THURSDAY, JUNE 22, 2017 ~ VOL. XXXV NO. 99 WSJ.

com EUROPE EDITION

DJIA 21410.03 g 0.27% NASDAQ 6233.95 À 0.74% NIKKEI 20138.79 g 0.45% STOXX 600 388.50 g 0.18% BRENT 44.82 g 2.61% GOLD 1243.40 À 0.19% EURO 1.1144 À 0.07%

What’s Uber Chief Resigns Under Duress

News Travis Kalanick exits
following investor
of Silicon Valley’s highest-fly-
ing startups.
Mr. Kalanick, 40 years old,
executives after several recent
departures, including one of
the CEO’s top deputies who
bid to oust him, according to
people familiar with the mat-
ter. They sent a letter to Mr.
Business
letter questioning his
Business & Finance
ability to make changes
handed in his resignation
Tuesday, a spokesman said.
Several investors pushed Mr.
was pushed out last week by
the board.
“I love Uber more than any-
Kalanick expressing their
doubt about his ability to im-
plement changes to the com-
Model Is
U Biggest
Kalanick to resign, people fa- thing in the world and at this pany as recommended by the
ber CEO Kalanick re-
BY GREG BENSINGER miliar with the matter said, to difficult moment in my per- law firm of former U.S. At-
signed under pressure
help turn around the company sonal life I have accepted the torney General Eric Holder
from investors following
months of scandal and set-
backs at the ride-hailing
firm he co-founded. A1
Uber Technologies Inc.’s co-
founder and chief executive,
Travis Kalanick, has resigned
as it works to battle allega-
tions that it has a workplace
permissive of sexual harass-
investors request to step aside
so that Uber can go back to
building rather than be dis-
following an investigation
into workplace culture. The
Please see UBER page A8
Problem
after a group of investors pres- ment and sexism. tracted with another fight,” BY CHRISTOPHER MIMS
 Toshiba chose a Tokyo- sured him to step down follow- Uber has no replacement Mr. Kalanick said in a state-  CEO leaves, but Uber’s
backed group as preferred ing a bruising six months of for Mr. Kalanick and is run- ment Tuesday. battles won’t go away......... A8 Memo to Uber Technolo-
bidder in a chip-unit sale scandal and setbacks, marking ning without financial and op- A group of investors on  Driver’s seat at Uber offers gies’ next chief executive: The
that the company hopes can a stunning turnabout for one erating chiefs and other key Tuesday banded together in a big challenge.............................. A8 problems there may be bigger
raise about $20 billion. B1 than you think.
Uber is currently trying to
 MSCI’s decision to in-
clude mainland Chinese
shares in its global indexes
U.K. Parliament Reopens With Less Pomp Than Usual put out the fire that has culmi-
nated in the resignation of co-
founder and CEO Travis Kalan-
could prompt changes in
ick, a decision he made in the
how companies are run. B1
face of investor pressure fol-
 Theranos said it reached lowing a damning report on
a tentative agreement to the company’s
settle a suit by Walgreens ANALYSIS internal culture
that alleged the blood-test and missteps in
firm breached a contract. B3 its quest to be
first with self-driving vehi-
 Diageo agreed to buy
cles—among other problems.
upscale tequila brand Casa-
But even when it steers
migos for $700 million. B3
through that thicket of crises,
 Wal-Mart told tech ven- Uber will have to come to
dors that they can’t run their grips with a fundamental vul-
apps on Amazon’s cloud- nerability that is increasingly
computing provider. B4 apparent in its business model.
Uber may be great at technol-
 SoftBank is investing
ogy, but unlike in the busi-
$100 million in a cybersecu-
nesses of Google, Facebook,
rity firm run by ex-Israeli cy-
Apple or Amazon, technology
berintelligence members. B4
hasn’t proven to be a signifi-
 Altice’s U.S. unit is ex- cant barrier to new entrants in
pected to start trading
STEFAN WERMUTH/PA WIRE/ZUMA PRESS

ride-sharing. Across the globe,

Thursday, in what is poised Uber has dozens of competi-
to be one of the biggest U.S.- tors, and in many markets they
listed IPOs of the year. B5 have grabbed the lion’s share
of ride-sharing demand.
 PwC is adding indepen-
Even if Uber fixes all of its
dent directors to its board,
current problems, it seems in-
an unusual move for a ma-
creasingly unlikely that it can
jor U.S. accounting firm. B5
live up to the inflated expecta-
 Tesla said an executive tions that come with the nearly
on its self-driving technol- $70 billion valuation that has
ogy team left the firm. B4 CEREMONY: Queen Elizabeth II, left with Prince Charles, laid out Prime Minister Theresa May’s agenda at the official reopening of Parliament. made it the world’s most valu-
The need for hasty arrangements after this month’s election, along with the queen’s recent birthday celebration, led to a toned-down event. A3 able startup. There are barbar-
 U.S. home sales rose in
ians at Uber’s gate, and it’s
May despite fast-rising
Please see MIMS page A8
prices and tight inventory. A7

World-Wide
Saudi Monarch Upends Succession INSIDE
 Saudi Arabia’s king
named his 31-year-old son DUBAI—Saudi Arabia’s King med bin Salman on Wednesday
Mohammed bin Salman, the Salman designated his son as congratulated him and dis-
country’s minister of de- his successor, paving the way cussed the “priority” of ending
fense, as his successor. A1, A4 for the young, aggressive support for terrorism and how
SAUDI PRESS AGENCY/EUROPEAN PRESSPHOTO AGENCY

prince to assume the throne at to resolve the political crisis

 Cybersecurity officials a time when the kingdom is pitting Saudi Arabia against
said investigators had evi- facing tumultuous change at Qatar, according to a White
dence that Russia targeted
election systems in nearly
home and intensifying rivalries
in the Middle East.
House statement about the call.
The two also discussed how
PRIVATIZING
two dozen U.S. states. A1 to reach “a lasting peace” be- AIR-TRAFFIC
 Belgian officials said a
man killed in a Brussels train
By Nicolas Parasie,
Margherita Stancati
tween Israel and the Palestin-
ians, the statement said. Jared
CONTROL
station tried to use a home- and Summer Said Kushner, a top adviser and son-
made bomb and had sympa- in-law to Mr. Trump, is in Israel THE MIDDLE SEAT, A12
thy for Islamic State. A3 The new crown prince, Mo- to meet with Prime Minister
hammed bin Salman, is the el- Benjamin Netanyahu on the
YURIKO NAKAO/REUTERS

 Romanian lawmakers derly monarch’s 31-year-old same subject. Mr. Kushner will
ousted the prime minister son and minister of defense. also meet with Palestinian Au-
after only six months in of- His influence soared when his thority President Mahmoud Ab-
fice following massive anti- The new heir, left, kisses the hand of the cousin he replaced.
father became king in early bas and his senior advisers in
corruption protests. A3 2015. He then set about leading  Middle East Crossroads: What the reshuffle means................. A4 the West Bank city of Ramallah.
 Queen Elizabeth unveiled an ambitious economic over-  Meet the kingdom’s new crown prince.............................................. A4 As next in line to the
the Conservative govern- haul to reduce the kingdom’s  State oil company IPO plan buoyed................................................................. A4 throne, Prince Mohammed bin
ment’s legislative agenda, dependence on oil and to usher
in a more muscular Saudi for-
Salman could become a rarity:
a young Saudi king. The 81-
CHIP UNIT SALE
confirming Britain’s negoti-
ating aim in Brexit talks. A3 eign policy in the region. posts, including interior minis- ing terrorism and was widely year-old King Salman and his RAISES CHINA
 Philippine militants
Prince Mohammed bin Sal-
man succeeds Prince Moham-
ter. His ouster effectively ends
the political career of a royal
praised for combating the threat
from al Qaeda in the kingdom.
predecessors have taken
power as septuagenarians or
FEARS IN JAPAN
aligned with Islamic State med bin Nayef, a nephew of the who was one of Washington’s President Donald Trump in a octogenarians, with little incli-
attacked a village and king, who was stripped of all his most trusted partners in fight- phone call with Prince Moham- Please see SAUDI page A4 BUSINESS & FINANCE, B1
fought security forces in
the south of the country. A5
 Democrats bemoaned a
loss in a Georgia race that
Japan Wants Tourists, Except Those Moscow
In Mario Costumes Driving Go-Karts
Oracle #1
had been seen as their best
shot of gaining a House seat
before the 2018 midterms. A6 i i i
Targeted 21
 The FBI said the man A tourist boom is catering to a Western U.S. States
who shot GOP lawmakers
at a baseball practice didn’t
appear to have methodi-
conception of Japanese culture In Election SaaS Enterprise
cally planned his attack. A7 Applications Revenue
 France’s Macron re- BY ALASTAIR GALE Nintendo Co., introduced a BY BYRON TAU
vamped his government, re- AND RIVER DAVIS quarter-century ago and now AND ERICA ORDEN
placing the justice minister played on videogame consoles
who led a centrist party. A3 TOKYO—On their recent globally. A new business here WASHINGTON—Russian
 ISIS bombed a Mosul
mosque where the group de-
honeymoon in Japan, Jason
and Nicole Francis savored the
temples of the ancient capital
takes advantage of Mario
Kart’s popularity and loose
regulations on go-karts to of-
government hackers targeted
voting systems in nearly two
dozen states, seeking vulnera- #1
clared a caliphate. WSJ.com of Kyoto and unwound at a re-
sort with a private
fer self-driving tours of Tokyo
and other cities,
bilities to exploit in future
elections and aiming to under-
#2
CONTENTS Markets Digest..... B6 hot spring. Later with costumes of mine public faith in the integ-
Business News...... B3 Middle Seat.......... A12
they dressed up as characters from rity and legitimacy of U.S.
Capital Account.... A2 Opinion.............. A10-11
a lime-green dino- the game pro- democratic elections, current
Oracle Salesforce
Crossword.............. A12 Technology............... B4
Heard on Street.... B8 U.S. News............. A6-7 saur and an Italian vided. The com- and former U.S. officials testi- Cloud Cloud
Life & Arts......... A9,12 Weather................... A12 plumber and sped pany, MariCar, fied Wednesday. 14.5% 12.4%
Markets...................... B8 World News........ A2-5
through the says it books thou- The House and Senate intel-
€3.20; CHF5.50; £2.00; streets of Tokyo in sands of trips a ligence committees held si-
U.S. Military (Eur.) $2.20
go-karts. month and most of the cus- multaneous hearings on al- 1,000+ Employees Segment, 2015
“I picked Yoshi because I tomers are non-Japanese. leged Russian meddling,
always pick Yoshi in the It’s part of a tourism boom offering the public new details
game,” said Mr. Francis, a 35- that is changing the face of about the extent, scope and
year-old emergency-services the world’s third-largest econ- federal response to threats to
worker in New Jersey, explain- omy. Many businesses are sell- the integrity of U.S. election oracle.com/applications
ing his decision to don the di- ing a slice of what foreigners systems. Source: IDC “Worldwide SaaS Enterprise Applications Market Shares, 2015: The Top 15 by Buyer Size,”
s Copyright 2017 Dow Jones & nosaur costume. perceive as authentically Japa- Three current officials with doc #US41913816, Dec. 2016; Table 4. For the purposes of this report, SaaS enterprise applications include
the following application markets: CRM, engineering, ERP, operations and manufacturing, and SCM.
Company. All Rights Reserved
The game is Mario Kart, a nese. But while visitors are en- the Department of Homeland Copyright © 2017, Oracle and/or its affiliates. All rights reserved.
racing challenge from Japan’s Please see MARIO page A2 Please see page A2
A2 | Thursday, June 22, 2017 THE WALL STREET JOURNAL.

WORLD NEWS
CAPITAL ACCOUNT | By Greg Ip

The U.S. Needs Amazons, but Mostly Has GEs

When Am- the Fire smartphone), but flated profits under Mr. Indeed, for two years, cash
azon.com some will be home runs (such The GE Way vs. the Amazon Way Welch. Yet Mr. Immelt’s in- flow of U.S. corporations has
Inc. an- as Amazon Web Services, its General Electric has long generated copious ‘free’ cash flow (i.e., after vestment decisions too often exceeded capital spending.
nounced Fri- cloud computing arm). capital spending) but Amazon’s focus on investment has been better chased the conventional wis- Much of the difference has
day it was dom on Wall Street and in gone into buying back stock.

A
for shareholders.
buying Whole mazon launched Prime, Washington. Thus, GE Capi- Yet while good for share-
Foods, the stock market got which offers free deliv- Annual free cash flow tal bulked up on residential holders in the short run, this
a taste of something long ery in exchange for an $40 billion GE mortgages and commercial is no recipe for growth in
missing: volatility. annual fee, in 2005. John 30 Amazon real estate in the run-up to the long run. GE’s cash flow
The turmoil, however, was Blackledge, an analyst at Co- 20 the financial crisis. From is shrinking despite the com-
confined to retail. While the wen & Co., notes Amazon has 2010 to 2013, the company pany’s focus on preserving
10
two companies’ stocks rose repeatedly innovated in ways announced many acquisi- it, while Amazon’s is grow-
sharply and their competi- that make Prime even more 0 tions in oil and gas services, ing despite that company’s
tors’ tanked, the rest of the valuable to subscribers: the –10 only to see the price of oil readiness to spend it.
market remained placid. In- Kindle e-book reader lending crash, taking orders with it.

A
2000 ’05 ’10 ’15
deed, months of historically library, streaming video and Growth is hard for any mazon is clearly not a
low market volatility has be- music, discounted access to Market capitalization company that dominates its template for most com-
gun to look like dangerous FreeTime, which offers chil- $600 billion markets as much as GE does. panies. Defying conven-
complacency. dren’s books, games and me- 500 Amazon GE’s size also attracts debili- tional wisdom usually fails,
Yet there is another, poten- dia content, and Amazon tating political scrutiny. Its which is why for every suc-
400
tially more troubling explana- Family, which offers discounts proposed acquisition of Hon- cessful long shot like Amazon
tion: stagnation. Muted mar- on baby products. Innovation 300 eywell was derailed by Euro- there are hundreds if not
kets may be the inevitable is also exceptionally rapid. 200 pean antitrust regulators just thousands of failed startups.
product of steady, sluggish Mr. Blackledge says Prime 100 GE before Mr. Immelt took over. Amazon has come near death
growth, low and predictable Now, which offers same-day It took 18 months for Mr. Im- more than once, and may
0
interest rates, declining busi- delivery, launched in New melt’s purchase of Alstom’s again. Moreover, the larger it
ness startups and failures, York in less than four months 2000 ’05 ’10 ’15 power business to clear regu- gets, the more it will bump
and decreased competition. after conception without so Source: FactSet THE WALL STREET JOURNAL. latory barriers. GE Capital af- against the constraints of size,
In other words, the problem much as a focus group. ter the financial crisis became such as antitrust concerns. As
is, there aren’t enough Ama- Amazon is now profitable, If Amazon is one extreme turing moves—even how five the poster child of dangerous, for GE, a history of reinven-
zons disrupting the stock yet cash retention remains in how companies invest, uncollected aviation ac- unregulated finance. In re- tion suggests it is more likely
market and the economy. secondary to retaining cus- General Electric Co. is the counts were affecting profit. sponse to new regulations to be around in 125 years than
Since Jeff Bezos founded tomers. Asked by an analyst in other. It has long been fas- Chief Executive Jack and pressure from Wall is Amazon. Given investors’
Amazon in 1994, he has put April whether Alexa, a voice- tidious about capital and Welch perfected this ap- Street, Mr. Immelt largely tendency to go to extremes,
expansion and innovation activated assistant, was boost- cash deployment. On its last proach in the 1990s, and it dismantled the business. now may be a bad time to buy
ahead of profit. In its early ing sales, the company’s fi- quarterly earnings call, the continued under his succes- Investors still want GE to Amazon shares, or sell GE’s.
years, free cash flow—cash nance chief, Brian Olsavsky company meticulously laid sor, Jeffrey Immelt. Last return cash to shareholders, Yet the country as a whole
from operations minus capi- responded: “The monetization, out profit growth by product week, Mr. Immelt said he and it has obliged, spending badly needs some rules-defy-
tal spending—hovered around as you might call it, is…not our and business segment, the would retire, after 16 years $79 billion on share buybacks ing risk-taking. For business,
zero. Mr. Bezos approaches primary issue right now. It’s sources of margin improve- struggling to restore growth. and dividends between 2012 that means a bit more Ama-
new products like a venture about building great products ment, cost savings antici- In part, that reflected how and 2016 compared with $50 zon in the boardroom and a
capitalist. Many will flop (like and delighting customers.” pated from specific restruc- financial engineering had in- billion of capital expenditures. bit less GE.

RUSSIA purpose was to “denigrate”

Democratic presidential candi-
date Hillary Clinton and boost
President Donald Trump, he
Amid Legal Issues, Ronaldo Keeps His Head
Continued from Page One said.
Security and the Federal Bu- In the House committee,
reau of Investigation docu- former DHS Secretary Jeh
mented the scope of the Rus- Johnson said the Obama ad-
sian intervention in testimony ministration was reluctant to
before the Senate panel, re- alert the public to the Russian
vealing for the first time the hacking efforts last year be-
number of state election sys- cause officials wanted to avoid
tems targeted by Russian ac- the appearance of taking sides
tors. The officials said no evi- in the election.
dence existed to suggest vote Mr. Johnson also said the
tallies were changed, and that joint DHS and Office of the Di-
much of the data targeted was rector of National Intelligence
voter-registration information. statement in October that the
“As of right now, we have U.S. intelligence community
evidence of election-related was “confident that the Rus-
systems in 21 states that were sian Government directed the
targeted,” said Jeanette Man- recent compromises of emails
fra, the acting deputy under- from US persons and institu-
secretary for cybersecurity tions, including from US politi-
and communications at DHS. It cal organizations,” was re-
FRANCOIS NEL/GETTY IMAGES

was the first time a govern- duced to “below the fold”

ment official had publicly news by the emergence that
quantified the number of day of the “Access Hollywood”
states targeted by the hacking. tape featuring lewd remarks
by then-candidate Trump.
The U.S. intelligence com-
munity has determined that
U.S. officials say Moscow ran a campaign de- WORLD CUP REHEARSAL: Cristiano Ronaldo, center left, scored on a header in Portugal’s 1-0 win over Russia in Moscow at the
they have evidence signed to help Mr. Trump win Confederations Cup. The soccer star this week was summoned to court in Spain over tax-fraud allegations. He has denied any wrongdoing.
the presidential election. The
voter-registration Russian campaign, according
data was sought. to U.S. officials, included cy-

Ms. Manfra didn’t make

berattacks on the email ac-
counts of senior Democrats
and a propaganda effort aimed
at demonizing Mrs. Clinton.
MARIO tourists not to climb boughs
or break off branches.
In Kyoto, the kimono indus-
try has mushroomed as new
topped skydiving and bungee
jumping. “What is so surreal is
that within the strict culture of
Japan you get to do this wild
with a police request to
tighten safety procedures, in-
cluding by banning the use of
smartphones while driving.
clear whether those penetra- The Russian government Continued from Page One businesses have cropped up thing,” Ms. Adamo-Parker said. Kazuki Omura, manager of one
tion attempts were successful, denies the allegation. The joying thrill rides in city offering cheap, bright-colored Groups of MariCar drivers of the Tokyo branches of Mari-
nor did she name any of the 21 White House has said the streets, plucking off cherry- versions of the garment for have become a common sight Car, said customers are given
states in question—citing the Trump campaign didn’t col- blossom branches for souve- daily rental. Keiko Enomoto, in downtown Tokyo, zipping a safety briefing and their
privacy rights of entities that lude with any alleged Russian nirs and taking selfies in who runs a kimono store in through the shopping district driving skills are checked be-
contacted the DHS for help on meddling. rented polyester kimonos, Kyoto, is not impressed. She of Shibuya or across Rainbow fore they drive.
cybersecurity-related issues. Mr. Johnson said the Demo- some locals are not amused. calls some of the newer rent- Bridge in Tokyo Bay. Videos of MariCar offers costumes of
Only a few states—including cratic National Committee, “They really are a nui- als “awful” and “too gaudy.” MariCar riders spotted in To- game characters including
Arizona and Illinois—have which had a trove of emails sance,” said Akio Arinaka, a Many visitors are drawn to kyo have been posted online by Yoshi the dinosaur. Many driv-
publicly acknowledged that stolen and published on Tokyo-based taxi driver in his the tech-infused side of Japa- visiting celebrities Kim Kar- ers pick the main character, a
their systems were targeted. WikiLeaks, and several states 60s, of the costume-clad Mari- nese popular culture, says Tim dashian and Hugh Jackman. portly plumber named Mario
Ms. Manfra testified along rejected DHS’s offer of assis- Car riders. “When I see them Oakes, Australia branch man- Rides are led by a guide and who has become an iconic Jap-
with Samuel Liles, another tance last summer. driving close by it’s scary, es- ager for InsideJapan Tours. participants are asked not to anese figure even though he is
DHS official who runs the cy- “In retrospect, it would be pecially since they drive in One of its most popular group race each other or throw ba- nominally Italian. At the clos-
ber division of the office of in- easy for me to say that I large groups.” tours is the 11-day “HyperJa- nana peels or other items from ing ceremony for the Olympics
telligence and analysis at the should have bought a sleeping Over 24 million foreign pan J-Pop & Go!” trip, fully the game onto the street. in Brazil last year, Japanese
agency, as well as Bill Priestap, bag and camped out in front tourists visited Japan last booked in several of the com- A spate of minor accidents, Prime Minister Shinzo Abe ap-
assistant director of the FBI’s of the DNC,” Mr. Johnson said. year, nearly double the level ing months. The tour includes including one in which a go- peared dressed as Mario.
counterintelligence division. Still, Mr. Johnson said, “I two years earlier. The govern- visits to a restaurant with a kart driver hit a police station,
“I think the primary goal know of no evidence that ment has set a goal of attract- futuristic cabaret show of has led to calls for tighter reg- THE WALL STREET JOURNAL.
was to sow discord and to try through cyberintrusions, votes ing 40 million visitors a year— semi-erotic dancing robots ulation by taxi drivers and oth- Europe Edition ISSN 0921-99
to delegitimize our free and were altered or suppressed in almost one-third of the and a museum for animation ers who have questioned the The News Building, 1 London Bridge Street,
London, SE1 9GF
fair election process,” Mr. some way.” national population—by the producer Studio Ghibli. go-karts’ safety. Drivers aren’t
Priestap said of the Russian —Rebecca Ballhaus time Tokyo hosts the Summer Japan is synonymous with required to wear seat belts or Thorold Barker, Editor, Europe
Grainne McCarthy, Senior News Editor, Europe
effort. Moscow’s secondary contributed to this article. Olympics in 2020. videogames for many younger helmets, and the karts are Cicely K. Dyson, News Editor, Europe
The influx raises an array of visitors, including Natasha Ad- treated similarly to mopeds un- Darren Everson, International Editions Editor
challenges for Japan, where amo-Parker, a 29-year-old der Japanese traffic laws.
CORRECTIONS  AMPLIFICATIONS
Joseph C. Sternberg, Editorial Page Editor
English isn’t widely spoken. nurse and self-declared Mario Customers must possess a
Anna Foot, Advertising Sales
The country’s high-tech toi- Kart obsessive from Australia. valid local or international Jacky Lo, Circulation Sales
lets, for instance, often mys- She joined a recent MariCar driving license. MariCar said Andrew Robinson, Communications
Jonathan Wright, Commercial Partnerships
Pathmatics estimated that of its loan-repayment rate tify tourists who have trouble ride and said the experience in May it would cooperate
spending on certain YouTube data. These loan repayment distinguishing between func- Katie Vanneck-Smith,
ads rose 50% to an estimated data were a component of the tions such as the bidet and Global Managing Director & Publisher

$739 million in the period WSJ/THE college rankings. The seat warmer. Earlier this year, Advertising through Dow Jones Advertising
from March 15 to June 13 com- revised rankings remove loan- makers of the seats said they Sales: Hong Kong: 852-2831 2504; Singapore:
65-6415 4300; Tokyo: 81-3 6269-2701;
pared with a year earlier. A repayment data from the cal- would standardize the icons to Frankfurt: 49 69 29725390; London: 44 207
Technology article Wednesday culation, resulting in revised reduce mishaps. 842 9600; Paris: 33 1 40 17 17 01;
New York: 1-212-659-2176
about YouTube advertising in- overall rankings and revisions Most visitors are from
Printers: France: POP La Courneuve; Germany:
correctly said such spending in the Outcomes category of elsewhere in Asia, with Chi- Dogan Media Group/Hürriyet A.S. Branch; Italy:
fell by 50%. the rankings. In addition, the nese making up one of the Qualiprinters s.r.l.; United Kingdom: Newsprinters
(Broxbourne) Limited, Great Cambridge Road,
revised ranking includes cor- biggest contingents. Locals Waltham Cross, EN8 8DY
The Wall Street Journal/ rections to the Resources cate- recoil at videos of Asian tour- Registered as a newspaper at the Post Office.
JASON AND NICOLE FRANCIS

Times Higher Education U.S. gory for 20 colleges. Those er- ists shaking cherry trees to Trademarks appearing herein are used under
license from Dow Jones & Co.
College Rankings for 2016, rors were caused by a WSJ/ create a snow-flurry effect ©2017 Dow Jones & Company. All rights reserved.
Editeur responsable: Thorold Barker M-17936-
published on Sept. 28, 2016, THE calculation error. The from falling blossoms. Ahead 2003. Registered address: Avenue de Cortenbergh
have been revised in response revised rankings are available of the flowering season last 60/4F, 1040 Brussels, Belgium
to a correction made by the online at on.wsj.com/college- year, when many Japanese NEED ASSISTANCE WITH
U.S. Department of Education rankings-2016. gather for picnics under YOUR SUBSCRIPTION?
cherry trees, the Chinese Em- By web: http://services.wsje.com
bassy in Japan published an Jason and Nicole Francis from New Jersey, in the front row, By email: [email protected]
Readers can alert The Wall Street Journal to any errors in news articles by By phone: +44(0)20 3426 1313
emailing [email protected]. advisory on its website asking during a MariCar ride in Tokyo in May.
 THE WALL STREET JOURNAL. Thursday, June 22, 2017 | A3

WORLD NEWS
Belgians Say Slain Bomber Acted Alone
Officials say failed Wednesday.
Police conducting the raid
attacker sympathized on Zariouh’s apartment in a
with Islamic State; small, redbrick townhouse
took away a laptop, a phone
travelers escape injury and a tablet computer and
hard drive, witnesses and offi-
BY VALENTINA POP cials said. Officials briefed on
AND JULIAN E. BARNES the investigation said such
electronic devices could pro-
BRUSSELS—Belgian author- vide more clues about his con-
ities said that a 36-year-old tacts before the attack.
Moroccan man shot dead by a U.S. officials said they have
soldier in a Brussels train sta- offered assistance, as is stan-
tion tried to use a homemade, dard practice, in analyzing any
nail-packed bomb and had electronic devices recovered

EMMANUEL DUNAND/AGENCE FRANCE-PRESSE/GETTY IMAGES

sympathy for Islamic State. in the investigation.
Prosecutors on Wednesday Several of the apartments
said the suspect in the attack, in the building were raided, a
which caused no casualties, bomb squad was on site and
had no previously known links police took in for questioning
to terrorism and had acted at least one resident, who was
alone. They said chemicals later released.
and materials found at his Mustafa Er, a spokesman
apartment suggested he made for Molenbeek town hall, said
the bomb. the suspect was self-employed
The prosecutors said they and had come to Belgium in
had indications the suspect 2002 and lived in other towns
had sympathy for Islamic before moving to Molenbeek.
State, but provided no further Neighbors said they didn’t see
details. much of Zariouh.
An official briefed on the “He…had a petty criminal
investigation identified the A soldier patrolled Wednesday outside the rail station where Moroccan terrorist suspect Oussama Zariouh was shot dead a day earlier. past in connection to drugs,”
suspect as Oussama Zariouh. said Annalisa Gadaleta, a local
Other officials, who identified vestigating whether he com- emphasizing for the past year fled, leaving the suitcase, and onated explosives. councilor in Molenbeek, who
him officially only as O.Z., said municated with other, higher- and a half that radical jihad- ran downstairs, prosecutors “It’s clear he wanted to do added that the community
he had lived in the Brussels ranking suspects. ists in Europe shouldn’t come said more damage than he did. He was now awaiting the result of
neighborhood of Molenbeek Eric Van Der Sypt, a to the Middle East to fight, The abandoned bag ex- tried to set off the luggage, the investigation and whether
since 2013 and had been in- spokesman for the prosecu- but should instead remain at ploded in what prosecutors which exploded a second time, Zariouh had connections to
vestigated for drug-related tors, declined to comment on home to carry out attacks. described as a second, more so it could have been much other groups.
crimes. any ties to a broader network. Offering new details of the violent blast. The man re- worse,” Mr. Van Der Sypt said. Ms. Gadaleta highlighted
Officials said that while the The Brussels attack, by a Tuesday night attack, officials turned to the hall where the The man lived in Molen- the difficulty of tracking peo-
man wasn’t considered high- suspect without previously said the man entered Brussels explosion occurred, rushing a beek, the Brussels neighbor- ple who self radicalize and
risk by Belgian authorities, he known ties to extremist Central Station at 8:39 p.m. soldier and shouted “Allahu hood where a number of ter- aren’t known to authorities.
had communicated with other groups acting alone and tar- and approached a group of akbar,” Arabic for God is rorists connected to the Paris More than 100 radicalized sus-
self-radicalized individuals. geting a public space near a passengers before grabbing great. The soldier fired several and Belgium attacks were pects listed by national au-
Those contacts weren’t with tourist area, had echoes of his suitcase, shouting and times, killing the suspect, based, authorities have said. thorities live in Molenbeek, al-
people considered dangerous other recent terror attacks in causing a small explosion. prosecutors said. His body Police raided the man’s home though Zariouh wasn’t on that
terror suspects, one official Europe. No one was hurt in the ini- then lay there for hours as the on Tuesday night, officials list, Ms. Gadaleta said.
said, although U.S. and Belgian Islamic State, U.S. and Eu- tial blast, but the suitcase Belgian military bomb squad said, and other searches were —Natalia Drozdiak
intelligence agencies are in- ropean officials said, has been caught fire. The man then examined the scene for undet- conducted in Molenbeek on contributed to this article.

Romania Leader French Justice Minister Resigns

BY WILLIAM HOROBIN

Fired Over Graft

minister Sylvie Goulard and MoDem has denied any poll numbers, securing his po-
European affairs minister wrongdoing. sition as front-runner in the
PARIS—Emmanuel Macron Marielle de Sarnez—both Mr. Bayrou’s departure de- presidential election.
revamped his government, members of MoDem—were prives Mr. Macron of a senior After winning the presiden-
BY DREW HINSHAW December, telling reporters, “I sidelining centrist allies buf- also left out of the new gov- figure of French politics who tial election in May, the back-
wanted a man I could trust.” feted by an expenses probe ernment. rallied centrist voters to his ing of MoDem gave Mr. Ma-
Romania ousted its prime Since then, bribery, abuse of that contrasts with the new The ministers said they successful election campaign. cron an experienced party
minister of only six months, office, and favoritism cases have French president’s push for chose to leave after French Mr. Bayrou backed Mr. Ma- apparatus as he scrambled to
dissolving a government that piled up against Romanian polit- probity. prosecutors on June 9 cron in February, saluting the recruit candidates for legisla-
was knocked off balance by ical leaders and Mr. Dragnea has Mr. Macron made the most launched a preliminary probe presidential candidate’s prom- tive elections.
one of Europe’s biggest anti- grown critical of Mr. Grindeanu. senior change on Wednesday, into allegations MoDem law- ise to clean up politics after a But Mr. Macron’s party La
corruption movements. The friction between the two replacing justice minister makers at the European Par- series of expense scandals République En Marche, made
A majority of 241 lawmak- has proven untenable, and all François Bayrou, the founder liament wrongfully used Euro- dogged rivals in the presiden- up mainly of political neo-
ers in the 428-seat Parliament but three of Romania’s 27 min- and leader of the centrist pean funds to employ people tial race. phytes, defied early expecta-
on Wednesday voted no confi- isters resigned before the vote. party Mouvement Démocrate, working for the party as par- At the time, Mr. Bayrou’s tions by winning an outright
dence in Prime Minister Sorin Romania—the fastest-grow- known as MoDem. Defense liamentary assistants. support boosted Mr. Macron’s majority in the election.
Grindeanu, who took office in ing economy in Central and
January. The key votes came Eastern Europe over the past
from his own Social Demo-
cratic Party, which has become
so frustrated with his leader-
ship that it expelled him from
five years—is in a protracted
political deadlock over how seri-
ously to tackle corruption.
Since November 2015, anti-
Queen Lays Out May’s Two-Year Agenda
its member list last week. corruption protests have flared BY JENNY GROSS
Within days, Parliament is regularly in the capital. Each
expected to form the fourth of the past three governments LONDON—Queen Elizabeth
government in two years. were ushered into—or out of— II unveiled the Conservative
Corruption protests have be- power by such a protest. government’s legislative
come a recurrent threat to Ro- The ruling party, which lost agenda in a speech that con-
manian governments. Mr. Grind- power in 2015 and regained it firmed Britain’s negotiating
eanu’s fall from power began in last year, has tried to refocus aim in Brexit talks and set out
February with Romania’s largest public attention onto popular the government’s intention to
demonstrations since the fall of benefit programs. Starting next come up with a new counter-
communism. More than 250,000 year, Mr. Dragnea’s party hopes terrorism strategy after a
protesters marched through to raise public wages by 25%, a spate of recent attacks.
snow-packed streets against a $2 billion expenditure that In a ceremony on Wednes-
ruling party ordinance that would reward his political base day marking the official re-
CARL COURT/PRESS ASSOCIATION/ZUMA PRESS

would have restricted prosecu- of aging rural voters. opening of Parliament after
tors from investigating public But that program has been the election this month, the
officeholders for corruption. delayed as protesters—primar- queen read out a list of bills
That ordinance was crucial ily in urban centers, home to that Prime Minister Theresa
to the leader of Mr. Grinde- some of Europe’s fastest-grow- May hopes to pass in the two
anu’s party, Liviu Dragnea, who ing wages—push for a crack- years to come, ranging from
is under indictment for abuse down on corruption. Many plans to improve data protec-
of office. Mr. Dragnea says he have been enticed home from tion in the wake of a recent
is innocent, and his party ar- Western Europe by rising cyberattack on the National
gues that increasingly exhaus- wages, and a chance to reform Health Service to an outline
tive corruption investigations— an ex-communist dictatorship of major bills related to Brit-
partly funded by the European into something closer to the ain’s exit from the European
Union—have made governing standard of governance they Union, set for March 2019. Queen Elizabeth II and Prince Charles, in the distance, presided over the opening of the new Parliament.
Romania too difficult. feel they experienced abroad. Whether Mrs. May can
Still, days of protests “More and more people pass the bills through Parlia- agenda thin and disappointing. To stay in power, Mrs. side her on a table rather
pushed Mr. Grindeanu to with- look at Europe, look at the ment is another story: Her “This is a government May’s government will have than on her head. The proces-
draw the ordinance. That U.S., and understand it’s not poor electoral performance without a majority, without a to rely on cooperation from sion around the queen, as she
move freed prosecutors to like the ’90s, when your entire has diminished her authority mandate, without a serious other parties to pass legisla- arrived from the palace, was
keep pursuing corruption dream was ‘how do I get out in the legislature. Having legislative program, led by a tion. Without official support also smaller.
cases against the ruling party. of here,’ ” said Laura Stefan, a fallen short of a majority, her prime minister who has lost from the DUP, this is unlikely The queen, whose address
But it also sparked a rivalry former director in the Roma- Conservative Party will re- her political authority and is to work in the long term, par- was written by Mrs. May’s
with Mr. Dragnea, who first nian Ministry of Justice. “Now, quire support from Northern struggling to stitch together a ticularly at a moment of his- team, confirmed the govern-
nominated the then-obscure Mr. Romania is a country worth Ireland’s Democratic Unionist deal to stay in office,” Mr. toric change for a country ment’s plans to convert EU leg-
Grindeanu as prime minister in fighting for.” Party to pass legislation. Af- Corbyn said. “We will use ev- deeply divided over what its islation into U.K. law to smooth
ter days of discussion the two ery opportunity to vote down new relationship with the EU the transition out of the bloc.
parties haven’t reached an government policies that should look like. The government also plans to
agreement, but talks are con- failed to win public support Wednesday’s ceremony had implement legislation to estab-
tinuing. and we will use every oppor- less pomp than usual. The lish new national policies on
Mrs. May said earlier that tunity to win support for our need for hasty arrangements areas including immigration.
while the election result program.” for opening Parliament after The government also said
wasn’t one she had hoped for, To continue as prime min- the snap election, along with the U.K. would put in place a
she would respond with “hu- ister, Mrs. May will need a the queen’s lavish birthday legislative framework to al-
mility and resolve” to the majority of Parliament’s 650 celebration just days ago, led low it to operate its own in-
VADIM GHIRDA/ASSOCIATED PRESS

message the electorate sent lawmakers to approve the Buckingham Palace to tone dependent trade policy, a sig-
her government. agenda laid out in the Queen’s down arrangements. nal the government intends
“We will work hard every Speech. Parliament is ex- For the first time since not to be subject to the com-
day to gain the trust and con- pected to give Mrs. May only March 1974—the last time a mon external tariffs of the
fidence of the British people, a narrow win in a vote on minority government took of- EU’s customs union.
making their priorities our June 29, suggesting she will fice in Britain—the queen The speech omitted several
priorities,” Mrs. May said. likely face difficulties ahead traveled to Parliament in a policies the party campaigned
Jeremy Corbyn, leader of in running a minority govern- car rather than in a royal car- on, including a key pledge to
the main opposition Labour ment, which are rarities in riage; she wore a day dress, cut annual migration to tens
Prime Minister Sorin Grindeanu in Parliament on Wednesday, Party, speaking in Parliament, the U.K. and have tended to rather than traditional formal of thousands from the current
before the vote of confidence that led to his removal. called the Conservatives’ be short-lived. robes, and her crown was be- level of about 250,000.
A4 | Thursday, June 22, 2017 HK JP KO ML SI IN UK FR MN PR THE WALL STREET JOURNAL.

THE ROYAL SUCCESSION

Shuffle Means a More Activist Saudi Arabia

and interior minister, Mo- velop an unexpectedly warm
hammed bin Nayef, was relationship with President
widely seen as the voice of Donald Trump, who repeat-
caution and experience in edly bashed the kingdom
the kingdom’s halls of during last year’s campaign.
power—and a possible check The prince visited the
on some of Mohammed bin White House in March, pav-
MIDDLE EAST Salman’s rasher moves. ing the way for last month’s
high-pomp Riyadh summit at
CROSSROADS

N
ow that he is gone which Mr. Trump seemed to
By Yaroslav Trofimov (and replaced at the endorse Saudi claims to lead
interior ministry by a the entire Muslim world.
33-year-old nephew of Mo- Shortly thereafter, Saudi
Brace for more turbulence. hammed bin Nayef), Saudi Arabia and its allies moved
The dynastic struggle in Arabia’s regional posture is against Qatar—securing, at

NAIF RAHMA/REUTERS
Saudi Arabia is over, and likely to become even more least at first, Mr. Trump’s
power—for all practical pur- adventurous. backing.
poses—is now in the hands of “Mohammed bin Salman

O
a young generation of princes is much more willing to use n Tuesday, however—
determined to show the Mid- Saudi hyper-nationalism as a just hours before the
dle East who’s the boss. way to solidify domestic so- Saudi leadership shake-
Mohammed bin Salman, cial change,” said Andrew A Saudi-led airstrike left an auto repair shop in flames in the northwestern city of Saada, Yemen. up—the U.S. State Depart-
appointed on Bowen, a specialist on the ment issued an unusually
Wednesday as kingdom at the American En- ruler of the United Arab Emir- This means that—despite the of government (including a strong rebuke of the Saudi
the kingdom’s terprise Institute, a Washing- ates, Mohammed bin Zayed— consolidation of power in Ri- younger brother as ambassa- and Emirati embargo on Qa-
crown prince ton think tank. “It’s a risk has by contrast advocated yadh—the change in the dor to Washington), it in- tar, which houses a major U.S.
and desig- when you put a very head- showcasing the kingdom’s kingdom’s behavior may be creasingly seemed just a mat- military base in the region. To
nated succes- strong, stubborn, impulsive, military and financial might. less dramatic than many ex- ter of time before Mohammed many in the Middle East, this
sor to his 81- more nationalist leader in “Now you are going to see pect, cautioned Saudi analyst bin Nayef was forced out. was a signal that Saudi lead-
year-old father, King Salman, that position compared to more decisiveness, be it in the Mohammed Alyahya, a non- Yet few expected this time ers may have been overconfi-
is the face of bold changes Mohammed bin Nayef, who war in Yemen or in the recent resident fellow at the Atlan- to be so short: As the consen- dent in their dealings with
launched by once staid Saudi was slow, deliberate and disturbance of relations with tic Council. sus among Western diplomats Washington, too.
Arabia in the past two years. pragmatic.” Qatar. The Saudi foreign pol- “In terms of foreign policy, in Riyadh went, Mohammed “I do not see so far that
At just 31 years of age, he While Mohammed bin icy is going to be more open economic policy and defense, bin Salman needed to show the Trump administration has
is the architect of the bloody Nayef didn’t publicly criticize and more dynamic,” predicted I don’t foresee a seismic shift some actual achievements be- given the Saudis a blank
war in Yemen, the initiator of his young rival, he supported Ahmad al-Ibrahim, a Saudi because Mohammed bin Sal- fore making the move. check,” said Riad Kahwaji,
painful economic overhauls, a more traditional Saudi ap- political commentator and man has already been in With the war in Yemen CEO of the Institute for Near
the instigator of moves to ag- proach of acting behind the businessman. charge of these files for quite bogged down, Qatar refusing East and Gulf Military Analy-
gressively counter Iran and, scenes and building regional some time,” Mr. Alyahya said. to capitulate and the House sis in Dubai. “It is too early to

M
more recently, the catalyst of consensus—including in rela- ohammed bin Nayef, Indeed, over the past sev- of Saud forced to roll back talk of this as an achievement
a Saudi-led regional cam- tions with Qatar and Iran. of course, exercised eral months, as Mohammed unpopular austerity mea- because we are yet to see
paign to isolate tiny Qatar. Mohammed bin Salman— only limited author- bin Salman widened his au- sures in April, the only such what the Trump administra-
His 57-year-old cousin, the who has developed close ties ity outside his internal-secu- thority with the appointment success has been Mohammed tion will actually give to the
now-removed crown prince with the activist de facto rity turf in recent months. of young princes to key levers bin Salman’s ability to de- Saudis in the near future.”

A ‘Gatekeeper’ Is Handed the Keys State Oil Company

New crown prince has overseen economic overhauls and defense; ‘the king trusts him’
keeper for the king,” a senior
IPO Plan Buoyed
BY SUMMER SAID Saudi official said.
AND MICHAEL AMON  Mohammed bin Salman BY SUMMER SAID place in 2018. Prince Moham-
has been the driving force AND NIKHIL LOHADE med has pledged to invest
Saudi King Salman pro- behind an ambitious plan to much of the proceeds in eco-
moted his son, Mohammed diversify the economy of the Mohammed bin Salman’s nomic diversification, boosting
bin Salman, to crown prince, world’s largest oil exporter. promotion to become crown the country’s technological and
upending the line of succes- The centerpiece of the pro- prince of Saudi Arabia will industrial sectors and reducing
sion for Saudi Arabia and gram is the public listing of drive forward his plan to list its reliance on oil revenue.
putting a 31-year-old a a small piece of Saudi Ara- the kingdom’s state oil com- Shares in Saudi Arabia’s
heartbeat away from the bia’s state-run oil company, pany and strengthen his man- main stock market rose about
throne during a turbulent known as Aramco. It could date to diversify its economy. 5.5% Wednesday after the
period of war and change in generate as much as $100 The leadership shuffle re- news of Prince Mohammed’s
the Middle East. Here is billion, which the prince moves almost all doubt that promotion.
SAUDI PRESS AGENCY/ASSOCIATED PRESS

what you need to know would direct into a new sov- the Saudi state-run oil com- In particular, investors were
about Prince Mohammed bin ereign-wealth fund aimed at pany, known as Saudi Aramco, cheered when index compiler
Salman. encouraging the develop- will list a portion of its shares MSCI Inc. said it had added
 Known as MbS, Moham- ment of technology and in- publicly—a move driven by Saudi Arabia to its watch list
med bin Salman wasn’t a dustrial sectors. “By 2020, Prince Mohammed that has for possible classification as
widely known figure before we’ll be able to live without been opposed in parts of the an emerging market as early
his father became king in oil,” Prince Mohammed said country. as 2018—a move prompted in
2015 and appointed him dep- after the plan’s announce- Some people had feared part by Prince Mohammed’s
uty crown prince and de- ment in 2016. Prince Mohammed’s initiatives reform program.
fense minister. He is the el-  As minister of defense, would stall or end if Moham- The prince’s ascent comes
dest son of King Salman’s Mohammed bin Salman has med bin Nayef—the crown at a time of general economic
third wife, Fahdah bin Falah Mohammed bin Salman, left, with Saudi King Salman in April overseen Saudi Arabia’s Ye- prince who was replaced strain caused by faltering oil
bin Sultan. He obtained a men campaign, which began Wednesday—became king. prices, with crude falling into
bachelor’s degree in law at prince. His promotion passed Saudi royal court say King in March 2015 with the aim “Those dissenting voices a bear market on Tuesday and
King Saud University in Ri- over scores of older family Salman sees Mohammed bin of countering the Houthi will likely be silenced for down again on Wednes-
yadh and worked for several members, including several Salman as a national figure rebels and restoring the de- now,” said Helima Croft, head day morning.
government bodies before prominent half-brothers. who represents the king- posed president, Abed Rabbo of global commodity strategy The value of the Aramco
his first prominent national Since then he has become dom’s restless younger gen- Mansour Hadi, to power. He for RBC Capital Markets, in a IPO will largely depend on oil
job in 2013, when he was the face of the kingdom’s eration. Mohammed bin Sal- is also the architect of the note to clients on Wednes- prices, which were below $46
named head of the Crown ambitious economic over- man has long worked at his Saudi backing of rebels op- day morning. “It will be full a barrel for Brent crude on
Prince’s Court, with the rank hauls and its war to oust Ira- father’s side, including as a posed to Syrian President steam ahead with the Wednesday—25% lower than
of minister. nian proxies from Yemen. He special adviser when Salman Bashar al-Assad. Mohammed planned partial listing of the $60 the Saudis are pri-
 In 2015, Mohammed speaks to Western media was the governor of Riyadh. bin Salman was among the Saudi Aramco.” vately targeting.
bin Salman took over two of outlets, discussing Saudi “The king trusts him with first foreign leaders to visit The Aramco initial public “With the IPO at the cen-
the country’s most sensitive Arabia’s challenges with a everything and he sees him President Donald Trump, offering has been billed as the ter stage, the kingdom needs
portfolios—the economy and degree of openness unseen as the only one that can forging a warmer relation- most valuable listing ever, po- higher [oil] prices,” said Am-
defense—before being ele- before in the kingdom. truly transform this country. ship with the U.S. after years tentially fetching as much as rita Sen, chief oil analyst
vated to deputy crown  People close to the He is the definitely the gate- of tension. $100 billion when it takes at Energy Aspects.

SAUDI reforms he has sponsored

prove controversial.
“Mohammed bin Salman’s
elevation to crown prince has
composed of senior princes
who advise the king on mat-
ters of succession.
In a display of royal unity,
conservative society where
women still can’t drive, Saudi
Arabia is now embracing sig-
nificant cultural reforms,
Saudi Arabia’s Generational Shift
Prince Mohammed
bin Salman’s ascension Abdulaziz ibn Saud
Continued from page A1 been on the cards for a while, state television on Wednesday staging public concerts and is risks a backlash within Founder
nation for robust changes or but still represents an enor- broadcast footage of Moham- set to open its first movie the House of Saud Established the Kingdom
time to implement them. mous shake-up in Saudi suc- med bin Nayef pledging alle- theaters, once opposed by the of Saudi Arabia in 1932.
“The benefit now is that we cession dynamics,” he said. giance to his successor. The religious establishment. Died 1953
have a young leader who has Wednesday’s appointment video showed Prince Moham- Some senior officials say
the authority to…plan not 10 wasn’t the first time that med bin Salman kneeling down the succession move is a sign
years in advance but 40 years King Salman had tinkered and kissing the hands of Mo- of other big changes to come.
in advance and ensure there is with the traditional lines of hammed bin Nayef, who told “It is a highly calculated
institutional continuity going succession. his cousin: “May God help you.” move to make Saudi Arabia as
forward,” said Mohammed Al- One of his first acts as The royal shake-up coin- stable as possible,” said an-
yahya, a nonresident fellow at monarch was to remove a cides with a political crisis in other senior Saudi official.
the Atlantic Council, a think half-brother as his heir and to the Persian Gulf that pits “You need this clarity when
tank in Washington. appoint two younger princes Saudi Arabia and its allies you have a big ambitious re-
But while Prince Moham- in the line of succession— against Qatar. Saudi Arabia is form plan you want to
med bin Salman’s ascension Prince Mohammed bin Nayef also entangled in a continuing achieve,” Nayef bin Abdulaziz Salman bin Abdulaziz al Saud
Crown Prince King
signals a generational shift— and Prince Mohammed bin war in neighboring Yemen Some critics have por-
2011-2012 Served as Riyadh governor
one that makes the monarchy Salman—a change that and is challenging rival Iran trayed the new crown prince
Long-serving interior minister, and defense minister until he
more reflective of the coun- shocked many royals but was for regional sway. as reckless. Saudi Arabia’s in-
died in 2012 ascended the throne in 2015
try’s burgeoning youth popula- accepted because of the close Since following his father tervention in Yemen has cost
tion—it also risks a backlash ties he had cultivated with into power, Prince Mohammed billions of dollars, killed thou-
within the vast House of Saud. other members of his ex- bin Salman has been the public sands of civilians and so far
For much of Saudi Arabia’s tended family over the years. face of change in the kingdom. failed to oust Houthi rebels
existence as a nation, the ex- Still, by appointing his own He has introduced austerity from the country’s capital.
tended families and clans that son as his successor, the 81- measures—some of which And for all the talk of an eco-
make up the kingdom’s ruling year-old King Salman over- were reversed later—to help nomic overhaul, the country’s
royal family have ruled through turns decades of royal tradi- reduce a budget deficit caused economy continues to depend
consensus. In recent years, tion. Since the reign of King by the drop in oil prices. He overwhelmingly on oil reve-
Mohammed bin Nayef Mohammed bin Salman
however, that has given way to Abdulaziz Ibn Saud, the has also backed the potential nues. Economic growth and Crown Prince Named Crown Prince
more jockeying for power, in- founder of the modern Saudi listing next year of state oil job creation, especially among 2015-2017 June 21, 2017; Defense Minister
fluence and wealth as the num- state who came to power in giant Saudi Aramco, in part to the young, remains lackluster.
Viewed as a trusted He is now the new
ber of royals has expanded. 1932, the throne has passed push the economy toward pri- As Prince Mohammed bin
counterterror partner for the U.S. heir apparent to the throne.
Kristian Ulrichsen, a Middle from brother to brother vatization and greater com- Salman amasses more power,
East expert at Rice Univer- among his sons. petitiveness needed to gener- his youth is both an asset and Photos: Clockwise from top: Associated Press; Agence France-Presse/Getty Images;
sity’s Baker Institute for Public The upending of the line of ate jobs for the young and a potential liability, some Reuters; Associated Press; Zuma Press
Policy, said the crown prince’s succession was endorsed by attract foreign investment be- Saudis say. Sources: Royal Embassy of Saudi Arabia; staff reports THE WALL STREET JOURNAL.

success depends on the sup- 31 out of 34 members of the yond the oil sector. “I admire his energy,” said
port he receives from the Allegiance Council, a senior The economic pressures a Saudi close to a powerful worries many Saudis that he and Rebecca Ballhaus
wider Al Saud family, espe- Saudi official at the royal have precipitated broader so- line of the family. “But at the is overconfident.” in Washington
cially if some of the economic court said. The council is cial changes. Long an ultra- same time it worries me and —Maria Abi-Habib in Beirut contributed to this article.
THE WALL STREET JOURNAL. Thursday, June 22, 2017 | A5

WORLD NEWS

Congo Crisis
Sparks Flood
Of Refugees
BY NICHOLAS BARIYO raping underage girls in the

LEONARD PONGO/REDUX PICTURES FOR THE WALL STREET JOURNAL

central Kasai region.
KYANGWALI, Uganda—The Ms. Mabuya, who found her
day Bungwile Mabuya discov- husband’s body the next morn-
ered her husband’s mangled ing, denied that her husband
body near her house in the belonged to Kamuina Nsapu
Democratic Republic of and said he was a victim of a
Congo’s Kasai region, she government crackdown that has
grabbed her children and ran. intensified since Mr. Kabila’s of-
The mother of five, who ficial mandate expired in De-
found refuge in a sprawling cember. Mr. Kabila, who is
lakeside refugee camp here, is barred from running again by
one of roughly 1.5 million Con- the nation’s constitution, has
golese fleeing a brutal power put off elections, citing a lack of
struggle pitting President Jo- funds and security issues.
seph Kabila against traditional “We could not even hold a
chiefs, who still administer burial ceremony. Everyone was
large swaths of the vast cen- running,” Ms. Mabuya said.
tral African nation. Tensions in impoverished The Kyangwali refugee camp in western Uganda is sheltering some of the 1.5 million Congolese who have fled violence in their homeland.
Government forces and lo- Kasai escalated last year, when
cal militias have killed more Mr. Kabila refused to recognize of Congo’s exports—cut into
than 3,300 people in Ms. Jean-Pierre Mpandi, a chief government spending on so- On the Run
Mabuya’s home region since who founded Kamuina Nsapu cial services and other pay- More people have been forced from their homes in the Democratic Republic of Congo over the
October, according to the and was friendly with Mr. ments that usually flow to lo- past 18 months than in other conflict zones. Displacements in selected conflict-torn nations:
Catholic Church, which has Kabila’s political opponents. In cal chiefdoms. The
had its priests count the bod- August, government forces commodities crash also dimin- Number of internally Total number of displaced people
ies since then. On Tuesday, the fighting Kamuina Nsapu killed ished the chiefs’ revenue from displaced people since 2016 since beginning of each conflict*
United Nations’ high commis- Mr. Mpandi. Aid agencies say illicit mining and logging, as Congo 1.5 million 3.7 million
sioner for human rights, Zeid more than a dozen other tradi- well as informal levies they
Ra’ad Al Hussein, accused Mr. tional chiefs across five prov- collect from local traders. Syria 824,000 6.3 million
Kabila’s government of arming inces have since been killed. “A deteriorating economy Iraq 659,000 3.0 million
a new militia he said has Traditional chiefs are se- has fueled resentment toward
slaughtered hundreds of vil- lected according to local cus- Mr. Kabila’s regime, especially Afghanistan 653,000 2.7 million
lagers—including pregnant tom and perform religious cer- among traditional chiefs,” said Nigeria 501,000 1.9 million
women and toddlers—in Kasai. emonies, but receive Adeline van Houtte, Africa an-
Yemen 478,000 3.1 million *Includes people who have
A government spokesman has government salaries. Under alyst at the Economist Intelli- fled to different countries
denied the allegations. Congo’s constitution they are gence Unit. South Sudan 281,000 3.5 million Source: Norwegian Refugee
The killings reflect the un- required to be apolitical and In Kasai, a longtime opposi- Council; United Nations
Central African Republic 46,000 2.3 million
raveling of a complex network resolve local disputes, forming tion stronghold, Kamuina Nsapu THE WALL STREET JOURNAL.
of power trading and patron- a vital link between the capital has ambushed government
age, backed by amateur fight- Kinshasa and remote villages. troops, which the U.N. says mutilated.” The blurring of government likely murdered while looking
ers unchecked by the official In late 2015, however, Mr. have responded with dispropor- The U.N. has identified 42 and traditional powers has for additional mass graves.
security apparatus, that has Kabila implemented a law that tionate force. On Tuesday, the mass graves and Mr. Hussein also been an issue in the Some Congo watchers say
helped secure Mr. Kabila’s rule requires a presidential decree U.N.’s Mr. Hussein said investi- said there may be more. Lam- March kidnapping and murder they believe Mr. Kabila is using
for the past 16 years. to formally recognize each gators now believe Mr. Kabila’s bert Mende, Congo’s informa- of two U.N. contractors investi- the clashes as an excuse to fur-
Ms. Mabuya said her hus- chief—a step his critics say government has been arming tion minister, dismissed these gating alleged atrocities in Ka- ther delay elections, now due
band, Constantine Masumbe, was an attempt to sideline op- its own militia, Bana Mura, to claims as “fabrications aimed sai. While Congolese officials by the end of the year. The gov-
had stepped outside their hut position-friendly leaders. Mr. fight Kamuina Nsapu. at discrediting government” have blamed the killings on Ka- ernment denies the allegations.
one December night when she Kabila’s spokesman denies “My team saw children as and said the government was muina Nsapu, the government “Although the government
saw three men wearing army these claims, saying the state young as 2 whose limbs had ready to work with the U.N. to says it is also investigating the might see the security situa-
uniforms drag him away, ac- had the right to oversee chiefs been chopped off. Many babies investigate the allegations. former development minister, tion as an opportunity to re-
cusing him of being a member receiving government funds. had machete wounds and se- The U.S. and the European Clement Kanku. He has denied main in power, not dealing
of Kamuina Nsapu, an antigov- At the same time, the drop vere burns,” he said. “At least Union have put sanctions on any role in the killings. with the crisis, or even fueling
ernment militia the U.N. says in prices for oil, copper and two pregnant women were Congolese officials in connec- Mr. Hussein said on Tuesday it, is a risky game,” Ms. Van
is recruiting child soldiers and cobalt—which account for 90% sliced open and their fetuses tion with the Kasai violence. that the two U.N. experts were Houtte said.

WORLD WATCH
Philippine Rebels Hit Second Town GERMANY bor nearly twice as many vi-
BY BEN OTTO ruses that either threaten hu-
Rising Asia Exports mans today, or could threaten
MANILA, Philippines—Mili- Seen Countering U.S. them in the future than the next
tants aligned with Islamic mammal on the list—primates.
State attacked a village and German exports to Asia are Rodents came in third.
fought with security forces in rising strongly this year, a trend —Betsy McKay
the southern Philippines, that could mitigate the risks to
spreading a bloody conflict Europe’s largest economy should UNITED KINGDOM
about 50 miles south of where U.S. President Donald Trump
government forces have been make good on his protectionist BOE Officials Divided
battling Islamist insurgents promises. On Rate-Rise Need
for more than a month. Data showed Germany’s ex-
Members of the Bangsamoro
MARK NAVALES/EUROPEAN PRESSPHOTO AGENCY

ports to China rising around 12% Differences have emerged in

Islamic Freedom Fighters group in the first four months of the the Bank of England’s most se-
attacked a village near the town year compared with the year- nior ranks over the need for a rise
of Pigcawayan in central Minda- earlier period. Exports to India in interest rates, as Chief Econo-
nao Island at dawn on Wednes- rose by a similar rate, while mist Andrew Haldane said he
day, occupying a school for shipments to Indonesia and now favored an increase this year.
hours and holding dozens of lo- Vietnam jumped more than 20% The pound rose on the news.
cal civilians hostage while using each, according to the Federal Mr. Haldane’s comments, in a
them as human shields, the mil- Statistical Office. speech in the northern English
itary said. Members of the German exports to the U.S. city of Bradford, came a day af-
group have been involved in the rose 3.9% in the first four ter BOE Gov. Mark Carney laid
prolonged battle against gov- months of 2017. —Nina Adam out the case against raising the
ernment troops to the north. central bank’s key interest rate.
The gunmen targeted a pa- Troops in Pigcawayan, in the southern Philippines, where Islamist fighters have made a new push GLOBAL HEALTH There has been relatively lit-
trol base of government-spon- tle dissent on the rate-setting
sored militiamen and held 31 added that the militants “were More than 300 people have the end of the Muslim fasting Bats Likely Hold Key Monetary Policy Committee dur-
hostages, including 12 children, taking advantage of the situa- been killed and 180,000 dis- month next week, reinforce- To Future Pandemics ing Mr. Carney’s time at the
at a nearby school, military tion that we have a placed in the fighting, and the ments could join the fighting, helm. —Paul Hannon
spokesman Brig. Gen. Restituto very…lightly defended outpost military estimates around 500 including from foreign shores. Where will the next pandemic
Padilla said. The militants left and that they think our forces civilians remain trapped. The government has said mili- come from? Hint: likely from EUROZONE
the area under the cover of are elsewhere in the province. Militants have been seeking tants in Marawi include citizens bats.
darkness, leaving the hostages But that’s not the case. Our to establish a caliphate in the from Indonesia, Saudi Arabia, Fighting emerging infectious Current-Account
unharmed, Mr. Padilla said. forces are spread all over.” predominantly Muslim south- Malaysia and other countries. diseases costs billions of dollars. Surpluses Narrow
Area residents said four of Government troops have ern Philippines. The Bureau of Immigration So researchers from New York
the militants were killed in an been battling militants linked In recent days, authorities on Wednesday moved to City-based nonprofit EcoHealth The eurozone’s large current-
exchange of gunfire with secu- to Islamic State in Marawi, a have said a small number of tighten borders, ordering Alliance set out several years account surpluses have started to
rity forces, Mr. Padilla said. Mindanao city of 200,000, fighters in Marawi have es- more stringent screening of ago to try to pinpoint where and shrink as oil prices recover, the Eu-
“The school area is again leading President Rodrigo Du- caped the city, fueling concern foreigners arriving at airports how future pandemics might ropean Central Bank said, wading
safe. The patrol base is well terte to place the entire region that the conflict could spread. across the country and sea- erupt. Analyzing a database of into a debate over global trading
secured,” Mr. Padilla said. He under martial law in May. Authorities also fear that with ports in the south. wildlife species and viruses relations that has raised tensions
known to infect mammals and between Washington and Berlin.
people, they calculated how The eurozone’s current-ac-

European Union Seeks Role in Pyongyang Talks many unknown viruses may be
out there, who carries them and
where they are likely to be.
count surplus—which roughly
measures the gap between do-
mestic saving and investment—
The European Union is in Warmbier, the American col- participants believe the EU cessions from Pyongyang on its Using a database of 2,805 rose to 3.3% of gross domestic
discussions with South Korea lege student imprisoned in could facilitate negotiations nuclear program, a senior U.S. mammal-virus connections, the product last year from 3.2% the
and China about taking a po- North Korea for more than a with North Korea, drawing on official said. There would be a researchers found that bats har- previous year. —Tom Fairless
tential role as a broker for ne- year before returning home its members’ diplomatic ties concern, the official said, that
gotiations with North Korea with a severe brain injury, has with Pyongyang and on its ex- the process would be used to
added to pressure in Washing- perience in helping to negoti- water down Washington’s call
KIM LUDBROOK/EUROPEAN PRESSPHOTO AGENCY

By Jeremy Page in ton for more strenuous action ate the 2015 nuclear deal with for a full dismantling of North
Beijing and Laurence against Pyongyang. Iran, the officials said. Korea’s nuclear program.
Norman in Brussels President Donald Trump EU officials have discussed The Wall Street Journal re-
said Tuesday that China has the matter with Chinese Pre- ported this week that the U.S.
on ending its nuclear program, been unable to crack down on mier Li Keqiang during his has held secret talks with
according to EU officials in- North Korea, pointing to a new visit to Brussels this month, North Korea for more than a
volved in the effort. direction for U.S. policies. and with South Korea’s special year, hoping to free U.S. pris-
The discussions reflect con- “While I greatly appreciate the envoy, Cho Yoon-je, in May. oners and establish a diplo-
cern in Brussels, Seoul and efforts of President Xi & China Any role for Brussels would matic channel for efforts to
Beijing that sanctions alone to help with North Korea, it has need backing from Washington constrain Pyongyang’s nuclear
won’t persuade Pyongyang to not worked out,” Mr. Trump and EU member states, neither and missile programs.
halt its nuclear program and said in a Twitter message. of which is assured. The Trump EU officials said they
that negotiations are needed A series of meetings in re- administration doesn’t see Brus- wouldn’t do anything to under- ANCIENT RITUAL: A Druid joins hundreds of people who gathered
to avoid military conflict. cent weeks in Brussels and Bei- sels as having the necessary le- mine U.S. moves to tighten eco- at Stonhenge to watch the sun rise at 4:52 a.m. Wednesday, the
The death this week of Otto jing have focused on ways that verage to help extract real con- nomic sanctions on Pyongyang. longest day of the year at the prehistoric monument.
A6 | Thursday, June 22, 2017 THE WALL STREET JOURNAL.

U.S. NEWS
Democrats Bemoan
Loss in Georgia Race
BY REID J. EPSTEIN district, local critics said they creases for the rich.
AND JANET HOOK could have done better if party Rep. Tim Ryan, an Ohio
officials in Washington had Democrat who challenged Mrs.
WASHINGTON—Recrimina- listened to their pleas that the Pelosi in a party leadership
tions in the Democratic Party race was competitive and de- election late last year, attri-
came swiftly following Jon Os- voted more resources to driv- buted Mr. Ossoff’s loss to the
soff’s expensive loss in Tues- ing up turnout in African- “toxic” Democratic brand and
day’s special election in Geor- American neighborhoods. Republican advertising tying
gia, a race that had been Democrats need to win at Mr. Ossoff to Mrs. Pelosi.
viewed as the party’s best shot least 24 seats from Republi- “It’s quite clear that these

CHRISTOPHER ALUKA BERRY/REUTERS

at gaining a House seat ahead cans in next year’s midterm ads are still effective,” Mr.
of the 2018 midterm elections. elections to seize control of Ryan said. “They’re still mov-
The populist wing of the the House. They were hoping ing the needle with vot-
party blamed Washington con- the Georgia contest would ers...and at the end of the day,
sultants and Mr. Ossoff for not kick-start efforts to close that that matters, especially when
backing the type of economic gap. Instead, the result leaves these elections are so close.”
Drew Hammill, a spokes-
man for Mrs. Pelosi, said that
GOP attacks on her come with
‘We have to offer big ideas to match the times the political territory because Democrat John Ossoff addressed supporters after his defeat in a House special election Tuesday.
we’re living in...’ she is a party leader, as the
GOP did in the past with Presi- trict’s African-American needs to focus more on local Karen Handel 52%, Mr. Ossoff
dent Barack Obama and Hil- voters with little help from voters’ economic concerns if 48%.
lary Clinton. national Democrats. candidates are going to appeal Messrs. Ossoff and Parnell
policies favored by U.S. Sen. them struggling to find a win- Mr. Ossoff’s effort raised a “As Democrats begin to to disaffected Republicans. did much better than fellow
Bernie Sanders of Vermont. ning message and split on the record amount of money—his chart a path back to a House “When you nationalize a Democrats performed last No-
Young House Democrats who best way forward. campaign and outside-group majority, we must listen to race too much you leave be- vember but not well enough to
have clamored for a change in “We have to offer big ideas allies spent more than $30 state parties and the folks on hind voters who may think carry heavily Republican dis-
party leadership bemoaned to match the times we’re liv- million—in what became the the ground,” said former South [President Donald] Trump is tricts.
the effectiveness of GOP at- ing in and unless we offer an most expensive House race in Carolina Democratic Party arrogant but are not ready yet Matt Bennett, vice presi-
tacks that tied Mr. Ossoff to economic vision that people U.S. history. Chairman Jaime Harrison, who to turn their back on a party dent of Third Way, a centrist
Rep. Nancy Pelosi of Califor- think is actually going to help But in a special election in is now an associate chairman of their mamas and papas,” Democratic group, disputed
nia, the House Democratic their lives we won’t be able to neighboring South Carolina, of the Democratic National Ms. Kleeb said. the progressive critique of Mr.
leader. get the debate to be about pol- Mr. Parnell came closer to Committee. “They have a bet- Mr. Ossoff and his staff Ossoff, saying the party would
And in South Carolina, icy,” said Rep. Ro Khanna, a victory on a shoestring bud- ter feel for the electorate.” didn’t respond to a request for have done even worse if the
where Democrat Archie Par- California Democrat aligned get of less than $1 million. Jane Kleeb, the chairwoman comment Wednesday. candidate had run as a liberal
nell came far closer than ex- with Mr. Sanders, who backs Mr. Parnell, a 66-year-old for- of the Nebraska Democratic According to the Georgia populist.
pected to snatching a House ideas such as a single-payer mer Goldman Sachs execu- Party and another ally of Mr. Secretary of State’s office, the —Natalie Andrews
seat in a heavily Republican health-care system and tax in- tive, heavily targeted the dis- Sanders, said that the party final result was Republican contributed to this article.

Health Overhaul Bill Is Hard Sell for Alaska Senator

BY KRISTINA PETERSON back anything that effectively
AND STEPHANIE ARMOUR limits access,” Ms. Murkowski Insurance Startup week, Oscar said that it will be- pital systems, he said.
said Tuesday. She declined to gin selling marketplace plans in Oscar, which has been val-
WASHINGTON—Senate Re- say whether that could cost Raises Its ACA Bet Ohio next year, working with ued at $2.7 billion, decided last
publicans’ quest for the 50 Mr. McConnell her support, the Cleveland Clinic. year to pull out of New Jersey’s
votes needed to pass their noting that senators haven’t Brother of Jared Kushner Josh Kushner, brother of ACA exchange for 2017, as well
health-care bill has put them yet seen the bill’s text. Is Company’s Co-Founder Jared Kushner, Mr. Trump’s son- as in Dallas. An Oscar spokes-
in hot pursuit of one duck- “I can’t tell you where my in-law and senior adviser, is a co- man said both markets ap-
hunting, occasionally defiant vote is going to be,” she said. founder of Oscar. According to his peared unstable at the time.
GOP senator: Lisa Murkowski Mr. McConnell declined on Insurance startup Oscar In- financial-disclosure forms, Jared Separately, Anthem Inc. said
RON SACHS/CNP/ZUMA PRESS

of Alaska. Tuesday to predict the bill’s surance Corp. said it plans to Kushner has divested his interest it would pull out of the ACA
Senate Majority Leader passage, saying that “we’re expand its offerings in the Af- in Thrive Capital, his brother’s in- marketplaces in Wisconsin and
Mitch McConnell (R., Ky.) con- going to make every effort to fordable Care Act marketplaces, vestment firm, which is a major Indiana next year. The India-
firmed Tuesday that the bill’s pass a bill” that overhauls the as insurers faced a federal dead- Oscar shareholder. napolis-based insurer, which
text would be released Thurs- health-care system. line Wednesday for initial filings Oscar is betting on the mar- had previously said it would
day and a vote held likely next The majority leader has sig- to participate in the health law’s ketplaces at a time when their leave the exchange in Ohio,
week, triggering an intensified naled that whatever the out- exchanges next year. future is uncertain, as Senate Re- cited a “volatile” insurance mar-
effort to secure the votes of come, he wants to act on the Oscar, which has been un- publicans aim to vote soon on a ket in its latest pullback an-
senators like Ms. Murkowski. Sen. Lisa Murkowski (R., Alaska) bill quickly. Republican leaders der a spotlight partly because health overhaul bill. Other insurers nouncement, and it said that
An assessment of the bill’s im- in Washington on Tuesday. have said they are eager to of its tie to President Donald now making exchange-plan filings “planning and pricing for ACA-
pact by the nonpartisan Con- tackle the next big item on the Trump’s administration, said it for next year said they may still compliant health plans has be-
gressional Budget Office is ex- was one of two Senate Repub- GOP agenda, an overhaul of aims to begin selling ACA plans change their minds about partici- come increasingly difficult due
pected by early next week. licans to oppose confirmation the tax system. in Tennessee for the first time pating in coming months. to a shrinking and deteriorating
Mr. McConnell’s schedule of Education Secretary Betsy Democrats are stepping up in 2018, and re-enter the ex- Mario Schlosser, Oscar’s individual market, as well as
gives him limited time to nail DeVos. And the Senate GOP their criticism of Republicans change in New Jersey, where it chief executive, said the insurer continual changes and uncer-
down support for a bill whose health bill could pose specific for writing the bill behind sat out this year. The insurer believed that ultimately the tainty in federal operations,
emerging shape has raised problems for Alaskans, causing closed doors and leaving little also will expand the regions marketplaces will stabilize, and rules and guidance,” including
alarms among conservatives some of the state’s other time for the public to review it where it sells ACA plans in Cal- the “apocalyptic scenario…just the future of federal payments
and centrists alike. The major- elected officials to hesitate. before the vote. “This is much ifornia and Texas, and will con- won’t come to pass, not this that help reduce health costs
ity leader can lose no more Ms. Murkowski has raised more akin to a reality TV show tinue selling plans in its home year, and not in the future.” Os- for low-income ACA enrollees.
than two of his 52 GOP sena- concerns over the bill’s ex- reveal than the legislative pro- market of New York. Last car is working closely with hos- —Anna Wilde Mathews
tors, prompting an urgent out- pected cuts to Medicaid, as cess,” said Sen. Chris Coons
reach to senators like Ms. well as a provision effectively (D., Del.).
Murkowski who face compli- cutting off funding for Planned Mr. McConnell faces chal- states. That raises the possi- Alaska is unique in facing don’t get insurance on the job
cated pressures at home. Parenthood Federation of lenges on both ends of the bility that GOP leaders could both high health-care costs with tax credits or subsidies
It won’t be easy to secure America. GOP spectrum. But he is also tweak the bill to address those and high premiums; because would be especially problem-
the support of Ms. Murkowski, “What they provide for contending with lawmakers, issues, such as beefing up tax of its small population, its atic in Alaska if those credits
who has been willing to break women is an important level including Ms. Murkowski, wor- credits or directing more Med- sickest residents have driven aren’t structured to take into
with party leaders in the past. of access to care, and I don’t ried about the bill’s impact on icaid funding to states with costs up sharply. Republican account areas with high
As recently as February, she think we ought to be rolling specific conditions in their expensive health care. plans to provide people who health-care costs.

Spicer Adopts a Lower-Key Approach Pence Rules Out One

BY MICHAEL C. BENDER Investigation director, when
Mr. Trump made several state-
Way to Pay Legal Bills
WAS H I N GT O N — O n c e ments that contradicted those BY PETER NICHOLAS accounts, mutual funds or
lauded by President Donald of his aides and fueled specu- AND REBECCA BALLHAUS 401(k) accounts from before
Trump for his ability to draw lation about Mr. Spicer’s job he entered elected office. As
more daytime television view- status. Vice President Mike Pence Indiana’s governor, he was
ers than many soap operas, Recently, internal discus- has chosen not to use an allied paid $173,860 over the previ-
press secretary Sean Spicer is sions have centered on political committee to pay for ous year, the disclosure
spending less time in the whether Mr. Spicer should the private attorney he re- showed.
White House briefing room as transition to a more strategic, tained last week to represent The vice president’s office
questions have been raised behind-the-scenes role if the him in the special counsel declined to comment on
about his role. president could find a replace- probe of Trump associates’ whether Mr. Pence will pay for
Mr. Spicer has made just ment for him, either internally ties to Russia, two people his attorney out of his own
seven appearances before the or externally, to handle the close to Mr. Pence said on pocket. Mr. Pence won’t use
media since returning from briefings, a senior White Wednesday. taxpayer funds to cover the
the president’s first foreign House official said. Last week, a person famil- fees incurred by his lawyer,
trip more than three weeks Asked about his job sta- iar with the matter told The Richard Cullen of McGuire-
ago. When he has taken the tus on Tuesday, Mr. Spicer Wall Street Journal the vice Woods, a spokesman for his
podium at the briefings, which smiled and said, “I’m right president would most likely office said.
are held most weekdays, he here.” use funds raised through a Mr. Cullen said last week
has adopted a less combative “We’re always looking for leadership PAC created earlier that Mr. Pence’s office had di-
JONATHAN ERNST/REUTERS

approach and shown an in- ways to do a better job of ar- this year to pay his legal bills. rected him to “make certain
creasing willingness to leave ticulating the president’s mes- At that point Mr. Pence that whatever method [of pay-
reporters’ questions unan- sage and his agenda and we’ll hadn’t been presented with ment] is used is compliant
swered. continue to have those discus- the options for paying his le- with all federal law and regu-
Amid speculation about sions internally,” he said. gal bills, another person said. lation.”
how long he will remain the For now, Mr. Spicer—a for- When he reviewed them, he It would be legal to pay for
main face of the briefings, Mr. mer communications director decided he wouldn’t use the a personal attorney with funds
Spicer has also been more White House press secretary Sean Spicer is seen less in public. for the Republican National leadership PAC, called the raised by a leadership PAC. Yet
likely to say he hasn’t talked Committee—has avoided wad- Great America Committee. such an action would poten-
to Mr. Trump about major pol- Multiple U.S. intelligence said will be voted on next ing into hot-button issues. It isn’t clear how Mr. Pence tially expose the vice presi-
icy issues. agencies say the Russians did week. The same inquiry was Mr. Spicer said Tuesday he will pay his legal fees, which dent to criticism that he is
On Tuesday, Mr. Spicer’s interfere, but Mr. Trump has made of Mr. Spicer on Mon- didn’t know whether the presi- can be a daunting expense, es- tapping well-heeled donors to
first on-camera briefing in been reluctant to embrace day during an off-camera me- dent recorded conversations pecially for public officials of pay his legal team.
more than a week, he was their assessment. Russia has dia briefing. “That’s a good with Mr. Comey, a question re- relatively limited means. President Donald Trump, a
asked if the president believes denied any meddling. question,” he replied then. porters have asked him re- A financial disclosure Mr. multibillionaire, has at least
Russia interfered with the Mr. Spicer also said Tues- Mr. Spicer’s lower-key ap- peatedly since Mr. Trump sug- Pence released last year ap- four attorneys representing
2016 election. day he didn’t know whether proach follows a tumultuous gested the possibility in a peared to show a negative net him in the probe into Russia’s
“I have not sat down and the president has seen the period for the communications tweet last month. worth, not counting his state alleged interference in the
talked to him about that spe- Senate health-care bill, which team after the firing of James —Rebecca Ballhaus pension or his residence. He 2016 presidential election and
cific thing,” Mr. Spicer said. his fellow Republicans have Comey as Federal Bureau of contributed to this article. reported no significant savings possible collusion.
THE WALL STREET JOURNAL. Thursday, June 22, 2017 | A7

U.S. NEWS

Lawmaker’s Shooter Did Little Planning

FBI says it found a list where you could tell things
were not going well.”
of six members of At this point in the FBI’s in-
Congress on Virginia vestigation, he added, the Bu-
reau believes the attack was
baseball field gunman “more spontaneous” than
planned.
BY ARUNA VISWANATHA Authorities said they were
still investigating the shooting
James T. Hodgkinson was a and have yet to arrive at a
troubled man who railed complete understanding of Mr.
against Republicans on social Hodgkinson’s motivations, but
media and kept more than 200 acknowledged his anti-Repub-
rounds of ammunition in a lican posts on social media.
storage locker, but he didn’t Mr. Slater also said Mr.
appear to have methodically Hodgkinson had contacted a
planned his attack at a con- family member on June 12,
gressional baseball practice, two days before the shooting,
an FBI official said on seeking to return home to Illi-
Wednesday. nois. Mr. Slater declined to say
“I think he was struggling what that family member had

KEVIN LAMARQUE/REUTERS
in a lot of aspects of his life,” told Mr. Slater in response,
Timothy Slater, head of the citing the continuing investi-
criminal division at the Fed- gation.
eral Bureau of Investigation’s Separately, Mr. Scalise
Washington field office, said “continues to make good prog-
at a press conference. ress,” according to a state-
Officials at the event pro- ment Wednesday from Med-
vided new details of Mr. Hodg- The FBI’s Timothy Slater, right, along with two police chiefs, shares investigative findings about last week’s shooting in Alexandria, Va. Star Washington Hospital
kinson’s final days before his Center, which upgraded his
June 14 rampage outside Mr. Slater confirmed that tack plans or targets. names on the list.” taken photos, but he said condition to “fair” from “seri-
Washington which critically investigators had found a list Rather, Mr. Slater said, a Mr. Slater said Mr. Hodg- those appeared to be the pho- ous.” He is now “beginning an
injured Rep. Steve Scalise (R., with the names of six mem- review of Mr. Hodgkinson’s kinson hadn’t searched online tos of a tourist. extended period of healing
La.) and wounded three oth- bers of Congress on the web searches found “only…a for information about the “It appears that…he was and rehabilitation,” the hospi-
ers. shooter but declined to say cursory search of two of the baseball game they were prac- running out of money, he was tal said.
Mr. Hodgkinson opened fire who was on the list. The FBI members.” ticing for in Virginia. not employed at the time of Mr. Scalise was near death
at a practice of Republicans doesn’t consider this a “hit He added, “We don’t know Mr. Hodgkinson visited the the event,” Mr. Slater said. when he was brought to the
preparing for a congressional list,” Mr. Slater said, because what the list was for.… There’s office of Sen. Bernie Sanders “He was married for 30 years hospital after being shot in
charity game. Mr. Hodgkinson, Mr. Hodgkinson’s internet no indication that that was a (I., Vt.) in April, Mr. Slater and that appears that mar- the hip by the gunman, and
armed with a rifle and hand- search history didn’t suggest list to target, or there was any said, and had visited other riage was not going so well.… has undergone multiple sur-
gun, was fatally shot by police. he had formulated specific at- threats associated with those congressional buildings and It was just a pattern of life, geries.

Bill Would Spin Off Air-Traffic Control From FAA

BY SUSAN CAREY The Trump administration access to federal funding for
has made air-traffic privatiza- safety and equipment projects,
A leading House lawmaker tion the centerpiece of its and the ability to use contrac-
said Wednesday he would in- planned infrastructure build- tors to staff their airport tow-
troduce a bill to take manage- out. Transportation Secretary ers. The FAA will be the safety
ment of U.S. airspace away Elaine Chao testified in sup- organization overseeing the
from the Federal Aviation Ad- port of the plan before Con- new air-traffic service pro-
ministration. gress earlier this month. vider, he said.
Rep. Bill Shuster (R., Pa.), Mr. Shuster said the Sept. The agency would be
who leads the House Trans- 30 expiration of the FAA’s cur- headed by a 13-member board
portation and Infrastructure rent mandate puts pressure on including representatives from
Committee, said his bill would legislators to act quickly. the Transportation Depart-
extend the FAA’s general man- But the plan still faces ment, major airlines, regional
date for six years but move skepticism from some corners carriers, private pilots, other
air-traffic control functions to of the aviation industry and aviation companies and unions
a not-for-profit federal corpo- on Capitol Hill, where Demo- representing existing FAA con-
ration over three years. crats widely oppose it and trollers and pilots.
The bill, which Mr. Shuster Republicans are concerned “No one group can domi-
said he hopes to bring to the about its impact in rural air- nate,” the new corporation Mr.
CLIFF OWEN/ASSOCIATED PRESS

House floor next month, im- ports. The community of pri- Shuster said.
proves on a version he intro- vate pilots has also raised The FAA’s efforts to mod-
duced last year that never concerns that the fees they ernize its air-traffic control
reached the floor. Mr. Shuster pay for using the airspace systems would become the re-
said this version has “increased would rise. sponsibility of the new entity.
support across the spectrum,” Rep. Shuster said private Mr. Shuster said many of the
including from President Don- pilots of small planes would be FAA’s modernization efforts to
ald Trump and more aviation exempt from paying user fees. date haven’t yielded the prom-
Washington Dulles Airport in Virginia. The White House supports privatization of air-traffic control. industry stakeholders. Small airports will still have ised changes.

U.S. WATCH
TRUMP ADMINISTRATION a seasonally adjusted annual EDUCATION have since been removed from
rate of 5.62 million, the National the online review website. One re-
Path for Foreign-Born Association of Realtors said Yale Dean Out After view of an Asian restaurant said
Founders at Risk Wednesday. Economists had ex- Being Placed on Leave it would be perfect for “white
pected a modest decline from trash,” according to the student
The Trump administration plans April. Compared with a year ear- June Chu, a Yale University newspaper, while another implied
to dismantle a regulation that lier, sales were up 2.7% last dean who was put on leave last that an ice cream treat would be
would have helped more foreign- month. month after being tied to a string good for a white person “who has
TED JACKSON/ASSOCIATED PRESS

born entrepreneurs build startups “The fact that sales of exist- of racially insensitive reviews on no idea what mochi is.”
in the U.S. without a traditional ing homes rose in May—despite Yelp, has formally left the school. —Melissa Korn
visa, according to people briefed incredibly limited selection, Head of Pierson College Ste-
on the administration’s plans. shrinking times on market and phen Davis wrote in a letter EMPLOYMENT
The International Entrepreneur rapidly rising prices—is a testa- Tuesday that Ms. Chu left her
Rule, enacted by the Obama ad- ment to just how strong the position at the school “and Visa Allotment to Rise
ministration in the final days of draw to homeownership is right wishes the best to the students.” For Seasonal Workers
his presidency and set to go into now for millions of Americans,” Ms. Chu didn’t immediately re-
effect next month, would have said Svenja Gudell, Zillow’s chief spond to an email inquiry, or to a The Department of Homeland City workers and volunteers shore up levee gaps in Lafitte, La.
let foreign entrepreneurs apply to economist. message left on a cellphone Security said Wednesday it would
work in the U.S., provided their
startup raised $250,000 from es-
tablished U.S. investors.
Sales have seesawed from
month to month so far in 2017
and hit a 10-year high in March.
number listed under her name.
Ms. Chu, who taught psychol-
ogy and Asian-American studies
make more visas available for
seasonal summer workers, re-
sponding to complaints from
Gulf Coast Braces for
The Department of Homeland
Security plans to file an official
notice to delay that rule by eight
At the same time, increasingly
scarce inventory is driving up
prices faster than household in-
and was dean of the residential
Pierson College, apologized in
mid-May for two reviews that
businesses and members of Con-
gress about a significant shortfall.
By law, the number of H-2B visas
Tropical Storm Cindy
months with the intention of re- comes are growing. “The way to were deemed offensive and as- is capped at 66,000, divided be- BY ARIAN CAMPO-FLORES main threat Cindy poses is
scinding it, these people say. The solve this housing shortage, sured administrators and stu- tween the summer and winter from rainfall. The storm is ex-
delay will give the administration housing crisis that is developing, dents those were the only such seasons. This year, the allotment Residents along the U.S. pected to dump 6 to 9 inches
more time to complete the re- is to just build more homes,” posts. But the Yale Daily News, was exhausted in March. The vi- Gulf Coast from Texas to Flor- of rain from southeastern Lou-
scinding process, the people said. said Lawrence Yun, chief econo- the student newspaper, pub- sas, which are for temporary, ida braced Wednesday for isiana to the Florida panhan-
The DHS’s decision isn’t final mist for the National Association lished more posts by her. nonagricultural jobs, are used in tropical storm Cindy, which is dle, with some spots getting
and still could change, the peo- of Realtors. The posts, about area restau- tourism and other industries. expected to unleash torrential soaked with as much as 12
ple cautioned. After filing an offi- —Ben Leubsdorf rants, movie theaters and gyms, —Laura Meckler rains that could trigger what inches.
cial delay, the DHS will open a the National Hurricane Center Forecasters warned that po-
comment period which could af- described as “life-threatening tential flash flooding could be
fect the outcome of the rule. flash flooding.” fatal.
“We cannot speculate on the On Wednesday morning, a Forecasters said a storm
outcome of the DHS review of the 10-year-old boy died as a re- surge could produce inunda-
rule. When the review is final, we sult of the storm in Fort Mor- tion of 1 to 3 feet along the
will make the decision public," said gan, Ala., on the Gulf Coast, Gulf Coast. The system could
Dave Lapan, a DHS spokesman. said Capt. Steve Arthur of the also spawn tornadoes from
The San Francisco Chronicle Baldwin County Sheriff’s Of- southern Louisiana to the Flor-
earlier reported on the possible fice. He was on vacation from ida panhandle, they said.
delay and rescinding of the rule. St. Louis with his family and “This is going to be a seri-
—Douglas MacMillan was hit by a heavy object in a ous event,” said New Orleans
and Laura Meckler wave, Capt. Arthur said. Mayor Mitch Landrieu at a
JUSTIN LANE/EUROPEAN PRESSPHOTO AGENCY

Cindy, with maximum sus- news conference Tuesday.

ECONOMY tained winds of 50 miles an City officials warned resi-
hour, was churning over the dents to prepare for potential
Home Sales Rise Gulf of Mexico about 170 miles flooding and to stay home dur-
Despite Tight Supply southwest of Morgan City, La., ing heavy bouts of rain. Along
Wednesday afternoon. with the U.S. Army Corps of
Sales of previously owned U.S. Its center was forecast to Engineers, the city is monitor-
homes increased in May, a sign strike the coast of southwest ing water levels in canals and
of solid demand during the hous- Louisiana or southeast Texas Lake Pontchartrain, which bor-
ing market’s spring selling season by Wednesday night, before ders New Orleans, according to
in the face of fast-rising prices moving inland and sweeping to a news release.
and tight inventory. the east. On Wednesday, Louisiana
Existing-home sales rose 1.1% NEW YORKERS IN ZEN MODE: People participate in ‘Solstice in Times Square: Mind Over Madness Forecasters at the National Gov. John Bel Edwards de-
in May from the prior month to Yoga,’ an all-day event in New York’s Times Square to mark to the summer solstice on Wednesday. Hurricane Center said the clared a state of emergency.
 A8 | Thursday, June 22, 2017 THE WALL STREET JOURNAL.

UBER CEO RESIGNS

Driver’s Seat at Uber

Offers Big Challenge
BY JOANN S. LUBLIN shoes temporarily—particu-
AND VANESSA FUHRMANS larly Arianna Huffington, who
has emerged as the main
The most tantalizing CEO job voice for Uber’s board in re-
now open in the tech world also cent months and has taken a
may be the toughest. prominent role in Uber’s in-
Travis Kalanick’s abrupt vestigation into its workplace
resignation as chief executive practices—said Bart Fried-
of Uber Technologies Inc. has man, a corporate governance
kicked off a search for a leader expert and senior counsel at
to run the world’s most valu- law firm Cahill Gordon &

MONEY SHARMA/AGENCE FRANCE-PRESSE/GETTY IMAGES

able startup. His successor, Reindel LLP.
though, will have to contend Given her limited opera-
with scandals on numerous tional experience, though,
fronts, a leadership team gut- some executive recruiters say
ted by executive departures Ms. Huffington is unlikely to
and ousters, and a workplace be a candidate for the chief
culture widely criticized for executive role longer term,
being permissive of sexual ha- and is a long shot even as an
rassment and sexism. interim leader. Mr. Friedman
“It’s a once-in-a-generation said Uber co-founder Garrett
opportunity,’’ said Jeffrey Camp, also its chairman, is a
Cohn, managing director of dark horse as he “may not
global CEO succession plan- demonstrate sufficient change
ning for DHR International, for investors, who will really
an executive-search firm. be calling the shots.”
Yet any future Uber CEO “The investors are going to Uber’s aggressiveness has often been viewed as linked to Travis Kalanick’s personality. Some analysts say a fresh start is possible.

CEO Gone, Fights Remain

will have to contend with Mr. be looking for not only some-
Kalanick, who is expected to one who is transformative but
remain an influential presence a big public-relations success,”
at the ride-hailing company. he added. “It is going to have
He will keep a seat on Uber’s to be a head-snapper.”
board of directors and he re- Ms. Huffington couldn’t
tains control of a majority of immediately be reached for Executive change not cial for the European Union’s captured on the video. app, are both providing fierce
Uber’s voting shares. “You comment. executive arm said that Mr. Still, Uber’s aggressiveness competition in Southeast Asia,
don’t want to be [his] puppet,” Mr. Cohn said he expects likely to help soon Kalanick’s resignation will around the world has often where Uber has said it would
Mr. Cohn said. Uber to choose an external with Uber’s regulatory have no impact, for instance, been viewed as interlinked focus—along with India—after
In launching a search for a candidate to replace Mr. Ka- on a set of appeals it has with Mr. Kalanick’s own per- abandoning the China market.
new leader, Uber likely will lanick “if they are serious battles world-wide made in Europe. The com- sonality, and the change of In Hong Kong, where local
suspend its pending hunt for about getting the culture in plaints “concern the applica- leadership could offer a fresh taxis have a tight grip on the
a chief operating officer, ac- shape.’’ BY SAM SCHECHNER tion of EU law and not the start with some of the author- passenger-ferrying market,
cording to people familiar The outside recruit also management of companies ities with which Uber has tan- police arrested several Uber
with the matter. should know how to take them The resignation of Uber concerned,” the EU official gled. Dave Ashton, co-founder drivers in May for allegedly
A board member could through an initial public offer- Technologies Inc. Chief Exec- said. of French car-booking app running afoul of the city’s per-
step in to fill Mr. Kalanick’s ing, he said. utive Travis Kalanick may do Nor are some of those Mr. SnapCar, said Mr. Kalanick’s mitting and insurance rules. A
little immediately to soften Kalanick offended ready to departure is “an astute move spokesman said the company
regulatory scrutiny or blunt forgive the company he by the board” that could “re- is hopeful Hong Kong’s new
opposition from taxi and driv- founded until it changes its pair Uber’s reputation and chief executive will be more
ers groups globally, under- ways. British independent- help the company mature.” open to the service.
scoring the steep road the car- workers union IWGB wel- Xiaofeng Wang, an analyst An Uber spokeswoman said
hailing company still faces in comed Mr. Kalanick’s resigna- with research firm Forrester Mr. Kalanick’s departure won’t
turning around the hard-driv- tion, but said the company in Singapore, said Mr. Kalan- affect the company’s efforts to
ing image it has earned must start giving drivers more ick’s resignation “helps a little join with regulators and cities
FABRICE COFFRINI/AGENCE FRANCE-PRESSE/GETTY IMAGES

around the world under Mr. benefits. Driver groups in bit,” she said, since it shows globally. She added that Uber
Kalanick. other countries echoed the they “actually want to take re- is already making changes to
Uber has for years faced sentiment. sponsibility and change.” how it works separately from
opposition in the U.S. and “We saw how Travis treated In Asia, Uber faces a clutch Mr. Kalanick’s resignation, in-
abroad from taxi companies, his drivers,” said Sayah Baar- of fast-growing, homegrown cluding an announcement this
regulators and—increasingly— oun, head of a driver’s union startups that are capitalizing week that it will start imple-
its own disgruntled drivers, in France, referring to an inci- on factors such as local knowl- menting changes drivers have
who argue that the company dent where Mr. Kalanick was edge and better relationships asked for, such as allowing
co-founded by Mr. Kalanick is videotaped arguing with an with regulators in the battle riders to tip drivers.
a scofflaw that rolls into coun- Uber driver. “But for us, the for ride-hailing turf. Singa- —Natalia Drozdiak
tries and tries to gain market larger battle continues.” Mr. pore-based startup GrabTaxi in Brussels and Dan Strumpf
share while flouting local reg- Kalanick later said he was Holdings Pte. and Indonesia’s in Hong Kong
ulations. “ashamed” of the behavior Go-Jek, a motorcycle-hailing contributed to this article.
Uber counters that it is
mainly the victim of lobbying
Arianna Huffington has become the main voice for Uber’s board. by taxi monopolies that take Uber’s Chaotic Year: enly underpaid New York City
advantage of riders and driv- drivers for the past 2½ years.
ers, forcing Uber into the A Timeline u June 1 Uber says its head of

UBER Kalanick’s leave last week,

the company said it would be
run by a committee of 14 ex-
ecutives, including the chief
courtroom to push back.
That has left it embroiled in
multiple legal battles, particu-
larly in Europe, where Uber
u Feb. 19 A former Uber engi-
neer says that management ig-
finance, Gautam Gupta, is leav-
ing as the ride-hailingcompany
reports a $708 million quar-
terly loss.
Continued from Page One technology officer, regional has been forced to shut down nored complaints of sexual ha- u June 13 Board member Da-
firm’s list of nearly 50 rec- managers and heads of legal, at least some services rassment and sexism. vid Bonderman resigns after
SETH WENIG/ASSOCIATED PRESS

ommendations was endorsed product, operations and in France, Germany, Italy, u Feb. 23 Google parent Al- making a disparaging remark
by the board. other areas. Spain, the Netherlands, Swe- phabet Inc. sues Uber for al- about women during a meeting
The investors who drafted Mr. Kalanick’s departure ex- den, and other countries— legedly stealing trade secrets to address problems with the
the letter include Bench- poses Uber’s leadership short- sometimes only after a court to jump-start its own autono- company’s workplace culture.
mark, whose partner Bill comings and raises the ques- order. mous vehicle program. u June 13 Mr. Kalanick says he
Gurley is an Uber board mem- tion of who can lead a Those legal fights, many u Feb. 28 A video shows CEO would take an indefinite leave
ber; Menlo Ventures; Lower- company whose defiantly com- initiated by Uber to challenge Travis Kalanick berating an from the company.
case Capital; First Round petitive startup culture and laws that restrict it, won’t go Uber driver. u June 20 Mr. Kalanick resigns
Capital; and Fidelity Invest- leadership style reflected the away just because Mr. Kalan- Scandals have dogged Uber. u May 23 Uber says it mistak- following investor pressure.
ments, according to people fa- pugnacious chief executive. ick is no longer CEO. An offi-
miliar with the matter. Mr. Ka- Mr. Kalanick didn’t respond
lanick handed in his to a request for comment.
resignation just hours after
the letter was sent and after
speaking with one board mem-
ber, who counseled him to
The next CEO will face a
nearly unprecedented set of
challenges, including restoring
rattled employees’ faith in the
MIMS company. If Uber is right and it
can maintain an advantage like
this in the long term, it could
endure a long war of attrition
Uber’s service is still better
in the suburbs and commuter
towns, but Lyft is starting to
reach more of them, having
quarter tripled from a year
earlier. Even if Uber continues
to be the most notorious com-
pany in Silicon Valley, momen-
step aside, according to a per- company, as well a business Continued from Page One with its competitors. But since added 150 markets in the past tum—and its $7.2 billion cash
son familiar with the matter. that lost at least $2.8 billion sorely in need of a moat. neither Uber nor its competi- four months. Most important, hoard—should guarantee its
last year and another $708 mil- Mr. Kalanick, who initially tors are public companies, no both companies generate the survival. The danger is the
lion in this year’s first quarter, announced a leave of absence one knows the actual unit cost bulk of their revenue in the company fails to meet the in-
due in large part to cash incen- last week, wrote then that the of their rides. biggest U.S. markets—not co- flated expectations of its lofty
Mr. Kalanick will tives necessary to keep drivers company must evolve into In the U.S., Uber’s biggest incidentally, the markets in valuation.
likely remain a figure driving. Uber management is “Uber 2.0,” acknowledging it competitor, Lyft, has rapidly which Uber claims to have be- Google, Apple, Facebook
also tasked with a tremendous needs a complete overhaul of closed the distance with Uber come profitable. and Amazon weren’t first mov-
in the company he shift in culture from the one its corporate culture. But it’s by some of the most important In China, another key bat- ers in their industries, but
co-founded in 2009. crafted under Mr. Kalanick not clear how Uber the cater- measures, and has reached tleground, Uber bowed out en- they had superior technology
that often operated in a legal pillar becomes Uber the but- that point with far less invest- tirely. Uber continues to ag- and infrastructure. Apple’s
gray area, including pushing terfly. ment. Lyft is now in the same gressively pursue international brand and proprietary soft-
ahead in cities where its ser- “We think the company’s number of markets as Uber, markets, but this growth is ware and services gave it the
Mr. Kalanick had been on vice was barred, and reward- back is to the wall, and there is and in major cities can match costing it dearly. Uber lost pricing power to generate
indefinite leave from the com- ing high performers despite no more room for continued Uber on both price and speed $708 million in the first quar- huge profits. Google’s search
pany as of last week, a move misbehavior. screwups,” early Uber investor of service, says a company ter of 2017, despite logging and ad technology outclassed
he said was necessary to Even before Uber’s string of Mitch Kapor said last week. spokesperson. Lyft’s share of $3.8 billion in revenue. its competitors. Facebook capi-
mourn the sudden death of his scandals began earlier this Mr. Kapor, who in February co- rides in the U.S. grew from 10% In some respects, Uber still talized on the network effect
mother last month in a boat- year, Mr. Kalanick had come to wrote an open letter to Uber to 25% between June 2015 and has the wind at its back: Over- that increased its utility as
ing accident, and with an aim embody an extreme version of about the company’s “toxic” June 2017, according to TXN all demand for rides is surging. more people joined. Amazon
to re-emerge as a newly invig- the archetypal brash startup culture, suggested last week Solutions, which tracks credit- Uber has said the number of got so good at building cloud
orated leader. CEO who succeeds by thumb- that Mr. Kalanick should come card transactions. rides it completed in the first services for itself that it
“This is a bold decision ing his nose at convention and back only if he is “genuinely started selling them to oth-
and a sign of his devotion pushing the boundaries of es- committed to Uber 2.0.” ers—reaping huge profits.
and love for Uber,” said mem- tablished business practices. Assuming there is a magic Ridesharing Hits the Fast Lane And Uber? Aside from the
bers of Uber’s board in a Uber—with a valuation of pill to fix Uber’s culture, the Car services with self-employed drivers are rapidly outpacing cash, it has a (tarnished) brand
statement Tuesday. “By step- nearly $70 billion that exceeds next step will be fixing the traditional employee-based local transportation providers. and an app that has been
ping away, he’s taking the companies such as Ford Motor business. widely copied. Uber once could
time to heal from his per- Co.—was the epitome of a new Uber’s original approach 800 thousand plausibly claim that the com-
sonal tragedy while giving breed of startup using soft- was more sprint than mara- pany with the most customers
700 Number of drivers for Self-employed drivers
the company room to fully ware to reshape long-en- thon. Believing he could pre- could support the most driv-
embrace this new chapter in trenched industries from emptively wipe out the compe- 600 ridesharing and traditional (Ex: Uber and Lyft) ers, creating a virtuous circle
Uber’s history.” transportation to hospitality tition by amassing more transportation companies where mass plus engineering
500
Mr. Kalanick will likely re- to health care. money and market share early might yield an unbeatable cus-
main a figure in the company But the mood changed at on, Mr. Kalanick employed a 400 Uber founded March 2009 tomer experience.
that he co-founded in 2009 Uber after a former software hyperactive management style Now, the preponderance of
300
since he will keep his board engineer alleged chauvinism at that prized speed over integ- its competitors, ably luring
seat and, along with co- the ride-hailing firm in Febru- rity. But the finish line never 200 away customers and drivers,
founder Garrett Camp and ary. A series of blows, includ- really appeared. suggests that the ride-sharing
100
early employee Ryan Graves, ing a lawsuit from Google par- Uber still believes that it market will come to resemble
holds a majority of Uber’s vot- ent Alphabet Inc. over has superior technology and Company-employed drivers (Ex. taxis and limos) something far less sexy—and
0
ing rights. Mr. Camp is chair- allegedly stolen technology, data science that gives it lower 1997 2015 less profitable. Uber may just
man of the board. only added to investors’ doubts costs per ride than competi- Source: Brookings Analysis of Census Bureau and Moody's data be a gigantic taxi company af-
When Uber announced Mr. about Uber’s leadership. tors, says a source close to the THE WALL STREET JOURNAL. ter all.
THE WALL STREET JOURNAL. Thursday, June 22, 2017 | A9

LIFE&ARTS
TV & MUSIC

Music Supervisors Get

Their Own Emmy Award
For the first time, the people who choose the cool songs that play in TV
shows will be competing for an award this September
multiple levels, it is hard to imag-
BY JOHN JURGENSEN
ine substituting any other song,
Ms. Phillips says. “Tempo, instru-
WHEN EMMY nominations are an- ments, vocals. It all sums up to
nounced next month, music super- something that transforms the pic-
visors will be competing for the ture you’re seeing in front of you.
first time ever, after being granted That’s when I feel like I created
an award category of their own. something, by putting two sepa-
But long before the Sept. 17 rate things together to make
awards ceremony, supervisors are something new.”
wondering how Emmy voters will TV has been on a tear in the
evaluate excellence for a job that last decade, opening the door for
is more subtle and complicated unconventional creativity in every-
than it sounds: selecting the thing from cinematography to
soundtrack for scenes in TV soundtracks. At the same time, the
shows. in-depth online analysis of certain
One of the episodes that music shows helped raise the profile of
supervisor Maggie Phillips submit- behind-the-scenes pros, such as
ted for Emmy contention is from music supervisors. As links be-
“Fargo.” It includes a montage tween the worlds of TV and music, Unlike composers, however, su- Left, Little Richard, whose music has been featured in the TV show, ‘Better
scene in which two charac- they have also emerged as pervisors more often come from Call Saul,’ starring Bob Odenkirk as Jimmy McGill, above. Below, the show’s
ters strut their way influential allies of mu- the DJ world than the conserva- music supervisor, Thomas Golubić at the Guild of Supervisors’ music awards.
into a bridge tourna- sicians looking for tory. Initially, there was some re-
ment. The contes- exposure. To help luctance “as to why they’d allow
tants’ slow-mo- viewers connect us into their group,” says Thomas
tion entrance is with TV music, Golubić, a co-founder of the music
accompanied by some supervisors supervisors guild. “A lot of com-

CLOCKWISE FROM TOP RIGHT: AMC; ZUMA PRESS; FX; FOX; ASSOCIATED PRESS
a tune with a verify the songs posers really don’t know what su-
propulsive beat, they use with pervisors do. Or maybe they had
tight horn riffs websites and apps bad experiences. That created a
and lyrics that are that identify them, little bit of confusion.”
total gibberish. such as Tunefind This year, the Academy voted to
“Prisencolinensi- and Shazam. add the music-supervision cate-
nainciusol” was re- An official embrace gory (along with a new Emmy for
corded in 1972 by an Ital- by the television industry reality-series casting). Music su-
ian singer, Adriano Celentano, was slower to come. After form- pervisors have submitted about 90
replicating the sound of American ing the Guild of Music Supervisors entries, the Academy says. Voting
English. in 2010 (which includes members on nominees ends Monday. All
The song is catchy, cool and ob- working in film, advertising, Emmy nominees will be announced
scure, but Ms. Phillips says it was games and other mediums) ambas- July 13, ahead of the September
chosen more for the way it under- sadors for the craft made inroads awards show.
scores the relationship between with the organization that runs Neither the Academy Awards
the two characters, an ex-con and the Emmys, the Academy of Tele- nor the Golden Globes honor mu-
her parole officer, in a romance vision Arts and Sciences. Starting sic supervisors.
that soon involves murder. The in 2015, music supervisors were al- Supervisors had to supplement
tune’s swagger symbolizes the lowed to join the Academy as their Emmy submissions with writ-
confidence they give one another, members of the music branch, ten answers to 10 questions, such
but its nonsense lyrics telegraph which oversees awards for music as: “What was your creative con-
that the bravado is hollow. direction (typically performance tribution to advancing the story Malone found herself dealing with songs for each musical moment.
When music clicks in a scene on shows) and composition. line in the episode submitted?” court-appointed lawyers to negoti- After winnowing them down to
and “How did your work support ate with the estate of a rapper about 20, they play them against
character development?” who was shot to death in 2013. the scene and debate how the
Jen Ross, music supervisor for Only 10 seconds of “Let Me Find songs interact with the scene
the hip-hop drama “Empire,” sub- Out” by Montgomery, Ala., native through their mood, lyrics and
mitted a song-packed episode that Doe B can be heard in the first ep- tempo.
bounces among Eminem, Theloni- isode of the FX series as it plays Before selecting a handful of the
ous Monk and an original tune on the car stereo of an under- songs to edit into the scene and
that addressed gun violence. In ground rapper and his sidekick. present to the show’s creators for
one scene record-label bosses Despite the hassle, the song was a a final decision, Mr. Golubić gets
meet with mogul Lucious Lyon, more authentic choice for those preapproval to license the songs
played by Terrence Howard. A dec- characters than “something you from their rights holders; he
adent song by French Montana would hear on the radio in L.A.,” learned not to suggest songs with-
and Drake (“No Shopping”) transi- says Ms. Malone, who often tracks out knowing that he can deliver
tions to a triumphant one from down emerging southern rappers them.
Frank Sinatra and Count Basie’s and producers with direct mes- “Sometimes the amount of re-
orchestra (“The Best Is Yet to sages on Instagram and Twitter. search is epic, going to the far cor-
Come”). With “Atlanta” creator Donald ners of the world [to track down
The contrast could seem abrupt Glover she co-submitted an epi- licensing approvals] under the
“but is absolutely believable in the sode for Emmy contention that hopes that maybe we’ll pitch the
world of Lucious Lyon,” Ms. Ross peaks with the Funkadelic song song” to “Better Call Saul” produc-
says. “Just like real human beings, “Hit It and Quit It.” ers, says Mr. Golubić, who submit-
the characters are shaped by the For the AMC series “Better Call ted an episode of the series that
Terrence Howard stars in ‘Empire,’ above. Below, Dan Stevens as David music that surrounds them.” Saul,” Mr. Golubić and his team showcased acts from Little Richard
Haller in ‘Legion.’ “Atlanta” music supervisor Jen consider hundreds of pre-existing to Norwegian producer Todd Terje.

FILM AND TELEVISION

NOW STARRING WITH WILL FERRELL: THIS GUY?

(“Trainwreck”) and Lena Dunham leaves him. “I think we’ve all been
BY ELLEN GAMERMAN
(HBO’s “Girls”) have similarly there—I’ve had that breakup
Jason Mantzoukas is avoided the supporting-actress pi- where I was so devastated all I did
JASON MANTZOUKAS, the one of many geonhole by writing their own ma- was eat yogurt for two months
bearded character actor who often unconventional terial. The movement of ensemble and wear the same clothes every
plays a friend or a dirtball for a supporting actors actors into leading roles has cre- day,” he says.
few memorable scenes before dis- finding new routes to ated opportunities for racially and The 44-year-old Los Angeles
appearing from the screen, is fi- center stage. ethnically diverse actors as well. transplant can thank a failed ro-
nally sticking around. Mr. Mantzoukas, a New England mance for one of his longstanding
In “The House,” Mr. Mantzou- native of Greek descent whose career assets: his untamed beard.
kas steps into his largest film role voice carries a slight Cookie Mon- He stopped shaving after a partic-
yet as Frank, a heartbroken former ster rumble, is a veteran of impro- ularly bad split and suddenly
gambling addict who opens an il- visational comedy’s Upright Citi- started getting parts with his
licit casino in his house with his zens Brigade Theatre. He has wilder look.
best friends, played by Will Ferrell played drug dealers (Amazon’s Mr. Mantzoukas, whose father
and Amy Poehler. The comedy “Transparent” and the 2016 movie worked in health care while his
opens nationwide June 30. “Dirty Grandpa”), a sleazy per- mother raised him and his younger
“I know this is absurd because fumer (fragrances include “Side- sister in the coastal town of Nah-
EVERETT COLLECTION

we’re talking about a movie where boob” on the NBC series “Parks ant, Mass., got into acting as a
we’re organized crime bosses of and Recreation”), a gigolo (Com- student when he joined an improv
the suburbs, but Frank has a really edy Central’s “Kroll Show”) and, group at Middlebury College in
nice, very sweet emotional arc,” currently, an unhinged detective Middlebury, Vt. At the Upright Cit-
says Mr. Mantzoukas, best known (“Brooklyn Nine-Nine”). izens Brigade, he met future col-
as the exuberantly uncouth Rafi on As a self-styled casino kingpin laborators like Ms. Poehler and in
the FX series “The League.” “I’ve new routes to center stage. Audi- star of “Master of None,” the Net- in “The House,” Mr. Mantzoukas 2010 made the jump to “The
never had a part this big, to have a ences are getting used to seeing flix comedy he co-created. Rob moves with a ludicrous suburban League,” a series with largely im-
performance that starts in one outside-the-box actors in comedies Delaney was largely known for his posse. They blow wads of cash provised dialogue that ran until
place and ends in a very different that defy TV sitcom and movie profane stand-up before co-writing around with leaf blowers and 2015.
kind of place.” formulas. Quirkiness, not a square his layered character for the Ama- force-feed a man frozen yogurt Thanks to some of his over-the-
Mr. Mantzoukas is one of a jaw, is often at a premium. zon series “Catastrophe.” Kumail straight from the spigot to collect top roles, fans often assume Mr.
string of unconventional support- Several actors are writing their Nanjiani, the socially stunted com- on a gambling debt. Mantzoukas is just like his unsa-
ing actors stepping into larger way into leading roles, creating puter programmer Dinesh in “Sili- Mr. Mantzoukas drew on his vory characters. “The frequency
screen roles in recent years. characters informed by their own con Valley,” becomes a romantic own romantic breakups to play the with which people say insane stuff
Thanks to the explosion of enter- experiences. Aziz Ansari was an leading man in his new semi-auto- other side of Frank, a wounded to me in bathrooms is crazy,” he
tainment options, actors who used ensemble player in “Parks and biographical movie, “The Big Sick.” sad-sack who walks around in a says. “I have to tell people, ‘I’m an
to stay on the fringes are finding Recreation” but broke out as the Actresses Amy Schumer big smelly poncho after his wife actor.’”
A10 | Thursday, June 22, 2017 THE WALL STREET JOURNAL.

OPINION
REVIEW & OUTLOOK Anatomy of a Witch Hunt
Americans won’t be associations interspersed with claims
The Next Step on North Korea really good citizens
until they read Timur
from the Trump dossier to make the
innocuous, incidental and routine

T
he death of Otto Warmbier, a 22-year- The report dispels the misconception that Kuran and Cass Sun- seem nefarious.
old student held in a North Korean North Korea obtains the materials and tech- stein’s 1999 law review Maybe Mr. Schiff is a cynic, or maybe
article about “avail- Harvard Law sent him back into the
prison for 17 months, saddened and an- nology for its weapons programs through an
ability cascades.” world with the same skull full of mush
gered Americans. We don’t invisible network that can’t BUSINESS
Their launching with which he arrived. But ever since,
know what mistreatment led New sanctions against be stopped by sanctions. It WORLD
point is the process by every faulty or incomplete recollection
to his brain damage, but the finds that the same small By Holman W.
fact that Pyongyang concealed
China’s traders and number of Chinese individu- Jenkins, Jr.
which we (i.e., human of a meeting with a Russian has been
beings) decide to be- promoted in the media as proof of trea-
his condition for more than a financiers might work. als and companies that domi- lieve what others be- son by Trump associates.
year is damning enough. The nate legal trade with the lieve, and judge the truth of a proposi- The president’s obvious irritation
incident is a reminder of the North also supply it with tion by how familiar it is. with being called a traitor is proof that
regime’s brutality and is one more reason for “dual use” goods to build nukes and missiles. Such “availability cascades” drive he is a traitor.
the Trump Administration to increase sanctions These individuals and their shell companies government policy in good ways and Whether the Russia incubus did more
to prevent Kim Jong Un from developing a mis- are also dependent on access to the interna- bad, but usually bad. An example the harm to Mr. Trump’s vote or Hillary’s
authors analyze in detail is 1989’s fake vote during the election is impossible to
sile capable of hitting the mainland U.S. with tional financial system.
“Alar” cancer scare that devastated U.S. know. But Mr. Trump won, so under the
a nuclear warhead. As sanctions have tightened, this network apple growers. hindsight fallacy his victory is now
U.S. and Chinese officials were due to meet in has grown smaller and more consolidated. Which brings us to today’s question: proof that he conspired with Russia.
Washington Wednesday to discuss the problem. That’s because there are only a few individuals How did it become widely believed in
But Donald Trump on Tuesday suggested that he who have the skills and connections within the first half of 2017 that a U.S. presi-
no longer holds out hope that Beijing will change China and North Korea to continue trade under dent committed treason with Russia? The Trump-Russia scare is
Pyongyang’s behavior. He tweeted, “While I these circumstances. Pyongyang will find it Consider what has passed for proof from the same playbook as
greatly appreciate the efforts of President Xi & hard to replace them. in the media. Tens of thousands of
China to help with North Korea, it has not The U.S. stumbled across this North Korean Americans have done business with the fake-cancer scare.
worked out. At least I know China tried!” vulnerability in September 2005 when the U.S. Russia since the collapse of the Soviet
Mr. Trump built up expectations of Chinese Treasury named Macau’s Banco Delta Asia a Union, not to mention before.
In 2009 President Obama made the The term “availability bias” origi-
help after his April summit with President Xi “primary concern” for North Korean money first of his two trips to Russia with a nated in the work of Amos Tversky and
Jinping. That was a long shot given China’s laundering. The bank was forced to freeze $25 gaggle of U.S. business leaders in tow. Daniel Kahneman, whose Nobel Prize-
failure to rein in its ally in the past. But it million in North Korean assets, but the knock- Of these many thousands, four were winning research gave birth to the field
made sense diplomatically, putting Mr. Xi on on effects were huge. Trade that depended on associated with the Trump campaign, of behavioral economics.
notice that tougher U.S. action would follow the bank ground to a halt, and other banks cut and now became evidence of Trump col- Mr. Kahneman went on to write
if he failed to deliver while avoiding the ap- their business with North Korea. lusion with Russia. 2011’s indispensable “Thinking, Fast
pearance of a threat. In a tragic miscalculation, the Bush Admin- Every president for 75 years has and Slow,” and I’m here to tell you that
As the Journal reported last week, the Ad- istration released the frozen funds two years sought improved relations with Russia. journalists especially pride themselves
ministration asked Beijing to crack down on later in return for North Korea returning to the That’s what those endless summits were on their fast thinking—the kind that
some 10 Chinese companies and individuals six-party disarmament talks, which went no- about. Mr. Trump, in his typically bom- mistakes randomness for pattern, con-
bastic way, also promoted improved re- fuses correlation with causation and
that trade with North Korea. If China did not where. North Korea moved most of its trading
lations with Russia. Now this was evi- gives excessive rein to emotional and
do so, the U.S. said it is prepared to act unilater- network to China, and the Obama Administra- dence of collusion. cognitive biases.
ally against them by the end of the summer. In tion let the North Korea problem grow as it fo- Russian diplomats live in the U.S. and Notice I don’t say reporters and edi-
light of Warmbier’s death and the North’s prep- cused on other priorities. rub shoulders with countless Ameri- tors are so dumb they can’t free them-
arations for a sixth nuclear test, the U.S. can North Korea is now a few years away from cans. Such shoulder rubbing, if Trump selves from such errors. I say that such
now move with dispatch to use tougher sanc- fielding an intercontinental missile, and U.S. associates were involved, now is proof errors are their stock in trade.
tions to deprive those on that list from access options are dwindling. A pre-emptive mili- of crime. The original allegory of fast thinking,
to the international financial system. tary strike is the last resort because the Kim The Alar pesticide scare only took off of course, is the old folklore tale, “the
Skeptics are right that United Nations sanc- regime could kill millions in South Korea when activists whom Messrs. Kuran and emperor’s new clothes.” In his 1922
tions have done little to stop North Korea’s with conventional and nuclear weapons. But Sunstein label “availability entrepre- book “Public Opinion,” Walter Lipp-
weapons programs. But those sanctions are now that Beijing has been given the chance neurs” peddled deceptive claims to a mann explained how journalists reduce
credulous “60 Minutes.” We would complex, novel realities to off-the-shelf
far-less stringent than those that forced Iran to help and either refused or failed, the U.S.
probably not be having this Russia dis- “stereotypes.”
to the negotiating table. And a new report and its allies have to use every sanctions and cussion today if not for the so-called Or as a colleague once said of Stalin,
from the Washington research group C4ADS other tool available to prevent the Kim re- Trump dossier alleging improbable, lu- “[He] tries to force life into a ready-
suggests that the North’s trading network is gime from doing to millions what it did to rid connections between Mr. Trump and made framework. The more life re-
highly vulnerable to the new sanctions. Otto Warmbier. the Kremlin. sists . . . the more forcefully he mangles
It had no provenance that anyone and breaks it.”
was bound to respect or rely upon. Its Come to think of it, that’s not a bad
Free Speech for Sex Offenders alleged author, a retired British agent
named Christopher Steele, supposedly
way of describing how the D.C. anthill
has reacted to the unexpected, exotic,

U
nsympathetic plaintiffs serve a salu- “speaking and listening in the modern public had Russian intelligence sources, but high-risk, possibly providential experi-
tary purpose in the law, reminding square” (Packingham v. North Carolina). why would Russian intelligence blow ment of the Trump presidency.
the cover of their blackmail agent Mr. We mean every descriptor. His very
politicians and the public that princi- In a concurrence, joined by Chief Justice John Trump, whom they presumably so unsuitability, the mood of the American
ples must govern even in un- Roberts and Justice Clarence carefully and expensively cultivated? public that elected him, the obscure im-
savory circumstances. The A hard case that makes Thomas, Justice Samuel Alito They wouldn’t. passe of American politics that brought
U.S. Supreme Court rose to good First Amendment agreed that the law was over- Yet recall the litany of Rep. Adam him to power—all these signs deserve
the occasion on Monday, rul- broad but cautioned that the Schiff, who declared in a House Intelli- more respect than they’re getting.
ing 8-0 that the First Amend- law in the internet age. majority’s opinion may go too gence Committee hearing: “Is it possible His Torquemadas don’t and can’t
ment protects the right of far and discourage states from that all of these events and reports are know whether America’s democracy, in
even sex offenders to use so- enacting more narrowly tai- completely unrelated and nothing more the improbable Mr. Trump, found a le-
cial media. lored laws protecting minors. Justice Alito men- than an entirely unhappy coincidence?” ver to move it forward, but there’s
Lester Packingham was 21 years old when he tioned teenage dating sites or sites “where mi- His litany actually consisted of in- something repugnant in their desire not
nocuous, incidental and routine Trump to find out.
was convicted of statutory rape for having sex nors communicate with each other about
with a 13-year-old. In 2010 he posted a remark personal problems” as possible examples. But
about a traffic ticket on Facebook and ran afoul states must not “burden substantially more LETTERS TO THE EDITOR
of a North Carolina law that made it illegal for speech than is necessary to further the govern-
a sex offender “to access a commercial social ment’s legitimate interests,” he added.
networking Web site where the sex offender Justice Kennedy’s opinion also notes that
Qatar Responds to U.A.E., Saudi Charges
knows that the site permits minor children to the decision “should not be interpreted as bar- In his June 14 op-ed “Qatar Can- The ambassador writes that the
become members or to create or maintain per- ring a State from enacting more specific laws not Have It Both Ways,” United Arab U.A.E. did not act “in haste”
sonal Web pages.” than the one at issue. Specific criminal acts are Emirates (U.A.E.) Ambassador against Qatar, yet the U.A.E. never
Packingham challenged the law as an in- not protected speech even if speech is the Yousef Al Otaiba demands that Qa- brought any of its complaints to
fringement on his First Amendment right to use means for their commission.” The broad ban on tar be “all in” in the fight against the responsible entities at the Gulf
terrorism. I can assure him that we Cooperation Council (GCC) before
social media. The Justices agreed. Even if well using social media seems to have been North
are. The better question might be, launching aggressive diplomatic
intentioned, “the Government ‘may not suppress Carolina’s fatal mistake. where do the U.A.E. and the other and economic measures against us.
lawful speech as the means to suppress unlawful The internet poses new challenges for the nations currently boycotting Qatar Instead, as leaked emails show, the
speech,’ ” Justice Anthony Kennedy wrote for law, but the High Court’s unanimous and robust stand on this existential threat? ambassador and the U.A.E. govern-
the majority. Barring sex offenders from all so- defense of the First Amendment shows that tra- Ambassador Otaiba must cer- ment privately conspired against
cial media would block them from a source of ditional American rights still apply, as they tainly be aware that the United Na- Qatar in the shadows.
current events, potential employment and should no matter the media platform. tions and the U.S. Treasury Depart- It has become clear that the cur-
ment list 10 times as many rent campaign against Qatar is not
suspected terrorists and terrorist fi- about terrorism, Al Jazeera or any
The Tax-and-Spend Capitulation nanciers from the boycotting coun-
tries as from Qatar. Surely his excel-
of the other issues highlighted by
the boycotting nations. It is about

B
lency also remembers that the Qatar’s independence, which some
ruce Rauner spent a chunk of his personal boring states and repair its fisc. It includes U.A.E. was singled out in the 9/11 apparently view as a threat. We
fortune running for Governor in 2014 to nothing on right-to-work and little workers’ Commission’s report for its role in would like our brothers in the GCC
save Illinois from its tax-and-spend polit- compensation reform. It doesn’t give local laundering money to terrorists, and to know that we are a threat to no
ical class. More than two years governments the collective- that Emiratis, not Qataris, were one. But they should also under-
later it looks like the former A U.S. governor bargaining reforms they need among the hijackers who flew stand that Qatar is a sovereign na-
private-equity star has made cries uncle on taxes and it fails to solve the state’s planes into the Twin Towers. tion, and that we will not be bullied.
better investments. $130 billion or so in unfunded Ambassador Otaiba calls upon Qa- H.E. SHEIKH MESHAL
On Tuesday evening the and economic reform. pension liabilities. tar “to return to the community of BIN HAMAD AL-THANI
Governor with the worst job The Governor’s capitula- responsible nations,” and criticizes Ambassador of Qatar to the U.S.
in America explained why he tion may have been triggered television news channel Al Jazeera Washington
for inciting violence, though he fails
and his fellow Republicans have offered to by the latest downgrade by Moody’s and Stan-
to mention that the U.A.E. financed Instead of encouraging Saudi Ara-
raise taxes for the sake of ending a multiyear dard & Poor’s in the state bond rating to near the military coup that overthrew bia and the emirates to boycott Qatar,
budget impasse with Democrats. He said he’ll junk status, with a warning that another down- Egypt’s first democratically elected we should encourage tolerance and
accept a four-year increase in the flat state in- grade could come this summer. Mr. Rauner government, and that the U.A.E. al- compromise. Look at Israel. As much
come tax to 4.95% from the current 3.75%, ex- doesn’t want to run for re-election next year legedly bankrolled the coup plotters as Israel is opposed to Iran and
pand the sales tax and implement a cable and as Governor Junk. who attempted to overthrow the Hamas, it maintains a cordial relation-
satellite TV tax. But the rating agencies have never met a tax elected government in Turkey. ship with Qatar. Maybe Qatar could
This is a political defeat by any definition increase they didn’t like. They merely want to become the bridge for peaceful coex-
since Mr. Rauner campaigned on lowering the see more revenue coming in so they can judge istence of the two important factions
income tax to 3%, not on restoring the rate if bondholders will get repaid. The real threat Theresa, Come What May, in Islam, Sunnism and Shiism.
Instead of allowing ourselves to
close to what it was under the last Democratic to long-term bondholders is an unrestrained Didn’t Blame Anyone Else be drawn into sectarianism, we
Governor. The “temporary” 5% rate partially tax-and-spend political culture that drives
Regarding British Prime Minister should endeavor to work efficiently
sunset in December 2014. Democrats who run more people out of the state and pension liabil- Theresa May’s recent electoral wipe- with the two factions, especially if
the legislature refused to negotiate over a bud- ities ever upward. out (“Britain’s Lesson for Conserva- we want to bring peace in the Mid-
get unless Mr. Rauner agreed to a tax increase, The political tragedy is that Mr. Rauner tives,” Review & Outlook, June 12): dle East and eradicate terrorism.
and now they’re refusing to make notable didn’t make this mess; he was elected to clean Perhaps, to borrow from Churchill, PROF. HESKEL M. HADDAD
spending or economic reforms in return. it up. Former Governors Rod Blagojevich and this is her finest hour. I haven’t President
Mr. Rauner is also proposing to freeze prop- Pat Quinn, a crook and a schnook, borrowed heard her suggest that her loss was The World Organization of Jews
erty taxes and says the deal will reduce the some $17 billion through pension-obligation due to voter misogyny. Nor foreign From Arab countries
state’s backlog of unpaid bills by at least $4 bil- bonds. Since 2009 the state bond rating has influence. Nor her postnasal drip. New York
lion. The property-tax freeze could provide been downgraded 21 times. The biggest culprit Nor any of the 10,000 excuses that
last year’s losing American presi-
some election contrast with Democrats. But a is state House Speaker Michael Madigan, who Letters intended for publication should
dential candidate gave for her cam- be addressed to: The Editor, 1211 Avenue
freeze isn’t a reduction from already sky-high fronts for the government unions. paign mismanagement. of the Americas, New York, NY 10036,
property levies, and the current backlog of un- Mr. Madigan hasn’t said if he’ll accept Mr. I’m happy to report to the British or emailed to [email protected]. Please
paid state bills is $15.1 billion. Rauner’s offer, and perhaps he’s holding out for people and the world that Theresa include your city and state. All letters
The bigger problem is that his proposed even more concessions. Mr. Rauner may come May is no Hillary Clinton. are subject to editing, and unpublished
deal includes almost none of the reforms Illi- out the political loser, but the citizens of Illi- GREG DEBSKI letters can be neither acknowledged nor
returned.
nois desperately needs to compete with neigh- nois will suffer the most. Howell, N.J.
THE WALL STREET JOURNAL. Thursday, June 22, 2017 | A11

OPINION

Congress and Obama Depleted the U.S. Military

By Dick Cheney power; the basis of how we defend the analyses and concluded this is the
And Liz Cheney homeland, advance U.S. interests, and amount necessary in 2018 to begin

N
meet our alliance commitments.” rebuilding the military. This figure is
orth Korea is making The situation President Trump in- a floor, not a ceiling.
alarming progress in its herited is dire. America today faces For context, compare it with the
ballistic-missile and nu- an array of threats more serious and projections from the Pentagon’s fiscal
clear-weapons programs. complex than at any time in the past 2012 budget. Because this was the
China and Russia are de- 75 years. last budget prepared prior to the
veloping and fielding advanced weap- President Obama and his policies Budget Control Act, it was also the
ons against which the U.S. may not be are largely to blame. The 2011 Budget last one based on assessing the
able to defend. Al Qaeda operates in Control Act, which mandated across- threats America faces and what

AGENCE FRANCE-PRESSE/GETTY IMAGES

more countries than ever. Islamic the-board cuts, known as sequestra- would be needed to meet them.
State is targeting the West and tion, at a time when threats were It projected a base defense budget
launching attacks throughout Europe growing, has also done serious dam- of $661 billion for 2018. That assess-
and the Middle East. Iran is support- age. “No enemy in the field,” Mr. Mat- ment was made before Islamic State
ing terrorist organizations across the tis told lawmakers, “has done more to arose in the Middle East, before North
globe, modernizing its ballistic-missile harm the combat readiness of our mil- Korea’s recent progress on nuclear
and other capabilities and likely con- itary than sequestration.” weapons and ballistic missiles, before
tinuing to pursue nuclear weapons. What have eight years of Mr. Russia invaded Ukraine, before China’s
Obama’s policies, and six years of the aggression in the South China Sea,
Budget Control Act, wrought? The and before Mr. Obama’s indefensible
The Trump budget would military superiority America relied U.S. and Australian soldiers at a military exercise in the Philippines on May 8. nuclear agreement with Iran.
on after the end of the Cold War has Rebuilding the military isn’t a one-
increase spending only 3%. been seriously eroded, our capabili- Rebuilding America’s defenses will tial areas, including $300 million year project. To undo the damage of
With today’s threats, ties diminished. In the past three require a massive, concerted and from missile defense and $1 billion the Obama era and provide for Amer-
months alone, military leaders have long-term effort that must begin to- from Navy shipbuilding. ica’s security in a world of increas-
that’s not nearly enough. testified that: day. Mr. Trump rightly promised to In sum, the 2018 White House de- ingly threatening adversaries, Con-
• The Army is “outranged, out- do this during last year’s presidential fense budget differs little from what gress must dedicate itself to
gunned, outdated,” with only three of election. Unfortunately, the White Mr. Obama would have requested providing significant resources for
U.S. Defense Secretary Jim Mattis 58 brigade combat teams ready to House budget submitted to Congress were he still president. many years to come.
told the House Armed Services Com- “fight tonight.” earlier this month fails to provide the If Congress is serious about pro- Providing for the defense of
mittee last week that the U.S. is los- • The Navy is the smallest and necessary resources. viding the resources necessary to de- America is the most sacred constitu-
ing the military edge on which our least ready it has been in modern The White House has requested fend America, lawmakers must do tional obligation of the U.S. Con-
security has long relied: “Today, ev- times. Fewer than half the Navy’s air- only 3% more funding for defense two things: pass a base defense bud- gress. If it fails in this, no balanced
ery operating domain—including craft can fly because so many are than Mr. Obama’s proposed 2018 get for fiscal 2018 of at least $640 budget, no health-care reform, no
outer space, air, sea, undersea, land grounded for maintenance or because budget, meaning the Pentagon would billion, instead of the $603 billion the tax reform, no entitlement reform
and cyberspace—is contested.” they lack spare parts. essentially tread water for at least a White House requested; and repeal will matter. If lawmakers fail to pro-
Gen. Joseph Dunford, chairman of • The Air Force is the oldest and year—time the U.S. cannot spare in the Budget Control Act to eliminate vide the resources necessary for the
the Joint Chiefs of Staff, seconded smallest it has ever been, and less this threat environment. Instead of the arbitrary spending caps and dev- defense of the nation, nothing else
that worry in written testimony for than half of its combat forces are suf- leading the effort to repeal the Bud- astating sequestration. they do will matter.
the same hearing: “Without sustained, ficiently ready to fight tonight. get Control Act, the White House The figure of $640 billion comes
sufficient and predictable funding,” he • The Marine Corps is insuffi- budget envisions extending it by six from the House and Senate Armed Mr. Cheney was vice president
wrote, “I assess that within five years ciently manned, trained and equipped years, to 2027. The president’s budget Services committees, which over the from 2001 to 2009. Ms. Cheney is Wy-
we will lose our ability to project across the depth of the force. also cuts funding in absolutely essen- past year have conducted in-depth oming’s U.S. representative.

A Better Model for European Defense

By Elisabeth Braw vestments. The commission’s presi- making our armed forces more effec- tent headache in multinational ac- suggests a limited geographical focus

L
dent, Jean-Claude Juncker, has gone tive while using the same amount of quisitions. And the two countries de- as another starting point. The
ast fall Sweden practiced de- further, proposing that the EU inte- resources,” said Niklas Granholm, a pend on each other for training and Franco-German led operation in Mali
fending its Baltic Sea island of grate its armed forces. This week Swedish defense analyst. Bilateral in- maintenance. France and the U.K., could expand into an EU African
Gotland from invasion by a EU leaders will meet to discuss a tegration saves money by maximiz- meanwhile, are seven years into a bi- command, he says. Starting small
powerful enemy. But the Swedish more-modest version of that con- ing capabilities. lateral agreement that includes a works in the military, too.
Air Force didn’t use its own crews cept: joint military missions, use of While no modern country pairing joint expeditionary force. Joint acquisitions could also ad-
and aircraft to play the red side, EU battle groups and an EU pool of has gone as far as Sweden and Fin- Other European countries could vance integration. Denmark, Italy,
leaving that role to the Finnish Air helicopters. land, Belgium and the Netherlands adopt the Swedish-Finnish model, the Netherlands, Norway and the
Force. Sweden and Finland are inte- Their modesty is understandable: but the challenge is national pres- U.K. are buying the F-35 joint strike
grating their armed forces, and the An alliance that operates 177 weap- tige: It takes a certain amount of hu- fighter. If these countries can break
burden-sharing goes far beyond ons systems would struggle to inte- Instead of waiting for mility for decision makers to give up the bad habit of insisting on national
playing the enemy in exercises. It’s grate even small sections of its an EU army, member some control in exchange for added variations, it would go a long way to-
a better model for efficient defense armed forces. Add to that some capabilities. Success also requires a ward building a partly integrated air
than an EU army. members’ skepticism of anything re- countries could form history of armed-forces collabora- force. Collective decision making is
Europe’s militaries are notoriously sembling an EU army. their own integrated tion, including joint exercises. And as tricky, but a partially integrated air
wasteful and woefully underfunded. But European countries can no lon- retired Gen. Vincenzo Camporini, an force would give each country more
The European Union’s member states ger ignore their inefficiencies. “We armed forces. Italian former chief of defense, value for its investment.
spend an average of 1.3% of gross do- have big shortages of deployable points out, military integration re- There’s another reason the time
mestic product on defense, compared troops and available planes,” Mr. Rob- quires a common foreign policy. is ripe for bottom-up European
to 3.6% by the U.S. EU members also ertson said. “That won’t be solved operate a joint navy. “When operat- But for countries that have en- armed-forces integration. Two gen-
have a multitude of weaponry, but it through new battle groups.” ing the ships, it means you’re 100% joyed many years of close relations erations ago, few troops were fluent
suffers from enormous disarray: Sweden and Finland-style integra- interoperable and standardized,” and have similar equipment, armed- in another language. Today almost
There are 177 weapons systems tion would be a much more viable so- said Dick Zandee, a former head of forces integration can be a highly every officer speaks English. The in-
among members, while the U.S. only lution. Discussions between the two policy and planning at the European practical solution. A combined tegrated Swedish and Finnish units
has 30. “We Europeans spend on de- countries began a decade ago but Defense Agency who is now a senior Czech and Slovak air force would, communicate in English, as does the
fense,” observed George Robertson, sped up after Russia seized Crimea. fellow at Clingendael, the Nether- for example, multiply the two neigh- Dutch-Belgian navy. “Integration is
the former NATO Secretary-General The two air forces are in the process lands Institute of International Re- bors’ power. Lithuania could maxi- possible with English as the work-
and U.K. Defense Secretary. “We just of integrating, and the navies have es- lations. “In theory, you can even mize its capabilities by integrating ing language,” said Mr. Zandee.
need to spend more wisely.” tablished a task group. swap crews.” parts of its armed forces with Po- “Even French commanders are fine
Earlier this month, the European Each country can use the other’s The Belgians and the Dutch have land, while Poland would gain well- with English.”
Commission announced a €5.5 bil- exercise ranges and landing fields, already bought minehunters and trained troops.
lion ($6.13 billion) defense fund that and troops may be commanded by frigates together without insisting Countries could also team up with Ms. Braw is a nonresident senior
will coordinate defense-research in- officers from the other side. “This is on national specifications, a consis- the existing pairs. Mr. Camporini fellow at the Atlantic Council.

The Experts Want Kids to Have a Fun-Free Summer

By Lenore Skenazy I was unable to find the EPA’s Why take them to the beach at all? cause . . . well, everyone is obsessed wrong sort of water. Google “hose wa-

I
granular list of caveats. But the blog’s Keep them at home on a hard, nonpo- with “hydration” these days. ter” and you will be deluged with sto-
t’s summer! Time to dig in the author, Karl Neumann of the Ameri- rous surface, free of dirt and obsta- It’s always seemed to me that drink- ries linking the stuff to just about ev-
sand, gulp from the hose, play at can Academy of Pediatrics, lays out cles, checking frequently for venom- ing when thirsty does the trick. No. ery illness except gout. Some study,
the park, and leap with joy. his own don’ts: “Studies show that ous spiders, disease-bearing insects Now there’s a new product on the mar- endlessly reported, found that hose
Unless you’re a kid—in which case, children playing in the sand are more and sewage. Children should be in ket called Gululu, which is a water bot- water contained “PVC plastic addi-
find yourself a comfy sofa in a dark, likely to become ill than children steel-toed work boots at all times, as tle with a Wi-Fi connection. The Gululu tives, which can cause birth defects,
quiet room and settle in. This is the merely walking on it. And the risk of well as oven mitts and chain mail. liver toxicity, and cancer.” Naturally, in
season your parents are bombarded illness increases with digging in the But even that isn’t enough. Simply these stories there is no mention of
with the kind of warnings previously sand, being ‘buried’ in it, and digging keeping the kids at home doesn’t en- Digging in wet sand is how many cisterns of water a child
associated with incoming torpedoes. in wet sand.” sure they’re safe, especially if they would have to guzzle for any of these
The basic message: Don’t have fun, Got it. Keep your kids on dry sand. make it into the backyard. Parents dangerous. ‘Dry sand issues to ever develop.
it’s too dangerous. No, wait: “Dry sand presents prob- magazine warns that “bees are at- presents problems, too.’ Being a kid these days is no walk
Yes, that would be the same kind lems, too.” So, Mr. Neumann warns: tracted to flowers, so don’t put fra- in the park. But that’s just as well.
of summer fun your parents end- “Discourage children from lying di- grances or floral-patterned clothing And don’t ask about water. Yet another Parents magazine mas-
lessly reminisce about. “Remember rectly on the sand.” on kids.” Surely you’ve seen swarms terpiece warns that to keep children
when digging in the sand at the While you’re at it: “Walking bare- of bees chasing children in floral safe at the playground, you should
beach was a fun activity for young footed is another ‘don’t.’ Have chil- prints, convinced they are flowering app allows parents to monitor how “walk away if you see cement, as-
children,” says the website Kids- dren wear lightweight, ventilated, shrubs in work boots? much water their child is drinking. The phalt, dirt, or grass: These surfaces
TravelDoc. “Sorry. No more. Based hard-soled footwear that covers the The American Academy of Pediat- cagey gadget even knows if the kids are linked to head injuries.”
on recent findings, only with lots of toes. This helps prevent stubbed toes, rics, meanwhile, suggests that if your are secretly not drinking—pouring out So are walls, if you bang your
do’s and don’ts is frolicking in the lacerations, puncture wounds, and moppets still insist on playing out- water to stop their parents from tex- head against them. My summer ad-
sand a healthy activity, says the U.S. burns from hot sand. Ideally, foot- side, the little daredevils at least ting them to drink more. vice to parents is therefore short
Environmental Protective [sic] wear should be worn for wading in “limit sun exposure during the peak To make the sipping less oner- and sweet. Tell your kids they can’t
Agency.” the water.” intensity hours—between 10 a.m. and ous—it really does get tiring if you’re swim alone, get into a stranger’s car,
4 p.m.” That shouldn’t put a crimp in not thirsty—an animated character or let their parents buy them a high-
anyone’s day, should it? on the bottle’s built-in screen grows tech water bottle.
The academy is afraid that kids happier and healthier the more the And then stop reading other
PUBLISHED SINCE 1889 BY DOW JONES & COMPANY will get too much sun. It’s also afraid child drinks. Let’s hear it for more safety tips.
Rupert Murdoch Robert Thomson they’ll get too little sun and end up screen time!
Executive Chairman, News Corp Chief Executive Officer, News Corp with rickets. A related fear is that Gululu’s other advantage is it keeps Ms. Skenazy is founder of Free-Range
Gerard Baker William Lewis kids won’t get enough water be- the little ones from drinking the Kids and a contributor to Reason.com.
Editor in Chief Chief Executive Officer and Publisher

Matthew J. Murray DOW JONES MANAGEMENT:

Notable & Quotable: A Lesson of the 1967 War

Deputy Editor in Chief Mark Musgrave, Chief People Officer;
DEPUTY MANAGING EDITORS: Edward Roussel, Innovation & Communications;
Michael W. Miller, Senior Deputy; Anna Sedgley, Chief Operating Officer & CFO;
Thorold Barker, Europe; Paul Beckett, Katie Vanneck-Smith, President
Washington; Andrew Dowell, Asia; OPERATING EXECUTIVES: The Hudson Institute’s Michael lies, were abysmal. Why would a proved a very smart bet. In 1967, how-
Christine Glancey, Operations; Ramin Beheshti, Product & Technology; Doran, testifying before the United leader in such a precarious position ever, it utterly failed—with disastrous
Jennifer J. Hicks, Digital; Jason P. Conti, General Counsel;
Neal Lipschutz, Standards; Alex Martin, News; Frank Filippo, Print Products & Services; Nations Security Council about the behave so recklessly? consequences for Egypt—to say noth-
Shazna Nessa, Visuals; Ann Podd, Initiatives; Steve Grycuk, Customer Service; 50th anniversary of the Six Day War, The revisionists have much of the ing of the Palestinians. How much bet-
Matthew Rose, Enterprise; Kristin Heitmann, Transformation; June 20: story right but they miss a crucial fac- ter would it have been for all parties
Stephen Wisnefski, Professional News Nancy McNeill, Advertising & Corporate Sales;
Jonathan Wright, International tor. Nasser was applying lessons that if, back in 1956, the United Nations
Paul A. Gigot, Editor of the Editorial Page;
Daniel Henninger, Deputy Editor, Editorial Page
DJ Media Group: May I again remind you of the ex- he learned a decade earlier, during the had insisted that, in return for an Is-
Almar Latour, Publisher; ample of [Egypt’s] Gamal Abdel Nas- Suez Crisis. Then, as in 1967, he had raeli withdrawal from Egyptian terri-
WALL STREET JOURNAL MANAGEMENT: Kenneth Breen, Commercial
Suzi Watford, Marketing and Circulation; Professional Information Business: ser? A revisionist school of historiog- precipitated a war that he could not tory, Nasser must grant Israel mean-
Joseph B. Vincent, Operations; Christopher Lloyd, Head; raphy claims that he never wanted possibly win militarily, but which he ingful security guarantees?
Larry L. Hoffman, Production Ingrid Verschuren, Deputy Head war in 1967. His best military units believed he could win politically, be- The key lesson of 1967 war is that
EDITORIAL AND CORPORATE HEADQUARTERS: were bogged down in Yemen, his econ- cause, he gambled, the superpowers peace is best achieved not by United
1211 Avenue of the Americas, New York, N.Y., 10036 omy was a shambles, and his relations and the United Nations would inter- Nations intercession but by facilitating
Telephone 1-800-DOWJONES
with Jordan and Syria, his putative al- cede on his behalf. In 1956, that direct negotiations between the parties.
A12 | Thursday, June 22, 2017 THE WALL STREET JOURNAL.

LIFE & ARTS

THE MIDDLE SEAT | By Scott McCartney

The Case for Privatizing Air-Traffic Control

The argument for splitting the FAA is based on how Canada, the U.K., and others have made flying better for travelers
POLITICS ASIDE, travelers really paying the full load for big bureau-
should want—demand—a privat- cracy through hefty taxes on their
ized air-traffic control services tickets. On a $400 domestic
provider. Many other countries round-trip ticket with a connec-
have shown that it just plain tion, you pay $46.40 in FAA taxes
works better than having a gov- and fees. In addition, airlines pay a
ernment bureaucracy directing air- fuel tax of 4.3 cents a gallon and a
planes. tax of 6.25% on cargo and mail.
Air-traffic control, known as Privatized ATC organizations
ATC, depends on technology. Bet- charge user fees instead of taxes.
ter tools can improve safety, (There likely would still be some
shorten flights, get planes out of ticket tax to cover safety regula-
turbulence faster and reduce de- tion and airport improvements.)
lays. And privatized ATC providers There are required international
in Canada, the U.K., Australia and guidelines on charges so fees don’t
elsewhere have shown they can get out of hand and limit travel. In
modernize and continuously up- many cases, charges end up get-
grade faster than the Federal Avia- ting reduced as organizations get
tion Administration. more efficient and traffic in-
On some key functions, the FAA creases.
is more than a decade behind. Rural representatives are wor-
The Transportation Depart- ried that airport improvement
ment’s inspector general, Calvin funding from the FAA might dry
Scovel, told Congress in May that up, and that fees for private avia-
while the FAA is doing better with tion would make it harder to get
modernization, two decades of re- medical flights and business-jet
form efforts have still fallen short. trips important to their communi-
FAA Administrator Michael ties. Small private-plane owners
GETTY IMAGES

Huerta, an Obama appointee, and worry they’ll be hit with user fees
other senior officials in the every time they practice landings
trenches on air-traffic control say in a Cessna 172.
the FAA just isn’t structured to be Providers have concluded that
a high-tech developer and opera- Strong headwinds can lead to landing delays at congested airports like Los Angeles International. New technology in making small planes pay small fees
tor. They argue splitting the use at London’s Heathrow Airport had dramatically reduced those delays. It will take years to reach the U.S. is a billing nightmare and would
agency would let it focus on safety reduce safety. You don’t want pri-
regulation of airlines and air-traf- world. Strong headwinds cause big technology and cut costs—13% communicating with airborne vate pilots avoiding air-traffic con-
fic controllers instead of the po- delays: If planes are spaced 5 over the past 11 years. planes by text won’t come until trollers to save money. So service
tentially conflicting role of being miles apart and it takes longer to Flying in remote areas of Can- 2019 at the earliest. providers charge a one-time, re-
the watchdog over its own control- fly the 5 miles, fewer land each ada, pilots send text messages to Privatization was first proposed quired annual fee. In Canada, the
lers. The controllers’ union also hour and some end up circling in controllers and get electronic re- in Congress in 1974, but then and annual fee for small propeller air-
supports the idea after seeing the holding patterns. So NATS Hold- sponses. Requests for altitude every time since it has failed to craft is aviation’s best bargain:
technology other countries are us- ings Ltd., the United Kingdom’s changes are automatically checked gain support. Sometimes Republi- C$65, or about $49.
ing and facing the threat of fur- privatized air services provider, for conflicts before they even pop cans like the idea; sometimes Others argue airlines would
lough in past budget showdowns. developed a tool to let controllers up on controllers’ screens. One Democrats. Rep. Bill Shuster, Re- have too much control. That de-
Privatized ATC organizations easily optimize spacing by time, mouse click can approve a request, publican chair of the House trans- pends on how you set up the
say their big advantage, in addi- not distance. When the tool went update the plane’s flight plan and portation and infrastructure com- board of directors. In Canada, air-
tion to steady funding and borrow- into use in 2015 after two years of alert other controllers. It’s faster, mittee, proposed legislation in lines get four seats on a 15-mem-
ing, is that they can continuously development, headwind delays more efficient and more accurate 2016. It never got out of commit- ber board.
take on small projects that make were reduced by 50%. than U.S. procedures, and results tee. Some complain that sending
incremental improvements. When Time-based separation could in better flights for passengers. Legislation is being drafted government assets to a company
you’re a government agency beg- have a big impact at large U.S. air- The FAA has implemented digi- again, with White House backing. would be a huge giveaway. Yet the
ging for appropriations, you pitch ports. But it won’t be operational tal communications at 55 major Proponents say they are making current FAA infrastructure was
big, attention-getting programs. for arrivals and approach until fis- airports to deliver flight plans on progress addressing many of the paid for by travelers and shippers.
But big projects are exponentially cal year 2022 at the earliest. the ground. That saves time, espe- criticisms of past proposals. But If the new ATC organization had to
more complex and prone to delay. Canada privatized its ATC oper- cially in stormy situations where the headwinds will again be stiff. buy the assets from the govern-
Take London’s Heathrow Air- ations more than 20 years ago and lots of flights are getting new Opponents warn of higher ticket ment, travelers and shippers
port, one of the busiest in the has since leapfrogged the U.S. in routes, and can reduce errors. But prices. But passengers are already would be paying for it again.

Weather The WSJ Daily Crossword | Edited by Mike Shenk

Shown are today’s noon positions of weather systems and precipitation. Temperature bands are highs for the day.
-15 1 2 3 4 5 6 7 8 9 10 11 12 13 67 Lummox 28 1998 home run
-10 race participant
Riga
g -5 14 15 16 68 Does in forests
Glasgow
w Copenhagen
C p h g Moscow
oscow 0 69 Bolts 30 Mollify
17 18 19
5
70 Mouths off 32 Killer of Paris
10 20 21 22
D bli
Dublin Down 33 Backwoods brew
15
Berlin Warsaw
arsaw 23 24 25 26 27 28 35 Pooh’s pal
A d
Amsterdam 20 1 Menacing
London
Lond
25 29 30 31 36 Interminable wait
2 Free of friends
Brussels Frankfurt
k 30
Prague
Pra Kiev
e
32 33 34 35 36 37 38 3 Nation on the 37 Agcy. that won
35
Mediterranean the 1969 Nobel
P
Paris Munich
i h
Vienna
V
39 40 41 Peace Prize
Warm 4 R&D locale
Geneva
Budapest 42 43 44 39 Suffer from the
Cold 5 Alerts akin to heat
Milan Bucharest
h Stationary 45 46 47 48 BOLOs
40 “Bonanza” or
49 50 51 52 53 54 55 56 6 “Sherry” singer “Rawhide”
Showers
Rome Istanbul
t b 7 “Tricksy spirit” 41 Expert
57 58 59 60
Madrid
d id Rain of drama
61 62 63 64
46 “Get off my
Lisbon
L b 8 1983 title role lawn!” shouter
T-storms
65 66 67 for Barbra
Algiers
Tunis
T i Athens
Ath 48 Airing
Snow 9 Recipe direction
68 69 70 50 Amazon field
Flurries 10 Many a
Rabat
b marathon 51 Dealership
Ice FOUR BEARING | By Alan Arbesfeld champion document
Global Forecasts City Hi
Today
Lo W
Tomorrow
Hi Lo W City Hi
Today
Lo W
Tomorrow
Hi Lo W
Across 22 “The 43 Myriad 11 Panhandlers? 52 Scoundrel
s...sunny; pc... partly cloudy; c...cloudy; sh...showers; 1 Leaves time? Fountainhead” 44 Enterprise 54 Musk product
Geneva 32 19 pc 32 18 t Ottawa 25 16 pc 24 15 r 12 Brite Liner brand
t...t’storms; r...rain; sf...snow flurries; sn...snow; i...ice Hanoi 35 28 t 34 28 t Paris 36 16 pc 28 14 s
cover name inits.
5 Big name in 13 Bugler in the 55 Walk steadily
Havana 33 24 pc 32 24 pc Philadelphia 32 24 pc 32 23 t Internet 23 Eschew
Today Tomorrow Hong Kong 32 27 t 31 28 t Phoenix 45 31 s 45 32 pc 45 Geometry wild 56 Sites of some
City Hi Lo W Hi Lo W telephony tech ignorance measure
Honolulu 30 23 pc 29 23 pc Pittsburgh 29 20 t 25 17 t
18 Difficult sales
Amsterdam 27 16 t 22 16 pc Houston 28 25 r 32 25 t Port-au-Prince 35 24 pc 35 23 pc 10 Honshu city 25 Reason to cancel 47 On the side of
Anchorage 16 10 c 15 9 pc Istanbul 27 20 s 28 22 s Portland, Ore. 27 13 s 30 16 s situation 59 Breyers
popular with a Peruvian pack
Athens 31 22 s 32 22 s Jakarta 33 24 sh 31 24 sh Rio de Janeiro 24 20 pc 25 19 pc
train? 49 Why some 22 Literary middle competitor
Atlanta 27 23 t 31 23 c Johannesburg 20 3 s 18 2 s Riyadh 42 27 s 41 25 s steak fans
people visit an name 61 Cabbage roll?
Baghdad 38 24 s 40 26 s Kansas City 32 20 s 28 15 t Rome 29 18 s 29 19 pc 14 Lee who 29 Targets of aquarium?
Baltimore 33 23 pc 29 22 t Las Vegas 46 31 s 45 31 s Salt Lake City 32 15 s 32 17 s browser blockers 24 Precipitate 62 Groundbreaking
Bangkok 34 26 t 34 26 t Lima 22 16 pc 22 16 pc San Diego 24 19 pc 24 19 pc
managed the
Cubs and 53 Cockamamie implement
Beijing 24 19 t 25 19 sh London 26 15 pc 25 16 pc San Francisco 28 16 s 25 14 pc 31 Current event? 26 Opened
Berlin 30 17 t 23 16 pc Los Angeles 29 18 pc 27 18 pc San Juan 30 25 pc 31 25 sh Phillies 57 2013 film 63 Pound sound
Bogota 19 9 r 19 10 r Madrid 38 22 pc 38 20 s Santiago 11 6 r 13 6 c 32 Apt. count nominated for 27 Lake Titicaca’s
Boise 28 12 s 29 14 s Manila 34 26 t 34 26 t Santo Domingo 33 23 pc 32 23 pc 15 Dealt with locale 64 Slick
budgetary 34 Tater Tots Best Picture
Boston 27 19 pc 29 21 t Melbourne 15 7 c 15 8 pc Sao Paulo 21 14 pc 22 13 s
Brussels 33 15 t 26 14 pc Mexico City 28 12 pc 28 13 pc Seattle 24 12 s 25 14 s bloat trademarker 58 Article of faith Previous Puzzle’s Solution
Buenos Aires 22 16 c 21 13 c Miami 32 26 pc 33 26 pc Seoul 28 20 pc 31 21 pc 38 Some NFL
Cairo 33 22 s 34 22 s Milan 35 21 pc 36 21 pc Shanghai 26 24 r 28 24 t 16 Maleficent 60 Important time N
A
O
C
C
R
H A S E
O S T I
R
C
F
T
AM I L Y
R I V I A
Calgary 15 7 c 16 7 pc Minneapolis 23 14 t 22 13 s Singapore 31 26 t 31 26 t
highlight reel
17 Totally fleece features 61 Expert B
O
E
L
A
D
C H E S
Y E N
A N
E
D
I
C R E AM
S H I M
Caracas 32 26 pc 31 26 s Monterrey 41 22 pc 41 22 s Stockholm 20 9 pc 21 12 c
Charlotte 27 21 c 31 23 c Montreal 25 17 sh 26 16 r Sydney 18 10 pc 18 9 s
bluesman 63 One telling you B O L A R E L A X C A S E
King? 39 “Yippee, that T E R M R O T T U D O R
Chicago 32 19 pc 28 15 t Moscow 17 9 sh 18 8 pc Taipei 34 26 pc 34 26 pc
delicious Chinese how to go? B A Y G E L A T I N S
Dallas 33 24 pc 35 24 pc Mumbai 32 28 t 32 27 t Tehran 37 22 s 36 21 s 19 Make out S H O R E F I R E H I T S
Denver 32 13 s 25 11 pc Nashville 26 22 r 28 21 t Tel Aviv 28 20 s 28 21 s brew!”? 65 Prime S P O R E S A C D O C
Detroit 31 22 t 28 16 t New Delhi 32 25 pc 33 25 pc Tokyo 27 20 pc 27 21 pc 20 Whichever 42 Texter’s “If you 66 Like venture
L
U
O
R
P
S
E S
A
C
S E
A T
L E S
E L L E
E A R N
Dubai 41 30 s 41 31 s New Orleans 30 25 r 31 25 t Toronto 24 19 t 25 14 r G T O I O U C H I C A A
Dublin 19 13 pc 20 11 c New York City 28 22 pc 30 22 t Vancouver 20 10 s 22 13 s 21 Key ask me...” capital investing G I V E S U P T H E C O A S T
Edinburgh 20 13 c 18 10 c Omaha 33 16 pc 26 13 pc Washington, D.C. 33 24 pc 29 23 t E V E N T S U N D E R S E T
Solve this puzzle online and discuss it at WSJ.com/Puzzles.
s

Frankfurt 34 20 t 30 16 pc Orlando 32 22 t 32 23 pc Zurich 33 18 pc 32 15 t R E R O S E G O S T E A D Y

Share Your Favorite

WSJ Articles from
WSJ.com

© 2017 Dow Jones & Co. Inc. All rights reserved. 6DJ5617
 TECHNOLOGY: WAL-MART WANTS VENDORS TO GET OFF AMAZON’S CLOUD B4

BUSINESS & FINANCE

© 2017 Dow Jones & Company. All Rights Reserved. THE WALL STREET JOURNAL. Thursday, June 22, 2017 | B1

Euro vs. Dollar 1.1144 À 0.07% FTSE 100 7447.79 g 0.33% Gold 1243.40 À 0.19% WTI crude 42.53 g 2.25% German Bund yield 0.267% 10-Year Treasury yield 2.156%

Tokyo Leads Race for Toshiba Unit Bigger

BY TAKASHI MOCHIZUKI work Corp. of Japan, said it is
pursuing the deal because
slightly more than ¥2 trillion
($18 billion), and the Japa-
Is Better
TOKYO—The Japanese gov- “there is significant social nese government-backed in-
In Bond

TOMOHIRO OHSUMI/BLOOMBERG NEWS

ernment seized the lead role in value for this technology and vestors would own more than
buying Toshiba Corp.’s chip business to remain in Japan.” half of the unit.
unit after expressing concerns The Toshiba memory chips are Closing the deal won’t be
about technology leaking to
China, but a legal fight could
hold up a deal.
used in Apple Inc.’s iPhones as
well as computers that are the
backbone of internet services.
easy. Toshiba’s chip business
partner, Western Digital Corp.,
which says it has the right to
World
Toshiba, seeking to hasten a Fast-growing demand and veto any transaction, has filed
sale that it hopes can raise security concerns are turning a request for binding arbitra- BY JON SINDREU
about $20 billion, said the semiconductor business tion and separately asked a
Wednesday it had chosen as its into a battlefield among gov- state court in California to Giant bond firms increas-
preferred bidder a consortium ernments of the leading eco- Toshiba hopes to raise $20 billion from selling its chip business. block any deal. In a statement ingly are taking on a price-set-
that includes a state-backed nomic powers. China has said Wednesday after Toshiba’s an- ting role in global debt mar-
investment fund and a state- it would funnel tens of billions Development Bank of Japan venting technology leakage nouncement, Western Digital kets, elbowing aside big banks
owned bank. The company is of dollars into buying semicon- and U.S. private-equity firm and keeping jobs at home. reiterated its claims and said it facing tighter postcrisis regu-
trying to stay afloat after the ductor technology overseas Bain Capital. SK Hynix Inc., a Toshiba said it wants to looks forward to a court hear- lation and generating con-
bankruptcy of its U.S. nuclear and developing it domestically. South Korean chip maker, said conclude an agreement with ing July 14. cerns about the toll paid by
subsidiary, Westinghouse Elec- That has unsettled other pro- it would join as a lender. the group by next Wednesday, Satoru Oyama, an analyst at smaller investors.
tric Co., left it with an esti- ducers, and the governments Japan’s industry minister, the day of the company’s an- research firm IHS Markit, pre- What trading banks still do
mated loss of nearly $9 billion of the U.S. and Taiwan have Hiroshige Seko, hailed the an- nual shareholder meeting. dicted that the court fight is directed at bigger funds, say
for the year ended March 31. blocked some Chinese bids. nouncement, saying the gov- Details of the bid weren’t would stymie Toshiba’s goal of bankers and fund managers.
The state-backed invest- Also in the consortium are ernment-backed bid met the disclosed. One person briefed getting cash from the sale Smaller funds have less ser-
ment fund, Innovation Net- the 100% government-owned conditions he had set for pre- on the offer said it totaled Please see CHIPS page B4 vice and higher costs in trad-
ing, say many money manag-
ers who work for them.
HEARD ON While bigger bond inves-
tors have long had advantages,
THE STREET
the differences have become
By Nathaniel Taplin more pronounced.
“There’s no question that

Oil Story bank balance sheets are much

more constrained than they
used to be,” said Scott Clem-

Is Different ons, chief strategist at Brown

Brothers Harriman & Co.,
which oversees $54 billion,

This Time and this “has shifted the rela-

tive importance of players in
the market.”
It’s offi- What’s happening in bond
cial—oil is in markets would be similar to a
a bear market retail sector in which wholesal-
following ers—a role played by banks in
Tuesday’s 2% financial markets—were scal-
fall, taking ing back their business. Small
prices 21% below late-winter retailers would struggle to
highs. The Organization of stock up, but big-box stores
the Petroleum Exporting with their mega warehouses
Countries’ high hopes for and access to international
crude have been shredded by producers would get by fine.
the sharp claws of resurgent Before the financial crisis,
U.S. shale. Jay Sommariva, portfolio man-
It has been a nasty few ager at Fort Pitt Capital Group,
weeks for oil investors. The a Pittsburgh firm that manages
J.B. FORBES/TNS/ZUMA PRESS

International Energy Agency $1.5 billion, would call a few

last week cast doubt on banks to sell a bond and it
OPEC’s ability to do “what- would be snatched up within
ever it takes” to drain mas- hours, he says. Now, he says, it
sive global crude stocks, cit- takes at least a couple of days,
ing American shale and the cut that the bank takes
production. Given the is much greater.
world’s huge supply of For every billion dollars of
crude, prices will likely Traders say the online auction isn’t providing the promised reality check for prices in the cattle-futures market. An auction in Vienna, Mo. bonds outstanding in U.S. mar-
struggle to head much kets, dealer banks held only $8

Online Cattle Auction Needs a Jolt

above $60 a barrel regard- million in stock in 2016, one-
less of what Saudi Arabia third the amount in 2008, ac-
and its allies do. cording to the Federal Reserve
The question then be- and the Securities Industry
comes: How low can they Exchange meant to bolster opaque futures market battles breakdowns, low participation and Financial Markets Associa-
go? A collapse back toward tion. This change has made
2016 lows below $30 a bar- BY BENJAMIN PARKIN auction isn’t providing the swings that we’ve seen,” said know about the fundamentals, trading choppier, research
rel remains unlikely, for two promised reality check for Justin Tupper, a cattle rancher and say, ‘Are we on two differ- published by the Fed last
key reasons. An online auction meant to pricing in the $19 billion cat- in St. Onge, S.D. “It looks a lot ent pages?’ ” said John Nalivka, month suggested.
First, unlike before the big help set prices in the volatile tle-futures market. Without more like a gambling fund.” president of advisory firm Ster-
steps down in oil in 2014 cattle market is in trouble. real-time data on the price Take feeder cattle, animals ling Marketing Inc. in Vale, Ore.
and 2015, Chinese demand Superior Livestock Auction meatpackers are paying for that need to be fattened before Public cattle prices became
still looks firm. A little-noted LLC launched the Fed Cattle Ex- the cattle they purchase from slaughter. This month, feeder- scarce over the past decade as
Smaller funds have
fact about the 2014 crash is change last year to help guide feedlots, traders say futures cattle futures hit a 14-month the share of cattle sold on the less service and
that besides a surge in sup- the often opaque cattle market, have become too speculative. high at the Chicago Mercantile open market fell sharply. That
ply, Chinese oil-consumption where sparse trading can leave Some believe a market that is Exchange before falling to the shift reflected consolidation
higher trading costs,
growth had also turned participants scrounging for meant to provide a hedge bottom of their allowed daily among both ranchers and meat say money managers.
sharply negative in late 2013 timely price data. But break- against what cattle might cost trading band, all in about an companies into a few large
as the economy slowed. U.S. downs and dwindling participa- in the future has become dis- hour. A circuit breaker kicked players that favor contracts
demand growth had also tion have dogged the weekly located from the real world, in to prevent further losses. over auctions as the most effi-
weakened to nearly zero by online auction. The exchange leaving feedlots unsure what Analysts and traders said they cient way to sell the 30 million It is also shifting the bal-
mid-2014. It was weak oil- has crashed multiple times this their herds are worth. saw little in the real world to or more cattle slaughtered in ance of power away from
buying from the world’s two month; last week’s auction was “It’s become increasingly dif- justify the move. the U.S. each year. banks and small funds, inves-
largest consumers—not just called off altogether. ficult to use [futures] as a hedg- “There are days where I look The CME stopped listing tors say, and into the hands of
surging supply from U.S. As a result, traders say the ing tool because of the huge at the futures, knowing what I Please see CATTLE page B2 the largest asset managers.
wildcatters—that caused the In recent years, whenever
epic crash later that year. Mr. Sommariva wanted to sell
This time around, Chinese
consumption growth is hov-
ering around the 3% mark—
uninspiring but still better
MSCI’s Move Could Prod Chinese Firms a bond, banks would normally
only buy it if they had someone
lined up to sell it to, he said.
Big funds say that this some-
than 2016, when it was flirt- BY GREGOR STUART HUNTER one is them.
ing with zero for much of “They’ll call us, Pimco,
the year. In the U.S., prelimi- MSCI Inc.’s decision to in- BlackRock, and ask ‘Can you
nary data indicate petroleum clude mainland Chinese shares take that on?’” said Gregory
consumption may have in its global benchmarks for Peters, a senior fund manager
bounced back in May after the first time could prompt at PGIM Fixed Income, part of
months of weakness. Lower changes to how companies are PGIM Inc., an asset manager
prices may finally be tempt- run, even if the initial amount that oversees $1 trillion. “It’s
ing thrifty consumers back of capital inflows won’t be really Darwinian when it
into their cars. enough to cause a sizable shift comes to size.”
Meanwhile, U.S. supply in the country’s markets, ana- This approach wasn’t as
growth, while still strong, is lysts and brokers said. common pre-2008, when banks
showing signs of peaking as MSCI said it would admit could buy the bond on the spot
lower prices start to bite: 222 Chinese stocks—known as and wait to sell it when a buyer
Year-over-year growth in the A-shares, or stocks denomi- was willing to meet their price.
number of active U.S. oil rigs nated in yuan and listed in ei- Taking the bond off the
QILAI SHEN/BLOOMBERG NEWS

slowed for the first time in ther Shanghai or Shenzhen— banks’ hands, however, is a ser-
20 weeks in early June. to benchmarks such as its vice done only for a good price,
The headwinds to oil re- Emerging Markets Index, Mr. Peters added, giving firms
main strong and prices which is tracked by funds with like his an edge.
could still fall further in the some $1.6 trillion of assets un- Who is getting the short end
weeks ahead. der management world-wide. of the deal? Banks are being
But unless China’s growth The approval—which came hit because they have less flex-
slowdown proves much ug- before the start of Chinese ibility in trading, and because
lier than expected—or U.S. stock trading Wednesday and Exchanges in Shanghai and Shenzhen, seen here, have a combined $7.5 trillion market cap. asset managers now have more
consumers sit out the peak followed three years of rejec- analysts, more data and elec-
driving season in July and tions by MSCI—drew a muted part gained 0.4%. sion. After discussions with it would admit roughly half of tronic tools that allow them to
August—oil’s slippery slope reaction from mainland in- The tepid response was big fund managers such as the largest number of compa- trade directly with one an-
probably won’t carry it back vestors. The Shanghai Com- viewed in the market as a re- BlackRock Inc., the world’s nies it had considered includ- other, analysts say.
down to the soggy depths of posite Index closed up 0.5%, flection of the relative cau- largest money manager by as- ing in past years. “A client has a lot of trans-
January 2016. while its Shenzhen counter- tion apparent in MSCI’s deci- sets, the index provider said Please see MSCI page B2 Please see BOND page B2
B2 | Thursday, June 22, 2017 THE WALL STREET JOURNAL.

INDEX TO BUSINESSES BUSINESS & FINANCE

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

A
adidas..........................B4
Alphabet................A8,B4
Altice...........................B5
Amazon.com..........A2,B4
First Round Capital....A8
G
GameStop....................B4
General Electric.....A2,B2
General Motors...........B4
Oscar Insurance..........A6
Pricewaterhouse
Coopers.....................B5
R
Rolls-Royce Holdings..B2
GE Is Big Player at Air Show
Anthem.......................A6 Go-Jek.........................A8 S Acquisition spree gives
Apple......................B1,B4
Aviva ........................... B8
GrabTaxi Holdings ...... A8
H
Salesforce...................A8 U.S. firm aerospace
Saudi Aramco ............. A4
B HNA Group..................B8 Shenzhen Metro expertise and a strong
Bank of New York Group ....................... B5
Mellon.......................B8
I
Snowflake Computing B4 presence in Europe
BC Partners.................B5 Ifo Institute................B8 SoftBank Group..........B4
Benchmark..................A8 Innovation Network State Street................B8
Corp. of Japan .......... B1 BY DANIEL MICHAELS
BlackRock....................B1 Superior Livestock
British American K Auction......................B1 AND ROBERT WALL
Tobacco ..................... B8 Kellogg.........................B5 T
Brown Brothers L Tesla............................B4
LE BOURGET, France—One
Harriman...................B1 Theranos......................B3 of the biggest European play-
Lofty Labs...................B4
C Lowercase Capital......A8 Toshiba........................B1 ers at this year’s Paris Air
China Vanke................B5 Tsinghua Unigroup......B4 Show isn’t a European com-
M
Cybereason..................B4 U pany at all. It is General Elec-
Menlo Ventures..........A8
D tric Co.

MARLENE AWAAD/BLOOMBERG NEWS

Microsoft.....................B4 Uber Technologies.A1,A8
Dell..............................A8 MSCI............................B1 Under Armour.............B4 Over the past decade, the
United Technologies...B2
DHR International......A8 N U.S. industrial icon has bought
Diageo ......................... B3 V-Y a number of aerospace compa-
Netflix.........................B4
E Nike.............................B4
Volvo Car.....................B4 nies and suppliers from Brit-
Walgreen.....................B3
Etsy ............................. B4 Nintendo ..................... A1
Wal-Mart Stores.........B4 ain and Sweden to Italy and
F O-P Walt Disney................A8 the Czech Republic. The deals
Fidelity Investments..A8 Oracle..........................A8 Yahoo...........................B4 have made GE parts ubiqui-
tous on modern jetliners. It

INDEX TO PEOPLE has grown into one of Europe’s

largest aerospace employers,
with roughly 11,600 workers
David Joyce, head of GE’s aviation division, with a jet engine at the Paris Air Show on Monday

A-B F-H Nistér, David...............B4 across the Continent, setting it said, “GE’s size has always French rival, which was building Aero, an important supplier
Anderson, Kevin ......... B2 Friedman, Bart............A8 O-P apart from many of its peers. been and I believe will always engines for the supersonic Con- near Milan whose private-equity
Anderson, Sterling ..... B4 Gurley, Bill..................A8 Orr, Chris.....................B2 European deals are familiar be a threat for Rolls-Royce corde, and today their CFM In- owner was looking to exit.
Block, Keith ................ A8 Huffington, Arianna...A8 turf for John Flannery, who last and for the others, including ternational joint venture is the Last year, GE acquired 3-D
Patel, Rakesh..............B2
C K-L Pottenger, Carol..........B5 week was named GE’s new chief their own customers.” The world’s biggest producer of jet printing companies in Ger-
Camp, Garrett.............A8 Kalanick, Travis.....A1,A8 R-S
executive officer starting in Au- British aircraft-engine maker engines. In 2007, GE bought U.K. many and Sweden that are im-
Catz, Safra..................A8 Kapor, Mitch...............A8 gust. He made his mark at the is GE’s biggest rival in power- airplane-electronics maker portant suppliers to Avio, Wal-
Ryan, Tim....................B5
Chia, Chin-Ping ........... B2 Karpathy, Andrej.........B4 company leading GE’s biggest ing the largest jetliners. Smiths Aerospace, expanding its ter and GE’s engine division in
Sen, Amrita ................ A4
Cohn, Jeffrey..............A8 Keller, Jim...................B4 industrial acquisition ever, the But Mr. Schulz said size has aviation business beyond en- the U.S. Mr. Joyce said that
Croft, Helima..............A4 Lattner, Chris..............B4 Staggs, Tom................A8
$17 billion purchase of France’s drawbacks, making companies gines and landing gear. when GE wanted to boost its
Cullinan, Brian ............ B5 M-N V-Y Alstom SA power business. less flexible as they try to pro- The company’s massive 3-D activities, it had to strike
D Mio, Victoria...............B2 Vell, Dora....................A8 GE is now trying to turn its tect broader corporate interest plane-leasing business, GE deals in Europe because that
Div, Lior.......................B4 Musk, Elon..................B4 Yu Liang ...................... B5 collection of disparate European and, as a result, fail to offer the Capital Aviation Services, is where the expertise resided.
aerospace assets into a whole most competitive product. Being known as Gecas, largely oper- Last week, on the day GE
that is greater than the sum of leaner “I hope gives us more cre- ates from Ireland and London. named Mr. Flannery its new

CATTLE cattle-supply pinch that has led

feedyards to strike deals with
slaughterhouses in advance.
To compensate participants
its parts. It wants to knit the
businesses into a pan-European
group that can develop new
equipment and tap European
ativity and innovation,” Mr.
Schulz said. Rolls also is invest-
ing, including in the U.S., he said.
GE executives in Europe say
It has a fleet of about 1,700
planes with more than 200
customers. Gecas placed deals
to buy 100 Airbus aircraft and
boss, it also said it had bought
OC Robotics of Bristol, England,
for an undisclosed sum. The
company’s snake-arm robots
Continued from the prior page for the recent crashes, Supe- Union development funding. that getting employees from a another 20 from Boeing on the should make repairs in difficult-
new live cattle contracts last rior Livestock waived fees of a “We pick the best companies variety of companies and coun- first day of the Paris Air Show to-reach places on wings easier.
year as concerns over their dollar a head to sell cattle on at the time wherever they are tries to learn the conglomerate’s this week. GE’s European empire “is
volatility intensified. This the exchange for the remain- globally,” David Joyce, GE vice ways and to cooperate is can be When GE decided to expand something that came together
month, the CME said it would der of June. chairman and boss of the avia- difficult, but their engineering into the civilian turboprop mar- almost accidentally,” said Ric-
relist contracts that better mir- Sam Hughes, the Fed Cattle tion business said. “As long as it talent benefits the group. ket, long dominated by U.S. rival cardo Procacci, a GE veteran
ror real-world cattle trades and Exchange’s Oklahoma City- makes sense we buy them.” GE’s recent European spree is Pratt & Whitney, a unit of who moved to Avio from its Ital-
improve efficiency by redefin- based manager, said the com- Rivals are watching with in- built on deep links. In 1941, GE United Technologies Corp., it ian oil-and-gas business. “Step-
ing the quality of the beef in pany wants to attract more terest. Eric Schulz, president built the U.S.’s first jet engine bought Prague-based Walter ping back now, we can see we
question and protocol for the buyers and sellers. The com- for civil aerospace at Britain’s based on a British design. In Aircraft Engines in 2008. are one of the biggest aviation
cattle’s physical delivery. The pany has reverted to an older Rolls-Royce Holdings PLC, 1974, it teamed up with a In 2013, GE snapped up Avio companies in Europe.”
CME also increased by about website while building a more
15% the collateral needed to stable auction platform.
place bets on its exchanges.
“We want to make sure we
have an efficient tool,” said
Fred Seamon, CME Group
“It is concerning at times,
whenever the volume is low,”
Mr. Hughes said. “People were
kind of scratching their heads
MSCI Wall, so to speak.”
Including mainland Chinese
stocks in MSCI benchmarks
will have “far-reaching implica-
making it more difficult for
companies to halt trading in
shares.
One concern for investors is
derson, head of investments
for Asia-Pacific at State Street
Global Advisors.
“There will now be a lens
Inc.’s director of commodity last week because this is the Continued from the prior page tions” for global investors, said whether having more share- shone on Chinese companies,
product development. first time since September MSCI estimates some $17 Rakesh Patel, head of equities holders from overseas will en- with an eye on improving
Mr. Seamon welcomed the that people haven’t had a billion will flow into Chinese for Asia-Pacific at HSBC. He courage greater transparency shareholder value, corporate
Fed Cattle Exchange’s efforts to readily available price,” refer- markets—both from passive said some $500 billion could and better corporate gover- governance and returns from
generate more price data that ring to the suspended auction. funds that automatically track flow into Chinese markets in nance at Chinese companies. those companies,” he said.
might calm trading on the CME Still, some traders say they its indexes and active fund time, as they become more ac- “Now that China’s domestic Yet others were less upbeat.
as well. He said the two compa- are willing to stick with it in managers—when the country’s cessible and companies such as stock market has become a Chinese stock markets “still
nies aren’t working together. hopes that the auction would stocks are included a year from MSCI and FTSE Russell give a member of the international suffer from serious institu-
The new auctions lost some eventually provide more reli- now. That is a fraction of the full weighting to Chinese family, it has become easier for tional shortcomings as well as
momentum last year during a able ballast for futures prices. Shanghai and Shenzhen mar- stocks in their indexes. heavy political influence,” ac-
nearly three-month outage to “If it doesn’t make it, then kets’ combined $7.5 trillion The country’s stock-market cording to analysts at research
address technical issues. Sales we’re back to the same mess market capitalization. regulator, the China Securities firm Eurasia Group.
on the Fed Cattle Exchange that we were in,” said Dan Nor- MSCI indexes already in- Regulatory Commission, said
MSCI estimates some Since China’s market
have dwindled to as little as a cini, an independent trader in clude Chinese companies’ the decision reflected confi- $17 billion will flow crashes in 2015 and early 2016,
few hundred in recent weeks Coeur d’Alene, Idaho. shares listed in cities like Hong dence from global investors in the presence of state-backed
from a few thousand earlier “That makes these cattle fu- Kong and New York, but not the Chinese economy and fi-
into Chinese markets investment funds in the market
this year. Analysts say the tures markets almost impossible those in mainland China. nancial markets. next year. has risen in importance. Do-
lower volume partly reflects a to trade.” Still, the decision was her- The regulator also pledged mestic traders say such funds
alded by market participants to further revamp its capital often step in to buy or sell
ADVERTISEMENT who have long salivated over markets. “The Chinese capital shares during periods of mar-
the prospect of gaining greater market must welcome foreign us to have a dialogue with ket volatility.
Legal Notices access to the world’s second-
largest economy. The move
investors more openly,” it said.
In the year since MSCI’s
companies and regulators to
express our views,” said Victo-
In addition, China’s market
regulator continues to exert
could change the way that most recent rejection of Chi- ria Mio, Hong Kong-based chief strong control over the pace of
BANKRUPTCIES global investors look at China, nese stocks’ inclusion in its in- investment officer for China at initial public offerings. Despite
said Chin-Ping Chia, head of re- dexes, the country has further asset manager Robeco. recent revamps, the country’s
  
  
     search for Asia-Pacific at MSCI. opened up the Shenzhen mar- Following MSCI’s decision, tight capital controls can still
   “It’s about the opening of ket to global investors via a global investor attention will make it difficult for investors to

   !
a new phase of emerging- trading link with Hong Kong. It focus on improvements in the move money across the border.
LEGAL
 
    

    "# $"%& '( market investing,” he said. has also overhauled the rules quality of management at Chi- —Chao Deng and Shen Hong
  ')*+ ,

NOTICES
  
   
   “The opening of the Great governing share suspensions, nese companies, said Kevin An- contributed to this article.
 

     
  
   

BOND
- . / 0
/  ., **
 *  ' 1 2  3
4* *56 7     more like banks used to.
'12 **  8*  '12 **#
  8*  '12  **#
ADVERTISE TODAY Now, instead of just calling New Day
  96  '12  
:  8  8  12 4
banks for quotes on bonds, big Banks stepping out of bond markets...
  ;<6+ 6 7  .6 funds often amass large stock-
 7
: =< ' 1
 !" 2  Amount of debt securities U.S. banks stockpile for each $1 billion
Continued from the prior page piles of their own and then call
12 7  7  4* *56#
  , 7 ,  (44) 20-7572-2123 parency now and, in many banks to tell them at what
outstanding in the market
7      +, *
6  ! 7  . ;<6+  ways, more than a dealer,” said price they are willing to sell, $25 million
' 1 2 / >   
3*+ ,   6, "# $"%& Robert.Monaghan Chris Orr, co-head of European said David Lloyd, head of insti-
    :**  * 7
 8* ( *  , !?%  @wsj.com investment-grade credit trad- tutional public debt at M&G In- 20
;:* 
: =<
= $$$@  66
& ?$ "  $A$$ , '  ** #
ing at Swiss bank Credit Suisse vestments, a £265 billion ($335
6 7 +  66 " ?$ "  $A$$
, ' ' 1#2 For more information visit: Group AG. billion) asset manager. 15
But ultimately, if banks It is hard to pin down the
+ 3    ,6  ' B*
:  6   7 )6*+ $ ?$ " ' wsj.com/classifieds
1$! %&2 ' *4   trade less, it is the small inves- cost of trading because it var- 10
, 7  8* ( * 
. ;<6+ )6  ' 4 6
tor who suffers, analysts say. ies depending on the risk and
 > 6*  < 8 C Smaller asset managers are re- maturity of the asset, as well 5
.6*77 -- !  !? .
: =<

: =< $$ D ' A 4  8** liant on banks; they don’t have as daily moves. Large funds
5 **, 87 5   > 4 )
the capacity to stockpile bonds say that roughly 1% of the
5 **    56    0
  7 4  **     themselves. money they can make on a
6      4 +  3#
 * bond may be spent on buying 1980 ’90 2000 ’10
 7     
*6 7B4  E  7 or selling it to a bank, with
…could hurt small investors more than the big funds.
76* 6 7    4** some reporting only slight in-
6  ;<6+ 6> :  

=.; .64
Ultimately, if banks creases since the crisis. Cumulative returns since 2007 for U.S. dollar corporate-bond funds
/ 6,    77 7 *
7 6    . .6
,+   77  *    .
trade less, it is the Some smaller funds say that 60%
for them, this cost could go up Large funds
    E, 7, #
 6  . .6  7 D%%  small investor who to 15%, an increase of roughly a
© 2017 Dow Jones & Company, Inc. Small funds*
,
   + 7  7B*#
   7  3 4* *56 All Rights Reserved. suffers, analysts say. fifth after 2008. 40
   +  7 + 77
 6  6* 77 7 6   Larger funds tend to outper-
 .
form smaller ones, although 20
there are many other possible
ADVERTISEMENT
To be sure, banks have long reasons. Individual U.S. dollar

The Mart given better prices to bigger

funds sending larger orders, be-
cause they bring in more fees—
corporate-debt funds larger
than $1 billion returned a cu-
mulative 61% between 2008
0

trading small blocks can be five and 2016, while those manag- –20
TRAVEL
Businesses times as pricey as doing it in ing less than that yielded only 2008 ’09 ’10 ’11 ’12 ’13 ’14 ’15 ’16

Save Up To 60% For Sale. bulk, managers said. Smaller

funds are also trying to adapt
48%, according to data by fund
tracker Morningstar Inc.
*Individuals funds holding less than $1 billion
Sources: Securities Industry and Financial Markets Association, Federal Reserve (stockpile);
First & Business and play to their strengths, they And small funds face myriad Morningstar Inc. (returns) THE WALL STREET JOURNAL.
Advertise in The Mart. Call
INTERNATIONAL say, for example by holding new problems. Swaths of post-
Major Airlines, Corporate Travel +44 (0) 20  212 less-traded bonds for longer. crisis regulation are costlier to and large firms hold 88% of chief global economist at Prin-
Never Fly Coach Again!
www.cooktravel.net
Large asset managers, handle for smaller investors. those assets, Morningstar says. cipal Global Investors, which
(800) 435-8776 meanwhile, are adapting to Customers are migrating en “The bigger you are the bet- manages more than $400 bil-
their new role, and behaving masse to low-cost index funds, ter off you are,” said Bob Baur, lion.
THE WALL STREET JOURNAL. Thursday, June 22, 2017 | B3

BUSINESS NEWS

Theranos, Walgreens to Settle Suit Diageo to Pay

$700 Million
Tentative agreement
calls for blood-testing
For Tequila
firm to pay retailer BY SAABIRA CHAUDHURI

less than $30 million LONDON—Diageo PLC

agreed to buy upscale tequila
BY CHRISTOPHER WEAVER brand Casamigos for
$700 million, part of a larger
A seven-year relationship push by the spirits giant to in-
between Theranos Inc. and crease its exposure to the te-
Walgreens that soured into a quila market.
costly feud for the drugstore The world’s largest spirits
giant will soon come to a maker will pay the amount up-
close. front to acquire Casamigos, co-
Theranos has told its inves- founded by actor George Cloo-
tors it has reached an agree- ney, and said it would also pay a
ment in principle to settle a potential $300 million over 10
lawsuit by Walgreens Boots years linked to performance.
Alliance Inc. that had alleged Tequila is among the fast-
the embattled laboratory est-growing spirits in the
MICHAEL CHOW/THE ARIZONA REPUBLIC

startup breached the compa- world right now, with volumes

nies’ contract, people familiar increasing 5.3% last year, com-
with the matter said. Wal- pared with the 0.04% growth
greens’ stores once hosted seen by the broader spirits in-
about 40 Theranos blood-test- dustry, according to industry
ing centers, providing a main tracker IWSR.
conduit to consumers. Casamigos, which was
The pact would mean Wal- founded in 2013, sold 120,000
greens’ alliance with Theranos cases last year, mainly in the
cost the drug retailer well over U.S. The brand is expected to
$100 million. In its suit, Wal- A Theranos center in a Walgreens store in Arizona in 2015. The companies are ending their alliance, which had resulted in a costly feud. hit 170,000 cases this year.
greens had sought to recover Its other co-founders are
the full $140 million it put into million in cash left as it sought people said. tests on a few drops of blood nal first raised questions about Rande Gerber, husband of su-
the partnership, including a to resolve claims, people famil- It isn’t clear which inves- and Walgreens hoped to one Theranos’s technology and ca- permodel Cindy Crawford,
$40 million convertible-debt iar with the matter said. The tors may have been ap- day put its devices in its pabilities in October 2015, and real-estate tycoon Mike
note and a separate payment Walgreens pact would further proached about the offer or stores. Walgreens said it would halt Meldman.
as part of an effort to expand bite into that remaining supply whether any had agreed to do Walgreens kicked off its re- the nationwide expansion of The Casamigos deal is Dia-
the partnership. of money. Theranos also car- so. Theranos also plans to seek lationship with Theranos in the partnership. geo’s first since 2015. The
The tentative agreement ries insurance policies that to raise $150 million to $200 2010, including with an inter- But it kept the Theranos company had been focused on
calls for Theranos to pay Wal- could cover certain claims, million in a funding round next nal party at the drugstore cor- testing centers at its Phoenix jump-starting sales in the U.S.,
greens less than $30 million, court records show. year, some of the people said. poration’s Deerfield, Ill., head- stores open for months and its biggest market, where per-
according to some of the peo- Theranos has been burning Theranos has retracted quarters, company documents patients continued to receive formance has until recently
ple familiar with the matter. through its cash. In January, it nearly one million medical-test show. blood tests there. Some Ther- been weak as consumers aban-
The pact hadn’t been com- had about $187 million, ac- results since regulators found At the gathering, one Wal- anos patients later alleged doned brands like Smirnoff
pleted as of late Tuesday and cording to an investor docu- problems early last year with greens executive recited, to that both Theranos and Wal- and Captain Morgan for
terms could change, the people ment made public last month its lab practices that they said the tune of the John Lennon greens misled them about smaller rivals.
said. in a court filing. The firm has put patients in danger, a court song “Imagine,” lyrics urging their tests’ accuracy. The Diageo plans to expand
Representatives for Wal- been spending about $10 mil- filing shows. After lab regula- listeners to imagine a world cases are pending in an Ari- Casamigos internationally,
greens and Theranos declined lion a month since, much of it tors barred Theranos from where blood tests could be zona federal court, where a saying it sees strong potential
to comment. on legal costs, as it cut staff to running medical labs for two done without pain, a person judge last week threw out across Western Europe in par-
In its November 2016 suit, about 170 from around 900 years last summer, the com- who was there recalled. some of the claims and asked ticular. The tequila comes in
Walgreens alleged Theranos late last year, according to pany said it developed new The relationship became the plaintiffs to amend oth- three variants that sell for be-
misled it about the state of the people familiar with the mat- blood-testing devices to sell to strained as both parties ers. The companies are fight- tween $45 and $55 a bottle.
lab firm’s technology as they ter and the court filing. third-party lab operators. It blamed the other for delays, ing the suits and have said “The category is relatively
formed their partnership, and In a series of meetings with hasn’t yet sought regulatory and Walgreens managers be- they are without merit. underdeveloped outside North
about the firm’s growing legal investors in recent days, Ther- approval for these devices. came frustrated that Theranos In June 2016, Walgreens America and we see a huge
and regulatory challenges anos said it planned to ask Walgreens had once viewed repeatedly limited their access abruptly ended its partnership opportunity for our existing
throughout 2016. Theranos has some existing shareholders to the partnership as a key pillar to its labs, data or devices, with Theranos after executives brands and Casamigos,” said
called the allegations “un- loan it an additional $50 mil- of its strategy to use its brick- people familiar with the mat- grew frustrated they were Diageo’s North America head
founded.” lion, people familiar with the and-mortar footprint to diver- ter have said. The two compa- learning of regulators’ con- Deirdre Mahlan on a call with
Separately, Theranos told discussions said. As of Mon- sify into more areas of health- nies finally rolled out their cerns from news reports, ac- reporters.
investors in a series of recent day, that planned deal hadn’t care services. Theranos had Phoenix-area pilot in late 2013. cording to people familiar with —Tapan Panchal
meetings that it had about $54 been completed, one of the claimed it could do dozens of After The Wall Street Jour- the matter. contributed to this article

Messaging Explore CMO Today.

Matters.
Clarify the chaos. CMO Today is your definitive
source for insight on digital disruption in
marketing—and what the industry is doing
to keep up.
Sign up now at WSJ.com/CMOnewsletter
© 2017 Dow Jones & Co., Inc. All rights reserved. 6DJ5493

Sponsored by
B4 | Thursday, June 22, 2017 THE WALL STREET JOURNAL.

TECHNOLOGY WSJ.com/Tech

Wal-Mart Takes Fight to Amazon SoftBank

BY JAY GREENE Invests in gest businesses—by announc-

Security
AND LAURA STEVENS ing a $13.7 billion deal to buy
Whole Foods Market Inc. That
The battle between the came after Wal-Mart in recent

Startup
King Kong and Godzilla of re- years slashed grocery prices
tail has moved into the cloud. in part to head off Amazon’s
Wal-Mart Stores Inc. is online incursion into the busi-
telling some technology com- ness. More recently, Amazon
panies that if they want its lowered its Prime member- BY TIMOTHY W. MARTIN
business, they can’t run their ship fee by nearly half for AND ROBERT MCMILLAN
applications serving the re- people who obtain govern-
tailer on Amazon.com Inc.’s ment assistance, targeting a Japan’s SoftBank Corp. is
leading cloud-computing pro- Wal-Mart stronghold. investing $100 million in a
vider, Amazon Web Services, Their cloud battle takes aim Boston-based cybersecurity
several tech companies say. at the financial advantage AWS firm run by former Israel
Amazon’s rise as the domi- gives Amazon. The company’s counterintelligence members,
nant player in renting on-de- global retail business operates the latest high-profile cash in-

SEAN GALLUP/GETTY IMAGES

mand, web-based computing on thin margins, but they are jection into a bustling industry
power and storage has put offset by the enormous profits offering newfound defenses
some competitors, such as AWS generates. In the first against global hackers.
Netflix Inc. for streamed vid- quarter, AWS posted $890 mil- The deal, announced early
eos, in the unlikely position of lion in operating income, ac- Wednesday, values Cyberea-
relying on a corporate rival as counting for 89% of overall op- son at about $1 billion, ac-
they move to the cloud. erating income, even as AWS’s cording to people familiar
Wal-Mart, loath to give any Wal-Mart is advising some of its vendors to steer clear of using Amazon’s cloud-computing service. $3.66 billion in net sales ac- with the matter. The firm,
business to Amazon, said it counted for just 10% of the founded in 2012, has raised a
keeps most of its data on its An Amazon spokeswoman Mart. Worldwide Media Inc., a re- company’s total. total of $189 million so far
own servers and uses services referred to Wal-Mart’s moves The San Mateo, Calif., com- tail-technology provider that The notion that AWS sup- with investors. The latest in-
from emerging AWS competi- as attempts to “bully” tech pany had been developing an works with sensitive data in- ports Amazon’s retail business vestment isn’t part of the
tors, such as Microsoft Corp.’s service suppliers. “Tactics like Azure offering, and “Wal-Mart cluding automated inventory is incorrect, the spokeswoman roughly $100 billion SoftBank
Azure. this are bad for business and has expedited our work,” said tracking and provides pricing- said, citing the fact that its Vision Fund the Japanese firm
Wal-Mart uses some tech customers,” the spokeswoman Mr. Muglia, a former senior content management. “There North American retail busi- launched in May with Saudi
vendors’ cloud apps that run said. Microsoft executive. Snow- are retailers that have specifi- ness logged an operating Arabia’s sovereign-wealth
on AWS, said Wal-Mart Snowflake Computing Inc., flake won the business from cally requested that we sit on profit. fund.
spokesman Dan Toporek. He a data-warehousing service, the Wal-Mart provider. Azure,” he said, declining to While Wal-Mart’s efforts
declined to say which apps or was approached by a provider Other large retailers also name them. aren’t likely to slow AWS’s
how many, but acknowledged to Wal-Mart about handling have requested, as Wal-Mart Amazon said a number of growth, it could boost rivals.
instances when Wal-Mart its business from the retailer, did, that service companies retailers it competes with use “People jump through
Cybersecurity firms
pushed for AWS alternatives. Chief Executive Bob Muglia move away from AWS, accord- AWS, such as GameStop hoops to do business with have been attracting
“It shouldn’t be a big surprise said. The catch: Snowflake had ing to technology vendors that Corp. Wal-Mart all the time,” said
that there are cases in which to run those services on work with retailers. Wal-Mart and Amazon have Robert Hetu, an analyst with
interest from deep-
we’d prefer our most sensitive Azure. Retailers “are all very par- sparred for years. Last week, the research firm Gartner Inc. pocketed investors.
data isn’t sitting on a competi- “They influence their ven- ticular, and some are more Amazon sent shock waves “That should absolutely accel-
tor’s platform,” he said, adding dors, which has influence on particular than others,” said through the grocery indus- erate the competition from
that it’s a “small number.” us,” Mr. Muglia said of Wal- Kevin Howard, CEO of Adroit try—one of Wal-Mart’s big- Azure.”
A string of high-profile cy-
berattacks, including last

Tesla Loses Executive of Self-Driving Unit

month’s WannaCry ransom-
ware assault that was linked
to North Korea and a series of
breaches at internet giant Ya-
BY TIM HIGGINS year dealt with safety regula- hoo Inc., have exposed how
tors examining Autopilot, he hackers are quickly discover-
Tesla Inc. has parted ways was pushing ahead with prom- ing new ways to unearth net-
with another senior leader on ises to make the system more work vulnerabilities. A spate
its self-driving technology robust. of startups including Cyberea-
team, adding more turmoil to a In October, he announced son are pitching a new genera-
program that is under pressure that vehicles coming off the tion of computer security
to meet the grand ambitions of assembly line were being products that use machine
Chief Executive Elon Musk. equipped with the hardware learning and computer algo-
The Silicon Valley electric- need to make them fully self- rithms to sniff out problems
car maker on Tuesday said driving once the software was before they spread.
Chris Lattner, the vice presi- ready—and promised to dem- The WannaCry attack was
dent of Autopilot software, onstrate that ability by driving spotted instantaneously by Cy-
has left the company about six from Los Angeles to New York bereason’s algorithms—requir-
JUSTIN SULLIVAN/GETTY IMAGES

months after Tesla hired him by the end of 2017. ing no human intervention—
away from Apple Inc. Amid the Autopilot drama, and no clients were affected,
“Chris just wasn’t the right Tesla is on the eve of begin- said Lior Div, Cybereason’s
fit for Tesla, and we’ve de- ning production of the Model chief executive, and a former
cided to make a change,” Tesla 3, its foray into less-expensive decorated Israeli cyberintelli-
said Tuesday. vehicles. The $35,000 car is gence officer, in an interview.
Mr. Lattner followed Tesla’s supposed to help boost the The firm’s clients, including
statement with a posting on company’s production to SoftBank and Lockheed Martin
Twitter: “Turns out that Tesla Elon Musk vowed one of Tesla’s cars will drive itself from Los Angeles to New York by year-end. 500,000 next year from about Corp., use Cybereason often in
isn’t a good fit for me after all. 84,000 last year. tandem with legacy services
I’m interested to hear about with steering, braking and Anderson, a leader in developing Mr. Keller joined Tesla in 2016 The hard-charging Mr. Musk offered by Symantec Corp. or
interesting roles for a sea- changing lanes, sparked a safety the system. Tesla sued Mr. An- from chip maker Advanced Mi- has seen several executives McAfee LLC.
soned engineering leader!” debate after a Tesla driver in derson over his efforts to create cro Devices Inc. leave in recent years, including “Today we’re the last line
Mr. Lattner didn’t respond Florida died in a crash a year a competing startup; the lawsuit The company also said An- the chief financial officer. of defense, but I would argue
to a request for comment. ago while using the semiauton- was settled in April. drej Karpathy, an expert in None of the hurdles, how- we’re the only line of de-
The program, under pressure omous system. In March, David Nistér left computer vision who worked ever, seem to have damped en- fense—because the first line of
from Mr. Musk to demonstrate U.S. regulators closed their his job as the vice president of recently as a research scientist thusiasm for his vision among defense is not working,” said
a Tesla vehicle can drive itself investigation of the crash in Autopilot vision for chip at OpenAI—a nonprofit co- investors, who have sent the Mr. Div, 39 years old.
by year-end, has grappled with January by concluding Autopilot maker Nvidia Corp. founded by Mr. Musk—would company’s stock to record Cybereason is one of sev-
an exodus of talent and ques- didn’t contain a safety defect. On Tuesday, Tesla said it had become director of AI and Au- highs, pushing Tesla past Gen- eral new cybersecurity start-
tions about the safety of the Mr. Lattner’s hiring in Janu- elevated Jim Keller, vice presi- topilot vision. eral Motors Co. as the largest ups attracting interest from
technology. Tesla’s Autopilot ary coincided with the departure dent of Autopilot hardware, to The team has an ambitious U.S. auto maker by market deep-pocketed investors. Ta-
system, which can assist drivers of Autopilot director Sterling also oversee Autopilot software. agenda. Even as Mr. Musk last capitalization. nium, the world’s most valu-
able cybersecurity startup,

BUSINESS WATCH
valued at $3.75 billion, and

NIKE Nike and Amazon declined to VOLVO

CHIPS it trails only Samsung Elec-
tronics Co. in market share, ac-
cording to IHS Markit.
But Toshiba has fallen be-
CrowdStrike, which helped
the Democratic National
Committee respond last year
to a network breach linked
comment. Continued from page B1 hind rivals in securing critical to Russia, both raised $100
Amazon to Sell Some —Sara Germano Polestar to Focus quickly. Toshiba rejects West- supplies for next year’s pro- million last month. Another
Products Directly and Laura Stevens On Electric Cars ern Digital’s claims, saying it is duction, people familiar with cyber firm, Illumio, raised
permitted to make a deal on the matter said last week. If $125 million earlier this
Nike Inc. has agreed to sell ETSY Sweden’s Volvo Car Corp. its own. Japanese government-backed month.
some of its products directly to joined a growing list of manufac- Other countries’ antitrust au- entities take control, one chal- SoftBank, which spans a
Amazon.com Inc., a person fa- Online Marketplace turers looking to take on Tesla thorities, notably China’s, could lenge would be finding the bil- Japanese telecom arm, U.S.
miliar with the matter said, a To Cut 140 Jobs Inc., announcing Wednesday that also step in to delay the deal, on lions of dollars needed every mobile carrier Sprint Corp.,
concession by the sneaker giant its Polestar performance brand the theory that the involvement year for investments to remain and U.K. chip designer ARM
that it can no longer afford to Etsy Inc. announced another will become a stand-alone busi- of rival chip maker SK Hynix competitive. Holdings Inc., is increasing its
ignore the online retailing behe- round of layoffs, outlining plans ness focusing purely on electri- could lessen competition. China’s government-backed investment staff around the
moth. to slash its head count by 22% fied high-performance cars. Although Toshiba hasn’t re- Tsinghua Unigroup, which world, betting on technology
While Nike sells its shoes and for the year in an attempt to The new electric cars will leased audited financial results last year acquired state-owned that it says will be key when
sportswear through department rein in spending. drop the Volvo badge and be since last year, it estimates chip maker XMC, is catching everyday items like shoes and
stores and specialty retailers, it The online marketplace will branded as Polestar, but they that as of March 31 it had neg- up technologically with a fi- microwaves are connected to
has refused to sell directly to cut 140 positions, or 15% of its will maintain ties with each ative shareholder equity of nancial boost from Beijing. The the internet.
Amazon, fearing it would under- workforce, primarily in market- other to enjoy technological and ¥540 billion ($4.9 billion). If it The company recently led a
mine its brand. But with traffic ing, product management and engineering synergies and econ- is still negative next March, funding round for London-
to traditional stores on the de- administration, in addition to the omies of scale. Toshiba shares would be de- based startup Improbable,
cline and chains like Sports Au- 80 jobs Etsy said it would trim As part of the new setup, listed from the Tokyo Stock
Toshiba said which designs virtual worlds
thority disappearing, Nike has last month. Thomas Ingenlath, senior vice Exchange. the Japanese for videogames and simula-
been ramping up efforts to sell New CEO Josh Silverman said president of design at Volvo, be- The Japanese government- tions that can be applied to
directly to consumers, especially the layoffs were necessary to comes CEO of Polestar. led group wasn’t the highest
government-led plan the real world, as well as Al-
its own e-commerce efforts. drive focus. —Dominic Chopping bidder, according to people is the ‘best proposal.’ phabet Inc.’s robot units.
Adidas AG and Under Ar- The latest announcement briefed on the bids. Taiwan- Global security spending is
mour Inc. sell some of their brings expected severance costs NBC SPORTS based iPhone assembler Fox- forecast to hit $81.7 billion in
products directly to Amazon, for the year to between $12.5 conn Technology Group, for- 2017, according to market re-
which has been working to add million and $16.8 million, the Network Jumps on mally known as Hon Hai group has made unsuccessful searcher International Data
fashion brands and apparel to its company said. Esports Bandwagon Precision Industry Co., was efforts to buy or tie up with Corp., with forecasts of
inventory. —Imani Moise ready to offer more, but Japa- chip makers including SK growth to about $105 billion in
Comcast Corp.’s NBC Sports nese government officials said Hynix, Western Digital and Mi- 2020. Meanwhile, information-
said it would televise an esports its large China operations cron Technology Inc. technology startup invest-
tournament later this summer, raised the risk that technology Toshiba shares have risen ments rose to $3.05 billion
the latest broadcaster turning to would leak. more than 60% from their re- during the first three months
competitive videogaming to Toshiba said the Japanese cent low in mid-April on ex- of this year, up 13% from the
boost viewership. The U.S.-based government-led plan is the pectations that the chip-unit same period in 2016, accord-
cable network hopes a tourna- “best proposal, not only in sale will allow the company to ing to data from Dow Jones
ment built around a popular terms of valuation, but also in regain its footing. The shares VentureSource.
game called “Rocket League” will respect to certainty of closing, closed down 2.2% in Wednes- Cybereason was founded by
attract hard-to-reach viewers— retention of employees, and day trading after the an- Mr. Div and two other ex-
particularly younger males—who maintenance of sensitive tech- nouncement. members of Israel’s Unit 8200,
increasingly are ditching cable nology within Japan.” —Kosaku Narioka in Tokyo, the equivalent to the U.S. Na-
PSYONIX

subscriptions for live-streaming The Toshiba chip unit is en- Eva Dou in Beijing and tional Security Agency.
services such as Netflix Inc. joying a demand boom for Timothy W. Martin in Seoul —Mayumi Negishi
NBC Sports wants to build a tournament around ‘Rocket League.’ —Sarah E. Needleman NAND flash memory, in which contributed to this article. contributed to this article.
 THE WALL STREET JOURNAL. Thursday, June 22, 2017 | B5

FINANCE & MARKETS

China
Vanke’s
A Clash Over VIX Bragging Rights
BY BEN EISEN idea of a volatility index long lished research on the idea of

Founder Two academics who did

early work on a gauge of
was discussed in general
terms, including by Messrs.
Brenner and Galai, he was the
the index, as well as on a de-
rivatives market built around
the index.

To Exit stock-market volatility fear

they are being written out of
its history.
first to create a formula calcu-
lated in real time.
A spokeswoman for the ex-
Mr. Galai said he first ex-
plained the details of the work
he was doing to Mr. Whaley
BY DOMINIQUE FONG Menachem Brenner, a fi- change said, “CBOE engaged when the two were expert wit-
nance professor at New York Professor Robert Whaley to nesses on a legal case in 1988
Property tycoon Wang Shi’s University, and Dan Galai of develop the original methodol- and 1989. “We had long days
decision to step down from the Hebrew University of Je- ogy for the CBOE Volatility In- and nights working on the
the helm of China Vanke rusalem called their version dex.” The spokeswoman case,” Mr. Galai said.
marks the end of an era for “Sigma” and say they pitched added, “The staff involved Mr. Whaley remembers
one of the crown jewels of it to various exchanges years with the development of the working on that case and said
China’s private business world. before the Chicago Board Op- original index are no longer at a conversation about volatility
Mr. Wang said Wednesday tions Exchange rolled out its CBOE and we have no one who indexes could have taken place
that he wouldn’t seek a board volatility index in 1993. can comment on what trans- although he didn’t recall any-
position this year. His decision The CBOE’s VIX is based on pired.” thing specific. He said in a
came soon after he wrested the work of Vanderbilt Univer- Messrs. Brenner and Galai written response to questions
back control of the company sity’s Robert Whaley, who is say that at the center of their that he had such discussions
from an unwanted takeover at- typically credited with devel- work was the idea to create with many people during that

MICHAEL BUCHER/THE WALL STREET JOURNAL

tempt that ended up giving a oping the index, widely known what they called synthetic op- period, given that the general
state-owned firm a dominant as Wall Street’s “fear gauge” tions prices that consistently idea had been circulating in
position in the company. for its options-based read on showed implied volatility over certain corners of academia.
“I have decided not to be expected stock-price swings. It the next 30 days. Because S&P Mr. Whaley had also been
nominated as a candidate,” the tends to soar as stocks fall and 500 options had monthly expi- doing work on volatility before
66-year-old Mr. Wang said on investors turn anxious. rations, they needed to find a CBOE hired him to create the
mobile-messaging app WeChat. In academic circles, the duo way to create something that VIX. He said that he had been
“Today, I passed the baton to has for years quietly fumed didn’t exist: a series of options aware of some of the work
the leadership team led by Yu that Mr. Whaley’s work is prices whose time until expi- done by Messrs. Brenner and
Liang,” Vanke’s president. “I based on theirs. The popular- ration never changed. Galai, and cited it in research
believe this is the best timing,” ity of the gauge has grown as Once they had that, they published in 1993, but that
Mr. Wang wrote. “They are it declined to record lows this say, they had the pieces in they didn’t have a formula or
much younger, but fully ma- year, pushing some investors New York University finance professor Menachem Brenner place for a consistently updat- specific computations for in-
ture.” to fret over market compla- ing index. They pitched the dex levels. He considers his
Over the past three decades cency. sures came to be. ments about the disagreement. idea of the index to the Ameri- creation of the formula to be
as Vanke chairman, Mr. Wang The resulting interest in the “There were many occa- “But every time I said, ‘Let’s can Stock Exchange and the the heart of his work, he said.
built a reputation as an inde- VIX’s history has prompted sions that I wanted to come be positive.’” CBOE in the mid-1980s, but “The CBOE asked me to
pendent businessman, adept at Messrs. Brenner and Galai to out with it, even though it’s a Mr. Whaley stands behind nothing came of it, according build an implied market vola-
navigating a tricky relationship openly dispute the common 20-year-old story,” Mr. his work and the credit it has to the two academics and cor- tility index and show them
with the Communist Party. knowledge of how one of the Brenner told The Wall Street earned him as the VIX’s devel- respondence written at the how it performed, and that’s
Yet, Mr. Wang recognized most popular market mea- Journal in his first public com- oper. He said that while the time. In 1989, they jointly pub- what I did,” he said.
the advantage of having the
state on his side. He used his

Altice IPO Set to Be One of Biggest in 2017

political ties to a subway oper-
ator backed by the govern-
ment of the southern tech hub
of Shenzhen as the key to res-
cuing Vanke from a hostile bid BY NICK KOSTOV IPO since 2000, according to Altice executives say the
by financial conglomerate Ba- AND CORRIE DRIEBUSCH data provider Dealogic, when Making Waves strategy helped boost the
oneng Group. His departure the tech boom ushered in a Altice USA’s IPO is set to raise more money than any other performance of its U.S. arm
from Vanke’s board comes af- Altice USA hopes to woo wave of cable and wireless U.S.-listed telecom since 2000. last year.
ter he had put Vanke safely in investors back into telecom in operators. Altice USA posted a net
the hands of handpicked ally its initial public offering. At $29 a share, Altice USA Company loss of $721.3 million last
Shenzhen Metro Group. The U.S. subsidiary of Eu- would be valued at more than IPO date Deal value year compared with a $1.1 bil-
Even before that, Mr. Wang ropean telecommunications $21 billion. AT&T Wireless Services lion loss a year earlier. Its ad-
had dialed back his involve- company Altice NV, formed Altice executives traversed April 26, 2000 $10.62 billion justed earnings rose to $3.35
ment in the company, pursuing through the merger of New the country during its pitch China Unicom billion from $2.77 billion in
a busy agenda of hobbies. An York-based Cablevision Sys- to investors, with executives June 16, 2000 5.65 the same period, according to
avid mountaineer, he has tems Corp. and Suddenlink making stops in New York, Telefonica Moviles a regulatory filing.
climbed Mount Everest twice. Communications, is expected Boston and California, ac- 2.81 But Altice’s approach has
Nov. 20, 2000
In recent years, he took classes to start trading on the New cording to a person familiar Altice USA*
drawbacks. According to the
at Harvard and Cambridge. York Stock Exchange on with the roadshow. June 21, 2017 1.85 filing, Altice USA’s net debt
It is unclear whether Mr. Thursday, according to people Investors who buy shares stands at more than $20 bil-
Turkcell Iletisim Hizmetleri
Wang will continue to have a familiar with the offering. will be making a bet that the July 10, 2000 1.77 lion.
It is poised to be one of U.S.’s fourth-largest cable op- At the group level, Altice
Telenor ASA
the biggest U.S.-listed IPOs of erator by revenue will be able 1.56 NV’s debt stood at more than
Dec. 4, 2000
the year. to leverage the money raised €50 billion ($55.74 billion) on
Mr. Wang was adept Altice, private-equity firm in an offering and expand in China Telecom March 31, and the company
Nov. 6, 2002 1.52
at navigating a tricky BC Partners LLP and stake- an environment in which spent about €3 billion on in-
holder Canada Pension Plan competition is stiff. MetroPCS Communications terest payments last year, ac-
relationship with the Investment Board aim to sell U.S. telecom stocks have April 18, 2007 1.32
cording to filings.
Communist Party. roughly 63.9 million shares in slumped this year. Altice China Netcom Group
1.31
Altice executives were
the offering, raising $1.85 bil- competitors AT&T Inc. and Nov. 10, 2004 pressed about some of these
lion if it prices at the mid- Verizon Communications Inc. Corvis things during the company’s
point of its target range of are down 9.1% and 14%, re- July 27, 2000 1.29 pitch to investors, according
role at Vanke. “He basically to- $27 to $31 a share, according spectively, in 2017 through *Based on pricing at the midpoint of its range
to the person familiar with
tally retired, or quit, from to a regulatory filing. In a Tuesday. European-listed Sources: Dealogic; regulatory filings (Altice) THE WALL STREET JOURNAL. the roadshow.
China Vanke,” said Raymond sign of solid demand for the shares of Altice NV are up Investors questioned exec-
Cheng, an analyst at CIMB Re- IPO, Altice updated its filing roughly 20% over the same cording to a regulatory filing. tapped into investor demand utives about the company’s
search about Mr. Wang’s Wednesday to reflect that it period. Altice is offering Class A for higher-yield corporate plan to convert its systems
Wednesday announcement. and selling stakeholders will Investors will also be bet- shares, which have almost no bonds to finance a shopping into an ultrafast fiber-to-the-
A Vanke spokeswoman re- be selling more shares than ting on Patrick Drahi, the voting rights. spree. home network and the cost
ferred to a Hong Kong stock ex- the 46.6 million it had previ- French billionaire who Altice’s growth strategy in Mr. Drahi, who has cited savings that it still expects to
change filing that didn’t include ously targeted. founded Altice. He will retain the U.S. has followed a play- U.S. cable magnate John Ma- wring from merging Cablevi-
Mr. Wang on a list of board can- That would make it the almost entire control over the book it rolled out in Europe lone as an influence, then cut sion with Suddenlink, accord-
didates. She declined to com- biggest U.S.-listed telecom company after the IPO, ac- and Israel, where Mr. Drahi costs to improve profit. ing to the person.
ment further. Mr. Wang didn’t

FINANCE WATCH
respond to calls to his cellphone
or emails requesting comment.
Under Mr. Wang’s leadership,
Vanke rose to the top of China’s
PwC Will Add Outside Directors
property boom in the late 1990s INTESA SANPAOLO M&A BY MICHAEL RAPOPORT
selling high-end apartments and
became one of the country’s Bank Weighs a Deal Citigroup Makes PricewaterhouseCoopers
biggest home builders by sales For Parts of Rivals A Hire From UBS LLP is adding independent di-
in the process. Mr. Wang took rectors to its governing board,
almost no shares in his com- Intesa Sanpaolo SpA said it Citigroup Inc. has hired a se- a first for the private partner-
pany, an unusual move among is willing to buy at a symbolic nior investment banker from ship and an unusual move for
Chinese tycoons who tend to re- price, on certain conditions, parts UBS Group AG to head up any Big Four accounting firm
tain close ownership of their of two troubled Italian lenders, mergers and acquisitions for the in the U.S.
MATT CARDY/GETTY IMAGES

firms. City officials sought out raising the prospect that Italy’s U.S. bank’s Europe, Middle East PwC has named two new
Mr. Wang to do business on his second-largest bank could help and Africa operations. members to its board of part-
terms, noted a 2014 Harvard save their businesses. Alison Harding-Jones will fo- ners and principals from out-
Business Review article on Chi- Intesa said its board has cus on increasing Citi’s market side the firm: Carol Pottenger,
nese management thinking. given the green light to acquire share in the EMEA countries a retired U.S. Navy vice admi-
Shenzhen Metro, a subway some assets and liabilities of and sectors, the bank said in a ral who was one of the first
operator, is now Vanke’s larg- Banca Popolare di Vicenza SpA release. The 47-year-old invest- women selected for sea duty,
est investor, with a 29% stake. and Veneto Banca SpA, two ment banker was most recently and Carlos Gutierrez, a former The auditing firm chose Carol Pottenger and Carlos Gutierrez.
Baoneng remains the second midsize Italian banks that asked head of Asia-Pacific M&A at Kellogg Co. chief executive
largest. Shenzhen Metro’s role in March to tap government Switzerland’s UBS. who served as commerce sec- emy Awards in February. At board members to get more
in Vanke is the strongest a money to stay afloat. Currently based in Hong retary under President George the event, the wrong film was diverse perspectives on its
government has ever had in Intesa said any purchases Kong, Ms. Harding-Jones will W. Bush. The firm made the announced as the best-picture business and avoid group-
the company. The developer would have to take place under move to London to take up her announcement Wednesday af- winner because a PwC partner think, Mr. Ryan said in an in-
can build real-estate projects terms that wouldn’t dent the new role in October. Ms. Hard- ter The Wall Street Journal re- gave a presenter the wrong terview. The move also aligns
on top of subway stations in lender’s capital buffer or affect ing-Jones has also been ap- ported the move. envelope. PwC more with the require-
Shenzhen. its dividend-payout policy. The pointed vice chairman of EMEA The company and other big The board move was in the ments its audit clients face, he
—Pei Li contributed bank won’t raise fresh capital to corporate and investment bank- accounting firms are partner- works long before that, said said. “It’s absolutely the logi-
to this article. complete the transaction, it ing, Citi said. ships that generally have gov- Tim Ryan, the firm’s U.S. cal thing to do,” Mr. Ryan said.
said. The bank has had a strong erning boards made up of chairman. He said Brian Culli- “It’s a big message that we are
A rescue of Veneto and Vi- performance so far this year ad- their own personnel. nan, the partner behind the open to hearing different
cenza would be an important vising on deals in the EMEA re- PwC said the move to en- Oscar mistake, was and re- points of view.”
step in fixing the problems of gion. The bank is ranked at the hance its governance isn’t re- mains on PwC’s board. The new board members
Italian banks. The sector has top of the M&A league table for lated to its snafu at the Acad- PwC decided to add outside will join the board July 1.
been struggling with insufficient EMEA, working on transactions

INTERNATIONAL INVESTMENT FUNDS

capital and low profitability for worth a total of almost $191 bil-
years. lion, according to Dealogic. Advertisement
Veneto and Vicenza have a Ms. Harding-Jones succeeds
combined estimated capital Wilhelm Schulz, who had been
shortfall of €6.4 billion ($7.1 bil- head of EMEA M&A. Mr. Schulz, [ Search by company, category or country at europe.WSJ.com/funds ]
lion). who is based in London, moved
Earlier in June, the European up in January to be chairman of NAV —%RETURN—
FUND NAME GF AT LB DATE CR NAV YTD 12-MO 2-YR
VCG/GETTY IMAGES

Union cleared the way for a mul- EMEA M&A and one of three
n Chartered Asset Management Pte Ltd - Tel No: 65-6835-8866
tibillion-dollar rescue of Banca co-heads of Citi’s new global Fax No: 65-6835 8865, Website: www.cam.com.sg, Email: [email protected]
Monte dei Paschi di Siena SpA, communications group, which re- CAM-GTF Limited OT OT MUS 06/16 USD 303610.13 0.5 6.5 -3.2
another major trouble spot in sulted from the combination of
the system, by approving a re- its global media and telecom in- Data as shown is for information purposes only. No offer is being made by
Morningstar, Ltd. or this publication. Funds shown aren’t registered with the
For information about listing your funds,
Wang Shi has climbed Mount structuring plan for the lender. vestment-banking divisions. U.S. Securities and Exchange Commission and aren’t available for sale to United
States citizens and/or residents except as noted. Prices are in local currencies.
please contact: Freda Fung tel: +852 2831
Everest twice. —Giovanni Legorano —Ben Dummett All performance figures are calculated using the most recent prices available. 2504; email: [email protected]
B6 | Thursday, June 22, 2017 THE WALL STREET JOURNAL.

MARKETS DIGEST
Nikkei 225 Index STOXX 600 Index S&P 500 Index Data as of 4 p.m. New York time
Last Year ago
20138.79 t 91.62, or 0.45% Year-to-date s 5.36% 388.50 t 0.71, or 0.18% Year-to-date s 7.49% 2435.61 t 1.42, or 0.06% Trailing P/E ratio 24.09 23.85
High, low, open and close for each 52-wk high/low 20230.41 14952.02 High, low, open and close for each 52-wk high/low 396.45 308.75 High, low, open and close for each P/E estimate * 18.75 17.87
trading day of the past three months. All-time high 38915.87 12/29/89 trading day of the past three months. All-time high 414.06 4/15/15 trading day of the past three months. Dividend yield 1.95 2.19
All-time high: 2453.46, 06/19/17

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

20500 395 2450

20000 390 2420

65-day moving average

19500 385 2390

19000 380 2360

Session high
DOWN UP
18500 375 2330
t

Session open Close

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

t

18000 370 2300

Session low
Bars measure the point change from session's open
17500 365 2270
Mar. Apr. May June Mar. Apr. May June Mar. Apr. May June

International Stock Indexes Data as of 4 p.m. New York time Global government bonds
Latest 52-Week Range YTD Latest, month-ago and year-ago yields and spreads over or under U.S. Treasurys on benchmark two-year
Region/Country Index Close NetChg % chg Low Close High % chg and 10-year government bonds around the world. Data as of 3 p.m. ET
World The Global Dow 2763.27 –3.54 –0.13 2193.75 • 2791.48 9.3 Country/ Spread Over Treasurys, in basis points Yield
MSCI EAFE 1885.16 –2.60 –0.14 1471.88 • 1956.39 9.8 Coupon Maturity, in years Yield Latest Previous Month Ago Year ago Previous Month ago Year ago
MSCI EM USD 1005.84 –2.83 –0.28 691.21 • 1044.05 26.6 5.250 Australia 2 1.680 32.8 35.0 34.8 91.5 1.698 1.623 1.681
4.750 10 2.402 25.0 26.9 25.6 46.2 2.428 2.492 2.171
Americas DJ Americas 583.23 –0.69 –0.12 480.90 • 588.61 7.9
3.000 Belgium 2 -191.6 -180.4 -127.8 -0.559 -0.530 -0.512
-0.564 -190.7
Brazil Sao Paulo Bovespa 60753.97 –12.19 –0.02 48954.41 • 69487.58 0.9
0.800 10 0.593 -155.9 -157.2 -148.5 -142.1 0.588 0.752 0.289
Canada S&P/TSX Comp 15137.60 –12.00 –0.08 13609.58 • 15943.09 –1.0
0.000 France 2 -0.477 -183.0 -183.1 -172.6 -122.0 -0.483 -0.452 -0.454
Mexico IPC All-Share 48989.77 –43.28 –0.09 43902.25 • 50154.33 7.3
1.000 10 0.608 -154.5 -155.2 -142.8 -129.1 0.607 0.809 0.419
Chile Santiago IPSA 3606.90 –36.62 –1.01 3061.18 • 3786.05 11.9
0.000 Germany 2 -0.655 -200.7 -201.1 -196.4 -134.0 -0.663 -0.690 -0.574
U.S. DJIA 21410.03 –57.11 –0.27 17063.08 • 21535.03 8.3
0.250 10 0.267 -188.5 -189.9 -186.7 -165.8 0.261 0.369 0.052
Nasdaq Composite 6233.95 45.92 0.74 4574.25 • 6341.70 15.8
0.300 Italy 2 -0.318 -167.0 -165.6 -152.9 -79.1 -0.308 -0.254 -0.026
S&P 500 2435.61 –1.42 –0.06 1991.68 • 2453.82 8.8
2.200 10 1.913 -24.0 -23.6 -10.5 -33.5 1.924 2.131 1.375
CBOE Volatility 10.83 –0.03 –0.28 9.37 • 26.72 –22.9
0.100 Japan 2 -0.098 -145.1 -145.9 -143.2 -101.0 -0.111 -0.157 -0.244
EMEA Stoxx Europe 600 388.50 –0.71 –0.18 308.75 • 396.45 7.5 0.100 10 0.061 -209.2 -210.3 -219.5 -184.9 0.056 0.042 -0.140
Stoxx Europe 50 3191.51 –8.68 –0.27 2626.52 • 3279.71 6.0 4.000 Netherlands 2 -0.613 -196.5 -197.7 -188.8 -130.2 -0.629 -0.613 -0.537
Austria ATX 3110.32 12.20 0.39 1981.93 • 3212.50 18.8 0.750 10 0.469 -168.3 -169.1 -166.6 -155.6 0.469 0.571 0.154
Belgium Bel-20 3869.94 –40.26 –1.03 3127.94 • 4055.96 7.3 4.750 Portugal 2 0.035 -131.7 -137.7 -99.9 -35.5 -0.029 0.275 0.411
France CAC 40 5274.26 –19.39 –0.37 3955.98 • 5442.10 8.5 4.125 10 2.895 74.3 68.8 93.6 144.9 2.847 3.173 3.158
Germany DAX 12774.26 –40.53 –0.32 9214.10 • 12951.54 11.3 2.750 Spain 2 -0.297 -165.0 -165.5 -157.5 -76.9 -0.307 -0.300 -0.004
Greece ATG 823.32 –3.69 –0.45 517.10 • 827.56 27.9 1.500 10 1.366 -78.6 -77.5 -67.8 -19.6 1.385 1.559 1.513
Hungary BUX 35945.23 –44.46 –0.12 25126.36 • 36168.63 12.3 4.250 Sweden 2 -0.702 -205.4 -206.7 -197.2 -135.3 -0.719 -0.698 -0.588
Israel Tel Aviv 1439.32 3.13 0.22 1372.23 • 1490.23 –2.1 1.000 10 0.460 -169.2 -170.7 -172.6 -112.8 0.453 0.511 0.582
Italy FTSE MIB 21071.91 261.89 1.26 15017.42 • 21828.77 9.6 1.750 U.K. 2 0.214 -113.8 -121.6 -115.7 -25.9 0.132 0.117 0.507
Netherlands AEX 520.48 –0.40 –0.08 409.23 • 537.84 7.7 4.250 10 1.035 -111.7 -116.1 -114.2 -41.9 0.998 1.095 1.290
Poland WIG 61162.22 320.28 0.53 42812.99 • 62666.49 18.2 1.250 U.S. 2 1.352 ... ... ... ... 1.348 1.274 0.766
Russia RTS Index 973.33 –7.70 –0.78 885.22 • 1196.99 –15.5 2.375 10 2.152 ... ... ... ... 2.159 2.236 1.710
Spain IBEX 35 10740.70 –5.40 –0.05 7579.80 • 11184.40 14.8
Sweden SX All Share 592.69 –2.06 –0.35 443.66 • 598.42 10.9 Commodities Prices of futures contracts with the most open interest 3:30 p.m. New York time
Switzerland Swiss Market 8985.61 –37.94 –0.42 7475.54 • 9136.95 9.3 EXCHANGE LEGEND: CBOT: Chicago Board of Trade; CME: Chicago Mercantile Exchange; ICE-US: ICE Futures U.S.; MDEX: Bursa Malaysia
South Africa Johannesburg All Share 51402.69 242.12 0.47 48935.90 • 54716.53 1.5 Derivatives Berhad; TCE: Tokyo Commodity Exchange; COMEX: Commodity Exchange; LME: London Metal Exchange;
NYMEX: New York Mercantile Exchange; ICE-EU: ICE Futures Europe. *Data as of 6/20/2017
Turkey BIST 100 99390.12 120.85 0.12 70426.16 100000.7 27.2
• 9 Commodity Exchange Last price Net
One-Day Change
Percentage
Year
high
Year
low
U.K. FTSE 100 7447.79 –24.92 –0.33 5788.74 • 7598.99 4.3 Corn (cents/bu.) CBOT 377.00 -1.00 -0.26% 399.25 368.25
Asia-Pacific DJ Asia-Pacific TSM 1625.79 –5.82 –0.36 1308.52 • 1643.59 14.3 Soybeans (cents/bu.) CBOT 929.50 -9.25 -0.99 1,034.50 915.50
Australia S&P/ASX 200 5665.70 –91.60 –1.59 5103.30 5956.50 –0.00 Wheat (cents/bu.) CBOT 479.25 -8.50 -1.74 502.00 430.75
• 2 Live cattle (cents/lb.) CME 115.575 -0.325 -0.28 127.650 99.400
China Shanghai Composite 3156.21 16.20 0.52 2854.29 • 3288.97 1.7 Cocoa ($/ton) ICE-US 1,843 -75 -3.91 2,281 1,767
Hong Kong Hang Seng 25694.58 –148.46 –0.57 20172.46 • 26063.06 16.8 Coffee (cents/lb.) ICE-US 121.95 -2.65 -2.13 163.75 121.85
13.28 -0.54 -3.91 20.50 13.23
India S&P BSE Sensex 31283.64 –13.89 –0.04 25765.14 • 31311.57 17.5 Sugar (cents/lb.) ICE-US
Cotton (cents/lb.) 68.19 -0.78 -1.13 75.72 68.13
Japan Nikkei Stock Avg 20138.79 –91.62 –0.45 14952.02 • 20230.41 5.4
Robusta coffee ($/ton)
ICE-US
ICE-EU 2072.00 -2.00 -0.10 2,286.00 1,885.00
Singapore Straits Times 3201.77 –28.65 –0.89 2729.85 • 3271.11 11.1
Copper ($/lb.) 2.6095 0.0375 1.46% 2.8495 2.4850
South Korea Kospi 2357.53 –11.70 –0.49 1925.24 • 2381.69 16.3
Gold ($/troy oz.)
COMEX
COMEX 1247.20 3.70 0.30 1,300.30 1,155.00
Taiwan Weighted 10349.72 25.26 0.24 8458.87 • 10349.72 11.8
Silver ($/troy oz.) COMEX 16.470 -0.006 -0.04 18.780 16.125
Currencies
Source: SIX Financial Information;WSJ Market Data Group
London close on June 21 Aluminum ($/mt)* LME 1,899.50 23.50 1.25 1,972.00 1,688.50
Tin ($/mt)* LME 19,675.00 -25.00 -0.13 21,225.00 18,760.00
Yen, euro vs. dollar; dollar vs. major U.S. trading partners US$vs,
Wed YTDchg Copper ($/mt)* LME 5,699.00 -11.00 -0.19 6,156.00 5,491.00
Country/currency in US$ per US$ (%) Lead ($/mt)* LME 2,140.00 3.00 0.14 2,445.00 2,022.00
5%
s Europe Zinc ($/mt)* LME 2,572.00 21.50 0.84 2,958.50 2,450.50
WSJ Dollar index Bulgaria lev 0.5697 1.7554 –5.5 Nickel ($/mt)* LME 9,045.00 45.00 0.50 11,095.00 8,780.00
0
Croatia kuna 0.1502 6.657 –7.2 Rubber (Y.01/ton) TCE 186.30 -4.00 -2.10 n.a. n.a.
s
Euro zone euro 1.1144 0.8974 –5.6
–5 Euro Palm oil (MYR/mt) MDEX 2441.00 -25.00 -1.01 2966.00 2390.00
Czech Rep. koruna-b 0.0424 23.587 –8.2
s Denmark krone 0.1498 6.6750 –5.6 Crude oil ($/bbl.) NYMEX 42.63 -0.88 -2.02 58.30 42.06
–10 Yen 0.003601 277.69 –5.6
Hungary forint NY Harbor ULSD ($/gal.) NYMEX 1.3722 -0.0300 -2.14 1.7930 1.3609
Iceland krona 0.009492 105.35 –6.7 RBOB gasoline ($/gal.) NYMEX 1.4043 -0.0145 -1.02 1.8561 1.3902
–15 Norway krone 0.1171 8.5379 –1.2
0.2620 3.8167 –8.8
Natural gas ($/mmBtu) NYMEX 2.918 -0.012 -0.41 3.5750 2.8990
2016 2017 Poland zloty
Russia ruble-d 0.01669 59.926 –2.2 Brent crude ($/bbl.) ICE-EU 45.12 -1.13 -2.44 60.18 44.60
US$vs, US$vs,
YTDchg YTDchg Sweden krona 0.1141 8.7618 –3.8 Gas oil ($/ton) ICE-EU 406.25 -6.50 -1.57 529.00 402.50
Wed Wed
Country/currency in US$ per US$ (%) Country/currency in US$ per US$ (%) Switzerland franc 1.0261 0.9746 –4.3
Turkey lira 0.2836 3.5266 0.1 Sources: SIX Financial Information; WSJ Market Data Group
Americas Hong Kong dollar 0.1282 7.8009 0.6
Ukraine hryvnia 0.0384 26.0137 –3.9
Argentina peso-a 0.0613 16.3247 2.9
India rupee
Indonesia rupiah
0.0155
0.0000751
64.5329
13310
–5.0
–1.6
U.K. pound 1.2661 0.7898 –2.5 Cross rates London close on Jun 21
Brazil real 0.3002 3.3314 2.3 Middle East/Africa
Japan yen 0.008966 111.53 –4.7
Canada dollar 0.7506 1.3323 –0.9 USD GBP CHF JPY HKD EUR CDN AUD
Kazakhstan tenge 0.003062 326.59 –2.1 Bahrain dinar 2.6508 0.3773 0.02
Chile peso 0.001504 664.70 –0.8 Australia 1.3252 1.6776 1.3596 0.0119 0.1699 1.4765 0.9946 ...
Macau pataca 0.1244 8.0361 1.5 Egypt pound-a 0.0551 18.1435 0.1
Colombia peso 0.0003279 3049.86 1.6 Canada 1.3323 1.6868 1.3671 0.0119 0.1708 1.4847 ... 1.0055
Malaysia ringgit-c 0.2328 4.2962 –4.2 Israel shekel 0.2824 3.5407 –8.0
Ecuador US dollar-f 1 1 unch
New Zealand dollar 0.7213 1.3864 –4.0 Kuwait dinar 3.2940 0.3036 –0.7 Euro 0.8974 1.1361 0.9208 0.0080 0.1150 ... 0.6735 0.6772
Mexico peso-a 0.0551 18.1635 –12.4
Pakistan rupee 0.0095 104.845 0.5 Oman sul rial 2.5976 0.3850 0.003 Hong Kong 7.8009 9.8773 8.0032 0.0699 ... 8.6935 5.8554 5.8872
Peru sol 0.3058 3.2702 –2.5
Philippines peso 0.0199 50.284 1.4 Qatar rial 0.2721 3.675 1.0 Japan 111.5340 141.2100 114.4400 ... 14.2980 124.2800 83.7200 84.1700
Uruguay peso-e 0.0353 28.300 –3.6
Singapore dollar 0.7188 1.3912 –3.9 Saudi Arabia riyal 0.2666 3.7504 –0.01 0.9746 1.2339 ... 0.0087 0.1250 1.0861 0.7315 0.7355
Venezuela bolivar 0.098850 10.12 1.2 Switzerland
South Korea won 0.0008740 1144.10 –5.3 South Africa rand 0.0766 13.0471 –4.7
U.K. 0.7898 ... 0.8104 0.0071 0.1012 0.8802 0.5928 0.5960
Asia-Pacific Sri Lanka rupee 0.0065274 153.20 3.2 Close Net Chg % Chg YTD % Chg
0.7546 1.3252 –4.6 Taiwan dollar 0.03288 30.417 –6.3 U.S. ... 1.2661 1.0261 0.0090 0.1282 1.1144 0.7506 0.7546
Australia dollar WSJ Dollar Index 88.98 0.02 0.02 –4.26
China yuan 0.1464 6.8297 –1.7 Thailand baht 0.02940 34.010 –5.0 Sources: Tullett Prebon, WSJ Market Data Group Source: Tullett Prebon

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

Latest 52 wks ago % YTD% % YTD% % YTD%
Libor Cur Stock Sym Last Chg Chg Cur Stock Sym Last Chg Chg Cur Stock Sym Last Chg Chg Asia Titans 50
One month 1.21556% 0.45205% ¥ TakedaPharm 4502 5693.00 0.48 17.75 CHF RocheHldgctf ROG 252.40 -0.28 8.51 Last: 158.26 t 1.41, or 0.88% YTD s 12.3%
Three month 1.28944 0.64010 Asia Titans HK$ TencentHoldings 0700 279.20 -0.29 47.18 £ RoyDtchShell A RDSA 2064.50 -1.24 -7.94
Six month 1.44500 0.92965 HK$ AIAGroup 1299 56.60 -0.88 29.37 ¥ TokioMarineHldg 8766 4791.00 -1.30 -0.10 € SAP SAP 95.20 0.37 14.96 High 165
One year 1.73539 1.25100 86.56 -0.30 12.56
¥ AstellasPharma 4503 1377.00 -0.15 -15.18 ¥ ToyotaMtr 7203 5840.00 0.53 -15.09 € Sanofi SAN Close 50–day 160
Euro Libor AU$ AustNZBk ANZ 27.50 -1.79 -9.60 AU$ Wesfarmers WES 40.22 -0.72 -4.56 € SchneiderElectric SU 68.98 0.16 4.34 Low moving average 155
One month -0.40500% -0.35857% AU$ BHP BHP 22.10 -3.75 -11.81 AU$ WestpacBanking WBC 29.77 -1.78 -8.68 € Siemens SIE 124.45 -0.56 6.55 t
Three month -0.37286 -0.28500 HK$ BankofChina 3988 3.79 -0.79 10.17 AU$ Woolworths WOW 25.10 -0.20 4.15 € Telefonica TEF 9.53 -0.57 8.05 150
Six month -0.29729 -0.16671 HK$ CKHutchison 0001 98.50 ... 12.06 € Total FP 44.40 -0.35 -7.04 145
One year -0.18686 -0.03643 HK$ CNOOC 0883 8.56 -0.70 -11.75 Stoxx 50 CHF UBSGroup UBSG 15.74 0.38 -1.32
140
Euribor AU$ CSL CSL 139.50 0.68 38.93 € Unilever UNA 50.10 -0.06 28.08
CHF ABB ABBN 24.61 0.49 14.57
One month -0.37300% -0.35800% ¥ Canon 7751 3895.00 -1.17 18.21 £ Unilever ULVR 4306.00 -0.27 30.78 24 31 7 14 21 28 5 12 19 26 2 9 16
€ ASMLHolding ASML 116.80 0.56 9.52
Three month -0.32900 -0.26800 ¥ CentralJapanRwy 9022 18475 0.65 -3.93 € Vinci DG 79.50 -0.51 22.87 Apr. May June
€ AXA CS 24.05 -0.93 0.25
Six month -0.27100 -0.16100 HK$ ChinaConstructnBk 0939 6.42 -0.62 7.54 £ VodafoneGroup VOD 222.80 0.20 11.48
€ AirLiquide AI 112.60 -0.13 6.58
One year -0.16100 -0.02900 HK$ ChinaLifeInsurance 2628 23.80 -1.04 17.82 CHF ZurichInsurance ZURN 289.20 -1.13 3.14
175.05
Yen Libor HK$ ChinaMobile 0941 83.65 -0.06 1.76
€
€
Allianz
AB InBev
ALV
ABI 102.30
-0.45 11.50
-0.49 1.74 DJIA Stoxx 50
One month -0.02000% -0.07614% HK$ ChinaPetro&Chem 0386 6.19 -2.52 12.55 £ AstraZeneca AZN 5400.00 -0.30 21.69 Last: 3191.51 t 8.68, or 0.27% YTD s 6.0%
Three month 0.00243 -0.03086 AU$ CmwlthBkAust CBA 80.80 -1.75 -1.95 € BASF BAS 85.89 -0.76 -2.74
$ AmericanExpress AXP 82.24 -0.33 11.02
Six month 0.02171 -0.00829 ¥ EastJapanRailway 9020 11175 -0.04 10.64 € BNP Paribas BNP 62.14 -0.66 2.63
$ Apple AAPL 145.87 0.59 25.95 3275
One year 0.13329 0.08543 ¥ Fanuc 6954 21705 -0.09 9.54 £ BT Group BT.A 283.20 -1.08 -22.81
$ Boeing BA 199.21 0.44 27.96
$ Caterpillar CAT 103.47 -3.34 11.57 3200
Offer Bid ¥ Hitachi 6501 678.80 0.68 7.41 € BancoBilVizAr BBVA 7.34 -0.04 15.57
TW$ Hon Hai Precisn 2317 113.00 -1.31 34.20 $ Chevron CVX 104.48 -1.88 -11.23 3125
Eurodollars € BancoSantander SAN 5.85 -0.12 17.97
¥ HondaMotor 7267 3067.00 0.03 -10.19 $ CiscoSystems CSCO 31.84 -0.03 5.36
One month 1.1000% 1.0000% £ Barclays BARC 200.15 -1.31 -10.43 3050
KRW HyundaiMtr 005380 160500 -3.60 9.93 $ Coca-Cola KO 45.22 -0.86 9.07
Three month 1.2000 1.1000 € Bayer BAYN 121.80 ... 22.87
2975
HK$ Ind&Comml 1398 5.12 -1.16 10.11 $ Disney DIS 104.83 0.86 0.59
Six month 1.3500 1.2500 £ BP BP. 456.70 -0.77 -10.38
$ DuPont DD 81.00 -2.55 10.35
One year 1.6000 1.5000 ¥ JapanTobacco 2914 4045.00 -1.49 5.23 £ BritishAmTob BATS 5553.00 -0.18 20.16 2900
¥ KDDI 3064.00 -0.87 3.53
$ ExxonMobil XOM 81.46 -1.03 -9.75
Latest 52 wks ago 9433 € Daimler DAI 65.45 -0.18 -7.45 $ GeneralElec GE 27.78 -1.24 -12.09 24 31 7 13 21 28 5 12 19 26 2 9 16
¥ Mitsubishi 8058 2266.50 -0.87 -8.98 € DeutscheTelekom DTE 16.78 -0.06 2.60 $ Apr. May June
Prime rates GoldmanSachs GS 222.46 -1.17 -7.10
¥ MitsubishiElectric 6503 1603.50 -1.08 -1.60 £ Diageo DGE 2374.50 -0.65 12.54 $
U.S. 4.25% 3.50% HomeDepot HD 156.59 -0.68 16.79
¥ MitsubishiUFJFin 8306 719.80 -1.34 -0.06 € ENI ENI 13.70 0.51 -11.44 $
Canada 2.70 2.70 Intel INTC 34.58 -0.80 -4.66
1544.00 -0.77 -3.92 1683.00
Japan
Hong Kong
1.475
5.00
1.475
5.00
¥
¥
Mitsui
Mizuho Fin
8031
8411 198.00 -0.15 -5.62
£
£
GlaxoSmithKline
Glencore
GSK
GLEN 281.45
-0.59
1.75
7.75 $
1.48 $
IBM
JPMorganChase
IBM
JPM
153.79
87.12
-0.75 -7.35
-0.46 0.96
Dow Jones Industrial Average P/E: 21
¥ NTTDoCoMo 9437 2765.00 0.69 3.83 £ HSBC Hldgs HSBA 687.40 -0.13 4.64 $ J&J JNJ 134.93 0.53 17.12 Last: 21410.03 t 57.11, or 0.27% YTD s 8.3%
Policy rates
ECB 0.00% 0.00%
AU$ NatAustBnk NAB 29.06 -2.94 -5.25 € INGGroep INGA 15.06 -0.20 12.68 $ McDonalds MCD 153.82 -0.16 26.37
Britain 0.25 0.50
¥ NipponTeleg 9432 5461.00 0.24 11.18 £ ImperialBrands IMB 3547.00 -0.67 0.13 $ Merck MRK 65.47 1.46 11.21 21700
Switzerland 0.50 0.50
¥ NissanMotor 7201 1067.50 -0.37 -9.19 € IntesaSanpaolo ISP 2.60 2.45 7.01 $ Microsoft MSFT 70.27 0.51 13.08
¥ Panasonic 6752 1519.00 0.53 27.70 € LVMHMoetHennessy MC 231.90 -0.22 27.84 $ Nike NKE 52.61 2.04 3.50
21150
Australia 1.50 1.75
HK$ PingAnInsofChina 2318 52.00 0.19 34.02 £ LloydsBankingGroup LLOY 67.17 0.24 7.45 $ Pfizer PFE 33.88 0.95 4.31
U.S. discount 1.75 1.00 20600
Fed-funds target 1.00-1.25 0.25-0.50
$ RelianceIndsGDR RIGD 43.95 1.27 39.30 € LOreal OR 190.00 -0.65 9.57 $ Procter&Gamble PG 89.43 -0.22 6.36
Call money 3.00 2.25
KRW SamsungElectronics 005930 2374000 -1.37 31.74 £ NationalGrid NG. 1008.00 -0.98 -2.90 $ 3M MMM 213.00 -0.17 19.28 20050
¥ Seven&I Hldgs 3382 4783.00 0.06 7.41 CHF Nestle NESN 82.80 -1.43 13.35 $ Travelers TRV 128.62 -0.10 5.06
Overnight repurchase rates 19500
U.S. 1.06% 0.59%
¥ SoftBankGroup 9984 9182.00 -0.98 18.25 CHF Novartis NOVN 79.85 0.06 7.76 $ UnitedTech UTX 121.81 0.25 11.12
Euro zone n.a. n.a.
¥ Sony 6758 4228.00 -1.17 29.10 DKK NovoNordiskB NOVO-B 290.40 -0.03 14.02 $ UnitedHealth UNH 184.98 0.93 15.58 24 31 7 13 21 28 5 12 19 26 2 9 16
¥ Sumitomo Mitsui 8316 4232.00 -0.70 -5.11 £ Prudential PRU 1799.00 -0.88 10.54 $ Visa V 94.54 0.17 21.17 Apr. May June
Sources: WSJ Market Data Group, SIX HK$ SunHngKaiPrp 0016 116.60 -1.27 18.98 £ ReckittBenckiser RB. 7878.00 -1.48 14.41 $ Verizon VZ 45.42 -1.13 -14.91 Note: Price-to-earnings ratios are for trailing 12 months
Financial Information, Tullett TW$ TaiwanSemiMfg 2330 215.50 -0.46 18.73 £ RioTinto RIO 3020.00 0.67 -4.38 $ Wal-Mart WMT 76.25 0.94 10.32 Sources: WSJ Market Data Group; Birinyi Associates
THE WALL STREET JOURNAL. Thursday, June 22, 2017 | B7

The World’s
Most Influential
Marketers
As the newest,
invitation-only
executive membership
within The Wall Street
Journal’s C-Suite
portfolio, CMO
Network convenes
Member Events Include
captains of industry,
business leaders and Annual Meeting at Cannes
June 20, 2017
brand visionaries to Hosted by WSJ Editor in Chief Gerard Baker, enjoy a private dinner at sea and
breakfast panels with inf luencers throughout the week.
identify and debate
the issues that matter D.LIVE Laguna
October 16–18, 2017 | The Montage | Laguna Beach, CA
to marketers through
D.LIVE brings together CEOs, founders, investors and luminaries from around

the lens of global the world to set the global tech agenda.

finance, markets Editor’s Dinner Series

September 27, 2017 | New York, NY
and business. December 6, 2017 | New York, NY
2018 dates to be announced soon.

Hosted by WSJ Editor in Chief Gerard Baker and WSJ Advertising Editor
Suzanne Vranica. These exclusive engagements provide rare opportunities for
candid discussions with WSJ editors and industry peers.

Women in the Workplace

October 10, 2017 | New York, NY
Membership is by invitation.
Attend the annual, invitation-only dinner featuring prominent executives
For more information, please and global leaders to examine the successes and challenges of women in the
workplace today, including a discussion on WSJ’s report of the “Women in the
visit CMONetwork.wsj.com Workplace” study conducted by McKinsey & Company and LeanIn.Org.

Proudly supported by:

© 2017 Dow Jones & Co., Inc. All rights reserved. 6DJ5544
B8 | Thursday, June 22, 2017 THE WALL STREET JOURNAL.

MARKETS
HNA Deals Pile Up Risks U.S. Blue Chips
BY JULIE STEINBERG
AND ANJANI TRIVEDI Extend Losses as
Chinese conglomerate HNA
Group Co. is copying the fi-
nancing strategies of hedge
funds and private-equity firms
Oil Falls Further
as it pursues its quest to be- BY RIVA GOLD AND AKANE OTANI rel—its lowest settlement
come one of the world’s larg- since August—after govern-
est companies. The Dow Jones Industrial ment data showed U.S. oil out-
HNA, a sprawling group Average posted a second con- put continuing to rise last
that operates in everything secutive day of losses Wednes- week. Energy shares in the
from airlines to hotels, has day as oil prices continued S&P 500 fell 1.5%, deepening
been on an overseas acquisi- their slide, their declines for the year.
MARK KAUZLARICH/BLOOMBERG NEWS

tion spree. It is financing WEDNESDAY’S pulling en- Health-care stocks in the

those deals with loans backed MARKETS ergy shares S&P 500 rose 1.2% by late af-
by company stakes it has pur- lower. ternoon, with Regeneron Phar-
chased. The conglomerate has The Dow maceuticals, the second-big-
also entered into derivatives industrials fell 57.11 points, or gest gainer in the S&P 500 on
with U.S. and European banks 0.3%, to 21410.03. The S&P 500 Tuesday, posting among the
that are helping fund its in- lost less than 0.1%, while the biggest advances Wednesday.
vestments outside China. Nasdaq Composite added 0.7%, The sector, the worst-perform-
Some of the arrangements boosted by gains in the shares ing group in the S&P 500 in
are similar to those used by in- of health-care companies. 2016, has rebounded this year
vestment firms, which often HNA has used share-backed financing to build stakes in companies including Hilton Worldwide. In Europe, the Stoxx Europe as investors have lifted the
acquire shares in companies 600 slipped 0.2% to 388.50, shares of biotechnology com-
with borrowed money. Such fi- capital controls implemented Yang. but closed off its worst levels panies.
nancial leverage, as it is known, Splurging on Deals by the Chinese government in In the past year, HNA used of the day.
allows buyers to stretch their HNA’s debt levels have steadily late 2016. share-backed financing and The U.S.’s blue-chip index
capital by putting up relatively risen in recent years. HNA says it isn’t trying to derivatives arranged by banks has wobbled after oil slumped
little money and borrowing the avoid capital controls and that such as UBS Group AG and J.P. to its lowest level since Sep-
The Nasdaq was
remainder from banks. Debt levels and breakdown it has used cash from offshore Morgan Chase & Co. to rapidly tember on Tuesday, renewing boosted by gains in
400 billion yuan
The strategy can be costly entities for its purchases. It build stakes in companies in- concerns among analysts that
and has risks. If the stocks or says it is instead trying to use cluding hotel firm Hilton there could be a more severe
the shares of health-
Others
other assets fall in value, 300 Bonds the low-interest-rate environ- Worldwide Holdings Inc. and pullback in commodity prices. care companies.
banks can force buyers to ment to earn good returns. OM Asset Management PLC, Energy stocks, the worst-
cough up additional funds on “We try to be a smart in- the U.S. money-management performing sector in the S&P
200
short notice or sell the invest- vestor,” said Guang Yang, chief arm of British insurer Old Mu- 500 this year, have fallen more
Loans
ments if the owners cannot investment officer of HNA tual PLC, according to regula- than any other group in the Government bonds edged
meet margin calls. 100 Capital, the group’s finance tory filings. broad index so far this week. lower, with the yield on the
Still, the financing tactics arm. “We’re not different The moves haven’t been Still, many investors and benchmark 10-year U.S. Trea-
are useful for HNA, which is from, let’s say, some of the without problems. Swissport analysts say they remain cau- sury note rising to 2.156%,
0
trying to aggressively increase best private-equity funds.” He International Ltd., a Zurich- tiously optimistic on the out- from 2.153% on Tuesday.
its revenue globally and al- 2010 ’11 ’12 ’13 ’14 ’15 ’16* added the firm wants to “ef- based air-cargo handler ac- look for the U.S. stock market. Yields rise as bond prices fall.
ready has a heavy debt bur- Note: Figures do not include investments in fectively use leverage to the quired by HNA last year, found Strong earnings have sup- In earlier trading on
shares purchased on the open market;
den. 100 billion yuan = $14.7 billion extent that’s possible.” itself in breach of debt cove- ported stock indexes this year, Wednesday, stocks across the
Bankers say it is relatively *Through June Banks have been eager to nants after its shares were and valuations, which are Asia-Pacific region mostly fell
uncommon for corporations Source: S&P Global Market Intelligence advise on HNA’s investments pledged toward a loan taken trading at higher-than-average amid losses in energy compa-
to use margin loans and de- THE WALL STREET JOURNAL. and help structure its financ- out by an HNA subsidiary. levels, haven’t risen to exces- nies and banks, with the Nik-
rivatives like total return ing arrangements. Over the Credit rater S&P Global sive levels, said Tom kei Stock Average dropping
swaps to finance investments typically cost 1% or 2% for past year and a half, HNA Ratings is reviewing Swiss- Siomades, head of the invest- 0.5% and Hong Kong’s Hang
to the extent that HNA has companies with investment- Group has paid fees totaling port’s speculative-grade rating ment consulting group of Seng Index falling 0.6%.
done. Most companies that grade ratings, according to $100 million to global and Chi- for a potential downgrade. It Hartford Funds. Mainland China markets
are actively acquiring other data provider Dealogic. nese banks for acquisitions said the technical breach “We’re not at the point inched higher, however, after
businesses are financially One benefit the strategies abroad, almost a fifth of all means Swissport cannot ac- where we think we need to MSCI Inc. late Tuesday said it
stronger and have simpler or give HNA is that they don’t in- such fees paid by Chinese cess a revolving credit line un- cash out from the U.S. yet,” would include China A-shares
cheaper ways to raise money. volve transferring money out companies, according to Dea- til the issue is resolved. Mr. Siomades said. “Global in its emerging-markets index,
HNA doesn’t have a credit of mainland China, because logic. HNA put $800 million into growth hasn’t been great, but meaning funds that track it
rating, which limits its ability banks provide funding off- Top-tier financial institu- Swissport shortly after the it’s been OK, and that’s help- will automatically allocate
to access low-cost financing. shore. tions are “waiting to work breach was discovered, some ing us hang in there.” money into China.
Foreign banks have charged it That effectively enables with us in terms of structuring of which was to help support U.S. crude for August deliv- The Shanghai Composite In-
as much as 6% on loans that HNA to sidestep tightened those transactions,” said Mr. the company’s finances. ery fell 2.3% to $42.53 a bar- dex added 0.5%.

Email: [email protected]
HEARD ON THE STREET FINANCIAL ANALYSIS & COMMENTARY WSJ.com/Heard

China Market Has Long Way to Go OVERHEARD Tobacco

Stocks Look
China has won a longed- links between the mainland “Strong and stable” didn’t
Join the Club
for trophy with admission of
its domestically listed stocks
to MSCI’s global benchmarks.
Weightings in MSCI Emerging
and Hong Kong, and cracking
down on companies arbi-
trarily suspending trading in
fare well as the constantly re-
peated political battle cry of
U.K. Prime Minister Theresa
Easy to Quit
Markets Index after A-shares
Don’t hold your breath that inclusion their shares. It has also loos- May. Now Germany’s Ifo eco- Another big investor is
it will lead to a more open China* ened the requirement that it nomic think tank has appro- giving up cigarettes. Regret
AGENCE FRANCE-PRESSE/GETTY IMAGES

China A-shares 28.6%

market. needs to preapprove any fi- priated it, and will be hoping has stalked similar decisions
0.7%
MSCI said Tuesday it nancial products that are it fares better. in the past, but the timing
would add shares listed in Other tracking A-shares. There might be more rea- looks better this time.
Shanghai and Shenzhen, 34.6% Some global investors on son to believe in its assess- U.K. insurer Aviva is in
known as A-shares, to its ma- Wednesday said MSCI’s inclu- ment that the German econ- the process of selling the
jor indexes, after rejecting in- sion for Chinese shares would omy is “stark und stabil.” roughly $1.4 billion of to-
clusion in the previous three enable them to press for Growth is now expected to bacco stocks and bonds it
years. For now, the move is more such changes at both reach 1.8% in 2017 and 2% in holds. It joins a throng of
mostly symbolic because India Taiwan South Korea the market and corporate 2018, up from previous fore- money managers. Fifty-three
MSCI is only allowing 222 8.8% 12.1% 15.3% level in China. Still, the inclu- casts of 1.5% and 1.8%, re- investors, health systems,
companies in initially: A- *Firms listed in Hong Kong and overseas
sion only brings a relative spectively, the Ifo Institute pension funds and insurers,
shares will only make up Source: MSCI Investors watch the market in handful of Chinese companies said Tuesday. Meanwhile in- representing $3.8 trillion in
0.7% of the MSCI Emerging THE WALL STREET JOURNAL. Beijing into the MSCI orbit, com- flation looks contained at assets under management,
Markets Index, with inclusion pared with more than 3,000 1.7% this year and 1.6% next. last month signed a state-
only happening in two phases reform before big decisions it backtracked on efforts to stocks listed in China. The Still, there is one number ment flagging the economic
beginning next year. Goldman like the MSCI inclusion. Take liberalize its capital account. roughly 1.5% of Chinese stock in the Ifo forecasts that costs of smoking and sup-
Sachs estimates a total in- the addition of the yuan into Capital controls have tight- markets that foreigners cur- might raise concern: The in- porting stronger regulation.
flow of just $12 billion from the International Monetary ened further in recent rently own will barely rise. stitute says Germany’s cur- The longest-standing to-
international funds initially— Fund’s elite basket of reserve months, while the Chinese It is vital, then, that any rent-account surplus is set to bacco critic may be the Cali-
a drop in China’s roughly $7.5 currencies in late 2015: To currency seems unable to further increase in the remain very high, at over 8% fornia Public Employees’
trillion equity markets. persuade the IMF to give its break through a floor of weighting of A-shares in of gross domestic product. Retirement System, which
Now that MSCI has made currency this coveted status, seven yuan to the dollar. MSCI indexes is matched by While the country’s other sold out in 2000. A 2015
its long-awaited admission, China showed it was willing In the same way, China further strides in market re- economic outcomes might be analysis for the Calpers in-
the worry is that China may to let the yuan depreciate and has introduced several stock- forms in China. As they hail the subject of envy, this vestment committee sug-
have lost a big incentive to move within a wider trading market reforms as it has MSCI inclusion of Chinese strong and stable indicator gested that it had forgone $3
further reform its financial range the summer before. pushed for MSCI inclusion, shares, global investors could yet be a source of fric- billion in investment returns.
markets. But when capital outflows scrapping quotas on the should keep their eyes on the tion with the rest of Europe Now looks like a better
China is pretty good at from China subsequently be- number of stocks foreign in- pace of further development. and with Donald Trump. time to sell out. In 2000, to-
showing sincerity regarding came a big issue for Beijing, vestors can buy via trading —Jacky Wong bacco stocks, particularly in
the U.S., were wheezing after
a decade of litigation. But

Trump Plan Offers a Potential Bonanza for Trust Banks over the past decade and a
half they have staged a spec-
tacular recovery as investors
Among the biggest win- on making loans. Instead, of their total assets freed up, and 26% at State Street. This have got used to ever tighter
ners from President Donald they tend to invest in safe, according to analysts at Trust Surplus assumes the banks make regulation and focused in-
Trump’s deregulatory agenda highly liquid assets like Goldman Sachs Group. Percent of total assets exempt large, instantaneous adjust- stead on the industry’s big
could be a handful of banks Treasury bonds or else just J.P. Morgan Chase, which from altered leverage ratio ments to their balance cash flows and emerging-
that don’t often garner much hold cash on deposit with also has a sizable custody sheets, which isn’t realistic. markets exposure. British
attention. the Federal Reserve. business, would see around State Street 38% But it still illustrates the po- American Tobacco’s divi-
Northern Trust Corp. 35%
Custody or trust banks, in- These are among the as- 21% of assets exempted. At Bank of New York Mellon 33% tential power of changes in dend yield is now 3.1%—
cluding Bank of New York sets that the Treasury De- other large banks the ratio J.P. Morgan Chase 21% leverage calculations. lower than that of the FTSE
Mellon and State Street, spe- partment now wants to ex- ranges from 12% to 17%, ac- Citigroup 17% Since the Treasury report 100, in a rare reversal. If
cialize in safekeeping the se- clude from calculating total cording to Goldman’s analy- Wells Fargo 17% was released, shares of BNY there is a substantial gain
Morgan Stanley 15%
curities and other assets of leverage, according to the sis. Bank of America 12% Mellon and State Street have for an investor picking up
institutional investors such as department’s report on Since around 2014, BNY risen 2.4% and 2.8% through Aviva’s tobacco shares, it is
Note: Includes cash, U.S. Treasuries, and
mutual funds and insurers. banking regulation last week. Mellon and State Street have deposits with the Federal Reserve Tuesday, respectively, com- hard to see it at these prices.
They stand to benefit more If the change goes through, shrunk their balance sheets Source: Goldman Sachs pared with a 0.8% rise in the Investment returns
than other banks from poten- it would be a windfall to the and issued billions of dollars THE WALL STREET JOURNAL. KBW Nasdaq Bank Index. shouldn’t play a part in an
tial changes to how regulators custody banks. of preferred shares to bring These moves seem minor ethically motivated decision.
calculate lenders’ total lever- If these assets were ex- down their leverage ratios. If as a result. compared with the potential But it helps if ethics and in-
age. cluded from leverage calcula- leverage calculations are Analysts at Keefe, earnings upside. As bank de- vestment strategy point in
Custody banks take some tions, BNY Mellon, State loosened, it would allow Bruyette & Woods estimate regulation slowly moves for- the same direction. The deci-
cash deposits from their in- Street, and smaller competi- them to call back the pre- the regulatory shift could ward, look for the trust sion may prove easier for
vestor clients, but their busi- tor Northern Trust could ferred shares, lever up again, boost 2018 earnings per banks to keep rising. Aviva than it was for early
ness models aren’t focused have between 33% and 38% or both. Earnings would rise share by 19% at BNY Mellon —Aaron Back quitters. —Stephen Wilmot