is im- Trump campaign adviser. Sessions place at the hearings at which he said the president
mony on that day, Mr. Comey campaign because he had portant for the American peo- Tuesdays hearing offers before the appropriations com- asked the attorney general to
portrayed Mr. Sessions as an played such a high-profile role ple to hear the truth directly Mr. Sessions an opportunity to mittees. His announced subject exit from the room, ultimately
attorney general who didnt in the Trump campaign. That from him. tackle some of those issues, will be the Justice Depart- leaving Mr. Comey alone with
manage the relationship be- announcement came after rev- Mr. Sessions, a former fed- and it will be the first time he ments budget, but he is likely Mr. Trump.
tween President Donald elations that Mr. Sessions had eral prosecutor and chairman is expected to personally ad- to face questions on matters Louise Radnofsky
Trump, his boss, and Mr. met twice with Russias am- of the Senate Judiciary Com- dress several of them in pub- like his role in the presidents contributed to this article.

President Sued Over Government Payments to His Firms

BY JOE PALAZZOLO court in Greenbelt, Md. Absent the consent of Con- constitutional provision to
A Justice Department gress, private enrichment reach the presidents private
A lawsuit filed Monday by spokeswoman declined to through the receipt of benefits business pursuits. The clauses
attorneys general in Maryland comment on the new suit. from foreign governments is apply only to the receipt of
and the District of Columbia Government lawyers have ar- prohibited, according to the compensation for personal
alleges U.S. and foreign gov- gued in the New York case lawsuit, which asks a federal services and to the receipt of
ernment payments to Presi- that Mr. Trumps businesses judge to declare Mr. Trump in honors and gifts based on offi-
dent Donald Trumps hotels place him in the company of violation of the Constitution cial position, they wrote, add-
and other businesses violate past high-ranking U.S. officials and to prohibit him from fur- ing that CREWs interpretation
the Constitution. who profited while in office, ther violations. would mean that presidents
The lawsuit, similar to one including Vice President Nel- Mr. Trump, through his from the very beginning of

filed in New York by a govern- son Rockefeller who had hold- lawyers, has pledged to donate the Republic, including George
ment watchdog group in Janu- ings in major oil companies to the U.S. Treasury all prof- Washington, had also violated
ary, pivots on Mr. Trumps de- and other corporations that its from foreign-government the Constitution.
cision to place his business conducted business globally. payments made to his hotels. Maryland and District of
assets into a trust, rather than White House press secre- The policy will apply only to Columbia officials must show
divest upon taking office. Mr. tary Sean Spicer on Monday payments from guests who they have been injured to have
Trump tapped his two adult suggested the lawsuit was po- identify themselves as a repre- standing to sue. The complaint
sons to run the Trump Organ- litically motivated and the sentative of a foreign govern- says they own businesses that
ization in his absence. business transactions in ques- ment, the Trump Organization compete with Mr. Trumps and
Payments from domestic tion were commonplace for D.C.s Karl Racine, right, and Marylands Brian Frosh lead the suit. told Congress in May. could lose economic and com-
and foreign governments to government officials. On Friday, lawyers for the mercial activity to the Trump
Mr. Trumps hotels and other Its not hard to conclude sions of the Constitution. dollars in payments from for- U.S. Department of Justice Organization.
businesses violate constitu- that partisan politics may be Some legal experts say the eign governments that lease moved for dismissal of the They also argue that they
tional provisions that prohibit one of the motivations, Mr. Foreign Emoluments clause space in Trump properties, pa- New York lawsuit, which was are harmed by perceived and/
U.S. officials from accepting Spicer said, noting the similar- was intended to prevent U.S. tronize the presidents hotels filed by Citizens for Responsi- or actual pressure to grant
any present, Emolument, Of- ities between Mondays law- officials from entering the em- or otherwise conduct business bility and Ethics in Washing- special treatment to Trump
fice, or Title from foreign suit and one filed in New York. ploy of foreign governments, with the Trump Organization. ton and makes nearly the businesses, which could put
states, and that bar the presi- He added the suit challenges making it inapplicable to Mr. Mr. Trumps receives benefits same case as the complaint them at a disadvantage to
dent from receiving compen- the sort of business transac- Trumps situation. from the U.S. government as filed by Maryland and the Dis- other states that have given or
sation from the federal or tion that government officials D.C. Attorney General Karl well, through his lease of fed- trict of Columbia. will give his companies favor-
state governments, other than have long engaged in. Racine and Maryland Attorney eral property for the Trump Department lawyers said in able consideration.
his salary, according to the Few courts have consid- General Brian Frosh cite in International Hotel in Wash- their brief that the nations Rebecca Ballhaus
lawsuit, filed in federal district ered the emoluments provi- their complaint millions of ington, D.C., the lawsuit says. founders didnt intend for the contributed to this article.
THE WALL STREET JOURNAL. Tuesday, June 13, 2017 | A7


Iowa Seeks
To Rework
Health Law
Other states nationwide are keeping an eye on
the states plan to revamp the Affordable Care Act
BY ANNA WILDE MATHEWS administration is open to


AND LOUISE RADNOFSKY maximizing opportunities for
states proposals under the
Iowa officials are seeking law, but were not going to
federal permission to imple- stretch the law.
ment a plan that would alter Iowa officials believe the
major aspects of the Afford- federal government has flexi-
able Care Act in the state, an bility to approve the plan,
effort that will draw close at- which aims to steady the Iowa
tention from other states fac- individual insurance market,
ing a meltdown of their health- Mr. Ommen said. If you dont
insurance marketplaces next have a stable market, no one
year. has insurance, he said.
Officials in President Donald Iowas gambit will get no- Iowa insurance officials said action must be taken to ensure thousands of people in the state arent left without coverage next year.
Trumps administration said tice from around the country,
they were aware of the Iowa experts said, as insurers an- surers to discuss their options,
proposal and were open to nounce they plan to pull back including answering questions Opioid Crisis Poses premiums or deny them sub- So many people on Medic-
supporting it to the extent from ACA marketplaces next and encouraging them to con- stance-abuse coverage. aid and expanded Medicaid rely
possible under the current year in the wake of a wave of tinue to offer coverage in some Challenge for Bill Concerns about those provi- on that funding for their treat-
health law. withdrawals in 2017. About 45 cases. sions cut into Republican sup- ment for substance abuse, he
If Iowa thinks that certain counties across three states The Iowa proposal would The nations worsen- port for the replacement mea- said. This is clearly an issue
things are what they need, Missouri, Ohio and Washing- change important features of ing opioid crisis has become sure in the House. Of the 20 where you dont want to make
were going to try to work tonare poised to be without the federal health law. The another sticking point in Re- Republicans who voted against matters worse by reducing ac-
with them, a White House of- any products available through laws subsidies that enable publican plans to dismantle the House bill, 16 represent cess to treatment.
ficial said. The official said the their insurance marketplaces lower-income people to buy portions of the Affordable Care states that saw significant in- Mr. Portman, along with
administration welcomed sug- in 2018. Other states, including health insurance would be- Act, with key GOP senators creases in drug-overdose death other Republican senators from
gestions from the states to Alaska, are seeking federal come flat payments tied to age hesitating to support a bill that rates in recent years. states that have expanded
tweak the workings of the law waivers for programs to bol- and income. The plan stream- could threaten addiction treat- Now, the same concerns are Medicaid such as Dean Heller
within their borders, and offi- ster their markets, but the lines the insurance plans now ment. emerging as a factor as the of Nevada, are pushing to wind
cials want to get to yes with Iowa proposal is more sweep- sold under the law to one de- Several provisions of the Senate takes up the House bill down the Medicaid expansion
states. ing. sign at the ACAs most popular ACA, also known as Obama- and ponders how to change it. funding more slowly. They
The Iowa proposal, which silver tier of coverage. Con- care, allowed millions of Ameri- Sen. Rob Portman (R., Ohio) would have the rollback occur
would offer one type of insur- sumers would purchase the cans seeking substance-abuse said in an interview that there over a seven-year window be-
ance plan and revamp the laws plans outside the insurance ex- treatment to gain coverage, in- is a growing worry among fel- ginning in 2020.
subsidies that help people buy
Were confident there change created by the law. cluding through an expansion low GOP senators that rolling Lawmakers are also looking
coverage, among other changes, will be [coverage] in Consumers would still be of the Medicaid health program back the Medicaid expansion at including a pot of money
would be in effect for 2018, able to buy 2018 plans during for the poor. But the House bill without offering other afford- specifically for opioid treat-
though it could be extended.
2018, but we cant this falls open enrollment pe- repealing the ACA, passed in able options would have an ment, according to Republican
Iowa Insurance Commis- guarantee anything. riod, but to purchase them af- early May, would roll back that outsize effect on people seek- Senate aides. But more budget-
sioner Doug Ommen, a Repub- ter Jan. 1 they would need to Medicaid expansion beginning ing addiction treatment, who hawkish lawmakers want to
lican, said the state must take show they had maintained con- in 2020 and allow insurance access medications and other end the Medicaid expansion in
emergency action to ensure tinuous coverage, with no gap companies to charge some peo- treatments through their insur- three years, by 2023.
that about 72,000 Iowans who Mr. Trump, a Republican, longer than 63 days in the pre- ple with drug addictions higher ance. Sharon Nunn
have ACA plans arent left and other administration offi- vious 12 months. That restric-
without coverage options next cials have sought to highlight tion aims to prevent people
year, after insurers said they insurance-market problems from signing up only when open enrollment in the fall, Mr. preciate [the Iowa Insurance emeritus professor at Wash-
would pull out. The proposal including Iowasin their bid they have medical needs, Mr. Forsyth said. Division] working with inter- ington and Lee University. Its
was meant as a stopgap mea- to push GOP health-care legis- Ommen said. The laws man- Were confident there will ested carriers for input. just hard to imagine how this
sure, Mr. Ommen said, as Re- lation through the Senate. The dated essential benefits would be something in 2018, but we Aetna Inc., which is exiting could be legal, he said.
publicans in Congress work to House has already passed a stay in place, as would protec- cant guarantee anything until Iowas exchange next year, said The Iowa program may also
pass a bill that would make bill. Democrats have said Mr. tions that ban insurers from the state gets the federal si- the proposal wouldnt change pose challenges to some older
significant changes to the law Trumps administration is ex- setting premiums or denying gnoff, he said. its plans. A spokeswoman for and lower-income ACA enroll-
at a national level. acerbating strains on the in- coverage based on consumers Mr. Forsyth said he and Gundersen Health Plan, which ees, compared with the current
Iowas largest insurer, Well- surance marketplaces by pre-existing health conditions. other Iowa officials met last has a small Iowa ACA foot- laws setup, due to how the
mark Blue Cross and Blue threatening to stop certain A new reinsurance program Wednesday with leaders of the print, didnt respond to a re- Iowa subsidies would work,
Shield, now said it would re- federal ACA payments that in- would limit insurers costs for Centers for Medicare and Med- quest for comment. said Larry Levitt, a senior vice
verse its plans to exit from the surers said are vital. the most-expensive enrollees. icaid Services, including its Legal experts said federal president at the Kaiser Family
states individual market and But there is also pressure Wellmark Blue Cross and head, Seema Verma, and got officials might lack the author- Foundation. There may be
will sell plans in every county on Mr. Trumps administration Blue Shield had said in early encouraging signals. A CMS ity under the law to approve some winners and losers from
next year if the new proposal to ensure the individual insur- April that it would stop selling spokeswoman said the agency the Iowa proposal. The law in- this, he said, but it sounds
goes into effect. ance markets dont im- ACA plans in Iowa after losses. cant comment until a final de- cludes a waiver program that like an important proactive ef-
Still, the effort faces signifi- plode. Even if Republican leg- CEO John Forsyth said the in- cision is made on the states allows for federal subsidy fort from the state to preserve
cant challengesincluding islation is signed, it likely surer believed the current proposal. money to be redirected under coverage for people.
questions about whether Mr. wouldnt take effect in time to market wasnt sustainable but A spokesman for Medica, a state plan, but the program Mr. Ommen said the plan is
Trumps administration has change insurance markets in wanted to help develop another ACA insurer that has has specific requirements and not a perfect solution, but
the authority to approve all as- 2018. White House officials changes that would improve it. said it may pull out of Iowa it is far from clear whether the our view is this is the only
pects of it under the law. The said they have worked behind Wellmark needs an answer next year, said, We are famil- Iowa proposal could meet option we have to preserve our
White House official said the the scenes for months with in- by late August to be ready for iar with the proposal and ap- them, said Timothy S. Jost, an market.

PTSD cebo, Ms. Olmsted said. The

problem, she said, is word-of-
mouth is very powerful.
Researchers began enrolling
operations troops who are al-
ready convinced.
Honestly, I feel like Ive let
people down, said Army Dr.
at its medical center in Long
Beach, Calif.
The prospects of generating
scientific consensus are clouded
sound to guide the needle to
the area around the target
nerves. The right side of the
brain controls the fight-or-flight
American bomb in 2001 and
again in a 2005 helicopter crash.
Gen. Bolduc said he came
home with symptoms from
Continued from Page One subjects last summer at military Sean Mulvaney, a former Navy by the nature of the population reaction. Doctors surmise that headaches and memory loss to
immediately, Dr. Lynch said. hospitals in Germany, Hawaii SEAL who practices at Fort Bel- suffering from PTSD. Doctors in patients with PTSD, mes- excessive alertness and flashes
The shot isnt a cure, he said, and North Carolina. RTI said voir, Va., and said he had ad- say some veterans are problem- sages between the brain and of anger. He was diagnosed with
but eases symptoms enough to only 45 had volunteered. ministered more than 600 stel- atic trial subjects because they body get stuck in a loop. The PTSD in 2014 and received his
allow talk therapy, pharma- Between 11% and 20% of late ganglion injections to PTSD have an incentive to stay sick anesthetic resets the system. first of two stellate ganglion
ceuticals and other ap- Iraq and Afghanistan veterans blocks. His wife, he said, noticed
proaches to achieve long-term suffer from PTSD in a given the change in his demeanor on
improvements. year, according to the National the drive home.
The treatment occupies an Center for PTSD, an arm of the The shot gives you the
unusual medical netherworld. Department of Veterans Af- break to deal with things, he
Most of the doctors who have fairs. Commanders worry that said. I was able to put myself
administered it said they PTSD reduces the combat ef- on the road to recovery. He
firmly believe it works. The fectiveness of those still in the said he is also on medication for
wider military, hewing to stan- military and can make life a anxiety and depression as part
dard medical practice, wont misery for those who have left of a broad treatment plan for
endorse the treatment without it. Sufferers are often irritable, his PTSD and injuries. The injec-
evidence from a controlled edgy and quick to anger. tion, he said, doesnt stop you
trial such as the one the Army The most common psycho- from operating effectively in a
has commissioned. logical treatments, called expo- combat environment.
It has yet to be proven sure therapiesin which a In a 2014 study led by Drs.
that it really does work, said PTSD sufferer repeatedly revis- Lynch and Mulvaney, research-
psychologist Ron Hoover, who its the traumatic event to ers injected a local anesthetic
oversees the new PTSD study weaken its effectease symp- into the necks of 166 service
on behalf of the Army. The toms in about 60% of those members suffering from PTSD.
Army takes a fairly conserva- with combat-related PTSD, ac- They concluded the injection is
tive position about treatments cording to an estimate by psy- a safe and minimally invasive
or any kind of medical care. chologist JoAnn Difede, direc- procedure that may provide at
They dont want to risk ser- tor of the Program for Anxiety least 3 months of relief from
vice members lives or experi- and Traumatic Stress Studies at symptoms associated with com-
ment on them. Weill Cornell Medicine and New bat-related PTSD.
Researchers are finding it York-Presbyterian Hospital. That study didnt feature a
difficult, though, to recruit vol- About the same percentage control group. One small con-
unteers for the study because see at least some improvement trolled study published in 2015

likely candidates have already from the most frequently used found no statistically signifi-
heard promising reports about anti-PTSD drugsselective se- cant difference between ef-
the treatment from comrades, rotonin reuptake inhibitors Dr. Sean Mulvaney administers a stellate ganglion block. fects from one stellate gan-
said co-principal investigator but only 20% to 30% see com- glion block and the placebo.
Kristine Rae Olmsted of RTI In- plete remission from the drugs, patients. Among most military the VA pays benefits to those The drug is marketed under Patients showed improvement
ternational, a nonprofit research according to 2014 research led doctors, he said, its not get- suffering from combat-induced the brand name Naropin by after a second injection.
organization hired by the Army by Dr. Difede. ting traction. PTSD. The elite commandos Germanys Fresenius Kabi AG The most obvious explana-
to conduct the study. Physicians such as Dr. Lynch The Department of Veterans who have already become fans and, according to RTI, costs less tion would be that the previ-
Of the 240 patients that re- who advocate use of the stel- Affairs said it has no specific of the injections have the oppo- than $2 a dose. Most patients ously reported benefits for
searchers hope to enroll, 80 late ganglion block say it im- policy regarding use of stellate site incentiveactive-duty require just one injection, al- PTSD were attributable to pla-
would receive a harmless saline proves the effectiveness of tra- ganglion blocks to treat PTSD SEALs and Green Berets usually though some return for a sec- cebo effect, psychiatrist Robert
injection to distinguish the real ditional treatments. among those who have left the want to show improvement so ond shot, doctors said. McLay, then the research direc-
shots medical impact from any The conundrum surrounding military. Doctors use the injec- they can stay with their teams, One of the patients is Dr. tor at Naval Medical Center San
placebo effect. PTSD sufferers the new Army study highlights tions for PTSD on a limited ba- doctors said. Lynchs commander, Brig. Gen. Diego, said at the time. He said
know they can get the genuine both the injections promise sis at their discretion, a VA In the stellate ganglion pro- Donald Bolduc, a Green Beret this year he believes the treat-
injection free from military hos- and the frustration its advo- spokesman said. The depart- cedure, doctors inject the anes- who has served more than five ment is worthy of further study.
pitals without signing up for the cates feel trying to win it wider ment is conducting a small re- thetic ropivacaine in the right years in Afghanistan. He was in- The Army study is intended
study and risking getting a pla- acceptance beyond the special- search project on the injections side of the neck, using ultra- jured by an errant 2,000-lb. to settle the debate.
A8 | Tuesday, June 13, 2017 THE WALL STREET JOURNAL.


VIX kets. Others credit the growth of

passive investing with overrid-
ing the herd mentality that ex-
acerbates panicked selling. And
the perceived odds of a payoff,
akin to the way home insur-
ance costs more on a hurri-
cane-plagued coast than in an
VIX trading as a new risk-man-
agement tool, banking on the
same appeal that had drawn Mr.
Cuban. Trading grew steadily,
A Recipe for Fear
The CBOE Volatility Index has spawned a booming marketplace that
both expresses and inuences how investors perceive risk.
Continued from Page One yet another theory claims VIX untroubled inland suburb. but slowly.
imminent crash, the VIX has trading itself has smoothed the Unlike home insurance, op- Then the financial crisis hit, BASIC INGREDIENTS
morphed into a giant casino of markets jagged edges by allow- tions prices fluctuate constantly serving up a huge marketing op-
its own. ing traders to offset risks easily. as traders react to news and re- portunity. Amid an economic Traders buy and sell It costs
Volatility trading has Whatever the reason, be- assess their risks. Those prices tailspin akin to the Great De- stock-market wagers,
wormed its way into many cor- calmed stock markets have be- feed into the VIX. The CBOE pression, surging unemploy-
called options, to bet to buy an
ners of the investing universe, come a feature of the postcrisis launched the original index in ment, and more than $5 trillion on the direction, But its
S&P 500
including insurance products world. Central bankers have 1993, and it quickly became a erased from the S&P 500, the timing, speed and only
that guarantee retirement in- lulled investors with record-low staple of the financial press. only thing rising in the U.S. was severity of market
come and mutual funds that try interest rates and flooded the It took Wall Street another the VIX, which topped 80 in late
moves. Prices change
to avoid the worst declines. market with cash. Even though decade to figure out the VIX 2008. constantly as traders for an
Once the obscure province of ac- the Federal Reserve is slowly wasnt just a market weather At Barclays PLC, a farsighted reassess the odds 18%
ademics and derivatives experts, withdrawing those supports, vane but also a potential gold few realized access was a big that their wagers will betting on a 5% drop.
volatility is now traded by stocks have lost none of their mine. In the summer of 2002, problem. Trading futures and pay off. The better drop in the
would-be retirees alongside the appeal, notching new highs de- newly minted billionaire Mark options was too complicated the odds, the higher S&P 500 index
most sophisticated hedge funds spite U.S. political turmoil. Cuban called Goldman Sachs and costly for many investors. the price. in June*.
in the world. This leads to the VIX para- Group Inc. looking for a way to The bank instead devised a
Even investors who have dox: The lack of fear scares protect his fortune from a crash. product that tracks VIX con-
never heard of the VIX are ex- some investors who say bloated Because the VIX typically rises tracts but trades on an exchange CBOE VOLATILITY INDEX, OR THE VIX
posed to its gyrations. There is stock prices portend a painful when stocks fall, he wanted to just like any a corporate stock.
an estimated $200 billion in so- reckoning when monetary policy use it as insurance. But there Suddenly anyone with a broker- The VIX synthesizes
called volatility control funds tightens. was no way to trade it. age account could trade like the thousands of options on S&P
that use the VIX to decide Theyre not adding to mar- Devesh Shah, the Goldman pros. The Barclays iPath S&P 500 futures, distilling the
whether to buy or sell stocks. ket stability. Theyre just build- trader who fielded the call, said 500 VIX Short-Term Futures prices into a single number
Tail risk strategies, designed ing a bigger bomb, said Tom he instead offered him an arcane ETN launched in January 2009, that measures expectations
for the velocity of market Recent VIX level
to steer clear of sudden slumps, Chadwick, a New Hampshire fi- derivative called a variance just months before the S&P 500 indicated an
often rely on it. Pensions such as nancial adviser who uses VIX swap, but Mr. Cuban wasnt in- hit a 12-year low. turbulence, called volatility.
outlook for
the San Bernardino County Em- options to help protect his cli- terested. VIX trading exploded. Terri- 10 continued calm.
ployees Retirement Association fied investors piled into Bar-
in California have profited from clayss new product and similar The VIX hit 80 during the

bets the VIX would fall. Asset ones that followed. nancial crisis, implying
managers including Alliance- I think of it as the great de- that anticipated gyrations
Bernstein incorporate volatility mocratization of volatility, said
will average more than
into retirement-date savings Bill Speth, vice president of re-
4% a day during the next
funds, adjusting stock exposure How much the VIX spiked following reports Mr. Trump had pressured search and product develop-
30 days.
based on the severity of market James Comey to drop a probe into former NSA adviser Michael Flynn. ment at CBOE. Investors who
swings. And insurance giant AIG never would have opened a fu-
sells annuities with fees that tures account or traded an op-
rise along with the VIX. tion could and did trade these VIX INSURANCE
Lately, the VIX has been sig- ents portfolios from downturns. Lamenting the lost opportu- exchange-traded products.
naling a near-complete absence He said the Feds policies have nity, Mr. Shah met up with Amid the panic, investors Because stocks tend to But there was no way to
of fear, and the preternatural kept volatility artificially low for Sandy Rattray, a Goldman col- were willing to pay to insure fall much more sharply trade it until 2004 when
calm is making some people so long that the speed of any re- league and erstwhile indexing their portfolios. The costs would than they rise, the VIX CBOE Holdings Inc.

nervous. Opinion is divided on versal will be more severe. buff with a knack for packaging be a drag in bull markets, but typically spikes when launched standardized,

whether it is a bullish signal for When this goes, youre going investment products. What if, looked like a small price to pay stocks plummet, publicly traded VIX
stocks or a worrying sign of to see the mushroom cloud from the pair speculated, they could in the immediate wake of the making it an attractive futures. VIX options
complacency. After all, the VIX Saturn, he said. tap the VIX brand and reformu- crisis. followed two years later.
form of insurance.
also approached a record low in The VIX was conceived after late the index based on their es- It was the Wild West, said
early 2007, just before the sub- the Black Monday crash in oteric swaps? Bill Luby, who quit a 20-year
prime crisis began unspooling. 1987, when the market fell 26% The world wanted to drink consulting career in 2005 to be-
In recent days the VIX nudged in a single day. The measure Coca-Cola, said Mr. Shah, who come a full-time trader. If you FEAR GOES MAINSTREAM
higher, rising more than 10%, as used stock-market bets, known retired from Goldman as a part- knew the landscape, there was a
technology stocks fell. as options, to gauge expecta- ner in 2011. They didnt want lot of money to be made. VIX insurance comes 100%
Cumulative percentage change,
Some analysts see low vola- tions for the speed and sever- the white label. Trading the VIX, however, is at a cost. Exchange- shown monthly, in the price of the
tility as a sign of increased effi- ity of market moves, or what These were the heady days a lot different from watching it traded products iPath S&P500 VIX Short-Term
ciency, where shocks are more traders call volatility. Options after financial deregulation, and on TV, and its idiosyncrasies that track VIX 60 Futures ETN from its inception in
quickly absorbed by the mar- prices rise and fall based on Wall Street was busily securitiz- left some investors feeling futures typically January 2009
ing everything from weather re- burned. No trading strategy lose money in the 40
ports to bundles of sliced-and- can exactly replicate the VIX long term because
Trading on Volatility diced mortgages. Turning the index, and traders rely on of the idiosyncrasies
The CBOE Volatility Index, Wall Streets fear gauge, soared during VIX into something tradable was proxies like futures and op- of futures pricing. 0
the nancial crisis, which kicked off a surge in trading of VIX nothing more than a math prob- tions, which can veer widely
2009 10 11 12 13 14 15 16
derivatives that has continued to this day. lem, Mr. Rattray said. from the VIX itself.
*As of June 9
The pair rewrote the VIX for- VIX exchange-traded prod- Sources: FactSet (data); Macro Risk Advisors, Deutsche Bank,
VIX index mula, expanding it to a larger ucts are especially susceptible to CBOE Holdings, WSJ analysis (explanation) THE WALL STREET JOURNAL.
80 Oct. 24, 2008 VIX hits record universe of stock-market bets this divergence because of the
high as stocks plummet.
and making it possible to create peculiar structure of VIX fu- When the VIX dipped in Sep- past year as market shocks
a tradable futures contract. tures. Uncertainty increases tember, Larry Tabb, president proved fleeting. The ProShares
Their equation synthesizes with time, and the further away and founder of the Tabb Group, Short VIX Short-Term Futures
thousands of trades and distills an anticipated downturn is, the a consulting firm, said he ETF that, like Mr. Miller, shorts
40 them all into a single number more expensive it is to insure thought volatility would rise and the VIX, is up 70% this year.
meant to represent the collec- against. That means VIX futures bought an exchange-traded Pravit Chintawongvanich, head
tive expectations for the market. for this month are typically less product that aims to double the of derivatives strategy for
When the VIX is at its current expensive than next months daily gain of VIX futures. And Macro Risk Advisors, estimated
level of around 10, it implies contracts, which are less expen- even though the VIX rose 28% in that traders and investors now
0 that traders believe the S&P 500 sive than the month after that, October, the VelocityShares have a near-record $512 million
2006 08 10 12 14 16 will move by an average of less and so on. Daily 2x VIX Short-Term ETN at stake for every single-point
than 1% a day during the next 30 Some of the most popular ex- lost money. move in VIX futures.
Average daily volume of VIX futures and options*
days. change-traded products invest It just kept going down and In a twist, the very funds that
The more stocks move, the in a combination of this months down and down, said Mr. Tabb, are meant to protect against
1.2 million contracts higher the VIX goes. Since the VIX futures and next months. who blames himself for not volatility may make any correc-
market typically falls much To maintain their exposure, they reading up on its mechanics be- tion worse, said Rocky Fishman,
1.0 more sharply than it rises, the sell the contracts that are near- fore buying. I got completely an equity-derivative strategist
VIX tends to surge when the ing expiration and buy contracts screwed. with Deutsche Bank. So-called
Jan. 30, 2009
market crasheshence its po- for the following month. Put Janus Henderson Group PLC, volatility control funds aim to
Barclays launches
0.8 rst exchange- tential as insurance. simply, they buy high and sell owner of VelocityShares, de- provide investors with a
traded VIX product. Messrs. Shah and Rattray low almost every day, steadily clined to comment. smoother ride by sidestepping
handed their invention to CBOE bleeding money. A share of the The flip side of the punishing the worst dips. A rising VIX sig-
Holdings Inc., the owner of the original Barclays product, decay favors short sellers, allow- nals the funds to shed stocks in
VIX trademark. bought at its January 2009 de- ing them to profit when volatil- favor of safer assets, accelerat-
0.4 I didnt realize how big it but, would be nearly worthless ity is flat and sometimes even ing the selloff and spooking
would be, said Mr. Rattray, who today. when it rises. Instead of buying other investors into joining the
is now the chief investment offi- This decay is difficult to com- insurance, selling it became the exodus.
0.2 cer for Man Group PLC, an $89 prehend, even for sophisticated new hot trade. Traders like Mr. Rising volatility triggered
billion hedge fund. investors, and leveraged funds Miller see spikes in volatility $50 billion in stock selling dur-
The formula allowed the can compound those losses. such as those ahead of the U.S. ing the market gyrations of Au-
CBOE to cash in its marquee in- Market experts have said the presidential electionas oppor- gust 2015, and $25 billion in the
2006 08 10 12 14 16 dex. The exchange launched VIX products are designed for short- tunities to bet that the VIX will wake of the U.K.s surprise vote
*Through May 17 futures in 2004, and VIX options term tactical trading, not long- quickly collapse again. to exit from the European Union
Sources: FactSet (index); CBOE Holdings (volume) THE WALL STREET JOURNAL. two years later. The firm billed term passive investment. Such bets have paid off in the last year, Mr. Fishman said.

GHOST age. The dispute really

messed up the whole mythos
of the band, one fan com-
plained online. The lawsuit
endure a month in the van.
During concerts around
that time, the band churned
through songs such as Death
face printed next to the num-
ber 666. Friends and audi-
ence members recruited as
sisters of sin dressed up as
sier sent to venues.
When band members
werent on stage or discussing
evolutions in Ghosts devilish
Not the darkness of which
Ghost sings, but a darkness
that pushes a person to be-
tray his best friends when
Continued from page A1 reduces them all to boring, Knell and Satan Prayer. At nuns to administer the ersatz mythology, they grappled with fame and fortune appear
The bands lead singer, Papa flawed people. one point, Papa handed out communion. the earthly concerns of road within reach.
Emeritus, pairs skeletal face Kathleen Higgins of Halifax, unconsecrated communion wa- Backstage protocol was life. In the cramped confines Ghosts anonymity is a
makeup with a pope hat bear- Canada, a pet-store manager fers and sang about the stench more basic. A list of requests of the tour bus, sleeping throwback to the 1970s, when
ing an inverted cross. whose husband plays in a of dead human sacrifices. sent to concert venues, ob- schedules conflicted, recalls groups like Kiss shrouded
He performs while flanked Ghost tribute band, avoided Afterward, one of the tained by The Wall Street Mr. Persner. Debates about themselves in sinister mys-
by musicians known as news of the lawsuit online and Nameless Ghouls was tasked Journal, included Ghosts de- which restaurants to eat at tery. Pre-Wikipedia, fans had
Nameless Ghouls who wear said she was bummed out by with cleaning the bands mands for cold cuts, beer and were common. to piece together group lore
silver-horned, mouthless the bands money squabbles gamey vestments in his apart- The ultimate behind-the- by poring over music maga-
masks. Without revealing and mundane affairs. Its like ment buildings communal scenes clashes, however, were zines, album liner notes and
their faces, the band walked watching a Broadway show. washing machine in Sweden. about money. Mr. Forges legal urban legends.
the red carpet at last years When I saw Phantom of the It was like getting the
Ghosts anonymity response to the Ghouls suit, To be sure, some inquisitive
Grammys and accepted an Opera as a child I wasnt in- whole football teams dirty is a throwback to the filed last week, describes and savvy Ghost fans were
award with Papa proclaiming terested in who the actors wash, Martin Persner, the showdowns over the bands able to ferret out details about
that a nightmare has turned were or what they ate for former Ghoul, said in an inter-
1970s and groups salaries, and claims the Ghouls the musicians before they
into a dream. breakfast, she said. view. Minutes from a band like Kiss. were never more than musi- were exposed in the suit. But
Four Nameless Ghouls are In character, Papa is a sort meeting included with court cians for hire. Their lawsuit for the band, concealing their
now suing Papaa 36-year- of occult sect leader who documents noted him raising destroyed the mystery of everyday identities was just a
old whose real name is Tobias leads audiences in chants of concerns about the dank ward- Ghost, Mr. Forge said, and way to amp up the theater.
Forgein a Swedish court. Belial, Behemoth, Beelzebub, robe situation and asking if it room-temperature bottled wa- their anonymity made them The goal was to fuel rumors
They have accused him of fi- Asmodeus, Satanas, Lucifer, was possible to do laundry at ter. The band stipulated that replaceable. He didnt respond and to create something
nancially shortchanging them incantations in the song the concert venues. Mr. Per- bananas remain bagged in the to requests for comment for larger than five dudes. Like
and reneging on an agree- Year Zero. But ahead of the sner, a longtime Ghost guitar- catering area due to a very this article. comic book characters, said
ment to make them partners bands 2013 American tour, ist who left the band last year, severe banana allergy among Papa Emeritus recently de- Mr. Persner, who went public
and distribute the bands the frontman was especially didnt join the other Ghouls in the traveling crew. buted a new set of Nameless separately in a YouTube reveal
profits equally. excited about Ghosts trans- filing suit. At each tour stop, they Ghouls, with no announcement meant to promote his own
The suit identified all the portation upgrade. As Ghost ascended in pop- asked for six local postcards to fans. The band launched a band, Magna Carta Cartel.
bands members and has di- It will be a real tour bus ularity in recent years, its plus stamps (YES WE REALLY U.S. tour earlier this month. Being shrouded in a cloak
vided fans world-wide. Some on the U.S. bit! Mr. Forge concertsknown to fans as WANT THESE), along with The former Ghouls who and mask had practical ad-
have pored over the court doc- wrote to the band in an email ritualsbecame more elab- good chocolate (NOT HER- filed suit declined interview vantages, too. There was
uments and soaked up the be- included in the suit. Had we orate, featuring faux stained SHEY!) and quality food. You requests. In a statement re- never a bad hair day, said
hind-the-scenes details, while taken the van we would [have] glass and burning incense. A are what you eat and in this leased in April, they accused Mr. Persner.
others resent the revelations gotten a minimal profit, but confetti cannon shot fake regard we want to stay Mr. Forge of unabashed dis- Neanda Salvaterra
for ruining Ghosts spooky im- not sufficiently large for us to money with Papas scowling healthy, Ghost noted in a dos- honesty, greed, and darkness. contributed to this article.
THE WALL STREET JOURNAL. Tuesday, June 13, 2017 | A9


FITNESS | By Rachel Bachman

Your Gyms Tech Is Getting Smarter

From cardio equipment that can talk to your Apple Watch to sensors that track your movements, new tools surface at health clubs
FROM THE Apple Watch to eagle- talk to new members via instant tion from sensors will help the
eyed sensors, digital technology is messaging. Equinoxs chatbot club help members achieve their
going ever further to embed itself reaches out to new members weekly goals. The more engaged members
into your health club. for the first month, encouraging are with the club, the more often
These advances promise exercis- them to set goals and nudging them they show up and exercise, she
ers everything from smoother when they fall short. It also re- says.
workout starts to better data to in- sponds when they send a message. I would say that everyone to-
creased gym attendance. However, In a recent monthlong test at all day understands that theyre being
tech-savvy gym rats concerned 88 Equinox clubs, new members tracked, Ms. Leondakis says, cit-
about privacy should remember who used the chatbot visited the ing a shopper browsing for shoes
that they can always opt out. club 40% more often than new on a website.
This fall, an update to Apple members who opted out, according The aim is to install the sensor
Watchs operating system launches to Samir Desai, Equinox chief in- system at all clubs, Mr. Desai says.
a feature called GymKit, which will formation officer. The chatbots Equinox says its members are asked
allow the watch to link to most first goal is to get people coming if they want to allow the app to
major cardio-equipment brands to the gym, since people who dont track their location and can opt out.
available at gyms by tapping the form that habit in the first few Bay Area-based Active Wellness
watch to an enabled machine, says months are likely to drop their is going further. It manages about
Jeff Williams, Apples chief operat- membership. 60 fitness locations across the
ing officer. At four clubs in New York, Equi- U.S., mostly in corporate settings.
On a treadmill, for instance, the An update to the Apple Watch operating system this fall will allow users to nox has also installed sensors to In its Oakland, Calif., club, Active
machine will track speed, workout capture data from a workout by tapping the watch to a cardio machine. track members through their Wellness is testing a facial-recog-
duration, incline and distance cov- smartphones while theyre in the nition system designed to let
ered. The watch will track heart anticipates the Apple Watchs new ples director of fitness for health club. The sensors can tell when a members breeze in without a card
rate, and use a combination of connectivity will boost the number technologies. member regularly runs on a tread- or digital swipe, and track mem-
treadmill data and its knowledge of tracked workouts. Bryan ORourke, a fitness-in- mill, for instance, and prompt a bers in most places except locker
of user age, sex and body type to A simpler connection to cardio dustry consultant specializing in message suggesting the person try rooms and bathrooms.
calculate calorie count. All data machines will remove a step or technology, says Apple Watchs one of Equinoxs Precision Running Mike Rucker, Active Wellnesss
from the workout will beam to the two from groggy morning routines move is part of a larger push to classes. vice president of technology, ac-
Apple Watch, but the watch wont and could give Apple Watch an integrate easy-to-use technology Nadine Kerstan, a 45-year-old knowledged some members reser-
share any user data with the car- edge in the wearables market, into health club members lives at holistic health coach in South Or- vations about the system. Mem-
dio equipment, Apple officials say. where it is playing catch-up two the gym and elsewhere. Tradi- ange, N.J., joined Equinox about a bers can opt out, he says, but
For the past few years, gym-go- years after its launch. About 7% of tional health clubs are facing year ago. She enjoys the guided facial recognition could create
ers have been able to connect to adult consumers own a smart- more competition from specialty meditations she listens to through more seamless gym experiences in
cardio equipment through various watch, compared with 18% who fitness boutiques and online- Equinoxs smartphone app. But the the near future.
smartphone apps. But it is a patch- own a wearable fitness tracker, ac- streaming workout services. concept of sensor-tracking is a lit- Imagine a world where you
work system, and many people cording to the NPD Group. Another New York-based health club chain tle creepy, she says. I dont want step on a treadmill that automati-
skip it and leave their data locked perk: not having to use the cardio Equinox is testing a smartphone- to feel like Big Brother is watching cally adjusts to all your favorite
in machines. console. Who wants to punch in based chatbota computer pro- me at the gym. settings, Mr. Rucker says. And
A spokeswoman from equip- your weight before you do your gram that uses artificial intelligence Niki Leondakis, CEO of Equinox literally without touching a button,
ment maker Life Fitness says she workout? says Jay Blahnik, Ap- to simulate human conversationto Fitness Clubs , says the informa- youre ready to go.



Alan Alda, 81, is a film, stage My mother was tender and
and TV actor who has won easily hurt. One day when we
seven Emmy awards. He is the were in Amsterdam just be-
author of If I Understood fore I spent my junior year in
You, Would I Have This Look college in Paris, she innocently
on My Face? (Random said, Your father and I are in
House). He spoke with Marc Amsterdam, and youll be in
Myers. Paris. You can come up and
visit us.
When I was 31, I bought the I said, Im not coming up
Beatles Sgt. Pepper just after to see you all the time. My
the album came out in June mother became upset and
1967. The more I listened to it, walked ahead of me. It was
the more the album felt like a difficult to catch up to her.
collection of really sharp show tunes. It was The Beatles song opens with a strangely
so unlike anything else. SHES LEAVING anxious harp solo. When Paul McCartney be-

HOME is still a favorite and deeply personal. gins to sing the songs narrative, hes backed
Listening to the song today, Im left with by a sorrowful cello and strings. The ar-
a grateful sense of melancholy. The songs rangement is haunting.
lyric is beautifully constructed and illus- Meanwhile, John sings the parents per-
trates both sides of the chasm between car- spective as a Greek chorusWe gave her The Beatles in their Sgt. Pepper days, photographed in 1967.
ing parents and a newly independent child. most of our lives. In the song, the daughter
Looking back, I wish I had made it easier leaves a note that she hoped would say called an incident with one of my daughters Later, she called to apologize. I said, I
on my parents when I was trying to break more, while her parents wonder, How could many years ago, when she was still in col- didnt mind. I thought you were just being
free. Im sure I hurt them many times by she do this to me? Two inner voices, each so lege. After she failed to win an audition, I colorful. But it was more than that. Now I
saying what I felt or thought without soft- far from understanding the other. wasnt as sympathetic as I could have been. realize that her outburst was probably the
ening the blow. Recently, I listened to the song and re- She told me off in blunt terms. very moment she emotionally left home.
A10 | Tuesday, June 13, 2017 THE WALL STREET JOURNAL.

A French Charter
Americas Steel-Trapped Minds Of Integration
onald Trump has ordered a national April U.S. Steel slashed its annual profit fore-
security review of steel imports with cast to invest in retrofitting decades-old mills. Frances President Em- think-tank, Institut Montaigne, last year
manuel Macron, know- came up with some interesting results
a goal of justifying a broad-based tariff. Improvements in technology and workflow are
ing only success in his on the 5.6% of Frances population that
If his advisers look honestly at the main reasons the U.S. first month in office, it counts as Muslim.
the evidence, they cant possi- A new Trump steel steel workforce has shrunk has yet to act on one of The study found that 28% of those
bly find enough to justify such tariff would crush his and survived an onslaught of his most quietly an- Muslims have adopted value systems
a job-killing, economically competition. nounced goals: dealing clearly opposed to the values of the Re-
harmful policy. forgotten workers. Yet U.S. foundries are still EYE ON
with Islam in France. public. Hold that up alongside an esti-
Start with the fact that U.S. running at only 71% capacity By John
Hes pledged affirma- mate a year ago from former Prime
steel prices are already higher while imports make up a tive-action measures, Minister Manuel Valls that only 1% of
than in the rest of the world, and the gap has quarter of the U.S. market. One reason is that zero tolerance on secu- French Muslims are Salafists support-
significantly widened over the past five years most advances in high-strength steel have oc- rity and a determined ing jihadism.
amid increased import duties. In 2012 the aver- curred overseas. Many downstream consumers policy of reconquest of the Republic in Boualem Sansal, an Algerian novelist,
the countrys no-go, Islamist-controlled recently told a French reporter that when
age price of cold-rolled coil produced in the say domestic steel doesnt meet industry qual-
enclaves. it came to Islamism or political Islam,
U.S. was 11.5% and 12.1% higher than the Chi- ity or safety standards. Mini-mills produce Tall order. Taller still, even in Mr. Ma- Mr. Macron didnt grasp Frances No. 1
nese and Southern European equivalent. This lower-grade metal thats suitable for roads and crons current state of grace, considering problem. The Islamists in France think
year U.S.-made steel is 34% and 27% more ex- buildings, but not as much for automotive historys great Reconquista took more in terms of conquering neighborhoods,
pensive, respectively. sheet or appliances. than 700 years. not states, Mr. Sansal said.
American steel makers cry dumping, but This excess capacity should moot natural se- In the context of Frances battle with
is every foreign company in every country curity concerns. Defense consumes less than 3% homegrown Islamist terrorism (Mr.
dumping? The U.S. Commerce Department has of domestic steel, and U.S. foundries would have Macrons verbal escalation over former Defining the relationship
already imposed 152 antidumping or counter- plenty of spare capacity to ramp up production President Franois Hollandes obscu-
rantism) and its hundreds of French between Muslims and the
vailing-duty orders on imports from 32 coun- in wartime. Canada, Mexico and South Korea
tries, and many more cases are pending. Com- accounted for 40% of imports last year, while dead, the details of the new presidents state and setting an example
approach to restraining Islamism are
merce charged South Korea and Turkey with China and Russia together provided 7%. few. So far, they have nothing to do with for the rest of Europe.
dumping welded line pipe in 2015 and last year The greatest harm from broad-based steel a unifying charter of national civiliza-
slapped duties on imported cut-to-length steel tariffs would be to the thousands of American tion that would represent a binding so-
plate from Brazil, China and Turkey. Antidump- businesses and workers that use steel. These lution for an Islamic presence that has Perhaps Mr. Macron should talk to
ing duties contributed to a 25% decline in for- would include the higher cost of American steel been described by the intellectual Alain Grald Darmanin. Hes the presidents
eign imports between 2015 and 2016. for construction (42% of steel shipments), auto- Minc as a subterranean territory within budget minister with a part-Algerian her-
Domestic steel makers have exploited these motive (27%) and machinery (9%). Public works French society. itage who, as mayor of Tourcoing, the
protectionist measures to raise prices and boost and homes would cost more to build. Instead, the presidents announced northern French town with a large Mus-
their bottom lines. Last year Nucor posted an Many U.S. companies that compete globally priorities are the moralization of lim population, had refused to approve a
11.9% profit before taxes, depreciation and would risk losing business to overseas competi- French politics (dont hold your breath) building permit for a minaret.
and, in order to restore international Mr. Darmanin said last year that Is-
amortization. AK Steels margins have doubled tors. Some would turn to substitute materials
confidence in Frances economic stabil- lam has to adapt to the Republic and not
in two years to 8.5% while Steel Dynamicss has such as plastic or aluminum, tweak their supply ity, the difficult reform of the rigid vice versa. To establish this relation-
increased by half to about 15%. chains or move production overseas. Auto mak- French labor code. ship officially, making clear that French
Commerce Secretary Wilbur Ross nonethe- ers would likely utilize more high-strength alu- When it comes to drawing Muslims law and values have precedence over
less says that antidumping duties are not able minum and shift more production to Canada closer to France, Candidate Macron any interpretation of the Quran, he
to resolve the broader structural economic and Mexico. American steel workers could even spoke of reducing class sizes in schools urged that there has to be a compact or
harm to the U.S. steel industry caused by mas- be harmed if demand for steel drops as users in difficult neighborhoods and giving state agreement.
sive global overcapacity and unfair foreign adapt to higher prices. employers 15,000 ($16,800) over three A covenant of this kind would create
competition. His beef is that China, which ac- There are 16 times more workers employed years for each new open-term hire from an Islamic consistory in France with le-
counted for nearly half of the worlds output today in U.S. steel-consuming industries than those neighborhoods. gal status equal to that of similar Roman
last year, has driven down global prices and in- the 150,000 or so American steelworkers. A That, for now, is it on affirmative ac- Catholic, Protestant or Jewish bodies. As
tion (discrimination positive, in French) was the case with the Jews more than
creased pressure on U.S. steel companies. study by economists Joseph Francois and
which Mr. Macron said in March hell 200 years ago, Muslims could be asked
The reality is that foreign competition forced Laura Baughman found that more American take on totally. His predecessor, Mr. to pledge to defend France ahead of all
the U.S. steel industry to become more effi- workers lost jobs (200,000) after George W. Hollande, had experimented with a simi- other considerations.
cientor at least it did before the tariff walls Bush imposed steel tariffs in 2002 than were lar but no-name employment inducement With Muslims representing an esti-
began going up. Over the past four decades, employed in the entire steel industry at the for two years before dropping it. mated 5% to 6% of the French voting
production has shifted from unionized inte- time (187,500). The result was $4 billion in And the reconquest of the Republic population, Mr. Macrons subordinate fo-
grated mills that use blast furnaces and iron ore lost wages. remarks? cus on their role buys him momentary
to lower-cost mini-mills that employ electric The case against steel tariffs is so over- They received virtually no media at- calm to solidify power through another
arc furnaces, scrap metal and nonunionized la- whelming that its hard to believe even Mr. Ross tention. In spite of last months election remarkable performance in the second
bor. Steel from integrated mills makes up a can find a way to justify it. The motivation defeat of Marine Le Pen, and a consis- round of legislative elections Sunday.
tent majority view in France that the But dealing with the issue of Islam
third of domestic production, down from about could only be to assist the politically clamorous
failure to integrate Muslims is a Muslim- head-on, comprehensively and soonof-
three-quarters in 1980. owners of a handful of steel companies that made problem, broad political discus- fering job and educational opportunity
Domestic manufacturers that were slow to would exploit government favoritism to raise sion of Islam remains couched in euphe- while achieving real accommodation of
adapt, such as Bethlehem Steel, have gone out prices. The losers would be millions of the so- mism. The talk is instead of migrants, French valueswould be a profound
of business while leaner steel makers that have called forgotten men and women the President the suburbs (a verbal stand-in for Mus- statement of Mr. Macrons authority. He
embraced new technologies are prospering. In vowed to help during his campaign. lim-majority enclaves), or communau- cannot fail to try.
tarisme (referring to the total rejection As far as a reconquest of lost terri-
of French law and values in many Mus- tory goes, thats a lot of verbal reso-
Hezbollah in New York lim-majority housing projects).
Who these Muslims are, or their num-
nance bound in with a much smaller
practical reality. Still, a charter of inte-

ederal prosecutors have charged two in Panama that included the American and Is- ber, is left vague by the state, which con- gration, setting an example for Muslim
siders precise information on the subject relationships with the rest of Europe,
U.S. citizens with providing material raeli embassies as well as the Panama Canal.
potentially discriminatory. But a liberal could be considered progress.
support to Hezbollah and helping the Attorneys for the two men didnt respond to
Iranian-backed Lebanese ter- media inquiries.
ror group prepare potential The feds say the Iran- Mr. Debeks alleged Pana-
attacks in America and Pan- backed militia recruited manian operations are consis-
ama. The charges, announced tent with Hezbollahs pres-
The Robot-Human Alliance
Thursday after the men were agents in the U.S. ence across Latin America By Ken Goldberg ests, was developed by Leo Breiman and

arrested June 1, show that that goes back to the bomb- Adele Cutler at the University of Califor-
Irans terror proxies roam far ings of the Israeli embassy umans have been beaten by a nia, Berkeley. They proved that in com-
beyond the Middle East. and a Jewish community center in Buenos Ai- machine again. Last month the plex problems with noisy data, a group of
The FBI and New York Police Department res, in 1992 and 1994 respectively, killing more worlds top-ranked player of Go, decision trees will always outperform a
an abstract strategy board game, lost to single treeso long as the trees are suffi-
carried out the investigation, which resulted in than 100 people.
Googles AlphaGo program. This ciently diverse.
a raft of terror-related charges for naturalized In 2011 U.S. investigators foiled a plot to kill marked a major achievement for ma- By the same token, the benefits and
citizens Ali Kourani of the Bronx and Samer el the Saudi ambassador at a Washington restau- chine learning. challenges of human diversity have been
Debek of Dearborn, Mich. Prosecutors say Hez- rant, leading to a guilty plea by the would-be What might be more important, recognized for centuries in political sci-
bollah recruited the men as operatives, pro- assassin. Hezbollah was also behind a 2012 bus though, went less noticed: Around the ence, economics and sociology. Experi-
vided them with military-style training, then bombing in Bulgaria that killed five Israeli tour- same time, some of the worlds top Go ments on group problem-solving show
gave them a variety of ominous tasks. ists and their local bus driver. players began competing alongside the that the diversity of the people involved
Prosecutors in the Southern District of New Iran bankrolls Hezbollah to the tune of $200 AlphaGo program in human-machine is more important than their total IQ.
York say the 32-year-old Mr. Kourani con- million annually and provides most of the teams. The players learned new strate- Perhaps the most exciting area of ma-
ducted pre-operational surveillance of mili- 80,000 missiles the group points at Israel. The gies by studying AlphaGos previous chine learning is deep learning, in which
games and said working with the pro- millions of parameters are tuned based
tary and law-enforcement sites around New latest allegations are a reminder that the Teh-
gram gave them new confidence. on diverse training examples of speech or
York as well as Kennedy Airport. The feds al- ran regime still deserves its reputation as the Most computer scientists agree that images that have been labeled by people.
lege that Mr. Debek, age 37, staked out targets worlds leading state sponsor of terror. predictions about robots stealing jobs In robotics, too, the exciting progress,
are greatly exaggerated. Rather than especially in autonomous driving, can be
worrying about an impending Singular- characterized in terms of Multiplicity.
Macrons French Sweep ity, consider instead what we might call Data from a varied group of human driv-

Multiplicity: diverse groups of people ers is combined to demonstrate appro-
mmanuel Macron is looking like more right rival, the National Fronts Marine Le Pen. and machines working together to priate responses to varying conditions,
than a one-election wonder. On Sunday The legislative races suggest voters prefer Mr. solve problems. and to train multiple statistical machine-
the new French Presidents upstart po- Macrons reform vision over what the tradi- Multiplicity isnt science fiction. A learning algorithms that run on distrib-
litical party, La Rpublique tional parties are offering. So combination of machine learning, the uted hardware.
Voters bolster wisdom of crowds and cloud computing The systems must be continuously up-
en Marche, swept the first when labor unions hit the
already underlies tasks Americans per- dated and fine-tuned based on changes in
round of elections for the Na- the new Presidents barricades and set tires form every day. Consider Googles search road, weather and traffic conditions, and
tional Assembly, the lower alight to protest his reforms, engine. It runs on a set of algorithms as human expectations evolve. All this re-
house of Parliament. If the reform mandate. Mr. Macron can point out with input from a large number of human quires a continuing feedback cycle with
results continue through the that they represent an un- users who share valuable feedback every people at the core.
second round Sunday, Mr. popular special interest. time they click on or skip over a link. Collective intelligence with artificial
Macron will have a sturdy mandate to repair A big majority in the National Assembly Multiplicity allows Amazon to recom- intelligence enables many of the most so-
Frances broken economy. will also permit Mr. Macron to enact his re- mend books, Netflix to suggest movies phisticated and effective systems in use
Turnout was a historic low 49%, but En form agenda via legislation rather than rely- and Facebook to organize newsfeed today. If people stopped providing input,
Marche and its smaller centrist ally, Modem, ing on brittle Presidential decrees. With posts. Millions of people show their pref- these systems would quickly become out-
qualified for the second round in nearly every more than two-thirds of the Assembly in his erences by clicking, and that data is used dated and would deteriorate.
to build and maintain statistical models Despite years of experience in human
constituency where they fielded candidates. camp, he could be more ambitious in tackling
that predict what users want. factors and human-machine interfaces,
Mr. Macrons party came first with 32% of the Frances job- and growth-killing taxes and The key is clustering people and more research is needed on the best
vote overall, thumping the center-right Re- regulations. products, which allows the algorithm to ways to combine diverse groups of peo-
publicans (22%), the hard-right National Start with the 35-hour workweek. Mr. Ma- make recommendations under the as- ple with diverse groups of machines.
Front (13%) and the center-left Socialists cron during the campaign vowed to keep the sumption that similar people have simi- The important question isnt when ma-
(10%). Smaller far-left parties divided the law intact while giving firms more room to ne- lar tastes. A continuing stream of human chines will surpass human intelligence,
rest of the ballots. gotiate overtime. But abolition is the real cure interaction ensures that the system but how humans can work together with
These results could translate into some for a measure that discourages job creation, evolves as new items are introduced and them in new ways.
400 En Marche seats out of 577 once the sec- and the former investment banker should as tastes change. Multiplicity is collaborative instead
ond round is complete. This is an astonishing make the case for it. While scientists still dont under- of combative. Rather than discourage
feat for a party that didnt exist a year ago stand Multiplicity very well, they are the human workers of the world, this
Mr. Macrons meteoric rise in politics is im-
discovering clear benefits to machine new frontier has the potential to em-
as well as a rebuke to the countrys tradi- pressive, but the real test will be whether he diversity. Researchers have developed a power them.
tional political class. can put Frances 10% unemployment rate on family of techniques known as ensem-
The legislative election is inoculating Mr. a downward trajectory and accelerate a GDP ble learning, in which a set of special- Mr. Goldberg, a professor of engi-
Macron against the antireform lefts accusa- growth rate stuck at zero to 1%. With a bigger ized algorithms work together to pro- neering at the University of California,
tion that he is in the lyse Palace only be- majority should come bigger reform goals to duce a single result. Berkeley, is director of the People and
cause the French wanted to keep out his far- restore the vitality of France. One variant, known as random for- Robots Initiative.
THE WALL STREET JOURNAL. Tuesday, June 13, 2017 | A11


Comey Closes the CaseAlmost The Trump

By Peter J. Wallison that would determine the outcome of
Budget Still

the 2016 election.
ow we know, thanks to
former FBI Director
Similarly, Mr. Mueller probably will
scold Mr. Trump for his actions, which
James Comeys testimony certainly violated normal Washington
last week, that President
Trump wasnt a target of
protocol, but say ultimately that pros-
ecution isnt warranted.
The Military
the investigation into Russian med- There isnt even much for Mr.
dling in the 2016 election. Mueller to investigate. Only two peo- By Mac Thornberry

Thats by far the most important ple are involved, Messrs. Trump and
thing Mr. Comey said. For a year, the Comey, and the latters testimony is sk anyone who served in the
FBI has been looking into possible the only evidence Mr. Mueller needs. U.S. military in the late
collusion between the Trump cam- He could make the decision 1970s, and he will tell you it
paign and Russia, and apparently promptly, allowing the president and was a miserable time. Morale was
there wasnt enough evidence to Congress to turn to the important low. Training was deficient. Weap-
make Mr. Trump a target. That news domestic and foreign issues America ons and equipment didnt work.
should put to restas the president faces. Mr. Comeys failure before last Good people left the armed ser-
had hopedan allegation that, if week to acknowledge publicly that vices in droves.

true, would undoubtedly have caused Mr. Trump wasnt a target of the At the same time the world was
even Republicans in Congress to con- Russia probe shows the damage un- growing more dangerous, with the
sider impeachment. necessary delay can do. Soviet invasion of Afghanistan, the
But Mr. Comeys testimony has put What might have foreclosed this Iranian revolution and hostage cri-
another question on the table: President Trump and then-FBI Director Comey at the White House on Jan. 22 favorable outcome, however, is the sis, and multiple nations falling to
whether the president attempted to presidents unnecessary challenge communism.
obstruct justice. According to Mr. was couched as a wish: I hope you Under this conventional analysis Friday to Mr. Comeys account. Never A decade later the situation had
Comey, he met with Mr. Trump pri- can see your way clear . . . of the executive branch, the president one to leave well enough alone, Mr. turned around. How did America go
vately in the Oval Office while the FBI Similarly, the presidents desire is authorized to direct or counter- Trump accused Mr. Comey of lying from the hollow military of the
was investigating former national se- for loyalty is not unusual. All presi- mand investigations or prosecutions and offered to give his own testi- 1970s to the strength that helped
curity adviser Mike Flynn. I hope dents expect loyalty from those in by the Justice Department, which mony. That sets up a conflict that the drive the Soviet Union out of exis-
their administrations. The executive acts on his authority alone. Thus, the media will treat as a test of Mr. tence? Are there lessons we could
branch cannot function if subordi- president cannot be guilty of obstruc- Trumps honesty. apply today?
The presidents insistence nates arent loyal to the president. tion of justice unless he attempts to Unless there are tapeswhich
Leaks are evidence of this. obstruct an investigation of himself, would raise even more questions
on disputing the former In addition, Mr. Comey reported as in Watergate. this is a challenge the president will After the stagnant 70s,
directors testimony was a Mr. Trump said several things that We dont know how many times lose. His exculpatory recollections un-
Presidents Carter and
are inconsistent with an intent to dis- past presidents have instructed the der oath, whatever they are, will not
needless complication. rupt the investigation generally. Justice Department to prosecute, or be more credible than Mr. Comeys Reagan boosted spending
The most serious part of the in- not, a criminal case. When the contemporaneous memorandums.
quiry relates to the Trump cam- House voted in 2012 to hold Presi- If that is Mr. Muellers finding, by double digits annually.
you can see your way clear to letting paigns possible collusion with the dent Obamas attorney general, Eric the president will have given his en-
this thing go, Mr. Comey says the Russiansclearly an impeachable of- Holder, in contempt for failing to emies the priceless opportunity to
president told him. The former FBI fense if it occurred with Mr. Trumps turn over documents, who directed claim he lied under oath, an im- A few months ago the vice chiefs
chief testified that the president also knowledge or direction. Mr. Comey that he not be prosecuted? It isnt peachable offenseat least in Re- from each branch of the U.S. mili-
asked him for loyalty. Mr. Trump reports Mr. Trump as saying if there publicly known how often this hap- publican eyes when President Clin- tary appeared before the House
later fired Mr. Comey, possibly be- were some satellite associates of his pens, but Mr. Mueller and the rest ton was in the dock. Armed Services Committee, which I
cause he hadnt shown it. who did something wrong, it would of the professionals in the Justice But the situation isnt irretriev- lead. Their testimony certainly got
As this national obsession contin- be good to find that out. That clearly Department certainly know. That able. Mr. Mueller could still say the my attention. Only three of the
ues, there will be heated discussions indicates Mr. Trump wasnt trying to adds further ambiguity to Mr. Muel- presidents testimony would change Armys 58 Brigade Combat Teams
about whether Mr. Trumps state- keep the FBI from investigating the lers decision. nothing and neednt be taken, since are ready to fight tonight. More
ments and actions, and the sur- Russia collusion issue. The idea that on this limited evi- Mr. Comeys statements and memo- than half the Navys airplanes can-
rounding circumstances, were an ef- These factual ambiguities alone dence Mr. Mueller would find the randums simply dont make out a not fly because they are awaiting
fort to obstruct justice. The answer: make the case for obstruction of jus- president obstructed justice, and thus case of obstruction. Mr. Mueller maintenance and spare parts. The
Given what we know, there is very tice far less than clear-cut. Legal and set in motion proceedings that could would face merciless media and Dem- Air Force is short 1,500 pilots and
little chance Special Counsel Robert political considerations militate in unseat the winner of a presidential ocratic criticism for cutting this cir- 3,000 mechanics, and its fleet is
Mueller will bring an obstruction the same direction. election, is a dream of the resis- cus short. older and smaller than ever.
charge. There is a strong argument that, as tance, but it isnt credible. But if he is the man of integrity ev- All that is alarming enough, but
For one thing, the facts are ambig- a matter of law, the president cannot The smartest thing ever said about eryone has averred, he will follow this what surprised me most was testi-
uous. Yes, Mr. Trump asked Mr. be criminally guilty of obstructing jus- Mr. Comeys approach to the Hillary course for the good of the country. mony that pilots today get fewer
Comey to abandon the investigation tice if he simply orders the FBI direc- Clinton email issueshaming her in training hours in the cockpit than
of Mr. Flynn, but he didnt order it tor not to investigate someone. All ap- public but refusing to recommend Mr. Wallison is a senior fellow at during the dire days of the 1970s.
something that, as president, he had pointed officials are the presidents prosecution of what was clearly a se- the American Enterprise Institute. He How did this happen? Since 2010
the authority to do. As Mr. Comey re- subordinates, and he is responsible for, rious crimewas that the FBI direc- was White House counsel in the Rea- the defense budget has been cut by
membered the presidents request, it and has authority over, their actions. tor didnt want to make a decision gan administration. more than 20%, but the world
hasnt become 20% safer.
To get planes, ships and equip-

In Iran, Radio Liberty Doesnt Live Up to Its Name ment ready to deploy to the Middle
East or elsewhere, the military has
had to take parts off other planes,
By Sohrab Ahmari The story went on to claim that Still another article, published in McCain in a 2012 article. But he said ships and units. This cannibalization

Ahmad Dawabsheh, a 6-year-old Pal- February 2017, concerned Israels de- the other instances arose from has diminished American readiness.
resident Trump is hiring a chief estinian boy who eight months ear- cision to deny a visa to a researcher quotes, or came from opinion pieces, The military isnt prepared to carry
executive for the Broadcasting lier survived an arson attack by with Human Rights Watch. The story or were otherwise in line with the out all the missions it may be asked
Board of Governors, the federal hard-line Israeli settlers, had been failed to note that the researcher had kind of political observation fre- to do in a time of war.
agency that oversees Voice of Amer- transferred to Spain for treatment participated in the movement to boy- quently found in news analysis. What is the answer? Rebuilding
ica and other media outlets charged of wounds sustained in the flames, cott the Jewish statecontext Irani- Yet RFE/RL couldnt point to any the military after the 1970s took se-
with beaming light and liberty into and Israel still hasnt arrested any- ans deserved to know. instances in which Democrats or sup- rious and sustained effort. When
closed societies world-wide. Politico one on suspicion of carrying out the porters of the deal were labeled ex- the Soviets invaded Afghanistan, the
reports the leading contender is Mi- attack. tremistsor with other pejoratives Carter administration raised de-
chael Pack, a conservative filmmaker Again, incorrect. Israel had two The Persian-language like peaceniks or hippies. As a fense spending by 12% in 1979 and
and president of the Claremont Insti- months earlier indicted two Jews, taxpayer-funded broadcaster, RFE/RL 15% in 1980.
tute. Whoever gets the job faces an charging one with murder over the service too often parrots has a particular duty to refrain from Ronald Reagan added even more:
uphill battle to reform an agency that attack, which killed Ahmads parents state media and doesnt partisanship when reporting on 17% in 1981 and 18% in 1982. After
has lost its sense of mission. and 18-month-old brother. Iranians American politics. that the rate of growth slowed a
To get a feel for the dysfunction, relying on Farda to understand these give Israel a fair shake. Perhaps most dismaying are the bit, but in all there were five
consider Radio Farda, the Persian- events were given the false impres- stories that seem to be borrowed straight years of double-digit in-
language component of Radio Free sion that Israel is a place where Jews wholesale from state-run Iranian creases followed by three more of
Europe/Radio Liberty. With an an- kill Arabs with impunity. Nenad Pejic, Mr. Pejic countered that a three- media. nearly 10%. At that point the de-
nual budget of $117 million, RFE/RL a former Balkan correspondent who paragraph squib didnt allow room An April 2016 Farda headline fense budget was about 6% of
is supposed to serve as a surrogate now serves as RFE/RLs Prague-based for elaboration. Yet Farda published quoted President Hassan Rouhani to Americas gross domestic product.
press in 23 countries across Europe editor-in-chief, conceded in an email a second, much longer story on this the effect that If It Werent for Irans Today its only 3.1%.
and Asia that restrict media free- that the stabbing story that also dis- incident that still didnt divulge the Assistance, ISIS would Have Captured Repairing the damage done to
dom. Farda is one of its most impor- cussed the Dawabsheh case had been researchers anti-Israel views. Baghdad and Damascus. Another, the military in our time will require
tant broadcasters, intended to give inaccurate. Then there is Fardas coverage of from November 2016, read: Irans a similar sort of response. Its
Iranians a rigorous, fair and morally Heres a Farda headline, from a President Obamas nuclear diplo- Deputy President Visits Shiite Festi- wrong to send brave men and
credible alternative to propaganda March 10, 2016, news brief: Three Pal- macy. At least five stories, published val in Iraq. women out on missions for which
from Tehran. estinians and One American Killed in between 2012 and 2017, described Like any item that might appear in they arent fully prepared or with-
But Farda too often fails to deliver. Clashes in Israel. The implication of critics of Mr. Obamas engagement Islamic Republic of Iran Broadcast- out the best equipment the nation
Nowhere is this more apparent than saying that Palestinians were killed in with Tehran as extremists and ing, these U.S.-funded stories defer- can produce.
in its treatment of Israel. Heres how impersonal clashes is that unmen- their views of Iranian realities as entially quoted one Iranian official President Trump has committed
it recounted a Palestinian attack that tioned Israelis hover in the back- amateurish. after another without offering con- to rebuilding Americas military, but
took place March 19, 2016, amid last ground as potential culprits. It is only The extremists in question in- text or any alternative view. Mr. Pejic his first budget proposal doesnt
years stabbing intifada: Israeli me- in the second paragraph that the story cluded Sen. John McCain, congressio- agreed that these stories were in- follow through on that promise. Ad-
dia, quoting security officials, identifies the attacker as a Palestinian nal opponents of the deal generally, complete. mittedly, very few of his Pentagon
claimed that Abdullah Ajlouni, a 20- man. Omitted altogether is that the GOP aides on Capitol Hill, the Ameri- If any federal agency could use a appointees were in place to help
year-old youth, had, as Israeli media clashes started after he began stab- can Israel Public Affairs Committee Trumpian shake-up, the Broadcasting write the budget. Still, the proposal
put it, approached several Israeli sol- bing mainly Jewish civilians. and the Foundation for Defense of Board of Governors is it. he sent to Congress for next year
diers in a suspicious manner, and Such obfuscation of assailants Democracies. adds to defense spending a mere 3%
had tried to attack them. and victims identities reinforces the Mr. Pejic said the label extremist Mr. Ahmari is a Journal editorial above President Obamas last bud-
In fact, Israeli forces didnt open frame, familiar to Iranians from was misused with respect to Mr. writer in London. get. Although it may stop the bleed-
fire on Ajlouni merely because he had their own media, in which Israelis ing, it wont do much to help the
acted suspicious. Ajlouni had pulled a are always aggressors. Mr. Pejic ac- military get well.
knife and stabbed one of the soldiers knowledged that this story was in- At the same time, the Pentagon
before they opened fire. complete. Notable & Quotable: Hillary needs to get better value for the
money its spends. Outdated acqui-
From Can Hillary Clinton Please driver to stagger back to the wheel sition systems result in wasted dol-
Go Quietly Into the Night? by T.A. and call out Onward together! On- lars and delays in getting our
PUBLISHED SINCE 1889 BY DOW JONES & COMPANY Frank, VanityFair.com, June 9: ward, fine. Together, maybe not. troops the weapons and equipment
Rupert Murdoch Robert Thomson All of this would be easier to take they need. That is why defense re-
Executive Chairman, News Corp Chief Executive Officer, News Corp Theres a fine lineor maybe not if Hillary were on a crusade for a form has been, and will continue to
Gerard Baker William Lewis even so fine a linebetween boost- distinctive cause, in the manner of be, such a high priority for the
Editor in Chief Chief Executive Officer and Publisher ing morale and monopolizing the Bernie Sanders or Pat Buchanan or House and Senate Armed Services
Matthew J. Murray DOW JONES MANAGEMENT: spotlight. One reason Bill Clinton Jesse Jackson or Ross Perot. But Committees.
Deputy Editor in Chief Mark Musgrave, Chief People Officer; was able to make a name for him- when she offers her take on the But fixing the militarys planes
Edward Roussel, Innovation & Communications;
Anna Sedgley, Chief Operating Officer & CFO;
self decades ago was that previous world, she speaks in clichs and and ships cannot wait until the bud-
Michael W. Miller, Senior Deputy;
Thorold Barker, Europe; Paul Beckett, Katie Vanneck-Smith, President candidates had the grace to get out vague generalities like progress get is balanced. Americas military
Washington; Andrew Dowell, Asia; OPERATING EXECUTIVES: of the way. Jimmy Carter and Wal- versus turning back the clock. personnel need those tools now.
Christine Glancey, Operations; Ramin Beheshti, Product & Technology; ter Mondale and Michael Dukakis Such teleological smugness (to Few remember how fierce the oppo-
Jennifer J. Hicks, Digital; Jason P. Conti, General Counsel;
Neal Lipschutz, Standards; Alex Martin, News; Frank Filippo, Print Products & Services; werent trying to place themselves which Barack Obama was likewise sition was to the defense buildup of
Shazna Nessa, Visuals; Ann Podd, Initiatives; Steve Grycuk, Customer Service; at center stage during the cam- prone) doesnt just attract the ire of the 1980s. But looking back, Presi-
Matthew Rose, Enterprise; Kristin Heitmann, Transformation; paign of 1992. The Clintons, by con- conservatives; liberals can get dent Reagans policy was obviously
Stephen Wisnefski, Professional News Nancy McNeill, Advertising & Corporate Sales;
Jonathan Wright, International trast, kept sticking around. . . . As a miffed, too. Is progress on the side the right onefor those who served
Paul A. Gigot, Editor of the Editorial Page;
Daniel Henninger, Deputy Editor, Editorial Page
DJ Media Group: friend of mine recently wrote to me of expanding NATO or the opposite? and for the good of mankind.
Almar Latour, Publisher; in an e-mail, They both had to be Is it on the side of greater National I hope that 30 years from now
Suzi Watford, Marketing and Circulation; Professional Information Business: president? Security Agency surveillance or of they can say we did the right thing
Joseph B. Vincent, Operations; Christopher Lloyd, Head; Even the name of [Mrs.] Clintons less? Is it in favor of immigration as well.
Larry L. Hoffman, Production Ingrid Verschuren, Deputy Head PAC has a presumptuous ring to it. amnesty or high-tech border secu-
EDITORIAL AND CORPORATE HEADQUARTERS: When someone has driven a bus off rity? We all want to move forward, Mr. Thornberry, a Texas Republi-
1211 Avenue of the Americas, New York, N.Y., 10036 the road and hurled passengers out but maybe were not all facing Hil- can, is chairman of the House
Telephone 1-800-DOWJONES
of their seats, its a bad time for the larys way. Armed Services Committee.
A12 | Tuesday, June 13, 2017 THE WALL STREET JOURNAL.



Your Tote Bag Says So

Much About You

Shoppers turn into walking billboards for brands as bags
become visible status symbols


THE DECISION ON which of the 29 tote

bags stashed in your closet to bring on your
Saturday afternoon stroll can spark a minor
identity crisis.
Kyle Chayka, a freelance writer in Brook-
lyn, N.Y., says he owns somewhere between
12 and 20 tote bags. He favors a red one
with both long and short straps, from cloth-
ing brand Freitag (acquired as a conference
freebie) and an especially roomy Christies
bag which he likes on the weekends.
Theyve become visible status symbols,
Mr. Chayka says. Its like the equivalent of
wearing a sports jersey. A tote shows what
style and brands you affiliate with, he says.
Totes are conversation starters, the way
noticing the book someone is reading on the Some of those eyeballs, though, might be
subway used to be, he says. Sometimes the wrong type of customer. It takes five
when you see a tote bag, you know that per- views of an online ad for the brand to really
son is one degree of separation from you. register with someone, he says. A real-world
Sturdy, canvas, waterproof or made of re- logo on a bag, however, is actually a testi-
cycled material, tote bags take up an ex- monial, he says.
panding part of our lives (and car trunks) as When totes are durable and reusable they
cities, counties and states continue to im- become longer-lived ad campaigns. Swim-
pose fees or bans on plastic bags. Stores ei- wear label 6 Shore Roads founder, Pooja
ther give them away free with purchase or Kharbanda, says that she made 1,000 tote
sell them for a couple bucks in the hopes bags to distribute at pop-up stores in Mon-
that consumers will like them and carry tauk, N.Y., and Newport, R.I., this summer.
themand that others will notice. She estimates the cost is 2.5 times what it
They are walking billboards, says Ty would be if she had just chosen paper bags. Companies pay to offer shoppers durable bags
Haney, founder of Outdoor Voices, an ath- But she hopes the bags will turn up on the that spread their brands messages. The more
letic-leisure clothing brand that emphasizes beach, carrying flip flops and towels. For a stylish totes can also be conversation-starters
recreational play over performance. Its tote customer who might forget about the brand for consumers, like team jerseys or books.
bags, which come free with an in-store pur- over the winter, they could pick it up again
chase, carry the slogan technical apparel and think maybe I should check out what H&M North America, which operates 477
for recreation. Ms. Haney says it is a more new things they have, says Ms. Kharbanda. stores in the U.S. And, this is like a form of
cost effective way of advertising than buy- Some retailers sell the bags to help cover word-of-mouth. They are recommending it
ing online ads because it gets the brand the cost. H&Ms tote bags cost $2 to $4 and by wearing it.
name into neighborhoods and scenes where help spread the word about their garment Catherine Deprets black, Honest Co.,
there are lots of potential customers. recycling program. Customers who trade in glow-in-the dark, Halloween-themed tote
The companys investment is $5 a bag, old clothing or textiles can get 15% off their has become the daily day care bag for 5-
and it says it distributes thousands in its purchase. The bags proclaim: Theres only year-old Alexandre, filled with snacks, water
stores each month, but declined to specify a one rule in fashion: Recycle your clothes or and a stuffed animal, says the Washington,
number. Bring it: The lonely sock, the stained shirt, D.C., attorney. She originally got the tote
Jonathan Hochman, an internet market- the washed-out dress and it will be reborn. with a shipment of diapers.
ing consultant in Cheshire, Conn., says that We know that word-of-mouth is the The canvas is sturdy and I like the de-
for $5,000 worth of bags, you could proba- strongest kind of advertising, says Mary- sign, she says. If it was a brand I didnt
bly buy 3 to 5 million online impressions. beth Schmitt, communications manager for like, I wouldnt like it as much.

Weather The WSJ Daily Crossword | Edited by Mike Shenk

Shown are todays noon positions of weather systems and precipitation. Temperature bands are highs for the day.
-15 1 2 3 4 5 6 7 8 9 10 11 12 13 Down 31 Shot up
14 15 16
1 Keep out of 32 Shadow
Riga -5
sight Dancing singer
w 0
17 18 19 Andy
C p h g
Copenhagen 5 2 B-boy link
10 20 21 22 3 Cynically 34 Small amounts
D bli
Dublin 15 tough
Berlin arsaw
Warsaw 23 24 25 26 27 37 Pitch
A d
Amsterdam 20
Lo d 25 4 Mariners 38 Act the agitator
28 29 30 31
Frankfurt 30 affirmative
Brussels Pra
Prague e
Kiev 39 Opposed to
35 32 33 34 5 Pirate address
i h 42 Worthy of
P i
Paris 35 36 37 38 39 40
Vienna Warm
6 Wake mention
d p
41 42 43 44 7 Oh, What a 44 Gives a
Beautiful ___ dressing-down
Milan h
Bucharest 45 46 47 48
Stationary (Oklahoma! to
49 50 51 song)
Showers 46 Hall of Fame
Rome t b
Istanbul 52 53 54 55 56 57 58
8 Washroom shortstop
d id Rain fixtures Appling
59 60 61 62
T-storms 9 BP bought it in 48 Supermarket
63 64 65 2000 section
Al i
Algiers T i
Tunis Athens
66 67 68 10 Do business 50 Less-jolting joe
Flurries with a bookie
b 51 Profound
11 Newsboys cry
Ice WILD PITCHES | By Aaron L. Peterson quality
12 Fencing sword 52 Sacred bird of
Global Forecasts City Hi
Lo W
Hi Lo W City Hi
Lo W
Hi Lo W
Across 28 Baseball pitch 49 Baseball pitch
1 Youre a riot! from a chef? from a 13 Hall of Fame
s...sunny; pc... partly cloudy; c...cloudy; sh...showers; Geneva 30 18 t 29 18 t Ottawa 27 9 pc 22 9 pc
t...tstorms; r...rain; sf...snow flurries; sn...snow; i...ice Woodstock pitcher Whitey 53 Zilch
Hanoi 34 27 t 35 27 r Paris 24 14 pc 28 18 s 5 Venomous 32 I understand
Havana 31 23 pc 31 23 pc Philadelphia 35 22 s 28 17 pc attendee? 18 Yuletide display 54 Home run pace
Today Tomorrow Hong Kong 32 26 r 33 27 t Phoenix 36 21 s 40 24 s
African snake 33 Sartre play
City Hi Lo W Hi Lo W Honolulu 30 23 sh 30 23 t Pittsburgh 31 20 t 28 20 t
52 Consumption 19 Loosen, as a 56 Eur. language
10 Grievance 35 NYCs first
Amsterdam 20 10 pc 24 15 pc Houston 32 25 t 32 24 pc Port-au-Prince 34 23 pc 35 23 sh 55 Friend of lace
Anchorage 13 8 r 14 7 r Istanbul 25 18 pc 26 19 s Portland, Ore. 18 10 c 21 11 c 14 By Jove! subway line 57 Notorious
Athens 30 21 s 32 21 s Jakarta 32 26 t 32 25 sh Rio de Janeiro 26 21 sh 24 20 sh Jerry and 24 Catchall abbr. Roman
15 Cheering loudly 36 Contest George
Atlanta 30 22 t 32 23 t Johannesburg 22 4 s 21 6 s Riyadh 45 29 s 46 29 s
Baghdad 45 27 s 44 25 s Kansas City 33 23 pc 32 21 t Rome 28 18 s 28 18 pc
hopeful 27 President before 58 Gaelic tongue
Baltimore 34 22 s 29 17 t Las Vegas 33 21 s 37 23 s Salt Lake City 22 11 r 25 14 s
16 Convention 59 Baseball pitch Jack
center event 40 Bag-checking 60 Play for a sap
Bangkok 34 26 c 33 25 t Lima 22 17 s 22 16 pc San Diego 22 16 pc 23 17 pc from a
org. 28 Asian peninsula
Beijing 31 15 s 36 20 s London 22 13 pc 25 14 pc San Francisco 20 12 pc 21 12 pc 17 Baseball pitch backyard cook? 61 Superlative
Berlin 21 11 pc 21 12 c Los Angeles 26 16 pc 29 16 pc San Juan 31 26 sh 31 26 pc
from a DVD fan? 41 ___ there, done 29 Suspend suffix
Bogota 18 10 sh 18 9 pc Madrid 37 21 s 38 21 pc Santiago 18 4 c 16 5 pc that 63 Fans favorite
Boise 20 8 pc 24 12 s Manila 33 26 t 33 26 t Santo Domingo 32 23 pc 33 23 sh 20 Break off 30 Roadhouses 62 Just a ___!
Boston 32 17 pc 22 14 s Melbourne 15 6 pc 15 8 pc Sao Paulo 21 16 sh 20 15 c 43 Hired thugs 64 Balance sheet
Brussels 21 11 pc 25 15 s Mexico City 26 14 pc 24 14 pc Seattle 18 10 c 19 11 c 21 Alumni assembly listing Previous Puzzles Solution
Buenos Aires 18 8 pc 17 11 c Miami 31 26 t 31 25 t Seoul 25 16 pc 25 16 pc 44 Like champion
Cairo 36 23 s 34 22 s Milan 33 21 s 33 22 t Shanghai 24 21 sh 26 19 c 22 Johnny Bench, racehorses 65 Little pitchers B A M B I C AM P U P S Y
Calgary 16 10 t 18 8 r Minneapolis 33 22 pc 32 20 t Singapore 30 26 t 31 26 t for 17 seasons have big ones, S P U R S I N T O A C T I O N
Caracas 31 26 pc 30 26 t Monterrey 37 21 pc 37 21 pc Stockholm 14 6 pc 21 10 pc 45 Boringly reportedly H O I O T I S P A I N T S
Charlotte 32 21 pc 33 21 t Montreal 27 11 pc 22 10 s Sydney 18 14 pc 19 12 pc 23 Pollen collector unoriginal A L A N D A T E R
Chicago 34 23 pc 33 22 t Moscow 17 11 r 17 7 sh Taipei 34 27 t 30 24 r 66 Fill fully
Dallas 33 25 pc 34 25 pc Mumbai 31 27 r 32 27 r Tehran 37 21 s 36 24 s
25 Evangelists 47 Warm the L
Denver 26 10 s 28 10 s Nashville 32 22 t 33 23 t Tel Aviv 28 22 s 29 21 s topic bench 67 Bring back a M A O S H U T R E F S
Detroit 31 20 t 28 19 t New Delhi 42 29 s 41 29 s Tokyo 23 18 sh 25 19 sh ball, e.g. B I T O N E S H E A D O F F
Dubai 40 29 s 42 32 s New Orleans 30 24 t 31 24 t Toronto 27 15 t 22 14 s
26 Sportage 48 College A R O S E R I O T
producer heads 68 Sour fruit O T T AWA A U D I T A U
Dublin 19 11 c 19 12 c New York City 33 20 s 27 14 pc Vancouver 17 9 c 17 10 pc R E I N S I N S P E N D I N G
Edinburgh 18 12 sh 20 11 c Omaha 35 22 pc 35 19 t Washington, D.C. 34 24 s 31 19 t F R O G N E S T G A V E L
Solve this puzzle online and discuss it at WSJ.com/Puzzles.

Frankfurt 23 12 pc 26 14 s Orlando 29 22 t 30 22 t Zurich 28 14 pc 27 14 pc F I N E T O T S S H O W Y


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2017 Dow Jones & Company. All Rights Reserved. THE WALL STREET JOURNAL. Tuesday, June 13, 2017 | B1

Euro vs. Dollar 1.1203 0.05% FTSE 100 7511.87 g 0.21% Gold 1266.10 g 0.19% WTI crude 46.08 0.55% German Bund yield 0.250% 10-Year Treasury yield 2.215%

Tech Shares Lead Global Declines

BY RIVA GOLD Dow Jones Industrial Average ries of critical research tures gained 0.5% to $46.08 a said tech stocks can rebound
AND ALEXANDER OSIPOVICH fell 36.30 points, or 0.2%, to notes on players like Apple barrel, after falling 3.8% last quickly, despite relatively high


21235.67. as the trigger for the selloff, week. valuations, if investors con-
Shares of technology com- Apple shares fell 2.9%, but after the run-up, the sec- Some analysts said inves- tinue to favor large companies
panies fell around the world while Netflix tumbled 4.5%. tor was ripe for a pullback tors have sold tech shares to with growth potential.
Monday, with the U.S. giants Google parent Alphabet and of some sort, said Mark move into other areas of the For the second quarter,
that had been driving this Facebook lost nearly 1% each, the information-technology
years stock-market gains ex- and Amazon fell 1.4% by late sector is expected to report
tending Fridays steep declines. afternoon. Shares of those the second-highest year-
In Europe, the Stoxx Europe companies each fell 3% or
Some analysts said investors have sold tech over-year earnings growth in
600 dropped 1% to 386.62, more Friday. shares to move money into other areas. the S&P 500 at 9.3%, accord-
weighed down by a 3.6% drop Several large tech compa- ing to FactSet. Emil Michael has left the firm.
in the tech sector. Shares of nies have led this years rally, Earlier, declines in tech
semiconductor manufacturer
AMS fell 8.3%, 3-D sensors
maker STMicroelectronics lost
8.9% and the U.K.s Dialog
prompting concerns that ma-
jor indexes gains have been
too concentrated in a handful
of stocks. Tech shares in the
Luschini, chief investment
strategist for Janney Mont-
gomery Scott.
market. Its more the winners
into the losers, rather than a
broader move towards safety,
shares also hit stock markets
in Asia. Leading the way lower
was Hong Kongs Hang Seng
Index, which slid 1.2% amid
Semiconductor declined 6.7%.
In the U.S., the tech-heavy
Nasdaq Composite fell 0.5%.
S&P 500 have climbed roughly
17% this year, while the Nas-
daq has risen 15%.
Energy shares in the S&P
500 rose 0.6% by late after-
noon on Monday, buoyed by
said Russ Koesterich, co-port-
folio manager of BlackRocks
Global Allocation Fund.
declines in internet heavy-
weight Tencent, which had re-
cently climbed to record highs.
Analysts have cited a se- Please see STOCKS page B2
The S&P 500 lost 0.1%, and the

rising oil prices. U.S. crude fu- Several market watchers
By James Mackintosh
Hot Sector, Again

Trade Mean Uber Technologies Inc.

said a top lieutenant of its
chief executive had left the

Danger firm and it planned to name

Nestl SA executive Wan Ling
Martello to its board, Ubers
Normally, a third prominent female hire in
slight fall in a the past week, as the ride-
volatile stock- hailing company grapples with
market sector a leadership crisis.
would be of Ubers chief business offi-

little note. cer, Emil Michael, told em-

But Fridays pullback in ployees Monday that he had
technology stocks bears left the company. According
closer attention than usual, to people familiar with the
coming out of the blue and, matter, his departure was re-
unusually, not being part of lated to a report on Ubers
a wider selloff. workplace culture by former
The fall was small in ab- U.S. Attorney General Eric
solute terms, but it looks Holder that was presented to
huge compared with every- the board.
thing else. The S&P 500 The board, in a meeting
tech sector has had only Sunday, also considered a pos-
two worse days relative to sible leave of absence for Chief
the wider market since the Executive Travis Kalanick as
dot-com bear market ended Jon Maddux used to advise homeowners on how to get rid of debt. Now he runs a firm that pitches loans to nonprime borrowers. he deals with the death of his
in 2003. One was amid the mother in a boating accident

Help Wanted: Subprime Brokers

post-Lehman carnage in Oc- last month that left his father
tober 2008, the other after seriously injured.
the market began its The board meeting capped
credit-crunch-induced de- a difficult stretch for Uber,
scent in late 2007. These Riskier mortgages are back; the problem is finding enough people with the skills to sell them which has come under fire
are not good precedents for over its workplace culture af-
investors. BY KIRSTEN GRIND loan to fit the customer. The ter a former software engineer
Investors should be cau- Starting Over lender then funds the bor- in February published a blog
tious about reading too Brokers willing to learn the Nonprime mortgages, and those originated by brokers, rowers loan. alleging the company ignored
much into one or two days lost art of making risky mort- have plummeted since the nancial crisis. While brokers before the harassment claims from her
moves. Nvidia Corp., the gages are in demand again. crisis served banks and inde- and other workers.
graphics card maker that Brandon Boyd was a high Nonprime mortgage originations Broker mortgage originations pendent lenders, today they The company is also dealing
has become the picks-and- school junior during the finan- are working largely for non- with a lawsuit by Google par-
$1.2 trillion
shovels supplier to the gold cial crisis. Now, the former bank lenders who make up a ent Alphabet Inc. over the al-
rush in artificial intelli- Calvin Klein salesman is critical part of the mortgage leged theft of self-driving-car
gence and cryptocurrencies, teaching mortgage brokers market. trade secrets, a federal probe
had a hard time, dropping how to make subprime loans. 0.8
In the first quarter, nonbank into its business practices and
6.5% on Friday. Facebook Mr. Boyd, a 25-year-old ac- lenders accounted for about the recent departures of top
Inc., Amazon.com Inc., Al- count executive at Fund- 0.6
half the mortgages originated executives.
phabet Inc. and Apple Inc. Loans in a beach town outside in the U.S., according to indus- The results of Mr. Holders
fell more than 3% on Friday of San Diego, is at the cusp of 0.4 2016 try publication Inside Mort- investigation are set to be re-
and were lower again Mon- efforts to bring back an army $206 billion gage Finance. leased to employees Tuesday af-
day afternoon. But the of salespeople who once pow- 0.2 $22 billion The going has been tough in ter the board unanimously
wider Nasdaq-100 index, ered the mortgage industry subprime, though: In the first voted to adopt all its recommen-
dominated by technology, and, some say, contributed to 0 quarter, nearly a decade after dations. They were expected to
was off only 2.4% on Friday the housing crisis. the start of the housing crisis, include new human-resources
2003 06 09 12 15 2003 06 09 12 15
and 1% on Monday after- Mortgage brokers, who lenders originated just $6 bil- processes and training, as well
noon. Even Nvidias Friday serve as middlemen between Source: Inside Mortgage Finance THE WALL STREET JOURNAL. lion in loans to borrowers with as to address the future of key
drop wasnt its worst day lenders and borrowers, used to less-than-stellar credit scores executives, including Mr. Mi-
this year. (The stock was up be a key part of the home-loan brokers anymore because they country and arrange mort- or who are using alternative chael, according to people famil-
slightly Monday afternoon.) process. But some brokers are third-party contractors, gages to people with lower documentation to prove in- iar with the matter.
This will probably turn out faked loan applications and making it harder to police loan credit scores, or who cant come, a category now known Mr. Kalanick is protected in
to be merely a small correc- steered people into debt they quality. prove their income through a as nonprime, according to his position because of his
tion to the phenomenal run- couldnt afford. Now, small and midsize in- typical tax return. Inside Mortgage Finance. share-based voting power
up in tech stocks this year. Financial regulation has se- dependent lenders want the Brokers are a key part of a In all of 2016, they origi- which, along with co-founder
Yet, there are both short- verely diminished their ranks brokers back. Nonbank lenders mortgage chain that starts nated $22 billion in loans, ac- Garrett Camp and early em-
term and long-term reasons since the housing meltdown. that typically cater to riskier with a borrower going to a cording to Inside Mortgage Fi- ployee Ryan Graves, gives him
to worry about tech. In the And big banks with national borrowers say they need bro- broker for a loan. The broker nance. Back in 2005, at the a large majority.
short term, the fall was an sales teams say they wont use kers to fan out across the surveys lenders for the best Please see BROKER page B2 Please see UBER page B4
example of what happens
when shares lose momen-
tum. When shareholders
buy stocks just because
theyre going up, any inter-
ruption can be brutal.
Investors Bets in Europe Diverge After Elections
The tech sector has also BY CHRISTOPHER WHITTALL The yield on French 10-year But sterling was down 0.8%
become universally popular, Changing Fortunes government bonds fell around against the dollar in late after-
suggesting the shares have French and Italian debt prices rallied, sending yields lower, French and Italian bonds 0.05 percentage point to 0.595%, noon trading in Europe, on the
become a crowded trade. in response to the weekends election results. rose in value and the British according to Tradeweb, its low- heels of the currencys 1.7% de-
Goldman Sachs Group Inc. pound continued its fall on est close since November. That cline against the U.S. currency
analysts even point out Yields on 10-year government bonds Monday, with investors taking came after French President Friday. The yield on 10-year
that the biggest tech 2.5% very different views of the pol- Emmanuel Macrons La Rpub- U.K. government bonds fell
stocksthe FAAMGs of Italy itics currently affecting three lique en Marche party won the 0.03 percentage point to
Facebook, Apple, Amazon, France of Europes largest economies. first round of parliamentary 0.977%, however, as investors
Microsoft Corp. and Alpha- Weekend ballots in France elections Sunday, putting the sought havens amid the con-
bet (Google)have appeal and Italy showed signs that upstart centrist party on course tinuing political uncertainty.
to investors who buy into 1.5 the popularity of the anties- to secure a sweeping majority. In the near term, the risk
low volatility, after record- tablishment parties that had Yields fall as prices rise. of populism across Europe is in
ing lower volatility than spooked investors earlier this The yield on Italys 10-year retreat, said Nicola Mai, global
any market sector in the 1.0 year continues to wane. But government bond fell about sovereign credit analyst at Pa-
past six months. They al- the pound has been falling 0.09 percentage point to 2.00%, cific Investment Management
ready qualified for those 0.5
since the U.K.s ruling Conser- its lowest close since January, Co. Both on the macro side,
April 23
who screen shares for mo- First round of voting in vative Party failed to secure a after no candidates from the where the data are really
mentum and earnings French presidential election parliamentary majority in last antiestablishment 5 Star Move- strong in Europe, and on the
growth. When popular 0 Thursdays election, spurring ment made it through to the politics side, things have been
trades go out of fashion, 2016 17 investors concern that this runoff vote for any of the main quite encouraging for markets.
they often do so suddenly. will make Brexit negotiations cities contested in Italian mu- There are early signs also
Please see STREET page B2 Source: Tradeweb THE WALL STREET JOURNAL. even harder for Britain. nicipal elections. Please see RALLY page B2
B2 | Tuesday, June 13, 2017 THE WALL STREET JOURNAL.


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

Adam Opel .................. B3
General Motors...........B3
Goldman Sachs Group
............................... B1,B7
Great Eastern ............. B7
Qatar Airways.............B3
STREET What Goes Up Must Come Down a Bit
Shares in leading technology stocks have dropped sharply but
remain strongly ahead for 2017.
panies. History has shown
time and again that execu-
tives without effective
checks and balances waste
Alibaba Group Holding Rotary International .. A3
.....................................B4 Gymboree....................B4 Schulte Roth & Zabel.B5
Continued from the prior page company cash on poorly
Alphabet ................ B1,B4 H-K Yet, tech stocks arent re- 35% thought out or overly ex-
Alstom ........................ A2 Hisense Electric..........B4 Sony.............................B4 peating the dot-com bubble pensive vanity projects, and
Amazon.com..........A5,B1 Hon Hai Precision Starboard Value..........B5 Amazon.com
American International
of 2000. Its true that be- 30 Stock and index founders of several of the
Industry.....................B4 Starwood Capital Group
Group.........................B5 .....................................B5 fore its drop on Friday, the performance Facebook biggest tech businesses
JANA Partners............B5
Apple ................ A9,B1,B4 J.P. Morgan Chase......B5 T-V S&P tech sector came have kept control of their
Arconic ........................ B5 Jupiter Impex ............. A5 within 0.1% of breaking its 25 companies through special
Astro Malaysia Holdings Tata Motors................B4 Apple
Kohl's...........................B5 Toshiba........................B4 dot-com high for the first share classes.
L-N Trian Fund Management time. But unlike 2000, many Alphabet Mark Zuckerberg still
B-C ............................... A1,B8 20 (Google)
Lotte Chemical Titan..B7 of todays tech stocks are controls 60% of Facebook
Baker Hughes ............. B8 Lotte Group.................B7 Trump International
Citigroup......................B7 Lyft..............................B4 Hotel.........................A6 well established and run votes, co-founders Larry
CSX..............................B5 Maybank Asset Uber Technologies.B1,B4 highly profitable oligopo- 15 Page and Sergey Brin con-
D-E Management.............B7 Valeant Pharmaceuticals lies. trol 51% of Alphabet votes,
Microsoft.....................B1 International.............B5
Darden Restaurants ... B5 In the long term, the Microsoft and Snap Inc.s IPO this
Dragos.........................B4 Mitsubishi Motors......B4 W-X 10
Morgan Stanley..........B7
danger is that hubris in the year gave buyers of its
ESET............................B4 Wal-Mart Stores.........B4 S&P 500
Nestle..........................B1 boardrooms of tech compa- shares zero votes.
F-G Warner Chilcott..........B5
Neuberger Berman Wellmark Blue Cross nies will lead them to frit- 5 There are other risks.
Facebook................B1,B4 Group.........................B5
Ford Motor..................B5
and Blue Shield........A7 ter away shareholder cash New tech eventually dis-
Nokia...........................B2 Whole Foods Market..B5
Forest City Realty Trust Nvidia..........................B1
as they set out on a rupts old tech; could a new
XBiotech......................B8 0 As of noon EDT
.....................................B5 landgrab of new technolo- approach to social media
FujiFilm Holdings........B4 P-Q Y-Z Jan. Feb. March April May June
GE Capital...................A2 Permodalan Nasional . B7 Yancoal Australia........B4
gies away from their core send Facebook the way of
General Electric Pershing Square Capital Yanzhou Coal Mining..B4 expertise. Source: Thomson Reuters THE WALL STREET JOURNAL. Myspace, or a new phone
..........................A1,A2,B8 Management.............B5 Zoetis..........................B5 Apple has put the hub style leave Apple looking
in hubris with its flashy ing shares. Are they high- stocks implies the former, like Nokia Corp.? Hard to

INDEX TO PEOPLE new wheel-shaped head-

quarters. Some of the mad-
dest projects have been put
margin oligopolies in social
media, mobile phones and
operating systems? Or are
but that isnt compatible
with their cash generation
being plowed back into
imagine, but so was the in-
vention of the iPhone. Staff
shortages are bidding up
A-C Herendeen, Paul ......... B5 .....................................B3 on iceApples plan to di- they generic technology in- high-growth moonshots. costs rapidly, as Silicon Val-
Agran, Greg.................B7 Huffington, Arianna...B4 O-P versify from mobile phones ley competes with itself and
Bonderman, David......B4 Hunker, David ............. B5
Osanai, Atsushi..........B4 into electric cars or Wall Street for the best
Bornstein, Jeff............B8 I-K Page, Larry..................B2 Googles internet provision computer-science graduates.
Brin, Sergey................B2 Immelt, Jeff.....A1,A2,B8 R-S via solar-powered drones
The lack of effective controls on the founders Theres also a danger that
Camp, Garrett.............B1 John, Bozoma Saint...B4
Cukierman, Joram.......B7 Kalanick, Travis...........B1 Rumayyan, Yasir Al....B4 but plenty of moonshot of many of the big tech firms adds to risk. governments, particularly in
Simard, John...............B8 projects remain. Europe, get serious about
F-H Kantor, Charles...........B5
Klein, Eleazer..............B5 Singh, Harry................B7 Some of these moonshots their tax, antitrust or en-
Flannery, John.A1,A2,B8
M-N V-Z will surely pay off, but in- cryption concerns.
Frei, Frances................B4
Friedlich, Jim .............. B4 Manbeck, Keith...........B5 Voegele, Will...............B5 vestors would be wise to cubation operations able to Worsening this risk is the All these are for the fu-
Graves, Ryan...............B1 Martello, Wan Ling .... B1 Worley, Guy ................ B5 wonder about the core ex- turn wacky ideas into new lack of effective controls on ture; for now, worry about a
Gurley, Bill .................. B4 Michael, Emil..............B1 Xu, Haidong ................ B3 pertise of some of the com- business models? Treating the powerful founders of crowded trade quickly be-
Hanifi, Moe.................B7 Neumann, Karl-Thomas Zuckerberg, Mark ....... B2 panies in which theyre buy- them as safe, low-volatility many of the big tech com- coming much less crowded.

BROKER sibly made loans to borrowers

with credit problems that have
had bankruptcies in the past
or had to sell their home for
him a Calvin Klein suit at a lo-
cal outdoor mall. I came in
just a blank slate.
Before he co-founded Drop
I dont want to be a part of
that, he said.
Steve Arnold, an account
executive at Angel Oak Mort-
A lot of [the brokers] are
timid and scared and dont
know where to start with the
nonprime type loans, said Mr.
sand brokers packed presenta-
tion rooms. Five years ago, the
association said it was lucky to
get 200 people.
Continued from the prior page less than it was worth. Mortgage, the parent company gage Solutions, one of the larg- Arnold, who is based in West Its been a hard battle
peak for such loans, lenders If they are successful in re- of FundLoans, in 2014, Mr. est nonprime lenders, said he Palm Beach, Fla. against the stigma of subprime
made about $1 trillion of these cruiting brokers, lenders be- Maddux ran the website You- is on the phone almost non- Mr. Arnold made subprime lending, said Krista Donecker,
mortgages. lieve the market potential for WalkAway.com between 2008 stop from 8:30 a.m. to 6 p.m. loans between 2003 and 2007, an account executive at Irving,
Meanwhile, the volume of both types of loans could and 2012. The site charged every day except Sunday and laughs when asked about Texas-based Caliber Home
loans produced by mortgage reach $200 billion annually. homeowners on the brink of coaching brokers on how to the difference between the Loans Inc. Ms. Donecker some-
brokers dropped to $37 billion A big hurdle: finding the foreclosure $995 to learn how make nonprime loans. precrisis lending period and times uses a presentation
in this years first quarter, right kind of brokers and in- to leave their debt behind. Recently, Mr. Arnold said, a today. showing the difference be-
down about 34% from the last structing them in the lost art Mr. Maddux said his experi- broker called with a client who Back then we saw a lot of tween a precrisis subprime
three months of 2016. Loans of making a subprime loan. ence advising down-and-out had a credit score of 620 and fraud with wages and earnings loan and a subprime loan to-
from brokers peaked at around Some are returning to the in- homeowners is today helping had sold his prior house in a and bank statements, he said. day when she trains brokers.
$1.1 trillion in 2003. dustry for the first time since him pitch them loan products. sale that didnt generate Today, every loan file is man- She said she would never
Lenders say there is an un- the crisis. Others like Mr. Boyd Drop Mortgage and FundLoans enough funds to cover the ually reviewed and underwrit- forget the first time she gave
tapped market among borrow- have never been in it. made about $200 million mortgage. But the person had ten by our company. the presentation a couple of
ers with good credit scores I knew a mortgage was a in subprime and alternative stellar income and was paying At the trade industrys an- years ago. One of the brokers
like self-employed workers loan for a house, said Mr. documentation loans in 2016. his rent on time. nual conference at the Luxor raised her hand and asked:
who dont have proper income Boyd, who was recruited by his Ive seen what caused The broker didnt know how Hotel and Casino in Las Vegas Are you sure this isnt ille-
documentation, or for respon- boss, Jon Maddux, after selling these people to walk away and to make a loan possible. last September, several thou- gal?

RALLY also cheered investors. Brit-

ains economic growth was re-
vised lower to 0.2% in the first
quarter of the year, according
polling firm Ipsos Sopra-Steria.
That would strengthen Mr. Ma-
crons hand in efforts to loosen
Frances rigid labor laws.
toral law. The European Central
Bank on Thursday reaffirmed
its commitment to keep its
huge bond-buying program in
Still, Mr. Fois said he ex-
pected the 5 Star Movement to
keep polling neck-and-neck
with the ruling center-left
means for Britains negotia-
tions with Brussels. Some in-
vestors say reduced Conserva-
tive Party influence could lead
Continued from the prior page to figures released last month. Political risk in France has place, which has supported Ital- Democratic Party at the na- to a softer Brexit, which could
that the U.K. and eurozones Investors dumped French disappeared, and its good for ian debt in recent years, lending tional level. Meanwhile, the risk be good for the economy, but
economies are taking diver- bonds earlier this year on con- structural reforms over the of no party securing enough others argue that the in-
gent paths, which will influ- cerns that far-right candidate long term, said Thomas Page- seats in parliament to win an creased uncertainty will make
ence where investors put their Marine Le Pen could clinch the Lecuyer, a strategist at CPR outright majority remains high the divorce even more tortu-
money. Analysts have become French presidency. Ms. Le Pen Asset Management.
Analysts have become ahead of the countrys next ous and unpredictable.
increasingly bullish on the eu- favored pulling France out of In Italy, the euroskeptic 5 bullish on the general elections, he said. In the meantime, though,
rozones economy just as Brit- the euro, a move many feared Star Movement failed to reach Pimcos Mr. Mai said the the direction has been lower
ainstypically Europes sec- would presage a messy the second round of voting for
eurozone economy as risk of populism in Europe for the pound, which is the
ond or third largesthas breakup of the currency bloc. any of the major cities in local Britains has slowed. hasnt gone away. While pop- main barometer of investor
slowed after years of outper- But Mr. Macron won a con- electionsa contrast with its ulism might be on the decline sentiment toward the U.K.
forming its neighbors. vincing victory in May and victories in Turin and Rome while the macro [economy] The bit of opacity is
The eurozone economy Sundays vote in France has last year. improves in Europe, at the around what happens in the
grew at its quarterly fastest put his party and its centrist Italian government bonds further support to the market. next crisis there is going to be negotiations with the EU, said
rate in the first three months ally, MoDem, on course to win had already been boosted last The 5 Star Movements im- significant risk again of popu- Stephen Macklow-Smith, a
of 2017 since the first quarter a majority of as much as 455 week after the risk of a snap petus seems to have lost some lism rising, he said. portfolio manager at J.P. Mor-
of 2015. Signs that antiestab- seats in the 577-seat National general election receded when momentum, Fabio Fois, an Meanwhile, in the U.K., in- gan Asset Management.
lishment, euroskeptic parties Assembly in the second-round Italys largest political parties economist at Barclays, wrote vestors are scrambling to as- Jon Sindreu
are losing momentum have vote on Sunday, according to failed to agree on a new elec- in a note to clients. sess what Thursdays election contributed to this article.


The Mart


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TRAVEL STOCKS date to implement the policies
he says are needed for
Frances economy and the Eu-
ropean Union. Yields on 10-
minority government propped
up by Northern Irish lawmak-
ers. Britains Brexit minister
David Davis said Monday that
Romanian or English language , on hard copy or electronic Save Up To 60% Continued from the prior page year French government negotiations with the EU may
format can be purchased at a price of 3000 Lei (VAT First & Business South Koreas Kospi also bonds fell to 0.595% from not start next Monday as orig-
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included) or equivalent in Euro, USD at the Romanian Major Airlines, Corporate Travel sung, while in Taiwan, home Tradeweb. There is a lot of confusion
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global market strategist at J.P.
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THE WALL STREET JOURNAL. Tuesday, June 13, 2017 | B3


Car Sales
In China GMs Opel Unit Names New CEO
Finance chief gets
Slide Amid top job as Peugeot
ecutive turnover at Opel. The
former CEO of German parts
maker Continental AG put in
Higher Taxes prepares to complete place a 10-year plan that in-
cluded a $5 billion commit-
BY TREFOR MOSS its deal for car maker ment from GM for investment
in new vehicles.
SHANGHAIChinas pas- BY ERIC SYLVERS Mr. Neumann, an avid mar-
senger-car market is suffering AND MIKE COLIAS athon runner, had some suc-
a lean spell, mirroring a simi- cess in reviving the belea-
lar slowdown in the U.S. auto General Motors Co.s Euro- guered brand. He hired a new
sector, with sales falling for pean unit, Opel AG, appointed marketing chief from the cos-
the second month in a row in a new chief executive as Peu- metics industry who oversaw
May as higher taxes hurt. geot gets set to complete its edgy advertising campaigns
Passenger-car sales in the more than $2 billion acquisi- that emphasized stylish de-
worlds biggest auto market tion of the perennially unprof- signs and distinctive features.
dropped 2.6% to 1.75 million itable car maker. The vehicles improved and
last month, the government- Michael Lohscheller, who garnered critical praise too, as


backed China Association of had been Opels chief financial Opel gained market share in
Automobile Manufacturers officer for the past five years, categories such as compact
said Monday. has taken over as the German cars and crossover sport-util-
That performance followed companys CEO, Opel said ity vehicles.
a 3.7% decline in April, the Monday. He succeeds Karl- Still, Mr. Neumann was un-
sharpest since a mid-2015 Thomas Neumann, who called able to deliver on his goal of
slump, which prompted the his decision to leave Opel ending a long run of losses in
government to slash its auto- personal, without revealing Europe. GM said it had been
sales tax to 5% from 10% to further details. Opels headquarters in Ruesselsheim, Germany, earlier this year. Peugeot intends to purchase Opel on track to break even on the
stoke demand. Peugeot earlier this year in a $2 billion deal that would make Peugeot Europes No. 2 car maker, behind Volkswagen. continent in 2016 before the
The market is gloomy, agreed to buy Opel, betting it U.K.s vote to leave the Euro-
said Xu Haidong, the associa- can turn around a company would jump by one-third. through an Opel spokesman. pected to make some changes pean Union created currency-
tions assistant secretary-gen- that hasnt posted a profit in It wasnt immediately clear I know some of you are among Opels top managers, exchange headwinds. GM re-
eral, blaming overconsump- almost two decades. The ac- what role Peugeot CEO Carlos disappointed, but I hope you though many analysts expected ported a loss of $257 million
tion last year for weak quisition, which could close as Tavares played in the change can understand my decision, that significant changes were in Europe last year, adding to
demand now. early as the end of July, would at Opel. A Peugeot spokesman Mr. Neumann wrote on Twit- likely to come only after Peu- the nearly $20 billion in red
Passenger-car sales surged make Peugeot Europes No. 2 declined to comment on the ter. He said he would take geot gained control of Opel. ink it has spilled there over
16% in 2016, thanks in part to car maker, behind Volkswagen relationship between Messrs. some time before deciding his GM installed Mr. Neumann the past two decades.
the governments tax cut. But AG. Revenue at Peugeot, offi- Tavares and Neumann. Mr. next move. in early 2013 after a turbulent Nick Kostov
Beijing raised the tax back to cially known as Groupe PSA, Neumann couldnt be reached Mr. Tavares had been ex- period of restructuring and ex- contributed to this article.
7.5% at the start of this year,
sapping buyer interest in the

Qatar Airways Boss Hits Back at Trump

early months of 2017.
Tighter liquidity controls
are also making some Chinese
banks reluctant to finance auto
purchases, said Robin Zhu, an DUBAIThe chief executive links to Qatar, accusing it of the U.S. for its role in isolating such as Qatar Airways, Emir- which are vital to Qatars plan
auto analyst with Sanford C. of Qatars national airline supporting Islamist groups the Persian Gulf state. ates Airline, and Etihad Air- to diversify its energy-depen-
Bernstein, a research and bro- struck a strident tone in the and extremists in the region. He called the four coun- ways, though other U.S. carri- dent economy.
kerage firm. Having forecast face of an air blockade imposed Doha denies that it supports tries blockade an illegal act ers and tourist groups have The air blockade has affected
4.6% growth for the China auto by its Arab neighbors, express- extremists. Mr. Trump has sig- that contravenes existing urged Washington to maintain 18 Qatar Airways destinations
market in 2017 at the start of naled he backed the move by agreements with Qatar allow- an open market. The Trump or about 50 daily flights since it
this year, Mr. Zhu said there is By Nicolas Parasie Qatars neighbors. ing free and unhindered air- administration hasnt said was announced last week, ac-
now a risk of growth failing to in Dubai Im extremely disappointed space passage. which side it would back. cording to Mr. Al Baker.
achieve that level. and Robert Wall in President Trump, I thought The tension with the U.S. The suspension of flights Mr. Al Baker said he would
However, surging demand in London he was more shrewd, Akbar Al comes at a politically sensitive between the Arab states use the planes normally de-
for commercial vehicles is off- Baker, CEO of state-owned Qa- time for Mideast airlines that threatens to disrupt Qatar Air- ployed on one of the affected
setting sluggish passenger-car ing dismay that President Don- tar Airways, said in an inter- have expanded rapidly on U.S. ways model, which consists of routes to accelerate the launch
sales. Sales of commercial ve- ald Trump backed the action view. I was expecting that the routes. shuttling passengers from of several new destinations.
hicles in China increased 15% while talking up the carriers U.S. will lead the challenge to Some U.S. rivals, including larger nearby countries like The airline had earlier said
year-over-year in May to growth prospects. this blockade, he said. American Airlines Group Inc., Saudi Arabia across its net- that for 2017 and 2018 it ex-
345,000. The commercial vehi- A group of Middle East Mr. Al Baker, who has for Delta Air Lines Inc. and United work of more than 150 destina- pects to establish new routes
cle market grew 18% in the countries led by Saudi Arabia, years maintained friendly rela- Continental Holdings Inc., have tions. Through Dohas airport, to Thailand, Brazil, Chile,
first five months of 2017. the United Arab Emirates, tions with Mr. Trump, is lobbied the Trump administra- the airline carries millions of Ivory Coast, Ghana, Australia
Lilian Lin Bahrain and Egypt last week among the first Qatari execu- tion to curb the growth of air- passengers every year, helping and Kenya among two dozen
contributed to this article. cut diplomatic and transport tives to publicly lash out at lines from the Persian Gulf, boost tourism and business, destinations.

Englands Wine Industry

Is in Ferment Over Brexit
For English winemakers,
theres no real benefit at all,
was disappointed by the result
of the vote.

from the weaker pound, says Mark Driver, a former
Englands wine industry has Bob Lindo, a former pilot who hedge-fund manager at Lon-
a Brexit hangover. turned to vine-growing 27 dons Horseman Capital who
The fast-expanding sector years ago, after a midair colli- quit to set up winery Rath-
has transformed itself over the sion ended his Royal Air Force finny Estate, voted to leave
past 30 years from a national career. the EU but says costing will
joke to an international award In many cases, the fall in certainly increase because of
winner. the pound isnt helping sales. the weaker pound.
The 14% drop in sterling The long-term nature of the He still has to invest about

against the euro since the business means it can take six 4 million ($5 million) in
vote in June 2016 to leave the years or more for planting ad- the winery he is building.
European Union might have ditional vines to result in Around half of this will be in
been expected to benefit U.K. more wine on the shelf. euros and covers bottling, dis-
industries selling abroad. A At the same time, the cur- gorging and riddling equip-
weaker pound means exports rency move means vineyards ment from France and Italy
are cheaper for foreign buyers. have to absorb higher import and 250,000 vines from Ger-
Foreign wares become more costs. Most of the specialist many and France.
expensive in the U.K. equipment and raw materials Brexit could be adding 5%

But, as for many British in- for producing wine, from the to 7% to our capital invest-
dustries, the reality isnt vines themselves, to ferment- ment bill over the next year,
straightforward. Plus, last ing tanks, glass bottles and Mr. Driver said.
weeks U.K. election adds to corks, can only be bought This could mean a bill
uncertainty over what Brexit abroad and usually come from roughly 200,000 to 280,000
will look like, winegrowers France or elsewhere in the eu- higher than before the Brexit
say. rozone. vote.
English winemakers must Winegrowers now have to However, Mr. Driver be-
buy their gear and vines from buy at the new exchange rate, lieves the weaker pound will

countries where winemaking said Mr. Lindo. It depends be positive for sales as over-

is better established. English what stage of the cycle youre seas buyers find it cheaper to
wine is a niche product, atif youre just starting out, buy English wine.
mostly sold domestically; un- then youve had a 7 or 8% in- Others in an industry that
like Scottish whiskey, the crease in costs. mostly favored staying in the
global market is small. And Mr. Lindo, whose Camel EU echoed his concerns.
domestic drinkers arent read- Valley vineyard is based It is affecting margins. It
ily willing to give up their be- in Cornwalla southwest re- does have an impact, said Ta-
loved Champagne, even if Eng- gion that voted to leave the mara Roberts, chief executive
lish wine comes with a European Union in last years of Ridgeview Estate. Her com- Walt Disney
cheaper price tag. referendumadded that he pany, which makes spar-
kling wine in Sussex, south of
London, is the official supplier
to receptions at the U.K. prime
ministers Downing Street res-
Ms. Roberts said domestic Our mission is to uncover, nurture and guide the most promising
and foreign sales had been
buoyant in the first half of entrepreneurial talent in technology across Europe. With the support
2017, but it was hard to know of corporates, our not-for-prot community welcomes talented
how much of this was due to
the pounds fall. individuals who are not currently founders, but
She said she saw little exhibit signals that they will be.

chance that weaker sterling

would help English wine dis- We accelerate their development and help them nd
place the power and place of
teams, ideas and launch startups that could change
Champagne among U.K. buy-
ers. Champagne is almost im- the world.
mune to any exchange rate
moves, she said. If this sounds like you or you know any other
English winemakers grow exceptional people who should be part of this
their grapes domestically, ben-
efiting from a similar climate community, visit us at www.foundersofthefuture.co
to northern France. The sector
A weaker pound isnt helping British winemakers, who typically is expected to double produc-
purchase equipment and vines from countries outside the U.K. tion by 2020.
B4 | Tuesday, June 13, 2017 THE WALL STREET JOURNAL.


Cyber Experts
Identify Malware
That Hit Grid
BY ROBERT MCMILLAN than merely reconnaissance as
in some other examples of
Computer-security re- such software. That makes it
searchers said Sunday they the most powerful industrial-
have discovered the malicious attack code uncovered since
software that knocked out Stuxnet, the software jointly
electricity in Ukraines capital developed by the U.S. and Is-
last year, and warned U.S. rael a decade ago to disrupt
companies that the code could Irans Natanz nuclear enrich-
be repurposed to disrupt sys- ment facility, he said.
tems in the U.S. Crashoverride is a selec-
The discovery sheds light tion of tools that are targeted,
on an incident that security well planned and tested, said
experts have been watching another industrial-control

closely, hoping to understand system expert briefed on the
the risk to the U.S. electrical malicious software. Weve
grid. It follows a 2014 cyber- never seen this level of capa-
campaign against the U.S. in bilities before.
which networks at 17 energy The software runs on the
companies, including four Microsoft Windows operating
electric utilities, were com- system. Once installed on a A conference last year in Paris. A Facebook news feature would be a boon to publishers as they emphasize digital subscriptions.

Facebook Eyes News Feature

promised. network, it scans to discover
The malicious software, what computer systems are
called Crashoverride, has been available and can then be con-
analyzed over the past week figured to switch circuit
by Dragos Inc., a Washington, breakers, cutting off power,
D.C., firm specializing in se- Mr. Lee said.
curing the industrial-control Microsofts free security Subscription support matter said. company eMarketeris one The idea didnt get off the
software now detects and Another point under discus- reason many newspapers now ground partly because Face-
helps remove the Crashover- for news on firms sion is how payments would see subscription growth as book didnt want to introduce
Crashoverride took ride malware, a company mobile app seen be processed and whether paramount. barriers between its users and
spokeswoman said Monday. Facebook would get a cut of Helping news publishers content, one of the people
out power in Ukraine Mr. Lee said the software rolling out by year-end the revenue. One model being get paid for their digital con- said. One of the goals of In-
contains a number of digital considered is to have Face- tent is arguably the most stant Articles, through which
and could be used to clues linking it to the 2016 at- BY DEEPA SEETHARAMAN book take payment informa- meaningful help that Facebook media outlets publish stories
target U.S. systems. tack that caused a partial out- AND LUKAS I. ALPERT tion but let publishers keep all could provide to global jour- directly on Facebook instead
age in Kiev, Ukraines capital, the money, some of the people nalism, said Jim Friedlich, of linking back to their sites,
in the early hours of Dec. 17. Facebook Inc. may soon said. chief executive of the founda- was to speed up load times on
It isnt clear who was re- help its users do something Were working with part- tion behind the Philadelphia mobile.
systems in manufacturing sponsible for that attack. At unfamiliar on the platform: ners to understand their busi- Inquirer, which has lobbied But many publishers found
plants or power facilities. the time, Ukrenergo, the util- pay for news. ness and explore ways we can Facebook for the initiative. If they werent making as much
Robert M. Lee, Dragoss chief ity that operates the backbone The social-media giant is help them drive more value Facebook truly creates a suc- money on Instant Articles as
executive, said the software of Ukraines power transmis- building a feature that would from Facebook. We are taking cessful platform for the sale of on their own sites due to Face-
was discovered earlier this sion network, suspected a allow users to subscribe to the time to deeply understand news subscriptions at scale it books restrictions on the
year by ESET, a Slovakia- computer intrusion. publishers directly from the their different goals and will be a powerful and historic number and types of ads, ac-
based antivirus vendor. Were 99% sure that it was mobile app, according to peo- needs, Facebook said in a game-changer for the news in- cording to a January report
ESET obtained the sample a hacker, the utilitys chief ple familiar with the matter. statement. dustry. from Digital Content Next, a
through the companys regu- executive, Vsevolod Koval- The feature, long requested by The new feature would be a He argued that such a trade group for digital-content
lar research channels, which chuk, said at the time. publishers, is expected to roll boon to publishers that are in- change would likely be hugely companies. Publishers are also
include victims, established Ukrenergo didnt respond out by the end of 2017, three creasingly emphasizing digital beneficial to local and regional experimenting with new rival
malware sample sharing plat- to requests for comment Mon- of the people said. subscriptions to power reve- publishers who have been offerings from Apple Inc. and
forms, public sources and our day. Many details remain up in nue growth, including the The less successful than national Google.
own detection technology, a There are no known Crash- the air, but discussions have Wall Street Journal, the New news enterprises in building In response to mounting
company spokeswoman said override infections in the U.S., centered on making the fea- York Times, the Washington revenue beyond print. frustration and competition,
on Monday. Mr. Lee said. While the code ture available only on stories Post and the Financial Times. Top publishers urged Face- Facebook eased some of its ad
U.S. officials have ex- isnt designed to work with published natively to Facebook Publishers have long been book to include a subscription restrictions on Instant Arti-
pressed concern about cyber- systems on the U.S. power through its Instant Articles frustrated by Facebooks out- option on Instant Articles be- cles.
attacks on the industrial-con- grid, it wouldnt be difficult to product. size role in news dissemina- fore the formats launch in In April, it added a new tool
trol systems that run power modify it to work in the U.S., Talks also have focused on tion and commanding pres- May 2015. At the time, Face- so publishers could encourage
plants and factory systems. he said. how to structure the arrange- ence in the digital advertising book employees studied differ- readers to sign up for their
Software specifically designed Mr. Lee is skeptical that the ment, with Facebook leaning market. The dominance of Al- ent subscription models, such newsletters. Facebook execu-
to infect these systems is rel- Crashoverride code could toward a metered-payment phabet Inc.s Google and Face- as prompting users to visit a tives also warmed to the idea
atively rare, howeverCrash- have a widespread impact, model, which would allow us- book in online advertising publishers website and sub- of driving subscriptions
override is only the fourth ex- however, because it would ers to read some articles free the companies are expected to scribe after they have read a through Facebook and started
ample, according to Dragos. need to be manually config- of charge each month before receive more than 60% of U.S. certain number of articles, ac- working on a payment sys-
Mr. Lee said Crashoverride ured to attack individual sub- prompting them to pay, three digital ad spending this year, cording two people familiar tem more seriously, the peo-
focuses on disruption, rather stations. of the people familiar with the according to market-research with matter. ple familiar said.

UBER that is extraordinary for a
company of Ubers size. The
company, which investors
value at $68 billion, has expe-
Inc.s international division.
She also sits on the board of
China internet company Ali-
baba Group Holding Ltd.
of Harvard Business School
management professor Fran-
ces Frei and Apple Inc. music
executive Bozoma Saint John. GYMBOREE companies not seen as conven-
Continued from page B1 rienced a parade of executive Ms. Martello couldnt be Ms. Frei was hired as senior tional competitors in the car
Mr. Michaels exit, though, departures since early this reached for comment. Uber vice president of leadership Clothing Retailer business on autonomous-vehicle
could complicate a proposal year, including its heads of fi- declined to comment on her and strategy to assist the hu- Files For Bankruptcy technology and testing.
that Mr. Kalanick step aside nance, communications, prod- appointment. man-resources team, while Ms. Jaguar Land Rover, owned by
for a period. uct and ride-sharing. Uber The ride-hailing firms Saint John will be chief brand Childrens clothing seller Gym- Indias Tata Motors Ltd., follows
The board took no action fired the head of its autono- board is made up of investors officer. boree filed for bankruptcy, hop- General Motors Co. as a Lyft in-
on the idea and left it to Mr. mous vehicle development and and insiders, including Mr. Ka- For the first time in its ing to cement a deal to pare vestor. GM invested $500 million
Kalanick to decide, a person a senior vice president of en- lanick; Mr. Camp, the co- eight-year history, Uber re- more than $900 million in debt in the Uber Technologies Inc. ri-
familiar with the matter said. gineering. founder and chairman; Mr. leased diversity numbers in off its books and survive the val in early 2016. Lyft has struck
It isnt clear whether Mr. Ka- Uber is set to soon an- Graves, who at one time was March, showing it is about in- shakeout in the retail sector. deals with Alphabet Inc.s
lanick ultimately will take the nounce Ms. Martello, Nestls Ubers chief executive; private- line with other technology The San Francisco-based Waymo unit and NuTonomy Inc.
time off. executive vice president for equity billionaire David Bond- companies. companys survival would be to work on technology.
Uber confirmed Mr. Michael Asia, Oceania and sub-Saharan erman; media mogul Arianna As of the reports release, costly to unsecured creditors, as- John D. Stoll
is no longer with the company Africa, as its eighth voting di- Huffington; Yasir Al Ru- women comprised 36% of suming Gymboree succeeds in
and declined to comment fur- rector, according to people fa- mayyan, an official from a Ubers employees, thanks to a implementing a fast-track re- FUJIFILM
ther. Messrs. Kalanick and Mi- miliar with the matter. Saudi Arabian government in- prevalence of women in cus- structuring.
chael havent responded to re- Ms. Martello previously vestment fund; and venture tomer support and other non- Suppliers deemed critical to Scandal Losses Bigger
quests for comment. served as chief financial offi- capitalist Bill Gurley. technical jobs. On the techni- Gymborees continued business Than First Thought
Mr. Michaels departure ac- cer for the Kit Kat maker and The addition of Ms. Mar- cal team, 15% of employees will be paid in full, but general
centuates leadership turmoil was CFO for Wal-Mart Stores tello follows last weeks hiring were women. unsecured creditors are being of- Fujifilm Holdings Corp. said
fered nothing, according to a de- losses from accounting irregular-
scription of the restructuring ities in New Zealand were larger

Sharp Sues to Regain Use of Name in U.S. strategy buried in court papers.
More than 375 stores, and
perhaps as many as 450, would
be closed in the restructuring to
than first thought and extended
to the companys Australian of-
fice-equipment unit, a develop-
ment that raises further doubts
BY TAKASHI MOCHIZUKI Sharp said its testing found allow Gymboree to free up capi- about Japanese firms control
the Sharp-brand televisions tal to boost its online selling ef- over their overseas operations.
TOKYOSharp Corp. has made by Hisense violated U.S. fort, court papers say. The Japanese camera and
sued Chinas Hisense Electric Federal Communications Com- Gymboree has set a target copier maker said six board
Co., which licensed the Sharp mission standards. date of Sept. 24 to get confir- members at its subsidiary Fuji
brand for televisions sold in It said Hisense gave con- mation of a chapter 11 plan. Xerox would resign to take re-

the U.S., accusing Hisense of sumers deceptive information Peg Brickley sponsibility for losses that bal-
putting the Sharp name on about the size and brightness and Imani Moise looned to 37.5 billion ($340
poor-quality TVs and decep- of the TVs, violating other fed- million) between fiscal 2010 and
tively advertising them. eral standards. Hisense said it LYFT 2015, from 22 billion. It also
The court action is the lat- did nothing wrong. docked pay from all the board
est effort by Osaka-based Hisense categorically de- Jaguar Invests members at Fuji Xerox and two
Sharp to retrieve the right to nies Sharps claims in the liti- in Ride-Sharing Firm senior group executives. Only
use its own name when selling gation and looks forward to one of the resigning board mem-
TVs in one of the worlds larg- presenting its case in the ap- Lyft drivers are getting an bers will stay with the company.
est markets. Sharp is trying to propriate forum, a company upgrade. Fujifilm said the scandal-re-
recover its position as a global representative told The Wall The U.K.s luxury-vehicle lated losses shouldnt widen fur-
maker of consumer electron- Street Journal. Hisense is in maker Jaguar Land Rover has in- ther because it had reviewed all
ics. Hisense rejected the alle- Sharp found its TVs made by Hisense violated U.S. standards. full compliance with the trade- vested $25 million in Lyft Inc., existing contracts at the two
gations and said it was selling mark license agreement and the latest auto company to units and didnt see the same
high-quality televisions under financial distress and selling Francisco, Sharp lawyers said Sharps attempt to terminate strike a deal with the Silicon problems in any of its other
the Sharp name. assets to raise cash. the Japanese companys brand the agreement is of no effect. Valley ride-hailing company. markets, including Japan.
The dispute illustrates the In 2016, Taiwans Foxconn and trademark are at risk of Hisense will continue to Under the agreement, the The latest example of Japa-
risks when the owner of a Technology Group, formally being destroyed by the time manufacture and sell quality companies will collaborate on nese accounting irregularities is
well-known brand name gives known as Hon Hai Precision the five-year term of the televisions under the Sharp li- mobility services, including self- likely to add to investors con-
up control over products sold Industry Co., took a control- Hisense agreement expires. censed brands. driving cars, and certain Lyft cerns over corporate governance
under that name. ling stake in Sharp for 388.8 It said that under Hisenses Waseda Business School drivers will be supplied with Jag- at Japans companies, after a
In 2015, Sharp signed a deal billion ($3.52 billion), and Fox- management, the televisions professor Atsushi Osanai, who uar or Land Rover vehicles, likely long-running accounting scandal
with Hisense giving the Chi- conn has sought to put the are shoddily manufactured used to work at Sony Corp.s for testing purposes. The part- at Toshiba Corp. and last years
nese company the right to use Japanese company back on a and in many cases, perceived TV unit, said the case was im- nership follows a wave of con- admission by Mitsubishi Motors
the Sharp name on TVs sold in growth track. by consumers as cheap. It portant to Sharps efforts to ventional auto companies pairing Corp. that it falsified fuel-effi-
the U.S. through 2020. In a complaint filed to a said it wanted Hisense to stop restore itself as a global with a growing patchwork of ciency data for some of its cars.
At the time, Sharp was in California state court in San using the Sharp name. brand. tech companies, startups or Megumi Fujikawa
THE WALL STREET JOURNAL. Tuesday, June 13, 2017 | B5


Mall of the Future Will Have No Stores

Landlords rethink the mall into a gathering space for
residents, including outdoor
traditional model and patios, seating and landscap-
create housing, offices ing. Its tenant mix will feature
more food options and street-
and much less retail facing retail.
Sometimes developers con-
BY ESTHER FUNG clude that the only way to
save a dying mall is to level it
When Starwood Capital and start over.
Group LLC bought Fairlane The City Center mall in
Town Center in 2014, the in- downtown Columbus, Ohio,
vestment firm had a lot of was a community centerpiece
work to do. where pop bands such as Han-
The Dearborn, Mich., mall son performed in the 1990s.
was only 72% leased, and But the 1.25-million-square-
among the vacant space was a foot mall started to deterio-
sprawling former anchor rate as competition from
store. shopping centers increased.
A chance call to Ford Mo- City Centers anchor de-
tor Co. to sell some mall ad- partment stores, Lazarus,
vertising turned out to be a Kaufmanns and Jacobsons,
game changer. In April, Ford closed in the last decade, and
moved its entire engineering vacancy rates jumped to 75%.
and purchasing staff into The city in 2007 sued the
space once inhabited by de- owners of the mall and sought
partment-store chain Lord & to evict them, accusing them
Taylor. Ford is now the malls of neglecting the property.
largest tenant, with 240,000 The city purchased the prop-
square feet of space. erty that year in hopes of re-
Our relationship began as developing it, but closed it in

good neighbors, said Michael 2009.
Powers, senior vice president We looked at 10 different
of leasing at Starwood. Then redevelopment plans, said
we found out they were in the Ford Motor moved its entire engineering and purchasing staff into this Dearborn, Mich., mall, above, which is now 91% leased. Guy Worley, chief executive
market for office space. It was and president of Columbus
somewhat serendipitous. gether and turning them into Dubensky, chairman and chief of the roughly 1,100 malls in other conveniencesand much Downtown Development Corp.,
As retailers close bricks- entertainment or industrial executive of Ford Land, the the U.S. will close in coming less retail. a nonprofit development firm.
and-mortar stores at an accel- parks. companys real estate arm. years. In Arlington, Va., landlord It was built to be a mall and
erating pace, shopping-center Fords 10-year lease at Fair- A construction binge in the Many mall owners are try- Forest City Realty Trust is nothing else.
landlords like Starwood Capi- lane Town Center brought 1980s and 1990s left the U.S. ing to liven up the experience, redeveloping Ballston Com- So, the city demolished the
tal are facing a vexing ques- 1,800 to 2,000 employed peo- oversaturated with malls. bringing more dining and en- mon Mall by knocking down property over a two-year pe-
tion: What to do with all this ple to our property, people Growth in online sales and de- tertainment tenants, and es- the main entrance to create a riod and retained the under-
empty space? with a paycheck, said Mr. clining demand for full-price chewing the traditional mix of plaza, removing two-thirds of ground parking structure,
Their solutions are varied Powers. The mall, which is still goods are causing retailers to middling food courts, fashion the roof and installing more which was still used by work-
but all have a common ele- anchored by Macys, J.C. Pen- shrink the number of stores retailers and department windows to create wider vis- ers downtown. In 2011, Colum-
ment: reducing, or even elimi- ney and Sears, is 91% leased, and divert resources to e-com- stores. tas of open spaces. The Cleve- bus Downtown opened a park
nating, retail from the equa- he said, and its food operators merce platforms. The appetite for experi- land-based real-estate invest- in its place called Columbus
tion. are doing better in the day- In all, retailers have an- mentation is there, said Mat- ment trust is also building 406 Commons, which has a perfor-
Some landlords plug empty time than they did before, as nounced 2,880 store closings thew Billerbeck, a Seattle- apartments linked to the mall. mance space, two cafes, a car-
spaces with churches, for- Ford workers pile in for lunch. from January to April 6 of this based senior vice president of Were turning the mall in- ousel and bocce courts.
profit schools and random en- Ford liked the malls prox- year, more than twice as many design and architecture at Cal- side out, said Will Voegele, The park has spurred devel-
terprises while they figure out imity to its main facility in as in the same period a year lisonRTKL. senior vice president at Forest opment around its perimeter,
a long-term plan. Others see a Dearborn, which is being re- earlier, according to Credit One strategy is to convert City Realty Trust. We dont mostly office and residential,
future in mixed-use real es- built over the next 10 years, Suisse Group AG. enclosed malls into open-air want a building with its back and hosts more than 200
tate, converting malls into and its wide open spaces. For the full year, the invest- properties that landlords call turned to the street. events annually. The flagship
streetscapes with restaurants, We didnt move walls, ment bank anticipates more lifestyle centers, with apart- The firm is converting what Lazarus department store,
offices and housing. And some didnt change anything in a than 8,600 stores to close. An- ments, theaters, grocery was once Macys furniture which had been linked to the
are razing properties alto- significant way, said Dave alysts predict that 400 or so stores, medical offices and store on the third level of the mall, is now an office building.

Finance Chiefs Under Fire

As Activists Turn Up Heat
BY RICHARD TEITELBAUM ously served as senior vice The finance chiefs role can
president of digital finance, require doing the activists
Investors cheered last strategy management and bidding or pushing back.
month when Whole Foods business transformation at re- That takes a special person
Market Inc. named a chair- tailer Kohls Corp., according in the CFO position to stand up
woman and five independent to Whole Foods. to an activist and say, Thats

directors. Its hard to argue that they not right, said Valeant
After losing more than 40% hired someone with the skill Pharmaceuticals Interna-
since late 2013, shares rose sets described in our letter, tional Inc. finance chief Paul
2.2%. Mr. Kantor said. Herendeen.
CFO Charles Kantor A Whole Foods spokes- His experience dealing with
JOURNAL was less im- woman didnt respond to pressure from activists dates
pressed with a emails and phone calls seeking back to the middle part of the
different change. comment. last decade while CFO at War-
The portfolio manager at Neu- The kinds of opportunities ner Chilcott PLC, he said. Mr.
Goldman Sachs CEO Lloyd Blankfein, above, and Citis Michael Corbat were fooled by fake emails. berger Berman Group LLC activists exploit are changing, Herendeen was two months
was concerned that the finance and some practitioners are re- into a new CFO role at Zoetis

Bankings Email Prankster chief the company named the

same day, Keith Manbeck,
lacked experience, as the com-
pany is being targeted by ac-
calibrating their tactics in
ways that bolster the CFOs
profile. After the 2008-09 fi-
nancial crisis, U.S. companies
Inc. in 2014 when he learned
Pershing Square Capital
Management LP had a stake
of more than 8% in the animal-

Dupes Wall Street Executives tivist investor Jana Partners

LLC. Neuberger Berman owned
a 2.7% stake in the upscale
built up cash in response to
fear of more turmoil. That
made them targets for activ-
health company and was agi-
tating for board seats and ex-
pense reductions.
grocery chain as of March 31, ists who could score a bump in Mr. Herendeen helped lead
BY LIZ HOFFMAN Google documents, or phony Michael ONeill. Mr. Corbat according to FactSet. share price by pushing man- a drive that included cutting
AND TELIS DEMOS password-reset requests. only sent a brief response, He has a very steep learn- agement to use cash for a divi- Zoetiss head count by more
Last year, the Federal Bu- while Mr. Bird traded a series ing curve, said Mr. Kantor, dend rise or share buyback. than 20% over about 24
The chief executives of reau of Investigation said that of emails with the prankster. who signed a letter last year Those opportunities have months, refocusing research
Goldman Sachs Group Inc. and it had observed a 270% in- The emails were personal in calling for a new CFO with a largely vanished, said David and development, and reduc-
Citigroup Inc. are the latest crease in business-email scams nature and didnt pertain to background in real estate, Hunker, head of shareholder ing the variety of packages and
bank bosses to be hooked by over a 15-month period. business dealings of the banks cost-cutting and store econom- activism defense at J.P. Mor- dosages it sold. The efforts are
an email prankster trolling top The anonymous bank trick- or their financial workings. ics. gan Chase & Co. Thats led expected to save $300 million
Wall Street brass, exposing a ster so far has appeared to CEOs are trying to be When activist investors ask activists to find other levers to in annual costs in 2017, accord-
low-tech gap in banks cyber- seek to embarrass executives hands on these days, tweeting for changes at a company or improve performance. ing to a company spokesman.
security armor. rather than extract secrets or and emailing and responding on its board, their campaigns
Goldmans Lloyd Blankfein plant viruses. to many things themselves, often start at the top, with the
and Citigroups Michael Cor- The fear, though, is that if said Sandeep Kumar, manag- CEO in the crosshairs. Public
bat, as well as Citigroup con- bankers can fall for prank- ing director for capital mar- activist pressure played a
sumer-banking chief Stephen sters, they might also fall vic- kets at Synechron, an informa- prominent role in ousting the
Bird, responded over the tim to the kinds of phishing tion-technology consulting chief executives of three S&P
weekend to emails sent by the attacks that hackers used to firm. These firms have many 500 companies this year: in-
anonymous prankster, who breach the Democratic Na- layers of security and filter- surer American International
masqueraded as top executives tional Committees email, en- ing.But at times, emails will Group Inc., railroad CSX Corp.

at the two banks. abled by a false email asking sneak in and somebody will be and aerospace-parts maker Ar-
The hoaxer, who last month to reset a password. tempted to click on a wrong conic Inc.
snared Barclays PLC chief Jes Mr. Blankfein received an link or respond to someone But pressure is mounting on
Staley and Bank of England email that appeared to be they shouldnt. CFOs, too, as they are more of-
Gov. Mark Carney, on Sunday from a top lieutenant, Harvey Many bankers, including ten given the job of cutting
published screenshots of the Schwartz. The prankster ap- those at Citigroup, access waste, increasing efficiency
exchanges on Twitter. Gold- peared to be looking for con- their email through third- and boosting margins.
man and Citigroup confirmed firmation that a pair of recent party security applications Mr. Kantors concerns about
the email exchanges. tweets from Mr. Blankfein such as those developed by Whole Foods speak to the vital
None of the executives dis- were a swipe at President Good Technology, now part of function that CFOs have as-
closed sensitive information in Donald Trumps infrastruc- BlackBerry Ltd. Those apps sumed. Mr. Manbeck previ- Whole Foods is facing calls to get a CFO with different experience.
responding to the prankster, ture agenda. screen links when they are
but the repeated episodes flag Tweet won some online clicked and block many of
concerns about whether banks
have done enough to guard
award for humorous tweet
Trump will be so pissed ;), it
them. Mr. Corbat, in his re-
sponse to the prankster, noted
against online threats. read, according to the screen- that he couldnt open the link.
The emails mimic a well- shots published on Twitter. In fact, bankers often com- [ Search by company, category or country at europe.WSJ.com/funds ]
known scam known as phish- Mr. Blankfein largely de- plain that their email is too
ing. In this, scammers try to clined to take the bait. He said secure, making it cumbersome NAV %RETURN
get victims to click on mali- the tweet seemed like a good to interact with clients. At
n Chartered Asset Management Pte Ltd - Tel No: 65-6835-8866
cious links or try to capture way to bookend my trip, many firms, emails dealing Fax No: 65-6835 8865, Website: www.cam.com.sg, Email: cam@cam.com.sg
sensitive information, such as though he did say he would with client or financial infor- CAM-GTF Limited OT OT MUS 06/02 USD 307280.21 1.7 11.1 -3.7
passwords, via seemingly in- settle for getting away with it. mation go through additional
nocuous emails. These emails Messrs. Corbat and Bird re- layers of security. Data as shown is for information purposes only. No offer is being made by
Morningstar, Ltd. or this publication. Funds shown arent registered with the
For information about listing your funds,
can take the form of invoices ceived emails appearing to Peter Rudegeair U.S. Securities and Exchange Commission and arent 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
from customers, shared come from Citigroup Chairman contributed to this article. All performance figures are calculated using the most recent prices available. 2504; email: freda.fung@wsj.com
B6 | Tuesday, June 13, 2017 THE WALL STREET JOURNAL.

Nikkei 225 Index STOXX 600 Index S&P 500 Index Data as of 4 p.m. New York time
Last Year ago
19908.58 t 104.68, or 0.52% Year-to-date s 4.16% 386.62 t 3.77, or 0.97% Year-to-date s 6.97% 2429.39 t 2.38, or 0.10% Trailing P/E ratio 24.15 24.29
High, low, open and close for each 52-wk high/low 20177.28 14952.02 High, low, open and close for each 52-wk high/low 396.45 308.75 High, low, open and close for each P/E estimate * 18.97 17.92
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 1.95 2.16
All-time high: 2439.07, 06/02/17

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

20500 400 2450

20000 390 2420

65-day moving average

19500 380 2390

19000 370 2360

Session high
65-day moving average
18500 360 2330

Session open Close

Close Open

65-day moving average

18000 350 2300
Session low
Bars measure the point change from session's open
17500 340 2270
Mar. Apr. May June Mar. Apr. May June Mar. Apr. May June

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 2772.96 8.43 0.30 2193.75 2791.48 9.7 Country/ Spread Over Treasurys, in basis points Yield
MSCI EAFE 1885.70 7.27 0.38 1471.88 1956.39 9.9 Coupon Maturity, in years Yield Latest Previous Month Ago Year ago Previous Month ago Year ago
MSCI EM USD 1007.71 10.48 1.03 691.21 1044.05 26.9 5.250 Australia 2 1.612 26.1 28.0 38.7 90.5 1.619 1.682 1.635
4.750 10 2.402 19.1 21.0 31.4 47.0 2.411 2.642 2.112
Americas DJ Americas 583.25 0.54 0.09 480.90 585.50 7.9
3.000 Belgium 2 -194.5 -193.2 -183.1 -122.8 -0.593 -0.537 -0.497
Brazil Sao Paulo Bovespa 61657.42 553.14 0.89 48066.67 69487.58 2.4
0.800 10 0.587 -162.4 -159.7 -153.5 -135.8 0.605 0.793 0.284
Canada S&P/TSX Comp 15382.88 90.33 0.58 13609.58 15943.09 0.6
0.000 France 2 -0.515 -186.6 -185.8 -174.6 -115.8 -0.519 -0.451 -0.427
Mexico IPC All-Share 49129.33 47.60 0.10 43902.25 50154.33 7.6
1.000 10 0.607 -160.4 -155.5 -148.5 -125.3 0.646 0.843 0.389
Chile Santiago IPSA 3681.57 2.30 0.06 2998.64 3786.05 14.2
0.000 Germany 2 -0.756 -210.7 -208.7 -196.7 -127.0 -0.748 -0.672 -0.540
U.S. DJIA 21235.67 36.30 0.17 17063.08 21305.35 7.5
0.250 10 0.250 -196.1 -193.7 -193.3 -162.0 0.265 0.394 0.023
Nasdaq Composite 6175.46 32.45 0.52 4574.25 6341.70 14.7
0.300 Italy 2 -0.266 -161.7 -160.5 -147.6 -74.8 -0.266 -0.181 -0.017
S&P 500 2429.39 2.38 0.10 1991.68 2446.20 8.5
2.200 10 2.017 -19.5 -11.5 -7.6 -33.3 2.087 2.251 1.309
CBOE Volatility 11.47 0.77 7.20 9.37 26.72 18.3
0.100 Japan 2 -0.111 -146.2 -144.6 -147.1 -100.1 -0.107 -0.176 -0.271
EMEA Stoxx Europe 600 386.62 3.77 0.97 308.75 396.45 7.0 0.100 10 0.059 -215.2 -214.7 -228.3 -179.4 0.055 0.044 -0.152
Stoxx Europe 50 3181.93 28.14 0.88 2626.52 3279.71 5.7 4.000 Netherlands 2 -0.700 -205.1 -204.9 -189.7 -126.5 -0.710 -0.603 -0.534
Austria ATX 3168.56 40.71 1.27 1981.93 3212.50 21.0 0.750 10 0.469 -174.2 -172.2 -172.5 -151.5 0.479 0.603 0.127
Belgium Bel-20 3899.49 46.93 1.19 3127.94 4055.96 8.1 4.750 Portugal 2 0.082 -126.9 -122.1 -99.0 -48.2 0.118 0.305 0.248
France CAC 40 5240.59 59.12 1.12 3955.98 5442.10 7.8 4.125 10 2.965 75.4 79.5 103.2 145.1 2.997 3.360 3.094
Germany DAX 12690.44 125.28 0.98 9214.10 12878.59 10.5 2.750 Spain 2 -0.301 -165.2 -164.8 -155.6 -79.6 -0.310 -0.262 -0.066
Greece ATG 784.60 2.50 0.32 517.10 800.08 21.9 1.500 10 1.433 -77.8 -76.5 -71.2 -20.1 1.437 1.615 1.441
Hungary BUX 35334.48 76.53 0.22 25126.36 35423.40 10.4 4.250 Sweden 2 -0.740 -209.1 -206.2 -194.8 -128.1 -0.724 -0.654 -0.550
Israel Tel Aviv 1420.63 6.70 0.47 1372.23 1490.23 3.4 1.000 10 0.386 -182.5 -179.1 -173.0 -115.9 0.410 0.597 0.484
Italy FTSE MIB 20910.23 212.19 1.00 15017.42 21828.77 8.7 1.750 U.K. 2 0.073 -127.8 -124.7 -118.4 -33.1 0.092 0.110 0.400
Netherlands AEX 521.89 5.41 1.03 409.23 537.84 8.0 4.250 10 0.966 -124.5 -119.4 -123.8 -40.7 1.007 1.089 1.235
Poland WIG 60354.56 827.01 1.35 42812.99 62666.49 16.6 1.250 U.S. 2 1.351 ... ... ... ... 1.339 1.295 0.731
Russia RTS Index 1041.49 Closed 884.83 1196.99 9.6 2.375 10 2.211 ... ... ... ... 2.201 2.328 1.642
Spain IBEX 35 10842.40 135.90 1.24 7579.80 11184.40 15.9
Sweden SX All Share 588.60 6.43 1.08 443.66 595.45 10.1 Commodities Prices of futures contracts with the most open interest 3:30 p.m. New York time
Switzerland Swiss Market 8807.85 38.00 0.43 7475.54 9136.95 7.2 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 51564.00 652.93 1.25 48935.90 54716.53 1.8 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 6/09/2017
Turkey BIST 100 99442.11 499.24 0.50 70426.16 99707.33 27.3
One-Day Change Year Year
U.K. FTSE 100 7511.87 15.46 0.21 5788.74 7598.99 5.2 Commodity Exchange Last price Net Percentage high low
376.75 -11.00 -2.84% 393.75 360.75
Asia-Pacific DJ Asia-Pacific TSM 1624.47 3.68 0.23 1308.52 1637.17 14.2 Corn (cents/bu.) CBOT
Soybeans (cents/bu.) 932.00 -9.50 -1.01 1,092.50 909.50
Australia S&P/ASX 200 5677.80 Closed 5103.30 5956.50 0.2
Wheat (cents/bu.)
CBOT 434.00 -11.75 -2.64 488.75 416.00
China Shanghai Composite 3139.88 18.52 0.59 2833.07 3288.97 1.2
Live cattle (cents/lb.) CME 121.875 -1.975 -1.59 127.650 99.400
Hong Kong Hang Seng 25708.04 322.25 1.24 20038.42 26063.06 16.9
Cocoa ($/ton) ICE-US 2,092 54 2.65% 2,281 1,767
India S&P BSE Sensex 31095.70 166.36 0.53 25765.14 31309.49 16.8
Coffee (cents/lb.) ICE-US 129.60 0.75 0.58 163.75 127.65
Japan Nikkei Stock Avg 19908.58 104.68 0.52 14952.02 20177.28 4.2
Sugar (cents/lb.) ICE-US 14.23 -0.24 -1.66 20.50 13.93
Singapore Straits Times 3248.34 5.85 0.18 2729.85 3271.11 12.8
Cotton (cents/lb.) ICE-US 72.39 -0.10 -0.14 75.72 69.81
South Korea Kospi 2357.87 23.82 1.00 1925.24 2381.69 16.4 Robusta coffee ($/ton) ICE-EU 2029.00 27.00 1.35 2,283.00 1,871.00
Taiwan Weighted 10109.96 89.69 0.88 8458.87 10226.84 9.3
Copper ($/lb.) COMEX 2.6170 -0.0325 -1.23 2.8400 2.4725
Source: SIX Financial Information;WSJ Market Data Group Gold ($/troy oz.) COMEX 1269.00 -2.40 -0.19 1,300.30 1,155.00
Silver ($/troy oz.) COMEX 16.965 -0.258 -1.50 18.725 16.060
Currencies London close on June 12 Aluminum ($/mt)* LME 1,902.50 -1.00 -0.05 1,972.00 1,688.50
Tin ($/mt)* LME 18,975.00 -200.00 -1.04 21,225.00 18,760.00
Yen, euro vs. dollar; dollar vs. major U.S. trading partners US$vs,
Mon YTDchg Copper ($/mt)* LME 5,764.00 88.50 1.56 6,156.00 5,491.00
Country/currency in US$ per US$ (%) Lead ($/mt)* LME 2,115.00 28.00 1.34 2,445.00 2,022.00
Europe Zinc ($/mt)* LME 2,496.00 16.00 0.65 2,958.50 2,450.50
Bulgaria lev 0.5736 1.7435 6.2 Nickel ($/mt)* LME 8,865.00 10.00 0.11 11,095.00 8,780.00
10 Yen
0.1512 6.615 7.8
Croatia kuna Rubber (Y.01/ton) TCE 186.90 -0.10 -0.05 n.a. n.a.
sWSJ Dollar index Euro zone euro 1.1203 0.8927 6.1
0 Palm oil (MYR/mt) MDEX 2,420.00 unch. unch. 2,966.00 2,390.00
Czech Rep. koruna-b 0.0427 23.396 8.9
s Denmark krone 0.1506 6.6384 6.1 Crude oil ($/bbl.) NYMEX 46.32 0.25 0.54 58.30 44.45
10 Euro 0.003642 274.61 6.7
Hungary forint NY Harbor ULSD ($/gal.) NYMEX 1.4274 -0.0038 -0.27 1.7901 1.3846
Iceland krona 0.010028 99.72 11.7 RBOB gasoline ($/gal.) NYMEX 1.4872 -0.0145 -0.97 1.8859 1.4543
20 Norway krone 0.1180 8.4713 2.0
0.2669 3.7469 10.5
Natural gas ($/mmBtu) NYMEX 3.013 -0.026 -0.86 3.5770 2.8880
2016 2017 Poland zloty
Russia ruble-d 0.01753 57.030 6.9 Brent crude ($/bbl.) ICE-EU 48.34 0.19 0.39 60.21 46.98
US$vs, US$vs,
YTDchg YTDchg Sweden krona 0.1144 8.7450 4.0 Gas oil ($/ton) ICE-EU 425.25 -2.00 -0.47 529.00 415.75
Mon Mon
Country/currency in US$ per US$ (%) Country/currency in US$ per US$ (%) Switzerland franc 1.0319 0.9691 4.9
Turkey lira 0.2837 3.5249 0.04 Sources: SIX Financial Information; WSJ Market Data Group
Americas Hong Kong dollar 0.1282 7.8003 0.6
Ukraine hryvnia 0.0384 26.0715 3.7
Argentina peso-a 0.0627 15.9478 0.5
India rupee
Indonesia rupiah
64.4817 5.1
13285 1.8
U.K. pound 1.2652 0.7904 2.4 Cross rates London close on Jun 12
Brazil real 0.3019 3.3122 1.8 Middle East/Africa
Japan yen 0.009116 109.69 6.2
Canada dollar 0.7432 1.3456 0.1 USD GBP CHF JPY HKD EUR CDN AUD
Kazakhstan tenge 0.003161 316.40 5.2 Bahrain dinar 2.6508 0.3773 0.02
Chile peso 0.001511 661.70 1.2 Australia 1.3271 1.6787 1.3691 0.0121 0.1701 1.4865 0.9863 ...
Macau pataca 0.1246 8.0267 1.4 Egypt pound-a 0.0552 18.1015 0.2
Colombia peso 0.0003419 2925.00 2.6 Canada 1.3456 1.7020 1.3883 0.0123 0.1725 1.5071 ... 1.0138
Malaysia ringgit-c 0.2344 4.2655 4.9 Israel shekel 0.2823 3.5422 8.0
Ecuador US dollar-f 1 1 unch
New Zealand dollar 0.7202 1.3885 3.8 Kuwait dinar 3.2949 0.3035 0.7 Euro 0.8927 1.1293 0.9211 0.0081 0.1145 ... 0.6635 0.6728
Mexico peso-a 0.0550 18.1775 12.3
Pakistan rupee 0.0095 104.750 0.4 Oman sul rial 2.5972 0.3850 0.02 Hong Kong 7.8003 9.8672 8.0489 0.0711 ... 8.7373 5.7971 5.8782
Peru sol 0.3053 3.2758 2.3
Philippines peso 0.0202 49.595 0.02 Qatar rial 0.2725 3.670 0.8 Japan 109.6940 138.7700 113.1900 ... 14.0630 122.8900 81.5300 82.6600
Uruguay peso-e 0.0351 28.490 2.9
Singapore dollar 0.7223 1.3844 4.3 Saudi Arabia riyal 0.2666 3.7504 0.01 0.9691 1.2261 ... 0.0088 0.1242 1.0857 0.7203 0.7303
Venezuela bolivar 0.100050 10.00 unch Switzerland
South Korea won 0.0008835 1131.82 6.3 South Africa rand 0.0778 12.8459 6.2
U.K. 0.7904 ... 0.8156 0.0072 0.1013 0.8856 0.5875 0.5957
Asia-Pacific Sri Lanka rupee 0.0065664 152.29 2.6 Close Net Chg % Chg YTD % Chg
0.7535 1.3271 4.4 Taiwan dollar 0.03309 30.225 6.9 U.S. ... 1.2652 1.0319 0.0091 0.1282 1.1203 0.7432 0.7535
Australia dollar WSJ Dollar Index 88.47 0.04 0.05 4.81
China yuan 0.1471 6.7982 2.1 Thailand baht 0.02935 34.070 4.9 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 1.13933% 0.44205% TakedaPharm 4502 5601.00 0.85 15.84 CHF RocheHldgctf ROG 249.60 0.73 7.31 Last: 157.89 t 0.52, or 0.33% YTD s 12.0%
Three month 1.24167 0.65250 Asia Titans HK$ TencentHoldings 0700 270.60 -2.45 42.65 RoyDtchShell A RDSA 2132.00 1.21 -4.93
Six month 1.42183 0.93640 HK$ AIAGroup 1299 55.60 -1.24 27.09 TokioMarineHldg 8766 4955.00 1.47 3.32 SAP SAP 92.56 -3.58 11.77 High 165
One year 1.73567 1.25925 84.85 -1.50 10.34 50day
AstellasPharma 4503 1355.50 0.93 -16.51 ToyotaMtr 7203 5880.00 0.72 -14.51 Sanofi SAN Close 160
Euro Libor AU$ AustNZBk ANZ 27.71 -0.50 -8.91 AU$ Wesfarmers WES 40.06 -0.22 -4.94 SchneiderElectric SU 67.44 -2.15 2.01 Low moving average 155
One month -0.40357% -0.35757% AU$ BHP BHP 23.54 0.99 -6.07 AU$ WestpacBanking WBC 29.97 0.17 -8.07 Siemens SIE 126.25 -2.43 8.09 t
Three month -0.37143 -0.28114 HK$ BankofChina 3988 3.82 -1.55 11.05 AU$ Woolworths WOW 25.95 -0.46 7.68 Telefonica TEF 10.02 -0.40 13.61 150
Six month -0.29857 -0.16314 HK$ CKHutchison 0001 99.75 -0.25 13.48 Total FP 45.48 -0.46 -4.76 145
One year -0.18029 -0.02757 HK$ CNOOC 0883 8.65 -0.12 -10.82 Stoxx 50 CHF UBSGroup UBSG 15.47 -0.13 -3.01
Euribor AU$ CSL CSL 135.05 -0.20 34.50 Unilever UNA 49.43 -1.63 26.37
CHF ABB ABBN 24.23 -1.42 12.80
One month -0.37400% -0.35300% Canon 7751 3908.00 0.67 18.60 Unilever ULVR 4300.50 -0.65 30.62 17 24 31 7 14 21 28 5 12 19 26 2 9
ASMLHolding ASML 115.20 -3.92 8.02
Three month -0.33100 -0.26300 CentralJapanRwy 9022 18070 0.31 -6.03 Vinci DG 77.60 -0.53 19.94 Apr. May June
AXA CS 24.07 0.19 0.35
Six month -0.26600 -0.15800 HK$ ChinaConstructnBk 0939 6.37 -1.39 6.70 VodafoneGroup VOD 224.25 1.45 12.21
AirLiquide AI 109.15 -0.59 3.31
One year -0.14700 -0.02000 HK$ ChinaLifeInsurance 2628 24.85 -2.36 23.02 CHF ZurichInsurance ZURN 284.30 -0.21 1.39
Yen Libor HK$ ChinaMobile 0941 83.40 -0.71 1.46

AB InBev
ABI 100.95
-0.14 10.57
-0.59 0.40 DJIA Stoxx 50
One month -0.03857% -0.09943% HK$ ChinaPetro&Chem 0386 6.36 -1.24 15.64 AstraZeneca AZN 5285.00 -0.97 19.10 Last: 3181.93 t 28.14, or 0.88% YTD s 5.7%
Three month -0.01093 -0.04064 AU$ CmwlthBkAust CBA 79.19 0.18 -3.91 BASF BAS 86.02 -0.66 -2.59
$ AmericanExpress AXP 80.17 -0.17 8.22
Six month 0.02486 -0.01657 EastJapanRailway 9020 10780 0.98 6.73 BNP Paribas BNP 63.39 -1.74 4.69
$ Apple AAPL 145.32 -2.46 25.47 3275
One year 0.13086 0.07586 Fanuc 6954 21615 -2.00 9.08 BT Group BT.A 298.50 1.27 -18.64
$ Boeing BA 190.10 0.04 22.11
$ Caterpillar CAT 106.05 0.12 14.35 3200
Offer Bid Hitachi 6501 672.30 -0.88 6.38 BancoBilVizAr BBVA 7.35 -1.45 15.74
TW$ Hon Hai Precisn 2317 102.00 -2.86 21.14 $ Chevron CVX 108.04 1.54 -8.21 3125
Eurodollars BancoSantander SAN 6.07 -0.90 22.30
HondaMotor 7267 3066.00 -0.29 -10.22 $ CiscoSystems CSCO 31.24 -0.41 3.38
One month 1.1000% 1.0000% Barclays BARC 205.25 -0.65 -8.14 3050
KRW HyundaiMtr 005380 162500 1.56 11.30 $ Coca-Cola KO 45.34 0.04 9.36
Three month 1.2000 1.1000 Bayer BAYN 118.45 -0.50 19.49
HK$ Ind&Comml 1398 5.17 -0.96 11.18 $ Disney DIS 107.05 1.35 2.72
Six month 1.3500 1.2500 BP BP. 470.90 0.66 -7.59
$ DuPont DD 82.16 -0.89 11.93
One year 1.6000 1.5000 JapanTobacco 2914 4127.00 2.41 7.36 BritishAmTob BATS 5462.00 -1.01 18.19 2900
KDDI 3007.00 0.03 1.61
$ ExxonMobil XOM 82.93 0.97 -8.12
Latest 52 wks ago 9433 Daimler DAI 65.64 0.27 -7.18 $ GeneralElec GE 28.94 3.58 -8.42 17 24 31 7 13 21 28 5 12 19 26 2 9
Mitsubishi 8058 2298.50 1.26 -7.69 DeutscheTelekom DTE 16.95 -0.99 3.67 $ Apr. May June
Prime rates GoldmanSachs GS 221.97 -0.21 -7.30
MitsubishiElectric 6503 1605.50 -0.40 -1.47 Diageo DGE 2323.50 -0.11 10.12 $
U.S. 4.00% 3.50% HomeDepot HD 152.18 -0.51 13.50
MitsubishiUFJFin 8306 733.30 -0.19 1.82 ENI ENI 13.96 0.43 -9.76 $
Canada 2.70 2.70 Intel INTC 35.73 0.06 -1.49
1509.00 0.07 -6.10 1695.50
Hong Kong

Mizuho Fin
8411 200.70 0.50 -4.34

GLEN 294.15
8.55 $
6.06 $
0.73 -6.49
0.02 0.80
Dow Jones Industrial Average P/E: 21
NTTDoCoMo 9437 2702.50 -0.07 1.48 HSBC Hldgs HSBA 691.60 -0.59 5.28 $ J&J JNJ 131.82 0.22 14.42 Last: 21235.67 t 36.30, or 0.17% YTD s 7.5%
Policy rates
ECB 0.00% 0.00%
AU$ NatAustBnk NAB 29.40 -0.81 -4.14 INGGroep INGA 15.28 -1.55 14.29 $ McDonalds MCD 148.48 -1.98 21.98
Britain 0.25 0.50
NipponTeleg 9432 5246.00 0.15 6.80 ImperialBrands IMB 3589.00 0.74 1.31 $ Merck MRK 64.40 0.02 9.39 21700
Switzerland 0.50 0.50
NissanMotor 7201 1077.00 0.05 -8.38 IntesaSanpaolo ISP 2.57 -0.46 6.10 $ Microsoft MSFT 69.78 -0.77 12.29
Panasonic 6752 1478.50 0.58 24.30 LVMHMoetHennessy MC 224.10 -1.67 23.54 $ Nike NKE 54.04 1.08 6.32
Australia 1.50 1.75
HK$ PingAnInsofChina 2318 51.50 -1.06 32.73 LloydsBankingGroup LLOY 69.10 -1.30 10.54 $ Pfizer PFE 32.70 -0.21 0.68
U.S. discount 1.50 1.00 20600
Fed-funds target 0.75-1.00 0.25-0.50
$ RelianceIndsGDR RIGD 40.60 -1.34 28.68 LOreal OR 187.50 -1.34 8.13 $ Procter&Gamble PG 88.24 0.09 4.95
Call money 2.75 2.25
KRW SamsungElectronics 005930 2269000 -1.56 25.92 NationalGrid NG. 1010.50 -0.93 -2.66 $ 3M MMM 207.41 0.23 16.15 20050
Seven&I Hldgs 3382 4686.00 1.01 5.23 CHF Nestle NESN 80.55 -0.49 10.27 $ Travelers TRV 125.73 0.40 2.70
Overnight repurchase rates 19500
U.S. 1.00% 0.50%
SoftBankGroup 9984 9228.00 -2.62 18.84 CHF Novartis NOVN 78.10 -0.89 5.40 $ UnitedTech UTX 119.87 -0.64 9.35
Euro zone n.a. n.a.
Sony 6758 4066.00 -1.21 24.15 DKK NovoNordiskB NOVO-B 288.40 1.23 13.23 $ UnitedHealth UNH 179.26 -1.21 12.01 17 24 31 7 13 21 28 5 12 19 26 2 9
Sumitomo Mitsui 8316 4256.00 -0.26 -4.57 Prudential PRU 1789.00 -0.33 9.92 $ Visa V 93.50 -1.12 19.84 Apr. May June
Sources: WSJ Market Data Group, SIX HK$ SunHngKaiPrp 0016 119.20 -1.89 21.63 ReckittBenckiser RB. 7917.00 -0.47 14.97 $ Verizon VZ 47.19 1.01 -11.60 Note: Price-to-earnings ratios are for trailing 12 months
Financial Information, Tullett TW$ TaiwanSemiMfg 2330 207.50 -2.12 14.33 RioTinto RIO 3246.00 -0.57 2.77 $ Wal-Mart WMT 79.23 -0.24 14.63 Sources: WSJ Market Data Group; Birinyi Associates
THE WALL STREET JOURNAL. Tuesday, June 13, 2017 | B7


Trump to Urge Curbs on Watchdog Wind

Power Up tors could pursue on their

administration was ready to
own, once Mr. Trumps team
completes the process of ap-
pointing new regulators.
recommend limits on the U.S. Regulators are already re- BY LIZ HOFFMAN
consumer-finance regulator viewing the Volcker rule, for
and a reassessment of a broad instance, and people familiar A wind farm in Scranton,
range of banking rules in a re- with the matter said the re- Pa., sitting over ancient coal
port to be released as early as port examines how the current seams, will soon power Gold-
Monday, according to people enforcement environment for man Sachs Group Inc.s data


familiar with the matter. the rule is affecting financial centers in New Jersey.
The report from the Trea- markets. The Wall Street bank said
sury Department, drafted in The report is expected to Monday that it has agreed to
response to a February execu- set in motion a re-evaluation buy 68 megawatts of electric-
tive order from President Don- of the Community Reinvest- ity from the plant, which will
ald Trump, is less sweeping ment Act, a law intended to come online in 2019. It is the
than financial legislation ap- make sure banks meet local first such agreement struck by
proved by the House of Repre- credit needs, people familiar a bank, according to trade
sentatives last week, these with the matter said. It will group Business Renewables
people said. also likely suggest that big Center, and pushes Goldman
That suggests the adminis- banks be asked to file living closer to its goal of procuring
tration is taking a more prag- wills every two years, instead 100% of the energy it uses
matic path than some Republi- of annually, these people said. from renewable sources by
cans who want to throw out The wills outline how banks 2020.
Obama-era financial rules could go through bankruptcy The deal is Goldmans effort
wholesale, although adminis- without needing a taxpayer to stake a claim in a hot cor-
tration officials are still seek- bailout. ner of the energy-trading mar-
ing to loosen regulatory re- The Treasury Department report is highly critical of the Consumer Financial Protection Bureau. The report also is likely to ket and to try to catch up with
strictions on banks in examine bank regulators posi- rivals.
significant ways. examine financial institutions, the director at will. Currently, assetsbe exempt from it, tion on leveraged loans, a Citigroup Inc. and Morgan
The Treasury Department people familiar with the mat- the presidents authority to do these people said. It isnt ex- form of risky lending to al- Stanley are already big in the
didnt respond to a request for ter said. By law, the bureau that is the subject of a legal pected to recommend repeal- ready-indebted companies, one renewables-trading segment.
comment. has the authority to enforce battle. ing the Volcker rule, they said, of the people said. Goldman recently hired a Citi-
The report makes recom- consumer laws as well as to The report also contains a a change that was included in It will likely raise broad group trader, Moe Hanifi, who
mendations on policy goals, examine individual firms on a substantial section on the Vol- the House Republicans bill. concerns about the use of ar- will join Harry Singh and Jo-
without laying out a specific continuing basis. cker rule, which bans banks Changes to the CFPBs au- bitrary asset-size thresholds ram Cukierman in spearhead-
process for achieving them, One person familiar with from most trading or speculat- thority or structure, or the ap- to apply bank regulations, ing the firms effort.
these people said. It is harshly the reports contents said it is ing unless they are doing so plicability of the Volcker rule, such as the 2010 Dodd-Frank Commodities trading has
critical of the Consumer Fi- likely to recommend that the on customers behalf. would require congressional laws provisions requiring been a tough business across
nancial Protection Bureau and CFPB continue to be led by a And it will likely recom- action. tougher supervision of banks Wall Street since the financial
recommends that the agency single director, but that the mend that small banksthose The report also explores with more than $50 billion in crisis due to stricter capital
be stripped of its authority to president be able to remove with less than $10 billion in bank-rule changes that regula- assets, this person said. rules. It was among the busi-
nesses that Goldman blamed
for disappointing trading reve-

Lotte Decides on Price Range for Chemical IPO nue last quarter.
Goldman wont just be in
the renewables market for its
own needs. The firms com-
BY YANTOULTRA NGUI lion ringgit ($1.39 billion), and asset managers Maybank produces plastics including zlement in October. Lotte modities arm has been build-
making the IPO Malaysias Asset Management and East- polyethylene used in shopping apologized for causing con- ing a business to connect cor-
KUALA LUMPUR, Malay- largest since the pay-television spring Investments. Corner- bags and toys, plans to use cern and said it would coop- porate buyers of electricity
siaSouth Koreas Lotte operator Astro Malaysia stone investors are generally most of the IPO proceeds to erate with the investigation with developers.
Group plans to offer shares in Holdings Bhd. raised $1.5 bil- allocated substantial blocks of build a naphtha plant in Indo- process. In January, the chair- That group, reporting to
its petrochemical unit in Ma- lion in 2012. IPO shares in exchange for a nesia, according to a draft mans sister was sentenced to commodities chief Greg Agran,
laysia at between 7.80 ringgit Four so-called cornerstone commitment to hold the stock prospectus filed with the Se- three years in prison. will manage the 15-year elec-
and 8 ringgit ($1.83 and $1.88) investors have agreed to take for a set period, but there is curities Commission. Lotte is South Koreas fifth- tricity contract, protecting
each, according to two people up to 20% of the IPO, The Wall no lockup period for this IPO, An IPO of Lotte Chemical largest conglomerate. Besides Goldman from price swings,
with direct knowledge of the Street Journal reported they added. Titan had been planned for petrochemicals, it has inter- grid congestion and other
initial public offering. Wednesday. The people famil- A Lotte Group spokes- last year, but the offering was ests in duty-free stores, luxury risks.
If the stock sells at the high iar with the IPO identified woman said the company delayed after South Korean hotels and insurance. It boasts It hopes to market that
end of the price range, the them as Malaysian state- could not comment on de- prosecutors charged the par- annual sales of about $74 bil- same service to a group of
740.4 million shares in Lotte owned fund manager Per- tailed information about the ent companys chairman and lion, and has been controlled companies that are striking
Chemical Titan being sold modalan Nasional Bhd., the process. four of his family members by the Shin family since it was their own power agreements,
would be worth about 5.92 bil- insurance firm Great Eastern Lotte Chemical Titan, which with tax evasion and embez- established in 1948. Mr. Agran said in an interview.


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2017 Dow Jones & Co., Inc. All rights reserved. 6DJ5495
B8 | Tuesday, June 13, 2017 THE WALL STREET JOURNAL.

THE DAILY SHOT By Lev Borodovsky

Stars not aligned for job openings and skills WSJ

subscribers can get
The Daily Shot
a chart-by-chart brieng
on markets and economics
Unemployment dropped last month to its lowest level since dissonant readings point to an increasing mismatch between sent to their email
2001, yet wage growth is below levels seen in the late stages workers skills and the roles employers are seeking to ll, a each morning. Subscribe at
of previous economic expansions and underemployment conict measured by the Beveridge curve, which tracks the
remains above the lows of the previous cycles. These relationship between unemployment and job vacancies.

Joblessness has fallen sharply Fewer workers are being hired

since the recession ended. for each opening, a likely sign of
THE BEVERIDGE CURVE skills mismatch.
Continuing unemployment-
insurance claims, weekly The higher level of the curve since the 2008 Ratio of hires to openings

6 million crisis shows the workforce isn't entirely 2.0

satisfying the need for skills that have
April 2017 become more important in the 1.5
post-recession economy.

Recessions 0.0 Recessions

2001 10
Unemployment falling, 2001 05 10 15
05 15
job openings rising
Two broader measures of labor slack following recession The share of small-business
are down but above previous lows. owners reporting at least one
hard-to-ll job has risen.
U-6 unemployment rate*
U-4 unemployment rate 40%
20% 3
Job openings rate

2000 20
December 10
Recessions Start of U.S. 0 Recessions
recession 2001 05 10 15
2001 05 10 15
2 The number of workers quitting is
Openings at restaurants and hotels rising relative to those being hired.
have surged during the recovery.
Ratio of resignations to hires
800 thousand 0.6
Unemployment rising,
600 job openings falling
during recession June 2009 0.4
400 End of
recession 0.2
200 1
4 5 6 7 8 9 10 11 12%
0 Recessions Recessions
2001 05 10 15 Unemployed plus marginally attached workers (U-5) 2001 05 10 15

*The U-6 measure is total unemployed plus all marginally attached workers plus total employed part-time for economic reasons. The U-4 measure is total unemployed plus discouraged workers.
Sources: Bureau of Labor Statistics via Federal Reserve Bank of St. Louis (unemployment, openings); U.S. Employment and Training Administration (claims); National Federation of Independent Business (small businesses) THE WALL STREET JOURNAL.

Email: heard@wsj.com

GE Must Bring Good Things Back to Life OVERHEARD

A fresh face will be lead- earning $2 a share in 2018. portfolio later this year, and Perseverance is admirable.
ing General Electric. Next Lower Bar Even the move to spin off he will have some options. XBiotech Inc. provides a
up for the industrial giant: GEs forward price/earnings ratio GE Capital, which investors Perhaps, to pick one exam- case in point. The company
freshening up shareholder celebrated, has had just a ple, a greater investment in announced Friday that its
returns. 45 times limited effect on the share the struggling oil-and-gas late-stage study for its exper-
GE said Monday that long- 39 price. GE shares have lagged business, which is in the pro- imental colon cancer treat-
time Chief Executive Jeff Im- behind the Dow Jones Indus- cess of merging with Baker ment Xilonix has been discon-
melt will retire on Aug. 1. 34 trial Average since the split Hughes, is in order. Segment tinued after an interim
The change is more of a 28 was announced in 2015. operating profit fell 33% analysis of the data. While it
makeover than a full-scale So, Mr. Flannery has his from a year earlier, but didnt show any safety con-
rebuild. John Flannery, a work cut out for him. On the equipment orders were up cerns, the findings were not
veteran company executive, 17 bright side, he will enjoy the 30%. Mr. Immelts timing on sufficient to meet efficacy.
will take over as CEO. Fi- benefit of lower expecta- energy bets has been unfor- However, CEO John Si-
nance chief Jeff Bornstein tions. GE trades at about 16 tunate, but Mr. Flannerys mard is undeterred. In the
will remain in place. GE said 6 times forward earnings, ac- might be fortuitous. coming weeks, the company
that succession planning has cording to FactSetnot nec- Even without a total over- plans to analyze the data ex-
been under way since 2011. essarily cheap, but well be- haul of the business, there tensively to further under-
Investor returns under Mr. 1997 2000 2010 low the nosebleed valuations should be good opportunities stand the primary and sec-
Immelt were disappointing. Source: FactSet THE WALL STREET JOURNAL. that Mr. Immelt had inher- to cut expenses and sharpen ondary endpoint data, as well
Much of that was due to bad ited. The shares yield a the companys portfolio, es- as to identify populations that
luck. Mr. Immelt took the has converted operating the industrial business was healthy 3.5%. pecially with activist hedge may have benefited from the
helm on Sept. 10, 2001, and profit into free cash flow, an negative $1.6 billion in the Dont expect the status fund Trian Fund Manage- therapy. These findings today
presided over the company important metric for an in- first quarter, though GE held quo. Mr. Flannery signaled a ment installed as a major will not affect our efforts to
during the 2008 financial dustrial company, has deteri- this years expectation of $12 deep review with a sense of shareholder. pursue approval of the ther-
crisis. orated to 76% in 2016 from billion to $14 billion con- urgency in a note to em- GE shares were up 3.8% in apy, he said in a statement.
More recently, however, 91% in 2014 (GE subse- stant. ployees. Monday afternoon trad- Shareholders may not have
GE has missed analyst sales quently changed the way it Mr. Immelt said last He will review the wide ing. Mr. Flannery will have a much else left besides that
estimates in 10 of the past 13 measures cash-flow conver- month that deeper cost cuts portfolio of industrial busi- good opportunity to keep character trait, though. Shares
quarters, according to Fact- sion). might be needed for the nesses and announce more that momentum. plunged 66% on Friday.
Set. The rate at which GE Operating cash flow from company to meet a goal of detailed plans to shape the Charley Grant

U.K. Drifts Away From Europe Recovery Microsofts Game Plan for Xbox One X
The U.K. wants to separate ritory for more than eight Microsoft is putting a for the same games as their Xbox One is estimated to
from Europe. Judging by eco- Breakdown months now. U.K. data have high price on its new lower-priced siblings, but have sold around half the
nomic and political out- Citigroup economic-surprise disappointed. Xboxbut the companys with more robust graphics. 60 million units that Play-
comes, it looks like it is get- indexes The clearest reversal is in real game lies elsewhere. Sony says its Pro has ac- Station 4 has since both
ting its wish. Eurozone U.K. foreign-exchange markets: Microsoft first teased counted for about 20% of consoles hit the market in
The U.K. election has left 100 The euro has reached its the development of a more total PlayStation 4 unit late 2013.
the incumbent Conservative 50 highest against sterling, powerful version of its sales since the launch, The Xbox One X wont
party under Prime Minister above 0.88, since the U.S. Xbox One videogame con- which suggests at least 2.5 change the console game
Theresa May in a much election in November, the sole a year ago. It lifted million PlayStation users for Microsoft. But a high-
weaker position. Uncertainty 50 event that put markets on the wraps on that machine have chosen to pay for end machine that appeals
over the economy and Brexit J F M A M J notice that politics mattered. on Sunday, ahead of the sharper resolution. to a small number of enthu-
has only risen. But other markets reflect the game industrys annual E3 That isnt a huge number, siasts may be helpful for
Note: Readings below zero indicate data is
That has overshadowed weaker than expected. shifting risks too. The 10- conference. although Microsoft will find the companys wider gam-
events in Europe. The first Source: FactSet year Italian bond yield has The new console, called it a challenge to match: The ing business. Microsoft gen-
round of parliamentary elec- THE WALL STREET JOURNAL. fallen to just above 2%, its the Xbox One X, is designed Xbox One X is priced $100 erates much higher returns
tions in France suggest there lowest since late January; to render games in super- higher than the PlayStation through software and ser-
will be a strong majority for diverged too. The U.K. U.K. stocks are underper- high-resolution, 4K graph- 4 Pro. It is also double the vices such as the popular
President Emmanuel Macron slipped in the first quarter to forming their European ics. It goes on sale in No- recently reduced price of Xbox Live, which hosts 52
to push ahead with reforms. the bottom of the European peers so far this year. vember with a starting the mainstream Xbox One million active users paying
In Italy, local elections pro- league table with growth of The eurozones many mov- price tag of $499. S. That means Microsoft is a monthly fee.
duced a subdued perfor- just 0.2% from a quarter ear- ing parts mean jitters about This represents Micro- charging a much higher That is up 13% from a
mance for the antiestablish- lier; the eurozone grew by continental politics will re- softs attempt at a mid-gen- premium than Sony, which year ago, despite a decline
ment 5 Star Movement. The 0.6%. Pleasant surprises in turn, particularly in Italy. But eration console update. has priced its Pro console in Xbox hardware sales
populist tide some saw eurozone data have contin- the U.K.s troubles are front Sony took a crack at it in at only 33% above the regu- over that time. It is a much
sweeping Europe has failed ued, with the Citigroup eco- and center. Eurozone assets, November with the launch lar PlayStation 4. better game for Microsoft
to advance. nomic-surprise index for the particularly the euro, look of the PlayStation 4 Pro. Microsoft also is working to be playing to win.
Economic outcomes have currency bloc in positive ter- more stable.Richard Barley Both consoles are designed from a smaller base. The Dan Gallagher