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A President Bids Farewell

What’s News W is expected to agree to plead guilty to criminal wrongdoing and pay $4.3 billion to resolve a Justice Department probe of diesel-emissions cheating. A1

Nominee for attorney general departs from some Trump positions, is pressed on race

Valeant reached deals to sell $2.1 billion in assets, the struggling drug firm’s biggest moves yet to regroup and pare a heavy debt load. B1

BY ARUNA VISWANATHA

Snap said it is making London its European headquarters and eschewing a strategy many tech firms have used to lower taxes. B1

Attorney general nominee Jeff Sessions departed from several of President-elect Donald Trump’s campaign stances during a confirmation hearing Tuesday that drew tough questions from the senator’s Democratic colleagues over issues ranging from race to immigration to waterboarding. Sen. Sessions, a Republican from Alabama, said he doesn’t support a ban on Muslims entering the U.S., as Mr. Trump once proposed, and noted that the use of waterboarding is illegal under current law. Mr. Trump has advocated using

SkyBridge’s Scaramucci is likely to take a job advising Trump that could be announced Thursday. B1 GM said pretax earnings this year should beat the record it expects for 2016, and its board approved a $5 billion share repurchase. B3

Google is in talks to sell its satellite business to Planet Labs, which is seeking funds to help finance a deal. B4 The Nasdaq closed at a record for a fourth straight session. The Dow shed 31.85 points to 19855.53. B13 Turkey’s central bank failed to stop the lira’s plunge with its limited step to boost liquidity in markets. A9 Brookdale Senior Living is in talks with suitors about a possible sale. B6

World-Wide Session rejected accusations of racism and departed from several Trump stances during a Senate hearing on his nomination to be attorney general. A1 Several Trump picks for his cabinet donated to senators conducting their confirmation hearings. A4 U.S. spy agencies and the FBI have been probing unverified allegations that Russian operatives engaged in a conspiracy with advisers to Trump’s campaign. A1 Leading senators from both parties proposed new Russia sanctions that could limit Trump’s ability to improve Kremlin ties. A2 The FBI director said Russians successfully hacked GOP groups and campaigns as well as Democrats. A4 Obama delivered a farewell speech in Chicago in which he urged Americans to unite to protect the nation’s democracy. A2 Reports released by the administration challenged Republicans’ key criticisms of the health law. A2 Roof was sentenced to death for the killing of nine black worshipers at a Charleston, S.C., church. A3 Germany released a plan to rein in known extremists following last month’s attack in Berlin. A7

JOHN GRESS/REUTERS

Wal-Mart is preparing to eliminate close to a thousand corporate jobs before the end of the month. B3 The EU proposed new rules that would curb how companies like Google and Facebook track users to deliver targeted ads. B4

PATRIOTIC CALL: President Barack Obama, in his farewell address Tuesday night, encouraged Americans to come together to protect the nation from both outside threats and tensions within. A2

VW Set to Pay $4.3 Billion To U.S. in Emissions Cheat Volkswagen AG, in a historic settlement, is expected as early as Wednesday to agree to plead guilty to crimiBy William Boston in Berlin, Mike Spector in Detroit and Aruna Viswanatha in Washington nal wrongdoing and pay a $4.3 billion penalty to resolve a U.S. Justice Department probe of the German auto giant’s diesel-emissions cheating. Volkswagen said in a disclosure to financial markets on Tuesday that it had agreed to a draft settlement with the Jus-

tice Department and U.S. customs authorities. If completed, as expected, the unusually severe punishment would resolve the final significant U.S. government action expected against Volkswagen stemming from its emissions cheating. The German auto maker, which Tuesday also claimed the throne as the world’s biggest car maker by sales, admitted in 2015 that it had rigged nearly 11 million diesel vehicles world-wide, including some 600,000 in the U.S., to cheat on emissions tests. The cars produced toxic tailpipe emissions up to 40 times allowable limits during normal road use.

Deanna White told a contractor she couldn’t afford the $42,200 loan he recommended for improvements to her house in Inglewood, Calif. The contractor, she recalled, said she wouldn’t be on the hook because the loan was part of a “government program.” She applied and was approved. Two years later, Ms. White is struggling to make payments on the loan, which was packaged with more than 10,000 similar loans into bonds and sold to investors. Under its terms, Ms.

White’s five-bedroom house could be foreclosed on if she defaults. Her loan is part of a booming corner of the lending industry called Property Assessed Clean Energy, or PACE. Such loans, set up by local governments across the U.S., are designed to encourage homeowners to buy energy-efficient solar panels, window insulation and air-conditioning units. About $3.4 billion has been lent so far for residential projects, and industry executives predict the total will double within the next year. That would likely rank PACE loans as the

INSIDE

By Shane Harris, Devlin Barrett and Alan Cullison atives engaged in an extensive conspiracy with advisers to Donald Trump’s presidential campaign and employees of his company, people familiar with the matter said. The unverified allegations— including a claim Russia has material that could be used to blackmail Mr. Trump—were deemed sufficiently significant by senior intelligence officials to summarize them in a twopage addendum to the classified briefing President-elect Trump received last Friday about Russian efforts to influence the U.S. presidential campaign, the people said.

fastest-growing type of financing in the U.S. As the loans spread, so do problems that echo the subprime mortgage crisis. Plumbers and repairmen essentially function as loan brokers but have scant training and oversight. They often pitch PACE loans to help land contracting jobs and earn referral fees, according to loan documents and more than two dozen borrowers, industry executives and employees. Creditworthiness matters little to lenders, because loans are based on the Please see LOAN page A10

YEN 115.77

that practice more frequently on terror suspects. The nominee said he wouldn’t serve as a rubber stamp for the incoming administration and would recuse himself on any pending investigation into Mr. Trump’s opponent during the presidential campaign, Democrat Hillary Clinton. “You have to say ‘no’ sometimes…for the good of the country,” Mr. Sessions said at the start of the hearing in the Senate, which is set to elevate one of its most conservative members to run the Please see SENATE page A4

The Trump Cabinet Tillerson’s broader experience hints at State style.......... A4 Nominees contributed to senators.................................. A4 Companies’ lobbying blitz hits Washington................ A6

“FAKE NEWS - A TOTAL POLITICAL WITCH HUNT!” Mr. Trump tweeted after the allegations surfaced publicly Tuesday evening. U.S. officials confirmed that a summary of the information had been given to Mr. Trump. They said sharing of such unverified information was taken out of an abundance of caution that the incoming president should be aware of allegations being made against him that could become public—a decision intelligence experts backed. President Barack Obama received the same information, officials said. The agencies are continuing to investigate the claims, the people familiar with the matter said. “I can picture how difficult a decision this must have been,” former CIA Director Michael Hayden said of the deciPlease see TRUMP page A6 Senators push tougher sanctions against Russia.... A2

Home Improvement Cumulative PACE ﬁnancing for residential projects 2016: $3.4 billion*

$3.5 billion 3.0 2.5 2.0 1.5 1.0 0.5 0 2009

’11

*Through Dec. 20

’13

’15

Source: PACENation

THE WALL STREET JOURNAL.

Escalator Riding: China Says You’re Doing It Wrong i

Standing to one side to let others pass creates ‘uneven wear’ BY JOSH CHIN

Opinion.............. A15-17 Property Report... B6 Sports....................... A14 Technology............... B4 U.S. News............. A2-6 Weather................... A13 World News. A7-9,18

The company’s admission set off a whirlwind of civil litigation and a criminal investigation into the company and many of its senior executives. Volkswagen has already agreed to pay up to $17.5 billion to address civil claims with consumers, regulators, dealers and state attorneys general in the U.S. Now, in an unprecedented resolution for a criminal case involving an automotive company, Volkswagen is expected to plead guilty to charges of conspiring to defraud the U.S., commit wire fraud and violate the Clean Air Act; obstruction of justice; and violating import Please see VW page A9

U.S. intelligence agencies and the Federal Bureau of Investigation have spent months trying to substantiate explosive claims, compiled by a former Western intelligence official, that Russian government oper-

Rapid rise of energy-conscious financing echoes subprime crisis ; investors can’t get enough BY KIRSTEN GRIND

EURO $1.0555

Spy Agencies Probe Trump, Russia Dossier

NEW LOANS, SAME OLD DANGERS

Iranians massed in Tehran for Rafsanjani’s funeral procession, which was marked by displays of discontent. A9 Iran agreed to cut its uranium stockpile far below the cap fixed in its 2015 nuclear accord. A9 CONTENTS Business News.. B3,8 Crossword.............. A13 Heard on Street. B14 Life & Arts....... A11-13 Management.......... B7 Markets Digest.. B10

GOLD $1,184.20 À $0.70

Sessions Is Grilled by Democrats

‘There have been moments throughout our history that threatened to rupture that solidarity.’

Business & Finance

HHHH $3.00

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WEDNESDAY, JANUARY 11, 2017 ~ VOL. CCLXIX NO. 8

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THE PRODUCTS FALLING OUT OF FAVOR WITH MARKETERS LIFE & ARTS, A11

Subway commuters in some of China’s biggest cities had just begun to embrace a key tenet of escalator etiquette— standing to one side to let others pass. Now, officials have another message. Never mind. In a recent spate of newspaper articles, commentaries and social-media posts, elevator experts have warned the practice represents a danger to public safety. That’s because of the uneven wear to escalators caused by so many people standing on the right side, which increases the

chances of breakdowns. Besides, they say, escalators were never meant to be walked on. The arguments run counter to the now-familiar exhortation, which is currently embla-

zoned in bold characters on many Chinese public escalators. It’s also leading to confusion and exasperation. “If this ‘civilized behavior’ really does harbor immense dangers, then who should we blame for all the effort and resources that have gone into getting people to cultivate a bogus faux-civilized habit these past few years?” said the Communist Party-controlled China Youth Daily newspaper, in a commentary last week. Hundreds of millions of people are expected to flood Please see RIDE page A10

A2 | Wednesday, January 11, 2017

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THE WALL STREET JOURNAL.

U.S. NEWS

Obama Calls for Unity in Address CHICAGO—In a farewell address to a hall filled with the activists who helped him become the first black president, Barack Obama Tuesday urged Americans to unite to protect the nation’s democracy, which he said is being threatened by outside forces as well as tensions within. “There have been moments throughout our history that threatened to rupture that solidarity,” the president said. “The beginning of this century has been one of those times. A shrinking world, growing inequality, demographic change and the specter of terrorism—these forces haven’t just tested our security and prosperity, but our democracy as well,” he warned. Beyond economic and national-security threats, the president said two other forces threaten the nation’s future: race relations and a hardening political divide riven by disputed facts such as the veracity of global warming and human contributions to it.

Parting Words How televised presidential farewell addresses compare President

Length (min., sec.)

Number of words

Barack Obama

49m 55s

4,266

George W. Bush

13m 7s

1,862

Bill Clinton

7m 23s

1,109

George H.W. Bush

27m 25s

3,298

Ronald Reagan

20m 40s 3,305

Jimmy Carter

16m 52s

2,167

Dwight Eisenhower 15m 43s

1,843

25m 1s

Harry Truman

3,748

Note: Excludes Lyndon Johnson and Gerald Ford, who chose to give State of the Union addresses as their farewells, and Richard Nixon, whose resignation announcement is considered his farewell address. Obama word count based on prepared text. Sources: C-SPAN; Museum Syndicate (lengths); THE WALL STREET JOURNAL. American Presidency Project (words)

While acknowledging progress for the black community, Mr. Obama said the nation needed to do more and to broaden the discussion to include other minorities whose children also will inherit the nation. “If we decline to invest in the children of immigrants, just because they don’t look like us, we diminish the pros-

U.S. WATCH POLICING

Survey: Reluctance to Use Force Increases A survey of police officers reveals that high-profile incidents involving black men have increased officers’ reluctance to use force and stop suspicious people while heightening tension with AfricanAmericans. The study of nearly 8,000 officers, conducted by Pew Research Center and the National Police Research Platform between May and August, also shows a deep gulf between the attitudes of police and the general public over racial equality and officer-involved shootings. In the survey, 76% of officers said they are now more reluctant to use force even when they believe it is appropriate and 72% said they are less willing to stop and question people who seem suspicious. Two-thirds of police officers said they believe deadly encounters are isolated incidents, while 31% said they were signs of a broader problem. Meanwhile, 60% of Americans believe the shootings are a sign of a broader problem, according to Pew. —Zusha Elinson ENDANGERED SPECIES

Rusty Patched Bee Is Added to List The rusty patched bumblebee was named to the endangered species list, the first bee species in the continental U.S. to receive that

pects of our own children because those brown kids will represent a larger share of America’s workforce,” he said. Mr. Obama addressed the country still popular among Americans. A Wall Street Journal/NBC News poll in December found he has a 52% approval rating, with 42% disapproval. The president’s decision to

deliver his speech in his hometown of Chicago, where he first addressed the country after his 2008 victory, is a departure from the traditional settings his predecessors have chosen for their farewell addresses. Mr. Obama, who campaigned aggressively against his successor, President-elect Donald Trump, has often told his supporters that all the progress of the last eight years “goes out the window” if Americans elect “somebody who has proven himself unfit to lead or represent this country that we love.” On Tuesday, he referred just once to Mr. Trump, who has vowed to dismantle much of Mr. Obama’s policies when he takes office on Jan. 20. “I committed to Presidentelect Trump that my administration would ensure the smoothest possible transition, just as President Bush did for me,” Mr. Obama said. Mr. Obama also defended policies he sees as the benchmarks of his legacy. On the domestic front, that included the economy’s recovery from the biggest recession

since the Great Depression and his health-care law. In terms of foreign policy, Mr. Obama pointed to the reduction of U.S. troops serving in Iraq and Afghanistan, although his promise to end both of those wars is unfulfilled and he has opened new military fronts against terrorist groups in other countries such as Syria, Libya and Yemen. Mr. Obama also highlighted his re-establishment of U.S. relations with Cuba, a deal with Iran to restrain its nuclear program and an international climate-change agreement. Mr. Trump has criticized Mr. Obama on all of those policies, although it remains unclear how he will attempt to change them. The president, meanwhile, included a veiled bit of advice for the incoming administration. “Rivals like Russia or China cannot match our influence around the world—unless we give up what we stand for, and turn ourselves into just another big country that bullies smaller neighbors,” he said.

A Wall of Ice in North Dakota

designation amid widespread bee losses in the past two decades. A prodigious pollinator, the rusty patched bumblebee has disappeared from much of its range on the prairies and grasslands of the Upper Midwest and Northeast. Its population has crashed by 87% since the late 1990s, according to federal officials, putting it on the brink of extinction. “Pollinators are small but mighty parts of the natural mechanism that sustains us and our world,” said Tom Melius of the U.S. Fish and Wildlife Service, which made the designation. —Kris Maher

TOM STROMME/THE BISMARCK TRIBUNE/ASSOCIATED PRESS

BY CAROL E. LEE

DEFENSE DEPARTMENT

Firm Says Nominee Would Leave Board General Dynamics Corp. said President-elect Donald Trump’s pick for defense secretary would step down from its board if confirmed by Congress. Retired Marine Corps Gen. James Mattis has been on the company’s board since 2013 and last week stepped down as a director of blood-testing company Theranos Inc. General Dynamics is one of the Pentagon’s biggest suppliers and is the lead contractor for the new Columbia-class nuclear-missile submarines, a $100 billion program that is the Navy’s biggest acquisition priority. Gen. Mattis’s confirmation process is due to start with a congressional hearing on Jan. 12. —Doug Cameron

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GET YOUR DRIFT: Cody Rohrich chipped away at a large snowdrift, measuring nearly a hundred feet long, in downtown Bismarck on Tuesday. The city has received 55.3 inches of snowfall so far this season, according to the National Weather Service.

Senators Seek to Toughen Sanctions Against Russia BY JAY SOLOMON AND WILLIAM MAULDIN WASHINGTON—Leading U.S. senators from both parties proposed new sanctions against Russia that would markedly increase Moscow’s economic isolation and could limit Presidentelect Donald Trump’s ability to improve ties with the Kremlin. Tuesday’s proposed legislation would set in stone many of the sanctions the Obama administration levied against Russia after revelations of election-related cyberhacking and significantly broaden the restrictions against companies seeking to invest in Russia’s energy sector and the state-run corporations that dominate the country’s economy. The sanctions, which U.S. officials acknowledge could lead to retaliation by the Kremlin, also would directly target U.S. and foreign banks that help Russia sell sovereign debt, a restriction the Obama administration had preferred to assert more informally, through conversations with Wall Street executives. “We have been attacked by Russia. That’s no longer up to any debate,” said Sen. Ben Cardin (D., Md.), one of the sponsors of the bill. “It cannot be business as usual.” Sens. Lindsey Graham of South Carolina and John McCain of Arizona—Republicans who have differed sharply with Mr. Trump’s skepticism over U.S. intelligence agencies’ finding that the Kremlin was behind last year’s cyberhacking of the Democratic National Committee, Hillary Clinton’s presidential campaign and some Republicanaffiliated targets—are also spearheading the measure, called the “Countering Russian Hostilities Act of 2017.” Other Republican co-sponsors include Sens. Marco Rubio

of Florida, Rob Portman of Ohio and Ben Sasse of Nebraska. The bill so far has bipartisan support among 10 U.S. senators, its backers say. While any bill introduced by the senators could be scaled back in committee or in the broader Senate or House, Congress in recent years has been willing to take the lead in punishing Russia, even when the Obama administration urged a more targeted approach. The measure would provide the White House with the ability to waive the sanctions, but it would have to certify that Russia’s international behavior has improved. “The waiver is not to be used unless progress is made,” Mr. Cardin said. Responding to the electionyear hacking, the legislation would impose visa bans and asset freezes on foreigners tied to cybersecurity breaches, ban transactions with key Russian intelligence agencies and codify in law President Barack Obama’s recent executive order on cybersecurity. The bill also would take in the sanctions Mr. Obama imposed after Moscow’s interference in Ukraine and its move to annex Crimea. It could thus hamstring Russian President Vladimir Putin’s efforts to lobby the Trump administration and European leaders to end those sanctions, a step Mr. Trump hasn’t ruled out. Moscow’s reaction was dismissive. “Every day I read the news from Washington,” said Russian Foreign Ministry spokeswoman Maria Zakharova. “God created the world in seven days. The Obama administration has two days more than that to destroy it.” Sanctions brought by the U.S. executive branch can be more easily removed as Washington’s relations with other countries

improve. But it can take years or decades to roll back punitive laws passed by Congress, such as those that still apply to Cuba and Iran. It wasn’t clear Tuesday whether the bill is likely to win congressional approval in time for Mr. Obama to sign it or wait for the start of the Trump administration. Either way, if passed it stands to exert pressure on Mr. Trump’s stance on ties with Mr. Putin. “None of us know the position of the president-elect, but we do know and should know the position of the Congress,” Mr. McCain said. Mr. Graham said he was confident the bill would get overwhelming support, but allies of Mr. Trump could seek to block it. Mr. Trump’s transition team didn’t respond to a request for comment.

CORRECTIONS AMPLIFICATIONS Trump donor Robert Mercer hosted an annual holiday party at his Long Island estate on Dec. 3. A Page One article Monday about the hedge-fund manager’s involvement in Donald Trump’s campaign incorrectly said the party occurred 10 days after the Nov. 8 U.S. election. Mark J. Rebilas of Reuters should have received credit for a Sports page photo in some editions Tuesday of Clemson quarterback Deshaun Watson in the College Football Playoff national championship game. The photo was incorrectly credited to Kevin C. Cox of Getty Images. Readers can alert The Wall Street Journal to any errors in news articles by emailing wsjcontact@wsj.com.

Reports Defend Stability of Health Law BY STEPHANIE ARMOUR The double-digit jump in premiums this year on the health law’s exchanges was a one-time correction, and a brisk pace of sign-ups shows the marketplaces are on solid ground, the Obama administration said Tuesday in two reports that challenge Republicans’ key criticisms of the Affordable Care Act. The reports, released as congressional Republicans are poised to topple key pillars of the ACA, again put the outgoing administration at odds with the GOP argument that the law is rapidly failing and must be quickly repealed. Some Republicans have said the system created by the law is in the throes of a death spiral in which too many sick and expensive consumers cause insurers to raise rates and healthier people to leave. A report from the Council of Economic Advisers, the threemember council that advises the president on national economic policy, asserts that the premium increases for 2017 were a one-time event and will return to sustainable levels. A separate report released Tuesday by the Centers for Medicare and Medicaid Services shows sign-ups for coverage on the health law’s exchanges are eclipsing last year’s pace. The pace of sign-ups and the report on the stability of the exchanges will increase pressure on Republicans who are being urged to delay repeal. GOP leaders are moving quickly to topple parts of the ACA with a lengthy transition for writing a replacement, although President-elect Donald Trump has been urging Republicans to vote at the same time to repeal and replace the law. This year’s showdown over the law has pitted GOP members saying they can come up with a better plan against Democrats arguing the law is largely working well and should be improved upon. Republicans have pointed to problems with the law to make their repeal case—specifically, rising premiums on the ACA’s exchanges, lower-than-expected enrollment, and decisions by some large insurers to leave marketplaces. “We are in the midst of a rescue mission to save the families who are getting caught up in the death spiral that has become Obamacare,” House Speaker Paul Ryan (R., Wis.) said Tuesday. Mr. Trump also slammed the law. “The Democrats, lead by head clown Chuck Schumer, know how bad Obamacare is and what a mess they are in,” Mr. Trump tweeted last week. Premiums on the midlevel benchmark health plans increased, on average, 25% for 2017, and some states such as Arizona, Illinois, Montana and Tennessee approved rate increases for their market leader that topped 50%. More than 9.3 million people who signed up for 2017 plans will get tax credits to help offset premiums, according to CMS. As of late December, 11.5 million people were signed up for exchange coverage for 2017—an increase of almost 300,000 from the comparable period last year. THE WALL STREET JOURNAL (USPS 664-880) (Eastern Edition ISSN 0099-9660) (Central Edition ISSN 1092-0935) (Western Edition ISSN 0193-2241) Editorial and publication headquarters: 1211 Avenue of the Americas, New York, N.Y. 10036

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THE WALL STREET JOURNAL.

U.S. NEWS

Ranchers, Government in Rare Accord Foes join forces in fight with animal rights’ groups over wild horse refuge

After years of tussling with federal authorities over public land where cattle herds graze, ranchers are now teaming up with the government to battle a common foe: wild horses. The traditional antagonists are on the same side of a lawsuit brought by animal-rights groups over a disputed territory for wild horses in a sparsely populated corner of northern California. The cooperation represents a departure from the usual tension between ranchers and the federal agencies that oversee open lands, which flared dramatically with last year’s armed occupation of an Oregon refuge. A federal appellate court is set to hear arguments Wednesday in the case. Animal-rights groups claim that the U.S. Department of Agriculture and other agencies unfairly restricted where wild horses can roam when they reevaluated a horse-management plan in 2013 for Modoc County, which borders Oregon and Nevada. Ranchers argue that their livestock, chiefly cattle and sheep, should have claims to the land, not horses. The Agriculture Department and U.S. Forest Service, meanwhile, say that they were fixing a decades-old clerical error when they eliminated a 23,000-acre section from the Devil’s Garden Plateau Wild Horse Territory, largely encompassed by the Modoc Na-

U.S. FOREST SERVICE

BY SARA RANDAZZO

Wild horses in Modoc County, Calif. Animal rights’ groups say the U.S. Department of Agriculture and other agencies have unfairly restricted where the horses can roam.

Wild Horse Totals Spur Fertility Curbs Wild horses have been protected and managed since the 1971 passage by Congress of the Wild Free-Roaming Horse

and Burros Act, which sought to preserve the horses as “living symbols of the historic and pioneer spirit of the West.” An estimated 55,000 wild horses roamed public U.S. rangelands as of March of last year, more than double the federally advised number. As natu-

ral predators diminish, efforts are under way to use fertilitycontrol methods to curb births. The wild horses in the Modoc County region are said to be descendants of local ranch horses, which have been in the area since the late 1800s. —Sara Randazzo

tional Forest. Now, the horse territory includes two noncontiguous stretches totaling 232,500 acres. Animal-rights groups say inbreeding could occur as the horse populations remain segregated and discouraged from traveling through the disputed middle region.

The Forest Service says it can remove horses at any time from the contested area. It says the area was never meant to be included in the horse territory and was only mistakenly interpreted as such because of an incorrect acreage figure given in a 1991 forest plan. The court’s ruling could

have a broader impact on how federal agencies manage land, said William Eubanks, an attorney for the American Wild Horse Preservation Campaign, which first brought the lawsuit in 2014. “If we win, it’ll send the signal to agencies that they can’t just assert they’re fixing an er-

ror done years earlier and do no analysis on it,” Mr. Eubanks said. The lawsuit seeks an environmental-impact study on carving up the horse territory. The federal agencies say correcting the 1991 error “would not have a significant impact on the environment.” The wild-horse population in rural Modoc County, which has less than 10,000 people, has ballooned in recent years. Last February, the Forest Service counted nearly 2,500 adult horses, well over the 402 the agency said is the “appropriate management level” in the region. A Forest Service spokesman said the agency has since removed 220 horses, but expects the population has

increased again. The California Cattlemen’s Association and other industry groups intervened in the case on the side of the government, and argued in a court filing that a decision overturning a lower court’s dismissal of the lawsuit “dangerously signals to the Forest Service a policy of ever-expanding wild horse territories at the expense of other statutorily protected uses of public land natural resources.” The dispute is scheduled for oral arguments at the U.S. Court of Appeals for the District of Columbia, an influential court that hears many appeals involving federal agencies.

To Stop Traffic Jams, Avoid Urge to Merge, States Say Sometimes it’s better not to be polite. That’s the advice a growing number of states are giving drivers to promote the practice of late merging, known in traffic-engineering circles as the “zipper merge,” before construction zones and other areas of traffic congestion. There’s a growing consensus among many state transportation officials that when a lane closure is looming, getting drivers to use all available lanes until the point where cars need to merge can keep traffic moving and even cut down on road rage. Yet in places like Minnesota, known for a courteousness dubbed “Minnesota nice,” this has meant changing some ingrained driving habits. Traffic officials there found that 80% of residents identified themselves as “early mergers,” who were more apt to shift over to a slow lane rather than use an available lane until it was closed. To get people to use the zipper merge, states typically use signs that tell driv-

ers approaching work zones to use all available lanes until taking turns to merge. States also are educating drivers through classes and driving manuals, and getting the word out through social media and TV and radio ads. “It’s kind of counterintuitive” to Minnesota drivers, said TJ Melcher, a spokesman for the Minnesota Department of Transportation in Bemidji, Minn. “You defer to others a lot in our culture here.” The practice is gaining momentum in states like Kansas, Colorado and Missouri, where transportation officials also have run into some reluctance among drivers to keep moving in a lane that will be closed. Missouri first tried directing drivers to use the zipper merge in a construction zone in 2015 and found it reduced a 4-mile backup to 1 mile, while cutting the delay in half. The state has experimented several more times and plans to use it again this summer at two scheduled construction zones on Interstate 70. “The odd thing about it is that the public will actually

complain that they want us to tell them which lane is closed sooner,” Linda Wilson Horn, a spokeswoman for the Missouri Department of Transportation said, adding, “No, no, no. We don’t want to tell you.” K.C. Matthews, a traffic engineer with the Colorado Department of Transportation, said the practice is becoming more widespread as more states witness others having success. “Once someone is willing to take the risk and try it and it works, it’s a bandwagon effect,” he said. Proponents say the zipper merge is most effective in work zones where traffic slows and a backup begins to form. By reducing the length of backups, the practice can free up exits that would otherwise be blocked. If traffic is flowing at highway speeds, traffic engineers recommend drivers merge earlier. Not everyone is sold on the zipper merge. “We want people to merge early, instead of waiting until that last second,” said Mark Dinger, a spokesman for the California Department of Transportation. “When drivers wait until

Late merging, also known as ‘the zipper merge,’ does several things to improve safety, said a Minnesota work-zone engineer, even cutting down on road rage in the polite state. that last minute, it can lead to sudden braking and cause rear-end collisions.” Ken Johnson, state workzone engineer in Minnesota, said the zipper merge does improve safety. By keeping lanes moving at the same speed, the practice prevents “queue jumping,” where drivers move suddenly into the open lane to get ahead of other cars, he said. It also prevents “lane forcing,” in which drivers try to work their way into the backed-up lane.

©T&CO. 2017

BY KRIS MAHER

JERRY HOLT/MINNEAPOLIS STAR TRIBUNE/ZUMA PRESS

Waiting until the last minute can ease congestion in construction zones, but ‘Minnesota nice’ gets in the way

Jury Sentences Church Shooter to Death CHARLESTON, S.C.—A federal jury sentenced Dylann Roof to death Tuesday for the 2015 killing of nine black worshipers at a historic church here, just hours after he told the panel “I still feel like I had to do it.” Mr. Roof, who first sat with his victims in a Bible study meeting at the historic Emanuel African Methodist Episcopal Church for 40 minutes before turning a gun on them, hasn’t expressed remorse for the slayings. The white 22-year-old wrote in a jailhouse journal that he had shed tears of selfpity for himself, but had “not shed a tear for the innocent people I killed.” When the verdict was announced Tuesday afternoon, Mr. Roof had no expression on

CHUCK BURTON/ASSOCIATED PRESS

BY VALERIE BAUERLEIN

Dylann Roof told the jury he had to kill the worshipers. his face. He clasped his hands and looked downward. The jury of nine whites and three blacks deliberated for

three hours before coming back with their verdict. The same jury convicted Mr. Roof last month of hate crimes and other charges in the first phase of his trial in U.S. District Court. Melvin Graham, brother of victim Cynthia Hurd, said he hopes the verdict sends a message to people who share Mr. Roof’s racist views. “This wasn’t a killing, it was an execution,” Mr. Graham said. “He admitted it and he’s proud of it.” In a statement, Mr. Roof’s family expressed grief to the victims. “We will struggle as long as we live to understand why he committed this horrible attack,” the family said. Prosecutors argued that Mr. Roof deserved the death penalty because he targeted the church to ensure maximum

notoriety and attention to the slayings and because it was a place where people weren’t likely to be armed. “This was not some moment where he just got mad,” prosecutor Jay Richardson said. “This was calculated. Misguided, but thoughtful.” In a halting six-minute closing argument Tuesday, Mr. Roof told the jury he still feels he had to carry out the racebased killings. “I think that it’s safe to say that no one in their right mind wants to go into a church and kill people,” he said. “In my confession to the FBI, they asked me, ‘Is it safe to say that you don’t like black people?’ ” he said. “My response to them was, ‘Well, I don’t like what black people do.’” —Cameron McWhirter contributed to this article.

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U.S. NEWS

Tillerson’s Broad Experience Created Ties Outside activities helped secretary of state pick cultivate allies in both parties

Rex Tillerson was a 16-yearold janitor at Oklahoma State University earning $1 an hour when his conversations with students working late in labs put him on the path toward an engineering degree. “I think God put me in that electrical engineering building because I’d be there late in the evenings,” he told a group of students at Texas Tech University in 2015. “It’s funny how things take you where you’re supposed to be.” Mr. Tillerson, Exxon Mobil Corp.’s former chief executive officer, on Wednesday will appear before the Senate Foreign Relations Committee for a hearing that could lead to his next chapter: serving as President-elect Donald Trump’s secretary of state. While lawmakers are expected to focus on the oil executive’s business experience, particularly his work to expand Exxon’s footprint in Russia and the company’s record on climate change, the 64-

ANDREW HARRER/BLOOMBERG NEWS

BY FELICIA SCHWARTZ AND BRADLEY OLSON

Rex Tillerson’s confirmation hearing is expected to focus on his long career at Exxon Mobil. year-old native of Texas has a broader range of experiences that have helped him cultivate allies—both Republicans and Democrats—who could ease his way to confirmation. He brushed elbows with Democrats while serving on the board at Ford’s Theatre in Washington; he made a friend of a Hillary Clinton supporter while serving on a jury in Texas; and he forged a close relation-

ship with the man who would recommend him to Mr. Trump while serving on the Boy Scouts of America board. “He’s someone who understands ‘big p politics’ and ‘little p politics,’” said lobbyist Heather Podesta, who served with him on the Ford’s Theatre board, adding that she has advised concerned Democratic friends to “withhold judgment until you meet him.”

Emily Roden, who backed Mrs. Clinton in last year’s presidential campaign, got to know Mr. Tillerson in 2007 when they served on a jury in Denton County, Texas. She said he had a key role in helping convict a man accused of sexually assaulting a minor. “The defense did a very good job of making the facts really muddy…he was excellent at thinking very clearly about

the case,” she said. Mr. Tillerson’s broader experience could help inform those people concerned about whether the contacts he has made while cutting business deals internationally will translate effectively to his new, proposed post. “Business interests don’t always align with diplomatic interests,” said Douglas Brinkley, a professor of history at Rice University. “Sometimes, the art of diplomacy is about nuance, shades of gray. It’s not about the bottom line.” Mr. Tillerson was set to retire from Exxon in March and told friends he was planning to spend time on a ranch in Texas. His coming nomination to be secretary of state, at the suggestion of former Boy Scout president and Defense Secretary Bob Gates, surprised some of those who know him. As a member of the Business Roundtable, a CEO advocacy group in Washington, Mr. Tillerson pushed for standardized education goals in math and English, which Mr. Trump opposes. At Exxon, he repositioned the company on the issue of global warming, a phenomenon the president-elect has been reluctant to acknowledge. And as a board member of the Boy Scouts of America, he played a major role in ending

Trump Nominees Contributed to Senators BY REBECCA BALLHAUS

Republican President-elect Donald Trump’s cabinet nominees include several who have financially backed the same people now charged with determining if they are qualified for their new posts. Five of Mr. Trump’s nominees—Sen. Jeff Sessions; Reps. Tom Price, Mike Pompeo and Mick Mulvaney; and former Sen. Dan Coats—have collectively donated about $106,000 to senators sitting on the committees conducting their confirmation hearings, according to a Wall Street Journal analysis of Federal Election Commission data for the past six years. The donations were made through the lawmakers’ leadership PACs, committees created most often by current and former members of Congress to help them raise their profiles and curry favor with colleagues.

The donations aren’t without precedent—Democrat John Kerry, President Barack Obama’s nominee for secretary of state in 2013, had previously served as chairman of the Senate committee tasked with confirming him and donated to its members. Still, the contributions show the potential for conflicts as confirmation hearings begin. “We have a president-elect who talked about understanding that contributions buy something,” said Larry Noble, general counsel with the Campaign Legal Center, which advocates for reducing the influence of money in politics. “So it’s disturbing that you then have people being nominated for these high-level cabinet positions who have made contributions to senators who have to confirm them.” Betsy DeVos, Mr. Trump’s pick for education secretary,

has together with her relatives in the past two election cycles donated more than $220,000 to five senators on the Committee on Health, Education, Labor and Pensions, which will conduct her confirmation hearing, according to campaign financial-disclosure records.

The donations were made through the lawmakers’ leadership PACs. Linda McMahon, tapped to head the Small Business Administration, has donated more than $126,000 to five senators running her confirmation hearing. Mr. Trump has drawn criticism for nominating to serve in his administration several

top donors to his own campaign after saying that as president he wouldn’t be beholden to wealthy backers. “When you give, they do whatever the hell you want them to do,” Mr. Trump said of politicians in an interview with the Journal in July 2015. His nominees collectively gave more than $10.5 million to his campaign and allied super PACs during the election. Mr. Sessions, Mr. Trump’s nominee for attorney general, through his leadership PAC has donated $42,500 to seven of the eight Republican senators on the Senate Judiciary Committee, which on Tuesday conducted his confirmation hearing. In the 2016 election cycle, Mr. Sessions directed $7,500 to the committee’s chairman, Sen. Charles Grassley (R., Iowa), who opened Tuesday’s hearing by acknowledging the existing relationships. “We’re here today to

review the character and qualifications of a colleague who has served alongside us in the Senate for 20 years,” Mr. Grassley said. “We know him well.” Sarah Isgur Flores, a spokeswoman for Mr. Sessions, said the senator has long supported the Republican Party. “So it’s no surprise that he has supported his Republican colleagues on the committee that he chaired and has served on for two decades,” she said. Mr. Coats—Mr. Trump’s nominee for director of national intelligence who retired from the Senate this year—through his leadership PAC has donated $25,000 to five members of the Senate Select Committee on Intelligence, which will conduct his confirmation hearing. Spokesmen for Messrs. Coats, Price, Pompeo and Mulvaney didn’t respond to requests for comment.

Continued from Page One Justice Department. The hearing was the first of what is likely to be a contentious series of committee meetings in coming days to consider Mr. Trump’s picks for cabinet posts and other top jobs, some of whom have drawn sharp complaints from critics. Few, if any, of the selections will be rejected, given Republicans’ 52-48 Senate majority, but Democrats plan to use the hearings to highlight Mr. Trump’s more controversial positions and elicit commitments from his top officials to follow established policies. Among the scheduled hearings are one on Wednesday for former Exxon Mobil Corp. Chief Executive Rex Tillerson, Mr. Trump’s choice for secretary of state, who some senators worry is too close to Russia. Retired Marine Corps Gen. James Mattis, the pick for defense secretary, is slated for Thursday. Republicans and Democrats are also arguing over the pace of the hearings, as Democrats complain that holding many of them simultaneously, and so early in the year, means the figures won’t get the scrutiny they deserve. GOP leaders have relented somewhat, postponing several hearings initially scheduled for Wednesday. Mr. Sessions’s hearing followed a dance likely to be repeated at many of the hearings: Democrats criticized Mr. Trump and raised questions about parts of Mr. Sessions’s record, but apparently did little to hurt his chances of confirmation. The senators often showed the deference they typically afford colleagues nominated to high positions. Democrats frequently pressed issues of race, and protesters periodically inter-

ANDREW HARNIK/ASSOCIATED PRESS

SENATE

Republican Sen. Jeff Sessions of Alabama, arriving for a confirmation hearing on his nomination as attorney general, greets fellow Alabama Republican Sen. Richard Shelby on Tuesday in Washington. rupted the proceedings to shout such slogans as “No Trump! No KKK!” They were escorted out by Capitol Police. Mr. Sessions said allegations that he is sympathetic to groups such as the Ku Klux Klan, or is otherwise racially biased, are “damnably false.” The issue of race has hovered over the selection of Mr. Sessions to be the nation’s top law-enforcement officer in part because his 1986 nomination to be a federal judge was rejected amid racial concerns. Mr. Sessions, 70 years old, said in his opening remarks that as a prosecutor he had forcefully pushed the prosecution of KKK members accused of killing a young black man, successfully advocating the death penalty for one of them. He said he is deeply committed to treating people equally

under the law. At his 1986 hearing, Mr. Sessions was asked about allegations that he told a black federal prosecutor in Alabama that he had thought the KKK “was OK until I found out they smoked pot.” Mr. Sessions suggested then that his comment wasn’t meant to be taken seriously, and that it was “ludicrous” to think he supported the group. At Tuesday’s hearing, responding to another allegation, Mr. Sessions said he had never declared that the NAACP was un-American. He said he was warning that the group could be perceived that way by some people if it continued voicing support for Latin American communist groups. Mr. Sessions engaged in a contentious exchange with Sen. Al Franken (D., Minn.),

who suggested the nominee had exaggerated the degree to which he worked on some significant cases, based on what some lawyers in those cases have said. “Our country needs an attorney general who doesn’t misrepresent or inflate,” Mr. Franken said. Mr. Sessions said he had played a major role in the cases, though he conceded that at one point he overstated the number of desegregation cases he pursued. The senator, who has been one of the chamber’s loudest critics of illegal immigration, also said that Mr. Trump no longer wants a ban on all Muslims, but that “the focus should be on individuals coming from countries that have a history of terrorism.” “I do not support the idea that Muslims as a religious group should be denied ad-

mission to the United States,” Mr. Sessions said. On another hot-button issue, Mr. Sessions reiterated his belief that voter ID laws, if drafted properly, are legitimate. But he said he would follow whatever the courts decide. Civil-rights groups have argued that such laws are intended to discourage minorities from voting, and cite voting-rights issues as one of their biggest concerns under a Trump administration. Mr. Sessions said he wouldn’t take part in any further action against Mrs. Clinton, acknowledging that some of his comments during the campaign could lead to a perception of bias. An early supporter of Mr. Trump, Mr. Sessions had called for a special prosecutor to investigate her. —Devlin Barrett contributed to this article.

the organization’s ban on gay scouts in 2013. Mr. Tillerson struggled with the issue, said people involved in the discussions and who spoke with him about the gay ban. “He thought on it, he read on it, he prayed on it for a long time” said John Hamre, Mr. Tillerson’s friend and CEO of Center for Strategic and International Studies. “When he finally made his decision, he said, ‘the only thing I could really do is do what was best for the boys.’ He decided that meant to change the policy.” Randall Stephenson, the current Boy Scouts president and AT&T CEO, said Mr. Tillerson made sure “every voice was heard.” Gay-rights advocates say his record on the issue as Exxon CEO is more mixed, since the company was one of the last to extend benefits to the spouses of gay employees, doing so in 2013 after the U.S. Supreme Court struck down the Defense of Marriage Act. Still, after the Boy Scouts’ ban was ended, Mr. Stephenson joked that Mr. Tillerson should next turn his attention to Middle East peace. “I told Rex, ‘Maybe you ought to try to tackle the Palestinian-Israeli situation,’ ” Mr. Stephenson said. “I just said it in jest, but here we are.”

FBI Chief: Russians Also Hacked Republicans BY DEVLIN BARRETT FBI Director James Comey said Tuesday that Russian hackers successfully hacked some Republican groups and campaigns, though officials said the Russians revealed much less of that material compared with the volume of disclosures made about Democrats’ emails. Mr. Comey, in his first public appearance since the election, appeared with other intelligence chiefs before the Senate Intelligence Committee to discuss the alleged Russian hacking of the Democratic National Committee and senior party operatives with the goal of tarnishing Hillary Clinton’s presidential bid. Committee Chairman Richard Burr (R., N.C.) asked Mr. Comey whether Republicans were also targeted by Russian intelligence. “There were successful penetrations of some groups and campaigns, particularly at the state level on the Republican side of the aisle, and some limited penetration of old [Republican National Committee] domains,’’ the Federal Bureau of Investigation chief said. Those domains, Mr. Comey added, “were no longer in use’’ at the time of the hacking. “Information was harvested from there, but it was old stuff,’’ he said. “We did not develop any evidence that the Trump campaign or the current RNC was successfully hacked.’’ The Wall Street Journal previously reported that an email account linked to a long-departed RNC staffer was targeted. Officials familiar with the investigation have also said the Russian hacking effort was generally much less extensive against the Republicans than the Democrats. Mr. Comey, like the other intelligence chiefs, said he had never seen this level of Russian interference in U.S. elections. Mr. Comey testified alongside James Clapper, director of national intelligence, and the heads of the National Security Agency and the Central Intelligence Agency. Mr. Clapper said Russian President Vladimir Putin and Russian officials didn’t expect Mr. Trump to win, particularly when the hacking began. “They thought he was a fringe candidate,’’ Mr. Clapper said. The head of the CIA, John Brennan, said he spoke to his Russian counterpart in August, warning him that the U.S. knew Russia was behind the leaking of Democratic emails and warning they should stop. The Russian official denied involvement but said he would relay the message to Mr. Putin. After that discussion, the leaks continued.

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U.S. NEWS

Lobbying Blitz Hits Washington WASHINGTON—Presidentelect Donald Trump’s victory has sparked one of the most pitched lobbying efforts in Washington in years as the prospect of business-friendly policies has companies from the airline industry to Wall Street launching new blitzes. Oil and gas firms are pressing to roll back federal regulations on drilling. Verizon Communications Inc. and other large telecommunications firms want changes to the net neutrality rules championed by President Barack Obama’s administration. Airlines are seeking stronger enforcement of an aviation agreement in hopes of stopping foreign carriers from getting an unfair advantage on the most prized international routes. Boeing Co., Lockheed Martin Corp. and other defense contractors are scrambling to protect against cuts in the Pentagon’s budget. “People are getting out the agendas that they have had for years, but never thought could happen,” said Ed Kutler, a longtime Washington lobbyist. “Now, all of a sudden, people are firing with real bullets because things can be passed

and go to a president who has his pen ready to sign.” Mr. Trump said on the campaign trail that he wants to curb the influence of lobbyists and special interests. But his election has been a boon for Washington’s influence sector as airlines, defense contractors, tech companies, retailers, manufacturers and others seek to advance their agendas. Lawmakers are getting “a lot of contact and a lot of outreach” from hopeful businesses seeking regulatory relief and other changes, said Rep. Tom Cole (R., Okla.), a senior House member. Business-focused initiatives in Congress this year are likely to include repeal and replacement of Mr. Obama’s signature health-care law, a tax-code rewrite and repeal of a range of environment and energy rules. Lobbyists for Wall Street already are pressing Congress to rescind a range of Dodd-Frank financial regulations. McDonald’s Corp., Choice Hotels International Inc. and other restaurant, hotel and retail companies are pushing to overturn a decision by Mr. Obama’s administration to make it easier for unions to organize employees at franchises. Led by the International Franchise Association, the in-

Power Push

Industries Prepare For New Muscle

Total amount spent on lobbying $4 billion

2016 (through Oct. 28): $2.36 billion

Many industries said President-elect Donald Trump’s campaign statements should translate into new momentum for their causes. U.S. airlines said his concerns about inequitable trade policies means his administration should enforce an agreement with foreign carriers, such as Qatar Airways of Qatar and Emirates of the United Arab Emirates. American Airlines Inc., Delta Air Lines Inc. and United Continental Holdings Inc. say the Gulf carriers violate the

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Source: Center for Responsive Politics

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dustry is seeking legislation to overturn the 2015 decision by the National Labor Relations Board. That effort stood little chance, but gained new life with Mr. Trump’s win. “It’s a whole new opportunity to go on offense in a way that we had not expected,” said Matthew Haller, a senior vice president at the trade group. The franchisees got another boost when Mr. Trump nominated Andrew Puzder as Labor secretary. Mr. Puzder served on the International Franchise Association’s board and re-

Continued from Page One sion to inform Mr. Trump. “But if we had this data, others may have had this data too. And regardless of truth or falsity, I can see why they thought the president-elect should know.” Among the allegations, contained in a set of confidential memos written by the former official, are that Mr. Trump’s attorney, Michael Cohen, met with Kremlin officials and discussed how to arrange cash payments to hackers working under Moscow’s direction against the presidential campaign of Hillary Clinton. The FBI has found no evidence that he traveled to the Czech Republic, where the meeting allegedly took place in August of last year, officials said. Mr. Cohen denied any such meeting. He said in an interview Tuesday evening that he had never been contacted by the FBI or any other U.S. agency on these issues. He said Mr. Trump has also not contacted him about them. Mr. Cohen said he previously knew about the allegations because he had been contacted about them by journalists. The former official who compiled the dossier works for a private investigations company and was hired by both Republicans and Democrats to investigate Mr. Trump, ac-

ALBIN LOHR-JONES/PRESS POOL

TRUMP

Donald Trump, shown Monday, rejects the memos as ‘fake news.’ cording to one official close to the matter. His reports have circulated for months among law-enforcement and intelligence agencies as well as congressional offices and news outlets, including The Wall Street Journal. While U.S. agencies have been unable to verify the allegations, the former official who produced the report has a long and respected track record among intelligence officials. The Journal hasn’t been able to verify the allegations. The memos, which have been the subject of intense interest, include claims that Russian officials have evidence of Mr. Trump engaging in sexual acts with prostitutes and have held the information in reserve as potential blackmail. The memos were published in full online Tuesday evening,

amid the latest twist in a monthslong feud between the intelligence community and Mr. Trump over the question of whether and why Russia interfered with the U.S. election. Before last week’s briefing, the heads of the intelligence agencies spent hours testifying before the Senate about their evidence, which showed that Russian President Vladimir Putin ordered an extensive hacking campaign and leaks of private emails, principally directed at Democrats, in a bid to help Mr. Trump. Mr. Trump had expressed skepticism about the claims. After the briefing he received Friday, he toned down his rhetoric and seemed to allow that the Russians had engaged in hacking, though he later added that it was important for the U.S. to maintain good

pact by using government subsidies to fly newer planes at cheaper prices. Oil and gas firms are preparing a broad effort to roll back regulations they said make it hard to drill for oil and gas and build new pipelines. Environmental groups had successfully blocked key projects, such as the Keystone Pipeline, during President Barack Obama’s presidency. Verizon and other telecom firms want to try to roll back net-neutrality rules put in place by the Obama administration, which was more closely aligned with Google and other internet firms that favored the rules. —Brody Mullins sponsive Politics. However, the decline likely had more to do with lobbyists reducing the activity they reported on disclosure forms, rather than a real decline in lobbying activity. To be sure, Washington’s lobbying industry gets a boost every time there is a shift in power, as companies and industries build lobbying teams to deal with the uncertainty of a new administration and defend their issues.

signed his seat last week. Mr. Trump isn't the first president to come to Washington with a pledge to rein in the influence-peddling industry. Mr. Obama made a similar promise when he took office. Companies, labor unions and interest groups spent a total of $3.2 billion on lobbying in 2015, the last year for which complete figures are available, down slightly from $3.3 billion in 2008, the year before Mr. Obama took office, according to lobbying data compiled by the nonpartisan Center for Re-

Developer backs investor visas................................................ B6

relations with Russia. Russian officials have repeatedly denied involvement in election-related hacking or trying to influence the U.S. presidential election. The revelations about the unsubstantiated allegations could complicate a week in which several of Mr. Trump’s highest-level cabinet officials face confirmation hearings and when Mr. Trump, on Wednesday morning, is scheduled to give his first press conference since July. Top lawmakers already have inquired publicly about the kinds of issues described in the memos. In a hearing Tuesday with four top intelligence officials, Sen. Ron Wyden (D., Ore.) asked FBI Director James Comey if the bureau had investigated whether individuals close to the Trump campaign have any links to Russians. Mr. Comey declined to answer, saying he couldn’t confirm or deny if an investigation had begun. CNN first reported that officials had given the allegations to Mr. Trump. “The story as presented by CNN lacks any accuracy and is yet another attempt to discredit Mr. Trump’s landslide victory in this election,” said Mr. Cohen, executive vice president of the Trump Organization and special counsel to the president-elect. Mr. Trump won the electoral college but lost the popular vote to Mrs. Clinton. Mr. Cohen said that there is “zero truth” to the idea that

there has been any relationship between the Trump Organization and the Russian government or any ongoing communications during the campaign between the Trump campaign and Russian affiliates. A Russian official who was alleged to have met with Mr. Cohen in Prague, Oleg Solodukhin, also denied any such meeting took place, calling the report “some kind of misunderstanding.” House Intelligence Committee Chairman Devin Nunes (R., Calif.) said that he hadn’t seen the memos and that they hadn’t been discussed in a briefing on Tuesday for the heads of the intelligence committees and top lawmakers from the House and Senate. “It should not be a surprise to anyone that the Russians are always looking for dirt on any politician,” he said. Mr. Nunes is one of the lawmakers working with Mr. Trump’s transition team. Lt. Gen. Michael Flynn and K.T. McFarland, Mr. Trump’s picks for national security adviser and deputy national security adviser, declined to comment on the reports. On Sunday, Sen. Lindsey Graham (R., S.C.) suggested in a television appearance that the government was probing whether or not Russian operatives coordinated with people linked to U.S. political campaigns. —Alexandra Berzon, Kristina Peterson and Carol Lee contributed to this article.

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Nominee Gives View On Border Wall Plan Donald Trump’s nominee to run the Department of Homeland Security expressed some skepticism about the impact of the president-elect’s signature promise to build a wall along the border with Mexico to keep out illegal immigrants. Retired Marine Gen. John Kelly said that if the U.S. built “a wall from the Pacific to the Gulf Mexico” it would still need to be backed up by border patrols and technology. He said border security hinges on building stronger partnerships in Latin America. “A physical barrier in and of itself will not do the job,” Gen. Kelly told the Senate Homeland Security Committee during his confirmation hearing Tuesday. Gen. Kelly was asked to weigh in on another sensitive topic: Mr. Trump’s dismissal of intelligence reports that concluded that the Russian government hacked the Democratic National Committee with the intent of influencing the 2016 election. Gen. Kelly said he accepted that report “with high confidence.” —Beth Reinhard CONGRESS

Probe of Lawmaker’s Stock Trades Sought A legislator who wrote a law to curtail abusive stock trading in Congress asked securities regulators to open an investigation into President-elect Donald Trump’s nominee to be secretary of Health and Human Services Department. Tuesday’s request to investigate Rep. Tom Price, a Georgia Republican, comes after The Wall Street Journal reported last month he made trades worth more than $300,000 in stocks of biomedical, pharmaceutical and health insurers while serving on the health subcommittee of the House Ways and Means Committee, sponsoring and advocating legislation that could potentially affect those companies’ stock. Rep. Louise Slaughter, a New York Democrat and author of the 2012 Stop Trading on Congressional Knowledge (STOCK) Act, sent the letter asking the Securities and Exchange Commission to determine whether Mr. Price made the trades based upon information he gleaned on the health panel. Calls to Mr. Price requesting comment were referred to Phil Blando, a spokesman for Mr. Trump’s transition team, who said: “With yet another politically motivated attack on Dr. Price, Democrats are showing just how out of touch they are with the American people. The election is over. These charges are laughable.” —James V. Grimaldi

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WORLD NEWS

Germany Plans New Terror Fight Measures would make it easier for authorities to monitor, detain and deport suspects

Italian Siblings Arrested In Hacking BY GIOVANNI LEGORANO

BERLIN—Germany released a plan to rein in known extremists after authorities failed to prevent a terrorist attack last month by a Tunisian radical on a government watch list. The proposed overhauls aim to make it easier for police to monitor, detain and deport asylum seekers believed to pose a terror threat, Germany’s interior and justice ministers said on Tuesday. The plan—which the government plans to implement with legal changes in the weeks to come—reflects efforts to tighten enforcement within the guidelines of constitutional safeguards, informed by abuses committed under the Nazis, that strongly protect personal freedom. Under current state police laws, for instance, preventive custody doesn’t exceed 14 days. Detentions of foreigners to be expelled also face stringent legal requirements, such as the necessity to obtain proof of identity of a suspect from his or her country of origin. Under the ministers’ proposals, police would be allowed to detain rejected asylum seekers deemed dangerous for up to 18 months, by lowering some of the current requirements. German authorities have been seeking ways to improve antiterror enforcement since Anis Amri rammed a truck into a Berlin Christmas market last month, killing 12 people and exposing holes in the country’s security architecture. The planned overhaul “shows that in difficult times we are capable of finding reasonable solutions that will increase the safety of citizens in Germany without disproportionately constraining the pub-

ROME—Italian police arrested two people for allegedly hacking the email accounts of politicians, entrepreneurs and government officials, including European Central Bank President Mario Draghi. Italian police on Tuesday arrested Giulio Occhionero, a 45-year-old financial consultant and nuclear engineer, and his 49-year-old sister Francesca Maria Occhionero, both of whom Italian prosecutors accuse of accessing private emails without authorization and stealing classified information. The Occhioneros couldn’t be reached to comment, nor could lawyers for the pair. Roberto Di Legami, head of the police unit leading the investigation, said Mr. Draghi’s emails were from his Bank of Italy account likely dating from when he was the governor of the Italian central bank. Another person with knowledge of the matter said there was no sign of a breach of Mr. Draghi’s ECB email account. Mr. Draghi led Italy’s central bank from 2006 to 2011. Police said the Occhioneros stored the allegedly stolen information on U.S. servers, which were seized with the help of the U.S. Federal Bureau of Investigation. The pair are both residents of London and Italy, the police said. The suspects allegedly hacked the email accounts by infecting them with malware. Mr. Di Legami said roughly 18,000 email accounts may have been hacked and more than 2,000 passwords collected. Police also seized a server containing stolen information in Rome, Mr. Di Legami said.

JULIAN STRATENSCHULTE/EUROPEAN PRESSPHOTO AGENCY

BY RUTH BENDER

lic’s freedoms,” said Interior Minister Thomas de Maizière. German authorities came under criticism for failing to expel Amri in the months before the attack even though he was on a watch list of extremists, had voiced plans to commit atrocities and was using fake identities. The target of Tuesday’s proposals are people like Amri who are found to be radical Islamists capable of committing an attack. German authorities are tracking 550 such extremists— known in German as Gefährder—according to security officials. Half of them are believed to be in Germany. Amri was killed by police in Italy several days after the Berlin attack. Most of these individuals haven’t been determined to have broken laws, leaving German authorities few legal tools to keep them in check. Around

80 are in detention. The others are being watched by police and intelligence services, some more closely than others, security officials said. The German constitution makes it very hard to detain people who aren’t suspected of committing a crime. That contrasts with the U.S., which allows the detention of terrorism suspects for indefinite periods. “It’s pretty much impossible to take a Gefährder into custody unless one has a very concrete indication that a person is planning an immediate attack,” said Nikolaos Gazeas, a Cologne-based lawyer and expert on counterterrorism law. “That would mean a complete inversion of our legal system.” One way to strengthen antiterror laws, illustrated by Tuesday’s proposals, is to authorize a tighter grip on suspected foreign extremists.

New China Antigraft Panel Gets Trial Run in Provinces BY CHUN HAN WONG BEIJING—China’s government is introducing a new anticorruption watchdog to enforce a cleaner civil service, but some legal experts worry it will boost President Xi Jinping’s already weighty clout. Officials say a national supervisory commission will target graft and dereliction of duty from lowly functionaries to top government figures, with powers to interrogate and detain suspects, freeze assets and, in some cases, punish. The commission, which is undergoing regional trials ahead of a nationwide rollout next year, aims to merge the roles of several government departments and offices, centralizing the oversight of China’s vast bureaucracy. On paper, the watchdog will answer directly to a rubber-stamp parliament. But in practice, officials say, the commission will share personnel and responsibilities with a powerful disciplinary agency that answers to Mr. Xi’s 89-million-strong Communist Party. “To use a Chinese saying, it’s ‘one group of personnel, two plaques,’ ” Xiao Pei, vice minister at China’s ministry of supervision, said Monday at a news briefing. “Our aim in deepening reforms of the national supervisory system is to strengthen the party’s centralized and unified leadership over anticorruption efforts.” Since taking power in late 2012, Mr. Xi has pursued a withering crackdown on graft that has sidelined rivals, bolstered his popularity and helped raise his stature as China’s most dominant leader in decades. Last week, Mr. Xi told top party disciplinarians that “the spread of corruption has been effectively contained.” But he urged more efforts to improve institutional safeguards, including tougher supervision mechanisms. The prospect of a new, powerful party-linked watch-

Graft Graphed China says its corruption crackdown is curbing wrongdoing within the now 89-million-strong Communist Party. Number of party members disciplined

Number of public complaints against alleged disciplinary violations

600,000

3.0 million

500,000

2.5

400,000

2.0

300,000

1.5

200,000

1.0

100,000

0.5

0 2013

’14

’15

’16

2013

Source: Central Commission for Discipline Inspection

dog is worrying some Chinese lawyers, who say the commission may aggravate the problems it is meant to solve. “Those in power think that corruption stems from the lack of effective supervision over the use of power, so they create a more powerful authority to manage officials who may turn corrupt,” Lu Liangbiao, a Beijing-based senior partner at interna-

Observers say Mr. Xi’s targets include rivals and footdragging bureaucrats. tional law firm Dentons, wrote in an essay about the new commission. “Yet this more-powerful authority similarly lacks its own requisite supervision, and its potential for corruption becomes greater,” Mr. Lu wrote. Such an approach to fighting graft, lacking checks and balances from an independent judiciary and a free press, is akin to “swatting flies beside a pile of feces.” Rather, observers say, the new commission stands to give more room to Mr. Xi and his party disciplinarians to

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enforce loyalty and compliance with the Chinese leader’s policy agenda while extending a popular anticorruption crackdown. His targets, observers say, are rivals and foot-dragging bureaucrats who hamper his policy edicts, particularly at lower tiers of government. The creation of the supervisory commission seems to be an attempt to increase the anticorruption system’s “independence from local party organizations and strengthen its accountability to the central leadership,” said Andrew Wedeman, a professor at Georgia State University who studies governance in China. Party officials dismissed criticism of China’s lack of independent checks on party power, saying new data show the party’s success in fighting graft. Public complaints against alleged official wrongdoing fell in 2016 from a year earlier, the first annual decline since the antigraft campaign began, while the proportion of party members disciplined rose to 0.43% last year from 0.18% in 2012, according to Mr. Xiao. The national supervisory commission will likely be set up in 2018, said Wu Yuliang, deputy chief of the party’s central commission for discipline inspection.

GERMAN FEDERAL POLICE OFFICE/ZUMA PRESS

Police searched a building in Hildesheim in November, amid the arrests of suspected Islamic State members. Below, Berlin attacker Anis Amri.

In the case of Amri, authorities say they couldn’t clear the high bar for evidence or the administrative prerequisites needed to quickly deport or detain him. The new rules would lower the requirements to detain and deport some dangerous Islamists. Roughly half of the 550 Gefährder are foreign nationals, according to the interior

ministry. Of these, 62 have been refused residency; they may be more easily deported in the future. Many of the most dangerous extremists, however, are German, said Sebastian Fiedler, deputy chairman of the federation of German criminal police officers BDK. For these, stricter enforcement can focus only on surveillance. Part of Tuesday’s proposal is to place ankle bracelets on suspected extremists to better track their movements. This would require changes in state law in Germany’s 16 states, which determine for themselves the tools police can use to keep tabs on and investigate suspects. Mr. de Maizière said only a very small number of radical Islamists, currently being watched chiefly by federal authorities, could be eligible for carrying an ankle bracelet.

A8 | Wednesday, January 11, 2017

THE WALL STREET JOURNAL.

out of

ain’t bad. WSJ readers control $2 out of $3 spent in American business Once again, and for 30 years running, The Wall Street Journal is the No. 1 media brand for reach and influence in American business. Our readers managed $4.6 trillion in expenditures—that’s 63% of B2B purchases in the U.S. The Wall Street Journal—we mean business.

Source: 2016–2017 Purchase Influence in American Business, Erdos & Morgan. Brand nets reflect net of print average issue audience and past 30 day use of measured digital platforms; purchasing volumetric reflects aggregate of 47 measured categories. © 2017 Dow Jones & Co., Inc. All rights reserved. 6DJ4821

Wednesday, January 11, 2017 | A9

THE WALL STREET JOURNAL.

WORLD NEWS

Crowds Fill Tehran at Ex-Leader’s Funeral Rare public displays of discontent mark event mourning former President Rafsanjani

A massive crowd filled the streets of Tehran on Tuesday for a funeral procession for former President Akbar Hashemi Rafsanjani marked by rare public outbursts of discontent with the regime.

The crowd was estimated by Tehran’s governor at up to 2.5 million people and became, in effect, two parallel funerals. One featured Supreme Leader Ayatollah Ali Khamenei and senior officials honoring Mr. Rafsanjani. The other included protests in support of opposition leaders and carried echoes of mass demonstrations that followed the disputed presidential elections of 2009. As a van draped in black carrying Mr. Rafsanjani’s body moved slowly through packed streets, people in the crowd lifted their fists in the air and chanted, “Ya Hossein, Mir Hossein,” and, “Our demand is clear, end the house arrest,” a reference to Mir Hossein Mousavi and Mehdi Karroubi, the leaders of the opposition Green Movement who have been under house arrest for six years. Pictures of mourners showed many wearing green wristbands. The deputy speaker of parliament, Ali Mottahari, took to

ATTA KENARE/AGENCE FRANCE-PRESSE/GETTY IMAGES

By Farnaz Fassihi in New York, Aresu Eqbali in Tehran and Asa Fitch in Dubai

Iranians gathered around a hearse carrying the casket of former President Akbar Hashemi Rafsanjani during his funeral ceremony in the capital Tehran on Tuesday. Twitter acknowledging the public’s demands. “People’s slogans today at Ayatollah Rafsanjani’s funeral show that regime officials have to resolve the issue of house arrest of leaders of the 2009 dissidents,” said Mr. Mottahari. The events unfolded as Iranian moderates grappled with how Mr. Rafsanjani’s death will affect the chances of his longtime ally, incumbent President Hassan Rouhani, of winning reelection in May. The only declared candidate

backed by conservatives has a low public profile and there are no official opinion polls to gauge popularity in Iran’s opaque electoral system. But Mr. Rafsanjani’s death deprived Mr. Rouhani, who backed the 2015 nuclear deal and favors improving ties with the West, of his most powerful supporter. Former President Mohammad Khatami, a close ally of Mr. Rafsanjani and a controversial figure among the ultraconservative elite, was banned from attending. Mr. Khatami

has been sidelined politically since throwing his support behind Green Movement activists. At one point during the procession, Mr. Rafsanjani’s daughter, Faezeh, who is an opposition supporter and has served jail time for her activism, flashed the victory sign and shouted, “People, they didn’t let Khatami come today.” As a central figure in the 1979 Islamic Revolution, Mr. Rafsanjani was considered a pillar of Iran’s establishment whose loyalty to the survival of

the Islamic Republic outweighed his concerns for human rights and personal freedoms. But Mr. Rafsanjani criticized the 2009 regime crackdowns, at one point saying “I can’t see the revolution without the public’s support.” Top Iranian officials and allies of Mr. Rafsanjani attended a prayer ceremony at Tehran University before his body was moved to be interred alongside other prominent revolutionaries in the mausoleum of the Islamic Republic’s founding figure, Aya-

tollah Ruhollah Khomeini. The crowds on Tuesday looked on as Mr. Rafsanjani’s casket, topped with the late leader’s tightly wrapped white cleric’s turban, was driven through the streets of Tehran. The turnout was a strong show of support for the causes he fought for, according to his moderate allies. Mr. Rouhani maintains strong political bonds with pragmatic allies throughout the political system, and enjoys considerable popular support.

Iran Agrees to Cut Back Its Uranium Stockpile BY LAURENCE NORMAN BRUSSELS—Iran agreed to take steps that would push its stockpile of enriched uranium far below the 300-kilogram cap fixed in its 2015 nuclear agreement, potentially eliminating one flashpoint over an accord that President-elect Donald Trump repeatedly criticized during his election campaign, Western diplomats said. The pledge by Tehran to

take the step came after discussions in Vienna on Tuesday with the six powers that negotiated the nuclear accord. The meeting is expected to be the last the Obama administration will take part in before Mr. Trump takes office on Jan. 20. While the agreement could remove one potential flashpoint over the accord, modestly lengthening the period before Iran could build a nuclear weapon, others exist.

The outgoing administration has been looking for ways to bolster the accord, a key part of the president’s foreign-policy legacy, ahead of Mr. Trump’s inauguration. Mr. Trump’s plans for the deal are uncertain. He attacked it repeatedly during the presidential campaign. However, Mr. Trump has mentioned the agreement only once since winning the election—describing it as a “horrible” deal in a December

tweet—leading European officials to hope that he won’t tear up the accord. Iranian officials have said the U.S. is undercutting the accord by renewing sanctions legislation on Tehran. U.S. critics of the accord have lambasted six-power decisions to allow the export of natural uranium from Russia to Iran, to exempt some nuclear material from Iran’s stockpile count, and not to react more forcefully

when Iran briefly exceeded a separate limit on heavy water. European and U.S. diplomats have expressed concerns that the agreement could unravel if the Trump administration seeks to take fresh measures against Iran, including new nonnuclear sanctions and efforts to crimp its regional influence. The Wall Street Journal reported in November that the U.S. and its partners were discussing with Iran steps that

could be taken to reduce its enriched-uranium stockpile at its mothballed uranium facility in Isfahan in central Iran. According to people involved in Tuesday’s discussions, Iran agreed to a plan that would see the facility cleaned out and enriched uranium taken out and degraded. When the nuclear deal was agreed to in 2015, Iran had some 100 kilograms of enriched uranium stuck in the pipes and machinery at the plant.

Turkey’s Half-Measures Fail to Stem Currency’s Fall Attacks

VW Continued from Page One rules, according to people familiar with the situation. Toyota Motor Corp. and General Motors Co. in recent years resolved criminal cases stemming from fatal safety failures and each agreed to deferredprosecution agreements under which the government pledged to later seek to dismiss charges as long as the companies complied with the deals’ terms. Both those auto makers admitted to their safety failures, expressed regret and promised reforms. Toyota paid a $1.2 billion penalty to settle its criminal case; GM paid $900 million. Prosecutors believe the Volkswagen case is different. In past cases involving coverups of violations, auto makers sought to conceal problems after they emerged. But the U.S. government accused Volkswagen, which launched its “clean diesel” campaign a decade ago, of setting out from the beginning to carry out a bold, systematic fraud that it sustained over many years. And once U.S. environmental authorities began to sus-

pect that Volkswagen was cheating, the company organized a well-orchestrated and aggressive coverup, prosecutors have alleged in related cases against individuals, misleading authorities for nearly a year and a half before finally admitting to using illegal software to game the system. Ultimately, prosecutors view Volkswagen’s transgressions as a worse offense than attempting to cover up problems after the fact, according to people familiar with the matter. The result for Volkswagen is a fine that is several billion dollars more than the other auto makers faced. “To understand the different outcomes in this case as opposed to those cases, the answer lies in the premeditation and conscious decision by so many actors to knowingly violate U.S. law. Not just a violation of law, but a lasting systematic fraud and then a cover up. This is pretty systematic and intentional,” said a person familiar with the investigation. Volkswagen has taken €18.2 billion ($19.2 billion) in provisions to pay for the legal costs and penalties associated with the diesel scandal in the U.S. Volkswagen said Tuesday that the agreement, if reached,

desire to keep rates low as a boost for the flagging economy. Instead, authorities have at-

tempted conventional and unconventional measures to prop up the lira. President Erdogan in December called on the public to sell their foreign-currency savings to support the currency, which had only a temporary effect. The downward pressure on the lira has been exacerbated by a selloff in emerging-markets currencies after Donald Trump’s surprise victory in November’s U.S. presidential elections and after the U.S. Federal Reserve raised interest rates in December. The Turkish currency has slid 6.5% against the dollar since the start of January. Turkish policy makers have been in a tight corner as they

aim to slow inflation and support financial stability. Mr. Erdogan and some senior advisers have said raising interest rates isn’t acceptable, as they hope to stimulate sputtering economic growth. Turkey’s economy contracted for the first time in seven years during the third quarter, with domestic demand hit by the failed coup and a battered tourism industry. Gross domestic product in July through September shrank by 1.8% annually. While outside economists cite weakening macroeconomic fundamentals, Turkish officials blame unspecified international manipulation for the lira’s depreciation.

would “lead to a financial expense that exceeds the current provisions.” In a sign of how Volkswagen has been humbled by its diesel crisis, its sales statement Tuesday makes no mention of hitting its long-held target of taking first place in global sales. Volkswagen said Tuesday that worldwide sales of its various brands rose 3.8% last year, to 10.3 million vehicles, despite the diesel crisis and economic troubles in emerging markets. The draft settlement must still be approved by the U.S. government, Volkswagen’s ex-

ecutive management and its supervisory board, which is made up of key shareholders—the heirs of the original Beetle designer Ferdinand Porsche, the German state of Lower Saxony, Qatar’s sovereign-wealth fund—as well as representatives of the powerful IG Metall trade union. The deal, which includes appointment of an independent monitor to audit the company’s compliance practices, and publication of a statement of facts by the Justice Department, is expected to be approved on Wednesday, according to people

familiar with the situation. A guilty plea by Volkswagen would be notable. While criminal investigations of corporations aren’t uncommon, guilty pleas are rare. “There is a stigma that comes with a criminal conviction,” said Laurie Levenson, a professor at Loyola Law School in Los Angeles. A guilty plea at the corporate level can send a powerful symbolic message and hurt a company’s reputation, though the logistics of such a deal can play out the same as if the government stopped short of getting the plea, said Samuel Buell, a Duke Law professor. Volkswagen’s expected settlement, which includes criminal and civil fines, comes days after Federal Bureau of Investigation agents arrested a Volkswagen executive, Oliver Schmidt, accused of conspiring to defraud the U.S. in the auto maker’s emissions-cheating scandal. Mr. Schmidt was arrested at Miami International Airport as he prepared to fly home to Germany, according to a Justice Department official. He appeared in a Miami federal court Monday and is currently being detained pending another hearing set for Thursday. —Sara Randazzo contributed to this article.

A currency exchange board in Istanbul, as seen in November.

CARLOS OSORIO/ASSOCIATED PRESS

ISTANBUL—The Turkish central bank failed to stop the lira’s free fall with its limited step to boost liquidity in financial markets, amid political pressure to keep interest rates low. The Turkish currency tumbled as much as 1.9% during trading in Istanbul on Tuesday, its fourth straight record low. Instead of raising interest rates, the central bank loosened foreign-currency reserve requirements by half of a percentage point, saying the measure would inject about $1.5 billion of liquidity into financial markets. It promised further steps to maintain prices and financial

stability, without providing further details. The move came against a background of debates in parliament on a constitutional overhaul bill that would concentrate executive powers in President Recep Tayyip Erdogan’s office, adding to uncertainty among investors, who fear the erosion of checks and balances in the government. With the currency under pressure since the state of emergency called in the aftermath of July’s failed coup attempt, the central bank has largely refrained from pushing for a rate increase that would stem the currency’s losses but also challenge the government’s

CHRIS MCGRATH/GETTY IMAGES

BY YELIZ CANDEMIR

A Volkswagen Touareg diesel at an EPA test facility in Michigan.

In Afghan Cities Kill Dozens

BY HABIB KHAN TOTAKHIL AND EHSANULLAH AMIRI KABUL—Attacks in three major Afghan cities highlighted the worsening security situation in the country, as blasts killed more than 45 people on Tuesday and wounded close to 100 others, including members of a delegation led by the ambassador of the United Arab Emirates. Kandahar’s provincial governor, Humayun Azizihad, had been meeting with the U.A.E. ambassador to Afghanistan, Jumaa al Kaabi, and both survived with injuries, Afghan officials said. The provincial health department in Kandahar said the explosion killed 11 people, including a number of Emirati diplomats and high-ranking Afghan officials at the meeting. There was no claim of responsibility. In Kabul, twin blasts killed at least 32 people and wounded at least 70 others near Parliament during the afternoon rush hour, at an office building used by members of Parliament, officials said. In the first explosion, a suicide bomber detonated an explosives vest next to a minibus transporting government employees, they said. As rescue crews reached the scene, a car bomb went off. The Taliban, Afghanistan’s largest insurgency, claimed responsibility. The third attack took place earlier Tuesday. The Taliban bombed a meeting of an elite Afghan intelligence agency squad in the capital of Helmand province, killing at least three people, said Payenda Mohammad, a local police official.

THE WALL STREET JOURNAL.

A10 | Wednesday, January 11, 2017

IN DEPTH

Across the U.S. Number of states with PACE legislation 34*

35 30 25 20 15 10 5 0 2007

’09

*As of Dec. 20

’11

’13

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Source: PACENation

THE WALL STREET JOURNAL.

Loans Could Get New Growth Spurt The growing pains of PACE loans are largely the result of the industry’s young age, executives say. The first PACE program was started in 2007 by Cisco DeVries, then chief of staff to the mayor of Berkeley, Calif.

RIDE Continued from Page One train stations and airports during the annual Lunar New Year holiday starting Jan. 28, including more than 250,000 a day on the 14 escalators inside Beijing West Train Station, according to the state-run Beijing Daily. Subway authorities in cities such as Beijing and Shanghai struggled for years to convince escalator riders to stand to the right to let those in a rush pass on the left. “Stand right, walk left” was a central feature of civilized-behavior campaigns launched ahead of both the 2008 Beijing Olympics and 2010 Shanghai Expo. Concerns over escalator use became a public issue last month after the city of Nanjing’s subway operator issued a social media post that cited statistics saying 95% of escalators experienced severe wear and tear on the right side. “No longer advocate ‘stand right, walk left,’” the post said. “It’s more important to stand still and hold the rail!” Commuters in Beijing thus far seem largely unaffected by

Cindi Ventura and her mother, shown in mirror, got a PACE loan for $16,732, which Cindi says was called a property-tax assessment. pany denies the allegations and says it will “defend PACE, our company and the program vigorously.” In November, the Energy Department urged administrators of the loan programs to clearly explain loan costs and other terms, allow borrowers to cancel their loan during a short period and deter kickbacks to contractors.

Few defaults so far Industry executives say most borrowers are satisfied with their loans and defaults are rare. Lenders are working with consumer groups to create nationwide standards “to prevent things that wouldn’t benefit consumers,” says JP McNeill, Renovate America’s founder and chief executive. PACE loans range in size from about $5,000 to more than $100,000, with an average of about $25,000, and charge interest rates of 6% to 9% over a repayment period of usually five to 25 years. Instead of making monthly mortgage payments, PACE borrowers pay what they owe once or twice a year along with their property taxes. Cities and counties collect the loan payments and pass along the money to lenders. Local governments collect fees from finance companies. In the fiscal year that ended June 30, the Western Riverside Council of Governments collected revenue of $7.1 million, or about 15% of its budget, from the PACE program. Another quirk of PACE loans is that the debt usually goes to the front of the line, ahead of the homeowner’s Thirty-four states and Washington, D.C., have passed legislation allowing the creation of PACE programs, according to PACENation, an industry trade group in Pleasantville, N.Y. Mr. DeVries, who calls himself a “capitalist hippie” and now is chief executive of Renew Financial Group LLC, a clean-energy finance company in Oakland, Calif., says he is “really proud of what we’ve ac-

the debate, with most sticking to the right. “It’s a good habit and people finally learned it. Now you want to cancel it, and what are we supposed to do?” Zhang Li, a saleswoman in the Mall at Oriental Plaza, said while traipsing through the nearby Dong Dan subway station in Beijing. “How could people walk faster during rush hours?” Uneven wear is indeed a concern, says Zhang Lexiang, general secretary of the China Elevator Association, which also covers escalators and moving walkways. Where subway entrances in the West often have multiple escalators that can alternate up and down duty, he says, Chinese subway entrances tend to have only one escalator that always goes up. Escalators can be built to withstand that problem, Mr. Zhang says. The bigger issue is that escalators, which are typically steeper and have bigger steps than staircases, aren’t designed for walking. “I’ve been opposed [to walking on escalators] for the past 10 years,” says Mr. Zhang. “I think it’s extremely dangerous.” Last year, London tried an

mortgage. Like a typical tax assessment, that means if a homeowner defaults on the PACE loan, the property can be seized as collateral and sold to repay the lender. That setup puts local governments in the awkward position of potentially foreclosing on their constituents. If that happens and the house turns out to be worth less than the amount owed by the homeowner, other taxpayers could be stuck with a loss on the difference. So far, that hasn’t happened. Some investors say the ex-

‘It’s just a matter of time before we get regulated,’ says one PACE loan executive. tensive involvement in PACE loans by governments across the country amounts to an implicit financial backstop. The belief that governments stand behind the loans is a major reason why investors are attracted to the bond deals, according to investors. “There is such big national and state backing,” says Mike Warmuth, portfolio management vice president at FBL Financial Group Inc., the owner of Farm Bureau Life Insurance Co. The insurer owned $22 million of PACE bonds at the end of September. Mr. Warmuth says the insurer’s broker suggested the bonds, which generally yield about 4%. He says he isn’t aware of any underwriting decomplished.” He adds: “We set out to help people save money and save energy, and it’s under way.” The industry could get a new growth spurt from a July decision by the Department of Housing and Urban Development to allow the Federal Housing Administration to purchase mortgages on homes with PACE loans. —Kirsten Grind

ficiencies with the loans, adding that Farm Bureau only had access to aggregate loan data before buying the bonds. Defaults on loans in PACE bond deals overall have been less than 1%, according to Kroll Bond Rating Agency Inc. Cecil Smart, a senior director, says the bond deals are structured so that lenders bear the brunt of any losses, rather than investors. Germany’s Deutsche Bank AG is one of the largest packagers of PACE loans into securities and led a $284 million deal in mid-December, which drew far more investor demand than expected. The bank is aware of problems stemming from the role of contractors, says a person familiar with the matter. Contractors often line up loans while on house calls and can earn a referral fee of at least $500 per borrower, according to current and former employees. The loans also are marketed at county fairs and by cold calling, borrowers say. Renovate America uses about 8,000 contractors to help line up loans, according to bond documents. Those contractors are overseen by 23 employees at the San Diego company. The company says it recently put in place a morestringent contractor management program. Renovate America says only about 200 contractors are actively arranging PACE loans. Cindi Ventura, 65 years old, says she was urged last summer by her plumber to apply for a PACE loan after sewer pipes eroded underneath her three-bedroom house in San Jose, flooding the property. She said she had recently filed for personal bankruptcy, didn’t have the money to make all the repairs and couldn’t qualify for a home-equity line of credit. She and her mother, 83, received a $16,732 loan for five years from Ygrene Energy Fund Inc. with a 6.5% interest rate. Ygrene (“energy” spelled backward), based in Santa Rosa, Calif., is the second-largest provider of PACE financing in the country.

Hungry Investors The growth of PACE loans has been fueled partly by investor appetite for bonds created from the loans. Cumulative securitization of residential PACE loans* by dollars funded $3 billion Renew Financial: $288 million Ygrene*: $479 million Renovate America: $1.96 billion

Unfinished work

0 2014

’15

Ms. White, the borrower in Inglewood, a neighborhood in Los Angeles County, says a contractor from a company named the House Next Door told her in late 2014 not to worry that she couldn’t afford the $42,200 loan because “it wouldn’t be coming out of my pocket.” The company says no one there would ever describe PACE loans like that and says Renovate America has held weekly training sessions for its contractors for “more than a year.” Ms. White says the contractor finished the drought-resistant landscaping at her house only after being contacted by a Journal reporter. Renovate America says the contractor has been “under suspension” for the past several weeks. Her loan went into a pool of 11,282 PACE loans that are collateral on bonds issued by the Western Riverside Council of Governments. Deutsche Bank packaged the bonds into a $240 million deal called “HERO Funding Trust 2015-1.” Kroll gave it a AA rating, the firm’s third-highest. According to the latest available figures, fewer than 70 of the underlying PACE loans have defaulted, and Kroll said the transaction “has performed as projected.” Ms. White’s next loan payment is due in April. She says she doesn’t know how she will be able to pay it.

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Note: Through Dec. 15 *Ygrene includes some commercial loans. Source: PACENation

THE WALL STREET JOURNAL.

Ms. Ventura says she was confused about the loan’s terms because it was called an assessment. She says she called and emailed Ygrene several times with questions about her loan documents and never heard back. “I still don’t really understand what the program is,” she says. Louis Lalonde, chief marketing officer of Ygrene, says company representatives had a call with Ms. Ventura and her mother to answer all their questions before the loan was signed. He says he has no record of any further attempts to contact them.

Contractor training The 3,200 contractors who drum up business for Ygrene are regularly screened for compliance with contractor licensing requirements and receive training before they are allowed to pitch loans to homeowners, he adds. Malcolm Scott, 61, was planning to pay in cash the $34,000 it would cost for a new air-conditioning unit, furnace and other improvements at his house in Woodland Hills, Calif. His contractor suggested applying for a PACE loan. Mr. Scott was surprised to

REUTERS

Continued from Page One value of a homeowner’s property. PACE loans typically require no down payment, and the debt is added to propertytax bills as an assessment. Ms. White’s annual property taxes soared to $6,500 from $1,215. Loan growth is fueled partly by investor appetite for bonds created from PACE loans, especially among mutual funds and insurers. Investors like the bonds’ relatively high payouts, environmentally friendly reputation and lofty credit ratings. On the other hand, rating firms have said there aren’t enough historical data on PACE loans to forecast potential defaults. Some local governments that embraced the loans as a way to bring clean energy to the masses didn’t anticipate the messy consequences. “We wanted to put ourselves in the thick of this,” says Rick Bishop, executive director of the Western Riverside Council of Governments, a group of city and county governments in California that helps run the largest PACE program. “The downside is now we hear about these stories from people who feel like they’ve been misinformed in some fashion.” The government group tries to resolve problems for borrowers. Riverside County, Calif., has opened an investigation into marketing practices for PACE loans, and California Gov. Jerry Brown signed into law in September new requirements establishing uniform disclosures for PACE loans. Homeowners now have three days to back out. The largest PACE lender, Renovate America Inc., is accused in three lawsuits filed in November by borrowers of double-charging interest and administrative fees and failing to immediately credit loan payments. The suits seek class-action status. The com-

PRESTON GANNAWAY FOR THE WALL STREET JOURNAL

LOAN

Travelers in a Beijing subway station pile onto escalators and stairways during rush hour. experimental “no walking” rule on escalators in one underground station, to mixed results. In Singapore, Seoul, and Taipei, escalator users have also been encouraged to reconsider the wisdom of standing to one side. In 2014, Japanese railways launched a “Let’s All Grab a Handrail” campaign, though many Tokyo commuters con-

tinue to ignore the entreaty. Those who do stand generally still move to one side to let the climbers forge ahead. Mr. Zhang of the elevator association says compared with other countries, the dangers in China are greater because Chinese subways often try to cut costs by leaving less space for exits. That means steeper, narrower—and hence,

find out less than 24 hours later that he had been approved for $94,000. Renovate America says he qualified for the larger loan based on the amount of equity in his house. He decided to borrow just the $34,000. Michael Gardner, who runs Mediterranean Heating & Air Conditioning, which lined up the loan, says he has been recommending loans for about two years and got “an hour or two” of online training from Renovate America. The program “is real nice because there are no FICO score requirements or anything like that,” says Mr. Gardner. Some lenders have taken steps to strengthen underwriting practices, make loan documents more transparent and boost contractor oversight. Renovate America now requires in-house representatives to speak with a borrower by phone—outside of the room and away from the contractor—before signing a homeowner up for a PACE loan. Renovate America, which is backed by nine private-equity and venture-capital firms, says it has spent the last several months working with consumer groups and regulators to come up with national lending standards for PACE. The new standards could include a year with no payments for borrowers who are suffering from an economic hardship. “At the end of the day, PACE is an unregulated industry, and it’s just a matter of time before we get regulated,” says Mr. Lalonde of Ygrene. Phil Adleson, a lawyer in San Jose, Calif., who represents borrowers, says PACE is “a very great idea implemented in a dangerous fashion.”

riskier—escalators. Chinese subway escalators often exceed the 30-degree incline considered standard in the West, he said. Subway operators in Beijing, Shanghai and Nanjing— cities identified in local media reports as no longer advocating “stand right, walk left” policies—didn’t respond to questions about whether they

planned to actively encourage standing on both sides. Several grisly accidents involving escalators in shopping malls grabbed media attention in China in recent years. Overall, China recorded 22 accidents involving elevators, escalators and moving sidewalks in the first half of 2016, causing 16 deaths, compared with 58 accidents and 46 deaths for all 2015, according to the government’s quality supervision and inspection agency. At Beijing West’s crowded subway station, safety officers say people stand and run on both sides of the escalators, when they can. “People have big suitcases, and usually there is no space for them to walk left,” says Chang Zenghui, a safety worker. “New rules or old rules, we don’t care. The only principle for us is ‘safety first.’ No stampede. No crowding. That’s it.” Li Xiaopeng, a commuter who works for an investment company, said he prefers the stairs anyhow. “I know this new rule from Nanjing but I’m not quite sure about the logic. Maybe China is just too crowded to do anything.” —Olivia Geng and Yang Jie contributed to this article.

THE WALL STREET JOURNAL.

Wednesday, January 11, 2017 | A10A

* *

GREATER NEW YORK Steven McDonald, a New York Police Department detective who touched the world by forgiving the shooter who left him paralyzed 30 years ago, died on Tuesday. Mr. McDonald, 59 years old, of Malverne, Long Island, was admitted to North Shore University Hospital on Friday after suffering a heart attack. “No one could have predicted that Steven would touch so many people, in New York and around the world,” said Police Commissioner James O’Neill. “Like so many cops, Steven joined the NYPD to make a difference in people’s lives. And he accomplished that every day.” A 15-year-old shot Mr. McDonald as he patrolled Central Park in 1986, paralyzing him from the neck down. He was four days shy of his second anniversary as a police officer, authorities said. In the years since, Mr. McDonald was known for visiting police stations, schools, church groups and other com-

A shooting in 1986 left Steven McDonald paralyzed from the neck down. munity centers to preach forgiveness and peace. “I try to do something good every day,” Mr. McDonald said in a NY1 interview in December. “It’s always been my hope that I can think of something, say something that’s going to help people that I meet.” Mayor Bill de Blasio on Tuesday said Mr. McDonald helped bring police and communities together. “The story of Detective Steven McDonald needs to be understood across the United States, especially as we work to heal the wounds of the past,” Mr. de Blasio said. “Since that fateful day in 1986, Steven dedicated his life to fighting hate and encouraging forgiveness through his actions,” said Police Benevolent Association President Patrick Lynch. Mr. McDonald is survived by his wife, Patti Ann, and his son, Conor, an NYPD sergeant. A viewing service for Mr. McDonald will take place Wednesday and Thursday at St. Agnes Parish Center in Long Island. A funeral will be held at St. Patrick’s Cathedral on Friday.

BY KATE KING TRENTON—New Jersey Gov. Chris Christie pledged Tuesday to use his final year in office to aggressively combat drug addiction, calling it a crisis that is “ripping the very fabric of our state apart.” Mr. Christie, a Republican who is nearing the end of his second and final term, dedicated the majority of his 73minute State of the State address to outlining his plan for expanding drug prevention and treatment. “There is nothing more important that I could do in my last 373 days as governor than this,” he said. “I will not have the blood of addicted New Jerseyans on my hands.” Fatal drug overdoses in the state increased nearly 22% from 2014 to 2015, the governor said. In 2015, he said, nearly 1,600 people lost their lives to drugs. Across the U.S., abuse of opioid painkillers has been growing with states reporting higher numbers of fatal overdoses fueled in part by the proliferation of fentanyl, a synthetic drug with up to 50 times the potency of heroin. Mr. Christie said he recognized that his speech was unusual for its laser focus. He said New Jersey could become an example for the nation on how to effectively handle the drugaddiction epidemic. “We have to start treating this disease and not just jailing the victims,” he said. “We need to give them the tools they need to recover.” Democratic legislators said they share the governor’s commitment to addiction treatment but said the challenge is one of many facing New Jersey. Lawmakers said they hope the governor also works with them to address school funding, property tax relief and fiscal problems facing the state.

KEVIN HAGEN FOR THE WALL STREET JOURNAL

BY ZOLAN KANNO-YOUNGS

Christie Takes On Drug Scourge

New Jersey Gov. Chris Christie on Tuesday, with daughter Sarah and wife, Mary Pat, before his State of the State address in Trenton. “The governor’s attachment to this issue, starting with the abuse of prescription medication, is 100% on point,” said Assembly Majority Leader Lou Greenwald. “But if it’s only on this issue and doesn’t dig deeper into the other issues around education and access to health care, growing our economy, economic independence for young people in this state, then we’re glossing over the root of the problem.” The governor has frequently called for improved addictiontreatment services; one of his close friends died of a prescription drug overdose nearly three years ago. In his speech, Mr. Christie

said his administration would spend millions expanding residential treatment and soberliving facilities for New Jersey teenagers, college students and adults. Stressing the risks of drug addiction for young people, the governor said he has instructed the state education department to develop a curriculum on opioid abuse for students beginning in kindergarten. Mr. Christie also called for stricter regulation of prescription opioids, and said he would work to reduce the number of pills that doctors are authorized to prescribe for initial treatment to a five-day supply from 30 days.

Governor Stays Firm On Recreational Pot Christie points to research that shows vulnerability of young and rejects upside of revenue In his State of the State address Tuesday, New Jersey Gov. Chris Christie indicated that he remains opposed to legalizing marijuana. Late last year, lawmakers introduced legislation to permit recreational use of the drug. Mr. Christie said research shows young people are particu-

larly vulnerable to drug addiction. “I hope that this will give pause to those who are blindly pushing ahead to legalize another illicit drug in our state for tax revenue or by saying it will cause no harm,” he said. “The statistics prove you wrong. Dead wrong.” Medicinal marijuana is legal in New Jersey. In September, the governor signed a bill permitting its use for posttraumatic stress disorder. Phil Murphy, a leading contender for the Democratic nomination in the November gubernatorial race, supports legalization. —Kate King

GREATER NEW YORK WATCH LONG ISLAND

Cuomo Rolls Out Plan For Transit Upgrades NEW YORK COSMOS/ASSOCIATED PRESS

Detective Who Forgave And Preached Peace Dies

SOCCER SCORE: The New York Cosmos have a new majority owner. Rocco B. Commisso, center, flanked by coach Giovanni Savarese and Chief Operating Officer Erik Stover, will be the club’s chairman.

New York Gov. Andrew Cuomo wants to spend $80 million upgrading 16 Long Island Rail Road stations. The improvements would include new facilities, Wi-Fi access and cellphone-charging docks. The governor, in a speech Tuesday, also proposed adding a LIRR stop at the Brookhaven National Laboratory, a major employer in Upton, N.Y., and adding a connection to the commuter railroad from MacArthur Airport in Ronkonkoma, N.Y.

Each addition would cost $20 million. —Joseph De Avila NEW JERSEY

Two Charged With Health-Care Fraud An ex-union official and an insurance broker are facing criminal charges for allegedly defrauding a health-care plan of about $6.6 million. Sergio Acosta, the former president of United Auto Workers Local 2326, and broker Lawrence Ackerman conspired to defraud Horizon Blue Cross Blue

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Shield and the union’s own plan, federal prosecutors said. Mr. Ackerman, of Old Tappan, created two shell companies to market insurance to hundreds of people from across the country not employed by them, prosecutors said. Mr. Acosta, of Passaic, let some of those people stay on the union’s plan after Horizon discovered they weren’t eligible, prosecutors said. It wasn’t immediately clear if the men had attorneys to comment on their behalf. They face up to 10 years in prison and a $250,000 fine. —Associated Press

A10B | Wednesday, January 11, 2017

THE WALL STREET JOURNAL.

* *

CITY NEWS

New York’s governor doesn’t talk ethics in policy tour; allies say he is aware of scandal BY MIKE VILENSKY AND ERICA ORDEN

A scandal has cost New York over $1 million in legal fees, giving Gov. Andrew Cuomo political headaches, and by his own account it has caused him personal heartache. But as Mr. Cuomo lays out his agenda this month in a whirlwind of policy announcements, he has avoided any mention of a federal corrup-

tion case that rocked his administration last year even as he was talking up the economic-development initiative at the heart of the case. On Monday, the governor surprised political observers by doubling down on his signature public-private development project and allotted another $500 million to the Buffalo Billion, a development program prosecutors alleged in an indictment was rigged to favor Mr. Cuomo’s allies. Political strategists said Mr. Cuomo is sidestepping the case, while government watchdogs have expressed concerns about him changing the subject. “What the governor ap-

pears to have done is to stop discussions of corruption, and increase the discussion of his plans for the future,” said Hank Sheinkopf, a Democratic strategist who has worked for Mr. Cuomo. Other people familiar with the governor’s thinking said he ANALYSIS is mindful of the scandal and hopes to move past it. A spokeswoman for the governor, Dani Lever, denied that Mr. Cuomo’s policy tour was designed to distract from the scandal. She said the U.S. attorney’s office is handling the case and the governor thinks it isn’t appropriate to comment

throughout the legal process. A former top Cuomo aide, Joseph Percoco, and seven other allies of the governor, including a former State University of New York president who also served as a Cuomo adviser, were arrested in September and have pleaded not guilty to 14 counts including extortion, bribery and conspiracy. Another former Cuomo ally, lobbyist Todd Howe, has pleaded guilty and is cooperating with prosecutors. Mr. Cuomo, who hasn’t been accused of wrongdoing, was interviewed by federal prosecutors about the case in the fall. Mr. Cuomo has said he found the allegations “breathtaking” and heartbreaking.

His office has a contract with an outside attorney’s office for between $750,000 and $950,000 in state funds for related advice, according to the New York state comptroller’s office. And a state agency overseeing economic development is paying hundreds of thousands of dollars for related legal advice. The Buffalo Billion case has led to calls for greater oversight of state procurement practices and stricter ethics laws. In speeches on Monday and Tuesday, Mr. Cuomo didn’t push new ethics laws; his office said he plans to do so on Wednesday, his third day of a speech tour.

There’s a New Old Boys’ Club, With a Pink Glow

The Wing occupies a loft on East 20th Street. In the locker room, below, Nabiha Syed and Melissa Fensterstock with son Parker.

ELIZABETH SHAFIROFF FOR THE WALL STREET JOURNAL (2)

The Wing, a new coworking space and hangout in Manhattan’s Flatiron District, isn’t your typical social club. There are the quirky questions on the membership application: “What’s your side hustle?” “Who would attend your dream dinner party?” And then there’s the METRO unusual proMONEY gramming: a ANNE KADET hair-braiding workshop, a crossword class. But what really sets this place apart is its membership policy: No boys allowed. Co-founder and chief executive Audrey Gelman (dream dinner guests: Janet Malcolm, Morticia Addams) says she tried the usual coworking spaces and disliked “being surrounded by tech guys who think everything they say is the most brilliant thing, and interrupt and speak over you.” “I think of co-working as bro-working,” she said. She has plenty of company. Most of the investors behind the Wing’s $2.4 million startup fund are women. “Lisa Simpson is our muse,” Ms. Gelman said of the smart little sister on “The Simpsons,” the longrunning animated television show. “I just think she was so ahead of her time.” I spent a day at the Wing, which is open weekdays and Saturdays, chatting with members and drinking too much coffee. It was interesting to see this contemporary take on a ladies’ social club, a tradition that has a long history in New York. Women started forming societies in the early 1900s to have a space of their own for culture and camaraderie. Not too much has changed. The Wing’s library includes several thousand titles, all written by or about women. The cafe fare is made by women. The playlist features female musicians. The space itself, a modern, bright, 3,500-squarefoot loft on East 20th Street, is Barbie-meets-Bau-

haus. The couches are pink. The desk lamps are pink. Even the bathroom trash cans are pink. “Pink needs to be embraced and re-appropriated, in an elevated way,” said Ms. Gelman. “We love pink.” The Wing’s lockers and showers are a big draw.

There’s a lactation room, a clothes steamer and a vast array of fancy creams. My morning at the Wing was quiet. But by noon, the space was filled with women chatting over dishes like the $12 vegan, glutenfree “Shades of Green” quinoa bowl.

The Wing’s 500 members, ranging in age from 21 to 78, were selected to represent a variety of occupations. They include executives, teachers, artists and a police officer. Alex Stikeleather was spending the day at the Wing while the boiler in her home was replaced. The graphic designer uses the club to freshen up between appointments and meet friends. “It’s not a place to meet guys, that’s for sure,” she said. “But I still love coming. You can meet guys other times.” Indeed, members said they have nothing against men. They just want a space of their own. “When I’m surrounded by a community of completely freethinking women who are really nonjudgmental and really individualistic, I’m free to be myself as well,” said entrepreneur Allison Vicenzi. It was hard to imagine a herd of dudes barreling into the penthouse. Would they pull our pigtails? Hog the cucumber-mint water? For what it’s worth, the Wing felt a lot more Zen than

other co-working spaces I’ve tried. The $185 a month membership fee seems reasonable. Most Manhattan coworking spaces start at $250 a month and don’t have perfume samples and back issues of Tom Tom Magazine, a glossy dedicated to female drummers.

‘Lisa Simpson is our muse. I just think she was so ahead of her time.’ Open just three months, the Wing has a wait list of 2,300, Ms. Gelman said. It’s looking to launch other locations in the city—and beyond. As for men who want in? There’s only one surefire method, said Ms. Gelman: “We see a really nice group of guys who work at UPS and come to drop stuff off.” anne.kadet@wsj.com

BRENDAN HOFFMAN/BLOOMBERG

Cuomo Sidesteps Corruption Case

Former Sen. Alfonse D’Amato

D’Amato Rises Up Against JetBlue BY ZOLAN KANNO-YOUNGS New Yorker Alfonse D’Amato was known for speaking his mind during his three terms in the U.S. Senate, and it got him tossed off a JetBLue flight to Florida. A video taken by a fellow passenger shows Mr. D’Amato, a Republican, rallying other passengers as he was being led off the plane by law enforcement officials. “I’m making an appeal to all you people. Stand up for what’s right and walk out with me,” he said in the video taken by Layla Delarmelina. Flight 1002 to John F. Kennedy International Airport was scheduled to leave Fort Lauderdale at 1:42 p.m. Monday but didn’t take off until 8:09 p.m., according to a JetBlue spokesman. Ms. Delarmelina said the plane had already been delayed several times when the pilot asked passengers at the front of the plane to move back because of weight issues. “No one was moving,” she said, “so he [Mr. D’Amato] flipped out on them.” Crew members then told the former senator to get off the plane, according to Ms. Delarmelina. Mr. D’Amato had been visiting an ill friend and hadn’t gotten enough sleep, his representative said. “Anyone who knows Sen. D’Amato knows he speaks his mind,” said the representative. “JetBlue has apologized to the senator for overreacting and the senator apologized for speaking his mind at a time when he clearly had left his patience at the gate.” The JetBlue spokesman said it is standard procedure to ask a disruptive passenger to get off the plane if crew members think the situation could escalate in the air. The video shows one passenger following Mr. D’Amato off the plane and others booing crew members. “Me and several other people had to wait nine hours in the airport just to be treated this poorly and see a righteous man get kicked off the plane,” Ms. Delarmelina said. Mike Long, chairman of the Conservative Party of New York State, has known Mr. D’Amato for 40 years. “He’s clearly outspoken,” Mr. Long said, “and evidently that’s what he was trying to accomplish on the flight.” Mr. D’Amato flew home Tuesday on another airline. —Mike Vilensky contributed to this article.

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THE WALL STREET JOURNAL.

Wednesday, January 11, 2017 | A11

LIFE&ARTS

GROUND COFFEE

PHOTO ILLUSTRATION BY F. MARTIN RAMIN/THE WALL STREET JOURNAL, STYLING BY LEAH LATELLA (8); F. MARTIN RAMIN/WSJ (JUICE); ISTOCK (SOAP)

HOUSEHOLD PRODUCTS

Coffee drinkers seeking convenience in recent years turned to single-serve coffee pods, and those craving indulgence and freshness increasingly buy wholebean coffees, leaving cans of ground coffee in decline. Sales have fallen 8% in five years. Katie Bistrian, a marketing executive in Greenwich, Conn., last year bought a Keurig single-serve coffee maker after years of buying cans of ground coffee. “Cleaning out that coffee pot just takes so long,” she says. “The pods are much easier and faster.”

GOING, GOING, GONE?

BY ELLEN BYRON

ALKALINE BATTERIES

A field guide to products marketers are pushing out of the pantry

ARE YOU OLD SCHOOL about your powder detergent? Are you nostalgic for grilled cheese made with cellophaned slices? Grocery store aisles are dotted with staples falling out of favor as consumer habits change and new versions arrive. “It’s evolutionary,” says Susan Viamari, vice president of thought

leadership for market researcher IRI. Often it is lucrative for product and food makers to sway consumers toward the latest iterations of their products. “It’s a dirty secret in the industry that you use so much more body wash than bar soap because it flows through your fingers,” says Deutsche Bank managing di-

rector Bill Schmitz. If you are a devoted user of a dwindling product, experts advise monitoring local store shelves for clues on when to start stockpiling. “If all of a sudden it’s not at your usual store, then I would think about it,” Ms. Viamari says. Some examples, with sales data from IRI:

More technology relies on rechargeable batteries, driving down sales of alkaline batteries. While dollar sales are down only slightly, thanks to steady price increases, unit sales are down about 18% since 2011. Patty Toth, who runs customer support for a financial services company and lives in Greenwich, Conn., says she buys batteries only about once a year for her flashlights. Even her smoke detector, connected to a home system, doesn’t require batteries. “Anything new you buy comes with chargers,” she says.

BAR SOAP

More people prefer to lather up with liquid body wash, pushing sales of nondeodorant bar soap to $1.1 billion in the 52 weeks ended Dec. 25, down nearly 7% since 2011. Procter & Gamble Co., maker of Ivory and Olay soaps in bar and liquid form, hopes people will take up its new cleansing device, the Duo, which emits soapy lather when wet and has exfoliating and smooth sides. Shaped like a round bar of soap, the $10 device sold under Ivory, Olay and Old Spice brands is designed to last up to 30 showers. “We’re not abandoning the bar soap users, we’re looking for new ways to innovate,” says Stephanie Robertson, P&G’s North American associate director of personal cleansing.

MARGARINE

More people are eating butter instead of margarine amid renewed enthusiasm for the naturalness—and taste—of full-fat dairy products. Margarine sales, which totaled $1.4 billion for the year ended Dec. 25, have fallen 24% over the last five years. Unilever, which leads U.S. margarine sales, says its spreads are more nutritious than butter. “Our flagship brands, Country Crock and I Can’t Believe It’s Not Butter, are made with the goodness of plant-based oils and real, simple ingredients,” Unilever spokeswoman Joelle Hutcheon says.

POWDER DETERGENT

Sales of powder detergent have sunk amid the rise of liquid detergent and, most recently, unit-dose detergent, sometimes called pacs or pods. Sales reached $722 million in the year ended Dec. 25, down 47% since 2011. Still, P&G, the leading maker of powder detergent, says powder devotees need not hoard. “Millions of consumers still prefer powder and we plan to continue to meet their needs,” says Damon Jones, a spokesman for P&G.

FROZEN JUICE CONCENTRATE

Frozen juice concentrate sales fell 37% since 2011. Shoppers prefer refrigerated options, or they skip it altogether. “People are shifting to low-calorie, natural products,” says Deutsche Bank’s Mr. Schmitz. “That’s my challenge with the beverage industry—the biggest competitor is tap water.” Ali Martillotta, a publicist in New York, grew up drinking frozen juice concentrate. “I would never use that now,” she says. Instead, about once a week she makes juice at home using spinach, lemon, turmeric and water in a blender.

PROCESSED CHEESE

Sales of processed cheese, including imitation cheese slices and aerosol spreads, are declining. The category reached $2.97 billion in the year ended Dec. 25, down 9% since 2011. Meanwhile, natural cheeses reached $13.3 billion, up 19% over the same period. “Processed anything belongs on this list,” says Mr. Schmitz. “The world is going more natural.”

WORK & FAMILY | Sue Shellenbarger

ELLEN SURREY

WHEN YOUR YOUNG DAUGHTER ACTS LIKE A TEEN IT’S AN ALARMING moment for any parent: Your 6-year-old daughter announces that she wants to wear a miniskirt or crop top to look “sexy.” Or your 7-year-old starts dancing like a seductive pop star in a music video. The natural reaction is overreaction. Some parents plunge into a discourse on the risks of inviting sexual attention, scaring the child. Others try to bury the matter by ordering the child never to talk or act like that again—inadvertently teaching her that any topic involving the word sex is taboo and should never be discussed with parents. One calming truth: Children’s remarks about sex are seldom what they seem. “It doesn’t mean they’re being sexual,” says Victor Fornari, director of child and adolescent psychiatry at Zucker Hillside Hospital, Glen Oaks, N.Y. They’re usually just imitating something they’ve seen or heard. There are plenty of sexualized images for children to imitate. More than half the female charac-

ters in children’s Halloween costumes, dolls, action figures and Valentine’s Day cards wear provocative, revealing clothing, according to a 2016 study by researchers at Kenyon College. And children are being exposed earlier: About 1 in 6 children ages 4 to 5 already watch music videos, follow fashion trends and want “the latest stuff,” according to a 2014 survey of 815 mothers in the journal Body Image. Ask open-ended questions such as, “What does it mean to be sexy?” says Jennifer Berger, executive director of About-Face, a San Francisco nonprofit that offers media-literacy training and resources for women and girls. Does it mean dressing so others will like you? Walking in a certain way to get attention on the playground? Or having fun, like the hip-hop dancers in music videos? Then set clear limits in simple language. Give some dos along with the don’ts. “The expectations parents set are hugely important,” says Please see DAUGHTERS page A13

THE WALL STREET JOURNAL.

A12 | Wednesday, January 11, 2017

LIFE & ARTS MY RIDE

Tom Mineo, 64, a retired human-resources executive from Bradenton, Fla., on his 1974 Triumph TR6, as told to A.J. Baime. Back when I was working, I used to wake up on Saturdays and take the dogs for a drive in my Triumph. My late wife fostered dogs, but she did not understand the concept of fostering. She would bring home a dog, and that dog never left. These dogs were so smart, they knew the day of the week. On weekdays, I would wake up for work and they would not move. On Saturday, the moment I opened my eyes, the whole place would explode, because the dogs knew we were going for a ride. Now Iâ&#x20AC;&#x2122;m retired, and we go every morning around Anna Maria Island, near where I live. At the bridge onto the island, the dogs pile over to the left side of the car to say hello to the bridge tender. At the elementary school, they pile over to the other side to say hello to the police officer stationed there, Officer Rob. Trolley drivers ring their bells for the dogs, and the manager of a local tavern brings out treats. The dogs just go nuts. Not long ago, the local paper did a story on us, so everywhere I go, people recognize me. â&#x20AC;&#x153;Hey, youâ&#x20AC;&#x2122;re the guy with the dogs and that green car!â&#x20AC;? I first fell in love with Triumph cars in the 1970s. At the time, everyone was crazy for muscle cars, but I loved little British sports cars. I bought my first for $250 while in college. It had no heat, no defroster, but I drove it all year round in Massachusetts. I bought a Chilton manual, which is like a â&#x20AC;&#x153;Computers for Dummiesâ&#x20AC;? book today, only for cars. Using that book, I learned how to do all the work on the car myself. I bought my current TR6 in 1996 for $4,000. It is British racing green, the most desirable color for Triumphs, because in the early days of racing, British cars competed in green paint (as opposed to red for Italy or blue for France). There is a cult following for Triumphs today. They are beautiful, easy to fix, not too expensive, and a blast to motor in. Just ask my dogs.

EDWARD LINSMIER FOR THE WALL STREET JOURNAL (3)

Three Dogsâ&#x20AC;&#x2122; Daily Victory Lap in a Triumph

Tom Mineo, a retired human-resources executive from Bradenton, Fla., with his 1974 Triumph TR6 and his dogsâ&#x20AC;&#x201D;Harley, Hoops and Savannahâ&#x20AC;&#x201D;above and below left. Some detail of the carâ&#x20AC;&#x2122;s interior, below right. The TR6 has a 2.5-liter, six-cylinder engine and a four-speed manual shifter.

Contact A.J. Baime at facebook.com/ajbaime.

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THE WALL STREET JOURNAL.

Wednesday, January 11, 2017 | A13

LIFE & ARTS EXHIBITION REVIEW

of you.” Here the association extends to geishas and courtesans, glossing over the commerce and servitude at the heart of their Hartford, Conn. professions by mesmerizing viewers with ONE OF JAPAN’S highly regarded ukiyo-e, or beauty, elegance, artistry, and the possibility floating world, artists, Kitagawa Utamaro (c. of intimacy and romance. 1753-1806), is the subject of three successive The only other time the Wadsworth disshows centered on three unusual works: wallplayed “Cherry Blossoms” was in an eclectic size paintings first displayed together in Japan assortment of museum treasures. Here, curain 1879 and later in Paris showrooms in the tor of European art Oliver Tostmann uses the 1880s. One belongs to the Smithsonian’s Freerpainting to introduce the museum’s connecSackler; another to Hartford’s Wadsworth Athtion to the Japan craze of the late 1800s. It eneum Museum of Art; and the third—redisstarts with firearms magnate Samuel Colt, a covered in 2012 after disappearing in 1948—to Hartford resident whose widow bequeathed the Okada Museum of Art in Hakone, Japan. much of their collection to the museum. Colt Each museum is organizing a show, the first made sure the 1852-54 U.S. naval expedition being “Utamaro and the Lure of Japan” at the to Japan, headed by Commodore Matthew Wadsworth (through March 26), where its Perry, included among its diplomatic gifts the “Cherry Blossoms at Yoshiwara” (c. 1793) latest Colt Revolvers. The shogun, in return, hangs kitty-corner to the Okada Museum’s “Fu- sent Colt gifts, of which we see two swords kagawa in the Snow” (c. 1802-06). Across the and a length of brocade teeming with dragons gallery is a full-scale and phoenixes. reproduction of A lively U.S.-Japan “Moon at Shinagawa” trade soon followed— (c. 1788); the original ceramics and overis in the Freer and the-top cloisonnés fill cannot travel. a grandiose wooden All three depict cabinet from the Japan’s so-called Colts’ residence and pleasure quarters, assortments of sculpbut unlike the intitural netsuke, knife mate portrayals of handles and tsubos Utamaro’s woodblock (sword guards) illusprints—four of which trate the tastes of lohang nearby—they cal collectors at the fill the walls with turn of the 20th cenlively group scenes tury. Over the years, of courtesans and the Wadsworth accugeishas. Each inmulated almost 1,000 cludes one or more Japanese pieces, most musicians, an amusrarely or never ing incident involvshown. They range ing a mischievous from export wares child or pet, a décor and souvenirs to claswith ink paintings sical works acquired and other markers of during a second phase taste, and subtle reof Japanophilia. Mr. minders of what unTostmann has trotted Top: Samurai sword, c. 1853; above: Kitagawa dergirds this world— out some of the best, Utamaro’s ’Two Geisha Preparing for a Fancy a glimpse of bedding including a pair of Dress Procession’ (c. 1782) here, the shadow of 17th-century screens a man behind a shoji with depictions of arscreen there. Kimonos and obis of brocade, tisanal workshops that supplied the samurai taffeta and silks create cornucopias of colors, and some 20 ukiyo-e prints, selected to compatterns and motifs. Willowy bodies sway, plement and echo the paintings. The mulean, bend and pivot as the women share seum’s 1957 purchase of “Cherry Blossoms” gossip, munch delicacies, smoke longfits with this second wave of collecting. stemmed pipes, read letters, or marvel at The Wadsworth’s show does a good job of cherry blossoms. Some turn away, revealing integrating “Cherry Blossoms” into the history pale napes with swallow-tailed hairlines. of the city and an institution associated with These scenes are as carefully choreographed American and European art. It also whets our as the public promenades in which a courteappetite to know more. Why would Utamaro san described by novelist Ihara Saikaku in paint such unusually large works? And is this 1689 “arranges her clothing so that her red his work or that of a talented imitator? Were crepe de chine undergarment will flip open they ever intended as a set given their differto reveal a flash of white ankle, sometimes ent sizes and dates? For a deeper look into as high as her calf or thigh,” causing many a such issues, American audiences will need to man to part with his mind and treasure. wait until April when the Freer-Sackler’s “InLong attributed to Utamaro, the three venting Utamaro: A Japanese Masterpiece Repaintings have historically been viewed as a discovered” opens. This larger exhibition will trilogy. A most helpful brochure produced by delve into recent scholarship and showcase all the Freer and available at the Wadsworth three paintings. The Wadsworth’s “Lure” thus notes that Japanese audiences would recogbegins an exciting journey of discovery. nize in these images the fleeting nature of pleasure evoked in a couplet by the Chinese Ms. Lawrence writes about Asian and poet Bai Juyi (722-846): “Snow, moon and Islamic art for the Journal. flowers—in these moments I think longingly

STARR, C.R. & FERGUSON, G. M. (2012)

A Journey of Discovery BY LEE LAWRENCE

Weather V Vancouver Seattle Por P tl d Portland

-0s

Calgary

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30s

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Bismarckk

70s 0s

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40s 50s

Boston Albany A ttfordd l Hartford Buffalo

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U.S. Forecasts

International City Amsterdam Athens Baghdad Bangkok Beijing Berlin Brussels Buenos Aires Dubai Dublin Edinburgh

Today Hi Lo W 48 39 r 55 46 r 63 40 s 85 77 sh 44 19 s 36 31 sn 49 35 r 87 63 s 79 68 s 46 32 pc 43 32 sh

Tomorrow Hi Lo W 42 34 sn 54 42 s 63 41 pc 90 75 pc 42 19 s 38 31 sn 42 32 r 91 73 s 79 67 s 39 32 sh 40 33 pc

WADSWORTH ATHENEUM MUSEUM OF ART (2)

29 33

Warm

Rain

Cold

T-storms

Stationary

Snow

Showers

Flurries

City Frankfurt Geneva Havana Hong Kong Istanbul Jakarta Jerusalem Johannesburg London Madrid Manila Melbourne Mexico City Milan Moscow Mumbai Paris Rio de Janeiro Riyadh Rome San Juan Seoul Shanghai Singapore Sydney Taipei Tokyo Toronto Vancouver Warsaw Zurich

Today Hi Lo W 42 36 sn 37 35 sn 78 62 s 73 66 c 44 34 pc 87 78 t 54 37 s 74 56 pc 52 36 pc 61 35 pc 85 76 r 74 56 pc 71 43 pc 33 22 s 19 13 pc 85 59 pc 52 41 c 93 78 pc 82 51 pc 46 30 s 79 73 pc 35 24 s 48 40 c 89 77 pc 97 72 pc 72 66 pc 49 37 s 38 33 c 32 19 s 25 17 s 38 36 sn

Tomorrow Hi Lo W 40 32 sn 42 33 sn 80 63 s 71 60 c 41 36 sn 87 77 t 57 39 pc 79 62 pc 42 32 r 57 37 pc 87 75 pc 80 62 s 73 45 pc 37 28 c 19 17 sn 85 61 pc 45 34 r 88 78 t 76 48 pc 54 49 sh 82 73 s 37 19 pc 45 37 sh 89 76 t 79 71 pc 72 63 c 53 39 s 40 22 sh 33 21 s 37 28 sn 40 31 sn

7 Grounded flyer

40 Combo’s performances

Across 1 Grazers on the Serengeti plains 8 Pig’s pad

the range 27 Emblem of Scotland 30 Took it easy

9 Dull sound 10 Fashionable monogram

refresher

13 Knocked on the noggin

53 Puffins’ kin

18 Bray bit

54 They’re hard to get out of

22 Best replacement?

31 Debate side

55 Cosmo, e.g.

14 Muffles

32 Small trace

24 Drive away

15 Surprised sounds

34 Rhine tributary of Switzerland

56 Be under the weather

19 Sought a seat 20 Winter home, of a sort

35 •It departs from Platform 9¾ 41 JFK guess 42 Birds, biologically

48 Ankle covering

12 Source of advice •Post-workout

23 Yen

17 •Yellowstone attraction

45 Bean topper 46 Senators’ home

11 Cologne application

11 More than mewl

16 Debate side

44 Makes unreadable, in a way

8 Balkan capital

IT’S A GAS | By Susan Gelfand •Its home is on

37 Increasingly

6 Singer DiFranco

36 Houdini’s real name

33 Frisky org.?

39 Drop in the ocean

34 Skater’s stunt

5 Economical, as writing

2 Gene’s “Young Frankenstein” director

38 Shoulder adornments

29 Constantinople coin

4 Costs of certain campaigns

Down 1 Merger announcement?

3 Canoeist’s activity

18 20

Ice

City Omaha Orlando Philadelphia Phoenix Pittsburgh Portland, Maine Portland, Ore. Sacramento St. Louis Salt Lake City San Francisco Santa Fe Seattle Sioux Falls Wash., D.C.

57 Waste watchers’ org.? 58 Release pent-up emotions, or what the starred answers can do 63 Dawn drops

21 Cologne article

43 Projectile in a comedic fight

64 Epoch division

22 Word before pay, day or bay

44 Hard-to-read type

66 Salt source

23 Getaway destination

47 Like an evening gown

65 Short solo 67 General activity? 68 Less refined

Solve this puzzle online and discuss it at WSJ.com/Puzzles.

s...sunny; pc... partly cloudy; c...cloudy; sh...showers; t...t’storms; r...rain; sf...snow flurries; sn...snow; i...ice Today Tomorrow City Hi Lo W Hi Lo W Anchorage 15 1 pc 11 -2 s Atlanta 65 50 c 69 51 pc Austin 82 64 s 81 65 pc Baltimore 52 41 c 60 46 pc Boise 38 15 sn 25 9 pc Boston 50 39 r 54 42 c Burlington 45 38 pc 48 32 r Charlotte 54 47 sh 65 51 s Chicago 42 28 c 30 11 sn Cleveland 50 48 sh 54 23 r Dallas 78 63 pc 76 56 pc Denver 50 30 pc 37 18 c Detroit 44 39 sh 40 19 r Honolulu 82 67 s 83 67 s Houston 79 66 pc 79 65 c Indianapolis 53 51 r 57 25 r Kansas City 55 18 c 30 17 pc Las Vegas 63 47 pc 58 45 pc Little Rock 70 61 sh 71 46 t Los Angeles 63 52 r 57 45 r Miami 78 68 pc 81 71 pc Milwaukee 37 21 c 27 7 sn Minneapolis 12 2 sn 12 -15 pc Nashville 65 61 sh 68 46 c New Orleans 75 62 pc 76 62 pc New York City 49 44 pc 57 46 r Oklahoma City 74 35 pc 53 28 pc

100+

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80s

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TALKING THE TALK

90s

Jacksonville

bil Mobile

clothing in her drawer that upsets you if she wears it.” Many parents sharply restrict children’s access to Continued from page A11 all those blocks to balance? media. A better route is to Judy Vredenburgh, presiYou helped your friend set limits, but also to watch dent of Girls Inc., a New when she scraped her TV and videos with chilYork nonprofit education knee,’ ” Ms. Faber says. dren, Ms. Berger says. Reand advocacy group. “Kids are trying on a lot of search shows this helps Explain to your daughter hats as they find their children make better judgthat you want friends and identity. We have to make ments about the characters relatives to value her for sure we give them lots of they see. how smart or athletic she hats to try on.” Shailushi Ritchie someis, or for her ability to If she wants to have fun times sits beside her 9solve problems and do like dancers in music vidyear-old daughter while she things for herself, rather eos, offer classes in dance plays computer games and than how she looks, Ms. or gymnastics, or find vidcomments on the avatars, Vredenburgh says. eos of children dancing in which she sees as “pushing Without guidance, even ways you’d like her to emu- a hyper-sexualized image,” young children may emlate, Ms. Faber says. “Put says Ms. Ritchie, a fundraisbrace the stereotype that on some music and dance ing executive for a nongirls should be valued profit who lives in Oak only for their appearPark, Ill. “The only opance and ability to tions are to be the girl please males. Nearly with the big eyes, exthree-fourths of 208 aggerated figure and children ages 6 to 11 wooshy hair. There’s Set simple limits for children: rated paper dolls no Pippi Longstock“Sexy is something for grown-ups wearing short, lowing.” to be, not for kids to be.” cut tops and miniParents also need —Jennifer Berger, executive direcskirts or short shorts to be ready with antor of About-Face, on limits in lanas more popular than swers to children’s guage children can understand. dolls dressed in loose, sticky questions long-sleeved tops and whenever they arise. Tell children what you expect: jeans, according to a When Ms. Ritchie’s “In our family, we dress so that we 2015 study in Child daughter abruptly can be comfortable and warm.” Development. They asked en route to a —Judy Vredenburgh, president of also rated the more playdate whether diGirls Inc., on explaining why not to adult dressers as less eting is bad, Ms. dress in more grown-up clothes. intelligent, athletic or Ritchie quickly exnice. plained the different Watch and comment on the Those beliefs can meanings of the word, media children use: affect children’s classthe reasons people “That’s an interesting outfit that avroom performance, diet and the pitfalls atar has on. What do you think research shows. “The of chronic dieting to about that? She’s a little more ones who believe they be thin, including losdressed-up than she needs to be to should be sexualized ing essential nutrients go to the grocery store.” are the ones who say, and “feeling hungry —Shailushi Ritchie, mother of a 9‘I want to be sure all the time, like year-old girl, commenting on her people don’t think I’m you’re missing out.” daughter’s computer games. smart,’ ” says Christia Her daughter replied Spears Brown, a psythat dieting didn’t around with her. Let her chology professor at the sound like much fun. run and jump until she colUniversity of Kentucky, and And when her daughter lapses in exhaustion.” one of the study’s authors. observed that Ms. Ritchie’s Child-friendly videos and Avoid sending a message legs were more muscular other media can be found that looking attractive is than a rail-thin teenager’s, on the websites A Mighty bad, but emphasize other Ms. Ritchie, a former colGirl and Common Sense attributes, says Joanna lege soccer player and Media. Faber, co-author of “How swimmer, told her, “I’m reProvide a range of acto Talk So Little Kids Will ally proud of my legs, beceptable clothing choices. “If cause they help me run far Listen.” she craves a purple miniPraise her for what she and fast,” she says. “When skirt with ruffles, give her does: “ ‘Look at how fast you get those moments, one that’s a little longer,” you ran! You carried that you try to emphasize subMs. Faber says. “Don’t have heavy bag. How did you get stance over style.”

30s

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T t Toronto

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DAUGHTERS

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. d t Edmonton

Most young girls asked to imagine these images as real children predicted that those dressed in more revealing clothing would be more popular than the others, but less athletic, smart or nice.

50 Maker of Speedmaster watches 51 Fire fighter 52 Analysis topic 56 Home to four billion 58 House work?

25 Place for a night out

59 Univ. staff 60 Way to sway

26 Pass

61 Put away

28 Put a roof over one’s head

62 Keep from being perfect

Previous Puzzle’s Solution D I L A T E

A R A L S E A

M O R T A L S

T L E A L S E C O M

O N E L A N E

A N G E R

G O E R S

K O N A

F O G S

L L B S

S C A M

E S T R E H R T H A S I N WH E T O A O R T R F S A U E TW H E D E E R O U T U L A T S E A E R P

H E N R Y O N I N B E T A

E L L E

I M I T

R E F U S R O A U B L T I S T E L A D A L O T D R I E I N R A G

S T E R N I E L D E R E N T S T O

T O O K O N

THE WALL STREET JOURNAL.

A14 | Wednesday, January 11, 2017

SPORTS HEARD ON THE FIELD

Mega World Cup May Signal U.S. as Host T-B: JAMIE SQUIRE/GETTY IMAGES; STREETER LECKA/GETTY IMAGES

Professional sports’ irresistible urge to expand their most successful events spread to the World Cup on Tuesday when FIFA, soccer’s global governing body, voted to add 50% more teams to the tournament starting in 2026. The World Cup will feature 48 teams instead of 32, meaning that nearly a quarter of FIFA’s 211 member associations will qualify. The organization’s top committee gave its unanimous approval only on Tuesday morning, citing the need to be more inclusive. “We have to look at football [as] more than just Europe and South America,” FIFA President Gianni Infantino (pictured) said. FIFA hasn’t yet decided who will host the first 48-team World Cup, but the logistical demands of hosting such a large event with match venues, practice facilities, accommodation and infrastructure already narrow the field to a small handful. The U.S., which has publicly expressed interest, is widely considered to be the front-runner in a possible joint bid with Mexico and Canada. No other credible contenders have emerged so far and countries from Asia and Europe wouldn't be eligible in 2026 due to FIFA rules on rotating hosts. —Joshua Robinson

COLLEGE FOOTBALL

Victory for the Anti-Saban Dabo Swinney triumphed over Alabama’s hard-nosed tactician by being his complete opposite

T-B: ARND WIEGMANN/REUTERS; ERIK S. LESSER/EUROPEAN PRESSPHOTO AGENCY

Rose Returns to Knicks After AWOL Episode Less than 24 hours after a bizarre incident in which he disappeared and missed Monday night’s game without explanation, New York Knicks point guard Derrick Rose returned to the team. Rose told reporters that he traveled to Chicago to be with his mother and wouldn’t elaborate on why he went AWOL, other than “it had nothing to do with the team or basketball.” The Knicks announced Tuesday that they had fined Rose an undisclosed amount but would not suspend him. Coach Jeff Hornacek said that if Rose appears up to it, he would start Wednesday’s game against the Philadelphia 76ers. Hornacek benched Rose in the fourth quarter in Friday night’s win over the Milwaukee Bucks in favor of rookie Ron Baker. That decision sparked speculation that Rose had left because of a fractured relationship with the Knicks, but he denied that accusation Tuesday. —Jared Diamond

when it’s up against Swinney’s. Saban wakes up at 6:15 a.m. every day—if he actually sleeps until his alarm. “Which doesn’t happen very often,” he says. He lets out his dogs, Ray Ray and Snoopy, and then he drinks coffee with two Little Debbie oatmeal creme pies. He watches the Weather Channel, drives to his office at 7 a.m. and stays until at least 10 p.m. Swinney hosts Friday movie nights and finds the moral in films that don’t have any. He still coaches his son’s Little League baseball team. It wasn’t long ago that he was introduced to a Wall Street Journal reporter at a football game and responded: “Man, I’m like George Jefferson, movin’ on up! But something funny happened as Swinney’s friendlier approach evolved. The Tigers started to win and haven’t stopped. They beat Ohio State, Florida State and Louisiana State. They beat Oklahoma, and now they’ve beaten Alabama. Clemson is 28-2 in its last 30 games. Swinney is the first to point out that’s the exact same record as the mighty Crimson Tide. And yet he may be the only coach who could inspire a family in Alabama houndstooth outside the stadium before Monday’s game to say they wouldn’t be devastated if Alabama lost—because it would have meant that Swinney won. But even after Swinney’s ascent, every coach in college football understands that one team has to be toppled when each season begins: It’s still Alabama. Last year, before Swinney nearly upset Saban in that national championship, the coaches who say they’re friends made a bet: The loser buys dinner at the seafood restaurant on the Florida island where they both vacation. Swinney owed him. A few months later, a mutual acquaintance of the Swinneys and Sabans invited both coaches on a dinner cruise, and Swinney paid off his debt. He showed up with a gift certificate and wrote Saban a note: “See you in Tampa next year.”

BY BEN COHEN TAMPA, Fla.—The coach who has dominated college football for the last decade is a stern control freak who is never satisfied. The coach who beat him for this year’s title is one who texts emojis to his players. He recently called himself “the best gutter-cleaner out there”—as in cleaning actual gutters. He once trademarked the phrase “BYOG.” Which is short for “bring your own guts.” Clemson coach Dabo Swinney’s philosophy is that college football should be fun. And he actually seems to believe it. Swinney is now the most successful of a modern breed of coach that isn’t exactly the authoritarian of years past. But what Clemson did in this year’s College Football Playoff—topple Urban Meyer’s Ohio State in the semifinal and dethrone the mighty Alabama team of Nick Saban in Monday’s championship— suggested there is a new way to win in this sport. Dabo Swinney can be a national champion, too. To understand Swinney’s outlier status in college football, it’s useful to look at a similarly peculiar coach in another sport: Chicago Cubs manager Joe Maddon. Swinney went to a Cubs game this season and found himself in the clubhouse during a rain delay. He saw a disco ball, a drum set and something called a celebration room. “I like this guy,” Swinney said. Then he actually met him. Swinney didn’t know who Maddon was. But the most progressive coach in a hidebound sport walked up to Swinney in a shirt with the words “try not to suck.” Swinney was inspired. “Joe Maddon says, hey, if we just don’t suck, we’ve got a chance to win,” he said. “My message has always been, hey, don’t lose to Clemson. If we don’t lose to Clemson we’ve got a chance.” For a long time, Clemson was good at losing to Clemson. After its 1981 national championship—

Clemson’s Dabo Swinney celebrating with quarterback Deshaun Watson, top, and embracing Alabama’s Nick Saban after Monday’s national title win. its lone title until this week—this South Carolina agricultural school found itself in the football wilderness. Clemson weathered sanctions for a recruiting scandal, blew enough big games that the phenomenon came to be known as “Clemsoning” and teetered on the edge of irrelevance. Swinney, who is 47, was an unlikely candidate for the turnaround job when he was hired in 2008. He was a former Alabama walk-on who came from a poor family and roomed with his mother in college to save money. He lost his job as a grunt on Alabama’s coaching staff and spent the next two years as a real-estate developer until he took one last shot in football—as the wide receivers coach at Clemson. Swinney was still a position coach five years later when he was promoted to interim head coach. He embraced the unlikely, outsized expectations of a fan base that believed any school with a national title was one of the sport’s elites. No one expected him to last long, but Swinney turned out to be a good fit for today’s players. “You have to explain to them, because they want to know why,” said Clemson co-offensive coordinator Tony Elliott, who played for Swinney as a wide receiver. “If you can tell them why, they’ll do whatever

you say. But they come from the generation that everybody wants to know why.” “He explained everything,” Elliott added. “You knew exactly what you were doing, why you were doing it and how you were going to do it.” Swinney connects as easily with five-star recruits, like Clemson quarterback Deshaun Watson, as he does with walk-ons, like wide receiver Hunter Renfrow, who caught Watson’s game-winning touchdown pass with one second remaining in their 35-31 win on Monday. “These kids don’t respond to guys that are just going to yell at them all the time,” said quarterbacks coach Brandon Streeter. Saban doesn’t operate the same way. At a practice earlier this season, Alabama wide receiver Trevon Diggs realized that he was missing a hip pad. He was hoping that Saban wouldn’t see. “He saw,” Diggs said. “I got a ripping.” Diggs wasn’t exactly a star worthy of Saban’s unrelenting attention. On Monday, he didn’t catch a single pass. So how did Saban notice that in one random practice the hip pad on one player was out of place? “I don’t know,” Diggs said. “I really don’t know.” Saban’s approach is exacting, but his style is even more extreme

THE COUNT

EZRA SHAW/GETTY IMAGES

THE CHIEFS’ VINTAGE SWISS ARMY KNIFE

Chiefs rookie Tyreek Hill returns a punt against the Broncos on Nov. 27.

Kansas City rookie Tyreek Hill is the best wide receiver/running back/kick returner/punt returner in the NFL. This is possibly because he’s the only player to fit that description in decades. The Chiefs’ all-purpose talent is a throwback to another NFL era when players didn’t play positions as much as they played football. He’s the game’s top return specialist but also has twice as many catches in the second half of the season as any Chiefs wide receiver. And in this span, he has more rushing touchdowns (three) than all the Chiefs running backs combined. The last time a player had a punt return, kickoff return, rushing and receiving touchdowns while also contributing as many yards from scrimmage as Hill was more than 40 years ago when Terry Metcalf did it for the 1975 St. Louis Cardinals. Hill’s 811 yards from scrimmage aren’t even indicative of his current value to the Chiefs offense as 581 of them have come in the second half of the season. And 178 of those

Player From Another Era The players in history who have scored a rushing, receiving, punt return and kickoff return TD, ranked by yards from scrimmage, according to Pro-Football-Reference: PLAYER/TEAM/YEAR

Gale Sayers, Bears, 1965 Terry Metcalf, Cardinals, 1975 Ollie Matson, Cardinals, 1954 Buddy Young, Yankees, 1947 Gale Sayers, Bears, 1967 Spec Sanders, Yankees, 1946 Bobby Mitchell, Browns, 1961 Tyreek Hill, Chiefs, 2016

RUSH TD

REC TD

KR TD

PR TD

SCRIMMAGE YDS

14 9 4 3 7 6 5 3

6 2 3 2 1 3 3 6

1 1 1 1 3 1 1 1

1 1 1 1 1 1 1 2

1374 1194 1117 1015 1006 968 916 860

yards have come on the ground in just the last three Chiefs games—on only 10 carries. That’s great return for a fifth-round pick from West Alabama. (Hill fell in the draft after a guilty plea to domestic violence led to a 2014 dismissal from Oklahoma State.) Hill’s recent involvement in his team’s offense heading into Sunday’s playoff game against the Steelers is unheard of since the league expanded to

16 games in 1978. In fact, only three players besides Metcalf have scored in these multitude of ways while being an integral a part in their team’s offense—Gale Sayers (1965, 1967), Ollie Matson (1954) and Buddy Young (1947). And this company suggests that Chiefs’ fans have just gotten of taste of what’s to come: Sayers and Matson are enshrined in Canton. —Michael Salfino

THE WALL STREET JOURNAL.

Wednesday, January 11, 2017 | A15

OPINION Exxon vs. Russia Illusions With former Exxon Mobil chief Rex Tillerson to be grilled Wednesday on Capitol BUSINESS Hill, let’s WORLD save the By Holman W. chefs time Jenkins, Jr. by knocking down some obvious nonsense. Exxon is hostage to Vladimir Putin because Exxon needs Russia’s oil. At the time of the 2011 agreement in question, the Russian partners threw around giant numbers for the potential revenues involved. These numbers are still thrown around by left-wing groups. The website DemocracyNow recently spun a fantasy about how this “$500 billion oil exploration partnership” lay at the heart of a Russian plan to get Donald Trump elected. In fact, the deal is tiny by big-oil standards. Exxon says the sanctions may have cost it $1 billion; the partners had originally talked of spending $3.2 billion. These are small numbers in relation to Exxon’s $240 billion in annual revenues and $360 billion market cap. Exxon pursued Russia in defiance of U.S. national interests. Actually the deal was a fruit of the Obama reset. President Obama, with an Exxon executive in tow, dropped in on a Moscow business conference during his July 2009 summit with Mr. Putin. Twenty months later, Joe Biden highlighted the

resulting deal in his own speech at Moscow State University. The Oil Daily headlined its story: “White House Gives Blessing to Alliance Between Exxon, Rosneft.” Exxon opposed sanctions over Crimea. Sure it did, but the company knows force majeure when it sees it. And notice something else: carrot begets stick. Of all the sanctions levied after Mr. Putin’s Crimea grab, biting hardest were those that froze Russian access to Exxon’s shale and arctic know-how.

The oil giant’s Rosneft joint venture was a product of the Obama ‘reset.’ Mr. Tillerson is not only a friend but an “unabashed admirer” of Vladimir Putin, according to ABC News’s Brian Ross. Uh huh. A “friend” in Mr. Putin’s world is somebody ripe to be thrown to the wolves when it suits Mr. Putin’s interests, and who would probably sever Mr. Putin’s spine if he could get away with it. And Mr. Tillerson is perhaps the one to be admired, including by Mr. Putin, for the way he fought off Gazprom’s attempt to seize the benefits of the firm’s 20-year-old Sakhalin project, which still constitutes most of Exxon’s modest stake in Russian oil. Mr. Putin intervenes in such

fights hesitantly, warily, according to his ever-changing calculations of self-preservation. Witness his flip-flopping over Rosneft’s recent takeover of Bashneft, which he opposed and then supported. At the same time, he knows that the shakedowns that befell BP and Shell, amid the predatory scramble of Russian elites for control of resources, are a continuing danger to his regime and its all-important oil revenues. Exxon “stands out even among oil giants in its steadfast refusal to invest in renewable energy . . . a strategy of maximizing immediate earnings at the price of future generations’ ability to live on the planet,” writes Masha Gessen in the New York Review of Books. When senators aren’t bashing Mr. Tillerson over Russia, they are likely to bash him over climate change. But several common mistakes are illustrated in this indictment. It makes no sense for a company whose expertise is oil geology to invest in wind or solar, very different skill sets. Oil companies do so only for PR reasons—so they can decorate their annual reports with windmills and solar panels. Meanwhile, the easiest way to “maximize immediate earnings” is by not investing at all. Exxon has done a lot of this, returning half its prodigious earnings to shareholders over the past decade in the form of dividends and share buybacks. Both left and right have dubbed Exxon a hypocrite for its lukewarm endorsement of a

carbon tax. In fact, in its typically Boy-Scouty way, Exxon said as long as we’re having a debate, let it be a serious one—and pointed out the ways a carbon tax is superior to cap and trade. Exxon continues to confound critics on both sides by talking about climate change as a “risk,” and, equally accurately, a risk that climate science has done far less to elucidate than common rhetoric suggests. Russia, though, is likely to dominate Wednesday’s hearing. Watch to see if a senator tries to make Mr. Tillerson accuse Mr. Putin of the many crimes the U.S. government declines to accuse him of—the murders of Anna Politkovskaya and Boris Nemtsov, the 1999 Russian apartment-building bombings, etc. David Satter, in his own piece in today’s Journal, hopes U.S. policy makers will use the opportunity to acknowledge the true nature of the Putin regime. Don’t bet on it. As chess champion Garry Kasparov explained in his Putin book two years ago, “If they admitted the truth, they would have to act, and nobody wants to act.” Russian politics is a tough and dangerous business, but somebody’s got to do it—that’s been America’s bottom line on Mr. Putin. Mr. Tillerson’s success as our next secretary of state is not guaranteed—success is hard even to define in today’s complex world. But at least Americans would be getting somebody with a record of succeeding in difficult assignments.

ObamaCare Facts Are Stubborn Things Even if we live in a post-truth culture, which I doubt, we do not live in a fact-free zone. POLITICS Un d e r n e a t h politicians’ & IDEAS unending efBy William forts to frame A. Galston issues and events to their advantage resides a world that is what it is, however they may choose to describe it. When rhetoric and facts diverge, the world has a nasty habit of reasserting itself. This real world helps explain the emerging Republican shift on ObamaCare. Two weeks ago the consensus strategy was to repeal the Affordable Care Act immediately and issue a promissory note that it would be replaced sometime in the next few years. By Jan. 5, House Speaker Paul Ryan signaled a faster timetable: “Our legislating on ObamaCare, our repealing and replacing and transitioning . . . will occur this year.” A day later, in a telephone call to Republican Sen. Rand Paul, President-elect Trump turned the heat up another notch, reportedly expressing “complete agreement” with Mr. Paul’s insistence that repealing and replacing ObamaCare should occur simultaneously, a position the American Medical Association also endorses. With five moderate Senate Republicans joining forces to delay repeal until committees can draft a replacement, it isn’t clear that Senate Majority Leader Mitch McConnell could muster even a bare majority for a repeal-only bill.

Behind this development is a swelling bipartisan chorus warning of the disastrous consequences of repealing ObamaCare without an agreed-upon alternative. On Dec. 13, the Brookings Institution’s Alice Rivlin, Loren Adler and Stuart Butler published a report to this effect, estimating that without a replacement plan “premiums would jump at least 20 percent and cause 4.3 million to lose health insurance as soon as next year.” On Jan. 3, Joseph Antos and James Capretta, respected conservative health-care experts, posted a devastating analysis of the repeal-and-delay strategy on the Health Affairs Blog. This approach, they argue, “carries too much risk of unnecessary disruption to the existing insurance arrangements upon which many people are now relying to finance their health services” and would be “unlikely to produce a coherent reform of health care in the United States.” For these reasons, they conclude, Congress should roll back key elements of the Affordable Care Act in the same legislation that moves the country toward a better-functioning marketplace. Republicans’ legislative strategy for repealing ObamaCare without 60 votes in the Senate relies on the budget reconciliation procedure. But congressional rules restrict reconciliation bills to provisions that change taxes or spending. This excludes many important features of the Affordable Care Act, including the use of pre-existing conditions by insurers when offering

benefits or setting premiums. So a repeal only of the funding provisions of the bill, Messrs. Antos and Capretta say, would leave insurers in an “untenable” position: They would be forced to provide coverage to individuals with costly health conditions without the mandates and subsidies needed to make this policy economically viable. This would further destabilize already fragile insurance markets. Without rapid action to stabilize them, Messrs. Antos

Republicans are realizing that ‘repeal and delay’ was never a realistic option. and Capretta predict, we are likely to see “more insurers dropping out and another round of sharply increasing premiums.” The Trump team is considering executive decisions, such as terminating subsidies insurers receive for low-income exchange enrollees, that could make a bad situation worse. In these circumstances, Messrs. Antos and Capretta warn, it would be difficult for Republicans to avoid blame for weakening the insurance market and potentially leaving millions of Americans without options. Worst of all, a repeal-anddelay strategy would make it much more difficult to pass a replacement later, because a new bill would require spending increases over the postrepeal baseline, which many

Republicans would be reluctant, and some unwilling, to support. Faced with these problems, Republicans are rushing to reassure voters that they won’t be left without coverage. Senior Trump adviser Kellyanne Conway told MSNBC last week: “We don’t want anyone who currently has insurance to not have insurance.” And Sen. John Cornyn has promised that “the status quo will be maintained until there’s a replacement.” This is one key benchmark against which the people will judge Republicans’ legislative efforts. Measuring up to it won’t be easy. Given Republicans’ sevenyear offensive against ObamaCare, they have no choice but to pass legislation they can sell to their base as a “repeal.” But if they accede to Mr. Trump’s insistence that repeal and replacement should occur together, they will be compelled to seek Democratic support for key elements of the replacement that cannot be crammed into a reconciliation bill and will require 60 votes. This would mean negotiating seriously with the 13 moderate Democrats, led by Sen. Tim Kaine, who recently wrote the Senate leadership proposing such a course. And it would mean taking seriously the compromise proposals Alice Rivlin and her Brookings co-authors advance in their recent report. If Republicans begin by repealing the Affordable Care Act without replacing it, they can forget about Democratic cooperation down the road. They would own the mess.

he environmental activist Robert F. Kennedy Jr., a vaccine skeptic, told reporters Tuesday in the lobby of Trump Tower that the president-elect has asked him to lead a commission “to make sure we have scientific integrity in the vaccine process for efficacy and safety effects.” Mr. Kennedy also suggested that Donald Trump “has some doubts about the current vaccine policies” and that “we ought to be debating the science.” This is insane. Mr. Kennedy in the past has raised doubts about thimerosal, a mercury-containing preservative used in some vaccines, which has been wrongly accused of causing autism. The notion that vaccines cause autism was decisively rebutted in

a 2002 paper published by the New England Journal of Medicine. The study examined data on more than 537,000 children in Denmark, most of whom had been received the vaccine for measles, mumps and rubella. Researchers concluded that it provided “strong evidence against the hypothesis that MMR vaccination causes autism.” Thimerosal has since been removed from most vaccines, yet autism rates continue to increase. It’s clear that the preservative isn’t to blame. Anti-vaxxers have also latched onto the idea that children are given too many vaccines at one time. This, too, is bunk. The immune system is capable of handling countless foreign substances. When children stick their dirty fingers into their mouths, they are “vaccinating” themselves against

whatever germs are in their environment. Fifteen years after the New England Journal of Medicine study, the evidence has grown only stronger that vaccines are safe and that autism is caused by something else, such as genetics. But it shouldn’t be surprising that Mr. Kennedy would back strange ideas about vaccines. He has even flirted with conspiracy theories about the assassination of his uncle John F. Kennedy. After the 2008 presidential election, Mr. Kennedy’s name came up as a potential chief for the Environmental Protection Agency. Yet he was quickly taken out of the running. Why? Mr. Kennedy had made plenty of controversial statements over the years that would have caused severe blowback for the Obama administration. For instance, he

Why Johnny (Still) Can’t Read Language at the Speed of Sight By Mark Seidenberg (Basic, 374 pages, $28.99)

or as long as this country has been committed to providing a basic education to all its children, we have been arguing about the best way to teach reading. In the 1800s, Horace Mann posited that we learn by coming to understand whole words: We read for meaning, and words have a content unrelated to how they are spelled out. By the middle of the 1900s, researchers were arguing, on the contrary, that we learn to read by sounding out words through their basic components—phonemes—and that it is through building phonetic skills that reading capacity is best developed. The two sides have been going at it ever since. The temptation for an author coming fresh to the topic today is to take the cultural historian’s synthetic approach and show how each side has contributed positively to how we teach literacy. This is not Mark Seidenberg’s approach. In “Language at the Speed of Sight,” he develops a careful argument, backed by decades of research, to show that the only responsible way to teach children to read well is to build up their abilities to connect reading with speech and then to amplify these connections through practice, developing skillful behavioral patterns hand in hand with the neurological networks that undergird them. “Language at the Speed of Sight” begins with the paradox that people become good at reading without having any idea of how they go about it. How did humans come to read in the first place? Drawing pictures of animals is one thing, but using arbitrary symbols to stand for speech-sounds that have meaning without resembling that to which they refer—that was a giant leap forward. Reading and writing are technologies that humans developed after many thousands of years, and the first chapters of the book provide a fascinating account of scholars’ best guesses as to how we first began to use abstractions to denote the sounds that make up words. “To be effective . . . ,” Mr. Seidenberg writes, “the properties of a writing system must align with properties of the spoken language it represents.” Due in part to the number of syllables in our speech, English employs an alphabet that represents both vowels and consonants. Phonetics matters. Around the world there are many different alphabets, but wherever you go, all children have to acquire the same “specialized type of expertise” in order to be skilled readers. They must become “alphabetic,” and this “requires instruction, feedback, and practice.” New computational models have helped us understand the iterative process through which kids seem “suddenly” to start recognizing patterns linking graphemes to phonemes. Children may be haltingly sounding out words, but when instruction is successful, young brains are growing more capable of recognizing patterns connecting marks on the page to sounds, and sounds to meaning. “Readers build neural structures that represent these statistical patterns and tune them every time a text is

We know more than ever about how to teach literacy, but when we test American kids, two-thirds score at low levels of competency.

had co-written an article for Rolling Stone magazine and Salon.com purporting that “government health agencies colluded with Big Pharma to hide the risks of thimerosal from the public.” The article contained serious factual errors, and Salon eventually retracted it. Clearly, this would not mesh well with President Obama’s pledge to “restore science to its rightful place.” Although it is encouraging that Mr. Trump is reaching out to people who did not support him, Mr. Kennedy belongs nowhere near the reins of power. We encourage the incoming president to follow his predecessor’s lead—and stay far away from this nonsense.

read.” Students don’t need to memorize explicit rules, but they do need experience so that “the child accumulates sufficient linguistic and experiential data to bootstrap the meanings of more and more words once they occur.” “Language at the Speed of Sight” has interesting chapters on the reading difficulties labeled “dyslexia.” Mr. Seidenberg shows how computational models suggest that “the dyslexic brain” has trouble recognizing commonalities among words because of a “phonological impairment”—a deficit in the ability to link sound to word to meaning. The heart of this book, though, is the concluding section on “educational challenges.” It is clear that we are not doing a good enough job of teaching young people deep reading skills. Despite enormous progress in the science of reading, every time we test the reading ability of American children, two-thirds score at low levels of competency. That’s like having vaccinations at hand that are proven to prevent disease and then not using them because some people don’t believe in immunology. Intolerable. Or at least it should be. Mr. Seidenberg has little patience for those who think that they are defending hardworking teachers by ignoring the evidence of our country’s mediocre performance in teaching kids how to read. The author knows that poverty and prejudice undermine education, and he knows that our education system works worst for those who need it the most, while wealthy families make sure their kids get wellfunded schools and supplementary programs. But he doesn’t let social injustices distract him from the effort to improve education for all—an effort that, if successful, would help counteract both poverty and prejudice. So much for how we should teach students. How should we teach teachers? Here Mr. Seidenberg has fewer good answers. He rails against the culture of our education schools, which, he claims, are more attentive to cultural diversity than to scientific research about education; he attributes bad teacher-training practices to the notion that ed schools view knowledge as a mere social construction. Here the scientist mounts an ideological soapbox without much supportive evidence. But he is right about the core problem: Too many American children are becoming adept only at rapidly skimming information in what they are told is a “post-truth” world where skills and facts don’t matter. Meanwhile, those who know they do matter are finding ways to read deeply, to learn and, through learning, to thrive. Mr. Seidenberg makes a convincing case that we have learned more about reading and the brain in the past two decades than in the previous century. He also shows that our failure to use this new knowledge to improve how we teach children is causing real harm, especially to the most vulnerable. Every teacher of young children as well as those who train them should read this book.

Mr. Berezow is a senior fellow at the American Council on Science and Health, of which Mr. Campbell is president.

Mr. Roth is president of Wesleyan University. His most recent books are “Beyond the University: Why Liberal Education Matters” and “Memory, Trauma and History: Essays on Living With the Past.”

Ignore Anti-Vaccine Hysteria, Mr. Trump By Alex Berezow And Hank Campbell

BOOKSHELF | By Michael S. Roth

THE WALL STREET JOURNAL.

A16 | Wednesday, January 11, 2017

OPINION

REVIEW & OUTLOOK

LETTERS TO THE EDITOR

A Repeal and Replace Explainer

Change Chicago’s Failed Anti-Murder Efforts

very important legislative reform has This two-stage maneuver is a political risk, Perils of Pauline moments, but the early but then the other option is dragging out the Republican anxiety over ObamaCare represent indecision and disorder. Better commupeal and replace is less than nication would improve intelpromising. Liberals want to lalectual cohesion inside the Republicans have bel the effort a failure before GOP. Also helpful would be a a plan. Maybe they the hard work even begins, and major speech that explains to President-elect Trump and should explain it to the voters and the health-care inCongress need to swiftly unite the logic of what Conpublic—and each other. dustry around a better health-care algress is doing and why; typiternative and a political stratcally this role falls to the egy to pass it. President. There is a plan, but confusion is raging Meanwhile, too many Republicans are buyamong the media and Republicans in Con- ing into the progressive line that this is an exergress, perhaps because its details and logic cise in sending poor people to the blacking fachaven’t been explained in public. Speaker Paul tory. About 20 million Americans have gained Ryan said Tuesday that repeal and replace coverage and the uninsured rate has dropped will happen “concurrently” and “without a to 9% from 16%, the entitlement’s only notable gap,” while Mr. Trump told the New York achievement. The GOP shouldn’t think of repeal Times that he favored a repeal vote “probably and replace as stripping benefits but solving some time next week” and then “the replace the enormous problems the law has created in will be very quickly or simultaneously, very the process. shortly thereafter.” Surveys consistently show that consumers Reporters somehow construed this as a in the individual insurance market want choices Trumpian “break” with the GOP leadership, and an affordable plan worth the money. That’s though Mr. Trump said the same thing as Mr. why it’s called the Affordable Care Act and also Ryan, albeit in Trumpese. Meanwhile, some what the law has failed to deliver. Premiums are Senators seem to think they can take years to rising by 25% on average next year, while the replace ObamaCare, others are upset because Kaiser Family Foundation survey of ObamaCare they fear years will separate the two stages, beneficiaries for 2016 reports that 54% rate the and the House Freedom Caucus might resist the value of their insurance as “poor” or “only fair,” budget vote Mr. Trump mentioned. despite the subsidies. The same figure was 42% For the record, the plan according to our rein 2015 and 39% in 2014. The entitlement is rapporting is to vote in the next week on a “recon- idly deteriorating. ciliation” resolution. This will not repeal the Meanwhile, the Health and Human Services law. The bare-bones measure instructs the rele- Department estimates that 11.4 million people vant committees to start to draft repeal legisla- will enroll in ObamaCare in 2017, leaving an tion, which can pass the Senate with a simple “addressable market” of 15.8 million uninsured, 50-vote majority and could happen as soon as more than eight of 10 of whom are eligible for next month. subsidies. Despite the insurance mandate, more Congress only has a narrow window to use people are rejecting ObamaCare and paying the reconciliation early because the procedure is penalty than joining it. a leftover from the last fiscal year. They can’t Republicans have a rare opening to improve start reconciliation for 2018 until that budget the lives of people on and off ObamaCare with resolution passes, and the 2018 bill is meant as low-cost plans. The House’s Better Way plan the vehicle for tax reform. While the repeal would create universal tax credits and deregutrain advances, the same committees will de- late, among other provisions. The University of bate a replacement. This parallel measure will Minnesota health economist Stephen Parente require 60 Senate votes, and the GOP is inviting estimates the reform would reduce premiums Democrats to contribute. The Republican plan by 9% to 35% over the next decade. Overall covis a work in progress, but the hope is to build erage would rise by about a million over the a consensus by the spring. ObamaCare status quo in the first year as conThe replace portion would keep the Obama- sumers were lured back into the market, though Care status quo for two or three years to allow it would fall by about four million by 2026 due a phase-in and orderly transition. The GOP to Medicaid changes. won’t wait two or three years to design the new These trade-offs can be figured out in an system, provided they don’t botch the politics. open debate. The GOP would do better to get If Democrats don’t cooperate, the GOP can stuff this process started—and doing what they told as much of the replacement as possible into the voters they would do—than lapse into more second reconciliation bill later in the year. nerves and disarray.

Kentucky Goes Right to Work

he policy consequences of Republican victories in November are already being felt in the states. Kentucky’s new GOP House majority on Friday passed a right-to-work law giving workers the choice not to pay union dues or fees as a condition of employment. The state Senate did the same on Saturday and Governor Matt Bevin signed it. Kentucky has struggled economically for a variety of reasons, notably declines in coal mining and manufacturing. Neighboring states like West Virginia and Indiana have adopted right to work to boost competitiveness, and Virginia and Tennessee have long been right to work. Such laws can help a state draw manufacturers and industries where union work rules affect productivity and can be a factor in decisions to outsource business overseas. Kentucky becomes the 27th state with a right-to-work statute, and it was able to move after years of trying because Republicans took the state House in November for the first time

in 95 years. Missouri and New Hampshire may be next following the election of new GOP Governors, with hearings scheduled for this week on right to work. By the way, right to work isn’t anti-union. It’s pro-worker. Union jobs increase when businesses and the economy are growing, and that means unions add workers in right-to-work states even as they lose them in non-right-to-work states as companies locate elsewhere. In testimony on the right-to-work bill, Governor Bevin noted that Kentucky had lost manufacturing plant opportunities like a Volvo factory that went to South Carolina and “because we were not a right-to-work state we didn’t make the final cut.” Big Labor leaders are so inured to government coercing workers to join unions that they can’t abide individual choice by their members. This is one reason unions are in decline, down to 6.7% of the private economy workforce. They’d do better if they helped states and businesses stay competitive in the global marketplace.

California vs. Trump

onald Trump hasn’t even taken the who can be the most anti-Trump. oath of office, but Progressive CaliforThe other issue concerns Covington & Burlnia Nation is already massing the ing and political double standards. The whitetroops against him. Hollywood shoe firm based in WashingEric Holder and his is led by Meryl Streep, and the ton represents corporate California legislature is bringclients around the world. The white-shoe law firm ing on the mercenaries at the firm is making a major politidiscover federalism. Covington & Burling law firm. cal statement putting itself on Last week California’s proretainer to fight the Trump gressive lawmakers anAdministration even before it nounced that they’ve put former Attorney Gen- takes office. Covington & Burling’s partners eral Eric Holder, now a Covington & Burling must figure they won’t get blowback from their partner, on retainer as the state’s outside coun- other clients. sel. “This is potentially the legal fight of a genThe same wasn’t true for former Solicitor Generation, and with Eric Holder we’ve added a eral Paul Clement, who in 2011 was told by his law world-class lawyer,’’ said Senate majority firm, King and Spalding, that he couldn’t repreleader Kevin de León. sent the House of Representatives in its litigation This is odd. Typically states hire outside over the Defense of Marriage Act. The House counsel for help with specific cases, but the leg- wanted legal help because the Obama Adminisislature is paying Mr. Holder $25,000 a month tration refused to defend the law passed by Confor three months under the initial contract, ap- gress and signed by President Bill Clinton. parently for 40 hours a month and the privilege Mr. Clement acted honorably by resigning of his attention if something comes up. from King and Spalding, forming his own firm, There’s no current case, and it’s hard to see and continuing to represent his client. We trust how the legislature’s interests would be impli- no one in corporate America, much less Covingcated soon over a state law. The California execu- ton & Burling’s partners, will object to the tive branch might want to defend San Francisco firm’s anti-Trump litigation. and other “sanctuary cities” on immigration if We’re all for states defending their constituthe Trump Administration cuts off funds, but tional rights against the feds, though we wish that’s a constitutional question. liberals would accord the same respect to Scott The state attorney general’s office already Pruitt. Mr. Trump has nominated the Oklahoma has a budget of more than $833 million. Why Attorney General to run the Environmental Procan’t the state hire Mr. Holder out of that AG tection Agency, and he’s the target of progresaccount when there’s an actual legal issue to lit- sives for successfully suing to block the federal igate? One answer may be that there’s grand- Clean Power Plan. It’s nice to see liberals disstanding going on, as politicians compete to see covering the glories of federalism.

Your editorial “Murder and Policing in Chicago” (Jan. 3) and Michael Saltsman’s same-day op-ed “The ‘Fight for $15’” highlight two elephants in the room. The first is Mayor Rahm Emanuel’s positioning Chicago as a “sanctuary city.” How many murders are related to foreign drug cartels and gangs? The second is Chicago’s minimum wage, destroying entry-level “training jobs” that could help innercity youth build skills and enable career advancement. Mayor Emanuel connected the two with his response to President-elect Donald Trump’s tweet recommending federal involvement in curbing Chicago’s violence. The mayor was lauded on TV news for a mild reply requesting federal support for his summer youthjobs program. If the minimum wage didn’t destroy jobs for youth, perhaps they would be working instead of joining gangs or becoming their target. DONNA ROOK Chicago

lice for protecting the people instead of the murderers who kill black people more than anybody else. RANDY ROSSI Grayslake, Ill. Your editorial opines “the demonization of cops has contributed to Chicago’s surge of violence.” I suggest you have it backward. Structural and cultural racism by police and the ensuing unnecessary roughness sparked the violence. LINDA BOLTON Vero Beach, Fla.

I am from the South Side of Chicago, but I “made it out.” The problem with the black community in Chicago is that most kids lack a family structure. They are bored and have no guidance. I believe these kids can be productive members of society if they are fostered in an environment that cultivates their talents and pushes them past their potential. The black community does not need When police cut back their stops of more pandering or pity handouts. high-probability criminal suspects by What we need is a figure to hold us ac82%, why is anybody surprised that ar- countable for our actions. We don’t rests went down by 33% and murders need crooked, corrupt and racist powent up by 57% in 2016? Because of lice imported from the suburbs. We politically motivated attacks on the need cops who will double as commupolice, police now need to fill out a nity leaders. We don’t need more welform that takes 45 minutes for each fare checks or federal programs that stop. A police officer can make five incentivize black mothers to keep havstops in the first four hours of a shift ing babies with different men. Instead and spend the last four hours filling we need to invest in local education out five silly forms rather than proand entrepreneurs. We need structure tecting Chicagoans. Worse, because and organization. young black males are eight times If you want the killings to stop, give more likely to commit murder than these kids something to do. The whites, police should mathematically Trump administration should invest be stopping young black males 80% of less in welfare programs and more on the time. But in our hysterical politicommunity leaders. These Americans cally correct world, they would be are talented and creative, but they are slandered and attacked if they did. The raw. With direction and discipline, the 57% increase in murders in Chicago violence will go away and society will was totally predictable. Sadly, this is a reap a net positive return on its inself-inflicted tragedy created by the vestment. liberal press, Democrats and the Black D.K. SMITH New York Lives Matter crowd who attack the po-

FDA’s Committees Provide Political Cover There are some aspects of the FDA’s advisory committees that deserve comment in addition to those described in “The FDA’s Rigged Drug Committees” (Review & Outlook, Jan. 3). During my years at the FDA (1979-1994), the convening of advisory committees was relatively rare. It occurred primarily when there were particularly difficult decisions to be made that actually required outside expertise—when the risk-benefit judgment about a new drug was problematic, for example, or when there arose thorny issues of policy, such as how human gene-therapy products should be regulated. Now, however, advisory committee meetings are quotidian affairs, held often when the FDA wants what amounts to political cover for a decision that has already been made.

The committee meeting to discuss Exondys 51, which the FDA manipulated shamefully, is a case in point. In 1982 the FDA received New Drug Applications for the first two drugs made with a spectacular new technology, variously known as gene-splicing or recombinant DNA technology; the products were two human insulins synthesized in genetically engineered bacteria. I was the medical officer and head of the review team. Not only did we not convene an advisory committee to discuss these revolutionary products, but we approved them for marketing in a record-setting five months, at a time when the average review time was 31.5 months. How times have changed. HENRY I. MILLER, M.D. Hoover Institution Stanford, Calif.

Time to Get Real About Closing the Skills Gap Gary MacDougal comes so close to the mark in “The ‘Labor Secretary’ Needs a Promotion” (op-ed, Dec. 30), but in the end his analysis falls short. His suggestions on renaming the Labor Department to the Workforce Department and then creating a new comprehensive workforce strategy are excellent. However, Mr. MacDougal’s solutions for closing our skills gap ring hollow. Most community colleges and private technical colleges across the country already are “teaching what employers actually need.” We already spend countless hours discussing workforce needs directly with employers to help shape and improve our curricula. This is a never-ending

Merit Triumphs Over Racist Identity Political Models While Sol Trujillo nails it with his rosy picture of the promise and prosperity of Latinos in America today, the premise that underlies “The Latino Drivers of Economic Growth” (op-ed, Dec. 22) should offend thinking people everywhere. The racial makeup of Donald Trump’s incoming cabinet tells us precisely nothing; any other perspective is bald racism. And the presupposition that leaders advance the interests of like-race citizens is the worst kind of tribalism. Worse, it isn’t even true. Ask the African-Americans of Chicago, who’ve suffered explosive violence under the Obama presidency. We should cheer leadership that hires the best candidate—all other considerations be damned. Cheers to the triumph of merit over identity politics. JOEL LAPIDUS Denver Letters intended for publication should be addressed to: The Editor, 1211 Avenue of the Americas, New York, NY 10036, or emailed to wsj.ltrs@wsj.com. Please include your city and state. All letters are subject to editing, and unpublished letters can be neither acknowledged nor returned.

project due to our dynamic economy. The biggest need to help close the skills gap is having enough students in class. Declining numbers of highschool graduates in most parts of the country, along with too many students choosing postsecondary education paths that don't lead directly to employment, and especially the social stigma against working in the trades, are some of the key reasons for the shortage of students. This is the area where two-year colleges need help. Does Mr. MacDougal really think that the model to follow is the community colleges of Chicago? The average graduation rate for Chicago’s seven-branched community college system is just 16%. Adding in the 21% of students who transfer to other schools, the “success rate” is just 37%. And the overall student loan default rate for the Chicago community colleges is a disappointing 22% (data from U.S. Education Department). DENNIS WILKE President Rosedale Technical College Pittsburgh

Pepper ... And Salt THE WALL STREET JOURNAL

“Just waiting for the bus. And you?”

THE WALL STREET JOURNAL.

Wednesday, January 11, 2017 | A17

OPINION Russia Questions for Rex Tillerson By David Satter

New revelations about an opposition leader’s murder and bombings in Boston and Russia. To this picture has now been added new information from two sources: Andrei Piontkovsky, a Russian publicist, and Igor Murzin, a St. Petersburg lawyer who specializes in working with video material. On Feb. 28, 2012, according to Mr. Piontkovsky (writing for the opposition website, Kasparov.ru, July 16, 2016), he and Nemtsov met Ahmed Zakaev, the leader of the Chechen separatist government in exile, in Oslo. Mr. Zakaev said that according to Chechen sources there was a plan to murder Nemtsov. Nemtsov and Mr. Piontkovsky at first were skeptical but while they were discussing the warning Mr. Putin

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ith U.S.-Russia relations at a possible turning point, the confirmation hearings of Secretary of Statedesignate Rex Tillerson need to go beyond superficialities and weigh the true nature of Vladimir Putin’s regime. Senators should demand that the former Exxon Mobil CEO demonstrate an understanding of recent developments regarding three issues: the 2015 assassination of opposition leader Boris Nemtsov, the 2013 Boston Marathon bombing, and the 1999 Russian apartment bombings. Nemtsov was shot repeatedly while walking near the Kremlin on the Bolshoi Moskvoretsky Bridge, an area under constant surveillance by Mr. Putin’s personal guard, the Federal Protective Service. According to expert analyses, the murder required the participation of no fewer than two dozen persons. Video cameras on the bridge were disabled, lookouts were placed at strategic locations, and a garbage truck appeared in front of the scene of the shooting to block it from view.

Sealing an oil deal with Vladimir Putin in Tuapse, Russia, 2012. appeared on television and said he had information that members of the opposition were planning to murder an opposition leader and blame it on the authorities. The time between Mr. Zakaev’s warning and the announcement was 30 minutes. Nemtsov was killed shortly before midnight on Feb. 27, 2015. Hours later, the Russian media said he was a “sacrificial victim,” killed as part of a plot to discredit the authorities. Mr. Murzin, in a Dec. 4, 2016, blog post about the Nemtsov murder, reported that he was able to analyze a videotape made from a car that passed the murder scene three minutes after Nemtsov was shot. The tape, which appeared on the internet, picked up fragments of conversation coming from the garbage truck. By slowing the audio, Mr. Murzin identified the words “Kornienko” and “shooting was not visible.” Gennady Kornienko is a general in the Federal Security Service, or FSB, the main successor to the KGB. He was also deputy director of Mr. Putin’s Federal Protective Service. The second development involves the April 15, 2013, Boston Marathon bombing. According to U.S. law-enforcement officials, in 2011 the Russians sent a warning to the FBI that Tamerlan Tsarnaev, the older of the two brothers who carried out the attack, was a follower of radical Islam. Despite repeated requests, however,

the Russians provided no further information. In January 2012, Tsarnaev, an ethnic Chechen with permanent U.S. residency, traveled to Moscow on a Russian visa arriving at Sheremetyevo International Airport, where he was neither questioned nor detained. He then spent six months in Russia’s Dagestan region without being interrogated. During this period, two of Tsarnaev’s extremist contacts were killed by Russian forces. Tsarnaev nonetheless left Dagestan unhindered, passing through passport control at Sheremetyevo on his way back to the U.S. In October 2016, Mr. Putin raised the subject of the Boston bombing at a meeting with Russian journalists following a summit in Goa, India. Contradicting Washington, he said U.S. officials had refused Russia’s offer to cooperate, telling them, in Mr. Putin’s words, “Mind your own business.” Because of that, Mr. Putin said he ordered FSB head Alexander Bortnikov not to provide any further information to the U.S. As a result, U.S. officials didn’t know that Tsarnaev had spent six months in the Dagestan region—a fact that, if known, could have prevented the Boston bombing. There is also new information about the September 1999 Russian apartment bombings, the acts of terror that brought Mr. Putin to power. The bombings—in Moscow,

Buinaksk and Volgodonsk between Sept. 4 and 13—killed 300 and were blamed on Chechen terrorists and used to justify the second Chechen war. The Chechens have always denied the accusation. On Sept. 22, 1999, another bomb was discovered, in the basement of a building in Ryazan, southeast of Moscow. Two days later, two men and a woman were arrested for planting it. They turned out to be not Chechens but agents of the FSB. After the arrests, Russian officials said the bomb was a fake and part of an FSB “training exercise.” The U.S. never officially challenged the Kremlin’s version of events, despite its implausibility. Last month I received documents from the State Department in response to my pending Freedom of Information Act lawsuit. In a cable on the Ryazan incident, the U.S. Embassy in Moscow reported that a former member of Russia’s security services (name redacted) said that the true story of the Ryazan affair would never be known because “the truth would destroy the country.” The CIA, meanwhile, is refusing to release any information about the 1999 bombings, including its view about who was responsible. The new administration needs to demand that all information about how Putin came to power be made a matter of public record. The failure of previous administrations to react to the 1999 apartment bombings and the 2006 murders of former FSB agent and Kremlin critic Alexander Litvinenko and investigative journalist Anna Politkovskaya led to the Obama administration’s “reset” policy and the Russian invasion of Ukraine. The failure to weigh the lessons of the murder of Boris Nemtsov, the Boston bombing and the apartment bombings will make possible a new “reset,” with consequences not difficult to foresee. Mr. Satter is affiliated with the Hudson Institute and Johns Hopkins University. His book, “The Less You Know, the Better You Sleep: Russia’s Road to Terror and Dictatorship under Yeltsin and Putin,” is just out from Yale.

The Real Crime Problem Doesn’t Make Much News The Chicago video that features four black suspects assaulting a white man has sparked another discussion about “hate crimes,” UPWARD MOBILITY but it also highlights a phenomenon that By Jason L. has been underreRiley ported by a liberal media more interested in political correctness. Crime reporting these days seems more focused on the behavior of the police than on the behavior of criminals. Police shootings of black men are rare, for example, but they get far more media coverage than when black civilians shoot one another, which is much more common. There were 4,368 shootings in Chicago last year, according to the Chicago Tribune’s crime database. Almost all of the shooting victims were black, and more than 99% of the shootings were carried out by civilians, not cops. Obviously, young black men in Chicago don’t roam the streets in fear of getting shot by police. When the media aren’t indulging liberal activists by pretending that police shootings drive black homicide rates, they’re playing down the very real episodes of black criminality shown in the video. For years, Asian students in public schools have complained of racially motivated harassment and bullying by black students. Surveillance cameras have caught young black men playing the “knockout game,” which involves sucker-punching random white pedestrians. Cities from Los Angeles to Philadelphia to Baltimore have experienced “wilding”

incidents, which involve flash mobs of black youths rampaging through a mall or park or convenience store and physically attacking people in the process. Most violent crimes involve a perpetrator and victim of the same race. But when they don’t, incidents of black-on-white crimes far exceed the reverse scenario. “In 2012, blacks committed 560,600 acts of violence against whites (excluding homicide), and whites committed 99,403 acts of violence (excluding homicide)

The media play up shootings by police. Last year in Chicago, they were less than 1% of the total. against blacks,” writes the Manhattan Institute’s Heather Mac Donald, citing federal Bureau of Justice Statistics data. “Blacks, in other words, committed 85 percent of the non-homicide interracial crimes of violence between blacks and whites, even though they are less than 13 percent of the population.” When the mainstream media discuss relations between poor black communities and law enforcement without including data on black crime rates, readers and viewers aren’t getting the full picture. Racially motivated attacks on blacks shouldn’t be ignored or played down, but neither should racially motivated attacks perpetrated by blacks. Nationwide, crime is down from where it was in the 1990s, but it has

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ticked up in recent years in some major cities. Chicago’s murder rate in 2016 was the highest in two decades. Violent crime in Los Angeles has increased for three straight years. Liberals are quick to blame poverty or economic downturns or racial bias in policing, but those explanations can’t withstand scrutiny. Crime began spiking in the 1960s, when the U.S. economy was strong and jobs were plentiful. The economic boom of the 1980s coincided with a steady increase in crime. Police officials in Los Angeles have attributed the higher crime rate to increased homelessness, among other factors, but homelessness has also risen in New York City, where violent crime has fallen. Hiring more police officers to flood crime-ridden neighborhoods could help. In 2015 the LAPD sent extra officers to South Los Angeles after an increase in shootings. “By the time the emergency operation ended on Oct. 1, the rate of violent crime had stabilized in South L.A.,” reports the Los Angeles Times. “But with resources concentrated there, some other parts of the city experienced upticks in crime.” Last fall, Chicago announced plans to hire 970 officers over the next two years. Increasing police presence alone, however, may have

limited effect if cops feel they are being targeted by the press and scapegoated by activist groups like Black Lives Matter. Despite the national downward trend over the past two decades, people remain concerned for their safety. In a Gallup poll last March, 53% of respondents said they worry “a great deal” about crime and violence. That’s up from less than 40% in 2014 and a 15-year high. Respondents who were low-income, nonwhite and less educated expressed by far the most concern, which you would expect from the people who bear the brunt of violent crime in the U.S., however it’s trending. Donald Trump made clear throughout the campaign that his instinct would be to support police in a way that they haven’t been supported under the Obama administration, which made a habit of secondguessing law enforcement and politicizing police investigations. Let’s hope the incoming administration’s sympathies will be with the mostly law-abiding residents of poor neighborhoods for a change. And let’s hope it doesn’t take another group of criminals who are stupid enough to live stream their offenses in order for the media to present a more accurate picture of crime in America.

Notable & Quotable: Facts From a Jan. 9 dispatch by the Associated Press’s Mark Kennedy: FACT CHECK: Streep overrated? Trump picks a decorated star NEW YORK (AP)—President-elect Donald Trump took to Twitter on Monday, calling Meryl Streep “one of the most over-rated actresses in Hollywood” following her speech Sunday night at the Golden Globe awards. . . . While “overrated” is an opinion, Streep, who took aim at Trump in her speech while accepting the Globes lifetime achievement award, holds the record for the most Academy Award nominations of any actor. She has earned 19 Oscar nominations and three wins, as well as a record 29 Golden Globe nominations and eight wins, and two Emmy Awards. Plus there’s a Presidential Medal of Freedom, not to mention 10 People’s Choice Awards, two British Academy Film Awards, four National Society of Film Critics Awards, two Screen Actors Guild Awards, a Kennedy Center Honor and has been named a Commandeur de l’Ordre des Arts et des Lettres, the highest

civilian honor given by the French government. She’s also earned a Tony Award nomination, five Grammy Award nominations, the American Film Institute’s Life Achievement Award, an MTV Movie Award for Best Villain, an American Comedy Award, an Irish Film and Television Award, two Italian Online Movie Awards, two Teen Choice Award nominations and two Screen Actors Guild Awards. Additionally, there have been honors from film critics from Toronto, St. Louis, San Francisco, Phoenix, Palm Springs, New Jersey, Iowa, Kansas City, Las Vegas, Florida, North Texas, Oklahoma and Washington, D.C. Trump and Streep, who spoke on behalf of Hillary Clinton at this year’s Democratic National Convention, are far apart on politics and have found themselves on opposite ends in Hollywood when it comes to honors. He has two Emmy nominations—no wins— for best outstanding reality competition. But he beat her to one award—a Golden Raspberry. He won a worst supporting actor trophy in 1989, appearing opposite Bo Derek in the crime comedy “Ghosts Can’t Do It.”

Which Party Truly Speaks For Elites? By Michael Barone

any on the left side of the political spectrum imagine that the top 1% oppresses the rest of America. They tend to define that 1% solely by income, and then associate it with Republicans. But what if we looked at the people who are America’s elite in terms not only of wealth, but also of cultural power? I’d say my American Enterprise Institute colleague Charles Murray, the social scientist behind the “bubble” quiz, has best defined the cultural elite. He directs our attention to the most socioeconomically blessed ZIP Codes near the “Big Four” metropolitan areas. “It is difficult,” Mr. Murray writes, “to hold a nationally influential job in politics, public policy, finance, business, academia, information technology, or the media and not live in the areas surrounding New York, Washington, Los Angeles, or San Francisco.”

It isn’t the Republicans. The classiest ZIP Codes in America’s cultural capitals skew heavily Democratic. Rich oil and gas businessmen in places like Dallas might have a major influence on who’s the next president of Exxon Mobil. But the rich folks in the Big Four make decisions that affect every American: in New York, they decide what is on the evening news; in San Francisco, which conservatives to permaban from Twitter; in Los Angeles, what shows will appear on TV; in D.C., what loopholes will be written into tax law and whether the Keystone XL pipeline will be built. The stereotype of Republican fat cats is that they spend big bucks to buy elections for the supposed “party of business.” But who do the elite in the Big Four cities support when they pull out their checkbooks for political candidates? A new study that I wrote in collaboration with the Capital Research Center answers that question. The study analyzed political contributions from the most affluent parts of the country during the 2013-14 campaign cycle, the most recent for which complete data are available. Researchers examined individual donations to political candidates of the two major parties. In other words, they did not look at donations from businesses, special-interest groups and labor unions or money given to party committees and super PACs. But even if the study’s parameters were broader, there’s little reason to believe the outcomes would significantly change. For example, federal spending by Super PACs in the same cycle skewed $196.8 million “for Democrats/against Republicans,” versus $139.9 “for Republicans/ against Democrats,” according to the Center for Responsive Politics. The researchers adopted Mr. Murray’s definition of “Super ZIPs”—the ZIP Codes that rank highest in education and income—and then checked the data for political donations in local, state and federal elections, as compiled by the center-left website FollowTheMoney.org. What they found was that Americans in the most elite 5% who live in the Big Four cities’ Super ZIPs donated overwhelmingly to Democrats. The advantage was large: $96 million to Democrats and only $30 million to Republicans, or better than 3 to 1, after excluding unlimited contributions by self-funding candidates. Some might argue that political contributions aren’t a fair measure of partisan beliefs. Donors may be supporting state and local officials simply for pragmatic reasons, and in the Big Four cities those politicians are predominantly Democrats. That’s how Donald Trump defended his donations to Democrats in New York, saying that the money was intended to help his businesses with the powers that be. One way to eliminate this phenomenon from the data is to look only at donations to out-of-state candidates. Doing so only reinforces the finding that America’s elite have powerful Democratic sympathies. In the Big Four cities, 70% of the money—from Super ZIPs to candidates out of state— flowed to Democrats: $48 million versus $21 million for Republicans. Perhaps these numbers can kill off a false narrative: It’s simply not true that the Republicans are the party of the rich and Democrats the party of the little guy. Mr. Barone, longtime co-author of “The Almanac of American Politics,” is a resident fellow at the American Enterprise Institute and a senior political analyst for the Washington Examiner.

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A18 | Wednesday, January 11, 2017

WORLD NEWS

Cuba’s Private Sector Braces for Change Possible shifts under Trump on ties to U.S., leader’s inertia add up to new uncertainty HAVANA, Cuba—Cuba’s private-business owners, having profited from a growing flow of funds and tourists from the U.S. under the Obama administration, are facing uncertainty the influx—and their hard-won gains—will continue. President-elect Donald Trump has suggested he might reverse the actions President Barack Obama has undertaken since 2014 to scale back Washington’s economic isolation of Raúl Castro’s regime. Mr. Castro himself, meanwhile, has offered his country’s budding entrepreneur class no indication that he intends to press on with measures he began six years ago to ease the way for some private businesses. A third of Cuba’s five million workers are now in the private sector, including 522,000 business owners, up from 150,000 six years ago. Much of the seed capital for those businesses came from Cuban-Americans’ remittances to relatives here, a flow that has more than doubled since President Obama took office in

The value of remittances that Cubans receive from the U.S. is greater than what the country makes from exports

NICOLA LO CALZO/L’AGENCE À PARIS FOR THE WALL STREET JOURNAL

BY JUAN FORERO

Life Line

2015 remittances $3.354 B (exports $3.350 B ) $3 billion

0 2007 ’08 ’09 ’10 ’11 ’12 ’13 ’14 ’15 Source: Havana Consulting Group

Private food sellers lined the road to Santiago de Cuba before last month’s funeral for Fidel Castro.

THE WALL STREET JOURNAL.

2009. Those funds amounted to $3.4 billion in 2015—more than Cuba’s total export earnings, according to Emilio Morales, head of Miami’s Havana Consulting Group. For many of the country’s restaurants, bed-and-breakfasts and cafes, the mainstays of revenue are the more than 3.5 million tourists who now visit annually. More of those visitors have come from the U.S. since 2014, and in late 2015 Mr. Obama removed limits on remittances to Cuban

architect, said his Havanabased firm has grown rapidly in recent years, largely thanks to contracts to redesign restaurants for tourists and renovate homes purchased by CubanAmerican exiles. But he said political uncertainty recently has prompted a client to suspend a renovation project that would have meant six months’ work renovating a home. “So I have an international crisis on my hands, because of Donald Trump, but I also have a domestic crisis,” he said.

nationals and to the funds U.S. citizens bring to the island. Cuba’s small businesses inhabit a fragile sector, however, susceptible to policies on either side of the Florida Straits. Being an entrepreneur remains a daily struggle in Cuba, a country with a highly controlled economy and a government that frowns on the very idea of accumulating wealth. Restaurateurs scour Havana for ingredients, while mechanics look for parts. Permits and regulations are stringent, as

the government purposefully keeps businesses from growing too large. Importing necessities is nearly impossible. While the Trump administration’s approach to Cuba remains unclear, the presidentelect’s warning that he might not retain Mr. Obama’s administration’s friendlier stance toward the island has fueled concerns among the emerging capitalist class and, some entrepreneurs say, is already putting a chill on investment. Yoandy Rizo, a 33-year-old

Last month, more than 100 Cuban owners of businesses from restaurants to nail salons made public a letter they had written to Mr. Trump asking him not to scale back U.S. reforms. “As a successful businessman, we’re confident that you understand the importance of economic engagement between nations,” said the letter. The impact of people and capital from the U.S. on the country of 11 million has been momentous, well beyond the elegant hotels where rooms cost hundreds of dollars a night, said Ted Henken, an expert on the Cuban economy at New York’s Baruch College. “A lot of people are off the beaten track, staying in private homes, taking private taxis, eating in private restaurants,” he said, referring to the visitors. Mr. Rizo, the architect, said he started the year with eight projects and is now down to three. But he hasn’t given up: he is even considering a new business providing tours of Cuba’s wild western province. “I’m not waiting for a response from the Cuban government, or the American,” he said. “People say, ‘You have to wait and see what happens.’ We’ve been waiting 50 years.” —Ryan Dube in Lima and Anatoly Kurmanaev in Cienfuegos, Cuba, contributed to this article.

WORLD BANK

Proposed Tax Cuts Set to Boost Growth President-elect Donald Trump’s vowed tax cuts could aid global economic growth this year and next, the World Bank said Tuesday, fresh fuel for a world struggling with stagnant trade, weak investment and rising policy uncertainty. The development institution said the global economy should expand 2.7% this year, up from last year’s postcrisis low of 2.3%. The

U.S. economy is picking up steam and stabilizing commodity prices are helping major emerging-market economies rebound, it said. The bank warned that Mr. Trump could offset potential gains from his promised tax cuts if he triggers a trade war with rivals such as China and Mexico. Nearly a decade after the financial crisis rocked world markets, the global economy has struggled to recover. Emerging markets have strained at the limits of growth without fundamentally restructuring. —Ian Talley

ICELAND

MEXICO

Independence Party Forms Government

Official Says Country Won’t Pay for Wall

Iceland’s Independence Party announced the formation of a center-right coalition government Tuesday, ending over two months of stalemate and seeing off a challenge from the anti-establishment Pirate Party. The Independence Party coalition with the Revival and Bright Future parties will have 32 seats, the narrowest possible majority. —Charles Duxbury

Mexico’s new Foreign Minister Luis Videgaray said there is “no way” his country will pay for a wall Donald Trump wants to build along the Mexico-U.S. border. Mr. Trump last week said any money spent by the U.S. building the wall would be paid back by Mexico. “There is no way that’s going to happen,” Mr. Videgaray said on the Televisa network. —Anthony Harrup

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WORLD WATCH

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Valeant Sheds Assets to Pay Down Debt Reversing Course Valeant is retreating from a debt-fueled acquisition spree and refocusing its business after the stock plunged. Long-term debt

Total value of acquisitions and divestments by year announced As of Sept. 30 $30.39 billion

$35 billion

$20 billion

As of Tuesday $2.12 billion

25 20

Acquisitions

5 2011 ’12

’13

’14

’15

’16

Divestments 2011 ’12 ’13 ’14 ’15 ’16 ’17 THE WALL STREET JOURNAL.

Sources: the company (debt); Dealogic

Valeant Pharmaceuticals International Inc. reached deals to sell $2.1 billion in assets, the struggling drug company’s biggest moves yet to By Dana Mattioli, David Benoit and Jonathan D. Rockoff

10 5

L’Oréal buys skin-care brands from drug firm; China’s Sanpower lands cancer business

regroup around its core prescription drugs and pare its heavy debt load. The Canadian company agreed to sell three skin-care brands, including its CeraVe

line, to French cosmetics giant L’Oréal SA for $1.3 billion. It also said it would sell its Dendreon cancer business to Chinese conglomerate Sanpower for $820 million. The asset sales are part of Valeant Chief Executive Joseph Papa’s efforts to sharpen the company’s focus on its key franchises in skin drugs, stomach treatments, eye care and consumer health while selling noncore assets to pay down its roughly $30 billion in debt. Mr. Papa was set to speak late Tuesday at the J.P. Morgan Healthcare Conference in San Francisco. The former Perrigo Co. CEO joined Valeant in May to help restore battered investor confidence. Valeant’s stock has col-

‘The Mooch’ Gets Ear of Trump BY DAVE MICHAELS AND LISA BEILFUSS

The move is the latest maneuver in a career advanced through self-promotion, well-timed bets and a knack for surviving failure and gaffes.

1996. “I think Washington is in many ways a more natural fit” than Wall Street, he said. Mr. Scaramucci, a former Goldman Sachs Group Inc. stockbroker, joins a long list of Trump appointments with Goldman and Wall Street ties,

Snapchat owner Snap Inc. is making London its European headquarters and eschewing the controversial maneuvers many tech companies have used, especially in Europe, to lower taxes. As Snap, based in Venice, Calif., gears up for an initial public offering in the U.S. that could value the startup at as much as $25 billion, the tax strategy could boost investor transparency—while potentially avoiding any distracting criticism or scrutiny of its overseas tax arrangements. Such arrangements have attracted intense scrutiny in re-

following a campaign in which the Republican nominee regularly bashed the firm and the financial industry. For the self-described “diva” dubbed “the Mooch,” the move to the White House is the latest maneuver in a career ad-

vanced through self-promotion, well-timed bets and a knack for surviving failure and gaffes. Mr. Scaramucci supported Barack Obama in the 2008 presidential campaign, then turned on the president for his Please see MOOCH page B2

By Liz Hoffman, Jenny Strasburg and Ryan Knutson cations Inc. and AT&T Inc. and running dangerously low on cash. Within SoftBank, executive Rajeev Misra was working to limit the damage. The former derivatives trader helped design a series of deals, pledging Sprint’s handset leases, network equipment and eventually some of its airwaves to

HEARD ON THE STREET | Aaron Back

M&A Boutiques Enter Risky Place With a New President Financial stocks have rallied hard since Donald Trump’s victory, but not all financiers will benefit equally. Investors who have bid up shares of boutique investment banks might be disappointed. Global merger activity peaked in 2015. Total deal volume declined 18% in 2016, to $3.84 trillion, according to Dealogic. But revenue booked by M&A advisers fell by just 2%, because there is typically a lag between when a deal closes and when advisers get paid. This itself

suggests that deal revenue is set to decline further in coming months. The case for optimism rests with the notion that faster growth under a Trump administration will propel more deal making. Nomura Instinet analyst Steven Chubak estimates that an extra percentage point of U.S. economic growth in 2017 would translate into a roughly 12% rise in deal volumes. But Mr. Chubak notes it is far from clear that this tailwind will be sufficient to overcome several new obstacles in the Trump era. For one thing, higher interest rates will make it costlier to finance deals with debt.

Mr. Trump’s views on antitrust policy aren’t completely clear, but before the election he spoke out against the AT&T-Time Warner deal,

18.3

Average price/earnings ratio of three M&A specialist boutiques

saying it would represent “too much concentration of power in the hands of too few.” He said that Comcast’s 2011 acquisition of NBCUniversal “should never ever

have been approved.” Mr. Trump may not look favorably on mergers that result in job cuts, or deals in which foreign acquirers seek control of U.S. companies. One major driver of M&A activity has been outbound deals by Chinese buyers. Announced Chinese acquisitions in the U.S. alone reached a record $68.3 billion in 2016, according to Dealogic, up from $12 billion the year before. That is unlikely to continue under Mr. Trump. Finally, as part of a broader tax reform, congressional Republicans have drafted plans to eliminate the corporate deduction for interestrate expenses. Though it is

L’Oréal expands its strategy with latest deal........................ B2

cent years, triggering an international effort to close loopholes as well as probes into whether firms, including Apple Inc., have been unfairly paying too little tax. Targeted companies have said they pay their fair share, but many have moved recently to overhaul their tax practices in the wake of these reviews. Still, few have gone so far as Snap in promising to keep its overseas tax arrangements tidy, something tax lawyers said could be a sign of how other companies could restructure. “Creating a structure to pay no tax is increasingly diffiPlease see SNAP page B4

The Trader Behind SoftBank’s Big Fund After SoftBank Group Corp. bought control of Sprint Corp. in 2013, the business went further downhill, losing ground to Verizon Communi-

SkyBridge Capital founder Anthony Scaramucci

$95 million and bought Dendreon out of bankruptcy in 2015 for about $500 million. “Some good news finally,” Evercore analyst Umer Raffat headlined his note on the sales, saying the reduction in revenue would mostly be offset by the lower debt payments. In a Tuesday note, Wells Fargo & Co. analyst David Maris said the proceeds from the sales wouldn’t fully cover the $3.8 billion in debt Valeant has coming due by the end of 2018. Valeant has put a number of assets on the auction block Please see VALEANT page B2

Snap Changes Tack On Overseas Taxes BY SAM SCHECHNER

ALBIN LOHR-JONES/BLOOMBERG NEWS

Wall Street’s hedge-fund showman is ready to leave investing behind for a new act in Washington. Anthony Scaramucci, the founder of SkyBridge Capital and an extravagant hedge-fund conference known as SALT, is likely to take a job advising President-elect Donald Trump that could be announced as soon as Thursday. Mr. Scaramucci has been a loyal—if late arriving—surrogate for Mr. Trump on television and Twitter as well as a nearly daily fixture at Manhattan’s Trump Tower transition headquarters since the New York businessman won the November election. The role for Mr. Scaramucci, 53 years old, will likely focus on selling Mr. Trump’s agenda through the media and public events and as a kind of liaison to the business community. He is expected to work closely with Jared Kushner, Mr. Trump’s son-in-law, who will be a senior adviser in the West Wing. He also could have a voice on policies that affect Wall Street, including those that he has criticized, such as a Obama administration rule shaking up the $3 trillion industry for advising investors on retirement savings. It is still possible the announcement could be delayed as the transition team rounds out the next list of White House appointees who will work for Mr. Trump. “Being in the arena, at the center of power, is something Anthony has always desired,” said Andrew Boszhardt, who started a money-management firm with Mr. Scaramucci in

lapsed since late 2015, when an accounting issue raised questions about its earnings and spurred a crisis of confidence in management. The company’s backers have consistently argued the stock market has ignored the value of the underlying businesses, while its detractors have focused on the company’s debt and slumping earnings. The stock rose 6.8% to $16.40 on Tuesday, but it is still down about 82% over the past 12 months and is well below its all-time high above $260 set in August 2015. Valeant’s deal announcements eased concerns that the company would have to sell assets at fire-sale prices. It purchased CeraVe in 2008 for

far from certain this will happen, it would upend how M&A has been practiced in the U.S. for decades. Listed boutique banks that specialize in M&A, including Evercore Partners, Greenhill and Moelis, have rallied an average 26% since Nov. 8, compared with a 15% rise for the S&P 500 Financials index and 6% for the broader stock market. These three boutiques now trade at an average valuation of 18.3 times estimated 2017 earnings, according to FactSet, above the five-year average of 17.4 times forward earnings. Given the risks they face, that seems too high.

raise billions of dollars in fresh debt and blunt fears the struggling wireless carrier was headed toward bankruptcy. Now, Mr. Misra is a top lieutenant to SoftBank chief Masayoshi Son for the entrepreneur’s next big thing: a $100 billion fund to invest in futuristic technologies like artificial intelligence, robotics and other “Jetsons”-like inventions. Mr. Misra, who built Deutsche Bank AG’s large credit-derivatives business in the last decade, is leading a crew of ex-bond traders and Wall Street salespeople helping Mr. Son raise and manage Please see FUND page B2

INSIDE

GM EXPECTS PROFIT TO KEEP FAST PACE AUTOS, B3

BIG DEVELOPER BACKS VISAS FOR INVESTORS PROPERTY REPORT, B6

B2 | Wednesday, January 11, 2017

THE WALL STREET JOURNAL.

* ****

INDEX TO BUSINESSES

BUSINESS & FINANCE

These indexes cite notable references to most parent companies and businesspeople in today’s edition. Articles on regional page inserts aren’t cited in these indexes.

Bank of America.......B13 Bath & Body Works....B3 Blackstone Group ....... B6 BMW ......................... B14 Boeing.........................A6 Brookdale Senior Living .....................................B6 BuzzFeed.....................B4

C Chevron ..................... B13 China Evergrande......B14 Chipotle Mexican GrillB3 Citigroup....................B13 Comcast.......................B1 Comerica....................B13 Coty.............................B3 Country Garden Holdings..................B14

D Daimler......................B14 Deutsche Bank....A10,B1 Deutsche Telekom....B14

E-F Evercore Partners.......B1 Exxon Mobil..............B13 Facebook......................B4

G Gap .............................. B3 General Dynamics.......A2 General Motors ........................ B3,B8,B14 Goldman Sachs Group ........................... B13,B14 Greenhill......................B1

H HCP..............................B6 HealthPrize Technologies...........B14

J J. Crew Group.............B3 J.P. Morgan Chase....B13

K Kroll Bond Rating.....A10

L Land and Buildings Investment Management.............B6 L Brands......................B3 Limited Stores............B3 Lockheed Martin.........A6 L'Oreal....................B1,B2

M Mitsubishi Motors......B8 Moelis..........................B1

N New York Knicks ...... A14

P Paysa...........................B7 PepsiCo........................B4 Perrigo.........................B1 Planet Labs.................B4 Port Authority of New York and New Jersey ...................................B13

R Related Cos.................B6 Renault........................B8 Renovate America....A10

S Salix Pharmaceuticals B2 Sandell Asset..............B6 Sanpower....................B1 SkyBridge Capital.......B1 Snap.............................B1 SoftBank Group..........B1 Sunac China..............B14

T Takeda Pharma...........B2 Tesla Motors.............B14 TJX...............................B3 Toyota Motor.......B8,B14

U United Continental Holdings..................B13

V-W-Y Valeant Pharmaceuticals International ....... B1,B2 Verizon Comm ............ A6 Wal-Mart Stores.........B3 Wells Fargo...............B13 Ygrene Energy Fund.A10

INDEX TO PEOPLE B

Balkrishnan, Rajesh..B14 Baruch, Bill ............... B13 Bhar, Robin ............... B12

Hartung, Jack..............B3 Horowitz, Keith ........ B13 Huscroft, Melanie.......B3

Occhionero, Francesca Maria.........................A7 Occhionero, Giulio ...... A7

C Chubak, Steven...........B1

I Ihara, Yasumori...........B8

Draghi, Mario..............A7 Duensing, Jon...........B14

Legami, Roberto Di....A7

Maris, David................B1 Massad, Timothy......B12 Maxfield, Derek .......... B3 McNeill, JP................A10 Misra, Rajeev..............B1

Emanuel, Julian........B13

F Fasano, Philip..............B3

MOOCH

P Papa, Joseph...............B1

R Raffat, Umer...............B1

S Sandven, Terry..........B13 Scaramucci, Anthony..B1 Sena, Ken..................B14

W Wexner, Leslie............B3

a time when hedge-fund returns have lagged behind a more traditional mix of stocks and bonds for six straight years. Skybridge’s flagship fund was down 1% through mid-December, on track for its second straight year of negative returns, according to an investor document. Mr. Scaramucci is also likely to sell the lavish SALT (for SkyBridge Alternatives) conference, where he has hosted celebrities such as Will Smith and world leaders such as Tony Blair. The Las Vegas affair is synonymous with Mr. Scaramucci, who launched it during the depths of the 2008 recession. “It will be difficult to live on without Anthony,” Marc Lasry, founder of Avenue Capital Group, and a major Democratic donor, said of SALT. Mr. Scaramucci’s charisma has propelled his career. It helped him survive being fired by Goldman Sachs in 1991, where he washed out of the real-estate investment banking business. His boss at the time, Michael Fascitelli, recommended him for another job in the division that sold stocks to institutional investors and private clients, where he excelled at cold-calling and building his client base. Mr. Scaramucci later left Goldman, and started and sold a money-management firm to Neuberger Berman Group Inc. His next move was to start Skybridge, which at the time took stakes in new hedge-fund management firms. The business essentially failed during the 2008 financial crisis and lost money for its original investors, some of them former colleagues at Goldman Sachs. Mr. Scaramucci quickly pivoted the firm by purchasing Citigroup Inc.’s hedge-fund management group. That former Citigroup business is the one he is poised to sell, and which Mr. Scaramucci has promoted through hundreds of hours of television appearances every year. “He was not the best analyst or associate,” said Mr. Fascitelli, who was also CEO of Vornado Realty Trust. “As he got more into what his skill set is— dealing with people, selling and trusting his instincts—he was really terrific.”

DAVID PAUL MORRIS/BLOOMBERG NEWS

Continued from the prior page handling of the financial crisis, briefly becoming a symbol of elitism after directly complaining to the new president in a public forum that he was “whacking the Wall Street piñata.” Comedian Jon Stewart lampooned him, saying the hits would stop after “the candy comes out.” During the 2016 campaign, Mr. Scaramucci stirred controversy again in October by likening the Obama investmentadvice rule to the notorious 1857 U.S. Supreme Court Dred Scott decision extending the reach of slavery. He said the analogy fit because both actions were discriminatory and later tweeted that he meant both were “bad governmental decisions.” After his public confrontation with Mr. Obama, Mr. Scaramucci ramped up his political involvement, while pivoting to the Republican Party. His path to Mr. Trump’s inner circle was a winding one, including fundraising for two Trump rivals for the GOP nomination. In the heat of that contest, Mr. Scaramucci attacked Mr. Trump as a “hack politician” and an “inherited money dude” after the businessman disparaged hedge-fund managers. Eventually, he changed his tune after meeting privately with Mr. Trump. He signed on to raise money for Mr. Trump in May, when many establishment Republicans still shunned the GOP front-runner. He was later named to the Trump transition team’s executive committee, a group that includes Mr. Trump’s children, and has helped to interview nominees for the administration. The move to Washington means Mr. Scaramucci would sell his stake in Skybridge, which pitches high-cost, hedgefund investments to wealthy individuals. Clients pay additional fees to Skybridge, which groups their cash and puts the pooled money with dozens of hedge funds. It is unclear which buyers might bid for the firm. Mr. Scaramucci would be selling at

VALEANT

Nissan Motor..............B8

CHARLES PLATIAU/REUTERS

FBL Financial Group.A10 Fiat Chrysler Automobiles......B8,B14 Financial Select Sector SPDR ETF................B13 Ford Motor...........B8,B14

Anthony Scaramucci, left, and Mark Cuban last May

The all-cash deal with Valeant would give L’Oréal the skin-care brands CeraVe, AcneFree and Ambi.

L’Oréal Expands Its Strategy BY NICK KOSTOV

Cooling Cream

PARIS—L’Oréal SA plans to buy CeraVe and two other skincare brands from Valeant Pharmaceuticals Inc. for $1.3 billion, expanding the French cosmetics firm’s U.S. presence and deepening its portfolio in a product segment that has become the beauty industry’s largest. The all-cash deal will give L’Oréal the CeraVe brand, which includes cleansers, moisturizers and healing ointments, as well as the AcneFree and Ambi brands, which distribute a range of acne treatments and skin-care products. L’Oréal, one of the world’s leading cosmetics makers, said the three brands have an annualized combined revenue of around $168 million. Companies across multiple industries—beauty, consumer goods and pharmaceuticals— are battling to stake a claim in the skin-care business, which is highly coveted because of its crossover appeal as both a medical and beauty product. In 2015, Unilever purchased four skin-care brands, including Ren and Murad, while Nestlé last year formed a joint venture with the maker of Proactiv, one of the world’s top-selling acne treatments. “What you can see in the skin-care market—in the U.S., Asia and Europe—is that people are looking for brands that are

Growth for the skin-care business, the beauty industry's biggest, has slowed in recent years. Industrywide sales, change from a year earlier 8% 7

Skin care

6 5 4 3

Beauty and personal care

2 1 0 2006

’08

’10

’12

’14

Source: Euromonitor

THE WALL STREET JOURNAL.

recommended by health professionals,” Brigitte Liberman, president of L’Oreal’s Active Cosmetics Division, said in an interview. For nearly a decade, skin care has outgrown the wider beauty and personal-care market, according to data tracker Euromonitor International. Skin care is now the beauty industry’s largest category, accounting for a quarter of the market, but growth has begun to cool in recent years. The price paid by L’Oréal “looks high,” but the deal “will

clearly strengthen the position of L’Oreal’s Active Cosmetics division in the U.S.,” said Hermine de Bentzmann, an analyst at brokerage house Raymond James in Paris. She added that the deal would double the unit’s revenue in the North American market, where it made only 12% of its sales in 2015. CeraVe offers a range of skin-care products including cleansers, moisturizers and sunscreens, as well as a baby line. It is one of the fastestgrowing skin-care brands in the U.S., averaging 20% annual growth over the past two years, L’Oréal said. L’Oréal said the three brands would stand alongside the likes of Vichy, La RochePosay and SkinCeuticals in its Active Cosmetics division, which has been growing in recent quarters. L’Oreal’s Ms. Liberman said the company would first look to increase sales of the brands in the U.S., particularly by working with dermatologists and other doctors who would recommend their products. For Valeant, the sale is part of new Chief Executive Joseph Papa’s efforts to focus the company on its key franchises by selling noncore assets or milking them for cash to pay down $30 billion in debt. —William Horobin contributed to this article.

Continued from the prior page but has struggled to strike deals at acceptable prices. It came close but ultimately failed to seal a deal to sell stomach-drug maker Salix Pharmaceuticals Ltd. to Japan’s Takeda Pharmaceutical Co. for $10 billion. It is also exploring a sale of its Bausch & Lomb surgical equipment business, which could fetch $2.5 billion, people familiar with the matter have said. Dendreon is known for prostate-cancer treatment Provenge. The acquisition was Valeant’s first big transaction after losing a hostile bid in 2014 for Botox maker Allergan, which went instead to Actavis PLC for about $67 billion. Valeant wasn’t a big player in cancer treatments, and Provenge proved a disappointing fit. Provenge had $300 million in sales the year before the acquisition; it isn’t clear what revenue has been more Chief Executive Joseph Papa joined Valeant in May to help boost investor confidence. recently. The CeraVe brand includes cleansers, moisturizers and healing ointments. The other brands—AcneFree and Ambi—encompass a range of acne treatments. L’Oréal, one of the world’s leading cosmetics suppliers, said the three have combined revenue of around $168 million a year. For L’Oréal, the deal will expand its U.S. presence and add to its offerings that cross between skin treatments and beauty products. Skin care is now the beauty industry’s largest category, accounting for onequarter of the market, but growth has begun to slow in recent years. —Nick Kostov contributed to this article.

FUND Continued from the prior page the SoftBank Vision Fund. Others include a trio of Deutsche and Goldman Sachs Group Inc. alums well-connected among Middle Eastern royals. Their knack for financial structuring and ties to ultrarich investors are key as the 59-year-old Mr. Son reinvents SoftBank as an incubator of next-generation technologies. The fund is set to launch in coming weeks with money from SoftBank itself, several Middle East sovereign-wealth funds, and Silicon Valley luminaries including Apple Inc., Qualcomm Inc. and Oracle Corp.’s Larry Ellison, The Wall Street Journal has reported. Of course, the fund is Mr. Son’s show. He is its sole “key man”—a formal designation

He was ‘a creative genius,’ says one former colleague of Mr. Misra. for a fund’s top decision maker—and has tapped some of his longstanding relationships in the technology world to fill its coffers. Mr. Son also has a record as a technology investor, albeit owing more to gut than careful study. He famously decided to invest in Chinese entrepreneur Jack Ma five minutes after meeting him. That $20 million investment was valued at $58 billion when Mr. Ma’s company, Alibaba Group Holding Ltd., went public in 2014. But his empire building has hit its limits. SoftBank carries more than $100 billion in debt and “can’t leverage too much anymore,” Mr. Son told VentureBeat in October. The Vision Fund gives him billions of dollars to expand further using other people’s money. Not that there aren’t practical challenges. One is finding bargains as startup valuations have climbed. The fund, because of its large size, also will likely need to pursue large, mature com-

Economics 101

PHIL MCCARTEN/REUTERS

A Aisin Seiki...................B8 Alaska Air Group......B13 Alibaba Group ...... B2,B7 Alphabet......................B4 Amazon.com........B4,B14 Amundi Smith Breeden ...................................B14 Apple...........................B1 AT&T............................B1

Rajeev Misra is a top lieutenant to SoftBank’s chief. panies in which returns are often harder to achieve. Another issue is structuring deals without taxing SoftBank’s balance sheet, in which the fund’s holdings will be consolidated. Solving those problems will fall to a team of financial whizzes in London. About 15 analysts recently set up shop in the city’s posh Mayfair district, a neighborhood thick with hedge funds. Mr. Misra, SoftBank’s 54year-old head of strategic finance, is an Indian-born, U.S.educated cricket fan who was once Mr. Son’s banker, structuring debt for his early telecom takeovers. The son of middle-class parents in New Delhi, Mr. Misra earned engineering degrees from the University of Pennsylvania. He worked in the 1980s designing satellites at the Los Alamos National Laboratory in New Mexico, then was at a technology startup before going to Wall Street to join Merrill Lynch’s trading desk. He jumped to Deutsche Bank in 1996 among a wave of Merrill Lynch defectors, including the German lender’s future chief executive, Anshu Jain. Mr. Misra spent the next decade building Deutsche Bank’s credit-trading desk into one of the most profitable on Wall Street. He was “a creative genius,” said Martin Belvisi, a former Deutsche Bank trader. As the crisis hit, Mr. Misra left Deutsche Bank and later joined UBS Group AG to run its fixed-income business, then Fortress Investment Group LLC. In 2014, he reconnected with Mr. Son at the lavish Italian wedding of SoftBank former executive Nikesh Arora, according to attendees. Mr. Son wooed his old banker to SoftBank.

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Wednesday, January 11, 2017 | B3

BUSINESS NEWS Wal-Mart to Cut Nearly 1,000 Corporate Jobs This Month

General Motors Says Earnings On Record Pace

Wal-Mart Stores Inc. is preparing to cut close to a thousand corporate jobs this month, according to a person familiar with the matter. The world’s biggest retailer plans to eliminate the jobs before the end of its fiscal year on Jan. 31, the person said. The cuts will fall broadly but focus on Wal-Mart’s U.S. operations, including the human-resources department, as well as the technology and e-com-

merce divisions. The cuts are part of WalMart’s wider structural efforts to make the company more efficient and responsive to fast changing consumer behaviors, the person said. “We are always looking for ways to operate more efficiently and effectively,” said Wal-Mart spokesman Greg Hitt. “While we continually look at our corporate structure, we have not made any

announcements.” Chief Executive Doug McMillon, shown above in June, said during an investor presentation in October that the company needed to manage expenses better, “including how we do work inside the company.” In late 2015, Wal-Mart laid off hundreds of workers in its Bentonville, Ark., headquarters. In September, it cut about 7,000 back-office jobs in its stores, automating some tasks

by adding cash recyclers that count money. Wal-Mart has predicted that per-share adjusted earnings in fiscal 2018 will be flat compared with fiscal 2017, then fall at the low end of its 2019 target of 5% to 10% growth. Other retailers have slashed jobs and shut stores as they battle sluggish sales. Wal-Mart employs around 18,000 people in the Bentonville area. —Sarah Nassauer

Chain’s Demise Is a Sign of the Times Leslie Wexner, the chief executive of L Brands Inc., saw a decade ago the changes that would roil today’s apparel industry. In 2007, Mr. Wexner sold 75% of Limited Stores, once the cornerstone of his empire, to private-equity firm Sun Capital, part of a broader move to focus on lingerie and personal-care products through his Victoria’s Secret and Bath & Body Works brands. Over the weekend, Limited Stores LLC said it would close all of its 250 stores nationwide as it looks for a buyer for the business. Like Gap Inc., J. Crew Group and other apparel retailers, the Limited has struggled to compete with fast-fashion and discount sellers such as Zara and T.J. Maxx. Moreover, declining foot traffic at many shopping centers has hurt traditional mall stores such as the Limited. The business has the added burden of being saddled with debt. In a letter to employees reviewed by The Wall Street Journal, Finance Chief Larry Fultz said that due to a heavy

OCTAVIO JONES/TAMPA BAY TIMES/ZUMA PRESS

BY SUZANNE KAPNER

Apparel retailer the Limited couldn’t keep pace with fast fashion. debt load and tough retail environment, the company has to be sold or it will close altogether. “Private equity has been a curse on retail,” said Howard Davidowitz, the chairman of Davidowitz & Associates Inc., a consulting and investmentbanking firm, explaining that retailers lack the steady earnings stream to service the debt typically associated with these deals. A call to Sun Capital was referred to a representative for the Limited, who declined to comment. In 1963, Mr. Wexner opened the first Limited—a nod to its

narrow focus on women’s sportswear—in Columbus, Ohio. He became known for his sharp merchandising skills. “When you went into the stores, they had it in every color and the display was so dramatic,” Mr. Davidowitz said. Other innovations included stocking new merchandise every several weeks rather than every four or five months, Mr. Davidowitz said. And like the fast-fashion chains of today, Mr. Wexner tested small batches of goods before introducing them chainwide. Realizing early on the im-

portance of sourcing, he bought Mast Industries, an apparel importer that he later sold to private-equity firm Sycamore Partners. By 1995, Limited had grown to more than 700 stores, and Mr. Wexner’s company, then called Limited Brands Inc., largely consisted of apparel chains, including Express, Abercrombie & Fitch Co., Lerner New York, Lane Bryant, Henri Bendel and The Limited Too. During the next decade, however, the CEO backed away from apparel, selling or spinning off many of those chains. He changed Limited Brands’s name to L Brands in 2013. The Limited already was struggling before its sale to Sun Capital. By February 2007, its store count had shrunk to 260, and its sales had fallen to $493 million from $577 million three years earlier. “Limited failed to change their approach to a rapidly changing consumer,” said Liz Dunn, CEO of consulting firm Talmage Advisors. “Their stores were too big, their assortment wasn’t that special, and the brand became stale.” —Lillian Rizzo contributed to this article.

General Motors Co. said pretax earnings this year should beat the record profit the auto maker expects to post for 2016, and its board approved a $5 billion share repurchase based on the “strong outlook.” GM said Tuesday the bright forecast is based on continued strength in North America—particularly strong sales of pickup trucks, SUVs and crossover wagons—as well as resilient demand in China and cost cuts from better logistics and other moves. The company forecasts 2017 pretax operating earnings, adjusted for any special items, of $6 to $6.50 a share; that compares with the $5.50 to $6 it expects to post in financial results due out Feb. 7. The 2016 result should come in at the “high-end” of that range,” Chief Executive Mary Barra told reporters ahead of an investor conference in Detroit. The nation’s largest auto maker is benefiting from strong U.S. demand for pickup trucks and SUVs—its biggest moneymakers—stoked by low gasoline prices and interest rates. It also has leveraged its strength in China, where a tax cut on some vehicles last year helped increase GM’s sales in its biggest market to a record 3.9 million vehicles. GM also said its results in South America—hard hit by recession and political instability—should improve in 2017. But executives expressed a cautious view in Europe due to the unfolding impact of Brexit. The company’s stock repurchase pushes the total of its buyback program, first announced in March 2015, to $14 billion. About $6 billion of that total has been completed. GM shares rose 3.7% to close at $37.35 on Tuesday. Asked about uncertainty caused by President-elect Don-

ald Trump’s recent threats of a tariff or border tax on imported vehicles, Ms. Barra said it is too early to speculate on an eventual effect but reiterated the complexity of GM’s manufacturing footprint and the long lead times of production decisions. “We think there are many things we can do working with the administration that are going to make America great again, that will strengthen business, that will strengthen growth,” she said. While Mr. Trump’s policy intentions remain unclear, GM could be more of a target for the president-elect than rival Ford Motor Co. Ford made the equivalent of 95% of the vehicles it sold in the U.S. at domestic plants, according to WardsAuto data for the first 11 months of 2016. That figure was 83% for GM and 69% for Fiat Chrysler Automobiles NV.

GM could be more of a target for the president-elect than rival Ford. Mr. Trump said in a Twitter message last week that GM should face a “big border tax” for importing Chevrolet small cars from Mexico. Ms. Barra has said GM doesn’t plan to rejigger its production plans. Auto executives are on edge as Mr. Trump widens his criticism of vehicle imports. Tweets going after GM and Toyota Motor Corp. followed long-running criticism of Ford’s plans—since scrapped— to build a new plant in Mexico. —Stephen Wilmot contributed to this article. See more auto coverage.......B8

GARY CAMERON/REUTERS

JASON IVESTER/ASSOCIATED PRESS

BY MIKE COLIAS

General Motors pinned its bright financial outlook on continued sales strength in North America and China, and on cost cuts.

BUSINESS WATCH CHIPOTLE MEXICAN GRILL

Pricey Avocados Crimp Earnings Sky-high avocado prices and increased advertising costs slashed Chipotle Mexican Grill Inc.’s profit in the fourth quarter, hindering its efforts to recover from a food-safety crisis. Chief Financial Officer Jack Hartung said avocados cost as much as $75 a case, up from about $30 a case normally. California’s drought and a farmworkers’ strike in Mexico caused a shortage of the ingredient. Mr. Hartung said prices have returned to normal. But the avocado crunch pinched Chipotle’s profit, which fell

to between 50 cents and 58 cents a share for the quarter, down from $2.17 a share a year ago. Analysts expected profit of 96 cents a share. Marketing and promotional expenses also ate into profit. Revenue in the quarter rose to $1.04 billion compared with $997.5 million a year earlier. Fourth quarter same-store sales dropped by 4.8%, versus expectations of a 3.5% decline. —Julie Jargon YOUNIQUE

Coty Takes Control For $600 Million Younique LLC, a social-mediadriven cosmetics company that

sells products through about 200,000 “presenters,” on Tuesday agreed to be acquired by Coty Inc. in a deal valuing the four-year-old startup at $1 billion. Coty, whose brands include CoverGirl makeup, said it plans to buy 60% of Younique for $600 million. Younique’s founders, siblings Derek Maxfield and Melanie Huscroft, would own the remaining 40% and stay as chief executive and chief visionary officer, respectively. Younique said it was profitable and had about $400 million in revenue in 2016. Mr. Maxfield, a computer programmer, paired up with Ms. Huscroft, who has a background in advertising and spent 16 years as a homemaker, to build the Lehi, Utah, company. Younique said the siblings weren’t available to comment. Tuesday, Coty’s chief executive, Camillo Pane, called the siblings “tremendous entrepreneurs who have built one of the most engaging and fastest-growing ecommerce companies in beauty.” —Khadeeja Safdar

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Costly avocados have further hurt Chipotle’s food-safety recovery.

1WSJW1702

orman Ebenstein, a Boca Raton based real estate developer and philanthropist, passed away peacefully on December 20, 2016 at his home in Boca Raton, Florida. It is with great sadness and respect, and an enormous sense of loss, that we honor his extraordinary life. Norman will be remembered for his love and devotion to family, brilliant intellect, athleticism and huge personality. Norman was born October 23, 1928 in New York City to Samuel and Jeannette Ebenstein and was raised in Worcester, Massachusetts with a deep connection to his Jewish heritage. Norman strongly believed in the importance of education and was extremely proud of the educational accomplishments of his children and grandchildren. He formed Capital Commercial Properties and served as its president for more than 50 years building a portfolio of shopping centers, shopping malls and multifamily residential properties. One of Norman’s proudest achievements was the revitalization of Eden Center, a shopping district in Falls Church, Virginia, which became the cultural and social focal point of the Vietnamese-American community on the East Coast. This is but one of Norman’s legacies that will continue for future generations. He also enjoyed contributing to regional and national non-profits, served as President for a local chapter of B’nai B’rith, and created the Norman Ebenstein Foundation to support philanthropic activities. Norman graduated from Phillips Exeter where he played power forward on the basketball team, halfback on the football team, and he pitched on the baseball team. He received a degree in economics from Brown University where he pitched for the varsity baseball team and was feared for his fast ball. While at Brown he met Shirley Gorlick, to whom he was married for 65 years. Norman received his law degree from Boston University and enjoyed a successful legal career. He enjoyed tennis, placing 19th in New England’s 45 and over rankings and continuing to play into his 80’s. Norman is survived by his wife Shirley, his daughter, Jaime Ruth Ebenstein, son Douglas Ebenstein and his wife Robin, and grandchildren Lisa Ebenstein and Lori Ebenstein. Memorial contributions may be made to Tri-County Animal Rescue or Congregation B’nai Israel, Boca Raton, FL.

B4 | Wednesday, January 11, 2017

THE WALL STREET JOURNAL.

TECHNOLOGY

WSJ.com/Tech

Eyes Google Seeks to Sell Satellite Unit EU Web Curbs Planet Labs is in talks to buy the business, which captures aerial images of the earth

Alphabet Inc.â&#x20AC;&#x2122;s Google is in talks to sell its satellite business to competitor Planet Labs Inc., a satellite-imagery startup that is seeking a new round of funding to help pay for the possible acquisition, according to people familiar with the talks. The sale of its satellite-imagery unit, Terra Bella, would be a rapid about-face for Google, which has recently shed some of its bolder ventures. Google bought the company for $500 million in 2014, when it was known as Skybox Imaging. Discussions about the possible acquisition, which were earlier reported by Bloomberg News on Monday, are focused on a possible cash-plus-equity

SNAP Continued from page B1 cult,â&#x20AC;? said Heather Self, a tax partner at Pinsent Masons LLP in London. â&#x20AC;&#x153;Large groups are starting to look for where can they have a structure that pays a reasonable amount of tax, and is less likely to be challenged.â&#x20AC;? Snap said Tuesday it will immediately start collecting all international revenue through its business in the U.K. A spokeswoman said the company will then shift soon to collecting revenue from foreign clients at local branches, and pay local taxes. For clients in countries with no local Snap branches, the company will continue to book revenue in Britain. That breaks

GOOGLE/SKYBOX IMAGING/REUTERS

BY ROLFE WINKLER AND JACK NICAS

A satellite image collected by Skybox Imaging shows the aftermath of explosions at a warehouse in Tianjin, China, in 2015. Google bought Skybox in 2014 for $500 million and renamed it Terra Bella. deal, the people said. Planet, founded in 2011, is seeking to raise funds to help finance the deal and pay for continuing operations, one of the people said. Terra Bella has launched seven relatively small satel-

litesâ&#x20AC;&#x201D;each weighing roughly 220 poundsâ&#x20AC;&#x201D;to capture aerial images of earth. The company uses those images to collect data it can sell, such as traffic at a cargo port or the size of stockpiles at a copper ore

mine. The images also helped augment Googleâ&#x20AC;&#x2122;s mapping service, said Tim Farrar, head of satellite-research firm TMF Associates. But building, launching and operating a fleet of satellites

from the practice at many other tech firms. Many of those bigger firms have chosen headquarters in smaller European countries that have allowed them to take advantage of a patchwork of national rules to lower taxes, including legally moving profits to tax havens such as Bermuda. The U.K.â&#x20AC;&#x2122;s 20% corporate income tax is relatively low and is slated to go down to 17% beginning in 2020, but that rate still is well above the 12.5% rate in Ireland, a popular destination for many firms. The decision to establish a cleaner structure also is a lot easier for Snap than for other tech firms, which set up shop around the world well before all the new scrutiny of the various tax strategies. Some avenues pursued by others, meanwhile, simply are

no longer an option. The financial stakes also are lower for Snap, which isnâ&#x20AC;&#x2122;t bringing in nearly as much money as some of its more-established Silicon Valley peers. Snap is primarily known for its Snapchat messaging app that is particularly popular among teens and millennials. Snap makes the bulk of its money showing ads to Snapchat users. While it isnâ&#x20AC;&#x2122;t profitable and isnâ&#x20AC;&#x2122;t likely to be posting a big overseas tax bill for now, its success reaching a young audience has garnered ad dollars from big brands such as PepsiCo Inc. and led to partnerships with media companies such as BuzzFeed Inc. and The Wall Street Journal. Non-U.S. ad revenue totaled just $18.3 million, or 5% of its total in 2015, according to estimates from research firm

eMarketer. But that figure is expected to rise to $440 million, or 25% of the total ad revenue in 2018, eMarketer says. For Snap, establishing London as its main office for overseas operations makes plenty of practical sense, taxes aside.

Snap said the U.K.â&#x20AC;&#x2122;s 10 million users and the size of the ad market there drove its choice. It said the size of the U.K. advertising market and the companyâ&#x20AC;&#x2122;s 10 million users in the U.K. drove its decision. Despite economic uncertainty surrounding Britainâ&#x20AC;&#x2122;s vote to leave the EU, tech com-

is expensive, and Google has decided it can save money by purchasing similar imagery from third parties, one of the people said. Mr. Farrar said purchasing such satellite imagery would likely cost Google $10 million to $50 million a year. â&#x20AC;&#x153;They donâ&#x20AC;&#x2122;t need to own satellites,â&#x20AC;? he said. The move to shed a seemingly superfluous unit from the sprawling Alphabet empire fits into the recent era of financial discipline at the tech giant that began nearly two years ago with the arrival of finance chief Ruth Porat from Morgan Stanley. Alphabet has also recently pared back efforts in high-speed internet, robotics and modular smartphones, for instance. Planet sells imagery of the earth from its own fleet of satellites. The San Francisco company has dozens of satellitesâ&#x20AC;&#x201D; weighing roughly 10 pounds eachâ&#x20AC;&#x201D;in orbit, enabling it to take pictures more frequently of the earthâ&#x20AC;&#x2122;s surface, but the resolution of the images is low. panies including Apple have since announced London expansion plans. Other companies have taken measures to begin cleaning up their tax affairs in Europe. Last year, Facebook began directing big U.K. clients to start paying a Facebook unit in the country rather than moving that revenue through lowtax Ireland and then on to the Cayman Islands. Alphabetâ&#x20AC;&#x2122;s Google said it would start attributing some revenue from Google clients in the U.K. to its local unit. And in 2015, Amazon.com Inc. began to collect customer revenue from subsidiaries in several European Union countries. All of these companies have maintained they pay their fair share in tax. â&#x20AC;&#x201D;Georgia Wells contributed to this article.

On Cookies BY NATALIA DROZDIAK

BRUSSELSâ&#x20AC;&#x201D;The European Union has proposed new rules that would curb how companies like Alphabet Inc.â&#x20AC;&#x2122;s Google and Facebook Inc. track users to deliver targeted ads, introducing legislation that could reduce a key revenue stream for online advertisement companies and other website publishers. The rules proposed Tuesday by the European Commission, the blocâ&#x20AC;&#x2122;s executive arm, would require users to actively consent to the use of cookiesâ&#x20AC;&#x201D;tiny pieces of code deployed on web browsers that track individualsâ&#x20AC;&#x2122; online activity. The commission said the draft rules are to protect user privacy and provide more transparency about how companies use individualâ&#x20AC;&#x2122;s data. Around 80% of Europeans say it is important that tools like browser cookies are only allowed with the userâ&#x20AC;&#x2122;s permission, according to the EU. â&#x20AC;&#x153;Transparency is important. People must know whether information stored in their devices is being accessed or whether their online behavior is tracked,â&#x20AC;? the European Commission said in a press release. When installing a browser or any other software permitting electronic communications, users would have to choose whether to allow or reject the tracking for advertisement purposes before continuing with the installation. The settings, which could be changed at any time, would take precedence over any individual consent granted to Google or Facebook via a privacy-policy agreement. Google and Facebook declined to comment. â&#x20AC;&#x201D;Sam Schechner contributed to this article.

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Wednesday, January 11, 2017 | B5

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THE PROPERTY REPORT Related Cos. defends program that gives big foreign financiers permanent residency BY ELIOT BROWN A New York real-estate developer is playing a central role in blocking a bipartisan plan to overhaul a controversial immigration program that gives green cards to foreign investors. Related Cos., a developer of massive mixed-use projects, has waged an aggressive campaign to head off proposed changes to the so-called EB-5 program in an apparent effort to keep low-cost money flowing to luxury urban projects such as its $20 billion Hudson Yards development in Manhattan. The EB-5 program offers green cards, allowing for permanent legal U.S. residency, to immigrants who invest at least $500,000 in certain U.S. businesses measured to create at least 10 jobs per investor. The program allows 10,000 visas a year. At the heart of the fight is that developers including Related use a provision meant for rural and high-unemployment areas to bring financing for luxury projects, often in some of the most expensive neighborhoods in the country. Critics decry the practice, known as gerrymandering, because it involves creating special districts that link the luxury projects with economically

struggling neighborhoods. They say it sucks money away from distressed areas that could most use the investment. The developers say entire regions benefit from projects in central cities, which they say create jobs everywhere. They say they have offered compromise overhaul plans, to no avail. Related has spent more than $1.4 million on immigration-related lobbying since January 2015, more than double any other individual user of the EB-5 program, up from zero in previous years, according to federal lobbying records. Related executives have poured money into federal political donations, largely targeting congressional committees. Between January 2015 and November 2016, Related Chairman Stephen Ross, Chief Executive Jeff Blau and their wives contributed a combined total of $1.27 million to federal candidates and political-action committees, compared with a total of $833,000 in the eight years before 2015, according to federal campaign-finance reports. A Related spokeswoman said the program spurs large and small projects throughout the country, and with the help of EB-5, “Hudson Yards is now an economic engine pumping over $150 million a month in construction costs alone into the economy and creating thousands of jobs.” “We continue to support a

CHRIS GOODNEY/BLOOMBERG NEWS

Developer Backs Investor Visas

Related Cos. Chairman Stephen Ross has made political donations. robust expansion of the EB-5 program, greater transparency and stronger oversight measures to ensure the program’s integrity moving forward,” she said. Related has been a central strategist with smaller real-estate companies in pressing lawmakers to block changes sought by a bipartisan group, making it by far the most active individual player on the issue. “They’ve been effective at getting the message out,” said Nicholas Mastroianni II, chief executive of US Immigration Fund, a Related ally and one of the largest companies that pools together EB-5 funding from foreign investors. “They’ve been effective at communicating with leadership.”

A key provision of the EB-5 law, which took effect in 1990, was due to expire in September 2015, but has been given three short-term extensions since. Foreign investors have rushed in under the existing rules well past the program’s capacity, with applications pending from more than 20,000 immigrant investors— roughly six to seven years’ capacity of visas given that investors typically bring family members. The latest four-month extension keeps the program alive until April, when many developers, including Related, have said they hope the political environment will favor a long-term extension given that President-elect Donald Trump is a real-estate developer and

his son-in-law, Jared Kushner, has used the program. Mr. Kushner, named Monday as a White House senior adviser, will recuse himself from EB-5related issues, his spokeswoman said. A Trump transition spokesperson didn’t immediately respond to a request for comment on the EB-5 program. A bipartisan group of lawmakers pushing for changes to the program is growing frustrated. The provision meant to direct money to struggling areas “has been rendered obsolete,” said Sen. Patrick Leahy (D., Vt.) after the latest attempt at a compromise early last month failed. “Anyone who maintains today’s EB-5 program is about creating jobs is either a lobbyist for the realestate industry or simply not paying attention.” In 2015, Mr. Leahy and Sen. Charles Grassley (R., Iowa), respectively the top Democrat and Republican on the Senate Judiciary Committee, agreed with their counterparts in the House on a general overhaul package meant to address the developers’ use of the distressed-area provision. But they ran into resistance from a set of developers and others in the industry—most prominently Related. The developers, in turn, found support from a handful of key senators including Sen. John Cornyn (R., Texas) and Sen. Charles Schumer (D., N.Y.), who have been resistant to the changes opposed by the developers.

As Australia Spends, the Criticism Builds SYDNEY—With more cranes in the sky than the U.S. and one of the developed world’s highest rates of public-infrastructure spending, Australia has become a magnet for global investors from Canadian pension funds to Chinese high-speed train operators. But scrutiny is growing for the public-funding model behind the infrastructure spending, which is highly beneficial to developers racing to take advantage of rising property prices. Australia’s public investment in roads, rail, waterways, marine ports and airports, at 1.6% of gross domestic product, is the highest among major countries in the Organization for Economic Cooperation and Development. PwC and Oxford Economics forecast Australia to invest 4.9% more taxpayer money each year in transportation projects over the next decade, slightly above the average global rate of 4.7%. State governments have sold assets worth nearly US$50 billion to groups, including Middle Eastern sovereign-wealth funds, to raise money for the projects, according to Dealogic data. At the same time, rundown suburbs are receiving a facelift as town planners map out new high-rise apartments, airports, parks and metro lines to serve a fast-growing population. But concerns are growing that Australia is letting private investors profit too much from higher land and property values generated by the new

WILLIAM WEST/AFP/GETTY IMAGES

BY VERA SPROTHEN

The public-funding model behind infrastructure spending is under scrutiny in Australia. Above, a building site in Sydney last month. transportation projects. Australia lags behind places such as Hong Kong, London and Denver in the use of mechanisms to ensure private real-estate developers—not just the public purse—help to pay for infrastructure, critics say. “We’re spending money, but we’re losing value,” said Joe Langley, a director in the infrastructure advisory unit of engineering-services firm AECOM Technology Corp. in Sydney. In London, where a new train line known as Crossrail is set to be completed in 2019, authorities charge developers and businesses various levies to siphon off some of the rise in land values. This concept,

called value capture, pays for a third of the Crossrail project. Developers in Australia aren’t saddled with such costs. In the suburb of Baulkham Hills, about 30 kilometers from central Sydney, land values jumped 82% in the four years after the A$20 billion Sydney Metro project was unveiled in 2011. Sydney Metro aims to use rail links to connect outer suburbs with the central business district. The price rise outpaced the 57% growth in residentialproperty prices in the London suburb of Shenfield, a similar distance from the city center, in the six years since Crossrail got the go-ahead, real-estate firm Knight Frank said.

Lawmakers have signaled a need to change tack. The Australian government said in November that the country is nearing the limits of financing infrastructure projects entirely with taxpayer money, and value capture is a possible solution. Andrew Constance, the transportation and infrastructure minister for the state of New South Wales, Australia’s most populous, said the government was exploring new funding options, including value capture. Real-estate lobby groups are preparing to push back. Urban Taskforce Australia recently said “value capture isn’t a magic pudding that will fund all infrastructure,” while

the Property Council of Australia recently warned lawmakers against introducing “new taxes under the cloak of value capture.” Some developers think they can solve the public-funding dilemma and benefit at the same time. MTR Corp., which operates the Hong Kong railway and helped construct London’s Crossrail, offers to build new train lines with private money in exchange for the right to develop land near stations. Property firms wishing to build apartment or office towers would pay a land premium, with proceeds flowing back into the railway. MTR has tested the model in Hong Kong and Shenzhen.

Brookdale Senior Living in Deal Talks Brookdale Senior Living Inc. is in talks with private-equity firm Blackstone Group LP and other suitors about a possible sale of part or all of the company, the nation’s largest operator of senior-living centers. By Dana Mattioli, David Benoit and Dana Cimilluca The talks are complex and at any early stage and may not lead to a deal, people familiar with the matter said. There are a number of different forms a deal could take, from a sale involving Brookdale’s property to a full purchase of the company, the people said. Should there be a transaction, it could be substantial. After its shares tumbled in the last couple of years, Brookdale had a market value of $2.4 billion Tuesday morning. But including its longterm debt and lease obligations of nearly $6 billion as of September, it had a so-called enterprise value of more than $8 billion. Brookdale has been under pressure from two separate hedge funds in the past two years urging it to take steps including selling or spinning off its real-estate portfolio to reverse a decline in the shares. Shares, fallen from nearly $40 in 2015, surged 15% Tuesday to close at $14.80 after The Wall Street Journal reported on the deal talks. Brookdale has more than 1,000 communities spread across the U.S. with more than 100,000 residents, according to its website. It also offers services such as outpatient therapy, hospice care and assisted living. Its property alone could be worth as much as $7 billion, one of the hedge funds, Land and Buildings Investment Management LLC, said last month in a letter urging a sale of the real estate. Land and Buildings cited three recent senior-housing property sales, including a deal in which Blackstone agreed to buy a stake in a joint venture owning Brookdale-managed properties. In 2015, Sandell Asset Management launched a proxy fight and urged Brookdale to spin off its realestate portfolio. It settled for a seat on the board. Sandell has since sold its stake. Separating out the company’s real estate would leave a management and operating company that would lease the properties. Brookdale already serves that function for some properties it leases from HCP Inc., a real-estate investment trust focused on seniors. Brookdale was founded in 1986 and has grown through a number of mergers. In 2015, when the board added Sandell’s nominee to its investment committee, Brookdale said it was working with bankers and lawyers to review options to create value. Land and Buildings, a well-known real-estate investor that owns about 2% of Brookdale, said last month that the slumping stock price is evidence a new review is needed.

Europe’s Alternative Properties Entice Real-Estate Investors BY ART PATNAUDE

Building Up European investment in the alternative-property sector has risen as a percentage of total commercial-property investment. 2016 14.89%

16% 14 12 10 8 6 4 2 0 2007

’09

’11

’13

Source: Real Capital Analytics

THE WALL STREET JOURNAL.

’15

Alt-property in Europe is on the rise. So-called alternativeproperty sectors such as hotels, student housing and data centers captured a record share of Europe’s commercial real-estate market in 2016, according to data tracker Real Capital Analytics. The €35.1 billion ($37.1 billion) of deals in 2016 made up 15% of the total value of all commercial property transactions, compared with 12% in 2015, Real Capital said. Commercial real-estate investment has surged in recent years in part because ultralow interest rates have sent investors hunting for returns. And after years of strong demand pushing up prices in tradi-

tional commercial-property sectors—offices, retail and warehouses—investors increasingly have turned to alternatives. Alternative property is yielding about 6.5%, compared with 5.9% for offices, the most actively traded real-estate sector in Europe, according to Real Capital. Commercial-property investment in Europe declined about 30% in 2016 from a very strong year in 2015, Real Capital data show, but alternative real-estate investment held up better, slipping 17%. Analysts say demand remains high. Just before Christmas, the investment arm of French insurer AXA SA bought two portfolios of health-care properties in Germany and Finland.

Health-care deals more than doubled in 2016. AXA Investment Managers said it paid about €310 million for 17 health-care properties in Germany from U.S. privateequity firm Blackstone LP. In a separate deal, AXA bought 11 properties in Finland for €65 million. Hideki Kurata, the head of alternatives at AXA Investment Managers—Real Assets, said an aging population is a key demographic trend that made the health-care investments attractive. “We’re all getting older,” Mr. Kurata said. Even if the economy falters, secular trends such as this “make alternative assets more resilient” than other real-estate sectors, he said.

Data centers had a big year in Europe. Investment volume of €5.6 billion was four times greater than in 2015, Real Capital data show. Student-housing investment also has been strong. In the U.K., the largest student-housing market in the region, £3.1 billion ($3.8 billion) of investment marked the second-biggest year on record, according to property broker Cushman & Wakefield. After such a strong year, some investors have voiced unease. “One thing I’m wary of is the herd effect,” Mr. Kurata said. “People are chasing yield, but higher yield comes with higher risk.” In health care, for instance, landlords need to make sure their tenant is providing qual-

ity service, he said. And because the sector is heavily regulated, understanding where government policy is moving is important. Another potential pitfall for alternatives: Because these markets are smaller, they are typically less liquid. “It’s easy to get into these sectors, but more difficult to get out,” said James Petit, head of real estate in the U.K. and Ireland at the asset-management arm of German lender Deutsche Bank AG. Deutsche Asset Management invested in alternative real estate such as gas stations and marinas before the 2008 financial crisis. It has yet to go back, mostly because its clients are uncomfortable with the risks, Mr. Petit said.

THE WALL STREET JOURNAL.

Wednesday, January 11, 2017 | B7

MANAGEMENT Some Tech Workers Are Underpaid Sure, you know what youâ&#x20AC;&#x2122;re paid. But what are you worth? In high-demand labor markets such as technology, it is tough for workers to keep up with changing salary norms, so they might be leaving money on the table, a new study says. More than one-third of technology professionals are earning at least 10% less than they could command if they looked for a new job today, according to salary-data firm Paysa. The firm compared the rĂŠsumĂŠs and total compensation, including bonuses and equity where applicable, of more than five million workers with real-time information on what companies are paying employees with similar credentials and characteristics.

It is tough for workers to keep up with changing salary norms, a study says. The lost income can translate to thousands of dollars at the same time that median annual pay for software developers, for instance, is $100,690, according to the Labor Department. Paysa analyzed thousands of variables, such as individual work histories, hiring trends and turnover rates at companies to determine whether workers might be underpaid or overdue for a promotion. It found that nearly 80% of technologistsâ&#x20AC;&#x201D; software engineers, developers, systems administrators and othersâ&#x20AC;&#x201D;have one or more characteristics that indicate they might be ready to move to a new job. The mismatch on salaries probably doesnâ&#x20AC;&#x2122;t stem from malicious intent or a desire by employers to â&#x20AC;&#x153;get a deal,â&#x20AC;? said Paysa Chief Executive Chris Bolte. More likely, many workers donâ&#x20AC;&#x2122;t know their own value. â&#x20AC;&#x201D;Lauren Weber

Alibaba New Hires Get Crash Courses

E-commerce giant seeks to create globally minded leaders with one-year immersion program in Chinese business, culture BY RACHEL FEINTZEIG Since starting at Alibaba Group Holding Ltd. in October, Matt Shofnos has improved his Mandarin, helped an American retailer target Chinese consumers and donned a Captain America costume to meet the companyâ&#x20AC;&#x2122;s chief executive. Alibaba has brought Mr. Shofnos and 31 other young workers from around the world to China for a yearlong immersion in Chinese business, language and the companyâ&#x20AC;&#x2122;s culture. Alibaba executives are betting that the leadership program will produce China-trained, globally minded leaders able to make and manage partnerships with Western retailers, moving the e-commerce giant closer to its goal of earning 40% of revenue outside China in the next decade. As Chinese companies look abroad for growth, they are trying to build workforces able to do business abroad without cultural or commercial hiccups. Chinaâ&#x20AC;&#x2122;s overseas direct investment reached nearly $146 billion in the first 10 months of 2016, up 53.3% from the year-earlier period, ac-

CHRISTINE WANG

WORKAROUNDS

Matt Shofnos, fifth from left, with a group including some other Alibaba program participants. cording to official data. â&#x20AC;&#x153;Going global is almost like a buzzword now for Chinese companies,â&#x20AC;? said Audrey Widjaja, an Aon Hewitt partner in China who helps companies there with leadership development. Alibaba has committed to running the program for at least 10 years, and expects en-

rollment to grow to 100 annually. Participants, all new hires, typically join after business school or a few years working in fields such as marketing and technology. More than 3,000 applied to the inaugural class, according to Alibaba. Finalists underwent several rounds of interviews, including a visit to the companyâ&#x20AC;&#x2122;s Hang-

zhou headquarters. The company wouldnâ&#x20AC;&#x2122;t provide salary figures for the workers, but said they are paid competitively. The recruits complete two six-month rotations at Alibaba businesses such as shopping platform Tmall Global, and take classes on Chinese culture, politics and economics.

They also travel, visiting rural villages to observe how ecommerce has transformed local economies. Participants must learn how to navigate life in China, including finding apartments, commuting to work and learning Alibaba products, many of which are in Chinese. â&#x20AC;&#x153;We say you have to empty yourself out when you enter the company,â&#x20AC;? said Brian Wong, a company vice president and Wharton M.B.A. who oversees the program. â&#x20AC;&#x153;Itâ&#x20AC;&#x2122;s like drinking from a fire hose plus getting blasted by a tornado wind.â&#x20AC;? Come fall, the graduates are expected to head back to Alibaba offices in their home regions in places such as New York and Paris. Having been integrated into â&#x20AC;&#x153;the mothership,â&#x20AC;? in the words of one executive, the workers will help ensure an expanded Alibaba stays true to its Chinese roots and company culture.

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Email Can Reveal How Well New Hires Fit In BY JOANN S. LUBLIN New hires donâ&#x20AC;&#x2122;t always fit inâ&#x20AC;&#x201D;despite companiesâ&#x20AC;&#x2122; best efforts to assess their cultural suitability. There might be a smarter strategy: analyzing newcomersâ&#x20AC;&#x2122; email. A team of California researchers used this novel approach to predict whether fresh recruits would adjust or exit a midsize technology firm that favors hiring for cultural

fit. The review of 10.2 million internal messages found that new hires who stuck around and thrived used language styles similar to those of their co-workers. Newcomers with high cultural fit had a greater chance of advancing to managerial positions, the study found. Quitters experienced decreased cultural fit roughly midway through their tenure. But individuals with low cul-

tural fit had a four-timeshigher risk of getting fired after three years. Researchers scrutinized 64 categories of language style, including curses, expressions of positive emotion and the use of concrete imagery. Salespeople at the tech firm frequently swore, for instance. New colleagues eager to fit in â&#x20AC;&#x153;had to swear a fair amount in their email,â&#x20AC;? recalled Sameer B. Srivastava, an assistant

management professor at University of California-Berkeleyâ&#x20AC;&#x2122;s Haas School of Business. By contrast, the study reported, fired recruits â&#x20AC;&#x153;fail to accommodate their colleagues linguistically from the moment they join the organization.â&#x20AC;&#x2122;â&#x20AC;&#x2122; Businesses should â&#x20AC;&#x153;change their screening criteria from being about fit to being about adaptabilityâ&#x20AC;&#x2122;â&#x20AC;&#x2122; because those employees perform better over time, said Mr. Srivas-

tava. He and Amir Goldberg, an associate professor of organizational behavior at Stanford Universityâ&#x20AC;&#x2122;s business school, led the research with help from two Stanford associates. They examined email exchanged among 601 full-time staffers of the tech concern between 2009 and 2014. Their paper, titled â&#x20AC;&#x153;Enculturation Trajectories,â&#x20AC;? will appear soon in Management Science.

Business Real Estate & Services

To advertise: 800-366-3975 or WSJ.com/classiďŹ eds

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THE WALL STREET JOURNAL.

* *

AUTOS

Gas Prices Take Backseat for Auto Makers Car companies launch more profit-driving SUVs, pickups even as pump costs rise

Gas Creep Analysts believe gas prices could approach $3 a gallon this year. Weekly U.S. regular retail gasoline prices, per gallon* $4

BY CHESTER DAWSON

3 PAUL SANCYA/ASSOCIATED PRESS

Auto makers, betting that rising gasoline prices wonâ&#x20AC;&#x2122;t spoil Americaâ&#x20AC;&#x2122;s love affair with pickups and SUVs, are increasing their exposure to a light-truck segment that let the industry down a decade ago. Executives say itâ&#x20AC;&#x2122;s different this time. Todayâ&#x20AC;&#x2122;s sport utilities and pickup trucks are lighter and carry smaller engines, helping achieve better fuel economy than the gas guzzlers that once jammed American dealer lots. â&#x20AC;&#x153;Thereâ&#x20AC;&#x2122;s some major differences,â&#x20AC;? Ford Motor Co. Chief Executive Mark Fields said in a recent interview, referring to the current vehicle model mix. â&#x20AC;&#x153;Weâ&#x20AC;&#x2122;re much better prepared as a company and in our product lineup to handle that.â&#x20AC;? Analysts expect pump prices to potentially rise to near $3 a gallon in 2017, a trend that could reduce spending power for American buy-

2 1 0 â&#x20AC;&#x2122;10 â&#x20AC;&#x2122;11 â&#x20AC;&#x2122;12 â&#x20AC;&#x2122;13 â&#x20AC;&#x2122;14 â&#x20AC;&#x2122;15 â&#x20AC;&#x2122;16 â&#x20AC;&#x2122;17 *All formulations Source: Energy Information Administration

A 2018 Chevrolet Traverse at the North American International Auto Show in Detroit this week.

THE WALL STREET JOURNAL.

ers who increasingly opted for heavier vehicles in recent years. Key vehicles being launched at the Detroit auto show this week, including an updated version of General Motors Co.â&#x20AC;&#x2122;s Chevrolet Traverse SUV, are responsible for a disproportionate portion of auto makersâ&#x20AC;&#x2122; profits. About 60% of the 17.5 million light-vehicles sold in 2016 were considered light trucks, according to Autodata Corp. Pickups and SUVs make up more than half of Fordâ&#x20AC;&#x2122;s pretax

rel. Since then, gasoline prices have risen steadily to an average of $2.38 a gallon in the U.S. â&#x20AC;&#x153;Prices this year are going to be considerably higher than in 2016,â&#x20AC;? said Tom Kloza, global head of energy analysis at OPIS, a petroleum pricing consultancy. â&#x20AC;&#x153;Theyâ&#x20AC;&#x2122;re going to get to the point that people start talking about them again,â&#x20AC;? he said, estimating the average U.S. price of gasoline will peak this year above $2.80 a gallon. â&#x20AC;&#x153;If we see a spike in prices,

operating profit in North America and two-thirds of GMâ&#x20AC;&#x2122;s pretax operating profit in the region, according to a Citigroup Inc. research note in June. Growing reliance on bigger vehicles mirrors a trend that stung domestic auto makers a decade ago. Ignoring warnings that gasoline prices were creeping up, car companies were caught flat-footed when prices eclipsed $4 a gallon, triggering a collapse in truck demand that drained cash reserves. Gasoline prices averaged

Toyota Supplier Muses on Mexico BY CHESTER DAWSON

DETROITâ&#x20AC;&#x201D;A top parts maker for Toyota Motor Co. would cancel a new plant in Mexico designed to supply the Japanese auto maker and General Motors Co. if Toyota were to bow to political pressure and abandon a planned Mexican factory. â&#x20AC;&#x153;Weâ&#x20AC;&#x2122;ll have to rethink our investment if Toyota pulls out,â&#x20AC;? Yasumori Ihara, president of Aisin Seiki Co., said Tuesday in an interview at Detroitâ&#x20AC;&#x2122;s auto show. Toyota and GM both rebuffed recent attacks from U.S. President-elect Donald Trump for producing vehicles in Mex-

ico. Toyota has vowed to push ahead with plans to build a $1 billion Mexican factory to make Corolla sedans. Ford Motor Co., the first auto maker to face criticism from Mr. Trump about producing in Mexico, last week shifted its Mexican plans. Aisin Seikiâ&#x20AC;&#x2122;s $45 million plant is designed to supply a nearby GM factory and Toyotaâ&#x20AC;&#x2122;s planned Corolla production line in the Guanajuato state of central Mexico with components such as sun roofs and door frames. The company said the facility is under construction with production starting as soon as next year. The factory would allow Ai-

sin to supply Toyota and GM in Mexico with components currently shipped from a factory in Marion, Ill., according to company officials. Mr. Ihara said he is concerned about the implications of a possible U.S. tariff on imports, an initiative the incoming Trump administration is mulling. That could jeopardize production in Mexico of parts for auto factories on both sides of the border, he said. Aisin Seiki expects to spend about $800 million in the U.S. over three years on its own plants, Mr. Ihara said. Toyota owns about 23% of Aisin Seikiâ&#x20AC;&#x2122;s shares outright and another 11% indirectly.

Business Real Estate & Auctions

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$2.14 a gallon last year, the lowest level since 2004, according to the U.S. Energy Information Administration. The drop in gasoline prices over the past two years coincided with slump in crude-oil prices after Saudi Arabia said in late 2014 that it would no longer curb output. But in November the Saudis and other members of the Organization of Petroleum Exporting Countries reached a deal to cut production, stabilizing crude prices above $50 a bar-

thereâ&#x20AC;&#x2122;ll be an immediate drawback in demandâ&#x20AC;? for light trucks, said Ivan Drury, a Santa Monica, Calif.-based senior analyst at Edmunds.com. Auto makers arenâ&#x20AC;&#x2122;t buying it. Ford on Monday said it will revive the Bronco SUV and Ranger small pickup trucks, a nod to a broader industry expectation that the U.S. market has undergone a structural shift. While some auto makers are investing heavily to revamp popular sedansâ&#x20AC;&#x201D;including Toyota Motor Corp.â&#x20AC;&#x2122;s iconic Camryâ&#x20AC;&#x201D;most are scrambling to add light-truck production capacity while paring back passenger-car production. â&#x20AC;&#x153;It appears to me that itâ&#x20AC;&#x2122;s a permanent trend,â&#x20AC;? Fiat Chrysler Automobiles NV Chief Executive Sergio Marchionne said Monday. The company has killed off its Chrysler and Dodge brand small cars and will sell a lineup almost entirely of SUVs and trucks. â&#x20AC;&#x153;People have abandoned the sedan as being a traditional mode of transportation,â&#x20AC;? Mr. Marchionne said. â&#x20AC;&#x153;If you can afford something, you much prefer a SUV.â&#x20AC;? â&#x20AC;&#x201D;Adrienne Roberts and Mike Colias contributed to this article.

â&#x20AC;&#x2DC;Chicken Taxâ&#x20AC;&#x2122; Surfaces In Talk of Auto Tariffs

BY JOHN D. STOLL AND ADRIENNE ROBERTS

DETROITâ&#x20AC;&#x201D;A half-centuryold clash over chicken exports is cropping up in conversations at the Motor Cityâ&#x20AC;&#x2122;s car show this week as auto executives hash out their responses to President-elect Donald Trumpâ&#x20AC;&#x2122;s pressure on U.S. companies manufacturing goods abroad. The annual auto extravaganza has become more of a truck-fest, with low gasoline prices prompting manufacturers to launch revamped versions of pickups and hefty wagons. U.S. and foreign auto executives say elimination of the â&#x20AC;&#x153;Chicken Tax,â&#x20AC;? a 25% tariff on pickups and work vans imported to North America from other regions, could boost supplies of these profitable vehicles and offset wilting demand for sedans. The name of the tax comes from a trans-Atlantic trade dispute in the early 1960s. European countries including the then-West Germany taxed chickens imported from the U.S., and President Lyndon B. Johnson retaliated with a tariff that included pickup trucks made by the likes Volkswagen AG and others. Subject to the duty for decades, auto makers have either built all pickups and work vans in North America to avoid the tax or shipped stripped down versions of those vehicles from Europe and Asia and completed assembly on U.S. shores. Even though 1994â&#x20AC;&#x2122;s North American Free Trade Agreementâ&#x20AC;&#x201D;a frequent target of Mr. Trumpâ&#x20AC;&#x2122;s ireâ&#x20AC;&#x201D;allows auto makers to build these vehicles for the U.S. market in Mexico and Canada, deep-rooted U.S. manufacturers have maintained their dominance. Many analysts say the Chicken Tax has protected U.S. jobs. But the tax also has lim-

ited options for buyers and likely hurt the overall fueleconomy opportunities for light trucks, said Dan Ikenson, director of trade-policy studies at the Cato Institute. Ford Motor Co., Volkswagen, Mitsubishi Motors Corp. and other auto makers have long built fuel-efficient and sporty pickups on foreign soilâ&#x20AC;&#x201D;including a large number in Thailandâ&#x20AC;&#x201D;and refused to take a hit to put them in American showrooms.

Tax born of the 1960s has deterred imports of pickups, dismaying some dealers. Daimler AG is preparing a new Mercedes pickup to be built outside the U.S., but Chief Executive Dieter Zetsche told reporters Monday the product isnâ&#x20AC;&#x2122;t right for the U.S. At the same time, American truck buyers routinely spend more on Ford F-150s than they do for most German luxury sedans, so Mr. Zetsche will monitor the situation. Ford plans to move some small-car production to Mexico and refurbish the Michigan plant currently building those cars so it can build the Ranger pickup on U.S. soil to avoid the tariff. However, that will take another two years. Volkswagen is currently researching ways to bring its rugged Amarok pickup to the U.S. to help spark demand for a brand tarnished by an emissions scandal and criticized for not making cars Americans want. A spokeswoman said the more immediate focus is on ramping up SUV supply. One company hit especially hard by the Chicken Tax is Mitsubishi Motors. The Renault SA-Nissan Motor Co. al-

liance recently took controlling interest in the Japanese auto maker and a big priority is finding success in a U.S. market where it has more than 300 dealers but sells fewer than 100,000 vehicles a year. Those dealers are more profitable than they were a few years ago thanks to some new products and operational tweaks, but they need a jumpstart to be viable over the long term. Mitsubishi last year closed a plant in Normal, Ill., and has said the partnership with Nissan is a reason for hope. Dealers say they want to get their hands on the Mitsubishi Triton pickup the auto maker sells elsewhere and builds in Thailand. â&#x20AC;&#x153;Itâ&#x20AC;&#x2122;s at the top of the dealer wish list,â&#x20AC;? Mitsubishiâ&#x20AC;&#x2122;s North American operating chief, Don Swearingen, said. The Japanese auto maker isnâ&#x20AC;&#x2122;t participating in the formal auto show. But at a private event before the kickoff of the show, Mr. Swearingen said he has to tell those dealers no Triton. Why? â&#x20AC;&#x153;The Chicken Tax.â&#x20AC;? He said one option would be to work with Nissan, which has ample U.S. pickup-truck production capacity and is eager to maximize its Mitsubishi investment, even if the two brands remain competitors. Dealers are â&#x20AC;&#x153;foaming at the mouthâ&#x20AC;? for the truck, Ryan Gremore, general manager of Oâ&#x20AC;&#x2122;Brien Mitsubishi in Illinois, said. At a meeting with Mitsubishiâ&#x20AC;&#x2122;s executive board at its U.S. headquarters in Cypress, Calif., in November, dealers were asked, â&#x20AC;&#x153;If you could have one Mitsubishi vehicle in the U.S. thatâ&#x20AC;&#x2122;s not here now, what would you pick?â&#x20AC;? he said. The dealers unanimously said the Triton. â&#x20AC;&#x153;I hope they are going to find a way to get it done,â&#x20AC;? Mr. Gremore said.

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A Ford Ranger at an auto show in Germany in 2015. The pickup isnâ&#x20AC;&#x2122;t available at U.S. dealerships.

THE WALL STREET JOURNAL.

Wednesday, January 11, 2017 | B9

BIGGEST 1,000 STOCKS How to Read the Stock Tables The following explanations apply to NYSE, NYSE Arca, NYSE MKT and Nasdaq Stock Market listed securities. Prices are composite quotations that include primary market trades as well as trades reported by Nasdaq OMX BXSM (formerly Boston), Chicago Stock Exchange, CBOE, National Stock Exchange, ISE and BATS. The list comprises the 1,000 largest companies based on market capitalization. Underlined quotations are those stocks with large changes in volume compared with the issueâ&#x20AC;&#x2122;s average trading volume. Boldfaced quotations highlight those issues whose price changed by 5% or more if their previous closing price was $2 or higher.

Footnotes: s-New 52-week high. t-New 52-week low. dd-Indicates loss in the most recent four quarters. FD-First day of trading. h-Does not meet continued listing standards lf-Late filing q-Temporary exemption from Nasdaq requirements. t-NYSE bankruptcy v-Trading halted on primary market. vj-In bankruptcy or receivership or being reorganized under the Bankruptcy Code, or securities assumed by such companies.

Wall Street Journal stock tables reflect composite regular trading as of 4 p.m. and changes in the closing prices from 4 p.m. the previous day. Tuesday, January 10, 2017 Stock

Net Sym Close Chg

NYSE ABB ABB 22.10 AECOM ACM 37.15 AES AES 11.33 Aflac AFL 69.43 AT&T T 40.81 AXIS Capital AXS 64.89 AbbottLabs ABT 41.29 AbbVie ABBV 64.07 Accenture ACN 115.06 AcuityBrands AYI 208.94 Adient ADNT 58.54 AdvanceAuto AAP 169.92 AdvSemiEngg ASX 5.41 Aegon AEG 5.47 AerCap AER 43.49 Aetna AET 122.67 AffiliatedMgrs AMG 143.27 AgilentTechs A 48.10 AgnicoEagle AEM 44.35 Agrium AGU 102.91 AirProducts APD 145.26 s AlaskaAir ALK 92.00 Albemarle ALB 89.88 Alcoa AA 30.98 AlexandriaRealEst ARE 110.85 Alibaba BABA 96.75 Alleghany Y 599.50 Allegion ALLE 64.50 Allergan AGN 221.25 AllianceData ADS 235.26 AllianceBernstein AB 22.85 AlliantEnergy LNT 37.24 AllisonTransm ALSN 33.47 Allstate ALL 73.75 AllyFinancial ALLY 20.04 Altria MO 67.72 AlumofChina ACH 10.64 Ambev ABEV 5.06 Ameren AEE 51.97 AmericaMovil AMX 12.74 AmericaMovil A AMOV 12.56 AmCampus ACC 49.56 AEP AEP 62.12 s AmericanExpress AXP 76.65 AmericanFin AFG 87.13 s AIG AIG 67.20 AmerTowerREIT AMT 103.50 AmerWaterWorks AWK 70.72 Amerigas APU 47.20 Ameriprise AMP 114.73 AmerisourceBrgn ABC 84.83 Ametek AME 49.87 Amphenol APH 67.79 AnadarkoPetrol APC 69.58 ABInBev BUD 105.43 AnnalyCap NLY 10.17 AnteroMidstream AM 32.50 AnteroResources AR 24.22 Anthem ANTM 146.34 Aon AON 112.63 Apache APA 62.87 ApartmtInv AIV 44.25 AquaAmerica WTR 29.92 Aramark ARMK 34.02 ArcelorMittal MT 8.10 ArcherDaniels ADM 44.46 Arconic ARNC 20.71 AristaNetworks ANET 100.42 s ArrowElec ARW 73.10 AshlandGlobal ASH 110.92 Assurant AIZ 94.20 AstraZeneca AZN 28.75 Athene ATH 46.73 AtmosEnergy ATO 73.29 Autoliv ALV 113.13 AutoNation AN 51.13 AutoZone AZO 793.68 Avalonbay AVB 176.82 Avangrid AGR 39.07 AveryDennison AVY 72.73 Avnet AVT 46.97 AxaltaCoating AXTA 27.28 BB&T BBT 46.66 BCE BCE 43.83 BHPBilliton BHP 38.56 BHPBilliton BBL 34.21 BP BP 37.11 BRF BRFS 14.38 BT Group BT 23.94 BakerHughes BHI 62.38

0.60 1.12 -0.20 -0.09 0.01 -0.12 0.55 -0.14 0.06 6.43 2.66 0.39 0.02 0.03 0.35 -0.26 -0.16 -0.04 0.22 0.39 -1.05 4.53 -0.60 1.50 -0.20 2.03 -3.25 -0.92 1.15 -2.33 -1.00 -0.04 0.66 0.66 0.29 -0.23 0.27 -0.07 -0.02 0.04 -0.05 -0.51 -0.19 0.79 0.38 0.82 -1.52 -0.63 -0.35 -0.47 -0.65 0.24 0.41 -0.40 -0.51 -0.05 -0.81 0.10 3.55 -0.77 0.51 -0.71 -0.05 -0.68 0.59 -0.29 0.32 0.90 0.80 0.08 0.09 0.22 -0.20 0.08 1.22 0.59 3.34 -0.40 0.53 0.17 0.13 -0.33 -0.07 0.04 1.71 1.77 -0.20 0.12 0.13 -0.86

Stock

Net Sym Close Chg

Stock

Net Sym Close Chg

Ball BLL 75.62 -0.36 Citigroup C 60.23 0.01 BancoBilbaoViz BBVA 6.73 -0.11 CitizensFin CFG 36.28 0.60 BancodeChile BCH 70.72 0.11 Clorox CLX 119.38 -1.92 BcoSantChile BSAC 21.69 -0.20 Coach COH 35.48 0.49 BancoSantander SAN 5.34 -0.01 Coca-Cola KO 41.04 -0.28 BanColombia CIB 38.26 -0.13 t Coca-Cola Femsa KOF 60.25 -0.86 BankofAmerica BAC 22.94 0.39 Colgate-Palmolive CL 65.39 -1.03 s BankofMontreal BMO 73.86 0.28 Comerica CMA 69.61 0.07 BankNY Mellon BK 47.72 0.08 SABESP SBS 9.12 0.03 BkNovaScotia BNS 58.18 0.49 CSC CSC 60.55 0.74 Barclays BCS 11.46 0.13 ConagraBrands CAG 38.29 -0.15 Bard CR BCR 232.66 2.51 ConchoRscs CXO 133.69 -0.98 BarrickGold ABX 16.80 -0.17 ConocoPhillips COP 49.66 ... BaxterIntl BAX 46.51 0.34 ConEd ED 72.64 -0.12 BectonDickinson BDX 170.94 2.07 ConstBrands A STZ 149.24 -1.03 Berkley WRB 66.91 0.94 ConstBrands B STZ/B 149.55 -0.74 BerkHathwy A BRK/A 242077-1034.00 ContinentalRscs CLR 49.88 -0.14 BerkHathwy B BRK/B 161.47 -0.55 Cooper COO 181.80 3.72 BerryPlastics BERY 50.63 0.27 CoreLabs CLB 121.43 -2.75 BestBuy BBY 43.86 0.52 Corning GLW 24.49 0.02 s Bio-RadLab A BIO 188.48 0.10 Coty COTY 18.96 0.11 BlackRock BLK 380.31 -0.11 Credicorp BAP 165.00 1.80 BlackstoneGroup BX 30.07 -0.40 CreditSuisse CS 15.63 0.02 BoardwalkPipe BWP 18.20 -0.12 CrescentPoint CPG 12.81 -0.12 Boeing BA 159.07 0.75 CrestwoodEquity CEQP 25.40 -0.35 BoozAllen BAH 36.45 0.36 CrownCastle CCI 84.36 -1.37 BorgWarner BWA 40.77 -0.05 CrownHoldings CCK 53.17 0.30 BostonProperties BXP 128.79 -1.45 Cullen/Frost CFR 87.40 0.94 BostonScientific BSX 23.61 1.42 Cummins CMI 139.56 2.14 Braskem BAK 22.25 0.34 DDR DDR 15.04 -0.05 Bristol-Myers BMY 59.98 0.25 DTE Energy DTE 97.43 -0.45 BrixmorProp BRX 24.44 -0.16 Danaher DHR 81.10 0.51 BroadridgeFinl BR 66.02 -0.13 Darden DRI 72.25 0.69 BrookfieldMgt BAM 33.13 0.19 DaVita DVA 63.63 0.25 BrookfieldInfr BIP 34.08 -0.17 Deere DE 104.89 -0.30 Brown&Brown BRO 44.61 -0.05 DelphiAutomotive DLPH 70.47 2.41 t Brown-Forman A BF/A 46.11 -0.19 DeltaAir DAL 50.93 1.24 Brown-Forman B BF/B 44.57 -0.18 DeutscheBank DB 18.67 -0.38 BuckeyePtrs BPL 65.79 -1.33 DevonEnergy DVN 46.70 0.12 Bunge BG 70.40 0.26 Diageo DEO 105.92 -0.64 BurlingtonStores BURL 87.39 1.90 Dick's DKS 54.62 0.80 CBRE Group CBG 30.96 -0.17 DigitalRealty DLR 102.36 -0.44 CBS A CBS/A 63.79 -1.89 DiscoverFinSvcs DFS 72.11 0.49 CBS B CBS 62.69 -0.79 Disney DIS 108.38 0.02 CF Industries CF 32.73 -1.04 DollarGeneral DG 74.25 0.52 CGI Group GIB 48.62 -0.51 DominionRscs D 75.43 -0.29 CIT Group CIT 42.99 -0.04 Domino's DPZ 166.36 1.85 CMS Energy CMS 41.51 -0.07 Donaldson DCI 41.88 0.59 CNA Fin CNA 40.79 0.41 DouglasEmmett DEI 36.82 0.36 CNOOC CEO 126.48 0.86 Dover DOV 77.02 0.30 s CPFLEnergia CPL 15.76 0.05 DowChemical DOW 57.67 -0.12 CRH CRH 34.04 0.32 DrPepperSnap DPS 90.08 -0.46 CSRA CSRA 31.95 -0.05 DrReddy'sLab RDY 44.94 0.07 CVS Health CVS 82.67 0.97 DuPont DD 73.56 -0.16 CabotOil COG 22.17 0.08 DukeEnergy DUK 76.50 -0.14 CamdenProperty CPT 82.69 -1.32 DukeRealty DRE 26.73 -0.15 Cameco CCJ 11.85 1.10 ENI E 32.78 0.42 CampbellSoup CPB 60.01 0.26 EOG Rscs EOG 103.40 0.38 CIBC CM 83.69 -0.45 EQT EQT 63.34 0.17 CanNtlRlwy CNI 69.29 0.52 EQT Midstream EQM 75.43 -1.56 CanNaturalRes CNQ 31.15 -0.45 EastmanChem EMN 77.33 0.72 CanPacRlwy CP 146.29 0.80 Eaton ETN 67.21 0.33 Canon CAJ 28.64 0.09 Ecolab ECL 117.86 -0.98 CapitalOne COF 88.98 1.54 Ecopetrol EC 9.37 0.07 CardinalHealth CAH 75.22 0.46 EdisonInt EIX 71.11 0.09 Carlisle CSL 108.22 0.02 EdwardsLife EW 99.14 1.19 CarMax KMX 65.68 0.49 EmersonElectric EMR 56.69 0.50 Carnival CCL 54.25 0.56 EnbridgeEnPtrs EEP 25.37 -0.37 Carnival CUK 53.08 0.72 Enbridge ENB 42.82 -0.63 Caterpillar CAT 93.83 1.46 Encana ECA 12.79 0.08 Celanese A CE 81.33 0.77 Endurance ENH 92.61 0.08 Cemex CX 7.80 -0.09 EnelAmericas ENIA 8.27 0.06 Cencosud CNCO 8.28 -0.10 EnelGenChile EOCC 19.60 0.20 CenovusEnergy CVE 14.78 -0.19 Energen EGN 57.47 0.84 Centene CNC 62.12 0.15 EnergyTrfrEquity ETE 18.74 -0.18 CenterPointEner CNP 24.95 0.07 EnergyTrfrPtrs ETP 35.61 -0.92 CentraisElBras EBR 6.81 -0.19 Enerplus ERF 8.88 ... CenturyLink CTL 25.20 -0.03 EnLinkMidPtrs ENLK 17.93 0.01 ChesapeakeEner CHK 6.92 0.05 Entergy ETR 71.24 0.15 Chevron CVX 114.96 -0.88 EnterpriseProd EPD 26.84 -0.72 ChinaEastrnAir CEA 24.22 0.36 EnvisionHlthcr EVHC 65.22 -2.03 ChinaLifeIns LFC 13.62 0.22 Equifax EFX 120.04 0.20 ChinaMobile CHL 54.49 0.34 EquityLife ELS 72.16 -0.88 ChinaPetrol SNP 75.80 1.00 EquityResdntl EQR 63.88 -0.59 ChinaSoAirlines ZNH 28.85 1.66 EssexProp ESS 230.10 -0.63 ChinaTelecom CHA 47.97 0.08 EsteeLauder EL 77.35 -0.89 ChinaUnicom CHU 11.73 -0.16 s EverestRe RE 219.42 2.45 Chipotle CMG414.48 19.42 EversourceEner ES 54.28 -0.29 EXC 35.06 -0.21 Chubb CB 130.46 -0.05 Exelon ChunghwaTelecom CHT 31.75 0.19 ExtraSpaceSt EXR 76.63 -1.63 Church&Dwight CHD 43.58 -0.72 ExxonMobil XOM 85.93 -1.11 Cigna CI 140.23 -2.12 FMC FMC 57.70 -0.25 CimarexEnergy XEC 141.34 1.98 FMC Tech FTI 35.79 -0.10

Stock

Net Sym Close Chg

FactSet FDS 169.46 FederalRealty FRT 141.19 FedEx FDX 188.42 s FiatChrysler FCAU 10.81 FibriaCelulose FBR 9.76 FidelityNatlFin FNF 34.04 FNFV Group FNFV 13.15 FidelityNtlInfo FIS 77.65 FirstData FDC 15.51 FirstRepBank FRC 92.30 FirstEnergy FE 30.37 FleetCorTech FLT 147.97 Flowserve FLS 49.01 Fluor FLR 53.08 t FomentoEconMex FMX 74.57 FootLocker FL 70.94 FordMotor F 12.85 ForestCIty A FCE/A 20.42 Fortis FTS 30.94 Fortive FTV 53.80 FortBrandsHome FBHS 54.17 Franco-Nevada FNV 61.78 FranklinRscs BEN 40.40 Freeport-McMoRan FCX 15.55 FreseniusMed FMS 40.55 Gallagher AJG 52.42 Gap GPS 23.91 Gartner IT 97.62 Gazit-Globe GZT 9.36 GeneralDynamics GD 176.36 GeneralElec GE 31.37 GeneralGrowthProp GGP 25.04 GeneralMills GIS 60.45 s GeneralMotors GM 37.35 GenuineParts GPC 97.28 Gerdau GGB 3.72 Gildan GIL 25.64 GlaxoSmithKline GSK 39.34 GlobalPayments GPN 77.88 Goldcorp GG 14.45 GoldmanSachs GS 242.57 Grainger GWW 230.72 GreatPlainsEner GXP 27.22 GpoAvalAcciones AVAL 8.17 GpFinSantandMex BSMX 7.06 GrupoTelevisa TV 20.02 s GuangshenRail GSH 31.38 HCAHoldings HCA 78.27 HCP HCP 30.05 HDFC Bank HDB 61.89 HP HPQ 14.69 HSBCHoldings HSBC 40.75 Halliburton HAL 54.64 Hanesbrands HBI 22.43 HarleyDavidson HOG 58.50 HarmanIntlInds HAR 110.65 Harris HRS 101.71 HartfordFinl HIG 48.43 Helmerich&Payne HP 78.84 Hershey HSY 104.83 Hess HES 61.45 HewlettPackard HPE 22.95 HighwoodsProp HIW 51.70 HiltonWorldwide HLT 56.02 HollyFrontier HFC 30.71 HomeDepot HD 136.10 HondaMotor HMC 30.10 Honeywell HON 117.85 HormelFoods HRL 34.92 DR Horton DHI 28.15 HostHotels HST 18.03 HuanengPower HNP 26.22 Hubbell HUBB 117.47 Humana HUM 200.95 HuntingtonIngalls HII 191.30 HyattHotels H 55.17 ICICI Bank IBN 7.73 ING Groep ING 14.41 Invesco IVZ 30.67 IDEX IEX 90.81 IllinoisToolWks ITW 122.57 Infosys INFY 14.78 Ingersoll-Rand IR 76.01 Ingredion INGR 124.08 ICE ICE 56.77 InterContinentl IHG 45.73 IBM IBM 165.52 IntlFlavors IFF 115.48 IntlGameTech IGT 26.87 IntlPaper IP 53.78 Interpublic IPG 23.31 IronMountain IRM 33.30 IsraelChemicals ICL 4.48 ItauUnibanco ITUB 11.16 JPMorganChase JPM 86.43 JacobsEngineering JEC 57.29 JamesHardie JHX 15.91 J&J JNJ 116.16 JohnsonControls JCI 43.61 JoyGlobal JOY 28.13 JuniperNetworks JNPR 28.40 s KAR Auction KAR 45.34 KB Fin KB 36.38 KKR KKR 17.11 KT KT 13.84 KSCitySouthern KSU 81.28 Kellogg K 71.66 KeyCorp KEY 18.48 KeysightTechs KEYS 36.31 KilroyRealty KRC 72.85 KimberlyClark KMB 114.36 KimcoRealty KIM 25.14 KinderMorgan KMI 21.57 KinrossGold KGC 3.39 Kohl's KSS 41.21

Stock

Net Sym Close Chg

Stock

Explanatory Notes

Data provided by

Top 250 mutual-funds listings for Nasdaq-published share classes with net assets of at least $500 million each. NAV is net asset value. Percentage performance figures are total returns, assuming reinvestment of all distributions and after subtracting annual expenses. Figures donâ&#x20AC;&#x2122;t reflect sales charges (â&#x20AC;&#x153;loadsâ&#x20AC;?) or redemption fees. NET CHG is change in NAV from previous trading day. YTD%RET is year-to-date return. 3-YR%RET is trailing three-year return annualized. e-Ex-distribution. f-Previous dayâ&#x20AC;&#x2122;s quotation. g-Footnotes x and s apply. j-Footnotes e and s apply. k-Recalculated by Lipper, using updated data. p-Distribution costs apply, 12b-1. r-Redemption charge may apply. s-Stock split or dividend. t-Footnotes p and r apply. v-Footnotes x and e apply. x-Ex-dividend. z-Footnote x, e and s apply. NA-Not available due to incomplete price, performance or cost data. NE-Not released by Lipper; data under review. NN-Fund not tracked. NS-Fund didnâ&#x20AC;&#x2122;t exist at start of period.

Net YTD Fund

Tuesday, January 10, 2017 Net YTD

NAV Chg %Ret Fund

A American Funds Cl A AmcpA p 27.80 +0.09 AMutlA p 37.13 -0.02 BalA p 25.01 -0.02 BondA p 12.76 -0.01 CapIBA p 58.02 -0.08 CapWGrA 44.74 +0.12 EupacA p 46.22 +0.19 FdInvA p 55.22 +0.06 GwthA p 43.20 +0.17 HI TrA p 10.35 +0.01 ICAA p 36.84 +0.10 IncoA p 21.86 -0.01 N PerA p 36.16 +0.06 NEcoA p 37.11 +0.22 NwWrldA 52.75 +0.21 SmCpA p 47.09 +0.27 TxExA p 12.80 +0.01 WshA p 41.27 -0.03 AMG Managers Funds YacktmanFd I 21.63 ... AQR Funds MgdFutStrI 9.35 ...

2.1 0.8 0.8 0.4 0.7 2.1 2.5 1.4 2.8 1.0 1.7 0.9 2.3 3.2 2.5 2.4 0.5 0.8 1.1 0.3

B Baird Funds AggBdInst 10.75 ... CorBdInst 11.08 ... BlackRock Funds A GlblAlloc p 18.44 +0.02 BlackRock Funds C GlblAlloc t 16.79 +0.02 BlackRock Funds Inst EqtyDivd 22.68 ... GlblAlloc 18.54 +0.02 HiYldBd 7.72 +0.01 StratIncOpptyIns 9.86 ...

0.5 0.5 1.4 1.5 0.6 1.4 1.2 0.4

D Del Invest Instl Value 19.80 Dimensional Fds 5GlbFxdInc 10.89 EmgMktVa 24.65 EmMktCorEq 17.82 IntlCoreEq 11.92 IntSmCo 17.65 IntSmVa 19.48 US CoreEq1 19.52 US CoreEq2 18.83 US Small 34.00 US SmCpVal 37.64 US TgdVal 24.18 USLgVa 35.43 Dodge & Cox Balanced 104.72 Income 13.64 Intl Stk 39.21 Stock 187.52

-0.04 0.6 ... +0.24 +0.12 +0.01 +0.01 +0.02 +0.07 +0.09 +0.36 +0.45 +0.24 +0.12 +0.27 ... +0.10 +0.65

0.2 2.9 2.6 2.2 2.2 2.4 1.3 1.2 0.5 0.7 0.7 1.0 1.3 0.4 2.9 1.7

Net YTD

NAV Chg %Ret Fund

DoubleLine Funds TotRetBdI NA TotRetBdN NA

NAV Chg %Ret

Income C t 2.35 ... 1.2 ... NA FrankTemp/Temp A ... NA GlBond A p 11.91 -0.06 -0.7 Growth A p 23.98 +0.06 1.8 FrankTemp/Temp Adv GlBondAdv p 11.86 -0.07 -0.8 ... NA

Federated Instl StraValDivIS NA Fidelity 500IdxInst 79.44 ... 500IdxInstPrem 79.44 ... 500IdxPrem 79.44 ... ExtMktIdxPrem r 56.53 +0.39 TMktIdxF r 65.48 +0.08 TMktIdxPrem 65.48 +0.09 USBdIdxPrem 11.54 ... USBdIdxInstPrem 11.54 ... Fidelity Advisor I NwInsghtI 27.62 +0.04 Fidelity Freedom FF2020 15.19 +0.01 FF2025 13.03 +0.01 FF2030 16.05 +0.02 FreedomK2020 14.14 +0.01 FreedomK2025 14.80 +0.02 FreedomK2030 15.13 +0.02 FreedomK2035 15.69 +0.02 FreedomK2040 15.71 +0.02 Fidelity Invest Balanc 22.38 +0.02 BluCh 69.82 +0.23 Contra 101.29 +0.15 ContraK 101.21 +0.14 CpInc r 9.85 +0.02 DivIntl 33.85 +0.01 DivIntlK r 33.78 +0.01 GroCo 141.46 +0.39 GrowCoK 141.31 +0.39 InvGB 7.83 ... InvGrBd 11.14 -0.01 LowP r 49.86 +0.20 LowPriStkK r 49.81 +0.20 MagIn 93.41 +0.05 OTC 86.83 +0.17 Puritn 20.93 +0.01 SrsEmrgMktF 16.19 +0.08 SrsInvGrdF 11.15 ... TotalBond 10.57 ... Fidelity Selects Biotech r 190.92 +0.52 First Eagle Funds GlbA 55.01 ... FPA Funds FPACres 33.06 +0.10 FrankTemp/Frank Adv IncomeAdv 2.30 ... FrankTemp/Franklin A CA TF A p 7.34 ... Fed TF A p 12.03 +0.01 IncomeA p 2.32 ... RisDv A p 53.12 +0.07 FrankTemp/Franklin C

1.4 1.4 1.4 1.8 1.5 1.5 0.5 0.5

Harbor Funds CapApInst 58.76 +0.04 3.7 IntlInst r 59.75 -0.02 2.3

I Invesco Funds A EqIncA 10.69 +0.02 1.2

2.5 John Hancock Class 1 LSBalncd 14.44 +0.02 1.3 LSGwth 14.96 +0.03 1.4 John Hancock Instl 1.6 DispValMCI 21.81 +0.11 1.3 JPMorgan Funds 1.4 MdCpVal L 36.63 +0.09 1.7 JPMorgan R Class 1.8 CoreBond 11.55 ... 1.7 JPMorgan Select Cls CoreBond 11.54 ... 1.6 USLgCpCorPls 28.79 +0.11 3.7 2.9 2.9 Lazard Instl 1.5 EmgMktEq 16.35 +0.12 1.7 Loomis Sayles Fds 1.7 LSBondI 13.69 ... 3.4 Lord Abbett A 3.4 ShtDurIncmA p 4.31 ... 0.6 Lord Abbett F 0.5 ShtDurIncm 4.31 ... 0.8

1.4 1.8 1.6 0.6 0.4 0.5 2.4

0.8 2.2 4.2 1.7 2.9 0.5 0.5

0.6 0.5 0.9 0.9

1.0 0.1 0.3

Metropolitan West TotRetBd 10.57 TotRetBdI 10.57 TRBdPlan 9.94 MFS Funds Class A ValueA p 36.40 9.7 MFS Funds Class I ValueI 36.60 1.4 Mutual Series GlbDiscA 31.01 31.58 1.4 GlbDiscz 0.9

2.4

... 0.3 ... 0.4 ... 0.4 +0.01 1.0 +0.02 1.0 +0.08 1.4 +0.09 1.4

O Oakmark Funds Cl I EqtyInc r 30.87 Oakmark 73.85 OakmrkInt 23.30 Old Westbury Fds LrgCpStr 13.06

+0.13 1.5 +0.23 1.9 +0.11 2.6 +0.02 1.8

NAV Chg %Ret Fund

Net Sym Close Chg

Stock

VEREIT VER 8.78 VF VFC 53.24 Visa V 81.31 VailResorts MTN 164.65 Vale VALE 8.96 ValeantPharm VRX 16.40 ValeroEnergy VLO 66.53 Valspar VAL 105.11 Vantiv VNTV 61.71 VarianMed VAR 89.99 Vedanta VEDL 13.69 VeevaSystems VEEV 43.85 Ventas VTR 61.16 Verizon VZ 52.76 VermilionEnergy VET 42.58 Vipshop VIPS 11.56 VMware VMW 81.48 VornadoRealty VNO 105.00 VoyaFinancial VOYA 40.36 VulcanMaterials VMC 123.61 WABCO WBC 106.55 EWEC Energy WEC 58.10 W.P.Carey WPC 60.66 Wabtec WAB 85.31 Wal-Mart WMT 68.23 WasteConnections WCN 81.20 WasteMgt WM 69.49 Waters WAT 137.56 Watsco WSO 147.57 WeatherfordIntl WFT 5.68 s WellCareHealth WCG 141.09 WellsFargo WFC 54.62 Welltower HCN 66.32 s WestPharmSvcs WST 87.70 WestarEnergy WR 54.58 WestAllianceBcp WAL 49.20 WesternGasEquity WGP 42.57 WesternGasPtrs WES 58.73 WesternUnion WU 22.23 WestlakeChem WLK 58.04 WestpacBanking WBK 24.82 WestRock WRK 52.08 Weyerhaeuser WY 30.73 Whirlpool WHR 183.82 WhiteWaveFoods WWAV 55.38 Williams WMB 28.50 WilliamsPartners WPZ 38.62 Wipro WIT 9.75 WooriBank WF 32.00 Workday WDAY 74.35 Wyndham WYN 76.93 XcelEnergy XEL 40.29 Xerox XRX 7.03 Xylem XYL 49.14 YPF YPF 20.53 YanzhouCoal YZC 7.02 YumBrands YUM 64.98 YumChina YUMC 26.18 ZTO Express ZTO 13.53 ZayoGroup ZAYO 31.46 ZimmerBiomet ZBH 113.67 Zoetis ZTS 53.93

0.02 0.31 -0.44 2.92 0.74 1.05 0.16 1.31 -0.24 0.42 0.28 0.45 -2.29 0.08 0.12 -0.08 0.93 -1.06 1.02 0.89 1.44 0.12 0.20 1.25 -0.48 0.16 -0.29 -1.62 0.99 -0.20 2.24 0.38 -2.08 0.86 0.24 0.62 -0.10 -0.19 -0.32 -0.18 0.01 -0.12 -0.24 2.21 0.06 -3.43 -0.04 ... 0.82 -0.41 0.15 -0.01 0.06 -0.23 2.35 0.07 0.38 0.13 0.53 0.49 6.67 -0.02

NASDAQ AGNC Invt AGNC 18.75 Ansys ANSS 94.19 ARRIS Intl ARRS 30.16 s ASML ASML 112.65 ActivisionBliz ATVI 38.38 AdobeSystems ADBE 108.26 AkamaiTech AKAM 70.28 AlexionPharm ALXN 143.67 AlignTech ALGN 96.13 Alkermes ALKS 58.49 Alphabet A GOOGL 826.01 Alphabet C GOOG 804.79 Amazon.com AMZN 795.90 Amdocs DOX 58.13 Amerco UHAL 369.08 AmericanAirlines AAL 48.48 Amgen AMGN 158.76 AnalogDevices ADI 72.35 Apple AAPL 119.11 AppliedMaterials AMAT 33.13 ArchCapital ACGL 86.31 Atlassian TEAM 25.24 Autodesk ADSK 79.98 ADP ADP 102.20 s B/EAerospace BEAV 61.36 BOK Fin BOKF 83.24 Baidu BIDU 180.31 BankofOzarks OZRK 53.05 BedBath BBBY 40.75 Biogen BIIB 297.79 BioMarinPharm BMRN 90.40 BlackBerry BBRY 7.12 Broadcom AVGO 180.57 CA CA 33.01 CBOE Holdings CBOE 73.68

-0.12 -0.10 -0.22 0.16 0.68 -0.31 0.28 -1.10 1.34 -1.43 -1.17 -1.86 -1.02 0.11 0.85 1.40 -0.08 0.41 0.12 0.35 1.09 0.21 0.39 -0.27 0.33 0.51 3.15 0.17 0.31 -1.23 -0.63 ... 3.60 -0.24 -0.85

Net Sym Close Chg

Stock

CDK Global CDK 59.70 -0.48 CDW CDW 52.24 1.07 CH Robinson CHRW 73.14 -0.02 CME Group CME 116.30 -0.03 CSX CSX 37.42 0.43 CadenceDesign CDNS 25.77 0.05 Celgene CELG 119.98 -0.23 Cerner CERN 49.27 1.28 s CharterComms CHTR 298.20 1.94 CheckPointSftw CHKP 88.21 1.01 CincinnatiFin CINF 74.52 0.02 Cintas CTAS 114.78 -0.70 CiscoSystems CSCO 30.38 0.20 CitrixSystems CTXS 90.65 -0.14 s Cognex CGNX 65.71 1.74 CognizantTech CTSH 56.66 0.08 s Comcast A CMCSA 70.92 0.09 CommerceBcshrs CBSH 57.87 0.47 CommScope COMM 37.57 0.33 s Copart CPRT 56.71 0.18 CoStarGroup CSGP 194.20 1.77 Costco COST 161.66 0.69 Ctrip.com CTRP 43.71 0.47 s DISH Network DISH 61.74 0.10 DentsplySirona XRAY 58.17 -0.30 DexCom DXCM 67.04 4.55 DiamondbackEner FANG 102.71 1.28 DiscoveryComm A DISCA 26.34 -0.53 DiscoveryComm C DISCK 25.76 -0.49 DollarTree DLTR 77.96 0.82 Dunkin' DNKN 51.63 -0.20 s E*TRADE ETFC 36.79 0.33 EastWestBancorp EWBC 50.95 0.73 eBay EBAY 30.25 -0.50 ElectronicArts EA 78.85 0.21 Equinix EQIX 370.03 -3.16 Ericsson ERIC 5.88 0.01 ErieIndemnity A ERIE 111.89 0.58 Expedia EXPE 117.62 0.32 ExpeditorsIntl EXPD 52.87 -0.17 ExpressScripts ESRX 72.50 0.94 F5Networks FFIV 144.24 0.09 Facebook FB 124.35 -0.55 Fastenal FAST 46.51 0.34 FifthThirdBncp FITB 27.07 0.31 Fiserv FISV 108.23 0.13 Flex FLEX 14.62 0.29 Fortinet FTNT 31.96 0.65 Gaming&Leisure GLPI 30.99 -0.09 Garmin GRMN 47.93 -0.16 Gentex GNTX 20.67 0.39 GileadSciences GILD 75.01 -0.83 Goodyear GT 32.07 0.23 Grifols GRFS 16.78 -0.12 HDSupply HDS 41.99 -0.03 Hasbro HAS 82.86 0.26 HenrySchein HSIC 158.09 0.84 Hologic HOLX 40.44 0.39 JBHunt JBHT 97.72 0.85 HuntingtonBcshs HBAN 13.33 0.01 s IAC/InterActive IAC 69.91 0.13 s IdexxLab IDXX 120.71 1.69 IHSMarkit INFO 36.61 0.04 IPG Photonics IPGP 97.57 -0.25 IcahnEnterprises IEP 61.14 -0.42 Illumina ILMN 165.04 23.50 s Incyte INCY 119.30 0.77 Intel INTC 36.54 -0.07 Intuit INTU 116.11 -0.40 IntuitiveSurgical ISRG 662.20 20.90 IonisPharma IONS 50.07 1.93 JD.com JD 26.90 0.64 JackHenry JKHY 89.50 -0.71 JazzPharma JAZZ 116.12 -0.46 JetBlue JBLU 22.51 0.46 KLA Tencor KLAC 79.33 -0.26 KraftHeinz KHC 85.91 -0.16 LKQ LKQ 31.26 0.07 LamResearch LRCX 108.47 -0.39 s LamarAdvertising LAMR 70.31 1.12 LibertyBroadbandA LBRDA 74.23 0.67 s LibertyBroadbandC LBRDK 75.54 0.44 LibertyGlobal A LBTYA 34.01 0.22 LibertyGlobal C LBTYK 32.71 0.01 LibertyLiLAC A LILA 22.53 -0.43 LibertyLiLAC C LILAK 21.72 -0.38 LibertyQVC B QVCB 20.47 0.36 LibertyQVC A QVCA 19.46 0.03 LibertyVenturesA LVNTA 39.83 0.68 LincolnElectric LECO 79.37 1.37 LinearTech LLTC 62.33 0.09 lululemon LULU 69.90 1.71 MarketAxess MKTX 156.06 -0.73 Marriott MAR 81.93 -0.32 MarvellTech MRVL 14.56 0.19 Mattel MAT 29.91 -0.61 MaximIntProducts MXIM 40.89 0.24 MelcoCrownEnt MPEL 16.98 0.98 MercadoLibre MELI 177.79 3.68 MicrochipTech MCHP 64.85 0.43

Net Sym Close Chg

Stock

MicronTech MU 22.48 0.14 Microsemi MSCC 56.35 0.71 Microsoft MSFT 62.62 -0.02 Middleby MIDD 132.41 1.38 Mondelez MDLZ 44.17 -0.52 MonsterBeverage MNST 43.50 -0.90 Mylan MYL 38.95 ... NXP Semi NXPI 98.63 0.52 Nasdaq NDAQ 67.20 -0.57 NetApp NTAP 35.25 0.02 Netease NTES 239.98 5.08 Netflix NFLX 129.89 -1.06 NewsCorp A NWSA 12.00 ... NewsCorp B NWS 12.50 0.10 Nordson NDSN 112.50 2.26 NorthernTrust NTRS 89.27 0.24 NorwegianCruise NCLH 45.22 0.83 NVIDIA NVDA 106.47 -0.81 OPKOHealth OPK 9.37 0.06 OReillyAuto ORLY 281.30 1.90 OldDomFreight ODFL 86.69 1.06 s ON Semi ON 13.45 0.11 OpenText OTEX 63.10 0.88 PTC PTC 49.47 0.69 Paccar PCAR 66.25 1.18 PacWestBancorp PACW 55.12 0.62 Paychex PAYX 60.81 -0.21 PayPal PYPL 41.08 -0.32 People'sUtdFin PBCT 19.50 0.23 Priceline PCLN 1535.25 5.61 Qiagen QGEN 28.63 -0.09 Qorvo QRVO 56.40 2.03 Qualcomm QCOM 65.63 -0.02 RandgoldRscs GOLD 81.61 0.79 RegenPharm REGN 373.00 17.94 RossStores ROST 66.77 1.32 Ryanair RYAAY 83.95 0.67 SBA Comm SBAC 102.60 -0.39 SEI Investments SEIC 51.38 0.18 SS&C Tech SSNC 30.68 0.35 SVB Fin SIVB 175.95 1.62 Sabre SABR 24.94 0.04 s ScrippsNetworks SNI 74.29 -0.47 Seagate STX 37.63 -0.42 SeattleGenetics SGEN 59.01 0.20 Shire SHPG 177.25 -1.03 SignatureBank SBNY 151.19 1.18 s SiriusXM SIRI 4.63 0.03 Skyworks SWKS 77.31 1.66 Splunk SPLK 56.18 0.49 Staples SPLS 9.34 0.20 Starbucks SBUX 57.88 -0.32 SteelDynamics STLD 37.13 1.03 Stericycle SRCL 78.04 -0.80 Symantec SYMC 25.13 0.14 Synopsys SNPS 60.69 0.61 s TD Ameritrade AMTD 46.84 0.29 s TESARO TSRO 147.24 -1.61 TFS Fin TFSL 19.06 0.15 T-MobileUS TMUS 58.74 2.07 TRowePrice TROW 73.48 0.65 TeslaMotors TSLA 229.87 -1.41 TexasInstruments TXN 74.60 0.26 TractorSupply TSCO 76.35 0.98 Trimble TRMB 30.31 0.06 TripAdvisor TRIP 51.31 0.39 21stCenturyFoxA FOXA 29.67 0.20 21stCenturyFoxB FOX 28.92 0.15 UltaSalon ULTA 262.50 1.71 UltimateSoftware ULTI 191.13 0.07 s UnitedTherap UTHR 152.46 4.60 s VCA WOOF 90.83 0.04 VeriSign VRSN 79.25 -2.57 VeriskAnalytics VRSK 82.26 0.53 VertxPharm VRTX 82.93 0.07 Viacom A VIA 42.15 0.35 Viacom B VIAB 38.40 0.06 VimpelCom VIP 4.04 -0.07 Vodafone VOD 26.03 0.45 WPP WPPGY 113.85 0.59 WalgreensBoots WBA 82.67 0.12 Weibo WB 45.70 0.57 WesternDigital WDC 70.84 -1.02 WholeFoods WFM 30.73 -0.04 WillisTwrsWatson WLTW 126.22 0.21 WynnResorts WYNN 94.83 2.08 Xilinx XLNX 58.53 -0.53 Yahoo YHOO 42.30 0.96 Yandex YNDX 21.57 -0.38 Zillow A ZG 37.09 -0.13 Zillow C Z 36.65 -0.30 ZionsBancorp ZION 43.56 0.66

NYSE MKT BritishAmTob BTI CheniereEnergy LNG CheniereEnerPtrs CQP CheniereEnHldgs CQH ImperialOil IMO

113.43 43.35 28.21 22.55 34.49

-0.28 -0.49 -0.78 -0.10 -0.16

Dividend Changes

Dividend announcements from January 10. Payable / Record

Jan17 /Jan13 Jan17 /Jan13

Initial

Net YTD Fund

Net Sym Close Chg

IX -0.34 KoninklijkePhil PHG 30.57 0.20 Orix 80.09 -0.25 SilverWheaton SLW 20.41 0.14 -1.49 t KoreaElcPwr KEP 17.93 0.12 OwensCorning OC 51.66 -0.25 SimonProperty SPG 184.19 -1.72 SIX 60.68 0.28 KR 33.19 0.27 PG&E -1.27 Kroger PCG 60.07 -0.23 SixFlags AOS 47.76 0.36 0.24 Kyocera KYO 50.49 -0.22 PLDT PHI 31.59 1.06 SmithAO 0.13 LATAMAirlines LFL 8.51 0.20 PNC Fin PNC 118.67 0.47 Smith&Nephew SNN 30.37 0.28 -0.15 L Brands SJM 128.74 0.73 LB 61.35 0.05 POSCO PKX 53.21 2.61 Smucker 0.30 LGDisplay LPL 13.44 SNA 176.27 2.28 ... PPG Ind PPG 96.39 0.04 SnapOn SOQUIMICH SQM 30.39 0.60 LN 35.33 -0.11 PPL -0.39 LINE PPL 33.94 -0.28 LLL 150.96 -1.91 PVH 0.06 L3 Tech PVH 93.85 1.59 SonocoProducts SON 54.17 0.30 SNE 29.53 0.71 0.28 LabCpAm LH 132.06 1.33 s PackagingCpAm PKG 87.98 0.21 Sony SO 48.38 -0.15 -0.64 s LambWeston LW 36.84 -0.05 PaloAltoNtwks PANW 134.68 0.96 Southern SCCO 34.18 0.88 0.11 LasVegasSands LVS 56.61 0.90 ParkHotels PK 29.22 -0.11 SoCopper SouthwestAirlines LUV 51.34 1.04 LAZ 40.65 -0.36 ParkerHannifin PH 141.83 1.05 0.50 Lazard LEA 142.77 6.80 ParsleyEnergy PE 36.67 0.91 SpectraEnergy SE 41.73 -0.64 0.66 s Lear 0.38 Leggett&Platt LEG 48.01 0.10 Pearson PSO 9.93 -0.01 SpectraEnerPtrs SEP 46.89 -0.20 0.07 Leidos LDOS 50.27 0.29 PembinaPipeline PBA 31.51 -0.04 SpectrumBrands SPB 119.81 -3.39 0.22 Lennar A LEN 43.73 0.18 Pentair PNR 56.93 0.36 SpiritAeroSys SPR 58.71 0.05 ... Lennar B LEN/B 35.20 -0.01 PepsiCo PEP 101.97 -1.49 SpiritRealtyCap SRC 10.89 -0.14 S 8.76 0.06 -0.04 LennoxIntl LII 150.25 -0.25 PerkinElmer PKI 53.34 -0.21 Sprint SQ 14.91 -0.15 0.07 LeucadiaNatl LUK 23.61 0.39 Perrigo PRGO 83.65 -1.78 Square 0.27 Level3Comm LVLT 58.45 -0.19 s PetroChina PTR 79.76 1.08 StanleyBlackDck SWK 117.75 0.09 0.31 LibertyProperty LPT 39.98 -0.15 PetroleoBrasil PBR 11.02 0.19 StarwoodProp STWD 22.30 0.05 0.09 EliLilly LLY 76.27 ... PetroleoBrasilA PBR/A 9.65 0.11 StateStreet STT 81.30 -0.07 STO 18.53 0.01 0.87 LincolnNational LNC 67.16 0.64 Pfizer PFE 33.44 -0.03 Statoil STE 69.45 0.41 0.85 LionsGate A LGF/A 27.47 -0.17 PhilipMorris PM 90.52 -0.79 Steris STMicroelec STM 11.29 0.14 0.02 LiveNationEnt LYV 27.65 0.36 Phillips66 PSX 83.76 -0.26 SYK 121.90 2.88 0.07 LloydsBanking LYG 3.27 0.06 PinnacleFoods PF 53.00 -0.25 Stryker 1.80 LockheedMartin LMT 256.17 -1.64 PinnacleWest PNW 77.13 -0.10 SumitomoMits SMFG 7.83 -0.02 L 46.47 0.18 PioneerNatRscs PXD 181.27 -1.33 SunCommunities SUI 77.26 -0.76 0.06 Loews LOW 71.21 0.14 PlainsAllAmPipe PAA 31.92 -0.48 SunLifeFinancial SLF 39.01 0.11 0.29 Lowe's LUX 50.54 0.51 PolarisIndustries PII 83.74 0.02 SuncorEnergy SU 32.52 -0.36 -0.09 Luxottica -0.51 LyondellBasell LYB 86.88 -0.01 PostHoldings POST 82.90 -0.74 SunocoLogistics SXL 23.85 -0.67 -0.11 M&T Bank MTB 156.70 0.74 Potash POT 18.60 0.18 SunTrustBanks STI 55.70 0.46 1.34 MDU Rscs MDU 28.65 0.50 Praxair PX 115.85 -0.70 SynchronyFin SYF 36.96 0.06 SYT 81.50 0.60 1.23 MGM Resorts MGM 29.62 0.46 PrincipalFin PFG 58.65 0.46 Syngenta SYY 55.33 -0.35 MPLX 35.34 0.08 Procter&Gamble PG 83.49 -0.91 Sysco 0.13 MPLX MSCI 81.52 -1.16 s Progressive PGR 36.32 0.60 TAL Education TAL 76.35 -0.69 0.38 MSCI -0.09 MSC Industrial MSM 92.17 1.25 Prologis PLD 52.47 -1.23 TE Connectivity TEL 67.60 0.29 TU 33.18 -0.02 MAC 70.09 -1.33 PrudentialFin PRU 105.57 0.83 Telus -1.91 Macerich TX 23.79 0.17 -0.01 MacquarieInfr MIC 82.64 0.90 Prudential PUK 38.53 -0.33 Ternium TSU 12.95 0.18 M 30.30 -0.16 PublicServiceEnt PEG 43.46 -0.06 TIM Part -0.32 Macy's TJX 76.69 0.59 0.37 MagellanMid MMP 73.77 -2.07 PublicStorage PSA 225.30 -1.49 TJX -0.35 MagnaIntl MGA 45.41 1.13 PulteGroup PHM 18.69 0.16 TaiwanSemi TSM 30.07 0.03 -0.05 Mallinckrodt MNK 53.75 0.20 QuestDiag DGX 93.00 0.57 TargaResources TRGP 57.02 -1.58 TGT 71.43 ... -0.04 Manpower MAN 90.27 0.46 QuintilesIMS Q 77.88 -0.11 Target -0.97 ManulifeFin MFC 18.57 0.25 RELX RENX 16.62 -0.08 TataMotors TTM 38.15 0.89 TeckRscsB TECK 22.41 1.63 0.57 MarathonOil MRO 17.48 0.08 RELX RELX 17.92 -0.05 8.76 ... -0.65 MarathonPetrol MPC 48.97 -0.49 RPM RPM 52.17 -0.03 TelecomItalia TI -0.76 MarineHarvest MHG 17.16 0.02 RSP Permian RSPP 43.80 -0.30 TelecomItalia A TI/A 7.20 0.05 MKL 896.67 -4.33 RalphLauren RL 87.94 0.69 Teleflex TFX 167.88 2.91 1.16 Markel 0.01 Marsh&McLennan MMC 67.51 -0.29 RangeResources RRC 33.36 0.60 TelefonicaBras VIV 14.04 0.41 0.09 MartinMarietta MLM 220.56 1.20 RaymondJames RJF 74.43 0.78 Telefonica TEF 9.64 -0.01 MAS 32.21 0.03 Raytheon RTN 146.61 -1.58 TelekmIndonesia TLK 29.64 -0.41 -1.43 Masco TS 35.44 -0.02 0.21 Mastercard MA 107.32 -0.23 RealtyIncome O 58.69 -0.71 Tenaris 0.35 McCormick MKC 89.79 -0.35 RedHat TER 26.31 0.59 RHT 71.66 -0.48 Teradyne 0.04 McCormickVtg MKC/V 89.94 -0.21 RegencyCtrs REG 68.70 -0.63 Tesoro TSO 81.59 -0.09 -0.43 McDonalds MCD 120.25 -0.18 RegionsFin RF 14.56 0.19 TesoroLogistics TLLP 52.95 -0.59 0.36 McKesson MCK 146.82 -0.02 ReinsuranceGrp RGA 123.58 0.88 TevaPharm TEVA 35.20 0.14 -0.46 MeadJohnson MJN 71.16 -0.44 RelianceSteel RS 83.09 3.24 Textron TXT 49.94 0.40 MD 68.87 0.21 RenaissanceRe RNR 137.32 1.65 ThermoFisherSci TMO 147.78 0.29 0.94 Mednax 0.84 Medtronic MDT 74.90 1.08 RepublicServices RSG 56.69 0.27 ThomsonReuters TRI 44.61 0.05 MRK 59.92 -1.18 ResMed 0.39 Merck RMD 64.25 0.99 ThorIndustries THO 101.86 0.80 MET 53.93 0.23 RestaurantBrands QSR 49.63 0.18 3M -0.30 MetLife MMM 176.58 -0.69 -0.94 MettlerToledo MTD 429.94 3.56 ReynoldsAmer RAI 55.81 0.10 Tiffany TIF 77.14 0.30 -0.24 MichaelKors KORS 43.38 1.34 RioTinto RIO 41.00 2.64 TimeWarner TWX 93.40 -0.15 1.79 MidAmApt MAA 97.50 0.10 RiteAid RAD 8.32 -0.13 Torchmark TMK 74.01 0.10 -0.33 MitsubishiUFJ MTU 6.28 -0.03 RobertHalf RHI 49.02 0.67 Toro TTC 56.76 0.37 ... s Rockwell 0.30 MizuhoFin MFG 3.65 ROK 139.53 1.22 TorontoDomBk TD 50.74 0.08 -0.66 MobileTeleSys MBT 9.40 0.10 RockwellCollins COL 91.00 -0.78 Total TOT 50.62 0.01 MBLY 40.37 0.51 RogersComm B RCI 38.72 -0.12 TotalSystem TSS 53.08 -0.32 0.19 Mobileye -0.17 MohawkIndustries MHK 203.18 -0.55 Rollins ROL 33.11 -0.02 ToyotaMotor TM 119.76 0.02 0.59 MolsonCoors A TAP/A 96.03 -1.91 RoperTech ROP 186.00 -0.31 TransCanada TRP 45.77 -0.30 0.85 MolsonCoors B TAP 96.41 -1.87 RoyalBkCanada RY 70.31 0.37 TransDigm TDG 253.27 -2.06 -1.75 Monsanto MON 108.44 -0.51 RoyalBkScotland RBS 5.53 -0.01 Transocean RIG 15.14 -0.15 MCO 94.67 -2.19 RoyalCaribbean RCL 85.93 1.38 TransUnion TRU 32.01 -0.19 0.85 Moody's 0.39 MorganStanley MS 43.06 0.35 RoyalDutchA RDS/A 54.37 -0.23 Travelers TRV 117.18 -0.14 MOS 30.72 0.01 RoyalDutchB RDS/B 57.58 -0.25 TurkcellIletism TKC 6.81 -0.09 0.11 Mosaic 0.02 MotorolaSolutions MSI 82.63 -0.39 SAP SAP 88.63 -0.73 TurquoiseHill TRQ 3.56 0.25 -0.18 MurphyOil MUR 30.80 0.24 S&P Global SPGI 111.35 -1.93 Twitter TWTR 17.37 -0.13 NCR 42.50 0.41 s SINOPECShanghai SHI 57.50 0.54 TylerTech TYL 150.11 0.79 1.28 NCR 0.29 NTTDoCoMo DCM 23.65 0.08 SK Telecom SKM 21.16 0.16 TysonFoods TSN 61.21 -1.44 -0.18 NVR NVR 1690.97 9.47 SLGreenRealty SLG 106.05 -1.39 UBS Group UBS 16.47 0.01 1.11 NationalGrid NGG 56.84 -0.81 Salesforce.com CRM 73.98 0.02 UDR UDR 35.73 -0.32 -0.92 NatlOilwell NOV 37.76 -0.31 Sanofi UGI 45.31 -0.13 SNY 41.05 0.09 UGI -0.25 NatlRetailProp NNN 44.85 -0.41 Sasol SSL 29.38 0.31 US Foods USFD 26.96 -0.14 0.71 NewOrientalEduc EDU 48.51 -0.36 Scana SCG 71.02 0.09 UltraparPart UGP 21.26 0.12 -2.13 NY CmntyBcp NYCB 15.85 0.08 Schlumberger SLB 84.60 -1.17 UnderArmour A UAA 30.71 0.24 -0.08 NewellBrands NWL 46.97 0.03 SchwabC SCHW 41.19 0.07 UnderArmour C UA 27.32 0.30 0.05 NewfieldExpln NFX 41.61 -0.71 ScottsMiracleGro SMG 94.82 0.12 Unilever UN 40.89 -0.43 0.16 NewmontMining NEM 35.08 -0.28 SealedAir UL 40.88 -0.31 SEE 47.80 0.73 Unilever -0.20 NextEraEnergy NEE 118.58 0.23 SemicondctrMfg SMI 7.36 -0.03 UnionPacific UNP 103.42 1.00 0.04 NielsenHoldings NLSN 41.75 -0.61 SempraEnergy SRE 101.06 -0.32 UnitedContinental UAL 73.66 2.38 NKE 53.11 -0.27 s SensataTech ST 41.43 0.64 UPS B -0.07 Nike UPS 113.92 -0.85 -0.01 NipponTelegraph NTT 43.89 0.44 ServiceCorp SCI 28.92 0.09 UnitedRentals URI 108.90 2.74 NI 21.94 -0.12 ServiceNow NOW 81.67 -0.33 US Bancorp USB 51.22 0.15 0.25 NiSource 0.55 NobleEnergy NBL 36.99 -0.41 s ShawComm B SJR 21.13 0.14 US Steel X 35.50 1.89 NOK 4.84 0.01 SherwinWilliams SHW 278.88 0.12 UnitedTech UTX 111.26 -0.24 -0.19 Nokia -0.12 NomuraHoldings NMR 5.95 -0.02 ShinhanFin SHG 37.32 0.51 UnitedHealth UNH 161.58 -0.37 1.01 Nordstrom JWN 45.67 0.62 s Shopify SHOP 47.87 0.69 UniversalHealthB UHS 112.34 0.80 0.06 NorfolkSouthern NSC 109.26 0.08 SignetJewelers SIG 87.46 1.34 UnumGroup UNM 44.60 0.21 0.01 NorthropGrumman NOC 233.11 -2.70 NVS 74.11 -0.06 0.17 Novartis 0.91 NovoNordisk NVO 36.01 -0.49 Nucor NUE 61.22 1.58 -0.03 -0.05 NuSTAREnergy NS 51.19 -1.45 -0.27 OGE Energy OGE 33.06 -0.08 OKE 56.07 -1.41 -0.47 ONEOK 0.22 ONEOK Partners OKS 44.68 0.17 Amount 0.21 OccidentalPetrol OXY 69.35 -1.13 Symbol Yld % New/Old Frq OZM 3.20 0.03 Company -0.50 Och-Ziff -0.28 OmegaHealthcare OHI 32.00 -0.40 OMC 85.24 -0.15 Increased -0.43 Omnicom GJO 1.7 .0305 /.02928 M ORCL 38.66 -0.37 4.65% Fltg. Rate STRATS -0.07 Oracle GJP 3.5 .0635 /.06148 M ORAN 15.37 -0.19 STRATS Dom Res Ser 05-06 0.05 Orange 0.25 OrbitalATK OA 89.87 1.07

Park Hotels & Resorts

Mutual Funds | WSJ.com/fundresearch

Stock

Net YTD NAV Chg %Ret

MuLtdAdml 10.88 +0.01 0.4 Oppenheimer Y DevMktY 32.79 +0.23 2.6 MuShtAdml 15.74 +0.01 0.2 IntGrowY 35.06 -0.04 1.1 PrmcpAdml r 111.81 +0.48 2.7 REITAdml r 117.34 -1.01 0.4 SmCapAdml 62.68 +0.43 1.5 Parnassus Fds STBondAdml 10.44 ... 0.1 ParnEqFd 39.90 -0.05 1.6 STIGradeAdml 10.65 ... 0.2 PIMCO Fds Instl TotBdAdml 10.69 -0.01 0.4 AllAsset NA ... NA TotIntBdIdxAdm 21.60 ... -0.3 HiYld 8.89 +0.01 1.0 TotIntlAdmIdx r 25.18 +0.05 2.2 TotRt 10.09 +0.01 0.7 TotStAdml 56.90 +0.07 1.5 PIMCO Funds A TxMIn r 11.99 +0.01 2.1 IncomeFd NA ... NA ValAdml 36.40 ... 0.5 PIMCO Funds D WdsrllAdml 63.22 +0.19 1.4 IncomeFd NA ... NA WellsIAdml 61.93 -0.07 0.4 PIMCO Funds Instl WelltnAdml 68.08 +0.02 0.9 IncomeFd NA ... NA WndsrAdml 70.30 +0.18 1.5 PIMCO Funds P VANGUARD FDS IncomeP NA ... NA DivdGro 23.70 -0.04 1.2 Price Funds GNMA 10.53 -0.01 ... BlChip 75.36 +0.20 3.8 HlthCare r 193.35 +1.21 4.6 CapApp 26.47 ... 1.1 INSTTRF2020 20.36 +0.02 1.1 EqInc 31.69 +0.04 0.7 INSTTRF2025 20.35 +0.02 1.2 EqIndex 60.94 ... 1.4 INSTTRF2030 20.32 +0.02 1.3 Growth 55.26 +0.15 3.8 INSTTRF2035 20.29 +0.03 1.4 HelSci 62.33 +0.26 5.5 INSTTRF2040 20.25 +0.03 1.6 InstlCapG 18.60 +0.01 0.9 30.38 +0.11 3.9 LifeCon IntlValEq 29.29 +0.04 1.5 13.02 +0.02 1.6 LifeGro IntlStk 24.43 +0.02 1.2 15.65 +0.04 2.4 LifeMod MCapGro 22.73 +0.13 2.5 77.13 +0.28 2.3 PrmcpCor MCapVal 29.24 +0.15 1.6 29.47 +0.09 1.4 SelValu r N Horiz 24.09 +0.05 1.7 44.53 +0.30 2.8 STAR N Inc 10.65 ... 0.2 9.41 ... 0.5 STIGrade OverS SF r 14.64 +0.01 0.9 9.25 +0.01 2.0 TgtRe2015 R2015 28.56 +0.01 1.1 14.34 +0.01 1.1 TgtRe2020 R2020 16.54 +0.01 1.2 20.69 +0.02 1.4 TgtRe2025 R2025 29.59 +0.03 1.3 15.74 +0.02 1.5 TgtRe2030 TgtRe2035 R2030 17.99 +0.02 1.4 22.91 +0.04 1.7 R2035 30.68 +0.04 1.6 16.59 +0.03 1.8 TgtRe2040 R2040 19.19 +0.02 1.6 23.66 +0.05 1.9 TgtRe2045 SmCapStk 30.88 +0.05 1.6 45.51 +0.41 1.3 TgtRe2050 12.89 ... 0.6 SmCapVal 45.10 +0.44 -0.1 TgtRetInc ... -0.4 Value 34.00 +0.01 1.0 TotIntBdIxInv 10.80 WellsI 25.56 -0.03 0.4 Prudential Cl Z & I 39.42 +0.01 0.9 TRBdZ 14.16 -0.01 0.6 Welltn WndsrII 35.63 +0.10 1.4 VANGUARD INDEX FDS Schwab Funds 500 209.46 ... 1.4 S&P Sel 34.90 ... 1.4 ExtndIstPl 182.66 +1.25 1.8 SmValAdml 52.45 +0.41 0.9 TotBd2 10.65 -0.01 0.4 TIAA/CREF Funds TotIntl 15.05 +0.03 2.2 EqIdxInst 16.83 +0.02 1.4 TotSt 56.88 +0.07 1.5 Tweedy Browne Fds VANGUARD INSTL FDS GblValue 25.32 +0.04 1.1 BalInst 31.45 +0.02 1.1 DevMktsIndInst 12.01 +0.02 2.2 ExtndInst 74.02 +0.51 1.8 VANGUARD ADMIRAL GrwthInst 58.83 +0.01 2.7 500Adml 209.46 ... 1.4 InPrSeIn 10.44 ... 0.6 BalAdml 31.44 +0.02 1.1 InstIdx 206.68 ... 1.4 CAITAdml 11.60 +0.01 0.7 InstPlus 206.69 ... 1.4 CapOpAdml r 128.59 +0.88 3.5 InstTStPlus 51.08 +0.06 1.4 EMAdmr 30.55 +0.18 2.6 MidCpInst 36.61 +0.08 1.7 EqIncAdml 68.57 -0.05 0.3 MidCpIstPl 180.58 +0.41 1.7 ExtndAdml 74.02 +0.51 1.8 SmCapInst 62.67 +0.43 1.5 GNMAAdml 10.53 -0.01 ... STIGradeInst 10.65 ... 0.2 GrwthAdml 58.82 +0.01 2.6 TotBdInst 10.69 -0.01 0.4 HlthCareAdml r 81.55 +0.51 4.6 TotBdInst2 10.65 -0.01 0.4 HYCorAdml r 5.88 +0.01 1.0 TotBdInstPl 10.69 -0.01 0.4 InfProAd 25.63 +0.01 0.6 TotIntBdIdxInst 32.42 ... -0.3 IntlGrAdml 70.20 +0.57 4.3 TotIntlInstIdx r100.70 +0.20 2.2 ITBondAdml 11.30 ... 0.6 TotItlInstPlId r100.71 +0.20 2.2 ITIGradeAdml 9.68 ... 0.5 TotStInst 56.91 +0.07 1.5 LTGradeAdml 10.19 -0.02 1.4 ValueInst 36.40 ... 0.5 MidCpAdml 165.75 +0.38 1.7 MuHYAdml 11.08 +0.01 0.7 MuIntAdml 13.97 +0.01 0.6 Western Asset MuLTAdml 11.45 +0.01 0.7 CorePlusBdI NA ... NA

2.79

Mar09 /Jan19

Funds and investment companies Brookfield Real Assets Deutsche Gl Hi Incm Fd Deutsche Hi Incm Opps Fd Deutsche MultiMkt Income Deutsche Mun Income Tr Deutsche Strat Income Tr Deutsche Strat Mun Incm

RA LBF DHG KMM KTF KST KSM

10.5 4.3 5.6 4.9 6.2 4.0 5.6

.199 .03 .0675 .035 .07 .04 .0575

M M M M M M M

Jan26 /Jan19 Jan31 /Jan19 Jan31 /Jan19 Jan31 /Jan19 Jan31 /Jan19 Jan31 /Jan19 Jan31 /Jan19

Company

Amount Yld % New/Old Frq

Symbol

Fed Premier Intemediate Federated Premier MS Cush MLP HI ETN Tekla Healthcare Opps Fd Tekla World Hlthcr Fd

FPT FMN MLPY THQ THW

Payable / Record

4.2 5.1 7.2 7.9 10.0

.045 .061 .1472 .1125 .1167

M M Q M M

Feb01 /Jan23 Feb01 /Jan23 Jan24 /Jan13 Jan31 /Jan20 Jan31 /Jan20

4.1 4.6

.43826 .12028

Q M

Mar01 /Feb15 Feb15 /Jan25

Foreign Enbridge Inc Pembina Pipeline

ENB PBA

Special LogMeIn

.50

LOGM

Jan31 /Jan16

KEY: A: annual; c: corrected; M: monthly; Q: quarterly; r: revised; SA: semiannual; S2:1: stock split and ratio; SO: spin-off.

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THE WALL STREET JOURNAL.

B10 | Wednesday, January 11, 2017

MARKETS DIGEST EQUITIES Dow Jones Industrial Average

S&P 500 Index Last Year ago

19855.53 t 31.85, or 0.16% High, low, open and close for each trading day of the past three months.

Trailing P/E ratio * 21.65 15.66 P/E estimate * 18.68 15.22 Dividend yield 2.41 2.69 All-time high 19974.62, 12/20/16

Nasdaq Composite Index Last

2268.90 t 0.004, or 0.0002% High, low, open and close for each trading day of the past three months.

Year ago

Trailing P/E ratio * 25.02 21.63 P/E estimate * 17.65 15.75 Dividend yield 2.06 2.26 All-time high: 2276.98, 01/06/17

Last Year ago

5551.82 s 20.00, or 0.36% High, low, open and close for each trading day of the past three months.

Trailing P/E ratio * 24.57 22.01 P/E estimate * 18.54 17.65 Dividend yield 1.22 1.23 All-time high: 5551.82, 01/10/17

Current divisor 0.14602128057775 20000

2280

5540

19600

2245

5450

2210

5360

18800

2175

5270

18400

2140

Session high UP Close

DOWN Session open

Open

19200 65-day moving average

65-day moving average

Session low

5180 65-day moving average

18000

5090

2105

Bars measure the point change from session's open 17600 Oct.

Nov.

Dec.

5000

2070

Jan.

Oct.

Nov.

Dec.

Oct.

Jan.

Nov.

Dec.

Jan.

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

Major U.S. Stock-Market Indexes High

Latest Close

Low

Net chg

Transportation Avg

9144.40

9025.08

9095.07

72.24

653.20

648.34

651.14

-2.05

23698.91 23554.96 23607.80 609.81 604.02 608.59

29.73 5.00

Utility Average Total Stock Market Barron's 400

Nasdaq Stock Market Nasdaq Composite 5564.25 Nasdaq 100 5049.83

5528.11 5016.19

5551.82 5035.17

20.2

0.5

6.5

6625.53

30.3

0.6

6.8

Most-active issues in late trading

723.51

578.66

12.4

-1.3

9.7

23669.99 18663.11 446.15 0.83 613.94

18.5 26.6

1.4 1.2

6.8 6.0

High

-0.16

52-Week Low

% chg

-0.31 0.13

0.36 0.20

Standard & Poor's 500 Index

2279.27

2265.27

2268.90 -0.004 -0.0002

MidCap 400 SmallCap 600

1686.58 841.07

1672.08 832.33

1681.10 840.10

Other Indexes Russell 2000

1371.50

1357.74

1370.90

11229.51 11171.58 11183.33

19974.62 15660.18

20.00 10.27

YTD

% chg 3-yr. ann.

5551.82 5035.17

4266.84 3947.80

3.1 3.5

18.5 16.2

10.0 12.2

2276.98

1829.08

17.0

1.3

7.2

10.86 7.72

0.65 1696.12 857.50 0.93

1238.82 588.26

28.4 34.5

1.2 0.3

7.6 8.4

13.41

0.99

953.72

31.2

1.0

5.6

1388.07

0.12

13.54

Volume, Advancers, Decliners

0.80 9421.08

% chg

19957.12 19836.03 19855.53 -31.85

Trading Diary

Most-active and biggest movers among NYSE, NYSE Arca, NYSE MKT and Nasdaq issues from 4 p.m. to 6:30 p.m. ET as reported by electronic trading services, securities dealers and regional exchanges. Minimum share price of $2 and minimum after-hours volume of 5,000 shares.

Dow Jones Industrial Average

Late Trading

Company

Symbol

Williams Cos

WMB

3,568.3

28.48

-0.02

-0.07

28.79

28.42

FireEye

FEYE

3,316.7

12.88

-0.02

-0.16

12.94

12.88

NVIDIA

NVDA

2,783.6 106.41

-0.06

-0.06 107.20 106.37

General Electric

2,633.6

31.37

…

unch.

31.53

31.37

Colony Capital

CLNY

2,408.1

21.52

…

unch.

21.68

21.52

NorthStar Asset Mgmt Grp NSAM 2,362.1 BAC Bank of America 1,934.4

15.85

0.01

0.06

15.92

15.84

22.98

0.04

0.17

23.12

22.91

Ichor Holdings

ICHR

7.6

14.90

1.50

11.19

15.00

13.46

Impax Laboratories

IPXL

9.6

13.80

1.10

8.66

13.80

12.60

Achaogen

AKAO

88.6

16.60

1.14

7.37

16.99

15.13

TransCanada

TRP

10.4

48.73

2.96

6.47

48.73

45.77

Kraton

KRA

19.3

29.88

1.43

5.03

29.88

28.20

70.77 -20.06

11247.69

9029.88

16.8

1.1

2.5

518.98

383.82

24.4

1.3

1.6

NYSE Arca Biotech

3343.73

3273.55

3325.52

18.06

0.55

3477.87

2642.53

-0.8

8.1

10.2

NYSE Arca Pharma

554.66

463.78

-4.1

2.3

1.1

...And losers

93.71

56.51

38.2

1.0

9.4

VCA Inc.

38.84 101.9

9.7

-0.2

-0.19

492.58

492.64

-0.93

91.96

0.61

PHLX§ Gold/Silver

92.74

87.90

85.42

1.10

PHLX§ Oil Service

86.50

189.85

186.58

PHLX§ Semiconductor CBOE Volatility

186.64

-2.82 -1.49

924.98 11.79

918.13 11.31

923.06 11.49

4.48 -0.07 -0.61

0.66 1.29 0.49

Philadelphia Stock Exchange

192.66

128.61

939.21 28.14

559.18 51.7 11.27 -48.9

1.6 -12.4

34.1

1.8 -18.2

20.0 -1.8

WOOF

27.6

-22.09

90.88

70.77

Novadaq Technologies NVDQ

21.2

6.40

-1.25

-16.34

7.64

5.49

Caesars Entertainment CZR

18.1

7.65

-1.15

-13.07

9.40

7.65

ImmunoCellular Therap IMUC

89.8

3.95

-0.25

-5.95

4.55

3.75

5.1

57.60

-3.05

-5.03

60.65

57.60

Applied Indl Techs

AIT

Sources: SIX Financial Information; WSJ Market Data Group

International Stock Indexes Region/Country Index

Percentage Gainers... Latest % chg

Net chg

0.33 0.26 0.45

0.54 431.51 37.33 332.76 10.14

0.10 0.70 0.24 0.73 0.31

1.5 3.2 0.9 0.5 0.5

0.40 –0.11 –6.84 0.66 19.31 –3.56 64.17 –0.36 –40.80 0.47 24.33 37.70

0.11

World

8.56 –0.30 0.86 0.99

Americas Brazil Canada Mexico Chile

DJ Americas 548.59 Sao Paulo Bovespa 62131.80 S&P/TSX Comp 15426.28 IPC All-Share 45886.27 Santiago IPSA 3238.57

Europe Euro zone Belgium France Germany Israel Italy Netherlands Spain Sweden Switzerland U.K.

Stoxx Europe 600 Euro Stoxx Bel-20 CAC 40 DAX Tel Aviv FTSE MIB AEX IBEX 35 SX All Share Swiss Market FTSE 100

Asia-Pacific Australia China Hong Kong India Japan Singapore South Korea Taiwan

DJ Asia-Pacific TSM 1463.78 S&P/ASX 200 5760.70 Shanghai Composite 3161.67 Hang Seng 22744.85 S&P BSE Sensex 26899.56 Nikkei Stock Avg 19301.44 Straits Times 3006.02 Kospi 2045.12 Weighted 9349.64

364.07 352.57 3632.02 4888.23 11583.30 1460.04 19424.19 484.74 9452.00 533.28 8449.19 7275.47

YTD % chg

1.9 1.5 1.7 2.0

The Global Dow 2580.71 The Global Dow Euro 2294.18 DJ Global Index 331.70 DJ Global ex U.S. 218.33

World

112.86

–0.01

–0.03 –0.19

–0.24 –0.07 –0.43

0.01 0.17 0.33

0.09 0.29 0.52

0.46 6.76 –46.70 –0.80 –9.56 –0.30 0.83 186.16 0.65 173.01 –152.89 –0.79 0.82 24.48 –0.18 –3.66 0.08 7.22

0.7 0.7 0.7 0.5 0.9 –0.7 1.0 0.3 1.1 –0.2 2.8 1.9 2.9 1.7 1.9 3.4 1.0 1.0 4.3 0.9 1.0

Company

Symbol

Signal Genetics ImmunoCellular Therap GenVec Neuralstem EnteroMedics

SGNL

Diffusion Pharmaceuticals CombiMatrix Onconova Therapeutics Moleculin Biotech Pacific Continental

DFFN

Roka Bioscience Sarepta Therapeutics Interpace Diagnostics Amer Shared Hospital Illumina

ROKA

IMUC GNVC CUR ETRM

High

17.48 12.69 264.93 4.20 2.02 92.82 8.79 3.82 76.86 6.06 2.25 59.06 27.70 10.00 56.50

17.50 14.80 14.00 14.17 132.30

ILMN

1.80 1.83 2.70 2.47 1.75

66.5 -64.4 41.8 -54.3 -72.7

Egalet Corp. NanoString Technologies Sino-Global Shipping Amer Siebert Financial VOXX International

EGLT

Symbol

Williams Cos Bank of America Direxion Jr Gold Bull 3X VanEck Vectors Gold Miner Ariad Pharmaceuticals

WMB

DXN DLY GLDMNR 3x BL Ford Motor SPDR S&P 500 Finl Select Sector SPDR iShares MSCI Emg Markets

NUGT

BAC JNUG GDX ARIA

F SPY XLF EEM

Selected rates

A consumer rate against its benchmark over the past year

New car loan

22.45 21.21 19.45 18.84 16.60

16.00 3.66 63.73 8.00 19.80 0.70 4.40 1.51 186.88 119.37

-37.4 11.5 133.3 148.5 -2.1

Abaxis Bonanza Creek Energy Christopher Banks Williams Cos ENGlobal Corp

ABAX

4.00% Prime rate 3.50

Volume % chg from Latest Session (000) 65-day avg Close % chg

102,119 99,018 71,989 68,177 62,137

1399.5 -13.5 101.7 -16.7 615.8

60,525 57,600 56,220 45,664 44,980

30.4 64.4 -36.0 -41.5 -30.0

Benchmark Yields Treasury yield curve andtoRates Yield maturity of current bills,

2.50

2.00 F M A M J J A S O N DJ 2016

TrustCo Bank Albany, NY

1.89% 800-288-3425

PNC Bank, NA Chesapeake, VA

2.14% 888-762-2265

28.50 -10.74 22.94 1.73 8.44 6.57 22.62 0.71 23.68 -0.29

First Citizens Bank Raleigh, NC

2.19% 800-367-0995

Interest rate

Federal-funds rate target 0.50-.75 0.50-.75 Prime rate* 3.75 3.75 Libor, 3-month 1.00 1.02 Money market, annual yield 0.30 0.30 Five-year CD, annual yield 1.20 1.19 30-year mortgage, fixed† 4.16 4.09 15-year mortgage, fixed† 3.39 3.31 Jumbo mortgages, $424,100-plus† 4.48 4.62 Five-year adj mortgage (ARM)† 3.55 3.76 New-car loan, 48-month 2.99 3.04 HELOC, $30,000 4.60 4.59

3-yr chg 52-Week Range (%) Low 0 2 4 6 8 High (pct pts)

0.25 l l 3.50 0.61 l 0.22 l 1.17 l l 3.43 l 2.70 l 4.02 l 2.97 l 2.87 l 4.29

0.75 3.75 1.02 0.32 1.36 4.29 3.50 4.88 4.03 3.38 5.01

0.50 0.50 0.78 -0.12 -0.17 -0.58 -0.41 -0.38 -0.38 0.11 -0.62

Bankrate.com rates based on survey of over 4,800 online banks. *Base rate posted by 70% of the nation's largest banks.† Excludes closing costs. Sources: SIX Financial Information; WSJ Market Data Group; Bankrate.com

CBK WMB ENG

9.54 12.85 226.46 23.43 36.12

1.81 1.74 ... 0.21 0.58

35.80 3.48 14.22 11.02 228.34 181.02 23.87 15.86 38.32 27.61

6 0

1.00 One year ago 0.00

–6

Yen

Euro s

WSJ Dollar index

–12

2016

Yield (%) Last Week ago

52-Week High Low

Total Return (%) 52-wk 3-yr

1430.970

2.010

2.064

2.186

1.141

10-yr Treasury, Ryan ALM 1698.565 DJ Corporate 362.603 Aggregate, Barclays Capital 1883.630 High Yield 100, Merrill Lynch 2711.541 Fixed-Rate MBS, Barclays 1941.090 Muni Master, Merrill 502.264

2.379 3.159 2.580 5.293 2.840 2.188

2.450 3.199 2.630 5.533 2.870 2.313

2.600 3.414 2.770 8.696 3.070 2.516

1.366 –4.580 3.687 2.460 5.394 4.154 1.820 2.369 2.911 5.248 14.808 3.375 1.930 1.250 2.857 1.297 –0.182 3.401

746.961

5.922

6.036

7.128

5.134

Treasury, Ryan ALM

EMBI Global, J.P. Morgan

Symbol

City Office REIT iSh Edge MSCI Intl Value Williams Cos EnteroMedics Goldman Sachs Trea 0-1Y

Latest Session Close Net chg % chg

6.52 17.99 3.06 3.13 4.50

-1.86 -5.00 -0.64 -0.60 -0.80

-22.20 -21.75 -17.30 -16.09 -15.09

10.00 4.12 6.61 3.70 2.37

-1.75 -0.72 -1.08 -0.60 -0.36

-14.89 -14.88 -14.04 -13.95 -13.19

48.59 1.84 2.10 28.50 2.33

-6.43 -0.24 -0.27 -3.43 -0.28

-11.69 -11.54 -11.39 -10.74 -10.73

High

52-Week Low % chg

10.21 4.34 23.45 11.30 14.20 0.40 3.75 1.00 5.90 2.47

-31.6 41.8 393.5 156.6 -11.9

9.75 2.70 4.02 3.45 2.34

-34.3 -68.1 52.7 -16.7 -98.5

55.95 37.71 4.67 0.60 3.02 1.20 32.69 10.22 2.89 0.68

-6.3 -41.4 40.0 72.3 177.4

16.99 32.28 9.46 8.11 278.40

Volume % chg from Latest Session (000) 65-day avg Close % chg

19447 6948 4392 1853 1852

2,475 476 3,728 425 121

46.49 0.49 25.72 0.21 0.51

8.35 65.74 26.15 9.72 9.80

1727 12.43 -3.79 1402 22.69 0.31 1400 28.50 -10.74 1248 27.70 56.50 1159 100.05 0.0003

1,585 132 WMB 102,119 ETRM 21,232 GBIL 114 CIO

IVLU

52-Week High Low

17.00 1.94 66.55 52.25 26.35 13.60 9.75 9.43 9.90 9.75 13.93 22.89 32.69 132.30 100.07

10.65 18.43 10.22 1.75 99.96

CURRENCIES

0.321 3.240

12.367 5.845

Sources: J.P. Morgan; Ryan ALM; S&P Dow Jones Indices; Barclays Capital; Merrill Lynch

Country/currency

US$vs, YTDchg Tues in US$ per US$ (%)

Americas Argentina peso .0631 15.8445 Brazil real .3129 3.1958 Canada dollar .7557 1.3233 Chile peso .001490 671.30 Colombia peso .0003394 2946.75 Ecuador US dollar 1 1 Mexico peso .0459 21.8009 Peru new sol .2952 3.387 Uruguay peso .03482 28.7200 Venezuela b. fuerte .100100 9.9900

ONLINE Real-time U.S. stock quotes are available on WSJ.com. Track most-active stocks, new highs/lows, mutual funds and ETFs. Plus, get deeper money-flows data and email delivery of key stock-market data. All are available free at WSJMarkets.com

–0.2 –1.8 –1.6 0.2 –1.8 unch 5.1 1.0 –2.1 –0.1

Asia-Pacific Australian dollar .7369 1.3570 –2.3 China yuan .1445 6.9222 –0.3 Hong Kong dollar .1290 7.7547 –0.01 India rupee .01464 68.327 0.5 Indonesia rupiah .0000752 13298 –1.7 Japan yen .008638 115.77 –1.1 Kazakhstan tenge .003003 332.99 –0.2 Macau pataca .1260 7.9388 0.3 Malaysia ringgit .2235 4.4745 –0.3 New Zealand dollar .6989 1.4308 –0.9 Pakistan rupee .00960 104.130 –0.2 Philippines peso .0202 49.578 –0.1 Singapore dollar .6964 1.4360 –0.8 South Korea won .0008321 1201.80 –0.5 Sri Lanka rupee .0066845 149.60 0.8 Taiwan dollar .03130 31.944 –1.6

US$vs, YTDchg Tues in US$ per US$ (%)

Country/currency

.02813 35.550 –0.7 .00004430 22571 –0.9

Thailand baht Vietnam dong

Europe Czech Rep. koruna Denmark krone Euro area euro Hungary forint Iceland krona Norway krone Poland zloty Russia ruble Sweden krona Switzerland franc Turkey lira Ukraine hryvnia UK pound

.03906 25.604 .1420 7.0433 1.0555 .9475 .003413 292.98 .008692 115.05 .1162 8.6062 .2413 4.1444 .01663 60.122 .1101 9.0836 .9834 1.0169 .2636 3.7942 .0368 27.1500 1.2177 .8212

–0.3 –0.4 –0.3 –0.4 1.9 –0.4 –1.0 –1.9 –0.3 –0.2 7.7 0.2 1.4

Middle East/Africa Bahrain dinar Egypt pound Israel shekel Kuwait dinar Oman sul rial Qatar rial Saudi Arabia riyal South Africa rand

2.6527 .3770 –0.1 .0534 18.7205 3.2 .2600 3.8465 –0.04 3.2717 .3057 0.01 2.5968 .3851 0.03 .2747 3.640 ... .2666 3.7507 unch .0728 13.7414 0.4 Close Net Chg % Chg YTD%Chg

WSJ Dollar Index 92.71

0.07 0.07 –0.25

Sources: Tullett Prebon, WSJ Market Data Group

Commodities

COMMODITIES Tuesday

52-Week

Pricing trends on someClose raw materials, or commodities Net chg % Chg High Low DJ Commodity

WSJ .COM

* Primary market NYSE, NYSE MKT NYSE Arca only. †(TRIN) A comparison of the number of advancing and declining issues with the volume of shares rising and falling. An Arms of less than 1 indicates buying demand; above 1 indicates selling pressure.

U.S.-dollar foreign-exchange rates in late New York trading

Corporate Borrowing Rates and Yields Bond total return index

NYSE Arca

* Common stocks priced at $5 a share or more with an average volume over 65 trading days of at least 5,000 shares =Has traded fewer than 65 days

2.00

1 2 3 5 710 years maturity

Nasdaq

Total volume*1,780,091,605 279,201,910 Adv. volume*1,060,640,388 187,231,052 Decl. volume* 677,542,322 74,884,480 Issues traded 2,999 1,344 Advances 1,861 781 Declines 979 525 Unchanged 159 38 New highs 104 64 New lows 23 10 Closing tick 281 52 Closing Arms† 1.21 0.76 Block trades* 6,591 1,561

Ranked by change from 65-day average*

Diffusion Pharmaceuticals DFFN SPDR Russ 1000 MomentumONEO PCBK Pacific Continental MIII M III Acquisition AHPA Avista Healthcare Cl A

10.22 10.99 2.05 12.40 4.37

Sources: Ryan ALM; Tullett Prebon; WSJ Market Data Group Yield/Rate (%) Last (l)Week ago

BCEI

32.69 23.39 33.29 31.79 23.81

18%

3.00 Tuesday

1 3 6 month(s)

DRYS

Company

Yen, euro vs. dollar; dollar vs. major U.S. trading partners

4.00

2.12% 518-436-9043

VNCE

52-Week High Low

Forex Race

5.00%

3.04%

First Savings Bank of Hegewisch 1.99% Chicago, IL 773-646-4200

Currencies

New car loan

3.00

Think Mutual Bank Rochester, MN

DGAZ

Volume Movers

notes and bonds

Bankrate.com avg†:

VOXX

6.00 1.10 37.89 6.63 7.00 1.14 4.10 0.65 165.04 23.50

* Volumes of 100,000 shares or more are rounded to the nearest thousand

U.S. consumer rates

SIEB

KONA

CREDIT MARKETS Consumer Rates and Returns to Investor

SINO

Kona Grill VelocityShares 3x Power REIT Vince Holding DryShips

Most Active Stocks Company

NSTG

... -53.7 -57.0 ... 79.1

PCBK

AMS

Symbol

17.00 1.94 9.00 2.15 8.17 2.11 9.58 1.41 26.35 13.60

MBRX

IDXG

Company

46.49 32.73 31.95 28.10 25.72

ONTX

SRPT

52-Week Low % chg

2.65 0.90 0.77 0.59 5.35

8.35 3.65 3.18 2.69 26.15

CBMX

NYSE MKT

Percentage Losers Latest Session Close Net chg % chg

Sources: SIX Financial Information; WSJ Market Data Group

-0.004 226.76 226.34

Percentage gainers…

0.61

93.32

Low

-0.01

3.09

495.58

After Hours % chg High

7,157.5 226.45

512.59

KBW Bank

Net chg

SPY

509.50

Value Line

Last

SPDR S&P 500

513.61

NYSE Composite

Volume (000)

NYSE

Total volume* 929,888,444 17,612,966 Adv. volume* 550,329,705 13,065,982 Decl. volume* 369,911,305 4,371,776 Issues traded 3,106 339 Advances 1,924 191 Declines 1,075 135 Unchanged 107 13 New highs 92 11 New lows 12 … Closing tick 216 48 Closing Arms† 1.21 0.47 Block trades* 6,624 245

TR/CC CRB Index Crude oil, $ per barrel Natural gas, $/MMBtu Gold, $ per troy oz.

565.39

4.07

191.14 50.82 3.278 1184.20

0.53 -1.14 0.175 0.70

0.73

573.28

420.23

0.28 195.82 54.06 -2.19 3.93 5.64 0.06 1364.90

155.01 26.21 1.64 1073.90

% Chg

31.32

YTD % chg

-0.33

17.93 -0.71 66.95 -5.40 45.24 -11.98 2.97 9.08

THE WALL STREET JOURNAL.

Wednesday, January 11, 2017 | B11

COMMODITIES Futures Contracts

Open

Metal & Petroleum Futures Contract Open High hi lo Low Settle Chg Copper-High (CMX)-25,000 lbs.; $ per lb. 2.5620 2.6135 s 2.5620 2.6035 0.0735 Jan March 2.5320 2.6300 s 2.5300 2.6125 0.0740 Gold (CMX)-100 troy oz.; $ per troy oz. Jan 1184.30 1188.90 s 1182.30 1184.20 0.70 Feb 1181.30 1190.60 s 1180.20 1185.50 0.60 April 1184.70 1193.60 s 1183.50 1188.50 0.60 June 1188.20 1196.20 s 1186.20 1191.40 0.70 Aug 1196.00 1198.00 s 1191.80 1194.20 0.80 Dec 1194.80 1204.50 s 1194.80 1199.90 0.90 Palladium (NYM) - 50 troy oz.; $ per troy oz. 740.15 740.15 t 740.15 764.65 8.10 Jan Feb 747.00 756.85 747.00 765.30 8.10 March 760.20 766.30 756.60 765.25 8.10 June 757.75 766.30 757.75 765.90 8.15 Platinum (NYM)-50 troy oz.; $ per troy oz. 970.50 970.50 969.50 978.40 –0.10 Jan April 981.30 985.40 970.80 982.80 0.20 Silver (CMX)-5,000 troy oz.; $ per troy oz. 16.635 16.800 16.595 16.803 0.173 Jan March 16.615 16.955 s 16.575 16.848 0.165 Crude Oil, Light Sweet (NYM)-1,000 bbls.; $ per bbl. 51.83 52.37 t 50.71 50.82 –1.14 Feb March 52.72 53.25 t 51.59 51.70 –1.17 April 53.55 54.09 t 52.42 52.53 –1.19 May 54.40 54.79 t 53.16 53.28 –1.19 June 54.89 55.41 t 53.75 53.87 –1.18 Dec 55.89 56.48 t 54.92 55.10 –0.99 NY Harbor ULSD (NYM)-42,000 gal.; $ per gal. 1.6379 1.6506 t 1.6080 1.6114 –.0262 Feb March 1.6488 1.6640 t 1.6198 1.6237 –.0274 Gasoline-NY RBOB (NYM)-42,000 gal.; $ per gal. 1.5698 1.5891 t 1.5410 1.5467 –.0240 Feb March 1.5962 1.6133 t 1.5686 1.5736 –.0236 Natural Gas (NYM)-10,000 MMBtu.; $ per MMBtu. 3.115 3.327 3.110 3.278 .175 Feb March 3.126 3.319 3.121 3.275 .162 April 3.118 3.297 3.117 3.259 .153 May 3.123 3.298 3.123 3.258 .144

3.211 3.215

July Oct

Open interest

Contract High hilo Low 3.365 3.363

Settle

3.211 3.215

Open interest

Chg

3.333 3.337

.142 .138

56,728 89,229

Corn (CBT)-5,000 bu.; cents per bu. 359.25 373.00

March July

359.50 373.25

Oats (CBT)-5,000 bu.; cents per bu.

161 263,739 88,028 38,035 11,352 23,840

225.75 227.00

March May

230.50 227.75

357.25 371.25

358.25 372.50

225.25

–1.75 671,536 –1.50 188,768

226.50

1.00 –.25

t 225.00 224.75 Soybeans (CBT)-5,000 bu.; cents per bu. 993.75 1006.00 990.00 1005.50 Jan March 1004.25 1015.00 997.25 1013.75 Soybean Meal (CBT)-100 tons; $ per ton. 310.00 313.40 307.50 313.40 Jan March 313.90 318.00 311.50 317.50 Soybean Oil (CBT)-60,000 lbs.; cents per lb. 35.07 35.44 s 34.80 35.43 Jan March 35.44 35.75 s 34.99 35.64 Rough Rice (CBT)-2,000 cwt.; $ per cwt. 956.50 956.50 s 956.50 945.50 Jan March 969.00 979.00 965.00 967.50 Wheat (CBT)-5,000 bu.; cents per bu. 426.75 427.25 423.50 426.75 March May 440.00 440.25 436.00 439.75 Wheat (KC)-5,000 bu.; cents per bu. 436.75 438.75 434.75 438.25 March July 461.00 462.00 458.25 461.25 Wheat (MPLS)-5,000 bu.; cents per bu. 558.00 562.00 s 554.75 561.25 March May 551.50 554.00 s 547.50 552.00 Cattle-Feeder (CME)-50,000 lbs.; cents per lb. 129.825 132.875 s 129.325 132.700 Jan March 126.500 130.000 s 125.675 130.000 Cattle-Live (CME)-40,000 lbs.; cents per lb. 116.800 119.525 s 116.775 119.525 Feb April 116.100 118.925 s 116.050 118.675 Hogs-Lean (CME)-40,000 lbs.; cents per lb. 64.200 65.900 63.850 65.050 Feb April 68.575 69.500 s 68.400 69.325 Lumber (CME)-110,000 bd. ft., $ per 1,000 bd. ft. 304.90 307.50 t 303.30 306.70 Jan

3 6 25,477 1,052 35 58,486 358 133,238 377,643 385,820 148,070 122,846 226,666 216,810 99,557 103,169 104,521 106,307 162,930 273,356 110,624 104,699

Contract High hilo Low

Open

Settle

5,067 1,396

9.00 2,584 8.50 313,531 3.60 1,043 3.60 174,027 .16 743 .15 196,237 –.50 –1.50

28 10,941

–.50 256,608 –.25 76,134 –.25 116,326 –.50 61,838 1.50 –1.50

34,284 13,912

3.425 4.500

6,063 23,120

3.000 101,798 2.700 94,234 1.300 .950

63,402 62,709

1.90

242

March 322.00 324.00 t 320.20 322.60 Milk (CME)-200,000 lbs., cents per lb. 16.64 16.71 s 16.61 16.70 17.19 17.59 s 17.14 17.42 Cocoa (ICE-US)-10 metric tons; $ per ton. 2,180 2,214 2,161 2,207 March May 2,160 2,198 2,145 2,191 Coffee (ICE-US)-37,500 lbs.; cents per lb. 144.25 147.90 s 144.15 147.70 March May 146.50 150.20 s 146.50 150.05 Sugar-World (ICE-US)-112,000 lbs.; cents per lb. 20.50 20.56 20.15 20.48 March May 20.30 20.37 19.99 20.31 Sugar-Domestic (ICE-US)-112,000 lbs.; cents per lb. 28.90 29.00 t 28.90 29.00 March May 29.05 29.10 29.05 29.08 Cotton (ICE-US)-50,000 lbs.; cents per lb. 72.99 73.70 72.82 73.19 March May 73.40 74.09 73.26 73.64 Orange Juice (ICE-US)-15,000 lbs.; cents per lb. 186.00 186.00 184.00 182.50 Jan March 178.55 183.20 t 177.10 182.70

Tuesday

13232

Coins,wholesale $1,000 face-a

Energy 0.7064 0.9583 3.210 3.160 3.230 3.040 3.120 2.750 3.060 46.500 11.050

Propane,tet,Mont Belvieu-g Butane,normal,Mont Belvieu-g NaturalGas,HenryHub-i NaturalGas,TranscoZone3-i NaturalGas,TranscoZone6NY-i NaturalGas,PanhandleEast-i NaturalGas,Opal-i NaturalGas,MarcellusNE PA-i NaturalGas,HaynesvilleN.LA-i Coal,C.Aplc.,12500Btu,1.2SO2-r,w Coal,PwdrRvrBsn,8800Btu,0.8SO2-r,w

Other metals LBMA Platinum Price PM *976.0 Platinum,Engelhard industrial 975.0 Platinum,Engelhard fabricated 1075.0 Palladium,Engelhard industrial 763.0 Palladium,Engelhard fabricated 863.0 Aluminum, LME, $ per metric ton *1717.0 Copper,Comex spot 2.6035 Iron Ore, 62% Fe CFR China-s 80.1 Shredded Scrap, US Midwest-s,w 286 Steel, HRC USA, FOB Midwest Mill-s 604

Fibers and Textiles

Metals Gold, per troy oz 1186.46 1275.44 1189.50 1320.34 *1176.10 *1178.50 1233.13 1244.99 1244.99 1437.60 1165.22 1244.99

Engelhard industrial Engelhard fabricated Handy & Harman base Handy & Harman fabricated LBMA Gold Price AM LBMA Gold Price PM Krugerrand,wholesale-e Maple Leaf-e American Eagle-e Mexican peso-e Austria crown-e Austria phil-e

Silver, troy oz. 16.3000 19.9560 16.9100 21.1380 £13.7319 16.6650

Engelhard industrial Engelhard fabricated Handy & Harman base Handy & Harman fabricated LBMA spot price (U.S.$ equivalent)

0.5675 0.7319 *82.95 75.250 n.a.

Burlap,10-oz,40-inch NY yd-n,w Cotton,1 1/16 std lw-mdMphs-u Cotlook 'A' Index-t Hides,hvy native steers piece fob-u Wool,64s,staple,Terr del-u,w

Grains and Feeds n.a. 100 3.4150 97.7 507.0 220 85 283 2.8900 354.00 21.38 7.0225 317.00

Barley,top-quality Mnpls-u Bran,wheat middlings, KC-u Corn,No. 2 yellow,Cent IL-bp,u Corn gluten feed,Midwest-u,w Corn gluten meal,Midwest-u,w Cottonseed meal-u,w Hominy feed,Cent IL-u,w Meat-bonemeal,50% pro Mnpls-u,w Oats,No.2 milling,Mnpls-u Rice, 5% Broken White, Thailand-l,w Rice, Long Grain Milled, No. 2 AR-u,w Sorghum,(Milo) No.2 Gulf-u SoybeanMeal,Cent IL,rail,ton48%-u

Tuesday

9.8750 6.9625 4.2000 3.7325 4.6388

Soybeans,No.1 yllw IL-bp,u Wheat,Spring14%-pro Mnpls-u Wheat,No.2 soft red,St.Louis-bp,u Wheat - Hard - KC (USDA) $ per bu-u Wheat,No.1soft white,Portld,OR-u

March June

152-260 152-310 151-100 151-130

Beef,carcass equiv. index choice 1-3,600-900 lbs.-u select 1-3,600-900 lbs.-u Broilers,dressed 'A'-u Broilers, National comp wghtd-u,w Butter,AA Chicago Cheddar cheese,bbl,Chicago Cheddar cheese,blk,Chicago Milk,Nonfat dry,Chicago lb. Cocoa,Ivory Coast-w Coffee,Brazilian,Comp Coffee,Colombian, NY Eggs,large white,Chicago-u Flour,hard winter KC Hams,17-20 lbs,Mid-US fob-u Hogs,Iowa-So. Minnesota-u Pork bellies,12-14 lb MidUS-u Pork loins,13-19 lb MidUS-u Steers,Tex.-Okla. Choice-u Steers,feeder,Okla. City-u,w

177.76 171.16 n.a. 0.8716 2.3000 163.00 172.00 102.00 2557 1.4138 1.6035 0.6450 13.60 n.a. 61.46 n.a. 0.9401 n.a. 144.01

Fats and Oils 37.7500 0.2750 n.a. 0.3414 0.3150 0.3400

Corn oil,crude wet/dry mill-u,w Grease,choice white,Chicago-u Lard,Chicago-u Soybean oil,crude;Centl IL-u Tallow,bleach;Chicago-u Tallow,edible,Chicago-u

KEY TO CODES: A=ask; B=bid; BP=country elevator bids to producers; C=corrected; E=Manfra,Tordella & Brooks; G=ICE; I=Natural Gas Intelligence; L=livericeindex.com; M=midday; N=nominal; n.a.=not quoted or not available; R=SNL Energy; S=The Steel Index; T=Cotlook Limited; U=USDA; W=weekly, Z=not quoted. *Data as of 1/9 Source: WSJ Market Data Group

January 10, 2017

March June

124-265 124-295 124-110 124-110

March June

117-277 117-300 117-170 117-170

March

108-115 108-117

152-070 151-020 124-200 124-035

Week Latest ago Chg From (%) Oct. '16 Nov. '15

–0.16 0.004

241.353 249.227

1.7 2.1

International rates Latest

Week ago

52-Week High Low

3.75 3.75 3.75 3.50 2.70 2.70 2.70 2.70 1.475 1.475 1.475 1.475

Policy Rates Euro zone Switzerland Britain

1.50

2.00

0.52

0.53

U.S.

1.30

0.15

U.S. government rates 1.25

1.25

0.6900 0.8125 0.4500 0.6600 0.7500

0.6900 0.8125 0.5000 0.6600 0.7500

0.00 0.50 0.25

0.05 0.50 0.50

0.00 0.50 0.25

4 weeks 13 weeks 26 weeks

0.6900 0.8125 0.6500 0.6600 0.7500

0.2700 0.5600 0.2000 0.2000 0.2600

99.353 99.285

March

0.500 0.475 0.500 0.160 0.510 0.530 0.555 0.215 0.590 0.630 0.660 0.340

Largest 100 exchange-traded funds, latest session

AlerianMLPETF CnsmrDiscSelSector CnsStapleSelSector DBGoldDoubleLgETN DBGoldDoubleShrt DeutscheXMSCIEAFE EnSelectSectorSPDR FinSelSectorSPDR GuggenheimSP500EqW HealthCareSelSect IndSelSectorSPDR iShIntermCredBd iSh1-3YCreditBond iSharesTIPSBondETF iShCoreHiDividend iShCoreMSCIEAFEETF iShCoreMSCIEmgMk iShCoreS&P500ETF iShCoreS&PMdCp iShCoreS&PSmCpETF iShS&PTotlUSStkMkt iShCoreUSAggBd iShSelectDividend iShEdgeMSCIMinEAFE iShEdgeMSCIMinUSA iSharesGold iShiBoxx$InvGrCpBd iShiBoxx$HYCpBd iSharesJPMUSDEmgBd iShMBSETF iShMSCIACWIETF iSharesMSCIEAFESC iSharesMSCIEAFEETF iShMSCIEmgMarkets iShMSCIEurozoneETF iShMSCIJapanETF iShNasdaqBiotech iShNatlAMTFrMuniBd iShRussell1000Gwth iShRussell1000ETF iShRussell1000Val iShRussell2000Gwth iShRussell2000ETF iShRussell2000Val iShRussell3000ETF iShRussellMid-Cap iShRussellMCValue iShS&P500Growth iShS&P500ValueETF

AMLP XLY XLP DGP DZZ DBEF XLE XLF RSP XLV XLI CIU CSJ TIP HDV IEFA IEMG IVV IJH IJR ITOT AGG DVY EFAV USMV IAU LQD HYG EMB MBB ACWI SCZ EFA EEM EZU EWJ IBB MUB IWF IWB IWD IWO IWM IWN IWV IWR IWS IVW IVE

12.63 83.55 51.44 21.42 6.42 28.61 74.11 23.43 87.78 71.50 62.91 108.49 104.97 113.72 81.70 54.75 43.79 227.80 167.44 137.84 52.03 108.44 88.42 62.38 45.38 11.44 117.85 87.22 111.78 106.61 60.24 50.87 58.97 36.12 34.97 50.32 286.50 108.59 107.40 126.27 112.50 156.77 136.09 119.19 134.82 181.72 81.25 124.16 102.01

–0.86 0.36 –0.50 0.89 –0.93 –0.17 –0.91 0.21 0.09 0.35 0.42 –0.02 0.05 0.08 –0.46 –0.02 0.69 –0.04 0.67 0.90 0.02 –0.03 –0.11 –0.18 –0.13 0.53 –0.06 0.01 –0.16 0.03 ... –0.10 0.02 0.58 –0.19 –0.38 0.78 –0.03 0.04 0.06 –0.03 0.82 0.96 1.15 0.09 0.31 0.15 –0.12 0.09

0.2 2.6 –0.5 6.5 –6.3 2.0 –1.6 0.8 1.3 3.7 1.1 0.3 0.0 0.5 –0.7 2.1 3.2 1.2 1.3 0.2 1.4 0.4 –0.2 1.9 0.4 3.2 0.6 0.8 1.4 0.3 1.8 2.1 2.1 3.2 1.1 3.0 8.0 0.4 2.4 1.5 0.4 1.8 0.9 0.2 1.4 1.6 1.0 1.9 0.6

ETF

Closing Chg YTD Symbol Price (%) (%)

iShUSPfdStk iSh1-3YTreasuryBd iSh7-10YTreasuryBd iShRussellMCGrowth PwrShrs QQQ PS SP500LoVoltlPrt PwrShSrLoanPtf SPDRBloomBarcHYBd SchwIntlEqty SchwUS BrdMkt SchwUS LrgCap SPDR DJIA Tr SPDR GldTr SPDR S&PMdCpTr SPDR S&P 500 SPDR S&P Div TechSelectSector UtilitiesSelSector VanEckVectBiotech VanEckGoldMiner VanEckVctrOilSvcs VanEckVectorsPharm VanEckVctrRetail VanEckSemiconduc VanguardInfoTech VanguardSCVal VangdDivApp VanguardFTSEDevMk VanguardFTSEEmgMk VanguardFTSEEurope VanguardAWxUS VangdGrowth VanguardHiDiv VanguardIntrm VangIntrCorpBd VanguardLC VanguardMC VanguardMCVal VanguardReit VanguardS&P500 VanguardSTBd VanguardSTCpBd VanguardSC VanguardTotBd VanguardTotIntlBd VanguardTtlIntlStk VanguardTotStk VangdTotlWrld VanguardValue WisdomTreeEurope WisdomTreeJapanHdg

PFF SHY IEF IWP QQQ SPLV BKLN JNK SCHF SCHB SCHX DIA GLD MDY SPY SDY XLK XLU BBH GDX OIH PPH RTH SMH VGT VBR VIG VEA VWO VGK VEU VUG VYM BIV VCIT VV VO VOE VNQ VOO BSV VCSH VB BND BNDX VXUS VTI VT VTV HEDJ DXJ

… –.02

1,136 1,774

.20 175,572 .20 43,098 .60 3.55

26 11,524

117-245 117-170 108-100

94.906

99.353 99.290

–6.0 620,862 –7.0 35

124-245 124-060

–.5 3,093,666 –.5 2,767

117-272 117-155

… 2,985,982 … 186

108-112

… 1,182,590

99.353 99.285

… 163,104 … 268,800

99.350 99.285

95.109

94.859

94.891

–.047

31,978

99.2350

…

1,306

1 Month Libor (CME)-$3,000,000; pts of 100%

Jan

...

98.9800 98.9250 98.7750 98.4900

t 98.9750 t 98.9200 t 98.7600

98.9825 98.9300 98.7750 98.4950

98.4750

Settle

Chg

Open interest

Currency Futures Japanese Yen (CME)-¥12,500,000; $ per 100¥ March June

.8647 .8696

.8701 .8743

.8614 .8658

.8658 .8702

March June

.7569 .7559

.7585 .7593

.7548 .7557

.7564 –.0001 .7572 –.0001

Canadian Dollar (CME)-CAD 100,000; $ per CAD British Pound (CME)-£62,500; $ per £

.0021 199,866 .0021 5,474 87,670 1,982

t 1.2123 1.2179 .0001 227,524 t 1.2157 1.2211 .0001 702 Swiss Franc (CME)-CHF 125,000; $ per CHF March .9891 .9922 .9858 .9868 –.0024 49,918 June .9918 .9954 .9903 .9932 –.0022 112 Australian Dollar (CME)-AUD 100,000; $ per AUD March .7347 .7373 s .7319 .7357 .0009 96,458 June .7318 .7357 s .7305 .7341 .0009 460 Mexican Peso (CME)-MXN 500,000; $ per MXN March .04641 .04641 t .04536 .04555 –.00080 133,065 June .04533 .04538 t .04467 .04486 –.00079 36,015 Euro (CME)-€125,000; $ per € March 1.0610 1.0656 1.0579 1.0587 –.0020 409,037 June 1.0670 1.0710 s 1.0634 1.0642 –.0020 8,871 March June

1.2192 1.2218

1.2206 1.2236

Index Futures

152-170 151-090

10 Yr. Del. Int. Rate Swaps (CBT)-$100,000; pts 32nds of 100%

98.9775 … 215,278 98.9250 … 1,336,558 98.7650 –.0050 1,351,171 98.4850 … 1,368,056

Mini DJ Industrial Average (CBT)-$5 x index 19826 19759

March June

19885 19822

19765

19788

t 19711 19730 S&P 500 Index (CME)-$250 x index March 2263.00 2274.00 2260.00 2263.70 June ... 2267.20 2254.20 2257.80 Mini S&P 500 (CME)-$50 x index March 2264.50 2274.00 2259.50 2263.75 June 2259.50 2268.00 2253.75 2257.75 Mini S&P Midcap 400 (CME)-$100 x index March 1668.30 1685.90 1663.90 1679.20 Mini Nasdaq 100 (CME)-$20 x index March 5022.0 5047.0 s 5007.3 5031.3 June 5005.8 5043.8 s 5005.8 5030.3 Mini Russell 2000 (ICE-US)-$100 x index March 1353.10 1372.10 t 1351.10 1369.20 Mini Russell 1000 (ICE-US)-$100 x index March 1256.20 1262.70 1255.00 1257.50 U.S. Dollar Index (ICE-US)-$1,000 x index March 101.85 102.09 101.49 102.00 June 101.79 102.01 101.47 101.92

–40 128,899 –40 519 –1.30 –1.40

59,194 1,742

–1.25 2,814,013 –1.50 17,388 11.10

96,915

9.3 220,663 9.0 356 13.90 655,217 –.10

8,020

.09 .08

79,102 1,540

Source: SIX Financial Information

Bonds | WSJ.com/bonds Tracking Bond Benchmarks Return on investment and spreads over Treasurys and/or yields paid to investors compared with 52-week highs and lows for different types of bonds YTD total return (%)

Yield (%) Latest Low High

Index

0.4

1883.63

Total return close

YTD total return (%)

Yield (%) Latest Low High

Index

Mortgage-Backed Bloomberg Barclays

Broad Market Bloomberg Barclays 2.580 1.820 2.770

U.S. Aggregate

U.S. Corporate Indexes Bloomberg Barclays

1941.09

0.1

Mortgage-Backed

1917.81

0.02

Ginnie Mae (GNMA) 2.790 1.850 2.990

2.840 1.930 3.070

2642.05

0.6

U.S. Corporate

3.330 2.750 3.710

1135.77

0.1

Fannie mae (FNMA) 2.850 1.950 3.090

2526.94

0.3

Intermediate

2.820 2.190 3.110

1748.50

0.1

Freddie Mac (FHLMC) 2.870 1.980 3.110

Long term

4.460 3.960 5.130

502.26

0.7

Muni Master

2.188 1.297 2.516

543.54

0.4

Double-A-rated

2.710 1.980 2.870

349.96

0.7

7-12 year

2.236 1.300 2.618

674.70

0.6

Triple-B-rated

3.660 3.180 4.450

388.93

0.8

12-22 year

2.652 1.610 3.047

373.85

0.7

22-plus year

3.238 2.027 3.622

1.1

3547.34

High Yield Bonds Merrill Lynch 1.1

392.79

High Yield Constrained 5.884 5.884 10.099

1.4 Triple-C-rated

390.01

536.10

5.293 5.248 8.696

754.85

1.0

High Yield 100

355.77

1.0

Global High Yield Constrained 5.581 5.581 9.437 Europe High Yield Constrained 3.154 3.125 6.500

0.5

288.57

Global Government J.P. Morgan†

10.662 10.662 21.753

2711.54

-0.2

Global Government 1.410 0.750 1.490 0.2

Canada

1.850 0.770 1.960

366.02 -0.8

EMU§

1.085 0.512 1.204

699.42 -1.0

France

0.880 0.270 1.040

Germany

0.340 -0.100 0.660

Japan

0.370 -0.120 0.640

511.15

U.S Agency Bloomberg Barclays

-0.7

1607.61

0.2

U.S Agency

1.770 1.150 1.910

287.60

1447.22

0.1

10-20 years

1.580 0.960 1.710

561.86 -0.8

Netherlands

0.510 0.020 0.810

3.220 2.390 3.460

900.15 -1.5

U.K.

1.660 0.960 2.140

2.920 2.320 3.090

746.96

1.2 20-plus years

3158.02

0.5

2351.96

Yankee

-0.2

1.1

Emerging Markets ** 5.922 5.134 7.128

*Constrained indexes limit individual issuer concentrations to 2%; the High Yield 100 are the 100 largest bonds ** EMBI Global Index

† In local currency § Euro-zone bonds

Sources: Merrill Lynch; Bloomberg Barclays; J.P.Morgan

38.01 84.43 105.44 99.58 122.60 41.52 23.38 36.77 28.29 54.95 54.02 198.40 113.15 305.50 226.46 85.63 49.40 48.04 116.23 22.62 34.20 53.91 77.06 73.05 124.63 122.09 85.76 37.35 36.87 48.52 45.23 114.31 75.63 83.43 86.08 103.83 133.84 98.31 82.82 207.92 79.55 79.44 130.82 81.13 54.03 46.96 116.87 62.16 93.36 57.89 50.43

0.42 –0.04 –0.05 0.42 0.22 –0.14 –0.04 0.05 0.04 0.13 –0.04 –0.18 0.43 0.65 ... 0.05 0.02 –0.31 0.79 0.71 –1.13 –0.02 0.39 0.38 –0.01 0.81 0.03 0.11 0.55 –0.02 0.04 0.04 –0.17 0.02 0.08 0.05 0.22 0.20 –0.85 –0.01 –0.04 0.05 0.73 –0.02 –0.11 0.17 0.08 0.10 –0.01 –0.02 –0.69

2.1 –0.0 0.6 2.2 3.5 –0.1 0.1 0.9 2.2 1.4 1.4 0.5 3.2 1.2 1.3 0.1 2.2 –1.1 8.1 8.1 2.5 2.7 1.7 2.0 2.6 0.9 0.7 2.2 3.0 1.2 2.4 2.5 –0.2 0.4 0.4 1.4 1.7 1.2 0.4 1.3 0.1 0.1 1.4 0.4 –0.5 2.4 1.3 1.9 0.4 0.9 1.8

Yields and spreads over or under U.S. Treasurys on benchmark two-year and 10-year government bonds in selected other countries; arrows indicate whether the yield rose(s) or fell (t) in the latest session 1.250 2.000

0.250

Week Latest ago

1.250

2.50

2.25

...

n.q.

...

Commercial paper (AA financial)

30 day Two month Three month Four month Five month Six month

0.90

0.87

1.03

n.q. -0.13 -0.14 n.q. n.q. n.q. n.q. n.q. n.q. n.q. n.q. n.q. n.q. n.q. n.q. n.q. n.q. n.q.

n.q. n.q. n.q. n.q. n.q. n.q. 0.76500 1.01789 1.33378 1.70178

0.77167 0.99789 1.31767 1.68567

0.77333 1.01789 1.33378 1.70178

0.42450 0.61260 0.84905 1.11560

Euro Libor One month Three month Six month One year

-0.381 -0.341 -0.237 -0.094

-0.378 -0.336 -0.227 -0.086

-0.219 -0.141 -0.058 0.049

-0.386 -0.341 -0.237 -0.094

Euro interbank offered rate (Euribor) One month Three month Six month One year

-0.372 -0.324 -0.232 -0.090 Latest

-0.370 -0.319 -0.221 -0.084 Value Traded

-0.220 -0.142 -0.053 0.049

-0.374 -0.324 -0.232 -0.090

52-Week High Low

DTCC GCF Repo Index Treasury MBS

0.535 0.545

69.606 1.266 0.244 87.600 1.328 0.257

Open Implied Settle Change Interest Rate

DTCC GCF Repo Index Futures Treasury Jan Treasury Feb Treasury Mar

1.137 2.467

0.932 2.117

1.850

1.779

2.018

2.772

2.825

2.728

France 2 -0.622 t 10 0.806 s

-0.620

-0.652

-0.345

0.805

0.809

0.880

Germany 2 -0.727 s 10 0.286 s

-0.743

-0.758

-0.390

0.283

0.368

Italy 2 -0.137 t 10 1.910 s

-0.131

-0.098

-0.001

1.901

2.038

1.520

Japan 2 -0.241 t 10 0.062 s

-0.211

-0.180

-0.019

-95.1

0.055

-142.6 0.230 -231.3

-139.7

-231.3

-188.7

Spain 2 -0.266 s 10 1.466 t

-0.267

-0.251

0.009

-145.2

-92.3

1.487

1.506

1.717

-90.9

-88.0

-40.0

0.214 s 1.456 s

0.177

0.149

-100.9

-42.4

1.424

1.336

0.507 -97.1 1.774 -91.9

-94.4

-34.2

1.870 s 2.722 t

1.250

U.K. 2

4.250

0.45

Libor One month Three month Six month One year

0.250 1.300

Commercial paper

90 days

0.100 0.100

Call money

1.186 2.368

Other short-term rates 52-Week high low

Year ago

Australia 2

0.000

99.440 0.010 4170 0.560 99.420 0.020 5352 0.580 99.325 0.010 3033 0.675

Notes on data: U.S. prime rate is effective December 15, 2016. Discount rate is effective December 15, 2016. U.S. prime rate is the base rate on corporate loans posted by at least 70% of the 10 largest U.S. banks; Other prime rates aren’t directly comparable; lending practices vary widely by location; DTCC GCF Repo Index is Depository Trust & Clearing Corp.'s weighted average for overnight trades in applicable CUSIPs. Value traded is in billions of U.S. dollars. Futures on the DTCC GCF Repo Index are traded on NYSE Liffe US. Sources: Federal Reserve; Bureau of Labor Statistics; DTCC; SIX Financial Information; General Electric Capital Corp.; Tullett Prebon Information, Ltd.

Spread Under/Over U.S. Treasurys, in basis points Latest Prev Year ago

Month ago

5.250

0.000

Yield (%) Latest(l) 0 20 40 60 80 100 120 Previous

U.S. 2 1.186 t 10 2.375 s

4.750 0.250

30 to 270 days

Exchange-Traded Portfolios | WSJ.com/ETFresearch

ETF

.06 342,256 .08 163,210

30 Day Federal Funds (CBT)-$5,000,000; 100 - daily avg.

Jan April

30-year mortgage yields 30 days 3.625 3.686 3.828 2.806 60 days 3.659 3.720 3.862 2.832

Euro commercial paper

Tuesday, January 10, 2017 Closing Chg YTD Symbol Price (%) (%)

94,794 39,862

2 Yr. Treasury Notes (CBT)-$200,000; pts 32nds of 100%

0.000

Fannie Mae

Federal funds Effective rate High Low Bid Offer

—52-WEEK— High Low

Secondary market

1.00

Treasury bill auction 0.00 0.50 0.25

Week Latest ago

1.50

Discount

Prime rates U.S. Canada Japan

—52-WEEK— High Low

Overnight repurchase

U.S. consumer price index All items Core

Australia

3.50 3.50

5 Yr. Treasury Notes (CBT)-$100,000; pts 32nds of 100%

Country/ Coupon (%) Maturity, in years

Key annual interest rates paid to borrow or lend money in U.S. and international markets. Rates below are a guide to general levels but don’t always represent actual transactions. Nov. index level

23 125,788 23 61,118

Contract High hilo Low

Open

Global Government Bonds: Mapping Yields

Borrowing Benchmarks | WSJ.com/bonds Money Rates

Inflation

4,516 4,075

Treasury Notes (CBT)-$100,000; pts 32nds of 100%

Total return close

Food

2,938

.08 .28

Interest Rate Futures

Jan March June Dec

Tuesday, January 10, 2017 These prices reflect buying and selling of a variety of actual or “physical” commodities in the marketplace— separate from the futures price on an exchange, which reflects what the commodity might be worth in future months.

.50

Treasury Bonds (CBT)-$100,000; pts 32nds of 100%

Eurodollar (CME)-$1,000,000; pts of 100%

Cash Prices | WSJ.com/commodities

Open interest

Chg

Jan Feb

Agriculture Futures

1,822 147,292

| WSJ.com/commodities

68.5 34.7 -180.7 -156.9 -191.2

0.517 -208.9 -132.2 -46.5

-145.1

66.5

108.6

40.4

61.2

-180.5

-127.7

-156.3

-123.7

-192.8

-132.1

-208.5

-160.0

-131.7

-93.3

-46.6

-59.7

Source: Tullett Prebon

Corporate Debt Price moves by a company’s debt in the credit markets sometimes mirror and sometimes anticipate moves in that same company’s share price. Here’s a look at both for two companies in the news.

Investment-grade spreads that tightened the most… Maturity

Current

Spread*, in basis points One-day change

Last week

Stock Performance Close ($) % chg

Issuer

Symbol Coupon (%)

Citigroup Morgan Stanley Ensco Bank of Montreal

C MS ESV BMO

5.350 5.550 8.000 2.100

May 15, ’49 July 15, ’49 Jan. 31, ’24 Dec. 12, ’19

288 –45 194 –26 490 –19 –14 77

329 194 n.a. 89

60.23 43.06 11.44 73.86

0.02 0.82 –2.22 0.38

Williams Partners Bank of New York Mellon Toyota Motor Credit UBS AG

WPZ BK TOYOTA UBS

4.875 4.500 1.550 7.625

May 15, ’23 June 20, ’49 Oct. 18, ’19 Aug. 17, ’22

216 319 55 292

–14 –13 –13 –13

n.a. n.a. 66 n.a.

38.62 47.72 ... 16.47

–0.10 0.17 ... 0.06

…And spreads that widened the most Bnp Paribas S.A. Citigroup Sky Intesa Sanpaolo Spa

BNP C SKYLN ISPIM

6.750 March 14, ’49 4.500 Jan. 14, ’22 3.750 Sept. 16, ’24 6.500 Feb. 24, ’21

424 128 123 193

13 12 12 11

n.a. 110 n.a. n.a.

... 60.23 ... ...

... 0.02 ... ...

Sempra Energy Canadian Natural Resources Kinder Morgan

SRE CNQCN KMI

1.625 3.800 3.050

88 135 110

11 10 10

n.a. n.a. n.a.

101.06 ... 21.57

–0.32 ... –0.32

Oct. 7, ’19 April 15, ’24 Dec. 1, ’19

High-yield issues with the biggest price increases… Maturity

Bond Price as % of face value Current One-day change

Issuer

Symbol

Coupon (%)

Valeant Pharmaceuticals International Bristow Transworld Systems Affinion

VRXCN BRS TSIACQ AFFINI

7.000 6.250 9.500 7.875

Oct. 1, ’20 Oct. 15, ’22 Aug. 15, ’21 Dec. 15, ’18

92.750 88.975 68.000 89.500

Cheniere Corpus Christi Holdings FirstEnergy Solutions GameStop Sensata Technologies Uk Financing

CHCOCH FE GME ST

7.000 June 30, ’24 6.800 Aug. 15, ’39 6.750 March 15, ’21 6.250 Feb. 15, ’26

112.250 39.000 103.500 107.750

Last week

Stock Performance Close ($) % chg

n.a. 86.000 n.a. n.a.

... 18.60 ... ...

... –4.37 ... ...

1.75 1.38 1.25 1.25

109.562 36.250 101.500 105.000

... … 24.64 …

... … 0.61 …

–1.75 –1.75 –1.75 –1.50

90.750 n.a. 77.750 88.750

19.53 3.69 ... ...

–3.84 –0.27 ... ...

n.a. 102.250 n.a. 78.750

10.84 5.68 15.14 ...

0.28 –3.40 –0.98 ...

4.19 2.98 2.25 1.88

…And with the biggest price decreases California Resources Denbury Resources Murray Energy Avaya

CRC 8.000 DNR 4.625 MURREN 11.250 AVYA 9.000

Dec. 15, ’22 July 15, ’23 April 15, ’21 April 1, ’19

89.250 82.250 73.500 83.000

Rent–A–Center Weatherford International Transocean Intelsat Jackson Holdings S.A.

RCII WFT RIG INTEL

6.625 7.750 7.500 7.250

Nov. 15, ’20 June 15, ’21 April 15, ’31 Oct. 15, ’20

92.375 102.938 85.197 77.250

–1.38 –1.31 –1.30 –1.25

*Estimated spread over 2-year, 3-year, 5-year, 10-year or 30-year hot-run Treasury; 100 basis points=one percentage pt.; change in spread shown is for Z-spread. Note: Data are for the most active issue of bonds with maturities of two years or more Sources: MarketAxess Corporate BondTicker; WSJ Market Data Group

THE WALL STREET JOURNAL.

B12 | Wednesday, January 11, 2017

COMMODITIES

MARKETS WATCH

Reflation Rally Lifts Metal Palladium is up 12% in new year, but some fear reversal if car sales slow abroad BY ALISTAIR MACDONALD One asset has taken an early lead in this year’s reflation rally: palladium. The metal is up around 12% in the first weeks of the new year, outperforming most other assets as investors continue last year’s trend of putting money in more cyclical, risky investments, such as equities and industrial metals. That reflation trade favors assets that respond well to economic growth and inflation and has been driving markets since Donald Trump’s election victory. Palladium settled Tuesday at $765.25 a troy ounce, up 1.1% on the day. But some investors worry that the reflation trade is getting crowded and is subject to a sudden reversal. Regarding palladium specifically, some analysts are skeptical the boom will last. The metal is geared to the auto industry, where sales may have peaked after hitting record or near-record highs in the U.S., China and Europe. “There was a lot of speculative investment at the end of the year and it’s unlikely the gains reflect a change in the fundamentals,” said Simona Gambarini, commodities economist at Capital Economics who believes that car-sales growth in China and Europe will slow this year. Around half of palladium use is by the auto industry, where it is used in the catalytic converters that help filter out pollution from engine emissions. Platinum, which is used in diesel engines, is up 7.5% this year. These metals’ gains are

steeper than year-to-date rises of 1.3% for the S&P 500 and 4.2% for copper. Those two markets have also benefited from the reflation trade. Last year, a fourth-quarter surge in light-vehicle sales in the U.S. pushed annual sales to a second-consecutive high. In China and parts of Europe, auto sales also hit highs last year. But analysts aren’t sure that such breakneck growth will continue. While U.S. sales are expected to remain strong, analysts don’t expect them to break a record this year. In China, consumers rushed to benefit from a tax break before its scheduled expiration at the end of the year. Falling Chinese demand “does not appear to be reflected in palladium prices at the current point in time,” Carsten Menke, a commodities analyst at Julius Baer, said in a research note. Other factors could take the sparkle out of palladium. A higher gold price often benefits other precious metals, like palladium. But rising U.S. interest rates could help to cap gold’s gains this year. The metal has more trouble competing with yield-bearing securities when rates rise. Palladium may also eventually suffer from its gains. Its recent strength along with a runup in steel prices could encourage more recycling through car scrap. While the demand for this metal has been greater than its supply, that deficit is clouded by users of the metal holding large inventories, analysts say. Even for those with a positive view of the metal, big inventories pose a risk if the higher price encourages holders to sell it or use it. Above-ground stocks are abundant, equaling around 12 months of supply in inventories, said Robin Bhar, a commodities analyst at Société Générale.

Palladium Shines Palladium is one of global markets' biggest gainers this year, propelled by strong auto sales and the reﬂation trade. Year-to-date performance* Nymex palladium

11.9%

Gold

3.1%

S&P 500 Brent crude oil

1.6% –4.3% *Through 11:30 a.m. Tuesday in New York

Ingots of palladium at a nonferrous-metals plant in Krasnoyarsk, Russia THE WALL STREET JOURNAL.

Sources: WSJ Market Data Group; FactSet; Ryan ALM

Jewelry Demand Boosts Gold Prices

vestors starting to buy as the great unknown of the Trump presidency looms,” wrote David Govett, head of precious metals at brokerage firm Marex Spectron. The precious metal erased gains after trading as high as $1,190.60, as the dollar made a comeback from the day’s losses. A weaker greenback makes dollar-priced commodities cheaper for holders of other currencies. The WSJ Dollar Index rose 0.1% to 92.71. “We think that the U.S. dollar is likely to continue to consolidate and this should help keep gold supported,” wrote Joni Teves, precious-metals analyst at UBS Group AG. —Ed Ballard

Gold prices closed at the highest level in six weeks Tuesday, helped by an uptick in jewelry demand ahead of Lunar New Year and investors covering their short positions. Gold for February delivery settled up 0.1% at $1,185.50 a troy ounce on the Comex division of the New York Mercantile Exchange, the highest close since Nov. 29. “Gold seems to be behaving true to January form at the moment, with physical demand picking up ahead of the Chinese Lunar New Year and in-

ESAM OMRAN AL-FETORI/REUTERS

BY TIMOTHY PUKO

Libya’s oil output has surged. Above, a terminal near Benghazi. put by nearly 1.8 million barrels a day in total, more than 1% of global supply. However, some countries, including Libya and Iran, were given exemptions because of civil conflicts or economic considerations. Iraq was allowed to cut by a small amount, then government officials made plans to increase exports anyway. The Journal reported Tuesday that Libyan militias that

New Highs and Lows | WSJ.com/newhighs

Stock

The following explanations apply to the New York Stock Exchange, NYSE Arca, NYSE MKT and Nasdaq Stock Market stocks that hit a new 52-week intraday high or low in the latest session. % CHG-Daily percentage change from the previous trading session. Tuesday, January 10, 2017

Stock

52-Wk % Sym Hi/Lo Chg Stock

NYSE highs - 92 AVX AVX AdvntClymrFd AVK AlaskaAir ALK AlpineGlblDyn AGD AlpineTotDynDiv AOD AmericanExpress AXP AIG Wt AIG/WS AIG AIG ArrowElec ARW AshfordHosp AHT AspenIns AHL AtkoreIntl ATKR AvenueIncmCrStrat ACP BRT Realty BRT BankofMontreal BMO BaringsGlbShtDurHY BGH Bio-RadLab A BIO BlkRkDebtStratFd DSU BrookfldRealAssts RA CPFLEnergia CPL CapsteadMtg CMO Cooper-Standard CPS Dana DAN DellTechnologies DVMT DeutscheHiIncmOpps DHG DeVry DV EatonVanceFRIT EFT EmpresaDisCom EDN EquusTotReturn EQS EvercorePtrs EVR EverestRe RE Exterran EXTN FiatChrysler FCAU FT HiIncLgShrt FSD GEO Group GEO GasLogPartners GLOP GeneralMotors GM GeneralMotorsWt19 GM/WS/B Greenbrier GBX GuangshenRail GSH HillIntl HIL IRSA IRS KAR Auction KAR KeyEnergySvcs KEG KeyCorpPfdE KEYpI LambWeston LW Lear LEA CBTCS 01-31 XKE

16.23 15.53 92.49 9.27 7.92 78.00 25.26 67.47 73.61 7.96 56.30 24.47 13.92 8.55 74.25 19.70 194.20 11.50 22.68 15.85 10.59 109.81 19.89 57.67 14.62 33.92 15.12 32.33 2.11 72.85 219.58 29.48 10.86 16.56 38.29 22.70 38.16 20.19 49.00 31.41 5.20 20.38 45.37 37.91 26.68 38.96 143.62 8.88

3.1 0.7 5.2 ... 0.5 1.0 2.8 1.2 1.1 2.2 2.0 5.6 -0.3 0.5 0.4 0.5 0.1 -0.2 0.4 0.3 1.4 1.3 3.9 0.9 0.2 3.1 0.2 0.2 -1.0 0.8 1.1 4.3 2.3 0.3 2.9 -1.1 3.7 7.6 2.6 1.9 4.1 0.9 0.4 4.6 ... -0.1 5.0 -0.3

52-Wk % Sym Hi/Lo Chg Stock

52-Wk % Sym Hi/Lo Chg

1.29 0.8 FomentoEconMex FMX MechelPfd MTLp 6.83 14.4 GpoAeroportuar PAC Mechel MTL 13.54 3.9 HealthSouthWt HLS/WS Meritor MTOR 23.10 1.5 HH Gregg NexPointResidentl NXRT HGG 15.34 0.3 InvescoHiIncm2023 IHIT NuvDow30Dyn DIAX 11.96 0.8 KoreaElcPwr NuvFRIncmFd JFR KEP 12.41 1.5 MexicoFund NuvFR OppFd JRO MXF 16.13 0.4 TurkishFd NuvGlblHiIncmFd JGH TKF 17.94 0.5 NuvShrtDurCrOppFd JSD 27.71 3.5 Olin OLN 11.43 1.9 OrchidIslandCap ORC 25.88 0.4 ARKWebx.0ETF ARKW OutfrontMedia OUT 88.58 0.2 AdvisorDorseyADR AADR PackagingCpAm PKG PampaEnergia 39.91 6.3 AdvShsPeritusHiYd HYLD PAM 8.06 6.0 DeutscheXAustralia DBAU Petrobras PZE 80.16 1.4 DeutscheXUSDHiYd HYLB PetroChina PTR 36.50 1.7 DrxTechMktBull 3x TECL Progressive PGR RexnordPfdA RXNpA 51.91 1.7 DirexniBillionaire IBLN 140.08 0.9 DirexionNASD100EW QQQE Rockwell ROK FTEC Rogers 81.14 3.7 FidelityMSCIIT ROG FDN 8.40 -0.1 FstTrDJIntrnt RoyceMicroCap RMT SINOPECShanghai SHI 57.83 0.9 FirstTrUSEquityOpp FPX 34.11 2.2 FlexSharesCurrHdDM TLDH SPX FLOW FLOW 15.15 2.0 GlbXMSCIArgentina ARGT SelectMedical SEM 41.49 1.6 GlbXISuperDivEM SDEM SensataTech ST 21.39 0.7 GSHedgeIndVIP GVIP ShawComm B SJR FRN 49.13 1.5 GuggFronMkts Shopify SHOP 22.27 3.5 GuggS&P500EWTech RYT SpeedwayMotor TRK 12.88 4.4 HrznsS&P500CovCall HSPX StellusCapInvt SCM iPathLXS&P500 SFLA 21.90 5.0 Strats WlMrt GJO GJO 67.08 3.1 iShCoreRussUSGrw IUSG Tenneco TEN 42.45 1.8 iShCurrHdgIntlHY HHYX Timken TKR 10.13 5.1 iShCurHdgMSCIUS HAWX TransportadGas TGS TrecoraResources TREC 14.80 3.9 iShCurHdgMSCISwitz HEWL 22.50 ... iShU.S.Technology IYW Tri-Continental TY 12.44 5.1 iShEdgeMSCIMultif ACWF Tronox TROX 12.75 0.8 iShExponentialTech XT UCP UCP 56.52 1.0 iShMSCIKokusaiETF TOK Validus VR 5.61 0.2 iShMornLCGrowth JKE VoyaPrimeRate PPR 16.66 3.4 iShMornMCGrowth JKH WabashNational WNC 142.52 1.6 iShRussell1000Gwth IWF WellCareHealth WCG 88.30 1.0 iShRussellTop200Gr IWY WestPharmSvcs WST 11.59 0.2 iShS&P500Growth IVW WstAstCpLoanFd TLI 20.99 -0.3 iShGlobalTechETF IXN XO Group XOXO iShNorthAmerTech IGM iSh0-5YHYCorpBd SHYG JanusShrtDurIncm VNLA 5.53 -4.4 JanusVelocityVolLC SPXH AmiraNatureFoods ANFI 45.69 -0.4 MadronaDomestic FWDD Brown-Forman A BF/A 59.95 -1.4 MeidellTacticalAdv MATH Coca-Cola Femsa KOF 13.33 -3.6 OppenheimerRevWtd RTR Conduent CNDT

73.45 75.11 0.28 0.61 9.99 17.73 13.35 6.36

0.5 -0.3 9.6 -40.5 -0.2 0.7 -1.0 -1.4

NYSE Arca highs - 64

NYSE lows - 12

once kept oil fields and ports closed have instead struck deals that allowed the National Oil Co., or NOC, to raise production to a three-year high of 708,000 barrels a day this week, a NOC spokesman said. It had been just 200,000 barrels a day last year, but now NOC believes it could hit 900,000 barrels a day in 2017. Iran has likely sold oil it had been holding in storage. 52-Wk % Sym Hi/Lo Chg Stock

PwrshsDyMedia PBS PwrShsLgCpGro PWB PSRussMCPureGrwth PXMG ProSharesShtVIXST SVXY ProShrUlCnsmr UCC ProShrUltraQQQ QLD ProShrUlTech ROM RenaissanceIPOETF IPO RiverFrontDyUSFlex RFFC SPDRBloomBarSTHYBd SJNK SPDRMSTech MTK SPDRS&P500Growth SPYG SchwUSLrgCpGrwth SCHG TechSelectSector XLK UBSAGFIEnhLCGrw FBGX UBSProSh3xInvCrd WTID VanEckInvtGrFR FLTR VanEckMornWideMoat MOAT VanEckRussiaSC RSXJ VanguardInfoTech VGT VangdGrowth VUG VanguardMegaCapGrw MGK Vanguard 500Grow VOOG Velocity3xInvCrude DWT

27.00 0.9 43.04 1.0 36.15 0.2 FT Nasd100Tech 26.64 0.6 FT Nasd100 EW 50.88 0.1 FlexSTOXXGlbESGImp 16.29 0.1 GenMarkDiagn 53.85 -0.2 DrxTechMktBear 3x TECS 41.91 -0.9 GlbPartnerAcqnWt 26.04 0.2 iShMSCIMexicoCap EWW 30.00 -2.0 iShMSCITurkeyETF TUR 71.69 0.6 HarmonyMergerWt 45.59 -0.2 HawthornBcsh 37.96 ... ProShrShortQQQ PSQ 15.88 -2.3 HealthInsInnov 84.18 0.1 ProShrUltMexico UMX 22.22 -0.4 HealthEquity 55.41 0.3 PrShrsUShrQQQ QID 30.36 0.3 REW 26.05 ... ProShrUSTech HennessyCapWt 22.01 -4.1 25.06 2.5 UBSProSh3xLgCrude WTIU Heska 23.14 -6.3 Velocity3xLgCrude UWT 15.17 0.1 HomeTownBkshs 40.45 0.2 WisdTreeMngdFutStr WDTI 43.65 0.3 HostessBrands 12.25 0.7 HostessBrandsWt 111.62 ... HovnanianPfdA 46.25 0.1 Amcon 122.90 1.2 HowardBancorp DIT 231.00 11.9 AmShrHosp 4.40 18.8 IAC/InterActive AMS 44.08 0.1 ContinentalMatls CUO 28.50 0.2 IdexxLab 26.41 ... DenisonMines 0.69 13.4 Ichor DNN 23.63 0.2 EmersonRadio 1.11 0.9 Incyte MSN 24.22 0.2 FriedmanInds 7.29 -0.6 InnovSolSuprt FRD 123.88 ... Network1Techs NTIP 3.80 1.4 IntegraLifeSci 25.40 0.7 PacholderHiYld 7.32 0.5 iRhythmTechs PHF 27.60 0.2 PharmAthene 3.45 1.5 iShFallAngelsUSDBd PIP 55.83 0.4 RingEnergy 13.73 6.8 JM Global Un REI 124.95 0.2 UraniumEner 1.55 9.6 j2Global UEC 166.63 0.4 K2MGroup 107.75 ... KtckyFstFdBcp 57.89 ... KindredBiosci 124.70 -0.1 LamarAdvertising 113.28 ... LeMaitreVascular 127.78 ... LibertyBroadbandC 47.66 ... ASML ASML 113.13 0.1 LoxoOncology 50.15 0.1 AmCapSeniorFloat ACSF 12.75 -0.8 MillAcqn Un 31.50 0.2 AquaBountyTechsWi AQBTV 0.17 2211.1 MKS Instrum 46.23 ... AquinoxPharm 19.12 1.2 MMACapitalMgmt AQXP 30.84 3.8 ArrayBioPharma ARRY 9.88 3.7 MagellanHealth 33.88 0.3 AsureSoftware ASUR 11.00 -0.8 Masimo

NYSE MKT highs - 11

NYSE MKT lows - 0 Nasdaq highs - 104

The dollar rose to record highs against the Mexican peso and Turkish lira Tuesday, as political and economic concerns continued to bedevil the emergingmarket currencies. Late Tuesday, the dollar was up 1.9% to 21.81 against the Mexican peso. Against the Turkish lira, the U.S. currency rose nearly 2% to $3.7885. Mexico’s economy has come under pressure on worries that U.S. President-elect Donald Trump will follow through on pledges to renegotiate key trade agreements with the country. Turkey’s economy contracted in the third quarter for the first time since 2009, as the country grapples with accelerating inflation and political uncertainty. “The selling in these currencies has been relentless,” said Win Thin, a strategist at Brown Brothers Harriman. The Wall Street Journal Dollar Index, which gauges the U.S. currency against a basket of 16 others, was slightly higher at 92.71. The dollar fell 0.2% against the Japanese yen to ¥115.76. —Ira Iosebashvili

ACBI AUBN ACLS AXGN BEAV BGCP CACQ CCN CHTR CLVS COBZ CGNX CMCSA CPRT CUTR DISH EMCI ETFC ELECW EQFN EXEL ONEQ JOBS QQXT QTEC QQEW ESGG GNMK GPACW HRMNW HWBK HIIQ HQY HCACW HSKA HMTA TWNK TWNKW HOVNP HBMD IAC IDXX ICHR INCY ISSC IART IRTC FALN WYIGU JCOM KTWO KFFB KIN LAMR LMAT LBRDK LOXO MIIIU MKSI MMAC MGLN MASI

19.80 33.15 15.00 10.50 61.49 10.92 14.55 14.05 300.15 51.72 17.20 66.28 71.76 57.13 19.05 61.81 31.47 37.24 0.46 10.15 18.92 219.11 36.59 42.30 54.52 48.12 79.37 13.42 0.50 0.88 20.97 19.45 47.38 0.96 76.23 11.00 14.10 2.09 7.98 15.47 70.33 121.81 14.25 121.18 4.36 45.50 32.64 27.24 10.25 85.15 23.10 9.75 5.75 70.35 26.90 75.99 37.81 10.01 62.05 20.15 77.70 70.77

0.3 0.7 1.4 -1.0 0.5 2.3 -1.4 4.9 0.7 -0.9 3.6 2.7 0.1 0.3 6.1 0.2 0.4 0.9 2.4 1.4 7.6 0.1 6.2 0.6 0.4 0.5 0.8 11.4 16.3 4.1 12.6 12.5 9.5 ... 2.6 14.6 4.4 8.2 -0.5 0.8 0.2 1.4 -4.3 0.7 2.1 0.4 0.3 0.2 0.4 0.7 6.3 2.8 1.8 1.6 5.2 0.6 1.5 0.2 2.1 1.8 1.8 2.7

106.90 3.4 26.60 2.9 72.12 0.2 70.41 2.1 19.36 -0.1 27.89 1.3 2.75 11.8 12.76 0.6 27.05 2.1 13.48 0.8 26.35 25.7 36.75 2.1 5.85 0.5 81.45 0.2 16.80 13.0 122.97 0.2 141.82 0.6 25.59 0.1 31.75 3.4 75.47 -0.6 7.80 ... 17.50 264.9 4.67 0.7 22.74 0.2 47.07 0.6 149.89 -1.1 20.24 2.2 16.89 5.0 11.90 1.7 152.66 3.1 91.05 ... 110.48 0.1 54.84 0.8 22.25 0.9 0.57 9.0 17.70 4.1

2.34 0.66 18.34 6.03 3.45 4.19 1.60 3.30 0.21 1.74 5.60 4.50 11.66 0.69 4.05 7.38 4.25 3.89 1.15 2.60 6.78 11.19 0.28

REGULATION

CFTC’s Chief Warns On Rules Rollback Timothy Massad, the outgoing chairman of the Commodity Futures Trading Commission, warned the incoming Donald Trump administration against rolling back postcrisis financial regulation. “My belief is that to repeal or dismantle the reforms we have implemented would be a major mistake,” Mr. Massad said Tuesday during a speech at the London School of Economics. “Their repeal would not contribute to improving the economic conditions that might have given rise to populist discontent expressed in recent elections.” Financial overhauls introduced after the financial crisis, such as the 2010 Dodd-Frank Act, could however be improved upon, he said. “As regulators, we should approach our jobs with a degree of humility,” he said. “Financial markets develop so quickly. It is difficult to write rules that work the way you want them to.” U.S. regulators should focus on central clearinghouses, market liquidity, automated trading and the risk of cyberattacks, he said, although “it is unclear what will happen” amid increasing signs of a potential repeal of postcrisis regulation. House Republicans, in a push to ease financial regulations they perceive as unduly rigorous, already are working on demolishing some of Mr. Massad’s initiatives. The House is expected to vote as early as Wednesday on legislation that would hamper the commission’s attempts to complete rules aimed at curbing speculation in commodities such as gold and oil. “We have been working on this rule and I had hoped to finalize it,” Mr. Massad said, adding it is up to the next commission to take up the matter. —Nina Trentmann

Average Yields of Major Banks

Nasdaq lows - 23 Dryships DRYS EcoStimEnergy ESES ExtractionOil XOG GlobalEagle ENT GreatElmCap GEC HebronTech HEBT InsigniaSystems ISIG MerrimackPharm MACK MoSys MOSY ONE GroupHosp STKS PAVmed PAVM PAVmedWt PAVMW ProShUltraProShQQQ SQQQ RXiPharm RXII SearsHometown SHOS SenesTech SNES SocialReality SRAX SteinMart SMRT SupercondctrTech SCON TransWorldEnt TWMC VS2xVIXShortTerm TVIX VSVIXMedTerm VIIZ Yield10Bioscience YTEN

Coffee prices rose Tuesday on concerns that dryness in Brazil could continue to affect coffee crops. Arabica coffee for March delivery was up 2.4% to close at $1.477 a pound on the ICE Futures U.S. exchange, its highest close since Nov. 30. Brazil is the largest coffee producer in the world, and rainfall in areas growing the mild-flavored arabica bean have been 60% below normal so far this month and 97% below normal in areas that grow robusta coffee, typically used in instant-coffee blends, according to WeatherBELL Analytics in New York. In other markets, raw sugar for March was up 0.3% to close at 20.48 cents a pound, cocoa for March rose 1.1% to settle at $2,207 a ton, frozen concen-

Type

52-Wk % Sym Hi/Lo Chg

MetaFinancial CASH Mindbody MB NVE NVEC Nuvasive NUVA NuvNasd100Dyn QQQX NxstageMed NXTM O2MicroIntl OIIM OakValleyBncp OVLY OldPointFinl OPOF ON Semi ON PacificContinent PCBK PacificPremBncp PPBI PartnerComms PTNR PatrickIndustries PATK PioneerPwrSols PPSI PwrShrs QQQ QQQ PrShrUltPrQQQ TQQQ ReconDAXGerm DAX RushEnt B RUSHB ScrippsNetworks SNI SecurityNatFin SNFCA SignalGenetics SGNL SiriusXM SIRI StarBulkNts2019 SBLKL TD Ameritrade AMTD TESARO TSRO TowerSemi TSEM TwinDisc TWIN UltraClean UCTT UnitedTherap UTHR VCA WOOF VangrdRuss1000Grw VONG VSInverseVIXSTerm XIV VidentIntlEquityFd VIDI VikingTheraWt VKTXW WayneSavings WAYN

Coffee Prices Climb Amid Brazil Worries

trated orange juice for March was up 2% to end at $1.827 a pound and March cotton jumped 0.3% to end at 73.19 cents a pound. —Julie Wernau

BANKRATE.COM® MMA, Savings and CDs

ClipperData had said Monday that Iranian floating storage was down to 17 million barrels from 32.5 million. “It’s just incredible how much” production is still coming, said Tariq Zahir, who oversees $8 million as managing member of Tyche Capital Advisors LLC. “All of these cuts could be negated just by Libyan production.” The OPEC deal to cut output had sparked a rebound throughout most of last year. By its end, money managers moved to hold seven bullish positions for every one bearish position on oil prices, according to regulatory data. That kind of heavy favor for one side of a trade can often lead to a sharp reversal, and many said that has accelerated the selloff to start this week. With so many buyers already locked in, it makes it more likely that sellers become the primary movers in the market. Without more big bullish news, money managers may start bailing from their bullish positions, sparking others to do the same.

52-Wk % Sym Hi/Lo Chg Stock

27.04 0.4 AtlCapitalBcshs 32.77 0.2 AuburnNatlBncp 32.50 0.4 AxcelisTechs 106.41 0.7 AxoGen 121.52 1.6 B/EAerospace 92.62 0.4 BGC Partners 103.25 0.2 CaesarsAcqn 21.53 -0.4 CardConnect 27.97 0.1 CharterComms 27.90 ... ClovisOncology 62.87 -0.2 CoBizFin 107.83 ... Cognex 57.54 0.1 Comcast A 49.57 ... Copart 145.95 0.1 Cutera 28.45 8.6 DISH Network 25.06 ... EMC Insurance 36.01 0.2 E*TRADE 40.14 2.1 ElectrumSpecWt 125.13 ... EquitableFin 114.66 ... Exelixis 89.65 -0.1 FdltyNasCompFd 111.84 ... 51job 25.59 6.3 FT Nasd100xTech

NYSE Arca lows - 10

Peso, Lira Fall Again As Dollar Rolls On

COMMODITIES

Oil Falls Anew as Libya Ramps Up Oil prices sank to a onemonth low with investors still questioning the impact of an OPEC deal to cut production that had originally sent prices to 18-month highs. The Wall Street Journal reported Tuesday that Libya, exempted from production cuts, had more than tripled its crude output in the past six months. Data in recent days also showed increasing exports from Iran and Iraq, which has made investors nervous that a plan for output cuts from the Organization of the Petroleum Exporting Countries may not be enough to end an oversupply. Light, sweet crude for February delivery lost $1.14, or 2.2%, at $50.82 a barrel on the New York Mercantile Exchange. Brent crude, the global benchmark, fell $1.30, or 2.4%, to $53.64 a barrel on ICE Futures Europe. Both have lost about 6% in just two sessions. OPEC members and several other big global exporters agreed last month to cut out-

CURRENCIES

-13.2 1.3 -0.9 ... -2.7 -10.0 -3.4 -7.4 -6.2 -8.9 -3.5 -11.7 -0.7 -2.1 -5.7 0.8 -9.4 -7.5 -2.5 -5.4 -1.8 0.3 -8.3

Tuesday, January 10, 2017

MMA

1-MO

2-MO

3-MO

6-MO

1-YR

2-YR

2.5YR

5YR

0.10 0.19

0.07 0.07

0.10 0.12

0.16 0.18

0.26 0.29

0.42 0.46

0.43 0.45

0.81 0.85

0.00 0.00

-0.01 0.00

0.00 0.01

0.00 0.00

0.00 0.01

National average Savings Jumbos

Weekly change Savings Jumbos

Consumer Savings Rates Explanation of ratings: Safe Sound SM, (855) 733-0700, evaluates the financial condition of federally insured institutions and assigns a rank of 1,2,3,4 or 5 based on data from the fourth quarter of 2015 from federal regulators. 5: most desirable performance; NR: institution is too new to rate, not an indication of financial strength or weakness. Information is believed to be reliable, but not guaranteed.

High yield savings Bank/rank Phone number

Minimum

Yield (%)

Bank/rank Phone number

Money market and savings account

Six-month CD

Dime Community Bank /4 $1,000 (800) 321-3463 iGObanking.com /3 $25,000 (888) 432-5890 firstcentral.direct /3 $10,000 (866) 400-3272

iGObanking.com /3 (888) 432-5890 TAB Bank /4 (800) 837-4136 VirtualBank /4 (877) 998-2265

1.10 1.10 1.06

One-month CD 0.15 0.10 0.09

Two-month CD

$1,000

1.10

$1,000

0.95

$10,000

0.93

$5,000

1.35

$10,000

1.31

$1,500

1.30

EverBank /3 $5,000 (855) 228-6755 First Internet Bank of Indiana /4 $1,000 (888) 873-3424 VirtualBank /4 $10,000 (877) 998-2265

1.52

EverBank /3 (855) 228-6755 VirtualBank /4 (877) 998-2265 Banesco USA /3 (786) 552-0524

Two-year CD $10,000

0.15

$1,000

0.05

Three-month CD TAB Bank /4 (800) 837-4136 VirtualBank /4 (877) 998-2265 EH National Bank /1 (888) 392-5265

Yield (%)

One-year CD

VirtualBank /4 $10,000 (877) 998-2265 AloStar Bank of Commerce /4 $1,000 (877) 738-6391 Mount McKinley Bank /4 $5,000 (907) 452-1751 VirtualBank /4 (877) 998-2265 Applied Bank /5 (800) 616-4605

Minimum

1.51 1.51

Five-year CD $1,000

0.85

$10,000

0.82

$10,000

0.81

EverBank /3 $5,000 (855) 228-6755 State Farm Bank /4 $500 (877) 734-2265 First Internet Bank of Indiana /4 $1,000 (888) 873-3424

2.28 2.10 2.07

High yield jumbos - Minimum is $100,000 Money market and savings account ableBanking,adivisionofNortheastBank/4 (877) 505-1933 California First National Bank /4 (800) 735-2465 EH National Bank /1 (888) 392-5265

1.00 1.00 0.87

One-month CD USAA /5 (800) 583-8295 VirtualBank /4 (877) 998-2265 AloStar Bank of Commerce /4 (877) 738-6391

0.15 0.10

0.92 0.90

EverBank /3 (855) 228-6755 My e-BAnC by BAC Florida Bank /4 (855) 512-0989 California First National Bank /4 (800) 735-2465

1.35 1.30 1.26

Two-year CD 0.15 0.05 0.01

Three-month CD EH National Bank /1 (888) 392-5265 EverBank /3 (855) 228-6755 First Internet Bank of Indiana /4 (888) 873-3424

0.98

One-year CD 0.22

Two-month CD VirtualBank /4 (877) 998-2265 Applied Bank /5 (800) 616-4605 Citizens Trust Bank /3 (404) 659-5959

Six-month CD TriState Capital Bank /4 (866) 680-8722 My e-BAnC by BAC Florida Bank /4 (855) 512-0989 First Internet Bank of Indiana /4 (888) 873-3424

EverBank /3 (855) 228-6755 First Internet Bank of Indiana /4 (888) 873-3424 My e-BAnC by BAC Florida Bank /4 (855) 512-0989

1.52 1.51 1.50

Five-year CD 0.82 0.80 0.60

EverBank /3 (855) 228-6755 State Farm Bank /4 (877) 734-2265 First Internet Bank of Indiana /4 (888) 873-3424

2.28 2.10 2.07

Notes: Accounts are federally insured up to $250,000 per person effective Oct. 3, 2008. Yields are based on method of compounding and rate stated for the lowest required opening deposit to earn interest. CD figures are for fixed rates only. MMA: Allows six (6) third-party transfers per month, three (3) of which may be checks. Rates are subject to change. Source: Bankrate.com, a publication of Bankrate, Inc., North Palm Beach, FL 33408 Internet: www.bankrate.com

THE WALL STREET JOURNAL.

* * * *

Wednesday, January 11, 2017 | B13

MARKETS AHEAD OF THE TAPE Steven Russolillo

Nasdaq Pulls Ahead of Dow, S&P

For U.S. Inflation, Seeing Is Believing

The Nasdaq Composite closed at a record for the fourth session in a row Tuesday, as the stock index moved ahead of its peers. A surge in health-related stocks at the start of 2017 has helped the index outperform after it lagged behind both the S&P 500 and the Dow Jones Industrial Average last year. The Nasdaq Biotechnology index, which fell 22% in 2016 in part because of scrutiny about drug pricing, climbed 0.8% Tuesday and is up 8.1% in the year to date. The S&P 500 health-care sector, the worst performer in the index in 2016, rose 0.3% Tuesday and is up 3.7% this year. The Nasdaq Composite finished higher for a sixth consecutive session, with the index climbing 20 points, or 0.4%, to 5551.82. The Dow industrials fell 31.85 points, or 0.2%, to 19855.53 and the S&P 500 closed at 2268.90, where it ended Monday. So far this year, the Nasdaq is up 3.1%, outpacing the Dow industrials’ 0.5% rise and the S&P 500’s 1.3% gain. Many analysts and investors believe stocks will continue climbing throughout the year, bolstered by signs of a strengthening economy and the prospect of fiscal stimulus and tax cuts under Presidentelect Donald Trump. “Sentiment has clearly improved with the pro-growth Washington agenda,” said Terry Sandven, chief equity strategist at U.S. Bank Wealth Management, who expects the S&P 500 to rise to 2400 by the

SIMON DAWSON/BLOOMBERG NEWS

BY AKANE OTANI AND MIKE BIRD

Airline stocks rose Tuesday, lifting the industrials sector in the S&P 500. Shares of United Continental Holdings advanced 3.3%. end of the year. Still, with many of the potential policies “still very much a work in progress,” corporate earnings will be a key driver of stocks in the coming weeks, Mr. Sandven added. Financials and industrials, which have helped lead the postelection rally, rose again Tuesday. The S&P 500 financials sector gained 0.4% and industrials added 0.3%, lifted by a surge in airline stocks. Alaska Air Group rose $4.53, or 5.2%, to $92, and United Continental Holdings gained 2.38, or 3.3%, to 73.66. Energy stocks slumped as U.S. crude oil fell 2.2% to $50.82 a barrel. Exxon Mobil

fell 1.11, or 1.3% to 85.93, and Chevron fell 88 cents, or 0.8%, to 114.96, weighing on the Dow industrials. Dividend-heavy sectors—

The Nasdaq this year is up 3.1%, outpacing the Dow’s 0.5% and S&P’s 1.3% gains. which have been among the laggards in the postelection rally—pulled back. Shares of real-estate companies lost 1.3% in the S&P 500 and utili-

ties slipped 0.3%. Government bonds weakened slightly. The yield on the 10-year U.S. Treasury note rose to 2.379% from 2.377% Monday. Yields rise as bond prices fall. The Stoxx Europe 600 index rose 0.1%. The U.K.’s FTSE 100 added 0.5%, notching its ninth consecutive record. The index tends to rise as sterling falls, since the companies listed on the index make most of their revenue abroad. Early Wednesday, Japan’s Nikkei 225 was up 0.4%, Hong Kong’s Hang Seng Index was up 0.7%, South Korea’s Kospi was up 1.2% and Australia’s S&P ASX 200 was up 0.4%.

AUCTION RESULTS

Here are the results of Tuesday's Treasury auctions. All bids are awarded at a single price at the marketclearing yield. Rates are determined by the difference between that price and the face value. FOUR-WEEK BILLS $155,657,195,000 Applications $45,000,347,500 Accepted bids $326,458,500 " noncompetitively $100,000,000 " foreign noncompetitively 99.961111 Auction price (rate) (0.500%) 0.507% Coupon equivalent 58.87% Bids at clearing yield accepted 912796KG3 Cusip number The bills, dated Jan. 12, 2017, mature on Feb. 9, 2017. THREE-YEAR NOTES $72,573,462,900 Applications $25,329,938,900 Accepted bids $52,061,300 " noncompetitively $0 " foreign noncompetitively 99.716805 Auction price (rate) (1.472%) 1.375% Interest rate 86.68% Bids at clearing yield accepted 912828V31 Cusip number The notes, dated Jan. 17, 2017, mature on Jan. 15, 2020.

Some Analysts Warn on Bank Stocks After Rally BY CHRIS DIETERICH Have bank stocks climbed too far, too fast? Financial stocks have risen 17% since U.S. elections in November, making them the topperforming sector in the S&P 500 in that span, by far. The group has been buoyed by expectations for relaxed banking regulation under the new administration and greater lending profitability as a result of higher interest rates. Investors turned bullish literally overnight, pumping $7.5 billion into the Financial Select Sector SPDR exchangetraded fund, ticker XLF, since Nov. 8—third-most among all ETFs, according to FactSet. Strong gains prompted one analyst to recommend booking profits ahead of a wave of earnings announcements from

Leveling Off Percentage change since October

Bank of America Goldman Sachs

40% 30

U.S. election J.P. Morgan Chase

20 Dow Jones Industrial Average

10 0 –10 November

December

Source: WSJ Market Data Group

the big banks starting this week. Bank of America Corp., Wells Fargo & Co. and J.P. Morgan Chase & Co. all are due to report results on Friday. Citigroup banking analyst Keith Horowitz in a note Tues-

January THE WALL STREET JOURNAL.

day told clients to sell shares of Goldman Sachs Group Inc.; the Wall Street firms is up 33% since Nov. 8. Mr. Horowitz said the 23% climb for the KBW Nasdaq Banking index since the

election leaves little room for error for banks. “The bull case we are hearing on the banks is that they are broadly under-owned, they benefit from higher rates and better economic growth, and they are less risky now due to higher capital levels,” he wrote. “While this is all true, we think this is mostly reflected in the recent performance of the group.” Mr. Horowitz likewise cut his rating of Comerica, which has climbed 34% since the election, for valuation reasons. Shares of Goldman Sachs fell 0.1% on Tuesday while Comerica added 0.1%. Separately, Julian Emanuel, strategist at UBS, noted a worrisome disconnect: While retail investors continue to pump money into bank and financial stocks, hedge funds and other

professional managers already recently have been taking money out, according to the firm’s in-house flow data on clients’ behavior. “The sharp rally in financials since Donald Trump‘s election, buoyed by higher interest rates and a steepening yield curve, may be due for a tactical pause,” Mr. Emanuel wrote. “Retail flow, especially into ETF products, remains positive, further supporting the idea that the sector could pull back, especially if earnings don’t surpass the ‘high expectations bar’ or if managements provide a less optimistic outlook for 2017.” Mr. Emanuel recommends buying protective put options in the Financial Select Sector SPDR ETF that expire next month. Buyers of puts generally profit from declines in the shares of the underlying asset.

BY TIMOTHY PUKO Natural-gas prices made their second-largest gains of the past month, with colder long-term forecasts helping to spark a rebound from steep losses that had sent the market to a one-month low the day before. Monday’s selloff is likely the big reason behind Tuesday’s large gains. It gave an opportunity for bearish traders to cash out and for bullish speculators to buy in at bargain prices, brokers, analysts and traders said. But weather forecasts likely also played a role. Some longterm forecasts appear colder, suggesting stronger heating demand by late January or early February. Weather forecasts have been highly volatile lately, causing widespread uncertainty and frustration among traders that is leading to bigger swings in prices, brokers said. Natural gas for February delivery settled up 17.5 cents, or 5.6%, to $3.278 a million British thermal units on the New York Mercantile Exchange. There have been one-session gains that large only once since the first week of December. Forecasts are still exceptionally warm for the next two weeks, but there is still another month if not two afterwards that could bring winter cold. About half of U.S. homes use natural gas for heat. Power plants are also using more nat-

ural gas instead of coal, and power demand can spike during cold weather. Speculators, including some of the country’s most prominent hedge funds, have pounced on low prices throughout the past year. They have been betting that the shift to gas from coal and increasing gas exports have fundamentally changed the market, likely making winter demand even more intense than usual. There are still traders interested in making that bet, especially when prices dip. Momentum traders may also be playing a role, brokers and analysts said. Gas prices have bounced higher after approaching past multiday averages and then bounced back through others, likely inspiring those traders who react to momentum to keep buying, brokers said. Bill Baruch, senior strategist at Chicago brokerage iiTrader, had said Monday that the risk of another plummet would wane if a rebound came close to $3.25/mmBtu, around the prior one-month low. Tuesday’s rally briefly halted near that number in the morning and then accelerated to bigger gains. Despite the gains, near-term weather forecasts are still sending poor signs for demand. Forecasters are predicting temperatures of more than 8 degrees Fahrenheit above normal for just about everywhere east of the Mississippi River until Jan. 24.

ANDREW BURTON/GETTY IMAGES

Gas Prices Rebound As Forecasts Shift

Bond funds used to fix the Pulaski Skyway were raised to construct a rail tunnel, investigators say.

Agency Fined in Bond Case BY MELANIE GRAYCE WEST The Port Authority of New York and New Jersey agreed to pay a $400,000 fine to settle charges brought by the Securities and Exchange Commission that the bistate agency misled investors about risks associated with $2.3 billion in bonds to fund its projects. The SEC said the Port Authority acknowledges that its conduct violated the federal securities law. Late Tuesday, attorneys representing the Port Authority said in a letter to the SEC that it didn’t admit “wrongdoing” but “negligent conduct.” The attorneys also asked in their letter to the SEC to publicly make plain if the investigation is completed or ongoing. A press release from the SEC referred to the investigation as “continuing.” The action is the latest ef-

fort by the SEC to improve disclosure in the municipal-bond world. In August, 71 municipal issuers ranging from Hawaii to Ohio State University agreed to put training and better policies in place as part of settlement agreements with the SEC. In September, a jury found the city of Miami and its former budget director had defrauded bond investors by failing to disclose a deteriorating financial condition, in the first federal jury trial the SEC has brought against a municipality. In New Jersey, the SEC said attorneys for the Port Authority repeatedly raised red flags on whether projects for New Jersey’s state-owned roads, including repairs to the Pulaski Skyway, were outside the scope of the agency’s mandate or even legal to pursue. Further, those warnings weren’t conveyed to the Port

Authority Board of Commissioners who voted to approve the projects in March 2011, according to the investigation. To clear spending on the Pulaski Skyway project, Port Authority attorneys claimed it was an access road to the Lincoln Tunnel, according to the SEC investigation. The Pulaski Skyway is several miles away from the Lincoln Tunnel, which is owned by the Port Authority, and is a New Jersey state highway. Bond funds used to repair the Skyway, and other projects, were initially raised for construction of a rail tunnel under the Hudson River, among other projects, investigators said. New Jersey Gov. Chris Christie in October 2010 said the rail tunnel was dead. The Port Authority has said it instituted several new policies, including hiring outside counsel to review bond offerings.

If inflation really is heading higher, businesses will want to do something they have been reluctant to do ever since the financial crisis: spend more money. Inflation expectations have been heating up since the election of Donald Trump. The 10-year breakeven inflation rate—what Treasury inflation-protected securities imply inflation will average over the next 10 years—has climbed to 2% from 1.7% on Election Day. Consumers surveyed by the Federal Reserve Bank of New York last month said inflation will average 2.8% over the next three years, versus a forecast of 2.6% in October. That still counts as low, because people habitually overestimate inflation, but it suggests attitudes are shifting. An indication of how much the rise in expected inflation has extended to businesses will come Wednesday when the Federal Reserve Bank of Atlanta releases its monthly business inflation-expectations survey. Administered to businesses within the Atlanta Fed’s district, Wednesday’s update will include a question, asked quarterly, on what respondents think inflation will average over the next five to 10 years. In October, the answer was 2.7%. Economists think inflation expectations matter because the higher people think prices are going to go, the higher prices actually tend to go. But at a time when interest rates are still low, an increase in inflation expectations could boost investment. One reason is that rising inflation helps borrowers to pay down debts. If companies put money they have borrowed back into their business, the extra sales those investments generate will come with a tailwind of higher prices that makes it easier for them to meet interest payments. That would contrast with the climate since the financial crisis in which a lack of pricing power was a factor behind companies’ reluctance to invest. Investing ahead of an uptick in inflation also could help companies save themselves money later. That is partly because prices for many types of equipment would likely rise alongside prices for other things. More important, higher inflation is associated with rising labor costs, with workers demanding higher wages, and employers passing them on to consumers in the form of higher prices. Labor-saving equipment offers a better return. But investing in expectation of higher inflation also carries a substantial risk: If the inflation doesn’t come, a company can be left with heavy costs that are difficult to pay. So while a tightening labor market, combined with the expectation that the combination of tax cuts, infrastructure spending and lighter regulation Mr. Trump is promising, seems like it should stir inflation’s embers, companies will want to be careful. After years of botched forecasts that inflation was about to revive, companies may put less stock in expectations than evidence.

Price Is Right 10-year break-even inﬂation rate 2.5% 2.0 1.5 1.0 0.5 2014

’15

’16

Source: Treasury Department

THE WALL STREET JOURNAL.

’17

B14 | Wednesday, January 11, 2017

THE WALL STREET JOURNAL.

MARKETS

Bonds Rebound, and Companies Dive In BY BEN EISEN So much for the death of the bond market. For all the talk in recent months of how faster economic growth and higher inflation would spur a sustained move out of fixed-income investments and into stocks, bond prices so far have rallied in 2017 while share-price index gains have slowed. The yield on the 10-year Treasury note has fallen 0.066 percentage point this year to 2.379%. Bond yields fall when prices rise. That is good news for a market that got hit hard at the end of last year, and it has meant more gains for other bonds, particularly those issued by highly rated companies. U.S. investment-grade companies, including financial institutions, have issued $61.9 billion of debt in the year through Tuesday, the most for any comparable period in records going back to 1995, according to data provider Dealogic. Among the biggest issuers in the U.S. in 2017 are Toyota Motor Corp., Deutsche Telekom AG and Daimler AG. The 10-year portions of each sale all traded at a smaller yield premium over Treasurys on Tuesday than when they were issued, a sign that investor appetite for the bonds has been healthy. The 2017 rebound in bond prices, as nascent as it may be, reflects a sort of goldilocks scenario for large companies, in which investors expect a solid economy and easing taxes and regulations to fuel a renewed boom in corporate profits. That trend, analysts said, is likely to lead to further

Email: heard@wsj.com

Big Pharma: ‘Take Your Medicine’ It may be time for big pharma to revisit an old, familiar problem: helping patients adhere to prescription drug regimens. Last year was a relatively fallow one for new drug approvals, while attempted price increases on drugs already on the market attracted unwanted attention from politicians and regulators. But improving patients’ ability to stick with doctor’s orders marks an area of opportunity for drug companies to generate growth. The optimal adherence range for patients on medicines for chronic diseases is about 80%, according to Dr. Rajesh Balkrishnan, professor at the University of Virginia School of Medicine. However, he adds, it isn’t uncommon to observe adherence rates below 50% for certain drugs. That problem translates into a thinner top line for big pharma. HealthPrize, a software provider that licenses patient adherence programs to third parties such as manufacturers, estimates that global pharma companies missed out on $637 billion of revenue in 2015 due to patients discontinuing treatment early. Granted, there are good reasons for slippage from a prescribed drug regimen. Many drugs carry unwanted side effects, and some treatments can be cumbersome. That means improving patient adherence isn’t easy. But technology such as smartphone apps to engage and incentivize patients gives drug companies new tools. In a world where traditional avenues of growth have been harder to come by, improving adherence is an area worthy of drugmakers’ attention. —Charley Grant

Bouncing Back

Strong Demand Marks Note Auction

U.S. bond issuance by highly rated companies has rebounded this month, reﬂecting renewed ﬂows into bond exchange-traded funds and falling bond yields, as the investor rotation into stock investments has slowed. $60 billion

$61.9 billion

U.S.-marketed investment-grade debt issuance*

50 40 30 20 10 0

1995

’96

’97

’98

’99

2000 ’01

’02

’03

’04

’05

’06

’07

Yield on the 10-year Treasury note

U.S. stock ETF ﬂows, weekly

2.6%

$40 billion

2.4

’08

’09

’10

’11

’12

’13

’14

’15

$4 billion Jan. 4 $10.8 billion

’16

’17

U.S. bond ETF ﬂows, weekly Jan. 4 $2.4 billion

2.2 Tuesday 2.379%

2.0

–2

1.8

1.6 Nov. 2016

Dec.

Jan. ’17

–4 Nov. 2016

Dec.

’17

Nov. 2016

Dec.

’17

*Includes debt sold by ﬁnancial institutions. Data are year to date through Jan. 10 of each year

THE WALL STREET JOURNAL.

Sources: Dealogic (debt issuance); Ryan ALM (yields); Morningstar (ﬂows)

gains in corporate-debt prices, further driving down yields and potentially enabling more borrowing at relatively low rates. “I think there was an element of pent-up demand,” said Jon Duensing, deputy chief investment officer at Amundi Smith Breeden, who said his firm had participated in a handful of the recent bond sales. The healthy demand for new deals counteracts suggestions that investors were apt to exit from the bond market for stocks after the presidential election. Many investors said President-elect Donald

Trump’s plans to roll back regulations, cut taxes and enact infrastructure spending would send economic growth higher and push inflation up sharply. Those prospects helped push Treasury yields higher. The yield on the 10-year note rose nearly three-quarters of a percentage point between the presidential election and midDecember. That pushed down returns on high-grade corporate debt and other bonds. But the “reflation trade” took a pause in mid-December, helping fuel a rebound in investment-grade corporate bonds. Since the start of the year, U.S. investment-grade

corporate bonds have returned 0.6% this year through Monday, according to Bloomberg Barclays index data. The S&P 500 index is up 1.3% through Tuesday. It isn’t just high-grade corporate debt that has been doing well. The market for junkrated corporate bonds capped its biggest annual returns last year since 2009. One reason analysts said that investors aren’t running for the hills is that some can’t. The Federal Reserve owns $4.2 trillion of Treasury and other bonds, but by virtue of its own rules can’t rotate into stocks. Insurance companies

also own $3.2 trillion of corporate bonds, which amount to about 70% of their debt holdings, and guidelines typically prohibit such a rotation, according to research published last week by Goldman Sachs Group Inc. To be sure, households have more flexibility to switch from bonds into stocks. But debt holdings amount to almost the lowest share of household financial assets in three decades, according to the Goldman Sachs report. That means there are plenty of potential buyers of bonds. —Sam Goldfarb contributed to this article.

HEARD ON THE STREET FINANCIAL ANALYSIS & COMMENTARY

U.S. Car Makers’ Unlikely Patriots

Which are the most patriotic U.S. car makers? By Donald Trump’s apparent measure, Tesla Motors, BMW and, yes, Ford Motor are the improbable medalists. The president-elect’s tweets damning auto makers that build factories in Mexico have sent a chill through Detroit. Having focused his ire mainly on Ford last year—and taken credit for a reversal of its plan to build a new plant south of the border—Mr. Trump has this year broadened his attack to include General Motors and Toyota. His target seems clear enough: companies that relocate manufacturing, and thus jobs, away from the U.S. But the American companies he has picked actually make most of their U.S.-sold cars in the U.S. Ford makes the equivalent of 95% of the cars it sells in the U.S. locally, according to

Made in America U.S.-made cars as a percentage of cars sold in U.S., including exports Tesla BMW Ford Daimler* GM Honda Fiat Chrysler Nissan Kia Motors Toyota Subaru Hyundai Volkswagen

196% 116 95 86 83 81 69 67 59 57 55 50 30

*Includes AM General, which makes the Mercedes R Class Note: Jan. through Nov. 2016

BLOOMBERG NEWS

Investment-grade debt sales are the most at the start of a year in two decades

THE WALL STREET JOURNAL.

BMW sedans lined up for loading in Charleston, S.C.

WardsAuto data for the first 11 months of 2016. For GM, the figure is 83%. The company Mr. Trump should really be picking on, according to this measure, is Fiat Chrysler: The number of cars it makes in the U.S.

works out at just 69% of its U.S. sales. Meanwhile, the company with the most extensive U.S. manufacturing base relative to sales is electric-vehicle specialist Tesla, which makes all its cars in the U.S. and ex-

Source: WardsAuto

ports almost half of them. While Tesla makes a fraction of the vehicles of the big auto makers, it could be hurt if the Trump administration rolls back the environmental rules and subsidies that underpin the electric-car industry. German luxury manufacturers also figure highly in a ranking of U.S. manufacturers. BMW is a net exporter, thanks to its huge base in South Carolina, while the number of cars Mercedes owner Daimler makes in the U.S. amounts to 86% of its U.S. sales. They may be foreign-owned, but like Tesla, they face less pressure to shift production to cheaper countries because they charge premium prices and make fatter margins. Ford is the odd one out: a mass-market brand with predominantly local production. Little wonder it wanted to build that factory in Mexico. —Stephen Wilmot

The first Treasury note auction in 2017 drew the strongest overall demand since August as the U.S. government bond market has been stabilizing from one of the biggest selloffs since the financial crisis. Treasury bond prices held steady after the auction as two longer-term debt offerings loom. The yield on the 10-year Treasury note closed at 2.379%, compared with 2.377% Monday. Yields rise as bond prices fall. The $24 billion new threeyear notes were sold Tuesday at a yield of 1.472%, the highest yield for a three-year auction since 2010, which drew solid buying interest. One highlight was the 54.6% indirect bidding, a proxy of demand from foreign investors. The gauge was the highest since September as U.S. government bonds offer more attractive yields compared with their peers in Europe and Japan. A $20 billion sale of 10year notes is due on Wednesday followed by a $12 billion sale of 30-year bonds on Thursday. The 10-year yield, a bedrock for global finance, has jumped from 1.867% on Nov. 8, Election Day. After reaching a two-year high of 2.6% in mid-December, it has since been pulling back. Selling Treasury bonds had been the main trade since the election as investors had bet that expansive fiscal stimulus proposed by President-elect Donald Trump will lead to stronger economic growth, higher inflation and a potentially faster pace of interest-rate increases by the Federal Reserve. —Min Zeng

WSJ.com/Heard

OVERHEARD Alexa isn’t everywhere yet. But for Amazon.com, growing its virtual assistant appears to be job No. 1. Alexa was the star of last week’s CES conference where makers of nearly every type of gadget showed off efforts to build the technology into their wares. This is less than two years after Amazon first brought Alexa to the mass market. Ken Sena of Evercore estimates about 8 million Echo units sold last year—impressive for such a young category, but a pittance compared to the estimated 214 million iPhones sold in the same period, all carrying Apple’s Siri virtual assistant. Mr. Sena believes Amazon will nearly double annual spending on developing Alexa this year. He notes that Amazon’s job boards show 550 openings related to Alexa compared with about 120 similar positions at Apple. That speaks volumes.

Time to Start Worrying Again About Chinese Property After more than a year of euphoria in China’s housing market, 2017 looks to be a perilous letdown. Property prices in the Middle Kingdom surged 18% in the first 11 months of 2016, continuing the previous year’s rebound. The rally was kicked off by the biggest, so-called Tier 1, cities in 2015 but has since spread to smaller ones. Property prices in the southern metropolis of Shenzhen, for example, have doubled from two years ago, after rising by another 29% in 2016. Shanghai prices increased by 24%. Smaller Tier 3 cities’ prices have gone up 9%— making 2016 the first year of gains in three years. But that was last year’s party. Prices are suddenly growing with a bit less gusto and may be peaking. In re-

High Rise Housing prices in China, change from a year earlier 60% 40 20

Tier 1 cities National Tier 2 cities Tier 3 cities

0 –20 2015

2016

Source: Wind Info

cent months, local governments have started using homebuying restrictions to rein in runaway prices. At an annual top-level economic meeting in December, central-government policy makers made curbing the property bubble one of the top priorities for 2017. In a market where the state plays a big part, policy change is a

good predictor. It will be a tricky transition since property is so integral to almost everything in China’s economy. A price meltdown will hurt local governments as land sales are a major source of government revenue. The state-owned banking system, meanwhile, is heavily exposed, both directly to home buyers and property projects, and through the use of property as collateral in business loans. And state-owned enterprises were aggressive buyers of land in 2016 in a market where prices of land sometimes traded higher than those of fully built apartments nearby on a persquare-meter basis. Such a balancing act could be harder and riskier to pull off as debt builds up along

with every cycle. Propertyrelated loans grew 25% in the first three quarters in 2016, adding 4.32 trillion yuan ($622.51 billion) of debt to the banking system. Mortgages grew at an even faster pace of 33%. While the loan-to-value ratio for the overall market may looks comfortable at 55%, new home buyers are much more leveraged. UBS estimated the loan-to-value ratio for newhome purchases at close to 70%, high by Chinese standards, where cash buyers used to be common. A drop in housing prices could push the ratio to dangerous levels, especially in fast-rising cities like Shenzhen. Some of the biggest property developers have also loaded up on debt. China Evergrande, the country’s biggest developer by assets, has

seen its net debt, including perpetual securities, double since the end of 2014. Borrowings at other developers like Country Garden and Sunac China have also ballooned during the boom.

25%

Chinese property-loan growth in the first three quarters of 2016

Given the accumulated risks and the effects on the broader economy, China’s property market may just be the most important in the world for investors to watch. In 2017, euphoria will again turn to worry. —Jacky Wong