For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
As of 12 p.m. ET DJIA 20538.52 g 0.60%
What’s
News
Business & Finance
esla, the upstart elec-
T tric-car maker, has
overtaken automotive pi-
oneer Ford as the second-
largest U.S. auto maker by
stock-market value. A1
 Indian stocks reached
a new high, powered by
foreign funds optimistic
that Modi will be able to
accelerate change. B1
 Moves in China’s cur-
rency may have given the
country a competitive
edge against many of its
trading partners—except
for the U.S. A1
 Deutsche Bank is shuf-
fling more executives
while it searches for a new
finance chief and reshapes
global businesses. B5
 The top two U.S. auto
makers reported divergent
results for March amid
concerns about the indus-
try’s inventory levels and
reliance on discounts. B1
 Reckitt Benckiser,
owner of French’s mus-
tard, said it started a
strategic review of its
food business. B2
 France’s Schneider Elec-
tric agreed to sell its U.S.-
based data-software busi-
ness DTN to TBG in a deal
valued at $900 million. B3
 Apollo Global Manage-
ment and HNA Group
made offers to buy Ger-
many’s HSH Nordbank. B5
 U.S. companies are try-
ing to stop employees from
raiding their 401(k) plans,
warning of the impact on
their retirement goals. B7
World-Wide
 Trump senior adviser
Kushner arrived in Bagh-
dad on a surprise visit to
meet U.S. and Iraqi offi-
cials and to receive mili-
tary briefings on the fight
against Islamic State. A1
 Flynn initially didn’t
disclose payments he re-
ceived from three Russian-
linked entities on a finan-
cial disclosure form. A7
 Trump signaled that he
wasn’t abandoning efforts
to dismantle and replace
the Affordable Care Act. A7
 A blast tore through a
subway train in St. Peters-
burg, Russia, killing 10
people and injuring dozens
more, officials said. A4
 Japan’s ambassador to
South Korea will return to
Seoul to bolster coordina-
tion in dealing with North
Korea. A3
 Trump said the U.S. is
willing to take unilateral
action against North Korea
if China doesn’t act to con-
tain the burgeoning nu-
clear power. A3
 The U.N. criticized Aus-
tralia for “deeply disturb-
ing” levels of racism against
its indigenous people. A3
 Declines in the number
of jobless people in Italy
and Spain drove the euro-
zone’s unemployment rate
to its lowest level since
mid-2009 in February. A4
 Interest rates will rise
again and firms, households
and politicians must prepare
for higher borrowing costs,
an ECB official said. A4
CONTENTS
Business News...... B3
Capital Journal...... A2
Crossword................. A9
Heard on Street.... B8
Life & Arts........... A8-9
China: RMB28.00; Hong Kong: HK$23.00;
Indonesia: Rp25,000 (incl PPN);
Japan: Yen620 (incl JCT); Korea: Won4,000;
Malaysia: RM7.50; Singapore: S$5.00 (incl GST)
KDN PP 9315/10/2012 (031275); MCI (P)
NO. 066/01/2017; SK. MENPEN R.I. NO: 01/
SK/MENPEN/SCJJ/1998 TGL. 4 SEPT 1998
s Copyright 2017 Dow Jones &
Company. All Rights Reserved
RUSSIAN LOOK/ZUMA PRESS
Markets...................... B8
Opinion.............. A10-11
Technology............... B4
U.S. News.................. A7
Weather..................... A9
World News....... A2-4
TUESDAY, APRIL 4, 2017 ~ VOL. XLI NO. 150 WSJ.com ASIA EDITION
NIKKEI 18983.23 À 0.39% STOXX 600 379.29 g 0.49% BRENT 53.21 g 0.60% GOLD 1251.80 À 0.36% EURO 1.0664 À 0.08% DLR ¥110.95 g 0.40%
Blast in Russian Subway Kills 10 Kushner
In Iraq
For ISIS
Briefing
BY GORDON LUBOLD
BAGHDAD—President Don-
ald Trump’s senior adviser and
son-in-law Jared Kushner ar-
rived in Baghdad on Monday
on a surprise visit to meet U.S.
and Iraqi officials and to re-
ceive military briefings on the
fight against Islamic State.
Mr. Kushner is the first
member of Mr. Trump’s inner
circle to visit the country,
currently engaged in a fight
to drive the militant group
from Mosul and other areas.
He was invited here by the
chairman of the U.S. Joint
Chiefs of Staff, Gen. Joe Dun-
ford, who is on a visit to meet
with U.S. and Iraqi command-
ers and troops.
The visit comes as the
Trump administration is as-
sessing the current strategy to
EXPLOSION: President Vladimir Putin said it was too early to identify the cause of the incident in St. Petersburg, but didn’t rule out terrorism. A4 combat Islamic State in Iraq,
Syria and elsewhere.
Mr. Kushner, 36, a new-
comer to foreign-policy is-
Tesla Value Speeds by Ford
sues, has taken an active
role as an adviser to Mr.
Trump on national security
and foreign policy.
Last month, Mr. Kushner
Electric-vehicle firm second-largest U.S. auto sales climbed to a record. Model 3. It is a sleek, comput- made, for a White House offi-
maker by stock-market value. The changing of the guard erized $35,000 sedan that can cial, a rare appearance at the
drives its market cap Tesla shares were up 5.3% reflects a belief that inter- drive nearly the distance Pentagon, where he met Saudi
above Detroit maker’s; at $293 late Monday morning, nal-combustion engines will from New York City to Wash- Arabia’s Deputy Crown Prince
pushing the California auto eventually be replaced by ington, D.C., on a single and Minister of Defense Mo-
an industry transition maker’s market capitalization electric motors as the pri- charge. hammed bin Salman during
to $47.79 billion, above the mary power source for auto- Tesla is a bet that Mr. his meeting with Defense Sec-
BY TIM HIGGINS Michigan company’s $44.91 mobiles. It is the latest threat Musk—who is 45 years old, retary Jim Mattis.
AND CHRISTINA ROGERS billion, according to FactSet. to Detroit’s once-dominant the same age as Mr. Ford was He has also been influential
The next milestone for stranglehold on personal in 1908 when he released the with his father-in-law on is-
Elon Musk has steered past Tesla is General Motors Co., transportation, a role that Model T—can reshape trans- sues pertaining to Mexico and
Henry Ford in the minds of valued at roughly $51 billion. was diminished by Japanese portation not only with elec- other countries, and he has
investors, the latest sign that Tesla shares, which had al- car companies in the 1980s tric vehicles, but with cars been given broad authority by
the auto industry is undergo- ready received a vote of con- and is now being challenged that drive themselves. his father-in-law to broker a
ing a seismic shift. fidence last week with Chi- by Silicon Valley’s technologi- Some investors believe peace deal between the Israe-
Tesla Inc., the upstart Sili- nese tech company Tencent cal might. Tesla is better positioned lis and the Palestinians.
con Valley electric-car maker Holdings Ltd. revealing it had While Mr. Ford’s Model T than auto makers and tech gi- Mr. Kushner, a multimilli-
run by Mr. Musk, has over- taken a 5% stake, were ushered in a wave of afford- Please see TESLA page A2 ionaire businessman and de-
taken Ford Motor Co., the au- boosted by an announcement able mobility for the middle veloper interested in how
tomotive pioneer that is ex- Sunday that the auto maker’s class, Mr. Musk is promising  Auto makers post mixed technology can reform organi-
actly 100 years older, as the first-quarter global vehicle the same with the coming sales results................................ B1 Please see IRAQ page A4
Southern Squeeze
Australia’s two biggest cities are
among the world’s least
SYRIA’S WAR PRODUCES A WINNER
affordable in terms of house-
price-to-income ratio.* B1
Hezbollah, the Lebanese militant group, has grown stronger fighting Syrian rebels
Hong Kong 18.1
Sydney 12.2 BY MARIA ABI-HABIB “Many houses have been confiscated sian troops, its first alliance with a
with notices that they’ve been reserved global power. It was Hezbollah that de-
Vancouver 11.8 Few wars have seen such a tangle of for this or that family,” Mohammed said. vised the battlefield plan for Aleppo
Auckland 10.0 combatants as Syria’s, from obscure and Hezbollah, founded in the early 1980s used by Syrian and Russian forces last
morphing rebel groups to Russians, to fight Israel’s occupation of southern year, according to Arab and U.S. offi-
San Jose 9.6 Turks, Kurdish and Iraqi militias. From Lebanon, became involved in the civil cials who monitor the group.
Melbourne 9.5 the chaos, one clear winner is emerging. war next door to protect its patrons in Thanks to money and arms from
Returning to his ancestral Syrian Damascus and a supply line of Iranian Tehran, Hezbollah now stands almost
Honolulu 9.4 town of Qusayr after years away, a weapons. After years of growing engage- on a par with Iran as a protector of
Los Angeles 9.3 man named Mohammed discovered a ment, including training thousands of President Bashar al-Assad’s govern-
new militia patrolling the neighbor- mostly Shiite Muslim fighters and begin- ment, and as a sponsor of Shiite fight-
San Francisco 9.2 hood. Patches on the men’s camouflage ning to provide social services, Hezbol- ing forces in Syria.
Bournemouth
8.9 uniforms called them the Islamic Resis- lah is today stronger, more independent “It’s hard to see people rising
and Dorset
tance of Syria. Their identity became and in command of a new Syrian militia through Syrian intelligence or military
*As of 3Q, 2016 clearer when he found a notice on his that its officials say is ready to be de- ranks without the blessing of Hezbol-
Source: Demographia
house claiming it for Hezbollah, the ployed to other conflicts in the region. lah or the Iranians,” said Andrew
THE WALL STREET JOURNAL.
Lebanese militant group. Hezbollah now fights alongside Rus- Please see SYRIA page A6
Braking Bad: Vandals Lay Waste INSIDE A Twist for Yuan
To China’s Share Bikes
i i i
As Leaders Meet
EVAN VUCCI/ASSOCIATED PRESS
Pranksters are having a free ride with
bicycles that don’t require docking stations BY SAUMYA VAISHAMPAYAN year ago.
Yet while the yuan has
BY TREFOR MOSS wheelers on Chinese streets Moves in China’s currency been broadly weakening in
over the past year. The hugely may have given the country a 2017, it has gained about 1%
SHANGHAI—They’ve been popular bikes cost just a hand- competitive edge against against the U.S. dollar, the
stripped bare, thrown in ful of U.S. cents to rent per many of its trading partners currency with the biggest
dumpsters, hung in trees, set hour after users sign up, usu- this year, but there is one weighting in the index. That
on fire, wrenched out of ally putting down a deposit of
shape, tossed in canals, flung between $15 and $45.
TRIBALISM notable exception: the U.S.
The twist comes ahead of
is consistent with the dol-
lar’s pullback against a range
under cars and piled Unlike programs in IN TRUMP’S this week’s meeting between of currencies from the Mexi-
in mangled heaps
outside town.
the U.S. and Europe,
however, these bikes
WASHINGTON President Donald Trump and
his Chinese counterpart, Xi
can peso to the yen as inves-
tors temper their expecta-
In one video, a don’t have docking Jinping, where trade and ex- tions for fiscal stimulus and
young man trundles stations—bikes can be CAPITAL JOURNAL, A2 change rates are set to top the large-scale infrastructure
to the riverfront in left anywhere and agenda. Mr. Trump has repeat- spending, hopes that under-
the northern city of renters use smart- edly accused China of keeping pinned the so-called Trump
Tianjin and flips one phone apps to unlock the yuan’s value artificially trade following the U.S. elec-
casually into the wa- their built-in locks. low, among other alleged un- tion in November.
F. MARTIN RAMIN/WSJ
ter. In others, a pack London and New fair practices that he and Still, the yuan’s rise against
of children vandalize York, where bikes can other critics have said contrib- the U.S. dollar is much
them with delight, be picked up or ute to a ballooning U.S. trade smaller than those notched by
and an old woman A share bike dropped off only at deficit with China. other currencies. The yen has
bludgeons hers with in China docking stations, have The yuan is down 2% this advanced 4.9% and the won
a hammer. about 23,000 share year against a basket of cur- has surged 8.2% against the
The moral of this story: If bikes between them. Shanghai rencies that includes the U.S. dollar so far this year.
you’re somehow reincarnated alone has half a million—and
as a share bike, pray you don’t the sheer number of bikes,
WHEN CHILDREN dollar, Japanese yen, South
Korean won and Australian
That means that even
though the charge China is
end up in China. their often isolated and hap- ARE READY dollar, according to an index deliberately weakening the
More than two dozen bike- hazard parking locations, and
share startups have put mil- the age-old scourges of thiev-
FOR CHORES published by a branch of
China’s central bank. The in-
yuan against the dollar now
carries less weight, the coun-
lions of cheery-hued yellow, ery, petty vandalism and gen- dex is at its lowest since its try might be gaining a rela-
blue, green or orange two- Please see BIKES page A6 LIFE & ARTS, A8 introduction more than a Please see YUAN page A2
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
A2 | Tuesday, April 4, 2017
Tribalism Spreads in Trump’s Washington
CAPITAL JOURNAL
GERALD F. SEIB
T
he problem in Wash-
ington is no longer
simply paralyzing par-
tisanship. The danger at the
moment is that the capital
could be sliding into a kind
of tribalism.
The fights over health
care and a new Supreme
Court justice
suggest that
the divides
aren’t simply
between Re-
publicans
and Demo-
crats. Instead, there are
schisms within the parties,
and in some cases schisms
within the schisms.
The polarizing nature of
President Donald Trump and
his presidency is fueling this
trend, though the roots run
deeper. “Most of these fault
lines, in my view, predate
the president,” says Republi-
YUAN
Continued from Page One
tive edge in trade against
some of its competitors, as a
cheaper currency tends to
make a country’s exports
more attractive.
“Ultimately the weakening
of [the yuan] against the
basket of currencies helps
them achieve the objective of
export competitiveness and
reflation in the economy
while at the same time
avoiding that negative spill-
over effect,” said Roland Mi-
eth, emerging-markets port-
folio manager for Pacific
Investment Management Co.
in Singapore.
In late 2015, the People’s
Bank of China introduced the
index, compiled by the China
Foreign Exchange Trading
System, as it fought to
loosen the yuan’s connection
to the dollar and struggled
to tamp down expectations
of further depreciation after
a surprise devaluation ear-
lier that year. In December
2016, the central bank in-
creased the number of cur-
rencies in the basket to 24
from 13.
Analysts have said the in-
dex was created in part to
stem fears about declines in
the currency, which tend to
lead to capital outflows, fur-
ther destabilizing it. When
Chinese residents and com-
panies expect the yuan to
weaken, they are more eager
TESLA
Continued from Page One
ants by taking bold steps to
bring advanced self-driving
technology to the roadway.
“Other auto makers really
have to make this transition
to electric and autonomous,
and it’s almost like twice as
hard for them to get there
than it is for Tesla,” said
Tasha Keeney, an analyst for
ARK Invest, which owns
shares in Tesla, GM and Toy-
ota Motor Corp.
Tesla is on a path to meet
its goal of 50,000 deliveries
in the first half of the year.
The company said Sunday it
delivered roughly 25,000 ve-
hicles—about 13,450 Model S
sedans and about 11,550
Model X sport-utility vehi-
cles—in the quarter, up 69%
from a total of 14,820 a year
earlier.
It was Tesla’s best quarter
of sales on record, topping
the third quarter of 2016,
when it delivered 24,500 ve-
hicles.
Much of the first-quarter
gain came from the continued
rollout of the Model X, which
had 2,400 sales a year earlier.
The Model S increased about
8% from a year earlier.
Yet, Tesla remains a shaky
bet. The 13-year-old company
is unprofitable, deeply in-
debted and delivered just
76,000 cars last year. Its Au-
topilot mode is untested as a
fully autonomous feature and
has raised safety concerns.
Ford has over 20 times the
annual revenue, billions of
can Rep. Tom Cole of Okla-
homa, a Washington veteran.
“He didn’t create them. He
walked into it.” Indeed, the
divides may be signs of a po-
litical and ideological re-
alignment under way.
A new health-care bill
was choked off by ideologi-
cal divisions among Repub-
licans, while Democrats are
splitting over whether to
force a blowup in the Sen-
ate rules in an attempt to
stop Supreme Court nomi-
nee Neil Gorsuch. A similar
fate may await coming ef-
forts at tax reform and in-
frastructure spending unless
the White House finds a
way to blur the lines to
form a governing coalition
across them.
For now, think of the capi-
tal as divided among five
tribes:
• The Trump Tribe. This
group is made up of the
president, his advisers and
his wider administration.
The president is essentially
an independent force who
won office with limited sup-
port from his Republican
Party’s leaders, and who
now is surrounded in the
White House largely by peo-
to swap their savings into a
currency that isn’t eroding in
value, such as the dollar.
In periods when the yuan
is declining against the dol-
lar, the People’s Bank of
China tends to hold the index
stable, highlighting its
steadiness as evidence it
isn’t deliberately devaluing
the currency, market partici-
pants say.
When the yuan lost 4.4%
against the dollar in the last
six months of 2016, the
CFETS index slipped only
0.2%, prompting an unidenti-
fied official to write that the
yuan “continued to remain
generally stable against a
basket of currencies” in a
widely noted article posted
on the CFETS website.
By contrast, when the
yuan is strengthening
against the dollar, the cen-
tral bank tends to let the in-
dex fall by not letting the
yuan rise as much as other
currencies, as is happening
now.
For much of the year to
date, the yuan’s value against
the dollar has been higher in
offshore markets, where it
trades more freely, than in
domestic markets, suggest-
ing that broader market ex-
pectations of yuan deprecia-
tion have receded for now.
“Even though we saw the
index dropping to record low,
sentiment in the market is
still quite stable,” said Ken
Cheung, Asian foreign-ex-
change strategist at Mizuho
Bank in Hong Kong.
dollars in profit and sells mil-
lions of cars each year. It isn’t
standing still under Chief Ex-
ecutive Mark Fields, promis-
ing to deliver self-driving
cars by 2021. It is buying and
investing in tech startups: It
invested $1 billion in Argo AI,
a company consisting of engi-
neers from the autonomous-
vehicle programs of Uber
Technologies Inc. and Alpha-
bet Inc.
A Tesla Model S 90D at a showroom in South Korea.
Electric Shock
Ford and Tesla market values since Tesla’s IPO, in billions
$60
40
20
0 *Based on prices during early Monday trading
2010 ’11 ’12 ’13
Source: FactSet
WORLD NEWS
ple with limited govern- party show it can get things
ment experience. done, even if that means ac-
Administration officials’ cepting compromises.
loyalty is more to their pres- Mr. Cole estimates that,
ident than to the party that while this group had com-
runs Congress, and many prised about 70 of the
Capitol Hill Republicans ap- House’s 237 Republicans,
pear to feel limited loyalty in the health-bill episode actu-
return. That was illustrated ally has drawn in more
in the health debacle. members alarmed by that
Mr. Trump’s own loyalty failure. He estimates its size
is largely to his voters out- now as 100 or more. This
side Washington. And those group also is well repre-
voters are standing with sented in the Senate.
The polarizing nature of the Trump
presidency is fueling this trend.
him. The Journal’s Dante • Freedom Caucus Re-
Chinni dug deep into Gallup’s publicans. This is a group
presidential job-approval that, at its core, consists of
numbers for February and about 40 of the House’s
March and found that, even most conservative Republi-
as Mr. Trump’s approval rat- cans. (The exact number
ings slumped nationally, they isn’t clear and shifts
went up in the working-class around a bit.) They are the
and Appalachian counties people who stood in the
that form his base. way of the bill to repeal
and replace Obamacare be-
• Governing Republicans. cause they thought it didn’t
These are Republicans who sufficiently adhere to their
think that, after waiting to principles.
gain full control of the gov- The Freedom Caucus has
ernment, it’s essential the in the past found sympathiz-
New Airline Employees Are Set for Takeoff
MASS MEETING: More than 1,600 Japan Airlines employees attended a company entrance ceremony at a hangar in Tokyo on Monday.
Ford is coming off one of
its most profitable periods in
history, after a restructuring
effort led by former Chief Ex-
tors that brighter days are
ahead, particularly as impor-
tant markets plateau. He has
proposed a number of ways
ecutive Alan Mulally that to reshape Ford, but his vi-
eliminated brands, closed sion is weighed down by a
plants and streamlined the century-old business model
company’s global operations. that will be expensive to re-
Under Mr. Fields, who took shape.
over Ford in 2014, the com- Ford is forecasting leaner
pany has benefited from results for 2017, further con-
strong truck demand but firming Wall Street’s view
struggled to persuade inves- that traditional car makers
are still too exposed to the
auto industry’s boom-bust cy-
cles.
“We do not run our busi-
ness based on day-to-day
stock changes,” Ford said
Monday. “What we are doing
is focusing our business on
what drives value creation,
SEONGJOON CHO/BLOOMBERG NEWS
which is profitable growth,
minimizing risk and deliver-
ing strong returns.”
Ford’s market value is
roughly the same as it was in
late 2010, when a newly pub-
lic Tesla was valued at less
than $2 billion. Ford’s stock
has fluctuated since then,
while Tesla’s has steadily
risen and has surged more
than 50% since the com-
pany acquired SolarCity Corp.
in November. The acquisition
was part of Mr. Musk’s vision
to have under one roof a
Tesla company that could offer cus-
$46.67 tomers solar roof panels, bat-
billion* tery storage units and elec-
tric-powered cars. It is a
Ford
vision he highlighted in Feb-
$46.14 ruary when he removed the
billion*
word “Motors” from Tesla’s
official name.
Mr. Musk is betting that a
less-expensive Model 3 will
’14 ’15 ’16 ’17
help Tesla evolve from a lux-
THE WALL STREET JOURNAL. ury-car maker into one with
THE WALL STREET JOURNAL.
ers in the Senate: Ted Cruz,
Mike Lee, Rand Paul. Mr.
Trump has spent the past
few days sniping at the Free-
dom Caucus, and its mem-
bers are firing back.
• Never-Trump Demo-
crats. On the other side of
the aisle are some Demo-
crats who appear determined
not to cooperate with Mr.
Trump on anything. The pre-
cise number is hard to tell,
but Sen. Bernie Sanders of-
ten gives voice to the feel-
ings of such Democrats; on
Friday he defended Trump
voters while calling the pres-
ident a “fraud.”
Intense anti-Trump feel-
ings at the Democratic grass
roots are fueling such incli-
nations. Republicans are
pointing to a speech last
week by new party Chairman
Tom Perez in which he told a
rally that Democratic pro-
testers feel Mr. Trump
“didn’t win the election.”
• Maybe-Sometimes-
Trump Democrats. These
are moderate to conservative
Democrats, many from states
the president won in the No-
vember election, who are
willing to work with the
Trump administration on se-
mass-market appeal. He is
aiming to make 500,000 vehi-
cles next year, a projection
doubted by some of his big-
gest supporters.
Still, Morgan Stanley autos
analyst Adam Jonas has a
price target of $305 a share
for Tesla, estimating the
added value could come from
a ride-hailing service that
Mr. Musk has hinted will
work with future vehicles.
“Tesla is distinctively posi-
tioned to commercialize an
app-based, on-demand mobil-
ity service,” Mr. Jonas wrote
in a note to investors.
Some old-timers disagree.
CORRECTIONS 
AMPLIFICATIONS
ICBCIL Finance Co., a sub-
sidiary of Industrial & Com-
mercial Bank of China, issued
a $2 billion bond in the first
quarter. A Markets Review &
Outlook article Monday about
Chinese companies’ bonds in-
correctly said that Industrial &
Commercial Bank issued the
bond.
Xiaomi Inc. co-founder
Lei Jun met with Elon Musk
in Silicon Valley in 2013. The
China Circuit column in the
Friday-Sunday edition about
Tencent’s investment in
Tesla Inc. incorrectly said
the meeting took place in
2014.
Readers can alert The Wall Street
Journal to any errors in news articles
by emailing wsjcontact@wsj.com.
lected issues. Sens. Heidi
Heitkamp of North Dakota,
Joe Manchin of West Vir-
ginia and Joe Donnelly of In-
diana, for example, have said
they would back Judge Gor-
such for the Supreme Court,
while a big majority of their
colleagues go the other way.
The chances of such Dem-
ocrats working with the
White House are “completely
dependent on what the issue
is,” says Ms. Heitkamp. “The
question is whether the well
is too poisoned to get any-
thing done. I think the an-
swer to that is no.”
In fact, the Senate’s com-
bination of governing Re-
publicans and Democrats
willing to work with them
form the likeliest path to
any legislative achievement
amid a tribal Washington.
Democratic Sens. Heitkamp,
Manchin, Mark Warner and
Claire McCaskill, and Repub-
lican Sens. Bob Corker, John
McCain, Rob Portman and
Lamar Alexander—they are
the kinds of people who
hold the key.
It may be impossible for
them to prevent a standoff
over a Supreme Court nomi-
nee, but a tax overhaul
looms as the next big test.
FRANCK ROBICHON/EUROPEAN PRESSPHOTO AGENCY
“Its market cap is based on
hype and promises versus
substance,” said David Cole,
an outspoken supporter and
investor in Detroit auto mak-
ers, and chairman emeritus of
the Center for Automotive
Research in Ann Arbor, Mich.
THE WALL STREET JOURNAL.
Dow Jones Publishing Company (Asia)
25/F, Central Plaza, 18 Harbour Road,
Hong Kong
Tel: 852 2573 7121 Fax 852 2834 5291
Andrew Dowell, Asia Editor
Troy McCullough, Senior News Editor, Asia
Darren Everson, International Editions Editor
Hugo Restall, Editorial Page Editor
Mark Rogers, Advertising Sales
Jacky Lo, Circulation Sales
Jacquelyn Drozdoff, Communications
Simon Wan, Technology
Jonathan Wright,
Managing Director Asia & Publisher
Advertising through Dow Jones Advertising
Sales: Hong Kong: 852-2831 2504; Singapore:
65-6415 4300; Tokyo: 81-3 6269-2701;
Frankfurt: 49 69 29725390; London: 44 207
842 9600; Paris: 33 1 40 17 17 01; New York:
1-212 659 2176.
Or email: Mark.Rogers@wsj.com
Printers: Hong Kong: Euron Limited, 2/F., Block 1,
Tai Ping Industrial Centre, 57 Ting Kok Road, Tai
Po, Hong Kong; Indonesia: PT Gramedia Printing
Group, Jalan Palmerah Selatan 22-28, Jakarta
10270; Japan: The Mainichi Newspapers Co., Ltd.,
1-1-1 Hitotsubashi, Chiyoda-ku, Tokyo, 100-8051;
Korea: JoongAng Ilbo. 100 Seosomun-ro, Jung-gu,
Seoul, 100-814. Publisher/ Printer: Song, Pil-Ho;
Malaysia:Dasar Cetak (M) Sdn Bhd, Lot 2, Jalan
Sepana 15/3, Off Persiaran Selangor, Seksyen 15,
40200 Shah Alam, Selangor. (ROC No: 048885)6;
Singapore: Singapore Press Holdings Limited, 82
Genting Lane Media Centre Singapore 349567
Trademarks appearing herein are used under
license from Dow Jones & Co.
©2017 Dow Jones & Company. All rights reserved.
USPS 337-350; ISSN 0377-9920
NEED ASSISTANCE WITH
YOUR SUBSCRIPTION?
By web: http://wsj-asia.com
By email: service@wsj-asia.com
By phone: Hong Kong: 800 901 216; Australia:
0011 8000 322 8482; China: 400 991 1174;
India: 000 800 440 1938; Indonesia: +62 21
2970 2702; Japan: 0120 779 868; Korea: 0030
844 0063; Malaysia: 1800 804 612; New
Zealand: 0800 442 434; Philippines: 1800 1441
0033; Singapore: 1800 823 2042; Taiwan:
00801 444 141; Thailand: 001800 441 8323
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
THE WALL STREET JOURNAL.
For Black Boxes, a Holding Pattern U.N. Slams
Australia’s
Aviation community is
deadlocked on best way
to improve technology
for probing accidents
BY ANDY PASZTOR
Three years after Malaysia
Airlines Flight 370’s unre-
solved disappearance sparked
efforts to implement new
flight-data recorder technol-
ogy, the global aviation com-
munity is deadlocked over the
best way to ensure investiga-
tors will have timely access to
vital clues in future crashes.
Technical, marketing and ju-
risdictional disputes—pitting
Boeing Co. and U.S. regulators
against Airbus SE and Euro-
pean authorities—have blocked
consensus over prospective
changes to today’s black boxes
that help unravel accidents.
The most prominent dis-
agreement involves deployable
recorders, devices designed to
capture real-time flight data
and cockpit conversations, just
as damage-resistant black-box
recorders do.
But while conventional black
boxes are intended to be recov-
ered from wreckage, the alter-
native devices, already used in a
broad range of military jets and
helicopters world-wide, are de-
signed to be jettisoned automat-
ically before impact and to float.
Airbus and other proponents
say that supplementing current
systems with deployable tech-
nology would lead to easier
searches, with features includ-
ing built-in emergency trans-
mitters that can pinpoint loca-
tions on the surface of water.
In the opposing camp, Boe-
ing’s position is that the de-
ployable technology is unnec-
essary partly because there are
Japan Envoy to Return to Seoul After Monthslong Rift
BY ALASTAIR GALE
TOKYO—Japan’s ambassador
to South Korea, withdrawn three
months ago amid a dispute over
the countries’ wartime past, will
return to Seoul on Tuesday to
bolster coordination in dealing
with North Korea, Japan said.
Japanese Foreign Minister
Fumio Kishida said Tokyo is
also sending its ambassador
back to prepare for a new gov-
ernment in South Korea,
which is set to hold a presi-
dential election on May 9.
Japan and South Korea are
the two closest allies of the U.S.
in East Asia and coordinate
with Washington on defense.
The three nations are holding a
joint three-day antisubmarine
exercise starting Monday as
part of moves to counter rising
threats from North Korea.
However, Tokyo and Seoul
Malaysia Airlines ground staff worked on aircraft at Kuala Lumpur International Airport in January.
so few crashes of big jets, and
the recorders are expensive to
maintain and potentially haz-
ardous if ejected by mistake.
The disagreement has played
out in various forums, both in
public and private. Federal
Aviation Administration offi-
cials say it is hard to justify
the costs of deployable record-
ers versus the safety benefits.
Progress in adopting de-
ployable systems has been
slow, with U.S. and European
regulators watching to see
whether the other side takes
action to benefit either Boeing
or Airbus at the other’s ex-
pense. Equipment changes will
take at least several years to
show up, and they are expected
to affect only new jetliners
rolling off assembly lines.
The rivals say they don’t
compete on safety matters, but,
in this instance, each company
also frequently clash over the
legacies of Japan’s 35-year col-
onization of the Korean Penin-
sula through 1945. One of the
most contentious issues is the
use of Korean women by the
Japanese military as forced
sex workers during that time.
In late 2015, the two coun-
tries reached a deal that both
sides said would “finally and
irreversibly” end a dispute
over Japan’s atonement for
the so-called comfort-women
system by providing an apol-
ogy from Japan’s prime minis-
ter and ¥1 billion ($9 million)
in Japanese government funds
to support the women. Around
40 of the women remain alive.
The deal was accepted by
most of the women but became
unpopular in South Korea, in
part because it was agreed to
by former President Park
Geun-hye, who has since been
Tuesday, April 4, 2017 | A3
WORLD NEWS
United Nations agency that
sets global-safety standards,
the International Civil Aviation
Organization, worked to over-
Treatment
come public concerns. Ac-
knowledging that new options
were essential, experts spelled
Of Natives
out various potential solu- BY ROB TAYLOR
tions, publicly debated their
merits and tried to persuade CANBERRA, Australia—The
plane makers and equipment top United Nations envoy on
suppliers to embrace them. indigenous rights criticized
After some hiccups, indus- Australia for “deeply disturb-
try and the ICAO agreed on ing” levels of racism and urged
steps to track aircraft more the country to embrace a
closely, especially when they treaty that would recognize its
fly over large expanses of wa- indigenous people as its first
ter or remote polar regions. inhabitants, a move she said
RAHMAN ROSLAN/GETTY IMAGES
But to help future investiga- would help combat prejudice.
tors, industry and government Australia’s indigenous peo-
officials world-wide are consid- ple make up less than 3% of
ering a different option, which the 24 million population, but
doesn’t involve hunting for and suffer higher rates of impris-
retrieving recorders: streaming onment, domestic violence and
some flight data to the ground unemployment, according to
via satellites, in the event of an government data.
in-flight emergency or when tra- “I have found the preva-
ditional recorders are damaged lence of racism against Ab-
has quietly pressured suppliers searches were often protracted or lost after a crash. That solu- original and Torres Strait Is-
and government agencies to affairs. In the case of Malaysia tion, however, has been held up lander Peoples deeply
embrace their view, people fa- Airlines’ Flight 370, black by concerns about transmission disturbing,” Victoria Tauli-
miliar with the details said. boxes haven’t been recovered costs and who would control in- Corpuz, the U.N. special rap-
The result, these people say, despite extensive underwater formation flowing off aircraft. porteur on indigenous rights,
has impeded the initial sense searches in remote, deep parts The FAA initially considered said in a report ending her 15-
of urgency among regulators. of the Indian Ocean. deployable recorders unreliable. day visit. “This manifests itself
“Governments and interna- Airbus, which considers de- As the Boeing-Airbus contro- in different ways, ranging
tional organizations are moving ployable recorders a market- versy was revving up in 2015, from public stereotyped por-
mighty slowly,” said Alan Diehl, ing advantage, intends eventu- the FAA told international avia- trayals of them as violent
a former military and commer- ally to install them widely on tion authorities that mandating criminals, welfare profiteers
cial accident investigator. “The newly manufactured jets. Out- deployable systems would and poor parents and to dis-
public perception is, ‘Why can’t side experts said continued amount to a “redundant and ec- crimination in the administra-
we have the solution now?’ ” maneuvering over the issue onomically burdensome” step. tion of justice.”
Historically, the FAA consid- has complicated those plans. The agency has now devel- One in four prison inmates
ered status-quo black-box tech- The standoff wasn’t what oped design standards to miti- is of indigenous heritage, a
nology as acceptable. Agency of- was envisioned after the myste- gate those risks, said Peggy Gil- statistic Ms. Tauli-Corpuz said
ficials point out that in nearly rious predawn tragedy of March ligan, who retired in March as was “simply astounding.”
every jetliner accident stretch- 8, 2014, when Flight 370 and the FAA’s top safety regulator. In a February report to Par-
ing back decades, including the the 239 people on board bound Still, an FAA spokeswoman liament, Prime Minister Mal-
2009 midocean crash of an Air for Beijing from Kuala Lumpur said the agency hasn’t re- colm Turnbull said his govern-
France Airbus A330 that killed dropped off radar and continued ceived a single request to cer- ment was failing to close the
228 people, conventional black flying for hours without com- tify such a system on a com- gap between indigenous and
boxes ultimately were recovered. munication from the cockpit. mercial aircraft. other Australians in six of
Supporters of deployable Airline trade groups, regu- —Robert Wall seven priority areas, including
devices counter that those lators and leaders of the contributed to this article. health and unemployment.
Following the deal, Japan
said it expected South Korea Trump Vows to Act signaled it would keep Chinese
to remove a statue of a com- goods eligible for higher U.S.
fort woman built by a civic Against Pyongyang tariffs well into the future.
group outside the Japanese “China will either decide to
Embassy in Seoul in 2011. WASHINGTON—President help us with North Korea, or
However, that statue remains Donald Trump said the U.S. is they won’t,” Mr. Trump said in
in place, and at the end of willing to take unilateral action an interview with the Financial
2016, activists built an identi- against North Korea if China Times published Sunday. “And
cal statue outside the Japa- doesn’t move to contain the if they do that will be very
LEE JIN-MAN/ASSOCIATED PRESS
nese consulate in South Ko- burgeoning nuclear power, as good for China, and if they
rea’s second city of Busan. he put trade and the military don’t it won’t be good for any-
Japan recalled its ambassa- threat from Pyongyang at the one.” He added: “I think trade is
dor, Yasumasa Nagamine, in top of the agenda of his the incentive.”
early January, saying the instal- planned meeting with Chinese Asked if a grand bargain
lation of the Busan statue was President Xi Jinping this week. with China could result from
a violation of the 2015 agree- In his comments, Mr. Trump the meeting, he said: “Well, if
ment. It called on South Korea looked to tie U.S. imports of China is not going to solve
Yasumasa Nagamine in January to remove it before Mr. Naga- Chinese goods with China’s co- North Korea, we will. That is all
mine would return to Seoul. operation on North Korea. The I am telling you.”
removed from office. Critics of Since then, concerns have Trump administration, which China has favored talks with
the deal in South Korea have risen in both countries about the has made narrowing the trade North Korea, while signing on to
also slammed the Korean gov- threat from North Korea follow- deficit a priority, has called United Nations sanctions.
ernment for not consulting the ing a string of missile launches. China a nonmarket economy —Ben Kesling
surviving comfort women be- —Jonathan Cheng in Seoul with unfair trade practices, and and Peter Nicholas
fore the agreement was signed. contributed to this article.
 For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
A4 | Tuesday, April 4, 2017 HK JP KO ML SI IN UK FR MN PR THE WALL STREET JOURNAL.

WORLD NEWS

St. Petersburg Subway Blast Kills 10 History of Attacks

On Russian Targets
One explosive device
If the St. Petersburg blast
disarmed at another turns out to be a terrorist at-
station; Putin considers tack, it would be the latest in
a string of attacks on Russian
terrorism ‘above all’ targets. The deadliest include:

BY NATHAN HODGE u October 2015: Islamic

AND JAMES MARSON State-affiliated militants
down Russian airliner over
MOSCOW—A blast tore Egypt, killing 224 people.
through a subway train in St.
Petersburg on Monday, killing u December 2013: Suicide
10 people and injuring dozens bombings in city of Volgo-
more, officials said, adding an grad kill 34 and injure 100.
explosive device was found and
disarmed at another station. u January 2011: Bomber
Russian President Vladimir blows himself up at Mos-
Putin, who was in St. Peters- cow’s Domodedovo Airport,
burg to attend a media forum, killing 35 and injuring 180
said it was too early to say people.
what caused the explosion, but
didn’t rule out terrorism. u March 2010: Suicide
“Naturally, we always con- bombers attack Moscow
sider all options—both domes- subway during rush hour,
tic and criminal, and above all killing at least 40 and injur-
WWW.VK.COM/SPB_TODAY/ASSOCIATED PRESS

actions of a terrorist nature,” ing more than 100.

he said at a meeting with Be-
larusian President Alexander u November 2009: Bomb
Lukashenko. explodes under train travel-
State television showed first ling between Moscow and
responders arriving on the St. Petersburg, causing de-
platform at Technology Insti- railment that kills 28, injures
tute station and treating ap- nearly 100.
parent victims. Videos posted
on social media and broadcast u September 2004: About
on television showed smoke in- 30 Chechen militants seize
side the station and the doors school in Beslan. More than
of a subway train bent out- Blast victims lying near a subway train hit by an explosion at the Technology Institute station in St. Petersburg, Russia, on Monday. 330 people, about half of
ward by the blast. them children, are killed.
Seven people died at the rate subway station, a spokes- to the scene of the blast, which alties by allowing the wounded more than a century ago, in-
scene, one in an ambulance man for the National Anti-Ter- happened between Sennaya to be treated and evacuated cluding the assassination of u October 2002: Chechen
and two on arrival at hospital, rorist Committee, Andrei Ploshchad, or Haymarket quickly, a spokeswoman for the Czar Alexander II. But the militants take 800 people
Russian Health Minister Veron- Przhezdomsky, told state tele- Square, a busy downtown sub- Investigative Committee told 300-year-old city, popular hostage at Moscow theater.
ika Skvortsova said in televised vision channel Rossiya 24. way station that connects Interfax news agency. with tourists for its architec- Special forces storm building,
comments. She said 47 people Authorities closed down all three lines, and Technology In- Much of Russia’s elite hails ture, theaters and museums, and 129 hostages and 41
had been injured, six of whom subway stations in St. Peters- stitute station. from St. Petersburg, including has been spared the large- Chechen fighters are killed.
are in a serious condition. burg, Russia’s second-largest The subway driver carried Mr. Putin. scale terror attacks that have
An explosive device was city. Officials said more than on to the next station, prevent- The former czarist capital hit Moscow in the past two —Associated Press
found and disarmed at a sepa- three dozen ambulances raced ing a greater number of casu- was a site of terror attacks decades.

WORLD WATCH
South Africa EUROPEAN UNION tors watch for signs that the

Cabinet Shuffle
ECB is preparing to end its very
Unemployment Falls, generous monetary policy. Critics
But Remains High say strong growth numbers com-
bined with recent sharp rises in

Deepens Divide
A drop in the number of peo- inflation render the central bank’s
ALI LUFTI/EUROPEAN PRESSPHOTO AGENCY

BY GABRIELE STEINHAUSER as analyst warnings of an al-
most-certain downgrade of the
JOHANNESBURG—Rifts be- country’s credit rating.
tween allies and opponents of But it is unclear how much
South African President Jacob the opposition or a disgruntled
Zuma deepened over the week- ANC leadership can do to rein
end, setting up a decisive week in Mr. Zuma. The 86-member
for the ruling African National National Executive Committee,
Congress following the ouster the ANC’s top decision-making
of a popular finance minister. panel, remains stacked with the
The ANC’s top six officials— president’s allies. A previous at-
three of whom have lashed out tempt to oust him failed in No-
against the firing of Pravin vember and among the officials
Gordhan—were meeting on promoted in the cabinet shuffle
Monday to decide whether to were several members of the
take further steps against Mr. National Executive Committee.
Zuma, including a gathering of “That is Zuma taking out
the party’s National Executive insurance against the NEC tip-
Committee, which could force ping against him,” Prof. Booy-
the president to step down. sen said.
Parliament Speaker Baleka
Mbete said on Sunday that she
would spend the week in con-
CORNELL TUKIRI/EUROPEAN PRESSPHOTO AGENCY
ple without work in Italy and
Spain drove a decline in the eu-
rozone’s unemployment rate to
its lowest level since mid-2009
in February, a sign that the cur-
rency area’s modest economic
recovery accelerated slightly in
the early months of 2017.
The European Union’s statis-
tics agency said the unemploy-
ment rate across the 19 coun-
tries that use the euro fell to
9.5% from 9.6% in January,
reaching its lowest level since
May 2009. The number of peo-
ple without work fell by 140,000
from January, as the number of
jobless Italians dropped to 2.98
million from 3.06 million, and the
number of jobless Spanish to
4.09 million from 4.13 million.
The eurozone’s unemployment
rate has been falling steadily, if
slowly, since the bloc’s economy
returned to growth in mid-2013.
The decline is set to continue in
RECOVERY: Indonesian rescuers carried the body of a landslide victim
in Ponorogo on Monday. Three people are dead and dozens missing.
in just under six years.
However, unemployment
rates in southern Europe are still
very high, with Italy’s clocking in
at 11.5% in February, and Spain’s
at 18%. Overall, the eurozone’s
jobless rate was more than dou-
ble its U.S. equivalent.
—Paul Hannon
EUROPEAN CENTRAL BANK
Top Official Says
negative interest rate and bond-
buying program inappropriate.
Still, the day of reckoning
likely remains far off. The ECB
hasn’t yet discussed its exit
from its bond-buy program, Mr.
Coeuré said. The central bank’s
chief economist said separately
that the ECB’s monetary policy
remained appropriate.
Mr. Coeuré said the central
bank’s negative deposit rate was
a good complement to bond
buying, but cautioned that this
must prepare for higher borrowing couldn’t last forever. “Negative
costs, a top European Central Bank rates were very effective but
official said, putting the economy they shouldn’t go on for too
on notice that the days of ultralow long as that penalizes the bank-
policy rates are numbered. ing sector.”
“It is clear that the financial The central bank is unlikely to
sector and the economy and change policy soon, meaning
states should prepare for an en- there will continue to be a sig-
vironment of higher rates,” nificant policy divergence be-
Benoît Coeuré said. Mr. Coeuré tween two of the world’s most
sits on the ECB’s six-person important central banks. The
Frankfurt-based executive board, Federal Reserve decided in mid-

sultations on whether lawmak-
ers should be recalled from re-
cess to vote on the president’s
future. Without a special ses-
sion, any motion against Mr.
Zuma would be delayed until
May, giving the ANC time to
pacify defectors in its ranks.
Zweli Mkhize, the ANC’s
treasurer, added his criticism of
Mr. Zuma’s conduct to that of
Deputy President Cyril Rama-
phosa and ANC Secretary-Gen-
President Jacob Zuma eral Gwede Mantashe, who
complained they weren’t con-
Opposition parties de- sulted on the cabinet changes.
manded that Parliament be That means three of the
convened for a special session ANC’s six most senior officials
to consider motions of no con- have come out against the shuf-
fidence against Mr. Zuma, fle, with only ANC Deputy Sec-
while civil-society groups retary-General Jessie Duarte
called on citizens to wear black standing by the president.
on Monday to protest the cabi- Ms. Mbete, the final member
net shuffle. The hashtag of the leadership team, which
#BlackMonday was trending includes Mr. Zuma, on Sunday
on Twitter in South Africa. declined to endorse or criticize
More street protests are the president’s decision.
planned for Friday, the same In a statement released Sat-
day Moody’s Investors Service urday, Mr. Mkhize warned that
is expected to release its latest the way Mr. Gordhan was let
assessment of South Africa’s go “may have had long unde-
creditworthiness. It rates the sirable consequences for the
country’s debt at Baa2, two ANC and South Africa,” includ-
notches above junk. ing the economy.
“What we see this time is a Opposition parties took ad-
more all-around mobilization vantage of the warring within
against the president,” said Su- the ANC to harden their own
san Booysen, professor at the ranks.
Wits School of Government in The Democratic Alliance an-
Johannesburg. “What we do nounced Sunday it was initiat-
not know is whether this time ing disciplinary actions
coming months, with a survey of
3,000 manufacturing companies
by IHS Markit pointing to a
pickup in hiring during March as
output grew at its fastest pace
IRAQ
Continued from Page One
zations, launched an innova-
tion office for the White
House last week that intends
to help reform government.
Mr. Kushner didn’t speak
with reporters on the trip into
Iraq, his first ever trip here,
which was preceded by an
overnight stay at a U.S. mili-
tary base in Germany.
He is accompanied by Tom
Bossert, a former administra-
tion official under President
Brace For Rate Rise
Interest rates will rise again and
firms, households and politicians
George W. Bush who is now
serving as Mr. Trump’s home-
land security adviser.
Mr. Mattis and Gen. Dun-
ford are completing a review
of the strategy to fight the
group. Mr. Trump signaled
during the campaign and
since assuming office that he
had a plan to accelerate the
fight against Islamic State,
offering no details about
what it might be.
No plan has emerged, and it
now falls to Mr. Mattis and
Gen. Dunford to come up with
a new strategy. Gen. Dunford
declined to discuss what the
which along with the 19 national March to raise interest rates and
central bank governors of the policy makers there expect fur-
countries that use the euro sets ther tightening this year.
ECB monetary policy. —Todd Buell
The comments come as inves- and William Horobin
new strategy would look like.
But, according to numerous
U.S. officials, the strategy may
largely resemble the old one,
where we go strategically—
having good situational
awareness about what’s hap-
pening tactically and hear it
initiated under President Ba- first hand and unfiltered, how
rack Obama, with tweaks and our advisers assess the Iraqi
additions in the margins, U.S. security forces, both the op-
officials said. portunities and the chal-
Gen. Dunford said he in- lenges—will feed into some-
vited Messrs. Kushner and body’s strategic view,” Gen.
Bossert to join him on the trip Dunford told the small group
some weeks ago so they could of reporters traveling with
see for themselves the work him on a military jet.
troops are doing here, since The new strategy, or a re-
they will be part of the deci- finement of it, may include ad-
sion on strategy. ditional U.S. troops for both
“I think anyone who’s in- Iraq and Syria, possible
volved in the discussion on changes that could put Ameri-
can soldiers closer to the front
lines, and an accelerated air-
strike campaign.
Under Mr. Obama last fall,
the U.S. military had already
been given additional authori-
ties which essentially dele-
gated decision making closer
to the battlefield.
The visit comes as Ameri-
can and Iraqi troops fight to
evict Islamic State militants
from the northern Iraqi city of
Mosul and prepare for a fight
against the group in Raqqa,
its self-declared de facto capi-
ANDRES MARTINEZ CASARES/REUTERS

around it will go further.” against its former leader and tal in Syria.
Mr. Zuma dismissed Mr. current premier of the West- Meanwhile, the U.S. mili-
Gordhan—along with 19 other ern Cape province, Helen Zille, tary is investigating a series
ministers and deputy ministers for a series of tweets in which of airstrikes in recent weeks
who were either moved out of she defended the legacy of co- that officials believe may be
or around the cabinet—early lonialism in South Africa. DA partly responsible for the
Friday, ignoring objections leader Mmusi Maimane said deaths of scores of civilians in
from his party’s top brass. The the tweets damaged the repu- both Iraq and Syria. There
move sent the rand tumbling tation of the DA, which has was no new assessment from
and triggered a selloff of South been working to draw in more those investigations, Gen.
African banking stocks, as well black voters. An Iraqi police officer walks along a street recaptured from Islamic State fighters in Mosul. Dunford said Sunday.
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
THE WALL STREET JOURNAL. Tuesday, April 4, 2017 | A5

Turning Dreams
Into Success
MULTIPLIERS OF
PROSPERITY

Seed capital can produce great yields.

For some people, it’s getting a lender to listen, give advice and take a chance.

For others, it’s their own savings, kept in a safe place — a bank account — for the first time, or a
small grant that can give just enough of a lift to help them escape the rut of poverty.

MetLife Foundation recognizes the power of

financial inclusion to improve people’s lives.
Helping small businesses — or low-income individuals wanting to become entrepreneurs — requires
different solutions. Cultures and economies vary, not just around the world but also within specific countries.

MetLife Foundation presents a collection of programs, tailored to different segments of the world’s
low-income majority, which can build their financial well-being and make them part of the global economy.

Hear the stories of individuals who have succeeded in moving toward financial health and the people who
have helped them do it.

multipliersofprosperity.com

WSJ. Custom Studios is a unit of The Wall Street Journal advertising department.
The Wall Street Journal news organization was not involved in the creation of this content.
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
A6 | Tuesday, April 4, 2017
SYRIA
Continued from Page One
Exum, until January a U.S.
deputy assistant secretary of
defense for the Middle East.
With its growing might, this
arch-foe of Israel, a group long
labeled terrorist by the U.S.,
has gained a modicum of inter-
national recognition. It partici-
pated in negotiations sponsored
by Russia following the rout of
rebels from Aleppo. When
China’s special envoy to Syria
visited Lebanon in December,
he carved out time to see Hez-
bollah’s foreign-relations chief.
Even before the Syrian civil
war, Hezbollah had evolved
beyond its guerrilla-group ori-
gins into a business and politi-
cal enterprise that holds posi-
tions in Lebanon’s government
and runs social programs such
as schools and clinics. Now it
is poised to capitalize on what
many Middle East analysts ex-
pect will be an eventual end to
the Syrian war that leaves Mr.
Assad in power. Syria will
have $180 billion of war-re-
construction needs, by a
World Bank estimate. Hezbol-
lah has experience at that. Af-
ter a 2006 conflict with Israel,
the group efficiently orga-
nized the rebuilding of bat-
tered Beirut suburbs.
“Hezbollah is well-posi-
tioned to make a lot of
money” from Syrian recon-
struction, said Matthew Levitt,
director of the Washington In-
stitute’s Stein Program on
Counterterrorism and Intelli-
gence, a veteran of the Trea-
sury and State departments.
U.S. and Israeli officials
have watched the growth of
Hezbollah with concern, wor-
ried it could draw on its Syr-
ian recruits to pressure Israel
from a new front along the
Golan Heights, captured by Is-
rael 50 years ago. In March,
Hezbollah announced the for-
mation of a Syria-based “Bri-
gade for the Liberation of the
Golan” devoted to wresting
the heights back for Syria.
“Israel knows that what has
happened in Syria has changed
Hezbollah, which has devel-
oped from not just defending
against Israel, but attacking
it,” said a senior official from
an alliance of Hezbollah, Syria
and Iran. “It has now devel-
oped traditional and nontradi-
tional means of war. It fights
like a guerrilla army but also
like a conventional one.”
Israel hasn’t waited for a
Hezbollah attack in the Golan,
sending aircraft to strike Ira-
nian shipments of sophisticated
arms to Hezbollah.
Premier Benjamin Netanyahu
told President Donald Trump
during a February U.S. visit that
Hezbollah’s expanded arsenal
also endangers American war-
ships in nearby waters, said dip-
lomats briefed on the meeting.
The U.S. is well aware of
Hezbollah’s expanding capabili-
ties and will continue working
closely with partners in the re-
gion to address threats the mil-
itant group poses, a State De-
partment official said, adding
that disrupting Hezbollah’s ter-
rorist and military capabilities
BIKES
Continued from Page One
eral mischief-making have led
many to meet grisly fates.
The abuse has become so
widespread that several hun-
dred Good Samaritans across
the country have taken up the
cause. “I can’t bear to see this
behavior,” said 26-year-old
Sun Shiyue, who works for a
unit of Coca-Cola Co. in
Shanghai by day, and patrols
his neighborhood by night
with a flashlight looking for
damaged or misused bikes
from Mobike, one of China’s
largest bike-share programs.
He reports problems via the
Mobike app, moves badly
parked bikes and tapes a small
notice—which he made him-
self—to the bike’s saddle re-
buking the previous user for
irresponsible behavior.
“They are the prey, and I
am the hunter,” he said of the
saboteurs.
Before China began opening
up in the late 1970s, bicycles
conferred prestige. They were
one of the four status symbols
Chinese newlyweds aspired to
own—the others being a watch,
a radio and a sewing machine.
Bicycles lost their glow to cars
as China’s economy took off,
but as traffic and congestion
became a problem, bikes be-
came trendy again.
In recent months, investors
have plowed $1 billion into Chi-
nese bike-share companies.
Hezbollah fighters honor one of their comrades who died in combat in Syria during a funeral last month in southern Lebanon.
was a top U.S. priority.
Hezbollah’s new clout is add-
ing to fears among Gulf states
that Iran’s power also is grow-
ing, drawing Saudi Arabia and
the United Arab Emirates to
agree to work with Israel. Their
focal point is now Yemen,
where Mr. Trump has agreed to
provide a Saudi-led alliance
with stepped-up U.S. military
assistance to counter the
Houthis, who were trained by
Hezbollah and supported by
Iran. The Gulf states, in turn,
have tentatively agreed to try
to bring the Palestinians to the
negotiating table with Israel.
Religious power
Hezbollah’s role has implica-
tions for eventual postwar ar-
rangements in Syria, given how
its religious influence will likely
compete with the secular poli-
tics of the Assad regime. Before
the war, that government was
improving relations with Saudi
Arabia and once even consid-
ered a peace treaty with Israel.
The improved ties have broken
down, with the Saudis support-
ing Syrian rebel groups. Diplo-
mats in the region say any nor-
malization of relations after the
war ends, likely with Mr. Assad
still in power, will be even more
difficult given Hezbollah and
Iran’s newfound clout in Syria.
Hezbollah has helped the
Assad regime survive partly by
propping up its undisciplined
military, which is plagued by
corruption and defections. In
Syrian villages retaken from
rebel control, Hezbollah fight-
ers have been seen holding
Syrian soldiers by the wrist or
collar and forcing them to re-
turn appliances or furniture
looted from homes.
Syrian civilians say Hezbol-
lah fighters sometimes openly
disrespect Syrian troops on bat-
tlefronts, a stark change from
its previous deference. Cars
with blacked-out windows and
Lebanese license plates screech
up to Syrian checkpoints, the
Biking Bonanza
Use of China’s shared bike
services is growing fast.
120 million users
100
80
60
40
20
0.2
0 station said thousands of
2015 ’16 ’17 ’18
Forecasts
Source: BigData Research
THE WALL STREET JOURNAL.
The bright yellow, single-
gear bikes from Ofo, another
of the nation’s largest opera-
tors, cost under $60 apiece,
making them relatively unat-
tractive to thieves, said Chief
Operating Officer Zhang Yanqi.
But their locks are simple and
security is rudimentary, a
strategy Mr. Zhang said helps
keep costs low. Users receive a
code for a bike’s combination
lock after inputting the bike’s
ID number into the Ofo app.
Ofo has lost 1% of its bikes
since it launched in September
2015—a small share but still a
large number; Ofo is set to
have 20 million bikes on the
street by the end of 2017, Mr.
Zhang said.
Mobike, Ofo’s orange rival,
has taken a different tack: Its
higher-end bicycles cost up to
IN DEPTH
A Power in Syria
The Lebanese militant group Hezbollah has become an important
player in the Syrian civil war, training local fighters and leading
offensives against anti-Assad rebels.
100 miles
100 km
Homs
Qusayr
LEBANON
Beirut Zabadani
Damascus
Quneitra
ISR.
JORDAN
Source: staff reports
Hezbollah commanders inside
refusing to get off their phones
during identification checks or
to answer questions posed by
their Syrian allies.
When Russia and Syria
wanted to put priority on re-
taking Islamic State’s capital
of Raqqa last year, Hezbollah,
along with Iran, insisted the
focus instead be dislodging
rebels from Aleppo to force
them to the negotiating table,
according to Mr. Exum and a
Hezbollah official.
The strategy worked. The
rebels evacuated Aleppo and
agreed to participate in Rus-
sian-sponsored political negoti-
ations now taking place in loca-
tions outside Syria.
When formed in the 1980s,
Hezbollah was trained by
Iran’s Quds Force, an arm of
the Islamic Revolutionary
Guard Corps that manages Ira-
nian clients across the region.
Hezbollah gave Lebanon’s dis-
’19
A mass of sabotaged shared bikes near a park in Shenzhen in southern China.
$400 each to build; users un-
lock them by scanning a QR
code on the bike with their
smartphone. They are bristling
with security measures, in-
cluding GPS tracking and an
alarm system. That makes Mo-
bike’s loss rate “negligible,”
said spokesman Martin Reidy.
Nevertheless, tech-savvy
thieves have begun producing
fake QR codes for Mobikes and
sticking them over the genuine
codes. When users scan the bo-
gus codes they end up, in some
cases, transferring money to
the scammers. Two men in the
coastal cities of Ningbo and Fu-
zhou were charged with com-
mitting such a fraud in March,
state media reported.
Bikes stolen from various
programs—and repainted—
have turned up for sale in
Cities where Hezbollah has
TURKEY spearheaded major offenses
Aleppo
SYRIA
IRAQ
SAUDI ARABIA
THE WALL STREET JOURNAL.
enfranchised Shiite community
political power and won its
loyalty by providing free
schooling and health care in
addition to protection.
Militarily, it remained a
guerrilla force, better at launch-
ing rockets from the bushes
than spearheading offensives
on urban centers—until Syria’s
civil war began in 2011. After
wading in to protect its Iranian
arms flow, Hezbollah stepped
up its military commitment to
counter Sunni extremists such
as Islamic State, which regards
Shiite Muslims such as Hezbol-
lah as infidels. Hezbollah ex-
panded its arsenal by gaining
access to Russian and Syrian
weapons under the cover of the
civil war’s chaos.
Shipments from Iran gave
the Lebanese group precise and
powerful armaments that it
previously lacked, such as Rus-
sian-made Yakhont missiles,
said a former State Department
countryside shops.
A man in Chengdu was ar-
rested last month after being
caught red-handed, sur-
rounded by the dismantled
parts of numerous shared
bikes. Stealing the bikes and
reselling them whole was too
unsubtle, the man told police,
local media said, so he was
breaking the bikes down and
jumbling the parts together to
form new ones.
Some people are so fond of
the bikes they have taken to
hoarding them, so one is al-
ways handy. It is common to
see bikes stashed inside offices,
or cached in stairwells. In Feb-
ruary, two Beijing nurses were
arrested for allegedly locking
up shared bikes with their own
locks, for which they spent five
days locked up themselves, lo-
THE WALL STREET JOURNAL.
Hezbollah social influence in
parts of Iraq that persists.
In Syria, Hezbollah is play-
ing for lasting political and so-
cial influence, Western and
Arab diplomats say. The group
has broadened its mandate
from countering Israel to
fighting Sunni extremist
groups across the region to
protect religious minorities—
not only Shiites but also Chris-
tians. It has begun replicating
inside Syria the social pro-
grams that brought it loyalty
and political success at home.
Hezbollah has created a Syr-
ian branch of its Imam al-
Mahdi youth movement, a Boy
MAHMOUD ZAYYAT/AGENCE FRANCE-PRESSE/GETTY IMAGES
Scouts-type group whose Face-
book page shows videos of chil-
dren getting coloring books, sa-
luting at military parades and
somersaulting over fire pits.
Part of the idea is to funnel
young people to Hezbollah-
sponsored local fighting groups
and to the larger ranks of Syr-
ian civilians—accountants, hair-
dressers and farmers—who
maintain a fierce dedication to
what they call the resistance.
Among Hezbollah supporters
in Syria, deference to the Da-
mascus regime is eroding. Pho-
tos on the walls in Syrian towns
official. Cooperation with Rus- show dead fighters, described
sia on the battlefield further in- as martyrs, against a backdrop
creased the flow of weaponry. of Hezbollah leader Hassan
“Russian stocks are open to Nasrallah and Iranian revolu-
Hezbollah,” said a Hezbollah tionary leader Ayatollah Ruhol-
official who travels frequently lah Khomenei. There are few
to Damascus. “Our fighters photos of Mr. Assad.
eat and sleep alongside theirs Coffins of Syrians who
and we’re sharing everything, fought with Hezbollah used to
always.” While an end to come home draped with both
Syria’s war could change the Syria’s flag and Hezbollah’s
dynamics, Middle East ana- bright yellow banner showing
lysts generally think Hezbol- a green hand holding up a ri-
lah’s expanded access to fle. Over the past year, they
weapons is secure. have started arriving with just
Damascus was once consid- the Hezbollah flag.
ered a Hezbollah proxy mas-
ter, but Western diplomats
say the Lebanese group is War spoils
carving out its own zones of In Qusayr, the Syrian town
influence across Syria by where Hezbollah has confis-
training local fighters. They cated homes for its support-
include Shiites and Alawites, ers, Hezbollah militants held a
the latter being adherents of a military parade in November
branch of Shiite Islam that in- showcasing antiaircraft sys-
cludes the Assad family. tems and tanks. “To host a
Western diplomats estimate military parade commending
the number of these fighters yourselves in another country
loyal to Hezbollah’s command, is as bold as you can get,” said
which Hezbollah calls al-Ridha a former State Department of-
Forces, and known locally as ficial. “It’s telling your masters
“Hezbollah in Syria,” in the tens ‘We’re here now.’ ”
of thousands. Hezbollah offi- The boldness carries over
cials say it is lower. Hezbollah’s to the negotiating table in
presence in Syria stretches 250 talks to decide Syria’s fate.
miles from the northern tip to Hezbollah has dangled offers
the south, longer than the to Syrian rebel groups weary
length of Lebanon. of fighting. A pending deal
Ryan Crocker, a former U.S. with one called Saraya Ahl
ambassador to both Iraq and Alsham, in the southwest Syr-
Syria, said the autonomy Hez- ian town of Qalamoun, would
bollah enjoys in Syria arises allow people who fled to re-
partly because “Iraq is more turn with a promise of protec-
important for Iran in many tion from Syrian government
ways than Syria is,” while to prosecution or conscription.
Hezbollah, next-door Syria is Hezbollah has said it would
more important. guarantee the agreement.
Messrs. Crocker and Exum “Hezbollah is in charge of
said Hezbollah’s strategy in the whole region, and they
Syria mirrors the Lebanese control everything here,” said
group’s involvement in Iraq af- Abu Ishak, a spokesman for
ter the 2003 U.S.-led invasion. Saraya Ahl Alsham. Tweaking
At that time, Hezbollah pro- an Arabic proverb to describe
vided training inside Iran to the Syrian regime’s absence
Iraqi Shiite militiamen. Iran re- from the negotiating table, he
lied on Arabic-speaking Hezbol- said, “Hezbollah designs it, and
lah officers to bridge a language the Syrian regime wears it.”
gap that Iran’s Farsi-speaking —Noam Raydan
Quds Force couldn’t overcome. and Rory Jones
A collateral result was to seed a contributed to this article.
of charge.
“It’s a lot of fun,” Li said.
Sometimes they mix it up by
locking bikes together, Li said,
or by removing locks and
swapping them, baffling the
next user when the code they
are given doesn’t work.
Authorities, until now gen-
erally supportive of the pro-
grams, are starting to get fed
up with the snarls of parked
share bikes blocking streets
and intersections.
A vendor at Beijing’s
Bawangfen long-distance bus
SIPA/ZUMA PRESS
shared bikes routinely block
buses from entering or leaving
the station. “It causes argu-
ments and even fights,” said
Mr. Yan, the vendor, who gave
cal media reported. only his surname. “The city
In January, hundreds of sent a guy to maintain order,
shared bikes were found but he does nothing.”
dumped in a huge pile in the Some local governments
southern city of Shenzhen by have impounded thousands of
unknown saboteurs. In other bikes, and Shanghai authorities
locations, ranks of bikes have warned bike companies not to
had their brake lines severed. put any more on the streets.
Vandals have also taken to Mobike and Ofo both said they
scratching off Ofo bikes’ ID are working with authorities to
codes, making locked bikes un- iron out these troubles.
usable. Mr. Sun, the Good Samari-
Some of the vandalism is tan, said bike sharing had
just old-fashioned mischief. Li, brought too big an improve-
a 12-year-old Shanghai middle- ment to urban China to be fa-
school student, and his friends tally punctured by crooks or
have a game: seeing how many vandals. He said he thinks
Ofo bikes they can unlock by China will eventually learn to
exploiting a weakness in the love its bikes once more, add-
company’s system: People of- ing, “Mobike is part of my life
ten neglect to jumble up the now.”
lock’s combination at the end —Junya Qian
of their ride, enabling some- and Kersten Zhang
one to flip open the lock free contributed to this article.
 For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
THE WALL STREET JOURNAL.
Senate Panel Considers Court Nominee
Republicans weigh
whether to change
rules if Democrats try
to block judge
BY BYRON TAU
WASHINGTON—The Senate
Judiciary Committee was vot-
ing Monday on whether to
support Neil Gorsuch’s nomi-
nation as the Senate braces for
an increasingly acrimonious
fight this week over President
Donald Trump’s pick to fill the
vacancy left by the death of
Justice Antonin Scalia.
Monday’s vote by the 20-
member Judiciary Committee
is the first step in Judge Gor-
such’s confirmation vote by
the full Senate, with a show-
down over Senate rules brew-
ing in the chamber. As of Sun-
day, three Democrats said they
would support confirming
Judge Gorsuch in a body
where 60 votes are needed to
clear a procedural hurdle. Re-
publicans control 52 seats but
have the power to change the
Senate rules to eliminate the
60-vote requirement on Su-
preme Court nominees.
“What I can tell you is that
Neil Gorsuch will be confirmed
this week. How that happens
really depends on our Demo-
cratic friends,” said Senate Re-
publican leader Mitch McCon-
KEVIN LAMARQUE/REUTERS
Rep. Justin Amash (R., Mich.), left, and Mark Sanford (R., S.C.) are part of the Freedom Caucus, which opposed the GOP health-care bill.
Trump Still Hopeful on Health Bill
BY PETER NICHOLAS
President Donald Trump sig-
naled that he wasn’t abandon-
ing efforts to dismantle and re-
place the Affordable Care Act,
invoking unity within the same
Republican Party he threatened
just last week to purge of dissi-
dent lawmakers.
“Anybody (especially Fake
News media) who thinks that
Repeal & Replace of Obamacare
is dead does not know the love
and strength in R Party!” ac-
cording to a message posted
Sunday on Twitter by Mr.
Trump. He added: “Talks on Re-
pealing and Replacing Obama-
care are, and have been, going
on, and will continue until such
time as a deal is hopefully
struck.”
The GOP health-care bill col-
lapsed in the House late last
month, when Republican lead-
ers failed to secure enough sup-
port to bring it to the floor. Al-
though some Republicans have
said they hoped to revive
it, leaders for now want to ad-
dress other agenda items, nota-
bly a rewrite of tax policy.
Rep. Kevin Brady (R., Texas),
WASHINGTON
What Ivanka Trump,
Kushner Pay for Rent
Ivanka Trump and Jared Kush-
ner, President Donald Trump’s
daughter and her White House
adviser husband, are paying
$15,000 a month to rent their
new home in Washington’s fash-
ionable Kalorama neighborhood
from its billionaire owner, accord-
ing to newly filed documents.
The documents, filed by the
landlord with the District of Co-
lumbia housing department,
present the first concrete finan-
nell on Sunday, speaking on
NBC.
The vote in the committee
is expected to fall largely
along party lines. Of the nine
Democrats on the Judiciary
committee, eight said they
would vote against Judge
Gorsuch—citing concerns
about his judicial decisions
from his time of the federal
Tenth Circuit Court of Ap-
peals and worries about his
independence from Mr.
Trump. Judge Gorsuch is ex-
pected to draw unanimous
support from Republicans on
both the committee and the
Senate as a whole. They
praise him as a model jurist
who is well-qualified to fill a
Supreme Court seat.
At the start of Monday’s
Senate committee hearing,
Sen. Chuck Grassley (R., Iowa),
the committee’s chairman,
praised Mr. Gorsuch’s qualifi-
cations and said the judge is
“well within the mainstream.”
Ranking member Dianne
Feinstein of California an-
nounced at the committee
hearing that she wouldn’t sup-
port Judge Gorsuch. Another
Democrat on the committee,
Chris Coons of Delaware,
hadn’t yet said which way he
would vote on Judge Gorsuch.
The committee’s vote is
technically only advisory—
Judge Gorsuch could still be
considered by the full Senate
the chairman of the House
Ways and Means Committee,
told reporters in the Capitol last
week: “We continue to move
our focus to tax reform.”
Mr. Trump’s tweet marks an-
other shift in his roller-coaster
rhetoric following the failure of
the Republican health-care
push. After initially blaming
Democrats, Mr. Trump later
lashed out at conservatives and
floated the idea of working out
a compromise with Democrats.
It is unclear whether Mr.
Trump’s latest tweet was meant
to demonstrate a shift in politi-
cal strategy toward smoothing
over differences between the
Republican Party’s conservative
and establishment blocs.
Last week, he took aim at the
conservative Freedom Caucus,
saying he would target them in
the 2018 elections unless they
got on board with his plans, as
punishment for their opposition
to the GOP health bill.
Mr. Trump wrote that the
caucus would “hurt the entire
Republican agenda if they don’t
get on the team, & fast.” Refer-
encing the midterm elec-
tions, he lumped in Freedom
U.S. WATCH
cial information about the rental
agreement between the couple
and the home’s owner, a Chilean
magnate whose company is em-
broiled in a dispute with the U.S.
government over a mine poten-
tially worth billions of dollars.
The rent is in line with that
paid for similar luxury properties
in the area, according to local
brokers. Andrónico Luksic, bought
the house after the November
election and paid $5.5 million for
the six-bedroom property. The
house never was advertised for
rent. The White House has said
Ms. Trump’s and Mr. Kushner’s
broker knew somebody had a bid
U.S. NEWS
Supreme Court Justice nominee Neil Gorsuch during his Senate confirmation hearing on March 22.
without the approval of a ma-
jority of the committee, but
such an event is extremely
rare. Moreover, Republicans
control a majority of seats on
the panel and no GOP senator
has indicated any opposition
to Judge Gorsuch.
After clearing the commit-
tee, Judge Gorsuch would be
voted on by the full Senate. A
procedural vote on Judge Gor-
Caucus members with Demo-
crats as opponents “we must
fight.”
Picking up on this theme, se-
nior White House aide Dan
Scavino, in a tweet Satur-
day, singled out a prominent
member of the Freedom Cau-
cus, Rep. Justin Amash (R.,
Mich.). Mr. Scavino’s tweet de-
scribed the congressman as a
“big liability” and urged the
“TrumpTrain” to defeat him
next year in a GOP primary.
Mr. Amash responded on
Twitter: “Bring it on. I’ll al-
ways stand up for liberty, the
Constitution & Americans of
every background” and said
the Trump administration and
party establishment have
merged into the “Trumpstab-
lishment.”
Appearing on CNN’s “State
of the Union,” Freedom Caucus
member Jim Jordan (R., Ohio)
stuck up for Mr. Amash.
“Justin Amash is a good
friend and one of the most prin-
cipled members of Congress
and frankly if he is primaried
I’m going to do everything I can
to help him,” Mr. Jordan said.
On Sunday, however, the
on the property and helped facili-
tate the match.
“This was an arm’s-length
transaction at a market price,”
said Hope Hicks, a spokes-
woman for the White House,
Ms. Trump and Mr. Kushner.
—Mark Maremont
and James V. Grimaldi
MANUFACTURING
Factory Activity
Continues to Expand
U.S. factory activity deceler-
ated slightly in March but con-
tinued to expand at a solid pace,
such is expected on Thursday,
where he would need to get 60
votes to advance. If that vote
fails, Republicans are expected
to seek to vote to change Sen-
ate rules, a move that requires
51 votes, and advance the nom-
ination that way. A final vote
in the Senate to confirm the
nominee is expected Friday.
Many Democrats have said
Judge Gorsuch is out of the
White House seemed to want to
make amends with health-care
critics. After sending out his
tweet, Mr. Trump went to his
club in Virginia for a golf out-
ing with Sen. Rand Paul (R., Ky.)
who had dismissed the GOP’s
health law as “Obamacare-lite.”
They were joined by White
House Budget Director Mick
Mulvaney.
After playing golf with Mr.
Trump, Mr. Paul told reporters
that the two men had “talked
about a little bit of health care.”
He also said that “I continue
to be very optimistic that we
are getting closer and closer to
an agreement on repealing
Obamacare.”
Mr. Trump made clear in an
interview with the Financial
Times, published Sunday, that
he isn’t giving up on passing a
health-care bill.
“If we don’t get what we
want, we will make a deal with
the Democrats and we will have
in my opinion not as good a
form of health care, but we are
going to have a very good form
of health care and it will be a
bipartisan form of health care,”
Mr. Trump said.
signaling healthy momentum in
the nation’s manufacturing sec-
tor. The Institute for Supply
Management said its closely
watched index of U.S. manufac-
turing activity fell to 57.2 in
March from 57.7 in February. A
number above 50 indicates ex-
pansion in the factory sector.
Economists surveyed by The
Wall Street Journal had ex-
pected a March reading of 57.5.
It was the seventh consecutive
month of industrial expansion,
though down from a February
reading that was the highest level
for the index since August 2014.
—Ben Leubsdorf
Tuesday, April 4, 2017 | A7
during an election year.
“Gorsuch will not reach the
60-vote margin,” Sen. Chuck
Schumer, the Democratic
leader in the Senate, predicted
on NBC Sunday. “Instead of
changing the rules, which is
up to Mitch McConnell and the
Republican majority, why
doesn’t President Trump,
Democrats, and Republicans in
the Senate, sit down, and try
to come up with a mainstream
nominee?”
Democrats changed Senate
rules in 2013 to eliminate the
60-vote procedural threshold
on cabinet nominees and
lower-court judges, but kept it
SUSAN WALSH/ASSOCIATED PRESS
in place for Supreme Court
nominees. Republicans are
threatening to use the same
procedure on Supreme Court
nominees if they can’t reach
60 votes.
“We’re all arguing against
it, but we don’t know any
other options,” Sen. John Mc-
Cain (R., Ariz.), who has a his-
tory of working across the
mainstream and threatened to aisle, said of the rules change.
mount a filibuster. They en- “It’s just not a good day. It’s
couraged Mr. Trump to choose not a good time.”
a different nominee. Demo- “Our base wants him con-
crats are also upset about the firmed, and would not under-
treatment of former President stand if we didn’t get him con-
Barack Obama’s nominee Mer- firmed with [our] majorities,”
rick Garland, who was nomi- Mr. McCain said. “The Demo-
nated for the same seat. Re- crats are saying this is just an-
publicans declined to vote on other outrage perpetrated by
his nomination, saying that the Republicans. It further po-
the seat shouldn’t be filled larizes the country.”
Flynn Initially
Didn’t Disclose
Russian Incomes
BY BYRON TAU for possible immunity.
Robert Kelner, an attorney
WASHINGTON—President for Mr. Flynn, said he had dis-
Donald Trump’s embattled for- closed a speaker’s bureau con-
mer national-security adviser, tract but not the itemized
Mike Flynn, initially didn’t dis- speeches in the February
close payments he received form, which he described as a
from three Russian-linked enti- draft. He said the process of
ties on a financial disclosure submitting a disclosure form
form he filed upon entering was suspended when Mr.
government. Flynn resigned.
As part of the routine public “When he made his initial
release of the financial-disclo- submission, he very clearly
sure reports from top officials, showed his speaker’s bureau
the White House provided two contract in the relevant part of
versions of Mr. Flynn’s 2016 fi- the form. It was not at all clear
nancial-disclosure form over that he had to itemize,” said
the weekend—an initial version Mr. Kelner. “When he was re-
he filed in February and a more quested to do so, he did.”
complete version he submitted The March 31 form listed the
last week. companies under a section for
On the earlier version of the sources of compensation ex-
form, Mr. Flynn didn’t provide ceeding $5,000 in a year, along
a full list of organizations and with a full list of other speak-
companies that had paid him ing engagements from Mr.
for speaking engagements, in- Flynn that were omitted from
cluding three Russia-linked or- the February form.
ganizations. Those payments Mr. Flynn’s attendance at
became a source of controversy an RT event in December 2015
for the former national security in particular has been a
adviser and retired three-star source of controversy for
Army general who was forced both him and Mr. Trump. RT,
to resign from the Trump ad- previously known as Russia
ministration earlier this year. Today, has routinely been ac-
On a second, amended form cused of acting in the inter-
filed Friday, Mr. Flynn ac- ests of the Russian govern-
knowledged that he had re- ment, and Mr. Flynn was
ceived fees from RT, the televi- seated at the same table as
sion network and media outlet Russian President Vladimir
funded by the Russian govern- Putin during the dinner.
ment; Volga-Dnepr Group, a Mr. Flynn was paid $45,000
Russian air-cargo company; for his appearance, according
and Kaspersky Government Se- to documents released by a
curity Solutions, a U.S. subsid- congressional committee, part
iary of a leading Russian cy- of which went to the speaker’s
bersecurity firm. Those three bureau.
speaking engagements had Since leaving his position as
been previously reported. director of the Defense Intelli-
Mr. Flynn was forced out gence Agency in 2014,
of his White House position Mr. Flynn has taken on signifi-
this year after it was revealed cant private sector work as a
that he misled top officials consultant.
about the nature of his com- He reported $827,055 in sal-
munications with representa- ary from his firm, Flynn Intel
tives of the Russian govern- Group LLC, and additional con-
ment. sulting fees from and salary
He has since been in discus- from a number of other firms
sions with the House and Sen- including the software com-
ate intelligence committees pany Adobe and several de-
about testimony in exchange fense contractors.
LUCAS JACKSON/REUTERS
Mike Flynn at President Donald Trump’s inauguration. Mr. Flynn
was forced out of his White House position earlier this year.
 For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
A8 | Tuesday, April 4, 2017 THE WALL STREET JOURNAL.

LIFE&ARTS
FAMILY

When Can My Child Mow the Lawn?

Chores boost confidence and teach many lessons; a guide to appropriate tasks children can master by age
BY ELLEN BYRON

CAN YOUR 8-YEAR-OLD vacuum

yet?
Assigning new jobs for children
as they mature will develop their
work ethic, says Gregg Murset,
chief executive of BusyKid, a chore
and allowance tracking app based
in Scottsdale, Ariz. “The most im-
portant thing is to challenge
them,” he says. “Once they have
some proficiency you need to
make them stretch to do the next
job.”
Mr. Murset, a father of six chil-
dren ages 10 to 20, believes par-
ents should teach children to do
housework when they’re young, no
matter if it yields imperfect re-
sults. “Even though it’s easier to
just clean the toilet by yourself
and be done with it, you have to
take the long view and realize that
these fundamental life skills are so
important,” he says.
Michael Eisenberg, a financial For age 5 and under, pick up the toys, clean the bedroom and comb their hair. By age 16 to 18, teens can do laundry, grocery shop and car maintenance.
advisor in Encino, Calif., and mem-
ber of the American Institute of
CPA’s National Financial Literacy
Commission, recommends attach-
ing an allowance. “At earlier ages,
it instills within children the real-
ity that you do something and you
get paid for it,” he says.
Here are some housework and
personal-finance matters that chil-
dren can master, by age.

5 and Under: Grasp the Basics

Parents should teach children to
pick up their toys and clean their

F. MARTIN RAMIN/THE WALL STREET JOURNAL

bedroom. Hygiene rituals, including
brushing teeth and combing hair,
can also be assigned as daily jobs.
“You need to get young children
started on these basics so they will
be able to graduate to more impor-
tant tasks,” says Mr. Murset.
Instead of an allowance at this
age, show children how to put
coins into a piggy bank.

6 to 9: Find New Challenges

Assigning essential tasks like fill-
ing the dog bowls with food and
water and operating household
appliances like the vacuum and
dishwasher help build maturity,
responsibility and motor skills.
Families should introduce an al-
lowance at this stage and visit a
bank together. “Let them watch a
teller take the money, do a deposit
and see how much they have in
their account,” says Mr. Eisenberg.
Parents can also offer to match a
child’s savings to help reach a
goal, like buying a toy. The incen-
tive mirrors adult retirement sav-
ings programs.
10 to 12: Offer Choices
Chores that let children make
Teens, 13 to 15, can wash the windows, clean the garage and mow the lawn.
their own decisions are effective
confidence boosters, Mr. Murset
says. Taking out the trash and
walking the garbage and recycling
cans to and from the curb require
manipulating awkward items and
offer a taste of independence, he
says. So does making their school
lunches. “They can decide what’s
in their lunch, and figure out
when and how to get it done,” he
says.
As chores increase in sophisti-
cation and are completed success-
fully, allowances should rise, too,
Mr. Eisenberg says. Parents should
help children designate their earn-
ings between spending, savings
and even investing. Children can
buy a few shares of companies
that make products they’re inter-
ested in, such as toy, candy or en-
tertainment companies.
13 to 15: Build Ambition
“Teens now need to do the big
stuff, like mow the lawn and wash
the windows and cars, making sure
there are no spots on them,” says
Mr. Murset. “The ability to get a
job done all the way is a really
good skill to have.”
New and more challenging tasks
help keep teenagers motivated, he
says. “A work ethic has to be de-
veloped over time, and as you get
Chores for ages 10 to 12 include making lunch and taking out the trash.
harder tasks, you’re becoming bet-
ter adept taking on those chal-
lenges and accomplishing them—
that’s the character development
piece.”
Given the rise of electronic
banking, few children will grow up
watching their parents tackle bills
each month with a stack of paper
statements and a checkbook. Sit-
ting with your teenager as you pay
bills online introduces how house-
holds manage finances, and how
much everything costs, Mr. Eisen-
berg says.
16 to 18: Time to Grow Up
“This is when you start piling on
the stuff that they’re actually go-
ing to need in the next few years
of their life, when they’re adults,”
says Mr. Murset. “Have them do
their own laundry and cook their
own dinner once a week.”
Other adult errands, like gro-
cery shopping and taking the car
for an oil change or emissions
testing, help them better articulate
their needs to strangers, he says.
“And if you have a teen with an at-
titude problem, send them to the
DMV, that’s even better,” Mr. Mur-
set says.
At this stage, Mr. Eisenberg
wants teenagers to get a summer
job outside the home.

YOUR HEALTH | By Sumathi Reddy

A PUSH TO ENCOURAGE SCANS FOR SKIN CANCER

BEVERLY MCCORMICK gets a man, director of the melanoma re-
full-body exam for skin cancer ev- search program at Oregon Health
ery six months. With blond hair, & Science University’s Knight Can-
freckles and light skin, she’s not cer Institute in Portland.
taking any chances. Dr. Leachman was one of the
Ms. McCormick, a 64-year-old two first authors on the perspec-
manager in the financial-services tive piece. Because there isn’t a
department at the Christ Hospital high concentration of dermatolo-
in Cincinnati, says that over the gists in every part of the country,
years her dermatologist has re- she said, it makes sense for pri-
moved a squamous cell carci- mary-care physicians also to per-
noma—a type of skin cancer—as form exams. But to do so, insur-
well as numerous precancerous le- ance coverage is necessary, she
sions. said.
“This isn’t one of those preven- Some experts say the criteria
tive services like mammograms or set forth in the Melanoma Man-
pap smears that are always cov- agement article don’t go far
ered by insurance,” she said. Most enough.
of the cost goes toward her high- “I recommend that every adult
deductible insurance plan. have an annual skin examination,”
Melanoma accounts for the ma- said Elizabeth Hale, a clinical asso-
jority of skin cancer-related deaths ciate professor of dermatology at
and is the fifth most common in- New York University Langone
vasive cancer in men and the sev- Medical Center and senior vice
ISTOCK

enth in women. In the U.S., there
is no national consensus on who
should be screened for melanoma
or how often, so insurance cover-
age varies.
Currently, most patients who
get regular exams, like Ms. McCor-
mick, consult a dermatologist on
their own initiative. But some ex-
perts say screening for melanoma
should be more widespread and
accessible. In a perspective piece
published last week in the journal
Melanoma Management, more
than 50 dermatologists and skin-
cancer experts called for uniform
Some doctors say individuals at high risk for skin cancer should have one head-to-toe exam a year.
guidelines to help individuals de-
termine whether they should get
regular total-body skin exams.
Such tests usually entail a 10-
to-20-minute head-to-toe examina-
tion in which a health professional
studies the size, shape, color and
borders of moles, including in
hard-to-spot places such as the
scalp, under fingernails, behind
the ears and even in the iris of the
eyes. Any suspicious-looking moles
often will be tested for skin can-
cer.
In the Melanoma Management
article, the experts recommend an
annual total body skin exam for
people between the ages of 35 and
75 with one or more risk factors.
Such factors include previous
cases of melanoma, a mutation in
a melanoma gene or a compro-
mised immune system. Other risk
factors: a family history of mela-
noma or a history of indoor tan-
ning and blistering sunburns. Fi-
nally, an annual exam is
recommended for individuals with
a broad array of physical features,
such as light skin; blonde or red
hair; lots of freckles; severely sun-
damaged skin; 40 or more moles;
or two or more atypical moles.
“It’s probably one of the most
cost-effective screenings you can
think about.” said Sancy Leach-
president of the Skin Cancer Foun-
dation, which also recommends
annual screenings for everyone.
Dr. Hale recommends that indi-
viduals with risk factors such as
indoor tanning, light skin, freckles
or atypical moles get two scans a
year. “What makes skin cancer so
unique is early detection is possi-
ble and so critical,” she said.
The average five-year survival
rate is as high as 98% for mela-
noma caught at an early stage, but
drops to about 18% once it is stage
four, or has spread to other or-
gans.
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
THE WALL STREET JOURNAL. Tuesday, April 4, 2017 | A9

LIFE & ARTS

BOOKS

New Insights into a Prince

A new biography reveals unexpected quirks; from a passion for Monty Python to the game-changing role of Camilla
BY BRENDA CRONIN

VISITING THE WHITE HOUSE in

1970, Prince Charles met with

FROM LEFT: GETTY IMAGES; RYAN DONNELL FOR THE WALL STREET JOURNAL
President Richard Nixon in the
Oval Office. Nixon’s advice to wait
watchfully in the wings before be-
coming king didn’t sit well with
the 21-year-old heir apparent.
“To be just a presence would be
fatal,” Charles wrote in his diary,
railing at the notion of “saying
meaningless niceties.”
The account, from a biography
out April 4, reveals a young man
“who didn’t want to spend his life
cutting ribbons,” says the author,
Sally Bedell Smith. Although the
Prince of Wales has devoted con-
siderable time to fox hunting, gar-
dening and painting watercolors,
he “is absolutely driven by this
sense that he has to accomplish all
sorts of things,” Mrs. Smith says. The book reveals the prince was pressured to marry Diana, left with princes
In “Prince Charles: The Passions William and Harry, by his father. Above, author Sally Bedell Smith.
and Paradoxes of an Improbable
Life,” Mrs. Smith decodes a very paralyzed by in- ents preoccupied by their duties,
private public figure whose de- decision—and Charles turned to his grandmother
cades of philanthropy have re- impervious to for affection. “The first part of his
ceived less tabloid coverage than advice. “Proba- life was completely dictated by”
his romances and occasional bly one flaw is Charles’s father, Prince Philip, Mrs.
gaffes. Overshadowed by his daz- his unwilling- Smith says. “He went to schools
zling first wife, Lady Diana Spen- ness to listen to that he hated and went into the
cer, Charles ultimately was re- other points of Navy as he was commanded to
deemed by his second, Camilla view,” Mrs. do.”
Parker Bowles, whom he wed in Smith says. Although a stickler for protocol
2005. “The game-changer in his “He’s very stub- with a sharp temper, Charles has
life was marrying Camilla,” Mrs. born when it mellowed over time, Mrs. Smith
Smith says. comes to pushing his point of says. A Monty Python fan, he has a
Paradoxes dot the life of a man view.” self-deprecating sense of humor
who moves in rarified circles but Mrs. Smith first crossed paths and sustains a good-natured ri-
is most at ease in the countryside, with Prince Charles in 1991 at a valry with his sister Anne, the
where he spends hours weeding conditions before the Industrial out,” she says, citing one person polo match in England. Among the Princess Royal, to tally the most
and tending to hedges. If he hadn’t Revolution. Charles doesn’t like who served Charles’s mother, seven biographies she has written appearances every year.
been born into the royal family, computers and replies to emails Queen Elizabeth II, for almost 20 are lives of Queen Elizabeth II, as The heir apparent since the age
“he would have been a farmer,” with fountain-penned energetic years before going to work for the well as Diana, the Princess of of three, Charles has waited a re-
Mrs. Smith says. scrawls known in England as his Prince of Wales. The employee Wales, who died in 1997. cord stretch of time to become
In the early 1990s, Charles ad- “black spider” memos. found the shift “a total shock to Charles’s life is improbable, king. Queen Elizabeth, who will be
vocated to “radically modernize” The 68-year-old prince does the system,” according to Mrs. Mrs. Smith says, because it follows 91 this month, is Britain’s longest-
the monarchy, in part by slimming know how to use a smart phone Smith. “He said, ‘In the whole time a jagged arc compared with his reigning sovereign. Mrs. Smith de-
down the royal payroll. But the and to text, Mrs. Smith says, a I worked for the Queen, she never mother’s smooth grooming for the scribes how as a boy, Charles
fervent modernizer also is an un- concession largely to communicate called me on the weekend. And the throne. Charles “was caught be- watched his 27-year-old mother
apologetic luddite, who bought with his staff. There has been first weekend I worked for Prince tween the modern world and the practice for her coronation, walk-
property in Romania’s Transylva- churn among employees because Charles, he called me five times.’ ” world of his parents, his mother in ing around the nursery wearing a
nia in part to experience life in the energetic royal “wears people The exacting prince can seem particular,” she says. With his par- bejeweled crown.

Weather The WSJ Daily Crossword | Edited by Mike Shenk

Shown are today’s noon positions of weather systems and precipitation. Temperature bands are highs for the day.
-15 1 2 3 4 5 6 7 8 9 10 11 12 Down 34 Wrestling match
-10 participants
13 14 15 16
1 Worked for
-5
chicken feed 36 Pub fixture
0
17 18 19
5 2 Sighs, e.g. 39 Sierra Club
Beijing
10 20 21 22 23 3 Visits overnight founder
Seoul
Toky
Tokyo 15
24 25 26 27 4 NHL great 40 ___ Plaines
Shanghai
h gh 20
New D
Delhi
lh Bobby 41 Fleshy yellowish
25 28 29 30 31
Riyadh
h Taipei
Taip 30 5 Ballroom dance fruits
lk t
Kolkata
Karachi
h 35 32 33 34 35 36 37 from Brazil 42 Popular
Hong Kong
Hanoi 6 Neopagan Upper East Side
Bangkok
Ban k k Manila 38 39 40
Warm practitioner restaurant closed
41 42 43 44 45 46 47 in 2011
Cold 7 Cologne cry
Kualaa LLumpur
p 43 Carry on
Stationary 48 49 50 51 52 53 8 Mawkish
Singapore
p drivel 46 Not yet captured
54 55 56 57 58
Showers 47 Barry Levinson
Jakarta
k 9 Pair for Arctic
59 60 61
hikers film that won
Rain
the Best Picture
62 63 64 65 66 10 Studio with a Oscar
T-storms
Pegasus logo
67 68 69 49 Off-premise
Snow 11 Starkly simple hosp. worker
70 71 72
Sydney
yd eyy Flurries
12 Blows a gasket 51 Complete
b
Melbourne 15 Wow ’em at the 53 Past, present
Ice STICK TO YOUR GUNS | By Daniel Hamm comedy club and future
Global Forecasts City
Today
Hi Lo W
Tomorrow
Hi Lo W City
Today
Hi Lo W
Tomorrow
Hi Lo W
Across 31 ___ avis 58 Position on the 18 Répondez ___ 55 Drink brand with
s...sunny; pc... partly cloudy; c...cloudy; sh...showers; 1 Mexican moolah 32 Police trap fairway vous plaît a lizard logo
Geneva 17 6 sh 16 5 c Ottawa 7 1 sn 10 0 pc
t...t’storms; r...rain; sf...snow flurries; sn...snow; i...ice Hanoi 27 20 c 28 22 c Paris 18 7 c 16 5 c 59 “Hamilton” prop
6 Funny folks 35 Place for a 23 Netanyahu is its 56 Singapore sling
Havana 32 19 s 32 20 s Philadelphia 22 11 t 20 10 s PM
Today Tomorrow Hong Kong 25 21 s 26 21 s Phoenix 27 14 s 30 16 s 10 Place for a price circuit board 60 Put a bow in ingredient
City Hi Lo W Hi Lo W Honolulu 29 23 pc 30 22 pc Pittsburgh 16 7 sh 19 12 pc 37 Stop indicator 61 Curry of TV 26 “The Barber of 57 “Love Story”
Amsterdam 15 6 pc 11 6 c Houston 31 15 s 24 10 s Port-au-Prince 34 22 pc 35 23 pc 13 Crowd scene
38 Rural news Seville” writer Erich
Anchorage 9 6 r 11 4 c Istanbul 17 11 c 17 10 c Portland, Ore. 16 8 c 16 8 sh participant
property 62 Singer DiFranco composer 64 30-Across
Athens 18 12 pc 19 12 t Jakarta 32 23 t 31 25 t Rio de Janeiro 31 21 s 34 24 s
14 App stand-ins
Atlanta 27 16 pc 24 9 t Johannesburg 28 12 s 28 15 s Riyadh 29 15 s 29 16 s
41 Oomph 63 Ready for battle, 27 Whiskey built it
Baghdad 23 11 s 27 12 s Kansas City 13 6 r 12 3 r Rome 19 7 t 19 8 t 16 Feel sorry about distiller’s need
Baltimore 24 10 t 20 11 s Las Vegas 22 11 s 25 14 pc Salt Lake City 9 0 pc 15 5 pc 44 Haleakala like the other 65 Artist
Bangkok 33 26 c 34 26 t Lima 27 22 pc 27 22 pc San Diego 20 13 pc 23 14 s 17 Institution with National Park long Across 29 “What’s the Lichtenstein
Beijing 21 11 c 19 9 pc London 15 5 c 13 5 c San Francisco 19 11 pc 21 12 pc Post graduates? location answers? ___?” (“Who
Berlin 15 5 pc 13 5 c Los Angeles 24 13 s 27 13 s San Juan 29 24 pc 29 24 pc 66 “Moonlight”
19 Believer’s suffix 67 Horror director cares?”) Oscar winner
Bogota 22 8 pc 22 8 pc Madrid 22 6 s 20 6 pc Santiago 25 10 pc 27 11 s 45 Dill pickle
Boise 14 5 pc 20 11 pc Manila 32 25 s 33 25 s Santo Domingo 31 22 pc 31 22 pc 20 Major retail quarter Craven 33 1960s war zone Mahershala
Boston 7 4 r 7 3 s Melbourne 24 12 pc 24 12 pc Sao Paulo 28 17 pc 30 21 pc
Brussels 16 5 c 12 4 c Mexico City 29 10 s 30 13 pc Seattle 15 8 c 14 8 r
jeweler 48 Away from the 68 Embarrassment
for a fielder Previous Puzzle’s Solution
Buenos Aires 26 16 c 26 12 s Miami 32 24 s 31 24 pc Seoul 19 9 pc 15 10 r 21 Pen name wind C H T A L E A P S F
E L T
Cairo 29 16 s 31 19 s Milan 22 10 pc 20 8 pc Shanghai 20 16 pc 21 16 c 69 Aquarium R O E S A G R E E E
V E R
Calgary 9 -2 s 13 2 pc Minneapolis 15 3 c 12 0 pc Singapore 31 24 pc 31 25 t 22 Belt settings 50 Car freshener T W I
N E N G I N E P L
A N E
Caracas 32 25 s 32 25 pc Monterrey 37 16 pc 27 10 pc Stockholm 13 5 pc 10 1 t scent buildup S L A
T E D D A I
N T Y
24 Some CTA trains P L O T S B I N
S
Charlotte 27 12 s 24 12 t Montreal 6 2 r 9 1 pc Sydney 21 17 sh 21 17 pc
52 Right away, to 70 Booming jet of R E D O N O I S E L E
V E L
Chicago 13 3 c 6 1 r Moscow 7 2 pc 10 4 c Taipei 26 16 s 27 19 s 25 Burglar deterrent the past E V I L P R O D S I R E
Dallas 30 11 s 22 9 s Mumbai 32 24 pc 32 23 pc Tehran 12 4 pc 15 5 s a nurse G O R E P O L L S C L O G
Denver 4 -5 sn 12 -1 s Nashville 26 14 pc 25 5 t Tel Aviv 26 18 s 30 14 s 28 Out of juice 54 Georgia site of 71 Long-haired I K E D E F O E A L D A
S E C R E T F I L E R E E L
Detroit 12 5 c 9 3 r New Delhi 38 22 pc 37 23 t Tokyo 15 10 s 18 13 pc
30 Builder of FDR’s “Little terrier breed T E N D N Y M P H
Dubai 30 24 s 29 22 s New Orleans 28 20 s 27 13 t Toronto 14 4 r 11 3 pc S A I D S O B O O Z E S
Dublin 11 4 pc 11 4 c New York City 17 10 r 17 7 s Vancouver 13 8 r 12 7 r 64-Down White House” 72 Property claims C L O S E O R D E R D R I L L
Edinburgh 12 6 pc 12 4 c Omaha 15 6 c 14 2 r Washington, D.C. 26 12 t 22 12 s A O N E R O OM Y N O L A
Solve this puzzle online and discuss it at WSJ.com/Puzzles.
s

Frankfurt 18 5 pc 16 5 c Orlando 33 20 pc 35 21 c Zurich 15 3 sh 15 4 c M E S A S E E T O S N A P

THE DAILY SHOT

Micro Trends, Macro Context. In Minutes.

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

© 2017 Dow Jones & Co., Inc. All rights reserved. 6DJ5059
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
A10 | Tuesday, April 4, 2017 THE WALL STREET JOURNAL.

OPINION
REVIEW & OUTLOOK
Donald Trump and
The Truth About the China Trade Shock The Plutocrat’s Hubris
W
hen President Trump hosts Chinese and unemployment to workers in trade-exposed
President Xi Jinping this week at sectors is comparable—or even lower—than the By Joseph Epstein A strong argument can be made that,

I
contra Trump, success in business is
Mar-a-Lago, trade will be high on the risk to workers in non-traded sectors and that
n the petit-bourgeois, confidently too narrow to transfer to other realms.
agenda. If Mr. Trump hopes to these risks have not increased philistine milieu in which I grew up, Orderly thought is needed for success
come away a winner, he’ll need New evidence shows that during the period of more in- plutocratic values held a firm pur- of any kind. So, too, the clarity to get
the right objectives. That imports made firms and tense competition with Chi- chase. When the men gathered in the outside oneself to grasp the larger
means focusing on China’s nese imports.” living room after dinner, money talked— forces involved in any complicated
mercantilist practices without workers more competitive. A second recent study— those who had found the greatest finan- transaction. Confidence helps, to be
jeopardizing the benefits of “Firm Reorganization, Chinese cial success tended to dominate the con- sure. But making a wad in real estate,
mutual trade and investment. Imports, and US Manufactur- versation. Since Lou Riskin had made a mail order or auto sales doesn’t impart
Support for this policy comes from two re- ing Employment” by Columbia Ph.D. candidate killing in the mail-order business, the any special advantage in understanding
cent economic studies that debunk the claim Ildikó Magyari—looks at the impact of Chinese assumption was that he had penetrating the complexities of health care, African-
that imports from China—particularly after its imports on U.S. companies. It finds that trade things to say on the subject of urban re- American culture or foreign policy—as
newal. Saul Levine had run the most Mr. Trump and his billionaire-laden
accession to the World Trade Organization in with China reduced costs and allowed firms to
successful Buick agency in the city, cabinet are discovering.
2001—have hollowed out large areas of the U.S. expand “their total manufacturing employment therefore definitely worth listening to
and made Americans worse off. in industries in which the US has a comparative him hold forth on welfare.
The two new papers address the work of MIT advantage relative to China, even as specific” When I hear Donald Trump talk, I It’s now obvious financial
economist David Autor and co-authors David parts of the same company got smaller. think of how much at home he would
Dorn and Gordon Hanson, who have published Although Chinese imports may mean job have felt in those living rooms. The
success does not easily
several papers on Chinese imports. Their much- losses in one part of the company, Ms. Magyari guy’s a multibillionaire, cleaned up in transfer into other realms.
quoted study, “The China Syndrome: Local Labor writes, “these losses were more than offset by real estate, so why shouldn’t he know
Market Effects of Import Competition in the gains in employment within the same firms. about health care, immigration, life in
United States,” looked at 722 geographic areas Contrary to conventional wisdom, firms ex- the inner cities? Or if he doesn’t know, President Trump’s first weeks in office
no reason why with a bit of quick study demonstrate the hubris of the plutocrat.
from 1990 to 2000 and 2000 to 2007. It found that posed to greater Chinese imports created more
he can’t find out enough to put every- The defeats began with his releasing an
“rising imports cause higher unemployment, manufacturing and nonmanufacturing jobs thing in order. immigration order neither well thought
lower labor force participation, and reduced than non-exposed firms.” Somewhere David Ri- My father was a moderately success- out nor even quite legal. He obviously
wages in local labor markets that house import- cardo is smiling. ful businessman—for a kid who never didn’t investigate thoroughly the men he
competing manufacturing industries.” Both studies conclude that competition from finished high school, an immensely suc- hired for key positions in his campaign
Jonathan Rothwell, senior economist at Gal- China increased the value of U.S. workers. As Ms. cessful one—but too well-mannered to (Paul Manafort) or his administration
lup and a visiting scholar at George Washington Magyari notes, using Census Bureau data, compa- wish to dominate these living-room dis- (Mike Flynn). On health care, he evidently
University Institute of Public Policy, studied the nies that faced competition and reorganized, ex- cussions. Yet he had no argument with had no notion of the variety of views
effects of China trade on the same areas during panded employment “by 2 percent more per year the underlying rules of the game. As an within his newly adopted party.
the same two time periods. His findings, pub- as they hired more (i) production workers in man- adolescent, I heard several of his busi- I’ve not read “The Art of the Deal,”
lished in “Cutting the Losses: Reassessing the ufacturing, whom they paid higher wages, and (ii) ness homilies: If you work for a man for nor do I plan to do so during this life, but
a dollar an hour, always give him two I should imagine that the heart of any ef-
Costs of Import Competition to Workers and in services complementary to high-skilled and
dollars worth of effort; you make your fective negotiation is finding common in-
Communities,” are different because his meth- high-tech manufacturing, such as R&D, design, money not in selling, but in buying terests among those at the bargaining ta-
odology is different. engineering, and headquarters services.” right; you can’t argue with success. ble. In business, the paramount common
The Autor team compared changes across the An import surge does hurt some workers in That last bit was the only one that, interest is obvious: money, profit all
two time periods, but Mr. Rothwell analyzed the some industries, and the Chinese surge after its as I grew older, began to get on my round. In politics, it turns out, much
two time periods separately. He did this to ac- entry into the WTO was bigger than most. But the nerves. What, I would ask my father, is more is usually entailed.
count for macroeconomic trends, which were evidence suggests that its impact was also a net better to argue with? How the success In government, unlike business, many
not the same in both times for all places. For ex- benefit to many U.S. workers and firms, and that’s was achieved, what went into it, who things cannot be delegated. Careful
ample, the dot.com boom followed by a bust in without taking into account the benefit to con- suffered because of it? By success my study may be sufficient for determining
places like San Jose, Calif., shows a downturn in sumers from lower prices for clothing and other father meant financial success. The where to build a new hotel, but an un-
the second period compared to the first but that daily goods. In any event that surge is now over money game was the real one, and not derstanding of varied, often subtle hu-
the least satisfying thing about it was man motives is required to compose and
had little to do with China. and the U.S. economy has adjusted.
the tidy means of keeping score: How pass a complex piece of legislation.
Mr. Rothwell’s results show that foreign com- Mr. Trump is right to press Mr. Xi on intellec- much, in hard cash, did one come out That financial success doesn’t easily,
petition didn’t affect workers in manufacturing tual property and cyber theft, high tariffs, favor- with in the end? or always, transfer into other realms is
any more than domestic factors like automation, itism to “national champions” and other bad I am someone who finds it difficult now obvious. Let’s hope that the evi-
bad management or right-to-work, low-tax practices. He shouldn’t worry about trade in to think about money for more than dence on display during the early days
states. The economist finds “the risk of layoff general or the size of the trade deficit. two minutes at a time. I rather envy of his administration will soon humble
those who have earned enough money even so arrogant a man as America’s
to sit out forever from the financial new president. Donald Trump and those
Japan’s Open Hand to South Korea wars, but I don’t envy them sufficiently
to drop the things that interest me
who support him ought to think about
arguing with success, at least as the plu-

T
okyo’s decision to send Ambassador Ya- the war. But it makes no sense to kill a deal that more in order to emulate them. Money- tocrats construe it.
making seems a useful skill, but not
sumasa Nagamine back to Seoul is a re- offers help for victims in their old age. In this much more. I’ve known too many nin- Mr. Epstein’s books include “Frozen
sponsible decision that will benefit the case, left-wing groups are exploiting the comfort nies who seem to have mastered it to in Time: Twenty Stories” and “Wind
security of Japan and South women issue to hold the coun- be in thrall myself. Sprints: Shorter Essays.”
Korea. The display of leader- Countering North Korea try’s foreign policy hostage.
ship should inspire reflection is too important to let gently Japan and South Korea ur-
among South Koreans.
Mr. Nagamine was with-
drawn from his post early this
need to improve coop-
WWII issues interfere. eration to meet the threat from
North Korea. Last November
No Justice in Argentina
year after the South failed to the two countries reached a The international com- an amnesty for both sides. But when
honor the terms of a 2015 agreement to resolve the deal to share military intelligence. And this week munity is up in arms President Néstor Kirchner took office in
about last week’s at- 2003, he and his wife, Cristina (who was
issue of “comfort women”—Korean women forced they are holding a joint naval exercise along with
tempt by the Venezuelan president from 2007 to 2015) decided
to become prostitutes by the Japanese Imperial the U.S. aimed at countering submarine- Supreme Court to take they would make a name for themselves
Army during World War II. The deal included Jap- launched missiles. Mr. Nagamine’s return will over the National Assem- as human-rights advocates by jailing the
anese compensation for the survivors. help security ties develop smoothly.
The breakthrough agreement also required As Japanese Vice Minister for Foreign Affairs AMERICAS bly, as if doing so would armed forces. The propaganda from the
mark the end of democ- left was already hip-deep, as evidenced
By Mary
Seoul to remove a statue of a Korean girl placed Kiyoshi Odawara wrote in these pages in Janu- racy in the troubled na- by the widespread belief that the dicta-
Anastasia
as a protest outside the Japanese Embassy. That ary, “It is difficult to accept the actions of activ- O’Grady
tion. Let’s face it: That torship “disappeared” 30,000 individu-
didn’t happen, and activists erected an identical ists undermining the trust and expectation of ship sailed long ago. The als, a claim never substantiated.
statue outside the Japanese Consulate in Busan. friendship that we have strenuously worked to onset of authoritarian- With the help of the many militants
It’s easy to understand that many South Kore- build up.” As Tokyo continues to act responsibly ism in Venezuela dates to at least April still dreaming of making Argentina an-
ans remain dissatisfied with Tokyo’s refusal to and offer reconciliation, Seoul has a responsibil- 2002, when the military tried and failed to other Cuba, the Kirchners began arrest-
remove then-President Hugo Chávez for ing former soldiers. They refused to ar-
fully acknowledge atrocities committed during ity to reciprocate.
his violations of the constitution. rest former guerrillas, though many
In those days of the glorious “Bolivar- openly admitted that they had been part

The Other French Radical ian revolution,” Chávez’s defenders re-

fused to recognize his frontal attack on
of the terrorist rampage. Many became
Kirchner government officials.

Y
the rule of law and civil liberties as a Clearly not everyone who wore a uni-
ou wouldn’t know from the heavy media come by taxing firms that employ robots. problem. Now it’s beginning to dawn. form was complicit in crimes committed
coverage of Marine Le Pen, but the Na- The problem for Mr. Hamon is that voters as- Thanks a lot. by the military. Most were not. But the
tional Front leader isn’t the only radical sociate him with President François Hollande’s di- It’s not the first time reality got by Kirchners wanted headlines. They
outsider threatening the sastrous tenure, which began in the global elite. For some reason, so- packed the courts with left-wing
French political establishment Socialist voters are 2012 with a march to the hard called human-rights defenders always judges—some of whom were former
in this month’s presidential abandoning the party for left and ended with modest at- rise in opposition to left-wing tyranny guerrillas—who allowed false testimony
only after it has become entrenched. for the prosecution and mobs in the
election campaign. The other tempts at pro-growth reforms. While there is still a chance to make a courtroom to harass witnesses. Many
is independent hard-left candi- a hard-left alternative. Socialist voters who liked the difference? Crickets. defendants were tried in groups, which
date Jean-Luc Mélenchon, who reform half are now supporting Take a country that has rounded up, is against Argentine law. Judges did lit-
over the weekend overtook the Mr. Macron, while the party’s imprisoned and denied adequate medi- tle to hide their biases, sometimes hug-
center-left Socialists in the polls. base sees Mr. Mélenchon as the authentic voice cal care to almost 2,200 citizens since ging fans of the prosecution in jubilation
Mr. Mélenchon is in striking distance of dis- of the left. Why support Mélenchon-lite in Mr. 2005. Only about one-third of those after issuing a guilty verdict.
placing the center-right’s François Fillon in third Hamon if you can get the real thing? prisoners have been given their day in Frequently a lack of evidence tying a
place, not far behind the two frontrunners, Ms. Le France’s leftist grandees are urging the two court. Those who have made it to a tri- defendant to a crime was no obstacle to
Pen and the independent centrist Emmanuel Ma- men to merge campaigns in the hope of making bunal have mostly received show trials. a conviction. He could be pronounced
cron. If enough Socialist voters abandon their it to the runoff, likely against Ms. Le Pen, but Mr. The rest are languishing in jails. Almost guilty on the ground that, given his rank
400 have died behind bars. and posting, he should have known
party’s candidate, Benoît Hamon, Mr. Mélenchon Mélenchon has so far resisted. It isn’t clear whom
Burma, Cuba, North Korea? No, this about human-rights violations. It’s hard
might make it to the second round in May. his voters would support in case Mr. Mélenchon is “democratic” Argentina. The prison- to think of a modern republic anywhere
The 65-year-old spent 35 years in the Social- is eliminated in the first round. Mr. Mélenchon so ers are former members of the mili- in the world that would stand for such a
ist Party before leaving in 2008 to launch his loathes Ms. Le Pen that he refuses to mention her tary. Their problem: They defeated the manipulation of justice.
own movement, which he calls “Unbowed by name, yet the two see eye-to-eye on many eco- left-wing guerrillas of the 1970s and According to the nongovernmental or-
France.” Mr. Mélenchon makes Bernie Sanders nomic questions. early 1980s. ganization La Fuerza de los Dignos—
look like American Senator Ted Cruz, and his Like Ms. Le Pen, Mr. Mélenchon wants to see The guerrillas never got over their made up of sons and daughters of impris-
campaign platform would undo even the mod- Paris form an alliance with Vladimir Putin and loss and are now getting revenge via Ar- oned military—717 former members of
est pro-growth reforms enacted in France over Bashar Assad. He wants to pull the country out gentina’s courts, which deny the former the armed forces have been convicted,
the past decade while adding a raft of new stat- of NATO, and he views the European Union as soldiers their civil liberties. The victims and most have received life sentences. Al-
ist measures. a “neoliberal” vehicle designed to oppress of the guerrilla terrorism have lost their most 1,100 are still in the process of being
rights as well. The state has never com- investigated and tried. Most of them are
These include raising the minimum wage by French workers. Voters who back such a plat-
pensated their families, or even recog- over 70, which means they are entitled to
15% to €1,300 ($1,386) a month after taxes; form might prefer to hold their noses and vote nized their suffering. house arrest under Argentine law. But
shortening the workweek to 32 hours from 35, for Ms. Le Pen in a runoff instead of supporting The “Dirty War” began in Argentina that, too, is politically incorrect in a na-
and lowering the retirement age to 60 from 62. a reformer like Mr. Macron. in the early 1970s, when Castro-inspired tion dizzied by leftist spin. So they sit in
Mr. Mélenchon would slap a 100% tax on anyone France isn’t the only country where the tradi- youth brought terror to the country, jail—for years, denied due process. Mean-
earning 20 times the median income, or about tional center-left party is either jumping further bombing, robbing, kidnapping and mur- while former terrorists roam free.
€33,000 a month. For bad measure, he vows a to the left or falling off a political cliff, or both. dering politicians, businessmen, diplo- Argentines want to move on from this
€273 billion splurge in stimulus spending, public Support for Britain’s Labour Party has plum- mats, police and others. The chaos was painful history. They would rather not
works and “green” projects. meted under the leadership of ’60s-style radical so overwhelming that in 1975 Isabel confront it. In Mauricio Macri, they have
Mr. Hamon, his rival for the left-wing vote, Jeremy Corbyn, and the center-left Labor Party Perón ordered the military to “annihi- elected a reformer as president. But he
calls these proposals irresponsible. But Mr. fell apart in last month’s election in the Nether- late” the subversives. In 1976, with the faces violent obstruction from Kirchner-
civilian government at wit’s end, the era diehards.
Hamon, a former education minister, isn’t all lands, supplanted by the Greens and the far-left military took over. It remained in power If the nation is to avoid Venezuela’s
that moderate himself. He won the Socialist D66 party. until 1983. No one doubts that it, along fate, it needs to restore the rule of law.
nomination after thumping the party’s reform The collapse of Europe’s center-left is as im- with the guerrillas, committed human- That means granting justice to the many
wing, led by former Prime Minister Manuel portant a story as the rise of the far-right. In rights violations. victims of the rotten judiciary that
Valls. Mr. Hamon would also shorten the work- France it is another reason not to rule out a Le In 1989, in an attempt to reconcile the served the Kirchners’ political ends.
week, and he wants to fund a universal basic in- Pen victory next month. nation, President Carlos Menem decreed Write to O’Grady@wsj.com.
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
THE WALL STREET JOURNAL.
How to Make U.S. Tax Reform Bipartisan
By Jason Furman
T
he implosion of the U.S.
Republican health-care bill
shows the limits of what
one party alone can do in
Washington. Tax reform
will be even trickier, since it touches
a larger fraction of the economy and
threatens more powerful vested in-
terests. The only hope for seriously
revamping America’s inefficient
business-tax system to unlock stron-
ger economic growth is a bipartisan
approach, but it will require a course
correction by President Trump. Here
are five important steps to building
a sensible tax reform:
Focus on fixing the badly
broken corporate-tax
system, and commit
to no loss of revenue.
• Commit to revenue neutrality
and distributional neutrality, as in
the 1986 tax reform. In other words,
a bipartisan plan would focus on
making the tax system more efficient
without cutting the revenue raised
or shifting the burden in any direc-
tion. This wouldn’t require a change
in rhetoric. House Speaker Paul Ryan
has already said tax reform should
be revenue-neutral, and Treasury
Secretary Steven Mnuchin has said
that there will be “no absolute tax
cut for the upper class.”
Any specific legislation should be
judged against these benchmarks by
the nonpartisan analysts at the Joint
Committee on Taxation, a group that
Who Wins When Foreign Firms Comply With U.S. Tax Laws?
By Nigel Green
R
ecently I launched the Cam-
paign to Repeal Fatca—the For-
eign Account Tax Compliance
Act. The 2010 law, which purports to
track down tax cheats hiding money
abroad, forces foreign banks and
other financial institutions to disclose
Americans’ accounts to the Internal
Revenue Service.
Threatened with U.S. sanctions if
they don’t comply, banks around the
world have rushed to submit to
Fatca. Foreign governments have
hastened to abrogate their domestic
privacy laws. Fatca, it seems, has
been a big success. But who really
benefits?
Not the U.S. budget. The IRS
claimed in October that Fatca has
helped it to collect $10 billion since
2009 from “taxpayers coming back
into compliance.” But that figure
lumps in penalties for filing deficien-
cies and money from all offshore en-
forcement programs.
William H. Byrnes, a law profes-
sor at Texas A&M, believes the ac-
tual net recovery attributable to
A Lawsuit Accuses Yale of Censoring Even Inoffensive Ideas
By Peter Berkowitz
Y
ale’s president, Peter Sa-
lovey, affirmed in October
that “we adhere to excep-
tionally strong principles of free
expression.” He invoked Yale’s ex-
emplary 1974 Woodward Report,
which states that the university’s
educational mission is inextricably
bound up with “the right to think
the unthinkable, discuss the un-
mentionable, and challenge the
unchallengeable.”
A February lawsuit tells a differ-
ent story. Tucked inside the
amended complaint, Doe v. Yale, is
the extraordinary claim that Yale
punished the anonymous male
plaintiff for writing a class essay in
which he condemned rape.
Like dozens of lawsuits now
working their way through state
and federal courts, Doe v. Yale al-
leges that university officials
grossly mishandled sexual-assault
allegations. According to the com-
PUBLISHED SINCE 1889 BY DOW JONES & COMPANY
Rupert Murdoch
Executive Chairman, News Corp
Gerard Baker
Editor in Chief
Matthew J. Murray
Deputy Editor in Chief
DEPUTY MANAGING EDITORS:
Michael W. Miller, Senior Deputy;
Thorold Barker, Europe; Paul Beckett,
Washington; Andrew Dowell, Asia;
Christine Glancey, Operations;
Jennifer J. Hicks, Digital;
Neal Lipschutz, Standards; Alex Martin, News;
Shazna Nessa, Visuals; Ann Podd, Initiatives;
Matthew Rose, Enterprise;
Stephen Wisnefski, Professional News
Paul A. Gigot, Editor of the Editorial Page;
Daniel Henninger, Deputy Editor, Editorial Page
WALL STREET JOURNAL MANAGEMENT:
Suzi Watford, Marketing and Circulation;
Joseph B. Vincent, Operations;
Larry L. Hoffman, Production
EDITORIAL AND CORPORATE HEADQUARTERS:
1211 Avenue of the Americas, New York, N.Y., 10036
Telephone 1-800-DOWJONES
incidentally now uses dynamic scor-
ing in assessing major tax changes.
But the frameworks put out last year
by the Trump campaign and House
Republicans don’t pass the test.
They would add trillions of dollars
to the deficit while providing, re-
spectively, 50.8% and 99.6% of their
benefits to the top 1%, according to
the Tax Policy Center.
• Focus on business taxes only.
This is where the largest economic
gains from tax reform can be found.
In part that’s because companies can
and do move across borders in
search of lower taxes, while individ-
uals are much less likely to do so.
For a reformed system to work,
all large companies should have to
file under the corporate-tax code, as
President George W. Bush’s tax-
reform commission proposed. Small
businesses should have their rates
left alone but could be helped in
other ways—for instance, with more-
generous tax breaks for research or
employer benefits.
• For overseas business income,
adopt something like a “minimum
tax.” The current system, which
taxes U.S. companies on their repa-
triated earnings at the regular rate
of 35%, is badly broken. It raises lit-
tle or no revenue while imposing
substantial distortions, such as giv-
ing firms an incentive to stash
money overseas permanently.
A minimum tax instead would ap-
ply to all overseas earnings at some
intermediate rate—President Obama
proposed 19% and Republican Sen.
Rob Portman supported a lower rate.
Earnings could then be repatriated
tax-free. A minimum tax wouldn’t
apply to investments in countries
such as Germany or the U.K., which
Fatca (subtracting IRS enforcement
costs) may be closer to $200 mil-
lion a year and possibly as low as
$100 million.
That isn’t enough to fund the fed-
eral government for more than half
an hour. It’s far less than was ex-
pected at Fatca’s enactment, since
the law was scored as bringing in
$800 million a year. Excepting penal-
ties, writes Mr. Byrnes, Fatca could
“soon cost more money than it
brings in.”
That meager gain must be
weighed against the law’s costs.
Fatca adds one more onerous and
expensive reporting obligation for
American taxpayers who hold any
asset abroad. It largely duplicates
existing mandates, notably the Re-
port of Foreign Banks and Foreign
Accounts, and the penalties for er-
ror are draconian. The Tax Founda-
tion estimated in 2016 that comply-
ing with Fatca each year takes
almost 4.5 million hours and costs
$166 million.
But the really big boodle goes to
the accounting, law and software
firms that help foreign financial in-
plaint, a university panel found in
spring 2014 that Doe had engaged
in sexual intercourse with a woman
without her consent. He alleges that
the woman expressly consented and
on that evening she harassed him.
He adds that Yale’s disciplinary pro-
cedures were stacked against him
and administered by biased officials
who presumed his guilt.
This case is unusual in several
respects. Doe advances one rela-
tively new and one completely
novel legal theory. The relatively
new one revolves around Title IX,
the 1972 federal law that provides
that “no person” may be discrimi-
nated against based on sex in edu-
cational programs that receive fed-
eral assistance.
In April 2011, the U.S. Education
Department’s Office for Civil Rights
issued a “Dear Colleague” letter
declaring that Title IX imposed a
duty on colleges and universities
receiving federal funding—as virtu-
ally all do—to investigate, prose-
Robert Thomson
Chief Executive Officer, News Corp
William Lewis
Chief Executive Officer and Publisher
DOW JONES MANAGEMENT:
Mark Musgrave, Chief People Officer;
Edward Roussel, Innovation & Communications;
Anna Sedgley, Chief Operating Officer & CFO;
Katie Vanneck-Smith, President
OPERATING EXECUTIVES:
Ramin Beheshti, Product & Technology;
Jason P. Conti, General Counsel;
Frank Filippo, Print Products & Services;
Steve Grycuk, Customer Service;
Kristin Heitmann, Transformation;
Nancy McNeill, Advertising & Corporate Sales;
Jonathan Wright, International
DJ Media Group:
Almar Latour, Publisher;
Kenneth Breen, Commercial
Professional Information Business:
Christopher Lloyd, Head;
Ingrid Verschuren, Deputy Head
OPINION
already tax U.S. companies doing
business there at more than 19%. But
on investments in low-tax countries
such as Ireland, which has a corpo-
rate rate of 12.5%, U.S. firms would
pay the difference. Profits reported
in tax havens such as the Cayman Is-
lands could end up facing nearly the
full 19%.
This is a less-elegant solution to
taxing international income than the
House Republican plan of shifting to
a territorial system with a border
adjustment. But the GOP proposal
comes with serious side effects:
large movements in the currency,
shifts in asset prices and the poten-
tial to start a trade war. A minimum
tax would avoid all of those.
• For domestic business income,
adopt something along the lines of
the House Republican proposal. Shift
from taxing profits to taxing cash
flow. This would allow businesses to
stitutions sift through millions of cli-
ent accounts looking for American
“indicia.” Although there is no offi-
cial figure for the cumulative world-
wide cost, the magnitude can be ex-
trapolated from piecemeal disclo-
sures by banks and the companies
Soon the Foreign Account
Tax Compliance Act will
cost more to enforce than
it recovers in taxes.
selling them services. These ex-
penses, as Mr. Byrnes writes, are
“staggering.”
In 2014 Thomson Reuters sur-
veyed some 300 financial institu-
tions, 27% of which expected their
annual Fatca compliance costs of be-
tween $100,000 and $1 million. The
same year, The Wall Street Journal
reported that Canada’s five biggest
banks collectively had spent about
750 million Canadian dollars ($693.5
million) on initial Fatca compliance
cute and adjudicate sexual-assault
allegations and impose punish-
ments where appropriate. The let-
ter also directed schools to reduce
due-process protections for the ac-
cused, typically men.
Doe insists that Title IX must
protect men as well as women. In
punishing him for sexual assault on
the basis of allegations that were
either unfounded or refuted by
facts to which both sides of the dis-
pute agreed, the lawsuit argues,
Yale discriminated against him on
the basis of his sex in violation of
Title IX.
The novel legal theory flows out
of a reading of “state action” doc-
trine developed by Jed Rubenfeld of
Yale Law School, who served as
Doe’s faculty adviser during the uni-
versity’s sexual-assault proceedings.
Doe argues that through the “Dear
Colleague” letter, the Education De-
partment conscripted Yale to enforce
criminal law—thereby transforming
the private university into an agent
of the government.
That would subject the university
to constitutional limitations. Thus
Doe alleges Yale violated his 14th
Amendment rights to due process
and equal protection of the law.
This case also involves free ex-
pression because it began, Doe al-
leges, with Yale’s draconian regula-
Notable & Quotable: Russia and the West
Open Russia coordinator Vladimir
Kara-Murza in “Answering the
Kremlin’s Challenge,” an essay from
the coming World Affairs book:
There is a growing appreciation in
capitals around the globe . . . that
nothing will change until Mr. Putin’s
regime is replaced by a democratic
government.
That task, of course, must be un-
dertaken by Russian citizens alone.
DAVID GOTHARD
expense their investments fully
while disallowing interest deduc-
tions—effectively like a consumption
tax. At the same time, eliminate as
many loopholes as possible and
lower the tax rate as far as possible.
These reforms would make the tax
system neutral toward investing in
different types of assets, as well as
neutral between financing with debt
or with equity.
How far could rates drop? Clos-
ing loopholes and moving to an in-
ternational minimum tax would pro-
vide some revenue. If the goal is
revenue neutrality, then getting the
rate down to 28% might be possible.
But the 15% or 20% rate proposed
by the Trump campaign and House
Republicans, respectively, would be
impossible without massively rais-
ing the deficit.
• Incorporate into the bill a real
plan for public infrastructure spend-
expenses. That included some C$100
million spent by the Bank of Nova
Scotia alone as of 2013.
Mr. Byrnes cites KPMG and Del-
oitte estimates that more than
250,000 foreign financial institutions
are affected by Fatca, with costs for
some of the larger ones reaching
more than $200 million. The repre-
sentative of Spain’s Banco Bilbao
Vizcaya Argentaria said in a paper
released in 2014 that compliance
costs could range from $8.5 million
for a local entity to $850 million for
a global one. The British government
estimated the aggregate initial costs
to U.K. financial institutions at $1.1
billion to $1.9 billion, with a continu-
ing cost of $60 million to $100 mil-
lion a year.
Thus there are plausible projec-
tions that the law’s aggregate global
cost is anywhere from $60 billion to
$170 billion. That money comes out
of the pockets of consumers, deposi-
tors and perhaps shareholders.
There’s no question where this
money goes—not to the U.S. govern-
ment but to the bottom line of the
vendors. Fatca had barely passed
tion of his speech. According to his
lawsuit, in late 2013 a female phi-
losophy teaching assistant filed a
complaint with the university’s Ti-
tle IX office about a short paper
Doe had written. In the context of
A class essay condemning
rape was ‘unnecessarily
provocative,’ the Title IX
coordinator allegedly said.
Socrates’ account in Plato’s “Repub-
lic” of the tripartite soul, the paper
argued that rape was an irrational
act in which the soul’s appetitive
and spirited parts overwhelm rea-
son, which by right rules.
According to the lawsuit, Pamela
Schirmeister, Title IX coordinator
and an associate dean in the Gradu-
ate School of Arts and Sciences,
summoned Doe to her office and
told him his rape example was “un-
necessarily provocative.” She or-
dered him to have no contact with
the teaching assistant and directed
him to attend sensitivity training at
the university’s mental-health cen-
ter. She also informed him that he
had become a “person of interest”
to Yale, which meant that the uni-
Yet, while outsiders should not at-
tempt to shape political events in-
side Russia, neither should they en-
able Mr. Putin and his kleptocrats by
providing safe harbor for their illicit
gains. For the many striking paral-
lels between the Soviet system and
the current regime in Russia—from
political prisoners to media censor-
ship—there is also a crucial differ-
ence: while they were persecuting
dissenters and engaging in anti-
Tuesday, April 4, 2017 | A11
ing. The goal should be to expand
investment meaningfully in Amer-
ica’s roads, bridges, railways and air-
ports. It could be funded with a
mandatory one-time tax—say, of
15%—on unrepatriated foreign earn-
ings as part of the transition to the
new international tax system. Both
tax reform and infrastructure would
be good for growth—and pairing
them has been a staple of Demo-
cratic and Republican proposals
alike in recent years.
Following these five steps is the
way to enact genuine, durable tax re-
form. If Republicans work alone,
they might be able to pass a tempo-
rary tax cut through the reconcilia-
tion process, which requires only 51
votes in the Senate. But the rules of
reconciliation mean that the tax cut
would sunset after a decade. That
would only add a new layer of uncer-
tainty on top of America’s inefficient
tax system, while swelling the bud-
get deficit.
Real tax reform would create win-
ners and losers, making it almost
impossible to pass with only one
party. Republican majorities are rel-
atively slim, and vested interests
trying to sink the legislation would
need to pick off only three GOP sen-
ators or 22 representatives. An eas-
ier path would be to write a biparti-
san bill and aim for the support of
30 Democrats in the Senate and 100
in the House. That could be doable,
but only if President Trump is open
to changing his approach.
Mr. Furman, a senior fellow at the
Peterson Institute for International
Economics, was chairman of the
White House Council of Economic
Advisers from 2013 to 2017.
when massive compliance practices
sprang up, offering their services and
advising that repeal of the law wasn’t
in the cards. “Fatca is here to stay,”
experts from Deloitte, Ernst & Young,
KPMG and PricewaterhouseCoopers
rushed to pontificate.
As a businessman, I have no ob-
jection to anyone offering profes-
sional expertise. But non-American
accountants who pooh-pooh the no-
tion that Fatca could be repealed of-
ten have little insight into American
politics. What lies behind the smug
posture of inevitability other than
making sure vulnerable clients main-
tain a proper Stockholm syndrome
docility?
Fatca was not subjected to a cost-
benefit analysis before it was en-
acted, but the results are now in. As
a revenue tool for the public purse,
the law is a failure. Instead it offers
a windfall of corporate welfare for
the compliance industries. That’s no
reason to keep it.
Mr. Green is founder and CEO of
deVere Group, a world-wide financial
consultancy.
versity had to intervene to ensure
he “was not a perpetrator himself,”
in the lawsuit’s words. A few
months later, the same Title IX of-
fice initiated the sexual-assault in-
vestigation against him.
Through a spokeswoman, Yale
described the lawsuit as “legally
baseless and factually inaccurate”
but declined on confidentiality
grounds to address any specific fac-
tual allegations.
If the lawsuit’s account is accu-
rate, Yale has reached a new low in
the annals of campus policing of
speech. Surely no female student
would incur criticism, much less
censorship or punishment, for pro-
viding weighty philosophical au-
thority in support of the proposi-
tion that rape is wrong.
If Doe’s story is true, Yale is no
longer satisfied in enforcing correct
opinions. To utter the correct opin-
ion, Yale also demands that you be
the correct sex. Far from protecting
the right to “discuss the unmen-
tionable” in accordance with the
Woodward Report, Yale is stretch-
ing the boundaries of censorship by
abridging the right to discuss even
the uncontroversial.
Mr. Berkowitz is a senior fellow
at the Hoover Institution, Stanford
University.
Western propaganda, members of
the Soviet Politburo did not store
their money in Western banks, send
their children to Western schools, or
invest in luxurious real estate in
Western countries. Those who rule
Russia today treat their citizens in
ways expected of third-world dicta-
torships, but choose the freedoms
and protections of the West when it
comes to their own families and
their ill-gotten money.
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
A12 | Tuesday, April 4, 2017 THE WALL STREET JOURNAL.

DANA MATTIOLI MERGERS & ACQUISITIONS REPORTER

The Face of Real News

Dana Mattioli’s unrivaled access to the business world helped break the
story of Berkshire Hathaway’s 2015 agreement to acquire Precision
Castparts—the largest such deal in Warren Buffett’s storied career. The
timely, accurate reporting from Dana and her colleagues delivered scoop
after scoop, including 8 out of the 10 biggest M&A deals that year.

Real journalists and real news from America’s most trusted newspaper.

Watch the film illustrating this story at WSJ.com/Dana

#TheFaceOfRealNews

Source: Pew Research Center, Political Polarization & Media Habits, 2014
© 2017 Dow Jones & Company, Inc. All rights reserved. 6DJ5144
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
BUSINESS & FINANCE
© 2017 Dow Jones & Company. All Rights Reserved.
Yen vs. Dollar 110.9510 g 0.40%
Bets on Modi Lift Indian Stocks
Hope for economic
overhauls grows as
prime minister’s
popularity increases
BY CORINNE ABRAMS
AND DEBIPRASAD NAYAK
MUMBAI—Indian stocks
reached a new high, powered
by foreign funds optimistic
that the country’s prime min-
ister, Narendra Modi, will use
his growing popularity to ac-
celerate the pace of change
and keep Asia’s third-largest
economy expanding as much
of the world struggles with
slowdowns and uncertainty
about how U.S. President
Donald Trump’s policies will
affect trade.
India’s bellwether S&P BSE
Sensex broke a two-year-old
closing record Monday as it
Macau
Gambles
On High
Rollers
Things are looking up in
the world’s biggest gambling
hub—but investors need to
be cautious, given what is fu-
eling the boom.
Macau had its best growth
in three years last month,
with gross gambling revenue
up 18% from
a year ear-
lier. Analysts
had expected
the recovery
that began
HEARD ON last August
THE STREET to continue,
JACKY but not quite
WONG so vigor-
ously, fore-
casting
growth at around 15%.
One reason results ex-
ceeded expectations: The
high rollers seem to be com-
ing back. Credit Suisse, for
example, estimates VIP reve-
nue was up 24% in March,
compared with a 15% rise in
mass-market revenue.
And one reason for their
return is a flood of easy
credit in China, meant to
boost the economy. That
same credit fire hose is
also driving people to buy
more houses and more
costly cars and other luxury
goods. According to Bern-
stein, sales volume for pre-
mium car brands in China
was 29% in January, exclud-
ing Audi, whose sales
plunged because of a dis-
pute with dealers. The Ital-
ian fashion group Prada
said sales in China have re-
sumed “rapid growth” since
the quarter that ended in
October.
The result is surging hous-
ing prices and heated con-
struction activity, which are
helping drive up China’s pro-
ducer-price index. Histori-
cally, both housing prices
and the index are highly cor-
related with Macau’s gam-
bling revenue.
But easy come, easy go.
Times could sour quickly if
the credit-driven boom ends,
and China’s recent cash
crunch shows how fragile
such growth is. The property
market looks to be peaking
as well. There is also the
risk that Beijing, in its un-
ending battle against capital
outflows, will tighten re-
strictions on cash channeled
into Macau.
Wynn Macau, the most
indebted of the six casino
operators and more geared
toward the VIP business,
could suffer the most when
the tide turns. The com-
pany cut its dividend last
week to preserve cash. Gal-
axy Entertainment, which
has net cash, and Sands
China, which has a robust
mass business, may be
more resilient.
It could be time to take
some bets off the table.
TECHNOLOGY: UBER’S SELF-DRIVING PROGRAM HITS ANOTHER POTHOLE B4
Hang Seng 24261.48 À 0.62%
rose to end the trading day 1%
higher at 29910.22.
India has outperformed
most developed and emerging
markets this year. The index is
up more than 12%, while key
indexes in China, Brazil and
the U.S. are up between 4%
and 8%, and Russian stocks
are down. Meanwhile, the ru-
pee has risen 4.5% against the
U.S. dollar since January.
Overseas investors bought a
net $8.57 billion worth of In-
dian shares and bonds during
March in the hope that Mr.
Modi will be able to step up
his plans to revamp the often
inefficient and overregulated
Indian economy.
State elections last month
proved the prime minister’s
popularity was actually bol-
stered by his controversial de-
cision to nullify close to 90%
of the country’s cash late last
year. The move—which was
Housing crowds the shoreline in Clovelly, a suburb of Sydney, Australia, where the median home price reached $821,000 last year.
Housing Bubbles Resist Controls
BY ROB TAYLOR
AND RACHEL PANNETT
SYDNEY—From Australia to
Canada, authorities are learn-
ing a hard lesson in their ef-
forts to curb the foreign
money flooding their property
markets: Deterrents quickly
lose their punch.
In recent years, regulators
in several countries have
raised taxes on residential
real-estate purchases, required
banks to demand bigger down
payments and taxed empty
homes—to little long-term
avail.
Now they are trying again.
Australian regulators on
Friday ordered banks to limit
the flow of interest-only
loans—a villain in the U.S.
subprime mortgage crisis—to
30% of new loans from about
40% now and to restrict loans
to people making small down
payments. The country’s cor-
porate regulator said on Mon-
day it was investigating
whether lenders and mortgage
For Google’s Data Wars, Location Matters
BY JACOB GERSHMAN
Google and the Justice De-
partment are clashing in court-
rooms across the country over
the government’s power to
compel the company to turn
over emails and other personal
data sought in criminal probes.
The tensions deepened fol-
lowing a landmark court ruling
last year declaring private on-
line communications stored
overseas off limits to prosecu-
tors—even if there’s probable
cause to suspect the data con-
tains evidence of a crime.
Law-enforcement authorities
send Google thousands of re-
quests a year for user data in
probes ranging from investiga-
tions of human trafficking and
child pornography to terrorism
and white-collar cases. Google’s
THE WALL STREET JOURNAL.
Gold 1251.80 À 0.36%
aimed at punishing tax evad-
ers and other criminals who
hoard cash—slowed growth
and forced millions of Indians
to stand in line at banks for
hours to exchange old notes.
Still, voters rewarded Mr.
Modi’s Bharatiya Janata Party
in state elections, indicating
they were willing to go
through the pain if they
thought it was for the good of
the country.
“It signals to investors that
this administration will be
able to push through a lot of
the reforms and restructuring
that it wants to do in the fu-
ture,” said Zhikai Chen, head
of Asia ex-Japan equities at
Lombard Odier, which has
money invested in In-
dia. “We are seeing a pretty
resilient economy on the back
of this surprise demonetiza-
tion exercise.”
The BJP notched a landslide
Raising the Roof
Home prices are soaring again in
Australia's capital cities...
Residential property price index,
change from a year earlier
5%
4 ure, equivalent to 12.2 times
3 made Sydney the world’s sec-
2 ond-most-expensive city after
1 to-income ratio.
0
–1
2014 ’15
*October 2016-January 2017. Figures don’t add up to 100 because of rounding.
Sydney is the capital of New South Wales.
Sources: Australian Bureau of Statistics (index); Credit Suisse (foreign buyers)
brokers were inappropriately
promoting interest-only loans.
New South Wales state, home
to Sydney, is considering a
further property-tax rise for
foreigners.
The moves are an attempt
“legal investigations support”
team is responsible for finding
and disclosing matching re-
cords, often taking weeks to
complete a single request, ac-
cording to the company.
Until a few months ago,
Google turned over data de-
manded in warrants regardless
of where content was stored to
comply with a 1986 federal
statute that created safeguards
over electronic communica-
tions and established disclo-
sure procedures.
Google, a unit of Alphabet
Inc., changed its policy last
year when a New York federal
appeals court became the high-
est judicial body to rule that
data on foreign servers is be-
yond the reach of warrants.
That case was brought by
Microsoft Corp., which sought
WTI crude 50.27 g 0.65%
RITESH SHUKLA/ZUMA PRESS
Prime Minister Narendra Modi’s party did well in state elections.
victory in the state of Uttar
Pradesh, indicating it will be
tough to beat in national elec-
tions in 2019. That allows Mr.
...as China dominates foreign buying
in at least one major market.
Foreign property buyers in New
South Wales, share of value*
Indonesia
1.7%
U.S.
1.6%
Others
’16
19%
THE WALL STREET JOURNAL.
to blunt a price rise that has
resumed after the last crack-
down that started in late 2014.
House prices in Sydney and
Melbourne, the nation’s two
biggest cities, rose by about
19% and 16%. respectively, in
to quash a search warrant in a
drug-trafficking probe seeking
data in Ireland.
Within hours after the ruling
by the Second U.S. Circuit
Court of Appeals, Google halted
The tensions
deepened following
a landmark court
ruling last year.
the processing of all search
warrants. Coordinating with
hundreds of employees, the
company quickly developed
tools to identify and filter out
data stored overseas, Google
said in court documents.
10-Year JGB yield 0.075%
Modi to expect a second term
in office and less resistance to
his reforms, infrastructure
Please see STOCKS page B2
DAVID GRAY/REUTERS
the year through March 31,
much of it in the past six
months, according to an analy-
sis by data company CoreLogic
released on Monday.
The median house price in
Sydney hit $821,000 last year,
according to Demographia, a
China
U.S. think tank. It said the fig-
77%
the average annual wage,
Hong Kong on a house-price-
Demand in Melbourne is
driving up the valuations of
plots of land for housing by
$7,500 a week, said Giles Bray,
a local mortgage broker.
Developers are now build-
ing 300-square-foot apart-
ments—roughly one-third the
area of the average new Amer-
ican unit—with 8-foot ceiling
heights to pack in more units.
In the past three years, for-
eigners have bought thou-
sands of these apartments
sight unseen. “They are poorly
Please see BUBBLE page B2
Weeks later in August,
Google lifted the moratorium.
But it no longer discloses
emails, videos, photos and
other data that it believes are
stored overseas. The company
has the support of other tech
companies, including Microsoft,
Yahoo Inc., Apple Inc. and Am-
azon.com Inc.
Google’s tighter lid on data
has angered federal prosecu-
tors, who say the tech firm is
impeding investigations.
“When any provider refuses
to follow court orders, investi-
gations are jeopardized, and
sometimes end unsuccessfully,”
said Justice Department
spokesman Peter Carr. “The
Justice Department is holding
Google to its legal obligation.”
In at least one case, involv-
Please see GOOGLE page B4
Tuesday, April 4, 2017 | B1
10-Year Treasury yield 2.337%
Sales of
Cars in
March
Were
Mixed
BY ADRIENNE ROBERTS
The top two U.S. auto mak-
ers reported divergent results
for March amid growing con-
cerns about the industry’s in-
ventory levels and reliance on
discounts.
General Motors Co. re-
ported a 1.6% sales increase in
March to 256,224 units com-
pared with the year-earlier
month. The Detroit auto
maker said the company’s re-
tail sales were up 5% in March
to 203,113 units.
Ford Motor Co. reported a
7.2% sales decline in March
compared with the year-ear-
lier month. The Dearborn,
Mich., auto manufacturer
pulled back on fleet sales
and experienced a substan-
tial decline in sales of pas-
senger cars.
Leading Japanese auto
makers reported mixed U.S.
sales results for March, with
Honda Motor Co. posting a
0.7% decline and Nissan Mo-
tor Co. reporting a 3.2% in-
crease.
1.6%
Industrywide auto-sales increase
J.D. Power expects for March
Ford said fleet sales
dropped 17% in March, due in
large part to the timing of
customer orders. Retail sales
for the No. 2 U.S. auto maker
fell 1.5%.
The four auto makers were
among the first to report
monthly sales Monday. Other
car companies were scheduled
to report tallies for the month
throughout the day.
Industry watchers are
keeping a close eye on inven-
tory levels, which are near
historic highs and forcing
auto makers to ladle out gen-
erous discounts. A glut of
used cars flooding the market
is also putting pressure on
new-car prices.
Analysts expect auto sales
to have increased in March in-
dustrywide, representing the
first monthly uptick in 2017.
J.D. Power projects a 1.6%, in-
crease for the month, driven
by retail sales.
Sales to retail customers,
are seen increasing 2.4% in
March, the firm said, repre-
senting one of the strongest
performances in the past year.
Meanwhile, sales to fleet buy-
ers—including car-rental
agencies and businesses—are
expected to total 374,600
units in March, down by 1.2%
compared with the year-ear-
lier month.
Analysts expect between
1.61 million and 1.63 million
vehicles were sold in March.
Forecasts call for a seasonally
adjusted rate in the range of
17.2 million and 17.4 million, up
from the 16.8 million rate in
March 2016 but down from
February’s 17.5 million rate.
Deirdre Borrego, general
Please see CARS page B2
INSIDE
JUSTIN SULLIVAN/GETTY IMAGES
SAFER CARS
COST MORE
TO INSURE
FINANCE & MARKETS, B5
 For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
B2 | Tuesday, April 4, 2017
INDEX TO BUSINESSES
These indexes cite notable references to most parent companies and businesspeople
in today’s edition. Articles on regional page inserts aren’t cited in these indexes.
A
Airbus Group...............A3
Alphabet ................ B1,B4
Amazon.com ............... B1
Apple......................B4,B8
Audi.............................B1
B Investec Bank.............B4
Boeing.........................A3
C Juniper Networks.......B3
Credit Suisse...............B1
F Live Nation
FedEx...........................A3
Ford Motor ............ A1,B1
G M
Galaxy Entertainment
Group.........................B1
General Motors.....A1,B1
Grab.............................B4
H Microsoft.....................B1
Home Depot................B7
Honda Motor...............B1
INDEX TO PEOPLE
A H
Alexander, Tal.............B3
Austin, Rob.................B7
B Johnson, Kevin............B3
Borrego, Deirdre.........B1
Buben, Don..................B7
C Kalanick, Travis...........B4
Cheung, Ken................A2
Cole, David..................A2
F mated that the food unit could
Fields, Mark................A2
G Long, David.................B5
Gillan, Andrew............B2
ALAN DIAZ/ASSOCIATED PRESS
Honda’s sales declined 0.7% in the U.S. last month.
CARS
Continued from the prior page
manager of J.D. Power’s auto-
motive data and analytics, said
that while the sales growth in
March pushes sales on a year-
to-date basis ahead of those in
2016, “the competitiveness of
the industry continues to be
evident in ever-rising incen-
tive levels.”
The average incentive is ex-
ADVERTISEMENT
The Mart
TRAVEL
Save Up To 60%
First & Business
INTERNATIONAL
Major Airlines, Corporate Travel
Never Fly Coach Again!
www.cooktravel.net
(800) 435-8776
Imagination
I
Technologies Group..B4
Institute for Supply
Management.............B7
P
Prada ........................... B1
Q
Qualcomm...................B4
Mustard Maker Is for Sale
Intel.............................B8 R Reckitt Benckiser
Reckitt Benckiser Group starts strategic review
J .....................................B2
S
of French’s food unit;
L
Sands China................B1 higher margins prized
SoftBank Group..........B4
Entertainment..........B3
Starbucks....................B3 BY DENISE ROLAND
T
Lombard Odier............B1
Tencent Holdings........A1 French’s mustard is up for
Tesla............................A1 sale.
Malaysian Airline Reckitt Benckiser Group
U
System......................A3
Uber Technologies ...... B4
PLC, the British owner of
Mead Johnson Nutrition
America’s best-selling mustard
W
.....................................B2
as well as Durex condoms and
Wynn Macau...............B1 Lysol disinfectants, said it had
N Y started a strategic review of
Nissan Motor..............B1 Yahoo...........................B1 its food business. The com-
pany is considering all options
for the unit as it seeks to close
its $16.6 billion takeover of
baby-food maker Mead John-
son Nutrition Co.
Mulally, Alan...............A2 The French’s unit, which
Herndon, Justin..........B5 Musk, Elon ............ A1,A2 also includes Frank’s RedHot
J O pepper sauces and Cattlemen’s
Oliphant, Grant...........B4 barbecue sauces, generated
£411 million ($516 million) of
Jonas, Adam...............A2 P
the company’s overall revenue
K Panagiotidis, Themy...B2 of £9.89 billion in 2016.
Phillips, Roger.............B4 Reckitt didn’t provide further
Kapoor, Rakesh...........B2 S detail except to say the unit
Keeney, Tasha.............A2 Schultz, Howard ......... B3 was no longer considered core.
Bankers and analysts esti-
Kerr, Jarrod.................B2 V
L-M von zur Mühlen, be valued at $2.5 billion to $4
Alexander..................B5
Lim, Adrian ................. B2 billion.
Z The move comes as Uni-
Lucas, Lori...................B7 Zhikai, Chen................B1 lever PLC is in the middle of
its own review of its portfolio
after snubbing a $143 billion
bid by Kraft Heinz Co.
Both reviews come as con-
sumer-goods giants re-evalu-
ate their slower-growing pack-
aged-food businesses and
move toward higher-margin
health and household goods.
Investors for years have been
encouraging Unilever to sell
underperforming businesses
such as its spreads unit, which
includes margarines like Flora
and Blue Band.
Reckitt’s acquisition of
STOCKS
Continued from the prior page
spending and other programs.
pected to reach 10.4% of the
sticker price, exceeding the
10% level in March for the first
time since 2009 when the
In the latest example of the
Modi administration’s growing
confidence, last week it passed
a landmark revamp of the
country was navigating the fi- country’s messy tax system
nancial collapse, the research that had been stuck for years.
firm said. India could end up as a ha-
Also troubling to analysts is ven of sorts in times of trade
the number of days a vehicle uncertainty, some India opti-
sits on a dealer’s lot before be- mists say, as it is less depen-
ing sold. That number is ex- dent on exports than other
pected to reach 70 days in Asian economies such as China
March, the highest level for and South Korea.
any month since July 2009, “There’s not a huge tech-
according to J.D. Power. nology supply chain, a manu-
BUSINESS OPPORTUNITY
Businesses
For Sale.
Advertise in The Mart
Exclusively in
The Wall Street Journal Asia
Call (852) 2831-2553
(65) 6415-4279
or (813) 6269-2701
BUSINESS & FINANCE
The French’s food business could be valued at up to $4 billion, according to bankers and analysts.
Mead Johnson would nearly
double the size of its con-
sumer-health business and
push the Slough, England,
company deeper into emerging
markets. Reckitt Chief Execu-
tive Rakesh Kapoor lost out to
Bayer AG in a bidding war for
Merck & Co.’s consumer busi-
ness in 2014 and since had
been seeking a big acquisition.
Reckitt has financing lined
up for the Mead Johnson pur-
chase and doesn’t see it as a
primary motivation for selling
French’s, a person familiar
with the situation said.
“Its main value would be as
a sale to another food com-
pany,” the person said, adding
that its value to a private-eq-
uity buyer would be limited
because of Reckitt’s lean man-
agement of the business.
French’s is already managed
facturing base that you see in
some of the north Asian econ-
omies,” so India is less ex-
posed to any slump in exports
to the U.S., said Andrew Gillan,
a fund manager at Henderson
Global Investors (Singapore)
Ltd., which manages roughly
$200 million of investments in
India.
President Trump is ex-
pected to demand more in-
vestment and fewer imports
from countries with big trade
surpluses with the U.S. India’s
software and outsourcing as
well as its pharmaceutical
businesses, could be hurt by
new barriers to trade, but the
nation has much less to lose
than the big exporters.
BUBBLE
Continued from the prior page
built and lack light,” Mr. Bray
said.
The gains are testing the
limits of government measures
aimed at preventing housing
bubbles from developing in
cities around the world.
The frothiness is driven by
ultralow interest rates at cen-
tral banks that spur investors
to hunt for returns in tangible
assets. Chinese investors also
are a big driver of the phe-
nomenon.
The concern: Foreign, spec-
ulative investors are making
properties unaffordable for lo-
cal residents and adding eco-
nomic risk because these buy-
ers are more likely to flee in a
downturn.
In 2010, when Australian
prices last rose sharply, the
Reserve Bank of Australia
tightened policy to cool down
markets. But lately the central
bank has been keeping rates at
a record-low 1.5% to aid an
economy that is still strug-
gling to adjust at the end of a
long mining boom.
Australia narrowly avoided
a recession last year—defined
as two straight quarters of
negative growth—as it re-
bounded in the three months
through December from a sur-
prise contraction in the third
quarter. The central bank
meets again on Tuesday and is
widely expected to keep rates
unchanged.
Before the 2007-2008 fi-
nancial crisis, many policy
makers thought asset bubbles
couldn’t be detected in ad-
vance and that it was there-
fore better to clean up after-
ward rather than try to
influence their growth. Now,
regulators generally believe
they need to take action as
risks rise.
Some places that have been
favorites for Chinese investors
THE WALL STREET JOURNAL.
separately from the rest of
Reckitt Benckiser’s business,
which largely focuses on
cleaning products, over-the-
counter remedies and brands
such as K-Y lubricants and
Veet hair-removal cream.
This is a busy time for
shopping around a food busi-
ness: Danone SA of France last
week put its Stonyfield or-
ganic-yogurt unit up for sale,
seeking to clear the biggest
antitrust hurdle to its $10.4
billion acquisition of White-
Wave Foods Co.
On Friday, Reckitt disclosed
in its annual report that the
board cut Mr. Kapoor’s pay
last year after a scandal at the
company’s South Korean busi-
ness, in which scores of people
were killed and hundreds left
with permanent lung damage
by a humidifier disinfectant
“India is being seen as a
relatively resilient place to in-
vest because quite a bit of the
economy is driven by domestic
consumption,” said Adrian
‘India is being seen
as a relatively
resilient place to
invest.’
Lim, a Singapore-based senior
investment manager, Asia (ex
Japan) at Aberdeen Asset
Management, which manages
$11.5 billion of assets in India.
Sydney home prices were up 19% in the year through March 31.
in recent years—including
London, and, most recently,
New York—are rolling out pol-
icies that discourage foreign
purchasers.
Canada has tightened hous-
ing-financing rules numerous
times since mid-2008 to curb
excesses. In Canada’s hottest
market, Vancouver, British Co-
lumbia, the government last
year introduced a new resi-
dential-property tax on outsid-
ers and imposed a separate
vacancy tax on properties left
unoccupied.
Vancouver’s latest efforts
seem to be working. Web
searches in China for Vancou-
ver properties dropped 37% in
December compared with a
year earlier, according to Ju-
wai.com, an online real-estate
portal aimed at Chinese home
seekers.
But policy makers worry
about whether cooling mea-
sures might just shift demand
from one jurisdiction to an-
other. Chinese buyer interest
has been rising in the Seattle
region since Vancouver’s tax-
policy changes were intro-
duced in August, brokers said.
Auckland overtook Toronto
as the world’s “hottest” city
for luxury real estate in 2015,
partly because of New Zea-
land’s relatively open-door
ROBERTO MACHADO NOA/LIGHTROCKET/GETTY IMAGES
between 2001 and 2011.
Mr. Kapoor received total
pay of £14.6 million last year,
compared with £25.5 million
in 2015, a figure that made
him one of the highest-paid
bosses in the FTSE 100 that
year. His 2015 pay package
stoked a rebellion among some
shareholders, with 18% of in-
vestors voting against last
year’s pay policy.
Reckitt’s remuneration
panel said Mr. Kapoor would
have been entitled to a further
£14 million in bonus and share
rewards had the committee
not decided to “exercise dis-
cretion” to curb his pay.
—Ben Dummett
and Ian Walker
contributed to this article.
 Heard: Kraft Heinz might not
be the best match. ............... B8
“More than two thirds of the
stocks listed [on the Sensex]
are driven primarily by do-
mestic demand, something you
can’t see on the Chinese
benchmark.”
To be sure, being an outlier
has made India a bit expen-
sive, analysts say, with price/
earnings ratios suggesting
there are more affordable
emerging markets. Still, bulls
say they see the country as a
good long-term bet as earn-
ings will likely catch up with
prices in the next year.
“India remains a compelling
investment market for us be-
cause the earnings growth re-
mains high relative to the rest
of the region,” said Mr. Gillan.
BRENDON THORNE/BLOOMBERG NEWS
policies to foreign investment,
according to a Christie’s Inter-
national Real Estate survey.
And Melbourne’s recent tax on
unoccupied apartments may
spur new buyer calculations.
“The [Melbourne] tax may
be enough to divert buyers
back to Sydney or Auckland,
with the risk of course these
cities follow suit,” said Jarrod
Kerr, a director at Common-
wealth Bank in Sydney.
Policy makers and ratings
firms also worry about a glut.
In Australia, economists are
looking at heat maps showing
where cranes are clustered to
predict which areas are most
at risk of overheating.
Australia’s apartment
boom, once primarily limited
to city centers, is spreading to
the suburbs. More than
100,000 apartments are under
construction in the states of
New South Wales and Victoria,
roughly double the number
five years ago.
Outsiders, mostly from
China, are buying up a quarter
of the new supply in New
South Wales and 16% in Victo-
ria, according to Credit Suisse.
Australian apartments still
look cheap compared with
their counterparts in Chinese
cities such as Shanghai and
Shenzhen, analysts said.
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
THE WALL STREET JOURNAL.
Schneider
Electric
To Sell
DTN Unit
BY BEN DUMMETT
AND NOEMIE BISSERBE
French power-equipment
supplier Schneider Electric
SE agreed on Monday to sell
its U.S.-based data-software
business DTN to TBG AG, a
Switzerland-based private
holding company, in a deal
valued at $900 million.
The transaction comes a
day after The Wall Street
Journal reported that Schnei-
der, whose major competitors
include ABB Ltd., Rockwell
Automation Inc. and Siemens
AG, was nearing a deal to sell
its DTN division.
Schneider acquired DTN,
which distributes real-time
weather information to farm-
ers and other customers, as
part of its €1.4 billion ($1.5 bil-
lion) purchase of Spain’s Tel-
vent in 2011.
But in October, Schneider
announced a strategic review
of the business and decided
against trying to build a sub-
scription-based business as a
new source of revenue.
The deal allows Schneider,
which is based near Paris, to
recover the bulk of what it
paid to acquire Telvent while
retaining a large part of its
operations.
The deal allows
Schneider to recover
the bulk of what it
paid to buy Telvent.
Schneider said it plans to
use net proceeds from the
transaction to buy back about
€1 billion of its shares over
two years.
The expected sale also
comes as the French multina-
tional’s overall strategy is
showing signs of paying off.
In February, it reported 24%
growth in annual net profit,
attributing the strength to a
combination of organic
growth, cost controls and im-
proving margins.
TBG, which is acquiring
DTN, doesn’t have a website,
and a spokesman for the com-
pany couldn’t immediately be
reached for comment. The Zu-
rich-based firm is described as
a family office focused on in-
vesting in buyouts of indus-
trial products and services
companies, according the
Swiss Private Equity & Corpo-
rate Finance Association web-
site. It invests in companies in
Europe and the U.S., taking eq-
uity stakes ranging in size
from €20 million to €200 mil-
lion, according to the website.
The acquisition of DTN
gives TBG ownership of the
Progressive Farmer magazine,
a storied U.S. agricultural peri-
odical founded in 1886. That
operation, though, is only a
small part of DTN’s business.
It also collects and electroni-
cally transmits weather infor-
mation to farmers, primarily
in the U.S. on a subscription
basis.
What makes a law firm different?
Legal acumen? Global reach? Industry depth? Yes, but that’s not all.
What truly differentiates a law firm is how it serves its clients. When our
clients tell us that the quality of our work and the experience of working
with us are equally satisfying—that is true distinction. Let us show you
what a fully integrated global practice and an unwavering commitment to
unsurpassed client service can mean for you and your business.
K&L Gates LLP. Global legal counsel across five continents.
Starbucks CEO Faces U.S. Test
New captain Kevin Johnson is tasked with turning around the coffee giant’s fortunes at home
BY JULIE JARGON
Kevin Johnson, the tech-
industry executive who took
over Monday as the chief ex-
ecutive of Starbucks
Corp., inherits a company
facing its most prolonged
slowdown in the U.S. since
the recession.
For more than six years,
Starbucks had been posting
quarterly same-store sales
growth of 5% or greater in
its biggest market. But that
changed last year when the
company began missing ana-
lysts’ sales targets.
Starbucks last year
blamed everything from un-
certainty about the outcome
of the U.S. presidential elec-
tion and weak consumer con-
fidence to disruption brought
on by changes in its loyalty
program.
As Howard Schultz, the
CEO who built Starbucks into
a global coffee chain, steps
down to focus on developing
luxury coffee shops within
the company, Mr. Johnson
has to make good on Star-
bucks’s promise to restore
the U.S. business to its his-
toric growth levels of at least
5% increases in same-store
sales.
Some Wall Street analysts
have expressed reservations
about whether Mr. Johnson
has the right background to
steer a large, global retail
business, but others have
said his time running daily
operations at Starbucks has
prepared him well.
The 56-year-old former
Microsoft Corp. executive
and Juniper Networks Inc.
CEO has been on the Star-
bucks board since 2009 and
has served as the coffee
chain’s operating chief for
the past two years, before
being tapped to take the top
job late last year.
The Wall Street Journal
sat down with Mr. Johnson
North Korean Link Found to Bangladesh Theft
BY ROBERT MCMILLAN
A newly discovered digital
clue links the hacking group
blamed for a multimillion-dol-
lar cyberattack on Bangla-
desh’s central bank to a com-
puter in North Korea,
according to the Russian cy-
bersecurity company Kasper-
sky Lab ZAO.
Kaspersky announced Mon-
day at its security conference
on the Caribbean island of St.
Maarten that its researchers
had obtained digital records
showing a European server
used by the group to launch its
attacks exchanged data in Jan-
uary with a computer that had
an internet address belonging
to North Korea’s state-owned
internet service provider.
Security experts have long
suspected the hacking group,
known as Lazarus, was backed
by North Korea, but that as-
sessment hinged on a 2014
Federal Bureau of Investigation
claim that one Lazarus hack—
the compromise of Sony Pic-
tures Entertainment in 2014—
BUSINESS NEWS
If it’s driven by our principles, I think it helps the company, says Kevin Johnson, shown at Starbucks’s headquarters in Seattle.
to talk about the chief-ex-
ecutive handoff, the slow-
down in U.S. sales and why
he doesn’t plan to back
away from taking a stand
on social issues, despite re-
cent backlash from a refu-
gee-hiring announcement.
Edited excerpts:
WSJ: How much autonomy
will you have as CEO?
Mr. Johnson: Howard has
been clear that I’ll be the
CEO, so that means the buck
stops with me, but I am also
smart enough to know that
you collaborate with people
to get their input on things.
So will I talk to Howard
about things that I am noo-
dling on? Of course.
WSJ: Transactions were
down in the last quarter due
to congestion caused by cus-
tomers picking up their mo-
bile orders. What are you do-
Bangladesh Bank’s account was attacked at the New York Fed.
was conducted by North Korea.
Although The Wall Street
Journal reported last month
that the FBI is pursuing a
criminal case linking North Ko-
rea to Lazarus’s activity, the
agency hasn’t provided any
public evidence to substantiate
the alleged North Korean link.
Multiple calls to the North
Korean mission to the United
Tuesday, April 4, 2017 | B3
ing to fix that? More than half of those
Mr. Johnson: In some of stores will be in the U.S. and
those stores we’ve added a China.
dedicated barista who’s WSJ: When do you think
greeting those customers China will overtake the U.S.
and handing them their food as your largest market?
and beverage as they come in Mr. Johnson: Not in the next
the door. That’s alleviating five years, but you could do
some of the congestion. the math and say in the next
We’ve also launched some 10, 15 years.
new technology that gives a
customer who orders on WSJ: Howard has never been
their mobile app a notifica- shy about voicing his opinion
tion when their food and on social issues, and his re-
beverage is ready. cent pledge to hire refugees
was met with backlash. Do
WSJ: How much more room you think taking a stand on
is there to expand in the certain social issues could
U.S.? hurt the company?
Mr. Johnson: A lot of growth Mr. Johnson: If it’s driven by
opportunities might be in our principles, I think it
less urban places, more sub- helps the company. Many of
urban areas, the Midwest. our veterans had worked
Over the next five years with interpreters in Iraq and
we’ve projected building Afghanistan that are now ref-
12,000 additional stores ugees and so we saw that as
globally, taking us to 37,000 very much aligned to the
stores. work we did hiring veterans.
rea, said Vitaly Kamluk, a re-
searcher with Kaspersky.
North Korea has “very little
presence on the internet, and
the chances that this is just a
random connection are ex-
tremely small,“ Mr. Kamluk
said. ”It does place North Ko-
rea into this equation.”
As with most developments
in the shadowy world of com-
BRENDAN MCDERMID/REUTERS
puter intrusions, this latest
piece of evidence isn’t conclu-
sive. It is technically possible,
for example, for someone to
hack the North Korean com-
puter and connect it to the
Lazarus server to throw off in-
vestigators, Mr. Kamluk said.
Although the attacks against
Sony and Bangladesh Bank oc-
Nations went unanswered. curred in 2014 and 2016, re-
The newly discovered evi- spectively, the Lazarus group
dence came from a rare techni- has been active since at least
cal error by the Lazarus hack- 2009 and recently has targeted
ers, according to Kapersky. banks in Europe and the U.S.,
The hackers failed to re- Mr. Kamluk said. Lazarus is a
move computer-log files on a name given to a group of the
server used by the group, and hackers by security research-
these digital records show the ers. No member of the group
server briefly connecting to has been publicly identified.
another computer in North Ko- Often, as with the Bangla-
JORDAN STEAD FOR THE WALL STREET JOURNAL
It helps us attract great tal-
ent, but it also shows that
we care about helping create
opportunities for people.
WSJ: Do you think you’ll be
as public as Howard when it
comes to speaking out on is-
sues?
Mr. Johnson: I expect him to
continue to be a spokesper-
son for us but that doesn’t
mean that I won’t be playing
a role in that.
WSJ: Why not just sell cof-
fee?
Mr. Johnson: One of the rea-
sons people come to work at
Starbucks is because we
stand for something. It’s
about human connection and
having a sense of humanity.
We think that’s part of what
makes Starbucks a special
place that both partners and
customers want to be associ-
ated with.
desh central-bank hack, the
Lazarus hackers quietly break
into computer networks and
lurk undetected for months be-
fore attacking, the security ex-
perts said. The Lazarus group
is suspected of stealing $81
million from he Lazarus group
is suspected of stealing $81
million from Bangladesh
Bank’s account at the Federal
Reserve Bank of New York last
year at the Federal Reserve
Bank of New York last year af-
ter initiating fraudulent orders
asking for nearly $1 billion.
The use of digital currency
may have been one of the rea-
sons that Lazarus’s server logs
weren’t removed, Mr. Kamluk
said. The European server
containing log files was config-
ured to perform a series of cal-
culations that generated
Monero, a digital currency sim-
ilar to Bitcoin. But this compu-
tationally intensive work
seems to have overwhelmed
the machine, Mr. Kamluk said.
“They overconsumed the re-
sources of the server and the
server just crashed,” he said.
©2017 K&L Gates LLP. All rights reserved.
 For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
B4 | Tuesday, April 4, 2017
Apple Supplier
Raises Prospect
Of Patent Fight
BY STU WOO
LONDON—A small but criti-
cal Apple Inc. supplier here is
raising the prospect of a pat-
ent fight with the smartphone
giant after Apple said it would
stop using its technology to
process graphics in its iPhones
and other devices.
Shares of Imagination
Technologies Group PLC fell
as much as 70% in London
trading after it disclosed that
Apple—its biggest customer—
would stop using Imagination
technology in the graphics
processing units in its devices
within 15 months to two years.
Graphics processing units,
or GPUs, are computer chips
that power videos and other
animations on smartphones,
computers and other gadgets.
Based in the English village
of Kings Langley, outside
London, Imagination runs its
business based on intellec-
tual property, designing and
selling basic blueprints for
GPUs, but not manufacturing
the chips itself.
Imagination said Monday
that Apple told the company it
was working on a “separate,
independent” design. Imagina-
tion said it believed it would
be “extremely challenging” to
design a brand-new GPU archi-
tecture “without infringing its
intellectual property rights.”
Imagination licenses its
technology to Apple, which
pays it royalties. Imagination
said it was in talks with Apple
about an alternative licensing
and royalty arrangement.
An Apple spokeswoman de-
clined to comment. An Imagi-
nation spokesman said the
company was at the beginning
of a process with Apple.
Imagination is a relatively
small part of the global smart-
GOOGLE
Continued from page B1
ing a warrant in a wire-fraud
probe, the government has
asked a court to hold Google in
contempt. In January, prosecu-
tors told a U.S. magistrate
judge in San Francisco that the
company had wrongly withheld
“volumes of data” and has
“frustrated ongoing efforts to
locate the perpetrators.”
Google, in turn, asked the
judge to quash the warrant and
possibly “investigate the gov-
ernment’s conduct” in the dis-
pute, saying it’s sought “dili-
gently and in good faith” to
comply with its obligations.
The law in question is the
Stored Communications Act, a
pre-internet age statute autho-
rizing the government to com-
pel the disclosure of electronic
records with a judge-approved
warrant based on probable
cause.
It’s a fight Google says it
tried to avoid. Court papers de-
scribe failed attempts at “con-
structive dialogue” with the
Justice Department.
In the wire-fraud case in San
Francisco, Google said in court
papers that its data-location
tools enabled it to disclose
more emails it could now con-
firm were domestically stored.
Prosecutors say Google is still
holding back email attach-
ments, calendar data and pho-
tos that could be important ev-
idence.
There hasn’t been any ruling
in this case yet.
The fight in some ways
echoes Apple’s confrontation
with the Justice Department
last year over whether the
company could be forced to un-
lock a terrorist’s iPhone. The
standoff ended after the gov-
ernment said it bought a
phone-hacking tool to crack the
device without Apple’s help.
LLUIS GENE/AGENCE FRANCE-PRESSE/GETTY IMAGES
Google no longer discloses data that it believes is stored overseas.
phone supply chain, but its
technology has been a key
component of Apple products
for years, including its phones,
tablets, iPods and watches.
Apple last year said it held
discussions with Imagination
about acquiring the chip sup-
plier but didn’t plan on mak-
ing an offer.
The chip designer had a
market value of about £760
million (about $950 million)
when markets closed Friday,
before the Apple disclosure.
The news Monday reduced its
market capitalization to less
than £300 million as of Mon-
day afternoon in London.
“The biggest risk to Imagi-
nation’s business model was
realized this morning,” said
Roger Phillips, an analyst for
Investec Bank. He had fore-
cast Apple would account for
50% to 60% of Imagination’s
revenue this year and said
other customers might not
sign deals with Imagination
until it resolves its situation
with Apple.
The blow to Imagination
has been the second shock to
Britain’s semiconductor indus-
try, which is small but has an
outsize global influence, in
less than a year. In July, Japa-
nese technology giant Soft-
Bank Group Corp. agreed to
acquire Cambridge, England-
based ARM Holdings PLC,
which designs the basic blue-
prints for more than 95% of
the world’s smartphone chips.
Apple, the world’s most
valuable company, is in a legal
tussle over intellectual prop-
erty with another chip sup-
plier. Apple in January sued
Qualcomm Inc., saying it dis-
agreed with what Qualcomm
charged in royalties. Qual-
comm has called Apple’s
claims baseless.
While both disputes are ex-
amples of a major tech com-
pany throwing down the gaunt-
let to prosecutors, the privacy
concerns in Google’s legal fight
are more opaque, according to
American University law pro-
fessor Jennifer Daskal, who
specializes in national security
law.
Google has likened the gov-
ernment’s demands to requir-
ing a U.S.-based hotel chain to
hand over a customer’s suitcase
located in a foreign hotel.
But Google’s customers
don’t know where their data is
stored, as a federal magistrate
judge in Philadelphia observed.
Data is dispersed across data
centers. An email with an at-
tachment can be located in the
country and abroad simultane-
ously. That’s because, as a
Google told judges, a file can be
split into “smaller chunks” and
stored in separate servers.
Lawyers for Google and
other tech companies say it’s
not just customer privacy at is-
sue. Turning over foreign data
risks an intrusion upon foreign
sovereignty that could provoke
countermeasures, they have ar-
gued.
In a brief supporting
Google’s position, Microsoft
and Apple said the govern-
ment’s position “invites foreign
nations to reciprocate by like-
wise demanding that local of-
fices of U.S. technology compa-
nies turn over U.S. citizens’
private communications stored
on U.S. soil.”
The Justice Department, for
its part, says Congress never
intended to create such an in-
vestigative impediment.
“Because Google’s data
moves across its global net-
work automatically and does
not persist in any one geo-
graphic location,” the govern-
ment told a Wisconsin federal
court in March, “the Microsoft
decision renders such data in-
accessible.”
TECHNOLOGY
Uber Hits Another Pothole
Self-driving program
encounters snag as
Pittsburgh presses
firm to give back more
BY IANTHE JEANNE DUGAN
AND GREG BENSINGER
PITTSBURGH—A pilot pro-
gram that allowed Uber Tech-
nologies Inc. to launch its first
self-driving cars in this former
steel town has hit a bump.
It isn’t about regulation,
which steered Uber’s driverless
program out of San Fran-
cisco. Nor is it about safety,
which last month led the ride-
hailing company to temporarily
suspend its self-driving test-
ing after an accident in Ari-
zona. Here, some top officials
say Uber isn’t giving enough
back to the community.
“If they are going to be in-
volved in economic disruption,
they have a moral obligation to
society,” said Mayor Bill Peduto.
“In a partnership, it’s not just
what we can do for them.”
Mr. Peduto, a Democrat,
said he plans to seek Uber’s
signature on a memorandum
of understanding demanding
better work conditions for
Uber drivers, services to some
elderly residents, and improve-
ments in fuel efficiency.
A spokesman for Uber said
the company hadn’t seen the
memorandum. “Uber is proud
to have put Pittsburgh on the
self-driving map, an effort that
included creating hundreds of
tech jobs and investing hun-
dreds of millions of dollars,” he
said. “We hope to continue to
have a positive presence in
Pittsburgh by supporting the
local economy and community.”
The Pittsburgh mayor’s in-
tervention highlights a broader
clash as transportation compa-
nies test new technology on
public roads in a race to roll
out driverless cars.
It marks the latest challenge
for Uber, which has been buf-
feted by charges of sexism and
Apple iPads: The Old Ones Are Just Fine
Apple just delivered a
brand new iPad that it says
features “a brighter 9.7-inch
Retina® display and best-in-
class performance at its most
affordable price ever.”
Here’s my Honest Press
Release®: There’s a new iPad
that’s a teensy bit faster and
brighter than the last one,
and they’re
pretty much
otherwise in-
distinguish-
able. Oh, and
it starts $70
PERSONAL cheaper.
TECHNOLOGY The iPad
GEOFFREY has descended
A. FOWLER from one of
Apple’s most-
hyped prod-
ucts to one of its slowest to
evolve. Even last year’s 9.7-
inch “Pro” model looks like a
fraternal twin of the 2013 iPad
Air. That doesn’t mean they
aren’t worth owning: iPads,
which outsell Macs, serve
many of us well from vacation
spots to children’s playrooms.
For most of us, here’s my
simple advice: If you bought
one of the new iPads in No-
vember 2013 or after, you’re
golden. Those, including the
first iPad Air and iPad Mini
2, can run iOS 10, Apple’s lat-
est and most secure software.
If you enjoy a stroll down
memory lane—or seek a tad
more specific upgrade ad-
vice—I present seven years of
iPads and what they’re still
good for today.
2010: iPad
In the beginning, Steve
Jobs said, “Let there be
iPad.”
Nowadays, however, mine
sometimes doesn’t even turn
on. It can still stream Netflix,
GRAB
Ride Service Buys
Indonesia’s Kudo
Ride-hailing company Grab
said it was acquiring the Indone-
sian e-commerce company Kudo
for an undisclosed sum, and said
it hopes to expand its online
payments network in the coun-
try.
Grab’s acquisition of Kudo
paves the way for the Singa-
A self-driving Uber car crosses the Ninth Street Bridge in downtown Pittsburgh last year.
sexual harassment (the com-
pany is investigating them), an
embarrassing video of Chief Ex-
ecutive Travis Kalanick berating
a driver (Mr. Kalanick apolo-
gized) and a lawsuit from rival
Alphabet Inc. alleging that Uber
stole corporate secrets for its
self-driving car development
(Uber says it will be vindicated.)
Last week, Uber published
data about its workforce, saying
women comprised just 15% of its
technical team but 36% of all
employees. Uber released the
report in the wake of criticism
from civil-rights groups that
had called for Uber to be more
transparent about its workforce.
In Pittsburgh, Uber has set
up what it calls its Advanced
Technologies Center. “Its mis-
sion: To make self-driving Ubers
a reality,” according to a release
published last September, when
Uber began offering customers
rides in self-driving Volvos, with
a human in the driver’s seat
ready to intervene when
needed.
The company has hired about
700 people, including more than
display e-books and double
as a digital photo frame, but
not much else. If you’re done
with it, recycle it responsibly
at a Best Buy or Apple Store.
2011: iPad 2
This is what the first iPad
should have looked like: It
was about half as thick and
had two cameras—very excit-
ing at the time.
But by today’s standards,
that front-facing camera isn’t
great for FaceTiming with
Seven generations of iPads. The latest one has a 9.7-inch display.
the grandparents. The low-
resolution screen might hurt
our precious eyes. It’s also
slower than molasses. Ver-
dict: Give it to a 5-year-old.
2012: iPad with Retina
display (aka iPad 3), iPad
Mini and iPad 4
This iPad came with the
high-resolution screen we now
take for granted. But the Ret-
ina iPad was heavier than the
iPad 2, and I’ve bonked my
nose a few times while read-
ing in bed. The 7.9-inch Mini
didn’t have the nicer screen
(and wouldn’t hurt your nose).
BUSINESS WATCH
pore-based company to expand
its offerings beyond ride-hailing
services, by moving into online
payments and e-commerce in In-
donesia.
Kudo allows customers with-
out access to traditional banking
services to shop online.
The ride-hailing company said
it plans to invest $700 million in
Indonesia over the next four
years to help develop the coun-
try’s digital economy.
—Dan Strumpf
THE WALL STREET JOURNAL.
WSJ.com/Tech
GENE J. PUSKAR/ASSOCIATED PRESS
40 engineers from Carnegie past year. He said Uber fought
Mellon University’s National to ensure Pittsburgh wouldn’t
Robotics Engineering Center. impose a tax on ride-sharing,
“The mayor is rightly con- did a U-turn on offering free
cerned about what the rela- service during the pilot pro-
tionship is between companies gram and didn’t participate in
that are coming to leverage some civic causes.
our assets—universities, roads For instance, Pittsburgh
and so forth—and those com- sought to join with Uber to win
munities they are benefiting a Smart City Challenge, which
from,” said Grant Oliphant, grants cities federal money for
president of the $1.52 billion developing high-tech transpor-
Heinz Endowments, a philan- tation systems. It suggested
thropic arm of the food con- that Uber sponsor a program
glomerate. “It is in some ways that would allow low-income
a modern expression of the seniors to have free access to
old-fashioned expectation of health-care providers and help
corporate citizenship.” build a driverless-car test track.
Uber has been well received “They walked away from
by many residents and busi- both,” Mr. Peduto said. Pitts-
ness leaders. Brian Kennedy, burgh lost the competition and
senior vice president for the the $50 million prize.
Pittsburgh Technology Council, Uber, a private company val-
a trade group, said Uber’s proj- ued at nearly $70 billion, be-
ect has made it easier to draw lieves self-driving vehicles will
other high-tech companies. He curb costs and limit accidents
added that drunken-driving caused by human error. The
incidents dropped 18% in technology might be necessary
Uber’s first year. to help Uber one day be profit-
Mr. Peduto, an early fan of able by eliminating the cost of
Uber, said he has become in- paying drivers and seek an ini-
creasingly disillusioned in the tial public offering of stock.
Today, both can run iOS 9, If your only problem is
which still supports many battery drain, consider get-
apps. But those apps may run ting a replacement battery
painfully slow, so you’re best for $100 from Apple. (Replac-
limiting activity to streaming ing it yourself costs $30 us-
video—and perhaps strength ing instructions on iFixit, but
training. beware, this isn’t easy.)
For the trivia buffs out
there: Yes, there was another 2014: iPad Air 2
iPad released in 2012. The and iPad Mini 3
fourth-generation iPad was Hey, you can use your fin-
nearly identical to its prede- gerprint now! Otherwise,
cessor, but had a faster chip nothing to write home about.
plus a Lightning port to These are still great iPads.
match the iPhone 5.
2015: iPad Pro 12.9
and iPad Mini 4
This is the year we wel-
comed the linebacker of the
GEOFFREY A. FOWLER/THE WALL STREET JOURNAL
iPad family, the 12.9-inch
iPad Pro. About the size of a
box of Cheerios, it also works
with the Apple Pencil and
keyboard case, sold sepa-
rately. It’s a potential laptop
replacement: Its battery lasts
longer than many of Apple’s
newest MacBooks.
2016: iPad Pro 9.7
The fancy processor,
screen, speakers and accesso-
ries of the big boy come to a
familiar form. The smaller
2013: iPad Air and iPad Pro is only a hair thicker
Mini with Retina Display than the iPad Air 2.
This is the fastest stan-
In this banner year, the dard-sized iPad you can buy
iPad shed a third of its today. But unless you’re an
weight, and the Mini got the artist or trying to replace a
screen we love. laptop, you don’t need all the
Today, both are still fine. bells and whistles.
They run the current iOS 10
and can handle the tasks 2017: iPad
most of us use iPads for. Apple didn’t even give its
If you keep them, you’re latest—the seventh-genera-
stuck with two mild frustra- tion standard iPad—a new
tions: The screens are hard to name. With the same proces-
see in direct sunlight, and sor as an iPhone 6s, it’s a bit
there’s no Touch ID finger- slower than an iPad Pro, but
print reader to speed up un- that’s noticeable only if you
locking, banking and shop- play games or run intensive
ping. apps like Adobe Lightroom.
BOX OFFICE additional $59 million to the
DreamWorks Animation film’s
‘Boss Baby’ Delivers total gross.
Strong Opening The weekend’s other new
wide release feature, “Ghost in
“The Boss Baby,” an animated the Shell,” fared worse, with a
comedy featuring Alec Baldwin disappointing debut of $19 mil-
as the voice of a petulant, pint- lion. “Ghost in the Shell,” starring
size executive, unexpectedly Scarlett Johansson as a cyborg
took the No. 1 spot at the box in futuristic Japan, is based on a
office this past weekend with an popular comic series whose fan
estimated $49 million in the U.S. base was expected to turn out
and Canada. in stronger numbers.
Overseas grosses added an —Erich Schwartzel
 For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
THE WALL STREET JOURNAL. Tuesday, April 4, 2017 | B5

FINANCE & MARKETS

Deutsche
Bank
Safer Cars Cost More to Insure
Premiums reflect since 2003. In addition to the

Shuffles expense of repairing

sensors when high-
High-Priced Avoidance
Advances in crash-prevention technology have
made cars safer by using sensors, cameras
need to fund costly repairs of
safety tech, the company is
also factoring in trends such

Executives
BY JENNY STRASBURG
Deutsche Bank AG is shuf-
fling more executives while it
searches for a new chief finan-
cial officer and reshapes
global businesses for the sec-
ond time in 18 months.
The lender’s group trea-
surer since 2009, Alexan-
der von zur Mühlen, will
leave that post and return to
the investment bank, where
he previously worked, accord-
ing to people familiar with
the matter.
The move, to be announced
as soon as this week, means
Mr. von zur Mühlen will con-
tinue working for current CFO
Marcus Schenck, who will co-
head a newly recombined in-
vestment bank once a new
CFO is named.
The investment bank,
Deutsche Bank’s largest divi-
sion, is being restructured to
encompass the trading unit
that was split from the deal-
advisory and transaction-
banking businesses in late
2015.
Plans are being drawn up
for new, adjacent offices to be
constructed for the invest-
ment-bank co-heads, Mr.
Schenck and current markets
chief Garth Ritchie, on the
fourth floor of Deutsche
Bank’s London headquarters,
people with knowledge of the
plans say. That floor is home
to a reduced European stock-
trading business.
The investment bank
is narrowing its client
roster while trying to
recover market share.
tech vehicles do crash
BY CHRISTINA ROGERS
AND LESLIE SCISM
New cars loaded with high-
tech crash-prevention gear are
having a perverse effect on
car-insurance costs: They are
soaring.
Safety features such as au-
tonomous braking and systems
to prevent drivers from drift-
ing out of their lanes are in-
creasingly available on vehi-
cles rolling off assembly
lines. Auto companies and
third-party researchers say
these features help prevent
crashes and are building
blocks to self-driving cars. But
progress comes with a price.
Enabling the safety tech are
cameras, sensors, micropro-
cessors and other hardware
whose repair costs can be
more than five times that of
conventional parts. And the
equipment is often located in
bumpers, fenders and external
mirrors—the very spots that
tend to get hit in a crash. In-
surance companies, unwilling
to shoulder all the pain, are
passing some of the cost to
buyers.
Jeff Woods, a professor in
Illinois, recently bought a 2017
Volkswagen Passat to replace
a two-year-old model. It was
loaded with so-called active
safety equipment. So he
wasn’t expecting his State
Farm insurance-policy premi-
ums to jump 20% to $1,200 a
year.
“I was told by the car deal-
ership all the technology
would improve the cost of in-
surance,” Mr. Woods said. “In-
stead, it went up.” Volkswagen
AG declined to comment on
Mr. Woods’s experience but
said it was “proud to offer ad-
vanced-safety technology sys-
and radars to detect potential hazards but the
high-tech gear can make repairs costlier when
a collision can’t be averted.
Near-range
cameras
Ultrasonic
sensors
Radar
devices
Note: Diagram shows approximate placement of devices in a typical configuration.
Sources: Insurance Institute for Highway Safety, Highway Loss Data Institute, AAA (technology); CCC Information Services (cost)
tems on our vehicles.”
Mr. Woods ended up nego-
tiating a price reduction with
State Farm.
Insurance sticker shock is a
blow to auto makers looking
to increase adoption of high-
tech safety packages, which
can add thousands of dollars
to the price of a new car and
deliver significantly higher
margins than other options.
At present, though, only a
fraction of buyers opt for the
technology, often known as
“advanced driver assistance
systems,” or ADAS. As a result,
replacement parts are dispro-
portionately expensive.
About 14% of vehicles sold
in the 2016 model-year were
equipped with collision-miti-
gation technology, according
to WardsAuto.com. Some in-
Stereo camera,
as more miles driven and dis-
tracted driving, a company
spokeswoman said.
Car-crash fatalities are in-
infrared night vision;
creasing as people spend more
lidar (light detection time on the road and attempt
and ranging) to multitask with smartphones
while at the wheel. Miles
driven by Americans
rose 2.8% to a record 3.2 tril-
lion in 2016, according to the
Federal Highway Administra-
tion. That increase was far
outpaced by a 6% surge in mo-
tor-vehicle deaths in the same
period.
Industrywide, the average
Average damage-repair cost, annual car-insurance premium
change from previous year* increased 14% since 2014 to
4% $990, according to an estimate
by the Insurance Information
2 Institute.
“Safer vehicles are more ex-
0 pensive to repair,” Liberty Mu-
tual Chief Executive David
–2 Long told investors in March,
explaining why the severity of
’09 ’10 ’11 ’12 ’13 ’14 ’15 ’16
claims is increasing. The Bos-
*Based on damage appraisals of repairable vehicles ton-based company, among the
10 largest car insurers, has
THE WALL STREET JOURNAL. been raising rates by an aver-
age annual 9% since late last
surers estimate 25% to 50% of fall over time. year.
all vehicles on the road will Owners of ADAS-equipped “We are nowhere near an
have to have forward-collision cars aren’t the only ones foot- inflection point,” Allstate
prevention systems before ac- ing the bill. Liability insurance Corp. spokesman Justin Hern-
cident rates decline enough to is on the rise, too: A driver of don said. Even after an aver-
offset higher repair costs. a more-basic car may be liable age 7% increase in 2016, he
It now costs $166 to fix a for damages in a collision with said “there is really no other
conventional left mirror on a a vehicle loaded with safety place for premiums to go but
2015 Mercedes-Benz ML350, gear. up.”
according to Allstate Corp., Bumpers, fenders, grilles The National Highway Traf-
but the repair bill balloons to and side mirrors fitted with fic Safety Administration esti-
$925 for that mirror with col- safety sensors often cost more mated more than 90% of all
lision-avoidance technology. A to fix because of the need to crashes are caused by human
tech-equipped mirror on a recalibrate software and the error.
Lexus RX 350 is $840, more limited availability of replace- Some insurers are experi-
than double the $390 for a ment parts, said Susanna menting with discounts. Hart-
mirror without the tech. Gotsch, lead analyst for CCC ford Financial Services Group
An industry alliance repre- Information Services, which Inc. is piloting a program in a
senting a dozen auto manufac- provides software to collision- few states that offers breaks
turers declined to comment on repair shops, insurers and the for car buyers who get fea-
repair costs. Several auto mak- automotive industry. tures such as automatic-brak-
ers said safety is a prior- State Farm in October ing systems or adaptive head-
ity, and while new parts are raised Illinois insurance rates lights; Liberty Mutual also
expensive at first, they tend to 5.9%, the largest such jump offers some discounts.

Mr. von zur Mühlen previ- FINANCE WATCH

ously was a senior European
debt capital-markets and de-
rivatives banker at Deutsche
Bank. His fate as the longtime
treasurer has been a subject
of speculation inside and out-
side Deutsche Bank because
some co-workers and inves-
tors saw him as a potential
successor to Mr. Schenck as
CFO, according to people
close to the bank. A Deutsche
Bank spokeswoman declined
to comment on his behalf.
Deutsche Bank’s new trea-
surer will come from the mar-
LOUIS DREYFUS
Profit Rose in 2016
Despite Grain Surplus
Agricultural commodities
trader Louis Dreyfus Company
BV reported a rise in 2016 in-
come on Monday despite an-
other year of ample supplies of
grain.
The Switzerland-based, pri-
vately held company reported
net income, group share, of
agribusiness industry had to
face during 2016,” said Chief Ex-
ecutive Officer Gonzalo Ramírez
Martiarena.
The volume of grain and
other products shipped by Louis
Dreyfus was in line with the pre-
vious year at 81 million metric
tons.
The financial results of the
dominant agricultural trading
houses—Archer Daniels Midland
Co., Bunge Ltd., Cargill and
Dreyfus—have suffered in recent
GUNVOR GROUP
Oil Trader Earns Less
Profits slipped last year at
Gunvor Group after asset sales
provided a one-time boost to
the firm’s results in 2015.
The privately held oil-trading
firm said that net profit was
$312 million, down from $1.25
billion in 2015, when it finished
divesting itself of its Russian as-
sets in a move to diversify.
DADO GALDIERI/BLOOMBERG

kets division: Dixit Joshi is $305 million for 2016, up from years from three consecutive The firm said the 2016 under-
moving into the job after $211 million the previous year. large global grain crops, but lying profit increased from the
overseeing fixed-income sales The total was well below the there are signs of improvement. previous year, but didn’t disclose
globally since late 2015, ac- 2014 level of $648 million. Last week, Cargill, the largest figures.
cording to people familiar “Oversupply, market shocks, of the four, said that quarterly Gunvor’s total trading volume
with the pending move. Dis- geopolitical dynamics and ad- net income in the period ended rose to 187 million metric ton
cussions about the plans were verse weather conditions were Feb. 28 rose 42% to $650 mil- from 180 million tons in 2015.
earlier reported by eFinan- some of the difficulties that the lion. —Sarah Mcfarlane —Sarah Mcfarlane Cane is harvested at a Dreyfus farm in 2012.
cialCareers.
Mr. Joshi’s departure from
global markets is the latest
example of change in client- HSH Nordbank Gets Advertisement INTERNATIONAL INVESTMENT FUNDS
facing roles in the invest-
[ Search by company, category or country at asia.WSJ.com/funds ]
ment bank. Deutsche Bank is
still narrowing its client ros-
ter while trying to win back
Two Offers to Buy It FUND NAME
NAV
GF AT LB DATE CR NAV
—%RETURN—
YTD 12-MO 2-YR
market share it has lost in BY WILLIAM WILKES Karatzas Marine Advisors &
VP Classic-B Units AS EQ HKG 03/31 USD 128.32 12.0 20.1 -0.3
key areas. AND COSTAS PARIS Co. in New York, said the VP Classic-C Units AS EQ HKG 03/31 USD 16.20 12.1 20.3 -0.3
VP Classic-C Units AUD H AS EQ HKG 03/31 AUD 13.36 11.9 21.2 0.3
A number of current em- bank’s portfolio would proba- VP Classic-C Units CAD H AS EQ HKG 03/31 CAD 12.95 11.8 20.6 -0.5
ployees, including some in the FRANKFURT—The race to bly have to be parceled into VP Classic-C Units HKD H
VP Classic-C Units NZD H
AS
AS
EQ HKG
EQ HKG
03/31 HKD
03/31 NZD
11.00
13.39
11.7
11.0
19.0
19.9
NS
0.9
Data as shown is for information purposes only. No offer is being made by
investment bank and trading sell HSH Nordbank AG picked different sizes in order for the Morningstar, Ltd. or this publication. Funds shown aren’t registered with the VP Classic-C Units RMB AS EQ HKG 03/31 CNH 11.39 9.3 25.7 NS
U.S. Securities and Exchange Commission and aren’t available for sale to United VP Classic-C Units RMB H AS EQ HKG 03/31 CNH 10.86 13.0 22.0 NS
division, have been discussed up speed after Apollo Global states to get the best price for States citizens and/or residents except as noted. Prices are in local currencies. VP Multi-Asset Fund Cls A HKD OT OT HKG 03/31 HKD 10.10 5.0 NS NS
as potential CFO candidates, Management LLC and China’s taxpayers. All performance figures are calculated using the most recent prices available. VP Multi-Asset Fund Cls A USD OT OT HKG 03/31 USD 10.24 4.8 7.0 NS
VP Taiwan Fund AS EQ CYM 03/31 USD 18.59 11.0 22.6 7.0
but people close to the bank HNA Group made offers for The global shipping crisis is NAV —%RETURN—
FUND NAME GF AT LB DATE CR NAV YTD 12-MO 2-YR
say Deutsche Bank executives the state-owned German bank. also complicating the process, For information about listing your funds,
have signaled that an external HSH Nordbank faces liqui- with banks world-wide strug- n Chartered Asset Management Pte Ltd - Tel No: 65-6835-8866 please contact: Freda Fung tel: +852 2831
Fax No: 65-6835 8865, Website: www.cam.com.sg, Email: cam@cam.com.sg
hire is more likely. dation if it can’t find a buyer gling to unload bad shipping CAM-GTF Limited OT OT MUS 03/24 USD 310782.95 2.6 7.3 -2.1 2504; email: freda.fung@wsj.com
The CFO search is focusing after the European Commis- loans and shipping companies
on fluent German speakers sion last year ordered its own- scrapping worthless vessels.
with experience in a finance ers, the federal states of Ham- In Germany, Deutsche Bank
role at a bank or other finan- burg and Schleswig-Holstein, AG and Commerzbank AG
cial entity, the people said.
Deutsche Bank executives
have said they are confident
to sell their combined 85%
stake in the bank.
The privatization must be
have warned that their losses
on shipping loans could be as
high as €346 million and €600
n Website: Https://Www.Valuepartners-Group.Com/ Tel: (852) 2143 0688
China A-Share Fund Cls A AUD H OT
China A-Share Fund Cls A AUD UnH OT
China A-Share Fund Cls A CAD H OT
OT HKG
OT HKG
OT HKG
03/31 AUD
03/31 AUD
03/31 CAD
12.66
11.41
11.69
7.4
4.4
7.1
13.3
9.0
11.5
-0.9
-2.5
-1.5
LIST YOUR
China A-Share Fund Cls A EUR H OT OT HKG 03/31 EUR 12.27 6.8 10.4 -2.1
the revamped strategy an- completed by February 2018, million, respectively. China A-Share Fund Cls A EUR UnH OT OT HKG 03/30 EUR 12.28 6.5 13.4 NS

nounced last month is the

right one and that an €8 bil-
the European Commission has
said. Taxpayers in northern
China A-Share Fund Cls A GBP H OT
China A-Share Fund Cls A GBP UnH OT
China A-Share Fund Cls A HKD H OT
China A-Share Fund Cls A HKD UnH OT
OT HKG
OT HKG
OT HKG
OT HKG
03/31 GBP
03/31 GBP
03/31 HKD
03/31 HKD
12.30
14.45
12.49
12.37
6.8
7.8
7.0
10.9
14.3
24.5
12.0
8.4
-0.1
8.6
-1.6
-2.5
FUNDS
lion ($8.5 billion) capital in- Germany face multibillion-euro China A-Share Fund Cls A NZD H OT OT HKG 03/31 NZD 12.48 7.6 13.8 0.9

crease has put the lender on losses if a suitable buyer can’t

The German bank China A-Share Fund Cls A NZD UnH OT
China A-Share Fund Cls A RMB (CNH) OT
OT HKG
OT HKG
03/31 NZD
03/31 CNH
10.97
13.64
10.1
8.8
7.9
15.7
NS
1.3
China A-Share Fund Cls A USD OT OT HKG 03/31 USD 12.33 10.8 9.3 -2.5
firm financial ground. be found. faces liquidation if its China A-Share Fund Cls A USD H OT OT HKG 03/31 USD 12.45 7.1 12.4 -1.6
China Greenchip-A Units AS EQ CYM 03/31 HKD 57.13 12.3 18.7 -5.7
HNA Group and Apollo
Global Management made in-
privatization isn’t China Greenchip-A Units AUD H AS
China Greenchip-A Units CAD H AS
EQ CYM
EQ CYM
03/31 AUD
03/31 CAD
9.65
9.38
12.3
12.2
19.3
18.0
-6.2
-7.3
China Greenchip-A Units NZD H AS EQ CYM 03/31 NZD 9.92 12.5 20.1 -5.4
dicative offers for the bank complete by February. China Greenchip-A Units USD AS
China Greenchip-A2 QDIs Units AS
EQ CYM
EQ CYM
03/31 USD
03/31 HKD
9.44
10.36
12.1
11.8
18.4
18.1
-6.6
-5.9
ahead of a Friday deadline, ac- GC Hi Yield Inc - Cls A MDIs GBP H OT OT CYM 03/31 GBP 9.87 5.9 19.4 NS
cording to people familiar with GC Hi Yield Inc-Cls A MDIs AUD H OT
GC Hi Yield Inc-Cls A MDIs CAD H OT
OT CYM
OT CYM
03/31 AUD
03/31 CAD
9.42
9.50
6.3
6.2
21.5
20.3
14.1
12.8 In print & online. Contact:
the matter. They didn’t say GC Hi Yield Inc-Cls A MDIs NZD H OT OT CYM 03/31 NZD 9.77 6.6 22.3 15.3
GC Hi Yield Inc-Cls P HKD Acc sh OT OT CYM 03/31 HKD 15.01 6.5 20.9 13.0
how much the investors bid HSH Chief Executive Stefan GC Hi Yield Inc-Cls P HKD MDIs sh OT OT CYM 03/31 HKD 9.39 6.4 20.9 13.0
TORSTEN SILZ/EUROPEAN PRESSPHOTO AGENCY

GC Hi Yield Inc-Cls P MDIs SGD H OT OT CYM 03/31 SGD 10.31 6.1 20.3 13.2
for the troubled bank, which Ermisch has urged the bank’s GC Hi Yield Inc-Cls P USD Acc sh OT OT CYM 03/31 USD 15.10 6.3 20.6 12.9
last week said it had loan loss state owners not to dawdle on GC Hi Yield Inc-Cls P USD MDIs sh OT OT CYM 03/31 USD 9.44 6.3 20.6 12.9 wsja.advertising@dowjones.com
GC Hi Yield Inc-ClsA MDIs EUR H OT OT CYM 03/31 EUR 10.31 5.7 18.5 11.6
provisions of €2 billion ($2.13 the cleanup and privatization. Hi-Div Stk Cls A RMB H Acc OT OT HKG 03/31 CNH 11.28 12.8 17.7 4.4
Hi-Div Stk Cls A RMB UnH Acc OT OT HKG 03/31 CNH 13.45 9.8 21.4 6.7
billion) because of soured The finance ministries of Hi-Div Stk Cls A1 OT OT HKG 03/31 USD 80.07 11.6 15.4 2.0
shipping loans. Hamburg and Schleswig-Hol- Hi-Div Stk Cls A2 AUD H MDIs OT
Hi-Div Stk Cls A2 CAD H MDIs OT
OT HKG
OT HKG
03/31 AUD
03/31 CAD
9.57
9.70
11.4
11.5
15.4
14.2
2.2
1.0
The bidders were earlier re- stein said in a joint statement Hi-Div Stk Cls A2 GBP H MDIs OT OT HKG 03/31 GBP 9.17 12.4 14.5 0.6
Hi-Div Stk Cls A2 HKD MDIs OT OT HKG 03/31 HKD 9.99 12.0 15.8 2.0
ported by Bloomberg. they were “very satisfied” with Hi-Div Stk Cls A2 MDIs OT OT HKG 03/31 USD 10.91 11.4 15.2 1.8
Hi-Div Stk Cls A2 NZD H MDIs OT OT HKG 03/31 NZD 9.80 11.6 16.0 3.2
While the offer details the response from interested Hi-Div Stk Cls A2 RMB H MDIs OT OT HKG 03/31 CNH 9.50 13.2 18.0 4.3
weren’t known, the cost to ac- buyers, without naming them. Hi-Div Stk Cls A2 RMB UnH MDIs OT
Hi-Div Stk Cls A2 SGD H MDIs OT
OT HKG
OT HKG
03/31 CNH
03/31 SGD
9.93
10.53
10.1
NS
22.6
NS
7.0
NS
quire the bank could fall The ministries plan to launch Intel-China Converg Fund-A AUD H AS EQ CYM 03/31 AUD 10.04 14.1 14.9 NS
Intel-China Converg Fund-A CAD H AS EQ CYM 03/31 CAD 10.16 -0.1 1.4 NS
sharply as the February 2018 talks with interested parties, Intel-China Converg Fund-A NZD H AS EQ CYM 03/31 NZD 11.33 10.4 11.0 NS
deadline draws nearer. though any deal requires Euro- Intel-China Converg Fund-A Units AS
Intel-Chinese Mainland Foc Fund AS
EQ CYM
EQ CYM
03/31 USD
03/31 USD
150.10
42.73
12.5
15.3
14.4
18.6
-3.7
-1.1
CFO Marcus Schenck will move. Basil Karatzas, founder of pean Union approval. VP Classic-A Units AS EQ HKG 03/31 USD 285.47 12.1 20.7 0.2
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
B6 | Tuesday, April 4, 2017 THE WALL STREET JOURNAL.

MARKETS DIGEST
Nikkei 225 Index STOXX 600 Index S&P 500 Index Data as of 12 p.m. New York time
Last Year ago
18983.23 s 73.97, or 0.39% Year-to-date t 0.69% 379.29 t 1.85, or 0.49% Year-to-date s 4.94% 2346.38 t 16.34, or 0.69% Trailing P/E ratio * 24.75 23.82
High, low, open and close for each 52-wk high/low 19633.75 14952.02 High, low, open and close for each 52-wk high/low 381.14 308.75 High, low, open and close for each P/E estimate * 18.28 17.49
trading day of the past three months. All-time high 38915.87 12/29/89 trading day of the past three months. All-time high 414.06 4/15/15 trading day of the past three months. Dividend yield 1.97 2.20
All-time high: 2395.96, 03/01/17

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

20000 385 2390

19500 375 2350

19000 365 2310

18500 355 2270

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

Session open Close

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

17500 335 2190

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

International Stock Indexes Data as of 12 p.m. New York time Global government bonds
Latest 52-Week Range YTD Latest, month-ago and year-ago yields and spreads over or under U.S. Treasurys on benchmark two-year
Region/Country Index Close NetChg % chg Low Close High % chg and 10-year government bonds around the world. Data as of 12 p.m. ET
World The Global Dow 2676.08 –16.09 –0.60 2193.75 • 2720.47 5.8 Country/ Spread Over Treasurys, in basis points Yield
MSCI EAFE 1787.08 –5.90 –0.33 1471.88 • 1956.39 4.1 Coupon Maturity, in years Yield Latest Previous Month Ago Year ago Previous Month ago Year ago
MSCI EM USD 962.97 4.60 0.48 691.21 • 1044.05 21.2 5.250 Australia 2 1.752 51.4 50.4 52.4 122.1 1.758 1.833 1.957
4.750 10 2.687 35.4 31.6 33.5 76.6 2.702 2.815 2.537
Americas DJ Americas 565.86 –3.95 –0.69 480.90 • 577.65 4.7
3.000 Belgium 2 -178.9 -178.2 -185.0 -116.5 -0.528 -0.541 -0.429
-0.551
Brazil Sao Paulo Bovespa 64816.71 –167.36 –0.26 47873.65 • 69487.58 7.6
0.800 10 0.821 -151.3 -154.7 -167.5 -139.6 0.839 0.805 0.376
Canada S&P/TSX Comp 15468.09 –79.66 –0.51 13217.17 • 15943.09 1.2
0.000 France 2 -0.503 -174.1 -172.4 -179.7 -117.1 -0.470 -0.488 -0.435
Mexico IPC All-Share 48793.76 252.20 0.52 43902.25 • 49523.94 6.9
0.250 10 0.952 -138.2 -142.7 -153.0 -130.2 0.959 0.950 0.470
Chile Santiago IPSA 3699.17 6.82 0.18 2998.64 • 3764.58 14.8
0.000 Germany 2 -0.808 -204.6 -199.6 -212.3 -120.7 -0.742 -0.813 -0.471
U.S. DJIA 20538.52 –124.70 –0.60 17063.08 • 21169.11 3.9
0.250 10 0.279 -205.5 -205.7 -212.8 -163.6 0.329 0.352 0.135
Nasdaq Composite 5871.21 –40.53 –0.69 4574.25 • 5928.93 9.1
0.300 Italy 2 -0.076 -131.4 -131.5 -135.8 -76.0 -0.061 -0.049 -0.024
S&P 500 2346.38 –16.34 –0.69 1991.68 • 2400.98 4.8
1.250 10 2.144 -19.0 -24.3 -37.6 -54.9 2.143 2.104 1.223
CBOE Volatility 13.31 0.94 7.60 9.97 • 26.72 –5.2
0.100 Japan 2 -0.167 -140.5 -144.7 -159.4 -95.4 -0.193 -0.285 -0.218
EMEA Stoxx Europe 600 379.29 –1.85 –0.49 308.75 • 381.14 4.9 0.100 10 0.075 -225.9 -231.7 -240.6 -183.4 0.069 0.074 -0.062
Stoxx Europe 50 3145.86 –14.83 –0.47 2626.52 • 3174.79 4.5 4.000 Netherlands 2 -0.751 -198.9 -196.6 -209.7 -122.1 -0.712 -0.788 -0.485
France CAC 40 5085.91 –36.60 –0.71 3955.98 • 5132.93 4.6 0.750 10 0.539 -179.4 -180.9 -187.7 -155.2 0.577 0.603 0.220
Germany DAX 12257.20 –55.67 –0.45 9214.10 • 12375.58 6.8 4.450 Portugal 2 -0.166 -140.4 -139.9 -132.4 -50.1 -0.145 -0.015 0.235
Israel Tel Aviv 1394.65 –1.36 –0.10 1372.23 • 1504.42 –5.2 2.875 10 3.558 122.4 126.0 143.1 96.2 3.645 3.911 2.733
Italy FTSE MIB 20242.88 –250.06 –1.22 15017.42 • 20540.39 5.2 2.750 Spain 2 -0.219 -145.7 -144.0 -161.1 -72.6 -0.186 -0.302 0.010
Netherlands AEX 513.45 –3.09 –0.60 409.23 • 518.88 6.3 1.500 10 1.636 -69.8 -74.0 -88.1 -40.2 1.645 1.599 1.370
Russia RTS Index 1122.98 9.22 0.83 839.62 • 1196.99 –2.5 4.250 Sweden 2 -0.607 -184.5 -186.5 -190.3 -138.1 -0.611 -0.594 -0.645
Spain IBEX 35 10325.30 –137.60 –1.32 7579.80 • 10462.90 10.4 1.000 10 0.593 -174.1 -178.5 -178.8 -101.1 0.601 0.692 0.760
Switzerland Swiss Market 8633.86 –25.03 –0.29 7475.54 • 8710.26 5.0 1.750 U.K. 2 0.112 -112.6 -112.5 -121.6 -30.7 0.129 0.093 0.429
South Africa Johannesburg All Share 52457.76 401.70 0.77 48935.90 • 54704.22 3.6 4.250 10 1.067 -126.6 -124.4 -129.6 -36.0 1.142 1.184 1.411
Turkey BIST 100 88669.47 –277.93 –0.31 70426.16 • 91497.00 13.5 1.250 U.S. 2 1.238 ... ... ... ... 1.254 1.309 0.736
U.K. FTSE 100 7282.69 –40.23 –0.55 5788.74 • 7447.00 2.0 2.250 10 2.334 ... ... ... ... 2.386 2.480 1.772
Asia-Pacific DJ Asia-Pacific TSM 1555.00 7.43 0.48 1308.52 • 1570.38 9.3
Australia S&P/ASX 200 5872.70 7.80 0.13 4924.40 • 5896.20 3.7 Commodities Prices of futures contracts with the most open interest 12 p.m. New York time
China Shanghai Composite 3222.51 … Closed 2806.91 • 3282.92 3.8 EXCHANGE LEGEND: CBOT: Chicago Board of Trade; CME: Chicago Mercantile Exchange; ICE-US: ICE Futures U.S.; MDEX: Bursa Malaysia
Hong Kong Hang Seng 24261.48 149.89 0.62 19694.33 • 24593.12 10.3 Derivatives Berhad; TCE: Tokyo Commodity Exchange; COMEX: Commodity Exchange; LME: London Metal Exchange;
NYMEX: New York Mercantile Exchange; ICE-EU: ICE Futures Europe. *Data as of 3/31/2017
India S&P BSE Sensex 29910.22 289.72 0.98 24673.84 • 29910.22 12.3 One-Day Change Year Year
Indonesia Jakarta Composite 5606.79 38.68 0.69 4704.22 • 5606.79 5.9 Commodity Exchange Last price Net Percentage high low
371.50 7.25 1.99% 387.25 354.25
Japan Nikkei Stock Avg 18983.23 73.97 0.39 14952.02 • 19633.75 –0.7 Corn (cents/bu.) CBOT
Soybeans (cents/bu.) 944.00 -2.00 -0.21% 1,088.25 942.75
Malaysia Kuala Lumpur Composite 1745.49 5.40 0.31 1614.90 • 1754.67 6.3
Wheat (cents/bu.)
CBOT
CBOT 433.75 7.25 1.70 477.00 416.25
New Zealand S&P/NZX 50 7225.01 28.23 0.39 6664.21 • 7571.11 5.0
Live cattle (cents/lb.) CME 110.925 0.050 0.05 114.200 103.150
Pakistan KSE 100 48227.75 71.82 0.15 33566.22 • 50192.36 0.9
Cocoa ($/ton) ICE-US 2,103 8 0.38 2,273 1,869
Philippines PSEi 7341.65 29.93 0.41 6563.67 • 8102.30 7.3
Coffee (cents/lb.) ICE-US 139.45 0.15 0.11 159.30 136.20
Singapore Straits Times 3187.51 12.40 0.39 2729.85 • 3187.51 10.6
Sugar (cents/lb.) ICE-US 16.81 0.05 0.30 21.21 16.58
South Korea Kospi 2167.51 7.28 0.34 1925.24 • 2178.38 7.0
Cotton (cents/lb.) ICE-US 75.68 -1.65 -2.13 79.46 71.55
Taiwan Weighted 9811.52 … Closed 8053.69 • 9972.49 6.0 Robusta coffee ($/ton) ICE-EU 2150.00 1.00 0.05 2,279.00 2,093.00
Thailand SET 1580.86 5.75 0.37 1356.69 • 1591.00 2.5
Copper ($/lb.) COMEX 2.6085 -0.0440 -1.66 2.8360 2.4800
Source: SIX Financial Information;WSJ Market Data Group Gold ($/troy oz.) COMEX 1255.00 3.80 0.30 1,268.10 1,152.20
Silver ($/troy oz.) COMEX 18.245 -0.011 -0.06 18.540 16.000
Currencies London close on April 3 Aluminum ($/mt)* LME 1,954.50 -5.50 -0.28 1,960.00 1,688.50
Tin ($/mt)* LME 20,000.00 -50.00 -0.25 21,225.00 18,760.00
Yen, euro vs. dollar; dollar vs. major U.S. trading partners US$vs,
Mon YTDchg Copper ($/mt)* LME 5,865.50 -15.50 -0.26 6,156.00 5,518.00
Country/currency in US$ per US$ (%) Lead ($/mt)* LME 2,319.00 -30.50 -1.30 2,445.00 2,022.00
20%
Europe Zinc ($/mt)* LME 2,802.00 -46.50 -1.63 2,958.50 2,555.00
Bulgaria lev 0.5447 1.8358 –1.2 Nickel ($/mt)* LME 9,955.00 -55.00 -0.55 11,095.00 9,430.00
10 WSJ Dollar index
0.1436 6.966 –2.9
s
Croatia kuna Rubber (Y.01/ton) TCE 245.00 unch. unch. n.a. n.a.
sYen Euro zone euro 1.0664 0.9378 –1.4
0 Palm oil (MYR/mt) MDEX 2663.00 17.00 0.64 3068.00 2642.00
Czech Rep. koruna-b 0.0394 25.370 –1.2
s Euro Denmark krone 0.1434 6.9747 –1.3 Crude oil ($/bbl.) NYMEX 50.29 -0.31 -0.61 57.50 47.01
–10 0.003455 289.42 –1.7
Hungary forint NY Harbor ULSD ($/gal.) NYMEX 1.5693 -0.0053 -0.34 1.7770 1.4825
Iceland krona 0.008783 113.85 0.8 RBOB gasoline ($/gal.) NYMEX 1.6989 -0.0041 -0.24 1.9065 1.5824
–20 Norway krone 0.1164 8.5894 –0.6
0.2511 3.9831 –4.9
Natural gas ($/mmBtu) NYMEX 3.151 -0.039 -1.22 3.5070 2.7370
2016 2017 Poland zloty
Russia ruble-d 0.01775 56.327 –8.1 Brent crude ($/bbl.) ICE-EU 53.20 -0.33 -0.62 59.89 50.00
US$vs, US$vs,
YTDchg YTDchg Sweden krona 0.1117 8.9551 –1.7 Gas oil ($/ton) ICE-EU 473.50 1.25 0.26 526.50 448.00
Mon Mon
Country/currency in US$ per US$ (%) Country/currency in US$ per US$ (%) Switzerland franc 0.9977 1.0023 –1.6
Turkey lira 0.2743 3.6452 3.5 Sources: SIX Financial Information; WSJ Market Data Group
Americas Hong Kong dollar 0.1287 7.7711 0.2
Ukraine hryvnia 0.0370 27.0000 –0.3
Argentina peso-a 0.0648 15.4363 –2.7
India rupee
Indonesia rupiah
0.0154
0.0000750
65.0401
13331
–4.3
–1.4
U.K. pound 1.2488 0.8008 –1.1 Cross rates London close on Apr 3
Brazil real 0.3208 3.1173 –4.2 Middle East/Africa
Japan yen 0.009013 110.95 –5.2
Canada dollar 0.7465 1.3396 –0.3 USD GBP CHF JPY HKD EUR CDN AUD
Kazakhstan tenge 0.003192 313.33 –6.1 Bahrain dinar 2.6532 0.3769 –0.1
Chile peso 0.001519 658.20 –1.7 Australia 1.3161 1.6433 1.3129 0.0119 0.1693 1.4032 0.9825 ...
Macau pataca 0.1249 8.0055 1.1 Egypt pound-a 0.0552 18.1320 –0.003
Colombia peso 0.0003488 2866.86 –4.5 Canada 1.3396 1.6728 1.3365 0.0121 0.1724 1.4284 ... 1.0180
Malaysia ringgit-c 0.2259 4.4275 –1.3 Israel shekel 0.2749 3.6373 –5.5
Ecuador US dollar-f 1 1 unch
New Zealand dollar 0.6997 1.4292 –1.0 Kuwait dinar 3.2781 0.3051 –0.2 Euro 0.9378 1.1711 0.9356 0.0085 0.1207 ... 0.7001 0.7126
Mexico peso-a 0.0534 18.7387 –9.6
Pakistan rupee 0.0095 104.800 0.4 Oman sul rial 2.5968 0.3851 0.03 Hong Kong 7.7711 9.7053 7.7540 0.0700 ... 8.2867 5.8012 5.9052
Peru sol 0.3080 3.2465 –3.2
Philippines peso 0.0199 50.234 1.3 Qatar rial 0.2747 3.641 0.02 Japan 110.9510 138.5500 110.6900 ... 14.2760 118.3100 82.8300 84.3200
Uruguay peso-e 0.0351 28.520 –2.8
Singapore dollar 0.7157 1.3973 –3.5 Saudi Arabia riyal 0.2666 3.7505 –0.01 1.0023 1.2517 ... 0.0090 0.1290 1.0689 0.7482 0.7617
Venezuela bolivar 0.100150 9.99 –0.1 Switzerland
South Korea won 0.0008940 1118.56 –7.4 South Africa rand 0.0732 13.6648 –0.2
U.K. 0.8008 ... 0.7989 0.0072 0.1030 0.8540 0.5978 0.6085
Asia-Pacific Sri Lanka rupee 0.0065794 151.99 2.4 Close Net Chg % Chg YTD % Chg
0.7598 1.3161 –5.2 Taiwan dollar 0.03289 30.400 U.S. ... 1.2488 0.9977 0.0090 0.1287 1.0664 0.7465 0.7598
Australia dollar –6.3 WSJ Dollar Index 90.40 0.02 0.02 –2.73
China yuan 0.1451 6.8913 –0.8 Thailand baht 0.02909 34.380 –4.0 Sources: Tullett Prebon, WSJ Market Data Group Source: Tullett Prebon

Key Rates Top Stock Listings 12 p.m. New York time

Latest 52 wks ago % YTD% % YTD% % YTD%
Libor Cur Stock Sym Last Chg Chg Cur Stock Sym Last Chg Chg Cur Stock Sym Last Chg Chg Asia Titans 50
One month 0.98333% 0.44020% ¥ TakedaPharm 4502 5249.00 0.38 8.56 £ RoyDtchShell A RDSA 2076.00 -0.95 -7.42 Last: 152.98 s 0.58, or 0.38% YTD s 8.5%
Three month 1.14983 0.63010 Asia Titans HK$ TencentHoldings 0700 225.20 1.08 18.71 € SAP SAP 91.91 -0.08 10.99
Six month 1.42628 0.90410 HK$ AIAGroup 1299 49.40 0.82 12.91 ¥ TokioMarineHldg 8766 4700.00 0.09 -2.00 € Sanofi SAN 84.48 -0.17 9.86 High 155
One year 1.80261 1.22150 68.32 -0.45 3.34
¥ AstellasPharma 4503 1492.00 1.77 -8.10 ¥ ToyotaMtr 7203 6046.00 0.07 -12.10 € SchneiderElectric SU Close 150
Euro Libor AU$ AustNZBk ANZ 31.97 0.47 5.10 AU$ Wesfarmers WES 45.10 0.07 7.02 € Siemens SIE 127.60 -0.62 9.25 Low t
145
One month -0.39500% -0.33214% AU$ BHP BHP 24.00 -0.17 -4.23 AU$ WestpacBanking WBC 35.21 0.43 8.01 CHF Syngenta SYNN 446.00 0.88 10.81
Three month -0.36071 -0.25114 10.39 -0.91 17.80 50–day 140
HK$ BankofChina 3988 3.80 -1.55 10.47 AU$ Woolworths WOW 26.67 0.64 10.66 € Telefonica TEF
moving average
Six month -0.25229 -0.13600 HK$ CKHutchison 0001 95.45 -0.16 8.59 € Total FP 46.97 -0.95 -2.64 135
One year -0.12614 -0.01529 HK$ CNOOC 0883 9.30 0.22 -4.12 Stoxx 50 CHF UBSGroup UBSG 15.80 -1.43 -0.94
130
Euribor AU$ CSL CSL 126.23 0.72 25.71 € Unilever UNA 46.46 -0.24 18.78
CHF ABB ABBN 23.29 -0.60 8.43
One month -0.37200% -0.33900% ¥ Canon 7751 3509.00 1.09 6.49 £ Unilever ULVR 3922.00 -0.44 19.12 6 13 20 27 3 10 17 24 3 10 17 24 31
€ ASMLHolding ASML 123.65 -0.60 15.94
Three month -0.33000 -0.24600 ¥ CentralJapanRwy 9022 18120 -0.11 -5.77 € Vinci DG 74.46 0.22 15.09 Jan. Feb. Mar.
€ AXA CS 23.93 -1.36 -0.25
Six month -0.24300 -0.13200 HK$ ChinaConstructnBk 0939 6.32 1.12 5.86 £ VodafoneGroup VOD 206.65 -0.70 3.40
€ AirLiquide AI 106.95 -0.14 1.23
One year -0.11100 -0.00100 HK$ ChinaLifeInsurance 2628 23.95 0.42 18.56 CHF ZurichInsurance ZURN 262.20 -1.94 -6.49
172.00
Yen Libor HK$ ChinaMobile 0941 85.95 1.06 4.56
€
€
Allianz
AB InBev
ALV
ABI 103.35
-0.95
0.44
9.55
2.78 DJIA Stoxx 50
One month -0.00029% -0.06571% HK$ ChinaPetro&Chem 0386 6.32 0.32 14.91 £ AstraZeneca AZN 4910.00 -0.05 10.65 Last: 3145.86 t 14.83, or 0.47% YTD s 4.5%
Three month 0.02164 -0.00457 AU$ CmwlthBkAust CBA 86.39 0.56 4.83 € BASF BAS 93.05 0.14 5.37
$ AmericanExpress AXP 78.25 -1.09 5.63
Six month 0.04229 0.02264 ¥ EastJapanRailway 9020 9721.00 0.28 -3.75 € BNP Paribas BNP 61.22 -1.94 1.11
$ Apple AAPL 143.61 -0.03 23.99 3175
One year 0.14429 0.10286 ¥ Fanuc 6954 22875 0.24 15.44 £ BT Group BT.A 316.00 -0.69 -13.87
$ Boeing BA 176.01 -0.48 13.06
$ Caterpillar CAT 91.20 -1.68 -1.66 3100
Offer Bid ¥ Hitachi 6501 603.70 0.20 -4.48 € BancoBilVizAr BBVA 6.95 -4.46 8.29
TW$ Hon Hai Precisn 2317 91.00 -0.44 8.08 $ Chevron CVX 106.69 -0.63 -9.35 3025
Eurodollars € BancoSantander SAN 5.64 -1.74 13.83
¥ HondaMotor 7267 3351.00 ... -1.87 $ CiscoSystems CSCO 33.58 -0.67 11.10
One month 1.1000% 1.0000% £ Barclays BARC 221.45 -1.62 -0.90 2950
KRW HyundaiMtr 005380 156500 -0.63 7.19 $ Coca-Cola KO 42.42 -0.04 2.33
Three month 1.3000 1.2000 € Bayer BAYN 107.80 -0.23 8.75
2875
HK$ Ind&Comml 1398 5.11 0.59 9.89 $ Disney DIS 112.90 -0.43 8.33
Six month 1.4000 1.3000 £ BP BP. 456.10 -0.32 -10.50
$ DuPont DD 79.24 -1.36 7.96
One year 1.7500 1.6500 ¥ JapanTobacco 2914 3622.00 0.11 -5.78 £ BritishAmTob BATS 5290.00 -0.19 14.47 2800
¥ KDDI 2878.50 -1.49 -2.74
$ ExxonMobil XOM 81.53 -0.59 -9.67
Latest 52 wks ago 9433 € Daimler DAI 68.45 -1.08 -3.21 $ GeneralElec GE 29.85 0.17 -5.54 6 13 20 27 3 10 17 24 3 10 17 24 31
¥ Mitsubishi 8058 2366.00 -1.64 -4.98 € DeutscheTelekom DTE 16.40 -0.15 0.28 $ Jan. Feb. Mar.
Prime rates GoldmanSachs GS 226.43 -1.43 -5.44
¥ MitsubishiElectric 6503 1610.00 0.81 -1.20 £ Diageo DGE 2279.00 -0.20 8.01 $
U.S. 4.00% 3.50% HomeDepot HD 146.44 -0.27 9.22
¥ MitsubishiUFJFin 8306 694.30 -0.77 -3.60 € ENI ENI 15.12 -1.50 -2.26 $
Canada 2.70 2.70 Intel INTC 36.45 1.05 0.50
1611.00 -0.09 0.25 1657.00
Japan
Hong Kong
1.475
5.00
1.475
5.00
¥
¥
Mitsui
Mizuho Fin
8031
8411 201.10 -1.42 -4.15
£
£
GlaxoSmithKline
HSBC Hldgs
GSK
HSBA 646.60
-0.15 6.08 $
-0.66 -1.57 $
IBM
JPMorganChase
IBM
JPM
174.09
86.80
-0.03
-1.18
4.88
0.59
Dow Jones Industrial Average P/E: 21
¥ NTTDoCoMo 9437 2622.50 1.16 -1.52 € INGGroep INGA 13.98 -1.31 4.60 $ J&J JNJ 124.57 0.02 8.12 Last: 20538.52 t 124.70, or 0.60% YTD s 3.9%
Policy rates
ECB 0.00% 0.00%
AU$ NatAustBnk NAB 33.45 0.33 9.06 £ ImperialBrands IMB 3866.50 -0.01 9.15 $ McDonalds MCD 128.96 -0.50 5.95
Britain 0.25 0.50
¥ NipponTeleg 9432 4833.00 1.70 -1.61 € IntesaSanpaolo ISP 2.51 -1.57 3.30 $ Merck MRK 63.39 -0.24 7.68 21100
Switzerland 0.50 0.50
¥ NissanMotor 7201 1071.00 -0.23 -8.89 € LVMHMoetHennessy MC 204.05 -0.87 12.49 $ Microsoft MSFT 65.44 -0.64 5.31
¥ Panasonic 6752 1271.00 1.03 6.85 £ LloydsBankingGroup LLOY 66.03 -0.44 5.63 $ Nike NKE 55.33 -0.72 8.85
20450
Australia 1.50 2.00
HK$ PingAnInsofChina 2318 43.30 -0.46 11.60 € LOreal OR 179.50 -0.36 3.52 $ Pfizer PFE 34.24 0.10 5.43
U.S. discount 1.50 1.00 19800
Fed-funds target 0.75-1.00 0.25-0.50
$ RelianceIndsGDR RIGD 42.60 5.71 35.02 £ NationalGrid NG. 1009.00 -0.44 6.03 $ Procter&Gamble PG 89.65 -0.22 6.62
Call money 2.75 2.25
KRW SamsungElectronics 005930 2072000 0.58 14.98 CHF Nestle NESN 76.75 -0.13 5.07 $ 3M MMM 190.57 -0.40 6.72 19150
¥ Seven&I Hldgs 3382 4454.00 2.11 0.02 CHF Novartis NOVN 74.35 ... 0.34 $ Travelers TRV 120.05 -0.41 -1.94
Overnight repurchase rates 18500
U.S. 0.84% 0.48%
¥ SoftBankGroup 9984 7883.00 0.27 1.52 DKK NovoNordiskB NOVO-B 238.90 -0.25 -6.20 $ UnitedTech UTX 111.46 -0.67 1.68
Euro zone n.a. n.a.
¥ Sony 6758 3664.00 -2.71 11.88 £ Prudential PRU 1653.00 -1.96 1.57 $ UnitedHealth UNH 165.17 0.71 3.21 6 13 20 27 3 10 17 24 3 10 17 24 31
¥ Sumitomo Mitsui 8316 4015.00 -0.74 -9.98 £ ReckittBenckiser RB. 7256.00 -0.41 5.37 $ Visa V 88.75 -0.14 13.75 Jan. Feb. Mar.
Sources: WSJ Market Data Group, SIX HK$ SunHngKaiPrp 0016 115.30 0.96 17.65 £ RioTinto RIO 3186.50 -0.72 0.89 $ Verizon VZ 48.94 0.38 -8.32 Note: Price-to-earnings ratios are for trailing 12 months
Financial Information, Tullett TW$ TaiwanSemiMfg 2330 189.00 -1.31 4.13 CHF RocheHldgctf ROG 256.20 0.16 10.15 $ Wal-Mart WMT 71.98 -0.14 4.14 Sources: WSJ Market Data Group; Birinyi Associates
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
THE WALL STREET JOURNAL. Tuesday, April 4, 2017 | B7

FINANCE & MARKETS

Firms Curb Raids on 401(k)s Stocks Edge Down

Employers seek to
stave off growing
Loans and Leaks
As 401(k)-style plans have taken a greater role in Americans’ retirement savings,
trend of early pillaging ‘leakage’ of plan assets through unpaid loans and early withdrawals has emerged
of retirement savings as a costly problem that saps savings.
BY ANNE TERGESEN
American companies are
trying to stop employees from
raiding their 401(k)s, in an at-
tempt to ensure that older
workers can afford to retire
and make room for younger,
less-expensive hires.
Employers of all types—
from Home Depot Inc. to a
mortgage lender—are taking
steps to warn workers of the
financial implications of bor-
rowing from their retirement
accounts and pulling the
money out when they leave
jobs.
Tapping or pocketing re-
tirement funds early, known in
the industry as leakage,
threatens to reduce the wealth
in U.S. retirement accounts by
about 25% when the lost an-
nual savings are compounded
over 30 years, according to an
analysis by economists at Bos-
ton College’s Center for Retire-
ment Research.
“Employers have done a lot
to encourage people to save in
401(k) plans, such as automat-
ically enrolling them. But
there is a growing recognition
that if the money isn’t staying
in the system, the objective of
helping employees reach their
retirement goals isn’t being
met,” says Lori Lucas, defined-
contribution practice leader at
investment-consulting firm
Callan Associates Inc.
Movement Mortgage LLC, a
Fort Mill, S.C.-based mortgage
lender with 4,200 employees,
this year started requiring
Assets in 401(k)-style
retirement plans
$8 trillion
$7.03 trillion
6
4 19
2 $4,239
0 16
1998 ’02 ’06 ’10 ’14 ’16
Sources: Investment Company Institute; Employee Benefit Research Institute
Employees who grew accus-
tomed to borrowing from their
401(k)s during the recession
are tempted by the rising bal-
ances in these types of plans,
which currently hold $7 tril-
lion, up from $4.2 trillion in
2009, experts say.
“People are getting state-
ments telling them they have
$5,000 in this account and they
are asking themselves, ‘How
can I get my hands on this
money?’ ” said Rob Austin, di-
rector of retirement research
at Aon Hewitt, a human-re-
sources consulting firm.
Home Depot in recent years
launched several initiatives
aimed at “getting people out
of the habit of going from one
[401(k)] loan to the next,” says
director of benefits Don Bu-
ben.
The home-improvement
chain recently started making
employees wait at least 90
Percentage of eligible
401(k) participants
with loans outstanding
22%
21
20
20%
18
17
1996 ’00 ’05 ’10 ’14
ployees automatically get a
pop-up notice that includes an
estimate of how much the loan
would reduce the employee’s
savings by retirement age.
“Most people don’t realize
the impact of taking a loan,”
Mr. Buben said, adding that
some borrowers reduce their
401(k) contributions while re-
paying their loans.
Other companies are taking
different steps, including en-
couraging new employees to
roll existing retirement sav-
ings from former employers’
plans into their 401(k) plans.
Some are preventing employ-
ees from borrowing money the
employer contributed, and
others are helping employees
amass emergency savings or
tap funds other than their
401(k)s.
ABG Retirement Plan Ser-
vices, a Peoria, Ill., 401(k) re-
cordkeeper and administrator,
Median and average dollar
amounts of 401(k) loans
$10,000
Average loan balance
Median loan balance
8,000
6,000 $7,780
4,000
2,000
0 ening dollar and a rising yen
1998 ’02 ’06 ’10 ’14
THE WALL STREET JOURNAL.
tirement.
On average, about 30% to
40% of people leaving jobs
elect to cash out their ac-
counts and pay taxes and often
penalties rather than leave the
money or transfer it to an-
other tax-advantaged retire-
ment plan, according to re-
cordkeepers and economists.
Most plans also allow peo-
ple to pull out their savings—
after paying taxes and typi-
cally a penalty—for reasons
including buying a home, pre-
venting foreclosure, and pay-
ing medical bills and college
expenses, something relatively
few participants do annually.
These are known as hardship
distributions and the em-
ployee must demonstrate an
“immediate and heavy finan-
cial need,” according to the In-
ternal Revenue Service.
“401(k) plan leakage
amounts to a worryingly large
In U.S and Europe
BY RIVA GOLD
AND KOSAKU NARIOKA
U.S. and European stocks
kicked off the second quarter
with declines Monday, but
shares across Asia inched
higher.
Japan’s Nikkei Stock Aver-
age rose 0.4%, ending 73.97
points higher at 18983.23,
buoyed by shares of compa-
nies in industries such as food
that are con-
MONDAY’S sidered less
MARKETS reliant on
overseas de-
mand. A weak-
have weighed on exporters’
shares in recent sessions.
Probiotic drink maker
Yakult Honsha Co. rose 3.6%
and the chocolate maker Meiji
Holdings Co. gained 3.1%.
Hong Kong’s Hang Seng in-
dex gained 0.6%, and the Ko-
rean market benchmark rose
0.4%. Australia’s S&P/ASX 200
rose 0.1%. The Stoxx Europe
600 fell 0.5% to 379.29
In the U.S., the S&P 500 fell
0.6% after posting its biggest
quarterly gain since 2015 on
Friday. Near midday in New
York, the Dow Jones Industrial
Average was down 101 points,
or 0.5%, to 20562 and the Nas-
daq Composite fell 0.6%.
Investors have been wager-
ing on a stronger U.S. econ-
omy and have dialed back on
some popular postelection
trades recently. Shares of fi-
nancial companies were
among Monday’s biggest de-
cliners, with the KBW Nasdaq
Bank Index of large U.S. com-
mercial lenders declining by
1.3%.
A gauge of U.S. factory-sec-
tor health moderated slightly
in March, data showed Mon-
day, with the Institute for
Supply Management saying
its manufacturing PMI for last
month was 57.2, down from
57.7 in February.
The yield on the 10-year
U.S. Treasury note fell to
2.335%, according to
Tradeweb, from 2.396% Friday.
Yields fall as prices rise.
The WSJ Dollar Index, rose
less than 0.1%.
Investors are also likely to
focus on the outlook for
U.S.policy, including a poten-
tial tax overhaul and a summit
later this week between U.S.
President Donald Trump and
his Chinese counterpart Xi
Jinping that could shed light
on prospects for trade.
Markets are “trying to ad-
just for the prospects of poli-
tics in Washington. That’s
the major turbulence right
now,” said Brad McMillan,
chief investment officer at
Commonwealth Financial
Network.

TOSHIYUKI AIZAWA/BLOOMBERG NEWS

workers who initiate a 401(k)
loan to consult with a financial
counselor first, at the com-
pany’s expense.
“We want them to stop
looking at their 401(k) like a
cash register,” said Chief Ex-
ecutive Casey Crawford. Move-
ment Mortgage aims to help
employees get “a game plan in
place,” he said.
days after paying off one
401(k) loan before initiating
another. Workers are also en-
couraged to pay off their
401(k) loan balances early.
Since 2014, the total num-
ber of outstanding loans at
Home Depot has declined by
17%, the company said.
When applying for a 401(k)
loan online, Home Depot em-
plans to soon start offering its
employees the option to con-
tribute—via payroll deduc-
tions—to an emergency sav-
ings account linked to its
401(k) plan. The company
plans to offer its clients the
feature this summer.
A typical 401(k) account of-
fers participants several ways
to tap their savings before re-
sum of money that threatens
to undermine retirement secu-
rity,” says Jake Spiegel, senior
research analyst at research
firm Morningstar Inc. His cal-
culations show that employees
pulled $68 billion from their
401(k) accounts taking loans
and cashing out when chang-
ing jobs in 2013, up from $36
billion they withdrew in 2004. Meiji Holdings gained 3.1%, helping to lift the Tokyo market.

GER ALD F. SEIB

E XECUTIVE WASHINGTON EDITOR

The Face of
Real News

Gerald Seib’s illustrious career covering

politics has taken him around the world and
put him face-to-face with some of the biggest
players on the global stage—but it has also put
him in situations of real danger. In 1987, he was
kidnapped and imprisoned for four days on
suspicion of espionage by Iranian officials
while covering the Iran–Iraq War.

Real journalists and real news from America’s

most trusted newspaper.

Watch the film illustrating this story

at WSJ.com/Gerald

#TheFaceOfRealNews

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

© 2017 Dow Jones & Company, Inc. All rights reserved. 6DJ5221
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
B8 | Tuesday, April 4, 2017
The U.S. housing rebound has helped drive the economic recovery that began in 2009, yet indicators of its health are mixed.
Home builders are catching up with the S&P 500 after a long lag, and supply is in line with long-run averages. But home prices
are running well ahead of wage growth, a function of soft housing starts and the limited number of new houses coming to
Percentage change since 2015
30% PulteGroup
S&P 500
SPDR S&P
20 Home Builders ETF
Toll Brothers
D.R. Horton
10
0 6
–10
–20
–30
2016
New privately owned housing units started,
three-month moving average
2000 units
1500
1000
500
Recessions
0 0
2000
Source: FactSet (change since 2015); U.S. Census Bureau (new homes for sale, housing starts, supply of houses); U.S. Federal Housing Finance Agency (prices vs. earnings); Freddie Mac (30-year mortgage rate)
Email: heard@wsj.com
These Condiments May Not Mix
French’s Foods is up for
sale, and Kraft Heinz is on
the hunt for acquisitions.
But the U.S. leaders in mus-
tard and ketchup, respec-
tively, aren’t the perfect
match they might appear to
be.
Reckitt Benckiser on
Monday announced a “stra-
tegic review” of its food
business, which includes
the French’s and Frank’s
RedHot brands. The U.K.-
listed consumer group is
eager to raise cash, having
A private-equity
buyer wouldn’t have
to contend with
antitrust concerns.
announced the $17.9 billion
acquisition of nutrition
group Mead Johnson in
February, and there isn’t
much overlap between
French’s and the rest of
Reckitt’s operations, which
center on hygiene brands
such as Lysol and over-the-
Semiconductor Giant Intel Must Chip Away at Fab Rivals
Intel is getting more seri-
ous about wanting to make
chips—for other companies.
It has good reason to.
That the company is in
this position now speaks to
how much the semiconduc-
tor business has shifted in
recent years. Intel has long
had a virtual lock on pro-
cessors for personal com-
puters and servers. Those
are huge markets that re-
quire a large number of
chips to be produced for
them every year, but the PC
business has been stagnat-
ing for quite a while now.
Meanwhile, demand for
servers from individual
businesses is also slipping
market, while mortgage rates have risen the most in four years. What will coming months bring?
2017
’10
HEARD ON THE STREET
counter drugs.
French’s would be small
change for Kraft Heinz,
which withdrew a $143 bil-
lion offer for Reckitt’s peer
Unilever after the Anglo-
Dutch group mounted a
more spirited defense of its
stand-alone strategy than
the U.S. condiments giant
expected.
French’s made an ad-
justed operating profit of
£118 million ($148 million)
last year, which would
make the unit worth £2.2
billion if the food business
changes hands at the same
valuation multiple as
shares in the wider Reckitt
group. Unlike Unilever’s
food business, French’s
isn’t noticeably underper-
forming.
The business’s organic
growth of 5% last year was
better than the group’s
overall 3% rate.
But there are major ob-
stacles to this speculated
combination. One concerns
antitrust issues.
French’s and Heinz have
started to compete for each
other’s lunch over the past
two years. French’s lost
Semi-Sweet
Annual revenue for fiscal
years ended December
$60 billion
Intel
40 TSMC*
20
0
2000 ’05 ’10
*Currency adjusted Source: S&P Capital IQ
THE WALL STREET JOURNAL.
and being only partially off-
set by growing sales of
server processors to cloud
service operators.
The results of all this
MARKETS
THE DAILY SHOT
House Divided
U.S. monthly supply of houses, seasonally adjusted
12 months
10
8 175
4 125
2 100
Recessions
0 75
1963 ’70
New one-family homes for sale per
10,000 U.S. civilians
30 units
20
10
Recessions
1963 ’70
FINANCIAL ANALYSIS & COMMENTARY
Food for Thought
Operating margin before
exceptional items
Reckitt Benckiser Food
30% Kraft Heinz
20
10
0
2012 2013 2014 2015 2016
Sources: S&P Capital IQ, FactSet
THE WALL STREET JOURNAL.
market share in mustard to
a new product from Heinz
in 2015, only to regain it
last year. And all the while,
it has focused on expand-
ing its ketchup business. A
private-equity buyer
wouldn’t have to contend
with the risk that regula-
tors would see a merger as
a consumer-unfriendly
stitch-up.
The other problem, per-
haps counterintuitively, is
French’s high operating
margin, which was close to
have been hard on Intel. Its
revenue is projected to rise
by only 1% this year, but the
costs for keeping its chip
production facilities up-to-
date keeps going up at a
much faster pace. Capital
expenditures are expected
to hit a record $12 billion
this year after having aver-
aged $9 billion annually
over the past three years.
’15 Intel naturally wants to
eke out a better return on
this very large investment,
hence the company’s latest
program to offer production
services to other chip de-
signers who can make use
of its state-of-the-art capa-
bilities. Intel estimates this
Average
’80 ’90 2000 ’10
Average
’80 ’90 2000 ’10
PHOTO: LIGHTROCKET VIA GETTY IMAGES
Reckitt Benckiser's food unit
includes the French's brand
29% last year. Kraft Heinz,
which has earned a reputa-
tion for aggressive cost-
cutting since it came under
the control of Warren Buf-
fett and Brazilian private-
equity investor 3G, made a
27% adjusted operating
margin over the same pe-
riod.
If the model is to buy
and find savings, Kraft
Heinz would need to get its
teeth into a flabbier busi-
ness.
—Stephen Wilmot
market to be worth about
$23 billion a year now, but
it will likely take some time
to build up.
And it is worth noting
that serving large custom-
ers such as Apple, which
outsources production of
the chips it designs for
products like the iPhone,
would require a significant
expansion of Intel’s produc-
tion footprint. Intel itself
notes that the cost of build-
ing a modern chip fab is
now around $10 billion.
What is more, Intel’s
competitors in chip fabrica-
tion are hardly sitting still.
Taiwan Semiconductor Man-
ufacturing Co. and Samsung
THE WALL STREET JOURNAL.
House prices vs. earnings (May 1996=100)
225
200
150
Recessions
1996 2000
30-year mortgage rate
5.0%
4.5
4.0
3.5
3.0
2012 ’13 ’14
OVERHEARD
The computer systems at
the Internal Revenue Service
made headlines for all the
wrong reasons in recent
years.
Whatever one’s political in-
terpretation of lost emails
and crashed hard drives
might have been, there is
also an economic angle that
should enrage liberals and
conservatives alike: The IRS
spends a tremendous amount
of money on information
technology. The Tax Prof Blog
points out that $37,051 is
spent on IT for the average
Treasury Department em-
ployee, of which the IRS is a
big part, compared with less
than $5,000 per employee in
the private sector.
The International Associa-
tion of IT Asset Managers es-
timates that the IRS could
save a whopping $31,000 per
employee annually. Translated
into the typical $9,118 that
most Americans send each
year to the IRS, that is
281,000 taxpayers’ contribu-
tions to the federal budget
eaten up by waste in the
agency tasked with collecting
their taxes.
Electronics, which serve the
bulk of the mobile chip mar-
ket, also are investing heav-
ily to keep their own fabs
on the leading edge. Com-
bined capital expenditures
for the two are expected to
reach $22.9 billion this
year, up 6% from last year,
estimates analyst Wes
Twigg of Pacific Crest Secu-
rities.
It helps that Intel is still
considered unrivaled in its
ability to squeeze more per-
formance out of shrinking
pieces of silicon. However,
fully cashing in on that ad-
vantage requires Intel to get
a little bit of help from its
friends. —Dan Gallagher
WSJ
subscribers can get
The Daily Shot
— a chart-by-chart briefing
on markets and economics —
sent to their email
each morning. Subscribe at
wsj.com/newsletters
U.S. purchase-only
house price index
Average
hourly earnings*
*Production and nonsupervisory
employees, total private
’10
’15 ’16 ’17
THE WALL STREET JOURNAL.
WSJ.com/Heard
The Danger
Lurking at
China Banks
The veil of stability over
the Chinese economy is
masking some worrying real-
ities at its banks.
Earnings for China’s major
banks ticked up last year as
they doled out piles of new
loans. A rise in corporate
profits overall, driven by
surging factory-gate prices
in China, might suggest wor-
ries about banks’ loan books
should ease further. Beijing
has been pushing ahead with
plans to cut overcapacity in
major industries like mining
and steelmaking, another
helpful sign.
Beneath the surface, all is
not so well. Even though the
balance of nonperforming
loans remained stable last
year at China’s big and mid-
size banks, their return on
assets and equity continued
to fade as credit costs—a
measure of banks’ impair-
ment charges—rose to their
highest in six years.
There is likely more of
this to come. For now, major
pain from souring corporate
debt seems at bay as Chinese
companies’ cash flows
grow—rising a whopping 9%
last year. But corporate debt
balances are growing even
faster at 13%, according to
Deutsche Bank analysts. The
moment there is a pullback
in the broader economy,
debts will get tougher to ser-
vice and pay off. There are
already signs that debt is
spinning further out of con-
trol.
Investors seem overjoyed
with apparent improvements
in Chinese companies’ finan-
cial health. Chinese bank
stocks are up an average of
10% this year, and are at last
trading, on average, close to
their book value. If China’s
economy runs into any trou-
ble, this resurgence could
prove to have flimsy founda-
tions. —Anjani Trivedi