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What’s
News
Business & Finance
T he top six U.S. banks
could potentially return
over $100 billion to inves-
tors in dividends and stock
buybacks if Trump succeeds
in easing regulations. A1
 Republicans in Congress
are set to release plans to
roll back the Dodd-Frank
law as early as this week. B1
 Bankers want a Dodd-
Frank overhaul to include a
pledge to end new rules and
changes to stress tests. B8
 Hospital executives are
telling lawmakers they fear
a loss of revenue if the ACA
is repealed and would want
federal funding restored. B1
 Google is selling its
Terra Bella satellite-imag-
ery business to Planet Labs
for shares in the startup. B4
 An oil-market gauge is
signaling that a glut may be
easing, a development that
could boost crude prices. B9
 BuzzFeed was sued by a
Russian tech executive whose
name appeared in an unver-
ified dossier on Trump. B4
 Michael Jackson’s estate
is set to face off with the IRS
over the valuation of the pop
star’s name and image. B5
 Universal’s “Split” led the
box office for a third-straight
week, a rare streak for a
low-budget horror film. B5
 Tiffany said the luxury-
goods firm’s CEO is leaving,
effective immediately. B3
World-Wide
 Trump ramped up his
criticism of the judge who
ruled against his immigra-
tion order, saying the courts
should be blamed if there is
a terrorist attack. A1, A4
 The administration is ex-
ploring ways to break Rus-
sia’s ties with Iran in a bid to
end the Syria war and aid the
fight against Islamic State. A1
 Trump faced criticism
from Republicans after he
appeared to draw an equiva-
lence between Putin and the
behavior of the U.S. A7
 Intelligence officials
speculate that arrests in
Russia may be tied to alleged
U.S. election hacking. A8
 Al Qaeda’s offshoot in Ye-
men exhorted followers to
take on the U.S. in response
to a raid by Navy SEALs. A6
 Over 11,400 civilians
were killed or injured in Af-
ghanistan last year, the
U.N. said, a record. A7
 DeVos faces the risk of
Senate rejection as opposi-
tion mounts to Trump’s pick
for education secretary. A3
 The U.N. chief urged
Washington not to scale
back financial support. A6
 Avalanches killed at least
54 people in Afghanistan
over the past three days. A9
 The suspect in a ma-
chete attack on soldiers in
Paris was questioned. A9
CONTENTS
Business News. B3-5
Closed-End Funds B7
Commodities........... B9
Crossword.............. A12
Heard on Street. B10
Journal Report.. R1-8
s Copyright 2017 Dow Jones &
Company. All Rights Reserved
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* * * * * MONDAY, FEBRUARY 6, 2017 ~ VOL. CCLXIX NO. 29 WSJ.com HHHH $3.00
NASDAQ 5666.77 À 0.1% STOXX 600 364.07 g 0.6% 10-YR. TREASURY g 4/32 , yield 2.496% OIL $53.83 À $0.66 EURO $1.0786 YEN 112.59
Appellate Standoff Looms Over Ban
BY DEVLIN BARRETT
AND BRENT KENDALL
WASHINGTON—A federal
U.S. Supreme Court.
The Ninth U.S. Circuit Court
of Appeals early Sunday morn-
ing denied a request from the
the U.S. for visitors from seven
predominantly Muslim coun-
tries for at least 90 days, say-
ing such action was needed to
he posted Sunday afternoon
on Twitter. “If something hap-
pens blame him and court sys-
tem. People pouring in. Bad!”
court could reach a decision
on whether to reinstate the
ban during the ongoing court
case would be late Monday.
appeals court, based in San Justice Department to imme- keep terrorists from entering The appeals court in its or- Either side could appeal
Francisco, is set to rule as diately restore the executive the U.S. The order also sought der early Sunday asked for any action by the appeals
soon as this week on President order after U.S. District Judge to freeze the entire U.S. refu- further legal briefings on the court, asking the Supreme
Donald Trump’s executive or- James Robart, a federal judge gee program for four months. issue, the last of them due Court to intervene. But that
der on immigration in a deci-
sion that may have more influ-
in Seattle, late on Friday is-
sued a restraining order
Over the weekend, Mr.
Trump repeatedly criticized
Monday afternoon. The case
was brought by the state of
may prolong the legal limbo,
Please see FREEZE page A4
ence—and last longer—than against enforcement of the Judge Robart’s ruling. “Just Washington and was joined by
usual because of the long- travel ban. cannot believe a judge would the state of Minnesota.  Why Seattle case stands
standing vacant seat on the The ban suspended entry to put our country in such peril,” The earliest the appeals above others.............................. A4
Patriots Come Back From the Dead to Defeat Falcons in Super Bowl U.S. Aims
To Sever
Russia’s
Iran Ties
BY JAY SOLOMON
WASHINGTON—The Trump
administration is exploring
ways to break Russia’s military
and diplomatic alliance with
Iran in a bid to both end the
Syrian conflict and bolster the
fight against Islamic State,
said senior administration, Eu-
ropean and Arab officials in-
volved in the policy discus-
MIKE EHRMANN/GETTY IMAGES
sions.
The emerging strategy
seeks to reconcile President
Donald Trump’s seemingly
contradictory vows to improve
relations with Russian Presi-
dent Vladimir Putin and to ag-
gressively challenge the mili-
RECORD WIN: New England quarterback Tom Brady, owner Robert Kraft and coach Bill Belichick celebrate their 34-28 overtime win in tary presence of Iran—one of
Super Bowl LI, a record fifth for Mr. Brady and Mr. Belichick, A14. See how Super Bowl ads scored with fans, WSJ.com/SuperBowlAds. Moscow’s most critical allies—
in the Middle East, these offi-
cials say.
A senior administration of-
A Social Snapshot ficial said the White House
SHARING: Plans for an IPO for
Snap prompt comparisons to
MEXICO RECONSIDERS doesn’t have any illusions
about Russia or see Mr. Putin
as a “choir boy,” despite fur-
Facebook’s stock launch. B4
Daily
active Facebook
ITS U.S. FRIENDSHIP ther conciliatory statements
from Mr. Trump about the
Russian leader over the week-
users 483 million end. But the official said that
(4Q 2011) the administration doesn’t
view Russia as the same exis-
Trump’s plans rekindle the nationalism that marked 170 years of hostility tential threat that the Soviet
Snap
161M Union posed to the U.S. during
(4Q 2016) BY DAVID LUHNOW AND JACOB M. SCHLESINGER trillion dollars worth of goods and services the Cold War and that Mr.
each year. There is cooperation on security, Trump was committed to con-
Revenue Mexico had a closed and struggling econ- migration and the environment. Wal-Mart straining Iran.
omy in the mid-1980s, with little American Stores Inc. has become Mexico’s largest pri- “If there’s a wedge to be
$1.13B investment, and most Mexicans viewed the vate-sector employer. Americans couldn’t driven between Russia and
(4Q 2011) U.S. as their historic enemy. After Mexican make enough Super Bowl guacamole without Iran, we’re willing to explore
drug lords tortured and murdered a U.S. Mexican avocados. that,” the official said.
Drug Enforcement Administration agent, President Donald Trump’s vows to move Such a strategy doesn’t en-
$166M President Ronald Reagan temporarily closed quickly to renegotiate the Nafta accord, tirely explain the mixed sig-
Note: Data for (4Q 2016) the border. build a wall along the border and crack Please see RUSSIA page A7
quarter immediately Much has changed in the ensuing 30 down on immigration are testing those
preceding the S-1 filing
Source: the companies
years. Under the North American Free Trade bonds. He has said the alliance fostered by  Trump draws fire on Russia
Agreement, the two countries trade half a Please see MEXICO page A10 stance............................................. A7
California’s Next Buzzy Varietal INSIDE Bank Push Paves Way
May Not Come From Grapes For Capital Returns
i i i
BY TELIS DEMOS return more capital to share-
Pot farmers aim to copy wine’s system of AND PETER RUDEGEAIR holders. While there is no guar-
antee the banks will do so when
provenance; ‘hints of lavender and gas’ The six biggest U.S. banks they are able, they have been
could potentially return more eager in recent years to return
than $100 billion in capital to capital as their profits have
BY ZUSHA ELINSON Calvino, a 37-year-old mari-
juana farmer who lives here
TV’S investors over time through
dividends and share buybacks if
grown and their balance sheets
have become less risky.
ALBION, Calif.—Justin with his wife and seven chil- GRIMMEST the Trump administration suc- The top six U.S. banks have
Calvino maneuvered his mud- dren.
spattered black Ford truck With recreational pot be-
CITY ceeds in a push to loosen bank
regulation.
$101.57 billion in capital in ex-
cess of what regulators require
away from crashing waves of coming legal in the state in President Donald Trump on them to set aside, according to
the Pacific Ocean and into the November—though it is still il- LIFE & ARTS, A11 Friday signed a memorandum research from RBC Capital Mar-
piney hills of what he hopes legal under federal law— ordering a review of the Dodd- kets. Analysts at Morgan Stan-
will become “the growers in the Frank Act, the postfinancial-cri- ley estimate such capital at
Bordeaux of canna- Emerald Triangle, sis regulatory overhaul that has around $120 billion across 18 of
Life & Arts....... A11-13 bis.” a remote portion guided regulators such as the the largest banks.
Markets................... B10
Opinion.............. A15-17 The cool, ma- of Northern Cali- Federal Reserve. The aim is Big banks such as J.P. Mor-
Sports....................... A14 rine air that blan- fornia known for “cutting a lot out” of those gan Chase & Co. and Citigroup
U.S. News............. A2-4 kets the Mendo- its prolific canna- rules, Mr. Trump said in a Inc. climbed more than 3% Fri-
Weather................... A12
World News....... A6-9
cino coast gives bis crops, are try- meeting at the White House. day, while the KBW Nasdaq
the marijuana ing to model That caused bank stocks to Bank Index gained about 2.2%.
grown here a dis- Coffee Kush themselves after gain ground Friday, building on That index has risen about 24%
> tinctive “fresh, the wine industry,
earthy taste” he said as he which places great worth on
HITS AND sharp increases since the presi-
dential election. Those occurred
since Election Day compared
with a 7.4% gain for the S&P
gunned the V8 turbo diesel en- provenance. MISSES OF A as expectations among inves- 500.
gine. State officials said they
“If you’re growing a Coffee would set up a governmental
STOCK MANTRA tors of higher interest rates,
less regulation and stronger
Please see BANKS page A2
Kush, you can almost taste the body to decide whether certain economic growth stoked opti-  GOP gets ready to roll back
moss and the sea,” said Mr. Please see STRAIN page A10 JOURNAL REPORT, R1 mism that banks will be able to financial overhaul..................... B1
 For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
A2 | Monday, February 6, 2017 THE WALL STREET JOURNAL.

Spending Math Promises Wider Deficits
F
or an economy that isn’t
in recession, the U.S. is
facing one of the bleak-
est fiscal outlooks since World
War II. One question that
President Donald Trump will
soon have to decide: How
much is he willing to embrace
even wider deficits?
The answer will determine
whether Mr. Trump’s domes-
tic agenda lives up to markets’
bold expectations, and his
ing on health care and retire-
ment, it also shrinks the tax
base and may lead to slower
rates of growth in personal in-
come and household spending.
Faster economic growth
would solve many of Mr.
Trump’s problems. But dou-
bling the growth rate to 4%,
Mr. Trump’s stated goal,
would be difficult when pro-
ductivity and the labor force
are growing slowly. Another
U.S. NEWS
to detail the scope of his Mercatus Center at George
Debt Burdens agenda and the deficits it may Mason University.
Government debt loads are projected to soar as entitlement require. Even if Republicans opt to
spending rises, squeezing other spending. One overriding question: offset new spending with cuts,
Would he design tax changes it remains unclear whether
Publicly held debt as a share Capital investment as a share that don’t raise deficits, a goal the White House could iden-
of GDP of all federal outlays of House Republicans, or tify programs that allies in
would he stick with plans Congress are willing to ax. Mr.
100% 25% sketched out during his cam- Trump has ruled out changes
paign that relied heavily on to the biggest drivers of rising
80 20 growth to offset steep revenue outlays, Social Security and
losses? Medicare.
Mr. Trump has tipped his

own.
THE Before Mr.
OUTLOOK Trump does
NICK anything, grow-
TIMIRAOS ing budget defi-
cits are already
on a course to
push federal debt to record
levels as a share of gross do-
mestic product. That will
make it extremely difficult to
make good on promises to cut
taxes and boost spending
without spilling more red ink.
Unlike past periods, deficits
are swelling not because of an
economic downturn or a
short-term boost in discre-
tionary spending, but because
of the costs of caring for an
aging population. Medicare
and Social Security are the
biggest projected drivers of
hurdle: Unemployment is al-
ready low. The Federal Re-
serve might stand in the way
of a very fast growth rate if it
threatens to push unemploy-
ment much lower and risks
spurring inflation.
The Fed sees a long-run
growth rate of just 1.8%.
“You’re not going to be able
to grow your way out of this
one. It’s too big,” said Rep.
Tom Cole (R., Okla.). He ex-
presses worry about relying
on rosy growth projections
through the use of so-called
dynamic scoring, to assume
tax cuts would stimulate the
economy to materially offset
immediate revenue losses. “I
worry we’re so in love with
dynamic scoring, and it never
works out the way the tax gu-
60
40
20
0 Estimate
1962 ’70 ’80 ’90 ’00 ’10 ’20
Sources: Congressional Budget Office (ratio);
White House Office of Management and Budget (outlays)
borrowing costs. Second,
health-care inflation has been
slower than expected. It isn’t
clear how long those will last.
The Congressional Budget
Office expects, under current
law and assuming the econ-
omy keeps expanding mod-
estly, deficits to rise from
2.4% in the fiscal year that
15
10
5 Mr. Trump said on Fox News
0 Estimate
1962 ’70 ’80 ’90 ’00 ’10
THE WALL STREET JOURNAL.
large tax cuts. President Ron-
ald Reagan inherited shrinking
deficits, and George W. Bush
inherited budget surpluses
that were projected to grow.
The publicly held debt was
much lower, too, at 25% and
31% of GDP, respectively, com-
pared with 77% today.
R
hand in favor of tolerating epublicans are planning
deficits. “A balanced budget is cuts on nondiscretion-
fine, but sometimes you have ary spending and wel-
to fuel the well in order to re- fare programs, but some of
ally get the economy going,” those have already seen large
reductions due to automatic
last month. “Our military is curbs Congress imposed five
more important to me than a years ago.
balanced budget.” Big cuts can be popular in
He could face resistance symbolic budget resolutions
from budget hawks in his own offered in the spring. But ana-
party. GOP lawmakers have lysts at Beacon Policy Advi-
split sharply over the past two sors said in a report that
years on whether to boost when it comes to actually
military spending without passing spending bills in late
adding to the deficit. summer, Republican lawmak-
Lawmakers are even warier ers will object to specific re-
about adding to deficits with ductions that affect their own
infrastructure spending, an constituents.
initiative where Mr. Trump’s “The long-term budget
appetite seems most out of problems are no longer long-
step with GOP elected offi- term. They are here now,”
cials. White House officials are says Andrew Laperriere, pol-

spending. Ten years ago, some
6,700 Americans turned 65 ev-
ery day. The number is now
9,800 Americans, and it will
rise to 11,700 by 2026.
An aging population not
only pushes up federal spend-
rus tell us it’s going to,” said
Mr. Cole.
Two trends kept deficits
below forecasts in recent
years. First, low inflation and
weak global growth held down
interest rates and thus federal
starts this October to 4.2%
gradually over the following
four years.
The last two times Republi-
cans reclaimed the White
House from Democrats, in
1981 and 2001, they secured
F
aced with a worsening
deficit outlook when he
took office in 1993, Pres-
ident Bill Clinton tossed over-
board his campaign promise
of a middle-class tax cut. Mr.
Trump and his team have yet
looking at creative ways to fi-
nance such spending.
“There’s a big budget battle
coming if they don’t come for-
ward with a big pay-for plan,”
said William Beach, an econo-
mist with the right-leaning
icy analyst at research firm
Cornerstone Macro LP. In
overlooking the budget math,
he believes, investors are too
optimistic about both the tim-
ing and size of any fiscal stim-
ulus.

Train-Car Pileup Narrowly Misses House in Iowa Volunteers Host Events

To Archive U.S. Data
BY DANIELA HERNANDEZ
Academics, librarians and
technology professionals are
hosting “archive-a-thons” to
copy public databases hosted
by the U.S. Environmental Pro-
tection Agency, NASA and
other federal agencies, saying
they are worried access to the
data could be compromised un-
der the Trump administration.
The goal is to ensure the
climate, environmental and
DAVE KETTERING/TELEGRAPH HERALD/ASSOCIATED PRESS
homa Attorney General Scott
Pruitt, Mr. Trump’s pick to run
the EPA, said last month that
the role of human activity on
climate change is subject to con-
tinued debate, a statement that
runs counter to the consensus of
the scientific community.
“Everybody knows [Mr.
Trump is] unconventional,”
said Rush Holt, chief executive
officer of the American Associ-
ation for the Advancement of
Science, a general scientific so-

other data remain in the public ciety, and a former Democratic

domain, according to organiz-
ers of the events, which are
taking place across the U.S.
and in Canada.
“We don’t feel like some-
one’s going to flip a switch and
turn off webpages,” said Je-
rome Whitington, a faculty
member in New York Univer-
sity’s department of anthropol-
ogy who is part of the archiving
effort. “One of the easiest ways
to attack that stuff is to defund
that maintenance…We want to
CLOSE CALL: Over 20 cars from a Canadian Pacific Railway train derailed Sunday south of Dubuque, Iowa. No injuries were reported. ensure that high-quality infor-
mation is in the hands of people
so they can use it.”
While President Donald
congressman. “There’s uncer-
tainty about whether evidence
has a privileged place in the
administration.”
White House spokeswoman
Kelly Love declined to com-
ment, and the EPA didn’t pro-
vide a comment.
National Aeronautics and
Space Administration spokes-
man Allard Beutel said the
agency was “continuing to pro-
vide NASA data and informa-
tion about our research and
missions to the public as we
previously have been doing.”
Scott Smullen, a spokesman
for the National Oceanic and

BANKS Holding Back

Continued from Page One
“Bank regulation didn’t seem
like priority one for the admin-
istration, so to see these execu-
tive actions come so early is a
positive,” said Jason Benowitz,
senior portfolio manager at the
Roosevelt Investment Group
Inc., which manages $3 billion.
Requirements for capital
aren’t explicitly laid out in the
Dodd-Frank Act, but are set by
Estimated amount of excess capital
held by the six largest U.S. banks
capital is a key reason for the
investment, Mr. Muldoon said.
Being able to release more or
all of that capital would be a
boon to banks and their inves-
Citigroup tors in several ways. First,
$27.5 billion banks would likely return much
of the capital through dividend
J.P. Morgan
increases or higher share buy-
20.3 backs. The latter, by decreasing
Wells Fargo the number of shares a bank
16.4 has outstanding, helps to boost
earnings per share. That, in
Bank of America turn, can boost share prices.
14.1 Goldman Sachs bank ana-
Goldman Sachs lysts said the average big U.S.
ECONOMIC
CALENDAR
Economic data this week will
provide details about the state
of international trade, a hot
topic thanks to President Donald
Trump’s promise to reorient U.S.
trade policy.
MONDAY: Mario Draghi, pres-
ident of the European Central
Bank, will travel to the European
Parliament in Brussels for his
regular testimony. He is ex-
Trump has said nothing spe-
cific about cutting off access
to data, his past statements
about reducing funding to the
Atmospheric Administration,
said the agency hadn’t re-
ceived any directives from the
Trump administration target-
EPA, during which he called it ing the availability of NOAA
“the laughingstock of the databases. Archivists are also
world,” and his administra- copying NOAA data.
tion’s moves to clamp down on Archiving events have been
communications at some fed- held in New York, Portland,
eral agencies, have raised con- Ore., and Ann Arbor, Mich.,
cern among scientists about with others planned for Cali-
long-term access to data. fornia and Boston this month.
The administration’s skepti- —Thomas M. Burton
cism toward climate science has and Stephanie Armour
added to these concerns. Okla- contributed to this article.

the Fed and other regulators.
They also are guided by inter-
national banking agreements.
While the Trump administra-
tion couldn’t directly change
these requirements, it could in-
fluence them, as well as the
Fed’s stress tests.
As much as shareholders
would welcome greater capital
returns, such a move would cre-
ate risks. Before the financial
crisis, for example, it was com-
mon for large banks to spend
more on dividends and stock re-
purchases than they earned in
annual profit. That left big
banks including Citigroup
poorly positioned for financial
tumult, leading it and others to
accept government bailouts.
It isn’t clear exactly what
regulatory measures Mr.
Trump’s push could eliminate.
One area of interest for inves-
tors are the billions of dollars of
capital that banks have been
forced to hold as a buffer
against future financial crises.
Bankers have argued that those
buffers are in excess of what
they need to absorb losses. Reg-
ulators, however, see them as a
means to ensure that systemi-
cally important firms can with-
stand global shocks.
Supporters of higher capital
12.4
Morgan Stanley
10.9
Source: RBC Capital Markets
THE WALL STREET JOURNAL.
requirements counter that
banks need even higher buffers
to truly dispel the notion that
they are too big to fail.
Some investors have come to
regard these buffers as trapped
capital since the banks’ ability
to return funds to shareholders
is restricted by the Fed through
annual “stress tests.” That has
led many lenders to hold more
capital.
Citigroup has the most ex-
cess capital at around $27 bil-
lion, according to RBC. J.P. Mor-
gan has $20 billion, and Wells
Fargo & Co. has $16 billion.
“Regulatory relief could be a
significant tailwind for the in-
dustry in terms of capital effi-
ciency and managing cost,” said
Conor Muldoon, fundamental
portfolio manager at Causeway
Capital Management LLC, which
manages $44 billion globally.
Citigroup is the largest holding
in the firm’s Global Value fund,
which invests across sectors.
The potential for it to return
bank could boost 2018 earnings
per share by 13% if all excess
capital is returned to sharehold-
ers via buybacks.
As well, reducing the amount
of capital a bank holds helps to
boost returns on equity. This is
a measure of bank profitability
that compares net income with
common shareholder equity.
Many big banks have strug-
gled in recent years to post re-
turns that exceed their theoreti-
cal cost of capital—or how
much it costs them to raise
funds—of about 10%.
If banks’ return on equity
jumps, that would likely lead to
higher valuations for their
shares.
But capital returns that are a
boon for shareholders could
make debt investors nervous,
leading to an increase in bank
funding costs. Fitch Ratings
warned Friday that banks could
become riskier with smaller
capital buffers.
“Any changes in rules that
reduce capital and liquidity re-
quirements could have negative
rating implications if banks re-
spond to such rules with
weaker capital and liquidity po-
sitions,” said Joo-Yung Lee,
head of North American finan-
cial institutions for Fitch.
pected to face questions about
when the ECB might start to
wind down its €2.3 trillion ($2.5
trillion) quantitative-easing pro-
gram. A recent rise in inflation
has sparked calls in Germany for
a policy reversal from Frankfurt.
TUESDAY: The U.S. Com-
merce Department releases its
final international trade report
from 2016. The December data
will effectively serve as a base-
line for the trade deficit before
Mr. Trump took office in January.
He has promised to narrow that
gap and proposed imposing fees
on certain imports. An rise in
imports and a fall in exports
helped retard economic growth
in the last three months of 2016
FRIDAY: China will release its
January trade data (Thursday
evening in the U.S.). Given re-
cent improvement in the “new
export orders” subindex of
China’s official purchasing man-
agers index—to 50.3 in January
from 50.1 in December—econo-
mists expect exports to range
from flat to a few percentage
points positive following Decem-
ber’s 6.1% year-to-year decline.
FRIDAY: The U.S. Labor De-
partment will release its import-
price report. The data are seen
as a possible indicator of future
consumer inflation.
CORRECTIONS  AMPLIFICATIONS
A Page One article in some in the Review section incor-
editions Saturday about a fed- rectly omitted the word “al-
eral judge blocking President leged.”
Donald Trump’s executive order
on immigration and refugees Six years ago, Yosan Tesfay
was written by Devlin Barrett fled her home country of Eri-
and Dan Frosch. Mr. Frosch’s trea for Ethiopia. On Wednes-
byline was incorrectly omitted. day, she arrived in Phoenix
from Ethiopia. A photo caption
Alleged Jewish terrorists in with a U.S. News article on Fri-
2015 firebombed a Palestinian day about refugees incorrectly
home in the West Bank village said she arrived in Phoenix
of Duma. Saturday’s cover story from Eritrea.
Readers can alert The Wall Street Journal to any errors in news articles by
emailing wsjcontact@wsj.com or by calling 888-410-2667.
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THE WALL STREET JOURNAL. * * * * * Monday, February 6, 2017 | A3

U.S. NEWS

Few Recall Gorsuch Volunteer Role President:

Repeal of
Questions arise over
Supreme Court pick’s
level of participation
ACA Won’t
in Harvard programs Be Swift
BY BETH REINHARD BY LOUISE RADNOFSKY
AND JESS BRAVIN
President Donald Trump
When President Donald lowered expectations for his
Trump introduced his Supreme party’s swift repeal and re-
Court pick on live television placement of the 2010 health
last week, he said Neil Gorsuch law in an interview with Fox
had “demonstrated a commit- News’s Bill O’Reilly aired Sun-
ment to helping the less fortu- day, saying “maybe it’ll take til
nate” by working in the Har- some time into next year.”
vard Prison Legal Assistance “Obamacare doesn’t work.
Project and the Harvard De- So we are putting in a wonder-
fenders. ful plan. It’s statutorily… takes
His affiliation with these awhile to get. We’re going to
volunteer programs—which of- be putting it in fairly soon,”
CHIP SOMODEVILLA/GETTY IMAGES

fer law school students real-life Mr. Trump said.

legal experience representing “I think that yes, I would
prison inmates and the poor— like to say by the end of the
helped give Mr. Gorsuch’s year, at least the rudiments,
deeply conservative résumé a but we should have something
personal touch, and the groups within the year and the follow-
were highlighted in news re- ing year.”
ports about his nomination. He was responding to a
But roughly three dozen stu- question from Mr. O’Reilly
dents who participated in the President Trump said Neil Gorsuch, pictured on Capitol Hill last week, had ‘demonstrated a commitment to helping the less fortunate.’ over whether Americans could
two programs while Mr. Gor- expect to see the Trump ad-
such was at Harvard Law this period said they had no attended a few weeks of train- tion isn’t reflected on Harvard’s question of whether he remem- ministration roll out a plan by
School from 1988 to 1991 said memory of Judge Gorsuch’s in- ing for the Defenders program transcripts. bered Judge Gorsuch. year-end to overturn the 2010
they have no recollection of his volvement, a third one declined with Judge Gorsuch in either Mr. Gorsuch didn’t appear in Lisa Dealy, Harvard’s assis- health law and enact new pol-
involvement. to say, and a fourth died in 1990 or 1991. any of the yearbook photos for tant dean for clinical and pro icy in its place.
“If he was active in PLAP I 1998. Other Harvard classmates “What I am prepared to do either of the groups during his bono programs, and Boston Mr. Trump’s remarks ap-
am sure I would remember and friends of Mr. Gorsuch say is corroborate that Neil Gor- three years at Harvard, nor was criminal defense lawyer John peared to acknowledge Repub-
him,” said Elizabeth Buckley they have no recollection of such was in the Harvard De- he listed among other students “Jack” Cunha, who worked as a licans’ current logjam in fulfill-
Lewis, who attended Harvard at him discussing either program. fenders,” said Mr. Edel. “I have as “not pictured.” Still, other supervising attorney of the De- ing a long-stated ambition of
the same time as Mr. Gorsuch. Memories can fade over 25 a specific recollection of talking students active in the groups fenders from 1985 to 1995, both striking President Barack
The White House gave The years, and the programs de- to him about one case, but I sometimes didn’t appear in the said they had no recollection of Obama’s signature Affordable
Wall Street Journal the name of manded no specific time com- don’t want to go into the de- photos, and PLAP and Defend- Mr. Gorsuch’s involvement. Care Act. The party’s majori-
one Harvard Law School gradu- mitment. tails…I’d like to leave it there.” ers are clearly informal in Marty Gideonse, who was ties in the House and Senate
ate who said he could corrobo- Mr. Gorsuch didn’t respond In PLAP, students represent many ways, with no official ar- PLAP’s supervisor while Mr. cannot sustain significant de-
rate that Judge Gorsuch was in to emailed questions. inmates at disciplinary and pa- chives. Gorsuch was at Harvard, died fections by either moderate or
the Defenders, but declined to According to the White role hearings. Defenders pro- “It’s not like there is a roster in 1998. conservative GOP lawmakers,
give any details of the judge’s House, Mr. Gorsuch said he par- vide representation to indigent of people who participated, A spokesman for the Massa- and those two sides are cur-
participation. The White House ticipated in PLAP his first year defendants. In both cases, stu- who came to one meeting or 10 chusetts Department of Correc- rently seeking irreconcilable
also provided copies of a 2008 of law school and the Defenders dents are guided by more expe- meetings or did what on some tion said the agency doesn’t approaches. The answer came
email exchange between the during the latter part of his rienced students and by super- case,” said John Salsberg, who maintain records dating to after a week in which conser-
Defenders’ alumni director and time there. The White House vising attorneys. has served as a supervising at- 1988-1991, the period during vative lawmakers said they
Judge Gorsuch. referred The Wall Street Jour- PLAP and Defenders are vol- torney for the Harvard Defend- which Mr. Gorsuch would have were frustrated at the slow
Two people who broadly nal to Chris Edel, a New York unteer programs and students ers since the early 1980s. He represented prison inmates in pace of movement to repeal
oversaw the students during County prosecutor who said he don’t earn credit, so participa- said he couldn’t answer the disciplinary proceedings there. the health law.

Opposition Mounts for Trump’s Education Nominee

BY SIOBHAN HUGHES
AND TAWNELL D. HOBBS
Betsy DeVos, President
Donald Trump’s choice to be
secretary of education, is at
risk Tuesday of becoming the
first cabinet nominee in 28
BRENDAN SMIALOWSKI/AGENCE FRANCE-PRESSE/GETTY IMAGES
DeVos Comments cation fitted to their needs.
When Sen. Maggie Hassan
Fuel Pushback (D., N.H.), whose son has cerebral
palsy, asked whether Mrs. DeVos
understood that the disabilities
During a Senate hearing on act applies nationally, Mrs. DeVos
her nomination to be secretary replied, “I may have confused it.”
should determine policies on
guns in schools. Referencing a
mention by Sen. Mike Enzi (R.,
Wyo.) of a grizzly-bear fence
surrounding a Wyoming school,
Mrs. DeVos said, “I would imag-
ine that there is probably a gun
victory, bringing national at-
tention to the president’s views
on education that Democrats
believe are out of the main-
stream.
“I have heard from thou-
sands—truly thousands—of
Alaskans,” said Sen. Lisa

years to be rejected by the
Senate, due in large part to
the efforts of people like Tim
Royers, a high-school history
teacher in Nebraska.
Named his state’s teacher of
the year, Mr. Royers started or-
ganizing his fellow honorees
against Mrs. DeVos when they
gathered for a celebration last
month in Florida. When Mrs.
DeVos, a school-choice activist,
seemed to stumble in her con-
firmation hearing days later,
Facebook messages began fly-
ing among the teachers about
Betsy DeVos during a Senate how to use the moment to
confirmation hearing Jan. 17 lobby lawmakers.
of education last month, Betsy The comments were a red in the school to protect from po- Murkowski (R., Alaska) in an-
DeVos said states should de- flag to some educators who tential grizzlies.” nouncing she would oppose the
cide whether federally funded worry the federal government Clips of the exchanges nomination. “They’ve con-
schools must meet the require- will provide money to charter posted on the Facebook page of tacted me by phone, by email,
ments of the Individuals with schools without holding them ac- Sen. Chuck Schumer (D., N.Y.) in person.”
Disabilities Education Act, a countable for providing services have been viewed million of Mrs. DeVos, a 59-year-old
U.S. law that ensures students mandated under the law. times. billionaire, has spent decades
with a disability receive an edu- Mrs. DeVos also said states —Siobhan Hughes pushing for charter schools and
advocating for vouchers.
Those opposing Mrs. DeVos
Similar efforts by parents, the confirmation vote. making her the only cabinet question her loyalty to the tra-
teachers and others around the Republicans hold 52 Senate nominee in history to win con- ditional public school system.
country helped jam Senate seats, and Democrats have 48. firmation on a tiebreaking Supporters say her 30-plus
phone lines for days. With two If no additional opponents to vote. years of dedication to the
Republican senators now op- her nomination emerge, the For a Democratic Party that school-choice movement and to
posed to Mrs. DeVos, her nomi- Senate will be tied, 50-50, leav- lacks the votes to stop Mr. widening educational options
nation would fail if a third Re- ing Vice President Mike Pence Trump’s nominees on its own, for low-income families make
publican abandons her during with the deciding vote and the process has become a small her a good fit for the job.
©T&CO. 2017

Lines Drawn on Legislation in South

BY CAMERON MCWHIRTER ability to prosper,“ he said.
AND JON KAMP The Human Rights Cam-
paign, a national advocacy
ATLANTA—Socially conser- group for lesbian, gay, bisexual
vative legislation pushed by Re- and transgender people, said it
publicans in Southern states counted 250 bills in 38 states in
such as Georgia, Tennessee and 2016 that the group said could
GORDON DICKSON/TRIBUNE NEWS SERVICE/ZUMA PRESS

Texas faces opposition from cause harm through steps like

some business groups worried eliminating local protections for
about the potential economic the LGBT community, or allow-
fallout. ing businesses to cite religion
Business coalitions with as a reason to deny services.
names like Texas Competes, Only five, including the
Georgia Prospers and Tennessee North Carolina bill restricting
Thrives are advocating against transgender bathroom access,
legislation that they say would became law. The Human Rights
allow discrimination based on Campaign says the low number
sexual identity, or could limit is in part due to staunch busi-
bathroom access for transgen- ness opposition.
der people. The next test may come in
Proponents of such legisla- Texas, where some lawmakers
tion say it protects religious be- Sign on a women’s bathroom door at a business in Texas. are trying to pass a bill that
liefs or public safety in bath- would put limits on transgender
rooms. The coalitions argue it ticultural affairs. “Those laws support these bills in Georgia bathroom access, similar to the
hurts states as they compete for do not reflect our values,” he are “keeping their heads down,” bill passed in North Carolina
businesses and workers. said. afraid to speak up for fear of re- last year that led to the exit of
Multinational companies in- Social conservatives also prisals. businesses and events from the
cluding Atlanta-based Delta Air claim public business support. David Fowler, president of state.
Lines Inc. and Memphis-based As controversy swirled follow- the Christian-conservative Fam- Speaking recently, Texas Love is...
International Paper Co., the ing the passage of North Caro- ily Action Council in Tennessee, House Speaker Joe Straus, a
Atlanta Falcons football team
and small businesses liked Ur-
lina’s bathroom law last year,
groups favoring the law listed
and a former state senator, sup-
ports bills in his state that have
San Antonio Republican, set the
table for a fractious debate SOMETHING TO
ban Hippie Chiropractic in Dal-
las have joined the effort in op-
backing from hundreds of local
business owners. One group,
drawn controversy, including a
bathroom-access measure that
ahead.
“Many people where I come WRITE HOME ABOUT
position to the legislation. KeepNCSafe, says on its website failed last year and a law that from get concerned about any-
Bethesda, Md.-based Mar- it had more than 300 busi- allowed Tennessee counselors thing that could slow down our NEW SWEET NOTHINGS ENVELOPE CHARM
riott International Inc., which nesses sign a letter thanking to refuse and refer on clients overall job-creating machine,”
has signed up for both Texas the governor for the law that it based on personal principles. Mr. Straus said, addressing a
Competes and Georgia Prospers said allowed businesses to oper- He said Tennessee can main- conference sponsored by the
business coalitions because of ate “with their deeply held be- tain a business-friendly environ- Texas Association of Business
its properties in those states, liefs.” ment and its conservative roots. last month. “They’re also
found taking such positions “an Virginia Galloway, regional “The state as a whole has al- watching what’s happened in
easy call” because such laws are field director for the Atlanta- ways been conservative, partic- North Carolina, and they’re not 800 843 3269 | TIFFANY.COM
bad for business, said Apoorva based Faith and Freedom Coali- ularly on social issues, and it enthusiastic about getting that
Gandhi, vice president for mul- tion, said small businesses that obviously has not affected our type of attention.”
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
A4 | Monday, February 6, 2017
Why Seattle Case Stands Above Others
Judge Robart’s ruling
for nationwide halt to
Trump’s immigration
order has swift impact
BY ASHBY JONES
AND JACOB GERSHMAN
In the 10 days since Presi-
dent Donald Trump handed
down his executive order on
immigration, plaintiffs have
flooded the courts with legal
challenges. As of Sunday, more
than two dozen petitions and
lawsuits had been filed.
But for the moment, one
lawsuit looms above all others,
a case brought by Washington
state and Minnesota filed last
week in Seattle federal court.
The pre-eminence of the Se-
attle case, which now sits with
a federal appeals court in San
Francisco, owes largely to the
breadth of the ruling made
Friday by U.S. District Judge
James L. Robart.
While other courts have
chipped away at Mr. Trump’s
directive, the Seattle-based
judge ordered a nationwide
halt to all of its main parts, a
dramatic and controversial
move that went far beyond
GOP Bill Led to Nations
Named in Trump Order
BY JOE PALAZZOLO
White House officials had an
answer ready when reporters
asked how President Donald
Trump chose the seven coun-
tries whose citizens he tempo-
rarily banned from entering the
U.S.: He took his cues from the
Obama administration.
Mr. Trump’s chief of staff,
Reince Priebus, said in a recent
appearance on NBC that the
places named in Mr. Trump’s
executive order on immigration
and refugees were “identified
by the Obama administration
as the seven most dangerous
countries in the world in re-
gard to harboring terrorists
and affirmed by Congress.”
But most of the countries
were first identified in legisla-
tion introduced by Republicans.
The bill, which later passed
Congress with bipartisan sup-
port, was aimed not at curbing
immigration, but at pressuring
European allies to share more
terror-related intelligence.
The story of how the seven
majority-Muslim countries
came to be in Mr. Trump’s or-
der begins with a 2014 bill in-
troduced by then-Rep. Candice
Miller, a Michigan Republican
who retired from Congress this
year.
The bill sought to tighten
the security of a federal pro-
gram that allows citizens of the
U.K., France and three dozen
other nations to travel to the
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Before U.S. District Judge James L. Robart’s ruling, several courts
had curbed parts of President Trump’s travel ban.
other rulings so far.
The impact was immediate:
Travelers who had been
barred from entering the U.S.
under the order began to ar-
rive this weekend, without ap-
parent incident.
Legal experts called the
move unusual, but well within
Judge Robart’s discretion to
make.
The White House appealed
U.S. without a visa.
Ms. Miller’s bill forced coun-
tries to turn over intelligence
about their citizens with sus-
pected terrorist links or face
suspension from the visa-
waiver program.
She introduced an amended
version of the bill the following
year. It included the informa-
tion-sharing provisions and
new restrictions on waivers.
Citizens from the 38 countries
in the program who had made
trips to Iran, Iraq, Sudan or
Syria since 2011 would be ineli-
gible to enter the U.S. without
a visa.
Ms. Miller declined to com-
ment.
A stand-alone version of the
bill sailed through the House
by a vote of 407-19. The legisla-
tion, given urgency by the No-
vember 2015 Paris attacks, ulti-
mately passed as part of a
spending bill in December 2015
and was signed by then-Presi-
dent Barack Obama.
The new law required the
Department of Homeland Secu-
rity to decide whether travel to
any additional countries should
disqualify people from obtain-
ing visa waivers.
The department added
Libya, Somalia and Yemen to
the list of disqualifying coun-
tries last year, bringing the to-
tal to seven.
The Department of Home-
land Security didn’t respond to
a request for comment.
P W L C 10 11 12
the ruling on Saturday. Mr.
Trump was critical of Judge
Robart, referring to him as
“this so-called judge,” in a
tweet Saturday. He also said
the ruling was “ridiculous and
will be overturned!”
Before Judge Robart’s ruling,
several courts had curbed parts
of Mr. Trump’s travel ban, but
had largely chosen to leave the
main thrust of it undisturbed.
Iran-born bioengineer researcher Nima Enayati checked in on a flight from Milan to New York on Sunday afternoon.
FREEZE
Continued from Page One
potentially for months.
Given the current 4-4 split
on the Supreme Court be-
tween liberal-leaning and con-
servative-leaning justices, it is
possible that the losing side
at the Ninth Circuit won’t be
able to muster the support
needed among the justices for
high-court intervention. An
emergency stay of the lower
court ruling by the Supreme
Court would require agree-
ment from five justices. A Su-
preme Court tie vote would
leave the Ninth Circuit deci-
sion in place.
The Ninth Circuit has long
been regarded as perhaps the
nation’s most prominent left-
leaning appeals court, though
such leanings aren’t necessar-
ily predictive of how three-
judge panels will rule on spe-
cific issues. A large majority of
judges on the court have been
appointed by Democratic pres-
idents.
The vacancy on the high
court remains open because
Republicans declined to act on
U.S. Circuit Judge Merrick
Garland’s nomination by for-
mer President Barack Obama
to succeed the late Justice An-
tonin Scalia, saying they
wanted to allow voters to
weigh in on the court’s direc-
tion by electing the next presi-
dent.
The justices have found
ways to come together in a
range of cases, but even with
Chief Justice John Roberts’s
push for consensus, the eight-
member court has found itself
at loggerheads in some ideo-
logically divisive cases. And
those tie votes have left some
areas of the law unsettled, in-
cluding in a major case last
year involving Obama adminis-
tration efforts to assist illegal
immigrants.
It isn’t yet clear if Mr.
Trump’s immigration order
would produce those kinds of
divisions, and lower court
judges appointed by both lib-
H T G K B F A M 1 2 3 4 5 6 7 8
U.S. NEWS
A day after Mr. Trump
signed the order, a federal
judge in Brooklyn, N.Y.,
blocked the government from
deporting refugees, visa hold-
ers and others from the seven
listed countries who had been
cleared to enter the U.S. but
JOSE ROMERO/AGENCE FRANCE-PRESSE/GETTY IMAGES
were detained as they came
into country.
A federal judge in Virginia
last week temporarily blocked
the federal government from
detaining green card holders at
Dulles International Airport.
A federal court in Los Ange-
les, meanwhile, issued a tem-
porary restraining order on
Tuesday that prohibited the
government from denying en-
try to immigrants from the
seven countries with valid vi-
sas. The order didn’t address
refugees or nonimmigrants,
such as students and tourists.
Exactly why Judge Robart
chose the path he did wasn’t
completely explained in his or-
der. His broad power derives
from the idea that in presiding
over a dispute, a judge gener-
ally has the authority to bind
the parties from acting in a
way deemed to violate the law.
That power often inherently
broadens when a case involves
the U.S. government—and a
Travelers Trickle In
As Rules Change
A handful of travelers who
had been barred from entering
the U.S. under an executive or-
der by President Donald Trump
began to arrive this weekend,
moving through customs with-
out incident, immigration law-
yers said.
The slow resumption of
travel reflects the chilling ef-
fect of the Jan. 27 order and
its associated legal uncertainty,
along with the difficulty in
quickly arranging for interna-
tional travel.
The executive order blocked
people from seven countries—
Iran, Iraq, Libya, Somalia, Su-
dan, Syria and Yemen—from
entering the U.S. for 90 days
and paused refugee admissions
eral and conservative presi-
dents have ruled against the
administration so far. But if
there were gridlock at the high
court, the ruling from the
Ninth Circuit could be the final
word on what legal rules are
in place in the near term while
a flurry of court challenges
unfold.
Mr. Trump last week nomi-
A Supreme Court
emergency stay would
require agreement
from five justices.
nated Judge Neil Gorsuch as
his nominee to fill the vacant
seat, though his nomination
process may become a pro-
longed fight given that some
Democratic senators feel they
were unfairly deprived of con-
sideration for Judge Garland.
The eight current Supreme
Court justices don’t automati-
cally split into ideological
camps and broad agreement
among them is possible. The
9 O I X X **** THE WALL STREET JOURNAL.
widely applied federal policy.
Judge Robart concluded the
states were likely to succeed
on the merits of their claims,
but didn’t engage in a full anal-
ysis of the constitutional is-
sues. Rather, his ruling empha-
sized the impracticable nature
of a piecemeal order.
Other factors could have
been at play in dictating the
scope of the order since the
plaintiffs were two states—
Washington and Minnesota—
rather than individuals.
“It’s fairly straightforward
to give relief when the plain-
tiffs are individuals asking for
[something] specific and dis-
crete,” said Adam Winkler, a
constitutional-law expert at
the University of California,
Los Angeles. “But when you
have a whole state, or two
states, it can be hard to give
relief that’s short of compre-
hensive.”
The ruling’s breadth might
also have been driven by a per-
ceived need to halt, at least
temporarily, the confusion cre-
ated by week’s other rulings,
say legal experts.
But despite its front-runner
status at the moment, legal ex-
perts say there is no guarantee
the Seattle case will be the one
for four months. The order re-
sulted in the revocation of tens
of thousands of visas.
Camille Mackler of the New
York Immigration Coalition said
visa holders began arriving in
Boston and New York on Sat-
urday and Sunday. “It’s back
to business as usual, as far as
I can tell,” she said.
Lawyers at Chicago’s
O’Hare International Airport
said visa holders from the
seven targeted countries were
trickling in. Some had changed
their flights to get in as soon
as possible after they heard of
a federal judge’s order Friday
that blocked the ban.
Refugee One, a Chicago
group that resettles refugees
in the area, said it was expect-
ing refugees to begin arriving
at O’Hare on Monday.
—Joe Palazzolo and
Shibani Mahtani
previous immigration split,
however, highlights potential
court tensions. The justices
deadlocked last June on the
Obama administration’s plan
to defer deportations and al-
low work authorization for
millions of illegal immigrants.
At some point months down
the road, a nine-judge Su-
preme Court may decide to
answer the overarching legal
question of how much author-
ity a president has to decide
who does and doesn’t enter
the U.S.
Mr. Trump, meanwhile,
ramped up his criticism Sun-
day of the legal wrangling
over the ban, saying the courts
should be blamed if there is a
terrorist attack.
For now, immigration
agents aren’t enforcing Mr.
Trump’s Jan. 27 order. A small
number of people from the
targeted countries in the ban
began to clear customs this
weekend without incident, im-
migration attorneys said.
On Saturday, also on Twit-
ter, Mr. Trump had referred to
Judge Robart as “this so-
called judge,” an attack that
made some Republicans un-
to provide resolution to the
constitutional and other issues
raised in the legal challenges.
For instance, were the Ninth
U.S. Circuit Court of Appeals to
enter a stay, the case would go
back to Judge Robart, who
would move forward with the
substance of the case rather
than potentially have the case
end up quickly before the Su-
preme Court, said Erwin
Chemerinsky, an expert on the
federal court system and the
dean at the University of Cali-
fornia, Irvine, School of Law.
Early Sunday morning, the
Ninth Circuit denied a request
from the Justice Department to
lift the stay. Instead, the court
asked for further legal brief-
ings on the issue, the last of
them due Monday afternoon.
A halt of the stay would put
the Seattle case on a slower
track, opening the door for
other challenges and other rul-
ings to move ahead of it.
“With so many cases coming
up in so many courts, it’s not
clear that this case is going to
be the most important,” said
Mr. Winkler. “How it plays out
from here is anyone’s guess.”
—Joe Palazzolo
and Nicole Hong
contributed to this article.
ANTONIO CALANNI/ASSOCIATED PRESS
easy. “I think it’s best not to
single out judges for criti-
cism,’’ Senate Majority Leader
Mitch McConnell (R., Ky.) told
CNN on Sunday.
Mr. Trump’s comments this
weekend aren’t the first time
he has publicly attacked a fed-
eral judge. During the presi-
dential campaign, he criticized
a judge overseeing civil fraud
lawsuits against Trump Uni-
versity, claiming Judge Gon-
zalo Curiel had “an absolute
conflict’’ in presiding over the
litigation because he was of
Mexican heritage. The judge
was born in the U.S.
After the election, Mr.
Trump reached a $25 million
settlement to end the litiga-
tion. He didn’t admit wrong-
doing.
Over the weekend, govern-
ment lawyers filed court pa-
pers arguing that because the
executive order was issued out
of a concern for national secu-
rity, it is wrong and poten-
tially dangerous for a court to
review such judgments.
“Judicial second-guessing of
the president’s national secu-
rity determination in itself im-
poses substantial harm on the
federal government and the
nation at large,’’ Justice De-
partment lawyers wrote in le-
gal papers defending the exec-
utive order.
Noah Purcell, a lawyer for
the state of Washington, which
had filed the suit, criticized
that reasoning at Friday’s
court hearing.
“They’re basically saying
that you can’t review anything
about what the president does
or says, as long as he says it’s
for national security reasons.
And that just can’t be the
law.’’
Mr. Trump’s executive or-
der, which suspended entry to
the U.S. of visitors from Iran,
Iraq, Libya, Somalia, Sudan,
Syria and Yemen, indefinitely
barred Syrians from entering
as refugees. It cut the number
of refugees the U.S. will accept
in fiscal 2017 to 50,000—less
than half the number former
President Barack Obama called
for this year.
THE WALL STREET JOURNAL. Monday, February 6, 2017 | A5

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For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
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A6 | Monday, February 6, 2017
Al Qaeda in Yemen Urges Reprisal for Raid
Al Qaeda’s offshoot in Ye-
men exhorted followers to
take on the U.S. in response to
a raid by American comman-
dos that killed two senior fig-
ures in the group, while the
militants launched fresh at-
tacks on territory held by the
internationally recognized
government.
By Asa Fitch in Dubai
and Saleh al-Batati in
Aden, Yemen
Qasim al-Raymi, the leader
of al Qaeda in the Arabian
Peninsula, or AQAP, com-
pared his group to extremists
fighting American forces in
Iraq, Afghanistan and Soma-
lia, according to a speech
translated by SITE Intelli-
gence Group, which tracks ex-
tremist activities and mes-
saging.
“My message to our lions
in the battlefield [is] here
comes America, stepping on
your land with its arrogance
and pride,” Mr. Raymi said on
Saturday, according to SITE.
“Remind it with the raids of
Mogadishu, the victories of
Kandahar, and the persis-
tence of Fallujah,” he added,
referring to cities in Somalia,
Afghanistan and Iraq, respec-
tively.
U.N.’s New Chief Presses U.S. to Keep Up Its Support
BY FARNAZ FASSIHI
UNITED NATIONS—Secretary
General António Guterres urged
the U.S. not to scale back its
support for the United Nations,
saying that any move to defund
or disengage from the world
body would pave the way for
other nations to fill in the void.
In an interview with The
Wall Street Journal, Mr. Gu-
terres said he hoped to send a
message to President Donald
Trump that “there is value” to
the U.S. for its contributions to
programs and operations such
We reinvent
our classics
#AirLiquideistransforming
Yemeni government forces in Zinjibar in August following an offensive to recapture the city from al-Qaeda jihadists.
An American special forces
unit attacked an AQAP com-
pound in a remote part of
central Yemen on Jan. 29,
killing militants and likely
some civilians, according to
U.S. officials. A U.S. Navy
SEAL was killed in a firefight
and three American soldiers
were wounded.
as peacekeeping, climate change
and humanitarian relief. “We
are engaging in a dialogue….I
hope will lead to a confidence
being built to allow the U.S. to
be a strong and reliable partner
to the U.N.,” he said.
“Whenever there is space
left by someone, another
moves to occupy it,” he added.
The U.S. contributes about
$8 billion a year to the U.N.
and is its top donor.
Mr. Guterres’s comments
followed indications by Mr.
Trump that he was rethinking
the U.S.’s commitment to the
WORLD NEWS
The raid, the first such op-
eration under Mr. Trump and
the first involving U.S.
ground troops in Yemen since
2014, sparked controversy in
Washington as officials of the
former administration of Ba-
rack Obama disputed ac-
counts of its planning and
questioned assertions that it
global body.
Mr. Trump, on his Twitter
account, has called the U.N. a
“club.” A draft executive order
prepared at the White House,
meanwhile, calls for a 40% cut
in U.S. funding of international
organizations, including such
programs as Unicef, which is
focused on children, and U.N.
peacekeeping. The Trump ad-
ministration hasn’t formally
proposed the cuts and hasn’t
said whether the draft order is
under serious consideration.
Mr. Guterres took charge of
the U.N. on Jan. 1. after a poll-
had been considered under
Mr. Obama’s watch.
Mr. Raymi said 25 people,
including 14 men and 11
women and children, were
killed in the raid. Among the
dead were two senior AQAP
figures—Abdulraoof al-Dha-
hab and Sultan al-Dhahab—he
said.
António
Guterres, who
took charge
Jan. 1, made
structural
reforms a top
priority.
ing process in which he con-
sistently ranked first among
his competitors for the job.
Previously, he served as Portu-
gal’s prime minister and the
head of U.N.’s refugee agency,
where he gained a reputation
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THE WALL STREET JOURNAL.
AQAP’s narrative of defend-
ing Muslims against the West
and could increase anti-U.S.
sentiment and with it AQAP’s
pool of recruits,” the Brus-
sels-based International Cri-
sis Group said in a report on
Tuesday.
AQAP has also begun at-
tacking villages recently in
the southern Abyan province,
south of where the U.S. raid
SALEH AL-OBEIDI/AGENCE FRANCE-PRESSE/GETTY IMAGES
took place, according to local
residents. While it was un-
clear whether the assaults
were a direct response to the
raid, AQAP fighters haven’t
made such a push in Abyan in
months.
The areas attacked are
currently in control of Ye-
meni forces allied to the in-
ternationally recognized gov-
ernment of President Abed
Rabbo Mansour Hadi. Mr.
Hadi is backed by a Saudi
Arabia-led military coalition
that is fighting an almost
two-year war against Yemen’s
Experts have warned that Houthi rebels, who control
AQAP would try to exploit the capital, San’a.
the raid to drum up anti- AQAP has tried to capital-
American feelings, as Mr. ize on the country’s chaos to
Raymi is doing, and attract gain territory during the war,
more recruits. but has lost significant
“The use of U.S. soldiers, ground over the past year.
high civilian casualties and Among the losses were its
disregard for local tribal and headquarters in the southern
political dynamics…plays into coastal city of Al Mukalla.
as a vocal advocate for pro- three arms of the organization
tecting and sheltering refu- work as one entity.
gees. The U.S.’s new Ambassador
In trying to convince Mr. to the U.N., Nikki Haley, has
Trump to maintain his sup- said that overhauling the or-
port, he said, he intended to ganization, including getting rid
highlight that negotiations of programs she called obsolete,
and deals are central to the is one of her priorities.
U.N.’s success. Mr. Guterres said her goals
Mr. Guterres has made in- for greater efficiency weren’t
stitutional reform the bedrock too far from his, adding that
of his vision. he believed that if the U.N.
In the interview, he said avoided overlap and improved
one of his goals was to accountability, “it will be
streamline the U.N.’s develop- much easier with this adminis-
ment, human rights and peace tration to have strong support
and security endeavors so the for what we do.”
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
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THE WALL STREET JOURNAL. * * Monday, February 6, 2017 | A7

WORLD NEWS

Trump Draws Fire on Russia Stance Afghan

Civilian
President appears to
draw an equivalence
between U.S., Putin,
Casualties
sowing confusion At a High
BY MICHAEL C. BENDER BY HABIB KHAN TOTAKHIL
AND REBECCA BALLHAUS AND JESSICA DONATI

President Donald Trump KABUL—More than 11,400

faced criticism Sunday from civilians were killed or injured
fellow Republicans as his ad- in Afghanistan last year, ac-
ministration sowed confusion cording to a United Nations
about its approach to Russia, report released Monday, a re-
the latest example of the new cord high amid rising armed
commander-in-chief creating clashes between the country’s
distractions from the work of coalition-backed government
unifying his party around forces and the Taliban.
plans to cut taxes and rework Civilian casualties increased
health-care laws. 3% year-on-year in 2016, in-
In an interview that aired cluding 3,498 deaths and 7,920
Sunday on Fox, Mr. Trump ap- injured, for which both the in-
peared to draw an equivalence surgents and Afghan govern-
between Russian President ment forces were responsible,
Vladimir Putin and the behav- the report said. The U.N.
ior of the U.S. He waved off a started keeping records in
DREW ANGERER/GETTY IMAGES

description of Mr. Putin as “a 2009.

killer” by suggesting the U.S. Casualties were at a record
was similarly immoral. level for the second consecu-
“We’ve got a lot of killers,” tive year, reflecting the deteri-
Mr. Trump said on Fox. “You oration in security conditions
think our country’s so inno- in Afghanistan since the with-
cent?” drawal of most foreign troops
His comments drew a quick after the North Atlantic Treaty
rebuke from the Senate Re- U.S. President Donald Trump speaks on the phone with Russian President Vladimir Putin in the Oval Office in January. Organization combat mission
publican leader—and others in ended at the end of 2014.
the party—and appeared to Trump had “a very good call” Trump took office that he ap- Sen. Marco Rubio of Florida; Mr. Pence also drew criti- “This appalling conflict de-
conflict with messages from with Ukrainian President peared to push his party off Wyoming Rep. Liz Cheney, the cism from some in his own stroys lives and tears commu-
within his own cabinet. United Petro Poroshenko, addressing message and alienate Republi- daughter of former Vice Presi- party after he suggested that nities apart in every corner of
Nations Ambassador Nikki Ha- various topics including can leaders in Congress, fur- dent Dick Cheney; and Senate the U.S. could lift sanctions on Afghanistan,” said Tadamichi
ley criticized Russia in her “Ukraine’s long-running con- ther straining relationships Majority Leader Mitch McCon- Russia in the coming months Yamamoto, U.N. Special Repre-
first appearance at the U.N. flict with Russia.” with the lawmakers he will nell. if Mr. Putin cooperates with sentative of the Secretary-
Security Council on Thursday, Moscow has denied in- need to approve the robust “Putin is a former KGB the fight against Islamic State. General for Afghanistan.
when she called for “clear and volvement in a nearly three- agenda he promised on the agent—he’s a thug,” Mr. Asked on ABC’s “This The rise in civilian casual-
strong condemnation of Rus- year conflict with Ukrainian campaign trail. McConnell said Sunday on Week” whether sanctions on ties was driven by an escala-
sian actions” in Ukraine.” government forces in Instead of letting Republi- CNN. The Kentucky Republi- Russia would remain in place tion of fighting around heavily
Critics charged the presi- Ukraine’s east, despite evi- cans focus on praise for his can added that while he was as long as Moscow continued populated areas in provinces
dent with being too soft on a dence that it provides not Supreme Court nominee and “not going to critique every to violate the cease-fire in where the Taliban have sought
nation that is challenging and only weapons and fighters to pressuring Democrats for a utterance of the president, I Ukraine, Mr. Pence answered to overrun major cities.
complicating U.S. foreign pol- pro-Russian separatists there quick confirmation, Mr. obviously don’t see this issue that a decision would depend In October last year, the
icy in the Middle East and but also its own military units. Trump’s comments add fur- the same way he does… I on whether “we see the kind Taliban overran the provincial
Eastern Europe. The White House statement ther cracks to already tenuous don’t think there’s any equiva- of changes in posture by Rus- capital of Kunduz and threat-
The Trump administration quoted Mr. Trump as saying relationship with Congress. lency between the way the sia and the opportunity per- ened several other provinces,
also added to the uncertainty he would work with Ukraine, “There is confusion and Russians conduct themselves haps to work on common in- including southern Helmand
about its Russia strategy with Russia “and all other parties mixed signals, which is the and the way the United States terests,” including the fight and western Farah.
a statement released late Sat- involved to help them restore last thing the world needs at a does.’’ against terrorists. The escalation in attacks
urday, after a phone call with peace along the border.” The time of conflict and aggres- Vice President Mike Pence Mr. Rubio said sanctions forced the U.S. military to dis-
Ukraine’s president, that conflict, which flared up again sion,” said Adrian Karatnycky, defended Mr. Trump’s com- should only be lifted if Russia patch troops and air support
noted Russia’s involvement in last week, is taking place a senior fellow at the Atlantic ments Sunday, saying on NBC “ends violations of Ukraine to the besieged city centers to
the conflict there but ap- along a 250-mile front inside Council, a Washington think that the president was “not in sovereignty.” prop up struggling govern-
peared to misstate where the eastern Ukraine. tank. the least” drawing an equiva- —Devlin Barrett ment forces, adding to the toll
fighting is taking place. It marked the third consec- Republican criticism of Mr. lence between the U.S. and and James Marson on the civilian population
The statement said Mr. utive weekend since Mr. Trump’s remarks came from Mr. Putin. contributed to this article. caught in the fighting.

RUSSIA
Continued from Page One
nals Mr. Trump and his circle
have sent regarding Moscow,
which have unnerved U.S. al-
lies and caught Republican
leaders in Congress off guard.
VAHID SALEMI/ASSOCIATED PRESS

Days after the U.S. ambas-

sador to the United Nations,
Nikki Haley, said a surge in vi-
olence in eastern Ukraine de-
manded “clear and strong con-
demnation of Russian actions,”
Vice President Mike Pence
suggested Sunday that Wash-
ington could lift sanctions on
Moscow soon if it cooperated Ali Shamkhani, right, Secretary of Iran’s Supreme National
in the U.S. fight against Is- Security Council, with Russia’s special envoy on Syria, Alexander
lamic State. Lavrentiev, in Tehran on Sunday
Mr. Trump spoke again
about wanting to mend rela- The Kremlin has said it the talks at a high-level, an in-
tions with Mr. Putin in an in- aims to mend ties with the vitation not extended while
terview that aired before Sun- U.S. under the Trump adminis- President Barack Obama was
day’s Super Bowl, saying “it’s tration but in recent months in office. Last week, the ad-
better to get along with Russia has also signaled its intent to ministration sent only a lower-
than not.” After Fox News host continue to build on its coop- level official, its ambassador
Bill O’Reilly said Mr. Putin was eration with Iran. to Kazakhstan.
a “killer,” the president re- Moscow and Tehran have Mr. Putin largely has suc-
sponded: “What, you think our
country’s so innocent?”
But those involved in the
formed a tight military alli-
ance in Syria in recent years.
The Kremlin is a major sup-
ceeded in saving the regime of
Mr. Assad from collapse
through a brutal air war in
The #1 heart care
latest policy discussions argue
there is a specific focus on
trying to drive a wedge be-
tween Russia and Iran.
plier of weapons systems and
nuclear equipment to Iran.
But the Trump administra-
tion is seeking to exploit what
Syria over the past 18 months.
But the Kremlin is interested
in fortifying its long-term mil-
itary presence in Syria and
in the nation.
“There’s daylight between
Russia and Iran for sure,” said
a senior European official who
has held discussions with Mr.
senior U.S., European and
Arab officials see as potential
divisions between Russia and
Iran over their strategy in
doesn’t necessarily view Mr.
Assad as an enduring partner,
these officials said.
Iran, conversely, is wholly
22 years in a row.
Trump’s National Security Syria and the broader Mideast. wedded to Mr. Assad as its
Council staff in recent weeks. “The issue is whether Putin primary partner for shipping It’s why people from 127 countries
“What’s unclear is what Putin is prepared to abandon [Aya- weapons and funds to Iran’s
would demand in return for tollah] Khamenei,” said Mi- military proxies in Lebanon traveled to Cleveland for heart care.
weakening the alliance.” chael Ledeen, an academic and the Palestinian territories.
But persuading Mr. Putin to who advised National Security “Russia is fully aware of the
break with Tehran would be Council Advisor Michael Flynn corruption and incompetence
immensely difficult and—a during the transition and co- of the Assad regime…[and]
number of Russian experts in wrote a book with him last knows that a stable Syria—a
Washington say—come at a year. “I think that might be country worth having military Same-day appointments available.
heavy cost likely to reverber- possible if he is convinced we bases in the long term—is un-
ate across America’s alliances will ‘take care’ of Iran. I doubt attainable with Assad at the
with its Western partners. Nor he believes that today.” helm,” said Fred Hof, a former
would Mr. Trump be the first Russia, Iran and Turkey State Department official who
U.S. president to pursue the have been leading talks in Ka- oversaw Syria policy during
strategy: The Obama adminis- zakhstan in recent weeks to President Obama’s first term.
tration spent years trying to try to end Syria’s six-year war. A number of Russia experts
coax Russia away from Iran, Participants in the discussions, in Washington say they believe
particularly in Syria, only to which have excluded high-level Mr. Putin would demand a
see the two countries intensify U.S. diplomats, said Russia has heavy price now for any move
their operations there to bol- appeared significantly more to distance himself from Iran.
ster the Damascus regime. open than the Iranians to dis- In addition to easing sanc- Call 1.855.299.APPT l clevelandclinic.org /heartcare
“If the Kremlin is to reduce cussing a future without Presi- tions, they believe he would
its arms supplies to Iran, it is dent Bashar al-Assad. want assurances that the U.S.
likely to expect a significant A Russian-backed faction in would scale back its criticism
easing of sanctions,” said Dim- the talks has promoted the of Russia’s military operations
itri Simes, a Russia expert and creation of a new Syrian con- in Ukraine and stall further ex-
U.S. News & World Report 2016-17
president of the Center for the stitution and a gradual transi- pansion of North Atlantic
National Interest in Washing- tion away from Mr. Assad. Treaty Organization member-
ton. “The Russians don’t be- Moscow has pressed the ship for countries near the
lieve in free lunches.” Trump administration to join Russian border.
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 | Monday, February 6, 2017
Colombia Rebels Start Transition to Peace
FARC guerrillas move
to secure zones even
as government works
to finish building them
BY KEJAL VYAS
CALDONO, Colombia—It
was supposed to be a happy
ending, with 6,300 Marxist
rebels marching on jungle
paths for days to lay down
their guns in secure zones and
finally put one of the world’s
longest-running civil conflicts
to rest.
But as bedraggled fighters
carrying Galil assault rifles
and rucksacks filed into
this remote hilltop village,
they took stock with looks of
dejection. The government had
promised them accommoda-
tions with beds, running wa-
ter, electricity, and fully
stocked kitchens. What they
found were sacks of cement in
an empty field.
The scene here has been re-
peated at two dozen hamlets
across this country, where reb-
els from the FARC, or Revolu-
tionary Armed Forces of Co-
lombia, were congregating
over the weekend as they be-
gin a six-month process of
surrendering weapons of war
to United Nations monitors
and becoming civilians again.
Most of the guerrilla force
is expected to have assembled
in the next few days as gov-
ernment contractors scramble
to build housing.
President Juan Manuel San-
tos and his aides have ac-
knowledged difficulties in get-
ting promised supplies to the
camps, citing their far-flung
locations.
But they said they were still
on track to have the majority
Trump Gives Poland Reason to Reset EU Ties
EUROPE FILE
SIMON NIXON
German Chancellor Angela
Merkel’s trip to Poland this
week is an important moment
for both sides—and for all of
Europe. Since Poland’s conser-
vative Law and Justice party
took office in October 2015,
the Polish government has
been a persistent thorn in the
side of the European Union.
Whereas its predecessor
prioritized building a network
of alliances across the conti-
nent and es-
tablishing a
reputation as
a reliable
partner, the
current gov-
ernment has
adopted a more confronta-
tional approach, particularly
over the question of EU asy-
lum reform, where it has
blocked proposals for the
mandatory redistribution of
refugees across the bloc.
Meanwhile, the European
Commission has accused
Warsaw of abusing the rule
of law, not least because of
changes to Poland’s constitu-
tional tribunal, and threat-
ened reprisals.
But Poland has good rea-
sons to want to reset its re-
lationship with the rest of
the EU. The first concerns
Arrests in Russia Spur Questions on Hacking Links
MOSCOW—A series of high-
profile arrests in Russia, pur-
portedly including officers of
the country’s secretive Federal
Security Service and a cyber-
security expert, has intelli-
gence officials on both sides of
By Nathan Hodge and
Olga Razumovskaya in
Moscow and
Shane Harris in
Washington
the Atlantic trying to unravel
a mystery they suspect may be
connected to Russian hacking
in the U.S.
Russian news media have
described the arrests—includ-
ing at least two intelligence
officials at the FSB, the suc-
cessor agency to the KGB, and
of the rebels disarmed by
June, except for about 5% of
FARC combatants whom they
expect to abstain from the
peace. Colombia’s Defense
Ministry has said it plans to
pursue dissidents as orga-
nized-crime gangs.
For the rebels, as well as
for farmers in this region of
rugged, cloud-covered moun-
tains, there are more serious
concerns than creature com-
forts.
The withdrawal of the
FARC—a battle-hardened
group that until now has con-
trolled drug-producing regions
in the countryside—has
sparked fears over who will
fill the void amid a boom in
coca, the plant used to make
cocaine. Rex Tillerson, who
became U.S. secretary of state
on Thursday, said last month
he would “review the details”
of the peace pact and hold the
Santos government to its com-
mitment to “rein in drug pro-
duction.”
The Colombian government
said unidentified gunmen
killed a dozen leftist activists
in January, adding to nearly
60 killed last year across re-
mote regions like this one. The
threat has put former FARC
fighters on edge.
“Everyone from the guerril-
las to the surrounding commu-
nities are scared about what
comes next,” said a rebel who
goes by the nom de guerre
Marcela González. “We bet ev-
erything on this.”
Clipboard in hand, Ms.
González, who has spent 30 of
her 50 years with the FARC,
was supervising some 200
comrades, most in civilian at-
tire, as they carried in bamboo
poles to set up a makeshift
campsite while awaiting the
housing the government had
German Chancellor Angela Merkel, in Malta on Friday, heads to Warsaw this week.
national security since the
arrival of Donald Trump in
the White House. What Pol-
ish ministers and officials
fear most is a deal between
Mr. Trump and Russian Pres-
ident Vladimir Putin over
Ukraine that forces the gov-
ernment in Kiev to take back
the Donbas region on terms
that will make Ukraine un-
governable, creating instabil-
ity along Poland’s eastern
border. They fear that the
latest upsurge in violence in
eastern Ukraine is a ploy by
Mr. Putin to bring Mr. Trump
to the negotiating table.
There is also growing anxi-
ety in Warsaw over evidence
of Russia attempting to ex-
tend its soft power in Be-
larus, as well as the prospect
of Moscow stirring up insta-
an employee at Kaspersky
Lab, Russia’s most prominent
cybersecurity firm—as being
part of a treason case.
Russian officials haven’t
publicly confirmed details of
the case or the arrests, but lo-
cal news outlets have reported
dramatic details, including the
arrest of one of the intelli-
gence officers at an FSB meet-
ing, with the suspect being led
away with a bag over his head.
The reports have fueled spec-
ulation among Western intelli-
gence officials who have been
monitoring the situation closely
that the arrests may be tied to
allegations that Russia was in-
volved in hacking aimed at influ-
encing the recent U.S. presiden-
tial election and an unverified
dossier alleging collusion be-
WORLD NEWS
Above, a transition site in Cauca, Colombia, set to host FARC rebels. Below, FARC graffiti seen on a wall in the hamlet of San Antonio.
promised.
“Doubts? We have lots of
them,” she said as two trucks
and a bus, all packed with reb-
els, arrived on Wednesday.
Still, the rebels from the
FARC, weakened by years of a
U.S.-supported military offen-
sive to the point that peace
talks became a logical option,
said they were ready to give
peace a chance.
“Our only weapon will be
words,” reads a FARC welcome
sign at the entrance to the
makeshift camp here. A 29-
year-old guerrilla using the
alias Karina said she hoped to
work as an activist for the
bility in the Baltic states. Pol-
ish ministers and officials
have been trying to estab-
lish—so far without success—
where Mr. Trump intends to
draw the border of U.S. influ-
ence in the region and
whether this includes Poland.
W
arsaw has no inten-
tion of being drawn
into any European
anti-Trump front. Nonetheless,
it is clearly in Warsaw’s inter-
ests to repair its relations with
other EU members who might
be better placed to exercise le-
verage on Mr. Trump.
Poland also has economic
reasons to want to reset its re-
lationship with the EU. The
government has embarked on
a substantial program of social
spending. That has raised
tween the Kremlin and President
Donald Trump’s campaign.
The roundup of Russian in-
telligence officials has the ear-
marks of a classic mole hunt,
some current and former in-
telligence officials said. But
The Kremlin has
made only a cryptic
acknowledgment of
the recent arrests.
they said there are other plau-
sible explanations why Russian
authorities would go after
their own spies, including
cracking down on government
THE WALL STREET JOURNAL.
FARC’s still-to-be-founded po-
litical party.
“People think we’re like the
police in these parts,” said
Karina, smiling at the irony,
when asked about the group’s
relationship with local villag-
ers.
While the prospect of peace
has given many in Colombia
hope, it has also polarized so-
ciety. Mr. Santos, who won the
Nobel Peace Prize for working
to end the 52-year conflict,
had to resort to congressional
approval of the peace deal af-
ter voters rejected an earlier
version of it in an October ref-
erendum.
increased support for do-
mestic small and midsize
businesses, paid for in part
by demanding foreign inves-
tors pay more tax in Poland.
But in the absence of deep
domestic capital markets, he
also knows that Poland re-
mains heavily reliant on for-
eign investment, which in
LEON NEAL/PRESS ASSOCIATION/ZUMA PRESS
turn hinges on the country
restoring its reputation for
strong institutions and pre-
dictable decision-making.
M
s. Merkel’s visit of-
fers an opportunity
for Poland to begin
the process of resetting its
relationship with the EU.
Germany is the biggest in-
vestor in Poland and a cru-
cial ally in Polish attempts to
persuade the U.S. and other
European partners to take a
questions about how it will hard-line against Russian re-
fund these handouts, particu- visionism in Western Europe.
larly after a fall in the rate of That said, there is little evi-
growth in 2016 to 2.7%, com- dence that Warsaw is ready
pared with expectations of to back down on the two ma-
3.5%, in large part because of jor points of conflict. Oppo-
a slowdown in investment. sition to mandatory resettle-
The government says for- ment of refugees remains
eign investment remains ro- resolute across the Polish
bust and that the shortfall re- political spectrum.
flects lower spending by local Nor does Warsaw have any
councils and slower deploy- intention of backing down in
ment of EU funds. Opponents its dispute with Brussels over
say this is the government’s the rule of law, believing the
fault for firing officials with commission overreached by
relevant technical and financial intervening in what was a do-
expertise and replacing them mestic political dispute.
with incompetent party hacks. Besides, Ms. Merkel may
Deputy Prime Minister be willing to sweep both is-
Mateusz Morawiecki has am- sues under the carpet in the
bitious plans to boost long- interests of wider strategic
term potential growth and priorities. Whether other EU
enable Poland to escape its members are willing to do so
middle-income trap through is another matter.
officials who moonlight as Kaspersky Lab confirmed
hackers for hire and may have that one of its employees had
been jeopardizing ongoing in- been arrested. A spokeswoman
telligence operations. for the Moscow-based firm, a
The Kremlin has made only well known provider of antivi-
a cryptic acknowledgment of rus technology, confirmed that
the recent arrests. Kremlin Ruslan Stoyanov, the head of
spokesman Dmitry Peskov said an investigation unit at
Wednesday that Russian Presi- Kaspersky Lab, was arrested.
dent Vladimir Putin had most Mr. Stoyanov, who joined
likely been briefed on a cyber- Kaspersky Lab in 2012, worked
espionage case that has been for the Russian Interior Minis-
making headlines in Russia. “I try’s cybercrime unit in Mos-
do not rule out that, as part of cow between 2000 and 2006,
[intelligence] reports, informa- according to his LinkedIn pro-
tion was provided in a timely file. He couldn’t be reached for
manner to the president” on comment.
the matter, Mr. Peskov said. “This case is not related to
The FSB hasn’t spoken pub- Kaspersky Lab,” the company
licly about the matter and said. “Ruslan Stoyanov is un-
hasn’t responded to a formal der investigation for a period
request for comment from The predating his employment at
Wall Street Journal. Kaspersky Lab.”
CARLOS VILLALON FOR THE WALL STREET JOURNAL (2)
Church
Assails
Duterte
For ‘Reign
Of Terror’
BY JAKE MAXWELL WATTS
The Roman Catholic Church
in the Philippines slammed
President Rodrigo Duterte’s
war on drugs in a sermon deliv-
ered during Sunday’s services,
marking its strongest opposi-
tion yet to a flagship policy
that has led to the deaths of
more than 7,000 people in the
last seven months.
Church leaders, in a pastoral
letter by the Catholic Bishops’
Conference of the Philippines,
called Mr. Duterte’s antinarcot-
ics campaign a “reign of terror
in many places of the poor.”
They said that while illegal
drug trafficking needs to be
stopped, “the solution does not
lie in the killing of suspected
drug users” and dealers.
Opposition to Mr. Duterte’s
drug war has intensified in the
past week, following the al-
leged murder in police custody
of a South Korean business-
man after he was abducted by
antinarcotics officers. After
strangling the businessman,
Jee Ick-joo, to death, the offi-
cers allegedly pretended he
was still alive to extract a ran-
som from his wife.
The incident, which took
place in October but came to
light last month, shocked the
political establishment in the
Philippines, leading to calls
for police chief Gen. Ronald
Dela Rosa, a staunch ally of
the president, to step down.
Mr. Dela Rosa kept his job but
promptly suspended all antin-
arcotics operations of the po-
lice force, handing the respon-
sibility over to a much smaller
drug-enforcement agency.
Sunday’s criticism from the
Catholic church adds further
pressure on the government
at a time when it is reeling
from Mr. Jee’s murder. The
Philippines is one of the
world’s most Catholic coun-
tries; more than 80% of Filipi-
nos identify as belonging to
the religion.
To date, however, Mr. Du-
terte’s drug war remains popu-
lar among Filipinos, who have
embraced the tough talk and
expletive-laced language of a
president who has taken swift
and bloody action against a
problem that many see as fuel-
ing crime and corruption.
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
THE WALL STREET JOURNAL. Monday, February 6, 2017 | A9

WORLD NEWS WORLD WATCH

Zambia Battles a Corn-Crop Pest

AFGHANISTAN
Avalanches Leave
Dozens Dead
BY NICHOLAS BARIYO Avalanches in Afghanistan
have killed at least 54 people in
Zambia’s military is fighting the past three days and left
a life-or-death battle. dozens of others injured, officials
Soldiers toting pesticide said on Sunday.
pumps in backpacks are work- The death toll may rise as re-
ing to eradicate a recent inva- ports come in from remote ar-
sion of armyworms, inch-long eas, officials said. Mohammad
brown-and-yellow-striped cat- Aseem, governor of the hard-hit
erpillars that are exacerbating northern province of Parwan,
Southern Africa’s worst grain said that 16 people were killed
shortage in a decade. Above, and eight others injured in ava-
troops flying Chinese Harbin lanches in two districts. Many
helicopters drop pesticide to roads to affected areas were
farms whose corn crops are blocked by snow, he said.
being devoured. More than 150 homes have
“It was a surprise outbreak been destroyed by the ava-
which required a military-style lanches, said Omer Mohammadi,
response,” said John Ndhlovu, spokesman for the Afghan state
a spokesman for Zambia’s mil- minister for disaster manage-
itary. ment and humanitarian affairs.
The unprecedented offen- The avalanches, which came
sive against the armyworms after heavy snowfall, also have
highlights the threat to Afri- killed hundreds of animals and
can countries from plant-eat- destroyed several thousand
ing pests that find hospitable acres of farmland, Mr. Moham-
conditions because of increas- madi said. On Sunday, the gov-
ingly volatile weather patterns ernment declared a public holi-
scientists have associated with day due to the heavy snowfall.
JEAN MANDELA/REUTERS

climate change. —Associated Press

Since late last year, army-
worms—so called because FRANCE
they march in large forma-
tions and leave behind de- Suspect in Louvre
struction—have invaded a Attack Is Silent
third of Zambia’s 3.5 million Small-scale farmer Mutale Sikaona and agriculture officials examine corn plants attacked by armyworms in Keembe district, Zambia.
acres of cornfields. An Egyptian man suspected
They have also crossed over to spray,” said the 35-year-old armyworms crossed the Atlan- of charging soldiers at Paris’s
into Zimbabwe and Malawi, mother of three. “By the time Threatened Harvest tic on container ships ferrying Louvre museum with a machete
two countries that depend on I received pesticides, the ar- Zambia produces more corn than it needs, unlike many of its grain imports from South was questioned Sunday by
international food aid after a myworms had consumed most neighbors in Southern Africa, but a pest invasion threatens yields. America. They were first de- French investigators for the first
severe drought last year. of the plants. I don’t how I will tected in West Africa last year, time since Friday’s attack.
South Africa, Africa’s top corn feed my children.” Corn deficit/surplus for 2016–2017 season, in millions of metric tons before making their way The Paris prosecutor’s office
grower, confirmed Friday that The armyworm outbreak south, the Zambia Farmers said the suspect, who allegedly
Zambia
armyworms had invaded two has delivered a one-two punch Union said. shouted “Allahu akbar!” while
of its corn-growing provinces, to a region still reeling after Lesotho “It will take a bit of time rushing toward the soldiers and
according to Bomikazi Molapo, its worst drought in 35 years. before farmers and other was shot four times after
the spokeswoman for the Last year, Zambia was the only Botswana stakeholders understand how slightly injuring one, remained si-
country’s Ministry of Agricul- country in Southern Africa Malawi to manage” the new pest, said lent during the interview and
ture, Forestry and Fisheries. that produced more corn than David Phiri, regional coordina- will remain in custody.
Brenda Chihame, who it needed and expectations of Zimbabwe tor for Southern Africa for the The Louvre was closed imme-
grows corn on a family farm in a serious grain shortage this South Africa
United Nations’ Food and Ag- diately following the attack, but
Zambia’s Copper Belt, hoped year have driven up lo- riculture Organization. reopened for the weekend.
for a record harvest this year cal corn prices to 50% above –2,000 –1,500 –1,000 –500 0 500 Corn is the main ingredient Authorities haven’t thus far
after early rains persuaded her their five-year average. Sources: FAO, FEWSNET THE WALL STREET JOURNAL. for the region’s staple food, a named the suspect, but con-
to double plantings. But one The shortages and price in- starchy thick porridge known firmed he was likely a 29-year-
morning in late December she creases threaten to compound tons in 2016-17, compared with But this year’s outbreak as nsima that millions eat at old Egyptian man.
noticed moths perched on the hunger in a region containing an average surplus of three caught many unprepared be- every meal. He matches the photo and
lush green shoots in a corner some 40% of the world’s poor- million tons. cause it is led by so-called fall “Food-price pressures risk fingerprints of an Egyptian resi-
of her garden. Soon after, a le- est populations. Southern Africa has fallen armyworms, which are usually stoking social and economic dent of Dubai who arrived
gion of armyworms had U.S.-funded research group victim to armyworm attacks in endemic to the Americas and tensions” in the entire region, France on Jan. 26, said French
gnawed its way across the Famine Early Warning Sys- the past and governments and immune to the pesticides that warned Irmgard Erasmus, an antiterror prosecutor François
five-acre farm. tems Network said it expects farmers usually store pesti- kill African armyworms. analyst with NKC Africa Eco- Molins.
“I did not even get a chance a corn deficit of five million cides to fend off an incursion. Scientists believe the fall nomics. —Associated Press

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A10 | Monday, February 6, 2017 THE WALL STREET JOURNAL.

FROM PAGE ONE

MEXICO that the gringos are not our

enemies,” says Armando San-
tacruz, 55, president of a Mex-
ican company that distributes
Continued from Page One chemicals throughout Latin
his four predecessors, two Re- America. “Every day, Mexicans
publicans and two Democrats, had less of a chip on their
has undermined America’s shoulder. It was all: Let’s get
economy by encouraging U.S. down and do business, Mexi-
manufacturers to relocate jobs cans and gringos.”
south of the border, and its se- In a 2015 survey of atti-
curity by what he calls lax en- tudes around the world to-
forcement of immigration re- ward the U.S., the Pew Re-
strictions. search Center found one of the
The U.S. trade deficit with biggest generation gaps in
Mexico, he notes, has in- Mexico: 74% of Mexicans be-
creased. Mexico “has outnego- tween the ages of 18 and 29
tiated us and beat us to a pulp had a favorable view of the
through our past leaders,” he U.S., compared with 55%
said on Jan. 27. “They’ve among those age 50 or older.
made us look foolish.” On Over the past decade, U.S.
Thursday, he told U.S. lawmak- law enforcement and military
ers he is aiming to “kick-start” authorities have helped train
the Nafta renegotiation pro- their Mexican counterparts to
cess. fight drugs and organized

EUROPEAN PRESSPHOTO AGENCY

The escalating tension has
called into question whether
the friendliness of the past
three decades will endure, or
whether the two neighbors
will revert to the hostility
common during the first 170
years of U.S.-Mexican rela-
tions. Much will depend on
whether early signs of a work-
ing relationship between
lower-level officials will over-
come President Trump’s pro-
pensity to rile the Mexican
government.
The confrontation is spark-
ing a nationalist backlash in
Mexico not seen in years. Mr.
Trump’s insistence that Mex-
ico pay for the proposed
wall—a demand seen as an in-
sult in Mexico—prompted the
normally mild-mannered Mexi-
can President Enrique Peña Ni-
eto leader to call off a planned
visit to Washington. “This is
not a negotiating strategy,”
Foreign Minister Luis Videga-
ray told a Mexican broad-
caster. “This is a limit we are
not going to cross because it’s
about Mexican dignity.”
A recently trending Twitter
hashtag was #FueraStarbucks,
or Starbucks Out, referring to
the American coffee chain that
has opened hundreds of shops
across Mexico. The flare-up is
stoking support for populist
leftist Andrés Manuel López
Obrador, an early front-runner
in next year’s presidential
election, who has branded Mr.
Trump’s actions “foreign ag-
gression” and declared “the
fatherland is first.” A recent
poll showed 59% of Mexicans
think relations with the U.S.
are bad or very bad, compared
with 13% two years ago.
Mr. Trump’s approach to
Mexico is an early test for his
foreign policy—one that gives
primacy to trade and promises
to rethink longstanding alli-
ances and assumptions. How
the confrontation with Mexico
plays out could affect how the
Trump presidency takes on
other challenges overseas, es-
pecially in trying to redress a
trade imbalance with China.
“Trump inherited an inbox
of foreign policy problems that
could be described as daunt-
ing,” said Richard Haass, pres-
ident of the Council on For-
eign Relations who formerly
worked in George W. Bush’s
State Department. “What he
has done with Mexico and
China is add to that inbox.”
Mr. Trump formally an-
nounced his plan to go ahead
with the border wall on the
same day that high-ranking
Mexican officials arrived in
The U.S.-Mexico border near Ciudad Juarez; bonds between the nations have been tested lately by President Donald Trump’s remarks.
A Closed Economy
For Several Decades
Mexican sensitivities about
American slights are studded
throughout the history of the
relationship. The seminal event
in Mexican history is the
1846-48 war that led the U.S.
to take half of Mexico’s land.
Late 19th and early 20th cen-
tury dictator Porfirio Díaz said:
“Poor Mexico, so far from God
and so close to the United
States.”
Behind-the-scenes maneu-
vering by a U.S. ambassador
helped lead to the 1913 assas-
sination of Mexico’s first dem-
ocratically elected leader. That
intensified the Mexican revolu-
tion, when some 700,000 died.
Washington for talks on how
to proceed with the bilateral
agenda. The timing was seen
in Mexico as a diplomatic slap
in the face.
Nevertheless, Foreign Min-
ister Videgaray and Economy
Minister Ildefonso Guajardo
met with senior White House
officials over two days, includ-
ing Mr. Trump’s son-in-law,
Jared Kushner and top aide
Mr. Trump’s policies
on Mexico have set
off a nationalist
backlash there.
Steve Bannon. “The meetings
were going well until Trump’s
tweet,” said a high-ranking
Mexican official in reference to
Mr. Trump’s suggestion that
the Mexican president cancel
his U.S. visit if his country
wasn’t prepared to pay for the
wall.
A White House official said,
“President Trump and his
team continue to have produc-
tive meetings on a wide range
of issues with officials from
Mexico.”
Aides to both leaders set up
another phone call for that
crime—a once-unthinkable col-
laboration given historical
sensitivities. In 2016, Mexico
deported close to 150,000 non-
Mexican immigrants headed to
the U.S.
Despite those ties, U.S.-
Mexico relations have been a
sensitive subject for some
Americans suspicious of the
impact of Mexican exports and
Democracy didn’t return for
What Mexico Trades with the U.S.
immigrants on the U.S. econ-
nearly 90 years. omy and on their communi-
Yet Mexico never fully Total U.S.-Mexico trade was $590 billion in 2015. ties, even as the number of il-
turned against the U.S. It re- legal immigrants crossing the
buffed a German attempt to Mexico exports to the U.S. Mexico imports from the U.S. border has dropped in recent
enlist Mexico against the U.S. in years. From the start of his
World War I in exchange for Capital goods presidential campaign, Mr.
the return of Mexico’s old lands. Trump made a point of speak-
In World War II, Mexico de- $88 billion $83 billion ing to those voters’ concerns
clared war on Axis powers and in blunt terms.
sent a fighter squadron to the Automobiles
Pacific to fight the Japanese. $106 billion $34 billion
After the war, Mexico Job losses
closed off its economy to the Industrial Even Nafta advocates ac-
outside world. “Made in Mex- $34 billion $79 billion knowledge job loss from the
ico” became paramount. Mex- pact. In a 2014 report, the Pe-
ico stayed on the sidelines of Consumer goods terson Institute for Interna-
the Cold War. Mexican school- $40 billion $15 billion tional Economics put the an-
children grew up reading text- nual net U.S. job loss from
books that highlighted the his- Food trade with Mexico at 15,000,
toric danger the U.S. posed to $23 billion $16 billion
while also citing research ar-
their country. guing that the offsetting bene-
—Jacob M. Schlesinger Travel fit to the U.S. economy was
and David Luhnow several hundred thousand dol-
$14 billion $17 billion lars for each lost job.
Other services Some Mexicans view Mr.
Friday to smooth things over. Trump as a blip in the increas-
Both sides agreed not to dis- $8 billion $15 billion ing integration of North Amer-
cuss the issue of payment for Other goods
ica. Cross-border supply
the wall publicly. Mr. Trump chains in industries such as
was quoted as saying Mexico $9 billion $8 billion autos will make unwinding
wasn’t doing a good job tack- commercial ties costly and
ling drug gangs, whom he Total complicated. Some 4.9 million
called “bad hombres,” anger- $322.4 billion U.S. jobs are linked to exports
ing many in a nation that has $267.2 billion to Mexico, the U.S.’s second-
lost hundreds fighting cartels. biggest export market, accord-
Mr. Trump says his tough Source: U.S. Commerce department THE WALL STREET JOURNAL.
ing to a recent estimate by the
stance on trade, immigration Wilson Center, a nonpartisan
and the border wall will help, think tank in Washington.
not hurt, ties between the two table and strengthen and im- wanted a stable neighbor,” There are more than 160 mil-
countries. “By working to-
gether on positive trade, safe
prove the Nafta agreement.”
Starting in the early 1980s,
says Carla Hills, who launched
the Nafta negotiations as Pres-
lion Mexicans and Mexican-
Americans in North America.
borders and economic cooper- financial crises rocked Mexico, ident George H.W. Bush’s trade Just as Mexico was begin-
ation, I truly believe we can
enhance the relation between
and millions headed to “El
Norte”. Mexico’s government
representative.
Mexico signed more free-
ning to view itself more as
North American than Latin
our two nations to a degree began slowly opening the trade deals than any country American, it feels to many in
not seen before in a very, very economy. in the world. Nafta and trade Mexico as if the U.S. wants to
long time,” he said when an- helped stabilize its economy kick it out of the neighbor-
nouncing his actions. “I think following the 1994-95 peso hood. Mr. Trump’s emphasis
our relationship with Mexico Future with the U.S. collapse and eventually helped on building a wall—a fence al-
is going to get better.” In 1988, then-President Car- pull millions out of poverty. ready exists along much of the
Michael C. Camúñez, chief los Salinas decided to advance The pact forced Mexico to em- border—sends a pointed mes-
executive of Washington con- the opening by seeking part- brace investment rules and sage to Mexicans, says
sulting firm ManattJones nerships with more advanced protections demanded by Lorenzo Meyer, a leading Mex-
Global Strategies and a former economies. He has said the in- Western companies, opening ican historian.
U.S. assistant Commerce sec- difference he encountered on its economy to a flood of for- “The idea, which had been
retary in the Obama adminis- trips to Japan and Europe eign direct investment. Mexico accepted in Mexico, that we
tration, said that “despite the made him realize that Mexico’s also became a full democracy. were a part of—a poor part of,
rhetoric, there’s actually a future was with the U.S. The Nafta era largely erased but part of—North America
plausible scenario in which the He told countrymen they anti-Americanism, one of the has been destroyed,” says Mr.
U.S.-Mexico relationship could had to change the way they foundations of the nationalist Meyer. “Trump is saying, we
ironically emerge even stron- thought of the U.S.: It wasn’t PRI regime which ruled from have changed the definition of
ger, commercially speaking, their greatest threat, he said, 1929 until 2000, and returned who belongs in North America,
under a Trump administration but their greatest opportunity. in 2012 under Mr. Peña Nieto. and it’s just us and Canada.”
because of the political will- American leaders re- “Nafta has created a men- —José de Córdoba
ingness to actually get to the sponded enthusiastically. “We tality in younger Mexicans contributed to this article.

STRAIN ter people to the couch, “you’ll

still be able to do your work”
after smoking it, said Mr.
Canady. “It’s not too couchy.”
Continued from Page One In the pot world, citrus,
parts of California deserve pine, earthy, floral and spice
their own exclusive appella- odors are good things, while
tions for cannabis, like Cham- buds that smell “strongly of
ZUSHA ELINSON/THE WALL STREET JOURNAL
stimulating type of cannabis
called sativa has “citrus fla-
vors, which go naturally with
fish or chicken,” he said.
Northern California was cho-
sen by growers in the days
when marijuana was illegal be-
cause it was easy to conceal
At home, the 31-year-old, from law enforcement, not be-
who is the CEO of Cultivating cause it is the ideal climate for
Spirits, said he is partial to a the plant.
combination of fish tacos with “The best stuff I could grow

pagne and Bordeaux wine in
France, or Napa Valley Caber-
net Sauvignon just down the
road.
Soon, a Mendocino Kush
could take its place in this pan-
theon—not to be sold by grow-
ers from any other region.
Behind the push is the no-
tion of terroir, which holds
that unique climate, soil and
farming practices influence ag-
ricultural crops. It stretches
back centuries to the grape-
growing monks of Burgundy,
France, who, legend has it,
tasted the soil in an effort to
demarcate different wine re-
gions.
Wine connoisseurs taste the
subtle differences between
grapes grown just miles from
each other in slightly different
climates. Now, as pot laws re-
lax around the country, “can-
nasseurs” are refining their
own taste buds for buds.
Surrounded by the towering
redwood trees at Mr. Calvino’s
Mendocino County farm,
where bright blue peacocks
roam free, he and two other
Nick Smilgys, who has served as a judge in the Emerald Cup
cannabis competition, takes a whiff of locally grown marijuana.
cannabis aficionados extolled
the virtues of the local product
on a cold afternoon in January.
“A lot of it starts with nose
and look,” said Nick Smilgys,
whose palate has earned him a
position as a judge at the Em-
erald Cup, which Rolling Stone
magazine has called “the Acad-
emy Awards of the cannabis
industry.”
Mr. Smilgys eyeballed a
sample of Coffee Kush, noting
the “bluish highlights.” He held
it up and took a deep whiff, de-
claring it was “leaning more
toward fruity than fuely. You
got earthy in there, too.”
salt and pepper” and those
that evoke “rancid old gym
lockers” are negatives, accord-
ing to instructors at the
Trichome Institute, which
trains cannabis sommeliers in
Colorado.
“Cannabis itself has a bad
stigma because our culture
makes it that way—every TV
show or movie shows cannabis
users as stoners,” said Max
Montrose, 28, Trichome’s pres-
ident. “Cannabis is also an-
It doesn’t taste like coffee— cient, and it’s way more so-
the effects are like drinking a phisticated in how many types
cup of it, he said. there are and how it affects
Later, the men smoked a people in so many ways.”
joint and commented on Long Mr. Montrose teaches peo-
Valley Royal Kush, a strain that ple how to discern the effects
does particularly well on the of a particular marijuana
Mendocino coast because it strain by smelling and looking
can grow in the at it. His students have been
shorter warm season here, Mr. growers, pot shop owners and
Calvino said. even chefs who want to pair
“The taste is amazing, it’s food with cannabis.
like lavender and gas,” said Indica “has more earthy
Brett Canady, the man who tones and goes better with red
tends the crops here. meats,” said Philip Wolf, who
The effect is unique as well. leads $249 tours in Colorado
Even though it is an indica, a that feature cannabis-food
relaxing variety known to plas- pairings. In contrast, the more
some Golden Goat, which has is if I were in the Central Val-
“a lemony pine taste.” ley,” he said, referencing the
“Braised Oxtail with Creamy sun-drenched region that pro-
Corn Porridge and Orange-Po- duces much of the country’s
blano Marmalade” paired with fruits and vegetables as well as
Blue Dream, which “balances large cannabis crops.
full-body relaxation with gen- Emerald Triangle farmers
tle cerebral invigoration,” was are hoping to snag the high
part of a seven-course dinner end of the market in the com-
hosted in Boulder, Colo., late petition with production from
last month by the Mason Jar the Central Valley, which can
Event Group. be cultivated year-round.
Of course, cannabis fa- Legal cannabis sales in Cali-
mously stimulates the appetite fornia could be worth about
in ways that wine doesn’t. “We $6.2 billion in five years, ac-
don’t have a lot of leftovers, cording to estimates from the
I’ll tell you that,” said Kendal Arcview Group, a cannabis in-
Norris, the founder of Mason dustry investment and market
Jar. research firm.
As California’s cannabis Part of that will be market-
farmers gear up to make the ing Northern California’s out-
case for their unique location, law past, reminiscent of Prohi-
there is still debate over bition-era bootleggers, said Mr.
whether the Emerald Trian- Calvino, who has been growing
gle—Mendocino, Humboldt in the area for close to a de-
and Trinity counties—is as cade.
special as France’s Bordeaux “We’re like an American
region. treasure: we’ve lived through
Ed Rosenthal, a founder of some s—,” he said. “The hip-
High Times Magazine who is sters are going to love that—
known as the Guru of Ganja, it’s like meeting Machine Gun
said this foggy region of Kelly.”
 For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
THE WALL STREET JOURNAL. * * NY Monday, February 6, 2017 | A10A

GREATER NEW YORK

Man Charged
With Killing
Queens Jogger
BY ZOLAN KANNO-YOUNGS
A 20-year-old man from the
East New York section of
Brooklyn was arrested for the
strangling death of a jogger
last summer in a Queens park,
the New York Police Depart-
ment said Sunday.
Chanel Lewis faces a charge
of murder in the second degree
AGATON STROM FOR THE WALL STREET JOURNAL
displaying suspicious behavior
in the area around Spring
Creek Park.
Investigators looked into a
report filed by officers who
had stopped Mr. Lewis at that
time and found he had been
issued three criminal sum-
monses for quality-of-life of-
fenses near the park.
Chief Boyce said the police

for allegedly killing Karina Ve-
trano, 30, in early August, Chief
of Detectives Robert Boyce
said.
The Saturday night arrest
came after police said they
matched the man’s DNA with
crime-scene evidence from
Spring Creek Park in the How-
ard Beach section of Queens,
which abuts East New York.
“This was a three-week
Joshua Mahinanda Kangere in his apartment with Deo Byakisaka, right, his case manager from International Institute of Connecticut. crime scene in the hot August
sun,” Chief Boyce said. “Our
had been confident that who-
ever killed Ms. Vetrano lived in
East New York because cam-
eras didn’t show anyone leav-
ing the Howard Beach side of
the park on the night she was
killed.
“So now we turned to East
New York, Brooklyn, and that
bicycle path that runs along the
Belt [Parkway],” he said.
A DNA match led

A New Country, a New Life

field investigators and forensic
investigation division worked to the man’s arrest:
thoroughly and tirelessly.”
On Sunday afternoon, the
‘Karina helped us
NYPD detectives walked Mr. identify this person.’
Congo refugee is one his life, said politics aren’t Lewis out of the 107th Precinct

of last to arrive in U.S.

before ban took effect;
feeling lonely—and cold
BY KATE KING
BRIDGEPORT, Conn.—
Joshua Mahinanda Kangere
started his first morning in the
U.S. with a prayer over a tradi-
tional Congolese breakfast. It
would be his last familiar expe-
rience of the day.
The 41-year-old, who landed
Thursday at John F. Kennedy
International Airport, was one
of the last refugees to arrive in
the U.S. before a White House
order suspending the refugee
resettlement program took ef-
fect. He was the 55th refugee
received by the International
Institute of Connecticut since
October, according to executive
director Claudia Connor.
“It was heartbreaking for
our team to know that peo-
ple that we were preparing
to receive would not be ar-
his primary concern. He is
more focused on finding a job
so he can eventually bring his
family—he has 10 children—
to the U.S.
“I can’t say I will change my
life without working,” Mr. Kan-
gere said in Swahili to Deo By-
akisaka, his case manager from
the resettlement agency.
Many Congolese refugees
arrive with degrees and had
worked in Africa as teachers,
accountants and medical pro-
fessionals, Ms. Connor of the
International Institute of Con-
necticut said. But without pro-
ficiency in English, most refu-
gees can only find entry-level,
minimum wage jobs until their
language skills improve.
The federal government pro-
vides every refugee with $950
to help them get started, Mr.
Byakisaka said, adding that he
encourages refugees to begin
looking for work right away. In
Mr. Kangere’s case, his small
room in the three-bedroom
apartment that he will share
with three other refugees costs
Local Groups Boost
Refugee Assistance
With a federal court ruling
over the weekend that lifted
the ban on refugee arrivals, the
International Institute of Con-
necticut is expecting a Syrian
family of five who had been
scheduled to arrive Tuesday to
be allowed to travel.
The order, signed by Presi-
dent Donald Trump at the end
of January, barred entry to na-
tionals from seven predomi-
nantly Muslim countries for 90
days, due to terror concerns,
suspended the refugee pro-
and a cellphone plan.
In the Democratic Republic
of Congo, Mr. Kangere worked
as a nurse in his native vil-
lage of Uvira. As part of his
job, he documented rape
cases for court proceedings,
at one point working with
United Nations peacekeepers
on cases allegedly involving
gram for four months and
stopped acceptance of Syrian
refugees indefinitely.
Each year, the U.S. resettles
tens of thousands of refugees
who each go through a vetting
process that can take two years.
They arrive often with few pos-
sessions and receive about
$1,000 in cash from the federal
government to get started.
More support is often pro-
vided by local resettlement
agencies, nonprofit organiza-
tions and faith-based groups
that provide language classes,
training, employment assis-
tance and rent support.
—Kate King
they living, how is their life?
All those things when I think
about it, I really feel bad.”
On Friday afternoon, with
the temperature dipping below
freezing, Mr. Byakisaka took
Mr. Kangere out into the
neighborhood, pausing at
street corners to explain
crossing signals. They stopped
to a police car that took him to
the Queens Central Booking
building to await arraignment.
The suspect didn’t com-
ment before he was put into
the police car. A lawyer for
Mr. Lewis couldn’t be reached
for comment.
If convicted, Mr. Lewis faces
25 years to life in prison,
Queens District Attorney Rich-
ard Brown said.
“This is truly a very sad case
in which a beautiful and tal-
ented young woman senselessly
lost her life,” Mr. Brown said.
The NYPD received more
than 250 leads from the public.
Within the past 10 days, Chief
Boyce said, investigators fol-
lowed up on a 911 call from
May that warned of someone
Police spoke to Mr. Lewis on
Thursday and he willingly gave
a swab of his DNA. A match
was made with DNA found on
Ms. Vetrano’s body, police said.
“Karina helped us identify
this person,” Chief Boyce said.
Ms. Vetrano left her home
on Aug. 2 for a jog in the park;
the area’s tall weeds shield jog-
gers from view.
Hours later, her father, Phil
Vetrano, went looking for her
after she didn’t return his
phone calls. He found her in
the park with scrapes on her
legs and articles of clothing
pulled down.
Mr. Vetrano didn’t return
calls seeking comment.
PETER J. SMITH FOR THE WALL STREET JOURNAL

riving and would be stuck in
refugee camps indefinitely,”
said Ms. Connor.
Roughly two-thirds of the
refugees who the International
Institute of Connecticut reset-
tles in the Bridgeport area are
from the Democratic Republic
of Congo, where war has been
waged for decades.
Mr. Kangere, who fled the
Democratic Republic of Congo
seven years ago fearing for
$350 a month.
Mr. Kangere, who speaks
limited English, said he is ea-
ger to begin working and not
picky about what job he takes.
He will participate in an em-
ployment program run by the
International Institute of Con-
necticut, which will help him
look for a job and cover three
months of rent and utility
costs as well as some spend-
ing money for transportation
Congolese soldiers.
One day in 2010, he said he
was threatened by two Congo-
lese soldiers and, concerned
for his life, fled to Nairobi,
Kenya, where he received refu-
gee status and lived for seven
years awaiting resettlement.
He hasn’t seen his family since.
“Sometimes I feel bad that I
am all alone,” said Mr. Kangere,
who is divorced. “I don’t how
my children are, and how are
at a grocery store, where Mr.
Kangere picked out two bags
of cornmeal, long-grain rice,
peanut butter and coffee
creamer.
Back in the apartment, Mr.
Kangere kept his jacket and
gloves on as he sat at the
kitchen table, weary from jet
lag. On Monday, he will sit
down with an employment
counselor to begin looking for
jobs. “I have to work,” he said. Chanel Lewis on Sunday outside the 107th Precinct in Queens.

Up Close With a Dragon Facebook, Where Gangs Are Waging Turf Wars
BY ZOLAN KANNO-YOUNGS prevent the next fatal shooting municate to young people the are watching.”
by defusing online confronta- repercussions of aggressive on- That makes it difficult to per-
For years, Samuel Jackson tions. line behavior. suade a young person who has
walked through the Bronx Social media rapidly esca- The training is now being been embarrassed online not to
ready to step in between rival lates tension between gangs. extended to all 18 Cure Violence retaliate. Mr. Alvarado directs
gangs on the verge of a Many of the gang shootings sites citywide. A team of inter- his interrupters to initially send
deadly exchange. last year were rooted in an ex- rupters said they spot up to 25 a message asking the online
PETER FOLEY/EUROPEAN PRESSPHOTO AGENCY

As a “violence interrupter”
for Bronx Connect’s Release the
Grip office, a Bronx site for the
global nonprofit Cure Violence,
the 39-year-old former gang
member used his personal ex-
perience to persuade young
gang members to walk away
from violent showdowns.
Today, Mr. Jackson spends
almost 14 hours of the day on
Facebook and Instagram.
GOOD LUCK SYMBOL: A young girl encountered a magical beast As heated social media ex-
Sunday in the Lunar New Year Parade in Manhattan’s Chinatown. changes fuel gang violence, Mr.
Jackson and his colleagues
have gone digital. They aim to
change on social media, author-
ities said.
“When people scream at
each other in the streets, when
it’s over, it’s over,” said Richard
Aborn, president of the Citizens
Crime Commission, a nonprofit
focusing on crime and public
safety policies. “When people
scream at each other on Face-
book, it stays there.”
New York University and the
Citizens Crime Commission
launched a pilot program last
year to train interrupters to
identify risky posts and com-
online posts a day that have the
potential to turn violent.
These posts can take many
forms: a Facebook status sham-
ing a family member, a post
threatening a rival gang or
even a live stream of a violent
interaction.
“With social media, things
have the potential to go viral,”
said Michael Alvarado, 30, the
program supervisor for Release
the Grip. “Not only do you have
the potential to get beat up, but
you have the potential to get
beat up and millions of people
user to come into the Release
the Grip office and talk.
When that doesn’t work, the
staff shows young people re-
ports of indictments where so-
cial-media photographs and
comments were used as evi-
dence against gang members.
“Think about what you do-
ing before you do it,” Mr. Jack-
son said he often tells the
young people who he encoun-
ters. “You don’t want to be sit-
ting in a prison cell, contem-
plating for the next 25 years of
the mistake you made.”

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 For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
A10B | Monday, February 6, 2017
A High Line
Plan Emerges
In Newark
BY KEIKO MORRIS
A former skeptic of the
High Line walkway on Manhat-
tan’s West Side is now one of
the biggest advocates of a
similar project across the Hud-
son River.
Jerry Gottesman, chairman
of Edison Properties LLC, a
real estate com-
PROPERTY pany and park-
ing-lot and self-
storage giant,
was once a vocal skeptic of ef-
forts to convert the abandoned
freight rail line on the West
Side into a landscaped prome-
nade. The project attracts
more than 7.5 million people a
year.
Now, Mr. Gottesman is an
advocate of a similar elevated
promenade in Newark, N.J.
A raised pedestrian bridge
is one of the signature fea-
tures of a 22-acre public-pri-
vate redevelopment project
called Mulberry Commons, un-
veiled by the city of Newark
and developers last month.
Developers unveiled
plans for Mulberry
Commons in Newark
last month.
Although the bridge won’t
be built on old railroad tracks,
like the High Line is, it will
connect neighborhoods, creat-
ing a pathway linking the
city’s Ironbound neighbor-
hood, a former industrial sec-
tion known for its ethnic mix,
restaurants and shops, with
Newark Penn Station and a
planned 3-acre park sur-
rounded by commercial and
residential development in
front of the downtown Pru-
dential Center.
Edison Properties’ $80 mil-
NELSON
A rendering of the revamped lobby at 1250 Broadway, which has been renamed Nomad Tower.
‘Waitress’ Fans Vie for Chance to Sing Along
BY CHARLES PASSY
When Monroe Scott at-
tended a performance of
“Waitress” last week, she got
more than an opportunity to
see the hit musical. She also
got a chance to be a part of it
on stage.
Ms. Scott, a 21-year-old as-
piring songwriter, was one of
a handful of audience mem-
bers selected for a post-show
karaoke session in which ev-
eryday folks sing songs from
the musical, guided by “Wait-
ress” cast members and ac-
CORRECTIONS AMPLIFICATIONS
The last Broadway theater
to open was the Henry Miller’s
Theater (now the Stephen
Sondheim Theatre), which
bowed in 2009, according to
the Broadway League, a trade
Readers can alert The Wall Street Journal to any errors in news articles by
emailing wsjcontact@wsj.com or by calling 888-410-2667.
lion conversion of a vacant
warehouse to retail and loft-
style office space will sit in
the middle of Mulberry Com-
mons at one end of the raised
promenade. The bridge and
park will be designed by Sage
and Coombe Architects, with
the park expected to be com-
pleted by late summer in 2018.
The hope is that the public
open space would do for New-
ark what the High Line helped
do for Manhattan’s West Side:
spur further development,
raise property values and
bring more foot traffic and
residents.
“Mulberry Commons is the
catalyst we’re waiting for, the
catalyst to raise the value of
property and also bring people
to an essential location of the
city where they can hang out,
live and play,” said Newark
Mayor Ras Baraka.
In a statement, Mr. Gottes-
man said: “Edison Properties
has been a strong believer in
Newark for decades, and now
we are delighted to play a ma-
jor role in its resurgence.”
His embrace of the High Line
happened over many years.
Edison Properties executives
said a key turning point was re-
zoning, which allowed for
greater density on certain par-
cels and the transfer of devel-
opment rights that added value
to surrounding properties.
Before Friends of the High
Line, the organization that led
the conversion of the tracks to
public open space, came on
the scene, Mr. Gottesman and
about two dozen property
owners had long been lobby-
ing for the dilapidated rail line
to be demolished. He was
known to have his staff mail to
elected officials pieces of de-
bris that had fallen from the
tracks onto his property.
Even after the two co-
founders of Friends of the
companied by the show’s
band. The event, the fifth such
one that the Broadway show
has hosted, has created buzz
among fans, say “Waitress”
producers.
Many of the karaoke par-
ticipants at last Wednesday’s
show said they attended the
nearly sold-out performance
largely for the singing oppor-
tunity, even if the odds were
slim they would be among the
dozen picked from those who
vied for a shot.
Producers said the selec-
tions were made via lottery,
group. An article Friday about
the new Hudson Theatre in-
correctly said the last theater
to open was the Ford Center
for the Performing Arts (now
the Lyric Theatre) in 1998.
NY
GREATER NEW YORK
At top, a rendering of Mulberry Commons Park in Newark, N.J., with Newark Penn Station in the background. The project would
convert abandoned railroad tracks, above left, into walkways and replace an existing parking lot, right, in the city’s downtown.
High Line launched their
quest, Mr. Gottesman was
skeptical there would be
enough funding, said Benjamin
Feigenbaum, chief operating
officer of Edison Properties.
But the High Line quickly
proved to be a success.
Friends of the High Line esti-
mates the park will generate
$1 billion in tax revenue for
the city over 20 years.
In 2015, Newark-based Edi-
son, which Mr. Gottesman and
his late brother started in the
1950s, sold an entire block site
PROPERTY WATCH
with the winners hailing from
locales such as White Plains,
N.Y., and Wilmington, Del.
Or, in Ms. Scott’s case, from
Australia. She said she has be-
come a booster of the musical
during her extended visit to
New York, with the karaoke
night marking the fifth time
she has seen the show.
But seeing is one thing, Ms.
Scott said; participating is an-
other. “It takes it to the next
level,” said Ms. Scott, who
performed the comical ballad
“When He Sees Me.”
The quality of perfor-
mances at the latest karaoke
night ranged from perfectly
polished to decidedly amateur-
ish, though the crowd voiced
their support of everyone.
While “Waitress” producers
say they welcome the extra
ticket sales karaoke night is
yielding, the opportunity is
more about creating ties be-
tween the show and audience.
“It was just an obvious add-
on to us,” said lead producer
Barry Weissler.
in Chelsea with the High Line
running through it for $870
million, far more than it paid
for it in the 1980s.
The Mulberry Commons de-
velopment is the result of
more than a decade of compli-
cated land exchanges involving
Edison and J&L Cos., another
Newark developer committed
to developing two sites in the
project.
The mayor made it a prior-
ity to complete the negotia-
tions. Mr. Gottesman brought
Mr. Baraka to visit the High
MIDTOWN
Tower Gets New
Moniker, Upgrades
The owner of an office tower
at the edge of Manhattan’s No-
Mad neighborhood is investing
$80 million in improvements and
has named real-estate services
firm JLL as its exclusive leasing
agent.
Global Holdings Management
Group has renamed the 39-story
building at 1250 Broadway No-
mad Tower and plans to expand
its retail space, revamp the
lobby and add tenant meeting
spaces and bicycle access, ac-
cording to JLL.
About 52,000 square feet of
the 773,000-square-foot tower
will become available for lease in
the next 12 months, with an ad-
ditional 435,000 square feet
available in 2018. Built in 1968,
the tower sits between West
31st and West 32nd streets.
The JLL team handling the
office leasing is led by Paul
Glickman and Mitch Konsker,
both vice chairmen.
Such thinking is becoming
the Broadway norm, say the-
ater-industry insiders and ob-
servers. Shows are looking for
a variety of ways to connect
with fans. Consider the Broad-
wayCon gathering, the second
annual edition of which was
held in late January at the
Javits Center and featured
cast members from several
musicals, attracting a crowd of
thousands.
At BroadwayCon, attendees
make a point of dressing up as
the characters from their fa-
vorite shows. Some “Wait-
ress” karaoke participants did
the same. For example, Eliza-
beth Brandon, a fan from Bed-
ford Hills, N.Y., arrived in
waitress garb, joined by two
friends in similar attire. Dur-
ing the karaoke event, they
sang one of the show’s signa-
ture numbers, “Opening Up.”
Ms. Brandon said the three
friends even rented a studio to
prepare for their moment on
stage. “These girls are as
crazy as I am,” she said.
* * THE WALL STREET JOURNAL.
Line, in part to assuage con-
cerns that the new project
would steer people off the
streets, as with the drab en-
closed walkways built decades
ago as part of the Gateway of-
fice complex.
“The High Line has made
people think of how public
space can be used to connect
places,” said Robert Ham-
mond, co-founder and execu-
tive director of Friends of the
High Line.
Edison Properties owns six
sites surrounding the planned
MIDTOWN EAST
Renovated Building
Gets New Financing
The owners of a Midtown
East office tower have secured
$65 million in refinancing a few
years after investing in signifi-
cant upgrades.
The joint venture of the Wil-
liam Kaufman Organization and a
subsidiary of Travelers Cos. ob-
tained a $65 million leasehold
mortgage on the 471,240-square-
foot building at 747 Third Ave.,
according to the Singer & Bassuk
Organization LLC, the real-estate
finance brokerage firm that rep-
resented the owners.
The building, built in 1972,
spans the entire east block of
Third Avenue between East
46th and East 47th streets.
The William Kaufman Organi-
zation launched a renovation in
2012, investing $17.3 million, said
Jonathan Kaufman Iger, chief ex-
ecutive of Sage Realty Corp., the
leasing and management divi-
sion of the William Kaufman Or-
ganization.
Sisters Tori and Hayley Feinstein belted a number Wednesday on
stage as ‘Waitress’ cast member Caitlin Houlahan looked on.
T-B: PERKINS EASTMAN; AGATON STROM FOR THE WALL STREET JOURNAL (2)
Mulberry Commons Park, in-
cluding a large vacant 110-
year-old warehouse. Edison is
investing another $20 million
in the park and bridge, which
essentially serve as the front
door to its warehouse-conver-
sion project, now called Iron-
side Newark.
“We considered all options,
including tearing it down until
we started seeing what other
people were doing with old
warehouse buildings,” said
Robert Selsam, chairman of
Edison’s board.
CHELSEA
Startup Matchmaker
Firm Finds Space
An Israeli company that fos-
ters relationships between big
corporations and startups from
across the globe has estab-
lished its first New York City lo-
cation in Chelsea.
SOSA, founded by people in
the high-tech and venture-capi-
tal industry in Israel, opened a
temporary, 6,600-square-foot
space at 50 W. 17th St., with
plans to move to a 40,000-
square-foot space at 115 Sev-
enth Ave. after a renovation
there.
“We work with corporates
and investors and connect them
to the most relevant startups in
Israel,” said Roy Oron, SOSA’s
chief executive.
SOSA is partnering in the
building with Ashkenazy Acqui-
sition Corp., which bought the
building in 2014, and two other
investors, Izaki Group Invest-
ments and G-Holdings LLC.
—Keiko Morris
CLAUDIO PAPAPIETRO FOR THE WALL STREET JOURNAL
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
THE WALL STREET JOURNAL. Monday, February 6, 2017 | A11

LIFE&ARTS
TELEVISION

TV Writers Obsess Over Chicago

Producers of prime-time series about crime aim to balance headlines, politics and ratings
BY JOHN JURGENSEN

IN THE NEW TV SERIES “APB,” a

billionaire comes to Chicago, takes
over a police district and equips
cops with high-tech tools, includ-
ing a crime-tracking
app.
The series pre-
mieres Monday, days
after the real Chi-
cago Police Depart-
ment touted an app
that lets officers
track gunfire in real
time, and President
Donald Trump said
that if Chicago can’t
quell its violence
problem, “we’re go-
ing to solve the
problem for them.”
Grim facts are col-
liding with TV fiction
in a number of dra-
mas set in a city un-
der national scrutiny
because of its bloodshed. Fifty-one
people were murdered in Chicago
last month, according to police, one
more than in January 2016, the
start of the city’s most violent year
in two decades.
That epidemic, along with re-
lated tensions between law en-
forcement and minorities, isn’t al-
ways reflected in broadcast shows
depicting the city for prime-time The creators of television series set in Chicago are trying to square the city’s reputation for violence with storylines that attract and hold viewers. Among the
audiences. They include three se- series that unfold in the Windy City are Fox’s ‘APB,’ below left, which premieres Monday, and NBC’s ‘Chicago P.D.,’ below right, produced by Dick Wolf, inset.
ries (“Chicago Fire,” “Chicago P.D.”
and “Chicago Med”) on NBC, which
in March will add a fourth to pro-
ducer Dick Wolf’s franchise, “Chi-
cago Justice.”
“APB” (Fox) cites the ratio of
cops to citizens in Chicago, but not
the city’s homicide or shooting sta-
tistics. In the show’s fictional ver-
sion of the city, the mayor (not
Rahm Emanuel) wants tech mogul
Gideon Reeves (played by Justin
Kirk) to fail in his effort to reinvent
policing with souped-up stun guns,
drones and bulletproof vehicles.
Producers say they’re trying to
keep the show realistic and plan to
tackle actual problems plaguing
the city—within the parameters of
network entertainment. “We have
a crime-of-the-week format, an ac-
tion-packed, adrenaline-driven in-
vestigation, but we’re hoping that
the show not only addresses how production costs. Then creator Da- work wanted a version where Gid- plot involves the characters’ quest of 17-year-old Laquan McDonald
to better catch bad guys but also vid Slack quit because his plans, eon and the police go after bad to find common ground with gang and the release of a report by a
how to improve police and polic- such as having the hero aggres- guys more than a version that had leaders and “a community that ba- mayoral task force citing racism
ing,” says executive producer, Trey sively target problems in police Gideon battling the police.” A rep- sically doesn’t trust cops,” Mr. Nix throughout the Chicago Police De-
Callaway. culture, didn’t match Fox’s. “I resentative for Fox declined to says. partment. In the “Chicago P.D.” ep-
The series went through didn’t know how to do a police comment. In a “Chicago P.D.” episode last isode, protesters chant “Hands up,
changes on its way to air. Origi- show that didn’t speak to Black The first few episodes don’t fea- spring, a white officer shoots a don’t shoot!” The officer is
nally set in Los Angeles, which Lives Matter, so I felt like I had to ture the street killings and gang young black man in the back after cleared; the honor student she
was closer to home for its produc- walk away,” Mr. Slack says. skirmishes for which Chicago has she and her partner are ambushed. shot turns out to have avenged a
ers, it switched cities because Illi- His replacement, executive pro- become notorious, but the “APB” The show aired after months of loved one whose life was ruined by
nois offers a tax credit that cut ducer Matt Nix, says, “The net- writers say later episodes will. One protests over the police shooting Please see CHICAGO page A13

CLOCKWISE FROM TOP: ROOM RM/GETTY IMAGES; NBC; FOX; SAVERIO TRUGLIA FOR THE WALL STREET JOURNAL; BELOW: WINNI WINTERMEYER FOR THE WALL STREET JOURNAL

BOOKS

THE GRIEF BEHIND

‘LINCOLN IN THE BARDO’
BY ELLEN GAMERMAN
AUTHOR GEORGE SAUNDERS knows the
question of what happens after death can’t
be deferred indefinitely. “We really are go-
ing to find out—it kind of sounds obvious,
but we are,” he says. “Even if it’s nothing,
that’s something.” In his long-awaited debut
novel “Lincoln in the Bardo,” he
offers an answer.
The book, due out Feb. 14, is
rooted in the death of Abraham
Lincoln’s 11-year-old son Willie,
inspired by a story Mr. Saunders
heard from a relative more than
20 years ago when driving near
Washington, D.C.’s Oak Hill Ceme-
tery. The tale, reported in some
newspapers after the child’s
death in 1862, held that the
grieving president repeatedly re-
turned to the Oak Hill crypt alone after the
funeral. An image of Lincoln cradling his
dead son emerged in Mr. Saunders’s mind
and has stayed there ever since.
The novel depicts the afterlife in that
cemetery, a place full of ghosts who hold
onto their quirks and gripes. They crave hu-
man contact, unable to realize or accept that
they are dead. In this realm, young spirits
smell like wild onions and ghosts don’t fly,
they “walk-skim.” When they move on to
heaven or hell, they disappear with a clat-
tering boom.
Anticipation for the book is high in pub-
lishing circles. Elle magazine raved, calling
it “an unsentimental novel of Shakespearean
proportions.” But a New York magazine on-
line review deemed the book “very, very
weird.”
Mr. Saunders has long been fascinated by
the supernatural. He said when he was
about 11, he saw his grandfather’s spirit, “a
dark form” at the end of his bed two or
three days after the man’s unexpected death.
“I was really scared and I got shivers but I
also knew it was him,” Mr. Saun-
ders says, adding that the ghost
conveyed to him a sense that ev-
erything was all right. “It was a
message of almost humorous reas-
surance.”
The 58-year-old author, known
for short-story collections with
other-worldly twists both melan-
choly and absurd, is closing a deal George Saunders has his first novel out Feb. 14. It is getting early rave reviews for the best-selling
with actors Nick Offerman and author who is known for his short stories.
Megan Mullally to adapt the novel
for the screen. On other fronts, invented testimonies. in Golden, Colo., spent years working odd
Mr. Saunders is developing a series based on The novel lays out the president’s strug- jobs, including pulling knuckles out of cow
his story, “Sea Oak” for Amazon, and he is gle with private loss against the mounting legs in a slaughterhouse. He published his
working with actor Ben Stiller on a TV proj- numbers of anonymous Civil War dead. first book at age 37. Since then, the Syracuse
ect based on his tale “CivilWarLand in Bad While Willie was dying, possibly from ty- University English professor has racked up
Decline.” He is exploring a potential adapta- phoid fever spread through drinking water honors. He received a MacArthur “genius
tion of his short story, “Escape from Spider- contaminated by soldiers along the Potomac grant” and his 2013 short-story collection
head,” with “Little Miss Sunshine” directors River, Lincoln was facing rising criticism “Tenth of December” was a finalist for the
Jonathan Dayton and Valerie Faris. Two over the war. National Book Award.
other possible film projects are in the works. Mr. Saunders was surprised to learn how But novels always eluded him. In his
“Lincoln in the Bardo”—the title is drawn unpopular Lincoln was at that time and youth, he believed, wrongly, that he had
from the term in Tibetan Buddhism that de- noted his resilience. “I can’t even take a bad written a great one (his wife had her head in
scribes the transitional state between death review,” he says. her hands by the sixth page). After that,
and rebirth—is a blend of fiction and nonfic- The author, a guitar-playing one-time even if he giddily sensed that he had landed
tion. Mr. Saunders culled quotes from his- prom king who almost skipped college but on a longer work of fiction, he inevitably
tory books and isolated them like dialogue. instead got a degree in geophysical engi- kept it short. “If I start thinking, expanding,
Then he mixed in his own equally convincing neering from the Colorado School of Mines I just lose my mojo,” he says.
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
A12 | Monday, February 6, 2017 THE WALL STREET JOURNAL.

LIFE & ARTS

MUSIC REVIEW | Jim Fusilli

The Top-of-the-Chart Awards

The Grammys overwhelmingly favor popularity over pure talent, but there is still superior work recognized if you look for it.
IS THIS THE YEAR the Recording
Academy admits that the word
“best” has an alternative definition
when applied to the Grammys?
Probably not, but in Grammy-
land “best” clearly means “top sell-
ing” or “most familiar.” Four of the
nominees for Album of the Year—
“25” by Adele, “Lemonade” by Be-
yoncé, “Purpose” by Justin Bieber
and “Views” by Drake—achieved
the top position on the Billboard
200 albums chart, which measures
sales and streams. The fifth, “A
Sailor’s Guide to Earth” by Sturgill
Simpson, reached the No. 3 slot on
the Billboard 200, but it was No. 1
on the country and Americana/folk
charts. Let’s not pretend that these
albums are the best released dur-
ing the eligibility period of Oct. 1,
2015, to Sept. 30, 2016. The
Grammy Awards will be broadcast
on CBS on Sunday beginning at 8
p.m.
The celebration of what sells
and what’s well known continues Clockwise from above: Beyoncé;
throughout the 84-category list. A Fantastic Negrito, nominated for Best
commercial juggernaut, Twenty Contemporary Blues Album; René
One Pilots is up for five Grammys. Marie, nominated for Best Jazz Vocal
The innocuous duo’s “Stressed Out” Album.
competes for Record of the Year
against singles by Adele, Beyoncé, Veloso and Gilberto Gil. Across the “You and I” is the only a cappella

CLOCKWISE FROM TOP LEFT: ZUMA PRESS; ASSOCIATED PRESS; GETTY IMAGES (2)
Lukas Graham and Rihanna (featur- global, there are many less-familiar number among the nominees. Mr.
ing Drake) in a category that is, like musicians—like Imarhan, the Alge- Collier is also nominated in Cate-
Album of the Year, another eyes- rian desert-blues band; Maarja gory 64—Best Arrangement, In-
on-the-charts cluster. How popular Nuut, the avant-garde violinist and struments and Vocals—for his ren-
are these tracks? Beyoncé didn’t li- singer from northern Estonia; or dition of the “Flintstones” theme.
cense hers to Spotify, but each of Terra Sangue Mare, the Sicilian trio Hair-splitting by the academy
the four other nominees have been that adds new colors to the island’s can befuddle music fans in search
streamed more than 625 million traditional folk music—who are of what’s new. Category 50 seeks
times on that service. worthy of recognition. to recognize the Best Contempo-
Going with what’s well known In Category 63—Best Arrange- rary Blues Album and three of its
isn’t the rule only in major catego- ment, Instrumental or a Cappella— five nominees—“The Last Days of
ries. There are times when it ap- three of the six nominees were se- Oakland” by Fantastic Negrito,
pears the Academy isn’t even try- lected for their work on songs “Love Wins Again” by Janiva Mag-
ing: Down in Category 54, related to Christmas. The other ness and “Give It Back to You” by
recordings by household names three songs were composed by the Record Company—veer pleas-
constitute the Best World Music Al- John Lennon and Paul McCartney, ingly from the traditional blues
bum list: Celtic Woman, Ladysmith Thelonious Monk and Stevie Won- format. But the other two, “Blood-
Black Mambazo, Yo-Yo Ma and the der. No one excels at arranging line” by Kenny Neal and “Every-
Silk Road Ensemble, Anoushka new music? By the way, Jacob Col- body Wants a Piece” by Joe Louis
Shankar and the tandem of Caetano lier’s arrangement of Mr. Wonder’s Walker, adhere to the time-tested
electric blues format and thus
crowd out a more experimental ap-
proach to the genre. Better they the quest for superior work is re- Lagerberg, Hillary Lindsey and Ste-
should be among the Best Tradi- warded with a deep search of the ven Lee Olsen for Keith Urban; “Die
tional Blues Album nominees. categories. The Best Jazz Vocal Al- a Happy Man” by Sean Douglas,
R&B is so strong these days that bum nominees, which is Category Thomas Rhett and Joe Spargur for
it would be hard to put together a 32, represent well the great Ameri- Mr. Rhett; “Humble and Kind” by
bad set of nominees in the genre. can art form with mature, evoca- Lori McKenna for Tim McGraw;
In the Best Urban Contemporary tive performances. René Marie’s “My Church” by Busbee and Maren
Album class—Category 20—“Lem- “Sound of Red,” the Branford Morris for Ms. Morris; and “Vice”
onade” by Beyoncé is joined by Marsalis Quartet with Kurt Elling’s by Miranda Lambert, Shane
“Ology” by Gallant, “We Are King” “Upward Spiral,” Gregory Porter’s McAnally and Josh Osborne for Ms.
by King, “Malibu” by Anderson “Take Me to the Alley,” Catherine Lambert. The recorded perfor-
Paak and “Anti’ by Rihanna, all fine Russell’s “Harlem on My Mind” mances, with the exception of Ms.
modern R&B albums. One quibble: and the Tierney Sutton Band’s Morris’s overly fussy arrangement,
The excellent “In My Mind” by BJ “The Sting Variations” feature are stripped back, letting the songs
the Chicago Kid isn’t on that list, classy singers who work wonders shine. The category serves as a re-
even though the album features a within the tradition while stretch- minder that it is the song, and not
variety of A-list rappers. Instead, ing it when the mood arises. the popularity of the artist who
it’s nominated in the more retro- A great composition is still the sings it, that is at the heart of
minded Best R&B Album category, spine of country music, as the Best what’s best in rock and pop music.
thus blurring the distinction be- Country Song list indicates. The
tween the groupings. nominees in Category 28 are “Blue Mr. Fusilli is the Journal’s rock and
Twenty One Pilots is up for five Grammys this year. Not all is puzzling, though, and Ain’t Your Color” written by Clint pop music critic.

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.
30s Edmonton
d t <0 1 2 3 4 5 6 7 8 9 10 11 12 13 7 Edinburgh 37 Extremely
10s residents popular
Vancouver
V Calgary
Calgary
ary -0s 0s 14 15 16
0s 10s 8 California’s 39 Call out
Seattle Winnipeg
ip 10s 17 18 19 Big ___
20s 40 It breaks on the
Portland
P d
Montreal 30s 20 21 22 9 Overhead beach
Helena
Bismarckk Ottawa
40s
railways 41 Not new
30s Billings 20s Augusta
A g t 23 24 25 26 27
Eugene
g 10 Fr. holy woman
20s Mpls./St. Paul
pls //St. Pa
P Toronto
T t Albany t
A bany Boston 50s 46 Sue Grafton’s
Boise 28 29
30s 60s 11 “Time heals all “___ for
40s P oux Falls
Pierre Sioux ll k
Milwaukee Detroit
t l
Buffalo
Hartford
t d
Clevel d
Cleveland 70s 30 31 32 33 34 35 36 37 wounds,” for Evidence”
50s es Moines
Des Ch
Chic g
Chicago New
ew York
Reno
Lake
L ke City
Salt Lak C example
Ch y
Cheyenne Omaha
h Ph
hil d lphi
Philadelphia 80s 38 39 40 41 47 Mechanics work
Sacramento Springfield
Spring
p g d Pittsburgh
Pit b gh 12 Kind of boom or
Denver
d p
Indianapolis hington
hi gton D.C.
Washington DC 90s on them
San
an Francisco Kansas
Topeka barrier
C d
Colorado 42 43 44
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City
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Charles
Ch
h l t
Charleston h
Richmond d 100+ 48 Sea of
60s Wichita
hit LLouisville
Lou ill
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Vegas Raleigh
l igh
h 45 46 47 48 13 “If only!” Tranquillity
Nashville
h 50s
Los A
Ange
Angeles 60s Santaa FFe Memphis
phi
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Charlotte
C h l tt 18 Black, to poets setting
Albuquerque
Alb q q Columbia
C b 49 50 51 52 53 54 55
Ph
Phoenix Oklahoma City Warm Rain 49 Cumin or
San Diego LLittlee Rockk Atlanta
Atl t 22 Not just rent
Tucson 70s Birmingham
h 56 57 58 cardamom
El Paso
Ft. Worth D Dallas Jack
Jackson
Cold 24 Fleece stuff
70s T-storms 50 Wore
Mobile
bil Jacksonville 59 60 61 62 63 25 Corrosive
80s A
Austin 80s Stationary 51 ___ Sketch
10s t
Houston
l d
Orlando Snow 64 65 66 liquids
0s New
ew Orleans (drawing toy)
70s San
an Antonio
A t i Tampa 26 Signals to the
0s Anchorage
A h g 80s Showers Flurries 67 68 69
Honolulu
l Miami auctioneer 52 Roused
20s 30s 80s
Ice 27 Tune for two 53 Unconfined
CATCH MY DRIFT? | By Matt Skoczen 54 ___ Gay (famed
30 “Eureka!”
U.S. Forecasts City Hi
Today
Lo W
Tomorrow
Hi Lo W City Hi
Today
Lo W
Tomorrow
Hi Lo W
Across 23 Many-layered 60 Words to avert 31 Fireplace item
bomber)
s...sunny; pc... partly cloudy; c...cloudy; sh...showers; 1 Long, involved snack bad luck 55 Sing in the Alps,
Omaha 52 35 c 42 17 c Frankfurt 44 34 c 40 30 c 32 Make slow
t...t’storms; r...rain; sf...snow flurries; sn...snow; i...ice story 28 Small bill 64 Jailbird say
Orlando 80 59 pc 83 62 s Geneva 43 34 c 41 35 r progress
Today Tomorrow Philadelphia 48 39 s 54 53 r Havana 81 60 sh 84 61 pc
City Hi Lo W Hi Lo W 5 Ordinary people, 29 Take a tally 65 Carrie of “Star 60 Chain offering
Phoenix 73 55 pc 74 55 pc Hong Kong 72 62 pc 69 63 pc
with “the” 33 Witches’ group
Anchorage 22 15 pc 24 14 pc Pittsburgh 49 43 pc 60 46 r Istanbul 57 47 pc 55 44 c 30 Brand for beagles Wars” meals in buckets
Atlanta 63 53 sh 70 60 t Portland, Maine 29 17 pc 28 24 sn Jakarta 87 77 t 87 75 t 11 Letter before 34 Garden shed
33 Rebuke 66 Castaway’s place sight 61 Zero, in scores
Austin 78 60 c 85 52 pc Portland, Ore. 43 32 r 42 33 c Jerusalem 57 41 s 62 41 s omega
Baltimore 52 41 s 61 55 r Sacramento 59 55 sh 62 58 r Johannesburg 76 59 pc 76 60 t 35 “How disgusting!” 67 London lang. 36 Singapore sling 62 Sugar suffix
Boise 47 31 sh 40 31 sn St. Louis 61 55 sh 64 32 c London 46 41 r 51 33 pc 14 Long in the
Boston 34 27 pc 37 36 sn Salt Lake City 49 38 sh 46 40 sh Madrid 60 41 pc 57 33 pc tooth 38 Paramount, for 68 Does a maid’s job ingredient 63 Humor
Burlington 21 18 sn 30 29 sn San Francisco 61 56 sh 63 57 r Manila 86 74 pc 86 72 c example 69 Blue-green hue
Charlotte 65 50 s 71 56 c Santa Fe 55 34 pc 58 37 pc Melbourne 61 53 r 79 62 s 15 Mystical Previous Puzzle’s Solution
Chicago 46 37 sh 44 23 r Seattle 41 33 sn 42 28 c Mexico City 75 48 pc 76 49 pc practices 42 In the past Down A B D U L D O G P A P A S
Cleveland 48 42 c 57 38 r Sioux Falls 44 25 pc 29 6 sn Milan 56 35 pc 52 41 pc L O R N A R OW I R I S H
16 Like bass voices 43 Roof features 1 Did some E N J O Y L I F E N I C K I
Dallas 79 56 c 80 54 pc Wash., D.C. 55 46 s 65 58 r Moscow 4 -7 s 2 -6 s
Denver 59 32 pc 57 29 pc Mumbai 84 70 pc 86 71 pc 44 Mailed off carpentry O Y E N A G T U E
17 Greek ruse in G E N O V E S E G E T U P S
Detroit
Honolulu
38 33 pc 45 31 r
80 68 sh 80 64 pc
International Paris
Rio de Janeiro
45
93
40 c
77 pc
49 37 pc
91 78 pc
the Trojan War 45 Inquire (into) 2 Greek E L I D
R O G E R
E S V E N
S I R E
D O R
N E H I
Houston 79 66 c 80 65 pc Today Tomorrow Riyadh 63 41 sh 67 44 s 19 Singer DiFranco marketplace M P H S A T D OWN F A D
City Hi Lo W Hi Lo W 47 Mrs., to Michel S E T H D Y E S E X I L E
Indianapolis 52 48 sh 59 29 r Rome 56 42 sh 59 43 pc
20 Make mistakes 3 Conductor Solti V E R E E N T B I L L S
Kansas City 59 40 sh 58 25 pc Amsterdam 43 34 c 40 26 r San Juan 84 75 sh 84 75 sh 49 “Divergent” star P A I R U P T E A R I E S T
Las Vegas 67 55 pc 70 55 c Athens 64 52 pc 59 48 sh Seoul 35 21 s 36 21 pc 21 Pitcher 4 Put two and two O N S P T A B S A
Little Rock 71 59 sh 75 47 c Baghdad 63 37 pc 65 40 s Shanghai 49 36 pc 48 40 c 56 Best buds together U N I T E S H O E S T O R E
Saberhagen N O O S E P I N K I W I S
Los Angeles 62 57 r 67 59 r Bangkok 94 72 s 94 73 pc Singapore 88 77 t 86 76 c 57 Four-legged Oz
Miami 83 70 sh 83 68 sh Beijing 42 21 s 39 24 pc Sydney 93 73 pc 77 71 sh 22 “(Sittin’ on) 5 Madison’ s D Y N E S S P Y A L L O T
visitor successor The contest answer is DOG POUND. If you change
Milwaukee 40 35 c 41 22 r Berlin 32 24 c 29 21 pc Taipei 65 58 c 68 60 pc The Dock of the
Minneapolis 35 25 c 32 3 sn Brussels 44 37 c 42 34 r Tokyo 60 37 s 49 38 s 58 Lennon’s wife one letter in each theme entry, you’ll get a pair of
Toronto 33 27 sf 33 31 sn
Bay” singer 6 Needed a synonyms: ENJOY/LIKE, SAD (or EAT)/DOWN,
Nashville 64 58 sh 69 48 r Buenos Aires 74 54 pc 76 60 pc
New Orleans 77 61 pc 77 64 pc Dubai 71 61 pc 72 61 s Vancouver 35 27 sn 38 26 sf Redding 59 Wedding words massage SHOP/STORE, PICTURE/FILM, and SIGHT/VISION.
New York City 43 37 s 47 47 r Dublin 49 36 r 45 31 c Warsaw 28 16 sn 21 14 sf The contest answer (found at 6-Across and
Solve this puzzle online and discuss it at WSJ.com/Puzzles.
s

Oklahoma City 77 43 pc 75 40 pc Edinburgh 43 35 r 44 32 c Zurich 42 33 c 42 35 c 52-Down) can become DOG/HOUND.

 For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
THE WALL STREET JOURNAL. Monday, February 6, 2017 | A13

LIFE & ARTS

Debbi Brawley, a real-estate broker in Greers

Ferry, Ark., trains for skydiving by doing yoga,
CLOCKWISE FROM LEFT: BRANDON JOHNSON; MIKE BRAWLEY (3)

below, and lugging hay bales, above, for the

horses she owns with her husband, Mike.

WHAT’S YOUR WORKOUT?

She’s 59 and Fit to Jump sends assembled ingredients for meals to

cook at home. One favorite recipe: sesame
chicken with bok choy and jasmine rice.

From an Airplane “Because we live in a rural area, we don’t

really have access to a lot of those ingredi-
ents,” she says.

The Cost & Gear

BY RACHEL BACHMAN
FOR DEBBI BRAWLEY, life began at 55.
Her daughter showed her a video of some-
one leaping from a mountain in a wingsuit
and flying through the air. Mother and
daughter took their first skydiving jump
months later, for Ms. Brawley’s 55th birthday.
She was hooked before her feet hit the
ground.
Since then the 59-year-old real-estate
broker in Greers Ferry, Ark., has built a
workout routine and her life around a pur-
suit she says has transformed her.
“There’s so many women my age who just
think their lives are over,” Ms. Brawley says.
“I mean, they’ve told me that. Actually,
these have been my best years.”
Twice a month she makes the six-hour
drive to her favorite drop zone, Skydive
The scene after Ms. Brawley’s first skydiving
experience 4½ years ago.
Assembling her skydiving rig, which includes
Spaceland Dallas in Whitewright, Texas. The She says the combination of skydiving parachute, reserve chute, safety devices, suit
company’s two larger-than-average planes and the workouts has improved her balance and helmet, cost Ms. Brawley about $9,000.
mean she can jump from 14,000 feet five or and reflexes, and made her stronger and She rides her mountain bike indoors on a
six times in a day. Ms. Brawley’s lifetime more alert. CycleOps bike trainer that sells for $300.
tally is more than 420 jumps. “When you’re in the sky, even a slight Packs of DDP Yoga DVDs cost $50 to $90.
She’s working on a discipline called free- movement of your arm or leg can change At Skydive Spaceland Dallas, jumps cost
flying, which is free-falling in various verti- the dynamic,” she says. “You’ve got to con- $25 each for licensed jumpers—about one-
cal positions. The more common, slower stantly be thinking and analyzing.” quarter of what they cost for a beginning
skydiving position is with one’s belly toward student. Each license carries a $30 fee, but
the earth. Ms. Brawley is working toward The Diet most of the cost of securing licenses is in
earning her C skydiving license (on an A-to- Ms. Brawley eats Cheerios for breakfast and paying for its requirements. The C license,
D scale, with A the first step). She ulti- an apple, grapes or nuts for snacks. Lunch is for example, requires completing 200 jumps
mately wants to compete in formation sky- often a turkey sandwich, salad or peanut and landing within 7 feet of a target on 25
diving on a two-person team. butter and jelly with all-fruit jam. She jumps, among other things.
“It’s almost like a dance in the sky,” she avoids deep-fried foods and has cut out Ms. Brawley says skydiving for her is “not
says. “It’s beautiful to watch.” most added sugars except on her birthday, like a circus ride, it’s not a death wish, or an
Thanksgiving and Christmas. obsession or an addiction. It just feels right.
The Workout She’s a fan of Blue Apron, a service that Like I belong in the sky.”
Skydiving keeps Ms. Brawley motivated to
stay in shape. “In free-flying you use your
legs more than anything, but you are going
to use your arms to kind of help balance,”
she says.
She does DDP Yoga, created by former
professional wrestler Diamond Dallas Page,
three times a week to maintain upper-body
strength. She follows the video workouts on
an old laptop while watching skydiving vid-
eos on another laptop.
“When I first started yoga, I couldn’t
even do one push-up,” she recalls. Now she
can do more than 20.
If she’s tired after work, she’ll skip yoga
and pedal for 45 minutes on a mountain
bike placed on a stationary trainer. In the
spring and summer, she hikes most evenings
after work on trails near her home.
An occasional workout is lugging 40-
pound hay bales from a trailer into the barn
or from the loft into a stall for the three
horses she and her husband own.

CHICAGO
Continued from page A11
a racist cop.
Since its launch five years
ago, the “Chicago” fran-
chise’s success has had less
to do with hot-button sto-
rylines than the relationship
drama among its core char-
acters. However, producers
have suggested that the new
“Chicago Justice” will tackle
controversial topics. In one
episode a familiar cop is
prosecuted after a dealer he
arrested dies in custody. The Art of precision
Representatives for NBC
and the “Chicago” franchise Goyen Ornamental Lathe
declined to comment.
Regardless of good inten- Rare machine. Incredible workmanship. A craftsman’s dream.
tions by TV writers, some This incredible ornamental lathe by William Goyen is one
Chicagoans say the police of only 12 known to exist. Goyen’s lathes are considered
procedural format doesn’t al- to be the most exquisite ever made, as evidenced by the
low for much nuance. “If it’s
a cop-driven program, it’s al- sheer beauty and quality of the present masterpiece. This
ways lock up, lock up, lock remarkable machine is the ultimate carving tool, capable
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SHOWTIME

says LeVon Stone Sr., a

South Side native and a pro-
gram director for CeaseFire,
an organization that deploys
“interrupters” to prevent vi-
olence in community hot
spots and sends responders
to hospitals to head off retal-
iation.
Lena Waithe, creator of
the coming drama series
“The Chi,” says she’s re-
sponding to the image of
her hometown that comes
across in news reports.
“People see the numbers
coming out of the city and
hear about it as background
Its matching mahogany cabinet is filled with hundreds of
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to categorize it as a jungle. recently picked it up. Ms.
We really want to show the Waithe, who appeared in the
human-ness behind the Netflix comedy “Master of
headlines.” The series, None,” says making “The 630 Royal Street, New Orleans, Louisiana • 877-677-2801 • ws@rauantiques.com • rauantiques.com
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around black characters of view. She says she wants
from the South Side, includ- to depict day-to-day life in
ing an aspiring restaurateur the midst of violence.
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
A14 | Monday, February 6, 2017
Patriots Storm Back to Stun Falcons
Down 19 points to start the fourth quarter, Tom Brady leads New England on a historic Super Bowl rally and overtime victory
BY BRIAN COSTA
HOUSTON—The New England Pa-
triots had been here before. They had
won here before. But never like this.
Their 34-28, overtime victory over
the Atlanta Falcons in Super Bowl LI
on Sunday night didn’t just earn
them their fifth championship since
2001. It was the greatest comeback
in Super Bowl history, a stunning
feat that came after they trailed by
as many as 25 points in
NE 34 the third quarter. And
ATL 28 it stirred in them a
feeling unlike anything
from Super Bowls past.
Beneath the confetti that de-
scended on NRG Stadium following
James White’s clinching, 2-yard
touchdown run, there were the famil-
iar scenes of celebration. But from
the scrum of players at midfield to
bars and living rooms across New
England, there was also a new senti-
ment: redemption.
A franchise marred for two years
by the Deflategate scandal was tri-
umphant again. Tom Brady, whose
season began with a related four-
game suspension, set Super Bowl re-
cords with 43 completions and 466
passing yards. He was named Super
Bowl MVP.
After the game, Brady received a
congratulatory handshake from
NFL commissioner Roger Goodell,
whom he fought in court in a failed
effort to have his suspension over-
turned. Goodell was booed loudly
by the crowd when he emerged on
a stage to hand the Vince Lombardi
Trophy to Patriots owner Robert
Kraft.
When the Patriots won the Super
Bowl two years ago, Kraft said, “I
told our fans that was the sweetest
one of all. But a lot has transpired in
the last two years. And I don’t think
that needs any explanation.” Now, he
said, “This one is unequivocally the
sweetest.”
The Falcons were vying for their
first championship in their 51-year
history. For three quarters, there was
little doubt that they would secure it.
The Patriots didn’t score a point until
a field goal with just seconds remain-
ing in the first half, and they still
trailed 21-3. Even early in the second
half, there was little hint of what
would come.
A 6-yard touchdown catch by Te-
vin Coleman put Atlanta ahead 28-3
with 8:36 left in the third quarter,
turning the game into a snoozer.
“Down 25 points,” Brady said, “it’s
hard to imagine us winning.”
New England’s Comeback Shakes Houston
Houston
An hour after overtime ended, it
still didn’t feel real. The players
had long left the field, half of them
triumphant, the rest shellshocked.
Snowdrifts of confetti piled around
the benches, looking like an aban-
doned New Year’s Eve
bash. Inside this emp-
tying stadium late Sun-
day night, a surreal
question lingered:
What, exactly, had happened
here?
The New England Patriots had
done everything in football, it
seemed, but they hadn’t done any-
thing like this. Not this insanity.
Not simply coming back, but
crawling back from the crypt.
From 25 points down. No team in
Super Bowl history had ever done
anything like that—not even Tom
Brady, Bill Belichick and these un-
deniable and now unprecedented
Patriots.
Let’s briefly review, because
it’s all so absurd: they trailed the
Atlanta Falcons 28-3 with eight
and a half minutes left in the
third quarter. If you shut off the
TV at that point, taken the dog
for a walk, and a cocktail, or sim-
ply drifted to sleep, it cannot be
held against you. These Patriots
appeared cooked. They appeared
cooked even before a bedazzled
Lady Gaga dropped from the sta-
dium roof into the halftime show.
Brady and Belichick had enjoyed
many great days and nights over
the past decade and a half, but
this did not appear to be one of
them.
Then it changed, almost imper-
ceptibly. It’s hard to detect ex-
actly when the key moment for
New England occurred; not even
Brady could pinpoint it after the
game. There were some big com-
pletions and penalties and a key
Falcons fumble, but it felt more
like an accumulation of little suc-
James White #28 of the New England Patriots scores the game winning touchdown in overtime against the Atlanta Falcons during Super Bowl LI in Houston.
But slowly, like a snowflake that
became an avalanche, the tension be-
gan to mount. First came White’s 5-
yard touchdown catch with just over
two minutes left in the third quarter.
Then came a field goal kick by Ste-
phen Gostkowski with 9:44 left in the
fourth, followed by a Falcons fumble
that led to Danny Amendola’s 6-yard
touchdown catch.
Brady’s summary was more con-
cise. “There was a lot of shit that
happened tonight,” he said.
None of it was more stirring than
the Patriots’ final drive of regulation.
With New England down 28-20 and
just over three minutes left, Brady
led the Patriots on a 91-yard march
to the end zone. It ended with
Tom Brady of the Patriots celebrates with head coach Bill Belichick after clinching their fifth Super Bowl title together.
cesses and Atlanta mistakes than
a single, defining break. The Pa-
triots chipped, chipped, chipped—
they pulled off a pair of two-
point conversions in the fourth
quarter, for goodness’s sake, of
course there was New England re-
ceiver Julian Edelman’s comically
athletic catch inches from the
turf—“I don’t know how the hell
he caught it,” Brady said—and
then somehow, in the last minute,
they tied it 28-28.
It became the first overtime
game in Super Bowl history. And a
handful of minutes later, the Patri-
ots shockingly won it.
“We’re all going to remember
SPORTS
SUPER BOWL LI
White’s 1-yard run across the goal
line with 57 seconds left. He then
threw to Amendola to complete a
game-tying, two-point conversion.
The Falcons never got possession
of the ball in overtime. After New
England won the coin toss, Brady
fired five consecutive completions to
move the ball down the field. White
took it from there, with a 10-yard run
before his decisive dive across the
goal line.
“As soon as I dove,” White said, “I
knew I got in.”
The Falcons won 11 games during
the regular season and saw quarter-
back Matt Ryan emerge as an elite
passer, earning his first MVP award.
They had the best offense in the NFL.
SUPER BOWL LI | Jason Gay
this for the rest of our lives,” said
Brady, who was brilliant in victory,
completing 43 of 62 passes for 466
yards, a Super Bowl record.
This is a fifth ring for Brady,
presumably for his thumb. Enter-
ing the game, there was the sub-
plot of “Deflategate” and the New
England region’s feud with league
commissioner Roger Goodell, and
that awkward trophy ceremony did
indeed happen, but it would be a
mistake to think that revenge was
the story Sunday night in Houston.
The story will be the comeback.
You can probably capitalize it now:
The Comeback.
Meanwhile, let’s end the argu-
* ***** THE WALL STREET JOURNAL.
RICHARD MACKSON/REUTERS
But Atlanta will go down as simply of a representative sample of Ameri-
the latest of five different teams to can fans found them to be the most
lose in the Super Bowl to New Eng- disliked team in the NFL.
land in this century. The fallout from the deflated foot-
As usual, the most notable his- balls used during the 2015 AFC
tory was made by the Patriots, one championship game pitted Brady
of the great dynasties in profes- against Goodell. But it also inspired
sional sports. Bill Belichick became even more loyalty from Patriots fans,
the first coach to win five Super who came to view Brady as not
Bowls. Brady became both the first merely a beloved icon but also a
quarterback to win five titles and cause to rally around. Across New
the first to win four Super Bowl England, shirts that read “Free
MVP awards. Brady” became ubiquitous.
The game marked New England’s It all culminated Sunday night,
seventh Super Bowl appearance since with Brady and the Patriots trium-
2001, and at no point in that storied phant over Atlanta and the masses
run have the Patriots been more divi- who have come to despise them.
sive than they are now. For the sec- “We’ll remember this,” Brady said,
ond consecutive year, public polling “for the rest of our lives.”
rushed, hurried and hit. Even suc-
cessful completions had conse-
quences. It was hard to tell if
Brady was rattled, but the Falcons
were achieving the desired effect.
An early fumble from LeGarrette
Blount nullified a potential New
England scoring drive.
But the biggest mistake in the
first half was Brady’s own. With
Atlanta roaring at 14-0, Brady had
the Patriots deep in Falcons terri-
tory, only to throw a short pass
dangerously into double-coverage.
Atlanta’s Robert Alford jumped in
front and intercepted it—and, with
only Brady to beat, he raced 82
yards for an emphatic touchdown.
21-0. Oof.
By the third quarter the Patriots
were resorting to trick plays and
onside kicks. Frantic and over-
matched is not a familiar look for
this era of Patriots. Decades-old
vibes of New England Super Bowl
blowouts—46-10 Bears in Super
KEVIN C. COX/GETTY IMAGES
Bowl XX, anyone?—began to recir-
culate like a bad dream. The
Brady/Belichick Patriots had lost
this game before, but not like this.
This did not feel real.
And then it became familiar and
real.
This spectacular Super Bowl is
why the NFL lights $1,000 cigars
ments about Brady being the with $100 bills. Why TV networks
sport’s greatest quarterback and line up to pay billions for rights,
Belichick being among its greatest and digital companies will pay bil-
coaches. lions in the future. It’s why foot-
Those questions are resolved. ball—despite all of its abundant
For most of the night, however, nonsense—remains the premier
victory did not appear to be in the entertainment in America, ahead
cards. New England sputtered of even movies about talking ani-
early. In Brady and Belichick’s two mals.
Super Bowl losses to the New York It is a crazy game that can get
Giants, a blueprint had emerged: you to do crazy things, football. It
get to Brady early, rush him, hurry can get you to scream at the TV
him, make him uncomfortable. Put and break your heart in the space
what may be the greatest quarter- of minutes. We often flip between
back ever on the back foot early. loving it and hating it and yet it
It’s easier said than done, but remains irresistible. Never was it
that’s exactly what Atlanta’s de- more irresistible than it was Sun-
fense did. Brady was repeatedly day night in Houston.
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.
Sharp Left Turn Ahead—Beware
By Douglas E. Schoen
C
huck Schumer practically
lives in the Senate, but
these days there’s a lot
going on at the house. Leftist
throngs have been gathering
outside Mr. Schumer’s resi-
dence in Brooklyn, N.Y., de-
manding that the Senate mi-
nority leader “get a spine” and
oppose President Trump on
everything.
That probably isn’t his nat-
ural inclination. Mr. Schumer
once said that a “pause” in
Syrian immigration “may be
necessary,” and after the elec-
tion he declared himself ready
to “work with” Mr. Trump. But
now he has yielded to the
noisy crowd.
Mr. Schumer vows to fight
the president “tooth and nail”
and to “vote against nominees
who will be the very worst of
this anti-immigrant, anti-mid-
dle-class, billionaires’ club
cabinet.” That includes Trans-
portation Secretary Elaine
Chao, herself an immigrant
and the wife of Majority
Leader Mitch McConnell. Mr.
Schumer was in the Senate in
2001 when Ms. Chao was con-
firmed, without opposition, as
President Bush’s labor secre-
tary.
Mr. Schumer isn’t alone in
feeling pressure from the left.
His party is deeply divided be-
tween pragmatic politicians
and an activist base that styles
itself “the resistance.” The mi-
nority leader may feel his sur-
vival depends on adopting the
activist approach. But outside
the heavily blue coasts, it
Fire and Terrorism in Chile
More than
one million
acres in the
center and
south of Chile
have gone up
AMERICAS in flames
since July
By Mary
2016, with al-
Anastasia
most 70% of
O’Grady
the destruc-
tion occurring
last month. The affected area
is larger than the state of
Rhode Island. At least 11 peo-
ple have died and more than
1,000 homes have been de-
stroyed.
Forest fires during the hot,
dry Chilean summer are not
uncommon. But Socialist Pres-
ident Michelle Bachelet’s anti-
market ideology may be exac-
erbating the situation.
One example: When the
Chilean wife of Sam Walton’s
grandson, heir to a fortune,
offered to charter a 747-400
supertanker equipped to fight
fires, the government put up
obstacles. That delayed, by a
couple of precious days, the
arrival of the plane, which has
turned out to be enormously
effective. Yet when Russia of-
fered to send smaller planes,
there was no such delay and
Ms. Bachelet celebrated on
Twitter.
La presidenta’s near-wor-
ship of Fidel Castro and his
communist vision for Latin
America is legendary. But her
decision to put her politics
over the well-being of rural
Chileans in this crisis is a
scandal.
Some fires have been in-
tentionally set and this has el-
There’s No School Like the Kitchen
By Lorraine Allen
M
y husband and I cook
daily for our 8-year-
old daughter because,
like 15 million other Americans
(an estimated two children per
classroom), she has food aller-
gies. For our daughter, this rit-
ual is inspiring and educa-
tional. She loves helping out—
rolling dough, mixing sauces—
and creating her own dishes,
from tarts to homemade lin-
guine. At age 6 she opened her
own allergy-friendly bakery.
I’m no gourmet chef, but I
spent much of my own child-
hood helping my grandmother
in the kitchen, a lucky thing, I
now know.
As our child grows, I’ve
come to realize that helping in
the kitchen develops far more
than basic cooking skills. Chil-
dren gain countless crucial de-
velopmental skills, and because
they absorb these lessons in a
hands-on, playful way, they are
immediately engaged without
parental nagging.
could consign Democrats to
permanent minority status,
continuing a trend that has
cost the party the White
House, both houses of Con-
gress, 13 governorships and
nearly 1,000 state legislative
seats in the past eight years.
If Democrats have a
road back to power,
‘the resistance’ will
drive them off it.
There may be more losses
to come, especially in the Sen-
ate, where 10 Democrats are
up for re-election next year in
states Mr. Trump carried.
They’re unlikely to win
through unyielding resistance.
Total noncooperation with
Mr. Trump’s agenda isn’t via-
ble in Indiana, Missouri, Mon-
tana, North Dakota and West
Virginia, all of which Mr.
Trump carried with more than
55% of the vote. Florida, Mich-
igan, Ohio, Pennsylvania and
Wisconsin were closer, but
Democratic senators in those
states surely realize anti-
Trump intransigence will not
persuade the thousands of
Trump voters they need.
Mr. Trump’s executive or-
der on immigration draws fu-
rious opposition in blue-state
cities, but its reception in
Trump country is likely to be
different. Quinnipiac polling
after the election found 48%
nationwide support for Mr.
Trump’s policy of “suspending
evated concerns in rural Chile
about the rise in organized vi-
olence against civilians and
private property by left-wing
extremists aiming to topple
the democracy. Ms. Bachelet
was warned about the threat
during her first term
(2006-10), as was former
President Sebastian Piñera
(2010-14). Neither acted.
President Bachelet refers to
the violence as a “rural con-
flict.” But it is terrorism, and
the unwillingness of her gov-
ernment to address it is al-
lowing its spread.
The causes of the fires—
more than 100 in January—
are under investigation. My
sources in Chile say that much
of the destruction will likely
be attributed to accidents
made worse by litter, high
winds and drought.
But the government has ad-
mitted there is evidence of ar-
son in some cases and it has
arrested 43 people as part of
its investigation. Undersecre-
tary of the Interior Mahmud
Aleuy said on Jan. 30 that
“there is no pattern” that
leads to “definite conclu-
sions,” and that “some of the
detainees have been street
people, others have severe
mental problems.”
Even so, on Jan. 29 Interior
Minister Mario Fernández said
the government hasn’t ruled
out terrorism in some cases.
Perhaps that’s because there
have been reports that don’t
jibe with the “homeless” nar-
rative. Last month in the par-
ish of Arauco, in the Bío Bío
region, police reported being
shot at when the occupants of
For toddlers, the kitchen is
a perfect place to hone their
gross and fine motor skills, us-
ing their hands to wash and
peel produce, stir sauce, or dig
out a measure of flour or pinch
of salt. A preschooler will gain
important cognitive skills from
sorting forks and spoons,
matching lids on sippy cups,
and avoiding a hot stove.
Curious elementary school
children can practice literacy
skills when they decipher in-
gredient labels and recipe di-
rections. As they create dishes
more independently, they learn
about nutrition, natural sci-
ences and health. They
sharpen math skills by weigh-
ing, measuring, adding, sub-
tracting and multiplying ingre-
dients. And in contrast to a
classroom, after all those mea-
surements, they can have their
cake and eat it, too—at least a
fraction of it.
At any age, and especially
for children with dietary re-
strictions, the kitchen is a sci-
entific laboratory. Are eggs off
OPINION
immigration from ‘terror
prone’ regions, even if it
means turning away refugees
from those regions”; only 42%
were opposed. Polls taken af-
ter the executive order
showed levels of support rang-
ing from 42% to 52%, depend-
ing on how the question was
framed.
Whereas Mr. Schumer has
cast his lot with “the resis-
tance,” Democratic senators
from Trump states have made
clear that they seek areas of
cooperation with the presi-
dent. Even the fiercely left-
wing Sherrod Brown has said
he is “ready to support Ohio
workers by working with the
Trump Administration to re-
negotiate NAFTA, put Ameri-
can workers ahead of corpo-
rate profits, and create jobs.”
North Dakota’s Heidi Heit-
kamp has said that it is “abso-
lutely critical” to work with
the Trump administration on
“common interests in doing
things in energy, doing things
in agriculture.” West Virginia’s
Joe Manchin, a staunch advo-
cate of the coal industry, has
said that he looks forward “to
working with [Mr. Trump], his
administration and my col-
leagues in order to keep Amer-
ica’s promise to our miners
and make sure they receive
the healthcare they have
earned and deserve.” Michi-
gan’s Debbie Stabenow told
NPR in November that “the re-
sponsible approach is to work
with the president when he is
proposing something that’s
good for working people and
for the economy.”
a suspicious car they’d been
chasing fled on foot. Inside
the abandoned vehicle they
found fuel and lighters.
Both the fire chief and the
fire superintendent in the par-
ish of Empedrado in El Maule
reported that in the wee hours
of Jan. 26 some 20 gunshots
were heard outside the fire
house. The fire chief said that
a nearby vehicle was left with
bullet holes. He worried that
his volunteer firefighters
might not come back to work.
Setting churches and
forests afire is the
modus operandi of
guerrillas in the south.
A Jan. 30 headline in the
online news outlet biobio-
chile.cl declared: “Neighbors
and authorities fear forest fires
may be terrorist attacks.” The
story reported that locals in
Constitución, also in El Maule,
are concerned that sabotage
aimed at forestry companies
endangers their homes.
The presence of left-wing
extremist groups—claiming to
represent the indigenous Ma-
puche—in the southern region
of La Araucanía is well known.
In recent years they have ex-
panded into Los Ríos and Bío
Bío. Setting churches, forests,
trucks and other property
afire and killing people in am-
bushes and sniper attacks is
their modus operandi, and
they operate on both sides of
the border with Argentina.
the menu because a child is at
risk of anaphylaxis? Not a prob-
lem. Mix white vinegar with
baking soda, and watch it in-
stantly foam up and fizzle. Stir
this magical concoction into
cake or muffin batter as an egg
replacement, and you’ll get the
same light, moist results.
Cooking opens minds to
different ideas and cultures.
Our travel options are limited
by food allergies, but recently
our daughter suggested going
around the world from our
stove. After homemade Italian
pizza, we hit China to prepare
pork and ginger dumplings in
shiitake broth. Next, we ex-
perimented with Mexican car-
nitas followed by a Moroccan
tagine.
While preparing meals, chil-
dren observe and assist care-
givers as they stir boiling liq-
uids, use oven mitts (or forget
to), and adjust flames. In to-
day’s sterilized world, there is
no place like the kitchen, where
delectable things come together
from dangerous tools such as
For these vulnerable incum-
bent senators—among the few
moderate Democratic office-
holders left—the way to win in
2018 and beyond will be to
carve out an alternative
agenda based on working with
Mr. Trump in areas where
compromise is possible, and
also offering ideas to guaran-
tee health care for all, pro-
mote affordable prescription
drugs, invest in infrastructure
and lift federal spending lim-
its. Cooperating on trade, job
creation, infrastructure and
tax reform would enable sena-
tors to push Mr. Trump for
compromise on traditional
Democratic priorities such as
green energy and access to
health care.
But the more Mr. Trump
proposes policies anathema to
the Democratic base, the more
strident the activism will be-
come, and the greater the
pressure on Democratic law-
makers to take the road of in-
transigence and “total resis-
tance”—to become the party
of Bernie Sanders, who calls
Mr. Trump a “delusional presi-
dent.”
If the Democratic Party’s
activists cannot accept that
victory requires selective co-
operation with Mr. Trump as
well as protection of their core
values, the party itself could
be condemned to further
weakness, irrelevance and
even obsolescence—beginning
with the 2018 election.
Mr. Schoen served as a po-
litical adviser and pollster for
President Clinton, 1994-2000.
In 2015 Chilean lawyer Fe-
lipe Silva told the Chilean
magazine Qué Pasa that in
2009, during Ms. Bachelet’s
first presidential term, the
government received a report
from then-Colombian Defense
Minister Juan Manuel Santos
linking so-called Mapuche ter-
rorist groups with the Revolu-
tionary Armed Forces of Co-
lombia, known as the FARC,
and the Chilean Communist
Party.
Mr. Silva told me in a tele-
phone interview on Thursday
that he knew about it be-
cause he retrieved a similar
report from Colombia for the
Chilean opposition that same
year.
In an April 2016 letter to
Ms. Bachelet, the president of
the association of southern
trucking companies alleged
that she had made a deal inside
her ruling coalition—which in-
cludes the Chilean Communist
Party—not to apply Chile’s an-
titerrorism law against the
guerrillas. This, the letter said,
is putting “a violent few above
the immense majority of Chil-
eans” and it implored her to
reconsider.
The terrorists use the face
of the native Mapuche as an
excuse for their violence. Yet
they don’t represent the popu-
lation, which heavily backed
Gen. Augusto Pinochet and
still votes overwhelmingly
conservative. Most Mapuche
are peaceful, small-landown-
ers trying to earn a living.
Their trial by fire, terrorism,
seems not to trouble the Chil-
ean government.
Write to O’Grady@wsj.com.
fire and electric blenders, used
routinely and calmly.
Parents today cover sharp
corners and install baby gates.
We want to keep our children
safe, but the world cannot be
padded and children must
learn to manage danger to
thrive. The kitchen provides a
controlled space to sharpen
and wield blades without fan-
fare or panic or elbow pads. A
place where children learn
from experience, by example,
and by engaging their senses,
and food can be safely pre-
pared and enjoyed.
The kitchen fosters close
connections, promotes self-
sufficiency. Maybe best of all,
when we learn to prepare food,
we also learn to feed ourselves
and others better. We improve
our health, in addition to our
knife skills. At the start and
end of any day, the kitchen of-
fers a life full of flavor, no mat-
ter the challenges.
Ms. Allen writes a blog at
MixPlayEat.com.
Monday, February 6, 2017 | A15
BOOKSHELF | By Robert D. Kaplan
How to Spread
Our Values
Why Wilson Matters
By Tony Smith
(Princeton, 332 pages, $35)
A
merican elites flatter themselves in their belief that
they understand the world, with its countless
geographical, cultural and political cleavages. They
theorize abstractly in Washington, meet with fellow elites
at conferences in country capitals, and then delude them-
selves into thinking that they know the mind-set and reality
of distant villages and border posts. This assumption of
knowledge where little exists has been a factor in our
misadventures in Iraq, Libya and elsewhere.
Tufts University political scientist Tony Smith calls such
hubris “neo-Wilsonianism,” which he claims does violence
to President Woodrow Wilson’s original and more nuanced
vision of how to spread our values. “Why Wilson Matters”
is a painstaking, take-no-
prisoners attack on those
who believe that America’s
historical experience can be
duplicated everywhere. Mr.
Smith argues that liberal
internationalism is now in deep
crisis because of its own recent
bent toward militarism and not
because of the vision of
America’s 28th president.
Wilson, the author writes,
“tried to promote a concept of
world order that would take this
nation permanently out of
isolationism.” The U.S. would claim a
leadership role “in the name of promoting democratic
governments, open markets, and . . . collective security.”
Wilson wanted to replace the balance of power with a
“community of power.” Over time, this shift turned out to be
a successful grand strategy, Mr. Smith claims, culminating in
the fostering of democracy in Japan and Germany after World
War II and, later, in the creation of the European Union.
Yet Wilson himself, Mr. Smith says, was a gradualist
whose inclinations were “restrained.” He attacked the
French Revolution and championed the American
Revolution precisely because the former, with its
declaration of lofty principles unmoored to any program of
governance, led to chaos, while the latter was undergirded
by a concept of order that was itself built on “the strictures
of English law, customs, and institutions.”
Just before and during Wilson’s years in office, America’s
interventions in the Philippines, Mexico and Haiti had
proved ever more vexing. Even so, he remained committed
to his long-range goal of expanding the boundaries of
historical liberalism, if cautious about how exactly to
achieve it. His worldview may have been expressed best
decades later by the philosopher Reinhold Niebuhr, who in
1952 celebrated liberalism’s “fortunate vagueness,” its
rootedness in “common sense rather than in abstract
theories.” Only in the post-Cold War period of the 1990s,
Mr. Smith says, would liberal internationalism begin to
degenerate into “a ‘hard’ ideology.”
What Iraq needed in 2003 was not a thuggish
democracy, but a more enlightened dictatorship
like the one then in Egypt and Pakistan.
It is certainly true that Wilson’s outlook was more
nuanced than is generally known. Even so, and despite Mr.
Smith’s protestations, Wilson was naive about the world’s
persistent dangers. He hailed the end of empire in Habsburg
Austria and Ottoman Turkey but could not understand that
the new democracies and other regimes in these imperial
voids could be even more unstable and impose even harsher
repressions on their minorities. His ultimate goal of making
the rest of the world just like us was itself a form of
narcissism, which avoided the complexities of the world as
it was, with its widely varied historical experiences.
For Wilson, and for sectors of the academic and policy
establishments to this day, “the heart of the matter of war
and peace,” as Mr. Smith puts it, has been the struggle
between autocracy and democracy. But this Manichaean
dichotomy does not hold up in the real world. On the
ground there are usually shades of gray rather than good
and evil, with autocracies in places such as Oman, Jordan
and Morocco providing more liberalism than full-fledged
democracy would. What Iraq needed in 2003 was not the
violent sectarian chaos and thuggishly incompetent
democracy that would follow Saddam Hussein, but a more
enlightened military dictatorship like the ones that were
then operating in Egypt and even Pakistan.
Mr. Smith’s argument builds to a denunciation of what he
considers the naive and militant ideology of the Clinton,
younger Bush and Obama administrations, when liberal
internationalism, he believes, was taken to an extreme by
neo-Wilsonian academics, neoconservatives and humanitar-
ian interventionists. He offers up their maximalist urgings,
including the claim that it is America’s duty to help imple-
ment democracy in Baghdad, Beijing and almost every-
where else. He juxtaposes such assertions, sometimes on
the same page, with quotations from Wilson that manifest
caution and restraint. In the author’s eyes, contemporary
thinkers have misinterpreted Wilson rather than emulated
him. They did not see that places like Libya and Iraq at the
turn of the 21st century were not the cultural and historical
equivalents of Germany and Japan following World War II.
All this makes for powerful reading but breaks little
ground, given that supposedly Wilsonian interventionism
has already been condemned in a plethora of other books.
What’s new in “Why Wilson Matters” is the author’s
narrative showing Wilson’s beliefs becoming more and more
distorted by others as time goes on. Mr. Smith concludes
with the nostrum that we need to deepen our own
democratic institutions while encouraging gradual liberal
change elsewhere, even as we try to avoid military force.
The election of Donald Trump demonstrates, among
much else, a deep-seated resentment in the heartland
toward neo-Wilsonian interventionism. Yet Mr. Trump
himself needs to understand that Wilson’s original vision of
pushing out the boundaries of liberalism world-wide still
works as a grand strategy. For if American foreign policy
were to be simply pragmatic and nothing more, little would
separate it from the foreign policy of, say, the Chinese. Our
values are still worth promoting, and we project power
mainly so that we can indeed advance them.
Mr. Kaplan is the author of “Earning the Rockies: How
Geography Shapes America’s Role in the World.” He is a
senior fellow at the Center for a New American Security.
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A16 | Monday, February 6, 2017 THE WALL STREET JOURNAL.

OPINION
REVIEW & OUTLOOK LETTERS TO THE EDITOR

A Trump-Cohn Financial Rewrite Repeal of Transparency Rule Was a Mistake

P
resident Trump is focusing early on roll- has ruled in its favor. The Trump Administration House Majority Leader Kevin American companies aren’t being
ing back regulation, and on Friday he could drop the government’s appeal and settle McCarthy’s “How the House Will singled out, as the anticorruption re-
Roll Back Washington’s Rule by Bu- porting effort is also applied to for-
took another good step with directives with MetLife in a way that exempts insurers
reaucrat” (op-ed, Jan. 25) encourag- eign competitors, including private
to peel back Dodd-Frank and from the SIFI label. ing Congress to overturn the Cardin- and state-owned companies in China,
the Labor Department’s fidu- They could offer Wall Also in need of review is Lugar anticorruption rule (Section Russia, India and Brazil. Shell, BP and
ciary rule. Democrats are pre- Street fewer rules in the Volcker Rule, which had 1504 of Dodd-Frank)—which had even Russian giant Gazprom have al-
dicting another financial cri- the sensible goal of barring strong bipartisan support and was ready filed reports under EU rules.
sis, but it’s possible to build a return for more capital. high-risk trading at taxpayer- widely debated—wrongly paints a There is no unreasonable burden to
sturdy system that also allows insured banks. But regulators danger sign on public transparency businesses in asking them to track op-
for more risk-taking to serve needed four years to finalize and accountability. erating payments that should be part
economic growth. the abstruse 950-page rule that includes 2,800 The Republican-controlled House of the normal course of legitimate
Start by repealing rules that add costs with- footnotes. One iron rule of government is that and Senate gutted the rule last week, business. Who supports gutting trans-
out making the system safer, such as the fidu- the more complex a regulation, the easier to doing the bidding of Big Oil. For years, parency? The dictators and autocrats
the American Petroleum Institute, who are skimming billions from their
ciary rule that Labor imposed last year under find loopholes.
fueled by Exxon, fought Cardin-Lugar countries’ oil and mineral revenues at
the guise of protecting savers. The rule requires Dodd-Frank’s fatal flaw is assuming that reg- relentlessly in court. Last year the SEC the expense of their own people.
brokers to act in the “best interest” of clients, ulators who failed to prevent the last crisis will finally published its rule that requires I’m not done fighting the war
though many investors will be harmed. The rule foresee and prevent the next one. All they need extractive companies listed on the U.S. against entrenched corruption that
will make investment advice too expensive for are more rules and more power. But financial stock exchanges to disclose their pay- harms American taxpayers and
many small investors as brokers eliminate com- manias happen precisely because everyone as- ments to foreign governments. Mean- keeps millions of people in poverty
missions and instead charge fees. Plaintiff at- sumes the good times will last forever. while, following U.S. leadership, the worldwide.
torneys are circling, ready to slap brokers with i i i EU and Canada passed nearly identical
class-action lawsuits if stock prices fall. The better way to prevent a panic is to have laws, already in effect. Cardin-Lugar SEN. BEN CARDIN (D., MD.)
Small investors may also find themselves at simple but firm rules along with high capital has become an international norm. Washington
the mercy of robo advisers that may have a hard standards that make banks better able to en-
time discerning their client’s best interest. dure losses in a downturn. That’s the philoso-
Want to know whether to boost your invest- phy behind House Financial Services Chairman Good Economic Policy Makes Its Own Luck
ment in health stocks if ObamaCare is repealed? Jeb Hensarling’s proposed financial reform, and Regarding Alan S. Blinder’s “Will dent Jimmy Carter and 3.61% under
Ask Alexa. Robert Litan and Hal Singer have es- it’s the direction the Trump Administration Trump Deliver a Growth Miracle? President Ronald Reagan.
timated that depriving small investors of hu- should take even without legislation. Don’t Count on It” (op-ed, Jan. 23): We need men of clear vision to re-
man advice could cost clients $80 billion in a But will it? The President signed his direc- Prof. Blinder approves both Dodd- store our economy. We cannot expect
downturn. Mr. Trump ordered Labor to review tives Friday after meeting with bank executives, Frank and EPA regulations, blind to the Blinder to lead the lame.
and perhaps rewrite the rule that was sched- and he didn’t help himself politically by prais- costs and benefits. He condemns tax CHARLES W. MEYRICK
uled to take effect in April. ing the “great returns” BlackRock has earned. cuts that disproportionately benefit Bridgeport, Conn.
The President also directed a review of the The point is to help the larger economy, not those who pay disproportionately, not
seeing that we can’t cut taxes for Prof. Blinder points to a review of
2,300-page Dodd-Frank law that has turned bank profits.
those who pay no taxes. He believes research regarding the effect of sup-
banks into regulated utilities. Gary Cohn, who As a Goldman Sachs alum, Mr. Cohn has a we are at “approximately full employ- ply-side tax cuts on economic growth
runs Mr. Trump’s National Economic Council, particular burden not merely to relax regula- ment,” turning a blind eye to the dete- that concluded there was no positive
told the Journal that Dodd-Frank’s costs and tions that are the bane of big banks while doing rioration in the labor-force participa- relationship. The conclusion of that
complexity have restrained bank lending. Dem- little to relieve the burden on their smaller tion rate. He claims that Congress has review, however, is at odds with the
ocrats wrote Dodd-Frank with enough ambigu- competitors and tech start-ups. J.P. Morgan’s done the “opposite” of stimulating de- two-decade acceleration of growth
ity so the feds could regulate as they please. But Jamie Dimon and Goldman Sachs’s Lloyd Blank- mand, not considering the near dou- that followed President Reagan’s sup-
this means a new government can ease those fein have argued against a wholesale repeal of bling of the national debt in eight ply-side tax cuts. Perhaps the re-
burdens without Congress. Dodd-Frank, which has given these large incum- years. He tells us that cutting taxes searchers attributed the excess
Take the Financial Stability Oversight Coun- bents a competitive advantage. “does redistribute income from the growth delivered by Reaganomics to
cil (FSOC), which has the power to designate Although Mr. Cohn said the U.S. has the high- have-nots to the haves,” blindly rede- the dumb luck of 1980s technical
fining “redistribution” to mean “not progress, but lower taxes and less reg-
“systemically important financial institutions.” est bank capital standards in the world, they
redistributing.” ulation that stimulate business invest-
SIFIs must comply with onerous regulations but aren’t as high as they should be. The trade he He offers an “interesting historical ment may be the elixir that creates
carry an implicit taxpayer guarantee. could offer Wall Street is less burdensome regu- fact”: “Since Harry Truman, the dumb luck. Sometimes the “luck” oc-
Big banks that accept taxpayer-insured de- lation in return for higher capital standards. growth rate has fallen every time a curs immediately, and sometimes a
posits are obvious SIFI candidates, but the The banks would then be freer to lend money Republican president replaced a Dem- subsequent administration reaps the
Obama FSOC also tagged AIG, MetLife and Pru- while taxpayers have more protection against ocrat.” According to the Federal Re- benefit, thereby making cause-effect
dential Financial as SIFIs. These insurers are the next bailout. This would have the added po- serve Bank of St. Louis’s historical real analyses more challenging.
burdened with bank-style regulations that don’t litical benefit of blunting the inevitable Demo- GDP figures, the annual average BILL GREENE
fit their business model. MetLife sued to rescind cratic attacks that Messrs. Cohn and Trump are growth rate was 2.75% under Presi- Williamsburg, Va.
the arbitrary designation, and a federal judge trying to help Wall Street.

Coaxing Workers Back to Work Our Civil Servants Need Real Accountability

F
Philip K. Howard’s “The President’s rity officer who was incompetent, so
riday’s employment report for January U.S. has shifted to a permanently lower level Right to Say ‘You’re Fired’” (op-ed, the government shuffled him to Health
was good news, and not only because of employment. This would be a significant re- Jan. 30) on the need for civil-service and Human Services. The deal the HHS
the private economy created 237,000 straint on the economy’s ability to grow, bar- reform makes some valid points, but I employees made with him was that if
net new jobs in the month. ring faster immigration. The would hate to see the service return to he wouldn’t come out of his office, they
The rise in the jobless rate to Can faster growth trend to watch in future a spoils system. Considering my 34- would leave him alone until he retired.
4.8% from 4.7% and the in- year career in the U.S. civil service, I The excuse is always the same: We
crease in labor participation
induce idle Americans months is if faster growth
and rising incomes continue have to agree that it is far too difficult can’t fire them. Yes, we can. Let’s
into the labor force? for poor employees to be fired. I have change the rules.
suggests that faster growth to coax more Americans into
seen a supervisor spend the majority TOM C. JOHNSON
could pull more workers off the workforce. of his time doing a great deal of paper- San Francisco
the economic sidelines. Another hopeful sign last work over three years to successfully
The jobless rate rose because the size of the week was the blowout in the National Federa- fire two useless employees. This, after
labor force increased while the overall civilian tion of Independent Business hiring plans in- they had previously been fired, ap- Is This Becoming the U.S.-
population declined amid the Bureau of Labor dex. The small business survey reported job pealed and won reinstatement with
Statistics’ annual revisions. Both the labor par- openings at a level not seen since April 2006. back pay.
Mexican War, Round Two?
ticipation rate (62.9%) and the employment- NFIB cited a continuation of “post-election op- Most supervisors aren’t willing to Regarding your editorial “Trump’s
population ratio (59.9%) increased by two per- timism” with gains in compensation “to recov- put themselves through the agony of Little Mexican War” (Jan. 27): If Presi-
centage points. ery record high levels.” All of this confirms the firing employees; they will sideline dent Trump is on weak footing with
These key measures of labor market health increase in animal spirits that has also boosted them, transfer them, even promote Mexican policy, why is the peso drop-
them to be rid of them. And if poor ping and not the dollar? Mexico has
have lagged during the Obama expansion, stock prices. Now Republicans have to deliver
employees have any type of minority more to lose than we do.
leading some economists to conclude that the the policies to keep it going. status there is no use even trying to So much of the anti-Trump rhetoric
get them out of the system. The solu- has a “shoot the messenger” ring to it.

Trump Restraining Order tion is to make it easier for supervisors

to fire poor employees; let’s not take
President Trump has the courage to
voice some inconvenient truths. Mex-

T
the civil service back to the horrors ofico exports its problems to the U.S.,
he damage from President Trump’s as injury to States’ operations, tax bases and political favoritism. NATO members aren’t paying their
order on immigration and refugees public funds.” BILL HASLEM
fair share of the costs and the U.S. is
continues to compound, now escalat- The Constitution gives the federal govern- St. George, Utah
taken advantage of in trade deals—
ing into a conflict with the ment supremacy over immi- and Mr. Trump is singled out as the
He’s right on the law Mr. Howard presents a pretty dismal bad guy. Shouldn’t the light shine on
judicial branch. There’s gration, and in the Immigra-
portrait of federal government employ- the source of the problem rather than
enough bad behavior and but his rants against tion and Naturalization Act of ees. There is no accountability. I had on the one who’s expressing it?
blame to go around, but Mr. 1952 Congress gave the Presi- personal experience with a Social Secu- VINCENT MCCORD
Trump didn’t need to court a judge are offensive. dent the exclusive authority Santa Monica, Calif.
this altercation. to temporarily suspend “the
On Friday federal Judge entry of any class of aliens” No, She Didn’t Deserve It, You liken President Trump’s treat-
James Robart in Seattle issued a nationwide that “would be detrimental to the interests of ment of Mexico to President Obama’s
temporary restraining order (TRO) on Mr. the United States.”
Even If It Was Only an Egg maltreatment of Israel. A few weeks
Trump’s suspension of U.S. entry for migrants The first step for any judge is to determine I’m stunned that someone of Doug- before he left office, President Obama
from seven countries associated with terror- if he has jurisdiction—that is, the plaintiffs las M. Parker’s experience would write signed off on a plan to donate $38 bil-
ism risks. The Trump Administration is obey- have suffered concrete injuries that are a letter (Feb. 1) making the ultimate lion to Israel, or roughly $5,000 for
argument that the victim of an assault every man, woman and child, over the
ing and not enforcing its new immigration pol- grounds for a lawsuit. Speculative claims about
“had it coming”—which is what the next decade. Mexico would be happy
icy pending appeal of the TRO, so apparently state budgets and colleges don’t qualify. Thus closing paragraph of his letter sug- to be maltreated like that.
the onset of fascism that we keep hearing Judge Robart’s TRO exceeds the limits on judi- gests. He should have stopped at, PETER UNGAR
about will be postponed by the Constitution’s cial power. The Ninth Circuit Court of Appeals “There is no excuse,” because there New Rochelle, N.Y.
normal checks and balances. denied the Trump Administration’s motion for isn’t.
But Mr. Trump is exporting his politics-by- an administrative stay that would have lifted I write as someone who attended
insult to the courts, writing on Twitter that Judge Robart’s order immediately, but the the Women’s March in Los Angeles, Pepper ...
“The opinion of this so-called judge, which es- plaintiff—Washington State—must respond by didn’t vote for Donald Trump and is
sentially takes law-enforcement away from our Monday. Then a panel will decide whether to concerned by fire-breathing rhetoric
And Salt
country, is ridiculous and will be overturned!” rule or hear oral arguments. wherever it comes from. As we nor- THE WALL STREET JOURNAL

The more appropriate response to executive Mr. Trump’s rants against the judiciary are malize trivial violence like throwing
eggs (free-range organic?) we open
defeat in the courts is to say that the Adminis- offensive to the rule of law, and perhaps also
the door to the unbalanced few who
tration is confident it will prevail on appeal, to his own case. Anyone who defies Mr. Trump welcome more serious political vio-
and especially in this case. Judge Robart’s TRO these days becomes an overnight progressive lence. I see some of this in the left.
is remarkably flimsy. folk hero—think Sally Yates—and the judicial Some progressives want to imagine
Judges have the power to impose temporary liberals of the Ninth Circuit may rally around themselves as heroic revolutionaries.
restraining orders when the plaintiffs can a bad ruling if they feel they have to defend That didn’t end well in the ’70s, and it
show they are suffering irreparable injury and the judiciary from presidential attack. won’t end well now.
are likely to win on the merits. Judges have an Even if the law is on his side, Mr. Trump and MARC DANZIGER
obligation to explain why they are availing aides Stephen Bannon and Stephen Miller cre- Los Angeles
themselves of this extraordinary remedy and ated this mess with an executive order that was
to work through the logic. conceived in secret, sloppily written and over- Letters intended for publication should
Judge Robart’s seven-page ruling includes broad, and sprung on a confused public. Breit- be addressed to: The Editor, 1211 Avenue
of the Americas, New York, NY 10036,
no discussion or analysis, with only a cursory bartian methods may work online but in the or emailed to wsj.ltrs@wsj.com. Please
assertion of the harms that Washington and Oval Office they run up against political reality. include your city and state. All letters
other states have conjured to “the operations When Mr. Trump indulges his worst impulses, are subject to editing, and unpublished
and missions of their public universities and he makes enemies out of potential friends and letters can be neither acknowledged nor “Because sitting is bad
returned.
other institutions of higher learning, as well debacles out of should-be victories. for my health.”
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
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THE WALL STREET JOURNAL.
The Iran Deal Can’t Be Enforced
By John Bolton
I
ran’s continued missile testing
on Saturday has given Presi-
dent Trump one more reason
to tear up his predecessor’s
deal with the regime in Teh-
ran. After Iran’s Jan. 29 ballistic-mis-
sile launch, the Trump administra-
tion responded with new sanctions
and tough talk. But these alone won’t
have a material effect on Tehran or
its decades-long effort to acquire de-
liverable nuclear weapons.
The real issue is whether America
will abrogate Barack Obama’s deal
with Iran, recognizing it as a strate-
gic debacle, a result of the last pres-
ident’s misguided worldview and
The agreement’s entire
basis is appeasement. It
merely ‘calls upon’ Tehran
not to test missiles.
diplomatic malpractice. Terminating
the agreement would underline that
Iran is already violating it, clearly in-
tends to continue pursuing nuclear
arms, works closely with North Korea
in seeking deliverable nuclear weap-
ons, and continues to support inter-
national terrorism and provocative
military actions. Escaping from the
Serbonian Bog that Obama’s negotia-
tions created would restore the reso-
lute leadership and moral clarity the
U.S. has lacked for eight years.
But those who supported the Iran
A Libel Suit Threatens Catastrophe for the Climate of Public Debate
By Michael A. Carvin
And Anthony Dick
T
he First Amendment provides
robust protection for political
and scientific debate, but it
faces a new threat from a climate ac-
tivist determined to silence his crit-
ics. In a case pending before the Dis-
trict of Columbia Court of Appeals,
Penn State professor Michael Mann is
waging an aggressive campaign of
lawfare, accusing of defamation those
who dare to question his work. So far,
the courts have given this assault on
free speech a green light.
Mr. Mann is famous as the creator
of the “hockey stick” graph, which
portrays a dramatic trend in global
warming over the past century. Nu-
merous critics have cast doubt on the
quality and accuracy of his work.
They argue that his historical tem-
perature proxies are unreliable, his
data presentation misleading, and his
statistical techniques skewed.
Even among those who support
the theory of global warming, some
have singled out Mr. Mann’s work as
sloppy and exaggerated. David Hand,
a former president of Britain’s Royal
Statistical Society, has written that
Mr. Mann’s technique “exaggerated
the size of the blade at the end of the
hockey stick,” which corresponds to
the 20th-century temperature rise.
It’ll Take More Than a Band-Aid to Fix Medicaid
By Regina Herzlinger
And Richard Boxer
O
ne of the most fraught ques-
tions in Donald Trump’s
Washington is how Republi-
cans will reform health care. No as-
pect of the debate over ObamaCare
presents as much risk, or opportu-
nity, as what to do with the law’s ex-
pansion of Medicaid, which gave
government health insurance to mil-
lions of Americans. It won’t be easy,
but President Trump and Congress
have an opportunity to control Med-
icaid costs, improve the health of en-
rollees—and also win bipartisan sup-
port.
Republicans should combine two
ideas popular in their party: block
grants and health savings accounts.
The former would let states tailor
their Medicaid policies to their lo-
cal communities, while the latter
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deal, along with even many who had
opposed it, argue against abrogation.
Instead they say that America should
“strictly enforce” the deal’s terms and
hope that Iran pulls out. This would
be a mistake for two reasons. First,
the strategic miscalculations embod-
ied in the deal endanger the U.S. and
its allies, not least by lending legiti-
macy to the ayatollahs, the world’s
central bankers for terrorism.
Second, “strictly enforcing” the
deal is as likely to succeed as nailing
Jell-O to a wall. Not only does the
entire agreement reflect appease-
ment, but President Obama’s diplo-
macy produced weak, ambiguous and
confusing language in many specific
provisions. These drafting failures
created huge loopholes, and Iran is
now driving its missile and nuclear
programs straight through them.
Take Tehran’s recent ballistic-
missile tests. The Trump administra-
tion sees them as violating the deal.
Iran disagrees. Let’s see what “strict
enforcement” would really mean,
bearing in mind that the misbegot-
ten deal is 104 pages long, consisting
of Security Council Resolution 2231
and two attachments: Annex A, the
Joint Comprehensive Plan of Action
(the main nuclear deal, known by
the acronym JCPOA); and Annex B,
covering other matters including
ballistic missiles.
Annex B isn’t actually an agree-
ment. Iran is not a party to it. Instead
it is a statement by the Security Coun-
cil’s five permanent members and
Germany, intended to “improve trans-
parency” and “create an atmosphere
conducive” to implementing the deal.
Not content to answer his critics
in the public square, Mr. Mann has
sued them. One target of his lawsuit
is the political magazine National Re-
view, which published a 270-word
blog post criticizing Mr. Mann as
“the man behind the fraudulent . . .
‘hockey-stick’ graph.” His lawsuit ob-
jects to the magazine’s decision to
quote a critic who wrote that Mr.
Mann “could be said to be the Jerry
Sandusky of climate science, except
that instead of molesting children, he
has molested and tortured data.”
National Review moved to dismiss
the suit, citing a phalanx of Supreme
Court precedent. The Constitution
obviously does not allow crippling
damages to be imposed for voicing
one’s opinion, however vehemently or
caustically. Punishing such criticism
because a jury disagrees with it does
not aid the search for truth, but im-
pedes it by stifling conflicting views.
As the liberal Justice William Bren-
nan observed: “Truth may not be the
subject of either civil or criminal
sanctions where discussion of public
affairs is concerned.” Such speech “is
the essence of self-government.”
As a federal court once put it in
the particular context of scientific
controversies: “More papers, more
discussions, better data, and more
satisfactory models—not larger
awards of damages—mark the path
would give enrollees the ability to
choose their own insurers and pro-
viders. In essence, Washington
could give the states Medicaid block
grants, allocated per capita, to pro-
vide beneficiaries with high-deduct-
ible insurance and health savings
accounts.
Premiums on ObamaCare’s insur-
ance exchanges are rising in part be-
cause so few providers participate.
Our plan would allow Medicaid en-
rollees to shop for their high-deduct-
ible plans on exchanges. More people
shopping would draw more insurers,
thereby increasing competition and
containing costs.
A 2015 study in the American
Journal of Health Economics simu-
lated what would have happened if
all the insurers active on the ex-
changes in 2011 had participated
statewide through 2014. The results?
Premiums for silver coverage would
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OPINION
A long-range missile fired during a military drill in Bushehr, Iran, Dec. 29, 2016.
The key paragraph of Annex B says:
“Iran is called upon not to undertake
any activity related to ballistic mis-
siles designed to be capable of deliver-
ing nuclear weapons” for eight years.
Note the language I’ve italicized.
Iran is not forbidden from engaging
in all ballistic-missile activity, merely
“called upon” to do so. The range of
proscribed activity is distinctly lim-
ited, applying only to missiles “de-
signed to be capable” of carrying nu-
clear weapons. Implementation is
left to the Security Council.
The loopholes are larger than the
activity supposedly barred. Iran sim-
ply denies that its missiles are “de-
signed” for nuclear payloads—be-
cause, after all, it does not have a
nuclear-weapons program. This is a
palpable lie, but both the JCPOA and
toward superior understanding of the
world around us.” Even a meritless
defamation suit can be an effective
weapon to intimidate critics and shut
down debate through ruinous litiga-
tion costs.
In this case the trial court refused
to dismiss Mr. Mann’s libel suit.
Judge Natalia Combs Greene ruled
that the defamation claims were
“likely” to succeed because “to call
Michael Mann sues to
silence critics, and errant
courts ignore the First
Amendment to help him.
his work a sham or to question his in-
tellect and reasoning is tantamount
to an accusation of fraud,” when in
fact Mr. Mann “has been investigated
by several bodies (including the
EPA)” which determined that his re-
search was “sound and not based on
misleading information.” For proce-
dural reasons, the case was reas-
signed to Judge Frederick Weisberg,
who largely adopted Judge Green’s
reasoning.
Appellate courts, which exist to
reverse such legal error, in this case
compounded it. National Review was
have fallen by more than 10%, saving
the government $1.7 billion in subsi-
dies.
Health savings accounts, which
force medical providers to compete
for consumers who pay out of their
own pocket, also reduce overall
costs. When employers introduce
such accounts, health-care costs are
reduced by about 5% for each of the
next three years, according to a 2015
study from the National Bureau of
Economic Research.
Two years ago Indiana imple-
mented a modified version of the
program we propose, the Healthy In-
diana Plan, or HIP 2.0. Comparing
enrollees who used health savings
accounts with those who didn’t
showed that the former used more
primary and preventive care, ad-
hered better to their drug regimens,
missed fewer appointments and
showed up less frequently at the
emergency room.
Although the Hoosier State’s “ba-
sic” traditional Medicaid was free,
those in HIP 2.0 were charged 2% of
their income but did not have to
make copayments. If payments
Notable & Quotable: Parties
Scott Adams writing on his Dil-
bert.com blog, Feb. 5:
One of the most underrated
qualities of Republicans is that they
police their own ranks. If you have
a problem with a violent Republi-
can racist, call some Republicans.
They’ll solve it for you.
But don’t call a Republican if you
are simply offended by another per-
son’s opinion. In that situation you
want to call some Democrats to rid-
icule and physically attack the per-
son with the objectionable opinion.
Monday, February 6, 2017 | A17
ASSOCIATED PRESS
a unanimous Security Council ac-
cepted it. Resolution 2231 includes a
paragraph: “Welcoming Iran’s reaf-
firmation in the JCPOA that it will
under no circumstances ever seek,
develop or acquire any nuclear
weapons.” The ayatollahs have been
doing precisely that ever since their
1979 revolution.
Finally, Resolution 2231 itself also
merely “calls upon” Iran to comply
with Annex B’s ballistic-missile lim-
its, even as the same sentence says
that all states “shall comply” with
other provisions. When the Security
Council wants to “prohibit” or “de-
mand” or even “decide,” it knows
how to say so. It did not here.
The upshot is very simple: Iran
can’t violate the ballistic-missile lan-
guage because it has reaffirmed that it
supported in friend-of-the-court
briefs by such unlikely allies as the
American Civil Liberties Union, the
Electronic Frontier Foundation, the
Washington Post and the Reporters
Committee for Freedom of the Press.
Yet a panel of the D.C. Court of Ap-
peals—Judges Vanessa Ruiz, Corinne
Beckwith and Catharine Easterly—
held in December that Mr. Mann’s
suit should proceed to a jury. The
court again relied on various “offi-
cial” investigations that had cleared
Mr. Mann of misconduct, including
an inquiry by the federal govern-
ment. Speech that disagrees with the
government is at the core of the
First Amendment’s protection—
though not in this court’s topsy-
turvy world.
National Review has filed a peti-
tion for rehearing along with its co-
defendants, the Competitive Enter-
prise Institute and Rand Simberg. If
the full court of appeals does not cor-
rect the error and end this assault on
the First Amendment, the case will
doubtless proceed to the Supreme
Court.
Those hoping Mr. Mann prevails
because they agree with him about
global warming are missing the
point. If he succeeds in diminishing
the right to free speech, he and his
fellow climate activists have just as
much to lose. Mr. Mann has attacked
weren’t made for six months they
would lose insurance. Yet the pro-
gram remained popular: 70% of en-
rollees contributed and 86% de-
scribed themselves as satisfied,
according to a survey from the
Lewin Group last summer. As more
Save the program by giving
states money to provide
high-deductible plans with
health savings accounts.
data are gathered, policy makers can
better understand what beneficiaries
want and how Medicaid dollars can
be efficiently spent to meet their
health needs.
Combining high-deductible plans
and health savings accounts could
also improve the health of enroll-
ees. Current Medicaid coverage
overemphasizes costly treatments.
Duke University professor Barak
Richman has long argued that the
program doesn’t take full advantage
By the way, I’m not a Republi-
can. This is just an observation.
I’ve been watching Democrats not
police their own ranks—after the
Berkeley violence for example—and
it occurred to me that you don’t
see that on the Republican side.
Republicans generally appreciate
free speech, but if someone attacks
your family, your country, or your
freedom in some physical form,
keep some Republicans on speed
dial.
Try it. You’ll be surprised how
well it works.
doesn’t have a nuclear-weapons pro-
gram. Really, what could go wrong?
These are weasel words of the
highest order, coupled with flat-out
misrepresentation by Iran and willful
blindness by the United States. The
Jell-O will not stick to the wall. The
deal cannot be “strictly enforced.”
And this is only one example of the
slippery language found throughout
the deal.
Pentagon sources have said that
the missile Iran recently tested failed
while re-entering the Earth’s atmo-
sphere. This is telling. If the missile
program were, as Iran claims, only
for launching weather and communi-
cations satellites, there would be no
need to test re-entry vehicles. The
goal would be to put satellites in or-
bit and keep them there. But nuclear
warheads obviously have to re-enter
the atmosphere to reach their tar-
gets. The recent tests provide even
more evidence of what Iran’s ballis-
tic-missile program has always been
about, namely supplying delivery ve-
hicles for nuclear weapons.
Time always works on the side of
nuclear proliferators, and the Iran
deal is providing the ayatollahs with
protective camouflage. Every day
Washington lets pass without rip-
ping the deal up is a day of danger
for America and its friends. We pro-
ceed slowly at our peril.
Mr. Bolton is a senior fellow at
the American Enterprise Institute
and author of “Surrender Is Not an
Option: Defending America at the
United Nations and Abroad” (Simon
& Schuster, 2007).
his critics for peddling “pure scien-
tific fraud,” engaging in what he calls
“the fraudulent denial of climate
change,” and taking “corporate pay-
offs for knowingly lying about the
threat climate change posed to hu-
manity.” He accused Fox News of try-
ing to “mislead its viewers” through
a “deceptive” report about climate
change.
None of this is particularly polite,
but it is common in the cut-and-
thrust of public debate. If such caus-
tic criticism is now to be fair game
for legal action, big oil companies
and other well-heeled interests can
launch their own lawsuits asking ju-
ries in Texas or Oklahoma to silence
Mr. Mann and his allies.
The logic of Mr. Mann’s position
threatens to convert political and sci-
entific debate into a litigation free-
for-all, with all sides seeking to sue
one another into submission instead
of resolving differences through the
free exchange of ideas. For those who
care about the spirit of open inquiry
at the heart of the scientific enter-
prise, it is scarcely possible to imag-
ine a greater legal disaster than the
prospect of Mr. Mann’s succeeding on
his claims.
Messrs. Carvin and Dick are Wash-
ington lawyers. They represent Na-
tional Review in Mr. Mann’s lawsuit.
of low-cost, high-value services,
such as home care. Demonstration
projects such as Medicaid’s Cash and
Counseling program have shown
that beneficiaries can fulfill unmet
needs and improve their quality of
life when they have more control
over their medical dollars.
The high-deductible plan should
be required to cover preventive care,
as well as maintenance medications.
And as with other health savings ac-
counts, unspent funds could be
rolled over to the next year or used
for purchases beyond prescribed
medical expenditures.
Current Medicaid rules also often
pay for services that beneficiaries
find unnecessary. For example, a 2015
paper for the National Bureau of Eco-
nomic Research found that Oregon
recipients gained only 20 to 40 cents
in value for services that cost Medic-
aid $1. The integrity of the Medicaid
program depends on bringing real
value to its beneficiaries.
Democrats often say that block
grants allow states to divert federal
dollars away from Medicaid benefi-
ciaries. But allocating the funds di-
rectly to beneficiaries through health
savings accounts should allay con-
cerns and draw more moderate Dem-
ocrats to support the reform.
Combining high-deducible insur-
ance plans and health savings ac-
counts—and block-granting them per
capita for use on exchanges—isn’t
the sexiest proposal. But it would al-
locate scarce dollars more effi-
ciently, address the nexus of poverty
and illness, and make insurance mar-
kets work again. It could also pass
even in a deeply divided Congress.
Ms. Herzlinger is a professor of
business administration at Harvard
Business School. Dr. Boxer is a pro-
fessor at the UCLA School of Medi-
cine.
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
A18 | Monday, February 6, 2017 THE WALL STREET JOURNAL.
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
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TECHNOLOGY: GOOGLE SELLS SATELLITES TO PLANET LABS B4

BUSINESS & FINANCE

© 2017 Dow Jones & Company. All Rights Reserved. * * * * THE WALL STREET JOURNAL. Monday, February 6, 2017 | B1

Last Week: S&P 2297.42 À 0.12% S&P FIN À 0.18% S&P IT À 0.02% DJ TRANS g 2.15% WSJ $ IDX g 1.17% LIBOR 3M 1.034 NIKKEI 18918.20 g 2.82% See more at WSJMarkets.com

GOP Gets
Ready to
Hospitals Fear Changes to ACA
BY MELANIE EVANS fordable Care Act. If that hap- The Congressional Budget Chief Executive William Car- can Hospitals. The AHA, with a

Roll Back Hospital executives are de-

scending on Washington with
pens, however, hospitals say
they want Congress to restore
billions of dollars in federal
Office estimated the funding
cuts would total $232 billion
through the first 10 years of
penter told a San Francisco
health-care conference in Jan-
uary. In an interview, Mr. Car-
membership of about 5,000
hospitals, health systems and
other organizations, is urging

Financial a message: They are con-

cerned about losing insured
patients and revenue under
funding they lost when the
ACA took force.
The ACA cut two kinds of
the law.
The belief was the ACA
would make up for these cuts
penter said he conveyed the
company’s ACA priorities to
Republican senators on the fi-
hospital leaders to visit Wash-
ington as soon as possible, ac-
cording to Tom Nickels, the

Overhaul any plan to dismantle or sig-

nificantly alter the Affordable
Care Act.
funding for hospitals: federal
dollars known as “dispropor-
tionate share payments” that
by providing hospitals with
new, paying customers. More
than 20 million Americans
nance and budget committees
during a trip to Washington in
November. LifePoint, based in
group’s executive vice presi-
dent for government relations.
“It’s an ongoing effort,” he
BY RACHEL WITKOWSKI In a flurry of recent meet- were sent to some hospitals to gained health insurance under Brentwood, Tenn., operates 72 said.
AND RYAN TRACY ings, the executives have told help them care for uninsured the law. hospitals. GOP leaders entered the
lawmakers they don’t want and low-income patients; and “If you’re going to repeal Others bringing that mes- year vowing to repeal and re-
WASHINGTON—Republi- Americans to lose insurance annual raises the government the Affordable Care Act, we sage to lawmakers include the place the ACA, but consensus
cans in Congress are preparing under any alternative the Re- paid hospitals for treating need to have the cuts repealed American Hospital Association on a full repeal is far from es-
to release plans to roll back publicans devise for the Af- Medicare patients. as well,” LifePoint Health Inc. and the Federation of Ameri- Please see ACA page B2
the 2010 Dodd-Frank financial
overhaul as early as this week,
following an executive order
by President Donald Trump
seeking a broad review of the
Obama-era law.
Super Bowl Ads Run With Humor, Unity
House Financial Services
Committee Chairman Jeb Hen-
sarling (R., Texas), who has
been working on a package to
undo parts of Dodd-Frank, is
poised to unveil his plan,

(LEFT TO RIGHT, TOP ROW) AVOCADOS FROM MEXICO; KIA MOTORS; NFL (BOTTOM ROW) PROCTER & GAMBLE (2); BUICK/GETTY IMAGES
called the Financial Choice Act
2.0, people familiar with the
matter said.
The Dodd-Frank law was
enacted after the financial cri-
sis, when Democrats controlled
Congress and the White House,
with the aim of avoiding an-
other economic meltdown. Re-
publicans and industry critics
say it has led to overly burden-
some regulations that unnec-
essarily constrain financial
firms and limit consumer op-
tions for financial products.
Mr. Hensarling attended the
ceremony Friday where Mr.
Trump signed the Dodd-Frank
order along with a memoran-
dum asking the Labor Depart-
ment to review a regulation
scheduled to take effect in April
that critics have said would up-
end the retirement-account ad-
visory business. “I was proud to
stand next to President Trump
Please see DODD page B8

INSIDE Clockwise from top left: Avocados from Mexico, Me-

lissa McCarthy for Kia Motors, NFL ad, Cam Newton
for Buick, Mr. Clean, Terry Bradshaw for Tide.

BY SUZANNE VRANICA
A sexy Mr. Clean, a sloppy
Terry Bradshaw, and a pot-
seeking Snoop Dogg all fea-
tured in the Super Bowl com-
TIFFANY CHIEF mercials that scored big with
marketing experts, in a year
EXITS LUXURY when weighty ads on political
JEWELER and social themes were also
on full display.
The Wall Street Journal.
“They took an old ad icon
and made it fun again,” said
Courtney Cotrupe, managing
director at Partners + Napier.
Another acclaimed ad from
the consumer-product giant
promoted Tide detergent by
showing sports TV analyst and
former star quarterback Terry
Bradshaw enduring a social-
Funny ads always tend to do
well, and this year they may
have been just what many
viewers were looking for—a
respite from the divisive politi-
cal climate, ad executives said.
“People need an escape
right now,” said Pete VonDer-
Linn, executive creative direc-
tor at Partners + Napier.
For marketers, striking the
pearing during the National
Football League title game
between the New England Pa-
triots and the Atlanta Falcons
went for the funny bone.
Several companies tackled
heavier topics, venturing into
potentially controversial polit-
ical and social territory or ad-
vocating for unity in these di-
visive times.
edlin, an 83-year-old in Riviera
Beach, Fla.
“The ad had nice inten-
tions but I am not really in-
terested in a political mes-
sage during the game” said
Dan White, a 45-year-old
from Rowley, Mass. “I am
looking for more humor in
Please see ADS page B2

Procter & Gamble Co. aired
RETAIL, B3 a spot featuring an animated
version of the decades-old
OIL GLUT icon for its multipurpose
household cleaner, Mr. Clean,
SEEMS TO BE dancing, thrusting and mop-
SHRINKING ping as a woman looks on with
pleasure. It was a clear winner
among advertising executives
COMMODITIES, B9 and consumers surveyed by
media shaming for getting a
stain on his shirt. (Mr. Brad-
shaw wore a stained shirt dur-
ing the live Fox broadcast be-
fore the ad ran.)
“The Tide ad was really
funny and the casting was re-
ally good,” said Juliana Stan-
campiano, a 38-year-old in Se-
attle, Wash.
right note with Super Bowl
commercials is critical. The big
game reaches more than 100
million viewers. Companies
shelled out up to $5 million for
30 seconds of ad time this
year, more than double the
price of 10 years ago, according
to ad tracker Kantar Media.
Not every advertiser ap-
During the pregame, Coca-
Cola Co. aired “It’s beautiful,”
a 2014 Super Bowl ad that
highlighted America’s diversity
by showing people from vari-
ous ethnicities and lifestyles
singing “America the Beauti-
ful” in several languages.
See how Super Bowl ads
scored with fans, plus watch
“I loved that spot, it sends and vote for your favorite ones
a nice message,” said Jane Sh- at WSJ.com/SuperBowlAds

How Millennials Are Turning

Snapchat Into the New TV RULES OF
LEADERSHIP ACT WITH
I
CONFIDENCE
n the registration filing
for its initial public stock
offering, Snapchat parent
Snap Inc. said its competitors
range from Google, Apple and
THOMAS TRUTSCHEL/PHOTOTHEK/GETTY IMAGES

Facebook to popular Asian

messaging apps such as
Kakao and Line. But it didn’t
list any tra-
ditional me- Trading over 15 million times an hour,* the
dia compa- SPDR S&P 500 ETF has given investors the confidence
nies like Fox
they need to get in—or out of—the market with ease.
or Viacom.
That is
Visit spdrs.com/spy to learn more
KEYWORDS odd, be-
about SPDR S&P 500 ETF (SPY).
CHRISTOPHER cause Los
MIMS Angeles-
based Snap Snapchat in many ways is also a new kind of television.
is, funda- *Source: NYSE Arca, as of 12/31/2016.
mentally, a burgeoning me- are clips that are never lon- Snapchat’s swipe-based in-
ETFs trade like stocks, are subject to exchange traded fund listed on Street Corporation. No financial
dia company. Snapchat may ger than 10 seconds. They’re terface makes it easy to investment risk, fluctuate in market NYSE Arca, Inc., seeks to track product offered by State Street or
be a messaging app, but in usually strung together into mindlessly cruise through value and may trade at prices above an index of large-cap U.S. equity its affiliates is sponsored, endorsed,
many ways, it is also a new “stories” that often stretch the barrage of friends’ sto- or below the ETFs net asset value. securities. sold or promoted by S&P.
kind of television. several minutes. ries and messages, and it ETF shares may not readily trade SPDR ®, S&P and S&P 500 ALPS Distributors, Inc. is distributor
The parallels with TV It is hard for people who even has a mode where you in all market conditions. Brokerage are registered trademarks of for SPDR S&P 500 ETF Trust, a unit
start with how people use aren’t teens with a million can play through all the sto- commissions and ETF expenses will Standard & Poor’s Financial investment trust. ALPS Distributors,
reduce returns. Services LLC (S&P) and have Inc. is not affiliated with State Street
Snapchat. In the filing, made Snapchat friends to grasp, ries you like without inter-
SPDR ® S&P 500 ® ETF Trust, an been licensed for use by State Global Markets, LLC.
Thursday, Snap reported its but once your network is ruption. It is reality TV, star-
users view 10 billion videos a sufficiently big, viewing sto- ring people you know. Before investing, consider the funds’ investment objectives, risks, charges and expenses.
day, more than the eight bil- ries can feel like the “lean Since there is no social feed- To obtain a prospectus or summary prospectus, which contains this and other information,
lion video views a day last back” experience of watching back, the way there is on Face- call 1.866.787.2257 or visit www.spdrs.com. Read it carefully.
claimed by Facebook in late television, as opposed to the book and Instagram, the pres-
IBG-22308 Not FDIC Insured • No Bank Guarantee • May Lose Value
2015. It is important to note “lean forward” experience of sure to judge and possibly
that on Snapchat, “videos” engaging on social media. Please see MIMS page B4
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
B2 | Monday, February 6, 2017
INDEX TO BUSINESSES
These indexes cite notable references to most parent companies and businesspeople
in today’s edition. Articles on regional page inserts aren’t cited in these indexes.
A
Alphabet .............. B4,B10
Amazon.com ............. B10
Amgen.......................B10
Anheuser-Busch InBev
.....................................B2
Apple.........................B10
AT&T............................B3
Audi.............................B2
B iShares MSCI Mexico
Bank of America.........B8
Big Spaceship ............. B2
Bitcoin Investment
Trust..........................R8
BlackRock...............B8,R6
BMW ........................... B3
BTCC............................R6
Butler, Shine, Stern &
Partners....................B2
BuzzFeed.....................B4
C .....................................B8
Chubu Electric Power.B9
Citigroup ..................... A1
Coca-Cola.....................B1
D
Delta Air Lines...........A3
E Morgan Stanley.....A1,B8
84 Lumber...................B2
F National Football
Facebook......................B4
Fidelity Investments
.....................................B8
G OKCoin.........................R6
General Motors...........B2
Goldman Sachs Group
............................... A2,R6
INDEX TO PEOPLE
A Fishman, Seth Matthew
Aked, Michael.............R5
B
Barra, Mary.................B2
Benowitz, Jason.........A2
Beutel, Allard ............. A2
Bogart, Spencer..........R8
Borzi, Phyllis...............B8
Brown, Sherrod...........B8
Burniske, Christopher
.....................................R8
C Hung, Anne.................B9
Cantor, Susan ............. B2
Carbone, Jeff .............. R8
Carpenter, William ..... B1
Chan, Kam Fong..........R1
Chen, Morris ...............R5
Choate, Natalie...........R1
Cohn, Gary...................B8
Cotrupe, Courtney.......B1
Cotton, Ed...................B2
Cumenal, Frederic.......B3
D Love, Kelly .................. A2
Devitt, Cedric..............B2
F Magerko, Maggie Hardy
Fink, Larry...................R6
ADS
Continued from the prior page
the commercials,” he added.
A commercial for building-
supply chain 84 Lumber Co.,
which features a Spanish-
speaking mother and daughter
on a journey—apparently to-
ward the U.S. border—was
clearly polarizing, ad execu-
tives said.
The spot directed viewers
to a special website where the
rest of the ad was available.
The video showed the pair
making it to the border and
finding a wall had been
erected. But the two were able
to cross because the wall had
a big door that opened.
“Even President Trump has
said there should be a ‘big
beautiful door in the wall so
that people can come into this
country legally,’” said Maggie
Hardy Magerko, 84 Lumber’s
president, in a statement. “It’s
not about the wall. It’s about
the door in the wall. If people
are willing to work hard and
make this country better, that
door should be open to them.”
Super Bowl Ad Battle
Super Bowl advertising inventory is the priciest real estate on
television, thanks to the estimated 100 million viewers who tune in
for the game. Companies collectively shelled out $369.6 million for
ad time during the Super Bowl in 2016.
Ad spending
in millions
$163 $152
2006 ’07
Source: Kantar Media
* **** THE WALL STREET JOURNAL.
BUSINESS & FINANCE
H
Harbin Bank..............B10
Hasbro.........................B9
S
Sanofi........................B10
Sharp...........................B3
GM Hits Hurdles in Europe ACA
Honda Motor...............B2 Shoprite Holdings.......B3 BY MIKE COLIAS Continued from the prior page
Hull Tactical US ETF .. R7 Snap..................B1,B4,R6 tablished. Republicans are ac-
Huobi...........................R6 SolidX Bitcoin Trust...R8 Shortly after taking the knowledging that knocking
I Space Exploration helm three years ago, Gen- down the law is more difficult
Intel...........................B10 Technologies.............B3
eral Motors Co. Chief Execu- than they expected. Some in
International Paper....A3 Starbucks.............A10,R6
tive Mary Barra flew to the the GOP now are considering
T auto maker’s money-losing moves to repair parts of the
Capped ETF...............R6
Takata..........................B3 Opel unit in Germany to tell law, namely retaining and
J Tata Consultancy employees they were a “vital propping up key provisions.
J.P. Morgan Chase......A1 Services...................B10 part” of the company and “As people are studying this
K Tiffany.........................B3 profits would come by “the more, there’s both a rhetorical
T-Mobile US................B2
Kaspersky Lab ............ A8 middle of the decade.” and substantive change,” said
Kia Motors..................B2 U Ms. Barra Sen. Susan Collins (R., Maine)
L U.S. Tax Court.............B5 THE WEEK will reveal last week. “Regardless of who
LifePoint Health.........B1 V AHEAD Tuesday was elected president, we
LPL Financial Holdings Vanguard Group..........B8 whether that were going to have to do ma-
goal was jor repairs on the Affordable
MATTHEW BUSCH/BLOOMBERG NEWS
Vanguard REIT Index
M Fund .......................... R5 reached when GM reports Care Act.”
Marriott International Vanguard Total Stock fourth-quarter earnings. President Donald Trump
.....................................A3 Market ETF...............R1 Opel, a longtime subsidiary told ABC News in January that
Massmart Holdings....B3 Vanguard Value ETF...R8 of the Detroit auto giant, his ACA replacement would of-
Mattel..........................B9 Verizon Communications hasn’t turned an annual fer “better health care for
Microsoft ............. B10,R8 .....................................B3 profit there since 2000 and more people at a lesser cost.”
Volkswagen.................B2 has lost more than $15 bil- Mr. Trump has said he
N W lion over that span. wouldn’t release a detailed
Wal-Mart Stores...A1,B3 Brisk sales of pickups and plan until Rep. Tom Price (R.,
League.......................B1 Walt Disney................B9 sport-utility vehicles are lift- A General Motors assembly plant in Arlington, Texas, last year. Ga.), his nominee to lead the
Netflix.........................B3 Wells Fargo ........... A2,B8 ing U.S. operations to record Department of Health and Hu-
O Winklevoss Bitcoin profits. Any reversal in GM’s GM has been restructur- tion. man Services, is confirmed.
Trust..........................R8 nascent comeback in Europe ing European operations for “Europe might be the Mr. Price said in hearings a re-
P Wipro.........................B10 could reignite questions of years. In 2009, when the most competitive market in placement would assure Amer-
Planet Labs.................B4 X whether the U.S. auto giant’s company used bankruptcy to the world,” Susquehanna Fi- icans “access to affordable
Procter & Gamble.......B1 XBT Holding................B4 presence there continues to fix its U.S. operation, GM nancial Group Matthew Sto- coverage.”
make sense. found a buyer for Opel but ver said in an interview. “It’s There are signs of at least
GM, which has exceeded
most of Ms. Barra’s financial
targets, has warned that the
ended up backing away from
that sale.
GM’s actions aimed at fix-
going to be tough for them
to get beyond break-even.”
GM was breaking even in
partial Republican sympathy
toward the hospitals’ requests.
In a 2015 reconciliation bill
Marsh, Terry ............... R1 fallout from Brexit could ing Opel include the 2014 Europe as of the first three sponsored by Mr. Price to dis-
.....................................R2 Masturzo, Jim.............R5 spoil the company’s Europe closure of an assembly plant quarters of 2016, erasing a mantle parts of the ACA that
G May, Theresa..............R6 goals for 2016. Analysts say in Bochum, Germany—the $500 million loss from the was passed by Congress and
Meighan, Bob..............R7 the company’s annual perfor- first auto maker to shut a same period the prior years. ultimately vetoed by President
Gayed, Michael ........... R5
Muldoon, Conor .......... A2 mance in the region is too major German car factory The devaluation of the Brit- Barack Obama, Republicans re-
Gorsuch, Neil..............A3
Musk, Elon..................B3 close to call. amid the country’s strict la- ish pound in the wake of the stored some of the cuts to dis-
Gubarev, Aleksej.........B4
N Even if GM reports a bor laws since World War II. U.K.’s exit from the European proportionate share payments.
H small amount of black ink But GM still is saddled Union threatened to wipe But that bill left in place
Nadig, David................R8
Hensarling, Jeb...........B1
P for 2016 in Europe, plotting with too much unused fac- away as much as $400 mil- the rest of the ACA’s reduc-
Hira, Ron...................B10 the next steps to make Opel tory capacity in Europe. And lion in profit during the sec- tions.
Holt, Rush...................A2 R a meaningful contributor to Opel’s vehicle lineup lacks ond half of 2016, company Some believe it may prove
Hull, Blair....................R7 Roper, Barbara............B8 the bottom line remains one the higher-margin trucks, executives said. difficult to persuade Congress
S of Ms. Barra’s toughest sports cars and luxury name- Still, industry sales in Eu- to restore the federal funding.
J Schmansky, Robert.....R7 tasks. And, while the auto plates that fuel GM’s profit rope since the June Brexit Giving the money back to hos-
Silbert, Barry..............R8 maker is pulling ahead of in the U.S. vote have fared better than pitals “puts Medicare further
Johnson, Kevin ........... R6
Slott, Ed.................R1,R2 Ford Motor Co. in total Excess manufacturing ca- many industry watchers in the hole,” said Joseph An-
K profit, it is far behind its pacity—a problem across Eu- feared, rising 5.2% for the tos, health-policy expert at the
Smith, Ben..................B4
Kantrowitz, Mark ....... R7
Smullen, Scott............A2 crosstown rival in Europe. rope because of the difficulty year. right-leaning American Enter-
Kemery, Ebele.............B9 Steele, Christopher.....B4 “There are a number of getting government approval GM’s rivals have re- prise Institute. Medicare is ex-
Knight, Thaya Brook...B8 Stoyanov, Ruslan........A8 actions that we’re working to lay off workers or close bounded more rapidly from a pected to be insolvent in 2028,
Kowalski, Michael.......B3 through with the European plants—is a bigger problem bruising six-year decline in according to the latest projec-
W
L team to mitigate” Brexit’s for GM than most auto mak- European auto sales that tions.
White, Dan..................B1 fallout, GM Chief Financial ers. GM used just 63% of its ended in 2014. Ford notched A spokeswoman for Repub-
Lee, Joo-Yung.............A2 Whitington, Jerome...A2 Officer Chuck Stevens told factory capacity there last a record $1.2 billion operat- lican U.S. Sen. Chuck Grassley
Winklevoss, Cameron.R8
analysts in October. “But cer- year, LMC Automotive esti- ing profit for 2016, and Fiat- of Iowa, a senior member of
M Winklevoss, Tyler.......R8
tainly the environment in mates. That is worse than Chrysler Automobiles boosted the Senate Finance Committee,
Z Europe is challenging and the industry average 71% and margins in the region for a said he is hearing from many
.....................................B2 Zuckerberg, Mark ....... B4 uncertain, and very volatile.” Ford’s 70% capacity utiliza- second consecutive year. health-care organizations.
Some ad executives praised
the company for being brave
enough to tackle the issue of
immigration.
blocked the order pending a
legal battle.)
In the six days after its re-
lease on Jan. 31, the Budweiser
A spot for Volkswagen’s
Audi that showed a father
watching his daughter com-
peting in a cart race and pro-
“Many will be violently ad, as of early Sunday, had moted gender pay equity also
against the message and other
will be more positive,” said Ed
generated over 57,000 com-
ments on social media—about
touched off controversy in the
days leading up to the Super
Economics 101
Cotton, chief strategy officer 17% of them negative and 14% Bowl.
of Butler, Shine, Stern & positive, according to research Beyond the fees for airtime,
Partners. firm Networked Insights. marketers spent millions more
“It was a provocative ad “It’s a great ad, but it on special effects, well-known
but I liked it” because it seems unlikely that people will directors and celebrities.
showed a different view of im- interpret the ad as being Honda Motor Co.’s ad
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THE WALL STREET JOURNAL.
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BUSINESS NEWS

Tiffany CEO Will Wal-Mart Takes Its Time

Exit as Sales Slip Subsidiary Massmart
is expanding slowly in
especially because loans in
many African countries are
dollar-denominated. And infla-
BY SUZANNE KAPNER South Africa, even as tion, a malady in various econ-
AND STEPHEN NAKROSIS omies on the continent, has
consumer class grows cut into the buying power of
Tiffany & Co. on Sunday middle-class consumers.
said Chief Executive Frederic BY ALEXANDRA WEXLER Wal-Mart’s slow but deliber-
Cumenal is stepping down and ate approach to Africa diverges
the luxury jeweler is starting a JOHANNESBURG—After from past strategies in devel-
search for a new leader to re- some costly stumbles on its oping markets, where aggres-
DENNIS VAN TINE/FUTURE-IMAGE/ZUMA PRESS

verse a prolonged sales slump. march into developing mar- sive expansions hit hurdles.

WALDO SWIEGERS/BLOOMBERG NEWS

The New York-based com- kets, Wal-Mart Stores Inc. has Last year, Wal-Mart closed
pany said Mr. Cumenal, who adopted a different strategy 115 outlets in Latin America,
has run Tiffany for the past for Africa: taking it easy. leaving its store count in the
two years, will be succeeded, When the U.S. retail behe- region at roughly 4,000. In
effective immediately, by his moth bought a $2.4 billion China, the company has
predecessor, company Chair- majority stake in South Afri- slowed store growth, and in
man Michael Kowalski. can retailer Massmart Hold- June sold its Yihaodian web-
Tiffany said its board is ings Ltd. in 2011, it trumpeted site for a stake in local online
“committed to our current core the potential of the continent’s retailer JD.com Inc.
business strategies, but has burgeoning consumer class. At A five-year U.S. investigation
been disappointed by recent fi- the time, Massmart had 26 Massmart-operated supermarkets include the Game brand, above. into possible foreign bribery has
nancial results.” The company Departing CEO Frederic Cumenal stores outside its home mar- dogged Wal-Mart in Mexico; and
reiterated its recent financial ket; in the five years since, it C. America 3,097 the probe, which is related to
forecasts and said it needed to has been flat at about $4 bil- has added only 13 of its signa- Costa Rica 232
store openings, has also pointed
Mexico 2,379
accelerate its execution to im- lion since 2014. ture large destination-type Guatemala 218 to possible misconduct in Brazil
prove its performance. Tiffany is the latest luxury outlets. In that same span, by and in India. Wal-Mart, which
Shares of Tiffany, which have company to undergo an execu- contrast, rival Shoprite Hold-
Other* 268 Retailer's Reach didn’t respond to requests for
underperformed the broader tive shake-up, underscoring ings Ltd. has opened 182 of its U.S.-based Wal-Mart has comment on its African strategy,
S. America 966
market, closed Friday at $80.47, the pressure on established mostly smaller, grocery-cen- moved into emerging has said it is cooperating fully in
Chile 360 Brazil 499 markets, though not
little changed from when Mr. brands to reinvent themselves tric stores outside South Af- the various investigations. But
Argentina 107 always smoothly. Its
Cumenal took the helm. for a fast-changing market, rica, for a total of 375. the company’s efforts to im-
The luxury brand has where social media allows up- Some analysts and investors stores in those regions: prove compliance have slowed
Asia 446
posted declining same-store starts to quickly gain a footing wonder whether Massmart’s expansion in some markets, ac-
sales for several quarters, hurt and consumers are no longer slow expansion means Wal- China 426 cording to a former employee
*Nicaragua (92); El Salvador (89);
by diminished spending by for- loyal. Last week, Ralph Lauren Mart is losing interest in its Af- India 20 Honduras (87) familiar with the situation.
eign tourists as the stronger Corp. said its chief executive, rican venture. But Guy Hayward, †Botswana (11); Mozambique, Nigeria (5 Massmart’s Mr. Hayward
dollar has made such shopping Stefan Larsson, will leave the who took over as Massmart’s Africa 412 each); Namibia, Zambia (4); Lesotho (3); concedes that the chain’s ap-
Malawi (2); Ghana, Kenya, Swaziland,
trips more expensive. company in May after less chief executive in June 2014, S. Africa 373 Tanzania, Uganda (1)
proach in Africa is partly born
Last month, the company re- than two years on the job due says the modest pace is part of Other† 39 of necessity. Sketchy land reg-
ported a 4% drop in North to creative differences with “a very deliberate strategy” and Source: the company THE WALL STREET JOURNAL. istries, sudden changes to lo-
American same-store sales for the company’s founder. not a sign of weakness. cal laws and property owners
the holidays, which it blamed Mr. Cumenal joined Tiffany “If being sort of Steady Ed- Mr. Hayward notes that its ing high rents, a lack of shop- holding out for a bonanza are
on lower foot traffic to its flag- in 2011 to oversee sales and die is described as a criticism, outlets—most of which bear ping malls and intense bureau- only a few of the hindrances to
ship Fifth Avenue store. The distribution, and was ap- I’m happy to be criticized,” its Game and Builders Ware- cracy. In 2011, Pick n Pay Stores doing business.
company highlighted traffic dis- pointed president and joined said Mr. Hayward, a South Af- house brands—average about Ltd. entered Mozambique and “The rule of thumb is prob-
ruptions and security around the board in 2013. The French- rican native who joined Mass- 3.5 times the sales of a typical Mauritius, but exited both mar- ably about three years from
its neighbor, Trump Tower, man was hired from LVMH, mart in 2000. Shoprite store. kets two years later, citing un- first meeting a developer on a
where the new president was where he had been CEO of In August, Massmart an- Some retailers who rushed profitability and differences dusty piece of land to opening
meeting with various leaders. Moet & Chandon SA. nounced plans to open five into African markets have paid with its respective franchisees. the stores,” the 51-year-old
Mr. Cumenal said he didn’t Mr. Kowalski, who joined new stores in Africa beyond a steep price. Woolworths More broadly, recent sharp CEO said. “This is their once-
expect a material improvement the company in 1983, was the its home market through 2017, Holdings Ltd., an upmarket re- fluctuations in African curren- in-a-lifetime payday and valu-
in the macroeconomic chal- CEO of Tiffany from 1999 until while Shoprite set out to add tailer of groceries and clothing cies—a result of the commodi- ations are crazy.”
lenges the company faced in he handed over the top spot to 46 stores outside South Africa in South Africa, closed its three ties crisis—have jolted busi- —Sarah Nassauer
2016. The company’s revenue Mr. Cumenal in April 2015. in the 12 months to June 2017. Nigerian stores in late 2013, cit- nesses including retailers, contributed to this article.

Trump Would Seek Private Space Funds

BY ANDY PASZTOR White House advisers assigned
to oversee NASA also have or-
The Trump administration’s ders to delay big decisions un-
evolving space policy is ex- til a governmentwide space
pected to foster private invest- council is formally set up un-
ment, while likely favoring rel- der Vice President Mike Pence,
atively short-term goals such according to people familiar
as sending astronauts back to with the details.
orbit the moon by 2020, ac- But in the interim, the
cording to industry and transi- agency and its programs are
tion officials. embroiled in political maneu-
Based on interviews with vering. Proponents of com-
these officials and copies of mercial space efforts have
previously confidential memos sought to recast the initial
sent to the White House, Pres- NASA transition team’s pro-
ident Donald Trump’s aides posed “agency action plan” by
envision one of NASA’s top stressing, among other items,
priorities will be further pro- a rapid and affordable return
motion of public-private part- to the moon, possibly led by
nerships in the heavens. private enterprise.
completed during Mr. Trump’s
current four-year term.
From potentially staking
out mineral rights on the
moon to fostering the concept
of privately owned and oper-
ated space stations circling
the globe, the vision sketched
out in memos reviewed by The
Wall Street Journal illustrates
growing pressure on NASA to
change its traditional way of
operating.
Despite an annual budget of
roughly $19 billion and some
17,000 employees, outside ex-
perts say the agency isn’t
likely to have the needed fund-
ing to carry out all of its man-
dates during the next decade.
Co. and Lockheed Martin Corp.
are seeking to safeguard mul-
tibillion-dollar rocket and
manned capsule programs
slated to explore deep space in
coming decades.
The result, according to in-
dustry and transition officials,
is a tussle pitting such estab-
lished priorities against alter-
native, commercially driven
projects championed by com-
panies including entrepreneur
Elon Musk’s Space Explora-
tion Technologies Corp., or
SpaceX.
Mr. Musk is a member of
Mr. Trump’s economic advi-
sory council.
For each of the past four
RAD SINYAK/NASA

No final decisions have The common thread among But for now, Republican years, NASA has spent more
been made, and steps to alter many of the policy options, congressional leaders are vow- than $2 billion overall devel-
existing programs or launch transition and industry offi- ing to maintain every big- oping its most powerful
new ones await nomination of cials said, is a focus on proj- ticket item. rocket, called Space Launch
a National Aeronautics and ects able to attract voter sup- At the same time, legacy System, and a companion
Space Administration chief. port that realistically can be contractors including Boeing manned capsule, named Orion. A launch simulator at NASA’s Johnson Space Center in Houston.

BUSINESS WATCH
BMW U.S. due to potentially dysfunc-
tional air-bag inflators produced
Air-Bag Inflators by troubled Japanese manufac-
Lead to Recall turer Takata Corp.
The recalls affect some BMW
BMW AG is recalling more 3-series cars produced between
produced from 2001 to 2002,
and sport-utility vehicles made
between 2001 and 2003, accord-
ing to a safety recall report from
the U.S. National Highway Traffic
Safety Administration.
sure after millions of its rupture-
prone air bags were recalled
around the world.
—Andrea Thomas
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B4 | Monday, February 6, 2017 * * THE WALL STREET JOURNAL.

TECHNOLOGY WSJ.com/Tech

Facebook Looms Over Snap MIMS

crease brand awareness—in
other words, TV ads.
Taco Bell, an early adver-
tiser, knew from the beginning
Continued from page B1 that “this level of engagement
As Snapchat parent revenue of $404.5 million com- share everything you see is off. was a total game-changer,” a
Social Profiles pares with more than $27 bil- “People are using Snapchat spokesman says, adding that
prepares for IPO, At the time of their IPO filings, Facebook was lion for Facebook. as their down time,” says Mike it plans to continue to adver-
larger rival is borrowing larger and about three years older than Snap. But Snapchat and Insta- Germano, chief digital officer tise on Snapchat.
gram were neck-and-neck of millennial-focused media In a new form of product
some of its moves REVENUE PER DAILY ACTIVE USER NUMBER OF EMPLOYEES among more than 10,000 U.S. company Vice and chief execu- placement, advertisers can
Facebook Snap teens surveyed In the fall of tive of Carrot Creative, a Vice- customize Snapchat’s aug-
BY DEEPA SEETHARAMAN 3,200 1,859 2016 by Piper Jaffray, with owned agency that creates ads mented-reality selfie “lenses.”
(4Q 2011) (4Q 2016) 80% saying they used Snap- for major social platforms. “In Taco Bell says it worked with
Two years ago, as Face- Facebook chat at least once a month, an age when if you look at Snapchat on its Cinco de
book Inc. was struggling to $2.41 compared with 79% for Insta- your Twitter and Facebook Mayo taco head lens for
get its users to post more, the (4Q 2011) Snap gram. Slightly more than half feed and it’s depressing as nearly six weeks; the feature
social-media giant turned for $1.05 of the teens said they went on all hell, Snapchat is this fun garnered 224 million views.
inspiration to a messaging app (4Q 2016) Facebook that often. Those place where it’s a little bit of When Twentieth Century
called Snapchat. Note: Data are for the quarter trends were nearly identical to escapism.” Fox used superpowered lenses
Facebook teams created dia- immediately preceding the S-1 filing a year earlier. Snap uses actual humans to to promote the movie “X-Men:
grams to compare how many Source: the companies THE WALL STREET JOURNAL. Facebook declined to com- curate snaps from across the Apocalypse” last year, the
steps a user had to take to post ment for this article. site into stories on anything of campaign yielded 298 million
on each of the two apps, ac- Snap and Facebook are chas- interest, ranging from scenes views, according to Snap.
cording to people familiar with ing the same juicy user demo- from the Coachella music fes- As advertisers take notice
the matter. At least one chart graphic: people under the age of tival to funny things grand- of Snapchat’s 160 million or
was sobering: It took nearly 35, who have become increas- mothers say. so daily users, Snap has the
twice as many steps to post on ingly hard to reach with ads in Content also comes from opportunity to capture a
Facebook as it did on Snap- traditional media. Snapchat’s partnerships with celebrities portion of the $71 billion a
chat, one of the people said. ease of use appeals to these and production studios that year that goes to television
Comparing Snapchat and consumers and is a big reason may split revenue with Snap, commercials. Nielsen re-
Facebook is likely to be the why it has become teens’ favor- more like a traditional studio ported a 37% decline in the
latest hobby of IPO investors ite place to hang out. than a platform such as amount of time spent view-
after the messaging app’s par- On Snapchat, the camera is Facebook. ing television among 18- to
ent, Snap Inc., filed plans for available from the moment you Comedy Central was a 24-year-olds, Snapchat’s core
an initial public stock offering open the app. Images disap- launch partner on the very
Thursday. The IPO is targeting pear, creating a sense of infor- first version of Snapchat’s
a valuation between $20 bil- mality and a safe zone for post- Discover section, which al-
lion and $25 billion for the ing. And there is no need to lows media brands, from
Snap has a chance to
five-year-old company with a “like” or comment, eliminating magazines like Cosmo and capture a slice of the
coveted user base—an indica- the popularity-contest nature Complex to news outlets like
tion of, among other things, of posting on Facebook and its CNN and, yes, The Wall Street
$71 billion a year that
how desperate advertisers are photo-sharing app, Instagram. Journal, to create curated sto- goes to television ads.
to penetrate the bubble of to- Facebook executives were ries of their own. Each ever-
SNAPCHAT

day’s smartphone-tethered keenly aware of how Snapchat’s refreshing collection of highly

teens and young adults. core features differed from their produced, video- and anima-
Yet for all of Snapchat’s Snapchat helps ‘X-Men’ fans become their favorite characters. own. Determined to out-Snap tion-rich stories feels like its demographic, between 2010
popularity, it has reason to Snapchat, Facebook launched or own TV channel. and 2016. And IDC projects
worry, as Facebook rips pages three months of 2016, com- dress what is their unique sell- tested several new features in- “I kept referring to it as that by 2020, advertisers
out of its playbook. Face- pared with 11% in the year- ing proposition in those mar- cluding Stories on Instagram. the millennial skinny bun- will spend more money on
book’s launch in August of earlier quarter. In 2009, when kets, if a legacy player already Snapchat caught Facebook dle,” says David Bernath, mobile than they will on TV.
Stories on Instagram is espe- Facebook’s daily user count has some of the key features Chief Executive Mark Zucker- general manager of Comedy Snapchat reported $404
cially ominous. was roughly the same size, its that someone might download berg’s attention early on: Central. A “skinny bundle” is million in revenue in 2016, and
In its S-1 IPO filing Thurs- quarterly user growth was at Snapchat for,” said Cathy Facebook in 2013 offered to the growing trend in cable aims to hit $1 billion in 2017.
day, Snap warned that intensi- a roughly 30% pace. Boyle, analyst at eMarketer. buy the then-two-year-old ri- toward selling consumers a But that growth must be built
fying competition could clip Facebook could undercut Snap Inc. ended 2016 with val for more than $3 billion. handful of channels for less primarily atop better ad target-
its growth rate further. Snapchat especially outside the 161 million daily users, com- Snapchat’s co-founder and than they would typically ing and deeper engagement
Growth in daily active users of U.S., where Facebook and In- pared with 1.2 billion for Face- CEO, Evan Spiegel, rejected pay for cable-TV service. from users, because it isn’t at
Snapchat is slowing, with us- stagram already have a running book, which is about seven the offer, believing his app “Twenty years ago you all clear Snapchat will grow its
ers growing by 5% in the last start. “Snap will have to ad- years older. Snapchat’s annual was worth more. would create MTV2 or VH1 user base the way Facebook
Classic,” says Mr. Bernath, did. Snapchat’s user growth ac-
but now that content goes to tually slowed in the fourth

Google to Sell Its Satellite Business

Snapchat. quarter of 2016.
Snapchat is also a great Snapchat is the most im-
deal like television in its busi- portant social network for
ness model. Video ads that ap- teens and people in their early
BY JACK NICAS self, a person familiar with the pear in the app are more like 20s, according to a survey by
deal said. Negotiations be- TV commercials than the pre- Piper Jaffray. But investing in
Alphabet Inc.’s Google is tween the companies took roll advertising that has failed Snap means weighing its at-
selling its satellite business to place last month. to generate profit at YouTube. traction against a litany of un-
competitor Planet Labs Inc. Google purchased Terra One reason is sheer quantity. knowns.
for shares in the startup, in a Bella for $500 million in 2014, While YouTube limits itself to Robust competition from
move to simplify Google’s when it was known as Skybox 15- or 30-second pre-roll ads Facebook is foremost among
sprawling operations. Imaging. The sale is Alphabet’s in front of every third video or them. The company has been
Under the deal, Planet would latest move to shed some of so, Snapchat can cram three rapidly copying Snapchat’s
acquire Google’s satellite-imag- its bolder bets, including its under-10-second ads into ev- features in both Instagram
ery Terra Bella unit and its effort to sell robot-maker Bos- ery one-and-a-half to two-min- and Messenger. Facebook also
seven satellites in orbit, the ton Dynamics. ute story—without annoying wants to be the next TV, and
companies said. In exchange, Planet Chief Executive Will viewers. is spending some of its mas-
Google would get a stake in Marshall said Terra Bella’s sat- How does Snapchat achieve sive (mobile) ad revenues on
Planet and agree to purchase ellites capture imagery six such density without serious original programming and
satellite images from the com- times as detailed as the im- backlash? The brief ads are of- new apps for set-top boxes.
HANDOUT/EPA

pany for five years. The compa- ages from Planet’s network of ten actually fun to watch. Then there is the concern
nies declined to disclose further 60 satellites. Planet, based in They have to be, because all that the Snapchat app is un-
details of the deal, which re- San Francisco, also said Friday Snapchat’s ads can be in- likely to ever capture a criti-
quires regulatory approval. that it plans to launch an addi- Liftoff for satellites for Terra Bella in French Guiana last year. stantly skipped. Snap charges cal mass of users over 30.
Google is selling Terra Bella tional 88 satellites later this less for skipped ads than ones Even loyalists could age out
largely because it believes it month, enabling it to photo- world in medium resolution, we Planet plans this year to that are viewed, and full pay- of the app as they reach a
can save money and simplify graph all 57.3 million square can spot changes. And then we launch six more Terra Bella ment only comes when a user point when social display
its business if it buys satellite miles of the Earth’s land mass can point [Terra Bella’s] high- satellites, which weigh about swipes up to see the ad in its and fear of missing out—two
imagery from a third party each day, up from roughly 19 resolution satellites on those 260 pounds each. Planet’s ex- entirety. Those features make key drivers of Snapchat en-
versus launching and operat- million square miles today. changes,” Mr. Marshall said. isting satellites weigh about 10 them perfect for the kind of gagement—are no longer
ing a network of satellites it- “By scanning the whole “So it’s very complementary.” pounds each. advertising that aims to in- motivating forces.

ADVERTISEMENT

Legal Notices
Russian Sues BuzzFeed
BY LUKAS I. ALPERT
To advertise: 800-366-3975 or WSJ.com/classifieds
A Russian tech executive
NOTICE OF SALE whose name appeared in an
unsubstantiated intelligence

  

  
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ported to contain intelligence an undetermined amount of doesn’t employ hackers.
 For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
THE WALL STREET JOURNAL. Monday, February 6, 2017 | B5

BUSINESS NEWS

‘Split’ Tops Box Office

Third Straight Week
Associated Press
NEW YORK—M. Night Shya-
malan’s multiple personality
thriller “Split” led the box of-
fice for a third-straight week,
a fairly unprecedented streak
for a low-budget horror film.
According to studio esti-
mates Sunday, “Split” came
out on top again with $14.6
million in North American
ticket sales, bringing the
Universal Pictures release’s
three-week haul to $98.7
riod at multiplexes. Hollywood
traditionally bypasses Super
Bowl weekend due to the
game’s enormous television
audience.
Paramount’s horror offer-
ing, “Rings,” came in second
with an estimated $13 million.
The sequel revived the dor-
mant franchise begun with
2002’s “The Ring.”
The weekend’s other debut,
“The Space Between Us,” fiz-
zled. The STX Entertainment
release, starring Asa Butter-

JOEL RYAN/ASSOCIATED PRESS

million. The film’s run has field as a boy born on another
come in an especially slow pe- planet, earned $3.8 million.

Estimated Box-Office Figures, Through Sunday

SALES, IN MILLIONS

FILM DISTRIBUTOR WEEKEND* CUMULATIVE % CHANGE

1. Split Universal
2. Rings Paramount
3. A Dog’s Purpose Universal
4. Hidden Figures Fox
5. La La Land Lions Gate
*Friday, Saturday and Sunday
UNIVERSAL/EVERETT COLLECTION
Depending on the outcome of the case, Michael Jackson’s estate could have to pay more than $500 million in taxes, IRS documents show.
$14.6 $98.7 -43%
$13.0 $13.0 —
$10.8
$10.1
$7.5
$32.9
$119.4
$118.3
-41
-28
-39
Jackson’s Estate Faces Tax Demand
IRS disputes valuation
Source: comScore
of the singer’s name
and likeness rights at
the time of his death
BY HANNAH KARP
When pop star Michael
Jackson died in 2009, weeks
before a planned comeback
tour, how much was the man in
the mirror worth? The answer
is far from black and white.
After coming to agreements
on the value of some of the
King of Pop’s more concrete as-
sets in a legal fight that began
four years ago, the estate’s ex-
ecutors are facing off with the
Internal Revenue Service in
U.S. Tax Court on Monday, pri-
marily about the valuation of
the singer’s name and likeness
his name and likeness essen-
tially worthless, valuing it at
$2,105, as Mr. Jackson’s reputa-
tion was then tainted by child-
abuse allegations and his
strange public behavior.
After releasing his last studio
album in 2001, he was accused
in 2003—and later acquitted—
of molesting children at his
Neverland ranch in Southern
California. Numerous other inci-
dents also hurt his public image.
Even after Mr. Jackson had
sold out the 50 shows at Lon-
don’s O2 arena that he had
planned for the “This Is It”
tour in the summer of 2009, he
was unable to find a tour spon-
sor, said Howard Weitzman,
one of the attorneys represent-
ing the estate in the trial. But
the IRS argues that the pop
star’s name and likeness should
have been valued at $161 mil-
likeness—as opposed to his Mr. Jackson’s death have been
music—in his lifetime,” said entertainment attorney John
Mr. Weitzman, noting that he Branca and veteran music ex-
only earned about $50 million ecutive John McClain.
from those rights while he Since 2009, the two executors
was alive.“They are trying to have helped the estate net about
take what Michael’s estate $1 billion, due to endeavors in-
created for his children after cluding the posthumous release
death and extract an unrea- of the documentary “This Is It,”
sonable and excessive tax.” which followed Mr. Jackson as he
prepared for his comeback tour.
The biggest payout came
last year when they sold the
$161M
Value the IRS places on the pop
estate’s approximately 50%
stake in the world’s biggest
music publishing company,
Sony/ATV Music Publishing, to
star’s name and likeness. Sony Corp., netting about $750
million. As a result, the $500
million in debt Mr. Jackson
died with has been trans-
The IRS didn’t respond to a formed into about the same
request for comment. amount in cash for the per-
The gaping discrepancy former’s mother and children.
highlights the difficulty of put- The executors first brought

rights at the time of his death.
Depending on the outcome
of the case, the estate could be
on the hook for more than
$500 million in taxes and $200
million in penalties, according
to the IRS’s notice to the es-
tate of its deficiency.
The run for ‘Split’ has come during a slow period at multiplexes. The estate said it considered
lion; that would be down from
2013, when it valued those
rights at $434 million.
“No celebrity’s name and
likeness rights have sold for
anywhere near that much—
not Elvis, not Marilyn, not Ali.
And Michael did not make
that much from his name and
ting a price on a music star’s
name and image, as distinct
from what his or her music is
worth. Doing so requires guess-
ing what the celebrity would
have earned in licensing deals.
Future licensing opportunities
also can be hard to predict.
Running the estate since
the fight to U.S. Tax Court in
2013 when they filed a petition
challenging a notice from IRS
that had adjusted the estate’s
total value to more than $1.3
billion, from $7 million. The
right to Mr. Jackson’s image
and likeness was among the
IRS’s biggest adjustments.

S
Lo hoc
$3 w ki

4 95
Pr ng
ice
!
ea
ch

Actual size
is 40.6 mm

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B6 | Monday, February 6, 2017 THE WALL STREET JOURNAL.

MARKETS DIGEST
Dow Jones Industrial Average S&P 500 Index New to the Market
Last Year ago Last Year ago
20071.46 t 22.32, or 0.11% last week Trailing P/E ratio * 20.33 17.12 2297.42 s 2.73, or 0.12% last week Trailing P/E ratio * 24.18 21.40
Public Offerings of Stock
High, low, open and close for each of P/E estimate * 17.24 15.31 High, low, open and close for each of P/E estimate * 17.59 15.87 IPOs in the U.S. Market
the past 52 weeks Dividend yield 2.39 2.78 the past 52 weeks Dividend yield 2.08 2.32 Initial public offerings of stock expected this week; might include some
All-time high 20100.91, 01/26/17 All-time high: 2298.37, 01/25/17 offerings, U.S. and foreign, open to institutional investors only via the
Rule 144a market; deal amounts are for the U.S. market only
Current divisor 0.14602128057775 Symbol/ Pricing
19900 2300 Expected primary Shares Range($)
pricing date Filed Issuer/business exchange (mil.) Low/High Bookrunner(s)
65-day moving average
2/8 8/7 Mauser Group MSR 12.6 20.00/ BofA ML, Citi,
19200 2225 2015 Supplier of plastic and N 22.00 Credit Suisse, RW
metal packaging products Baird & Co, DB,
and services for industrial Jefferies
use.
18500 2150
2/9 10/7 Clipper Realty CLPR 7.1 13.50/ FBR Cptl Mrkts & Co,
2016 Acquires, owns, and N 15.50 Raymond James
operates multi-family & Assoc., Janney
17800 2075 residential and commercial Montgomery
properties. Scott, Wunderlich
Secs.
200-day moving average
Week's high 2/9 1/13 Foundation Building Materials FBM 12.8 17.00/ DB, Barclays, RBC
17100 2000 Supplier of construction N 19.00 Cptl Mkts, Citi,
DOWN UP materials, including RW Baird & Co
concrete and steel
t

Monday's open Friday's close products.

16400 1925
Friday's close Monday's open 2/9 10/28 Sachem Capital SACH 3.0 5.00/ Joseph Gunnar & Co
t

2016 Real Estate Investment Nq 5.00

200-day moving average 65-day moving average Trusts focused on short-
15700 1850 term loans secured by first
Week's low mortgage liens.
Bars measure the point change from Monday's open
15000 1775
Lockup Expirations
F M A M J J A S O N D J F F M A M J J A S O N D J F Below, companies whose officers and other insiders will become eligible
Primary
to sell shares in their newly public companies for the first time. Such
NYSE weekly volume, in billions of shares market Composite sales can move the stock’s price.
t
t

30
Financial Flashback Lockup Offer Offer amt Through Lockup
20 The Wall Street Journal, February 6, 2006 expiration Issue date Issuer Symbol price($) ($ mil.) Friday (%) provision
10 Chemicals maker Huntsman Corp. abandoned efforts to Feb. 6 Aug. 10, ’16 Medpace Holdings MEDP 23.00 185.2 45.2 180 days
0 sell itself, highlighting tensions between leveraged-buyout Aug. 10, ’16 Protagonist Therapeutics PTGX 12.00 93.0 59.5 180 days
F M A M J J A S O N D J F firms and targets looking for higher prices. Feb. 7 Aug. 11, ’16 Airgain AIRG 8.00 12.0 109.0 180 days
* P/E data based on as-reported earnings from Birinyi Associates Inc.
Sources: Dealogic; WSJ Market Data Group

Major U.S. Stock-Market Indexes Nasdaq Composite IPO Scorecard

Latest Week 52-Week % chg s 5.98, or 0.11% Performance of IPOs, most-recent listed first
High Low Close Net chg % chg Low Close (l) % chg YTD 3-yr. ann. % Chg From % Chg From
High last week
Dow Jones Company SYMBOL Friday3s Offer 1st-day Company SYMBOL Friday3s Offer 1st-day
IPO date/Offer price close ($) price close IPO date/Offer price close ($) price close
Industrial Average 20081.48 19784.77 20071.46 -22.32 -0.11 15660.18 l 20100.91 23.9 1.6 9.3 Kimbell Royalty Ptnrs 20.64 14.7 ... JELD-WEN Holding 28.51 24.0 9.2
Transportation Avg 9368.54 9047.40 9241.56 -202.72 -2.15 6883.49 l 9468.77 33.1 2.2 9.4 KRP Feb. 3/$18.00 JELD Jan. 27/$23.00
5670
Utility Average 669.10 654.14 662.07 4.37 0.66 610.87 l 723.51 6.0 0.4 9.7 Ramaco Resources 13.55 0.4 ... Jounce Thera 17.05 6.6 –1.2
METC Feb. 3/$13.50 JNCE Jan. 27/$16.00
Total Stock Market 23917.51 23555.38 23909.98 46.91 0.20 18663.11 l 23922.9 24.4 2.7 9.3
5630 Invitation Homes 20.63 3.2 3.2 REV Grp 25.86 17.5 3.4
Barron's 400 614.97 602.94 613.59 0.35 0.06 446.15 l 617.4 33.2 2.0 8.7 INVH Feb. 1/$20.00 REVG Jan. 27/$22.00
Nasdaq Stock Market Laureate Edu 13.27 –5.2 0.2 AnaptysBio 17.53 16.9 3.1
5590 LAUR Feb. 1/$14.00 ANAB Jan. 26/$15.00
Nasdaq Composite 5666.84 5576.09 5666.77 5.98 0.11 4266.84 l 5666.77 29.9 5.3 12.3
Jagged Peak Energy 14.72 –1.9 2.7 ObsEva 11.68 –22.1 0.3
Nasdaq 100 5165.47 5086.33 5161.60 -6.46 -0.13 3947.80 l 5168.06 28.3 6.1 14.5 JAG Jan. 27/$15.00 OBSV Jan. 26/$15.00
5550
Standard & Poor's 27 30 31 1 2 3 Sources: WSJ Market Data Group; FactSet Research Systems
500 Index 2298.31 2267.21 2297.42 2.73 0.12 1829.08 l 2298.37 22.2 2.6 9.7 January
Other Stock Offerings
MidCap 400 1707.33 1666.34 1706.64 9.97 0.59 1238.82 l 1710.29 33.4 2.8 10.5 DJ US TSM
Secondaries and follow-ons expected this week in the U.S. market
SmallCap 600 841.95 820.91 841.34 2.98 0.36 588.26 l 857.5 39.0 0.4 10.7 s 46.91, or 0.20%
None expected this week
Other Indexes last week
Russell 2000 1377.93 1342.66 1377.84 7.13 0.52 953.72 l 1388.07 39.8 1.5 8.0 Off the Shelf
NYSE Composite 11316.73 11147.11 11310.75 27.56 0.24 9029.88 l 11339.05 20.5 2.3 5.1 “Shelf registrations” allow a company to prepare a stock or bond for
Value Line 517.04 507.25 517.01 1.08 0.21 383.82 l 520.17 29.1 2.1 4.0 23950 sale, without selling the whole issue at once. Corporations sell as
NYSE Arca Biotech 3304.64 3103.49 3302.80 117.10 3.68 2642.53 l 3477.87 20.4 7.4 10.4 conditions become favorable. Here are the shelf sales, or takedowns,
NYSE Arca Pharma 484.65 469.86 484.65 10.76 2.27 463.78 l 554.66 -0.7 0.6 1.6 23800 over the last week:
KBW Bank 93.25 90.50 93.14 0.29 0.32 56.51 l 93.71 51.7 1.5 12.5 Takedown date/ Deal value Registration
Issuer/Industry Registration date ($ mil.) (mil.) Bookrunner(s)
PHLX§ Gold/Silver 94.02 88.66 92.92 3.34 3.73 54.34 l 112.86 68.0 17.8 1.1
23650 Neos Therapeutics Feb. 3 $25.0 $125.0 Cowen & Co,
PHLX§ Oil Service 184.16 177.28 183.12 -0.77 -0.42 129.55 l 192.66 29.1 -0.4 -11.0 Healthcare Aug. 1,316 BMO Cptl Mkts
PHLX§ Semiconductor 965.31 938.76 964.02 1.76 0.18 559.18 l 964.02 64.4 6.3 23.0 Interpace Diagnostics GroupFeb. 3 $3.6 $100.0 Maxim Group
CBOE Volatility 12.99 9.97 10.97 0.39 3.69 10.58 l 28.14 -53.1 -21.9 -20.0 23500 Healthcare Oct. 2,315
27 30 31 1 2 3 First BanCorp (Puerto Rico) Feb. 2 $128.6 $206.1 Citi, UBS

Philadelphia Stock Exchange Sources: SIX Financial Information; WSJ Market Data Group January Finance Feb. 23,316
Civeo Corp Feb. 2 $60.0 $300.0 RBC Cptl Mkts
Dining & Lodging July 29,316
International Stock Indexes Commodities and Corium International Feb. 2 $20.0 $125.0 Cantor Fitzgerald & Co

Latest Week 52-Week Range YTD

Currencies Healthcare
Cymabay Therapeutics
May 8,315
Feb. 2 $10.0 $100.0 JonesTrading Institutional
Region/Country Index Close % chg Low Close High % chg Last Week YTD
Healthcare Nov. 7,314 Services
Close Net chg %Chg % chg
World The Global Dow 2615.06 –0.24 2047.44 • 2626.44 3.3
DJ Commodity 575.04 -0.24 -0.04 1.37
Synergy Pharmaceuticals Feb. 1
Healthcare July 2,315
$125.0 $250.0 Cantor Fitzgerald & Co,
Canaccord Genuity
DJ Global Index 337.59 0.22 272.15 • 337.59 3.5
193.20 -0.23 -0.12 0.36 Univar Jan. 31 $435.0 ... GS
DJ Global ex U.S. 223.20 0.25 184.52 • 223.20 4.3 TR/CC CRB Index
Chemicals Dec. 12,316
Global Dow Euro 2282.27 –1.01 1699.54 • 2320.68 1.0 Crude oil, $ per barrel 53.83 0.66 1.24 0.20
Taylor Morrison Home Jan. 31 $190.0 ... JPM, Citi, Credit Suisse
Natural gas, $/MMBtu 3.063 -0.295 -8.78 -17.75
DJ TSM Global 3478.33 0.23 2795.15 • 3478.33 3.5 Construction/Building March 2,315
Global ex U.S. 2254.88 0.27 1863.63 • 2254.88 4.4 Gold, $ per troy oz. 1218.50 30.10 2.53 5.96 Sanchez Energy
Oil & Gas
Jan. 31
March 21,316
$143.8 ... JPM, Citi, Johnson Rice & Co
Developed ex U.S. 2195.04 0.18 1843.94 • 2195.04 3.8 U.S. Dollar Index 99.73 -0.83 -0.82 -2.42 Rigel Pharmaceuticals Jan. 31 $40.0 $150.0 Jefferies, Piper Jaffray,
Global Small-Cap 4794.35 0.70 3665.30 • 4794.35 3.7
WSJ Dollar Index 90.35 -1.07 -1.17 -2.79 Healthcare May 7,315 BMO Cptl Mkts
Global Large-Cap 3293.21 0.17 2667.12 • 3293.21 3.5
Euro, per dollar 0.9272 -0.0075 -0.81 -2.47 New Residential InvestmentJan. 30 $848.2 ... Citi, Barclays, BofA ML,
Americas DJ Americas 556.99 0.22 433.35 • 557.05 3.1
Yen, per dollar 112.59 -2.55 -2.21 -3.78
Real Estate/Property Aug. 10,316 Credit Suisse
Brazil Sao Paulo Bovespa 64953.93 –1.64 39318.30 • 66190.62 7.8
U.K. pound, in dollars 1.25 -0.01 -0.50 1.14
Summit Midstream PartnersJan. 30
Utility & Energy Oct. 4,316
$96.0 $2,337.0 Barclays
Canada S&P/TSX Comp 15476.39 –0.64 12087.37 • 15643.84 1.2
Mexico IPC All-Share 47225.10 –0.41 42359.26 • 48694.90 3.5 52-Week
Low Close(l) High % Chg Public and Private Borrowing
Chile Santiago IPSA 3298.64 –0.32 2910.90 • 3358.44 2.3
DJ Commodity 432.69 580.38 30.51 Treasurys
Europe Stoxx Europe 600 364.07 –0.63 303.58 • 367.50 0.7 l

Stoxx Europe 50 3008.31 –0.77 2566.26 • 3051.81 –0.1 TR/CC CRB Index 155.01 l 195.82 19.31
Monday, February 6 Tuesday, February 7
Eurozone Euro Stoxx 351.49 –0.77 284.92 • 355.72 0.4 Crude oil, $ per barrel 26.21 l 54.06 74.26
Auction of 13-week bills; Auction of three-year notes;
Euro Stoxx 50 3273.11 –0.91 2680.35 • 3326.15 –0.5 Natural gas, $/MMBtu 1.64 l 3.93 48.47 announced on Feb.2; settles on Feb.9 announced on Feb.1; settles on Feb.15
Belgium Bel-20 3606.16 0.02 3130.76 • 3665.69 –0.01 Gold, $ per troy oz. 1127.80 l 1364.90 5.24 Auction of 26-week bills; Auction of four-week bills;
France CAC 40 4825.42 –0.30 3896.71 • 4922.49 –0.8
Germany DAX 11651.49 –1.38 8752.87 • 11848.63 1.5 U.S. Dollar Index 92.57 l 103.25 2.85 announced on Feb.2; settles on Feb.9 announced on Feb.6; settles on Feb.9
Israel Tel Aviv 1414.40 –0.65 1382.34 • 1502.66 –3.8 WSJ Dollar Index 84.64 l 93.56 0.60 Wednesday, February 8 Thursday, February 9
Italy FTSE MIB 19116.04 –1.10 15104 • 19688 –0.6
Euro, per dollar 0.87 l 0.96 3.45 Auction of 10-year notes; Auction of 30-year bonds
Netherlands AEX 485.92 0.01 382.61 • 488.09 0.6
Yen, per dollar 99.88 l 118.18 -3.67 announced on Feb.1; settles on Feb.15 announced on Feb.1; settles on Feb.15
Spain IBEX 35 9462.70 –0.44 7645.5 • 9549.3 1.2
Sweden SX All Share 549.61 1.26 435.21 • 549.61 2.8 U.K. pound, in dollars 1.20 l 1.49 -13.90 Public and Municipal Finance
Switzerland Swiss Market 8350.84 –0.34 7496.62 • 8452.19 1.6
Real-time U.S. stock
Deals of $ 150 million or more expected this week
U.K. FTSE 100 7188.30 0.05 5536.97 • 7337.81 0.6 Final Total Rating Bookrunner/

WSJ quotes are available on Sale maturity Issuer ($mil.) Fitch Moody’s S&P Bond Counsel(s)
Asia-Pacific DJ Asia-Pacific TSM 1495.40 0.24 1190.45 • 1498.20 5.1
WSJ.com. Track most- Feb. 6 prelim. New York City 800.0 N.R. N.R. N.R. D A Davidson
Australia S&P/ASX 200 5621.60 –1.62 4765.3 • 5807.4 –0.8
.COM active stocks, new -New York & Co/—
China Shanghai Composite 3140.17 –0.60 2687.98 • 3282.92 1.2
highs/lows, mutual Feb. 7 prelim. California Poll 215.0 N.R. N.R. N.R. Stifel Nicolaus
Hong Kong Hang Seng 23129.21 –0.99 18319.58 • 24099.70 5.1
funds and ETFs. Control Fin
India S&P BSE Sensex 28240.52 1.28 22951.83 • 29045.28 6.1
Auth
Japan Nikkei Stock Avg 18918.20 –2.82 14952.02 • 19594.16 –1.0 Plus, get deeper money-flows data and
Feb. 7 Jan. 1, 2035 Massachusetts 197.4 N.R. N.R. N.R. BoA Merrill/
Singapore Straits Times 3041.94 –0.75 2538.28 • 3067.49 5.6 email delivery of key stock-market
Dept of Locke Lord
South Korea Kospi 2073.16 –0.50 1835.28 • 2087.14 2.3 data.
Transport LLP
Taiwan Weighted 9455.56 0.08 8053.69 • 9455.56 2.2 All are available free at Feb. 7 prelim. Metropolitan 178.7 A N.R. N.R. Jefferies LLC
Source: SIX Financial Information;WSJ Market Data Group WSJMarkets.com Transport Auth
(MTA)

Consumer Rates and Returns to Investor Benchmark Yields and Rates Feb. 7 prelim. NYC Transit
Authority
665.0 N.R. Aa3 N.R. Goldman
& Co/—
U.S. consumer rates Selected rates Treasury yield curve Forex Race Feb. 7 Dec. 1, 2034 Nevada 159.0 AA+ Aa2 AAA Preliminary/
A consumer rate against its Home Equity Yield to maturity of current bills, Yen, euro vs. dollar; dollar vs. Sherman &
benchmark over the past year notes and bonds major U.S. trading partners Howard
Bankrate.com avg†: 4.69%
Feb. 7 prelim. University of 200.0 N.R. N.R. N.R. M. Stanley/—
Home equity loan
First Citizens Bank 2.24% 5.00% 18% Pittsburgh
t 5.00% Rancho Santa Margari, CA 949-459-8250
4.00 s Feb. 7 prelim. Virgin Islands 219.2 N.R. N.R. N.R. M. Stanley/
FirstNorthernBankandTrustCompany 3.20% 12
4.00 Yen Public Fin Au Hawkins Delafield
Palmerton, PA 800-242-4671 3.00 6 (VIPFA) & Wood
t
3.00 Berkshire Bank 3.25% Euro
s Feb. 8 April 1, 2047 Fairfax Water 198.6 AAA Aaa AAA Preliminary/
Friday
t

2.00 0
Prime rate New Hartford, NY 315-735-6106 Authority Ballard Spahr
2.00 InstitutionforSavingsinNewburyport 3.25% 1.00 –6 LLP
s
t

Newburyport, MA 978-462-2344 One year ago Feb. 8 Aug. 1, 2017 Metropolitan 500.0 N.R. N.R. N.R. Preliminary/
1.00 0.00 WSJ Dollar index
–12 Transport Auth Nixon Peabody
F MA M J J A S O N D JF Salem Five 3.25% 1 3 6 1 2 3 5 710 30 2016 2017 (MTA) D Seaton & Asso.
2016 2017 Salem, MA 978-745-5555 month(s) years Feb. 10 prelim. California 405.0 N.R. N.R. N.R. Citi/—
Yield/Rate (%) 52-Week Range (%) 3-yr chg maturity Municipal Fin
Interest rate Last (l)Week ago Low 0 2 4 6 8 High (pct pts) Sources: Ryan ALM; Tullett Prebon; WSJ Market Data Group Auth
Federal-funds rate target 0.50-.75 0.50-.75 0.25 l 0.75 0.50 Feb. 10 prelim. California 322.7 N.R. N.R. N.R. Goldman
Prime rate* 3.75 3.75 3.50 l 3.75 0.50
Corporate Borrowing Rates and Yields State & Co/—
Libor, 3-month 1.03 1.04 0.62 l 1.04 0.80 Spread +/- Treasurys, Univ Trustees
Yield (%) in basis pts, 52-wk Range Total Return
Money market, annual yield 0.31 0.27 0.22 l 0.32 -0.10 Bond total return index Last Wk ago Last Low High 52-wk 3-yr Feb. 10 prelim. California 821.0 N.R. N.R. N.R. Goldman
Five-year CD, annual yield 1.22 1.22 1.17 l 1.32 -0.11 State & Co/—
10-yr Treasury, Ryan ALM 2.496 2.480 -4.07 2.53 Univ Trustees
30-year mortgage, fixed† 4.19 4.20 3.43 l 4.29 -0.17
DJ Corporate 3.266 3.200 4.99 3.59 Feb. 10 prelim. NYS Dorm 242.8 N.R. N.R. N.R. J P Morgan
15-year mortgage, fixed† 3.38 3.39 2.70 l 3.50 -0.05
Aggregate, Barclays Capital 2.650 2.630 44 43 70 1.16 2.41 Authority Securities
Jumbo mortgages, $424,100-plus† 4.62 4.58 4.02 l 4.88 -0.02
High Yield 100, Merrill Lynch 5.418 5.259 352 341 741 17.713 3.622 LLC/—
Five-year adj mortgage (ARM)† 3.66 3.79 2.97 l 4.03 0.06
Fixed-Rate MBS, Barclays 2.930 2.940 22 10 30 0.17 2.38 Feb. 10 prelim. Salt Lake 198.5 N.R. A2 A+ Citi/—
New-car loan, 48-month 3.15 3.09 2.87 l 3.38 0.34
Muni Master, Merrill 2.180 2.205 9 -9 12 -0.857 3.019 City-Utah
HELOC, $30,000 4.69 4.65 4.29 l 4.84 -0.58
Bankrate.com rates based on survey of over 4,800 online banks. *Base rate posted by 70% of the nation's largest EMBI Global, J.P. Morgan 5.821 5.915 338 338 538 12.659 6.698
banks.† Excludes closing costs. Feb. 10 prelim. Salt Lake 753.6 N.R. A2 A+ Citi/—
Sources: SIX Financial Information; WSJ Market Data Group; Bankrate.com Sources: J.P. Morgan; Ryan ALM; S&P Dow Jones Indices; Barclays Capital; Merrill Lynch
City-Utah
Source:Thomson Reuters/Ipreo
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
THE WALL STREET JOURNAL. Monday, February 6, 2017 | B7

CLOSED-END FUNDS
Listed are the 300 largest closed-end funds as 52 wk 52 wk Prem12 Mo Prem12 Mo Prem12 Mo
measured by assets. Prem Ttl Prem Ttl Fund (SYM) NAV Close /Disc Yld Fund (SYM) NAV Close /Disc Yld Fund (SYM) NAV Close /Disc Yld
Closed-end funds sell a limited number of shares and Fund (SYM) NAV Close /Disc Ret Fund (SYM) NAV Close /Disc Ret
invest the proceeds in securities. Unlike open-end Income Preferred Stock Funds Prudentl Sh Dur Hi Yd Fd ISD 16.86 15.88 -5.8 8.1 Single State Muni Bond
funds, closed-ends generally do not buy their shares Royce Value Trust RVT 16.28 14.00 -14.0 48.2 Eaton Vance Tax-Mng Div ETY 11.60 10.76 -7.2 15.2 Calamos Strat Fd CSQ 11.84 NA NA NA Wells Fargo Incm Opps Fd EAD 9.24 8.57 -7.3 9.0 BlackRock CA Municipal Tr BFZ 15.09 14.92 -1.1 5.5
back from investors who wish to cash in their holdings. Source Capital SOR 42.18 36.93 -12.4 15.8 EatonVanceTax-MngdOpp ETW 10.95 10.81 -1.3 19.5 Cohen & Steers Dur Pfd LDP 25.99 25.28 -2.7 22.4 Wstrn Asset Glbl Hi Inco EHI NA 10.14 NA 11.1 BlkRk MuniHldgs CA Qlty MUC 15.28 14.39 -5.8 5.2
Instead, fund shares trade on a stock exchange.
a-The NAV and market price are ex dividend. b-The
Tri-Continental TY 26.54 22.68 -14.5 30.1 EtnVncTxMngGlDvEqInc EXG 9.13 8.60 -5.8 19.9 Cohen & Strs Sel Prf Inco PSF 26.48 26.76 +1.1 20.6 Wstrn Asset High Inco II HIX NA 7.27 NA 10.0 Blkrck MunHl NJ Qlty MUJ 15.14 14.16 -6.5 5.8
NAV is fully diluted. c-NAV is as of Thursday’s close. d- Specialized Equity Funds Fiduciary/Clymr Opp Fd FMO 16.15 17.31 +7.2 90.0 FT Interm Duration Pfd FPF 23.74 23.27 -2.0 17.9 Wstrn Asset Opp Fd HIO NA 5.12 NA 8.1 BlRk MuHldg NY Qlty MHN 14.45 13.68 -5.3 5.3
NAV is as of Wednesday’s close. e-NAV assumes rights Adams Natural Rscs Fd PEO 23.91 20.29 -15.1 32.8 FT Energy Inc & Growth Fd FEN 26.63 27.55 +3.5 48.9 Flaherty & Crumrine Dyn DFP 25.09 24.81 -1.1 19.3 West Asst HY Def Opp Fd HYI NA 15.37 NA 8.5 BlkRk MuniYld CA Fd MYC 15.24 16.01 +5.1 5.2
offering is fully subscribed. f-Rights offering in process. AllnzGI NFJ Div Interest NFJ 14.79 13.26 -10.3 31.3 FstTrEnhEqtIncFd FFA 15.74 14.00 -11.1 27.1 Flaherty & Crumrine Pfd FFC 19.28 19.91 +3.3 9.3 Other Domestic Taxable Bond Funds BlkRk MuniYld CA Quality MCA 15.43 14.81 -4.0 5.4
g-Rights offering announced. h-Lipper data has been AlpnGlblPrProp AWP 6.42 5.46 -15.0 19.0 First Tr Engy Infr Fd FIF 20.26 19.29 -4.8 51.5 Apollo Tactical Incm Fd AIF 17.38 15.99 -8.0 9.5
adjusted for rights offering. j-Rights offering has
John Hancock Pfd Income HPI 21.65 21.04 -2.8 10.5 BlkRk MuniYld MI Qlty MIY 15.13 13.66 -9.7 5.7
expired, but Lipper data not yet adjusted. l-NAV as of ASA Gold & Prec Metals ASA 14.76 12.80 -13.3 44.1 First Tr MLP & Engy Incm FEI 16.20 16.99 +4.9 62.9 John Hancock Pfd II HPF 21.38 21.00 -1.8 13.0 Ares Dynamic Credit Alloc ARDC NA 15.68 NA 8.1 BlkRk MuniYld NJ Fd MYJ 15.50 15.45 -0.3 5.7
previous day. o-Tender offer in process. v-NAV is BlkRk Enh Cap Inco CII 15.46 13.96 -9.7 20.4 Gabelli Utility Tr GUT 5.44 6.65 +22.2 23.6 John Hancock Pfd Inc III HPS 19.04 18.35 -3.6 9.7 Barings Corp Investors MCI NA 14.72 NA 6.1 BlRk Muyld NY Qlty MYN 13.85 12.95 -6.5 5.2
converted at the commercial Rand rate. w-Convertible BlkRk Engy Res Tr BGR 16.12 14.59 -9.5 32.8 GAMCOGlblGoldNatRscs&Inc GGN 5.87 5.58 -4.9 35.9 JHancock Pr Div PDT 15.70 15.98 +1.8 26.1 BlackRock Multi-Sector IT BIT 18.68 17.25 -7.7 11.1 Eaton Vance CA Mun Bd EVM 12.27 11.60 -5.5 5.5
Note-NAV (not market) conversion value. y-NAV and BlackRock Enh Eq Div Tr BDJ 9.29 8.31 -10.5 27.2 GoldmanSachsMLPIncOpp GMZ 11.41 NA 85.5 LMP Cap & Inco Fd SCD 13.94 NA 38.1 BlackRock Taxable Mun Bd BBN 22.67 22.07 -2.6 7.1 Invesco CA Value Mun Incm VCV 13.20 12.43 -5.8 5.6
market price are in Canadian dollars. NA signifies that
the information is not available or not applicable. NS Blackrock Global Trust BOE 13.89 12.27 -11.7 19.6 Goldman Sachs MLPEnergy GER 9.12 8.63 -5.4 94.3 Nuveen Preferred & Incm JPI 24.58 23.82 -3.1 11.4 Doubleline Oppor Credit DBL NA 23.21 NA 8.6 Invesco PA Value Mun Incm VPV 13.80 12.37 -10.4 5.7
signifies fund not in existence of entire period. BlkRk Health Sci BME 32.53 33.44 +2.8 8.2 John Hancock Finl Opps Fd BTO 35.14 NA NA NA Nuveen Pfd Incm Opps Fd JPC 10.41 10.03 -3.7 15.9 Duff & Phelps Utl & Cp Bd DUC 9.95 9.38 -5.7 6.4 Invesco Inv Grade NY Muni VTN 14.33 13.51 -5.7 5.7
12 month yield is computed by dividing income BlkRk Intl Grwth&Inco BGY 6.50 5.76 -11.4 10.1 KayneAndersonEngyTRFd KYE 13.77 12.83 -6.8 97.1 Nuveen Pfd Secs Incm Fd JPS 9.75 9.57 -1.8 15.0 EtnVncLtdFd EVV NA 14.13 NA 8.1 Nuveen CA AMT-Free Qual NKX 15.25 14.68 -3.7 5.6
dividends paid (during the previous twelve months for BlackRck Rscs Comm Str Tr BCX 10.33 8.89 -13.9 46.9 Kayne Anderson MLP Invt KYN 21.32 21.59 +1.3 74.3 TCW Strategic Income Fund TSI 5.46 NA 10.8 Franklin Ltd Duration IT FTF NA 12.22 NA 6.8 Nuveen CA Muni Value NCA 10.20 10.24 +0.4 4.3
periods ending at month-end or during the previous
fifty-two weeks for periods ending at any time other BlackRock Science & Tech BST 21.61 19.60 -9.3 38.3 Kayne Andrsn Midstr Engy KMF 18.57 16.89 -9.0 95.4 Virtus Global Dividend ZTR 12.41 11.36 -8.5 18.1 GuggenheimTaxableMuni GBAB 22.87 21.83 -4.5 7.3 Nuveen CA Quality Muni NAC 15.21 14.55 -4.3 6.0
than month-end) by the latest month-end market price BlackRock Utility & Infr BUI 19.85 19.48 -1.9 18.5 Macquarie Glbl Infrstrctr MGU 24.58 21.40 -12.9 26.0 Convertible Sec's. Funds John Hancock Investors JHI 18.17 17.11 -5.8 7.8 Nuveen MD Qual Muni NMY 14.13 12.67 -10.3 5.2
adjusted for capital gains distributions. CBREClarionGlblRlEstIncm IGR 8.62 7.51 -12.9 14.6 NeubergerBermanMLPIncm NML 10.38 NA 61.6 AdvntClymrFd AVK 17.39 NA NA NA KKR Income Opps Fund KIO NA NA NA 9.5 Nuveen MI Qual Muni NUM 15.04 13.41 -10.8 5.3
Source: Lipper Central Fund of Canada CEF 13.27 12.28 -7.5 7.0 Neubrgr Brm Rl Est Sec Fd NRO 5.91 5.31 -10.2 26.1 AllianzGI Conv & Incm NCV 6.89 6.78 -1.6 58.2 MFS Charter MCR 9.41 8.65 -8.1 8.5 Nuveen NC Qual Muni NNC 14.59 13.05 -10.6 4.4
Friday, February 3, 2017 ClearBridge Amer Engy CBA 10.38 NA 80.1 Nuveen Dow 30 Dynamic DIAX 16.82 15.62 -7.1 28.4 AllianzGI Conv & Incm II NCZ 6.17 6.10 -1.1 58.6 MFS Multimkt MMT 6.72 6.17 -8.2 8.6 Nuveen NJ Qual Muni NXJ 15.06 13.32 -11.6 5.7
52 wk ClearBridge Engy MLP Fd CEM 17.42 NA 48.2 Nuveen Diversified Div JDD 12.74 11.98 -6.0 32.5 AllianzGI Equity & Conv NIE 21.69 19.26 -11.2 27.6 Nuveen Build Am Bd Fd NBB 21.50 20.94 -2.6 6.2 Nuveen NY AMT-Free NRK 14.15 12.96 -8.4 5.2
Prem Ttl Clearbridge Engy MLP Opp EMO 14.18 NA 67.0 Nuveen Engy MLP Fd JMF 14.42 14.26 -1.1 93.0 Calamos Conv Hi Inco Fd CHY 11.72 11.20 -4.4 33.2 PIMCO Corporate & Incm PTY NA 15.29 NA 11.2 Nuveen NY Qual Muni NAN 14.79 13.74 -7.1 5.5
Fund (SYM) NAV Close /Disc Ret Clearbridge Engy MLP TR CTR 14.01 NA 66.8 NuvNASDAQ100DynOver QQQX 20.22 20.04 -0.9 28.6 Calamos CHI 11.10 10.90 -1.8 38.5 PIMCO Corporate & Incm PCN NA 15.81 NA 11.3 Nuveen OH Qual Muni NUO 16.25 15.00 -7.7 5.0
Cohen & Steers Infr Fd UTF 22.74 20.67 -9.1 25.3 Nuveen Real Est Incm Fd JRS 11.47 11.36 -1.0 26.6 World Equity Funds PIMCO HiInco PHK NA 8.75 NA 12.5 Nuveen PA Qual Muni NQP 14.74 13.29 -9.8 5.7
General Equity Funds C&S MLP Incm & Engy Opp MIE 13.39 11.82 -11.7 79.7 14.95 NA 33.2 PIMCO Inco Str Fd PFL NA 10.85 NA 9.9
NuvS&P500DynOverwrite SPXX Alpine Tot Dyn Div AOD 9.26 8.04 -13.2 26.8 Nuveen VA Qual Muni NPV 13.99 13.04 -6.8 4.7
Adams Divers Equity Fd ADX 15.83 13.25 -16.3 23.7 Cohen & Steers Qual Inc RQI 13.42 12.72 -5.2 25.5 NuveenS&P500Buy-Write BXMX 13.77 13.18 -4.3 18.1 PIMCO Incm Strategy Fd II PFN NA 9.88 NA 9.8
Calamos Glbl Dyn Inc CHW 8.46 7.52 -11.1 32.8 PIMCO California Muni PCQ NA 16.16 NA 5.6
Boulder Growth & Income BIF 11.17 9.11 -18.4 39.2 CohnStrsPfdInco RNP 21.96 19.81 -9.8 24.4 Reaves Utility Fund UTG 32.80 33.18 +1.2 33.9 Putnam Mas Inco PIM 5.07 4.74 -6.5 6.6
Cdn Genl Inv CGI 28.63 19.15 -33.1 19.6 PIMCO California Mun II PCK NA 9.81 NA 6.1
Central Securities CET 27.87 22.49 -19.3 34.3 Cohen & Steers TR RFI 13.36 12.72 -4.8 17.9 Salient Midstream & MLP SMM 14.15 NA 105.0 China Fund CHN 18.42 15.77 -14.4 22.2 Putnam Premier Income Tr PPT 5.60 5.30 -5.4 5.8
CohSteer Opprtnty Fd FOF 13.55 12.35 -8.9 33.8 Wells Fargo Multi-Sector ERC 14.34 13.17 -8.2 8.0 52 wk
CLSeligmn Prem Tech Gr Fd STK 19.42 19.97 +2.8 37.3 Tekla Hlthcr Investors HQH 24.05 23.39 -2.7 11.7 Clough Global Opp Fd GLO 11.07 9.76 -11.8 19.2 Prem Ttl
Cornerstone Strategic CLM 13.48 15.24 +13.1 41.3 Divers Real Asset Incm Fd DRA 18.81 16.80 -10.7 25.6 Tekla Healthcare Opps Fd THQ 18.41 17.03 -7.5 23.5 EtnVncTxAdvGblDiv ETG 16.56 15.09 -8.9 20.4 World Income Funds
EtnVnc TaxAdvDiv EVT 22.24 21.78 -2.1 32.8 Abeerden Asia-Pacific FAX 5.47 4.90 -10.4 6.9 Fund (SYM) NAV Close /Disc Ret
Duff & Phelps DNP 9.68 10.59 +9.4 21.4 Tekla Life Sciences HQL 19.29 18.29 -5.2 17.5 EatonVance TxAdv Opport ETO 22.70 22.28 -1.9 26.0
Gabelli Dividend & Incm GDV 22.77 20.53 -9.8 34.5 Duff&PhelpsGblUtilIncFd DPG 19.26 16.63 -13.7 29.8 Tekla World Hlthcr Fd THW 14.86 14.02 -5.7 17.3 First Trust Dynamic Eur FDEU 17.97 16.17 -10.0 16.3 Etn Vnc Short Dur Fd EVG NA 13.94 NA 7.7 General Equity Funds
Gabelli Equity Trust GAB 6.07 5.79 -4.6 33.3 Eaton Vance Eqty Inco Fd EOI 13.86 12.85 -7.3 11.7 Tortoise Engy Ind Fd NDP 17.26 16.76 -2.9 90.8 India Fund IFN 25.76 22.83 -11.4 15.5 Legg Mason BW Glbl Incm BWG NA 12.42 NA 9.5 Specialized Equity Funds
Genl American Investors GAM 38.65 32.71 -15.4 30.5 Eaton Vance Eqty Inco II EOS 14.27 13.45 -5.7 19.8 Tortoise Energy TYG 33.18 34.63 +4.4 61.9 Japan Sml Cap JOF 11.70 10.25 -12.4 19.6 MS EmMktDomDebt EDD 8.53 7.63 -10.6 9.8 Griffin Inst Access RE:M NA NA NA NS
HnckJohn TxAdv HTD 25.43 24.35 -4.2 23.9 EtnVncRskMngd ETJ 10.08 9.52 -5.6 12.5 Tortoise MLP Fund NTG 21.75 21.41 -1.6 58.4 Korea Fund KF 39.70 34.99 -11.9 17.1 MS Emerging Mkts Debt MSD 10.75 9.45 -12.1 6.7 NexPointRlEstStrat;A 21.07 NA NA NS
Liberty All-Star Equity USA 6.33 5.43 -14.2 30.4 Etn Vnc Tax Mgd Buy-Write ETB 15.75 17.03 +8.1 24.9 Tortoise Pipeline & Engy TTP 25.13 22.22 -11.6 95.5 Mexico Fund MXF 16.72 14.64 -12.4 -4.8 PIMCO Dynamic Credit PCI NA 20.68 NA 12.5 NexPointRlEstStrat;C 21.02 NA NA NS
Royce Micro-Cap RMT 9.80 8.40 -14.3 44.1 Eaton Vance BuyWrite Opp ETV 14.28 15.34 +7.4 20.8 Voya Gl Equity Div IGD 7.95 7.04 -11.4 26.2 MS China a Shr Fd CAF 21.58 18.07 -16.3 23.4 PIMCODynamicIncomeFund PDI NA 28.71 NA 14.3 NexPointRlEstStrat;Z 21.02 NA NA NS
MS Emerging Fund MSF 16.14 14.01 -13.2 19.6 PIMCO Income Opportunity PKO NA 24.67 NA 10.8 Resource RE Div Inc:A 10.25 NA NA 18.5
MS India Invest IIF 32.78 29.16 -11.0 31.9 PIMCO Strat Income Fund RCS NA 9.20 NA 10.1 Resource RE Div Inc:C 10.23 NA NA 17.5
New Germany Fund GF 15.69 13.85 -11.7 16.3 Stone Harbor Em Mkts Fd EDF 14.75 15.59 +5.7 13.8 Resource RE Div Inc:D 10.40 NA NA 17.8
Borrowing Benchmarks | WSJ.com/bonds Swiss Helvetia Fund SWZ 12.26 10.87 -11.3 14.5
Templeton Dragon TDF 20.37 17.67 -13.3 23.3
Templeton Emerging TEI 12.49 11.42 -8.6 7.0
Templeton Global GIM 7.41 6.64 -10.4 4.6
Resource RE Div Inc:I 10.70 NA NA 17.4
Resource RE Div Inc:T 10.22 NA NA 17.6
Templeton Emerging EMF 14.88 13.02 -12.5 42.4 Wstrn Asset Gl Def Opp Fd GDO NA 17.47 NA 7.8
National Muni Bond Funds Resource RE Div Inc:U 10.25 NA NA 18.5
Money Rates February 3, 2017 Voya Infr Indls & Matls IDE 15.31 13.78 -10.0 36.6
Wells Fargo Gl Div Opp EOD 6.32 5.64 -10.8 9.4 AllianceBrnstn NtlMun AFB 14.46 13.63 -5.7 5.1 Resource RE Div Inc:W 10.40 NA NA 17.8
RvrPrk Comm Rl Est:Inst RCRIX 10.09 NA NA NS
Blackrock Invest BKN 15.18 14.82 -2.4 5.7
Prem12 Mo BlackRockMun2030Target BTT 22.82 22.71 -0.5 4.2 SharesPost 100 27.11 NA NA 8.0
Key annual interest rates paid to borrow or lend money in U.S. and international markets. Rates below are a Fund (SYM) NAV Close /Disc Yld Versus Cap MMgr RE Inc:F 27.30 NA NA 7.0
BlackRock Municipal Trust BFK 14.15 14.41 +1.8 6.0
guide to general levels but don’t always represent actual transactions. U.S. Mortgage Bond Funds BlackRockMuni BLE 14.85 14.91 +0.4 6.1 Versus Cap MMgr RE Inc:I 27.35 NA NA 7.3
Week —52-WEEK— Week —52-WEEK— BlackRock Income Trust BKT 6.74 6.23 -7.6 5.1 BlackRockMuni Tr BYM 14.89 14.05 -5.6 5.7 Wildermuth Endwmnt Str 12.12 NA NA 20.4
Inflation Latest ago High Low Latest ago High Low Nuveen Mtg Opp Term Fd JLS 25.46 24.46 -3.9 5.7 Wildermuth Endwmnt S:C 12.03 NA NA NS
BlkRk MuniAssets Fd MUA 13.92 14.10 +1.3 4.9
Dec. index Chg From (%) Investment Grade Bond Funds BlkRk Munienhanced MEN 11.75 11.64 -0.9 5.9 Income Preferred Stock Funds
level Nov. '16 Dec. '15 Secondary market Libor Blackrock Core Bond Tr BHK 14.31 13.13 -8.2 6.1 BlkRk MuniHldgs Inv MFL 14.60 14.47 -0.9 5.8 MultiStrat Gro & Inc:A 15.69 NA NA 9.9
One month 0.77556 0.77833 0.78000 0.42650 BlkRk Credit Alloc Incm BTZ 14.44 13.06 -9.6 6.8 BlkRk MuniHldgs Qlty II MUE 14.01 13.43 -4.1 5.8 MultiStrat Gro & Inc:C 15.44 NA NA 9.0
U.S. consumer price index Fannie Mae John Hancock Income Secs JHS 15.19 14.35 -5.5 6.0 BlkRk MuniHldgs MHD 16.72 16.94 +1.3 5.9 MultiStrat Gro & Inc:I 15.86 NA NA 10.8
Three month 1.03400 1.03900 1.04344 0.61720
All items 241.432 0.03 2.1 30-year mortgage yields MFS Inc Tr MIN 4.65 4.38 -5.8 9.1 BlkRk MuniVest MVF 9.59 9.95 +3.8 6.0 MultiStrat Gro & Inc:L 15.53 NA NA 9.4
Six month 1.34989 1.35878 1.36183 0.85785 WstAstClymr InfLnkd Fd WIW NA 11.18 NA 3.5 BlkRk MuniVest II MVT 15.13 16.35 +8.1 5.9
Core 249.134 –0.04 2.2 30 days 3.695 3.728 3.828 2.806 One year 1.71344 1.72400 1.73289 1.11560 Convertible Sec's. Funds
WstAssetClymr InflLnk Sec WIA NA 11.45 NA 3.3 BlkRk MuniYield MYD 14.60 14.49 -0.8 6.1 Calmos Dyn Conv and Inc CCD 20.27 18.95 -6.5 23.3
60 days 3.728 3.760 3.862 2.832 Loan Participation Funds BlkRk MuniYld Quality MQY 15.47 14.98 -3.2 5.9
International rates Euro Libor Apollo Sr Fltg Rate Fd AFT 18.13 17.48 -3.6 7.0 BlkRk MuniYld Qlty II MQT 13.62 12.98 -4.7 5.8
World Equity Funds
Other short-term rates BMO LGM Front ME 9.23 NA NA 20.6
One month -0.383 -0.385 -0.240 -0.386 BlackRock FR Incm Strat FRA 15.04 14.68 -2.4 5.5 BlRkMunyldQltyIII MYI 14.19 13.85 -2.4 6.0
Week 52-Week Blkrk FltRt InTr BGT 14.51 14.45 -0.4 5.2 Deutsche Mun Income Tr KTF 12.59 13.62 +8.2 6.1 Prem12 Mo
Latest High Low
Three month -0.344 -0.345 -0.188 -0.345
ago Week 52-Week BlackstoneGSO Strat Cred BGB NA 15.95 NA 8.4 Dreyfus Mun Bd Infr Fd DMB 13.52 12.82 -5.2 5.6 Fund (SYM) NAV Close /Disc Yld
Six month -0.241 -0.241 -0.115 -0.242
Latest ago high low Blackstone GSO Sr Float BSL NA 18.33 NA 6.3 Dreyfus Municipal Income DMF 9.26 9.06 -2.2 5.6 U.S. Mortgage Bond Funds
Prime rates One year -0.106 -0.095 0.000 -0.106
Eagle Point Credit ECC NA 17.46 NA 13.8 Dreyfus Strat Muni Bond DSM 8.31 8.37 +0.7 5.9 Vertical Capital Income 12.24 NA NA 2.8
U.S. 3.75 3.75 3.75 3.50 Call money Eaton Vance FR Incm Tr EFT 15.51 15.42 -0.6 5.9 Dreyfus Strategic Munis LEO 8.52 8.70 +2.1 5.9 Loan Participation Funds
Euro interbank offered rate (Euribor) EatonVnc SrFltRate EFR 15.17 15.09 -0.5 6.2 Eaton Vance Mun Bd Fd EIM 13.47 12.67 -5.9 5.4
Canada 2.70 2.70 2.70 2.70 2.50 2.50 2.50 2.25 504 Fund 9.78 NA NA 3.1
One month -0.373 -0.372 -0.234 -0.374 Eaton Vance Sr Incm Tr EVF 7.15 6.78 -5.2 5.9 Eaton Vance Mun Income EVN 13.02 12.65 -2.8 5.9 FedProj&TrFinanceTender 10.01 NA NA NS
Japan 1.475 1.475 1.475 1.475 1st Tr Sr Fltg Rt Fd II FCT 14.26 13.89 -2.6 6.0 EV National Municipal Opp EOT 21.69 21.33 -1.7 4.8
Commercial paper Three month -0.328 -0.328 -0.167 -0.329 Invesco Sr Loan A 6.66 NA NA 4.9
Six month -0.244 -0.243 -0.104 -0.244 Invesco Credit Opps Fund VTA 13.21 12.40 -6.1 7.1 Invesco Adv Mun Incm II VKI 11.97 11.33 -5.3 6.4 Invesco Sr Loan B 6.66 NA NA 4.9
Policy Rates 30 to 270 days n.q. ... ... ... Invesco Senior Income Tr VVR 4.91 4.67 -4.9 6.3 Invesco Mun Incm Opps Tr OIA 7.39 7.54 +2.0 5.3
One year -0.101 -0.101 -0.001 -0.103 Invesco Sr Loan C 6.67 NA NA 4.2
Euro zone 0.00 0.00 0.05 0.00 Nuveen Credit Strt Inc Fd JQC 9.41 8.84 -6.1 7.0 Invesco Mun Opportunity VMO 13.36 13.02 -2.5 6.5
Commercial paper (AA financial) NuvFloatRteInco Fd JFR 11.80 12.24 +3.7 6.2 Invesco Municipal Trust VKQ 13.33 12.67 -5.0 6.1 Invesco Sr Loan IB 6.66 NA NA 5.2
Switzerland 0.50 0.50 0.50 0.50 Value 52-Week
Nuv Float Rte Opp Fd JRO 11.75 12.45 +6.0 6.4 Invesco Qlty Mun Inco IQI 13.32 12.54 -5.9 6.0 Invesco Sr Loan IC 6.66 NA NA 5.0
Britain 0.25 0.25 0.50 0.25 90 days 0.91 0.88 1.03 0.45 Latest Traded High Low
Invesco Sr Loan Y 6.66 NA NA 5.2
Australia 1.50 1.50 2.00 1.50 Nuveen Senior Income Fund NSL 7.00 6.96 -0.6 6.3 Invesco Inv Grade Muni VGM 13.83 13.02 -5.9 6.2
DTCC GCF Repo Index Pioneer Floating Rate Tr PHD 12.60 12.13 -3.7 5.9 Invesco Value Mun Incm Tr IIM 15.82 14.91 -5.8 5.4 RiverNorth MP Lending RMPLX 25.36 NA NA NS
Euro commercial paper
Voya Prime Rate Trust PPR 5.79 5.59 -3.5 5.7 MainStay DefinedTerm MMD 19.37 18.89 -2.5 5.8 Voya Senior Income:A 12.81 NA NA 5.4
Overnight repurchase 30 day n.q. n.q. -0.13 -0.14 Treasury 0.605 57.330 1.266 0.244 Voya Senior Income:B 12.75 NA NA 4.9
High Yield Bond Funds MFS Munl Inco MFM 7.22 6.96 -3.6 5.3
U.S. 0.60 0.55 1.30 0.15 Two month n.q. n.q. n.q. n.q. MBS 0.618 73.650 1.328 0.257 AllianceBernstein Glbl AWF 13.72 12.78 -6.9 7.6 NuveenAMT-FreeMunValue NUW 16.67 16.67 0.0 4.5 Voya Senior Income:C 12.79 NA NA 4.9
Three month n.q. n.q. n.q. n.q. Open Implied Barings Glbl Short Dur HY BGH 21.39 19.98 -6.6 9.1 Nuveen AMT-Free Quality NEA 14.50 13.42 -7.4 5.7 Voya Senior Income:I 12.78 NA NA 5.7
U.S. government rates Four month n.q. n.q. n.q. n.q. Settle Change Interest Rate BlackRock Corp Hi Yd Fd HYT 12.08 11.05 -8.5 8.0 Nuveen AMT-Free Mun NVG 15.49 14.59 -5.8 5.9 Voya Senior Income:W 12.82 NA NA 5.7
Five month n.q. n.q. n.q. n.q. BlkRk Debt Strat Fd DSU 12.62 11.57 -8.3 6.5 Nuveen Mun Credit Incm Fd NZF 15.21 14.34 -5.7 6.1 High Yield Bond Funds
Discount DTCC GCF Repo Index Futures BlackRockDurInco Tr BLW 16.85 15.78 -6.4 9.2 Nuveen Enhncd Mun Val Fd NEV 14.71 14.26 -3.1 6.4 PionrILSInterval 10.30 NA NA 9.8
Six month n.q. n.q. n.q. n.q.
1.25 1.25 1.25 1.00 Brookfield Real Assets RA 25.50 NA NA NS Nuveen Intermed Dur Mun NID 13.34 13.22 -0.9 5.1 WA Middle Mkt Dbt NA NA NA 11.0
Treasury Feb 99.405 0.005 9314 0.595 Credit Suisse High Yld DHY 2.76 2.72 -1.4 10.2 NuveenMuniIncoOpp Fd NMZ 12.90 13.03 +1.0 6.7
Treasury Mar 99.320 0.000 3157 0.680 WA Middle Mkt Inc WMF NA NA NA 11.2
Federal funds DoubleLine Incm Solutions DSL NA 20.25 NA 9.0 Nuveen Muni Value Fund NUV 10.04 9.75 -2.9 4.0 Other Domestic Taxable Bond Funds
Treasury Apr 99.260 0.005 378 0.740 Dreyfus Hi Yld Fd DHF 3.58 3.42 -4.5 9.5 Nuveen Qual Mun Incm Fd NAD 14.86 13.92 -6.3 6.0
Effective rate 0.6800 0.6800 0.7000 0.2700 Capstone Church Capital 11.52 NA NA 1.1
Fst Tr Hi Inc Lg/Shrt Fd FSD 18.03 16.64 -7.7 6.3 Nuveen Sel Tax Free NXP 14.90 14.13 -5.2 3.8 CION Ares Dvsfd Crdt Fd NA NA NA NS
High 0.8125 0.8125 0.8125 0.5600 Guggenheim Strat Opps Fd GOF 19.47 20.07 +3.1 10.8 Nuveen Sel TF NXQ 14.37 13.48 -6.2 3.8
Low 0.5000 0.5000 0.6600 0.2000 Notes on data: GL Beyond Income 4.39 NA NA NE
Ivy High Income Opps Fund IVH 16.35 15.07 -7.8 9.99 PIMCO MuniFd PMF NA 14.39 NA 6.3
Bid 0.6600 0.6700 0.6800 0.2000 U.S. prime rate is effective December 15, 2016. Discount rate is effective December 15, 2016. U.S. Palmer Square Opp Income 19.01 NA NA 6.6
Neuberger Berman HYS NHS 13.44 12.00 -10.7 8.0 Pimco Muni Inc II PML NA 12.55 NA 6.2
Offer 0.7500 0.6800 0.7500 0.2600 prime rate is the base rate on corporate loans posted by at least 70% of the 10 largest U.S. banks; NexPoint Credit Strat Fd NHF 25.93 23.32 -10.1 12.0 PIMCO Muni Inc III PMX NA 11.67 NA 6.2 Resource Credit Inc:A 11.06 NA NA 4.7
Other prime rates aren’t directly comparable; lending practices vary widely by location; DTCC GCF Nuveen Gl Hi Incm Fd JGH 18.31 16.77 -8.4 9.2 Pioneer Mun Hi Inc Adv Tr MAV 11.75 11.11 -5.4 7.0 Resource Credit Inc:C 11.17 NA NA 4.2
Treasury bill auction Repo Index is Depository Trust & Clearing Corp.'s weighted average for overnight trades in applicable Nuveen High Incm Dec18 JHA 10.15 10.33 +1.8 5.9 Pioneer Mun Hi Incm Tr MHI 12.62 11.88 -5.9 6.3 Resource Credit Inc:D 11.03 NA NA 4.4
CUSIPs. Value traded is in billions of U.S. dollars. Futures on the DTCC GCF Repo Index are traded on Nuveen High Incm Dec19 JHD 10.27 10.30 +0.3 NS Putnam Tr PMM 7.74 7.36 -4.9 5.8 Resource Credit Inc:I 11.08 NA NA 4.8
4 weeks 0.490 0.480 0.520 0.160 NYSE Liffe US. Resource Credit Inc:T 11.02 NA NA 4.2
Nuveen Hi Incm Nov 2021 JHB 10.05 10.06 +0.1 NS PutnamMuniOpportunities PMO 12.88 12.24 -5.0 5.6
13 weeks 0.515 0.505 0.555 0.220 Sources: Federal Reserve; Bureau of Labor Statistics; DTCC; SIX Financial Information; Resource Credit Inc:U 11.06 NA NA 4.7
Pioneer High Income Trust PHT 10.64 9.98 -6.2 10.3 Wstrn Asset Mngd Muni MMU NA 13.95 NA 5.5
26 weeks 0.625 0.600 0.660 0.340 General Electric Capital Corp.; Tullett Prebon Information, Ltd. Prud Gl Shrt Dur Hi Yd GHY 16.61 15.12 -9.0 8.4 WesternAssetMunTrFund MTT NA 22.85 NA 4.8 Resource Credit Inc:W 11.04 NA NA 4.4

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B8 | Monday, February 6, 2017
DODD
Continued from page B1
in the Oval Office today as he
signed two important executive
actions that represent the be-
ginning of the end of the Dodd-
Frank mistake,” Mr. Hensarling
said after the event.
Passing legislation through
the Republican-controlled
House appears likely. The more
difficult task is the Senate,
where most legislation re-
quires 60 out of 100 votes to
advance. Republicans hold 52
Senate seats.
Democrats may agree to mi-
nor Dodd-Frank changes, such
as easing rules on community
banks and credit unions.
But Republicans at the least
want to raise the $50 billion
asset threshold at which banks
face tougher oversight, require
more disclosure by the Finan-
cial Stability Oversight Council
and change the leadership of
the Consumer Financial Pro-
Mr. Trump’s actions
in office have made
compromise on the
legislation less likely.
tection Bureau from a single
director to a five-person com-
mission.
There are other, more sig-
nificant, regulatory rollbacks
that have been proposed, such
as repealing the Volcker rule,
which restricts how banks in-
vest taxpayer-insured deposits,
or scrapping mortgage-under-
writing standards that were
designed to ensure borrowers
have the ability to repay.
Mr. Trump’s actions during
his first two weeks in office
may have made legislative
compromise less likely by in-
flaming partisan passions on
Capitol Hill.
“Contrary to lobbyists’ talk-
ing points, we’re still open to
finding consensus on other
ways to provide relief where it’s
warranted,” Sen. Sherrod
Brown (D., Ohio) said. “But it
will be hard to have a construc-
tive conversation about that if
Republicans are hellbent on
gutting Dodd-Frank.”
Fiduciary Rule Changes: What Investors Need to Know
BY DAISY MAXEY
President Donald Trump’s
move to roll back an Obama-
era retirement-savings rule
leaves many retirement in-
vestors wondering what the
action means for their nest
eggs.
The fiduciary rule, which
was unveiled by the Labor
Department last spring and
is due to take effect in April,
aims to hold brokers and fi-
nancial advisers who work
with tax-advantaged retire-
ment savings to a fiduciary
standard as opposed to the
previous suitability standard.
Under the fiduciary stan-
dard, advisers overseeing
about $3 trillion in U.S. re-
tirement savings would be
required to work in their cli-
ents’ best interest and gener-
ally avoid the conflicts that
can arise with commission-
based compensation.
Here are answers to ques-
tions that individual inves-
tors may be asking:
Where does the rule
stand now?
For now, the fiduciary
rule is under review and pos-
sibly won’t take effect, at
least as originally planned, in
April.
Mr. Trump in a memoran-
dum directed the Labor De-
partment to study the rule’s
impact and rescind or revise
it if it isn’t consistent with
the administration’s regula-
tory principles, which were
laid out in a separate execu-
tive order, that “empower
Americans to make indepen-
dent financial decisions and
informed choices in the mar-
ket place, save for retire-
ment, and build individual
wealth.”
What does the rule mean
for retirement savers?
It depends upon whom
you ask.
Proponents of the rule say
it would eliminate incentives
that led brokers to give con-
flicted advice. The Obama
administration has said such
conflicted advice costs Amer-
ican families $17 billion a
year and pushes down an-
nual returns on their retire-
ment savings by a percentage
THE WALL STREET JOURNAL.
BANKING & FINANCE
Banks Offer Regulatory Wish List
Lenders see some
good in Dodd-Frank,
but seek changes in
Fed ‘stress tests’
The Dodd-Frank law
spawned thousands of pages of
rules designed to make banks
safer. Now, with President Don-
ald Trump looking to undo
much of that U.S. legislation,
banks are scurrying to prepare
their wish lists.
By Emily Glazer,
Christina Rexrode
and Liz Hoffman
It isn’t an easy task, in part
because many bank executives
say the sprawling law did some
ERIC THAYER/BLOOMBERG NEWS
good, helping restore confi-
dence in bank balance sheets
and the financial system. But it
also added costs and restric-
tions they say have hurt profits
and restricted lending.
Banks and investors reacted
positively Friday to the White
House’s proposal to gut the Morgan Stanley, which has a large financial-advisory network, was the top gainer among big bank stocks Friday. Its shares rose 5.5%.
2010 Dodd-Frank financial-
overhaul act. Shares of the big- senior bankers are looking for is bank reporting and compliance
gest lenders rose between 3% a commitment to stop adding ‘Now the question is, with the Volcker rule, at times
and 6% on investor hopes that new rules to those instituted asking for conflicting remedies
banks’ costs would drop sharply since the financial crisis. Bank has it gone too far? Do to the same issue.
and that the deregulatory of America Chairman and Chief we have [to hold] an Executives at large banks
moves could boost lending rev- Executive Brian Moynihan said extra $20 billion in also want more freedom to
enue and economic growth. at a conference last week that manage their inventories of
Morgan Stanley was the top the postcrisis regulations were capital? Which doesn’t stocks and bonds to serve cli-
big-bank gainer, in part because needed to hold banks to higher sound like a lot, but ents’ trading demands without
it could benefit not just from standards. that’s $200 billion in running afoul of Volcker. “You
changes to Dodd-Frank but also “Now the question is, has it have active market making in
SIMON DAWSON/BLOOMBERG NEWS
from a separate move by the gone too far? Do we have [to
loans we could make.’ lumber, rebar, chicken, pork,
Trump administration Friday to hold] an extra $20 billion in cotton; we need it in financial
effectively kill the fiduciary rule capital? Which doesn’t sound BRIAN MOYNIHAN instruments,” J.P. Morgan CEO
governing financial advisers. like a lot, but that’s $200 billion CEO, Bank of America James Dimon said in December
Morgan Stanley has one of the in loans we could make,” Mr. at a conference.
biggest financial-adviser net- Moynihan said at the confer- Although it is a politically
works in the U.S. ence. fraught topic, some banks
Despite the initial banker eu- Bank executives also have would also like to see Congress
phoria, some executives coun- said regulators should look at or regulators revisit Dodd-
seled patience, saying the over- how recently passed rules have Frank’s Durbin amendment,
all impact of Dodd-Frank should worked together and how much tative, less unpredictable and to return to freewheeling days which set interchange fees on
be studied further before dra- economic growth could be re- more collaborative process. This before the crisis, when proprie- debit-card transactions. The
matic changes are made. Many gained if they are relaxed. is crucial for them since the tary-trading desks at the banks move hurt bank revenue and
prefer slowly unwinding regula- Next on bankers’ wish lists tests help determine how much operated like hedge funds helped retailers, which was a
tions a few at a time, rather are changes to the “stress tests” capital can be returned via divi- within taxpayer-backed deposit popular tonic after the financial
than a ripping-off-the-bandage administered each year by the dends or share buybacks. gatherers. crisis. But bankers argue it had
approach that could add uncer- Federal Reserve. The exam is Banks as a whole aren’t nec- What banks do want, though, nothing to do with the overall
tainty and concerns about a re- meant to gauge a bank’s ability essarily keen for the adminis- is a more consistent and safety of the economy.
turn to precrisis practices. to weather shocks that could tration to scrap the Volcker straightforward approach to Many banks also say they are
That said, there are things upend the financial system. rule, which curtailed firms’ abil- how this and other rules are en- in favor of changes that would
bankers would like to see While banks see merit in the ity to engage in proprietary forced and monitored. At pres- relax regulations on community
changed. Among the first steps tests, they want a more quanti- trading. Few banks, if any, want ent, multiple regulators oversee and regional banks.
point. But some believe the rule brokers face, Ms. Brook spent millions of dollars to said. And LPL has imple-
Many financial-industry would prove harmful to re- Knight said. comply. Many say they will mented lower account mini-
leaders have said those fig- tirement investors with small Would the rule’s delay or continue to move ahead with mums on fee-based accounts
ures are inflated. Consultancy accounts. death mean the end to the embracing the fiduciary stan- and other pricing changes.
A.T. Kearney projected that “It risks reducing access fiduciary standard? dard regardless of what hap- How can investors pro-
the rule would result in as to advice and has an infan- Not likely. pens going forward. tect themselves without a
much as $20 billion in lost tilizing view of American in- Over the past few years, Bank of America Corp.’s fiduciary rule?
revenue for the industry, vestors,” said Thaya Brook more financial advisers have Merrill Lynch, which has Investors should ask if
about 7% of total revenue in Knight, associate director of voluntarily adopted fee-only more than $2 trillion in cli- their adviser is a fiduciary,
2015. financial-regulation studies compensation models—for ent assets, has said it would required by law to act in
Brokers who work under at the Cato Institute, a liber- example, charging a percent- end commission-based re- their best interest. All regis-
the suitability standard are tarian think tank. “The big- age of a clients’ assets under tirement accounts and tered investment advisers,
required to make recommen- gest risk is that the cost of management—rather than charge a fee based on a per- who charge fees for their ad-
dations that are suitable for compliance in particular for accepting commissions. centage of assets even if the vice, are fiduciaries.
their clients, not those that a broker who typically works Many brokerage firms rule doesn’t survive. “The single most impor-
are in their best interest. on commission would be so also see benefits in embrac- Other brokerages, such as tant thing investors can and
Some brokers make recom- great that they would just ing the fiduciary model and Morgan Stanley, Wells should do if [the rule] is re-
mendations that pay them stop offering advice” to re- are moving in that direction. Fargo & Co. and LPL Finan- pealed is make sure they’re
the biggest commissions tirement savers without In preparation for the fidu- cial Holdings Inc., haven’t getting their advice from a fi-
rather than those that are large accounts, she said. ciary rule’s implementation, eliminated commissions as duciary adviser, and not a
best for their clients, propo- Investors are capable of many brokerages have made an option for retirement sav- salesperson masquerading as
nents of the rule say. understanding the conflicts changes to fee structures and ers but are moving ahead a financial adviser,” said Bar-
with other changes. Morgan bara Roper, director of inves-
Stanley has told its brokers it tor protection at the Con-
Genie Out of Bottle, will move ahead with sumer Federation of America.
changes to product pricing, “It’s really hard to do be-
Rule’s Architect Says such as lowering the price of cause they all market them-
commissions tied to stocks selves as financial advisers;
and exchange-traded funds. legally, they are salespersons,
WASHINGTON—For some- Wells Fargo plans to go for- and they are fighting very
one whose life work was just ward with heightened over- hard for their right to profit
thrown onto the chopping sight of retirement accounts, at their customers’ expense.”
block, Phyllis Borzi sounds sur- people familiar with the —Michael Wursthorn
prisingly upbeat. bank’s strategy previously contributed to this article.
The former Labor Depart-
ment assistant secretary, who
JONATHAN ERNST/REUTERS
led work on the department’s Currencies
retirement-savings advice rule,
said that even before President U.S.-dollar foreign-exchange rates in late New York trading
US$vs, US$vs,
Donald Trump’s order to delay Fri YTDchg Fri YTDchg
and potentially halt its imple- Country/currency in US$ per US$ (%) Country/currency in US$ per US$ (%)
mentation, the rule was push- Americas Vietnam dong .00004417 22639 –0.6
ing the financial industry to- Argentina peso .0640 15.6150 –1.6 Europe
ward the intended goals of Phyllis Borzi led work on the Labor Department’s fiduciary rule. Brazil real .3208 3.1174 –4.2 Czech Rep. koruna .03991 25.056 –2.5
helping people save more for Canada dollar .7678 1.3024 –3.1 Denmark krone .1450 6.8960 –2.4
their retirement. Amid fierce opposition from rule is shelved. Chile peso .001561 640.60 –4.4 Euro area euro 1.0786 .9272 –2.5
Colombia peso .0003509 2850.00 –5.1 Hungary forint .003479 287.40 –2.3
“I think the genie is out of industry and Republican law- Asset managers such as 1 1 .008811 113.50
Ecuador US dollar unch Iceland krona 0.5
the bottle,” Ms. Borzi said in an makers, Mr. Trump Friday or- BlackRock Inc., Fidelity Invest- Mexico peso .0491 20.3634 –1.8 Norway krone .1218 8.2070 –5.1
interview. “The market has al- dered the Labor Department to ments and Vanguard Group Peru new sol .3068 3.260 –2.8 Poland zloty .2506 3.9898 –4.7
ready spoken. The best interest put off the April 10 implemen- have lowered fees for ex- Uruguay peso .03574 27.9800 –4.7 Russia ruble .01695 59.006 –3.7
is what they are asking for and tation of the rule completed change-traded funds and index Venezuela b. fuerte .100150 9.9851 –0.1 Sweden krona .1141 8.7622 –3.8
what consumers are now be- last year, with an eye toward mutual funds. Asia-Pacific Switzerland franc 1.0075 .9926 –2.6
Turkey lira .2705 3.6964 4.9
ginning to expect…Nothing we killing it off eventually. “I think companies have Australian dollar .7684 1.3014 –6.3
Ukraine hryvnia .0368 27.1635 0.3
did was wasted.” Ms. Borzi, 70 years old and spent an awful lot of money on China yuan .1456 6.8661 –1.1
UK pound 1.2486 .8009 –1.1
Hong Kong dollar .1289 7.7576 0.03
The fiduciary rule holds bro- recently retired from the gov- compliance, and I’m not sure if Middle East/Africa
India rupee .01488 67.205 –1.1
kers and financial advisers help- ernment, was referring to deci- they are going to be turning Indonesia rupiah .0000750 13325 –1.5 Bahrain dinar 2.6531 .3769 –0.1
ing retirement savers to a fidu- sions by various large financial back,” Ms. Borzi said. Japan yen .008882 112.59 –3.8 Egypt pound .0534 18.7385 3.3
ciary standard, or to work in companies to revamp their Critics say the rule hurts Kazakhstan tenge .003090 323.63 –3.0 Israel shekel .2666 3.7515 –2.5
the best interest of their clients. compensation structures and smaller savers by cutting off Macau pataca .1246 8.0232 1.4 Kuwait dinar 3.2773 .3051 –0.2
Previously, these professionals cut fund fees to comply with access to investment advice. Malaysia ringgit .2258 4.4280 –1.3 Oman sul rial 2.5980 .3849 –0.01
New Zealand dollar .7320 1.3661 –5.4 Qatar rial .2746 3.641 0.02
were only required to offer the fiduciary rule even before it Gary Cohn, White House Na- Pakistan rupee .00955 104.700 0.3 Saudi Arabia riyal .2666 3.7506 ...
“suitable” advice, which made it took effect. tional Economic Council Direc- Philippines peso .0201 49.648 0.1 South Africa rand .0754 13.2685 –3.1
easier to recommend products Merrill Lynch, for example, tor, said Thursday: “We think Singapore dollar .7096 1.4092 –2.6
that generated higher fees, has said it would stick with its it’s a bad rule. It is a bad rule South Korea won .0008785 1138.35 –5.8 Close Net Chg % Chg YTD%Chg
even when they weren’t neces- plan to end commission-based for consumers.” Sri Lanka rupee .0066765 149.78 0.9 WSJ Dollar Index 90.35 –0.16–0.18 –2.79
sarily the “best” for their clients. retirement accounts even if the —Yuka Hayashi Taiwan dollar .03244 30.829 –5.0 Sources: Tullett Prebon, WSJ Market Data Group
Thailand baht .02855 35.030 –2.2
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
THE WALL STREET JOURNAL.
Oil Gauge Signals Glut Is Abating
BY STEPHANIE YANG
AND ALISON SIDER
A closely watched indicator
in the oil market is signaling
that a glut may be easing, a
development that could help
boost crude prices.
This market gauge refers to
the relationship between cur-
rent and future oil prices. For
more than two years, the price
of oil delivered in the future
has been higher than the spot
price—a market condition
known as contango. That has
made it more profitable to
store oil rather than sell it
right away and is one reason
for a supply buildup that has
weighed on the market.
But now this crucial price
relationship may be changing.
After the Organization of
the Petroleum Exporting
Countries and other major
producers in late November
agreed to cut output by 1.8
million barrels a day for the
next six months, near-term
crude prices have moved
higher.
Bank of America Merrill
Lynch and Goldman Sachs
project that as a result of this
deal, current prices could be-
gin to exceed future prices as
early as the second quarter of
2017. That situation is known
as backwardation.
The price difference be-
tween contracts for delivery
late this year and early next
year has been fluctuating, a
signal that closer-dated oil fu-
tures could move into back-
wardation in the next few
months, according to Société
Générale Commodities Re-
search.
That shift would be good
news for crude prices because
it would make oil more attrac-
tive to investors.
“It’s what causes investors
or market participants to take
AHEAD OF THE TAPE | Steven Russolillo
Hasbro: The Force Is Strong With This One
Playtime
isn’t over for
at least one toy
maker.
Hasbro Inc.
should fare
better in its fourth-quarter
earnings Monday than rival
Mattel Inc., whose stock
sank 18% last month follow-
ing disappointing results.
Mattel’s difficult end to 2016
sent shivers across the toy
landscape, pushing Hasbro’s
shares lower. Roughly half of
retail sales in the toy indus-
try occur during the holiday
season.
But Hasbro has advan-
tages over Mattel, mostly
thanks to its product lineup.
Its stable of branded toys
and games inspired by mov-
ies and TV usually have bet-
ter margins than generic
toys. Analysts polled by Fact-
Set estimate Hasbro earned
$1.27 a share, down from
$1.39 in the year-earlier pe-
THE TICKER | Market events coming this week
Monday
Earnings expected*
Estimate/Year Ago($)
Hasbro 1.27/1.39
Loews 0.63/(0.02)
Newell Brands
Sysco
0.80/0.56
0.54/0.45
Twenty-First Century Fox
0.49/0.44
Tyson Foods 1.27/1.15
Tuesday
Consumer credit
Nov., previous up $24.5 billion
Dec., expected up $19.8 billion
Int’l trade deficit
Nov., previous $45.2 billion
Dec., expected $44.8 billion
Earnings expected*
Estimate/Year Ago($)
Emerson Electric 0.42/0.56
General Motors 1.17/1.39
Intercontinental Exchange
0.69/0.65
Mondelez 0.49/0.46
S&P Global 1.18/1.04
Walt Disney 1.50/1.63
Wednesday
Mort. bankers indexes
Purch., previous
Refinan., previous
EIA status report
Previous change in stocks in millions of barrels
Crude oil
* FACTSET ESTIMATES EARNINGS-PER-SHARE ESTIMATES DON’T INCLUDE EXTRAORDINARY ITEMS (LOSSES IN PARENTHESES)  ADJUSTED FOR STOCK SPLITNOTE: FORECASTS ARE FROM DOW
JONES WEEKLY SURVEY OF ECONOMISTS
Crude Comeback
As the oil market prices in less supply, that could
prompt investors to jump back into the market.
Analysts say a long period of contango—in which future oil
prices are more expensive—may be nearing its end this year.
$20 a barrel
One year difference in oil futures
10
0 to lock in prices and ramp up
–10
–20
2006 ’07 ’08
As the market moves to backwardation, in which current oil
prices are more expensive, it could pull more money into oil.
400,000 contracts
Net long positions held
by speculative investors
300,000
200,000
100,000
0
2006 ’07 ’08
Sources: Société Générale (oil prices);
Commodity Futures Trading Commission
a bullish stance,“ said Ebele
Kemery, head of energy in-
vesting at J.P. Morgan Asset
Management. If the oil-price
curve returns to backwarda-
tion, she added, “I would ex-
pect the market would jump
on it.”
While U.S. oil prices have
bounced off their lows of
about a year ago, trading in
recent weeks between $50 and
$55 a barrel, they are at
roughly half their level of
mid-2014.
riod. Revenue is expected to
have ticked up 2.5% to $1.5
billion.
By comparison, Mattel,
which named a new chief ex-
ecutive last month, reported
that its sales dropped 8% in
the final three months of the
year.
Hasbro has benefited from
its “Star Wars” products as
well as gaining the licenses
for Walt Disney Co.’s prin-
cess dolls and toys associ-
ated with the blockbuster hit
“Frozen” last year. Those
have helped lift sales in its
girls’ portfolio—Hasbro’s
strongest division—and
should help mask potential
weakness elsewhere.
Even if Hasbro disap-
points, its shareholders don’t
have much to gripe about.
The stock’s performance was
nearly quadruple that of the
S&P 500 over the past two
years and outperformed Mat-
tel by 55 percentage points.
A scene from Activision Blizzard’s videogame ‘Overwatch’
Gasoline
Distillates
Earnings expected*
down 6% Estimate/Year Ago($)
down 1% Allergan
Cognizant Technology
Exelon
Fiserv
up 6.5 Prudential Financial
COMMODITIES
may not ease so quickly and
backwardation could remain
elusive or short-lived.
Some analysts say that this
time backwardation might in-
dicate a flurry of speculative
activity, rather than a tighten-
ing oil market. They say the
lower future prices signal a
Backwardation sharp uptick in hedging by
U.S. drillers, which are enter-
ing into futures contracts to
sell oil in late 2017 and 2018
production.
The increase in U.S. shale
Contango
production could also become
a major hurdle in forcing down
inventory levels, preventing
contango from ending.
’09 ’10 ’11 ’12 ’13 ’14 ’15 ’16 ’17 But hedge funds and other
speculative investors are al-
ready betting that oil prices
will rise on the theory that
supply and demand come into
balance. Last week, net bullish
positions reached their high-
est levels in the 10 years of re-
cords kept by the Commodity
Futures Trading Commission.
And if future oil prices do
flip to become less expensive
than near-term prices, the fu-
tures market could also attract
money by offering investors a
short-term profit boost.
Since funds tend to hold the
’09 ’10 ’11 ’12 ’13 ’14 ’15 ’16 ’17 nearest-month oil contracts,
rolling contracts over to the
THE WALL STREET JOURNAL. next month requires paying
the difference. In contango,
This extended period of rel- the following futures contract
atively depressed oil prices co- is more expensive than the
incides with the second-lon- current one, creating a “roll
gest period of contango, cost” that eats into any prof-
according to S&P Dow Jones its.
Indices data going back to But in backwardation, that
1987. Only the period from No- difference becomes positive,
vember 2008 to October 2011, boosting returns for commod-
when demand plummeted ity investors even when oil
amid the financial crisis, prices are relatively flat. Gold-
lasted longer. man Sachs analysts expect
Even if OPEC follows that to become “an increas-
through on its pledged cuts, ingly important driver of total
analysts say there are plenty return” in commodities in the
of reasons why the supply glut next 12 months.
EQUITIES
fate. In the past five years,
Toy Story not including last month’s re-
Share-price performance sults, Mattel’s stock fell nine
times in the trading day af-
150% ter its own earnings reports.
Hasbro Yet in those same earnings
100 Mattel seasons, Hasbro shares
gained six of nine times fol-
lowing its own results.
50
One risk for the toy indus-
try is a tax-code proposal
0 that would curb deductions
for the cost of items made
overseas. Roughly half of
–50
Hasbro’s revenue comes from
2012 ’13 ’14 ’15 ’16 ’17 the U.S., but nearly all of its
Source: FactSet products are made overseas.
Toy companies could be
Over the past five years, Has- forced to raise prices as a re-
bro’s stock has more than sult.
doubled even as Mattel’s has Despite the uncertainty,
fallen. Hasbro shares have held
Hasbro and Mattel are of- steady since the election.
ten linked because they, And fetching 18 times pro-
along with Lego, make up jected earnings over the next
roughly half of the U.S. toy 12 months, its multiple is
market, according to UBS. similar to Mattel’s but with-
But Mattel’s struggles don’t out the drama. It is all fun
necessarily foretell Hasbro’s and games for this stock.
Expected
EIA report: natural gas
Previous change in stocks in billions of cubic
feet
Wholesale inventories
Nov., previous
Dec., expected
Earnings expected*
Estimate/Year Ago($)
Activision Blizzard 0.73/0.83
Coca-Cola 0.37/0.38
CVS Health 1.67/1.53
Nvidia 0.83/0.35
Occidental Petro. (0.03)/(0.17)
Reynolds American 0.60/0.48
Friday
ACTIVISION BLIZZARD
Import price index
Dec., previous
Jan., expected
U.Mich. consumer index
Jan., final
Feb., prelim.
up 3.9 Time Warner 1.19/1.06
up 1.6
Thursday Treasury budget
Jan., ‘16 $55.0 billion surplus
Short-selling reports
Ratio, days of trading volume of current Jan., ‘17, exp.
position, at Jan. 13
3.73/3.41 NYSE 4.3 Earnings expected*
0.86/0.80
0.45/0.38
1.16/1.00
Nasdaq
Initial jobless claims
4.3
CBRE Group
Interpublic Group
Estimate/Year Ago($)
2.32/1.94 Previous 246,000 Ventas
Monday, February 6, 2017 | B9
An LNG tanker arrives at Chubu’s power station in Japan in January.
Japan Market Beckons
U.S. Exporters of LNG
BY MAYUMI NEGISHI
TOKYO—In early January, a
ship carrying liquefied natural
gas from Louisiana docked on
the Japan Sea coast, where it
will fuel a power plant owned
by Chubu Electric Power Co.
It was a milestone: LNG—
gas supercooled into liquid
form at minus-260 degrees
Fahrenheit—has been coming
to Japan for decades, but this
was the first time it came from
the lower 48 states in the U.S.
and the first LNG shipment de-
rived from American shale gas.
U.S. natural gas is playing a
role in a transformed energy
market for Japan, which would
quickly grind to a halt without
imported fuel. Ample supplies of
gas from around the world are
bringing down prices for Japa-
nese consumers and factories
previously at the mercy of ma-
jor oil and gas players. Helped
by deregulation, electricity
prices fell nearly 8% in 2016, ac-
cording to government data.
The prospects of an LNG
glut could be propelled further
by the energy-friendly admin-
istration of President Donald
Trump, who has said Japan
doesn’t buy enough American
products.
Buyers in Japan “now have
more options and can say no
to what’s being negotiated.
They can walk away,” said
Anne Hung, a partner at law
firm Baker & McKenzie who
advises Japanese companies
on oil and gas deals.
The changing market isn’t
good news for everyone, in-
cluding some potential U.S.
suppliers that are getting into
the game late. Companies can
get whipsawed by unexpected
price swings, such as the one
that dropped the spot price of
LNG in Japan from nearly $20
per million British thermal
units in 2014 to below $5 in
early 2016 before a recovery
later in the year. The current
price is $8 per million British
thermal units.
After misreading natural-
gas prices in connection with
LNG investments, major trad-
ing companies Mitsubishi Corp.
and Mitsui & Co. both recorded
multibillion-dollar losses in the
year ended March 2016.
Japan is the world’s biggest
buyer of LNG, receiving 85 mil-
lion tons a year on giant tank-
$280 billion
The value of acquisitions announced
250,000
world-wide last month, the second-largest
January for M&A on record
down 87
M&A Jumps in January
up 1.0%
up 1.0% The brisk pace of mergers
and acquisitions to start this
year has many deal makers hop-
ing that “animal spirits” have re-
turned to corporate America.
Acquirers announced $280
billion of deals world-wide last
month, according to Dealogic.
MONEYBEAT
Purchases of U.S. companies ac-
counted for $107 billion of that
total. Last month’s global total is
up 0.4% the largest for a January since
up 0.3% 2000. The U.S. total, meanwhile,
is the biggest in eight years.
Since the election, consumer
98.5 and business sentiment surveys
97.5 have jumped, in a sign of grow-
ing confidence in the economy,
but is the increased deal making
a manifestation of animal spirits
n.a returning to the business world?
Perhaps, but a closer look sug-
gests it would be wise not to
0.80/0.81
0.66/0.66
read too much into January’s
M&A data.
Since 1995, Januarys have
0.43/0.38 averaged $184 billion of an-
TOMOHIRO OHSUMI/BLOOMBERG NEWS
Stepping on the Gas
Japan liquefied-natural-gas
prices have recovered lately
despite fears of oversupply.
Contracted LNG spot price
$20 per million British thermal units
15
10
5
0
2014 ’15 ’16
Note: December 2016 price is preliminary.
Source: Ministry of Economy, Trade and
Industry
ers. The imported LNG is the
leading fuel for electricity gen-
eration after the Fukushima
nuclear accident in 2011
pushed most nuclear reactors
offline, accounting for 44% of
electricity in the year ended
March 2016.
Last year Japan spent
nearly $30 billion importing
LNG, so if the U.S. over the
next decade can grab a signifi-
cant chunk of that business, it
could make a dent in the $60
billion trade surplus Japan had
with the U.S. in 2016. That will
mean competing with Austra-
lia, which was the biggest LNG
supplier to Japan last year.
Mr. Trump’s nominee for
energy secretary, former Texas
Gov. Rick Perry, said at his
Senate confirmation hearing in
January that he wanted to
boost U.S. LNG exports. “If we
produce it in America, it
makes abundant good sense to
me for us to sell it to the
world,” he said.
Japanese utilities have con-
tracted to buy 14 million tons
of U.S. LNG a year by 2020,
about one-fifth of projected to-
tal U.S. LNG exports, making
Japan one of the biggest buy-
ers alongside nations in Eu-
rope and South America.
The issue for now is over-
supply. Last July, Royal Dutch
Shell PLC postponed a final in-
vestment decision on an LNG
export plant in Lake Charles,
La., with Shell’s chief executive
saying it was “not the moment
to commit to large-scale capi-
tal outlays.”
nounced deals world-wide, the
second lowest level of any
month. So while the value of
deals announced last month may
rank as one of the biggest Janu-
arys, it is just the 55th largest
monthly total globally and the
70th biggest for the U.S., accord-
ing to Dealogic.
Also, the level of deal activity
to start a year is no predictor of
how the rest of the year will
proceed. For example, this year’s
U.S. deal volume is the highest
since 2009, but that year’s an-
nual total is the lowest from
2003 through 2016. Meanwhile,
some of the biggest years for
M&A activity, such as 2007,
2014, 2015 and 2016, have got-
ten off to middling starts.
—Stephen Grocer
ONLINE
For more
WSJ
.COM
MoneyBeat blog
posts, go to
blogs.wsj.com/
MoneyBeat
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
B10 | Monday, February 6, 2017
Trump Makes ‘Smart Beta’ Look Smart
ETFs focusing on value
are popular, but some
worry investors will be
led into new mistakes
BY ASJYLYN LODER
The Trump Trade has been
a boon for “smart beta,” the
hottest trend in exchange-
traded funds.
ETFs that pick undervalued
U.S. stocks have swelled to re-
cord size since the election,
buoyed by the gains in financial
and technology stocks that fol-
lowed President Donald Trump’s
victory. Value ETFs that invest
in big U.S. companies have
taken in $15 billion since the
start of November, though in-
flows slowed in January, ac-
cording to Morningstar Inc.
Smart beta, a term popular-
ized by a consulting firm, has
become a catchall for funds
that pick stocks based on traits
like value, growth or volatility,
as opposed to traditional index
products that invest in propor-
tion to company size.
Issuers are looking to smart
beta to help bolster profits,
charging fees that can be as
much as five times the cost of
traditional index ETFs. The
smart-beta category has added
208 new U.S. ETFs since the
start of 2015, according to
Morningstar. Despite its rising
popularity, there is still con-
siderable confusion about how
smart beta works, how best to
harness it and even what it
means.
“There’s a huge range of
possibilities in the smart-beta
world, and they can’t all be
that smart,” said Yves Chouei-
faty, chief executive of Tobam,
a Paris-based asset manager.
Money managers and quant
traders have used the strate-
gies for decades, and value and
growth “style” ETFs have been
around for years. It is only re-
cently that asset managers like
BlackRock Inc. and Invesco
Ltd. began marketing ETFs un-
Email: heard@wsj.com
Tech Titans Could Get Visa Shift to Work
Big U.S. technology com-
panies worried about poten-
tial changes to America’s
worker visa programs under
President Donald Trump
could—ironically—make a
case that might appeal to the
nationalistic ethos of the
new administration.
Of course, that depends
on the details, none of which
are certain at this point. A
draft executive order circu-
lating around Washington di-
rects the government to re-
examine immigration
programs, including the H-1B
visa system used heavily in
the tech industry. Nearly
two-thirds of the H-1B posi-
tions certified by the Labor
Department in fiscal 2016
were in tech-related fields.
Many of these positions
are used by India-based com-
panies such as Tata Consul-
tancy Services, Infosys and
Wipro that provide out-
sourcing services to large
corporations. That is accord-
ing to a study of govern-
ment-issued data by Howard
University professor Ron
Good News for Amgen Is Good for Biotech
Biotechnology, lately the
stock market’s laggard, may
finally be on the mend.
Amgen announced a
highly anticipated clinical
trial involving its new cho-
lesterol drug, Repatha, was
successful in reducing the
risk of cardiovascular events
in patients with heart dis-
ease. That should bolster
the case for doctors to pre-
scribe Repatha, which car-
ries a price tag above
$14,000 a year before re-
bates and discounts, instead
of older statins that cost
much less.
The good news comes
with some caveats: Amgen
won’t present the complete
trial data until March, so it
remains unclear to what ex-
tent Repatha improves
Tide Turns
Exchange-traded funds that seek to buy low-priced
companies, such as the Vanguard Value ETF, have bested
the market lately. Low-volatility funds have fallen behind
after outperforming for much of last year.
PERCENTAGE CHANGE SINCE FEB. 1, 2015
Weekly data through Jan. 31, 2017
2015
Investors are buying ETFs that buy underpriced U.S.
companies, forsaking funds that aim to reduce risk.
MONTHLY INVESTOR DEMAND*
Risk oriented Return oriented
15%
10
5
0 Consumer defensive
–5
2016
*Measures asset growth attributable to investor inflows, excluding market
performance. Risk-oriented includes strategies like low-volatility, while
return-oriented includes value, growth, momentum and others.
Sources: Morningstar
der the smart-beta moniker.
Smart beta’s purported ben-
efit is that it avoids the built-
in hazards of traditional funds
that apportion their invest-
ments based on company size,
where bigger companies and
industries are larger shares of
the pie. Smart-beta adherents
say that weighting based on
HEARD ON THE STREET
Workup
2013 median wages of workers on H-1B visas.
Google
Apple
Microsoft
Amazon
Intel
Accenture
Infosys
Tata
Wipro
Cognizant
Sources: Howard University; Getty Images (photo)
Hira, who testified before
Congress last year on abuses
of the H-1B visa. These visas
are controversial because
U.S. companies often employ
these types of services to re-
place their own employees
with lower-paid, outsourced
positions.
But large tech companies
such as Google parent Al-
phabet, Microsoft, Ama-
zon.com, Apple Inc. and In-
health outcomes. Repatha is
also subject to a legal battle
with Regeneron and Sanofi
surrounding the intellectual
property of their competing
drug, Praluent.
Still, the positive result is
significant. Repatha came to
the market in 2015 amid
high expectations, but total
sales so far have been less
than $150 million. Payers
have pushed back against
the drug’s relatively high
price absent hard data on
cardiovascular outcomes,
and as a result most of the
prescriptions issued were
turned down by payers such
as insurers.
But expectations for Re-
patha are still high over the
long term. Analysts expect
nearly $3 billion in annual
MARKETS
Vanguard
Value ETF
SPDR S&P
500 ETF
iShares Edge
MSCI Min Vol USA
’16
Smart beta tries to improve on traditional index funds that invest based on market value. But
there’s no one definition of ‘smart beta,’ and funds that sound alike can behave very differently.
SHARE OF INVESTMENTS, BY SECTOR
iShares Edge MSCI USA Value Factor
0%
Real estate
PAST SIX MONTHS
Basic materials
Communication services
Utilities
Consumer cyclical
Energy
Industrials
Health care
Technology
’17
Financial services
company size forces investors stocks peaked in 2000 at al-
to pay inflated prices. most 35%, right before the tech
“ M a r k e t - c a p - w e i g h te d bubble burst. It is now 21.3%.
benchmarks are simply very Smart beta does it differ-
dumb,” Mr. Choueifaty said. ently. Instead of weighting in-
“The benchmark only buys vestments based on the size of
what is fashionable, and the company, a smart-beta in-
there’s a price for that.” For dex might give equal weight to
example, the S&P 500’s expo- stocks; focus on companies
sure to information-technology with share prices considered
FINANCIAL ANALYSIS & COMMENTARY
$118,000
115,000
105,000
95,000
94,223
67,100
65,631
65,600
64,522
61,131
Microsoft headquarters
THE WALL STREET JOURNAL. H-1B workers are in demand.
tel Corp. also have system favor positions that
sponsored thousands of H-1B pay higher wages, that could
workers over the years. benefit the big tech compa-
Many of these are talented nies who already are paying
software and semiconductor a premium over what out-
engineers hired from abroad sourcing firms can afford.
that end up staying in the According to Mr. Hira’s
U.S., earning high wages, study, the median wage paid
paying taxes and buying for H-1B positions at Google,
goods and services while Apple, Microsoft, Amazon
working their way up the and Intel was a little more
ranks. than $105,000, on average.
If the changes to the H-1B That is far above the median
OVERHEARD
sales by 2022, according to
FactSet. Negative data on Better believe it: Chinese
the drug would have called banks’ “brand value” now out-
those expectations into strips that of American ones.
question. That is according to re-
Since sentiment plays a search firm Brand Finance.
large role in biotech stock What has pushed Chinese
prices, the trial success is lenders to the top of the
also good news for the in- league table?
dustry overall. The optimistic and patriotic
While drug-pricing con- Chinese consumer—something
troversies and fears of new Western brands “can only
regulation battered stocks dream of.”
last year, so did a relative The most rapidly growing
absence of positive clinical brand this year is China’s Har-
data. bin Bank, whose brand value
Risks to the sector ha- has grown 199%, making it “im-
ven’t vanished altogether. possible to ignore.”
But with the Nasdaq Bio- Also hard to ignore is the
technology Index more than bank’s 123% rise in impairment
25% below all time highs, a losses in the first half of last
little positivity might go a year.
long way for shareholders. Headquartered in China’s
—Charley Grant
THE WALL STREET JOURNAL.
Vanguard Value ETF PowerShares Dynamic Large Cap Value ETF
5 10 15
cheap relative to profits; or try
to build portfolios that aim to
muffle market swings.
But the industry’s popular-
ity, along with the prolifera-
tion of new funds, has sparked
concern that smart beta will
lead investors into new mis-
takes. The recent surge into
value ETFs at the expense of
wage of about $65,000 aver-
aged across the five largest
outsourcing firms in the
study.
While no one knows for
sure what changes will be
made or how they will be
rolled out, immigration in
general is rightly of major
STEPHEN BRASHEAR/GETTY IMAGES
concern to U.S. tech execu-
tives running global busi-
nesses under a distinctly an-
tiglobalist president. Most
big tech companies have spo-
ken out against the adminis-
tration’s controversial travel
ban, which bars entry into
the U.S. from seven majority-
Muslim countries that also
happen to be home to some
of their employees. Some,
such as Apple and Amazon,
have said they are examining
legal challenges to the order.
But the stated rationale
for H-1B reform is about eco-
nomics, not national secu-
rity. So U.S. tech companies
have a stronger case to
make—and perhaps a
slightly better chance that
the new president will listen.
—Dan Gallagher
old-economy industrial region,
it also topped a list of China’s
best wealth-management firms
on the back of rapidly growing
sales of retail investment prod-
ucts.
Brand Finances uses an ap-
proach called the “Royalty Re-
lief” method to evaluate a
brand’s strength, which de-
pends on the present value of
future sales.
What this calculation
misses is that Chinese banks
are stuffed with bad loans,
need fresh capital and trade
for well below book value.
Add in China’s banks’ profit
growth slowing to a crawl in
recent quarters and Chinese
consumers’ loyalty may have
its limits.
20%
15
10
5
SINCE U.S. ELECTION
0
–5
’17
20 25
Though all three
are value ETFs,
their sector
allocation can
vary widely,
as they do in
technology stocks,
ranging from
11.6% to 22.4%.
THE WALL STREET JOURNAL.
last year’s vogue for low-vola-
tility funds, in the view of
some analysts, is a sign that
investors are using smart beta
to chase the latest fad.
“People are making classic
mistakes with a shiny new set
of toys,” said Ben Johnson,
head of ETF research for
Morningstar.
WSJ.com/Heard
China Faces
Trickier Path
To Growth
“The sky has unexpected
storms,” a Chinese maxim
goes. It fits the surprise
election of Donald Trump—
and China’s just-released
manufacturing purchasing
manager’s index.
The January PMI from
Caixin, whose survey focuses
on the private sector, show-
ed the biggest fall in 18
months. It adds to recent
data showing the manufac-
turing sector cooling quicker
than expected following last
year’s record stimulus and
inconveniently comes just as
the People’s Bank of China
shifts more aggressively into
tightening mode.
The central bank has sig-
naled increasing unhappiness
with some side effects of
that stimulus, such as mas-
sive debt issuance by strug-
gling industrial companies
and rising leverage in the in-
terbank bond market. It
lifted its guidance for inter-
bank rates Friday, after rais-
ing longer-term borrowing
costs before the weeklong
Lunar New Year holiday.
Chinese bonds sold off
sharply Friday on the news,
with the benchmark 10-year
treasury yield hitting its
highest since August 2015.
The Caixin numbers
weren’t all bad. New export
orders rose at their fastest
pace since September 2014,
adding to evidence of a
global pickup in trade.
An export boom could
prop up manufacturing. But
Chinese exports have been
strongest recently precisely
to the most inconvenient
place: the U.S.
If January’s export data
later this month continue
that pattern, expect more
rumblings from across the
Pacific. Mr. Trump isn’t one
to pass up on a convenient
source of leverage.
—Nathaniel Taplin
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JOURNAL REPORT | A MONTHLY ANALYSIS

Follo
© 2017 Dow Jones & Company. All Rights Reserved. THE WALL STREET JOURNAL. The E w Monday, February 6, 2017 | R1
xper
A ts
Convn Online INSIDE
e
DETA rsation
Everything You Need to I LS , R2
INVESTING FOR RETIREMENT
Ask Encore: Time for That
Shakespeare Class

Know About Required The best places to start when

looking for continuing education
in retirement
R2

Distributions NEED TO KNOW

How to Figure If REITs
Are Worth It
There are three steps that
investors can take to estimate
REITs’ future returns
R5

NEWS CHALLENGE
Test Your Smarts on Dow 20K,
Starbucks, Snapchat
Try our monthly quiz to
measure your knowledge about
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R6

SAVING FOR COLLEGE

BY LAURA SAUNDERS
IF YOU ARE ONE of the millions of Americans
with a retirement-savings account, three of the
most important letters in your financial life
might be these:
RMD.
They stand for required minimum distribu-
tion, which is something that the nation’s baby
boomers now need to grapple with for the first
time. It refers to an annual payout that savers
must take from their retirement kitty at a cer-
tain point, as required by law.
The first of the boomers (people born
mid-1946 through 1964) are just now hitting
the age of 70½, when most will be required to
pull money out of their 401(k)s and IRAs, but
there are a dizzying array of exceptions and
When Is a Fafsa Pointless?
Experts’ answers to questions
about paying for college
R7
Eventually, we must Q&A
all take withdrawals Blackjack Expert on Stocks
Blair Hull shuffles the S&P 500
from 401(k)s and IRAs like it’s a deck of cards. So why
is he wary of market timing?
R7
JOHN HOLCROFT
EXCHANGE-TRADED FUNDS
deadlines regarding these payouts. For exam- Such payouts are often required for 401(k), ‘Irrational Exuberance’ for
ple, some people who are still working at age 403(b) and other workplace plans as well. Bitcoin ETFs?
70½ don’t have to start taking RMDs from a Some analysts predict just that,
401(k). Why are withdrawals required? assuming a new fund is
“I was surprised at how complicated the Congress encouraged people to save for re- approved next month
process was for me—and I’m an expert,” says tirement by providing tax benefits for these ac- R8
Natalie Choate, a lawyer with Nutter, McClen- counts, but lawmakers don’t want to shelter
nen & Fish in Boston who turned 70½ last year. these savings forever. So users often must SCOREBOARD
Here are questions savers are asking about withdraw at least a minimum amount every
withdrawal requirements, with answers that year after age 70½. January 2017 fund performance,
draw on the expertise of Ms. Choate and an- total return by fund type. More on R2.
other IRA specialist, CPA Ed Slott of Rockville Do all retirement accounts have mandatory
Centre, N.Y. withdrawals after 70½? U.S. Intl. Bonds
Most, but not all. Under current law, there stocks* stocks* (intmd.)
Why is age 70½ important? are no required withdrawals from Roth IRAs
It marks the point when savers must begin during the owner’s lifetime. Roth IRAs are dif-
taking required annual payouts from tax-shel- ferent from many other tax-sheltered retire-
tered retirement accounts such as individual ment accounts in that savers pay tax on the 1.8% 3.5% 0.3%
retirement accounts, Simple IRAs and SEP IRAs. Please turn to the next page *Diversified funds only, excluding sector
and regional/country funds
Source: Lipper

‘Sell in May and Go Away’? Mostly a Myth, but Not Entirely

BY MARK HULBERT
THE STOCK MARKET’S famous six-
months-on, six-months-off pattern—
known alternately as “Sell In May
and Go Away” or the Halloween Indi-
cator—is more than a superstition.
But not by much.
To be precise, according to a new
study, there is evidence that the phe-
nomenon of stocks performing better
in winter than in summer does tend
to occur. However, almost all of the
of the U.S. presidential term but was
Hit and Miss otherwise not statistically signifi-
Winters are better for stocks, but cant.
mostly in the third year of presidencies What might cause stocks to per-
form so much better in the winters of
12 %
presidential third years than in the
10 Winters summers of those years? The profes-
8 (Nov.-April) sors offer only a conjecture. They
6 Summers point to a 2013 University of Chicago
(May-Oct.) study that created an index measur-
4
ing uncertainty surrounding economic
2 policy. That index turns out to be
0 highest in the winter months of presi-
–2 –0.1% dential third years, on average. Draw-
JOHN HOLCROFT

advantage comes in the third year of
presidential terms. Otherwise, the
seasonal difference is so weak as to
be statistically nonexistent.
These are the implications of re-
search now circulating by Kam Fong
Chan, a senior lecturer in finance at
the University of Queensland in Aus-
tralia, and Terry Marsh, an emeritus
finance professor at the University of
California, Berkeley, and CEO of Quan-
tal International, a risk-management
firm for institutional investors.
Consider the Dow Jones Industrial
Average back to 1896. In the first,
second and fourth years of presiden-
Year 3 Years 1, 2 and 4
Note: Data reflect DJIA from 1896 through 2016
Source: www.HulbertRatings.com
THE WALL STREET JOURNAL.
tial terms, there was just a 1-per-
centage-point difference between the
Dow’s average winter and summer
returns—3.3% versus 2.3%. Given the
variation in year-to-year results, this
difference turns out to be not signifi-
cant at the 95% confidence level that
statisticians use to determine
whether a pattern is genuine.
Third years are the exception.
During such years over the past 12
decades, there was an 11-percentage-
point difference between the average
winter and summer. That spread is
highly significant statistically.
Another implication of this re-
search is that there is no reason to
get out of stocks most summers—in-
cluding this coming one. The Dow
rose in three of the four summers
during Barack Obama’s second term,
by an average of 3.9%. The third
summer was the exception.
The two researchers became even
more confident in their conclusions
after searching for the Halloween In-
dicator in the stock markets of sev-
eral foreign countries: Canada,
France, Germany, Italy, Japan, Brit-
ain, Australia and Singapore. Just as
in the U.S., the seasonal difference in
other countries’ stock markets was
most pronounced in the third years
ing on standard principles from Fi-
nance 101, they reason that the
market may be providing a higher re-
turn during those times to compen-
sate investors for greater uncertainty.
For most investors, of course, the
best advice remains to buy and hold
a low-cost index fund—such as Van-
guard Total Stock Market ETF
(VTI), with an expense ratio of just
0.05%, or $5 per $10,000 invested.
Mr. Hulbert is the founder of the
Hulbert Financial Digest and a
senior columnist for MarketWatch.
Email him at reports@wsj.com.

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R2 | Monday, February 6, 2017 * *** THE WALL STREET JOURNAL.

JOURNAL REPORT | INVESTING IN FUNDS & ETFS

Required Distributions
Continued from the prior page
money they contribute. Then the assets
can grow tax-free and be withdrawn tax-
free.
There’s also a useful exception for em-
ployees who participate in workplace
plans such as 401(k)s and are still working
after age 70½. If these workers don’t own
more than 5% of the company and their
plan doesn’t mandate payouts at 70½,
then they needn’t take required withdraw-
als from the plan until they retire.
In addition, if this plan accepts roll-
overs of the worker’s other IRAs or other
401(k)s, then those assets can typically be
shielded from required payouts as well,
until the worker retires. Otherwise, those
accounts will have required withdrawals
after 70½.
How large are mandatory withdrawals?
For most people they begin at about
3.6% of assets and rise with age—al-
though they’re never large enough to
empty the account. The withdrawal per-
centage is lower for savers whose spouse
is more than 10 years younger and is the
sole beneficiary of the IRA.
The annual percentage applies to an
individual’s retirement assets as of the
preceding Dec. 31. In other words, a re-
quired withdrawal for 2017 is based on
assets as of Dec. 31, 2016. There’s no limit
on withdrawals—for example, an IRA
owner can pull out as much above the
RMD amount as he or she wants.
How do I figure the minimum with-
drawal?
IRA sponsors are required to compute
this amount for savers, but they can make
mistakes.
If you want to double-check, the Inter-
nal Revenue Service gives tables for mak-
ing the calculation in Appendix B to Pub-
lication 590-B. In essence, savers take
their relevant retirement assets and di-
vide it by a life-expectancy factor—which
changes slightly every year.
For example, say a 72-year-old single
woman had $400,000 of IRA assets on
Dec. 31, 2016. According to Table III, her
factor is 25.6 years. So she divides
$400,000 by 25.6 and learns that she
must withdraw at least $15,625 in 2017.
What’s the deadline for taking re-
quired withdrawals?
The first payout is for the year a tax-
payer turns 70½. This can be tricky, so
we’ll use two presidents as an example.
For someone like Donald Trump who was
born during first half of 1946, the first
withdrawal must be taken for 2016. But
for someone like Bill Clinton born in the
second half of 1946, the first payout is
due for 2017.
For most years, the deadline for taking
the mandatory withdrawal is Dec. 31. But
there’s a grace period for the first payout,
CHARITY CAN COUNT TOWARD YOUR IRA WITHDRAWAL
Want to make required withdrawals from
a retirement account and do good at the
same time?
Owners of individual retirement ac-
counts can donate a total of up to
$100,000 annually from their IRAs to
qualified charities, such as a school,
church or other group, and have the do-
nations count toward their required mini-
mum distribution. (Owners of traditional
IRAs have to start taking distributions
from their accounts after age 70½, or
face a tax penalty.)
For charitably minded IRA owners,
this is often a highly tax-efficient move.
While there’s no deduction for such do-
MONTHLY MONITOR | WILLIAM POWER
and the deadline is April 1 of the follow-
ing year. Thus, someone born in the first
half of 1946 must take the first payout by
April 1, 2017, but for someone born in the
last half of 1946, the initial deadline is
April 1, 2018.
Caveat: Savers who postpone their
first withdrawal until the April 1 deadline
risk triggering a higher tax bracket, be-
cause they will have two payouts in the
same year.
What’s the tax rate on withdrawals?
The withdrawal becomes part of the
saver’s ordinary income and is taxed at
those rates, not lower long-term capital-
gains rates.
If the saver has after-tax money in a
traditional IRA, then a portion of the re-
quired annual payout is not taxable. Fig-
uring this portion can be troublesome
and requires good records.
I have several IRAs and a 401(k) plan
with required withdrawals. Must the
payout for each account come from
that account?
This issue causes much confusion.
Each payout from a 401(k) plan must be
figured separately and taken from that
account.
With IRAs, however, the saver is free
to take the required payout dispropor-
tionately. So he or she can take a large
amount from one IRA, a little from an-
other and nothing from others, as long as
payments add up to the correct total. A
good reason to take uneven payouts
might be that one account has more cash
than another, or the owner wants to drain
a smaller IRA and close it.
But be sure to avoid another common
mistake in this area, which is when one
spouse takes the entire required payout
for both spouses if each has IRAs. In-
stead, each partner must take such pay-
outs from his or her own accounts.
Must I take the withdrawals in cash?
No, it’s possible to take them “in
kind”—that is, as stock shares or even a
piece of real estate. For an IRA owner
who doesn’t plan to spend the money,
this move could help avoid commissions
for selling and then repurchasing an in-
vestment. But it can be complicated, so
allow extra time and find out if the spon-
sor charges fees.
The new “cost basis” in the asset,
which is the starting point for measuring
taxable gain, is the value on the date of
the payout.
How should I time withdrawals?
This is a matter of individual choice.
Some savers opt for periodic payments
similar to a pension. Others take a lump
sum late in the year to delay owing
taxes. Retirees often owe quarterly esti-
mated taxes, so consider whether to
nations, neither are they part of the do-
nor’s adjusted gross income, or AGI. And
AGI is a trigger for several important tax
provisions. Minimizing AGI can help lower
or avoid the 3.8% surtax on net invest-
ment income, payments for Medicare
premiums and even taxes on Social Se-
curity payments.
Doing a charitable transfer also en-
ables some savers to forgo filing Sched-
ule A and claim the “standard” deduc-
tion, reducing paperwork and possibly
lowering taxes.
Details matter with these transfers.
For example, the benefit is available only
for donations of IRA assets, not 401(k)
have taxes withheld.
If a saver dies without having taken
the required payout for the year, there
can be complications for the person or
people who inherit the IRAs. There’s still
a required withdrawal, but it goes on the
heir’s tax return.
If I take more than the minimum pay-
out one year, can I apply the excess to
my minimum payout the next year?
No.
Required withdrawals are showering
me with taxable income I don’t need.
Are there ways to lower them?
Yes, within limits. Still-working em-
ployees older than 70½ may be able to
forgo payouts until they retire (see dis-
cussion above). In addition, charitably
minded savers often benefit by using IRA
assets to make their donations (see ac-
companying article).
IRA owners can also exclude up to
$125,000 of assets from the base for com-
puting required payouts if they use the
assets to buy “qualifying longevity annu-
ity contracts,” or QLACs. These are IRS-
approved deferred annuities that don’t
pay out until the owner reaches age 85,
and they help make sure savers won’t
outlive their assets.
Finally, the IRA owner can convert IRA
assets above the required annual payout
to a Roth IRA, which doesn’t require
withdrawals during the owner’s lifetime
under current law.
The catch here is the cost: Assets con-
verted to a Roth IRA are taxable, and do-
ing a conversion can push the taxpayer
into higher brackets. Whether the move
is worth it depends on individual circum-
stances.
Many people who convert assets to
Roth IRAs do so in increments over sev-
eral years in order minimize the tax bill.
Often a good time to do such conversions
is in the years leading up to age 70½. If
the IRA owner has retired and is in a
lower tax bracket, the cost of Roth con-
versions will often be lower as well.
What if I miss a withdrawal or take
less than the required amount?
The penalty is 50% of the amount not
withdrawn. That’s stiff, but there’s often
a remedy, says Mr. Slott. Just withdraw
the shortfall right away, file Form 5329
with the IRS, and attach a short state-
ment explaining why. You don’t need to
pay the penalty to do this.
Often the IRS will forgive the penalty,
he says, and filing the form also starts
the clock running for the statute of limi-
tations. “I’ve seen this work in virtually
every case,” he says.
Ms. Saunders is a Wall Street Journal
special writer in New York. Email her
at laura.saunders@wsj.com.
assets, and the donation must bypass
the owner and go directly from the IRA
sponsor to the charity. Charitable trans-
fers also aren’t valid until an IRA owner
actually turns 70½.
In addition, IRA sponsors don’t have
to include IRA donations on the 1099-R
tax form, so donors must remember
them when gathering tax documents.
Finally, donors who have highly appre-
ciated investments held longer than a
year in a taxable account may reap more
benefits by donating them instead of IRA
assets, so it’s important to evaluate al-
ternate strategies.
—Laura Saunders
ASK ENCORE | GLENN RUFFENACH
Where to Find
Continuing Ed
Also: Questions on IRAs,
401(k)s and Social Security
I would like to hear about resources for con-
tinuing education. For instance, I would be in-
terested in taking a college-level class on in-
troductory Shakespeare or one on psychology,
but finding all that is offered and distinguish-
ing between the strengths and weaknesses of
the offerings is a challenge.
The best place to start is institutions of higher education
(two- and four-year colleges and universities) in your own back-
yard. But you might have to dig a bit: Programs for older learn-
ers aren’t always called the same thing or found in the same
places.
For instance, some schools have programs that are clearly
labeled for older adults: “Lifelong Learning” or “Senior Scholar”
or “Project 60” (which is found at Cleveland State University in
Ohio). In other cases, though, a program (if there is one) might
fall under the broad heading of “department of continuing edu-
cation.” Or there might not be a formal program at all, but
older students might be able to attend (read: audit) the normal
lineup of classes. The admissions office at most schools should
be able to help.
Two great resources: Osher Lifelong Learning Institutes and
Road Scholar. The former (osherfoundation.org) can be found,
currently, on 120 university and college campuses across the
country. The latter (roadscholar.org) has programs that combine
education and travel in all 50 states (as well as 150 countries).
Also, don’t forget local libraries and museums, says Seth
Matthew Fishman, an assistant professor at Villanova Univer-
sity, in suburban Philadelphia, who has studied lifelong learning.
“They don’t always find a place in the conversation” about
older students, he notes. But “they’re rich in programs involving
the humanities and arts.”
You can, of course, go the online route. Organizations like
the Kahn Academy, One Day University, Coursera.org, edX.org
and Udacity.com offer hundreds of classes that you can screen
at home. That said, many older students seem to prefer face-
to-face classes, as opposed to online offerings. “It’s more en-
gaging; you’re meeting people outside your immediate social
groups,” Prof. Fishman says.
As for picking “better” or “best” courses and instruc-
tors…we haven’t come across any good rankings. Here again,
some homework might be in order: Look online for instructors’
names and reviews of their classes; talk to others who have al-
ready taken a course; try sitting in on a single class (if you’re
thinking about enrolling in, say, a semesterlong program).
And finally, a request of our own: Tell us about any educa-
tional programs for the 50-plus crowd that you think are espe-
cially valuable. Your thoughts may be used in a future column.
i i i
I am retiring soon and wondered if I can roll over both my
401(k) and cash-balance pension plan into the same individual
retirement account. I would be opening a new IRA for this pur-
pose.
Yes, you can do this—but keep three things in mind.
First, the best way to do this is a direct rollover of your
funds to the new IRA, as opposed to a “60-day” rollover. In the
latter case, your company gives you a check, which you, in turn,
must deposit in the new IRA. That approach has too many po-
tential pitfalls. Stick with the direct rollover.
Second, check to see if your retirement plan includes highly
appreciated company stock, says Ed Slott, an IRA expert in
Rockville Centre, N.Y. If so, you might benefit from a tax break
for “net unrealized appreciation,” or NUA. In short, you would
place the stock in a taxable brokerage account and the rest of
the funds in the IRA. This could minimize your tax bite in the
future. (Needless to say, talk with a good tax professional.)
Third and last: You might want to wait before you do any-
thing. President Donald Trump is proposing tax cuts, which, in
the long run, could affect the value of the NUA strategy, Mr.
Slott says. “That’s what I’m telling people with any significant
tax transactions now,” he adds. “It’s still early in the year, so
there’s no rush.”
i i i
Can I contribute to my individual retirement account after age
70½?
Nope. The Internal Revenue Service, in publication 590-A
(“Contributions to Individual Retirement Arrangements”),
states: “Contributions cannot be made to your traditional IRA
for the year in which you reach age 70.5 or for any later year.”
The key words in that sentence are “traditional IRA.” The
rules are different for Roth IRAs. You can make contributions to
a Roth IRA after turning 70½, as long as you have taxable
compensation. (See pages 40-41 of the same publication.).

U.S.-Stock Funds Rose 1.8% in January i i i

Well, it sure was better than last year.
U.S.-stock funds posted a 1.8% total re-
turn in January, a month that saw the hul-
labaloo of Dow 20000 and the minute-to-
minute ups and downs of the Trump
administration.
It was a turnaround from January 2016,
when the market’s tumult sent the average
diversified U.S.-stock mutual fund to a
negative 6.3% return, according to Thom-
son Reuters Lipper data. In fact, indexes
hadn’t had a January gain since 2013.
Stock-market indexes have risen since
President Donald Trump’s election, on ex-
pectations the economy will reignite. Toward
Mr. Power is a Wall Street Journal news editor in South Brunswick, N.J. Email him at william.power@wsj.com.
the end of January, though, the administra-
tion’s travel-ban fallout cut into gains.
As financial and industrial shares—
which soared after the November vote—fell
back in January, some investors again vis-
ited the “safe” corners of the market, like
gold. Gold-oriented funds, which had
soared 55% in 2016 but ended the year on
a down note, advanced 15% in January.
Bond funds eked out small gains, but
analysts said some investors are warming
to them again as yields increase.
Funds focused on intermediate-maturity,
investment-grade debt, the most com-
monly held type of bond fund, gained
0.3% for the month.
International-stock funds, which had
been pummeled by U.S. counterparts in
2016 (10.8% to 0.7% in favor of the U.S.),
turned the tables in January with a total
return of 3.5%.
Super Bowl’s Final Score
Final update on the Super Bowl Predic-
tor of the market, which worked after 40
of the 50 Super Bowls through last year.
Stocks go up for the year if an original
NFL team wins, or down otherwise. The
winner Patriots are from the old AFL, so
the market is poised to deflate in 2017.
In a recent column, you stated that an ex-wife could claim So-
cial Security benefits as a divorced spouse at her full retire-
ment age and allow her own benefit (based on her work re-
cord) to grow. I’m married. Does the same advice apply to
me?
It depends on your birthday. If you were born before Jan. 2,
1954—and if you first claim Social Security when you reach your
full retirement age—then, yes, the same rule would apply to
you. You could claim just a spousal benefit and switch to your
benefit (based on your work record) at a later point in time.
Again, Congress, in 2015, eliminated this claiming strategy for
most people, but made an exception for people born before the
above date.
Mr. Ruffenach is a former reporter and editor for The Wall Street
Journal, and co-author of “The Wall Street Journal Complete
Retirement Guidebook.” His column examines financial issues for
those thinking about, planning and living their retirement. We
welcome your questions and comments at askencore@wsj.com.

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THE WALL STREET JOURNAL. Monday, February 6, 2017 | R3

Interest rates may change.

The reasons you invest
in bonds don’t.
Growth of $100K investment in Fidelity® Total Bond Fund
Since 10/15/2002
Fidelity® Total Bond Fund $210,000
Bloomberg Barclays U.S. Aggregate Bond
4.25% increase $200,614
in Fed Funds rate
June 2004–June 2006
$188,000 $182,793

$166,000

$144,000

$122,000

$100,000
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Average Annual Total Returns Life of Fund

as of 12/31/2016 1 year 3 year 5 year 10 year Since 10/15/2002 Expense Ratio
Fidelity® Total Bond Fund 5.85% 3.62% 3.26% 4.90% 5.02% 0.45%
Bloomberg Barclays U.S. Aggregate Bond 2.65% 3.03% 2.23% 4.34% 4.33%

Performance data shown represents past performance and is no guarantee of future results. Investment return and principal
value will fluctuate, so investors may have a gain or loss when shares are sold. Current performance may be higher or lower
than what is quoted, and investors should visit Fidelity.com/performance for most recent month-end performance.

2016 U.S. Fixed-Income
Fund Manager of the Year1
The Fidelity® Total Bond Fund has delivered income and diversification in
all types of markets by being flexible. Seasoned portfolio managers take
advantage of opportunities across fixed income markets in search of value
for our clients. Fidelity® Total Bond Fund and Fidelity® Total Bond ETF:
actively managed to navigate changing environments.

Two options for your core bond investment.

Overall Morningstar Rating™ as of 12/31/2016,

compared with 869 within its Morningstar
Intermediate-Term Bond category.

FIDELITY® TOTAL BOND FUND TM

FTBFX
Fidelity.com/TotalBond
FIDELITY® TOTAL BOND ETF 800.FIDELITY or call your advisor.
FBND

Before investing in any mutual fund or exchange-traded fund, you should consider its investment objectives, risks, charges,
and expenses. Contact Fidelity for a prospectus, offering circular or, if available, a summary prospectus containing this
information. Read it carefully.
Past performance is no guarantee of future results.
ETFs are subject to market fluctuation and the risks of their underlying investments. ETFs are subject to management fees and other expenses. Unlike mutual funds, ETF shares are bought and sold at market price,
which may be higher or lower than their NAV, and are not individually redeemed from the fund.
Total returns are historical and include change in share value and reinvestment of dividends and capital gains, if any. Cumulative total returns are reported as of the period indicated. Life of fund figures are reported as of the commencement
date to the period indicated.
In general, the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income
securities also carry inflation risk, liquidity risk, call risk, and credit and default risks for both issuers and counterparties. Lower-quality fixed income securities involve greater risk of default or price changes due to potential changes in the
credit quality of the issuer. Unlike individual bonds, most bond funds do not have a maturity date, so holding them until maturity to avoid losses caused by price volatility is not possible.
Expense ratio is the total annual fund operating expense ratio from the fund’s most recent prospectus.
As of 12/31/2016, Fidelity Total Bond Fund earned a 4-Star Overall Morningstar RatingTM, based on its risk-adjusted performance, compared to 869 funds within the Morningstar Intermediate-Term Bond category.
Morningstar Awards 2017 ©. Morningstar, Inc. All Rights Reserved. Awarded to Ford O’Neil and Team, FTBFX, for Fixed-Income Fund Manager of the Year (2016), U.S.
1
Morningstar’s award recognizes Ford O’Neil, Matthew Conti, Jeffrey Moore, and Michael Foggin for Fidelity Total Bond Fund (FTBFX). Established in 1988, the Morningstar Fund Manager of the Year award recognizes portfolio managers
who demonstrate excellent investment skill and the courage to differ from the consensus to benefit investors. To qualify for the award, managers’ funds must have not only posted impressive returns for the year, but the managers also must
have a record of delivering outstanding long-term risk-adjusted performance and of aligning their interests with shareholders’. Nominated funds must be Morningstar Medalists—a fund that has garnered a Morningstar Analyst Rating™ of
Gold, Silver, or Bronze. The Fund Manager of the Year winners are chosen based on Morningstar’s proprietary research and an in-depth evaluation by its manager research analyst team.
The Overall Morningstar RatingTM for a fund is derived from a weighted average of the performance figures associated with its 3-, 5-, and 10-year (if applicable) Morningstar Rating metrics, which are based on risk-adjusted returns.
The Morningstar RatingTM for funds, or “star rating,” is calculated for funds with at least a three-year history. (Exchange-traded funds and open-end mutual funds are considered a single population for comparative purposes.) It is calculated
based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a fund’s monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The top 10% of funds in
each fund category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star.
© 2017 Morningstar, Inc. All rights reserved. The Morningstar information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or redistributed; and (3) is not warranted to be accurate,
complete, or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Fidelity does not review the Morningstar data and, for mutual fund performance, you
should check the fund’s current prospectus for the most up-to-date information concerning applicable loads, fees, and expenses.
The Morningstar Analyst Rating is a subjective, forward-looking evaluation that considers a combination of qualitative and quantitative factors to rate funds on five key pillars, which are process, performance, people, parent, and price. Gold is the
highest of four Analyst rating categories. For the full rating methodology, go to Corporate.morningstar.com/us/documents/MethodologyDocuments/AnalystRatingforFundsMethodology.pdf. For the report, go to Global.Morningstar.com/FTBFX.
Fidelity Brokerage Services LLC, Member NYSE, SIPC. © 2017 FMR LLC. All rights reserved. 728275.11.0
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
R4 | Monday, February 6, 2017 THE WALL STREET JOURNAL.

JOURNAL REPORT | INVESTING IN FUNDS & ETFS

Category Kings in 16 Realms Data provided by Leaders and Laggards Data provided by

Top-performing funds in each category, ranked by year-to-date total returns (changes in net asset values Performance numbers are total returns (changes in net asset values with reinvested distributions) as of
with reinvested distributions) as of Jan. 31; assets are as of Dec. 30. All performance numbers are final. January 31; assets are as of December 30. Equity data are final. All other data are preliminary.
Best-Performing Stock Funds
Large-Cap Core Small-Cap Core Assets
Total Return (%)
Annualized
Assets Total return (%) Assets Total return (%) Fund Ticker ($ millions) January 1-year 3-year 5-year 10-year
($ millions) Jan 1-yr 3-yr* 5-yr* ($ millions) Jan 1-yr 3-yr* 5-yr*
Direxion:Jr Mnr Bull 3X JNUG 645.2 62.2 207.0 –56.3 N.A. N.A.
Direxion:iBillionaire Id 13.8 5.5 17.9 N.A. N.A. LMCG Internatl SmCp;Inst 5.2 4.4 N.A. N.A. N.A. Direxion:Gold M Id Bl 3X NUGT 1,468.2 44.6 114.1 –46.6 –66.2 N.A.
AMG Yacktman Focsd;S 4,540.9 4.9 19.2 8.3 10.9 Bernzott US Sm Cap Val 73.6 4.3 29.1 7.2 N.A. VelShs 3x Inv Nat Gas DGAZ 256.6 44.4 –63.2 2.5 N.A. N.A.
Amer Cent:Foc DG;Inv 10.2 4.7 18.9 7.0 11.1 Federated Eq Advtg;Inst 2.3 4.1 N.A. N.A. N.A.
ProShares:Ult Jr Miners GDJJ 5.3 40.4 199.4 N.A. N.A. N.A.
American Tr Allegiance 22.1 4.5 19.2 4.4 8.0 AlphaMark Act Mgd SC 24.5 4.0 15.5 N.A. N.A.
Direxion:Slvr M Id Bl 2X SHNY 1.6 38.4 N.A. N.A. N.A. N.A.
J Hancock II:US Gro;1 103.0 3.5 14.2 7.4 N.A. Frst Tr Srs:Cnfl SCV;A 11.2 3.8 31.4 10.1 12.5
Glbl X Uranium ETF URA 126.0 35.3 44.1 –14.5 –20.1 N.A.
Indep Franch Prtnrs USEq 1,558.7 3.4 16.5 12.1 13.6 Nashville Area ETF 8.0 3.3 12.7 4.6 N.A.
Direxion:Brazil Bull 3X BRZU 71.5 33.2 325.0 –32.6 N.A. N.A.
BNY Mellon:Foc Eq Op;M 416.0 3.3 22.9 10.2 13.6 Pru Jenn Small Co;Z 3,472.7 3.3 27.5 7.9 11.9
Rex VolMAXX SVW Ftrs Str VMIN 6.8 31.8 N.A. N.A. N.A. N.A.
AMG Yacktman Fund;I 8,532.4 3.3 16.8 7.6 10.7 AMG SouthernSun SC;I 324.0 3.2 28.1 1.1 9.0
Direxion:Latin Bull 3X LBJ 12.1 30.8 143.9 –25.0 –32.7 N.A.
Vulcan Value Partners 1,387.0 3.3 20.7 7.8 14.1 Highland:Sm-Cp Eqty;A 50.9 3.0 47.7 10.1 13.0
VelShs 3x Long Silver USLV 186.7 30.8 41.7 –29.4 –49.7 N.A.
BlackRock:LC Gro;A 1,126.4 3.2 17.7 10.1 12.9 TD Asset Mgmt:USSMCE;Ins 100.9 2.9 30.6 7.9 N.A.
VelShs DlyInv VIX ST ETN XIV 566.0 29.5 201.0 29.0 48.3 N.A.
Category Average: 806.0 1.8 18.2 8.8 12.6 Category Average: 294.8 0.4 30.4 7.4 12.1
ProShs II:UlS Blm Nat Gs KOLD 4.0 29.4 –36.6 26.8 –6.3 N.A.
Fund Count 772.0 930 873 792 704 Fund Count 821.0 942 877 735 641 ProShs II:ShVIX STF ETF SVXY 228.1 29.2 198.6 28.5 47.4 N.A.
ProShares:Ult Gold Minrs GDXX 11.1 29.2 115.2 N.A. N.A. N.A.
Direxion:S&P Btech Bl 3X LABU 299.1 28.6 39.6 N.A. N.A. N.A.
Large-Cap Value Small-Cap Value Direxion:S Korea Bull 3X KORU 3.6 27.4 56.2 –10.4 N.A. N.A.
Assets Total return (%) Assets Total return (%) VelShs VIX Short Vol Hdg XIVH 35.6 23.5 N.A. N.A. N.A. N.A.
($ millions) Jan 1-yr 3-yr* 5-yr* ($ millions) Jan 1-yr 3-yr* 5-yr* PureFds Jr Silver(SCM/E) SILJ 49.4 23.2 209.7 11.1 N.A. N.A.
TCW/Gargoyle Sys Val;I 1.3 3.5 22.7 N.A. N.A. Aegis Value;I 143.1 3.9 94.1 0.9 9.8 ProFunds:UltraLatin;Inv UBPIX 23.3 23.0 127.3 –13.7 –21.2 N.A.
Natixis:VN Select;Y 128.0 3.4 17.3 9.0 N.A. Invesco SC Value;Y 2,718.6 3.6 39.6 7.4 14.1 ProShares:Ult MSCI Braz UBR 15.4 21.6 206.2 –12.2 –24.8 N.A.
TCW:New America Prm Eq;I 8.8 3.2 18.1 N.A. N.A. Ancora MicroCap;I 17.2 2.1 28.6 8.7 13.1
Glbl X Copper Miners ETF COPX 39.5 20.7 147.4 –1.6 –9.9 N.A.
Fidelity Blue Chip Value 403.8 3.0 20.0 9.9 13.5 Towle Deep Value 154.2 1.9 78.2 12.6 18.6
Direxion:EmgMk Bull 3X EDC 154.9 20.7 65.7 –9.6 –13.9 N.A.
DoubleLine:Sh Enh CAPE;I 1,966.9 3.0 29.2 16.3 N.A. Huber Cap SC Val;Inst 108.3 1.8 32.6 –0.7 8.6
ProFunds:Prec Metals;Inv PMPIX 28.5 20.3 99.0 –11.1 –25.9 –13.1
Barclays ETN+ShillerCAPE 43.8 2.8 27.3 15.1 N.A. Walthausen:Sel Val;Rtl 89.4 1.6 23.5 4.3 12.2
Direxion:CSI Ch Int Bl2X CWEB 2.0 19.9 N.A. N.A. N.A. N.A.
Fidelity Adv Val Ldr;A 34.2 2.8 18.7 9.2 12.9 iShares:S&P MC 400 Val 5,625.2 1.4 35.5 10.7 14.7
iPath Bloomberg Lead A LD 1.2 19.1 38.2 1.7 –1.2 N.A.
Snow Cap Foc Val;I 1.3 2.7 27.3 3.7 N.A. SPDR S&P 400 Mid Cap Val 371.5 1.4 35.6 10.7 14.7
VnEck Vctrs:Jr Gld Mnrs GDXJ 3,454.3 18.5 107.6 4.5 –18.8 N.A.
MassMutual Sel:Fc Vl;I 749.6 2.4 31.9 9.6 15.0 Vanguard S&P MC400V;ETF 729.2 1.4 35.6 10.7 14.8
iShares:MSCI Gl SMiners SLVP 57.9 18.4 138.9 5.0 –11.4 N.A.
Dodge & Cox Stock 61,600.5 2.3 33.2 10.6 16.2 iShares:Mornstr SC-Val 428.2 1.3 39.2 10.1 14.4
ProFunds:UltraEM;Inv UUPIX 19.2 18.4 62.5 0.9 –8.2 –9.3
Category Average: 481.2 0.9 22.9 8.4 12.5 Category Average: 346.7 –0.3 35.5 7.8 12.3 Rydex:Emg Mk 2x Str;H RYWVX 3.4 18.3 61.1 0.4 –8.7 N.A.
Fund Count 447.0 508 484 414 370 Fund Count 286.0 337 318 268 238 DB Base Met Db Long ETN BDD 3.8 18.0 88.7 0.1 –10.4 N.A.

Best-Performing Bond Funds

Total Return (%)
Large-Cap Growth Small-Cap Growth Fund Ticker
Assets
($ millions) January 1-year 3-year
Annualized
5-year 10-year
Assets Total return (%) Assets Total return (%)
($ millions) Jan 1-yr 3-yr* 5-yr* ($ millions) Jan 1-yr 3-yr* 5-yr* ProShs II:Ult Yen YCL 5.5 6.7 9.8 –9.2 –16.8 N.A.
iShares:Intl Pref Stk IPFF 66.4 6.5 24.5 –5.6 –3.4 N.A.
Transam:Cap Growth;I2 600.7 10.5 19.6 8.4 15.3 Delaware Smd Cp G;A 951.7 5.5 8.9 5.5 10.1
Rydex:Wkn Dlr 2x Str;H RYWBX 2.9 5.5 –2.6 –13.9 –10.0 –4.2
Morg Stan I:Growth;A 3,070.2 10.1 19.2 8.3 15.0 JPMorgan:Dyn SCG;Sel 148.6 5.1 32.4 4.0 11.7
WisdomTree:AU NZea Debt AUNZ 17.2 5.4 10.41 –0.04 –1.9 N.A.
Touchstone:Sel Gro;Y 2,408.7 8.5 13.1 2.7 11.5 JPMorgan:SmCp Gro;R6 1,088.2 5.1 32.3 4.3 12.1
Mrkt Vctrs ETN Dbl Lg Eu URR 2.1 5.4 –4.4 –16.8 –9.9 N.A.
Touchstone Inst:Snd Gr 2,097.8 8.5 13.1 2.8 11.7 WellsFargo:Emer Gr;I 707.8 5.1 29.5 3.0 10.6
CurShs:AU Dollar FXA 173.9 4.9 8.3 –3.2 –4.8 2.1
Columbia:Select LCG;Z 4,163.8 7.7 14.2 5.2 12.3 Artisan:Small Cap;Inv 1,195.0 4.7 24.6 2.3 10.8
Bishop St:Strat Gro;I 26.2 7.3 12.8 4.6 9.6 Timothy Plan:Agg Gr;A 21.7 4.7 18.4 2.5 8.4
ProShs II:Ult Euro ULE 11.9 4.7 –4.5 –16.3 –9.6 N.A.
Baron Fifth Ave Gro;Inst 140.4 7.0 15.5 7.0 13.2 Westcore:Sm Cp Gr;Inst 4.2 4.6 27.7 4.2 N.A. iShares:Curr Hgd Em Mkts HEEM 245.3 4.3 16.7 N.A. N.A. N.A.
Edgewood Growth;Inst 6,552.4 5.9 19.8 11.9 16.2 Buffalo:Small Cap 561.4 4.6 23.9 0.9 10.0 WisdomTree:Brz Real Str BZF 24.2 4.3 41.8 1.8 –2.9 N.A.
Dunham:Focused LC Gro;N 56.3 5.9 7.5 4.3 10.2 Morg Stan I:SCG;IS 757.0 4.6 17.8 –4.5 N.A. Franklin Inv:Cv Sec;Adv FCSZX 2,129.4 4.2 19.3 5.9 9.6 N.A.
SS Inst:Prem Gro Eq;Inv 324.2 5.9 18.7 10.2 14.6 T Rowe Price New Hzns 16,741.6 4.3 23.9 7.9 15.0 Cav Hedged High Inc;Inst CHIIX 6.4 4.0 9.8 3.8 N.A. N.A.
Category Average: 782.3 4.1 13.9 8.3 12.6 Category Average: 179.3 2.3 24.9 4.6 11.2 Ashmore:Ems Crp Dbt;Inst EMCIX 237.7 3.9 29.3 5.2 6.3 N.A.
UBS E-TRACS MP 2xL D HI DVHL 21.7 3.9 67.0 9.8 N.A. N.A.
Fund Count 628.0 711 669 597 534 Fund Count 513.0 590 562 504 445
Measured Risk Strategy;A MRPAX 0.2 3.8 N.A. N.A. N.A. N.A.
CurShs:Swedish Krona FXS 21.3 3.8 –3.4 –10.1 –5.2 –2.1
iPath ETN JPY/USD ExRt A JYN 1.5 3.7 7.1 –4.0 –8.3 N.A.
Midcap Core Multicap Core EuroPac Intl Bond;A EPIBX 43.4 3.6 6.7 –4.1 –2.9 N.A.
Assets Total return (%) Assets Total return (%) CurShs:Japanese Yen FXY 136.4 3.6 7.0 –3.7 –7.9 N.A.
($ millions) Jan 1-yr 3-yr* 5-yr* ($ millions) Jan 1-yr 3-yr* 5-yr*
Lord Abbett Convert;I LCFYX 562.0 3.5 24.7 4.2 9.0 5.6
CB Select;IS 10.6 8.3 28.3 7.6 N.A. Aspiration Redwood 7.4 4.8 34.9 N.A. N.A.
Frst Tr VIII:CEF Inc Opp FCEF 16.0 3.5 N.A. N.A. N.A. N.A.
Sterling:Cp SMID Opps;I 7.0 4.4 N.A. N.A. N.A. SPDR MFS Sys Gro Eqty 12.5 4.8 19.5 13.3 N.A.
Oppenheimer Mn St MC;A 2,961.8 4.0 24.5 7.9 12.2 Manning&Napier:PB Max;S 708.5 4.4 14.0 3.9 8.7 Merk Hard Curr;Inv MERKX 113.8 3.4 2.8 –5.6 –4.1 0.9
Osterweis Emerg Oppt 39.1 3.6 N.A. N.A. N.A. Davenport Equity Opps 334.4 4.4 17.7 7.3 12.6 Eaton Vance Ms Inc;I EVBIX 594.2 3.4 32.4 3.4 N.A. N.A.
Sterling:Mid Value;Inst 623.6 3.5 28.2 9.3 14.2 Weitz:PrtnrsIII Opp;Inst 667.1 4.4 16.7 3.0 9.2 SPDR WF Preferred Stock PSK 488.9 3.3 2.9 7.8 5.8 N.A.
Sterling:Cp Str MCV;Inst 62.2 3.3 25.6 7.7 12.7 Weitz:Research 29.5 4.4 20.5 4.8 9.4 Oppenheimer Ro VA Mu;A ORVAX 77.8 3.2 8.6 6.3 2.5 1.4
AMG Mg Fairpt MC;I 3,897.8 3.1 40.9 8.9 14.8 Weitz:Partners Val;Inv 733.5 4.2 16.9 3.3 9.8 Fairholme:Focused Inc FOCIX 243.2 3.1 43.1 8.3 11.4 N.A.
Thompson MidCap 44.4 3.1 36.3 8.0 12.8 UBS US LgCp Eq;P 27.6 4.1 26.6 10.7 13.6 SPDR Bbg Barclays Cnv Sc CWB 3,116.5 3.0 20.1 6.2 9.8 N.A.
Calvert US MCC Resp Ix;Y 19.3 3.0 27.2 N.A. N.A. Lyrical US Val Eqty;Inst 1,067.5 4.0 29.4 9.7 N.A. iShares:Internatl HY Bd HYXU 68.6 3.0 9.8 –3.0 N.A. N.A.
WellsFargo:Cm Stk;A 1,252.4 3.0 27.3 7.5 11.8 Dreyfus Opptnstc MCV;A 1,341.0 3.9 32.7 6.7 13.6 1290:Conv Secs;I TNFIX 20.5 3.0 17.4 N.A. N.A. N.A.
Columbia:Conv Secs;A PACIX 697.5 3.0 24.3 5.3 9.4 5.7
Category Average: 399.7 1.9 25.7 8.1 12.5 Category Average: 516.9 2.1 19.8 8.0 12.3
TETON WW:Convert Sec;AAA WESRX 7.1 3.0 18.4 4.7 8.1 3.7
Fund Count 424.0 478 424 369 315 Fund Count 663.0 788 743 647 572
Worst-Performing Stock Funds
Total Return (%)
Assets Annualized
Midcap Value Multicap Value Fund Ticker ($ millions) January 1-year 3-year 5-year 10-year

Assets Total return (%) Assets Total return (%) Direxion:Jr Mnr Bear 3X JDST 81.9 –48.8 –98.7 –86.3 N.A. N.A.
($ millions) Jan 1-yr 3-yr* 5-yr* ($ millions) Jan 1-yr 3-yr* 5-yr* VelShs 3x Long Nat Gas UGAZ 320.2 –46.5 –55.7 –81.4 N.A. N.A.
Ancora Special Oppty;C 15.2 3.3 28.8 7.3 13.0 GPS:Emerg Mkts;Svc 100.8 6.3 23.2 5.5 11.4 VelShs Dly 2x VIX ST ETN TVIX 247.1 –42.7 –97.4 –87.0 –89.6 N.A.
Nuveen Mid Cp Value;I 106.0 3.3 27.7 9.8 13.4 RvrPrk:Foc Value;Instl 44.5 4.7 10.9 N.A. N.A. ProShs II:UltVIX STF ETF UVXY 538.3 –42.6 –97.4 –86.9 –89.6 N.A.
Neuberger MC Int V;Inv 90.6 3.1 31.1 9.3 13.7 Fidelity Lvrgd Co Stk 3,167.3 4.1 23.7 4.5 11.7 Direxion:Gold M Id Br 3X DUST 242.5 –37.5 –95.5 –72.8 –47.5 N.A.
Huber Cap MC Val;Inst 1.5 3.0 30.8 N.A. N.A. Biondo Focus;Inv 22.2 3.9 22.6 1.6 9.8 iPath Bloomberg NatGas A GAZ 6.9 –34.8 –12.5 –47.9 –32.0 N.A.
PENN:Cap S/M Cp Eq;Inst 10.3 2.7 32.4 N.A. N.A. Berwyn Cornerstone 22.3 3.5 40.7 5.2 10.5 Direxion:Slvr M Id Br 2X DULL 4.0 –33.6 N.A. N.A. N.A. N.A.
TCW:Rel Value MC;I 105.8 2.6 41.7 7.5 12.8 Putnam Multi-Cap Val;A 449.3 3.2 23.8 8.2 13.9 ProShs II:Ult Blm Nat Gs BOIL 43.2 –30.5 –24.2 –60.1 –45.4 N.A.
Glenmede:Mid Cap Eq;Adv 18.2 2.4 21.2 N.A. N.A. Invesco Val Opps;A 795.6 3.0 36.6 7.0 11.6 Direxion:S&P Btech Br 3X LABD 62.6 –28.2 –81.1 N.A. N.A. N.A.
CM:Advisors Fund;I 72.4 2.4 56.3 1.0 5.3 Monongahela All Cap Val 6.9 2.9 30.3 9.2 N.A. Rex VolMAXX LVW Ftrs Str VMAX 2.5 –27.6 N.A. N.A. N.A. N.A.
BlackRock:MC Val Opp;A 541.9 2.4 35.1 8.3 12.1 Fairholme:Fairholme 2,907.7 2.9 45.8 4.7 13.1 ProShares:UlS Gold Minrs GDXS 3.5 –26.0 –83.6 N.A. N.A. N.A.
Gabelli Eq:Foc Five;I 186.7 2.3 13.2 –0.1 8.7 Ariel:Focus;Inv 50.4 2.9 33.2 6.5 10.9 VelShs 3x Invrs Silver DSLV 9.4 –25.7 –62.6 –24.4 –6.2 N.A.
Category Average: 298.1 1.5 28.3 8.2 12.9 Category Average: 548.4 1.3 24.9 8.1 12.5 iPath ETN SP500 VIX ST A VXX 1,240.3 –23.8 –79.7 –54.0 –59.2 N.A.
Fund Count 138.0 157 149 118 107 Fund Count 303.0 365 351 305 280 VelShs VIX ShTm ETN VIIX 10.3 –23.8 –79.7 –54.0 –59.2 N.A.
ProShs II:VIX ST Fut ETF VIXY 174.2 –23.7 –79.6 –54.1 –59.2 N.A.
VelShs Dly 2x VIX MT ETN TVIZ 1.6 –23.3 –63.6 –46.2 –59.0 N.A.
Midcap Growth Multicap Growth iPath ETN Glbl Carbon A GRN 1.5 –20.8 –13.4 –3.4 –13.1 N.A.
Assets Total return (%) Assets Total return (%)
($ millions) Jan 1-yr 3-yr* 5-yr* ($ millions) Jan 1-yr 3-yr* 5-yr* ProFunds:UltSh Latin;Inv UFPIX 6.1 –20.3 –71.6 –19.1 –5.3 N.A.
ProShares:UlS MSCI Brz BZQ 36.9 –19.4 –82.6 –34.0 –12.4 N.A.
Tocqueville:Opportunity 79.4 7.1 20.6 3.8 10.5 Morg Stan MultiCp Gr;A 306.1 10.5 18.0 6.1 13.3
Direxion:EmgMk Bear 3X EDZ 118.2 –18.1 –60.3 –25.9 –21.7 N.A.
BlackRock:MC Gro;A 530.0 6.0 20.4 7.8 13.3 Zevenbergen Genea;Inst 2.9 10.2 29.1 N.A. N.A.
Virtus:Mid-Cap Gro;A 82.7 6.0 17.3 6.2 8.9 RidgeWorth:Innv Gr St;I 18.4 8.0 22.7 4.8 12.8 DB Base Metals Db Sh ETN BOM 1.9 –18.0 –54.1 –10.5 –0.4 N.A.
Alger Inst:MdCp Gr;I 95.6 6.0 19.5 5.7 11.1 Morg Stan I:MCG;I 760.8 7.9 5.5 –3.6 4.6 ProFunds:UltSh EM;Inv UVPIX 5.2 –16.3 –49.6 –19.2 –10.1 –28.6
Alger:Mid Cap Growth;A 159.2 5.8 18.2 4.7 10.4 Zevenbergen Growth;Inst 4.2 7.8 19.9 N.A. N.A. Direxion:Hbldrs&Sup Br3X CLAW 3.1 –16.2 –54.8 N.A. N.A. N.A.
Baron Partners Fund;Rtl 1,567.5 5.6 29.3 6.6 14.4 Baron Opportunity;Rtl 194.2 7.4 15.3 0.6 8.8 Rydex:Inv EM 2x Str;H RYWYX 1.2 –16.1 –49.0 –18.9 –10.1 N.A.
Alger:SMid Cap Growth;A 161.3 5.4 21.6 3.9 9.3 Berkshire:Focus 52.4 7.1 16.3 4.7 13.5 United States Nat Gas UNG 533.2 –16.1 –7.5 –31.6 –18.2 N.A.
Manning&Napier:Dyn Opp;S 247.1 5.2 16.3 2.9 N.A. Franklin Cust:Dyna;A 2,848.4 6.6 18.5 7.9 13.8 Direxion:China Bear 3X YANG 75.6 –15.8 –57.5 –40.9 –39.1 N.A.
Am Beacon:Md Cp Gro;Inst 81.3 5.0 24.3 5.3 10.7 WellsFargo:Growth;A 4,897.9 6.1 16.3 4.6 10.2 ProShares:UPS Nasdaq Bio ZBIO 7.2 –15.7 –46.6 N.A. N.A. N.A.
Putnam Equity Spectrum;Y 1,233.4 5.0 20.4 0.3 10.7 Direxion:NASDAQ-100 EWI 99.7 6.0 23.6 12.2 N.A. ProFunds:UlSh China;Inv UHPIX 3.3 –15.4 –36.9 –24.0 –25.9 N.A.
Category Average: 278.5 3.4 19.7 6.0 11.1 Category Average: 306.8 4.0 16.0 6.8 11.9 Direxion:Cybr Sc&IT Br2X HAKD 2.9 –14.6 –51.0 N.A. N.A. N.A.
ProShares:UltP Sht QQQ SQQQ 618.7 –14.3 –49.5 –42.9 –46.1 N.A.
Fund Count 348.0 408 393 362 318 Fund Count 522.0 612 591 513 453
Worst-Performing Bond Funds
Total Return (%)
Gold-Oriented funds Natural Resources Assets Annualized
Fund Ticker ($ millions) January 1-year 3-year 5-year 10-year
Assets Total return (%) Assets Total return (%)
($ millions) Jan 1-yr 3-yr* 5-yr* ($ millions) Jan 1-yr 3-yr* 5-yr* ProShs II:UltSht AUD CROC 16.6 –9.7 –18.8 1.2 N.A. N.A.
ProShares:Ult Gold Minrs 11.1 29.2 115.2 N.A. N.A. Dreyfus Natural Res;I 301.1 4.9 43.1 1.6 3.5 FX Strategy;I FXFIX 28.4 –7.1 0.2 4.3 0.9 N.A.
PureFds Jr Silver(SCM/E) 49.4 23.2 209.7 11.1 N.A. Spirit of Amer:Energy;A 614.2 4.6 38.7 N.A. N.A. ProShs II:UlS Yen YCS 276.8 –7.0 –16.1 3.9 13.2 N.A.
VnEck Vctrs:Jr Gld Mnrs 3,454.3 18.5 107.6 4.5 –18.8 MainStay:Cushing RA;I 226.2 3.8 46.9 1.4 N.A. Rydex:Stg Dlr 2x Str;H RYSBX 29.8 –5.5 –1.5 11.1 5.8 –0.9
iShares:MSCI Gl SMiners 57.9 18.4 138.9 5.0 –11.4 SPDR S&P N Amer Ntrl Res 828.5 3.8 53.0 N.A. N.A. Mrkt Vctrs ETN Dbl Sh Eu DRR 36.4 –5.1 0.8 14.7 6.4 N.A.
Glbl X Silver Miners ETF 278.3 17.5 119.1 3.0 –11.3 ICON:Ntrl Res;S 79.0 3.3 41.2 4.0 6.7 ProShs II:UlS Euro EUO 356.2 –4.9 0.4 13.3 5.4 N.A.
Oppenheimer Gld & Sp;A 991.3 17.5 73.9 2.2 –13.6 PowerShares Water Res 738.6 3.0 25.0 0.5 7.4 ProFunds:Rs USD;Inv RDPIX 68.6 –2.8 –1.2 5.0 2.5 –0.3
Glbl X Gold Explrs ETF 40.0 16.5 112.5 13.8 –16.4 Frst Tr:Water 221.8 3.0 40.2 8.9 13.7 Direxion:20+Y Trs Br 3X TMV 482.9 –2.8 –1.2 –27.1 –19.2 N.A.
Rydex:Precious Metls;Inv 61.8 16.3 88.9 0.7 –13.1 Virtus:Essential Res;I 4.8 3.0 16.0 N.A. N.A. PowerShares DB USD Bull UUP 845.9 –2.7 –0.6 5.6 3.1 N.A.
ALPS Sprott Gold 180.3 16.2 67.1 N.A. N.A. Frst Tr:NASDAQ CE Green 51.8 2.5 11.5 –4.5 9.0 WisdomTree:Blm USD Bull USDU 205.1 –2.6 –1.6 5.3 N.A. N.A.
ALPS Sprott Junior Gold 46.1 16.0 88.9 N.A. N.A. PowerShares WldHill CE 84.8 2.4 –4.4 –15.3 –5.9
ProShs II:Short Euro EUFX 15.8 –2.4 0.3 6.6 N.A. N.A.
Category Average: 380.7 14.9 75.7 3.1 –13.2 Category Average: 447.4 –0.1 35.8 –5.1 –0.4 Pac Fds:Curr Strat;P 84.2 –2.2 1.1 1.2 N.A. N.A.
Fund Count 63.0 73 73 70 65 Fund Count 77.0 100 93 81 66 Pac Fds:Flt Rt Ln;P 8.0 –2.1 5.8 0.9 2.7 N.A.
ProShares:UPSh 20+ Trs TTT 95.1 –1.7 unch. –26.1 N.A. N.A.
ProShares:UlS TIPS TPS 1.3 –1.7 –8.0 –4.7 –2.4 N.A.
Latin American funds Financial Services PowerShares Eu Curr HLV FXEU 10.5 –1.4 1.8 N.A. N.A. N.A.
Assets Total return (%) Assets Total return (%)
($ millions) Jan 1-yr 3-yr* 5-yr* ($ millions) Jan 1-yr 3-yr* 5-yr*
iPath ETN Trs 5Yr Bear DFVS 2.2 –1.4 12.2 –8.1 –5.5 N.A.
GMO:Curr Hgd Intl Bd;III GMHBX 61.7 –1.3 1.7 5.7 5.9 4.9
iShares:MSCI Brz Sm-Cap 38.0 16.7 114.6 –7.0 –10.0 iShares:US BD & SE ETF 192.9 4.2 44.8 13.2 20.0
PowerShares Jp Curr HLV FXJP 1.3 –1.3 0.8 N.A. N.A. N.A.
VnEck Vctrs:Brazil Sm Cp 82.9 13.8 101.2 –8.1 –12.6 SCM:Shelton BDC Inc;Inv 13.5 3.0 27.3 N.A. N.A.
DFA Wld ex US Gv FI;Inst DWFIX 784.7 –1.3 1.6 4.9 4.2 N.A.
Frst Tr ADex:Brazil 100.3 11.1 88.2 –0.4 –6.6 PowerShares KBW Hi Dv Y 241.5 2.7 37.0 6.4 9.2
Glbl X MSCI Argnt ETF 85.0 11.1 49.8 14.8 2.6 SPDR S&P Cap Mkts ETF 80.7 2.5 28.1 1.2 11.1 iPath ETN Trs 10Y Bear A DTYS 54.4 –1.3 23.6 –12.4 –8.6 N.A.
BlackRock:Latin Amer;A 162.0 9.9 42.3 –1.8 –6.4 Innovator IBD 50 36.3 2.2 20.1 N.A. N.A. CG Cap Mkts:Intl Fxd Inc TIFUX 175.8 –1.1 4.3 4.2 3.7 5.1
iShares:MSCI Brazil Cap 4,254.1 9.7 93.6 0.3 –8.3 Fidelity Sel Brkg & IM 358.6 1.8 25.0 2.8 11.9 JPMorgan:Dvs Rtn Euro CH JPEH 24.9 –1.1 N.A. N.A. N.A. N.A.
iShares:Lat Amer 40 941.3 9.4 50.7 –0.8 –5.8 PIMCO:Captl Sec&Fin;Inst 35.6 1.7 11.7 N.A. N.A. ProShares:UlS 20+ Yr Trs TBT 2,116.6 –1.0 1.4 –17.1 –11.1 N.A.
Frst Tr ADex:Lat America 106.8 9.1 61.0 0.7 –3.1 Davis:Financial;A 976.3 1.4 26.3 12.1 14.8 Deutsche Barclays ITBH IGVT 4.9 –1.0 N.A. N.A. N.A. N.A.
T Rowe Price Int:Lat Am 568.5 8.6 45.2 0.2 –6.0 Guggenheim LC Optmz Dvsf 1.3 1.3 N.A. N.A. N.A. Pru International Bond;Q PXBQX 25.5 –1.0 N.A. N.A. N.A. N.A.
Deutsche Latin Am Eq;S 255.4 8.4 47.9 –0.1 –3.9 Frst Tr VI:RBA Am IndRen 138.3 1.2 57.6 N.A. N.A. iShares:Intl Agg Bond IAGG 237.9 –1.0 2.3 N.A. N.A. N.A.
Category Average: 276.7 7.7 45.0 –2.9 –6.9 Category Average: 575.1 0.4 32.9 11.0 15.7 ProShares:Sht High Yield SJB 125.8 –1.0 –15.9 –5.8 –7.7 N.A.
SEI Inst Intl:Intl FI;F SEFIX 479.5 –1.0 2.4 3.4 3.4 3.5
Fund Count 34.0 40 39 34 31 Fund Count 76.0 92 85 75 72 Barclays Inv US TC ETN TAPR 18.5 –1.0 2.5 N.A. N.A. N.A.
N.A.: Not applicable; fund is too new * Annualized Note: For funds with multiple share classes, only the largest is shown. Note: For funds with multiple share classes, only the largest is shown. N.A.: Not applicable; fund is too new or data not available
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.
IN TRANSLATION
NORMALIZATION
Increasingly we are hearing mar-
ket professionals talk about “nor-
malization.” Usually they are re-
ferring to interest rates on
government securities, which
have been anything but normal
over the past few years.
Since the financial crisis, the
government’s cost to borrow
money has been low by historical
standards. For short-term bor-
rowing, the benchmark federal-
funds rate, set by the Federal Re-
serve, has been near zero. For
longer-term borrowing, a govern-
ment bond-buying program
known as quantitative easing has
kept the 10-year Treasury rate
low. The yield is now 2.496%.
Now that the economy is
healthier and inflation is starting
to rise, it seems the era of ex-
traordinarily low rates is ending.
In other words, it is normalizing.
The thing is, it isn’t altogether
clear what normal means any-
more in terms of interest rates.
That “has to be fine-tuned,”
says Michael Gayed, portfolio
manager at investment adviser
Pension Partners in New York.
Mr. Gayed says that normal
rates likely won’t be as high as
they were in the past. In the
1990s, the 10-year rate for gov-
ernment borrowing rarely dipped
below 5%, and in the decade pre-
ceding the financial crisis, it
mostly remained above 4%.
Normal rates likely won’t return
to that level because inflation is
so much lower than it once was,
thanks in part to improved eco-
nomic efficiency, he says. “There
has been a generic shift down on
rates due to efficiency. People
who talk about rising rates aren’t
necessarily understanding the
shift in rates due to technology.”
In short, the new normal might
not be the old normal because
new tech has allowed the economy
to grow without surges in prices.
—Simon Constable
All investments involve risk, including loss of principal, and there is no guarantee that investment objectives will be met.
Income and dividends will fluctuate and are not guaranteed.
Equity securities are subject to price fluctuation and possible loss of principal.
International investments are subject to special risks, including currency fluctuations and social, economic and political uncertainties, which could increase volatility.
Before investing, carefully consider a fund’s investment objectives, risks, charges and expenses.You can find this and other information
in each prospectus, and summary prospectus, if available, at www.LeggMason.com/ETF. Please read the prospectus carefully.
© 2017 Legg Mason Investor Services, LLC. Member FINRA, SIPC. Legg Mason Investor Services is a subsidiary of Legg Mason, Inc. 685919 ADVR334808 1/17
INVESTMENT PRODUCTS: NOT FDIC INSURED • NO BANK GUARANTEE • MAY LOSE VALUE
JOURNAL REPORT | INVESTING IN FUNDS & ETFS
NEED TO KNOW
How to Figure If REITs Are Worth It
Here is a 3-step
way to estimate
future returns
BY JOHN COUMARIANOS
MANY INVESTORS have reaped
hefty returns from real-estate funds
in recent years, but there are signs
that the party may be winding down.
That’s because the prices of build-
ings—and the stocks of the compa-
nies that own income-producing real
estate (known as real-estate invest-
ment trusts, or REITs)—are high.
Commercial property prices have
risen so much since the financial cri-
sis that investors already have cap-
tured much of the future profits that
real estate likely will deliver.
Just how good was the run? In-
vestors in Vanguard REIT Index
Fund (VGSIX), for example, achieved
15.5% annualized returns from 2009
through 2016. Over that same time,
the fund’s assets swelled above $60
billion from less than $10 billion.
With the help of Research Affili-
ates, a Newport Beach, Calif., invest-
ment firm, we came up with a way
to estimate the likely future returns
of REITs. The formula starts with
dividend yield, adjusts it for prop-
erty-maintenance costs, and then
factors in an element of price, or
how properties are trading relative
to their history. Based on that for-
mula, we predict REIT returns over
the next decade won’t be nearly as
robust as they have been over the
past five years. Here is a closer look:
1. FIRST, DIVIDEND YIELD
Real-estate investors estimating
future returns of a commercial prop-
erty start with the current rent mi-
nus basic expenses such as repairs,
insurance, and taxes. That number—
often called net operating income by
FUND RESULTS
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WSJ
.COM
fund listings and other
performance tables are
available free at
WSJ.com/FundsETFs.
Menlo Park Mall in Edison, N.J., owned by a giant REIT, Simon Property.
real-estate pros—is the current
profit properties are delivering to
investors. Investors typically con-
sider net operating income in rela-
tion to the price of property to ar-
rive at what’s called a capitalization
rate—or a rough estimate of an in-
vestor’s return on investment from a
property or a portfolio of properties.
A Research Affiliates paper by Mi-
chael Aked and Jim Masturzo uses a
capitalization rate or income per
unit of price as the first component
of return. In an interview, Messrs.
Aked and Masturzo said investors in
REITs or REIT mutual funds could
simply substitute dividend yield for
the capitalization rate as the first in-
put of the return model. (A REIT’s
dividend yield is typically covered by
the cash remaining after collecting
rent and paying basic expenses.)
According to Research Affiliates,
the capitalization rate of commercial
real estate has been falling, from
7%-8% in the 1980s and 1990s to
5.5% in the past five years. The Re-
search Affiliates model used 4.6% for
current profit when it was published
in August 2016. The current dividend
yield of U.S. REIT indexes is around
4%, according to Standard & Poor’s.
2. MAINTENANCE COSTS
After current profit, the second
component of the model is the capi-
tal required to maintain properties
over the longer haul. These aren’t
day-to-day repairs but rather bigger
projects that are more expensive and
What to Expect
REIT returns could be meager after
adding up three variables
PRICES
HIGH REVERT TO
COMPONENTS PRICES HISTORICAL
OF RETURN PERSIST NORMS
Dividend Yield 4% 4%
Reserves for –2 –2
replacement
Real constant- 0 –2
qualtity price change
Expected 2% 0%
real return
Sources: S&P, Research Affiliates
THE WALL STREET JOURNAL.
necessary to maintain the quality of
the property. They include replacing
roofs and refurbishing kitchens and
bathrooms, among other things.
Messrs. Aked and Masturzo argue
that landlords have spent 2% of the
value of their property a year to
maintain the property at “constant
quality,” or to keep it in the condi-
tion it was when first completed.
Letting the property deteriorate,
maintaining it only at “minimum
quality,” can boost profit at first, but
ultimately erodes the property’s
value and future profitability. Alter-
natively, maintaining property at
“current quality” of technology, ame-
nities and building standards, as op-
posed the standards of its own com-
pletion date, drains too much cost
that can’t be recouped in big enough
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Monday, February 6, 2017 | R5
rent increases.
Different property types may re-
quire different levels of expenditure.
REIT funds own a mixture of prop-
erty types, making the 2% annual
long-term “constant quality” mainte-
nance cost reasonable.
That means REIT investors should
cut the roughly 4% dividend yield by
2 percentage points, leaving a 2% an-
nualized return before factoring in
MICHAEL NAGLE/BLOOMBERG NEWS
the third element of the model.
3. PRICE CHANGE
The third component of the fore-
cast is the constant-quality price
change. Research Affiliates estimates
that constant-quality prices are 20%
above their long-term trend, which
is a rough proxy for replacement
cost, the amount for which a builder
would build and sell a building. If
that 20% premium shrinks, it could
cut into the next decade’s already
paltry 2% annualized real return.
Some good news for investors is
that developers haven’t been active
in creating new supply. Messrs. Aked
and Masturzo say credit is tighten-
ing. Without credit flowing freely
and new development occurring,
prices of commercial real estate can
remain high and investors can keep
the expected 2% real return.
Morris Chen, who heads commer-
cial mortgage-backed securities and
commercial real estate at DoubleLine
Capital, says money-center bank
lending for new projects has been
tepid. He, too, expects lower com-
mercial-property returns over the
next decade.
Of course, it’s possible that new
development activity could send real
prices down by around 2% a year
over the next decade, in which case
REIT investors wouldn’t make any
real return. Either way, investors al-
most certainly won’t achieve any-
thing like the 15% annualized returns
domestic REITs have delivered since
2009. Investors may want to con-
tinue holding a small allocation in
REITs, but those who have piled into
the sector with gusto recently, hop-
ing for continued torrid returns,
should lower their expectations.
Mr. Coumarianos, a former
Morningstar analyst, is a writer in
Laguna Niguel, Calif. He can be
reached at reports@wsj.com.
LVHI
International
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
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R6 | Monday, February 6, 2017 THE WALL STREET JOURNAL.

JOURNAL REPORT | INVESTING IN FUNDS & ETFS

NEWS CHALLENGE: THE MONTH IN FUNDS AND INVESTING

Test Your Smarts on Dow 20K, Starbucks, Snap

D. none of the above
BY VICTOR REKLAITIS
ANSWER C. The coffee chain created the
INVESTORS MOSTLY buzzed about two app to reduce long lines at the cash regis-
things in January: The Dow Jones Indus- ter, but the lines just shifted to the pickup
trial Average topping 20000 for the first counter, said Mr. Johnson, who is slated to
time and President Donald Trump taking become CEO in April. The long waits there
office. The new state of affairs in Washing- have driven away some potential custom-
ton helped spark moves in Mexican and ers, he said.
Russian assets. Brexit, bitcoin and Star-
bucks also made waves.
How much do you know about last
month’s news in fund investing and the
8. How much did China’s three largest
bitcoin exchanges start charging
customers last month in an effort to curb
markets? Here’s a quiz to test your knowl- speculation?
edge.
A. 0.2% per transaction

1. In his annual letter to U.S. corpora-

tions, BlackRock Chief Executive
Larry Fink said businesses will need to
B. 0.5% per transaction
C. 1.5% per transaction
D. 2.5% per transaction

PATRICK FALLON/BLOOMBERG NEWS

help “the employee who once operated a
machine learn to ____________.” ANSWER A. BTCC, Huobi and OKCoin ac-
count for most of the virtual currency’s
A. program it B. destroy it global trading volume.
C. love it D. ship it to China

ANSWER: A. The boss at the world’s largest

money manager called for offering more
9. Where does Snap Inc. plan to list its
much-anticipated initial public offer-
ing of stock?
internal training to help workers adapt to
technological changes. The IPO for Snapchat’s parent will get buzz, but on which market? See Question No. 9. A. Nasdaq
B. New York Stock Exchange

2. Goldman Sachs Group stock contrib-

uted how many points to the Dow’s
see a reason to buy. Brexit will affect the currency. C. London Stock Exchange
D. none of the above
rise to 20000 from 19000?
A. 525 points
C. 379 points
B. 436 points
D. 287 points
4. True or false: Gold’s gain in January
topped the S&P 500’s advance. 6. True or false: The biggest U.S. ex-
change-traded fund focused on Mexi-
can stocks slumped last month, as Presi-
ANSWER B. The parent for messaging app
Snapchat is expected to list on the NYSE,
True False dent Trump backed his plan to build a going public as soon as March. Young tech
ANSWER C. Goldman and other bank stocks wall on the border with Mexico. companies historically have headed to the
have been big winners since President ANSWER True. Gold prices rose about 5% to Nasdaq Stock Market, but that has changed
Trump’s election as investors expect higher around $1,210 an ounce, while the stock True False somewhat after Facebook’s glitch-filled IPO
interest rates and looser regulations. benchmark climbed 1.8% to 2279. in 2012.
ANSWER False. The iShares MSCI Mexico

3. What was rated as this year’s least

attractive asset class, according to a
poll of chief investment officers?
5. Fill in the blank: The British pound
on Jan. 16 fell to its lowest level
since __________ as investors braced for a
Capped ETF gained 1.9% in January. Some
traders said any Trump-inspired selling
had become overdone.
10. True or false: The ruble lost
ground in January, even as traders
see the Trump administration aiming for
A. Stocks B. Government bonds speech by U.K. Prime Minister Theresa warmer relations between the U.S. and
C. Hedge funds D. Gold

ANSWER B. Some 83% of respondents in

May on her plans for negotiating the
country’s exit from the European Union. 7. Fill in the blank: In explaining a drop
in transactions in the fiscal first
quarter, Starbucks Corp. Chief Operating
Russia.

True False
the poll by Dow Jones’s Financial News A. January 1986 B. August 1992 Officer Kevin Johnson said: “The
said government bonds are set for poor re- C. August 2011 D. October 2016 __________ of mobile order-and-pay has ANSWER False. Russia’s currency gained
turns in the next 12 months, making them created a new challenge.” about 2% against the dollar last month.
the least attractive asset class by a com- ANSWER D. The pound traded under $1.20
fortable margin. That suggests investors during that session, hitting its lowest level A. error-riddled launch Mr. Reklaitis is a markets writer for
might want to steer clear of government since its flash crash in October, on con- B. confusing design MarketWatch in London. Email him at
bonds in 2017, though contrarians might cerns about how the details of the looming C. success vrek@marketwatch.com.

Tracking Exchange-Traded Portfolios How the Largest Funds Fared Data provided by

Performance figures are total returns for periods ended Jan. 31; for largest exchange-traded funds and Performance numbers are total returns (changes in net asset values with reinvested distributions) as of
other portfolios, ranked by asset size. Jan. 31; assets are as of Dec. 30. All data are final.
Assets Volume Expense Launch Performance (%)
Fund Symbol ($ billions) (000s) ratio date January 1-year 3-year
SPDR S&P 500 ETF SPY 227.39 73,917.6 0.09 01/22/93 1.9 19.9 10.7 The Largest Stock Mutual Funds
iShares Core S&P 500 ETF IVV 92.85 4,785.9 0.07 05/15/00 1.9 20.0 10.8 Total Return (%)
Assets Annualized
Vanguard Tot Stk Mkt Idx ETF VTI 71.90 3,305.8 0.05 05/24/01 1.9 21.7 10.2 Fund Ticker ($ billions) January 1-year 3-year 5-year 10-year
iShares MSCI EAFE ETF EFA 62.21 29,663.7 0.33 08/14/01 2.9 12.0 0.6 Vanguard TSM Idx;Adm VTSAX 498.12 1.9 21.7 10.2 13.9 7.2
Vanguard 500 Index ETF VOO 59.72 994.7 0.05 09/07/10 1.9 20.0 10.8 Vanguard 500 Index;Adm VFIAX 282.40 1.9 20.0 10.8 14.1 7.0
Vanguard FTSE Emerging Markets ETF VWO 47.31 15,383.9 0.14 03/04/05 4.9 24.8 2.5 Vanguard Tot I Stk;Inv VGTSX 231.93 3.9 15.1 1.5 4.8 1.2
PowerShares QQQ Nasdaq 100 QQQ 43.16 18,530.6 0.20 03/10/99 5.2 20.8 14.4 SPDR S&P 500 ETF SPY 224.82 1.9 19.9 10.7 14.0 6.9
Vanguard FTSE Developed Markets ETF VEA 42.57 21,455.2 0.09 07/20/07 3.7 12.7 1.6 Vanguard Instl Indx;Inst VINIX 211.50 1.9 20.0 10.8 14.1 7.0
iShares Core US Aggregate Bond ETF AGG 42.06 7,075.5 0.07 09/22/03 0.2 1.4 2.6 American Funds Gro;A AGTHX 146.04 4.5 22.6 10.1 14.5 7.3
iShares Russell 2000 ETF IWM 37.75 32,649.5 0.20 05/22/00 0.4 33.6 8.0 American Funds EuPc;R-6 RERGX 120.69 4.4 12.3 2.3 6.9 N.A.
iShares Core S&P Mid-Cap ETF IJH 36.60 3,335.3 0.12 05/22/00 1.7 30.1 10.3 Fidelity 500 Idx;Pr FUSVX 109.23 1.9 20.0 10.8 14.0 7.0
iShares Russell 1000 Value ETF IWD 35.04 2,641.2 0.20 05/22/00 0.7 24.3 10.0 Fidelity Contrafund FCNTX 102.72 4.4 14.4 8.8 13.3 8.1
American Funds Inc;A AMECX 101.82 1.3 14.6 6.8 9.2 5.5
Vanguard REIT ETF VNQ 33.74 11,091.4 0.12 09/23/04 –0.04 12.3 11.6
iShares Russell 1000 Growth ETF IWF 31.98 1,782.8 0.20 05/22/00 3.4 17.0 10.6 American Funds Bal;A ABALX 101.24 1.8 13.4 7.8 10.4 6.6
Vanguard Total Bond Market ETF BND 31.74 2,857.1 0.06 04/03/07 0.3 1.5 2.5 American Funds CIB;A CAIBX 99.53 1.2 9.5 4.9 7.4 4.1
SPDR Gold Shares GLD 31.15 10,403.8 0.40 11/18/04 4.6 8.7 –1.4 Vanguard Wellington;Adm VWENX 95.04 0.9 15.3 7.8 10.0 7.0
iShares:Core S&P 500 IVV 90.60 1.9 20.0 10.8 14.0 6.9
iShares iBoxx $ Inv Grade Cor B ETF LQD 28.33 4,982.5 0.15 07/22/02 0.2 6.2 3.8
American Funds Wash;A AWSHX 85.93 1.3 20.1 9.7 13.1 6.5
iShares Core S&P Small-Cap ETF IJR 28.24 5,252.3 0.12 05/22/00 –0.4 34.3 10.7
American Funds CWGI;A CWGIX 81.84 3.1 15.5 4.9 9.7 4.6
Vanguard Value ETF VTV 27.98 1,896.0 0.08 01/26/04 0.6 23.5 11.0
Franklin Cust:Inc;A FKINX 81.06 0.9 21.4 4.3 7.4 5.2
iShares MSCI Emerging Markets Index Fund EEM 27.42 67,138.6 0.72 04/07/03 5.4 24.7 0.8
American Funds ICA;A AIVSX 79.99 2.7 22.1 10.2 13.8 6.5
*Expense charge is a maximum of 8 cents a share †Assets are estimated N.A.= Not applicable, fund is too new.
Note: Total returns are based on the change in the net asset values, not changes in market prices. Net asset values can vary from market prices, which American Funds FInv;A ANCFX 79.82 2.9 22.1 10.7 13.8 7.3
therefore can reflect a premium or discount to the net asset values. Source: Thomson Reuters Vanguard Md-Cp Idx;Adm VIMAX 76.47 3.0 23.7 9.6 13.6 7.6
Vanguard Sm-Cp Idx;Adm VSMAX 69.48 1.6 30.1 8.3 13.6 8.1
Vanguard FTSE Dev Mk ETF VEA 67.28 3.7 12.7 1.6 6.5 N.A.
Mutual-Fund Yardsticks: How Fund Categories Stack Up Dodge & Cox Stock DODGX 61.60 2.3 33.2 10.6 16.2 6.0
All returns are for periods ended Jan. 31. All data are final. Data provided by
Vanguard REIT Idx;ETF VNQ 61.19 –0.04 12.3 11.6 10.4 4.4
Vanguard FTSE Em Mkt ETF VWO 61.03 4.9 24.8 2.5 0.3 2.4
Performance (%) Performance (%) iShares:MSCI EAFE ETF EFA 59.67 2.9 12.0 0.6 5.9 0.9
Investment objective January 1-yr 5-yr* 10-yr* Investment objective January 1-yr 5-yr* 10-yr*
American Funds NPer;A ANWPX 59.37 4.4 13.7 6.4 10.7 6.1
Diversified stock & stock/bond funds World stock funds Vanguard Gro Idx;ETF VUG 54.30 3.7 16.9 10.0 13.5 8.2
Large-Cap Core 1.8 18.2 12.6 6.2 Global 2.9 15.2 8.5 3.8 Dodge & Cox Intl Stock DODFX 54.19 4.3 24.6 1.6 7.6 2.4
Large-Cap Growth 4.1 13.9 12.6 7.3 International (ex-U.S.) 3.5 10.8 5.3 0.9 Vanguard Ext Mk Id;Adm VEXAX 51.55 2.1 30.1 7.9 13.5 7.8
Large-Cap Value 0.9 22.9 12.5 5.0 European Region 2.0 7.7 6.7 0.9 Vanguard Value Idx;ETF VTV 50.80 0.6 23.5 11.0 14.4 6.0
Midcap Core 1.9 25.7 12.5 6.9 Emerging Markets 5.4 21.3 0.7 1.9 American Funds AMCP;A AMCPX 50.28 3.3 19.9 8.9 13.7 7.7
Midcap Growth 3.4 19.7 11.1 6.8 Latin American 7.7 45.0 –6.9 –0.3 First Eagle:Global;I SGIIX 50.20 2.7 18.0 5.9 7.9 6.7
Midcap Value 1.5 28.3 12.9 6.3 Pacific Region 5.2 16.1 5.5 3.8 Vanguard Wellesley;Adm VWIAX 49.68 0.3 8.7 6.1 7.0 6.7
Small-Cap Core 0.4 30.4 12.1 6.7 Gold Oriented 14.9 75.7 –13.2 –1.9
Small-Cap Growth 2.3 24.9 11.2 7.0 Global Equity Income 1.6 12.8 7.1 2.6
Small-Cap Value –0.3 35.5 12.3 6.5 International Equity Income 2.3 10.6 3.8 0.2 The Largest Bond Mutual Funds
Total Return (%)
Multicap Core 2.1 19.8 12.3 5.9 Taxable-bond funds Assets Annualized
Multicap Growth 4.0 16.0 11.9 7.0 Short-Term 0.3 2.1 1.3 2.5
Fund Ticker ($ Billions) January 1-year 3-year 5-year 10-year
Multicap Value 1.3 24.9 12.5 5.4 Long-Term 0.5 5.8 3.4 5.0 Vanguard Tot Bd;Adm VBTLX 171.81 0.3 1.5 2.5 2.0 4.3
Equity Income 1.0 19.7 11.0 5.9 Intermediate Bond 0.3 2.4 2.2 4.0 Vanguard Tot Bd II;Inv VTBIX 114.01 0.3 1.3 2.4 1.9 N.A.
S&P 500 Funds 1.8 19.2 13.5 6.4 Intermediate U.S. 0.7 3.7 0.4 3.4 Met West:Total Return;I MWTIX 78.57 0.3 1.5 2.5 3.8 5.9
Specialty Divers. Equity 1.0 4.1 –4.6 –4.7 Short-Term U.S. 0.3 2.4 2.2 4.0 PIMCO:Tot Rtn;Inst PTTRX 75.73 0.7 2.3 2.4 2.8 5.7
Balanced (BL) 1.5 11.8 7.2 4.6 Long-Term U.S. 0.3 –1.3 1.1 3.9 PIMCO:Income;Inst PIMIX 70.33 0.9 9.3 6.0 8.5 N.A.
Stock/Bond Blend 1.6 11.7 6.2 4.1 General U.S. Taxable 0.8 6.2 4.0 5.5 Vanguard Tot Itl BI;Adm VTABX 68.19 –0.9 2.1 4.0 N.A. N.A.
Avg. U.S. Stock Fund† 1.8 20.7 11.2 5.7 High-Yield Taxable 1.2 16.4 5.8 6.0 Vanguard Sh-Tm Inv;Adm VFSUX 57.77 0.4 2.6 1.9 2.2 3.4
Sector stock funds Mortgage 0.1 0.8 1.9 4.0 DoubleLine:Tot Rtn;I DBLTX 55.70 0.3 1.2 3.1 3.8 N.A.
Science & Technology 4.8 25.8 13.5 8.1 World Bond 1.2 8.3 1.2 3.9 Vanguard Int-Tm TxEx;Adm VWIUX 49.37 0.5 –0.5 3.1 2.6 4.1
Telecommunication 2.9 18.4 10.5 3.9 Avg. Taxable-Bond Fund** 0.6 6.3 2.5 4.0 Dodge & Cox Income DODIX 46.63 0.4 6.1 3.1 3.4 5.1
Health/Biotechnology 4.2 10.1 16.7 11.0 Muncipal-bond funds Vanguard Sh-Tm Bd;ETF BSV 46.07 0.3 0.8 1.1 1.1 N.A.
Utility 1.8 13.5 9.6 5.5 Short-Term Muni 0.2 0.3 0.3 1.9 iShares:Core US Agg Bd AGG 41.55 0.2 1.4 2.6 2.0 4.2
Natural Resources –0.1 35.8 –0.4 1.6 Intermediate Muni 0.5 –1.0 1.8 3.3 Templeton Gl Bond;Adv TGBAX 40.94 –0.4 6.9 2.2 3.2 6.8
Sector –0.3 14.7 8.6 3.0 General & Insured Muni 0.4 –0.5 2.9 3.7 Lord Abbett Sh Dur;F LDLFX 37.03 0.6 4.6 2.2 2.8 N.A.
Real Estate –0.2 11.3 9.4 3.5 High-Yield Muni 0.7 0.7 4.7 3.4 American Funds Bond;A ABNDX 31.91 0.5 2.1 2.4 2.3 3.0
T Rowe Price New Inc PRCIX 30.77 0.3 2.0 2.5 2.2 4.5
Stock and Bond Benchmark Indexes All total return unless noted Fidelity Str Adv Cre Inc FPCIX 28.85 0.5 4.1 2.9 2.9 N.A.
Performance (%) Performance (%) Vanguard Int-Tm Bd;Adm VBILX 28.77 0.4 1.3 3.0 2.6 5.4
Investment objective January 1-yr 5-yr* 10-yr* Investment objective January 1-yr 5-yr* 10-yr* Vanguard Int-Tm Inv;Adm VFIDX 27.55 0.4 3.3 3.4 3.5 5.4
Large-cap stocks Stock indexes Fidelity US B Id;IP FXNAX 27.05 0.2 1.4 2.5 2.1 N.A.
DJIA 0.6 23.9 12.3 7.4 DJ U.S. TSM Growth 3.3 20.0 14.0 8.5 JPMorgan:Core Bond;Sel WOBDX 27.04 0.4 1.2 2.4 2.1 4.7
S&P 500 1.9 20.0 14.1 7.0 DJ U.S. TSM Value 0.7 23.3 13.8 5.9 iShares:iBoxx $IG Corp LQD 27.04 0.2 6.2 3.8 3.9 5.5
Midcap stocks Taxable bond Vanguard GNMA;Adm VFIJX 25.90 –0.1 0.6 2.6 1.9 4.5
Fidelity Total Bond FTBFX 25.71 0.5 5.8 3.3 3.1 5.0
S&P MidCap 400 1.7 30.2 14.2 8.9 Barclays Agg. Bond 0.2 1.5 2.1 4.4
Vanguard Infl-Prot;Adm VAIPX 25.34 1.0 4.0 1.8 0.6 4.3
Small-cap stocks Muncipal bond Fidelity Srs Inv Gd Bd FSIGX 23.43 0.5 4.1 2.9 2.5 N.A.
Russell 2000 0.4 33.5 13.0 6.9 Barclays Muni. Bond 0.7 –0.3 2.9 4.3 Vanguard Ltd-Tm TxEx;Adm VMLUX 21.89 0.6 –0.1 1.1 1.1 2.5
Broad stock market International stocks iShares:TIPS Bd ETF TIP 21.35 0.9 3.9 1.7 0.5 4.3
DJ U.S. Total Stock Market 1.9 21.7 13.9 7.2 MSCI EAFE†† (price return) 2.9 8.9 3.1 –1.8 Vanguard HY Corp;Adm VWEAX 20.98 1.0 13.5 4.9 6.2 6.5
Russell 3000 1.9 21.7 14.0 7.1 Dow Jones World (ex. U.S.) 3.6 16.3 4.8 1.6 Pru Tot Rtn Bond;Z PDBZX 19.40 0.5 4.2 3.7 3.8 5.9
*Annualized †Diversified funds only **Excludes money-market funds ††Europe, Australia, Far East Note: For funds with multiple share classes, only the largest is shown. N.A.: Not applicable; fund is too new or data not available
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
THE WALL STREET JOURNAL. NY Monday, February 6, 2017 | R7

JOURNAL REPORT | INVESTING IN FUNDS & ETFS

Q&A
‘We do it with
He Shuffles the S&P Like Cards science, looking
at the various
A former blackjack player runs an ETF that times the market indicators.’

face cards] and aces. That’s a ter, people tweeting about [founder of Vanguard Group]

HULL ASSET ALLOCATION

BY CHUCK JAFFE
BLAIR HULL BELIEVES that
investors owe it to them-
selves to do some market
timing—if they do it analyti-
cally, not emotionally, and
don’t do too much of it.
Mr. Hull is founder of Hull
Tactical Asset Allocation in
Chicago, which runs the $95
million Hull Tactical US ETF
(HTUS). He made a living at
blackjack, spending the early
1970s as a card counter (the
art of expertly tracking the
cards that have been dealt).
As a trader, Mr. Hull al-
ways wanted to take a simi-
lar approach—basing his
moves more on a system
than a hunch. His fund plays
the S&P 500 index the way
Mr. Hull played blackjack, us-
ing data to time each move.
He spoke with The Wall
Street Journal about why
market timing makes more
sense in the 21st century than
before, and how it should fit
into an investor’s portfolio.
WSJ: You say there are simi-
larities between market timing
and counting cards. How do
they give the investor an edge?
MR. HULL: You have 10 differ-
ent indicators in a deck of
cards: You have 2 through 9,
and you have 10s [including
SAVING FOR COLLEGE | CHANA R. SCHOENBERGER
total of 10 numbers. the S&P 500 and whether was correct when he said
And we have 10 indica- they are bullish or bearish. If that, in the last century, buy-
tors—or something like that, they are bullish for a certain and-hold was the best strat-
it can be a few more or less amount of time, it’s time to egy, but since 2000 we have
depending on the model—for sell the market; if they’re had this explosion of data,
our trading programs. How bearish for a certain amount and along with that explosion
do we count them? We do it of time, it’s a signal to buy. has come predictive analytics Blair Hull hopes for just a slight advantage in the market.
with science, looking at the If the sentiment is sus- and machine-learning tech-
various indicators, which tained long enough, it be- niques that we really didn’t possible to have a systematic egies should be 5% or 10% of
show when there is a time to comes meaningful and we have before. Right now, you approach that gives you bet- the typical investor’s portfo-
be in or out of the market. factor it in with the other in- have very few academic pa- ter returns for less risk. lio. People can do both, they
dicators; there’s nothing pers saying you can’t time can buy-and-hold and time
WSJ: How big of an edge can emotional about that. the market. Right now, they WSJ: Despite that belief, you the market. Not having all of
you create? all say it’s possible, and they don’t believe in putting most your eggs in one basket cer-
MR. HULL: I played blackjack WSJ: Why have you changed have a vast number of ways of your money at risk through tainly makes a lot of sense,
for five years from 1971-75, your mind about buy-and- people are trying to do it. market timing, do you? no matter which approach
getting an advantage of, at hold investing? A lot of those approaches MR. HULL: The strategy fits you believe in.
best, 51-49 [wins to losses]. MR. HULL: I haven’t. It’s still aren’t going to work—they in the alternative-investment
If we can get a slight advan- right for most people and are too susceptible to fear area—essentially, it’s hedge- Mr. Jaffe is a writer in
tage in the market, say 55-45, most of their money. Timing and greed and are run by fund performance at retail Boston. He can be reached at
and we sustain that over a is very hard. Jack Bogle emotions—but I think it’s prices—but alternative strat- reports@wsj.com.
long period, we will have the
odds in our favor and will ac-
tually gain more wealth than
if we just went buy-and-hold.
I think that’s possible.
WSJ: Your system is all
about removing emotion
from the market, yet one in-
dicator you rely on in some
models is Twitter. Isn’t that
injecting emotion?
MR. HULL: We’re not making
emotional decisions about
Twitter, or any of the other
indicators used in any of our
models. We read the Twitter
feed, and we look at the sen-
timent that occurs on Twit-
There will be more than nine
billion people to feed by 2050.
Over the next 35 years, it’s estimated that the world’s population

At What Point Is the will swell by two billion. To keep up, global food production needs to
increase by 70%. CME Group is helping farmers, ranchers, processors

Fafsa Just Pointless? and producers meet this need by giving them products designed
to manage the inherent risks associated with grain and livestock
markets. This is how global agribusiness can sustain a hungry world.
More college-finance answers This is how the world advances.Learn more at cmegroup.com/food.

Readers continue to ask questions about paying for college, and we

again answer their queries with the help of experts.
i i i
I’m told I should fill out financial-aid forms for college, even if I
think I don’t qualify. But realistically, how much income is the
likely cutoff?

There is no firm cutoff, but unless you can pay the full tuition
cost out of pocket for every child you have in college, you ought
to file the federal financial-aid form known as Fafsa, says educa-
tion-savings expert Mark Kantrowitz, publisher of Cappex.com.
Except for the wealthiest families, most college-goers will qual-
ify for some kind of aid,
especially if a family has
more than one child in col-
lege, because of the way
the formulas are calcu-
lated, Mr. Kantrowitz says.
They’re dependent on in-
come, and to a lesser ex-
tent on assets, but also on
the number of college stu-
dents in a household. You
can qualify for more aid either by having a lower expected family
contribution (which gauges how much your family can afford to
pay), or by attending a school with a higher cost of attendance.
That’s why expensive private colleges sometimes give financial aid
to families whose incomes you might think would be too high, he
says. “At some of the most selective colleges with ‘no loans’ fi-
nancial-aid policies, even families with income up to $180,000 can
qualify for institutional grants,” he says.
A family with one child enrolled at an in-state public college,
with household income over $350,000 a year and assets of more
than $1 million (aside from retirement accounts and the family
home), shouldn’t bother filing the Fafsa unless they want to take
out loans, he says. But if you make less than that, have fewer as-
sets, have a student at a more expensive school or have more
than one child in college, you should fill out the form.
i i i
My grandson has graduated from college with student loans. If
he cashes in savings bonds to repay the loans, would that be
considered an education expense for which savings-bond interest
isn’t taxable?

You can’t use this money in a tax-free manner to pay off stu-
dent loans. “The exemption for excluding savings-bond interest is
for qualified education expenses, which the payback of loans
isn't,” says Robert Schmansky, a certified financial planner with
Clear Financial Advisors in Livonia, Mich. What’s more, he says,
the bondholder must have been 24 years old before the bond’s is-
sue date.
One potential bright spot: Student-loan interest can be re-
ported as a tax deduction on your tax return. “This has the po-
tential to lower your tax liability,” says Bob Meighan, a vice presi-
dent at Intuit’s TurboTax unit.
i i i
Is it possible to set up a Upromise 529 account for future grand-
children not yet born? In that way, the account could benefit
from my purchases without me having to put any personal
money in until I have grandchildren.

Upromise, a product offered by Sallie Mae, incorporates both

your contributions and loyalty bonuses based on your purchases
from participating shopping partners to fund either a regular sav-
ings account or a 529 account, Mr. Meighan says. However, you’ll
need a living beneficiary—not a future grandchild—before you can
establish a 529. “While you cannot set up a 529 for anyone not
currently alive, you can set up a 529 for yourself as the benefi-
ciary and make a change of beneficiary at some point in the fu-
ture,” Mr. Schmansky says.
CME Group is a trademark of CME Group Inc. The Globe logo is a trademark of Chicago Mercantile Exchange Inc. All other trademarks are the property of their respective owners.
Copyright © 2017 CME Group. All rights reserved.
MORE ONLINE: Go to WSJ.com/FundsETFs for more questions
and answers this month, as well as links to past columns. Have
a college-finance question in general? Write to reports@wsj.com.
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
R8 | Monday, February 6, 2017 THE WALL STREET JOURNAL.

JOURNAL REPORT | INVESTING IN FUNDS & ETFS

EXCHANGE-TRADED FUNDS

‘Irrational Exuberance’ for Bitcoin ETFs?

Some analysts predict just that, in 2013, the SEC has teased out
the many, often bizarre risks of
assuming that a new fund is a bitcoin ETF. Among the is-
sues: Could robots hijack more SPOTLIGHT
approved by the SEC next month than half of the mining capacity
and bring the whole system VANGUARD VALUE
down? Could the bitcoin uni-
BY ROB CURRAN
already trades over the coun-
ter but currently is only avail-
verse split in two as a rival
cryptocurrency did? Could the
LARGE-CAP
‘VALUE’ ETFS

DAVID PAUL MORRIS/BLOOMBERG NEWS

able to wealthy investors. fund be hacked?

DRAW CASH
IF THE SECURITIES and Ex- (Closely held SolidX, the
change Commission approves Winklevosses ready smaller entrant in the race,
a bitcoin exchange-traded fund After a nearly four-year distinguishes itself from the
next month, it might set off a wait, the SEC faces a deadline other two by promising to in- Despite the hype over so-
speculative rush into bitcoin. of March 11 to decide on a rule sure its bitcoin.) called smart-beta funds,
An easily accessed ETF that change that would allow the Spencer Bogart, an analyst which are index funds that
tracks the value of bitcoin Winklevoss Bitcoin Trust ETF who follows bitcoin for bou- weight holdings by more
could cause money to flood to trade on the Bats Global tique brokerage Needham & “factors” than just market
into the fledgling bitcoin mar- Market exchange. Co., says the Winklevosses capitalization, ETF inves-
ket, analysts say. Indeed, what Two other funds have filed TWO SIDES OF A COIN | Winklevoss twins Cameron and Tyler have addressed security con- tors are flocking to funds
some see as a chance for aver- similar applications that cerns—planning, for example, that emphasize one of the
age investors to participate in would offer ordinary investors obtains SEC approval, it would The Winklevosses declined to keep private keys locked in- most basic factors of all—
one of the great financial in- broader access to bitcoin in- likely mark Mr. Silbert as a to comment, through a repre- side offline computers, which value. According to Fact-
novations of recent years vesting as well: Bitcoin Invest- new style of Wall Street wun- sentative; Mr. Silbert said, in would themselves be locked Set, three of the top four
could set off a trading frenzy ment Trust, run by tech entre- derkind. Similarly, if the Win- an email, that his lawyers had away in secure locations. Mul- smart-beta ETFs for new
in an already wild market. preneur Barry Silbert, and klevoss twins, Tyler and Cam- put him on “total lockdown” tiple individuals in multiple lo- assets in 2016 were value
“My concern is that the SolidX Bitcoin Trust, run by eron, succeed with their ETF, with the press since filing for cations would have to grant funds, said David Nadig,
launch of an ETF could lead to SolidX Partners, are waiting they would see vindication af- his fund’s NYSE listing. access simultaneously to a bad CEO of ETF.com, at a Jan-
irrational exuberance if the for the SEC to rule on their ter they were elbowed out of actor wanting to see the keys, uary conference.
price of bitcoin appreciates applications to be listed on the social-networking phenome- How bitcoin works he says, for a theft to occur— Leading the pack was
dramatically,” says Christo- New York Stock Exchange. non Facebook. The novel nature of bit- an event he considers unlikely. Vanguard Value ETF
pher Burniske, blockchain- There’s no guarantee that Further, the Winklevosses coin—essentially a chain of The small size of the bitcoin (VTV), which attracted
products lead at money man- any of these applications will stand to gain from any price numbers linked to another market, however, could still be $5.4 billion in new assets
ager and research firm ARK succeed. But most bitcoin ob- increase caused by the ETF as number on a public ledger an impediment to orderly fund to close the year with
Investment Management. ARK servers say that a bitcoin ETF they are among the largest in- stored in the internet cloud— trading. Across all U.S. ex- $27.2 billion. Like other
invests in Bitcoin Investment is an inevitability eventually. dividual holders of bitcoin— intrigues investors but has changes tracked by data pro- value funds, it focuses on
Trust, an ETF-like fund that If Bitcoin Investment Trust alongside Mr. Silbert’s fund. given the SEC pause. vider CoinDesk, the average stocks that are underval-
Once a bitcoin is created in daily volume of bitcoin traded ued relative to the market.
a computer “mining” process, is about $30 million. Much With an expense ratio
the community recognizes more trading occurs in China, of 0.08%, VTV is a share
ETFs vs. ETNs: There Are Different Risks ownership of the invisible ab-
straction through two num-
but those exchanges wouldn’t
be used by a U.S. fund, Mr. Bog-
class of Vanguard’s value-
index mutual fund, ac-
When it comes to investment products, some- the assets they track—an S&P 500 ETF, for bers produced in that process. art says, because they function counting for more than
times a slight difference in a name means a instance, owns stocks that are included in One is the public key, which is in an opaque manner. half of the overall $50.8
lot of difference in risk. the index. ETNs don’t own a portfolio of as- like the owner’s PayPal ad- If the Winklevoss fund isn’t billion in assets. The fund
A case in point: The difference between sets. They are simply debt issued by banks dress. Anyone can send bitcoin approved, the closest thing to tracks the CRSP U.S.
an exchange-traded fund and an exchange- that promise a return to the investor linked to this address. The other is an ETF will be Bitcoin Invest- Large Cap Value Index,
traded note. to the performance of the assets they track. the private key, a number that ment Trust, which uses a pri- which includes 327 stocks
“ETFs and ETNs are as different as a dog That difference is important in a worst- is mathematically linked to the vate-trust structure and is and has an aggregate
and a cat,” says Steve Hanke, professor of case scenario. The assets of an ETF are held public key but is revealed only managed by Grayscale Invest- price-to-book ratio of 2.2.
applied economics at Johns Hopkins Univer- in trust for the fund’s investors. With an ETN, to the owner of the bitcoin. ments LLC, a unit of Digital Traditionally, value
sity. “And if you get a bad ETN, then it could there is no such protection. If the issuer goes Bitcoin has proved useful as Currency Group Inc. Only ac- stocks tend to be from
be a dog.” bust and can’t pay off debt, investors could a low-cost way of moving credited investors can buy the slower growing, more ma-
Confusion could leave some investors lose it all. In any case, the price of the notes money around the world. But shares on the primary private ture industries as opposed
more exposed to risk than they think they are can fluctuate with the issuer’s credit rating. its price is volatile. Last year market, where they are priced to growth stocks, currently
if they own ETNs. And that applies to more ETN issuers make these risks clear. alone, bitcoin closed in a daily in line with bitcoin. at a 4.7 price-to-book ratio
investors—the ETN market is now $22 bil- For those who decide ETNs are worth the trading range between $358 and more heavily concen-
lion, up from $4.7 billion at the end of 2007. risk: “You want to make sure that the ETN is- and $993, according to data Mr. Curran, a writer in trated in technology and
Here’s what investors need to know: Both suer is solid, just like you would with a bond,” provider CoinDesk. Denton, Texas, is a regular consumer services. Still,
ETFs and ETNs track the price of things like says Jeff Carbone, managing partner at Cor- contributor to Dow Jones the largest stockholding in
baskets of stocks, bonds or commodities, but nerstone Financial Partners in Charlotte, N.C. SEC’s task Newswires and The Wall the VTV ETF is Microsoft.
they do so differently. ETFs own a portion of —Simon Constable Since the Winklevosses ap- Street Journal. Email him at —Ari I. Weinberg
plied for approval of their ETF rob.curran@dowjones.com.

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