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THURSDAY, MARCH 30, 2017 ~ VOL. XLI NO. 147 WSJ.com ASIA EDITION
As of 12 p.m. ET DJIA 20647.53 g 0.26% NIKKEI 19217.48 À 0.08% STOXX 600 378.53 À 0.33% BRENT 52.25 À 1.79% GOLD 1252.20 g 0.25% EURO 1.0756 g 0.54% DLR ¥111.09 g 0.04%

What’s U.K. Starts the Clock on EU Exit

News Prime Minister May
opens two-year
window for talks on
Business & Finance
leaving the bloc
ushner Cos. said it The U.K. on Wednesday for-
K ceased talks with
China’s Anbang Insurance
mally began the process of exit-
ing the European Union, em-
for a $7.5 billion redevelop- barking on an unprecedented
ment of a mixed-use sky- path from which British Prime
scraper in Manhattan amid Minister Theresa May said
concerns about the potential there would be no turning back.
for a conflict of interest. A1
 The EU blocked the pro- By Jenny Gross in
posed tie-up between London and Laurence
Deutsche Börse and LSE Norman in Brussels
primarily on concerns the
Nine months after Britain
merger would effectively

ANDY BUCHANAN/AGENCE FRANCE-PRESSE/GETTY IMAGES

voted to leave the EU, Tim
create a monopoly. B1
Barrow, Britain’s ambassador
 Samsung unveiled a new to the bloc, hand-delivered a
flagship smartphone, its letter to European Council
first launch in the wake of President Donald Tusk for-
product-safety issues that mally notifying the bloc that
beset the firm last year. B1 the U.K. will be the first mem-
ber state ever to leave it.
 Westinghouse filed for
“This is an historic moment
bankruptcy protection, rais-
from which there can be no
ing questions about the fate
turning back,” Mrs. May said
of four half-finished nuclear
in Parliament. “Britain is leav-
reactors in the U.S. A1
ing the European Union.”
 BlackRock has started Managing Britain’s exit will
relying more on robots be a major political test for
rather than humans to Mrs. May, who has only a A TV in Edinburgh, Scotland, shows Tim Barrow, Britain’s envoy to the EU, left, delivering notice to European Council President Donald Tusk.
make decisions on what to small majority in Parliament.
buy and sell. B7 She faces competing pressure close trade ties. dramatically shift its internal She promised to “represent ing that “in essence, this is
from lawmakers on the right The negotiations will also dynamics. every person in the United about damage control.”
 Regeneron and Sanofi
wing of her Conservative test the unity of the remain- Striking a conciliatory tone, Kingdom” and added that “we “There is no reason to pre-
said they would charge
party who want a complete ing 27 nations of the EU— Mrs. May attempted to reach will do all we can to help the Please see BREXIT page A4
$37,000 annually in the
cutting of ties with Brussels which have different priori- out broadly—offering assur- European Union prosper and
U.S. for their newly ap-
and from politicians in Scot- ties—and the endurance of the ances of good will to the bloc, succeed.”  J.P. Morgan Chase looks for
proved eczema drug. B3
land, who say they will secede bloc as a whole. to fellow Britons however they Mr. Tusk, speaking in Brus- post-Brexit home..................... B5
 Charles Murphy, a part- from the U.K. if Mrs. May fails The U.K.’s exit, and the voted, and to EU citizens who sels, expressed regret about  Heard: Investors face quiet
ner at hedge fund Paulson to cut a deal that maintains shape of any new deal, will make the U.K. home. Britain’s decision to leave, say- before negotiating storm........ B8
& Co. whose former firm
invested billions with Ber-
nard Madoff, died in an
Samsung Tries to Bounce Back
apparent suicide. B5
 Uber published a break-
ERA OF GLOBALIZATION
down of its workforce by
gender and ethnicity, part
of an effort to push back
against criticism. B3
HEADS INTO RETREAT
 The FDA approved a
multiple-sclerosis drug
called Ocrevus. B3
Nations and companies scramble to adapt to bigger barriers to trade, finance
World-Wide BY BOB DAVIS AND JON HILSENRATH ing public backlash.
Nationalist politicians are on the ascent.
RICHARD DREW/ASSOCIATED PRESS

After World War II, the global economy On Wednesday, the United Kingdom formally
 The U.K. formally be- rose on a wave of trade and finance, lifting started proceedings to remove itself from
gan the process of exiting hundreds of millions of people out of pov- the European Union. In the U.S., President
the EU, embarking on an erty in developing countries and providing Donald Trump pulled out of a Pacific trade
unprecedented path from rich countries with cheaper goods, lucrative pact on his first working day in the Oval Of-
which Prime Minister May investments and hopes for a more peaceful fice, declaring, “Great thing for the Ameri-
said there would be no planet. can worker, what we just did.”
turning back. A1 That tide is now receding. For traditional economists, globalization
Nine years after the financial crisis, is a pathway to prosperity. Rooted in the
 Trump signed an order
FRESH START: Samsung unveiled the Galaxy S8, its new flagship global trade is barely growing when com- works of Adam Smith in 1776 and David Ri-
to reverse rules aimed at
smartphone, in New York on Wednesday, after being beset last pared with overall economic output. Cross- cardo in 1817, the classical canon has em-
pushing U.S. utilities to
year by product-safety concerns with its Galaxy Note 7. B1, B4 border bank lending is down sharply, as are braced the idea that trade is the basis for
shift from coal plants to
international capital flows. Immigration in wealth because it makes nations more effi-
cleaner-burning fuels. A6
the U.S. and Western Europe faces a deepen- Please see STALL page A8
 Trump promised to
change the H-1B visa pro-

Westinghouse Seeks Bankruptcy Protection

gram, but the government
will open another round of
applications using rules that
have long been in place. A6
Westinghouse Electric Co., Toshiba said. clear business for us. There- “The commitments are not
 North Korea is prepar- By Russell Gold in
a major player in global nu- Toshiba said last month it fore, we don’t see any more just financial and operational,
ing to test its sixth nuclear Austin, Texas, Takashi
clear construction, filed for would take a write-down of risk,” said Toshiba Chief Exec- but there are moral commit-
device, an analysis of com- Mochizuki in Tokyo
bankruptcy protection, rais- more than $6 billion due to utive Satoshi Tsunakawa at a ments as well,” Mr. Fanning
mercial-satellite imagery and Matt Jarzemsky
ing questions about the fate the U.S. cost overruns. To con- news conference Wednesday. said in an interview. “As a
suggests. A3 in New York
of four half-finished reactors tain the financial damage, it But Mr. Tsunakawa faced good partner, we expect
 More than half of the in the U.S. allowed its subsidiary to seek an angry customer in South- Toshiba to follow through on
Democrats in the Senate A storied name in nuclear Carolina, a financial disaster bankruptcy protection and ern Chief Executive Tom Fan- those commitments.”
say they will vote against power, Westinghouse incurred that threatens Japanese par- says it plans to exit from the ning, who arrived in Tokyo on Westinghouse said it ob-
Trump nominee Gorsuch’s billions of dollars of cost ent Toshiba Corp.’s viability. nuclear-construction business. Wednesday and said Toshiba tained $800 million in debtor-
Supreme Court bid. A6 overruns building the nuclear Westinghouse had $9.8 billion “This is a de facto with- should finish the job that led in-possession financing, al-
reactors in Georgia and South in liabilities as of Dec. 31, drawal from the overseas nu- to its subsidiary’s bankruptcy. Please see POWER page A2
 Trump’s nominee to
lead the FDA plans to re-

Kushner
cuse himself for a year
from decisions on more Riding a Hobbyhorse: Yes,

Oracle #1
than 20 firms. A7
It’s an Organized Sport
 Malaysian police are in-
vestigating allegations that i i i
Talks With
North Korea is violating in-
ternational sanctions Finnish youngsters on stick horses Anbang
through Malaysian busi-
nesses. A3 compete in jumping, dressage Fall Apart SaaS Enterprise
 The U.S. Senate ratified
legislation backing Montene-
BY ESTHER FUNG Applications Revenue
BY ZEKE TURNER dressage on hobbyhorse-back. AND PETER GRANT
gro’s bid to become the 29th
member of NATO, a move
Though the horses aren’t 1,000+ Employees Segment, 2015
TURKU, Finland—At a re- real, competitors say their sport New York real-estate devel-
that threatens to increase
cent equestrian competition, demands dancerly rhythm, oper Kushner Cos. said it has
tensions with Putin. A4
dozens of girls and a team of gymnastic control and the ath- ceased talks with Chinese in-
judges studied rider letic skill to complete surer Anbang Insurance Group

#1
CONTENTS Markets...................... B8 Ada Filppa’s every jumps over obstacles Co. for the planned $7.5 billion
Business News.......... B3 Middle Seat............ A9
Capital Account.... A2 Opinion.............. A10-11
move as she ap- that can be chest- redevelopment of a mixed-use
Crossword.............. A12 Technology............... B4 proached a series of high for many partic- skyscraper in Manhattan.
Finance & Mkts... B5,7
Heard on Street.... B7
Life & Arts......... A9,12
U.S. News............. A6-7
Weather................... A12
World News....... A2-4
jumps, measuring
the length of each
ipants—mostly girls
between ages 10 and
The disclosure came after
lawmakers and ethics experts #2
stride and noting 18, although boys are last week expressed concerns
China: RMB28.00; Hong Kong: HK$23.00; the tension she kept allowed to partici- about the potential for a con-
Indonesia: Rp25,000 (incl PPN);
Japan: Yen620 (incl JCT); Korea: Won4,000; on her horse’s reins. pate—all while keep- flict of interest given that Oracle Salesforce
Malaysia: RM7.50; Singapore: S$5.00 (incl GST)
Later that night A Hobbyhorse ing control of their Jared Kushner, son of com- Cloud Cloud
KDN PP 9315/10/2012 (031275); MCI (P)
NO. 066/01/2017; SK. MENPEN R.I. NO: 01/ Ms. Filppa, 16 years horses-on-a-stick. pany founder Charles Kushner, 14.5% 12.4%
SK/MENPEN/SCJJ/1998 TGL. 4 SEPT 1998
old, packed her two horses in “Your steps have to be light is the son-in-law of President
the back seat of her black and beautiful,” said Elsa Salo, 16. Donald Trump and occupies a
compact car and drove home What seems like high art to key advisory position in the
to her parents’ house in Naan- these disciplined youngsters can administration.
tali, an archipelago area on look quite different to everyone The younger Mr. Kushner
Finland’s southwest coast. else. After all, hobbyhorses are has taken steps to protect oracle.com/applications
She is a rising talent in a basically toys—and people rid- against potential conflicts. For Source: IDC “Worldwide SaaS Enterprise Applications Market Shares, 2015: The Top 15 by Buyer Size,”
s Copyright 2017 Dow Jones & new sport with more than ing them have clowned around example, he has sold his per- doc #US41913816, Dec. 2016; Table 4. For the purposes of this report, SaaS enterprise applications include
the following application markets: CRM, engineering, ERP, operations and manufacturing, and SCM.
Company. All Rights Reserved
10,000 athletes and followers in during intermissions at eques- sonal stake in 666 Fifth Ave., Copyright © 2017, Oracle and/or its affiliates. All rights reserved.
Finland: equestrian jumping and Please see HORSE page A2 Please see TALKS page A7
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
A2 | Thursday, March 30, 2017
France’s Ideological Standoff
I
n France as in most of the
West, politics has long
been dominated by a left-
wing and a right-wing party.
This year an earthquake is in
the making: If current polls
are borne out, neither the
left-wing Socialists nor right-
wing Republicans will make it
past the first round of the
presidential election in April.
Instead, two parties that
have never held power will
proceed to May’s runoff. And
both agree
their contest
isn’t over tra-
ditional issues
of right and
left, such as
CAPITAL taxes and
ACCOUNT spending. Ma-
GREG IP rine Le Pen,
leader of the
National Front,
says it’s between “globalists
and patriots” or, as support-
ers of Emmanuel Macron,
leader of the upstart En
Marche! (“Forward!”) put it,
“open and closed.”
That makes the French
election the starkest and
most consequential contest
yet in the world’s ideological
divide between nationalism
and globalism.
The nationalists who led
the British vote to leave the
European Union and put
Donald Trump in the White
House operate within estab-
lished conservative parties
and thus coexist uneasily
with traditional free traders.
The National Front arose
outside the mainstream and
POWER
Continued from Page One
lowing it to continue
operations while it seeks to
reorganize under chapter 11 of
the U.S. bankruptcy code.
Apollo Global Management
LLC agreed to provide the
loan, which Westinghouse
plans to use to bolster liquid-
ity for its fuel and consulting
operations, a Westinghouse
spokeswoman said.
“We are focused on devel-
oping a plan of reorganization
to emerge from chapter 11 as
a stronger company while
continuing to be a global nu-
clear technology leader,” said
Westinghouse interim Chief
Executive José Emeterio
Gutiérrez.
The filing is likely to start
extensive negotiations be-
tween Toshiba and the utili-
ties for which it was building
the reactors, Southern Co. and
Scana Corp.
Scana spokeswoman Rhonda
O’Banion said “we continue to
HORSE
Continued from Page One
trian events for decades.
“People assume that it’s a
game or we are…more or less
crazy,” said Venla-Maria Uutela,
20, chairwoman of the Finnish
Stick Horse Enthusiasts Associa-
tion and author of two books on
the sport, including a volume
dedicated to hobbyhorse acces-
sories. But riders do “not just
run around neighing through
bushes,” said Ms. Uutela, who is
applying to veterinary college.
At the Alfons Cup last week-
end in Turku, Finland’s sixth-
biggest city, Ms. Filppa com-
peted in jumping events on
Charmi, which she describes as
a Danish warmblood stallion.
She rode Jadwa, her caramel-
colored Arabian mare, for the
dressage event known in eques-
trian circles as kur, or freestyle.
While the British pop song
“Wings” played off a portable
speaker, Ms. Filppa squared her
shoulders while leading Jadwa
through passage, a serene but
powerful walk. The piaffe, a
rhythmic jogging in place, made
her blonde ponytail bounce. For
the extended trot, a move that
involves taking the biggest step
possible while maintaining full
control, she raised her thigh,
flexed her ankle and pointed her
toe forward without losing bal-
ance. When the song came to an
end, horse and rider bowed in
front of the judges and Ms. Fil-
ppa patted Jadwa’s neck.
Judge Anni Toivonen, 11,
awarded Ms. Filppa first place
for her “elegant movements”
and “perfect rhythm” while an-
other rider who didn’t place left
the room to cry.
Ms. Filppa hopes to repeat
her performance next month
against the best riders in Fin-
espouses a more uncompro-
mising, coherent rejection of
economic, geopolitical and
cultural integration. Ms. Le
Pen wants to take France out
of the EU and the euro,
which could precipitate the
collapse of both.
F
rance makes a singu-
larly appropriate bat-
tlefield over national-
ism. The modern nation state
can be traced to the Peace of
Westphalia in 1648 when
France, putting national in-
terest ahead of religion, sided
with Germany’s protestant
princes to contain the power
of the Catholic Holy Roman
Empire. Three centuries later
it switched places, choosing,
with Germany, to subordinate
sovereignty to an ever closer
European Union.
Jean-Marie Le Pen led the
National Front from its cre-
ation in the 1970s as an au-
thoritarian reaction to wan-
ing French colonial power,
but his xenophobia and anti-
Semitism repelled main-
stream voters. His daughter
Marine has sought to ex-
punge those elements and
now focuses on European in-
tegration as the source of
France’s ills.
French unemployment, at
10%, is more than double Ger-
many’s. The National Front
zeroes in on the euro’s role.
Between the euro’s creation
in 1999 and 2011, French la-
bor costs rose three times as
quickly as Germany’s thanks
to the latter’s labor market
The Vogtle Unit 3 and 4 site, a Westinghouse project, in Georgia.
monitor the situation with
Westinghouse and Toshiba,
and we are preparing for a va-
riety of possible outcomes.”
U.S. taxpayers could also
be drawn in, since the fed-
eral government has pro-
vided a $8.3 billion guaran-
teed credit facility for the
construction of the two reac-
tors being built for Southern
in Georgia.
Toshiba said it had guaran-
teed Westinghouse obliga-
tions to the utilities of about
land at the Hobbyhorse Cham-
pionships just outside Hel-
sinki, where she placed second
last year. She has taken up a
regime of squats and jogging
to prepare for jumps as high
as 4-feet-three inches and
trains up to six hours a week.
The sport’s growing stable
of riders is eliciting perplexity
in serious equestrian circles.
Professional riders puzzle at
the age of the top contestants,
some of whom legally qualify
as adults and can drive them-
selves to competitions.
“You’re kidding me!” said
Gunilla Swartling, director of
the Swartling Riding School in
Stockholm, Sweden, founded
in 1905 by her great-grandfa-
ther, an officer in the Swedish
cavalry. “Wow. I thought they
were 9 or something…It’s like
using a doll.”
Hobbyhorse riders, includ-
ing an estimated 5,000 in Swe-
Strife in South Africa Plays Out at Funeral
LAID TO REST: Ahmet Kathrada, an antiapartheid luminary, was buried in Johannesburg. President Jacob
Zuma was absent—a dying wish of Mr. Kathrada—underscoring divisions in the African National Congress.
WORLD NEWS
reforms and export-friendly only 5% to 10% depreciation
tax changes. With an inde- by a free-floating franc is
pendent currency, France “reasonable.” Still, he doesn’t
might devalue to eliminate its rule out capital controls to
cost disadvantage. In the deter capital flight.
euro, it couldn’t. This trans-
H
formed a French trade sur- istory and theory sug-
plus equal to 3% of GDP in gest that this won’t
1998 to a deficit of 2% in restore France’s indus-
2016. trial glory. Like Mr. Trump’s,
“The euro has not only Ms. Le Pen’s plan to bring
killed one of the engines of back factory jobs is fighting
the French economy…it the march of automation and
caused our economy to bleed shifting consumption. The
one million industrial jobs,” competitive benefit of devalu-
says Mikael Sala, an eco- ation is eventually neutral-
nomic adviser to Ms. Le Pen. ized by inflation.
The euro, he says, is a “politi- “Suppose France gets out
cal experiment” that forces of the euro,” says Philippe
the wages, corporate taxes Martin, an economist at Sci-
and welfare policies of mem- ences Po university advising
ber states to converge. “Our Mr. Macron. “Do you think
welfare state may be costly for one second Italy and
but it’s part of our identity.” Spain will remain? Of course
The National Front yearns not. So we devalue by 20%
for a return to the state-di- and they will devalue by 30%
rected capitalism, or diri- or 40%. In the end it won’t
gisme, of the 1960s. It would have any effect on long-term
require life insurers to devote growth or productivity and
2% of their assets to French will deter investment.”
venture capital, let the With support for the con-
French central bank print servative candidate François
money to finance government Fillon, a former prime minis-
deficits, favor French firms in ter, undermined by scandal,
government purchasing, re- establishment hopes are rid-
quire “Made in France” labels ing on Mr. Macron, a former
and impose “smart protec- economy minister who quit
tionism” against cheap im- the socialist government last
ports. All of that is illegal year. He would seek to
within the EU. deepen eurozone integration
Analysts predict a Le Pen and press Germany to adopt
victory would tank stocks and fiscal policies that reduce its
cause interest rates to rise as trade surplus, while liberaliz-
investors, fearing redenomi- ing French labor markets to
nation, flee. Mr. Sala dis- bolster competitiveness.
agrees, and predicts a free- It won’t be easy. Germany
floating franc may depreciate has rebuffed calls to bend its
the value of assets belonging
to Toshiba shareholders
would fall short of liabilities.
The bankruptcy filing cre-
ates new risks of delays at the
U.S. nuclear-power plants. The
plants, which are the first
started in the U.S. in nearly
four decades, are over budget
GEORGIA POWER/REUTERS
and years behind schedule.
Westinghouse is expected
to soon run out of money and
stop construction without
help from Toshiba or a rene-
gotiation of the contracts,
which Southern and Scana
have said they won’t consider.
Southern’s Mr. Fanning said
¥650 billion, or nearly $6 bil- his company agreed to fund
lion. Assuming the Japanese construction for the next 30
parent has to carry out that days while the parties talk
guarantee and that it won’t be about a longer-term solution.
repaid money directly owed to The Westinghouse filing is
it by Westinghouse, Toshiba just the latest chapter in the
said it expected a net loss of troubled story of the global
about ¥1 trillion ($9 billion) nuclear industry.
in the fiscal year ending “This development illus-
March 31, 2017. trates that there is no bright
Toshiba said it expects un- future for nuclear anymore,”
der those conditions to end said Mycle Schneider, a
the fiscal year with negative Paris-based independent con-
shareholder equity of about sultant on nuclear and en-
¥620 billion, signifying that ergy policy. He pointed to
den, dismiss such comments
as elite snobbery. Competitors
who invest real time, money
and tears in the sport say it is
“Some of the horses are good
at jumping and some are fast,”
said Elli Toivoniemi, 32, co-pro-
ducer of “Hobbyhorse Revolu-
much more than just horse- tion,” which is premiering in
play for the ponytail set. North America in May at To-
Ms. Filppa’s cousins have ronto’s Hot Docs Canadian In-
been asking her when she’s go- ternational Documentary Festi-
ing to put her hobbyhorse out to val. “The level of creativity and
pasture. “If your hobbies are ice imagination really struck me as
hockey, nobody asks you when something radical,” said Selma
you’re going to stop,” she said. Vilhunen, the film’s director.”
“I am always happy, I always Hobbyhorse riders insist
smile when I do this…and I’m al- their sport isn’t just economy
ways improving,” she added. equestrian. But frequent real
“Why would I want to stop?” riding lessons don’t always fit
The sport has grown so much into family budgets, parents say.
in Finland that a secondary hob- The sport’s success speaks to an
byhorse market is emerging on egalitarian streak coming from
Instagram. Competitors create Finland this year after the coun-
identities for their hobbyhorses, try became one of the first to
which change hands for as much experiment with a guaranteed
as €160, about $174, depending basic income.
on their provenance and type, Registration fees at hobby-
according to Alisa Aarniomäki, horse competitions are kept as
20, a biology student in Helsinki low as possible, about €0.50
who sells them. per event. Competition orga-
GULSHAN KHAN/AGENCE FRANCE-PRESSE/GETTY IMAGES
THE WALL STREET JOURNAL.
The Center Cannot Hold
Support for France’s traditional left- and right-wing parties has
collapsed, making room for the nationalist National Front and upstart
En Marche.
Round 1 voting
1995
Socialist
Conservative*
National Front
2002
Socialist
Conservative*
National Front
2007
Socialist
Conservative*
National Front
2012
Socialist
Conservative*
National Front
0% 10 20 30
2017 OPINION POLL AVERAGE
A If François Fillon and Marine Le Pen win the first round
2017
Socialist
Conservative*
National Front
En Marche!
B If Emmanuel Macron and Marine Le Pen win the first round
2017
Socialist
Conservative*
National Front
En Marche!
0% 10 20 30
* In 1995-2002, Jacques Chirac; in 2007-2012, Nicolas Sarkozy; in 2017, François Fillon
The data exclude third party candidates except National Front and, in 2017, En Marche;
in 1995, two conservatives ran in the first round
Sources: NSD–Norwegian Centre for Research Data (1995-2012, actual results);
OpinionWay, Ifop-Fiducial, Ipsos (2017 polls)
fiscal policies to its neigh-
bors’ needs, and French legis-
lators watered down labor
market revisions once cham-
pioned by Mr. Macron.
Polls suggest Ms. Le Pen
Siemens AG’s decision to
abandon the industry, Areva
SA’s financial and safety
problems, the falling market
value of China General Nu-
clear Power Group and the
junk-bond status of Russia’s
Atomenenergoprom as evi-
dence of global turmoil in the
business of building nuclear-
power plants.
A person familiar with
Toshiba’s planning said the
company is interested in
handing control of Westing-
house to Korea Electric Power
Corp., known as Kepco, which
is building a reactor in the
United Arab Emirates without
any apparent problems. A
Kepco spokesman said “we
have received no official offer
from Toshiba. If any offer
comes, we will put it under
careful review.”
Even if such a deal is ar-
ranged, Kepco is expected to
be mostly interested in West-
inghouse’s profitable busi-
ness of servicing existing re-
actors, selling new fuel rods
and decommissioning retired
plants. The potential for a
nizers must work as volun-
teers, according to constitu-
tion of the Finnish Stick Horse
Enthusiasts Association, the
sport’s governing body.
The movement has become
so popular that a teacher at
Turku’s Wäinö Aaltonen elemen-
tary school added a new rule
aimed at students such as 10-
year-old Lempi Henell: “No
horses in the classroom.”
Lempi’s mother, Saara Mal-
ila, 46, who works for the city,
said she can’t afford more than
two €27 hourlong riding lessons
a month for her daughter. But
together with another mother
she spent €90 to rent a hall for
the recent competition, and has
spent up to €40 on hobbyhorse
fabric. Lempi’s grandmother
Kristiina Malila, 69, has learned
to sew the horses. Still, she
said, she wished the sports of
her childhood—“skiing, skating
and running after boys”—were
CORRECTIONS 
AMPLIFICATIONS
Oceanwide Holdings’
planned development in down-
town Los Angeles will include
more than 166,000 square feet
of retail space on two floors. A
Property Report article
Wednesday about the L.A.
condo market incorrectly said
that the project will include
seven floors of retail.
Redwood Regional Park is
6 miles east of downtown Oak-
land, Calif. An Off Duty article
in the Friday-Sunday edition
about the city incorrectly said
the park is west of downtown.
Readers can alert The Wall Street
Journal to any errors in news articles
by emailing wsjcontact@wsj.com.
Round 2 voting
40 50 60 70 80 90
40 50 60 70 80 90
THE WALL STREET JOURNAL.
will lose—but with the big-
gest vote share since the
party’s founding. If the glob-
alist Mr. Macron fails to re-
vive France, the nationalists
will be ready to pounce again.
growing nuclear industry, fed
by a renaissance of new
plants, is dimming quickly.
The most profitable part of
the nuclear industry at this
point could be in decommis-
sioning closed plants, a stark
reminder of the problems
facing the industry.
The bankruptcy filing is a
humbling fall for Pittsburgh-
based Westinghouse. It in-
vented the pressurized water
reactor found in half of the
world’s nuclear fleet. It pro-
moted its AP1000 design as a
blueprint that would be easy
to build and deliver on time.
Westinghouse bet that it
could deliver and took on in-
creased financial risk to propel
the projects, according to legal
filings and interviews with
people involved in the con-
struction process. That bet
backfired as costs rose, creat-
ing an unmanageable debt.
Westinghouse, which says
on its website that “We Are
Nuclear Energy,” now faces an
uncertain future that most
likely doesn’t include building
any new nuclear plants.
more popular nowadays.
Yet Kyra Kyrklund, who won
the dressage World Cup Finals
in 1991—on a live horse—and
tied a Finnish record by compet-
ing in six Olympics, said naysay-
ers should hold their horses.
The devotion of young stick rid-
ers may be a first step toward
greater success. In dressage, she
said, “the top riders today, they
do not come from wealthy fami-
lies. They are nerds.”
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THE WALL STREET JOURNAL.
Pyongyang
Is Said
To Prepare
New Test
BY JONATHAN CHENG
SEOUL—New commercial-
satellite imagery suggests
North Korea is preparing to
test its sixth nuclear device, as
the U.S. and Chinese leaders
plan to meet in April on how
to contain Pyongyang’s weap-
ons program.
An analysis of commercial-
satellite imagery released on
Tuesday by North Korea ex-
perts showed signs of activity
at the nuclear test site at
Punggye-ri in the country’s
northeast, where North Korea
had previously conducted tests.
Joseph Bermudez and Jack
Liu, analysts for 38 North, said
the imagery, taken on March
25, suggested that communica-
tions cables had recently been
laid and water had been
drained at an entrance to an
underground site.
That evidence “strongly
suggests that test prepara-
tions are well under way,”
they wrote for 38 North, a
North Korea-focused website
run by the U.S.-Korea Institute
of the Johns Hopkins School
for Advanced International
Studies in Washington.
The analysts cautioned,
however, that the apparent ac-
tions may be an effort to de-
ceive experts monitoring
North Korea’s nuclear test site
for signs of activity.
In January, Pyongyang
launched a ballistic missile into
the Sea of Japan as President
Donald Trump met with Japa-
nese Prime Minister Shinzo
Abe at the American leader’s
Mar-a-Lago estate in Florida.
Mr. Trump is tentatively
scheduled to meet with Chi-
nese President Xi Jinping in
Florida in April.
North Korea conducted two
nuclear tests last year, suggest-
ing it is ramping up activity.
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Firms Probed for North Korea Link
KUALA LUMPUR, Malaysia—
Malaysian police are investi-
gating allegations that North
Korea is violating international
sanctions through Malaysian
businesses, including one that
has used North Korean work-
ers to build thousands of
homes in Africa.
By Jake Maxwell
Watts,
Tom Wright
and Nicholas Bariyo
The North Korean director of
the company, Malaysia Korea
Partners, travels in North Ko-
rean diplomatic vehicles in Ma-
laysia and Africa and was rou-
tinely greeted at African airports
by his country’s ambassadors,
according to a person familiar
with MKP’s business activities.
North Korean laborers—em-
ployed by MKP in Africa, accord-
ing to the head of a joint venture
with MKP and others familiar
with the company—typically
must give most of their earnings
to the regime as a condition of
going abroad, according to hu-
man-rights groups.
MKP has earned tens of mil-
lions of dollars or more on con-
struction projects in Angola and
Zambia over the past decade, ac-
cording to two analysts who
separately evaluated MKP’s busi-
ness operations.
The company has strong
ties to the North Korean gov-
ernment, according to several
North Korea experts, including
one of the analysts, Park
Syung-je, chairman of the Asia
Strategy Institute, a Seoul re-
search center.
Employees at MKP’s head-
quarters in Kuala Lumpur de-
clined to answer questions. At-
tempts to reach Edward Han,
who is identified in Malaysian
corporate records as the North
Korean director of MKP’s hold-
ing company, and his Malaysian
business partner, Yong Kok
Yeap, weren’t successful.
The United Nations is exam-
ining MKP for possible viola-
tions of sanctions against North
Korea and has pressed Malaysia
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WORLD NEWS
The U.N. Security Council voted to approve tighter sanctions against North Korea in March 2016.
Projects Abroad
Some enterprises of Malaysia
Korea Partners, which has
headquarters in Kuala Lumpur
and has employed North
Korean workers in Africa:
u Luanda, Angola MKP built
5,000 low-cost houses and
sold them to the government
to look into the company and
others. The U.N. originally raised
concerns about MKP’s opera-
tions in 2014; it raised those
concerns again in a February re-
port, and said the Malaysian
government hadn’t responded to
its latest queries.
Malaysia has had friendly re-
lations with North Korea, with
business connections and rela-
tively lax travel restrictions for
North Koreans. But Malaysia has
ramped up its scrutiny of several
companies after the Feb. 13 as-
sassination of Kim Jong Nam,
the half brother of North Korean
leader Kim Jong Un, at Kuala
Lumpur’s international airport.
for $50,000 each, according
to a person familiar with the
company’s business.
u Lusaka, Zambia MKP
worked with the state-run
National Housing Authority to
build 428 houses in Zambia’s
capital, and a further 253 are
under construction. In 2007,
MKP began construction on a
$12 million hospital called
The attack, which South Ko-
rean officials said was orches-
trated by Pyongyang, chilled re-
lations between Malaysia and
North Korea and led the U.S.
and others to press Kuala Lum-
pur to clamp down on North
Korean businesses in the coun-
try. Malaysian police named nu-
merous North Korean suspects
in the killing.
Malaysian officials said after
the attack they were concerned
their country might have been
used for illegal behavior by
Pyongyang.
A Malaysian government
spokesman declined to comment
on the investigations. Calls to
Thursday, March 30, 2017 | A3
foreign-exchange earnings that
may be used to support weap-
ons development.
MKP is now the focus of Ma-
laysia’s inquiries, though other
companies are also in the mix,
according to the person familiar
with the Malaysian investiga-
tions. MKP lists former Malay-
sian government officials, in-
cluding a former senior member
of parliament, as shareholders
or directors in corporate regis-
tration documents.
LI MUZI/XINHUA NEWS AGENCY/GETTY IMAGES
The U.N. said in its February
report that MKP owns a bank in
Pyongyang called International
Consortium Bank. Such arrange-
ments in which foreign compa-
nies own banks in North Korea
are often used to keep financial-
flow channels open and evade
sanctions, the report said. The
U.N. said it inquired with MKP
but hadn’t received a reply.
Calls to a number for Interna-
tional Consortium Bank on
MKP’s website led to an auto-
mated message saying the line
Trust Medical Services Hospi- doesn’t exist.
tal in the Zambian capital, ac- MKP is an example of compa-
cording to the company’s nies that “mix licit and illicit ac-
website. tivity to generate revenue” for
Pyongyang, said Andrea Berger,
u Pyongyang, North Korea a researcher at the Middlebury
MKP owns the International Institute of International Studies
Consortium Bank in the in Monterey, Calif.
North Korean capital, accord- In the late 2000s, MKP built
ing to a United Nations re- 5,000 low-cost houses in An-
port, which cites the com- gola’s capital, Luanda, using
pany’s website. North Korean workers, and later
sold them to the government for
$50,000 each, a total of $250
North Korea’s embassy in Malay- million, the person familiar with
sia were unanswered. MKP’s business activities said.
Malaysia is specifically trying Angola’s government didn’t re-
to determine whether North Ko- ply to requests to comment.
rea used the Southeast Asian In Zambia, the chief executive
nation as a hub for earning for- of a private joint venture be-
eign exchange in violation of the tween MKP and the state-run
U.N. sanctions, which were de- National Housing Authority said
signed to cut Pyongyang off it had built 428 houses there
from global financial flows, ac- and was constructing an addi-
cording to a person familiar tional 253, sometimes with
with the inquiries. North Korean workers.
U.N. sanctions from 2006 “We don’t really have a prob-
prohibit countries from trad- lem with” using the workers be-
ing with North Korean individ- cause MKP is a Malaysian-regis-
uals or companies suspected of tered entity, said the chief
supporting Pyongyang’s nu- executive, Charles Holland.
clear-weapons program, in- —Ben Otto and Alastair Gale
cluding those that send home 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 | Thursday, March 30, 2017
Germany Considers
Bases Outside Turkey
Tensions prompt
Berlin to weigh
alternatives in fight
against Islamic State
BY RUTH BENDER
BERLIN—The German gov-
ernment is weighing alternative
locations to Turkey for its
forces involved in fighting Is-
lamic State amid rising tensions
between the two countries.
Berlin has identified eight
possible alternatives to Incir-
lik air base in Jordan, Kuwait
and Cyprus, according to an
official document seen by The
Wall Street Journal. Germany
has about 250 soldiers, six re-
connaissance planes and a re-
fueling aircraft in Incirlik,
where other countries in-
volved in fighting Islamic
State are represented, includ-
ing from the U.S., Saudi Ara-
bia, Denmark and Qatar.
While Berlin has yet to ap-
proach any country about a
move, the revelation that it has
been researching other loca-
BREXIT
Continued from Page One
tend that this is a happy day,
neither in Brussels nor in Lon-
don,” he said. “We already
miss you.”
The triggering of Article 50
of the Lisbon Treaty, which
governs EU law, opens a two-
year window for Britain to ne-
gotiate the terms of its exit
from the bloc, unraveling 44
years of ties.
Many of Britain’s anti-EU
politicians have been waiting
for this moment for years.
“The impossible dream is hap-
pening,” said Nigel Farage,
one of the leaders of the
Brexit movement, in a mes-
sage from his Twitter account.
“Today we pass the point of
no return.”
The negotiations are ex-
pected to be tough. Early indi-
cations are that Britain and
the EU are far apart. Mrs. May
has said Britain would pursue
a clean break from the EU, re-
gaining control over immigra-
tion, leaving the jurisdiction
of the bloc’s courts and exit-
ing its common market.
British officials have said
they want to negotiate the
best deal they can for trade
with the EU. European leaders
have said they don’t want to
punish the U.K. for leaving,
but won’t grant Britain a bet-
ter deal outside the club than
it had in it.
In her letter to Mr. Tusk,
Mrs. May said she wanted a
free-trade agreement “of
greater scope and ambition
than any such agreement be-
fore it,” covering sectors such
as financial services.
Mrs. May said she accepted
European warnings that Brit-
ain can’t choose what it would
like to keep from the EU while
dropping obligations it
doesn’t.
“We understand that there
will be consequences for the
U.K. of leaving the EU,” she
said. “We know that U.K. com-
INDONESIA
Tax Amnesty Is Seen
Falling Short of Goals
A tax amnesty to bring home
billions of dollars stashed over-
seas by wealthy Indonesians will
likely fall short of expectations,
tax officials said, dealing a blow
to President Joko Widodo’s am-
bitious spending plans.
Since the program was intro-
duced in July, wealthy taxpayers
had pledged as of Tuesday to
repatriate 146 trillion rupiah ($11
billion) of assets kept in havens
like Singapore, the Cayman Is-
lands, the British Virgin Islands
and Hong Kong, officials said.
The program ends on Friday. The
money must be invested in the
country for at least three years
after repatriation.
The haul is far below the 560
trillion rupiah ($42 billion) in
pledges Bank Indonesia had
sought to increase the funds avail-
able for investment, help lower
chronically high borrowing costs
and fund government spending.
The total value of declared
tions underlines the rapid loss
of trust between the two North
Atlantic Treaty Organization
allies over recent months.
Wednesday’s news came a
day after German officials this
week accused Turkey of con-
ducting extensive spying in
Germany and weeks after
Turkish President Recep
Tayyip Erdogan accused Ger-
man politicians of Nazi prac-
tices for banning electoral ral-
lies by members of his AKP
party in Germany.
The spat comes amid
months of rising tension since
last summer’s failed coup
against Mr. Erdogan. The pres-
ident’s subsequent crackdown
on opponents at home, the re-
cent arrest of a prominent
German-Turkish journalist in
Turkey, and a campaign by the
AKP to urge some three mil-
lion Turks based in Germany
to vote in a referendum this
month that would consider-
ably extend the Turkish presi-
dency’s power have sparked a
backlash in Germany.
The German Defense Minis-
try prepared the document
Protesters marched in central London last week against the U.K.’s plan to leave the European Union.
panies that trade with the EU
will have to align with rules
agreed by institutions of
which we are no longer a part,
just as we do in other over-
seas markets. We accept
that.”
One of the first—and likely
most contentious—issues in
the negotiations is set to be
how much the U.K. will have
to pay to exit from the bloc.
While some U.K. officials
have said the country
shouldn’t have to pay any-
thing, EU officials say the bill,
which would include pay-
ments for programs the U.K.
committed to before it voted
to leave, could be as high as
€50 billion ($54 billion) to
€60 billion.
Mrs. May said in the letter
the U.K. wants talks on the fu-
ture relationship to take place
assets kept outside Indonesia
was $77.2 billion, an official said.
Mr. Widodo’s administration
is striving to boost tax revenue
to help fund much-needed infra-
structure projects across the na-
tion, home to 250 million people,
as low oil and commodities
prices have drastically reduced
revenue collection.
The government said the am-
nesty program raised 123 trillion
rupiah in cash from penalties
taxpayers paid to get the assets
they haven’t disclosed both in
the country or overseas cleared,
lower than the government’s ex-
pectations of 165 trillion rupiah.
—I Made Sentana
MONTENEGRO
U.S. Senate Backs
Bid to Join NATO
The U.S. Senate ratified legis-
lation backing Montenegro’s bid
to become the 29th member of
the North Atlantic Treaty Organ-
ization, a move that threatens to
increase tensions with Russian
President Vladimir Putin.
HK JP KO ML SI
WORLD NEWS
Turkish President Erdogan has inflamed tensions with Germany, leading Berlin to look for alternatives to the Incirlik air base.
listing alternatives to Incirlik
for opposition lawmakers. The
list was drafted in November,
after Turkey and Germany
clashed over Ankara’s refusal
to let German parliamentari-
ans visit the base, a ministry
spokesman said. Germany
largely provides surveillance
to the coalition.
After the German Parlia-
ment voted last June to label
the Ottoman-era massacre of
Armenians as genocide, An-
kara barred German lawmak-
ers from visiting the base. It
appeared to relent later, au-
thorizing a visit in early Octo-
alongside negotiations over
the terms of its exit, acknowl-
edging that reaching a com-
prehensive deal within that
time would be difficult.
She warned that if the two
sides fail to wrap up an agree-
ment within two years, secu-
rity could be affected.
“In security terms, a failure
to reach an agreement would
mean our cooperation in the
fight against crime and ter-
rorism would be weakened,”
she wrote. “In this kind of
scenario, both the United
Kingdom and the European
Union would of course cope
with the change, but it is not
the outcome that either side
should seek.”
German Chancellor Angela
Merkel said negotiations over
the divorce have to be con-
cluded before talks about fu-
WORLD WATCH
A woman walks by a yacht that was washed ashore after Cyclone Debbie hit Airlie Beach, Australia.
Montenegro’s bid received bi-
partisan support from the Sen-
ate, which voted 97-2 in favor of
the measure. Leading Republi-
cans and Democrats described
the vote as a signal to Mr. Putin
of U.S. resolve to defend Europe.
“Montenegro’s membership in
NATO will serve to strengthen
the organization, enhance Ameri-
can national security, and send a
IN UK FR MN PR
OZAN KOSE/AFP/GETTY IMAGES
ber, but six lawmakers are still Berlin wasn’t in negotiations
waiting to be allowed to visit with other potential host na-
troops there, according to the tions and had no plans to leave
document. Incirlik. Logistically, the Turk-
Parliament must authorize ish base remained the pre-
all German military deploy- ferred option, it said, because
ments abroad, and several it had NATO-level safety stan-
lawmakers have warned they dards and was more easily ac-
could rescind the mandate if cessible than the alternatives.
they can’t visit the base. German politicians also
“The government must act pushed back this week against
fast now,” said Jan van Aken, Ankara’s aggressive pursuit on
a lawmaker with the Left German soil of suspected sup-
party, who was refused a visit porters of the putsch—in par-
this month to German troops ticular followers of U.S.-based
stationed at another Turkish cleric Fethullah Gulen, a for-
air base in Konya. mer ally turned nemesis of Mr.
The ministry stressed that Erdogan.
Mind the Gap
Britain imports more from most EU countries than it exports to them.
The U.K.’s 2015 trade with its top 10 EU partners
Height of each segment reflects trade value in billions
U.K. imports from Goods
Trade balance
61% (£70.24)
54% (£37.32)
56% (£36.93)
40% (£17.66)
63% (£24.72)
PETE MACLAINE/ZUMA PRESS
61% (£23.25)
55% (£20.66)
55% (£10.27)
64% (£10.04)
46% (£4.63)
Source: HMRC (goods); ONS (services)
ture relations can begin. security databases, and
“During the negotiations, whether the U.K. will stay un-
we first have to clarify how to der the jurisdiction of EU reg-
untie these links in an orderly ulatory agencies for issues,
way,” she said. “Only then— such as nuclear power, now
but hopefully soon—can we handled by the bloc’s institu-
address questions about our tions.
future relations.” U.K. politicians who sup-
Mrs. May has said one of ported staying urged Mrs.
her priorities is to guarantee May to keep close ties. “It is
EU citizens living in Britain crucial that in this two-year
and U.K. citizens living in period the voices and con-
other parts of Europe con- cerns of those who want to
tinue to have the right to stay preserve close links between
even after the U.K. leaves. The Britain and Europe are not
EU has said talks on that issue shouted down and silenced,
alone will likely take at least and that those with power
several months. over this process are held to
The U.K. and the EU will account,” said Anna Soubry, a
also have to decide what to do Conservative lawmaker.
with unspent EU funds that Within the next two days,
were supposed to go to U.K. Mr. Tusk is expected to send
farmers, how to implement draft guidelines to the 27 re-
cross-border security arrange- maining capitals framing the
ments including access to EU talks from the EU’s side.
strong message of resolve to Russia has opposed NATO
Russia as it invades its neigh- membership for countries in
bors and seeks to upend the in- Central and Eastern Europe and
ternational order,” said Sen. Ben the Baltics, arguing that the ex-
Cardin of Maryland, the ranking pansion of the alliance threatens
Democrat on the Senate Foreign Moscow on its own border.
Relations Committee. Montenegrin officials have ac-
The two senators who voted cused Russia of backing a mili-
against backing the bid were Re- tary coup in October, a charge
publicans Rand Paul of Kentucky Moscow has denied.
and Mike Lee of Utah. —Jay Solomon
THE WALL STREET JOURNAL.
TOBIAS SCHWARZ/AGENCE FRANCE-PRESSE/GETTY IMAGES
Germany’s federal prosecu-
tor said on Tuesday it was in-
vestigating potential spying
activities by Turkey’s intelli-
gence agency MIT in Germany.
The decision came after Turk-
ish officials handed the Ger-
man foreign-intelligence
agency, known as the BND, a
list of suspected Gullen follow-
ers in the country.
A spokesman for Turkey’s
Ministry of Foreign Affairs
didn’t immediately respond to
a request for comment. The
BND declined to comment.
—Ned Levin in Istanbul
contributed to this article.
Services U.K. exports to
39% (£44.76) Germany
46% (£32.07) France
44% (£29.33) Netherlands
60% (£26.09) Ireland
37% (£14.62) Spain
39% (£15.14) Belgium
45% (£16.72) Italy
45% (£8.54) Sweden
36% (£5.61) Poland
54% (£5.47) Denmark
THE WALL STREET JOURNAL.
Those guidelines should be fi-
nally agreed upon at a Brus-
sels summit on April 29.
After that, EU governments
and the European Commis-
sion, which is set to lead day-
to-day negotiations, will likely
take several weeks to set a de-
tailed negotiating mandate for
Michel Barnier, the EU’s
Brexit negotiator. Only then,
possibly in late May, are nego-
tiations set to begin in ear-
nest.
“The task before us is mo-
mentous but it should not be
beyond us,” Mrs. May wrote in
her letter, saying that the U.K.
and EU could build a partner-
ship “that contributes toward
the prosperity, security and
global power of our conti-
nent.”
—Jason Douglas contributed
to this article
AUSTRALIA
Cyclone Brings
Moderate Damage
Cyclone Debbie wrought wide-
spread but moderate damage in
Australia’s northeast, authorities
said, as flooding rain and fallen
trees slowed troops and emer-
gency workers attempting to
reach the worst-hit areas.
No deaths were reported a
DAN PELED/AAP/REUTERS
day after Debbie smashed tourist
resorts, flattened canefields and
shut coal mines in tropical
Queensland state as a Category
4 storm, one rung below the
most dangerous wind-speed level.
As poor weather persisted and
several Bowen Basin coal-produc-
tion facilities stayed shut, analysts
said Debbie could push coking
coal prices higher—while tourism
operators, even in unaffected re-
gions, reported canceled bookings.
Resorts along the world-fa-
mous Great Barrier Reef and
coastal areas bore the brunt of
the storm with wind gusts stron-
ger than 260 kph (160 mph).
—Reuters
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
THE WALL STREET JOURNAL. Thursday, March 30, 2017 | A5

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

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

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

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

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

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

vision of creating manufacturing jobs in America.

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

well-paying manufacturing jobs.

Sincerely,

Anthony Pratt
Executive Chairman, Pratt Industries

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

www.prattindustries.com
 For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
A6 | Thursday, March 30, 2017
Trump Loosens Obama’s Climate Rules
President says rollback
will save coal jobs;
order draws EU rebuke;
Asia backs Paris accord
WASHINGTON—President
Donald Trump took steps to be-
gin unraveling the centerpiece
of the Obama environmental
agenda, signing an order to re-
verse rules aimed at pushing
U.S. utilities to shift from coal
plants to cleaner-burning fuels.
By Louise Radnofsky,
Cassandra Sweet
and Brian Spegele
“My administration is put-
ting an end to the war on
coal,” Mr. Trump said ahead of
the official signing at the En-
vironmental Protection
Agency, repeating a campaign
slogan he used to champion
policies he said would bring
back mining jobs.
He said he was paring back
regulations that impeded job
creation, while still ensuring
clean air and water.
But while the moves are be-
ing billed as job savers, compa-
nies and energy experts said
the order is unlikely to reverse
the U.S. utility industry’s shift
to natural gas, solar and wind
as leading sources of electricity.
The order Tuesday drew a
rebuke from the European
Union, which said Mr. Trump’s
order reversing key clean-en-
ergy policies would eliminate
the main pillar of U.S. efforts
to fight climate change, under-
mining America’s leadership in
a critical global effort.
“Now, it remains to be seen
by which other means the
United States intends to meet
its commitments under the
Paris Agreement,” said Miguel
Arias Canete, climate action
and energy chief at the Euro-
pean Commission, the EU’s ex-
ecutive arm.
Meanwhile, officials around
MANDEL NGAN/AGENCE FRANCE-PRESSE/GETTY IMAGES
The Senate may vote on Neil Gorsuch’s nomination next week.
Most Democrats Vow
To Oppose Gorsuch
BY BYRON TAU
WASHINGTON—More than
half the Democrats in the Sen-
ate now say they will vote
against President Donald
Trump’s nominee to the Su-
preme Court, setting up an ac-
rimonious showdown over
Judge Neil Gorsuch’s bid to fill
the seat left vacant by Antonin
Scalia’s death last year.
The battle shows signs of
becoming bitter, with Demo-
crats promising a filibuster,
Republicans threatening to in-
voke a rules change known as
the “nuclear option,” and
Democrats essentially daring
them to try.
More than two dozen Sen-
ate Democrats had said they
would vote “no” on Mr. Gor-
such’s nomination, while no
Democrats had said they
would vote “yes.”
The Senate Judiciary Com-
mittee is scheduled to vote on
the nomination Monday, with
a vote in the full Senate com-
ing later in the week.
Senate Democratic leaders
say they support an attempted
filibuster of Judge Gorsuch’s
nomination to a lifetime ap-
pointment on the court, citing
concerns about his record of
judicial decisions while serv-
ing on the federal 10th Circuit
Court of Appeals and about his
independence from the Trump
administration.
“The bottom line is very
simple, and that is that Gor-
such did not acquit himself
well at the hearings and did
Mr. Trump signs an order to reverse rules aimed at pushing utilities to shift from coal plants to cleaner-burning fuels. Right, a bad-air day in Beijing this year.
Asia on Wednesday said they
would continue their drive to-
ward cleaner fuels.
This leaves an opening for
China and other countries to
seize leadership in the global
effort to curb the rise in tem-
peratures, as set out in the
2015 Paris Agreement, which
went into force in November.
China, the biggest emitter
of climate-changing gases,
won’t change its climate-
change policies, a spokesman
said. “We still advocate that
all sides should move with the
times, grasp opportunities,
fulfill their promises and ear-
nestly take positive action to
jointly promote implementa-
tion of [the Paris] Agreement,”
Chinese Foreign Ministry
spokesman Lu Kang told a reg-
ular news briefing.
Australia’s conservative
government said it had no
plans to abandon its Paris ac-
not impress our caucus,” said
Sen. Chuck Schumer of New
York, the Senate Democratic
leader.
A filibuster by Democrats
would mean Judge Gorsuch
would need to win 60 votes to
move forward in a body where
Republicans control 52 seats,
and where filibusters of Su-
preme Court nominees have
been exceedingly rare.
Republican leaders say that
Judge Gorsuch is a model ju-
rist and that they will move
forward with his nomination
with or without Democratic
cooperation.
They note that former Pres-
ident Barack Obama’s two suc-
cessful Supreme Court nomi-
nees were confirmed by
Senate majorities that in-
cluded Republican support.
“We’re going to get Judge Gor-
such confirmed,” Senate Ma-
jority Leader Mitch McConnell
(R., Ky.) said.
Democrats remain furious
about Republicans’ handling of
the open seat last year. GOP
leaders declined to hold a vote
or hearing after President Ba-
rack Obama nominated Judge
Merrick Garland in March
2016 to fill the seat, saying
whoever was elected in No-
vember should choose the next
justice.
That gamble paid off when
Mr. Trump won, but Demo-
crats now view the seat as es-
sentially stolen from Mr.
Obama, putting pressure on
Democratic senators to mount
and sustain a filibuster.
U.S. NEWS
cord target. “Australia takes
its international commitments
very seriously,” said Environ-
ment and Energy Minister
Josh Frydenberg.
In India, Piyush Goyal, the
minister for power and coal,
said a day before Mr. Trump’s
announcement that the coun-
try is “pursuing religiously”
its goal of developing 225
gigawatts of renewable and
clean energy sources by 2022.
On Wednesday a senior official
reiterated the commitment to
the Paris accord. “It’s not sub-
ject to some other coun-
try’s decision,” he said.
Indonesia, whose forest-
clearing fires are a source of
greenhouse gases, also recom-
mitted to the Paris Agreement.
Even if the U.S. curtails aid to
Indonesia for climate pro-
grams, “we will not stop or
withdraw,” said Nur Masripa-
tin, the director general of cli-
H-1B Visas Set for Lottery—Again
BY LAURA MECKLER
WASHINGTON—President
Donald Trump ran for office
promising changes to the H-1B
visa program, which brings
highly skilled foreign workers
to the U.S. But on Monday, the
government opens another
round of applications using
rules that have long been in
place.
Demand for the program
badly outstrips the supply so,
as in past years, the govern-
ment will use a lottery to de-
cide which companies get
them. The visas are coveted by
tech firms, which have unsuc-
cessfully lobbied Congress to
increase the cap, set at 85,000.
Large outsourcing firms
typically scoop up a substan-
tial share of the visas, and
they have drawn scrutiny for
importing foreign workers,
particularly in cases where
they are hired to do work once
performed by Americans.
Smaller firms that request just
a few visas have said they
have a hard time planning be-
cause of uncertainty about
whether they will win any.
Changing that distribution
would require a time-consum-
ing rewrite of regulations gov-
erning the program, experts
said. Given that no action was
launched right away, the new
administration has been ex-
pected to maintain existing
rules for this year.
“There was a window in
which the White House could
have made serious reforms,”
said Russ Harrison, director of
government relations for the
Institute of Electrical and
GOP Is Unlikely to Risk a Shutdown
BY KRISTINA PETERSON
AND NATALIE ANDREWS
WASHINGTON—Republi-
can leaders signaled Tuesday
that they were likely to ex-
clude the most-contentious
provisions from legislation
needed to keep the govern-
ment running past April, de-
escalating the partisan ten-
sions that risk prompting a
partial government shutdown
at the end of next month.
House Speaker Paul Ryan
(R., Wis.) suggested that the
House wouldn’t try to strip
THE WALL STREET JOURNAL.
PABLO MARTINEZ MONSIVAIS/ASSOCIATED PRESS
ROMAN PILIPEY/EUROPEAN PRESSPHOTO AGENCY
mate change at the Ministry of mate change and official esti- what Republicans and busi-
Environment and Forestry, mates of the social cost of car- nesses say is a burdensome
adding that she believes the bon, methane and nitrous and costly regulatory environ-
U.S. people still support the oxide and rescinds a tempo- ment created under the Demo-
fight against climate change. rary ban on new coal leases on cratic administration. It also
In the U.S., Democrats an- federal lands, which Mr. gave the president an opportu-
nounced swift opposition to Obama’s Interior Department nity to move beyond the diffi-
Mr. Trump’s action, which is all issued early last year. cult collapse of health-care
but certain to trigger legal and The moves are all but cer- legislation in the House last
political pushback that could tain to trigger legal and politi- week and hand a win to allies
take years to resolve. The roll- cal pushback from environ- who have fervently opposed
back will likely take “some mentalists. The actual repeal the power-plant rules.
time,” the White House said. could take years as the litiga- The move also raises ques-
Mr. Trump’s order begins a tion and rule-making process tions about what steps, if any,
formal review of President Ba- run their course. the Trump administration
rack Obama’s Clean Power “Ultimately, litigation will might take to comply with a
Plan, which would have re- keep these agencies on course, global pact to address climate
quired utilities to reduce power but this order is a big waste of change that roughly 200 na-
plant carbon-dioxide emissions time and effort, done to ap- tions agreed to in Paris in 2015.
to 32% below 2005 levels by pease a dirty industry and A senior White House official
2030. It also initiates a review right-wing climate-denial fa- said Monday that the Trump
of a regulation that would im- natics,” said Sen. Sheldon administration hasn’t reached a
pose tougher emissions re- Whitehouse, a Rhode Island decision on how to proceed
quirements on new plants. Democrat. with the Paris Agreement.
It further pulls back 2016 The White House action is —Emre Peker
guidance from the Council on part of a broad push across and Te-Ping Chen
Environmental Quality on cli- the government to rein in contributed to this article.
Electronics Engineers-USA, a members of the same. Still, received more than 236,000
professional society that lob- Ms. Consaul said: “This is the applications for the 85,000 vi-
bies for changes in the pro- plan. If it changes, we will let sas, of which 20,000 are re-
gram. “For whatever reason, the public know.” served for people with ad-
they decided not to take it.” Early this year, a draft of an vanced degrees. That exceeded
Michael Short, a White executive order for Mr. the previous year’s record and
House spokesman, said “re- Trump’s consideration was was the fourth year in a row
forms of the H-1B visa system widely circulated and directed in which the cap was reached
are something that the admin- the government to re-examine within five days.
istration is actively consider- a range of visa programs to During his presidential
ing and working through.” ensure they prioritize and pro- campaign, Mr. Trump prom-
Some lobbyists have been ex- tect “the jobs, wages and well- ised to reduce legal as well as
pecting Mr. Trump to an- being of United States work- illegal immigration, saying for-
nounce changes to the pro- ers.” But that order hasn’t eign workers drive down
gram around now, but nothing been signed by the president. wages and threaten American
appears to be imminent. In Congress, a bipartisan workers. At times, he was par-
Arwen Consaul, a spokes- bill pending in the House ticularly critical of the H-1B
woman for U.S. Citizenship would punish companies seek- program.
and Immigration Services, ing H-1B visas by imposing “These are temporary for-
said Tuesday the agency plans burdensome requirements if eign workers, imported from
to use the lottery system if de-
mand again outstrips supply,
and this week, the American
they don’t pay workers at
least $100,000 a year. The cur-
rent threshold to avoid those
abroad, for the explicit pur-
pose of substituting for Amer-
ican workers at lower pay,” he
Immigration Lawyers Associa-
tion sent a notice advising its
requirements is $60,000.
Last year, the government
said in a statement last year.
“I remain totally committed to
eliminating rampant, wide-
spread H-1B abuse.”
Much of the criticism has
focused on Indian outsourcing
firms, which receive many of
the available H-1Bs. Their U.S.
subsidiaries bring in workers
that typically perform work at
American firms that in some
cases was once performed by
American workers at higher
wages. Some U.S. outsourcing
companies have a similar busi-
ness model. The companies
say they are unable to find
ABHISHEK CHINNAPPA/REUTERS
Americans to do these jobs.
Employers pay fees to sub-
mit each application, though
only a fraction of the applica-
tions are expected to win vi-
sas. Universities and nonprof-
its, which aren’t subject to a
cap, also use H-1Bs to hire
Tech firms in particular covet H-1B visas for foreign workers. many workers each year.
funding from Planned Parent- to start construction of a wall repealing the Affordable Care
hood Federation of America, along the U.S.-Mexico border. Act showed that the party will
the women’s health provider, “My guess is that comes to- likely need to turn to Demo-
in a spending bill needed to gether better without” those crats in both chambers to sup-
fund the government after requests included, Mr. Blunt ply the votes needed for a
April 28, when current fund- said of the late-April spending number of measures, includ-
ing expires. bill. ing legislation to avoid shut-
Separately, Sen. Roy Blunt The developments indi- tering the government.
(R., Mo.), a member of the cated Republicans are starting Democrats said their dis-
Senate Appropriations Com- to factor in Democratic de- cussions with Republicans
mittee and the Senate GOP mands as they move forward over the bill were progressing.
leadership, suggested that the on must-pass legislation, as Lawmakers will be on recess
April spending bill likely Democrats were sure to resist for two weeks in April, return-
would exclude two other con- all three of the measures. ing just five days before the
tentious provisions—President The inability of House Re- government’s funding runs
Donald Trump’s request to publicans to coalesce last out, and so there will be little
boost military spending and week behind a bill aimed at time for negotiations.
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
THE WALL STREET JOURNAL. Thursday, March 30, 2017 | A7

U.S. NEWS

Loans to Manafort Reflect Trump Ties

Bank run by a former with Mr. Manafort and none dorf, a lawyer and investor
planned. working with Mr. Manafort.
campaign adviser Since the mid-2000s, The New York and Califor-
threw a lifeline to the around the time Mr. Manafort nia loans went into default
started working as a political last year as Mr. Yohai ran
drive’s ex-chairman adviser to wealthy pro-Russia short of cash, people familiar
politicians in the Ukrainian with the transactions said.
BY MICHAEL ROTHFELD Party of Regions, he and im- Genesis started foreclo-
mediate family members sure proceedings in Brooklyn
Paul Manafort, the onetime bought at least six properties in September, New York state
campaign chairman for Presi- in New York, Florida and Vir- court records show. In Cali-
dent Donald Trump who did ginia for more than $16 mil- fornia, Mr. Yohai filed for
lucrative consulting for Ukrai- lion, property records show. corporate bankruptcy in De-
nian tycoons, faced foreclosure Mr. Manafort’s recent finan- cember as Genesis was mov-
on several real-estate invest- cial problems relate ing to foreclose on those
ments but received a $16 mil- to loans taken out to support properties as well, court fil-
lion lifeline through another the development projects of ings show.
former Trump adviser, real-es- his son-in-law, Jeffrey Yohai. As financial troubles
tate and court records show. Mr. Yohai began borrowing mounted, Mr. Manafort turned

CARLO ALLEGRI/REUTERS
Mr. Manafort was at risk of two years ago from Genesis to Mr. Calk’s bank, Federal
losing both his Brooklyn, N.Y., Capital, a California lender, to Savings. In late November, he
townhouse and his family’s in- flip high-end properties in Los and his wife borrowed $9.5
vestments in California prop- Angeles, according to promo- million from the bank, with
erties being developed by his tional material for the proper- two other homes they own
son-in-law, the records show. ties, loan records and bank- and $630,000 in a bank ac-
But in November and Janu- Paul Manafort borrowed $16 million to halt foreclosure on his home and invest in other properties. ruptcy-court filings. Mr. count to be used as collateral,
ary, Mr. Manafort and his wife Manafort, his wife and daugh- property records in Virginia
received as much as $16 mil- A foreclosure proceeding on The loans show how Mr. said the loans “all reflect ter put about $4.2 million into and New York show.
lion in loans from the Federal the Brooklyn house was with- Manafort, who resigned under arm’s-length transactions.” those projects, bankruptcy- On Jan. 17, the Chicago bank
Savings Bank, a small bank in drawn in January. Mr. pressure from the Trump cam- Around the time Mr. court records show. agreed to lend them up to $6.5
Chicago run by Steve Calk. The Manafort also planned to put paign in August over his activ- Manafort was dealing with Genesis declined to com- million more, which records
loans equaled almost 24% of more money into the Califor- ities in Ukraine, continued to Mr. Calk’s bank, he was tell- ment. Mr. Yohai couldn’t be show was secured by the
the bank’s reported $67 mil- nia investments to salvage tap connections from Mr. ing associates of plans for po- reached. Mr. Manafort’s Brooklyn property and $2.5
lion of equity capital. them, bankruptcy-court filings Trump’s circle. tential private-equity deals spokesman said his wife and million in cash the couple
Mr. Calk was a member of show. Mr. Manafort, a political with Thomas J. Barrack Jr., a daughter declined to com- agreed to deposit into an ac-
Mr. Trump’s Economic Advi- In an interview, Mr. Calk consultant and investor, de- wealthy real-estate investor ment. count. The next day, Jan. 18,
sory panel who overlapped said the loans to clined to be interviewed. In a who backed Mr. Trump, The Early last year, Genesis lent Genesis agreed to withdraw
with Mr. Manafort on the Mr. Manafort were “absolutely statement, he said he had bor- Wall Street Journal has re- $4.4 million secured by the foreclosure action in
Trump campaign. Messrs. not” related to his role in the rowed at 7.25% interest on the ported. Mr. Barrack, a Trump Mr. Manafort’s Brooklyn town- Brooklyn, according to court
Manafort and Calk knew each campaign. He said the loans Brooklyn property, a higher- adviser who was his inaugu- house, according to court re- records.
other before the campaign, a were “grossly overcollateral- than-market rate, in what he ral committee chairman, has cords. Those proceeds sup- —Jim Oberman
person familiar with the rela- ized,” with multiple properties called a “straightforward” said through a spokesman he ported Mr. Yohai’s projects, and Peter Nicholas
tionship said. securing them. transaction. The statement has no business relationship according to Matthew Brown- contributed to this article.

FDA Pick’s Industry Failed Deal Is Setback for Anbang

Links Prompt Recusals BY ESTHER FUNG
AND KANE WU
BY THOMAS M. BURTON
China’s Anbang Insurance
The Trump administration’s Group Co. has had a tough
nominee to lead the Food and time pulling off splashy U.S.
AMERICAN ENTERPRISE INSTITUTE/REUTERS

Drug Administration plans to real-estate deals since it

recuse himself for a year from scooped up the iconic Waldorf
FDA decisions on more than Astoria Hotel in 2015.
20 companies, including some On Wednesday, New York
drug giants. real-estate developer Kushner
Scott Gottlieb in recent Cos. said it had ceased talks
years has held positions and with Anbang for a planned
received millions of dollars in $7.5 billion redevelopment of a
income as adviser, executive, mixed-use skyscraper in Man-
paid speaker or consultant to hattan.
the companies, according to fi- That came almost exactly a
nancial-disclosure documents Nominee Scott Gottlieb has year after the Chinese insurer
DREW ANGERER/GETTY IMAGES

he has filed with government done paid work for some firms. made a high-profile retreat
ethics officials. from a bidding war to buy
Among the companies are ics to recuse himself from in- Starwood Hotels & Resorts
cancer-therapy startups, such volvement with the medical Worldwide Inc. The hotel
as Cell Biotherapy Inc., and companies at the FDA for a chain went to Marriott Inter-
large concerns, such as Glaxo- year after resigning positions national Inc. for $13 billion.
SmithKline PLC and Bristol- and divesting his interests. The Beijing-based insurer,
Myers Squibb Inc. An FDA commissioner one of China’s best-known
Much of that work involved rarely is required to get in- overseas investors, had shot to New York’s Waldorf Astoria, shown last month. Anbang purchased the hotel for $1.95 billion in 2015.
assessing the prospects of volved in company-specific de- fame in the international deal-
fledgling companies, investing cisions, instead directing pol- making circuit with its $1.95 Anbang’s shareholders in- making abroad. This time, Anbang had been
in some and advising them on icy covering entire industries. billion purchase of Manhat- clude a collection of 39 Chi- But Chinese investors are in talks to provide as much as
medical and regulatory mat- Dr. Gottlieb’s work with tan’s Waldorf Astoria, at the nese companies, some of still doing deals overseas. half of the $2.5 billion in eq-
ters. such a wide range of drug time the steepest price ever which at one point shared the “When you think about invest- uity for the planned redevel-
Dr. Gottlieb, a physician, firms could provide fodder for paid for a U.S. hotel. same contact address or legal ing in China, there isn’t so opment of 666 Fifth Avenue,
has provided some of that Senate Democrats to attack his Last year, Anbang made an representative and in turn are much to buy. Properties aren’t according to people close to
seed money himself. Other nomination in hearings sched- abortive attempt to steal Star- owned by other companies, ac- cheap,” said Theo Cheng, An- the negotiations. A Kushner
venture capital came from uled for next week. Unlike wood from Marriott, sealing cording to online corporate bang’s head of overseas real- Cos. spokesman added that the
New Enterprise Associates, some other Trump cabinet its reputation for flashy deal registry filings reviewed by estate investment, at an indus- firm remains in active negotia-
where he has been a venture members who are relative making. It had partnered with The Wall Street Journal. try conference in France tions with other potential in-
partner, and from T.R. Win- novices to federal government, New York financier Chris Anbang’s chairman and earlier this month. “There’s a vestors for the project.
ston & Co., where he has been Dr. Gottlieb previously served Flowers on the Starwood bid. founder, Wu Xiaohui, is mar- whole bunch of capital that for The disclosure about ending
a managing partner and in- in government, as a deputy But Anbang pulled the bid af- ried to the granddaughter of different reasons needs to talks with Anbang came after
vestment consultant. FDA commissioner under Pres- ter questions about its owner- former Chinese leader Deng come out to diversify and seek lawmakers and ethics experts
The consulting work for ident George W. Bush. ship and political connections Xiaoping. better returns.” last week expressed concerns
GlaxoSmithKline, for which he According to the docu- in China—concerns that kept Since the aborted Starwood Mr. Wu, who has hob- about the potential for a con-
was paid $87,153 in 2016 ments, during 2016 and some Wall Street banks from deal, Anbang has made lower- nobbed with former U.S. Sec- flict of interest. Jared Kush-
through the first two months through March 1, 2017, when taking the insurer as a client— profile property deals in Can- retary of State Henry Kissinger ner, son of the real-estate
of 2017, involved helping the the disclosure period ended, and increased scrutiny over ada and Japan, according to and Stephen Schwarzman, the company’s founder, Charles, is
company make decisions about Dr. Gottlieb made more than the company at home. data from Dealogic. billionaire chief executive of the son-in-law of President
drugs in its research pipeline. $3 million in gross income. A few weeks before the For more than a year, Chi- Blackstone Group, said in a Donald Trump and occupies a
In all cases, Dr. Gottlieb The income included a re- Starwood pullout, Anbang had nese regulators have intensi- dinner gala earlier this year key advisory position in the
pledged to ethics officials at tainer and bonus of $1.85 mil- inked an agreement to buy fied controls over capital out- that friendships built at a per- administration.
the Office of Government Eth- lion from T.R. Winston. Strategic Hotels & Resorts flows and spend more time sonal level between business —Phred Dvorak
from Blackstone Group LP in a scrutinizing potential deals partners help improve ties be- and Peter Grant

U.S. WATCH
deal valued at $6.5 billion. that Chinese companies are tween China and the U.S. contributed to this article.

EDUCATION

Ex-Pentagon Chief
come communities and programs
to develop entrepreneurship could
expand work opportunities and
TALKS
Takes Harvard Role benefit the overall labor market. Continued from Page One
Ms. Yellen said low- and moder- the building that was to be re-
Former U.S. Secretary of De- ate-income communities and mi- developed as part of the An-
fense Ash Carter is heading to nority groups continue to strug- bang deal, and dozens of other
Harvard University as director of gle to find jobs despite steady properties to a trust controlled
the John F. Kennedy School of improvement in the overall labor by other family members.
Government’s Belfer Center for market, in remarks Tuesday at a But some ethics experts
Science and International Affairs, National Community Reinvest- have said the measures have
where he plans to pursue his in- ment Coalition conference. fallen short, and members of
terest in connecting the technol- —David Harrison Congress expressed concerns
ogy, defense and public-service over the Anbang talks.
sectors. Mr. Carter will draw on WASHINGTON “Kushner Companies is no
initiatives he championed as de- longer in discussions with An-
fense secretary to leverage the Woman Strikes bang about 666 Fifth Avenue’s
country’s technological capabili- Capitol Police Cruiser potential redevelopment, and
ERIC BARADAT/AGENCE FRANCE-PRESSE/GETTY IMAGES

ties to benefit its global position. our firms have mutually

Mr. Carter made overtures to Sili- A woman described as “er-
con Valley while at the Pentagon, ratic and aggressive” drove a ve-
and last year created the De- hicle into a U.S. Capitol Police
fense Innovation Advisory Board. cruiser near the Capitol on
—Melissa Korn Wednesday morning and was
taken into custody, police said.
WORKFORCE DEVELOPMENT Shots were fired during the ar-
rest attempt, but the incident
Yellen Urges Better appeared to be criminal in na-
Public Education ture with “no nexus to terror-
ism,” a Capitol Police spokes-
Federal Reserve Chairwoman woman said. No one was injured
Janet Yellen said better educa- and the Capitol remained open.
tional opportunities for low-in- —Associated Press
agreed to end talks regarding
the property,” according to the
statement by a Kushner Cos.
spokesman.
Anbang had been in talks to
provide as much as half of the
$2.5 billion in equity for the
planned redevelopment, accord-
ing to people close to the talks.
“Kushner Companies re-
mains in active, advanced nego-
tiations around 666 5th Avenue
with a number of potential in-
Kushner Cos. ended talks with Anbang about potential redevelopment of 666 Fifth Ave., above. vestors,” the spokesman added.
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
A8 | Thursday, March 30, 2017
STALL
Continued from Page One
cient by allowing each to spe-
cialize at what its workers do
best.
Few of them fully grasped
globalization’s downsides in a
modern economy. Tying to-
gether disparate nations eco-
nomically also expanded the
labor pool globally, pitting
workers in wealthy nations
against poorly paid ones in
developing nations. That
greatly boosted the fortunes
of the world’s poor, but also
created a backlash in the U.S.
and Europe. At the same time,
freeing financial flows led to
debilitating financial excesses
that ended in crisis.
“Globalization is in retreat,”
Larry Fink, the chief executive
of the big investment firm
BlackRock Inc., said in a Feb-
ruary memo to employees,
outlining a new corporate
strategy. “We need to be Ger-
man in Germany, Japanese in
Japan and Mexican in Mexico.”
An earlier era of globaliza-
tion, which stretched from
1870 to 1913, ended when the
world descended into war. Ris-
ing trade barriers later played
a role in the Great Depression
of the 1930s. The present era
may not turn out as cata-
strophically, but nations, com-
panies, multilateral institu-
tions and ordinary citizens are
already scrambling to adapt to
a world with bigger barriers
to trade and finance as blow-
back builds.
Big banks, such as Citi-
group and HSBC, have reduced
their global footprints. Indus-
trial firms like General Electric
are developing strategies for a
more localized world. Guard-
ians of globalization, like the
World Trade Organization,
struggle with challenges from
China and other emerging
powers. Poor nations are find-
ing it harder to count on ex-
ports for economic develop-
ment. Wealthy nations face
less-hospitable overseas mar-
kets, while their workers grap-
ple with the demands of auto-
mated workplaces.
Critics of globalization said
a slowdown in cross-border
trade and finance will help
ease pressure on wages of un-
skilled workers in wealthy na-
tions, stem the threat of finan-
cial bubbles and reduce the
influence of multinational com-
panies in developing nations.
“Maybe the U.S. will supply
more of its demand by itself,”
said Clyde Prestowitz, presi-
dent of the Economic Strategy
Institute, a policy research
group in Washington, D.C.,
who has long urged the U.S.
adopt more-aggressive trade
policies. “That could be a good
thing and create jobs.”
During the globalization ep-
och that started after World
War II, trade growth usually
far outpaced—and helped
drive—overall economic out-
put. Now it is barely keeping
up. The slowdown has long
outlasted the financial crisis
of 2007 to 2009, which helped
set it off.
Between 2011 and 2015, the
value of global merchandise
exports contracted 10%, ac-
cording to the WTO, marking
the largest drop over a four-
year period in post-World War
II history, driven in part by
tumbling commodities prices.
Merchandise export growth
over a 10-year time frame is
also the slowest of this era.
“We have a deflationary
mind-set,” Jakob Stausholm,
chief financial officer of Mae-
rsk, the Danish shipping giant,
told investors in February,
while reporting a $1.9 billion
loss. A few days earlier a court
in Seoul declared that Hanjin
Shipping Co., the world’s sev-
enth-largest shipper, was
heading for liquidation.
Among the hottest trends
in the industry last year was
the dismantling of giant con-
tainer ships for scrap
metal—862 in all—along the
beaching yards of Pakistan,
Bangladesh and India.
Annual movement of capital
across borders—in the form of
stock and bond purchases, for-
eign direct investment and
lending—fell more than two-
thirds, to $3.3 trillion in 2015
from $11.9 trillion in 2007, ac-
cording to McKinsey & Co.
Overseas bank lending, partic-
ularly from Europe, has been
hard hit. The stock of cross-
border loans held at banks
around the world contracted
21%, to $28.2 trillion in the
third quarter of 2016 from
$35.5 trillion in 2008, accord-
ing to the Bank for Interna-
tional Settlements.
Peterson Institute for Inter-
national Economics trade econ-
THE WALL STREET JOURNAL.
IN DEPTH
ries than makes economic
sense,” he said.
China, once an assembly
platform that sucked in com-
modities and manufactured
goods from abroad, put them
together and reshipped them,
is now producing much of
what it needs domestically.
Benjamin Dolgin-Gardner,
founder of Hatch International
Ltd., an electronics manufac-
turer in Shenzhen, China, said
he now uses Chinese-made
LCD screens rather than ones
made elsewhere in Asia for the
tablets he produces. Memory
chips for MP3 players are also
made in China rather than im-
ported from Japan and South
Korea.
“China is increasingly can-
nibalizing supply chains,” said
Alex Wolf, a London economist
at the investment firm of
Standard Life Investments, re-
ducing exports from Korea,
Taiwan and other nations
whose economies are tightly
linked to China’s.
The reaction to the finan-
cial crisis in many countries
included new banking rules,
adopted globally, which re-
quire banks to hold bigger
PPI /ZUMA PRESS
capital buffers against securi-
ties and loans. That has cut
into their willingness to take
risks across borders.
One of the hottest trends in the shipping industry last year was the dismantling of giant container ships for scrap metal. Regulators in China, Cy-
prus, Iceland, Brazil and other
countries imposed capital con-
Changing Attitudes INTERCONTINENTAL Global crisis 40
trols to limit the waves of po-
tentially destabilizing money
and aftermath
Stifle the Flow of Trade EUROPE
AMERICAS
35 washing into and out of their
financial systems. In all, 31 out
30 of 108 countries tracked by
The surge of international agreements that ASIA
economists Menzie Chinn and
followed the Cold War has waned signifi- AFRICA 25
Hiro Ito became less open to
cantly since the global financial crisis. OCEANIA 20 global capital flows between
2008 and 2014, while 13 be-
Preferential trade agreements signed 15
came more open.
each year, by continent That is a sharp reversal
10
from the five-year precrisis
5 period, when 40 countries be-
came more open to global cap-
0
ital flows and 12 became less
1950 ’60 ’70 ’80 ’90 2000 ’10 ’15 open.
Europe is the epicenter of
As popular sentiment has turned against globalization, the once-steady reduction in tariff levels has stalled and many the global lending crunch.
countries have turned to protectionist measures. Hungary privatized most of its
Average tariff rates, by country’s level of Products subject to World-trade banks after the fall of Commu-
nism in 1989, drawing inves-
economic development temporary trade barriers policies
tors from Austria, Italy, Bel-
30% 3.0% implemented* 300
gium and beyond. By the mid-
LIBERALIZING 2000s, Hungarian
25 2.5 150
homeowners had become avid
20 2.0 0 consumers of mortgages is-
sued by Austrian banks de-
15 1.5 150 nominated in Swiss francs,
10 DEVELOPING 1.0 emblematic of the rapid glob-
300
alization of European finance.
5 0.5 450 After the financial crisis,
DIS-
ADVANCED
the Swiss franc soared, push-
0 0 CRIMINATORY 600
ing up the cost of those mort-
1980 ’90 2000 ’10 ’15 1990 2000 ’10 ’15 2010 ’15 gages. Nearly one-third of
Hungarian borrowers went 90
At the same time as both opinions and regulations turned against trade, the global flow of goods and finance itself has days or more delinquent on
begun to shrink. Cross-border finance has stalled as banks and other investors retrench, making it tougher for emerging their mortgages, inviting a po-
markets to grow. litical backlash.
Hungarian Prime Minister
Merchandise trade as a share of global GDP Cross-border capital inflows Viktor Orban’s nationalist Fi-
55%
desz party won parliamentary
FOREIGN DIRECT LENDING AND elections with a landslide in
50 INVESTMENT OTHER 2010 and Mr. Orban set out to
INVESTMENTS increase Hungarian ownership
45 DEBT
of the banking sector to at
SECURITIES EQUITY least 50%. His administration
40
imposed taxes and fees on the
35 12 trillion sector and demanded banks
30 10 convert Swiss franc loans into
local currency denominations.
25 8 Foreign bank lending con-
tracted for eight straight years
20 6
through 2016, according to the
15 4 Institute of International Fi-
nance, a banking trade associ-
10 2 ation in Washington.
5 0 As foreign banks departed,
the country’s economy minis-
0 –2 ter, Mihaly Varga, told local
1960 ’70 ’80 ’90 2000 ’10 ’15 2000 ’10 ’15 reporters that the policy
“boosts economic sover-
*Counts policies documented between 1 January and 31 October of a given year to correct for reporting lags. eignty.” A 2016 review by the
Sources: Design of Trade Agreements Database (agreements); IMF and World Bank (tariff rates); World Bank (trade barriers, trade to GDP); Global Trade IMF, while lauding Hungary’s
Alert (policies); IMF via McKensey Global Institute (capital flows) Bob Davis, Jon Hilsenrath and Andrew Van Dam/THE WALL STREET JOURNAL. rebound from the recession,
said the government had sim-
omist Gary Hufbauer calculates to pay. “If you want to move in mal,” after falling by about 1 strategy to focus on regional ply shifted risks from private
that U.S. output in 2016 was $2 an easy way, then you can’t percentage point a year be- centers. In explaining the hands to the public sector be-
trillion greater than it other- achieve double-digit growth,” tween 1986 and 1995 and 0.5 move last year, GE Chief Exec- cause the Hungarian govern-
wise would have been because he said in a recent interview. percentage point annually for utive Jeff Immelt said he ment took big stakes in banks
of greater trade and financial “We have to carefully manage the following 13 years. would prefer to operate by and other companies.
integration since 1950. Slowing it, but there is a way out also. Multinational companies free-trade principles, but “a In wealthy nations, the big
the pace of globalization will We have a huge potential in used the 1990s and 2000s to localization strategy can’t be hope is that a reversal in glob-
actually slow U.S. income terms of exports.” build global supply chains—for shut down by protectionist alization will lift wages of un-
gains, he said. The lethargic recovery from instance linking rubber planta- politics.” skilled workers by reducing
No less is at stake for a the global recession, especially tions in Malaysia to tire manu- In practice, that means GE competition from low-wage
country such as Ethiopia, weak demand for capital facturers in China and retail- is building up its manufactur- nations. That hasn’t been the
which has averaged growth goods and big investment ers in the U.S., or coffee ing capacity in China and In- case so far. Globally, wage
rates in excess of 10% for the projects, helps to explain the growers in Colombia to Star- dia and other big markets to growth slowed to an average
past decade as part of a push global trade slowdown. bucks restaurants. supply customers there, rather 2.1% in the past five years,
toward industrialization and than counting on exports and compared with 2.4% in the
greater international expo- global links. As part of the five years leading up to the
sure. The country has little to strategy, GE signed a deal in 2007-09 financial crisis, ac-
fall back on if its globalization
‘We need to be German in Germany, 2015 to build locomotives in cording to the International
bet sours. Japanese in Japan and Mexican in Mexico.’ India, rather than relying on a Labor Organization.
Hoping to emulate China’s global production site in the In the U.S., wages and sala-
ride on the globalization wave, U.S., as it once did. ries of workers rose 2% a year
Ethiopia is building a half- Surveying the global econ- in the past five years. That is
dozen manufacturing zones to Protectionism is another These webs of commerce omy from Beijing, where he down from 2.9% in the five
produce garments, textiles and cause. Global Trade Alert, a supercharged trade but have co-owns eight electronics and years before the crisis.
shoes for multinational firms, trade monitoring group, begun to retrench, as compa- medical equipment factories, That hasn’t stilled globali-
along with railroads and counts nearly 7,000 protec- nies localize their production Dwight Nordstrom, chairman zation’s many critics. “Globali-
power plants. The construc- tionist measures enacted and import fewer components of Pacific Resources Interna- zation has made the financial
tion spree, which keeps the air world-wide since the recession for assembly. The World Bank tional LLC, said he is “waiting elite who donate to politicians
in Addis Ababa thick with of 2009. About half of the said global supply chains to see how the politics shake very, very wealthy,” Mr.
dust, has created rising exter- measures are aimed at China. stopped growing around 2011 out” before building any Chi- Trump said in June 2016 at a
nal debt loads, which jumped It has been 23 years since after expanding about 4% an- nese plants aimed at the ex- Rust Belt stop in Pennsylvania,
to $20.4 billion in 2015 from the completion of the last nually for the previous two port market. “but it has left millions of our
$2.3 billion in 2006, according global trade deal in 1994 and decades. That is because local-con- workers with nothing but pov-
to the World Bank. no other is on the horizon. General Electric Co., which tent rules may require firms erty and heartache.”
Ethiopia’s prime minister, Since 2008, the International since the 1980s has expanded like his to build factories in —Matina Stevis, Anjani
Hailemariam Desalegn, said Monetary Fund reports, tariff its global footprint, said it is different countries. “We may Trivedi and Margit Feher
the debt is a price he is willing reductions have been “mini- time for a “bold pivot” in be forced to have more facto- contributed to this article.
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
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THE WALL STREET JOURNAL. Thursday, March 30, 2017 | A9

LIFE&ARTS
TURNING POINTS | Clare Ansberry

When College Rejections Land

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

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

THE MIDDLE SEAT | Scott McCartney

WILL YOUR LOST BAG STILL COUNT AS LOST?

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

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

OPINION
REVIEW & OUTLOOK
The Too-Darn-Bad
China’s Australia Extradition Bust Scandal at Google
L
i Keqiang’s state visit to Australia The Australian government’s response has
didn’t quite go to plan. As the Chinese been muted, including a statement that it Selling ads against Which is fine, but it also means en-
user-generated con- during the limitations inherent in the
Premier talked up economic and cul- can’t provide consular assistance to Mr. Feng
tent was always a possibility of monetizing such content.
tural ties over the weekend, as a noncitizen. But Parlia- risky proposition, in This passing storm, in fact, is one
agents in China detained an China’s abuse of a ment reacted more appropri- which Google and its that Google has long anticipated. Some
Australia-based professor professor shows its legal ately. On Tuesday a multipar- advertisers indulged of its big initiatives have been aimed
and barred him from leaving tisan group of lawmakers with their eyes open at finding ways, preferably without
the country. That helped turn system can’t be trusted. compelled Prime Minister BUSINESS
on Google’s YouTube paying, of getting traditional televi-
WORLD
lawmakers in Canberra Malcolm Turnbull to abandon By Holman W.
platform. sion-style content, made with pleasing
against a pending extradition his ill-conceived drive to rat- Now this predict- potential advertisers in mind, against
Jenkins, Jr.
treaty with Beijing. ify the extradition treaty with China, which able challenge has which to use its ad-targeting skills.
The professor, Feng Chongyi, is a Chinese had been the top agenda item in relations with produced an alleged These include its Google Fiber proj-
national and Australian permanent resident Beijing. This is a victory for human rights and crisis for the internet, as businesses as ect, its attempt (with the Obama ad-
diverse as Hyundai, L’Oréal and ministration) to force new set-top box
who was visiting China with his wife, an good sense.
McDonald’s march off in a huff and rules on the cable-TV industry, and its
Australian citizen. A former head of China China seeks a treaty (and has threatened say they can no longer advertise on current effort to develop a YouTube-
studies at the University of Technology Syd- to halt counternarcotics cooperation without YouTube. based cable-TV substitute.
ney, he studies human rights and democratic one) because it wants international respecta- That ads are ending up next to
activism. Mr. Feng has warned of Beijing’s bility and help with “Operation Fox Hunt,” its content they find inappropriate and
growing influence in Australian politics and effort to round up corrupt officials and other offensive might seem a big yawn. Hey, advertisers, some of
media, including investments in Australian fugitives who have absconded overseas. Some Google’s algorithms are good at pick- us supply content that’s
outlets and pressure on editors: “The net ef- are surely bad guys, but Beijing also hunts ing out which viewers are likely to
fect is now the Chinese community in Aus- journalists, activists, Falun Gong members and bite on which ads, then good at tasteful and family-friendly.
tralia, actually their major cultural con- other political targets. The treaty would have tracking these users across the web
even when they linger on sites de-
sumption is still [Communist] Party a chilling effect in Australia even if local offi-
voted to anti-Semitic rants or terror- For his part, Facebook’s Mark
propaganda.” cials retained nominal discretion. “We should ism promotion. Zuckerberg has also made it clear
Chinese police say they’re keeping Mr. Feng be deporting the spies, not their dissidents,” Understandably, though, advertis- that somehow getting Facebook into
in China on suspicion of “endangering state said one Aussie lawmaker who helped bury ers, especially those with a brand to the TV business is his next big prior-
security.” That catch-all charge apparently re- the deal. promote, aren’t keen when this fact is ity. Again, the goal is professionally
fers to the professor’s research meetings with Canada is still pursuing an extradition rubbed in their faces. That was always produced content against which to
human-rights lawyers, activists and fellow ac- treaty with Beijing, while France and Spain al- a risk they took. And lord knows, deploy Facebook’s copious ad-target-
ademics—all targets of President Xi Jinping’s ready ratified deals. But the reality of China’s plenty of content producers are willing ing information gleaned from its 1.8
harsh crackdown on liberal ideas. The 56-year- legal system is that it remains an assault on and eager to produce content that fits billion users.
old isn’t in prison but remains in limbo in the human rights, and subjects extradited into the the needs of advertisers. You are look- Show us how it’s done, boys. For all
city of Guangzhou, subject to questioning system have no meaningful chance of receiv- ing at one right now. the moaning about cable bills, Ameri-
Not without poetic significance, the cans have been willing to pay them. In
from authorities and clearly unable to speak ing justice. Here’s hoping Australia’s example
YouTube fury was kicked off by a fact, Americans suddenly seem almost
freely about his ordeal. shows Canada the way. newspaper, the Times of London, endlessly willingly to pay for content.
whose investigation found numerous Millions not only fork up for cable but

Yellen’s Labor Forces cases of respected brands showing up

against unacceptable videos. Worse,
for Amazon Prime, HBO, Netflix,
Showtime, etc. They fork up for Spo-

F
technically a few pennies of the pro- tify’s ad-free music service. To assure
ederal Reserve Chair Janet Yellen set munities and in distressed, white-majority ceeds even flowed to the unacceptable access to all this content, they pay
aside her monetary-policy cap Wednes- towns across the U.S. content’s creator. two broadband bills, one at home and
day to give an interesting talk about the What to do? Ms. Yellen of course led her list Is it me or are certain Google part- one for mobile.
importance of getting the with improving general edu- ners, like newspapers, taking a muf- On top of this, Americans are still
least well-off Americans into The Fed Chair elevates cation, which has faltered, fled delight in this scandal? Print pub-
lishers have long chafed under
keen to pay for content in yet an ad-
ditional way, via their tolerance for
decent jobs. a good cause beyond she modestly noted, “for a
Google’s business model, which con- ads. Sorting out the right ad-sup-
She bluntly cited data on wide variety of reasons that sists of collecting 100% of the revenue ported business models for the future
the people who the economy’s interest rates. are beyond the scope of this from selling ads against content that will be a challenge. Linear TV—the
recovery passed by. From talk.” She emphasized the im- someone else bore 100% of the cost of kind pouring out of your cable box—is
2011 through 2015, unemploy- portance of work, noting the producing. largely doomed, except for sports and
ment in low- and moderate-income communi- long-term benefits of high-school seniors who The parent of Britain’s Guardian news. Or so insists Netflix CEO Reed
ties averaged 13%. worked 20 hours a week. newspaper positively chortled amid its Hastings.
She described the lifetime income dispari- Her speech had other good ideas, but we crocodile tears: “It is completely unac- Facebook, Google and their col-
ties that exist between those with a college ed- were struck by how virtually all of Ms. Yellen’s ceptable that Google allows advertis- leagues presumably are inventing a
ucation and individuals who don’t complete remedies flowed from government institutions. ing for brands like the Guardian to ap- brave new future for the ad-backed
high school. Between 2011 and 2015, the high- Maybe it’s asking too much to think the head pear next to extremist and hate-filled consumer services. Ads would become
videos.” less cluttery. They would be more pre-
school drop-out rate in less well-off communi- of the Federal Reserve would mention public- Noisily marching off too were AT&T cisely targeted, serving both market-
ties was an awful 23.5%. school alternatives, and perhaps she believes and Verizon Wireless, both currently ers and consumers better. In the pro-
Let us note here that one of the indisput- charter schools and vouchers are bad ideas. adapting their business models to cess, incalculable opportunities
able realities pressed home in the 2016 elec- But nonprofits funded by the private sector are compete with the dominant duo in supposedly would be created to dun
tion is that these destructive, downwardly doing strong work. Noting them would have digital advertising, Google (or its par- the masses with valuable new services
mobile pressures exist both in minority com- benefited the Fed Chair’s good cause. ent, Alphabet) and Facebook. The on a free, ad-supported basis.
wireless carriers would do so, notice, Google and Facebook should get on
by giving advertisers professionally with it. That means refraining from ex-
Trump’s Energy Progress produced content to serve as backdrop
for their ads.
cessively censoring their users. It also
means providing advertisers with en-

O
Confronted with such challenges, forceable guarantees about what type
ne area where President Trump is a 2015 hearing. The Obama Administration
Google and Facebook have long in- of content their ads will appear next
notching early victories is unleashing rolled out these new calculations with no sisted they are tech companies, not to. Neither likes the idea of opening its
American energy, which for years has public comment, and the models surely media companies. They shouldn’t be systems to third-party monitoring.
been held hostage to pro- wouldn’t survive a rigorous held responsible for the content that Maybe that’s the place to start. Also,
gressive climate obsessions. A new executive peer review. users generate. Their role is to enable maybe one or both should think about
On Tuesday Mr. Trump order stops Obama’s Our contributor Paul Tice communication, not censor it. buying and running a newspaper.
signed an executive order to makes an intriguing case
rescind many of the Obama war on fossil fuels. nearby that the Trump Ad-
Administration’s energy di-
rectives, and he deserves
ministration should go fur-
ther to bring regulatory cer-
credit for ending punitive policies that tainty for energy investment. He argues that
Opioids Shouldn’t Be
harmed the economy for no improvement in the EPA should revisit its 2009 “endanger-
global CO2 emissions or temperatures. ment finding,” which blacklisted carbon diox-
A Doctor’s First Resort
The order directs the U.S. Environmental ide as a pollutant. By Marc Siegel Stop program forces physicians to
Protection Agency to review the Clean Power The Trump Administration could update

P
consult a state-run database before
Plan, which the Supreme Court stayed last this finding, as recent literature has revealed ercocet, my patient announced, writing prescriptions for highly addic-
year in an extraordinary rebuke. The plan es- a pause in rising global temperatures that was the best antidepressant tive drugs. In Maine, a new law estab-
sentially forces states to retire coal plants can’t be explained by carbon reductions. she’d ever had. An orthopedist lishes a prescription-monitoring pro-
early, and the tab could top $1 trillion in lost Meantime, progressives will continue to flog had prescribed her the drug for back gram and limits the amount of opioids
output and 125,000 jobs, according to the the endangerment finding in court as long as pain resulting from a fall. When the that a doctor can prescribe. These are
American Action Forum. Also expected are it exists, and then use it as a pretext for more patient, who suffered from depres- good policies that should be employed
sion, asked for more, I refused, ex- nationwide.
double-digit increases in the price of elec- regulation when a Democrat returns to the
plaining the opioid’s high addictive New Jersey is going after irrespon-
tricity—and a less reliable power grid. All White House. potential. Still, I worried that if I sible physicians, including one who al-
for nothing: A year of U.S. reductions in Another question is whether President didn’t give her a prescription, an- legedly prescribed more than 60,000
2025 would be offset by Chinese emissions Trump will withdraw from the Paris climate other doctor would. oxycodone pills to patients he had
in three weeks, says Rice University’s deal, which would—in theory—force annual Close to 50% of the opioids pre- never met. In Maryland, Gov. Larry
Charles McConnell. U.S. emissions reductions of 26% over 2005 scribed in the U.S. are given out by Hogan declared a state health emer-
The rule also fulfills a campaign promise levels by 2025. That decision is “still under dis- primary-care doctors like me. Our gency after heroin and fentanyl killed
to end Barack Obama’s war on coal. It’s true cussion,” according to a White House official pain training is minimal, yet patients nearly 1,500 residents in the first nine
that market forces are reducing coal’s share who briefed reporters Monday night. frequently ask us to help them man- months of 2016.
of U.S. electric power—to some 30% from Yet the Clean Power Plan would only fulfill age or overcome it. Too many of us President Trump campaigned on a
about 50% a decade ago—thanks mainly to a fraction of the U.S. Paris commitments at jump too quickly to Percocet, Vicodin promise to fight the opioid epidemic,
and codeine, drugs that merely mask and stemming the flow of illegal drugs
fracking for natural gas. Yet Mr. Obama still an exorbitant cost. Not even Mr. Obama’s en-
symptoms instead of treating under- across the southern border could help.
deployed brute government force to bankrupt tire regulatory agenda would have reached lying causes. But a better long-term strategy is to
the coal industry. Mr. Trump is right to end the targets. Already other countries with no Frequently patients suffer from lit- keep people from getting hooked in
that punishment and let the market, not fed- intention of reducing their emissions are de- tle more than muscle spasms, which, the first place.
eral dictates, sort out the right energy mix manding U.S. compliance and threatening while painful, might be better treated Opioid abuse cuts across economic,
for the future. tariffs, so a prompt exit may minimize the with heat, physical therapy, muscle re- social and ideological barriers. It’s nei-
The story is similar on a methane rule that damage. laxants or Advil. Sometimes even ther a Republican issue nor a Demo-
the executive order will begin to roll back. Environmental groups are accusing Mr. proper posture or weight loss will do cratic one. The 21st Century Cures Act,
Total U.S. methane emissions have dropped Trump of “reversing climate progress,” even the trick. These are do-no-harm op- which President Obama signed before
15% since 1990, as Bernard Weinstein of as they call the order “symbolic” because the tions. But doctors may be too rushed leaving office, provides $1 billion to
Southern Methodist University told the regulatory damage to the coal industry— or self-serving to consider them. help states set up prevention and
Patients deserve some of the treatment programs. Medicaid’s addic-
House last fall, even though domestic oil-and- from rules on mercury, ozone, dust—is
blame. Typically, they wait until an tion coverage for the poor should also
gas production has doubled over the past de- mostly irreversible. In any event, Scott appointment is almost over before be preserved, no matter what shape
cade. One reason is that energy companies Pruitt’s EPA can expect lawsuits that may mentioning pain. Savvy physicians the GOP’s health-care reform efforts
have a financial incentive to capture the stuff take years to untangle. should anticipate this. We also need ultimately take.
and sell it. Still, the EPA promulgated expen- The Trump order is a promise in the bank to be better at diagnosing underlying Alicia Reddy, a nurse known as the
sive new emissions targets, equipment rules for the voters who elected the President be- problems correctly and having a list “addiction angel” of Staten Island, N.Y.,
and more. cause he promised to focus on jobs and rev- of initial treatments (not including says that addiction is a family illness.
The order also dumps the “social cost of ving up the economy. It’s also a welcome re- opioids) at the ready. “In most cases,” she explains, “the fam-
carbon,” which is a tool the Obama Adminis- turn to regulatory modesty: One of the more Some 100 million Americans suffer ily is as sick, if not sicker than the ad-
tration employed to junk mandatory cost- outrageous aspects of the Obama anticar- from chronic pain, according to the In- dict himself.” Friends and relatives of-
stitute of Medicine. Doctors use this es- ten need to “learn the difference
benefit analyses for regulations. bon agenda is that agencies rammed
timate to justify a quick opioid pre- between helping and hurting.”
For example: An EPA power-plant rule through what Congress refused to pass in scription. But four out of five heroin Sadly, physicians like me need to
predicted net benefits from $26 billion to legislation. abusers started with prescription pain- learn to do the same.
$46 billion, but as much as 65% of that de- As for climate change, President Trump’s killers. Only 27% of those taking opioids
rived from guesswork about the positives order will have the same practical effect on are using their own prescriptions. Dr. Siegel is a professor of medicine
of reducing carbon, as Bracewell & Giu- rising temperatures as the Clean Power Plan: Attempts to clamp down on abuse at NYU Langone Medical Center and a
liani’s Scott Segal explained to Congress at none. vary from state to state. New York’s I- medical correspondent for Fox News.
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
THE WALL STREET JOURNAL.
Trump’s Next Step on Climate Change
By Paul H. Tice
T
he executive orders on cli-
mate change President
Trump signed this week
represent a step in the
right direction for U.S. en-
ergy policy and, importantly, deliver
on Mr. Trump’s campaign promise to
roll back burdensome regulations af-
fecting American companies. But it
will take more than the stroke of a
pen to make lasting progress and re-
verse the momentum of the climate-
change movement.
On Tuesday, in a series of orders,
Mr. Trump instructed the U.S. Envi-
ronmental Protection Agency to re-
work its Clean Power Plan, which
Reconsider the EPA’s
labeling of carbon dioxide
as a pollutant, based on
now-outdated science.
would restrict carbon emissions from
existing power plants, mainly coal-
fired ones. Last year the U.S. Supreme
Court stayed enforcement of the CPP
pending judicial review.
Mr. Trump also directed the Inte-
rior Department to lift its current
moratorium on federal coal leasing
and loosen restrictions on oil and
gas development (including methane
flaring) on federal lands. And he in-
structed all government agencies to
stop factoring climate change into
the environmental-review process
for federal projects. The federal gov-
ernment will recalculate the “social
cost of carbon.”
How Trump Can Break the Washington Gridlock
Donald Trump
wasn’t elected to
perpetuate the ideo-
logically driven grid-
lock of the past six
years. But his deci-
POLITICS sion to pursue a
one-party approach
& IDEAS
By William
on health care
threatened to do just
A. Galston
that. Now that this
approach has failed,
Mr. Trump has an opportunity to be-
gin again with a more inclusive strat-
egy, as many members of his own
party are urging.
Pennsylvania Rep. Charlie Dent, a
leader of the center-right Republican
Tuesday Group, told NBC on Sunday
that “in order to reform health care
in this country, we are going to have
to do it in a durable, sustainable way
and in a bipartisan manner.”
Ohio’s Gov. John Kasich declared
the same day on CNN that “you can-
not have major changes in major
programs affecting things like health
care without including Democrats
from the very beginning.” Mr. Kasich
placed this point in a broader con-
text: “The Republicans tried to do it
Can Bias Against Asians Be a ‘Trade Secret’?
Shortly after the U.S.
Supreme Court’s
dispiriting decision
last year in Fisher v.
University of Texas,
which upheld the use
of racial preferences
UPWARD
MOBILITY in college admis-
sions, Gallup re-
By Jason L.
leased some encour-
Riley
aging poll results.
More than six out of
10 white, black and Hispanic respon-
dents said they disagreed with the
ruling. And seven in 10 people—in-
cluding 76% of whites, 61% of Hispan-
ics and 50% of blacks—said colleges
should admit applicants based “solely
on merit.”
Of course, the Supreme Court’s job
is to interpret the commands of the
Constitution, not opinion surveys.
Still, the polling results are a re-
minder that the courts and the col-
lege administrators who cheered the
ruling are much bigger fans of racial
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These actions are a good start,
but all they do is reverse many of
the executive orders President
Obama signed late in his second
term. While easy to implement and
theatrical to stage, such measures
are largely superficial and may
prove as temporary as the decrees
they rescind.
Because they don’t attack the cli-
mate-change regulatory problem at
its root, Mr. Trump’s orders won’t
provide enough clarity to U.S. energy
companies—particularly electric util-
ities and coal-mining companies—for
their long-term business forecasting
or short-term capital investment and
head-count planning.
To accomplish that, the Trump
administration, led by EPA Adminis-
trator Scott Pruitt, needs to target
the EPA’s 2009 “endangerment find-
ing,” which labeled carbon dioxide
as a pollutant. That foundational
ruling provided the legal underpin-
nings for all of the EPA’s follow-on
carbon regulations, including the
CPP.
It also provided the rationale for
the previous administration’s anti-
fossil-fuel agenda and its various cli-
mate-change initiatives and pro-
grams, which spanned more than a
dozen federal agencies and cost the
American taxpayer roughly $20 bil-
lion to $25 billion a year during Mr.
Obama’s presidency.
The endangerment finding was
the product of a rush to judgment.
Much of the scientific data upon
which it was predicated—chiefly,
the 2007 Fourth Assessment Report
of the United Nations’ Intergovern-
mental Panel on Climate Change—
was already dated by the time of
its publication and arguably not
with just Republicans. It doesn’t
work like that in our country. We are
not a parliamentary system.”
Sen. Lindsey Graham, speaking
Saturday at a town hall in Columbia,
S.C., said that what should happen
next is that “the president should
reach out to Democrats, I should
reach out to Democrats, and we
should say ‘Let’s get a shot at doing
this together, because it ain’t work-
ing doing it by ourselves.’ ”
Maine’s Sen. Susan Collins ex-
pressed optimism about this strat-
egy: “With the demise of the House
bill, there’s a real window of oppor-
tunity for a bipartisan approach to
health care.”
Why didn’t the House Freedom
Caucus support the GOP health bill?
“I have no idea,” Mick Mulvaney,
President Trump’s budget director,
told NBC on Sunday. “I know the
Freedom Caucus. I helped found it. I
never thought it would come to this.”
Mr. Mulvaney must have slept
through the events that culminated
in John Boehner’s resignation.
The question now is whether the
Trump administration will allow its
entire agenda to be held hostage by
double standards than are the gen-
eral public—even those who suppos-
edly benefit from race-based affirma-
tive action.
But the Gallup poll also illustrates
how America’s discussion of racial
preferences in higher education has
become so dated. Nowhere men-
tioned in the survey—and only glanc-
ingly referred to in the Fisher major-
ity opinion written by Justice
Anthony Kennedy—are Asian-Ameri-
cans, though they are the country’s
fastest-growing racial group and have
become increasingly fed up with their
treatment at elite colleges.
“The old paradigm of affirmative
action being about white versus black
has been completely upended,” says
Edward Blum of Students for Fair Ad-
missions, a group that opposes racial
preferences. “California, Arizona,
Texas, Florida—these are states that
are becoming majority-minority, mul-
tiracial, multiethnic. We’re compet-
ing as different racial and ethnic
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OPINION
Signing an executive order eliminating climate-change regulations on Tuesday.
properly peer-reviewed as federal
law requires.
With the benefit of hindsight—in-
cluding more than a decade of ac-
tual-versus-modeled data, plus the
insights into the insular climate-
science community gleaned from the
University of East Anglia Climate-
gate email disclosures—there would
seem to be strong grounds now to
reconsider the EPA’s 2009 decision
and issue a new finding.
In 2013, the IPCC issued a more
circumspect Fifth Assessment Re-
port, which noted a hiatus in global
warming since 1998 and a break-
down in correlation between the
world’s average surface tempera-
tures and atmospheric carbon diox-
ide levels, causing the U.N. body to
revise down its 2007 projections for
the rate of planetary warming over
the first half of the 21st century.
Although this initially reported
a minority faction of Republicans
who will accept nothing less than
policy purity—as they define it. This
is the inevitable consequence of try-
ing to legislate with the votes of
only one party. But there are signs
The answer is to get
both sides together
from the outset of the
legislative process.
that the White House is contemplat-
ing a course correction. “This presi-
dent is not going to be a partisan
president,” Chief of Staff Reince
Priebus told Fox News. “It’s time to
potentially get a few moderate Dem-
ocrats on board.”
It isn’t clear, however, that Mr.
Priebus understands the implications
of his statement. Real bipartisanship
means getting the parties together
around a table at the beginning of
the legislative process. Asking Demo-
crats to sign on to bills that Republi-
cans have already drafted won’t
groups that really have less and less
meaning in our multiracial and multi-
ethnic society.”
In 2006 Jian Li filed a complaint
with the Education Department’s Of-
fice of Civil Rights after he was denied
admission to Princeton University. Mr.
Li, who emigrated from China at age
4, had a perfect score on the SAT and
graduated in the top 1% of his high-
school class. He alleged that Princeton
violated civil-rights laws banning dis-
crimination on the basis of race, color
and national origin.
The complaint was initially re-
jected, but Mr. Li appealed and the
government reopened the investiga-
tion in 2008. Seven years later, in
2015, the Obama administration,
which strongly supported the use of
racial preferences in college admis-
sions and obviously took its sweet
time reviewing Mr. Li’s case, issued a
report exonerating Princeton.
Last year Mr. Blum’s organization
filed a public records Freedom of In-
formation Act request with the Edu-
cation Department to gain access to
the same documents that the federal
government used to clear Princeton
Notable & Quotable: Tax Cuts
From James Freeman’s Best of the
Web, WSJ.com, March 27:
There will be many opportunities
for bipartisanship and Republicans
should seize them whenever sensi-
ble. But Republicans should first
agree among themselves to stop
playing by Washington budget rules
that were largely written by Demo-
crats and were created in part to
prevent tax cuts.
This means that House Republi-
cans should abandon the idea that
their pending tax relief effort must
be “revenue-neutral” according to
the chronically flawed projections of
Thursday, March 30, 2017 | A11
REUTERS
“pause” was subsequently eliminated
through the downward manipulation
of historical temperature data, this
latest IPCC assessment calls into
question both the predictive power
and input-data quality of most global
climate models, and further high-
lights the scientific uncertainty sur-
rounding the basic premise of an-
thropogenic climate change.
An updated EPA endangerment
finding based on an objective review
of the latest available scientific data
is warranted, along with a more so-
ber discussion of the threat posed
by carbon dioxide and other green-
house gases to the “public health
and welfare of current and future
generations,” in the words of the
original endangerment finding.
As long as the 2009 finding re-
mains on the books, it will provide
legal ammunition for environmental-
ists, academics and state govern-
work; not enough of them will break
ranks to change the dynamic.
In today’s polarized climate, real bi-
partisanship needs to make it impossi-
ble for the most intransigent forces to
veto potential agreements. This means
building coalitions from the center
out, beginning with the forces in both
parties that do not reject the very le-
gitimacy of compromise.
If the White House gets serious
about this approach, it won’t need to
start from scratch. Thirty-six repre-
sentatives, evenly balanced between
Democrats and Republicans, have
formed the independent Problem
Solvers Caucus, co-chaired by New
Jersey Democrat Josh Gottheimer
and New York Republican Tom Reed.
(Full disclosure: I am a co-founder of
No Labels, a bipartisan group that
some years ago set in motion the
process that led eventually to the
formation of this caucus.)
Many of these elected officials
have been working together across
party lines for years and can boast
some modest legislative successes.
Now they are developing common
approaches to many of the forthcom-
ing issues, beginning with the resolu-
of any wrongdoing. Mr. Blum’s organ-
ization represents a group of Asian
plaintiffs who are suing Harvard Uni-
versity over its admissions policies.
The judge in that case has ordered
Princeton sues to block
the government’s release
of documents that could
show discrimination.
Harvard to turn over six years of ad-
missions records, and Mr. Blum sus-
pects that the data will show that
Harvard is unlawfully capping Asian
enrollment.
America’s Asian population has ex-
ploded in recent decades, and Asian
attendance at highly selective schools
with colorblind admissions, such the
California Institute of Technology
and the University of California,
Berkeley, reflects this demographic
trend. At Harvard, however, the per-
centage of Asian undergrads has re-
mained remarkably consistent for an
Washington’s Joint Committee on
Taxation and Congressional Budget
Office. U.S. workers—and those who
would like to find work—need the
economy to grow faster than the me-
diocre pace of the Obama era. . . .
Across-the-board cuts for individ-
uals and a big cut in the corporate
rate are reforms to which the Free-
dom Caucus won’t object. Such a
program is bound to spoil the cele-
bratory mood at DNC headquarters,
but a big tax cut will turn frowns up-
side down for a broad swath of the
electorate, and begin the growth
break-out that investors have been
hoping for since Election Night.
ment officials seeking to sue the ad-
ministration for any actions related
to climate change, including this
week’s executive orders.
Issuing a new endangerment find-
ing would be a bold move requiring
thorough work, but the Trump EPA
would be well within its legal rights
to undertake such an updated review
process. In Massachusetts v. EPA
(2007), the Supreme Court ruled
that the Clean Air Act gives the EPA
the authority, but not the obligation,
to regulate carbon dioxide and other
greenhouse gases. The EPA needs to
“ground its reasons for action or in-
action” with “reasoned judgment”
and scientific analysis.
Addressing the 2009 endanger-
ment finding head-on would show
that Mr. Trump is serious about chal-
lenging climate-change orthodoxy.
Thus far he has sent a mixed message,
as demonstrated by this week’s am-
bivalence on CPP (reworking rather
than repealing) and his administra-
tion’s silence on U.S. participation in
the U.N.’s 2015 Paris Agreement.
Simply standing down on regula-
tory enforcement, cutting govern-
ment funding for climate-change re-
search and stopping data collection
for the next four years will not suf-
fice. Ignoring the EPA’s 2009 endan-
germent finding would mean that it
is only a matter of time before an-
other liberal-minded occupant of the
White House reasserts this regula-
tory power, bringing the country
and the domestic energy sector back
where Mr. Obama left them.
Mr. Tice is an executive-in-resi-
dence at New York University’s Stern
School of Business and a former
Wall Street energy research analyst.
tion to continue government funding
beyond its current expiration date of
April 28.
On Feb. 8, all 36 Problem Solvers
sent President Trump a letter re-
questing a meeting to discuss where
they could work together with his
administration. The signatories
pointed out that “the most conse-
quential and long-lasting reforms are
usually bipartisan, from the passage
of Social Security and Medicare to
the last time comprehensive tax re-
form in 1986 was achieved.”
They declared their willingness to
begin working immediately with the
White House on tax reform and in-
frastructure legislation. “Addressing
either issue on a broad bipartisan
basis,” they said, could “give a signif-
icant boost to our economy and pro-
vide Americans with confidence that
government can work for them.” As
Rep. Adam Kinzinger (R., Ill.), a
member of the Problem Solvers, re-
cently said: “I think that’s going to
have to be the new coalition.”
If Mr. Trump wants a strategy
that can break the gridlock and pro-
mote the common good, he knows
where he can start.
institution that claims race is not a
determining factor in who is admit-
ted. Mr. Blum suspects that Princeton
engages in similar shenanigans, but
the school has been pressuring the
Education Department to deny him
the information that he requested
more than a year ago.
Concerned that the government
was finally going to fulfill the FOIA re-
quest, Princeton sued the Education
Department on March 17 to block the
release of the admissions documents.
The suit argues that the material be-
ing sought is exempt from FOIA, a
claim that the government has re-
jected. The school also maintains that
releasing the data would compromise
student privacy, and it likened its ad-
missions process to “trade secrets”
that, if exposed, would put Princeton
at a competitive disadvantage in at-
tracting students.
Don’t believe it. Admissions offi-
cers switch schools all the time, pre-
sumably taking knowledge of admis-
sions procedures with them, and the
criteria used by elite institutions to
evaluate applicants is not the equiva-
lent of an iPhone patent.
Nor is student privacy an issue
since names, addresses and other per-
sonal information can be redacted. Mr.
Blum’s organization simply wants the
number of Asians who have applied to
Princeton, their SAT scores and grade-
point averages, and other information
that the school used to analyze appli-
cants academically.
What really concerns Princeton is a
potential discrimination lawsuit. What
ought to concern the rest of us is the
apparent determination of elite col-
leges to punish Asian students for their
academic success. Asians have long
been the forgotten victims of liberal af-
firmative-action schemes, subject to
unwritten “just for Asian” admissions
standards that recall the treatment of
Jews in the first half of the 20th cen-
tury. Princeton wants them to shut up
about it. Let’s hope they don’t.
 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 | Thursday, March 30, 2017 THE WALL STREET JOURNAL.

LIFE & ARTS

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

Interest in Joplin is still robust.

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

Hail the King of Ragtime

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

Weather The WSJ Daily Crossword | Edited by Mike Shenk

Shown are today’s noon positions of weather systems and precipitation. Temperature bands are highs for the day.
-15 1 2 3 4 5 6 7 8 9 10 11 12 69 “Bullets Over 26 15-year-old
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Zurich 21 4 pc 21 6 pc A S S E S N Y E T L E N O
Frankfurt 21 9 pc 23 9 pc Orlando 33 19 pc 30 16 t

THE DAILY SHOT

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BUSINESS & FINANCE
© 2017 Dow Jones & Company. All Rights Reserved.
Yen vs. Dollar 111.0940 g 0.04%
Samsung Looks to Restore Trust
Phone maker unveils
new flagship device
after brand took hit
from Galaxy Note 7
BY TIMOTHY W. MARTIN
NEW YORK—Samsung Elec-
tronics Co. unveiled a new
flagship smartphone on
Wednesday, its first launch in
the wake of product-safety is-
sues that beset the South Ko-
rean technology giant last year.
The Samsung Galaxy S8 is
longer and slimmer than prior
premium models. Its screen
now extends to the device’s
top and bottom edge, and it
has no physical home button.
Unlocking is now done
through a touch-screen home
button, full-face recognition or
a fingerprint scanner on the
back of the device. An ear-
phone jack is included.
Samsung, the world’s larg-
Tencent
Makes It
Harder to
Short Tesla
BY CHARLEY GRANT
AND SPENCER JAKAB
A $1.8 billion investment
in Tesla Inc. isn’t chump
change, even for one of
China’s most valuable com-
panies, Tencent Holdings.
But what does it mean for
the electric-car pioneer?
If one takes the view that
the market is generally right,
then seeing
HEARD ON the money-
THE STREET losing com-
pany’s value
briefly pass
that of 113-year-old Ford
Motor, the world’s fifth-larg-
est auto maker, suggests it
opens up vast new possibili-
ties for Tesla. Cynics, on the
other hand, see a star-struck
Asian company pouring cash
into a late-stage American
bubble as so many others
have before it.
As with Elon Musk’s busi-
ness ventures themselves,
the gulf between hype and
reality is enormous. The
truth lies somewhere in be-
tween, but probably toward
the less exciting end of the
spectrum.
Tencent’s investment cer-
tainly shouldn’t be dismissed
as the company simply trying
to be one of China’s cool kids.
Rivals Baidu and Alibaba also
have invested in autonomous-
vehicle ventures back home.
Given the rapid convergence
between various technologies,
the notion that a Chinese per-
son may one day use Tencent’s
WeChat app to order an au-
tonomous electric taxi from
Please see HEARD page B2
 Heard: Tencent hits a speed
bump with Tesla .................... B8
EU Blocks Merger of German and British Exchanges
BRUSSELS—The European
Union formally blocked the
proposed tie-up between
Deutsche Börse AG and Lon-
don Stock Exchange Group
PLC, primarily because of con-
cerns the merger would effec-
tively create a monopoly in
the clearing of fixed-income
trading in Europe.
By Natalia Drozdiak
in Brussels and Ben
Dummett in London
The decision on Wednesday
to block the $28 billion deal
had been expected after the
LSE in late February rejected
demands by the European
Commission, the bloc’s anti-
trust authority, to sell its
stake in Italian trading plat-
form MTS SpA, a solution that
would have addressed the EU’s
main concerns.
The German and British
TECHNOLOGY: ISRAELI STARTUP FREIGHTOS RAISES $25 MILLION B4
Hang Seng 24392.05 À 0.19%
Smaller Share
Samsung's mobile division share
of total company profits
80%
60
4Q 2016
27%
40
20
0
2011 ’12 ’13 ’14 ’15
Source: the company
THE WALL STREET JOURNAL.
est smartphone maker, needs a
controversy-free rollout fol-
lowing last year’s recall of Gal-
axy Note 7 devices, after faulty
batteries caused some devices
Emirati company NIMR Automotive produces armored vehicles and is looking to export to both Eastern European and Asian markets.
Arab States Cultivate Arms Firms
Wealthy Gulf Arab states
have a warning for Western
suppliers of military equip-
ment: If they want business,
they have to transfer technical
knowledge to local companies
that are part of a rising,
homegrown defense sector.
By Margherita
Stancati in Riyadh and
Nicolas Parasie in
Dubai
Saudi Arabia and the United
Arab Emirates, with troops
fighting in neighboring Yemen
and participating in allied air-
strikes against Islamic State, al-
ready have some of the region’s
most advanced forces. But they
are limited in their ability to
maintain and repair sophisti-
cated military equipment let
alone manufacture it.
The rulers want to become
less dependent on the U.S. and
other Western countries, and
exchanges had agreed to
merge last March with the
aim of creating Europe’s big-
gest stock-exchange operator
and one that could better
challenge rivals in the U.S.
and Asia.
“We could not approve this
merger on the terms which the
two companies proposed,”
said EU antitrust chief Mar-
grethe Vestager.
The EU’s decision came on
the day the U.K. government
officially notified Brussels
that it would break away from
the bloc. Brexit wasn’t a fac-
tor in the antitrust review by
the EU, but it was seen as a
potential hurdle in Germany,
where the deal still needed
regulatory approval and faced
pushback over plans to base
the joint company’s headquar-
ters in London.
After the EU’s announce-
ment on Wednesday, the LSE
THE WALL STREET JOURNAL.
Gold 1252.20 g 0.25%
’16
Samsung’s Galaxy S8
to catch fire. The incident
caused a dip in customer loy-
alty and trust, bruising Sam-
sung’s chic brand and costing
the company $5 billion.
Big Spenders
Countries with the world’s largest military expenditures in 2015.
U.S.
China
Saudi Arabia
Russia
U.K.
India
France
Japan
Germany
South Korea
$0 $100
Military expenditures, in billions
Source: Stockholm International Peace Research Institute
they see defense as a sector that
can help diversify their oil-
based economies.
The Saudi government, the
world’s No. 3 defense spender
after the U.S. and China, last
year said it wants half the
The proposed LSE-Deutsche Börse tie-up sparked monopoly fears.
said it plans to buy back £200
million ($249 million) of its
shares, an amount the LSE
said is “broadly equivalent to
the return it would have made
had the merger with Deutsche
WTI crude 49.30 À 1.92%
The Galaxy S8 is the com-
pany’s most closely watched
product launch in years. “If
the product is really good, it
will help bring back the loyalty
and trust in the Galaxy brand,”
said Samsung’s mobile chief,
D.J. Koh, in a meeting with
The Wall Street Journal at the
Galaxy S8 launch event.
EMILY PRAPUOLENIS/THE WALL STREET JOURNAL
The company plans to an-
nounce the smartphone’s price
soon. It will hit shelves on
April 21.
Samsung will lean heavily
on a new virtual assistant,
similar to Apple Inc.’s Siri,
called Bixby, that uses artifi-
cial intelligence to field com-
plex tasks. The feature, which
is turned on with a button on
the side of the phone, can
complete multiple tasks with a
single voice command, such as
locating a nearby steakhouse
and hailing a taxi.
Samsung’s monthslong in-
vestigation into the Galaxy
Note 7 debacle concluded in
$200 $300 $400 $500 $600
THE WALL STREET JOURNAL.
money it allots for military
equipment to go to local firms
by 2030, up from 2% today.
Even if the kingdom only
partly achieves its goal, the im-
pact will reverberate through
the global defense industry. In
Börse proceeded as planned.”
The British exchange said it
regrets the commission’s deci-
sion, but that it was confident
in its prospects as a stand-
alone entity and that it would
Thursday, March 30, 2017 | B1
10-Year JGB yield 0.055%
January that the root cause of
the overheating could be
traced to battery manufactur-
ing problems and design flaws.
To avoid a repeat mistake,
Samsung adopted an eight-
point quality plan and added
other safety measures for the
Galaxy S8. The device, in a
break with previous launches,
doesn’t feature a more power-
ful battery. But Samsung em-
ployed cutting-edge 10-nano-
meter chips that take up less
space and work the battery
less strenuously.
“It could have happened to
anybody,” Mr. Koh said, refer-
ring to the Galaxy Note 7 epi-
sode. Samsung’s investigation
into the device’s battery
problems allowed the com-
pany to obtain “tremendous
data that we believe will be
important for all our prod-
ucts,” he said.
 Samsung goes to greater
lengths to impress.................. B4
NICOLAS PARASIE/THE WALL STREET JOURNAL
2015, Saudi Arabia military ex-
penditures totaled around $87.2
billion, according to research
firm Stockholm International
Peace Research Institute.
“We spend more than Britain,
and France, and don’t have in-
dustry. We have a strong de-
mand that we should meet in-
side Saudi Arabia,” Saudi
Arabia’s defense minister, Dep-
uty Crown Prince Mohammed
bin Salman, said in a televised
interview last year.
The prince added that, under
new official policies, the Saudi
government would agree to de-
fense deals with foreign provid-
ers “only if they are linked to lo-
cal industry.”
That message is trickling
down. AM General, the South
Bend, Ind.-based maker of the
Humvee, said in February it was
starting to export commercial
chassis abroad. That allows cus-
tomers, including partners in
Please see GULF page B2
continue to explore potential
deals in the sector.
Deutsche Börse supervisory
board Chairman Joachim
Faber also said he regretted
the commission’s decision,
adding it was “a setback for
Europe…and the bridge be-
tween continental Europe and
Great Britain.”
CHRIS RATCLIFFE/BLOOMBERG NEWS
The EU’s decision now
forces the companies to switch
tack and look for ways to drive
earnings higher independently
without the hundreds of mil-
lions of dollars in cost savings
and additional revenue that
the proposed tie-up was
meant to deliver.
The companies proceeded
with their plans despite the
U.K.’s vote to quit the EU last
summer. On Wednesday, the
U.K. government triggered Ar-
ticle 50 of the Lisbon Treaty,
the formal mechanism to with-
Please see MERGER page B2
10-Year Treasury yield 2.388%
Chinese
Bolster
India’s
Startups
BY NEWLEY PURNELL
As the U.S.’s top technology
brands ramp up operations in
India, they are running into
unexpected resistance: their
Chinese equivalents stepping
in to bolster their Indian rivals
with billions of dollars in in-
vestments and expertise.
In recent years, Ama-
zon.com Inc., Facebook Inc.,
Uber Technologies Inc. and
others have announced ambi-
tious plans and rapid rollouts
in India, calling it one of the
last great untapped internet
economies.
The U.S companies plan to
use their war chests to domi-
nate India’s market of more
than 1.2 billion people, most of
whom are just now connecting
to the internet. The companies
have been able to use their
capital to capture significant
market share, but local start-
ups have put up a good fight,
challenging the U.S. giants
thanks to help from China.
More U.S. tech companies
are pouring money into their
Indian subsidiaries, expanding
their offerings directly into
the market as it starts to ma-
ture, and largely without the
regulatory challenges found in
China. Amazon is investing $5
billion in its operations in In-
dia, while Uber is putting over
$1 billion into the country. In-
dia is Facebook’s second-big-
gest market in terms of users,
after the U.S., and more peo-
ple use its WhatsApp messag-
ing platform in the country
than anywhere else.
But joining the battle for
India’s internet newcomers are
China’s tech titans—including
Alibaba Group Holding Ltd.
(e-commerce), Tencent Hold-
ings Ltd. (social networking)
and Didi Chuxing Technology
Co. (ride-hailing)—all of which
are providing muscle to their
Indian counterparts.
Alibaba this month led a
$200 million round of fund-
raising into a new e-commerce
arm of Indian mobile-pay-
ments and online-shopping
startup Paytm. That followed
its 2015 investment, with its
financial-services affiliate Zhe-
jiang Ant Small & Micro Finan-
cial Services Group, of more
than $500 million for a 40%
stake in One97 Communica-
tions Ltd., Paytm’s parent
company.
“India is an important
emerging market with great
potential,” said an Alibaba
spokesman.
Chinese interest in Indian
startups has shot up just as
U.S. investment has waned. In
2015 and 2016, Chinese tech
companies invested a total of
$3.2 billion in Indian startups,
more than twice the $1.4 bil-
lion invested in Indian start-
ups by U.S. companies during
those years, according to AVCJ
Research in Hong Kong.
An Amazon spokeswoman
declined to comment on how
Chinese investments have
changed the playing field in
India, but said the company
has made rapid strides in the
country and is “committed to
long-term investment” in e-
commerce infrastructure and
technology in India.
Please see INDIA page B4
INSIDE
IN STOCK PICKS,
TACK SHIFTS
AT BLACKROCK
FINANCE & MARKETS, B7
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
B2 | Thursday, March 30, 2017 THE WALL STREET JOURNAL.

INDEX TO BUSINESSES BUSINESS & FINANCE

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 Fairfield Greenwich Roche Holding.............B3

Access Industries ....... B2
Advanced
Electronics..........B1,B2
Alibaba Group
Holding......................B1
Alphabet......................B3
Amazon.com..........B1,B4
AM General.................B1
Apple...........................B3
B Tesaro..........................B8
Baidu ........................... B1
BlackRock....................B7
Boeing ......................... B2
Bremer Financial.........B2
Bristol-Myers Squibb.A7
C-D
Group.........................B5 S
Ford Motor..................B1
Samsung Electronics..B1
G Sanofi..........................B3
Genentech...................B3 Scana...........................A2
General Electric .......... B4 Snap.............................B8
Sony Music
GlaxoSmithKline.........A7
Entertainment..........B2
H-K
T
Hike ............................. B4
J.P. Morgan Chase......B5 Tencent Holdings........B1
Kuehne Nagel
International.............B4 Tesla............................B1
Thales..........................B2
L
Toshiba........................A1
Lockheed Martin.........B2 T.R. Winston...............A7
London Stock Exchange
Group.........................B1
U
Uber Technologies.B1,B3
M

CHRIS O’MEARA/ASSOCIATED PRESS

Cell Biotherapy...........A7 Universal Music
Clovis Oncology .......... B8 Master Toys................B4 Group ....................... B2
Comerica......................B2 P V
Deutsche Börse...........B1 Paulson........................B5 Vivendi ........................ B2
DHL..............................B4 R W
Didi Chuxing................B1
Raytheon.....................B2 Warner Music Group..B2
F Regeneron Westinghouse
Facebook...........B1,B3,B8 Pharmaceuticals.......B3 Electric......................A1

INDEX TO PEOPLE Prince, seen performing at the Super Bowl XLI halftime show in Miami in 2007, died of an opioid overdose in April.

C
Calk, Steve..................A7
D
Deora, Madhur............B4
H M
Han, Edward...............A3
Hauser, Stephen L......B3
J Musk, Elon..................B1
Jackson, Alfred...........B2
Jensen, Marcia............B2
Jones, Van...................B2
K
Kalanick, Travis...........B3
Koppelman, Charles....B2
McMillan, Londell.......B2
Murphy, Charles..........B5
N Z
Nelson, Prince Rogers B2
Nelson, Tyka ............... B2
P
Pulitzer, Jonathan ...... B4
S
Schreiber, Zvi..............B4
T
Tsunakawa, Satoshi...A1
Tusk, Donald...............B8
Zagieboylo, Cyndi ....... B3
Prince Sale Stirs Discord
Universal signed three
deals with Prince’s
estate, including rights
to unreleased music
BY HANNAH KARP
Universal Music Group in
Prince estate, people familiar
with the matter said.
Sony Music executives were
excluded from bidding despite
repeated attempts to engage
with the estate, people famil-
iar with the negotiations said.
Warner Music, which released
Prince’s first 18 albums, also
voiced interest but received
chance to bid on all licensing
deals, and that they made the
best possible deals for the es-
tate. Mr. Koppelman called the
complaints “sour grapes.”
Mr. McMillan said that it
was “not all about the
money”: He said that he and
Mr. Koppelman weighed fac-
tors such as each company’s
stay on as an adviser to
Comerica, but a judge decided
otherwise. Two of the heirs
Mr. McMillan doesn’t repre-
sent—Tyka Nelson, the late
singer’s younger sister, and
half-brother Omarr Baker—
didn’t want him to stay on.
Ms. Nelson and Mr. Baker,
who are represented by a team

MERGER pants, the EU in February de-

termined the
wouldn’t address concerns
solution

that the merger would create

January won the licensing
rights to Prince’s “vault,” a
trove of the late pop star’s un-
released music, but there
minimal information in re-
sponse, some of the people
said. Estate representatives
said Universal didn’t get much
size, scope, expertise, copy-
right-management ability and
executives.
Mr. McMillan said the gen-
that includes former Prince
adviser and CNN political
commentator Van Jones, al-
leged in a January court filing
Continued from page B1 a de facto monopoly in fixed- wasn’t much of a bidding war. information about the assets eral lack of transparency was that Mr. McMillan had been
draw from the EU, opening a income trading and demanded The auction process is rais- either—because there wasn’t typical for such high-profile making other deals that prior-
two-year window for talks set the LSE sell its stake in MTS. ing questions among people much available. dealings and that there was a itized his own interests over
to disentangle decades of The fixed-income clearing close to Prince’s estate about The deal, which concerned particular dearth of informa- maximizing revenue for the
close ties. business of LSE’s French clear- whether the estate could have the unreleased music in “the tion on Prince’s musical assets. estate. Mr. McMillan denied
Despite claims from ing operation is “vitally de- earned more for the rights vault” and the licensing rights The process has deepened those charges.
Deutsche Börse executives pendent” on trading feeds than the $30 million that they to Prince’s independent al- the divide between the artist’s The heirs declined to com-
that Brexit made the merger from LSE’s MTS platform, ac- said Universal ended up agree- bums, was the last of three six heirs, who splintered into ment through their represen-
that much more important to cording to the EU. ing to pay. signed by Prince’s estate with two groups following the art- tatives.
ensure stable financial rela- “Without these trading The deal for the rights to Universal Music in the past six ist’s death, butting heads over Mr. McMillan said he and
tions between London and feeds, the viability of [the Prince’s independently re- months. issues from a tribute concert Mr. Koppelman presented all
Frankfurt, the U.K. govern- French clearing] business line corded music was sealed less All three deals were guided to the singer’s legacy. the offers in all three bidding
ment’s plans disrupted the in the future would be se- than a year after the artist by the advisers in charge of Mr. McMillan is acting as a contests to interim adminis-
deal. verely undermined,” the EU died in April of an opioid over- making deals for the estate: business adviser to three of trator Bremer Trust, a unit of
German regulators and offi- said, adding it therefore dose without leaving a will. All Prince’s former lawyer Londell the six heirs, though he Bremer Financial Corp.,
cials opposed the companies’ couldn’t tell whether the di- three major record labels—Vi- McMillan and entertainment doesn’t have an advisory role which made the final deci-
plans to locate the combined vested business would have vendi SA’s Universal, Sony executive Charles Koppelman. with the estate’s new adminis- sions.
entity’s headquarters in Lon- been a viable competitor in Corp.’s Sony Music Entertain- With a combined value of trator, Comerica Bank & Bremer Trust spokeswoman
don, which would soon find it- the fixed-income market. ment and Access Industries’ about $60 million, the three Trust. Prince’s half-brother Marcia Jensen said that the
self outside the bloc. To Deutsche Börse’s sur- Warner Music Group—had deals netted each man about Alfred Jackson recently ended company’s “fiduciary role as
prise, the London-based ex- voiced interest in the rights, $3 million, people familiar his business relationship with the court-supervised special
change in late February re- but his estate’s interim admin- with the negotiations said. Mr. McMillan, according to a administrator of the Prince
buffed the EU’s demands. The istrator submitted only a pro- Messrs. Koppelman and representative for Mr. Jack- Rogers Nelson estate was to
The EU said the LSE defended its position by posed deal with Universal to McMillan said Sony, Warner son. preserve, protect and maxi-
merger would create a saying that the MTS subsid- the court overseeing the and Universal had ample Mr. McMillan had pushed to mize the value of the assets.”
iary is part of its Italian busi-
de facto monopoly in ness, a significant source of
fixed-income trading. revenue and profit, and any
sale would damage the ex-
change’s relationship with se-
curities regulators in Europe.
HEARD what Tesla needs to develop
the Model 3 sedan on which
its valuation rests. Tesla has
said it expects between $2 bil-
Wheel of Fortune
Market value of major
auto manufacturers
dence still argues strongly
against Tesla being worth $46
billion or anything close to it,
even if it raises enough cash to
Faced with that opposition, After LSE’s February an- Continued from page B1 lion and $2.5 billion of capital make the Model 3 a mass-mar-
Deutsche Börse had tried since nouncement, both companies Didi Chuxing (China’s answer to spending this year before the General Motors ket vehicle.
September to discuss the pos- said they would continue to Uber, in which Tencent also has Model 3 starts production. The $53.3 billion But actively making a bet
sibility of establishing dual implement the merger, but an investment) is plausible. The company also has $2.4 billion against the stock is another
headquarters in the U.K. and in also signaled they would each odds of that vehicle being a in long-term debt maturities Ford Motor matter. Even before Tencent
Germany as a compromise. But be ready to stand indepen- Tesla, though, look slim given over the next two years, at a took its stake, Tesla’s top five
$46.3
the LSE refused to address the dently of the other company. China’s policy of supporting its time when operating cash flow shareholders collectively
issue, according to a person fa- Recent financial results domestic electric-car industry. is persistently negative. Tesla owned 53% of the company.
miliar with the matter, repeat- seem to support their claims. Tencent, like many Chinese Yet even if Tencent doesn’t $45.3
Such concentrated ownership
edly removing it from meeting Last year, Deutsche Börse in- companies, prefers to spread put another dime into Tesla meant its stock was prone to
agendas over recent months. creased earnings 14% from the its bets around and probably and potential synergies come Fiat Chrysler Automobiles surges when it merely hopped
Late in the EU’s review, the prior year, adjusted for the sees its investment as the ba- to naught, Tuesday’s invest- over financial bars that the
$17.1
exchanges had offered a single sale of a business, but the fig- sis for possible future coopera- ment slightly increased the company had recently lowered.
remedy to assuage any anti- ures also partly reflect bene- tion, yet it implies no further auto maker’s chances of suc- Source: FactSet Now another 5% of the stock is
trust concerns: to sell the fits from cost-cutting and commitment. And the funds it cess.That is because Tesla will THE WALL STREET JOURNAL. basically removed from the
LSE’s French clearing opera- gains from its derivatives- plowed into Tesla shares don’t have to return to the equity market.
tion to pan-European rival Eu- trading venue. For the LSE, represent fresh cash for the market many times in the fu- price, means that future capi- Tesla’s gain of about 30% so
ronext NV for €510 million earnings in 2016 rose 17%, company beyond its already ture for billions, and possibly tal calls will be less dilutive. far this year has cost short
($551 million). LSE on when excluding one-time costs announ-ced $1.2 billion capital tens of billions, of dollars. Given the onslaught of com- sellers a pretty penny.
Wednesday said that proposed associated with an asset sale raise. Tencent’s vote of confidence, petition and execution risk, —Charley Grant
sale had been terminated after and an acquisition. That amount is less than like any boost to Tesla’s share though, the weight of the evi- and Spencer Jakab
the EU’s decision. —William Wilkes
After a test of the proposed in Frankfurt
remedy with market partici-

ADVERTISEMENT
contributed to this article.
GULF
The Mart Continued from page B1
the Gulf, to assemble custom-
ized versions of armored vehi-
BUSINESS OPPORTUNITY cles locally.
“The bottom line is they
want to spend more of their
money in their country,” said
Nguyen Trinh, an executive at
AM General.
Saudi Arabia’s Advanced
Electronics Co., a Riyadh-based
supplier of defense equipment
such as signal jammers and la-
sers, recently entered a new
partnership with Raytheon Co.
for a Saudi government contract
to develop cybersecurity capa-
bilities. Raytheon declined to
comment on the contract.
Local defense firms cite the
deal as evidence foreign suppli-
ers are scouting for new or ex-
panded partnerships. “Instead
of us pulling them, they are the
ones pushing, they are ap-
proaching us,” said Mohammed
Al Khalifa, vice president of
TRAVEL AEC, which is jointly owned by
British weapons maker BAE Sys-
tems PLC and Saudi investors.
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opportunities for mutual growth
of business,” Bernard Dunn,
president of Boeing Middle East,
North Africa and Turkey, said in
an email.
But such opportunities are no
simple matter for foreign con-
tractors. Policy rules in the U.S.
and Europe would allow the
manufacturing of some compo-
nents to be outsourced, but the
rules are stricter for sensitive
military technology.
In Abu Dhabi two years ago,
a senior U.S. Defense Depart-
ment official told potential Gulf
buyers and industry executives
The Saudis want half
the money they allot
for military gear to go
to local firms by 2030.
that they wouldn’t be allowed in
the foreseeable future to buy
Lockheed Martin Corp.’s radar-
evading F-35 Joint Strike
Fighter, according to Danny
Sebright, president of the U.S.-
U.A.E. Business Council and a
former Defense Department of-
ficial, who was there.
The official alluded to rules
to ensure Israel maintained a
competitive military edge in the
region.
The Emiratis decided to turn
to Russia. The U.A.E.’s defense
ministry said in February it
would jointly develop a light
combat fighter with Russia’s
state-run defense corporation
Rostec.
“It was completely a state-
ment to the Americans and to
the Europeans that, if you don’t
give us what we need, if you
don’t help us with what we
need, we have no choice but to
try to get it somewhere else to
protect our legitimate security
needs,” said Mr. Sebright.
Saudi Arabia reached a deal
earlier this month with China to
jointly manufacture drones.
“It’s a very important mar-
ketplace, and we have to adapt
to it,” said a Gulf-based execu-
tive with a U.S. defense firm.
Many Gulf-based defense
companies were established de-
cades ago under offset pro-
grams that required foreign
suppliers to invest part of their
compensation locally. The push
into manufacturing, however, is
new.
Alsalam Aerospace Indus-
tries, a firm based in Riyadh and
partly owned by Boeing, wants
to manufacture its first com-
plete aircraft by 2030. Last year,
with Boeing’s help, the company
started assembling wings and
forward fuselages in its factory
to upgrade F-15 jet fighters for
the Royal Saudi Air Force.
“We want to be the Lockheed
Martin or the Boeing of Saudi
Arabia,” said Yehya Al Ghoraibi,
the company’s chief executive.
The company is expanding
into helicopter maintenance and
repair. In the more distant fu-
ture, Mr. Ghoraibi is considering
expanding into areas ranging
from tank manufacturing to
bomb making.
The U.A.E. is already produc-
ing armored vehicles. In Febru-
ary, the country’s armed forces
awarded a contract of 1,750 ar-
mored vehicles to an Emirati
company, NIMR Automotive. It
was a rare example of a local
business securing a deal of such
size.
In 2014, the U.A.E. merged
more than a dozen state-owned
firms under a conglomerate
called the Emirates Defence In-
dustries Co. It is led by Luc Vi-
gneron, the former head of
Thales SA, Europe’s leading de-
fense electronics maker.
NIMR, one of the conglomer-
ate’s subsidiaries, produces
about four vehicles a day and is
looking to export to Eastern Eu-
ropean and Asian markets.
In a sign of how the develop-
ment of the local defense indus-
try is shaping career perspec-
tives, many of NIMR’s engineers
are Emirati.
“My father thought a suc-
cessful path would be in oil and
gas,” recalled 29-year-old Om-
ran Alhashemi.
 For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
THE WALL STREET JOURNAL. Thursday, March 30, 2017 | B3

BUSINESS NEWS

Eczema Drug Gets FDAClearsDrugtoTreatSevereMS

‘Responsible’ Price BY THOMAS M. BURTON

The Food and Drug Adminis-

BY JOSEPH WALKER
Regeneron Pharmaceuti-
cals Inc. and Sanofi SA said
they would charge $37,000 an-
medical officer. ICER recently
shared an early version of its
draft evidence report with Re-
generon so the companies
could take it into account
tration approved a multiple-scle-
rosis drug called Ocrevus, the
first treatment for the most se-
vere type of the disease, known
as primary progressive MS.
The medicine, from Genen-

PAUL SAKUMA/ASSOCIATED PRESS

nually in the U.S. for their
newly approved eczema drug,
a price the companies said
they reached after months of
negotiations with pharmacy-
benefit managers.
The Food and Drug Admin-
istration approved the drug,
called Dupixent, for U.S. sale
on Tuesday. Through their ne-
gotiations, the companies said
they aimed to set a price the
pharmacy-benefit managers,
or PBMs, would find accept-
able. PBMs administer pre-
scription drug benefits for em-
ployers and insurers.
when setting Dupixent’s price,
Dr. Rind said.
Dupixent’s price falls within
the cost-effectiveness range
that ICER projected for the
drug in the draft report, which
was published on Friday.
It isn’t clear that all PBMs
agree the price is justified.
CVS Health Corp., one of the
largest PBMs, said it is working
to ensure the drug is available to
patients with a demonstrated
need for it. At least some PBMs
say Dupixent’s price is reason-
able given its significant medical
value to patients and when com-
pared with similar therapies for
psoriasis, another skin condi-
tech Inc., is generically called
ocrelizumab. Primary progres-
sive MS affects about 15% of
the estimated 2.3 million MS
patients in the world. The pa-
tients with this severe type
have watched for years as
more than a dozen other
treatments have emerged for
other MS patients. The FDA Genentech is planning to charge $65,000 a year for the company’s new multiple-sclerosis treatment.
also approved the drug for the
more common type of MS. between the ages of 20 and 50, chair, to aid in mobility. There pal investigator in pivotal
Genentech plans to charge though it can begin far earlier, are 14 different medicines that studies of the drug published
$65,000 a year for the treat- or as late as 75. Its course is are generally called disease- in the New England Journal of
ment, likely adding fuel to the highly unpredictable, hence the modifying, because they aren’t Medicine in December.
debate over drug prices. name of the more common form cures. They include Avonex, The drug was a product of
“This is an historic day for called relapsing-remitting multi- Copaxone, Tysabri and others. collaboration between Dr.
the MS community with the ple sclerosis, for which the drug These help to reduce central- Hauser’s team, other academic
approval of the first-ever also was approved. It can cause nervous-system inflammation partners and scientists at Ge-

$37,000
Annual charge set by Regeneron
and Sanofi for Dupixent.
In exchange, the companies
sought, and in some cases re-
ceived, assurances that the
PBMs wouldn’t implement cov-
erage restrictions that could
prevent patients from getting
the drug, Regeneron CEO
Leonard Schleifer said.
Dupixent will be one of the
most closely watched drug
launches this year, with global
annual sales potentially reach-
ing $3.13 billion in 2020 if it
gains favorable insurance cov-
erage, according to analysts
polled by FactSet.
As the companies worked to
set the price, Dr. Schleifer also
met with officials at the Insti-
tute for Clinical and Economic
Review, a nonprofit group in
Boston that analyzes the cost
and benefits of new prescrip-
tion drugs. Regeneron pro-
vided the group with previ-
ously unpublished data that
ICER requested for a continu-
ing analysis of eczema drugs,
said David Rind, ICER’s chief
MARK NEULING/CNBC/GETTY IMAGES
tion, that have list prices of treatment for people living a wide range of symptoms, like and reduce the number and nentech, part of Roche Group
$50,000 annually or more. with primary progressive MS. loss of balance and poor coordi- severity of flare-ups. of Switzerland. Ocrelizumab
“I’d characterize it as a re- This is a real game changer,” nation, fatigue and weakness. As Ocrelizumab was developed interferes with a type of white
sponsible price,” said Steven said Cyndi Zagieboylo, presi- the name suggests, it can go for MS based upon many years blood cells that can course
Miller, chief medical officer at dent and chief executive of the away and then flare up with lit- of basic scientific work in the from the bloodstream into the
Express Scripts Holding Co., National MS Society. “The Na- tle predictability. lab of Stephen L. Hauser, chief brain, leading to inflammation
the largest PBM. tional MS Society hopes this is The majority of MS suffer- of neurology at the University in the myelin covering of
Eczema, also known as just the beginning of the de- ers don’t become severely dis- of California, San Francisco, nerve cells. Damage to the my-
atopic dermatitis, is a common velopment of the next genera- abled or paralyzed, but many and director of the UCSF Weill elin sheath and to the underly-
condition that causes itchy tion of treatments for MS.” will need a cane or crutches, Institute for Neurosciences. ing nerve fiber are key facets
skin. Severe forms of the dis- MS typically strikes people or even a scooter or wheel- Dr. Hauser also was the princi- of the disease.
ease can be debilitating, caus-
ing large areas of patients’
bodies to be covered with in-
flamed patches of skin.
The FDA approved Dupixent
for adults with moderate to se-
vere forms of the disease for
whom topical treatments, such
as steroidal ointments, don’t
work. Regeneron and Sanofi
estimate that 1.6 million peo-
ple in the U.S. meet the FDA’s
approval criteria, but their
launch will focus on about
300,000 patients who are most
in need of treatment.
The companies will provide
copay assistance to some pa-
tients and pay rebates to in-
surers; after those costs are
taken into account, the compa-
nies estimate that net revenue
from the drug will be at the
“low” range of $30,000 to
$35,000, Dr. Schleifer said.
—Denise Roland
contributed to this article.

Leonard Schleifer of Regeneron. It will launch Dupixent with Sanofi.

Uber Offers Data on

Workforce Diversity
BY GEORGIA WELLS
AND GREG BENSINGER
Uber Technologies Inc. on
Tuesday published the first
breakdown of its workforce by
gender and ethnicity, part of
an effort to push back against
criticism that the ride-sharing
company’s culture is hostile to
women.
As of this month, women
comprised 36% of Uber’s em-
ployees, in line with other tech
companies, thanks to a preva-
lence of women in customer
support and other nontechni-
cal jobs. On the technical team,
15% of staff were women.
But Uber faces an uphill
battle improving its numbers.
There is a dearth of top tech
talent, and recent scandals
could hinder Uber’s ability to
attract job candidates who are
also being courted by other
companies.
Civil-rights groups have
been calling for transparency
into the makeup of Uber’s
workforce for nearly a year.
Last month, a former engineer,
Susan Fowler Rigetti, pub-
lished a stinging assessment of
the company’s workplace,
which she said was permissive
of sexual harassment and sex-
ism.
Chief Executive Travis Ka-
lanick acknowledged his com-
pany is late to post its report.
“I know that we have been too
slow in publishing our num-
bers,” he said in a statement.
“The best way to demonstrate
our commitment to change is
through transparency.”
Uber is one of the last big
tech firms to release its diver-
sity report. Companies includ-
ing Apple Inc. and Facebook
Inc. began reporting their di-
versity statistics in 2014 in re-
sponse to calls for measuring
progress toward more diver-
sity in the industry.
Overall, Uber’s workforce of
about 11,000 contains a
slightly higher portion of
women than Apple, Alphabet
Inc.’s Google and Facebook, al-
though a smaller portion of its
leaders and technical employ-
ees are women. Uber doesn’t
count its roughly 1.5 million
contracted drivers.
In the U.S., 8.8% of Uber’s
employees are black and 5.6%
are Hispanic. Apple employs a
larger share of black and His-
panic employees than Uber,
particularly in technical and
leadership roles.
But experts in diversity cau-
tion against relying on top-line
figures to understand how
women and underrepresented
minorities are advancing in
the workplace. The data don’t
reflect the internal climate for
these employees.
Separately, Uber said Tues-
day that it is pulling its opera-
tions out of Denmark in April
in protest of local laws that
are favorable to the taxi indus-
try there.
The company has pulled out
of other markets before, in-
cluding Taiwan earlier this
year and Austin, Texas, last
year.
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To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
B4 | Thursday, March 30, 2017 THE WALL STREET JOURNAL.

TECHNOLOGY WSJ.com/Tech

Samsung Makes Edgy Bid to Impress Israeli

When was the last time Freight
any new smartphone really
looked different from last
year’s model? Well, the Sam-
sung Galaxy S8 that debuted
Wednesday looks like it
Startup
beamed in from the year
2025.
This thing is nearly all
Doubles
screen. The S8’s bright pixels
curve all the way to its
edges, with
just a sliver
Funding
of metal at BY ERICA E. PHILLIPS
the top and
bottom. In- Shipping-technology
side, there’s startup Freightos raised $25
PERSONAL Bixby, a vir- million in a funding round led
TECHNOLOGY tual assis- by General Electric Co.’s GE
GEOFFREY A. tant that Ventures, the company said
FOWLER promises to Wednesday.
operate any The Series B round brings
MARK KAUZLARICH/BLOOMBERG NEWS

aspect of the Israel-based company’s to-

your phone by voice. And if tal funding to $50 million—
you want, the S8 can double one of the most well-funded
as—get this—a desktop com- entities in a group of technol-
puter. ogy startups trying to take the
What’s this feeling? Oh booking of freight transporta-
yeah, gadget envy… some- tion online.
thing many iPhone owners Freightos operates an on-
will struggle with for the line marketplace that it likens
next few months. to travel-booking websites,
I haven’t had a chance to D.J. Koh, president of mobile communications at Samsung Electronics, with the Galaxy S8 smartphone on Wednesday in New York. where shippers can compare
test Samsung’s claims to de- rates and book transportation
termine whether the S8 Is a but measures 6.2 inches di- Other aspects of the S8 you’re watching to your TV. Is it a Chromebook or an for their cargo. Freightos spe-
good buy; I’ll do that ahead agonally. hardware will be less sur- (You can even ask her to Android tablet? There are a cializes in trans-Pacific air and
of its arrival in stores April Longer screens make a ton prising to Samsung follow- change her voice to male.) lot of unanswered questions. ocean shipments. Shortly after
21. But from my first look, of ergonomic sense. Within a ers. It now uses USB-C plugs, There’s a dedicated Bixby Samsung says Microsoft Of- launching its online platform
it’s clear the S8 is Samsung year, I expect many—even a the new standard plug for button on the side of the fice and Adobe Lightroom last July, Freightos bought
at its most ambitious, push- new iPhone—to join this phones and laptops. It’s wa- phone. She also uses the have been optimized for Spanish startup WebCargoNet,
ing both its proven hardware trend. LG kicked it off last ter-resistant. The standard camera to visually identify DeX, but notably Google’s adding its database of global
chops and its investments in month by elongating the headphone jack remains, and products and even famous Chrome browser hasn’t. Non- airfreight rates.
software to keep Android screen in its G6 phone, you can expand storage. places. supported Android apps sim- Freightos and other freight-
people in the fold. though it doesn’t curve There’s one hardware dis- I didn’t get to test many ply appear as they do on a booking platforms compete
The question is: Will it be around the sides like the appointment: The back cam- Bixby functions. Samsung phone, as rectangles. with traditional forwarders,
enough to douse memories Samsung. era is largely the same as says she’ll work with a hand- Although Microsoft has though the startups have yet
of the fiery end of its last big The new shape does come last year’s S7. That was a re- ful of Samsung’s own apps promoted the idea that to grab significant market
phone, the Galaxy Note 7? with a few compromises. ally good camera, but others when the S8 comes out in phones are powerful enough share. The world’s largest
What stands out most is Battery life, a problem with like Apple have moved on to April. It plans to add Bixby to replace laptops, its mobile freight forwarders, such as
how much Samsung has past Samsung phones, isn’t multiple lenses that let you to other connected Samsung Windows 10 is available only DHL Global Forwarding and
evolved phone design beyond likely to improve now that zoom or do interesting devices, like TVs and wash- on phones that almost no- Kuehne + Nagel International
Apple. Its ace in the hole is there’s more screen to light things with depth. ing machines. body uses. With DeX, Sam- AG, ship millions of containers
screen tech. Samsung was up. The long screen, whose The S8’s biggest ambi- But Samsung faces gigan- sung might have the distri- each year and often pay signif-
able to do away with most of aspect ratio is 18.5:9, looks tions—and biggest risks—are tic competition in getting bution power to make the icantly lower rates for ocean
the frame around its screen, great if you’re watching an in its software. It runs An- other apps, services and de- idea finally catch on. freight than smaller competi-
and bend its edges so it ap- ultra-widescreen movie, but droid N, but Samsung wants vices to join in. Bixby com- That’s assuming Samsung tors, according to supply-chain
pears to float in your hand. will give you black bars on to give reasons to choose its petes with Apple’s Siri, doesn’t blow it again. The consultants Armstrong & As-
This isn’t a gimmick: Be- the sides of more common phones over Android rivals Google’s Assistant, Amazon’s memory of the fires that sociates.
cause of design, this bigger 16:9 HD videos. like the Pixel, a high-end Alexa and Microsoft’s Cor- caused an unprecedented re-
phone doesn’t feel bigger. Since there’s no frame to phone created by Google it- tana. There just won’t be call of the Note 7 are still
Now there’s a 5.8-inch screen hold a physical home button, self. enough space on the island raw. Samsung says the S8
in a form only slightly taller it is now part of the screen, This is the first Samsung for all of them—and Bixby is will go through its new 8-
Freightos raised
than last year’s S7 with a 5.1- and responds with a little product to include the vir- last to arrive. point battery quality system $25 million to help
inch screen—the old fore- haptic jiggle when you press. tual assistant dubbed Bixby. The S8 has one other un- but didn’t have further spe-
head and chin are now barely The fingerprint reader has She—yep, another AI that expected software talent: cifics. For example: How
finance its efforts in
there. (Measuring screens is moved to the back of the defaults to a female voice— With an adapter, the S8 can many phones will be X-rayed shipping technology.
so confusing we had to make phone, and you’ll have to can take voice commands for transform into a computer, for battery problems? If just
a chart, but rest assured, the learn not to accidentally anything you’d normally ac- capable of driving a monitor, one phone combusts, Sam-
new phone has significantly smudge the camera when complish by touching your mouse and keyboard. It’s ac- sung is toast—pun intended.
more screen area—and about reaching for it. You can also phone, Samsung says. For ex- tually a Samsung-modified Samsung wants to put its With the new funding, Chief
half a million more pixels.) unlock an S8 with your face, ample, you can ask Bixby to version of Android called battery woes behind it, but Executive Zvi Schreiber said
Not big enough? A second or by using a front-facing in- show you the last photo you DeX, which creates a desk- that’s going to take more Freightos aims to expand the
model called the S8+ follows frared camera to scan your took, change the screen top-like experience including than just having the coolest- number of routes available, in-
the same squeezed design iris. brightness or beam what resizable windows. looking phones out there. cluding more services to and
from Europe. The company
also wants to provide its soft-
ADVERTISEMENT ware to freight forwarders,
companies that help retailers
Legal Notices and manufacturers book their
cargo on ships and planes. Mr.
Schreiber said Freightos is
BANKRUPTCIES providing its software in some
capacity to several top global
  
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have launched their own baba is able to help with, he “Freightos has helped many
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© 2017 Dow Jones & Company, Inc.
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when it forced Uber to give up The “enormous and complex” Master (HK) Toys isn’t a
All Rights Reserved. +,, # 3#  )277   , %  $'     =       on China, has had a stake in ride-sharing demands require Freightos customer but plans
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the company behind India’s Didi spokeswoman. Schreiber 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. Thursday, March 30, 2017 | B5

FINANCE & MARKETS

Bank Looks for Post-Brexit Home Pound

J.P. Morgan scours
Europe as it weighs
changes before the two-year
negotiations finish.
Slips on
regulatory effects and
logistics of new base
“It’s complex and there is
no easy solution to this,” said
Joe Cassidy, a partner at con-
sultancy KPMG. Closely
Step to
BY MAX COLCHESTER
watched factors include
French elections and whether
the EU allows the U.K. to grad-
Leave EU
LONDON—A group of 75 ually transition out of the
J.P. Morgan Chase & Co. staff trading bloc, Mr. Cassidy said. BY CHELSEY DULANEY
spent the past nine months Each U.S. bank is different,
evaluating European cities on but their plans share common The pound steadied but re-
factors ranging from employ- themes: to build on infrastruc- mained lower Wednesday as
ment law to the frequency of ture in existing offices across the U.K. formally began the
flight delays at local airports. Europe, keep as much as pos- process to exit the European
They are picking the bank’s sible in London and see what Union.
SIMON DAWSON/BLOOMBERG NEWS

new homes after Britain’s exit happens, executives say. The British currency was at
from the European Union. Goldman Sachs Group Inc., $1.2408 midday in New York,
The bank is checking out as which already has a banking down from $1.2450 late Tues-
many as eight cities including license in Frankfurt, is upgrad- day but up from $1.2377 dur-
Paris, Frankfurt, Luxembourg ing infrastructure in several ing Asian trading Wednesday.
and Dublin, people familiar European cities and is prepar- Nine months after Britain
with the plans say. Its staffers ing to shift hundreds of staff, voted to leave the EU, the U.K.
have begun pulling together Richard Gnodde, a vice chair- formally notified the bloc on
paperwork to apply for li- man at the bank, said recently. Wednesday that it will leave,
censes. It has scouted for real J.P. Morgan CEO James Dimon says up to a quarter of the firm’s 16,000 U.K. employees may move. Morgan Stanley favors Dublin becoming the first country to
estate in locations including as its main European subsid- do so. The triggering of Article
Dublin and Frankfurt. A final ents in Asia and Latin Amer- If J.P. Morgan decides to turn Each venue has distinct iary but is considering Paris 50 of the Lisbon Treaty, which
decision on its Brexit plans ica, and a sprawling back- Paris into a hub that can sell pros and cons. The bank’s and Frankfurt as secondary governs EU law, opens a two-
will be made in the coming office operation in the English products across the whole of Frankfurt office, for instance, options, according to people year window for Britain to ne-
months. seaside town of Bournemouth Europe, it has a choice. It can doesn’t have the infrastructure familiar with the plan. gotiate the terms of its exit
J.P. Morgan is a U.S. giant, helps process transactions for either connect the Paris to host a major trading plat- At Citigroup Inc., executives from the bloc.
but it employs 16,000 people its global clients. branch to another European form. Space in existing offices have a spreadsheet rating cit- Investors had been expect-
in the U.K., and in 2015 a third For its European clients, subsidiary or get regulatory might be tight; the unit al- ies on 26 factors as it decides ing the formal negotiations for
of its $33.5 billion of invest- that compact setup might not clearance to transform it into ready houses around 450 em- where to shift a chunk of its weeks, which is likely limiting
ment-banking revenue came function after Brexit. Under a subsidiary and pump in capi- ployees. There are also exter- London-based investment the pound’s weakness, analysts
from Europe, the Middle East current EU rules, J.P. Morgan tal. nal factors to consider. bank, according to executives. said.
and Africa. That makes it Eu- can sell products to European Currently, J.P. Morgan has Germany will hold elections These banks are hoping to ini- ”Much of the bad news and
rope’s largest investment bank clients from London and set three European subsidiaries this year featuring candidates tially need to move only hun- uncertainties are priced in the
and one of the most promi- up a network of branches with banking licenses: a bank with varying views on busi- dreds of jobs each, executives currency,” said analysts at TD
nent among scores of foreign across the continent. But after in Dublin, one in Luxembourg ness. The bank also has to say. Securities in a research note.
lenders trying to figure out Brexit that will probably no and a Frankfurt-based invest- make sure there is enough Once new sites are selected, “What’s more, actual negotia-
their post-Brexit futures. longer be the case. J.P. Morgan ment bank that handles some space in schools for its staff’s applying for new banking li- tions do not begin until late
On Wednesday, British Chief Executive James Dimon of the lender’s euro clearing children. On the plus side, censes could take up to a year. Q2, leaving the market with a
Prime Minister Theresa May has said up to a quarter of the operations. It also has Frankfurt is home to the Euro- In J.P. Morgan’s case, any deci- bit of a grace period.”
officially declared the U.K.’s company’s staff in the U.K. branches in several major Eu- pean Central Bank and near sion to shift capital and exper- Meanwhile, the dollar con-
intention to quit the EU, may have to move. ropean cities including Am- some big German corporate tise from its U.K. subsidiary tinued to edge higher as inves-
touching off fraught negotia- Fixing for Brexit isn’t sterdam, Milan and Brussels. clients. into a European unit then re- tors refocused on the U.S.
tions with Brussels. London’s easy. Maintaining an office on The bank’s executives are Once the divorce talks be- quires sign off from multiple economy and path for U.S. in-
banking industry will be a key the Continent isn’t enough to still deciding which operating gin, banks will embark on a regulators including the U.S. terest rates. The WSJ Dollar
sticking point. insulate the bank from Brexit’s model to use. Given the uncer- balancing act. The longer they Federal Reserve, Britain’s Pru- Index, measuring the U.S. cur-
Like its American peers, J.P. effects. For instance, J.P. Mor- tainty around Brexit negotia- wait to adjust operations, the dential Regulation Authority rency against 16 others, rose
Morgan concentrated much of gan has operated a fancy of- tions, the bank is hedging its more clarity they will have re- and the European Central 0.1%.
its European corporate and in- fice on Paris’s Place Vendome bets and considering plans to garding the Brexit deal the Bank. European client con- The U.S. currency fell to a
vestment-banking activities in for over a century. But that scale up both branches and U.K. may get. But if they wait tracts would then have to be four-month low earlier this
London. A cluster of British le- Paris office is only a branch, subsidiaries, according to peo- too long, they may not have rewritten out of that new en- week after Friday’s failure to
gal entities also handles its cli- or outpost, of its U.S. business. ple familiar with the plan. enough time to implement tity. repeal the Affordable Care Act
raised doubts that the Trump
administration will be able to

Foreigners Still Favor London Office Market

BY ART PATNAUDE the show,” said Walter
Boettcher, director of research
As the U.K. officially files at Colliers.
for divorce from the European The U.K. government for-
Union, one British asset re- mally kicked off Brexit on
mains fashionable for foreign Wednesday, delivering a letter
investors: shiny London office to Brussels officially saying it
buildings. intends to be the first country
Investors from outside the to leave the bloc. The event
U.K., especially those from marks the start of a two-year
China and Hong Kong, have window for negotiations with
dominated a London commer- the EU.
cial real-estate market that Foreign property buyers in
has otherwise gone quiet this London have been selective
year amid caution over Brexit. amid uncertainty about how
Since the start of January, these talks will proceed. De-
85% of the £3.86 billion ($4.8 mand has focused on large
billion) of central London of- buildings with low vacancy
fice deals have been from levels, and therefore less per-
overseas investors, according ceived risk, brokers said.
to property broker Colliers In- CC Land Holdings Ltd.,
ternational. backed by a Hong Kong prop-
“It’s foreign money driving erty tycoon, earlier this month
agreed to pay £1.15 billion for
the Cheesegrater, the nick-
name of the tallest tower in
London’s main financial dis-
trict. It was one of the city’s
biggest-ever real estate deals.
‘It’s foreign money
driving the show.’
—Walter Boettcher of
Colliers International
Investors from China and
Hong Kong bought more than
£3 billion of central London
property last year, more than
those from the U.S. or Europe,
according to real-estate broker
push through its tax-reform
and stimulus plans. The dollar
rebounded after data Tuesday
showed a measure of U.S. con-
JLL. cording to property brokers. sumer confidence at its high-
The drop in the value of Office rents are also ex- est level in 16 years.
sterling has been a major fac- pected to fall. Landlords have Federal Reserve officials
tor. While the yuan has lost been increasingly offering in- continue to indicate that the
value against the dollar, it is centives to tenants, such as central bank remains on track
up 15% versus sterling since rent-free periods or fitting out to raise rates this year. Chi-
the Brexit vote last June. office space free, brokers and cago Fed President Charles Ev-
In addition to making prop- analysts said. ans reiterated on Wednesday
erty cheaper, there is a view Now, with Brexit negotia- his support for higher U.S. in-
that sterling “may appreciate tions just starting, “nothing is terest rates, adding that he
once there is more clarity certain. As a result, caution is sees an increasing chance the
around Brexit and its eco- likely to remain a prevalent economy could perform better
nomic implications,” said Ben theme among investors and than he expected.
Burston, head of U.K. office occupiers,” said Colin Wilson, Fed-fends futures, used by
and capital markets research head of U.K. and Ireland and investors to wager on the
at JLL. broker Cushman & Wakefield. Fed’s interest-rate policy out-
Caution around the impact Some foreign investors are look, show a 48.5% chance
of Brexit has been com- taking a longer-term view, that the Fed will raise rates at
pounded by falling London of- brokers and analysts said. its June meeting. Higher rates
fice values after a multiyear Private investors from the typically support the dollar by
property boom. Office values Far East are “just looking to making U.S. assets more at-
in central London are widely play the safe-haven card,” said tractive to yield-seeking inves-
expected to drop in 2017, ac- Mr. Boettcher at Colliers. tors.

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died Monday in an apparent n Chartered Asset Management Pte Ltd - Tel No: 65-6835-8866 please contact: Freda Fung tel: +852 2831
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suicide. CAM-GTF Limited OT OT MUS 03/24 USD 310782.95 2.6 7.3 -2.1 2504; email: freda.fung@wsj.com
Police received a report of a
jumper at the Sofitel New York
SYLVAIN GABOURY/PATRICK MCMULLAN

Hotel in Midtown Manhattan

at 4:40 p.m. Monday, accord-
ing to law-enforcement offi-
cials. The man, who was later
identified as Mr. Murphy,
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
03/28 AUD
03/28 AUD
03/28 CAD
12.60
11.46
11.63
6.9
4.8
6.5
14.2
9.5
12.4
-0.2
-0.4
-1.3
LIST YOUR
China A-Share Fund Cls A EUR H OT OT HKG 03/28 EUR 12.21 6.3 11.2 -1.4
jumped from the 24th floor, China A-Share Fund Cls A EUR UnH OT OT HKG 03/28 EUR 12.22 6.0 13.3 NS

one of the officials said. He

landed on the fourth floor ter-
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
03/28 GBP
03/28 GBP
03/28 HKD
03/28 HKD
12.25
14.29
12.43
12.34
6.3
6.6
6.5
10.7
15.3
23.2
12.8
10.3
0.5
9.1
-1.1
-1.7
FUNDS
race. China A-Share Fund Cls A NZD H OT
China A-Share Fund Cls A NZD UnH OT
OT HKG
OT HKG
03/28 NZD
03/28 NZD
12.42
10.89
7.1
9.3
14.6
5.9
1.4
NS
Emergency Medical Services China A-Share Fund Cls A RMB (CNH) OT OT HKG 03/28 CNH 13.58 8.3 16.7 2.0
China A-Share Fund Cls A USD OT OT HKG 03/28 USD 12.29 10.4 11.2 -1.7
responded and pronounced the Charles Murphy was an architect of investments in AIG and Hartford. China A-Share Fund Cls A USD H OT OT HKG 03/28 USD 12.39 6.6 13.2 -1.0
China Greenchip-A Units AS EQ CYM 03/28 HKD 57.27 12.6 20.7 -4.9
man dead at the scene. China Greenchip-A Units AUD H AS EQ CYM 03/28 AUD 9.67 12.6 21.3 -5.4
“We are extremely sad- vestments into Mr. Madoff’s tect behind Paulson’s invest- China Greenchip-A Units CAD H AS
China Greenchip-A Units NZD H AS
EQ CYM
EQ CYM
03/28 CAD
03/28 NZD
9.40
9.94
12.4
12.7
19.9
22.1
-6.5
-4.6
dened by this news,” John firm over nearly two decades. ments in insurance companies China Greenchip-A Units USD AS EQ CYM 03/28 USD 9.47 12.5 20.6 -5.7
China Greenchip-A2 QDIs Units AS EQ CYM 03/28 HKD 10.43 12.5 20.6 -4.9
Paulson, founder of Paulson & Mr. Madoff was convicted of American International Group GC Hi Yield Inc - Cls A MDIs GBP H OT OT CYM 03/28 GBP 9.92 5.7 20.6 NS
Co., said in a statement. running a Ponzi scheme that Inc. and Hartford Financial GC Hi Yield Inc-Cls A MDIs AUD H OT
GC Hi Yield Inc-Cls A MDIs CAD H OT
OT CYM
OT CYM
03/28 AUD
03/28 CAD
9.49
9.55
6.3
6.0
22.9
21.4
14.4
12.9 In print & online. Contact:
“Charles was an extremely cost about $17.5 billion in Services Group Inc. Mr. Mur- GC Hi Yield Inc-Cls A MDIs NZD H OT OT CYM 03/28 NZD 9.83 6.4 23.5 15.4
GC Hi Yield Inc-Cls P HKD Acc sh OT OT CYM 03/28 HKD 14.98 6.2 21.9 13.1
gifted and brilliant man, a losses for customers around phy pushed for the companies GC Hi Yield Inc-Cls P HKD MDIs sh OT OT CYM 03/28 HKD 9.44 6.2 22.0 13.1
GC Hi Yield Inc-Cls P MDIs SGD H OT OT CYM 03/28 SGD 10.35 5.9 21.5 13.3
great partner and a true the world. He is currently to break apart as a way to im- GC Hi Yield Inc-Cls P USD Acc sh OT OT CYM 03/28 USD 15.08 6.1 21.8 13.0
friend.” serving a 150-year sentence in prove shareholder returns. GC Hi Yield Inc-Cls P USD MDIs sh OT OT CYM 03/28 USD 9.49 6.2 21.8 13.0 wsja.advertising@dowjones.com
GC Hi Yield Inc-ClsA MDIs EUR H OT OT CYM 03/28 EUR 10.37 5.6 19.8 11.8
Mr. Murphy’s stint at Paul- federal prison. Both companies resisted the Hi-Div Stk Cls A RMB H Acc OT OT HKG 03/28 CNH 11.37 13.7 21.2 5.5
Hi-Div Stk Cls A RMB UnH Acc OT OT HKG 03/28 CNH 13.54 10.5 23.8 7.6
son followed his work at in- Fairfield Greenwich agreed breakup plans that Mr. Murphy Hi-Div Stk Cls A1 OT OT HKG 03/28 USD 80.75 12.6 18.8 3.0
vestment firm Fairfield to pay $8 million to settle the advocated, but the firms did Hi-Div Stk Cls A2 AUD H MDIs OT
Hi-Div Stk Cls A2 CAD H MDIs OT
OT HKG
OT HKG
03/28 AUD
03/28 CAD
9.71
9.83
12.4
12.5
18.8
17.7
3.3
2.0
Greenwich Group and earlier civil-fraud charges and neither proceed with other changes, Hi-Div Stk Cls A2 GBP H MDIs OT OT HKG 03/28 GBP 9.30 13.5 18.0 1.7
Hi-Div Stk Cls A2 HKD MDIs OT OT HKG 03/28 HKD 10.11 12.9 19.1 3.0
at several investment banks. admitted nor denied wrongdo- including divestitures. Hi-Div Stk Cls A2 MDIs OT OT HKG 03/28 USD 11.05 12.4 18.6 2.9
Hi-Div Stk Cls A2 NZD H MDIs OT OT HKG 03/28 NZD 9.92 12.3 19.2 4.2
Mr. Murphy had joined Fair- ing. Fairfield Greenwich’s Last year, Mr. Paulson gained Hi-Div Stk Cls A2 RMB H MDIs OT OT HKG 03/28 CNH 9.62 14.1 21.5 5.4
field Greenwich in 2007 from founding partners agreed to be a board seat at AIG alongside a Hi-Div Stk Cls A2 RMB UnH MDIs OT
Hi-Div Stk Cls A2 SGD H MDIs OT
OT HKG
OT HKG
03/28 CNH
03/28 SGD
10.04
10.67
10.8
NS
25.0
NS
7.9
NS
Credit Suisse. In 2009, Fairfield part of an $80 million settle- representative of activist inves- Intel-China Converg Fund-A AUD H AS EQ CYM 03/28 AUD 10.08 14.5 17.5 NS
Intel-China Converg Fund-A CAD H AS EQ CYM 03/27 CAD 10.83 6.5 10.1 NS
Greenwich faced lawsuits and ment with some of its investors. tor Carl Icahn. Intel-China Converg Fund-A NZD H AS EQ CYM 03/28 NZD 11.38 10.9 13.1 NS
civil-fraud claims for helping to More recently, Mr. Murphy, —Leslie Scism Intel-China Converg Fund-A Units AS
Intel-Chinese Mainland Foc Fund AS
EQ CYM
EQ CYM
03/28 USD
03/28 USD
150.57
42.86
12.8
15.7
16.9
21.6
-2.2
0.2
steer billions of dollars of in- 56 years old, was a key archi- contributed to this article. VP Classic-A Units AS EQ HKG 03/28 USD 286.20 12.4 22.5 1.3
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
B6 | Thursday, March 30, 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
19217.48 s 14.61, or 0.08% Year-to-date s 0.54% 378.53 s 1.23, or 0.33% Year-to-date s 4.73% 2358.46 t 0.11, or 0.005% Trailing P/E ratio * 24.52 23.53
High, low, open and close for each 52-wk high/low 19633.75 14952.02 High, low, open and close for each 52-wk high/low 378.53 308.75 High, low, open and close for each P/E estimate * 18.27 17.55
trading day of the past three months. All-time high 38915.87 12/29/89 trading day of the past three months. All-time high 414.06 4/15/15 trading day of the past three months. Dividend yield 1.97 2.23
All-time high: 2395.96, 03/01/17

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

20000 385 2390

19500 375 2350

19000 365 2310

18500 355 2270

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

Session open Close

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

17500 335 2190

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

International Stock Indexes Data as of 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 2694.90 –6.80 –0.25 2193.75 • 2720.47 6.6 Country/ Spread Over Treasurys, in basis points Yield
MSCI EAFE 1802.27 –9.79 –0.54 1471.88 • 1956.39 5.0 Coupon Maturity, in years Yield Latest Previous Month Ago Year ago Previous Month ago Year ago
MSCI EM USD 971.06 0.74 0.08 691.21 • 1044.05 22.3 5.250 Australia 2 1.751 47.3 44.0 55.0 118.4 1.746 1.814 1.972
4.750 10 2.725 33.3 29.1 34.3 78.0 2.711 2.737 2.586
Americas DJ Americas 568.90 0.30 0.05 480.90 • 577.65 5.3
3.000 Belgium 2 -182.3 -184.0 -123.8 -0.507 -0.576 -0.450
-0.545 -181.3
Brazil Sao Paulo Bovespa 65232.30 591.85 0.92 47873.65 • 69487.58 8.3
0.800 10 0.824 -156.8 -156.2 -169.3 -142.1 0.858 0.701 0.384
Canada S&P/TSX Comp 15639.39 40.82 0.26 13217.17 • 15943.09 2.3
0.000 France 2 -0.507 -178.5 -178.9 -179.7 -121.5 -0.483 -0.533 -0.426
Mexico IPC All-Share 49094.28 –244.96 –0.50 43902.25 • 49523.94 7.6
0.250 10 0.927 -146.5 -144.9 -150.6 -132.4 0.971 0.888 0.481
Chile Santiago IPSA 3744.81 –13.50 –0.36 2998.64 • 3764.58 16.2
0.000 Germany 2 -0.747 -202.5 -200.3 -216.5 -127.6 -0.698 -0.901 -0.488
U.S. DJIA 20647.53 –53.97 –0.26 17063.08 • 21169.11 4.5
0.250 10 0.347 -204.5 -202.9 -218.6 -166.6 0.391 0.209 0.139
Nasdaq Composite 5883.90 8.76 0.15 4574.25 • 5928.06 9.3
0.300 Italy 2 -0.087 -136.5 -138.3 -129.2 -78.3 -0.078 -0.028 0.005
S&P 500 2358.46 –0.11 –0.005 1991.68 • 2400.98 5.3
1.250 10 2.130 -26.2 -26.5 -30.6 -56.6 2.154 2.089 1.239
CBOE Volatility 11.38 –0.15 –1.30 9.97 • 26.72 –18.9
0.100 Japan 2 -0.251 -152.8 -156.7 -153.4 -101.2 -0.261 -0.270 -0.224
EMEA Stoxx Europe 600 378.53 1.23 0.33 308.75 • 378.53 4.7 0.100 10 0.055 -233.7 -236.0 -234.0 -189.2 0.060 0.055 -0.087
Stoxx Europe 50 3149.03 13.28 0.42 2626.52 • 3151.89 4.6 4.000 Netherlands 2 -0.770 -204.8 -202.8 -209.7 -129.7 -0.723 -0.833 -0.509
France CAC 40 5069.04 22.84 0.45 3955.98 • 5073.23 4.3 0.750 10 0.589 -180.3 -179.2 -191.5 -157.6 0.628 0.480 0.230
Germany DAX 12203.00 53.58 0.44 9214.10 • 12233.76 6.3 4.450 Portugal 2 -0.125 -140.3 -144.8 -128.4 -54.2 -0.142 -0.020 0.246
Israel Tel Aviv 1400.48 –0.52 –0.04 1372.23 • 1504.42 –4.8 2.875 10 3.680 128.8 131.1 147.2 91.9 3.730 3.866 2.724
Italy FTSE MIB 20276.80 –53.62 –0.26 15017.42 • 20388.87 5.4 2.750 Spain 2 -0.213 -149.0 -151.8 -152.5 -77.6 -0.212 -0.261 0.012
Netherlands AEX 513.58 1.43 0.28 409.23 • 518.88 6.3 1.500 10 1.635 -75.7 -76.1 -85.6 -43.3 1.659 1.539 1.372
Russia RTS Index 1124.91 –0.67 –0.06 839.62 • 1196.99 –2.4 4.250 Sweden 2 -0.603 -188.1 -190.0 -193.6 -144.0 -0.595 -0.672 -0.652
Spain IBEX 35 10367.60 –21.40 –0.21 7579.80 • 10424.50 10.9 1.000 10 0.615 -177.7 -178.7 -186.5 -129.6 0.632 0.529 0.509
Switzerland Swiss Market 8661.53 64.51 0.75 7475.54 • 8704.11 5.4 1.750 U.K. 2 0.150 -112.8 -112.3 -117.8 -31.9 0.183 0.086 0.469
South Africa Johannesburg All Share 52444.78 135.55 0.26 48935.90 • 54704.22 3.5 4.250 10 1.155 -123.7 -122.5 -124.3 -39.1 1.195 1.151 1.414
Turkey BIST 100 89269.72 –912.01 –1.01 70426.16 • 91497.00 14.2 1.250 U.S. 2 1.278 ... ... ... ... 1.305 1.264 0.788
U.K. FTSE 100 7373.72 30.30 0.41 5788.74 • 7447.00 3.2 2.250 10 2.392 ... ... ... ... 2.420 2.394 1.805
Asia-Pacific DJ Asia-Pacific TSM 1566.78 –2.05 –0.13 1308.52 • 1570.38 10.1
Australia S&P/ASX 200 5873.50 52.30 0.90 4924.40 • 5873.50 3.7 Commodities Prices of futures contracts with the most open interest 12 p.m. New York time
China Shanghai Composite 3241.31 –11.63 –0.36 2806.91 • 3282.92 4.4 EXCHANGE LEGEND: CBOT: Chicago Board of Trade; CME: Chicago Mercantile Exchange; ICE-US: ICE Futures U.S.; MDEX: Bursa Malaysia
Hong Kong Hang Seng 24392.05 46.18 0.19 19694.33 • 24593.12 10.9 Derivatives Berhad; TCE: Tokyo Commodity Exchange; COMEX: Commodity Exchange; LME: London Metal Exchange;
NYMEX: New York Mercantile Exchange; ICE-EU: ICE Futures Europe. *Data as of 3/28/2017
India S&P BSE Sensex 29531.43 121.91 0.41 24673.84 • 29648.99 10.9 One-Day Change Year Year
Indonesia Jakarta Composite 5592.51 51.31 0.93 4704.22 • 5592.51 5.6 Commodity Exchange Last price Net Percentage high low
357.00 -0.75 -0.21% 387.25 354.25
Japan Nikkei Stock Avg 19217.48 14.61 0.08 14952.02 • 19633.75 0.5 Corn (cents/bu.) CBOT
Soybeans (cents/bu.) 969.00 -3.00 -0.31 1,088.25 968.25
Malaysia Kuala Lumpur Composite 1750.41 –4.01 –0.23 1614.90 • 1754.67 6.6
Wheat (cents/bu.)
CBOT
CBOT 423.75 -0.75 -0.18 477.00 416.25
New Zealand S&P/NZX 50 7133.57 68.34 0.97 6664.21 • 7571.11 3.7
Live cattle (cents/lb.) CME 111.675 0.075 0.07% 114.200 103.150
Pakistan KSE 100 48375.63 –147.78 –0.30 32922.40 • 50192.36 1.2
Cocoa ($/ton) ICE-US 2,086 -43 -2.02 2,273 1,869
Philippines PSEi 7324.00 –7.46 –0.10 6563.67 • 8102.30 7.1
Coffee (cents/lb.) ICE-US 139.65 0.80 0.58 159.30 136.20
Singapore Straits Times 3184.57 26.75 0.85 2729.85 • 3184.57 10.5
Sugar (cents/lb.) ICE-US 17.22 -0.34 -1.94 21.21 17.02
South Korea Kospi 2166.98 3.67 0.17 1925.24 • 2178.38 6.9
Cotton (cents/lb.) ICE-US 76.60 -0.28 -0.36 79.46 71.55
Taiwan Weighted 9856.25 –20.20 –0.20 8053.69 • 9972.49 6.5 Robusta coffee ($/ton) ICE-EU 2173.00 5.00 0.23 2,279.00 2,093.00
Thailand SET 1574.97 –1.75 –0.11 1356.69 • 1591.00 2.1
Copper ($/lb.) COMEX 2.6800 0.0040 0.15 2.8360 2.4800
Source: SIX Financial Information;WSJ Market Data Group Gold ($/troy oz.) COMEX 1254.40 -4.40 -0.35 1,268.10 1,152.20
Silver ($/troy oz.) COMEX 18.205 -0.047 -0.26 18.540 16.000
Currencies London close on March 29 Aluminum ($/mt)* LME 1,928.50 4.00 0.21 1,939.00 1,688.50
Tin ($/mt)* LME 19,900.00 365.00 1.87 21,225.00 18,760.00
Yen, euro vs. dollar; dollar vs. major U.S. trading partners US$vs,
Wed YTDchg Copper ($/mt)* LME 5,800.00 106.00 1.86 6,156.00 5,518.00
Country/currency in US$ per US$ (%) Lead ($/mt)* LME 2,314.00 -4.00 -0.17 2,445.00 2,022.00
20%
s Europe Zinc ($/mt)* LME 2,783.00 5.00 0.18 2,958.50 2,555.00
Yen Bulgaria lev 0.5499 1.8186 –2.1 Nickel ($/mt)* LME 9,785.00 35.00 0.36 11,095.00 9,430.00
10
Croatia kuna 0.1447 6.911 –3.7 Rubber (Y.01/ton) TCE 244.00 5.80 2.43 n.a. n.a.
s
Euro Euro zone euro 1.0756 0.9298 –2.2
0 Palm oil (MYR/mt) MDEX 2723.00 16.00 0.59 3068.00 2642.00
Czech Rep. koruna-b 0.0398 25.125 –2.2
s WSJ Dollar index Denmark krone 0.1446 6.9178 –2.1 Crude oil ($/bbl.) NYMEX 49.27 0.90 1.86 57.50 47.01
–10 0.003474 287.86 –2.2
Hungary forint NY Harbor ULSD ($/gal.) NYMEX 1.5437 0.0236 1.55 1.7770 1.4825
Iceland krona 0.008973 111.45 –1.3 RBOB gasoline ($/gal.) NYMEX 1.6696 0.0332 2.03 1.9065 1.5824
–20 Norway krone 0.1173 8.5235 –1.4
0.2548 3.9243 –6.3
Natural gas ($/mmBtu) NYMEX 3.229 0.052 1.64 3.5070 2.7370
2016 2017 Poland zloty
Russia ruble-d 0.01764 56.695 –7.5 Brent crude ($/bbl.) ICE-EU 52.33 0.91 1.77 59.89 50.00
US$vs, US$vs,
YTDchg YTDchg Sweden krona 0.1126 8.8807 –2.5 Gas oil ($/ton) ICE-EU 464.50 4.75 1.03 523.50 444.00
Wed Wed
Country/currency in US$ per US$ (%) Country/currency in US$ per US$ (%) Switzerland franc 1.0028 0.9972 –2.1
Turkey lira 0.2733 3.6590 3.8 Sources: SIX Financial Information; WSJ Market Data Group
Americas Hong Kong dollar 0.1287 7.7694 0.2
Ukraine hryvnia 0.0370 27.0150 –0.3
Argentina peso-a 0.0647 15.4476 –2.7
India rupee
Indonesia rupiah
0.0154
0.0000752
64.8799
13305
–4.5
–1.6
U.K. pound 1.2404 0.8062 –0.5 Cross rates London close on Mar 29
Brazil real 0.3207 3.1181 –4.2 Middle East/Africa
Japan yen 0.009001 111.09 –5.1
Canada dollar 0.7477 1.3375 –0.5 USD GBP CHF JPY HKD EUR CDN AUD
Kazakhstan tenge 0.003169 315.59 –5.4 Bahrain dinar 2.6525 0.3770 –0.05
Chile peso 0.001508 663.30 –1.0 Australia 1.3057 1.6198 1.3094 0.0118 0.1681 1.4043 0.9763 ...
Macau pataca 0.1246 8.0282 1.4 Egypt pound-a 0.0551 18.1543 0.1
Colombia peso 0.0003465 2885.82 –3.9 Canada 1.3375 1.6590 1.3410 0.0120 0.1721 1.4383 ... 1.0243
Malaysia ringgit-c 0.2263 4.4190 –1.5 Israel shekel 0.2761 3.6220 –5.9
Ecuador US dollar-f 1 1 unch
New Zealand dollar 0.7024 1.4237 –1.4 Kuwait dinar 3.2841 0.3045 –0.4 Euro 0.9298 1.1534 0.9323 0.0084 0.1197 ... 0.6952 0.7120
Mexico peso-a 0.0531 18.8320 –9.2
Pakistan rupee 0.0095 104.835 0.4 Oman sul rial 2.5974 0.3850 0.01 Hong Kong 7.7694 9.6378 7.7918 0.0699 ... 8.3570 5.8091 5.9505
Peru sol 0.3081 3.2452 –3.2
Philippines peso 0.0199 50.163 1.1 Qatar rial 0.2746 3.642 0.04 Japan 111.0940 137.8100 111.4100 ... 14.2990 119.4800 83.0700 85.0800
Uruguay peso-e 0.0351 28.450 –3.1
Singapore dollar 0.7164 1.3958 –3.6 Saudi Arabia riyal 0.2666 3.7503 –0.01 0.9972 1.2371 ... 0.0090 0.1283 1.0727 0.7457 0.7638
Venezuela bolivar 0.100100 9.99 –0.1 Switzerland
South Korea won 0.0008977 1113.97 –7.8 South Africa rand 0.0766 13.0480 –4.7
U.K. 0.8062 ... 0.8083 0.0073 0.1038 0.8670 0.6027 0.6174
Asia-Pacific Sri Lanka rupee 0.0065725 152.15 2.5 Close Net Chg % Chg YTD % Chg
0.7659 1.3057 –6.0 Taiwan dollar 0.03309 30.220 –6.9 U.S. ... 1.2404 1.0028 0.0090 0.1287 1.0756 0.7477 0.7659
Australia dollar WSJ Dollar Index 90.19 0.14 0.16 –2.96
China yuan 0.1451 6.8899 –0.8 Thailand baht 0.02905 34.420 –3.9 Sources: Tullett Prebon, WSJ Market Data Group Source: Tullett Prebon

Key Rates Top Stock Listings 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 0.98222% 0.43400% ¥ TakedaPharm 4502 5139.00 -0.73 6.29 £ RoyDtchShell A RDSA 2130.00 0.90 -5.02 Last: 154.87 t 0.10, or 0.06% YTD s 9.9%
Three month 1.14678 0.62510 Asia Titans HK$ TencentHoldings 0700 228.00 0.88 20.19 € SAP SAP 91.09 0.53 10.00
Six month 1.41989 0.89890 HK$ AIAGroup 1299 49.80 1.01 13.83 ¥ TokioMarineHldg 8766 4814.00 0.85 0.38 € Sanofi SAN 84.51 0.68 9.90 High 155
One year 1.79400 1.21415 67.60 1.30 2.25
¥ AstellasPharma 4503 1505.00 0.60 -7.30 ¥ ToyotaMtr 7203 6124.00 -0.39 -10.96 € SchneiderElectric SU Close 150
Euro Libor AU$ AustNZBk ANZ 32.30 1.13 6.18 AU$ Wesfarmers WES 44.88 1.13 6.50 € Siemens SIE 125.80 0.52 7.71 Low t 145
One month -0.39786% -0.32714% AU$ BHP BHP 23.97 0.29 -4.35 AU$ WestpacBanking WBC 35.14 1.27 7.79 CHF Syngenta SYNN 439.50 1.29 9.19
Three month -0.35786 -0.24900 3.93 9.34 € Telefonica TEF 10.42 -0.86 18.14 50–day 140
HK$ BankofChina 3988 0.51 14.24 AU$ Woolworths WOW 26.35 0.38
moving average
Six month -0.25014 -0.13657 HK$ CKHutchison 0001 96.35 -0.57 9.61 € Total FP 46.62 0.43 -3.36 135
One year -0.11900 -0.01586 HK$ CNOOC 0883 9.34 0.32 -3.71 Stoxx 50 CHF UBSGroup UBSG 15.78 1.15 -1.07
130
Euribor AU$ CSL CSL 124.33 1.08 23.82 € Unilever UNA 46.80 0.65 19.65
CHF ABB ABBN 23.22 0.30 8.10
One month -0.37300% -0.33200% ¥ Canon 7751 3486.00 -0.17 5.80 £ Unilever ULVR 4031.00 0.62 22.43 30 6 13 20 27 3 10 17 24 3 10 17 24
€ ASMLHolding ASML 123.60 ... 15.89
Three month -0.33000 -0.24300 ¥ CentralJapanRwy 9022 18500 -0.96 -3.80 € Vinci DG 73.75 -0.24 13.99 Jan. Feb. Mar.
€ AXA CS 24.05 0.71 0.25
Six month -0.24200 -0.13200 HK$ ChinaConstructnBk 0939 6.41 0.47 7.37 £ VodafoneGroup VOD 210.70 0.21 5.43
€ AirLiquide AI 107.05 0.80 1.33
One year -0.10900 -0.00400 HK$ ChinaLifeInsurance 2628 24.05 ... 19.06 CHF ZurichInsurance ZURN 281.90 -0.56 0.53
172.25
Yen Libor HK$ ChinaMobile 0941 86.40 -0.46 5.11
€
€
Allianz
AB InBev
ALV
ABI 102.85
0.41
-0.10
9.71
2.29 DJIA Stoxx 50
One month 0.01157% -0.06743% HK$ ChinaPetro&Chem 0386 6.35 1.11 15.45 £ AstraZeneca AZN 4954.50 -0.11 11.65 Last: 3149.03 s 13.28, or 0.42% YTD s 4.6%
Three month 0.02436 -0.00429 AU$ CmwlthBkAust CBA 86.14 1.03 4.53 € BASF BAS 92.10 0.61 4.29
$ AmericanExpress AXP 78.40 -0.31 5.83
Six month 0.04214 0.02350 ¥ EastJapanRailway 9020 9850.00 0.50 -2.48 € BNP Paribas BNP 62.04 0.19 2.46
$ Apple AAPL 143.35 -0.31 23.77 3175
One year 0.14757 0.10457 ¥ Fanuc 6954 23235 1.82 17.26 £ BT Group BT.A 322.35 -0.59 -12.14
$ Boeing BA 177.34 -0.01 13.91
$ Caterpillar CAT 92.98 0.04 0.26 3100
Offer Bid ¥ Hitachi 6501 620.30 0.80 -1.85 € BancoBilVizAr BBVA 7.18 -1.14 11.99
TW$ Hon Hai Precisn 2317 91.50 0.33 8.67 $ Chevron CVX 107.83 0.62 -8.39 3025
Eurodollars € BancoSantander SAN 5.72 -0.66 15.39
¥ HondaMotor 7267 3436.00 1.69 0.61 $ CiscoSystems CSCO 33.78 -0.71 11.78
One month 1.1000% 1.0000% £ Barclays BARC 227.30 -0.35 1.72 2950
KRW HyundaiMtr 005380 156000 -2.50 6.85 $ Coca-Cola KO 42.41 -0.05 2.29
Three month 1.3000 1.2000 € Bayer BAYN 106.90 ... 7.84
2875
HK$ Ind&Comml 1398 5.17 0.39 11.18 $ Disney DIS 112.42 -0.56 7.87
Six month 1.4000 1.3000 £ BP BP. 461.20 1.71 -9.50
$ DuPont DD 81.80 -0.05 11.44
One year 1.7500 1.6500 ¥ JapanTobacco 2914 3701.00 -0.67 -3.72 £ BritishAmTob BATS 5318.00 1.90 15.07 2800
¥ KDDI 3001.00 1.01 1.40
$ ExxonMobil XOM 82.22 0.46 -8.91
Latest 52 wks ago 9433 € Daimler DAI 72.36 1.02 2.32 $ GeneralElec GE 29.48 -0.49 -6.72 30 6 13 20 27 3 10 17 24 3 10 17 24
¥ Mitsubishi 8058 2456.00 1.28 -1.37 € DeutscheTelekom DTE 16.36 0.28 0.03 $ Jan. Feb. Mar.
Prime rates GoldmanSachs GS 228.62 -0.31 -4.52
¥ MitsubishiElectric 6503 1632.00 1.71 0.15 £ Diageo DGE 2316.00 0.43 9.76 $
U.S. 4.00% 3.50% HomeDepot HD 146.38 -0.56 9.17
¥ MitsubishiUFJFin 8306 712.30 1.05 -1.10 € ENI ENI 15.12 0.47 -2.26 $
Canada 2.70 2.70 Intel INTC 35.56 -0.11 -1.96
1652.00 1.54 2.80 1678.50
Japan
Hong Kong
1.475
5.00
1.475
5.00
¥
¥
Mitsui
Mizuho Fin
8031
8411 208.90 0.84 -0.43
£
£
GlaxoSmithKline
HSBC Hldgs
GSK
HSBA 656.40
0.09 7.46 $
0.17 -0.08 $
IBM
JPMorganChase
IBM
JPM
173.65
88.29
-0.49
-0.35
4.61
2.32
Dow Jones Industrial Average P/E: 21
¥ NTTDoCoMo 9437 2651.50 -0.49 -0.43 € INGGroep INGA 13.92 0.07 4.11 $ J&J JNJ 124.98 -0.54 8.48 Last: 20647.53 t 53.97, or 0.26% YTD s 4.5%
Policy rates
ECB 0.00% 0.00%
AU$ NatAustBnk NAB 33.24 1.22 8.38 £ ImperialBrands IMB 3825.50 -0.04 7.99 $ McDonalds MCD 128.80 -0.50 5.82
Britain 0.25 0.50
¥ NipponTeleg 9432 4924.00 0.08 0.24 € IntesaSanpaolo ISP 2.52 -0.79 3.87 $ Merck MRK 63.83 0.77 8.43 21100
Switzerland 0.50 0.50
¥ NissanMotor 7201 1114.00 0.36 -5.23 € LVMHMoetHennessy MC 202.60 0.57 11.69 $ Microsoft MSFT 64.99 -0.46 4.59
¥ Panasonic 6752 1267.50 3.72 6.56 £ LloydsBankingGroup LLOY 66.54 -0.37 6.45 $ Nike NKE 56.61 -0.02 11.37
20450
Australia 1.50 2.00
HK$ PingAnInsofChina 2318 43.80 ... 12.89 € LOreal OR 179.80 0.62 3.69 $ Pfizer PFE 34.34 0.53 5.73
U.S. discount 1.50 1.00 19800
Fed-funds target 0.75-1.00 0.25-0.50
$ RelianceIndsGDR RIGD 38.60 0.78 22.35 £ NationalGrid NG. 1013.00 -0.05 6.45 $ Procter&Gamble PG 90.71 -0.06 7.89
Call money 2.75 2.25
KRW SamsungElectronics 005930 2089000 0.72 15.93 CHF Nestle NESN 77.60 0.71 6.23 $ 3M MMM 190.71 -0.15 6.80 19150
¥ Seven&I Hldgs 3382 4436.00 1.05 -0.38 CHF Novartis NOVN 74.50 1.02 0.54 $ Travelers TRV 120.55 -1.03 -1.53
Overnight repurchase rates 18500
U.S. 0.82% 0.48%
¥ SoftBankGroup 9984 8034.00 1.57 3.46 DKK NovoNordiskB NOVO-B 236.00 0.38 -7.34 $ UnitedTech UTX 111.97 -0.68 2.14
Euro zone n.a. n.a.
¥ Sony 6758 3704.00 3.03 13.10 £ Prudential PRU 1708.00 -0.84 4.95 $ UnitedHealth UNH 162.98 -1.43 1.84 30 6 13 20 27 3 10 17 24 3 10 17 24
¥ Sumitomo Mitsui 8316 4134.00 0.15 -7.31 £ ReckittBenckiser RB. 7311.00 -0.12 6.17 $ Visa V 88.58 -0.60 13.54 Jan. Feb. Mar.
Sources: WSJ Market Data Group, SIX HK$ SunHngKaiPrp 0016 114.10 -0.26 16.43 £ RioTinto RIO 3258.50 1.20 3.17 $ Verizon VZ 49.08 -0.45 -8.06 Note: Price-to-earnings ratios are for trailing 12 months
Financial Information, Tullett TW$ TaiwanSemiMfg 2330 191.50 -1.54 5.51 CHF RocheHldgctf ROG 255.40 0.91 9.80 $ Wal-Mart WMT 70.63 0.44 2.18 Sources: WSJ Market Data Group; Birinyi Associates
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THE WALL STREET JOURNAL. Thursday, March 30, 2017 | B7

FINANCE & MARKETS

BlackRock Shifts to Robots Over Humans

Fund giant moves to
overhaul its lagging
stock-picking business;
plan means job losses
BY SARAH KROUSE

BlackRock Inc. has started

a shake-up of its stock-picking
business, relying more on ro-
bots rather than humans to
make decisions on what to buy
and sell.
The firm has become the
world’s largest asset manager,
with $5.1 trillion in total assets,
in large part because of its
dominant position in low-cost,
passive investment such as ex-
change-traded funds.

JESSE WINTER FOR THE WALL STREET JOURNAL

But its stock-picking unit—
which depends on money man-
agers to choose investments—
has lagged behind rivals in
performance and clients have
been withdrawing their money.
The company has taken the
view that it is difficult for hu-
man beings to beat the market
with traditional bets on large
U.S. stocks. So the firm on
Tuesday announced an over-
haul of its actively managed eq-
uities business that will include
job losses, pricing changes and
a greater emphasis on com-
puter models that inform in-
vestments. Seven stock portfo-
lio managers are among several
dozen employees who are ex-
pected to leave the firm as part
of the revamp, a person famil-
iar with the matter said.
The firm is offering its Main
Street customers lower-cost
quantitative stock funds that
rely on data and computer sys-
tems to make predictions, an
investment option previously
available only to large institu-
tional investors. Some existing
funds will merge, get new in-
vestment mandates or close.
The changes are the most
significant attempt yet to reju-
venate a unit that has long
lagged behind rivals in perfor-
mance. Clients have pulled
money from the actively man-
aged stock business in three of
the past four years even as
BlackRock’s total assets
Clients have pulled money from BlackRock’s actively managed stock business in three of the past four years even as the firm’s total assets climbed to a record.
climbed to a record $5.1 tril-
lion. BlackRock had $275.1 bil-
lion in active stock assets un-
der management at the end of
December, down from $317.3
billion three years earlier.
The author of the company’s
new strategy is former Canada
Pension Plan Investment Board
Chief Executive Mark Wiseman,
who was hired last year to turn
around the stock-picking busi-
ness. The effort is the first test
for Mr. Wiseman, viewed by
some company observers as a
potential successor to Chief Ex-
ecutive Laurence Fink.
Mr. Wiseman—who spent his
first six months examining the
strengths and weaknesses of
the business with staff, consul-
tants and clients—said the firm
is trying to play offense as
smaller rivals struggle.
“We’re in really rough seas,
but BlackRock is an aircraft
carrier,” Mr. Wiseman said.
“Everyone else is in dinghies,
and they’re bailing like hell.”
Many other firms that spe-
cialize in handpicking stocks
are also struggling with low re-
turns and shifting investor
tastes. Since the 2008 financial
crisis, clients across the money-
management industry have
moved hundreds of billions of
dollars to lower-cost funds that
track indexes, known as passive
investment funds, instead of
aiming to beat the market.
BlackRock has also benefited
from investors’ embrace of pas-
sively managed investments.
The amount overseen by the
entire firm has been bolstered
by its exchange-traded-fund
business, which comprises
about a quarter of all assets
under management. It also sells
investment and risk-manage-
ment technology, giving it a
broader mix of businesses than
many of its rivals.
The effort to improve the
performance of BlackRock’s
stock-picking unit isn’t the first
but goes further than past
changes. In 2012, BlackRock re-
placed management teams of
some of its largest stock funds
and analyzed the investment
process of each team.
Yet by the end of last year
more than half of the assets in
BlackRock’s traditional actively
managed stock products under-
performed their benchmarks or
peers over one year, up from
less than a quarter a year ear-
lier, according to the company’s
earnings report. Over three
years, 38% underperformed,
compared with 40% at the
same time in 2015.
Under Mr. Wiseman’s plan,
BlackRock will change the in-
vestment mandates of some
funds and focus on a slightly
smaller lineup of stock prod-
ucts that includes nine quanti-
tative funds that will be avail-
able to individual investors. In
some cases, those funds come
at roughly half the cost of
those they replace.
The firm will also run coun-
try- and sector-focused stock
products in which executives
believe they can outperform,
funds that pursue specific out-
comes such as social impacts,
and riskier funds that make
more concentrated bets. The
changes weed out actively
managed stock funds that
closely follow indexes.
The planned price cuts in-
volved in creating that lineup
will result in a loss of $30
million in revenue annually,
the firm said. The firm will
take a $25 million charge in
the first quarter to fund lay-
offs, staff relocations and re-
search investments.
San Francisco will become
the firm’s hub for quantitative
investing, and some emerging-
markets staff will move to Asia
from London. Another change,
Mr. Wiseman said, will be a bet-
ter integration of research and
data informing both traditional
and quantitative stock picks.
Despite immediate job cuts,
executives said that, 18
months from now, the firm
will have roughly the same
number of staff in the unit be-
cause it will continue to hire
people as needed.
Executives acknowledge po-
tential risks from the staff-
ing and fund changes. Too
much manager turnover at
funds can spook customers and
trigger withdrawals. And
changing fund mandates can
lead clients who want what
they initially signed up for to
head for the exits.
But executives said the
planned moves will better po-
sition the business to be com-
petitive longer term and take
advantage of BlackRock’s scale.
“We should be acting like
BlackRock, not a part of Black-
Rock,” Mr. Wiseman said.

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B8 | Thursday, March 30, 2017
Money Markets Gain Sway in China Nasdaq
Edges Up;
Central bank leans on
How Money Flows Through China's Financial System
sector via interest
rates to control
The complexity of financial linkages in China is rising.
liquidity in the country
BY SHEN HONG
SHANGHAI—Money mar-
kets are often described as the
financial system’s plumbing.
When they work, which is
most of the time, hardly any-
one notices, but when they get
blocked up, it creates quite a
stink.
That is why China’s money
market—in which banks and
other financial institutions
borrowed some $6.4 trillion
from each other last month
alone to fund their daily
needs—is becoming one of the
world’s most important mar-
kets to watch.
China’s central bank has
raised interest rates twice
since early February. That im-
mediately pushed funding
costs to the highest in two
years, hitting smaller banks
that have come to rely on the
market particularly hard. Last
week, some small rural banks
failed to make good on short-
term loans from other lenders.
And while anxiety in the
market has eased somewhat
this week, short-term borrow-
ing rates are still high. Broker-
ages and asset managers are
having to pay interest of as
much as 6% on short-term bor-
rowings, more than double the
central bank’s benchmark rate.
Tightness in money markets
is a worry because if banks
stop lending to each other,
they soon stop lending to the
broader economy, too. A sharp
rise in interbank borrowing
costs thanks to a liquidity
crunch in major Western mar-
kets in 2007 heralded the
global financial crisis. China’s
money market has become just
as central to the country’s fi-
nancial system as those of its
U.S. and European counter-
parts after rapid expansion
this century.
Email: heard@wsj.com
Facebook
Moves Onto
Snap’s Turf
Facebook couldn’t buy
Snapchat, but it can afford to
build its own. That is making
Snapchat parent Snap look
vulnerable.
Facebook said Tuesday it
is launching three new fea-
tures on its main app that
mirror key features of the
Snapchat messaging app. In
doing so, Facebook aims to
encourage users to share
more on its platform. It also
threatens to curb growth
for Snapchat, which Face-
book tried and failed to buy
for more than $3 billion in
2013.
For Snap, whose shares
fell nearly 7% Tuesday, the
relative ease with which the
much larger Facebook can
encroach on its turf raises
questions about the depth of
its competitive moat. Insta-
gram, which Facebook owns,
introduced in a “stories” fea-
ture last August that mim-
icked Snapchat Stories and
may be responsible for the
deceleration in Snap’s user
growth over the past two
quarters.
To the extent its efforts
result in limiting Snap’s user
growth, Facebook will also
be preventing future ad dol-
lars from shifting to its
smaller rival. The ability to
capture a growing slice of ad
budgets matters for both
companies’ valuations.
Snap’s $32.5 billion diluted
market capitalization rests
heavily on expectations for
growth.
Facebook’s announcement
came a day after a barrage of
mostly positive analyst notes
on Snap as banks that served
as underwriters for the com-
pany’s IPO initiated coverage
of its shares. Investors
should question whether the
rosier estimates among them
properly account for the
Facebook risk.
—Miriam Gottfried
PEOPLE’S BANK OF CHINA
(Assets: 34 trillion yuan)
lends to banks
POLICY BANKS
(24 trillion yuan)
JOINT-STOCK
BANKS
(43 trillion yuan)
NON-FINANCIAL INSTITUTIONS
(Trusts, brokers, funds, insurers, etc.)
Note: 10 trillion yuan = $1.455 trillion. Assets as of Dec. 2016 (PBOC, policy banks), 3Q 2016 (big four and joint-stock banks),
2Q 2016 (small city/rural banks)
Source: Deutsche Bank
That has handed a new le-
ver to the Chinese central
bank, which is using money-
market interest rates as its
main tool to control the
amount of money in the coun-
try, a big change from the days
when it ran the economy by
directly controlling banks’ to-
tal lending.
But as the money market
becomes more influential, so
has the risk of widespread
damage to the world’s second-
largest economy when it jams
up.
“Because there’s been a
trend for small banks and non-
bank institutions to play a
larger role in the money mar-
ket in recent years, the risk of
a liquidity crisis is growing,”
said Julian Evans-Pritchard, a
Singapore-based economist at
Capital Economics.
China’s banks for years re-
lied on deposits from ordinary
customers. As the economy ex-
panded and banks lent more
aggressively, they borrowed
more from each other in
money markets to get extra
funding. Typical borrowers are
smaller banks, which have
lower deposit bases, while
large banks flush with funds,
HEARD ON THE STREET
Tencent Hits a Tesla Speed Bump
China’s most valuable
company, Tencent Holdings,
has become global tech giant
in less than two decades
thanks to its dominance of
China’s computer gaming in-
dustry and the phenomenal
success of its instant-mes-
saging app WeChat. So its
$1.8 billion investment in
electric-vehicle maker Tesla
for a 5% stake is a bit of a
head-scratcher.
There is an element of
“me too” about this. Tencent
is often grouped with search-
engine company Baidu and e-
commerce giant Alibaba as
the holy trinity of Chinese
tech. The latter two have al-
ready made strides in electric
vehicles: Baidu aims to roll
out commercially viable au-
tonomous vehicles next year,
while Alibaba is developing
“internet-connected cars” in
a joint venture with local car
maker SAIC. The three com-
panies have all invested in
Didi Chuxing, China’s suc-
cessful answer to Uber.
Tencent itself has invested
in several domestic electric-
vehicle startups. It is a
Investors Face Brexit Quiet Before the Negotiating Storm
For nine months, the U.K.
has been living the Brexit
dream. Even with the trig-
gering Wednesday of the for-
mal process for leaving the
European Union, the lull can
continue for a while. But as
the clock ticks on negotia-
tions, the real shape of
Brexit will emerge for inves-
tors—and for the pound, still
the key U.K. barometer.
The fate of the pound and
the U.K. economy are inter-
twined in Brexit. So far, that
has led to some curious ef-
fects. The fall in sterling of
some 17% against the dollar
since the June vote reflects
investors’ concerns about the
U.K.’s outlook.
Yet the economy hasn’t
worsened. The U.K. is still in
MARKETS
LENDING TO
CHINA’S
BIG FOUR BANKING
BANKS SYSTEM
(81 trillion yuan)
all banks lend to
SMALL CITY/
RURAL BANKS
(44 trillion yuan)
such as Industrial & Commer-
cial Bank of China Ltd., act as
lenders.
The volume of interbank
lending, usually uncollateral-
ized, hit a record with the
equivalent of $34 trillion in
loans last year, nearly 100
times the amount of lending in
2002 when data provider
Wind Info’s full-year records
began.
Banks also use large
amounts of repurchase agree-
ments, or repos, in which one
bank borrows in the short
term from another, typically
using a Chinese government
bond as collateral. Turnover in
the repo market surged to the
equivalent of $216 trillion last
year, about 24 times its vol-
ume a decade ago.
China’s central bank plays a
big role, using daily open-mar-
ket operations to adjust the
supply and cost of funds in the
financial system. When there
is a cash shortage, it offers
loans to banks, usually ranging
from seven to 28 days. Its
seven-day repo rate has be-
come its main policy tool, the
equivalent of the fed-funds
rate.
What is worrying China’s
FINANCIAL ANALYSIS & COMMENTARY
Fully Charged
Sales of new energy
vehicles in China
500 thousand
400
300
200
100
0
2011 ’12 ’13 ’14 ’15 ’16
Sources: CEIC; Zuma Press (photo)
THE WALL STREET JOURNAL.
backer of Shanghai-based
NextEV, which is aiming to
bring its autonomous electric
vehicles to the U.S. by 2020.
But it is unclear how taking
a minority stake in Tesla, with
no specific plans for joint ven-
tures or other projects with
the Elon Musk-run outfit, will
help Tencent crack the elec-
tric-vehicle scene. Mr. Musk
may hope Tencent will aid
Tesla in navigating the Middle
Kingdom, but Beijing has a
Brexit Divide
Performance since June 23
Brexit referendum vote
20% FTSE 100
10
0 nest, with the EU’s 27 other
–10 Sterling vs. U.S. dollar
–20
2016 ’17
Note: As of midday Wednesday in New York
Source: FactSet
the EU, meaning for now it
gets the benefits of the
cheaper currency and all the
trade and regulatory condi-
tions for businesses remain
the same.
The ceremonial handing-
over of a letter from Prime
BORROWING FROM
deposits
CONSUMERS/
CORPORATIONS
THE WALL STREET JOURNAL.
central bank is that lenders
are plowing the funds they
raise in these markets into
speculative investments, fuel-
ing asset bubbles.
One big problem is the rise
of what are euphemistically
called wealth-management
products. The products bundle
together all sorts of assets or
debt, even other wealth-man-
agement products, and aren’t
transparent. These are sold to
bank customers offering much
higher returns than ordinary
deposits, by making big, lever-
aged bets on everything from
government bonds to garlic.
Critics consider them a big
risk to banks and individual
savers, with the outstanding
amount issued having bal-
looned to the equivalent of
$3.8 trillion, or 35% of gross
domestic product.
Because the products are
often short term, there is a
risk investors won’t be repaid
if the value of the investments
drops sharply. At that point,
the issuers of wealth-manage-
ment products often look to
tap the money market to get
the funds they need to pay
back investors, a problem if
rates have risen.
An electric concept car is shown in Beijing last year.
bias toward supporting local
car makers and battery pro-
ducers. The cash-hungry elec-
tric-car company may happily
take Tencent’s investment dol-
lars, but may not offer much
in return if it doesn’t get any
further benefit.
Sure, Tencent can afford
this: The company generated
nearly $10 billion of cash
from operations last year,
and it is already sitting on a
nice $490 million paper
Minister Theresa May to Eu-
ropean Council President
Donald Tusk triggering Arti-
cle 50 won’t change anything
immediately. It will likely
take a couple of months for
negotiations to start in ear-
members needing to agree
formally how they will ap-
proach the talks. Further de-
laying matters, both sides
will need to see the outcome
of German elections in Sep-
tember.
That doesn’t mean the
status quo goes on forever.
The task ahead of the nego-
tiators is daunting in its
technical, legal and political
scale. From the issue of
whether the U.K. owes many
billions of euros to the EU
Higher and Higher
Volume of interbank lending
in China, in trillions of yuan
250
1Q 2Q 3Q
200
150
100
50
0 trading,
2006 ’10
10 trillion yuan = $1.455 trillion
Source: Wind Info.
THE WALL STREET JOURNAL.
Beijing has set reducing the
country’s debt buildup and
high leverage in financial mar-
kets as a top policy priority.
The central bank has raised its
seven-day repo rate twice re-
cently, its first increases since
October 2015.
As interbank borrowing
rates soar, they are feeding
through to hurt China’s al-
ready slowing economy, as
banks pass on the higher
costs.
A quarterly record of 104
companies have dropped or
delayed the equivalent of $14.1
billion of bond-issuance plans
since the start of this year, ac-
cording to Wind Info.
The central bank’s control
over China’s markets is also
being tested. After the latest
rises, its seven-day repo rate
remains a low 2.45%. But big
state-owned banks that bor-
row directly from the central
bank are charging much higher
rates when they lend to
smaller institutions.
“That means the transmis-
sion mechanism is not well de-
veloped, which can dilute the
effectiveness of policy
changes,” said Tim Condon,
economist at ING. China’s
money market is distorted by
the big five state banks that
dominate the supply of funds,
he said.
profit on its Tesla stake.
But Tencent’s investors
aren’t buying its shares for
its stock-market acumen.
Having built a reputation as
one of China’s best-run tech
businesses, Tencent should
be careful to avoid becoming
known as just another
sprawling Chinese company
wasting its money on vanity
investments with little obvi-
ous strategic value.
—Jacky Wong
to settle obligations under-
taken as a member, to the
Northern Irish border, to
questions around the U.K.
financial industry outside
the single market, the com-
plexity of the talks is clear.
The process is supposed to
take two years, but in real-
ity that period will be short-
ened by Europe’s political
calendar and the need to al-
low time for ratification. In-
vestors will need to juggle
news on a stream of conten-
tious debates on weighty
matters such as tariffs, drug
regulation, and the status of
British and EU citizens liv-
ing in each others’ realms.
The question for the
pound and investors is
whether there are any good
THE WALL STREET JOURNAL.
Oil Prices
4Q
Advance
BY RIVA GOLD
The Nasdaq Composite In-
dex rose Wednesday, headed
for a fourth straight session of
gains, while the Dow Jones In-
dustrial Average slipped.
The tech-heavy Nasdaq was
up 0.3% in midday New York
’16 WEDNESDAY’S poised for a
MARKETS small gain
in March,
even as
other indexes have wobbled.
The failure of a U.S. health-
care overhaul has spurred con-
cerns that President Donald
Trump would struggle to en-
act key corporate-friendly pol-
icies such as tax cuts, deregu-
lation and infrastructure
spending.
The Dow industrials were
off 48 points, or 0.2%, at
20653 on Wednesday after a
big gain Tuesday. The S&P 500
was up less than 0.1%.
The energy sector in the
S&P 500 was up 1% after
larger-than-anticipated de-
clines in inventories of crude
products including gasoline
suggested strong demand for
oil. U.S. crude climbed 1.5% to
$49.07 a barrel.
In Asia, Hong Kong’s Hang
Seng Index added 0.2%, while
the Nikkei Stock Average was
up 0.1% to 19217.48. Several
Japanese stocks underper-
formed as they went ex-divi-
dend. The Shanghai Composite
fell 0.4%. Australia’s S&P/ASX
200 climbed 0.9% to 5873.50,
its highest level since April
2015.
U.S. government-bond prices
rose. The yield on the bench-
mark 10-year Treasury note fell
to 2.383%, according to
Tradeweb, from 2.411% the prior
day. Yields fall as prices rise.
The Stoxx Europe 600
gained 0.3%.
WSJ.com/Heard
OVERHEARD
Who said day trading was
easy money?
Certainly not biotech in-
vestors after Monday after-
noon’s price action. Shares of
cancer-drug developer Tesaro
were halted for pending news
late in the trading day. Inves-
tors had long speculated
about Tesaro, whose shares
have more than tripled over
the past year, as an acquisi-
tion target. Shares of Clovis
Oncology, a biotech develop-
ing a similar cancer drug, im-
mediately snapped 3% higher
as traders sensed an immi-
nent flurry of deals.
The good times for Clovis
traders vanished quickly; Tes-
aro’s news turned out to be
an early Food and Drug Ad-
ministration approval for its
drug to treat ovarian cancer—
good news, but not the sort
of thing that triggers a deal
frenzy. Within minutes, Clovis
shares plunged 5% before re-
bounding. On the bright side,
perhaps the episode helped a
few traders see the wisdom
of a buy-and-hold investment
strategy.
reasons to bet on a rebound.
By purchasing power parity
and other measures, at $1.24,
the pound is undervalued,
Nomura notes. Yet there are
too many moving parts for
that to be a comfortable po-
sition, with the economic
data starting to show hints
of Brexit strain. Inflation has
risen and will rise further,
squeezing consumers who
have already been running
down savings to sustain their
purchasing habits.
Brexit is unprecedented. A
messy negotiation, including
an outcome in which the U.K.
gets no special trade deal
with the EU upon exit, would
require a much lower pound
to compensate.
—Richard Barley