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DJIA 21797.79 À 0.06%
What’s
News
Business & Finance
hina is starting to un-
C wind some of its mea-
sures aimed at bolstering
the yuan after the cur-
rency’s recent surge began
taking a toll on exporters. A1
 Apple’s new iPhone is
expected to cost about
$1,000 as smartphone
makers buck the trend to-
ward lower prices. B1
 Apple is gearing up for
a big push to popularize
augmented reality. B4
 Bridgewater is poised
to amass a huge invest-
ment fund in China to buy
and sell assets there. B1
 Equifax is facing criti-
cism from consumers over
its response to a hack that
may have exposed the data
of most American adults. B1
 Warner Bros.’ “It” broke
several box office records
as the horror film opened
to a massive $117.2 million
in the U.S. and Canada. B2
 SES intends to announce
a deal for a new fleet of
smaller, easily reprogram-
mable Boeing satellites. B3
 Reinsurers will bear the
brunt of Hurricane Irma’s
damage to potentially mil-
lions of Florida homes. B5
 U.S. authorities are
probing whether Uber used
software to interfere ille-
gally with a competitor. B3
 Facebook is willing to
spend as much as $1 bil-
lion through 2018 on origi-
nal video content. B4
 SoFi is the latest Silicon
Valley startup to face criti-
cism over its culture and
treatment of women. B5
World-Wide
 Hurricane Irma delivered
destructive winds, torrential
rains, and life-threatening
storm surges to southern
Florida after making landfall
in the Keys early Sunday. A1
 The hurricane left
widespread human and
economic havoc in a string
of Caribbean islands. A4
 Mexican forces intensi-
fied recovery efforts after
one of the strongest quakes
in decades along the nation’s
southern Pacific Coast. A4
 Trump is set to welcome
Malaysia’s leader to the
White House, underscoring
the administration’s efforts
to assemble Asian allies. A3
 Pope Francis told 6,000
victims of Colombia’s long
civil conflict to reject re-
venge and forgive those
who harmed them. A4
 Saudi Arabia sought to
reassure citizens and poten-
tial investors of its commit-
ment to revamp the nation’s
oil-dependent economy. A3
 U.S. House Republicans
are backing several provi-
sions in a package of spend-
ing bills that could reshape
campaign finance rules. A7
 NASA’s Cassini probe is
exploring Saturn’s rings be-
fore a final plunge into the
planet’s atmosphere Sept. 15
after 20 years in space. A7
 Foreign students enrolled
at U.S. high schools more
than doubled in number from
2004 to 2016 to 81,981. A7
 Sloane Stephens won her
first tennis Grand Slam title,
beating Madison Keys in the
women’s U.S. Open final. A3
CONTENTS
Business News..... B3
Crossword.............. A12
Europe File............... A2
Heard on Street.. B10
Journal Report....... B6
Keywords................... B1
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Company. All Rights Reserved
NASDAQ 6360.19 g 0.59%
Life & Arts.... A8-9,12
Markets................... B10
Opinion.............. A10-11
Technology............... B4
U.S. News.................. A7
Weather................... A12
World News....... A2-4
MONDAY, SEPTEMBER 11, 2017 ~ VOL. XXXV NO. 156 WSJ.com EUROPE EDITION
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Hurricane Irma Strikes Florida
Storm hits state’s
southern region after
making landfall with
top winds of 130 mph
BY ARIAN CAMPO-FLORES
AND JOSEPH DE AVILA
MIAMI—Hurricane Irma—
one of the most powerful
storms to cross the Atlantic—
delivered destructive winds,
torrential rain, and a life-
threatening storm surge to
southern Florida as it moved
toward the state’s western
coast after making landfall in
the Keys.
The U.S. National Hurri-
cane Center said the eye of
the Category 4 hurricane
made landfall on Cudjoe Key
at 9:10 a.m. ET on Sunday,
with top sustained winds of
130 miles an hour. By Sunday
afternoon, Irma made landfall
again on Marco Island as a
Category 3 storm that was
CARLOS BARRIA/REUTERS
more than 400 miles wide and
moving 12 mph.
“It’s going to be horrible,”
said Florida Gov. Rick Scott on
NBC’s “Today Show.” He
warned that some parts of the
state will see storm surges up Heavy wind along Ocean Drive in South Beach, above. Officials have warned that Irma could be worse than 1992’s Hurricane Andrew.
to 15 feet above ground level.
“What is really scary is the through the state lingering plicate rescue efforts because dra Mattia, 48 years old, who Department of Corrections em-
storm surge,” Mr. Scott said. along the western coast. On many of the supplies are kept lives in Naples outside of the ployee were killed in a traffic
“It flushes in and flushes out. Sunday, Gov. Scott warned in the north. mandatory evacuation zone accident, the cause of which is
That’s going to be difficult to residents of the Panhandle to As Irma got closer to Flor- and about 15 miles from the under investigation.
survive.” be on alert. He said hurricane ida’s mainland, the storm Gulf of Mexico. “It sounds like Please see IRMA page A4
After hitting the Florida force winds would hit Talla- lashed at the homes of resi- trucks smashing one another.”
Keys, Hurricane Irma will hassee, the state capital. But dents who stayed behind. “All The governor said a Hardee  Reinsurers will largely be
take about 36 hours to get the protracted path will com- you hear is bangs,” said Zan- County deputy and a Florida paying for Irma damage...... B5
Beijing Strives to Contain Resurgent Yuan
BY LINGLING WEI and investors to buy dollars quirement was enacted in Jan-
while selling the yuan, and uary 2016. China's Global Buying Spree Hits Hurdles
BEIJING—China is starting thereby help rein in the Chi- Meanwhile, officials famil- After a record 2016 for Chinese deals in the U.S., recent difficulties
to unwind some of the ex- nese currency’s steep ascent in iar with the policy changes are leading companies to seek out more deals in other markets. B9
traordinary measures aimed at recent weeks, traders and ana- said authorities are expected
bolstering its currency, after lysts said. The step will “fend to phase out by the end of Chinese companies' announced Chinese announced outbound
the yuan’s recent surge in off macro-financial risks,” said month draconian measures acquisitions and purchases of mergers and acquisitions
value began taking a toll on the central bank notice, which put in place late last year to stakes in U.S. firms by market, 2017
Chinese exporters, adding to was reviewed by The Wall curb China’s outbound invest- $80 billion Singapore $23.3 billion
economic headwinds. Street Journal. ment and stabilize the yuan. Through Full U.K. 19.8
Starting Monday, the Peo- In addition, according to a Instead, those measures— 60 Sept. 6 year Hong Kong 11.5
ple’s Bank of China will scrap separate notice by the PBOC, which many companies com-
a two-year-old rule that made the monetary authority late plain have resulted in a near- U.S. 9.9
it more expensive for traders Friday also removed the re- blanket ban on their foreign- 40 Brazil 8.2
to bet the yuan will fall in serve requirement on foreign investment endeavors—are Australia 5.0
value, according to a central banks’ yuan deposits, which being replaced by formal 20 Germany 2.7
bank notice sent to commer- will release more yuan funds guidelines issued by the State
United Arab Emirates 2.7
cial banks late Friday. into what’s known as the off- Council in August.
0 Indonesia 2.5
The move, which ends a de- shore yuan market in Hong Those new guidelines en-
posit requirement on trades Kong, potentially making it courage foreign deals in some 2012 ’13 ’14 ’15 ’16 ’17 Switzerland 2.2
called currency forwards, will easier for foreign investors to areas such as technology, Note: 2017 data through Sept. 6
make it cheaper for companies bet against the yuan. That re- Please see YUAN page A2 Source: Dealogic THE WALL STREET JOURNAL.
INSIDE European Union Encounters
Defiance on Its Eastern Edge
BLOOMBERG NEWS
KCNA/REUTERS
Hungarian Prime Minister “Our fiercest opponents are traditional Poles. Commenta-
Viktor Orban barely mentions not in Hungarian opposition tors on state-run TV compare
his political rivals as he cam- parties,” Mr. Orban said in a the EU to the Soviet Union.
paigns for a fourth term. In- speech last week. “They are Tensions between Western
abroad…Berlin. Brussels.” European capitals on one side
THE LIMITS OF HOME WI-FI’S By Drew Hinshaw in
Warsaw and Valentina
In neighboring Poland, gov-
ernment rhetoric is even
and Warsaw and Budapest on
the other have hit their high-
ECONOMIC EXOTIC Pop in Brussels harsher. Politicians have one- est levels since their countries
SANCTIONS FUTURE stead, he’s targeting the Euro-
upped each other in attacking
France and Germany, arguing
Please see EU page A2
pean Union and its biggest they are forcing multicultural,  Simon Nixon: Macron set to
THE OUTLOOK, A7 KEYWORDS, B1 members. liberal democracy on more defy doubters again.............. A2
Saudis Try
HOSPITALS KEEP To Calm
‘GOLD SEAL’ Economic
Concerns
DESPITE WOES OVERHAUL: Saudi
Arabia stressed its
commitment to
revamp its oil-
Private accrediting group certifies hundreds of dependent economy
despite a series of
institutions despite documented problems setbacks. Prince
Mohammed bin
BY STEPHANIE ARMOUR “The failure to provide Salman, left. A3
BANDAR AL-JALOUD/AGENCE FRANCE-PRESSE/GETTY IMAGES
quality medical care resulted
Patient-safety problems in the death of all three pa-
were so serious at Cooley tients,” said the report from
Dickinson Hospital in North- the Centers for Medicare and
ampton, Mass., that the fed-
eral Medicare agency threat-
Medicaid Services, or CMS.
Yet the Joint Commission,
Fear No Weevil: Town Embraces Its Peculiar Monument
ened to cut it off. Most a nonprofit organization that i i i
patients never knew. provides hospital accredita-
Two babies died within six tion, made no change in Coo- Enterprise, Ala., honors pest that triggered serendipitous success
weeks in late 2013 and early ley Dickinson’s status, allow-
2014. That was just a couple ing it to continue promoting BY BETH DECARBO the Deep South under fire, the weevil, once a hated villain
of months after a pregnant itself as fully accredited de- Boll Weevil Monument stands that laid waste to cotton crops.
woman died when the hospi- spite being out of compliance ENTERPRISE, Ala.—Tower- alone. “There’s no other place At All About Art, co-owned by
tal didn’t ensure she was with safety requirements to ing 13 feet over Main Street, a that has a monument to a Ms. Goodson and her mother, a
treated for high blood pres- participate in Medicare. robed goddess holds aloft a bug,” says local merchant Jes- clay tray featuring a boll wee-
sure from a condition called The Joint Commission is menacing six-legged creature, sica Goodson. vil is a best seller.
pre-eclampsia, according to a the accrediting organization a true monument to weevil. For almost a century, the Nearby, Shopaholic offers
federal inspection report. Please see SAFETY page A6 With other landmarks in city has embraced the boll Please see WEEVIL page A6
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, September 11, 2017
France’s Macron Set to Defy Doubters Again
EUROPE FILE
By Simon Nixon
PARIS—When Emmanuel
Macron ran for president of
France, his critics dismissed
him as an empty suit who
didn’t stand a chance.
When he won, they said
he would never secure a par-
liamentary majority so he
would be a lame duck. When
he secured a massive major-
ity, they said
he would
never be able
to deliver his
program be-
cause he
would be de-
feated on the street—just as
all his recent predecessors
had been.
This week it seems likely
the doubters will be proved
wrong again: One of the
country’s most powerful
trade unions is planning a
day of protests on Wednes-
day against Mr. Macron’s
planned overhaul of labor
market rules but no other
major trade union is backing
EU
Continued from Page One
stepped out from Soviet domi-
nation, a sign of the national-
ist challenge to the bloc even
after pro-EU candidates de-
feated populists in France and
the Netherlands this summer.
The fight is part of a larger
argument about what the EU’s
balance of power should look
like after the U.K. leaves. Lon-
don has long advocated for
smaller, eastern countries, who
now feel they will be domi-
nated by France and Germany.
EU membership is broadly
popular in both Poland and
Hungary. EU funding helped
Poland steer clear of a reces-
sion during the eurozone crisis
and Hungary’s main source of
foreign direct investment is
the EU budget. Their neighbors
like Czech Republic, Slovakia,
and Romania are growing
closer to Europe’s west on sev-
eral key issues. Even Mr. Orban
talks fondly of his country’s
membership in the community.
But relations have soured.
Even with Brexit negotiations
YUAN
Continued from Page One
while discouraging them in
property, sports, entertain-
ment and other sectors. “As
situations in the foreign-ex-
change market improve, it
makes sense to withdraw
some of those temporary mea-
sures,” said one of the officials
involved in policy-making.
In dismantling certain con-
trols, Beijing is shifting
course in an unprecedented
effort started two years ago
to keep the yuan from weak-
ening too quickly and to
maintain confidence in the
world’s second largest econ-
omy. To do so, Beijing sub-
jected outbound investments
to heavy scrutiny, made bet-
ting on the yuan’s decline
more expensive for traders,
and burned through $1 trillion
in foreign-exchange reserves
in the past several years.
ECONOMIC
CALENDAR
TUESDAY: Analysts polled by
The Wall Street Journal expect
U.K. consumer-price inflation to
come in at 2.8% in August.
WEDNESDAY: The first hard
data on eurozone economic out-
put in the third quarter comes in
the form of industrial produc-
tion figures, which are expected
to show modest increases.
THURSDAY: The U.S. Labor
Department releases consumer-
price index figures for August.
Inflation has stayed stubbornly
weak in recent months.
FRIDAY: Economists will get
the latest pulse on U.S. consumer
spending when the Commerce
Department releases August re-
tail sales. Economists surveyed
by the Journal see a slowdown,
with sales forecast to rise 0.1%.
the strikes. Government offi-
cials aren’t complacent—
they recall how similarly
bold overhauls were de-
feated on the street in 1995
despite union acquiescence—
but few observers expect Mr.
Macron to suffer the same
fate so soon after securing a
clear electoral mandate.
E
ven if Mr. Macron
manages nothing else,
this labor market over-
haul would be a substantial
achievement, delivering
changes that all govern-
ments of the past 20 years
have recognized are needed
but which none has been
able to deliver.
It addresses the two main
criticisms of France’s byzan-
tine labor code highlighted
by businesses and investors.
First, it removes much of the
uncertainty that surrounds
laying off workers by clarify-
ing what constitutes a legiti-
mate economic circumstance,
streamlining legal proce-
dures and capping awards
for unfair dismissal. Second,
it extends to France’s small-
est companies—crucially in-
cluding those without union
representation—the ability
to set their own pay and
working conditions at firm
level in consultation with
their employees, whose own
representation is to be
Hungarian Prime Minister Viktor Orban at the European Parliament in Brussels in April.
under way, “Britain is closer to
us than the Poles,” said one
senior EU official who de-
scribed the dispute with Po-
land, and to a lesser extent
with Hungary, as the bloc’s
biggest challenge this year.
Countries on the bloc’s
eastern edge have resisted
opening their borders to mi-
grants, a fight that flared
Its strategies gained trac-
tion this year, helped by an
unexpected softening of the
dollar, causing the yuan to
soar and making the currency
again a policy headache for
the government. So far this
year, the yuan has more than
recouped all of its 6.6% de-
cline against the dollar last
year, and last week alone, it
gained more than 1.8%—its
biggest weekly advance in al-
most 12 years.
The surge is starting to
drag on China’s export
growth, making Chinese goods
more expensive and threaten-
ing to erode profits for many
manufacturers who sell to for-
eign markets. That further
weighs on the economy that,
while growing steadily re-
cently, is forecast to resume a
yearslong slowdown and is
struggling with anemic pri-
vate investment, heavy corpo-
rate debt and frothy real-es-
tate prices.
“It’s really hard to under-
Investors and analysts
have discussed whether
Volkswagen AG should spin
off auto maker Porsche AG
and other units. A Business
News article in the Friday-
Sunday edition about VW in-
correctly said that Porsche
Automobil Holding SE, which
is the investment fund that
holds the Porsche family’s
Volkswagen shares, was one
of the VW units subject to
spinoff speculation.
Krishna Memani, chief in-
vestment officer of Oppen-
heimerFunds, recommends
this investment strategy: Ei-
ther look outside the U.S., or
stick to larger growth stocks
Readers can alert The Wall Street Journal to any errors in news articles by emailing wsjcontact@wsj.com.
WORLD NEWS
streamlined from three com-
mittees to just one. The ben-
efit to firms will come not
only from increased flexibil-
ity but also by improving the
quality of dialogue with
workers, says one senior
French business leader.
But Mr. Macron knows
that changes to the labor
code alone aren’t enough to
tackle the two big challenges
facing the French economy:
persistently high unemploy-
ment, currently at 9.5%, and a
worrying slide in productivity
growth that has reduced the
economy’s long-term poten-
tial growth rate to as low as
1% on some estimates from
closer to 2% two decades ago.
The government hopes
that the labor market
changes should over time
lead to increased investment
and job creation. But senior
government officials know
that to deliver the decisive
change in economic fortunes
necessary to put government
debt as a proportion of gross
domestic product on a down-
ward trajectory from its cur-
rent level of 96%, other bold
overhauls are also needed.
Those include rebalancing
France’s tax system away
from high taxes on business
and investment; overhauling
the country’s social security
and training system to boost
incentives and skills for
anew last week as the EU’s
highest court ruled they must
resettle refugees. Hungary, Po-
land and the Czech Republic
have refused to comply.
Poland has shrugged off EU
criticism that its government
is limiting the independence of
the courts and ignored an in-
junction from the EU high
court to stop logging in an an-
stand why the renminbi is
soaring all of sudden,” said
Pan Haisong, who runs an in-
ternational shipping company
in the eastern metropolis of
Shanghai. Renminbi, or the
people’s currency, is another
name for the yuan.
Mr. Pan, chairman of the
Shanghai Taijing International
Currency Becomes
Tougher to Control
The latest yuan policy twist
underscores how hard it is for
Beijing to control the currency
to its exact liking.
Deepening economic ties be-
tween China and the rest of the
world have led to greater cross-
border flows of funds, inevitably
subjecting the yuan to the whip
of market forces, despite Bei-
jing’s penchant for keeping a
strong hold on the economy. At
the same time, companies and
CORRECTIONS  AMPLIFICATIONS
in the U.S. rather than shares
dependent on faster economic
growth. The Streetwise col-
umn about inflation and in-
vesting in the Friday-Sunday
edition incorrectly stated his
view as either look outside the
U.S., or in the U.S., and stick to
larger growth stocks rather
than shares dependent on
faster economic growth.
The Honda HA-420 jet
costs $4.9 million. An Off Duty
article in the Friday-Sunday
edition about personal jets in-
correctly gave the price as
$4.5 million. The article also
incorrectly referred to the
Stratos 714 jet as the Stratos
71 in one instance.
THE WALL STREET JOURNAL.
sion changes too will hinge
on persuading powerful
vested interests to forego
generous future entitlements.
Even if Mr. Macron sur-
vives this week’s showdown
on the streets, he knows he
may face tougher resistance
in the future: after all, even
YORGOS KARAHALIS/BLOOMBERG NEWS
trade unions must pick their
battles. Mr. Macron will in-
stead hope to overcome fu-
ture resistance by proceed-
ing in the same way as he
has with his labor overhauls:
by being transparent about
his plans from the start, un-
like his predecessors who
only discovered a taste for
French president’s labor overhaul faces a union protest this week. reform after being elected;
by proposing comprehensive
work; and revising a pension duce its budget deficit below one-off changes, rather than
system that left unchanged 3% of GDP. Attempts to plug piecemeal revisions that can
poses a long-term risk to fis- holes in this year’s budget be undermined by endless
cal stability. with cuts to military spending compromises; and by con-
and welfare prompted a polit- sulting intensively with
T
hese are the real tests ical backlash over the sum- trade unions and other
of Mr. Macron’s presi- mer and a slide in Mr. Ma- stakeholders at every stage
dency and where the cron’s approval ratings. in an attempt to build as
greatest political challenges Similarly, plans to over- broad a coalition of support.
may lie. The government has haul the welfare system to in- Above all, he will seek to
already pledged to deliver €12 troduce a Scandinavian-style take advantage of the unique
billion ($14.4 billion) of busi- “flexicurity” model in which political circumstances in
ness and investment tax cuts unemployment benefits are which he finds himself, with
this year out of a total of €20 linked to accepting training a substantial majority in par-
billion planned over Mr. Ma- will bring the government liament, all opposition politi-
cron’s five-year term. But it into conflict with some of the cal forces in disarray and fac-
has yet to explain how these most powerful vested inter- ing no electoral test for three
cuts will be squared with the ests in the country, not least years. Perhaps Mr. Macron
government’s commitment to the trade unions who cur- will fall short, as his doubt-
stick within eurozone budget rently tightly control access ers keep insisting. But it is
rules which require it to re- to vocational training. Pen- too soon to write him off yet.
overhauls and restrictions on
free movement that have upset
the newer, ex-communist mem-
bers, whose citizens are a
pletely it would need unanim-
ity, and Hungary and Poland
have each promised to block
any attempt to sanction the
source of inexpensive labor. other, but the EU official said
Germany’s Chancellor Angela that just starting the process
Merkel has expressed openness would be “a big nuclear
to some of his ideas. weapon” never before triggered
“Right now, the older mem- against a member state. It is
ber states are dominating,” also possible Hungary wouldn’t
Polish Prime Minister Beata veto the more drastic vote.
Szydlo said last week. “They A critical factor will be Ms.
dictate the terms to new mem- Merkel. Germany has hesitated
ber states.” to criticize Poland, which suf-
Officials in Brussels worry fered more than most countries
that if countries get away with at Nazi hands in World War II.
ignoring bloc-wide decisions Ms. Merkel has hinted that her
ERIC VIDAL/REUTERS
and EU court rulings, the en- patience is eroding. She warned
tire system will start unravel- Poland last month that “we will
ing. Until now, governments of not keep our mouth shut” on
other EU members have hesi- the issues of rule of law for the
tated to punish their peers, sake of good relations.
but that may be changing. While few analysts foresee
Later this month, ministers a Brexit-style departure, some
cient forest. Hungary has overseeing EU affairs from envision a two-speed EU, in
brushed aside criticisms from member states will meet to which Poland, Hungary or oth-
the EU Parliament that it lim- discuss Poland. The European ers ignore rules they don’t like
its journalistic independence. Commission, the EU executive, and become more isolated.
Their disagreements under- could ask them to start pro- “The important question is
score how the U.K.’s impending ceedings that culminate with are we in a community of Euro-
departure has upended Eu- sanctions, including suspend- pean free nations, or part of an
rope’s balance of power. French ing Poland’s voting rights. It empire with its headquarters in
President Emmanuel Macron, has the 22 countries it needs Brussels,” Mr. Orban said in a
in the wake of the British refer- to do that, the EU official said. radio interview Friday. “The
endum, has proposed economic To cut voting rights com- real battle is only beginning.”
Freight Co., said many of his
exporter clients are feeling the
pinch from the rising yuan.
“They have reduced their or-
growth forecast from econo-
mists polled by The Wall
Street Journal. While Chinese
manufacturers are expected to
sued late Friday involves a
rule enacted in October 2015
that required banks to set
aside reserves with the central
ders for my services,” he said. continue to benefit from a re- bank when dealing in a finan-
Customs data released Fri- covery in global demand, cial contract known as cur-
day show that China’s exports economists said any continued rency forwards. Under the
increased 5.5% in August from appreciation of the yuan rule, banks that were buying
a year earlier, lower than would crimp a further expan- dollars while selling yuan un-
July’s 7.2% rise and the 6% sion of Chinese exports. der a forward contract were
Beijing isn’t looking for a required to deposit $20 with
wholesale weakening of the the central bank for every
investors look at Beijing’s policy yuan and still retains formida- $100 traded. The reserve ef-
directions for clues as to which ble control of the currency— fectively raised the cost of wa-
way to play the yuan—and then from limits on the ability of gering against the yuan.
sometimes pour in, driving the Chinese companies and indi- As of Monday, no deposit
currency in one direction. viduals to take money out to a will be required for such a
Even before Friday’s move heavy hand in setting the transaction, in effect removing
ending a deposit requirement yuan’s official rate against the a penalty on a tool that many
on trades, the yuan’s recent dollar. Known as the “fixing,” traders and investors used two
surge and its impact on the the daily official rate indicates years ago to bet on the yuan’s
economy had begun to turn which way Beijing wants the decline. “Now the PBOC is ba-
some investors cautious. “We’re yuan to go. sically inviting short sellers in
neutral on the yuan right now,” On Friday, for instance, the to help stem the yuan’s rise,”
said Luke Spajic, head of port- central bank set the fixing said a currency trader in a
folio management for Asia weaker than the market had Shanghai-based bank.
emerging markets at Pacific In- expected, hinting at a desire to
vestment Management Co. control the yuan’s pace of ap- THE WALL STREET JOURNAL.
—Lingling Wei preciation. Europe Edition ISSN 0921-99
The PBOC deposit notice is- The News Building, 1 London Bridge Street,
London, SE1 9GF
Thorold Barker, Editor, Europe
Grainne McCarthy, Senior News Editor, Europe
Cicely K. Dyson, News Editor, Europe
Darren Everson, International Editions Editor
Joseph C. Sternberg, Editorial Page Editor
United Airlines considered News article about Russia’s
Anna Foot, Advertising Sales
ordering Bombardier C Series new ambassador to the U.S. Jacky Lo, Circulation Sales
planes before opting for incorrectly referred to ten- Andrew Robinson, Communications
planes from Boeing. The Mid- sions between Moscow and Jonathan Wright,
dle Seat column Thursday Russia. Global Managing Director & Publisher
about roomier aircraft incor- Advertising through Dow Jones Advertising
rectly said United canceled an The amount of new one- Sales: Hong Kong: 852-2831 2504; Singapore:
order for C Series planes. to-four family mortgage debt 65-6415 4300; Tokyo: 81-3 6269-2701;
Frankfurt: 49 69 29725390; London: 44 207
funneled through Fannie 842 9600; Paris: 33 1 40 17 17 01;
Kurdish Peshmerga fight- Mae, Freddie Mac and other New York: 1-212-659-2176
ers seized the northern Iraqi taxpayer-backed entities Printers: France: POP La Courneuve; Germany:
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city of Kirkuk in October roughly doubled after the fi- Qualiprinters s.r.l.; United Kingdom: Newsprinters
(Broxbourne) Limited, Great Cambridge Road,
2014. A World News article nancial crisis, to around 70%. Waltham Cross, EN8 8DY
on Aug. 31 about a planned A Page One article Aug. 15 Registered as a newspaper at the Post Office.
referendum on Kurdistan’s in- about sales of securities by Trademarks appearing herein are used under
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Editeur responsable: Thorold Barker M-17936-
the date as June 2014. make clear that the sentence 2003. Registered address: Avenue de Cortenbergh
referred to new mortgage 60/4F, 1040 Brussels, Belgium
Tensions have been rising debt for one-to-four-family NEED ASSISTANCE WITH
between Moscow and Wash- housing units rather than all YOUR SUBSCRIPTION?
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THE WALL STREET JOURNAL.
Saudis Recommit to Widespread Changes
Riyadh seeks to calm
concerns in the wake
of setbacks to the
planned overhauls
BY MARGHERITA STANCATI
AND NICOLAS PARASIE
Saudi Arabia sought to reas-
sure citizens and potential in-
vestors of its commitment to
revamp the country’s oil-depen-
dent economy after a series of
setbacks that slowed the effort.
The government has back-
tracked on some politically sen-
sitive moves in recent months,
postponing an increase in fuel
prices and reinstating some
government employee perks. It
is now redrafting part of the
plan to allow more time for im-
plementation.
“It is important to adjust
and adapt to unexpected situa-
tions,” Saudi Arabia’s Ministry
of Culture and Information
said on Saturday. “Such flexi-
bility should not undermine
the stability and predictability
needed to allow the private
sector to plan its new invest-
ments and expansions.”
Asia Ties in Mind, Trump Rohingya Refugees Seek Relief in Bangladesh
To Meet Malaysian Leader
President Donald Trump is
expected this week to welcome
Malaysia’s leader to the White
House, a visit that underscores
how hard the administration is
working to assemble Asian al-
lies as Mr. Trump seeks to
pressure North Korea over its
nuclear-weapons program.
By Alan Cullison and
Aruna Viswanatha in
Washington, D.C. and
Ben Otto in Jakarta
The visit Tuesday by Malay-
sian Prime Minister Najib
Razak comes as a U.S. Justice
Department investigation into
the looting of a Malaysian eco-
nomic-development fund
threatens to ensnare much of
the country’s ruling elite, in-
cluding Mr. Najib.
The Justice Department has
alleged that billions of dollars
were misappropriated from
the fund, 1Malaysia Develop-
ment Bhd., or 1MDB. Justice
Department lawyers are suing
to seize more than $1.6 billion
in allegedly stolen assets.
Mr. Najib, who set up the
fund in 2009 aiming to boost
the Malaysian economy, hasn’t
been named in the lawsuits,
and he denies any wrongdoing
in the affair. But the suit does
allege that a “Malaysian Offi-
cial 1” received hundreds of
millions of dollars in siphoned
funds. The Wall Street Journal
UKRAINE
Stateless Ex-Governor
Saakashvili Returns
Mikheil Saakashvili and a
small crowd of supporters
pushed their way through a line
of guards on the Ukrainian bor-
der, making good on the politi-
cian’s vow to return to the land
that stripped him of citizenship.
The return of Mr. Saakashvili,
who became governor of
Ukraine’s Odessa region after be-
ing Georgian president from
MIKE SEGAR/REUTERS
2004-13, poses a challenge to
Ukrainian Petro Poroshenko, who
once was Mr. Saakashvili’s pa-
tron but then revoked his citi-
zenship in July.
Mr. Saakashvili was appointed
to the Odessa post in 2015 on
the strength of his record of
fighting corruption in Georgia.
However he resigned after only
18 months, complaining official
corruption was so entrenched he
couldn’t work.
Georgia, where he faces accu-
sations of abuse of power and
misappropriation of property, has
sent an extradition request for
him to Ukraine. It isn’t clear if
Ukraine intends to honor it.
—Associated Press
CHINA
Inflation Rebounds
To Seven-Month High
Consumer inflation rose to a
seven-month high last month as
prolonged weakness in food
Saudi Arabia last year
rushed to put in place a plan
to end the kingdom’s depen-
dence on oil and overhaul a
sluggish bureaucracy on a
strict timeline. The changes
underscore the challenge the
Saudi leadership is facing amid
worries about a public back-
lash and the limited capacity
of the kingdom’s bureaucracy.
The Saudi economic plan,
called Saudi Vision 2030, was
unveiled in April 2016 by
Prince Mohammed bin Salman,
32, who in June leapfrogged his
older cousin Mohammed bin
Nayef to become crown prince.
Since then, the government
has pared spending and nar-
rowed its budget deficit. The
more-austere stance has
weighed on the economy,
damping consumer confidence,
hurting the private sector and
causing the unemployment
rate to rise. It reached 12.7%
this year.
As the kingdom struggles to
quickly create new sources of
wealth, it continues to rely
heavily on oil sales. The Inter-
national Monetary Fund ex-
pects economic growth to be
close to zero this year.
has reported that official is
Mr. Najib, citing a person with
direct knowledge of the inves-
tigation.
The White House declined
interview requests last week
on the visit.
People familiar with the
case also said the meeting
could complicate any future
criminal case stemming from
the allegations, if future de-
fendants in subsequent cases
could use any photos of Mr.
Najib meeting with Mr. Trump
or other senior White House
officials in their defense be-
fore a jury.
A White House visit
comes as U.S. probes
looting of Malaysian
development fund.
Last month, the White
House said Mr. Trump was
looking forward to discussing
with Mr. Najib ways to
strengthen ties, calling Malay-
sia “one of America’s closest
partners in Southeast Asia.”
A Justice Department
spokesman declined to com-
ment, but people familiar with
the case said the Department
wasn’t involved with planning
Mr. Najib’s visit and stressed
WORLD WATCH
CHAMPION: Sloane Stephens won her first Grand Slam title,
beating Madison Keys in the first all-American women’s final at the
U.S. Open since 2002, when Serena Williams beat Venus Williams.
prices subsided and commodities
prices rebounded.
August’s stronger, yet still
moderate, inflation is a good
sign for the economy, econo-
mists said, as improved demand
for consumer and industrial
products points to better profits
ahead for industrial firms.
The consumer-price index
rose 1.8% in August from a year
earlier, compared with a 1.4%
gain in July, the National Bureau
of Statistics said. The inflation
reading outpaced a 1.6% gain
forecast by economists polled by
The Wall Street Journal and is
well below policy makers’ infla-
tion ceiling of about 3%.
Food prices, which have been
Monday, September 11, 2017 | A3
WORLD NEWS
kis, a former economic adviser state assets in areas ranging
A Slowing Economy to the Saudi government and from transport to energy. It
Saudi Arabia's dwindling foreign reserves and weak growth the Riyadh-based director of also relaxed rules on foreign
prospects reflect challenges in transforming its economy. research for the Gulf Research investment, allowing 100% for-
Center. “That is changing be- eign ownership in the health
Foreign reserves GDP cause the reality on the ground care and education sectors, for
3 trillion riyals 6% paints a different picture.” example.
One important part of the At the same time, a corner-
economic plan is the National stone of the Vision 2030
Transformation Program, or plan—the sale of up to 5% of
2 4 NTP, which sets efficiency the kingdom’s state-owned oil
goals for ministries and looks firm, Saudi Arabian Oil Co., or
for ways to spur private sector Aramco—has hit snags.
growth. The money from that sale,
1 2 The program is now being which Prince Mohammed said
revised, maintaining goals on could amount to as much as
key policies such as privatiza- $2 trillion, would be trans-
tion and job creation but ex- ferred to the country’s sover-
0 0 tending deadlines to achieve eign-wealth fund for invest-
them up to 2030, say people ments at home and abroad.
’12 ’13 ’14 ’15 ’16 ’17* ’12 ’13 ’14 ’15 ’16 ’17† familiar with the document. But an initial public offering
*First-half †Projection $1=3.75 riyals
Sources: Saudi Arabian Monetary Authority (reserves);
The government currently slated for the first half of 2018
International Monetary Fund (GDP) THE WALL STREET JOURNAL. employs about 70% of working was recently pushed back to
Saudi citizens, and is trying to the end of 2018, according to a
Under Prince Mohammed, canceled months earlier, a shift that burden to private timetable seen by The Wall
the government has taken some move that was aimed in part companies. The government Street Journal, partly due to
bold steps, such as reducing at boosting consumer confi- this weekend said it has allo- indecision over where to list.
subsidies for fuel, electricity dence. A planned increase in cated 200 billion Saudi riyals, “The IPO process is well un-
and water. But he has also domestic energy prices, which or about $53 billion, to support derway and Saudi Aramco re-
backed away from parts of the was expected to take place in the private sector, including by mains focused on ensuring
plan that have proven deeply July, hasn’t happened yet. funding industrial projects. that all IPO-related require-
unpopular with ordinary Saudis. “Before, the approach was: To encourage private in- ments are completed on time
In April, the government re- ‘Let’s march ahead and push vestment, the government last and to the very highest stan-
instated allowances and perks economic reform regardless of month created a new agency dards,” the Saudi Ministry of
for state employees that it had the pain,’ ” said John Sfakiana- to spearhead privatization of Information and Culture said.
MUNIR UZ ZAMAN/AGENCE FRANCE-PRESSE/GETTY IMAGES
that the Malaysian leader
hadn’t been charged.
The people familiar with
the case said that the White
House and State Department
are responsible for U.S. diplo-
macy, but that it was unusual
that Mr. Trump would be
meeting with Mr. Najib, given
the corruption case.
Other U.S. officials said the
visit should be worthwhile if
only because it will offer a
chance to discuss North Korea Rohingya Muslim refugee children trailed a vehicle with relief supplies Sunday near the Bangladeshi town
with Malaysian officials, and of Teknaf, as Myanmar dismissed a militant Rohingya group’s cease-fire in the Myanmar-Bangladesh
press them to do more to border area. The U.N. says more than 290,000 refugees have crossed into Bangladesh since Aug. 25,
crack down on Pyongyang. when militant attacks on government outposts prompted retribution from Myanmar’s armed forces.
Mr. Najib will be the second
Southeast Asian leader to visit
Mr. Trump in Washington, fol-
lowing a trip in May by Viet-
nam’s prime minister.
Mr. Najib also met with for-
mer President Barack Obama—
on a 2014 trip by Mr. Obama
to Malaysia, for a game of golf
that year in Hawaii, and at a
2015 summit—but he never
visited Mr. Obama at the
White House.
With a fast-growing econ-
omy and straddling oceango-
ing trade routes to much of
Asia, Malaysia could be a cru-
cial partner to any effort to
isolate North Korea. But for
years it has been a conduit for
Pyongyang to do business in
ways that United Nations in-
vestigators say have helped
the regime evade global sanc-
tions.
Ingenious Design
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machine was the first
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to successfully produce an exact copy of an original written
declining for seven straight work. Perhaps the most enthusiastic and well-known user of the
months, edged down 0.2% on machine was George Washington, whose personal Watts copying
year, after dropping 1.1% in July.
Consumers paid more for fresh machine can still be found on display at Mount Vernon. Labeled
vegetables and eggs last month. “J. Watt & Co. Patent.” Circa 1795. 6”h x 201/2”w x 14”d. #30-6542
Pork prices, the main reason
behind this year’s food-price
weakness, dropped at a slower
pace last month, declining 13.4%
in August from a year earlier
and shaving nearly 0.4 percent-
age point off the headline CPI. In
July, pork prices dropped 15.5%.
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in July. That faster nonfood infla-
tion was partly due to a pickup
of industrial prices, Mr. Liu said.
—Liyan Qi
 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, September 11, 2017
MARTIN BUREAU/AGENCE FRANCE-PRESSE/GETTY IMAGES
Debris litters a street after Hurricane Irma struck St. Martin. Hotels were damaged and there was widespread looting there.
Irma Devastates Caribbean
At least 22 people
died as hurricane
swept islands; Havana
among cities flooded
BY DUDLEY ALTHAUS
Hurricane Irma left wide-
spread human and economic
havoc in a string of tourism
dependent Caribbean islands
as the storm pulsed into Flor-
ida on Sunday.
Irma departed the last of
those islands, Cuba, by Sunday
morning after scraping along
its northern coast. Buildings
collapsed, trees and power
lines tumbled and roofs flew
away in the 130-mile-an-hour
winds.
Rain and seawater flooded
towns and cities, including the
colonial center of Havana, the
country’s capital and a key
tourist magnet. Communica-
tions were cut off, power was
down and infrastructure was
damaged in some affected
parts of the island.
No deaths have yet been re-
ported in Cuba, as authorities
evacuated thousands of resi-
dents and tourists ahead of
Irma’s arrival. But the hurri-
cane killed at least 22 others
across the northern Caribbean
in four days of torment.
The storm’s damage comes
just a few months before the
beginning of the winter tour-
ism season, which last year
pumped $56 billion into the
regional economy and pro-
vided 725,000 jobs, according
to the World Travel and Tour-
ism Council, an international
industry group.
But Irma affected only a
Pope Tells Colombia IRMA
To Reject Revenge
BY JUAN FORERO
AND KEJAL VYAS
VILLAVICENCIO, Colom-
bia—Pope Francis, speaking on
Friday in a swath of cattle
country that was an epicenter
of this country’s long civil
conflict, told 6,000 war vic-
tims assembled before him to
discard any desires for re-
venge and forgive those who
caused them harm.
“Let us heal that pain and
welcome every person who
has committed offenses, who
admits their failure, is repen-
tant and truly wants to make
reparations,” the pontiff said,
standing on a stage in this sti-
fling hot city on the edge of
the country’s great plains.
The pontiff spoke before
victims chosen by the Catholic
Church and the government of
President Juan Manuel Santos,
which operates a special unit
that addresses the needs of an
estimated 6.6 million people
who lost loved ones, were
forced off land, held hostage
or otherwise victimized in a
guerrilla war that lasted half a
century.
Pope Francis urged combat-
ants to divulge information on
missing persons, child-soldier
recruitment and sexual crimes
against women as part of a
peace pact the state signed
with the FARC rebel group last
year. “Truth is an inseparable
companion of justice and
portion of the Caribbean. And
while severe on some islands,
the storm’s destruction was
negligible in others, accord-
ing to an early assessment by
the Caribbean Tourism Or-
ganization.
Damage so far appears to
have been heaviest in St. Mar-
tin and nearby islands in the
U.S. and British Virgin Islands.
On Saturday, U.S. President
Donald Trump increased fed-
eral funding for debris re-
moval and emergency protec-
tive measures for the U.S.
Virgin Islands.
The storm’s impact still
hasn’t been fully assessed in
Cuba. Puerto Rico and the Do-
minican Republic seem to
largely have been spared.
“For the countries that are
badly affected, it will take
some time to get back on their
feet,” Hugh Riley, an official
with Caribbean Tourism Or-
ganization, said early Sunday.
The affected islands caught
a break Saturday when Hurri-
cane Jose, a Category 4 storm
that had been on track to fol-
low Irma’s path, turned to the
north without making a Carib-
bean landfall.
Irma began its rampage far
to the east of Cuba on
Wednesday, tearing into the
small two-island nation of An-
tigua and Barbuda in the
northern Leeward Islands. An-
tigua, the larger of the two,
was mostly spared by the
storm.
Barbuda, famed for its pink
sand beaches and several lux-
ury resorts, suffered wide-
spread damage and the death
of a toddler. More than 90% of
the buildings on the island
suffered extensive damage, of-
mercy,” Pope Francis said,
adding that it would lead to
reconciliation and forgiveness,
themes central to the pontiff’s
five-day trip to Colombia,
which ended Sunday night. In-
deed, Rodrigo Londoño, who
led the FARC, which last week
transformed itself into a polit-
ical party, made public on
Thursday night a letter he
sent the pontiff asking for for-
giveness.
“Your repeated displays of
God’s infinite mercy move me
to plead for your pardon for
any tears or pain that we had
caused the people of Colom-
bia,” Mr. Londoño wrote.
The victims who came to
the prayer service here repre-
sented people victimized by all
of the main armed groups in
Colombia’s conflict, from two
leftist rebel groups to their
adversaries, a now-defunct
right-wing paramilitary organ-
ization and the country’s mili-
tary. Some had lost limbs to
land mines. Others had been
forced to flee their land be-
cause of combat. Women
raped by combatants attended,
as did victims of kidnapping.
“I discovered I couldn’t
keep living full of hate,” said
Luz Dary Landazury, who had
told the pontiff about her
painful, lengthy recovery after
stepping on a land mine.
Pope Francis, minutes later,
said, “I am moved listening to
them.”
HK JP KO ML SI
WORLD NEWS
ficials say.
Philmore Mullin, director of
the tiny country’s emergency-
response agency, told report-
ers Saturday that poor build-
ing practices were the main
cause for much of the damage.
He said a primary lesson from
the devastation is that the is-
land needs “strict enforcement
of the building codes.”
The storm’s destruction
was even worse on the islands
to the west of Barbuda, where
at least 11 people were killed
on St. Martin, a small island
jointly controlled by France
and the Netherlands. Many of
its hotels were badly damaged
and widespread looting was
reported.
More than 90% of
the buildings on
Barbuda suffered
extensive damage.
“The situation on the
ground is dire. It actually
looks like a war zone after a
bombing raid,” said Alex
Woolfall, a resident of St. Mar-
tin. “Everything is flattened
and scorched.”
“Hope to God Floridians
take the warnings seriously,”
Mr. Woolfall said by email late
Saturday after he was airlifted
by the U.S. military to Puerto
Rico. “This is no average hur-
ricane. It will destroy every-
thing.”
By Sunday morning, the
U.S. National Guard evacuated
by aircraft some 500 of the
more than 5,000 American cit-
Continued from Page One
As Irma pounded the Mi-
ami area with powerful winds
and sheets of rain, a construc-
tion crane collapsed in the
city’s downtown.
Wind gusts of about 70
miles an hour hit Miami Inter-
national Airport, according to
the National Weather Service.
The state of 20.6 million
people has been preparing
for days for Irma as the
storm barreled into the Ca-
ribbean, killing at least 22
people and battering islands
with winds in excess of 150
miles an hour.
Around Florida, more than
6.5 million people were or-
dered to evacuate and the
Waves produced by Hurricane Irma crash into a fishing pier in Fort Lauderdale, Fla.
IN UK FR MN PR
izens who were on St. Martin
when the storm struck.
St. Martin authorities de-
clared a state of emergency
Saturday, calling on residents
to remain indoors, according
to the Dutch newswire ANP.
The state of emergency makes
it easier for security forces to
more easily arrest suspected
looters. Authorities said that
people with medical condi-
tions are being evacuated to
Aruba and Curaçao.
Another storm, Hurricane
Katia, hit Mexico’s Gulf Coast
early Saturday. Two people
died in mudslides in the city
of Xalapa in Veracruz state af-
ter it was battered by high
winds and heavy rains. The
storm weakened quickly after
it hit and became a tropical
depression.
In the Caribbean, both St.
Thomas and St. John, in the
U.S. Virgin Islands, were badly
hit by Irma and remained un-
der curfew overnight Satur-
day. At least four people were
killed on the islands and many
of its tourist hotels were badly
damaged.
After skirting north of
both Puerto Rico and the is-
land of Hispaniola, shared by
the Dominican Republic and
Haiti, Irma closed in on the
central Cuban coast, making
landfall near idyllic barrier
islands where all-inclusive
hotels serve foreign tourists.
Some 5,000 tourists were
evacuated from the hotels as
the storm approached, Cuban
officials said.
Waves as high as 27 feet
flooded seaside communities
across the northern coast, in-
cluding in the historic colo-
nial section of Havana.
state reported that 77,000
people were seeking refuge in
450 shelters.
Florida officials have
warned that Irma could be
worse than Hurricane Andrew
that devastated South Florida
in 1992. Andrew, a Category 5
hurricane, killed 61 people in
the U.S. and caused nearly
$48 billion in damage in 2017
dollars, according to the Na-
tional Oceanic and Atmo-
spheric Administration—the
costliest storm in U.S. history
until Hurricane Katrina in
2005.
Irma was the second Cate-
gory 4 hurricane of the season
to hit the U.S., after Harvey
hit the Texas coast last
month. Lixion Avila, senior
specialist with the National
Hurricane Center, said it is ex-
tremely rare to have two Cat-
THE WALL STREET JOURNAL.
Mexico Quake Kills
Dozens, Leaves Ruin
BY DUDLEY ALTHAUS U.S.
Gulf of
Mexico
MEXICO CITY—Mexican se- MEXICO
curity forces intensified recov- Earthquake
epicenter
ery efforts on Sunday after one Mexico City
of the country’s strongest
earthquakes in decades along
its southern Pacific Coast and a 500 miles
hurricane that dropped heavy G U AT E M A L A
500 km
rains inland from the Gulf coast.
Source: U.S. Geological Survey
At least 90 people were
killed in the 8.1-magnitude THE WALL STREET JOURNAL.
quake, which struck late
Thursday off the Pacific Coast most severe in Juchitán, a city
of southern Mexico. The worst of 100,000 people. Parts of the
hit was the Zapotec indige- city’s town hall, a hotel, a
nous city of Juchitán in church and other buildings
Oaxaca state. In all, 71 people collapsed. Hundreds of houses
died in Oaxaca state, 15 in were damaged.
neighboring Chiapas state and Across Mexico, local au-
four in the Gulf state of Ta- thorities set up collection cen-
basco, local authorities said. ters that received donations of
Hundreds of aftershocks have basic goods such as baby for-
struck since Thursday night’s mula and diapers for the chil-
temblor. A 4.4-magnitude quake dren affected by the earth-
was recorded Sunday morning quake.
near the Oaxaca coast by Mex- “We will have to confront
ico’s Seismic Service. the destructive force of this
Late Friday, Mexican Presi- quake with the constructive
dent Enrique Peña Nieto de- force of Mexicans’ unity,” Mr.
clared three days of mourning Peña said on Friday during a
for the people killed in the tour of the damage in Juchitán.
earthquake. Thursday’s quake was simi-
Hours later, Hurricane Ka- lar in strength to, but far less
tia, a Category 2 storm that destructive than the Sept. 19,
had lingered offshore for days, 1985 quake that damaged
hit Veracruz state. The storm much of central Mexico City,
weakened quickly as it moved killing at least 6,000 people.
inland but dropped rain that Some estimates run far higher.
caused rivers to overflow their Thursday’s quake sent
banks, collapsed roads and many thousands of panicked
killed two people in the state residents into the streets as
capital of Xalapa. buildings swayed and seismic
Meanwhile, some 2,000 alarms sounded.
Mexican troops rushed food, The quake’s epicenter was
water and other basic supplies about 54 miles southwest of
into the poor southern states the Oaxacan coastal town of
of Oaxaca and Chiapas, which Pijijiapan, and was 43 miles
bore the brunt of the earth- below the earth’s surface. Mr.
quake. Both states have indig- Peña said half of Mexico’s 123
enous populations and are million people felt the quake.
among Mexico’s poorest. Over the weekend, the peo-
By Saturday, authorities ple of Juchitán began burying
had restored electricity and their dead even as crews
water services to most of the searched for more people in
affected communities. Crews the debris. Among the new
were searching for other vic- victims listed Saturday was a
tims, tearing down badly dam- Juchitán policeman whose
aged buildings and clearing body was recovered from the
streets and highways. rubble of city hall.
While widespread, the hu- —Juan Montes
man and property impact was contributed to this article.
CARLOS JASSO/REUTERS
A man walks past a building damaged by Thursday’s earthquake.
egory 4 storms hit in one sea-
son.
More than 1.5 million elec-
They include 1.3 million
who are over 65 years old, of
whom 320,000 live alone, ac-
tricity customers had lost cording to Census estimates.
power by midday Sunday, Among them are more than
mostly in Miami-Dade, Bro- 400,000 with physical or men-
ward and Palm Beach counties, tal disabilities that limit daily
according to the Florida Divi- activities.
sion of Emergency Manage- The storm’s move westward
ment. In Miami-Dade County, caused residents along the
nearly two-thirds of customers state’s west coast to quickly
had lost power. shift plans and hunker down.
“We are going to lose a lot Wrede McCollum, who lives
of power,” Gov. Scott said, on Pine Island off Florida’s
cautioning that it will take a southwest coast, had planned
while to restore service be- to stay at a friend’s house—
cause crews will have to wait despite a mandatory evacua-
for the storm to pass. tion order—because of reports
Just the nine southern of log-jammed highways and
counties of Florida that are packed shelters. But after see-
expected to be hit first— ing the storm’s projected
roughly from Palm Beach on westward turn, Mr. McCollum
the Atlantic coast to Port and his friends decided to go
Charlotte on the Gulf Coast— to a shelter.
count 7.2 million residents. “The current track seems
headed right for St. James
City,” where he lives, he said
by text. “Jangling a few nerves
here.”
Lisa Tilson, a Boca Raton
native, was staying at her
mother’s house in Sun City
Center, a retirement commu-
nity near Tampa on the Gulf
Coast. Ms. Tilson planned to
stay in one hallway with her
daughters, while her mother,
her mother’s partner and Ms.
Tilson’s 80-year-old aunt stay
in another, she said.
“That’s where we are going
CHIP SOMODEVILLA/GETTY IMAGES
to ride it out,” she said.
Gov. Scott said his home-
town of Naples on the Gulf
Coast could be particularly
hard hit.
“It’s going to be devastating
to all those homes on the
beaches,” he said.
—Paul Overberg
contributed to this article.
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To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
A6 | Monday, September 11, 2017
SAFETY
Continued from Page One
for almost 80% of U.S. hospitals,
including those for veterans,
the Federal Bureau of Prisons
and the Indian Health Service,
giving it a sweeping quasi-gov-
ernmental role overseeing care.
This certifier of hospital
quality, however, typically takes
no action to revoke or modify
accreditation when state in-
spectors find serious safety vio-
lations, according to a Wall
Street Journal database analy-
sis of hundreds of inspection re-
ports from 2014 through 2016.
In 2014, about 350 hospitals
found in those reports to be in
violation of Medicare require-
ments had Joint Commission
accreditation at the time, the
Journal found. More than a
third had additional violations
later in 2014, 2015 and 2016.
The Joint Commission re-
voked the accreditation of less
than 1% of hospitals that were
out of Medicare compliance in
2014, the Journal found.
A result is that hundreds of
hospitals with safety problems
could continue to display a
“Gold Seal of Approval.”
“It’s clearly a failed system
and time for a change,” said
Ashish Jha, a health-policy re-
searcher at Harvard, who said
the Journal finding “shows ac-
creditation is basically mean-
ingless—it doesn’t mean a
hospital is safe.”
Sen. Charles Grassley (R.,
Iowa.) said he will look for
ways to improve the system,
because “based on The Wall
Street Journal’s reporting, it’s
unclear what rock bottom a
hospital would have to hit be-
fore losing accreditation.”
Dr. Mark Chassin, president
and chief executive of the Joint
Commission, said it doesn’t
routinely withdraw accredita-
tion of hospitals with safety
problems because its focus is
less on regulating or penalizing
and more on preventing prob-
lems. “Our mission is to work
closely with health-care organi-
zations to help them improve
the care they provide,” he said.
The Commission, based in
Oakbrook Terrace, Ill., said its
inspectors make unannounced
Seal of Approval
Only a small percentage of
hospitals inspected by the
Joint Commission have
been denied accreditation.
Hospital inspections
by fiscal year
Denied accreditation
1,600
1,400
1,200
1,000
800
600
400
200
0 Journal also obtained informa-
2004 ’06 ’08 ’10 ’12
Note: Includes both renewal and
first-time inspections of hospitals.
Excludes some hospitals such as
psychiatric and critical access hospitals
Source: Centers for Medicare and
Medicaid Services
THE WALL STREET JOURNAL.
WEEVIL
Continued from Page One
boll weevil tea towels, boll
weevil wine glasses and boll
weevil coffee mugs, mostly pur-
chased by tourists who come to
see the monument. “Last year,
63% of my sales came from out
of town,” says Debbie Gaydos,
the store’s owner.
The boll weevil first ap-
peared in the U.S. in 1892, ac-
cording to a history by the Al-
abama Agriculture Experiment
Station, and slowly made its
way to Alabama. By 1917, the
entire state was infested, and
cotton production fell 70%
from three years earlier.
In the depths of the disas-
ter, banker and cotton mer-
chant H.M. Sessions persuaded
farmers in Coffee County,
where Enterprise is located, to
diversify into peanuts. The
goobers grew prodigiously. By
1919, Coffee County was the
largest peanut-producing
county in the U.S.
The financial rebound gave
visits to identify problems be-
fore they cause harm to pa-
tients. Denying accreditation
is sometimes necessary if hos-
pitals can’t bring their care up
to an acceptable level, it said,
but in the overwhelming ma-
jority of cases, they eventually
come into compliance.
Officials said they couldn’t
comment on a specific hospi-
tal, such as Cooley Dickinson,
as a matter of policy.
The hospital, an affiliate of
Massachusetts General Hospital,
said it reported the deaths of
the babies and pregnant woman
to regulators and began a reor-
ganization of its birth center. It
was determined to be back in
compliance with Medicare re-
quirements later in 2014. Vari-
ous litigation concerning deaths
at its birth center is pending.
The Joint Commission’s role
traces to the 1965 law creating
Medicare and Medicaid. The
law required hospitals to meet
certain safety conditions to re-
ceive money from the pro-
grams. Hospitals can use state
inspections to prove compliance
or hire a private, federally ap-
proved accrediting organization
such as the Joint Commission.
Ties to the industry
Most hospitals have chosen
that option, and many states
have allowed private accredi-
tors to take over much of their
inspection role. The process
turned the Joint Commission,
the largest private accreditor,
into a key safety watchdog.
It is one with ties to the in-
dustry it oversees. Twenty of
its 32 board members are ex-
ecutives at health systems it
accredits or work at parent or-
ganizations of such systems.
Other board members are
named by health-care lobbying
groups, such as the American
Hospital Association.
Joint Commission officials
said excluding hospital execu-
tives would deprive the board
of the most knowledgeable and
valuable advisers. The organiza-
tion said hospitals that have ex-
ecutives on its board sometimes
are cited by its inspectors for
Medicare violations, which
“shows our impartiality and ar-
gues against our accreditation
process showing any favoritism
to hospitals that have execu-
tives serving on our board.”
Hospitals accredited by the
Joint Commission pay it an an-
nual fee of from $1,500 to
$37,000, depending on size.
They also pay the Joint
Commission for inspections,
which occur at least every
three years and cost an aver-
age of about $18,000 in 2015.
A subsidiary, Joint Commis-
sion Resources, has consul-
tants that hospitals can hire to
help gain accreditation.
The Joint Commission said
it maintains a strict firewall so
information isn’t shared.
The Joint Commission’s
program revenue totaled $142
million in 2013, according to
its filing for that year with the
Internal Revenue Service, the
latest available. The nonprofit
paid its CEO, Dr. Chassin, more
than $1 million in 2013, includ-
ing salary, benefits and retire-
ment-plan contributions, the
filing shows.
To examine its record, the
Journal built a database from
information on hospital viola-
tions provided by CMS. The
’14 tion on state inspection reports.
The Journal found that not only
did about 350 hospitals have ac-
creditation while in violation of
Medicare requirements in 2014,
but 60% had such violations in
the preceding three years.
local merchant Roscoe Fleming
the idea to erect a monument
to honor the unexpected bounty
wrought by the boll weevil.
On Dec. 11, 1919, thousands
of people attended the unveil-
ing of the Boll Weevil Monu-
ment. George Washington
Carver, who invented hun-
dreds of uses for the peanut,
was invited. But heavy rains
washed out a section of the
railroad track between Enter-
prise and Tuskegee, Ala.,
scrubbing his plans.
The original monument fea-
tured only the goddess and a
fountain. Enterprise, which
calls itself “the City of Prog-
ress,” installed the much
larger-than-life weevil in 1949.
Erin Grantham, president of
the Enterprise Chamber of
Commerce—organizer of the
town’s annual Boll Weevil Fall
Festival—says the beetle-ma-
nia is good for business.
The town of about 30,000
has few empty downtown
storefronts these days, with
enterprises that include Boll
Weevil Brewing Supply, Boll
Weevil Soap Co. and the Boll
IN DEPTH
Jim Bennetts views photos of a daughter who killed herself when left alone at a hospital that had safety issues but full accreditation.
In later years, when more
than a third had Medicare defi-
ciencies, these included in-
stances of patients being
shocked by medical equipment,
sent away from emergency de-
partments with untreated bro-
ken bones or dying after staff
members didn’t respond for
trauma surgery, according to a
review of CMS inspection re-
ports, state health-department
information and data from Hos-
pitalInspections.org, a site run
by the Association of Health
Care Journalists.
Being in violation of Medi-
care safety rules puts a hospi-
tal’s federal funding at risk,
and a single serious deficiency
can limit its capability to pro-
vide adequate care and ensure
patient safety and health, said
a 2004 report by the Govern-
ment Accountability Office.
CMS checks the work of pri-
vate accreditors of hospitals by
using state inspectors to exam-
ine some of the same facilities.
The checks produce a “disparity
rate,” a formula showing what
percent of accreditors’ inspec-
tions missed a problem found in
inspections done at CMS’s be-
hest. If the rate is above 20%,
CMS informs the accreditor.
The Joint Commission had a
disparity rate of 42% in fiscal
2014. In the case of psychiatric
hospitals, the rate was 75%.
The Joint Commission
called the disparity rate an in-
complete measurement. It said
state inspectors use different
measurement tools to assess
compliance with Medicare re-
quirements and sometimes
take note of infractions that
don’t affect clinical care.
It isn’t easy for patients to
find out about hospital safety
problems on their own. Some
information is available from
The Boll Weevil Monument in downtown Enterprise, Ala.
Weevil Inn. The local radio
station is Weevil 101.1 WVVL.
To attract new business,
city administrators, wearing
boll weevil lapel pins, tell the
tale of the pest that turned
cotton into gold. The city’s
former mayor persuaded
Arista Aviation to relocate to
Enterprise from Arizona, says
Rich Enderle, Arista’s chief ex-
ecutive. The company repairs
and modifies Huey and Black
Hawk helicopters for commer-
states and CMS, but consum-
ers have to know where to
look and what to ask for. CMS
said it is required to notify the
public only about two weeks
before it cuts off a hospital’s
Medicare funding.
Hospital inspection reports
from the Joint Commission and
other private accreditors are
kept confidential. This secrecy
has long been criticized by con-
sumer groups, ex- and current
members of Congress and some
hospital leaders and physicians.
This spring, CMS proposed
making the Commission’s in-
spection reports public. The
Joint Commission opposed the
proposal, saying the confiden-
tiality of its inspections en-
couraged candor, and the pro-
posal would hamper its
consulting work. In August,
The vast majority of
hospitals with safety
violations retain full
accreditation.
CMS withdrew its proposal. It
noted that federal law bars
CMS itself from disclosing in-
spection results and said it
didn’t want to appear to be
circumventing the prohibition.
The Joint Commission said
it is “committed to making rel-
evant and accurate informa-
tion about our accredited and
certified health care organiza-
tions available.” It runs a web-
site, Quality Check, for looking
up a hospital’s status.
Eastern State Hospital in
Williamsburg, Va., is an insti-
tution CMS disqualified from
Medicare funding in April 2016
DOUGLAS BRADLEY
cial and government use.
The company picked Enter-
prise for a 65,000-square-foot
hangar that opened in 2014. A
display case in the lobby fea-
tures a crystal vase with an
etched boll weevil, presented
by the mayor at the time.
Mr. Enderle says he was al-
ready familiar with the Main
Street monument. He first
came to town in 1980 to at-
tend flight school at nearby
Fort Rucker, a U.S. Army post.
THE WALL STREET JOURNAL.
for safety violations. Yet Qual-
ity Check’s entry for the hospi-
tal says it is accredited and has
met all national patient-safety
goals, compared with other
commission-accredited organi-
zations. The listing notes that
the hospital performed below a
target range on assessing pa-
tients on certain criteria, such
as risk of violent behavior.
The Quality Check entry
makes no mention of the hos-
pital’s having been disqualified
from receiving Medicare funds.
Virginia health official Dan-
iel Herr, to whom state-run
Eastern State referred ques-
tions, said the institution is on
track to request again being
made eligible for Medicare for
its adult acute-care units.
A gap in observation
Some family members of pa-
tients are angry at the Joint
Commission for letting troubled
hospitals maintain their accred-
itation. Among them is Jim
Bennetts, 74, of Novato, Calif.
His daughter, Brittney, was
struggling with depression and
anxiety when she was admitted
in late 2014 to United Health
System’s Timberlawn Behav-
ioral Health System in Dallas.
Ms. Bennetts, 37, a therapist
who worked in hospice care,
was in the hospital because she
felt suicidal, her father said.
Timberlawn, built around a
stately white farmhouse, had
amassed 16 safety deficiencies
since 2011, a review of records
at HospitalInspections.org
shows. “How would we know?”
said Mr. Bennetts. The hospital
had accreditation from the
Joint Commission, which
ranked it as a top performer on
hospital-based in-patient psy-
chiatric care in 2013 and 2012.
Mr. Bennetts said his daughter
researched and selected the
hospital on her own.
Hospital staff wrote in their
records that Ms. Bennetts
needed constant observation
and was at high risk of sui-
cide, according to the report
of a state inspection for CMS
months later. The report said
that on Dec. 3, 2014, Ms. Ben-
netts was left alone and used a
sheet to hang herself from a
closet doorknob.
The inspection that followed
her death found continuing
problems at the hospital, in-
cluding patients sleeping on
chairs in an overcrowded unit
and an alleged rape of one pa-
One class taught about local
landmarks and introduced
newcomers to the Boll Weevil
Monument.
“There’s no way it’s real!”
Mr. Enderle recalls thinking.
Earlier flight-school classmates
started a tradition of dumping
Mr. Bubble bath soap in the
landmark’s fountain as a prank.
The monument has suffered
worse over the years. The
original beetle was first stolen
in the early 1950s and never
found. The city, taking the les-
son of turning calamity into
victory, replaced the original
boll weevil with a larger, more
anatomically correct version
with six legs instead of four.
Thieves struck again in
1974 and took the whole
statue. It was recovered, but
badly damaged. In 1981, just
the bug was stolen and never
found. Its replacement was
ripped off in 1992. The last
straw came in 1998, when two
teenagers stole the whole she-
bang, leaving the monument a
wreck. It is now on display at
the nearby Depot Museum,
and a pristine replica stands
SAMUEL WILSON FOR THE WALL STREET JOURNAL (2)
Problems Missed
A ‘disparity rate’ compiled by the
Medicare agency shows what
percent of hospital inspections
by the Joint Commission miss a
safety issue later found in state
inspections.
50%
40
30
20
10
0
2000 ’02 ’04 ’06 ’08 ’10 ’12 ’14
Notes: The disparity rate is based on a
formula that takes into account violations
the accrediting organization missed that
were identified in follow-up government
inspections; Fiscal year ends Sept. 30.
Source: Centers for Medicare and
Medicaid Services
THE WALL STREET JOURNAL.
tient by another. Eight months
after the suicide, CMS cut off
Medicare funding for Timber-
lawn, saying its violations
posed “an immediate jeopardy
to patient safety....”
Throughout the events, Tim-
berlawn remained accredited by
the Joint Commission and dis-
played its quality seal.
“It’s unbelievable they’re
able to still be accredited,”
said Mr. Bennetts. “We believe
Brittney would still be with us
if she’d been under constant
observation.”
Timberlawn CEO James
Miller said Medicare certifica-
tion was reinstated about 15
months later. He said he
couldn’t comment on a patient’s
care because of privacy laws,
but said “the incident was
tragic and our thoughts and
prayers continue to be with the
family.” The family reached a
confidential settlement with the
hospital. A spokesman for CMS
said it couldn’t comment.
Joint Commission officials
declined to comment on Tim-
berlawn but said scores of pub-
lished studies show the organi-
zation’s accreditation process,
including working with troubled
hospitals, drives improvements
in quality and patient safety.
“Health care has a long way
to go before it as safe as we
want it to be,” the organiza-
tion said in its response to the
Journal. “That road would be
a lot longer without The Joint
Commission.”
on Main Street.
Engineering students at En-
terprise High School used 3-D
printers last year to create
miniature boll-weevil monu-
ment Christmas ornaments.
About 300 sold at $10 a pop.
“They didn’t realize how big it
was going to be,” Ms. Gran-
tham says.
Enterprise State Commu-
nity College, which calls itself
the Weevil Nation, has for
years employed a boll weevil
mascot in bright green cos-
tume to roam the sidelines at
games. “I’ve had a lot of peo-
ple say I look like a frog or I
look like a lizard,” says Wil-
liam Lindgren, a sophomore
who gets a $1,000 scholarship
a semester to dress as school
mascot Bo Weevil.
“When people ask, I tell
them, ‘Yeah, I’m a boll weevil,’ ”
he says.
The boll weevil, Ms. Good-
son says, represents a message
of triumph over adversity, and
a willingness to embrace
change.
“We could take a lesson in
that right now,” she 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
THE WALL STREET JOURNAL.
THE OUTLOOK | Ian Talley
Economic Sanctions Have Limited Reach
The Trump
administra-
tion is turning
to economic
warfare—an
intensified
sanctions program—to deal
with an increasingly belliger-
ent North Korean regime.
But economic tools have a
mixed record of success ad-
dressing geopolitical prob-
lems. Sanctions helped end
apartheid in South Africa.
They pushed Iran to an agree-
ment to curtail its nuclear
program, though many critics
say the deal is insufficient.
Over 50 years they haven’t
budged the Castro family from
its hold on power in Cuba and
failed to turn Russia back
from its Ukraine incursions.
Much depends on how
forcefully Washington ap-
plies its economic weapons
and how much cooperation it
gets from other nations.
Alarmed by Pyongyang’s
latest nuclear test and prep-
arations for another inter-
continental ballistic missile
test, the Trump administra-
tion is crafting harsher eco-
nomic penalties against
North Korea and its facilita-
tors. Washington hopes
tougher measures will avert
a potentially catastrophic
military conflict and forestall
the evolution of Pyongyang’s
nuclear-weapons technology.
U.S. officials are pushing
the United Nations Security
Council to ban North Korea
textile exports, embargo oil
sales to the country and pro-
Inside Spending Bill: Campaign Finance Deregulation
BY CEZARY PODKUL
House Republicans are
backing several provisions
that could reshape campaign
finance rules ahead of next
year’s midterm elections as
spending negotiations con-
tinue this fall.
The measures are tucked
into a GOP package of spending
bills currently being debated in
the House. While the House
package is unlikely to advance
in the Senate, its provisions
could become bargaining chips
in the negotiations leading up
to the next government fund-
ing deadline, now Dec. 8.
The inclusion of the deregu-
latory measures in the spend-
ing package is prompting
pushback from campaign-fi-
nance watchdogs, who worry
they may ultimately become
law. If they do, churches may
be able to contribute to candi-
dates without fear of losing
their tax-exempt status, fur-
thering President Donald
U.S. WATCH
NASA‘S CASSINI PROBE
Final Mission: Solve Clinton Says Loss
Saturn Rings Mystery Still ‘Very Painful’
After 20 years in space, a
vintage probe called Cassini is
entering its last waltz with Sat-
urn with a series of rhythmic
maneuvers to explore Saturn’s
vast icy rings.
The NASA spacecraft has
been swooping back and forth
at 77,000 miles an hour through
the narrow gap between Sat-
urn’s rings and the planet’s
cloudy surface before making a
suicide plunge into Saturn’s at-
mosphere on Sept. 15.
The aging spacecraft is bring-
ing Saturn’s signature rings into
sharp focus, detail that could
help settle debates over their
age, mass and origin.
It is the grand finale of a
$3.27 billion mission that has in-
volved 5,000 scientists in 17
countries. And it signals the end
of an era of interplanetary explo-
ration in which big multipurpose
probes cruised the solar system
as humanity’s eyes and ears.
The Cassini probe is one of
the heaviest and most complex
interplanetary spacecraft ever
built. Its components included
the European Space Agency’s
Huygens probe, which landed on
one of Saturn’s moons in 2005.
“Today there isn’t a U.S.
launch vehicle that could lift
Cassini,” said Julie Webster, a
spacecraft operations team man-
ager at the Jet Propulsion Labo-
ratory in Pasadena, Calif.
—Robert Lee Hotz
hibit it from renting out its
workers abroad. Treasury
Secretary Steven Mnuchin is
readying new sanctions
likely targeting the largest
importers of North Korean
goods and some of the banks
facilitating that trade.
Past U.S. sanctions efforts
have a spotty record.
A
mong the successes:
U.S. lawmakers cham-
pioned sanctions in
1986 against South Africa’s
apartheid regime that even-
tually led to a global trade
embargo against the nation.
By 1991, with its economy in
recession, the government
repealed the apartheid laws.
A U.S. sanctions regime
against Myanmar’s antidemo-
cratic government was a key
factor in precipitating a col-
lapse in that country’s eco-
nomic growth. By 2012, as
democracy slowly returned
to the country, the U.S. be-
gan easing those measures.
The Bush administration
in 2007 was able to force
North Korea to shut down a
nuclear facility critical to the
regime’s weapons program
by cutting off a small Macao-
based bank from the U.S. fi-
nancial system. That tempo-
rarily chilled international
financing for Pyongyang as
foreign banks feared losing
access to the dollar, the cur-
rency used for most of the
world’s trade.
But the regime soon se-
cretly restarted its nuclear-
weapons program. China has
Trump’s promise to “get rid of
and totally destroy” a law that
forbids such activity.
Corporations would be able
to ask their employees to do-
nate to unlimited numbers of
trade associations’ political
action groups instead of limit-
ing employee solicitations to
one group per year.
Other measures included in
the bill would continue to pre-
vent the Internal Revenue Ser-
vice and the Securities and Ex-
change Commission from
implementing rules that would
affect political activities of
501(C)(4) nonprofits and pub-
licly traded corporations, re-
spectively. And the govern-
ment would again be
prohibited from requiring fed-
eral contractors to disclose
their political contributions
and campaign expenditures.
These multiple provisions—
called riders—are frequently
inserted into appropriation
bills as a way to pass contro-
versial policies without having
2016 ELECTION
Hillary Clinton described the
lingering pain of being “gob-
smacked” after losing the presi-
dency 10 months ago to Donald
Trump and said she wouldn’t be
a candidate for office ever again.
“I think I am good, but that
doesn’t mean that I am compla-
cent or resolved about what
happened,” the 2016 Democratic
presidential nominee said in an
interview Sunday with CBS
News’s Jane Pauley. “It is still
very painful. It hurts a lot.”
Mrs. Clinton’s interview marks
the beginning of what will be a
monthslong media tour around
her memoir of the campaign,
“What Happened,” set to be re-
leased by Simon & Schuster on
Tuesday. The tour, which begins
with a reading in New York on
Tuesday and continues with
events across the country
scheduled through December,
keeps 2016 in the news as Dem-
ocrats struggle to coalesce
around a new standard-bearer. It
also offers Mr. Trump myriad
opportunities to spar with his
former campaign rival anew.
The White House didn’t im-
mediately respond to a request
for comment. In May, Mr. Trump
wrote on Twitter, after Mrs. Clin-
ton spoke about her loss at an
event in California: “Crooked Hil-
lary Clinton now blames every-
body but herself, refuses to say
she was a terrible candidate.”
—Eli Stokols
U.S. NEWS
Nikki Haley, right, the U.S. ambassador to the United Nations, with her Chinese counterpart, Liu
Jieyi, before a U.N. Security Council emergency meeting over North Korea last week.
since stepped in to become
its biggest trade partner—
accounting for 90% of the to-
tal—and Pyongyang has im-
proved its sanction-evasion
techniques. “Targeted sanc-
tions—unintentionally and
counterintuitively—helped to
create more efficient mar-
kets in China for North Ko-
rea Incorporated,” said John
Park, director of the Korea
Working Group at the Har-
vard Kennedy School.
The Trump administration
is hoping now to replicate
with North Korea the sanc-
tions approach that forced
Iran to negotiate a nuclear
The IRS has rarely enforced a rule that bars nonprofit organizations
such as churches from endorsing or opposing political candidates.
them voted on individually,
since they will “ride along”
with a larger spending bill.
It is unclear which House
members inserted the language
into the bill, which was drafted
by the Republican majority.
House Democrats tried to
strike many of the provisions
but didn’t succeed. The House
High Schools Lure More Foreign Students
BY TAWNELL D. HOBBS
International students have
been changing the economics
and culture of U.S. college
campuses, and now they are
making inroads at American
high schools.
The number of interna-
tional students enrolled at U.S.
high schools more than dou-
bled from 2004 to 2016, to
reach 81,981 students, accord-
ing to a recent federally
funded study by the Institute
of International Education, a
nonprofit focused on educa-
tion across borders.
Most of the students ulti-
mately seek to enroll in U.S.
universities, with their high-
school diplomas acting as a
bridge to college, the study
found. “We have a very homo-
geneous community, and our
kids were unprepared to go
out into this globalized world
of college,” said Clark “Skip”
Hults, superintendent of New-
comb Central School District,
a rural public-school system in
upstate New York. “We felt
that having the world join us
in our classroom would also
make for better studies.”
Mr. Hults said his 85-stu-
dent district has 11 interna-
tional students this year, from
Russia, Spain and Vietnam.
About 4% of the interna-
tional students attended U.S.
public high schools on F-1 visas
in 2016, according to the Insti-
tute of International Education.
Unlike for private schools, those
Monday, September 11, 2017 | A7
that help finance Mr. Kim’s
regime. Even when Beijing
does act, those measures are
often temporary, and cross-
border sales are often soon
resumed.
“One way the Trump ad-
ministration can get the Chi-
nese into the game here in a
more effective fashion is by
looking at more sanctions on
Chinese entities, especially
certain smaller banks and
trading companies, that are
critical to the North Korean
economy,” said David Cohen,
a former top CIA and Trea-
sury official.
LI MUZI/XINHUA/ZUMA PRESS
S
tudies by C4ADS, a
nonprofit tracking
global security threats,
show Pyongyang’s evasion
networks are financed by a
centralized and limited sys-
tem. “A relatively small num-
ber of networks that bridge
licit and illicit systems”
deal under the Obama ad- Jong Un’s hold on power is means they are vulnerable to
ministration. In that case, needed to change his calcu- disruption, said David Lynch,
the U.S. secured European al- lus. “It would mean placing a chief of analysis.
lies’ support to stem oil rev- stranglehold on the North Capitalizing on that prem-
enue to the Persian economy. Korean economy that makes ise, U.S. lawmakers are back-
Former U.S. officials say it impossible for the leader ing legislation that would
the extent of the efforts to pay his military and secu- target the 10 largest Chinese
against Iran dwarf the cur- rity forces, to fuel his planes importers of North Korean
rent North Korea sanctions and trucks, or to provide goods. Treasury is also set-
regime. In contrast, foreign bribes to his family and cro- ting its sights on Chinese
government compliance with nies,” said Adam Szubin, the banks. Banning them from
U.N. sanctions against North former head of Treasury’s U.S. markets could scare the
Korea is poor. China, in par- sanctions office who is now broader Chinese financial
ticular, is proving to be a re- at Johns Hopkins University’s system into better sanctions
luctant partner. School of Advanced Interna- compliance. But applying
U.S. sanction experts say a tional Studies in Washington. hefty fines would likely re-
severe escalation in eco- Asia analysts say China quire the administration to
nomic pressure that threat- often fails to crack down on develop a more coordinated
ens North Korean leader Kim the firms and individuals strategy, some analysts say.
been done in this area. Proba- group, is lobbying to repeal
bly the most,” said Fred the Johnson Amendment and
Wertheimer, president of the has worked with House Major-
group Democracy 21 and an ar- ity Whip Steve Scalise (R-La.)
chitect of the 2002 McCain- to introduce a bill that would
Feingold campaign-finance do so, according to its website.
overhaul bill. His concern, he “A nonprofit organization
said, is that the riders would should not lose its tax-exempt
ANDREW HARNIK/ASSOCIATED PRESS
enable “secret money” to “flow status or be threatened with au-
into elections.” On Thursday, dits because it exercises its con-
Democracy 21 and about 20 stitutional right to speak in fa-
other organizations sent a let- vor of political candidates who
ter to House members asking share the organization’s values
them to oppose the riders. and mission,” the group argues.
Mr. Wertheimer is particu- A spokesman for Rep. Sca-
larly worried about the rider lise said in an email he “has
allowing churches to skirt the long supported efforts to pro-
so-called Johnson Amendment. tect the First Amendment
Named after its primary spon- rights of houses of worship
sor when he was senator, the and other nonprofit organiza-
is expected to debate and pos- late Lyndon Johnson, the 1954 tions” and that his bill would
sibly vote on a package of rule prohibits 501(C)(3) non- prevent “unelected IRS bu-
spending bills that includes the profit organizations—such as reaucrats from stifling the free
riders as early as this week. churches—from endorsing or speech of religious leaders and
On Friday, the House opposing political candidates. others under the auspices of
passed a bill to fund the gov- While the IRS has rarely en- the Johnson Amendment.” The
ernment until Dec. 8. Lawmak- forced the ban, the rider could Family Research Council didn’t
ers hope to pass a longer-term give violators a free pass. return a request for comment.
spending bill in December. The Family Research Coun- —Kristina Peterson
“It’s as many riders as has cil, a conservative Christian contributed to this article.
BRANDON THIBODEAUX FOR THE WALL STREET JOURNAL
Kyle Tang, 17, a Chinese student at the International Leadership of Texas charter school, in his dorm room.
visas extend a maximum of 12 into a U.S. university.” China, South Korea, Vietnam,
months for public schools, and In turn, international stu- Mexico, Japan and Canada.
federal law requires that inter- dents increasingly fill enroll- Visa applications are being
national students attending U.S. ment slots at U.S. colleges, accepted for students in six
public high schools under such which has made getting into Muslim-majority countries af-
visas pay full tuition, normally some schools harder for Amer- fected by the Trump adminis-
ranging between $3,000 and ican kids and boosted schools’ tration’s partially imple-
$10,000, according to the State revenue, because international mented travel ban, according
Department. Private schools set students typically don’t get a to the State Department. The
their own rates. discount on tuition. ban targets Iran, Libya, Soma-
“There’s a financial contri- Besides the more widely lia, Sudan, Syria and Yemen. In
bution when they’re paying used, longer-term F-1 visas, 2016, 87 visas were provided
into public schools,” said Ra- other students use the J-1 to high-school students from
jika Bhandari, head of re- visa, mainly for shorter-term those countries.
search, policy and practice at cultural-exchange programs. All 50 states and Washing-
the institute. “For most of Students from China make ton, D.C., have international
these students, the goal is to up about 42% of international students in high schools. The
graduate with a high-school students studying in U.S. high number of high schools enroll-
diploma. They’re really look- schools, the study says. Top- ing international students also is
ing at seeing themselves as sending countries of diploma- up, from 2,300 in 2013 to 2,800
being more competitive to get seeking students include in 2016, according to the study.
A8 | Monday, September 11, 2017 THE WALL STREET JOURNAL.

LIFE&ARTS
POETRY

‘Instagram Poets’ Sell Well

BY NINA SOVICH

AMONG THE HOT NEW BOOKS of the fall

season is a volume of poetry that might
once have been relegated to the back of the
bookstore. Rupi Kaur, a Canadian woman
born in India is putting out her second book
Oct. 3. The reason for the excitement? She
has 1.5 million followers on Instagram.
Ms. Kaur sits atop a new wave in poetry.
These Instagram poets, or pop poets as
some writers call them, use social media to
build their fan base for work that touches
on love and loss. “The Sun and her Flow-
ers”, to be released in October, has an initial

RUPIKAUR_; CHRISTOPHERPOINDEXTER; ATTICUSPOETRY

print run of a million books, an astonishing
run for poetry. Fiction writers are lucky to
have an initial print run of 10,000 books.
Ms. Kaur’s first book, “Milk and Honey”,
published in 2015 by Andrews McMeel, has
sold more than a million copies in the U.S.
and 700,000 abroad.
“For me, social media was the only way
to go,” says Ms. Kaur. She began publishing
poems on Tumblr and Instagram and found
an audience both devoted and demanding.
In 2013 she was posting a poem or two a
week, spending two to four hours a day re-
fining them. “It gets difficult to manage at
a certain point,” she says of social media.
Roughly two years ago she stopped posting
new poetry to Instagram. Sometimes when
her feed needs updating she will ask her
sister or an employee to help with the
technicalities so she can concentrate on
writing.
To poetry traditionalists, these new po-
ets the feeds seem to draw attention to
photographs and illustrations rather than
verse. Instagram poets use typewriters with
thick linen paper and tattered edges, then
photograph the work and post it to social
media. Bad breakups, whiskey in the desert
and exhortations to find inner strength are
common.
“Think of Walt Whitman … you can’t im-
mediately read it and feel something,” says
Lizzie Carroll, 21, and a student at Califor-
nia State University, Sacramento, who has
blogged about her appreciation for Ms.
Kaur. “You have to sit down and study it.
With Kaur you can take any poem and read
one line and know what it means.”
Ms. Kaur’s fans buy the paperback and
treat it like a journal, tagging pages and
making notes. At poetry readings—more like
performances with Ms. Kaur’s dramatic ca-
dence and delivery—the audience snaps
their fingers when they connect with a line.
“Rupi is real and honest and writes about
things other people are too scared to write
about,” says Harley Henderson, 21 and a
student at the University of West Florida
in Pensacola. “She can relate to people and
their problems.”
Atticus is a successful poet who doesn’t
publicly reveal his identity or show his face,
but has roughly 440,000 followers on Insta-
gram. His book, “Love Her Wild”, was re-
leased in July by Atria Books, an imprint of
Simon & Schuster, and has nearly 100,000
copies in print. He says he receives several
photos a day from people who have tattooed
his poetry on their body. One of his popular
images on Instagram is of a woman with
skeleton painted on her face and hands and
long brown hair. Next to her image a phrase:
“It was her chaos that made her beautiful.”
“I wear a mask so I write what I feel and
not what I should feel,” he
said, in a phone interview. He
declined to give his real name.
The challenge for publishers
is to separate good poets from
bad, and to confirm the fan base
is stable and inclined to buy
books.
Publishers say successful po-
ets must be seen as authentic
and heartfelt, a tricky task when
they also need to cultivate an
exclusive and glamorous per-
sona on Instagram.
“You have to look at all the
comments to see, is there really
a connection?” says Judith Curr,
president and publisher of Atria
Books, describing the process of
bringing on a new author. “Are
they responding to the poetry or
the fame of the person?”
Editors at the publishing
house keep an eye on Instagram.
If a writer has a growing follow-
ing, with comments that speak
to the work, the publishing
house will occasionally contact a
writer directly to see if he or
she is interested in doing a
book. Booksellers are often reas-
sured by a poetry book with an
online followings because it sug-
gests committed buyers, pub-
lishers say.
“It’s good for all poets that
the poetry section of the book-
store is suddenly the sexy sec-
tion,” says Kirsty Melville, presi-
dent and publisher of Andrews
McMeel.
Traditional writers like poet Thom Young
have bristled at the popularity of the Insta-
gram poets, publishing satirical verse on
the web to prove their point. Even the In-
stagram poets acknowledge the medium is
both a blessing and a curse. On one hand,
they reach far more people than traditional
Instagram posts from poets Rupi
Kaur, above left, and Christopher
Poindexter, above right, help build
their fan bases. Ms. Kaur’s feed, left,
includes some of her poems. The
poet who goes by Atticus, bottom
left, includes photos of fans who
tattoo on his verse.
poets. On the other, Instagram re-
stricts form and length. There
also is pressure to constantly feed
the beast.
Christopher Poindexter is 26-
year-old poet with roughly
320,000 followers on Instagram.
A Hungarian exchange student ig-
nited his interest in poetry when
he was young and he has been
writing for about six years. His
book, “Lavender”, came out in
February and will be rereleased
in September. When he started,
he posted one or two poems a
day but now he has dialed that
back.
He still posts three to six
times a day but he leans more to-
ward photos or written descrip-
tions of his life rather than po-
etry. The demands of Instagram
can be draining, he says, and he
is thinking of hiring someone
part time to help with his feed.
“I stepped away a little because
of the intensity,” says Mr. Poin-
dexter. “I know what people want,
and I know what I want to write.”
“It’s not the poetry I would
present to an academic scholar,”
he says.
“But it’s getting children back into poetry.
It’s getting them in Kerouac and Rimbaud
and Ginsberg and Cummings.”

PLAYLIST: LOUDON WAINWRIGHT III

BYE-BYE, BROWN RICE. HELLO, TOURING

Loudon Wainwright III,
70, is a humorist, a
Grammy-winning folk
guitarist and singer-
songwriter, and an ac-
tor. He is the author of
“Liner Notes” (Blue
Rider), a memoir. He
spoke with Marc Myers.
I recorded my first al-
bum in 1969, but when it
was released in early 1970, I was
anxious about performing on the
road. So instead, I holed up in a
communal house in Brookline,
Mass., outside Boston, eating mac-
robiotic food and studying the or-
der of the universe.
Eastern philosophies were big in
1970. At our house, selflessness was
in, and pride, arrogance and star-
dom were out. You were supposed
to be humble and chew your rice.
One evening in June 1970, I
sneaked out with a couple of other
macros to see THE BAND at Har-
vard Stadium. Our seats were high
short eternity, Levon Helm
joined, playing hard on the
drums. Then Richard Ma- THE BAND’S
nuel, Rick Danko and Helm Levon Helm
began to sing. performing in
It was hard to understand 1971.
exactly what they were sing-
ing. As best as I could tell
from their high, straining
voices, it was about some
guy and a girl who was
making him sick with love:
“As my mind unwheels / I feel the
freeze down in my knees / But just
before she leaves, she receives.”
The nonsensical quality of the
lyric is what made it appealing.
What I loved most, though, was
the song’s arrangement and the
music’s freedom and energy. I was
knocked sideways by the art.
As I listened, I asked myself
what I was doing hiding in
Brookline. “Music is where it’s at,”
I thought. “I have a record deal,
and I can do what they’re doing.
Audiences would be waiting for
me, if I had the courage.”
MICHAEL PUTLAND/GETTY IMAGES

up in the bleachers, but I could still
see the Fender amp’s red lights
glowing on the dark stage. Then
five shadowy figures ambled out.
When the stage lights came up,
The Band opened with “Chest Fe-
ver.” The song began with Garth
Hudson’s Bach-influenced organ
intro. After what seemed like a
“Chest Fever” and the rest of
the music performed that night
gave me a hard shake. I was re-
minded of my original ambition to
be a musician. The next morning, I
paid my rent in full and said good-
bye, telling friends that I was go-
ing to rejoin the real world.
I wanted my old job back.
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, September 11, 2017 | A9

LIFE & ARTS

WEEKEND CONFIDENTIAL | By Alexandra Wolfe

Gretchen Rubin’s Great Expectations

The lawyer turned self-help author on how she responds to expectations, keeps up habits and follows obsessions
IN 1996, Gretchen Rubin was ing. The variation in people’s abil-
working as a clerk for Supreme ity to keep those habits inspired
Court Justice Sandra Day O’Con- “The Four Tendencies.” “It’s not
nor when she started to think that that I’ve consciously steered my
a legal career wasn’t for her. For course,” she says. “I’ve been led by
one thing, she enjoyed writing, but my obsessions.”
she found little satisfaction in the Her book calls to mind previous
dense, technical jargon of the law. works that break people down into
“I was like Scarlett O’Hara, and I personality types—including, fa-
said, ‘As God is my witness! I will mously, by Katharine Cook Briggs
never write in such a confusing, and Isabel Briggs Myers and by so-
obfuscatory way,’ ” she says. ciologist David Riesman—but Ms.
She left the legal profession a Rubin says that she wasn’t influ-
few years later to devote herself to enced by other research. She had
research and writing that dealt been staring at her to-do list when
much more baldly with the basics she realized she could group peo-
of human nature. Her first book, ple according to how they re-
“Power Money Fame Sex: A User’s sponded to expectations.
Guide,” was published in 2000. It Ms. Rubin says most of her in-
describes how figures such as Rob- formation comes from what she
ert Moses, Madonna and Niccolò sees around her rather than from
Machiavelli attained those abiding scientific studies. “If I’m writing
objects of human aspiration and something, it’s always grounded in
draws lessons from their examples. my own experience and kind of
Since then, Ms. Rubin, 51, has good sense,” she says. “I use what
written seven more books—includ- I see around me.” In her books,
ing “The Happiness Project” she likes to rely on anecdotes as
(2009), “Happier at Home” (2012) well as statistics.
and “Better Than Before” (2015). Ms. Rubin, who grew up in Kan-
She has turned her observations sas City, says that she was a disci-
and advice about leading a more plined student from a young age.
fulfilling life into a mini brand, Her father is a lawyer, and her
with a weekly podcast, blog, online mother worked at an art museum.
quizzes and newsletters. Her books One of her childhood pastimes was
have sold nearly three million cop- writing down her favorite quota-
ies world-wide and have been tions and then finding a picture
MACKENZIE STROH FOR THE WALL STREET JOURNAL; HAIR & MAKEUP BY NICKEE DAVID

translated into 30 languages. from a magazine to match it—a

Her latest book, “The Four Ten- practice she keeps up today in a
dencies,” comes out on Sept. 12. In similar form on her blog. She
it, she says that people can be di- graduated from Yale University
vided into four different categories and then Yale Law School.
related to how they respond to ex- Now living in New York City, Ms.
pectations. Those groups, as she Rubin wakes up at 6 a.m. to walk
sees it, are upholders, who re- her dog and then spends time work-
spond to both inner and outer ex- ing before her family gets up. She
pectations; obligers, who answer and her husband have two daugh-
to others’ expectations; question- ters, ages 12 and 18. After walking
ers, who respond to inner expecta- her younger daughter to school, she
tions; and rebels, who react spends the day going to meetings,
against both inner and outer ex- recording podcasts or writing. If
pectations. she’s working on a book, she writes
Her goal with the book, she for three hours a day. Next, she’s
says, is to help people figure out working on a small book about how
their tendencies so they can better people respond to colors.
understand themselves and man- She continues to practice the
age their goals. “Most of us aren’t habits that she learned while writ-
doing that much to achieve our ing “The Happiness Project.” Some
aims at any one time,” she says. critics have called it a selfish im-
One category isn’t better than an- In her books, Ms. Rubin likes to rely on anecdotes as well as statistics. pulse, but she disagrees. “The re-
other, she says. search shows that happier people
She herself is an upholder, while why she wanted to know. “I’m an The idea for the book sprang kept a journal and scheduled time are more altruistic and they volun-
her husband, James, a New York upholder so I don’t need to know,” from her previous research. In for herself. After the book came teer more, give more money and
state government official, is a ques- she says, but “he’s not going to an- “The Happiness Project,” she ad- out, readers asked her how she they’re more interested in the
tioner. Recently, she was filling out swer me until I tell him.” She used opted habits over the course of a could possibly motivate herself to problems of the world and the
a form that asked for his office ad- to wonder why he was so uncoop- year that she thought might make actually keep up all those new problems of other people,” she
dress, which she called him to get. erative, but now realizes that he her happier. She exercised, orga- habits. That led her to write “Bet- says. “If we’re unhappy, we have a
Instead of telling her, he asked her isn’t trying to be difficult. nized her desk, got plenty of sleep, ter than Before,” about habit-mak- lot to deal with.”

DOCUMENTARY

VETERANS ON ‘THE
VIETNAM WAR’
BY JOHN JURGENSEN
FROM LEFT: MAARTEN DE BOER/GETTY IMAGES; HORST FAAS/ASSOCIATED PRESS

ate a place where diverse perspec-

tives can co-exist without making
the other wrong.”
KEN BURNS doesn’t like the ex- In addition to reams of letters,
pression “Thank you for your ser- government documents and jour-
vice.” Though it has become a de- nalists’ reports from Vietnam, the
fault way to pay respect to producers drew from on-camera in-
military veterans, too often the terviews with about 100 combat
phrase functions as a brushoff, the veterans and other witnesses—in-
filmmaker says. “It suggests no cluding former South Vietnamese
further conversation is necessary.” allies and North Vietnamese ene-
With marathon documentaries mies of U.S. troops.
about the Civil War, World War II The processes of gathering re-
and now the Vietnam War, Mr. search and identifying on-camera
Burns and his interviewees
producing team evolved in tan-
have conducted dem, Ms. Novick
a running in- says. Producers
quiry into the took notes during
personal experi- phone calls and
ences of combat informal meetings
troops. with Vietnam vet- Civilians after a 1965 attack by South Vietnamese forces, an image from a series by Ken Burns and Lynn Novick, left.
The scale of erans, who in turn
“The Vietnam introduced them Productions, a drama company rized zone, which the infantrymen not being able to sleep or eat after
War”—a 10-part, to other veterans. that has staged readings of Sopho- dubbed the “dead marine zone.” losing the majority of his men in a
18-hour series “Each person’s cles for military communities On camera, Mr. Musgrave occa- battle for which he earned a “He-
that took 10 story helps us add throughout the country and in Eu- sionally moves his mouth silently, roic American Killer” medal.
years to pro- a little bit of the rope. Mr. Musgrave, who writes as if weighing whether to share his Mr. Musgrave, who saw portions
duce—reflects puzzle,” says Ms. poetry and works with fellow vet- memories. “We did not torture of the documentary before it was
the complicated nature of the con- Novick, who went through a similar erans on issues such as post-trau- prisoners and we did not mutilate finalized, says watching North Viet-
flict. It claimed the lives of more process with World War II veterans matic stress disorder, says initially ’em,” he says in the documentary. namese soldiers tell their stories
than 58,000 U.S. service members, for “The War,” a 2007 seven-part he thought his role in the docu- Just as Mr. Musgrave says he was “essential” for both the film’s
scarred veterans returning to a series she directed with Mr. Burns. mentary would be connecting the was on guard to avoid “false hero- balance and his own mindset.
hostile home front, and continues To get a handle on Vietnam’s dif- filmmakers with other Vietnam ics” in his interview, Mr. Burns “It helped me to see that they
to divide Americans who lived ferent phases and jungle warfare, vets. says his team tries to protect such were old men, because in my
through it. The series debuts Sept. producers asked vets many of the By the time he sat down for his war stories throughout the editing dreams they’re still young men and
17 on PBS. same questions: What was it like at own on-camera interview, Mr. Mus- process from “the inclinations of they still terrify me,” he says.
Mr. Burns and co-director Lynn night? How close were you to the grave says he trusted the producers our business, which is to glorify “When I saw those old men talking
Novick doubled down on a strategy enemy? How did you operate in a based on their past war documen- the scoop or wring out more emo- about their war, I didn’t have the
refined in their previous work. civilian area and deal with people taries and the rapport they had fos- tion than is necessary.” hate getting in the way of accept-
Whether it’s an actor reading a let- you couldn’t identify as soldiers? tered with him. Vietnamese veterans of the war, ing their humanity and realizing
ter by a Union soldier at Gettys- Emotional details were a critical “They weren’t looking for a par- some wearing their old military that our experiences were the
burg, or an interview with an aging part of veterans’ memories. “More ticular answer. They cared about the uniforms, addressed similar ques- same.”
survivor of the D-Day invasion, par- telling was the depth of feeling answer that I had,” Mr. Musgrave tions to the American vets. During Mr. Burns, who is 64 years old—
ticipants hold the spotlight, not his- about their experiences and how says. Often that was as simple as their interviews, a Vietnamese- and at 18 had a high draft number
torians. close to the surface it was,” says giving him ample time to finish his speaking producer in a separate when the U.S. was drawing down
“That plows attention not to the Ms. Novick, who conducted many sentences. In the documentary, he room interpreted the responses si- troops in Vietnam—isn’t finished
‘expert’ but to the real expert—the of the interviews, as did producer recalls enlisting in the Marines at multaneously, speaking through an with examining the soldier’s expe-
person who experienced it,” Mr. Sarah Botstein. age 17 in an effort to jump-start his earpiece to Ms. Novick or Ms. Bot- rience. He already is working on a
Burns says. For Vietnam, that cho- Marine veteran John Musgrave manhood. One year later, in 1967, stein to avoid lags in the conversa- project to strip the “barnacles of
rus of voices, including veterans of met the producers through the ar- his unit had pushed to the border of tion. In the documentary, one sentimentality” from the American
the protest movement, helps “cre- tistic director of Theater of War North Vietnam and the demilita- North Vietnamese officer recalls Revolutionary War.
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
A10 | Monday, September 11, 2017 THE WALL STREET JOURNAL.

OPINION
REVIEW & OUTLOOK Comey’s Secret Power
J. Edgar Hoover’s central role in ginning up the fake
Man Up, Mr. Meadows abuse of power as FBI
director led America’s
dossier on Mr. Trump.
To this day, we don’t know who

T
he Washington Post reports that de- exclusion, without objecting to other provisions. Congress and Justice hired Fusion GPS to gather the dirt.
frocked White House aide Steve Bannon GOP leaders gave him what he wanted and killed Department to put new The New York Times early this year
checks on that most reported, citing an anonymous source,
and Members of the House Freedom Cau- the tax change. But within days Mr. Meadows be-
cus are plotting a coup to de- gan trashing the draft bill any- POTOMAC powerful and secretive that a wealthy anti-Trumper initially
of offices. By the time hired Fusion to dig into Mr. Trump’s
pose Paul Ryan as Speaker later The Congressman has a way—this time because it sup- WATCH
U.S. Congress finishes business dealings, but the contract
this fall. Freedom Caucus Chair- posedly didn’t reduce insurance By Kimberley
man Mark Meadows denied this
lean and hungry look. costs enough. His assault de- A. Strassel
investigating James was later taken over by a Clinton-
Comey’s role in the allied group. That’s when Fusion
on Friday on MSNBC, but you So run for Speaker. feated the first attempt at a 2016 presidential elec- shifted its focus to Russia and hired
can bet something is afoot. And House vote, and delayed its pas- tion, those safeguards may be due for Mr. Steele.
come to think of it, why wait? sage for weeks, helping Demo- an update. The question is when the FBI got
If the Freedom Caucus is upset enough to con- crats build public opposition and making it a much Powerful as Hoover was, even he in on the act. The Washington Post in
template a midsession leadership coup, let’s get harder lift in the Senate, where it failed. never simultaneously investigated both February reported that Mr. Steele
it on now. Congress is entering a critical few With this record of accomplishment, clearly major-party candidates for the presi- “was familiar” to the FBI, since he’d
dency. Mr. Comey did, and we’re now worked for the bureau before. The
months that will determine whether Republi- it’s time for Mr. Meadows to step into the spot-
getting a glimpse of how much he in- newspaper said Mr. Steele had
cans will have anything significant to show for light and take some leadership responsibility. fluenced political events. reached out to a “friend” at the FBI
their majority. If the fate of this Congress hangs The honorable act now would be to announce an Mr. Comey’s actions in the Hillary about his Trump work as far back as
in the balance, then it’s unconscionable to wait immediate challenge to Mr. Ryan surrounded by Clinton email probe are concerning July 2016. The Post even reported
and let the House fail. The manly—the patri- his Freedom Caucus supporters and Mr. Ban- enough. He made himself investigator, that Mr. Steele “reached an agree-
otic—thing to do is force a debate and vote while non’s Breitbart staff. judge and jury, breaking the Justice ment with the FBI a few weeks before
there’s still time to save the day. Lay out his strategy for passing tax reform, Department’s chain of command. the election for the bureau to pay him
This has the added advantage of being a stab for raising the debt limit, and for passing the He publicly confirmed the investiga- to continue his work.”
in the front for a change. The Freedom Caucus Freedom Caucus budget through the House and tion, violating the department’s princi-
specialty is the stab in the back. Claim to be co- the Senate this fall. Then the Members of the ples. He announced he wouldn’t rec-
operative, to be working constructively toward House GOP conference can hold a debate and ommend prosecuting Mrs. Clinton, Here’s a question: What if
even as he publicly excoriated her—an the FBI had a lot to do with
some legislative compromise, but then at a criti- vote, and Mr. Meadows and the country can see extraordinary abuse of his megaphone.
cal moment raise its demands, vote no and how much support he has for his political strat- Then he rekindled the case only 11 that fake Trump ‘dossier’?
blame the leadership. Soak up the cable-TV ap- egy compared to Mr. Ryan. days before the election.
pearances and then sit back as someone else If Mr. Meadows is too modest, or thinks he An inquiry by the Senate Judiciary
cleans up the political mess. can’t win, then perhaps his Freedom Caucus run- Committee has now shown that Mr. Who was Mr. Steele’s friend at the
This is how Mr. Meadows played the Obama- ning mate, Ohio Rep. Jim Jordan, would want to Comey’s investigation was a charade. FBI? Did the bureau influence the di-
Care repeal debate earlier this year. As House run. And if Mr. Jordan declines the honor, then He wrote a draft statement exonerat- rection of the Trump dossier? Did it
leaders and Health and Human Services Secre- perhaps Texas Rep. Louis Gohmert will want to ing Mrs. Clinton in May, long before give Mr. Steele material support from
tary Tom Price prepared the draft bill, Mr. Mead- exploit the high regard with which he is held by he bothered to interview her or her the start?
ows was regularly consulted. According to nu- his colleagues. staff. This at least finally explains The timing matters because it could
the probe’s lackluster nature: the ab- answer the vital question of why the
merous sources, Mr. Meadows’s priority in This is the way a congressional majority is
sence of a grand jury, the failure to FBI wanted the dossier. Here’s one
private discussions was killing any reduction, supposed to work. Individuals run for leader- follow up on likely perjury, the un- thought: warrants.
even a small one, in the tax exclusion for em- ship, the Members vote, and then everyone ac- orthodox immunity deals made with The Foreign Intelligence Surveillance
ployer-sponsored health insurance. cepts the results and moves on together. That’s Clinton aides. Court, which oversees spying activities,
For conservative health economists, this is a what Democrat Steny Hoyer did after he lost to But the latest big development is a is usually generous in approving war-
crucial policy reform. It would reduce a subsidy Nancy Pelosi in 2002, and Democrats proceeded new look at how Mr. Comey may have rants, on the presumption law-enforce-
that drives up health-care costs, and it would be- to govern in unified fashion after they won the similarly juked the probe into Donald ment agencies are acting in good faith.
gin to equalize the tax treatment for individual House in 2006. Trump’s purported ties to Russia. When a warrant is rejected, though, law
and employer insurance. But Mr. Meadows op- If Mr. Meadows wants to stage a coup, he The House Intelligence Committee’s enforcement isn’t pleased.
posed it as a “tax increase,” a definition which should do it publicly by putting his agenda and investigation took a sharp and notable Perhaps the FBI wanted to conduct
would mean that Congress could never reduce strategy front and center for everyone to see. turn on Tuesday, as news broke that it surveillance on someone connected to a
had subpoenaed the FBI and the Jus- presidential campaign (Carter Page?)
any tax subsidy. Take the dagger out from under the toga, Mark,
tice Department for information relat- but couldn’t hit what was—and ought
Mr. Meadows worked frantically behind the and show your colleagues that lean and hungry ing to the infamous Trump “dossier.” to be—a supremely high bar for getting
scenes to make sure there was no change in the tax look. Then let’s hold a vote. That dossier, whose allegations appear such a potentially explosive warrant. A
to have been fabricated, was commis- dossier of nefarious allegations might
sioned by the opposition-research firm well prove handy in finally convincing
The Next Middle East War Fusion GPS and then developed by a the FISA court to sign off.

I
srael launched airstrikes on a military com-
pound in Syria on Thursday, and the bomb-
ing should alert the Trump Administration
as much as the Syrians. They carry a warning
about the next war in the Middle East that could
draw in the U.S.
Israel doesn’t confirm or deny its military
strikes, but former officials said they were
aimed at a base for training and a warehouse
for short- and midrange missiles. The strikes
also hit a facility that the U.S. cited this year for
involvement in making chemical weapons.
The larger context is the confrontation that
is building between Israel and Iran as the war
against Islamic State moves to a conclusion in
Syria and Iraq. Iran is using Syria’s civil war,
and the battle against Islamic State, as cause
to gain a permanent military foothold in Syria
that can threaten Israel either directly or via its
proxies in Syria and Lebanon.
Tehran has helped Hezbollah stockpile tens
of thousands of missiles that will be launched
against Israel in the next inevitable conflict.
If it can also dominate southern Syria, Iran
can establish a second front on the border
near the Golan Heights that would further
stretch Israel’s ability to defend itself.
Israel may have to make more such strikes
in Syria because Iran isn’t likely to give up on
this strategic opening. Iran’s Revolutionary
Guards know they have Russia’s backing in
Syria, and the U.S. is signaling that it is loathe
to do anything to change that once Islamic State
is routed from Raqqa.
“As far as Syria is concerned, we have very
little to do with Syria other than killing ISIS,”
President Trump said Thursday at a White
House press conference with the emir of Ku-
wait. “What we do is we kill ISIS. And we have
succeeded in that respect. We have done better
in eight months of my Presidency than the pre-
vious eight years against ISIS.”
Great, but the problem is that the end of Is-
lamic State won’t bring stability to Syria, and
American interests in the Middle East don’t end
with Islamic State. The danger of a proxy war
or even a direct war between Iran and Israel is
growing, and it will increase as Iran’s presence
builds in Syria. Mr. Trump may not like it, but
he needs a strategy for post-Islamic State Syria
that contains Iran if he doesn’t want the U.S. to
be pulled back into another Middle East war.
former British spook named Christo-
pher Steele.
But the FBI had its own part in this
dossier, and investigators are finally
drilling down into how big a role it
played, and why.
The bureau has furiously resisted
answering questions. It ignored the
initial requests for documents and has
refused to comply with the House
committee’s subpoenas, which were
first issued Aug. 24.
Republicans are frustrated enough
that last week they sent orders com-
pelling FBI Director Christopher Wray
and Attorney General Jeff Sessions to
appear before the committee to ex-
plain the obstruction.
One explanation is that the docu-
ments might show the FBI played a
LETTERS TO THE EDITOR
Turkey Is a Victim, Not a Vector, of Terrorism
Your Aug. 11 editorial “An Aussie
Terror Warning” paints a distorted
picture of Turkey’s fight against ter-
rorism by suggesting that Turkey
acts as a gateway for terrorists try-
The FBI might have had a real mo-
tive to support Mr. Steele’s effort. It
might have even justified the unjusti-
fiable: working with a partisan oppo-
sition-research firm and a former
spook to engineer a Kremlin-planted
dossier that has roiled Mr. Trump’s
entire presidency.
Now that’s power.
Mr. Comey’s meddling has never
seemed to stem from some hidden
partisan impulse, but rather from an
overweening self-righteousness.
But power can be misused as much
in the hands of the sanctimonious as
the corrupt. And it’s overdue for con-
gressional investigators to get to the
bottom of precisely how much power
Mr. Comey was exercising.
Write to kim@wsj.com.
begun construction of a 911-kilome-
ter wall designed to protect the Syr-
ian border, cutting off Daesh finance
and member-acquisition routes.
Turkey has also been a leader in

Democrats and ‘Dogma’ ing to attack the West.

My country has suffered from the
welcoming refugees who escaped
the cruelty of Daesh and the

‘W
most violent forms of terrorism for broader war in Syria. We shelter
hy is it that so many of us on this David Rivkin, a constitutional litigator, says decades. Contrary to your sugges- the largest number of refugees in
side have this very uncomfortable “the tenor of questions by Democrat Senators tion, we have been a leader of ef- the world, with more than three
feeling that—you know, dogma seemed designed more to challenge the ideas forts to fight this scourge, both at million Syrians finding refuge in
and law are two different of Catholic orthodoxy—a sub- home and abroad. our country.
things. And I think whatever a Are you now or have ject more fitting for a theolog- Turkey was the first country in the We provide free health care to all
religion is, it has its own world to launch a successful ground registered Syrians in the country,
you ever been an ical debate than a Senate
offensive against Daesh in Syria, and we grant them access to educa-
dogma. The law is totally dif- hearing.” helping to clear an area that has tion. Our humanitarian budget ex-
ferent. And I think in your case, ‘orthodox Catholic’? Proving Mr. Rivkin’s point, since become a haven of peace for ceeds $25 billion—the second larg-
professor, when you read your Sen. Dick Durbin jumped in to 70,000 Syrians fleeing violence. We est in the world.
speeches, the conclusion one demand of Ms. Barrett: “Do have opened our facilities and air- So it isn’t appropriate to single
draws is that the dogma lives loudly within you, you consider yourself an orthodox Catholic?” space to the U.S. and other partners out Turkey as a gateway for terror-
and that’s of concern when you come to big is- Does Mr. Durbin understand that he sounds like in the fight against terrorism. ist attacks. We live on the front
sues that large numbers of people have fought the Southern Baptist ministers in 1960 who We have shut down 12 Daesh- lines of terrorism, and we fight it
for years in this country.” thought Jack Kennedy shouldn’t be President linked organizations in Turkey. We every day.
Thus did California’s Senator Dianne Fein- because he’d take orders from the pope? have moved aggressively to disrupt On the specific incident cited in
stein pronounce on Wednesday that, by virtue This questioning is part of a broader effort the flow of foreign fighters into your editorial, we reached out im-
Syria, banning more than 50,000 mediately to our Australian counter-
of being a faithful Catholic, Amy Barrett, a re- on the left to disqualify people with strong re-
foreigners from entering Turkey and parts and have been collaborating
spected law professor at Notre Dame, may have ligious views from the public square. Ms. deporting or arresting another 5,000 closely with them ever since.
excluded herself from a federal judgeship. Presi- Feinstein’s smear about Ms. Barrett’s linked to terrorist activity. We Turkey and the U.S. are NATO al-
dent Trump has nominated Ms. Barrett for the “dogma” dovetails with the left-wing South- launched a comprehensive social- lies. Turkey stood by the U.S. fol-
Seventh Circuit Court of Appeals. But the Demo- ern Poverty Law Center’s effort to label any media surveillance effort and closed lowing the 9/11 terrorist attacks, and
cratic obsession with Ms. Barrett’s religion outfit that doesn’t go along with its agenda more than 2,500 social-media ac- we have worked together ever since
transformed what should have been a routine a “hate group.” counts linked to terrorist activities, to stop terrorists and take down the
Senate confirmation hearing into a tour of the Sen. Al Franken, the great legal philosopher, knowing that terror networks re- networks that support them.
mind of the modern secular left. wrapped it all up nicely by accusing Ms. Barrett cruit members online. And we have As President Trump noted earlier
The ugly implication of Mrs. Feinstein’s words of having appeared before a “hate” group. He this year standing alongside Presi-
is underscored by the context. She deployed them was referring to the Alliance Defending Free- dent Recep Tayyip Erdogan: “Today
to suggest Ms. Barrett’s faith would lead her to dom, a religious liberty outfit that the Southern Pakistan, India Are Unlikely we face a new enemy in the fight
against terrorism, and again we seek
substitute her personal beliefs for the law, basing Poverty Law Center designated a hate group be- To Cooperate on Afghanistan to face this threat together.”
the accusation primarily on a law review article cause it adheres to traditional views about hu- Saad Mohseni and Mitchell Shiv- The common threat we face today
Ms. Barrett wrote in 1998 as a law clerk. man sexuality and marriage. ers are right in arguing that “Presi- calls for increased cooperation, not
Ms. Barrett and her co-author explicitly As for judges imposing dogma over the law, dent Trump Needs a Special Envoy baseless allegations thrown at
reached the opposite conclusion: “Judges can- it’s worth noting that not all dogmas are reli- in Afghanistan” (op-ed, Aug. 25). trusted and long-standing allies.
not—nor should they try to—align our legal sys- gious. Democratic interest groups are explicit in However, their suggestion that the SERDAR KILIÇ
tem with the Church’s moral teaching whenever demanding that Democratic judicial nominees appointee will have to coax India Ambassador of Turkey to the U.S.
the two diverge.” be committed to overturning Citizens United’s and Pakistan to work together on Washington
The question addressed by the law review ar- defense of free speech while brooking no modifi- Afghanistan shows that, despite
their depth and length of experi-
ticle was what Catholic judges ought to do when cation in Roe v. Wade. Letters intended for publication should
ence in that country, they have be addressed to: The Editor, 1211 Avenue
they conclude they cannot in good conscience Let’s hope the Senate rejects the bigotry that learned nothing about that particu- of the Americas, New York, NY 10036,
apply the law as written because it clashes with marred Wednesday’s hearing and approves the lar dynamic. It is analogous to ex- or emailed to wsj.ltrs@wsj.com. Please
their own moral views. If she was rattled by the eminently qualified Ms. Barrett for the Seventh pecting Iran to work with Israel to include your city and state. All letters
question, Sen. Feinstein ought to have been reas- Circuit. The federal bench could use more judges root out Hezbollah. are subject to editing, and unpublished
sured by the answer Ms. Barrett gave: They who understand their civic duty as well as Ms. VIJAY DANDAPANI letters can be neither acknowledged nor
returned.
should recuse themselves. Barrett does. New York
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
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THE WALL STREET JOURNAL.
Trump Finally Pivots—but Will It Last?
DECLARATIONS
By Peggy Noonan
A
nd so, the pivot. I thought
it would come sooner, on
the heels of the inaugural
address in which President
Trump deliberately de-
clared his distance from the Republi-
cans of George W. Bush’s era and the
Democrats of Barack Obama’s:
“Washington flourished—but the
people did not share in its wealth.
Politicians prospered—but the jobs
left, and the factories closed. The es-
tablishment protected itself, but not
the citizens of our country.” That
was the famous “American carnage”
speech, and it was Mr. Trump saying
he was something new, a beginner of
things, a party of one.
He had a great meeting
with ‘Chuck’ and
‘Nancy.’ What comes
next is anybody’s guess.
He didn’t follow through.
Because the pivot has come late,
after almost eight months of fumbles
and blunders that hardened sides,
the outlook for any new and sus-
tained legislative progress seems
doubtful at best. But yes, what we
saw last week was Mr. Trump’s pivot
toward the Democrats.
It’s amazing he didn’t try it
sooner. Mr. Trump isn’t, as all know,
a conservative; he has in his history
of statements and positions been at
least as much a Democrat as a Re-
publican, and long contributed
money to both parties.
His core supporters have always
been misunderstood as right-wing
when they’re something broader and
more complicated than that.
Mr. Trump has never been a stan-
By Paula Marantz Cohen
T
he more I read, teach and
watch performances of Shake-
speare’s plays, the more my po-
litical thinking is clarified. I have not
become more allied with a particular
party: Shakespearean politics are
philosophical, not partisan. They do,
however, express a basic value sys-
tem—still relevant today—with which
to think about society and judge its
health or sickness.
The Bard was, in the
classic sense, conservative.
What would he have made
of the U.S. president?
Shakespearean politics are conser-
vative in the classic sense. They value
order. For Shakespeare, society is the
Elizabethan “great chain of being”
made manifest. God is at the hierar-
chy’s top, as the embodiment of su-
preme order. Satan is at the bottom,
the epitome of complete chaos.
In between is society, the human
effort to replicate the orderliness as-
sociated with godliness. Its customs,
traditions and laws keep chaos at bay
and provide an emotional and intellec-
tual connection across the divide.
Yet Shakespeare’s support for so-
cial order isn’t an uncritical approval
of the status quo. There is no pre-
tense that whatever exists at any
given time is sacred or absolute. One
supports the king because he is the
king, not because he is a particularly
good one.
When Henry Bolingbroke usurps
the crown in “Richard II,” he goes
against the orderliness of succession
and prompts a long and bloody civil
war. Yet once Bolingbroke wins and
becomes Henry IV, his reign and suc-
cession assume their own legitimacy.
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dard Republican. He beat all the stan-
dard Republicans in the primaries.
On top of that, to govern success-
fully in an increasingly postpartisan
nation, he always needed Democrats
on the Hill more than he needed Re-
publicans. He could always, for in-
stance, get most Republicans to sup-
port some kind of tax reform, but
he’d need Democrats to get a bill
comfortably over the top and broadly
accepted by the people.
Mr. Trump instead threw in with
Republican leaders, was disappointed
on health care, and concluded they
were useless.
Now, after weeks of insulting
them—“They look like fools,” he
tweeted after that loss—comes what
reportedly happened in the Oval Of-
fice last week. The president, meet-
ing with Hill leaders from both par-
ties, rebuffed Speaker Paul Ryan and
Senate Majority Leader Mitch
McConnell and embraced Senate Mi-
nority Leader Chuck Schumer’s rec-
ommendation to raise the debt ceil-
ing and finance the government for
only three months.
He did this literally in front of the
Democrats, including House Minor-
ity Leader Nancy Pelosi, and while
overruling his own Treasury secre-
tary. Later the president spoke of
his great meeting with “Chuck” and
“Nancy.”
At a tax-reform rally in Mandan,
N.D., he invited the state’s Demo-
cratic senator, Heidi Heitkamp, who’d
flown out with him on Air Force One
and is up for re-election next year,
onto the stage, and praised her as a
“good woman.”
As Ben Domenech noted in the
Federalist, it can be assumed there
was something of a personal angle in
the pivot: Mr. Trump “doesn’t like
McConnell and Ryan, never did. He
likes Chuck Schumer, and knows him,
and thinks he can work with him.
And he knows Chuck always makes
money for his partners.” That last is
a brilliant allusion to “The Godfather,
Part II.”
I suspect most voters will like the
deal made last week—get something
Shakespeare’s Lessons on Donald Trump
In Shakespeare’s political philoso-
phy, social disruption is to be feared
and opposed, but when it happens, the
subsequent order then needs to be pre-
served, so long as it is rational.
In Shakespeare’s tragedies, disrup-
tion produces drama but is con-
demned as a course of action. There
would be no play if Claudius didn’t
kill Hamlet’s father. Don’t forget,
though, that Claudius is a villain
whose evil, illegitimate action pro-
duces devastating consequences.
In the comedies, one might argue
that disruption comes closer to what
we associate with innovation. In “As
You Like It,” when Duke Frederick ban-
ishes the legitimate king, Duke Senior,
the ultimate result is positive.
The Forest of Arden, where the
characters interact for most of the
story, is a site of experimentation and
play. Yet “As You Like It”—and all of
Shakespeare’s comedies, for that mat-
ter—is an extreme exercise in whimsy.
The audience knows this isn’t how life
really works. The disruption it enacts
is temporary, and, at the end, the ex-
isting social order is reinstated with
only minor revision.
That said, Shakespeare has an
acute understanding of the conse-
quences of prejudice and meanness.
“The Merchant of Venice” dramatizes
the result of persistent, socially sanc-
tioned mistreatment of one group of
people. The villain of the play, the
Jew Shylock, has experienced a life-
time of abuse, and his resentment fu-
els his determination to exact the
pound of flesh that he is legally
owed. Portia must exploit a loophole
in the law to foil his claim. Through
her ingenuity, the social order is
made right, but the verdict—forcing
Shylock to convert to Christianity—
perpetuates his mistreatment.
The play ends on a disturbing note.
Portia had asked Shylock to show
mercy, but then she doesn’t show it to
him. The sentence she delivers seems
bound to breed further resentment.
Robert Thomson
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Chief Executive Officer and Publisher
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Professional Information Business:
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OPINION
Minority Leader Chuck Schumer (foreground) in the Oval Office on Wednesday.
done, pass a bill! America doesn’t
need a government shutdown or a
prolonged debt-ceiling debate or a
stupid argument over helping Hous-
ton (and soon Florida). North Korea
is bubbling, hurricanes are batter-
ing—people won’t mind this deal,
and a lot of them will actively ap-
prove of it.
The president’s core supporters
won’t hold it against him. Again, he
had a lot of support from traditional
Democrats. His core isn’t far right,
it’s opposed to how Washington has
comported itself the past few de-
cades. They have a tropism toward
the outsider, and the more the main-
stream media hate him, the more
they’ll stick with him.
Will the pivot last? There are
plenty of reasons to doubt it.
Mr. Trump’s nature lacks con-
stancy. He’s shown he’s unsteady in
his direction. He’s changeable. This
is part of why he doesn’t do long-
term strategy but focuses on daily,
shifting tactics.
The Dreamers can depend on him,
he’ll take care of them. The Dreamers
are out of here in six months. The
Dreamers have nothing to fear, he’ll
work something out.
How do these insights apply to
America today? Some say electing
Donald Trump, despite his coarse,
unpredictable nature, was better than
the alternative. At least he would
shake things up. But shaking up a so-
cial system, even a deeply flawed
one, is treacherous.
This president combines qualities
of Shakespeare’s worst kings: the van-
ity of Lear, the impetuosity of Richard
II, the maliciousness of Richard III. His
presidency hasn’t introduced a new
order the way Henry IV did. It has in-
creased chaos and discord. No Trump-
like character could possibly triumph
in a Shakespeare play.
Yet Shakespeare’s “Henriad”—the
eight-play historical sequence that
Americans Are Richer Than They Realize
By Martin Feldstein
U
.S. government statistics paint
an excessively grim picture of
what is happening to real
wages in America and the growth of
real national income. Although most
households’ take-home cash has been
rising very slowly for decades, their
standard of living is increasing more
rapidly because those wages can now
buy new and better products at little
or no extra cost.
The government’s measure of real
incomes gives too little weight to
this increase in what take-home pay
can buy.
The common assertion that middle-
class American households have seen
no increase in real incomes for 30
years simply isn’t true. And contrary
to a common fear, most members of
the younger generation will have
higher real incomes as adults than
their parents had at the same age.
The government’s growth esti-
mates are excessively pessimistic for
two reasons. First, government statis-
ticians grossly understate the value of
improvements in the quality of exist-
ing goods and services. More impor-
tant, the government doesn’t even try
to measure the full contribution of
new goods and services.
Consider how the government
handles manufactured products when
their quality improves. Statisticians
track a large number of products. For
each, they ask the manufacturer two
questions: Has the product changed
since last year? If so, how much more
does it cost to make this year’s model
than it would now cost to make last
year’s model?
If there is no increase in the cost of
production, the government concludes
that there has been no increase in
quality. And if the manufacturer re-
ports an increase in the cost of produc-
tion, the government assumes that the
value of the product to consumers has
increased in the same proportion.
That’s a very narrow—and incor-
rect—way to measure quality change.
Monday, September 11, 2017 | A11
before. He’s done little to bring them
over or blunt their antagonism.
That base with its rising left will
make Democrats on the Hill pay a
heavy price for working with him.
They’ll howl and call Democratic
leaders sellouts, complicit, accuse
them of doing deals with the devil.
To get around this, Democratic
leaders will have to press Mr.
Trump hard to the left in the deals
they make.
That in turn would set Republican
lawmakers on a path of true rebel-
EVAN VUCCI/ASSOCIATED PRESS
lion. The president gives the leader-
ship no credit for it, but Republicans
have been patient with him, squelch-
ing their criticism after embarrassing
tweets and statements. They did so
not only because they fear Mr.
Trump’s core supporters, which they
do, but because they hoped to make
real progress with him, as they did
early on, with Justice Neil Gorsuch’s
Soon Mr. Schumer or Mrs. Pelosi appointment.
will get him mad, and he’ll be on the But if a Trump being forced too
phone with Mr. McConnell saying: “I far left frees them from the idea that
miss you, at least you have princi- they must work with him, some will
ples. Come see me.” turn on him, venting their long-
Mr. Trump isn’t moving toward the tamped-down fury. This will further,
Democrats from a position of strength. and in a formal way, rupture the
After the inauguration, he would have party.
had the mystique and power of a new A Trump in close alliance with
force who’d just won an amazing elec- Democrats will be disorienting to
tion. Now he’s battered. his closest allies in the House, the
Mr. Trump has always put himself conservative members of the Free-
forward as the best deal-maker in dom Caucus. They broke with the
history, and his core supporters have president on health care, but they
respected that—he’s “The Art of the come from largely pro-Trump dis-
Deal,” a survivor who finagled his tricts, they’ve defended him more
way through bankruptcies; he’s vocally and enthusiastically than
shrewd. But he hasn’t demonstrated the GOP leadership has, and they
this in the presidency. have good relations with him. But
Triangulating—making deals with they are traditionally conservative
the other party while holding on to in their philosophy and stands.
your own—requires real policy They would in many ways be philo-
depth. You have to know what’s non- sophically opposed to the new
negotiable, what can be given up Trump.
without much damage. It requires a For now the pivot is a major devel-
kind of philosophical reach—knowing opment. Democratic leaders in Con-
what you and your supporters stand gress are smiling and preparing wish
for and why. Without that knowledge lists. If the pivot lasts and works, it
you’ll get outfoxed. Without it you’ll will be remembered as big.
get rolled. If not, it’s just another zany,
As for the Democrats, their base has fleeting, unconnected moment in
come to hate the president as never Trumpland.
begins with Bolingbroke’s usurpation question of where to draw the line
of Richard II—chronicles a multigen- between supporting the office of the
erational war culminating in the as- presidency and backing a man who
cendancy of the villainous Richard III. seems to have no respect for its his-
His final defeat ushers in the Tudor torical traditions and values.
dynasty: a union of the warring Perhaps a Portia-like figure could
Houses of Lancaster and York. use her legal ingenuity to effect the
Perhaps by learning from that tale ouster of this selfish and irrational
of partisan vitriol, Americans can move man. Yet this risks perpetuating the
away from finger-pointing, take re- resentment that caused his election
sponsibility for political and social fail- in the first place. Studying Shake-
ures and build a new consensus. speare teaches nothing if not humil-
Reading Shakespeare’s historical ity: an openness to the possibility
plays could encourage people to be that someone else may have an an-
less self-righteous in their political swer that has escaped the rest of us.
positions. Still, that leaves the prob-
lem of how to rectify what years of Ms. Cohen is a professor of English
misrule and resentment have at Drexel University, where she is
wrought. It also doesn’t answer the dean of the Pennoni Honors College.
In reality companies improve prod- one-third decrease in the death rate
ucts in ways that don’t cost more to from heart disease among those over
produce and may even cost less. 65 between 2000 and 2007.
That’s been true over the years for fa- Or consider consumer electronics.
miliar products like television sets and New York University economist Wil-
audio speakers. liam Easterly recently tweeted an im-
The government therefore doesn’t age of a 1991 RadioShack newspaper
really measure the value to consumers ad and noted that all the functions of
of the improved product, only the cost the devices on sale—clock radio, cal-
culator, cellphone, tape-recorder, com-
pact-disc player, camcorder, desktop
The official economic computer—are “now available on a
$200 smartphone.” The benefits to
statistics fail to account consumers from these advances don’t
for quality improvements show up in GDP.
There are other problems that cause
and new products. the official statistics to underestimate
the true growth of real income. A basic
government rule of GDP measurement
of the increased inputs. The same ap- is to count only goods and services
proach, based on measuring the cost that are sold in the market. Services
of inputs rather than the value of out- like Google and Facebook are therefore
put, is also used for services. excluded from GDP even though they
The official estimates of quality are of substantial value to households.
change are therefore mislabeled and The increasing importance of such free
misinterpreted. When it comes to services implies a further understate-
quality change, what is called the ment of real income growth.
growth of real output is really the It’s impossible to know how much
growth of real inputs. The result is a the official statistics understate the
major underestimation of the increase true growth of real incomes. My own
in real output and in the growth of judgment is that the true annual
real incomes that occurs through growth rate could exceed the official
quality improvements. figure by two percentage points or
The other source of underestima- more, implying that the true annual
tion of growth is the failure to capture rate of real per capita income growth
the benefit of new goods and services. during the past two decades has
Here’s how the current procedure been much more than double the of-
works: When a new product is devel- ficial 1.3%.
oped and sold to the public, its market Even though real incomes are ris-
value enters into nominal gross do- ing faster than is widely believed, we
mestic product. But there is no at- can and should do even better.
tempt to take into account the full Changing our tax rules, reforming
value to consumers created by the regulation and improving education
new product. can spur faster growth and a more
Think about statins, the remarkable rapid rise in the standard of living.
class of drugs that lower cholesterol But even as we pursue these policies
and reduce deaths from heart attacks. we shouldn’t lose sight of the econ-
By 2003 statins were the best-selling omy’s superior performance.
pharmaceutical product in history. The
total dollar amount of statin sales was Mr. Feldstein, chairman of the
counted in GDP, but the government’s Council of Economic Advisers under
measure of real income never included President Reagan, is a professor at
anything for improvements in health Harvard and a member of the Jour-
that resulted from statins—such as a nal’s board of contributors.
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, September 11, 2017 THE WALL STREET JOURNAL.

LIFE & ARTS

WHAT’S YOUR WORKOUT? | By Jen Murphy

A Regimen to Stay Undefeated

Having put off a finance career for fighting, light heavyweight boxer Mike Lee explains how recovery is as important as training
Mike Lee knows you need more Mike Lee, top right, works with his
than strength to prevail in the trainer, Jamal Abdullah, and performs
ring. Boxing also takes brains. a workout for his abs, below.
At 16, Mr. Lee balanced time
practicing the sweet science with a once a week. Sundays are a rest
job as a runner on the commodi- day.
ties floor at the Chicago Board of
Trade. He competed as an amateur The Diet
boxer throughout college. After The first time Mr. Lee fought on
graduating with a finance degree ESPN, he had to lose 7 pounds in
from the University of Notre one day to make his agreed weight
Dame’s Mendoza College of Busi- for the fight—an amount consid-
ness in 2010, he decided to post- ered unhealthy for normal people,
pone a career in finance to pursue but not unusual for boxers pre-
MICHAL CZERWONKA FOR THE WALL STREET JOURNAL

pugilism. fight. “It was mostly water weight,

“In my early days, I felt immor- but it was still difficult and not
tal,” says Mr. Lee, who is now 30. something I ever want to have to
“Then my body started to show do again,” he says. His team now
signs that I wasn’t invincible.” A has his nutrition down to a science
succession of injuries kept him out so that he can weigh in at 175
of the ring for nearly two years. pounds and go into the ring
He broke his hand in the third around 187 pounds. “A lot of the
round of his first fight at New secret is water-weight manipula-
York’s Madison Square Garden in tion,” he says.
2011 and continued fighting until He works with a nutritionist
he won by knockout. “I probably and has microwavable meals
should have stopped, but when shipped to him each week. Mr. Lee
you’re in front of a crowd like is hypoglycemic, but says eating
that, you don’t feel the pain,” he small meals throughout the day
says. West Boxing Club cises like box jumps helps stabilize his blood sugar. He
He then struggled with jaw and in Santa Monica, and kettlebell swings. eats a largely plant-based diet
back injuries. He wondered if his Calif. Leading up to Between workouts with moderate amounts of lean
body was telling him it was time fights, he tries to he focuses on recov- protein. Breakfast might be quinoa
to hang up his gloves. spar with someone ery. He regularly vis- with kale and bison or egg whites
Mr. Lee began working with a who can mimic his its a chiropractor and with gluten-free toast and avo-
nutritionist and started to take re- opponent’s fighting massage therapist cado. “I could eat Mexican food
covery, like ice therapy, yoga and style. In a real specializing in mus- three meals a day,” he jokes, “but I
massage work, just as seriously as fight, each round cle-activation tech- try to limit it to one.” Chicken ta-
training. He also enlisted a sports lasts three minutes, nique. He spends cos topped with black beans and
psychologist who taught him visu- with one minute of three minutes in a rice in corn tortillas are a typical
alization techniques. “I visualize rest between cryotherapy cham- lunch. Dinner might be grilled
every fight,” he says. “The smells, rounds. In training, ber—similar to an in- salmon and a salad.
the colors, my opponent’s moves, he cuts the rest to tense ice bath—a few
my response.” Now he says he’s 30 seconds. “The times a week, particu- The Gear
the strongest, fastest and smartest idea is to push larly after tough spar- “I love Under Armour and they
he’s been in his boxing career. yourself so hard in ring days. The ex- send me a lot of gear,” he says. He
Ranked 12th in the World Boxing training that fight night becomes swim laps. “It’s like when you treme cold is meant to reduce has custom-made Reebok boxing
Association’s light heavyweight easy,” he says. Tuesdays, Thurs- throw a combo in a fight and are inflammation and muscle soreness. shoes and likes Nike and Under Ar-
division, he’s shooting to put his days and Saturdays he focuses on really out of breath but have to Mr. Lee was dubious about the mour sneakers for running. He’s
perfect 19-0 record on the line pad work, heavy bags and film collect yourself,” he says. He fin- benefits of yoga before he started worn Grant gloves his entire box-
with a Sept. 15 bout against Aaron study. ishes workouts by jumping rope practicing five years ago. “My ing career. He’s become a Lulu-
Quattrocchi in Rosemont, Ill. A second evening workout is for 15 minutes. Ten seconds of joints felt so loose after my first lemon convert. “My sister taught
dedicated to strength and condi- each minute he goes all-out, doing class,” he says. “I realized I had yoga and introduced me to the
The Workout tioning. He runs or swims for car- double jumps or high knees to ele- been totally ignorant about its brand,” he says. “They make some
Mr. Lee spars Mondays, Wednes- dio. In the pool, he’ll practice vate his heart rate. Strength work benefits.” He tries to go to a hot of the most comfortable workout
days and Fridays at Wild Card breath holds underwater and then includes explosive plyometric exer- yoga class at Core Power at least clothing.”

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. 28 Astute attorney
-15 1 2 3 4 5 6 7 8 9 10 11 12 13 64 Take note of
-10 29 Home of the
Riga -5 14 15 16 65 Zaps, in a way Crimson Tide,
0 66 Lip familiarly
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Glasgow osco
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10 20 21 22
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Dublin 15 1 Otherwise 31 There are 28 in a
A d
Amsterdam li
Berlin 20
23 24 25
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Warsaw
25 26 27 28 29 30 31 letter to, e.g. 33 Atlantic catch
Lond
London
Brussels 30
kf
Frankfurt Pra
Prague e
Kiev
35 32 33 34 35 3 Graph line 34 Gooey stuff
Paris i h
Munich 36 37 38 4 Pleasant to 40 Contacted the
Vienna
V
Warm listen to Coast Guard, in a
Budapest
Budapes
d p
Geneva Cold
39 40 41 42 43 44
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Milan h
Bucharest Stationary 45 46 47
6 Modernize, as a 41 Is caught in a
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48 49 50
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Rome t b
Istanbul 51 52 53 54 55 56 57
7 Popular tablets
Madrid
d id Rain
8 Chemist’s salt 43 Supply with
Lisbon
Lisbo
58 59 60 financing
T-storms 9 Merry
61 62 63 44 Diagonal movers
Al i
Algiers T
Tunis Ath
Athens 10 Canonization
Snow 46 Malleable metal
64 65 66 requirement
Rabat
b
Flurries
11 “Absolutely!” 49 Letters after
IT’S ABOUT TIME! | By Julian Thorne alephs
Ice 12 Touch down
50 Host at a roast
Global Forecasts City
Today
Hi Lo W
Tomorrow
Hi Lo W City
Today
Hi Lo W
Tomorrow
Hi Lo W
Across 23 They’re 45 In the family 13 Old flames
1 Cheese in a red outstanding 51 Unexciting
s...sunny; pc... partly cloudy; c...cloudy; sh...showers; Geneva 17 10 pc 17 10 sh Ottawa 23 10 s 25 12 pc 47 Brings together 18 Mideast
t...t’storms; r...rain; sf...snow flurries; sn...snow; i...ice Hanoi 31 25 c 32 26 c Paris 18 11 t 19 14 pc coat 25 Fiction’s 52 Choir costume
48 Fix sloppy chieftain
Havana 31 22 t 31 23 t Philadelphia 26 16 s 24 17 pc counterpart
Today Tomorrow Hong Kong 33 28 t 33 27 sh Phoenix 41 29 s 41 29 s
5 “Give me ___” sentences 53 “Toodle-oo!”
City Hi Lo W Hi Lo W (“Call me”) 22 Bears
Honolulu 31 23 pc 30 23 r Pittsburgh 23 14 s 21 15 c 26 Social 49 Demonstrates 55 Neighborhood
Amsterdam 16 12 t 17 12 pc Houston 30 16 s 31 19 s Port-au-Prince 34 23 pc 34 24 c
10 Like bulls and environment 24 Broker’s advice
Anchorage 14 9 c 14 10 c Istanbul 30 22 s 29 22 s Portland, Ore. 30 14 pc 28 12 s flexibility 56 Nutritional amts.
Athens 30 23 s 31 23 s Jakarta 33 25 t 33 24 pc Rio de Janeiro 30 20 s 30 20 s boars 29 Quantity of 26 Unimportant
51 •Medulla 57 Sets the price at
Atlanta 18 15 r 19 15 r Johannesburg 30 14 pc 30 12 pc Riyadh 42 25 s 42 25 s
14 Sumptuous tourists or oblongata’s 27 Start of a Caesar
Baghdad 46 26 s 46 26 s Kansas City 27 14 s 28 13 s Rome 23 17 t 25 15 s schoolchildren
Baltimore 24 14 s 22 16 c Las Vegas 36 26 s 36 24 s Salt Lake City 31 18 pc 32 19 t place boast 60 Day divs.
15 Mount Everest
Bangkok 34 26 c 34 26 t Lima 19 15 pc 19 16 pc San Diego 27 21 pc 26 21 pc
is on its northern 32 •Cirrus cloud 54 Scarlett Butler’s
Beijing 29 13 s 30 17 s London 18 10 sh 19 11 t San Francisco 28 18 pc 26 18 pc component Previous Puzzle’s Solution
Berlin 19 11 pc 18 10 pc Los Angeles 31 20 pc 28 19 pc San Juan 32 26 sh 32 26 sh border maiden name A T A L O S S A G A T E S
Bogota 21 8 pc 19 9 r Madrid 31 13 s 28 14 s Santiago 17 5 pc 18 5 s 16 Jumbo-screen 35 End for 58 Company
F I N A N C E S E R R A N T
R E D B E R E T S I M P L E
Boise 31 16 pc 31 17 s Manila 32 26 t 30 26 t Santo Domingo 33 25 pc 33 24 c luncheon or
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Charlotte 19 17 r 26 15 r Montreal 23 11 s 23 13 pc Sydney 23 14 pc 29 19 c 20 English town A D D M I S D I A L M O B
noted for its salts 38 Soil breaker 61 Up to the task
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Detroit 23 13 s 24 16 s New Delhi 37 27 pc 37 26 s Tokyo 29 24 pc 28 23 sh anesthetic The contest answer is ALGEBRA. The center
workshop, so 41 •Group of Across answers PERFECT/SQUARES suggest
Dubai 41 32 s 41 31 s New Orleans 29 18 s 28 19 s Toronto 22 10 s 24 12 s
Dublin 15 9 pc 15 8 r New York City 24 17 s 26 17 pc Vancouver 22 13 s 22 12 pc they say amateur rockers 63 High point looking at the boxes that contain numbers that are
Edinburgh 16 9 sh 15 7 sh Omaha 30 16 s 31 15 s Washington, D.C. 25 17 s 22 19 c perfect squares (1, 4, 9, 16, 25, 36 and 49). The
Solve this puzzle online and discuss it at WSJ.com/Puzzles.
s

Frankfurt 17 12 pc 17 12 pc Orlando 28 22 c 31 22 pc Zurich 16 10 sh 16 9 sh letters in those boxes spell the contest answer.

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 For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
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BUSINESS & FINANCE
© 2017 Dow Jones & Company. All Rights Reserved.
Euro vs. Dollar 1.2040 À 0.13%
Behind the Push for $1,000 Phones China
SEONGJOON CHO/BLOOMBERG NEWS
Samsung’s Galaxy Note 8, above, costs around $950. Apple’s new
anniversary iPhone is expected to start at about $1,000.
KEYWORDS
By Christopher Mims
The Future
Of Home
Wi-Fi Is
Fast, Exotic
Do you re-
member the
first time you
wirelessly
surfed the
web from a
laptop? What about when
you first watched a movie on
a wirelessly connected TV?
More such a-ha moments are
coming. Perhaps one day
you’ll fondly recall the first
time you streamed “Star
Wars: Episode 9” from your
overhead lights.
The wireless gods have
been hard at work on your
home network. You can al-
ready eliminate dead spots,
for a price, by placing wire-
less access points all over. But
some problems can’t be
solved by Wi-Fi’s evolution
alone. Three leaps forward
could be key to building a fast
and evenly distributed home
network, streaming ultra
high-resolution video—think
live virtual-reality TV—and
handling that ever growing
number of “smart” devices.
Some developments are
right around the corner. Oth-
ers work mostly in theory
but are worth watching.
Cisco projects that through
2021, consumption of data
through Wi-Fi on mobile de-
vices will grow 48% a year—
faster even than the growth
of data on cellular networks.
Much has been made of
the power of mesh Wi-Fi to
eliminate dead spots and in-
crease performance. The
principle is simple: Instead
of just a single router bris-
tling with antennas, why not
have a little one on every
floor or in every room, all
passing bits, like a bucket
brigade, to the farthest
reaches of your domicile?
The little routers don’t even
have to be very smart, since
most of them—from Google,
Eero, Plume and others—talk
to the cloud in order to opti-
mize the network.
The problem is that peo-
ple might not want to buy
boxes—seriously, six-packs—
of routers for their home.
One alternative is to rent
through your cable company:
Comcast has announced a
deal with Plume to eventu-
ally offer the system to its
customers. Eero Chief Execu-
tive Nick Weaver says his
company has its own part-
nerships in the works,
though he isn’t ready to an-
nounce them yet.
But why install network
extenders at all? What if ev-
ery Wi-Fi-equipped device in
your home could provide
bandwidth as easily as using
it? Why couldn’t your con-
nected speaker or smart TV
serve as a network node?
Plume is working with
wireless chip designers to
enable this, says CEO Fahri
Diner. Eventually, your net-
work could grow stronger as
you add more devices to it.
And because of standards
and smart-home tech from
Apple, Samsung, Amazon
Please see MIMS page B4
TECHNOLOGY: APPLE AIMS TO TAKE AUGMENTED REALITY MAINSTREAM B4
FTSE 100 7377.60 g 0.26%
Hiring Is Key to New Amazon Hub
Rising costs in Seattle, need for talent factor into company’s search for second headquarters
Three glass-covered domes under construction in April as part of an expansion of the tech giant’s campus in downtown Seattle.
BY LAURA STEVENS
Amazon.com Inc. is out-
growing its hometown of Seat-
tle.
A major reason behind Am-
azon’s new plan to build a sec-
ond headquarters elsewhere in
North America is the need to
hire thousands more software
developers. That will almost
certainly be cheaper and eas-
ier in a city other than Seattle,
experts say, where Amazon’s
growth has helped fuel soaring
labor and real-estate costs and
a shortage of space.
In Seattle, where Amazon
has been based for more than
20 years, the retailer has
opened new office buildings to
accommodate its rapidly grow-
ing workforce, which now tops
40,000. But Amazon said
Thursday it is seeking a new
campus to eventually house an
additional 50,000 workers.
Seattle is “just not big
enough to double the size of
their footprint,” says Christo-
pher B. Leinberger, a professor
at George Washington Univer-
Consumers Blast Equifax’s Hack Response
BY ANNAMARIA ANDRIOTIS
AND AARON LUCCHETTI
Consumers worried about
potential damage to their per-
sonal-financial information
criticized Equifax Inc.’s early
response to a hack that may
have exposed the majority of
American adults to harm.
The credit-reporting com-
pany, which plays an impor-
tant behind-the-scenes role
in helping lenders to de-
cide who gets loans and at
what rates, was thrust into a
bigger spotlight Thursday af-
ter it said that hackers had
gained access to some of its
systems, potentially compro-
mising personal information
such as names, addresses, So-
cial Security numbers and
birth dates for roughly 143
million U.S. consumers.
That figure represents
roughly 55% of Americans age
THE WALL STREET JOURNAL.
Gold 1346.00 À 0.07%
BY TRIPP MICKLE
AND TIMOTHY W. MARTIN
Prepare for smartphone
sticker shock.
A decade into the smart-
phone era, Apple Inc. and
Samsung Electronics Co. are
betting they can increase sales
by jacking up the price of their
flagship products—bucking
the usual downward arc for
prices of consumer electronics
in the years after introduction.
Apple on Tuesday is expected
to unveil a more-advanced
iPhone—also known as the anni-
versary iPhone, the iPhone 8 or
sity School of Business and a
nonresident senior fellow at
the Brookings Institution who
specializes in land use.
Amazon accounted for more
than half of the Seattle office
space created over the past
year and a half, and the city’s
commercial real-estate vacancy
rate is already lower than the
national average, according to
commercial real-estate firm
Colliers International. The un-
employment rate for the
county is below the national
average, according to the lat-
est available data. Meanwhile,
home prices in Seattle have
risen 47% to an average of
$667,488 since 2007, according
to the Cost of Living Index by
the Council for Community
and Economic Research.
The online-retail giant said
its next headquarters should
be located in a walkable trans-
portation hub with good ac-
cess to an educated workforce
and universities.
A second headquarters also
would give Amazon a chance
to spread its economic clout
18 or older. Equifax released a
statement Friday evening say-
ing “we understand that some
consumers are experiencing
difficulties getting the an-
swers and support they
need...We are focused on mak-
Equifax said hackers had gained access to some systems.
WTI crude 47.48 g 3.28%
iPhone X—which analysts pre-
dict will carry a starting retail
price of about $1,000. That
would be about 50% more than
the cheapest version of the
iPhone 7 Apple introduced last
year at $649, and about 30%
more than the larger iPhone 7
Plus, at $769. (On Tuesday, Ap-
ple also is expected to show off
updated versions of those
phones with prices similar to
last year’s models.)
Apple’s new iPhone debut
follows Samsung’s launch last
month of its new high-end
phone, the Galaxy Note 8,
which hits shelves Sept. 15
and political constituency.
Proposals are due next month,
Amazon said.
“When you think about how
deep a labor market needs to
be to fill that many jobs, it’s
much more of a constraint
than a real-estate piece,” said
Dylan Taylor, president and
chief operating officer at Col-
liers.
That is in part why a num-
ber of tech giants including
Facebook Inc. and Microsoft
Corp. are opening satellite of-
fices far from their home sites
to tap additional talent. Alpha-
bet Inc.’s Google and Apple
Inc. have offices in Seattle to
compete with Amazon for
workers.
“All this recent job
growth—which is great—is
showing us just how far be-
hind we are” in areas like
housing and public transporta-
tion, says Jon Scholes, chief
executive of the Downtown Se-
attle Association.
In addition, other industries
such as banking and retail are
hiring more software develop-
ing improvements as quickly
as possible.” On Thursday, the
company’s chairman and chief
executive, Richard F. Smith,
apologized in a statement and
acknowledged “the concern
and frustration this causes.”
Monday, September 11, 2017 | B1
German Bund yield 0.312% 10-Year Treasury yield 2.058%
starting at around $950.
Prices approaching $1,000
Opens
are more often associated with
durable kitchen appliances
than with pocket-size devices
people tend to replace every
Up for
few years. Yet Apple and Sam-
Fund
sung think they will be able to
sell tens of millions of smart-
phones at the higher price
points, in part because of how SHANGHAI—Bridgewater As-
vital the devices have become. sociates LP is poised to amass a
Many users are willing to pay huge investment fund in China,
a premium for a handset that giving its founder, Ray Dalio,
functions as not only a mobile the kind of clout that has
phone, but also a personal
computer, a video player, a By Rob Copeland,
Please see PHONES page B4 Bradley Hope
and James T. Areddy
largely eluded Western financial
firms in the world’s second-
largest economy.
Bridgewater already man-
ages billions of dollars invested
outside China by Chinese insti-
tutions and the government it-
self. It also won rarely granted
access to trade directly in local
Chinese financial markets.
The next move by the
world’s biggest hedge-fund firm
would be even grander. With
Chinese government approval,
Bridgewater plans to use a new
unit based in China to raise bil-
lions of dollars domestically to
buy and sell assets in the coun-
try. The size and ambition of
the new unit haven’t been re-
ported previously.
Bridgewater founder
Ray Dalio has said
that China is his
longest-term project.
ELAINE THOMPSON/ASSOCIATED PRESS
Mr. Dalio, 68 years old, has
been fascinated by China since
making his first trip there in
1984. He has been back to the
country several dozen times
and studied Chinese culture so
closely that Bridgewater re-
flects aspects of Chinese politi-
cal ideology, according to cur-
rent and former employees.
This article is based on inter-
views with current and former
Hired Hands Bridgewater employees who are
Amazon’s workforce is growing familiar with its efforts in
rapidly as it builds out new China, as well as other people
warehouses. close to Bridgewater.
382,400* Mr. Dalio turned Bridgewater
400,000 into one of the most successful
investment firms ever, making
investors $49 billion since its
300,000 launch in 1975, according to
LCH Investments NV. Based in
Westport, Conn., Bridgewater
200,000 handles $160 billion.
He has told associates at
Bridgewater that he considers
100,000 himself an “economic doctor”
who has a unique ability to di-
agnose countries’ financial ail-
0
ments, adding that China is his
2000 ’10 longest-term project. Mr. Dalio
*As of 2Q 2017 Source: the company has made charitable donations
THE WALL STREET JOURNAL. totaling tens of millions of dol-
lars in the country.
ers, says Vivek Ravisankar, He has instructed the re-
chief executive of developer search team at Bridgewater to
recruitment startup Hacker- send notes about China directly
Rank. “There are so many to him for review before they
other states that have talent,” are published.
he said, with the fastest-grow- “They aren’t there to curry
ing developer activity in Ha- Please see CHINA page B2
waii, Colorado, Virginia and
Maryland.
INSIDE
Shares of Equifax fell 14%,
to $123.23, on Friday.
Following the hack, Equifax
set up a special website for
people with questions about
the cyberattack—
www.equifaxsecurity2017.co
m—and a dedicated call cen-
ter. Among complaints from
consumers was that Equifax’s
offer of a free one-year credit-
report monitoring service ap-
peared to require those taking
CHINA’S BUYING
part to waive their right to SPREE HITS
take legal action against the
company.
HURDLES
The fine print in the Equi-
DEALS, B9
RHONA WISE/EPA/SHUTTERSTOCK
fax agreement concerning the
monitoring services said that
consumers who take part
waive the ability to bring or
participate in a class-action
EMPLOYEES
suit, a class arbitration or CALL OUT SOFI’S
other similar legal actions.
That seemed to suggest that
WORK CULTURE
consumers would be bound to
Please see DATA page B2 FINANCE & MARKETS, B5
 For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
B2 | Monday, September 11, 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 Foxconn Technology....B9
Akzo Nobel................B10
Alibaba Group
Holding......................B9
Alliance Global Group.B5
Alphabet......................B4
Amazon.com..........B1,B4
AMC Networks ........... B4
Anglo American........B10
Apple......................B1,B4
B Indian Health
BHP Billiton..............B10
C Syngenta.....................B9
Cerberus Singapore
Investor.....................B5
Citizens Property
Insurance .................. B5
D Joint Commission.......A1
Danone ........................ B9
E LCH Investments........B1
Elliott Management . B10
Equifax ........................ B1
F N
Facebook......................B4
INDEX TO PEOPLE
A G
Alexander, Peter.........B2
B
Batista, Joesley..........B3
Block, Carson..............B9
C
Cagney, Michael..........B5
Castella, Maelys.......B10
Cuban, Mark................B9
F Moorhead, Patrick ...... B4
Fanlo, Nino..................B5
ZHANG DUO/XINHUA/ZUMA PRESS
Bridgewater’s Ray Dalio, left, meets with Wang Qishan, then
China’s vice premier, in Beijing in 2011.
CHINA
Continued from the prior page
PR in China,” says Peter Alexan-
der, founder of Z-Ben Advisors
in Shanghai. “They are there to
do business.”
Non-Chinese banks, broker-
age firms and mutual funds
that have set up operations in
the world’s second largest-
economy have largely strug-
gled to gain market share.
Mr. Dalio’s history in China
might help Bridgewater find a
way around those challenges.
His 1984 trip sparked “an in-
credibly rewarding thirty-plus
year journey that has had a
profound impact on my family
and me,” he wrote in an auto-
biography to be released this
month.
In 1995, he told China’s offi-
cial Xinhua news agency:
“China is too big and exciting
to ignore.” He assembled a
$100 million fund to buy
stakes in Chinese companies.
The fund was disbanded with-
out making any investments.
Since then, Mr. Dalio has of-
ten traveled to the country for
meetings with local executives
and powerful officials in China’s
state-run bureaucracy.
Over time, Bridgewater has
raised billions of dollars for its
existing hedge funds from Chi-
nese clients such as the China
Investment Corp. sovereign-
wealth fund and State Adminis-
tration of Foreign Exchange,
which manages the country’s
currency reserves.
Some of Mr. Dalio’s “Princi-
ples,” the 123-page manifesto
that drives the philosophy and
management of Bridgewater,
evoke Chinese history.
Some current and former
employees say the practice of
“radical transparency,” which
requires most meetings to be
recorded and employees to
identify the weaknesses of
other employees, reminds them
of “struggle sessions” from the


Cultural Revolution era, when
* THE WALL STREET JOURNAL.
BUSINESS & FINANCE
P
G PPG Industries..........B10
Glencore...............B4,B10 Q
H Qualcomm...................B4
Hillsboro Capital.........B5 R
Hon Hai Precision Rio Tinto ................... B10
Industry.....................B9 Rosneft Oil..................B4
I S
Ikea..............................B4
Samsung Electronics..B1
Snap.............................B4
Service......................A6
Social Finance.............B5
Inner Mongolia Yili
Industrial Group Co..B9
Intesa Sanpaolo..........B4 T
J Time Warner...............B4
JBS .............................. B3 Toshiba........................B9
21st Century Fox........B4
L U
BROOKE PALMER/WARNER BROS. PICTURES/ASSOCIATED PRESS
Uber Technologies ...... B3
LinkedIn.......................B4 V
Lyft..............................B3 Vale............................B10
Z
Netflix.........................B4 Z-Ben Advisors...........B2
P-R
Gibney, Alex................B9 Petrelli, Joseph...........B5
Glibbery, Ronald..........B4 Ravisankar, Vivek.......B1
I S
Iggo, Chris...................B5
Sabagh, Karim ............ B3
K Shuai, William............B4 A scene from ‘It,’ with Bill Skarsgard as Pennywise the clown. Warner Bros. spent $35 million to produce the film.
Kalanick, Travis...........B3
T
‘It’ Movie Breaks Records
Karp, Jonathan ........... B2
Khosrowshahi, Dara ... B3 Tan, Andrew................B5
Taylor, Dylan...............B1
M-O
Z
O’Neil, Barry...............B4 Zuckerberg, Mark ....... B4 Film adaptation of duction. Hurricane Irma. More than 175 tion made by a company now
“In today’s theatrical mar- theaters in Florida closed owned by Warner.
Stephen King’s 1986 ketplace you can get extremely down over the weekend, likely While the book was set in
novel enjoys a $117.2 lucky and you can get ex- costing the movie about $5 the 1950s, the movie takes
tremely unlucky,” said Toby million, said Warner head of place in the 1980s and nostal-
million opening Emmerich, president and chief domestic distribution Jeff gia for that era among adults
content officer of Warner’s Goldstein. may have also increased its
BY BEN FRITZ motion picture group. “This Warner has been working appeal. Last year’s hit Netflix
movie will be super-profit- on “It” since 2009, during Inc. series “Stranger Things,”
Hollywood got a much- able.” which time the project sur- itself inspired by “It,” also
needed jolt after a disappoint- The film’s success is good vived multiple rewrites and a took place in the 1980s. 65% of
ing summer thanks to two let- news not just for Warner, but shutdown in production in the audience for “It” was over
ters: “It.” all of Hollywood. It comes fol- 2015 just three weeks before it 25, according to exit polls.
The adaptation of Stephen lowing a summer with the was to start shooting with di- After March’s trailer proved
King’s 1986 novel broke sev- lowest total box office grosses rector Cary Fukunaga. After so popular, Warner considered
eral box office records as it since 2006 and the smallest Mr. Fukunaga departed over moving the opening of “It” up
opened to a massive $117.2 number of tickets sold since creative differences, Andy to the summer or increasing
million in the U.S. and Canada, 1992. Muschietti took over and shot its marketing spend, but ulti-
according to studio estimates. Many movies with well “It” in 2016. mately stuck with its original
“It” more than doubled the known titles and huge bud- The prior year, Warner as- plans, said Mr. Emmerich. “In
prior highest September open- gets, like “Transformers: The signed oversight of “It” to its hindsight, that was the right
ing, $48.5 million for “Hotel Last Knight,” “The Mummy” New Line Cinema unit. In re- call,” he noted.
Transylvania 2” in 2015, and and Warner’s “King Arthur: cent years New Line has had a Reviews were solid if not
the record opening for a hor- Legend of the Sword,” flopped run of successful horror films spectacular, and opening night
ror movie, previously $52.6 audiences gave “It” an average
In 2015, Mr. Dalio told
Bridgewater clients that “our
views about China have
million for 2011’s “Paranormal
Activity 3.”
Early September is typically
The movie more than doubled the previous
grade of B+, according to mar-
ket research firm CinemaS-
core. Horror movies typically
changed.” The Chinese govern- one of the slowest times of the record for highest September opening. have limited appeal beyond
ment had just intervened in fi- year at the box office. But “It” fans who turn out on opening
nancial markets to counter a proved that in the current en- weekend and fade quickly at
stock-market swoon. “There are vironment, people go to the- the box office, but it remains
now no safe places to invest,” aters not based on a calendar when they failed to grab audi- including “The Conjuring” se- to be seen if “It” will adhere
he wrote in a research note. date but because a movie ence’s attention as “It” did. A ries and its “Annabelle” spin to conventional Hollywood
After The Wall Street Jour- breaks into the zeitgeist and handful of hits, like “Despica- offs. wisdom in the coming weeks
nal published excerpts of the becomes must-see. ble Me 3” and Warner’s “Won- The success of “It” appears after shattering it while open-
note, Bridgewater’s technology “It” has been building buzz der Woman,” took most of the to have been driven by the ing.
staff detected possible signs of since its first trailer, released buzz. fact that it is different than New Line is currently work-
a cyberattack on the hedge-fund in March, set a record with “It” also opened well over- the sequels, reboots and comic ing on a screenplay that
firm’s computer systems. Em- 197 million global views in one seas, grossing $62 million in book adaptations that domi- adapts of the rest of the book,
ployees suspected the possible day. 46 markets and posting the nated multiplexes in the sum- in which the main characters
involvement of Chinese hackers, Time Warner Inc’s Warner highest ever horror openings mer but still has a brand-name are adults. Warner hopes to
though the perpetrators were Bros. had relatively modest ex- in the U.K., Brazil, Russia and title. In addition to the best- release the “It” sequel in the
never identified.Bridgewater pectations when it started Australia. selling book, many people summer or early fall of 2019,
concluded that no sensitive making “It,” which is why it The U.S. opening would know “It” from a popular 1990 said a person with knowledge
data was believed to have been spent only $35 million on pro- have been bigger if not for television miniseries adapta- of the matter.
stolen.
Mr. Dalio took a softer tone
in a follow-up note, writing that
China “has the resources and
the capable leaders to manage”
DATA loan activity.
Equifax says the free moni-
toring will be for credit re-
NFL Star Plans Book
an economic restructuring. Continued from the prior page ports from it and the other BY JEFFREY A. TRACHTENBERG paid Mr. Brady an estimated
Since then, Mr. Dalio has re- an individual arbitration pro- two major credit-reporting $5 million advance—far higher
peatedly instructed Bridgewa- cess with the company, which companies, TransUnion and Five-time Super Bowl win- than the sums paid for compa-
ter’s hundreds of investment re- some argue is a more difficult Experian. Also, it will include ner Tom Brady is ready to tell rable advice-themed books by
searchers to be careful about place for consumers to get identity theft insurance and a the world what garbanzo bean athletes such as Tiger Woods
writing outright negative out- larger rewards for their prob- service that scans internet sliders, buffalo cauliflower ta- and Michael Phelps. It is a bet
looks about China, reminding lems. sites to see if they are display- cos and, yes, avocado ice that the book will appeal not
them that he is sanguine about “You’re bound to adhere to ing people’s Social Security cream, have to do with his just to NFL fans and weekend
its long-term prospects. He also their arbitration process,” numbers. success. The question is how warriors, but anyone search-
urged researchers to be aware Christina Verigan of Mason, Some consumers com- many people will pay to hear ing for secrets to maintain
of how their writing could be Ohio, a consumer upset by this plained on social media and him out. peak health and fitness as they
perceived if it were leaked out- clause wrote in an email to elsewhere Friday that they In his forthcoming book get older. Michael Cader’s
side the hedge-fund firm. The Wall Street Journal. couldn’t reach anyone at the “The TB12 Method,” which Publishers Lunch industry
In the first paragraph of a “Equifax should be ashamed to call center. Instead of being lands on bookshelves Sept. 19, newsletter earlier reported the
note to investors in July, Mr. pretend this is anything other put on hold or being asked to the New England Patriots’ star book’s price.
Dalio wrote: “We assess the than a way to cover their leave a message, consum- quarterback will expound on “There aren’t any other 40-
leadership in China to be butts.” ers heard an automated mes- the famously disciplined diet year-old NFL quarterbacks
skilled.” A note to clients Thurs- Friday, the ranking Demo- sage telling them that repre- and fitness regimen that he who are still performing at
day said China is “squeezing the crat on the Senate Banking sentatives were busy and that credits with helping him play their peak level, so clearly
bubble beautifully” as it adjusts Committee, Sherrod Brown of they should call back later. at the highest level in the Na- something about this method
its economy. Ohio, called on Equifax to “im- In its statement, Equifax tional Football League at age is working,” says Jonathan
Bridgewater’s only office in mediately remove forced arbi- said it has tripled its call cen- 40. Most quarterbacks tail off Karp, president and publisher
China—or anywhere outside tration from all services of- ter staff to more than 2,000 well before that. of the Simon & Schuster im-
Connecticut—is on the 28th fered to customers.” The agents and it continues to add Publisher Simon & Schuster print.
floor of the towering Shanghai National Consumer Law Cen- more.
World Financial Center, ter, a consumer advocacy Consumers who visited the ADVERTISEMENT
marked with a small sign. group, made a similar request. website also had questions
Bridgewater registered its
name in Chinese as QiaoShui, a
Equifax added a “frequently
asked question” item on its
and concerns. Among them is
that they are first asked to The Mart
literal translation of the words special website, which at- give the last six digits of their
“bridge” and “water.” It depos- tempted to clarify the matter. Social Security number before ANNOUNCEMENTS BUSINESS OPPORTUNITY
ited millions of dollars in re- While it is unclear exactly they can get help on the site.
quired capital and won approval when the note was added, as Meanwhile, some people
 
for its largest fund to invest in of Friday afternoon it said testing the site were told to 
   
 à As with all investments,
Chinese citizens were encour- China’s $9 trillion primary bond “the arbitration clause and check back in later.    
   appropriate advice should
aged to publicly criticize and market. class action waiver” in the Ms. Verigan said she visited 




    

 be obtained prior to
punish one another. To trade in Chinese markets, terms of its credit-monitoring Equifax’s website, input her   
    
  !"    entering into any
At Bridgewater headquar- Bridgewater is designing a new product TrustedID Premier information and received a
ters, Mr. Dalio created a team operation that focuses on Chi- “applies to the free credit file message informing her of an
   
 #$

   %    

binding contract. à
he named “the politburo,” a nese securities in the mold of monitoring and identity theft enrollment date for the free
modified version of the ruling its All Weather portfolio, which protection products, and not service. It said, “Please mark BUSINESS EQUIPMENT TRAVEL
Chinese Communist Party’s follows a “risk parity” strategy the cybersecurity incident.” your calendar—you won’t see
domineering governing body of and uses computer-driven bets. Unlike with lenders, con- additional reminders,” she Two Complete Buhler
the same name. Mr. Dalio has told people at sumers often don’t choose to said. Save Up To 60%
The hedge-fund firm’s polit- Bridgewater that a mechanical do business with credit-re- New York Attorney General
PET SSP Lines For Sale First & Business
60 and 77 TPD
buro included about two dozen investment approach that porting companies such as Eric Schneiderman said Friday INTERNATIONAL
Contact Steve Rotenberg
Major Airlines, Corporate Travel
top employees who adjudicated steers clear of active market Equifax. Rather, their informa- that his office has launched an Louisiana Chemical Equipment Co.
Never Fly Coach Again!
disputes and helped enforce speculation could be the most tion often ends up there be- investigation into the hack and stephenjr@LCEC.com
www.cooktravel.net
Bridgewater’s rules. The group palatable to Chinese and inter- cause of lenders reporting requested information from O: 225-923-3602
www.LCEC.com (800) 435-8776
was recently disbanded. national investors. their loan applications and Equifax about the incident.
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.
SES Bets on Fleet of Smaller Satellites
BY ROBERT WALL IN LONDON AND
ANDY PASZTOR IN LOS ANGELES
Satellite-services provider
SES SA on Monday intends to
announce a deal for a new
fleet of smaller, easily repro-
grammable Boeing Co. satel-
lites, reflecting widespread in-
dustry uncertainty about
demand for global internet
connectivity.
The Luxembourg-based
company, the world’s largest
commercial communication
satellites operator, is opting
for a less-expensive, lower-al-
titude design to seek an edge
in the intensifying battle to
beam web access to remote
regions. SES expects to spend
more than $1 billion on the
seven Boeing satellites and as-
sociated ground systems. Each
satellite is projected to cost
less than half the amount for
the biggest, high-altitude ver-
sions.
Like other parts of the sat-
ellite industry, SES faces de-
pressed prices for its current
offerings and also has been
hurt by growing competition
from legacy rivals, as well as
anticipated challenges from
aggressive startups with deep
pockets.
The new spacecraft, signifi-
cantly smaller and more flexi-
ble than older models, are
slated to be put into orbit
starting in 2021. They will be
deployed primarily to serve
mobile users in developing re-
Uber Faces FBI Probe Over Former JBS Chairman Surrenders
Program Targeting a Rival
BY REBECCA DAVIS O’BRIEN
AND GREG BENSINGER
Federal law-enforcement au-
thorities in New York are in-
vestigating whether Uber
Technologies Inc. used soft-
ware to interfere illegally with
a competitor, according to peo-
ple familiar with the investiga-
tion, adding to legal pressures
facing the ride-hailing company
and its new chief executive.
The investigation, led by
the Federal Bureau of Investi-
gation’s New York office and
the U.S. attorney’s office in
Manhattan, is focused on a de-
funct Uber program, known in-
ternally as “Hell,” that could
track drivers working for rival
service Lyft Inc., the people
said.
“We are cooperating with
the SDNY investigation,” said
an Uber spokesman, referring
to prosecutors in the Southern
# February 2014


#
'    (
 *
# +,-. 
    / & +,-0 
 1 2 

 
(
Uber is facing at least three federal probes into its practices.
 
 

 /34
District of New York. He de-
 

   
clined to offer additional de-
 # 5
tails.
Uber hasn’t publicly dis-
cussed the details of the pro-
gram.
People familiar with the
matter said “Hell” worked like
this: Uber created fake Lyft
customer accounts, tricking
Lyft’s system into believing
prospective customers were
seeking rides in various loca-
  9&  3  5
tions around a city. That al-
1  = > #
lowed Uber to see which Lyft
drivers were nearby and what
prices they were offering for
various routes, similar to how
Monday, September 11, 2017 | B3
BUSINESS NEWS
gions, but with prospects for Inc. also are developing ever
such markets still unclear, SES larger, more-powerful space-
seeks to maximize its maneu- craft to reduce customer ac-
vering room and reduce capi- cess costs. Yet industry ex-
tal expenditure risks. perts increasingly emphasize
Chief Executive Karim Sab- the benefits of faster connec-
bagh said the satellites will tions and enhanced produc-
add capacity and replace some tivity from hybrid constella-
bandwidth now provided by tions such as the one SES
big, high-flying spacecraft favors, featuring a blend of
that need replacement. Indi- high-earth orbit and lower-po-
cating that the emphasis on sitioned satellites.
smaller spacecraft built to be The company’s next-gener-
swiftly reconfigured in orbit is ation spacecraft are designed
gaining momentum, he said to beam highly tailored sig-
the constellation will be “radi- nals to serve many more but
cally different” from tradi- smaller customers, according
tional concepts because it is to Steve Collar, another senior
designed to be “more flexible SES official.
and scaleable.” Both Intelsat and Canada’s
In an interview, Mr. Sab- closely held Telesat, another
bagh said the principle of major operator with 15 satel-
smaller satellites, optimized lites, have made modest
ZUMA PRESS
to seamlessly supplement moves to embrace lower-orbit
each other as customers and satellites to target similar
markets change, is “what we market segments.
have been missing for three SES CEO Karim Sabbagh said the satellites will replace some bandwidth provided by spacecraft. SES, which built its reputa-
decades in our industry.” tion with top-of-the-line satel-
The move comes at a time direction of the market have big chunk of its competitors Entrepreneur Elon Musk lites hovering 23,000 miles
cash flow and profitability for contributed to a protracted are all considering smaller, and his high-profile Space Ex- above a specific point on the
operators is under pressure, so and sharp drop in orders for less costly models. ploration Technologies Corp., globe, initially increased its
they generally have been reti- big satellites, some of which Budding rivals are focusing commonly called SpaceX, are bet on smaller spacecraft last
cent to make investments in can cost about $400 million to on launching swarms of hun- actively planning to compete. year. It acquired the 49.5%
large, more-expensive satel- build, launch and insure. dreds—or even thousands—of Google parent Alphabet Inc. in O3b Networks Ltd. it didn’t
lites that have traditionally Such procurement con- still-smaller satellites to pipe also has publicly expressed in- already own.
dominated the telecommunica- tracts have slumped 50% be- fast, inexpensive connectivity terest in providing space- The latest decision doubles
tions segment. Advisory firm low historic levels, with Boe- to remote locations. This in- based web links. down on the strategy of tar-
Euroconsult says big satellites ing and Space Systems Loral, creasingly contested segment At the same time, long-time geting O3b’s network for
have experienced a “dramatic a unit of Canada’s MacDonald includes OneWeb Ltd., the rival Inmarsat PLC is position- growth. The additional satel-
downsizing of traditional pric- Dettwiler and Associates Ltd., startup backed by European ing its Global Xpress constel- lites are being designed to be
ing” for their primary services. among the satellite makers aerospace heavyweight Airbus lation of traditional, high-alti- more powerful than O3b’s ex-
At the same time, an abun- that have laid off staff in re- SE and Japanese internet and tude satellites to connect isting models, enabling SES to
dance of available bandwidth cent years. Industry officials telecommunications giant planes with high-capacity in- tap fast-growing mobile and
and questions about the future said manufacturers, SES and a SoftBank Group Corp. ternet. Intelsat SA and ViaSat transportation markets.
BY LUCIANA MAGALHÃES torney General Rodrigo Janot, granted them immunity for
AND JEFFREY T. LEWIS
SÃO PAULO—Joesley Ba-
tista, the former chairman of
according to documents made
public on Sunday.
In his decision, Mr. Fachin
agreed to partially suspend
their criminal acts in return
for their full cooperation with
legal authorities.
Mr. Janot recently said a
last month after Uber said the evade officials. Uber has said meatpacking giant JBS SA, some legal benefits that had recording, possibly delivered
suit didn’t allege a crime or it has used the technology for turned himself over to Brazil’s been granted to Mr. Batista, by mistake along with other
material loss. other purposes. An Uber legal authorities after the making his arrest possible. evidence by Joesley Batista
One critical question for in- spokesman declined to com- country’s Supreme Court ap- Mr. Batista and other JBS and executives, suggested that
vestigators is whether “Hell” ment on that investigation. proved his arrest for allegedly executives signed the plea deal some of them omitted evi-
constituted unauthorized ac- Additionally, the Justice De- reneging on the terms of a in April after admitting to dence. Mr. Batista said Sunday
cess of a computer, a person partment has taken prelimi- plea-bargain agreement. paying millions of dollars in in a note that he surrendered
briefed on the investigation nary steps to investigate High court Justice Edson bribes to nearly 2,000 Brazil- voluntarily and denied having
said. whether managers at Uber vio- Fachin approved the arrest ian officials over at least the omitted evidence related to
The battle to attract and re- lated the Foreign Corrupt following a request from At- past decade. The agreement his plea agreement.
tain drivers has been critical Practices Act, which bans the
for Uber’s and Lyft’s growth, use of bribes to foreign offi-
particularly as the two ven- cials to get or keep business,
ture-backed firms now com- people familiar with the mat-
pete in every major U.S. met- ter said.
ropolitan area and users can The Wall Street Journal re-
PAID ADVERTISEMENT
easily switch between the two ported the investigation,
apps to find a quicker pickup which is in early stages, last
or cheaper ride. month. Uber has said it is co- Founders Keepers asked Niraj Shah, co-founder/CEO of Wayfair
Uber has taken pains of late operating with the Justice De-
to appease drivers’ concerns, partment on the investigation.
adding a tipping option that it
had long resisted and making
other tweaks to its app.
The investigation of the
Uber is also contending
with a lawsuit from rival Al-
phabet Inc., Google’s parent
company, over allegedly stolen
Who has been
“Hell” program is one of at
least three federal investiga-
self-driving-car trade secrets,
which a federal judge in May
referred to the Justice Depart-
your pivotal hire?
ment for a possible criminal
probe. Uber has denied wrong-
doing and is contesting the  
lawsuit in court.
The existence of the “Hell”  Kate Gulliver
program was reported in April ! VP, Head of Global Talent
by tech website The Informa-
tion, which said the program "
had been active from 2014 to
early 2016, when it was dis- $  % 
continued.
SETH WENIG/ASSOCIATED PRESS
It isn’t clear when the pro- Founders Keepers: &    
gram came to the attention of 
law enforcement. Federal pros-
NS: )%   
ecutors in Manhattan had been

pursuing an investigation into
Uber’s anticompetitive strate- '     
gies since at least early 2016, Founders Keepers:  
several people familiar with %    #
the matter said. It isn’t clear
whether the investigation into NS: )% 
tions under way into Uber’s “Hell” grew out of that effort,  
practices, adding to a laundry or if it began with a separate     5  
list of challenges facing Dara inquiry.         
Khosrowshahi, who formally After The Information’s ar-  2     0,,, 
took over as CEO this past ticle was published in April, a -,,,,66 #
Tuesday after a 12-year tenure Lyft driver filed a class-action
at the helm of Expedia Inc. lawsuit against Uber in federal
Mr. Khosrowshahi inherited court in California, alleging %   #
a depleted executive suite, di- that Uber’s use of the program
738 9  
rectors and investors divided invaded his privacy and vio-
over the future of the company lated state wiretapping stat- & 8 :%# ; 
and the fallout from a months- utes and unfair-competition
long probe into Uber’s work- laws. <
place culture that led to the Lawyers for Uber said in a 
ouster of longtime CEO Travis court filing that the complaint MBA Harvard
Kalanick. was based “on allegations
The U.S. attorney’s office in made in a single online article
the Northern District of Cali- that in turn was based on two Founders Keepers   
  
   
such information appears fornia, working with FBI anonymous sources,” and     
    
      
when an authentic Lyft app is agents there, is investigating asked for the suit to be dis-        
  
opened on a user’s smart- another Uber software tool, missed.
phone, these people said. known as “Greyball,” which “Even if those allegations
The program was also used helped its drivers evade local were true, they would not de-    
  


to glean data on drivers who
worked for both companies,
and whom Uber could target
with cash incentives to get
them to leave Lyft, said these
people, who added that the
program was discontinued last
year.
The program was the sub-
ject of a federal class-action
lawsuit filed in April by a Lyft
driver in California, which was
dismissed by a federal judge
transportation regulators, ac- scribe anything other than the
cording to people familiar with collection and use of location
the matter. information that Plaintiff knew
The FBI has issued subpoe- was being broadcast by Lyft,”
nas to public officials in Port- Uber’s lawyers wrote.
land, Ore., Philadelphia and A judge dismissed the law-
Austin, Texas, in connection suit late last month, but attor-
with that investigation, ac- neys for the driver say they
cording to officials in Portland plan to refile a suit with an
and people familiar with the amended complaint later this
matter. month.
Uber has since said it —Nicole Hong
stopped using Greyball to contributed to this article.
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
B4 | Monday, September 11, 2017
Apple Backs Augmented Reality
New iPhone and
software are expected
to enhance experience
for consumers
BY TRIPP MICKLE
Apple Inc. is gearing up for
a big push to popularize aug-
mented reality, launching new
hardware and software in the
coming weeks that make it
easier for users to shop for
virtual couches, slay digital
zombies and drop artificial
videos into their living rooms.
A new high-end iPhone is
expected to be unveiled Tues-
day with a dual-lens camera
system and 3-D sensors that
improve depth-sensing and
enhance augmented-reality ex-
periences. Apple’s new operat-
ing system, iOS 11, which be-
comes available this fall, will
offer new augmented-reality
capabilities first previewed in
June. Meanwhile, apps that
impose virtual images on real
scenes are expected to flood
the company’s App Store, as
companies ranging from IKEA
to AMC Networks Inc. hope to
benefit from Apple’s promo-
tion of augmented reality.
Apple Chief Executive Tim
Cook has touted augmented
reality, telling analysts last
month: “This is one of those
huge things that we’ll look
back at and marvel on the
start of it.”
Facebook Embraces ‘Video-First’ Future
BY DEEPA SEETHARAMAN
Facebook Inc. is loosening
its purse strings in its drive to
become a major hub for video.
The social-media giant is
willing to spend as much as $1
billion to cultivate original
shows for its platform, ac-
cording to people familiar
with matter. The figure, which
could fluctuate based on the
success of Facebook’s pro-
gramming, covers potential
spending through 2018, one of
the people said.
The investment would far
outpace Facebook’s previous
outlays on video content, in-
cluding its live-video deals
last year. It also signals Face-
book’s readiness to spend
more than before to become
what Chief Executive Mark
Zuckerberg calls a “video-
first” platform.
Facebook’s thirst for video
content pits it against tradi-
tional broadcasters such as
Time Warner Inc.’s HBO and
deep-pocketed tech companies
such as Amazon.com Inc. and
Netflix Inc., which all are
banking on video to capture
the fleeting attention of users
PHONES
Continued from page B1
gaming device, a GPS system,
a music player, a reader, a
flashlight and a wallet.
U.S. consumers now spend
more than three hours a day
on average on their mobile de-
vices, according to research
firm eMarketer. Patrick Moor-
head, president of Moor In-
sights & Strategy, said people
are postponing upgrades to
their other gadgets so they
have more to spend on their
smartphones.
“The utility value of these
ROSNEFT
Glencore, Qatar to
Sell Large Stake
Glencore PLC and Qatar have
agreed to sell the bulk of their
nearly 20% stake in Russian oil
giant PAO Rosneft to a Chinese
energy company in a deal valued
at about $9 billion.
The deal, announced by Swiss
commodity miner and trader
Glencore on Friday, gives CEFC
China Energy Co. a 14.2% stake
in state-controlled Rosneft, deep-
ening a growing economic rela-
tionship between China and Rus-
sia. It also adds a twist in a
complex agreement to raise
money for the cash-strapped
government of President Vladi-
mir Putin by selling off part of
the crown jewel of Russia’s en-
ergy industry.
Glencore and the Qatar In-
vestment Authority formed a
consortium to buy a 19.5% stake
‘This is one of those huge things that we’ll look back at and marvel on the start of it,’ Apple CEO
Tim Cook told analysts last month. An Apple conference for developers in San Francisco in 2016.
Katy Huberty, an analyst
with Morgan Stanley, said Ap-
ple sees the addition of aug-
mented reality—which com-
bines the virtual and the real
on a smartphone screen or
other device—as potentially as
transformational for its busi-
ness as the App Store’s debut
in 2008.
If the technology takes off,
she said, it could help reinvig-
orate flagging iPhone sales. It
also could ease questions
Former Chinese
Official Joins Team
BEIJING—Facebook Inc. has
hired a veteran executive and
former Chinese official for a
new position leading its gov-
ernment relations here, in an-
other sign it is escalating ef-
forts to regain access to China.
William Shuai joins Face-
book from LinkedIn Corp.’s
China operation, where he also
managed government relations.
Unlike most other U.S. social-
networking companies,
LinkedIn agreed to submit to
government censorship to gain
and seize billions of dollars in
advertising that is expected to
migrate from television to
digital video. Apple Inc. is
preparing its own billion-dol-
lar war chest for content.
“Our read-through is that
Facebook is likely willing to
spend billions of dollars to
buy rights for content that
might otherwise appear on
TV,” Pivotal Research analyst
products is so, so high,” said
Horace Dediu, an industry an-
alyst at Asymco and a former
Nokia Corp. business develop-
ment executive.
The companies believe their
prices are justified to pay for
innovations such as longer
battery life, larger displays
and voice assistants. Apple’s
newest iPhone is expected to
have components that cost
about 80% more than the com-
ponents in the iPhone 7, in-
cluding an edge-to-edge, or-
ganic light-emitting diode, or
OLED, display, wireless charg-
ing and new sensors, accord-
ing to brokerage firm Susque-
of Rosneft in an $11.3 billion deal
last December, giving Moscow a
cash infusion during a budget
crunch. But in the deal’s complex
structure Glencore’s actual equity
stake in Rosneft was only about
0.5% and Qatar’s just under 5%.
The rest of the deal was fi-
nanced by Russian banks and It-
aly’s Intesa Sanpaolo SpA.
—Scott Patterson
and James Marson
APPLE
Qualcomm Loses
Royalty Injunction Suit
A federal judge Friday denied
Qualcomm Inc.’s motion for a
preliminary injunction in its law-
suit against Apple Inc.’s leading
manufacturers, allowing the
manufacturers to continue with-
holding royalty payments as the
case continues.
The decision was a small but
expected victory for Apple in
TECHNOLOGY
about Apple’s continuing abil-
ity to innovate.
The hope among some aug-
mented-reality enthusiasts is
that Apple will popularize the
technology, triggering con-
sumer trial and adoption.
Some proponents, though, are
skeptical about the technol-
ogy’s immediate potential.
Matt Miesnieks, a partner
at Super Ventures, an invest-
ment firm that targets aug-
mented-reality startups, ex-
access to the market. The
company has since been ac-
quired by Microsoft Corp.
Facebook has been blocked
in China since 2009, reflecting
the government’s concern over
the ability of large social net-
works to stir unrest. But Face-
book founder Mark Zuckerberg
believes China is key to the
company’s growth, and has
been working for several years
to stage a return.
In an email response to
questions from The Wall
Street Journal, Mr. Shuai said
he was “still learning” about
his new company and declined
to comment.
—Alyssa Abkowitz
Brian Wieser wrote in a recent
note.
Facebook declined to com-
ment on its spending strategy
for video.
The moves come as Face-
book seeks new avenues of
revenue growth to offset an
expected slowdown in its core
business. They also reflect Mr.
Zuckerberg’s evolving views
on paying for content, some-
hanna International Group.
If consumers take the new
price points in stride, Apple
and Samsung could widen
their advantage over hundreds
of smartphone rivals, many
struggling to break even. Ap-
ple and Samsung claim nearly
all the industry’s combined
annual profits, with about 79%
for Apple and 15% for Sam-
sung, according to market re-
searcher Strategy Analytics.
The two are defying the
gravity that usually pulls con-
sumer prices downward as in-
novation wanes and manufac-
turing costs fall.
The average iPhone selling
BUSINESS WATCH
Work at a Rosneft operation in Russia. CEFC China Energy is
buying a 14.2% stake in the state-controlled oil giant.
what is shaping up to be a mul-
tiyear battle with Qualcomm
over royalty prices for technol-
THE WALL STREET JOURNAL.
pabilities.
Augmented reality shot to
prominence last year following
the release of “Pokémon Go,” a
game in which players scoured
the real world, with the help
of location-tracking technol-
ogy, to find digital monsters
superimposed through the
smartphone screen. But public
enthusiasm soon faded.
Still, tech companies in-
cluding Alphabet Inc.’s
Google, Facebook Inc., and
Snap Inc. are vying with Apple
to drive augmented reality
forward. Google recently an-
nounced its own augmented-
reality software system, AR-
GABRIELLE LURIE/GETTY IMAGES
Core, to compete with Apple’s
system.
ARKit, which Apple re-
leased in June, eliminates ma-
jor obstacles for developing
augmented-reality apps, offer-
ing software capable of tasks
like tracking a user’s position
and estimating the light avail-
able in a room.
It also turned an estimated
pects most early apps in the 500 million iPhone owners
field will become seldom-used into potential customers.
novelties. He said features en- Using ARKit, Touch Press
abled by Apple’s augmented- Inc. was able to build an aug-
reality development platform, mented-reality world based on
ARKit, are limited and it is the children’s book “The Very
awkward for people to hold Hungry Caterpillar” in about
handsets in front of their faces six weeks, a quick turnaround
to commingle real and digital that surprised the company
worlds. because previous augmented-
Mr. Miesnieks doesn’t see reality projects performed in-
apps gaining traction until late consistently, said Chief Execu-
next year, when he expects an tive Barry O’Neill.
updated ARKit with more ca- Apple declined to comment.
thing he previously resisted, Mr. Wieser said Facebook’s
according to people familiar cricket bid was eye-popping
with the matter. Mr. Zucker- given the relatively small size
berg has said Facebook is will- of the Indian digital ad mar-
ing to pay for some content ket. He likened the bid to
now, but ultimately expects spending $24 billion in the
creators will be financed U.S., where the online adver-
through an ad revenue-shar- tising market is 40 times as
ing model. large as in India.
Facebook is trying to set it- Facebook is also looking to
self apart from a crowded clinch deals that make it eas-
market with programming ier for users to consume and
that its two billion monthly share video on the platform,
users will want to discuss— including talking with record
preferably on the social net- labels to secure rights to mu-
work. It also is interested in sic playing in the background
deepening engagement around of videos that users upload,
sports, which already spark people familiar with the dis-
conversation on Facebook. cussions said. Facebook is
The company recently bid prepared to pay hundreds of
more than $600 million for millions of dollars for the
the digital rights to stream rights, one of the people said.
cricket matches in India from Facebook has been negoti-
2018 to 2022, according to a ating music rights for years,
tweet by the Indian Premier but discussions intensified
League. last year, people familiar with
Facebook ultimately lost its the matter say. One of the
bid to 21st Century Fox Inc.’s people said Facebook hopes to
Star India, which bid $2.6 bil- wrap up negotiations this
lion for broadcast and digital- year.
streaming rights. 21st Century Bloomberg earlier reported
Fox and Wall Street Journal Facebook’s discussions to se-
parent News Corp share com- cure music rights.
mon ownership. —Anne Steele
In an interview, Pivotal’s contributed to this article.
price rose about 2.5% to $645
in Apple’s fiscal 2016, up from
$629 in fiscal 2009. Last
New features on Samsung’s
Galaxy Note 8 include a dual-
lens camera and a mammoth
year’s pricier iPhone 7 Plus 6.3-inch OLED screen. The Note
with a dual-lens camera out- 8’s component costs rose about
sold its predecessor, the 20% over the prior year, ac-
iPhone 6s Plus. cording to an estimate by IHS
Samsung had to pull the Markit, a market researcher.
Galaxy Note 7 from shelves last Many consumers are balk-
year due to overheating batter- ing at a $1,000 handset. A re-
ies, but the Galaxy S7 model cent survey of wireless con-
went on to become its top-sell- sumers by Barclay’s found
ing phone ever. Unlike Apple, only 11% of respondents would
Samsung, the world’s largest spend more than $1,000 on a
phone maker by shipments, smartphone, with respondents
also sells hundreds of millions on average saying they would
of lower-cost handsets, such as spend only about $580.
the “Z series” in India, which —Ryan Knutson
retails for around $90. contributed to this article.
licensing business.
In January, Apple sued Qual-
comm in the Southern District of
California over its licensing prac-
tices, alleging the leading sup-
plier of chips for smartphones
demanded unfair terms for its
technology. Apple later filed suits
in several overseas markets, in-
cluding the United Kingdom,
China, Japan and Taiwan.
In addition to ruling against
ANDREY RUDAKOV/BLOOMBERG NEWS
Qualcomm in the contract manu-
facturers’ case, Judge Gonzalo
Curiel denied Qualcomm’s motion
to unify Apple’s overseas suits.
Apple said it was pleased
with the decision, adding, “Qual-
comm must establish the fair
value of its technology and de-
fend its business practices in
court.” A Qualcomm spokes-
woman said, “While we are dis-
appointed by today’s rulings, we
recognize that the motions in-
ogy used in iPhones and iPads. volved high procedural hurdles.”
For Qualcomm, it was the latest —Tripp Mickle
setback to its profitable patent- and Ted Greenwald
WSJ.com/Tech
MIMS
Continued from page B1
and others, connecting them
may be seamless.
Imagine downloading an
entire movie in seconds. Or
streaming games and 4K vid-
eos from your phone to your
TV without dropping a
frame. Or even wandering
around the living room in a
VR headset, unencumbered
by a tether to some giant PC.
This is the promise of Wi-
Gig. It’s sometimes described
as the next generation of Wi-
Fi, but that isn’t accurate.
Until now, each new variant
of Wi-Fi improved upon the
last, but this one, known to
nerds as 802.11ad, has a spe-
cial purpose.
WiGig technology is capa-
ble of sending and receiving
data at up to 8 gigabits a sec-
ond—almost six times as
much as the current peak. But
in order to achieve superhigh
transfer rates, it operates at
60 GHz, far higher in fre-
quency than the 2.4 GHz and
5 GHz bands that we normally
access. The trouble is, 60 GHz
radio waves can’t penetrate
most walls, says Ronald Glib-
bery, CEO of Peraso Technolo-
gies, which makes chips that
power WiGig systems.
In June, Intel and HTC
demonstrated a wireless VR
system they argue could be
WiGig’s killer app. Anyone
who has tried whole-room
VR knows it’s annoying to
have a cable snaking out the
back of your head. And in
environments where Wi-Fi
spectrum is already impossi-
bly crowded, such as air-
ports or convention centers,
WiGig could enable “cones”
of high-speed connectivity.
A handful of products al-
ready support WiGig, includ-
ing $350-and-up Wi-Fi routers
from Netgear and TP-Link, and
a $1,000 laptop from Acer.
Some tech problems
can’t be solved by
Wi-Fi’s evolution
alone.
Will higher-frequency mi-
crowaves be a health haz-
ard? The Federal Communi-
cations Commission sets
rules, based in part on rec-
ommendations from non-
profits such as the National
Council on Radiation Protec-
tion and Measurements, in
an attempt to ensure that
doesn’t happen.
Transmitting information
with light is as old as the
signal fire, but transmitting
high-speed data via the
lights above our heads has
only been possible for about
five years. A handful of
startups—including VLN-
Comm, Velmenni and Pure-
LiFi—are working on sys-
tems that flicker LED lights
so quickly they can transmit
information at up to 43
megabits a second. The
flashing of these lights is be-
yond human perception, tens
of millions of times per sec-
ond, far faster than any an-
noying fluorescent bulb.
As the light flickers, a
sensor attached to a laptop,
TV, tablet or phone picks it
up and turns it back into
data, like a telegraph worker
translating Morse code.
While current “LiFi” is ac-
tually slower than conven-
tional Wi-Fi, in theory it’s pos-
sible to transmit a thousand
times as much information via
light. Just look at trans-Atlan-
tic fiber-optic cables.
But the challenges of mak-
ing LiFi work are consider-
able. For one thing, there
has to be a line of sight be-
tween transmitter and re-
ceiver. The upside is that
putting more LiFi lights into
a building won’t lead to in-
terference, like conventional
Wi-Fi. Alistair Banham, Pure-
LiFi’s CEO, says most appli-
cations in its pilot program
tend to be in places where
security is paramount.
Meanwhile, traditional
Wi-Fi isn’t standing still.
Qualcomm and other indus-
try heavyweights are work-
ing on 802.11ax, which
should make the existing
spectrum more efficient.
One day, we may beam ex-
abytes at each other using
gamma rays. In the mean-
time, we’ll have to settle for
wireless standards that are
ever faster but, owing to in-
escapable laws of physics,
come with new quirks to
adapt to.
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.
Employees Knock SoFi’s Culture
Fintech company is
latest in Silicon Valley
to face reproach over
treatment of women
BY PETER RUDEGEAIR
Social Finance Inc., a fin-
tech company whose hard-
charging ethos propelled it to
success, is ensnared in the
controversy over workplace
culture and the treatment of
women at Silicon Valley tech-
nology startups.
In interviews, nearly a
dozen current and former em-
ployees working in various de-
partments told The Wall
Street Journal that some exec-
utives, including the com-
pany’s former finance chief,
engaged in or tolerated what
they described as improper
behavior toward women in re-
cent years.
Nino Fanlo, who was SoFi’s
chief financial officer until the
end of May, said he occasion-
ally complimented both men
and women’s outfits and
touched both men and
women’s shoulders to try to be
friendly. “It wasn’t sexual,” he
said.
SoFi’s board said Mr. Fanlo
“left the company in May 2017
to pursue another executive
opportunity. He no longer has
any relationship with the com-
pany.”
Separately, SoFi’s board dis-
closed after questioning from
the Journal that in 2012 it
paid money to settle a dispute
between a lower-level em-
ployee and Chief Executive Mi-
chael Cagney. The nature of
the dispute isn’t known, but
the board said it didn’t involve
a sexual relationship.
The allegations levied
against SoFi occur against a
backdrop of debate within Sili-
con Valley about the culture of
startups. Numerous companies
in recent years have been the
subject of accusations of im-
proper conduct or hostile
Singapore
Euro IPO
Marketed
BY P.R. VENKAT
AND SAURABH CHATURVEDI
An Australian real-estate
company Friday started mar-
keting Singapore’s first initial
public offering of stock de-
nominated in euros, hoping to
attract investors seeking expo-
sure to the strengthening cur-
rency.
Cromwell European Real
Estate Investment Trust, a
unit of Australia-listed Crom-
well Property Group, has
started taking orders to raise
up to €1.09 billion ($1.31 bil-
lion) in what is expected to be
Singapore’s second-largest IPO
this year.
The company said in a pro-
spectus lodged with Singa-
pore’s central bank that it is
planning to sell up to 1.91 bil-
lion units at a price range of
€0.55 to €0.57.
The REIT will have an initial
portfolio of 81 assets that in-
clude office, retail and indus-
trial properties in six Euro-
pean countries, according to
the prospectus.
The company said it has se-
cured two investors—Cer-
berus Singapore Investor LLC
and Hillsboro Capital Ltd.—
which have agreed to sub-
scribe to a certain portion of
the units ahead of the IPO.
Cerberus Singapore is a unit of
Cerberus Capital Management
LP, a U.S. private investment
company managing $30 billion
in funds. Hillsboro is a fund
owned by Philippines-based
billionaire Andrew Tan and his
family. Mr. Tan is chairman of
Alliance Global Group Inc.
Stocks denominated in cur-
rencies other than the Singa-
pore dollar are relatively un-
common in the city-state.
About two dozen companies
listed on the Singapore Ex-
change have shares that trade
in such currencies.
Hutchison Port Holdings
Trust and Manulife US REIT
are among those with stocks
that trade in the U.S. currency.
Singapore is an Asian hot-
bed for REITs, which investors
find appealing because of their
generous and stable dividend
yields.
—Saumya Vaishampayan
contributed to this article
Current and former SoFi employees accused some company executives of improper behavior.
work environments. One of the
industry’s leading players,
Uber Technologies Inc., has
been criticized for its treat-
ment of women in the work-
place, which was one factor in
the resignation of Travis Ka-
lanick. its high-profile chief
executive and founder.
SoFi was started six years
ago and has thrived as it
courted money managers into
funding the loans it made to
graduates of top-ranked uni-
versities. The San Francisco
company has raised nearly $2
billion from investors, includ-
ing a $500 million funding
round this year, and recently
signaled it was moving closer
to an initial public offering.
Employees describe a cul-
ture inside its headquarters in
the Presidio neighborhood in
San Francisco and a call center
in nearby Healdsburg, Calif.,
where they felt pressure to
work extra hours at night and
on holidays to avoid being
fired. Mr. Cagney, 46 years
Bank-Research Rules Bring Price War
BY MAX COLCHESTER
AND CHRISTOPHER WHITTALL
How much are investment
research reports actually
worth?
The answer: less than the
banks that produce them
think.
In Europe a tug of war is
playing out between banks
and asset managers over the
value of research that floods
investors’ inboxes every day
urging them to buy or sell se-
curities.
Currently banks dole out
reports to asset managers for
free, hoping to recoup the cost
through commissions on trad-
ing. But as of Jan. 3 this
opaque pricing system will be
altered in Europe. New rules
mean asset managers will have
to disclose how much they
spend on research every year.
That means putting a price
on research. And banks and
asset managers aren’t seeing
eye to eye.
As the haggling gets under
way a price war has broken
out. Earlier this year, banks
were quoting Olivier de La-
rouzière, head of interest rates
at Natixis Asset Management,
an annual fee of as much as
€300,000 ($361,000) for his
firm to have unfettered access
to fixed-income research and
meetings with analysts. Since
then, most banks’ prices have
plummeted, he said, to around
€70,000 on average, though
some are still trying to charge
about €150,000.
“The gap has clearly nar-
rowed a lot,” said Mr. de La-
rouzière. But he still gets
“very, very different propos-
als,” he added.
Overall total spending on
research and trading execution
could fall by up to $3 billion,
according to consultancy Oli-
ver Wyman.
Banks are increasingly at
odds over the scope of re-
search coverage to offer cli-
ents—and how much to charge
for it. Some are still hoping to
negotiate big fees into the mil-
lions of dollars a year with the
biggest asset managers. Oth-
ers are looking to give away
some of their research reports
for free.
Credit Suisse Group AG is
exploiting a loophole in the
new regulations to offer some
basic bond research free of
charge online, according to a
FINANCE & MARKETS
old, used to tell SoFi staff that
if they weren’t waking up
twice a week in a cold sweat,
they weren’t working hard
enough, according to a former
staffer.
Some of those employees
said that the culture veered
out of control at times, with
executives breaking furniture
and throwing telephones out
of anger.
A SoFi spokesman said that
the company had experienced
strong growth and that it has
been adding staff “to make
sure we deliver the experience
SoFi members and applicants
expect while creating the in-
ternal culture we want.”
On Aug. 11, a former opera-
tions manager, Brandon
Charles, sued the company in
a wrongful-termination claim,
adding that a fellow manager
had harassed female employ-
ees by making sexual or inap-
propriate comments. SoFi has
said it investigated Mr.
Charles’s claims and found
Number Crunching
Some analysts are estimating a 25-30% fall in spending on research
by 2020. One reason why:
Big banks send 40,000
research notes every week...
... but less than
are actually opened.
Source: Quinlan & Associates
person familiar with the mat-
ter. The Swiss bank hopes to
make money by charging for
access to analysts instead, this
person said. Dutch bank ING
Groep said Tuesday it will be
giving away some of its eco-
nomics analysis for nothing, as
a way to promote its brand.
For equity research, banks
are hoping to charge a little
more. J.P. Morgan Chase & Co.
is toward the bottom of the
pack, quoting basic access to
read-only equity reports for
$10,000 a year, according to a
person familiar with the mat-
ter, with prices steadily in-
creasing for clients who want
more face-time with top ana-
lysts.
At the other end of the
scale, Barclays PLC is trying to
price its research as a pre-
mium product, according to
several clients.
Asset managers are work-
ing out how much of this re-
search they actually want.
“It’s made us have quality
control. How much do I really
need?“ said Chris Iggo, chief
investment officer for fixed in-
come at AXA Investment
Managers.
Several investment firms
asked their fund managers to
rank research based on what
was essential, helpful or use-
less. The results showed a lot
of research is never read.
The new rules are “very bad
for the price of bad research,”
said Neil Scarth, principal at
Frost Consulting & Advisory.
But they could also make the
cost of access to top quality
analysis increase, he adds.
Under the current system,
equity investors pay a com-
mission fee to a broker when
them to be meritless.
Less than 24 hours after
Mr. Charles amended his law-
suit on Aug. 31, a company-
wide note sent by Mr. Cagney
said that SoFi had launched an
investigation into sexual-ha-
rassment claims.
Mr. Charles’s lawsuit
claimed that Mr. Cagney fos-
tered a culture of “male bra-
vado” where sexual harass-
ment was permitted.
A separate suit was filed
last month by a group of for-
mer employees that accused
the firm of pushing staff to
work long hours without
proper compensation. SoFi
said it takes any allegations of
unfair treatment seriously and
it is reserving further com-
ment until it responds to the
complaint in court.
Mr. Cagney wrote to em-
ployees in his note that out-
side attorneys would look into
other sexual-harassment
claims. He said in the compa-
nywide note that as SoFi was
= 1,000 notes
5%
THE WALL STREET JOURNAL.
they trade. Part of that fee
goes toward executing the
trade and a portion is retained
to pay for additional services,
including equity research.
So there is some idea of
how much equity research
should cost. The U.K.’s Finan-
cial Conduct Authority esti-
mates U.K. investment manag-
ers pay around £3 billion
($3.96 billion) of dealing com-
missions a year to brokers, of
which half is spent on re-
search.
In fixed-income investing,
however, the two sides are
heading into uncharted wa-
ters. Banks currently provide
fixed-income research to cli-
ents for free in the hope they
would direct business their
way in the form of trading
bonds or currencies.
The new rules are part of a
revision of an EU law that is
implemented by regulators
across the trading bloc. One of
its aims is to stop asset man-
agers receiving “inducements”
to trade with certain brokers
and guarantee value for inves-
tors.
Fixed-income managers
aren’t delighted at the pros-
pect of transparency. Many
Advertisement
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Data as shown is for information purposes only. No offer is being made by
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Monday, September 11, 2017 | B5
preparing its response to Mr.
Charles’s lawsuit, it discovered
several people were prepared
to “formally allege” they were
witnesses to or victims of “im-
proper activity” at the com-
pany’s operations center in
Healdsburg, Calif.
Although the company is
growing fast, “Our rapid ex-
pansion is no excuse for bad
behavior in the workplace,”
Mr. Cagney wrote.
In 2012, a dispute between
Mr. Cagney and an employee
led to an investigation by the
company’s board, which hadn’t
RICHARD B. LEVINE/NEWSCOM/ZUMA PRESSW
been previously reported.
Last week, SoFi’s board is-
sued a statement to the Jour-
nal saying, “The board con-
cluded that it was in the best
interests of all parties to reach
a settlement. ... There was no
allegation or evidence of a ro-
mantic or sexual relationship
between Mr. Cagney and the
employee.”
The employee is no longer
with the company and de-
clined to comment. Mr. Cagney
said he never had any rela-
tionship with a current or for-
mer SoFi employee, except for
his wife, who works at SoFi.
Neither Mr. Cagney nor the
company would discuss the
nature of the dispute that led
to the settlement, citing confi-
dentiality agreements.
More than half a dozen for-
mer employees told the Jour-
nal that there were workplace
issues involving Mr. Fanlo. He
would commonly make com-
ments about the physical ap-
pearance of female employees
and touch their shoulders in
ways that made them uneasy,
according to ex-workers who
experienced both behaviors.
Mr. Fanlo said that no one
raised complaints with him
and that he would have
stopped had he known it made
employees uncomfortable.
“I would have said, 'Geez,
I’m sorry,’” had those gestures
been interpreted in that way.
—Telis Demos contributed to
this article.
see paying for research as an
extra cost that must either be
passed onto their clients or
taken from their own profits.
“Spreads will not come
down because of this,” said
Craig MacDonald, global head
of fixed income at Standard
Life Aberdeen, adding that it
costs a similar amount to
trade with some brokers who
don’t provide research as
those that do.
To push down research
prices, fund managers are tell-
ing the banks: You need us
more than we need you. Meet-
ing bank analysts may be help-
ful to gauge the mood in the
broader investment commu-
nity, but the exchange of infor-
mation cuts both ways.
They also exploited banks’
overriding concern that if
money managers didn’t buy
their research, they would
trade with them less. “If you
have no relationship in terms
of research, how strong will
your relationship stay in terms
of execution?” said Mr. de La-
rouzière.
Mr. de Larouzière said his
business uses about 50 re-
search providers now, but he
intends to cut that by more
than half. He said he was now
getting research quotes “at
very low prices because they
need to be on that list.”
The adoption of the new
European rules is complicated
by the fact that in the U.S. the
rules are in conflict. EU asset
managers will have an obliga-
tion to pay for research. How-
ever U.S. firms that aren’t reg-
istered investment advisers
are prohibited from receiving
direct payments. But analysts
expect this to change.
“Research is a product that
is going to be sold every-
where,” said Elliot Hand, a
manager at Pricewater-
houseCoopers LLP. “This will
become standard.“
INTERNATIONAL INVESTMENT FUNDS
FUND NAME
n Chartered Asset Management Pte Ltd - Tel No: 65-6835-8866
Fax No: 65-6835 8865, Website: www.cam.com.sg, Email: cam@cam.com.sg
CAM-GTF Limited
For information about listing your funds,
please contact: Freda Fung tel: +852 2831
2504; email: freda.fung@wsj.com
Reinsurers
On Hook
For Storm
Damage
BY LESLIE SCISM
A global array of reinsur-
ance companies will bear the
financial brunt of Hurricane
Irma’s damage to potentially
millions of homes across Flor-
ida.
Irma’s winds are expected
to leave tens of billions of dol-
lars in insured damage. And
when the insurance money ar-
rives for many homeowners,
much of it will be via reinsur-
ance companies—not the car-
rier on their contract.
Reinsurers play an espe-
cially large role in Florida’s
home-insurance market.
Andrew, Katrina and other
severe hurricanes from 1992
through 2005 devastated the
state’s insurance marketplace.
Most brand-name national
home insurers sharply reduced
their presence. Picking up the
slack today is a state-run “in-
surer of last resort,” Citizens
Property Insurance Corp.,
and some 50 small to midsize
home insurers.
Those carriers all are re-
quired to buy ample amounts
of reinsurance to help ensure
they have money for their pol-
icyholders, because they don’t
The global
reinsurance industry
had a record capital
cushion as of March.
have the fat capital cushions
of the national carriers. These
reinsurance firms are specialty
insurers that take on the risk
of some of the policies sold by
primary insurers. They send
insurers money to help pay
claims once claims reach con-
tractual, designated levels.
The use of so much reinsur-
ance introduces a few worries
into the marketplace. The
home insurers are exposed to
potential disputes with their
reinsurers over claims pay-
ments, industry analysts note.
It also ties the home insurers’
fates to the financial health of
their reinsurers.
Irma’s arrival is well-timed
from one perspective: The
global reinsurance industry is
awash in capital. As of March,
it had a record $605 billion
capital cushion, which was
built up thanks in large part to
relatively few major natural
disasters in the U.S. since
2005.
“Every company in Florida
has reinsurance,” said Joseph
Petrelli, president of Demotech
Inc., an insurance ratings firm
with a specialty in Florida’s
homeowners market. “They
buy reinsurance for multiple
storms, and it is across the en-
tire season.”
The national carriers now
account for about one-fifth of
Florida’s market, down from
more than half in 1992, ac-
cording to S&P. The replace-
ments include such companies
as Universal Insurance Hold-
ings Inc., Heritage Insurance
Holdings Inc. and HCI Group
Inc.
The state runs a reinsur-
ance company itself, the Flor-
ida Hurricane Catastrophe
Fund, that provides much of
the reinsurance. The next big-
gest providers to insurers in
the state are Lloyd’s of Lon-
don, Bermuda-based Everest
Re Group Ltd., Germany-based
Allianz SE and Tokio Marine
Holdings Inc. in Japan, accord-
ing to Fitch Ratings.
The reliance on this com-
munity has sent reinsurance
stocks tumbling, while na-
tional insurers were down
more modestly.
—Nicole Friedman
contributed to this article.
 Heard on the Street: Irma will
test cat-bond market.......... B10
NAV —%RETURN—
GF AT LB DATE CR NAV YTD 12-MO 2-YR
OT OT MUS 08/31 USD 310796.35 2.9 -3.7 7.1
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
B6 | Monday, September 11, 2017
What’s Your Tolerance for
Investment Risk? Probably
Not What You Think
Questions financial advisers ask
clients to get at the answer actually
measure something else—leading to
misguided investment strategies
BY MEIR STATMAN
ANYBODY WHO HAS EVER
BEEN to a financial adviser knows
the drill. The adviser begins by ask-
ing you to fill out a questionnaire,
aimed at getting at a key measure:
your appetite for risk. By knowing
how much risk you’re able to toler-
ate, the adviser knows how much
you’re willing to lose to get where
you want to go.
The adviser can then construct a
portfolio that reflects your risk tol-
erance.
Pretty simple, no? If only.
The truth is that the questions
advisers ask often don’t measure
what they purport to. Instead, they
take all sorts of different concepts—
such as regret, fear and overconfi-
dence—and they lump them all to-
gether under this vague concept
called risk. Each of those things is
worth understanding and examining
on its own. But to call them risk
ends up distorting more than clarify-
ing, and leaves investors with port-
folios that may be disturbingly inap-
propriate for their goals.
To get a better sense of what risk
questionnaires actually measure—
and how advisers and investors
could refine those questions—here’s
a look at some typical questions.
RISK VS. FEAR AND
EXUBERANCE
Imagine a steep stock-market de-
cline, as happened during the
2008-09 financial crisis when the S&P
500 index plunged more than 40% in
six months. How would you react?
I would sell all of my stock invest-
ments.
I would sell some of my stock in-
vestments.
I would make no changes to my
stock investments.
I would increase my stock invest-
ments.
This is a typical question posed to
investors, supposedly to gauge their
tolerance for a market decline. But
what do the answers tell us? Not
what we typically believe.
For starters, consider that every-
body finds it difficult to foresee fu-
ture emotions. Today, the fear in-
duced by the stock-market crash of
the recession is fading, while fear in-
duced by the dot-com crash of 2000
and the crash of 1987 are long gone.
Rather, how people feel about a
big decline depends almost entirely
on what has been happening in the
market recently. So asking people
how they would feel if the market
falls 40% is likely to elicit an answer
“I am afraid” in the wake of a big
decline, and “I am not afraid” when
the market has been moving up.
In other words, the answer tells
you very little.
But while the question doesn’t re-
veal anything about an investor’s
A Key to Feeling Better: Try Buying Some Time
Many people don’t do it out of guilt. But the growth in the sharing economy might be the answer.
BY ASHLEY WHILLANS
AND MICHAEL NORTON
PEOPLE FEEL HAPPIER when they
pay to save time than when they buy
something nice for themselves.
Those are the results we found in
a series of recent studies. Spending
on things like housecleaning services
or grocery delivery left people feel-
ing more satisfied than spending on
things like new clothes and wine.
The findings held true for people in
different countries, and at different
income levels.
But we learned something else:
Even though people feel better when
they spend money to free up time,
they often don’t choose to do it.
A shortage of time
We went looking into this topic to
see how people were dealing with a
big problem: They have more discre-
tionary income than in previous de-
cades, but less time to use it—be-
tween work and other obligations,
they simply have too much to do, or
at least feel that way.
So, we theorized that spending
money to “buy time” might reduce
stress and improve people’s mood.
To test the idea, our research team
headed to a science museum in Van-
JOURNAL REPORT | WEALTH MANAGEMENT
tolerance for risk, it does hint at an-
other important measure: an inves-
tor’s current feelings of fear or exu-
berance.
To get at those feelings, advisers
might ask clients to estimate stock-
market returns in the coming 12
months, and their perception of mar-
ket risk during the same period. In-
vestors who say the returns would
be high and risk low are likely in-
fected by exuberance. Investors who
say that returns will be low and risk
high are likely afflicted by fear.
Once advisers get answers to the
question, they need to push back. In
Questions Investors
Should Ask Themselves
How strongly do you agree with
the following statements?
Your answers offer a window into
your investing attitudes and have
important implications for your
investing strategies.
I HAVE LESS money than I need.
I find it difficult to pay my bills.
I am financially worse off than my
parents were at the same age.
People who agree strongly aren't
necessarily poor, but they
lag behind their aspirations.
This motivates them to accept
risk and possibly losses for a
chance to reach their aspirations.
I FEEL BAD if another alternative
has done better than the one I
have chosen.
People who agree strongly have
a high propensity for regret.
One prophylactic is to keep your-
self ignorant of how alternatives
have done.
SUCCESS IN CHOOSING
investments with above-average
returns depends on skill more
than on luck, and I have the skills
to choose such investments.
People who strongly agree are
likely overconfident in their
skills at choosing winning
investments, motivating them
to hold undiver-sified portfolios
and trade often.
IT’S MORE LIKELY that stock-
market returns will be low and
risk high in the coming 12 months
than returns high and risk low.
People who think it’s more likely
that returns will be low and risk
high are probably excessively
fearful, motivating them to
invest too little in stocks. People
who think returns will be high
and risk low are probably
excessively exuberant,
motivating them to invest too
much in stocks.
THE WALL STREET JOURNAL.
couver last year and offered visi-
tors—60 working adults—a total of
$80 to spend on two weekends, as
long as they let us tell them how to
spend it. One weekend, we sent par-
ticipants $40 and told them to spend
the money in any way that would
save them time. Some people ar-
ranged grocery delivery services,
while others hired house cleaners.
One woman paid a teenager in the
neighborhood to run errands for her.
Another bought pre-made bean dip
2009 they should have said, “I know
you are afraid. So am I. It is a natu-
ral feeling in times like today. You
believe that future returns will be
low and risk high, so you want to sell
your stocks. But I also know that
feelings can be exaggerated. More
likely than not, the economy will re-
cover and the stock market as well,
as happened post-2000 and
post-1987. You are better off leaving
your portfolio alone, even if fear
compels you otherwise.”
Advisers also need to push back
in the other direction in periods of
exuberance. “I know that you feel
good about the stock market and be-
lieve that returns will be high and
risk low. But I know that feelings can
be exaggerated. It isn’t wise to in-
crease your stock allocation beyond
prudent levels, because sometimes
declines follow increases, and you
are not in a financial position to
withstand a decline if you want ade-
quate retirement income.”
CONFUSING REGRET AND RISK
Suppose that five years ago you
bought shares in a highly regarded
company. The same year the com-
pany experienced a severe decline in
sales due to poor management. The
price of the shares dropped drasti-
cally and you sold at a substantial
loss. The company has been restruc-
tured under new management, and
most experts now expect the shares
to produce better than average re-
turns. Given your bad past experi-
ence with this company, would you
buy shares now?
This question is typically pre-
sented as about risk attitudes, inter-
preting a “no” answer as bolstering
a conclusion that a client is highly
risk-averse and therefore should be
assigned a low-risk portfolio.
The problem is that this is not re-
ally a question about risk attitudes.
Instead, it’s more about regret. Atti-
tudes toward risk and regret are
both important, but they are differ-
ent. Indeed, the correlation between
the two attitudes is close to zero.
Regret is a painful emotion, and
pride, its opposite, is pleasurable,
but both are effective teachers. We
recall our choices and their out-
comes, and learn to repeat choices
that brought pride and avoid choices
that inflicted regret.
So this is an important question
for financial advisers to ask—but not
to learn about their clients’ appetite
for risk. Rather, it tells us about
their susceptibility to regret and
pride.
Advisers should diagnose pride-
seeking and especially regret-aver-
sion in their clients, perhaps asking
them more directly whether they
agree with the statement: “When-
ever I make a choice, I feel the pain
of regret if another alternative has
done better than the alternative I
have chosen.”
Advisers should then proceed to
reduce clients’ susceptibility to pride
and regret by educating them about
the dominant role of luck in the link
between investment choices and out-
comes, rather than recommend low-
risk investments to regret-averse cli-
ents.
DAVID VOGIN
for her house party.
On a different weekend, we sent
those same people $40, but told
them to spend it on a material thing
for themselves. Our participants
filled their shopping bags with
pretty nice stuff, including polo
shirts, books, board games and wine.
On each weekend of the study, we
asked people how pressed for time
and how happy they felt. We found
that people felt happier when they
used money to buy time rather than
CONFIDENCE AND
OVERCONFIDENCE
How much confidence do you have
in your ability to make good finan-
cial decisions?
The risk questionnaire asking this
question considers people who pro-
fess high confidence as willing to ac-
cept high risk, bolstering recommen-
dations for high-risk portfolios.
There is indeed a relation be-
tween confidence and risk toler-
ance: High confidence generally cor-
responds to high risk tolerance. But
advisers should pause before rec-
ommending high-risk portfolios to
confident clients, because confi-
dence can easily turn into overcon-
fidence.
Overconfident investors perceive
risk as lower than less-confident in-
vestors, biasing upward the measure
of their risk tolerance. Advisers
therefore need to adjust downward
their assessment of the risk toler-
ance of overconfident investors, and
perhaps tamp down their overconfi-
dence as well.
Perhaps a better question diag-
nosing overconfidence asks: Some
people believe that they can pick in-
vestments that would earn higher-
than-average returns. Other people
believe that they are unable to do so.
Please indicate your belief.
DON’T FORGET ASPIRATIONS
How strongly do you agree with
this statement: “Generally, I prefer
investments with little or no fluctua-
tion in value, and I’m willing to ac-
cept the lower return associated
with these investments.”
Attitudes about volatility are cen-
tral in risk questionnaires. Investors
who strongly agree with the above
statement are deemed to have low
buying a material thing. And they
said they felt that way because they
felt less pressed for time.
The same results showed up in a
survey of more than 6,000 adults
from the U.S., Canada, Denmark and
the Netherlands. We asked the par-
ticipants about their typical spend-
ing habits and their life satisfaction,
and found that people who typically
spent money on saving time re-
ported greater satisfaction. This
finding held even when we took indi-
viduals’ wealth into account. The
benefits of buying time were re-
markably consistent across the in-
come spectrum.
Why not do it?
But only 50% of respondents actu-
ally chose to spend money to buy
time, and only 28% spent it on out-
sourcing disliked tasks. The results
were even more pronounced when
we returned to the science museum
in Vancouver and approached a
group of 98 working adults. We
asked them what they would do if
we gave them $40 to spend the fol-
lowing weekend. Over half reported
that they would spend the money on
a material purchase, but only 2% re-
ported that they would make a time-
saving purchase.
Why? Isn’t it obvious that it is
THE WALL STREET JOURNAL.
PHOTO ILLUSTRATION BY C.J. BURTON
risk tolerance, tilting adviser recom-
mendations toward portfolios that
are less volatile, and less likely to of-
fer the opportunity for substantial
gains.
But risk isn’t just about the fear
of volatility. Risk is also the risk of
failing to meet our goals. In this con-
text, an investor’s appetite for risk
could be very different than it would
seem by just asking about whether
they feel comfortable with volatility.
Many who would be willing to
wager $10,000 on a 50-50 chance for
a $3,639 loss or a $4,229 gain might
not be willing to wager $100,000 or
$1 million for proportionally higher
gains and losses.
That’s why it’s better for inves-
tors to think about that question
where there are substantial stakes,
such as lifetime standard of living.
Consider the following question:
Suppose that you are given an op-
portunity to replace your current in-
vestment portfolio with a new port-
folio. The new portfolio has a 50-50
chance to increase your standard of
living by 50% during your lifetime.
However, the new portfolio also has
a 50-50 chance to reduce your stan-
dard of living by X% during your life-
time. What is the maximum X% re-
duction in standard of living you are
willing to accept?
The lesson in all these questions
is that advisers and investors can’t
just think about their tolerance for
risk in a vacuum, without thinking
about their aspirations.
Risk is the payment we make for
a chance to reach our aspirations.
Dr. Statman is the Glenn Klimek
professor of finance at Santa
Clara University’s Leavey School of
Business and the author of “Fi-
nance for Normal People: How In-
vestors and Markets Behave.”
Email reports@wsj.com.
more enjoyable to pay someone to
clean the bathroom while you watch
Netflix in your pajamas?
Our ongoing research suggests
that one barrier to buying time is
that people often feel guilty about
paying someone else to complete
their disliked tasks. To the extent
that people feel that they are creat-
ing a burden for the service pro-
vider—rather than an opportunity to
earn money—even those who could
benefit from buying time might
choose not to participate in the
sharing economy.
This barrier to participation may
be further reinforced by companies
with reputations for paying low
wages and offering no benefits. En-
couraging consumers to recognize
that at least some corners of the
sharing economy do treat workers
well may encourage them to buy
time—potentially short-circuiting
the negative relationship between fi-
nancial affluence and time affluence.
Dr. Whillans is an assistant pro-
fessor and Dr. Norton is a profes-
sor at Harvard Business School.
Elizabeth Dunn, a professor of
psychology at the University of
British Columbia, contributed to
this article. Email re-
ports@wsj.com.
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
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THE WALL STREET JOURNAL. Monday, September 11, 2017 | B7

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B8 | Monday, September 11, 2017 THE WALL STREET JOURNAL.

MARKETS DIGEST Data as of Friday, September 8, 2017

Nikkei 225 Index STOXX 600 Index S&P 500 Index 4 p.m. New York time
Last Year ago
19274.82 t 121.70, or 0.63% Year-to-date s 0.84% 375.51 s 0.56, or 0.15% Year-to-date s 3.90% 2461.43 t 3.67, or 0.15% Trailing P/E ratio 23.82 24.86
High, low, open and close for each 52-wk high/low 20230.41 16251.54 High, low, open and close for each 52-wk high/low 396.45 328.80 High, low, open and close for each P/E estimate * 18.83 18.52
trading day of the past three months. All-time high 38915.87 12/29/89 trading day of the past three months. All-time high 414.06 4/15/15 trading day of the past three months. Dividend yield 2.00 2.12
All-time high: 2480.91, 08/07/17

Weekly P/E data based on as-reported earnings from Birinyi Associates Inc.
Session high 20500 390 2500
DOWN UP
Session open t Close
20250 385 2475
Close Open
t

Session low
20000 380 2450

65-day moving average

19750 375 2425

19500 370 2400

65-day moving average

65-day moving average
19250 365 2375

Bars measure the point change from session's open

19000 360 2350
June July Aug. Sept. June July Aug. Sept. June July Aug. Sept.

International Stock Indexes Data as of 4 p.m. New York time Global government bonds
Latest 52-Week Range YTD Latest, month-ago and year-ago yields and spreads over or under U.S. Treasurys on benchmark two-year
Region/Country Index Close NetChg % chg Low Close High % chg and 10-year government bonds around the world. Data as of 3 p.m. ET
World The Global Dow 2853.39 2.03 0.07 2390.11 • 2878.99 12.7 Country/ Spread Over Treasurys, in basis points Yield
MSCI EAFE 1953.56 4.68 0.24 1614.17 • 1955.39 16.0 Coupon Maturity, in years Yield Latest Previous Month Ago Year ago Previous Month ago Year ago
MSCI EM USD 1091.17 1.07 0.10 838.96 • 1091.36 26.5 2.750 Australia 2 1.863 60.1 61.8 43.5 74.2 1.884 1.794 1.516
2.750 10 2.587 52.6 60.9 37.2 27.4 2.648 2.636 1.871
Americas DJ Americas 594.13 –0.78 –0.13 503.67 • 597.46 9.9
3.000 Belgium 2 -184.5 -186.1 -188.7 -134.4 -0.595 -0.528 -0.570
-0.583
Brazil Sao Paulo Bovespa 73078.85 –333.56 –0.45 56820.77 • 73412.41 21.3
0.800 10 0.631 -143.0 -142.1 -149.6 -143.3 0.618 0.768 0.164
Canada S&P/TSX Comp 14985.32 –39.21 –0.26 14349.10 • 15922.37 –2.0
0.000 France 2 -0.560 -182.2 -183.3 -182.3 -135.7 -0.567 -0.464 -0.584
Mexico IPC All-Share 50083.80 –165.32 –0.33 44364.17 • 51713.38 9.7
1.000 10 0.622 -144.0 -142.8 -150.5 -142.9 0.611 0.759 0.169
Chile Santiago IPSA 3867.95 –14.23 –0.37 3127.54 • 3932.62 20.0
0.000 Germany 2 -0.755 -201.7 -205.2 -202.3 -141.4 -0.786 -0.665 -0.640
U.S. DJIA 21797.79 13.01 0.06 17888.28 • 22118.42 10.3
0.500 10 0.312 -175.0 -173.6 -178.9 -165.6 0.303 0.475 -0.059
Nasdaq Composite 6360.19 –37.68 –0.59 5046.37 • 6435.33 18.2
0.050 Italy 2 -0.106 -136.8 -138.9 -138.9 -84.9 -0.123 -0.030 -0.075
S&P 500 2461.43 –3.67 –0.15 2085.18 • 2480.91 9.9
2.200 10 1.963 -9.9 -12.7 -26.4 -44.4 1.911 2.000 1.153
CBOE Volatility 12.12 0.57 4.94 9.36 • 22.51 –13.7
0.100 Japan 2 -0.161 -142.3 -142.2 -146.6 -96.9 -0.156 -0.107 -0.195
EMEA Stoxx Europe 600 375.51 0.56 0.15 328.80 • 396.45 3.9 0.100 10 -0.005 -206.6 -202.4 -219.5 -163.3 0.015 0.069 -0.036
Stoxx Europe 50 3058.45 5.18 0.17 2730.05 • 3276.11 1.6 4.000 Netherlands 2 -0.715 -197.7 -201.3 -197.9 -137.0 -0.747 -0.620 -0.596
Austria ATX 3230.33 –6.89 –0.21 2320.70 • 3280.48 23.4 0.750 10 0.452 -160.9 -159.8 -167.4 -155.1 0.441 0.590 0.046
Belgium Bel-20 3938.24 16.30 0.42 3426.21 • 4041.03 9.2 4.750 Portugal 2 -0.055 -131.7 -134.5 -136.9 -29.2 -0.079 -0.010 0.482
France CAC 40 5113.49 –1.13 –0.02 4332.45 • 5432.40 5.2 4.125 10 2.780 71.9 68.8 56.6 146.7 2.726 2.830 3.064
Germany DAX 12303.98 7.35 0.06 10259.13 • 12888.95 7.2 2.750 Spain 2 -0.343 -160.5 -161.6 -169.8 -92.3 -0.350 -0.339 -0.149
Greece ATG 802.72 –8.32 –1.03 551.93 • 858.08 24.7 1.450 10 1.537 -52.4 -55.6 -83.3 -61.2 1.483 1.431 0.986
Hungary BUX 37596.75 –186.76 –0.49 27476.40 • 38097.59 17.5 4.250 Sweden 2 -0.710 -197.2 -196.5 -204.8 -138.1 -0.699 -0.689 -0.607
Israel Tel Aviv 1388.09 … Closed 1363.50 • 1478.96 –5.6 1.000 10 0.519 -154.2 -150.2 -162.1 -141.4 0.537 0.643 0.184
Italy FTSE MIB 21776.66 54.15 0.25 16134.71 • 22048.30 13.2 1.750 U.K. 2 0.167 -109.5 -113.0 -112.3 -62.8 0.136 0.236 0.146
Netherlands AEX 518.82 –0.01 –0.002 439.07 • 536.26 7.4 4.250 10 0.990 -107.1 -106.8 -110.7 -93.6 0.971 1.157 0.661
Poland WIG 64306.53 –75.34 –0.12 46756.18 • 65208.48 24.3 1.250 U.S. 2 1.262 ... ... ... ... 1.266 1.359 0.774
Russia RTS Index 1119.61 8.88 0.80 960.32 • 1195.61 –2.8 2.250 10 2.061 ... ... ... ... 2.039 2.264 1.597
Spain IBEX 35 10129.60 4.70 0.05 8607.10 • 11135.40 8.3
Sweden SX All Share 557.23 0.13 0.02 496.66 • 596.72 4.2 Commodities Prices of futures contracts with the most open interest 3:30 p.m. New York time
Switzerland Swiss Market 8912.05 5.39 0.06 7593.20 • 9176.99 8.4 EXCHANGE LEGEND: CBOT: Chicago Board of Trade; CME: Chicago Mercantile Exchange; ICE-US: ICE Futures U.S.; MDEX: Bursa Malaysia
South Africa Johannesburg All Share 55724.67 –153.52 –0.27 48935.90 • 56655.88 10.0 Derivatives Berhad; TCE: Tokyo Commodity Exchange; COMEX: Commodity Exchange; LME: London Metal Exchange;
NYMEX: New York Mercantile Exchange; ICE-EU: ICE Futures Europe. *Data as of 9/7/2017
Turkey BIST 100 108451.70 –1291.25 –1.18 72519.85 • 110423.11 38.8
One-Day Change Year Year
U.K. FTSE 100 7377.60 –19.38 –0.26 6665.63 • 7547.63 3.3 Commodity Exchange Last price Net Percentage high low

Asia-Pacific Corn (cents/bu.) CBOT 356.50 1.25 0.35% 417.25 344.25

Soybeans (cents/bu.) 961.50 -7.25 -0.75% 1,047.00 907.00
Australia S&P/ASX 200 5672.60 –17.30 –0.30 5156.60 • 5956.50 0.1
Wheat (cents/bu.)
CBOT
CBOT 437.75 0.50 0.11 592.25 422.50
China Shanghai Composite 3365.24 –0.25 –0.01 2980.43 • 3385.39 8.4
Live cattle (cents/lb.) CME 107.625 1.400 1.32 122.850 99.125
Hong Kong Hang Seng 27668.47 145.55 0.53 21574.76 • 28094.61 25.8
Cocoa ($/ton) ICE-US 1,940 34 1.78 2,301 1,794
India S&P BSE Sensex 31687.52 24.78 0.08 25765.14 • 32575.17 19.0
Coffee (cents/lb.) ICE-US 130.65 1.50 1.16 166.75 119.10
Japan Nikkei Stock Avg 19274.82 –121.70 –0.63 16251.54 • 20230.41 0.8
Sugar (cents/lb.) ICE-US 14.05 0.02 0.14 20.50 12.74
Singapore Straits Times 3228.56 0.50 0.02 2787.27 • 3354.71 12.1
Cotton (cents/lb.) ICE-US 74.61 0.34 0.46 75.75 66.15
South Korea Kospi 2343.72 –2.47 –0.11 1958.38 • 2451.53 15.7 Robusta coffee ($/ton) ICE-EU 1957.00 7.00 0.36 2,272.00 1,892.00
Taiwan Weighted 10609.95 71.44 0.68 8902.30 • 10617.84 14.7
Copper ($/lb.) COMEX 3.0405 -0.1030 -3.28 3.1785 2.5025
Source: SIX Financial Information;WSJ Market Data Group Gold ($/troy oz.) COMEX 1352.40 2.10 0.16 1,362.40 1,160.80
Silver ($/troy oz.) COMEX 18.090 -0.026 -0.14 18.875 14.440
Currencies London close on Sept. 8 Aluminum ($/mt)* LME 2,096.50 4.50 0.22 2,134.00 1,688.50
Tin ($/mt)* LME 20,690.00 15.00 0.07 21,225.00 18,760.00
Yen, euro vs. dollar; dollar vs. major U.S. trading partners US$vs,
Fri YTDchg Copper ($/mt)* LME 6,870.00 -21.00 -0.30 6,937.00 5,491.00
Country/currency in US$ per US$ (%) Lead ($/mt)* LME 2,335.00 -14.00 -0.60 2,481.00 2,022.00
10% Europe Zinc ($/mt)* LME 3,098.00 9.00 0.29 3,195.00 2,450.50
Bulgaria lev 0.6155 1.6247 –12.6 Nickel ($/mt)* LME 12,120.00 130.00 1.08 12,220.00 8,780.00
s WSJ Dollar index Croatia kuna 0.1620 6.173 –13.9 Rubber (Y.01/ton) TCE 226.00 -5.00 -2.16 n.a. n.a.
0
Euro zone euro 1.2040 0.8306 –12.6
s Euro Czech Rep. koruna-b 0.0461 21.678 –15.6 Palm oil (MYR/mt) MDEX 2766.00 -16.00 -0.58 2950.00 2380.00
–10 Denmark krone 0.1618 6.1802 –12.6 Crude oil ($/bbl.) NYMEX 47.58 -1.51 -3.08 58.34 42.52
sYen Hungary forint 0.003927 254.65 –13.5 NY Harbor ULSD ($/gal.) NYMEX 1.7663 -0.0198 -1.11 1.8138 1.3814
Iceland krona 0.009451 105.81 –6.3 RBOB gasoline ($/gal.) NYMEX 1.6465 -0.0145 -0.87 1.7832 1.2902
–20 Norway krone 0.1292 7.7420 –10.4
0.2835 3.5269 –15.8
Natural gas ($/mmBtu) NYMEX 2.899 -0.082 -2.75 3.5660 2.7990
2016 2017 Poland zloty
Russia ruble-d 0.01747 57.247 –6.6 Brent crude ($/bbl.) ICE-EU 53.76 -0.73 -1.34 60.08 45.19
US$vs, US$vs,
YTDchg YTDchg Sweden krona 0.1260 7.9392 –12.8 Gas oil ($/ton) ICE-EU 523.75 0.50 0.10 534.25 408.25
Fri Fri
Country/currency in US$ per US$ (%) Country/currency in US$ per US$ (%) Switzerland franc 1.0571 0.9460 –7.2
Turkey lira 0.2931 3.4113 –3.2 Sources: SIX Financial Information; WSJ Market Data Group
Americas Hong Kong dollar 0.1280 7.8096 0.7
Ukraine hryvnia 0.0384 26.0650 –3.8
Argentina peso-a 0.0582 17.1957 8.4
India rupee
Indonesia rupiah
0.0156
0.0000759
63.9250
13168
–5.9
–2.6
U.K. pound 1.3202 0.7575 –6.5 Cross rates London close on Sep 8
Brazil real 0.3232 3.0936 –5.0 Middle East/Africa
Japan yen 0.009280 107.76 –7.9
Canada dollar 0.8238 1.2139 –9.7 USD GBP CHF JPY HKD EUR CDN AUD
Kazakhstan tenge 0.002981 335.50 0.5 Bahrain dinar 2.6515 0.3772 –0.01
Chile peso 0.001612 620.30 –7.4 Australia 1.2396 1.6362 1.3103 0.0115 0.1587 1.4922 1.0211 ...
Macau pataca 0.1247 8.0188 1.3 Egypt pound-a 0.0566 17.6600 –2.6
Colombia peso 0.0003437 2909.38 –3.1 Canada 1.2139 1.6026 1.2832 0.0113 0.1554 1.4614 ... 0.9794
Malaysia ringgit-c 0.2381 4.2001 –6.4 Israel shekel 0.2846 3.5132 –8.7
Ecuador US dollar-f 1 1 unch
New Zealand dollar 0.7272 1.3751 –4.8 Kuwait dinar 3.3231 0.3009 –1.5 Euro 0.8306 1.0965 0.8779 0.0077 0.1064 ... 0.6840 0.6700
Mexico peso-a 0.0564 17.7216 –14.5
Pakistan rupee 0.0095 105.250 0.8 Oman sul rial 2.5976 0.3850 0.003 Hong Kong 7.8096 10.3099 8.2543 0.0725 ... 9.4028 6.4335 6.2998
Peru sol 0.3093 3.2330 –3.6
Philippines peso 0.0197 50.827 2.5 Qatar rial 0.2700 3.704 1.8 Japan 107.7600 142.2600 113.9000 ... 13.7990 129.7300 88.7600 86.9300
Uruguay peso-e 0.0348 28.750 –2.0
Singapore dollar 0.7465 1.3395 –7.4 Saudi Arabia riyal 0.2666 3.7503 –0.01 0.9460 1.2490 ... 0.0088 0.1211 1.1391 0.7793 0.7632
Venezuela bolivar 0.099274 10.07 0.8 Switzerland
South Korea won 0.0008827 1132.93 –6.2 South Africa rand 0.0773 12.9390 –5.5
U.K. 0.7575 ... 0.8006 0.0070 0.0970 0.9119 0.6239 0.6110
Asia-Pacific Sri Lanka rupee 0.0065454 152.78 2.9 Close Net Chg % Chg YTD % Chg
0.8067 1.2396 –10.7 Taiwan dollar 0.03327 30.053 U.S. ... 1.3202 1.0571 0.0093 0.1280 1.2040 0.8238 0.8067
Australia dollar –7.4 WSJ Dollar Index 84.45 –0.24 –0.28 –9.13
China yuan 0.1543 6.4817 –6.7 Thailand baht 0.03019 33.120 –7.5 Sources: Tullett Prebon, WSJ Market Data Group Source: Tullett Prebon

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

Latest 52 wks ago % YTD% % YTD% % YTD%
Libor Cur Stock Sym Last Chg Chg Cur Stock Sym Last Chg Chg Cur Stock Sym Last Chg Chg Asia Titans 50
One month 1.23611% 0.52689% ¥ TakedaPharm 4502 6017.00 0.91 24.45 CHF RocheHldgctf ROG 244.60 0.29 5.16 Last: 166.00 s 0.70, or 0.42% YTD s 17.7%
Three month 1.31033 0.85222 Asia Titans HK$ TencentHoldings 0700 321.80 0.37 69.64 £ RoyDtchShell A RDSA 2138.00 -0.90 -4.66
Six month 1.44767 1.25000 HK$ AIAGroup 1299 58.80 ... 34.40 ¥ TokioMarineHldg 8766 4207.00 -0.75 -12.28 € SAP SAP 90.54 0.48 9.33 High 170
One year 1.69511 1.55678 82.21 0.34 6.91
¥ AstellasPharma 4503 1369.50 -0.83 -15.65 ¥ ToyotaMtr 7203 6220.00 -0.24 -9.57 € Sanofi SAN Close 165
Euro Libor AU$ AustNZBk ANZ 28.85 -0.96 -5.16 AU$ Wesfarmers WES 42.14 0.36 ... € SchneiderElectric SU 69.57 0.29 5.23 Low 160
112.25
One month -0.39857% -0.37286% -0.58 -3.90
t
AU$ BHP BHP 27.29 -0.15 8.90 AU$ WestpacBanking WBC 30.81 -0.68 -5.49 € Siemens SIE
Three month -0.37500 -0.31871 HK$ BankofChina 3988 4.02 0.50 16.86 AU$ Woolworths WOW 25.33 0.12 5.10 € Telefonica TEF 8.96 0.38 1.55 50–day 155
Six month -0.30800 -0.20614 HK$ CKHutchison 0001 99.70 0.35 13.42 € Total FP 43.99 -0.78 -7.89 moving average 150
One year -0.21314 -0.07686 HK$ CNOOC 0883 9.29 0.32 -4.23 Stoxx 50 CHF UBSGroup UBSG 15.56 -0.06 -2.45
145
Euribor AU$ CSL CSL 131.26 0.24 30.72 € Unilever UNA 50.44 ... 28.95
CHF ABB ABBN 22.75 -0.09 5.91
One month -0.37200% -0.36900% ¥ Canon 7751 3715.00 -1.38 12.75 £ Unilever ULVR 4507.00 -0.51 36.89 9 16 23 30 7 14 21 28 4 11 18 25 1 8
€ ASMLHolding ASML 133.15 -0.04 24.85
Three month -0.33100 -0.30100 ¥ CentralJapanRwy 9022 18920 0.91 -1.61 € Vinci DG 79.04 -0.75 22.16 July Aug. Sept.
€ AXA CS 23.95 0.42 -0.13
Six month -0.27500 -0.19800 HK$ ChinaConstructnBk 0939 6.73 ... 12.73 £ VodafoneGroup VOD 213.75 -0.63 6.96
€ AirLiquide AI 103.30 -0.39 -2.22
One year -0.16600 -0.05700 HK$ ChinaLifeInsurance 2628 24.10 0.21 19.31 CHF ZurichInsurance ZURN 279.80 -0.11 -0.21
180.15
Yen Libor HK$ ChinaMobile 0941 82.30 -0.06 0.12
€
€
Allianz
AB InBev
ALV
ABI 101.15
... 14.75
0.40 0.60 DJIA Stoxx 50
One month -0.04800% -0.07514% HK$ ChinaPetro&Chem 0386 6.09 1.16 10.73 £ AstraZeneca AZN 4790.00 0.34 7.94 Last: 3058.45 s 5.18, or 0.17% YTD s 1.6%
Three month -0.03207 -0.03243 AU$ CmwlthBkAust CBA 73.24 -1.00 -11.13 € BASF BAS 84.40 0.60 -4.43
$ AmericanExpress AXP 84.25 -0.19 13.73
Six month -0.00493 -0.00150 ¥ EastJapanRailway 9020 10090 0.60 -0.10 € BNP Paribas BNP 62.99 0.75 4.03
$ Apple AAPL 158.63 -1.63 36.96 3275
One year 0.11214 0.08700 ¥ Fanuc 6954 21015 -0.40 6.06 £ BT Group BT.A 283.95 -0.91 -22.61
$ Boeing BA 238.78 1.05 53.38
$ Caterpillar CAT 117.82 0.04 27.04 3200
Offer Bid ¥ Hitachi 6501 737.80 0.39 16.74 € BancoBilVizAr BBVA 7.17 -0.26 12.97
TW$ Hon Hai Precisn 2317 117.00 1.30 38.95 $ Chevron CVX 110.78 -0.91 -5.88 3125
Eurodollars € BancoSantander SAN 5.34 1.21 7.76
¥ HondaMotor 7267 3070.00 -0.29 -10.10 $ CiscoSystems CSCO 31.48 -0.88 4.17
One month 1.3300% 1.2300% £ Barclays BARC 187.60 1.96 -16.04 3050
KRW HyundaiMtr 005380 135500 -1.81 -7.19 $ Coca-Cola KO 46.30 0.04 11.67
Three month 1.3700 1.2700 € Bayer BAYN 108.65 -0.64 9.60
2975
HK$ Ind&Comml 1398 5.82 1.04 25.16 $ Disney DIS 97.07 0.01 -6.86
Six month 1.5700 1.4700 £ BP BP. 446.10 -0.84 -12.46
$ DowDuPont DWDP 64.85 0.26 -3.47
One year 1.8200 1.7200 ¥ JapanTobacco 2914 3655.00 -1.72 -4.92 £ BritishAmTob BATS 4917.00 0.28 6.39 2900
¥ KDDI 2938.00 0.07 -0.73
$ ExxonMobil XOM 78.82 -0.27 -12.67
Latest 52 wks ago 9433 € Daimler DAI 64.83 -0.12 -8.33 $ GeneralElec GE 23.82 -0.83 -24.62 9 16 23 30 7 14 21 28 4 11 18 25 1 8
¥ Mitsubishi 8058 2521.00 -0.14 1.24 € DeutscheTelekom DTE 15.03 -0.40 -7.18 $ July Aug. Sept.
Prime rates GoldmanSachs GS 217.21 0.63 -9.29
¥ MitsubishiElectric 6503 1634.50 -0.88 0.31 £ Diageo DGE 2593.50 0.52 22.91 $
U.S. 4.25% 3.50% HomeDepot HD 159.66 1.10 19.08
¥ MitsubishiUFJFin 8306 653.60 -0.50 -9.25 € ENI ENI 13.46 -0.66 -12.99 $
Canada 2.95 2.70 Intel INTC 35.19 -0.98 -2.98
1618.00 -0.80 0.68 1494.00
Japan
Hong Kong
1.475
5.00
1.475
5.00
¥
¥
Mitsui
Mizuho Fin
8031
8411 185.50 -0.32 -11.58
£
£
GlaxoSmithKline
Glencore
GSK
GLEN 363.05
-1.09 -4.35 $
-1.48 30.90 $
IBM
JPMorganChase
IBM
JPM
142.45
88.42
-0.31
-0.12
-14.18
2.47
Dow Jones Industrial Average P/E: 20
¥ NTTDoCoMo 9437 2517.00 -0.10 -5.48 £ HSBC Hldgs HSBA 729.40 0.77 11.04 $ J&J JNJ 130.98 -0.92 13.69 Last: 21797.79 s 13.01, or 0.06% YTD s 10.3%
Policy rates
ECB 0.00% 0.00%
AU$ NatAustBnk NAB 30.02 -0.50 -2.12 € INGGroep INGA 14.69 0.65 9.87 $ McDonalds MCD 159.71 -0.12 31.21
Britain 0.25 0.25
¥ NipponTeleg 9432 5204.00 0.10 5.94 £ ImperialBrands IMB 3315.00 0.45 -6.42 $ Merck MRK 64.27 -0.08 9.17 22000
Switzerland 0.50 0.50
¥ NissanMotor 7201 1089.50 -0.27 -7.32 € IntesaSanpaolo ISP 2.81 0.21 15.91 $ Microsoft MSFT 73.98 -0.48 19.05
¥ Panasonic 6752 1468.50 -0.94 23.46 € LVMHMoetHennessy MC 219.95 -0.02 21.25 $ Nike NKE 52.20 -0.36 2.70
21500
Australia 1.50 1.50
HK$ PingAnInsofChina 2318 61.70 0.49 59.02 £ LloydsBankingGroup LLOY 63.77 1.09 2.02 $ Pfizer PFE 34.10 0.32 4.99
U.S. discount 1.75 1.00 21000
Fed-funds target 1.00-1.25 0.25-0.50
$ RelianceIndsGDR RIGD 51.20 0.20 62.28 € LOreal OR 178.60 0.14 3.00 $ Procter&Gamble PG 92.84 -0.14 10.42
Call money 3.00 2.25
KRW SamsungElectronics 005930 2454000 2.00 36.18 £ NationalGrid NG. 974.40 -0.72 -6.14 $ 3M MMM 205.69 0.60 15.19 20500
¥ Seven&I Hldgs 3382 4271.00 0.09 -4.09 CHF Nestle NESN 80.65 -0.25 10.40 $ Travelers TRV 119.76 3.98 -2.17
Overnight repurchase rates 20000
U.S. 1.13% 0.54%
¥ SoftBankGroup 9984 8441.00 -0.93 8.71 CHF Novartis NOVN 81.00 0.06 9.31 $ UnitedTech UTX 109.55 -0.39 -0.06
Euro zone n.a. n.a.
¥ Sony 6758 4298.00 0.94 31.24 DKK NovoNordiskB NOVO-B 296.90 -0.70 16.57 $ UnitedHealth UNH 197.75 -0.21 23.56 9 16 23 30 7 14 21 28 4 11 18 25 1 8
¥ Sumitomo Mitsui 8316 4000.00 -0.37 -10.31 £ Prudential PRU 1762.00 0.26 8.26 $ Visa V 104.43 -0.12 33.85 July Aug. Sept.
Sources: WSJ Market Data Group, SIX HK$ SunHngKaiPrp 0016 133.70 4.05 36.43 £ ReckittBenckiser RB. 7109.00 -0.70 3.24 $ Verizon VZ 46.11 -0.19 -13.62 Note: Price-to-earnings ratios are for trailing 12 months
Financial Information, Tullett TW$ TaiwanSemiMfg 2330 218.00 0.46 20.11 £ RioTinto RIO 3600.50 -3.10 13.99 $ Wal-Mart WMT 78.88 -1.55 14.12 Sources: WSJ Market Data Group; Birinyi Associates
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THE WALL STREET JOURNAL. Monday, September 11, 2017 | B9

FINANCE & MARKETS

Chinese Buyers Face Higher Bar Abroad

Merger activity slows ficials expressed concerns
about the risk of Toshiba’s
as some sellers grow chip technology being leaked
wary of deals with to China, where Taiwan-head-
quartered Foxconn has vast
mainland companies electronics manufacturing op-
erations. The deal talks aren’t
Chinese companies are dead, however, and Toshiba is
finding it harder to buy and still weighing multiple offers,
invest in businesses abroad— including one from Foxconn.
even if they are willing to pay The Chinese government
top dollar for such deals. recently formalized rules lim-
iting the types of transactions
By Julie Steinberg companies can pursue, re-
in Hong Kong and stricting overseas investments
Ben Dummett in in industries such as property,
mission and closed months af-
ter had been expected.
China-U.S. activity has
fallen more precipitously.
There have been 86 announced
Chinese deals in the U.S. so far
this year worth $9.9 billion,
down from 118 deals worth
$33 billion in the same period
last year. One reason: the
Committee on Foreign Invest-
ment in the U.S., a body that
screens deals for national se-
curity concerns, has been
toughening its scrutiny of Chi-
nese deals.

RICHARD B. LEVINE/ZUMA PRESS

London
Political, regulatory and
other hurdles to Chinese
cross-border acquisitions are
mounting in the U.S., Europe
and even Japan, making some
sellers wary of striking deals
with firms that have strong
ties to China. At the same
time, China has been reeling in
some big deal makers on con-
cerns about capital leaving the
country and high debt posing
a risk to its economy.
Together, the constraints
are limiting the prospects of
Chinese companies that still
have the resources and ability
to expand overseas, and damp-
ing an already lackluster envi-
ronment for global mergers
and acquisitions this year. The
setback for Chinese firms also
comes after they emerged in
recent years as credible bid-
China’s largest dairy company bid for Stonyfield. Danone sold the yogurt maker to a French firm.
ders for U.S. companies.
“In some ways they were
the perfect buyer because they
seemed to have a long-term
view and an unlimited check-
book,” said Scott Barshay,
head of mergers and acquisi-
tions for law firm Paul, Weiss,
Rifkind, Wharton & Garrison
LLP in New York. Their pur-
chases “definitely drove up as-
set prices,” he added.
So far this year, Chinese
companies have announced
$113 billion in cross-border
deals, down nearly a third
from the same period a year
earlier, according to Dealogic.
These days, simply being
Chinese can be a disadvantage
in some deal negotiations.
Earlier this summer, Inner
Mongolia Yili Industrial
Group, China’s largest dairy
company, bid more than $900
million for Stonyfield Farm
Inc., a Londonderry, N.H. yo-
gurt maker, according to peo-
ple familiar with the matter.
Stonyfield’s owner, Euro-
pean packaged-food giant
Danone SA, instead sold the
hotels and entertainment.
Companies were largely fol-
lowing those rules for months
before they were codified. Ac-
quisitions that are core to
companies’ main businesses
are generally permitted and
are continuing, say bankers,
though deals of a certain size
are more heavily scrutinized.
business for $875 million to Still, the guidelines, de-
French dairy company Lacta- signed to stem outlandish
lis, which won in part because deals and capital flight, have
Danone and its advisers felt sharply slowed the pace of
there was too much regulatory Chinese deals following a re-
uncertainty associated with a cord 2016 in which corpora-
Chinese buyer, people familiar tions announced over $220
with the matter said. billion of acquisitions abroad.
In Japan, Toshiba Corp. has China National Chemical
spent months seeking a buyer Corp. last year announced a
for its large memory-chip divi- $43 billion takeover of agro-
sion. It initially spurned a high giant Syngenta AG, China’s
bid from Hon Hai Precision biggest foreign deal to date.
Industry Co.—better known as That deal was delayed several
Foxconn Technology Group— times due to antitrust con-
after Japanese government of- cerns from the European Com-
Some Chinese are looking
for acquisitions in places
where they feel more wel-
come—including Hong Kong,
Singapore, Brazil, the Philip-
pines and India. Israel is an
emerging hot spot, bankers
say. Itamar Har-Even, co-
founder of Ion Pacific, a Hong
Kong investment bank, said
some Israeli targets offer in-
tellectual property Chinese
firms are seeking at reason-
able valuations. The number of
China-Israel deals his firm is
advising on is triple that of
last year, he added.
One indicator of Chinese in-
terest: the breakfast buffet at
the Royal Beach Tel Aviv hotel,
which last year added spring
rolls and egg noodles to cater
to the growing number of Chi-
nese deal makers flocking to
the top-rated hotel, said a ho-
tel spokesman.

Now Showing: Short Sellers’ Claims on China Firms

Deep-pocketed U.S. inves-
tors trying to expose fraud
they allege among companies
in mainland China have found
a new way to promote their
cause: a feature film.
A documentary called “The
China Hustle” premiered Fri-
day at the Toronto Interna-
tional Film Festival. The 84-
minute film features
prominent American short
sellers including Carson Block
of Muddy Waters LLC, who in
2011 undertook an aggressive
crusade against Chinese tim-
ber company Sino-Forest
Corp., and James Chanos, one
of Wall Street’s most vocal
naysayers on China.
By Steven Russolillo in
Hong Kong
and Vipal Monga in
Toronto
The film, written and di-
rected by Jed Rothstein, took
about two years to produce.
Its backers include American
documentary filmmaker Alex
Gibney and billionaire investor
and entrepreneur Mark Cuban.
Mr. Cuban, who helped fi-
nance the film through his me-
dia company, 2929 Entertain-
ment, said in an interview that
he got involved in part “be-
cause I’m not a big fan of the
job” the U.S. Securities and
Exchange Commission does. In
2008, the SEC charged Mr. Cu-
ban with insider trading after
he sold shares in an internet
company, but Mr. Cuban was
cleared years later by a federal
jury in Dallas.
The new documentary pro-
files a cast of U.S. investors In 2015, the Chinese affili- formation from companies
trying to expose and profit ates of the Big Four account- such as Chinese e-commerce
from irregularities and alleged ing firms settled a yearslong giant Alibaba Group Holding
fraud at many Chinese compa- dispute with the SEC over Ltd., whose initial public offer-
nies by shorting, or betting their reluctance to give the ing in 2014 was the largest on
against, their publicly traded regulator documents about record. An Alibaba spokesper-
stocks. Chinese companies that were son didn’t immediately re-
It takes aim at audit firms under investigation. Other spond to a request for com-
and investment banks that than that, few Chinese execu- ment.
helped engineer transactions tives have been charged or Mr. Rothstein, the film’s di-
such as reverse mergers that sued by U.S. enforcement rector, said in an interview:
took certain Chinese compa- agencies. “We’re trying to make people
nies public. It also says the An SEC spokesperson de- aware that short sellers are
SEC has been largely unable to clined to comment. blowing the whistle about a
go after Chinese citizens who The film also calls into larger fraud that is still brew-
run the companies. question the reliability of in- ing.”

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B10 | Monday, September 11, 2017
Storms Ripple Through the Markets
Initial jobless claims, weekly
With spikes following major weather events
600,000 claims
KATRINA
400,000
200,000
0
2005 ’06
Also worth watching: the ripples evident in the markets for energy and local agriculture,
including a sharp falloff in U.S. oil exports and rising prices for cotton and orange juice.
U.S. crude-oil exports, weekly
1.5 million barrels a day
1.0
0.5
0.0
J F M A M J
Sources: U.S. Department of Labor (claims); U.S. Energy Information Administration (exports); FactSet (price performance)
Email: heard@wsj.com
Irma Will Test Cat-Bond Market
The market for catastro-
phe risk is about to face its
toughest test as Hurricane
Irma tears through Florida.
For the illiquid but wildly
popular world of catastro-
phe bonds, a deep pool of
capital means a big hit
might only make them more
popular.
Across the market, inves-
tors have poured cash into
cat bonds, but have been
getting less return per unit
of catastrophe risk: In 2012,
the average coupon on cat
bonds was almost 4.5 times
their expected losses. This
year that multiple has
dropped below 2 times, ac-
cording to researcher Ar-
temis.
Cat bonds are different
from traditional reinsurance.
While they cover similar
risks, investors in cat bonds
can’t just make a promise to
pay claims like an insurer
does. Cash invested in cat
bonds goes into custody ac-
counts or U.S. Treasurys and
investors get a coupon pay-
ment that compensates for
the risk that the money they
invested is needed to settle
claims. Traditional insurers
As Metals Surge, Miners Risk Falling Down Same Old Hole
Bumpy Road
Indexes, 2006=100
Mining capital China floor space
expenditure* under construction*
400
300
200
100
0
–100
2007 ’09 ’11 ’13 ’15
*December 2017 figure is estimated.
**Net increase from a year earlier.
Sources: Factset, Thomson Reuters, CEIC,
company documents
THE WALL STREET JOURNAL.
THE DAILY SHOT By Lev Borodovsky and Amrith Ramkumar
How hard will the one-two punch of Hurricanes Harvey and Irma hit the U.S. economy? While past storms
haven't changed the trajectory of the national economic expansion, the scale of potential disruption is
evident in the sharp increase in jobless claims that typically accompanies a major weather event.
U.S. recession
’07 ’08
Commodity futures
Price performance, year to date
25%
0 0
–25
–50
J A S J
HEARD ON THE STREET
Picking Perils
Catastrophe bonds outstanding by type of exposure
International multiperil
U.S. multiperil
U.S. named storm and hurricane
Individual U.S. state multiperil
Florida storm and multiperil
U.S. quake
Japan quake
Japan typhoon
Life and health related
Other catastrophe
Misc.
Source: Artemis
take customers’ premiums
and invest them, earning an
investment return and a
payment for risk.
Roughly $14 billion of cat
bonds face exposure to At-
lantic hurricanes, according
to Artemis. That is about
half of all cat bonds, one
corner of alternative rein-
surance markets. Investors
also put money into private
and less liquid collateral-
ized reinsurance contracts
and vehicles known as side-
cars, a bigger, more opaque
Commodity powerhouse
Australia has always been
lucky, but the past few
months have been particu-
larly kind. Copper, coal and
aluminum prices are at or
near multiyear highs—with
iron ore not far behind—and
big miners’ shares are riding
high too.
That is a welcome for
mining investors. The cloud
looming over recent stellar
results from the likes of Rio
Tinto, Anglo American and
’17 BHP is that they are falling
into a familiar trap: using
high commodity prices as an
excuse to spend more at the
wrong time in the cycle. Ag-
gregate capital expenditures
MARKETS
IKE
’09 ’10
Orange juice
F M A M J J
FINANCIAL ANALYSIS & COMMENTARY
2.9
0.9
0.6
3.7
2.3
0.9
2.1
1.6 Note: Multiperil can
include storms, hurricanes,
1.3 earthquakes and other risks
THE WALL STREET JOURNAL.
market.
As Irma has ripped
through the Caribbean, cat-
bond trading has remained
subdued.
But most Florida or U.S.-
storm-focused bonds aren’t
trading because the price
gap between where people
will buy and sell is too
large. The fact that Irma
tracked to the west and
didn’t make a direct hit on
Miami likely means the mar-
ket will escape the worst
possible losses. More trad-
from the Big Five miners—
which also include Glencore
and Brazil’s Vale—are set to
rise sharply.
That investment push
comes as the biggest source
of demand for industrial
metals, the Chinese real-es-
tate sector, is showing signs
of weakness following big
growth over the past 18
months. Sure, mining invest-
ment is rising from very low
levels following years of
belt-tightening, which means
metals markets remain in
balance for now. But if min-
ers keep ramping up at cur-
rent levels next year, there is
a real danger of another
tumble in prices in the next
IRENE SANDY
’11 ’12 ’13
Among other key issues: the health of the insurance and reinsurance industries.
Judging by the summer swoon, investors are preparing for some grim days indeed.
Home insurers
Share-price performance, year to date
25%
Cotton
–25
Allstate
S&P Insurance ETF
Universal Insurance Holdings
Heritage Insurance Holdings
–50
A S J F M A M J
ing will take place this week
while damage is being as-
sessed, a process known as
postcat trading, for bonds
$6.9B that suffer the most dam-
6.0 age. In the past, when mar-
kets suffer a big loss, a rise
in insurance rates has fol-
lowed. There is less capital
available, and some inves-
tors worry the latest storm
increases the chances of fu-
ture storms.
Trouble is that many spe-
cialist fund managers who
are the biggest players—
owning about 60% of the
market—have a stream of
investors lined up waiting to
put in money to cash in on
such a rise. Some have been
waiting years for a big event
to create such a market cor-
rection. Plus, cat-bond
yields still look great com-
pared with yields on other
kinds of bond investments.
Investors are already tak-
ing on a lot of risk for the
returns they get. If a major
loss just leads to a rush of
new cash into the market,
questions about the sanity
of the market are only going
to get louder.
—Paul J. Davies
couple of years.
There is some logic to the
price gains for metals so far
this year, with demand strong
and investment in new sup-
ply low. Chinese property in-
vestment was galloping along
at growth rates of more than
10% by late 2016, levels not
seen since before the com-
modity crash. Total capital
expenditure by the Big Five
languished at around $8 bil-
lion in the first half of 2017—
about one quarter of the
boom levels of 2011 and 2012.
The bad news is that min-
ers’ guidance implies a
roughly 30% rise in capital
expenditure in the second
half of 2017—the sharpest on-
’14 ’15
Reinsurance and specialty-insurance sellers
Share-price performance, year to date
25%
0
–25
–50
J A S J
OVERHEARD
Hurricanes and other natu-
ral disasters are times for
quaint technologies and the
people who still know how to
use them to shine.
Enter Zello, a walkie-talkie
app that has rocketed to the
top of the charts in the Apple
and Android stores.
The “Cajun Navy” used it
to communicate as it rescued
people from flooding in Hous-
ton.
Unfortunately, the useful-
ness of the app is being
overestimated by the very
people who take more mod-
ern technology for granted.
Zello has had to point out
that it doesn’t actually turn
one’s cellphone into a walkie-
talkie.
It uses cellular signals or
Wi-Fi, just like actual calls and
texts.
Also, unlike actual radios,
batteries bought at the super-
market won’t keep your cell-
phone charged. You need elec-
tricity for that.
Zello has been tweeting
out the app’s quite obvious
limitations to set people
straight, at least to those
who still can access Twitter.
year rise since 2012—just as
Chinese real estate is starting
to look wobbly. Property in-
vestment in China grew at its
slowest pace in more than a
year in July.
Hot weather may have
played a role, but if August
data show investment weak-
ening again, demand for iron
ore and copper will follow.
Industrial metals have not
yet lost their shine, but the
mining sector has a history
of misreading China.
If capital expenditures
keep rising at the same rate
next year, it might be time
to sell those shares while
they are still glittering.
—Nathaniel Taplin
THE WALL STREET JOURNAL.
WSJ
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each morning. Subscribe at
wsj.com/newsletters
HARVEY
’16 ’17
XL Group
Everest Re Group
RenaissanceRe Holdings
Axis Capital Holdings
Aspen Insurance Holdings
F M A M J J A S
THE WALL STREET JOURNAL.
WSJ.com/Heard
Akzo’s Woes
Keep Deal
Talk Alive
Akzo Nobel seems less
and less likely to retain its
independence.
On Friday, before an ex-
traordinary general meeting
held to confirm the appoint-
ment of new Chief Executive
Thierry Vanlancker, the Eu-
ropean paint group said its
finance chief, Maelys Cas-
tella, was taking leave of ab-
sence for health reasons, is-
sued a profit warning and
unveiled a new management
structure.
Former Chief Executive
Ton Büchner, who was in-
strumental this year in de-
fending the company against
three takeover approaches
from U.S. peer PPG Indus-
tries and noisy activism
from top shareholder Elliott
Management, stood down
for health reasons less than
two months ago. To para-
phrase Oscar Wilde, to lose
one top executive may be
seen as a misfortune; to lose
both looks like carelessness.
“The coincidence is, I con-
cede, very coincidental,” said
Chairman Antony Burgmans.
The reorganization is de-
signed to revive growth and
boost margins despite rising
commodity costs. The irony
underlying this frenetic man-
agement activity is that Mr.
Burgmans’s arguments for
not entering talks with
PPG—as Elliott and many
other shareholders wanted—
centered on the disruption
and cost-cutting that would
result from a merger.
The more Mr. Burgmans
and his team lose credibility,
the likelier a fresh takeover
approach from PPG—though
the U.S. group would be wise
not to hint at a deal before
the pugnacious chairman re-
tires next April. Bid specula-
tion should put a floor under
the share price, however
sickly Akzo’s financial results
are. —Stephen Wilmot